Spongetech Delivery Systems Inc (fka SPNGQ)

[wadirum1]

What if the market cap rose to, say, $140mm. Can you swallow that? And what if the number of shares outstanding were 200mm due to RM holdings being retired and/or converted to a debt of under $15mm. All very reasonable, right?

Well, $140mm/200mm = $0.70/share. That would be a 5-bagger from here.

OK, I think the market cap could be a good bit higher than this (we already hit a market cap exceeding $200mm when SPNG was in the upper 20s). But what if we only get to a market cap of $50mm with 200mm shares? That would still be a DOUBLE from here (and it would leave SPNG at a price to sales multiple of under a half on the most conservative 2010 revenue estimates).

Ludicrously low valuations yield doubles, triples, or even 10-baggers so long as the O/S is low enough. Management has always said that they targeted an O/S of under 200mm as soon as they had a line of credit and as soon as they had the internally generated cash to retire RM's shares.

I am betting a TON that they do it.

Wadi