UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): February 1, 2018

 

FULLNET COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

Oklahoma

 

000-27031

 

73-1473361

(State or other Jurisdiction of Incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

 

 

201 Robert S. Kerr Avenue, Suite 210

Oklahoma City, Oklahoma

 

 

73102

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (405) 236-8200

 

 

(Former name or former address if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

 

1


 

  Item 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

 

The information disclosed in Item 2.01 of this Current Report on Form 8-K is incorporated by reference into this Item 1.01.

 

 

Item 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.

 

On February 1, 2018, FullTel, Inc. (“FullTel”), a wholly-owned subsidiary of FullNet Communications, Inc. (the “Company”), entered into an Asset Purchase Agreement (the “Agreement”) with Dobson Technologies – Transport and Telecom Solutions, LLC (“Dobson”), pursuant to which FullTel sold substantially all of its customers and certain operating assets to Dobson for $246,500 in cash as of the date of execution of the Agreement.

 

The foregoing description of the terms of the Agreement is qualified in its entirety by reference to the full text of the Agreement, a copy of which is attached as Exhibit 2.1 hereto and is incorporated herein by reference.

 

The Company has attached as Exhibit 99.1 hereto unaudited pro forma condensed consolidated financial information to illustrate the pro forma effects of this transaction on the financial statements of the Company.

 

 

Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

 

(b) Pro Forma Financial Information.   The unaudited pro forma condensed consolidated financial information of the Company is filed as Exhibit 99.1 hereto and incorporated herein by reference.

 

(d) Exhibits

 

 

 

Exhibit 2.1

Asset Purchase Agreement dated February 1, 2018, by and among FullTel, Inc. and Dobson Technologies – Transport and Telecom Solutions, LLC .*

 

*Pursuant to Item 601(b)(2) of Regulation S-K exhibits and schedules (and similar attachments) have been omitted. The Company agrees to furnish, supplementally, a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request by the Commission.

 

Exhibit 99.1 Unaudited Pro Forma Condensed consolidated Financial Information of the Company .  

 

 

 

Page 2 of 4



Forward-Looking Statements

    

This current report contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements include, but are not limited to, statements regarding management’s intents, beliefs and current expectations and typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” “forecast,” “target,” “will,” “would,” “intend,” “believe,” “project,” “estimate,” “plan” and similar words. Such forward-looking statements include, but are not limited to, the results of the transaction effected by the Asset Purchase Agreement, strategic objectives, business prospects, anticipated economic performance and financial condition, management’s expectations and other similar matters. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute current expectations based on reasonable assumptions.

 

Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in the Company’s filings with the Securities and Exchange Commission, including, but not limited to, the risks discussed under Item 1A “Risk Factors” in FullNet’s 2016 Annual Report on Form 10-K. Readers are encouraged to read the Company’s filings to learn more about the risk factors associated with FullNet’s business. FullNet undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Any security holder who desires copies of the Company’s periodic reports filed with the Securities and Exchange Commission may obtain copies (excluding Exhibits) without charge by addressing a request to the Office of the Secretary, FullNet Communications, Inc., 201 Robert S. Kerr Avenue, Suite 210, Oklahoma City, OK 73102. Exhibits also may be requested, but a charge equal to the reproduction cost thereof will be made. Copies of such reports also may be obtained by visiting the Company’s website at www.fullnet.net.

 

 

 

Page 3 of 4


 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

FULLNET COMMUNICATIONS, INC.

 

 

By: / s/ Roger P. Baresel                               

Roger P. Baresel

Chief Executive Officer  

 

 

 

Dated: February 1, 2018

 

 

 

 

 

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Exhibit 2.1

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (“Agreement”) is entered into this 1st day of February 2018 (the “Effective Date”), by and between FullTel, Inc., an Oklahoma corporation, with headquarter offices at 201 Robert S. Kerr Avenue, Suite 210, Oklahoma City, Oklahoma 73102 (“FullTel”), and Dobson Technologies – Transport and Telecom Solutions, LLC, an Oklahoma limited liability company, with offices located at 14101 Wireless Way, Suite 300, Oklahoma City, OK 73134 (“Dobson”).  Hereinafter, FullTel and Dobson may be referred to individually as a “Party” and collectively as the “Parties.”

 

WHEREAS, FullTel is a Competitive Local Exchange Carrier; and

 

WHEREAS, Dobson is a Competitive Local Exchange Carrier; and 

 

WHEREAS, FullTel is the owner of certain telecommunications customer contracts, customer contract rights, specific business equipment assets, fiber microduct rights, leases, and fiber assets which FullTel desires to sell and assign to Dobson; and

 

WHEREAS, Dobson desires to purchase and, where applicable, accept assignment of the above-described assets of FullTel; and

 

NOW, THEREFORE, for good and valuable consideration, the receipt and legal adequacy of which are hereby acknowledged, and upon the mutual covenants, conditions, warranties and representations contained herein, the Parties agree as follows:

 

1. Purchase Price.   Dobson shall pay to FullTel at Closing, as defined below, the sum of $246,500, subject to adjustment at Closing as set forth below (the “Purchase Price”). 

 

2. Assets to be Sold and Assigned From FullTel to Dobson.   

 

A.  FullTel shall sell and assign, and Dobson shall purchase and assume from FullTel, the internet/voice data contract rights and services related to thirty-four (34) customers currently being billed and serviced by FullTel as of the date of execution of this Agreement (the “Customer Assets”), said Customer Assets identified on the attached Exhibit “A”.  The Purchase Price shall be contingent on Dobson’s reasonable determination that it would only need to make a de minimis investment to convert the Customer Assets to Dobson’s current services, and that such services can be transitioned to Dobson within a forty-five (45) day period.  In the event that the Customer Assets contain more or less than the contemplated thirty-four (34) customers of FullTel, the Parties will confer and use commercially reasonable efforts to reduce or increase the Purchase Price for the Customer Assets proportionally based on the number of Customer Assets being conveyed by FullTel to Dobson at Closing. FullTel agrees to forward to Dobson any payments received by FullTel for services performed by Dobson as to the Customer Assets after February 28, 2018, and Dobson agrees to forward to FullTel any payments received by Dobson for services performed by FullTel as to the Customer Assets prior to February 28, 2018. Dobson specifically rejects the assumption of any FullTel accounts receivables owed to FullTel prior to Closing, and such account receivables shall remain the property of FullTel.

 

B.  At Closing, FullTel shall grant to Dobson the rights and access as required by Dobson to place a microduct from a pull box located in the ceiling of the elevator lobby of the second floor of the Bank of Oklahoma Building located at 201 Robert S. Kerr Avenue, Oklahoma City, Oklahoma 73102, thence out to the Southeast handhole (located on Robinson Avenue), and thence from the Southeast handhole to the Northeast handhole (also located on Robinson Avenue).  All installation costs to be borne by Dobson.


C.  FullTel shall sell and convey to Dobson, free and clear of all liens and encumbrances, four strands of dark fiber between FullTel’s data center located on the second floor of 201 Robert S. Kerr Avenue, Oklahoma City, OK 73102, and the AT&T Central office located at 405 North Broadway, Oklahoma City, Oklahoma.  

 

D.  The Parties acknowledge and agree that FullTel possesses certain lease rights as to certain locations that Dobson shall evaluate for assignment by FullTel to Dobson.  In the event the Parties reach an agreement prior to or at Closing as to assignment of such lease rights, the Parties will work towards Dobson taking assignment of said obligations at or shortly after Closing.

 

E.  The Parties acknowledge and agree that FullTel possesses certain underlying circuit connections (mainly through Cox Communications) to customer locations.  In the event the Parties reach an agreement prior to or at Closing as to assignment of such underlying circuit rights, the Parties will work towards Dobson taking assignment of said obligations at or shortly after Closing.

 

F.  In connection with the Customer Assets to be conveyed and assigned by FullTel to Dobson as set forth in Paragraph 2(A) above, and as part of the Purchase Price for the Customer Assets to be paid by Dobson, FullTel shall sell, convey, assign, transfer and deliver to Dobson at Closing, free and clear of all liens, encumbrances, claims and charges, those assets owned by FullTel which are described in Exhibit B attached to this Agreement (collectively referred to herein as the “Equipment Assets”).

 

G.  Following Closing, FullTel shall continue providing service to the customers included in the Customer Assets (the “Customers”) for so long as Dobson may request through March 15, 2018, at which time FullTel’s network will go dark and FullTel will no longer be able to service any remaining Customers.  On February 1, 2018, FullTel shall bill, collect, and keep the revenue associated with the Customers in addition to all revenues billed prior to that date.

 

3. Closing.  Closing for all transactions described above shall take place on February1, 2018, at a place and time agreed to between the Parties. 

 

4. Indemnification. FullTel shall indemnify and hold Dobson and its officers, managers, employees and agents, and their respective successors and assigns, harmless against and in respect of any and all third party claims, actions, judgments, liabilities, liens, damages, penalties, fines, costs, amounts, assessments, charges or expenses (including reasonable attorneys’ and other professional fees) (collectively, “Damages”), incurred by such parties from or relating to FullTel’s conduct of the Customer Assets business prior to Closing.  Dobson shall indemnify and hold harmless FullTel and its officers, directors, employees and agents, and their respective successors and assigns, harmless against and in respect of any and all Damages incurred by such parties from or relating to Dobson’s conduct of the Customer Assets business after Closing. 

 

5. Confidentiality.   The terms of this Agreement shall be considered confidential and shall not be disclosed to any employees of either Party without a direct need to know or to any third parties for any reason whatsoever except as may be required by law; provided, however, that both Parties may discuss the terms of this Agreement with their financial and legal advisors. This confidentiality clause shall survive the Closing and remain in effect in perpetuity. 

 

6. Non-Compete.  During the term of this Agreement, and for three (3) years following the termination of the Agreement, FullTel shall not accept, solicit or canvass, directly or indirectly, any business, contracts, transactions or any sort of business endeavors relating to internet/voice type services.  It is further agreed that as of the Closing date of this Agreement, and during any applicable transition period, FullTel shall use its best reasonable efforts on behalf of FullTel to continue amicable business relationships with the customers associated with the Customer Assets, and shall not induce, encourage or cause any customer encompassed by the Customer Assets to terminate its business relationship with FullTel.  

 

7. Binding Effect.  Notwithstanding any law or rule of contract interpretation to the contrary, this Agreement shall not be interpreted strictly for or against any Party hereto. In the event any covenant, condition or other  


provision contained in this Agreement is held to be invalid, void or unlawful by any administrative agency or court of competent jurisdiction, that provision shall be deemed severable from the remainder of this Agreement and shall in no way affect, impair or invalidate any other covenant, condition or other provision contained herein; and the Parties shall use their reasonable best efforts to make the covenant, condition or other provision valid and lawful, if possible, so as to preserve the rights and obligations of the Parties hereto.

 

8. Assumption of Liabilities.  Dobson shall not assume or be responsible for any liabilities or obligations of FullTel prior to Closing unless expressly set forth herein. 

 

9. Representations and Warranties of Dobson.  Dobson is a limited liability company duly and validly organized and existing and in good standing under the laws of the State of Oklahoma and has full power to consummate the transactions contemplated and set forth herein. This Agreement has been duly authorized and approved by all required corporate action of Dobson. Neither the execution nor the delivery of this Agreement nor the consummation of the transactions contemplated hereby will conflict with, or result in, any violation or default under, any agreement, mortgage, indenture, licenses, permit, lease or other instrument, judgment, decree, order, law or regulation by which Dobson is bound. 

 

10. Representations and Warranties of FullTel.  FullTel is an Oklahoma corporation duly and validly organized and existing and in good standing under the laws of the State of Oklahoma, and has full power to consummate the transactions contemplated and set forth herein.  This Agreement has been duly authorized and approved by all required corporate action of FullTel. Neither the execution nor the delivery of this Agreement nor the consummation of the transactions contemplated hereby will conflict with, or result in, any violation or default under, any agreement, mortgage, indenture, licenses, permit, lease or other instrument, judgment, decree, order, law or regulation by which FullTel is bound. FullTel represents and warrants that Exhibit A contains a listing of the name, contact information and monthly revenue of each customer encompassed by the Customer Assets.  FullTel represents and warrants that the Equipment Assets listed in Exhibit B are owned and transferable by FullTel to Dobson.  

 

11. Publicity.   Any general notices, releases, statements and communications to employees, suppliers, distributors and/or the customers encompassed by the Customer Assets of FullTel, and to the general public and the press occurring after the Effective Date of this Agreement and relating to the transactions covered by this Agreement, shall be made only at such times and in such manner as may be mutually agreed upon by the Parties. 

 

12. Severability; Waivers.   The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. No waiver of any of the provisions of this Agreement shall constitute a waiver of any other provision, nor shall any waiver as to one event constitute a waiver as to any other event. 

 

13. Assignment.   Neither Party hereto shall sell, assign or transfer this Agreement, or any part thereof, without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed. 

 

14. Counterparts.   This Agreement, and any Exhibits attached hereto, may be executed in counterparts, each of which shall be deemed originals, regardless of whether such execution is made electronically or in hard copy, but all of which together shall constitute one and the same instrument. 

 

15. Entire Agreement.  This Agreement, together with the attached Exhibits, represents the entire agreement of the Parties with respect to the subject matter hereof and supersedes all other agreements, written or oral, between the Parties relating to the transactions contemplated herein.  

 

16. Governing Law.    This Agreement shall be interpreted, construed and enforced in accordance with the laws of the State of Oklahoma. 


IN WITNESS WHEREOF , the parties have caused this Agreement to be duly executed as of the Effective Date first above written.

DOBSON TECHNOLOGIES  €TRANSPORT AND FULLTEL, INC.  

   TELECOM SOLUTIONS, LLC

 

 

By: By:  

Printed Name:  Jim Horsburgh Printed Name:  Roger P. Baresel 

Title:  Chief Development Officer Title:  Chief Executive Officer       

 

Exhibit 99.1

 

FullNet Communications, Inc. and Subsidiaries

Unaudited Pro Forma Condensed Consolidated Financial Statements

 

The following unaudited pro forma condensed consolidated financial information is presented to illustrate the effect of FullNet Communications, Inc.’s (“we”, “our”, “us”, or the “Company”) sale of substantially all of our wholly-owned subsidiary FullTel, Inc.’s customers and certain operating assets (collectively the “FullTel Assets”) on our historical financial position and operating results. This pro forma information is based on the historical condensed consolidated financial statements of the Company and should be read in conjunction with the accompanying footnotes and the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016, and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.

 

The accompanying unaudited pro forma condensed consolidated balance sheet as of September 30, 2017 has been prepared to give effect to the sale as if it had occurred on September 30, 2017. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2016 and the nine months ended September 30, 2017 have been prepared to give effect to the sale as if it had occurred on January 1, 2016, and January 1, 2017, respectively.

 

The unaudited pro forma condensed consolidated balance sheet and statements of operations included herein are for information purposes only and are not necessarily indicative of the results that might have occurred had the sale taken place on the respective dates assumed. Actual results may differ significantly from those reflected here in the unaudited condensed consolidated pro forma financial statements for various reasons, including but not limited to, the differences between the assumptions used to prepare the unaudited pro forma condensed consolidated financial statements and actual results. The pro forma adjustments in the unaudited pro forma condensed consolidated balance sheet and the statements of operations included herein include the use of estimates and assumptions as described in the accompanying notes. The pro forma adjustments are based on information available to management at the time these unaudited pro forma condensed consolidated financial statements were prepared. We believe our current estimates provide a reasonable basis of presenting the significant effects of the transaction. However, the estimates and assumptions are subject to change as additional information becomes available.

 

The unaudited pro forma condensed consolidated financial information gives effect to the following:

 

a) On February 1, 2018, FullTel, Inc. (“FullTel”), a wholly-owned subsidiary of FullNet Communications, Inc. (the “Company”), entered into an Asset Purchase Agreement (the “Agreement”) with Dobson Technologies – Transport and Telecom Solutions, LLC (“Dobson”), pursuant to which FullTel sold substantially all of its customers and certain operating assets to Dobson for $246,500 in cash as of the date of execution of the Agreement.  

 

b) Assumes the utilization of the net proceeds received from the sale to repay in full the outstanding balance on the convertible promissory note from a shareholder secured by all of our assets, and to pay certain FullTel liabilities.  

 

The preparation of the unaudited pro forma condensed consolidated financial information is based on financial statements prepared in accordance with accounting principles generally accepted in the United States. These principles require the use of estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates.


FullNet Communications, Inc. and Subsidiaries

Unaudited Pro Forma Condensed Consolidated Balance Sheet

September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

As Reported

Pro Forma Adjustments

Notes

Pro Forma Continuing Operations

ASSETS

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

Cash

 

$ 23,958   

40,011   

(1)

63,969 

Accounts receivable, net

 

7,672   

   

 

7,672 

Prepaid expenses and other current assets

 

19,966   

   

 

19,966 

 

 

 

 

 

 

Total current assets

 

51,596   

40,011   

 

91,607 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT, net

 

64,280   

   

(2)

64,280 

 

 

 

 

 

 

OTHER ASSETS AND INTANGIBLE ASSETS

 

24,021   

   

 

24,021 

 

 

 

 

 

 

TOTAL ASSETS

 

$ 139,897   

40,011   

 

179,908 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

Accounts payable

 

$ 86,342   

(54,229)   

(1)

32,113 

Accounts payable, related party

 

3,461   

   

 

3,461 

Accrued and other liabilities

 

632,382   

9,162   

(2)

641,544 

Convertible notes payable, related party - current portion

 

131,115   

(123,912)   

(1)

7,203 

Deferred revenue

 

405,727   

   

 

405,727 

 

 

 

 

 

 

Total current liabilities

 

1,259,027   

(168,979)   

 

1,090,048 

 

 

 

 

 

 

CONVERTIBLE NOTES PAYABLE, related party - long-term portion

 

27,328   

   

 

27,328 

 

 

 

 

 

 

Total liabilities

 

1,286,355   

(168,979)   

 

1,117,376 

 

 

 

 

 

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

Preferred stock — $.001 par value; authorized, 10,000,000 shares; Series A convertible; issued and outstanding, 987,102 shares in 2017 and 2016

 

611,950   

 

 

611,950 

Common stock — $.00001 par value; authorized, 40,000,000 shares; issued and outstanding, 11,871,009 shares in 2017 and 2016

 

119   

   

 

119 

Additional paid-in capital

 

8,645,840   

   

 

8,645,840 

Accumulated deficit

 

(10,404,367)  

208,990  

(2)

(10,195,377)

 

 

 

 

 

 

Total stockholders’ deficit

 

(1,146,458)  

208,990  

 

(937,468)

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

139,897  

40,011

 

179,908


FullNet Communications, Inc. and Subsidiaries

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Nine Months Ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

As Reported

Pro Forma Adjustments

Notes

Pro Forma Continuing Operations

REVENUES

 

 

 

 

 

Access service revenues

 

$ 32,892   

   

 

32,892 

Co-location and other revenues

 

1,471,535   

(184,797)   

(3)

1,286,738

 

 

 

 

 

 

Total revenues

 

1,504,427   

(184,797)   

(3)

1,319,630

 

 

 

 

 

 

OPERATING COSTS AND EXPENSES

 

 

 

 

 

Cost of access service revenues

 

35,709   

   

 

35,709 

Cost of co-location and other revenues

 

249,312   

(125,849)   

(3)

123,463 

Selling, general and administrative expenses

 

1,214,067   

(6,608)   

(3)

1,207,459 

Depreciation and amortization

 

21,188   

   

 

21,188 

 

 

 

 

 

 

Total operating costs and expenses

 

1,520,276   

(132,457)   

 

1,387,819 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

(15,849)  

(52,340)  

 

(68,189)

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

(10,264)  

8,652  

(4)

(1,612)

 

 

 

 

 

 

NET LOSS

 

$ (26,113)  

(43,688)  

 

(69,801)

Preferred stock dividends

 

(20,174)  

 

 

(20,174)

Net loss available to common stockholders

 

$ (46,287)  

(43,688)  

 

(89,975)

 

 

 

 

 

 

Net loss per common share

Basic and diluted

 

$ (.00)  

 

 

(.01)

 

 

 

 

 

 

Weighted average common shares outstanding

   Basic and diluted  

 

    11,871,009 

 

 

11,871,009 


FullNet Communications, Inc. and Subsidiaries

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Year Ended December 31, 2016

 

 

 

As Reported

Pro Forma Adjustments

 

Notes

Pro Forma Continuing Operations

REVENUES

 

 

 

 

 

Access service revenues

 

$ 60,134   

   

 

60,134   

Co-location and other revenues

 

1,887,317   

(253,944)   

(3)

1,633,373   

 

 

 

 

 

 

Total revenues

 

1,947,451   

(253,944)   

 

1,693,507   

 

 

 

 

 

 

OPERATING COSTS AND EXPENSES

 

 

 

 

 

Cost of access service revenues

 

78,003   

   

 

78,003   

Cost of co-location and other revenues

 

274,160   

(134,255)   

(3)

139,905   

Selling, general and administrative expenses

 

1,557,489   

(9,079)   

(3)

1,548,410   

Depreciation and amortization

 

28,530   

   

 

28,530   

 

 

 

 

 

 

Total operating costs and expenses

 

1,938,182   

(143,334)   

 

1,794,848   

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

 

9,269   

(110,610)   

 

(101,341)   

 

 

 

 

 

 

INTEREST EXPENSE

 

(15,227)  

12,774  

(4)

(2,453)  

 

 

 

 

 

 

NET LOSS

 

$ (5,958)  

(97,836)  

 

(103,794)  

Preferred stock dividends

 

(47,073)  

 

 

(47,073)  

Net loss available to common stockholders

 

$ (53,031)  

(97,836)  

 

(150,867)  

 

 

 

 

 

 

Net loss per share

  Basic and diluted

 

$ (.01)  

(.01)  

 

(.02)  

 

 

 

 

 

 

Weighted average shares outstanding  

  Basic and diluted

 

9,298,676   

   

 

9,298,676   


FullNet Communications, Inc. and Subsidiaries

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

 

Basis of Presentation

On February 1, 2018, FullTel, Inc. (“FullTel”), a wholly-owned subsidiary of FullNet Communications, Inc. (the “Company”), entered into an Asset Purchase Agreement (the “Agreement”) with Dobson Technologies – Transport and Telecom Solutions, LLC (“Dobson”), pursuant to which FullTel sold substantially all of its customers and certain operating assets to Dobson for $246,500 in cash as of the date of execution of the Agreement.  

The accompanying unaudited pro forma condensed consolidated balance sheet as of September 30, 2017 has been prepared to give effect to the sale as if it had occurred on September 30, 2017. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2016 and the nine months ended September 30, 2017 have been prepared to give effect to the sale as if it had occurred on January 1, 2016, and January 1, 2017, respectively.  

 

Pro Forma Adjustments

The unaudited pro forma condensed consolidated financial statements reflect the following adjustments:  

Balance Sheet Adjustments

1) Reflects the net proceeds received on the sale of the FullTel Assets and assumes the utilization of the net proceeds to repay in full the outstanding balance on the convertible loan from a shareholder secured by all of our assets, and to pay certain FullTel liabilities.  

 

Gross Cash Proceeds

$246,500

   Less Selling Costs

(28,348)

   Less Repayment of Secured Convertible Loan

(123,912)

   Less Repayment of Various FullTel Liabilities

(54,229)

Net Cash

$40,011

 

2) Reflects the gain on disposition assuming that all assets sold are fully depreciated and the net impact to retained earnings as follows:  

 

Gross Cash Proceeds

$246,500

   Less Selling Costs

(28,348)

Pre-tax Gain

$218,152

   Less Estimated Tax on Gain

(9,162)

Net After-tax Gain

$208,990

 

Statement of Operations Adjustments

3) Reflects adjustments to remove direct revenues and expenses associated with the FullTel Assets sold.  

4) Reflects a reduction in interest expense as a result of the utilization of the sale proceeds to repay debt.