Spongetech Delivery Systems Inc (fka SPNGQ)

[scion]

c. Lack Of Receivables Financing.

Prior to filing bankruptcy, Spongetech had a factoring relationship. The Trustee has been in communication with the factor and they have advised that they ceased factoring invoices for Spongetech on June 30. They further advise that they will not provide any additional financing to Spongetech. They finally advise that they are in the process of winding down their account with Spongetech and anticipate that after they completed collection of outstanding invoices they will have somewhere between $14,000 (Fourteen Thousand Dollars) and $20,000 (Twenty Thousand Dollars) in reserves to return to Spongetech. The Trustee will insure that a proper accounting of any monies which might be due and owing to the Debtor is provided by the Factor; however, since many of Spongetech’s customers, particularly large retailers, insist upon 30 day or greater terms, there may be a substantial delay before Spongetech receives payment from the Factor.



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