Spongetech Delivery Systems Inc (fka SPNGQ)

[scion]

2. Outstanding Accounts Receivable.

Since the Trustee’s appointment there have been no collections of accounts receivable. The Trustee is in the process of attempting to verify and collect these receivables. Debtor has provided Trustee with a schedule listing approximately $1.5 million in receivables. However, of this amount approximately $1.16 million is a receivable from Dicon, which is itself in bankruptcy, and Debtor has advised the Trustee that approximately $20,000 has been factored and approximately $27,000 is subject to set-off by the purchasers. The Debtor has advised the Trustee of one large receivable of approximately $130,000 (One Hundred Thirty Thousand Dollars) owed by a large retailer. The Trustee has attempted to verify and collect this receivable however the retailer has a “buyers hold” and has referred to this matter to its internal legal department. In addition, Spongetech holds a promissory note from a former insider of Spongetech in the face amount of $6 Million. The Trustee is attempting to collect amounts due under this note but cannot verify, as of the date of this report, whether the note is collectible or not.

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