Heads of Terms

On November 2, 2009, Elephant Talk Communications, Inc. (the "Registrant") entered into a generally non-binding heads of terms agreement (the "HOT Agreement") with ValidSoft Limited ("ValidSoft"), a company organized under the laws of the Republic of Ireland, and the shareholders of ValidSoft. The HOT Agreement replaces a previous agreement entered into on February 23, 2009, between Registrant and ValidSoft.

Under the HOT Agreement, the Registrant expects to enter into a definitive agreement to acquire 100% of the issued and outstanding securities of ValidSoft for consideration consisting of 20% of the issued and outstanding common shares of Registrant as of February 1, 2009 and warrants to purchase common shares of Registrant equal to (i) 20% of the issued and outstanding warrants of Registrant as of February 1, 2009; and (ii) 20% of the issued and outstanding options of Registrant as of February 1, 2009. Twenty-five percent of the foregoing consideration shall be placed into escrow and, in the event certain revenue milestones (as set forth the in the HOT Agreement) have not been achieved, is subject to forfeiture and cancellation.

The HOT Agreement includes the payment of a binding break-up fee of € 2,000,000 by a party if (i) such party breaches the exclusivity and conduct of business provisions described in the HOT Agreement; (ii) such party terminates negotiations before December 31, 2009 without good cause (as defined in the HOT Agreement); or (iii) such party is unable to complete the proposed transactions substantially upon the terms set forth in the HOT Agreement by December 31, 2009.

This summary of the terms of the HOT Agreement is qualified in its entirety by reference to the HOT Agreement, filed as Exhibit 10.1 to this Current Report, and incorporated by reference as if set forth in full.

                              Item 9.01. Exhibits.



(d) Exhibits.



   Exhibit
     No.    Description

    10.1*   Heads of Terms Agreement, dated November 2, 2009, among Elephant Talk
            Communications, Inc., ValidSoft Limited and the shareholders of
            ValidSoft Limited.

* Portions of this document have been omitted based on a request for confidential treatment submitted to the SEC. The unredacted document has been separately filed with the SEC. The redacted information is confidential information of the Registrant, ValidSoft Limited and the shareholders of ValidSoft Limited.