8-K

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

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):    December 28, 2007

Security With Advanced Technology, Inc.

(Exact name of registrant as specified in charter)

Colorado
(State or other jurisdiction of incorporation)

001-32566
(Commission File Number) 20-1978398
(IRS Employer Identification No.)

10855 Dover Street, Suite 1100 Westminster, Colorado   80021
(Address of principal executive offices)

Registrant’s telephone number, including area code:   (303) 439-0372

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 3.02   Unregistered Sales of Equity Securities.

                In previously reported private placements of securities Security With Advanced Technology, Inc. (the “Company”) issued (i) 2,026,667 “SWATW” Replacement Warrants (“‘SWATW’ Replacement Warrants”) exercisable at $8.00 per warrant as replacement warrants for “SWATW” Warrants issued by the Company in private placements in October 2006 and March and April 2007, (ii) 1,402,300 “SWATW” Warrants (“‘SWATW’ Warrants”) exercisable at $9.00 per warrant in private placements in October 2006 and March and April 2007, (iii) 3,428,967 “A” Warrants (“‘A’ Warrants”) exercisable at $4.75 per warrant in private placements in October 2006 and March and April 2007, (iv) 1,148,400 “B” Warrants (“‘B’ Warrants”) exercisable at $5.00 per warrant in an October 2006 private placement and (v) 246,320 warrants to placement agents and consultants (“Placement Agent / Consultant Warrants”) exercisable at between $4.92 and $5.00 per warrant in connection with the issuance of the “SWATW” Replacement Warrants, “SWATW” Warrants, “A” Warrants and “B” Warrants (collectively, the “December Conversion Warrants”).

                Between December 17, 2007 and December 31, 2007, holders (“Investors”) of December Conversion Warrants entered into Warrant Conversion Agreements (“Warrant Conversion Agreements”) with the Company pursuant to which the Investors agreed to exercise (i) 2,026,667 “SWATW” Replacement Warrants, (ii) 1,197,633 “SWATW” Warrants, (iii) 3,105,300 “A” Warrants, (iv) 1,085,400 “B” Warrants and (v) 63,133 Placement Agent / Consultant Warrants in exchange for the issuance of an aggregate of 747,814 shares of the Company’s Series B Preferred Stock (“Series B Preferred Stock”) at an exercise price of $0.50 per warrant. The closing of the Warrant Conversion Agreements was completed on December 31, 2007 and generated gross proceeds to the Company of $3,739,066.50. The terms of the Series B Preferred Stock are described in Item 5.03 below.

                In connection with the Warrant Conversion Agreements, the Company entered into Registration Rights Agreements (“Registration Rights Agreements”) with the Investors pursuant to which the Company granted the Investors one demand and one piggyback registration right covering the shares of common stock underlying the Series B Preferred Stock issued upon exercise of the December Conversion Warrants. The registration rights commence six months after the date of the closing of the Warrant Conversion Agreements and exist until such time as the common stock underlying the Series B Preferred Stock (i) has been sold pursuant to an effective registration statement registering such securities under the Securities Act of 1933, as amended (the “Securities Act”), (ii) has been sold in compliance with paragraph (d) of Rule 145 promulgated under the Securities Act or (iii) is eligible to be sold without volume limitations pursuant to Rule 144 promulgated under the Securities Act. The demand registration right may be triggered by the holders of a majority of the shares of common stock underlying the Series B Preferred Stock (on an as-converted basis).

                The proceeds from the exercise of the December Conversion Warrants will be used for the Company’s overhead expenses and to provide working capital (including inventory and certain product development costs). A more detailed description of the use of proceeds for the warrant exercise is described in Exhibit 4.1 filed herewith.

                The exercise of the December Conversion Warrants and the issuance of the Series B Preferred Stock were exempt from registration under Section 4(2) of the Securities Act and Regulation D promulgated thereunder (“Regulation D”), based upon the Company’s compliance with such rules and regulations. The Company received representations and warranties from the Investors that they are “accredited investors” (as such term is defined in Rule 501 of Regulation D) and no form of general solicitation or general advertising was conducted in connection with the offering. The securities contain restrictions on transfer in accordance with the rules and regulations of the Securities Act and Regulation D.

                The foregoing summary of the Warrant Conversion Agreements and the Registration Rights Agreements is qualified in its entirety by reference to the forms of Warrant Conversion Agreement and Registration Rights Agreement filed herewith as Exhibit 4.1 and Exhibit 4.2 , respectively.

                The information set forth in Item 5.03 of this Current Report on Form 8-K is incorporated herein by reference.

Item 3.03   Material Modification to Rights of Security Holders.

                The information set forth in Item 3.02 and Item 5.03 of this Current Report on Form 8-K is incorporated herein by reference.

Item 5.02   Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

                 Effective January 4, 2008, Barry Loder resigned from the Company's board of directors. Mr. Loder informed the board of directors that he resigned due to the demands on his time from his own business matters.

Item 5.03    Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

                In connection with the warrant exercise described under Item 3.02 above, on December 28, 2007, the Company filed an Amended and Restated Certificate of Designation of the Preferences, Rights, Limitations, Qualifications and Restrictions of the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock of the Company (the “Amended and Restated Certificate of Designation”) to (i) increase the number of shares of the Company’s capital stock designated as Series A Preferred Stock from 3,600,000 shares to 4,175,000 shares, (ii) designate 825,000 shares of the capital stock of the Company as Series B Preferred Stock and (iii) set forth the preferences, rights, limitations, qualifications and restrictions of the Series B Preferred Stock.

                The Amended and Restated Certificate of Designation provides that each share of Series B Preferred Stock shall automatically, and without any action on the part of the holder, convert into ten shares of the Company’s common stock, but shall in no event be so convertible until the later of (i) six months following the filing date of the Amended and Restated Certificate of Designation with the Colorado Secretary of State (the “Filing Date”) and (ii) the Company’s receipt of shareholder approval of the conversion of the Series B Preferred Stock into common stock. If the Company’s shareholders have not approved the conversion of the Series B Preferred Stock into common stock on or before the first anniversary of the Filing Date, the holders of the Series B Preferred Stock have the right to require the Company to redeem all or a portion of such holder’s shares of Series B Preferred Stock for cash and at a price per share of Series B Preferred Stock equal to $5.00, subject to certain adjustments, plus simple interest on such price per share at the rate of 6% per annum.

                The Series B Preferred Stock is non-voting and ranks pari passu with the Company’s Series A Preferred Stock (the “Series A Preferred Stock”) and, along with the Series A Preferred Stock, does not have any liquidation preference over the Company’s common stock. Accordingly, upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of the Company’s debts and liabilities, the holders of the Series A Preferred Stock and the Series B Preferred Stock shall share ratably with the holders of the common stock, on an as-converted basis, in any distribution of remaining assets of the Company.

                The Amended and Restated Certificate of Designation provides customary provisions regarding ratable adjustments to the number of shares of common stock issuable upon conversion of the Series B Preferred Stock in the event the Company effects a recapitalization, subdivision, combination, reclassification, exchange or substitution of shares of the Company’s common stock. The Amended and Restated Certificate of Designation also provides customary provisions regarding adjustments to the number of shares of common stock issuable upon conversion of the Series B Preferred Stock, if, at any time following the filing of the Amended and Restated Certificate of Designation and prior to the conversion of the Series B Preferred Stock, the Company’s common stock is converted into other securities or property pursuant to a reorganization, merger, or consolidation.

                The foregoing summary of the Amended and Restated Certificate of Designation is qualified in its entirety by reference to the Amended and Restated Certificate of Designation filed herewith as Exhibit 3.1.

Item 8.01   Other Events.

                On January 4, 2008, the Company issued a press release announcing the closing of the offering described above. A copy of the press release is furnished as Exhibit 99.1 to this report.

Item 9.01   Exhibits.

Exhibit No Description

3.1 Amended and Restated Certificate of Designation of the Preferences, Rights, Limitations, Qualifications and Restrictions of the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock of Security With Advanced Technology, Inc.

4.1 Form of Warrant Conversion Agreement

4.2 Form of Registration Rights Agreement

99.1 Press release dated January 4, 2008

                         


Date: January 4, 2008
                         
                          Security With Advanced Technology, Inc.


By: /s/ Jeffrey G. McGonegal
         Jeffrey G. McGonegal
         Chief Executive Officer

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION
of the
PREFERENCES, RIGHTS, LIMITATIONS, QUALIFICATIONS AND RESTRICTIONS
of the
SERIES A CONVERTIBLE PREFERRED STOCK
and
SERIES B CONVERTIBLE PREFERRED STOCK
of
SECURITY WITH ADVANCED TECHNOLOGY, INC.

        SECURITY WITH ADVANCED TECHNOLOGY, INC. (the “Corporation”), a corporation organized and existing under the Colorado Business Corporation Act (the “CBCA”), hereby certifies that, pursuant to the authority conferred upon the Board of Directors of the Corporation (the “Board”) by its Articles of Incorporation and pursuant to the provisions of the CBCA, the Board adopted the following resolution providing for the authorization of 4,175,000 shares of the Corporation’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”) and 825,000 shares of the Corporation’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”):

        RESOLVED, that pursuant to the authority vested in the Board by the Corporation’s Articles of Incorporation, the Board hereby establishes the Series A Preferred Stock and Series B Preferred Stock of the Corporation, authorizes 4,175,000 shares of Series A Preferred Stock, authorizes 825,000 shares of Series B Preferred Stock and determines the designation, preferences, rights, qualifications, limitations and privileges of Series A Preferred Stock and Series B Preferred Stock of the Corporation as set forth below. This Amended and Restated Certificate of Designation amends, restates, supersedes and replaces in its entirety the Certificate of Designation of the Corporation dated September 28, 2006, as amended.

    1.        Voting Rights.   Except as otherwise required by law, neither the Series A Preferred Stock nor the Series B Preferred Stock shall possess any voting rights.

    2.        Liquidation Rights.   The Series A Preferred Stock shall rank pari passu with the Series B Preferred Stock and neither the Series A Preferred Stock nor the Series B Preferred Stock shall have any liquidation preference over the Company’s common stock (the “Common Stock”). Accordingly, upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after payment or provision for payment of debts and other liabilities of the Corporation, the holders (each, a “Holder” and collectively, the “Holders”) of the Series A Preferred Stock and the Series B Preferred Stock shall share ratably with the holders of the Common Stock, on as-converted basis, in any distribution of the remaining assets and funds of the Corporation.

    3.        Conversion Rights of the Series A Preferred Stock.   The Holders of Series A Preferred Stock shall have the following rights with respect to the conversion of Series A Preferred Stock:

             (a)        Conversion.   Subject to and in compliance with the provisions of this Section 3, each share of Series A Preferred Stock may, at the option of the Holder thereof, be converted into one share of fully paid and nonassessable Common Stock. Notwithstanding the foregoing, Vision Opportunity Master Fund, Ltd. (“Vision”) shall not have the right to convert the Series A Preferred Stock, and the Corporation shall not effect the conversion of Series A Preferred Stock held by Vision, to the extent that after giving effect to such conversion Vision (together with its affiliates) would beneficially own in excess of 9.99% of the shares of Common Stock outstanding immediately after giving effect to such conversion; provided, however, that upon Vision providing the Corporation with 61 days notice (the “Waiver Notice”) that Vision would like to waive this restriction with regard to any or all securities issuable upon conversion of the Series A Preferred Stock, this restriction will be of no force or effect with regard to all or a portion of the Series A Preferred Stock referenced in the Waiver Notice. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by Vision and its affiliates shall include the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (A) exercise of the remaining, unconverted portion of the Series A Preferred Stock and the Series B Preferred Stock beneficially owned by Vision and its affiliates and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation beneficially owned by Vision and its affiliates that are not by their terms immediately exercisable. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Certificate of Designation, in determining the number of outstanding shares of Common Stock, Vision may rely on the number of outstanding shares of Common Stock as reflected in (I) the Corporation’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (II) a more recent public announcement by the Corporation or (III) any other notice by the Corporation or its transfer agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of Vision, the Corporation shall within one business day confirm orally and in writing to Vision the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company by Vision and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.

             (b)        Conversion Rate.   The conversion rate for the Series A Preferred Stock (the “Series A Conversion Rate”) shall be adjusted from time to time in accordance with this Section 3(b). For purposes of determining the adjusted Series A Conversion Rate, the following shall be applicable, and all references herein to the Series A Conversion Rate shall mean the Series A Conversion Rate as so adjusted:

                      (i)        Adjustment for Stock Splits and Combinations.   If, at any time or from time to time after the filing of this Certificate of Designation with the Colorado Secretary of State (the “Original Series A Filing Date”), the Corporation effects a subdivision of the outstanding Common Stock, the Series A Conversion Rate in effect immediately before that subdivision shall be ratably adjusted in proportion to the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and the number of shares of Common Stock outstanding immediately after such event. Conversely, if the Corporation shall at any time or from time to time after the Original Series A Filing Date combine the outstanding shares of Common Stock into a smaller number of shares, the Series A Conversion Rate in effect immediately before the combination shall be proportionately increased. Any adjustment under this Section 3(b) shall become effective at the close of business on the date the subdivision or combination becomes effective.

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                      (ii)        Adjustment for Common Stock Dividends and Distributions.   If, at any time or from time to time after the Original Series A Filing Date, the Corporation makes a dividend or other distribution payable in additional shares of Common Stock without any payment therefor, in each such event the Series A Conversion Rate then in effect shall be ratably adjusted in proportion to the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and the number of shares of Common Stock outstanding immediately after such event.

                      (iii)        Adjustments for Other Dividends and Distributions.   If, at any time or from time to time after the Original Series A Filing Date, the Corporation makes a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, provision shall be made so that the Holders of the Series A Preferred Stock shall receive upon conversion thereof, in addition to the number of shares of Common Stock receivable thereupon, the amount of other securities of the Corporation which they would have received had their Series A Preferred Stock been converted into Common Stock on the date of such event and had they thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period, subject to all other adjustments called for during such period under this Section 3 with respect to the rights of the Holders of the Series A Preferred Stock or with respect to such other securities by their terms.

                      (iv)        Adjustment for Reclassification Exchange and Substitution.   If, at any time or from time to time after the Original Series A Filing Date, the Common Stock issuable upon conversion of the Series A Preferred Stock is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend or a reorganization, merger or consolidation provided for elsewhere in this Section 3), in any such event each Holder of Series A Preferred Stock shall have the right thereafter, subject to the terms of Section 3(a), to convert such stock into the kind and amount of stock and other securities and property receivable in connection with such recapitalization, reclassification or other change with respect to the maximum number of shares of Common Stock into which such shares of Series A Preferred Stock could have been converted immediately prior to such recapitalization, reclassification or change (without giving effect to Section 3(a) hereof), all subject to further adjustments as provided in this Section 3 or with respect to such other securities or property by the terms thereof.

                      (v)        Reorganizations, Mergers or Consolidations.   If, at any time or from time to time after the Original Series A Filing Date, the Common Stock is converted into other securities or property, whether pursuant to a reorganization, merger, consolidation or otherwise (other than a recapitalization, subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in this Section 3), as a part of such transaction, provision shall be made so that the Holders of the Series A Preferred Stock shall be entitled thereafter to receive upon conversion of the Series A Preferred Stock the number of shares of stock or other securities or property of the Corporation or any successor or acquiring corporation to which a holder of the maximum number of shares of Common Stock deliverable upon conversion would have been entitled in connection with such transaction, subject to adjustment in respect of such stock or securities by the terms thereof. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3 with respect to the rights of the Holders of Series A Preferred Stock after such transaction to the end that the provisions of this Section 3 (including adjustment of the Series A Conversion Rate then in effect and the number of shares issuable upon conversion of the Series A Preferred Stock) shall be applicable after that event and be as nearly equivalent as practicable.

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                      (vi)        Treasury Shares.   The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation, if any, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock.

             (d)        Certificate of Adjustment.   In each case of an adjustment or readjustment of the Series A Conversion Rate or the number of shares of Common Stock or other securities issuable upon conversion of the Series A Preferred Stock, the Corporation, at its expense, shall compute such adjustment or readjustment in accordance with the provisions of this Section 3, prepare a certificate showing such adjustment or readjustment and furnish such certificate to each registered Holder of Series A Preferred Stock. Such certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (A) the consideration received or deemed to be received by the Corporation for any additional shares of Common Stock issued or sold or deemed to have been issued or sold, (B) the Series A Conversion Rate in effect before and after such adjustment, (C) the number of additional shares of Common Stock issued or sold or deemed to have been issued or sold and(D) the type and amount, if any, of other property which at the time would be received upon conversion of the Series A Preferred Stock.

             (e)        Notices of Record Date.   Upon (i) any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution or (ii) any capital reorganization of the Corporation, any reclassification or recapitalization of the capital stock of the Corporation, any merger or consolidation of the Corporation with or into any other corporation, any sale of all or substantially all the assets of the Corporation (an “Asset Transfer”) or any voluntary or involuntary dissolution, liquidation or winding up of the Corporation or (iii) an acquisition by an individual or legal entity or group (as set forth in Section 13(d) of the Exchange Act) of more than 50% of the voting rights or equity interests in the Corporation, whether in one transaction or in a series of related transactions (an “Acquisition”), in each case the Corporation shall furnish to each Holder of Series A Preferred Stock at least 20 days prior to the record date specified therein a notice specifying (1) the date on which any such record is to be taken for the purpose of such dividend or distribution and a description of such dividend or distribution, (2) the date on which any such Acquisition, reorganization, reclassification, transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or winding up is expected to become effective and (3) the date, if any, that is to be fixed for determining the holders of record of Common Stock (or other securities) that shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such Acquisition, reorganization, reclassification, transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or winding up.

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             (f)        Mechanics of Conversion.   Each Holder of Series A Preferred Stock who desires to convert the same into shares of Common Stock pursuant to this Section 3 shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or any transfer agent for the Series A Preferred Stock and shall give written notice to the Corporation at such office that such Holder elects to convert the same. Such notice shall state the number of shares of Series A Preferred Stock being converted. Thereupon, the Corporation shall, within three business days, issue and deliver at such office to such holder a certificate or certificates for the number of shares of Common Stock to which such Holder is entitled. Such conversion shall be deemed to have been made at the close of business on the date of such surrender of the certificate representing the shares of Series A Preferred to be converted, and the person entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Common Stock on such date.

             (g)        Fractional Shares.   No fractional shares of Common Stock shall be issued upon conversion of Series A Preferred Stock. All shares of Common Stock (including fractions thereof) issuable upon conversion of more than one share of Series A Preferred Stock by a Holder thereof shall be aggregated for purposes of determination whether the conversion would result in the issuance of any fractional share. If, after such aggregation, the conversion would result in the issuance of any fractional share, in lieu of issuing any fractional share, the Corporation shall round the number of shares of Common Stock to be issued to the nearest whole number.

    4.        Conversion Rights of the Series B Preferred Stock.   The Holders of Series B Preferred Stock shall have the following rights with respect to the conversion of Series B Preferred Stock:

             (a)        Conversion. Subject to and in compliance with the provisions of this Section 4, upon the later to occur of (i) six months following the Original Series B Filing Date (as defined below) and (ii) the date on which the shareholders of the Corporation approve the conversion of the Series B Preferred Stock to Common Stock, each share of Series B Preferred Stock shall automatically and without any action on the part of the holders of the Series B Preferred Stock, be converted into ten shares of fully paid and nonassessable Common Stock. Notwithstanding the foregoing, the shares of Series B Preferred Stock held by Vision shall not convert to Common Stock, and the Corporation shall not effect the conversion of Series B Preferred Stock held by Vision to Common Stock, to the extent that after giving effect to such conversion Vision (together with its affiliates) would beneficially own in excess of 9.99% of the shares of Common Stock outstanding immediately after giving effect to such conversion; provided, however, that upon Vision providing the Corporation with a Waiver Notice that Vision would like to waive this restriction with regard to any or all securities issuable upon conversion of the Series B Preferred Stock, this restriction will be of no force or effect with regard to all or a portion of the Series B Preferred Stock referenced in the Waiver Notice. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by Vision and its affiliates shall include the number of shares of Common Stock issuable upon conversion of the Series B Preferred Stock with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (A) exercise of the remaining, unconverted portion of the Series A Preferred Stock and the Series B Preferred Stock beneficially owned by Vision and its affiliates and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation beneficially owned by Vision and its affiliates that are not by their terms immediately exercisable. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Certificate of Designation, in determining the number of outstanding shares of Common Stock, Vision may rely on the number of outstanding shares of Common Stock as reflected in (I) the Corporation’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (II) a more recent public announcement by the Corporation or (III) any other notice by the Corporation or its transfer agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of Vision, the Corporation shall within one business day confirm orally and in writing to Vision the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company by Vision and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.

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             (b)        Conversion Rate.   The conversion rate for the Series B Preferred Stock (the “Series B Conversion Rate”) shall be adjusted from time to time in accordance with this Section 4(b). For purposes of determining the adjusted Series B Conversion Rate, the following shall be applicable, and all references herein to the Series B Conversion Rate shall mean the Series B Conversion Rate as so adjusted:

                      (i)        Adjustment for Stock Splits and Combinations.   If, at any time or from time to time after the filing of this Certificate of Designation with the Colorado Secretary of State (the “Original Series B Filing Date”), the Corporation effects a subdivision of the outstanding Common Stock, the Series B Conversion Rate in effect immediately before that subdivision shall be ratably adjusted in proportion to the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and the number of shares of Common Stock outstanding immediately after such event. Conversely, if the Corporation shall at any time or from time to time after the Original Series B Filing Date combine the outstanding shares of Common Stock into a smaller number of shares, the Series B Conversion Rate in effect immediately before the combination shall be proportionately increased. Any adjustment under this Section 4(b) shall become effective at the close of business on the date the subdivision or combination becomes effective.

                      (ii)        Adjustment for Common Stock Dividends and Distributions.   If, at any time or from time to time after the Original Series B Filing Date, the Corporation makes a dividend or other distribution payable in additional shares of Common Stock without any payment therefor, in each such event the Series B Conversion Rate then in effect shall be ratably adjusted in proportion to the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and the number of shares of Common Stock outstanding immediately after such event.

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                      (iii)        Adjustments for Other Dividends and Distributions.   If, at any time or from time to time after the Original Series B Filing Date, the Corporation makes a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, provision shall be made so that the Holders of the Series B Preferred Stock shall receive upon conversion thereof, in addition to the number of shares of Common Stock receivable thereupon, the amount of other securities of the Corporation which they would have received had their Series B Preferred Stock been converted into Common Stock on the date of such event and had they thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period, subject to all other adjustments called for during such period under this Section 4 with respect to the rights of the Holders of the Series B Preferred Stock or with respect to such other securities by their terms.

                      (iv)        Adjustment for Reclassification Exchange and Substitution.   If, at any time or from time to time after the Original Series B Filing Date, the Common Stock issuable upon conversion of the Series B Preferred Stock is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend or a reorganization, merger or consolidation provided for elsewhere in this Section 4), in any such event each Holder of Series B Preferred Stock shall have the right thereafter, subject to the terms of Section 4(a), to convert such stock into the kind and amount of stock and other securities and property receivable in connection with such recapitalization, reclassification or other change with respect to the maximum number of shares of Common Stock into which such shares of Series B Preferred Stock could have been converted immediately prior to such recapitalization, reclassification or change (without giving effect to Section 4(a) hereof), all subject to further adjustments as provided in this Section 4 or with respect to such other securities or property by the terms thereof.

                      (v)        Reorganizations, Mergers or Consolidations.   If, at any time or from time to time after the Original Series B Filing Date, the Common Stock is converted into other securities or property, whether pursuant to a reorganization, merger, consolidation or otherwise (other than a recapitalization, subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in this Section 4), as a part of such transaction, provision shall be made so that the Holders of the Series B Preferred Stock shall be entitled thereafter to receive upon conversion of the Series B Preferred Stock the number of shares of stock or other securities or property of the Corporation or any successor or acquiring corporation to which a holder of the maximum number of shares of Common Stock deliverable upon conversion would have been entitled in connection with such transaction, subject to adjustment in respect of such stock or securities by the terms thereof. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 4 with respect to the rights of the Holders of Series B Preferred Stock after such transaction to the end that the provisions of this Section 4 (including adjustment of the Series B Conversion Rate then in effect and the number of shares issuable upon conversion of the Series B Preferred Stock) shall be applicable after that event and be as nearly equivalent as practicable.

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                       (vi)        Treasury Shares.   The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation, if any, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock.

             (d)        Certificate of Adjustment.   In each case of an adjustment or readjustment of the Series B Conversion Rate or the number of shares of Common Stock or other securities issuable upon conversion of the Series B Preferred Stock, the Corporation, at its expense, shall compute such adjustment or readjustment in accordance with the provisions of this Section 4, prepare a certificate showing such adjustment or readjustment and furnish such certificate to each registered Holder of Series B Preferred Stock. Such certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (A) the consideration received or deemed to be received by the Corporation for any additional shares of Common Stock issued or sold or deemed to have been issued or sold, (B) the Series B Conversion Rate in effect before and after such adjustment, (C) the number of additional shares of Common Stock issued or sold or deemed to have been issued or sold and (D) the type and amount, if any, of other property which at the time would be received upon conversion of the Series B Preferred Stock.

             (e)        Notices of Record Date.   Upon (i) any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution or (ii) any capital reorganization of the Corporation, any reclassification or recapitalization of the capital stock of the Corporation, any merger or consolidation of the Corporation with or into any other corporation, any sale of all or substantially all the assets of the Corporation (an “Asset Transfer”) or any voluntary or involuntary dissolution, liquidation or winding up of the Corporation or (iii) an acquisition by an individual or legal entity or group (as set forth in Section 13(d) of the Exchange Act) of more than 50% of the voting rights or equity interests in the Corporation, whether in one transaction or in a series of related transactions (an “Acquisition”), in each case the Corporation shall furnish to each Holder of Series B Preferred Stock at least 20 days prior to the record date specified therein a notice specifying (1) the date on which any such record is to be taken for the purpose of such dividend or distribution and a description of such dividend or distribution, (2) the date on which any such Acquisition, reorganization, reclassification, transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or winding up is expected to become effective and (3) the date, if any, that is to be fixed for determining the holders of record of Common Stock (or other securities) that shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such Acquisition, reorganization, reclassification, transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or winding up.

             (f)        Mechanics of Conversion.   Each Holder of Series B Preferred Stock who desires to convert the same into shares of Common Stock pursuant to this Section 4 shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or any transfer agent for the Series B Preferred Stock and shall give written notice to the Corporation at such office that such Holder elects to convert the same. Such notice shall state the number of shares of Series B Preferred Stock being converted. Thereupon, the Corporation shall, within three business days, issue and deliver at such office to such holder a certificate or certificates for the number of shares of Common Stock to which such Holder is entitled. Such conversion shall be deemed to have been made at the close of business on the date of such surrender of the certificate representing the shares of Series B Preferred to be converted, and the person entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Common Stock on such date.

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             (g)        Fractional Shares.   No fractional shares of Common Stock shall be issued upon conversion of Series B Preferred Stock. All shares of Common Stock (including fractions thereof) issuable upon conversion of more than one share of Series B Preferred Stock by a Holder thereof shall be aggregated for purposes of determination whether the conversion would result in the issuance of any fractional share. If, after such aggregation, the conversion would result in the issuance of any fractional share, in lieu of issuing any fractional share, the Corporation shall round the number of shares of Common Stock to be issued to the nearest whole number.

    5.        Redemption.   In the event the shareholders of the Corporation have not approved the conversion of the Series B Preferred Stock to Common Stock on or before the first anniversary of the Original Series B Filing Date, at any time thereafter upon written notice to the Corporation each holder of Series B Preferred Stock shall have the right, at such holder’s option, to require the Corporation to redeem all or a portion of such holder’s shares of Series B Preferred Stock in cash at a price per share of Series B Preferred Stock equal to $5.00 (subject to adjustment pursuant to the provisions of Section 4(b)) plus simple interest on such price per share at the rate of 6% per annum. Such redemption shall be consummated by the Corporation, to the extent not prohibited by applicable law, within 15 days of the Corporation’s receipt of written notice from a holder of Series B Preferred Stock.

    6.        Transferability.   The Series A Preferred Stock and the Series B Preferred Stock and any shares of Common Stock issued upon conversion thereof, may only be sold, transferred, assigned, pledged or otherwise disposed of (“Transfer”) in accordance with state and federal securities laws. The Corporation shall keep at its principal office a register of the Series A Preferred Stock and Series B Preferred Stock. Upon the surrender of any certificate representing Series A Preferred Stock or Series B Preferred Stock at such place, the Corporation, at the request of the record Holder of such certificate, shall execute and deliver (at the Corporation’s expense) a new certificate or certificates in exchange therefor representing in the aggregate the number of shares represented by the surrendered certificate. Each such new certificate shall be registered in such name and shall represent such number of shares as is requested by the Holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate.

    7.        Amendment and Waiver.   This Certificate of Designation shall not be amended, either directly or indirectly or through merger or consolidation with another entity, in any manner that would alter or change the powers, preferences or special rights of the Series A Preferred Stock or the Series B Preferred Stock so as to affect them materially and adversely without the affirmative vote of Holders of more than 50% of the outstanding Series A Preferred Stock or more than 50% of the outstanding Series B Preferred Stock, respectively (“Required Holders”). Any amendment, modification or waiver of any of the terms or provisions of the Series A Preferred Stock or the Series B Preferred Stock by the Required Holders, whether prospectively or retroactively effective, shall be binding upon all Holders of the Series A Preferred Stock and the Series B Preferred Stock (as applicable).

    8.        Replacement.   Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit of the registered Holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing shares of Series A Preferred Stock or Series B Preferred Stock, and in the case of any such loss, theft or destruction upon receipt of indemnity reasonably satisfactory to the Corporation (provided that if the Holder is a financial institution or other institutional investor its own agreement shall be satisfactory) or in the case of any such mutilation upon surrender of such certificate, the Corporation, at its expense, shall execute and deliver in lieu of such certificate a new certificate of like kind representing the number of shares of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate.

    9.        Notices.   Any notice required by the provisions of this Certificate of Designation shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed facsimile if sent during normal business hours of the recipient; if not, then on the next business day; (iii) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All notices to the Corporation shall be addressed to the Corporation’s President at the Corporation’s principal place of business on file with the Secretary of State of the State of Colorado. All notices to stockholders shall be addressed to each holder of record at the address of such holder appearing on the books of the Corporation.

*   *   *   *   *

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        IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be executed by Jeffrey McGonegal, an Executive Officer of the Corporation, this 28^th day of December, 2007.

By:
Name:
Title: /s/ Jeffrey McGonegal
Jeffrey McGonegal
Chief Financial Officer

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EX-4.1

Exhibit 4.1

WARRANT CONVERSION AGREEMENT

        THIS WARRANT CONVERSION AGREEMENT (this “Agreement”) is made and entered into as of the ____ day of December, 2007 (the “Effective Date”) by and between Security With Advanced Technology, Inc., a Colorado corporation (the “Company”), and the warrant holder(s) set forth on the signature page to this Agreement (each, a “Warrant Holder”).

RECITALS

        WHEREAS, the Company’s Board of Directors has approved modifications to the terms of the outstanding (i) “SWATW” Replacement Warrants (the “SWATW-R Warrants”) issued as replacement warrants for the SWAT Warrants issued by the Company in private placements in October 2006 and March / April 2007, (ii) “A” Warrants (the “A” Warrants”) issued by the Company in private placements in October 2006 and March / April 2007 and (iii) “B” Warrants (the “B” Warrants”) issued by the Company in a private placement in March 2007 (all of which securities are collectively referred to as the “December Conversion Warrants”) in order to encourage the exercise of such December Conversion Warrants and therefore generate needed cash proceeds to the Company (the “Offering”);

        WHEREAS, the modified terms of the December Conversion Warrants are set forth on Exhibit A attached hereto;

        WHEREAS, the Warrant Holders shall have a period of 15 calendar days following the Effective Date (the “Conversion Period”) to exercise and exchange their December Conversion Warrants on the terms set forth on Exhibit A attached hereto and any holder of December Conversion Warrants who does not so exercise his or its December Conversion Warrants during the Conversion Period shall thereafter no longer have the right to exercise his or its December Conversion Warrants on the terms set forth on Exhibit A and the terms of such December Conversion Warrants existing prior to the Effective Date shall remain unchanged; and

        WHEREAS, the Company anticipates the proceeds from this Offering will be used as described on Exhibit B attached hereto.

AGREEMENT

        NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

    1.        The Recitals set forth above are hereby incorporated by reference into this Agreement and made a part hereof. Further, Exhibits A, B, C and D are hereby incorporated by reference into this Agreement and made a part hereof.

    2.        At any time during the Conversion Period, each Warrant Holder may exercise his or its December Conversion Warrants in accordance with the terms set forth on Exhibit A by (a) delivering to the Company an executed copy of this Agreement, and (b) delivering to the Company the amount of cash required to pay the exercise price of the December Conversion Warrants so exercised in immediately available good funds as instructed by the Company. In addition, the Company will execute and deliver to each Warrant Holder that exercises his or its December Conversion Warrants, and each Warrant Holder that exercises his or its December Conversion Warrants shall execute and deliver to Company, the Registration Rights Agreement in the form attached hereto as Exhibit D.

    3.        Each Warrant Holder agrees that to the extent it exercises his or its December Conversion Warrants pursuant to this Agreement, all future rights and claims to such December Conversion Warrant rights are null and void, regardless of whether the original December Conversion Warrant agreement issued to the Warrant Holder is surrendered.

    5.        Each Warrant Holder acknowledges and agrees that the shares of Series B Preferred Stock (the “Series B Preferred Stock”) to be issued in this Offering as well as the shares of Common Stock underlying the Series B Preferred Stock are “restricted securities” as defined in Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, each Warrant Holder acknowledges and agrees that such securities cannot be assigned, sold, transferred or otherwise disposed of by such Warrant Holder (or any permitted assignee) without registration under the Securities Act or pursuant to an exemption from such registration established satisfactory to the Company and its counsel.

    6.        Each Warrant Holder acknowledges and agrees that this Agreement and the transactions contemplated hereby constitute a private placement of securities under Section 4(2) of the Securities Act and Regulation D promulgated thereunder and the Company is relying upon the representations and warranties provided by the Warrant Holders in the Securities Purchase Agreement and Subscription Agreement (as the case may be) executed and delivered by the Warrant Holders in connection with the Company’s October 2006 and March / April 2007 private placements and the Warrant Holders therefore acknowledge and agree that such representations and warranties are incorporated by reference herein, are remade in their entirety in this Agreement and are accurate and complete on the Effective Date.

    7.        This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Colorado without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Colorado or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Colorado. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision(s) shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms. This Agreement, together with all exhibits hereto, constitutes the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes any and all prior negotiations, correspondence, agreements, understandings duties or obligations between the parties with respect to the subject matter hereof. From and after the date of this Agreement, upon the request of a majority of the Warrant Holders or the Company, the Company and the Warrant Holders shall execute and deliver such instruments, documents or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement. This Agreement is the result of the joint efforts of the Company and the Warrant Holders, and each provision hereof has been subject to the mutual consultation, negotiation and agreement of the parties and there shall be no construction against any party based on any presumption of that party’s involvement in the drafting thereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

THE COMPANY:

SECURITY WITH ADVANCED TECHNOLOGY, INC.


By: /s/ Jeffrey G. McGonegal
         Jeffrey G. McGonegal
         Chief Financial Officer


WARRANT HOLDER:

[____________________________________]


By: _________________________________
         Name:
         Title:

DECEMBER CONVERSION WARRANTS:

Description	Issue date	Face Exercise Price $	Number	Revised Exercise Price $	Exercise Proceeds $
SWATW Replacement Warrants and SWATW Warrants	October 2006	$8.00 / $9.00		$0.50
SWATW Replacement Warrants and SWATW Warrants	March 2007 / April 2007	$8.00 / $9.00		$0.50
A Warrants	October 2006	$4.75		$0.50
A Warrants	March 2007 / April 2007	$4.75		$0.50
B Warrants	March 2007 / April 2007	$5.00		$0.50
Placement Agent / Consultant Warrants	October and March / April 2007	$4.92 / $5.00		$0.50
Total exercise price

Attachments:

Exhibit A: Summary Term Sheet
Exhibit B: Use of Proceeds
Exhibit C: Amended and Restated Certificate of Designation of the Preferences, Rights, Limitations, Qualifications and Restrictions of the Series A and Series B Preferred Stock of the Company
Exhibit D: Registration Rights Agreement

Exhibit A: Summary Term Sheet

SUMMARY OF THE WARRANT CONVERSION

This term sheet is for discussion purposes only and does not represent an offer or commitment to purchase on the part of the Warrant Holders referenced herein, or an offer or commitment to sell on the part of Security With Advanced Technology, Inc. (the “Company”). Any such offer or commitment will be evidenced only by executed and definitive agreements among the parties. This term sheet is qualified in its entirety by, and should be read in conjunction with, the Company’s filings with the Securities and Exchange Commission (“SEC”). Prospective investors should also carefully review this term sheet, the Warrant Conversion Agreement and the Company’s Articles of Incorporation, as amended, and may also request additional information from the Company. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Warrant Conversion Agreement.

Warrants to be Converted: "SWATW" Warrants and "SWATW" Replacement Warrants issued as replacement warrants for the SWAT Warrants issued by the Company in private placements in October 2006 and March / April 2007 (the "SWATW-R Warrants"), "A" Warrants (the "A" Warrants") issued by the Company in private placements in October 2006 and March / April 2007, "B" Warrants (the "B" Warrants") issued by the Company in a private placement in October 2006 and placement agent and consultant warrants issues in connection with the foregoing private placements (collectively, the "December Conversion Warrants").

Modified Terms of Conversion \ the Exchange: Upon the surrender of ten December Conversion Warrants and payment of $0.50 for each such December Conversion Warrant surrendered, the Warrant Holder will be issued one share of Series B Preferred Stock for an aggregate of up to 825,265 shares of Series B Preferred Stock. The terms of the Series B Preferred Stock are identical to the terms of the Company's outstanding Series A Preferred Stock, except that each share of Series B Preferred Stock is convertible into ten shares of the Company's Common Stock as provided herein for an aggregate of up to 8,252,654 shares of Common Stock.

Escrow of Closing Funds: The Company will submit its required NASDAQ additional shares listing and other associated corporate documentation required to close this offering. Pending required Nasdaq listing approval and any other documents required to be completed, the Company shall hold wired funds upon receipt segregated in its investment account and such funds shall only be released and Series B Preferred Shares issued upon the completion of such procedures in the Company's sole discretion. If such completion and closing has not been completed by fifteen days from receipt of the wired funds, then such funds shall be returned to the Investors, without interest or offset.

Amount of Offering: $4,126,327.

Terms of the Series B Preferred Stock: The Series B Preferred Stock shall have terms identical to the Company's Series A Preferred Stock, except that:
      1. Each share of Series B Preferred Stock shall be convertible into ten shares of the Company's Common Stock;
     2. The Series B Preferred Stock shall in no event be convertible into shares of the Company's Common Stock until the later of six months from the date of the closing of this Offering or the approval by the Company's shareholders for this Offering; and
     3. Such conversion shall, in the case of Vision Opportunity Master Fund, Ltd. ("Vision"), be subject to the existing 9.99% ownership limitation blocker which, subject to Vision's delivering irrevocable written notice to the Company that such limitation shall not apply, will serve to restrict Vision's ability to convert Series B Preferred Stock into Common Stock.

A copy of the Amended and Restated Certificate of Designation of the Preferences, Rights, Limitations, Qualifications and Restrictions of the Series A and Series B Preferred Stock of the Company is attached hereto as Exhibit C.

Redemption Right: In the event the shareholders of the Company have not approved the conversion of the Series B Preferred Stock to Common Stock on or before the first anniversary of the closing date of the Offering, at any time thereafter upon written notice to the Company each holder of Series B Preferred Stock shall have the right, at such holder's option, to require the Company to redeem all or a portion of such holder's shares of Series B Preferred Stock in cash at a price per share of Series B Preferred Stock equal to $5.00 plus simple interest on such price per share at the rate of 6% per annum.

Registration Rights: The Company has agreed to provide the Investors with one demand and one piggyback registration right covering the shares of Common Stock underlying the Series B Preferred Stock, commencing six months after the date of the closing of this Offering, for so long as such shares cannot be sold without volume limitations under the provisions of Rule 144 of the Securities Act. The demand registration right may be triggered by the holders of a majority of the shares of Common Stock underlying the Series B Preferred Stock (on an as-converted basis). The terms of the registration rights are set forth in the Registration Rights Agreement in the form attached hereto as Exhibit D.

Common Stock Outstanding(1): Before Offering: 9,753,000 shares
After Offering: 18,005,654 shares

Conversion Period: Commencing on December 17, 2007 and expiring 15 calendar days thereafter (the "Conversion Period"). Any December Conversion Warrants not so converted during the Conversion Period shall revert to their original terms at the expiration of the Conversion Period.

Use of Proceeds: Proceeds from the Offering will be used for offering expenses, sales and marketing, inventory related requirements, tooling costs and working capital. See Exhibit B attached hereto.

Risk Factors: This Offering represents a significant level of risk.

Investors should carefully review the Risk Factors set forth in the Company's Form S-3 registration statement filed with the SEC on August 27, 2007, the Company's Form 10-KSB for the period ended December 31, 2006 and the Company's other recent SEC filings.

Additionally, Investors acknowledge that they have been made aware of, had the opportunity (to the extent in their sole discretion deemed adequate) to discuss with the Company's management and been afforded the opportunity to review information concerning the Company's current operations and recent developments that have not necessarily been made available to the public. This includes, but is not necessarily limited to the following:

1. The resignation of Scott Sutton and claims made by Mr. Sutton that he believes he is entitled to certain severance and earn-out payments under his agreements with the Company. The Company is disputing these claims based upon the Company's position that Mr. Sutton resigned without "good reason" (as defined in Mr. Sutton's employment agreement).

2. Delays in product launch including deficiencies in the Avurt IM-5 product that raise substantial questions about the Company's ability to launch, market and sell this product. The Company's has expended and expects to continue to expend significant sums of capital to launch this product, unless a decision is made to discontinue this product, which the Company is considering.

3. [Confidential Treatment Requested].

4. The Company's revenues continue to be well below the level necessary to achieve break even operations and if additional revenues are not achieved shortly additional funding will be necessary.

5. The Company's current business strategy is to focus on opportunities that are believed by management to be reasonable for near term revenues and certain product development opportunities have been deferred or curtailed.

Restrictions on Transfer: The Series B Preferred Stock and the Common Stock underlying the Series B Preferred Stock are "restricted securities" as defined in Rule 144 of the Securities Act of 1933, as amended (the "Securities Act"). Accordingly, such securities cannot be sold or transferred by an investor without registration under the Securities Act or pursuant to an exemption from such registration established satisfactory to the Company and its counsel.

Subscription Procedure: To subscribe for the Offering, Investors must fully and accurately complete, sign and return the Warrant Conversion Agreement to the Company. Investors should also return payment for the conversion by wire transfer to the Company's funding account as instructed below:

[Confidential Treatment Requested]

Stock symbol: NASDAQ: SWAT

(1)     The amounts outstanding before and after the Offering assume complete conversion of the approximate 3,006,000 shares of Common Stock underlying outstanding Series A Preferred Stock but do not give effect to any shares issuable upon exercise of outstanding warrants and options.

Exhibit B: Use of Proceeds

USE OF PROCEEDS

        The proceeds from this Offering will be approximately $4,126,327 (if fully subscribed). This assumes a net cash exchange exercise price of $0.50 per December Conversion Warrant. We do not expect to pay any placement agent fees or expenses in connection with this Offering, except minimal legal fees in connection with the closing of the Offering. We intend to use these net proceeds to fund our overhead expenses, and to provide working capital (including inventory and certain product development costs). Due to the current level of our revenues a significant portion of the Offering may be used to cover our monthly operating expenses. Depending upon developments and decisions made regarding the Company’s litigation with PepperBall, we may also use funds in connection with that litigation or other claims and settlements that may arise (such as potential litigation with the Company’s former President and Chief Executive Officer, Scott Sutton).

        Funds from this Offering, in combination with our current cash and working capital, are expected to meet our capital and operating requirements for a period of approximately nine to twelve months. We will retain broad discretion in the allocation and use of the net proceeds designated as working capital.

        The foregoing represents our best estimate of the allocation of the net proceeds of this Offering based on the current status of our business, our planned future growth and operations and our litigation with PepperBall. This estimate is based on multiple assumptions, some of which are quite speculative. If one of more of these assumptions proves materially incorrect, we may find it necessary to reallocate a portion of the net proceeds within the above categories or even use substantial proceeds for other purposes, including repayment of additional debt. Our estimates may prove to be inaccurate, we may undertake activities that will require material additional expenditures, or unforeseen material expenses may occur.

        Pending the application of these net proceeds, we intend to invest them in short-term interest-bearing securities which possess investment-grade status.

        While we intend to apply the proceeds as indicated, the Company’s board of directors may vary the use of proceeds as good business judgment dictates.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        Certain statements in these documents are forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. Such statements are based on current expectations, estimates and projections about the Company’s business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors discussed herein and in the Company’s recent filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-KSB for the period ended December 31, 2006 and the Company’s Registration Statement on Form S-3 filed with the Securities and Exchange Commission on August 27, 2007. All forward-looking statements attributable to us or any persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.  All guidance and forward-looking statements in these documents are made as of the date hereof and we do not undertake any obligation to update any forecast or forward-looking statements, except as may be required by law.  Investors are also directed to other risks discussed in documents filed by the Company with the Securities and Exchange Commission.

Exhibit C: Amended and Restated Certificate of Designation

See attached.

Exhibit D: Registration Rights Agreement

See attached.

EX-4.2

Exhibit 4.2

REGISTRATION RIGHTS AGREEMENT

        This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of December ____, 2007 (the “Effective Date”), by and between Security With Advanced Technology, Inc., a Colorado corporation (the “Company”), and the investors identified on the signature pages hereto (each, a “Stockholder” and collectively, the “Stockholders”). The Company and the Stockholders are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

      The Parties agree as follows:

1.     Definitions. For purposes of this Agreement, the following terms have the indicated meanings:

    1.1         "Common Stock" means the Company's Common Stock, no par value per share.

     1.2        "Demand Registration" has the meaning set forth in Section 2.1 hereof.

     1.3       “Register,”“Registered,” and “Registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act of 1933, as amended, or successor statute (the “Securities Act”), and the declaration or ordering of effectiveness of such registration statement or document.

    1.4        “Registrable Securities” means (i) the shares of Common Stock of the Company underlying the shares of Series B Preferred Stock issued to the Stockholders pursuant to the Warrant Conversion Agreement of even date herewith (the “Warrant Conversion Agreement”), and (ii) any Common Stock issued or issuable to the Stockholders with respect to the Common Stock referred to in clause (i) by way of a dividend, split, or in connection with a combination of securities, recapitalization, merger, consolidation or other reorganization; provided however, that with respect to any Registrable Securities, such securities shall cease to be Registrable Securities when (x) they have been sold pursuant to an effective registration statement registering such securities under the Securities Act, (y) they have been sold in compliance with paragraph (d) of Rule 145 or (z) they are eligible to be sold without volume limitations pursuant to Rule 144 promulgated under the Securities Act (“SEC Rule 144”).

2. Registration Rights.

    2.1        Demand Registration. At any time following the six month anniversary of the closing of the Warrant Conversion Agreement, the holders of a majority of the Registrable Securities may request registration (a “Demand Registration”) under the Securities Act of the Registrable Securities. Upon the Company’s receipt of a Demand Registration, the Company shall give all other Stockholders written notice thereof as soon as practicable but in no event less than 10 days prior to the filing of such registration statement, and shall provide such Stockholders an opportunity to include in such registration all Registrable Securities requested by the Stockholders in writing to be included therein, subject to the limitations set forth in this Section 2.1. The Company shall file a registration statement covering the Registrable Securities requested to be registered pursuant to this Section 2.1 for an offering to be made on a continuous basis pursuant to Rule 415 promulgated under the Securities Act on Form S-3 (or on such other form appropriate for such purpose) within 30 days of the Company’s receipt of a Demand Registration. The Company shall use its best efforts to cause such registration statement to be declared effective by the SEC within 120 days following the Company’s receipt of the Demand Registration, subject to any limitations imposed upon such registration by Rule 415 and the SEC’s guidelines and limitations promulgated thereunder. Notwithstanding the foregoing, the Company may postpone for up to six months the filing or the effectiveness (which may include the withdrawal of an effective registration statement) of a registration statement pursuant to this Section 2.1 if the Company’s board of directors reasonably determines in its good faith judgment that, because of the existence of any proposal or plan by the Company or any of its subsidiaries to engage in any acquisition or financing activity (other than in the ordinary course of business) or the unavailability for reasons beyond the Company’s control of any required financial statements, or any other event or condition of similar significance to the Company, it would be materially disadvantageous to the Company and its stockholders for such a registration statement to be maintained effective, or to be filed and become effective. The Company may include in a Demand Registration any securities that are not Registrable Securities. Only one registration may be demanded pursuant to this section. A registration will not count as a Demand Registration until it has become effective and includes at least 75% of the Registrable Securities requested by the Stockholders to be included in the registration statement.

    2.2        Piggyback Registration. In the event the Company proposes to register any of its securities under the Securities Act following the six month anniversary of the closing of the Warrant Conversion Agreement by filing any form of registration statement (other than Form S-4 or Form S-8 or the successor form of either of them) that would legally permit the inclusion of Registrable Securities, the Company shall give the Stockholders written notice thereof as soon as practicable but in no event less than 30 days prior to the filing of such registration statement, and shall provide the Stockholders an opportunity to include in such registration all Registrable Securities requested by the Stockholders in writing to be included therein, subject to the limitations set forth in this Section 2.2. If any Stockholder chooses to include in any such registration statement all or any part of the Registrable Securities it holds, such Stockholder shall, within 10 days after the above-described notice from the Company, so notify the Company in writing. Such notice shall state the intended method of disposition of the Registrable Securities by the Stockholder. If any Stockholder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Stockholder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to its securities, all upon the terms and conditions set forth herein.

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    2.3        Underwriting. If the registration statement for which the Stockholders have registration rights under this Agreement is for an underwritten offering, the Company shall so advise the Stockholders. The right of the Stockholders to be included in a registration pursuant to this Agreement shall be conditioned upon the Stockholders’ participation in such underwriting and the inclusion of the Registrable Securities in the underwriting to the extent provided herein. If the Stockholders elect to participate in such offering, the Stockholders shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, the Company, upon advice from its underwriters, reserves the right to reduce (on a pro rata basis) or eliminate the number of shares that may be included in the underwriting based upon a good faith determination that marketing factors require a limitation or elimination of the number of shares to be underwritten. The Company or its underwriters may also condition the participation of the Stockholders in such underwriting upon the Stockholders entering into a lock-up agreement with the Company or its underwriters for such period of time deemed appropriate by the underwriters. If any Stockholder disapproves of the terms of any such underwriting, such Stockholder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least 10 business days prior to the effective date of the registration statement. If, by the withdrawal of any Registrable Securities by a Stockholder, a greater number of securities held by other holders may be included in such registration statement (up to the limit imposed by the underwriters), the Company shall offer to all Stockholders who have not withdrawn from the registration statement the right to include their pro rata share of such additional securities to be registered. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.

    2.4        Costs of Registration. The Company shall bear the costs of each registration in which the Stockholders participate pursuant to Sections 2.1 and 2.2, but excluding any underwriting discounts or commissions on the sale of Registrable Securities.

    2.5        Transferability of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 2 may not be transferred by the Stockholders.

    2.6        Reports under Securities Exchange Act of 1934. With a view to making available to the Stockholders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit the Stockholders to sell securities of the Company to the public pursuant to a registration on Form S-3 or without registration, the Company agrees to:

             (a)            make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the first registration statement filed by the Company for the offering of its securities to the general public so long as the Company remains subject to the periodic reporting requirements under Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended, or any successor statute (the “Exchange Act”);

             (b)            file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

             (c)            furnish to the Stockholders, so long as accurate and so long as the Stockholders own any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Securities Act and the Exchange Act, or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (or any successor form that provides for short-form registration) (at any time after it so qualifies), and such other information as may be reasonably requested in availing the Stockholders of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to such form.

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3.     Obligations of the Company.

        In connection with the registration of the Registrable Securities, the Company shall have the following obligations:

     3.1        The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a registration statement and the prospectus used in connection with the registration statement as may be necessary to keep the registration statement effective at all times required for such registration statement under this Agreement, and, during such period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by the registration statement until the termination of said period.

    3.2        The Company shall furnish to the Stockholders and their one legal counsel selected by the Stockholders, if any (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one copy of the registration statement and any amendment thereto, each prospectus, including any preliminary prospectus, and each amendment or supplement thereto, and, in the case of a registration statement referred to in Section 2.1 or 2.2, each letter written by or on behalf of the Company to the SEC or the staff of the SEC, and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such registration statement (other than any portion, if any, thereof which contains information for which the Company has sought confidential treatment), and (ii) such number of copies of a prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as the Stockholders may reasonably request in order to facilitate the disposition of the Registrable Securities covered by the registration statement that are owned (or to be owned) by the Stockholders. All correspondence to or from the SEC or its staff shall, subject to applicable law and legal process, be kept confidential by the Stockholders.

    3.3        The Company shall use reasonable efforts to (a) register and qualify the Registrable Securities covered by the registration statement under securities laws of such jurisdictions in the United States as the Stockholders reasonably request, (b) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof for a period of three months following the effective date of the registration statement or such longer period of time deemed reasonable by the Company’s board of directors (the “Registration Period”), (c) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, (d) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3.3, (ii) subject itself to general taxation in any such jurisdiction, (iii) file a general consent to service of process in any such jurisdiction, (iv) provide any undertakings that cause the Company material expense or burden, or (v) make any change in its charter or by-laws, which in each case the board of directors of the Company determines to be contrary to the best interests of the Company and its stockholders, and (e) cause all Registrable Securities covered by such registration statement to be listed on each securities exchange on which similar securities issued by the Company are then listed or traded.

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    3.4        In the event of any underwritten public offering, the Company shall enter into and perform its obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the underwriters of such offering.

    3.5        As soon as practicable after becoming aware of such event, the Company shall notify the Stockholders of the happening of any event, of which the Company has knowledge, as a result of which the prospectus included in the registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and use its best efforts as soon as practicable to prepare a supplement or amendment to (and, in the event of an amendment, obtain the effectiveness thereof) the registration statement to correct such untrue statement or omission, and deliver such number of copies of such supplement or amendment to the Stockholders as the Stockholders may reasonably request.

    3.6        The Company shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a registration statement and, if such an order is issued, to obtain the withdrawal of such order at the earliest practicable time and to notify the Stockholders (and, in the event of an underwritten offering, the managing underwriters) of the issuance of such order and the resolution thereof.

    3.7        The Company shall permit a single firm of counsel designated by the Stockholders holding a majority of the Registrable Securities to review the registration statement and all amendments and supplements thereto a reasonable period of time prior to their filing with the SEC.

    3.8        The Company shall make generally available to its security holders as soon as practical an earnings statement (in form complying with the provisions of Rule 158 under the Securities Act) covering a 12-month period beginning not later than the first day of the Company’s fiscal quarter next following the effective date (as defined in said Rule 158) of the registration statement.

    3.9        In the event Registrable Securities are being sold through underwriters, the Company shall use its best efforts to furnish, on the date that such Registrable Securities are sold, (a) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, and (b) a letter dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering addressed to the underwriters.

    3.10        In the event Registrable Securities are being sold through underwriters, the Company shall make available for inspection by (a) any underwriter participating in any disposition pursuant to the registration statement, and (b) one firm of attorneys retained by all such underwriters all pertinent financial and other records, and pertinent corporate documents and properties of the Company, as shall be reasonably requested by any of the foregoing and cause the Company’s officers, directors and employees to supply all information which any Inspector may reasonably request.

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    3.11        The Company shall hold in confidence and not make any disclosure of information concerning the Stockholders provided to the Company unless (a) disclosure of such information is necessary to comply with federal or state securities laws, (b) the disclosure of such information is necessary to avoid or correct a material misstatement or omission in any registration statement, (c) the release of such information is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction or is otherwise required by applicable law or legal process, (d) such information has been made generally available to the public other than by disclosure in violation of this or any other agreement (to the knowledge of the Company), or (e) the Stockholders consent to the form and content of any such disclosure. The Company agrees that it shall, upon learning that disclosure of such information concerning the Stockholders is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Stockholders prior to making such disclosure, and allow the Stockholders, at their expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

    3.12        The Company shall cooperate with the Stockholders and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Securities to be offered pursuant to the registration statement and enable such certificates to be in such denominations or amounts, as the case may be, as the managing underwriter or underwriters, if any, or the Stockholders may reasonably request and registered in such names as the managing underwriter or underwriters, if any, or the Stockholders may request.

    3.13        At the request of the Stockholders, the Company shall promptly prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a registration statement and the prospectus used in connection with the registration statement as may be necessary in order to change the description of the plan of distribution set forth in such registration statement.

    3.14        The Company shall comply with all applicable laws related to the applicable registration statement and offering and sale of securities and all applicable rules and regulations of governmental authorities in connection therewith (including, without limitation, the Securities Act and the Exchange Act, and the rules and regulations promulgated by the SEC).

4.     Obligations of the Stockholders.

        In connection with the registration of the Registrable Securities, the Stockholders shall have the following obligations:

     4.1        Each Stockholder shall furnish to the Company such information regarding himself or itself, the Registrable Securities held by him or it and the intended method of disposition of the Registrable Securities held by him or it as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. At least 10 business days prior to the first anticipated filing date of the registration statement, the Company shall notify the Stockholders of the information the Company requires from the Stockholders.

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    4.2        The Stockholders, by acceptance of the Registrable Securities, agree to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the registration statements hereunder, unless the Stockholders have notified the Company in writing of their election to exclude all of their Registrable Securities from the applicable registration statement.

    4.3        In the event the Registrable Securities are included in a registration statement, the Stockholders understand that the Securities Act may require delivery of a prospectus relating thereto in connection with any sale thereof pursuant to such registration statement, and each Stockholder shall comply with the applicable prospectus delivery requirements of the Securities Act in connection with any such sale.

    4.4        The Stockholders agree to notify the Company promptly, but in any event within five business days after the date on which all Registrable Securities covered by a registration statement that are owned by the Stockholders have been sold by the Stockholders, if such date is prior to the expiration of the Registration Period, so that the Company may comply with its obligation to terminate such registration statement in accordance with Item 512(a)(3) of Regulation S-K.

    4.5        The Stockholders agree that, upon receipt of written notice from the Company of the happening of any event of the kind described in Section 3.5, the Stockholders will immediately discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until the Stockholders’ receipt of the copies of the supplemented or amended prospectus contemplated by Section 3.5 and, if so directed by the Company, the Stockholders shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in the Stockholders’ possession (other than a limited number of permanent file copies), of the prospectus covering such Registrable Securities current at the time of receipt of such notice.

    4.6        The Stockholders may not participate in any underwritten distribution pursuant to a registration statement under Sections 2.1 or 2.2 unless the Stockholders (a) agree to sell their Registrable Securities on the basis provided in any underwriting arrangements in usual and customary form entered into by the Company, (b) complete and execute all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, and (c) agree to pay its pro rata share of all underwriting discounts and commissions and any expenses in excess of those payable by the Company pursuant to Section 2.4.

5.     Indemnification.

        In the event any Registrable Securities are included in a registration statement under this Agreement:

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    5.1        The Company shall defend, indemnify, and hold harmless, to the fullest extent permitted by law, the Stockholders against all losses, claims, damages, liabilities and expenses caused by any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or a fact necessary to make the statements therein not misleading, except insofar as the same are caused by and contained in any information furnished in writing to the Company by the Stockholders expressly for use therein. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 5.1, as it pertains to any preliminary or final prospectus, shall not inure to the benefit of any indemnified Party if the untrue statement or omission of material fact contained in the preliminary or final prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented, if such corrected prospectus was timely made available by the Company pursuant to Section 3.3 hereof, and the indemnified Party was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a violation and such indemnified Party, notwithstanding such advice, used such incorrect prospectus.

    5.2        In connection with any registration statement in which the Stockholders are participating, the Stockholders will furnish to the Company in writing information regarding such Stockholder’s ownership of Registrable Securities and its intended method of distribution thereof and each Stockholder shall defend, indemnify, and hold harmless, to the extent permitted by law, the Company, its directors, officers, employees and agents and each Party who controls (within the meaning of the Securities Act) the Company or such other indemnified Party against any losses, claims, damages, liabilities and expenses (including with respect to any claim for indemnification hereunder asserted by any other indemnified Party) resulting from any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is caused by and contained in such information so furnished in writing by such Stockholder. The indemnification provided under this Section 5.2 shall be several and not joint.

    5.3        Any Party entitled to indemnification hereunder shall give prompt written notice to the indemnifying Party of any claim with respect to which its seeks indemnification; provided, however, the failure to give such notice shall not release the indemnifying Party from its obligation under this Section 5, except to the extent that the indemnifying Party has been materially prejudiced by such failure to provide such notice.

    5.4        In any case in which any such action is brought against any indemnified Party, and it notifies an indemnifying Party of the commencement thereof, the indemnifying Party will be entitled to participate therein, and, to the extent that it may wish, jointly with any other indemnifying Party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified Party, and after notice from the indemnifying Party to such indemnified Party of its election so to assume the defense thereof, the indemnifying Party will not (so long as it shall continue to have the right to defend, contest, litigate and settle the matter in question in accordance with this paragraph) be liable to such indemnified Party hereunder for any legal or other expense subsequently incurred by such indemnified Party in connection with the defense thereof other than reasonable costs of investigation, supervision and monitoring (unless such indemnified Party reasonably objects to such assumption on the grounds that there may be defenses available to it which are different from or in addition to the defenses available to such indemnifying Party, in which event the indemnified Party shall be reimbursed by the indemnifying Party for the expenses incurred in connection with retaining separate legal counsel). An indemnifying Party shall not be liable for any settlement of an action or claim effected without its consent. The indemnifying Party shall lose its right to defend, contest, litigate and settle a matter if it shall fail to diligently contest such matter (except to the extent settled in accordance with the next following sentence). No matter shall be settled by an indemnifying Party without the consent of the indemnified Party (which consent shall not be unreasonably withheld).

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    5.5        The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified Party and will survive the transfer of the Registrable Securities.

6.     Miscellaneous.

    6.1        Enforceability/Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

    6.2        Remedies. The Parties shall be entitled to enforce their rights under this Agreement specifically or to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The Parties agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that the Company or the Stockholders may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement.

    6.3        Entire Agreement; Successors and Assigns. Except as otherwise expressly set forth herein, this document embodies the complete agreement and understanding among the Parties with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the Parties, written or oral, which may have related to the subject matter hereof in any way. Subject to the exceptions specifically set forth in this Agreement, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective executors, administrators, heirs, successors and assigns of the Parties. This Agreement may not be assigned by any Stockholder.

    6.4        Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without giving effect to conflicts of laws principles.

    6.5        Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, and all of which taken together constitute one and the same instrument.

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     6.6        Headings. The section headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

    6.7        Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be delivered personally or by facsimile (receipt confirmed electronically) or shall be sent by a reputable express delivery service or by certified mail, postage prepaid with return receipt requested, addressed as follows:

If to the Stockholders:

To the address set forth in the Company’s books and records.

If to the Company:

Security With Advanced Technology, Inc.
10855 Dover St., Suite 1000
Westminster, CO 80021
Attention: Jeffrey G. McGonegal
Facsimile: (303) 722-4011

with a copy to:

Brownstein Hyatt Farber Schreck, P.C.
410 Seventeenth Street, 22nd Floor
Denver, CO 80202
Attention: Adam J. Agron
Facsimile: (303) 223-1111

Either Party hereto may change the above specified recipient or mailing address by notice to the other Party given in the manner herein prescribed. All notices shall be deemed given on the day when actually delivered as provided above (if delivered personally or by facsimile, provided that any such facsimile is received during regular business hours at the recipient’s location) or on the day shown on the return receipt (if delivered by mail or delivery service).

    6.8        Amendment and Waiver. Except as otherwise provided herein, no amendment or waiver of any provision of this Agreement shall be effective against the Company or the Stockholders unless such amendment or waiver is approved in writing by the Company and the Stockholders holder a majority of the Registrable Securities. The failure of any Party to enforce any provision of this Agreement shall not be construed as a waiver of such provision and shall not affect the right of such Party thereafter to enforce each provision of this Agreement in accordance with its terms.

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        IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

COMPANY:

SECURITY WITH ADVANCED TECHNOLOGY, INC.

By: /s/ Jeffrey G. McGonegal
Jeffrey G. McGonegal
Chief Executive Officer

BY EXECUTING THIS AGREEMENT, THE STOCKHOLDER ACKNOWLEDGES FOR ITSELF AND ITS ASSIGNS, THAT, DESPITE ENTERING INTO THIS AGREEMENT, THE COMPANY MAKES NO REPRESENTATION, GUARANTY OR WARRANTY WHATSOEVER OF ITS ABILITY TO SUCCESSFULLY EFFECT WITH THE APPLICABLE REGULATORY AUTHORITIES A REGISTRATION OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT.

STOCKHOLDERS:

_________________________

_________________________
_________________________

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EX-99.1

Exhibit 99.1

Security With Advanced Technology Raises $3.7 Million in Warrant Conversion

Westminster, CO — January 4, 2008 — Security With Advanced Technology, Inc. (Nasdaq: SWAT) announced today that it has closed on approximately $3.7 million in funding from a warrant conversion offering, generating funds to be used for product sales support, inventory, working capital and general corporate expenses. Warrants issued by the Company in private placements in October 2006 and March and April 2007 with exercise prices ranging between $4.75 and $9.00 as well as certain outstanding placement agent warrants with exercise prices ranging between $4.92 and $5.00 were eligible to participate in the warrant conversion at $.50 per warrant. The holders of approximately 90% of the total eligible warrants outstanding elected to participate in the funding. An aggregate of approximately 7,478,000 warrants were surrendered in exchange for the issuance of 747,800 shares of the Company’s Series B Preferred Stock. The closing of the warrant conversion was completed effective December 31, 2007.

Each share of Series B Preferred Stock is convertible into ten shares of the Company’s common stock upon the later of six months following the closing date of the offering and the Company’s receipt of shareholder approval of the conversion. If the Company’s shareholders have not approved the conversion of the Series B Preferred Stock into common stock on or before the first anniversary of the closing date of the offering, the holders of the Series B Preferred Stock have the right to require the Company to redeem their Series B Preferred Stock for cash at a price per share of Series B Preferred Stock equal to $5.00, subject to certain adjustments, plus simple interest on such price per share at the rate of 6% per annum. The Series B Preferred Stock is non-voting and ranks pari passu with the Company’s Series A Preferred Stock.

In connection with the warrant conversion, the Company granted the investors one demand and one piggyback registration right covering the shares of common stock underlying the Series B Preferred Stock. The registration rights commence six months after the closing date of the offering.

Jeff McGonegal, CEO of Security With Advanced Technology, noted “Product introduction delays and resulting revenue shortfalls resulted in significant losses and cash burn in 2007 that was very disappointing to the SWAT management team. While the IM-5 Avurt launcher continues in test mode to determine if velocity and projectile breakage issues can be overcome, we are seeing optimism with product advancement, especially the new Mark-IV product that we anticipate being in production and available for sale in the first quarter of 2008. With the level of cash burn in 2007, after giving effect to the recent significant expense reductions, it was clear that additional funding was needed to allow SWAT to operate into 2008. While the conversion rate was lower than would have been desired, negotiations with our lead investor in the 2006 and 2007 offerings made it clear that such a conversion rate was necessary to complete the funding and provide us with this needed cash infusion.”

About Security With Advanced Technology, Inc.
Security With Advanced Technology, Inc. is an emerging provider of critical, high-tech security products and services, which include non-lethal protection devices, tactical training services, surveillance and intrusion detection systems and mobile digital video surveillance solutions. SWAT’s products and services are designed for government agencies, military and law enforcement, in addition to transportation, commercial facilities and non-lethal personal protection segments. For additional information visit www.swat-systems.com or call the corporate headquarters at (800) 498-7965. Information on SWAT’s website does not comprise a part of this press release.

Forward-Looking Statement Disclaimer

This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission (the “SEC”). All statements, other than statements of historical fact, included in the press release that address activities, events or developments that the company believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made based on experience, expected future developments and other factors the company believes are appropriate under the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company and may not materialize, including, without limitation, the ability to complete development of and sell its products at acceptable margins or at all, the efficacy of the company’s non-lethal products and services, the company’s ability to secure its ownership of, right to use and protect its intellectual property and proprietary technology, the company’s ability to launch its non-lethal products and services, the company’s ability to successfully defend its lawsuit with PepperBall Technologies, Inc and the company’s ability to remain solvent. Investors are cautioned that any such statements are not guarantees of future performance. Actual results or developments may differ materially from those projected in the forward-looking statements as a result of many factors. Furthermore, the company does not intend to update publicly any forward-looking statements, except as required by law. The contents of this release should be considered in conjunction with the warnings and cautionary statements contained in the company’s recent filings with the SEC.

Company contacts:
     Jeff McGonegal, CEO - 303/ 475-3786
     Greg Pusey, Chairman - 303/ 722-4008