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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