Telanetix has recently issued a press release on strong sales growth and multiple new orders, the company has produced a new video on their offering, and an "independent analyst firm", Dutton Associates, has produced a new research report on Telenetix recommending a buy.

First the Press Release - Excerpts Below, Emphasis Mine

Telanetix Completes Multiple New Installations Leading to Strong Sales Growth in Third Quarter
New Orders Create Growing Backlog for the Company's Digital Presence Systems

SAN DIEGO, Sept. 6 /PRNewswire-FirstCall/ -- Telanetix, Inc. (OTCBB: TNXI) a leading developer of IP based video and conferencing solutions announced today that sales of its new Digital Presence conferencing system have increased significantly during the third quarter. In addition to new installations, the Company also reported strong backlog growth with orders for additional systems scheduled in New York, Chicago, Fremont, CA, Beverly Hills, and the Company's first international customer in Vancouver, British Columbia. The Company expects all of its current backlog of systems will be installed at customer sites during September.

"We are seeing good traction in the marketplace for our Digital Presence family of conferencing products," stated Tom Szabo, Telanetix Chairman and Chief Executive Officer, "with revenue and backlog growing accordingly this quarter. New customer development has also increased, not only in response to difficulties and delays in commercial travel, but also from clients finding that the clarity, data sharing, and ease-of-use of the Telanetix system allows them to earn a return on their investment in ways that traditional video conferencing could not support."

Telanetix Digital Presence Systems provide standard two and four screen conferencing systems with multi-location calling and data sharing as well as custom configurations using the Company's proprietary software CODEC's and technology integration. Telanetix products are sold through a network of audio-video Channel Partners with thirty nine sales offices in the United States and five Regional Demonstration Facilities.

Dutton Associates, an issuer-paid equity research firm employed by Telanetix to review its prospect, has produced a 17 page report written by Joe Noel. The complete report can be downloaded Here with key excerpts below (Emphasis Mine).

Rating: Strong Speculative Buy - Basis for Rating:

Quality of Product -- In our opinion, Telanetix's conferencing products are of very high quality and are likely to be considered by many to be a generation ahead of competitive products. Simply put, the Company offers the best conferencing experience we have seen.

Software Orientation -- The Company's encoders and decoders (Codecs) are based on MPEG-4 compression on a standard Linux (public domain computer operating system software) platform, which allows for very competitive pricing with strong profit margins. The software-based design, which utilizes decentralized Internet Protocol (IP) multicasting, allows for multipoint conferencing without the use of hardware-based bridges, potentially yielding significant cost savings over currently available solutions.

Telanetix is Moving From Development Stage to Implementation Stage -- Having spent the past two years on product development and the past three quarters implementing its distributor network, the Company is now moving toward a revenue generation phase. We believe some early successes are already being seen. We are estimating revenues to grow from approximately $1.9 million during 2006 to over $13 million for 2007. We are estimating revenues of approximately $25 million for 2008.

Highly Motivated Distribution Network -- The resellers and distributors of currently available competitive video conferencing systems typically operate at very low margins, often making zero margin on the sale of the equipment and instead producing margins through installation, room design and ongoing services. We believe the well established sales channel of resellers and distributors are highly interested in Telanetix's products because they believe meaningful profit margins can be realize on the sales of Telanetix's equipment. We believe a high level of interest from the distribution channel will be a key element in the success of this Company.

Low Capital/Labor Intensive Business Provides Potential for Significant Profit Leverage -- Because of the software orientation of the product, the strict adherence to Information Technology (IT) industry standards, the use of third party networks for connectivity and the extensive use of the already well established video conferencing sales channels for distribution, the capital and labor needs of the Telanetix organization are minimal. We believe this will allow the Company to reach profitability very quickly even with only limited sales success.

The Telanetix Team has a History of Success -- Many of the Company's employees, including the CEO, began working together at Digital On-Demand, which was sold to Alliance Entertainment Corp. In addition, the Company's VP of Engineering lead the team that built the highly successful RedDotNet, which is still in use today in thousands of entertainment-oriented retail establishments.

The Company
Telanetix, Inc. was formed in 2000 by the Company's current Chairman and CEO, Thomas (Tom) A. Szabo, and a small group of engineers. Many of the original founding team members worked for Tom at one of his previous companies, Digital On-Demand, which was sold to Alliance Entertainment Corporation in 1999. We see many similarities between the original product design concepts of the Digital On-Demand products and those designed into products at Telanetix in that both products emphasizes simplicity of use and very high reliability.

Telanetix began its life as a public company in August of 2005 via a reverse merger with AER Ventures. During 2005, the Company raised $5 million in a private financing round, which was used to complete product development, with another $2 million being raised early in 2006 and used to cover product launch expenses. We estimate that the Company currently has enough working capital to complete its product launch and to fund operations through at least the rest of 2006.

Telanetix, Inc. is a fully reporting public company and is at this time current on all SEC reporting requirements.
Having completed the vast majority of product development, management over the past two quarters has been concentrating on its distribution channels and has already executed sales and marketing agreements with most of the largest dealer and distributors within its market sector. These agreements have resulted in the Company now having nearly 40 regional sales offices. In addition to this extensive distribution network, the Company is also operating demonstration facilities in Dallas, San Diego and the San Francisco Bay Area.

Having completed the stages of initial product development and having developed its distribution network, Telanetix, over the past few months, has begun to execute the next stages of its business plan and is now moving towards its forecasted revenue and earnings targets.

...In the future, we expect the Company to release a product enhancement called "Media Cube," which will allow the sharing of video-based information from devices such as VCRs, DVDs, and digital video tape across the network. Such a product release is also likely to allow for recording and playback of video.

Product Distribution
The management team at Telanetix has chosen to distribute its product via the well established network of video
conferencing reseller and distributors. On April 25, 2006, the Company announced the completion of several important distribution partnerships, including Avidex LLC, Audio Video Innovations, Inc. (AVI), and Audio Visual Systems (AVS), which we view as three of the most important distributors of video conferencing products in the United States. In order to keeps cost low, Telanetix has required these distribution partners to pay to bring up demonstration systems in Seattle, New Jersey, Dallas Washington D.C., and Los Angeles. These centers will allow potential Telanetix purchasers to try the equipment. Under the agreements, AVS is responsible for sales, marketing and integration services in the Northeast Region of the U.S., while Avidex LLC receives the exclusive distribution rights to the Western Region. Additionally, Audio Innovations agrees to open and manage demonstration centers in Dallas and in the Washington D.C. area and has been given exclusive rights to the Southeastern U.S., Ohio, Michigan, Texas and the Rocky Mountain states.

In our recent conversations with Telanetix's distribution partners, we quickly became aware of the high level of interest in this Company's products among these distributors and resellers. The partners with whom we discussed Telanetix's products commented that the Company's products are unique and offer users several advantages over other currently available video products -- especially in the area of video quality.
We believe it is relatively easy for most companies in the high tech industry to sign distributors. Rather than being
impressed by the number of distributors signed by a particular company, we are instead are impressed by the actual level of excitement the distributor partners demonstrate. We believe this level of excitement over a particular product offering is the most important factor to be used to predict success in moving actual product out the door and money into the bank. It is clear to us -- these channel partners are exited about this set of products.

We believe this Company's partners are excited not only about the high quality of the products, but also are excited because of the simple fact that they believe they can make money by selling Telanetix's products. We have found that the margins currently obtainable by these resellers via reselling products offered by the two leading manufacturers of Codecs, Polycom and Tandberg, are very thin and are often nonexistent. In many cases, these resellers and distributors make no money at all on the sale of the equipment and rather make their margin on installation of the equipment, integration of related systems, room design and room installation.

More than one distributor in the video area commented to us that they were excited about Telanetix's products because they believed they could purchase the equipment from Telanetix, mark it up and still offer the end corporate customer a competitive price. The fact that most believed the quality of the systems is superior to those offered by Polycom and Tandberg is also important to the distributors, but we believe the profit motivation is the main reason for the substantial interest in this product set.

Business Risks
We believe the major investment risk factors relative to Telanetix are as follows:

* Market Acceptance -- The design of the conferencing products produced by Telanetix is innovative, in our
opinion, and has not yet been accepted by the market. While we, and the Company's management, believe an
active market will exist for products containing this feature set that has been designed into these products, we
believe a certain level of investment risk should be considered by investors relative to this issue.

* Competition -- Polycom, Inc. and Tandberg are well established competitors within the video conferencing
market and are much larger organizations. Both of these organizations have considerably more financial,
engineering and management resources than does Telanetix. Both of these competitors also have long-standing
relationships with the same resellers and distributors that Telanetix is relying on to distribute its products.

* Long Sales Cycles -- Sales lead times within the video conferencing industry are very long due to the high
average unit costs, the total value of the overall implementation, the strategic nature of a corporation's decision to
implement conferencing solutions and the reliance on distributors. In addition, in order to complete installations
other parties must complete sections of the overall implementation. For example, room designers must complete
the video conferencing room design, installation people and construction workers are often needed to modify
boardrooms and meeting rooms and telecom carrier personnel must often complete network installations before
the end customer can finally be billed for the products. Such delays could extend the sales, installation and billing
lead times for Telanetix, which could require significant additional working capital .

* Reliance on Reseller Network -- The management team has chosen to rely on resellers and distributors to sell its
products to end users. While this strategy could pay off big for the Company because only limited personnel will
be needed and thus selling expenses will remain low, such a strategy also has risks. The members of the video
conferencing-related reseller and distributor channels are well established with Telanetix's competitors. While we
believe that the resellers have a strong interest in selling the Company's product, such a theory is yet unproven.

* Potential litigation - Forgent Networks (FORG - $0.42) is suing all known companies that do video compression
in their products claiming patent violation. Telanetix believe they will not be involved in such suits due to
payment for licensing fees to the MPEG Licensing Authority.

* Capital Plan Dependent on 3Q 2006 and 4Q 2006 Product Ramp -- We believe the Company has sufficient working capital to execute its business plan through the end of 2006. After this point in time, the Company will either need to be generating cash though the sale of systems and network services or will likely need to raise additional cash.

Recent Events and Milestones
Listed below are the most recent significant events for Telanetix, Inc.:

* Over the past year the Company's management has completed the design of the product and installed trial systems in five major U.S. cities. Much of the past three quarters have been used to bring up the Company's distribution channel, which now includes nearly 40 regional sales offices. In addition, work has already been completed onintegration of the Company's resale network, which is currently being offered by SAVVIS, Inc. Early in 2006, management closed a $2 million financing round after landing approximately $5 million in 2005.

* There are currently eight complete systems installed to paying customers and we are expecting the Company to
install an additional 10 to 15 systems during 3Q 2006, with a larger number of additional systems being installed
during 4Q 2006.

* As of June 1, 2006, the Company's stock began trading on the over-the-counter market after trading on pink sheets since its inception as a public company.

* On April 26, 2006, the Company announced its distribution channel strategy, including some of the nations largest
AV resellers including Avidex, Audio Video Innovations, Inc. (AVI), and Audio Visual Systems (AVS). These
three organizations signed exclusive distribution agreements with Telanetix and have opened showcase Telanetix
Demonstration Centers in the Seattle, New Jersey, Dallas, Washington D.C., and Southern California markets. The
Company is planning additional demonstration facilities in the future.

* The Company's most recent filing with the Securities and Exchange Commission was for 10QSB, which was filed
on May 19, 2006.

* It appears that the Company is current with all filing requirements.

Near-Term Estimates

We believe that Telanetix is on the verge of moving out of the developmental stage and into the revenue generation stage. It appears several large opportunities are near closing, which we believe could generate sizable revenue streams for the Company. We are currently estimating the Company to begin to receive relatively significant revenues in the September quarter of 2006, with revenue likely growing each quarter moving forward. For the year ending 2006, we are estimating approximately $2 million in revenues with substantial growing likely being seen in 2007. We are estimating revenues for 2007 at just under $14 million.

Because of the software orientation of the product and the resulting high gross margins, combined with the low overhead and the very limited number of employees, we are expecting the Company to move into positive cash flow and EPS profitability fairly quickly upon even a modest revenue ramp. Based on the above revenue generation, we are estimating Telanetix to breakeven or to generate modest positive earnings during the June quarter of 2007.

For full year 2006, we are estimating a GAAP loss of approximately $1.7 million. For full year 2007, we are estimating GAAP untaxed net income of approximately $2.5 million, or $0.18 per share based on a total of approximately 14 million shares.

HSL's Thoughts and Analysis

The big news here is that Telanetix is off to the races and selling systems. It seems their distribution network is kicking in and beginning to produce dividends. I was impressed that the company now has 5 demonstration locations with more planned and, between Telanetix and their channel partners, almost 40 sales offices with incentivized reps.

While the analyst report from Dutton Associates does a fair job of covering the fundamentals of the company and is dead-on with respect to its insights on the traditional videoconferencing industry's dissatisfied channel and razor thin margins, I was a little disappointed that it took until the last page to discover that the report appears to be commissioned by the company when reading the fine print I got to the blurb that explained:

Neither the Firm, its principals, nor the assigned analysts own or trade shares of any company covered. The Firm does not accept any equity compensation. Anyone may enroll a company for research coverage, which currently costs US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. Dutton Associates received $35,000 from the Company for 4 Research Reports with coverage commencing on 07/19/2006. Reports are performed on behalf of the public, and are not a service to any company. The analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests and insure independence.

Paying for analyst coverage is usual and customary for firms whose company and/or specific product line is too small to attract the attention of the big boys. The Lab's recent paper Telepresence, Effective Visual Collaboration, and the Future of Global Business at the Speed of Light was sponsored by industry participants (including Telanetix) who received various benefits for their sponsorship including the ability to place marketing information in an appendix or distribute a version of the paper on their website. The problem I had with the Dutton Report is that you didn't learn of this relationship unless you read the fine print on the last page. The Lab disclosed the sponsors of our paper in the introduction in the same font that we used throughout.

The biggest problem that I had with the Dutton Associates' report was the section on competition. The report cites Polycom and Tandberg as the company's two leading competitors somehow missing completely "multi-screen and multi-camera systems primarily for the meeting environment" from what I would consider Telanetix's true competition: Destiny Conferencing, HP Halo and Teliris. While the report does mention Polycom it completely fails to mention the Polycom RPX ( a "multi-screen and multi-camera system primarily for the meeting environment" even though Polycom released the system almost two months before the Dutton Associates' report was published.

These are criticisms of the Dutton Associates analysis and should not be interpreted as criticisms of Telanetix or their offering. I remain impressed with the Telanetix solution (especially with the price point, IP multi-cast capabilities, and their choice of partnering with Savvis for their QoS network) and believe it deserves consideration from those interested in improving their visual collaboration capabilities.