| Company Address 3190 Tremont Avenue Trevose, PA 19053 United States |
| PSD Comments Despite a recent surge, we feel this stock may still have plenty of gas left in the tank, and may also still be fairly cheap. The stock has climbed from the depths of sub-penny land to as high as 39 cents per share in a little over one month. The positive action was directly caused by an announcement on Dec. 16, 2008 that WGI Investor, a private investment fund partially owned by ACN Inc., has agreed to buy a controlling interest in the company. The agreement calls for WGI Investor to exchange the debt, plus additional funds, for 63 percent of WorldGate’s common voting equity. The transaction includes another undisclosed cash investment and is subject to shareholder approval. The deal is slated to close early next year. In a separate transaction, ACN has agreed to buy more than $50 million worth of video phones from WorldGate. What has our interest for a highly speculative, lightly weighted trade are the improvements seen in the companies fundamentals over the past year or so. They have seen substantial year over year revenue growth since at least 2005, as well as solid numbers so far this year. Gross profit turned positive last year, and expenses have declined considerably making for a very significant decrease in their overall operating loss. We have also seen a ton of insider buying during the second half of this year, as well as some institutional interest. On November 7, 2008, the Company's officers, in consultation with the Company's independent accountants, concluded that the Company's financial statements contained in recent Quarterly Reports should not be relied upon due to the need for a restatement to account for share limitations applicable to the Company's warrants previously issued in connection with the Company's June 2004 private placement. Although this can often be a red flag for these companies, we would still feel comfortable with a short term trade, and the reason for the restatement does not effect our analysis all that much. |
Business description WorldGate Communications, Inc. engages in the development and sale of video phone products and technology in the United States and internationally. It offers Ojo video phones for in-home and business, personal video communication. The company's video phones are designed for use on the high speed data (HSD) network infrastructure primarily for video calls, ordinary voice only calls, and voice over Internet protocol calls. WorldGate Communications markets its products to HSD network operators, as well as to consumers through consumer electronics distribution channels. The company was founded in 1995 and is headquartered in Trevose, Pennsylvania. |
| Market Cap: 4.97M Shares Outstanding: 82.91M Float: 63.65M % Held by Insiders: 23.23% |
| WGAT (OTC BB) Year Founded 1995 # of Employees 39 Employees Website www.wgate.com |
| 3 Months Avg. Price: 0.0690 1 Month Avg. Price: 0.170 10 Days Avg. Price: 0.300 5 Days Avg. Price: 0.350 |
| 3 Months Avg. Volume: 1.12M 1 Month Avg. Volume: 1.61M 10 Days Avg. Volume: 2.81M 5 Days Avg. Volume: 1.19M |
as of 12/29/08
as of 12/29/08
as of 12/29/08