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Invest in SpongeBath

Sponge holder with patented cleaning technology that sanitizes kitchen sponges

  • $23,500Amount raised
  • $1,000Minimum
  • $5,000,000Valuation cap

Purchased securities are not currently tradeable. Expect to hold your investment until the company lists on a national exchange or is acquired.

SpongeBath is offering securities under both Regulation D and Regulation CF through SI Securities, LLC ("SI Securities"). SI Securities is an affiliate of SeedInvest Technology, LLC, a registered broker-dealer, and member FINRA/SIPC. SI Securities will receive cash compensation equal to 7.50% of the value of the securities sold and equity compensation equal to 5.00% of the number of securities sold. Investments made under both Regulation D and Regulation CF involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Furthermore, the contents of the Highlights, Term Sheet sections have been prepared by SI Securities and shall be deemed broker-dealer communications subject to FINRA Rule 2210 (the “Excluded Sections”). With the exception of the Excluded Sections noted above, this profile contains offering materials prepared solely by SpongeBath without the assistance of SI Securities, and not subject to FINRA Rule 2210 (the “Issuer Profile”). The Issuer Profile may contain forward-looking statements and information relating to, among other things, the company, its business plan and strategy, and its industry. Investors should review the risks and disclosures in the offering's draft. The contents of this profile are meant to be a summary of the information found in the company’s Form C. Before making an investment decision, investors should review the company’s Form C for a complete description of its business and offering information, a copy of which may be found both here and below.


Company Highlights

  • Raised $2.672 Million from Angel Investors including John Penotti (Producer of blockbuster movie "Crazy Rich Asians") and with advisors such as Kevin Harrington (of Shark Tank)
  • Lifetime revenue of over $850K, selling 40K units and over 67K refills which included a successful launch at Bed Bath & Beyond (unaudited)
  • New patent-pending cleaning formula has been shown to kill ≥99.9% of bacteria and is expansible beyond our current line
  • 6 issued utility and design patents (with other utility and formula patents pending in the US and worldwide)
  • Featured in prominent media outlets such as the New York Times, InStyle, Real Simple, House Beautiful, Women's Health, Digital Trends, and featured in the movie "The Other Woman"

Fundraise Highlights

  • Total Amount Raised: US $23,500
  • Total Round Size: US $500,000
  • Raise Description:  Seed
  • Minimum Investment:  US $1,000 per investor
  • Security Type:  Crowd Note
  • Valuation Cap:  US $5,000,000
  • Offering Type:   Side by Side Offering

SpongeBath is a multi-purpose sponge holder that cleans and stores your kitchen sponge at the same time. An effective and elegant solution to an everyday problem.


A New Category in Consumer Goods

SpongeBath is a patented and patent-pending product that solves the “dirty sponge” problem. SpongeBath aims to be a staple on every kitchen countertop with its mission to make homes and businesses cleaner and safer.

The Dirty Kitchen Sponge Problem

Sponges are the dirtiest item in the home – as much as 200,000 times dirtier than a toilet seat. They harbor bacteria and provide an environment for germs to grow rapidly. The notorious smelly sponge is loaded with dangerous bacteria. Sponges spread germs and cross-contaminate surfaces, contributing to food-borne illnesses.

The SpongeBath Solution

SpongeBath is an effective, sleek, and convenient solution to the “dirty smelly sponge” problem. Using our patent-pending Concentrated Cleaning Solution, SpongeBath freshens, cleans, and sanitizes your kitchen sponge while it’s being stored – out of sight and in style. SpongeBath is an elegantly designed product – eco-friendly, convenient, and a welcome addition to any home or business kitchen.

Proof of Concept & Sell-Through

The Company had a very successful launch of its "first generation" SpongeBath in over 1,025 Bed Bath & Beyond stores across the US, Canada, and Puerto Rico. After two years of research and development, the new and improved SpongeBath is now available for sale from the Company’s website, Amazon Prime, and other online retailers, such as Wayfair and Houzz. 

Extensible Product Lines

Beyond SpongeBath’s cleaning sponge holder, there will be an extensible product line. Our all natural patent-pending cleaning formula is versatile and can be used in a multitude of applications, and will be sold as a safe, fast-acting, odorless, disinfectant spray for residential and commercial use. Additional products and related lines are in development to build out the SpongeBath brand.  

Pitch Deck

Product & Service

Patented Cleaning Method

SpongeBath patented the Cleaning of Sponges. The key to SpongeBath’s effectiveness is our “paddle action” technology that draws the Cleaning Solution deep into the micro-crevices of the sponge. The user simply places the sponge between the paddles, squeezes and submerges the sponge in the Cleaning Solution. Releasing the paddles while submerged draws the Cleaning Solution deep into the interior micro-crevices of the sponge.

Sponges then soak in our powerful, patent-pending cleaning solution while they are being stored (like combs in Barbicide), so sponges are continuously cleaned while not being used. With SpongeBath, you will have a fresh, clean sponge when you reach for it.

Other methods of cleaning sponges don’t solve the problem. They can be ineffective, impractical, and inconvenient. They offer “periodic” cleaning for a temporary fix. In addition, other sponge holders are dirty and can re-contaminate new or clean sponges. 

Our Patent-Pending Cleaning Solution

SpongeBath's proprietary cleaning formula is made from pure, food-grade ingredients without harsh chemicals, parabens, or fragrances. It is odor-free and safe for people and the environment when used as directed. It is independently tested to kill 99.9% of dangerous bacteria like E.coli and Staph.

  • Kills ≥99.9% of odor-causing bacteria
  • Eliminates odors
  • Cleans & freshens sponges
  • Removes grease and mold stains
  • Dissolves soap scum

Competitive Advantage

SpongeBath patented a method to clean sponges. It is specifically designed to clean kitchen sponges and keep them clean. We have not found any direct competitors. Our 6 utility and design patents issued (with other utility and formula patents pending in the US and worldwide) provide a strong barrier to competition. 

Business Model

Customers initially purchase the SpongeBath Starter Kit ($39.95) that includes the sponge holder and one bottle of Concentrated Cleaning Solution ($9.95 for 2 month supply). Thereafter, they purchase additional bottles of Cleaning Solution.

Our "Razor and Blade" financial model generates revenue with excellent margins from both the initial purchase of the SpongeBath Starter Kit (the “razor”) and ongoing revenue from recurring sales of Concentrated Cleaning Solution (the “blade”).

SpongeBath is currently available in a high gloss white, with additional colors in the pipeline. The Company also sells its premium cellulose sponges and a sink mounting bracket to enable SpongeBath to be attached securely inside a sink.

Subscription

For additional convenience, akin to the Dollar Shave Club, customers can subscribe for automatic delivery of the Cleaning Solution with free shipping under the continuity purchase program.

Made in the USA

SpongeBath is manufactured and assembled in the USA with durable, high-quality materials and solid engineering. High-grade premium stainless steel components, high gloss lacquer resin, premium rubber grips, and non-slid feet, it resists rust and discoloration and is designed to stand up to heavy use.

For Any Home or Business/Communal Kitchen

With its elegant design and compact footprint, SpongeBath can be used in all kitchens. SpongeBath helps keeps the kitchen sink area neat and organized. It can be placed on a countertop or mounted securely inside a sink with our sink-mounting bracket and works with standard size and scrubber sponges.

View Our Gallery Below and Watch Our Videos To Learn More

Media Mentions

Team Story

Kitchen sponges are marvelous cleaning devices used to clean everything  – from dishes to countertops.  But there's a problem... Sponges get dirty and smelly and are a hotbed for dangerous bacteria. If your kitchen sponge smells, what you are actually smelling is odor-causing bacteria!

We realized that, with all the consumer products out there, there was a gap in the marketplace. We could not find a product specifically designed to clean and store the kitchen sponge, and then keep it clean between uses. So we went to work... to find a simple, elegant, and effective solution to a serious problem. After years of research, development, and design, we created SpongeBath. 

Our mission is to help make homes and businesses cleaner, using safe and eco-friendly ingredients. We will continue to manufacture high-quality products in the USA, deliver superior customer support, and expand the SpongeBath brand with our proprietary cleaning formula. 

Our team is a blend of successful people with individual skill sets and diverse experiences who have united in their belief in SpongeBath.  I am proud of each and every one and what they contribute on this journey to make SpongeBath a staple in every kitchen. 

Founders and Officers

Matthew Flannery

Founder & CEO

Matthew invented, patented, and developed SpongeBath along with his co-founder Tod Maitland. Prior to founding SpongeBath LLC, Matthew was a professional cameraman and still photographer for over 18 years, with over 55 film and television credits, commercials, music videos, including Emmy nominated shows Sex and the City (entire HBO series and both films) and Showtime’s The Big C, RoundersBoiler Room, 16 Blocks. He is also the creator of "Moving Portraits," an iPhone app, and the Founder of Visseon Inc., a film equipment rental company. Matthew has a life-long passion for science, technology and design and for creating elegant solutions to solve everyday problems. Matthew has a Bachelors of Fine Arts in Film and Photography from Syracuse University.

Matthew Flannery

Founder & CEO

Matthew invented, patented, and developed SpongeBath along with his co-founder Tod Maitland. Prior to founding SpongeBath LLC, Matthew was a professional cameraman and still photographer for over 18 years, with over 55 film and television credits, commercials, music videos, including Emmy nominated shows Sex and the City (entire HBO series and both films) and Showtime’s The Big C, RoundersBoiler Room, 16 Blocks. He is also the creator of "Moving Portraits," an iPhone app, and the Founder of Visseon Inc., a film equipment rental company. Matthew has a life-long passion for science, technology and design and for creating elegant solutions to solve everyday problems. Matthew has a Bachelors of Fine Arts in Film and Photography from Syracuse University.

A three-time Academy Award-nominated sound mixer who has worked on more than 90 films, including Seabiscuit, I Am Legend, JFK and Tootsie. He also founded New Deal Inc. sound company and co-founded SpongeBath LLC with Matthew Flannery, inventing, patenting and developing SpongeBath. Tod co-founded The Hollywood Edge, one of the world’s largest sound library company with an e-commerce platform.

Tod Maitland

Founder

A three-time Academy Award-nominated sound mixer who has worked on more than 90 films, including Seabiscuit, I Am Legend, JFK and Tootsie. He also founded New Deal Inc. sound company and co-founded SpongeBath LLC with Matthew Flannery, inventing, patenting and developing SpongeBath. Tod co-founded The Hollywood Edge, one of the world’s largest sound library company with an e-commerce platform.

Key Team Members

Susette Franklin

COO – Bloomberg LP, Thomson Reuters

Cordelia Ryan

EVP & GC – Dartmouth College & Fordham Law School

Eric Sherb

VP of Finance with extensive experience

Notable Advisors & Investors

John Penotti

Investor, Producer of "Crazy Rich Asians"

Mark Zittman

Investor, Founding Partner and Chairman of Tuatara Capital

Michael Young

Investor, Founder of Vision Marketing Inc.

Matthew Gross

Investor, Showrunner, Producer, Director; Currently Producer of "The Inbetween"

Kevin Harrington

Advisor, Original Shark on Shark Tank

Dr. Keri Peterson

Advisor, On-Air Medical Contributor

Dr. Jessica Tyler

Advisor, Weill Cornell Medical College

Gregory Attorri

Advisor, Founder, GJA Advisory Services

Jim Bugden

Advisor, CFO Consultant

Q&A with the Founder

  • Please detail your historical product road map from inception - YTD. 
    SpongeBath LLC was incorporated in 2013 and launched its first version of SpongeBath in 2014. The initial purchase order from Bed Bath & Beyond enabled the Company to raise the capital that financed the purchase and development of custom high-capacity production tooling and to bring SpongeBath to market.

    Since the first version of SpongeBath, the Company conducted two years of research and development on both the sponge holder and the cleaning solution based on market feedback. We relocated our manufacturing from California to New York, optimized our manufacturing process, and modified our high-volume production tooling to accommodate greater volume demand and reduce our cost of goods. We reformulated the cleaning element from a slow dissolve cleaning cartridge to a fast-acting liquid cleaner and underwent the registration of our EPA exempt cleaning solution in the required states. We also rebranded the product and redesigned packaging and strengthened our intellectual property in the US, Canada, EU, and China. 

  • Please detail the current stage of your product/platform development.
    The new and improved SpongeBath (Version 2) is currently selling. We have high-volume manufacturing in place and ready to ramp as soon as we have sufficient capital for inventory, marketing and operations.
  • Please outline the regulatory landscape of your market, any regulations you must comply with, and how you comply with those regulations, if applicable.

    SpongeBath only uses ingredients in our cleaning solution that are exempt from registration with the EPA, but SpongeBath is required to file registrations with certain states as a 25(b) product in order to sell within that state. (Registrations have been completed in all but 2 of the 41 states that require registration, as well as Puerto Rico and US Virgin Islands.) SpongeBath has been independently tested by a GLP laboratory (Gibraltar Labs) to kill 99.99% of bacteria (such as E.coli and Staph) and, as a result, it sanitizes and disinfects kitchen sponges. However, in order to make the “public health claim” that SpongeBath “kills bacteria” or “kills viruses” in the marketing of our product, SpongeBath is required to be registered with the EPA. A protocol for registration was commenced. While EPA registration is not required to market and sell our products, with sufficient capital, we will move forward with the EPA registration process so that we can make “public health claims” and advertise the product as an EPA registered sanitizer and disinfectant. 

  • Please describe your typical customer/user profile.
    We believe that SpongeBath has broad appeal across all demographics. Our initial target market will focus on those customers who:

    • Make neat, tidy, and clean kitchens a priority
    • Are concerned about the safety of their family, especially children
    • Are interested in food preparation / household cleaning
    • Are environmentally conscious, avoiding harsh/toxic chemicals and minimizing waste

    With an initial emphasis on women over 30 (especially “new Moms”) and customers who purchase cleaning tools with a refillable component (like Swiffer and Brita), we will focus first on early adopters and influencers and then work towards a more mass market.

  • Please detail your customer acquisition cost (CAC).

    As this new and improved version of SpongeBath is essentially pre-revenue and we have had minimal marketing budget, we continue to hone our CAC. Our data points to an initial CAC of $12. With our subscription model, our goal is to get SpongeBath into homes and businesses to drive recurring revenue from ongoing sales of our cleaning solution (with free shipping and promotions) so our CAC will be adjusted depending on capital raised. With brand awareness and optimization of marketing campaigns, we expect our CAC to decrease to $8. Furthermore, when the product is registered by the EPA as a sanitizer, we expect the CAC to decrease significantly more as third parties/health experts, publications, and news outlets will effectively promote the product for us. For example, any publication or health expert will be able to point to SpongeBath as a product to help keep your kitchens safer.

  • The Q&A with the Founder is based on due diligence activities conducted by SI Securities, LLC. The verbal and/or written responses transcribed above may have been modified to address grammatical, typographical, or factual errors, or by special request of the company to protect confidential information.

    Term Sheet

    A Side by Side offering refers to a deal that is raising capital under two offering types. If you plan on investing less than US $20,000.00, you will automatically invest under the Regulation CF offering type. If you invest more than US $20,000.00, you must be an accredited investor and invest under the Regulation D offering type.

    Fundraising Description

  • Round type:
    Seed

  • Round size:
    US $500,000

  • Raised to date:
    US $23,500
    US $23,500 (under Reg CF only)

  • Minimum investment:
    US $1,000

  • Target Minimum:
    US $150,000

  • Maximum Raise Amount:
    US $500,000
  • Key Terms

  • Security Type:
    Crowd Note

  • Conversion discount:
    20.0%

  • Valuation Cap:
    US $5,000,000

  • Interest rate:
    6.0%

  • Note term:
    24 months
  • Additional Terms

  • Custody of Shares

    Investors who invest $50,000 or less will have their securities held in trust with a Custodian that will serve as a single shareholder of record. These investors will be subject to the Custodian’s Account Agreement, including the electronic delivery of all required information. 


  • Investment Proxy Agreement

    All non-Major Purchasers will be subject to an Investment Proxy Agreement (“IPA”). The IPA will authorize an investment Manager to act as representative for each non-Major Purchaser and take certain actions for their benefit and on their behalf. Please see a copy of the IPA included with Company's offering materials for additional details.


  • Closing conditions:
    While SpongeBath has set an overall target minimum of US $150,000 for the round, SpongeBath must raise at least US $25,000 of that amount through the Regulation CF portion of their raise before being able to conduct a close on any investments below $20,000. For further information please refer to SpongeBath's Form C.

  • Transfer restrictions:
    Securities issued through Regulation CF have a one year restriction on transfer from the date of purchase (except to certain qualified parties as specified under Section 4(a)(6) of the Securities Act of 1933), after which they become freely transferable. While securities issued through Regulation D are similarly considered "restricted securities" and investors must hold their securities indefinitely unless they are registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available.

  • Use of Proceeds

    Investor Perks

    Early Bird Perks:

    Invest by January 27, 2019 at 11:59pm ET to receive the next tier up of your investment perk (e.g. invest $5,000 and receive the $10,000 level perks. Additionally, the first 25 investors of any size will receive the $5,000 perk.

    Regular Perks:

    • $5,000 Investment - (1) SpongeBath sponge holder + (1) 1-year subscription for cleaning solution
    • $10,000 Investment – (2) SpongeBath sponge holders + (2) 2-year subscriptions for cleaning solutions + (2) Mounting Brackets
    • $25,000 Investment - (4) SpongeBath sponge holders + (4) 4-year subscriptions for cleaning solution + (4) Mounting Brackets
    • $50,000 Investment - (4) SpongeBath sponge holders + (4) 4-year subscriptions for cleaning solution + (4) Mounting Brackets + Quarterly 1-on-1 calls with management to discuss strategy + Invite to dinner with Founder in New York (airfare/hotel not included)

    It is advised that you consult a tax professional to fully understand any potential tax implications of receiving investor perks before making an investment.

    Prior Rounds

    The graph below illustrates the valuation cap or the pre-money valuation of SpongeBath's prior rounds by year.


    This chart does not represent guarantees of future valuation growth and/or declines.

    Pre-Seed

  • Round Size
    US $192,500
  • Closed Date
    Feb 28, 2014
  • Security Type
    Common Equity
  • Seed

  • Round Size
    US $2,380,361
  • Closed Date
    Jan 30, 2015
  • Security Type
    Preferred Equity
  • Bridge

  • Round Size
    US $365,000
  • Closed Date
    Oct 27, 2017
  • Security Type
    Preferred Equity
  • Market Landscape

    Household cleaners market value worldwide from 2016 to 2022 (in billion U.S. dollars)


    In the US alone, 69% of the roughly 126 million households use sponges, crossing all demographics, with additional presence in businesses and other communal kitchens. The potential for SpongeBath worldwide is a vast multi-billion dollar market space.

    Marketing and Distribution Strategy

    SpongeBath’s new and improved model (Version 2) is ready for mass production and distribution. We will penetrate the market with a multi-faceted approach in phases:

    • We will commence with a direct to consumer approach selling from our website by implementing a broad-based, highly-targeted digital media campaign (including social influencers, social media, traffic and re-targeting, content marketing, email campaigns), out-of-home advertising directed towards residential and business customers, then expand into additional online retail outlets.
    • As a highly demonstrable product, the Company will then move quickly to selling on QVC/HSN/home shopping networks and Direct Response TV ads.
    • When we can leverage our brand for better margins and placement, we will re-enter retail stores, such as Bed Bath & Beyond and Target, as well as retailers, such as Staples Business, that cater to commercial customers. 

    Proof of Concept

    The Company had a very successful launch of its "first generation" SpongeBath in over 1,025 Bed Bath & Beyond stores across the US, Canada, and Puerto Rico in September 2014. With additional interest from national retail chains, SpongeBath has proof of concept and proof of sell-through at one of the biggest housewares retailers. 


    Risks and Disclosures

    The development and commercialization of the Company’s products and services are highly competitive.It faces competition with respect to any products and services that it may seek to develop or commercialize in the future. Its competitors include major companies worldwide. The sponge cleaner market is an emerging industry in which new competitors may enter.. The Company’s competitors may have significantly greater financial, technical and human resources and may have superior expertise in research and development and marketing approved services and thus may be better equipped than the Company to develop and commercialize services. These competitors also compete with the Company in recruiting and retaining qualified personnel and acquiring technologies. Smaller or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Accordingly, the Company’s competitors may commercialize products more rapidly or effectively than the Company is able to, which would adversely affect its competitive position, the likelihood that its services will achieve initial market acceptance and its ability to generate meaningful additional revenues from its products and services.

    The Company sells its products directly to consumers from its website and it also depends on third-party distributors for a substantial portion of its revenue.If these distributors were to cancel their distribution or reduce their purchase commitments,the Company’s revenue could decline significantly. As a result,, the Company’s revenue could fluctuate materially and could be materially and disproportionately impacted by decisions of its distributors. In the future, any distributor may alter their purchasing patterns at any time with limited notice, or may decide not to continue to distribute our products at all, which could cause its revenue to decline materially and materially harm its financial condition and results of operations. If the Company is not able to diversify its distributors be it will be susceptible to risks associated with distributors concentration.

    The Company currently has limited revenue and may not be successful in its efforts to grow and monetize its product. It has limited operating capital and for the foreseeable future may be dependent upon its ability to finance operations from the sale of equity or other financing alternatives. There can be no assurance that the Company will be able to successfully raise operating capital. The failure to successfully raise operating capital, and the failure to effectively monetize its products, could result in bankruptcy or other event which would have a material adverse effect on the Company and the value of its shares. The Company has limited assets and financial resources, so such adverse event could put investors’ dollars at significant risk.

    The Company’s business model is capital intensive. The amount of capital the Company is attempting to raise in this Offering may not be enough to sustain the Company’s current business plan if the Company is not able to effectively monetize its products according to its projections. In order to achieve the Company’s near and long-term goals, the Company may need to procure funds in addition to the amount raised in the Offering. There is no guarantee the Company will be able to raise such funds on acceptable terms or at all. If the Company is not able to raise sufficient capital in the future, it may not be able to execute its business plan, its continued operations will be in jeopardy and it may be forced to cease operations and sell or otherwise transfer all or substantially all of its remaining assets, which could cause a Purchaser to lose all or a portion of his or her investment.

    The Company’s cash position is relatively weak. The Company currently has only $3,725.65 in cash balances as of 11/30/18. This equates to roughly 1 month of runway. The Company could be harmed if it is unable to meet its cash demands, and the Company may not be able to continue operations if they are not able to raise additional funds.

    The Company has outstanding liabilities.The Company owes $61,340 in remaining payments due in 2021 and 2022.

    The Company may not be successful in obtaining issued patents. The Company's success depends significantly on their ability to obtain, maintain and protect their proprietary rights to the technologies used in their products and services to protect them from their potential competitors. Moreover, any patents issued to them may be challenged, invalidated, found unenforceable or circumvented in the future. Any intellectual enforcement efforts the Company seeks to undertake, including litigation, could be time-consuming and expensive and could divert management’s attention.

    The Company relies heavily on their technology and intellectual property, but they may be unable to adequately or cost-effectively protect or enforce their intellectual property rights, thereby weakening their competitive position and increasing operating costs. To protect their rights in their products and technology, they rely on a combination of copyright and trademark laws, patents, trade secrets, confidentiality agreements with employees and third parties, and protective contractual provisions. They also rely on laws pertaining to trademarks and domain names to protect the value of their corporate brands and reputation. Despite their efforts to protect their proprietary rights, unauthorized parties may copy aspects of their services or technology, obtain and use information, marks, or technology that they regard as proprietary, or otherwise violate or infringe their intellectual property rights. In addition, it is possible that others could independently develop substantially equivalent intellectual property. If they do not effectively protect their intellectual property, or if others independently develop substantially equivalent intellectual property, their competitive position could be weakened. Effectively policing the unauthorized use of their services and technology is time-consuming and costly, and the steps taken by them may not prevent misappropriation of their technology or other proprietary assets. The efforts they have taken to protect their proprietary rights may not be sufficient or effective, and unauthorized parties may copy aspects of their services, use similar marks or domain names, or obtain and use information, marks, or technology that they regard as proprietary. They may have to litigate to enforce their intellectual property rights, to protect their trade secrets, or to determine the validity and scope of others’ proprietary rights, which are sometimes not clear or may change. Litigation can be time consuming and expensive, and the outcome can be difficult to predict.

    Manufacturing or design defects, unanticipated use of our products, or inadequate disclosure of risks relating to the use of the products can lead to injury or other adverse events.These events could lead to recalls or safety alerts relating to our products (either voluntary or required by governmental authorities) and could result, in certain cases, in the removal of a product from the market. Any recall could result in significant costs as well as negative publicity that could reduce demand for our products. Personal injuries relating to the use of our products can also result in product liability claims being brought against us. In some circumstances, such adverse events could also cause delays in new product approvals. Similarly, negligence in performing our services can lead to injury or other adverse events.

    The Company has not filed a Form D for its fundraising in 2016-2017.The Company filed a Form D for its fundraising prior to 2015. The Company then raised additional funds from a limited number of existing and new investors in 2016-2017 in reliance on the private placement exemption in the Securities Act of 1933. The SEC rules require a Form D to be filed by companies within 15 days after the first sale of securities in the offering relying on Regulation D. Failing to register with the SEC or get an exemption may lead to fines, the right of investors to get their investments back, and even criminal charges. There is a risk that a late penalty could apply.

    Governmental regulation and associated legal uncertainties may adversely affect the Company’s business.Many of the products and services that the Company offers are regulated by federal and state governments, and its ability to provide these products and services is and will continue to be affected by government regulations. The implementation of unfavorable regulations or unfavorable interpretations of existing regulations by courts or regulatory bodies could require the Company to incur significant compliance costs, cause the development of the affected markets to become impractical and otherwise have a material adverse effect on the business, results of operations and financial condition. In addition, its business strategy involves expansion into regions around the world, many of which have different legislation, regulatory environments, tax laws and levels of political stability. Compliance with foreign legal, regulatory or tax requirements will place demands on the Company’s time and resources, and it may nonetheless experience unforeseen and potentially adverse legal, regulatory or tax consequences.

    The Company may be unable to maintain, promote, and grow its brand through marketing and communications strategies.It may prove difficult for the Company to dramatically increase the number of customers that it serves or to establish itself as a well-known brand in the competitive cleaning and storage space. Our advertising and marketing materials are subject to regulatory scrutiny that may limit commercialization of our products. Additionally, the product may be in a market where customers will not have brand loyalty.

    The Company may depend on the performance of distributors and other resellers. The Company sells its products and third-party products in most of its major markets directly to consumers and small and mid-sized businesses, education, enterprise and government customers through its online store and possible future retail or pop-up retail stores. The Company also distributes its products through wholesalers, online retailers, national and regional retailers, and value-added resellers, many of whom distribute products from competing manufacturers. Many resellers have narrow operating margins and have been adversely affected in the past by weak economic conditions. Some resellers have perceived the expansion of the Company’s direct sales as conflicting with their business interests as distributors and resellers of the Company’s products. Such a perception could discourage resellers from investing resources in the distribution and sale of the Company’s products or lead them to limit or cease distribution of those products. The Company has invested and will continue to invest in programs to enhance reseller sales, including staffing selected resellers’ stores with Company employees and contractors, and improving product placement displays. These programs could require a substantial investment while providing no assurance of return or incremental revenue. The financial condition of these resellers could weaken, these resellers could stop distributing the Company’s products, or uncertainty regarding demand for the Company’s products could cause resellers to reduce their ordering and markeng of the Company’s products.

    The Company relies on other companies to provide manufacturing and components for their products. The Company depends on these manufacturers, suppliers and subcontractors to meet their contractual obligations to their customers and conduct their operations. Their ability to meet their obligations to their customers may be adversely affected if suppliers or subcontractors do not provide the agreed-upon supplies or perform the agreed-upon services in compliance with customer requirements and in a timely and cost-effective manner. Likewise, the quality of their products may be adversely impacted if companies to whom they delegate manufacture of their products, or from whom they acquire such items, do not provide these components which meet required specifications and perform to their and their customers’ expectations. The Company previously ceased distribution of its products after changes with its manufacturers caused the Company’s products to become unprofitable. If the Company’s manufacturers or suppliers alter their pricing structure, the Company may be forced to raise its prices to a point not tolerated by consumers or cease operations.

    The Company has not yet received EPA registration for its products. The Company does not expect to receive this registration for approximately 24 months. If the Company does not receive registration, this may have a negative impact on the Company’s sales and growth. The Company cannot make “public health claims” until registration is received.

    Some of the Company’s key personnel are currently engaged as consultants. As a result, certain of the Company’s key personnel may not devote all of their time to the business, and may from time to time serve as employees, officers, directors or consultants of other companies. The Company intends to engage all key personnel as full-time employees when consistent with the meeting business objectives of the Company.

    Tod Maitland, one of the Founders, who is no longer active with the Company, still holds a significant ownership stake. The Company does not believe that this will prevent the Company from properly incentivizing employees with equity compensation. The Company is currently authorized to issue up to 13,125 units to employees, officers and consultants.

    The Company is managed by its Manager (or Managers). Although the Company is not required to have a separate board, boards can play a critical role in effective risk oversight. A board helps ensure that management’s actions are consistent with corporate strategy, reflective of the culture of the business, and in line with the organization’s risk tolerance. There is no guarantee that the Company will have a separate board.

    The Company does not have an employment contract in place. Employment agreements typically provide protections to the Company in the event of the employee’s departure, specifically addressing who is entitled to any intellectual property created or developed by those employees in the course of their employment and covering topics such as non-competition and non-solicitation. As a result, if employees were to leave the Company, the Company might not have any ability to prevent their direct competition, or have any legal right to intellectual property created during their employment. There is no guarantee that an employment agreement will be entered into.

    Risks Related to the Securities

    The Crowd Notes will not be freely tradable until one year from the initial purchase date. Although the Crowd Notes may be tradable under federal securities law, state securities regulations may apply and each Purchaser should consult with his or her attorney. You should be aware of the long-term nature of this investment. There is not now and likely will not be a public market for the Crowd Notes. Because the Crowd Notes have not been registered under the 1933 Act or under the securities laws of any state or non-United States jurisdiction, the Crowd Notes have transfer restrictions under Rule 501 of Regulation CF. It is not currently contemplated that registration under the 1933 Act or other securities laws will be effected. Limitations on the transfer of the Crowd Notes may also adversely affect the price that you might be able to obtain for the Crowd Notes in a private sale. Purchasers should be aware of the long-term nature of their investment in the Company. Each Purchaser in this Offering will be required to represent that it is purchasing the Securities for its own account, for investment purposes and not with a view to resale or distribution thereof.

    We are selling convertible notes that will convert into shares or result in payment in limited circumstances. These notes only convert or result in payment in limited circumstances. If the Crowd Notes reach their maturity date, investors (by a decision of the Crowd Note holders holding a majority of the principal amount of the outstanding Crowd Notes) will either (a) receive payment equal to the total of their purchase price plus outstanding accrued interest, or (b) convert the Crowd Notes into shares of the Company’s most senior class of preferred stock, and if no preferred stock has been issued, then shares of Company’s common stock, or if no common stock is issued into Class C Units of the Company. If there is a merger, buyout or other corporate transaction that occurs before a qualified equity financing, investors will receive a payment of the greater of their purchase price plus accrued interest or the amount of preferred shares (or such securities being offered in such financing) they would have been able to purchase using the valuation cap. If there is a qualified equity financing (an initial public offering registered under the 1933 Act or a financing using preferred shares), the notes will convert into a yet to-be-determined class of preferred stock. If the notes convert because they have reached their maturity date, the notes will convert based on a $5,000,000 valuation cap. If the notes convert due to a qualified equity financing, the notes will convert at a discount of 20%, or based on a $5,000,000 valuation cap. This means that investors would be rewarded for taking on early risk compared to later investors. Outside investors at the time of conversion, if any, might value the Company at an amount well below the $5,000,000 valuation cap, so you should not view the $5,000,000 as being an indication of the Company’s value.

    We have not assessed the tax implications of using the Crowd Note. The Crowd Note is a type of debt security. As such, there has been inconsistent treatment under state and federal tax law as to whether securities like the Crowd Note can be considered a debt of the Company, or the issuance of equity. Investors should consult their tax advisers.

    The Crowd Note contains dispute resolution provisions which limit your ability to bring class action lawsuits or seek remedy on a class basis. By purchasing a Crowd Note this Offering, you agree to be bound by the dispute resolution provisions found in Section 8 of the Crowd Note. Those provisions apply to claims regarding this Offering, the Crowd Notes and possibly the securities into which the Crowd Note are convertible. Under those provisions, disputes under the Crowd Note will be resolved in arbitration conducted in Delaware. Further, those provisions may limit your ability to bring class action lawsuits or similarly seek remedy on a class basis.

    You may have limited rights. The Company has not yet authorized preferred stock, and there is no way to know what voting rights those securities will have. In addition, as an investor in the Regulation CF offering you will be considered a Non-Major Investor (as defined below) under the terms of the notes offered, and therefore, you have more limited information rights.

    You will be bound by an investment management agreement which limits your voting rights. As a result of purchasing the notes, all Non-Major Investors (including all investors investing under Regulation CF) will be bound by an investment management agreement. This agreement will limit your voting rights and at a later time may require you to convert your future preferred shares into common shares without your consent. Non-Major Investors will be bound by this agreement, unless Non-Major Investors holding a majority of the principal amount outstanding of the Crowd Notes (or majority of the shares of the preferred equity the notes will convert into) held by Non-Major Investors vote to terminate the agreement.

    A majority of the Company is owned by a small number of owners. Prior to the Offering, the Company’s current owners of 20% or more of the Company’s outstanding voting securities beneficially own up to 64.47% of the Company’s voting securities. Subject to any fiduciary duties owed to our other owners or investors under New York law, these owners may be able to exercise significant influence over matters requiring owner approval, including the election of directors or managers and approval of significant Company transactions, and will have significant control over the Company’s management and policies. Some of these persons may have interests that are different from yours. For example, these owners may support proposals and actions with which you may disagree. The concentration of ownership could delay or prevent a change in control of the Company or otherwise discourage a potential acquirer from attempting to obtain control of the Company, which in turn could reduce the price potential investors are willing to pay for the Company. In addition, these owners could use their voting influence to maintain the Company’s existing management, delay or prevent changes in control of the Company, or support or reject other management and board proposals that are subject to owner approval.

    The Company does not keep proper records of board minutes and resolutions. Although the Company is not legally required to keep these records to conduct operations, boards play a critical role in effective risk oversight. A board helps ensure that management’s actions are consistent with corporate strategy, reflective of the culture of the business, and in line with the organization’s risk tolerance. There is no guarantee that the Company will begin keeping proper records.

    The Company does not have an employment contract in place. Employment agreements typically provide protections to the Company in the event of the employee’s departure, specifically addressing who is entitled to any intellectual property created or developed by those employees in the course of their employment and covering topics such as non-competition and non-solicitation. As a result, if employees were to leave the Company, the Company might not have any ability to prevent their direct competition, or have any legal right to intellectual property created during their employment. There is no guarantee that an employment agreement will be entered into.

    General Risks and Disclosures

    Start-up investing is risky. Investing in startups is very risky, highly speculative, and should not be made by anyone who cannot afford to lose their entire investment. Unlike an investment in a mature business where there is a track record of revenue and income, the success of a startup or early-stage venture often relies on the development of a new product or service that may or may not find a market. Before investing, you should carefully consider the specific risks and disclosures related to both this offering type and the company which can be found in this company profile and the documents in the data room below.

    Your shares are not easily transferable. You should not plan on being able to readily transfer and/or resell your security. Currently there is no market or liquidity for these shares and the company does not have any plans to list these shares on an exchange or other secondary market. At some point the company may choose to do so, but until then you should plan to hold your investment for a significant period of time before a “liquidation event” occurs. A “liquidation event” is when the company either lists their shares on an exchange, is acquired, or goes bankrupt.

    The Company may not pay dividends for the foreseeable future. Unless otherwise specified in the offering documents and subject to state law, you are not entitled to receive any dividends on your interest in the Company. Accordingly, any potential investor who anticipates the need for current dividends or income from an investment should not purchase any of the securities offered on the Site.

    Valuation and capitalization. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult to assess and you may risk overpaying for your investment. In addition, there may be additional classes of equity with rights that are superior to the class of equity being sold.

    You may only receive limited disclosure. While the company must disclose certain information, since the company is at an early-stage they may only be able to provide limited information about its business plan and operations because it does not have fully developed operations or a long history. The company may also only obligated to file information periodically regarding its business, including financial statements. A publicly listed company, in contrast, is required to file annual and quarterly reports and promptly disclose certain events through continuing disclosure that you can use to evaluate the status of your investment.

    Investment in personnel. An early-stage investment is also an investment in the entrepreneur or management of the company. Being able to execute on the business plan is often an important factor in whether the business is viable and successful. You should be aware that a portion of your investment may fund the compensation of the company's employees, including its management. You should carefully review any disclosure regarding the company's use of proceeds.

    Possibility of fraud. In light of the relative ease with which early-stage companies can raise funds, it may be the case that certain opportunities turn out to be money-losing fraudulent schemes. As with other investments, there is no guarantee that investments will be immune from fraud.

    Lack of professional guidance. Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g., angel investors and venture capital firms). These investors often negotiate for seats on the company's board of directors and play an important role through their resources, contacts and experience in assisting early-stage companies in executing on their business plans. An early-stage company may not have the benefit of such professional investors.

    Representatives of SI Securities, LLC are affiliated with SI Advisors, LLC (“SI Advisors”). SI Advisors is an exempt investment advisor that acts as the General Partner of SI Selections Fund I, L.P. (“SI Selections Fund”). SI Selections Fund is an early stage venture capital fund owned by third-party investors. From time to time, SI Selections Fund may invest in offerings made available on the SeedInvest platform, including this offering. Investments made by SI Selections Fund may be counted towards the total funds raised necessary to reach the minimum funding target as disclosed in the applicable offering materials.

    SpongeBath's Form C

    The Form C is a document the company must file with the Securities and Exchange Commission, which includes basic information about the company and its offering and is a condition to making a Reg CF offering available to investors. It is important to note that the SEC does not review the Form C, and therefore is not recommending and/or approving any of the securities being offered.

    Download SpongeBath's  Form C

    Frequently Asked Questions

    About Side by Side Offerings
    What is Side by Side?

    A Side by Side offering refers to a deal that is raising capital under two offering types. This Side by Side offering is raising under Regulation CF and Rule 506(c) of Regulation D.


    What is a Form C?

    The Form C is a document the company must file with the Securities and Exchange Commission (“SEC”) which includes basic information about the company and its offering and is a condition to making a Reg CF offering available to investors. It is important to note that the SEC does not review the Form C, and therefore is not recommending and/or approving any of the securities being offered.

    Before making any investment decision, it is highly recommended that prospective investors review the Form C filed with the SEC (included in the company's profile) before making any investment decision.


    What is Rule 506(c) under Regulation D?

    Rule 506(c) under Regulation D is a type of offering with no limits on how much a company may raise. The company may generally solicit their offering, but the company must verify each investor’s status as an accredited investor prior to closing and accepting funds. To learn more about Rule 506(c) under Regulation D and other offering types check out our blog and academy.


    What is Reg CF?

    Title III of the JOBS Act outlines Reg CF, a type of offering allowing private companies to raise up to $1 million from all Americans. Prior capital raising options limited private companies to raising money only from accredited investors, historically the wealthiest ~2% of Americans. Like a Kickstarter campaign, Reg CF allows companies to raise funds online from their early adopters and the crowd. However, instead of providing investors a reward such as a t-shirt or a card, investors receive securities, typically equity, in the startups they back. To learn more about Reg CF and other offering types check out our blog and academy.


    Making an Investment in SpongeBath
    How does investing work?

    When you complete your investment on SeedInvest, your money will be transferred to an escrow account where an independent escrow agent will watch over your investment until it is accepted by SpongeBath. Once SpongeBath accepts your investment, and certain regulatory procedures are completed, your money will be transferred from the escrow account to SpongeBath in exchange for your securities. At that point, you will be a proud owner in SpongeBath.


    What will I need to complete my investment?

    To make an investment, you will need the following information readily available:

    1. Personal information such as your current address and phone number
    2. Employment and employer information
    3. Net worth and income information
    4. Social Security Number or passport
    5. ABA bank routing number and checking account number (typically found on a personal check or bank statement)

    If you are investing under Rule 506(c) of Regulation D, your status as an Accredited Investor will also need to be verified and you will be asked to provide documentation supporting your income, net worth, revenue, or net assets or a letter from a qualified advisor such as a Registered Investment Advisor, Registered Broker Dealer, Lawyer, or CPA.


    How much can I invest?

    An investor is limited in the amount that he or she may invest in a Reg CF offering during any 12-month period:

    • If either the annual income or the net worth of the investor is less than $100,000, the investor is limited to the greater of $2,000 or 5% of the lesser of his or her annual income or net worth.
    • If the annual income and net worth of the investor are both greater than $100,000, the investor is limited to 10% of the lesser of his or her annual income or net worth, to a maximum of $100,000.

    Separately, SpongeBath has set a minimum investment amount of US $1,000.

    Accredited investors investing $20,000 or over do not have investment limits.


    After My Investment
    What is my ongoing relationship with the Issuer?

    You are a partial owner of the company, you do own securities after all! But more importantly, companies which have raised money via Regulation CF must file information with the SEC and post it on their websites on an annual basis. Receiving regular company updates is important to keep shareholders educated and informed about the progress of the company and their investment. This annual report includes information similar to a company’s initial Reg CF filing and key information that a company will want to share with its investors to foster a dynamic and healthy relationship.

    In certain circumstances a company may terminate its ongoing reporting requirement if:

    1. The company becomes a fully-reporting registrant with the SEC
    2. The company has filed at least one annual report, but has no more than 300 shareholders of record
    3. The company has filed at least three annual reports, and has no more than $10 million in assets
    4. The company or another party purchases or repurchases all the securities sold in reliance on Section 4(a)(6)
    5. The company ceases to do business

    However, regardless of whether a company has terminated its ongoing reporting requirement per SEC rules, SeedInvest works with all companies on its platform to ensure that investors are provided quarterly updates. These quarterly reports will include information such as: (i) quarterly net sales, (ii) quarterly change in cash and cash on hand, (iii) material updates on the business, (iv) fundraising updates (any plans for next round, current round status, etc.), and (v) any notable press and news.


    How can I sell my securities in the future?

    Currently there is no market or liquidity for these securities. Right now SpongeBath does not plan to list these securities on a national exchange or another secondary market. At some point SpongeBath may choose to do so, but until then you should plan to hold your investment for a significant period of time before a “liquidation event” occurs. A “liquidation event” is when SpongeBath either lists their securities on an exchange, is acquired, or goes bankrupt.


    How do I keep track of this investment?

    You can return to SeedInvest at any time to view your portfolio of investments and obtain a summary statement. If invested under Regulation CF you may also receive periodic updates from the company about their business, in addition to monthly account statements.


    Other General Questions
    What is this page about?

    This is SpongeBath's fundraising profile page, where you can find information that may be helpful for you to make an investment decision in their company. The information on this page includes the company overview, team bios, and the risks and disclosures related to this investment opportunity. If the company runs a side by side offering that includes an offering under Regulation CF, you may also find a copy of the SpongeBath's Form C. The Form C includes important details about SpongeBath's fundraise that you should review before investing.


    How can I (or the company) cancel my investment under Regulation CF?

    For offerings made under Regulation CF, you may cancel your investment at any time up to 48 hours before a closing occurs or an earlier date set by the company. You will be sent a reminder notification approximately five days before the closing or set date giving you an opportunity to cancel your investment if you had not already done so. Once a closing occurs, and if you have not canceled your investment, you will receive an email notifying you that your securities have been issued. If you have already funded your investment, your funds will be promptly refunded to you upon cancellation. To cancel your investment, you may go to your portfolio page


    What if I change my mind about investing?

    If you invest under any other offering type, you may cancel your investment at any time, for any reason until a closing occurs. You will receive an email when the closing occurs and your securities have been issued. If you have already funded your investment and your funds are in escrow, your funds will be promptly refunded to you upon cancellation. To cancel your investment, please go to your portfolio page.