Kyle, et al.,
A little food for thought...
(July 6)
'SPNG ... is pleased to announce that the company has expanded its operation into Europe, forming SpongeTech(R) Europe. This expansion is in response to the growing demand for SpongeTech(R)'s products in the European marketplace. The company will open a new office in Switzerland. They will also be opening the Asian Market - updates will be coming soon.
Management has determined that having a physical presence in Europe will serve to expedite sales in this market and provide stronger service to our European customers. The new offices will provide the European, Middle Eastern and African markets with SpongeTech(R)'s unique and innovative reusable cleaning product line that currently includes the Car Care, Child Care, Home Care and Pet Care sponges.
"We have existing strong relationships with key European retailers," said SpongeTech(R)'s COO, Steven Moskowitz. "By committing to a European presence, we are expanding our footprint and leveraging our relationships, resources and experience to create further success for SpongeTech(R)'s products globally. There is a growing demand for our unique and innovative product line and we believe that demand will continue to spread through the markets overseas. Our sponge is not just a sponge, but The Smarter Sponge(TM)."'
As for the rest of the story?
A matter of a little creative accounting. Management getting a tad too far ahead of themselves. Too aggressive relative to the issuance of securities to RM Enterprises. To maintaining the parent company as entirely debt free. Equally overly aggressive relative to the manner in which revenues have been recognized. Additionally, the way in which current assets have been accounted for. Management being desirous of both attracting a fitting buyout offer and precipitating a near-term move upstairs. Securing a senior listing.
None of the relevant task force's determinations amounting to any kind of a rarity relative to the industry big picture. With no direct mention of disgorgement for obvious reasons. That the whole of it is not a matter of ill-gotten gain on a personal level. A matter, instead, of run-of-the-mill aggressive accounting practices. Far from unique goings-on in general. Additionally, the issuance of securities in the absence of having effected the called-for registration statement. The whole idea being, after all, to issue securities to RM Enterprises and thereafter repurchasing same at the original price(s) paid.
The upshot being that a material restatement of the fiscal '08 and '09 numbers has been effected. The relevant fiscal '10 Quarterly numbers additionally adjusted. The situation set right with management to be enjoined from entertaining similar securities laws violations in the future. Permanent injunctions in place. Standard operating procedure. With possible pecuniary measures in play additionally. Payment of minimal damages or a fine(s).
The restated numbers to be soon with us. Numbers to, very much, smile about. Just not quite as aggressive as earlier presented. Management having been reigned in. No longer overly aggressive in bringing tangible value to the company's shareholder base.
The whole of it all to the good. Getting the job done the right way from here on out.
Very soon back to being OTCBB quoted. The PR and filing, etc. floodgates opened thereafter. The big picture fully emerged.
Completion of due diligence.
Just and exactly why Pike's involvement. Why the massive vested financial interest.
The future wide open.
With no looking back.
Holding tight.
AI
