Friday, September 25, 2009 4:03:52 PM
OK, so I did put together a quick summary of everything I understand at this point and mailed it to the Deep Capture team (Bagley, Byrne & Mitchell).
I am posting the email I sent below, It's a bit long sorry, but if you have additional data / facts to contribute, please let me know and I'll send that too.
I will let you know when I hear back from them. Those of you who care should write to them to (their email addresses are available on that page: http://www.deepcapture.com/about-deep-capture/). Also write to SpongeTech asking them if they are going to take legal action against the NY Post, engage the SEC etc. We need to get our voices heard
Good Luck To All Longs !
------- Email to Deep Capture Team sent Sept 25, 2009
Hi again Judd,
I have been trying to put together a high level picture of what I understand at this point. I'm not a stock professional by any means, just an individual retail investor with limited experience (I don't day trade, I try to pick long term investments), so some of my comments might be naive, but please let me know if you think this is something that Deep Capture might be interested in investigating further.
If you are interested in digging further into this, I would like to help by asking investment board members and other long term SPNG investors to gather all additional information they may have: a little crowdsourcing effort might yield more facts and data.
Thank you for your time,
**** 1 - Company overview
There is a pretty good company overview which has been put together by the members of the spongetech investment board on InvertorsHub :
http://investorshub.advfn.com/boards/board.aspx?board_id=7664
On that page (the IBox section) you can find a lot of info about the products (sold by many major US retailers now like CVS, Walgreens, Costco, Krogers, etc.), the marketing efforts (SPNG advertises on TV, and has signage in baseball fields, the 2009 US Open), etc. Verifiable data (I can see products on the shelves of CVS here in RI where I live) which seem to prove the company is actually legitimate.
**** 2 - Shorting data
Short data for SPNG : http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20090831005463&newsLang=en
SPNG has been on the RegSho list continuously since 7/24/2009, but has been there before (see http://investorshub.advfn.com/boards/read_msg.aspx?message_id=39976677&txt2find=RegSho)
On a day like today with a damaging article from the NYP, there has been over 200 million shares traded, while the available float is believed to be in the 200 million range (as of their last filing SPNG has 722 million issued and outstanding shares but about 480 million of them are held by RM Enterprises
International, Inc: see http://investorshub.advfn.com/boards/read_msg.aspx?message_id=41598363&txt2find=RM|Enterprise section 'Fundamentals, item #7).
**** 3 - Interesting stock price events
Back in Q2 2009, the company sotck price started to pick up some steam, as SPNG was announcing record sales month after month. Then on June 12, 2009, the stock price went crashing in a few minutes from $0.28 to $0.08.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=SPNGE&time=6&freq=1
On that day Timothy Sykes came up with this blog post:
http://timothysykes.com/blog/2009/06/12/spongetech-delivery-systems-inc.-spng.ob-told-you-so/
After that the stock price kept going down for a while, then it recovered slowly all the way to the low .20s by the end of august, and from then on it's been hammered down pretty much continuously, while the daily FTDs numbers kept rising. What happened is that shorters took advantage of the fact that SPNG 2009 10K filing got delayed, and that company announced and then canceled a reverse split (all of this linked to the SEC request for a 2008 financials re-audit). They started flooding all boards (Google, Yahoo, InvestorsHub) with hysterical and/or ominous comments about how the company was a fraud, the stock
price was going to zero, etc. I mean there always had been some level of bashing going on since I started investing in that stock (April 2009), but it just went through the roof in the past couple of weeks. It's just a non stop barrage of garbage and fear-inducing messages ...
Silly question : Could it be possible that someone at the SEC is involved in the manipulation since they timed the letter ordering the re-audit of 2008 just before SPNG was going to file 2009 10K ?
**** 4 - NY Post articles:
There has been 3 NY Post articles so far, all authored by Kaja Whitehouse
* Sept 17, 2009 : http://www.nypost.com/p/news/business/not_spongeworthy_ZZZ1QlWllnBaSYuVjqYysK
Alleges SEC launches inquiry, misrepresenting the fact that SEC simply asked SPNG to get their 2008 10K re-audited because previous auditor lost their license, and implying that new auditors selected by SPNG are also shady. Just all around insinuations that something is fishy. Quoting Timothy Sikes
accusing SPNG to be a blatant pump and dump.
The last line of the article is :
"SEC spokesman Kevin Callahan declined to comment, saying he cannot confirm or deny "the existence or non-existence" of any investigation."
* Sept 22, 2009: http://www.nypost.com/p/news/business/spongetech_is_all_wet_hBMpyldSkFZez0wuxFdupO
Story about a former SPNG attorney saying the company forged dozens of legal documents. Riding on the tail of the announcement of the SPGN ticker switching to SPNGE as the 2009 10K is late (reasonable people think the 2009 10K was ready in time bu that the SEC letter from Sept 11 asking SPNG to re-audit the 2008 numbers has caused the company to delay the 2009 filing). Mentions a letter the attorney is said to have sent to the SEC but not copy of it.
Continued insinuations, mentioning SPNG customers could be fake/shady too ?
* Sept 25, 2009: http://www.nypost.com/p/news/business/spongetech_client_records_spring_dw5hyBpvNxFyvS96Xmi5bN
Frontal attack insinuating the main clients of SPNG are scams too. Comments on investments boards say the article gives incorrect addresses (I haven't verified this). Also posters on investment boards say that fake web sites have popped-up recently:
http://dubaiexportimportco.com/index.htm
http://fescocorp.com/index.htm
http://satradingcompany.com/
A Sample IHub Post in reaction to this article:
Agreed that this isn't the NYTimes. But faking a contact with SPNGE's IR and putting a bunch of bogus addresses in their article seems pretty wild. The drama here has really stepped up to a whole new level.
But the buying has been intense, so maybe this will all work out fine.
I've been trying to get IR to confirm/deny that they gave that information to the Post. No luck yet.
**** 5 - People with websites posting frequent negative articles on SpongeTech:
* Timothy Sykes
June 12 SPNG price crash:
http://timothysykes.com/blog/2009/06/12/spongetech-delivery-systems-inc.-spng.ob-told-you-so/
Companion post to NY Post article:
http://timothysykes.com/blog/2009/09/25/the-ny-posts-latest-evidence-that-spongetech-delivery-systems-inc.-spnge-is-a-fraud/
* Moe Speek
Moe Speek : http://moespeeks.blogspot.com/
**** 6 - Misc Material
10Q for period ending Feb 28, 2009
http://www.sec.gov/Archives/edgar/data/1201251/000114420409021409/v146656_10q.htm
All SPNG Press releases in the recent months:
http://www.businesswire.com/portal/site/home/news/?ndmHsc=infSearch&vnsId=-
2147483648&ndmConfigId=searchNDMConfig&searchHereRadio=false&keywordType=1&keyword=spongetech&go=Go
I am posting the email I sent below, It's a bit long sorry, but if you have additional data / facts to contribute, please let me know and I'll send that too.
I will let you know when I hear back from them. Those of you who care should write to them to (their email addresses are available on that page: http://www.deepcapture.com/about-deep-capture/). Also write to SpongeTech asking them if they are going to take legal action against the NY Post, engage the SEC etc. We need to get our voices heard
Good Luck To All Longs !
------- Email to Deep Capture Team sent Sept 25, 2009
Hi again Judd,
I have been trying to put together a high level picture of what I understand at this point. I'm not a stock professional by any means, just an individual retail investor with limited experience (I don't day trade, I try to pick long term investments), so some of my comments might be naive, but please let me know if you think this is something that Deep Capture might be interested in investigating further.
If you are interested in digging further into this, I would like to help by asking investment board members and other long term SPNG investors to gather all additional information they may have: a little crowdsourcing effort might yield more facts and data.
Thank you for your time,
**** 1 - Company overview
There is a pretty good company overview which has been put together by the members of the spongetech investment board on InvertorsHub :
http://investorshub.advfn.com/boards/board.aspx?board_id=7664
On that page (the IBox section) you can find a lot of info about the products (sold by many major US retailers now like CVS, Walgreens, Costco, Krogers, etc.), the marketing efforts (SPNG advertises on TV, and has signage in baseball fields, the 2009 US Open), etc. Verifiable data (I can see products on the shelves of CVS here in RI where I live) which seem to prove the company is actually legitimate.
**** 2 - Shorting data
Short data for SPNG : http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20090831005463&newsLang=en
SPNG has been on the RegSho list continuously since 7/24/2009, but has been there before (see http://investorshub.advfn.com/boards/read_msg.aspx?message_id=39976677&txt2find=RegSho)
On a day like today with a damaging article from the NYP, there has been over 200 million shares traded, while the available float is believed to be in the 200 million range (as of their last filing SPNG has 722 million issued and outstanding shares but about 480 million of them are held by RM Enterprises
International, Inc: see http://investorshub.advfn.com/boards/read_msg.aspx?message_id=41598363&txt2find=RM|Enterprise section 'Fundamentals, item #7).
**** 3 - Interesting stock price events
Back in Q2 2009, the company sotck price started to pick up some steam, as SPNG was announcing record sales month after month. Then on June 12, 2009, the stock price went crashing in a few minutes from $0.28 to $0.08.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=SPNGE&time=6&freq=1
On that day Timothy Sykes came up with this blog post:
http://timothysykes.com/blog/2009/06/12/spongetech-delivery-systems-inc.-spng.ob-told-you-so/
After that the stock price kept going down for a while, then it recovered slowly all the way to the low .20s by the end of august, and from then on it's been hammered down pretty much continuously, while the daily FTDs numbers kept rising. What happened is that shorters took advantage of the fact that SPNG 2009 10K filing got delayed, and that company announced and then canceled a reverse split (all of this linked to the SEC request for a 2008 financials re-audit). They started flooding all boards (Google, Yahoo, InvestorsHub) with hysterical and/or ominous comments about how the company was a fraud, the stock
price was going to zero, etc. I mean there always had been some level of bashing going on since I started investing in that stock (April 2009), but it just went through the roof in the past couple of weeks. It's just a non stop barrage of garbage and fear-inducing messages ...
Silly question : Could it be possible that someone at the SEC is involved in the manipulation since they timed the letter ordering the re-audit of 2008 just before SPNG was going to file 2009 10K ?
**** 4 - NY Post articles:
There has been 3 NY Post articles so far, all authored by Kaja Whitehouse
* Sept 17, 2009 : http://www.nypost.com/p/news/business/not_spongeworthy_ZZZ1QlWllnBaSYuVjqYysK
Alleges SEC launches inquiry, misrepresenting the fact that SEC simply asked SPNG to get their 2008 10K re-audited because previous auditor lost their license, and implying that new auditors selected by SPNG are also shady. Just all around insinuations that something is fishy. Quoting Timothy Sikes
accusing SPNG to be a blatant pump and dump.
The last line of the article is :
"SEC spokesman Kevin Callahan declined to comment, saying he cannot confirm or deny "the existence or non-existence" of any investigation."
* Sept 22, 2009: http://www.nypost.com/p/news/business/spongetech_is_all_wet_hBMpyldSkFZez0wuxFdupO
Story about a former SPNG attorney saying the company forged dozens of legal documents. Riding on the tail of the announcement of the SPGN ticker switching to SPNGE as the 2009 10K is late (reasonable people think the 2009 10K was ready in time bu that the SEC letter from Sept 11 asking SPNG to re-audit the 2008 numbers has caused the company to delay the 2009 filing). Mentions a letter the attorney is said to have sent to the SEC but not copy of it.
Continued insinuations, mentioning SPNG customers could be fake/shady too ?
* Sept 25, 2009: http://www.nypost.com/p/news/business/spongetech_client_records_spring_dw5hyBpvNxFyvS96Xmi5bN
Frontal attack insinuating the main clients of SPNG are scams too. Comments on investments boards say the article gives incorrect addresses (I haven't verified this). Also posters on investment boards say that fake web sites have popped-up recently:
http://dubaiexportimportco.com/index.htm
http://fescocorp.com/index.htm
http://satradingcompany.com/
A Sample IHub Post in reaction to this article:
Agreed that this isn't the NYTimes. But faking a contact with SPNGE's IR and putting a bunch of bogus addresses in their article seems pretty wild. The drama here has really stepped up to a whole new level.
But the buying has been intense, so maybe this will all work out fine.
I've been trying to get IR to confirm/deny that they gave that information to the Post. No luck yet.
**** 5 - People with websites posting frequent negative articles on SpongeTech:
* Timothy Sykes
June 12 SPNG price crash:
http://timothysykes.com/blog/2009/06/12/spongetech-delivery-systems-inc.-spng.ob-told-you-so/
Companion post to NY Post article:
http://timothysykes.com/blog/2009/09/25/the-ny-posts-latest-evidence-that-spongetech-delivery-systems-inc.-spnge-is-a-fraud/
* Moe Speek
Moe Speek : http://moespeeks.blogspot.com/
**** 6 - Misc Material
10Q for period ending Feb 28, 2009
http://www.sec.gov/Archives/edgar/data/1201251/000114420409021409/v146656_10q.htm
All SPNG Press releases in the recent months:
http://www.businesswire.com/portal/site/home/news/?ndmHsc=infSearch&vnsId=-
2147483648&ndmConfigId=searchNDMConfig&searchHereRadio=false&keywordType=1&keyword=spongetech&go=Go
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