Spongetech Delivery Systems, inc. is a tiny company with an 800 square foot office in the Empire State Building that claims to have developed a biodegradable sponge that eliminates the use of a bucket. A very hot video just showed up on youtube featuring a woman washing a car with one of these new Sponges.
"The company has been making announcements lately that are quite beyond our comprehension. First they announced a television spot that will be viewed by 14 million homes. Then something about being featured in over 900 environmentally friendly magazines. In May, they announcied they received large orders to be shipped later in the year. One order was for $1.5 million and another for $3 million.
What is beyond our comprehension about these announcements is how do they intend to accomplish any of these things when they have no money? According to their latest SEC filing this company has $3,477 (three thousand four hundred seventy seven) dollars in the bank. That doesn't even pay a month's rent in a manhattan office.
They originally had incorporated under the name Romantic Scents, Inc. They have had several name changes and business model changes as well. In their 8 years of operations they have never made so much as a dime in profits, and have accumulated a deficit of approximately 3.4 million dollars.
Yet in spite of their operating inefficiencies management finds it perfectly appropriate to pay themselves salaries that exceed the entire revenues of the company. During their Fiscal year 2005, the company's entire revenue was $1,051 (one thousand fifty one)/ Yet, the three top directors recieved salaries of over $490,000 each.
What is even more odd is that their salaries were in Common Stock that they valued at $0.15. When you receive salary in stock you have a tax liability that you must pay. We estimate the officers will owe $250,000 each yet have not received any actual money as compensation. (I will not be submitting my resume to work as an exec at this company.)
The company has 37 million shares outstanding which puts the total valuation market valuation with the stock at $0.19 about 7.5 million. This valuation is not too high. But given their historical lack of a business, current lack of assets, and lack of taste with their latest video it still looks high to us.
They have not announced any new financings. Quite frankly, we cannot imagine how a company with $297,000 in currently due liabilities and $3,000 in the bank can possibly finance these alleged large orders.
Further, if they did receive orders of the magnitude that they claimed in their recent press releases, that is a material event. An event as such requires a form 8-k to be filed with SEC. As yet the company has not done so.
As much as we enjoyed the video and hot press releases coming out of this company we cannot give any investor who wants to buy this stock at $0.19 our blessing".
http://twitter.com/SpongeTech
Saturday, June 13, 2009
Spongetech (OTCBB:SPNG) Using Sex to Peddle Pennystocks
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