Last updated on April 19, 2014 at 1:20 EDT

Elephant Talk Communications Reports Q412 and Full Year 2012 Financial Results

April 2, 2013

Q412 Mobile and Security Revenue Grew 87% Y/Y – Sixth Consecutive Quarter of Q/Q Revenue Growth

SCHIPHOL, The Netherlands, April 2, 2013 /PRNewswire/ — Elephant Talk Communications, Corp. (NYSE MKT: ETAK) (www.elephanttalk.com), a leading international provider of proprietary Software Defined Network Architecture (Software DNA(TM)) platforms for the telecommunications industry that empower Mobile Network Operators (MNOs) and Mobile Virtual Network Operators (MVNOs), Enablers (MVNEs) and Aggregators (MVNAs) and a market leader in providing solutions to counter electronic fraud for the financial services industry, today announced total revenue of $6.8 million for the fourth quarter ended December 31, 2012.

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The higher margin(1) mobile and security solutions business generated revenue of approximately $3.6 million in Q412, a year-over-year increase of 86.6% compared to revenue of $1.9 million reported in Q411. Mobile and security revenue accounted for 52.1% of total company revenue in Q412 versus only 23.5% of total company revenue in Q411. This marked the first time that mobile and security solutions revenue made up the majority of total company revenue.

             Mobile and Security

     Quarter  Reported Revenue        % of Total
                                    Company Revenue
              ($ in millions)

     Q112                       2.4                 28.3

     Q212                       2.8                 39.3

     Q312                       2.9                 43.8

     Q412                       3.6                 52.1

Mobile and security business revenue increased 102.7% year-over-year to $11.7 million for 2012 from $5.8 million for 2011. For 2012, approximately 40% of total company revenue was generated by mobile and security with only about 18% of total company revenue generated by mobile and security solutions in 2011.

Total Margin for Q412 was $2.7 million, a year-over-year increase of 84.3% when compared to the total margin of $1.5 million reported in Q411. Total margin has increased for six consecutive quarters in dollars and as a percentage of total revenue.

     Quarter   Total Margin         % of Total
                                 Company Revenue
             ($ in millions)


       Q112                  1.7                 19.7

       Q212                  1.9                 26.8

       Q312                  2.1                 31.3

       Q412                  2.7                 39.4

    (1)        Margin is defined as
               revenue less cost of

“The sequential increase of mobile and security revenue to $3.6 million in Q412 from $2.9 million in Q312 was a significant contributor to the sequential increase of total company margin to $2.7 million in Q412 from $2.1 million in Q312, thereby illustrating the strong operating leverage associated with these operations,” stated Steven van der Velden, CEO of Elephant Talk Communication. “Continued year-over-year growth of the high margin mobile and security revenue is expected to contribute to our first month of positive operational cash flow, which we estimate using Adjusted EBITDA. While timing is dependent on the accounting treatment on revenue from existing contracts, we expect to achieve this company milestone in April of 2013. In addition, we are currently in the process of finalizing additional funding, and the company intends to close such financing in April/May, though there can be no assurance that financing will close in such period. This financing, combined with existing cash on hand and cash flow from operations will be sufficient to fund our operations and carry out our business plans.”

Key Company Highlights

  • Elephant Talk’s Software DNA(TM) Platform Expected to go Live with Mobile Operator in a Major Latin American Market in the Second Quarter of 2013. The rollout of the Company’s proprietary Software DNA(TM) platform is continuing on schedule. With an initial platform capacity of 10 million mobile subscribers, the Company expects to have at least 1.5 million mobile subscribers on its proprietary Software DNA(TM) platform by the end of the year. This is a 50% increase in subscriber expectations the Company had when the contract was first announced in January, consisting of a mix of the Operators existing mobile subscribers and subscribers from Mobile Virtual Network Operators (“MVNOs”) that work with the Operator.
  • Elephant Talk Expected to Achieve its First Month of Positive Operational Cash Flow in April of this Year. We estimate this measure using Adjusted EBITDA, defined as earnings before derivative accounting, such as warrant liabilities and conversion feature expensing, income taxes, depreciation and amortization, impairments, non-operating income and expenses and stock-based compensation.
  • Elephant Talk’s Acquisition of 100% of the Assets of Telnicity Closed April 1, 2013. The acquisition provides access to the U.S. mobile telecommunications market through Telnicity’s relationships with several major U.S.-based mobile telecommunication companies. The all equity transaction supports Elephant Talk’s strategic focus of expanding outside of Europe while preserving cash.
  • FICO/Adeptra Signed Agreements with a Leading UK Bank for the Provision of the ValidSoft SIM Swap technology and VALid-POS technology. Implementation is likely to commence in Q213. Discussions are ongoing with two UK banks for VALid-POS and VALid-SIM, through ValidSoft’s partner, FICO/Adeptra.
  • ValidSoft SIM Swap solution continues to run very smoothly in production at Santander, having now processed in excess of 7.5 million transactions, a 50% increase in transaction since last quarter
  • ValidSoft Awarded a Contract with a Leading US Financial Institution in November 2012 for VALid®, its core OOB (Out of Band) Authentication and Transaction Verification solution which includes its market leading Voice Biometrics capability.
  • ValidSoft client in Australia, Newcastle Permanent Building Society, has grown its active use base to almost 90,000 customers, and is expected to expand the deployment to 150,000 users in the coming months.
  • ValidSoft and Partner FICO/Adeptra Receive Prestigious Banking Security Technology Award For SIM Swapping Fraud Solution Implemented at Santander UK. Award for Best Security Initiative recognizes breakthrough solution that prevents online banking fraud achieved through mobile phone number theft.
  • ValidSoft Awarded Winner Jury Vote from the Florin Transaction Service Innovation Awards. ValidSoft recognized for its SMART(TM) telecommunications-based technology by a jury of five experienced industry professionals.
  • ValidSoft Voice Biometrics. ValidSoft successfully participated in the prestigious National Institute of Standards and Technology (NIST) Speaker Recognition Evaluation. ValidSoft is now recognized as a world leading provider of Voice Biometric solutions by independent research institutions.
  • ValidSoft SMART((TM)) Platform Shortlisted for 2013 FSTech ‘Technology Provider of the Year’ Award. Winners will be announced on April 17, 2013.

Financial results for the three and twelve months ended December 31, 2012

Revenue for the three months ended December 31, 2012 and December 31, 2011

    ($ in millions)   Quarter Ended


                      Dec. 31, 2012   Dec. 31, 2011   Y/Y % Change
                      -------------   -------------   ------------

    Mobile & Security
     Revenues                    $3.6            $1.9               86.6%
    -----------------            ----            ----               ----

    Total Revenues               $6.8            $8.1             (16.0%)
    --------------               ----            ----             ------
  • The higher margin mobile and security revenue increased 86.6% year-over-year.
  • In accordance with our strategy to reduce the emphasis on this business, the lower margin legacy landline revenue declined 47.5% year-over-year in Q412 when compared to the same period a year earlier.

Revenue for the twelve months ended December 31, 2012 and December 31, 2011

    ($ in          Twelve Months
     millions)     Ended

                      Dec. 31, 2012     Dec. 31, 2011     Y/Y % Change
                      -------------     -------------     ------------

    Mobile &
     Revenues                     $11.7              $5.8              102.7%
    ---------                     -----              ----              -----

    Total Revenues                $29.2             $32.2              (9.4%)
    --------------                -----             -----              -----
  • Growth in mobile and security revenue was driven by an increased subscriber base hosted on the Company’s platforms.
  • The increase in mobile and security revenue was offset by the expected continued decline in the Company’s legacy landline business.

Selected financial results for the quarter and full-year ended December 31, 2012 and December 31, 2011.

    ($ in millions)           Quarter Ended (Unaudited)  Year Ended (Unaudited)

                                     Dec. 31, 2012            Dec. 31, 2011      Y/Y % Chg.       Dec. 31, 2012       Dec. 31, 2011       Y/Y % Chg.
                                     -------------            -------------      ----------       -------------       -------------       ----------

    Cost of Services                               $4.1                    $6.7           (38.0%)              $20.8               $28.7            (27.5%)


    Margin                                         $2.7                    $1.5             84.3%               $8.4                $3.5             138.8%
    ------                                         ----                    ----             ----                ----                ----             -----

    Margin as a Percentage of
     Revenue                                         39%                     18%                                  29%                 11%
    -------------------------                       ---                     ---                                  ---                 ---

    Selling, general &
     administrative                                $4.5                    $5.0            (9.9%)              $17.9               $16.6               7.8%
    ------------------                             ----                    ----            -----               -----               -----               ---

    Adjusted EBITDA (a non-
     GAAP measure)                                ($1.8)                  ($3.6)          (48.6%)              ($9.5)             ($13.1)           (27.4%)
    -----------------------                       -----                   -----           ------               -----              ------            ------

    Net Income (loss)                             ($6.7)                  ($6.6)             0.9%             ($23.1)             ($25.3)            (8.6%)
    ----------------                              -----                   -----              ---              ------              ------             -----
  • The decline in cost of service for the full year ended December 31, 2012 is related to the decline in landline revenue.
  • The increase in margin for the three and twelve months ended December 31, 2012 was primarily attributable to the increased revenue contribution from the higher-margin mobile and security solution business.
  • The 7.8% year-over-year increase in SG&A to $17.9 million for the twelve months ended December 31, 2012 was mainly due to the 13.1% year-over-year increase in compensation cost following an increased number of full time employees, primarily European MNO operational support and technical staff as well as higher investor relations and sales and marketing related staffing and expense.
  • Net loss for the twelve months ended December 31, 2012 was reduced because of increased revenues from our higher margin mobile and security business combined with lower non-cash compensation expenses.

The table at the end of this press release includes a reconciliation of net loss to non-GAAP Adjusted EBITDA for the three and twelve months ended December 31, 2012 and 2011. An explanation of Adjusted EBITDA along with margin are included below under the heading “Non-GAAP Financial Measures.”

Conference call reminder

As a reminder, Elephant Talk Communications will host a Shareholder Update Conference Call on April 2, 2013 at 11:00 a.m. (EST). Anyone interested in participating should dial 1-480-629-9664 approximately 5 to 10 minutes prior to the start of the call. Participants should ask for the Elephant Talk Shareholder Update conference call. To listen to the playback please utilize the webcast by visiting the company’s website at www.elephanttalk.com.

This call is being webcast by ViaVid Broadcasting and can be accessed at either Elephant Talk’s website at www.elephanttalk.com or ViaVid’s website at http://www.viavid.net. To access the webcast, you will need to have the Windows Media Player on your desktop. For the free download of the Media Player, please visit: http://www.microsoft.com/windows/windowsmedia/en/download/default.asp

Non-GAAP financial measures

To supplement the consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP, Elephant Talk uses measures of non-GAAP Adjusted EBITDA and margin. A reconciliation of the non-GAAP Adjusted EBITDA to the closest GAAP financial measure, is presented in the financial table below under the heading “Reconciliation of Non-GAAP Measures to GAAP.” Margin is derived from the income statements by subtracting cost of service from revenues. These adjustments to the Company’s GAAP results are made with the intent of providing both management and investors a more complete understanding of the Company’s underlying operational results and trends and performance.

Management uses these non-GAAP measures to evaluate the Company’s financial results, develop budgets, manage expenditures, and determine employee compensation. The presentation of additional information is not meant to be considered in isolation or as a substitute for or superior to net income (loss) or net income (loss) per share determined in accordance with GAAP.

For the three and twelve months ended December 31, 2012 and 2011, non-GAAP Adjusted EBITDA is defined as earnings before derivative accounting, such as warrant liabilities and conversion feature expensing, income taxes, depreciation and amortization and stock-based compensation. It is determined by taking net loss and adding back provision for income taxes, interest income and expense, net loss attributable to non-controlling interest, depreciation and amortization, stock-based compensation expense, other income and expenses, and equity in earnings of unconsolidated joint venture.

About Elephant Talk:

Elephant Talk Communications Corp. (NYSE MKT: ETAK),is a leading international provider of proprietary Software DNA(TM) platforms for the telecommunications industry that empower Mobile Network Operators (MNOs) and Mobile Virtual Network Operators (MVNOs), Enablers (MVNEs) and Aggregators (MVNAs) with a full suite of applications, Full OSS/BSS Systems, Delivery Platforms, Support and Managed Services, on-site, cloud, hybrid and S/PaaS solutions, including Network, Mobile Internet ID Solutions, Secure Remote Access Management, Loyalty Management and Transaction Processing Services, superior Industry Expertise and high quality Customer Service without substantial upfront investment. Elephant Talk counts several of the world’s leading Mobile Operators amongst its customers including Vodafone, T-Mobile and Zain, and virtually all business is focused on tier 1 and tier 2 operators worldwide. Visit www.elephanttalk.com.

About ValidSoft:

ValidSoft Limited has been a wholly owned subsidiary of Elephant Talk since early 2010 and underpins our mobile/cloud security offering. ValidSoft is a market leader in providing solutions to counter electronic fraud relating to a variety of bank, card, internet and telephone channels. ValidSoft’s solutions are used to verify the authenticity of both parties to a transaction (Mutual Authentication), the security of the relevant telecommunication channel used (Secure Communications), and the integrity of transactions itself (Transaction Verification) for the mass market, in a highly cost effective and secure manner while being very easy to use. ValidSoft counts several leading worldwide service providers and institutions amongst its customers. ValidSoft is the only security software company in the world that has been granted three European Privacy Seals. Visit www.validsoft.com.

Forward-Looking Statements

Certain statements contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements with respect to the Company’s plans and objectives, projections, expectations and intentions. These forward-looking statements are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such statements involve risks and uncertainties, the actual results and performance of the Company may differ materially from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, the Company also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from that projected or suggested is contained in the Company’s filings with the Securities and Exchange Commission (SEC), copies of which are available from the SEC or may be obtained upon request from the Company.


                    COMPREHENSIVE LOSS

    The below financial statements have been
     prepared as though the Company will remain a
     going concern for the foreseeable future.  As
     described in Note 2 of the Form 10-K filed on
     or before April 2, 2013, our auditor's have
     included an explanatory paragraph in their
     report expressing substantial doubt about the
     Company's ability to continue as a going
     concern for the foreseeable future.

                                              2012          2011          2010
                                              ----          ----          ----

    REVENUES                           $29,202,188   $32,232,981   $37,168,351


    Cost of service                     20,819,327    28,723,265    35,120,916

    Selling, general and
     administrative expenses            17,884,137    16,589,649     9,620,322

    Non-cash compensation to
     officers, directors and
     employees                           6,302,141     6,818,905     5,588,392

    Depreciation and
     amortization                        5,710,396     5,254,708     5,312,469

    Intangible assets impairment
     charge                                      -       522,726             -
                                               ---       -------           ---

      Total cost and operating
       expenses                         50,716,001    57,909,253    55,642,099

    LOSS FROM OPERATIONS               (21,513,813)  (25,676,272)  (18,473,748)


    Interest income                        248,017       106,721       239,713

    Interest expense                      (780,852)     (201,184)   (1,802,804)

    Other income & (expense)                     -       460,000             -

    Interest expense  related to
     debt discount                      (1,089,126)            -   (21,094,104)

    Change in fair value of
     warrant liabilities                         -             -   (48,107,969)

    Change in fair value of
     conversion feature                  2,387,326             -             -

    Impairment of related party
     loans                              (1,060,784)            -             -

    Amortization of deferred
     financing costs                      (531,792)            -    (3,238,602)
                                          --------           ---    ----------

         Total other income (expense)     (827,211)      365,537   (74,003,766)

     INCOME TAXES                      (22,341,024)  (25,310,735)  (92,477,514)

    Provision for income taxes            (289,136)            -          (800)
                                          --------           ---          ----

     NONCONTROLLING INTEREST           (22,630,160)  (25,310,735)  (92,478,314)

    Net (loss) income
     attributable to non-
     controlling interest                        -             -        (5,046)

    Equity in earnings of
     unconsolidated joint
     venture                              (501,776)            -             -
                                          --------           ---           ---

     COMPANY                           (23,131,936)  (25,310,735)  (92,483,360)


    Foreign currency translation
     gain (loss)                           411,205      (624,275)   (1,655,917)
                                           -------      --------    ----------

                                           411,205      (624,275)   (1,655,917)

    COMPREHENSIVE LOSS                $(22,720,731) $(25,935,010) $(94,139,277)
                                      ============  ============  ============

    Net loss per common share
     and equivalents -basic and
     diluted                                $(0.21)       $(0.24)       $(1.31)
                                            ======        ======        ======

    Weighted average shares
     outstanding during the
     period -basic and diluted         111,322,029   104,326,066    70,670,776
                                       ===========   ===========    ==========

                                                              ELEPHANT TALK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                                                     CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                                                                  December 31,               December 31,

                                                                                                                                       2012                       2011
                                                                                                                                       ----                       ----



    Cash and cash equivalents                                                                                                    $1,233,268                 $6,009,576

    Restricted cash                                                                                                               1,230,918                    190,844

    Accounts receivable, net of an allowance for doubtful accounts of $559,120 and $436,546 at December 31, 2012
     and December 31, 2011 respectively                                                                                           5,123,803                  6,441,528

    Prepaid expenses and other current assets                                                                                     1,821,218                  1,522,461
                                                                                                                                  ---------                  ---------

       Total current assets                                                                                                       9,409,207                 14,164,409

    OTHER ASSETS                                                                                                                  1,038,306                  1,392,837

    PROPERTY AND EQUIPMENT, NET                                                                                                  13,088,271                 13,315,687

    INTANGIBLE ASSETS, NET                                                                                                       10,503,026                 12,784,199

    GOODWILL                                                                                                                      3,436,731                  3,154,971

    TOTAL ASSETS                                                                                                                $37,475,541                $44,812,103
                                                                                                                                ===========                ===========



    Overdraft                                                                                                                      $350,114                   $312,236

    Accounts payable and customer deposits                                                                                        5,139,292                  4,490,455

    Deferred Revenue                                                                                                                252,551                    132,467

    Accrued expenses and other payables                                                                                           4,120,536                  3,035,758

    8% Convertible Notes                                                                                                          3,067,416                          -

    Loans payable                                                                                                                   963,051                    960,869
                                                                                                                                    -------                    -------

       Total current liabilities                                                                                                 13,892,960                  8,931,785


    8% Convertible Notes                                                                                                          2,565,202                          -

    Conversion feature                                                                                                              311,986                          -

    Trade note payable                                                                                                       -                    271,915

    Loan from joint venture partner                                                                                                 555,907                    513,303
                                                                                                                                    -------                    -------

       Total long term liabilities                                                                                                3,433,095                    785,218

       Total liabilities                                                                                                         17,326,055                  9,717,003
                                                                                                                                 ----------                  ---------


    Common stock, no par value, 250,000,000 shares authorized, 111,918,386 issued and outstanding  as of December
     31, 2012 compared to 110,525,229 shares issued and outstanding as of December 31, 2011                                     223,965,907                216,188,899

    Accumulated other comprehensive income (loss)                                                                                  (732,090)                (1,143,295)

    Accumulated deficit                                                                                                        (203,260,307)              (180,128,371)
                                                                                                                               ------------               ------------

       Elephant Talk Communications Corp. stockholders' equity                                                                   19,973,510                 34,917,233
                                                                                                                                 ----------                 ----------

    NON-CONTROLLING INTEREST                                                                                                        175,976                    177,867

       Total stockholders' equity                                                                                                20,149,486                 35,095,100
                                                                                                                                 ----------                 ----------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                  $37,475,541                $44,812,103
                                                                                                                                ===========                ===========

                                           ELEPHANT TALK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                                  CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                       2012                                 2011                       2010
                                                                      ----                                 ----                       ----


    Net loss                                                  $(23,131,936)                        $(25,310,735)              $(92,483,360)

    Adjustments to reconcile net loss to
     net cash used in operating

       Depreciation and amortization                             5,710,396                            5,254,708                  5,312,469

       Provision for doubtful accounts                             117,394                              318,443                   (584,722)

       Stock based compensation                                  6,302,141                            6,319,314                  5,080,783

       Non-controlling interest                           -                                     -                      5,046

       Equity in earnings of joint venture          501,776                                     -                          -

       Amortization of shares issued for
        consultancy                                       -                               499,591                    507,609

       Change in fair value of derivative
        instruments                             (2,387,326)                                     -                 48,167,991

       Amortization of deferred financing
        costs                                       531,792                                     -                  3,238,602

       Interest expense relating to debt
        discount and conversion feature           1,089,126                                     -                 21,094,104

       Loans to related party impairment
        charge                                    1,060,784                                     -                          -

       Intangible assets impairment charge                -                               522,726                          -

    Changes in operating assets and

       Decrease (increase) in restricted
        cash                                    (1,040,074)                                     -                          -

       Decrease (increase) in accounts
        receivable                                               1,292,883                           (1,372,719)                  (238,523)

       Decrease (increase)  in prepaid
        expenses, deposits and other assets                       (247,443)                             782,920                    229,343

       Increase (decrease) in accounts
        payable, proceeds from related
        parties and customer deposits                              272,500                             (140,229)                (1,574,761)

       Increase (decrease) in deferred
        revenue                                                    114,673                              142,309                   (131,886)

       Increase (decrease) in accrued
        expenses and other payables                              1,014,042                           (1,587,264)                (2,730,533)

    Net cash used in operating activities                       (8,799,272)                         (14,570,936)               (14,107,838)
                                                                ----------                          -----------                -----------


       Purchases of property and equipment                      (2,224,923)                          (7,721,307)                (3,246,057)

       Restricted cash                                    -                                    49                         42

       Cash received from acquisition of
        subsidiary                                   36,188                                     -                     58,253

       Impairment of related party loans        (1,060,784)                                     -                          -

       Payments for acquisition                           -                              (347,758)                         -

       Loan to joint venture party                 (146,496)                                    -                          -

       Loan to third party                                        (111,023)                            (448,195)                         -

      Net cash used in investing activities                     (3,507,038)                          (8,517,211)                (3,187,762)
                                                                ----------                           ----------                 ----------


       Bank overdraft                                     -                                     -                     13,769

       Deferred financing costs                    (543,437)                                    -                   (205,326)

       Proceeds from 8% Convertible Note,
        net of OID                                8,000,000                                     -                          -

       Restricted cash                          (2,273,720)                                     -                          -

       Payments on convertible note
        installment payments and interest         1,531,293                                     -                          -

       Loan from related party QAT Bridge
        Loan                                              -                                     -                  2,518,220

       Loan from related party Bridge SPA                 -                                     -                  2,885,000

       Proceeds from Private Placement
        Offering                                          -                                     -                 14,000,000

       Trade note payable                                         (315,000)                             271,915                          -

       Proceeds from exercise of warrants &
        options                                                  1,081,925                           26,808,067                    502,621

       Placement & solicitation fees                      -                           (1,185,741)                (1,814,766)

      Net cash provided by financing
       activities                                                7,481,061                           25,894,241                 17,899,518
                                                                 ---------                           ----------                 ----------

     CASH EQUIVALENTS                                               48,941                              957,785                    183,879

     CASH EQUIVALENTS                                           (4,776,308)                           3,763,879                    787,797

     OF THE PERIOD                                               6,009,576                            2,245,697                  1,457,900

     END OF THE PERIOD                                          $1,233,268                           $6,009,576                 $2,245,697
                                                                ==========                           ==========                 ==========


    Cash paid during the period
     for interest                                                 $504,718                              $39,460                 $1,295,298
                                                                  --------                              -------                 ----------

    Reconciliation of Non-GAAP Measures to GAAP

                         Reconciliation of Net loss to Adjusted EBITDA

     (adjusted)                                 2012                   2011
                                                ----                   ----

    Net loss                                           $(23,131,936)                $(25,310,735)

    Provision for income
     taxes                                                  289,136                            -

    Depreciation and
     amortization                                         5,710,396                    5,254,708

     compensation                                         6,302,141                    6,818,905

    Net loss
     attributable to
     interest                                      -                              -

    Equity in earnings
     of unconsolidated
     joint venture                                          501,776                            -

    Intangible assets
     impairment charge                             -                        522,726

    Other income &
     expenses                                               827,211                     (365,537)
                                                            -------                     --------

     EBITDA                                             $(9,501,276)                $(13,079,933)
                                                        ===========                 ============

                            Three months ended December 31,

    EBITDA (adjusted)           2012                    2011
                                ----                    ----

    Net loss                           $(6,661,173)          $(6,604,981)

    Provision for income
     taxes                                  96,961                  (800)

    Depreciation and
     amortization                        1,943,902             1,260,808

     compensation                        1,362,010             1,218,622

    Equity in earnings of
     unconsolidated joint
     venture                               145,109                     -

    Intangible assets
     impairment charge                           -               522,726

    Other income & expenses              1,281,356                42,840
                                         ---------                ------

    Adjusted EBITDA                    $(1,831,835)          $(3,560,785)
                                       ===========           ===========

Investor Relations Contacts:

Steve Gersten
Elephant Talk Communications
+1 813 926 8920

Peter Salkowski
The Blueshirt Group
+1 415 489 2184

Media Contacts:

Public Relations
UK: Fishburn & Hedges
+44 (0)20 7839 4321

US: Fishburn & Hedges
Jessica Morris
+ 1 212 459 6232

SOURCE Elephant Talk Communications, Corp.

Source: PR Newswire