Spongetech Delivery Systems Inc (fka SPNGQ)

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for the quarterly period ended February 28, 2009:

During the last two fiscal years, we received some essential services at no charge due to certain business relationships established by our management. Had we been charged for all these services, these costs would be reflected as expenses in our financial statements. Some of the areas where these services were provided include, but are not limited to, art work, packaging, design and consulting. We anticipate that this arrangement will continue at least through the current fiscal year. If and when this arrangement ceases, we expect that our costs of doing business will increase.
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During the 2008 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.
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http://www.sec.gov/Archives/edgar/data/1201251/000114420409021409/v146656_10q.htm