Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 01, 2013 | |
Document And Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-13 | ' |
Entity Registrant Name | 'ELEPHANT TALK COMMUNICATIONS CORP | ' |
Entity Central Index Key | '0001084384 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Units Outstanding | ' | 140,021,423 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
CURRENT ASSETS | ' | ' |
Cash and cash equivalents | $6,085,215 | $1,233,268 |
Restricted cash | 495,983 | 1,230,918 |
Accounts receivable, net of allowance for doubtful accounts of $25,225 and $559,120 at September 30, 2013 and December 31, 2012 respectively | 4,173,398 | 5,123,803 |
Prepaid expenses and other current assets | 2,531,602 | 1,821,218 |
Total current assets | 13,286,198 | 9,409,207 |
NON-CURRENT ASSETS | ' | ' |
OTHER ASSETS | 1,382,857 | 1,038,306 |
PROPERTY AND EQUIPMENT, NET | 18,663,407 | 13,088,271 |
INTANGIBLE ASSETS, NET | 9,412,581 | 10,503,026 |
GOODWILL | 3,707,903 | 3,436,731 |
TOTAL ASSETS | 46,452,946 | 37,475,541 |
CURRENT LIABILITIES | ' | ' |
Overdraft | 380,550 | 350,114 |
Accounts payable and customer deposits | 4,905,101 | 5,139,292 |
Deferred Revenue | 428,473 | 252,551 |
Accrued expenses and other payables | 5,816,271 | 4,120,536 |
8% Convertible Note | ' | 3,067,416 |
Loans payable | 962,418 | 963,051 |
10% Related Party Loan (net of Debt Discount of $2,385,206) | 267,393 | ' |
Total current liabilities | 12,760,206 | 13,892,960 |
LONG TERM LIABILITIES | ' | ' |
8% Convertible Note | ' | 2,565,202 |
10% 3rd Party Loan (net of Debt Discount of $827,421) | 4,477,780 | ' |
Warrant liabilities | 4,116,480 | ' |
Conversion feature | ' | 311,986 |
Trade note payable | 593,903 | ' |
Loan from joint venture partner | 590,165 | 555,907 |
Total long term liabilities | 9,778,328 | 3,433,095 |
Total liabilities | 22,538,534 | 17,326,055 |
STOCKHOLDERS' EQUITY | ' | ' |
Common stock, .00001 par value, 250,000,000 shares authorized, 134,440,221 issued and outstanding as of September 30, 2013 compared to 111,918,386 shares issued and outstanding as of December 31, 2012 | 243,294,324 | 223,965,907 |
Accumulated other comprehensive income (loss) | -242,647 | -732,090 |
Accumulated deficit | -219,316,384 | -203,260,307 |
Elephant Talk Communications, Corp. stockholders' equity | 23,735,293 | 19,973,510 |
NON-CONTROLLING INTEREST | 179,119 | 175,976 |
Total stockholders' equity | 23,914,412 | 20,149,486 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $46,452,946 | $37,475,541 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Accounts receivable, allowance for doubtful accounts | $25,225 | $559,120 |
Common stock, par value per share | $0.00 | $0.00 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 134,440,221 | 111,918,386 |
Common stock, shares outstanding | 134,440,221 | 111,918,386 |
Convertible Note One [Member] | ' | ' |
Unamortized discount and conversion feature | 2,385,206 | ' |
Convertible Note Two [Member] | ' | ' |
Unamortized discount and conversion feature | $827,421 | ' |
CONSOLIDATED_STATEMENT_OF_COMP
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS [Abstract] | ' | ' | ' | ' |
REVENUES | $5,204,982 | $6,699,381 | $16,795,627 | $22,365,318 |
COST AND OPERATING EXPENSES | ' | ' | ' | ' |
Cost of service | 1,080,174 | 4,603,588 | 6,093,968 | 16,677,853 |
Selling, general and administrative expenses | 4,209,704 | 4,221,767 | 13,184,491 | 13,356,906 |
Non-cash compensation to officers, directors and employees | 1,233,165 | 1,709,403 | 5,639,124 | 4,940,131 |
Depreciation and amortization of intangibles assets | 1,543,687 | 1,263,137 | 4,699,906 | 3,766,494 |
Total cost and operating expenses | 8,066,730 | 11,797,895 | 29,617,489 | 38,741,384 |
LOSS FROM OPERATIONS | -2,861,748 | -5,098,514 | -12,821,862 | -16,376,066 |
OTHER INCOME (EXPENSE) | ' | ' | ' | ' |
Interest income | 33,773 | -85,364 | 89,020 | 194,554 |
Interest expense | -181,074 | -649,251 | -612,970 | -1,588,098 |
Interest expense related to debt discount and conversion feature | -259,795 | ' | -1,320,795 | ' |
Change in fair value of conversion feature | ' | 617,603 | 232,267 | 1,847,689 |
Loss on Extinguishment of Debt | -44,506 | ' | -1,983,103 | ' |
Changes in fair value of warrant liabilities | 173,333 | ' | 519,349 | ' |
Amortization of deferred financing costs | -44,076 | ' | -116,482 | ' |
Total other income (expense) | -322,345 | -117,012 | -3,192,714 | 454,145 |
LOSS BEFORE PROVISION FOR INCOME TAXES | -3,184,093 | -5,215,526 | -16,014,576 | -15,921,921 |
Provision for income taxes | -41,500 | -94,887 | -41,500 | -192,175 |
LOSS BEFORE EARNINGS OF UNCONSOLIDATED JOINT VENTURE | -3,225,593 | -5,310,413 | -16,056,076 | -16,114,096 |
Equity in earnings of unconsolidated joint venture | ' | -164,252 | ' | -356,667 |
NET LOSS | -3,225,593 | -5,474,665 | -16,056,076 | -16,470,763 |
OTHER COMPREHENSIVE (LOSS) INCOME | ' | ' | ' | ' |
Foreign currency translation gain (loss) | 489,443 | 594,468 | -807,208 | -315,226 |
Total Other Comprehensive Income (Loss), Net of Tax | 489,443 | 594,468 | -807,208 | -315,226 |
COMPREHENSIVE LOSS | ($2,736,150) | ($4,880,197) | ($16,863,284) | ($16,785,989) |
Net loss per common share and equivalents - basic and diluted | ($0.02) | ($0.05) | ($0.13) | ($0.15) |
Weighted average shares outstanding during the period - basic and diluted | 134,440,221 | 111,558,485 | 122,038,045 | 111,129,222 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
USD ($) | USD ($) | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($16,056,076) | ($16,470,763) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 4,699,906 | 3,766,494 |
Provision for doubtful accounts | 22,131 | 309,429 |
Provision for income taxes | 41,500 | 0 |
Stock based compensation | 5,639,124 | 4,923,738 |
Change in fair value of derivative instruments | 2,668,764 | 0 |
Financial Investments in Joint Venture | ' | 356,667 |
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities: | ' | ' |
Decrease (increase) in accounts receivable | 1,054,452 | 1,728,467 |
Decrease (increase) in prepaid expenses, deposits and other assets | -666,991 | -129,937 |
Increase (decrease) in accounts payable, proceeds from related parties and customer deposits | -2,030,393 | 938,142 |
Increase (decrease) in deferred revenue | 177,635 | -35,352 |
Increase (decrease) in accrued expenses and other payables | 1,859,634 | 945,862 |
Increase (decrease) in non-cash accrued expenses related to extinguishment of Debt | -890,997 | 0 |
Net cash used in operating activities | -3,481,311 | -3,667,253 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Purchases of property and equipment | -4,108,507 | -2,096,026 |
Restricted cash | 0 | -1,597,168 |
Loans to related party | 0 | -1,000,589 |
Loans to joint venture partners | 0 | -107,618 |
Loan to third party | -125,000 | -249,827 |
Net cash used in investing activities | -4,233,507 | -5,051,228 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from 12% Unsecured Loan from Related Party | 1,290,790 | 0 |
Proceeds from Share Purchase Agreement - Unregistered securities | 225,000 | 0 |
Proceeds from Share Purchase Agreement - Registered direct | 7,500,000 | 0 |
Proceeds from Share Purchase Agreement Related Party | 4,500,000 | 0 |
Proceeds from 10% Affiliate Loan | 2,652,600 | 0 |
Proceeds from 10% 3rd Party Loan | 5,305,200 | 0 |
Fundraise fees | -1,362,124 | 0 |
Proceeds from 8% convertible note, net of original issue discount | 0 | 8,000,000 |
Payments on 8% convertible note installment payments and interest | -8,490,360 | -964,958 |
Deferred financing costs | 0 | -543,438 |
Exercise of warrants & options | 78,971 | 969,714 |
Payments for share issue costs | 0 | -79,643 |
Cash from Escrow account for principal and interest payments on 8% Convertible notes | 742,427 | 0 |
Net cash provided by financing activities | 12,442,504 | 7,381,675 |
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 124,261 | -328,332 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 4,851,947 | -1,665,138 |
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD | 1,233,268 | 6,009,576 |
CASH AND CASH EQUIVALENTS, END OF THE PERIOD | 6,085,215 | 4,344,438 |
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING & FINANCING ACTIVITIES: | ' | ' |
Cash paid during the period for interest | -409,331 | -348,383 |
Purchases of property and equipment (delivered, not invoices yet) | -1,238,046 | 0 |
Trade note payable | 593,903 | 0 |
Increase in Share Capital due to Telnicity Acquisition | 1,180,000 | 0 |
Increase in Share Capital for third party settlement | $468,000 | $0 |
Description_of_Business_Basis_
Description of Business, Basis of Presentation and Principles of Consolidation | 9 Months Ended | ||
Sep. 30, 2013 | |||
Description of Business, Basis of Presentation and Principles of Consolidation [Abstract] | ' | ||
Description of Business, Basis of Presentation and Principles of Consolidation | ' | ||
Note 1. Description of Business, Basis of Presentation and Principles of Consolidation | |||
Description of Business | |||
Elephant Talk Communications Corp. also referred to as "we", "us", "Elephant Talk" and "the Company" is an international provider of mobile networking software and services. Its mission is to provide a single service fully enabling and securing the mobile cloud. In addition, the Company has traditionally been providing landline-based services. | |||
As a mobile Software Defined Network Architecture (Software DNA™) vendor Elephant Talk Communications Corp. and its subsidiaries (also referred to as "we", "Elephant Talk", "ET" and "the Company") provide a one stop shop solution for a full suite of mobile, fixed and convergent telecommunications software services. We also provide layered security services for mission critical applications in the cloud, through our product line, ValidSoft. | |||
Our Company has developed over the last decade, mainly 'in-house', a comprehensive Mobile Software DNA Platform, capable of hosting an integrated IT/BackOffice and Core Network for Mobile Network Operators (MNOs), Mobile Virtual Network Operators (MVNOs), Enablers (MVNEs) and Aggregators (MVNAs) on a fully outsourced basis. Our mobile enabling platform is either made available as an on premise solution or as a fully hosted service in 'the cloud', depending on the individual needs of our MNO and MVNO/MVNE/MVNA partners. Our mobile security services supply telecommunications-based multi-factor mutual authentication, identity and transaction verification solutions for all electronic transaction channels. This integrated suite of security services provides mission critical applications in the cloud to customers in industries such as financial services, government benefits, and insurance, as well as electronic medical record providers and mobile network operators. Our company provides customers the means to effectively combat a variety of electronic fraud while at the same time protecting consumer privacy. | |||
Basis of presentation of Interim Periods | |||
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and related notes as included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, which we refer to as our Form 10-K. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements in our Form 10-K. In the opinion of management, the accompanying unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and contain all adjustments (which include only normal recurring adjustments) considered necessary for a fair presentation of our financial position, results of operations and cash flows as of and for the periods presented. | |||
The results of operations for the nine months ended September 30, 2013 are not necessarily indicative of the results to be expected for the entire year. | |||
Principles of Consolidation | |||
The accompanying consolidated financial statements for September 30, 2013 and December 31, 2012 include the accounts of Elephant Talk Communications Corp. and its subsidiaries, specifically: | |||
· | its wholly-owned subsidiary Elephant Talk Europe Holding B.V. and its wholly owned subsidiaries Elephant Talk Communications Luxembourg SA, Elephant Talk Communications France S.A.S., Elephant Talk Communications Italy S.R.L., ET-Stream GmbH, Elephant Talk Business Services W.L.L., Guangzhou Elephant Talk Information Technology Limited, Elephant Talk Deutschland GmbH, Morodo Group Ltd., Elephant Talk Belgium BVBA, Elephant Talk de Mexico S.A.P.I. de C.V., and the majority owned (51%) subsidiaries Elephant Talk Communications PRS U.K. Limited and (51%) ET-UTS NV; | ||
· | Elephant Talk Europe Holding B.V.'s wholly-owned subsidiary Elephant Talk Communication Holding AG and its wholly-owned subsidiaries Elephant Talk Communications S.L.U., Elephant Talk Mobile Services B.V., Elephant Talk Telekom GmbH (Austria), Elephant Talk Communication Carrier Services GmbH, Elephant Talk Communication Schweiz GmbH, Elephant Talk Communication (Europe) GmbH and the majority owned (51%) subsidiary Elephant Talk Communications Premium Rate Services Netherlands B.V.; | ||
· | Elephant Talk Telecomunicação do Brasil LTDA, owned 90% by Elephant Talk Europe Holding B.V. and 10% by Elephant Talk Communication Holding AG; | ||
· | Elephant Talk Europe Holding B.V.'s majority (60%) owned subsidiary Elephant Talk Middle East & Africa (Holding) W.L.L., its wholly owned (100%) and its majority owned (99%) subsidiaries Elephant Talk Middle East & Africa (Holding) Jordan L.L.C. and Elephant Talk Middle East & Africa Bahrain W.L.L.; | ||
· | its wholly-owned subsidiary Elephant Talk Limited and its majority owned (50.54%) subsidiary Elephant Talk Middle East & Africa FZ-LLC; | ||
· | its wholly-owned subsidiary ValidSoft Ltd and its wholly-owned subsidiaries ValidSoft (UK) Ltd and ValidSoft (Australia) Pty Ltd.; and | ||
· | its wholly-owned subsidiaries Elephant Talk Group International B.V. and Elephant Talk North America Corp. | ||
All intercompany balances are eliminated in consolidation. | |||
Going Concern | |||
The consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. Historically, we have relied on a combination of debt and equity financings to fund our on-going cash requirements. | |||
The Company's operations have not yet resulted in positive cash flow and accordingly, management pursues on-going efforts in attracting financing. Consequently, the Company closed on financings totaling, in the aggregate, $21,473,590 during the second and third quarter of 2013, which consisted of the following: | |||
- | A registered direct offering with gross proceeds of $12,000,000 in equity; | ||
- | An unregistered sale of securities with gross proceeds of $225,000 in equity; | ||
- | Debt financing with a 1 year maturity of $1,290,790 (which was subsequently terminated and replaced by straight equity investment); | ||
- | Two unsecured convertible debt financing with gross proceeds of € 6,000,000 ($7,957,800). | ||
After deduction of fund raising expenses of $1,362,124, the above mentioned fundraises resulted in net proceeds of $20,111,466. Of these net proceeds $7,747,933 has been used to fully extinguish the 2012 8% senior secured convertible debt. In addition to these financings, the Company received $78,971 in net proceeds through the exercise of warrants. | |||
With the settlement of the outstanding 2012 convertible debt, the pledged assets of the Company have been released and have become available for further financing if the need arises. | |||
With cash and cash equivalents at September 30, 2013 of $6,085,215, the improvement of net cash used in operating activities and the intention of the Company to conclude further vendor financings and debtor cash management in the fourth quarter of 2013, the Company feels that it can carry out is operational plans for the coming 12 months. In case the Company is not able to achieve the anticipated revenues, pre-payments of customers and financing arrangement with the company's major vendors, the Company will need to attract further debt or equity financing. Since there can be no assurance that these additional revenues, vendor financings or debt and equity financing where required will be closed in the required time frames, the Company may arrive in a situation that may not be able to continue operations. As of September 30, 2013, these conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Significant_Accounting_Policie
Significant Accounting Policies | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Significant Accounting Policies [Abstract] | ' | ||||||||||||||||
Significant Accounting Policies | ' | ||||||||||||||||
Note 2. Significant Accounting Policies | |||||||||||||||||
Currency Translation | |||||||||||||||||
The functional currency is the Euro for both the Company's wholly-owned subsidiary Elephant Talk Europe Holding B.V. and its subsidiaries, the Hong Kong Dollar for its wholly-owned subsidiary Elephant Talk Limited and the British Pound Sterling for its wholly-owned subsidiary ValidSoft (UK) Ltd. The financial statements of these subsidiaries were translated to US Dollars using period-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses, and capital accounts were translated at their historical exchange rates when the capital transaction occurred. In accordance with Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 830, Foreign Currency Matters", net gains and losses resulting from translation of foreign currency financial statements are included in the statements of shareholder's equity as accumulated other comprehensive income (loss). Foreign currency transaction gains and losses are included in consolidated income/(loss). The accumulated other comprehensive income/(loss) as presented in the shareholders' equity as of September 30, 2013 and December 31, 2012 was ($242,647) and ($732,090), respectively. The foreign currency translation gain (/loss) for the nine months ended September 30, 2013 and 2012 was ($807,483) and ($315,226), respectively. The foreign currency translation gain (/loss) for the three months ended September 30, 2013 and 2012 was $489,168 and $594,468. | |||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of the accompanying financial statements conforms with accounting principles generally accepted in the United States of America and requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. | |||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. | |||||||||||||||||
Restricted Cash | |||||||||||||||||
Restricted cash represents cash deposited on blocked accounts as guarantees for national interconnection and wholesale agreements with telecom operators. | |||||||||||||||||
Accounts Receivables, net | |||||||||||||||||
The Company's customer base consists of geographically diverse customers. The Company maintains an allowance for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable on a customer by customer basis and analyzes historical bad debt, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these allowances. As of September 30, 2013 and December 31, 2012, the allowance for doubtful accounts was $25,225 and $559,120, respectively. | |||||||||||||||||
Revenue Recognition and Deferred Revenue | |||||||||||||||||
The Company's revenue recognition policies are in compliance with ASC 605, Revenue Recognition ("ASC 605"). Revenue is recognized only when all of the following conditions have been met: (i) there is persuasive evidence of an arrangement; (ii) delivery has occurred; (iii) the fee is fixed or determinable; and (iv) collectability of the fee is reasonably assured. We report revenue on a gross basis using authoritative guidance issued by the FASB. We consider the following factors to determine the gross versus net presentation: if we (i) act as principal in the transaction and (ii) have risks and rewards of ownership, such as the risk of loss for collection and delivery of service. The Company derives revenue from activities as a fixed-line, security and mobile services provider with its network and its own switching technology. Revenue represents amounts earned for telecommunication and security services provided to customers (net of value added tax and inter-company revenue). Revenue is recorded as deferred revenue before all of the relevant criteria for revenue recognition are satisfied. Deferred revenue represents amounts received from the customers against future sales of services since the Company recognizes revenue upon performing the services. | |||||||||||||||||
In managed services contracts and in other long term contracts, revenue from the operation of a customer's system is recognized either as services are performed based on time elapsed, output produced or volume of data processed, depending on the specific contract terms of the managed services arrangement. Typically, managed services contracts are long term in duration and are not subject to seasonality. Revenue from ongoing support services is recognized as work is performed. | |||||||||||||||||
Cost of Service | |||||||||||||||||
Cost of service includes origination, termination, network and billing charges from telecommunications operators, out payment costs to content and information providers, network costs, data center costs, facility costs of hosting network and equipment, and costs of providing resale arrangements with long distance service providers, costs of leasing transmission facilities and international gateway switches for voice and data transmission services. | |||||||||||||||||
Segments | |||||||||||||||||
ASC 820, "Segment Reporting" ("ASC 820"), defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performances. The Company operates in a single business segment because operating and strategic decisions are made by decision makers who monitor the Company as a whole. | |||||||||||||||||
Stock-based Compensation | |||||||||||||||||
We follow the provisions of ASC 718 "Compensation-Stock Compensation", ("ASC 718"). Under ASC 718, stock-based awards are recorded at fair value as of the grant date and recognized as expense with an adjustment for forfeiture over the employee's requisite service period (the vesting period, generally up to three years), which we have elected to amortize on a straight-line basis. | |||||||||||||||||
To determine the value of our stock options at grant date under our employee stock option plan, we currently use the Black-Scholes option-pricing model. The use of this model requires us to make a number of subjective assumptions. The following addresses each of these assumptions and describes our methodology for determining each assumption: | |||||||||||||||||
Expected Life | |||||||||||||||||
The expected life represents the period that the stock option awards are expected to be outstanding. We use the simplified method for estimating the expected life of the option, by taking the average between time to vesting and the contract life of the award. | |||||||||||||||||
Expected Volatility | |||||||||||||||||
We estimate expected cumulative volatility giving consideration to the expected life of the option of the respective award, and the calculated annual volatility by using the continuously compounded return calculated by using the share closing prices of an equal number of days prior to the grant-date (reference period). The annual volatility is used to determine the (cumulative) volatility of our common stock (=nnual volatility x SQRT (expected life)). | |||||||||||||||||
Forfeiture rate | |||||||||||||||||
The Company is using the aggregate forfeiture rate. The aggregate forfeiture rate is the ratio of pre-vesting forfeitures over the awards granted (Pre-vesting forfeitures/grants). The forfeiture discount (additional loss) is released into the profit and loss in the same period as the option vesting-date. The forfeiture rate is actualized every reporting period. | |||||||||||||||||
Risk-Free Interest Rate | |||||||||||||||||
We estimate the risk-free interest rate using the "Daily Treasury Yield Curve Rates" from the U.S. Treasury Department with a term equal to the reported rate, or derived by using both spread in intermediate term and rates, to the expected life of the award. | |||||||||||||||||
Expected Dividend Yield | |||||||||||||||||
We estimate the expected dividend yield by giving consideration to our current dividend policies as well as those anticipated in the future considering our current plans and projections. We do not currently calculate a discount for any post-vesting restrictions to which our awards may be subject. | |||||||||||||||||
For the executive officers the Company is using the contractual life instead of expected life of an option. | |||||||||||||||||
Income Taxes | |||||||||||||||||
The Company accounts for income taxes under ASC 740, "Accounting for Income Taxes" ("ASC 740") (formerly SFAS No. 109). This statement requires the recognition of deferred tax assets and liabilities for the future consequences of events that have been recognized in the Company's financial statements or tax returns. The measurement of the deferred items is based on enacted tax laws. In the event the future consequences of differences between financial reporting bases and the tax bases of the Company's assets and liabilities result in a deferred tax asset, ASC 740 requires an evaluation of the probability of being able to realize the future benefits indicated by such asset. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion or the entire deferred tax asset will not be realized. As part of the process of preparing our consolidated financial statements, we are required to estimate our income tax expense in each of the jurisdictions in which we operate. In the ordinary course of a global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of revenue sharing and reimbursement arrangements among related entities, the process of identifying items of revenue and expenses that qualify for preferential tax treatment and segregation of foreign and domestic income and expense to avoid double taxation. We also assess temporary differences resulting from differing treatment of items, such as deferred revenue, for tax and accounting differences. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. We may record a valuation allowance to reduce our deferred tax assets to the amount of future tax benefit that is more likely than not to be realized. Although we believe that our estimates are reasonable and that we have considered future taxable income and ongoing prudent and feasible tax strategies in estimating our tax outcome and in assessing the need for the valuation allowance, there is no assurance that the final tax outcome and the valuation allowance will not be different than those that are reflected in our historical income tax provisions and accruals. | |||||||||||||||||
ASC 740 prescribes a recognition threshold and measurement methodology to recognize and measure an income tax position taken, or expected to be taken, in a tax return. The evaluation of a tax position is based on a two-step approach. The first step requires an entity to evaluate whether the tax position would "more likely than not" be sustained upon examination by the appropriate taxing authority. The second step requires the tax position be measured at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement. In addition, previously recognized benefits from tax positions that no longer meet the new criteria would be derecognized. | |||||||||||||||||
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various foreign jurisdictions. The Company's income tax returns are open to examination by federal, state and foreign tax authorities, generally for the years ended December 31, 2008 and later, with certain state jurisdictions open for audit for earlier years. The Company has no amount recorded for any unrecognized tax benefits as of September 30, 2013 and December 31, 2012, nor did the Company record any amount for the implementation of ASC 740. The Company's policy is to record estimated interest and penalty related to the underpayment of income taxes or unrecognized tax benefits as a component of its income tax provision. During the first nine months 2013 and 2012, the Company did not recognize any interest or penalties in its statements of operations and there are no accruals for interest or penalties at September 30, 2013 or December 31, 2012. | |||||||||||||||||
Comprehensive Income/(Loss) | |||||||||||||||||
Comprehensive income/(loss) includes all changes in equity during a period from non-owner sources. Other comprehensive income refers to gains and losses that under GAAP are recorded as an element of stockholders' equity but are excluded from net income. In the first nine months of the years 2013 and 2012, the Company's comprehensive income/(loss) consisted of its net loss and foreign currency translation adjustments. | |||||||||||||||||
Intangible Assets | |||||||||||||||||
In accordance with ASC 350 Intangibles - Goodwill and Other, intangible assets are carried at cost less accumulated amortization and impairment charges. Intangible assets are amortized on a straight-line basis over the expected useful lives of the assets, between three and ten years. Other intangible assets are reviewed for impairment in accordance with ASC 350, on an annual basis, or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Measurement of any impairment loss for long-lived assets and identifiable intangible assets that management expects to hold and use is based on the amount of the carrying value that exceeds the fair value of the asset. | |||||||||||||||||
Property and Equipment, Internally Developed and Third Party Software | |||||||||||||||||
The Company has adopted the provisions of ASC 985, Software - Research and Development. Property and equipment are initially recorded at cost. Additions and improvements are capitalized, while expenditures that do not enhance the assets or extend the useful life are charged to operating expenses as incurred. Included in property and equipment are certain costs related to the development of the Company's internally developed software technology platform. We capitalize all costs related to software developed or obtained for internal use when management commits to funding the project and the project completes the preliminary project stage. Capitalization of such costs ceases when the project is substantially complete and ready for its intended use. | |||||||||||||||||
The Company has capitalized certain computer software development costs upon the establishment of technological feasibility. Technological feasibility is considered to have occurred upon completion of a detailed program design that has been confirmed by documenting the product specifications, or to the extent that a detailed program design is not pursued, upon completion of a working model that has been confirmed by testing to be consistent with the product design. Depreciation applied using the straight-line method over the estimated useful lives of the assets once the assets are placed in service. Once a new functionality or improvement is released for operational use, the asset is moved from the property and equipment category "projects under construction" to a property and equipment asset subject to depreciation in accordance with the principle described in the previous sentence. | |||||||||||||||||
Fair Value Measurements | |||||||||||||||||
In accordance with ASC 820 Fair Value Measurement, the Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. | |||||||||||||||||
Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company's assumptions about the inputs that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. | |||||||||||||||||
The fair value hierarchy is categorized into three levels based on the inputs as follows: | |||||||||||||||||
Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. | |||||||||||||||||
Level 2 - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these financial instruments include cash instruments for which quoted prices are available but are traded less frequently, derivative instruments whose fair values have been derived using a model where inputs to the model are directly observable in the market and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed. | |||||||||||||||||
Level 3 - Instruments that have little to no pricing observability as of the reported date. These financial instruments are measured using management's best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. Elephant Talk enters these estimates and other observable inputs into a Monte Carlo valuation model. | |||||||||||||||||
The degree of judgment exercised by the Company in determining fair value is greatest for securities categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined by the lowest level input that is significant to the fair value measurement. | |||||||||||||||||
The following table summarizes fair value measurements by level at September 30, 2013 for financial assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||||
30-Sep-13 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liability Derivatives | |||||||||||||||||
Conversion feature | $ | - | $ | - | $ | - | $ | - | |||||||||
Warrant Liabilities | $ | - | $ | - | $ | 4,116,480 | $ | 4,116,480 | |||||||||
Total liability derivatives | $ | - | $ | - | $ | 4,116,480 | $ | 4,116,480 | |||||||||
The following table summarizes fair value measurements by level at December 31, 2012 for financial assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||||
31-Dec-12 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liability Derivatives | |||||||||||||||||
Conversion feature | $ | - | $ | - | $ | 311,986 | $ | 311,986 | |||||||||
Warrant Liabilities | $ | - | $ | - | $ | - | $ | - | |||||||||
Total liability derivatives | $ | - | $ | - | $ | 311,986 | $ | 311,986 | |||||||||
We have classified the outstanding conversion feature into level 3 due to the fact that some inputs are not published and not easily comparable to industry peers. | |||||||||||||||||
Recently Issued Accounting Pronouncements | |||||||||||||||||
On July of 2013 the Financial Accounting Standards Board, or FASB issued Accounting Standards Update, or ASU, No. 2013-11, Income Taxes (Topic 740), Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward exists. This guidance provide that an unrecognized tax benefit, or a portion thereof, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, except to the extent that carryforwards are not available to settle any additional income taxes that would result from disallowance of a tax position. The unrecognized tax benefit should be presented as a liability. This guidance is applicable for fiscal years and interim periods beginning after December 15, 2013. The Company is evaluating the potential impact of adopting this standard on its consolidated financial statements. | |||||||||||||||||
On March 4, 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830) Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity ("ASU 2013-05"). ASU 2013-05 updates accounting guidance related to the application of consolidation guidance and foreign currency matters. This guidance resolves the diversity in practice about what guidance applies to the release of the cumulative translation adjustment into net income. This guidance is effective for interim and annual periods beginning after December 15, 2013. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. | |||||||||||||||||
In February of 2013, the FASB, issued ASU, No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for which the Total Amount of the Obligation Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force). This ASU addresses the recognition, measurement, and disclosure of certain obligations resulting from joint and several arrangements including debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The ASU is effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company has evaluated this guidance and concluded that it is not applicable to our situation, because the Company is not a co-obligor of our subsidiary in Hong Kong. See disclosure in Note 9. | |||||||||||||||||
In March of 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830)-Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. These amendments provide guidance on releasing Cumulative Translation Adjustments when a parent company sells partially equity method investments and in step acquisitions. The amendments are effective on a prospective basis for fiscal years and interim reporting periods beginning after December 15, 2013. The guidance is applicable to the Company in principle, but since its enactment, the Company has not derecognized any subsidiary or group of assets as of September 30, 2013. |
Prepaid_expenses_and_other_cur
Prepaid expenses and other current assets | 9 Months Ended |
Sep. 30, 2013 | |
Prepaid expenses and other current assets [Abstract] | ' |
Prepaid expenses and other current assets | ' |
Note 3. Prepaid expenses and other current assets | |
Prepaid expenses and other current assets amounted to $2,531,602 as of September 30, 2013, compared with $1,662,776 for the same period of 2012. As of as of December 31, 2012 the amount was $1,821,218. As of September 30, 2013, $962,619 of the prepaid expenses was related to prepaid Value Added Tax ("VAT"), $701,326 for the same period of 2012, and $534,327as of December 31, 2012. |
Other_assets
Other assets | 9 Months Ended |
Sep. 30, 2013 | |
Other assets [Abstract] | ' |
Other assets | ' |
Note 4. Other assets | |
Other assets at September 30, 2013 and December 31, 2012 are long-term in nature and were $1,382,857 and $1,038,306. Other assets consist of 'other assets' amounting $133,285 and $0 as of 30 September 2013, and long-term deposits and deferred financing costs as detailed below. | |
Long-term Deposit | |
As of September 30, 2013, there were long-term deposits to various telecom carriers during the course of its operations and a deposit towards the French Tax Authorities amounting to $ 657,024, compared with $657,192 as of December 31, 2012, and $638,339 as of September 30, 2012. The deposits are refundable at the termination of the business relationship with the carriers. | |
Deferred Financing Costs | |
At September 30, 2013, the company paid financing cost of $636,625 which was related to the issuance of two convertible notes: a 10% Convertible Note with a nominated amount of €2,000,000 (valued at $2,652,600) and another 10% Convertible Note with a nominated amount of €4,000,000 (valued at $5,305,200 during the quarter ended September 30, 2013.). These costs are amortized over the term of the convertible note. The deferred financing costs balances were $592,548 as of September 30, 2013 and $381,114 as of December 31, 2012 and were included in other assets in the accompanying balance sheet. |
Property_and_equipment
Property and equipment | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Property and equipment [Abstract] | ' | ||||||||||
Property and equipment | ' | ||||||||||
Note 5. Property and equipment | |||||||||||
The Company's Property & Equipment also include the capitalization of its systems engineering and software programming activities. Typically, these investments pertain to the Company's: | |||||||||||
· | Intelligent Network (IN) platform; | ||||||||||
· | CRM provisioning Software; | ||||||||||
· | Mediation, Rating & Pricing engine; | ||||||||||
· | ValidSoft security software applications; | ||||||||||
· | Operations and business support software; | ||||||||||
· | Network management tools. | ||||||||||
Property and equipment at September 30, 2013 and December 31, 2012 consist of: | |||||||||||
Average Estimated | September 30, | December 31, | |||||||||
Useful Lives | 2013 | 2012 | |||||||||
Furniture and fixtures | 5 | 287,933 | 269,731 | ||||||||
Computer, communication and network equipment | 10-Mar | 22,655,995 | 17,056,396 | ||||||||
Software | 5 | 6,742,463 | 6,123,371 | ||||||||
Automobiles | 5 | 89,946 | 87,925 | ||||||||
Construction in progress | 3,504,833 | 1,962,315 | |||||||||
Total property and equipment | 33,281,170 | 25,499,738 | |||||||||
Less: accumulated depreciation and amortization | (14,617,763 | ) | (12,411,467 | ) | |||||||
Total property and equipment, Net | $ | 18,663,407 | $ | 13,088,271 | |||||||
Construction in progress (capitalization) consists of software projects under development that have not yet been completed. Total net capitalization increased from $2,409,199 in June 30, 2013 by $1,095,634 or 45%. Total depreciation and amortization expense for the three months ended September 30, 2013 and 2012 was $818,025 and $599,446, respectively. Total depreciation expense for the nine months ended on September 30, 2013 and 2012 was $2,411,800 and $1,744,999 respectively |
Intangible_Assets
Intangible Assets | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Intangible Assets [Abstract] | ' | ||||||||||||||||||||||||
Intangible Assets | ' | ||||||||||||||||||||||||
Note 6. Intangible Assets | |||||||||||||||||||||||||
Intangible assets include customer contracts, telecommunication licenses and integrated, multi-country, centrally managed switch-based interconnects as well as ValidSoft Intellectual Property, including but not limited to software source codes, applications, customer list & pipeline, registration & licenses, patents and trademark/brands. | |||||||||||||||||||||||||
Intangible assets as of September30, 2013 and December 31, 2012 consisted of the following: | |||||||||||||||||||||||||
Estimated | September 30, | December 31, | |||||||||||||||||||||||
Useful Lives | 2013 | 2012 | |||||||||||||||||||||||
Customer Contracts, Licenses , Interconnect & Technology | 10-May | $ | 13,094,037 | $ | 12,096,592 | ||||||||||||||||||||
ValidSoft IP & Technology | 10-Jan | 15,956,336 | 15,597,814 | ||||||||||||||||||||||
Total intangible assets | 29,050,373 | 27,694,406 | |||||||||||||||||||||||
Less: Accumulated Amortization and impairment charges | (11,251,238 | ) | (10,569,693 | ) | |||||||||||||||||||||
Less: Accumulated Amortization ValidSoft IP & Technology | (8,386,554 | ) | (6,621,687 | ) | |||||||||||||||||||||
Total intangible assets, Net | $ | 9,412,581 | $ | 10,503,026 | |||||||||||||||||||||
Total amortization expense for the three months ended September 30, 2013 and 2012 was $725,662 and $663,691 respectively. Total amortization expense for the nine months ended in September 30, 2013 and 2012 was $2,288,106 and $2,021,495 respectively. | |||||||||||||||||||||||||
Estimated future amortization expense related to our intangible assets is: | |||||||||||||||||||||||||
Rest of 2013 | 2014 | 2015 | 2016 | 2017 | 2018 and | ||||||||||||||||||||
thereafter | |||||||||||||||||||||||||
Interconnect licenses and contracts | $ | 162,842 | $ | 470,805 | $ | 150,510 | $ | 16,375 | $ | - | $ | - | |||||||||||||
ValidSoft IP & Technology | 536,309 | 2,145,236 | 2,002,025 | 1,954,287 | 508,448 | 238,369 | |||||||||||||||||||
Total | $ | 699,151 | $ | 2,616,041 | $ | 2,152,535 | $ | 1,970,662 | $ | 508,448 | $ | 238,369 |
Telnicity_asset_purchase_agree
Telnicity asset purchase agreement | 9 Months Ended |
Sep. 30, 2013 | |
Telnicity asset purchase agreement [Abstract] | ' |
Telnicity asset purchase agreement | ' |
Note 7. Telnicity asset purchase agreement | |
On April 1, 2013, the Company, through its subsidiary Elephant Talk North America Corp, entered into an asset purchase agreement to acquire the assets of Telnicity LLC, a company established in the United States. The assets provide access to the U.S. mobile telecommunications market through Telnicity's relationships with several major U.S.-based mobile telecommunication companies as well as its complementary technological mobile capabilities. The assets and operations are consolidated into the financials of the Company as of April 1, 2013. This acquisition was accounted under the provisions of ASC 805, Business Combinations. | |
The transaction was valued at approximately at $1,180,000 plus related transaction costs, and was funded by issuing 1,000,000 shares of common stock of the Company, at a fair value of $1.18 per share. During the third quarter of 2013, we prepared an internal fair value analysis of the Telnicity's intangible assets and allocated the following values: $218,598 to relationship with customers, $366,112 to relationships with carriers and $404,888 to Technology and Intellectual property. The Company recorded $190,401 of goodwill, which is not deductible for income tax purposes. The intangible assets recognized have useful lives ranging from three to five years, based on estimates of the life of the customer relationship, the contractual life of contracts with carriers and government authorities/licenses. |
Goodwill
Goodwill | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Goodwill [Abstract] | ' | ||||||||
Goodwill | ' | ||||||||
Note 8. Goodwill | |||||||||
Goodwill represents the excess of cost over the fair value of assets of acquired businesses. Goodwill is not amortized, but instead is evaluated for impairment using a discounted cash flow model and other measurements of fair value such as market comparable transactions. The authoritative guidance for the goodwill impairment model includes a two-step process. First, it requires a comparison of the book value of net assets to the fair value of the reporting unit that have goodwill assigned to them. If the fair value is determined to be less than the book value, a second step is performed to compute the amount of impairment. In the second step, a fair value for goodwill is estimated, based in part of the fair value of the reporting unit used in the first step, and is compared to its carrying value. The shortfall of the fair value below carrying value, if any, would represent the amount of goodwill impairment. | |||||||||
We assess goodwill for impairment in the fourth quarter of each fiscal year, or sooner should there be an indicator of impairment as per ASC 350, Intangibles - Goodwill and Other. The Company periodically analyzes whether any such indicators of impairment exists. Such indicators include a sustained, significant decline in the Company's stock price and market capitalization, a decline in the Company's expected future cash flows, a significant adverse change in legal factors or in the business climate, unanticipated competition, and/or slower growth rate, among others. In the Company's case, the indicator is the continuing losses. | |||||||||
After considering qualitative factors such as our market capitalization and the Company's 2013 outlook announced in the Company, we concluded that, for the second quarter 2013, a goodwill impairment test was required. In performing the first step of the two-step goodwill impairment test, the Company determined that the fair value of the Company as a single reporting unit, measured by the Company's market capitalization ($93.5 million as of September 30, 2013), exceeded the carrying value of the reporting unit which amount to $26.5 million by $67 million, indicating no impairment was necessary. | |||||||||
The carrying value of the Company's goodwill as of September 30, 2013 and as of December 31, 2012 was as follows: | |||||||||
Goodwill | September 30, | December 31, | |||||||
2013 | 2012 | ||||||||
Goodwill at acquisition of ValidSoft Ltd | $ | 3,433,833 | $ | 3,433,833 | |||||
Goodwill Morodo | 214,689 | 214,689 | |||||||
Goodwill Telnicity LLC | 190,401 | - | |||||||
End of period exchange rate translation | (131,020 | ) | (211,791 | ) | |||||
Total | $ | 3,707,903 | $ | 3,436,731 |
Overdraft
Overdraft | 9 Months Ended |
Sep. 30, 2013 | |
Overdraft [Abstract] | ' |
Overdraft | ' |
Note 9. Overdraft | |
In 2004, Elephant Talk Ltd, a subsidiary of the Company, executed a credit facility with a bank in Hong Kong pursuant to which Elephant Talk Ltd. borrowed funds. As of September 30, 2013, the overdraft balance, including accrued interest totaled $380,550 compared to $350,114 as of December 31, 2012. The interest rate and default payment interest rate were charged at 2% and 6% per annum above the Lender's Hong Kong Dollar Prime Rate quoted by the Lender from time to time. The Company has not guaranteed the credit facility or is otherwise obligated to pay funds drawn upon it on behalf of Elephant Talk Ltd. Further detail can be found in Note 12. Loans Payable |
Deferred_Revenue
Deferred Revenue | 9 Months Ended |
Sep. 30, 2013 | |
Deferred Revenue [Abstract] | ' |
Deferred Revenue | ' |
Note 10. Deferred Revenue | |
Deferred revenue represents amounts received from the customers against future sales of services since the Company recognizes revenue upon performing the services. They typically represent implementation fees. Deferred revenue was $428,473 and $252,551 as of September 30, 2013 and December 31, 2012, respectively. | |
Accrued_expenses
Accrued expenses | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accrued expenses [Abstract] | ' | ||||||||
Accrued expenses | ' | ||||||||
Note 11. Accrued expenses | |||||||||
As of September 30, 2013 and December 31, 2012, the accrued expenses comprised of the following: | |||||||||
September 30, | December | ||||||||
2013 | 31, 2012 | ||||||||
Accrued Selling, General & Administrative expenses | $ | 2,759,617 | $ | 2,175,845 | |||||
Accrued cost of service | 600,898 | 648,958 | |||||||
Accrued taxes (including VAT) | 250,820 | 288,651 | |||||||
Accrued interest payable | 966,890 | 882,181 | |||||||
Accrued capital expenditure liabilities | 1,238,046 | 124,901 | |||||||
Total accrued expenses | $ | 5,816,271 | $ | 4,120,536 | |||||
Within the accrued taxes it is included the provision for income taxes as of September 30, 2013 amounting to $41,500. Refer to note 20. Provision for Income taxes. | |||||||||
Accrued Selling, General & Administrative expenses include social security premiums, personnel related costs such as payroll taxes, provision for holiday allowance, accruals for marketing & sales expenses, office related, etc. |
Loans_Payable
Loans Payable | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Loans Payable [Abstract] | ' | ||||||||
Loans Payable | ' | ||||||||
Note 12. Loans Payable | |||||||||
Loans payable at September 30, 2013 and December 31, 2012 are summarized as follows: | |||||||||
September | December | ||||||||
30, 2013 | 31, 2012 | ||||||||
Unsecured loan payable | $ | 962,418 | $ | 963,051 | |||||
Total loans payable | $ | 962,418 | $ | 963,051 | |||||
In December 2009, Chong Hing Bank Limited, formerly known as Liu Chong Hing Bank Limited, a foreign banking services company based in Hong Kong (Bank), commenced a lawsuit in the California Orange County Superior Court called Chong Hing Bank Limited v. Elephant Talk Communications, Inc., Case No. 30-2009-00328467. | |||||||||
The Bank alleged that it entered into various installment and term loan agreements and an overdraft account with Elephant Talk Limited (ETL), a wholly-owned Hong Kong subsidiary of the Company. Various former officers and directors of ETL personally guaranteed the loans and overdraft account. | |||||||||
The Bank alleged that ETL was in default on the loans and overdraft account, and that approximately $1,933,308 including interest and default interest was due. The Bank alleged that the Company was directly liable to repay the loans and overdraft account as a successor in interest to ETL or because the Company expressly or impliedly assumed direct liability for the loans and overdraft account. The Company denied the Bank's allegations and asserted several affirmative defenses. The Company contended that it had no direct liability to the Bank, and that the Bank must pursue its recourse against ETL and its personal guarantors. | |||||||||
The Bank and the Company tried the case in the court without a jury between October, 5 and 12, 2011. The court found, among other things, that | |||||||||
· | The Company was not liable as a successor in interest or otherwise on the Bank loans and overdraft account to ETL; | ||||||||
· | The Company was not liable on the Bank's claims because the Bank filed its action after the applicable California 4-year statute of limitations had expired; and | ||||||||
· | The Company was not liable to the Bank under the alternative theories of negligent or intentional misrepresentation. | ||||||||
The court entered judgment in favor of Elephant Talk Communications Corp. and against the Bank on December 14, 2011, and awarded the Company $5,925 in costs. The judgment became final on February 16, 2012. We continue to account for these loans since our subsidiary ETL in Hong Kong, alleged by the Bank as the contractual party, may be still held liable for these loans. | |||||||||
10_Convertible_Note_1
10% Convertible Note - 1 (Convertible Note One [Member]) | 9 Months Ended |
Sep. 30, 2013 | |
Convertible Note One [Member] | ' |
Debt Instrument [Line Items] | ' |
10% Convertible Note | ' |
Note 13. 10% Convertible Note | |
On August 17, 2013, the Company issued a Convertible Note for the amount of € 2,000,000 ($2,652,600 at September 30, 2013) to an accredited investor at an interest rate of 10% per annum. At any time after August 17, 2013, the Convertible Note is convertible, in whole or in part, at the option of the investor, into a number of shares of Common Stock of the Company equal to the quotient of the outstanding balance under the Convertible Note by $0.887. The Convertible Note also contains default provisions, including provisions for potential acceleration of the Convertible Note. | |
In conjunction with the issuance of the Convertible Note, on August 17, 2013, the Company issued a warrant to the investor to purchase 1,000,000 shares of restricted Common Stock. The Warrant is exercisable at any time on or after February 17, 2014 at a price of $0.887 per share for a term of 5 years, after issuance date. In connection with the issuance of the Convertible Note and the Warrant, the Company also issued letters of extension to certain investors holding warrants issued previously by the Company to purchase shares of Common Stock of the Company. Pursuant to the Extensions, the expiration date of these registered warrants has been extended for a period of two years from the original expiration date of these warrants, which now expire in 2015. | |
The securities underlying the Warrant and the shares of Common Stock issuable upon conversion of the Convertible Note have not been registered under the Securities Act of 1933, as amended, or any state securities laws. | |
The Company concluded that the warrants and the extended warrants do not require liability classification and are considered equity instruments. The warrants are recognized at the relative fair value on the issue date of the Note as a debt discount and will be amortized using the effective interest method from issuance to the maturity date of the Note. The warrants were valued using the binomial model and a relative fair value at issuance of $1,535,656 was determined and accounted for as debt discount. At September 30, 2013, the balance of the debt discount was $ 1,373,362. Also, a Beneficial Conversion feature of $1,132,404 was identified, of which $120,560 has been amortized. The unamortized portion of the Beneficial Conversion Feature amounts to $1,011,844 as of September 30, 2013. The embedded conversion feature is not required to be separated. | |
10_Convertible_Note_2
10% Convertible Note - 2 (Convertible Note Two [Member]) | 9 Months Ended |
Sep. 30, 2013 | |
Convertible Note Two [Member] | ' |
Debt Instrument [Line Items] | ' |
10% Convertible Note | ' |
Note 14. 10% Convertible Note | |
On August 28, 2013, the Company issued a Convertible Note for the amount of € 4,000,000 ($5,305,200 at September 30, 2013) to an accredited investor at an interest rate of 10% per annum with maturity date August 28, 2015. At any time after August 28, 2013, the Convertible Note is convertible, in whole or in part, at the option of the Investor, into a number of shares of Common Stock equal to the quotient of the outstanding balance under the Convertible Note by $0.887. The Convertible Note also contains default provisions, including provisions for potential acceleration of the Convertible Note. | |
In conjunction with the issuance of the Convertible Note, on August 28, 2013, the Company issued a warrant to the investor to purchase 2,000,000 shares of restricted Common Stock. The Warrant is exercisable at any time on or after February 28, 2014 at a price of $0.887 per share. The Warrant has a five year term. | |
The securities underlying the Warrant and the shares of Common Stock issuable upon conversion of the Convertible Note have not been registered under the Securities Act of 1933, as amended. | |
The Company concluded that the warrants do not require liability classification and are considered an equity instrument. The warrants are recognized at a relative fair value on the issue date of the Note as a debt discount and will be amortized using the effective interest method from issuance to the maturity date of the Note. The warrants were valued using the binomial model at $864,394 on date of issuance of the Note. The debt discount balance at September 30, 2013 was $827,421. | |
The embedded conversion feature is not required to be separated. | |
Conversion_and_Termination_of_
Conversion and Termination of Loan Agreement | 9 Months Ended |
Sep. 30, 2013 | |
Conversion and Termination of Loan Agreement [Abstract] | ' |
Conversion and Termination of Loan Agreement | ' |
Note 15. Conversion and Termination of Loan Agreement | |
As previously disclosed, on May 24, 2013, the Company entered into a certain loan agreement with a member of its Board of Directors pursuant to which the Company borrowed a principal amount of €1,000,000 (the "Principal Amount") at an interest rate of 12% per annum ("Loan Agreement") and issued a warrant ("Warrant") to the director to purchase 1,253,194 restricted shares of the Company's common stock, $0.00001 par value (the "Common Stock") exercisable at $1.03 per share for a term of 5 years, with a mandatory cash exercise after 12 months in the event the average closing bid price is $1.55 or higher for 10 consecutive trading days. | |
Following ASC 470-20 Debt - Debt with Conversion and Other Options guidance, the Company allocated the fair market value, using the binomial valuation method, of the detachable warrants between equity and debt and accounted for the debt component separately, with the debt discount offset against paid-in capital. The debt discount was amortized using the effective interest method during the life of the loan. | |
On July 14, 2013, the Company entered into an amendment (the "Amendment") to terminate the Loan Agreement and cancel the Warrant. In exchange for termination of the Loan Agreement, the Company entered into a Stock Purchase Agreement, dated July 15, 2013 (the "Purchase Agreement") with the director pursuant to which the Company agreed to convert the Principal Amount of the loan into 1,840,631 restricted shares of the Company's Common Stock. The conversion rate was calculated against the Euros (€) to U.S. Dollars ($) exchange rate as of July 12, 2013 and the closing of the Company's stock on NYSE MKT on that date, which was $0.71 per share (the "Conversion"). The closing of the Conversion will occur upon satisfaction or waiver of the customary closing conditions set forth in the Purchase Agreement. | |
Upon conversion and termination of the loan agreement the Company accelerated the debt discount amortization, which resulted in a loss on extinguishment of debt of $44,506. |
8_Senior_Secured_Convertible_N
8% Senior Secured Convertible Note | 9 Months Ended |
Sep. 30, 2013 | |
8% Senior Secured Convertible Note [Abstract] | ' |
8% Senior Secured Convertible Note | ' |
Note 16. 8% Senior Secured Convertible Note | |
On June 11, 2013, Elephant Talk Communications Corp. entered into a Purchase Agreement with each holder of the Company's Senior Secured Convertible Notes issued on March 29, 2012 pursuant to which the Company purchased the Convertible Notes at the purchase price equal to 110% of the aggregate of the outstanding principal amount of the Convertible Notes and interest due. The aggregate purchase price paid to the holders of the Convertible Notes was $6,701,824 which was paid out from the proceeds of the Share Purchase Agreements described under Note 1, in the section 'Going concern'. | |
The Purchase Agreement with the note holders resulted in the regular and accelerated amortization expenses during the second quarter of $349,639 for the original issue discount (OID), $1,179,732 for the conversion feature (CF) and $310,995 for the remaining financing costs of the note. The release of the balance of the fair market value of the conversion feature resulted in a gain of $451,779. Furthermore the 10% prepayment fee of $607,538 on the purchase price compared to the net outstanding principal was recorded as a loss in the income statement as part of the Loss of Extinguishment of Debt. The total Loss on Extinguishment of Debt was calculated at an amount of $1,938,597. | |
Registered_Direct_Offering_and
Registered Direct Offering and Warrant liabilities | 9 Months Ended |
Sep. 30, 2013 | |
Registered Direct Offering [Abstract] | ' |
Registered Direct Offering | ' |
Note 17. Registered Direct Offering and Warrant liabilities | |
On June 11, 2013, Elephant Talk Communications Corp. (the "Company") entered into an Amendment No. 1 (the "Amendment to SPA") to certain Securities Purchase Agreement (the "SPA") dated June 3, 2013 with certain institutional and other investors ("DJ Investors") placed by Dawson James Securities Inc. (the "Placement Agent") and Mr. Steven van der Velden, the Chief Executive Officer and Chairman of the Board ("Affiliated Investors"), relating to a registered direct public offering by the Company (the "Offering"). The gross proceeds of this SPA were $12,000,000 and resulted in net proceeds of $11,292,500 after the deduction of $707,500 for fundraising related expenses to various parties involved. The majority of the net proceeds were used to pay off the outstanding Senior 8% Secured Convertible Notes issued in 2012. | |
The number of shares issued relating to this SPA amounted to 17,425,640, the number of warrants amounted to 7,841,537 and were covered by the registration statement filing in 2012 for an amount of $75,000,000 (S-3/A Amendment No. 2, File No. 333-181738 dated June 6, 2012). The Company determined the fair value of the warrants with a Monte-Carlo Simulation model, which as of September 30, 2013 amounted to $4,116,480. | |
The SPA included the issuance of 7,841,537 investor warrants ("investor warrants") and 183,284 warrants issued to the fund raise agent ("agent warrants" and together with the investor warrants, the "RD warrants"). The RD warrants have a five year term from the date of issuance, are exercisable at the price of $0.887 per share for the investor warrants and $0.853 per share for the agent warrants immediately from the date of issuance and include provisions governing the adjustments to the number of Warrant Shares issuable upon exercise of the RD warrants upon stock dividends, stock splits, and other events. The RD warrants may be transferred by a holder thereof in accordance with applicable securities laws. | |
In the event that among other things, the registration statement relating to the shares of Common Stock is not effective, a holder of RD Warrants will also have the right, in its sole discretion, to exercise its RD Warrants for a net number of RD Warrant Shares pursuant to the cashless exercise procedures specified in the RD Warrants. The RD Warrants may be exercised in whole or in part, and any portion of a RD Warrant not exercised prior to the termination date shall be and become void and of no value. The absence of an effective registration statement or applicable exemption from registration does not alleviate the Company's obligation to deliver Common Stock issuable upon exercise of a RD Warrant. | |
Each RD Warrant also allows the holder the ability, at any time after 90 days from the issuance of the RD Warrant through its expiration, to exchange the RD Warrant with the Company for shares of Common Stock equal to the value of the RD Warrant at the time of the exchange based on a negotiated Black-Scholes formula. Under certain circumstances, the holder may receive cash in lieu of such shares of Common Stock. | |
Under certain circumstances after 90 days from the issuance of the RD Warrant, in the event that the Common Stock trades at a price that is 20% or more above the exercise price of the RD Warrants for a period of twenty consecutive trading days (with an average daily volume equal to or greater than $350,000), the Company may require the holder of the RD Warrants to exercise the RD Warrants for cash. After the 90 days waiting period some RD Warrant holders indeed did decide to use their right to exchange their RD Warrants, subsequently, the company did use its right to issue shares instead of paying cash. The number of RD Warrants exchanged amounted to 1,587,703 which resulted in the issue of 1,340,697 shares of common stock. The exchange of the RD Warrants did not result in any cash inflow or cash outflow. | |
If, at any time a RD Warrant is outstanding, the Company consummates any fundamental transaction, as described in the RD Warrants and generally including any consolidation or merger into another corporation, or the sale of all or substantially all of our assets, or other transaction in which the Common Stock is converted into or exchanged for other securities or other consideration, the holder of any RD Warrants will thereafter receive, the securities or other consideration to which a holder of the number of shares of Common Stock then deliverable upon the exercise or exchange of such RD Warrants would have been entitled upon such consolidation or merger or other transaction. | |
The exercisability or exchangeability of the RD Warrants may be limited in certain circumstances if, after giving effect to such exercise or exchange, the holder or any of its affiliates would beneficially own (as determined pursuant to Section 13(d) of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder) more than 9.9% of the Common Stock issued and outstanding. | |
According to ASC 480-10 Distinguishing Liabilities from Equity, the accounting for an equity instrument with detachable warrants classified as a liability reflects the notion that the consideration received upon issuance must be allocated between the instruments issued. Proceeds from the issuance of an equity instrument with stock purchase warrants are allocated to the two elements based on the following: (i) the liability element has initially been recorded at fair market value; and (ii) the remaining portion of the consideration has been allocated to the equity element. | |
The liability instrument will be re-evaluated at each reporting period with changes in the fair value recognized through the current period income statement. | |
Trade_Note_Payable
Trade Note Payable (Trade Notes Payable [Member]) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Trade Notes Payable [Member] | ' | ||||||||||||||||
Debt Instrument [Line Items] | ' | ||||||||||||||||
Trade Note Payable | ' | ||||||||||||||||
Note 18. Trade Note Payable | |||||||||||||||||
The Company has a number of financing arrangements with its vendors to acquire equipment and licenses. These trade arrangements contain maturity periods ranging from two to three years, and interest rates between 8.65% and Euribor (3M) +1.5% at different foreign exchange rates. | |||||||||||||||||
Payments | Principal | Interest | Total | Outstanding | |||||||||||||
Total Principal as of May 31,2013 | $ | 1,569,921 | |||||||||||||||
Paid until Sep 30, 2013 | $ | 120,123 | $ | 37,268 | $ | 157,391 | 1,449,798 | ||||||||||
Current portion | 775,560 | 89,913 | 865,473 | 674,238 | |||||||||||||
Long term portion | 674,238 | 26,763 | 701,001 | ||||||||||||||
$ | 1,569,921 | $ | 153,944 | $ | 1,723,865 | ||||||||||||
The current portion of the Trade note payable of $804,825 as of September 30, 2013 is included in Accounts Payable and Customer Deposits in the accompanying balance sheet and the long term portion of $593,903 is reported as Trade note payable as of September 30, 2013. Accrued interest is included in 'Accrued expenses' in the balance sheet. |
Loan_from_joint_venture_partne
Loan from joint venture partner | 9 Months Ended |
Sep. 30, 2013 | |
Loan from joint venture partner [Abstract] | ' |
Loan from joint venture partner | ' |
Note 19. Loan from joint venture partner | |
As of September 30, 2013, the Company's 51% owned subsidiary ET-UTS N.V. has $590,165 in interest bearing (8% per annum) unsecured loans due to the 49% shareholder in the joint venture, United Telecommunication Services N.V., the government owned incumbent telecom operator of Curaçao. The amount includes accumulated accrued interest. No maturity date has been fixed. The principal amount outstanding as of December 31, 2012 totaled $555,907. | |
Provision_for_Income_taxes
Provision for Income taxes | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Provision for Income taxes [Abstract] | ' | ||||||||
Provision for Income taxes | ' | ||||||||
Note 20. Provision for Income taxes | |||||||||
We file income tax returns in the U.S. federal jurisdiction, various state and foreign jurisdictions. The applicable statutory tax rates vary between 0 (zero) and 40%. However, due to Elephant Talk and its subsidiaries having incurred annual corporate income tax losses since their inception, management has determined that it is more likely than not that the Company will not realize the benefits of its U.S and foreign net deferred tax assets. Therefore, the Company has recorded a valuation allowance to reduce the net carrying amount of these deferred taxes to zero. Furthermore, the Company has not recorded a provision for income taxes for any of the periods presented, other than a provision for foreign income tax amounting $41,500 as of September 30, 2013. | |||||||||
In the ordinary course of the Company's business there are jurisdictions where income tax determinations remain uncertain, although the Company believes that the deferred taxes are adequate to cover any tax adjustments by federal, local and foreign tax authorities. In some jurisdictions tax years are still open for tax examination by the tax authorities. In all countries various periods of expiration dates for our net operating losses are applicable, which have been taken into account. To provide for a potential income tax exposure where the Company is under audit, we maintain a tax provision of $289,136, which we believe is adequate. | |||||||||
Income tax expense (benefit) for the period ended September 30, 2013 and December 31, 2012 is summarized as follows: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Current: | |||||||||
Federal | $ | - | $ | - | |||||
State | - | - | |||||||
Foreign | 41,500 | 289,136 | |||||||
Deferred: | |||||||||
Federal | - | - | |||||||
State | - | - | |||||||
Foreign | - | $ | - | ||||||
Income tax expense | $ | 41,500 | $ | 289,136 | |||||
Stockholders_equity
Stockholders' equity | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Stockholders' equity [Abstract] | ' | ||||||||||||||||
Stockholders' equity | ' | ||||||||||||||||
Note 21. Stockholders' equity | |||||||||||||||||
(A) Common Stock | |||||||||||||||||
The Company is presently authorized to issue 250,000,000 shares common stock. The Company had 136,799,765 shares of common shares issued and outstanding as of September 30, 2013, an increase of 24,881,397 shares since December 31, 2012, largely due to the shares issued in connection with the 2013 Registered Direct Offering (described in Note 17) which resulted in the issuance of a total number of shares of 17,425,621; another 1,340,697 shares were issued as a result of "exchanges" of warrants which had been issued under the same Registered Direct Offering; 250,000 shares were issued as a result of a share purchase agreement with a non-affiliate investor; 1,493,667 shares as a result of the exercise of 5,781,597 warrants; 74,521 shares issued to employees as a result of exercised employee stock options; 606,260 shares issued as consideration for executive officers and directors compensation; 400,000 shares after a settlement agreement with a former landlord of one of our offices after termination of the rental contract; 200,000 shares as consideration for consultancy services; 1,840,631 shares as a result of the conversion of convertible debt and 1,250,000 shares were issued for full consideration for the shares of the acquisition of Morodo (250,000) and the asset purchase agreement with Telnicity (1,000,000) which was concluded in the nine months ended September 30, 2013. | |||||||||||||||||
Reconciliation with stock transfer agent records: | |||||||||||||||||
The shares issued and outstanding as of September 30, 2013 according to the stock transfer agent's records are 139,604,603. The difference in number of issued shares recognized by the Company of 136,799,765 shares is the result of the exclusion of the 233,900 unreturned shares from 'cancelled' acquisitions (pre-2006), 12,000 treasury shares issued under employee benefits plan and the 2,558,938 contingent shares in connection with the ValidSoft acquisition which are kept in escrow. | |||||||||||||||||
(B) Preferred Stock | |||||||||||||||||
The Company's Certificate of Incorporation ("Articles") authorizes the issuance of 50,000,000 shares of 0.00001 par value Preferred Stock. No shares of Preferred Stock are currently issued and outstanding. Under the Company's Amended and Restated Certificate of Incorporation, the Board of Directors has the power, without further action by the holders of the Common Stock, to designate the relative rights and preferences of the preferred stock, and issue the preferred stock in such one or more series as designated by the Board of Directors. The designation of rights and preferences could include preferences as to liquidation, redemption and conversion rights, voting rights, dividends or other preferences, any of which may be dilutive of the interest of the holders of the Common Stock or the Preferred Stock of any other series. The issuance of Preferred Stock may have the effect of delaying or preventing a change in control of the Company without further shareholder action and may adversely affect the rights and powers, including voting rights, of the holders of Common Stock. In certain circumstances, the issuance of preferred stock could depress the market price of the Common Stock. | |||||||||||||||||
During 2012 and 2013, the Company did not issue any shares of Preferred Stock and no shares of Preferred Stock were outstanding as of September 30, 2013. | |||||||||||||||||
(C) Warrants | |||||||||||||||||
Throughout the years the Company has issued warrants with varying terms and conditions related to multiple funding rounds, acquisitions, and other transactions. During the third quarter of 2013, the number of outstanding warrants decreased by 1,047,239 due to the expiration of warrants; another 1,253,194 warrants were cancelled as part of the conversion agreement relating to the 12% unsecured loan from an affiliate. The number of outstanding warrants increased due to the closing of funding agreements closed on August 17, 2013 and August 28, 2013 (described under Notes 13 and 14) by 3,000,000 warrants. The Weighted Average Exercise Price for the currently outstanding warrants in the table below is $1.16. The below table summarizes the warrants outstanding as per September 30, 2013 and closing December 2012: | |||||||||||||||||
Outstanding Warrants | Exercise/ | Expiring | 2013 | 2012 | |||||||||||||
Conversion | |||||||||||||||||
price(s) | |||||||||||||||||
(range) | |||||||||||||||||
Warrants - Acquisitions | $0.63 - $2.25 | 2013 | 957,372 | 3,437,953 | |||||||||||||
Warrants - Fundraising | $0.853 - $2.00 | 2013 - 2018 | 40,773,492 | 46,322,101 | |||||||||||||
Warrants - Other | $ | 2.21 | 2016 | 18,659 | 18,659 | ||||||||||||
41,749,523 | 49,778,713 |
Basic_and_diluted_net_loss_per
Basic and diluted net loss per share | 9 Months Ended |
Sep. 30, 2013 | |
Basic and diluted net loss per share [Abstract] | ' |
Basic and diluted net loss per share | ' |
Note 22. Basic and diluted net loss per share | |
Net loss per share is calculated in accordance with ASC 260, Earnings per Share. Basic net loss per share is based upon the weighted average number of common shares outstanding. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Weighted average number of shares used to compute basic and diluted loss per share is the same since the effect of dilutive securities is anti-dilutive. | |
Employee_Benefit_Plan_and_NonQ
Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan | 9 Months Ended | ||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||
Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan [Abstract] | ' | ||||||||||||||||||||||
Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan | ' | ||||||||||||||||||||||
Note 23. Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan | |||||||||||||||||||||||
2006 Non-Qualified Stock and Option Compensation Plan | |||||||||||||||||||||||
Under this plan there are 30,000 stock options outstanding as of September 30, 2013, which have all vested. The options generally vested over a three year period. There are 183,685 shares and 59,490 stock options that remain available for issuance under the plan. Options generally expire 2 years from the date of vesting. During the nine months ended September 30, 2013, there were no grants, exercises or forfeitures. During 2013 45,000 options have expired. The remaining 30,000 outstanding options, if not exercised, will expire in the fourth quarter of 2013 with various expiration dates. | |||||||||||||||||||||||
Following is a summary of the status of options outstanding at September 30, 2013: | |||||||||||||||||||||||
Options outstanding | Options exercisable | ||||||||||||||||||||||
Range of | Total options | Weighted average | Weighted | Options | Weighted | ||||||||||||||||||
exercise prices | outstanding | remaining contractual | average exercise | exercisable | average exercise | ||||||||||||||||||
life (years) | price | price | |||||||||||||||||||||
$2.25 - $2.65 | 30,000 | 0.11 years | $ | 2.25 | 30,000 | $ | 2.25 | ||||||||||||||||
During Q2 2013, 235,947 shares were issued under this plan for the Q1 2013 non-cash compensation granted to management and board members and during Q3 another 180,368 shares were issued under this plan for the Q2 2013 non-cash compensation granted to management and board members. The non-cash compensation granted to management and board members relating to the issued shares under this plan have been accounted for through profit and loss for an amount of $261,194 for the three and nine month period ended September 30, 2013, respectively. These non-cash compensation shares are accounted and valued using the share price and number of shares issued at issuance date, and they vest immediately when issued. At September 30, 2013, the total compensation cost related to unvested stock-based awards granted to employees under the provisions of ASC 718 Compensation - Stock Compensation and the Company's 2006 stock award plan, but not yet recognized was $0. | |||||||||||||||||||||||
2008 Long-Term Incentive Plan | |||||||||||||||||||||||
In 2008, the Company adopted the 2008 Long-Term Incentive Compensation Plan (the "2008 Plan"). This 2008 Plan initially provided for total authorized awards of up to 5,000,000 shares of common stock, in the form of incentive and non-qualified stock options, stock appreciation rights, performance units, restricted stock awards and performance bonuses. The amount of common stock underlying the awards to be granted remained the same after the 25 to one reverse stock-split that was effectuated on June 11, 2008. | |||||||||||||||||||||||
In 2011, the Company filed, after approval of the shareholders, an "Amended and Restated 2008 Long-Term Incentive Compensation Plan", which increased the amount of shares available for issuance under the 2008 Plan to 23,000,000 shares of common stock in order to cover future grants under the 2008 Plan. At September 30, 2013 19,523,322 shares were issued and outstanding under the 2008 Plan and 908,724 remain available for issuance under the 2008 Plan. | |||||||||||||||||||||||
Reconciliation of registered and available shares and/or options as of September 30, 2013: | |||||||||||||||||||||||
Three | Balance | ||||||||||||||||||||||
months | September | ||||||||||||||||||||||
ended | 30, 2013 | ||||||||||||||||||||||
September | |||||||||||||||||||||||
30, 2013 | |||||||||||||||||||||||
Registered 2008 | 5,000,000 | ||||||||||||||||||||||
Registered 2011 | 18,000,000 | ||||||||||||||||||||||
Total Registered under this plan | 23,000,000 | ||||||||||||||||||||||
Shares (issued to): | |||||||||||||||||||||||
Consultants | - | 325,000 | |||||||||||||||||||||
Directors and Officers | - | 1,196,366 | |||||||||||||||||||||
Options exercised | 91,521 | 1,046,588 | |||||||||||||||||||||
Options (movements): | |||||||||||||||||||||||
Issued and Outstanding | (547,075 | ) | 19,523,322 | ||||||||||||||||||||
Available for grant at September 30, 2013: | 908,724 | ||||||||||||||||||||||
During the second quarter of 2013, no shares were issued to consultants under the Plan although the Company issued a total number of 325,000 shares during the term of the plan. As of 2012 the Company decided, in order to avoid costly separate registrations for the quarterly recurring share issues and the obligatory registration of such shares, to issue the non-cash compensation to directors and officers under this plan. During the first six months of 2013 the Company issued 189,945 shares to various directors and officers, which were issued in conjunction with their willingness to receive all or part of their cash compensation in shares of the Company. Options issued to directors and officers vested immediately at grant. | |||||||||||||||||||||||
During the third quarter of 2013 the total outstanding options under the Plan decreased by 547,075 options due to the exercise of various options and also due to the staff leaving the company resulting in cancellations of options. Currently a total of 19,523,322 stock options are outstanding under the Plan. As of the end of this reporting period 325,000 shares of restricted common stock have been issued to consultants, 1,196,366 shares of common stock have been issued towards directors and officers and another 1,046,588 shares were issued as a result of exercised options during the existence of this plan. | |||||||||||||||||||||||
Options granted generally vest immediately or up to a three-year period after grant date. Although options have been granted with a shorter term than two years, options generally expire between two and ten years from date of grant. | |||||||||||||||||||||||
Common stock purchase options consisted of the following as of the nine months ended September 30, 2013 and the years ended December 31, 2012: | |||||||||||||||||||||||
Number of | Weighted | Initial Fair | |||||||||||||||||||||
Options | Average | Market Value | |||||||||||||||||||||
Exercise | (Outstanding | ||||||||||||||||||||||
Price | Options) | ||||||||||||||||||||||
Options: | |||||||||||||||||||||||
Outstanding as of December 31, 2012 | 12,205,717 | $ | 2.15 | $ | 15,316,144 | ||||||||||||||||||
Granted in 2013 | 8,465,680 | $ | 0.89 | $ | 3,490,562 | ||||||||||||||||||
Exercised (with delivery of shares) | (104,521 | ) | $ | 0.63 | $ | (57,296 | ) | ||||||||||||||||
Forfeitures (Pre-vesting) | (637,838 | ) | $ | 1 | $ | (632,733 | ) | ||||||||||||||||
Expirations (Post-vesting) | (390,634 | ) | $ | 2.03 | $ | (794,585 | ) | ||||||||||||||||
Exchanged for Cashless exercise | (15,082 | ) | $ | 0.6 | $ | (7,852 | ) | ||||||||||||||||
Outstanding as of September 30, 2013 | 19,523,322 | $ | 1.62 | $ | 17,314,240 | ||||||||||||||||||
The options granted in 2013 were granted with a weighted average exercise price of $0.89. The grant date fair market value of the options, in the aggregate is $3,490,562. | |||||||||||||||||||||||
The weighted average assumptions used for the options granted in 2013 using the Black-Scholes options model are: expected cumulative volatility of 120% based on calculated annual volatility of 80%, contractual life of 3.36 years, expected option life of 2.32 years (using the simplified method) and a Risk Free Interest Rate of 0.290%. The expected dividend yield is zero. | |||||||||||||||||||||||
Following is a summary of the status and used assumptions of options outstanding as of the period ended September 30, 2013: | |||||||||||||||||||||||
Plan 2008 | Options outstanding | Options exercisable | |||||||||||||||||||||
Range of | Total options | Weighted average | Weighted | Options | Weighted | ||||||||||||||||||
exercise prices | outstanding | remaining contractual | average exercise | exercisable | average exercise | ||||||||||||||||||
life (years) | price | price | |||||||||||||||||||||
$0.60 - $3.39 | 19,523,322 | 3.91 | $ | 1.62 | 12,695,884 | $ | 1.52 | ||||||||||||||||
Unvested Options | Options expected to vest | ||||||||||||||||||||||
Number of | Forfeiture used | Number of options | Unrecognized stock- | Weighted average remaining | |||||||||||||||||||
options non yet | in this | expected to vest | based compensation | contract life of Total Options | |||||||||||||||||||
vested | reporting | corrected by forfeiture | expense | expected to vest (in years) | |||||||||||||||||||
rate | |||||||||||||||||||||||
6,827,438 | 10.33 | % | 6,122,170 | $ | 3,437,353 | 3.57 | |||||||||||||||||
Weighted average assumptions for 2013 grants: | |||||||||||||||||||||||
Weighted Average Annual Volatility | 80 | % | |||||||||||||||||||||
Weighted Average Cumulative Volatility | 120 | % | |||||||||||||||||||||
Weighted Average Contractual Life (in years) | 3.36 | ||||||||||||||||||||||
Weighted Average Expected Option life (in years) | 2.32 | ||||||||||||||||||||||
Weighted Average Risk Free Interest Rate | 0.29 | % | |||||||||||||||||||||
Dividend yield | 0 | % | |||||||||||||||||||||
At September 30, 2013 the unrecognized expense portion of stock-based awards granted to employees under the provisions of ASC 718 Compensation - Stock Compensation and the Company's 2008 stock award plan, was approximately $3,437,353. The future expensing takes place proportionally to the vesting associated with each stock-award, adjusted for cancellations, forfeitures and returns. The forfeiture rate has been adjusted from 10.673% at closing December 31, 2012 to 10,330% at closing September 30, 2013 and the corresponding variance has been accounted for in the third quarter of 2013. | |||||||||||||||||||||||
2013 Additional Equity Plan Awards | |||||||||||||||||||||||
The Compensation Committee agreed to an incentive plan for the executive officers which led to an aggregate grant towards the executive officers of 5,040,000 options. The grant date was April 5, 2013. The options were divided into three equal parts which resulted in a grant of 1,680,000 options with an exercise price of $0.91 granted under the 2008 Long-Term Incentive Plan and two conditional grants with exercise prices of $1.91 and $2.91 which will be cancelled in the event the stockholders of the Company do not approve an increase of shares issuable under the Plan from 23,000,000 to 30,000,000 in the 2013 Annual Stockholder Meeting of the Company to be held later this year. The 1,680,000 options granted under the 2008 Plan have been included in the numbers reported above "2008 Long-Term Incentive Plan" paragraph. The remaining 3,360,000 options were valued at an initial fair market value of $811,060. The current unrecognized expense portion as per September 30, 2013 for this conditional grant amounts to $180,629 and will be expensed over the remaining requisite period which is determined to end at next annual shareholders meeting in 2013. | |||||||||||||||||||||||
Stock-Based Compensation Expense | |||||||||||||||||||||||
Under the provisions of ASC 718 and ASC 505-50, the Company recorded for the 3-month quarter ended September 30, 2013, $1,311,002 and for the nine-months period ending September 30, 2013, $5,716,961 in stock-based compensation expense for both the 2006 Non-Qualified Stock and Option Compensation Plan, the 2008 Long-Term Incentive Plan as well as the Additional Equity Plan Awards granted to the Executive Officers, together consisting of shares issued to directors and officers and employee option expensing. For the comparable period in 2012, such expense was $1,719,494 for the three month period and $4,881,059 for the nine-month period ending September 30, 2012. The Company utilized the Black-Scholes valuation model for estimating the fair value of the stock-options at grant. The main reason for the nine month increase is caused by the grant and immediate vesting and therefore expensing of bonus options granted to employees as well as the options granted to the executive officers. | |||||||||||||||||||||||
Commitments
Commitments | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Commitments [Abstract] | ' | ||||||||||||||||||||||||
Commitments | ' | ||||||||||||||||||||||||
Note 24. Commitments | |||||||||||||||||||||||||
Commitments of the Company relating to co-location, network and office rents, regulatory, interconnection fees and interest payments are as follows: | |||||||||||||||||||||||||
Year | Office | Co-location | Interconnect | Network, Service & | Capital | Total | |||||||||||||||||||
Support | Expenditures | ||||||||||||||||||||||||
2013 | $ | 155,452 | 388,371 | 623,134 | 336,021 | 402,012 | $ | 1,904,990 | |||||||||||||||||
2014 | 210,855 | 377,117 | 380,881 | 84,272 | - | 1,053,124 | |||||||||||||||||||
2015 | 101,526 | 247,356 | 90,203 | 80,180 | - | 519,264 | |||||||||||||||||||
2016 | 23,042 | 78,397 | 12,732 | 40,457 | - | 154,629 | |||||||||||||||||||
2017 | 25,161 | - | 4,244 | - | - | 29,405 | |||||||||||||||||||
$ | 3,661,412 | ||||||||||||||||||||||||
Noncontrolling_Interest
Non-controlling Interest | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Non-controlling Interest [Abstract] | ' | ||||||||||||
Non-controlling Interest | ' | ||||||||||||
Note 25. Non-controlling Interest | |||||||||||||
The Company had non-controlling interests in several of its subsidiaries. The subsidiaries with a positive balance of the non-controlling interests as of September 30, 2013 and December 31, 2012 were as follows: | |||||||||||||
Non-controlling interest Balance at | |||||||||||||
Subsidiary | Non-controlling Interest % | 30-Sep-13 | 31-Dec-12 | ||||||||||
ETC PRS UK | 49 | % | $ | 9,685 | $ | 9,434 | |||||||
ETC PRS Netherlands | 49 | % | 132,504 | 126,013 | |||||||||
ET Bahrain WLL | 1 | % | - | 3,438 | |||||||||
ET ME&A FZ LLC | 49.46 | % | 36,931 | 37,091 | |||||||||
Total | $ | 179,119 | $ | 175,976 |
Litigations
Litigations | 9 Months Ended |
Sep. 30, 2013 | |
Litigations [Abstract] | ' |
Litigations | ' |
Note 26. Litigations | |
Rescission of the Purchase Agreement of March 31, 2004 of New Times Navigation Limited. | |
As previously described in our 2004 Annual Report we and New Times Navigation Limited mutually agreed to terminate this purchase agreement. We returned the received shares of New Times Navigation Limited to the concerned shareholders and received back 90,100 of our common stock out of the 204,000 issued by us for the purchase. In addition we issued 37 unsecured convertible promissory notes for a total amount of $3,600,000. On our request 21 notes were returned with a total value of $2,040,000. | |
We are presently seeking relief from the High Court of the Hong Kong Special Administrative Region against the holders of the unreturned shares to return a total of 113,900 common shares (valued at $381,565) and also to have them return the remaining 18 unsecured convertible promissory notes representing a total amount of $1,740,000 and rescind the purchase agreement. The case is currently pending. | |
Other. | |
The Company is involved in various claims incidental to our business. In the opinion of management, the ultimate resolution of such claims will not have a material effect on our financial position, liquidity, or results of operations. |
Geographic_Information
Geographic Information | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Geographic Information [Abstract] | ' | ||||||||||||
Geographic Information | ' | ||||||||||||
Note 27. Geographic Information | |||||||||||||
Nine months ended September 30, 2013 | |||||||||||||
Europe | Other foreign countries | Total | |||||||||||
Revenues from unaffiliated customers | $ | 15,542,781 | $ | 1,252,846 | $ | 16,795,627 | |||||||
Identifiable assets | $ | 31,428,900 | $ | 15,024,046 | $ | 46,452,946 | |||||||
Nine months ended September 30, 2012 | |||||||||||||
Europe | Other foreign countries | Total | |||||||||||
Revenues from unaffiliated customers | $ | 22,239,695 | $ | 125,623 | $ | 22,365,318 | |||||||
Identifiable assets | $ | 36,619,280 | $ | 5,941,483 | $ | 42,560,763 | |||||||
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
Note 28. Related Party Transactions | |
On August 17, 2013, the Company issued a Convertible Note for the amount to an accredited investor ("the Investor"), who is a Director of QAT Investment S.A., an entity affiliated with certain officers and directors of the Company, pursuant to which the Company borrowed a principal amount of €2,000,000 ($2,652,600) at an interest rate of 10% per annum ("the Convertible Note"). At any time after August 17, 2013, the Convertible Note is convertible, in whole or in part, at the option of the investor, into a number of shares of Common Stock, par value $0.00001, of the Company (the "Common Stock") equal to the quotient of the outstanding balance under the Convertible Note by $0.887. The Convertible Note also contains default provisions, including provisions for potential acceleration of the Convertible Note. | |
In conjunction with the issuance of the Convertible Note, on August 17, 2013, the Company issued a warrant ("the 2013 Warrant") to the Investor to purchase 1,000,000 shares of restricted Common Stock. The Warrant is exercisable at any time on or after February 17, 2013 at a price of $0.887 per share for a term of 5 years. In connection with the issuance of the Convertible Note and the 2013 Warrant, the Company also issued letters of extension ("the Extensions") to certain investors holding warrants issued previously by the Company ("the Old Warrants") to purchase shares of Common Stock of the Company. Pursuant to the Extensions, the expiration date of the Old Warrants has been extended for a period of two years from the original expiration date of the Old Warrants. The securities underlying the 2013 Warrant and the shares of Common Stock issuable upon conversion of the Convertible Note have not been registered under the Securities Act of 1933, as amended, or any state securities laws. See also Note 13. | |
Quercus Management Group N.V. ("QMG"), an entity affiliated with certain officers and directors of the Company served as fundraising agent for the 10% convertible notes of 17 August 2013 and 28 August 2013 pursuant to which €6,000,000 ($7,957,800) was raised. QMG received a selling concession of 8%, or €480,000 ($636,624). | |
As previously disclosed, on May 24, 2013, the Company entered into a certain loan agreement with a member of its Board of Directors pursuant to which the Company borrowed a principal amount of €1,000,000.00 (the "Principal Amount") at an interest rate of 12% per annum ("Loan Agreement") and issued a warrant ("Warrant") to the director to purchase 1,253,194 restricted shares of the Company's common stock. On July 14, 2013, the Company entered into an amendment (the "Amendment") to terminate the Loan Agreement and cancel the Warrant. In exchange for termination of the Loan Agreement, the Company entered into a Stock Purchase Agreement, dated July 15, 2013 (the "Purchase Agreement") with the director pursuant to which the Company agreed to convert the Principal Amount of the loan into 1,840,631 restricted shares of the Company's Common Stock. See Note 15 for further information. |
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Event [Abstract] | ' |
Subsequent Events | ' |
Note 29. Subsequent Events | |
The Company's management evaluated subsequent events through the date the financial statements were available to be issued, and concluded that there are no reportable events. | |
Significant_Accounting_Policie1
Significant Accounting Policies (Policy) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Significant Accounting Policies [Abstract] | ' | ||||||||||||||||
Currency Translation | ' | ||||||||||||||||
Currency Translation | |||||||||||||||||
The functional currency is the Euro for both the Company's wholly-owned subsidiary Elephant Talk Europe Holding B.V. and its subsidiaries, the Hong Kong Dollar for its wholly-owned subsidiary Elephant Talk Limited and the British Pound Sterling for its wholly-owned subsidiary ValidSoft (UK) Ltd. The financial statements of these subsidiaries were translated to US Dollars using period-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses, and capital accounts were translated at their historical exchange rates when the capital transaction occurred. In accordance with Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 830, Foreign Currency Matters", net gains and losses resulting from translation of foreign currency financial statements are included in the statements of shareholder's equity as accumulated other comprehensive income (loss). Foreign currency transaction gains and losses are included in consolidated income/(loss). The accumulated other comprehensive income/(loss) as presented in the shareholders' equity as of September 30, 2013 and December 31, 2012 was ($242,647) and ($732,090), respectively. The foreign currency translation gain (/loss) for the nine months ended September 30, 2013 and 2012 was ($807,483) and ($315,226), respectively. The foreign currency translation gain (/loss) for the three months ended September 30, 2013 and 2012 was $489,168 and $594,468. | |||||||||||||||||
Use of Estimates | ' | ||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of the accompanying financial statements conforms with accounting principles generally accepted in the United States of America and requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. | |||||||||||||||||
Cash and Cash Equivalents | ' | ||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. | |||||||||||||||||
Restricted Cash | ' | ||||||||||||||||
Restricted Cash | |||||||||||||||||
Restricted cash represents cash deposited on blocked accounts as guarantees for national interconnection and wholesale agreements with telecom operators. | |||||||||||||||||
Accounts Receivables, net | ' | ||||||||||||||||
Accounts Receivables, net | |||||||||||||||||
The Company's customer base consists of geographically diverse customers. The Company maintains an allowance for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable on a customer by customer basis and analyzes historical bad debt, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these allowances. As of September 30, 2013 and December 31, 2012, the allowance for doubtful accounts was $25,225 and $559,120, respectively. | |||||||||||||||||
Revenue Recognition and Deferred Revenue | ' | ||||||||||||||||
Revenue Recognition and Deferred Revenue | |||||||||||||||||
The Company's revenue recognition policies are in compliance with ASC 605, Revenue Recognition ("ASC 605"). Revenue is recognized only when all of the following conditions have been met: (i) there is persuasive evidence of an arrangement; (ii) delivery has occurred; (iii) the fee is fixed or determinable; and (iv) collectability of the fee is reasonably assured. We report revenue on a gross basis using authoritative guidance issued by the FASB. We consider the following factors to determine the gross versus net presentation: if we (i) act as principal in the transaction and (ii) have risks and rewards of ownership, such as the risk of loss for collection and delivery of service. The Company derives revenue from activities as a fixed-line, security and mobile services provider with its network and its own switching technology. Revenue represents amounts earned for telecommunication and security services provided to customers (net of value added tax and inter-company revenue). Revenue is recorded as deferred revenue before all of the relevant criteria for revenue recognition are satisfied. Deferred revenue represents amounts received from the customers against future sales of services since the Company recognizes revenue upon performing the services. | |||||||||||||||||
In managed services contracts and in other long term contracts, revenue from the operation of a customer's system is recognized either as services are performed based on time elapsed, output produced or volume of data processed, depending on the specific contract terms of the managed services arrangement. Typically, managed services contracts are long term in duration and are not subject to seasonality. Revenue from ongoing support services is recognized as work is performed. | |||||||||||||||||
Cost of Service | ' | ||||||||||||||||
Cost of Service | |||||||||||||||||
Cost of service includes origination, termination, network and billing charges from telecommunications operators, out payment costs to content and information providers, network costs, data center costs, facility costs of hosting network and equipment, and costs of providing resale arrangements with long distance service providers, costs of leasing transmission facilities and international gateway switches for voice and data transmission services. | |||||||||||||||||
Segments | ' | ||||||||||||||||
Segments | |||||||||||||||||
ASC 820, "Segment Reporting" ("ASC 820"), defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performances. The Company operates in a single business segment because operating and strategic decisions are made by decision makers who monitor the Company as a whole. | |||||||||||||||||
Stock-based Compensation | ' | ||||||||||||||||
Stock-based Compensation | |||||||||||||||||
We follow the provisions of ASC 718 "Compensation-Stock Compensation", ("ASC 718"). Under ASC 718, stock-based awards are recorded at fair value as of the grant date and recognized as expense with an adjustment for forfeiture over the employee's requisite service period (the vesting period, generally up to three years), which we have elected to amortize on a straight-line basis. | |||||||||||||||||
To determine the value of our stock options at grant date under our employee stock option plan, we currently use the Black-Scholes option-pricing model. The use of this model requires us to make a number of subjective assumptions. The following addresses each of these assumptions and describes our methodology for determining each assumption: | |||||||||||||||||
Expected Life | |||||||||||||||||
The expected life represents the period that the stock option awards are expected to be outstanding. We use the simplified method for estimating the expected life of the option, by taking the average between time to vesting and the contract life of the award. | |||||||||||||||||
Expected Volatility | |||||||||||||||||
We estimate expected cumulative volatility giving consideration to the expected life of the option of the respective award, and the calculated annual volatility by using the continuously compounded return calculated by using the share closing prices of an equal number of days prior to the grant-date (reference period). The annual volatility is used to determine the (cumulative) volatility of our common stock (=nnual volatility x SQRT (expected life)). | |||||||||||||||||
Forfeiture rate | |||||||||||||||||
The Company is using the aggregate forfeiture rate. The aggregate forfeiture rate is the ratio of pre-vesting forfeitures over the awards granted (Pre-vesting forfeitures/grants). The forfeiture discount (additional loss) is released into the profit and loss in the same period as the option vesting-date. The forfeiture rate is actualized every reporting period. | |||||||||||||||||
Risk-Free Interest Rate | |||||||||||||||||
We estimate the risk-free interest rate using the "Daily Treasury Yield Curve Rates" from the U.S. Treasury Department with a term equal to the reported rate, or derived by using both spread in intermediate term and rates, to the expected life of the award. | |||||||||||||||||
Expected Dividend Yield | |||||||||||||||||
We estimate the expected dividend yield by giving consideration to our current dividend policies as well as those anticipated in the future considering our current plans and projections. We do not currently calculate a discount for any post-vesting restrictions to which our awards may be subject. | |||||||||||||||||
For the executive officers the Company is using the contractual life instead of expected life of an option. | |||||||||||||||||
Income Taxes | ' | ||||||||||||||||
Income Taxes | |||||||||||||||||
The Company accounts for income taxes under ASC 740, "Accounting for Income Taxes" ("ASC 740") (formerly SFAS No. 109). This statement requires the recognition of deferred tax assets and liabilities for the future consequences of events that have been recognized in the Company's financial statements or tax returns. The measurement of the deferred items is based on enacted tax laws. In the event the future consequences of differences between financial reporting bases and the tax bases of the Company's assets and liabilities result in a deferred tax asset, ASC 740 requires an evaluation of the probability of being able to realize the future benefits indicated by such asset. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion or the entire deferred tax asset will not be realized. As part of the process of preparing our consolidated financial statements, we are required to estimate our income tax expense in each of the jurisdictions in which we operate. In the ordinary course of a global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of revenue sharing and reimbursement arrangements among related entities, the process of identifying items of revenue and expenses that qualify for preferential tax treatment and segregation of foreign and domestic income and expense to avoid double taxation. We also assess temporary differences resulting from differing treatment of items, such as deferred revenue, for tax and accounting differences. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. We may record a valuation allowance to reduce our deferred tax assets to the amount of future tax benefit that is more likely than not to be realized. Although we believe that our estimates are reasonable and that we have considered future taxable income and ongoing prudent and feasible tax strategies in estimating our tax outcome and in assessing the need for the valuation allowance, there is no assurance that the final tax outcome and the valuation allowance will not be different than those that are reflected in our historical income tax provisions and accruals. | |||||||||||||||||
ASC 740 prescribes a recognition threshold and measurement methodology to recognize and measure an income tax position taken, or expected to be taken, in a tax return. The evaluation of a tax position is based on a two-step approach. The first step requires an entity to evaluate whether the tax position would "more likely than not" be sustained upon examination by the appropriate taxing authority. The second step requires the tax position be measured at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement. In addition, previously recognized benefits from tax positions that no longer meet the new criteria would be derecognized. | |||||||||||||||||
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various foreign jurisdictions. The Company's income tax returns are open to examination by federal, state and foreign tax authorities, generally for the years ended December 31, 2008 and later, with certain state jurisdictions open for audit for earlier years. The Company has no amount recorded for any unrecognized tax benefits as of September 30, 2013 and December 31, 2012, nor did the Company record any amount for the implementation of ASC 740. The Company's policy is to record estimated interest and penalty related to the underpayment of income taxes or unrecognized tax benefits as a component of its income tax provision. During the first nine months 2013 and 2012, the Company did not recognize any interest or penalties in its statements of operations and there are no accruals for interest or penalties at September 30, 2013 or December 31, 2012. | |||||||||||||||||
Comprehensive Income/(Loss) | ' | ||||||||||||||||
Comprehensive Income/(Loss) | |||||||||||||||||
Comprehensive income/(loss) includes all changes in equity during a period from non-owner sources. Other comprehensive income refers to gains and losses that under GAAP are recorded as an element of stockholders' equity but are excluded from net income. In the first nine months of the years 2013 and 2012, the Company's comprehensive income/(loss) consisted of its net loss and foreign currency translation adjustments. | |||||||||||||||||
Intangible Assets | ' | ||||||||||||||||
Intangible Assets | |||||||||||||||||
In accordance with ASC 350 Intangibles - Goodwill and Other, intangible assets are carried at cost less accumulated amortization and impairment charges. Intangible assets are amortized on a straight-line basis over the expected useful lives of the assets, between three and ten years. Other intangible assets are reviewed for impairment in accordance with ASC 350, on an annual basis, or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Measurement of any impairment loss for long-lived assets and identifiable intangible assets that management expects to hold and use is based on the amount of the carrying value that exceeds the fair value of the asset. | |||||||||||||||||
Property and Equipment, Internally Developed and Third Party Software | ' | ||||||||||||||||
Property and Equipment, Internally Developed and Third Party Software | |||||||||||||||||
The Company has adopted the provisions of ASC 985, Software - Research and Development. Property and equipment are initially recorded at cost. Additions and improvements are capitalized, while expenditures that do not enhance the assets or extend the useful life are charged to operating expenses as incurred. Included in property and equipment are certain costs related to the development of the Company's internally developed software technology platform. We capitalize all costs related to software developed or obtained for internal use when management commits to funding the project and the project completes the preliminary project stage. Capitalization of such costs ceases when the project is substantially complete and ready for its intended use. | |||||||||||||||||
The Company has capitalized certain computer software development costs upon the establishment of technological feasibility. Technological feasibility is considered to have occurred upon completion of a detailed program design that has been confirmed by documenting the product specifications, or to the extent that a detailed program design is not pursued, upon completion of a working model that has been confirmed by testing to be consistent with the product design. Depreciation applied using the straight-line method over the estimated useful lives of the assets once the assets are placed in service. Once a new functionality or improvement is released for operational use, the asset is moved from the property and equipment category "projects under construction" to a property and equipment asset subject to depreciation in accordance with the principle described in the previous sentence. | |||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
Fair Value Measurements | |||||||||||||||||
In accordance with ASC 820 Fair Value Measurement, the Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. | |||||||||||||||||
Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company's assumptions about the inputs that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. | |||||||||||||||||
The fair value hierarchy is categorized into three levels based on the inputs as follows: | |||||||||||||||||
Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. | |||||||||||||||||
Level 2 - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these financial instruments include cash instruments for which quoted prices are available but are traded less frequently, derivative instruments whose fair values have been derived using a model where inputs to the model are directly observable in the market and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed. | |||||||||||||||||
Level 3 - Instruments that have little to no pricing observability as of the reported date. These financial instruments are measured using management's best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. Elephant Talk enters these estimates and other observable inputs into a Monte Carlo valuation model. | |||||||||||||||||
The degree of judgment exercised by the Company in determining fair value is greatest for securities categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined by the lowest level input that is significant to the fair value measurement. | |||||||||||||||||
The following table summarizes fair value measurements by level at September 30, 2013 for financial assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||||
30-Sep-13 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liability Derivatives | |||||||||||||||||
Conversion feature | $ | - | $ | - | $ | - | $ | - | |||||||||
Warrant Liabilities | $ | - | $ | - | $ | 4,116,480 | $ | 4,116,480 | |||||||||
Total liability derivatives | $ | - | $ | - | $ | 4,116,480 | $ | 4,116,480 | |||||||||
The following table summarizes fair value measurements by level at December 31, 2012 for financial assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||||
31-Dec-12 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liability Derivatives | |||||||||||||||||
Conversion feature | $ | - | $ | - | $ | 311,986 | $ | 311,986 | |||||||||
Warrant Liabilities | $ | - | $ | - | $ | - | $ | - | |||||||||
Total liability derivatives | $ | - | $ | - | $ | 311,986 | $ | 311,986 | |||||||||
We have classified the outstanding conversion feature into level 3 due to the fact that some inputs are not published and not easily comparable to industry peers. | |||||||||||||||||
Recently Issued Accounting Pronouncements | ' | ||||||||||||||||
Recently Issued Accounting Pronouncements | |||||||||||||||||
On July of 2013 the Financial Accounting Standards Board, or FASB issued Accounting Standards Update, or ASU, No. 2013-11, Income Taxes (Topic 740), Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward exists. This guidance provide that an unrecognized tax benefit, or a portion thereof, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, except to the extent that carryforwards are not available to settle any additional income taxes that would result from disallowance of a tax position. The unrecognized tax benefit should be presented as a liability. This guidance is applicable for fiscal years and interim periods beginning after December 15, 2013. The Company is evaluating the potential impact of adopting this standard on its consolidated financial statements. | |||||||||||||||||
On March 4, 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830) Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity ("ASU 2013-05"). ASU 2013-05 updates accounting guidance related to the application of consolidation guidance and foreign currency matters. This guidance resolves the diversity in practice about what guidance applies to the release of the cumulative translation adjustment into net income. This guidance is effective for interim and annual periods beginning after December 15, 2013. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. | |||||||||||||||||
In February of 2013, the FASB, issued ASU, No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for which the Total Amount of the Obligation Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force). This ASU addresses the recognition, measurement, and disclosure of certain obligations resulting from joint and several arrangements including debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The ASU is effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company has evaluated this guidance and concluded that it is not applicable to our situation, because the Company is not a co-obligor of our subsidiary in Hong Kong. See disclosure in Note 9. | |||||||||||||||||
In March of 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830)-Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. These amendments provide guidance on releasing Cumulative Translation Adjustments when a parent company sells partially equity method investments and in step acquisitions. The amendments are effective on a prospective basis for fiscal years and interim reporting periods beginning after December 15, 2013. The guidance is applicable to the Company in principle, but since its enactment, the Company has not derecognized any subsidiary or group of assets as of September 30, 2013. |
Significant_Accounting_Policie2
Significant Accounting Policies (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Significant Accounting Policies [Abstract] | ' | ||||||||||||||||
Schedule of Financial Liabilities Measured at Fair Value on a Recurring Basis | ' | ||||||||||||||||
The following table summarizes fair value measurements by level at September 30, 2013 for financial assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||||
30-Sep-13 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liability Derivatives | |||||||||||||||||
Conversion feature | $ | - | $ | - | $ | - | $ | - | |||||||||
Warrant Liabilities | $ | - | $ | - | $ | 4,116,480 | $ | 4,116,480 | |||||||||
Total liability derivatives | $ | - | $ | - | $ | 4,116,480 | $ | 4,116,480 | |||||||||
The following table summarizes fair value measurements by level at December 31, 2012 for financial assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||||
31-Dec-12 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liability Derivatives | |||||||||||||||||
Conversion feature | $ | - | $ | - | $ | 311,986 | $ | 311,986 | |||||||||
Warrant Liabilities | $ | - | $ | - | $ | - | $ | - | |||||||||
Total liability derivatives | $ | - | $ | - | $ | 311,986 | $ | 311,986 | |||||||||
Property_and_equipment_Tables
Property and equipment (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Property and equipment [Abstract] | ' | ||||||||||
Schedule of Property and Equipment | ' | ||||||||||
Property and equipment at September 30, 2013 and December 31, 2012 consist of: | |||||||||||
Average Estimated | September 30, | December 31, | |||||||||
Useful Lives | 2013 | 2012 | |||||||||
Furniture and fixtures | 5 | 287,933 | 269,731 | ||||||||
Computer, communication and network equipment | 10-Mar | 22,655,995 | 17,056,396 | ||||||||
Software | 5 | 6,742,463 | 6,123,371 | ||||||||
Automobiles | 5 | 89,946 | 87,925 | ||||||||
Construction in progress | 3,504,833 | 1,962,315 | |||||||||
Total property and equipment | 33,281,170 | 25,499,738 | |||||||||
Less: accumulated depreciation and amortization | (14,617,763 | ) | (12,411,467 | ) | |||||||
Total property and equipment, Net | $ | 18,663,407 | $ | 13,088,271 | |||||||
Intangible_Assets_Tables
Intangible Assets (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Intangible Assets [Abstract] | ' | ||||||||||||||||||||||||
Schedule of Intangible Assets | ' | ||||||||||||||||||||||||
Intangible assets as of September30, 2013 and December 31, 2012 consisted of the following: | |||||||||||||||||||||||||
Estimated | September 30, | December 31, | |||||||||||||||||||||||
Useful Lives | 2013 | 2012 | |||||||||||||||||||||||
Customer Contracts, Licenses , Interconnect & Technology | 10-May | $ | 13,094,037 | $ | 12,096,592 | ||||||||||||||||||||
ValidSoft IP & Technology | 10-Jan | 15,956,336 | 15,597,814 | ||||||||||||||||||||||
Total intangible assets | 29,050,373 | 27,694,406 | |||||||||||||||||||||||
Less: Accumulated Amortization and impairment charges | (11,251,238 | ) | (10,569,693 | ) | |||||||||||||||||||||
Less: Accumulated Amortization ValidSoft IP & Technology | (8,386,554 | ) | (6,621,687 | ) | |||||||||||||||||||||
Total intangible assets, Net | $ | 9,412,581 | $ | 10,503,026 | |||||||||||||||||||||
Estimated Future Amortization Expense Related to Intangible Assets | ' | ||||||||||||||||||||||||
Estimated future amortization expense related to our intangible assets is: | |||||||||||||||||||||||||
Rest of 2013 | 2014 | 2015 | 2016 | 2017 | 2018 and | ||||||||||||||||||||
thereafter | |||||||||||||||||||||||||
Interconnect licenses and contracts | $ | 162,842 | $ | 470,805 | $ | 150,510 | $ | 16,375 | $ | - | $ | - | |||||||||||||
ValidSoft IP & Technology | 536,309 | 2,145,236 | 2,002,025 | 1,954,287 | 508,448 | 238,369 | |||||||||||||||||||
Total | $ | 699,151 | $ | 2,616,041 | $ | 2,152,535 | $ | 1,970,662 | $ | 508,448 | $ | 238,369 | |||||||||||||
Goodwill_Tables
Goodwill (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Goodwill [Abstract] | ' | ||||||||
Schedule of Goodwill | ' | ||||||||
The carrying value of the Company's goodwill as of September 30, 2013 and as of December 31, 2012 was as follows: | |||||||||
Goodwill | September 30, | December 31, | |||||||
2013 | 2012 | ||||||||
Goodwill at acquisition of ValidSoft Ltd | $ | 3,433,833 | $ | 3,433,833 | |||||
Goodwill Morodo | 214,689 | 214,689 | |||||||
Goodwill Telnicity LLC | 190,401 | - | |||||||
End of period exchange rate translation | (131,020 | ) | (211,791 | ) | |||||
Total | $ | 3,707,903 | $ | 3,436,731 | |||||
Accrued_expenses_Tables
Accrued expenses (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accrued expenses [Abstract] | ' | ||||||||
Accrued Expenses | ' | ||||||||
As of September 30, 2013 and December 31, 2012, the accrued expenses comprised of the following: | |||||||||
September 30, | December | ||||||||
2013 | 31, 2012 | ||||||||
Accrued Selling, General & Administrative expenses | $ | 2,759,617 | $ | 2,175,845 | |||||
Accrued cost of service | 600,898 | 648,958 | |||||||
Accrued taxes (including VAT) | 250,820 | 288,651 | |||||||
Accrued interest payable | 966,890 | 882,181 | |||||||
Accrued capital expenditure liabilities | 1,238,046 | 124,901 | |||||||
Total accrued expenses | $ | 5,816,271 | $ | 4,120,536 | |||||
Loans_Payable_Tables
Loans Payable (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Loans Payable [Abstract] | ' | ||||||||
Loans Payable | ' | ||||||||
Loans payable at September 30, 2013 and December 31, 2012 are summarized as follows: | |||||||||
September | December | ||||||||
30, 2013 | 31, 2012 | ||||||||
Unsecured loan payable | $ | 962,418 | $ | 963,051 | |||||
Total loans payable | $ | 962,418 | $ | 963,051 | |||||
Trade_Note_Payable_Tables
Trade Note Payable (Tables) (Trade Notes Payable [Member]) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Trade Notes Payable [Member] | ' | ||||||||||||||||
Debt Instrument [Line Items] | ' | ||||||||||||||||
Schedule of Trade Notes Payable | ' | ||||||||||||||||
The Company has a number of financing arrangements with its vendors to acquire equipment and licenses. These trade arrangements contain maturity periods ranging from two to three years, and interest rates between 8.65% and Euribor (3M) +1.5% at different foreign exchange rates. | |||||||||||||||||
Payments | Principal | Interest | Total | Outstanding | |||||||||||||
Total Principal as of May 31,2013 | $ | 1,569,921 | |||||||||||||||
Paid until Sep 30, 2013 | $ | 120,123 | $ | 37,268 | $ | 157,391 | 1,449,798 | ||||||||||
Current portion | 775,560 | 89,913 | 865,473 | 674,238 | |||||||||||||
Long term portion | 674,238 | 26,763 | 701,001 | ||||||||||||||
$ | 1,569,921 | $ | 153,944 | $ | 1,723,865 |
Provision_for_Income_taxes_Tab
Provision for Income taxes (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Provision for Income taxes [Abstract] | ' | ||||||||
Schedule of the Provision (Benefit) for Income Taxes | ' | ||||||||
Income tax expense (benefit) for the period ended September 30, 2013 and December 31, 2012 is summarized as follows: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Current: | |||||||||
Federal | $ | - | $ | - | |||||
State | - | - | |||||||
Foreign | 41,500 | 289,136 | |||||||
Deferred: | |||||||||
Federal | - | - | |||||||
State | - | - | |||||||
Foreign | - | $ | - | ||||||
Income tax expense | $ | 41,500 | $ | 289,136 | |||||
Stockholders_equity_Tables
Stockholders' equity (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Stockholders' equity [Abstract] | ' | ||||||||||||||||
Summary of Warrants | ' | ||||||||||||||||
The below table summarizes the warrants outstanding as per September 30, 2013 and closing December 2012: | |||||||||||||||||
Outstanding Warrants | Exercise/ | Expiring | 2013 | 2012 | |||||||||||||
Conversion | |||||||||||||||||
price(s) | |||||||||||||||||
(range) | |||||||||||||||||
Warrants - Acquisitions | $0.63 - $2.25 | 2013 | 957,372 | 3,437,953 | |||||||||||||
Warrants - Fundraising | $0.853 - $2.00 | 2013 - 2018 | 40,773,492 | 46,322,101 | |||||||||||||
Warrants - Other | $ | 2.21 | 2016 | 18,659 | 18,659 | ||||||||||||
41,749,523 | 49,778,713 | ||||||||||||||||
Employee_Benefit_Plan_and_NonQ1
Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan (Tables) | 9 Months Ended | ||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||
2006 Non-Qualified Stock and Option Compensation Plan [Member] | ' | ||||||||||||||||||||||
Summary of Status of Options Outstanding | ' | ||||||||||||||||||||||
Following is a summary of the status of options outstanding at September 30, 2013: | |||||||||||||||||||||||
Options outstanding | Options exercisable | ||||||||||||||||||||||
Range of | Total options | Weighted average | Weighted | Options | Weighted | ||||||||||||||||||
exercise prices | outstanding | remaining contractual | average exercise | exercisable | average exercise | ||||||||||||||||||
life (years) | price | price | |||||||||||||||||||||
$2.25 - $2.65 | 30,000 | 0.11 years | $ | 2.25 | 30,000 | $ | 2.25 | ||||||||||||||||
2008 Long-Term Incentive Plan [Member] | ' | ||||||||||||||||||||||
Reconciliation of Registered and Available Shares and/or Options | ' | ||||||||||||||||||||||
Reconciliation of registered and available shares and/or options as of September 30, 2013: | |||||||||||||||||||||||
Three | Balance | ||||||||||||||||||||||
months | September | ||||||||||||||||||||||
ended | 30, 2013 | ||||||||||||||||||||||
September | |||||||||||||||||||||||
30, 2013 | |||||||||||||||||||||||
Registered 2008 | 5,000,000 | ||||||||||||||||||||||
Registered 2011 | 18,000,000 | ||||||||||||||||||||||
Total Registered under this plan | 23,000,000 | ||||||||||||||||||||||
Shares (issued to): | |||||||||||||||||||||||
Consultants | - | 325,000 | |||||||||||||||||||||
Directors and Officers | - | 1,196,366 | |||||||||||||||||||||
Options exercised | 91,521 | 1,046,588 | |||||||||||||||||||||
Options (movements): | |||||||||||||||||||||||
Issued and Outstanding | (547,075 | ) | 19,523,322 | ||||||||||||||||||||
Available for grant at September 30, 2013: | 908,724 | ||||||||||||||||||||||
Common Stock Purchase Options and Long Term Incentive Plan | ' | ||||||||||||||||||||||
Common stock purchase options consisted of the following as of the nine months ended September 30, 2013 and the years ended December 31, 2012: | |||||||||||||||||||||||
Number of | Weighted | Initial Fair | |||||||||||||||||||||
Options | Average | Market Value | |||||||||||||||||||||
Exercise | (Outstanding | ||||||||||||||||||||||
Price | Options) | ||||||||||||||||||||||
Options: | |||||||||||||||||||||||
Outstanding as of December 31, 2012 | 12,205,717 | $ | 2.15 | $ | 15,316,144 | ||||||||||||||||||
Granted in 2013 | 8,465,680 | $ | 0.89 | $ | 3,490,562 | ||||||||||||||||||
Exercised (with delivery of shares) | (104,521 | ) | $ | 0.63 | $ | (57,296 | ) | ||||||||||||||||
Forfeitures (Pre-vesting) | (637,838 | ) | $ | 1 | $ | (632,733 | ) | ||||||||||||||||
Expirations (Post-vesting) | (390,634 | ) | $ | 2.03 | $ | (794,585 | ) | ||||||||||||||||
Exchanged for Cashless exercise | (15,082 | ) | $ | 0.6 | $ | (7,852 | ) | ||||||||||||||||
Outstanding as of September 30, 2013 | 19,523,322 | $ | 1.62 | $ | 17,314,240 | ||||||||||||||||||
Summary of Status of Options Outstanding and Used Assumptions | ' | ||||||||||||||||||||||
Following is a summary of the status and used assumptions of options outstanding as of the period ended September 30, 2013: | |||||||||||||||||||||||
Plan 2008 | Options outstanding | Options exercisable | |||||||||||||||||||||
Range of | Total options | Weighted average | Weighted | Options | Weighted | ||||||||||||||||||
exercise prices | outstanding | remaining contractual | average exercise | exercisable | average exercise | ||||||||||||||||||
life (years) | price | price | |||||||||||||||||||||
$0.60 - $3.39 | 19,523,322 | 3.91 | $ | 1.62 | 12,695,884 | $ | 1.52 | ||||||||||||||||
Unvested Options | Options expected to vest | ||||||||||||||||||||||
Number of | Forfeiture used | Number of options | Unrecognized stock- | Weighted average remaining | |||||||||||||||||||
options non yet | in this | expected to vest | based compensation | contract life of Total Options | |||||||||||||||||||
vested | reporting | corrected by forfeiture | expense | expected to vest (in years) | |||||||||||||||||||
rate | |||||||||||||||||||||||
6,827,438 | 10.33 | % | 6,122,170 | $ | 3,437,353 | 3.57 | |||||||||||||||||
Weighted average assumptions for 2013 grants: | |||||||||||||||||||||||
Weighted Average Annual Volatility | 80 | % | |||||||||||||||||||||
Weighted Average Cumulative Volatility | 120 | % | |||||||||||||||||||||
Weighted Average Contractual Life (in years) | 3.36 | ||||||||||||||||||||||
Weighted Average Expected Option life (in years) | 2.32 | ||||||||||||||||||||||
Weighted Average Risk Free Interest Rate | 0.29 | % | |||||||||||||||||||||
Dividend yield | 0 | % | |||||||||||||||||||||
Commitments_Tables
Commitments (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Commitments [Abstract] | ' | ||||||||||||||||||||||||
Schedule of Commitments of the Company | ' | ||||||||||||||||||||||||
Commitments of the Company relating to co-location, network and office rents, regulatory, interconnection fees and interest payments are as follows: | |||||||||||||||||||||||||
Year | Office | Co-location | Interconnect | Network, Service & | Capital | Total | |||||||||||||||||||
Support | Expenditures | ||||||||||||||||||||||||
2013 | $ | 155,452 | 388,371 | 623,134 | 336,021 | 402,012 | $ | 1,904,990 | |||||||||||||||||
2014 | 210,855 | 377,117 | 380,881 | 84,272 | - | 1,053,124 | |||||||||||||||||||
2015 | 101,526 | 247,356 | 90,203 | 80,180 | - | 519,264 | |||||||||||||||||||
2016 | 23,042 | 78,397 | 12,732 | 40,457 | - | 154,629 | |||||||||||||||||||
2017 | 25,161 | - | 4,244 | - | - | 29,405 | |||||||||||||||||||
$ | 3,661,412 | ||||||||||||||||||||||||
Noncontrolling_Interest_Tables
Non-controlling Interest (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Non-controlling Interest [Abstract] | ' | ||||||||||||
Schedule of Non-controlling Interests | ' | ||||||||||||
The Company had non-controlling interests in several of its subsidiaries. The subsidiaries with a positive balance of the non-controlling interests as of September 30, 2013 and December 31, 2012 were as follows: | |||||||||||||
Non-controlling interest Balance at | |||||||||||||
Subsidiary | Non-controlling Interest % | 30-Sep-13 | 31-Dec-12 | ||||||||||
ETC PRS UK | 49 | % | $ | 9,685 | $ | 9,434 | |||||||
ETC PRS Netherlands | 49 | % | 132,504 | 126,013 | |||||||||
ET Bahrain WLL | 1 | % | - | 3,438 | |||||||||
ET ME&A FZ LLC | 49.46 | % | 36,931 | 37,091 | |||||||||
Total | $ | 179,119 | $ | 175,976 | |||||||||
Geographic_Information_Tables
Geographic Information (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Geographic Information [Abstract] | ' | ||||||||||||
Schedule of Revenues and Assets by Geographic Area | ' | ||||||||||||
Nine months ended September 30, 2013 | |||||||||||||
Europe | Other foreign countries | Total | |||||||||||
Revenues from unaffiliated customers | $ | 15,542,781 | $ | 1,252,846 | $ | 16,795,627 | |||||||
Identifiable assets | $ | 31,428,900 | $ | 15,024,046 | $ | 46,452,946 | |||||||
Nine months ended September 30, 2012 | |||||||||||||
Europe | Other foreign countries | Total | |||||||||||
Revenues from unaffiliated customers | $ | 22,239,695 | $ | 125,623 | $ | 22,365,318 | |||||||
Identifiable assets | $ | 36,619,280 | $ | 5,941,483 | $ | 42,560,763 | |||||||
Description_of_Business_Basis_1
Description of Business, Basis of Presentation and Principles of Consolidation (Details) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||||||||||||
Sep. 30, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
USD ($) | EUR (€) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Elephant Talk Communications PRS U.K. Limited [Member] | Elephant Talk United Telecommunication Services N.V. [Member] | Elephant Talk Communications Premium Rate Services Netherlands B.V. [Member] | Elephant Talk Middle East & Africa (Holding) W.L.L. [Member] | Elephant Talk Middle East & Africa (Holding) Jordan L.L.C. [Member] | Elephant Talk Middle East & Africa Bahrain W.L.L. [Member] | Elephant Talk Middle East & Africa FZ-LLC [Member] | Elephant Talk Telecomunicacao do Brasil LTDA [Member] | Elephant Talk Telecomunicacao do Brasil LTDA [Member] | |
Elephant Talk Europe Holding B.V. [Member] | Elephant Talk Communication Holding AG [Member] | ||||||||||||||||
Proceeds from financing | ' | ' | ' | $21,473,590 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from Share Purchase Agreement - Registered direct | ' | ' | 12,000,000 | ' | 7,500,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from Share Purchase Agreement - Unregistered securities | ' | ' | 225,000 | ' | 225,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from short-term loans | ' | ' | 1,290,790 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fundraising related costs | ' | ' | ' | 1,362,124 | 0 | 79,643 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net proceeds from financing | ' | ' | ' | 20,111,466 | 20,111,466 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Payments to extinguish 8% senior secured convertible debt | ' | ' | ' | ' | 7,747,933 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | 6,085,215 | ' | ' | 6,085,215 | 6,085,215 | 4,344,438 | 1,233,268 | 6,009,576 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from issuance of convertible debt | 7,957,800 | 6,000,000 | ' | ' | 0 | 8,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from exercise of warrants | $78,971 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ownership percentage | ' | ' | ' | ' | ' | ' | ' | ' | 51.00% | 51.00% | 51.00% | 60.00% | 100.00% | 99.00% | 50.54% | 90.00% | 10.00% |
Significant_Accounting_Policie3
Significant Accounting Policies (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' |
Accumulated other comprehensive income (loss) | ($242,647) | ' | ($242,647) | ' | ($732,090) |
Foreign currency translation gain (loss) | 489,443 | 594,468 | -807,208 | -315,226 | ' |
Accounts receivable, allowance for doubtful accounts | $25,225 | ' | $25,225 | ' | $559,120 |
Options granted vesting period | ' | ' | '3 years | ' | ' |
Minimum [Member] | ' | ' | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' |
Expected useful lives of intangible assets | ' | ' | '3 years | ' | ' |
Maximum [Member] | ' | ' | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' |
Expected useful lives of intangible assets | ' | ' | '10 years | ' | ' |
Significant_Accounting_Policie4
Significant Accounting Policies (Schedule of Fair Value Measurements) (Details) (Fair Value, Measurements, Recurring [Member], USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Liability Derivatives | ' | ' |
Liability derivatives | $4,116,480 | $311,986 |
Conversion Feature [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | ' | 311,986 |
Warrant [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | 4,116,480 | ' |
Fair Value, Inputs, Level 1 [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | ' | ' |
Fair Value, Inputs, Level 1 [Member] | Conversion Feature [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | ' | ' |
Fair Value, Inputs, Level 1 [Member] | Warrant [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | ' | ' |
Fair Value, Inputs, Level 2 [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | ' | ' |
Fair Value, Inputs, Level 2 [Member] | Conversion Feature [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | ' | ' |
Fair Value, Inputs, Level 2 [Member] | Warrant [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | ' | ' |
Fair Value, Inputs, Level 3 [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | 4,116,480 | 311,986 |
Fair Value, Inputs, Level 3 [Member] | Conversion Feature [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | ' | 311,986 |
Fair Value, Inputs, Level 3 [Member] | Warrant [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | $4,116,480 | ' |
Prepaid_expenses_and_other_cur1
Prepaid expenses and other current assets (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 |
Prepaid expenses and other current assets [Abstract] | ' | ' | ' |
Prepaid expenses and other current assets | $2,531,602 | $1,821,218 | $1,662,776 |
Prepaid value added tax | $962,619 | $534,327 | $701,326 |
Other_assets_Details
Other assets (Details) | 9 Months Ended | 9 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Aug. 17, 2013 | Aug. 17, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Aug. 28, 2013 | Aug. 28, 2013 | |
USD ($) | USD ($) | USD ($) | Convertible Note One [Member] | Convertible Note One [Member] | Convertible Note One [Member] | Convertible Note One [Member] | Convertible Note Two [Member] | Convertible Note Two [Member] | Convertible Note Two [Member] | Convertible Note Two [Member] | |
USD ($) | EUR (€) | USD ($) | EUR (€) | USD ($) | EUR (€) | USD ($) | EUR (€) | ||||
Other assets [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other assets, noncurrent | $1,382,857 | $1,038,306 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other assets | 133,285 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, principal amount | ' | ' | ' | 2,652,600 | 2,000,000 | 2,652,600 | 2,000,000 | 5,305,200 | 4,000,000 | 5,305,200 | 4,000,000 |
Debt, interest rate | ' | ' | ' | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% |
Fixed commission rate | ' | ' | ' | 8.00% | 8.00% | ' | ' | 8.00% | 8.00% | ' | ' |
Debt issuance costs | 636,624 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term deposits | 657,024 | 657,192 | 638,339 | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred financing cost, net | $592,548 | $381,114 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Property_and_equipment_Details
Property and equipment (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
Furniture and Fixtures [Member] | Computer, Communication and Network Equipment [Member] | Computer, Communication and Network Equipment [Member] | Software [Member] | Automobiles [Member] | ||||
Minimum [Member] | Maximum [Member] | |||||||
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Average Estimated Useful Lives | ' | ' | ' | '5 years | '3 years | '10 years | '5 years | '5 years |
Furniture and fixtures | $287,933 | ' | $269,731 | ' | ' | ' | ' | ' |
Computer, communication and network equipment | 22,655,995 | ' | 17,056,396 | ' | ' | ' | ' | ' |
Software | 6,742,463 | ' | 6,123,371 | ' | ' | ' | ' | ' |
Automobiles | 89,946 | ' | 87,925 | ' | ' | ' | ' | ' |
Construction in progress | 3,504,833 | 2,409,199 | 1,962,315 | ' | ' | ' | ' | ' |
Total property and equipment | 33,281,170 | ' | 25,499,738 | ' | ' | ' | ' | ' |
Less: accumulated depreciation and amortization | -14,617,763 | ' | -12,411,467 | ' | ' | ' | ' | ' |
Total property and equipment, Net | $18,663,407 | ' | $13,088,271 | ' | ' | ' | ' | ' |
Property_and_equipment_Additio
Property and equipment (Additional Information) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | Dec. 31, 2012 | |
Property and equipment [Abstract] | ' | ' | ' | ' | ' | ' |
Depreciation and amortization expense | $818,025 | $599,446 | $2,411,800 | $1,744,999 | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' | ' |
Construction in progress | 3,504,833 | ' | 3,504,833 | ' | 2,409,199 | 1,962,315 |
Construction in Progress [Member] | ' | ' | ' | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' | ' |
Increase in capitalization | $1,095,634 | ' | ' | ' | ' | ' |
Percentage increase in fixed assets | 45.00% | ' | ' | ' | ' | ' |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 |
Minimum [Member] | Maximum [Member] | Customer Contracts, Licenses, Interconnect & Technology [Member] | Customer Contracts, Licenses, Interconnect & Technology [Member] | Customer Contracts, Licenses, Interconnect & Technology [Member] | Customer Contracts, Licenses, Interconnect & Technology [Member] | ValidSoft IP & Technology [Member] | ValidSoft IP & Technology [Member] | ValidSoft IP & Technology [Member] | ValidSoft IP & Technology [Member] | |||
Minimum [Member] | Maximum [Member] | Minimum [Member] | Maximum [Member] | |||||||||
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected useful lives of intangible assets | ' | ' | '3 years | '10 years | ' | ' | '5 years | '10 years | ' | ' | '1 year | '10 years |
Intangible assets | $29,050,373 | $27,694,406 | ' | ' | $13,094,037 | $12,096,592 | ' | ' | $15,956,336 | $15,597,814 | ' | ' |
Less: Accumulated Amortization and impairment charges | ' | ' | ' | ' | -11,251,238 | -10,569,693 | ' | ' | -8,386,554 | -6,621,687 | ' | ' |
Total intangible assets, Net | $9,412,581 | $10,503,026 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible_Assets_Additional_I
Intangible Assets (Additional Information) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Intangible Assets [Abstract] | ' | ' | ' | ' |
Amortization Expense | $725,662 | $663,691 | $2,288,106 | $2,021,495 |
Intangible_Assets_Estimated_Fu
Intangible Assets (Estimated Future Amortization Expense Related to Intangible Assets) (Details) (USD $) | Sep. 30, 2013 |
Finite-Lived Intangible Assets [Line Items] | ' |
Rest of 2013 | $699,151 |
2014 | 2,616,041 |
2015 | 2,152,535 |
2016 | 1,970,662 |
2017 | 508,448 |
2018 and thereafter | 238,369 |
Customer Contracts Licenses Interconnect And Technology [Member] | ' |
Finite-Lived Intangible Assets [Line Items] | ' |
Rest of 2013 | 162,842 |
2014 | 470,805 |
2015 | 150,510 |
2016 | 16,375 |
2017 | ' |
2018 and thereafter | ' |
Valid Soft Ip And Technology [Member] | ' |
Finite-Lived Intangible Assets [Line Items] | ' |
Rest of 2013 | 536,309 |
2014 | 2,145,236 |
2015 | 2,002,025 |
2016 | 1,954,287 |
2017 | 508,448 |
2018 and thereafter | $238,369 |
Telnicity_asset_purchase_agree1
Telnicity asset purchase agreement (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Apr. 02, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 02, 2013 | Apr. 02, 2013 | Apr. 02, 2013 |
Telnicity LLC [Member] | Telnicity LLC [Member] | Telnicity LLC [Member] | Telnicity LLC [Member] | Telnicity LLC [Member] | Telnicity LLC [Member] | Telnicity LLC [Member] | Telnicity LLC [Member] | |||
Minimum [Member] | Maximum [Member] | Relationship with Customers [Member] | Relationships with Carriers [Member] | Technology and Intellectual Property [Member] | ||||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares | ' | ' | 1,000,000 | ' | ' | ' | ' | ' | ' | ' |
Fair value (share price at April 1, 2013) | ' | ' | $1.18 | ' | ' | ' | ' | ' | ' | ' |
Total Consideration Paid | ' | ' | $1,180,000 | ' | ' | ' | ' | ' | ' | ' |
Intangible assets acquired | ' | ' | ' | ' | ' | ' | ' | 218,598 | 366,112 | 404,888 |
Goodwill | $3,707,903 | $3,436,731 | $190,401 | $190,401 | ' | ' | ' | ' | ' | ' |
Useful lives of acquired intangibles | ' | ' | ' | ' | ' | '3 years | '5 years | ' | ' | ' |
Goodwill_Details
Goodwill (Details) (USD $) | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Apr. 02, 2013 | Dec. 31, 2012 | |
ValidSoft Ltd [Member] | ValidSoft Ltd [Member] | Morodo Ltd. [Member] | Morodo Ltd. [Member] | Telnicity LLC [Member] | Telnicity LLC [Member] | Telnicity LLC [Member] | |||
Goodwill [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
End of period exchange rate translation | ($131,020) | ($211,791) | ' | ' | ' | ' | ' | ' | ' |
Goodwill | 3,707,903 | 3,436,731 | 3,433,833 | 3,433,833 | 214,689 | 214,689 | 190,401 | 190,401 | ' |
Market capitalization | 93,500,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Carrying value of reporting unit | 26,500,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Difference between the fair value and carrying value of reporting unit | $67,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Overdraft_Details
Overdraft (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | |
Short-term Debt [Line Items] | ' | ' |
Overdraft | $380,550 | $350,114 |
Elephant Talk Ltd [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Overdraft | $380,550 | $350,114 |
Bank interest rate above prime rate | 2.00% | ' |
Bank interest rate above prime rate upon default | 6.00% | ' |
Deferred_Revenue_Details
Deferred Revenue (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Deferred Revenue [Abstract] | ' | ' |
Deferred Revenue | $428,473 | $252,551 |
Accrued_expenses_Details
Accrued expenses (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Accrued expenses [Abstract] | ' | ' |
Accrued Selling, General & Administrative expenses | $2,759,617 | $2,175,845 |
Accrued cost of service | 600,898 | 648,958 |
Accrued taxes (including VAT) | 250,820 | 288,651 |
Accrued interest payable | 966,890 | 882,181 |
Accrued capital expenditure liabilities | 1,238,046 | 124,901 |
Total accrued expenses | 5,816,271 | 4,120,536 |
Provision for income taxes | $41,500 | ' |
Loans_Payable_Details
Loans Payable (Details) (USD $) | 0 Months Ended | ||
Dec. 14, 2011 | Sep. 30, 2013 | Dec. 31, 2012 | |
Debt Instrument [Line Items] | ' | ' | ' |
Loans payable | ' | $962,418 | $963,051 |
Potential loss from default on bank loans and overdraft account that are still in litigation | ' | 1,933,308 | ' |
Litigation awarded value | 5,925 | ' | ' |
Unsecured Debt [Member] | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Loans payable | ' | $962,418 | $963,051 |
10_Convertible_Note_1_Details
10% Convertible Note - 1 (Details) (Convertible Note One [Member]) | 0 Months Ended | 9 Months Ended | ||
Aug. 17, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Aug. 17, 2013 | |
USD ($) | USD ($) | EUR (€) | EUR (€) | |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Debt instrument, principal amount | $2,652,600 | $2,652,600 | € 2,000,000 | € 2,000,000 |
Debt, interest rate | 10.00% | 10.00% | ' | ' |
Deb instrument, earliest conversion date | 17-Aug-13 | ' | ' | ' |
Debt instrument, conversion price | $0.89 | ' | ' | ' |
Number of shares covered by warrants | 1,000,000 | ' | ' | ' |
Warrants, exercisable date | 17-Feb-14 | ' | ' | ' |
Shares issued in connection with warrant exercises, price per share | 0.887 | ' | ' | ' |
Term of warrant | '5 years | ' | ' | ' |
Discount on debt | 1,535,656 | 1,373,362 | ' | ' |
Fair market value of conversion feature | 1,132,404 | ' | ' | ' |
Amortization of debt conversion feature | ' | 120,560 | ' | ' |
Unamortized portion of Beneficial Conversion Feature | ' | $1,011,844 | ' | ' |
10_Convertible_Note_2_Details
10% Convertible Note - 2 (Details) (Convertible Note Two [Member]) | 0 Months Ended | |||
Aug. 28, 2013 | Aug. 28, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
USD ($) | EUR (€) | USD ($) | EUR (€) | |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Debt instrument, principal amount | $5,305,200 | € 4,000,000 | $5,305,200 | € 4,000,000 |
Debt, interest rate | 10.00% | 10.00% | 10.00% | 10.00% |
Debt instrument, maturity date | 28-Aug-15 | 28-Aug-15 | ' | ' |
Deb instrument, earliest conversion date | 28-Aug-13 | 28-Aug-13 | ' | ' |
Debt instrument, conversion price | $0.89 | ' | ' | ' |
Number of shares covered by warrants | 2,000,000 | 2,000,000 | ' | ' |
Warrants, exercisable date | 28-Feb-14 | 28-Feb-14 | ' | ' |
Shares issued in connection with warrant exercises, price per share | 0.887 | 0.887 | ' | ' |
Term of warrant | '5 years | '5 years | ' | ' |
Discount on debt | $864,394 | ' | $827,421 | ' |
Conversion_and_Termination_of_1
Conversion and Termination of Loan Agreement (Details) | 3 Months Ended | 9 Months Ended | 0 Months Ended | ||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Jul. 14, 2013 | 24-May-13 | 24-May-13 | |
USD ($) | USD ($) | USD ($) | USD ($) | Unsecured Loan from Affiliate [Member] | Unsecured Loan from Affiliate [Member] | Unsecured Loan from Affiliate [Member] | |
USD ($) | USD ($) | EUR (€) | |||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, principal amount | ' | ' | ' | ' | ' | ' | € 1,000,000 |
Debt, interest rate | ' | ' | ' | ' | ' | 12.00% | 12.00% |
Number of shares covered by warrants | ' | ' | ' | ' | ' | 1,253,194 | 1,253,194 |
Warrant exercise price | ' | ' | ' | ' | ' | 1.03 | 1.03 |
Term of warrant | ' | ' | ' | ' | ' | '5 years | '5 years |
Term allowing put of warrant | ' | ' | ' | ' | ' | '12 months | '12 months |
Share price requiring warrant exercise | ' | ' | ' | ' | ' | $1.55 | ' |
Number of consecutive trading days | ' | ' | ' | ' | ' | '10 days | '10 days |
Debt conversion, shares issued | ' | ' | ' | ' | 1,840,631 | ' | ' |
Debt instrument, conversion price | ' | ' | ' | ' | $0.71 | ' | ' |
Loss on extinguishment of debt | ($44,506) | ' | ($1,983,103) | ' | ($44,506) | ' | ' |
8_Senior_Secured_Convertible_N1
8% Senior Secured Convertible Note (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 11, 2013 | |
Convertible 8.0% Senior Notes Installment [Member] | |||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' |
Debt purchase price, percentage | ' | ' | ' | ' | 110.00% |
Debt purchase price | ' | ' | ' | ' | $6,701,824 |
Amortization of original issue discount | ' | ' | ' | ' | 349,639 |
Amortization of debt conversion feature | ' | ' | ' | ' | 1,179,732 |
Write off of remaining financing costs | ' | ' | ' | ' | 310,995 |
Fair market value of conversion feature | ' | ' | ' | ' | 451,779 |
Purchase price surplus | ' | ' | ' | ' | 10.00% |
Prepayment fee | ' | ' | ' | ' | 607,538 |
Loss on Extinguishment of Debt | ($44,506) | ' | ($1,983,103) | ' | ($1,938,597) |
Registered_Direct_Offering_and1
Registered Direct Offering and Warrant liabilities (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jun. 11, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Class of Stock [Line Items] | ' | ' | ' | ' | ' |
Gross proceeds of SPA | ' | ' | $12,000,000 | ' | ' |
Net proceeds of SPA | ' | ' | 11,292,500 | ' | ' |
Fundraising related expenses | 707,500 | ' | 1,362,124 | 0 | ' |
Shares issued per SPA | ' | ' | 17,425,621 | ' | ' |
Number of warrants issued | ' | 3,000,000 | ' | ' | ' |
Warrant liabilities | ' | 4,116,480 | 4,116,480 | ' | ' |
Value covered by registration statement filing | ' | 75,000,000 | 75,000,000 | ' | ' |
Number of warrants exercised | ' | ' | 5,781,597 | ' | ' |
Shares issued in connection with warrant exercises | ' | ' | 1,493,667 | ' | ' |
Investors [Member] | ' | ' | ' | ' | ' |
Class of Stock [Line Items] | ' | ' | ' | ' | ' |
Number of warrants issued | ' | ' | 7,841,537 | ' | ' |
Warrant liabilities | ' | 4,116,480 | 4,116,480 | ' | ' |
Term of warrant | ' | ' | '5 years | ' | ' |
Warrant exercise price | ' | 0.887 | 0.887 | ' | ' |
Term allowing put of warrant | ' | ' | '90 days | ' | ' |
Percentage of trading price requiring exercise of warrants | ' | ' | 20.00% | ' | ' |
Number of consecutive trading days | ' | ' | '20 days | ' | ' |
Average daily trading volume | ' | $350,000 | $350,000 | ' | ' |
Number of warrants exercised | ' | 1,587,703 | ' | ' | ' |
Shares issued in connection with warrant exercises | ' | 1,340,697 | 1,340,697 | ' | ' |
Placement Agent [Member] | ' | ' | ' | ' | ' |
Class of Stock [Line Items] | ' | ' | ' | ' | ' |
Warrants issued to placement agent | ' | ' | 183,284 | ' | ' |
Warrant exercise price | ' | 0.853 | 0.853 | ' | ' |
Trade_Note_Payable_Details
Trade Note Payable (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
Accounts Payable [Member] | Borrowings [Member] | Trade Notes Payable [Member] | Trade Notes Payable [Member] | Trade Notes Payable [Member] | Trade Notes Payable [Member] | Trade Notes Payable [Member] | Trade Notes Payable [Member] | Trade Notes Payable [Member] | |
Scenario, Forecast [Member] | Minimum [Member] | Maximum [Member] | Principal Obligation [Member] | Interest Obligation [Member] | |||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total Principal as of May 31, 2013 | ' | ' | $1,449,798 | $1,569,921 | $674,238 | ' | ' | ' | ' |
Paid until Sep 30, 2013 | ' | ' | 157,391 | ' | ' | ' | ' | 120,123 | 37,268 |
Current portion | ' | ' | 865,473 | ' | ' | ' | ' | 775,560 | 89,913 |
Long term portion | ' | ' | 701,001 | ' | ' | ' | ' | 674,238 | 26,763 |
Total | ' | ' | 1,723,865 | ' | ' | ' | ' | 1,569,921 | 153,944 |
Interest rate for loans, minimum | ' | ' | 8.65% | ' | ' | ' | ' | ' | ' |
Loan payable, interest rate spread | ' | ' | 1.50% | ' | ' | ' | ' | ' | ' |
Maturity period | ' | ' | ' | ' | ' | '2 years | '3 years | ' | ' |
Liability, including foreign currency effect | $804,825 | $593,903 | ' | ' | ' | ' | ' | ' | ' |
Loan_from_joint_venture_partne1
Loan from joint venture partner (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Related Party Transaction [Line Items] | ' | ' |
Loan from related party | $590,165 | $555,907 |
Elephant Talk United Telecommunication Services N.V. [Member] | ' | ' |
Related Party Transaction [Line Items] | ' | ' |
Loan from related party | $590,165 | $555,907 |
Stated interest per annum | 8.00% | ' |
Ownership percentage | 51.00% | ' |
Ownership percentage by noncontrolling shareholders | 49.00% | ' |
Provision_for_Income_taxes_Det
Provision for Income taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Income Tax Contingency [Line Items] | ' | ' | ' | ' | ' |
Foreign tax contingencies | $289,136 | ' | $289,136 | ' | ' |
Current: | ' | ' | ' | ' | ' |
Federal | ' | ' | ' | ' | ' |
State | ' | ' | ' | ' | ' |
Foreign | ' | ' | 41,500 | ' | 289,136 |
Deferred: | ' | ' | ' | ' | ' |
Federal | ' | ' | ' | ' | ' |
State | ' | ' | ' | ' | ' |
Foreign | ' | ' | ' | ' | ' |
Income tax expense | $41,500 | $94,887 | $41,500 | $192,175 | $289,136 |
Minimum [Member] | ' | ' | ' | ' | ' |
Income Tax Contingency [Line Items] | ' | ' | ' | ' | ' |
Applicable statutory rate | ' | ' | 0.00% | ' | ' |
Maximum [Member] | ' | ' | ' | ' | ' |
Income Tax Contingency [Line Items] | ' | ' | ' | ' | ' |
Applicable statutory rate | ' | ' | 40.00% | ' | ' |
Stockholders_equity_Narrative_
Stockholders' equity (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | ||||
Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 02, 2013 | Sep. 30, 2013 | |
Investors [Member] | Investors [Member] | Non Affiliate Investors [Member] | Validsoft Ltd [Member] | Morodo Limited [Member] | Telnicity LLC [Member] | Telnicity LLC [Member] | ||||
Common Stock: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares authorized | 250,000,000 | 250,000,000 | 250,000,000 | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares issued | 134,440,221 | 134,440,221 | 111,918,386 | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares outstanding | 134,440,221 | 134,440,221 | 111,918,386 | ' | ' | ' | ' | ' | ' | ' |
Common stock, increase in shares issued during the period | ' | 24,881,397 | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued per SPA | ' | 17,425,621 | ' | ' | ' | 250,000 | ' | ' | ' | ' |
Shares issued in connection with warrant exercises | ' | 1,493,667 | ' | 1,340,697 | 1,340,697 | ' | ' | ' | ' | ' |
Number of warrants exercised | ' | 5,781,597 | ' | 1,587,703 | ' | ' | ' | ' | ' | ' |
Shares issued for non cash compensation of management and board | ' | 606,260 | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued for employee stock option exercises | ' | 74,521 | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued for settlement agreement with a former landlord | ' | 400,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued for consultancy services | ' | 200,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued for debt conversion | ' | 1,840,631 | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued for acquisitions | ' | 1,250,000 | ' | ' | ' | ' | ' | 250,000 | ' | 1,000,000 |
Number of shares issued according to Stock Transfer Agent | ' | 139,604,603 | ' | ' | ' | ' | ' | ' | ' | ' |
Unreturned shares from 'cancelled' acquisitions (pre-2006) | ' | 233,900 | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued under Employee benefits plan (Treasury shares) | ' | 12,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Contingent shares, acquisition of ValidSoft | ' | ' | ' | ' | ' | ' | 2,558,938 | ' | 1,000,000 | ' |
Preferred Stock: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, par or stated value per share | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of warrants expired | 1,047,239 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of warrants issued | 3,000,000 | ' | ' | ' | 7,841,537 | ' | ' | ' | ' | ' |
Number of warrants cancelled | 1,253,194 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stockholders_equity_Schedule_o
Stockholders' equity (Schedule of Warrants) (Details) | 9 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | |
Class of Warrant or Right [Line Items] | ' | ' |
Warrants | 41,749,523 | 49,778,713 |
Weighted Average [Member] | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' |
Exercise/ Conversion price(s) (range) | 1.16 | ' |
Warrants - Acquisitions [Member] | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' |
Expiring | 31-Dec-13 | ' |
Warrants | 957,372 | 3,437,953 |
Warrants - Acquisitions [Member] | Minimum [Member] | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' |
Exercise/ Conversion price(s) (range) | 0.63 | ' |
Warrants - Acquisitions [Member] | Maximum [Member] | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' |
Exercise/ Conversion price(s) (range) | 2.25 | ' |
Warrants - Fundraising [Member] | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' |
Warrants | 40,773,492 | 46,322,101 |
Warrants - Fundraising [Member] | Minimum [Member] | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' |
Exercise/ Conversion price(s) (range) | 0.853 | ' |
Expiring | 1-Jan-13 | ' |
Warrants - Fundraising [Member] | Maximum [Member] | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' |
Exercise/ Conversion price(s) (range) | 2 | ' |
Expiring | 31-Dec-18 | ' |
Warrants - Other [Member] | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' |
Exercise/ Conversion price(s) (range) | 2.21 | ' |
Expiring | 31-Dec-16 | ' |
Warrants | 18,659 | 18,659 |
Employee_Benefit_Plan_and_NonQ2
Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan (2006 Non-Qualified Stock and Option Compensation Plan) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
2006 Non-Qualified Stock and Option Compensation Plan [Member] | 2006 Non-Qualified Stock and Option Compensation Plan [Member] | 2006 Non-Qualified Stock and Option Compensation Plan [Member] | 2006 Non-Qualified Stock and Option Compensation Plan [Member] | |||||
Employee Stock Option [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Total Options Outstanding | ' | ' | ' | ' | 30,000 | ' | 30,000 | ' |
Remaining shares available for grant | ' | ' | ' | ' | 183,685 | ' | 183,685 | 59,490 |
Options granted vesting period | ' | ' | '3 years | ' | ' | ' | '3 years | ' |
Options expiration period | ' | ' | ' | ' | ' | ' | '2 years | ' |
Stock options outstanding expiration year | ' | ' | ' | ' | '2013 | ' | '2013 | ' |
Shares issued | ' | ' | ' | ' | 180,368 | 235,947 | ' | ' |
Options expired | ' | ' | ' | ' | ' | ' | 45,000 | ' |
Non-cash compensation to officers, directors and employees | $1,233,165 | $1,709,403 | $5,639,124 | $4,940,131 | $261,194 | ' | $261,194 | ' |
Stock-based awards granted to employees, not yet expensed | ' | ' | ' | ' | $0 | ' | $0 | ' |
Employee_Benefit_Plan_and_NonQ3
Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan (Summary of Status of Options Outstanding 2006 Non Qualified Stock and Option Compensation Plan) (Details) (2006 Non-Qualified Stock and Option Compensation Plan [Member], USD $) | 9 Months Ended |
Sep. 30, 2013 | |
2006 Non-Qualified Stock and Option Compensation Plan [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Range of exercise prices, minimum | $2.25 |
Range of exercise prices, maximum | $2.65 |
Total Options Outstanding | 30,000 |
Weighted average remaining contractual life (years) | '1 month 10 days |
Options exercisable | 30,000 |
Weighted average exercise price | $2.25 |
Employee_Benefit_Plan_and_NonQ4
Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan (2008 Long-Term Incentive Plan) (Details) (USD $) | 0 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | |||
Jun. 11, 2008 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Oct. 06, 2011 | Jan. 15, 2008 | Sep. 30, 2013 | Sep. 30, 2013 | |
Directors And Officers [Member] | Directors And Officers [Member] | Consultant [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | |||
Minimum [Member] | Maximum [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total Options Outstanding | ' | ' | ' | ' | ' | 19,523,322 | 12,205,717 | ' | ' | ' | ' |
Options granted vesting period | ' | '3 years | ' | ' | ' | '3 years | ' | ' | ' | ' | ' |
Options expiration period | ' | ' | ' | ' | ' | ' | ' | ' | ' | '2 years | '10 years |
Stock-based awards granted to employees, not yet expensed | ' | ' | ' | ' | ' | $3,437,353 | ' | ' | ' | ' | ' |
Number of shares authorized | ' | 23,000,000 | ' | ' | ' | ' | ' | 23,000,000 | 5,000,000 | ' | ' |
Stock split ratio | 0.04 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued | ' | ' | ' | 189,945 | ' | ' | ' | ' | ' | ' | ' |
Shares issued since inception of plan | ' | ' | 1,196,366 | 1,196,366 | 325,000 | ' | ' | ' | ' | ' | ' |
Granted | ' | ' | ' | ' | ' | $0.89 | ' | ' | ' | ' | ' |
Forfeiture rate used for this period ending | ' | ' | ' | ' | ' | 10.33% | 10.67% | ' | ' | ' | ' |
Employee_Benefit_Plan_and_NonQ5
Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan (Reconciliation of Registered and Available Shares and or Options) (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Number of shares authorized | 23,000,000 | 23,000,000 |
Increase (decrease) in option shares outstanding | -547,075 | ' |
Options exercised | 91,521 | ' |
Total options exercised since inception of plan | 1,046,588 | 1,046,588 |
Total options outstanding since inception of plan | 19,523,322 | 19,523,322 |
Total options available for grant | 908,724 | 908,724 |
Consultant [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Shares issued | ' | ' |
Shares issued since inception of plan | 325,000 | 325,000 |
Directors And Officers [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Shares issued | ' | 189,945 |
Shares issued since inception of plan | 1,196,366 | 1,196,366 |
Registered 2008 [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Number of shares authorized | 5,000,000 | 5,000,000 |
Registered 2011 [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Number of shares authorized | 18,000,000 | 18,000,000 |
Employee_Benefit_Plan_and_NonQ6
Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan (Common Stock Purchase Options, 2008 Long Term Incentive Plan) (Details) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Number of options | ' |
Exercised (with delivery of shares) | -74,521 |
2008 Long-Term Incentive Plan [Member] | ' |
Number of options | ' |
Beginning Balance | 12,205,717 |
Granted | 8,465,680 |
Exercised (with delivery of shares) | -104,521 |
Forfeitures (Pre-vesting) | -637,838 |
Expirations (Post-vesting) | -390,634 |
Exchanged for Cashless exercise | -15,082 |
Ending Balance | 19,523,322 |
Average Exercise Price | ' |
Beginning Balance | 2.15 |
Granted | 0.89 |
Exercised (with delivery of shares) | 0.63 |
Forfeitures (Pre-vesting) | 1 |
Expirations (Post-vesting) | 2.03 |
Exchanged for cashless exercise | 0.6 |
Ending Balance | 1.62 |
Initial Fair Market Value | ' |
Beginning Balance | 15,316,144 |
Granted | 3,490,562 |
Exercised (with delivery of shares) | -57,296 |
Forfeitures (Pre-vesting) | -632,733 |
Expirations (Post-vesting) | -794,585 |
Exchanged for Cashless exercise | -7,852 |
Ending Balance | 17,314,240 |
Employee_Benefit_Plan_and_NonQ7
Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan (Summary of Status of Options Outstanding, 2008 Long Term Incentive Plan) (Details) (2008 Long-Term Incentive Plan [Member], USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
2008 Long-Term Incentive Plan [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Range of exercise prices, minimum | $0.60 | ' |
Range of exercise prices, maximum | $3.39 | ' |
Options Outstanding | ' | ' |
Total options outstanding | 19,523,322 | 12,205,717 |
Weighted average remaining contractual life (years) | '3 years 10 months 28 days | ' |
Weighted average exercise price | $1.62 | $2.15 |
Options Exercisable | ' | ' |
Options exercisable | 12,695,884 | ' |
Weighted average exercise price | $1.52 | ' |
Unvested Options | ' | ' |
Number of options not yet vested | 6,827,438 | ' |
Forfeiture rate used for this period ending | 10.33% | 10.67% |
Options expected to vest | ' | ' |
Number of options expected to vest corrected by forfeiture rate | 6,122,170 | ' |
Unrecognized stock-based compensation expense | $3,437,353 | ' |
Weighted average remaining contract life of Total Options expected to vest (in years) | '3 years 6 months 26 days | ' |
Weighted average assumptions for 2013 grants: | ' | ' |
Weighted Average Annual Volatility | 80.00% | ' |
Weighted Average Cumulative Volatility | 120.00% | ' |
Weighted Average Contractual Life (in years) | '3 years 4 months 10 days | ' |
Weighted Average Expected Option life (in years) | '2 years 3 months 26 days | ' |
Weighted Average Risk Free Interest Rate | 0.29% | ' |
Dividend yield | 0.00% | ' |
Employee_Benefit_Plan_and_NonQ8
Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan (2013 Additional Equity Plan Awards) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Oct. 06, 2011 | Jan. 15, 2008 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | |||||
Executive Officers [Member] | Scenario, Plan [Member] | Conditional Options One [Member] | Conditional Options Two [Member] | Conditional Options [Member] | ||||||||
Executive Officers [Member] | Executive Officers [Member] | Executive Officers [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares authorized | 23,000,000 | ' | 23,000,000 | ' | ' | 23,000,000 | 5,000,000 | 5,040,000 | 30,000,000 | ' | ' | ' |
Options granted | ' | ' | ' | ' | ' | ' | ' | 1,680,000 | ' | ' | ' | 3,360,000 |
Granted | ' | ' | ' | ' | $0.89 | ' | ' | $0.91 | ' | $1.91 | $2.91 | ' |
Initial fair market value of options granted | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $811,060 |
Current unrecognized expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 180,629 |
Stock-based compensation expense | $1,311,002 | $1,719,494 | $5,716,961 | $4,881,059 | ' | ' | ' | ' | ' | ' | ' | ' |
Commitments_Details
Commitments (Details) (USD $) | Sep. 30, 2013 |
Other Commitments [Line Items] | ' |
2013 | $1,904,990 |
2014 | 1,053,124 |
2015 | 519,264 |
2016 | 154,629 |
2017 | 29,405 |
Total | 3,661,412 |
Capital Expenditures [Member] | ' |
Other Commitments [Line Items] | ' |
2013 | 402,012 |
2014 | ' |
2015 | ' |
2016 | ' |
2017 | ' |
Office [Member] | ' |
Other Commitments [Line Items] | ' |
2013 | 155,452 |
2014 | 210,855 |
2015 | 101,526 |
2016 | 23,042 |
2017 | 25,161 |
Co Location [Member] | ' |
Other Commitments [Line Items] | ' |
2013 | 388,371 |
2014 | 377,117 |
2015 | 247,356 |
2016 | 78,397 |
2017 | ' |
Interconnect [Member] | ' |
Other Commitments [Line Items] | ' |
2013 | 623,134 |
2014 | 380,881 |
2015 | 90,203 |
2016 | 12,732 |
2017 | 4,244 |
Network/Service/Support [Member] | ' |
Other Commitments [Line Items] | ' |
2013 | 336,021 |
2014 | 84,272 |
2015 | 80,180 |
2016 | 40,457 |
2017 | ' |
Noncontrolling_Interest_Detail
Non-controlling Interest (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Noncontrolling Interest [Line Items] | ' | ' |
Noncontrolling Interest | $179,119 | $175,976 |
Elephant Talk Communications Prs United Kingdom Limited [Member] | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' |
Non-controlling Interest % | 49.00% | ' |
Noncontrolling Interest | 9,685 | 9,434 |
Elephant Talk Communications Premium Rate Services Netherlands Bv [Member] | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' |
Non-controlling Interest % | 49.00% | ' |
Noncontrolling Interest | 132,504 | 126,013 |
Elephant Talk Bahrain Wll [Member] | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' |
Non-controlling Interest % | 1.00% | ' |
Noncontrolling Interest | ' | 3,438 |
Elephant Talk Middle East And Africa Fz Llc [Member] | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' |
Non-controlling Interest % | 49.46% | ' |
Noncontrolling Interest | $36,931 | $37,091 |
Litigations_Details
Litigations (Details) (Contracts And Purchase Agreement [Member], USD $) | 9 Months Ended |
Sep. 30, 2013 | |
notes | |
Loss Contingencies [Line Items] | ' |
Common stock received for termination of purchase agreement | 90,100 |
Common stock issued for purchase agreement | 204,000 |
Unsecured convertible promissory notes, number | 37 |
Unsecured convertible promissory notes issued, amount | $3,600,000 |
Returned [Member] | ' |
Loss Contingencies [Line Items] | ' |
Unsecured convertible promissory notes, number | 21 |
Unsecured convertible promissory notes returned | 2,040,000 |
Unreturned [Member] | ' |
Loss Contingencies [Line Items] | ' |
Unsecured convertible promissory notes, number | 18 |
Common stock, shares | 113,900 |
Common stock, value | 381,565 |
Unsecured convertible promissory notes unreturned, value | $1,740,000 |
Geographic_Information_Details
Geographic Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ' | ' | ' |
Revenues from unaffiliated customers | $5,204,982 | $6,699,381 | $16,795,627 | $22,365,318 | ' |
Identifiable assets | 46,452,946 | 42,560,763 | 46,452,946 | 42,560,763 | 37,475,541 |
Europe [Member] | ' | ' | ' | ' | ' |
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ' | ' | ' |
Revenues from unaffiliated customers | ' | ' | 15,542,781 | 22,239,695 | ' |
Identifiable assets | 31,428,900 | 36,619,280 | 31,428,900 | 36,619,280 | ' |
Other Foreign Countries [Member] | ' | ' | ' | ' | ' |
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ' | ' | ' |
Revenues from unaffiliated customers | ' | ' | 1,252,846 | 125,623 | ' |
Identifiable assets | $15,024,046 | $5,941,483 | $15,024,046 | $5,941,483 | ' |
Related_Party_Transactions_Det
Related Party Transactions (Details) | 3 Months Ended | 9 Months Ended | 0 Months Ended | 0 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Aug. 17, 2013 | Aug. 17, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Jul. 14, 2013 | 24-May-13 | Sep. 30, 2013 | Sep. 30, 2013 | |
USD ($) | EUR (€) | USD ($) | USD ($) | Convertible Note One [Member] | Convertible Note One [Member] | Convertible Note One [Member] | Convertible Note One [Member] | Unsecured Loan from Affiliate [Member] | Unsecured Loan from Affiliate [Member] | Affiliated Entity [Member] | Affiliated Entity [Member] | |
USD ($) | EUR (€) | USD ($) | EUR (€) | USD ($) | EUR (€) | USD ($) | EUR (€) | |||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, principal amount | ' | ' | ' | ' | $2,652,600 | € 2,000,000 | $2,652,600 | € 2,000,000 | ' | € 1,000,000 | ' | ' |
Stated interest per annum | ' | ' | ' | ' | 10.00% | 10.00% | 10.00% | 10.00% | ' | 12.00% | ' | ' |
Deb instrument, earliest conversion date | ' | ' | ' | ' | 17-Aug-13 | 17-Aug-13 | ' | ' | ' | ' | ' | ' |
Conversion price | ' | ' | ' | ' | $0.89 | ' | ' | ' | $0.71 | ' | ' | ' |
Number of shares covered by warrants | ' | ' | ' | ' | 1,000,000 | 1,000,000 | ' | ' | ' | 1,253,194 | ' | ' |
Warrants, exercisable date | ' | ' | ' | ' | 17-Feb-14 | 17-Feb-14 | ' | ' | ' | ' | ' | ' |
Proceeds from issuance of convertible debt | 7,957,800 | 6,000,000 | 0 | 8,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Selling concession | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.00% | 8.00% |
Payment of selling commission | ' | ' | $0 | $543,438 | ' | ' | ' | ' | ' | ' | $636,624 | € 480,000 |
Debt conversion, shares issued | ' | ' | ' | ' | ' | ' | ' | ' | 1,840,631 | ' | ' | ' |