Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended |
Mar. 31, 2014 | |
Document and Entity Information: | ' |
Entity Registrant Name | 'FULLNET COMMUNICATIONS INC |
Document Type | '10-Q |
Document Period End Date | 31-Mar-14 |
Amendment Flag | 'false |
Entity Central Index Key | '0001092570 |
Current Fiscal Year End Date | '--12-31 |
Entity Common Stock, Shares Outstanding | 9,118,161 |
Entity Filer Category | 'Smaller Reporting Company |
Entity Current Reporting Status | 'No |
Entity Voluntary Filers | 'No |
Entity Well-known Seasoned Issuer | 'No |
Document Fiscal Year Focus | '2014 |
Document Fiscal Period Focus | 'Q1 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | ||
ASSETS | ' | ' | ||
Cash | $22,880 | $30,072 | ||
Accounts receivable, net | 13,137 | 17,540 | ||
Prepaid expenses and other current assets | 12,032 | 8,728 | ||
Total current assets | 48,049 | 56,340 | ||
PROPERTY AND EQUIPMENT, net | 121,993 | 44,635 | ||
OTHER ASSETS AND INTANGIBLE ASSETS | 9,471 | 10,948 | ||
TOTAL ASSETS | 179,513 | 111,923 | ||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ' | ' | ||
Accounts payable | 159,390 | 127,077 | ||
Accrued and other liabilities | 442,942 | 410,763 | ||
Convertible notes payable, related party - current portion | 45,761 | 45,060 | ||
Deferred revenue | 352,650 | 302,129 | ||
Total current liabilities | 1,000,743 | 885,029 | ||
CONVERTIBLE NOTES PAYABLE, related party - less current portion | 222,871 | 230,129 | ||
Total liabilities | 1,223,614 | 1,115,158 | ||
STOCKHOLDERS' DEFICIT | ' | ' | ||
Preferred stock | 445,513 | [1] | 430,382 | [1] |
Common stock | 91 | [2] | 91 | [2] |
Additional paid-in capital | 8,707,364 | 8,716,803 | ||
Accumulated deficit | -10,197,069 | -10,150,511 | ||
Total stockholders' deficit | -1,044,101 | -1,003,235 | ||
TOTAL LIABILITES AND STOCKHOLDERS' DEFICIT | $179,513 | $111,923 | ||
[1] | $.001 par value; authorized, 10,000,000 shares; Series A convertible issued and outstanding, 987,102 shares | |||
[2] | $.00001 par value; authorized, 40,000,000 shares; issued and outstanding, 9,118,161 shares |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position Parenthetical | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock Series A convertible, shares outstanding | 987,102 | 987,102 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares outstanding | 9,118,161 | 9,118,161 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Income Statement | ' | ' |
Access service revenues | $23,789 | $34,406 |
Co-location and other revenues | 399,988 | 358,539 |
Total revenues | 423,777 | 392,945 |
Cost of access service revenues | 27,214 | 28,679 |
Cost of co-location and other revenues | 85,417 | 90,900 |
Selling, general and administrative expenses | 345,694 | 325,594 |
Depreciation and amortization | 7,915 | 8,083 |
Total operating costs and expenses | 466,240 | 453,256 |
LOSS FROM OPERATIONS | -42,463 | -60,311 |
INTEREST EXPENSE | -4,095 | -5,387 |
NET LOSS | -46,558 | -65,698 |
Preferred stock dividends | -15,131 | 0 |
Net loss available to common stockholders | ($61,689) | ($65,698) |
Net loss per common share -basic and diluted | ($0.01) | ($0.01) |
Weighted average shares outstanding - basic and diluted | 9,118,161 | 9,118,161 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $) | Common Stock | Preferred Stock | Additional Paid In Capital | Accumulated Deficit | Total |
Stockholders' deficit at Dec. 31, 2013 | $91 | $430,382 | $8,716,803 | ($10,150,511) | ($1,003,235) |
Shares outstanding at Dec. 31, 2013 | 9,118,161 | 987,102 | ' | ' | 10,105,263 |
Stock options compensation | ' | ' | 5,692 | ' | 5,692 |
Amortization of increasing dividend rate preferred stock discount | 0 | 15,131 | -15,131 | 0 | ' |
Net loss | ' | ' | ' | -46,558 | -46,558 |
Stockholders' deficit at Mar. 31, 2014 | $91 | $445,513 | $8,707,364 | ($10,197,069) | ($1,044,101) |
Shares outstanding at Mar. 31, 2014 | 9,118,161 | 987,102 | ' | ' | 10,105,263 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Cash Flow Statement | ' | ' |
Net loss | ($46,558) | ($65,698) |
Depreciation and amortization | 7,915 | 8,083 |
Stock options compensation | 5,692 | 936 |
Provision for uncollectible accounts receivable | -8,176 | 5,120 |
Net (increase) decrease in Accounts receivable | 12,579 | -8,815 |
Net (increase) decrease in Prepaid expenses and other current assets | -3,304 | -2,381 |
Net increase (decrease) in Accounts payable | -12,397 | 5,586 |
Net increase (decrease) in Accrued and other liabilities | 32,179 | 61,886 |
Net increase (decrease) in Deferred revenue | 50,521 | 8,147 |
Net cash provided by operating activities | 38,451 | 12,864 |
Purchases of property and equipment | -39,086 | -2,448 |
Net cash used in investing activities | -39,086 | -2,448 |
Principal payments on borrowings under notes payable | -6,557 | -6,195 |
Net cash used in financing activities | -6,557 | -6,195 |
Net increase (decrease) in cash | -7,192 | 4,221 |
Cash at beginning of period | 30,072 | 10,847 |
Cash at end of period | 22,880 | 15,068 |
Cash paid for interest | $4,095 | $5,441 |
Fixed assets purchased on accounts | 44,710 | ' |
Amortization of increasing dividend rate preferred stock discount | 15,131 | ' |
Unaudited_Interim_Financial_St
Unaudited Interim Financial Statements | 3 Months Ended | |||
Mar. 31, 2014 | ||||
Notes | ' | |||
Unaudited Interim Financial Statements | ' | |||
1 | UNAUDITED INTERIM FINANCIAL STATEMENTS | |||
The unaudited condensed consolidated financial statements and related notes 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 the audited consolidated financial statements of the Company and notes thereto for the year ended December 31, 2013. | ||||
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, 2014. Certain reclassifications have been made to prior period balances to conform with the presentation for the current period. |
Going_Concern_And_Managements_
Going Concern And Management's Plans | 3 Months Ended | ||
Mar. 31, 2014 | |||
Notes | ' | ||
Going Concern And Management's Plans | ' | ||
2 | GOING CONCERN AND MANAGEMENT’S PLANS | ||
At March 31, 2014, current liabilities exceed current assets by $952,694. The Company does not have a line of credit or credit facility to serve as an additional source of liquidity. Historically the Company has relied on shareholder loans as an additional source of funds. These factors raise substantial doubts about the Company’s ability to continue as a going concern. | |||
The ability of the Company to continue as a going concern is dependent upon continued operations of the Company that in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, to maintain present financing, to achieve the objectives of its business plan 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 in existence. | |||
The Company’s business plan includes, among other things, expansion through mergers and acquisitions and the development of its web hosting, co-location, traditional telephone services and advanced voice and data solutions. Execution of the Company’s business plan will require significant capital to fund capital expenditures, working capital needs and debt service. Current cash balances will not be sufficient to fund the Company’s current business plan beyond the next few months. As a consequence, the Company is currently focusing on revenue enhancement and cost cutting opportunities as well as working to sell non-core assets and to extend vendor payment terms. The Company continues to seek additional convertible debt or equity financing as well as the placement of a credit facility to fund the Company’s liquidity. There can be no assurance that the Company will be able to obtain additional capital on satisfactory terms, or at all, or on terms that will not dilute the shareholders’ interests. |
Convertible_Notes_Payable_Rela
Convertible Notes Payable Related Party | 3 Months Ended | ||
Mar. 31, 2014 | |||
Notes | ' | ||
Convertible Notes Payable Related Party | ' | ||
3 | CONVERTIBLE NOTES PAYABLE RELATED PARTY | ||
At December 31, 2013 the Company had a secured convertible promissory note from a shareholder with a balance of $225,189. During the three months ended March 31, 2014, the Company made principal and interest payments totaling $6,557. The secured convertible promissory note had a balance of $218,632 at March 31, 2014. | |||
At December 31, 2013 the Company had a secured convertible promissory from a shareholder with a balance of $50,000. During the three months ended March 31, 2014, the Company made interest payments totaling $750. The secured convertible promissory note had a balance of $50,000 at March 31, 2014. |
Stock_Based_Compensation
Stock Based Compensation | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Notes | ' | |||||||||||||
Stock Based Compensation | ' | |||||||||||||
4 | STOCK BASED COMPENSATION | |||||||||||||
The following table summarizes the Company’s employee stock option activity for the three months ended March 31, 2014: | ||||||||||||||
Schedule of Employee Stock Option Activity | ||||||||||||||
Weighted | ||||||||||||||
Weighted | average | Aggregate | ||||||||||||
average | remaining | intrinsic | ||||||||||||
Options | exercise price | contractual life (yrs) | value | |||||||||||
Options outstanding, December 31, 2013 | 3,202,882 | $0.03 | 9.1 | |||||||||||
Options exercisable, December 31, 2013 | 1,755,882 | $0.03 | 8.75 | $ 42,261 | ||||||||||
Options granted during the period | 3,000 | 0.05 | ||||||||||||
Options outstanding, March 31, 2014 | 3,205,882 | $0.03 | 8.85 | |||||||||||
Options exercisable, March 31, 2014 | 1,756,882 | $0.03 | 8.5 | $ 15,838 | ||||||||||
During the three months ended March 31, 2014, 3,000 nonqualified employee stock options were granted with an exercise price of $.05. The stock options shall vest one-third each year starting from February 11, 2015, and shall expire on February 11, 2024. | ||||||||||||||
Stock-based compensation expense for the three months ended March 31, 2014 was $5,692. | ||||||||||||||
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). | ||||||||||||||
The Black-Scholes option pricing model was used with the following weighted-average assumptions for options granted during the three months ended March 31, 2014: | ||||||||||||||
Risk-free interest rate 1.7% | ||||||||||||||
Expected option life 5 years | ||||||||||||||
Expected volatility 234% | ||||||||||||||
Expected dividend yield 0% |
Series_A_Convertible_Preferred
Series A Convertible Preferred Stock | 3 Months Ended | ||
Mar. 31, 2014 | |||
Notes | ' | ||
Series A Convertible Preferred Stock | ' | ||
5 | SERIES A CONVERTIBLE PREFERRED STOCK | ||
On March 31, 2014 the Company’s board of directors made the determination that it was in the best interest of the Company and its stockholders to conserve the Company’s working capital at this time and not make the annual dividend payment for the year ending December 31, 2013. As a result, pursuant to the Certificate of Designations, Preferences, and Rights of the Series A Convertible Preferred Stock, each share of the Series A Convertible Preferred Stock shall hereafter be entitled to two votes upon any matter that the holders of the Company’s common stock are entitled to vote. | |||
The amortization of the increasing dividend rate preferred stock discount for the three months ended March 31, 2014 was $15,131. |
Subsequent_Events
Subsequent Events | 3 Months Ended | ||
Mar. 31, 2014 | |||
Notes | ' | ||
Subsequent Events | ' | ||
6 | SUBSEQUENT EVENTS | ||
In April 2014, the Company granted 1,500 employee stock options to one employee with an exercise price of $.03. The stock options shall vest one-third each year starting from April 2, 2015, and shall expire on April 2, 2024. |
Unaudited_Interim_Financial_St1
Unaudited Interim Financial Statements: Basis of Accounting, Policy (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
Policies | ' |
Basis of Accounting, Policy | ' |
The unaudited condensed consolidated financial statements and related notes 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 the audited consolidated financial statements of the Company and notes thereto for the year ended December 31, 2013. |
Going_Concern_And_Managements_1
Going Concern And Management's Plans: Liquidity Disclosure (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
Policies | ' |
Liquidity Disclosure | ' |
At March 31, 2014, current liabilities exceed current assets by $952,694. The Company does not have a line of credit or credit facility to serve as an additional source of liquidity. Historically the Company has relied on shareholder loans as an additional source of funds. These factors raise substantial doubts about the Company’s ability to continue as a going concern. | |
The ability of the Company to continue as a going concern is dependent upon continued operations of the Company that in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, to maintain present financing, to achieve the objectives of its business plan 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 in existence. | |
The Company’s business plan includes, among other things, expansion through mergers and acquisitions and the development of its web hosting, co-location, traditional telephone services and advanced voice and data solutions. Execution of the Company’s business plan will require significant capital to fund capital expenditures, working capital needs and debt service. Current cash balances will not be sufficient to fund the Company’s current business plan beyond the next few months. As a consequence, the Company is currently focusing on revenue enhancement and cost cutting opportunities as well as working to sell non-core assets and to extend vendor payment terms. The Company continues to seek additional convertible debt or equity financing as well as the placement of a credit facility to fund the Company’s liquidity. There can be no assurance that the Company will be able to obtain additional capital on satisfactory terms, or at all, or on terms that will not dilute the shareholders’ interests. |
Stock_Based_Compensation_Share
Stock Based Compensation: Share-based Compensation, Option and Incentive Plans Policy (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
Policies | ' |
Share-based Compensation, Option and Incentive Plans Policy | ' |
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). | |
The Black-Scholes option pricing model was used with the following weighted-average assumptions for options granted during the three months ended March 31, 2014: | |
Risk-free interest rate 1.7% | |
Expected option life 5 years | |
Expected volatility 234% | |
Expected dividend yield 0% |
Stock_Based_Compensation_Sched
Stock Based Compensation: Schedule of Share-based Compensation, Stock Options, Activity (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Tables/Schedules | ' | |||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity | ' | |||||||||||||
Schedule of Employee Stock Option Activity | ||||||||||||||
Weighted | ||||||||||||||
Weighted | average | Aggregate | ||||||||||||
average | remaining | intrinsic | ||||||||||||
Options | exercise price | contractual life (yrs) | value | |||||||||||
Options outstanding, December 31, 2013 | 3,202,882 | $0.03 | 9.1 | |||||||||||
Options exercisable, December 31, 2013 | 1,755,882 | $0.03 | 8.75 | $ 42,261 | ||||||||||
Options granted during the period | 3,000 | 0.05 | ||||||||||||
Options outstanding, March 31, 2014 | 3,205,882 | $0.03 | 8.85 | |||||||||||
Options exercisable, March 31, 2014 | 1,756,882 | $0.03 | 8.5 | $ 15,838 |
Convertible_Notes_Payable_Rela1
Convertible Notes Payable Related Party (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | |
Details | ' | ' |
Convertible Notes Payable | $218,632 | $225,189 |
Repayments of Convertible Debt | 6,557 | ' |
Convertible Debt | $50,000 | $50,000 |
Stock_Based_Compensation_Sched1
Stock Based Compensation: Schedule of Share-based Compensation, Stock Options, Activity (Details) (USD $) | 1 Months Ended | 3 Months Ended | |
Apr. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |
Details | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | ' | 3,205,882 | 3,202,882 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | ' | $0.03 | $0.03 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | ' | 8.85 | 8.5 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | ' | 1,756,882 | 1,755,882 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | ' | $0.03 | $0.03 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | 1,500 | 3,000 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $0.03 | $0.05 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | ' | $15,838 | ' |
Stock_Based_Compensation_Detai
Stock Based Compensation (Details) (USD $) | 1 Months Ended | 3 Months Ended |
Apr. 30, 2014 | Mar. 31, 2014 | |
Details | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 'The stock options shall vest one-third each year starting from April 2, 2015 | 'The stock options shall vest one-third each year starting from February 11, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Date | 'April 2, 2024 | 'February 11, 2024 |
Allocated Share-based Compensation Expense | ' | $5,692 |
Stock_Based_Compensation_Share1
Stock Based Compensation: Share-based Compensation, Option and Incentive Plans Policy (Details) | 3 Months Ended |
Mar. 31, 2014 | |
Details | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 1.70% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 5 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 234.00% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 1 Months Ended | 3 Months Ended |
Apr. 30, 2014 | Mar. 31, 2014 | |
Details | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | 1,500 | 3,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $0.03 | $0.05 |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 'The stock options shall vest one-third each year starting from April 2, 2015 | 'The stock options shall vest one-third each year starting from February 11, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Date | 'April 2, 2024 | 'February 11, 2024 |