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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q  

(Mark One)

 

 

 

 

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

For the quarterly period ended June 30, 2023

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 000-27031

FULLNET COMMUNICATIONS INC.

(Exact name of registrant as specified in its charter)

 

 

 

Oklahoma

 

73-1473361

 

 

 

(State or other jurisdiction of

 

(I.R.S. Employer Identification No.)

incorporation or organization)

 

 

201 Robert S. Kerr Avenue, Suite 210

Oklahoma City, Oklahoma 73102

(Address of principal executive offices)

(405236-8200

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 þ  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o

 

 

Accelerated filer o

 

Non-accelerated filer þ

 

Smaller reporting company

Emerging-growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No þ

As of August 6, 2023, 19,565,087 shares of the registrant’s common stock, $0.00001 par value, were outstanding.


FORM 10-Q

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets — June 30, 2023 (Unaudited) and December 31, 2022

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations — Three and six months ended June 30, 2023 and 2022 (Unaudited)

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity — Six months ended June 30, 2023 and 2022 (Unaudited)

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows —Six months ended June 30, 2023 and 2022 (Unaudited)

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

 

14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Item 4. Controls and Procedures

 

 

14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Item 1. Legal Proceedings

 

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Item 5. Other Information

 

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Item 6. Exhibits

 

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signatures

 

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Exhibit 31.1

 Exhibit 32.1

 


2


 

 

FullNet Communications, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

June 30, 2023 (Unaudited)

 

December 31, 2022

ASSETS

 

 

 

 

CURRENT ASSETS

 

 

 

 

Cash and cash equivalents

 

$3,018,020 

 

$2,753,551  

Accounts receivable, net

 

5,671 

 

1,584  

Prepaid expenses and other current assets

 

33,129 

 

36,740  

 

 

 

 

 

Total current assets

 

3,056,820 

 

2,791,875  

 

 

 

 

 

PROPERTY AND EQUIPMENT, net

 

78,630 

 

87,173  

 

 

 

 

 

OTHER ASSETS AND INTANGIBLE ASSETS

 

20,616 

 

18,250  

 

 

 

 

 

RIGHT OF USE LEASED ASSET

 

213,682 

 

279,086  

 

 

 

 

 

TOTAL ASSETS

 

$3,369,748 

 

$3,176,384  

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

Accounts payable

 

$14,260  

 

$18,999  

Accrued and other liabilities

 

444,600  

 

413,646  

Dividends payable

 

-  

 

61,826  

Operating lease liability – current portion

 

139,418  

 

133,637  

Deferred revenue

 

1,098,722  

 

1,001,298  

 

 

 

 

 

Total current liabilities

 

1,697,000  

 

1,629,406  

 

 

 

 

 

OPERATING LEASE LIABILITY – net of current portion

 

74,264  

 

145,449  

Total liabilities

 

1,771,264  

 

1,774,855  

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

Preferred stock - $0.001 par value; authorized, 10,000,000 shares; Series A convertible; issued and outstanding, 618,257 shares in 2023 and 2022, respectively

 

409,531  

 

409,531  

Common stock - $0.00001 par value; authorized, 40,000,000 shares; issued and outstanding, 19,565,087 shares and 19,182,754 shares in 2023 and 2022, respectively

 

196  

 

192  

Additional paid-in capital

 

9,117,734  

 

9,108,410  

Accumulated deficit

 

(7,928,977) 

 

(8,116,604) 

Total shareholders’ equity

 

1,598,484  

 

1,401,529  

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$3,369,748  

 

$3,176,384  

 

See accompanying notes to unaudited condensed consolidated financial statements.


3


FullNet Communications, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

 

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

REVENUE

$1,053,868  

$1,062,413  

$2,100,741  

$2,178,859  

COST OF REVENUE

250,734  

215,143  

495,288  

442,610  

Gross profit

803,134  

847,270  

1,605,453  

1,736,249  

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

Sales and marketing

181,508  

168,746  

361,119  

331,033  

General and administrative expenses

434,765  

458,604  

882,342  

916,064  

Depreciation and amortization

4,134  

4,353  

8,544  

6,907  

Total operating expenses

620,407  

631,703  

1,252,005  

1,254,004  

 

 

 

 

 

INCOME FROM OPERATIONS

182,727  

215,567  

353,448  

482,245  

 

 

 

 

 

OTHER INCOME

41,070  

3,911  

69,927  

4,296  

 

 

 

 

 

NET INCOME BEFORE INCOME TAX

223,797  

219,478  

423,375  

486,541  

 

 

 

 

 

Income tax expense

(56,884) 

(56,166) 

(107,808) 

(124,168) 

NET INCOME

$166,913  

$163,312  

$315,567  

$362,373  

Preferred stock dividends

(17,002) 

(15,105) 

(34,004) 

(30,210) 

Net income available to common shareholders

$149,911  

$148,207  

$281,563  

$332,163  

 

 

 

 

 

Net income per share:

 

 

 

 

 Basic

$0.01  

$0.01  

$0.02  

$0.02  

 Diluted

$0.01  

$0.01  

$0.02  

$0.02  

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 Basic

19,543,846  

18,060,819  

19,363,300  

17,603,470  

 Diluted

19,633,735  

18,587,690  

19,454,281  

18,133,114  

See accompanying notes to unaudited condensed consolidated financial statements.

 


4


 

 

FullNet Communications, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

Six Months Ended June 30, 2023

 

 

 

 

 

 

 

Common stock

Preferred stock

Additional

Accumulated

 

Shares

 

Amount

Shares

 

Amount

paid-in capital

deficit

Total

                                                      

                           

 

                           

                           

 

                           

                           

                           

                           

Balance at January 1, 2023

19,182,754 

 

$192 

618,257 

 

$409,531 

$9,108,410 

$(8,116,603) 

$1,401,530  

 

 

 

 

 

 

 

 

 

 

Stock options expense

- 

 

- 

- 

 

- 

3,945 

-  

3,945  

 

 

 

 

 

 

 

 

 

 

Stock options exercised

382,333 

 

4 

- 

 

- 

5,379 

-  

5,383  

 

 

 

 

 

 

 

 

 

 

Common stock dividends paid

- 

 

- 

- 

 

- 

- 

(127,941) 

(127,941) 

 

 

 

 

 

 

 

 

 

 

Net income

- 

 

- 

- 

 

- 

- 

315,567  

315,567  

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2023 – (unaudited)

19,565,087 

 

$196 

618,257 

 

$409,531 

$9,117,734 

$(7,928,977) 

$1,598,484  

 

Six Months Ended June 30, 2022

 

 

 

 

 

 

 

Common stock

Preferred stock

Additional

Accumulated

 

Shares

 

Amount

Shares

 

Amount

paid-in capital

deficit

Total

                                                      

                           

 

                           

                           

 

                           

                           

                           

                           

Balance at January 1, 2022

17,146,121 

 

$171 

568,257 

 

$357,101 

$9,072,109  

$(8,074,427) 

$1,354,954  

 

 

 

 

 

 

 

 

 

 

Stock options expense

- 

 

- 

- 

 

- 

6,437  

-  

6,437  

 

 

 

 

 

 

 

 

 

 

Stock options exercised

1,746,633 

 

18 

- 

 

- 

26,156  

-  

26,174  

 

 

 

 

 

 

 

 

 

 

Warrants exercised

290,000 

 

3 

- 

 

- 

1,147  

-  

1,150  

 

 

 

 

 

 

 

 

 

 

Common stock dividends paid

- 

 

- 

- 

 

- 

-  

(537,425) 

(537,425) 

 

 

 

 

 

 

 

 

 

 

Amortization of increasing dividend rate preferred stock discount

- 

 

- 

- 

 

1,797 

(1,797) 

-  

-  

 

 

 

 

 

 

 

 

 

 

Net income

- 

 

- 

- 

 

- 

-  

362,373  

362,373  

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2022 – (unaudited)

19,182,754 

 

$192 

568,257 

 

$358,898 

$9,104,052  

$(8,249,479) 

$1,213,663  

See accompanying notes to unaudited condensed consolidated financial statements.

 

 


5


 

FullNet Communications, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

 

 

 

 

Six Months Ended

 

June 30, 2023

 

June 30, 2022

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net income

 

$315,567  

 

$362,373  

 Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

Depreciation and amortization

 

8,544  

 

6,907  

Loss on disposal of assets

 

-  

 

5,205  

Noncash lease expense

 

65,404  

 

60,092  

Provision for deferred tax expense

 

-  

 

38,359  

Stock options expense

 

3,945  

 

6,437  

Provision for uncollectible accounts receivable

 

2,365  

 

(802) 

Changes in operating assets and liabilities

 

 

 

 

Accounts receivable

 

(6,452) 

 

27,901  

Prepaid expenses and other assets

 

1,245  

 

(47,413) 

Accounts payable

 

(4,739) 

 

45,592  

Accrued and other liabilities

 

30,954  

 

(4,315) 

Deferred revenue

 

97,424  

 

128,122  

Operating lease liability

 

(65,404) 

 

(60,092) 

Net cash provided by operating activities

 

448,853  

 

568,366  

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Cash paid for property and equipment

 

-  

 

(47,889) 

Net cash used in investing activities

 

-  

 

(47,889) 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Proceeds from exercise of options

 

5,383  

 

26,173  

Proceeds from exercise of warrants

 

-  

 

1,150  

Payment of dividends payable – preferred stock

 

(61,826) 

 

(51,143) 

Payment of dividends payable – common stock

 

(127,941) 

 

(537,425) 

Net cash used in financing activities

 

(184,384) 

 

(561,245) 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

264,469  

 

(40,768) 

Cash and cash equivalents at beginning of period

 

2,753,551  

 

2,655,112  

Cash and cash equivalents at end of period

 

$3,018,020  

 

$2,614,344  

 

 

 

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES

 

 

 

 

Amortization of increasing dividend rate preferred stock discount

 

$-  

 

$1,797  

 

See accompanying notes to the unaudited condensed consolidated financial statements.


6


 

FullNet Communications, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

1.     UNAUDITED INTERIM FINANCIAL STATEMENTS

 

The unaudited condensed consolidated financial statements and related notes of FullNet Communications, Inc. and its subsidiaries (“we”, “our”, collectively, the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with our audited consolidated financial statements of and notes thereto for the year ended December 31, 2022.

 

The information furnished reflects, in the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of the interim periods presented. Operating results of the interim period are not necessarily indicative of the amounts that will be reported for the year ending December 31, 2023.

 

Recently Adopted Accounting Pronouncements

 

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. (“ASU”) 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, “Revenue from Contracts with Customers.” At the acquisition date, an acquirer should account for the related revenue contracts as if it had originated the contracts. Generally, this should result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree's financial statements, assuming the acquirer is able to assess and rely on how the acquiree applied ASC 606. ASU 2021-08 is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. We adopted ASU 2021-08 in the first quarter of 2022 with no material impact to our consolidated financial statements.

 

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions,” which clarifies and amends the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities. ASU 2022-03 is effective for interim and annual periods beginning after December 15, 2023, with early adoption permitted. We are evaluating the impact of the adoption of this guidance to our consolidated financial statements.

 

Income Per Share

 

Income per share – basic is calculated by dividing net income by the weighted average number of shares of stock outstanding during the year, including shares issuable without additional consideration. Income per share, assuming dilution, is calculated by dividing net income by the weighted average number of shares outstanding during the year adjusted for the effect of dilutive potential shares calculated using the treasury stock method for options and warrants and the “if converted” method for convertible preferred stock.

 

The reconciliation of basic and diluted income per share are as follows:


7


 

 

Three Months Ended

Six Months Ended

June 30,

2023

June 30,

2022

June 30,

2023

June 30,

2022

Net income:

    

    

 

 

Net income

$166,913  

$163,312  

$315,567  

$362,373  

Preferred stock dividends

(17,002) 

(15,105) 

(34,004) 

(30,210) 

Net income available to common shareholders

149,911  

148,207  

281,563  

332,163  

 

 

 

 

 

Basic income per share:

 

 

 

 

Weighted average common shares outstanding used in income per share

19,543,846  

18,060,819  

19,363,300  

17,603,470  

Basic income per share

0.01  

0.01  

0.02  

0.02  

 

 

 

 

 

Diluted income per share:

 

 

 

 

Shares used in diluted income per share

19,633,735  

18,587,690  

19,454,281  

18,133,114  

Diluted income per share

0.01  

0.01  

0.02  

0.02  

 

 

 

 

 

Computation of shares used in income per share:

 

 

 

 

Weighted average shares and share equivalents outstanding – basic

19,543,846  

18,060,819  

19,363,300  

17,603,470  

Effect of dilutive stock options

89,889  

526,871  

90,981  

529,644  

Weighted average shares and share equivalents outstanding – diluted

19,633,735  

18,587,690  

19,454,281  

18,133,114  

 

 

Schedule of Anti-dilutive Securities Excluded

 

 

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Preferred stock

618,257 

568,257 

618,257 

568,257 

Total anti-dilutive securities excluded

618,257 

568,257 

618,257 

568,257 

 

Anti-dilutive securities consist of stock options and convertible preferred stock whose exercise price or conversion price, respectively, was greater than the average market price of the common stock.

 

2.     STOCK BASED COMPENSATION

 

The following table summarizes our employee stock option activity for the six months ended June 30, 2023:

 

Schedule of Employee Stock Option Activity

 

Options

 

Weighted average exercise price

 

Weighted average remaining contractual life (yrs)

 

Aggregate Intrinsic value

Options outstanding, December 31, 2022

556,330 

 

$0.051 

 

6.74 

 

$184,485 

 

 

 

 

 

 

 

 

Options exercised during the period

382,333 

 

$0.014 

 

 

 

 

 

 

 

 

 

 

 

 

Options forfeited during the period

33,000 

 

$0.003 

 

 

 

 

 

 

 

 

 

 

 

 

Options outstanding June 30, 2023

140,997 

 

$0.163 

 

7.33 

 

$29,898 

 

 

 

 

 

 

 

 

Options exercisable June 30, 2023

61,497 

 

$0.122 

 

6.19 

 

$14,913 

 

During the six months ended June 30, 2023, no nonqualified employee stock options were granted.

 

During the six months ended June 30, 2023, certain employees of ours exercised options to purchase 382,333 restricted shares of our common stock, par value $0.00001 per share. Proceeds from the exercise of the Options were $5,383. The common shares were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, without payment of any form of commissions or other remuneration.

 


8


On June 15, 2023, we paid the May 15, 2023 dividends declared on our common stock of $64,602, to shareholders of record on May 31, 2023. On March 15, 2023, we paid the February 15, 2023 dividends declared on our common stock of $63,339, to shareholders of record on February 28, 2023.

 

Total stock-based compensation expense for the six months ended June 30, 2023 was $3,945, all of which is related to options issued in prior years. Stock-based compensation is measured at the grant date, based on the calculated fair value of the option, and is recognized as an expense on a straight-line basis over the requisite employee service period (generally the vesting period of the grant).  

 

3.     WARRANT ACTIVITY

 

During the six months ended June 30, 2023, no warrants were issued or exercised.

 

4.     SERIES A CONVERTIBLE PREFERRED STOCK

 

On January 3, 2023, we paid the December 23, 2022 dividends declared on our Series A Convertible Preferred Stock of $61,826. As of June 30, 2023, the aggregate outstanding accumulated arrearages of cumulative dividend was $34,004 or if issued in common shares, 103,043 shares.

 

5.     LEASES

 

We determine if a contract contains a lease by evaluating the nature and substance of the agreement. The only lease that we have is the real estate lease for our headquarters facility, which was originally executed on December 2, 1999, and which has been extended several times. This lease was renewed for a term of five additional years. We recognize lease expense for this lease on a straight-line basis over the lease term.

 

We used our incremental borrowing rate (8.5%) in determining the present value of the lease payments over the lease expiration date of December 31, 2024. At June 30, 2023, the remaining future cash payments under our lease total to $74,264.

 

For the six months ended June 30, 2023, we amortized $65,404 of our operating right-of-use, or ROU, asset and made payments of the associated lease liability for the same amount. At June 30, 2023, an operating ROU asset and liability of $213,682, each, are included on our condensed consolidated balance sheet.

 

For the six months ended June 30, 2023 and 2022, our fixed operating lease cost was $76,116, which is included within operating costs and expenses in our condensed consolidated statements of operations.

 

Future minimum lease payments under non-cancellable operating lease as of June 30, 2023, were as follows:

 

Year ending December 31,

2023 (six months remaining)

$76,116  

2024

152,232  

Total future minimum lease payments

228,348  

Present value of discount

(14,666) 

Current portion lease liability

(139,418) 

Long-term lease liability

$74,264  


9


 

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

The following discussion is qualified in its entirety by the more detailed information in our 2022 Annual Report on Form 10-K and the financial statements contained therein, including the notes thereto, and our other periodic reports filed with the Securities and Exchange Commission since December 31, 2022 (collectively referred to as the “Disclosure Documents”). Certain forward-looking statements contained in this Report and in the Disclosure Documents regarding our business and prospects are based upon numerous assumptions about future conditions which may ultimately prove to be inaccurate and actual events and results may materially differ from anticipated results described in such statements. These statements can sometimes be identified by our use of forward-looking words such as “may”, “believe”, “plan”, “will”, “anticipate”, “estimate”, “expect”, “intend”, and other phrases of similar meaning. Our ability to achieve these results is subject to certain risks and uncertainties, including those inherent risks and uncertainties generally in the Internet service provider and group message delivery industries, the impact of competition and pricing, changing market conditions, and other risks. Any forward-looking statements contained in this Report represent our judgment as of the date of this Report. We disclaim, however, any intent or obligation to update these forward-looking statements. As a result, the reader is cautioned not to place undue reliance on these forward-looking statements.

Overview

We are an integrated communications provider. Through our subsidiaries, we have historically provided high quality, reliable and scalable Internet access, web hosting, local telephone service, equipment colocation, customized live help desk outsourcing services, mass notification services using text messages and automated telephone calls, as well as advanced voice and data solutions. As explained below, the majority of our focus going forward is on our revenue and customers coming from three primary types of service: 1) Mass notification services using text messages and automated telephone calls, 2) Equipment colocation and related services, and 3) Customized live help desk outsourcing service.

References to us in this Report include our subsidiaries: FullNet, Inc. (“FullNet”), FullTel, Inc. (“FullTel”), FullWeb, Inc. (“FullWeb”), and CallMultiplier, Inc. (“CallMultiplier”). Our principal executive offices are located at 201 Robert S. Kerr Avenue, Suite 210, Oklahoma City, Oklahoma 73102, and our telephone number is (405) 236-8200. We also maintain Internet sites on the World Wide Web (“WWW”) at www.fullnet.net, www.fulltel.com and www.callmultiplier.com. Information contained on our Web sites is not, and should not be deemed to be, a part of this Report.

COVID-19 Pandemic

 

While the level of disruption caused by, and the economic impact of, the COVID-19 pandemic lessened in 2022, there is no assurance that the pandemic will not return with new strains of the virus, or that another health-related emergency will not emerge. We believe that the COVID-19 pandemic, with its shifts in human interactions and communications, resulted for us in a net addition of new customers and the sale of additional services to existing customers and increased interest in our automated group text and voice message delivery services. As the COVID-19 pandemic subsides, it is possible that the increases we experienced in 2020 and 2021 are slowing, resulting in adverse effects on our business, results of operations and financial condition. The ultimate extent of its impact on us will depend on future developments, which are highly uncertain and cannot be predicted, including the extent to which people return to preexisting patterns of behavior when the COVID-19 pandemic subsides.

Company History

We were founded in 1995 as CEN-COM of Oklahoma, Inc., an Oklahoma corporation, to bring dial-up Internet access and education to rural locations in Oklahoma that did not have dial-up Internet access. We changed our name to FullNet Communications, Inc. in December 1995. Through a wholly owned subsidiary, we started a competitive local exchange carrier (“CLEC”) in 2003 and later exited the retail telephone service business in early 2018. In response to the rapidly evolving Internet based telecommunications services environment, we have continued to expand and improve our service offerings.

Today we are an integrated communications provider primarily focused on providing mass notification services using text messages and automated telephone calls, equipment colocation and related services, and customized live help desk outsourcing service.

Through CallMultiplier Inc., our wholly owned subsidiary, we offer a comprehensive cloud-based solution to consumers and businesses for automated mass texting and voice message delivery. We serve groups throughout the United States and Canada that come from a wide range of industries including religious groups, non-profit companies, schools and universities, businesses, sports groups, staffing companies, property management groups, government entities, and more. These customers use CallMultiplier to quickly send important and informational messages to groups ranging in size from five to more than 250,000 people. We exclusively focus on messages that recipients have asked for or otherwise desire to receive. Sending unsolicited marketing or any unlawful messages through CallMultiplier is a violation of our Terms of Service.

 

We market our carrier neutral colocation solutions in our data center to competitive local exchange carriers, Internet service providers and businesses that need a physical presence in the Oklahoma City market. Our colocation facility is carrier neutral,


10


allowing customers to choose among competitive offerings rather than being restricted to one carrier. Our data center is telco-grade and provides customers a high level of operative reliability and security. We offer flexible space arrangements for customers and 24-hour onsite support with both battery and generator backup.

 

Our customized live help desk outsourcing service is used by companies that want the benefit of having someone answer the telephone and respond to email 24 hours a day, without wanting to incur the costs to maintain the necessary staff to do so themselves. This service complements our existing staff and leverages the resources we have in place 24 hours a day.

Our common stock trades on the OTC Markets Group “Pink Sheets” under the symbol FULO. While our common stock trades on the OTC Markets Group “Pink Sheets”, it is very thinly traded, and there can be no assurance that our shareholders will be able to sell their shares should they so desire. Any market for the common stock that may develop, in all likelihood, will be a limited one, and if such a market does develop, the market price may be volatile.

 

Results of Operations

 

The following table sets forth certain statement of operations data as a percentage of revenues for the three months and six months ended June 30, 2023 and 2022:

 

Three Months Ended

 

Six Months Ended

 

June 30, 2023

June 30, 2022

 

June 30, 2023

June 30, 2022

 

Amount

Percent

Amount

Percent

 

Amount

Percent

Amount

Percent

REVENUE

$1,053,868  

100.0  

$1,062,413  

100.0  

 

$2,100,741  

100.0  

$2,178,859  

100.0  

COST OF REVENUE

250,734  

23.8  

215,143  

20.3  

 

495,288  

23.6  

442,610  

20.3  

Gross Profit

803,134  

76.2  

847,270  

79.7  

 

1,605,453  

76.4  

1,736,249  

79.7  

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

Sales and marketing

181,508  

17.2  

168,746  

15.9  

 

361,119  

17.2  

331,033  

15.2  

General and administrative

434,765  

41.3  

458,604  

43.2  

 

882,342  

42.0  

916,064  

42.1  

Depreciation and amortization

4,134  

0.4  

4,353  

0.4  

 

8,544  

0.4  

6,907  

0.3  

Total operating expenses

620,407  

58.9  

631,703  

59.5  

 

1,252,005  

59.6  

1,254,004  

57.6  

 

 

 

 

 

 

 

 

 

 

Income from operations

182,727  

17.3  

215,567  

20.3  

 

353,448  

16.8  

482,245  

22.1  

Other income

41,070  

3.9  

3,911  

0.4  

 

69,927  

3.3  

4,296  

0.2  

Income tax expense

(56,884) 

(5.4) 

(56,166) 

(5.3) 

 

(107,808) 

(5.1) 

(124,168) 

(5.7) 

  Net income

166,913  

15.8  

163,312  

15.4  

 

315,567  

15.0  

362,373  

16.6  

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends

(17,002) 

(1.6) 

(15,105) 

(1.4) 

 

(34,004) 

(1.6) 

(30,210) 

(1.4) 

 

 

 

 

 

 

 

 

 

 

Net income available to common shareholders

$ 149,911 

14.2  

$148,207  

14.0  

 

$281,563  

13.4  

$332,163  

15.2  

 

 

Three Months Ended June 30, 2023 (the “2023 2nd Quarter”) Compared to Three Months Ended June 30, 2022 (the “2022 2nd Quarter”)

Revenue

 

Total revenue decreased $8,545 or 0.8% to $1,053,868 for the 2023 2nd Quarter from $1,062,413 for the same period in 2022. This decrease was primarily attributable to the loss of a customized live help-desk outsourcing service customer.

 

In the 2023 2nd Quarter, we had interest income of $34,645 and other income of $6,425. In the 2022 2nd Quarter, we had interest income of $3,911. The increase in interest income was primarily the result of interest rate increases resulting from actions taken by the Federal Reserve, and the increase in other income was primarily due to income from debt extinguishment.

 

Cost of Revenue

 

Cost of revenue increased $35,591 or 16.5% to $250,734 for the 2023 2nd Quarter from $215,143 for the same period in 2022. This increase was primarily due to price increases from our vendors. Cost of revenue as a percentage of total revenue increased to 23.8% during the 2023 2nd Quarter, compared to 20.3% during the same period in 2022, as a result of price increases from our vendors combined with increased utilization of higher cost components of our service offerings.


11


Gross Profit

 

Gross profit as a percentage of revenue decreased 3.5 % to 76.2% for the 2023 2nd Quarter from 79.7% for the same period in 2022. This decrease was primarily related to price increases from our vendors combined with increased utilization of higher cost components of our services offerings.

 

Operating Expenses

 

Sales and marketing expenses increased $12,762 or 7.6% to $181,508 for the 2023 2nd Quarter from $168,746 for the 2nd Quarter of 2022. This increase was primarily a result of increases in advertising expense. Sales and marketing expense as a percentage of total revenues increased to 17.2% for the 2nd Quarter of 2023 compared to 15.9% for the 2nd Quarter of 2022.

 

General and administrative expenses decreased $23,839 or 5.2% to $434,765 for the 2023 2nd Quarter compared to $458,604 for the same period in 2022. This decrease was primarily related to a decrease in employee costs of $24,699. General and administrative expenses as a percentage of total revenues decreased to 41.3% during the 2023 2nd Quarter from 43.2% during the same period in 2022 due to a decline in employee costs.

 

Depreciation and amortization expense decreased $219 or 5.0% to $4,134 for the 2023 2nd Quarter compared to $4,353 for the same period in 2022. This decrease was related to several assets reaching full depreciation during the 2023 2nd Quarter.

 

  Income Taxes

 

In the 2023 2nd Quarter, we had income tax expense of $56,884. In the 2022 2nd Quarter, we had income tax expense of $56,166.

 

  Net Income

For the 2023 2nd Quarter, we realized net income of $166,913 compared to net income of $163,312 for the same period in 2022. The increase was due primarily to the increase in other income combined with the decline in our general and administrative expenses. 

 

Six Months Ended June 30, 2023 (the”2023 Period”) Compared to Six Months Ended June 30, 2022 (the “2022 Period”)

 

Revenues

 

Total revenue decreased $78,118 or 3.6% to $2,100,741 for the 2023 Period from $2,178,859 for the same period in 2022. This decrease was primarily attributable to the loss of a customized live help-desk outsourcing service customer.

 

In the 2023 Period, we had interest income of $63,502 and other income of $6,425. In the 2022 Period, we had interest income of $4,296. The increase in interest income was primarily the result of interest rate increases resulting from actions taken by the Federal Reserve, and the increase in other income was primarily due to income from debt extinguishment.

 

Cost of Revenue

 

Cost of revenue increased $52,678 or 11.9% to $495,288 for the 2023 Period from $442,610 for the same period in 2022. This increase was primarily related to price increases from our vendors. Cost of revenue as a percentage of total revenue increased to 23.6% during the 2023 Period, compared to 20.3% during the same period in 2022, as a result of price increases from our vendors combined with increased utilization of higher cost components of our service offerings.

 

Gross Profit

 

Gross profit as a percentage of revenue decreased 3.3 % to 76.4% for the 2023 Period from 79.7 for the same period in 2022. This decrease was primarily related to price increases from our vendors combined with increased utilization of higher cost components of our services offerings.

 

Operating Expenses

 

Sales and marketing expenses increased $30,086 or 9.1% to $361,119 for the 2023 Period from $331,033 for the same period of 2022. This increase was primarily a result of increases in advertising expense. Sales and marketing expense as a percentage in total revenues increased to 17.2% for the 2023 Period compared to 15.2% for the same period in 2022.

 

General and administrative expenses decreased $33,722 or 3.7% to $882,342 for the 2023 Period compared to $916,064 for the same period in 2022. This decrease was primarily related to a decrease in employee costs of $35,777. General and administrative expenses as a percentage of total revenues decreased to 42.0% during the 2023 Period from 42.1% during the same period in 2022.


12


 

Depreciation and amortization expense increased $1,637 or 23.7% to $8,544 for the 2023 Period compared to $6,907 for the same period in 2022. This increase was related to depreciation associated with assets purchased during 2022.

 

  Income Taxes

 

Income tax expense for the 2023 Period was $107,808. Income tax expense for the 2022 Period was $124,168.

 

  Net Income

For the 2023 Period, we realized net income of $315,567 compared to net income of $362,373 for the same period in 2022. The decrease was due primarily to the decline in our gross profit as a percentage of revenue. 

 

Liquidity and Capital Resources

 

As of June 30 2023, we had $3,018,020 in cash and $3,056,820 in current assets and $1,697,000 in current liabilities. Current liabilities consist primarily of $444,600 in accrued and other liabilities, of which $151,507 is owed to our officers and directors, and $1,098,722 is deferred revenue. Our officers and directors, who are also major shareholders, have agreed to not seek payment of any of the amounts owed to them if such payment would jeopardize our ability to continue as a going concern. The deferred revenue represents advance payments for services from our customers which will be satisfied by our delivery of services in the normal course of business and will not require direct settlement in cash.

 

At June 30, 2023 and December 31, 2022, we had positive working capital of $1,359,820 and $1,162,469, respectively.

 

As of June 30, 2023, $7,019 of the $14,260 we owed to our trade creditors was past due. We have no formal agreements regarding payment of these amounts.

Cash flow for the six-month period ended June 30, 2023 and 2022 consist of the following:

 

 

For the Six-Month Period Ended June 30,

 

 

2023

 

2022

Net cash flows provided by operating activities

 

$448,853  

 

$568,366  

Net cash flows used in investing activities

 

 

 

(47,889) 

Net cash flows used in financing activities

 

(184,384) 

 

(561,245) 

 

No property and equipment were purchased in the six months ended June 30, 2023. Cash used for the purchase of property and equipment was $47,889 in the six months ended June 30, 2022.

 

No intangible assets were purchased in the six months ended June 30, 2023 and 2022.  

 

On January 3, 2023, we paid the December 23, 2022, preferred stock dividends declared of $61,826.

 

On March 15, 2023, we paid the February 15, 2023, common stock dividends declared of $63,339. On June 15, 2023, we paid the May 15, 2023, common stock dividends declared of $64,602.

 

Growth of our business and the anticipated continued payment of common stock dividends may require additional capital to fund capital expenditures and working capital needs. These additional capital expenditure requirements could include:

 

 

mergers and acquisitions;

 

improvements of existing services, development of new services; and

 

further development of operations support systems and other automated back-office systems.

Because our cost of developing new services, funding other strategic initiatives, and operating our business depend on a variety of factors (including, among other things, the number of customers and the service for which they subscribe, the nature and penetration of services that may be offered by us, regulatory changes, and actions taken by competitors in response to our strategic initiatives), it is almost certain that actual costs and revenues will materially vary from expected amounts and these variations could increase our future capital requirements.

Our ability to fund these potential capital expenditures and other potential costs in the near term will depend upon, among other things, our ability to generate consistent net income and positive cash flow from operations as well as our ability to seek and obtain additional financing if necessary. Each of these factors is, to a large extent, subject to economic, financial, competitive, political, regulatory, and other factors, many of which are beyond our control.


13


 

Critical Accounting Policies and Estimates

 

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect certain reported amounts and disclosures. In applying these accounting principles, we must often make individual estimates and assumptions regarding expected outcomes or uncertainties. As might be expected, the actual results or outcomes are generally different than the estimated or assumed amounts. These differences are usually minor and are included in our consolidated financial statements as soon as they are known. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates.

 

We periodically review the carrying value of our property and equipment whenever business conditions or events indicate that those assets may be impaired. If the estimated future undiscounted cash flows to be generated by the property and equipment are less than the carrying value of the assets, the assets are written down to fair market value and a charge is recorded to current operations. Significant and unanticipated changes in circumstances, including significant adverse changes in business climate, adverse actions by regulators, unanticipated competition, loss of key customers and/or changes in technology or markets, could require a provision for impairment in a future period.

 

We review loss contingencies and evaluate the events and circumstances related to these contingencies. We disclose material loss contingencies that are possible or probable, but cannot be estimated. For loss contingencies that are both estimable and probable the loss contingency is accrued and expense is recognized in the financial statements.

 

All of our revenues are recognized over the life of the contract as services are provided. Revenue that is received in advance of the services provided is deferred until the services are provided. Revenue related to set up charges is also deferred and amortized over the life of the contract. We classify certain taxes and fees billed to customers and remitted to governmental authorities on a net basis in revenue.

 

Item 3.     Quantitative and Qualitative Disclosures About Market Risk

 

As a smaller reporting company, we are not required and have not elected to report any information under this item.

 

Item 4.     Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act that are designed to ensure that information required to be disclosed in our reports filed or submitted to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to our management, including our principal executive and financial officer as appropriate, to allow timely decisions regarding required disclosures.

 

Our principal executive officer, who is also our principal financial officer, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2023 pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our CEO/CFO concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO/CFO, as appropriate, to allow timely decisions regarding required disclosure.

 

A system of controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

 

No change in our system of internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


14


 

PART II—OTHER INFORMATION

 

Item 1.  Legal Proceedings

 

We are not a party to any material legal proceedings.

Item 5.     Other Information

During the six months ended June 30, 2023, all events reportable on Form 8-K were reported.

Item 6.     Exhibits

 

 

 

 

 

 

 

The following exhibits are either filed as part of or are incorporated by reference in this Report:

 

 

 

 

Exhibit

 

 

 

 

Number

 

Exhibit

 

 

 

 

 

 

 

 

 

 

3.2

 

 

Bylaws (filed as Exhibit 2.2 to Registrant’s Registration Statement on Form 10-SB, file number 000-27031 filed on August 13, 1999, and incorporated herein by reference)

 

 

 

 

 

 

 

 

 

 

3.3

 

 

Amended and Restated Certificate of Incorporation of FullNet Communications, Inc. (filed as Exhibit 3.3 to Registrant’s Form 8-K, file number 000-27031 filed on June 7, 2013, and incorporated herein by reference)

 

 

 

 

 

 

 

 

 

 

4.4

 

 

Certificate of Designations, Preferences, and Rights of Series A Convertible Preferred Stock of FullNet Communications, Inc. (filed as Exhibit 4.18 to the Form 8-K filed June 7, 2013, and incorporated herein by reference)

 

 

 

 

 

 

 

 

 

 

31.1

 

 

Certification Pursuant to Rules 13a-14(a) and 15d-14(a) of Roger P. Baresel

 

*

 

 

 

 

 

 

 

 

32.1

 

 

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Roger P. Baresel

 

*

 

 

 

 

 

 

 

 

101.INS

 

 

XBRL Instance Document

 

**

 

101.SCH

 

 

XBRL Taxonomy Extension Schema Document

 

**

 

101.CAL

 

 

XBRL Taxonomy Extension Calculation Linkbase Document

 

**

 

101.DEF

 

 

XBRL Taxonomy Extension Definition Linkbase Document

 

**

 

101.LAB

 

 

XBRL Taxonomy Extension Label Linkbase Document

 

**

 

101.PRE

 

 

XBRL Taxonomy Extension Presentation Linkbase Document

 

**

 

104

 

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

*

 

Filed herewith.

 

 

 

**

 

In accordance with Rule 406T of Regulation S-T, the XBRL (Extensible Business Reporting Language) related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except to the extent expressly set forth by specific reference in such filing.

 

 

 


15


 

 

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

 

 

 

REGISTRANT:

FULLNET COMMUNICATIONS, INC.

 

 

Date: August 10, 2023

By:  

/s/ ROGER P. BARESEL  

 

 

 

Roger P. Baresel 

 

 

 

Chief Executive Officer and Chief Financial Officer 

 


16

 

EXHIBIT 31.1

CERTIFICATIONS

I, Roger P. Baresel, certify that:

1.

 

I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2023, of FullNet Communications, Inc.;

 

 

 

2.

 

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

 

3.

 

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

 

4.

 

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

 

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

 

 

 

(b)

 

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

 

 

 

(c)

 

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

 

 

 

(d)

 

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

 

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)

 

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

 

 

 

(b)

 

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

 

 Date: August 10, 2023

 

 /s/ Roger P. Baresel,

 

 

 

 Chief Executive Officer and Chief Financial Officer

 

 

 

 

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. §1350 (as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002), I, the undersigned Chief Executive and Chief Financial and Accounting Officer of FullNet Communications, Inc. (the “Company”), hereby certify that, to the best of my knowledge, the Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2023 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

 

 

 

Date: August 10, 2023 

/s/ Roger P. Baresel,  

 

 

Chief Executive Officer and Chief Financial Officer

 

 

 

 

 

 

 

v3.23.2
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2023
Aug. 06, 2023
Details    
Registrant CIK 0001092570  
Fiscal Year End --12-31  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2023  
Document Transition Report false  
Entity File Number 000-27031  
Entity Registrant Name FULLNET COMMUNICATIONS INC.  
Entity Incorporation, State or Country Code OK  
Entity Tax Identification Number 73-1473361  
Entity Address, Address Line One 201 Robert S. Kerr Avenue, Suite 210  
Entity Address, City or Town Oklahoma City  
Entity Address, State or Province OK  
Entity Address, Postal Zip Code 73102  
City Area Code 405  
Local Phone Number 236-8200  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   19,565,087
Amendment Flag false  
Document Fiscal Year Focus 2023  
Document Fiscal Period Focus Q2  
v3.23.2
CONDENSED CONSOLIDATED BALANCE SHEETS (June 30, 2023 Unaudited) - USD ($)
Jun. 30, 2023
Dec. 31, 2022
CURRENT ASSETS    
Cash and cash equivalents $ 3,018,020 $ 2,753,551
Accounts receivable, net 5,671 1,584
Prepaid expenses and other current assets 33,129 36,740
Total current assets 3,056,820 2,791,875
PROPERTY AND EQUIPMENT, net 78,630 87,173
OTHER ASSETS AND INTANGIBLE ASSETS 20,616 18,250
RIGHT OF USE LEASED ASSET 213,682 279,086
TOTAL ASSETS 3,369,748 3,176,384
CURRENT LIABILITIES    
Accounts payable 14,260 18,999
Accrued and other liabilities 444,600 413,646
Dividends payable 0 61,826
Operating lease liability - current portion 139,418 133,637
Deferred revenue 1,098,722 1,001,298
Total current liabilities 1,697,000 1,629,406
OPERATING LEASE LIABILITY - net of current portion 74,264 145,449
Total liabilities 1,771,264 1,774,855
SHAREHOLDERS' EQUITY    
Preferred Stock, Value 409,531 409,531
Common Stock, Value 196 192
Additional paid-in capital 9,117,734 9,108,410
Accumulated deficit (7,928,977) (8,116,604)
Total shareholders' equity 1,598,484 1,401,529
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,369,748 $ 3,176,384
v3.23.2
CONDENSED CONSOLIDATED BALANCE SHEETS (June 30, 2023 Unaudited) - Parenthetical - $ / shares
Jun. 30, 2023
Dec. 31, 2022
CONDENSED CONSOLIDATED BALANCE SHEETS (June 30, 2023 Unaudited)    
Preferred Stock, Par or Stated Value Per Share $ 0.001 $ 0.001
Preferred Stock, Shares Authorized 10,000,000 10,000,000
Preferred Stock, Shares Issued 618,257 618,257
Preferred Stock, Shares Outstanding 618,257 618,257
Common Stock, Par or Stated Value Per Share $ 0.00001 $ 0.00001
Common Stock, Shares Authorized 40,000,000 40,000,000
Common Stock, Shares, Issued 19,565,087 19,182,754
Common Stock, Shares, Outstanding 19,565,087 19,182,754
v3.23.2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)        
REVENUE $ 1,053,868 $ 1,062,413 $ 2,100,741 $ 2,178,859
COST OF REVENUE 250,734 215,143 495,288 442,610
Gross profit 803,134 847,270 1,605,453 1,736,249
OPERATING EXPENSES        
Sales and marketing 181,508 168,746 361,119 331,033
General and administrative expenses 434,765 458,604 882,342 916,064
Depreciation and amortization 4,134 4,353 8,544 6,907
Total operating expenses 620,407 631,703 1,252,005 1,254,004
INCOME FROM OPERATIONS 182,727 215,567 353,448 482,245
OTHER INCOME 41,070 3,911 69,927 4,296
NET INCOME BEFORE INCOME TAX 223,797 219,478 423,375 486,541
Income tax expense (56,884) (56,166) (107,808) (124,168)
Net Income (Loss) Attributable to Parent 166,913 163,312 315,567 362,373
Preferred stock dividends (17,002) (15,105) (34,004) (30,210)
Net income available to common shareholders $ 149,911 $ 148,207 $ 281,563 $ 332,163
Earnings Per Share        
Basic income per share $ 0.01 $ 0.01 $ 0.02 $ 0.02
Diluted income per share $ 0.01 $ 0.01 $ 0.02 $ 0.02
Weighted Average Number of Shares Outstanding, Basic 19,543,846 18,060,819 19,363,300 17,603,470
Weighted Average Number of Shares Outstanding, Diluted 19,633,735 18,587,690 19,454,281 18,133,114
v3.23.2
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($)
Common Stock
Preferred Stock
Additional Paid In Capital
Accumulated Deficit
Total
Equity Balance, Starting at Dec. 31, 2021 $ 171 $ 357,101 $ 9,072,109 $ (8,074,427) $ 1,354,954
Shares Outstanding, Starting at Dec. 31, 2021 17,146,121 568,257      
Shares Granted, Value, Share-Based Payment Arrangement, after Forfeiture $ 0 $ 0 6,437 0 6,437
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Net of Forfeitures 0 0      
Stock Issued During Period, Value, Stock Options Exercised $ 18 $ 0 26,156 0 26,174
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period 1,746,633 0      
Dividends $ 0 $ 0 0 (537,425) (537,425)
Net Income (Loss) 0 0 0 362,373 362,373
Equity Balance, Ending at Jun. 30, 2022 $ 192 $ 358,898 9,104,052 (8,249,479) 1,213,663
Shares Outstanding, Ending at Jun. 30, 2022 19,182,754 568,257      
Warrants exercised, value $ 3 $ 0 1,147 0 1,150
Warrants exercised, shares 290,000 0      
Amortization of increasing dividend rate preferred stock discount $ 0 $ 1,797 (1,797) 0 0
Equity Balance, Starting at Dec. 31, 2022 $ 192 $ 409,531 9,108,410 (8,116,603) 1,401,530
Shares Outstanding, Starting at Dec. 31, 2022 19,182,754 618,257      
Shares Granted, Value, Share-Based Payment Arrangement, after Forfeiture $ 0 $ 0 3,945 0 3,945
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Net of Forfeitures 0 0      
Stock Issued During Period, Value, Stock Options Exercised $ 4 $ 0 5,379 0 5,383
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period 382,333 0      
Dividends $ 0 $ 0 0 (127,941) (127,941)
Net Income (Loss) 0 0 0 315,567 315,567
Equity Balance, Ending at Jun. 30, 2023 $ 196 $ 409,531 $ 9,117,734 $ (7,928,977) $ 1,598,484
Shares Outstanding, Ending at Jun. 30, 2023 19,565,087 618,257      
v3.23.2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES    
Net income $ 315,567 $ 362,373
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation and amortization 8,544 6,907
Loss on disposal of assets 0 5,205
Noncash lease expense 65,404 60,092
Provision for deferred tax expense 0 38,359
Stock options expense 3,945 6,437
Provision for uncollectible accounts receivable 2,365 (802)
Changes in operating assets and liabilities    
Accounts receivable (6,452) 27,901
Prepaid expenses and other assets 1,245 (47,413)
Accounts payable (4,739) 45,592
Accrued and other liabilities 30,954 (4,315)
Deferred revenue 97,424 128,122
Operating lease liability (65,404) (60,092)
Net cash provided by operating activities 448,853 568,366
CASH FLOWS FROM INVESTING ACTIVITIES    
Cash paid for property and equipment 0 (47,889)
Net cash used in investing activities 0 (47,889)
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from exercise of options 5,383 26,173
Proceeds from exercise of warrants 0 1,150
Payment of dividends payable - preferred stock (61,826) (51,143)
Payment of dividends payable –common stock (127,941) (537,425)
Net cash used in financing activities (184,384) (561,245)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 264,469 (40,768)
Cash and cash equivalents at beginning of period 2,753,551 2,655,112
Cash and cash equivalents at end of period 3,018,020 2,614,344
NON-CASH INVESTING AND FINANCING ACTIVITIES    
Amortization of increasing dividend rate preferred stock discount $ 0 $ 1,797
v3.23.2
1. UNAUDITED INTERIM FINANCIAL STATEMENTS
6 Months Ended
Jun. 30, 2023
Notes  
1. UNAUDITED INTERIM FINANCIAL STATEMENTS

1.     UNAUDITED INTERIM FINANCIAL STATEMENTS

 

The unaudited condensed consolidated financial statements and related notes of FullNet Communications, Inc. and its subsidiaries (“we”, “our”, collectively, the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with our audited consolidated financial statements of and notes thereto for the year ended December 31, 2022.

 

The information furnished reflects, in the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of the interim periods presented. Operating results of the interim period are not necessarily indicative of the amounts that will be reported for the year ending December 31, 2023.

 

Recently Adopted Accounting Pronouncements

 

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. (“ASU”) 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, “Revenue from Contracts with Customers.” At the acquisition date, an acquirer should account for the related revenue contracts as if it had originated the contracts. Generally, this should result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree's financial statements, assuming the acquirer is able to assess and rely on how the acquiree applied ASC 606. ASU 2021-08 is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. We adopted ASU 2021-08 in the first quarter of 2022 with no material impact to our consolidated financial statements.

 

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions,” which clarifies and amends the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities. ASU 2022-03 is effective for interim and annual periods beginning after December 15, 2023, with early adoption permitted. We are evaluating the impact of the adoption of this guidance to our consolidated financial statements.

 

Income Per Share

 

Income per share – basic is calculated by dividing net income by the weighted average number of shares of stock outstanding during the year, including shares issuable without additional consideration. Income per share, assuming dilution, is calculated by dividing net income by the weighted average number of shares outstanding during the year adjusted for the effect of dilutive potential shares calculated using the treasury stock method for options and warrants and the “if converted” method for convertible preferred stock.

 

The reconciliation of basic and diluted income per share are as follows:

 

 

Three Months Ended

Six Months Ended

June 30,

2023

June 30,

2022

June 30,

2023

June 30,

2022

Net income:

    

    

 

 

Net income

$166,913  

$163,312  

$315,567  

$362,373  

Preferred stock dividends

(17,002) 

(15,105) 

(34,004) 

(30,210) 

Net income available to common shareholders

149,911  

148,207  

281,563  

332,163  

 

 

 

 

 

Basic income per share:

 

 

 

 

Weighted average common shares outstanding used in income per share

19,543,846  

18,060,819  

19,363,300  

17,603,470  

Basic income per share

0.01  

0.01  

0.02  

0.02  

 

 

 

 

 

Diluted income per share:

 

 

 

 

Shares used in diluted income per share

19,633,735  

18,587,690  

19,454,281  

18,133,114  

Diluted income per share

0.01  

0.01  

0.02  

0.02  

 

 

 

 

 

Computation of shares used in income per share:

 

 

 

 

Weighted average shares and share equivalents outstanding – basic

19,543,846  

18,060,819  

19,363,300  

17,603,470  

Effect of dilutive stock options

89,889  

526,871  

90,981  

529,644  

Weighted average shares and share equivalents outstanding – diluted

19,633,735  

18,587,690  

19,454,281  

18,133,114  

 

 

Schedule of Anti-dilutive Securities Excluded

 

 

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Preferred stock

618,257 

568,257 

618,257 

568,257 

Total anti-dilutive securities excluded

618,257 

568,257 

618,257 

568,257 

 

Anti-dilutive securities consist of stock options and convertible preferred stock whose exercise price or conversion price, respectively, was greater than the average market price of the common stock.

v3.23.2
2. STOCK BASED COMPENSATION
6 Months Ended
Jun. 30, 2023
Notes  
2. STOCK BASED COMPENSATION

2.     STOCK BASED COMPENSATION

 

The following table summarizes our employee stock option activity for the six months ended June 30, 2023:

 

Schedule of Employee Stock Option Activity

 

Options

 

Weighted average exercise price

 

Weighted average remaining contractual life (yrs)

 

Aggregate Intrinsic value

Options outstanding, December 31, 2022

556,330 

 

$0.051 

 

6.74 

 

$184,485 

 

 

 

 

 

 

 

 

Options exercised during the period

382,333 

 

$0.014 

 

 

 

 

 

 

 

 

 

 

 

 

Options forfeited during the period

33,000 

 

$0.003 

 

 

 

 

 

 

 

 

 

 

 

 

Options outstanding June 30, 2023

140,997 

 

$0.163 

 

7.33 

 

$29,898 

 

 

 

 

 

 

 

 

Options exercisable June 30, 2023

61,497 

 

$0.122 

 

6.19 

 

$14,913 

 

During the six months ended June 30, 2023, no nonqualified employee stock options were granted.

 

During the six months ended June 30, 2023, certain employees of ours exercised options to purchase 382,333 restricted shares of our common stock, par value $0.00001 per share. Proceeds from the exercise of the Options were $5,383. The common shares were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, without payment of any form of commissions or other remuneration.

 

On June 15, 2023, we paid the May 15, 2023 dividends declared on our common stock of $64,602, to shareholders of record on May 31, 2023. On March 15, 2023, we paid the February 15, 2023 dividends declared on our common stock of $63,339, to shareholders of record on February 28, 2023.

 

Total stock-based compensation expense for the six months ended June 30, 2023 was $3,945, all of which is related to options issued in prior years. Stock-based compensation is measured at the grant date, based on the calculated fair value of the option, and is recognized as an expense on a straight-line basis over the requisite employee service period (generally the vesting period of the grant).  

v3.23.2
3. WARRANT ACTIVITY
6 Months Ended
Jun. 30, 2023
Notes  
3. WARRANT ACTIVITY

3.     WARRANT ACTIVITY

 

During the six months ended June 30, 2023, no warrants were issued or exercised.

v3.23.2
4. SERIES A CONVERTIBLE PREFERRED STOCK
6 Months Ended
Jun. 30, 2023
Notes  
4. SERIES A CONVERTIBLE PREFERRED STOCK

4.     SERIES A CONVERTIBLE PREFERRED STOCK

 

On January 3, 2023, we paid the December 23, 2022 dividends declared on our Series A Convertible Preferred Stock of $61,826. As of June 30, 2023, the aggregate outstanding accumulated arrearages of cumulative dividend was $34,004 or if issued in common shares, 103,043 shares.

v3.23.2
5. LEASES
6 Months Ended
Jun. 30, 2023
Notes  
5. LEASES

5.     LEASES

 

We determine if a contract contains a lease by evaluating the nature and substance of the agreement. The only lease that we have is the real estate lease for our headquarters facility, which was originally executed on December 2, 1999, and which has been extended several times. This lease was renewed for a term of five additional years. We recognize lease expense for this lease on a straight-line basis over the lease term.

 

We used our incremental borrowing rate (8.5%) in determining the present value of the lease payments over the lease expiration date of December 31, 2024. At June 30, 2023, the remaining future cash payments under our lease total to $74,264.

 

For the six months ended June 30, 2023, we amortized $65,404 of our operating right-of-use, or ROU, asset and made payments of the associated lease liability for the same amount. At June 30, 2023, an operating ROU asset and liability of $213,682, each, are included on our condensed consolidated balance sheet.

 

For the six months ended June 30, 2023 and 2022, our fixed operating lease cost was $76,116, which is included within operating costs and expenses in our condensed consolidated statements of operations.

 

Future minimum lease payments under non-cancellable operating lease as of June 30, 2023, were as follows:

 

Year ending December 31,

2023 (six months remaining)

$76,116  

2024

152,232  

Total future minimum lease payments

228,348  

Present value of discount

(14,666) 

Current portion lease liability

(139,418) 

Long-term lease liability

$74,264  

v3.23.2
1. UNAUDITED INTERIM FINANCIAL STATEMENTS: Recently Adopted Accounting Pronouncements (Policies)
6 Months Ended
Jun. 30, 2023
Policies  
Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

 

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. (“ASU”) 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, “Revenue from Contracts with Customers.” At the acquisition date, an acquirer should account for the related revenue contracts as if it had originated the contracts. Generally, this should result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree's financial statements, assuming the acquirer is able to assess and rely on how the acquiree applied ASC 606. ASU 2021-08 is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. We adopted ASU 2021-08 in the first quarter of 2022 with no material impact to our consolidated financial statements.

 

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions,” which clarifies and amends the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities. ASU 2022-03 is effective for interim and annual periods beginning after December 15, 2023, with early adoption permitted. We are evaluating the impact of the adoption of this guidance to our consolidated financial statements.

v3.23.2
1. UNAUDITED INTERIM FINANCIAL STATEMENTS: Income Per Share (Policies)
6 Months Ended
Jun. 30, 2023
Policies  
Income Per Share

Income Per Share

 

Income per share – basic is calculated by dividing net income by the weighted average number of shares of stock outstanding during the year, including shares issuable without additional consideration. Income per share, assuming dilution, is calculated by dividing net income by the weighted average number of shares outstanding during the year adjusted for the effect of dilutive potential shares calculated using the treasury stock method for options and warrants and the “if converted” method for convertible preferred stock.

 

The reconciliation of basic and diluted income per share are as follows:

 

 

Three Months Ended

Six Months Ended

June 30,

2023

June 30,

2022

June 30,

2023

June 30,

2022

Net income:

    

    

 

 

Net income

$166,913  

$163,312  

$315,567  

$362,373  

Preferred stock dividends

(17,002) 

(15,105) 

(34,004) 

(30,210) 

Net income available to common shareholders

149,911  

148,207  

281,563  

332,163  

 

 

 

 

 

Basic income per share:

 

 

 

 

Weighted average common shares outstanding used in income per share

19,543,846  

18,060,819  

19,363,300  

17,603,470  

Basic income per share

0.01  

0.01  

0.02  

0.02  

 

 

 

 

 

Diluted income per share:

 

 

 

 

Shares used in diluted income per share

19,633,735  

18,587,690  

19,454,281  

18,133,114  

Diluted income per share

0.01  

0.01  

0.02  

0.02  

 

 

 

 

 

Computation of shares used in income per share:

 

 

 

 

Weighted average shares and share equivalents outstanding – basic

19,543,846  

18,060,819  

19,363,300  

17,603,470  

Effect of dilutive stock options

89,889  

526,871  

90,981  

529,644  

Weighted average shares and share equivalents outstanding – diluted

19,633,735  

18,587,690  

19,454,281  

18,133,114  

 

 

Schedule of Anti-dilutive Securities Excluded

 

 

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Preferred stock

618,257 

568,257 

618,257 

568,257 

Total anti-dilutive securities excluded

618,257 

568,257 

618,257 

568,257 

 

Anti-dilutive securities consist of stock options and convertible preferred stock whose exercise price or conversion price, respectively, was greater than the average market price of the common stock.

v3.23.2
1. UNAUDITED INTERIM FINANCIAL STATEMENTS: Income Per Share: Schedule of Earnings Per Share, Basic and Diluted (Tables)
6 Months Ended
Jun. 30, 2023
Tables/Schedules  
Schedule of Earnings Per Share, Basic and Diluted

 

 

Three Months Ended

Six Months Ended

June 30,

2023

June 30,

2022

June 30,

2023

June 30,

2022

Net income:

    

    

 

 

Net income

$166,913  

$163,312  

$315,567  

$362,373  

Preferred stock dividends

(17,002) 

(15,105) 

(34,004) 

(30,210) 

Net income available to common shareholders

149,911  

148,207  

281,563  

332,163  

 

 

 

 

 

Basic income per share:

 

 

 

 

Weighted average common shares outstanding used in income per share

19,543,846  

18,060,819  

19,363,300  

17,603,470  

Basic income per share

0.01  

0.01  

0.02  

0.02  

 

 

 

 

 

Diluted income per share:

 

 

 

 

Shares used in diluted income per share

19,633,735  

18,587,690  

19,454,281  

18,133,114  

Diluted income per share

0.01  

0.01  

0.02  

0.02  

 

 

 

 

 

Computation of shares used in income per share:

 

 

 

 

Weighted average shares and share equivalents outstanding – basic

19,543,846  

18,060,819  

19,363,300  

17,603,470  

Effect of dilutive stock options

89,889  

526,871  

90,981  

529,644  

Weighted average shares and share equivalents outstanding – diluted

19,633,735  

18,587,690  

19,454,281  

18,133,114  

v3.23.2
1. UNAUDITED INTERIM FINANCIAL STATEMENTS: Income Per Share: Schedule of Anti-dilutive Securities Excluded (Tables)
6 Months Ended
Jun. 30, 2023
Tables/Schedules  
Schedule of Anti-dilutive Securities Excluded

 

Schedule of Anti-dilutive Securities Excluded

 

 

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Preferred stock

618,257 

568,257 

618,257 

568,257 

Total anti-dilutive securities excluded

618,257 

568,257 

618,257 

568,257 

v3.23.2
2. STOCK BASED COMPENSATION: Schedule of Employee Stock Option Activity (Tables)
6 Months Ended
Jun. 30, 2023
Tables/Schedules  
Schedule of Employee Stock Option Activity

 

Schedule of Employee Stock Option Activity

 

Options

 

Weighted average exercise price

 

Weighted average remaining contractual life (yrs)

 

Aggregate Intrinsic value

Options outstanding, December 31, 2022

556,330 

 

$0.051 

 

6.74 

 

$184,485 

 

 

 

 

 

 

 

 

Options exercised during the period

382,333 

 

$0.014 

 

 

 

 

 

 

 

 

 

 

 

 

Options forfeited during the period

33,000 

 

$0.003 

 

 

 

 

 

 

 

 

 

 

 

 

Options outstanding June 30, 2023

140,997 

 

$0.163 

 

7.33 

 

$29,898 

 

 

 

 

 

 

 

 

Options exercisable June 30, 2023

61,497 

 

$0.122 

 

6.19 

 

$14,913 

v3.23.2
5. LEASES: Schedule of Future Minimum Rental Payments for Operating Leases (Tables)
6 Months Ended
Jun. 30, 2023
Tables/Schedules  
Schedule of Future Minimum Rental Payments for Operating Leases

 

Year ending December 31,

2023 (six months remaining)

$76,116  

2024

152,232  

Total future minimum lease payments

228,348  

Present value of discount

(14,666) 

Current portion lease liability

(139,418) 

Long-term lease liability

$74,264  

v3.23.2
1. UNAUDITED INTERIM FINANCIAL STATEMENTS: Income Per Share: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Net income        
Income (Loss) from Continuing Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest $ 166,913 $ 163,312 $ 315,567 $ 362,373
Preferred stock dividends (17,002) (15,105) (34,004) (30,210)
Net income available to common shareholders $ 149,911 $ 148,207 $ 281,563 $ 332,163
Basic income per share        
Weighted Average Number of Shares Outstanding, Basic 19,543,846 18,060,819 19,363,300 17,603,470
Basic income per share $ 0.01 $ 0.01 $ 0.02 $ 0.02
Diluted income per share        
Shares used in diluted income per share 19,633,735 18,587,690 19,454,281 18,133,114
Diluted income per share $ 0.01 $ 0.01 $ 0.02 $ 0.02
Computation of shares used in income per share        
Weighted Average Number of Shares Outstanding, Basic 19,543,846 18,060,819 19,363,300 17,603,470
Effect of dilutive stock options $ 89,889 $ 526,871 $ 90,981 $ 529,644
Weighted Average Number of Shares Outstanding, Diluted 19,633,735 18,587,690 19,454,281 18,133,114