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Elephant Talk Communications To Raise $12 Million In Registered Direct Offering From Investors

OKLAHOMA CITY, June 11, 2013 /PRNewswire/ -- Elephant Talk Communications Corp. (NYSE MKT: ETAK), a leading international provider of proprietary Software Defined Network Architecture (Software DNA™) platforms for the telecommunications industry that empower Mobile (Virtual) Network Operators (MNOs and MVNOs) and a market leader in providing solutions to counter electronic fraud in the cloud, announced today that it has increased its previously announced registered direct offering to an aggregate of $12.0 million, led by a $4.5 million investment from Elephant Talk CEO Steven van der Velden, an increase of $1.5 million from his previously announced investment, and a $5 million investment from Crede CG III. Ltd., a wholly-owned subsidiary of Crede Capital Group, llc., and investors placed by Dawson James  to purchase an additional $2.5 million.  The Company previously announced on June 3, 2013 a registered direct offering in the amount of $10.5 million, which it expected to close on or before June 6, 2013.  Subsequent to the announcement of such offering, holders of the outstanding 8% Senior Secured Convertible Notes issued in March 2012 (the "Convertible Notes") contacted the Company to negotiate a waiver of certain provisions in the Convertible Notes definitive agreements. Accordingly, the closing on the initial registered direct offering was postponed. The Company has now entered into an amendment to the Securities Purchase Agreement dated June 3, 2013, for an aggregate $12 million of its securities.  The Company increased the size of the offering and agreed to redeem all of the outstanding Convertible Notes, both of which are included in an amended plan of compliance the Company submitted to the NYSE MKT.  The aggregate redemption amount of the Convertible Notes is approximately $6.7 million which includes the outstanding principal amount and interest plus a 10% fee.

(Logo: http://photos.prnewswire.com/prnh/20120917/MM75872LOGO)

(Logo: http://photos.prnewswire.com/prnh/20120917/MM75492LOGO)

Under the terms of the Securities Purchase Agreements, as amended, Elephant Talk will sell an aggregate of 10,997,067 shares of common stock at a price of $0.682 per share, a discount to the $.70 closing price of the Company's stock on June 10, 2013, and issue warrants to acquire 4,948,680 shares of common stock, with a per share exercise price of $0.887, to Crede and the Dawson James investors and will sell an aggregate of 6,428,571 shares of common stock at a price of $0.70 per share, the closing price of the Company's stock on June 10, 2013, and issue warrants to acquire 2,892,857 shares of common stock, with a per share exercise price of $0.887, to Mr. van der Velden. The warrants issued to Crede and the Dawson James investors will be immediately exercisable following their issuance and will expire on the fifth anniversary of the date of issuance. The closing of the funding is expected to take place on or about June 14, 2013, subject to the satisfaction of closing conditions including but not limited to NYSE MKT's acceptance of the Company's Plan of Compliance. The warrants issued to Mr. van der Velden will not be exercisable for a period of 180 days from the date of issuance and until the Company obtains stockholder approval.

Dawson James Securities, Inc. acted as the exclusive placement agent in connection with this offering.

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