FullNet Communications, Inc.

What they do

Through subsidiaries FullNet, FullTel, FullWeb, and CallMultiplier, the company offers Internet access, web hosting, local telephone service, equipment colocation, customized live help desk outsourcing, and mass notification services. The majority of its focus is on three primary services: mass notification via text messages and automated calls, equipment colocation, and customized live help desk outsourcing. CallMultiplier provides a cloud-based solution for automated mass texting and voice message delivery to groups ranging in size from five to more than 250,000 people. The company markets carrier-neutral colocation services in its Oklahoma City data center.

Revenue drivers

• Mass notification services — CallMultiplier offers automated mass texting and voice message delivery to groups across various industries; it is a primary focus and a likely significant revenue contributor, though exact segment revenue is not disclosed.
• Equipment colocation and related services — Carrier-neutral colocation in the company's Oklahoma City data center, marketed to competitive local exchange carriers, Internet service providers, and businesses needing a physical presence; it is another primary focus.
• Customized live help desk outsourcing — 24/7 live help desk outsourcing for companies; it is the third primary focus and complements existing staff.
• Legacy services — Historically provided Internet access, web hosting, and local telephone service, but the company exited the retail telephone service business in early 2018; these are not a primary focus going forward.

Recent performance

Annual revenue declined slightly to $4.2M in 2023 from $4.3M in 2022, following growth from $2.4M in 2019 to $4.3M in 2022. Net income fell to $532,139 in 2023 from $672,236 in 2022, and diluted EPS was $0.02 in 2023 versus $0.03 in 2022. Operating cash flow was $690,293 in 2023, down from $774,364 in 2022. At December 31, 2023, total assets were $3.4M, total liabilities were $1.8M, shareholder equity was $1.6M, and cash was $3.1M. The company has been consistently profitable since 2018.

Strategy

The company intends to increase shareholder value by building scale through both internal growth and acquisitions, then leveraging increased revenues over its fixed-cost base. It aims to meet customer service requirements for retail, business, educational, and government advanced voice and data solutions in its target markets. The company continues to expand and improve its service offerings in response to the evolving Internet-based telecommunications environment. The key elements of its strategy for principal business operations are further described in the filing, but specific details are not provided here. No specific acquisition targets or investment amounts are disclosed.

Risks

• Customer concentration and growth — The company may lose customers or fail to grow its customer base, which could adversely affect results.
• Acquisition integration — It may not successfully integrate new customers or assets obtained through acquisitions, if any.
• Competition — It may fail to compete with existing and new competitors in the communications industry.
• Regulatory and technological change — It may not be successful in responding to new and modified industry standards, laws, and regulations applying to its business, or to technological developments impacting the Internet.

Outlook

Management states that the COVID-19 pandemic resulted in a net addition of new customers and increased interest in its automated group text and voice message delivery services, but as the pandemic subsides, increases experienced in 2020 and 2021 may be slowing, potentially adversely affecting business, results of operations, and financial condition. The company believes actions taken, including revenue enhancement and cost saving initiatives, have alleviated substantial doubt about its ability to continue as a going concern and satisfy estimated liquidity needs for 12 months from the issuance of the financial statements. However, it cannot predict with certainty the outcome of actions to remain profitable and generate additional liquidity.