Spongetech Delivery Systems, Inc. (fka SPNGQ)

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Here is some DD from before I invested in SPNG , I have since flipped 6x made good chunk of change , holding shares now , small amount , have small profit on them , will let them ride...

But - IMPO A/R is another red flag > IMPO SPNG is booking orders and POs as revenue and A/R even before the product is made and shipped...

Per the filing noted below (see link) it appears SPNG is listing $11 million of "purchase" orders as sales and Accounts receiveable.(?) IMO the A/R and sales in this filing is very deceptive > When the product SHIPS and or you collect the monies you list the sale??? IMPO listing "purchase orders" as sales and accounts receiveable before you produce THE ENTIRE order and or ship ALL of the product is deceptive....

IMO it appears they completed the "final test procedures" and got final approval for the 2 new sponges and then listed a years worth of Purchase orders as a sale?

Per the filing:

To date we have received purchase orders of $4.7 million for Puddle Pal’s Children’s Sponge products and $6.4 million for Uncle Norman’s Pet Sponge products.

7. Revenue Recognition

Sales and services are recorded when products are delivered to the customers. Provision for discounts, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. In instances where products are configured to customer requirements, revenue is recorded upon the successful completion of the Company’s final test procedures. For the six months ended November 30, 2008, three customers, SA Trading Company, Dubai Export Import Company and New Century Media, accounted for 82.9 percent of sales.

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