Dow Jones 13943.42 +92.34 1:12 pm PDT, July 23, 2007 NASDAQ 2690.97 +3.37 For info, visit access.smallcapnetwork.com S & P 500 1541.57 +7.47 Change your subscription status here Russell 2000 836.38 -0.06 VOLUME 07 : ISSUE 71 Titan Global: The Mouse Caught A Cat Never let it be said this business isn't interesting. After spending the first part of the year prepping to spin off its circuit board division from its telecom division, today Titan Global (OTCBB: TTGL) announced they're diving head-first into a new line of business.....and it has nothing to do with telecom or circuit boards. Titan bought an energy company - an energy company doing four times the sales Titan was already doing.  I admit my eyebrows were raised for a little longer than usual, either due to the sheer size of the purchase, or the choice to enter the energy arena (or both). Though the dust is still settling, I've got some initial opinions and observations about the acquisition.  In the meantime, if you missed my blogs/rants on Orchestra Therapeutics (OTCBB: OCHT) or Zupintra (OTCBB: ZUPC), you may want to check them out. Better still, you may want to respond with some thoughts or comments of your own.    Titan Tries Its Hand At Energy Here's the deal on Titan Global's acquisition - they bought Appalachian Oil Company (AOGA.PK), more commonly known as Appco. Appalachian Oil has a few different interests, including about 60 convenience stores in the southeast. In terms of energy-related offers, they sell everything from gasoline to heating oil to jet fuel. They also have easy terminal access to pipelines connecting refineries in the southeast to consumers in the northeast. Additionally, they've got supply contracts with some of the major energy names. Overall, Appalachian Oil seems to be a well-rounded organization with a decent foothold in their market.  And the numbers involved? Great question. From the press release, we know that Appalachian Oil did $400 million in sales last year. Considering Titan did $109 million last year, I'd call it a case where the little mouse caught a much bigger cat - quite a prize. Unfortunately, there were no other numbers disclosed...except for the confirmation Titan was buying 100% of Appco's stock, and taking on debt to do it. As a pink sheet stock, Appco isn't required to file with the SEC...and they don't. So, it's a little hard to get our hands on how good of a value this really was. I've certainly got some follow-up thoughts on the acquisition, but when I first heard the news, I immediately was reminded of one thing. I hope you were listening in on Friday's Titan conference call. If you were, you'll recall how - for the first time in a long time - CEO Bryan Chance really stressed how Titan Global was a diversified holding company. Today's announcement validates his words. So then why all the talk about telecom recently? Only because telecom properties were the biggest chunk of their holdings, until now.  In the grand scheme of things (beyond Appco) I think this is a reminder of something a lot of folks may have forgotten....Titan is in 'acquisition' mode, looking for companies that may be currently undervalued, but showing a great deal of promise. They could come from any sector. More in that in a second.    Shareholder Impact The details are academic; my primary concern is how this might affect shareholders. The thing is, without more information on the deal it's kind of hard to say what the ultimate impact might be. I believe it will be positive, but that's more 'feel' than 'founded'. As details come out, I'll be sure to post a follow-up edition. In the meantime, I do have some things to comment on....  First, Titan incurred debt to make the purchase. Now conventional wisdom might say that's a red flag, but I'm not going to jump to conclusions. Heck, the deal looked positive enough to the lender to finance the deal, so it must be at least moderately attractive (getting that much credit at all is a boon). But, if Appco has the potential to do what I think Titan expects, it should pay for the debt and debt service by itself - which reminds me of two other realities. First, Titan has proven adept at acquiring companies and turning them into something more, like they did with Oblio a couple of years ago. Second, they're good at paying off debt, thanks to strong cash flows.  In that sense, energy and telecom are a lot alike....pretty good cash flow. The trick is to scrape off as much margin as you can when it flows through.  My second comment - I think it's safe to say Titan would want to own a company for the same reason anybody would....because of the results it can produce after you stake your claim. I have enough faith in Titan's decision makers to say they see something much better for the future with Appco. We'll know more about the realities Appco next quarter.  As for the stock, it's been slowly working its way lower after peaking at $1.49 in March. More recently, the stock has been taking shots at getting back above its 200 day moving average line as well as a key resistance line. So far, no dice. I think the breakout potential is there though.  In the meantime, while sometimes stocks deserve to trade lower, I personally don't believe TTGL is one of those stocks. Before Appco came along, the company was going to do about $130 million in sales (pre-acquisition) in 2007, and generate their first-ever annual profit. The market cap of about $50 million just made no sense to me relative to their likely fiscal results. (But whoever said equity valuations always make sense?) Based on the fundamentals, I felt Titan was eventually going to be worth $3.00.  For now, I think we'll stick with our initial suggested target and stop levels. Though there's no disclosure on the financing yet, the numbers will start to show up on the books by the quarter after the transaction is complete. Titan thinks it will be in September. If we need to adjust anything then, we will.  In the bigger picture, I have to say I like the diversity direction this holding company is starting to take again. It doesn't exactly jive with their decision to spin-out their circuit board division later this year, and I'd really like to know more about Appco before making a final decision. But so far, I like where it could possibly go. Moreover, I'm eager to see what else Titan is looking to bring into the fold.  The upside to each new addition is a new revenue path, which for the most part makes Titan a developmental fund with multiple ways to win. Now we just need the rest of the market to get on board.  Take a look for yourself - here's the news release.    Titan Global Holdings Announces the Formation of Titan Energy Group  Company Executes Definitive Purchase Agreement to Acquire $400 Million Appalachian Oil Company as Initial Acquisition  RICHARDSON, Texas--Titan Global Holdings, Inc. ("Titan") (OTCBB: TTGL), a high-growth diversified holding company, announced today that the Company has formed Titan Energy Group, a division engaged in the acquisition and management of complementary energy sector assets. Concurrent with the formation of Titan Energy Group, the Company announced the execution of a definitive purchase agreement to acquire 100% of the outstanding stock of Appalachian Oil Company, Inc. ("Appco"), representing the Company's initial acquisition in the sector.  The formation of Titan Energy Group further validates the Company's strategic vision for creating long-term shareholder value through the creation of a dynamic, high-growth diversified holding company. Titan Energy Group, capitalizing on earnings opportunities within the energy sector, has been formed to aggregate undervalued assets which can provide significant opportunities for revenue and earnings growth.  Appco, formed in 1923 and based in Blountville, Tennessee, is a privately held petroleum company that owns and operates an extensive petroleum product distribution network that generated approximately $400 million in revenues for fiscal 2006. Appco distributes petroleum products to more than 160 dealers in the southeastern United States and owns and operates 56 convenience store locations. Appco has more than 550 employees and maintains long standing partnerships with strategic terminal operators and major oil companies.  "It is the opinion of Titan's Board of Directors that the formation of Titan Energy Group and the acquisition of Appco are the most important events in our Company's history," said David Marks, Chairman of Titan Global Holdings. "Titan's initiatives in the energy sector are consistent with Titan's unwavering commitment to the creation of shareholder value. Our expectation is that Titan will continue to grow as a high-growth diversified holding company and extend its reach even beyond energy."  "For more than two years, Titan shareholders have benefited from the strategic business model that helped build our communications division into a major force in telecommunications," said Bryan Chance, Chief Executive Officer of Titan Global Holdings. "Titan's senior management is firmly committed to building on that success through the execution of a strategic plan to similarly increase revenues and earnings in the dynamic energy sector. Appco's strong revenue base and storied 84-year history provides Titan with an ideal platform company for further expansion of our energy efforts. Furthermore, Appco's management team has more than 125 years experience in the petroleum and convenience store industry. We will preserve and leverage Appco's industry-leading management team."  The Company is acquiring Appco principally with debt financing provided by Greystone Business Credit. The terms of the agreement to acquire Appco were not disclosed. The Company anticipates closing the transaction in September 2007.  "Through the formation of the Titan Energy Group and the Appco acquisition, Titan's management team continues to demonstrate its ability to seek out businesses with value potential," said Drew Neidorf, President of Greystone Business Credit. "We continue to be enthused about our relationship where we already provide financing to other Titan related entities and look forward to considering the financing of many future businesses this talented team surfaces as Titan progresses into a formidable player in the energy sector." "The vision of Titan's management coupled with the Company's financial strength bode well for Appco's future growth," said Jeff Benedict, Chief Executive Officer of Appalachian Oil Company. "Titan has a track record of not only preserving but also creating jobs following its acquisitions and we are confident they will continue our legacy."  "Titan enjoys the stewardship of its equity sponsors at Crivello Group and Farwell Equity Partners, our forward thinking management team dedicated to increasing shareholder value, and seasoned business unit leadership that leverages its expertise to organically grow each business unit," said Mr. Chance.  About Titan Global Holdings  Titan Global Holdings, Inc. ("Titan") (OTCBB: TTGL) is a high-growth diversified holding company with a dynamic portfolio of companies engaged in emerging telecommunications markets, advanced technologies and energy. In its last fiscal year Titan generated in excess of $109 million in revenues on a consolidated basis.  Titan's Oblio Telecom Inc. ("Oblio") telecommunications subsidiary, based in Richardson, Texas, is a market leader in prepaid telecommunications products and the second largest publicly-owned international telecommunications company focused on the prepaid space. Oblio leverages strategic agreements with Tier 1 telecommunications leaders Sprint and Level3 to supply its brand-name prepaid calling cards. Annually Oblio sells an estimated 35 million of its brand-name prepaid calling cards through its established distribution channels estimated at more than 60,000 retail outlets.  Titan Wireless, Inc. ("T Wireless") is Titan's wireless subsidiary and is a mobile virtual network operator ("MVNO"). T Wireless sells its MVNO prepaid wireless products and wireless services through Oblio's established distribution channels. Titan's Electronics and Homeland Security division specializes in advanced manufacturing processes to provide commercial production runs and quick-turn delivery of printed circuit board prototypes for high-margin markets including Homeland Security and high-tech clients.  For more information, please visit: www.titanglobalholdings.com. For investor-specific information and resources, visit http://www.trilogy-capital.com/tcp/titan/ or http://www.b2i.us/irpass.asp?BzID=1314&to=ea&s=0. To view current stock quotes and news, visit http://www.trilogy-capital.com/tcp/titan/quote.html. To view an investor fact sheet about the company, visit http://www.trilogy-capital.com/tcp/titan/factsheet.html.  Forward-Looking Statements  Safe Harbor Statement Under the Private Securities Litigation Act of 1995 -- With the exception of historical information, the matters discussed in this press release are forward-looking statements that involve a number of risks and uncertainties. The actual future results of TTGL could differ significantly from those statements. Factors that could cause actual results to differ materially include risks and uncertainties such as the inability to finance the company's operations or expansion, inability to hire and retain qualified personnel, changes in the general economic climate, including rising interest rate and unanticipated events such as terrorist activities. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms, or other comparable terminology. These statements are only predictions. Although we believe that the expectations reflected in the forward-looking statements are reasonable, such statements should not be regarded as a representation by the Company, or any other person, that such forward-looking statements will be achieved. We undertake no duty to update any of the forward-looking statements, whether as a result of new information, future events or otherwise. In light of the foregoing, readers are cautioned not to place undue reliance on such forward-looking statements. For further risk factors see the risk factors associated with our Company, review our SEC filings.  Contact:  Trilogy Capital Partners  Financial Communications:  Ryon Harms, Toll-free: 800-592-6067  ryon@trilogy-capital.com Source: Titan Global Holdings, Inc.   We Value Your Feedback   Got comments, questions or suggestions? Send 'em on over: Email the Editor If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC 4653 Carmel Mtn Rd Suite 308 #402 San Diego, CA 92130 Subscribe Information is power and timely information is profitable. Become informed and profit from Small Cap Network Profiles and Trading Alerts by becoming a Preferred Member today. 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