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Risi,
Understood.
The best part is, in the absence of any dollar amounts to play with, it's a useless statistic.
Thanks.
SJJ,
No PM. MSG.
Actually your link didn't work for me and when I reported it to ecourts they told me I needed to start from the beginning:
From:
"ecourts ecourts" <ecourts@courts.state.ny.us>
Add sender to Contacts
To:XXXXXXXXXXXXXX
Links are dynamic - you cannot reuse an old link. If you wish to view a case simply go to the website and retrieve it using one of the search functions.
Sincerely,
Your e.Courts Administrator
I haven't had any problems with that before???
Anyway, I went to:
http://iapps.courts.state.ny.us/webcivil/FCASSearch?param=P
Entered Spongetech as defendant and clicked on "Appearances" when i got through.
"It's a motion hearing scheduled for 10:30am tomorrow (4/16/10)"
The appearances schedule that I'm looking at says:
4/16/2010 Motion Oral Argument (60 Centre) FRIED, BERNARD J.
IAS MOTION 60EFM 2:15PM
Odd that there's a time difference.
Hello Jay,
Pardon the delay and also please excuse me for focusing on a single statement in your post to the neglect of others. But I think it begs attention:
"And, the perspective changes further when considering the company's recent press release, indicating their belief in soon being able to submit the filings."
The company has expressed their "belief" on this issue a number of times, in terms ranging from appropriately vague to glaringly specific. I've rounded up those that I could find going back to the day after the 10K was due. Forgive its length......I've highlighted the excerpts that I thought were on point.
4/4/10PR The Company is aware of the shareholder frustration concerning the delinquent regulatory filings for the Form 10K and 10Qs and the listing status of its shares on a public exchange to provide the transparency that our shareholders deserve. Management is continuing to work tirelessly to address these important filings and believes that the Company will soon be in a position to report the validation of our growth, via public filings.
2/12/10PR The Company is working diligently to complete its financial reports required to file with the U.S. Securities and Exchange Commission. SpongeTech has retained James Reilly as an internal consultant to assist in these efforts. Robison & Hill remains our public accounting firm.
10/6/09 8-K “The Smarter Sponge™”, (OTCBB: SPNGE), today announced that its shares of common stock were temporarily suspended from trading on the OTC Bulletin Board by the U.S. Securities and Exchange Commission (SEC) on Monday October 5, 2009 and expects the suspension to terminate at 11:59 p.m. EDT on Oct. 16, 2009. The Company and its auditors are in the process of finalizing the re-audit of its 2008 financial statements and the audit of its 2009 financial statements and anticipates on filing them with the SEC by October 16, 2009.
9/16/09PR (OTCBB: SPNG) today announced that it requires additional time to file its Annual Report on Form 10-K for the fiscal year ended May 31, 2009...........CEO Michael Metter said, “We recognize that our shareholders have been waiting patiently for the filing of the fiscal 2009 Form 10-K. Unfortunately the requirement to re-audit the 2008 financial statements has caused the process to take longer than we expected. We are working with our current independent auditors to file the Form 10-K as quickly as possible.”
9/1 NT 10-K
|X| (b) The subject annual report, semi-annual report, transition report on Form 10-K, Form 20-F, Form 11-K, Form D N-SAR or Form N-CSR, or portion thereof, will be filed on or before the fifteenth calendar day following the prescribed due date; or the subject quarterly report or transition report on Form 10-Q or subject distribution report on Form 10-D, or portion thereof, will be filed on or before the fifth calendar day following the prescribed due date.
Both our sales and net income for the year ended May 31, 2009 increased. Sales for the year ended May 31, 2009 were approximately $50,000,000 compared to $5,633,084 for the year ended May 31, 2008. As a result, our net profits for the year ended May 31, 2009 also increased to approximately $11,000,000, compared to $1,244,455 for the year ended May 31, 2008.
9/1PR SpongeTech® Delivery Systems, Inc. Reports Record Booked Orders of $70 Million during the First Quarter of FY ‘10
"The first quarter has been a monumental success in the growth phase of our Company," commented Michael Metter, CEO of SpongeTech. "Within the quarter, we have had a tremendously successful release of our Children’s Bath Sponge Product into the marketplace. We also remain very confident that we will meet our goal of having our complete line of products sold in over 100,000 retail locations nationwide by the end of this year.” Metter continues, “We are in the process of finalizing our Annual Report for the fiscal year ending May 31, 2009 and expect to file the Form 10-K with the SEC shortly. We remain focused and committed to building SpongeTech into a globally recognized Company and continue to work towards building shareholder value."
Embracing "their belief in soon being able to submit the filings" as a basis to invest or hold an investment, to interpret the meaning of a loosely connected settlement extension request or to provide guidance for any purpose whatsoever, just doesn't make a lot of sense to me. Of course, whether you choose to rely on it or not is entirely up to you.
"Has Patch or anyone else posted the source of this alleged 3B O/S document? "
Wadi,
You mean the one that appears to show that all but 15,050 of the 3,000,000,000 authorized shares have been issued? And also appears to enjoin Spongetech from authorizing any shares beyond the shares already authorized? And also appears to enjoin Worldwide Stock Transfer from transferring any of those 15,050 shares to anyone other than an unnamed plaintiff? That document?
No.
patchman, in a post In reply to: None, has said "As to me providing the full document, in reality you don’t deserve my support" and proceeds to generally disparage the research efforts and comprehension levels of so-called "cheerleaders". Hey.....it's his ball and if he doesn't wanna play he doesn't have to, right?
If anyone else knows the source they ain't talkin'.
tt,
You're trying too hard. The copy you have linked, which I'll grant you does LOOK altered, is a piece of plaintiff evidence.......obviously they had no reason to alter it. Apparently they took a copy prior to deposit.
ps. Keep blowing it up and look at the other pre-printed 8's on the page. Also note that the bank encryption is clear.
https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=OngETBBRXLgJmSFDJJGiRg==&from=SearchDetailURL
If you have a different link that shows what you feel is an altered check number please post it.
AH(subtractionproblem)CHOOOO!
Thanks.
Sadly I knew all that.
Maybe you could help me with some things that I don't know:
What court has the authority to issue such an order? Must it be a state court in the state in which the company is domiciled(NY) or incorporated(DEL)? Or a Federal court in one of those states? Or the state in which the plaintiff is domiciled or incorporated? Or any old court? Is there not a difference between freezing assets in anticipation of a judgment and restraining a public company from issuing shares in terms of the authority to do such things?
I absolutely don't want to dissuade you from swiping at the "defendants", but what I really need help with is the research. It's too bad that Patch has decided not to facilitate it for anyone.
RM,
The timing doesn't seem right.
I can't get at the details of the documents, but it appears that all the case activity occurs in 2010. So "freezing" issuances as of 12/31/09 wouldn't seem to make much sense.
http://iapps.courts.state.ny.us/webcivil/FCASCaseInfo?parm=CaseInfo&index=W3rlZHe%2FCvUG3ky1Xp7pAw%3D%3D&county=M93CJjx3ctk1hjS74HpxqQ%3D%3D&motion=M&docs=&adate=05/04/2010
Risi,
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=49018612
I asked. I thought that appealing to the man's obvious ability to reason might be more effective than a grovel, which I'm willing to do when needed but am lousy at. Besides, I have to admit to being a little miffed at having the carrot dangled that way and it puts a real crimp in my groveling.
I usually don't require "spoonfeeding" and would rather confirm things independently anyway, but in this case I'm stumped. Neither Pacer nor SEC.gov provide returns on issues involving both Spongetech and Worldwide. Somebody better help me before I start speculating.
I can't even figure out what court COULD or WOULD issue such orders. It's very interesting to me to see the following phrase in the order restraining Worldwide: "to any person or entity, except plaintiff". Given that SPNG is constrained from authorizing and issuing new shares, the Worldwide order seems to be implying that existing shares, in another party's name, could be transferred to the plaintiff in satisfaction of their complaint.
Who doesn't love a good mystery?
ps. Sorry about the green....must look AWFUL. No evidence of it on my end except for user name.
"Patch provided a starter, I am sure a little bit of work would find what he found easily. It is not rocket science as to where to look."
I'm beginning to think that it might be rocket science after all.
I'm gettin' nowhere.
Court proceedings are "buried" somehow and don't respond to standard search efforts. Without knowing the venue it could take forever. And if the document isn't in the public domain forever wouldn't be long enough.
You make it sound so easy!
patchman,
I can't imagine why you would not share the source of these excerpts. The court, the case, the plaintiff. If you count being informative anywhere on your personal list of priorities you should be sharing its origin.
"Whatever the amount"
The amount is not "Whatever". The amount is not "ONE MILLION DOLLARS". The amount is $450,000. I felt that that needed correcting. If I was repeatedly making a mistake I would hope that someone would correct me at some point to prevent its repetition and I hope that oa appreciates that its purpose was constructive. There's no doubt in my mind that he would prefer that his posts be factual, especially the parts that are in ALL CAPS.
You say: "The fact that they can't come up with the money, other than via selling shares, also puts the lie to the fantasy that the business is doing well and that SPNG is making a boatload of money selling sponges."
No it doesn't. What in the wide world of sports does the revenue level of the company have to do with the cash position of the individuals and THEIR ability to meet an obligation?
I expressed one opinion in my post: "This wouldn't seem to be an amount that would by itself either justify the obvious promotional program in progress or jeopardize the current price per share given recent volumes." The purpose of that statement was to underline my personal belief that too much has been made of the settlement cash needs of 2 individuals as a factor motivating the PR campaign. It's just an opinion and I see no reason to change it....obviously I could be mistaken.
Don't worry. I'm sure there will be plenty of other opportunities for you to highlight the "dump shares" "house of cards" stuff. I apologize for not taking the opportunity in my post to make sure that that dead horse was beaten further.
TC,
He's done it several times before.....it's basically moving shares from one fund to another. Haven't seen a good explanation for it yet.
"ONE MILLION DOLLARS WORTH OF SPNG SHARES MUST BE DUMPED IN THE MONTH OF APRIL. Why? A Federal Court has ordered it to be so."
That's not quite correct.....but it's complicated.
All but $450,000 was paid as of 1/29/10 (which was already an extension date) according to the defendants, who filed a motion on that date requesting an extension of time to 4/30 to pay the $450,000. The court neither agreed or ordered the extension to 4/30. The plaintiffs argued that the court had no standing to grant the extension because the 1/29/10 original due date was agreed to by the parties and not dictated by the court.
Obviously whether the court ordered it or not doesn't matter, though, because the defendants owe it and the plaintiffs want it as soon as Ladenburg can sell any securities in the frozen accounts that are available to cover it. And have had since 1/29/10 to do so.
We don't know at this point how much of the $450,000 remains unpaid. We do know that at today's pps we're talking about 10,000,000 shares IF the entire amount remains unpaid. This wouldn't seem to be an amount that would by itself either justify the obvious promotional program in progress or jeopardize the current price per share given recent volumes.
The questions for me are:
Have any holdings already been sold and not filed? (The court ordered back in December that the shares in Jean Lazauskas's account be sold first. I believe that they would've required a filing by FL if sold).
Is it at all reasonable to think that this issue has anything at all to do with the 10K&Q filings, either being held to allow a pps increase to facilitate the settlement or being the reason for the 4/30 extension request?
big,
I think this is a more reliable source.
Nasdaq.com for 12/4/07:
12/04/2007 0.0525 0.0525 0.035 0.044 1,900,900
http://www.nasdaq.com/aspx/historical_quotes.aspx?symbol=SPNG&selected=SPNG
All time highs appear to have occurred here
04/30/2007 0.25 0.30 0.21 0.23 1,699,731
and here
02/07/2007 0.25 0.30 0.20 0.24 83,000
There was a .35 high on 12/5/06 but only 10,000 shares traded.
Tavy,
re: "A material event which this, should be noted in an 8K. They didnt do it."
They should have, but did they have to?
http://sec.gov/about/forms/form8-k.pdf
The term "material" apples to the entry into or termination of a "material agreement" and doesn't apply here.
The form does call for reporting the departure of an officer of the issuer, but that doesn't apply either......he's an officer of a subsidiary and not the issuer itself.
They could have reported it under Item 8.01 Other Events, which is totally optional.
The Item that MIGHT have required it is Item 7.01 Regulation FD Disclosure. Basically, the short form version of the rule requires the disclosure to the public of any information that has been provided to any person "Who is a holder of the issuer's securities, under circumstances in which it is reasonably foreseeable that the person will purchase or sell the issuer's securities on the basis of the information."
There's little doubt that some shareholder somewhere was told about the departure of Mr. Celia (if indeed he has departed) before it was "discovered" by Guru09 and reported on this board yesterday. But there is some wiggle room in the requirement that the information might reasonably result in a trade by its recipient.
That said, there's little doubt that he played a critical part in the design and manufacture of the Spongetech product from day one and if he's gone we shouldn't have to guess about it.....at the very least a PR would be in order.
I knew that. Known it for months.
That was the reason for the :o)
OT,
According to this guy it's Selvin :o)
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_S/threadview?m=tm&bn=63817&tid=190940&mid=191078&tof=1&frt=2
Speculative Footnotes:
http://www.sec.gov/Archives/edgar/data/1201251/000114420409037511/v154860_ex10-1.htm
3.2 Deliveries by the Company*** and the Sellers. On the Closing Date, the Company and the Sellers shall deliver, or cause to be delivered, the following:
(f) An acknowledgement from H.H. Brown Shoe Technologies, LLC (“H.H. Brown”) to the sale of the Membership Interests to the Purchaser, and an acknowledgement and confirmation from H.H. Brown that the Intellectual Property License Agreement effective November 30, 2007 by and between H.H. Brown and the Company (the “H.H. Brown License Agreement”) remains in force and effect as of the Closing Date, and that as of the Closing Date, the Company is not in breach of any of its material obligations under the H. H. Brown License Agreement.
***Remember that the Company in this agreement refers to Dicon.
Is the November 30, 2007 date also the date that the Celia Group bought Dicon from HH Brown?.......I'm pretty sure it was in 2007. Is it possible that the agreement was made contingent on the ongoing employment of Celia?
XXXXXXXXXXXX
Exhibit A (excerpts only)
1. During the Term, you will be employed as President and CEO for the Company.........You shall be required to report solely to, and shall be subject solely to the supervision and direction of, the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer of SpongeTech and the Board of Directors of SpongeTech, and no other person or group shall be given authority to supervise or direct you in the performance of your duties.
4.4 Termination Without Cause..........The Company or SpongeTech shall be deemed to have terminated your employment pursuant to this Paragraph 4.4 if such employment is terminated........(ii) by you voluntarily for "Good Reason”.............
For purposes of this Agreement, "Good Reason" means:
(c) any change in the designation of the particular executive that the you are obligated to report to under Paragraph 1 hereof;
XXXXXXXXXXXXX
http://finance.yahoo.com/news/SpongeTechR-Delivery-Systems-prnews-3246941473.html?x=0&.v=1
SpongeTech(R) Delivery Systems, Inc. Enhances Management Team with Plant Manager for Wholly Owned Subsidiary, Dicon Technologies, LLC
"Mr. Backer has over 25 years of experience in manufacturing and operations as well as supply chain, asset and product/project management. He most recently worked as the Director of Operations at PPT Research Inc. in Allentown, Pa. In addition, he has held significant management responsibilities at Rhodia Inc. in Cranbury, NJ and Air Products and Chemicals, Inc. in Allentown, Pa."
Did the company feel a need to bring in a fresh face to oversee Celia and Dicon? While the specifics regarding Mr. Backer's background aren't very detailed, he appears to be qualified beyond what I think of when I hear the title "Plant Manager".
100% speculation, like the title says.
OT is still trying to doublecheck (triplecheck sounds good) his departure.
I hope for the sake of the longs that it isn't true.
FWIW, this is the answer I received to my questions:
"http://www.sec.gov/investor/pubs/rule144.htm"
These were the questions:
“This timing also allows Lazauskas and Metter enough time to file Form 144s to unrestrict their shares in order to satisfy the court liquidation order.”
Please explain the reason for the restriction on these shares, when they were purchased if that relates to the restriction and what you*** mean by “enough time”. Finally, would these dispositions also have to be reported on Form 4?"
I guess it was a way of telling me to do my own DD.
But I have......my DD actually led me to the questions.
In fact I have more:
If Jean Lazauskas's shares represent shares purchased on the open market and transferred to her by FL why would they be restricted?
Do FL and MM have shares to sell above and beyond those reported on their Form 3's, filed on 10/22&23?
(The link provided in response to my questions says:
"Holding Period. Before you may sell any restricted securities in the marketplace, you must hold them for a certain period of time. If the company that issued the securities is subject to the reporting requirements of the Securities Exchange Act of 1934, then you must hold the securities for at least six months.")
Any help with ANY of these would be appreciated.
That's a fascinating discovery, Mengo!
I had thought, and earlier posted, that "Wayne" was given 2 employment contracts at the time of the "agreement"....one for President/CEO and the other for Director of Marketing. But looking back at the contracts the President/CEO document says "Wayne Celia" and the D of M version says "Wayne Celia Jr.". The only tricky part that might need an explanation is the fact that both use the same address.
http://sec.gov/Archives/edgar/data/1201251/000114420409037511/v154860_ex10-1.htm
Nice work.
OT,
Looking forward to your report.
In the meantime out of idle curiosity I took a look at the Termination section of his President/CEO contract and found something that I thought was amusing....probably meaningless, but amusing nonetheless.
There are 4 categories that can form the basis for termination: For cause, Without cause, Voluntarily for Good Reason and as a result of a Change in Control. The defining terms in all the categories are reasonably standard fare, with just a few exceptions. It's probably safe to say that this Item(b) under Change in Control is one of them:
For purposes of this Agreement, a “Change in Control” shall mean:
(b) Steven Moskowitz ceases for any reason to be the Company’s Chief Operating Officer or comparable position.
"Celia is no longer with Spongetech/Dicon !"
So in spite of the 2 contracts linked that established him as the President, CEO and Director of Marketing of Dicon he is no longer with the company?
http://sec.gov/Archives/edgar/data/1201251/000114420409037511/v154860_ex10-1.htm
vd,
Thanks for posting the update.
I just posted a few questions to the spngdd.com forum on this issue and while my post is "awaiting moderation" I thought that I'd repeat them here in case anyone on this board can answer them:
“This timing also allows Lazauskas and Metter enough time to file Form 144s to unrestrict their shares in order to satisfy the court liquidation order.”
Please explain the reason for the restriction on these shares, when they were purchased if that relates to the restriction and what you*** mean by “enough time”. Finally, would these dispositions also have to be reported on Form 4?"
***Obviously I don't expect anyone here to know what the author meant, but if someone can provide a very brief explanation of how the passage of a given amount (???) of time relates to restricted shares and Form 144 I would greatly appreciate it.
"At some point the actions of the SEC can be deemed as harmful as those of the accused or in this case accused without charges."
I take it you feel we reached that point. When?
I assume that it was at some point after this:
"On September 18, 2009, the Company received a formal order of investigation issued by the SEC regarding possible securities laws violations by the Company and/or other persons."
"The Commission cautions broker-dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company."
and this:
"On October 5, 2009, the U.S. Securities and Exchange Commission (the “Commission”) announced the temporary suspension of trading.....etc.
The Commission announced that trading was temporarily suspended because of questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning among other things, the amount of sales and customer orders received by the Company, investment agreements entered into by the Company and the Company’s revenues as reported in its financial statements. In addition, the Commission announcement noted that the Company has not filed any periodic reports since its Quarterly Report on Form 10-Q for the period ended February 28, 2009."
and this:
"On December 24, 2009, the Staff of the U.S. Securities and Exchange Commission.............advised that the Commission Staff intends to recommend that the Commission bring civil injunctive actions against them alleging violations of the federal securities laws....etc".
It would be nice if the commission would bring charges if they are to be brought. But I'm sure that you know better than most that a revocation, based on the lack of filings, is rarely if ever imposed in the time passed to date. So not only does the buy side of the roughly $64 million that you estimate traded since the suspension rest on the shoulders of someone other than the SEC.....their own, but it continues and can be expected to continue further. People either accept the risk or ignore it. Is it reasonable to think that investors like those that have purchased shares since the suspension will be deterred by some fines, disgorgements, cease-and-desist orders, maybe a couple bars from holding positions and whatever else might accompany a formal charging and finding?
I'm not suggesting that the SEC doesn't have some culpability that results from the delay, but it bothers me a bit that people might look to your post and find support for their feeling that "it's somebody else's fault".
"At some point the actions of the SEC can be deemed as harmful......"
At what point? Harmful to whom exactly? Current investors can sell and prospective investors can buy......or not buy.
BTW, I'm not at all clear on how you can throw the "over $1.4 Million in lawsuits" into the mix given that those debts were both incurred and for the most part overdue by the time the Wells notices were issued. No action by the commission since then would've changed anything in
regards to them.
Thanks for the thought provoking posts.
ps. If memory serves you have not expressed a concern at any point that the Wells allegations might be unfounded. Unless your feelings have change on that issue it seems that your sole complaint is with the commission's speed and my post is based on that assumption. If you are having second thoughts about the foundation of the Wells allegations please share them.
OT,
Please have a second cup of coffee and re-read the post, focusing on the phrase "for the privilege of accessing an ongoing float of $1,000,000." The $180,000 cost does not pertain to the total sales but rather the ongoing benefit.
Here's an explanation from a Yahoo poster that makes it clearer than I did:
"Ok, here we go. I give you $98 and 30 days later you give me $100. I have made $2 dollars. I can do this 12 times a year so i can make $24 on my $98 investment. So, simple math $24/$98 = 24.5% APY."
The flip side of the posters earnings are obviously the company's costs.
I agree that it SOUNDS like a staggering burden. It is the reason why any company that has a cash flow that permits it should take advantage of 1/10N30 or 2/10N30 when offered.
Please study this issue carefully before questioning the math. I've been raked over the coals on it several times now and am experiencing factoring cost burnout.
(1)"access to a million dollars for a cost of 240k... but you didn't finish the sentence.... they used that million dollars to generate 12 million in revenue...."
I didn't finish the sentence that way because that hasn't been the subject. The subject has simply been the cost of factoring.
(2)"and argueing that invoicing a million dollars a month--ie you sold a million dollars a month in product to generate those invoices-- somehow doesn't add up to a total of 12 million dollars in sales/revenue for the year is not an arguement that you can win... really... it just isnt... "
I never made that argument nor would I. Watch this:
If a company sells 1 million a month in product for 12 months it sells 12 million dollars worth of product.
I'll even go you one better:
A company that has invoices to factor also actually has sales.
People, I had no purpose here other than to TRY to clarify how the cost of factoring might be calculated in given circumstances. At no point did I imply that I thought that factoring was either the cat's friggin meow or a dark omen of impending catastrophe. I was then tempted to compare the cost of factoring to the cost of a cash discount......establishing that they were both methods a company might use to move their cash receipts forward in time and that they both had a cost. Finally, credit card service charges were tossed onto the pile and I pointed out that they are marketing expenses that a retailer in today's markets has no choice but to accept and don't necessarily belong in a discussion of the accounts receivable financing costs of a manufacturer.
If you can somehow find an agenda in this series of posts PLEASE point it out. If you're going to challenge my objectivity I'm entitled to some specifics.
Lastly, per the PR:
"Also, SpongeTech® has entered into a factoring arrangement for its accounts receivable to assist our cash requirements as the Company grows."
This arrangement will add to costs and will not create any incremental revenues, yet at no point have I suggested that it's a bad thing.....to the contrary:
"Using a factor isn't a bad thing......it's just that it can be expensive."
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=48765671
nilemerlin,
"loanranger wrote (my bold): "So the company pays $15,000 for the privilege of having access to $1,000,000 a month longer than it normally would."
That statement didn't make sense. It would have made sense if loanranger used the word "sooner" rather than "longer", as in:
So the company pays $15,000 for the privilege of having access to $1,000,000 a month sooner than it normally would."
Now, Mr. Wizard, tell us how your discovery affects the math.
loan"full of errors"ranger
A retailer will lose sales if he doesn't offer customers the opportunity to charge their purchases.
A company obviously will not lose sales if they choose not to use a factor.
Apples, meet oranges. Service charge meet finance charge.
No one is arguing that there are various ways to accelerate payment for sales made and that they all have a cost. What exactly is your point?
"this is exactly just like spongetech giving up a discount for receivables. EXACTLY."
I agree! Of course it is! Let's use the same assumptions.
1 customer, $1,000,000sales/mo. for 12 months. Offering 2/10n30 terms.
Each month the company gets a one time benefit of having access to $1,000,000 for 20 days at a cost of $20,000(assuming payment is received on the 10th day).
So, during the course of the year, the company gets access to $1,000,000 for 240 days at a cost of $240,000.
I know that calculating what the APR would be for a $1,000,000 loan costing $240,000 for 240 days would upset you so I won't do it. And I know that companies that offer discounts don't consider their costs in terms of an APR. But, just as companies that use factors might not think of factoring costs in terms of an APR, they are all financing costs. And to express them all in terms of an APR for comparison purposes is perfectly appropriate.
CYRX,
I don't, but obviously the longer the company enjoys the cash the lower the effective cost of factoring would be in the example provided.
Having been across the table from an 800lb gorilla in a different industry I wouldn't be at all surprised to find that Walmart can demand lengthy payment terms.
The thing is, the countervailing considerations of lengthy payment terms and minimal risk of non-payment are not lost on the factors. They adjust their rates accordingly. Kind of like insurance companies....they work on a spread based on expectations that are based on historical data.
I think the bottom line is that, regardless of the quality of the debtors, factors charge premium fees over more traditional lenders because they can. They know that, in general, they are getting the customers that aren't creditworthy enough.....that don't have the balance sheets.....to borrow funds without specifically assigned and clearly measurable collateral.
As you point out, there can be a significant cost to NOT having the money, too. Using a factor isn't a bad thing......it's just that it can be expensive.
kirby,
Let's try it another way.
Assumptions (simplified version):
Company has one customer to whom it sells $1,000,000 worth of goods a month.
Factor charges a flat rate of 1.5%.
Instead of waiting 30 days for payment from the customer, the factor pays on day one.
So the company pays $15,000 for the privilege of having access to $1,000,000 a month longer than it normally would.
It does this 12 times a year. So the company pays $180,000 for the privilege of accessing an ongoing float of $1,000,000.
It seems pretty clear that a $1,000,000 loan that costs $180,000/yr is being charged at a simple APR of 18%. And that is the way the cost of factoring can also be viewed.
pj,
re: "vote in a massive Reverse Split of Class A common shares and wipe out every one else."
I've seen this approach proposed before but I don't understand it. Please explain.
Nobody reads 'em.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=48614674
BTW, there is a filing subsequent to the one linked. Maybe you should read that one.
TC/oa,
Help me out here.
There's a guy named Louis Moskowitz who is attached to a Factor in New York that is an inactive Corporation.
There's a guy named David Rubin also attached to that Factor.
There's also a guy named David Rubin who is a named defendant (not a plaintiff) along with Getfugu and a bunch of related parties.
And these guys are somehow connected to SPNG's announcement of a new factoring relationship?
Are you sure it's not just a case of Google Gone Wild?
"can you show me where it exactly said they were going to sell spongetech shares to settle? i dont recall seeing that in any court document."
In the "Order on consent resolving pending motion fro turnover of assets and directing liquidation of certain assets" signed by Hon Robert P Patterson, USDJ as follows:
"and it is
FURTHER ORDERED that the sales of such securities will proceed in the following order:
1. First, the Spongetech Delivery Systems stock in the account of Jean Lazauskas, Account#NJ5-001074,
2. If the proceeds of the foregoing account are less than $1.1 million, then all other Restrained accounts at Ladenburg's discretion.
"On most if not all US exchanges they would not allow SPNG because of the way it is structured."
Risi,
Are you sure of that?
The following link is dated, but I distinctly recall the issue coming up vis-a-vis Google more recently because their Class B arrangement struck me as very similar to SPNG's.
http://www.businessweek.com/investor/content/may2007/pi20070514_912666.htm
"Share holders have no claim upon anything owned by RME."
In fact they are named defendants in the class action. What "anything" amounts to is yet to be determined.