Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 31, 2014 | |
Document And Entity Information [Abstract] | ' | ' |
Document Type | '10-Q/A | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-14 | ' |
Entity Registrant Name | 'ELEPHANT TALK COMMUNICATIONS CORP | ' |
Entity Central Index Key | '0001084384 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2014 | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Units Outstanding | ' | 151,749,339 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
CURRENT ASSETS | ' | ' |
Cash and cash equivalents | $1,176,650 | $1,252,315 |
Restricted cash | 169,536 | 191,600 |
Accounts receivable, net of an allowance for doubtful accounts of $0 and $7,693 at September 30, 2014 and December 31, 2013 respectively | 6,754,447 | 5,976,879 |
Prepaid expenses and other current assets | 2,319,310 | 2,254,213 |
Total current assets | 10,419,943 | 9,675,007 |
NON-CURRENT ASSETS | ' | ' |
OTHER ASSETS | 1,093,977 | 1,412,408 |
PROPERTY AND EQUIPMENT, NET | 19,603,707 | 19,786,122 |
INTANGIBLE ASSETS, NET | 6,000,884 | 8,670,677 |
GOODWILL | 3,490,242 | 3,773,226 |
TOTAL ASSETS | 40,608,753 | 43,317,440 |
CURRENT LIABILITIES | ' | ' |
Overdraft | 425,144 | 391,436 |
Accounts payable and customer deposits | 2,063,304 | 2,586,662 |
Obligations under capital leases (current portion) | 1,828,083 | 1,302,838 |
Deferred Revenue | 127,456 | 142,731 |
Accrued expenses and other payables | 5,804,999 | 4,961,303 |
Loans payable | 961,550 | 962,654 |
2013 10% Related Party Convertible Note (net of Debt Discount of $1,719,585 at December 31, 2013) | ' | 1,033,719 |
Total current liabilities | 11,210,536 | 11,381,343 |
LONG TERM LIABILITIES | ' | ' |
2013 10% 3rd Party Loan (net of Debt Discount of $410,853 and $726,695 at September 30, 2014 and December, 2013) | 4,663,227 | 4,779,913 |
Warrant liabilities | 2,248,169 | 1,973,534 |
Non-current portion of obligation under capital leases | 261,912 | 845,529 |
Loan from joint venture partner | ' | 602,047 |
Total long term liabilities | 7,173,308 | 8,201,023 |
Total liabilities | 18,383,844 | 19,582,366 |
STOCKHOLDERS' EQUITY | ' | ' |
Preferred Stock $0.00001 par value, 50,000,000 shares authorized, 0 issued and outstanding | ' | ' |
Common Stock $0.00001 par value, 250,000,000 shares authorized, 151,312,189 issued and outstanding as of September 30, 2014 and 140,466,801 shares issued and outstanding as of December 31, 2013 | 260,616,570 | 248,712,321 |
Accumulated other comprehensive income (loss) | -2,003,871 | 269,869 |
Accumulated deficit | -236,521,852 | -225,391,922 |
Elephant Talk Communications, Corp. stockholders' equity | 22,090,847 | 23,590,268 |
NON-CONTROLLING INTEREST | 134,062 | 144,806 |
Total stockholders' equity | 22,224,909 | 23,735,074 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $40,608,753 | $43,317,440 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Accounts receivable, allowance for doubtful accounts | $0 | $7,693 |
Preferred stock, par or stated value per share | $0.00 | $0.00 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value per share | $0.00 | $0.00 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 151,312,189 | 140,466,801 |
Common stock, shares outstanding | 151,312,189 | 140,466,801 |
Convertible Note One [Member] | ' | ' |
Discount on debt | ' | 1,719,585 |
Convertible Note Two [Member] | ' | ' |
Discount on debt | $410,853 | $726,695 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Abstract] | ' | ' | ' | ' |
REVENUES | $7,298,988 | $5,204,982 | $20,690,609 | $16,795,627 |
COST AND OPERATING EXPENSES | ' | ' | ' | ' |
Cost of service (exclusive of depreciation and amortization shown separately below) | 848,771 | 1,080,174 | 2,660,816 | 6,093,968 |
Selling, general and administrative expenses | 6,227,147 | 5,442,869 | 19,636,038 | 18,823,615 |
Depreciation and amortization of intangibles assets | 1,900,251 | 1,543,687 | 5,836,857 | 4,699,906 |
Total cost and operating expenses | 8,976,169 | 8,066,730 | 28,133,711 | 29,617,489 |
LOSS FROM OPERATIONS | -1,677,181 | -2,861,748 | -7,443,102 | -12,821,862 |
OTHER INCOME (EXPENSE) | ' | ' | ' | ' |
Interest income | 36,684 | 33,773 | 93,840 | 89,020 |
Interest expense | -260,295 | -181,074 | -895,453 | -612,970 |
Interest expense related to debt discount and conversion feature | -1,287,717 | -259,795 | -3,197,749 | -1,320,795 |
Change in fair value of conversion feature | ' | ' | ' | 232,267 |
Changes in fair value of warrant liabilities | -103,311 | 173,333 | -274,635 | 519,349 |
Gain / (Loss) on Extinguishment of Debt | 626,534 | -44,506 | 626,108 | -1,983,103 |
Other income & (expense), net | 301,199 | ' | 372,597 | ' |
Amortization of deferred financing costs | -73,789 | -44,076 | -323,246 | -116,482 |
Total other income (expense) | -760,695 | -322,345 | -3,598,538 | -3,192,714 |
LOSS BEFORE (BENEFIT) PROVISION FOR INCOME TAXES | -2,437,876 | -3,184,093 | -11,041,640 | -16,014,576 |
(Benefit) / provision for income taxes | -44,938 | 41,500 | 88,290 | 41,500 |
NET LOSS | -2,392,938 | -3,225,593 | -11,129,930 | -16,056,076 |
OTHER COMPREHENSIVE (LOSS) INCOME | ' | ' | ' | ' |
Foreign currency translation gain (loss) | -2,273,740 | 489,443 | -2,424,192 | -807,208 |
COMPREHENSIVE LOSS | ($4,666,678) | ($2,736,150) | ($13,554,122) | ($16,863,284) |
Net loss per common share and equivalents - basic and diluted | ($0.02) | ($0.02) | ($0.08) | ($0.13) |
Weighted average shares outstanding during the period - basic and diluted | 149,468,618 | 134,440,221 | 145,929,455 | 122,038,045 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($11,129,930) | ($16,056,076) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ' | ' |
Depreciation and amortization | 5,836,857 | 4,699,906 |
Provision for doubtful accounts | -10,661 | 22,131 |
Provision for income taxes | ' | 41,500 |
Stock based compensation | 3,536,680 | 5,639,124 |
Change in fair value of warrant liability | 274,635 | -519,349 |
Change in fair value of conversion feature | ' | -232,267 |
Amortization of deferred financing costs | 323,246 | 116,482 |
Interest expense relating to debt discount and conversion feature | 3,197,749 | 1,320,795 |
Unrealized foreign currency translation gain (loss) | -501,571 | ' |
Extinguishment of Debt | -626,108 | 1,983,103 |
Changes in operating assets and liabilities: | ' | ' |
Decrease (increase) in accounts receivable | -1,366,947 | 1,054,452 |
Decrease (increase) in prepaid expenses, deposits and other assets | -101,971 | -666,991 |
Increase (decrease) in accounts payable and customer deposits | 362,685 | -2,030,393 |
Increase (decrease) in deferred revenue | -11,931 | 177,635 |
Increase (decrease) in accrued expenses and other payables | 1,493,594 | 1,859,634 |
Increase (decrease) in non-cash accrued expenses related to extinguishment of Debt | -426 | -890,997 |
Net cash provided by (used in) operating activities | 1,275,901 | -3,481,311 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Purchases of property and equipment | -5,611,023 | -4,108,507 |
Loan to third party | ' | -125,000 |
Net cash used in investing activities | -5,611,023 | -4,233,507 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from 12% Unsecured Loan from Related Party | ' | 1,290,790 |
Proceeds from Securities Purchase Agreement - Unregistered securities | ' | 225,000 |
Proceeds from Securities Purchase Agreement - Registered direct | ' | 7,500,000 |
Proceeds from Securities Purchase Agreement Related Party | ' | 4,500,000 |
Proceeds from 2013 10% Related Party Convertible Note | ' | 2,652,600 |
Proceeds from 2013 10% 3rd Party Convertible Note | ' | 5,305,200 |
Financing related fees | -125,793 | -1,362,124 |
Payments on 8% Senior Secured Convertible Note installment payments and interest | ' | -8,490,360 |
Exercise of warrants and options | 4,286,576 | 78,971 |
Cash from Escrow account for principal and interest payments on 8% Senior Secured Convertible Notes | ' | 742,427 |
Interest paid for property and equipment acquired under capital leases | -57,079 | ' |
Net cash provided by financing activities | 4,103,704 | 12,442,504 |
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 155,753 | 124,261 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | -75,665 | 4,851,947 |
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD | 1,252,315 | 1,233,268 |
CASH AND CASH EQUIVALENTS, END OF THE PERIOD | 1,176,650 | 6,085,215 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ' | ' |
Cash paid during the period for interest | 174,592 | 409,331 |
Cash paid during the period for income taxes | 56,881 | ' |
Purchases of property and equipment (delivered, not invoiced yet) | ' | -1,238,046 |
Trade note payable | ' | 593,903 |
Increase in Share Capital due to Telnicity Acquisition | ' | 1,180,000 |
Increase in Share Capital for third party settlement | ' | $468,000 |
Reclassification_of_Changes_to
Reclassification of Changes to Prior Year Information | 9 Months Ended |
Sep. 30, 2014 | |
Reclassification of Changes to Prior Year Information [Abstract] | ' |
Reclassification of Changes to Prior Year Information | ' |
Note 1. Reclassification of Changes to Prior Year Information | |
Prior to December 31, 2013, the Company presented share-based compensation as a separate line item in the Company's Consolidated Statement of Comprehensive Loss. Commencing in 2014, the Company includes share-based compensation within Selling, General and Administrative ("SG&A") expenses in the Consolidated Statement of Comprehensive Loss. Share-based compensation amounted to $862,419 and $1,233,165 for the three months ended September 30, 2014 and 2013, respectively, and $3,536,680 and $5,639,124 for the nine months ended September 30, 2014 and 2013, respectively. These reclassifications had no effect on previously reported results of operations or accumulated deficit. |
Financial_Condition
Financial Condition | 9 Months Ended |
Sep. 30, 2014 | |
Financial Condition [Abstract] | ' |
Financial Condition | ' |
Note 2. Financial Condition | |
As reflected in the accompanying consolidated financial statements, the Company incurred net losses of $2,392,938 and $11,129,930 for the three and nine month period ended September 30, 2014, and had an accumulated deficit of $236,521,852 as of September 30, 2014. | |
On November 17, 2014 (the “Closing Date”), the Company and certain of its subsidiaries entered into a term loan credit agreement with Atalaya Administrative LLC, as the administrative agent and collateral agent, and the lenders party thereto (the “Credit Agreement”). The Credit Agreement provides for a twelve million dollar term loan facility (the “Term Loan Facility”) with advances to be made on the Closing Date. Borrowings under the Term Loan Facility shall bear interest at the LIBOR rate plus an applicable margin per annum equal to ten percent (10.00%), such margin currently increased by an additional two percent (2.00%) pending the satisfaction of certain post-closing conditions. The Term Loan Facility will mature on December 31, 2017. See also Note 27 Subsequent events. A portion of the proceeds of the Credit Agreement will be used to repay 50% of the 2013 10% 3rd Party Convertible Note as defined in Note 15 principal amount as well as all accrued interest, totaling approximately $3,123,011 (€2,498,849) until Closing Date. The remaining 50% of the principal amount of the 2013 10% 3rd Party Convertible Note will be converted into 2,817,993 shares of the Company's common stock at the Closing Date, totaling approximately $2,500,000 (€2,000,000). The Company also issued a three year warrant to purchase 1,000,000 shares of the Company's common stock, at an exercise price of $0.93 per share to the holder of the 2013 10% 3rd Party Convertible Note. | |
Due to the above, combined with the earlier conversion of the 2013 10% Related Party Convertible Note (defined below) amounting to $2,966,951 of principal and interest into equity in July, 2014 (refer to Note 14), cash and cash equivalents at September 30, 2014 of $1,176,650, and the improvement of net cash provided by operating activities, the Company believes that it can carry out its business plans. |
Description_of_Business_Basis_
Description of Business, Basis of Presentation and Principles of Consolidation | 9 Months Ended | ||
Sep. 30, 2014 | |||
Description of Business, Basis of Presentation and Principles of Consolidation [Abstract] | ' | ||
Description of Business, Basis of Presentation and Principles of Consolidation | ' | ||
Note 3. Description of Business, Basis of Presentation and Principles of Consolidation | |||
Description of Business | |||
As a mobile Software Defined Network Architecture (Software DNA®) vendor, Elephant Talk Communications Corp. and its subsidiaries (also referred to as “Elephant Talk”, “ET” and the “Company”) provide a one stop solution for a full suite of mobile, fixed and convergent telecommunications software services. The Company also provides layered security services for mission critical applications in the cloud, through its wholly owned subsidiary, ValidSoft UK Limited (“ValidSoft”). | |||
Over the last decade, Elephant Talk has developed a comprehensive Mobile Enabling Platform, capable of hosting an integrated IT/BackOffice and Core Network for Mobile Network Operators (MNOs) and Mobile Virtual Network Operators (MVNOs), Enablers (MVNEs) and Aggregators (MVNAs) on a fully outsourced basis. The Company's 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 its MNO and MVNO/MVNE/MVNA partners. The Company's 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 MNOs. The Company's services provide customers with tools to 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 United States (“US”) generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and the regulations referred to therein. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and related notes as included the Company's Annual Report on Form 10-K for the year ended December 31, 2013, (the “Form 10-K”). These consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the 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 the Company's financial position, results of operations and cash flows as of and for the periods presented or future periods. | |||
The results of operations for the three and nine months ended on September 30, 2014 are not necessarily indicative of the results to be expected for the entire year. | |||
Principles of Consolidation | |||
The accompanying consolidated financial statements for September 30, 2014 and December 31, 2013 include the accounts of Elephant Talk Communications Corp. and its subsidiaries, specifically: | |||
• | its wholly-owned subsidiary Elephant Talk Europe Holding B.V. and its wholly owned subsidiaries Elephant Talk Communications Luxembourg SA, Elephant Talk Communications 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, 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, 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 (100%) owned subsidiary Elephant Talk Middle East & Africa (Holding) W.L.L., its wholly owned (100%) subsidiaries Elephant Talk Middle East & Africa (Holding) Jordan L.L.C., and its majority owned (99%) Elephant Talk Bahrain W.L.L.; | ||
• | its wholly-owned subsidiary Elephant Talk Limited (“ETL”) and its majority owned (50.54%) subsidiary Elephant Talk Middle East & Africa FZ-LLC and 100% owned Elephant Talk Communications France S.A.S.; | ||
• | its wholly-owned subsidiary Elephant Talk North America, Corp; | ||
• | its wholly-owned subsidiary ValidSoft Limited (Ireland) and its wholly-owned subsidiary ValidSoft UK Limited; | ||
• | its wholly-owned subsidiary Elephant Talk Group International B.V., based in The Netherlands, and | ||
• | Its wholly-owned subsidiary ET de Mexico S.A.P.I. de C.V. and its wholly owned subsidiary (99%) Asesores Profesionales ETAK S. de RL. de C.V. | ||
All intercompany balances are eliminated in consolidation. |
Significant_Accounting_Policie
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2014 | |
Significant Accounting Policies [Abstract] | ' |
Significant Accounting Policies | ' |
Note 4. Significant Accounting Policies | |
Foreign Currency Translation | |
The functional currency is Euros for the Company's wholly-owned subsidiary Elephant Talk Europe Holding B.V. and its subsidiaries and the British Pound Sterling for its wholly-owned subsidiary ValidSoft. The financial statements of the Company were translated to US dollars (“USD”) 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 Accounting Standards Codification (“ASC”) 830, Foreign Currency Matters, net gains and losses resulting from translation of foreign currency financial statements are included in stockholders' equity as accumulated other comprehensive income (loss). Foreign currency transaction gains and losses are included in consolidated loss; under the line item ‘Other income and (expense)' for the loans, and in the line item “SG&A expenses” for accounts receivable. | |
Use of Estimates | |
The accompanying consolidated financial statements were prepared in accordance with GAAP, which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of 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. Significant areas of estimates include revenue recognition, bad debt allowance, and valuation of financial instruments, realizability of long –lived assets, including goodwill, useful lives and share-based compensation. 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 would normally consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. The Company has full access to the whole balance of cash and cash equivalents on a daily basis without any delay. | |
Restricted Cash | |
Restricted cash as of September 30, 2014 and December 31, 2013, was $169,536 and $191,600 respectively, and consists of cash deposited in blocked accounts as bank guarantees for national interconnection and wholesale agreements with telecom operators. | |
Accounts Receivables, Net | |
The Company's customer base is geographically dispersed. The Company maintains an allowance for potential credit losses on accounts receivable. The Company makes ongoing assumptions relating to the collectability of its accounts receivable. The accounts receivable amounts presented on its balance sheets include reserves for accounts that might not be collected. In determining the amount of these reserves, the Company considers its historical level of credit losses. The Company also makes judgments about the creditworthiness of significant customers based on ongoing credit evaluations, and the Company assesses current economic trends that might impact the level of credit losses in the future. The Company's reserves have generally been adequate to cover its actual credit losses. However, since the Company cannot reliably predict future changes in the financial stability of its customers, it cannot guarantee that its reserves will continue to be adequate. If actual credit losses are significantly greater than the reserves, the Company has established that it would increase its general and administrative expenses and increase its reported net losses. Conversely, if actual credit losses are significantly less than its reserve, this would eventually decrease the Company's general and administrative expenses and decrease its reported net losses. Allowances are recorded primarily on a specific identification basis. See Note 5 of the Financial Statements of this Report for more information. | |
Leasing Arrangements | |
At the inception of a lease covering equipment or real estate, the lease agreement is evaluated under the criteria of ASC 840, Leases. Leases meeting one of the four key criteria are accounted for as capital leases and all others are treated as operating leases. Under a capital lease, the discounted value of future lease payments becomes the basis for recognizing an asset and a borrowing, and lease payments are allocated between debt reduction and interest. For operating leases, payments are recorded as rent expense. Criteria for a capital lease include (i) transfer of ownership during the lease term; (ii) existence of a bargain purchase option under terms that make it likely to be exercised; (iii) a lease term equal to 75 percent or more of the economic life of the leased equipment; and (iv) minimum lease payments that equal or exceed 90 percent of the fair value of the property. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that type of asset. The assets are amortized in accordance with the Company's accounting policy for Property and Equipment. | |
Revenue Recognition and Deferred Revenue | |
The Company derives revenue from outsourced services in telecommunications based activities by deploying its operational management services, network, switching technology and mobile enabling platform. Revenue represents amounts earned for these services provided to customers (net of value added tax). | |
The Company follows ASC 605, Revenue Recognition (“ASC 605”) and recognizes revenue 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. Revenues are recognized on a gross basis as the Company acts as principal in the transaction and has risk of loss for collection and delivery of service. | |
For the mobile solutions services, the Company recognizes revenues from two different service offerings, namely managed services and bundled services. For managed services, revenues are recognized for network administration services provided to end users on behalf of MNOs. Managed service revenues are recognized monthly based on an average number of end-users managed and calculated on a pre-determined service fee per user. For bundled services, the Company provides both network administration as well as mobile airtime management services. Revenues for bundled services are recognized monthly based on an average number of end-users managed and mobile air time and calculated based on a pre-determined service fee. | |
For the security solutions services, the Company recognizes revenues primarily from Subscriber Identity Module (“SIM”) lookup services using the VALid-SSD platform. Security solutions revenue is recognized based on the number of SIM lookups performed and calculated based on a pre-determined service fee per lookup. Other revenues recognized in the security solutions business include consulting services which are recognized as the services are performed. | |
For landline solution services, the Company previously provided technical, operational and financial telecom infrastructure to telecommunication service providers. Revenues are recognized when delivery occurs based on a pre-determined rate, number of calls and number of user minutes that the Company has managed in a given month. | |
Management's judgment is applied regarding, among other aspects, conformance with acceptance criteria and if delivery of services has occurred, to determine if revenue and costs should be recognized in the current period. In addition, management evaluates the degree of completion of the services and the customer's credit standing to assess whether payment is likely or not to justify revenue recognition. | |
Cost of Service and Operating Expenses | |
Cost of service includes origination, termination, network and billing charges from telecommunications operators, charges from telecommunication service 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. Cost of service excludes depreciation and amortization. | |
SG&A expenses include all management and personnel related expenses, including share-based compensation, and other items such as: office rent, travel and car, corporate local and legal advice, audit, accountancy and tax, investor relations, marketing and communication costs and the costs incurred in the development of the Company's services which are expensed as incurred. Costs incurred during the application development stage of internal-use software projects, such as those used in the Company's network operations, are capitalized in accordance with the accounting guidance for costs of computer software developed for internal use. | |
Reporting Segments | |
ASC 280, Segment Reporting (“ASC 280”), 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 business operates as one single segment and discrete financial information is based on the whole, not segregated; and is used by the chief decision maker accordingly. | |
Financial Instruments | |
The carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and customer deposits approximate their fair values based on their short-term nature. The recorded values of long-term debt approximate their fair values, as interest approximates market rates. The Company's warrant liability, a derivative instrument, is recognized in the balance sheet at its fair values with changes in fair market value reported in earnings. | |
Fair Value Measurements | |
In accordance with ASC 820 Fair Value Measurement (“ASC 820”), 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 Company, has three asset groups that are valued at fair value categorized within Level 3: Warrant liabilities (recurring measurement), goodwill and intangibles (non-recurring measurements) for the impairment test. Below are discussions of the main assumptions used for the recurring measurements. | |
Recurring Measurement - Warrant Liabilities (see also Note 16) | |
Number of Outstanding Warrants | |
The number of outstanding warrants is adjusted every re-measurement date after deducting the exercise or exchange of any outstanding warrants during the previous reporting period. | |
Stock Price at Valuation Date | |
The closing stock price at re-measurement date being the last available closing price of the reporting period taken from www.nasdaq.com. | |
Exercise Price | |
The exercise price is fixed and determined under the terms of the 8% Senior Secured Convertible Note. | |
Remaining Term | |
The remaining term is calculated by using the contractual expiration date of the 8% Senior Secured Convertible Note at the moment of re-measurement. | |
Expected Volatility | |
Management estimates expected cumulative volatility giving consideration to the expected life of the note and calculated the annual volatility by using the continuously compounded return calculated by using the share closing prices of an equal number of days prior to the maturity date of the note (reference period). The annual volatility is used to determine the (cumulative) volatility of the Company´s common stock (=nnual volatility * square root (expected life)). | |
Risk-Free Interest Rate | |
Management estimates the risk-free interest rate using the “Daily Treasury Yield Curve Rates” from the US Treasury Department with a term equal to the reported rate, or derived by using both spread in intermediate term and rates, up to the maturity date of the 8% Senior Secured Convertible Note. | |
Expected Dividend Yield | |
Management estimates the expected dividend yield by giving consideration to the Company´s current dividend policies as well as those anticipated in the future considering the Company´s current plans and projections. | |
Exchange Condition | |
The warrant holder has the option to do a cashless exchange of warrants at certain exchange conditions described in the warrants. The valuation for the exchange is based on a Black-Scholes calculation with pre-determined variables such as volatility (135%), remaining term (5 years), risk-free rate (variable), dividend yield (0%), exercise price ($0.887) and market price (closing bid price one day prior to the exchange date). | |
Mandatory Exercise Condition | |
Management's estimate for the likelihood of being able to force a mandatory exercise of the warrants prior to the maturity of the warrant agreement. | |
Share-Based Compensation | |
The Company follows the provisions of ASC 718, Compensation-Stock Compensation, (“ASC 718”). Under ASC 718, share-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). The share-based compensation cost based on the grant date fair value is amortized over the period in which the related services are received. | |
To determine the value of the Company´s stock options at grant date under our employee stock option plan, the Company uses the Black-Scholes option-pricing model. The use of this model requires the Company to make a number of subjective assumptions. The following addresses each of these assumptions and describes the Company´s methodology for determining each assumption: | |
Expected Life | |
The expected life represents the period that the stock option awards are expected to be outstanding. The Company uses 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 | |
The Company estimates 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 its Common Stock (=nnual volatility x square root (expected life)). | |
Forfeiture Rate | |
The Company is using the aggregate forfeiture rate. The aggregate forfeiture rate is the ratio of pre-vesting forfeitures over the awards granted (pre-vesting forfeitures/grants). The forfeiture discount (additional loss) is released into the profit and loss in the same period as the option vesting-date. The forfeiture rate is actualized every reporting period. | |
Risk-Free Interest Rate | |
The Company estimates the risk-free interest rate using the “Daily Treasury Yield Curve Rates” from the U.S. Treasury Department with a term equal to the reported rate or derived by using both spread in intermediate term and rates, to the expected life of the award. | |
Expected Dividend Yield | |
The Company estimates the expected dividend yield by giving consideration to its current dividend policies as well as those anticipated in the future considering its current plans and projections. The Company does not currently calculate a discount for any post-vesting restrictions to which its awards may be subject. | |
Income Taxes | |
Current tax is based on the income or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purpose and is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized for the expected future tax benefit to be derived from tax losses and tax credit carry-forwards. Establishment of a valuation allowance is provided when it is more likely than deferred taxes will not be realized. | |
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. | |
The Company files federal income tax returns in the US, various US 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's policy is to record estimated interest and penalties on unrecognized tax benefits as part of its income tax provision. | |
Comprehensive Income/ (Loss) | |
Comprehensive income/ (loss) include all changes in equity during a period from non-owner sources, consisting of the Company's net loss and foreign currency translation adjustments. | |
Goodwill | |
The Company records goodwill when the fair value of consideration transferred in a business combination exceeds the fair value of the identifiable assets acquired and liabilities assumed. Goodwill and other intangible assets that have indefinite useful lives are not amortized, but the Company tests them for impairment annually during its fourth quarter and whenever an event or change in circumstances indicates that the carrying value of the asset is impaired. | |
The authoritative guidance for the goodwill impairment model includes a two-step process. First, it requires a comparison of the carrying value of the reporting unit to its fair value. If the fair value is determined to be less than the carrying value, a second step is performed. In the second step, the Company compares the implied fair value of goodwill to its carrying value in the reporting unit. The shortfall of the fair value below carrying value, if any, would represent the amount of goodwill impairment charge. The Company is using the criteria in the Accounting Standards Update (“ASU”) 2011-08 Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment, which permits the Company to make a qualitative assessment of whether it is more likely than not than not that a reporting unit's fair value is less than the carrying amount before applying the two-step goodwill impairment test. If the Company concludes that it is not more likely than not that the fair value of a reporting unit is less that its carrying amount, it would not need to perform the two-step impairment test for that reporting unit. | |
The Company tests goodwill for impairment in the fourth quarter of each year, or sooner should there be an indicator of impairment as per ASC 350, Intangibles – Goodwill and Other ("ASC 350"). The Company periodically analyzes whether any such indicators of impairment exist. Such indicators include a sustained, significant decline in the Company's stock price and market capitalization, a decline in the Company's expected future cash flows, a significant adverse change in legal factors or in the business climate, unanticipated competition, and/or slower growth rate, among others. In the Company's case, the indicator is the continuing losses. | |
Long-lived Assets and 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 indefinite life 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. The Company periodically analyzes whether any such indicators of impairment exist. Such indicators include a sustained, significant decline in the Company's stock price and market capitalization, a decline in the Company's expected future cash flows, a significant adverse change in legal factors or in the business climate, unanticipated competition, and/or slower growth rate, among others. In the Company's case, the indicator is the continuing losses. | |
Measurement of any impairment loss for long-lived assets and amortizing intangible assets that management expects to hold and use is tested for impairment when amounts may not be recoverable. Impairment is measured based on the amount of the carrying value that exceeds the fair value of the asset. | |
Property and Equipment, Internal Use Software and Third Party 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. | |
The Company has adopted the provisions of ASC 350-40, Accounting for the Costs of Computer Software developed or obtained for internal use (former AICPA SOP 98-1, “ASC 350-40”), and therefore the costs incurred in the preliminary stages of development are expensed as incurred. The Company capitalizes all costs related to software developed or obtained for internal use when management commits to funding the project; the preliminary project stage is completed and when technological feasibility is established. Software developed for internal use has generally been used to deliver hosted services to the Company's customers. 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. Once a new functionality or improvement is released for operational use, the asset is moved from the property and equipment category “construction in progress” ("CIP") to a property and equipment asset subject to depreciation in accordance with the principle described in the previous sentence. In this account management also records equipment acquired from third parties, until it is ready for use. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. Depreciation is applied using the straight-line method over the estimated useful lives of the assets once the assets are placed in service. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. There were no impairments to internal use software during the three and nine month periods ended September 30, 2014 and 2013. | |
Recently Issued Accounting Pronouncements | |
Standards That Are Not Yet Adopted | |
In August 2014, the Financial Accounting Standards Board (“FASB”), issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. The amendments require management to assess an entity's ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in US auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management's plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). For all entities, the new requirements are effective for annual periods ending after December 15, 2016. Early application is permitted. Management does not expect that the adoption of this standard will have a material effect on the Company´s financial statements. | |
In May 2014, as part of its ongoing efforts to assist in the convergence of US GAAP and International Financial Reporting Standards, the FASB issued a new standard related to revenue recognition. Under the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard will be effective for the Company beginning January 1, 2017 and early adoption is not permitted. Management is currently evaluating the methods of adoption allowed and the effect the standard is expected to have on the Company´s financial statements and related disclosures. | |
In April 2014, the FASB issued ASU-2014-08 “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”, which amends the definition of a discontinued operation in Accounting Standards Codification Topic 205-20 (Presentation of Financial Statements – Discontinued Operations) and requires entities to disclose additional information about disposal transactions that do not meet the discontinued operations criteria. The ASU redefines a discontinued operation as a component or group of components of an entity that (1) has been disposed of by sale or other than by sale or classified as held for sale and (2) represents a strategic shift that has (or will have) a major effect on an entity's operations and results includes the disposal of a major geographic area, a major line of business, a major equity investment, or other major parts of an entity. The ASU is effective prospectively for disposals of components classified as held for sale in periods on or after December 15, 2014. Management does not expect that the adoption of this standard will have a material effect on the Company´s financial statements. |
Allowance_for_Doubtful_Account
Allowance for Doubtful Accounts | 9 Months Ended |
Sep. 30, 2014 | |
Allowance for Doubtful Accounts [Abstract] | ' |
Allowance for Doubtful Accounts | ' |
Note 5. Allowance for Doubtful Accounts | |
Accounts receivable are presented on the balance sheet net of estimated uncollectible amounts. The Company records an allowance for estimated uncollectible accounts in an amount of its estimated anticipated losses. Individual uncollectible accounts are written off against the allowance when collection of the individual accounts appears doubtful. The Company recorded an allowance for doubtful accounts of $0 and $7,693 as of September 30, 2014 and December 31, 2013, respectively. |
Prepaid_Expenses_and_Other_Cur
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Sep. 30, 2014 | |
Prepaid Expenses and Other Current Assets [Abstract] | ' |
Prepaid Expenses and Other Current Assets | ' |
Note 6. Prepaid Expenses and Other Current Assets | |
Prepaid expenses and other current assets amounted to $2,319,310 as of September 30, 2014, compared with $2,254,213 as of December 31, 2013. On September 30, 2014, $741,544 of the prepaid expenses was related to prepaid Value Added Tax (“VAT”) and $732,838 as of December 31, 2013. |
Other_Assets
Other Assets | 9 Months Ended |
Sep. 30, 2014 | |
Other Assets [Abstract] | ' |
Other Assets | ' |
Note 7. Other Assets | |
Other assets are long-term in nature, and consist of long-term deposits, deferred financing costs and loans to related parties amounting to $1,093,977 as of September 30, 2014, compared to $1,412,408 as of December 31, 2013, broken down as follows: | |
Long-term Deposit | |
As of September 30, 2014, there was $672,487 in long-term deposits made to various telecom carriers during the course of operations and a deposit to the French Tax Authorities, compared with $771,193 as of December 31, 2013. The deposits are refundable at the termination of the business relationship with the carriers. | |
Deferred Financing Costs | |
During 2013, the Company paid financing costs of $636,624 for legal expenses, related to the issuance of the 2013 10% Related Party Convertible Note and the 10% 3rd Party Convertible Note in the quarter ended September 30, 2013 . These costs are amortized using the effective interest method over the term of each applicable convertible note. The net deferred financing cost balances was $154,427 as of September 30, 2014, compared with $477,673 as of December 31, 2013 | |
Loans to Third Parties | |
In 2013, the Company agreed to provide a loan to a third party at an interest rate of 5% per annum, with an option to acquire an equity interest. The loan was provided to fund the development and exploitation of applications using electronic medical health records. The loan will be repaid at the completion of the proof of concept, which is a prototype that is designed to determine feasibility of the application development, which will not occur prior to 2015. The loan has been provided in a number of tranches, the last one was on April 7, 2014 for additional $50,000. The carrying value of the loan was $267,063 and $163,542 as of September 30, 2014 and December 31, 2013, respectively. |
Property_and_Equipment
Property and Equipment | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
Property and Equipment [Abstract] | ' | ||||||||||
Property and Equipment | ' | ||||||||||
Note 8. Property and Equipment | |||||||||||
Property and equipment at September 30, 2014 (unaudited) and December 31, 2013 consisted of: | |||||||||||
Average | |||||||||||
Estimated | |||||||||||
Useful | September 30, | December 31, | |||||||||
Lives | 2014 | 2013 | |||||||||
(Unaudited) | |||||||||||
Furniture and fixtures | 5 | $ | 284,007 | $ | 314,686 | ||||||
Computer, communication and network equipment | 3 – 10 | 23,070,583 | 24,287,111 | ||||||||
Software | 5 | 4,680,076 | 8,473,042 | ||||||||
Automobiles | 5 | 84,389 | 91,580 | ||||||||
Construction in progress for internal use software | 4,732,934 | 2,603,731 | |||||||||
Total property and equipment | 32,851,989 | 35,770,150 | |||||||||
Less: accumulated depreciation and amortization | (13,248,282 | ) | (15,984,028 | ) | |||||||
Total property and equipment, Net | $ | 19,603,707 | $ | 19,786,122 | |||||||
Computers, communications and network equipment includes the capitalization of the Company's 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. | ||||||||||
Construction in progress (“CIP”) for internal use software consists of software projects in developments that have not been completed, and equipment acquired from third parties but not yet ready for service. Upon completion of development, the assets are reclassified from CIP to the appropriate Property and Equipment category, at which point the assets begin to depreciate or amortize. During the first nine months of 2014, the Company added to CIP $3,381,868 of internal use software costs, $912,849 in acquired equipment and management reclassified $919,792 from Computer, Communication and Network during the first quarter in 2014, because this equipment was not yet ready for service. During the nine months period ended September 30, 2014, the Company reclassified $1,968,969 from CIP into computer equipment and $740,907 as software. There is also an exchange rate translation effects amounting to approximately $375,430, because costs are incurred mostly in the functional currency Euro and translated to the reporting currency, US dollar. | |||||||||||
Depreciation amounted to $1,189,496 and $3,660,946 for the three and nine months period ended September 30, 2014 |
Intangible_Assets
Intangible Assets | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||
Intangible Assets [Abstract] | ' | ||||||||||||||||||||||||
Intangible Assets | ' | ||||||||||||||||||||||||
Note 9. 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 and pipeline, registration and licenses, patents and trademark/brands. | |||||||||||||||||||||||||
Intangible assets as of September 30, 2014 (unaudited) and December 31, 2013 consisted of the following: | |||||||||||||||||||||||||
Estimated | September 30, | December 31, | |||||||||||||||||||||||
Useful Lives | 2014 | 2013 | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||
Customer Contracts, Licenses , Interconnect & Technology | 10-May | $ | 4,244,641 | $ | 13,005,460 | ||||||||||||||||||||
ValidSoft IP & Technology | 10-Jan | 14,970,577 | 16,246,291 | ||||||||||||||||||||||
Total intangible assets | 19,215,217 | 29,251,751 | |||||||||||||||||||||||
Less: Accumulated amortization Customer Contracts, Licenses, Interconnect & Technology | (3,319,806 | ) | (11,484,600 | ) | |||||||||||||||||||||
Less: Accumulated Amortization ValidSoft IP & Technology | (9,894,528 | ) | (9,096,474 | ) | |||||||||||||||||||||
Total intangible assets, Net | $ | 6,000,884 | $ | 8,670,677 | |||||||||||||||||||||
Total amortization expense for the nine month periods ended September 30, 2014 and 2013 was $2,175,911 and $2,288,106, respectively. As of September 30, 2014, December 31, 2013 and September 30, 2013, the Company did not record any impairment. | |||||||||||||||||||||||||
Estimated future amortization expense related to the Company´s intangible assets is: | |||||||||||||||||||||||||
Rest of 2014 | 2015 | 2016 | 2017 | 2018 | 2019 and | ||||||||||||||||||||
thereafter | |||||||||||||||||||||||||
Customer contracts, Licenses, Interconnect and Technology | $ | 150,908 | $ | 384,776 | $ | 240,094 | $ | 84,222 | $ | 64,835 | $ | - | |||||||||||||
Validsoft IP and Technology | 513,742 | 1,917,783 | 1,872,055 | 544,130 | 101,484 | 126,855 | |||||||||||||||||||
Total | $ | 664,650 | $ | 2,302,559 | $ | 2,112,149 | $ | 628,349 | $ | 166,318 | $ | 126,855 |
Goodwill
Goodwill | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Goodwill [Abstract] | ' | ||||||||
Goodwill | ' | ||||||||
Note 10. Goodwill | |||||||||
The carrying value of the Company's goodwill as of September 30, 2014 (unaudited) and December 31, 2013 was as follows: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
Goodwill | (unaudited) | ||||||||
Goodwill ValidSoft Ltd | $ | 3,093,785 | $ | 3,359,210 | |||||
Goodwill Morodo Ltd. | 206,056 | 223,615 | |||||||
Goodwill Telnicity assets | 190,401 | 190,401 | |||||||
Total | $ | 3,490,242 | $ | 3,773,226 | |||||
Goodwill represents the excess of cost over the fair value of assets. 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. | |||||||||
The Company assesses goodwill for impairment during the fourth quarter of each 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 and the Company's previously announced outlook for 2014, it concluded that, for the third quarter of 2014, 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. |
Overdraft_and_Loan_Payable
Overdraft and Loan Payable | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Overdraft and Loan Payable [Abstract] | ' | ||||||||
Overdraft and Loan Payable | ' | ||||||||
Note 11. Overdraft and Loan Payable | |||||||||
In 2004, Elephant Talk Ltd (“ETL”), a subsidiary of the Company, executed a credit facility with a bank in Hong Kong pursuant to which ETL borrowed funds. The interest rate and default payment interest rate were charged at 2% and 6% per annum respectively, 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 nor is it otherwise obligated to pay funds drawn upon it on behalf of ETL. | |||||||||
The related loans payable as of September 30, 2014 (unaudited) and December 31, 2013 are summarized as follows: | |||||||||
September | December | ||||||||
30, 2014 | 31, 2013 | ||||||||
(unaudited) | |||||||||
Installment loan payable due December 24, 2006, secured by personal guarantees of two stockholders, a former director, and a third party | $ | 319,991 | $ | 320,358 | |||||
Installment loan payable, 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 stockholders and a former director | 254,404 | 254,696 | |||||||
Installment loan payable, 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 stockholders and a former director | 103,778 | 103,897 | |||||||
Term loan payable, monthly payments of interest at bank's prime rate, 7.0% at December 31, 2007 | 283,377 | 283,703 | |||||||
Total | $ | 961,550 | $ | 962,654 | |||||
In December 2009 Chong Hing Bank Limited (“Bank”), formerly known as Liu Chong Hing Bank Limited, a foreign banking services company based in Hong Kong, 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 ETL, a wholly-owned Hong Kong subsidiary of the Company. Various former officers and directors of ETL personally guaranteed the loans and overdraft account. As of September 30, 2014, the overdraft balance amounted to $425,144. The balance as of December 31, 2013 was $391,436. | |||||||||
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 to 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 the Company and against the Bank on December 14, 2011, and awarded the Company $5,925 in costs. The judgment became final on February 16, 2012. The Company continues to accrue for these loans and related interest since its subsidiary ETL, may still be held liable for these loans. |
Deferred_Revenue
Deferred Revenue | 9 Months Ended |
Sep. 30, 2014 | |
Deferred Revenue [Abstract] | ' |
Deferred Revenue | ' |
Note 12. Deferred Revenue | |
Because the Company recognizes revenue upon performance of services, deferred revenue represents amounts received from the customers against future sales of services, such as in pre-paid mobile services, pre-paid maintenance fees and mobile and security project work. Deferred revenue was $127,456 (unaudited) and $142,731 as of September 30, 2014 and December 31, 2013, respectively. |
Accrued_expenses
Accrued expenses | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Accrued expenses [Abstract] | ' | ||||||||
Accrued expenses | ' | ||||||||
Note 13. Accrued expenses | |||||||||
As of September 30, 2014 (unaudited) and December 31, 2013, the accrued expenses were comprised of the following: | |||||||||
September 30, | December | ||||||||
2014 | 31, 2013 | ||||||||
(unaudited) | |||||||||
Accrued SG&A expenses | $ | 2,325,318 | $ | 2,271,086 | |||||
Accrued cost of service | 611,611 | 547,111 | |||||||
Accrued taxes (including VAT) | 833,978 | 255,577 | |||||||
Accrued interest payable | 1,702,571 | 1,300,101 | |||||||
Other accrued expenses | 331,521 | 587,428 | |||||||
Total accrued expenses | $ | 5,804,999 | $ | 4,961,303 | |||||
Within accrued taxes are included income taxes payable as of September 30, 2014 (unaudited) and December 31, 2013 amounting to $7,236 and $88,420, respectively. | |||||||||
Accrued SG&A expenses include social security premiums, personnel related costs such as payroll taxes, provision for holiday allowance, accruals for marketing and sales expenses, and office related expenses. |
Conversion_into_Equity_of_the_
Conversion into Equity of the 2013 10% Related Party Convertible Note (Convertible Note One [Member]) | 9 Months Ended | ||
Sep. 30, 2014 | |||
Convertible Note One [Member] | ' | ||
Debt Instrument [Line Items] | ' | ||
10% Convertible Note | ' | ||
Note 14. Conversion into Equity of the 2013 10% Related Party Convertible Note | |||
On July 15, 2014, the Company entered into a certain note conversion letter agreement (the “Conversion Agreement”) and a certain warrant amendment letter agreement (the “Warrant Amendment”) with Mr. Moncarey (a related party and Director of QAT Investments S.A. and QAT II Investments S.A., affiliates of the Company) to, among other things, | |||
• | immediately convert the convertible note issued on August 17, 2013, due July 2, 2014 (the “Maturity Date”), pursuant to which the Company borrowed a principal amount of €2,000,000 ($2,966,951 as of July 15, 2014) at an interest rate of 10% per annum. ("the 2013 10% Related Party Convertible Note") into a number of shares of Common Stock. The 2013 10% Related Party Convertible Note permits conversion, in whole or in part, at the option of Mr. Moncarey, into a number of shares of Common Stock, par value $0.00001 of the Company (the “Common Stock”) equal to the quotient of the Outstanding Balance (as defined in the 2013 10% Related Party Convertible Note) divided by a Conversion Price of $0.70, modified from the original conversion price of $0.887 per share or 4,238,501 shares of the Company's Common Stock, which amounted to $2,966,951 of principal and interest, plus $824,590 as value assigned to the reduced Conversion Price, totaling $3,791,541 of equity increase. | ||
• | amend the warrant issued in conjunction with the issuance of the 2013 10% Related Party Convertible Note (“the 2013 Related Party Warrant”) to reduce the exercise price of the 2013 10% Related Party Warrant to $0.70 per share for the remainder of the term; and | ||
• | issue a warrant to Mr. Moncarey to purchase 500,000 shares of restricted Common Stock (the “July Warrant” and together with the Conversion Agreement and the Warrant Amendment, collectively, the “Transaction”). | ||
The July Warrant is exercisable any time after January 15, 2015 at an exercise price of $0.9228 per share (the closing price of the Company's Common Stock immediately preceding the date the July Warrant was issued). The term of the July Warrant expires on July 15, 2019.The Audit and Finance Committee of the Company's Board of Directors authorized the Transaction in order to immediately satisfy the Company's obligations under the 2013 10% Related Party Convertible Note. The Transaction was subsequently ratified by the Company's Board of Directors. | |||
The securities underlying the Warrant Amendment, July Warrant and the shares of Common Stock issuable upon conversion of the 2013 10% Related Party Convertible Note pursuant to the Conversion Agreement have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws, and were offered and sold only in Europe to an “accredited investor” (as defined in Rule 501(a) of the Securities Act) pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act and Regulation D promulgated pursuant thereto. | |||
In connection with the reduction of the conversion price of note and warrants from $0.887 to $0.70 and the additional 500,000 warrants issued, the Company recorded an expense amounting to $1,162,322 which is included in interest expense related to debt discount and conversion feature in the consolidated statement of comprehensive loss. |
10_3rd_Party_Convertible_Note
10% 3rd Party Convertible Note (Convertible Note Two [Member]) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Convertible Note Two [Member] | ' | ||||||||
Debt Instrument [Line Items] | ' | ||||||||
10% Convertible Note | ' | ||||||||
Note 15. 10% 3rd Party Convertible Note | |||||||||
On August 28, 2013, the Company issued a convertible note for the amount of €4,000,000 ($5,074,080) at September 30, 2014) to an accredited investor at an interest rate of 10% per annum with maturity date of August 28, 2015 (the “2013 10% 3rd Party Convertible Note”). At any time after August 28, 2013, the 2013 10% 3rd Party Convertible Note is convertible, in whole or in part, at the option of the investor, into a number of shares of common stock equal to the quotient of the outstanding balance under the 2013 10% 3rd Party Convertible Note divided by $0.887. The 2013 10% 3rd Party Convertible Note also contains default provisions, including provisions for potential acceleration of the 2013 10% 3rd Party Convertible Note. Interest is computed on the basis of the actual number of days elapsed in a 365-day year, and shall accrue from the date negotiated, and shall continue to accrue on the outstanding principal balance until paid in full or converted. | |||||||||
In conjunction with the issuance of the 2013 10% 3rd Party Convertible Note, on August 28, 2013, the Company issued a warrant to the investor to purchase 2,000,000 shares of restricted common stock (the “10% 3rd Party Warrant”). The 10% 3rd Party Warrant is exercisable at any time on or after February 28, 2014 at a price of $0.887 per share. The 10% 3rd Party Warrant has a five year term after the issuance date of August 28, 2013. | |||||||||
The securities underlying the 2013 10% 3rd Party Warrant and the shares of common stock issuable upon conversion of the 2013 10% 3rd Party Convertible Note have not been registered under the Securities Act, as amended, or any state securities laws. | |||||||||
The Company concluded that the 2013 10% 3rd Party Warrant does not require liability classification and is considered an equity instrument. The 2013 10% 3rd Party Warrant is recognized at a relative fair value on the issue date of the 2013 10% 3rd Party Convertible Note as a debt discount which was amortized using the effective interest method from issuance to the maturity date of the 2013 10% 3rd Party Convertible Note. The 2013 10% 3rd Party Warrant was valued using the binomial model at $864,394 on the date of issuance of the 2013 10% 3rd Party Convertible Note. The debt discount balance as of September 30, 2014 and December 31, 2013 was $410,853 and $726,695 respectively. The embedded conversion feature is not required to be separated. | |||||||||
The following table shows the composition of the 2013 10% 3rd Party Convertible Note as shown in the Condensed Consolidated Balance Sheet: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(unaudited) | |||||||||
10% 3rd Party Convertible Note (principal amount) | € | 4,000,000 | € | 4,000,000 | |||||
Exchange rate September 30, 2014: EURO 0.7883=$1, and December 31, 2013: EURO 0.7264=$1 | |||||||||
10% 3rd Party Convertible Note | $ | 5,074,080 | $ | 5,506,608 | |||||
Less: | |||||||||
Debt Discount (10% 3rd Party Warrant) | (410,853 | ) | (726,695 | ) | |||||
10% 3rd Party Convertible Note (Net of Debt Discount of $410,853 as per September 30, 2014 and $726,695 as per December 31, 2013) | $ | 4,663,227 | $ | 4,779,913 | |||||
Subsequent to September 30, 2014 the liability of the 2013 10% 3rd Party Convertible Note will be eliminated from the balance sheet following the partial repayment of the loan and conversion of the remainder into shares of the Company's common stock. As a result, the 2013 10% 3rd Party Convertible Note remains classified under long term liabilities at September 30, 2014. Further details in Note 27 (Subsequent events). | |||||||||
Registered_Direct_Offering_and
Registered Direct Offering and Warrant liabilities | 9 Months Ended |
Sep. 30, 2014 | |
Registered Direct Offering [Abstract] | ' |
Registered Direct Offering | ' |
Note 16. Registered Direct Offering and Warrant liabilities | |
On June 11, 2013, the Company entered into an Amendment No. 1 (the “Amendment to SPA”) to a certain Securities Purchase Agreement (the “SPA”) dated June 3, 2013 with certain institutional and other investors (“DJ Investors”) placed by Dawson James Securities Inc. (the “Placement Agent”) and Mr. Steven van der Velden, the Chief Executive Officer and Chairman of the Board (“Affiliated Investors”), relating to a registered direct public offering by the Company (the “Offering”). The gross proceeds of this SPA were $12,000,000 and resulted in net proceeds of $11,292,500 after the deduction of $707,500 for financing related expenses to various parties involved. The majority of the net proceeds were used to pay off the outstanding 8% Senior Secured Convertible Notes issued by the Company in 2012 (the “8% Senior Secured Convertible Notes”). | |
The number of shares issued relating to the SPA amounted to 17,425,621, the number of warrants amounted to 7,841,537 and was covered by the registration statement filed in 2012 for an amount of $75,000,000 (S-3/A Amendment No. 2, File No. 333-181738 dated June 6, 2012). The Company determined the fair value of the remaining outstanding warrants, totaling 2,892,857 using a Monte-Carlo Simulation model, which as of September 30, 2014 and December 31, 2013 amounted to $2,248,169 and $1,973,534, respectively. The warrants are re-evaluated at each reporting period with changes in the fair value recognized through the applicable period Consolidated Statement of Comprehensive Loss. | |
The SPA included the issuance of 7,841,537 investor warrants (“investor warrants”) and 183,284 warrants issued to the fund raising agent (“agent warrants” and together with the investor warrants, the “RD Warrants”). The RD Warrants have a five year term from the date of issuance, are exercisable at the price of $0.887 per share for the investor warrants and $0.853 per share for the agent warrants immediately from the date of issuance and include provisions governing the adjustments to the number of RD Warrant Shares (defined below) issuable upon exercise of the RD Warrants upon stock dividends, stock splits, and other events. The RD Warrants may be transferred by a holder thereof in accordance with applicable securities laws. | |
In the event that, among other things, the registration statement relating to the shares of common stock is not effective, a holder of RD Warrants will also have the right, in its sole discretion, to exercise its RD Warrants for a net number of RD Warrant shares pursuant to the cashless exercise procedures specified in the RD Warrants (the “RD Warrant Shares”). The RD Warrants may be exercised in whole or in part, and any portion of a RD Warrant not exercised prior to the termination date shall be and become void and of no value. The absence of an effective registration statement or applicable exemption from registration does not alleviate the Company's obligation to deliver common stock issuable upon exercise of a RD Warrant. | |
Each RD Warrant also allows the holder the ability, at any time after 90 days from the issuance of the RD Warrant through its expiration, to exchange the RD Warrant with the Company for shares of common stock equal to the value of the RD Warrant at the time of the exchange based on a negotiated Black-Scholes formula. Under certain circumstances, the holder may receive cash in lieu of such shares of common stock. | |
Under certain circumstances after 90 days from the issuance of the RD Warrant, in the event that the common stock trades at a price that is 20% or more above the exercise price of the RD Warrants for a period of twenty consecutive trading days (with an average daily volume equal to or greater than $350,000), the Company may require the holder of the RD Warrants to exercise the RD Warrants for cash. After the 90 days waiting period some of the RD Warrant holders indeed did decide to use their right to exchange their RD Warrants, and subsequently, the Company issued shares of common stock rather than paying cash. The number of RD Warrants exchanged amounted to 5,131,965 which resulted in the issuance of 4,102,792 shares of common stock. The exchange of the RD Warrants did not result in any cash inflow or cash outflow. | |
If, at any time a RD Warrant is outstanding, the Company consummates any fundamental transaction, as described in the RD Warrants and generally including any consolidation or merger into another corporation, or the sale of all or substantially all of its assets, or other transaction in which the common stock is converted into or exchanged for other securities or other consideration, the holder of any RD Warrants will thereafter receive the securities or other consideration to which a holder of the number of shares of common stock then deliverable upon the exercise or exchange of such RD Warrants would have been entitled upon such consolidation or merger or other transaction. | |
The exercisability or exchangeability of the RD Warrants may be limited in certain circumstances if, after giving effect to such exercise or exchange, the holder or any of its affiliates would beneficially own (as determined pursuant to Section 13(d) of the Securities Act, as amended, and the rules and regulations promulgated thereunder) more than 9.9% of the Common Stock issued and outstanding. | |
According to ASC 480-10, Distinguishing Liabilities from Equity, the accounting for an equity instrument with detachable warrants classified as a liability reflects the notion that the consideration received upon issuance must be allocated between the instruments issued. Proceeds from the issuance of an equity instrument with stock purchase warrants are allocated to the two elements based on the following: (i) the liability element has initially been recorded at fair market value; and (ii) the remaining portion of the consideration has been allocated to the equity element. |
Fair_Value_Measurements
Fair Value Measurements | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Fair Value Measurements [Abstract] | ' | ||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
Note 17. Fair Value Measurements | |||||||||||||||||
The following tables summarize fair value measurements by level as of September 30, 2014 and December 31, 2013 for financial assets and liabilities that are measured at fair value on a recurring basis: | |||||||||||||||||
30-Sep-14 | |||||||||||||||||
(unaudited) | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Derivative Liabilities | |||||||||||||||||
Warrant Liabilities | $ | - | $ | - | $ | 2,248,169 | $ | 2,248,169 | |||||||||
Total Derivatives Liabilities | $ | - | $ | - | $ | 2,248,169 | $ | 2,248,169 | |||||||||
31-Dec-13 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Derivative Liabilities | |||||||||||||||||
Warrant Liabilities | $ | - | $ | - | $ | 1,973,534 | $ | 1,973,534 | |||||||||
Total Derivatives Liabilities | $ | - | $ | - | $ | 1,973,534 | $ | 1,973,534 | |||||||||
The Company has classified the outstanding warrant liabilities into level 3 due to the fact that some inputs are not published and not easily comparable to industry peers. The differences in level 3 items from December 31, 2013 to September 30, 2014 were only as a result in changes in the fair values. The Company uses the Monte Carlo valuation model to determine the value of the remaining outstanding warrants from the Registered Direct Offering of June 2013, discussed in Note 16 under the title “Registered Direct Offering and Warrant Liabilities”. Since this model requires special software and expertise to model the assumptions to be used, the Company hired a third party valuation expert. The warrants are re-evaluated at each reporting period with changes in the fair value recognized through the applicable period Consolidated Statement of Comprehensive Loss. |
Obligations_under_Capital_Leas
Obligations under Capital Leases | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Obligations under Capital Leases [Abstract] | ' | ||||||||
Obligations under Capital Leases | ' | ||||||||
Note 18. Obligations under Capital Leases | |||||||||
The Company has a number of financing arrangements with its vendors to acquire equipment and licenses. These trade arrangements contain maturity periods ranging from two to three years, and interest rates between Euribor (3M) +1.5% and 8.65%. The following is an analysis of the property and equipment acquired under capital leases, recorded in the Property and Equipment line item by major classes: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(unaudited) | |||||||||
Network equipment | $ | 1,580,123 | $ | 1,642,759 | |||||
Software licenses | 1,439,807 | 874,174 | |||||||
Other | 158,569 | 103,249 | |||||||
Total | 3,178,499 | 2,620,182 | |||||||
Less: accumulated depreciation and amortization | (425,303 | ) | (101,209 | ) | |||||
Total | $ | 2,753,196 | $ | 2,518,973 | |||||
The current portion of the Obligation under Capital Leases of $1,828,083 and $1,302,838 as of September 30, 2014 and December 31, 2013, respectively, is included in Current Liabilities “Obligations under capital leases” in the accompanying balance sheets and the long term portion of $261,912 and $845,529, is reported as “Non-current portion of obligations under capital lease” as of September 30, 2014 and December 31, 2013, respectively. Accrued interest is included in ‘Accrued expenses' in the balance sheet. Depreciation of assets recorded under the capital leases is included in depreciation expense. | |||||||||
During the first nine months of 2014, the Company entered into a lease agreement for software licenses and pre-paid maintenance amounting in total to $721,077. |
Loan_from_joint_venture_partne
Loan from joint venture partner | 9 Months Ended |
Sep. 30, 2014 | |
Loan from joint venture partner [Abstract] | ' |
Loan from joint venture partner | ' |
Note 19. Loan from joint venture partner | |
The Company, through its subsidiary ET-UTS N.V, entered into a 51% owned joint venture agreement (the “Joint Venture Agreement”) on December 17, 2008 and received an unsecured loan with a principal amount of ANG (Netherlands Antillian Guilder) 724,264 ($402,424) at an interest rate of 8% per annum, from the 49% shareholder in the joint venture, United Telecommunication Services N.V. (“UTS NV”) that is the government owned incumbent telecom operator of Curaçao. The loan had no maturity date, and the agreed conditions were that repayment of the loan and accrued interest would only take place when the joint venture was in a cash flow positive situation. | |
Management decided to discontinue and liquidate the joint venture with UTS NV and the loan and accrued interest have been forgiven. Therefore the Company recognized a gain in extinguishment of debt in the amount of $626,534. The balance outstanding as of September 30, 2014 is $0. |
Stockholders_Equity
Stockholders' Equity | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Stockholders' Equity [Abstract] | ' | ||||||||||||||||||||
Stockholders' Equity | ' | ||||||||||||||||||||
Note 20. Stockholders' Equity | |||||||||||||||||||||
(A) Common Stock | |||||||||||||||||||||
The Company is presently authorized to issue 250,000,000 shares common stock. The Company had 151,312,189 and 140,466,801 shares of common stock issued and outstanding as of September 30, 2014 (unaudited) and December 31, 2013, respectively, an increase of 10,845,388 shares, largely due to: the issuance of 5,518,392 shares that were issued as a result of the exercise of 5,518,392 warrants; 4,238,501 shares were issued as a result of the conversion of a note; 478,984 shares were issued to employees as a result of exercised employee stock options; 309,511 shares (of which 295,551 shares were issued from the 2008 Plan plus 13,960 shares issued under the 2006 Plan) were issued as compensation to the Company's executive officers and non-executive directors, and 300,000 shares issued as consideration for consulting services. | |||||||||||||||||||||
Reconciliation with Stock Transfer Agent Records: | |||||||||||||||||||||
The shares issued and outstanding as of September 30, 2014 and December 31, 2013 according to the Company's stock transfer agent's records were 151,558,089 and 140,712,701, respectively. The difference in number of issued shares recognized by the Company of 151,312,189 amounts to 245,900 and it is the result of the exclusion of the 233,900 unreturned shares from ‘cancelled' acquisitions (pre-2006) and 12,000 treasury shares issued under the former employee benefits plan. | |||||||||||||||||||||
(B) Preferred Stock | |||||||||||||||||||||
The Company's Certificate of Incorporation (“Articles”) authorizes the issuance of 50,000,000 shares of preferred stock $0.00001 par value per share (the “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, subject to the rules of the NYSE MKT LLC, 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 stockholder 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. | |||||||||||||||||||||
For the period ended September 30, 2014, the Company did not issue any shares of Preferred Stock, and no shares of Preferred Stock are outstanding. | |||||||||||||||||||||
(C) Warrants | |||||||||||||||||||||
Throughout the years, the Company has issued warrants with varying terms and conditions related to multiple financing rounds, acquisitions and other transactions. The warrants outstanding at September 30, 2014 (unaudited) and December 31, 2013 have been recorded and classified as equity, except as of September 30, 2014 and December 31, 2013; the Company has recorded $2,248,169 and $1,973,534, respectively, in the balance sheet for the warrant liabilities issued in connection with the Registered Direct Offering described in Note 16. During the nine months of 2014, 5,518,392 warrants were exercised, 2,598,637 expired and 500,000 were issued. The weighted average exercise price for the currently outstanding warrants in the table below is $1.25. | |||||||||||||||||||||
The table below summarizes the warrants outstanding as of September 30, 2014 and as of December 2013: | |||||||||||||||||||||
Outstanding | Exercise/ | Expiring | 2014 | 2013 | |||||||||||||||||
Warrants | Conversion | ||||||||||||||||||||
price(s) | |||||||||||||||||||||
(range) | |||||||||||||||||||||
Warrants – Fundraising | $0.853- $2.00 | 2013 - 2018 | 29,612,201 | 37,229,230 | |||||||||||||||||
Warrants – Other | $2.21 | 2016 | 18,659 | 18,659 | |||||||||||||||||
29,630,860 | 37,247,889 | ||||||||||||||||||||
Noncontrolling_Interest
Non-controlling Interest | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Non-controlling Interest [Abstract] | ' | ||||||||||||
Non-controlling Interest | ' | ||||||||||||
Note 21. Non-controlling Interest | |||||||||||||
The Company had non-controlling interests in several of its subsidiaries. The balance of the non-controlling interests as of September 30, 2014 (unaudited) and December 31, 2013 were as follows: | |||||||||||||
Subsidiary | Non-controlling | September | December | ||||||||||
Interest % | 30, 2014 | 31, 2013 | |||||||||||
(unaudited) | |||||||||||||
ETC PRS UK | 49 | % | $ | 9,744 | $ | 9,894 | |||||||
ETC PRS Netherlands | 49 | % | 124,318 | 134,912 | |||||||||
ET Bahrain WLL | 1 | % | - | - | |||||||||
ET ME&A FZ LLC | 49.46 | % | - | - | |||||||||
Total | $ | 134,062 | $ | 144,806 | |||||||||
Net losses attributable to non-controlling interest were insignificant for all the years presented. |
Basic_and_Diluted_Net_Loss_Per
Basic and Diluted Net Loss Per Share | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Basic and Diluted Net Loss Per Share [Abstract] | ' | ||||||||
Basic and Diluted Net Loss Per Share | ' | ||||||||
Note 22. Basic and Diluted Net Loss Per Share | |||||||||
Net loss per share is calculated in accordance with ASC 260, Earnings per Share (“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. 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. | |||||||||
The diluted share base for 2014 and 2013 excludes incremental shares related to convertible debt, warrants to purchase common stock and employee stock options as follows: | |||||||||
Nine months ended September 30, | |||||||||
Dilutive Securities | 2014 | 2013 | |||||||
2013 10% 3rd and 10% Related Party Convertible Notes | 6,349,437 | - | |||||||
Warrants | 29,630,860 | 42,203,174 | |||||||
Employee Stock Options | 40,845,597 | 20,070,397 | |||||||
76,925,894 | 62,273,571 | ||||||||
These shares were excluded due to their anti-dilutive effect on the loss per share recorded in each of the years presented. No additional securities were outstanding that could potentially dilute basic earnings per share. |
2006_NonQualified_Stock_and_Op
2006 Non-Qualified Stock and Option Compensation Plan and 2008 Long Term Incentive Compensation Plan | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
2006 Non-Qualified Stock and Option Compensation Plan and Amended and Restated 2008 Long Term Incentive Compensation Plan [Abstract] | ' | ||||||||||||
2006 Non-Qualified Stock and Option Compensation Plan and Amended and Restated 2008 Long Term Incentive Compensation Plan | ' | ||||||||||||
Note 23. 2006 Non-Qualified Stock and Option Compensation Plan and Amended and Restated 2008 Long Term Incentive Compensation Plan | |||||||||||||
Reconciliation of Available Shares and/or Options as of September 30, 2014: | |||||||||||||
Total | |||||||||||||
Registered January 15, 2008 | 5,000,000 | ||||||||||||
Registered October 6, 2011 | 18,000,000 | ||||||||||||
Approved in 2013* | 23,000,000 | ||||||||||||
Approved in 2014* | 10,000,000 | ||||||||||||
Total Authorized under this plan | 56,000,000 | ||||||||||||
Shares issued in prior years | 1,521,366 | ||||||||||||
Q4-2013 share-based compensation issued in 2014 | 295,551 | ||||||||||||
Options exercised | 2,230,788 | ||||||||||||
Outstanding options | 40,845,597 | ||||||||||||
Available for grant: | 11,106,698 | ||||||||||||
* These shares have not been registered on a Registration Statement on Form S-8 as of September 30, 2014. | |||||||||||||
During the first quarter of 2014, the Company issued 295,551 shares to various directors and officers under the 2008 Plan, in conjunction with their willingness to receive all or part of their cash compensation for the fourth quarter of 2013 in shares of the Company. During 2014, there have been 1,240,000 options granted to members of the management team. | |||||||||||||
During the third quarter of 2014, the total authorized shares under the 2008 Plan increased by 10,000,000 to 56,000,000, and the increase was approved at the Company's annual meeting of shareholders meeting held at September 12, 2014. Currently, a total of 40,845,597 stock options are outstanding at September 30, 2014 under the 2008 Plan. Options awards generally vest immediately or over a three-year period after the grant date. Options generally expire between three and four years from the date of grant. | |||||||||||||
Common Stock Purchase Options Consisted of the Following as of the Quarter ended September 30, 2014 and the Years ended December 31, 2013 and 2012: | |||||||||||||
Options: | Number of | Weighted | Initial Fair | ||||||||||
Options | Average Exercise | Market | |||||||||||
Price | Value | ||||||||||||
(Outstanding | |||||||||||||
Options) | |||||||||||||
Outstanding as of December 31, 2012 | 12,181,130 | $ | 2.15 | $ | 15,418,671 | ||||||||
Granted in 2013 | 24,496,741 | $ | 1.12 | $ | 14,107,008 | ||||||||
Exercised (with delivery of shares) | (809,737 | ) | $ | 0.66 | $ | (270,682 | ) | ||||||
Forfeitures (Pre-vesting) | (805,266 | ) | $ | 1.81 | $ | (807,662 | ) | ||||||
Expirations (Post-vesting) | (556,524 | ) | $ | 1.92 | $ | (648,529 | ) | ||||||
Exchanged for Cashless exercise | (26,571 | ) | $ | 0.6 | $ | (13,834 | ) | ||||||
Outstanding as of December 31, 2013 | 34,479,773 | $ | 1.47 | $ | 27,784,972 | ||||||||
Granted in 2014 | 8,178,033 | $ | 1.22 | $ | 5,159,039 | ||||||||
Exercised (with delivery of shares) | (478,978 | ) | $ | 0.77 | $ | (155,155 | ) | ||||||
Forfeitures (Pre-vesting) | (710,338 | ) | $ | 1.52 | $ | (639,709 | ) | ||||||
Expirations (Post-vesting) | (622,893 | ) | $ | 1.99 | $ | (737,465 | ) | ||||||
Outstanding as of September 30, 2014 | 40,845,597 | $ | 1.39 | $ | 31,411,682 | ||||||||
Share-Based Compensation Expense | |||||||||||||
Share-based compensation amounted to $862,419 and $1,233,165 for the three months ended September 30, 2014 and 2013, respectively, and $3,536,680 and $5,639,124 for the nine months ended September 30, 2014 and 2013, respectively. From these amounts, for the three and nine month periods ending September 30, 2014, $794,582 and $3,392,843, respectively, consisted of shares issued to directors and officers and employee option expensing under the provisions of ASC 718 and ASC 505-50, Equity Based Payments to Non-Employees (“ASC 505-50”), for both the 2006 Non-Qualified Stock and Option Compensation Plan and the 2008 Long-Term Incentive Plan. The Company utilized the Black-Scholes valuation model for estimating the fair value of the stock-options at grant. The remaining $67,837 and $143,837 of share-based compensation for the three and nine month periods ending September 30, 2014, was not part of any compensation plan, but was the result of restricted common stock issued in 2013 with prior approval from the NYSE MKT LLC for one year of consultancy services. | |||||||||||||
Share-Based Compensation Expense | Three months | Three months | |||||||||||
ended September | ended September | ||||||||||||
30, 2014 | 30, 2013 | ||||||||||||
Consultancy services | $ | 67,837 | $ | - | |||||||||
Directors and Officers (shares and options) | $ | 125,529 | $ | 420,731 | |||||||||
Employee (options) | $ | 669,053 | $ | 812,434 | |||||||||
$ | 862,419 | $ | 1,233,165 | ||||||||||
Share-Based Compensation Expense | Nine months | Nine months | |||||||||||
ended September | ended September | ||||||||||||
30, 2014 | 30, 2013 | ||||||||||||
Consultancy services | $ | 143,837 | $ | - | |||||||||
Directors and Officers (shares and options) | $ | 166,516 | $ | 1,886,909 | |||||||||
Employee (options) | $ | 3,226,327 | $ | 3,752,215 | |||||||||
$ | 3,536,680 | $ | 5,639,124 | ||||||||||
As explained in Note 1 to the Financial Statements, under the title “Reclassification of Changes to Prior Year Information”, certain reclassifications have been made to the June 30, 2013 Financial Statements to conform to the current year presentation. Prior to December 31, 2013, the Company presented the share-based compensation as one line item in the Company's Consolidated Statement of Comprehensive Loss. The Company now includes the share-based compensation within SG&A expenses line in the Consolidated Statement of Comprehensive Loss. These reclassifications had no effect on previously reported results of operations or retained earnings. |
Income_Taxes
Income Taxes | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Income Taxes [Abstract] | ' | ||||||||||||||||
Income Taxes | ' | ||||||||||||||||
Note 24. Income Taxes | |||||||||||||||||
For financial statement purposes, loss before the income tax provision is divided amongst the following; | |||||||||||||||||
For the Three Months | For the Nine Months | ||||||||||||||||
Period ended September 30, | Period ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Domestic | $ | (3,138,444 | ) | $ | (2,771,554 | ) | $ | (10,766,842 | ) | $ | (11,462,493 | ) | |||||
Foreign | 700,568 | (412,539 | ) | (274,798 | ) | (4,552,083 | ) | ||||||||||
Total | $ | (2,437,876 | ) | $ | (3,184,093 | ) | $ | (11,041,640 | ) | $ | (16,014,577 | ) | |||||
The Company files income tax returns in the US federal jurisdiction and various state and foreign jurisdictions. The applicable statutory tax rates vary between none (zero) and 34%. However, because the Company and its subsidiaries have incurred annual corporate income tax losses since their inception, management has determined that it is more likely than not that the Company will not realize the benefits of its US and foreign net deferred tax assets. Therefore, the Company has recorded a full valuation allowance to reduce the net carrying amount of the deferred taxes to zero. The Company's provision (benefit) for income taxes for the three and nine month periods ending on September 30, 2014 were $(44,938) and $88,290, respectively. | |||||||||||||||||
In the ordinary course of business the Company is subject to tax examinations in the jurisdictions in which it files tax returns. The Company's statute of limitations for tax examinations is four years for federal and state purposes and four to six years in the major foreign jurisdictions in which the company files. | |||||||||||||||||
Income tax (benefit)/expense for the nine month periods ended September 30, 2014 and September 30, 2013 is summarized as follows: | |||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Current: | |||||||||||||||||
Federal | |||||||||||||||||
State | - | - | |||||||||||||||
Foreign | 88,290 | 41,500 | |||||||||||||||
88,290 | 41,500 | ||||||||||||||||
Deferred: | |||||||||||||||||
Federal | - | - | |||||||||||||||
State | - | - | |||||||||||||||
Foreign | - | - | |||||||||||||||
Income tax expense | $ | 88,290 | $ | 41,500 | |||||||||||||
The following is a reconciliation of the provision for income taxes at the US federal statutory rate (34%) to the foreign income tax rate for the nine month periods ended September 30, 2014 and 2013: | |||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Tax expense (credit) at statutory rate-federal | 34 | % | 34 | % | |||||||||||||
State tax expense net of federal tax | - | - | |||||||||||||||
Foreign income tax rate difference | (6.5 | )% | (5.5 | )% | |||||||||||||
Change in valuation allowance | (26.7 | )% | (28.2 | )% | |||||||||||||
Other | - | % | - | % | |||||||||||||
Tax expense at actual rate | 0.8 | % | 0.3 | % | |||||||||||||
The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at September 30, 2014 and December 31, 2013 are as follows: | |||||||||||||||||
Deferred tax assets: | September 30, | September 30, | |||||||||||||||
2014 | 2013 | ||||||||||||||||
Net Operating Losses | $ | 44,769,259 | $ | 33,740,565 | |||||||||||||
Total gross deferred tax assets | 44,769,259 | 33,740,565 | |||||||||||||||
Less: Valuation allowance | (44,769,259 | ) | (33,740,565 | ) | |||||||||||||
Net deferred tax assets | $ | - | $ | - | |||||||||||||
As of September 30, 2014 and December 31, 2013, the Company had significant net operating losses (“NOL”) carry forwards. The deferred tax assets have been offset by a full valuation allowance in 2014 and 2013 due to the uncertainty of realizing any tax benefit for such losses. Releases of the valuation allowances, if any, will be recognized through earnings. | |||||||||||||||||
As of September 30, 2014 and December 31, 2013, the Company had federal and state income tax NOLs carry forwards of approximately $33 million and $34 million, respectively. The NOL carry forwards for foreign countries amounts to approximately $131 million. Such NOL carry forwards expire as follows: | |||||||||||||||||
Domestic (US) | Foreign | ||||||||||||||||
2014-2019 | $ | 514,911 | $ | 28,969,104 | |||||||||||||
2019-2024 | 4,173,661 | 31,307,025 | |||||||||||||||
2024-2031 | 28,132,938 | 78,233,028 | |||||||||||||||
NOL's as of September 30, 2014 | $ | 32,821,510 | $ | 138,509,157 | |||||||||||||
Section 382 of the Internal Revenue Code limits the use of NOLs and tax credit carry forwards in certain situations where changes occur in the stock ownership of a company. In the event the Company has a changes in ownership, utilization of the NOL carry forward could be restricted. | |||||||||||||||||
The Company files federal income tax returns in the US and various US state and foreign jurisdictions. Due to the net operating loss, all the tax years are open for tax examination. As of September 30, 2014 and December 31, 2013, the Company accrued an ASC 740-10 tax reserve of $0 and $0 for uncertain tax (benefits)/liability including interest and penalties. | |||||||||||||||||
The Company does not currently anticipate recording any amount for unrecognized tax benefits within the next 12 months. The following table summarizes the 2012 and 2013 activity related to the unrecognized tax benefits and related tax carry forward: | |||||||||||||||||
Balance at December 31, 2012 | $ | 289,136 | |||||||||||||||
Increases related to prior year tax positions | - | ||||||||||||||||
Decreases related to prior year tax positions | (289,136 | ) | |||||||||||||||
Balance at December 31, 2013 | $ | - | |||||||||||||||
Increases related to prior year tax positions | - | ||||||||||||||||
Increases related to prior year tax positions | - | ||||||||||||||||
Balance at September 30, 2014 | $ | - | |||||||||||||||
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2014 | |
Contingencies [Abstract] | ' |
Contingencies | ' |
Note 25. Contingencies | |
Rescission of the Purchase Agreement of March 31, 2004 of New Times Navigation Limited. | |
As previously described in the Company's 2004 Annual Report on Form 10-K filed with the SEC on April 1, 2005, on May 24, 2004, the Company issued 5,100,000 shares of restricted Common Stock to four stockholders of New Times Navigation Limited ("New Times"), valued at $683,400 (the “2004 Purchase Transaction”). On December 10, 2004, New Times and the Company mutually agreed to terminate the 2004 Purchase Transaction. The Company returned the shares that were delivered to New Times to the Company's shareholders and received back 90,100 of the 204,000 shares of its Common Stock that were issued under the 2004 Purchase Transaction. In addition, the Company had issued 37 unsecured convertible promissory notes for a total amount of $3,600,000 as part of the 2004 Purchase Transaction. At the Company's request 21 of the unsecured convertible promissory notes were returned to the Company for a total value of $2,040,000. | |
On April 28, 2006, the Company instituted proceedings to seek relief from the High Court of the Hong Kong Special Administrative Region against the holders of the unreturned shares to return the remaining 113,900 common shares (valued at $381,565) and the remaining 18 unsecured convertible promissory notes, representing a total amount of $1,740,000, and to rescind the purchase agreement underlying the 2004 Purchase Transaction. Since the inception of the proceedings, the parties have undertaken discovery efforts in order to resolve this matter, which have included long periods of inactivity in the process. Management is currently considering its available options for resolving this matter, including proceeding to trial. The outcome of this proceeding and the amount of any potential recovery, if any, is inherently uncertain and cannot be predicted. | |
Other | |
The Company is involved in various claims and lawsuits incidental to its business. In the opinion of management, the ultimate resolution of such claims and lawsuits will not have a material effect on its financial position, liquidity, or results of operations. |
Geographic_and_Concentration_R
Geographic and Concentration Risk Information | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Geographic and Concentration Risk Information [Abstract] | ' | |||||||||||
Geographic and Concentration Risk Information | ' | |||||||||||
Note 26. Geographic and Concentration Risk Information | ||||||||||||
Nine months ended September 30, 2014 | ||||||||||||
Europe | Other | Total | ||||||||||
foreign | ||||||||||||
countries | ||||||||||||
Revenues from unaffiliated customers | $ | 10,715,354 | $ | 9,975,255 | $ | 20,690,609 | ||||||
Identifiable assets | $ | 31,637,609 | $ | 8,971,144 | $ | 40,608,753 | ||||||
Nine months ended September 30, 2013 | ||||||||||||
Europe | Other foreign | Total | ||||||||||
countries | ||||||||||||
Revenues from unaffiliated customers | $ | 15,542,781 | $ | 1,252,846 | $ | 16,795,627 | ||||||
Identifiable assets | $ | 31,428,900 | $ | 15,024,046 | $ | 46,452,946 | ||||||
Concentration of Credit Risk and Significant Customers | ||||||||||||
The Company has no off-balance sheet risks related to foreign exchange contracts, option contracts or other foreign hedging arrangements. The Company currently maintains the majority of its cash equivalent balances with one major financial institution. The Company, by policy, routinely assesses the financial strength of its customers. As a result, the Company believes that its accounts receivable credit risk exposure is limited and has not experienced significant write-downs in its accounts receivable balances. | ||||||||||||
As of September 30, 2014, two significant customers accounted for 45% and 40%, respectively, of the Company's revenue. In the same period for 2013, two significant customers represented 46% and 9%, respectively, of the Company's revenue. The loss, or reduction in services to, these significant customers or other discontinuation of their relationship with the Company's for any reason, or if either of these significant customers reduces or postpones purchases that the Company expects to receive, it could have an adverse impact on the Company's business, results of operations and financial condition. |
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Event [Abstract] | ' |
Subsequent Events | ' |
Note 27. Subsequent Events | |
Financing | |
On November 17, 2014 (the “Closing Date”), the Company and certain of its subsidiaries entered into a term loan credit agreement with Atalaya Administrative LLC, as the administrative agent and collateral agent, and the lenders party thereto (the “Credit Agreement”). The Credit Agreement provides for a twelve million dollar term loan facility (the “Term Loan Facility”) with advances to be made on the Closing Date. Borrowings under the Term Loan Facility shall bear interest at the LIBOR rate plus an applicable margin per annum equal to ten percent (10.00%), such margin currently increased by an additional two percent (2.00%) pending the satisfaction of certain post-closing conditions. The Term Loan Facility will mature on December 31, 2017. A portion of the proceeds of the Credit Agreement will be used to repay 50% of the 2013 10% 3rd Party Convertible Note principal amount as well as all accrued interest, totalling approximately $3,123,011 (€2,498,849) until Closing Date. The remaining 50% of the principal amount of the Convertible Note will be converted into 2,817,993 shares of the Company's common stock at the Closing Date, totalling approximately $2,500,000 (€2,000,000). The Company also issued a three year warrant to purchase 1,000,000 shares of the Company's common stock, at an exercise price of $0.93 per share to the holder of the 2013 10% 3rd Party Convertible Note. |
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Significant Accounting Policies [Abstract] | ' |
Foreign Currency Translation | ' |
Foreign Currency Translation | |
The functional currency is Euros for the Company's wholly-owned subsidiary Elephant Talk Europe Holding B.V. and its subsidiaries and the British Pound Sterling for its wholly-owned subsidiary ValidSoft. The financial statements of the Company were translated to US dollars (“USD”) 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 Accounting Standards Codification (“ASC”) 830, Foreign Currency Matters, net gains and losses resulting from translation of foreign currency financial statements are included in stockholders' equity as accumulated other comprehensive income (loss). Foreign currency transaction gains and losses are included in consolidated loss; under the line item ‘Other income and (expense)' for the loans, and in the line item “SG&A expenses” for accounts receivable. | |
Use of Estimates | ' |
Use of Estimates | |
The accompanying consolidated financial statements were prepared in accordance with GAAP, which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of 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. Significant areas of estimates include revenue recognition, bad debt allowance, and valuation of financial instruments, realizability of long –lived assets, including goodwill, useful lives and share-based compensation. 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 would normally consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. The Company has full access to the whole balance of cash and cash equivalents on a daily basis without any delay. | |
Restricted Cash | ' |
Restricted Cash | |
Restricted cash as of September 30, 2014 and December 31, 2013, was $169,536 and $191,600 respectively, and consists of cash deposited in blocked accounts as bank guarantees for national interconnection and wholesale agreements with telecom operators. | |
Accounts Receivables, Net | ' |
Accounts Receivables, Net | |
The Company's customer base is geographically dispersed. The Company maintains an allowance for potential credit losses on accounts receivable. The Company makes ongoing assumptions relating to the collectability of its accounts receivable. The accounts receivable amounts presented on its balance sheets include reserves for accounts that might not be collected. In determining the amount of these reserves, the Company considers its historical level of credit losses. The Company also makes judgments about the creditworthiness of significant customers based on ongoing credit evaluations, and the Company assesses current economic trends that might impact the level of credit losses in the future. The Company's reserves have generally been adequate to cover its actual credit losses. However, since the Company cannot reliably predict future changes in the financial stability of its customers, it cannot guarantee that its reserves will continue to be adequate. If actual credit losses are significantly greater than the reserves, the Company has established that it would increase its general and administrative expenses and increase its reported net losses. Conversely, if actual credit losses are significantly less than its reserve, this would eventually decrease the Company's general and administrative expenses and decrease its reported net losses. Allowances are recorded primarily on a specific identification basis. See Note 5 of the Financial Statements of this Report for more information. | |
Leasing Arrangements | ' |
Leasing Arrangements | |
At the inception of a lease covering equipment or real estate, the lease agreement is evaluated under the criteria of ASC 840, Leases. Leases meeting one of the four key criteria are accounted for as capital leases and all others are treated as operating leases. Under a capital lease, the discounted value of future lease payments becomes the basis for recognizing an asset and a borrowing, and lease payments are allocated between debt reduction and interest. For operating leases, payments are recorded as rent expense. Criteria for a capital lease include (i) transfer of ownership during the lease term; (ii) existence of a bargain purchase option under terms that make it likely to be exercised; (iii) a lease term equal to 75 percent or more of the economic life of the leased equipment; and (iv) minimum lease payments that equal or exceed 90 percent of the fair value of the property. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that type of asset. The assets are amortized in accordance with the Company's accounting policy for Property and Equipment. | |
Revenue Recognition and Deferred Revenue | ' |
Revenue Recognition and Deferred Revenue | |
The Company derives revenue from outsourced services in telecommunications based activities by deploying its operational management services, network, switching technology and mobile enabling platform. Revenue represents amounts earned for these services provided to customers (net of value added tax). | |
The Company follows ASC 605, Revenue Recognition (“ASC 605”) and recognizes revenue 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. Revenues are recognized on a gross basis as the Company acts as principal in the transaction and has risk of loss for collection and delivery of service. | |
For the mobile solutions services, the Company recognizes revenues from two different service offerings, namely managed services and bundled services. For managed services, revenues are recognized for network administration services provided to end users on behalf of MNOs. Managed service revenues are recognized monthly based on an average number of end-users managed and calculated on a pre-determined service fee per user. For bundled services, the Company provides both network administration as well as mobile airtime management services. Revenues for bundled services are recognized monthly based on an average number of end-users managed and mobile air time and calculated based on a pre-determined service fee. | |
For the security solutions services, the Company recognizes revenues primarily from Subscriber Identity Module (“SIM”) lookup services using the VALid-SSD platform. Security solutions revenue is recognized based on the number of SIM lookups performed and calculated based on a pre-determined service fee per lookup. Other revenues recognized in the security solutions business include consulting services which are recognized as the services are performed. | |
For landline solution services, the Company previously provided technical, operational and financial telecom infrastructure to telecommunication service providers. Revenues are recognized when delivery occurs based on a pre-determined rate, number of calls and number of user minutes that the Company has managed in a given month. | |
Management's judgment is applied regarding, among other aspects, conformance with acceptance criteria and if delivery of services has occurred, to determine if revenue and costs should be recognized in the current period. In addition, management evaluates the degree of completion of the services and the customer's credit standing to assess whether payment is likely or not to justify revenue recognition. | |
Cost of Service and Operating Expenses | ' |
Cost of Service and Operating Expenses | |
Cost of service includes origination, termination, network and billing charges from telecommunications operators, charges from telecommunication service 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. Cost of service excludes depreciation and amortization. | |
SG&A expenses include all management and personnel related expenses, including share-based compensation, and other items such as: office rent, travel and car, corporate local and legal advice, audit, accountancy and tax, investor relations, marketing and communication costs and the costs incurred in the development of the Company's services which are expensed as incurred. Costs incurred during the application development stage of internal-use software projects, such as those used in the Company's network operations, are capitalized in accordance with the accounting guidance for costs of computer software developed for internal use. | |
Reporting Segments | ' |
Reporting Segments | |
ASC 280, Segment Reporting (“ASC 280”), 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 business operates as one single segment and discrete financial information is based on the whole, not segregated; and is used by the chief decision maker accordingly. | |
Financial Instruments | ' |
Financial Instruments | |
The carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and customer deposits approximate their fair values based on their short-term nature. The recorded values of long-term debt approximate their fair values, as interest approximates market rates. The Company's warrant liability, a derivative instrument, is recognized in the balance sheet at its fair values with changes in fair market value reported in earnings. | |
Fair Value Measurements | ' |
Fair Value Measurements | |
In accordance with ASC 820 Fair Value Measurement (“ASC 820”), 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 Company, has three asset groups that are valued at fair value categorized within Level 3: Warrant liabilities (recurring measurement), goodwill and intangibles (non-recurring measurements) for the impairment test. Below are discussions of the main assumptions used for the recurring measurements. | |
Recurring Measurement - Warrant Liabilities (see also Note 16) | |
Number of Outstanding Warrants | |
The number of outstanding warrants is adjusted every re-measurement date after deducting the exercise or exchange of any outstanding warrants during the previous reporting period. | |
Stock Price at Valuation Date | |
The closing stock price at re-measurement date being the last available closing price of the reporting period taken from www.nasdaq.com. | |
Exercise Price | |
The exercise price is fixed and determined under the terms of the 8% Senior Secured Convertible Note. | |
Remaining Term | |
The remaining term is calculated by using the contractual expiration date of the 8% Senior Secured Convertible Note at the moment of re-measurement. | |
Expected Volatility | |
Management estimates expected cumulative volatility giving consideration to the expected life of the note and calculated the annual volatility by using the continuously compounded return calculated by using the share closing prices of an equal number of days prior to the maturity date of the note (reference period). The annual volatility is used to determine the (cumulative) volatility of the Company´s common stock (=nnual volatility * square root (expected life)). | |
Risk-Free Interest Rate | |
Management estimates the risk-free interest rate using the “Daily Treasury Yield Curve Rates” from the US Treasury Department with a term equal to the reported rate, or derived by using both spread in intermediate term and rates, up to the maturity date of the 8% Senior Secured Convertible Note. | |
Expected Dividend Yield | |
Management estimates the expected dividend yield by giving consideration to the Company´s current dividend policies as well as those anticipated in the future considering the Company´s current plans and projections. | |
Exchange Condition | |
The warrant holder has the option to do a cashless exchange of warrants at certain exchange conditions described in the warrants. The valuation for the exchange is based on a Black-Scholes calculation with pre-determined variables such as volatility (135%), remaining term (5 years), risk-free rate (variable), dividend yield (0%), exercise price ($0.887) and market price (closing bid price one day prior to the exchange date). | |
Mandatory Exercise Condition | |
Management's estimate for the likelihood of being able to force a mandatory exercise of the warrants prior to the maturity of the warrant agreement. | |
Share-Based Compensation | ' |
Share-Based Compensation | |
The Company follows the provisions of ASC 718, Compensation-Stock Compensation, (“ASC 718”). Under ASC 718, share-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). The share-based compensation cost based on the grant date fair value is amortized over the period in which the related services are received. | |
To determine the value of the Company´s stock options at grant date under our employee stock option plan, the Company uses the Black-Scholes option-pricing model. The use of this model requires the Company to make a number of subjective assumptions. The following addresses each of these assumptions and describes the Company´s methodology for determining each assumption: | |
Expected Life | |
The expected life represents the period that the stock option awards are expected to be outstanding. The Company uses 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 | |
The Company estimates 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 its Common Stock (=nnual volatility x square root (expected life)). | |
Forfeiture Rate | |
The Company is using the aggregate forfeiture rate. The aggregate forfeiture rate is the ratio of pre-vesting forfeitures over the awards granted (pre-vesting forfeitures/grants). The forfeiture discount (additional loss) is released into the profit and loss in the same period as the option vesting-date. The forfeiture rate is actualized every reporting period. | |
Risk-Free Interest Rate | |
The Company estimates the risk-free interest rate using the “Daily Treasury Yield Curve Rates” from the U.S. Treasury Department with a term equal to the reported rate or derived by using both spread in intermediate term and rates, to the expected life of the award. | |
Expected Dividend Yield | |
The Company estimates the expected dividend yield by giving consideration to its current dividend policies as well as those anticipated in the future considering its current plans and projections. The Company does not currently calculate a discount for any post-vesting restrictions to which its awards may be subject. | |
Income Taxes | ' |
Income Taxes | |
Current tax is based on the income or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purpose and is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized for the expected future tax benefit to be derived from tax losses and tax credit carry-forwards. Establishment of a valuation allowance is provided when it is more likely than deferred taxes will not be realized. | |
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. | |
The Company files federal income tax returns in the US, various US 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's policy is to record estimated interest and penalties on unrecognized tax benefits as part of its income tax provision. | |
Comprehensive Income/(Loss) | ' |
Comprehensive Income/ (Loss) | |
Comprehensive income/ (loss) include all changes in equity during a period from non-owner sources, consisting of the Company's net loss and foreign currency translation adjustments. | |
Goodwill | ' |
Goodwill | |
The Company records goodwill when the fair value of consideration transferred in a business combination exceeds the fair value of the identifiable assets acquired and liabilities assumed. Goodwill and other intangible assets that have indefinite useful lives are not amortized, but the Company tests them for impairment annually during its fourth quarter and whenever an event or change in circumstances indicates that the carrying value of the asset is impaired. | |
The authoritative guidance for the goodwill impairment model includes a two-step process. First, it requires a comparison of the carrying value of the reporting unit to its fair value. If the fair value is determined to be less than the carrying value, a second step is performed. In the second step, the Company compares the implied fair value of goodwill to its carrying value in the reporting unit. The shortfall of the fair value below carrying value, if any, would represent the amount of goodwill impairment charge. The Company is using the criteria in the Accounting Standards Update (“ASU”) 2011-08 Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment, which permits the Company to make a qualitative assessment of whether it is more likely than not than not that a reporting unit's fair value is less than the carrying amount before applying the two-step goodwill impairment test. If the Company concludes that it is not more likely than not that the fair value of a reporting unit is less that its carrying amount, it would not need to perform the two-step impairment test for that reporting unit. | |
The Company tests goodwill for impairment in the fourth quarter of each year, or sooner should there be an indicator of impairment as per ASC 350, Intangibles – Goodwill and Other ("ASC 350"). The Company periodically analyzes whether any such indicators of impairment exist. Such indicators include a sustained, significant decline in the Company's stock price and market capitalization, a decline in the Company's expected future cash flows, a significant adverse change in legal factors or in the business climate, unanticipated competition, and/or slower growth rate, among others. In the Company's case, the indicator is the continuing losses. | |
Long-lived Assets and Intangible Assets | ' |
Long-lived Assets and 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 indefinite life 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. The Company periodically analyzes whether any such indicators of impairment exist. Such indicators include a sustained, significant decline in the Company's stock price and market capitalization, a decline in the Company's expected future cash flows, a significant adverse change in legal factors or in the business climate, unanticipated competition, and/or slower growth rate, among others. In the Company's case, the indicator is the continuing losses. | |
Measurement of any impairment loss for long-lived assets and amortizing intangible assets that management expects to hold and use is tested for impairment when amounts may not be recoverable. Impairment is measured 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, Internal Use Software and Third Party 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. | |
The Company has adopted the provisions of ASC 350-40, Accounting for the Costs of Computer Software developed or obtained for internal use (former AICPA SOP 98-1, “ASC 350-40”), and therefore the costs incurred in the preliminary stages of development are expensed as incurred. The Company capitalizes all costs related to software developed or obtained for internal use when management commits to funding the project; the preliminary project stage is completed and when technological feasibility is established. Software developed for internal use has generally been used to deliver hosted services to the Company's customers. 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. Once a new functionality or improvement is released for operational use, the asset is moved from the property and equipment category “construction in progress” ("CIP") to a property and equipment asset subject to depreciation in accordance with the principle described in the previous sentence. In this account management also records equipment acquired from third parties, until it is ready for use. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. Depreciation is applied using the straight-line method over the estimated useful lives of the assets once the assets are placed in service. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. There were no impairments to internal use software during the three and nine month periods ended September 30, 2014 and 2013. | |
Recently Issued Accounting Pronouncements | ' |
Recently Issued Accounting Pronouncements | |
Standards That Are Not Yet Adopted | |
In August 2014, the Financial Accounting Standards Board (“FASB”), issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. The amendments require management to assess an entity's ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in US auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management's plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). For all entities, the new requirements are effective for annual periods ending after December 15, 2016. Early application is permitted. Management does not expect that the adoption of this standard will have a material effect on the Company´s financial statements. | |
In May 2014, as part of its ongoing efforts to assist in the convergence of US GAAP and International Financial Reporting Standards, the FASB issued a new standard related to revenue recognition. Under the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard will be effective for the Company beginning January 1, 2017 and early adoption is not permitted. Management is currently evaluating the methods of adoption allowed and the effect the standard is expected to have on the Company´s financial statements and related disclosures. | |
In April 2014, the FASB issued ASU-2014-08 “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”, which amends the definition of a discontinued operation in Accounting Standards Codification Topic 205-20 (Presentation of Financial Statements – Discontinued Operations) and requires entities to disclose additional information about disposal transactions that do not meet the discontinued operations criteria. The ASU redefines a discontinued operation as a component or group of components of an entity that (1) has been disposed of by sale or other than by sale or classified as held for sale and (2) represents a strategic shift that has (or will have) a major effect on an entity's operations and results includes the disposal of a major geographic area, a major line of business, a major equity investment, or other major parts of an entity. The ASU is effective prospectively for disposals of components classified as held for sale in periods on or after December 15, 2014. Management does not expect that the adoption of this standard will have a material effect on the Company´s financial statements. |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
Property and Equipment [Abstract] | ' | ||||||||||
Schedule of Property and Equipment | ' | ||||||||||
Property and equipment at September 30, 2014 (unaudited) and December 31, 2013 consisted of: | |||||||||||
Average | |||||||||||
Estimated | |||||||||||
Useful | September 30, | December 31, | |||||||||
Lives | 2014 | 2013 | |||||||||
(Unaudited) | |||||||||||
Furniture and fixtures | 5 | $ | 284,007 | $ | 314,686 | ||||||
Computer, communication and network equipment | 3 – 10 | 23,070,583 | 24,287,111 | ||||||||
Software | 5 | 4,680,076 | 8,473,042 | ||||||||
Automobiles | 5 | 84,389 | 91,580 | ||||||||
Construction in progress for internal use software | 4,732,934 | 2,603,731 | |||||||||
Total property and equipment | 32,851,989 | 35,770,150 | |||||||||
Less: accumulated depreciation and amortization | (13,248,282 | ) | (15,984,028 | ) | |||||||
Total property and equipment, Net | $ | 19,603,707 | $ | 19,786,122 |
Intangible_Assets_Tables
Intangible Assets (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||
Intangible Assets [Abstract] | ' | ||||||||||||||||||||||||
Schedule of Intangible Assets | ' | ||||||||||||||||||||||||
Intangible assets as of September 30, 2014 (unaudited) and December 31, 2013 consisted of the following: | |||||||||||||||||||||||||
Estimated | September 30, | December 31, | |||||||||||||||||||||||
Useful Lives | 2014 | 2013 | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||
Customer Contracts, Licenses , Interconnect & Technology | 10-May | $ | 4,244,641 | $ | 13,005,460 | ||||||||||||||||||||
ValidSoft IP & Technology | 10-Jan | 14,970,577 | 16,246,291 | ||||||||||||||||||||||
Total intangible assets | 19,215,217 | 29,251,751 | |||||||||||||||||||||||
Less: Accumulated amortization Customer Contracts, Licenses, Interconnect & Technology | (3,319,806 | ) | (11,484,600 | ) | |||||||||||||||||||||
Less: Accumulated Amortization ValidSoft IP & Technology | (9,894,528 | ) | (9,096,474 | ) | |||||||||||||||||||||
Total intangible assets, Net | $ | 6,000,884 | $ | 8,670,677 | |||||||||||||||||||||
Estimated Future Amortization Expense Related to Intangible Assets | ' | ||||||||||||||||||||||||
Estimated future amortization expense related to the Company´s intangible assets is: | |||||||||||||||||||||||||
Rest of 2014 | 2015 | 2016 | 2017 | 2018 | 2019 and | ||||||||||||||||||||
thereafter | |||||||||||||||||||||||||
Customer contracts, Licenses, Interconnect and Technology | $ | 150,908 | $ | 384,776 | $ | 240,094 | $ | 84,222 | $ | 64,835 | $ | - | |||||||||||||
Validsoft IP and Technology | 513,742 | 1,917,783 | 1,872,055 | 544,130 | 101,484 | 126,855 | |||||||||||||||||||
Total | $ | 664,650 | $ | 2,302,559 | $ | 2,112,149 | $ | 628,349 | $ | 166,318 | $ | 126,855 |
Goodwill_Tables
Goodwill (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Goodwill [Abstract] | ' | ||||||||
Schedule of Goodwill | ' | ||||||||
The carrying value of the Company's goodwill as of September 30, 2014 (unaudited) and December 31, 2013 was as follows: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
Goodwill | (unaudited) | ||||||||
Goodwill ValidSoft Ltd | $ | 3,093,785 | $ | 3,359,210 | |||||
Goodwill Morodo Ltd. | 206,056 | 223,615 | |||||||
Goodwill Telnicity assets | 190,401 | 190,401 | |||||||
Total | $ | 3,490,242 | $ | 3,773,226 |
Overdraft_and_Loan_Payable_Tab
Overdraft and Loan Payable (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Overdraft and Loan Payable [Abstract] | ' | ||||||||
Loans Payable | ' | ||||||||
The related loans payable as of September 30, 2014 (unaudited) and December 31, 2013 are summarized as follows: | |||||||||
September | December | ||||||||
30, 2014 | 31, 2013 | ||||||||
(unaudited) | |||||||||
Installment loan payable due December 24, 2006, secured by personal guarantees of two stockholders, a former director, and a third party | $ | 319,991 | $ | 320,358 | |||||
Installment loan payable, 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 stockholders and a former director | 254,404 | 254,696 | |||||||
Installment loan payable, 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 stockholders and a former director | 103,778 | 103,897 | |||||||
Term loan payable, monthly payments of interest at bank's prime rate, 7.0% at December 31, 2007 | 283,377 | 283,703 | |||||||
Total | $ | 961,550 | $ | 962,654 |
Accrued_expenses_Tables
Accrued expenses (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Accrued expenses [Abstract] | ' | ||||||||
Accrued Expenses | ' | ||||||||
As of September 30, 2014 (unaudited) and December 31, 2013, the accrued expenses were comprised of the following: | |||||||||
September 30, | December | ||||||||
2014 | 31, 2013 | ||||||||
(unaudited) | |||||||||
Accrued SG&A expenses | $ | 2,325,318 | $ | 2,271,086 | |||||
Accrued cost of service | 611,611 | 547,111 | |||||||
Accrued taxes (including VAT) | 833,978 | 255,577 | |||||||
Accrued interest payable | 1,702,571 | 1,300,101 | |||||||
Other accrued expenses | 331,521 | 587,428 | |||||||
Total accrued expenses | $ | 5,804,999 | $ | 4,961,303 |
10_3rd_Party_Convertible_Note_
10% 3rd Party Convertible Note (Tables) (Convertible Note Two [Member]) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Convertible Note Two [Member] | ' | ||||||||
Debt Instrument [Line Items] | ' | ||||||||
Schedule of Senior Secured Convertible Note | ' | ||||||||
The following table shows the composition of the 2013 10% 3rd Party Convertible Note as shown in the Condensed Consolidated Balance Sheet: | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(unaudited) | |||||||||
10% 3rd Party Convertible Note (principal amount) | € | 4,000,000 | € | 4,000,000 | |||||
Exchange rate September 30, 2014: EURO 0.7883=$1, and December 31, 2013: EURO 0.7264=$1 | |||||||||
10% 3rd Party Convertible Note | $ | 5,074,080 | $ | 5,506,608 | |||||
Less: | |||||||||
Debt Discount (10% 3rd Party Warrant) | (410,853 | ) | (726,695 | ) | |||||
10% 3rd Party Convertible Note (Net of Debt Discount of $410,853 as per September 30, 2014 and $726,695 as per December 31, 2013) | $ | 4,663,227 | $ | 4,779,913 |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Fair Value Measurements [Abstract] | ' | ||||||||||||||||
Schedule of Financial Liabilities Measured at Fair Value on a Recurring Basis | ' | ||||||||||||||||
The following tables summarize fair value measurements by level as of September 30, 2014 and December 31, 2013 for financial assets and liabilities that are measured at fair value on a recurring basis: | |||||||||||||||||
30-Sep-14 | |||||||||||||||||
(unaudited) | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Derivative Liabilities | |||||||||||||||||
Warrant Liabilities | $ | - | $ | - | $ | 2,248,169 | $ | 2,248,169 | |||||||||
Total Derivatives Liabilities | $ | - | $ | - | $ | 2,248,169 | $ | 2,248,169 | |||||||||
31-Dec-13 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Derivative Liabilities | |||||||||||||||||
Warrant Liabilities | $ | - | $ | - | $ | 1,973,534 | $ | 1,973,534 | |||||||||
Total Derivatives Liabilities | $ | - | $ | - | $ | 1,973,534 | $ | 1,973,534 |
Obligations_under_Capital_Leas1
Obligations under Capital Leases (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Obligations under Capital Leases [Abstract] | ' | ||||||||
Schedule of Equipment under Capital Leases | ' | ||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(unaudited) | |||||||||
Network equipment | $ | 1,580,123 | $ | 1,642,759 | |||||
Software licenses | 1,439,807 | 874,174 | |||||||
Other | 158,569 | 103,249 | |||||||
Total | 3,178,499 | 2,620,182 | |||||||
Less: accumulated depreciation and amortization | (425,303 | ) | (101,209 | ) | |||||
Total | $ | 2,753,196 | $ | 2,518,973 |
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Stockholders' Equity [Abstract] | ' | ||||||||||||||||||||
Summary of Warrants | ' | ||||||||||||||||||||
The table below summarizes the warrants outstanding as of September 30, 2014 and as of December 2013: | |||||||||||||||||||||
Outstanding | Exercise/ | Expiring | 2014 | 2013 | |||||||||||||||||
Warrants | Conversion | ||||||||||||||||||||
price(s) | |||||||||||||||||||||
(range) | |||||||||||||||||||||
Warrants – Fundraising | $0.853- $2.00 | 2013 - 2018 | 29,612,201 | 37,229,230 | |||||||||||||||||
Warrants – Other | $2.21 | 2016 | 18,659 | 18,659 | |||||||||||||||||
29,630,860 | 37,247,889 | ||||||||||||||||||||
Noncontrolling_Interest_Tables
Non-controlling Interest (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Non-controlling Interest [Abstract] | ' | ||||||||||||
Schedule of Non-controlling Interests | ' | ||||||||||||
The Company had non-controlling interests in several of its subsidiaries. The balance of the non-controlling interests as of September 30, 2014 (unaudited) and December 31, 2013 were as follows: | |||||||||||||
Subsidiary | Non-controlling | September | December | ||||||||||
Interest % | 30, 2014 | 31, 2013 | |||||||||||
(unaudited) | |||||||||||||
ETC PRS UK | 49 | % | $ | 9,744 | $ | 9,894 | |||||||
ETC PRS Netherlands | 49 | % | 124,318 | 134,912 | |||||||||
ET Bahrain WLL | 1 | % | - | - | |||||||||
ET ME&A FZ LLC | 49.46 | % | - | - | |||||||||
Total | $ | 134,062 | $ | 144,806 |
Basic_and_Diluted_Net_Loss_Per1
Basic and Diluted Net Loss Per Share (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Basic and Diluted Net Loss Per Share [Abstract] | ' | ||||||||
Schedule of Anti-dilutive Securities | ' | ||||||||
The diluted share base for 2014 and 2013 excludes incremental shares related to convertible debt, warrants to purchase common stock and employee stock options as follows: | |||||||||
Nine months ended September 30, | |||||||||
Dilutive Securities | 2014 | 2013 | |||||||
2013 10% 3rd and 10% Related Party Convertible Notes | 6,349,437 | - | |||||||
Warrants | 29,630,860 | 42,203,174 | |||||||
Employee Stock Options | 40,845,597 | 20,070,397 | |||||||
76,925,894 | 62,273,571 |
2006_NonQualified_Stock_and_Op1
2006 Non-Qualified Stock and Option Compensation Plan and 2008 Long Term Incentive Compensation Plan (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
2006 Non-Qualified Stock and Option Compensation Plan and Amended and Restated 2008 Long Term Incentive Compensation Plan [Abstract] | ' | ||||||||||||
Reconciliation of Registered and Available Shares and/or Options | ' | ||||||||||||
Reconciliation of Available Shares and/or Options as of September 30, 2014: | |||||||||||||
Total | |||||||||||||
Registered January 15, 2008 | 5,000,000 | ||||||||||||
Registered October 6, 2011 | 18,000,000 | ||||||||||||
Approved in 2013* | 23,000,000 | ||||||||||||
Approved in 2014* | 10,000,000 | ||||||||||||
Total Authorized under this plan | 56,000,000 | ||||||||||||
Shares issued in prior years | 1,521,366 | ||||||||||||
Q4-2013 share-based compensation issued in 2014 | 295,551 | ||||||||||||
Options exercised | 2,230,788 | ||||||||||||
Outstanding options | 40,845,597 | ||||||||||||
Available for grant: | 11,106,698 | ||||||||||||
Common Stock Purchase Options and Long Term Incentive Plan | ' | ||||||||||||
Common Stock Purchase Options Consisted of the Following as of the Quarter ended September 30, 2014 and the Years ended December 31, 2013 and 2012: | |||||||||||||
Options: | Number of | Weighted | Initial Fair | ||||||||||
Options | Average Exercise | Market | |||||||||||
Price | Value | ||||||||||||
(Outstanding | |||||||||||||
Options) | |||||||||||||
Outstanding as of December 31, 2012 | 12,181,130 | $ | 2.15 | $ | 15,418,671 | ||||||||
Granted in 2013 | 24,496,741 | $ | 1.12 | $ | 14,107,008 | ||||||||
Exercised (with delivery of shares) | (809,737 | ) | $ | 0.66 | $ | (270,682 | ) | ||||||
Forfeitures (Pre-vesting) | (805,266 | ) | $ | 1.81 | $ | (807,662 | ) | ||||||
Expirations (Post-vesting) | (556,524 | ) | $ | 1.92 | $ | (648,529 | ) | ||||||
Exchanged for Cashless exercise | (26,571 | ) | $ | 0.6 | $ | (13,834 | ) | ||||||
Outstanding as of December 31, 2013 | 34,479,773 | $ | 1.47 | $ | 27,784,972 | ||||||||
Granted in 2014 | 8,178,033 | $ | 1.22 | $ | 5,159,039 | ||||||||
Exercised (with delivery of shares) | (478,978 | ) | $ | 0.77 | $ | (155,155 | ) | ||||||
Forfeitures (Pre-vesting) | (710,338 | ) | $ | 1.52 | $ | (639,709 | ) | ||||||
Expirations (Post-vesting) | (622,893 | ) | $ | 1.99 | $ | (737,465 | ) | ||||||
Outstanding as of September 30, 2014 | 40,845,597 | $ | 1.39 | $ | 31,411,682 | ||||||||
Schedule of Share-Based Compensation Expense | ' | ||||||||||||
Share-Based Compensation Expense | Three months | Three months | |||||||||||
ended September | ended September | ||||||||||||
30, 2014 | 30, 2013 | ||||||||||||
Consultancy services | $ | 67,837 | $ | - | |||||||||
Directors and Officers (shares and options) | $ | 125,529 | $ | 420,731 | |||||||||
Employee (options) | $ | 669,053 | $ | 812,434 | |||||||||
$ | 862,419 | $ | 1,233,165 | ||||||||||
Share-Based Compensation Expense | Nine months | Nine months | |||||||||||
ended September | ended September | ||||||||||||
30, 2014 | 30, 2013 | ||||||||||||
Consultancy services | $ | 143,837 | $ | - | |||||||||
Directors and Officers (shares and options) | $ | 166,516 | $ | 1,886,909 | |||||||||
Employee (options) | $ | 3,226,327 | $ | 3,752,215 | |||||||||
$ | 3,536,680 | $ | 5,639,124 |
Income_Taxes_Tables
Income Taxes (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Income Taxes [Abstract] | ' | ||||||||||||||||
Schedule of Loss before Income Tax Provision | ' | ||||||||||||||||
For financial statement purposes, loss before the income tax provision is divided amongst the following; | |||||||||||||||||
For the Three Months | For the Nine Months | ||||||||||||||||
Period ended September 30, | Period ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Domestic | $ | (3,138,444 | ) | $ | (2,771,554 | ) | $ | (10,766,842 | ) | $ | (11,462,493 | ) | |||||
Foreign | 700,568 | (412,539 | ) | (274,798 | ) | (4,552,083 | ) | ||||||||||
Total | $ | (2,437,876 | ) | $ | (3,184,093 | ) | $ | (11,041,640 | ) | $ | (16,014,577 | ) | |||||
Schedule of the Provision (Benefit) for Income Taxes | ' | ||||||||||||||||
Income tax (benefit)/expense for the nine month periods ended September 30, 2014 and September 30, 2013 is summarized as follows: | |||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Current: | |||||||||||||||||
Federal | |||||||||||||||||
State | - | - | |||||||||||||||
Foreign | 88,290 | 41,500 | |||||||||||||||
88,290 | 41,500 | ||||||||||||||||
Deferred: | |||||||||||||||||
Federal | - | - | |||||||||||||||
State | - | - | |||||||||||||||
Foreign | - | - | |||||||||||||||
Income tax expense | $ | 88,290 | $ | 41,500 | |||||||||||||
Reconciliation of Effective Income Tax Rate | ' | ||||||||||||||||
The following is a reconciliation of the provision for income taxes at the US federal statutory rate (34%) to the foreign income tax rate for the nine month periods ended September 30, 2014 and 2013: | |||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Tax expense (credit) at statutory rate-federal | 34 | % | 34 | % | |||||||||||||
State tax expense net of federal tax | - | - | |||||||||||||||
Foreign income tax rate difference | (6.5 | )% | (5.5 | )% | |||||||||||||
Change in valuation allowance | (26.7 | )% | (28.2 | )% | |||||||||||||
Other | - | % | - | % | |||||||||||||
Tax expense at actual rate | 0.8 | % | 0.3 | % | |||||||||||||
Schedule of Deferred Tax Assets and Liabilities | ' | ||||||||||||||||
The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at September 30, 2014 and December 31, 2013 are as follows: | |||||||||||||||||
Deferred tax assets: | September 30, | September 30, | |||||||||||||||
2014 | 2013 | ||||||||||||||||
Net Operating Losses | $ | 44,769,259 | $ | 33,740,565 | |||||||||||||
Total gross deferred tax assets | 44,769,259 | 33,740,565 | |||||||||||||||
Less: Valuation allowance | (44,769,259 | ) | (33,740,565 | ) | |||||||||||||
Net deferred tax assets | $ | - | $ | - | |||||||||||||
Summary of Net Operating Loss Carryforwards | ' | ||||||||||||||||
As of September 30, 2014 and December 31, 2013, the Company had federal and state income tax NOLs carry forwards of approximately $33 million and $34 million, respectively. The NOL carry forwards for foreign countries amounts to approximately $131 million. Such NOL carry forwards expire as follows: | |||||||||||||||||
Domestic (US) | Foreign | ||||||||||||||||
2014-2019 | $ | 514,911 | $ | 28,969,104 | |||||||||||||
2019-2024 | 4,173,661 | 31,307,025 | |||||||||||||||
2024-2031 | 28,132,938 | 78,233,028 | |||||||||||||||
NOL's as of September 30, 2014 | $ | 32,821,510 | $ | 138,509,157 | |||||||||||||
Schedule of Unrecognized Tax Benefits | ' | ||||||||||||||||
The Company does not currently anticipate recording any amount for unrecognized tax benefits within the next 12 months. The following table summarizes the 2012 and 2013 activity related to the unrecognized tax benefits and related tax carry forward: | |||||||||||||||||
Balance at December 31, 2012 | $ | 289,136 | |||||||||||||||
Increases related to prior year tax positions | - | ||||||||||||||||
Decreases related to prior year tax positions | (289,136 | ) | |||||||||||||||
Balance at December 31, 2013 | $ | - | |||||||||||||||
Increases related to prior year tax positions | - | ||||||||||||||||
Increases related to prior year tax positions | - | ||||||||||||||||
Balance at September 30, 2014 | $ | - |
Geographic_and_Concentration_R1
Geographic and Concentration Risk Information (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Geographic and Concentration Risk Information [Abstract] | ' | |||||||||||
Schedule of Revenues and Assets by Geographic Area | ' | |||||||||||
Nine months ended September 30, 2014 | ||||||||||||
Europe | Other | Total | ||||||||||
foreign | ||||||||||||
countries | ||||||||||||
Revenues from unaffiliated customers | $ | 10,715,354 | $ | 9,975,255 | $ | 20,690,609 | ||||||
Identifiable assets | $ | 31,637,609 | $ | 8,971,144 | $ | 40,608,753 | ||||||
Nine months ended September 30, 2013 | ||||||||||||
Europe | Other foreign | Total | ||||||||||
countries | ||||||||||||
Revenues from unaffiliated customers | $ | 15,542,781 | $ | 1,252,846 | $ | 16,795,627 | ||||||
Identifiable assets | $ | 31,428,900 | $ | 15,024,046 | $ | 46,452,946 |
Reclassification_of_Changes_to1
Reclassification of Changes to Prior Year Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Reclassification of Changes to Prior Year Information [Abstract] | ' | ' | ' | ' |
Non-cash compensation to officers, directors and employees | $862,419 | $1,233,165 | $3,536,680 | $5,639,124 |
Financial_Condition_Details
Financial Condition (Details) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 2 Months Ended | 2 Months Ended | |||||||||
Jul. 15, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Jul. 15, 2014 | Nov. 17, 2014 | Nov. 17, 2014 | Nov. 17, 2014 | Sep. 30, 2014 | Nov. 17, 2014 | Nov. 17, 2014 | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | July Warrant [Member] | Convertible Note One [Member] | Convertible Note Two [Member] | Convertible Note Two [Member] | Convertible Note Two [Member] | Line of Credit [Member] | Line of Credit [Member] | |
USD ($) | Subsequent Event [Member] | USD ($) | EUR (€) | USD ($) | USD ($) | Subsequent Event [Member] | ||||||||
July Warrant [Member] | ||||||||||||||
USD ($) | ||||||||||||||
Financial Condition [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net loss | ' | ($2,392,938) | ($3,225,593) | ($11,129,930) | ($16,056,076) | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated deficit | ' | -236,521,852 | ' | -236,521,852 | ' | -225,391,922 | ' | ' | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | ' | 1,176,650 | 6,085,215 | 1,176,650 | 6,085,215 | 1,252,315 | 1,233,268 | ' | ' | ' | ' | ' | ' | ' |
Conversion of debt into equity | 2,966,951 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of Credit Facility [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12,000,000 | ' |
Bank interest rate above prime rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10.00% | ' |
Repayments of debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,123,011 | 2,498,849 | ' | ' | ' |
Percentage of debt repaid | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | 50.00% | ' | ' | ' |
Percentage increased by an additional interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.00% |
Amount of shares issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2,500,000 | € 2,000,000 | ' | ' | ' |
Number of warrants issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 | 1,000,000 | ' | ' | ' |
Debt Conversion, Converted Instrument, Shares Issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,817,993 | 2,817,993 | ' | ' | ' |
Warrant exercises, price per share | ' | ' | ' | ' | ' | ' | ' | $0.92 | $0.93 | ' | ' | $0.89 | ' | ' |
Description_of_Business_Basis_1
Description of Business, Basis of Presentation and Principles of Consolidation (Details) | Sep. 30, 2014 |
Elephant Talk Communications PRS U.K. Limited [Member] | ' |
Noncontrolling Interest [Line Items] | ' |
Ownership percentage | 51.00% |
Elephant Talk United Telecommunication Services N.V. [Member] | ' |
Noncontrolling Interest [Line Items] | ' |
Ownership percentage | 51.00% |
Elephant Talk Communications Premium Rate Services Netherlands B.V. [Member] | ' |
Noncontrolling Interest [Line Items] | ' |
Ownership percentage | 51.00% |
Elephant Talk Middle East & Africa (Holding) W.L.L. [Member] | ' |
Noncontrolling Interest [Line Items] | ' |
Ownership percentage | 100.00% |
Elephant Talk Middle East & Africa (Holding) Jordan L.L.C. [Member] | ' |
Noncontrolling Interest [Line Items] | ' |
Ownership percentage | 100.00% |
Elephant Talk Middle East & Africa Bahrain W.L.L. [Member] | ' |
Noncontrolling Interest [Line Items] | ' |
Ownership percentage | 99.00% |
Elephant Talk Middle East & Africa FZ-LLC [Member] | ' |
Noncontrolling Interest [Line Items] | ' |
Ownership percentage | 50.54% |
Elephant Talk Telecomunicacao do Brasil LTDA [Member] | Elephant Talk Europe Holding B.V. [Member] | ' |
Noncontrolling Interest [Line Items] | ' |
Ownership percentage | 90.00% |
Elephant Talk Telecomunicacao do Brasil LTDA [Member] | Elephant Talk Communication Holding AG [Member] | ' |
Noncontrolling Interest [Line Items] | ' |
Ownership percentage | 10.00% |
Elephant Talk France S.A.S. [Member] | ' |
Noncontrolling Interest [Line Items] | ' |
Ownership percentage | 100.00% |
Asesores Profesionales ETAK S De RL De CV [Member] | ' |
Noncontrolling Interest [Line Items] | ' |
Ownership percentage | 99.00% |
Significant_Accounting_Policie2
Significant Accounting Policies (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Dec. 31, 2013 | |
Summary Of Significant Accounting Policies [Line Items] | ' | ' |
Restricted cash | $169,536 | $191,600 |
Options granted vesting period | '3 years | ' |
Minimum [Member] | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' |
Expected useful lives of intangible assets | '3 years | ' |
Maximum [Member] | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' |
Expected useful lives of intangible assets | '10 years | ' |
Significant_Accounting_Policie3
Significant Accounting Policies (Fair Value Measurements) (Details) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
segments | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ' |
Number of reportable segments | 1 |
Derivative Financial Instruments, Liabilities [Member] | ' |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ' |
Volatility | 135.00% |
Remaining term | '5 years |
Dividend yield | 0.00% |
Exercise price | 0.887 |
Allowance_for_Doubtful_Account1
Allowance for Doubtful Accounts (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Allowance for doubtful accounts: | ' | ' |
Accounts receivable, allowance for doubtful accounts | $0 | $7,693 |
Prepaid_Expenses_and_Other_Cur1
Prepaid Expenses and Other Current Assets (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Prepaid Expenses and Other Current Assets [Abstract] | ' | ' |
Prepaid expenses and other current assets | $2,319,310 | $2,254,213 |
Prepaid value added tax | $741,544 | $732,838 |
Other_Assets_Details
Other Assets (Details) (USD $) | 0 Months Ended | 9 Months Ended | 12 Months Ended | |
Apr. 07, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Other Assets [Abstract] | ' | ' | ' | ' |
Other assets, noncurrent | ' | $1,093,977 | ' | $1,412,408 |
Funding of loan to third party | 50,000 | ' | 125,000 | ' |
Loan to third party, interest rate | ' | 5.00% | ' | ' |
Carrying amount of loan to third party | ' | 267,063 | ' | 163,542 |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Debt issuance costs | ' | ' | ' | 636,624 |
Long-term deposits | ' | 672,487 | ' | 771,193 |
Deferred financing cost, net | ' | $154,427 | ' | $477,673 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Property and equipment | $32,851,989 | $32,851,989 | $35,770,150 |
Less: accumulated depreciation and amortization | -13,248,282 | -13,248,282 | -15,984,028 |
Total property and equipment, Net | 19,603,707 | 19,603,707 | 19,786,122 |
Depreciation and amortization expense | 1,189,496 | 3,660,946 | ' |
Net effect of the adjustment | ' | 375,430 | ' |
Furniture and Fixtures [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Average Estimated Useful Lives | ' | '5 years | ' |
Property and equipment | 284,007 | 284,007 | 314,686 |
Computer, Communication and Network Equipment [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Property and equipment | 23,070,583 | 23,070,583 | 24,287,111 |
Additions to property and equipment | ' | 912,849 | ' |
Reclassification of equipment | ' | 1,968,969 | ' |
Computer, Communication and Network Equipment [Member] | Minimum [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Average Estimated Useful Lives | ' | '3 years | ' |
Computer, Communication and Network Equipment [Member] | Maximum [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Average Estimated Useful Lives | ' | '10 years | ' |
Software [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Average Estimated Useful Lives | ' | '5 years | ' |
Property and equipment | 4,680,076 | 4,680,076 | 8,473,042 |
Reclassification of equipment | ' | 740,907 | ' |
Automobiles [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Average Estimated Useful Lives | ' | '5 years | ' |
Property and equipment | 84,389 | 84,389 | 91,580 |
Construction in Progress for Internal Use Software [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Property and equipment | 4,732,934 | 4,732,934 | 2,603,731 |
Additions to property and equipment | ' | 3,381,868 | ' |
Reclassification of equipment | ' | $919,792 | ' |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 |
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 | $19,215,217 | $29,251,751 | ' | ' | $4,244,641 | $13,005,460 | ' | ' | $14,970,577 | $16,246,291 | ' | ' |
Less: Accumulated Amortization and impairment charges | ' | ' | ' | ' | -3,319,806 | -11,484,600 | ' | ' | -9,894,528 | -9,096,474 | ' | ' |
Total intangible assets, Net | $6,000,884 | $8,670,677 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible_Assets_Additional_I
Intangible Assets (Additional Information) (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Intangible Assets [Abstract] | ' | ' |
Amortization Expense | $2,175,911 | $2,288,106 |
Intangible_Assets_Estimated_Fu
Intangible Assets (Estimated Future Amortization Expense Related to Intangible Assets) (Details) (USD $) | Sep. 30, 2014 |
Finite-Lived Intangible Assets [Line Items] | ' |
Rest of 2014 | $664,650 |
2015 | 2,302,559 |
2016 | 2,112,149 |
2017 | 628,349 |
2018 | 166,318 |
2019 and thereafter | 126,855 |
Customer Contracts Licenses Interconnect And Technology [Member] | ' |
Finite-Lived Intangible Assets [Line Items] | ' |
Rest of 2014 | 150,908 |
2015 | 384,776 |
2016 | 240,094 |
2017 | 84,222 |
2018 | 64,835 |
2019 and thereafter | ' |
Valid Soft IP And Technology [Member] | ' |
Finite-Lived Intangible Assets [Line Items] | ' |
Rest of 2014 | 513,742 |
2015 | 1,917,783 |
2016 | 1,872,055 |
2017 | 544,130 |
2018 | 101,484 |
2019 and thereafter | $126,855 |
Goodwill_Details
Goodwill (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Goodwill [Line Items] | ' | ' |
Goodwill | $3,490,242 | $3,773,226 |
ValidSoft Ltd [Member] | ' | ' |
Goodwill [Line Items] | ' | ' |
Goodwill | 3,093,785 | 3,359,210 |
Morodo Ltd. [Member] | ' | ' |
Goodwill [Line Items] | ' | ' |
Goodwill | 206,056 | 223,615 |
Telnicity LLC [Member] | ' | ' |
Goodwill [Line Items] | ' | ' |
Goodwill | $190,401 | $190,401 |
Overdraft_and_Loan_Payable_Det
Overdraft and Loan Payable (Details) (USD $) | 0 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | |||||||||||
Dec. 14, 2011 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Nov. 30, 2008 | Sep. 30, 2014 | Dec. 31, 2013 | Nov. 24, 2008 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2007 | |
Elephant Talk Ltd [Member] | Elephant Talk Ltd [Member] | 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 | ' | $961,550 | $962,654 | ' | ' | $319,991 | $320,358 | $254,404 | $254,696 | ' | $103,778 | $103,897 | ' | $283,377 | $283,703 | ' |
Loan payable, monthly principal and interest payments | ' | ' | ' | ' | ' | ' | ' | 2,798 | ' | ' | 1,729 | ' | ' | ' | ' | ' |
Loan payable, interest rate | ' | ' | ' | ' | ' | ' | ' | 1.50% | ' | 8.25% | 1.50% | ' | 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 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Overdraft | ' | $425,144 | $391,436 | $425,144 | $391,436 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Bank interest rate above prime rate | ' | ' | ' | 2.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Bank interest rate above prime rate upon default | ' | ' | ' | 6.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred_Revenue_Details
Deferred Revenue (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Deferred Revenue [Abstract] | ' | ' |
Deferred Revenue | $127,456 | $142,731 |
Accrued_expenses_Details
Accrued expenses (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Accrued expenses [Abstract] | ' | ' |
Accrued SG&A expenses | $2,325,318 | $2,271,086 |
Accrued cost of service | 611,611 | 547,111 |
Accrued taxes (including VAT) | 833,978 | 255,577 |
Accrued interest payable | 1,702,571 | 1,300,101 |
Other accrued expenses | 331,521 | 587,428 |
Total accrued expenses | 5,804,999 | 4,961,303 |
Provision for income taxes | $7,236 | $88,420 |
Conversion_into_Equity_of_the_1
Conversion into Equity of the 2013 10% Related Party Convertible Note (Narrative) (Details) | 3 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Jul. 15, 2014 | Jul. 15, 2014 | Jul. 15, 2014 | Sep. 30, 2014 | Jul. 15, 2014 | Dec. 31, 2013 | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | July Warrant [Member] | Convertible Note One [Member] | Convertible Note One [Member] | Convertible Note One [Member] | Convertible Note One [Member] | |
USD ($) | USD ($) | USD ($) | EUR (€) | |||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, conversion price | ' | ' | ' | ' | $0.89 | ' | $0.70 | ' | ' | ' |
Debt instrument, conversion price | ' | ' | ' | ' | $0.70 | ' | ' | ' | ' | ' |
Value assigned to the reduced Conversion Price due to issuance of shares of the common Stock | ' | ' | ' | ' | $824,590 | ' | ' | ' | ' | ' |
Debt instrument, principal amount | ' | ' | ' | ' | ' | ' | 2,966,951 | ' | 2,000,000 | ' |
Debt, interest rate | ' | ' | ' | ' | ' | ' | 10.00% | ' | ' | 10.00% |
Debt instrument, convertible, number of shares | ' | ' | ' | ' | ' | ' | 4,238,501 | ' | ' | ' |
Shares issued in connection with warrant exercises, price per share | ' | ' | ' | ' | ' | $0.92 | ' | ' | ' | ' |
Number of shares covered by warrants | ' | ' | ' | ' | ' | 500,000 | ' | ' | ' | ' |
Equity increase due to issuance of shares of the common Stock | ' | ' | ' | ' | ' | ' | 3,791,541 | ' | ' | ' |
Number of warrants issued | ' | ' | 500,000 | ' | ' | ' | ' | ' | ' | ' |
Interest expense related to debt discount and conversion feature | ($1,287,717) | ($259,795) | ($3,197,749) | ($1,320,795) | ' | ' | ' | ($1,162,322) | ' | ' |
10_3rd_Party_Convertible_Note_1
10% 3rd Party Convertible Note (Narrative) (Details) | Jul. 15, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Aug. 28, 2013 |
USD ($) | Convertible Note Two [Member] | Convertible Note Two [Member] | Convertible Note Two [Member] | Convertible Note Two [Member] | Convertible Note Two [Member] | |
USD ($) | EUR (€) | USD ($) | USD ($) | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' |
Debt instrument, principal amount | ' | $5,074,080 | € 4,000,000 | ' | ' | ' |
Debt, interest rate | ' | 10.00% | 10.00% | ' | 10.00% | ' |
Debt instrument, maturity date | ' | 28-Aug-15 | 28-Aug-15 | ' | ' | ' |
Deb instrument, earliest conversion date | ' | 28-Aug-13 | 28-Aug-13 | ' | ' | ' |
Debt instrument, conversion price | $0.89 | $0.89 | ' | ' | ' | ' |
Number of shares covered by warrants | ' | 2,000,000 | 2,000,000 | ' | ' | ' |
Warrants, exercisable date | ' | 28-Feb-14 | 28-Feb-14 | ' | ' | ' |
Shares issued in connection with warrant exercises, price per share | ' | $0.89 | ' | ' | ' | ' |
Term of warrant | ' | '5 years | '5 years | ' | ' | ' |
Discount on debt | ' | $410,853 | ' | $726,695 | ' | $864,394 |
10_3rd_Party_Convertible_Note_2
10% 3rd Party Convertible Note (Schedule of Note) (Details) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Aug. 28, 2013 |
EUR (€) | EUR (€) | Convertible Note Two [Member] | Convertible Note Two [Member] | Convertible Note Two [Member] | Convertible Note Two [Member] | Convertible Note Two [Member] | |
USD ($) | EUR (€) | USD ($) | EUR (€) | USD ($) | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, carrying amount | ' | ' | $5,074,080 | € 4,000,000 | $5,506,608 | € 4,000,000 | ' |
Exchange rate | 0.7883 | 0.7264 | ' | ' | ' | ' | ' |
Debt Discount (10% 3rd Party Warrants) | ' | ' | -410,853 | ' | -726,695 | ' | -864,394 |
Total | ' | ' | $4,663,227 | ' | $4,779,913 | ' | ' |
Registered_Direct_Offering_and1
Registered Direct Offering and Warrant liabilities (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Class of Stock [Line Items] | ' | ' |
Gross proceeds of SPA | ' | $12,000,000 |
Net proceeds of SPA | ' | 11,292,500 |
Fundraising related expenses | ' | 707,500 |
Number of warrants issued | 500,000 | ' |
Warrants | 29,630,860 | 37,247,889 |
Warrant liabilities | 2,248,169 | 1,973,534 |
Value covered by registration statement filing | ' | 75,000,000 |
Number of warrants exercised | 5,518,392 | ' |
Investors [Member] | ' | ' |
Class of Stock [Line Items] | ' | ' |
Shares issued per SPA | ' | 17,425,621 |
Number of warrants issued | ' | 7,841,537 |
Warrants | 2,892,857 | ' |
Warrant liabilities | 2,248,169 | 1,973,534 |
Term of warrant | '5 years | ' |
Warrant exercise price | $0.89 | ' |
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 | ' |
Number of warrants exercised | ' | 5,131,965 |
Shares issued in connection with warrant exercises | ' | 4,102,792 |
Placement Agent [Member] | ' | ' |
Class of Stock [Line Items] | ' | ' |
Warrants issued to placement agent | ' | 183,284 |
Warrant exercise price | $0.85 | ' |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (Fair Value, Measurements, Recurring [Member], USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Liability Derivatives | ' | ' |
Liability derivatives | $2,248,169 | $1,973,534 |
Warrants [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | 2,248,169 | 1,973,534 |
Fair Value, Inputs, Level 1 [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | ' | ' |
Fair Value, Inputs, Level 1 [Member] | Warrants [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | ' | ' |
Fair Value, Inputs, Level 2 [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | ' | ' |
Fair Value, Inputs, Level 2 [Member] | Warrants [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | ' | ' |
Fair Value, Inputs, Level 3 [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | 2,248,169 | 1,973,534 |
Fair Value, Inputs, Level 3 [Member] | Warrants [Member] | ' | ' |
Liability Derivatives | ' | ' |
Liability derivatives | $2,248,169 | $1,973,534 |
Obligations_under_Capital_Leas2
Obligations under Capital Leases (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Dec. 31, 2013 | |
Capital Leased Assets [Line Items] | ' | ' |
Equipment | $3,178,499 | $2,620,182 |
Less: accumulated depreciation and amortization | -425,303 | -101,209 |
Total | 2,753,196 | 2,518,973 |
Obligations under capital leases (current portion) | 1,828,083 | 1,302,838 |
Non-current portion of obligation under capital leases | 261,912 | 845,529 |
Capital Lease Obligations [Member] | ' | ' |
Capital Leased Assets [Line Items] | ' | ' |
Maximum interest rate | 8.65% | ' |
Capital Lease Obligations [Member] | Minimum [Member] | ' | ' |
Capital Leased Assets [Line Items] | ' | ' |
Debt term | '2 years | ' |
Loan payable, interest rate spread | 1.50% | ' |
Capital Lease Obligations [Member] | Maximum [Member] | ' | ' |
Capital Leased Assets [Line Items] | ' | ' |
Debt term | '3 years | ' |
Network Equipment [Member] | ' | ' |
Capital Leased Assets [Line Items] | ' | ' |
Equipment | 1,580,123 | 1,642,759 |
Software Licenses [Member] | ' | ' |
Capital Leased Assets [Line Items] | ' | ' |
Equipment | 1,439,807 | 874,174 |
Additions to property and equipment | 721,077 | ' |
Other [Member] | ' | ' |
Capital Leased Assets [Line Items] | ' | ' |
Equipment | $158,569 | $103,249 |
Loan_from_joint_venture_partne1
Loan from joint venture partner (Details) | 3 Months Ended | 9 Months Ended | 9 Months Ended | |||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 17, 2008 | Dec. 17, 2008 | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Elephant Talk United Telecommunication Services N.V. [Member] | Elephant Talk United Telecommunication Services N.V. [Member] | Elephant Talk United Telecommunication Services N.V. [Member] | |
USD ($) | USD ($) | ANG | ||||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Loan from related party | ' | ' | ' | ' | $602,047 | ' | $402,424 | 724,264 |
Stated interest per annum | ' | ' | ' | ' | ' | 8.00% | ' | ' |
Ownership percentage | ' | ' | ' | ' | ' | 51.00% | ' | ' |
Ownership percentage by noncontrolling shareholders | ' | ' | ' | ' | ' | 49.00% | ' | ' |
Gain in extinguishment of debt | $626,534 | ($44,506) | $626,108 | ($1,983,103) | ' | $626,534 | ' | ' |
Stockholders_Equity_Narrative_
Stockholders' Equity (Narrative) (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Common Stock: | ' | ' |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 151,312,189 | 140,466,801 |
Common stock, shares outstanding | 151,312,189 | 140,466,801 |
Common stock, increase in shares issued during the period | 10,845,388 | ' |
Number of warrants exercised | 5,518,392 | ' |
Number of shares issued according to Stock Transfer Agent | 151,558,089 | 140,712,701 |
Unreturned shares from 'cancelled' acquisitions (pre-2006) | 233,900 | ' |
Shares issued under Employee benefits plan (Treasury shares) | 12,000 | ' |
Difference in number of issued shares | 245,900 | ' |
Preferred Stock: | ' | ' |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, par or stated value per share | $0.00 | $0.00 |
Preferred stock, shares outstanding | 0 | 0 |
Warrants: | ' | ' |
Number of warrants expired | 2,598,637 | ' |
Number of warrants issued | 500,000 | ' |
Number of warrants exercised | 5,518,392 | ' |
Common Shares [Member] | ' | ' |
Common Stock: | ' | ' |
Shares issued in connection with warrant exercises | 5,518,392 | ' |
Shares issued for non cash compensation of management and board | 309,511 | ' |
Shares issued for employee stock option exercises | 478,984 | ' |
Shares issued for consultancy services | 300,000 | ' |
Shares issued for debt conversion | 4,238,501 | ' |
2008 Long-Term Incentive Plan [Member] | ' | ' |
Common Stock: | ' | ' |
Shares issued for employee stock option exercises | 478,978 | 809,737 |
2008 Long-Term Incentive Plan [Member] | Common Shares [Member] | ' | ' |
Common Stock: | ' | ' |
Shares issued for non cash compensation of management and board | 295,551 | ' |
2006 Non-Qualified Stock and Option Compensation Plan [Member] | Common Shares [Member] | ' | ' |
Common Stock: | ' | ' |
Shares issued for non cash compensation of management and board | 13,960 | ' |
Stockholders_Equity_Schedule_o
Stockholders' Equity (Schedule of Warrants) (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Dec. 31, 2013 | |
Class of Warrant or Right [Line Items] | ' | ' |
Warrants | 29,630,860 | 37,247,889 |
Warrant liabilities | $2,248,169 | 1,973,534 |
Weighted Average [Member] | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' |
Exercise/ Conversion price(s) (range) | $1.25 | ' |
Warrants - Fundraising [Member] | ' | ' |
Class of Warrant or Right [Line Items] | ' | ' |
Warrants | 29,612,201 | 37,229,230 |
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 |
Noncontrolling_Interest_Detail
Non-controlling Interest (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Noncontrolling Interest [Line Items] | ' | ' |
Noncontrolling Interest | $134,062 | $144,806 |
Elephant Talk Communications PRS U.K. Limited [Member] | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' |
Non-controlling Interest % | 49.00% | ' |
Noncontrolling Interest | 9,744 | 9,894 |
Elephant Talk Communications Premium Rate Services Netherlands B.V. [Member] | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' |
Non-controlling Interest % | 49.00% | ' |
Noncontrolling Interest | 124,318 | 134,912 |
ET Bahrain WLL [Member] | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' |
Non-controlling Interest % | 1.00% | ' |
Noncontrolling Interest | ' | ' |
Elephant Talk Middle East & Africa FZ-LLC [Member] | ' | ' |
Noncontrolling Interest [Line Items] | ' | ' |
Non-controlling Interest % | 49.46% | ' |
Noncontrolling Interest | ' | ' |
Basic_and_Diluted_Net_Loss_Per2
Basic and Diluted Net Loss Per Share (Details) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Dilutive Securities | 76,925,894 | 62,273,571 |
Convertible Notes [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Dilutive Securities | 6,349,437 | ' |
Warrants [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Dilutive Securities | 29,630,860 | 42,203,174 |
Employee Stock Option [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Dilutive Securities | 40,845,597 | 20,070,397 |
2006_NonQualified_Stock_and_Op2
2006 Non-Qualified Stock and Option Compensation Plan and 2008 Long Term Incentive Compensation Plan (Reconciliation of Registered and Available Shares and or Options) (Details) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2011 | Dec. 31, 2008 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Number registered | 10,000,000 | 23,000,000 | 18,000,000 | 5,000,000 |
Total Authorized under this plan | 56,000,000 | ' | ' | ' |
Options exercised | 2,230,788 | ' | ' | ' |
Outstanding options | 40,845,597 | ' | ' | ' |
Total shares available for grant | 11,106,698 | ' | ' | ' |
Prior Period Awards [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Shares issued since inception of plan | 1,521,366 | ' | ' | ' |
Q4-2013 Awards [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Shares issued since inception of plan | 295,551 | ' | ' | ' |
Management [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Options granted | 1,240,000 | ' | ' | ' |
2006_NonQualified_Stock_and_Op3
2006 Non-Qualified Stock and Option Compensation Plan and 2008 Long Term Incentive Compensation Plan (2008 Long-Term Incentive Plan) (Details) | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Sep. 30, 2014 | |
2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | 2008 Long-Term Incentive Plan [Member] | ||
Minimum [Member] | Maximum [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Outstanding options | 40,845,597 | ' | 40,845,597 | 34,479,773 | 12,181,130 | ' | ' |
Options granted vesting period | '3 years | ' | ' | ' | ' | ' | ' |
Options expiration period | ' | ' | ' | ' | ' | '3 years | '4 years |
Number of shares authorized | 56,000,000 | ' | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period | ' | 295,551 | ' | ' | ' | ' | ' |
2006_NonQualified_Stock_and_Op4
2006 Non-Qualified Stock and Option Compensation Plan and 2008 Long Term Incentive Compensation Plan (Common Stock Purchase Options, 2008 Long Term Incentive Plan) (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Number of options | ' | ' |
Ending Balance | 40,845,597 | ' |
2008 Long-Term Incentive Plan [Member] | ' | ' |
Number of options | ' | ' |
Beginning Balance | 34,479,773 | 12,181,130 |
Granted | 8,178,033 | 24,496,741 |
Exercised (with delivery of shares) | -478,978 | -809,737 |
Forfeitures (Pre-vesting) | -710,338 | -805,266 |
Expirations (Post-vesting) | -622,893 | -556,524 |
Exchanged for Cashless exercise | ' | -26,571 |
Ending Balance | 40,845,597 | 34,479,773 |
Average Exercise Price | ' | ' |
Beginning Balance | $1.47 | $2.15 |
Granted | $1.22 | $1.12 |
Exercised (with delivery of shares) | $0.77 | $0.66 |
Forfeitures (Pre-vesting) | $1.52 | $1.81 |
Expirations (Post-vesting) | $1.99 | $1.92 |
Exchanged for cashless exercise | ' | $0.60 |
Ending Balance | $1.39 | $1.47 |
Initial Fair Market Value | ' | ' |
Beginning Balance | $27,784,972 | $15,418,671 |
Granted | 5,159,039 | 14,107,008 |
Exercised (with delivery of shares) | -155,155 | -270,682 |
Forfeitures (Pre-vesting) | -639,709 | -807,662 |
Expirations (Post-vesting) | -737,465 | -648,529 |
Exchanged for Cashless exercise | ' | -13,834 |
Ending Balance | $31,411,682 | $27,784,972 |
2006_NonQualified_Stock_and_Op5
2006 Non-Qualified Stock and Option Compensation Plan and 2008 Long Term Incentive Compensation Plan (Schedule of Stock-based Compensation Expense) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Non-cash compensation to officers, directors and employees | $862,419 | $1,233,165 | $3,536,680 | $5,639,124 |
Directors, Officers and Employees [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Non-cash compensation to officers, directors and employees | 794,582 | ' | 3,392,843 | ' |
Consultant [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Non-cash compensation to officers, directors and employees | 67,837 | ' | 143,837 | ' |
Directors and Officers [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Non-cash compensation to officers, directors and employees | 125,529 | 420,731 | 166,516 | 1,886,909 |
Employees [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Non-cash compensation to officers, directors and employees | $669,053 | $812,434 | $3,226,327 | $3,752,215 |
Income_Taxes_Narrative_Details
Income Taxes (Narrative) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Foreign Tax Authority [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss carry forwards | $138,509,157 | $131,000,000 |
Federal And State Jurisdiction [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss carry forwards | $32,821,510 | $34,000,000 |
Income_Taxes_Schedule_of_Loss_
Income Taxes (Schedule of Loss before Income Tax Provision) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Taxes [Abstract] | ' | ' | ' | ' |
Domestic | ($3,138,444) | ($2,771,554) | ($10,766,842) | ($11,462,493) |
Foreign | 700,568 | -412,539 | -274,798 | -4,552,083 |
LOSS BEFORE (BENEFIT) PROVISION FOR INCOME TAXES | ($2,437,876) | ($3,184,093) | ($11,041,640) | ($16,014,576) |
Income_Taxes_Schedule_of_Incom
Income Taxes (Schedule of Income Tax Expense (Benefit)) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Current: | ' | ' | ' | ' |
Federal | ' | ' | ' | ' |
State | ' | ' | ' | ' |
Foreign | ' | ' | 88,290 | 41,500 |
Current Income Tax Expense, Total | ' | ' | 88,290 | 41,500 |
Deferred: | ' | ' | ' | ' |
Federal | ' | ' | ' | ' |
State | ' | ' | ' | ' |
Foreign | ' | ' | ' | ' |
Income tax expense | ($44,938) | $41,500 | $88,290 | $41,500 |
Income_Taxes_Reconciliation_of
Income Taxes (Reconciliation of the Provision for Income Taxes at the United States Federal Statutory Rate to the Foreign Income Tax Rate) (Details) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Income Taxes [Abstract] | ' | ' |
Tax expense (credit) at statutory rate-federal | 34.00% | 34.00% |
State tax expense net of federal tax | ' | ' |
Foreign income tax rate difference | -6.50% | -5.50% |
Change in valuation allowance | -26.70% | -28.20% |
Other | ' | ' |
Tax expense at actual rate | 0.80% | 0.30% |
Income_Taxes_Schedule_of_Defer
Income Taxes (Schedule of Deferred Tax Assets) (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Income Taxes [Abstract] | ' | ' |
Net Operating Losses | $44,769,259 | $33,740,565 |
Total gross deferred tax assets | 44,769,259 | 33,740,565 |
Less: Valuation allowance | -44,769,259 | -33,740,565 |
Net deferred tax assets | ' | ' |
Income_Taxes_Schedule_of_Opera
Income Taxes (Schedule of Operating Loss Carryforwards) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Federal And State Jurisdiction [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss carry forwards | $32,821,510 | $34,000,000 |
Federal And State Jurisdiction [Member] | Tax Years 2014 Through 2019 [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss carry forwards | 514,911 | ' |
Federal And State Jurisdiction [Member] | Tax Years 2019 Through 2024 [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss carry forwards | 4,173,661 | ' |
Federal And State Jurisdiction [Member] | Tax Years 2024 Through 2031 [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss carry forwards | 28,132,938 | ' |
Foreign Tax Authority [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss carry forwards | 138,509,157 | 131,000,000 |
Foreign Tax Authority [Member] | Tax Years 2014 Through 2019 [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss carry forwards | 28,969,104 | ' |
Foreign Tax Authority [Member] | Tax Years 2019 Through 2024 [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss carry forwards | 31,307,025 | ' |
Foreign Tax Authority [Member] | Tax Years 2024 Through 2031 [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss carry forwards | $78,233,028 | ' |
Income_Taxes_Schedule_of_Unrec
Income Taxes (Schedule of Unrecognized Tax Benefits) (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Income Taxes [Abstract] | ' | ' |
Balance | ' | $289,136 |
Increases related to prior year tax positions | ' | ' |
Decreases related to prior year tax positions | ' | -289,136 |
Balance | ' | ' |
Contingencies_Details
Contingencies (Details) (USD $) | 0 Months Ended | 9 Months Ended | |||
24-May-04 | 24-May-04 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | |
Contracts And Purchase Agreement [Member] | Contracts And Purchase Agreement [Member] | Contracts And Purchase Agreement [Member] | |||
notes | Returned [Member] | Unreturned [Member] | |||
notes | notes | ||||
Loss Contingencies [Line Items] | ' | ' | ' | ' | ' |
Amount of common stock issued for purchase agreement | $683,400 | ' | ' | ' | ' |
Common stock received for termination of purchase agreement | ' | ' | 90,100 | ' | ' |
Common stock issued for purchase agreement | ' | 5,100,000 | 204,000 | ' | ' |
Unsecured convertible promissory notes, number | ' | ' | 37 | 21 | 18 |
Unsecured convertible promissory notes issued, amount | ' | ' | 3,600,000 | ' | ' |
Unsecured convertible promissory notes returned | ' | ' | ' | 2,040,000 | ' |
Common stock, shares | ' | ' | ' | ' | 113,900 |
Common stock, value | ' | ' | ' | ' | 381,565 |
Unsecured convertible promissory notes unreturned, value | ' | ' | ' | ' | $1,740,000 |
Geographic_and_Concentration_R2
Geographic and Concentration Risk Information (Schedule of Geographic Information) (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ' | ' | ' |
Revenues from unaffiliated customers | $7,298,988 | $5,204,982 | $20,690,609 | $16,795,627 | ' |
Identifiable assets | 40,608,753 | 46,452,946 | 40,608,753 | 46,452,946 | 43,317,440 |
Europe [Member] | ' | ' | ' | ' | ' |
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ' | ' | ' |
Revenues from unaffiliated customers | ' | ' | 10,715,354 | 15,542,781 | ' |
Identifiable assets | 31,637,609 | 31,428,900 | 31,637,609 | 31,428,900 | ' |
Other Foreign Countries [Member] | ' | ' | ' | ' | ' |
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ' | ' | ' |
Revenues from unaffiliated customers | ' | ' | 9,975,255 | 1,252,846 | ' |
Identifiable assets | $8,971,144 | $15,024,046 | $8,971,144 | $15,024,046 | ' |
Geographic_and_Concentration_R3
Geographic and Concentration Risk Information (Narrative) (Details) (Revenue Concentration [Member]) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Customer One [Member] | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Percentage of revenues | 45.00% | 46.00% |
Customer Two [Member] | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Percentage of revenues | 40.00% | 9.00% |
Subsequent_Events_Details
Subsequent Events (Details) | Jul. 15, 2014 | Nov. 17, 2014 | Nov. 17, 2014 | Sep. 30, 2014 | Nov. 17, 2014 | Nov. 17, 2014 | Nov. 17, 2014 |
July Warrant [Member] | Convertible Note Two [Member] | Convertible Note Two [Member] | Convertible Note Two [Member] | Line of Credit [Member] | Subsequent Event [Member] | Subsequent Event [Member] | |
USD ($) | USD ($) | EUR (€) | USD ($) | USD ($) | Convertible Note One [Member] | Line of Credit [Member] | |
July Warrant [Member] | |||||||
USD ($) | |||||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | ' | ' | ' | $12,000,000 | ' | ' |
Loan payable, interest rate spread | ' | ' | ' | ' | 10.00% | ' | ' |
Percentage of debt repaid | ' | 50.00% | 50.00% | ' | ' | ' | ' |
Percentage increased by an additional interest rate | ' | ' | ' | ' | ' | ' | 2.00% |
Repayments of debt | ' | 3,123,011 | 2,498,849 | ' | ' | ' | ' |
Amount of shares issued | ' | $2,500,000 | € 2,000,000 | ' | ' | ' | ' |
Number of warrants issued | ' | 1,000,000 | 1,000,000 | ' | ' | ' | ' |
Debt Conversion, Converted Instrument, Shares Issued | ' | 2,817,993 | 2,817,993 | ' | ' | ' | ' |
Warrant exercises, price per share | $0.92 | ' | ' | $0.89 | ' | $0.93 | ' |