Pareteum Corporation
Q4 2014 Earnings Call Transcript

Published: 31 Mar 2015

[Operator:]

Please standby, we are about to begin. Good day, and welcome to the Elephant Talk Communications Shareholder Update Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Steve Gersten of Capital Markets Group. Please go ahead.

[Steve Gersten:]

Thank you, and good morning to everyone in the United States, and good afternoon to our European listeners. And thank you for joining us for the Elephant Talk Communications shareholder update conference call. On our call today will be Steven van der Velden, CEO of Elephant Talk; Mark Nije, CFO of Elephant Talk; and Paul Burmester, CEO of ValidSoft. Following management's discussion, there will be a Q&A session open to all participants on the call. Now before we get started, I'm going to review the company's Safe Harbor statement. Remarks made on this call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended. All forward-looking statements are inherently uncertain, and they're based on current expectations and assumptions concerning future events or future performance of the company. Listeners are cautioned not to place undue reliance on these forward-looking statements, which are only predictions, and speak only of the date hereof. In evaluating such statements, perspective investors should review carefully various risks and uncertainties identified in this conference call in the manner stated in the company's SEC filings. The risks and uncertainties could cause the company's actual results to differ materially from those indicated in the forward-looking statements. With that out of the way, I'd like now to turn the call over to Elephant Talk's Chairman and CEO, Steven van der Velden. Steven van der Velden Thank you, Steve, and thanks to everyone for joining us today for our shareholder update call. 2014 was a year of a great number of achievements for Elephant Talk across the entire business, reflecting new contracts, critical new partnerships, and significant product enhancements, resulting in the continuation of positive quarterly financial trends. As we enter 2015, while the momentum in the business remains and is even growing, as we will talk about in more detail shortly, there have been a number of importance [ph], but unfortunate developments which will need to be addressed first if we are to deliver on the true potential of our business. Two of the most important issues are the needs to restate revenues for 2013, and the first three quarters of 2014, and the contract situation in Mexico with Iusacell. While it was necessary to restate, it's important to note that that it will have no impacts on reported cash flows. Additionally, we did not lose any revenue overall. Instead, we are now recognizing deferred revenues over time. This was caused by the circumstance that originally our revenue recognition policies were based on the fact that the vast majority of our services were focused on our landline activities. As we transitioned away from these landline activities to mobile platform and security managed services, the characteristics of our services moved away from a landline service provider to reflect more of those of cloud software service providers. As such, over the last few years we thus became more subject to revenue recognition rules that and generally apply to, for example, cloud service providers. As a result of our restatement, and in accordance with U.S. GAAP, revenue that had originally been recognized in 2013 and 2014 is now being recognized over an extended timeframe. The amount of revenue earned, or to be earned over the entire period of recognition essentially remains unchanged from the amounts we historically recognized. There was neither a change to the cash characteristics of the transactions being restated, nor the company's liquidity directly relating to these transactions. As a result of the restatements, the balance sheet reflects a significant increase in deferred revenue, which will be recognized as revenue over a number of years. Additionally, as we previously filed in an 8-K, our relationship with Iusacell/AT&T is currently under review. At this time we have reason to believe that we will not be continuing our work with Iusacell following its acquisition by AT&T under the terms of our five-year contract. As such, we are at discussions regarding compensation owed to the company per the contract terms. I want to reassure all of our shareholders that this is not based on an inability of Elephant Talk to deliver. In our views, it simply reflects AT&T's desire to maintain consistency within their global operations, and their preference to use their legacy vendors as they enter into this new geography. Under terms of the contractual agreement with Iusacell, ETAK management believes that we are entitled to certain compensation, which is currently under negotiation. We expect to come to a conclusion in the termination and payout of this contract over the coming months. From a compensation point of view, we anticipate being paid for full of our outstanding invoices for services rendered, plus additional payments. The fact that we were forced to delay our reporting to facilitate the restatement, and the uncertainty surrounding our Iusacell contracts clearly had a negative impact on our stock price. Our Board of Directors and management team remain committed to creating shareholder value, and believe that the future prospects of our company will allow us to just do that. We are working with top industry players, like HP and Affirmed Networks while we continue to increase our scope of work for Vodafone. On the ValidSoft side, we are continuing to monetize our technology by deploying with the second leading bank in the U.K., as well as beginning to see real demand for our voice biometric software solution. Our Board of Directors and management team have completed a formal operations plan designed to compensate for the loss of Iusacell, while ensuring we can continue to capitalize on our near and long-term opportunities. While we expect our revenue, at best, to remain flat on a comparative basis for the next few months, we now foresee to resume growth in the later part of 2015, based on several new projects and customers that are expected to ramp up during the third and fourth quarter, both in the mobile as well as on the security sides of our business. As part of this plan, because of the lost revenue we will be removing redundancies and staffing, and taking a number of other actions designed to reduce our cost base, and help us achieve positive cash flows as soon as possible. We will review our personnel needs again in the beginning of 2016. Additionally, most senior management will reduce their cash compensation, and I, personally, will forego any and all cash compensation for at least the remainder of 2015. It is important to us that we continue to align ourselves with our shareholders in a sustainable way. As many of you might know, we attended the Mobile World Congress, in Barcelona earlier this month. The number of meetings we had with potential customers and partners, as well as industry analysts, such as the Yankee Group and many others, only reinforces [ph] our belief that our platform is as strong as ever. Moreover, our roadmap will only increase our capabilities and service offerings, attracting leading MVNOs and MNOs who will utilize our platform to provide their end-customers with a host of new services. For example, we are making great inroads in North and South American, which represent large opportunities for our Company; something I will touch upon in a moment. In late December 2014, LOWI launched on Elephant Talk's fully redundant model platform in Spain, with Vodafone, joining virtual operators like Lebara, British Telecom, Eroski, NEO, and HITS. This success was achieved as a result of our six-year development and research partnership with Vodafone Enabler Espana, part of a leading global operator who is committed to embracing the power of software defined networks, and network function virtualization. As a result of this unique operator-vendor partnership, our platform enables LOWI to offer a full-services platform, including post-paid voice, text, and data services with 3G coverage for consumers throughout Spain. Since LOWI's launch, it has grown quickly, making it one of the most successful MVNO launches in Spain. It is important to realize that in the LOWI business case it's not just a matter of the number of subscribers, but also the unique way Elephant Talk was able to design a custom-made platform, and get it fully running in just a few months. This remarkable fact was acknowledged by both Vodafone, and leading technology experts in our field. We are continuing to work to, not only increase the number of users on our platform in Spain, but to also increase our scope of work and capabilities that we are providing to their new brands. Additionally, as part of our strategic plan, we expect to service other geographies in the future as a continuation of the success of the rollout in Spain. At this time it's important to discuss key management changes that will take place. We recently announced the hiring of Dr. Armin Hessler, who will join the Company from Vodafone Group tomorrow. Most recently, Armin Hessler served as head of global datacenter management and service excellence in Vodafone. He has a commercial background of over 20 years in the telecommunications and IT industries, at firms including Mannesmann, AT&T-Unisource, and Telefonica de Espana. He will be responsible for software development, business management, and operations. Additionally, he will be engaged on all major global transformation projects. Dr. Hessler is a welcome addition to our team, and we expect his knowledgebase will allow us to further implement similar platforms for larger and smaller telephone companies around the world that we're currently in discussions with us. This addition will help round out our management team and allow other members to further focus efforts on new business development and insurers. Martin Zuurbier who has been instrumental on developing the company's virtualized software ET Software DNA 2.0 platform, we'll now focus more heavily on sales initiatives as he has the best grasp of the strong capabilities that are platform possessors. Based on our strong pipeline, the Board felt this was right, the right time to free Martin up to focus on closing new agreements and to increase the number of SIMs on our platform. Martin has focused on expanding our contract with Vodafone, and working to further position our company indoors and South American markets. After significant business development with Zain in Saudi Arabia, Zain is now operating in three brands on our network; Sky brand, an M2M brand, Matrix, an international roaming brand, and Simpati, a cross-border brand of Telecom Indonesia. We expect that throughout the remainder of the year, Zain will continue to add subscribers, and that we will have users into six digits hosted in our platform before the end of the year, supported by additional marketing efforts from the various brands hosted on the platform. In the Netherlands, our MVNO has continued to grow. Premium model choose part of our long-term speak up has been launched and shows early signs of higher subscriber growth than forecasted. We're in the midst of replacing core competence of our Software Defined Network and Network Function Virtualization Platform enabling us to be 4G-ready, including the data-switching solution of Affirmed Networks, and HP's Virtualized Home Subscriber Service in order to continue to offer best-in-class services in the Netherlands and abroad. Further, we've agreed on a letter of intend with a MVNO at the end of last year, with launch foreseen in the upcoming quarter. I would now like to turn my attention to Elephant Talk North America, which has refocused its business plan to work with large scale opportunities. To-date, ETNA has partnered with various careers to recruit and enable mobile operators and virtual operators with a turnkey empowerment solution that offers multi-career access, combined with a sophisticated IT platform, licensed from a third-party and supported by devised logistics and devised financing options. ETNA also brings opportunity for our group to present its full mobile platform to appropriate mobile operators and larger scale virtual operators in the U.S. The strategic shift appears to have been the right move at the right time as management should shortly be in a position to confirm that ETNA has reached an agreement with a U.S. based Tier 1 mobile operator to provide a platform for the appropriate paid program. In this relationship, Elephant Talk would be to be fully referenced when a virtual operator requires Enablement Services. The teams have been coordinating integration efforts in a weekly meeting since February, and expect to sign a memorandum of understanding early next month while the master services agreement is being co-featured. A relationship is slated for market launch in Q2, 2015. This alignment was a top Tier 1 career. It should be considered a great compliment to Elephant Talk, and is a success indicator that points to the efforts the team has put into refreshing its go-to-market strategy over the past year. During 2014 and early 2015, we spent significant time in capital, upgrading our platforms to enhance its capabilities, including the addition of Affirmed Networks, Virtualized Evolved Packet Core Solution, and HP's Virtualized Home Subscriber Services Solution, thus enabling superior 4G/LTE capabilities throughout all of our platforms. These enhanced capabilities are key to servicing new and existing mobile operators as well as virtual operators, and has in fact led to an increase in the number of proposals that we're currently working on directly as well as our partners for platform and services. This continues to be another major competitive advantage as it greatly increases the regions and the numbers of careers that we can now extract, and as such, expect to close a number of new global contracts in both new and existing markets over the next six to nine months. Over to our security business now, I'll turn now the call over to Paul to discuss ValidSoft in further depth.

[Paul Burmester:]

Thank you, Steven. As you're aware, during 2014, Validsoft focused on the development productization of our product portfolio and a simplified marketing message. As a result of this, and our renewed efforts to commercialize the company during the later part of 2014, we've experienced a strong and exciting start to 2015. Firstly, we recently announced the successful deployment of our Device Trust Solution in partnership with FICO at a second major U.K. bank. This is the largest deployment of our Device Trust Solution to-date, and the fact that we now have two of the largest banks in the U.K. using this solution is testament not only to the quality of the technology, but also to our successful and growing partnership with FICO. Secondly, I'm very pleased to announce the signing of a large new commercial customer contract for our newly enhanced user authentication platform featuring our voice biometric technology. The firm will be employing Validsoft's voice biometric technology to authenticate its thousands of U.S. based staff working out of office and to control their remote access to work systems and data. This solution will ensure increased security while delivering an improved user experience for their employees. This contract win is a major milestone for ValidSoft, and an important validation of our voice biometric technology and our enhanced user authentication platform; not only because of the scale of the deployment, but also because of our technology was chosen after an intense competitive review of the solutions currently available in market including the prevailing an incumbent provider, a market share leader in the voice biometrics arena. We could not be more proud of our team for their commitment to our ongoing product development and commercialization efforts which resulted in this successful contract world that marks the second new large scale deployment for ValidSoft at the start of this year. The new user authentication platform is the first product released by ValidSoft in the United States and with our new go-to-market strategy clearly established North America represents a large and important new opportunity for ValidSoft allowing us to expand and extend our established European business throughout the U.S. and Canada. As a result, ValidSoft recently appointed Shawn Edmunds as Vice President in North America in support of our continued success in the voice biometric market. Shawn brings over 15 years experience of driving innovation and commercial success in North America and has a diverse background in speech and voice biometrics technology, having previously being Director of Business Development in the mobile and enterprise sectors of Nuance Communications. His wealth of experience and commercial success in the voice biometrics market has already proven invaluable in the development of a North American pipeline for our user authentication platform and voice biometric technology, and we sincerely look forward to publicly announcing a number of new customer agreements during the course of this year. Voice biometrics will be a key driver behind ValidSoft's commercial success in 2015. The number of deployments of the biometric solutions continues to grow and both MasterCard and Visa's recent commitment to use biometrics as a second authentication factor will only accelerate this market development. A recent independent research report from TechNavio featured ValidSoft as one of the three leading providers of voice biometric industry and a market that Opus Research predicts will be worth over $574 million by 2017. We believe that our independently recognized and superior technology and functional applications with voice biometrics combined with our new market strategy means that we're well placed to take advantage of this opportunity, and we look forward to sharing developments on this front with you in the coming months. As security and data privacy underpins all of our products, I'm most pleased to announce that after a rigorous, legal and technical assessment of ValidSoft's product portfolio and business practices, we successfully completed re-certification of our unprecedented for EuroPriSe Data Privacy Seals, and in addition to this, I'm following a successful order [ph] with just being recommended for ISO 27001 certification which is the international standard for information and security. This resolute commitment to secure customer's personal data has proved to be a clear commercial differentiator for ValidSoft in the user authentication and transaction security, and voice biometrics markets. I'll now hand over to Mark to discuss our financial data. Mark?

[Mark Nije:]

Yes, thanks, Paul. As mentioned earlier by Steven, the company has been engaged in reassessing the accounting policies that are thus [ph] being applying over the past few years on its managed service arrangements. As a result of these assessments, the company concluded that errors had been made in a manner that revenues are to be recognized, particularly certain revenues that are required to be spread over the life of the contract with the customer. Since the contracts with our customers are of a very long nature, often five years, this means that certain revenues even if they're invoiced and paid are to be recognized over a prolonged period, up to five years in our instance. As you'll understand, this requirement of the spreading the revenue over such a long periods heavily impacts the numbers as we use to report them. As an example, 2013 revenues were adjusted for within the amount of $3.4 million and 2014 revenues even by $8.2 million. I have to be continued on the old accounting basis, 2014 would have shown revenue of $28.6 million compared to $22.8 million in '13. However, when applying the correct revenue recognition, the revenues now ended up at $19.5 million in '13 and $20.4 million in '14. These revenues have not disappeared, but have moved to the balance sheet under the balance sheet item named "Deferred revenue." The substantial downward adjustment of revenues in '13 and '14 consequently impacted the balance sheet in a substantial manner. If you look at the deferred balance at the end of December 2012 that amount was only $250,000, whereas at the end of 2014, this amounts has increased to $11.2 million. The unfortunate consequence of the application of these required revenue recognition rules is that it's not always easy to see what you invest in community out of companies performing on an operational level. We therefore apply non-GAAP measures for revenues as well, as well as adjusted EBITDA in order to adjust for these particular deferred revenue components. When adjusted for these components, and if we had to report its Q4 '14 still under the older accounting methodology, revenue increased from $7.3 million in Q3 '14 to $7.9 million of the last quarter, an increase of 8%. Under the U.S. GAAP revenue, it increased from $4.4 million in the fourth quarter, sorry, in the previous quarter, and increased to $5.5 million in the fourth quarter, an increase of 23%. Our other non-GAAP metric adjusted EBITDA we have adducted to include changes in deferred revenue in order to arrive at more visibility on the operation forms of the company as mentioned earlier. Adjusted EBITDA for the fourth quarter, in case we've accounted in the old manner would have been $1.6 million positive compared to the earlier reported $1.1 million in the first quarter, an improvement of 45%. In addition to the corrections for revenue, the company has also been changing the face of the income statements for the periods 2012 until 2014, whereby we have provided more detail as to the operational expenses of the company. We have now added more expense line items such as product developments, sales and marketing, and the remaining item, general and administrative, all these are of course are in addition to the cost of service. Also the non-GAAP measure of margin that we had applied, traditionally we have now redefined and that is more aligned with the gross profit approach under U.S. GAAP. To summarize the following broader results that we will publish later today, loss from operations for the fourth quarter was $3.5 million, compared to $4.5 million in the previous quarter, an improvement of $1 million. Compared to the fourth quarter of the previous year, the improvement was $1.6 million. Loss from operations for the full year was $16.8 million compared to $20.8 million last year. Net loss for the fourth '14 was $4.9 million compared to $5.2 million previous quarter, and $6.6 million of the same quarter last year. Net loss for the full year was $21.9 million compared to $25.5 million last year. Steven, back to you.

[Steven van der Velden:]

Thank you, Mark. While we believe that our stock price does not reflect the value of our mobile and security businesses, we remain confident that we are poised to deliver on our strategic plan and begin to once again build value for our shareholders. Our entire team is frustrated with the development of the Iusacell agreement. However, we could not have predicted the purchase for the firm by AT&T and a subsequent decision by AT&T to stick with their legacy vendors. We will work hard to replace the value of that contract and finalize negotiations with AT&T to regard [ph] for as of the much of the value of that contract as possible. Based on realignment of management, we are now focusing more time and energy on new opportunities as we move forward throughout 2015. Looking forward in 2015, a few key milestones are ahead of us. Our contract with Vodafone is growing, and we expect to continuously deploy new locations in the coming years. Regardless of Iusacell, there are clear signs that Mexico markets is opening up, and we have identified quite a few virtual operator opportunities in Mexico that we are working on; opportunities we now have because of our proven capabilities, expertise, and even resources at that market, including the GEO redundant platforms have been deployed at Iusacell. Additionally, increasing demand for telecommunication services, Latin and South America is also growing, providing us new and large markets for our unique services. In that respect, we expect to launch new services in markets like Brazil later this year. Having completed the year-long process of product development and commercialization, ValidSoft is now seeing real momentum in the business. Having added another leading bank with their partner FICO and won a major contract for the voice biometric technology. ValidSoft's user authentication and voice biometric solutions are truly world-class products, generating significant recognition from industry experts, such as Opus, Forrester, and TechNavio which will help drive continued momentum this year. New contracts in Europe and new markets such as North America will start contributing to our overall revenue, later in 2015. If you follow the news reports, voice biometric adoption continues to be one of the leading security topics discussed across a number of industry sectors as they move to improve their security and enhance their user experience. Biometric technology is complimentary to the major shifts already occurring in the U.S., such as the adoption of EMV chip and PIN technology. As such, our team is focused on capitalizing on these opportunities in the near term. In closing, I want to reiterate that we are well-positioned for both near-term and long-term growth and success. Our management team is focused on rebuilding the confidence of our shareholders. Many platform enhancements and strategic relationships formed throughout 2014, combined with the necessary steps to support increasing sales in both our mobile and security businesses, and efforts to cut costs to improve our operating results will produce a number of benefits this year, as we move quickly to capitalize on the many new opportunities in front of us in 2015. This concludes management's update portion of the call. I would now like to open the floor up for any questions that you may have. Thank you.

[Operator:]

Thank you [Operator Instructions] And we'll go first to Rob Scarff, Private Investor.

[Rob Scarff:]

Hi, Steven. Thanks for the update. In the past, we talked about revenue growth in sort of a fixed percentage of growth over the quarters. For example, 10% growth per quarter, and if that changes it's because something got accelerated and you would exceed that. We just took a pretty big haircut in base sales. What should we be looking at for a base going forward into '15, and then what kind of quarterly growth should we be looking at?

[Steven van der Velden:]

Thank you, Rob. They are very good question of course. Yes, indeed we were anticipating continued growth quarter-over-quarter as we have been doing over the last few years in our relevant mobile and security businesses. Unfortunately, we have seen this movement in Mexico, where AT&T is preferring to use their legacy vendors, and this will make our platform to discontinue to work for Iusacell. This will indeed represent a big hit to our future revenues. On the other hand, the good thing is that we have been building up quite a few opportunities over the last couple of years, and luckily they start to materialize. And as such, yes, there will be a couple of quarters that will show stagnation at best. There could even be a slight reduction in sales quarter-over-quarter in the next couple of quarters. However, we as management feel comfortable that after readjusting our cost structure and readjusting our focus that we can pick up again growth around the end of the year, and basically go back to the growth lines that we had over the last couple of years. So, yes, we will lose sometime a few quarters, but thereafter we should pick it up where we left it off, let's say in Q4 and Q1 this year, and Q4 last year. And we feel comfortable that these [ph] can be accomplished. But to do that we do have to re-adjust, and that's where all the measures that management has taken are focused upon.

[Rob Scarff:]

How soon will we actually see the reduction in wages and the expenses?

[Steven van der Velden:]

Well, we will see that almost immediately. We have taken a couple of measures; no bonuses, we made some redundancies, a lot of the cash cost towards management has been exchanged for stock. All these measures together bring a substantial reduction in our cash outlays in the next few quarters. That affect should materialize reasonably quickly, and especially in relation to the original budget that was approved by our Board. In comparison to our outlays in earlier quarters, there will be some reduction, but of course not taking any growth into account you'll see a slightly -- or a smaller reduction and otherwise in comparison to our future budgets. But it will still be substantial, and we believe that we can, at least for the coming couple of quarters, produce the cash cost base substantially.

[Rob Scarff:]

Is it safe to say the company won't have any cash issues and need to go raise money?

[Steven van der Velden:]

Well, as the plan looks now, we should not have a need to raise cash. Of course this is subject to the favorable outcome of the settlements agreements and settlement negotiations with AT&T, and the further discussions we will have with our lender, but the feedback we got so far is encouraging. And if everything works out as we've planned, there will be no need to raise cash.

[Rob Scarff:]

Okay, thank you.

[Steven van der Velden:]

Welcome.

[Operator:]

We'll move next to Gregg Hillman, at First Wilshire Securities Management.

[Gregg Hillman:]

Yes, two questions; number one, in terms of helping your marketing, wouldn't it help to have a stronger balance sheet, and could that in effect -- or a stronger partner, and would it make sense to bring in a strategic partner with a equity investment and a commitment to the survivability of Elephant Talk to help your marketing efforts?

[Steven van der Velden:]

Yes, Gregg, thanks for your question. Yes, that certainly could be something to consider. As you know, we have a couple of pretty strong strategic partners. So far no equity investments have been done by any of them, but I definitely would not exclude such in the future. However, till date no serious discussions have taken place on that front. So I wouldn't expect anything to happen anytime soon. But definitely that could be one of the good alternatives to move forward.

[Gregg Hillman:]

Okay. And also, moving on to the voice biometrics, you mentioned you're one of the top three ones as per some research and marketing firms; how are you differentiated from the other two that are in the top quadrant or whatever?

[Steven van der Velden:]

Yes, also a very good question, but I think it's best for Paul to address this one.

[Paul Burmester:]

Yes, thank you, Steven. I think the key -- there are two key differentials for us. One is that our technology is very new and is state of the art. So a lot of the other companies have grown predominantly through acquisition and consolidation of acquisitions, and have a lot of legacy technologies that is at times disparate. We have one state-of-the-art solution that meets all of the different requirements and deployment opportunities within voice biometrics. The second thing is that we understand very well the industries that we are targeting. So it's not simply a matter of a box in which you pass audio and then get a yes or no answer out. We're very focused with the addition of our user authentication platform, which sits around our voice biometric technology to really tune the technology and the experience to suit the environments that we're targeting. So we really -- for example, in the financial services, we have a very good understanding of that market and user authentication in an enterprise and government environment, we believe those are key differentiators for us.

[Gregg Hillman:]

Okay. The voice is generally used in conjunction with another factor, such as a certificate for the user that's matched against a central database or something like that, is that correct?

[Paul Burmester:]

Well, voice biometrics on its own is a simple analysis of voice signatures, but when you add it to our user authentication platform, that has the ability to take in multiple data sources as part of its business logic and decision-making process, both data sources that possibly we could provide, or from third-party data, and can use those multiple data sources as part of the decision-making process. So it's normally down to wherever it's installed and applied as to how they might want to take data. For example, not only confirming a user's voice, but maybe looking at the device the user is calling in at, if its on a known network in a known location, if they were using it in a typical way, and they can use multiple factors in order to confirm and strengthen that authentication.

[Gregg Hillman:]

Okay. And then finally, how big is the addressable market, and what's your current size in that market?

[Paul Burmester:]

Well, they say Opus believe the voice biometric market will be worth just over $500 million in the next two years. Biometrics as a whole is a huge growth area. It's difficult to know exactly, but I think everybody agrees that it's very topical, it's very important today, and it's certainly a massive opportunity, and the nice thing is it effectively sits across all environments; it's not just financial services, but enterprise and government as well. So identifying people and authenticating them to gain access, whether it is to financial services or insecure environments such as simply to your office data systems or your personal data, your personal assets of value. So it's a pretty unlimited market opportunity, and the limitation today seems to be the speed at which people are adopting it and their imagination, but we are really talking about strengthening, and longer term taking the place of passwords and pins through these various types of multi-factual authentication using biometrics.

[Gregg Hillman:]

And where are you in market share today, and where would you like to be in three years?

[Paul Burmester:]

Obviously, where I would like to be is leading. It's different to know. There is no research that I'm aware of that gives clear market share information. There is one very large player, and then there this very small amount of smaller early-stage companies, like ourselves. So there are really only about half a dozen companies active in this space who have their own technology. So one of those is a multibillion dollar U.S. corporation, and the rest we're all of the same kind of size. So I think it's a very competitive market with a very big opportunity.

[Gregg Hillman:]

I take it -- and then the size of your division is only like a couple million right now, is that correct?

[Paul Burmester:]

Well, we don't breakout the ValidSoft revenues from the mobile and security revenues that are issued by Elephant Talk at this stage.

[Gregg Hillman:]

Okay. Thanks very much for your comments.

[Steven van der Velden:]

Thanks Gregg.

[Operator:]

We'll take our next question from Dennis Dolan, Private Investor.

[Dennis Dolan:]

Hi, thanks for taking my phone call. If we can just circle back to the line of credit for a second, how much is currently outstanding under line [ph] and do you continue to have complete access to the line, and when can we expect clarification from you about the overall status of the line with the vender?

[Steven van der Velden:]

Yes, thank you; also a very good question, of course. We have drawn down fully on the line of credit, which is $12 million, as of January this year. We have full access to all funds available, and we will only be able to finalize a possible reset with the lender once we have a clear picture of how the settlement with AT&T will evolve. This could take from a few weeks to a few months. So as far as that's concerned I think we should be a little patient to give room to those negotiations. As I indicated before, we have indications that we can comfortably look at how that settlement look like, and how that will then be translated in a possible reset of conditions with our lender.

[Dennis Dolan:]

Okay, thank you. And just one final question, if you fully turn down the $12 million on the credit, how much cash is currently on the balance sheet?

[Steven van der Velden:]

I don't know by hand what currently is on the balance sheet. It's sufficient to operate, but we have a substantial outstanding with Iusacell AT&T that we hope to clear in the next few weeks.

[Dennis Dolan:]

Okay, thank you very much, and good luck.

[Steven van der Velden:]

Thank you.

[Operator:]

We'll go next to John Nobile, at Taglich Brothers.

[John Nobile:]

Good morning. You mentioned in the press release a deferred revenue, at least at December 31, was $11.2 million versus $2.6 million in 2013, could you talk a little about what is included in that revenue, and approximately how long do you believe it would take to be recognized?

[Steven van der Velden:]

Thank you. I think this is a good question for Mark to answer. Mark?

[Mark Nije:]

Yes. The deferred revenues, they arise under so-called multiple element arrangements, and the multiple element arrangements we need to apply to our major managed service contracts, so that's with Zain, Iusacell, and Vodafone. Within that accounting you basically split the various revenue line items and assess each of them separately to decide whether they need to be bundled, as it is called under accounting, and whether they extend a long value and in what manner they need to be recognized immediately, partly immediately, or whether they need to be recognized over an extended term, usually over the life of the contract of the arrangement. So it primarily relates, or only relates at this point in time, to our managed service activities.

[John Nobile:]

And can I take that as looking at it, I know you had mentioned before that these contracts could be as long as five years, if I was to take a five-year contract, could I safely say that it wouldn't be a smooth recognition quarter-over-quarter as far as breaking that up into, say, whatever five years, but it could be more choppy depending on, as you already mentioned, multiple element arrangements in the contract?

[Steven van der Velden:]

No, in principle it's pretty straight line. So once you've determined that a -- let's say, you have a contract of $2 million and it's decided that $1 million needs to be deferred and $1 million can be recognized immediately, then the $1 million that's to be deferred would be spread relatively over the term of the contract, so meaning at $200,000 per year.

[John Nobile:]

Okay. So, if I was to take the $11.2 million that you had at December 31, would you have a rough timeline for when that would be recognized? I mean, I know you…

[Steven van der Velden:]

Yes, the thing is that there are different contracts and different starting dates as to when the deferral started, but overall it's averaged probably three to four years.

[John Nobile:]

Okay. And one other thing, as far as like AT&T purchasing Iusacell, and you're looking to recover revenue from services that were already rendered, could you quantify that, not to see what we are going to look out for in the future as far as missing contract, but what you've already rendered? What is that amount in terms of what you are looking to recoup, maybe, in the next few weeks or months?

[Steven van der Velden:]

Yes, very good question of course, but I will rather like to stay away from mentioning exact numbers here; as I said little earlier, we are in negotiation to bring this to a good end. We charged substantial amounts per month to Iusacell for our managed services platform, and it's now a matter of making sure that all the invoices for services rendered, as well as a certain additional payment on top are being collected by the company. And I think mentioning specific amounts at this stage may not help us in these negotiations, but I would be gladly -- to point that out hopefully over the next few weeks, or the next few months once that process is behind us. But these are substantial amounts of money, as you can imagine.

[John Nobile:]

Yes, and obviously everybody was focused on Iusacell, but excluding that [ph], going forward into 2015-2016, what customer do you believe -- that you believe has the most potential for the most growth in SIMs?

[Steven van der Velden:]

Well, the most growth in SIMs it's difficult to say, but as I stated a little earlier, we're pretty well established, as Vodafone I think we have a long-term six-year relationship, we recently launched LOWI, which was even by Vodafone's standards pretty impressive, at least that was the feedback we clearly got from all kind of angles. And we are trying to build up on that success to see how we might leverage our working relationship with Vodafone to add more business in Spain, and hopefully also to add more business in other geographies. So I believe, altogether, Vodafone was a very big customer, and as it looks now, they will stay on to be a very big customer, and I think they will become a larger customer over time, because that contract has been very successfully executed so far. And as you know, about 18 months, 17 months ago it was prolonged for another five years, and I believe that that new contract has pretty good terms to expand the business further. So I really look forward to seeing that relationship expand, and as I may say that I would expect Vodafone to be our largest customers for quite some time to come.

[John Nobile:]

Okay. And just one final question; I know that you're not going to breakout ValidSoft revenues, but if we could talk about it as far as transactions that were completed by ValidSoft in 2014, how do you believe that compares to 2013 to get an idea of growth?

[Steven van der Velden:]

Paul, I really have to refer to you for that question.

[Paul Burmester:]

Yes, certainly. Thank you, Steve. It's somewhat difficult, we can't actually state the number of transactions, because unfortunately that would be breaching our data protection confidentiality with the banks, but I would have said, during 2014, there was a small increase in the transactional volume. We were very focused on a lot of educational re-engineering, and also securing the data. So during the course of that year we actually negotiated and sourced the data directly from the mobile operators. We enhanced elements of the functionality, and really had to re-educate the banks in the market as to the authenticity of the data, and the functionality of it. Because the market, it was pretty unsure I would say going back a year or two, because there has been a lot of changes. But as a result of that work, we're now seeing growth, not just from the existing customers, but also the addition of new customers. So I think after a year of development, we're now back into a growth phase with existing and new customers in terms of our device trust transaction. And of course with the voice biometrics, that's a new area for us, and having already added the first new customer and commercial contract that's all pure growth as well.

[John Nobile:]

Okay. To sum up, a small increase in 2014, but in 2015 you anticipate this to grow a little bit larger?

[Paul Burmester:]

Yes, I mean as per our announcement earlier in the year, we added a second U.K. bank, who is larger in size than our existing customer, and so we would obviously expect much greater volumes, and more than doubling of our transaction volumes there. And we are also enhancing the services with both of them, as well as now working with FICO on a pipeline for additional customers. So we do -- we have already seen and do expect to continue seeing growth in that area.

[John Nobile:]

That's all I have; thank you for taking my questions.

[Operator:]

We'll go next to Greg Harrison, private investor.

[Greg Harrison:]

Yes, Steven, thanks for your effort with the company. The one thing that I stuff [ph] here, and you know, it's always a subject sensitive to me, and that is disclosure. If I was to take the transcript of this conference call, I could take a red pen and circle at least two material statements [indiscernible] in this meeting and one was ValidSoft easily; for example, first year USA, that's material, and I don't understand why that had not been disclosed today. It could have been a wonderful press release. The analogy I have is if Elephant Talk was a restaurant, I walk in, I'm served a shot of vinegar, and left sitting with no menu. If it's disclosed -- you cannot over-disclose, there are three material statements.

[Steven van der Velden:]

Yes, you are quite correct. However, if we look at these two elements, I think we, of course, first of all have MDAs and I think on the side of ValidSoft announcement, which is clearly material [technical difficulty], I think we will shortly follow-up with an official press release. However, it's probably still difficult to name the customer by name, because that entails many more processes, and will delay. On the other hand, as far as the Tier 1 operator, we clearly state that we hope to be able to announce soon a contract. So, in effect the materialness of the statement would only get there once the contract is there or initial documents are there. And we will certainly follow-up, because of course we, as management, are very proud to be able to share those achievements with all of you.

[Greg Harrison:]

Okay, I understand. And I do not mean to imply disclosing the name, Tier 1 is enough for the shareholders to know about, but if there's something coming in short-term PR-wise -- I rest my case, but quite frankly it wouldn't take much of a lawyer to circle a few statements in this meeting, which is largely [ph] be reduced to writing and put out. And you don't get in trouble for putting generalized forward-looking statements. You get in trouble for failing to disclose, now the other thing…

[Steven van der Velden:]

So -- sorry, yes, please go ahead.

[Greg Harrison:]

And the other thing is, I have communicated with a company on executive decision-making is already based on three platforms, uncertainty, certainty, and risk. And I have always talked about the external force that no one can see, no one can predict, and that was AT&T. So there are other external forces that can hit ETAK, such as a totally new system out of Japan [indiscernible] are going off and there is our world event, taken collectively [technical difficulty] I don't think I stand alone in that, I think it's time for ETAK to literally market the sales of the companies to a Vodafone or somebody else, such that maybe by the end of '15, first quarter '16, you will get something done. And when I was on the Board today, the measurement [ph] that's exactly what we did no matter what we put out, no matter what we said, the price would not move. And we were one and two bucks. We sold the company for $18 after giving a fairness opinion. So I think ETAK needs to consider that. My personal opinion is the price per share [indiscernible] is just horrendous; you guys have a great product. I think it's going to be very difficult to sell to Wall Street. I think it will be easier to sell to an expert like Hewlett-Packard, IBM, and Vodafone especially.

[Steven van der Velden:]

Okay. Greg, thanks. We'll certainly take your advice into account. And as you can imagine we're of course once in a while considering those steps. And once they become relevant, we will certainly communicate. With respect to your first advice, definitely once we enter into a material agreement, we will announce this to the market, and we will do this in close coordination with our lawyers and our business people to make sure that our shareholdership is up-to-date. So you can expect, indeed, certain announcements in the future.

[Operator:]

Now, we'll go next to Lisa Thompson, with Zacks Investment Research.

[Lisa Thompson:]

Good morning. Let me just ask you a little bit more about the AT&T wind down; have they actually indicated how they might stop using your services, is it going to be something where as of a certain date it's all over, or does it trickle away? Is there any discussion on how that's going to work?

[Steven van der Velden:]

Well, of course there have been discussions, and I think details are not really useful in this case to share this here at this time with you, but we don't know exactly how this will happen. But we have reasons to believe that AT&T would like to stop the contract and terminate it as soon as possible, as soon as practically possible, and how practically it will work out needs to be seen, but I think it's fair to say that management is fully prepared that this will happen in the very near future, and this is also the reason that we have started to sit down with AT&T and to discuss the settlement. And as I stated before, we feel comfortable that an amicable settlement will be reached in the very near future.

[Lisa Thompson:]

Okay. And then, going forward on a historical basis, are we going to see what those revenues used to be as you report earnings in the future, where you will say, X amount of revenue was from [indiscernible] customer that was discontinued, or will we never know?

[Steven van der Velden:]

Well, you could always know indirectly there is a section of customer concentration in the 10-K. Of course, it's not a precise calculation, but you can more or less calculate if you take the full revenues, and you take the percentage mentioned, then you will get close to what the Iusacell contract was all about.

[Lisa Thompson:]

Okay. And did I hear you correctly saying that you are going to file later today, the 10-K?

[Steven van der Velden:]

We intend to file the 10-K later today, correct.

[Lisa Thompson:]

Okay. And then, one other question was, you talked about the share count and people [indiscernible] through the step, how many shares outstanding do you have at the end of December?

[Steven van der Velden:]

We have approximately 150 million shares outstanding. We are not talking about any bonuses. Actually, we feel as a company that this is not the right time for bonuses. The only thing that might happen for stock are salaries and fees, and instead of paying cash they maybe either wholly or partly paid in stock, and that would be it.

[Lisa Thompson:]

Okay. And do you know what the fully diluted number is?

[Steven van der Velden:]

That depends a lot on the anticipated share price. At the moment, I don't believe any of our warrants are options are in the money, or if they are, it will be a relatively little amount of options and warrants. So the fully diluted will be close to the current count. However, if the share price would go up dramatically, it could be substantially higher, but at that stage, I mean, of course the share price would be much higher. And also the company could expect a sincere inflow of funds to pay for the warrants and the option exercise.

[Lisa Thompson:]

Okay, so that's like using Black-Scholes or whatever, to do that?

[Steven van der Velden:]

Well, or it might just be an exercise price mentioned in the warrant or in the option.

[Lisa Thompson:]

Okay. And then as far as ValidSoft, are we ever going to know the names of any of these customers, or they all under disclosure, or they don't want anybody to know?

[Steven van der Velden:]

Well, yes, this is of course for Paul to answer, but from history I know that most customers do not really appreciate to be mentioned in this space. But, Paul, maybe you can give some more color on this.

[Paul Burmester:]

Yes, I think we will, but typically not in the financial services market.

[Lisa Thompson:]

Right.

[Paul Burmester:]

It's well known that our first banking customer was Santander, but in fact that wasn't planned. It slipped out, because they won an award in conjunction with ourselves for the technology. Otherwise they wouldn't have approved the name being in the public. The second bank has declined, and they obviously don't like fraudsters to know the detail of the technology they're using. I think voice biometric area is somewhat different. And I would expect to be able to disclose some of those customers, particularly channel partners and enterprise customers outside of the financial services, as we grow that business. So I do sincerely believe we will be able to tell you more about that as the year goes on.

[Lisa Thompson:]

So the one that you said was the large commercial customer that's using it for their staff, we're never going to know that one or is that one going to come out some day?

[Paul Burmester:]

It's gone into the black hole of that corporate PR department. They are a large U.S. corporate. We have requested the ability to use their name. We don't know if and when that will happen. We are at the moment integrating into their systems, and I would sincerely we hope so, but I can't give you an honest answer. It's very much controlled by their own internal corporate PR and investor relations people as they are a listed entity.

[Lisa Thompson:]

Okay. All right, well, good luck with that. Thanks.

[Paul Burmester:]

Thank you very much.

[Steven van der Velden:]

Thank you.

[Lisa Thompson:]

Thank you. That's my pleasure.

[Operator:]

We'll go next to Ed Woo, at Ascendiant Capital.

[Ed Woo:]

Yes, thank you for taking my question. I had a question about the deferred revenue, is any of it, including Iusacell, and deferred revenue, how much of that is cash you already received or is cash pending to receive?

[Steven van der Velden:]

That is a good question for Mark to answer.

[Mark Nije:]

As I mentioned earlier, the deferred revenue applies to all of our customers. So it spreads over to the various customers. As to the amount of cash received, it's basically -- most of it has been received by the company, if not all apart from the outstanding amounts with Iusacell.

[Ed Woo:]

All right, great. And the last question I have is on ValidSoft; I believe you have three privacy seals, is there any other type of intellectual property protection or other field that you guys may have that may differentiate yourself among the scores of other competitors out there?

[Paul Burmester:]

Yes, we actually have four European privacy seals, which is certainly unique in the industry, and that's in part, because we very much had that at the core of design, and also maybe being a European company it is very prevalent, particularly in the European market. We do have a number of patents in patents pending issued to various elements of our technology as well. And have recently received the recommendation for ISO 27001. Those are the main things that we have today. I'm not aware of any other specific type of recognition. I know, it's a topic of discussion certainly within the biometrics industry as to how can you gauge one technology from another; there is no recognized industry standard unfortunately.

[Ed Woo:]

Great, well, thank you, and wish you guys good luck.

[Steven van der Velden:]

Thanks, Ed.

[Paul Burmester:]

Thank you.

[Operator:]

We'll go next to George Carcall, a Private Investor.

[George Carcall:]

Thank you for taking my questions. A question for Paul, please; obviously, I understand that disclosures are very difficult, and people need to understand that certainly in these sensitive areas of the marketplace, and even on the ETAK platform, most if not all corporation just are not willing for vendors to share their name publicly. So I'm fully onboard with that. Anybody that's been in this industry for a while has good visibility of that. But I do want to ask Paul specifically, and to congratulate you certainly on the achievements of ValidSoft, a second U.K. bank. Now, if anybody just does any cursory research into the United Kingdom there are only four major banks. Okay. So now we have two; so we have two out of four. Two questions; one, the new bank that we've done a deal with, to what extent is our offering fully deployed? Is it a programmatic milestone-based, or is it fully deployed already? And the second question is, how would you characterize the dialogue with those four or five major banks in the U.K. in this area, because when one bank does a deal in the U.K. before they sign it the other bank knows about it; that's the way that ecosystem works. So how would you talk to those two questions please, Paul?

[Paul Burmester:]

Sure, well, in answering the first one, we are fully deployed in that second new bank, fully integrated into their live system, tested and running. When a bank deploys a solution such as this for the first time, it can have quite a substantial effect on their processes, and so what we experience now is a period of, sometimes weeks or months, where they figure out how they change to suit this. To give you an example, if you look at a SIM swap scenario, then something in their risk system may have flagged up that a transaction is questionable. And they would then ask us to check and see if the SIM related to that customer is being swapped. If we were to say, yes, what do they then do? Do they cancel the transaction? Do they maybe let it through anyway, do they hand it to an agent to make a different type of decision, or to contact the person. And so they have to look at all those process changes, and put them in place. And that's why we often see a very erratic growth in the first month or two as they stabilize those processes, and then a very solid growth thereafter. But just to reiterate, we are fully integrated and live with that second bank. In terms of the conversations with banks, as I mentioned, going back a couple of years and before my time, the sources for this type of data were many, and not necessarily as were intentional. They were often from marketing sources, and other sources, and were a lot of people who dipped their toe in this market. As the mobile operators have become more secure in who they make the data available to, and the banks became less certain of the availability of that data. So a lot of the conversations last year were to get authorized and secure access to that data from the operators, and then to assure the banks that the data is reliable, it meets their needs, and will continue to do so for the foreseeable future, because they don't want to invest in those changes of process only to have the data source taken away in a couple of months time. So that was certainly a lot of the conversations. And that's what's borne fruit in bringing in the second bank. There are, you mentioned four main banks, of course many of those banks have different brands. And there are smaller, but not materially smaller banks out there that are operating as well. So when I look at our pipeline, we know that one other very major bank has been using similar solutions in the past, and would like a secure and reliable source of that data, and two or three others that are certainly considering it under evaluation. So I think within the U.K. alone, there is good opportunity for this to grow [ph] over this coming year.

[George Carcall:]

Very good. Congratulations on the progress on ValidSoft, very good. Thank you.

[Paul Burmester:]

Thank you.

[Operator:]

And we'll move next to Rob Scarff, Private Investor.

[Rob Scarff:]

I actually have two questions, one for Paul and another one a follow-up for Steven. So, Paul, if I understand it correctly, we've been awarded a patent in Russia for the location base using the cell phone, which will be really important with both Visa [ph] Europe and also what's going on here in the U.S. Is there any status on those patents, the reviews in Europe, and the U.S.?

[Paul Burmester:]

Well, we constantly do review our patents. And, obviously, the nature of them is quite territorial. And they're also quite specific in the different patents. So there are many different ways of identifying location, and obviously only certain ones are covered by patent. We take it from a perspective of, obviously, first and foremost, trying to protect and recognize our intellectual property. Then going forward, to utilize it wherever possible, and if necessary to either license it or take action to protect it if that's appropriate. And we do that on a very regular basis. We have quarterly reviews, both of the patents that we're applying for, the new ones, and the status of our existing ones. Clearly, the most prevalent markets, first and foremost in the patent world would be the U.S., and then looking at the pan-European market thereafter. So those are always our focus when taking at patents out now.

[Rob Scarff:]

Okay. So, Steven, the question I had earlier, I took in some of the follow-up questions and the answers, and it just seems like cutting back bonuses and more stock compensation would really depreciate its stock value, could potentially be too little too late. We've had a number of things that have been outside of the Company's control, and -- for instance, if we didn't have this full $12 million credit line inline we could be in some real trouble here. There's no plan for a reduction of workforce immediately to help protect against that, just in case it takes too long for the AT&T deal to be settled, or if any other customer goes away, or reduces its growth; it just seems like we're not doing enough soon enough.

[Steven van der Velden:]

Yes, thanks Rob. Well, maybe I was misunderstood. We clearly are starting to cut costs. We have already cut cost. And to give you the scale, I think that by the end of this year our staff may be 30% to 40% less than what we originally envisioned in the budget. So we are doing our utmost to cut costs on one hand, but on the other hand do not let the delivering capabilities evaporate. It would be a huge waste if we couldn't address the needs of our customers, both on the ValidSoft side, as well as on the mobile platform side. So we have to find some middle ground, and cut costs substantially without impeding our delivery capabilities. I think that by cutting our workforce with 30%-40% percent in comparison to the original budget by the end of this year, starting immediately, are severe cost cuts that are addressing the sincerity of the situation.

[Rob Scarff:]

So, do you anticipate us getting to cash flow positive pretty quickly than at this point?

[Steven van der Velden:]

Well, we still hope to be overall cash flow -- operational cash flow positive like we've been in the last few quarters. Of course we have to see when exactly the things will materialize with Iusacell and AT&T, but we believe that either we will stay operationally cash flow or we may have a few months of a negative operational cash flow situation, but then we will certainly go quickly into again an operational cash flow situation, positive cash flow situation. This is anticipated in the plan. And by the end of this year, we would -- we plan to reach the same kind of profitability that we had achieved earlier.

[Rob Scarff:]

That you had achieved earlier meaning year 2015 profitability forecast you think can still be achieved, because -- do it by a reduction in cost and then bringing up some of these other…

[Steven van der Velden:]

No. No, no. That would be too good to be true. I think that on a quarterly basis by the end of the year, we hope to be in a comparable shape where we were in the beginning of this year.

[Rob Scarff:]

I see. Okay. All right, thank you.

[Steven van der Velden:]

Welcome.

[Operator:]

And we'll go next to George Melas at MKH Management.

[George Melas:]

Yes. Good afternoon, gentlemen. First a financial question, I'm trying to look at cash flow from operation; it was positive in the first nine months of the year, and it is I think negative 2.1 for the full year. So there was significant negative cash flow from operations in the fourth quarter. And I just want to see if my math is right, and the second, trying to understand the reason, would that be with the Iusacell so that's withholding payment until the negotiation gets [indiscernible]?

[Mark Nije:]

Yes, this is Mark Nije. Thanks for a good question. Yes, indeed, and you'll see that later today when we plan to file the numbers you'll see that the accounts receivable has increased substantially at balance sheet date and that's causing this cash used from operations. I don't know why. It would have been positive, and it is indeed related to Iusacell.

[George Melas:]

Okay, very good. And the second question relate to trying to understand the revenue trends in the business. So clearly, Iusacell is going away. Zain is growing subscribers, and revenue should follow. And ValidSoft is clearly is on the way up. Can you sort of just comment on the other major parts of the business? Of course with the Vodafone where you're having some success with LOWI, but I would like to understand a little bit more the overall revenue at Vodafone, and some of the other parts of the business. Are you seeing some decline in other parts of business? Could you comment on that, please?

[Steven van der Velden:]

Yes, I think in general, we've seen no declines in other parts of our business. Of course we have to clean it up for currency effect as we all know. For example, Vodafone is paying us in Euros that may end up in dollars as being less because of course the appreciation of the U.S. dollar. But cleaned up for those kind of effects, in general, all of our business lines are growing and we believe that, yes, outside the potential loss of the Iusacell account, all business lines are doing improved business, and it's also expected to further grow for the balance of this year.

[George Melas:]

So if you look at the wireless business outside of the managed contract that you have, is that substantial or is that really sort of -- call that "Immaterial?"

[Steven van der Velden:]

No, the vast majority of our mobile services is platform managed services.

[Operator:]

Thank you. And that is all the time we have for questions today. At this time, I would like to turn the conference back over to Mr. Van der Velden for any closing remarks.

[Steven van der Velden:]

Thank you. On behalf of everyone at Elephant Talk Communications and ValidSoft, I would like to thank everyone for joining us on today's call, and thank you to all of our long-term shareholders for their patience and commitment to the company. We look forward to providing additional updates on future developments in the very near future. Thank you all, and have a great day. Bye-bye.

[Operator:]

And that does conclude today's conference. Again, thank you for your participation.