New York - SpongeTech Delivery Systems, a New-York-based manufacturer of polyurethane sponges, has reacted following recent press reports questioning the validity of six of its major customers as reported in the company's third quarter 2009 (Q3) financial results.
SpongeTech said in a 25 Sep company statement that "a number of documents cited in press reports about the company are internet forgeries being used by short sellers and stock speculators to undermine the integrity of the company and profit from the adverse publicity."
Press reports suggest that a number SpongeTech customers apparently making up 99.4 percent of the company's sales have been hard to track. However, according to SpongeTech, "The major customers cited in the SpongeTech's financial statements for the fiscal third quarter of 2009 are all current and active customers of the company."
Press reports had also said that SpongeTech would need to restate its financial statements over the last two years as the company's auditor Drakeford and Drakeford is no longer accredited by the Public Company Accounting Oversight Board (PCAOB).
SpongeTech's reply stated: "As a result of our former auditor's difficulties with the PCAOB, our financial statements for the 2008 and 2009 fiscal years are being re-audited, not restated, by our new auditing firm, Robison & Hill & Co. After the submission of the 10-K for fiscal 2009 year, Deliotte & Touche llp will assume responsibility for the audit of SpongeTech's financials beginning with the fiscal 2010 year that began 1 June 2009."
SpongeTech also said recently that its previously announced $4-million investment in GetFugu Inc., a mobile-based web search and e-commerce technology company, has now been rescinded. An aggregate of $1.75 million had been advanced to GetFugu in anticipation of the entry into a definitive investment agreement, SpongeTech said. GetFugu has advised the company that it currently does not have the funds to repay the $1.75 million and that it is seeking alternative financing sources to fund a reimbursement. (RD)