ttattletell,
With respect to the engagement of Robinson, Hill it seems to me it would be really stupid on the part of Spongetech to lie about this particular matter since doing so would certainly attract the attention of the SEC and other, unwanted, eyes.
My guess is that not only has Robinson been retained by Spongetech, but that they've been camped out in Spongetech's New York offices for several weeks now and were there doing some of the field work on the company for at least a few weeks prior to the announcement being made.
The more important question, it seems to me, is why would Spongetech want to retain an auditor located 2,000-plus miles from their offices in New York?
Did they start looking for an auditor in New York and make calls in outgoing concentric circles like the ripples from a pebble when you throw it in a lake and finally find Robinson who was so desperate for an engagement fee that they'd be willing to get paid in shares of Spongetech stock, like SPNG's law firm did last year in exchange for 2.25 million shares?
Here are a few predictions about the relationship between Robinson, Hill and Spongetech, the upcoming audit and what the 10-K will show when it's released:
1. Robinson has already been working for Spongetech for more than a month now, preparing work papers and doing field testing to support the due diligence requirements to satisfy the audit for the FY ending 05/31/2009.
2. There was no quid pro quo when Robinson was engaged, though Spongetech made it clear that they expected Robinson to NOT issue a going-concern statement in the Auditor's Opinion section of the audit.
3. Robinson made it clear going in that they'd expect to (a) set up a reserve against uncollectible accounts in the Accounts Receivable section of the audit; and (b) clean up the Cash Flow from Operations section of the statements, which badly needs cleaning up. lol
4. Spongetech made it clear that no matter what they expected to be GAAP net income positive for the FY.
5. This particular audit will be footnoted to death, which is where all the good stuff is always reported, not that any of the longs will ever notice.
6. Robinson knows they have their professional reputation on the line with this particular audit and are getting paid a premium engagement fee for taking on the professional risk of this particular engagement, and are quite possibly getting paid in Spongetech stock or in a combination of cash (later to be returned) and SPNG stock options (to be buried in the footnotes).
7. There will be a huge disparity between what SPNG reports as Net Income and the Cash Flow from Operations numbers that correspond with that figure, with the CFFO number being negative by a huge amount (say >$5 million).
8. The shareholders are going to get diluted into oblivion, with outstanding shares exceeding 500 million and quite possibly more.
9. Toward the end of August, an announcement will be made that the audit will be delayed while Robinson, Hill and Spongetech go at one another's throats over areas of substantive disagreement (after all, Robinson doesn't know yet how many dead mice SPNG has in its closet, and may not know by 08/31 for that matter) and smooth over those ruffled feelings.
All just fwiw and one man's opinion only.
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