To OTC Journal Members:
 

XML Global Technologies (OTC BB: XMLG)- Great Buy or a Bust?

As promised in this past weekend's edition, we have an update concerning the status of XML Global Technologies, a company we have been reporting on for over two years.

As you can easily see from the chart, the stock began dropping prolifically in mid February for no apparent reason. In fact, up until this past Friday, the last news out of the company was the completion of the remaining balance of a $2 million financing at $.20 per share. On February 5th XML Global announced the receipt of another $415,000 in financing, which we felt put the company on sound footing for the immediate future.

December quarterly numbers indicated continuing anemic top line growth. Based on December numbers, the annual sales are about $1.2 million. This is a far cry from where we had hoped this company would be when we first looked at it over two years ago, but the IT spending world has been in a deep depression and the company has grown very slowly as a result.

This past Friday XML Global disclosed in an 8K filling with the SEC that the company was experiencing deferrals in orders from major customers, and as a result would be laying off employees to cope with the diminished cash flow.

Therefore, we know the stock had been dropping because the company was having a weak first quarter. Management responded by cutting overhead in order to insure ongoing viability.

Based on conversations with management, we believed the company would be issuing a press release with further clarification yesterday or today, but no press release was forthcoming. Therefore, we have to report based on public information. 

So....
 

Where Do We Go From Here?

Buy, Sell, or Hold? Hard to say and we cannot make the decision for you. The stocks of most technology companies rebound after the company announces cutbacks as the market generally perceives this as a positive action.

The stock traded 1.8 million shares yesterday, the highest volume in months, and only 43,400 today. Therefore, it is safe to assume for the time being that everyone who wanted to sell has done so.

Based on the 8K filing we know the company is having a weak quarter, and we know they are cutting overhead. 

Here's the answer- probably a hold if you haven't sold, as the stock is trading as if the company has already gone out of business. The upside is probably greater than the downside risk at this point.

Buy- if you have a gambling streak and like to take a shot when others have thrown in the towel. If someone steps up to buy or acquire this technology and/or company, and easy double is probably in the cards. Someone has been willing to buy all the shares that have been for sale recently.

Management has informed us they will provide more disclosure on future events as they unfold, and we'll bring them to you as soon as they are made public.
 

Upcoming

Tomorrow- a couple of trading ideas in large cap technology stocks if the market sets up well. If you filter out all the noise associated with the war, and take a clinical look at the market, Monday's pull back was constructive and bodes well for higher levels. We only gave back 1/3 of last week's gains. Technicians believe this rally could extend well into May.

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MarketByte LLC has been paid the following fee by XML Global for a year of representation extending from February 2, 2001 to February 2, 2002: $100,000 cash, 60,000 shares of free trading stock, 60,000 shares of restricted stock which are now free trading, and 60,000 options exercisable at $2. The 60,000 shares of free trading stock have been contributed by a third party on behalf of the company. MarketByte's contract to represent the company expired February 2, 2002. The contract was renewed for another year, and XML Global has paid compensation of $20,000 in cash and one million shares of newly issued restricted common stock. 492,000 of the aforementioned 1 million shares became eligible to be freetrading in February, 2003. Currently, MarketByte LLC has no contractural obligation to cover XML Global.  Please review our policy on selling shares found in our Mission Statement on our home page. 

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