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This is a situation I am beginning to investigate. I think it's good enough to bring to your attention. I pick these situations from those presented to me by my network of brokers, market makers, PR companies, investment bankers, venture capitalists, & key people in various industries. My primary criterion is the same as I apply for Conservative Speculator -- my opinion of the stock's potential to double or better in the next six to 12 months.
My opinion of this situation will be online here until I find another one for you. I will, however, occasionally do updates on situations featured here which I continue to follow, either in the "Larry Oakley's Opinion" column, or in the "Larry Oakley's Comment" column. Please -- do not use these picks for investment decisions unless you decide on the basis of facts you uncover in your own investigation.
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Current Larry Oakley's Stock Pick:
Date Posted: 12/12/11
Elephant Talk Communications, Inc. (NYSE-AMEX: ETAK)
Comment
In my July 5, 2011 issue of Conservative Speculator, one of the many editorials in which I covered ETAK, I opened my coverage with the following comment:
“I have been following ETAK for a long time. I covered its early times as well as its more recent growth periods. As noted, I feel that ETAK is a real winner. It’s one of the few companies that should, in my opinion, be an important part of every serious investor’s portfolio. Its progress has been remarkable, & it certainly looks to me like that progress will accelerate during the next few years, regardless of what happens within & between international economies.”
If you took my advice, you did well. If you take my advice today based on what has recently been accomplished, & either take an initial position or increase your current position in ETAK shares, I predict that you will do even better -- & I say that knowing about the current world economic situation.
ETAK’s Move to the NYSE AMEX
This little piece of my update is perhaps the most important. Here is the official announcement ETAK made:
SCHIPHOL, THE NETHERLANDS –November 30, 2011 Elephant Talk Communications Corp. (OTCBB: ETAK) (www.elephanttalk.com), an international provider of business software & services to the telecommunications & financial services industries, today announced that the company has been approved to trade shares of its common stock on the NYSE Amex stock exchange. Elephant Talk anticipates its common stock will begin trading on the exchange on December 5, 2011, under the symbol ETAK. After commencement of trading on NYSE Amex, the Company's common stock will no longer be traded on the OTC Bulletin Board under the symbol OTCBB ETAK.
“We are honored to receive the approval for listing on the NYSE AMEX and believe that the transition provides Elephant Talk with increased exposure to institutions investors & investment funds, as well as more transparency for the market,” stated Steven van der Velden, Chief Executive Officer of Elephant Talk. “The up-listing is a natural step in the evolution of our company, as we continue to establish ourselves as a market leader. We look forward to announcing other key milestones in both our telecommunications & fraud prevention businesses, to a more expansive investment audience in the near future.”
“We welcome Elephant Talk to the NYSE Euronext family of listed companies & to NYSE Amex,” said Scott Cutler, Co-Head of U.S. Listings & Cash Execution, NYSE Euronext. “Elephant Talk & its shareholders will benefit from superior market quality & technology, a broad array of issuer & investor services, & a partnership with the Company & its shareholders.”
Other Key Update Points
Here are nine key update action comments that were mentioned during the company’s shareholder update call on 12/8/2011. I quote them from what the management described:
1. Through our Adeptra relationship, we are waiting for a contract from a worldwide top five bank for ValidSoft authentication. This bank has 14,000 branches & over 100 million customers. Revenue will be transaction, volume, & contract duration based. The contract is expected by the end of December. The integration between Adeptra & ValidSoft has been completed.
2. We believe we will sign first Elephant Talk deal in North America this month. (ATCH)
3. Patents are pending for ValidSoft authentication. Patents are not on cross referencing authentication & cell location, but on components thereof that make anyone else getting the desired privacy seal virtually impossible.
4. We have just migrated a Spanish MVNO to the ETAK platform of 600,000 plus Simms, the largest known migration ever. This is a big milestone achieved & it will cut the burn rate in half by all the managed Simms under the ETAK umbrella. These deals are RECURRING MONTHLY REVENUE.
5. With this Spanish migration, total managed SIMMs are now close to 1 million.
6. Using approximately $1 revenue per month per SIMM is still appropriate, but it depends on volume.
7. We are looking to double ETAK MVNE footprint from four to eight markets in 2012. Ultimately, each market is expected to yield $30mil in revenue within two years.
8. We will ring the closing bell on the NYSE on Dec 13, 2011.
9. Positive EBITDA when? Looking for sometime in 2012 based on signed agreements, but to date contracts have cut our current cash burn rate in half.
Share History
After doing a great deal of investigation, I wrote my first detailed editorial on 9/15/2010, when the price was 1.77 -- it rose to 2.36 by 12/1/2010. I continued to do my editorials, largely in several issues of Conservative Speculator, my news letter. In my editorial of 2/1/2011, I reported that ETAK traded at $2.98 at the close on 1/28/2011.
I am writing this update editorial on 12/12/2011 for posting this evening – ETAK today 12/12/2011 closed at 3.27 on a volume of 469,122 shares [the average volume during the last three months has been 226,025 shares]. The rise from 1.77 when I published my first detailed editorial on 9/15/2010 to 3.27 now has been about 84.7 percent. That’s not bad, but I believe that ETAK’s price will continue to move up during the next few years. As I have told you, this is one that should be in your portfolio for exceptional long-term appreciation.
What ETAK Is & Does
ETAK is an international provider of business software & services to the telecommunications & financial services industry. The company enables both mobile carriers & virtual operators to offer a full suite of products, delivery platforms, support services, superior industry expertise & high quality customer service without substantial upfront investments from clients. ETAK provides global telecommunication companies, mobile network operators, banks, supermarkets, consumer product companies, media firms, & other businesses a full suite of products & services that enables them to fully provide telecom services as part of their business offerings. The company offers various dynamic products that include remote health care, credit card fraud prevention, mobile internet ID security, multi-country discounted phone services, loyalty management services, & a whole range of other emerging customized mobile services. For more information, visit (www.elephanttalk.com).
ETAK Key Officers
Steven van der Velden is Chairman, CEO, & President.
Mark Nije is CFO & Principal Accounting Officer
Martin Zuurbier is COO, CTO, & Director
Willem Van Den Brink is Chief Commercial Officer
Alex Vermeulen is General Counsel & Secretary
ETAK’s ValidSoft Subsidiary
ValidSoft is a market leader in providing solutions to counter electronic fraud relating to card, the internet, & telephone channels. ValidSoft's solutions are at the cutting edge of the market & are used to verify the authenticity of both parties to a transaction (Mutual Authentication), & the integrity of the transaction itself (Transaction Verification) for the mass market, in a highly cost effective & secure manner, yet easy to use & intuitive. For more information, please visit (www.validsoft.com).
Four Things Originally Impressed Me
These are largely from my first detailed editorial of 9/15/2010:
1. ETAK’s completion of a private placement to accredited investors in 2009, raising $12 million via a note at $12% interest, all convertible to shares at $1.35 per share, all of which were converted. That was followed beginning in July 2010 by a raise of about $14.8 million. (check its 9/2/2010 Form 8-K).
2. CEO van der Velden said he expects ETAK’s mobile telecom platform to be operational on at least three continents with at least five operators within the next 12 to 18 months.
3. CEO Van der Velden & Steve Gersten, his VP of North America presented ETAK’s Mobile Platform & its subsidiary ValidSoft's real time proximity-based technology called VALid-POS® that effectively combats credit & debit card fraud, at the Rodman & Renshaw Annual Global Investment Conference in New York City on Monday, 9/13/2010.
4. Of even greater importance is the personal opinion of Josh Levine – one of my readers told me about the comments he included in his MicroCap Investor on 9/2/2010. I was so impressed that I called Josh. Here are some of the things Josh shared with me in my 9/8/2010 interview with him:
Basically, Josh has high confidence in ETAK’s ability to build a substantial business with tremendous upside potential. While he will not give his share price projection, he feels that ETAK has multiple platforms that could result in a scale-up of revenue within four to five years to perhaps as high as $1 billion.
He feels:
(a) The company is pursuing a realistic strategy to achieve success.
(b) Management has an excellent track record with similar situations in the past. ETAK’s superior management, technologies, & strategy are like few micros he has ever seen.
(c) The company could eventually be a candidate for acquisition by a very large corporation.
(d) ETAK is in the right business at the right time, & could scale up rapidly.
(e) A globally oriented company, ETAK management recognizes & is focusing on those international countries where the market pull is highest. It is directing its efforts to emerging areas & markets, a very sensible approach.
(f) ETAK’s mobile platform consists of a great deal of very complex software that ETAK has successfully integrated to make it exceptionally easy to use.
(g) Its platform enables both mobile carriers like T-Mobile, & virtual operators, to offer a full suite of products, delivery platforms, support, & customer service, without substantial upfront investments from clients. It enables them to extend their business models.
(h) Its telecom platform will enable many exciting next-generation mobile services that will play a major role in the coming revolution in the mobile telecom industry. These are applications built for mission-critical purposes & are highly secure in order to serve banking, energy management, medicine, & more.
(i) ETAK’s other primary direction asset is its subsidiary ValidSoft, which has developed a remarkably elegant solution for credit & debit card fraud, which costs banks & financial organizations $100 billion annually. ValidSoft's potential is so huge that it easily rivals that of ETAK's telecom platform & it could scale even faster.
I suggest that you consider using Josh Levine’s service. You can learn more at https://order.investorplace.com/?sid=MP3111.
Josh Levine’s More Recent Comments
I used ETAK’s 9/28/2011 news release for this: In his latest report, Josh focused on the recent ETAK annual shareholder meeting, held on Sept. 14 in New York at which ETAK CEO Steven van der Velden & ValidSoft CEO Pat Carroll gave presentations on their respective operations.
Josh said that if there was a single message at ETAK’s recent annual shareholder meeting, it was that the company & ValidSoft subsidiary have established strong technical foundations & favorable partnerships with multinational telecom & financial firms. He also noted that the Elephant Talk & ValidSoft businesses are modeled on recurring revenues. Elephant Talk & ValidSoft solutions enable their major customers to:
1. Shift investment from capital expenditures to the operational side, enabling them to free up resources;
2. Move from fixed to variable costs, preferring "pay as you go" arrangements; &
3. Replace overly complex and partial solutions with one-stop-shop solutions.
Josh said that Elephant Talk is targeting the market for companies to become virtual mobile operators. There will soon be close to 8 billion handset SIM's & approximately 50 billion machine-to-machine SIM's around the globe, Levine said. As an enabler of mobile network operators, Levine said, Elephant Talk will, on average, charge $1 per month per subscriber. The company expects to have one million SIM cards in operation at the end of 2011. Levine also described ValidSoft's revenue model, which is based on payments per transaction.
On 12/1/2011, Josh published his current opinion & titled it “Elephant Talk: Rolling Thunder.” Among his comments: “The new listing is very important because it opens up the playing field to a broader & more sophisticated audience. As long as ETAK was trading on the OTC Bulletin Board, many substantial prospective buyers (e.g. institutional investors) were cut off.”
NOTE: I plan to do an additional update re ETAK soon after the first of 2012 – when I do, I will advise you of my timing & in which editorial venue I will post my comments.
B>News from ETAK on 11/15/2011
ETAK announced the results of operations for the three & nine month periods ended September 30, 2011. "During 2011 management has remained committed & confident to the mass commercialization of our anti-fraud technology & the expansion of our mobile services," stated Steven van der Velden, Chairman & CEO. "In addition to our Visa Europe relationship, ValidSoft now has an agreement with Adeptra that will allow us to prevent fraudulent transactions while authenticating & verifying across all banking channels. Management has made significant progress in generating interest from multiple global banking institutions for ValidSoft's suite of products & we expect our first large-scale sale for ValidSoft within the coming months. Lastly, we are pleased with the $1.5 million increase so far this year in our higher margin mobile & security solutions business. With nearly $11 million in cash on our Balance Sheet & recently signed contracts with Your Card & SpeakUp in our mobile telecom operations, & Adeptra in our transaction security operations, we are well positioned to increase our mobile & security services revenue."
Key Operational Highlights:
• ValidSoft & Adeptra Form Partnership to Extend Global Fraud Detection & Customer
Communications. The partnership provides financial organizations with best-in-class fraud detection & prevention functionality, as well as total control over their customer
communications.
• ValidSoft was awarded its Second European Privacy Seal for its VALid-4F™solution & continues to be the only Security Software Company in the world to be certified to the
EuroPriSe standards. The European Privacy Seal certifies IT products & IT-based services privacy compliance with European data protection regulations.
• Elephant Talk signed a Mobile Network Virtual Operator (MVNO) agreement with SpeakUp, a Netherlands-based company whose telecom infrastructure covers the Netherlands, as well as Germany, Belgium, & the UK. SpeakUp will offer a new range of innovative services by combining both fixed & mobile functionalities. SpeakUp will target the small & medium enterprise market to offer high-quality, fully integrated fixed & mobile flexible services.
• We announced the signing of an agreement with Your Card B.V., a Mobile Virtual Network Operator (MVNO) serving the Dutch market. Your Card B.V. will launch Calling Card services -- under the name YOUR CARD® ONE -- to Dutch commercial & consumer mobile users this fall using Elephant Talk's fully integrated MVNE platform for hosting mobile services & supporting new channels.
• Elephant Talk appointed Charles E. Levine to the company's Board of Directors. In a career spanning more than 30 years, Mr. Levine has held executive positions at
several companies in the telecommunications industry including Sprint PCS, AT&T,
General Electric, & Octel Communications Corp.
Detailed financial data can be found following the above comments in the 11/15/2011 news release listed on ETAK’s web site.
The ValidSoft Fraud Solution
This news release was originally issued in Europe – I included it in one of my past editorials:
“Visa Europe has entered into a contractual arrangement with ValidSoft Limited for the provision of its fraud-prevention solutions, VALid-POS®, a sophisticated card fraud detection & prevention solution, & VALid®, ValidSoft’s multi-factor authentication platform. The agreement will allow Visa Europe to integrate & market the solutions as services to its member banks as part of its European processing platform.
“VALid-POS®, a groundbreaking fraud prevention solution, uses telecommunication technology accessing the global mobile phone network to confirm, in real time, whether a cardholder’s mobile phone is within the proximity of the ATM or merchant terminal at which the card is being used. This practice minimises the number of inappropriately declined cross-border transactions &, subsequently, improves fraud discovery rates. This results in reduced case-management processing costs for Issuers, reduced fraud levels &, critically, a greatly improved customer experience with legitimate transactions approved within one second.
“VALid® is a telecommunications based (Voice & SMS) solution that uses two separate channels designed specifically for combating the most advanced fraudulent techniques such as Man-in-the-Middle & Man-in-the-Browser, along with the more traditional attack vectors.
VALid® integrates with VALid-POS® where additional location based information is required for authentication, or where automated resolution is necessary.
“Steve Chambers, Visa Europe’s Chief Information Officer (CIO), said: `Security is fundamental to Visa Europe’s business & we feel that the solutions offered by ValidSoft can help us in our continuous efforts to address the increasingly sophisticated methods used by criminals. Visa Europe will never cease in finding ways to protect the interests of our European member banks & help them, in turn, protect those of their cardholders.’
“Pat Carroll, CEO of ValidSoft Limited, said: `We are absolutely delighted to be working in partnership with Visa Europe. Our solutions are at the forefront of technology innovation & we believe the convergence of payments & mobile telecommunications aligns with the underlying principles of VALid-POS®: proximity correlation of a transaction to a mobile phone.”
Visa Inc. is the world’s largest retail electronic payments network, with US$5.0 trillion transacted on its payment products over the four quarters ended September 30, 2010. It has 15,700 financial institution customers, handles about 1.8 billion Visa cards as of 6/30/2010, does a total volume of $5.0 trillion, a payments volume of $3.1 trillion, uses 1.7 million ATMs as of 6/30/2010, & does about 68 billion transactions a year.
In Europe, there are over 399 million Visa debit, credit, & commercial cards. In the 12 months ending March 2010, those cards were used to make purchases & cash withdrawals to the value of €1.4 trillion. 11.2% of consumer spending at point of sale in Europe is with a Visa card, & more than 70% of that is on Visa debit cards.
Visa Europe is owned & operated by more than 4,000 European member banks & was incorporated in July 2004. In October 2007, Visa Europe became independent of the new global Visa Inc., with an exclusive, irrevocable, & perpetual license in Europe. As a dedicated European payment system, it is able to respond quickly to the specific market needs of European banks & their customers - cardholders & retailers - & to meet the European Commission’s objective to create a true internal market for payments.
Visa enjoys unsurpassed acceptance around the world. In addition, Visa/PLUS is one of the world’s largest global ATM networks, offering cash access in local currency in over 200 countries. For more detail, visit www.visaeurope.com
The financial services industry is currently at levels of $128 billion per year & is expected to increase three fold over the next three to five years (Gartner Group).
My Opinion
I wanted to give you a summary of all of my previous editorials regarding ETAK, but after I downloaded them all, there were close to a hundred pages, so I just touched on a few of the newest things, such as the most important – the move to the NYSE AMEX.
As mentioned, I will bring you another editorial with several new plans that are in the works. Bottom line – the potential of this situation is rather huge. I suggest that you do some homework of your own – you’ll be impressed.
Contacts
Elephant Talk Communications, Inc. is located in Schiphol, The Netherlands. You may call CEO Steven van der Velden at + 31 20 653 59 16, or email him at steven.vandervelden@elephanttalk.com. www.elephanttalk.com
The U.S. office is at 19103 Centre Rose Boulevard, Lutz, FL 33558. Call 813/926/8920
Investors: Alliance Advisors, LLC Thomas P. Walsh 212-398-3486
twalsh@allianceadvisors.net
My comments in this column are strictly my personal opinion. At times, I will include forward-looking information as that term is defined in the Private Security Reform Act of 1995. Such information & the related company are subject to many risks & uncertainties. There can be no assurance that actual results, business conditions, business developments, losses & contingencies, local & foreign factors, & other matters will not differ materially from those suggested in any of my forward-looking statements. Such differences are the result of all sorts of factors (some examples: market conditions, competition, advances in technology, acquisitions, mergers, potential litigation, personnel changes, market changes, capital availability, etc., etc.).
Do not run out & buy a stock just because I am enthusiastic about the situation. Call the company before you buy -- satisfy yourself first. I always include a phone number for that purpose. My purpose in this column is to respond to your request for my personal opinion. You have the responsibility of making your own investment decisions. Do not give up that responsibility.
My editorial coverage has always been, is now, and always will be without charge. That includes what I write in Conservative Speculator, and what I write in "Larry Oakley's Opinion, " "Larry Oakley's Stock Pick," "Larry Oakley's Comment," & "Larry Oakley's Bold Ventures" columns. It also includes what I write in such venues as articles submitted to other publications, interviews on radio & television, and at the investment seminars and conferences at which I am a featured speaker. By doing all my editorial work free of charge, I have the advantage of writing about what companies I particularly like. There are occasions when I will write about a company that is a paying participant on WallStreetCorner -- that's because I like the company. I always make it clear to them that editorial coverage is free and is not a part of the fee they pay to have their Profile researched, prepared, & posted at WallStreetCorner.
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