UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.
SPONGETECH DELIVERY SYSTEMS, INC.,
RM ENTERPRISES INTERNATIONAL, INC.,
STEVEN Y. MOSKOWITZ, MICHAEL E.
METTER, GEORGE SPERANZA, JOEL
PENSLEY, and JACK HALPERIN,
Defendants,
and
BLUE STAR MEDIA GROUP, INC.,
BUSINESSTALKRADIO.NET
ACQUISITION CORP.
Relief Defendants.
NOW COMES Plaintiff, Securities and Exchange Commission ("SEC") and
Relief Defendant, BusinessTalkRadio.Net Acquisition Corp ("BTR"), and such parties
hereby state as follows:
WHEREAS by an order entered on or about July 18,2012, Michael Craven (the
"Receiver") was appointed as Receiver of BTR and its affiliates by the Delaware C o ~ r t of
Chancery;
WHEREAS, the Receiver is in the process of selling BTR' s assets and has
worked hard to manage and market the assets of BTR for the benefit of BTR and all of
BTR's creditors;
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WHEREAS, the SEC and Solution Funding, LLC support the work of the
Receiver to continue the sale of assets and the interim management of BTR's assets for
the benefit of all creditors;
WHEREAS, pursuant to the joint stipulation of BTR and the SEC, with the
consent of Solution Funding and the Trustee in Bankruptcy for Spongetech Delivery
Systems, Inc., entered by order of this Court on June 20, 2012, proceeds, net of
reasonable closing costs, from the sale of BTR assets are held in the Court Registry
Investment System Account ("CRIS Account");
WHEREAS, BTR's cash flow from operations is insufficient to fund certain
operating cost deficits which BTR' s management allowed to accrue in the months
preceding the Receiver's appointment, including accruals of back rent with respect to a
number of BTR office and tower locations;
WHERAS, BTR's management prior to the appointment of the Receiver allowed
substantial operating cost deficits to accrue with respect to critical areas of BTR's
operations and did so in a manner that has engendered a reluctance on the part of BTR's
critical vendors to deal with BTR on a commercially feasible basis without a showing by
BTR of bona fides in the form of some payment towards these accruals;
WHEREAS, the SEC and the Receiver previously entered into a stipulation on or
about November 8, 2012, pursuant to which funds were released from the CRIS Account
for the purpose of covering certain operational expenses, which stipulation was approved
by order of the Court entered on or about November 13,2012;
WHEREAS, the vast majority of the funds released from the CRIS account have
been strategically distributed to critical vendors and landlords that are essential to
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maintaining BTR as an operating entity so that it may continue to be marketed as a going
concern and preserve the value of BTR for its creditors;
WHEREAS, subsequent to this Court's November 13,2012 order, BTR was able
to proceed to the closing of the sale of its Las Vegas Assets, and BTR is depositing
$624,3 I 7.03 to the CRrS account;
WHEREAS, the Receiver is continuing to market the Debtor's two major
remaining assets: a radio station in the northeast and the network assets;
WHEREAS, the Receiver presently projects that if the assets can be preserved as
a going concern, then it is likely that additional proceeds in excess of those realized from
the sale of the Las Vegas assets may be realized;
WHEREAS, the Receiver has in place agreements with critical vendors who have
agreed to continue to provide essential services to BTR in return for negotiated monthly
payments;
WHEREAS, the funds released pursuant to the First Stipulation are insufficient to
bring BTR current on all critical leases and vendors, and BTR's cash flow continues to be
insufficient to fund the negotiated monthly critical leases and vendors on an ongoing
basis;
WHEREAS, the Receiver believes that a monthly return of capital from the CRrS
Account for the purpose of paying certain of BTR's operating cost accruals will
significantly aid in restoring vendor confidence in BTR for the Receiver, allowing the
Receiver to increase the stability of BTR's operations pending the Receiver's sale of
BTR's assets and thereby increase the Receiver's ability to avoid the unnecessary loss of
asset value due to the withholding of services by one or more of BTR' s critical vendors;
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WHEREAS, the Receiver has determined that a portion of sales proceeds held in
the CRlS Account should be applied to accrued operating cost deficits, such as accrued
rent, in order to preserve a greater amount of asset value, so that payment may be made to
critical vendors on or about the first day of each month beginning in January 2013;
WHEREAS, in the event the Receiver is unable to access the CRIS Account to
obtain these funds for operating expenses, it is believed by the Receiver, the SEC, and
Solution Funding that significant asset value may be lost; and
WHEREAS, Solution Funding, LLC consents to the release of funds to BTR and
the Trustee in Bankruptcy of Spongetech Delivery Systems, Inc. has no objection to the
release of such funds.
NOW THEREFORE, it is hereby stipulated and agreed, by and between the
parties, subject to the approval of the Court that:
1. Funds (the "Monthly Disbursement") shall be distributed in immediately available
funds from the CRlS Account to the Receiver on a monthly basis, for purposes of paying
certain critical vendors, as set forth below:
Date of Disbursement Amount
December 26,2012 $31,700.00
January 25, 2013 $26,400.00
February 22, 2013 $26,400.00
2. The Monthly Disbursement may be decreased by any of the following methods:
a. A notice filed by the Receiver with the Court that the amount of funds
required to continue to be paid to critical vendors has decreased. In the event such notice
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s/DLI
is filed, the subsequent Monthly Disbursements will be reduced by the amount specified
in the notice.
b. A stipulation between the Receiver and the SEC filed with the Court.
c. In the event the Receiver and the SEC do not agree on whether the
Monthly Disbursement continues to be necessary, the party claiming that the Monthly
Disbursement is no longer necessary shall file a motion with the Court requesting that the
Court determine whether the Monthly Disbursement continues to be necessary, and
specifically setting forth all facts and legal bases for the movant's claim that the Monthly
Disbursement is no longer necessary. The party continuing to claim that the Monthly
Disbursement is necessary shall have fourteen (14) days to respond to any such motion,
and the movant shall have seven (7) days to reply to any such response. The Court will
promptly address and determine any such motion and may order additional briefing or
other proceedings as the Court may deem appropriate and may, at its discretion, refer
such motion to a United States Magistrate Judge for initial decision and recommendation
in order to expedite resolution of the motion.
3. This stipulation and order is without prejudice to any further stipulation and/or
order for the release of funds from the CRIS Account.
U.S. SECURITIES AND EXCHANGE
COMMISSION
lsI Paul W. Kisslinger
Paul W. Kisslinger
100 F. Street N.E.
Washington, DC 20549
Telephone: (202) 551-4427
Facsimile: (202) 772-9292
Email: kisslingerp@sec.gov
Attorney for U.S. Securities and Exchange
MORRIS JAMES LLP
lsI Brett D. Fallon
Brett D. Fallon (DE Bar No. 2480)
500 Delaware Avenue, Suite 1500
P. O. Box 2306
Wilmington, DE 19899-2306
Telephone: (302) 888-6888
Facsimile: (302) 571-1750
Email: bfallon@morrisjames.com
Commission Attorneys for Michael Craven, not in his individual
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SO ORDERED this
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capacity but solely in his capacity as Receiver for
BusinessTalkRadio.Net Acquisition Corp.
1. IRIZARR
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