UPDATE: Elephant Talk (ETAK) Sats $30M of Contracts Put on Hold
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(Updated - September 19, 2012 5:08 PM EDT)
Elephant Talk Communications, Corp. (NYSE: ETAK) announced that the Company has been informed that due to an evaluation of internal procedures and practices within a group of German MVNOs that all mobile telecom contracts recently signed between the group and all external providers have been temporarily placed on hold.
"We look forward to a favorable and quick resolution so we may resume delivering services," stated Steven van der Velden, CEO of Elephant Talk Communications. "Despite the change, we remain on track to report our first month of operational cash flow positive, excluding non-cash expenses and capital expenditures, by early 2013. It is important to stress that the evaluation is not directed at Elephant Talk, but it has been applied to all contracts that provide mobile services to the MVNOs. Management would like to emphasize that this internal evaluation is not in any way related to the services Elephant Talk provides in Germany in cooperation with Telekom Deutschland."
Elephant Talk expected this contract to generate over $30 million of total revenue in the initial two year contract period. This estimate included approximately $8 million of total revenue in 2012, with about half of that revenue recognized on the Company's income statement and the remainder recorded as deferred revenue on the balance sheet. Based on this development, the Company does not expect to record any revenue from this contract in 2012 and until the hold has been removed the Company is not able to estimate the impact, if any, on the full contract.
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Elephant Talk Communications, Corp. (NYSE: ETAK) announced that the Company has been informed that due to an evaluation of internal procedures and practices within a group of German MVNOs that all mobile telecom contracts recently signed between the group and all external providers have been temporarily placed on hold.
"We look forward to a favorable and quick resolution so we may resume delivering services," stated Steven van der Velden, CEO of Elephant Talk Communications. "Despite the change, we remain on track to report our first month of operational cash flow positive, excluding non-cash expenses and capital expenditures, by early 2013. It is important to stress that the evaluation is not directed at Elephant Talk, but it has been applied to all contracts that provide mobile services to the MVNOs. Management would like to emphasize that this internal evaluation is not in any way related to the services Elephant Talk provides in Germany in cooperation with Telekom Deutschland."
Elephant Talk expected this contract to generate over $30 million of total revenue in the initial two year contract period. This estimate included approximately $8 million of total revenue in 2012, with about half of that revenue recognized on the Company's income statement and the remainder recorded as deferred revenue on the balance sheet. Based on this development, the Company does not expect to record any revenue from this contract in 2012 and until the hold has been removed the Company is not able to estimate the impact, if any, on the full contract.
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