U. S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                   FORM 10-QSB


 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
                              EXCHANGE ACT OF 1934

                 For the quarterly period ended: March 31, 2004

 [ ] QUARTERLY REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE SECURITIES AND
                              EXCHANGE ACT OF 1934

        For the transition period from ______________ to _______________

                        Commission File Number: 000-30061


                       ELEPHANT TALK COMMUNICATIONS, INC.
        (Exact name of small business issuer as specified in its charter)


                                   California
         (State or other jurisdiction of incorporation or organization)


                                   95-4557538
                        (IRS Employer Identification No.)

          438 East Katella Avenue, Suite 217, Orange, California 92867
                    (Address of principal executive offices)

                                 (714) 288-1570
                           (Issuer's telephone number)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days: Yes [ X ] No [ ].

As of May 12, 2004, Elephant Talk Communications,  Inc. had 46,879,220 shares of
Common Stock Outstanding.

Transitional Small Business Disclosure Format (check one):

                       Yes [  ]                No [ X ]










                                       1
<PAGE>
               ELEPHANT TALK COMMUNICATIONS, INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS

                              Report on Form 10-QSB
                                For quarter ended
                                 March 31, 2004
                                                                          Page
                                                                          ----
PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheet at March 31, 2004 (Unaudited)             3

        Consolidated Statements of Operations for the Three Months
        ended March 31, 2004 and 2003 (Unaudited)                            4

        Consolidated Statements of Cash Flows for the Three Months
        ended March 31, 2004 and 2003 (Unaudited)                            5


        Notes to the Consolidated Financial Statements (Unaudited)           6

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                                 11

Item 3. Controls and Procedures                                             14


PART II OTHER INFORMATION

Item 1. Legal Proceedings                                                   16

Item 2. Changes in Securities                                               16

Item 3. Defaults upon Senior Securities                                     16

Item 4. Submission of Matters to Vote of Security Holders                   16

Item 5. Other Information                                                   16

Item 6. Exhibits and Reports on Form 8-K                                    16

Signatures and Certifications                                               17

Exhibit 99.1 Certification pursuant to Section 906 of the
             Sarbanes-Oxley Act of 2002                                     22









                                       2
<PAGE>
                       ELEPHANT TALK COMMUNICATIONS, INC.
                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2004
                                   (UNAUDITED)

                                     ASSETS

CURRENT ASSETS
  Cash and cash equivalents                                     $   101,274
  Accounts receivable, net                                          184,027
  Prepaid expenses and other current assets                          63,124
                                                                -----------
         Total Current Assets                                       348,425
                                                                -----------

PROPERTY AND EQUIPMENT - NET                                        137,216
                                                                -----------

TOTAL ASSETS                                                    $   485,641
                                                                ===========

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
  Overdraft                                                     $   209,348
  Accounts payable and customer deposits                            423,646
  Deferred revenue                                                   80,631
  Accrued expenses and other payable                                 69,857
  Capital lease liability - current                                  14,018
  Due to related parties                                            105,358
                                                                -----------
        Total Current Liabilities                                   902,858
                                                                -----------
LONG-TERM LIABILITIES
  Note payable                                                      875,933
                                                                -----------
TOTAL LIABILITIES                                                 1,778,791
                                                                -----------
COMMITMENT AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
Preferred stock Class B, no par value, 5,000,000
  shares authorized, none issued and outstanding                          -
Common stock, no par value, 250,000,000 shares authorized,
  39,359,220 issued and outstanding                               7,942,136
Accumulated comprehensive loss                                       (2,342)
Accumulated deficit                                              (9,232,944)
                                                                -----------
        Total Stockholders' Deficiency                           (1,293,150)
                                                                -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                  $   485,641
                                                                ===========


           See accompanying notes to consolidated financial statements

                                       3
<PAGE>
                       ELEPHANT TALK COMMUNICATIONS, INC.
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
               FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
                                   (UNAUDITED)
                                                         2004          2003
                                                    ------------- -------------

REVENUES, NET                                       $    179,867  $    376,150

COST OF REVENUE                                          115,819       366,814
                                                    ------------  ------------
GROSS PROFIT                                              64,048         9,336
                                                    ------------  ------------
OPERATING EXPENSES
  Selling, general and administrative                    657,312       247,927
  Depreciation and amortization                           66,549        63,094
                                                    ------------  ------------
         Total Operating Expenses                        723,861       311,021
                                                    ------------  ------------
LOSS FROM OPERATIONS                                    (659,813)     (301,685)

OTHER INCOME (EXPENSE)
  Interest expense                                       (10,538)      (15,958)
  Equity in loss of unconsolidated affiliate                   -       (18,226)
  Loss on settlement with Hartcourt                            -      (270,613)
  Gain on settlement of vendor payables                  227,655             -
                                                    ------------  ------------
         Total Other Income (Expense)                    217,117      (304,797)
                                                    ------------  ------------
LOSS BEFORE INCOME TAXES                                (442,696)     (606,482)
                                                    ------------  ------------

Income taxes                                                 800           800
                                                    ------------  ------------
NET LOSS                                            $   (443,496) $   (607,282)
                                                    ------------  ------------
OTHER COMPREHENSIVE INCOME (LOSS)
  Foreign currency translation gain (loss)                  (811)           49
                                                    ------------  ------------
                                                            (811)           49
                                                    ------------  ------------
COMPREHENSIVE LOSS                                  $   (444,307) $   (607,233)

                                                    ============  ============
Net loss per common share and equivalents -
  basic and diluted                                 $      (0.01) $      (0.02)
                                                    ============  ============
Weighted average shares outstanding during the
  period - basic and diluted                          52,423,907    24,544,311
                                                    ============  ============





           See accompanying notes to consolidated financial statements

                                       4
<PAGE>
                       ELEPHANT TALK COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
                                   (UNAUDITED)
                                                          2004         2003
                                                      ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                            $  (443,496) $  (607,282)
  Adjustments to reconcile net loss to net cash
       used in operating activities:
  Depreciation and amortization                            66,549       63,094
  Issuance of stock for compensation and services         110,500       50,000
  Issuance of stock for consulting services               128,640            -
  Provision for uncollectible amounts                     285,283            -
  Loss on settlement with Hartcourt                             -      270,613
  Equity in loss of unconsolidated affiliate                    -       18,226
  (Increase) Decrease in accounts receivable              (27,835)      89,504
  Decrease in prepaid expenses, deposits and other assets  45,788      109,606
  Increase (Decrease) in cash overdraft                  (339,857)       1,071
  Decrease in accounts payable and customer deposits      (57,498)     (44,630)
  Decrease in accrued expenses and other payable         (182,362)           -
  Increase (Decrease) in deferred revenue                 (80,908)      26,810
                                                      -----------  -----------
     Net cash used in operating activities               (495,196)     (22,988)
                                                      -----------  -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                            -       (7,928)
  Proceeds from sale of investment in
       unconsolidated affiliate                           100,953            -
                                                      -----------  -----------
     Net cash provided by (used in) investing activities  100,953       (7,928)
                                                      -----------  -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from related parties, net                      203,139       49,357
  Proceeds from sale of shares                            300,000            -
  Payments of notes payable                               (15,093)           -
  Payments on capital leases                                    -      (18,437)
                                                      -----------  -----------
     Net cash provided by financing activities            488,046       30,920
                                                      -----------  -----------

EFFECT OF EXCHANGE RATES ON CASH                             (811)           -
                                                      -----------  -----------
NET INCREASE IN CASH                                       92,992            4

CASH, BEGINNING OF THE YEAR                                 8,282        5,533
                                                      -----------  -----------
CASH, END OF THE YEAR                                 $   101,274  $     5,537
                                                      ===========  ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the year for interest                $    10,538  $    15,958

Cash paid during the year for income taxes            $       800  $       800

           See accompanying notes to consolidated financial statements

                                       5
<PAGE>

               ELEPHANT TALK COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                 MARCH 31, 2004

NOTE 1:  Organization and Nature of Operations
         -------------------------------------
         Elephant   Talk   Communications,   Inc.   (herein   referred   to   as
         "ElephantTalk",   "ETCI"  or  "Company"   formerly   known  as  Staruni
         Corporation),  incorporated  on  February 5, 1962 under the laws of the
         state  of   California   as  Altius   Corporation,   was   involved  in
         manufacturing of freeway signs. In March 1997,  Altius acquired Starnet
         Universe Internet,  Inc., a web developer and Internet Service Provider
         (ISP) and changed its name to Staruni Corporation.  On January 4, 2002,
         Staruni  Corporation  merged  with  Elephant  Talk  Limited,  a limited
         company incorporated in Hong Kong, and filed a Certificate of Amendment
         of Articles of  Incorporation  to amend the corporate  name to Elephant
         Talk Communications, Inc. This name change was done in conjunction with
         the merger and to emphasize  that the  Company's  new focus will be the
         business of Elephant Talk Limited.

         On January 4, 2002,  the Company  exchanged 90% of its common stock for
         100% of the common stock of Elephant Talk Limited by issuing 31,164,210
         shares of common stock to the  shareholders  of Elephant  Talk Limited.
         Elephant Talk Limited is a limited  liability  company  incorporated in
         Hong Kong (ETHK) engaged in long distance telephone  business.  Per the
         agreement,  the  Company  sold  its  Internet  Service  Provider  (ISP)
         business  to a related  party,  Vision  Aerospace,  Inc.  (Vision)  for
         1,000,000  shares of Vision  valued at $10,835.  Vision is owned by the
         former CEO and  President of the  Company.  The value of the shares was
         recorded  at the book value of the  assets  exchanged  to  acquire  the
         shares  of  Vision.  Pursuant  to  the  terms  of  the  share  exchange
         agreement,  control  of the  combined  companies  passed to the  former
         shareholders of Elephant Talk Limited.  This type of share exchange has
         been treated as a capital  transaction  accompanied by recapitalization
         of  Elephant  Talk  Limited  in  substance,   rather  than  a  business
         combination,  and is deemed a "reverse merger" for accounting purposes,
         since the former owners of Elephant Talk Limited controlled majority of
         the total common shares outstanding  immediately  following the merger.
         Recapitalization   accounting   resulted  in   consolidated   financial
         statements being issued under the name of Elephant Talk Communications,
         Inc., but were considered a continuation  of Elephant Talk Limited.  No
         pro  forma  financial  statements  are being  presented  as ETCI has no
         assets  other  than the shares of the  related  third  party  discussed
         above.

NOTE 2:  Basis of Presentation
         ---------------------
         The accompanying  unaudited consolidated financial statements have been
         prepared in accordance with generally  accepted  accounting  principles
         for interim  financial  information  and with the  instructions to Form
         10-QSB.  Accordingly,  they do not include all of the  information  and
         footnotes  required by generally  accepted  accounting  principles  for
         complete  financial  statements  and  related  notes  included  in  the
         Company's 2003 Form 10-KSB.


                                       6
<PAGE>
         The audited  consolidated  financial  statements of the Company for the
         year ended  December  31,  2003 were  filed on April 15,  2004 with the
         Securities and Exchange  Commission and are hereby  referenced.  In the
         opinion  of  management,   the  accompanying   unaudited   consolidated
         financial statements contain all adjustments (which include only normal
         recurring  adjustments)  considered necessary for fair presentation has
         been included.

         The results of  operations  for the three  months ended March 31, 2004,
         are not  necessarily  indicative  of the results to be expected for the
         entire year.  Certain 2003 amounts have been reclassified to conform to
         current period presentation.  These reclassifications have no effect on
         previously reported net income (loss).

NOTE 3:  Principles of Consolidation
         ---------------------------
         The accompanying consolidated financial statements for the three months
         ended  March  31,  2004   included  the   accounts  of  Elephant   Talk
         Communications, Inc. and its 100% wholly owned subsidiary Elephant Talk
         Limited.  The consolidated  financial statements for the same period in
         2003 included the accounts of Elephant Talk  Communications,  Inc., its
         100%  wholly  owned  subsidiary  Elephant  Talk  Limited and its 35.42%
         equity   investment  in  ETNS  Singapore  Pte,  Ltd.  All   significant
         inter-company   accounts  and  transactions  have  been  eliminated  in
         consolidation. The merger with Elephant Talk Limited has been accounted
         for as a purchase and treated as a reverse acquisition since the former
         shareholders  of Elephant  Talk  Limited  control  the  majority of the
         outstanding shares of common stock of the Company immediately following
         the acquisition on January 4, 2002.

NOTE 4:  Use of Estimates
         ----------------
         In preparing financial statements in conformity with generally accepted
         accounting  principles,  management  is required to make  estimates and
         assumptions  that affect the reported amounts of assets and liabilities
         and the disclosure of contingent  assets and liabilities at the date of
         the financial  statements and revenues and expenses during the reported
         period. Actual results could differ from those estimates.

NOTE 5:  Supplemental Disclosure of Cash Flows
         -------------------------------------
         The Company  prepares its  statements  of cash flows using the indirect
         method as defined under the Financial  Accounting  Standard No. 95. The
         cash flow  statements do not include the following  non-cash  investing
         and financing activities:

         During the three  months  ended  March 31,  2004,  the  Company  issued
         554,307 common shares valued at $110,500 as  compensation  to directors
         for salaries and fees for attending Board meetings.  The Company issued
         644,005  common  shares  valued at  $154,561 to certain  directors  and
         related  parties  as  settlement  of their  debts to the  Company,  and
         2,188,773 common shares valued at $490,746 to consultants for providing
         consulting services and vendors for settlement of their debts.




                                       7
<PAGE>
NOTE 6:  Recent Pronouncements
         ---------------------
         On May 15 2003,  the FASB issued FASB  Statement  No. 150 ("SFAS 150"),
         Accounting for Certain Financial  Instruments with  Characteristics  of
         both  Liabilities  and  Equity.  SFAS 150 changes  the  accounting  for
         certain financial  instruments that, under previous guidance,  could be
         classified as equity or  "mezzanine"  equity,  by now  requiring  those
         instruments  to  be  classified  as  liabilities  (or  assets  in  some
         circumstances) in the statement of financial  position.  Further,  SFAS
         150 requires  disclosure  regarding the terms of those  instruments and
         settlement alternatives. SFAS 150 affects an entity's classification of
         the  following  freestanding  instruments:  a)  Mandatorily  redeemable
         instruments  b) Financial  instruments  to  repurchase  an entity's own
         equity instruments c) Financial  instruments embodying obligations that
         the issuer must or could choose to settle by issuing a variable  number
         of its shares or other equity  instruments  based solely on (i) a fixed
         monetary amount known at inception or (ii) something other than changes
         in its own equity  instruments  d) SFAS 150 does not apply to  features
         embedded  in a financial  instrument  that is not a  derivative  in its
         entirety.  The  guidance  in SFAS 150 is  generally  effective  for all
         financial  instruments entered into or modified after May 31, 2003, and
         is otherwise  effective at the  beginning of the first  interim  period
         beginning  after June 15,  2003.  For  private  companies,  mandatorily
         redeemable financial  instruments are subject to the provisions of SFAS
         150 for the fiscal  period  beginning  after  December  15,  2003.  The
         adoption  of SFAS  No.  150  does not  have a  material  impact  on the
         Company's financial position or results of operations or cash flows.

         In December  2003,  the  Financial  Accounting  Standards  Board (FASB)
         issued a revised  Interpretation  No. 46,  "Consolidation  of  Variable
         Interest  Entities"  (FIN  46R).  FIN 46R  addresses  consolidation  by
         business  enterprises of variable  interest  entities and significantly
         changes the  consolidation  application  of  consolidation  policies to
         variable  interest  entities and, thus improves  comparability  between
         enterprises  engaged in similar  activities  when those  activities are
         conducted through variable interest entities. The Company does not hold
         any variable interest entities.

NOTE 7:  Sale of Equity Interest in ETNS Singapore Pte, Ltd.
         ---------------------------------------------------
         On February 18, 2004, the Company's  wholly owned  subsidiary  Elephant
         Talk Limited completed the sale of all of its 35.42% equity interest in
         ETNS  Singapore  Pte, Ltd. for a cash  consideration  of $100,953.  The
         Company  did not  record  any gain or loss from the sale of its  equity
         investment during the three months ended March 31, 2004.

NOTE 8:  Related Party Transactions
         --------------------------
         The Company has advanced  funds  amounting to $685,283 to entities that
         the Company's  officers and/or  shareholders have an ownership interest
         in.  The  Company  has  provided  a  reserve  for  uncollectible  funds
         amounting to $685,283 for such funds advanced as of March 31, 2004.

         The Company has a standby  line of credit for  $591,026  with a bank in
         Hong  Kong  which  expires  on  January  16,  2005  and  is  personally


                                       8
<PAGE>
         guaranteed by four of the Company's shareholders.  The Company utilizes
         the standby line of credit for security purposes and short-term working
         capital  requirements of the Company and its affiliates.  The Company's
         affiliate had signed a promissory note of $408,975, fully guaranteed by
         the Company,  requiring  monthly  installments of $12,535 and due in on
         December 24, 2006. The affiliate has defaulted on the promissory  note,
         and,  therefore,  the Company has the  obligation to pay the promissory
         note in full.  The  Company  has  provided  a full  allowance  for such
         uncollectible funds in the accompanying  financial  statements at March
         31, 2004. (See Note 5 and Note 9).

NOTE 9:  Stockholders' Equity
         --------------------
         Stock  Split:  As  a  condition   precedent  to  the  merger,   Staruni
         Corporation  authorized a reverse  stock split of their  common  shares
         pursuant  to  which  for  every  ten  (10)  shares  of the  issued  and
         outstanding  common shares were exchanged for one (1) common share.  On
         January 22, 2002,  the Company  effected a one (1) for ten (10) reverse
         stock split of its outstanding common stock. This reduced the number of
         shares  outstanding  from 34,626,899  shares to 3,464,000  shares after
         having 1,311 partial  shares  redeemed.  The basic and diluted net loss
         per  share  per  these  financial   statements  has  been  restated  to
         retroactively effect the reverse stock split.

         Issuance of common stock: During the three months ended March 31, 2004,
         the  Company  issued  554,307  common  shares  valued  at  $110,500  as
         compensation  to directors  for salaries and fees for  attending  Board
         meetings.  The common shares were valued at the closing market price of
         the common  shares on the first day of each month  starting  January 1,
         2004.  The Company  issued  644,005 common shares valued at $154,561 to
         certain  directors and related  parties as settlement of their debts to
         the  Company,  and  2,188,773  common  shares  valued  at  $490,746  to
         consultants  and  vendors for  settlement  of their  debts.  The common
         shares were valued at the 10 days average market closing price from the
         date of issuance.

         The  Company  issued  2,000,000  restricted  (under  Rule  144 one year
         restriction)   common  shares  under  a  stock  sale  agreement  to  an
         accredited  investor under a private  placement for a consideration  of
         $300,000.

         Pursuant  to the terms of the  Spin-Off  Agreement  with The  Hartcourt
         Companies,  Inc.  ("Hartcourt"),  on September  25,  2002,  the Company
         issued  5,000,000  restricted  common  shares  to  Hartcourt  valued at
         $320,000 based on the market value on the date of issue.  On January 4,
         2003,  the Company  received  from  Hartcourt  17,895,579 of its common
         shares held by Hartcourt  pursuant to the  finalization of the terms of
         the Spin-Off Agreement. Upon consummation of the transaction on January
         4, 2003, the Company  recorded its  17,895,579  common shares as shares
         authorized but unissued  shares valued at $1,288,482.  As a part of the
         settlement,  the Company  settled a note receivable  including  accrued
         interest  thereon,  of $1,387,500  and a note payable of $349,000.  The
         Company also returned  1,000,000 shares of common stock of Hartcourt it
         was  holding,  valued at  $60,0000 to  Hartcourt  and assumed a loan of
         $140,595  from a third  party.  As a result  of the  completion  of the


                                       9
<PAGE>
         spin-off  agreement  with  Hartcourt that completed on January 4, 2003,
         the Company recorded a loss of $270,613 as loss on settlement. On March
         30, 2004, the Company cancelled  17,895,579 of its common shares valued
         at  $1,288,482  that  was  received  as  part  of the  settlement  with
         Hartcourt.

NOTE 10: Basic and Diluted Net Loss Per Share
         ------------------------------------
         Basic and diluted net loss per share for the three  months  ended March
         31, 2004 and 2003 were  determined by dividing net loss for the periods
         by the weighted  average  number of basic and diluted  shares of common
         stock  outstanding.  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.

NOTE 11: Going Concern
         -------------
         The accompanying  financial statements have been prepared in conformity
         with  generally  accepted  accounting   principle,   which  contemplate
         continuation  of the Company as a going concern.  However,  the Company
         has an  accumulated  deficit  of  $9,232,944  including  a net  loss of
         $443,496  for the three  months  ended March 31,  2004.  In view of the
         matters  described  below,  recoverability  of a major  portion  of the
         recorded  asset  amounts  shown in the  accompanying  balance  sheet is
         dependent  upon continued  operations of the Company,  which in turn is
         dependent  upon the  Company's  ability  to raise  additional  capital,
         obtain financing and to succeed in its future operations.

         The financial statements do not include any adjustments relating to the
         recoverability  and classification of recorded asset amounts or amounts
         and  classification  of liabilities  that might be necessary should the
         Company be unable to continue as a going concern.

         Management  has taken the  following  steps to revise its operating and
         financial requirements, which it believes are sufficient to provide the
         Company  with the ability to continue  as a going  concern.  Management
         devoted  considerable  effort  during the period  ended  March 31, 2004
         towards (i) obtaining  additional  equity financing (ii) controlling of
         salaries and general and  administrative  expenses (iii)  management of
         accounts  payable and (iv)  settlement  of vendors  debt by issuance of
         common shares.

NOTE 12: Subsequent Events
         -----------------
         On April 5,  2004,  the  Company  issued  5,100,000  restricted  common
         shares,  valued at  approximately  $2,550,000,  to third parties as its
         earnest deposit towards its proposed  investment in a potential  target
         company.  On April 25, 2004,  the Company issued  2,420,000  restricted
         common  shares to certain  consultants  for  advisory  fees,  valued at
         $421,800.







                                       10
<PAGE>
PART 1

ITEM 2   Management Discussion and Analysis or Plan of Operation

         Elephant Talk  Communications,  Inc. is a facility based  international
         long distance carrier offering highly reliable and competitively priced
         services on the  wholesale  market.  The Company  provides  services to
         first-tier  local  and   international   telecommunications   carriers,
         enabling those carriers and other service  providers to offer voice and
         fax   services  to  their   end-customers.   The   operations   include
         international long distance on both sides of the Pacific,  serving over
         20 foreign  countries  through an advanced  and flexible  network.  The
         Company has been  expanding  its foothold in Asia with more  profitable
         routes and the development of value-added services, such as PC-to-Phone
         service,  voice over Internet protocol (VoIP),  Short messaging service
         (SMS).  The Company is actively  pursuing  new sales  channels  for the
         higher-margin  prepaid calling card market,  expanding from the U.S. to
         several countries in South East Asia.

         Pursuant to an agreement and plan of  reorganization,  effective August
         27, 2001,  and through the  subsequent  acquisition  that  completed on
         January 4, 2002, Staruni Corporation, a California corporation acquired
         Elephant Talk Limited,  a limited  company  incorporated  in Hong Kong.
         This type of share  exchange has been treated as a capital  transaction
         accompanied by  recapitalization of Elephant Talk Limited in substance,
         rather  than  a  business   combination,   and  is  deemed  a  "reverse
         acquisition"  for  accounting  purposes  since  the  former  owners  of
         Elephant  Talk Limited  controlled  majority of the total common shares
         outstanding  immediately  following the  acquisition.  The  acquisition
         caused no change in any of the  shares of the  Company's  common  stock
         outstanding  on the  acquisition  date,  and no other  securities  were
         converted as a result of the acquisition.

         Elephant Talk Limited:
         ---------------------

         Established in late 1994, Elephant Talk Limited is located and operated
         in Hong  Kong,  and owned  switching  facilities  in China,  Hong Kong,
         United States of America,  Taiwan and  Singapore,  which now are own by
         the  Company  as a result  of the  merger.  ETCI  utilizes  both IP and
         circuit  switched  technologies  over a common  platform,  and provides
         international long distance services in wholesale market principally to
         carriers;  prepaid  and post paid phone  cards;  and other  value added
         services

         Elephant Talk Limited's customers include some of the largest first and
         second  tier  telecommunications  carriers  in  the  U.S.  and  several
         carriers in South East Asia,  including  two of the four fixed  network
         operators in Hong Kong. Since its establishment,  Elephant Talk Limited
         expanded   its   network  by   installing   more   switches   and  hubs
         internationally.  Because of this,  Elephant  Talk  Limited has secured
         termination   options  outside  Asia  by  entering  into  international
         operating  agreements with foreign-based  telecommunications  carriers,
         including AT&T Corporation,  Global Crossing, Frontier Telecom Ltd. and
         MCI WorldCom Inc.


                                       11
<PAGE>
         Capitalizing  on a unique  position to gain market  share in Asia,  the
         Company has leveraged  Elephant Talk Limited's  early entrant status by
         forging a stronger  position in the People's  Republic of China ("PRC")
         by forging an increasing  number of strategic  relationships.  In 1996,
         only  one-third of Elephant Talk  Limited's  traffic  terminated in the
         PRC. The traffic  increased to  approximately  70% in 1998, and to over
         80% in  1999-2000  and  declined  ever since then.  In keeping with the
         extremely    difficult    economic    and   market    conditions    for
         telecommunications   industry  in  Hong  Kong,  the  Company   reported
         disappointing  first  quarter  results.   The  management   discussions
         contained  herein  refer  to  only  the  operations  of  Elephant  Talk
         Communications, Inc. and its subsidiaries.

         Results of Operations: The results of operations of the Company for the
         three months ended March 31, 2004  consisted of the  operations of ETCI
         and its wholly owned subsidiary  Elephant Talk Limited.  The results of
         operations  for the three months ended March 31, 2003  consisted of the
         operations of ETCI, its wholly owned subsidiary  Elephant Talk Limited,
         and a 35.42% equity investment in ETNS Singapore Pte, Ltd.

         Revenues  and  Cost of  revenues:  The  Company  reported  revenues  of
         $179,867  during the three  months  ended  March 31,  2004  compared to
         $376,150   for  the  same  period  in  2003.   Revenues   consisted  of
         telecommunications  services such as voice and data  transmission  like
         IDD, pre-paid calling cards, eTalk and facsimile services provided to a
         wide range of customers including major telecommunication  companies to
         retail customers in the US, Europe, China,  Indonesia,  New Zealand and
         Hong Kong.  The major  component in decline  during  current year comes
         from price  compression for long distance business voice services and a
         loss of a number of key customers. The Company's international business
         continues to experience significant price pressure on its products. The
         sales  decline  was also a result of SARS in Hong Kong in 2003 when new
         customers  acquisition  campaigns were postponed.  The wholesale market
         continued to be extremely price  competitive,  and this, in addition to
         bankruptcies  in some  customers and industry  players,  a reduction in
         circuits  connected  to  customers  related to their  internal  network
         consolidation,   contributed  to  the  quarter-over-quarter   decrease.
         Wholesale  revenues  during  2004  were  also  impacted  by  continuous
         proactive revenue  initiatives,  which were made to improve the quality
         of the wholesale  revenue stream as the Company  shifted its focus from
         revenue growth to cash generation.

         Part of the Company's  revenue reduction is attributable to a strategic
         decision on the Company's part to  de-emphasize  certain  services with
         longer settlement terms (such as certain  wholesale  customers and most
         retail   post-paid   customers).   Partially   offsetting   the   items
         contributing  to the decrease in total revenue was the  introduction of
         eTalk - a PC to phone service  offered in China  through  pre-paid call
         arrangements, which saw a slight revenue increase in the quarter and is
         expected  to  be  more   significant   in  future   quarters  from  the
         introduction of chat-line services.

         Cost of revenue was  $115,819 for the three months ended March 31, 2004
         compared  to  $366,814  for the same  period in 2003.  Cost of revenues
         included the costs in providing resale  arrangements with long distance


                                       12
<PAGE>
         service   providers,   cost   of   leasing   transmission   facilities,
         international   gateway  switches  for  voice,  data  transmission  and
         facsimile  services and  discounts  offered on eTalk cards sold.  Gross
         margin for the three  months  ended  March 31,  2004  increased  to 36%
         compared to 2.5% for the same period in 2003.  It was due to the change
         in the revenue mix for the services  provided to the  customers as well
         as the direct  result of the pricing  pressure  in the telecom  markets
         without adequate volume offsets. The unexpired fixed facility contracts
         had adversely  impacted our cost since we accounted for facility  lines
         not used  through  our  re-focus,  the impact  would be on a short term
         basis  as most of such  contracts  expired  in 2003.  Although  our mix
         improved  towards a preferred  blend of pre-paid mode versus  post-paid
         mode, our international  business  continues to experience  significant
         pricing  pressure on its  products.  Both the local  voice  revenue and
         long-distance   revenue  decreases  were   significantly   impacted  by
         continued  weakness  in the  telecommunications  industry  and  ongoing
         economic  and  competitive  pressures  from  other   telecommunications
         services providers in Hong Kong and the world.

         Selling,  general and administrative  expenses (S,G&A):  S,G&A expenses
         were  $657,312 for the three  months  ended March 31, 2004  compared to
         $247,976 for the same period in 2003. S,G&A expenses as a percentage of
         revenues  increased  during  the three  months  ended  March  31,  2004
         compared to the same  period in 2003,  primarily  due to the  Company's
         revenue base  reduction by 52% and Company  paying  $128,640 in fees to
         consultants for identifying  potential targets for acquisitions in VoIP
         and SMS  business.  The Company  also  provided  for an  allowance  for
         uncollectible  debt from an  affiliate  for  $285,283  during the three
         months ended March 31, 2004 as the Company had guaranteed payments on a
         promissory  note  signed by the  affiliate.  Furthermore,  the  Company
         reduced  its  payroll  and  other  expenses  through  right-sizing  the
         organization.  Depreciation  expense was  $66,549 for the three  months
         ended March 31, 2004 compared to $63,094 for the same period in 2003.

         Other  Income and  Expenses:  Due to the  completion  of spin-off  with
         Hartcourt on January 4, 2003, the Company cancelled its promissory note
         and  recorded a loss of $270,613 as part of the final  settlement  upon
         separation.  The Company sold its equity  investment in ETNS  Singapore
         Pte,  Ltd.  in January  2004 and did not earn any income or loss during
         the three months ended March 31, 2004.  The Company  recorded a loss of
         $18,226 on its equity  investment  for the three months ended March 31,
         2003. As a result of settlement of its debts with vendors,  the company
         recorded a gain of  $227,655  during the three  months  ended March 31,
         2004. No such settlements were made during the three months ended March
         31, 2003.

         Liquidity and Capital Resources:  The Company believes that current and
         anticipated  future cash  requirements for the next three months cannot
         be met with the cash on hand and from revenue from current customers to
         fund the  internal  operations.  The Company  plans to raise  necessary
         funds by  selling  its own  common  shares to  selected  investors  and
         bringing in business  partners whose  contributions  include  necessary
         cash.  The issuance of additional  common stock will result in dilution
         of our existing shareholders. There can be no assurance that additional
         funding will be available on favorable  terms,  if at all. No assurance


                                       13
<PAGE>
         can be given, however, that the Company will have access to the capital
         markets in future,  or that  financing  will be available on acceptable
         terms to satisfy the Company's  cash  requirements  needed to implement
         its business strategies.  The Company's inability to access the capital
         markets or obtain  acceptable  financing could have a material  adverse
         affect on its results of operations and financial condition,  and could
         severely threaten the Company's ability as a going concern.

         The  Company's  forecast  of the  period  of  time  through  which  its
         financial  resources  will be adequate to support its  operations  is a
         forward-looking  statement that involves risks and  uncertainties,  and
         actual results could vary as a result of a number of factors.

         Operating activities:  Net cash used in operating activities during the
         three month period  amounted to $495,196  primarily due to the decrease
         in prepaid  expenses  and  carrier  deposits  of  $45,788,  increase in
         accounts receivable of $27,835, decrease in cash overdraft of $339,857,
         and  decrease  in  accounts  payable,  accrued  expenses  and  deferred
         revenues of $320,768. Additionally,  ElephantTalk's current liabilities
         exceeded  its  current  assets by  $554,433  at March 31,  2004.  These
         factors and ElephantTalk's  inability to meet its debt obligations from
         current  operations,   and  the  need  to  raise  additional  funds  to
         accomplish   its   objectives,   create  a   substantial   doubt  about
         ElephantTalk's ability to continue as a going concern.

         Investing activities.  Net cash provided by investing activities during
         the three  months  ended March 31, 2004 was $100,953 due to sale of the
         Company's equity interest in ETNS Singapore Pte, Ltd.

         Financing activities.  Net cash provided by financing activities during
         the three  months ended March 31, 2004 was  $488,046.  During the three
         months ended March 31,  2004,  the Company  sold  2,000,000  restricted
         common shares to an accredited investor for $300,000, received $203,139
         from related parties and made payments of $15,093 of notes payable.

         As a result of the above  activities,  the  Company  experienced  a net
         increase in cash of $92,992 for the three  months ended March 31, 2004.
         The ability of  ElephantTalk  to  continue as a going  concern is still
         dependent on its success in  obtaining  additional  financing  from the
         institutional  investors or by selling its common shares and fulfilling
         its plan of  restructuring  as outlined above.  Subsequent to March 31,
         2004 and through May 12, 2004, the Company issued 5,100,000  restricted
         common shares, valued at approximately  $2,550,000, to third parties as
         advance towards its proposed  investment in potential target companies,
         and  issued  2,420,000  restricted  common  shares to  consultants  for
         advisory fees, valued at $421,800.


PART 1

ITEM 3   Controls and Procedures

         Evaluation of disclosure controls and procedures: The Company maintains
         controls and procedures designed to ensure that information required to
         be  disclosed in this report is recorded,  processed,  accumulated  and


                                       14
<PAGE>
         communicated to our management,  including our chief executive  officer
         and our chief financial  officer,  to allow timely decisions  regarding
         the required disclosure. Within the 90 days prior to the filing date of
         this  report,  our  management,  with the  participation  of our  chief

         executive  officer  and  chief  financial   officer,   carried  out  an
         evaluation  of the  effectiveness  of the design and operation of these
         disclosure  controls and procedures.  Our chief  executive  officer and
         chief  financial  officer  concluded,  as of fifteen  days prior to the
         filing  date  of  this  report,  that  these  disclosure  controls  and
         procedures are effective.

         Changes  in  internal  controls:  Subsequent  to the date of the  above
         evaluation,  the Company  made no  significant  changes in its internal
         controls or in other  factors  that could  significantly  affect  these
         controls,  nor did it take any  corrective  action,  as the  evaluation
         revealed no significant deficiencies or material weaknesses.








































                                       15
<PAGE>
               ELEPHANT TALK COMMUNICATIONS, INC. AND SUBSIDIARIES
                          OTHER INFORMATION (UNAUDITED)
                                 MARCH 31, 2004

PART II

ITEM 1   Legal Proceedings

         None

ITEM 2   Changes in Securities

         During the three  months  ended  March 31,  2004,  the  Company  issued
         554,307 common shares valued at $110,500 as  compensation  to directors
         for salaries and fees for attending Board meetings.  The Company issued
         644,005  common  shares  valued at  $154,561 to certain  directors  and
         related  parties  as  settlement  of their  debts to the  Company,  and
         2,188,773 common shares valued at $490,746 to consultants for providing
         consulting  services and vendors for  settlement  of their  debts.  The
         Company  issued   2,000,000   restricted   (under  Rule  144  one  year
         restriction)   common  shares  under  a  stock  sale  agreement  to  an
         accredited  investor under a private placement for a cash consideration
         of  $300,000.  In addition,  the Company  cancelled  17,895,579  common
         shares valued at $1,288,482 that was received as part of the settlement
         with Hartcourt.

ITEM 3   Defaults Upon Senior Securities


         Not applicable

ITEM 4   Submission of Matters to Vote of Securities Holders

         None

ITEM 5   Other Information

         None

ITEM 6   Exhibits and Reports on Form 8-K

         a) Exhibits
         None

         b) Reports on Form 8-K
         None











                                       16
<PAGE>
               ELEPHANT TALK COMMUNICATIONS, INC. AND SUBSIDIARIES
                          OTHER INFORMATION (UNAUDITED)
                                 MARCH 31, 2004


                                    SIGNATURE

In accordance  with the  requirements  of the Exchange Act, the  registrant  has
caused  this  report  signed on its behalf by the  undersigned,  thereunto  duly
authorized.




                                   Elephant Talk Communications, Inc.

Date:  May 14, 2004                By: /s/ Russelle Choi
                                   ---------------------------
                                   Russelle Choi
                                   President & Chief Executive Officer





































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