(By Balaseshan) Elephant Talk Communications Corp. (NYSEAMEX: ETAK), a provider of mobile networking software and services, said it plans to acquire 100% of the assets of Oklahoma's Telnicity LLC in an all-equity transaction.
Elephant Talk will buy all the assets of Telnicity, a U.S. MVNE/MVNO enabler company including existing customer contracts, carrier agreements, and access to telSPACE and mCASH, Telnicity's propriety turnkey back office infrastructure and billing systems.
According to the acquisition agreement, the transaction value is about $1 million, with Elephant Talk issuing 1 million common shares at closing. The shares will be subject to a lock-up agreement restricting sale or disposition of the shares for 18 months.
The company said the all-equity transaction will result in less than 1% dilution to existing Elephant Talk stockholders while providing Elephant Talk a United States market presence. Elephant Talk remains on track to achieve its first month of positive operational cash flow in early 2013, the company noted.
The terms of the acquisition agreement also provides for a bonus arrangement applicable when revenue minus cost of sales is in excess of $1.00 per customer per month and payable once the cash flow from the Telnicity business is sufficient to cover the payments.
Telnicity's 6 full-time equivalent employees will remain in their current positions. The transaction is expected to close on or before March 8, 2013.
ETAK is trading down 2.01% at $0.97 on Wednesday. The stock has been trading between $0.77 and $3.00 for the past 52 weeks.