Page 1

BEACON EQUITY RESEARCH Analyst: Victor Sula, PhD Initial Report August 13th, 2008 SPNG daily

08/12/08 0.6

0.5

0.4

SpongeTech® Delivery Systems Inc. 43 West 33rd Street (between 5th-6th Avenue) Suite 600, New York, NY 10001

0.2 volume

30 20 10

Millions

Tel: 877-776-6438 Fax: 212-695-9342 Investor Inquiries: Bill Young, 1-877-776-6438 wayoung55@aol.com or info@spongetech.com www.spongetech.com

0.3

0

Jun

Jul

Aug

Market Data Market Data

28-Jul-08

SPNG Symbol Revenue, $ Mn OTC BB Exchange EPS, $ $0.04 Current Price $0.19 Price Target Gross margin Speculative Buy Rating Net Margin 409.9M Outstanding Shares $16.4M Market Cap P/E 6,747,430 Average 3M Volume P/S

2008E

FY 2009E 2010E

0.06 (0.020)

5.50 0.005

28.22 0.016

28.22 0.016

29.4% -1483%

84.7% 18%

83.2% 24%

83.2% 24%

n/m 297.58

8.69 2.98

2.50 0.58

2.50 0.58

2007E

FY

Company Introduction SpongeTech® Delivery Systems Inc. (OTCBB: SPNG) designs, produces, markets and distributes cleaning products for vehicular use. The Company has a patented technology based on sponges that contain hydrophilic (liquid absorbing) foam polyurethane matrices. SPNG’s sponges are specially configured with an outer contact layer and an inner matrix, which is loaded with custom formulated soaps and waxes that are released when the sponge is applied to a surface. At present, the Company’s product line focuses on vehicular cleaning uses. However, SPNG is applying its patented technology to the development of sponges for additional applications, including sponges with anti-bacterial, bath and kitchen soaps for household uses, as well as a children’s bath foam sponge.

Please carefully read the risks and disclaimer section at the end of this report.


Analyst: Victor Sula, PhD Initial Report August 13th, 2008

During FY 2008, SPNG reported robust growth with revenues approaching $5.5 million. The sales gain is attributable to an expanded marketing campaign, including sales from the Web site. Going forward, the Company continues to experience strong demand in the United States and abroad, and is entering FY 2009 with order backlog in a $27 million range.

Investment Highlights A business model capitalizing on innovative product offering SPNG manufactures and distributes specially configured sponges containing an outer contact layer and an inner matrix, which is loaded with formulated soaps or soap and wax. When the sponge is applied to a surface with minimal pressure, the soap is applied to the surface. When the sponge is not in use, the hydrophilic matrix contains the soap and prevents leeching. Product characteristics drive rapid adoption SPNG’s technology offers significant cost savings to consumers since the wash and wax are built into the sponge; the consumer doesn’t need to purchase these products separately. In addition, the Company’s sponges are biodegradable, gentle enough for all surfaces, yet tough enough to remove stubborn dirt. SPNG’s automotive/vehicle sponge was named one of the seven best new products at the Automotive Aftermarket Product Expo in Las Vegas this year. Robust revenue growth evidences strong product demand During FY 2008, SPNG reported robust sales growth with revenue approaching $5.5 million, up from $0.06 million in FY 2007. An expanded marketing campaign, development of sales from the Web site and extended distribution channels fueled FY 2008 sales growth. The Company continues to report strong interest from U.S. and international buyers and enters FY 2009 with confirmed order backlog in a $27 million range. Product line extension broaden revenue potential The Company’s primary product line has been designed for automotive/ vehicle applications, including boats, airplanes, ATVs, jet skis and motorcycles. SPNG also markets Uncle Norman’s™ Pet Sponge, designed for use with dogs, cats and other pets. Additional applications are in development. These include anti-bacterial, kitchen and bath cleaners and a unique foaming bath sponge for children. Effective marketing campaign accelerates growth pace During FY 2008, SPNG significantly expanded its sales and marketing, began airing a TV commercial for its auto wash & wax system, and produced a new commercial for the Pet Sponge Care Kit. The commercials are expected to run through February 2010 in all 50 U.S. states. SPNG’s Please carefully read the risks and disclaimer section at the end of this report.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

2


Analyst: Victor Sula, PhD Initial Report August 13th, 2008

commercials will air on LOGO, Inspiration, Hallmark Movie Channel, Discovery Science, NBATV, ESPN University, CBS College Sports, Sports New England, Sports Mid-Atlantic, Sports South, Fox Sports Pittsburgh, Fox Sports Southwest, and other cable and satellite TV channels. The Company has also signed advertising agreements with several magazines and retailer catalogs, including Eastwood Co Automotive, JC Whitney, Mid-America Motorworks, Publisher’s Clearinghouse, Quadratec Essentials for Jeep, Speedgear, Doubleday Military Book Club, Handyman Club of America, Carol Wright, Heartland America, Overstock.com, Reiman Country Store, Seventh Avenue, Fingerhut and Cabela’s Catalog. This campaign complements SPNG’s ongoing radio and TV advertising on WFAN-AM Radio, SportsNet New York, BusinessTalkRadio and LifestyleTalkRadio. Other promotional agreements include sponsorship by the New York Yankees and New York Mets and promotions on QVC’s “Keep It Clean” broadcast and on The Price is Right Game Show Prime Time Specials. Large purchase orders from major U.S. and Latin America retailers The Company is in discussions with several major retailers who are evaluating and test marketing its products. SPNG is also negotiating with a major supplier of brand name household cleaning products. The Company has secured several orders, which together exceed $11 million, from well-known chain stores. SPNG received initial orders totaling $4.95 million from Winn Dixie, Ollie’s, and Price Chopper, as well as Wal-Mart Mexico and Wal-Mart South America. The second order from Wal-Mart South America totaled $2.25 million and is scheduled for December 2008 delivery. A third order totaled $4.16 million and will ship to South America in January 2009.

Company Business Strategy Background SPNG designs, produces, markets and distributes cleaning products. The Company owns a patented technology based on sponges containing hydrophilic, which are liquid absorbing, foam polyurethane matrices. These products can be pre-loaded with detergents and waxes, which are absorbed in the core of the sponge, then gradually released during use. SPNG also began marketing products based on hydrophilic sponge technology for bath, pet and home use in 2008. Other opportunities for broadening SPNG’s product lines and distribution channels are being explored. The Company plans to operate through five business segments: 1) Car Care Products 2) Pet Care Products 3) Child Care Products 4) Home Care Products Please carefully read the risks and disclaimer section at the end of this report.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

3


Analyst: Victor Sula, PhD Initial Report August 13th, 2008

5) Pharma and Beauty Products Its products are produced in the United States by independent subcontractors using SPNG’s patented technology and brand names. The Company believes these sub-contractors have adequate manufacturing capacity to meet anticipated future demand. Products The Company markets specially configured sponges containing an outer contact layer and an inner matrix. SPNG’s manufacturer, H.H. Brown Shoe Technologies, loads the inner matrix of the sponge with custom formulated soaps and, in the case of the automotive cleaning and polishing product, soap and wax. When the sponge is applied to a surface with minimal pressure, the soap and wax are released. When the sponge is not in use, the hydrophilic matrix holds the soap and wax in so that these products don’t leech. Automotive/vehicle product line The Company’s primary product line is designed for automotive/vehicle applications. It can be used to clean and polish boats, airplanes, ATVs, jet skis, motorcycles and other vehicles. SPNG’s patented Super Absorbent Polymer technology locks the car soap and wax into the sponge when it is formed. Sufficient cleanser is loaded for eight or more washes and waxes. The technology also holds the soap and wax safely inside the sponge until it is activated by a combination of water and squeezing pressure. As a result, the soap and wax doesn’t leech or dry up between uses. With this technology, SPNG offers significant savings and convenience to consumers since the wash and wax are already built into the sponge. In addition, the Company’s sponge system is biodegradable, gentle enough for all surfaces, yet tough enough to remove most dirt. SPNG’s automotive/vehicle sponge was named one of the seven best products at the recent Automotive Aftermarket Product Expo in Las Vegas. Pets product line The Company also markets Uncle Norman’s™ Pet Sponge for shampooing dogs, cats and other pets. Embedded in the Pet Sponge are 1) shampoo, 2) coat conditioner, 3) odor inhibitor and 4) massage bumps. These items are embedded using hydrophilic foam that inhibits bacterial growth and provides a thorough gentle cleaning. In addition, 42 embedded massage bumps on the pet sponge’s surface increase the effectiveness of the bath and provide a massage effect that helps relax the pet. This earth-friendly product eliminates the need to purchase separate bottles of shampoo, conditioner, and odor neutralizers. Each pet sponge is good for multiple applications. The shampoo and other ingredients are activated when the sponge is squeezed after being soaked in water. Please carefully read the risks and disclaimer section at the end of this report.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

4


Analyst: Victor Sula, PhD Initial Report August 13th, 2008

Other applications The Company is exploring additional applications for its technology including an anti-bacterial, kitchen and bath cleaner, and a unique foaming bath sponge for children. SPNG has developed a children’s bath foam sponge (Puddle Pals), which features a “safe mesh” coating that prevents tearing. The sponge comes in various animal shapes and colors and is infused with a gentle no-tear, non-irritating anti-bacterial soap. The bath foam sponge does not leech soap when it is floating in the bathtub as the inner hydrophilic matrix retains the soap until the sponge is squeezed for use. SPNG may pursue retail distribution for this product through pharmacies and department stores. The Company has also developed prototype household cleaning sponges infused with anti-bacterial bath and kitchen soaps. These products are being testing by a national detergent manufacturer for possible use under its logo and brand. SPNG can use a wide variety of cleansers, including anti-bacterial and abrasive soaps, in its sponges. Products can be tailored to the cleaning needs of different kinds of vehicles. New vehicles or those being prepared for classic car shows, for example, require a gentle cleaner while older cars with faded paint may require a cleanser containing a compounding substance or gentle abrasive. Sales and marketing During FY 2008, SPNG’s quarterly sales rose from $64,000 in the first quarter to $1.3 million in the third quarter. Fourth-quarter sales are estimated to exceed $3.8 million. The strong sales gains reflect an expanded marketing campaign that included sales from the Web site.

Quarterly Revenue, $ thousands 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 -

Q3 FY2007

Q4 FY2007

Q1 FY2008

Q2 FY2008

Q3 FY2008 Q4 FY2008E

Source: SEC Filings

Please carefully read the risks and disclaimer section at the end of this report.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

5


Analyst: Victor Sula, PhD Initial Report August 13th, 2008

In the past, the Company sold its products through a network of representatives including TurtleWax, Lidel Fitzmaurice, Bill Perry & Associates, Creative Marketing and others. During FY 2008, SPNG significantly expanded its sales and marketing effort and began airing TV commercials for the auto wash & wax system. The commercial is currently appearing on a variety of cable and satellite channels and is scheduled to run through February 2010. While SPNG’s advertising began on a modest scale, it has since expanded to all 50 U.S. states. The Company’s commercials will air on LOGO, Inspiration, Hallmark Movie Channel, Discovery Science, NBATV, ESPN University, CBS College Sports, Sports New England, Sports Mid-Atlantic, Sports South, Fox Sports Pittsburgh, Fox Sports Southwest and other cable and satellite channels. SPNG is also producing a new commercial for the Pet Sponge Care Kit. When completed, the commercial will air on a variety of cable and satellite channels through June 2010. During 2008, SPNG entered into numerous arrangements, which help to promote its product offerings: • The Company has committed to donating a percentage of sales from its children’s bath sponge to The Darryl Strawberry Foundation, an organization dedicated to raising global awareness of autism and other developmental disorders. • SPNG signed an agreement with the New York Yankees, giving it the right to display advertising in Yankee Stadium and make certain other commercial arrangements for the 2008 baseball season. The Company held a promotional day at Yankee Stadium on July 28 and distributed key chains to the first 18,000 fans. Before the game, SPNG’s products were advertised through radio and television spots. In addition, the Company’s name was spotlighted in the ten games played prior to the promotional day. The term of the agreement extend through November 1, 2008. • In March, SPNG entered into a one-year consulting agreement with Straw Marketing and Darryl Strawberry. Per the terms of the agreement, Darryl Strawberry will make promotional appearances for the Company, coordinate promotional appearances with the New York Yankees and New York Mets, and introduce the Company to promotional opportunities with Major League Baseball • In April, SPNG’s auto care products, including “Smart Sponge,” with wash and wax imbedded inside, and the Detail Sponge and Chamois, were featured on QVC’s “Keep It Clean” broadcast.

Please carefully read the risks and disclaimer section at the end of this report.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

6


Analyst: Victor Sula, PhD Initial Report August 13th, 2008

• Also in April, the Company signed an agreement with the New York Mets for certain advertising rights during the 2008 baseball season. Per the terms of the agreement, SPNG has the right to post signage in left and right fields during three full innings of each game. The Company had a promotional day on May 13 and distributed T-shirts to the first 12,000 children in attendance. • SPNG was featured on The Price is Right Game Show during May TV Sweeps. The feature included two product placements on games. Airdates are tentatively scheduled for April 30 or May 7, May 14 or May 21. • In May, SPNG began offering coupon inserts for its auto wash & wax system. The Company will be advertising in a variety of magazines and catalogs, including Eastwood Co Automotive, JC Whitney, Mid-America Motorworks, Publisher’s Clearinghouse, Quadratec Essentials for Jeep, Speedgear, Doubleday Military Book Club, Handyman Club of America, Carol Wright, Heartland America, Overstock.com, Reiman Country Store, Seventh Avenue, Fingerhut, and Cabela’s Catalog. This campaign will complement SpongeTech® ‘s ongoing radio and TV advertising on WFAN-AM Radio, SportsNet New York, BusinessTalkRadio and LifestyleTalkRadio. In addition, the Company has updated its corporate Web site to include product information, an updated online ordering section for placing product orders and a new investor relations section with recent Company news, stock quotes and IR contact information. SPNG is also promoting its products at trade shows. During 2008, SPNG attended or plans to attend the Los Angeles Auto Show, the North American International Auto Show, the South Carolina International Auto Show, the West Virginia Auto Show, the Pennsylvania Auto and Boat Show, the Northeast Auto Show, the Motor Trend International Auto Show, the Chicago Auto Show, the Virginia International Auto Show, the New York International Auto Show, the Tampa Bay International Auto Show, the Charlotte International Auto Show and the National Hardware Show.

Please carefully read the risks and disclaimer section at the end of this report.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

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Analyst: Victor Sula, PhD Initial Report August 13th, 2008

Industry Outlook According to Freedonia Group, U.S. demand for industrial and institutional cleaning chemicals is projected to increase 3.8% annually to $10 billion by 2010. Increased spending reflects the growing popularity of multifunctional cleaning chemicals offering sanitizing and other benefits, as well as reduced labor costs for janitorial and other cleaning operations.

Demand for industrial and institutional cleaning chemicals, $ billions 12 10 8.3

8.6

2005

2006

8.9

9.2

2007

2008

9.6

10.0

2009

2010

8 6 4 2

2000

Source: http://www.allbusiness.com/marketing/market-research/3948060-1.html

Commercial applications lead the industrial and institutional cleaning chemical segment, accounting for about 65% of overall demand. While it will remain the largest segment, the commercial segment is expected to report growth slightly below the market average. The same is true for the manufacturing segment. The smaller institutional segment is poised for stronger growth mainly due to growing demand from the health care sector.

Industrial and institutional cleaning industry segments, $ billions

I&I Cleaning Chemical Demand Commercial: Foodservice Other Manufacturing Institutional & Government

2000

2005

7.1 4.7 1.7 3.0 1.6 0.8

8.3 5.4 2.0 3.4 1.8 1.1

2010

2000

2005

10.0 6.4 2.5 3.9 2.1 1.4

100% 66.2% 23.7% 42.5% 22.3% 11.5%

100% 65.4% 24.5% 40.9% 21.5% 13.1%

2010 100% 64.4% 25.1% 39.3% 21.1% 14.5%

Source: http://www.allbusiness.com/marketing/market-research/3948060-1.html Please carefully read the risks and disclaimer section at the end of this report.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

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Analyst: Victor Sula, PhD Initial Report August 13th, 2008

Foodservice is the largest commercial market, and food and beverage processing is by far the largest manufacturing market. Food-related operations are fairly intensive users of cleaning chemicals due to the need to ensure customer safety and comply with numerous regulatory requirements. Unlike many other markets, however, foodservice cleanser choices are limited. Foodservice and food processing customers can’t simply use the most effective product since their cleansers must also be safe for workers and consumers. Freedonia Group anticipates that disinfectants and sanitizers will record the fastest growth among industrial and institutional cleaning chemicals through 2010. Gains will be driven by heightened safety and health concerns regarding the spread of infectious diseases and risks associated with food-borne pathogens and other contaminants. Given Freedonia Group forecasts, we believe SPNG is addressing a huge, growing market. Considering the strong demand for cleaning solutions, we expect SPNG to garner a meaningful share of this growing segment of the cleaning market over the next three to five years.

Financial Review In FY 2008, the Company reported significant revenue growth with sales approaching $1.3 million in the third quarter and estimated to reach $3.8 million in the fourth quarter. SPNG also recorded a $0.9 million increase in operating expenses during the third quarter due to higher general and administrative expenses and advertising expenses totaling $0.7 million. Gross margins were 86.4% and SPNG turned profitable in the third quarter, reporting net income of approximately $0.2 million.

Income statement, $

Sales

Cost of goods sold

Gross profit

General and Administrative expenses Depreciation and amortization expense

Net income Diluted EPS

Gross margin Net margin

Q1 FY 2008

Q2 FY 2008

Q3 FY2008

64,076 13,566 50,510 56,786 3,985 (10,261) (0.000)

278,976 35,110 243,866 230,862 4,336 8,668 0.000

1,281,704 174,022 1,107,682 914,864 4,336 188,482 0.002

78.8% -16.0%

87.4% 3.1%

86.4% 14.7%

Source: SEC Filings, FY ending May 31. Please carefully read the risks and disclaimer section at the end of this report.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

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Analyst: Victor Sula, PhD Initial Report August 13th, 2008

At the end of February 2008, SPNG had cash and equivalents of $19,774 and a working capital surplus of $1.8 million. SPNG’s management anticipates that the Company will need to raise at least $100,000 in external funding to implement its FY 2009 business plan.

Balance sheet, $ 31-May-07 Cash and equivalents Current Assets Property and equipment Intangible assets Total assets Current liabilities Equity, including Accumulated deficit

30-Nov-07

29-Feb-08

387 387 19,979 90,000 110,366

21,064 779,773 17,486 297,443 1,094,702

19,774 2,131,880 14,993 305,443 2,452,816

268,885 (158,519) (3,652,718)

273,280 821,422 (3,654,311)

289,947 2,162,869 (3,455,568)

Source: SEC Filings

From January through June 2008, the Company issued an aggregate of 267 million shares of common stock to RM Enterprises International Inc., a company that is controlled by SPNG’s officers and directors. SPNG received proceeds of $4.9 million from this issuance. The average per share price was $0.0184. As a result of the forgoing transactions, the Company now has approximately 400 million shares of common stock and 10 million shares of Class B stock issued and outstanding.

Outlook and Valuation The Company is negotiating with major retailers who are evaluating its products. SPNG is also involved in discussions with a major supplier of brand name household cleaning products regarding the use of its patented technology to produce various household cleaning products under the supplier’s well-known brand name. SPNG has also announced multi-million dollar orders from well-known chain stores. The Company received nearly $5.0 million in initial orders from Winn Dixie, Ollie’s, Price Chopper, Wal-Mart Mexico and Wal-Mart South America. The second order from Wal-Mart South America totaled $2.25 million and is scheduled for Christmas delivery. A third order for $4.2 million will ship to South America in January 2009.

Please carefully read the risks and disclaimer section at the end of this report.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

10


Analyst: Victor Sula, PhD Initial Report August 13th, 2008

SPNG expects to report fourth-quarter revenues approaching $3.9 million and enters FY 2009 with confirmed order backlog exceeding $27 million. We estimate revenues will reach $5.5 million in FY 2008 and $28.2 million in FY 2009. Going forward, we expect SPNG to maintain 30% average annual longer-term growth as it introduces new products through major U.S. retailers and rapid penetrates key international markets.

EPS forecast, $ FY2008E

FY 2009E

FY 2010E

Sales Cost of goods sold Gross profit General and Administrative expenses Depreciation and amortization expense Total operating expenses

5,499,753 841,821 4,657,931 3,658,436 17,157 3,675,593

28,219,867 4,736,884 23,482,983 16,629,925 18,363 16,648,288

37,908,783 6,692,134 31,216,649 20,601,624 18,958 20,620,582

Net income Diluted EPS

982,339 0.005

6,834,695 0.016

10,596,067 0.023

Source: Analyst estimates

The Company turned profitable in the third quarter of FY 2008 and reported better balance sheet and cash positions. As a result, we don’t anticipate the need for significant external financing, which would result in share dilution. Comparative analysis For valuation purposes, we compared SPNG to manufacturers and distributors of soaps, detergents, waxes, sponges, cloths and other automotive, household and bath products. The peer companies are trading at 17 times forward Price/Earnings multiples and 1.4 times forward Price/Sales multiples. We think SPNG should trade at the lower end of the peer group P/E range due to the greater risk associated with its smaller size and earlier development stage.

Please carefully read the risks and disclaimer section at the end of this report.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

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Analyst: Victor Sula, PhD Initial Report August 13th, 2008

Peer group comparison Company Name 28-Jul-08

Ticker Share Mrkt. Cap P/E symbol Price, $ $ Mn 2008 2009

P/S 2008 2009

Ecolab Inc. Clorox Co. Church & Dwight Co. Inc. Stepan Co. Procter and Gamble Unilever plc Median

ECL CLX CHD SCL PG UL

44.79 54.51 54.95 57.39 64.80 27.90

11070 7510 3,650 542 197,8 37,53

23.82 16.88 19.56 25.17 18.51 12.98 19.03

20.83 14.65 17.23 21.90 16.83 12.13 17.03

1.79 1.43 1.51 n/a 2.40 0.62 1.51

1.67 1.34 1.42 n/a 2.24 0.60 1.42

SpongeTech® Delivery Systems

SPNG

0.04

14.96

7.93

2.28

2.72

0.53

Source: Yahoo Finance, Analyst estimates

Applying our 2009 EPS forecast of $0.016 to the Unilever Pls forward P/E multiple of 12.13x, we derive a $0.19 target price for SPNG’s shares. We are initiating coverage of Spongetech Delivery Systems Inc. with a Speculative Buy rating and a $0.19 price target. However, we strongly advise investors to consider the risk factors cited below before investing.

Investment Risks Inherent business risks SPNG is pursuing an aggressive growth strategy in the cleaning chemicals market. While the Company has provided optimistic sales forecasts, there is no assurance that it will be able to maintain this growth pace or successfully introduce new products. Opportunities will be limited if its expansion is not made on economically favorable terms. Intense competition SPNG competes with many cleaning product companies, which have greater financial resources, brand visibility and distribution channels. The Company’s strong product offerings may make it an attractive acquisition candidate.

Please carefully read the risks and disclaimer section at the end of this report.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

12


Analyst: Victor Sula, PhD Initial Report August 13th, 2008

Dilution to existing shareholders From January of 2008 through June 2008, the Company issued an aggregate of 267 million shares of common stock to RM Enterprises International Inc., a company controlled by SPNG’s officers and directors. In addition, SPNG issued shares to officers. These transactions have increased the fully diluted share count to nearly 400 million common shares and 10 million Class B shares. RM Enterprises International has given SPNG the right, at any time on or prior to February 28, 2010, to repurchase all or any portion of the 267 million shares that RM Enterprises International owns at the original price. However, there is no assurance that this right will be exercised.

Management Michael Metter

Michael Metter has served as president of RM Enterprises International, SPNG’s majority stockholder, since April 2001 and as its CEO since March 2, 2004. He has also been a director of Western Power and Equipment Corp. since February 2003. Mr. Metter has served as president and CEO of BusinessTalkRadio.net, a syndicated radio network based in Greenwich, Conn. Since June 2003, he has been chairman of the board of Tiburon Capital Group and DL Investments Inc., both of which are privately held investment companies. Since May 2000 he has served as vice president of ERC Corp., a privately held marketing consultant. He served as compliance director for Security Capital Trading Inc., a securities broker-dealer, from October 1998 to February 2001. Mr Metter was also a principal at Madison Capital from September 1997 to October 1998. On April 19, 2001, Mr. Metter filed a petition in personal bankruptcy in the District of Connecticut, Bridgeport Division, and was discharged on December 14, 2001. Mr. Metter received an MBA in finance and a Bachelor of Arts in marketing and accounting from Adelphi University.

Steven Moskowitz

Steven Moskowitz has served as a director of RM Enterprises International Inc. since April 2001 and as its secretary since March 2, 2004. He has been a director of Western Power and Equipment Corp. since February 11, 2003. He also served as a director of Tiburon Capital Group, a privately held investment corporation, and vice president of ERC Corp., a privately held marketing consultant. He served as vice president, marketing and business development for H. W. Carter & Sons, a distributor of children’s clothing, from 1987 to 2002. He was president of the H. W. Carter & Sons division of Evolutions Inc. from 1996 to 1997. Mr. Moskowitz served in various capacities at Smart

President, CEO and Director

Chief Financial Officer, Treasurer and Director

Please carefully read the risks and disclaimer section at the end of this report.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

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Analyst: Victor Sula, PhD Initial Report August 13th, 2008

Style Industries, a manufacturer and distributor of children’s apparel, from 1986 to 1987, eventually reaching the position of vice president of sales and marketing. Mr. Moskowitz has also served as a director of publicly traded National Stem Cell Inc. since January 2007. He holds a Bachelor of Science degree in management from Touro College.

Frank Lazauskas

Consultant and Director

Mr. Lazauskas is the founder and president of FJL Enterprises Inc. and TNJ Enterprises Inc. These businesses, formed in 1999 and 1997, respectively, own and operate eight Dominos Pizza Stores. He became a director of RM Enterprises International Inc. in March 2004. He holds a Bachelor of Arts degree in mathematics from Central Connecticut State University.

Please carefully read the risks and disclaimer section at the end of this report.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

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Analyst: Victor Sula, PhD Initial Report August 13th, 2008

Disclaimer We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice. The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them. Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company. An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report. Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research. Any individual who chooses to invest in any securities should do so with caution. Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested. Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing. The report is a service of BlueWave Advisors, LLC, a financial public relations firm that has been compensated by the companies profiled. All direct and third party compensation received has been disclosed within each individual profile in accordance with section 17(b) of the Securities Act of 1933. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled companies. BlueWave Advisors, LLC, and/or its affiliated will hold, buy, and sell securities in the companies profiled. This constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled companies. BeaconEquity.com is a website wholly-owned by BlueWave Advisors, LLC. BlueWave Advisors, LLC has been compensated fifty-thousand dollars from Pine Mountain Ventures, a shareholder of SPNG, as a marketing budget to manage a comprehensive investor awareness program including the creation and distribution of this report as well as other investor relations efforts.. BlueWave Advisors, LLC or its principals hold positions in the company profiled and may buy or sell securities at any time without notice. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled companies. Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Subscribers are cautioned not to place undue reliance upon these forward looking statements. These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated. Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC. We are committed to providing factual information on the companies that are profiled. However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions. We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable. To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information). We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

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Analyst: Victor Sula, PhD Initial Report August 13th, 2008

All decisions are made solely by the analyst and independent of outside parties or influence. I, Victor Sula, Ph.D, the author of this report, certify that the material and views presented herein represent my personal opinion regarding the content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compensation been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own and shares or securities in any of the companies featured in this report. Victor Sula, Ph.D. - Senior Analyst Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004, Mr. Sula held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistance and TACIS sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization and liquidation. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D. degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level III candidate in the CFA program.

SpongeTech Delivery Systems, Inc. (OTC BB: SPNG)

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BEACON EQUITY RESEARCH Analyst: Victor Sula, PhD  

Tel: 877-776-6438 Fax: 212-695-9342 Investor Inquiries: Bill Young, 1-877-776-6438 wayoung55@aol.com or info@spongetech.com www.spongetech.c...

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