Elephant Talk To Acquire The Assets Of U.S. Based Telnicity, LLC

SCHIPHOL, The Netherlands and OKLAHOMA CITY, Jan. 9, 2013 /PRNewswire/ -- Executing on its strategy to enter the United States telecommunications market, Elephant Talk Communications, Corp. (NYSE MKT: ETAK) (www.elephanttalk.com), an international provider of software and services developed to manage network, billing and systems infrastructure for the telecommunication industry and a market leader in providing solutions to counter electronic fraud for the financial services industry, today announced plans to acquire 100% of the assets of Telnicity, LLC, a U.S. MVNE/MVNO enabler company headquartered in Oklahoma City, Oklahoma in an all-equity transaction.

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According to the acquisition agreement between Elephant Talk and Telnicity, which is subject to certain closing conditions and based on the closing price of Elephant Talk stock on January 8, 2013, the transaction value is approximately $1 million, with Elephant Talk issuing 1 million shares of common stock at closing. The shares will be subject to a lock-up agreement restricting sale or disposition of the shares for 18 months. The terms of the acquisition agreement also provides for a bonus arrangement applicable when revenue minus cost of sales is in excess of $1.00 per customer per month and payable once the cash flow from the Telnicity business is sufficient to cover the payments.  The transaction is expected to close on or before March 8, 2013. 

"We will work on a seamless and efficient global platform for MNO's, MVNE's, and MVNO's to operate by taking advantage of the technologies of both companies," said Steven van der Velden, Chairman and Chief Executive Officer of Elephant Talk Communications. "Telnicity's relationships with several North American based telecommunications companies provide a head start for the launch of Elephant Talk's services into the U.S. mobile telecommunication market. In addition, Telnicity's existing customer base will be able to leverage Elephant Talk's technology and telecommunications relationships to offer more complete international calling and roaming packages."

According to the terms of the acquisition agreement, Elephant Talk will acquire all of the assets of Telnicity, LLC, a U.S. MVNE/MVNO enabler company including the company's existing customer contracts, carrier agreements, and access to telSPACE and mCASH, Telnicity's propriety turnkey back office infrastructure and billing systems. Telnicity's 6 full-time equivalent employees will remain in their current positions.

"The all-equity transaction will result in less than 1% dilution to existing Elephant Talk stockholders while providing Elephant Talk a United States market presence. We believe an all stock transaction is an efficient and lower risk approach to entering this important market," stated Mr. Van der Velden. "As we work to bring the Elephant Talk operations to the U.S., we expect the financial impact to be limited for at least the first several quarters.  Elephant Talk remains on track to achieve its first month of positive operational cash flow in early 2013."

"Telnicity is a one-stop shop for outsourced solutions for any company in any industry to become a reseller of mobile communication services," said Dane Gasio, Founder and Chief Executive Officer of Telnicity. "Joining forces with Elephant Talk will allow the combined company to bring an expanded product offering to the U.S. market to be driven by a strong U.S. based management team with substantial in-market sales, marketing, and technology development experience. Elephant Talk will give Telnicity the depth and breadth of product offerings that allow it to be more competitive and attractive to larger U.S. companies."

Upon the close of this transaction, Dane Gasio will become President of Elephant Talk North America and will report directly to Elephant Talk Chief Executive Officer Steven van der Velden. In this capacity, Mr. Gasio will work closely with Elephant Talk's global mobile telecommunications operations to build, further integrate, and maximize the value of this global telecommunications company.

Elephant Talk recognizes that companies that can differentiate their service on something other than price will have higher retention rates, higher margins, and higher penetrations. The future of wireless requires a successful data strategy where Telnicity's MVNO clients can provide customized content to their end users. Telnicity has created functionality allowing its clients to create dramatic product differentiation from its competitors.

Telnicity is positioned at the center of a true telecommunication convergence, with a system that can support cross carrier/cross technology billing. With the move towards convergent billing of multiple service offerings, and the unknowns of where technology will head with the latest spectrum auction to support LTE, WIMAX, and other 4G technology deployments, Telnicity is positioned to succeed with a system designed to support any carrier technology. If cellular carrier(s) change their wholesale strategy, Telnicity is well-positioned with multiple carrier and multiple technology relationships.

Telnicity's telSPACE allows its clients to sell, fulfill, and care for multiple telecommunication services, including Pre and Post-Paid Cellular, VOIP, Internet, and Long Distance. The system is completely rules based, allowing for greater speed of integration and customization than any competitor. Telnicity can enable any MVNO in only 3-4 weeks to sell privately branded telecommunications services for many U.S. Carriers.

The Boards of Directors of Elephant Talk Communications, Corp. and controlling shareholders of Telnicity, LLC have approved this transaction, which is subject to customary closing conditions.

Elephant Talk Communications, Corp. (NYSE MKT: ETAK) is a leading international provider of mobile networking software and services. The Company's mission is to provide a single service, fully enabling and securing the mobile cloud.

Elephant Talk empowers Mobile Network Operators (MNOs) and Mobile Virtual Network Operators (MVNOs) by providing a cloud based mobile communications infrastructure, operating software and managed services, based mostly on company developed and owned software. We enable these Mobile Operators and Virtual Network Operators by offering a full suite of products, delivery platforms, support services, superior industry expertise and high quality customer service without substantial upfront investment.

As a specialized outsourcing partner, we provide operating software, managed services, cloud and SaaS solutions, an integrated transaction and delivery platform to the mobile telecommunications industry globally. Our products include remote health care, credit card fraud prevention, mobile internet ID security, secure remote file access management, loyalty and transaction management services and a whole range of other emerging mobile services.

Elephant Talk can count several of the world's leading Mobile Operators amongst their customers including Vodafone, T-Mobile and Zain, and virtually all business is focused on tier 1 operators worldwide. Visit www.elephanttalk.com.

ValidSoft Limited has been a wholly owned subsidiary of Elephant Talk since early 2010 and underpins our mobile/cloud security offering. The company is a market leader in providing solutions to counter electronic fraud relating to a variety of bank, card, internet and telephone channels. ValidSoft's solutions are used to verify the authenticity of both parties to a transaction (Mutual Authentication), the security of the relevant telecommunication channel used (Secure Communications), and the integrity of transactions itself (Transaction Verification) for the mass market, in a highly cost effective and secure manner while being very easy to use.

The company's clients include leading worldwide service providers and institutions who benefit from a very substantial reduction in false positives, thereby freeing up resources to combat actual fraud, as well as a substantial elimination of the fraud itself, all in real time. ValidSoft is the only security software company in the world that has been granted three European Privacy Seals. Visit www.validsoft.com.

Telnicity, LLC, a U.S. company based in Oklahoma City is an MVNE/MNVO enabler where mobility and simplicity meet, has developed a full turnkey MVNO, vMVNO, VNO, and VNE billing system that enables any company in any industry to become a sophisticated reseller of communication services as well as mobile commerce. Telnicity offers MVNO client access to multiple services and technologies all connected to one central back office where customers are acquired, activated, billed and managed.  Telnicity's turnkey MVNO solution allows its clients to care for multiple telecom services including Pre and Post-Paid cellular VOIP, Internet, mobile commerce, and International long distance. The Telnicity back office integration strategy is based on automation and creating efficiencies in areas where technology has not yet caught up to its fullest potential.

Forward-Looking Statements
Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements with respect to the Company's plans and objectives, projections, expectations and intentions. These forward-looking statements are based on current expectations, estimates and projections about the Company's industry, management's beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such statements involve risks and uncertainties, the actual results and performance of the Company may differ materially from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, the Company also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from that projected or suggested is contained in the Company's filings with the Securities and Exchange Commission (SEC), copies of which are available from the SEC or may be obtained upon request from the Company.

Contacts

Investor relations:
Steve Gersten
Elephant Talk Communications Corp.
813-926-8920
[email protected]

Peter Salkowski
The Blueshirt Group
415-489-2184
[email protected]

Public  Relations:
UK: Fishburn Hedges
+44 (0)20 7839 4321
[email protected]

SOURCE Elephant Talk Communications, Corp.