UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 9, 2009
SPONGETECH DELIVERY SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 333-100925 54-2077231
(State or other jurisdiction
of incorporation) (Commission File Number) (IRS Employer
Identification No.)
10 West 33rd Street, Suite 518
New York, New York 10001
(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code: (212) 695-7850
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 4.01 Changes In Registrant's Certifying Accountant.
On October 13, 2009, Deloitte & Touche LLP (“D&T”) resigned as the independent registered public accounting firm for SpongeTech Delivery Systems, Inc. (“SpongeTech”) for the year ending May 31, 2010. During the fiscal years ended May 31, 2009 and 2008, and during any subsequent period through the date hereof, D&T did not issue any reports on SpongeTech’s consolidated financial statements. During the fiscal years ended May 31, 2009 and 2008, and during any subsequent period through the date hereof, there were no disagreements with D&T on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of D&T would have caused it to make reference to the subject matter of the disagreement(s) in connection with its reports, and (ii) there were no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K.
The decision to change SpongeTech’s auditors was made by D&T, and therefore no approval of SpongeTech’s Board of Directors or Audit Committee was obtained.
SpongeTech provided D&T with a copy of the foregoing disclosures and requested from D&T a letter addressed to the U.S. Securities and Exchange Commission stating whether it agrees with such statements, and, if not, stating the respects in which it does not agree. The letter from D&T will be filed by an amendment to this Current Report on Form 8-K when it becomes available.
A copy of D&T’s notification letter is attached hereto as Exhibit 99.1
Item 8.01 Other Events.
On October 9, 2009, a putative class action lawsuit asserting claims under the Securities Exchange Act of 1934, as amended (the “1934 Act”), was filed by The Rosen Law Firm, P.A., in the United States District Court for the Southern District of New York against SpongeTech, and Spongetech officers and directors, Michael L. Metter, Steven Moskowitz, Frank Lazauskas, as well as RM Enterprises International, Inc. (an entity in which SpongeTech’s directors and officers hold direct and/or indirect ownership interests, and of which Mr. Moskowitz and Mr. Lazauskas serve as officers and/or directors). The lawsuit was brought on behalf of all those who purchased SpongeTech common stock during the putative class period from April 15, 2008 to October 5, 2009, and alleges violations of Sections 10(b) and 20(a) of the 1934 Act and Rule 10b-5 promulgated thereunder. In particular, the complaint alleges that during the putative class period, SpongeTech engaged in a scheme to deceive the market and a course of conduct that artificially inflated SpongeTech’s stock price, and made false and misleading statements and/or omissions about SpongeTech’s financial condition and business prospects. The lawsuit seeks, among other relief, unspecified damages, costs and expenses.
On October 12, 2009, The Brualdi Law Firm, P.C. issued a press release announcing that it commenced a lawsuit in the United States District Court for the Southern District of New York on behalf of all purchasers of SpongeTech stock between April 15, 2008 and October 5, 2009, inclusive. As of the date of this report, SpongeTech has not seen a copy of the complaint.
Spongetech believes the allegations set forth in the complaint filed by The Rosen Law Firm are meritless and intends to defend these actions vigorously.
Item 9.01. Financial Statements and Exhibits.
Exhibit No. Description
99.1 Notification letter of Deloitte & Touche LLP
99.2 Press Release, dated October 16, 2009.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Spongetech Delivery Systems, Inc.
Date: October 16, 2009 By: /s/ Michael Metter
Michael Metter
Chief Executive Officer
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EXHIBIT INDEX
Exhibit No. Description
99.1 Notification letter of Deloitte & Touche LLP
99.2 Press Release, dated October 16, 2009.
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EX-99.1
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EX-99.2
SpongeTech® Delivery Systems, Inc.
Announces Class Action Lawsuits,
Resignation of Deloitte & Touche LLP
and Files Lawsuit Against Cresta Capital Strategies, LLC.,
NEW YORK, NY - SpongeTech® Delivery Systems, Inc. (the “Company” or "SpongeTech") “The Smarter Sponge™” (SPNG) today announced that a lawsuit was filed on October 9, 2009 by The Rosen Law Firm, P.A., in the United States District Court for the Southern District of New York against SpongeTech, and its officers and directors, Michael L. Metter, Steven Moskowitz, Frank Lazauskas as well as RM Enterprises International, Inc. (an entity in which SpongeTech’s directors and officers hold direct and/or indirect ownership interests, and of which Mr. Moskowitz and Mr. Lazauskas serve as officers and/or directors), as a purported class action suit on behalf of all purchasers of SpongeTech stock between April 15, 2008 and October 5, 2009, alleging violations of the federal securities laws.
In addition, a second law firm announced that it has commenced a lawsuit in the United States District Court for the Southern District of New York on behalf of all purchasers of SpongeTech stock between April 15, 2008 and October 5, 2009, inclusive. As of the date of this release, SpongeTech has not been served in this action and has not seen a copy of the complaint.
When and if SpongeTech is served in these actions it intends to carefully review the complaints in consultation with its counsel, and prepare an appropriate defense. SpongeTech and its directors and officers believe that the allegations set forth in the complaint filed by The Rosen Law Firm are meritless and intend to defend the action vigorously.
In addition, the Company today announced that Deloitte & Touche LLP ("Deloitte") has notified the Company that it would not act as SpongeTech’s independent registered public accounting firm for the Company’s fiscal year ending May 31, 2010. Deloitte was scheduled to commence its review of the Company’s financial statements for the quarter ended August 31, 2009, immediately following the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009.
Furthermore, the Company has filed a lawsuit in the New York State Supreme Court, Suffolk County against Cresta Capital Strategies, LLC. (“Cresta”). The complaint alleges a breach of contract, conversion, unjust enrichment, breach of fiduciary duty and unlawful appropriation of funds. The Company is seeking compensatory damages in the amount of $2.75 million as well as punitive and exemplary damages.
In March 2009, Cresta was hired by the Company to serve as the exclusive investment banker to the Company in which Cresta was to provide advice and services concerning potential merger, acquisition and/or any business transactions. Upon modification of the agreement with Cresta, in June 2009, the Company agreed to and did provide Cresta with a $1 million cash advance which was to be used against future fees as a result of any transactions under the agreement. Cresta did provide investment banking services to the Company on the acquisition of Dicon Technologies, LLC (“Dicon”) as well as introducing the Company to Getfugu, Inc. (“Getfugu”). Cresta was paid in full all fees due with regards to its participation in the Dicon transaction.
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In August 2009, the Company was introduced to Getfugu by Cresta, who was serving as investment banker for both the Company and Getfugu. At the advice of Cresta, the Company entered into a definitive agreement with Getfugu to invest $4 million into Getfugu’s mobile-based web search and e-commerce technology, and that the Company would be the first company to utilize Getfugu’s innovative mobile search platform. An aggregate of $1.75 million had been advanced to Getfugu, soon after Getfugu rescinded the transaction and to this date has not returned the monies to the Company.
In September 2009, Cresta terminated its agreement to serve as the investment banker for the Company, waiving and forfeiting any right to the $1 million cash advance for future fees. The Company has made demand for the $1 million, but Cresta has failed to return any part of the cash advance to the Company.
The Company alleges that Cresta breached its fiduciary duty to the Company by assisting Getfugu in obtaining money from the Company and failing to conduct any reasonable due diligence on Getfugu or its officers and personnel and failing to provide the Company with any reasonable due diligence upon which to make its investment decision. The Company is seeking compensatory, punitive and exemplary damages.
About SpongeTech® Delivery Systems, Inc.
SpongeTech® Delivery Systems is a company which designs, produces, and markets unique lines of reusable cleaning products for Car Care, Child Care, Home Care and Pet Care usages. These sponge-like products utilize SpongeTech®'s proprietary, patent (and patent-pending) technologies and other technologies involving hydrophilic (liquid absorbing) foam, polyurethane matrices or other ingredients. The Company's sponge-like products are pre-loaded with specially formulated ingredients such as soap, conditioner and/or wax that are released when the sponge is soaked and applied to a surface with minimal pressure. SpongeTech® is currently exploring additional applications for its technology in the health, beauty, and medical markets. SpongeTech® Delivery Systems, Inc. intends to globally brand its products as The Smarter Sponge™ .
Safe Harbor Statement
Under The Private Securities Litigation Reform Act of 1995: The statements in this press release that relate to the Company's expectations with regard to the future impact on the Company's results from new products in development are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The results anticipated by any or all of these forward-looking statements may not occur. Additional risks and uncertainties are set forth in the Company's Annual Report on Form 10-KSB for the fiscal year ended May 31, 2008 and the Company's Quarterly Report on Form 10-Q for the third fiscal quarter ended February 28, 2009. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events or changes in the Company's plans or expectations.
Contact:
SpongeTech® Delivery Systems, Inc.
Investor Relations
info@spongetech.com
1-877-776-6438
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