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Elephant Talk Communications Corp. (ETAK) Primed For Explosive Growth

|Includes: Pareteum Corporation (TEUM)

Elephant Talk Communications is poised for explosive growth in the international telecom operations and financial services space with a strong backbone of systems integration capability in multimedia distribution that spans all forms of content, and a firm footing in mobile, as well as fixed-telecom services, all via their proprietary Software DNA™ (software defined network architecture) platforms.

These guys have stitched up the transaction security envelope quite nicely with a mobile virtual network enabler suite and a security/fraud over-watch system that combines the best-in-class proprietary software of the company's wholly-owned, cross-border and e-fraud focused security services subsidiary, ValidSoft, with ETAK's own telecom platform for a total electronic fraud prevention solution. A brilliant little company with strong ties to many of the top global mobile operators, including Vodafone, T-Mobile, and Zain, with deep roots in the Netherlands and surrounding markets where they are based, as well as much broader play in worldwide tier 1 and 2 markets. The array of cloud, on-site, hybrid, and software/platform-as-a-service solutions available, including network and mobile internet ID solutions, are impressive to say the least and with backup in the form of secure remote access and loyalty management, as well as transaction processing services, operators don't have to go chasing around after third party components to get the job done.

Their primary offering, the mobile virtual network enabler suite, gives MNO (mobile network operator) clients an ideally scalable framework within which to build a custom services package for their MVNO (mobile virtual network operators) customers. This suite is also perfect for full-on MVNOs, as in the Netherlands and Belgium, where ETAK provides direct service via their existing MVNE (mobile virtual network enabler) architecture. The real genius is how robust and flexible this platform is, because these attributes ultimately result in shearing cost and time off of the operation, deployment, and management lifecycle, with the added benefit of a tight reliability/security cordon.

To be able to utilize ETAK's integrated mobile platform to rapidly access mobile services without giant infrastructural outlays is a god-send and fixed line operators or other non-telecoms can especially benefit from the company's one-stop-shop IP-based solutions. The obvious synergy here with ValidSoft's (subsidiary since 2010) mobile/cloud security capabilities are unmistakable and investors should take note of how the company has blended together a perfect mix. MVNOs have ready access to a much cheaper total solution here, that has every function of a standard mobile network, but without the reliance on critical hardware, as everything is software from end to end. Meaning these MVNOs get a full mobile services platform, including CRM (customer relationship management) and billing for retail and wholesale, complete customer care, logistics, and order fulfillment, the works. There are even some value-added services available like premium messaging and Voice/SMS/Data VPN for corporate concerns, again dovetailing nicely with ValidSoft's transaction voice verification expertise.

ETAK is gaining ground among credit networks and mobile operators as their offerings continue to whet the appetites of the commercial banking sector, and the iron is ready to strike in many ways for a company that can boast such a full-spectrum suite of platform capabilities. From full OSS/BSS (operational support/business support) systems and delivery systems, to customer care-minded support and managed services, ETAK brings high-quality customer service to the table without the need for some big, upfront investment. The potential is still there for a major adoption by a big commercial bank or something, where a centralized deployment of the entire architecture would really kick the stock and platform's usage into overdrive.

ValidSoft's transaction verification platform has evolved into a huge net (five-factor authentication) to catch fraud across just about any transaction type and the technology itself is constantly evolving. The baseline, mutual, multi-factor authentication and transaction verification process, VALid®, encapsulates contact center, phone, and web channels, shielding against fraud with the added power of the company's easily integrated voice biometrics plug-in, VALid -SVP™. Back in 2011 ValidSoft rolled out the world's first, commercially available, four-factor authentication framework VALid-4F™, with its own proximity engine based on the global mobile telephone network and an internal biometric voice verification engine. Another existing ValidSoft solution which shows their clear progress towards stitching up the transaction security envelope as a whole is their card-present fraud solution aimed at ATM and point-of-sale, VALid-POS® (awarded the European Privacy Seal back in March of 2010), a real-time and out-of-band technology that eliminates false-positives, completely shattering the extant fraud management paradigm.

A very good sign of insider skin in the game is the recently announced (June 17) completion of their aggregate, $12M registered direct public offering, boldly led by a $4.5M position from ETAK's own CEO, Steven van der Velden. With net proceeds (after expenses) of around $11.4M, ETAK will be looking to retire some $6.7M in outstanding obligations before piling the rest into top-line growth in order to stabilize operational cash flow. These recent, highly successful raisings are seen by management as integral to the NYSE MKT's approval (June 14) of the company's plan to regain compliance and coincide with milestone cash flow results and the reception of an additional $1.5M in funding in May.

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