Elephant Talk Communications (ETAK) Provides Update to Shareholders on ValidSoft Divestiture

Divestitures are a way for a company to manage its portfolio of assets. As companies grow, they may find they are trying to focus on too many lines of business and that they must close some operational business units in order to focus on more profitable lines. This is a problem that conglomerates may face. Companies may also sell off business lines if they are under financial duress. For example, an automobile manufacturer that sees a significant and prolonged drop in competitiveness may sell off its financing division in order to pay for the development of a new line of vehicles. Elephant Talk Communications Corp. (NYSE MKT: ETAK) announced, in a press release, an update on its divestiture of wholly-owned subsidiary, ValidSoft Limited (together with its wholly-owned subsidiary ValidSoft Limited UK, “ValidSoft”).

On March 22, 2016, Elephant Talk provided Cross River Initiatives LLC with a notice of default on the binding letter agreement dated February 17, 2016, between Cross River and the company concerning the proposed purchase of ValidSoft and governing certain important matters relating to the interim financing of ValidSoft’s business and operations. While Elephant Talk will not totally foreclose consummating the ValidSoft sale transaction with Cross River as originally contemplated, the company will no longer give preference or exclusivity to the buyer. The Elephant Talk team is working with an investment bank to evaluate strategic options regarding the planned divestiture of ValidSoft.

Hal Turner, executive chairman of the board of Elephant Talk, commented in a press release, “While we continue to have ongoing discussions with Cross River concerning the proposed purchase of ValidSoft, in the best interest of our shareholders, we cannot extend Cross River preference or exclusivity. We are working with an investment bank to evaluate strategic alternatives for the asset and remain optimistic that a transaction will be consummated in line with the company’s stated restructuring activities. Despite the setback in the divestiture of ValidSoft, the company’s restructuring plan is otherwise progressing on track and further details will be forthcoming on our earnings release and conference call later this month.”

Elephant Talk has developed a proprietary software and telecoms platform to provide cloud-based mobile network solutions to communications services providers (MNOs, MVNOs); enterprise and government/education organizations; and application/content and retail providers.

ValidSoft secures transactions using personal authentication and device assurance. ValidSoft enables its customers to enhance their security while improving their user experience, utilizing its multi-factor authentication platform, Voice Biometric engine and Device Trust technology, all of which may be used as ‘stand-alone’ services or integrated into multi-vendor solutions. ValidSoft serves multiple clients across the financial services, government and enterprise sectors and is the only company to have been granted four European Privacy Seals, reflecting its commitment to strong data privacy.

For more information, visit the company’s website: www.elephanttalk.com

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