Martinas B.

Spongetech (OTCBB:SPNG) Using Sex to Peddle Pennystocks

by Martinas B. May 17, 2007
Spongetech Delivery Systems, inc. (OTCBB:SPNG) is a tiny company with an 800 square foot office in the Empire State Building that claims to have developed a biodegradable sponge that eliminates the use of a bucket. A very hot video just showed up on youtube featuring a woman washing a car with one of these new Sponges.


YOUTUBE VIDEO FROM SPONGETECH

The company has been making announcements lately that are quite beyond our comprehension. First they announced a television spot that will be viewed by 14 million homes. Then something about being featured in over 900 environmentally friendly magazines. In May, they announcied they received large orders to be shipped later in the year. One order was for $1.5 million and another for $3 million.

What is beyond our comprehension about these announcements is how do they intend to accomplish any of these things when they have no money? According to their latest SEC filing this company has $3,477 (three thousand four hundred seventy seven) dollars in the bank. That doesn't even pay a month's rent in a manhattan office.

They originally had incorporated under the name Romantic Scents, Inc. They have had several name changes and business model changes as well. In their 8 years of operations they have never made so much as a dime in profits, and have accumulated a deficit of approximately 3.4 million dollars.

Yet in spite of their operating inefficiencies management finds it perfectly appropriate to pay themselves salaries that exceed the entire revenues of the company. During their Fiscal year 2005, the company's entire revenue was $1,051 (one thousand fifty one)/ Yet, the three top directors recieved salaries of over $490,000 each.

What is even more odd is that their salaries were in Common Stock that they valued at $0.15. When you receive salary in stock you have a tax liability that you must pay. We estimate the officers will owe $250,000 each yet have not received any actual money as compensation. (I will not be submitting my resume to work as an exec at this company.)

The company has 37 million shares outstanding which puts the total valuation market valuation with the stock at $0.19 about 7.5 million. This valuation is not too high. But given their historical lack of a business, current lack of assets, and lack of taste with their latest video it still looks high to us.

They have not announced any new financings. Quite frankly, we cannot imagine how a company with $297,000 in currently due liabilities and $3,000 in the bank can possibly finance these alleged large orders.

Further, if they did receive orders of the magnitude that they claimed in their recent press releases, that is a material event. An event as such requires a form 8-k to be filed with SEC. As yet the company has not done so.

As much as we enjoyed the video and hot press releases coming out of this company we cannot give any investor who wants to buy this stock at $0.19 our blessing.

spongetech Still Frame of Video (not bad)

References


Comments 34

1. Guest
September 07, 2009, 10:34AM

Quotes Scottrade normally will not let you buy a penny stock on line if they feel it is likely to exposed to "pump and dump." When I first bought SPNG (after much research), I had to call my broker to buy it because Scottrade had them on their list of such stocks. A month later I called Scottrade to purchase more shares and they told me I could now buy it on line and they had removed it from their list of questionable stocks. I seldom will look at stocks like this, but I really think there is very little downside risk at this point compared to the upside potential.

2. Guest
July 28, 2009, 09:18AM

Quotes The author is SPOT ON!!! This security has pump-N-dump written all over it!! Anyone can duplicate this product. IT'S A SPONGE!! Car care companies are already coming out with their own.

3. Guest
July 24, 2009, 02:09PM

Quotes My only concern about the company is the shares outstanding. A billion plus. They have been diluting shares to finance operations. I've read in edgar report that they are buying back shares and cancelling them, which is great for the public float. This is a sign that management see's the potential future advancement of their products. I also read where the pet sponges are out selling the car sponges. Either way you look at it, they have multiple product streams in the pipeline. I only wish I would have caught this one at a penny.

4. Guest
June 22, 2009, 11:21PM

Quotes I think the video is offensive also, just like I think some of the suggestive video ads I see on TV are offensive, and I'm glad this particular video is not on SpongeTech's website. It tells me they know their target audience and that selling sex is not what they are about. The product (specifically the technology) works and has enormous potential if it's in the right hands of people who know how to market the product. This is what investers need to focus on.

5. Guest
June 19, 2009, 12:47AM

Quotes I don't think many of you are reading the latest news about Spngetech. They just recently aquired Cosco as their customer. Just wait until they get Walmart and hospitals and nursing home as customers. I think they have good products. It may not seem like much to you but it is a good product. If you take a little trip down memory lane and remember when liquid soap and bottle water first came out it was not that big at the beginning but look at them now. Bottle water is big business and so is liquid soap.

6. Guest
June 18, 2009, 12:57AM

Quotes Revenues are massive...

Stock is flying...

What were you saying? Your article is laughable now!

7. Guest
June 15, 2009, 07:52AM

Quotes Hit .28 On Friday with Record Volume.............. Buffet wont let his Company's Fail.

The Sponge Tech is Owned by Warren Buffet

8. Guest
June 14, 2009, 09:25AM

Quotes The stock is a winner....the Author of this Blog is totally clueless.
Look at what these people secured in orders plus a patent on the sponge is huge......
I am in for the long haul.

9. Guest
June 09, 2009, 10:16PM

Quotes were trading at .14 now.. I bought 1 million shares at .013 in April and will hope to sell at .20 so you tell me 15 times my $$ didnt make me 6 Figs./

PUNKS!!

10. Guest
June 09, 2009, 12:52PM

Quotes what a ***tard

11. Guest
June 07, 2009, 12:34AM

Quotes People,that think this stock will go down. Pshhh...you probably are extremely ignorant. I'm pretty sure Walmart had to start somewhere, big or small to begin with, anything has great potential.

12. Guest
June 04, 2009, 09:19AM

Quotes C'Mon, you find the ad offensive because you're one of those limp wristed fellows...you know...a little light in the loafers! Give me a break heve you NEVER seen an add in a magazine? a commercial on tv ALL companies use sex to sell their products are you a freakin' idiot?!? Ummm ever heard the advertising phrsae "Sex sells" Man how blatantly stupid are you?!?!?!?!?

13. Guest
June 01, 2009, 09:32PM

Quotes Non-believers.....Spring is here, lets see where this one goes!

14. Guest
May 19, 2009, 03:26PM

Quotes This stock is going to make a lot of money for me. It is in the black and it is growing fast. They've run out of space in their current office and are moving to a bigger one. Bring it on.

15. Guest
May 18, 2009, 05:50PM

Quotes They own the patent, an extremely valuable peice of hardware. Experts are targeting this stock at 4-6.00. It looks like we all win except for the naysayers.

16. Guest
April 15, 2009, 10:18AM

Quotes SpongeTech(R) Delivery Systems, Inc. America's Cleaning Company(TM), (OTC Bulletin Board: SPNG), today reported record sales of over $13,000,000 for the third quarter ending February 28, 2009. Revenues for the period increased by $11,859,353 over revenues reported for the same quarter last year. Net income for the third quarter of 2009 was over $2,250,000, compared to a net loss of $188,482 for the comparative 2008 quarter; reflecting exponential growth over the same period last year.

For the nine-month period ended February 28, 2009, the company reported revenues of about $31,000,000 compared to $1,560,000 for the comparative period of 2008. Net income for the nine-month period ended February 28, 2009, was over $ 6,250,000 compared to a net loss of $197,150 for the comparative period of 2008.

17. Guest
April 08, 2009, 10:26AM

Quotes I have invested in Many Many company's .. I will invest my $$ with SPNG.

Buy today I see Big sales and growth ahead for spring...

18. Guest
April 05, 2009, 05:23PM

Quotes THIS COMPANY MIGHT HAVE A LOCK WITH WALMART IN THE AUTO AREA>. THAT MEANS HUGE SALES & VOLUME............
SPNG IS GOING UP. EASY $$ MAKER
SIT BACK AND TIME TO MAKE SOME $$ IN THE NEXT 60 DAYS

19. Guest
April 05, 2009, 05:19PM

Quotes Buy this stock and Buy it Heavy.. at .025 its a steal and I can see it with the Spring Sales ahead going to .15 before Mid May...
They are showing alot of Movement and Growth..

20. Guest
April 05, 2009, 05:17PM

Quotes I made 300% trading this stock in 3 days... You are all Chumps I just sold friday at .0297 and Ordered 2 cases of Spongetech and a New GS 430...
Fastest $80k I ever Made.

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