Spongetech Delivery Systems, Inc. (fka SPNGQ)

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This is strange> So what are the TRUE ACTUAL cost of goods sold? It is UNKNOWN?, The CEO bears added cost , and does not disclose this cost?! , this is very much a HUGE RED FLAG IMO - This is how you create profits and cook the books..... This needs to be disclosed......

Cost of Goods Sold

Cost of goods sold was $6,547,563 or approximately 36 percent of sales, for the six months ended November 30, 2008 as compared to $48,676 or approximately 14 percent of sales, for the six months ended November 30, 2007. While the cost of goods sold increased significantly as a result of our increase in sales. In addition, during the six months ended November 30, 2008, a portion of our cost of goods sold, including costs related to warehousing, packaging, and shipping of products, were borne by (and not charged back to the Company) a privately-held company controlled by our Chief Operating Officer.

THEN AGAIN UNDER SGAE>

Selling, general, and administrative expenses for the six months ended November 30, 2008 were $733,655, an increase from $95,108 for the six months ended November 30, 2007. During the 2007 fiscal year, a portion of our selling, general and administrative expenses, including costs related to product and package design as well as certain consultants, were borne by (and not charged back to the Company) a privately-held company controlled by the family of our Chief Operating Officer. During the current fiscal year, some of these costs are still being borne by (and not charged back to the Company) a privately-held company controlled by our Chief Operating Officer.


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http://www.sec.gov/Archives/edgar/data/1201251/000114420409002030/v137081_10q.htm