Thank you.
And a repost...
Karmasaur,
Over the years that I've been actively involved in the flighty world of equities I've read more false claims of rampant insider abuses than I care to remember.
Wholly misguided individuals running off at the mouth. Spouting utter nonsense.
The plain and simple fact being that, statistically, the number of startup/development stage public companies launched as deliberate scams is extremely small. Far and away we're talking about management teams delivering an earnest, concerted effort to bring value to shareholders. It being simply the case that we're talking about a very tough row to hoe. Taking a startup/development stage outfit to fully operating status. The reason behind the OTC typical.
Why, so often, a matter of massive shareholders' deficit. An asset base coming in concert with massive debt load and even more massive dilution. Empty revenues. Negative cash flows. Unrelenting cash burn. Period-over-period net losses. Massive loss carryovers often well in advance of $25m. Multi-year histories with no sign of worthwhile operations having been achieved.
A tough row to hoe. Precious little of it deliberately orchestrated. The whole idea behind a public start being the routine application of equity. The raising of needed capital both operating and growth/expansion. The OTC being rife with parasites only too willing to fork over boatloads of needed capital. But capital based on associated rights of convertibility. Freely tradable common stock issuances. Parasites intent upon helping no one but themselves. Toxic financings routine.
Right here our knowing well that, at the time of the operational refocusing on product development, the successful securing of a bank loan on favorable terms simply wasn't doable. Company fundamentals just weren't there. Our being fortunate enough to have RM Enterprises to lean on. No being forced to go the toxic route in achieving all that's been achieved to date. Both fundamentally and operationally.
While as for those statistically few outfits set up as deliberate scams? Insiders being in it for themselves? Fiduciary duties be damned!?
Well, one of the most prolific means of routine abuse was perpetrated via Form S-8 registrations. The setting up of a lucrative feedback loop between friends and relatives of insiders -- individuals positioned as 'consultants' and employees and such -- and the inside. Securities issued and liquidated in the open market. The majority of the resultant proceeds making their way back inside.
None of which is in evidence right here. At no time.
Noting that such abuses have been largely stemmed at this juncture courtesy of the adoption of certain new rules/regs. and amendments otherwise by the SEC.
The point being that SPNG management is perpetrating no form of deliberate abuse(s) along the lines of personal enrichment, of ill-gotten gain, goings-on. No deliberate scamming of those proverbial unwashed masses. Any such amounting to sheer insanity as talked about given the big picture. Ever-mounting raw numbers picture. Etc. Our Dicon subsidiary inclusive.
What we do have is the earlier 'forged' opinion letters bit of business. A situation, at the time, that stood as not only debatable in and of itself but, even if factual, it not necessarily being the case that the underlying securities issuance(s) was/were of a rules/regs. violative nature. Not necessarily non-exempt from registration provisions.
And then arriving the Wells notices. Directed as they were. Alleging as they have. Suggestive of violative findings. And breaking it all down we, as faithful longs, seek to uncover the facts. Yours truly, for one, having looked at the situation from every conceivable angle. Seeking answers.
The most logical of same being as outlined. The references per the '33 Act. Sections 5(a), 5(c) and 17(a). Which together, in essence, relate to two primary considerations. The first of such being the exemption(s) from registration provisions consideration. The second being the direction(s) of distribution of the underlying securities.
Two primary considerations...
1_
Securities that are freely tradable in the open market i.e., no restrictive legend(s) attached.
2_
Direction(s) of issuance(s) of those securities i.e., distribution.
The involved task force alleging that there was/were no legitimate exemption(s) from registration provisions. With, again, the relevant filing hosting no mention of the targeted parties being in disagreement to any degree with the therein recommendation.
The bottom line being that the talked about 'forged' opinion letters played a role and that settled enforcement will amount to the typical of permanently enjoining the involved from further violations of a similar nature combined with penalties of a monetary nature.
And were it a matter of personal enrichment -- of ill-gotten gain, of the egregiously fraudulent, of the criminal, of a deliberately orchestrated scam, so on -- there would be a recommendation accordingly. Inclusive of a call for the launching of a lawsuit(s). So on.
And from the relevant filing we have...
'SpongeTech does not anticipate any material interruption in its business operations by virtue of the Wells notices or any action(s) that may be brought by the Commission.'
And because...
1_
We're talking management and not the issuing company itself.
2_
We're talking minor/run-of-the-mill violative behaviors.
Just and exactly how the allegations and resultant recommendation pan out when all is said and done we'll find out. And, again, directly from the SEC's Division of Enforcement.
Or not.
Depending.
We shall see.
Stephen…
You're welcome.
While bearing in mind that the matter of the opening of the info./detail floodgates isn't all a voluntary consideration. There being also a matter of regulatory involvement.
A tad entwined.
With a horde of naysayers entirely at liberty to post as they see fit. Whatever the associated 'reasoning'. With none of it mattering.
The undeniable being in the offing.
Massive gross undervaluation circumstance made glaringly plain. For all to see. Latest share structure circumstance factored in.
Nowhere to go but up.
The reality.
And massively so!
Patience being a virtue.
Just ask Daniel Pike.
Taking care.
AI
