Thursday, January 29, 2009

More on Swap-A-Debt: Sometimes lenders can't find cash either.

This week, on behalf of Prosper Lending Review, I contacted Edward DeFeudis, Chairman of Swap-A-Debt (OTCBB: SWPD) in hopes of scheduling an interview with Mr. Defeudis or Marco Geribaldi, the company’s President.

I can verify that Tom’s suspicion about Swap-A-Debt being some time off from a real launch is correct.

When I contacted the company’s office, I was met with a confused “Hello” followed immediately by “How did you get this number?” As it turns out, I’d reached the company’s chairman himself. I reminded Mr. DeFeudis that the officers of publicly traded companies are supposed to be public record as a matter of SEC regulation and I was very impressed that he answered his own phone. It wasn’t long before I began to suspect his might be the only phone in the operation. (Company president Marco Geribaldi’s phone rings only to a busy signal).

After explaining my purpose was to obtain an interview for Prosper Lending Review about the Swap-a-Debt Web site that we discovered and announced a few days ago, a very pleasant Mr. DeFeudis told me that “nobody knows about us, and we’d like to keep it that way for a little while.”

I pressed further asking about the recent launch and how many loans have been offered on the site thus far. Mr. DeFeudis informed me that the site “works” but that no loans have been offered at this time and that they’re not exactly open for business as they’re in the middle of a Web site redesign and working out some “legal things” which he didn’t seem to want to explain.

Clearly, Mr. Defeudis isn’t ready to promote Swap-A-Debt, even though we’re all excited to hear about it. I sent him my card and told him to call me when he’s ready for some publicity because all of our readers want to know the scoop.

In the meantime, my curiosity piqued, I’ve decided to read through the last couple of SEC fillings via EdgarOnline. Here I’ve learned some fascinating stuff.

Interesting excerpt from the balance sheet revision (October 31 un-audited to January 16, Audited)
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)

Under “liquidity and capital resources” the company’s report states:
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.
The report also says: “In addition, we may not be able to raise additional funds on favorable terms, if at all.”


Swap-A-Debt Stocks are trading on the penny stocks board at an all-time low of $0.11, making this two-man operation worth an impressive $5Million. Not too shabby considering after opening nearly a year ago, they have yet to commence operation.

We’re waiting to see what Swap-a-Debt has to offer us when they are ready to launch for real this time.


For your reading enjoyment, here are my sources:
http://idea.sec.gov/Archives/edgar/data/846377/000121390009000105/fs1a4_swapadebt.htm

A very interesting article about Swap-A-Debt company President Marco Geribaldi’s eclectic and impressive work history, from advising members of the Presley family about Graceland operations to IBM and Helicopter companies. http://www.aviationtoday.com/rw/pressreleases_rw/25639.html

The SEC’s Warning about Microcap Stocks: http://www.sec.gov/investor/pubs/microcapstock.htm

11 comments:

Tom said...

Swap a debt could have saved themselves quite a bit of trouble by just keeping their website closed to the public until they are ready to launch.

In the SEC filing from Jan 16th it says "our website is approximately 95% completed." Unfortunately that is not the case. None of the functionality is there - can't even register yet.

Hopefully they will get it together and be an impressive site in the future but, like you mention, the financial data does not look good.

Since they have SEC approval to operate (I guess) they might be better off partnering with a site that already works but does not have SEC's blessing like Loanio.

JessicaW said...

Tom--That's a really great idea. It does seem like Swap-A-Debt has an opportunity there they could pursue. Thanks for reading!

Tom said...

I wonder if this was the $250 project.

The developer posted a note on Jan 17th and said he got paid for completing the "Prosper clone."

JessicaW said...

Wow Tom, that's a great post--I haven't read that far back. Did you ever hear back from the developer with more details?

Matt said...

There stock is about as thinly traded as you can get. Sometimes they go several days in a row with no trades at all. I don't have any evidence to back it up, but I would be suspicious about whether many of the stock trades are "insider trades" or trades among people that have a personal connection to the company.

jb523 said...

The stock history is interesting. Their financials are all for data from 2000. I'm not sure when their IPO was (2000, I'm guessing) or whether they had any presence on the Web at the time. Their stock price fell to 10 cents last February, at which point they had a 20:1 split, and with occasional trades it fell from 2 dollars to the current 11 cents. Given such a low volume, however, those trades reflect little about the worth of the company—only that one person thought it wasn't worth 5 million dollars and one other person thought it was.

With little data to go on, I'm guessing the principals opted to get a fresh reboot for the company by hiring Marco, did the SEC filing and are now awaiting investment money to do/complete a Website overhaul (perhaps they already had investment but it fell through?).

To be fair, their site could well be 95% complete and the site you currently see is just a much older incarnation of it (or is just a demo that was used for investment purposes). If that's the case, if I were them I'd throw up a splash page indicating that they're coming back soon, and keep the demo behind a login screen.

Clint said...

Strange that they have "testimonials" from borrowers without a live site...

http://www.swapadebt.com/getaloan/

Tom said...

Clint,

You are right - it is very strange. I actually wrote a whole post about that here.

crabby said...

Ok guys..sorry someone had to do it...here is an SEC 101 lesson: Yes, this company is registered with the SEC...but NO this company is NOT registered to issue "corresponding notes" in the manner which is now required to operate a peer to peer lending company. Thus, they can't currently facilitate p2p loans without being in violation of securities laws UNLESS they completely refile/amend their filings.

This is a shell corp that has been recycled and renamed several times (with many completely unrelated businesses) and while it says it is worth $5 million on paper, please show me a buyer and I will throw in the San Francisco Bridge for 10 cents.

It looks like they are trying to raise capital from the underbelly of boiler room/brokerage call centers catering to medium net worth penny stock investors. Not that there is anything wrong with that, I think?

With that said, I do wish them luck and believe that this industry is really great and has a great future. Hope they get it together and provide the public with more of these much needed credit markets.

Tom said...

The site is offline now. Not just offline, but displaying this server error message:

"If you can see this page, then the people who manage this server have installed cPanel and WebHost Manager (WHM) which use the Apache Web server software and the Apache Interface to OpenSSL (mod_ssl) successfully. They now have to add content to this directory and replace this placeholder page, or else point the server at their real content.

ATTENTION!
If you are seeing this page instead of the site you expected, please contact the administrator of the site involved."

Tom said...

Another change - They have rebranded as Wiki Loan. They have a whole new site up.