Spongetech Delivery Systems Inc (fka SPNGQ)

[scion]

REPORT

1. Cash Situation.

Spongetech currently has no available cash to fund its business operations. One subsidiary of Spongetech has less than $200 (Two Hundred Dollars) in a checking account. The Trustee has been in communication with the Chapter 11 Bankruptcy Trustee for Dicon Technologies LLC. (“Dicon”), who advises that Dicon is also in a liquidity crisis. Dicon is a wholly owned subsidiary of Spongetech for which an order for relief under Chapter 11 of the Bankruptcy Code was entered prior to the date on which Spongetech filed its Chapter 11 Petition. Obviously, there are substantial questions about the sources and uses of cash prior to the Bankruptcy; however, there is simply no readily available cash to fund business operations at this time.

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