To OTC Journal Members:
 

XML Global Technologies (OTC BB: XMLG)- Is It Time To Get Back On Board?

The last time we wrote about this company was January 10, 2002. At the time the stock was at the top of a meteoric come back, having risen from a low of $.18 last October to a high of $.76 in January- a 322% move.

In that edition we stated we felt the stock could be headed for $1 in the short term on the heels of a number of very positive developments. We were temporarily wrong. It's not the first time and it won't be the last.

However, the stock has pulled back, finally found bottom, and risk oriented investors should consider grabbing shares at these levels. We believe there is a good chance the stock will stage another comeback beginning this month, revenue growth will accelerate, and the company will be positioned for future prosperity.
 

Risk/Reward Ratio Attractive

XML Global is running low on money. Investors anticipated the company would complete an equity financing back in January when the stock was much stronger.

It didn't happen, and this has been a major factor in the pullback of the stock. In fact, based on the December quarterly financial statement and direct discussions with management, we believe the company will run out of capital early this summer if additional financing does not materialize. Therefore, if you are considering investing in this stock, you should be prepared for the possibility that you could lose 100% of your money.

We also believe the stock is currently priced for corporate failure, as it was last October. Just like last October, we believe the company is about to prove the pessimists wrong, and the stock will begin another attempt to attain the $1 level.

According to management, XML Global only requires about $500,000 of additional capital to fuel its growth for the remainder of 2002. Sales are ramping up and overhead is being cut, thereby lowering the company's cash burn rate.

We have been reluctant to cover recent positive developments, awaiting assurances the company will survive these lean times. We now believe that within the next 30 days the company will complete a financing which will reduce the risk of investing in the stock considerably.

Therefore, now is the time to enjoy the best Risk/Reward ratio in the stock. XML Global can only drop $.24 from these levels, but it could rise indefinitely. The editors of the OTC Journal are convinced there is a strong chance XML Global will receive additional financing in the next 30 days, and we would rather have members look at the stock while it is still priced for failure.

Our upside target on the stock remains $1 this year. Therefore, this risk/reward ratio from current levels is 100% loss vs. 400% gain.
 

What Does XML Global Do?

XML Global is a software company specializing in creating products using the revolutionary new programming language referred to as XML (extensible markup language). This "language" has the ability to act as a universal translator which allows huge computer systems to talk to each other efficiently. You can visit their web site at www.xmlglobal.com for more details.

Microsoft has been airing a television commercial where racks of wine crash to the ground. As the wine bottles are breaking, the wine merchant is updating his pricing to a customer live, in real time, via a hand held device. Microsoft describes this as "One Degree of Separation" at the end of the commercial. XML is the programming language which allows this fantasy to become reality.

In this era of massive main frames at huge multi national corporations, these large computer systems are surprisingly inefficient at
communicating with each other. Most people believe the major manufacturers order parts from suppliers, invoice customers, and perform many business functions through computer systems which talk to each other. In most instances, this is not the case. Many large companies employ outdated "Legacy Systems" which were not designed to interface with other systems or the Internet.

XML Global has developed software products which allow these outdated Legacy Systems to communicate with each other through transformation software. The translation software and other products lines have been gaining momentum since February, and March quarterly sales will show some improvement. The trend suggests June and September quarters will also improve, as sales finally materialize after a nasty recession in this market.

The chart provided shows a stock which has been under severe pressure since making its January high. It has found bottom, and is now trading sideways on light volume. This suggests that short term traders are gone, and the stock could be poised for a rebound into the $.42 range before taking a breather. 
 

Recent Developments

The stock gained tremendous momentum at the end of last year on the heels of high profile publicity. Here are some recent notable events. Very few $.25 stocks find their story published in Business Week or Investor's Business Daily.

• December 19th- XML Global's Xtract product for aiding law enforcement track stolen goods in featured in the December 19th edition of Business Week.
• December 31st- XML Global's Xtract product in featured in article in Investor's Business Daily.
• January 10th- XML Global is awarded contract by STAR (consortium of all major automobile manufacturers)
• January 23rd- XML Global signs reseller agreement with multi-national iWay Software.
• February 25th- XML Global receives approval to sell software to US Government.
• February 28th- XML Global signs consulting contract with EnSoftek.
• March 18th- XML Global signs distribution agreement with SEAGULL Software.
• March 25th- XML Global Invited to be Feature Presenter at Cisco Systems “Innovation Through Convergence Exposition”
• April 2nd- XML Global Deploys GoXML(TM) Registry for the US Defense Finance and Accounting Service

Market For XML's Products Re-Emerging

XML Global has been badly victimized by the recession. Companies simply stopped spending money on IT solutions. A formerly vibrant market went to zero overnight. B to B companies have been dropping from monitor screens like water over Niagara Falls.

There is evidence the IT Spending market is cautiously coming back after two years of recession. An April 2nd article in CIO magazine entitled IT Spending Expectations Hit 12 Month High brings out some bullish statistics:
 

The article goes on to provide more evidence of pent up demand for IT solutions:
 

Recent Successes in Low Priced Stocks

Despite the doom and gloom in the main stream financial media, there are plenty of small stocks trading extremely well. The Russell 2000 is near a 52 week high. Stocks which have been under severe pressure in protracted death spirals are exploding like coiled springs.

Below are two recent charts of very low priced stocks which have rocketed recently on the heels of positive developments:
 

These charts demonstrate several important lessons for risk oriented investors:

• You had to be willing to accumulate at the bottom and wait patiently for the explosion, never knowing when it would come.
• You had to have the faith that both companies would eventually create positive corporate developments.
• You had to be interested in microcap stocks- in this case stocks that were both well under $.50.

Conclusion

There are no guarantees XML Global will explode like either of the companies depicted above. These charts tell us investors are willing to jump into low price stocks when the right factors align.

There have been several recent changes- the stock has pulled back to a very attractive level, the company is beginning to gain some revenue traction, and with their market improving we believe they can obtain additional financing.

The stock is about $.25. By their very nature, $.25 stocks are risky. $.25 stocks also give you leverage, as you can own a lot of shares for a relatively small investment. From these levels the risk/reward ratio is highly attractive and poised to rebound. 

More coming on XML Global in future editions.
 

Correction From Last Edition

We reported on Cross Media's recent run in with the FTC in our April 17th edition. We noted the company has 20 million conversations monthlywith prospective customers. In fact, the company has 20 million conversations annually.

In addition, we reported the FTC was responding to 80 complaints. In fact, the FTC was referencing 1100 complaints during a period when the telemarketing division generated 2 million orders. The alleged violations all took place between 1996 and 2000 during a time frame prior to Cross Media's ownership of the company.

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Click Here to view our compensation on every company we have ever covered, or visit the following web address:  http://www.otcjournal.com/disclaimer.html for our full profiles and http://www.otcjournal.com/trading-alerts/disclaimer.html for Trading Alerts.

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, 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 agreed to tender compensation of $20,000 in cash and one million shares of newly issued restricted common stock. Please review our policy on selling shares found in the Mission Statement on our Home Page.

All statements and expressions are the sole  opinions of the editors and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any securities  mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein.

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