On Thursday, Elephant Talk
Communications Corp. (NYSE MKT: ETAK) took a major step forward in its ongoing
corporate restructuring efforts when it announced the execution of a binding
agreement to divest its interest in ValidSoft, a leading provider of personal
authentication and device assurance services.
According to the terms of the
agreement, Elephant Talk will receive a total consideration of $12.5 million
from Cross River Initiatives LLC in the form of a wire transfer of $8 million
and a $4 million short-term secured note, due no later than March 21, 2016, in
addition to a $500,000 advance that was paid last month. Effective February 1,
2016, Cross River has also agreed to assume all actual working capital and
general business expenses associated with the ongoing operation of ValidSoft,
with all payments being non-refundable in the event that the transaction fails
due to breach of the agreement by Cross River.
As part of this transaction,
Elephant Talk, ValidSoft and Cross River have also agreed to negotiate a
perpetual, royalty-free license to ValidSoft’s Device Trust™ and User
Authentication™ solutions, including the right to incorporate these technologies
into Elephant Talk’s mobile telecommunications-cloud platform and other
technologies. This agreement will also give Elephant Talk the right to resell
these technologies through its platform moving forward.
The sale of ValidSoft marks the
latest in a number of recent actions designed to bring Elephant Talk’s
operations in line with its current revenues. In particular, the company has
significantly reduced its staff, reorganized its management team and appointed
new board members. Following completion of this restructuring, Elephant Talk’s
management team expects the company to be in a strong position to achieve
favorable financial results in the months to come.
“The closing of this transaction
will significantly strengthen our balance sheet and provide working capital to
complete our restructuring and pursue key growth opportunities,” Hal Turner,
executive chairman of the board of Elephant Talk, noted in the news release.
“[W]e are pleased with the overall restructuring and we can see a clear path
towards sustainability and future profitable growth.”
Elephant Talk is a provider of
cloud-based mobile network solutions with a proven track record in the software
and telecom industries. The company deployed its first virtual network platform
for a major mobile carrier in 2008, and its turnkey mobile services platform is
capable of supporting millions of subscribers. With the assembly of a new
executive management team, Elephant Talk boasts a wealth of experience in the
telecom, software and technology sectors, as well as an extensive history of
achieving rapid financial and commercial growth.
For more information, visit
www.ElephantTalk.com
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