Spongetech Delivery Systems Inc (fka SPNGQ)

[hoggey1]

Actually LR, you seem to be the one "party to some confusion" here with regards to the A&M report. Either you don't quite get it or you're "overly zealous" to prove your point - whatever that may be.

You've reached a conclusion and seem desperately determined that everyone else on this board is to share your views, regardless how weak your argument. But, I've offered alternatives based on known and verifiable facts. But that's not "kosher" with you because you are completely unwilling to consider the alternatives.

And you're not only unwilling to consider the alternative view, you're prone to exaggerating your own. For example, you've exaggerated SPNG's potential liabilities by claiming a potential award that may come as a result of ongoing litigation represents the same form of liability as a senior secured debenture. Of course that couldn't be further from the truth since no judgement has been rendered or any awards made against SPNG. And as you no doubt know or at least should, lawsuits can take years to resolve while their outcome is at best uncertain. Therefore, potential liabilities from lawsuits are not the same as a secured or even unsecured debenture.

BTW, those are important distinctions for the judge to make in rendering a decision to freeze or not freeze the assets or whether or not to appoint a receiver. And I've made those distinctions, partly to counter your exaggerated claims against the company.

Whatever your reason for the exaggeration or the tunnel vision, one thing appears certain, Spongetech is a real business, generating real sales and employing real people. Let's not get bogged down in the DOL or FASB semantics of whether or not those 57 sales representatives are considered "employees" because the report makes it clear they work for either Spongetech or Dicon, selling "either Spongetech products or Dicon products or both." And the report states these reps sell these products over an area that covers 5 geographical regions for the companies.

quote:

"Spongetech and Dicon together employ 23 individuals. In addition, 57 sales representatives work for the company on commissions. Sales representatives sell either spongetech products or Dicon products or both. Sales teams cover 5 geographical regions: northeast, southeast, midwest, westcoast and Canada."

http://viewer.zoho.com/docs/pmhcL

If that's "parsing" the above "statement" of fact, then so be it, but the report makes a very clear distinction that these reps are employed by the companies to sell Spongetech, Dicon or both's products. The report states clearly these 57 reps "work for the company." And whether or not these reps have other jobs or not, seems irrelevant since A&M claims they do in fact work for the company.

And it's appropriate for A&M to distinguish between a salaried "employee" and a "representative on commissions." Obviously a salaried employee represents a fixed cost or expense to the company; whereas a commissioned worker does not represent a fixed expense. From an accounting perspective, salaried workers are accounted for differently than those working on commissions. That's the likely reason why A&M made the distinction as such, since one represents fixed costs and the other a variable expense.

Furthermore, the purpose of Alvarez & Marsal's report is to counter the SEC's motion for a freeze of assets. IMO, the A&M report is represents an outstanding counter to the Feds motion for a freeze of assets on the basis that the Feds have claimed that Spongetech is a complete fraud. In fact, the Feds have alleged that Spongetech is a complete fraud of a business, where 99% of all the business (sales) claimed by M&M are phony. As evidence, they claim Speranza created the phony websites, phony virtual office space and forwarded phones, faxes and emails to hide the fact the company had no real business. The A&M report represents a very strong counter claim proving in fact that at least $7.7 million worth of sales is NOT PHONY.

And, the sales "selected" by A&M for review appear to be from domestic sales only. It's quite possible the company has legitimate business from foreign sales that were not considered for A&M's forensic audit.

Personally I'm not interested in the past actions of M&M. Since it's obvious SPNG and Dicon produce real products, and are capable of generating millions in sales, and providing real jobs for real people, I believe SPNG should be removed from the list of defendants. In fact, there's no sound reason to destroy the company and therefore punish either those "23 employees," working for SPNG/Dicon, or the "57 representatives," working for SPNG/Dicon. If the company comes out a net loser in those lawsuits, it will have a better chance paying off any judgment(s) by remaining a viable Going Concern. If it is shut down and sold off in pieces, the parts will bring far, far less than what can be produced by the whole enterprise.

As an investor with a very low CB in the shares, I care about the validity and viability of the underlying business. IMO, the A&M report adequately proves this a valid enterprise. Now it remains to be seen whether or not the company can survive continue to make and sell products, and therefore remain a viable Going Concern. But that's the kind of risks inherent in most penny stocks.