Dow Jones 12582.59 +26.51 3:55 am PST, January 17, 2007 NASDAQ 2497.78 +0.00 For info, visit access.smallcapnetwork.com S & P 500 1431.90 +0.00 Change your subscription status here Russell 2000 791.48 +0.00 VOLUME 07: ISSUE 7 Titan's Q1 Results - Stellar as Expected We've only been following Titan Global Holdings (OTCBB: TTGL) for four days now, but we have to say, we've squeezed in a month's worth of excitement already. That's ok though, since it's a bullish kind of buzz. Yesterday's volume of 538,900 shares was the highest we'd seen in over a year, and the stock rallied 11.5% to close at new three-year highs.  And here's the kicker....the rally wasn't even made on the heels of those earnings we mentioned we were expecting sometime this week. We didn't get th6se numbers until a couple of hours after the market closed. And as you may suspect, they looked as great as we thought they would.  So, if you were impressed by Saturday's initial profile, we think you may be even more impressed by Titan's ability to achieve the lofty goals they've put in place for fiscal 2007.    The News No need for song and dance here - you knew Titan was looking for revenues of $145 million this year, and we felt it was well within the realm of possibility. As it stands so far, it looks like they're on track to do it. In Q1 of their fiscal 2007 (September 1st through November 30th), the company produced $29.9 million in sales, up $2.3 million from the same quarter last year.  The improvement was shared equitably between its communication division and its electronics & homeland security divisions. Titan's Communication Division (Oblio, Pinless, Startalk) improved revenues from $23.2 million to $24.5 million. The Electronics Division increased sales from $4.4 million to $5.4 million.  Nice top line enhancements, huh? The overall EBITDA was just as nice....maybe even nicer - it improved by 50% between Q1 of 2006 and Q1 of 2007, coming in at $1.2 million last quarter.  We mentioned on Saturday we thought Titan Global Holdings was likely approaching profitability in the foreseeable future. To us, the Q1 data reaffirms the notion. If Titan can stay on this course and does indeed get in the black, what we think is an undervalued stock could finally get fully valued - and potentially reward forward-thinking owners with triple-digit returns. (If you missed the original market cap math, be sure to click here and read through last weekend's initial profile.)    And The Bottom, Bottom Line? Our attraction to the opportunity all along has been the apparent progress towards full profitability. That hasn't changed, and probably won't change as long as we're tracking the trading idea.  It's just a key point we want to drive home first, as you'll also see the net operating loss came in at $6.8 million versus $6.3 million from the same quarter last year. We expected this, as Titan was reworking some its financing. The new deal makes much more sense in the long run, but will impact this quarter and possibly part of next quarter.  On the cash flow statement, the 'non-cash item' line mostly stems from a derivative expense related to the old financing. As the press release also states though, the positive impact of the new arrangement should show up soon, and these non-cash expenses should shrink going forward.  Point being, this changes nothing as far as we're concerned. The company has remained very vocal about hitting that $145 million sales goal in fiscal 2007, and we expect them to do it. Titan has also been very clear about a full-year EBITDA goal of $17.5 million, and we think they'll achieve that too.  And if they do? Well, just for some perspective......  In 2005, Titan saw a loss (EBITDA) of $2.1 million. In 2006, Titan reported an EBITDA gain of $7.9 million. Now the company is looking for an EBITDA of $17.7 million.....and they're on track to do it.  See any trend there? The company is adding about $10 million in cash flow per annum now. If they stay the course, we'd expect to see EBITDA around $28 million in 2008, and so on, and so on. Simultaneously, expenses are under control, and the updated financing deal isn't going to sap the bottom line going forward. Like we said, we won't be surprised to see this company and its stock finally turn the corner sometime within the next few quarters. In fact, the stock may already have done so....it's up more than 450% since May of last year.  We've got a feeling the story is just now getting good. Better still, we've got a feeling the potential from here remains enormous. That being said....    Stay Sharp As much as we like the stock, its quick ascension into popularity has also meant a heap of volatility, culminating with a big bullish gap at yesterday's open. While gaps can and do inspire a little more anxiety than they usually deserve, we think trading TTGL may require a nimble touch for the time being - just until things settle down a bit...if they settle down a bit. You may want to review our blog entry from yesterday regarding our thoughts on the gap.  In the meantime, that's not an up-or-down prediction. The run from $0.20 in May to the current level of $1.35 was stunning and hard to believe, but it still happened. We're just saying keep a close eye on it for early hints of....whatever, which includes the possibility of another upside breakout as much as anything else. As always, be prudent, pick your spots, and stay disciplined. Here's the press release.    Titan Global Reports Record Quarterly Performance in Fiscal Q1 2007 with $29.9 Million in Revenues and EBITDA of $1.2 Million Robust Financial Performance Led by $24.6 Million in Revenues by Communications Division Richardson, TX- Titan Global Holdings, Inc. (OTCBB: TTGL), a high-growth diversified holding company, reported record financial results for the fiscal quarter ended November 30, 2006, with the Company's divisions generating a total of $29.9 million in revenues for the period, representing a $2.3 million gain over the same period the previous year.  The Company also reported $1.2 million in earnings before interest, taxes, depreciation and amortization (EBITDA), an increase of 50% from the first quarter of 2006.  Titan's Communication Division, which includes Oblio Telecom Inc., Titan Wireless Inc., Pinless Inc., Startalk Inc. and others, reported strong financial performance, with revenues reaching $24.6 million in the first quarter of 2007 with a significant gain in EBITDA to $2.3 million, an 82% increase from the first quarter of 2006.  Titan's Electronics and Homeland Security division, which includes Titan PCB West and Titan PCB East, reported revenues reaching $5.4 million in the first quarter of 2007, a solid 23% increase from the first quarter of 2006.  "We are energized by the dramatic gains that Titan made during this period through our continued growth and the overall success," said Mr. Chance. "The Company entered fiscal 2007 with specific goals to increase revenue and earnings both organically and through acquisitions. During the first quarter of 2007 we leveraged our market position in each division to increase revenues and dramatically improve earnings in our Communications division."    Titan Global Holdings (in ,000's) 1st Quarter 2007 1st Quarter 2006 Change Revenue $29,986 $27,680 $2,306 Net Operating Loss ($6,839) ($6,336) ($503) Interest Expense $806 $1,563 ($757) Non-cash Items* $7,259 $5,591 $1,668 Earnings Before Interest, Taxes, Depreciation and Amortization $1,226 $818 $408 *Includes Depreciation, Amortization and Derivative Losses The following are revenue and EBITDA results by division.  Titan Communications Division  Titan's Communications reported the following results for Q1 2007:  Revenue of $24.6 million, up 6% for the same period the previous year.  EBITDA of $2.3 million, an 82% increase from the same period the previous year.  "Our revenues in the first quarter of 2006 were a result of an increased market share from international calling cards terminated through our strategic tier one partners and from added volume generated through our Startalk subsidiary," said Kurt Jensen, President of Titan's Communications Division. "By investing in our core international calling cards and growing our new subsidiaries in wireless, call termination and e-commerce, we intend to deliver communications services to more people, more often, in more places and thereby deliver more value to our shareholders."    Communications Division  (in ,000's) 1st Quarter 2007 1st Quarter 2006 Change Revenue $24,574 $23,267 $1,307 Net Operating Loss ($1,037) ($833) ($204) Interest Expense $654 $930 ($276) Non-cash Items* $2,698 $1,175 $593 Earnings Before Interest, Taxes, Depreciation and Amortization $2,315 $1,272 $1,043 *Includes Depreciation, Amortization and Derivative Losses  Electronics and Homeland Security Division  Titan's Electronics and Homeland Security Division reported the following results for 2006:  Revenue of $5.4 million, a substantial 23% increase from the first quarter of 2006  EBITDA loss of $461,000  "Our legacy print circuit board operations continued to increase revenues and expand market share in the first quarter of 2007," said Curtis Okumura, President and Chief Executive Officer of Titan's Electronics and Homeland Security Division. "Earnings were negatively impacted by a softening in the print circuit board market and rising costs of essential raw materials such as copper and laminate. We will counter this trend by continuing to compete for higher margin quick-turn and prototype work and efficiently structuring product offerings such as our Fastrac program to meet the needs of new customers."   Electronics & Homeland Security Division   (in ,000's) 1st Quarter 2007 1st Quarter 2006 Change Revenue $5,412 $4,413 $999 Net Operating Loss ($5,174) ($4,651) ($523) Interest Expense $152 $633 ($481) Non-cash Items* $4,561 $4,416 $145 Earnings Before Interest, Taxes, Depreciation and Amortization ($461) $398 ($859) *Includes Depreciation, Amortization and Derivative Losses  Overview  Titan also recently entered into new financing agreements with Greystone Business Credit II LLC to replace existing agreements with Laurus Master Funds and CapitalSource Finance. The Company repurchased 1.25M shares from Laurus upon the closing of our new financing agreements. The balance sheet impact and the related cash flow savings will be reflected in the Company's Q2 2007 financial statements."  "Management remains confident that the company will meet its stated earnings and revenue target of $145 million for fiscal 2007 as we continue to grow our Communications division and work to complete our outstanding recoveries with regards to USF and FET settlements," said Mr. Chance.  *Material items not spelled out.  About Titan Global Holdings  Titan Global Holdings, Inc. ("Titan") (OTCBB:TTGL - News) is a high-growth diversified holding company with a dynamic portfolio of companies engaged in emerging telecommunications markets and advanced technologies. 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:  Paul Karon, Toll-free: 800-592-6067  paul@trilogy-capital.com   We Value Your Feedback   Got comments, questions or suggestions? Send 'em on over: Editor@smallcapnetwork.com 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 Titan Global Division Doubles Its Sales Force Sometimes things are obvious, and sometimes things are subtle. We'd have to say this news is one of those subtle hints that Titan Global Holdings (OTCBB: TTGL) is on the verge of something very impressive.  We learned early yesterday morning their electronics and homeland security division has more than doubled its sales force. Why? Great question. Our assumption is they'd do it for the same reason anybody else would.....because they see demand growing faster than what they can possibly satisfy with current staffing levels. You think it's a good sign of strong sales increases? We do. We just don't see how or why Titan would even bother adding new hires if there weren't a substantial benefit in doing so.  For the full blog entry, click here.  For the full press release, click here.  If you happened to miss Saturday's profile and trading idea alert, it still may not be too late. Click here for the whole scoop.    Titan Global's Strong Open Leaves A Gap - What To Do? I guess sometimes you should be careful what you ask for. It was only a couple of days ago we were pounding the table on Titan Global (OTCBB: TTGL), saying shares were way undervalued. It looks like investors agreed right out of the gate, as shares opened this morning at $1.31.....5 cents above Friday's high. Even with today's low of $1.30, we've still got a case of the 'G' word dreaded by traders everywhere - a GAP! Why the worry? In general, the market hates them....and will likely try and fill the gap in by driving the stock down to $1.26 - even if just for a moment. For those who got in at the open this morning, it's a step in the wrong direction, temporary or not.  What to do, what to do......  To read the rest of our thoughts within this blog entry, click here. Subscribe Information is power and timely information is profitable. Become informed and profit from SmallCapDigest Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. 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