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XML Global (OTC
BB: XMLG) Hits Jackpot |
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The June
19th news release from XML Global was a blockbuster. The company
announced a $1.25 million contract with an immediate $500,000
payment,
which was by far the largest in the company's history. This event took
the possibility of corporate failure off the table for the remainder of
this year.
On June 20th the stock traded 5.4
million shares, about 20 times normal volume. The stock traded to a
high that day of $.28, nearly a double from the previous day's close.
The stock since drifted back below
the $.20 level, much to the disappointment of shareholders. We have discussed
this with management, and we now believe one institutional shareholder
who was one of the original funding sources has now dumped most of their
stock in the open market at about 1/5 of their original investment. We
estimate they may have another million shares to sell before the overhang
is cleaned up.
Today's news release might take care
of any remaining overhang, as this announcement is as good, if not better
than the June 19th announcement. After two years of slugging it out in
a very tough market for their products, this company is gaining momentum
rapidly.
Today, just after the market closed,
XML Global announced the signing of a letter of intent to acquire the
intellectual property of VertaPort Inc. In conjunction with the
acquisition, XML Global also receives a funding commitment
from The Paradigm Group II, L.L.C, the majority shareholder of VertaPort,
Inc.
The agreement calls for Paradigm
to provide $5 million in funding for XML Global. $2
million will be provided by August 15th in the form of a convertible
preferred stock with an 8% coupon. The preferred will convert into shares
of common stock at a level no lower than $.20, and no higher than $.35.
Therefore, if you own XML Global
in the $.20 range, you own it at the same price a venture fund is willing
to buy $2 million worth today.
As disclosed in the press release,
XML
is also exchanging 7 million shares of common stock for the assets of VertaPort,
Inc. Apparently, there is a great deal of synergy between the two companies,
and the merger should boost XML sales in the near term.
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The
US Congress Goes to XML |
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There is some debate concerning whether
the software industry will adopt XML (extensible markup language)
as the universal translator language all computer systems will eventually
use in order to communicate with each other.
More evidence unfolded this past
week that XML will be the language of choice for computer systems
in the future. It was announced on July 2nd that the US House of Representatives
is now recording all its resolutions in XML. Click
Here to read an article which appeared in the Washington Post concerning
this development.
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Conclusion |
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In light of recent events at XML
Global, we still expect the stock to rebound into the $.30 range.
Based on the stock's performance this year, one could see shares rebounding
into the $.35 to $.45 range if the company can continue announcing
positive corporate events.
Today's announcement assures the
company will have the required capital to survive well beyond the end of
this year once this transaction is closed. Coming on the heels of the announcement
of the company's largest contract in its history, this is welcome news
for shareholders.
Market conditions are still very
tough, and sustained momentum will require more universal renewed faith
in stocks. However, we believe innovation will come from smaller, low overhead
companies like this one in the immediate future. Larger companies with
bloated overhead and substantial debt are dropping like flies. XML
should be well financed and debt free for the forseeable future, and positioned
in a market which is finally showing some signs of growth.
Here is the complete text of the
news release for your review:
Monday July 8, 4:01 pm Eastern Time
Press Release
SOURCE: XML Global Technologies,
Inc.
XML Global Signs Letter of Intent
to Acquire the Intellectual Property of VertaPort, Inc. Combined with a
$5 Million Maximum Equity Investment
XML Global Technology acquires significant new
XML based e-Business products and a first phase $2 million capital injection
to propel them forward in the expanding middleware sector.
NEW YORK, NY, July 8 /PRNewswire-FirstCall/
- XML Global Technologies, Inc. (OTC BB: XMLG), a developer of XML middleware
today announced that it has signed a letter of intent to acquire all of
the intellectual property of VertaPort Inc. The letter of intent also provides
for up to a $5 million equity investment into XML Global by The Paradigm
Group II, L.L.C., the controlling shareholder of VertaPort, subject to
certain conditions. Under the proposed agreement, Paradigm would provide
an immediate $2 million equity investment upon closing of the transaction,
scheduled for no later than August 15th, 2002. Sheldon Drobny, the Chairman
of The Paradigm Group, would also join the board of XML Global. Completion
of the purchase of the Vertaport intellectual property and the funding
through Paradigm Group is subject to the completion of due diligence, the
execution of a definitive agreement and other conditions customary in transactions
of this nature.
"This is a very strategic move forward
for XML Global," said Peter Shandro, CEO of XML Global. "VertaPort's technology
is complementary to XML Global's, and VertaPort has customer validation
in our market segment. The net result of this transaction will be an extended,
more versatile and robust product range, as well as a strengthening of
XML Global's balance sheet. With XML Global enjoying both increasing revenues
and a growing sales pipeline," continued Shandro, "Paradigm's strategic
long term equity investment will lay the foundation for the company's profitable
and successful future".
"Today's funding environment is limited
not so much by a lack of capital but by a lack of exceptional and validated
business opportunities, coupled with experienced and talented management
teams," explained Sheldon Drobny, Chairman of Paradigm. "XML Global scores
very highly on both points and with the acquisition of VertaPort, combined
with additional working capital strength, we are confident XML Global will
continue to build on its already strong track record in the middleware
sector and deliver long term shareholder value."
The terms of the acquisition and
funding agreement provide for XML Global to issue 7 million common shares
in exchange for 100% of the intellectual property rights of VertaPort.
Additionally, XML Global will issue 7 million common share warrants exercisable
at $0.50 and a further 2.5 million common share warrants exercisable at
$1.00 per share to complete the acquisition transaction. The funding component
of the transaction, as currently proposed, provides for XML Global to issue
to Paradigm or its designee, upon closing of the transaction, $2 million
of 8% Convertible Preferred Stock plus 6 million warrants exercisable at
$0.50 per share. The Convertible Preferred Stock would convert at a price
of no less than $0.20 per share and no greater than $0.35 per share. As
proposed, Paradigm would agree to a further direct equity investment of
$3 million scheduled for the first quarter of 2003 at a discounted market
price, but not to be less than $0.75 per share, subject to several conditions,
including the requirement that the market price of XML Global's common
stock is at least $1.00 per share with certain minimum trading volume.
The purchasers would also be issued 3 million common share warrants exercisable
at $1.00 per share upon completion of the second stage investment.
"The acquisition of VertaPort fits
nicely into XML Global's long term strategic technology and business objectives,"
said Lawell Kiing, Chief Technology Officer for XML Global. "We have worked
hard over the last three years to deliver the best middleware and data
transformation tools possible that our partners and customers are now using
to solve their integration initiatives. With the acquisition of VertaPort,"
continued Kiing, "we will be able to accelerate our internal product development
schedule and offer a complete development environment for building integration
solutions. This will radically decrease the time required to complete e-Business
integration projects resulting in measurable ROI for our clients".
About The Paradigm Group
The Paradigm Group II, LLC is a private
investment firm, which originates, structures and acts as an equity investor
in growth capital financing, priding itself on its value-added investment
strategies, frequently facilitating strategic relationships for its portfolio
companies. These financings include, but are not limited to, private or
venture financing, bridge loans, and public equity financing. The Paradigm
Group has invested over 100 million dollars of equity in approximately
70 corporate transactions. In March 2001, the firm embarked upon funding
the Paradigm Millennium Fund. This fund will invest primarily in the public
equity markets and Paradigm will utilize its vast resources to aid in helping
portfolio companies achieve their personal financial goals. Paradigm conducts
its investment activities through its wealth of strategic investors as
well as its strategic relationships and it leverages these resources through
the diversity and experience of its partners. For more information visit
www.paradigmventure.com
About XML Global Technologies, Inc.
XML Global Technologies, Inc. is
an XML middleware company focused on providing a methodical approach to
the adoption of XML-based solutions. The Company's GoXML(TM) Transform
product line provides an intuitive, modular solution for integration of
structured data. Its powerful transformation engine links XML to traditional
data formats, like relational and EDI. It also transforms data between
various XML dialects. Transformation solutions developed with the XML Integration
Workbench can be deployed to GoXML Transform Enterprise Edition for centralized
management and connectivity to integration platforms, message queues, and
workflow engines. Interfaces for Web Services and ebXML allow it to plug
into popular e-business infrastructures.
The Company is an active member of
the ebXML, UDDI, OAG, W3C and OASIS standards initiatives. Founded in May
1999, XML Global has its US headquarters in New York, NY, and a research
and development office in Vancouver, BC. To find out more about XML Global
Technologies (OTCBB: XMLG - News), visit our website at www.xmlglobal.com
Forward Looking Statements
All statements are based on XML Global
Technologies, Inc.'s current knowledge and specific assumptions with respect
to future business decisions. The actual results of XML Global Technologies,
Inc. may differ materially from those indicated by these forward looking
statements as a result of various important factors, including, but not
limited to, those discussed in the Risk Factors section of XML Global Technologies'
recent registration document, SB- 2/A, which is on file with the Securities
and Exchange Commission.
PR Contact Information
Contact
Anthony Dutton - XML Global Technologies, Inc.
Director of Corporate Communications
Phone
1-604-717-1100 ext.112
1-800-201-1848 ext.112
Email
anthony.dutton@xmlglobal.com
Web
www.xmlglobal.com
SOURCE: XML Global Technologies,
Inc.
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