Replies to post #28040 on Spongetech Delivery Systems, Inc. (fka SPNGQ)

[Dem Franchise Boyz]

Posted by: wadirum1 Date: Sunday, December 07, 2008 8:03:08 AM
In reply to: bigtuna177 who wrote msg# 24840 Post # of 28041

Bigtuna,

Since you are looking at the fundamentals, think about some of these other key points:

1) There was concern in Sept because the accounts receivables ballooned on the 10K. Well, most of the revenue was recorded in the last quarter of fiscal 2008. In Q1 of 2009, they not only collected "every penny" of the A/R on the books from end of 2008 (according to Moskowitz), but then they REDUCED the ratio of A/R to revenues in the explosive Q1 2009. Utterly amazing performance on this key metric for a start-up.

2) Some may worry about RME dilution. However, note that SPNG holds OPTIONS to buy back the RME shares at cost. Thus, if this option is exercised, then 660M of the 800M or maybe 900M shares are essentially an interest free loan. (See recent PRs and the July 8k)

3) The company is guiding for 40M in 2009, with the SAME NET MARGINS as in 2008 (i.e., about 20 percent). But this guidance is solely based on orders shipped or signed orders as of a date prior to the Viacom/NickJr announcement -- and that is explicitly NOT factored into projections. (See PRs and the radio spots)

4) IF the company does 50M in 2009 at 20 percent margins, and if the share count is really 200M, then we are looking at EPS of 5 cents/share (twice the current share price). They are saying that 2010 will "dwarf" 2009... (quoted from PR)

5) They claim to be in talks with a major kitchen/bath company. And they claim to be in talks with 2 pharmaceutical companies. Any of these 3 ventures is apparently going to blow away the kid sponges, which are themselves supposed to blow away the car sponges. And don't rule out rumors in prior IHUB posts that they will be selling the pet sponges in PETCO.

6) Why is this gem selling at 2.5 cents? There are several reasons. First, it is not clear that they can get sufficient funding through RME (we have not seen RME's books) and it is not clear the RME shares will be bought back. Some have alleged or hypothesized that RME is dumping tons of shares into the market despite management's statements and filings suggesting this is incorrect. Second, and probably more importantly, the stock is very heavily shorted.

7) The shorting may prove to be an unbelievable gift. It enabled me to buy millions of shares at an average of 2.4 cents. Plus, it has enabled some MUCH larger positions to form. The BMAS buyer probably has 75M shares, and the Furth group is probably over 100M. The shorts may very well have been CORNERED. Indeed, they may have been cornered TWICE, so that they will need to negotiate with both groups before we find a maximum price.

All we need is a catalyst in the form of a major strategic move of some sort to light the fuse. With this board as GIDDY as it is, I suspect we might be almost there, but I frankly do not mind waiting another year or two if the return is as good as I think it will be. Maybe I got in too soon and maybe I will have to wait a lot longer, but I really think there is no point chasing other stocks when this looks so good. I have therefore put my entire trading portfolio and a good chunk of 2 IRAs into this one stock and will hold it until something very substantial makes me change my mind.

All just my honest opinion.

Wadi Rum

[snakecorleone]

yeah, he stated it over yahoo. so its published on the internet.

[wadirum1]

Crashman,

You asked how Snake could claim that Doug Furth has been contacted by the naked short. This is INDEED a key issue, because you claim there is no evidence of a NSS. So, it would be fairly damaging to your claim if in fact a NSS contacted Furth.

Alfie3155 addressed this in a series of Posts on Yahoo on December 8. You can find it by doing a message search on his board name. (Incidentally, several people have verified that Alfie is in fact Douglas Furth of the Signature Fund. I myself emailed Furth at the Signature Fund, asking him to (a) verify that he posts as Alfie and (b) reply to my email using his [e-mail] address. He did so.)

So what are the key Alfie/Furth quotations in this message thread? (All words in quotation marks are copied verbatim from his messages.)

1. "Yes I have been approached by at least one group who is short inquiring as to my intenti0ons and interest level for selling my shares. I advised them that I remained a buyer and not a seller. They further queried me as to potential sell targets and I did not give them one, save to say it would be a heck of a lot higher than the stock is trading now." (near the bottom)

2. Regarding a question of whether there is a viable plan to initiate a short squeeze he replied: "Yes, I do believe that the company has a viable expectation of success in this regard. I am betting a lot of my personal time and money on this." (from his first post in the thread)

3. Regarding the timing of this short squeeze, he replied: "There is a plan in place but it necessitates the coordination of several people, lawyers, shareholders, etc in order to fully unfold and that is why it has been so long in the undertaking.

Sooner or later it is going to reveal itself and I am asked the question of timing every day more times than I care to recount. But the answer is always the same, that being it will happen when everyone is coordinated and ready to pull the trigger.

I am working hard to try and make this happen but so far the pieces and parts are still not all lined up.

It could be any day now or it could take another few weeks given the weird time of year." (from his first post in the thread)

That was posted on December 8.

These are not "IMHO" statements by Furth. These are statements of fact. He is the largest shareholder we know of and has filed a 13G on his Signature Fund holdings. As the principal officer of that fund, he simply cannot be posting a bunch of deliberate lies on public message board. He cannot be making up the existance of a discussion with a short that did not take place. He cannot say that there is a plan in place if there was never a NSS to begin with.

Now, I think, the burden of proof shifts to where YOU need to prove that Furth is committing securities fraud by disseminating false material statements in a public forum.

Wadi Rum

[snakecorleone]

Here's the repost from Alfie/Doug...in regards to spng discussion. Linke is provided below what he stated... I will believe Doug, he and his group have delivered two Form 13's for over 80million shares when others bashed him or didn't believe his groups position... I report, you decide....

Dear Defrun,

Yes I have been approached by at least one group who is short inquiring as to my intenti0ons and interest level for selling my shares.

I advised them that I remained a buyer and not a seller.

They further queried me as to potential sell targets and I did not give them one, save to say it would be a heck of a lot higher than the stock is trading now.


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