SpongeTech® Delivery Systems, Inc. <http://cts.businesswire.com/ct/CT?id=sma...>; ("SpongeTech") /"*The Smarter Sponge*^(TM)*"*/, (OTC: SPNG), provides shareholders an update regarding its dispute with GetFugu, Inc. (OTCBB: GFGU). Both companies have come to terms on the original investment of $1,750,000 that was advanced by SpongeTech and its affiliates back in September. Management of both SpongeTech and GetFugu feel it is in the best interest of both parties to move forward in good faith for the mutual benefit of the companies and their respective shareholders. The aforementioned lawsuit will be dismissed and SpongeTech will proceed with their investment, which will immediately be converted into shares of GetFugu common stock.
Means, SPNG though his financial arm invested a total of approx. $ 6.3 Mio which had nothing to do with the product side, means pre-financing of orders. These 2 amounts alone explain why all those transactions of shares between SPNG-RME and Third-parties during a certain period took place. RME gave those shares to various Thirdparties and they had to pay for it through the proceeds of their sales. Now we can ask why RME did not sell directly. RME is an affiliate and therefore had to take into consideration the 1% volume rule of 144. By selling the shares to various third parties -and even if those third parties would have been related to M and M - they splitted of the shares-total in fractions and therefore could sell the shares in the market without actually violate the RegS 144 1 % volume rule. Of course, the SEC could take here another opinion, however, this would then be settled with paying a penaltySPNG gives shares to RME, RME on the other hand makes sure, that the financing for Dicon can be made and therefore directly or indirectly uses those shares to finance the deal. Of importance is, that SPNG then became the 100% owner of Dicon with the proceeds of the shares sale. That some gain must have been left for RME and others is rather logic, otherwise where would have been their motive, to choose such an alternative of financing. They could have chosen another model absolutely legal and even more beneficiary as the way they have opted for. The same has to be said with the payment to GFGU. As this was meant as a stock-dividend to the SPNG shareholders.
Just these 2 examples will explain, the huge need for liquidity and not as the negative opinioners always bring to the table for their own benefit. The rest of the transaction-flow (shares flow) of course is in connection with pre-financing of production etc. but such results as we all do know, will become only visible, once for the ordered goods the company will get the money back. This can take between 30 and 90 days. In the case of Wal-mart it takes the formula: Being paid when the goods are sold. So, this thought alone will and should explain the divergence between what they have said and what will become visible at a certain point. Issuing a statement, that they have received an order of let,s say 20 Mio is absolute legal, but it doesn,t mean at the end of the day, that they as well will get those money in a short future. Though economic conditions dictate liberal conditions between the seller and the buyer. The latter if and when paid: is an assumption as with every other company. So it would be wise, before bashing on SPNG with ref. to the Revenue Chapter, to compare all this with other companies.
At the end what will be of importance: That the company never exceeded the authorized shares-structure, the way it was filed in Delaware. If this is the case, they won,t have any problems. However, as the company issued statements with reference to the outstanding - why I still don,t understand, because this is not an obligo and usually, investors have to wait until the quarterly filings come out - I assume it had to do with the fact, that the Transfer-Agent was not allowed to be informative to the outside. Now, a chart – flow if presented by the company would show, if the company always was in harmony with what they said with ref. to the outstanding and the authorized. This then could/would prove the buy-in orders of their shares, means when RME bought those shares back as they were obliged to do, based on the agreements they had with SPNG. If they can prove that, no problem, the only blame they would get the from the SEC, why did you not order the physical delivery of the certificates. Here as well, this could constitute in paying a penalty. posted from another board
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