UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C.  20549
 ____________________________
 
 FORM 10-Q
 
 x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE SECURITIES EXCHANGE ACT OF 1934
 
 For the quarterly period ended June 30, 2010
 
 o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
 THE EXCHANGE ACT OF 1934
 
 For the transition period from _________ to _________
 
 Commission File Number:  000-7475
 ____________________________
 
 SWORDFISH FINANCIAL, INC.
 (Exact name of registrant as specified in its charter)
 
 Minnesota
41-0831186(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 142 Wembley Way
 
 Rockwall, TX  75032
 (Address of principal executive offices)
 
 (972) 310-1830
 (Registrant’s telephone number)
 
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.
 
 þ YesoNo
 
 Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yeso Noo
 
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large accelerated filero
Accelerated filero
Non-accelerated filero
Smaller reporting companyþ
 
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
 o Yesþ  No
 
 The number of shares of issuer’s common stock, par value $0.16 per share, outstanding as of October 29, 2010, was 24,044,000.  The registrant has no other classes of securities outstanding.
 
 
 
 
 
 
 SWORDFISH FINANCIAL, INC.
 
 INDEX
 
 PART I



FINANCIAL INFORMATION
Page NumberItem 1:

Condensed Financial StatementsCondensed Consolidated Balance Sheets – June 30, 2010 (Unaudited) and December 31, 2009
1Condensed Consolidated Statements of Operations - Three and Six Months Ended June 30, 2010 and 2009(Unaudited)
2Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2010 and 2009(Unaudited)
3Notes to Condensed Consolidated Financial Statements(Unaudited)
4Item 2:

Management's Discussion and Analysis of Financial Condition and Results of Operations
11Item 3:

Quantitative and Qualitative Disclosures About Market Risk
13Item 4T:

Controls and Procedures
13PART II



OTHER INFORMATIONItem 1A:

Legal Proceedings
14Item 1A:

Risk Factors
14Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds
14Item 3:

Defaults Upon Senior Securities
14Item 4:

Submission of Matters to a Vote of Security Holders
14Item 5:

Other Information
14Item 6:

Exhibits
14Signatures
15
 
 
 
 
 
 
 Part I – FINANCIAL INFORMATION
 
 Item 1: Financial Statements
 
 Swordfish Financial, Inc. and Subsidiaries
 Condensed Consolidated Balance Sheets
 June 30, 2010 and December 31, 2009
 
 UnauditedJune 30,


December 31,2010


2009ASSETSCURRENT ASSETSCash and Cash Equivalents

$
6,960


$
69,991Accounts Receivable, net


-



67,717Note Receivable – Related Party


3,500,000



3,500,000Accrued Interest Receivable – Related Party


153,125



65,625Other Receivables


75,875



75,875Total Current Assets


3,735,960



3,779,208PROPERTY AND EQUIPMENT, NET


944



-TOTAL ASSETS

$
3,736,904


$
3,779,208LIABILITIES AND STOCKHOLDERS’ EQUITYCURRENT LIABILITIESTerm Debt

$
687,345


$
444,346Note Payable – Related Party


1,604,029



1,604,029Current Portion of Deferred Retirement Benefits


51,306



51,306Accounts Payable


1,110,068



1,115,528Accrued Sales and Warranty Reserve


200,000



200,000Accrued Expenses


1,062,841



718,714Total Current Liabilities


4,715,589



4,133,923LONG-TERM LIABILITIESLong-term Debt, Net of Current Portion


0



242,999Deferred Retirement Benefits, Net of Current Portion


387,476



387,476Total Non-Current Liabilities


387,476



630,475Total Liabilities


5,103,065



4,764,398COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS’ EQUITYCommon Stock, $.16 Par Value per Share 25,000,000 Shares Authorized Common

Shares Issued and Outstanding at June 30, 2010 and December 31, 2009 were

13,936,000 and 13,400,000, respectively


2,229,762



2,144,002Additional Paid-In Capital


1,756,011



1,756,011Accumulated Deficit


(5,351,934
)


(4,885,203
)Total Stockholders’ Equity


(1,366,161
)


(985,190
)TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$
3,736,904


$
3,779,208
 
 See accompanying notes to condensed consolidated financial statements.
 
 
 1
 
 
 Swordfish Financial, Inc. and Subsidiaries
 
 Condensed Consolidated Statements of Operations (Unaudited)
 
 Three Months and Six Months Ended June 30, 2010 and 2009
   Three Months Ended


Six Months EndedJune 30,


June 30,


June 30,


June 30,2010


2009


2010


2009OPERATING EXPENSES:General andadministrative


154,780



0



404,121



0Total Operating Expenses


154,780



0



404,121



0LOSS FROM OPERATIONS


(154,780
)


0



(404,121
)


0OTHER INCOME:Interest expense


(75,818
)


0



(151,635
)


0Interest income


43,750



0



87,500



0Other income


0



0



1,525



0NET (LOSS)

$
(186,848
)

$
0


$
(466,731
)

$
0Net loss per share:Basic and diluted netIncome (loss) per share

$
(0.01
)

$
(0.00
)

$
(0.03
)

$
(0.00
)Weighted average sharesoutstanding:Basic and diluted


13,578,667



2,312,583



13,578,667



2,312,583
 
 
 
 
 See accompanying notes to condensed consolidated financial statements
 
 
 2
 
 
 Swordfish Financial, Inc. and Subsidiaries
 Condensed Consolidated Statements of Cash Flows (Unaudited)
 Six Months Ended June 30, 2010 and 2009
 
 2010


2009CASH FLOWS FROM OPERATING ACTIVITIESNet loss

$
(466,731
)

$
0Adjustments to reconcile net loss to net cash flows from operating activitiesStock based compensation


85,760



0Changes in operating assets and liabilitiesAccounts receivable


67,717



0Accrued interest receivable


(87,500
)Accounts payable


(5,460
)


0Accrued expenses


344,127



0Net Cash Flows from Operating Activities


(62,087
)


0CASH FLOWS FROM INVESTING ACTIVITIESPurchases of property and equipment


(944
)


0Net Cash Flows from (used in) Investing Activities


(944
)


0CASH FLOWS FROM FINANCING ACTIVITIESNet Cash Flows from (used in) Financing Activities


0



0Net Change in Cash and Cash Equivalents


(63,031
)


0CASH AND CASH EQUIVALENTS - January 1, 2010 and 2009


69,991



0CASH AND CASH EQUIVALENTS – June 30,  2010 and 2009

$
6,960


$
0
 
 See accompanying notes to condensed consolidated financial statements.
 
 
 3
 SWORDFISH FINANCIAL, INC. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 June 30, 2010
 
 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 NATURE OF OPERATIONS
 
 Swordfish Financial, Inc., (f/k/a Nature Vision, Inc. and Photo Control Corporation) (the “Company” or “we”)  as Nature Vision, Inc. designed, manufactured and marketed outdoor recreation products primarily for the sport fishing and hunting markets.  On August 14, 2009, Nature Vision, Inc. entered into a Stock Purchase Agreement with Swordfish Financial, Inc. for 10,987,417 shares (representing approximately 80% of the outstanding shares) of its common stock in exchange for a $3,500,000 promissory note.   On August 17, 2009, the shareholders owning a majority of the outstanding common stock voted to change the Company’s name from Nature Vision, Inc. to Swordfish Financial, Inc.
 
 The Company did not meet the minimum net worth covenants of a line of credit with M&I Business Credit LLC (M&I Bank) as of June 30, 2009, which put the Company in default on the line of credit.  On August 14, 2009, simultaneously with the signing of the Swordfish Financial, Inc. stock purchase agreement, M&I Business Credit LLC, owed approximately $1,800,000 by the Company, foreclosed on the line of credit and forced the Company to enter into a Voluntary Surrender Agreement.  The Voluntary Surrender Agreement gave M&I Business Credit LLC total possession of the Nature Vision Premises, its operations and all of the Nature Vision Collateral, which consisted of all of the Nature Vision assets.  M&I Business Credit LLC liquidated basically all of the Nature Vision assets to recover the line of credit debt.
 
 Based on the limited assets, product lines and resources remaining after the M&I Business Credit LLC liquidation, Swordfish Financial, Inc. has decided that there is not enough remaining of the Nature Vision operations to continue as an outdoor recreations products company and will concentrate on the business on being an asset recovery company and using the financial resources recovered to retire the Company’s debts and invest in other businesses domestically and internationally.
 
 Because of seasonal and other factors, the results of operations for the six months ended June 30, 2010 are not necessarily indicative of the results to be expected for the Company's full 2010 fiscal year.
 
 GOING CONCERN
 
 The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  We incurred net losses of $466,731 and $-0-, respectively, for the six months ended June 30, 2009 and 2008 and had an accumulated deficit of $5,351,934 as of June 30, 2010.  We have managed our liquidity during the first part of 2010 through cost reduction initiatives.
 
 Despite cost reduction initiatives, the Company will be unable to pay its obligations in the normal course of business or service its debt in a timely manner throughout 2010 without realizing one of its recovery projects, raising additional capital or issuing debt instruments.  There can be no assurance that the exploration of strategic alternatives will result in any specific action to alleviate the Company’s 12 month working capital needs.
 
 INTERIM FINANCIAL INFORMATION
 
 The accompanying condensed consolidated balance sheet at June 30, 2010 and the condensed consolidated statements of operations for the three and six month periods ended June 30, 2010 and 2009 and cash flows for the six months ended June 30, 2010 and 2009 are unaudited. The unaudited interim condensed consolidated balance sheet and condensed consolidated statements of operations and cash flows have been prepared in accordance with accounting principles generally accepted in the United States of America and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position, results of operations and its cash flows for the three and six months ended June 30, 2010 and 2009. The financial data and other information disclosed in these notes to the condensed consolidated financial statements related to these periods are unaudited.
 
 The results of the Company’s operations for the six months period ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. The condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2009 included in the Annual Report on Form 10-K of the Company filed with the Securities and Exchange Commission.
 
 
 
 4
  PRINCIPLES OF CONSOLIDATION
 
 The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant inter-company transactions and balances have been eliminated in consolidation.
 
 FINANCIAL INSTRUMENTS
 
 The carrying amounts for all financial instruments approximate fair value. The carrying amounts for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short maturity of these instruments. The fair value of long-term debt, notes payable, line of credit-bank, and deferred liabilities - retirement benefits approximates the carrying amounts based upon the Company’s expected borrowing rate for debt with similar remaining maturities and comparable risk.
 
 ACCOUNTS RECEIVABLE
 
 The Company reviews customers' credit history before extending unsecured credit and establishes an allowance for uncollectible accounts based upon factors surrounding the credit risk of specific customers and other information. Accounts receivable are due based on agreed upon customer terms. Accounts receivable are considered past due once they are over the due date of these terms. The Company does not accrue interest on past due accounts receivable. If accounts receivable, in excess of the provided allowance, are determined to be uncollectible, they are charged to expense in the year that determination is made. Accounts receivable are written off after all collection efforts have failed. Accounts receivable have been reduced by an allowance for uncollectible accounts when deemed necessary.  The Company did not deem  it necessary to provide an allowance at June 30, 2009 and December 31, 2009, respectively.
 
 NOTE RECEIVABLE -RELATED PARTY
 
 On August 14, 2009, the Company closed a Stock Purchase/Merger Agreement with Swordfish Financial, Inc., the Texas corporation  (which is controlled by the Company’s Chairman of the Board, President, Chief Executive Officer and majority shareholder)  pursuant to which the Company sold an aggregate of 10,987,417 shares of its common stock in exchange for a $3,500,000 promissory note, payable in two installments of $1,750,000 each with the first installment being forty-five (45) days from the date of the note and the second installment being one-hundred twenty (120) days from the date of the note.  The Company expects for the note and accrued interest to be paid by the shareholders of the Texas corporation.  The note bears interest at the rate of 5% per annum  the note and the related accrued interest at June 30, 2010 was $153,125.  The Company expects to collect the balance of the note receivable and  accrued interest from the shareholders of the Texas corporation.
 
 IMPAIRMENT OF LONG-LIVED ASSETS
 
 We assess the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, in accordance with FASB SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”  An asset or asset group is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset or asset group is expected to generate.  If an asset or asset group is considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds its fair value.  If estimated fair value is less than the book value, the asset is written down to the estimated fair value and an impairment loss is recognized.
 
 SALES AND WARRANTY RESERVE
 
 The Company has established a sales and warranty reserve for sales returns and warranty costs. Reserves are estimated based on historical experience, current product lines being sold, and management's estimates. The Company provides a standard one or two-year warranty program for its products. The sales and warranty reserve for sales returns and warranty costs relating to potential claims from the Nature Vision operations was $200,000 at June 30, 2010 and December 31, 2009, respectively. The sales and warranty reserve represents a significant estimate and actual results could differ from the estimate. The Company has not had any claims against the warranty reserve during the six months ended June 30, 2010.  The following table provides the activity through the returns and warranty accounts as recorded and charged against the reserve relating to previous operations that were discontinued at December 31, 2009.
 2010Accrued balance –December 31, 2009

$
200,000Provision


0Claims incurred


0Accrued balance – June 30, 2010

$
200,000
 
 
 
 5
 
  RESEARCH AND DEVELOPMENT
 
 The Company expensed all costs related to product research and development as incurred.  The Company incurred $96,246 and $192,392 in research and development expenses during the three and six months period ended June 30, 2010, respectively, related to consulting agreements held over from the Nature Vision operations.
 
 STOCK-BASED COMPENSATION
 
 In accordance with SFAS No. 123(R), cash flows from income tax benefits resulting from tax deductions in excess of the compensation cost recognized for stock-based awards have been classified as financing cash flows prospectively from January 1, 2006. Prior to adoption of SFAS No. 123(R), such excess income tax benefits were presented as operating cash flows. There were no cash flows from income tax benefits for the three months ended June 30, 2010.
 
 During the three months ended June 30, 2010, the Company did not issue any shares of common stock.
 
 LOSS PER COMMON SHARE
 
 Net loss per common share was based on the weighted average number of common shares outstanding during the periods when computing the basic net loss per share. When dilutive, stock options and warrants are included as equivalents using the treasury stock market method when computing the diluted net loss per share.  There were no dilutive common stock equivalents, options and warrants, for the quarter ended June 30, 2010 and 2009.
 
 INCOME TAXES
 
 The Company accounts for income taxes using the asset and liability approach, which requires the recognition of deferred tax assets and liabilities for tax consequences of temporary differences between the financial statement and income tax reporting bases of assets and liabilities based on currently enacted rates and laws. These temporary differences principally include depreciation, amortization, net operating losses, deferred retirement benefits, paid time off and performance benefits, contract payable, allowance for doubtful accounts, inventory obsolescence allowance, and warranty reserves. Deferred taxes are reduced by a valuation allowance to the extent that realization of the related deferred tax assets is not assured.  There is a full valuation allowance recorded as of June 30, 2010 and December 31, 2009.
 
 In June 2006, the Financial Accounting Standards Board, or FASB, issued FASB Interpretation No. 48, or FIN 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109," which prescribes comprehensive guidelines for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on tax returns. FIN 48, effective for fiscal years beginning after December 15, 2006, seeks to reduce the diversity in practice associated with
 certain aspects of the recognition and measurement related to accounting for income taxes. The Company adopted provisions of FASB Interpretation 48, Accounting for Uncertainty in Income Taxes: an interpretation of FASB Statement 109, Accounting for Income Taxes (“FIN 48) on January 1, 2007. To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income taxes, such amounts would be accrued and classified as a component of income tax expenses on the consolidated statement of operations. The Company has no material amount of accrued liabilities for interest or penalties recorded related to unrecognized tax benefits.
 
 The federal and state tax returns are open to examination for the years 2005-2009.
 
 ESTIMATES
 
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. For the Company, significant estimates include the allowance for doubtful accounts receivable, reserves for inventory valuation, impairment of goodwill and long lived assets, reserves for sales returns, reserves for warranty services, and the valuation allowance for deferred tax assets.
 
 RECENT ACCOUNTING PRONOUNCEMENTS
 
 In October 2009, the FASB issued Accounting Standards Update (“ASU”) ASU No. 2009-13 (ASC Topic 605) which provides authoritative guidance for revenue recognition with multiple deliverables. This authoritative guidance impacts the determination of when the individual deliverables included in a multiple-element arrangement may be treated as separate units of accounting. Additionally, this guidance modifies the manner in which the transaction consideration is allocated across the separately identified deliverables by no longer permitting the residual method of allocating arrangement consideration. This standard will be effective for us beginning in the first quarter of fiscal year 2012.  Early adoption is permitted.  The implementation is not expected to have a material impact on the Company’s financial position or results of operations.
 
 
 6
 
 In October 2009, the FASB issued ASU No. 2009-14 (ASC Topic 985)  which provides authoritative guidance for the accounting for certain revenue arrangements that include software elements. This authoritative guidance amends the scope of pre-existing software revenue guidance by removing from the guidance non-software components of tangible products and certain software components of tangible products. This standard is effective prospectively for us no later than the beginning of fiscal 2011.  Early adoption is permitted.  The implementation is not expected to have a material impact on the Company’s financial position or results of operations.
 
 In August 2009, the FASB issued ASU No. 2009-05 (ASC Topic 820) which amends the accounting standards related to the measurement of liabilities that are recognized or disclosed at fair value on a recurring basis.  This standard clarifies how a company should measure the fair value of liabilities and that restrictions preventing the transfer of a liability should not be considered as a factor in the measurement of liabilities within the scope of this standard.  This standard is effective for the Company on October 1, 2009 and did not have a material impact on our financial statements.
 
 In June 2009, FASB approved the FASB Accounting Standards Codification (“the Codification”) as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, such as FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other related literature, excluding guidance from the Securities and Exchange Commission (“SEC”), have been superseded by the Codification. All other non-grandfathered, non-SEC accounting literature not included in the Codification has become nonauthoritative. The Codification did not change GAAP, but instead introduced a new structure that combines all authoritative standards into a comprehensive, topically organized online database. The Codification is effective for interim or annual periods ending after September 15, 2009, and impacts the Company’s financial statements as all future
 references to authoritative accounting literature will be referenced in accordance with the Codification. There have been no changes to the content of the Company’s financial statements or disclosures as a result of implementing the Codification during the quarter ended September 30, 2009.   As a result of the Company’s implementation of the Codification during the quarter ended September 30, 2009, previous references to new accounting standards and literature are no longer applicable.   These changes and the Codification itself do not change GAAP.  Other than the manner in which new accounting guidance is referenced, the adoption of these changes had no impact on our consolidated financial statements.
 
 FASB ASC Topic 855, "Subsequent Events" established general standards of accounting for and disclosure of events that occur after the balance sheet date, but before the financial statements are issued or available to be issued (“subsequent events”). An entity is required to disclose the date through which subsequent events have been evaluated and the basis for that date. For public entities, this is the date the financial statements are issued. ASC Topic 855 does not apply to subsequent events or transactions that are within the scope of other GAAP and did not result in significant changes in the subsequent events reported by the Company. This guidance became effective for interim or annual periods ending after June 15, 2009 and did not impact the Company’s financial statements. The Company evaluated for subsequent events through the issuance date of the Company’s financial statements. No recognized or non-recognized subsequent events were noted.
 
 ASC Topic 350, "Intangibles--Goodwill and Other" amended the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under previously issued goodwill and intangible assets topics. This change was intended to improve the consistency between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset under topics related to business combinations and other GAAP. The requirement for determining useful lives must be applied prospectively to intangible assets acquired after the effective date and the disclosure requirements must be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date. FSP SFAS No. 142-3 became effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The adoption of this guidance did not impact the Company’s financial statements.
 
 FASB ASC Topic 810, "Consolidations" (formerly SFAS No. 160) changed the accounting and reporting for minority interests such that they will be recharacterized as noncontrolling interests and classified as a component of equity. ASC Topic 810 guidance became effective for fiscal years beginning after December 15, 2008 with early application prohibited. The Company implemented ASC Topic 810 guidance (formerly SFAS No. 160) at the start of fiscal 2009 and no longer records an intangible asset when the purchase price of a noncontrolling interest exceeds the book value at the time of buyout. Any excess or shortfall for buyouts of noncontrolling interests   is recognized as an adjustment to additional paid-in capital in stockholders’ equity. Any shortfall resulting from the early buyout of noncontrolling interests will continue to be recognized as a benefit in partner investment expense up to the initial amount recognized at the time of buy-in. Additionally, operating losses can be allocated to noncontrolling interests even when such allocation results in a deficit balance (i.e.,  book value can go negative).  The Company presents noncontrolling interests (previously shown as minority interest) as a component of equity on its consolidated balance sheets. Minority interest expense is no longer separately reported as a reduction to net income on the consolidated income statement, but is instead shown below net income under the heading “net income attributable to noncontrolling interests.” The adoption of this guidance did not have any other material impact on the Company’s financial statements.
 
 
 
 7
 
 In December 2009, the FASB issued Accounting Standards Update (ASU) 2009-17, “Consolidations (FASB ASC Topic 810) - Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” which codifies FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R). ASU 2009-17 represents a revision to former FASB Interpretation No. 46 (Revised December 2003), “Consolidation of Variable Interest Entities,” and changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance.  ASU 2009-17 also requires a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity will be required to disclose how its involvement with a variable interest entity affects the reporting entity’s financial statements.  ASU 2009-17 is effective at the start of a reporting entity’s first fiscal year beginning after November 15, 2009, or the Company’s fiscal year beginning January 1, 2010. Early application is not permitted. We have not yet determined the impact, if any, which of the provisions of ASU 2009-15 may have on the Company’s financial statements.
 
 Management does not believe that any other recently issued, but not yet effective, accounting standards or pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
 
 NOTE 2 - PROPERTY AND EQUIPMENT
 
 Property and equipment consisted of the following at:
 June 30,

2010


December 31,

2009Office furniture and equipment

$
944


$
0Less: Accumulated depreciation


(0
)


(0
)Net

$
944


$
0
 
 Depreciation expense of $-0- was recorded for the six months ended June 30, 2010 and 2009, respectively.
 
 
 NOTE 3 – RELATED PARTY NOTE PAYABLE
 
 Former Board of Director Member Note Payable
 
 On October 19, 2007, the Company borrowed $1,000,000 from a member of its Board of Directors in order to meet its short-term cash flow requirement. This demand promissory note was unsecured and had an interest rate of 15%.   Interest was payable on the first day of each month, commencing on December 1, 2007. The entire principal and accrued interest was payable upon demand anytime after January 19, 2008.
 
 On July 8, 2008, the Company amended the terms and replaced the original demand note issued to the member of its Board of Directors on October 19, 2007.  The amended demand note is held by the same member of the Company’s Board of Directors.  The demand promissory note is unsecured and bears an interest rate of 15% .   Interest is payable on the first day of each  month commencing on August 1, 2008.  The Company incurred approximately $76,000 of interest for the six months ended June 30, 2010.  The entire principal and interest is payable upon demand anytime after August 14, 2010.   The note in default and the Company is negotiating with the noteholder to modify the terms of the note.
 
 On August 17, 2009, the Company borrowed $200,000 from a former Board of Directors in order to meet its short-term cash flow requirement. This demand promissory note is secured by a second lien on the Company’s assets and has an interest rate of 15% .  The Company incurred approximately $15,000 of interest for the six months ended June 30, 2010. The entire principal and accrued interest is payable upon demand anytime after February 17, 2010.
 
 Former Chief Executive Officer Note Payable
 
 On October 27, 2008, the Company borrowed $700,000 from its Chief Executive Officer (CEO) in order to meet its short-term cash flow requirements. This promissory note was unsecured and had an interest rate of 15%. The entire principal and accrued interest was payable on January 1, 2009.  The Company incurred approximately $341,000 of interest for the six months ended June 30, 2010.  The Company paid $250,000 of the note in January 2009.  The Company is currently in default on the remaining $450,000 of the note and is in negotiations with its CEO to extend the remaining principal balance of $450,000 in a new note that was outstanding as of June 30, 2010.
 
 
 
 8
 
 NOTE 4 - TERM DEBT
 
 Term debt consisted of the following at:
 June 30,

2010


December 31,

2009Unsecured Promissory Note – Cass Creek – monthly installments of approximately $11,000  from September 2008 through March 2010, then annual installments ranging from $108,000 to $124,000 beginning September 2010 through September 2012, all payments include interest at 8%, guaranteed by the CEO of the Company.

$
469,257


$
469,257Unsecured Note Payable – Fish Hawk -  annual installments of $33,333 plus interest at 8% from July 2008 through July 2010


66,667



66,667Unsecured Note Payable – Castaic -  annual installments of $17,171, including interest at 8%, from January 2009 through January 2011


44,250



44,250Unsecured Note Payable – Castaic -  monthly installments of $1,175, including interest at 8%, from February 2008 through January 2011


26,978



26,978Unsecured Note Payable – monthly installments of $1,458, including interest at 7%, from August 2008 through July 2010


24,850



24,850Unsecured Note Payable – Innovative Outdoors – monthly installments of $4,632, including

interest at 7% from August 2008 through July 2011


127,129



127,129Totals


687,345



687,345Less: Current portion


687,345



444,346Net Long-Term Debt

$
0


$
242,999
 
 
 The Company is in default on all of the notes payable listed above due to its failure to make regularly scheduled payments and
 its plan is to retire all of the notes payable plus accrued  interest from the proceeds of its first recovery project.
 
 NOTE 5 - INCOME TAXES
 
 The provision for income taxes for continuing operations consists of the following components for the six months ended June 30:
 
 2010

2009Current

$
0


$
0Deferred


0



0Total Benefit from Income Taxes

$
0


$
0
 
 
 
 
 9
 
 A comparison of the provision for income tax expense at the federal statutory rate of 34% for the six months ended June 30 to the Company’s effective rate is as follows:
 
 2010


2009Federal statutory rate


(34.0
) %


(34.0
) %State tax, net of federal benefit


(3.3
)


(3.3
)Permanent differences and other including surtax exemption


0.1



0.1Valuation allowance


37.2



37.2Effective Tax Rate


0
%


0
%
 
 NOTE 6 - COMMITMENTS AND CONTINGENCIES
 
 Other Commitments
 
 The Company has a research and development consulting agreement with an outside entity that exist from the period prior to the reverse merger acquisition agreement.  The agreement has two components requiring it to pay monthly installments of $14,583 for research and development services and $8,333 for product support services.  At June 30, 2010 the amount remaining to be paid on the agreement was $312,504.   The Company has recognized $137,496 of expense relating to this agreement for the six months ended June 30, 2010, which is included in general and administrative expense.
 
 The Company has a research and development consulting agreement with an outside entity that exists from the period prior to the reverse merger acquisition agreement.  The agreement has two components requiring it to pay monthly installments of $5,000 for research and development services and $4,166 for product support services.  At June 30, 2010 the amount remaining to be paid on the agreement was $115,004.   The Company has recognized $54,996 of expense relating to this agreement for the six months ended June 30, 2010, which is included in general and administrative expense.
 
 Legal Proceedings
 
 Various creditors have brought suit for collections of their claims against the Company.  These liabilities are recorded on the Company’s financial statements.  Management is of the opinion that the outcome will not have a material adverse effect on our business, financial condition, or results of operation.
 
 NOTE 7 - SUPPLEMENTAL CASH FLOWS
 2010


2009Supplemental Cash Flow DisclosuresCash paid for interest

$
0


$
0Cash paid for income taxes

$
0


$
0
 
 NOTE 8 – SUBSEQUENT EVENTS
 
 In July, 2010 the Company issued its Chief Executive Officer and Chief Financial Officer, each, 279,000 shares of restricted common stock as stock based compensation.
 
 In August 2010, the Company borrowed $50,000 from an individual and executed a promissory note due in 180 days with interest at the annual rate of 15%.  During the term of the note, the Payee has the option of converting the promissory note and accrued interest into restricted common stock at the rate of $.10 per share and extending the same terms to a previous $200,000 loan to the Company.
 
 In September 2010, the Company increased its authorized common stock to 500 million shares and established 50 million shares of preferred shares.
 
 In October 2010, the Company issued its Chief Executive Officer 7,300,000 shares of restricted common stock as stock based compensation.
 
 In October 2010, the Company issued its Chief Financial Officer 1,500,000 shares of restricted common stock as stock based compensation
 
 
 
 
 10
 
 Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
 Forward Looking Statements
 
 Some of the statements made in this Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to the safe harbor provisions of the reform act. Forward-looking statements may be identified by the use of the terminology such as may, will, expect, anticipate, intend, believe, estimate, should or continue or the negatives of these terms or other variations on these words or comparable terminology. To the extent that this report contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of our business, you should be aware that our actual financial condition, operating results and business performance may differ materially from that projected or estimated by us in the forward-looking statements. We have attempted to identify, in context, some of the factors that we currently believe may cause actual future experience and results to differ from their current expectations. These differences may be caused by a variety of factors including, but not limited to, adverse economic conditions, intense competition, including entry of new competitors, inability to obtain sufficient financing to support our operations, progress in research and development activities, variations in costs, fluctuations in foreign currencies against the U.S. dollar in countries where we source products, adverse federal, state and local government regulation, unexpected costs, lower sales and net income (or higher net losses, than forecasted), price increases for equipment, inability to raise prices, failure to obtain new customers, the possible fluctuation and volatility of our operating results and financial condition, inability to carry out marketing and sales plans, loss of key executives and other specific risks that may be alluded to in this report.
 
 The following discussion and analysis of financial condition, results of operations, liquidity and capital resources should be read in conjunction with our audited consolidated financial statements and notes thereto appearing elsewhere in this report, which have been prepared assuming that we will continue as a going concern, and in conjunction with our Annual Report on Form 10-K/A for the year ended December 31, 2009.  As discussed in Note 1 to the condensed consolidated financial statements, our recurring net losses and inability to generate sufficient cash flows to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern.  Management’s plans concerning these matters are also discussed in Note 1 to the condensed consolidated financial statements.  This discussion contains forward-looking statements that involve risks and uncertainties, including information with respect to our plans, intentions and strategies for our businesses. Our actual results may differ materially from those estimated or projected in any of these forward-looking statements.
 
 Overview
 
 Swordfish Financial, Inc., (f/k/a Nature Vision, Inc. and Photo Control Corporation) (the “Company” or “we”) was incorporated as a Minnesota corporation in 1959.  On August 31, 2004, the Company changed its name to Nature Vision, Inc. in connection with a merger transaction with Nature Vision Operating Inc. (f/k/a Nature Vision, Inc.) a Minnesota corporation that was incorporated in 1998. As a part of the merger, Nature Vision Operating, Inc. became a wholly-owned subsidiary of the Company. On August 17, 2009, the shareholders of the Company owning a majority of the outstanding common stock voted to change its name to Swordfish Financial, Inc.  The shares of the Company trade on the Pinksheets OTC Market under the symbol, “SWRF.”
 
 Swordfish Financial will operate as a diversified financial asset recovery company for high net worth individuals and companies with orphaned or dormant assets held in financial institutions around the world.  Swordfish Financial will recognize its share of the recovered assets on its financial statements upon the successful completion of each recovery project.  Swordfish Financial plans to take the financial capital resources recovered and invest in companies that have the mission of being eco-friendly and providing a better standard of living for our world’s people.
 
 Despite cost reduction initiatives, the Company will be unable to pay its obligations in the normal course of business or service its debt in a timely manner throughout 2010 without completing a recovery project, raising additional debt or equity capital.  There can be no assurance that the Company will complete a recovery project, raise additional debt or equity capital.
 
 The Company is currently evaluating strategic alternatives that include the following: (i)  raising of capital, or (ii) issuance of debt instruments.  This process is ongoing and can be lengthy and has inherent costs.  There can be no assurance that the exploration of strategic alternatives will result in any specific action to alleviate the Company’s 12 month working capital needs or result in any other transaction.
 
 
 
 
 11
 
 Results of Operations
 
 Plan of Operations
 
 Swordfish Financial operates as a diversified financial asset recovery company for high net worth individuals and companies with orphaned or dormant assets held in financial institutions around the world.  Swordfish Financial will recognize its share of the recovered assets on its financial statements upon the successful completion of each recovery project.  Swordfish Financial plans to take the financial capital resources recovered and invest in companies that have the mission of being eco-friendly and providing a better standard of living for our world’s people.
 
 Operating Expenses
 
 Total operating expenses were $154,780 for the three months ended June 30, 2010 compared to $-0- for the three months ended June 30, 2009.  Consulting fees of $96,246 on carryover product design agreements, management fees of $15,000, audit fees of $6,000, professional fees of $10,777, rent expense of $4,500, travel of $7,679 are the basic components of these operating expenses.
 
 Total operating expenses were $404,121 for the six months ended June 30, 2010 compared to $-0- for the six months ended June 30, 2009.  Consulting fees of $199,492 on carryover product design agreements, management fees of $50,000, stock based expense of $85,760,  audit fees of $8,000, professional fees of $11,421, rent expense of $7,500, travel expense of $11,897, are the basic components of these operating expenses.
 
 Other Income and Expenses
 
 Other expense for the three and six months ended June 30, 2010 are primarily composed of interest expense accrued $75,818 and $151,635, respectively, on the Company’s outstanding notes payable.  Interest income for the three and six months ended June 30, 2010 represented accrued interest on the note receivable – related party.
 
 Loss from Operations
 
 The Company recognized a loss from operations of $154,780 for the three months ended June 30, 2010, compared to a loss from operations of $-0- for the three months ended June 30, 2009.  The increase in the pretax loss is as a result of the change in business model discussed above.
 
 The Company recognized a loss from operations of $404,121 for the six months ended June 30, 2010, compared to a loss from operations of $-0- for the six months ended June 30, 2009.   The increase in the pretax loss is as a result of the change in business model discussed above.
 
 Net Loss
 
 The Company recognized a net loss of $186,848for the three months ended June 30, 2010 compared to a net loss of $-0- for the three months ended June 30, 2009.  The increase in the net loss is as a result of the change in business model discussed above.
 
 The Company recognized a net loss of $466,731for the six months ended June 30, 2010 compared to a net loss of $-0- for the six months ended June 30, 2009.  The increase in the net loss is as a result of the change in business model discussed above.
 
 Liquidity and Capital Resources
 
 The Company’s cash flow from operating, investing and financing activities, as reflected in the consolidated statements of cash flows, is summarized in the following table for the six months ended June 30:
 
 (thousands)

2010


2009Cash provided by (used for):Operating activities

$
(62,087
)

$
0Investing activities


(944
)


0Financing activities


0



0Increase (decrease) in cash and cash equivalents

$
(63,031
)

$
0
 
 The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  We incurred net losses of $466,731 and $-0-, respectively, for the six ended June 30, 2010 and 2009 and had an accumulated deficit of $5,351,934 as of June 30, 2010.  We have managed our liquidity during the first quarter of 2010 through cost reduction initiatives.
 
 Despite cost reduction initiatives, the Company will be unable to pay its obligations in the normal course of business or service its debt in a timely manner throughout 2010 without realizing one of its recovery projects, raising additional capital or issuing debt instruments.
 
 
 12
 
 The Company is currently evaluating strategic alternatives that include the following: (i) raising of new capital, or (ii) issuance of debt instruments.  This process is ongoing and may be lengthy and has inherent costs.  There can be no assurance that the exploration of strategic alternatives will result in any specific action to alleviate the Company’s 12 month working capital needs or result in any other transaction.
 
 The Company believes that the effect of inflation has not been material during the six months ended June 30, 2010.
 
 
 Off-Balance Sheet Financing Arrangements
 
 As of June 30, 2010, there were no off-balance sheet arrangements, unconsolidated subsidiaries and commitments or guaranties of other parties.
 
 Critical Accounting Policies
 
 The Company’s critical accounting policies are identified in the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2009 inManagement’s Discussion and Analysis of Financial Condition and Results of Operations  under the heading “Critical Accounting Policies.” There were no significant changes to the Company’s critical accounting policies during the six months ended June 30, 2010.
 
 Item 3: Quantitative and Qualitative Disclosures About Market Risk.
 
 Not applicable for small reporting company.
 
 Item 4T: Controls and Procedures.
 
 Disclosure Controls and Procedures
 
 Our  management  is  responsible  for   establishing  and  maintaining adequate  internal  control  over  financial  reporting.  Internal  control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f)  promulgated under the Exchange  Act as a process  designed by, or under the supervision of, the company's  principal executive officer and principal financial officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and  includes those policies and procedures that:
  ●
pertain to the  maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;●
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting  principles, and that receipts and expenditures  of the company are being madeonly in accordance with authorizations of management and directors of the company; and●
provide reasonable assurance regarding prevention or timely detection of  unauthorized  acquisition,  use or disposition of the company's assets that could have a material effect on the financial statements.
 
 
 
 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
 In June 2010, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in "Internal Control -- Integrated Framework," issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.  Based upon this assessment, we determined that there are material weaknesses affecting our internal control over financial reporting.
 
 The  matters  involving  internal  controls  and  procedures  that our management considers to be material weaknesses under COSO and SEC rules are: (1) lack of a functioning  audit committee and lack of independent  directors on our board of  directors,  resulting in potentially ineffective oversight in the establishment and monitoring of required internal controls and procedures;  (2)
 inadequate segregation of  duties consistent with control objectives; (3) insufficient written policies and procedures for accounting  and financial reporting with respect to the requirements  and application of US GAAP and SEC disclosure requirements;  and (4) ineffective controls over period end financial disclosure and reporting  processes.  The aforementioned potential material
 weaknesses were identified by our Chief Financial Officer in connection with the preparation  of our financial  statements as of March 31, 2010 who communicated the matters to our management and board of directors.
 
 
 13
 Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an effect on our financial results.   However, the lack of a functioning  audit committee and lack of a majority of independent directors  on our  board of  directors,  resulting  in  potentially  ineffective oversight in the  establishment and monitoring of required internal controls and
 procedures, can  impact our financial statements.
 
 
 Although we are unable to meet the standards under COSO because of the limited funds available to a company of our size, we are committed to improving our financial organization. As funds become available, we will undertake to: (1) create a position to segregate duties  consistent with control  objectives,  (2) increase our personnel resources and technical  accounting  expertise within the accounting  function (3) appoint one or more  outside  directors to our board of directors  who shall be appointed to a Company  audit  committee  resulting in a fully  functioning  audit  committee  who will  undertake  the  oversight in the establishment and monitoring of required  internal controls and procedures;  and (4) prepare and implement  sufficient written policies and checklists which will set forth procedures for accounting and financial  reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.
 
 We will  continue to monitor and  evaluate  the  effectiveness  of our internal  controls  and  procedures  and our  internal  control  over  financial reporting on an ongoing  basis and are  committed to taking  further  action and implementing additional enhancements or improvements,  as necessary and as funds allow.  However, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake.  The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Projections of any evaluation of controls effectiveness to future periods are subject to risks.
 
 
 
 Part II – OTHER INFORMATION
 
 Item 1.  Legal Proceedings.
 
 Various creditors have brought suit for collections of their claims against the Company.  These liabilities are recorded on the Company’s financial statements.  Management is of the opinion that the outcome will not have a material adverse effect on our business, financial condition, or results of operation.
 
 Item 1A.  Risk Factors
 
 Not required by small reporting company.
 
 Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.
 
 None
 
 Item 3.  Defaults Upon Senior Securities.  Not applicable.
 
 Item 4.  Submission of Matters to a Vote of Security Holders.  Not applicable.
 
 Item 5.  Other Information.  Not applicable.
 
 Item 6.   Exhibits.
 
 Listing of Exhibits:
  31.1

Certification of Chief Executive Officer.31.2

Certification of Chief Financial Officer.32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
 
 
 14
 
 Signatures
 
 In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 SWORDFISH  FINANCIAL,  INC.Date:  November 29, 2010
By:
/s/ Michael AlexanderIts:  Chief Executive Officer and PresidentDate:  November 29, 2010
By:
/s/ Randy MoseleyIts:  Chief Financial Officer
 
 
 
 
 15