NEW YORK, Nov. 16, 2015 /PRNewswire/ -- Elephant Talk Communications Corp. (NYSE MKT: ETAK) ("Elephant Talk" or the "Company"), a global provider of Software Defined Network Architecture (ET Software DNA® 2.0) platforms and cyber security solutions, today announced its financial results for the third quarter ending September 30, 2015. A conference call will be held on Tuesday, November 17, 2015 at 4:15pm EDT.

Revenue totaled approximately $3.5 million for the quarter ended September 30, 2015 as compared to restated revenue of $4.4 million recorded in the third quarter of 2014. Revenue in the quarter also reflects the negative impact of exchange rates in the amount of approximately $550,000. Non-GAAP revenue* decreased to approximately $3.4 million in the third quarter of 2015 as compared to approximately $7.7 million for the same period of the prior year. Net loss for the third quarter of 2015 was approximately $4.2 million as compared to a restated loss of approximately $5.2 million reported in the third quarter of 2014. Adjusted EBITDA* loss was approximately $1.2 million for the third quarter of 2015 as compared to approximately a restated $1.4 million profit in the same quarter of the prior year.

The decrease in 2015 third quarter revenue reflects the impact of the termination of the Company's relationship with Iusacell and the Iusacell settlement agreement dated June 12, 2015 which provided the Company with net proceeds of $12.6 million. The termination of the Iusacell contract resulted in the loss of approximately $3.9 million of anticipated quarterly cash flow (based on historical monthly billings). The Company continued to transition the business, following the Iusacell settlement, without any significant revenue benefit during the quarter of new customer additions which included the wholesale division of a Tier 1 Mobile Operator in the United States and a Tier 1 license holder in Brazil. Restructuring initiatives will be ongoing and shareholders will be updated as progress is achieved. The Company anticipates a return to revenue and EBITDA growth taking place in 2016.

Operational Update:

• During the third quarter, Elephant Talk continued its global expansion:
  • In Brazil, the Company was selected as the platform provider for EU TV/Surf Telecom. Given the platform's proven ability to reduce operating expenses significantly, while greatly accelerating time to market, the Company believes that our software is the ideal solution to address the business model challenges now faced by operators in this market.
  • Shortly following the end of the third quarter, Elephant Talk signed a Cloud Service and Software License Agreement with the wholesale division of a Tier 1 US Mobile Operator. Feedback from its partner on the value proposition being offered is very positive and the two companies are collaborating in the sales process, having already partnered on pursuing 8 MVNO opportunities, in addition to responding to multiple new leads being generated each week.

• ValidSoft momentum continued during the quarter:
  • ValidSoft added AurionPro as a new channel partner. AurionPro is a technology products and solutions provider serving enterprises, financial services, government and logistics companies in 22 different countries. AurionPro has added the Company's voice biometric technology into their product portfolio and recently demonstrated it in their unique 'bank in a box' kiosk that was shown at the Money2020 conference and is scheduled to be rolled out across a number of developing countries in the coming year.
  • ValidSoft was selected by the European Union as the voice biometrics provider to the 'Octave Project' which is part of its latest Horizon2020 program. The program is focused on the development of a cloud based voice biometric user authentication solution. The project, which is now underway, includes a consortium of technology providers and leading research institutes and has received funding from the European Union for the further development of the solution.

All interested in participating should dial in approximately 5 to 10 minutes prior to the 4:15 p.m. EST conference call. Participants should ask for the Elephant Talk 2015 third quarter conference call.

* Non-GAAP financial measures

In order to provide investors additional information regarding our financial results, the Company is disclosing Adjusted EBITDA, a non-GAAP financial measures. Adjusted EBITDA is defined as earnings before income and income taxes, depreciation and amortization, share-based compensation, changes in deferred revenue, income interest and expenses, expenses from derivative accounting, such as debt discount and conversion feature expensing, changes in fair value of the conversion feature and warrant liabilities, amortization of deferred financing cost, loss on extinguishment of debt, impairment of tangible and intangible assets and impairments of loans. Adjusted EBITDA further eliminates share-based compensation. Adjusted EBITDA is designed to show a measure of the Company's operating performance. The Company uses Adjusted EBITDA because it removes the impact of items not directly resulting from the Company's core operations, allowing the Company to better assess whether the elements of the Company's growth strategy are yielding the desired results. Accordingly, the Company believes that Adjusted EBITDA provide useful information for investors and others which allow them to better understand and evaluate the Company's operating results.

Non-GAAP revenue is defined as GAAP revenue adjusted for changes in deferred revenue.

In particular, as a result of the characteristics of our services, the long term nature of the contracts and the small customer base, new and substantial sales will remain unnoticed to investors due to the fact that most of these sales will need to be deferred over a period of 3-5 years. The Company therefore adds back to the revenue in the income statement the revenues that were invoiced in the reporting period. At the same time the Company removes from the revenue in the income statement the revenues that have been recognized as a result of sales prior to the reporting period. These two adjustments we refer to us as changes in deferred revenue.

A reconciliation of GAAP Revenue to Non-GAAP Revenue, for each of the periods indicated, is as follows:

A reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDA, for each of the periods indicated, is as follows:

About Elephant Talk Communications Corp.:
Elephant Talk Communications Corp. (NYSE MKT: ETAK) is a global provider of mobile proprietary Software Defined Network Architecture (ET Software DNA® 2.0) platforms for the telecommunications industry. The Company empowers Mobile Network Operators (MNOs), Mobile Virtual Network Operators (MVNOs), Enablers (MVNEs) and Aggregators (MVNAs) with a full suite of applications, reliable industry expertise and high quality customer service without the need for substantial upfront investment. Elephant Talk counts several of the world's leading MNOs and technology companies amongst its customers and partners, including Vodafone, T-Mobile, Zain, HP and Affirmed Networks. Visit: www.elephanttalk.com.

About ValidSoft UK Ltd.:
ValidSoft, a subsidiary of Elephant Talk Communications Corp., secures transactions using personal authentication and device assurance. We enable our customers to enhance their security while improving their user experience, utilising our multi-factor authentication platform, Voice Biometric engine and Device Trust technology, all of which may be used as 'stand-alone' 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. Visit: www.validsoft.com.

Cautionary Note Regarding 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 Elephant Talk's plans and objectives, projections, expectations and intentions (including, without limitation, Elephant Talk's plans with regard to its ValidSoft subsidiary). These forward-looking statements are based on current expectations, estimates and projections about Elephant Talk's industry, operations, 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 Elephant Talk 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, Elephant Talk 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 those projected or suggested in Elephant Talk's filings with the Securities and Exchange Commission, copies of which are available from the SEC or may be obtained upon request from Elephant Talk.

Investor Contact:
Alan Sheinwald or Valter Pinto
Capital Markets Group, LLC
(914) 669-0222
valter@capmarketsgroup.com
www.CapMarketsGroup.com

Public Relations:
Michael Glickman
MWGCO, Inc.
917-397-2272
mike@mwgco.net

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SOURCE Elephant Talk Communications Corp.