By: Dylan Sikes - AllPennyStocks.com News

Thursday, February 18, 2016

After three straight days of gains, U.S. equities are seeing a pullback in trading today. The slight correction in U.S. equities could be due to some profit booking. It could also have been triggered by the minutes of the Federal Reserve’s most recent monetary policy meeting. The minutes showed that the Fed is worried about increased risk; officials remain in favor of further interest rate hikes. The Fed is tightening at a time when most developed world central banks are announcing easing measures. Central banks in Sweden, Switzerland, Japan and the European Union have announced measures such as negative interest rates. This has led to a further strengthening of the U.S. dollar.

While the broad market is lower, there are some stocks gaining momentum in trading today. One such stock is Elephant Talk Communications Corp. (NYSE MKT:ETAK). Based in New York City, ETAK and its subsidiaries provide a one-stop solution for a suite of mobile, fixed and convergent telecommunications software services. At last check, ETAK shares were trading almost 20% higher at $0.259 on almost six times the daily average volume of 93,786.

ETAK shares are gaining momentum after the company announced the signing of a binding agreement with Cross River Initiatives LLC to divest ValidSoft for a total consideration of $12.5 million.

The divestment is part of a previously announced restructuring by ETAK. The company is restructuring to bring costs in line with current revenues. The measures taken by the company have involved significant headcount reductions, executive management changes and new board members.

Cross River paid ETAK $500,000 last month as advance for the proposed purchase of ValidSoft. Cross River has now agreed to wire transfer ETAK $8 million no later than March 21, 2016. Cross River will also issue a $4 million short-term secured note in favor of ETAK for the balance of the purchase price.

Commenting on the divestment, Hal Turner, Executive Chairman of the Board of Elephant Talk Communications, said that the company is pleased to have reached a binding agreement with Cross River for the divesture of ValidSoft and the closing of the transaction will significantly strengthen the company’s balance sheet and provide working capital to complete its restructuring, as well as pursue key growth opportunities. Turner added that while the divesture has taken a little longer than the company had initially anticipated, he is pleased with the overall restructuring and sees a clear path towards sustainability and future profitable growth.

As mentioned above, shares are spiking on the news however are still close to their 52 week low.

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