“If there was one thing that I thought was key in this last year it is the rise in XML. I’ll talk a lot tonight about how I believe both Microsoft and the industry should really bet their future around XML. The standards around XML are key to where we need to go.” 
        Bill Gates – Comdex 2000 Keynote Speech, Las Vegas 

In a recent survey by IDG Research Services Group of 500 Chief Information Officers, it was projected spending on XML will increase 86% this year over last. 78% of companies surveyed use, or are considering using XML, up from 20% last June. 

David Hilal, and analyst with Friedman, Billings, Ramsey & Co., recently described XML as the Holy Grail of eCommerce.

[OTC Journal] Peter thanks for joining us today.  There is a lot of confusion about what XML actually is.  Quickly, in plain English, can you explain to our members what XML actually is?

[Peter] Thanks for having me Larry, and I’ll try to do my best.  Let me tell you what XML isn’t, it is not a programming language.  There are a number of people that will say that it was designed for programming.  In fact XML is a scribing language.  It allows the author of a document or a file, if you will, to describe using real word what the content of that file may be.

[OTC Journal] Okay, and rather than going into a lot of technical stuff Peter, why don’t you tell us how this XML revolution will actually affect the average person and benefit the average person.  Where will we actually see XML?

[Peter] Well the average person will probably not directly use XML.  What it is really going to do is fundamentally change the way business is done, which in and of itself will affect the lives of all of us, every facet of people.  Because of the access you’re going to have to information, the ability to interact with others using information and ultimately you’ll be able to design your own personal portal, if you will, to tie the information that’s out there globally that you want.

[OTC Journal] So can you give us a specific example of where XML might be used to impact me, lets say, or yourself?

[Peter] Well, I think the first one that most people are familiar with is wirelessly getting stock quotes or airline tickets that come down on your palm pilot for example.

[OTC Journal] So tell us where your company, XML Global Technologies, fits into the XML picture?

[Peter] Well I think one of the things you said in your preamble was that we are one of the riskier companies that you are following.  I think that what you’ve got to do is look at the XML statement in general.  Migrating business information so that machines can listen to it and understand so people can access it.  It is a very difficult and not a trivial technology challenge.  We as a company have been focused on building XML products that are designed to fit into an open infrastructure, and what I mean by an open infrastructure, is one that small and medium sized businesses can be part of, that individuals can participate in this open infrastructure and our software tools are like towns and villages along the highway, if you will, around which various programs can be written to tie business knowledge together so people can collaborate.

[OTC Journal] So how does that translate, Peter, into a revenue model for you, giving some specific examples?

[Peter] Well, specifically we would, and probably the best one is the people we are engaging with as partners right now.  A lot of the information that is going to be moved around the Internet is sitting in, what we call, legacies, databases where it is locked up because it is written in some format that cannot be moved on the Internet.  One of our premier products is our Go XML transform product, what it does is it transforms this back end or legacy data into an XML format which then allows it to be moved electronically on the Internet.  Then we sell that product.

[OTC Journal] So you sell it in the form of licensing fees or a piece of software, how does it work exactly?

[Peter] Well we sell the transformer as a license and in the case of an engagement with iWay, one of our partners, we’ve actually created a new product which is not only sold as a license but it also can be a transaction fee revenue model.

[OTC Journal] Currently, based on Friday’s closing price, your company is trading at a market cap of approximately $10 million.  Do you personally view your stock as being undervalued and if so, why?

[Peter] Well I personally do, and I think to a large extent we are kind of guilty by association, we are in a downturn in the technology sector in the market and we kind of get lumped in with everybody in that space.  There is a lot of consolidation taking place in this space and I think that if you look at some of the consolidations that have taken place, with NetFish being acquired by Iona and Sequoia Software being acquired by Citrix.  These are the kind of things that take place when you are in a downturn in the market and right now I think it is very difficult to get a very convincing solid story on the general feeling of testament in this market.

[OTC Journal] So you view your stock at $10 million as being undervalued, can you tell us what you think the fair value of your company is today?

[Peter] I think that we obviously have a go-forward plan.  One thing we can’t determine is how soon the market or the overall economy is going to turn around.  So I think that is a tough one to really pin down.

[OTC Journal] Okay, fair enough.  When the OTC Journal first started coverage of your company back in late March, Peter, based on conversations with management we stated that we believed the company would turn at least the cash flow breakeven by at least October or November of this year.  In view of maybe the technology business environment being worse than anyone really expected it to be, do you feel like your on track to meet our expectations or are you a little behind, can you give us a feel for that?

[Peter] Well my opinion is that we are probably going to miss October or November of this year, however I do believe that we can see any kind of daylight in the market and sort of confident in corporate America that I think we will in all likelihood be able to look at a breakeven in the next fiscal year.  I think a lot of that I’m confident of, specifically because our involvement with the U.S. Federal government and the Department of Defense specifically.  That engagement is growing and becoming solid and will turn into I think a very attractive revenue. 

[OTC Journal] So Peter you said this next fiscal year, XML Global is on a calendar year, correct?

[Peter] No, we are on a fiscal year, not a calendar year; our fiscal year end is June 30.

[OTC Journal] So between now and June 30, is when you anticipate the company will achieve at least a cash flow breakeven?

[Peter] That is our best estimate.

[OTC Journal] Do you currently have sufficient capital to meet your future needs?

[Peter] Well that is tied to the previous question.  As our product has become mature we have been able to consolidate some of our costs, so our burn rate is down.  I think in order to maintain the ability of our balance sheet what I am going to do is be out in the market probably doing some financing in the next three months.

[OTC Journal] So the answer is you might not have enough capital to meet your needs so you are going to do some sort of financing in the next few months if you can find the right situation.

[Peter] That is correct.  I think we’ve got a lot of very good partnerships that are going to involve into solid sales, but we as I said earlier don’t have any control over how this market unfolds.  So I think to put some stability in the balance sheet and make sure we can move forward beyond twelve months, eighteen months horizon.  That will stabilize the balance sheet with the financing.

[OTC Journal] Peter I know that when you announced the iWay relationship, and I do believe that was back in June, I know management at XML was very excited about the iWay software relationship, but the market didn’t seem to really respond to it in the manner that you would have hoped that it would.  Can you tell us a little bit about why you are so excited about this relationship and what it could mean to the company? 

[Peter] To answer the first part of the question I think the market didn’t respond as positively as it could have because iWay, which is a wholly owned subsidiary of a company called Information Builders, is a privately owned company.  So it is very difficult for people to sort of get a grasp of how large this company is, what it does.  I think first of all you have to understand its been around for about 25 years, it’s a major partner of IBM and they have over 9,000 installed software systems worldwide.  They are one of the original database management companies.  And the reason we are excited about it is because they are in the database business, what they want to do is take this back end data, transform it and then message it or handle it to the other systems on the web.  So we created a new product called Ebix, which is a transformation product and an XML server.  So we do all the transformations into the server and through various connectors, which are written by Iwave, we then move it into the web and it goes directly into IBM’s web sphere.  So this is going to become intimately tied to IBM’s web sphere product, which I think many of your listeners know about.  The other company of course is Microsoft, which is going to be tied to Microsoft’s Biztalk initiative.  So this is truly I think a major tool for our company because the way we positioned ourselves to really have a lot of our growth come from our partnering initiative.

[OTC Journal] So it would be fair to say that the iWay relationship lets you directly into both IBM’s and Microsoft’s XML initiatives and lets you provide tools for them.  Is that correct Peter?

[Peter] That is correct.

[OTC Journal] I think that a great way to wrap up today’s interview.  Thanks for everybody for listening, we’ll be back next Wednesday with an interview with Geoffrey Genovese, the President and Chairman of Envoy Communications.