Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 31, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2015 | |
Entity Registrant Name | ELEPHANT TALK COMMUNICATIONS CORP | |
Entity Central Index Key | 1,084,384 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 161,622,287 | |
Trading Symbol | ETAK |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 858,911 | $ 1,904,160 |
Financing receivable | 2,000,000 | |
Restricted cash | $ 383,283 | 312,935 |
Accounts receivable | 2,812,162 | 8,877,213 |
Prepaid expenses and other current assets | 1,677,013 | 2,478,681 |
Total current assets | 5,731,369 | 15,572,989 |
NON-CURRENT ASSETS | ||
OTHER ASSETS | 1,096,774 | 1,600,335 |
PROPERTY AND EQUIPMENT, NET | 17,445,139 | 19,319,202 |
INTANGIBLE ASSETS, NET | 3,275,756 | 5,076,208 |
GOODWILL | 3,115,142 | 3,352,264 |
TOTAL ASSETS | $ 30,664,180 | 44,920,998 |
CURRENT LIABILITIES | ||
Overdraft | 433,366 | |
Accounts payable and customer deposits | $ 1,923,945 | 1,856,014 |
Obligations under capital leases (current portion) | 493,858 | 1,831,050 |
Deferred Revenue | 1,971,150 | 8,813,385 |
Accrued expenses and other payables | $ 2,630,359 | 4,061,652 |
Loans payable | 962,269 | |
2014 10% + libor 3rd Party Loan (net of OID of $660,467 at September 30, 2015 and $798,894 at December 31, 2014) | $ 5,839,533 | 11,201,106 |
Total current liabilities | 12,839,845 | 29,158,842 |
LONG TERM LIABILITIES | ||
Warrant liabilities | 2,087,992 | |
Non-current portion of obligation under capital leases | 37,340 | 272,460 |
Other long term loan | 283,518 | 354,880 |
Non-current portion of deferred revenue | 1,111,764 | 2,434,257 |
Total long term liabilities | 1,432,622 | 5,149,589 |
Total liabilities | $ 14,291,467 | $ 34,308,431 |
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, 160,242,771 issued and outstanding as of September 30, 2015 and 154,671,258 shares issued and outstanding as of December 31, 2014 | $ 268,147,697 | $ 264,359,674 |
Accumulated other comprehensive income (loss) | (4,395,196) | (3,127,132) |
Accumulated deficit | (247,388,888) | (250,629,296) |
Elephant Talk Communications, Corp. stockholders' equity | 16,363,613 | 10,603,246 |
NON-CONTROLLING INTEREST | 9,100 | 9,321 |
Total stockholders' equity | 16,372,713 | 10,612,567 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 30,664,180 | $ 44,920,998 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Preferred stock, par or stated value per share | $ 0.00001 | $ 0.00001 |
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 | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 160,242,771 | 154,671,258 |
Common stock, shares outstanding | 160,242,771 | 154,671,258 |
Term Loan 2014 [Member] | ||
Loan payable, interest rate spread | 10.00% | 10.00% |
Description of variable rate basis | libor | libor |
Discount on debt | $ 660,467 | $ 798,894 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) [Abstract] | ||||
REVENUES | $ 3,485,624 | $ 4,445,239 | $ 27,743,023 | $ 14,901,944 |
COST AND OPERATING EXPENSES | ||||
Cost of service (excluding depreciation and amortization) | 1,361,347 | 1,565,054 | 4,671,107 | 5,049,713 |
Product development | 1,030,143 | 1,707,102 | 3,556,947 | 5,699,451 |
Sales and marketing | 640,680 | 555,519 | 1,639,800 | 1,784,161 |
General and administrative | 2,485,671 | 3,248,243 | 8,111,048 | 9,763,529 |
Depreciation and amortization of intangibles assets | $ 1,781,478 | $ 1,900,251 | 5,272,659 | $ 5,836,857 |
Impairment for assets held and used | 937,835 | |||
Total cost and operating expenses | $ 7,299,319 | $ 8,976,169 | 24,189,396 | $ 28,133,711 |
INCOME / (LOSS) FROM OPERATIONS | (3,813,695) | (4,530,930) | 3,553,627 | (13,231,767) |
OTHER INCOME (EXPENSE) | ||||
Interest income | 28,054 | 36,684 | 80,913 | 93,840 |
Interest expense | (280,182) | (260,295) | (1,203,348) | (895,453) |
Interest expense related to debt discount and conversion feature | $ (125,086) | (1,287,717) | (592,737) | (3,197,749) |
Changes in fair value of warrant liabilities | (103,311) | 395,905 | (274,635) | |
Gain on Extinguishment of Debt | 626,534 | 2,475,799 | 626,108 | |
Other income and (expense), net | $ 82,760 | 301,199 | (953,258) | 372,597 |
Amortization of deferred financing costs | (41,224) | (73,789) | (466,571) | (323,246) |
Total other income (expense) | (335,678) | (760,695) | (263,297) | (3,598,538) |
INCOME / (LOSS) BEFORE (BENEFIT) PROVISION FOR INCOME TAXES | (4,149,373) | (5,291,625) | 3,290,330 | (16,830,305) |
(Benefit) / provision for income taxes | 6,964 | (44,938) | 49,922 | 88,290 |
NET INCOME / (LOSS) | (4,156,337) | (5,246,687) | 3,240,408 | (16,918,595) |
OTHER COMPREHENSIVE LOSS | ||||
Foreign currency translation (loss) | (64,444) | (2,273,740) | (1,268,064) | (2,424,192) |
COMPREHENSIVE INCOME / (LOSS) | $ (4,220,781) | $ (7,520,427) | $ 1,972,344 | $ (19,342,787) |
Net income / (loss) per common share and equivalents - basic | $ (0.03) | $ (0.04) | $ 0.02 | $ (0.12) |
Net income / (loss) per common share and equivalents - diluted | $ (0.03) | $ (0.04) | $ 0.02 | $ (0.12) |
Weighted average shares outstanding during the period - basic | 160,161,678 | 149,468,618 | 157,153,104 | 145,929,455 |
Weighted average shares outstanding during the period - diluted | 160,161,678 | 149,468,618 | 158,340,437 | 145,929,455 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Income / (loss) | $ 3,240,408 | $ (16,918,595) |
Adjustments to reconcile net income / (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | $ 5,272,659 | 5,836,857 |
Provision for doubtful accounts | (10,661) | |
Stock based compensation | $ 2,521,424 | 3,536,680 |
Change in fair value of warrant liability | (395,905) | 274,635 |
Amortization of deferred financing costs | 466,571 | 323,246 |
Interest expense relating to debt discount and conversion feature | 592,737 | 3,197,749 |
Unrealized foreign currency translation gain (loss) | 953,258 | (501,571) |
(Gain) on Extinguishment of Debt | (2,475,799) | $ (626,108) |
Impairment for assets held and used | 937,835 | |
Changes in operating assets and liabilities: | ||
Decrease (increase) in accounts receivable | 5,299,888 | $ (1,345,278) |
Decrease (increase) in prepaid expenses, deposits and other assets | 987,176 | (101,971) |
Increase (decrease) in accounts payable and customer deposits | 1,820,596 | 362,685 |
Increase (decrease) in deferred revenue | (9,007,259) | 5,755,065 |
Increase (decrease) in accrued expenses and other payables | (1,188,561) | 1,493,168 |
Net cash provided by operating activities | 9,025,028 | 1,275,901 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (6,725,768) | (5,611,023) |
Net cash used in investing activities | (6,725,768) | $ (5,611,023) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Financing receivable | 2,000,000 | |
Exercise of warrants and options | 5,861 | $ 4,286,576 |
Financing related fees | (150,668) | $ (125,793) |
Principal payment on 2014 10% + libor 3rd Party Loan | $ (5,500,000) | |
Interest paid for property and equipment acquired under capital leases | $ (57,079) | |
Net cash (used in) provided by financing activities | $ (3,644,807) | 4,103,704 |
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 300,298 | 155,753 |
NET (DECREASE) IN CASH AND CASH EQUIVALENTS | (1,045,249) | (75,665) |
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD | 1,904,160 | 1,252,315 |
CASH AND CASH EQUIVALENTS, END OF THE PERIOD | 858,911 | 1,176,650 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Cash paid during the period for interest | 1,136,021 | 174,592 |
Cash paid during the period for income taxes | $ 14,771 | $ 56,881 |
Financial Condition
Financial Condition | 9 Months Ended |
Sep. 30, 2015 | |
Financial Condition [Abstract] | |
Financial Condition | Note 1 As reflected in the accompanying condensed consolidated financial statements, the Company reported net income / (loss) of $ (4,156,337) 3,240,408 (247,388,888) The Company's financial statements through September 30, 2015 were materially impacted by two events; the June 12, 2015 settlement and termination agreement with Grupo Iusacell S.A., and the modification of the November 17, 2014 Atalaya/Corbin Capital credit agreement, which had been in default since March 2015, and was amended on July 9, 2015. The termination of the relationship with Iusacell resulted in a settlement agreement on June 12, 2015, which provided the Company with net proceeds of $ 12.6 3.9 5 As required, on June, 22, 2015, the Company repaid Atalaya/Corbin $ 10.1 12.6 4.2 6.5 largely resulting from the termination of the Iusacell contract, the Company believes it will be in breach of certain financial covenants of the Atalaya/Corbin credit agreement as amended, and therefore will be in default, although Atalaya/Corbin has not yet notified the Company of such default. However, the Company has reclassified the Atalaya debt from a long term to a short term liability The Company's cash balance at September 30, 2015 was $ 858,911 and additional capital is required in the near term in order to continue the existing level of operations. The Company is currently in discussions with several investment groups, including Atalaya, regarding providing additional capital. In addition, the Company is in discussions with regard to the sale of all or a portion of its holdings in ValidSoft. In order for the Company to have sufficient cash to fund its operations for the next 12 months, the Company believes an additional 5 7 million of funding is required, depending on actual operating results achieved versus projected, and whether or not a ValidSoft transaction is concluded Although we have previously been able to raise capital as needed, there can be no assurance that additional capital will be available at all, or if available, on reasonable terms. Further, the terms of such financing may be dilutive to our existing stockholders or otherwise on terms not favorable to us, or our existing stockholders. If we are unable to secure additional capital, and/or do not succeed in meeting our sales objectives, the Company will be materially and negatively impacted, and we may have to significantly reduce our operations. As of September 30, 2015, these conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Description of Business, Basis
Description of Business, Basis of Presentation and Use of Estimates | 9 Months Ended |
Sep. 30, 2015 | |
Description of Business, Basis of Presentation and Use of Estimates [Abstract] | |
Description of Business, Basis of Presentation and Use of Estimates | Note 2. Description of Business, Basis of Presentation and Use of Estimates Description of Business As mobile Software Defined Network Architecture (ET Software DNA® 2.0) 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. We also provide layered security services for mission critical applications in the cloud, through our wholly owned subsidiary, ValidSoft UK Limited (“ValidSoft”). Over the last decade, Elephant Talk has developed a comprehensive virtualized (NFV & SDN) Mobile Software Platform, capable of hosting an integrated IT/BackOffice and Core Network for Mobile Network Operators (MNOs), Mobile Virtual Network Operators (MVNOs), Enablers (MVNEs) and Aggregators (MVNAs) on a fully outsourced basis. Our mobile enabling platform is either made available as an on premise solution or as a fully hosted service in ‘the cloud', depending on the individual needs of our customers. Our mobile security services supply voice biometric and telecommunications-based multi-factor 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 enterprise customers in a range of industries including financial services, government, insurance, as well as electronic medical record providers and MNOs. Our company provides customers the means to effectively combat a variety of electronic fraud while at the same time protecting consumer privacy. Basis of Presentation of Interim Periods The interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information and with the instructions to Securities and Exchange Commission, or SEC, Form 10-Q and Article 10 of SEC Regulation S-X. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2014, included in our 2014 amended Annual Report on Form 10-K/A originally filed with the SEC on April 3, 2015 as amended on April 30, 2015 and October 19, 2015, referred to as our 2014 Annual Report. The interim condensed consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly our results of operations and financial position for the interim periods. The results of operations for the three and nine months period ended September 30, 2015 are not necessarily indicative of the results to be expected for future quarters or the full year. For a complete summary of our significant accounting policies, please refer to Note 2, “Business and Summary of Significant Accounting Policies,” of our 2014 Annual Report. There have been no material changes to our significant accounting policies during the three and nine months period ended September 30, 2015. Use of Estimates The preparation of the accompanying financial statements conforms to accounting principles generally accepted in the U.S. and requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Significant areas of estimates include revenue recognition, bad debt allowance, valuation of financial instruments, useful lives of long-lived assets and share-based compensation. Actual results may differ from these estimates under different assumptions or conditions. Basic and diluted earnings per share Net earnings per share is calculated in accordance with ASC 260, Earnings per Share (“ASC 260”). Basic net earnings 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 in periods with a loss situation per share are the same. |
Supplemental Financial Informat
Supplemental Financial Information | 9 Months Ended |
Sep. 30, 2015 | |
Supplemental Financial Information [Abstract] | |
Supplemental Financial Information | Note 3. Supplemental Financial Information The following tables present details of our condensed consolidated financial statements: September 30, December 31, Prepaid expenses and other current assets 2015 2014 Recurring prepaid expenses $ 201,481 $ 455,529 Non recurring prepaid expenses 383,425 731,725 Taxes 327,349 359,087 VAT 757,604 742,773 Inventory SIM cards 7,154 189,567 $ 1,677,013 $ 2,478,681 September 30, December 31, Other Assets 2015 2014 Long term deposits $ 434,928 $ 653,002 Deferred financing costs 388,041 682,878 Due from third parties 273,805 264,455 $ 1,096,774 $ 1,600,335 September 30, December 31, Property and equipment 2015 2014 Furniture and fixtures $ 325,978 $ 281,214 Computer, communications and network equipment 24,974,767 23,904,494 Software 5,914,174 4,556,364 Automobiles 74,796 80,860 Construction in progress 2,991,108 4,044,932 Acc. Depreciation Property & Equipment (16,835,684 ) (13,548,662 ) $ 17,445,139 $ 19,319,202 September 30, December 31, Intangible assets 2015 2014 Validsoft IP and Technology $ 13,268,840 $ 14,344,604 Customer Contracts, Licenses , Interconnect and Technology 1,875,499 1,870,523 Accumulated amortization Validsoft IP and Technology (10,510,111 ) (9,973,063 ) Accumulated amortization Customer Contracts, Licenses, Interconnect & Technology (1,358,472 ) (1,165,856 ) $ 3,275,756 $ 5,076,208 September 30, December 31, Goodwill 2015 2014 Goodwill ValidSoft Ltd $ 2,742,108 $ 2,964,423 Goodwill Morodo Ltd. 182,633 197,440 Goodwill Telnicity 190,401 190,401 $ 3,115,142 $ 3,352,264 September 30, December 31, Accrued expenses and other payables 2015 2014 Accrued Selling, General and Administrative expenses $ 1,602,931 $ 1,863,020 Accrued cost of service 160,561 291,553 Accrued taxes (including VAT) 623,170 570,616 Accrued interest payable 126,719 1,184,418 Other accrued expenses 116,978 152,045 $ 2,630,359 $ 4,061,652 September 30, December 31, 2014 10% + libor 3rd Party Term Loan Agreement 2015 2014 2014 10% Term Loan (principal amount) $ 6,500,000 $ 12,000,000 Debt Discount (660,467 ) (798,894 ) $ 5,839,533 $ 11,201,106 On July 9, 2015 the Company entered into a First Amendment to the Credit Agreement dated November 17, 2014 with Corbin Mezzanine Fund I, L.P. (‘Lender') and Atalaya Administrative LLC as administrative agent and collateral agent for Corbin Mezzanine Fund I. In this amendment, Lender and Atalaya agreed to waive the existing default as defined in the November 17, 2014 credit agreement subject to certain terms and conditions in the Amendment. Upon repayment of approximately $ 5.7 6.5 6.5 11.00 0.5 one two 30 0.38 0.02 0.36 one 18 0.38 0.02 0.36 Leading up to the amendment of the credit agreement the Company paid $ 10,100,000 5,500,000 4,427,333 9,927,333 12,000,000 2,072,667 10,100,000 4.5 6,500,000 In line with the recording of the $ 5,500,000 Upon closing of the amendment, the company performed an analysis to determine if this amendment to the Credit Agreement of November 17, 2014 constituted a substantial modification to the original credit agreement and concluded that such was not the case. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 4. 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 Level 2 Level 3 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. As of September 30, 2105 there were no assets or liabilities measured at fair value on a recurring basis. The following table summarizes fair value measurements by level as of December 31, 2014 for financial assets and liabilities measured at fair value on a recurring basis: December 31, 2014 Level 1 Level 2 Level 3 Total Derivative Liabilities Warrant Liabilities $ - $ - $ 2,087,992 $ 2,087,992 Total Derivatives Liabilities $ - $ - $ 2,087,992 $ 2,087,992 The Company has classified the previously outstanding warrant liabilities into level 3 1,692,087 149,203 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity [Abstract] | |
Stockholders' Equity | Note 5. Stockholders' Equity (A) Common Stock The Company is presently authorized to issue 250,000,000 160,242,771 154,671,258 5,571,513 4,029,738 8,668 1,533,107 (B) Preferred Stock The Company's Certificate of Incorporation (“Articles”) authorizes the issuance of 50,000,000 0.00001 For the period ended September 30, 2015, 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, 2015 (unaudited) and December 31, 2014 have been recorded and classified as equity. The Weighted Average Exercise Price for the currently outstanding warrants in the table below is $ 1.06 Outstanding Warrants Exercise/ Conversion price(s) (range) Expiring 2015 2014 Warrants – Fundraising $ 0.380 1.50 2015 2019 15,429,205 29,610,206 Warrants – Other $ 2.21 2016 18,659 18,659 15,447,864 29,628,865 |
2006 Non-Qualified Stock and Op
2006 Non-Qualified Stock and Option Compensation Plan and Amended and Restated 2008 Long Term Incentive Compensation Plan | 9 Months Ended |
Sep. 30, 2015 | |
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 6. 2006 Non-Qualified Stock and Option Compensation Plan and Amended and Restated 2008 Long Term Incentive Compensation Plan 2006 Non-Qualified Stock and Option Compensation Plan The Company has a 2006 Non-Qualified Stock and Option Compensation Plan (the “2006 Plan”). Under the 2006 Plan, there are no stock options outstanding as of September 30, 2015 and December 31, 2014. All remaining outstanding options expired in December 2013. Amended and Restated 2008 Long-Term Incentive Compensation Plan Total Authorized under the plan 56,000,000 Shares issued in prior years (1,951,031 ) Shares issued in 2015 (1,533,107 ) Options exercised (2,382,110 ) Outstanding options (40,179,525 ) Available for grant at September 30, 2015 (unaudited) 9,954,227 During the first nine months of 2015, the Company issued 1,533,107 Stock option activity is set forth below: Options: Number of Options Weighted Average Exercise Price Outstanding as of December 31, 2014 40,056,080 $ 1.32 Granted in 2015 11,055,184 $ 0.60 Exercised (with delivery of shares) (8,668 ) $ 0.68 Forfeitures (Pre-vesting) (6,833,912 ) $ 1.08 Expirations (Post-vesting) (4,089,159 ) $ 1.70 Outstanding as of September 30, 2015 (unaudited) 40,179,525 $ 1.22 At September 30, 2015, the unrecognized expense portion of stock-based awards granted to employees under the 2008 Plan was approximately $ 5,056,060 10,939,973 |
Income taxes
Income taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income taxes [Abstract] | |
Income taxes | Note 7. Income taxes Income Taxes The following table presents details of the net (benefit) provision for income taxes: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (Benefit) Provision for income taxes $ 6,964 $ (44,938 ) $ 49,922 $ 88,290 As a result of our continued losses in the U.S. and certain foreign jurisdictions, we have concluded that a full valuation allowance should be recorded against deferred taxes in such jurisdictions. In certain other foreign jurisdictions where we do not have cumulative losses, we had net deferred tax liabilities. |
Significant Customer and Geogra
Significant Customer and Geographical Information | 9 Months Ended |
Sep. 30, 2015 | |
Significant Customer and Geographical Information [Abstract] | |
Significant Customer and Geographical Information | Note 8. Significant Customer and Geographical Information Sales to our significant customers, as a percentage of net revenue were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Two largest customers 87.9 % 94.3 % 82.6 % 82.5 % The geographical distribution of our revenue, as a percentage of revenue, was as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Europe 95.7 % 72.7 % 35.3 % 68.9 % All other (non-European) countries 4.3 % 27.3 % 64.7 % 31.1 % 100.0 % 100.0 % 100.0 % 100.0 % |
Per Common Share Information
Per Common Share Information | 9 Months Ended |
Sep. 30, 2015 | |
Per Common Share Information [Abstract] | |
Per Common Share Information | Note 9. Per Common Share Information Diluted earnings per common share is calculated using net income divided by the weighted-average basic and diluted shares. Diluted weighted-average shares include weighted-average shares outstanding plus the calculated dilutive effect of employee options and outstanding warrants using the treasury stock method. The dilutive effect has been determined to be 1,187,333 shares for the nine month period of 2015 and such effect is anti-dilutive due to the losses in the three month period of the year 2015 and also the three and nine months period of 2014 |
Restatement
Restatement | 9 Months Ended |
Sep. 30, 2015 | |
Restatement [Abstract] | |
Restatement | Note 10. Restatement In our 2014 Form 10-K, we restated our audited financial statements for fiscal year ended December 31, 2013 and our unaudited interim consolidated financial statements 2013 and 2014 to reflect certain corrections in the manner in which we recognize revenue related to our long term managed service contracts. The restatement is a result of the failure to identify all delivery obligations associated with multi-element revenue arrangements and an improper interpretation of standalone value of delivered elements. The revenue recognition errors identified by the Company, do not affect the total revenues ultimately earned or to be earned, or the amount or timing of cash received or to be received from individual customer arrangements. As a result of our restatement and in accordance with U.S. GAAP, revenues that had originally been recognized in 2013 are now being recognized ratably over an extended timeframe. The amount of revenues earned or to be earned over the entire period of recognition essentially remain unchanged from the amount we historically recognized, however the timing of when and the amount of revenues recognized for those periods discussed above were restated and certain amounts of revenues were restated. There was neither change to the cash characteristics of the transactions being restated nor the Company's liquidity directly relating to these transactions. As a result of the restatement, the balance sheet reflects a significant increase in deferred revenue, which will be recognized in revenue over a number of years. See our 2014 Form 10-K, as amended, for additional information regarding the restatement of our unaudited consolidated financial statements for the quarter ended September 30, 2014 and for information regarding the restatement of our unaudited consolidated financial statements for each of the quarters in the year ended December 31, 2013 and 2014. This Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (this “Form 10-Q”) reflects the impact of the restatement on the applicable unaudited quarterly financial information for the quarter ended September 30, 2014. The combined impact of the adjustments to specified line items included in this Form 10-Q have been restated to reflect the corrections of the above errors, which impact revenues from products, revenues from services and deferred revenues (current and non-current). The following schedules reconcile the amounts as originally reported in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 to the corresponding restated amounts as reported herein and in our 2014 Form 10-K. September 30, Restatement September 30, 2014 adjustment 2014 (Unaudited) Unaudited Unaudited Restated ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,176,650 $ - $ 1,176,650 Restricted cash 169,536 - 169,536 Accounts receivable, net of an allowance for doubtful accounts of $ 0 6,754,447 (907,023 ) 5,847,424 Prepaid expenses and other current assets 2,319,310 - 2,319,310 Total current assets 10,419,943 (907,023 ) 9,512,920 NON-CURRENT ASSETS OTHER ASSETS 1,093,977 - 1,093,977 PROPERTY AND EQUIPMENT, NET 19,603,707 - 19,603,707 INTANGIBLE ASSETS, NET 6,000,884 - 6,000,884 GOODWILL 3,490,242 - 3,490,242 TOTAL ASSETS $ 40,608,753 $ (907,023 ) $ 39,701,730 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Overdraft $ 425,144 $ - $ 425,144 Accounts payable and customer deposits 2,063,304 - 2,063,304 Obligations under capital leases - current portion 1,828,083 - 1,828,083 Deferred Revenue 127,456 468,256 595,712 Accrued expenses and other payables 5,804,999 - 5,804,999 Loans payable 961,550 - 961,550 Total current liabilities 11,210,536 468,256 11,678,792 LONG TERM LIABILITIES 2013 10 410,853 4,663,227 - 4,663,227 Warrant liabilities 2,248,169 - 2,248,169 Non-current portion of obligation under capital leases 261,912 - 261,912 Non-current portion of deferred revenue - 7,788,843 7,788,843 Total long term liabilities 7,173,308 7,788,843 14,962,151 Total liabilities 18,383,844 8,257,099 26,640,943 STOCKHOLDERS' EQUITY Preferred Stock $ 0.00001 50,000,000 0 - - - Common Stock $ 0.00001 250,000,000 151,312,189 260,616,570 - 260,616,570 Accumulated other comprehensive income -loss) (2,003,871 ) - (2,003,871 ) Accumulated deficit (236,521,852 ) (9,164,122 ) (245,685,974 ) Elephant Talk Communications, Corp. stockholders' equity 22,090,847 (9,164,122 ) 12,926,725 NON-CONTROLLING INTEREST 134,062 - 134,062 Total stockholders' equity 22,224,909 (9,164,122 ) 13,060,787 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 40,608,753 $ (907,023 ) $ 39,701,730 For the three month period ended September 30, 2014 Restatement adjustments Re- classifications Restated (unaudited) (unaudited) (unaudited) (unaudited) REVENUES $ 7,298,988 $ (2,853,749 ) $ - $ 4,445,239 COST AND OPERATING EXPENSES Cost of service (exclusive of depreciation and amortization shown separately below) 848,771 - 716,283 1,565,054 Product development - - 1,707,102 1,707,102 Sales and marketing - - 555,519 555,519 General and administrative 6,227,147 - (2,978,904 ) 3,248,243 Depreciation and amortization 1,900,251 - - 1,900,251 Total cost and operating expenses 8,976,169 - - 8,976,169 LOSS FROM OPERATIONS (1,677,181 ) (2,853,749 ) - (4,530,930 ) OTHER INCOME (EXPENSE) Interest income 36,684 - - 36,684 Interest expense (260,295 ) - - (260,295 ) Interest expense related to debt discount and conversion feature (1,287,717 ) - - (1,287,717 ) Changes in fair value of warrant liabilities (103,311 ) - - (103,311 ) Gain / (Loss) on Extinguishment of Debt 626,534 - - 626,534 Other income & (expense), net 301,199 - - 301,199 Amortization of deferred financing costs (73,789 ) - - (73,789 ) Total other income (expense) (760,695 ) - - (760,695 ) LOSS BEFORE (BENEFIT) PROVISION FOR INCOME TAXES (2,437,876 ) (2,853,749 ) - (5,291,625 ) (Benefit) / provision for income taxes (44,938 ) - - (44,938 ) NET LOSS (2,392,938 ) (2,853,749 ) - (5,246,687 ) OTHER COMPREHENSIVE (LOSS) INCOME Foreign currency translation gain (loss) (2,273,740 ) - - (2,273,740 ) COMPREHENSIVE LOSS $ (4,666,678 ) $ (2,853,749 ) $ - $ (7,520,427 ) Net loss per common share and equivalents - basic and diluted $ (0.02 ) $ - $ - $ (0.04 ) Weighted average shares outstanding during the period - basic and diluted 149,468,618 - - 149,468,618 For the nine month period ended September 30, 2014 Restatement adjustments Re- classifications Restated (unaudited) (unaudited) (unaudited) (unaudited) REVENUES $ 20,690,609 $ (5,788,665 ) $ - $ 14,901,944 COST AND OPERATING EXPENSES Cost of service (exclusive of depreciation and amortization shown separately below) 2,660,816 - 2,388,897 5,049,713 Product development - - 5,699,451 5,699,451 Sales and marketing - - 1,784,161 1,784,161 General and administrative 19,636,038 - (9,872,509 ) 9,763,529 Depreciation and amortization 5,836,857 - - 5,836,857 Total cost and operating expenses 28,133,711 - - 28,133,711 LOSS FROM OPERATIONS (7,443,102 ) (5,788,665 ) - (13,231,767 ) OTHER INCOME (EXPENSE) Interest income 93,840 - - 93,840 Interest expense (895,453 ) - - (895,453 ) Interest expense related to debt discount and conversion feature (3,197,749 ) - - (3,197,749 ) Changes in fair value of warrant liabilities (274,635 ) - - (274,635 ) Gain / (Loss) on Extinguishment of Debt 626,108 - - 626,108 Other income & (expense), net 372,597 - - 372,597 Amortization of deferred financing costs (323,246 ) - - (323,246 ) Total other income (expense) (3,598,538 ) - - (3,598,538 ) LOSS BEFORE (BENEFIT) PROVISION FOR INCOME TAXES (11,041,640 ) (5,788,665 ) - (16,830,305 ) (Benefit) / provision for income taxes 88,290 - - 88,290 NET LOSS (11,129,930 ) (5,788,665 ) - (16,918,595 ) OTHER COMPREHENSIVE (LOSS) INCOME Foreign currency translation gain (loss) (2,424,192 ) - - (2,424,192 ) COMPREHENSIVE LOSS $ (13,554,122 ) $ (5,788,665 ) $ - $ (19,342,787 ) Net loss per common share and equivalents - basic and diluted $ (0.08 ) $ - $ - $ (0.12 ) Weighted average shares outstanding during the period - basic and diluted 145,929,455 - - 145,929,455 The correction of the errors described above did not impact our total cash flows from operating activities, investing activities or financing activities within our consolidated statements of cash flows. Nine month period ended September 30, 2014 Restatement Restated Unaudited Unaudited CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (11,129,930 ) $ (5,788,665 ) $ (16,918,595 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 5,836,857 - 5,836,857 Provision for doubtful accounts (10,661 ) - (10,661 ) Stock based compensation 3,536,680 - 3,536,680 Change in fair value of warrant liability 274,635 - 274,635 Amortization of deferred financing costs 323,246 - 323,246 Interest expense relating to debt discount and conversion feature 3,197,749 - 3,197,749 Unrealized foreign currency translation gain (loss) (501,571 ) - (501,571 ) Extinguishment of Debt (626,108 ) - (626,108 ) Changes in operating assets and liabilities: - - Decrease (increase) in accounts receivable (1,366,947 ) 21,669 (1,345,278 ) Decrease (increase) in prepaid expenses, deposits and other assets (101,971 ) - (101,971 ) Increase (decrease) in accounts payable and customer deposits 362,685 - 362,685 Increase (decrease) in deferred revenue (11,931 ) 5,766,996 5,755,065 Increase (decrease) in accrued expenses and other payables 1,493,594 - 1,493,168 Increase (decrease) in non-cash accrued expenses related to extinguishment of Debt (426 ) - Net cash provided by operating activities 1,275,901 - 1,275,901 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (5,611,023 ) - (5,611,023 ) Loan to third party - - - Net cash used in investing activities (5,611,023 ) - (5,611,023 ) CASH FLOWS FROM FINANCING ACTIVITIES: Financing related fees (125,793 ) - (125,793 ) Exercise of warrants and options 4,286,576 - 4,286,576 Interest paid for property and equipment acquired under capital leases (57,079 ) - (57,079 ) Net cash provided by financing activities 4,103,704 - 4,103,704 EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS 155,753 - 155,753 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (75,665 ) - (75,665 ) CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 1,252,315 - 1,252,315 CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 1,176,650 $ - $ 1,176,650 *the Company reclassified the line items Accounts Receivable and Deferred Revenue compared to what was reported in the annual report 2014 on Form 10-K for the above quarter. The restatement for accounts receivable changed from ($ 2,468,434 21,669 8,257,099 5,766,996 426 426 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11. Subsequent Events The Company's management evaluated subsequent events through the date the financial statements were available to be issued and concluded there were none |
Supplemental Financial Inform17
Supplemental Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Supplemental Financial Information [Abstract] | |
Schedule of Prepaid Expenses And Other Current Assets | September 30, December 31, Prepaid expenses and other current assets 2015 2014 Recurring prepaid expenses $ 201,481 $ 455,529 Non recurring prepaid expenses 383,425 731,725 Taxes 327,349 359,087 VAT 757,604 742,773 Inventory SIM cards 7,154 189,567 $ 1,677,013 $ 2,478,681 |
Schedule of Other Assets | September 30, December 31, Other Assets 2015 2014 Long term deposits $ 434,928 $ 653,002 Deferred financing costs 388,041 682,878 Due from third parties 273,805 264,455 $ 1,096,774 $ 1,600,335 |
Schedule of Property and Equipment | September 30, December 31, Property and equipment 2015 2014 Furniture and fixtures $ 325,978 $ 281,214 Computer, communications and network equipment 24,974,767 23,904,494 Software 5,914,174 4,556,364 Automobiles 74,796 80,860 Construction in progress 2,991,108 4,044,932 Acc. Depreciation Property & Equipment (16,835,684 ) (13,548,662 ) $ 17,445,139 $ 19,319,202 |
Schedule of Intangible Assets | September 30, December 31, Intangible assets 2015 2014 Validsoft IP and Technology $ 13,268,840 $ 14,344,604 Customer Contracts, Licenses , Interconnect and Technology 1,875,499 1,870,523 Accumulated amortization Validsoft IP and Technology (10,510,111 ) (9,973,063 ) Accumulated amortization Customer Contracts, Licenses, Interconnect & Technology (1,358,472 ) (1,165,856 ) $ 3,275,756 $ 5,076,208 |
Schedule of Goodwill | September 30, December 31, Goodwill 2015 2014 Goodwill ValidSoft Ltd $ 2,742,108 $ 2,964,423 Goodwill Morodo Ltd. 182,633 197,440 Goodwill Telnicity 190,401 190,401 $ 3,115,142 $ 3,352,264 |
Accrued Expenses | September 30, December 31, Accrued expenses and other payables 2015 2014 Accrued Selling, General and Administrative expenses $ 1,602,931 $ 1,863,020 Accrued cost of service 160,561 291,553 Accrued taxes (including VAT) 623,170 570,616 Accrued interest payable 126,719 1,184,418 Other accrued expenses 116,978 152,045 $ 2,630,359 $ 4,061,652 |
Schedule of 2014 10% + libor 3rd Party Term Loan Agreement | September 30, December 31, 2014 10% + libor 3rd Party Term Loan Agreement 2015 2014 2014 10% Term Loan (principal amount) $ 6,500,000 $ 12,000,000 Debt Discount (660,467 ) (798,894 ) $ 5,839,533 $ 11,201,106 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Measurements [Abstract] | |
Schedule of Financial Assets And Liabilities Measured at Fair Value on a Recurring Basis | December 31, 2014 Level 1 Level 2 Level 3 Total Derivative Liabilities Warrant Liabilities $ - $ - $ 2,087,992 $ 2,087,992 Total Derivatives Liabilities $ - $ - $ 2,087,992 $ 2,087,992 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity [Abstract] | |
Summary of Warrants | Outstanding Warrants Exercise/ Conversion price(s) (range) Expiring 2015 2014 Warrants – Fundraising $ 0.380 1.50 2015 2019 15,429,205 29,610,206 Warrants – Other $ 2.21 2016 18,659 18,659 15,447,864 29,628,865 |
2006 Non-Qualified Stock and 20
2006 Non-Qualified Stock and Option Compensation Plan and Amended and Restated 2008 Long Term Incentive Compensation Plan (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
2006 Non-Qualified Stock and Option Compensation Plan and Amended and Restated 2008 Long Term Incentive Compensation Plan [Abstract] | |
Amended and Restated 2008 Long-Term Incentive Compensation Plan | Total Authorized under the plan 56,000,000 Shares issued in prior years (1,951,031 ) Shares issued in 2015 (1,533,107 ) Options exercised (2,382,110 ) Outstanding options (40,179,525 ) Available for grant at September 30, 2015 (unaudited) 9,954,227 |
Stock option activity | Options: Number of Options Weighted Average Exercise Price Outstanding as of December 31, 2014 40,056,080 $ 1.32 Granted in 2015 11,055,184 $ 0.60 Exercised (with delivery of shares) (8,668 ) $ 0.68 Forfeitures (Pre-vesting) (6,833,912 ) $ 1.08 Expirations (Post-vesting) (4,089,159 ) $ 1.70 Outstanding as of September 30, 2015 (unaudited) 40,179,525 $ 1.22 |
Income taxes (Tables)
Income taxes (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Income taxes [Abstract] | |
Schedule of net (benefit) provision for income taxes | Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (Benefit) Provision for income taxes $ 6,964 $ (44,938 ) $ 49,922 $ 88,290 |
Significant Customer and Geog22
Significant Customer and Geographical Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Significant Customer and Geographical Information [Abstract] | |
Schedule of Significant Customer and Geographical Information | Sales to our significant customers, as a percentage of net revenue were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Two largest customers 87.9 % 94.3 % 82.6 % 82.5 % The geographical distribution of our revenue, as a percentage of revenue, was as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Europe 95.7 % 72.7 % 35.3 % 68.9 % All other (non-European) countries 4.3 % 27.3 % 64.7 % 31.1 % 100.0 % 100.0 % 100.0 % 100.0 % |
Restatement (Tables)
Restatement (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Restatement [Abstract] | |
Schedule of restatement of previously issued financial statements and financial information | September 30, Restatement September 30, 2014 adjustment 2014 (Unaudited) Unaudited Unaudited Restated ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,176,650 $ - $ 1,176,650 Restricted cash 169,536 - 169,536 Accounts receivable, net of an allowance for doubtful accounts of $ 0 6,754,447 (907,023 ) 5,847,424 Prepaid expenses and other current assets 2,319,310 - 2,319,310 Total current assets 10,419,943 (907,023 ) 9,512,920 NON-CURRENT ASSETS OTHER ASSETS 1,093,977 - 1,093,977 PROPERTY AND EQUIPMENT, NET 19,603,707 - 19,603,707 INTANGIBLE ASSETS, NET 6,000,884 - 6,000,884 GOODWILL 3,490,242 - 3,490,242 TOTAL ASSETS $ 40,608,753 $ (907,023 ) $ 39,701,730 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Overdraft $ 425,144 $ - $ 425,144 Accounts payable and customer deposits 2,063,304 - 2,063,304 Obligations under capital leases - current portion 1,828,083 - 1,828,083 Deferred Revenue 127,456 468,256 595,712 Accrued expenses and other payables 5,804,999 - 5,804,999 Loans payable 961,550 - 961,550 Total current liabilities 11,210,536 468,256 11,678,792 LONG TERM LIABILITIES 2013 10 410,853 4,663,227 - 4,663,227 Warrant liabilities 2,248,169 - 2,248,169 Non-current portion of obligation under capital leases 261,912 - 261,912 Non-current portion of deferred revenue - 7,788,843 7,788,843 Total long term liabilities 7,173,308 7,788,843 14,962,151 Total liabilities 18,383,844 8,257,099 26,640,943 STOCKHOLDERS' EQUITY Preferred Stock $ 0.00001 50,000,000 0 - - - Common Stock $ 0.00001 250,000,000 151,312,189 260,616,570 - 260,616,570 Accumulated other comprehensive income -loss) (2,003,871 ) - (2,003,871 ) Accumulated deficit (236,521,852 ) (9,164,122 ) (245,685,974 ) Elephant Talk Communications, Corp. stockholders' equity 22,090,847 (9,164,122 ) 12,926,725 NON-CONTROLLING INTEREST 134,062 - 134,062 Total stockholders' equity 22,224,909 (9,164,122 ) 13,060,787 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 40,608,753 $ (907,023 ) $ 39,701,730 For the three month period ended September 30, 2014 Restatement adjustments Re- classifications Restated (unaudited) (unaudited) (unaudited) (unaudited) REVENUES $ 7,298,988 $ (2,853,749 ) $ - $ 4,445,239 COST AND OPERATING EXPENSES Cost of service (exclusive of depreciation and amortization shown separately below) 848,771 - 716,283 1,565,054 Product development - - 1,707,102 1,707,102 Sales and marketing - - 555,519 555,519 General and administrative 6,227,147 - (2,978,904 ) 3,248,243 Depreciation and amortization 1,900,251 - - 1,900,251 Total cost and operating expenses 8,976,169 - - 8,976,169 LOSS FROM OPERATIONS (1,677,181 ) (2,853,749 ) - (4,530,930 ) OTHER INCOME (EXPENSE) Interest income 36,684 - - 36,684 Interest expense (260,295 ) - - (260,295 ) Interest expense related to debt discount and conversion feature (1,287,717 ) - - (1,287,717 ) Changes in fair value of warrant liabilities (103,311 ) - - (103,311 ) Gain / (Loss) on Extinguishment of Debt 626,534 - - 626,534 Other income & (expense), net 301,199 - - 301,199 Amortization of deferred financing costs (73,789 ) - - (73,789 ) Total other income (expense) (760,695 ) - - (760,695 ) LOSS BEFORE (BENEFIT) PROVISION FOR INCOME TAXES (2,437,876 ) (2,853,749 ) - (5,291,625 ) (Benefit) / provision for income taxes (44,938 ) - - (44,938 ) NET LOSS (2,392,938 ) (2,853,749 ) - (5,246,687 ) OTHER COMPREHENSIVE (LOSS) INCOME Foreign currency translation gain (loss) (2,273,740 ) - - (2,273,740 ) COMPREHENSIVE LOSS $ (4,666,678 ) $ (2,853,749 ) $ - $ (7,520,427 ) Net loss per common share and equivalents - basic and diluted $ (0.02 ) $ - $ - $ (0.04 ) Weighted average shares outstanding during the period - basic and diluted 149,468,618 - - 149,468,618 For the nine month period ended September 30, 2014 Restatement adjustments Re- classifications Restated (unaudited) (unaudited) (unaudited) (unaudited) REVENUES $ 20,690,609 $ (5,788,665 ) $ - $ 14,901,944 COST AND OPERATING EXPENSES Cost of service (exclusive of depreciation and amortization shown separately below) 2,660,816 - 2,388,897 5,049,713 Product development - - 5,699,451 5,699,451 Sales and marketing - - 1,784,161 1,784,161 General and administrative 19,636,038 - (9,872,509 ) 9,763,529 Depreciation and amortization 5,836,857 - - 5,836,857 Total cost and operating expenses 28,133,711 - - 28,133,711 LOSS FROM OPERATIONS (7,443,102 ) (5,788,665 ) - (13,231,767 ) OTHER INCOME (EXPENSE) Interest income 93,840 - - 93,840 Interest expense (895,453 ) - - (895,453 ) Interest expense related to debt discount and conversion feature (3,197,749 ) - - (3,197,749 ) Changes in fair value of warrant liabilities (274,635 ) - - (274,635 ) Gain / (Loss) on Extinguishment of Debt 626,108 - - 626,108 Other income & (expense), net 372,597 - - 372,597 Amortization of deferred financing costs (323,246 ) - - (323,246 ) Total other income (expense) (3,598,538 ) - - (3,598,538 ) LOSS BEFORE (BENEFIT) PROVISION FOR INCOME TAXES (11,041,640 ) (5,788,665 ) - (16,830,305 ) (Benefit) / provision for income taxes 88,290 - - 88,290 NET LOSS (11,129,930 ) (5,788,665 ) - (16,918,595 ) OTHER COMPREHENSIVE (LOSS) INCOME Foreign currency translation gain (loss) (2,424,192 ) - - (2,424,192 ) COMPREHENSIVE LOSS $ (13,554,122 ) $ (5,788,665 ) $ - $ (19,342,787 ) Net loss per common share and equivalents - basic and diluted $ (0.08 ) $ - $ - $ (0.12 ) Weighted average shares outstanding during the period - basic and diluted 145,929,455 - - 145,929,455 The correction of the errors described above did not impact our total cash flows from operating activities, investing activities or financing activities within our consolidated statements of cash flows. Nine month period ended September 30, 2014 Restatement Restated Unaudited Unaudited CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (11,129,930 ) $ (5,788,665 ) $ (16,918,595 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 5,836,857 - 5,836,857 Provision for doubtful accounts (10,661 ) - (10,661 ) Stock based compensation 3,536,680 - 3,536,680 Change in fair value of warrant liability 274,635 - 274,635 Amortization of deferred financing costs 323,246 - 323,246 Interest expense relating to debt discount and conversion feature 3,197,749 - 3,197,749 Unrealized foreign currency translation gain (loss) (501,571 ) - (501,571 ) Extinguishment of Debt (626,108 ) - (626,108 ) Changes in operating assets and liabilities: - - Decrease (increase) in accounts receivable (1,366,947 ) 21,669 (1,345,278 ) Decrease (increase) in prepaid expenses, deposits and other assets (101,971 ) - (101,971 ) Increase (decrease) in accounts payable and customer deposits 362,685 - 362,685 Increase (decrease) in deferred revenue (11,931 ) 5,766,996 5,755,065 Increase (decrease) in accrued expenses and other payables 1,493,594 - 1,493,168 Increase (decrease) in non-cash accrued expenses related to extinguishment of Debt (426 ) - Net cash provided by operating activities 1,275,901 - 1,275,901 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (5,611,023 ) - (5,611,023 ) Loan to third party - - - Net cash used in investing activities (5,611,023 ) - (5,611,023 ) CASH FLOWS FROM FINANCING ACTIVITIES: Financing related fees (125,793 ) - (125,793 ) Exercise of warrants and options 4,286,576 - 4,286,576 Interest paid for property and equipment acquired under capital leases (57,079 ) - (57,079 ) Net cash provided by financing activities 4,103,704 - 4,103,704 EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS 155,753 - 155,753 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (75,665 ) - (75,665 ) CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 1,252,315 - 1,252,315 CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 1,176,650 $ - $ 1,176,650 *the Company reclassified the line items Accounts Receivable and Deferred Revenue compared to what was reported in the annual report 2014 on Form 10-K for the above quarter. The restatement for accounts receivable changed from ($ 2,468,434 21,669 8,257,099 5,766,996 426 426 |
Financial Condition (Details)
Financial Condition (Details) - USD ($) | Jul. 14, 2015 | Jun. 22, 2015 | Jun. 12, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Jul. 09, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Financial Condition [Abstract] | |||||||||||
Net losses | $ (4,156,337) | $ (5,246,687) | $ 3,240,408 | $ (16,918,595) | |||||||
Accumulated deficit | (247,388,888) | (245,685,974) | (247,388,888) | (245,685,974) | $ (250,629,296) | ||||||
Cash and cash equivalents | 858,911 | $ 1,176,650 | 858,911 | 1,176,650 | 1,904,160 | $ 1,252,315 | |||||
Change in accounts receivable | (5,299,888) | $ 1,345,278 | |||||||||
Concentration Risk [Line Items] | |||||||||||
Net proceeds from settlement | $ 12,600,000 | ||||||||||
Proceeds from agreement | 4,500,000 | ||||||||||
Amount available | 6,500,000 | 6,500,000 | |||||||||
Net proceeds | $ 4,200,000 | ||||||||||
Minimum [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Estimated capital required | 5,000,000 | 5,000,000 | |||||||||
Maximum [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Estimated capital required | 7,000,000 | 7,000,000 | |||||||||
Term Loan 2014 [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Repayments | $ 10,100,000 | ||||||||||
Debt instrument, principal amount | $ 12,000,000 | $ 6,500,000 | 6,500,000 | $ 2,072,667 | $ 12,000,000 | ||||||
Amount of facility | $ 6,500,000 | ||||||||||
Customer One [Member] | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Loss of monthly billings | 3,900,000 | ||||||||||
Estimated decrease in annual expenses | $ 5,000,000 |
Supplemental Financial Inform25
Supplemental Financial Information (Prepaid Expenses And Other Current Assets) (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Supplemental Financial Information [Abstract] | |||
Recurring prepaid expenses | $ 201,481 | $ 455,529 | |
Non recurring prepaid expenses | 383,425 | 731,725 | |
Taxes | 327,349 | 359,087 | |
VAT | 757,604 | 742,773 | |
Inventory SIM cards | 7,154 | 189,567 | |
Prepaid expenses and other current assets | $ 1,677,013 | $ 2,478,681 | $ 2,319,310 |
Supplemental Financial Inform26
Supplemental Financial Information (Other Assets) (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Supplemental Financial Information [Abstract] | |||
Long term deposits | $ 434,928 | $ 653,002 | |
Deferred financing costs | 388,041 | 682,878 | |
Due from third parties | 273,805 | 264,455 | |
Other Assets | $ 1,096,774 | $ 1,600,335 | $ 1,093,977 |
Supplemental Financial Inform27
Supplemental Financial Information (Property And Equipment) (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Property, Plant and Equipment [Line Items] | |||
Acc. Depreciation Property & Equipment | $ (16,835,684) | $ (13,548,662) | |
Property and equipment | 17,445,139 | 19,319,202 | $ 19,603,707 |
Furniture and Fixtures [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 325,978 | 281,214 | |
Computer, communications and network equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 24,974,767 | 23,904,494 | |
Software [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 5,914,174 | 4,556,364 | |
Automobiles [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 74,796 | 80,860 | |
Construction in Progress [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 2,991,108 | $ 4,044,932 |
Supplemental Financial Inform28
Supplemental Financial Information (Intangible Assets) (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Finite-Lived Intangible Assets [Line Items] | |||
Total intangible assets, net | $ 3,275,756 | $ 5,076,208 | $ 6,000,884 |
ValidSoft IP and Technology [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets, Gross | 13,268,840 | 14,344,604 | |
Accumulated amortization | (10,510,111) | (9,973,063) | |
Customer Contracts, Licenses, Interconnect and Technology [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets, Gross | 1,875,499 | 1,870,523 | |
Accumulated amortization | $ (1,358,472) | $ (1,165,856) |
Supplemental Financial Inform29
Supplemental Financial Information (Goodwill) (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Goodwill [Line Items] | |||
Goodwill | $ 3,115,142 | $ 3,352,264 | $ 3,490,242 |
ValidSoft Ltd [Member] | |||
Goodwill [Line Items] | |||
Goodwill | 2,742,108 | 2,964,423 | |
Morodo Ltd. [Member] | |||
Goodwill [Line Items] | |||
Goodwill | 182,633 | 197,440 | |
Telnicity LLC [Member] | |||
Goodwill [Line Items] | |||
Goodwill | $ 190,401 | $ 190,401 |
Supplemental Financial Inform30
Supplemental Financial Information (Accrued Expenses And Other Payables) (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Supplemental Financial Information [Abstract] | |||
Accrued Selling, General and Administrative expenses | $ 1,602,931 | $ 1,863,020 | |
Accrued cost of service | 160,561 | 291,553 | |
Accrued taxes (including VAT) | 623,170 | 570,616 | |
Accrued interest payable | 126,719 | 1,184,418 | |
Other accrued expenses | 116,978 | 152,045 | |
Total accrued expenses and other payables | $ 2,630,359 | $ 4,061,652 | $ 5,804,999 |
Supplemental Financial Inform31
Supplemental Financial Information (2014 10% + libor 3rd Party Term Loan Agreement) (Details) - USD ($) $ / shares in Units, shares in Millions | Jul. 09, 2015 | Jun. 22, 2015 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Jun. 30, 2015 |
Debt Instrument [Line Items] | |||||||
Proceeds from agreement | $ 4,500,000 | ||||||
Principal payment on 2014 10% libor 3rd Party Loan | $ 5,500,000 | ||||||
30-Month-Term Warrant [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Share Price | $ 0.36 | ||||||
Exercise/ Conversion price(s) (range) | 0.38 | ||||||
Per share price, in excess of bid price | $ 0.02 | ||||||
Term of warrant | 30 months | ||||||
Number of shares covered by warrants | 2 | ||||||
18-Month-Term Warrant [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Share Price | $ 0.36 | ||||||
Exercise/ Conversion price(s) (range) | 0.38 | ||||||
Per share price, in excess of bid price | $ 0.02 | ||||||
Term of warrant | 18 months | ||||||
Number of shares covered by warrants | 1 | ||||||
2014 10% Term Loan Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, principal amount | $ 12,000,000 | 6,500,000 | 6,500,000 | $ 12,000,000 | $ 2,072,667 | ||
Debt Discount | (660,467) | (660,467) | (798,894) | ||||
Long-term debt (Net of Debt Discount) | $ 5,839,533 | $ 5,839,533 | $ 11,201,106 | ||||
Reduction in principal | 4,427,333 | ||||||
Principal payment on 2014 10% libor 3rd Party Loan | 9,927,333 | ||||||
Prepayment of debt | 5,500,000 | ||||||
Repayments | $ 10,100,000 | ||||||
Repayments of debt | $ 5,700,000 | ||||||
Loan payable, interest rate spread | 11.00% | 10.00% | 10.00% | ||||
Potential decrease in rate | 0.50% | ||||||
Amount of facility | $ 6,500,000 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule of Financial Assets and Liabilities Measured at Fair Value on Rrecurring Basis) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2015 | Jun. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Derivative Liabilities | ||||||
Shares issued for warrant exercise | $ 1,692,087 | |||||
Change in fair value of warrants | $ 149,203 | $ (103,311) | $ 395,905 | $ (274,635) | ||
Fair Value, Measurements, Recurring [Member] | ||||||
Derivative Liabilities | ||||||
Derivative liabilities | $ 2,087,992 | |||||
Fair Value, Measurements, Recurring [Member] | Warrants [Member] | ||||||
Derivative Liabilities | ||||||
Derivative liabilities | $ 2,087,992 | |||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||||||
Derivative Liabilities | ||||||
Derivative liabilities | ||||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Warrants [Member] | ||||||
Derivative Liabilities | ||||||
Derivative liabilities | ||||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||||||
Derivative Liabilities | ||||||
Derivative liabilities | ||||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Warrants [Member] | ||||||
Derivative Liabilities | ||||||
Derivative liabilities | ||||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||||||
Derivative Liabilities | ||||||
Derivative liabilities | $ 2,087,992 | |||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Warrants [Member] | ||||||
Derivative Liabilities | ||||||
Derivative liabilities | $ 2,087,992 |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) - $ / shares | 9 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | |
Common Stock: | |||
Common stock, shares authorized | 250,000,000 | 250,000,000 | 250,000,000 |
Common stock, shares issued | 160,242,771 | 154,671,258 | 151,312,189 |
Common stock, shares outstanding | 160,242,771 | 154,671,258 | 151,312,189 |
Common stock, increase in shares issued during the period | 5,571,513 | ||
Shares issued in connection with warrant exercises | 4,029,738 | ||
Shares issued to the Company's executive officers and non-executive directors | 1,533,107 | ||
Shares issued for employee stock option exercises, shares | 8,668 | ||
Preferred Stock: | |||
Preferred stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 |
Preferred stock, par or stated value per share | $ 0.00001 | $ 0.00001 | $ 0.00001 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Stockholders' Equity (Summary o
Stockholders' Equity (Summary of Warrants) (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Class of Warrant or Right [Line Items] | ||
Warrants outstanding | 15,447,864 | 29,628,865 |
Weighted Average [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise price (in dollars per share) | $ 1.06 | |
Warrants - Fundraising [Member] | ||
Class of Warrant or Right [Line Items] | ||
Warrants outstanding | 15,429,205 | 29,610,206 |
Warrants - Fundraising [Member] | Minimum [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise price (in dollars per share) | $ 0.380 | |
Expiring | Dec. 31, 2015 | |
Warrants - Fundraising [Member] | Maximum [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise price (in dollars per share) | $ 1.50 | |
Expiring | Dec. 31, 2019 | |
Warrants - Other [Member] | ||
Class of Warrant or Right [Line Items] | ||
Exercise price (in dollars per share) | $ 2.21 | |
Expiring | Dec. 31, 2016 | |
Warrants outstanding | 18,659 | 18,659 |
2006 Non-Qualified Stock and 35
2006 Non-Qualified Stock and Option Compensation Plan and Amended and Restated 2008 Long Term Incentive Compensation Plan (Amended and Restated 2008 Long-Term Incentive Compensation Plan) (Details) | 9 Months Ended |
Sep. 30, 2015shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options exercised | (8,668) |
Employee Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total Authorized under the plan | 56,000,000 |
Shares issued in prior years | (1,951,031) |
Shares issued in 2015 | (1,533,107) |
Options exercised | (2,382,110) |
Outstanding options | (40,179,525) |
Available for grant | 9,954,227 |
Directors And Officers [Member] | Employee Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares issued in 2015 | (1,533,107) |
2006 Non-Qualified Stock and 36
2006 Non-Qualified Stock and Option Compensation Plan and Amended and Restated 2008 Long Term Incentive Compensation Plan (Stock Option Activity) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Number of Options | ||
Exercised (with delivery of shares) | (8,668) | |
2008 Long-Term Incentive Plan [Member] | ||
Number of Options | ||
Beginning Balance | 40,056,080 | |
Granted | 11,055,184 | |
Exercised (with delivery of shares) | (8,668) | |
Forfeitures (Pre-vesting) | (6,833,912) | |
Expirations (Post-vesting) | (4,089,159) | |
Ending Balance | 40,179,525 | |
Weighted Average Exercise Price | ||
Beginning Balance | $ 1.32 | |
Granted | 0.60 | |
Exercised (with delivery of shares) | 0.68 | |
Forfeitures (Pre-vesting) | 1.08 | |
Expirations (Post-vesting) | 1.70 | |
Ending Balance | $ 1.22 | |
Initial Fair Market Value (Outstanding Options) | ||
Unrecognized share-based compensation expense | $ 5,056,060 | $ 10,939,973 |
Income taxes (Details)
Income taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income taxes [Abstract] | ||||
(Benefit) Provision for income taxes | $ 6,964 | $ (44,938) | $ 49,922 | $ 88,290 |
Significant Customer and Geog38
Significant Customer and Geographical Information (Sales to Significant Customers) (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenue Concentration [Member] | Customer Concentration Risk [Member] | Two largest customers [Member] | ||||
Concentration Risk [Line Items] | ||||
Percentage of revenues | 87.90% | 94.30% | 82.60% | 82.50% |
Significant Customer and Geog39
Significant Customer and Geographical Information (Geographical Distribution of Revenue) (Details) - Revenue Concentration [Member] - Geographic Concentration Risk [Member] | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Concentration Risk [Line Items] | ||||
Percentage of revenues | 100.00% | 100.00% | 100.00% | 100.00% |
Europe [Member] | ||||
Concentration Risk [Line Items] | ||||
Percentage of revenues | 95.70% | 72.70% | 35.30% | 68.90% |
All Other (Non-European) Countries [Member] | ||||
Concentration Risk [Line Items] | ||||
Percentage of revenues | 4.30% | 27.30% | 64.70% | 31.10% |
Per Common Share Information (D
Per Common Share Information (Details) | 9 Months Ended |
Sep. 30, 2015shares | |
Per Common Share Information [Abstract] | |
Weighted Average Number Diluted Shares Outstanding Adjustment | 1,187,333 |
Restatement (CONSOLIDATED BALAN
Restatement (CONSOLIDATED BALANCE SHEET) (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 |
CURRENT ASSETS | ||||
Cash and cash equivalents | $ 858,911 | $ 1,904,160 | $ 1,176,650 | $ 1,252,315 |
Restricted cash | 383,283 | 312,935 | 169,536 | |
Accounts receivable, net of allowance for doubtful accounts | 2,812,162 | 8,877,213 | 5,847,424 | |
Prepaid expenses and other current assets | 1,677,013 | 2,478,681 | 2,319,310 | |
Total current assets | 5,731,369 | 15,572,989 | 9,512,920 | |
NON-CURRENT ASSETS | ||||
OTHER ASSETS | 1,096,774 | 1,600,335 | 1,093,977 | |
PROPERTY AND EQUIPMENT, NET | 17,445,139 | 19,319,202 | 19,603,707 | |
INTANGIBLE ASSETS, NET | 3,275,756 | 5,076,208 | 6,000,884 | |
GOODWILL | 3,115,142 | 3,352,264 | 3,490,242 | |
TOTAL ASSETS | $ 30,664,180 | 44,920,998 | 39,701,730 | |
CURRENT LIABILITIES | ||||
Overdraft | 433,366 | 425,144 | ||
Accounts payable and customer deposits | $ 1,923,945 | 1,856,014 | 2,063,304 | |
Obligations under capital leases (current portion) | 493,858 | 1,831,050 | 1,828,083 | |
Deferred revenue | 1,971,150 | 8,813,385 | 595,712 | |
Accrued expenses and other payables | $ 2,630,359 | 4,061,652 | 5,804,999 | |
Loans payable | 962,269 | 961,550 | ||
Total current liabilities | $ 12,839,845 | 29,158,842 | 11,678,792 | |
LONG TERM LIABILITIES | ||||
2013 10% 3rd Party Loan -net of Debt Discount of $410,853 at September 30, 2014) | 4,663,227 | |||
Warrant liabilities | 2,087,992 | 2,248,169 | ||
Non-current portion of obligation under capital leases | 37,340 | 272,460 | 261,912 | |
Non-current portion of deferred revenue | 1,111,764 | 2,434,257 | 7,788,843 | |
Total long term liabilities | 1,432,622 | 5,149,589 | 14,962,151 | |
Total liabilities | $ 14,291,467 | $ 34,308,431 | $ 26,640,943 | |
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 | $ 268,147,697 | $ 264,359,674 | $ 260,616,570 | |
Accumulated other comprehensive income (loss) | (4,395,196) | (3,127,132) | (2,003,871) | |
Accumulated deficit | (247,388,888) | (250,629,296) | (245,685,974) | |
Elephant Talk Communications, Corp. stockholders' equity | 16,363,613 | 10,603,246 | 12,926,725 | |
NON-CONTROLLING INTEREST | 9,100 | 9,321 | 134,062 | |
Total stockholders' equity | 16,372,713 | 10,612,567 | 13,060,787 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 30,664,180 | $ 44,920,998 | 39,701,730 | |
As Previously Reported [Member] | ||||
CURRENT ASSETS | ||||
Cash and cash equivalents | 1,176,650 | $ 1,252,315 | ||
Restricted cash | 169,536 | |||
Accounts receivable, net of allowance for doubtful accounts | 6,754,447 | |||
Prepaid expenses and other current assets | 2,319,310 | |||
Total current assets | 10,419,943 | |||
NON-CURRENT ASSETS | ||||
OTHER ASSETS | 1,093,977 | |||
PROPERTY AND EQUIPMENT, NET | 19,603,707 | |||
INTANGIBLE ASSETS, NET | 6,000,884 | |||
GOODWILL | 3,490,242 | |||
TOTAL ASSETS | 40,608,753 | |||
CURRENT LIABILITIES | ||||
Overdraft | 425,144 | |||
Accounts payable and customer deposits | 2,063,304 | |||
Obligations under capital leases (current portion) | 1,828,083 | |||
Deferred revenue | 127,456 | |||
Accrued expenses and other payables | 5,804,999 | |||
Loans payable | 961,550 | |||
Total current liabilities | 11,210,536 | |||
LONG TERM LIABILITIES | ||||
2013 10% 3rd Party Loan -net of Debt Discount of $410,853 at September 30, 2014) | 4,663,227 | |||
Warrant liabilities | 2,248,169 | |||
Non-current portion of obligation under capital leases | $ 261,912 | |||
Non-current portion of deferred revenue | ||||
Total long term liabilities | $ 7,173,308 | |||
Total liabilities | $ 18,383,844 | |||
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 | $ 260,616,570 | |||
Accumulated other comprehensive income (loss) | (2,003,871) | |||
Accumulated deficit | (236,521,852) | |||
Elephant Talk Communications, Corp. stockholders' equity | 22,090,847 | |||
NON-CONTROLLING INTEREST | 134,062 | |||
Total stockholders' equity | 22,224,909 | |||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 40,608,753 | |||
Restatement [Member] | ||||
CURRENT ASSETS | ||||
Cash and cash equivalents | ||||
Restricted cash | ||||
Accounts receivable, net of allowance for doubtful accounts | $ (907,023) | |||
Prepaid expenses and other current assets | ||||
Total current assets | $ (907,023) | |||
NON-CURRENT ASSETS | ||||
OTHER ASSETS | ||||
PROPERTY AND EQUIPMENT, NET | ||||
INTANGIBLE ASSETS, NET | ||||
GOODWILL | ||||
TOTAL ASSETS | $ (907,023) | |||
CURRENT LIABILITIES | ||||
Overdraft | ||||
Accounts payable and customer deposits | ||||
Obligations under capital leases (current portion) | ||||
Deferred revenue | $ 468,256 | |||
Accrued expenses and other payables | ||||
Loans payable | ||||
Total current liabilities | $ 468,256 | |||
LONG TERM LIABILITIES | ||||
2013 10% 3rd Party Loan -net of Debt Discount of $410,853 at September 30, 2014) | ||||
Warrant liabilities | ||||
Non-current portion of obligation under capital leases | ||||
Non-current portion of deferred revenue | $ 7,788,843 | |||
Total long term liabilities | 7,788,843 | |||
Total liabilities | $ 8,257,099 | |||
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 | ||||
Accumulated other comprehensive income (loss) | ||||
Accumulated deficit | $ (9,164,122) | |||
Elephant Talk Communications, Corp. stockholders' equity | $ (9,164,122) | |||
NON-CONTROLLING INTEREST | ||||
Total stockholders' equity | $ (9,164,122) | |||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ (907,023) |
Restatement (CONSOLIDATED BAL42
Restatement (CONSOLIDATED BALANCE SHEET) (Parenthetical) (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Accounts receivable, allowance for doubtful accounts | $ 0 | ||
Preferred stock, par or stated value per share | $ 0.00001 | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Common stock, par value per share | $ 0.00001 | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 | 250,000,000 |
Common stock, shares issued | 160,242,771 | 154,671,258 | 151,312,189 |
Common stock, shares outstanding | 160,242,771 | 154,671,258 | 151,312,189 |
Convertible Note Two [Member] | |||
Discount on debt | $ 410,853 |
Restatement (CONSOLIDATED STATE
Restatement (CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Jun. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) [Abstract] | |||||
REVENUES | $ 3,485,624 | $ 4,445,239 | $ 27,743,023 | $ 14,901,944 | |
COST AND OPERATING EXPENSES | |||||
Cost of service (excluding depreciation and amortization) | 1,361,347 | 1,565,054 | 4,671,107 | 5,049,713 | |
Product development | 1,030,143 | 1,707,102 | 3,556,947 | 5,699,451 | |
Sales and marketing | 640,680 | 555,519 | 1,639,800 | 1,784,161 | |
General and administrative | 2,485,671 | 3,248,243 | 8,111,048 | 9,763,529 | |
Depreciation and amortization | 1,781,478 | 1,900,251 | 5,272,659 | 5,836,857 | |
Total cost and operating expenses | 7,299,319 | 8,976,169 | 24,189,396 | 28,133,711 | |
INCOME / (LOSS) FROM OPERATIONS | (3,813,695) | (4,530,930) | 3,553,627 | (13,231,767) | |
OTHER INCOME (EXPENSE) | |||||
Interest income | 28,054 | 36,684 | 80,913 | 93,840 | |
Interest expense | (280,182) | (260,295) | (1,203,348) | (895,453) | |
Interest expense related to debt discount and conversion feature | $ (125,086) | (1,287,717) | (592,737) | (3,197,749) | |
Changes in fair value of warrant liabilities | $ 149,203 | (103,311) | 395,905 | (274,635) | |
Gain / (Loss) on Extinguishment of Debt | 626,534 | 2,475,799 | 626,108 | ||
Other income & (expense), net | $ 82,760 | 301,199 | (953,258) | 372,597 | |
Amortization of deferred financing costs | (41,224) | (73,789) | (466,571) | (323,246) | |
Total other income (expense) | (335,678) | (760,695) | (263,297) | (3,598,538) | |
INCOME / (LOSS) BEFORE (BENEFIT) PROVISION FOR INCOME TAXES | (4,149,373) | (5,291,625) | 3,290,330 | (16,830,305) | |
(Benefit) / provision for income taxes | 6,964 | (44,938) | 49,922 | 88,290 | |
NET INCOME / (LOSS) | (4,156,337) | (5,246,687) | 3,240,408 | (16,918,595) | |
OTHER COMPREHENSIVE (LOSS) INCOME | |||||
Foreign currency translation (loss) | (64,444) | (2,273,740) | (1,268,064) | (2,424,192) | |
COMPREHENSIVE INCOME / (LOSS) | $ (4,220,781) | $ (7,520,427) | $ 1,972,344 | $ (19,342,787) | |
Net loss per common share and equivalents - basic and diluted | $ (0.04) | $ (0.12) | |||
Weighted average shares outstanding during the period - basic and diluted | 149,468,618 | 145,929,455 | |||
As Previously Reported [Member] | |||||
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) [Abstract] | |||||
REVENUES | $ 7,298,988 | $ 20,690,609 | |||
COST AND OPERATING EXPENSES | |||||
Cost of service (excluding depreciation and amortization) | $ 848,771 | $ 2,660,816 | |||
Product development | |||||
Sales and marketing | |||||
General and administrative | $ 6,227,147 | $ 19,636,038 | |||
Depreciation and amortization | 1,900,251 | 5,836,857 | |||
Total cost and operating expenses | 8,976,169 | 28,133,711 | |||
INCOME / (LOSS) FROM OPERATIONS | (1,677,181) | (7,443,102) | |||
OTHER INCOME (EXPENSE) | |||||
Interest income | 36,684 | 93,840 | |||
Interest expense | (260,295) | (895,453) | |||
Interest expense related to debt discount and conversion feature | (1,287,717) | (3,197,749) | |||
Changes in fair value of warrant liabilities | (103,311) | (274,635) | |||
Gain / (Loss) on Extinguishment of Debt | 626,534 | 626,108 | |||
Other income & (expense), net | 301,199 | 372,597 | |||
Amortization of deferred financing costs | (73,789) | (323,246) | |||
Total other income (expense) | (760,695) | (3,598,538) | |||
INCOME / (LOSS) BEFORE (BENEFIT) PROVISION FOR INCOME TAXES | (2,437,876) | (11,041,640) | |||
(Benefit) / provision for income taxes | (44,938) | 88,290 | |||
NET INCOME / (LOSS) | (2,392,938) | (11,129,930) | |||
OTHER COMPREHENSIVE (LOSS) INCOME | |||||
Foreign currency translation (loss) | (2,273,740) | (2,424,192) | |||
COMPREHENSIVE INCOME / (LOSS) | $ (4,666,678) | $ (13,554,122) | |||
Net loss per common share and equivalents - basic and diluted | $ (0.02) | $ (0.08) | |||
Weighted average shares outstanding during the period - basic and diluted | 149,468,618 | 145,929,455 | |||
Restatement adjustments/Re-classifications | |||||
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) [Abstract] | |||||
REVENUES | $ (2,853,749) | $ (5,788,665) | |||
COST AND OPERATING EXPENSES | |||||
Cost of service (excluding depreciation and amortization) | 716,283 | 2,388,897 | |||
Product development | 1,707,102 | 5,699,451 | |||
Sales and marketing | 555,519 | 1,784,161 | |||
General and administrative | $ (2,978,904) | $ (9,872,509) | |||
Depreciation and amortization | |||||
Total cost and operating expenses | |||||
INCOME / (LOSS) FROM OPERATIONS | $ (2,853,749) | $ (5,788,665) | |||
OTHER INCOME (EXPENSE) | |||||
Interest income | |||||
Interest expense | |||||
Interest expense related to debt discount and conversion feature | |||||
Changes in fair value of warrant liabilities | |||||
Gain / (Loss) on Extinguishment of Debt | |||||
Other income & (expense), net | |||||
Amortization of deferred financing costs | |||||
Total other income (expense) | |||||
INCOME / (LOSS) BEFORE (BENEFIT) PROVISION FOR INCOME TAXES | $ (2,853,749) | $ (5,788,665) | |||
(Benefit) / provision for income taxes | |||||
NET INCOME / (LOSS) | $ (2,853,749) | $ (5,788,665) | |||
OTHER COMPREHENSIVE (LOSS) INCOME | |||||
Foreign currency translation (loss) | |||||
COMPREHENSIVE INCOME / (LOSS) | $ (2,853,749) | $ (5,788,665) | |||
Net loss per common share and equivalents - basic and diluted | |||||
Weighted average shares outstanding during the period - basic and diluted |
Restatement (CONSOLIDATED STA44
Restatement (CONSOLIDATED STATEMENTS OF CASH FLOWS) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Jun. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net Loss | $ 3,240,408 | $ (16,918,595) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||
Depreciation and amortization | $ 1,781,478 | $ 1,900,251 | $ 5,272,659 | 5,836,857 | |
Provision for doubtful accounts | (10,661) | ||||
Stock-based compensation | $ 2,521,424 | 3,536,680 | |||
Change in fair value of warrant liability | $ (149,203) | 103,311 | (395,905) | 274,635 | |
Amortization of deferred financing costs | 466,571 | 323,246 | |||
Interest expense relating to debt discount and conversion feature | $ 125,086 | 1,287,717 | 592,737 | 3,197,749 | |
Unrealized foreign currency translation gain/(loss) | 953,258 | (501,571) | |||
Extinguishment of Debt | (626,534) | (2,475,799) | (626,108) | ||
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities: | |||||
Decrease (increase) in accounts receivable | 5,299,888 | (1,345,278) | |||
Decrease (increase) in prepaid expenses, deposits and other assets | 987,176 | (101,971) | |||
Increase (decrease) in accounts payable, proceeds from related parties and customer deposits | 1,820,596 | 362,685 | |||
Increase (decrease) in deferred revenue | (9,007,259) | 5,755,065 | |||
Increase (decrease) in accrued expenses and other payables | (1,188,561) | 1,493,168 | |||
Net cash provided by operating activities | 9,025,028 | 1,275,901 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property and equipment | (6,725,768) | $ (5,611,023) | |||
Loan to third party | |||||
Net cash used in investing activities | (6,725,768) | $ (5,611,023) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Financing related fees | (150,668) | (125,793) | |||
Exercise of warrants and options | $ 5,861 | 4,286,576 | |||
Interest paid for property and equipment acquired under capital leases | (57,079) | ||||
Net cash (used in) provided by financing activities | $ (3,644,807) | 4,103,704 | |||
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 300,298 | 155,753 | |||
NET (DECREASE) IN CASH AND CASH EQUIVALENTS | (1,045,249) | (75,665) | |||
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD | 1,904,160 | 1,252,315 | |||
CASH AND CASH EQUIVALENTS, END OF THE PERIOD | $ 858,911 | 1,176,650 | $ 858,911 | 1,176,650 | |
As Previously Reported [Member] | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net Loss | (11,129,930) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||
Depreciation and amortization | 1,900,251 | 5,836,857 | |||
Provision for doubtful accounts | (10,661) | ||||
Stock-based compensation | 3,536,680 | ||||
Change in fair value of warrant liability | 103,311 | 274,635 | |||
Amortization of deferred financing costs | 323,246 | ||||
Interest expense relating to debt discount and conversion feature | 1,287,717 | 3,197,749 | |||
Unrealized foreign currency translation gain/(loss) | (501,571) | ||||
Extinguishment of Debt | (626,534) | (626,108) | |||
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities: | |||||
Decrease (increase) in accounts receivable | (1,366,947) | ||||
Decrease (increase) in prepaid expenses, deposits and other assets | (101,971) | ||||
Increase (decrease) in accounts payable, proceeds from related parties and customer deposits | 362,685 | ||||
Increase (decrease) in deferred revenue | (11,931) | ||||
Increase (decrease) in accrued expenses and other payables | 1,493,594 | ||||
Increase (decrease) in non-cash accrued expenses related to extinguishment of Debt | (426) | ||||
Net cash provided by operating activities | 1,275,901 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property and equipment | $ (5,611,023) | ||||
Loan to third party | |||||
Net cash used in investing activities | $ (5,611,023) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Financing related fees | (125,793) | ||||
Exercise of warrants and options | 4,286,576 | ||||
Interest paid for property and equipment acquired under capital leases | (57,079) | ||||
Net cash (used in) provided by financing activities | 4,103,704 | ||||
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 155,753 | ||||
NET (DECREASE) IN CASH AND CASH EQUIVALENTS | (75,665) | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD | 1,252,315 | ||||
CASH AND CASH EQUIVALENTS, END OF THE PERIOD | $ 1,176,650 | 1,176,650 | |||
Restatement [Member] | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net Loss | $ (5,788,665) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||
Depreciation and amortization | |||||
Provision for doubtful accounts | |||||
Stock-based compensation | |||||
Change in fair value of warrant liability | |||||
Amortization of deferred financing costs | |||||
Interest expense relating to debt discount and conversion feature | |||||
Unrealized foreign currency translation gain/(loss) | |||||
Extinguishment of Debt | |||||
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities: | |||||
Decrease (increase) in accounts receivable | $ 21,669 | ||||
Decrease (increase) in prepaid expenses, deposits and other assets | |||||
Increase (decrease) in accounts payable, proceeds from related parties and customer deposits | |||||
Increase (decrease) in deferred revenue | $ 5,766,996 | ||||
Increase (decrease) in accrued expenses and other payables | |||||
Increase (decrease) in non-cash accrued expenses related to extinguishment of Debt | |||||
Net cash provided by operating activities | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of property and equipment | |||||
Loan to third party | |||||
Net cash used in investing activities | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Financing related fees | |||||
Exercise of warrants and options | |||||
Interest paid for property and equipment acquired under capital leases | |||||
Net cash (used in) provided by financing activities | |||||
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | |||||
NET (DECREASE) IN CASH AND CASH EQUIVALENTS | |||||
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD | |||||
CASH AND CASH EQUIVALENTS, END OF THE PERIOD | |||||
As Reported In Annual Report [Member] | |||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||
Extinguishment of Debt | $ 426 | ||||
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities: | |||||
Decrease (increase) in accounts receivable | (2,468,434) | ||||
Increase (decrease) in deferred revenue | $ 8,257,099 |