Elephant Talk Communications Corp. (NYSE MKT: ETAK) said it had total revenue of approximately USD20.4 million for the year ended December 31, 2014 as compared to a restated USD19.5 million for the year ended December 31, 2013.
At the end of calendar 2014, the company had completed its multi-year transition away from its legacy landline business to the current mobile and security services business. As a result and following an exchange with the Audit and Finance Committee of the board of directors and management on revenue recognition, the company started a comprehensive review of the revenue recognition policies applicable to its mobile and security business and after discussion and consultation with its auditors and advisors, determined that it was necessary to restate previously reported financial results to comply with US GAAP accounting rules used by similar service providers.
In accordance with US GAAP, certain revenue that had originally been recognized in 2013 and part of 2014 is now being recognized over an extended timeframe. The amount of revenue earned or to be earned over the entire period of recognition essentially remains unchanged from the amount historically recognized. There was neither a 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 as revenue over a number of years.