UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2008 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ____________________ Commission file number 000-30061 Elephant Talk Communications, Inc. (Exact name of registrant as specified in its charter) California 95-4557538 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Schiphol Boulevard 249 1118 BH Schiphol The Netherlands N/A (Address of principal executive offices) (Zip Code) Issuer’s telephone number: 31 0 20 653 5916 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value (Title of class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ⌧ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company ⌧ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes No ⌧ The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2008 was approximately $19,247,001 based on the closing sale price of the company’s common stock on such date of U.S. $1.53 per share, as reported by the OTC BB. State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of March 31, 2009 there were 53,758,445 shares of common stock outstanding. Elephant Talk Communications Inc. Form 10-K For the fiscal year ended December 31, 2008 TABLE OF CONTENTS Note on Forward-Looking Statements PART I Item 1. Description of Business. 2 Item 2. Description of Property. 18 Item 3. Legal Proceedings. 19 Item 4. Submission of Matters to a Vote of Security Holders. 20 PART II Item 5. Market for Common Equity and Related Stockholder Matters. 20 Item 6. Selected Financial Data. 22 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 22 Item 8. Financial Statements. 31 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure. 61 Item 9A(T). Controls and Procedures. 62 PART III Item 10. Directors, Executive Officers and Corporate Governance. 63 Item 11. Executive Compensation. 68 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder 71 Matters. Item 13. Certain Relationships and Related Transactions, and Director Independence. 73 Item 14. Principal Accountant Fees and Services. 76 PART IV Item 15. Exhibits, Financial Statement Schedules. 77 NOTE ON FORWARD LOOKING STATEMENTS This Report, including the documents incorporated by reference in this Report, includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. Our actual results may differ materially from those discussed herein, or implied by, these forward-looking statements. Forward-looking statements are generally identified by words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “plan,” “project” and other similar expressions. In addition, any statements that refer to expectations or other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements included in this Report or our other filings with the SEC include, but are not necessarily limited to, those relating to: • risks and uncertainties associated with the integration of the assets and operations we have acquired and may acquire in the future; • our possible inability to raise or generate additional funds that will be necessary to continue and expand our operations; • our potential lack of revenue growth; • our potential inability to add new products and services that will be necessary to generate increased sales; • our potential lack of cash flows; • our potential loss of key personnel; • the availability of qualified personnel; • international, national regional and local economic political changes; • general economic and market conditions; • increases in operating expenses associated with the growth of our operations; • the possibility of telecommunications rate changes and technological changes; • the potential for increased competition; and • other unanticipated factors. The foregoing does not represent an exhaustive list of risks. Please see “Risk Factors” for additional risks which could adversely impact our business and financial performance. Moreover, new risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this Report are based on information available to us on the date of this Report. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this Report. 1 PART I Item 1. Description Of Business. Overview Our business plan is to position ourselves as an international telecom and multimedia content distributor specialized in carrier grade mobile enabling platforms. We facilitate the distribution of all forms of content to the multimedia industry, as well as offer international mobile and fixed telecom services to its global telecommunications customers. We provide traditional telecom services, media streaming, and distribution services primarily to the business-to-business (B2B) community within the telecommunications market where we have a presence. Our global footprint as a fully licensed carrier, supported by our propriety Intelligent Network and Billing/Client Relationship Management Systems, has been designed to offer cutting-edge solutions to the increasingly competitive global multimedia industry. The seamless utilization of our infrastructure through our customized software offers our clients a superior solution due to the ease of compatibility and simplicity in the use of our product. Our telecommunications platform eliminates the usual limitations caused by national borders, networks, devices or media and, therefore enables our B2B customers to operate as independent telecom and multimedia distribution organizations. In line with this positioning, we are a growing proprietary provider of carrier grade enabling platforms for mobile telecom and content distribution solutions and, as a Mobile Virtual Network Enabler (“MVNE”), we have positioned ourselves as the premier outsourcing partner for both certain Mobile Network Operators (“MNO’s”) as well as for certain Mobile Virtual Network Operators. MVNO’s are sales and marketing organizations that repackage, market and sell mobile services provided through the antenna network and spectrum of a MNO. Without any need for upfront capital expenditures or telecommunication knowledge and related development cost, we can help MVNO’s to a quick and cost effective market-entry, thereby enabling our clients to fully focus on distribution, marketing and sales. At the same time, we assist our MNO partners to more efficiently provide a broad range of services to their own existing base of MVNO clients We view ourselves as a specialized enabler, offering various parts of the back office network including messaging platforms, data platforms and billing solutions. As a result, we believe we are positioning ourselves as the MVNE partner of choice of these larger, global Mobile Network Operators. We also currently operate MVNE platforms in the Netherlands and Spain on top of our own sophisticated networks in over a dozen markets in Europe and the Middle East. We expect to expand the presence of its MVNE platforms to at least two more countries during