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theglobe.com, inc. (OTCMKTS:TGLO) Is Today's Penny Stock Focus

theglobe.com, inc. (OTCMKTS:TGLO) Is Today's Penny Stock Focus
Written by
Jarrod Wesson
Published on
December 30, 2017
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Incorporated in 1995 and one of the first social media sites, theglobe.com, inc. (OTCMKTS:TGLO) recently released a change in control that made the share price increase quite a bit. Logo - theglobe.com, inc. OTCMKTS:TGLOFrom trading below $0.01, the share price spiked to close to the one-year highs of $0.04. But, the most interesting is not the price, but the trading volume.More than 20 million shares changed hands in a short period of time, which, in our opinion, clearly shows that many market participants are expecting big developments from TGLO: 1 month chart for TGLOBusinesstheglobe.com, inc. was created as an online community of registered members worldwide. It was intended to develop a network of users, who provide information about their online experience and their interests. It seemed to be the same concept that myspace or Facebook developed.The company went public on November 13, 1998. It was a big success. It showed the largest first day gain of any IPO in history up to that date; 606% increase over the initial share price. The expectations seemed to be high.The company did not stop there.From 1990s until 2007, the management decided to expand its business and also provided Voice over Internet Protocol telephony services. We remember how this other sector grew; it was a good sector to operate at that time. The fact that the management decided to develop assets in the VoIP industry shows that the management was smart.Finally, in March 2017, the company commenced to restructure the business and sold assets to a private equity firm called Tralliance Registry Management Company LLC, a private entity. Once this process ended, the company seemed to wait for many years while its owners looked for a good industry to grow once again.Now, it seems that a new business is coming.Change in controlOn December 20, 2017, several market participants agreed to acquire 70.9% of the issued and outstanding shares of the company’s common stock. According to the new agreement, the current members of the company’s Board of Directors, who are Michael S. Egan, Edward A. Cespedes and Robin S. Lebowitz, will resign.The transaction is not yet closed, but we don't see why it should not. There are still certain conditions, such as the company will terminate working with Dancing Bear and pay several debts to this stakeholder. Once they are all satisfied and the change in control is official, the share price could increase.When is the transaction expected to close?We could read in the company materials that it is expected to occur on December 31, 2017. So, we will have to be alert around that date like other market participants in the market.Have a look at the following comment that was seen in the iHub Forum:

"The ownership change is set to close Dec 31st. So 4 tradeable days before then. If it closes, which it should, then this will be a great kickoff to 2018 imo. Most of these are set 30 days in advance, we are 10 day close. To me that makes it look like almost everything has already been worked out ahead of time." Source

Why is this company so interesting for buyers? - Net Operating LossesWe could read the following text about the net operating loss carry-forwarded in the last quarterly report released:

"As of December 31, 2016, we had net operating loss carryforwards which may be potentially available for U.S. tax purposes of approximately $166 million. These carryforwards expire through 2036. The Tax Reform Act of 1986 imposes substantial restrictions on the utilization of net operating losses and tax credits in the event of an "ownership change" of a corporation." Source

What does it mean?It shows that the acquirer of TGLO will be able to reduce many dollars from the total amount of taxes payable to U.S. Government. We believe that it is a great deal.The biggest question - Who is the buyer?The biggest concern of market participants in the iHub forum is whether the buyer, which is called Delfin Midstream LLC, is connected to a big company called Delfin Midstream as well.Check the following information, which was posted in iHub: Image from iHubWhat's our take?We believe that readers need to proceed with extreme caution.The company seems to be doing business in the U.S. So, getting listed in the country to get financing is not illogical. Additionally, if the company is able to reduce taxes by acquiring TGLO, the agreement gets even better.In our opinion, many in the market do not believe the story.Why?If such a big corporation is acquiring the company, the share price should have been pushed up much more. We don't believe it either. Thus, we encourage readers to beware and study closely the next developments. Maybe some more hints are provided by the company or the Chinese conglomerate.ConclusionCurrently trading with a market cap of $9.3 million, TGLO is an interesting story among small caps. We believe that many interesting things are coming in the next weeks. Thus, we encourage readers to be very alert.The new financial statements of the company after the acquisitions will have to be released, which will explain many things. We will study them closely, as they could be the biggest catalyst for the share price.To sum up, study this deal and this name, as it may deliver more exciting news soon.We will be updating our subscribers as soon as we know more. For the latest updates on TGLO, sign up below!Disclosure: We have no position in TGLO and have not been compensated for this article.Image courtesy of Mike Haufe via Flickr

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