Spongetech Delivery Systems, Inc. (fka SPNGQ)

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SpongeTech Gets Squeezed
The New York Post is tossing a whole lot of mud at SpongeTech. And it sure looks to us like it's sticking.

the New York city-based cleaning products maker, which trades on the Bulletin Board, came under serious attack by the New York tabloid last Friday. The Post is alleging that SpongeTech is falsifying revenue by booking sales to fictitious customers. SpongeTech dropped to 8 cents a share on Friday, down from 9 cents the day before.

SpongeTech claimed in an SEC filing that six customers accounted for 99.4% of its sales, or nearly $31 million, for the first nine months of its fiscal year. The firms are SA Trading Company, US Asia Trading, Dubai Export Import Company, Fesco Sales Corp., New Century Media and Walgreen(WAG Quote).
Unfortunately, after much searching, the reporters over at the Post could not track down a single representative for any of those companies except Walgreen. For example, the Post said it called the number SpongeTech provided for the Dubai Export Import Company only to see that number "disabled" a few hours later.
"Calls to the phone numbers SpongeTech provided for the other four companies also led to receptionists who took messages. They were all disabled shortly afterwards," reported the Post.
SpongeTech, famous for its "Smarter Sponge," responded on Friday with a press release calling the Post's accusations "inaccurate." The company maintained its operations were squeaky clean and that the customers cited in their financial statements are all current and active.
"We believe that a number of documents cited in press reports about the company are internet forgeries being used by short sellers and stock speculators to undermine the integrity of the company and profit from the adverse publicity," said the folks at SpongeTech.
They went on to say that statements in the press that SpongeTech must restate its financial statements are "wrong." What's actually happening says the company, is that it has hired a new accountant to "re-audit," its books, not restate them.
Hopefully the new auditor will have an easier time finding SpongeTech's so-called customers than the Post did. But we doubt they will.
If there is one thing we know, it's that those guys at the Post have put the squeeze on SpongeTech.

http://www.thestreet.com/story/10606281/1/the-five-dumbest-things-on-wall-street-oct-2.html