Replies to post #24970 on Spongetech Delivery Systems, Inc. (fka SPNGQ)

[Carpedeim357]

Tuna it is making over 20% on sales that is big reason why they have big future. Very profitable business model. Why we see so many products for sale on tv ads and infomercials. Most industries makes 5 to 15%. Over 20% is high.

[reaper21]

You can't possibly predict what their marketing cost would be, and cannot say that their profit margin will remain the same.

The 40 millions is made up primarily with reorder from foreign distributors. If somehow, SPNG can expand its market in the U.S., the initial cost for marketing will be very high (of course it will bring back revenue) to market the products. And without a credit line, they will have to issue more shares.

For example, if SPNG can get its foot in Walmart USA, and get widely distributed, the mgmt will have to devote initially a great deal on packaging and marketing for Walmart, since Walmart USA has stringent requirement of packaging for its suppliers to simplify Walmart's logistics and supply chain. The upside is that SPNG will bring back huge revenue and profit, but the downside is the short term cash flow will decrease. Without a loan of some sort, their only way is to turn to RME with that kind of loan again, and we all know how annoying that would be for all shareholders.

It is very important for SPNG to get a real credit line from banks to expand. They may or may not already have a deal with some bank already, marketing cost will be the major cost for new products like spng.