Spongetech Delivery Systems, Inc. (fka SPNGQ)

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hmmm... the PR is strangely worded.... Then of course it is also covered under foward looking statements.. IMPO PR from an OTC is almost worthless.....

My point is If you look into revenue recognition, lots of small companies get in to trouble by booking purchase orders that might be a full years worth of sales as one large order and hold it in A/R and book it as revenues upfront. SPNG recent filing had some confusing verbiage under revenue recognition and then under revenues they listed 2 large purchase orders, have they in fact produced, shipped abd been paid for all of the sales listed in the filing , or , do they book a initial order as sales upfront?

If you do some simple google searches you will find hundreds of cases. Like this:

Specifically, the complaint and/or cease-and-desist orders allege the following. Candie's senior management, including O'Shaughnessy, Klein and Golden primarily employed two fraudulent accounting practices. First, O'Shaughnessy directed employees to engage in a practice known as "bill and hold" that allowed Candie's to prematurely record revenue from various purchase orders calling for future delivery of shoes, by recording these orders as final sales prior to shipping the shoes to customers. Generally Accepted Accounting Principles (GAAP) do not permit revenue recognition for sales unless risk and title has passed to the customer, which typically occurred only when Candie's shipped shoes to customers. In fact, Candie's own revenue recognition policy called for recognition of revenue upon shipment of goods with risk and title passing. Despite the prohibitions of GAAP and its own policy, Candie's prematurely recognized over $4.4 million in revenue in fiscal years 1998 and 1999 through the improper use of bill and hold and other irregular shipping practices. Brown, who was in charge of customer service, played a crucial role in carrying out the bill and hold practice. Golden and Klein were aware that Candie's was engaged in the bill and hold practice and permitted Candie's to report the resulting revenue and income in its Forms 10-K and 10-Q. Cole ignored red flags that Candie's was engaged in this practice and failed to prevent the company from recognizing revenue from this improper practice.

Second, Candie's improperly recognized over $3.1 million in revenue from two illusory sales transactions with a barter company that Levi controlled. In these transactions, which were purportedly entered into in August 1997 and October 1998, Candie's claimed to sell shoes to the barter company in exchange for a combination of cash and advertising credits. The revenue and income that Candie's recorded in connection with these transactions was improper because Candie's either never shipped the shoes described by the contracts underlying these transactions, or Candie's shipped the shoes many months after recording the revenue. O'Shaughnessy and Klein negotiated and/or signed the barter agreements with Levi. Golden was aware of at least one of these agreements. After Candie's auditors raised questions about these transactions, O'Shaughnessy, Golden and Levi provided the auditors with false information about Candie's purported sales of shoes to the barter company.
http://www.404.gov/litigation/litreleases/lr18120.htm