Yesterday, Elephant Talk Communications Corp. announced the completion of a registered direct public offering of an aggregate $12.0 million, which was led by a $4.5 million investment from company CEO Steven van der Velden, a $5.0 million investment from Crede CG III Ltd. (a wholly owned subsidiary of Crede Capital Group LLC) and investors placed by Dawson James Securities to purchase an additional $2.5 million. The company sold an aggregate of 17,425,638 shares of common stock, par value $0.00001 per share, and warrants for purchasing up to an aggregate of 7,841,537 shares of common stock.
The shares are being sold to non-affiliate investors at $0.682 per share and to the affiliated investor (van der Velden) at $0.70 per share. The warrants have an initial exercise price of $0.887 per warrant share for both the affiliated investor and the non-affiliated investors. NYSE MKT notified Elephant Talk Communications on June 13 of its acceptance of the company’s plan of compliance; this was one of the closing conditions of the offering.
The gross proceeds realized by Elephant Talk Communications in connection with the offering are $12.0 million, and the net proceeds are anticipated to be around $11.4 million after deducting the placement agent and estimated offering expenses. A portion of the net proceeds from the offering will be used by Elephant Talk Communications to pay all outstanding obligations of around $6.7 million, pursuant to certain purchase agreements with the holders of certain senior secured convertible notes that the company issued on March 29, 2012. The remaining net proceeds will be used for working capital and other general corporate purposes.
Following this successful closing of the registered public offering, Elephant Talk Communications’ management plans to focus on growing the company’s topline while diligently moving Elephant Talk Communications toward being consistently operational cash flow-positive.
“I believe that the recent fund raisings were an integral component of the NYSE MKT’s decision to accept the company’s plan to regain compliance,” CEO and Chairman van der Velden said. “Using the proceeds to repay existing debt strengthens the company’s financial position by providing liquidity and significantly lowering the company’s outstanding debt. In addition, the company’s recent milestones of nearly reaching a positive cash flow position in March and receiving an additional $1.5 million of funding in May provide very positive momentum moving forward.”
For more information, visit www.elephanttalk.com
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