Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |||||||||||||
Jun. 30, 2013 | Jul. 31, 2013 | |||||||||||||
Document And Entity Information [Abstract] | ' | ' | ||||||||||||
Document Type | '10-Q | ' | ||||||||||||
Amendment Flag | 'true | ' | ||||||||||||
Document Period End Date | 30-Jun-13 | ' | ||||||||||||
Entity Registrant Name | 'ELEPHANT TALK COMMUNICATIONS CORP | ' | ||||||||||||
Entity Central Index Key | '0001084384 | ' | ||||||||||||
Current Fiscal Year End Date | '--12-31 | ' | ||||||||||||
Document Fiscal Period Focus | 'Q2 | ' | ||||||||||||
Document Fiscal Year Focus | '2013 | ' | ||||||||||||
Entity Filer Category | 'Accelerated Filer | ' | ||||||||||||
Entity Units Outstanding | ' | 135,958,674 | ||||||||||||
Amendment Description | ' | ' | ||||||||||||
Explanatory Note | ||||||||||||||
Overview | ||||||||||||||
Elephant Talk Communications Corp. ("we," "us," "our," or the "Company"), is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q (this "Amendment") to amend our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, originally filed with the Securities and Exchange Commission (the "SEC") on August 9, 2013 (the "Original 10-Q"). This Amendment restates our unaudited condensed interim financial statements and related financial disclosures for the three and six months ended June 30, 2013. This Amendment also amends certain other Items in the Original 10-Q, as listed in "Items in this Amendment" below, as a result of the restatement. Details of the impact of this restatement are discussed below and in Note 2 to the accompanying unaudited [condensed] consolidated financial statements and in Management's Discussion and Analysis of Financial Condition and Results of Operations. | ||||||||||||||
Restatement Background | ||||||||||||||
As described below and in Note 2, the restatement adjusts the Company's unaudited Condensed Consolidated Balance Sheet ended June 30, 2013 for amounts related to warrant liabilities that were incorrectly valued, the Consolidated Statements of Comprehensive Loss for the three and six months periods ended June 30, 2013 for line items Changes in fair value of warrant liabilities and Net Loss, and the Statement of Cash Flows for line items Net Loss and in the section 'Adjustments to reconcile net loss to net cash used in operating activities', the 'Change in Fair Value of Derivative Instruments' was also adjusted. | ||||||||||||||
During the second quarter the Company issued 17,425,621 shares of Common Stock and 7,841,537 warrants as well as 183,284 warrants (collectively, the "Warrants") issued to fundraising agents in connection with the Company's registered direct public offering (the "Offering") pursuant to the terms and conditions set forth in the share purchase agreement described in Note 16. As a result of the terms and conditions attached to the Warrants, the Company determined that for the quantitative valuation of the Warrants it is more appropriate to use a Monte-Carlo Simulation model instead of a Black-Scholes valuation model as used in the original 10-Q. Management of the Company believes that the Monte-Carlo Simulation model is a more dynamic model, which accommodates variable inputs. | ||||||||||||||
The impact of the Monte-Carlo Simulation model calculation on the affected line items of the Company's quarterly financial statements is set forth below. | ||||||||||||||
The restatement has no impact on the Company's previously reported total cash and cash equivalents, revenue, cost and operating expenses and the net cash used/ or provided from operating, investing and financing activities reported in the Consolidated Statements of Cash flows. | ||||||||||||||
On November 6, 2013, the audit committee of the board of directors of the Company and management concluded, after discussion with the Company's independent registered public accounting firm, BDO USA, LLP, that the consolidated financial statements included in the Company's Original 10-Q should no longer be relied upon as a result of an error in the presentation of warrant liabilities and Changes in fair value of warrant liabilities included in the Company's unaudited Condensed Consolidated Balance Sheet ended June 30, 2013, the Consolidated Statement of Comprehensive Loss for the three and six months periods ended June 30, 2013, and the Statement of Cash Flows for line items Net Loss and in the section 'Adjustments to reconcile net loss to net cash used in operating activities', the 'Change in Fair Value of Derivative Instruments'. | ||||||||||||||
Effects of Restatement: | ||||||||||||||
The table below presents the effect of the restatement on the consolidated financial statements as of and for the three and six months period ended June 30, 2013 : | ||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||||
As previously | Adjustment | As restated | ||||||||||||
reported | ||||||||||||||
LONG TERM LIABILITIES | ||||||||||||||
- Warrant liabilities | $ | 2,428,919 | $ | 2,862,432 | $ | 5,291,351 | ||||||||
STOCKHOLDERS' EQUITY | ||||||||||||||
- Common stock | $ | 238,813,861 | $ | (2,435,982 | ) | $ | 236,377,879 | |||||||
- Accumulated deficit | $ | (215,664,341 | ) | $ | (426,450 | ) | $ | (216,090,791 | ) | |||||
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||||||||||
Three months ended June 30, 2013 | As previously | Adjustment | As restated | |||||||||||
reported | ||||||||||||||
- Changes in fair value of warrant liabilities | $ | 772,466 | $ | (426,450 | ) | $ | 346,016 | |||||||
- Net loss | $ | (7,266,111 | ) | $ | (426,450 | ) | $ | (7,692,561 | ) | |||||
- Net loss per common share and equivalents - basic and diluted' | $ | (0.06 | ) | $ | (0.01 | ) | $ | (0.07 | ) | |||||
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||||||||||
Six months ended June 30, 2013 | As previously | Adjustment | As restated | |||||||||||
reported | ||||||||||||||
- Changes in fair value of warrant liabilities | $ | 772,466 | $ | (426,450 | ) | $ | 346,016 | |||||||
- Net loss | $ | (12,404,033 | ) | $ | (426,450 | ) | $ | (12,830,483 | ) | |||||
- Net loss per common share and equivalents - basic and diluted' | $ | (0.11 | ) | $ | (0.01 | ) | $ | (0.12 | ) | |||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
Cash Flows From Operating Activities | As previously | Adjustment | As restated | |||||||||||
reported | ||||||||||||||
- Net loss | $ | (12,404,033 | ) | $ | (426,450 | ) | $ | (12,830,483 | ) | |||||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||||
- Change in fair value of derivative instruments | $ | 2,067,270 | $ | 426,450 | $ | 2,493,720 | ||||||||
Internal Control Consideration: | ||||||||||||||
Our management has determined that there was a control deficiency in our internal controls over financial reporting that constitutes a material weakness and has concluded that our disclosure controls and procedures were not effective as of June 30, 2013 as a result of the valuation determination of the warrant liabilities that resulted in the restatement of our financial statements for the period ended June 30, 2013. Management further believes, however, that the material weakness identified is limited solely to the accounting treatment of the warrant liabilities used in connection with the Offering and therefore is not a recurring deficiency. | ||||||||||||||
Items Amended in this Amendment: | ||||||||||||||
For the convenience of the reader, this Amendment sets forth the Original 10-Q in its entirety, as modified and superseded where necessary to reflect the restatement. The following items in the Original 10-Q have been amended as a result of, and to reflect, the restatement: | ||||||||||||||
· | Part 1- Item 1- Financial Statements (Unaudited) including Note 2 to the condensed consolidated financial statements | |||||||||||||
· | Part 1 -Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations | |||||||||||||
· | Part 1- Item 4 - Controls and Procedures | |||||||||||||
In accordance with applicable SEC rules, this Amendment includes new certifications required under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), dated as of the filing date of this Amendment. | ||||||||||||||
We have not updated items in this Amendment to reflect events occurring after the Original 10-Q date, other than those associated with the restatement of our financial statements. Accordingly, this Amendment should be read in conjunction with the Company's Original 10-Q and the Company's subsequent filings with the SEC. | ||||||||||||||
In light of the restatement, readers should not rely on the Company's previously filed financial statements as of and for the three month and six months period ended June 30, 2013. |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Jun. 30, 2013 | Dec. 31, 2012 |
CURRENT ASSETS | ' | ' |
Cash and cash equivalents | $2,979,673 | $1,233,268 |
Restricted cash | 483,120 | 1,230,918 |
Accounts receivable, net of allowance for doubtful accounts of $486,591 and $559,120 at June 30, 2013 and December 31, 2012 respectively | 3,408,278 | 5,123,803 |
Prepaid expenses and other current assets | 2,194,320 | 1,821,218 |
Total current assets | 9,065,391 | 9,409,207 |
OTHER ASSETS | 621,182 | 1,038,306 |
PROPERTY AND EQUIPMENT, NET | 17,065,123 | 13,088,271 |
INTANGIBLE ASSETS, NET | 9,966,563 | 10,503,026 |
GOODWILL | 3,381,418 | 3,436,731 |
TOTAL ASSETS | 40,099,677 | 37,475,541 |
CURRENT LIABILITIES | ' | ' |
Overdraft | 369,859 | 350,114 |
Accounts payable and customer deposits | 4,809,726 | 5,139,292 |
Deferred Revenue | 482,381 | 252,551 |
Accrued expenses and other payables | 6,566,324 | 4,120,536 |
8% Convertible Note | ' | 3,067,416 |
Loans payable | 962,418 | 963,051 |
12% Related Party Loan | 975,763 | ' |
Total current liabilities | 14,166,471 | 13,892,960 |
LONG TERM LIABILITIES | ' | ' |
8% Convertible Note | ' | 2,565,202 |
Warrant liabilities | 5,291,351 | ' |
Conversion feature | ' | 311,986 |
Trade note payable | 869,450 | ' |
Loan from joint venture partner | 578,518 | 555,907 |
Total long term liabilities | 6,739,319 | 3,433,095 |
Total liabilities | 20,905,790 | 17,326,055 |
STOCKHOLDERS' EQUITY | ' | ' |
Common stock, no par value, 250,000,000 shares authorized, 133,139,900 issued and outstanding as of June 30, 2013 compared to 111,918,368 shares issued and outstanding as of December 31, 2012 | 236,377,879 | 223,965,907 |
Accumulated other comprehensive loss | -1,266,977 | -732,090 |
Accumulated deficit | -216,090,791 | -203,260,307 |
Elephant Talk Communications Corp. stockholders' equity | 19,020,111 | 19,973,510 |
NON-CONTROLLING INTEREST | 173,776 | 175,976 |
Total stockholders' equity | 19,193,887 | 20,149,486 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $40,099,677 | $37,475,541 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Jun. 30, 2013 | Dec. 31, 2012 |
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract] | ' | ' |
Accounts receivable, allowance for doubtful accounts | $486,591 | $559,120 |
Common stock, par value per share | $0 | $0 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 133,139,900 | 111,918,368 |
Common stock, shares outstanding | 133,139,900 | 111,918,368 |
CONSOLIDATED_STATEMENT_OF_OPER
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | |
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS [Abstract] | ' | ' | ' | ' |
REVENUES | $4,994,145 | $7,084,969 | $11,590,645 | $15,665,937 |
COST AND OPERATING EXPENSES | ' | ' | ' | ' |
Cost of service | 1,465,517 | 5,185,048 | 5,013,794 | 12,074,265 |
Selling, general and administrative expenses | 4,477,723 | 4,565,181 | 8,974,787 | 9,135,139 |
Non-cash compensation to officers, directors and employees | 2,995,049 | 1,538,982 | 4,405,959 | 3,230,728 |
Depreciation and amortization of intangibles assets | 1,836,231 | 1,224,888 | 3,156,219 | 2,503,357 |
Total cost and operating expenses | 10,774,520 | 12,514,099 | 21,550,759 | 26,943,489 |
LOSS FROM OPERATIONS | -5,780,375 | -5,429,130 | -9,960,114 | -11,277,552 |
OTHER INCOME (EXPENSE) | ' | ' | ' | ' |
Interest income | 21,527 | 174,756 | 55,247 | 279,918 |
Interest expense | -208,144 | -836,580 | -431,896 | -938,847 |
Interest expense related to debt discount and conversion feature | -502,972 | ' | -1,061,000 | ' |
Change in fair value of conversion feature | 372,059 | 1,226,417 | 232,267 | 1,230,086 |
Changes in fair value of warrant liabilities | 346,016 | ' | 346,016 | ' |
Loss on Extinguishment of Debt | -1,938,597 | ' | -1,938,597 | ' |
Amortization of deferred financing costs | -2,075 | ' | -72,406 | ' |
Total other income (expense) | -1,912,186 | 564,593 | -2,870,369 | 571,157 |
LOSS BEFORE PROVISION FOR INCOME TAXES | -7,692,561 | -4,864,537 | -12,830,483 | -10,706,395 |
Provision for income taxes | ' | -97,288 | ' | -97,288 |
LOSS BEFORE EARNINGS OF UNCONSOLIDATED JOINT VENTURE | -7,692,561 | -4,961,825 | -12,830,483 | -10,803,683 |
Equity in earnings of unconsolidated joint venture | ' | -29,084 | ' | -192,415 |
NET LOSS | -7,692,561 | -4,990,909 | -12,830,483 | -10,996,098 |
OTHER COMPREHENSIVE (LOSS) INCOME | ' | ' | ' | ' |
Foreign currency translation loss | -534,887 | -1,779,477 | -1,296,649 | -909,694 |
Total Other Comprehensive Income (Loss), Net of Tax | -534,887 | -1,779,477 | -1,296,649 | -909,694 |
COMPREHENSIVE LOSS | ($8,227,448) | ($6,770,386) | ($14,127,132) | ($11,905,792) |
Net loss per common share and equivalents - basic and diluted | ($0.07) | ($0.04) | ($0.12) | ($0.10) |
Weighted average shares outstanding during the period - basic and diluted | 118,686,598 | 111,167,932 | 115,734,177 | 110,912,231 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 6 Months Ended | |
Jun. 30, 2013 | Jun. 30, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($12,830,483) | ($10,996,098) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 3,156,219 | 2,503,357 |
Provision for doubtful accounts | -68,679 | 115,684 |
Stock-based compensation | 4,405,959 | 3,230,728 |
Change in fair value of derivative instruments | 2,493,720 | ' |
Financial Investments in Joint Venture | ' | 192,415 |
Changes in operating assets and liabilities: | ' | ' |
Decrease (increase) in accounts receivable | 1,679,337 | 492,139 |
Decrease (increase) in prepaid expenses, deposits and other assets | -406,790 | -320,444 |
Increase (decrease) in accounts payable, proceeds from related parties and customer deposits | -241,952 | 2,339 |
Increase (decrease) in deferred revenue | 246,755 | 11,250 |
Increase (decrease) in accrued expenses and other payables | 476,333 | 686,173 |
Net cash used in operating activities | -1,089,581 | -4,082,457 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Purchases of property and equipment | -2,262,540 | -1,616,811 |
Restricted cash | ' | -2,439,408 |
Loans to related party | ' | -1,011,265 |
Loans to joint venture partners | ' | -63,447 |
Loan to third party | ' | -216,970 |
Net cash used in investing activities | -2,262,540 | -5,347,901 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from 12% Unsecured Loan from Related Party | 1,290,790 | ' |
Proceeds from Share Purchase Agreement - Unregistered securities | 225,000 | ' |
Proceeds from Share Purchase Agreement - Registered direct | 7,500,000 | ' |
Proceeds from Share Purchase Agreement Related Party | 4,500,000 | ' |
Fundraising fees | -707,500 | ' |
Proceeds from 8% convertible note, net of original issue discount | ' | 8,000,000 |
Payments on 8% convertible note installment payments and interest | -8,490,360 | -388,358 |
Deferred financing costs | ' | -446,000 |
Exercise of warrants & options | 60,394 | 742,130 |
Payments for share issue costs | ' | -13,643 |
Cash from Escrow account for principal and interest payments on 8% Convertible Notes | 742,427 | ' |
Net cash provided by financing activities | 5,120,751 | 7,894,129 |
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | -22,225 | -421,570 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 1,746,405 | -1,957,799 |
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD | 1,233,268 | 6,009,576 |
CASH AND CASH EQUIVALENTS, END OF THE PERIOD | 2,979,673 | 4,051,777 |
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING & FINANCING ACTIVITIES: | ' | ' |
Cash paid during the period for interest | -304,381 | -118,358 |
Purchases of property and equipment (delivered, not invoiced yet) | -1,938,180 | ' |
Trade note payable | 927,133 | ' |
Increase in Share Capital due to Telnicity Acquisition | 1,180,000 | ' |
Increase in Share Capital for third party settlement | $468,000 | ' |
Description_of_Business_Basis_
Description of Business, Basis of Presentation and Principles of Consolidation | 6 Months Ended | ||
Jun. 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 (the ''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 three and six months ended June 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 June 30, 2013 and December 31, 2012 include the accounts of Elephant Talk Communications Corp., including: | |||
· | 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 and consequently closed a total of $13,525,000 in financing in the second quarter of 2013 consisting of the following: | |||
- | registered direct offering with gross proceeds of $12,000,000 in equity | ||
- | unregistered sale of securities with gross proceeds of $225,000 in equity | ||
- | debt financing with a 1 year maturity of $1,300,000 (which was subsequently terminated and replaced by a straight equity investment) | ||
After deduction of fund raising expenses of $707,500, the abovementioned fundraises resulted in net proceeds of $12,817,500. Of these net proceeds $7,747,933 has been used to pay two installments and fully extinguish the 2012 8% senior secured convertible debt. | |||
With the settlement of the outstanding convertible debt, the pledged assets of the Company have been released and have become available for follow on financing in order to complete the Company's required funding efforts. | |||
With cash and cash equivalents at June 30, 2013 of $2,979,673, the improvement of net cash used in operating activities and the intention of the company to close additional financing in the third quarter of 2013 the company feels that it can carry out is operational plans for the coming 12 months. However, there can be no assurance that such additional financing will be closed in such period. | |||
If the Company is unable to secure additional capital, it may not be able to continue operations. As of June 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. | |||
Restatement_of_unaudited_conde
Restatement of unaudited condensed consolidated financial statements | 6 Months Ended | ||||||||||||
Jun. 30, 2013 | |||||||||||||
Restatement of unaudited condensed consolidated financial statements [Abstract] | ' | ||||||||||||
Restatement of unaudited condensed consolidated financial statements | ' | ||||||||||||
Note 2. Restatement of unaudited condensed consolidated financial statements | |||||||||||||
On November 6, 2013, the Company concluded that the condensed consolidated financial statements for the period ended June 30, 2013 that the Company previously included in its Original 10-Q that was filed initially August 9, 2013 should be restated and should no longer be relied on. | |||||||||||||
In the second quarter the Company issued 17,425,621 shares of Common Stock and 7,841,537 warrants as well as 183,284 warrants (collectively, the "Warrants") issued to fundraising agents in the Offering pursuant to the terms and conditions set forth in the share purchase agreement described in Note 16. As a result of the terms and conditions attached to the Warrants, the Company determined that for the quantitative valuation of the Warrants it is more appropriate to use a Monte-Carlo Simulation model instead of a Black-Scholes valuation model as used in the Original 10-Q. Management of the Company believes that the Monte-Carlo Simulation model is a more dynamic model, which accommodates variable inputs. | |||||||||||||
The impact of the Monte-Carlo Simulation model calculation on the affected line items of the Company's quarterly financial statements is set forth below. | |||||||||||||
The restatement has no impact on the Company's previously reported total cash and cash equivalents, revenue, cost and operating expenses and the net cash used/ or provided from operating, investing and financing activities reported in the Consolidated Statements of Cash flows (other than the Net Loss and in the section "Adjustments to reconcile net loss to net cash used in operating activities", the "Change in Fair Value of Derivative Instruments"). | |||||||||||||
As detailed in the table below, this restatement impacts the following consolidated statements and line items: | |||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||
As previously | Adjustment | As restated | |||||||||||
reported | |||||||||||||
LONG TERM LIABILITIES | |||||||||||||
- Warrant liabilities | $ | 2,428,919 | $ | 2,862,432 | $ | 5,291,351 | |||||||
STOCKHOLDERS' EQUITY | |||||||||||||
- Common stock | $ | 238,813,861 | $ | (2,435,982 | ) | $ | 236,377,879 | ||||||
- Accumulated deficit | $ | (215,664,341 | ) | $ | (426,450 | ) | $ | (216,090,791 | ) | ||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS | |||||||||||||
Three months ended June 30, 2013 | As previously | Adjustment | As restated | ||||||||||
reported | |||||||||||||
- Changes in fair value of warrant liabilities | $ | 772,466 | $ | (426,450 | ) | $ | 346,016 | ||||||
- Net loss | $ | (7,266,111 | ) | $ | (426,450 | ) | $ | (7,692,561 | ) | ||||
- Net loss per common share and equivalents - basic and diluted' | $ | (0.06 | ) | $ | (0.01 | ) | $ | (0.07 | ) | ||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS | |||||||||||||
Six months ended June 30, 2013 | As previously | Adjustment | As restated | ||||||||||
reported | |||||||||||||
- Changes in fair value of warrant liabilities | $ | 772,466 | $ | (426,450 | ) | $ | 346,016 | ||||||
- Net loss | $ | (12,404,033 | ) | $ | (426,450 | ) | $ | (12,830,483 | ) | ||||
- Net loss per common share and equivalents - basic and diluted' | $ | (0.11 | ) | $ | (0.01 | ) | $ | (0.12 | ) | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
Cash Flows From Operating Activities | As previously | Adjustment | As restated | ||||||||||
reported | |||||||||||||
- Net loss | $ | (12,404,033 | ) | $ | (426,450 | ) | $ | (12,830,483 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities | |||||||||||||
- Change in fair value of derivative instruments | $ | 2,067,270 | $ | 426,450 | $ | 2,493,720 | |||||||
Significant_Accounting_Policie
Significant Accounting Policies | 6 Months Ended | ||||||||||||||||
Jun. 30, 2013 | |||||||||||||||||
Significant Accounting Policies [Abstract] | ' | ||||||||||||||||
Significant Accounting Policies | ' | ||||||||||||||||
Note 3. 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 and for its wholly-owned subsidiary Elephant Talk Global Holding B.V., 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" ("ASC 830"), 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 stockholders' equity as of June 30, 2013 and December 31, 2012 was ($1,266,977) and ($732,090), respectively. The foreign currency translation gain (/loss) for the six months ended June 30, 2013 and 2012 was ($1,296,649) and ($909,694), respectively. The foreign currency translation gain (/loss) for the three months ended June 30, 2013 and 2012 was ($534,887) and ($1,779,477). | |||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of the accompanying consolidated 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 June 30, 2013 and December 31, 2012, the allowance for doubtful accounts was $486,591and $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. 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 the 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 statement of operations 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" set by the U.S. Treasury Department with a term equal to the reported rate, or derived by using both spreads in intermediate term and rates, compared 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 June 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 six 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 June 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 loss 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 half year 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, 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. 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. | |||||||||||||||||
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 June 30, 2013 for financial assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||||
30-Jun-13 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liability Derivatives | |||||||||||||||||
Conversion feature | $ | - | $ | - | $ | - | $ | - | |||||||||
Warrant Liabilities | $ | - | $ | - | $ | 5,291,351 | $ | 5,291,351 | |||||||||
Total liability derivatives | $ | - | $ | - | $ | 5,291,351 | $ | 5,291,351 | |||||||||
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 various outstanding warrants into level 3 due to the fact that some inputs are not published and not easily comparable to industry peers. The warrants are a result of the SPA agreement closed in June 2013 and consist of 4,948,680 warrants issued to 'DJ investors', 2,892,857 warrants issued to 'affiliate investors' and 183,284 warrants issued to the placement agent 'agent warrants'(see Note 15). | |||||||||||||||||
The conversion feature derivative liability extinguished due to the early repayment of the 8% Senior Secured Convertible Note. | |||||||||||||||||
Recently Issued Accounting Pronouncements | |||||||||||||||||
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 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU requires companies to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income when applicable or to cross-reference the reclassifications with other disclosures that provide additional detail about the reclassification made when the reclassifications are not made to net income. This ASU is effective for fiscal years and interim periods, beginning after December 15, 2012. During the six months ended June 30, 2013, the Company adopted ASU 2013-02 and the adoption did not have a material impact on its consolidated financial statements since the Company did not have material reclassifications in any periods presented. | |||||||||||||||||
In February 2013, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or 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 is evaluating the potential impact of this adoption on its consolidated financial statements. | |||||||||||||||||
In July 2012, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. To be consistent with the guidance found under ASU 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment, ASU 2012-02 is intended to simplify impairment testing for indefinite-lived intangible assets other than goodwill by adding a qualitative review step to assess whether the required quantitative impairment analysis that exists today is necessary. Under the amended rule, a company will not be required to calculate the fair value of a business that contains recorded indefinite-lived intangible assets other than goodwill unless it concludes, based on the qualitative assessment, that it is more likely than not that the fair value of that business is less than its book value. If such a decline in fair value is deemed more likely than not to have occurred, then the quantitative impairment test that exists under current GAAP must be completed; otherwise, the indefinite lived assets other than goodwill are deemed to be not impaired and no further testing is required until the next annual test date (or sooner if conditions or events before that date raise concerns of potential impairment in the business). This new standard is effective for the Company beginning June 1, 2013. The Company does not expect this to have a material impact on its financial statements. | |||||||||||||||||
Prepaid_Expenses_and_Other_Cur
Prepaid Expenses and Other Current Assets | 6 Months Ended |
Jun. 30, 2013 | |
Prepaid Expenses and Other Current Assets [Abstract] | ' |
Prepaid Expenses and Other Current Assets | ' |
Note 4. Prepaid Expenses and Other Current Assets | |
Prepaid expenses and other current assets amounted to $2,194,320 as of June 30, 2013, compared with $1,821,218 as of December 31, 2012. As of June 30, 2013, $760,970 of the prepaid expenses was related to prepaid Value Added Tax ("VAT"). As of December 31, 2012, prepaid VAT represented $534,327. | |
Other_Assets
Other Assets | 6 Months Ended |
Jun. 30, 2013 | |
Other Assets [Abstract] | ' |
Other Assets | ' |
Note 5. Other Assets | |
Other assets are long-term in nature and consist of long-term deposits and deferred financing costs. | |
Long-term Deposit | |
As of June 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 together totaling $ 621,182, compared with $657,192 as of December 31, 2012. The deposits are refundable at the termination of the business relationship with the carriers. | |
Deferred Financing Costs | |
For its funding related activities the Company incurred costs related to perfecting the pledges on assets, contract review fees from lawyers and some other smaller fees. The 8% Senior Secured Convertible Loan issued on March 29, 2012 was fully repaid in the second quarter of 2013. This resulted in accelerating the recognition of the deferred financing cost balance of $265,995 during the second quarter of 2013. The outstanding balance at June 30, 2013, was zero and the outstanding balance at December 31, 2012 was $381,114. | |
Property_and_Equipment
Property and Equipment | 6 Months Ended | ||||||||||||
Jun. 30, 2013 | |||||||||||||
Property and Equipment [Abstract] | ' | ||||||||||||
Property and Equipment | ' | ||||||||||||
Note 6. Property and Equipment | |||||||||||||
The Company's Property and 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 June 30, 2013 and December 31, 2012 consist of: | |||||||||||||
Average | June 30, | December 31, | |||||||||||
Estimated | |||||||||||||
Useful Lives | 2013 | 2012 | |||||||||||
Furniture and fixtures | 5 | 276,256 | 269,731 | ||||||||||
Computer, communication and network equipment | 10-Mar | 21,278,404 | 17,056,396 | ||||||||||
Software | 5 | 6,334,757 | 6,123,371 | ||||||||||
Automobiles | 5 | 86,541 | 87,925 | ||||||||||
Construction in progress | 2,409,199 | 1,962,315 | |||||||||||
Total property and equipment | 30,385,157 | 25,499,738 | |||||||||||
Less: accumulated depreciation | (13,320,034 | ) | (12,411,467 | ) | |||||||||
Total Property and Equipment, Net | $ | 17,065,123 | $ | 13,088,271 | |||||||||
Construction in progress consists of software projects under development that have not yet been completed. Total depreciation expense for the three months ended June 30, 2013 and 2012 was $985,811 and $567,031, respectively. Total depreciation expense for the six months ended on June 30, 2013 and 2012 was $1,593,775 and $1,145,553 respectively. | |||||||||||||
Intangible_Assets
Intangible Assets | 6 Months Ended | ||||||||||||||||||||||||
Jun. 30, 2013 | |||||||||||||||||||||||||
Intangible Assets [Abstract] | ' | ||||||||||||||||||||||||
Intangible Assets | ' | ||||||||||||||||||||||||
Note 7. 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 June 30, 2013 and December 31, 2012 consisted of the following: | |||||||||||||||||||||||||
Estimated | June 30, | December 31, | |||||||||||||||||||||||
Useful Lives | 2013 | 2012 | |||||||||||||||||||||||
Customer Contracts, Licenses , Interconnect & Technology | 10-May | $ | 12,917,453 | $ | 12,096,592 | ||||||||||||||||||||
ValidSoft IP & Technology | 10-Jan | 15,352,291 | 15,597,814 | ||||||||||||||||||||||
Total intangible assets | 28,269,744 | 27,694,406 | |||||||||||||||||||||||
Less: Accumulated Amortization and impairment charges | (10,760,951 | ) | (10,569,693 | ) | |||||||||||||||||||||
Less: Accumulated Amortization ValidSoft IP & Technology | (7,542,230 | ) | (6,621,687 | ) | |||||||||||||||||||||
Total intangible assets, Net | $ | 9,966,563 | $ | 10,503,026 | |||||||||||||||||||||
Total amortization expense for the three months ended June 30, 2013 and 2012 was $850,420 and $657,857, respectively. Total amortization expense for the six months ended in June 30, 2013 and 2012 was $1,562,444 and $1,357,804 respectively. | |||||||||||||||||||||||||
Estimated future amortization expense related to our intangible assets is: | |||||||||||||||||||||||||
Rest of | 2014 | 2015 | 2016 | 2017 | 2018 and | ||||||||||||||||||||
2013 | thereafter | ||||||||||||||||||||||||
Interconnect licenses and contracts | $ | 348,574 | $ | 467,433 | $ | 145,634 | $ | 17,526 | $ | - | $ | - | |||||||||||||
ValidSoft IP & Technology | 1,057,452 | 2,114,904 | 1,973,718 | 1,926,655 | 501,259 | 234,999 | |||||||||||||||||||
$ | 1,406,026 | $ | 2,582,337 | $ | 2,119,352 | $ | 1,944,181 | $ | 501,259 | $ | 234,999 | ||||||||||||||
Telnicity_Asset_Purchase_Agree
Telnicity Asset Purchase Agreement | 6 Months Ended |
Jun. 30, 2013 | |
Telnicity Asset Purchase Agreement [Abstract] | ' |
Telnicity Asset Purchase Agreement | ' |
Note 8. 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 substantially all the assets of Telnicity LLC (Telnicity) for consideration of US$1,180,000. Telicity is United States company that provides access to the U.S. mobile telecommunications market through 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. | |
The Company issued 1,000,000 shares of its Common Stock as consideration for the acquisition. At the time of issuance, each share had a market value of $1.18, thus totaling US$ 1,180,000. For this price consideration we acquired US$1,180,000 in identifiable intangible assets (customer relationships, carrier relationships and acquired technology) and assumed no liabilities. Some of the estimated fair values may change as additional information is obtained during the measurement period within one year of the acquisition date. The related acquisition costs were not significant. | |
Goodwill
Goodwill | 6 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Goodwill [Abstract] | ' | ||||||||
Goodwill | ' | ||||||||
Note 9. 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. 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. | |||||||||
After considering qualitative factors including the Company's market capitalization , we concluded that, for the second quarter of 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, exceeded the carrying value by a significant amount indicating no impairment was necessary. | |||||||||
The carrying value of the Company's goodwill as of June 30, 2013 and as of December 31, 2012 was as follows: | |||||||||
Goodwill | June 30, | December | |||||||
31, | |||||||||
2013 | 2012 | ||||||||
Goodwill at acquisition of ValidSoft Ltd | $ | 3,433,833 | $ | 3,433,833 | |||||
Goodwill Morodo | 214,689 | 214,689 | |||||||
End of period exchange rate translation | (267,104 | ) | (211,791 | ) | |||||
Total | $ | 3,381,418 | $ | 3,436,731 | |||||
Overdraft
Overdraft | 6 Months Ended |
Jun. 30, 2013 | |
Overdraft [Abstract] | ' |
Overdraft | ' |
Note 10. 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 June 30, 2013, the overdraft balance, including accrued interest totaled, $369,859 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 22, Litigations. | |
Deferred_Revenue
Deferred Revenue | 6 Months Ended |
Jun. 30, 2013 | |
Deferred Revenue [Abstract] | ' |
Deferred Revenue | ' |
Note 11. 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 $482,381 and $252,551 as of June 30, 2013 and December 31, 2012, respectively. | |
Accrued_expenses
Accrued expenses | 6 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Accrued expenses [Abstract] | ' | ||||||||
Accrued expenses | ' | ||||||||
Note 12. Accrued expenses | |||||||||
As of June 30, 2013 and December 31, 2012, the accrued expenses comprised of the following: | |||||||||
June 30, | December | ||||||||
2013 | 31, 2012 | ||||||||
Accrued Selling, General & Administrative expenses | $ | 2,244,170 | $ | 2,175,845 | |||||
Accrued cost of service | 700,747 | 648,958 | |||||||
Accrued taxes (including VAT) | 796,589 | 288,651 | |||||||
Accrued interest payable | 907,654 | 882,181 | |||||||
Accrued capital expenditure liabilities | 1,917,164 | 124,901 | |||||||
Total accrued expenses | $ | 6,566,324 | $ | 4,120,536 | |||||
Loans_Payable
Loans Payable | 6 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Loans Payable [Abstract] | ' | ||||||||
Loans Payable | ' | ||||||||
Note 13. Loans Payable | |||||||||
Loans payable at June 30, 2013 and December 31, 2012 are summarized as follows: | |||||||||
June | December | ||||||||
30, 2013 | 31, 2012 | ||||||||
Installment loan payable due December 24, 2006, secured by personal guarantees of two shareholders, a former director, and a third party | $ | 320,280 | $ | 320,491 | |||||
Installment loan payable, bank, monthly principal and interest payments of $2,798 including interest at bank's prime rate plus 1.5% per annum, 8.25% at November 30, 2008, due December 24, 2011, secured by personal guarantees of three shareholders and a former director | 254,633 | 254,800 | |||||||
Installment loan payable, bank, monthly principal and interest payments of $1,729 including interest at bank's prime rate plus 1.5% per annum, 8.25% at November 24, 2008, due June 28, 2009, secured by personal guarantees of three shareholders and a former director | 103,872 | 103,940 | |||||||
Term loan payable, bank, monthly payments of interest at bank's prime rate, 7.0% at December 31, 2007 | 283,633 | 283,820 | |||||||
Total | $ | 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 accrue 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. | |||||||||
8_Senior_Secured_Convertible_N
8% Senior Secured Convertible Note | 6 Months Ended |
Jun. 30, 2013 | |
8% Senior Secured Convertible Note [Abstract] | ' |
8% Senior Secured Convertible Note | ' |
Note 14. 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 15. | |
The Purchase Agreement with the note holders resulted in the regular and accelerated amortization expenses during the second quarter of $349,639 for the (OID) original issue discount, $1,179,732 for the (CF) conversion feature 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. | |
12_Unsecured_Loan_from_Affilia
12% Unsecured Loan from Affiliate | 6 Months Ended |
Jun. 30, 2013 | |
12% Unsecured Loan from Affiliate [Abstract] | ' |
12% Unsecured Loan from Affiliate | ' |
Note 15. 12% Unsecured Loan from Affiliate | |
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 ($1,290,790) for a period of one year at the interest rate of 12% per annum ("Loan Agreement") and issued a warrant ("Warrant") to the director to purchase 1,253,194 restricted shares of Common Stock exercisable at $1.03 per share for a term of 5 years, with a mandatory cash exercise after 12 months in case the average closing bid price is $1.55 or higher for 10 consecutive trading days. | |
Following ASC 470-20 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 off set against paid-in capital. The debt discount being the initial fair market value of the warrants amounted to $434,433 and will be amortized using the effective interest method during the life of the loan. | |
Subsequent to the above, the Company entered into an amendment on July 14, 2013 to terminate the Loan Agreement, which is more fully described under Note 25 (subsequent events). | |
Registered_Direct_Offering
Registered Direct Offering | 6 Months Ended |
Jun. 30, 2013 | |
Registered Direct Offering [Abstract] | ' |
Registered Direct Offering | ' |
Note 16. Registered Direct Offering | |
On June 11, 2013, Elephant Talk Communications Corp. (the "Company") entered into 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 was $12,000,000 and resulted in net proceed of $11,292,500 after deduction of $707,500 for fundraising related expenses to various parties involved. An amount of $6,701,824 from the net proceed was used to pay off the outstanding 8% Senior Secured Convertible Notes issued in 2012. | |
The Company issued 17,425,621 shares of Common Stock and 7,841,537 warrants (the "Warrants") as well as 183,284 warrants issued to fundraising agents in the Offering pursuant to the terms and conditions set forth in the SPA, under the Company's shelf registration statement filed with the U.S. Securities and Exchange Commission on May 29, 2012, as amended on May 30, 2012 and June 6, 2012. | |
The Warrants have a five year term from the date of issuance, are exercisable at the price of $0.887 for the investor warrants and $0.853 for the 'agent warrants' per share immediately from the date of issuance and include provisions governing the adjustments to the number of Warrant Shares exercisable thereunder upon stock dividends, stock splits, and other events. The 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 Warrants also will have the right, in its sole discretion, to exercise such Warrants for a net number of Warrant Shares pursuant to the cashless exercise procedures specified in the Warrants. Warrants may be exercised in whole or in part until the termination date of such Warrant,. 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 Warrant. | |
Each Warrant also allows the holder the ability, at any time after 90 days from the issuance of the Warrant through its expiration, to put the Warrant back to the Company in exchange for shares of Common Stock equal to the value of the 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 Warrant, in the event that the Common Stock trades at a price that is 20% or more above the exercise price of the 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 Warrants to exercise the Warrants for cash. | |
If, at any time a Warrant is outstanding, the Company consummates a fundamental transaction(as described in the 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 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 Warrants would have been entitled upon such fundamental transaction. | |
The exercisability or exchangeability of the 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, 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; (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. | |
Loan_from_Joint_Venture_Partne
Loan from Joint Venture Partner | 6 Months Ended |
Jun. 30, 2013 | |
Loan from Joint Venture Partner [Abstract] | ' |
Loan from Joint Venture Partner | ' |
Note 17. Loan from Joint Venture Partner | |
As of June 30, 2013, the Company's 51% owned subsidiary ET-UTS N.V. has $578,518 outstanding in interest bearing (8% per annum) unsecured loans from the 49% shareholder in the joint venture, United Telecommunication Services N.V., the government owned incumbent telecom operator of Curaçao. The amount is inclusive of accumulated accrued interest. No maturity date has been fixed. The amount outstanding as of December 31, 2012 was $555,907. | |
Stockholders_Equity
Stockholders' Equity | 6 Months Ended | ||||||||||||
Jun. 30, 2013 | |||||||||||||
Stockholders' Equity [Abstract] | ' | ||||||||||||
Stockholders' Equity | ' | ||||||||||||
Note 18. Stockholders' Equity | |||||||||||||
(A) Common Stock | |||||||||||||
The Company is presently authorized to issue 250,000,000 shares common stock. The Company had 133,139,900 shares of common shares issued and outstanding as of June 30, 2013, an increase of 21,221,549 shares since December 31, 2012, largely due to the shares issued in connection with the 2013 Registered Direct Offering (described under Note 15) which resulted in the issuance of a total number of shares of 17,425,621, 250,000 shares were issued as a result of a share purchase agreement with a non-affiliate investor; 1,457,019 shares as a result of the exercise of 3,567,965 warrants; 13,000 shares issued to employees as a result of exercised employee stock options; 425,892 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 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 six months ended June 30, 2013. | |||||||||||||
Reconciliation with stock transfer agent records: | |||||||||||||
The shares issued and outstanding as of June 30, 2013 according to the stock transfer agent's records are 135,944,738. The difference in number of issued shares recognized by the Company of 133,139,900 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 Articles, 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 June 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 second quarter of 2013, the number of outstanding warrants decreased by 2,394,627 due to the expiration of warrants related to fundraising activities in 2008 and 2010 and increased due to the closing of funding agreements in May and June 2013 (described under Notes 14 and 15) by 9,278,015 warrants of which 183,284 warrants were issued to the 'Placement Agent' as part of the fund raising fees and 1,253,194 warrants were issued as part of the agreement relating to the 12% unsecured loan from an affiliate. The Weighted Average Exercise Price for the currently outstanding warrants in the table below is $1.17. The below table summarizes the warrants outstanding as per June 30, 2013 and closing December 2012: | |||||||||||||
Outstanding Warrants | Exercise/ Conversion price(s) | Expiring | Jun-13 | December | |||||||||
(range) | 2012 | ||||||||||||
Warrants - Acquisitions | $0.63 - $2.25 | 2013 | 1,007,372 | 3,437,953 | |||||||||
Warrants - Fundraising | $0.85 - $2.00 | 2013 - 2018 | 41,177,143 | 46,322,101 | |||||||||
Warrants - Other | $2.21 | 2016 | 18,659 | 18,659 | |||||||||
42,203,174 | 49,778,713 | ||||||||||||
Basic_and_diluted_net_loss_per
Basic and diluted net loss per share | 6 Months Ended |
Jun. 30, 2013 | |
Basic and diluted net loss per share [Abstract] | ' |
Basic and diluted net loss per share | ' |
Note 19. Basic and diluted net loss per share | |
Net loss per share is calculated in accordance with ASC 260, Earnings per Share ("ASC 260"). 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. The 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 | 6 Months Ended | ||||||||||||||||||||
Jun. 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 20. Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan | |||||||||||||||||||||
2006 Non-Qualified Stock and Option Compensation Plan | |||||||||||||||||||||
Under this plan there are 75,000 stock options outstanding as of June 30, 2013, which have all vested. The options generally vested over a three year period. During Q2 2013, 235,947 shares were issued under this plan for the Q1 2013 non-cash compensation granted to management and board members. There are 364,053 shares and 14,490 stock options that remain available for issuance under the plan. Options generally expire 2 years from the date of vesting. During the six months ended June 30, 2013, there were no grants, exercises, cancellations nor forfeitures. The current 75,000 outstanding options, if not exercised, will expire in 2013 with various expiration dates. | |||||||||||||||||||||
Following is a summary of the status of options outstanding at June 30, 2013: | |||||||||||||||||||||
Options outstanding | Options exercisable | ||||||||||||||||||||
Range of | Total options | Weighted | Weighted | Options | Weighted | ||||||||||||||||
exercise prices | outstanding | average | average exercise | exercisable | average exercise | ||||||||||||||||
remaining | price | price | |||||||||||||||||||
contractual | |||||||||||||||||||||
life (years) | |||||||||||||||||||||
$ 2.25 - $ 2.65 | 75,000 | 0.23 years | $ | 2.25 | 75,000 | $ | 2.25 | ||||||||||||||
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. At June 30, 2013, the total compensation cost related to unvested stock-based awards granted to employees under the provisions of ASC 718 and the Company's 2006 stock award plan, but not yet recognized was $0. | |||||||||||||||||||||
2008 Long-Term Incentive Plan | |||||||||||||||||||||
In 2008, the Company adopted an incentive plan. This incentive 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 this Plan. | |||||||||||||||||||||
Reconciliation of registered and available shares and/or options as of June 30, 2013: | |||||||||||||||||||||
Three months | Balance | ||||||||||||||||||||
ended | 30-Jun-13 | ||||||||||||||||||||
30-Jun-13 | |||||||||||||||||||||
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 | 3,000 | 955,067 | |||||||||||||||||||
Options (movements): | |||||||||||||||||||||
Issued and Outstanding | 5,290,621 | 20,077,064 | |||||||||||||||||||
Available for grant at June 30, 2013: | 446,503 | ||||||||||||||||||||
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. | |||||||||||||||||||||
During the second quarter of 2013 the total outstanding options under the Plan increased by 5,290,621 options due to the annual grant of options under the Company's performance management program and currently a total of 20,077,064 stock options are outstanding under the Plan. Currently 325,000 shares of restricted common stock have been issued to consultants, 1,196,366 shares of common stock had been issued towards directors and officers and another 955,067 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 six months ended June 30, 2013 and the years ended December 31, 2012: | |||||||||||||||||||||
Number of | Weighted | Initial Fair | |||||||||||||||||||
Options | Average | Market Value | |||||||||||||||||||
Exercise Price | (Outstanding | ||||||||||||||||||||
Options) | |||||||||||||||||||||
Options: | |||||||||||||||||||||
Outstanding as of December 31, 2012 | 12,205,717 | $ | 2.15 | $ | 15,316,144 | ||||||||||||||||
Granted in 2013 | 8,369,787 | $ | 0.89 | $ | 3,459,994 | ||||||||||||||||
Exercised (with delivery of shares) | (13,000 | ) | $ | 0.68 | $ | (7,779 | ) | ||||||||||||||
Forfeitures (Pre-vesting) | (402,702 | ) | $ | 1.02 | $ | (409,784 | ) | ||||||||||||||
Expirations (Post-vesting) | (89,405 | ) | $ | 2.13 | $ | (190,548 | ) | ||||||||||||||
Exchanged for Cashless exercise | - | $ | - | $ | - | ||||||||||||||||
Outstanding as of June 30, 2013 | 20,070,397 | $ | 1.63 | $ | 18,168,027 | ||||||||||||||||
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 is $3,459,994. | |||||||||||||||||||||
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 3.35 years, expected option life of 2.32 years (using the simplified method) and a Risk Free Interest Rate of 0.287%. The expected dividend yield is zero. | |||||||||||||||||||||
Following is a summary of the status and used assumptions of options outstanding as of the period ended June 30, 2013: | |||||||||||||||||||||
Plan 2008 | Options outstanding | Options exercisable | |||||||||||||||||||
Range of | Total options | Weighted | Weighted | Options | Weighted | ||||||||||||||||
exercise prices | outstanding | average | average exercise | exercisable | average | ||||||||||||||||
remaining | price | exercise | |||||||||||||||||||
contractual | price | ||||||||||||||||||||
life (years) | |||||||||||||||||||||
$ 0.60 - $ 3.39 | 20,077,064 | 4.16 | $ | 1.63 | 13,075,951 | $ | 1.52 | ||||||||||||||
Unvested Options | Options expected to vest | ||||||||||||||||||||
Number of | Forfeiture used | Number of options | Unrecognized | Weighted average | |||||||||||||||||
options non yet | in this | expected to vest | stock- | remaining | |||||||||||||||||
vested | reporting | corrected by | based | contract life of | |||||||||||||||||
forfeiture | compensation | Total Options | |||||||||||||||||||
rate | expense | expected to vest (in | |||||||||||||||||||
years) | |||||||||||||||||||||
6,994,446 | 9.317 | % | 6,342,764 | $ | 3,875,450 | 3.85 | |||||||||||||||
Weighted average assumptions for 2013 grants: | |||||||||||||||||||||
Weighted Average Annual Volatility | 80 | % | |||||||||||||||||||
Weighted Average Cumulative Volatility | 120 | % | |||||||||||||||||||
Weighted Average Contractual Life (in years) | 3.35 | ||||||||||||||||||||
Weighted Average Expected Option life (in years) | 2.32 | ||||||||||||||||||||
Weighted Average Risk Free Interest Rate | 0.287 | % | |||||||||||||||||||
Dividend yield | 0 | % | |||||||||||||||||||
At June 30, 2013 the unrecognized expense portion of stock-based awards granted to employees under the provisions of ASC 718 and the Company's 2008 stock award plan, was approximately $3,875,450. 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 9.317% at closing June 30, 2013 and the corresponding gain has been accounted for in the second 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 June 30, 2013 for this conditional grant amounts to $506,470 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 June 30, 2013, $2,995,049 and for the six-months period ending June 30, 2013, $4,405,959 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 $1,538,982 for the three month period and $3,230,728 for the six-month period ending June 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 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 | 6 Months Ended | ||||||||||||||||||||
Jun. 30, 2013 | |||||||||||||||||||||
Commitments [Abstract] | ' | ||||||||||||||||||||
Commitments | ' | ||||||||||||||||||||
Note 21. Commitments | |||||||||||||||||||||
Commitments of the Company relating to co-location, network and office rents, regulatory, interconnection fees are as follows: | |||||||||||||||||||||
Year | Office | Co- | Interconnect | Network, | Total | ||||||||||||||||
location | Service & | ||||||||||||||||||||
Support | |||||||||||||||||||||
2013 | $ | 204,164 | $ | 446,967 | $ | 602,401 | $ | 244,792 | $ | 1,498,324 | |||||||||||
2014 | 200,499 | 243,859 | 114,563 | 83,080 | 642,001 | ||||||||||||||||
2015 | 100,090 | 243,859 | 89,105 | 79,046 | 512,100 | ||||||||||||||||
2016 | 22,717 | 77,289 | 12,730 | 39,885 | 152,620 | ||||||||||||||||
2017 | 24,805 | - | 6,365 | - | 31,170 | ||||||||||||||||
$ | 2,836,215 | ||||||||||||||||||||
Noncontrolling_Interest
Non-controlling Interest | 6 Months Ended | ||||||||||||
Jun. 30, 2013 | |||||||||||||
Non-controlling Interest [Abstract] | ' | ||||||||||||
Non-controlling Interest | ' | ||||||||||||
Note 22. 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 June 30, 2013 and December 31, 2012 were as follows: | |||||||||||||
Non-controlling interest Balance at | |||||||||||||
Subsidiary | Non-controlling Interest % | 30-Jun-13 | 31-Dec-12 | ||||||||||
ETC PRS UK | 49 | % | $ | 9,128 | $ | 9,434 | |||||||
ETC PRS Netherlands | 49 | % | 127,488 | 126,013 | |||||||||
ET Bahrain WLL | 1 | % | 69 | 3,438 | |||||||||
ET ME&A FZ LLC | 49.46 | % | 37,091 | 37,091 | |||||||||
Total | $ | 173,776 | $ | 175,976 | |||||||||
Litigations
Litigations | 6 Months Ended |
Jun. 30, 2013 | |
Litigations [Abstract] | ' |
Litigations | ' |
Note 23. Litigations | |
Rescission of the Purchase Agreement of March 31, 2004 of New Times Navigation Limited. | |
As previously described in our 2004 Annual Report, the Company and New Times Navigation Limited mutually agreed to terminate a purchase agreement. The Company 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 the Company issued 37 unsecured convertible promissory notes for a total amount of $3,600,000. Upon the Company's request, 21 notes were returned with a total value of $2,040,000. | |
The Company is 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 | 6 Months Ended | ||||||||||||
Jun. 30, 2013 | |||||||||||||
Geographic Information [Abstract] | ' | ||||||||||||
Geographic Information | ' | ||||||||||||
Note 24. Geographic Information | |||||||||||||
Six months ended June 30, 2013 | |||||||||||||
Europe | Other foreign | Total | |||||||||||
countries | |||||||||||||
Revenues from unaffiliated customers | $ | 10,608,284 | $ | 982,361 | $ | 11,590,645 | |||||||
Identifiable assets | $ | 28,307,487 | $ | 11,792,190 | $ | 40,099,677 | |||||||
Six months ended June 30, 2012 | |||||||||||||
Europe | Other foreign | Total | |||||||||||
countries | |||||||||||||
Revenues from unaffiliated customers | $ | 15,583,125 | $ | 82,812 | $ | 15,665,937 | |||||||
Identifiable assets | $ | 35,825,355 | $ | 8,850,327 | $ | 44,675,682 | |||||||
Related_Party_Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
Note 25. Related Party Transactions | |
On May 24, 2013, the Company entered into a certain loan agreement with a director of the Company pursuant to which the Company borrowed a principal amount of €1,000,000 ($1,290,790) for a period of one year at the interest rate of 12% per annum ("Loan Agreement") and issued a warrant ("Warrant") to the director to purchase 1,253,194 restricted shares of Common Stock exercisable at $1.03 per share for a term of 5 years, with a mandatory cash exercise after 12 months in case the average closing bid price is $1.55 or higher for 10 consecutive trading days. | |
On June 11, 2013, Elephant Talk Communications Corp. (the "Company") entered into Amendment No. 1 (the "Amendment to SPA") to a certain Securities Purchase Agreement (the "SPA") dated June 3, 2013 with amongst others (as described in more detail Note 15) 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 from this SPA from Mr. van der Velden was $4,500,000. The number of shares issued to Mr. van der Velden amounted to 6,428,571 and the number of warrants amounted to 2,892,857. Further details of the SPA can be found in Note 15. | |
Quercus Management Group N.V. ("QMG"), an entity affiliated with certain officers and directors of the Company served as fundraising agent for Stock Purchase Agreements (the "SPA") with a non-affiliated investor pursuant to which $225,000 was raised. QMG received a selling concession of 8%, or $18,000. | |
Subsequent_Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2013 | |
Subsequent Event [Abstract] | ' |
Subsequent Events | ' |
Note 26. Subsequent Events | |
The Company's management evaluated subsequent events through the date the financial statements were available to be issued. | |
Conversion and Termination of Loan Agreement Related Party | |
On July 14, 2013, the Company entered into an amendment (the "Amendment") with a director of the Company, to terminate the Loan Agreement and cancel the Warrant that is mentioned Note 14 and 24. In exchange for termination of the Loan Agreement, the Company entered into a Stock Purchase Agreement, dated July 15, 2013 (the "Purchase Agreement") with the director pursuant to which the Company agreed to convert the Principal Amount of the loan into 1,840,631 restricted shares of the Company's Common Stock. The conversion rate was calculated against the Euros (€) to U.S. Dollars ($) 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. | |
Significant_Accounting_Policie1
Significant Accounting Policies (Policy) | 6 Months Ended | ||||||||||||||||
Jun. 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 and for its wholly-owned subsidiary Elephant Talk Global Holding B.V., 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" ("ASC 830"), 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 stockholders' equity as of June 30, 2013 and December 31, 2012 was ($1,266,977) and ($732,090), respectively. The foreign currency translation gain (/loss) for the six months ended June 30, 2013 and 2012 was ($1,296,649) and ($909,694), respectively. The foreign currency translation gain (/loss) for the three months ended June 30, 2013 and 2012 was ($534,887) and ($1,779,477). | |||||||||||||||||
Use of Estimates | ' | ||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of the accompanying consolidated 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 June 30, 2013 and December 31, 2012, the allowance for doubtful accounts was $486,591and $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. 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 the 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 statement of operations 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" set by the U.S. Treasury Department with a term equal to the reported rate, or derived by using both spreads in intermediate term and rates, compared 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 June 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 six 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 June 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 loss 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 half year 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, 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. 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. | |||||||||||||||||
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 June 30, 2013 for financial assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||||
30-Jun-13 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liability Derivatives | |||||||||||||||||
Conversion feature | $ | - | $ | - | $ | - | $ | - | |||||||||
Warrant Liabilities | $ | - | $ | - | $ | 5,291,351 | $ | 5,291,351 | |||||||||
Total liability derivatives | $ | - | $ | - | $ | 5,291,351 | $ | 5,291,351 | |||||||||
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 various outstanding warrants into level 3 due to the fact that some inputs are not published and not easily comparable to industry peers. The warrants are a result of the SPA agreement closed in June 2013 and consist of 4,948,680 warrants issued to 'DJ investors', 2,892,857 warrants issued to 'affiliate investors' and 183,284 warrants issued to the placement agent 'agent warrants'(see Note 15). | |||||||||||||||||
The conversion feature derivative liability extinguished due to the early repayment of the 8% Senior Secured Convertible Note. | |||||||||||||||||
Recently Issued Accounting Pronouncements | ' | ||||||||||||||||
Recently Issued Accounting Pronouncements | |||||||||||||||||
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 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU requires companies to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income when applicable or to cross-reference the reclassifications with other disclosures that provide additional detail about the reclassification made when the reclassifications are not made to net income. This ASU is effective for fiscal years and interim periods, beginning after December 15, 2012. During the six months ended June 30, 2013, the Company adopted ASU 2013-02 and the adoption did not have a material impact on its consolidated financial statements since the Company did not have material reclassifications in any periods presented. | |||||||||||||||||
In February 2013, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or 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 is evaluating the potential impact of this adoption on its consolidated financial statements. | |||||||||||||||||
In July 2012, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. To be consistent with the guidance found under ASU 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment, ASU 2012-02 is intended to simplify impairment testing for indefinite-lived intangible assets other than goodwill by adding a qualitative review step to assess whether the required quantitative impairment analysis that exists today is necessary. Under the amended rule, a company will not be required to calculate the fair value of a business that contains recorded indefinite-lived intangible assets other than goodwill unless it concludes, based on the qualitative assessment, that it is more likely than not that the fair value of that business is less than its book value. If such a decline in fair value is deemed more likely than not to have occurred, then the quantitative impairment test that exists under current GAAP must be completed; otherwise, the indefinite lived assets other than goodwill are deemed to be not impaired and no further testing is required until the next annual test date (or sooner if conditions or events before that date raise concerns of potential impairment in the business). This new standard is effective for the Company beginning June 1, 2013. The Company does not expect this to have a material impact on its financial statements. | |||||||||||||||||
Restatement_of_unaudited_conde1
Restatement of unaudited condensed consolidated financial statements (Tables) | 6 Months Ended | ||||||||||||
Jun. 30, 2013 | |||||||||||||
Restatement of unaudited condensed consolidated financial statements [Abstract] | ' | ||||||||||||
Schedule of Effects of Restatement Adjustments | ' | ||||||||||||
As detailed in the table below, this restatement impacts the following consolidated statements and line items: | |||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||
As previously | Adjustment | As restated | |||||||||||
reported | |||||||||||||
LONG TERM LIABILITIES | |||||||||||||
- Warrant liabilities | $ | 2,428,919 | $ | 2,862,432 | $ | 5,291,351 | |||||||
STOCKHOLDERS' EQUITY | |||||||||||||
- Common stock | $ | 238,813,861 | $ | (2,435,982 | ) | $ | 236,377,879 | ||||||
- Accumulated deficit | $ | (215,664,341 | ) | $ | (426,450 | ) | $ | (216,090,791 | ) | ||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS | |||||||||||||
Three months ended June 30, 2013 | As previously | Adjustment | As restated | ||||||||||
reported | |||||||||||||
- Changes in fair value of warrant liabilities | $ | 772,466 | $ | (426,450 | ) | $ | 346,016 | ||||||
- Net loss | $ | (7,266,111 | ) | $ | (426,450 | ) | $ | (7,692,561 | ) | ||||
- Net loss per common share and equivalents - basic and diluted' | $ | (0.06 | ) | $ | (0.01 | ) | $ | (0.07 | ) | ||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS | |||||||||||||
Six months ended June 30, 2013 | As previously | Adjustment | As restated | ||||||||||
reported | |||||||||||||
- Changes in fair value of warrant liabilities | $ | 772,466 | $ | (426,450 | ) | $ | 346,016 | ||||||
- Net loss | $ | (12,404,033 | ) | $ | (426,450 | ) | $ | (12,830,483 | ) | ||||
- Net loss per common share and equivalents - basic and diluted' | $ | (0.11 | ) | $ | (0.01 | ) | $ | (0.12 | ) | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
Cash Flows From Operating Activities | As previously | Adjustment | As restated | ||||||||||
reported | |||||||||||||
- Net loss | $ | (12,404,033 | ) | $ | (426,450 | ) | $ | (12,830,483 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities | |||||||||||||
- Change in fair value of derivative instruments | $ | 2,067,270 | $ | 426,450 | $ | 2,493,720 | |||||||
Significant_Accounting_Policie2
Significant Accounting Policies (Tables) | 6 Months Ended | ||||||||||||||||
Jun. 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 June 30, 2013 for financial assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||||
30-Jun-13 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liability Derivatives | |||||||||||||||||
Conversion feature | $ | - | $ | - | $ | - | $ | - | |||||||||
Warrant Liabilities | $ | - | $ | - | $ | 5,291,351 | $ | 5,291,351 | |||||||||
Total liability derivatives | $ | - | $ | - | $ | 5,291,351 | $ | 5,291,351 | |||||||||
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) | 6 Months Ended | ||||||||||||
Jun. 30, 2013 | |||||||||||||
Property and Equipment [Abstract] | ' | ||||||||||||
Schedule of Property and Equipment | ' | ||||||||||||
Property and equipment at June 30, 2013 and December 31, 2012 consist of: | |||||||||||||
Average | June 30, | December 31, | |||||||||||
Estimated | |||||||||||||
Useful Lives | 2013 | 2012 | |||||||||||
Furniture and fixtures | 5 | 276,256 | 269,731 | ||||||||||
Computer, communication and network equipment | 10-Mar | 21,278,404 | 17,056,396 | ||||||||||
Software | 5 | 6,334,757 | 6,123,371 | ||||||||||
Automobiles | 5 | 86,541 | 87,925 | ||||||||||
Construction in progress | 2,409,199 | 1,962,315 | |||||||||||
Total property and equipment | 30,385,157 | 25,499,738 | |||||||||||
Less: accumulated depreciation | (13,320,034 | ) | (12,411,467 | ) | |||||||||
Total Property and Equipment, Net | $ | 17,065,123 | $ | 13,088,271 |
Intangible_Assets_Tables
Intangible Assets (Tables) | 6 Months Ended | ||||||||||||||||||||||||
Jun. 30, 2013 | |||||||||||||||||||||||||
Intangible Assets [Abstract] | ' | ||||||||||||||||||||||||
Schedule of Intangible Assets | ' | ||||||||||||||||||||||||
Intangible assets as of June 30, 2013 and December 31, 2012 consisted of the following: | |||||||||||||||||||||||||
Estimated | June 30, | December 31, | |||||||||||||||||||||||
Useful Lives | 2013 | 2012 | |||||||||||||||||||||||
Customer Contracts, Licenses , Interconnect & Technology | 10-May | $ | 12,917,453 | $ | 12,096,592 | ||||||||||||||||||||
ValidSoft IP & Technology | 10-Jan | 15,352,291 | 15,597,814 | ||||||||||||||||||||||
Total intangible assets | 28,269,744 | 27,694,406 | |||||||||||||||||||||||
Less: Accumulated Amortization and impairment charges | (10,760,951 | ) | (10,569,693 | ) | |||||||||||||||||||||
Less: Accumulated Amortization ValidSoft IP & Technology | (7,542,230 | ) | (6,621,687 | ) | |||||||||||||||||||||
Total intangible assets, Net | $ | 9,966,563 | $ | 10,503,026 | |||||||||||||||||||||
Estimated Future Amortization Expense Related to Intangible Assets | ' | ||||||||||||||||||||||||
Estimated future amortization expense related to our intangible assets is: | |||||||||||||||||||||||||
Rest of | 2014 | 2015 | 2016 | 2017 | 2018 and | ||||||||||||||||||||
2013 | thereafter | ||||||||||||||||||||||||
Interconnect licenses and contracts | $ | 348,574 | $ | 467,433 | $ | 145,634 | $ | 17,526 | $ | - | $ | - | |||||||||||||
ValidSoft IP & Technology | 1,057,452 | 2,114,904 | 1,973,718 | 1,926,655 | 501,259 | 234,999 | |||||||||||||||||||
$ | 1,406,026 | $ | 2,582,337 | $ | 2,119,352 | $ | 1,944,181 | $ | 501,259 | $ | 234,999 |
Goodwill_Tables
Goodwill (Tables) | 6 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Goodwill [Abstract] | ' | ||||||||
Schedule of Goodwill | ' | ||||||||
The carrying value of the Company's goodwill as of June 30, 2013 and as of December 31, 2012 was as follows: | |||||||||
Goodwill | June 30, | December | |||||||
31, | |||||||||
2013 | 2012 | ||||||||
Goodwill at acquisition of ValidSoft Ltd | $ | 3,433,833 | $ | 3,433,833 | |||||
Goodwill Morodo | 214,689 | 214,689 | |||||||
End of period exchange rate translation | (267,104 | ) | (211,791 | ) | |||||
Total | $ | 3,381,418 | $ | 3,436,731 |
Accrued_expenses_Tables
Accrued expenses (Tables) | 6 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Accrued expenses [Abstract] | ' | ||||||||
Accrued Expenses | ' | ||||||||
As of June 30, 2013 and December 31, 2012, the accrued expenses comprised of the following: | |||||||||
June 30, | December | ||||||||
2013 | 31, 2012 | ||||||||
Accrued Selling, General & Administrative expenses | $ | 2,244,170 | $ | 2,175,845 | |||||
Accrued cost of service | 700,747 | 648,958 | |||||||
Accrued taxes (including VAT) | 796,589 | 288,651 | |||||||
Accrued interest payable | 907,654 | 882,181 | |||||||
Accrued capital expenditure liabilities | 1,917,164 | 124,901 | |||||||
Total accrued expenses | $ | 6,566,324 | $ | 4,120,536 |
Loans_Payable_Tables
Loans Payable (Tables) | 6 Months Ended | ||||||||
Jun. 30, 2013 | |||||||||
Loans Payable [Abstract] | ' | ||||||||
Loans Payable | ' | ||||||||
Loans payable at June 30, 2013 and December 31, 2012 are summarized as follows: | |||||||||
June | December | ||||||||
30, 2013 | 31, 2012 | ||||||||
Installment loan payable due December 24, 2006, secured by personal guarantees of two shareholders, a former director, and a third party | $ | 320,280 | $ | 320,491 | |||||
Installment loan payable, bank, monthly principal and interest payments of $2,798 including interest at bank's prime rate plus 1.5% per annum, 8.25% at November 30, 2008, due December 24, 2011, secured by personal guarantees of three shareholders and a former director | 254,633 | 254,800 | |||||||
Installment loan payable, bank, monthly principal and interest payments of $1,729 including interest at bank's prime rate plus 1.5% per annum, 8.25% at November 24, 2008, due June 28, 2009, secured by personal guarantees of three shareholders and a former director | 103,872 | 103,940 | |||||||
Term loan payable, bank, monthly payments of interest at bank's prime rate, 7.0% at December 31, 2007 | 283,633 | 283,820 | |||||||
Total | $ | 962,418 | $ | 963,051 | |||||
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 6 Months Ended | ||||||||||||
Jun. 30, 2013 | |||||||||||||
Stockholders' Equity [Abstract] | ' | ||||||||||||
Summary of Warrants | ' | ||||||||||||
The below table summarizes the warrants outstanding as per June 30, 2013 and closing December 2012: | |||||||||||||
Outstanding Warrants | Exercise/ Conversion price(s) | Expiring | Jun-13 | December | |||||||||
(range) | 2012 | ||||||||||||
Warrants - Acquisitions | $0.63 - $2.25 | 2013 | 1,007,372 | 3,437,953 | |||||||||
Warrants - Fundraising | $0.85 - $2.00 | 2013 - 2018 | 41,177,143 | 46,322,101 | |||||||||
Warrants - Other | $2.21 | 2016 | 18,659 | 18,659 | |||||||||
42,203,174 | 49,778,713 |
Employee_Benefit_Plan_and_NonQ1
Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan (Tables) | 6 Months Ended | ||||||||||||||||||||
Jun. 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 June 30, 2013: | |||||||||||||||||||||
Options outstanding | Options exercisable | ||||||||||||||||||||
Range of | Total options | Weighted | Weighted | Options | Weighted | ||||||||||||||||
exercise prices | outstanding | average | average exercise | exercisable | average exercise | ||||||||||||||||
remaining | price | price | |||||||||||||||||||
contractual | |||||||||||||||||||||
life (years) | |||||||||||||||||||||
$ 2.25 - $ 2.65 | 75,000 | 0.23 years | $ | 2.25 | 75,000 | $ | 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 June 30, 2013: | |||||||||||||||||||||
Three months | Balance | ||||||||||||||||||||
ended | 30-Jun-13 | ||||||||||||||||||||
30-Jun-13 | |||||||||||||||||||||
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 | 3,000 | 955,067 | |||||||||||||||||||
Options (movements): | |||||||||||||||||||||
Issued and Outstanding | 5,290,621 | 20,077,064 | |||||||||||||||||||
Available for grant at June 30, 2013: | 446,503 | ||||||||||||||||||||
Common Stock Purchase Options and Long Term Incentive Plan | ' | ||||||||||||||||||||
Common stock purchase options consisted of the following as of the six months ended June 30, 2013 and the years ended December 31, 2012: | |||||||||||||||||||||
Number of | Weighted | Initial Fair | |||||||||||||||||||
Options | Average | Market Value | |||||||||||||||||||
Exercise Price | (Outstanding | ||||||||||||||||||||
Options) | |||||||||||||||||||||
Options: | |||||||||||||||||||||
Outstanding as of December 31, 2012 | 12,205,717 | $ | 2.15 | $ | 15,316,144 | ||||||||||||||||
Granted in 2013 | 8,369,787 | $ | 0.89 | $ | 3,459,994 | ||||||||||||||||
Exercised (with delivery of shares) | (13,000 | ) | $ | 0.68 | $ | (7,779 | ) | ||||||||||||||
Forfeitures (Pre-vesting) | (402,702 | ) | $ | 1.02 | $ | (409,784 | ) | ||||||||||||||
Expirations (Post-vesting) | (89,405 | ) | $ | 2.13 | $ | (190,548 | ) | ||||||||||||||
Exchanged for Cashless exercise | - | $ | - | $ | - | ||||||||||||||||
Outstanding as of June 30, 2013 | 20,070,397 | $ | 1.63 | $ | 18,168,027 | ||||||||||||||||
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 June 30, 2013: | |||||||||||||||||||||
Plan 2008 | Options outstanding | Options exercisable | |||||||||||||||||||
Range of | Total options | Weighted | Weighted | Options | Weighted | ||||||||||||||||
exercise prices | outstanding | average | average exercise | exercisable | average | ||||||||||||||||
remaining | price | exercise | |||||||||||||||||||
contractual | price | ||||||||||||||||||||
life (years) | |||||||||||||||||||||
$ 0.60 - $ 3.39 | 20,077,064 | 4.16 | $ | 1.63 | 13,075,951 | $ | 1.52 | ||||||||||||||
Unvested Options | Options expected to vest | ||||||||||||||||||||
Number of | Forfeiture used | Number of options | Unrecognized | Weighted average | |||||||||||||||||
options non yet | in this | expected to vest | stock- | remaining | |||||||||||||||||
vested | reporting | corrected by | based | contract life of | |||||||||||||||||
forfeiture | compensation | Total Options | |||||||||||||||||||
rate | expense | expected to vest (in | |||||||||||||||||||
years) | |||||||||||||||||||||
6,994,446 | 9.317 | % | 6,342,764 | $ | 3,875,450 | 3.85 | |||||||||||||||
Weighted average assumptions for 2013 grants: | |||||||||||||||||||||
Weighted Average Annual Volatility | 80 | % | |||||||||||||||||||
Weighted Average Cumulative Volatility | 120 | % | |||||||||||||||||||
Weighted Average Contractual Life (in years) | 3.35 | ||||||||||||||||||||
Weighted Average Expected Option life (in years) | 2.32 | ||||||||||||||||||||
Weighted Average Risk Free Interest Rate | 0.287 | % | |||||||||||||||||||
Dividend yield | 0 | % |
Commitments_Tables
Commitments (Tables) | 6 Months Ended | ||||||||||||||||||||
Jun. 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 are as follows: | |||||||||||||||||||||
Year | Office | Co- | Interconnect | Network, | Total | ||||||||||||||||
location | Service & | ||||||||||||||||||||
Support | |||||||||||||||||||||
2013 | $ | 204,164 | $ | 446,967 | $ | 602,401 | $ | 244,792 | $ | 1,498,324 | |||||||||||
2014 | 200,499 | 243,859 | 114,563 | 83,080 | 642,001 | ||||||||||||||||
2015 | 100,090 | 243,859 | 89,105 | 79,046 | 512,100 | ||||||||||||||||
2016 | 22,717 | 77,289 | 12,730 | 39,885 | 152,620 | ||||||||||||||||
2017 | 24,805 | - | 6,365 | - | 31,170 | ||||||||||||||||
$ | 2,836,215 |
Noncontrolling_Interest_Tables
Non-controlling Interest (Tables) | 6 Months Ended | ||||||||||||
Jun. 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 June 30, 2013 and December 31, 2012 were as follows: | |||||||||||||
Non-controlling interest Balance at | |||||||||||||
Subsidiary | Non-controlling Interest % | 30-Jun-13 | 31-Dec-12 | ||||||||||
ETC PRS UK | 49 | % | $ | 9,128 | $ | 9,434 | |||||||
ETC PRS Netherlands | 49 | % | 127,488 | 126,013 | |||||||||
ET Bahrain WLL | 1 | % | 69 | 3,438 | |||||||||
ET ME&A FZ LLC | 49.46 | % | 37,091 | 37,091 | |||||||||
Total | $ | 173,776 | $ | 175,976 |
Geographic_Information_Tables
Geographic Information (Tables) | 6 Months Ended | ||||||||||||
Jun. 30, 2013 | |||||||||||||
Geographic Information [Abstract] | ' | ||||||||||||
Schedule of Revenues and Assets by Geographic Area | ' | ||||||||||||
Six months ended June 30, 2013 | |||||||||||||
Europe | Other foreign | Total | |||||||||||
countries | |||||||||||||
Revenues from unaffiliated customers | $ | 10,608,284 | $ | 982,361 | $ | 11,590,645 | |||||||
Identifiable assets | $ | 28,307,487 | $ | 11,792,190 | $ | 40,099,677 | |||||||
Six months ended June 30, 2012 | |||||||||||||
Europe | Other foreign | Total | |||||||||||
countries | |||||||||||||
Revenues from unaffiliated customers | $ | 15,583,125 | $ | 82,812 | $ | 15,665,937 | |||||||
Identifiable assets | $ | 35,825,355 | $ | 8,850,327 | $ | 44,675,682 |
Description_of_Business_Basis_1
Description of Business, Basis of Presentation and Principles of Consolidation (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Proceeds from financing | $13,525,000 | ' | ' | ' | ' |
Proceeds from Share Purchase Agreement - Registered direct | 12,000,000 | 7,500,000 | ' | ' | ' |
Proceeds from Share Purchase Agreement - Unregistered securities | 225,000 | 225,000 | ' | ' | ' |
Proceeds from short-term bank loans | 1,300,000 | ' | ' | ' | ' |
Fundraising related expenses | 707,500 | 707,500 | ' | ' | ' |
Net proceeds from financing | 12,817,500 | ' | ' | ' | ' |
Payments to extinguish 8% senior secured convertible debt | 7,747,933 | ' | ' | ' | ' |
Cash and cash equivalents | $2,979,673 | $2,979,673 | $4,051,777 | $1,233,268 | $6,009,576 |
Elephant Talk Communications PRS U.K. Limited [Member] | ' | ' | ' | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' | ' | ' | ' |
Ownership percentage | 51.00% | 51.00% | ' | ' | ' |
Elephant Talk United Telecommunication Services N.V. [Member] | ' | ' | ' | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' | ' | ' | ' |
Ownership percentage | 51.00% | 51.00% | ' | ' | ' |
Elephant Talk Communications Premium Rate Services Netherlands B.V. [Member] | ' | ' | ' | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' | ' | ' | ' |
Ownership percentage | 51.00% | 51.00% | ' | ' | ' |
Elephant Talk Middle East & Africa (Holding) W.L.L. [Member] | ' | ' | ' | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' | ' | ' | ' |
Ownership percentage | 60.00% | 60.00% | ' | ' | ' |
Elephant Talk Middle East & Africa (Holding) Jordan L.L.C. [Member] | ' | ' | ' | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' | ' | ' | ' |
Ownership percentage | 100.00% | 100.00% | ' | ' | ' |
Elephant Talk Middle East & Africa Bahrain W.L.L. [Member] | ' | ' | ' | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' | ' | ' | ' |
Ownership percentage | 99.00% | 99.00% | ' | ' | ' |
Elephant Talk Middle East & Africa FZ-LLC [Member] | ' | ' | ' | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' | ' | ' | ' |
Ownership percentage | 50.54% | 50.54% | ' | ' | ' |
Elephant Talk Telecomunicacao do Brasil LTDA [Member] | Elephant Talk Europe Holding B.V. [Member] | ' | ' | ' | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' | ' | ' | ' |
Ownership percentage | 90.00% | 90.00% | ' | ' | ' |
Elephant Talk Telecomunicacao do Brasil LTDA [Member] | Elephant Talk Communication Holding AG [Member] | ' | ' | ' | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' | ' | ' | ' |
Ownership percentage | 10.00% | 10.00% | ' | ' | ' |
Restatement_of_unaudited_conde2
Restatement of unaudited condensed consolidated financial statements (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | Dec. 31, 2012 | |
Shares issued per SPA | ' | ' | 17,425,621 | ' | ' |
Number of warrants issued | 9,278,015 | ' | ' | ' | ' |
Warrants issued to placement agent | 183,284 | ' | ' | ' | ' |
LONG TERM LIABILITIES | ' | ' | ' | ' | ' |
Warrant liabilities | $5,291,351 | ' | $5,291,351 | ' | ' |
STOCKHOLDERS' EQUITY | ' | ' | ' | ' | ' |
Common stock | 236,377,879 | ' | 236,377,879 | ' | 223,965,907 |
Accumulated deficit | -216,090,791 | ' | -216,090,791 | ' | -203,260,307 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS | ' | ' | ' | ' | ' |
Changes in fair value of warrant liabilities | 346,016 | ' | 346,016 | ' | ' |
Net loss | -7,692,561 | -4,990,909 | -12,830,483 | -10,996,098 | ' |
Net loss per common share and equivalents - basic and diluted | ($0.07) | ($0.04) | ($0.12) | ($0.10) | ' |
Cash Flows From Operating Activities | ' | ' | ' | ' | ' |
Net loss | -7,692,561 | -4,990,909 | -12,830,483 | -10,996,098 | ' |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' | ' | ' | ' |
Change in fair value of derivative instruments | ' | ' | 2,493,720 | ' | ' |
Investors [Member] | ' | ' | ' | ' | ' |
Number of warrants issued | ' | ' | 7,841,537 | ' | ' |
As Previously Reported [Member] | ' | ' | ' | ' | ' |
LONG TERM LIABILITIES | ' | ' | ' | ' | ' |
Warrant liabilities | 2,428,919 | ' | 2,428,919 | ' | ' |
STOCKHOLDERS' EQUITY | ' | ' | ' | ' | ' |
Common stock | 238,813,861 | ' | 238,813,861 | ' | ' |
Accumulated deficit | -215,664,341 | ' | -215,664,341 | ' | ' |
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS | ' | ' | ' | ' | ' |
Changes in fair value of warrant liabilities | 772,466 | ' | 772,466 | ' | ' |
Net loss | -7,266,111 | ' | -12,404,033 | ' | ' |
Net loss per common share and equivalents - basic and diluted | ($0.06) | ' | ($0.11) | ' | ' |
Cash Flows From Operating Activities | ' | ' | ' | ' | ' |
Net loss | -7,266,111 | ' | -12,404,033 | ' | ' |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' | ' | ' | ' |
Change in fair value of derivative instruments | ' | ' | 2,067,270 | ' | ' |
Adjustment [Member] | ' | ' | ' | ' | ' |
LONG TERM LIABILITIES | ' | ' | ' | ' | ' |
Warrant liabilities | 2,862,432 | ' | 2,862,432 | ' | ' |
STOCKHOLDERS' EQUITY | ' | ' | ' | ' | ' |
Common stock | -2,435,982 | ' | -2,435,982 | ' | ' |
Accumulated deficit | -426,450 | ' | -426,450 | ' | ' |
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS | ' | ' | ' | ' | ' |
Changes in fair value of warrant liabilities | -426,450 | ' | -426,450 | ' | ' |
Net loss | -426,450 | ' | -426,450 | ' | ' |
Net loss per common share and equivalents - basic and diluted | ($0.01) | ' | ($0.01) | ' | ' |
Cash Flows From Operating Activities | ' | ' | ' | ' | ' |
Net loss | -426,450 | ' | -426,450 | ' | ' |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' | ' | ' | ' |
Change in fair value of derivative instruments | ' | ' | $426,450 | ' | ' |
Significant_Accounting_Policie3
Significant Accounting Policies (Narrative) (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | Dec. 31, 2012 | |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' |
Accumulated other comprehensive loss | ($1,266,977) | ' | ($1,266,977) | ' | ($732,090) |
Foreign currency translation loss | -534,887 | -1,779,477 | -1,296,649 | -909,694 | ' |
Accounts receivable, allowance for doubtful accounts | $486,591 | ' | $486,591 | ' | $559,120 |
Options granted vesting period | ' | ' | '3 years | ' | ' |
Warrants | 42,203,174 | ' | 42,203,174 | ' | 49,778,713 |
DJ Investors Warrants [Member] | ' | ' | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' |
Warrants | 4,948,680 | ' | 4,948,680 | ' | ' |
Affiliate Investors Warrants [Member] | ' | ' | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' |
Warrants | 2,892,857 | ' | 2,892,857 | ' | ' |
Placement Agent Warrants [Member] | ' | ' | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' |
Warrants | 183,284 | ' | 183,284 | ' | ' |
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 $) | Jun. 30, 2013 | Dec. 31, 2012 |
Liability Derivatives | ' | ' |
Liability derivatives | $5,291,351 | $311,986 |
Conversion Feature [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | ' | 311,986 |
Warrant [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | 5,291,351 | ' |
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 | 5,291,351 | 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 | $5,291,351 | ' |
Prepaid_Expenses_and_Other_Cur1
Prepaid Expenses and Other Current Assets (Details) (USD $) | Jun. 30, 2013 | Dec. 31, 2012 |
Prepaid Expenses and Other Current Assets [Abstract] | ' | ' |
Prepaid expenses and other current assets | $2,194,320 | $1,821,218 |
Prepaid Value Added Tax | $760,970 | $534,327 |
Other_Assets_Details
Other Assets (Details) (USD $) | 3 Months Ended | |
Jun. 30, 2013 | Dec. 31, 2012 | |
Deposits [Line Items] | ' | ' |
Long-term deposits | $621,182 | $657,192 |
Write off of remaining financing costs | 265,995 | ' |
Deferred financing cost, net | $0 | $381,114 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | Jun. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 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 | $276,256 | $269,731 | ' | ' | ' | ' | ' |
Computer, communication and network equipment | 21,278,404 | 17,056,396 | ' | ' | ' | ' | ' |
Software | 6,334,757 | 6,123,371 | ' | ' | ' | ' | ' |
Automobiles | 86,541 | 87,925 | ' | ' | ' | ' | ' |
Construction in progress | 2,409,199 | 1,962,315 | ' | ' | ' | ' | ' |
Total property and equipment | 30,385,157 | 25,499,738 | ' | ' | ' | ' | ' |
Less: accumulated depreciation | -13,320,034 | -12,411,467 | ' | ' | ' | ' | ' |
Total Property and Equipment, Net | $17,065,123 | $13,088,271 | ' | ' | ' | ' | ' |
Property_and_Equipment_Additio
Property and Equipment (Additional Information) (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | |
Property and Equipment [Abstract] | ' | ' | ' | ' |
Depreciation expense | $985,811 | $567,031 | $1,593,775 | $1,145,553 |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | Jun. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2013 | Jun. 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 | $28,269,744 | $27,694,406 | ' | ' | $12,917,453 | $12,096,592 | ' | ' | $15,352,291 | $15,597,814 | ' | ' |
Less: Accumulated Amortization and impairment charges | ' | ' | ' | ' | -10,760,951 | -10,569,693 | ' | ' | -7,542,230 | -6,621,687 | ' | ' |
Total intangible assets, Net | $9,966,563 | $10,503,026 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible_Assets_Additional_I
Intangible Assets (Additional Information) (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | |
Intangible Assets [Abstract] | ' | ' | ' | ' |
Amortization Expense | $850,420 | $657,857 | $1,562,444 | $1,357,804 |
Intangible_Assets_Estimated_Fu
Intangible Assets (Estimated Future Amortization Expense Related to Intangible Assets) (Details) (USD $) | Jun. 30, 2013 |
Finite-Lived Intangible Assets [Line Items] | ' |
Rest of 2013 | $1,406,026 |
2014 | 2,582,337 |
2015 | 2,119,352 |
2016 | 1,944,181 |
2017 | 501,259 |
2018 and thereafter | 234,999 |
Customer Contracts Licenses Interconnect And Technology [Member] | ' |
Finite-Lived Intangible Assets [Line Items] | ' |
Rest of 2013 | 348,574 |
2014 | 467,433 |
2015 | 145,634 |
2016 | 17,526 |
2017 | ' |
2018 and thereafter | ' |
Valid Soft Ip And Technology [Member] | ' |
Finite-Lived Intangible Assets [Line Items] | ' |
Rest of 2013 | 1,057,452 |
2014 | 2,114,904 |
2015 | 1,973,718 |
2016 | 1,926,655 |
2017 | 501,259 |
2018 and thereafter | $234,999 |
Telnicity_Asset_Purchase_Agree1
Telnicity Asset Purchase Agreement (Details) (Telnicity LLC [Member], USD $) | 0 Months Ended |
Apr. 02, 2013 | |
Telnicity LLC [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 |
Goodwill_Details
Goodwill (Details) (USD $) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2013 | Dec. 31, 2012 | |
Goodwill [Line Items] | ' | ' |
End of period exchange rate translation | ($267,104) | ($211,791) |
Goodwill | 3,381,418 | 3,436,731 |
ValidSoft Ltd [Member] | ' | ' |
Goodwill [Line Items] | ' | ' |
Goodwill | 3,433,833 | 3,433,833 |
Morodo Ltd. [Member] | ' | ' |
Goodwill [Line Items] | ' | ' |
Goodwill | $214,689 | $214,689 |
Overdraft_Details
Overdraft (Details) (USD $) | 6 Months Ended | |
Jun. 30, 2013 | Dec. 31, 2012 | |
Short-term Debt [Line Items] | ' | ' |
Overdraft | $369,859 | $350,114 |
Elephant Talk Ltd [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Overdraft | $369,859 | $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 $) | Jun. 30, 2013 | Dec. 31, 2012 |
Deferred Revenue [Abstract] | ' | ' |
Deferred Revenue | $482,381 | $252,551 |
Accrued_expenses_Details
Accrued expenses (Details) (USD $) | Jun. 30, 2013 | Dec. 31, 2012 |
Accrued expenses [Abstract] | ' | ' |
Accrued Selling, General & Administrative expenses | $2,244,170 | $2,175,845 |
Accrued cost of service | 700,747 | 648,958 |
Accrued taxes (including VAT) | 796,589 | 288,651 |
Accrued interest payable | 907,654 | 882,181 |
Accrued capital expenditure liabilities | 1,917,164 | 124,901 |
Total accrued expenses | $6,566,324 | $4,120,536 |
Loans_Payable_Details
Loans Payable (Details) (USD $) | 0 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | ||||||||||
Dec. 14, 2011 | Jun. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2013 | Dec. 31, 2012 | Nov. 30, 2008 | Jun. 30, 2013 | Dec. 31, 2012 | Nov. 24, 2008 | Jun. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2007 | |
Installment Loan Payable Due December 24, 2006 [Member] | Installment Loan Payable Due December 24, 2006 [Member] | Installment Loan Payable Due December 24, 2011 [Member] | Installment Loan Payable Due December 24, 2011 [Member] | Installment Loan Payable Due December 24, 2011 [Member] | Installment Bank Loan Payable Due June 28, 2011 [Member] | Installment Bank Loan Payable Due June 28, 2011 [Member] | Installment Bank Loan Payable Due June 28, 2011 [Member] | Term Loan [Member] | Term Loan [Member] | Term Loan [Member] | ||||
entities | entities | entities | ||||||||||||
Short-term Debt [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loans payable | ' | $962,418 | $963,051 | $320,280 | $320,491 | $254,633 | $254,800 | ' | $103,872 | $103,940 | ' | $283,633 | $283,820 | ' |
Loan payable, monthly principal and interest payments | ' | ' | ' | ' | ' | 2,798 | ' | ' | 1,729 | ' | ' | ' | ' | ' |
Loan payable, interest rate spread | ' | ' | ' | ' | ' | 1.50% | ' | ' | 1.50% | ' | ' | ' | ' | ' |
Loan payable, Interest rate | ' | ' | ' | ' | ' | ' | ' | 8.25% | ' | ' | 8.25% | ' | ' | 7.00% |
Debt instrument, maturity date | ' | ' | ' | 24-Dec-06 | ' | 24-Dec-11 | ' | ' | 28-Jun-09 | ' | ' | ' | ' | ' |
Personal guarantee, number of shareholders | ' | ' | ' | 2 | ' | 3 | ' | ' | 3 | ' | ' | ' | ' | ' |
Personal guarantee, number of former directors | ' | ' | ' | 1 | ' | 1 | ' | ' | 1 | ' | ' | ' | ' | ' |
Personal guarantee, number of third parties | ' | ' | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Potential loss from default on bank loans and overdraft account that are still in litigation | ' | 1,933,308 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Litigation awarded value | $5,925 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
8_Senior_Secured_Convertible_N1
8% Senior Secured Convertible Note (Details) (USD $) | 3 Months Ended | 6 Months Ended | 0 Months Ended | ||
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 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 | 265,995 | ' | ' | ' | 310,995 |
Fair market value of conversion feature | ' | ' | ' | ' | 451,779 |
Purchase price surplus | ' | ' | ' | ' | 10.00% |
Prepayment fee | ' | ' | ' | ' | 607,538 |
Loss on Extinguishment of Debt | ($1,938,597) | ' | ($1,938,597) | ' | ($1,938,597) |
12_Unsecured_Loan_from_Affilia1
12% Unsecured Loan from Affiliate (Details) (Unsecured Loan from Affiliate [Member]) | 0 Months Ended | |
24-May-13 | 24-May-13 | |
USD ($) | EUR (€) | |
Debt Instrument [Line Items] | ' | ' |
Debt instrument, principal amount | $1,290,790 | € 1,000,000 |
Debt term | '1 year | '1 year |
Loan to joint venture, 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 |
Discount on debt | $434,433 | ' |
Registered_Direct_Offering_Det
Registered Direct Offering (Details) (USD $) | 3 Months Ended | 6 Months Ended | 6 Months Ended | |||
Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 11, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | |
Convertible 8.0% Senior Notes Installment [Member] | Investors [Member] | Placement Agent [Member] | ||||
Class of Stock [Line Items] | ' | ' | ' | ' | ' | ' |
Gross proceeds of SPA | ' | $12,000,000 | ' | ' | ' | ' |
Net proceeds of SPA | ' | 11,292,500 | ' | ' | ' | ' |
Fundraising related expenses | 707,500 | 707,500 | ' | ' | ' | ' |
Debt purchase price | ' | ' | ' | 6,701,824 | ' | ' |
Shares issued per SPA | ' | 17,425,621 | ' | ' | ' | ' |
Number of warrants issued | 9,278,015 | ' | ' | ' | 7,841,537 | ' |
Warrants issued to placement agent | 183,284 | ' | ' | ' | ' | ' |
Term of warrant | ' | ' | ' | ' | '5 years | ' |
Warrant exercise price | ' | ' | ' | ' | 0.887 | 0.853 |
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 | ' |
Loan_from_Joint_Venture_Partne1
Loan from Joint Venture Partner (Details) (USD $) | Jun. 30, 2013 | Dec. 31, 2012 |
Related Party Transaction [Line Items] | ' | ' |
Loan from related party | $578,518 | $555,907 |
Elephant Talk United Telecommunication Services Nv [Member] | ' | ' |
Related Party Transaction [Line Items] | ' | ' |
Loan from related party | $578,518 | $555,907 |
Stated interest per annum | 8.00% | ' |
Ownership percentage | 51.00% | ' |
Ownership percentage by noncontrolling shareholders | 49.00% | ' |
Stockholders_Equity_Narrative_
Stockholders' Equity (Narrative) (Details) (USD $) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | |
Common stock, shares authorized | 250,000,000 | 250,000,000 | 250,000,000 |
Common stock, shares issued | 133,139,900 | 133,139,900 | 111,918,368 |
Common stock, shares outstanding | 133,139,900 | 133,139,900 | 111,918,368 |
Common stock, increase in shares issued during the period | ' | 21,221,549 | ' |
Shares issued per SPA | ' | 17,425,621 | ' |
Shares issued in connection with warrant exercises | ' | 1,457,019 | ' |
Number of warrants exercised | ' | 3,567,965 | ' |
Shares issued for non cash compensation of management and board | ' | 425,892 | ' |
Shares issued for employee stock option exercises | ' | 13,000 | ' |
Shares issued for settlement agreement with a former landlord | ' | 400,000 | ' |
Shares issued for acquisitions | ' | 1,250,000 | ' |
Number of shares issued according to Stock Transfer Agent | ' | 135,944,738 | ' |
Unreturned shares from 'cancelled' acquisitions (pre-2006) | ' | 233,900 | ' |
Shares issued under Employee benefits plan (Treasury shares) | ' | 12,000 | ' |
Contingent Shares Acquisition ValidSoft | ' | 2,558,938 | ' |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 | ' |
Preferred stock, par or stated value per share | $0.00 | $0.00 | ' |
Number of warrants expired | 2,394,627 | ' | ' |
Number of warrants issued | 9,278,015 | ' | ' |
Warrants issued to placement agent | 183,284 | ' | ' |
Investors [Member] | ' | ' | ' |
Number of warrants issued | ' | 7,841,537 | ' |
Non Affiliate Investors [Member] | ' | ' | ' |
Shares issued per SPA | ' | 250,000 | ' |
Affiliated Note Holders [Member] | ' | ' | ' |
Number of warrants issued | 1,253,194 | ' | ' |
Morodo Limited [Member] | ' | ' | ' |
Shares issued for acquisitions | ' | 250,000 | ' |
Telnicity LLC [Member] | ' | ' | ' |
Shares issued for acquisitions | ' | 1,000,000 | ' |
Stockholders_Equity_Schedule_o
Stockholders' Equity (Schedule of Warrants) (Details) | 6 Months Ended | |
Jun. 30, 2013 | Dec. 31, 2012 | |
Class of Warrant or Right [Line Items] | ' | ' |
Warrants | 42,203,174 | 49,778,713 |
Weighted Average [Member] | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' |
Exercise/ Conversion price(s) (range) | 1.17 | ' |
Warrants - Acquisitions [Member] | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' |
Expiring | 31-Dec-13 | ' |
Warrants | 1,007,372 | 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 | 41,177,143 | 46,322,101 |
Warrants - Fundraising [Member] | Minimum [Member] | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' |
Exercise/ Conversion price(s) (range) | 0.85 | ' |
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 (Additional Information) (Details) (USD $) | 0 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 6 Months Ended | |||||||||||
Jun. 11, 2008 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Oct. 06, 2011 | Jan. 15, 2008 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | |
Directors And Officers [Member] | Directors And Officers [Member] | Consultant [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] | 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] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | ||||||
Employee Stock Option [Member] | Executive Officers [Member] | Minimum [Member] | Maximum [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] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total Options Outstanding | ' | ' | ' | ' | ' | ' | ' | ' | 75,000 | 75,000 | ' | 20,070,397 | 12,205,717 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Remaining shares available for grant | ' | ' | ' | ' | ' | ' | ' | ' | 364,053 | 364,053 | 14,490 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options granted vesting period | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | '3 years | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options expiration period | ' | ' | ' | ' | ' | ' | ' | ' | ' | '2 years | ' | ' | ' | ' | ' | ' | '2 years | '10 years | ' | ' | ' | ' |
Stock options outstanding expiration year | ' | ' | ' | ' | ' | ' | ' | ' | '2013 | '2013 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock-based awards granted to employees, not yet expensed | ' | ' | ' | ' | ' | ' | ' | ' | $0 | $0 | ' | $3,875,450 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares authorized | ' | 23,000,000 | ' | 23,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 23,000,000 | 5,000,000 | 5,040,000 | ' | ' | 30,000,000 | ' | ' | ' |
Stock split ratio | 0.04 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued | ' | ' | ' | ' | ' | ' | 189,945 | ' | 235,947 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued since inception of plan | ' | ' | ' | ' | ' | 1,196,366 | 1,196,366 | 325,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options granted | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,680,000 | ' | ' | ' | ' | ' | 3,360,000 |
Granted | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.89 | ' | ' | ' | $0.91 | ' | ' | ' | $1.91 | $2.91 | ' |
Initial fair market value of options granted | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,459,994 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 811,060 |
Forfeiture Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9.32% | 10.67% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Current unrecognized expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 506,470 |
Non-cash compensation to officers, directors and employees | ' | $2,995,049 | $1,538,982 | $4,405,959 | $3,230,728 | ' | ' | ' | $261,194 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
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 $) | 6 Months Ended |
Jun. 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 | 75,000 |
Weighted average remaining contractual life (years) | '2 months 23 days |
Options exercisable | 75,000 |
Weighted average exercise price | $2.25 |
Employee_Benefit_Plan_and_NonQ4
Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan (Reconciliation of Registered and Available Shares and or Options) (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2013 | Jun. 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 | 5,290,621 | ' |
Options exercised | 3,000 | ' |
Total options exercised since inception of plan | 955,067 | 955,067 |
Total options outstanding since inception of plan | 20,077,064 | 20,077,064 |
Total options available for grant | 446,503 | 446,503 |
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_NonQ5
Employee Benefit Plan and Non-Qualified Stock Option and Compensation Plan (Common Stock Purchase Options, 2008 Long Term Incentive Plan) (Details) (USD $) | 6 Months Ended |
Jun. 30, 2013 | |
Number of options | ' |
Exercised (with delivery of shares) | -13,000 |
2008 Long-Term Incentive Plan [Member] | ' |
Number of options | ' |
Beginning Balance | 12,205,717 |
Granted | 8,369,787 |
Exercised (with delivery of shares) | -13,000 |
Forfeitures (Pre-vesting) | -402,702 |
Expirations (Post-vesting) | -89,405 |
Exchanged for Cashless exercise | ' |
Ending Balance | 20,070,397 |
Average Exercise Price | ' |
Beginning Balance | 2.15 |
Granted | 0.89 |
Exercised (with delivery of shares) | 0.68 |
Forfeitures (Pre-vesting) | 1.02 |
Expirations (Post-vesting) | 2.13 |
Exchanged for cashless exercise | ' |
Ending Balance | 1.63 |
Initial Fair Market Value | ' |
Beginning Balance | 15,316,144 |
Granted | 3,459,994 |
Exercised (with delivery of shares) | -7,779 |
Forfeitures (Pre-vesting) | -409,784 |
Expirations (Post-vesting) | -190,548 |
Exchanged for Cashless exercise | ' |
Ending Balance | 18,168,027 |
Employee_Benefit_Plan_and_NonQ6
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 $) | 6 Months Ended | |
Jun. 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 | 20,070,397 | 12,205,717 |
Weighted average remaining contractual life (years) | '4 years 1 month 28 days | ' |
Weighted average exercise price | $1.63 | $2.15 |
Options Exercisable | ' | ' |
Options exercisable | 13,075,951 | ' |
Weighted average exercise price | $1.52 | ' |
Unvested Options | ' | ' |
Number of options not yet vested | 6,994,446 | ' |
Forfeiture rate used for this period ending | 9.32% | ' |
Options expected to vest | ' | ' |
Number of options expected to vest corrected by forfeiture rate | 6,342,764 | ' |
Unrecognized stock-based compensation expense | $3,875,450 | ' |
Weighted average remaining contract life of Total Options expected to vest (in years) | '3 years 10 months 6 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 6 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% | ' |
Commitments_Details
Commitments (Details) (USD $) | Jun. 30, 2013 |
Other Commitments [Line Items] | ' |
2013 | $1,498,324 |
2014 | 642,001 |
2015 | 512,100 |
2016 | 152,620 |
2017 | 31,170 |
Total | 2,836,215 |
Office [Member] | ' |
Other Commitments [Line Items] | ' |
2013 | 204,164 |
2014 | 200,499 |
2015 | 100,090 |
2016 | 22,717 |
2017 | 24,805 |
Co Location [Member] | ' |
Other Commitments [Line Items] | ' |
2013 | 446,967 |
2014 | 243,859 |
2015 | 243,859 |
2016 | 77,289 |
2017 | ' |
Interconnect [Member] | ' |
Other Commitments [Line Items] | ' |
2013 | 602,401 |
2014 | 114,563 |
2015 | 89,105 |
2016 | 12,730 |
2017 | 6,365 |
Network/Service/Support [Member] | ' |
Other Commitments [Line Items] | ' |
2013 | 244,792 |
2014 | 83,080 |
2015 | 79,046 |
2016 | 39,885 |
2017 | ' |
Noncontrolling_Interest_Detail
Non-controlling Interest (Details) (USD $) | Jun. 30, 2013 | Dec. 31, 2012 |
Noncontrolling Interest [Line Items] | ' | ' |
Noncontrolling Interest | $173,776 | $175,976 |
Elephant Talk Communications Prs United Kingdom Limited [Member] | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' |
Non-controlling Interest % | 49.00% | ' |
Noncontrolling Interest | 9,128 | 9,434 |
Elephant Talk Communications Premium Rate Services Netherlands Bv [Member] | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' |
Non-controlling Interest % | 49.00% | ' |
Noncontrolling Interest | 127,488 | 126,013 |
Elephant Talk Bahrain Wll [Member] | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' |
Non-controlling Interest % | 1.00% | ' |
Noncontrolling Interest | 69 | 3,438 |
Elephant Talk Middle East And Africa Fz Llc [Member] | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' |
Non-controlling Interest % | 49.46% | ' |
Noncontrolling Interest | $37,091 | $37,091 |
Litigations_Details
Litigations (Details) (Contracts And Purchase Agreement [Member], USD $) | 6 Months Ended |
Jun. 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 | 6 Months Ended | |||
Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | Dec. 31, 2012 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ' | ' | ' |
Revenues from unaffiliated customers | $4,994,145 | $7,084,969 | $11,590,645 | $15,665,937 | ' |
Identifiable assets | 40,099,677 | 44,675,682 | 40,099,677 | 44,675,682 | 37,475,541 |
Europe [Member] | ' | ' | ' | ' | ' |
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ' | ' | ' |
Revenues from unaffiliated customers | ' | ' | 10,608,284 | 15,583,125 | ' |
Identifiable assets | 28,307,487 | 35,825,355 | 28,307,487 | 35,825,355 | ' |
Other Foreign Countries [Member] | ' | ' | ' | ' | ' |
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ' | ' | ' |
Revenues from unaffiliated customers | ' | ' | 982,361 | 82,812 | ' |
Identifiable assets | $11,792,190 | $8,850,327 | $11,792,190 | $8,850,327 | ' |
Related_Party_Transactions_Det
Related Party Transactions (Details) | 3 Months Ended | 6 Months Ended | 0 Months Ended | 3 Months Ended | |||
Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | 24-May-13 | 24-May-13 | Jun. 11, 2013 | Jun. 30, 2013 | |
USD ($) | USD ($) | USD ($) | Unsecured Loan from Affiliate [Member] | Unsecured Loan from Affiliate [Member] | Chief Executive Officer [Member] | Affiliated Entity [Member] | |
USD ($) | EUR (€) | USD ($) | USD ($) | ||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, principal amount | ' | ' | ' | $1,290,790 | € 1,000,000 | ' | ' |
Stated interest per annum | ' | ' | ' | 12.00% | 12.00% | ' | ' |
Number of shares covered by warrants | ' | ' | ' | 1,253,194 | 1,253,194 | 2,892,857 | ' |
Shares issued in connection with warrant exercises, price per share | ' | ' | ' | 1.03 | 1.03 | ' | ' |
Term of warrant | ' | ' | ' | '5 years | '5 years | ' | ' |
Share price requiring warrant exercise | ' | ' | ' | $1.55 | ' | ' | ' |
Number of consecutive trading days | ' | ' | ' | '10 days | '10 days | ' | ' |
Term allowing put of warrant | ' | ' | ' | '12 months | '12 months | ' | ' |
Proceeds from Share Purchase Agreement - Registered direct | 12,000,000 | 7,500,000 | ' | ' | ' | 4,500,000 | ' |
Shares issued per SPA | ' | 17,425,621 | ' | ' | ' | 6,428,571 | ' |
Proceeds from Share Purchase Agreement - Unregistered securities | 225,000 | 225,000 | ' | ' | ' | ' | ' |
Selling concession | ' | ' | ' | ' | ' | ' | 8.00% |
Fundraising related expenses | $707,500 | $707,500 | ' | ' | ' | ' | $18,000 |
Subsequent_Events_Details
Subsequent Events (Details) (Subsequent Event [Member], USD $) | 0 Months Ended |
Jul. 14, 2013 | |
Subsequent Event [Member] | ' |
Subsequent Event [Line Items] | ' |
Debt conversion, shares issued | 1,840,631 |
Conversion price | $0.71 |