TTGL has to be characterized as the big surprise of the summer. This stock struggled January through March when the market was hot- making several attempts to push to new highs. Every advance was met with a rash of selling, and volume was not consistent enough to overcome the bad guys and let the stock break out. Very frustrating when you consider the corporate performance.
We are now embroiled in a miserable August with a liquidity crises causing a melt down in the markets, and TTGL is now breaking to new highs. Go figure.
In fact, TTGL managed to print at $1.50 in the early going today, a full one cent higher than the former $1.49 high the stock made on March 8th.
So, here’s my limited knowledge of what’s happening. TTGL experienced a lot of success with the acquisition and subsequent turn around of Oblio Telecom. Despite being the third largest phone card company in the US, Oblio struggled with profits until Titan took them on and turned them in the right direction by lowering costs and recovering excise taxes. Oblio is now a cash generating machine, and TTGL’s hard money lender apparently loves their performance.
It seems the plan to divest themselves of the unprofitable PCB division as previously announced has been sidelined, and TTGL has gone on an LBO (leveraged buy out) buying binge.
In July, TTGL formed Titan Energy Group, and entered into an agreement to buy Appalachian Oil Co, with a top line of over $400 million. TTGL also has formally hinted in a big way it will be getting into the Biofuels market.
Earlier this week, TTGL announced it has entered into a definitive agreement to purchase USA Detergents, a household products company with an undisclosed top line. While this move may seem a bit out of left field, there is synergy between the Titan’s Oblio Telecom and USA Detergents. Remember, Oblio’s phone cards are distributed through 65,000 retail locations in over 200 countries. That’s a hell of a distribution network for other retail products.
In addition to this mega buying binge, Titan also announced a 4 million share buy back program, of which they had bought back about 1/2 million shares when the stock was closer to $1.
Greystone Business Capital will be financing TTGL’s buying spree. So far, Greystone has been a straight debt holder to TTGL- no equity component. Terms of the financings have not been announced, so it’s too early to evaluate if there are any levels of toxicity.
There is a lending liquidity crises on Wall Street right now, so it’s legitimate to wonder if Greystone will be able to meet the commitments required to close these transactions. Time will tell- but nevertheless a legitimate concern. It would appear Greystone, who was one of the key lenders on the Oblio acquistion, likes what TTGL’s management has been able to achieve. Here’s the chart:
I drew in a couple of lines. 1- the previous all time OTC Journal high since we launched coverage at $.85. We’re closing in on a double on this one in well under one year, and as you can see we just blipped to a new all time high. 2. The current very steep uptrend line, which is doing almost exactly the opposite of what the market is doing. Very impressive. Perhaps a little sideways trading will be in the cards.
When it’s all said and done and if TTGL closes both of these deals, the top line of combined companies could be challenging the $1 billion mark. I have absolutely no way of quantifying what this could mean in EPS somewhere down the road. However, I suspect it will take some time for that smoke to clear.
In the meantime, TTGL has become my new favorite stock out of nowhere. Like the guy who comes up from AAA to hit .340 and ten homers, a welcome addition to the starting line up while other former starters go to the injured reserve list.
Comments and questions are welcome.
TTGL sure getting hammered this morning. Looks as if the speculators in in command. Even EFSF, with its news about RiteAid is down. We must not be out of the August doldrums.
BD
Editor: Once we get through this violent correction, large caps will start to trade better first, then small and micros will follow. By December you will wonder why you didn’t load up now.
I see that they hope to apply for listing on the Nasdaq in the short term. If they get it, does that mean a $4 or $5 price on the shares in order to get listed. How does that work.
I don’t believe they can actually obtain a NASDAQ listing until they have a quarter or two of post acquisition results under their belt. There is a $4 minimum price requirement for NASDAQ, however there can be variances for market cap, etc. In general, I am not a big fan of announcing you are going to try for a NASDAQ listing. It’s not too meaningful at this point. Everyone wants a NASDAQ listing. It’s a real possibility for this company sometime later in ’08 if they perform on the acquisitions they have announced.
Do you have new target for TTGL? Previously, you were projecting $3 based on Oblio alone. Now with Appalachian Oil and USA Detergents in play, and a NASDAQ listing (w/ a required $4 stock price) on the horizon, isn’t $3 a humble target?
We understand that these deals haven’t closed and the financing isn’t clear, but with the potential of a billion in revenues this is an entirely new game.
Editor: No matter what it is, it has to go through $3 to get there. That will be kind of a high class problem to have. I can’t really comment on what I think the stock might be worth until I have more financial information. However, with more than $1 billion in revs, it is a whole new game.
I believe Titan is doing everything right. They just announced tremendous growth. They have almost doubled over the summer.
Do you believe they will hit all their estimates ?
Also, are they getting into too many new different industries in such a short period of time ?
Is the purchase of the new companies going to result in additional debt or the issuance of additional stock ?
Editor:
1. The market sure likes it.
2. They have a record of coming pretty darn close to hitting estimates, so I believe them.
3. There are some synergies in the companies they are acquiring, but it is not readily apparent. Time will tell on that one.
4. The purchase of the new companies will definitely bring in debt. I’m not sure about an equity component. We have no way of knowing how these deals will be structured yet.
Please try to find out why Oblio Telecom just killed their entire prepaid calling card brand name but cutting delivered minutes by 90% !
Editor: I haven’t heard anything remotely close to what you are saying. Will contact the CEO, but if you don’t hear anything more about it, assume it is just some sort of ridiculous rumor. You might be thinking of them converting a lot of the traffic to their own switch, which actually makes them more profitable, but causes the deferred revenues entry on their balance sheet. The collect the cash, and have it to use. They can’t book it as revenues until the minutes get used. When they were buying their traffic, the liability went to AT&T or Sprint, but they made a smaller margin.
Can anyone comment on the current cash status of this company? they purchased USA Detergents a few months back and appear to have completely run out of cash. They have ceased ALL manufacturing operations and are not paying ANY suppliers/vendors (i am one of them). The company is completely unresponsive…i’m hoping someone here might know something… i see this as a dangerous situation for this company.
Editor: I don’t have any information on the day to day operations, but will forward your question on to the CEO and see if he responds.
i am in the same position as the prior poster. i too am a supplier to USA Detergents. they owe my company a huge sum of money and they will not return any calls/emails. i know that myself and a few other vendors i am in contact with are now planning legal action against TITAN to get our money back. they have left us with no other choice.
Editor: I have been informed that USA Detergent was a very distressed company, and they shut it down over the holidays for inventory counts. I also informed they intend to play hard ball with vendors as the company was headed towards bk anyways. I don’t know where they go with that one from here, but I do know that subsidiary is a very tiny percentage of their big picture. I feel terrible for all the vendors who did business with the company, but at least you have a chance of getting paid now. As a shareholder, I like the course they are taking with the division, but I have no idea where they are with it or what their plans are. I don’t know anything about the legal ramifications of what’s happening. Good luck with it. I hope it comes out to favorably for all involved.
who is giving you this information? yes, its true they were down for inventory over the holidays. but where i come from, the ‘holidays’ end on January 2nd. here we ae a week later an their plant remains shut and all the workers are laid off. their finished goods warehouse is nearly empty.
Their playing hardball with their vendors? whats the reason for that? what did we ever do to them except keep their raw materials coming in when the needed it the most. i’d really like to know who gave you this information. can you give me your email?
what is going to wind up is that many suppliers for USAD (i’m taking about companies with major presence in the Northeast) are going to take TITAN to court and with Titan’s deep pockets, i can predict the outcome.
Editor: Before you rush to court, you might want to consider their track record with Obio telecom. Oblio was very distressed before they took the company over. Now, about 18 months later, Oblio is doing huge revs and generating lots of positive cash flow. However, I am not trying to stick my nose into your business. You do whatever you have to do. I don’t have anything to do with the company’s operations in any way. I just follow the stock.
we are not rushing to court. these invoices that are overdue are from October and November when TITAN took ownership of the company, not when the former owners had it. If you have payment terms of Net 30 with a customer and 120 days comes around and you have no idea if/when you’re getting paid, that’s hardly rushing.
But you seem to have some inside track to the CEO of Titan based on prior posts i have seen here. Maybe you can pass this advice along…
Suggest to them that Frank Orlando (CEO of USAD) reaches out to the many suppliers that are owed money. Tell us we’ll get paid in a month, tell us we’ll never get paid, tell us to go jump in a lake. but tell us SOMETHING. this lack of communication is the most unprofessional behavior that i have ever witnessed in business. if we don’t know their situation, then it makes it impossible to work out a payment plan that is agreeable to both sides.
if you could pass that along, it would be nice.
Editor: I don’t have that great of communication lines with the company, and I certainly have absolutely nothing to do with what happens day to day at the subsidiary level. However, if the right opportunity comes along, I will pass on your message. One of the reasons their stock trades so poorly- they don’t have good communications.
hi, anyone know when their next investors conference call is scheduled for?
Editor: I believe we will find out tomorrow.
Editor, have you heard anything new on the USA Detergent situation? have they reached out to the suppliers that are owed $?
Editor: No news. Waiting quarterly numbers and an opportunity to talk to management for an update on each division.
when is the next conference call scheduled for? anyone know?
Editor: Hasn’t been announced yet.
Well I have spoken to Scott Hensell, refers me to Frank Orlando, no return calls, emailed Brian Chance (bchance@obliotel.com) no response.. They owe us a large amount of dollars. We new they were going through transition. Heped them through process. Then all contacts were released and no one will answer. They have called wanting info for themselves.. I told them I needed info on payment and that was last conversation. I am embarrased that a Company would work in this manner. Will work with others to stop companies from working in this manner.
Editor: Clearly, this company is a mess- that is no secret. I should have told everyone to just dump the damn thing and move on as it looks today. I don’t know who Scott Hensell or Frank Orlando are. Bryan Chance has been at the helm as they ran the ship up on the rocks.
BRYAN, are you part of the contingent of suppliers that is banding together to get your money back via legal action?
Editor: Brian- feel free to respond.
i read on their website that a conference call is set for 2/19 but no time or ph# is provided. does anyone know the details?
Editor: I suspect we will have them either later today or tomorrow. Please review my next posting on this company.
This is Bryan again. No I have not taken legal action yet but have spoken to our attorney.. I would visit banning together if it made since. Please advise on who to get in touch with?
Editor: I wouldn’t have the slightest idea on that issue. Good luck with it.
i just read on a website that 3 companies went ahead with a lawsuit against USAD that is forcing them into bankruptcy. GOOD FOR THEM!! i hope that something good will come out of this for these suppliers. its a shame because it seems like TITAN ignored them and chose the ‘hard way’ rather than the ‘easy way’ and now they have to deal with this.
Editor: Seems like there’s nothing but difficulties coming out of their second half of ’07 moves. I’m going to keep covering the situation for the benefit of readers, but at this point I would urge avoiding the stock until some of this smoke clears. At some point, they could right the ship and move forward.
BRYAN- wheels are already in motion here. if you are a creditor that is owed $$ by Titan, you will probably be notified by the courts. the lawsuit forced them into involuntary bankruptcy. i doubt you will recover what you lost fully, but you will no longer be ignored by Frank Orlando and his lackeys.
Editor: Great to see you guys using the BLOG for exchange of information. Hopefully, this open forum is proving useful. I don’t know anything about this, so I hope the information is accurate.
Editor – from what i know about this, the statements i’ve been below are accurate. to me, its like the old Lou Thesz vs. Strangler Lewis match where Lou said to him before the match started: “We can do this the easy way or the hard way”. In this situation Titan wanted to ignore the suppliers who kept them afloat when they bought USAD. We reached out on a daily basis when things were falling apart for them in January. To reply to us then would have been the easy way. Now, they can not proceed with selling the company because we have intervened legally (the hard way). Good luck to Frank Orlando and his goons. They are going to need it.
Editor: This company doesn’t seem to be doing things the easy way these days. This is winding down to a memory at this point. Not for those former suppliers to USAD, but this forum is really about the stock, and that will probably dribble down into oblivion until something changes.
anyone know why they have not updated the ‘news’ section of their website since February? what is going on w/ this company?
Editor: What is going on? I would say without a doubt this one is pretty much dead as it exists today (the stock, not the company). If they spin out their divisions as promised (they forecast it would be done by the end of March) into separate pub cos, there might be some hope for getting some money out. As it stands today, this is nothing but a mess based on what we’ve seen in the financial statements. If you will recall, I suggested it was time to get out when the stock rebounded to just above the $.70 level. If you’re still in, you can just hold your nose and hope. If nothing happens by the end of the year, you can take the tax loss.
Hey Larry how can you say that Oblio was distressed before it was taken over by Titan (comment 1/10)… Is it not true that Titan took 10M of NOS and offsetted it wih Oblio profits right after they took over Oblio… Now look at the track record of the Titan crew… when creditors at USAD hound them they create a diversion by suing the former owners…. and when the same happened with Oblio, they did the same thing. APPCO also has something coming up, this was the reason why they were not able to do their filings in time…
Editor: What does it matter what happened. It’s over, done with, and in my view there is little chance the company will recover. Why not focus on CREE, or something else?
Agreed, its a waste of time with TTGL. I like the V2K stuff… sounds promising but before jumping into it I think it would be wise to look at the guys involved… I think you should have a section on your site where there is some insight on the guys running the show. Had something like that done esp. on the prepaid hire at TTGL, we would have been able to get out in time. According to their releases the guy was a veteran at CVT Telecom… that company had some track record and the distributors in the industry were very cautious dealing with that company… additionally there were suits from the FTC against that company….Oblio I believe was doing great till he had joined the company. Its not worth talking about it anymore but as a rule of thumb it is quite clear that the majority of the players in the prepaid LD market are run by crooks. Thanks once again and hope that this would be the end of the TTGL fiasco. More insights on V2K would be very much appreciated.
Editor: At V2K there are two main players- Gordon Beckstead, who is a career accountant/financier, and Vic Yosha, who has been very successful building a multi million dollar private business and selling it to a larger company. That’s about all I know. I don’t believe either of them has been an officer of a pub co in the past.