FULLNET COMMUNICATIONS INC
10QSB, 2000-05-15
BUSINESS SERVICES, NEC
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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)
[X]               QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                       For the period ended March 31, 2000

[ ]               TRANSITION REPORT UNDER 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)

             200 N. Harvey, Suite 1704,Oklahoma City, Oklahoma 73102
             -------------------------------------------------------
              (Address of principal executive offices and zip code)

       Registrant's telephone number, including area code: (405) 232-0958




Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter  period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

                                  Yes  X  No
                                      ---    ---

The number of shares  outstanding  of the  Issuer's  Common  Stock,  $.00001 par
value, as of May 9, 2000 was 2,981,460.

Transitional Small Business Disclosure Format (check one):   Yes      No  X
                                                                 ---     ---


<PAGE>



                                   FORM 10-QSB

                                TABLE OF CONTENTS


                                                                            Page

PART I.   FINANCIAL INFORMATION

   Item 1.  Financial Statements

            Consolidated  Balance  Sheets - March 31, 2000  (unaudited)
            and December 31, 1999.........................................    3

            Consolidated  Statements  of  Operations  - Three  months
            ended March 31, 2000 and 1999 (unaudited).....................    4

            Consolidated Statement of Stockholders' Equity (Deficit) -
            Three months ended March 31, 2000 (unaudited).................    5

            Consolidated  Statements of Cash Flows - Three months ended
            March 31, 2000 and 1999 (unaudited)...........................    6

            Notes to Consolidated Financial Statements (unaudited) .......    8

   Item 2.  Management's Discussion and Analysis or Plan of Operation.....   11

PART II.  OTHER INFORMATION

  Item 2.  Changes in Securities..........................................   17

  Item 6.  Exhibits and Reports on Form 8-K...............................   17

  Signatures..............................................................   19












                                     - 2 -



<PAGE>

<TABLE>

<CAPTION>

                  FullNet Communications, Inc. and Subsidiaries

                           CONSOLIDATED BALANCE SHEETS

                                      ASSETS                  March 31, 2000    December 31, 1999
                                                              --------------    -----------------
                                                               (Unaudited)
<S>                                                           <C>               <C>
CURRENT ASSETS:
  Cash                                                          $   350,979        $    12,671
  Accounts receivable, net                                           77,543             70,306
  Inventory                                                          32,460               --
  Prepaid and other current assets                                   72,326             15,491
                                                                -----------        -----------
            Total current assets                                    533,308             98,468

PROPERTY AND EQUIPMENT, net                                         420,965            117,262

COST IN EXCESS OF NET ASSETS OF BUSINESSES
     ACQUIRED, net of accumulated amortization of $196,798
     In 2000 and $93,512 in 1999                                  2,522,168            295,084
OTHER ASSETS
     Deferred income taxes                                           17,500             17,500
     Deferred offering costs                                         20,000             30,899
     Other                                                            6,257              5,000
                                                                -----------        -----------
                                                                     43,757             53,399
                                                                -----------        -----------

                                                                $ 3,520,198        $   564,213
                                                                ===========        ===========

  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
     Accounts payable - trade                                   $   187,852        $   100,684
     Accrued liabilities                                             19,624             42,424
     Notes payable, current portion                                 938,247             58,949
     Capital lease obligations                                        6,203               --
     Deferred revenue                                               147,781             74,720
                                                                -----------        -----------
                  Total current liabilities                       1,299,707            276,777

NOTES PAYABLE, less current portion                                 582,565            586,922

CAPITAL LEASE OBLIGATIONS, less current portion                      17,686               --

STOCKHOLDERS' EQUITY (DEFICIT)
     Common stock - $.00001 par value;  10,000,000 shares
        Authorized; 2,981,460 and 2,088,928 shares issued and
        outstanding respectively                                         30                 21
  Common stock issuable, 253,117 and 318,709 shares in 2000
      and 1999, respectively                                        182,052            318,709
  Additional paid-in capital                                      2,955,786            429,295
  Accumulated deficit                                            (1,517,628)        (1,047,511)
                                                                -----------        -----------
            Total stockholders' equity (deficit)                  1,620,240           (299,486)
                                                                -----------        -----------

TOTAL                                                           $ 3,520,198        $   564,213
                                                                ===========        ===========

</TABLE>

See accompanying notes to financial statements

                                      -3-

<PAGE>

<TABLE>

<CAPTION>

                  FullNet Communications, Inc. and Subsidiaries

                Consolidated Statements of Operations (Unaudited)


                                                                  Three Months Ended
                                                            --------------------------------
                                                                March 31,       March 31,
                                                                  2000            1999
                                                            --------------  ----------------
<S>                                                         <C>             <C>
REVENUES:

        Access service revenues                                $  176,146      $  128,691
        Network solution and other revenues                       163,857         125,027
                                                               ----------     -----------

                 Total revenues                                   340,003         253,718


OPERATING EXPENSES:

        Cost of access service revenues                            87,192          47,546
        Cost of network solution and other revenues                61,881          46,924
        Selling, general and administrative expenses              464,041         143,037
        Depreciation and amortization                             130,185          29,547
                                                               ----------     -----------

                                                                  743,299         267,054
                                                               ----------     -----------

LOSS FROM OPERATIONS                                            (403,296)        (13,336)

OTHER INCOME (EXPENSE)
         INTEREST EXPENSE                                        (62,331)        (23,292)
         OTHER                                                    (4,490)        (15,442)
                                                               ----------      ----------

NET LOSS                                                       $(470,117)      $ (52,070)
                                                               ==========      ==========


BASIC AND DILUTED LOSS PER COMMON SHARE                        $    (.18)      $    (.03)


WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING                                                     2,645,896       1,452,383


</TABLE>

See accompanying notes to financial statements.

                                      -5-

<PAGE>

<TABLE>

<CAPTION>

                  FullNet Communications, Inc. and Subsidiaries
            Consolidated Statement of Stockholders' Equity (Deficit)
                        Three Months Ended March 31, 2000
                                   (Unaudited)



                                                     Common Stock              Common       Additional
                                                     ------------               Stock        Paid-in      Accumulated
                                                   Shares        Amount       issuable       capital        deficit         Total
                                                -----------   -----------    -----------   -----------    -----------    -----------
<S>                                             <C>           <C>            <C>           <C>            <C>            <C>
Balance at January 1, 2000                        2,088,928   $        21   $   318,709    $   429,295   $(1,047,511)   $  (299,486)


Issuance of common stock in conjunction with
acquisition                                         580,244             6          --        1,740,727          --        1,740,733

Common stock issued, net of offering expenses        31,233          --          41,902         80,907          --          122,809

Exercise of stock options issued relating to
services performed for offering                        --            --          34,830           --            --           34,830

Warrant exercise relating to bridge financing          --            --           1,000           --            --            1,000

Common stock issued for employee bonuses            181,055             2      (181,055)       181,053          --             --

Common stock issued in exchange for services        100,000             1       (33,334)        99,999          --           66,666

Warrants  to purchase common stock issued
relating to bridge financing                           --            --            --          400,367          --          400,367

Compensation from issuance of stock options            --            --            --           23,438          --           23,438

Net loss                                               --            --            --             --        (470,117)      (470,117)
                                                -----------   -----------    -----------   -----------    -----------    -----------
Balance at March 31, 2000                       $ 2,981,460   $        30    $   182,052   $ 2,955,786    $(1,517,628)   $ 1,620,240
                                                ===========   ===========    ===========   ===========    ===========    ===========

</TABLE>


See accompanying notes to financial statements.


                                      -6-

<PAGE>

<TABLE>

<CAPTION>

                  FullNet Communications, Inc. and Subsidiaries

                Consolidated Statements of Cash Flows (Unaudited)

                                                                                  March 31,    March 31,
                                                                                    2000         1999
                                                                                  ---------    ---------
<S>                                                                               <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                        $(470,117)   $ (52,070)
  Adjustments to reconcile net loss to net cash used in operating activities

      Noncash compensation expense                                                   23,438         --
      Depreciation and amortization                                                 130,185       29,547
      Common stock issued for services                                               25,000         --
      Provision for non-collection of accounts receivable                             3,349         --
       Net (increase) decrease in
          Accounts Receivable                                                        40,862      (13,000)
          Prepaid expenses and other current assets                                 (65,445)         337
          Other assets                                                               (1,257)      (7,503)
      Net increase (decrease) in
        Accounts payable - trade                                                    (42,461)     (37,163)
        Accrued and other liabilities                                               (29,766)     (11,536)
        Cash overdraft                                                                 --         (2,262)
        Deferred revenue                                                            (13,308)      25,001
                                                                                  ---------    ---------

            Net cash used in operating activities                                  (399,520)     (68,649)
                                                                                  ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment                                               (45,857)        --
  Acquisitions of businesses, net of cash acquired                                 (122,947)        --
                                                                                  ---------    ---------

             Net cash used in investing activities                                 (168,804)        --
                                                                                  ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Common stock issuable                                                              77,731         --
  Principal payments on borrowings under notes payable                              (14,499)     (16,258)
  Proceeds from issuance of bridge financing and warrants, net of offering
    Costs                                                                           721,250         --
  Principal payments on capital lease obligations                                      (659)      (3,317)
  Proceeds from borrowings under convertible notes payable                             --         50,000
  Issuance of common stock, net of offering costs                                   122,808       33,820
                                                                                  ---------    ---------

            Net cash provided by financing activities                               906,632       64,245
                                                                                  ---------    ---------

NET INCREASE (DECREASE) IN CASH                                                     338,308       (4,404)

Cash at beginning of year                                                            12,671          198
                                                                                  ---------    ---------

Cash at end of period                                                             $ 350,979    $   4,206
                                                                                  =========    =========
                                                                                              (continued)

</TABLE>

                                      -8-

<PAGE>

<TABLE>

<CAPTION>

                  FullNet Communications, Inc. and Subsidiaries

          Consolidated Statements of Cash Flows (Unaudited) (continued)
                                                                                     March 31,    March 31,
                                                                                       2000         1999
                                                                                    ----------   ----------
<S>                                                                                 <C>          <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest                                                              $   15,532   $   24,236

NONCASH INVESTING AND FINANCING ACTIVITIES
Fair value of liabilities assumed in conjunction with the acquisition of
Harvest Communications, Inc.                                                            73,062         --
Fair value of common stock issued to purchase Harvest Communications                 1,612,500         --
Note payable issued in conjunction with the acquisition of Harvest
Communications                                                                         175,000         --
Fair value of liabilities assumed in conjunction with the acquisition of
FullNet of Bartlesville                                                                  1,754         --
Fair value of common stock issued to purchase FullNet of Bartlesville                  128,232         --
Note payable issued in conjunction with FullNet of Bartlesville acquisition             50,168         --
Acquisition of net assets of FullNet of Tahlequah                                        6,763         --
Note payable issued in conjunction with FullNet of Tahlequah acquisition                61,845         --
Assets acquired through issuance of capital lease                                       24,548         --
                                                                                                  (concluded)

</TABLE>







    See accompanying notes to financial statements.


                                      -9-

<PAGE>


                  FullNet Communications, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


 1.    UNAUDITED INTERIM FINANCIAL STATEMENTS

       The unaudited  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  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, 1999.

       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, 2000.

 2.    USE OF ESTIMATES

       The  preparation  of financial  statements in conformity  with  generally
       accepted accounting  principles requires management to make estimates and
       assumptions  that affect the reported  amounts of assets and  liabilities
       and  disclosures of contingent  assets and liabilities at the date of the
       financial  statements  and the reported  amounts of revenues and expenses
       during the  reporting  period.  Actual  results  could  differ from those
       estimates.

3.     STOCKHOLDERS' EQUITY (DEFICIT)

       In February 2000, the Company raised an aggregate $135,600 in an offering
       of its common stock.  The offering was made pursuant to an exemption from
       the registration  requirements of the Securities Act pursuant to Rule 504
       of  Regulation D of such act. As of March 31, 2000,  13,967 of the shares
       had not yet been issued and are reflected as common stock issuable in the
       accompanying balance sheet.

4.     EARNINGS (LOSS) PER SHARE

       Basic  earnings  (loss)  per  common  share is  computed  based  upon net
       earnings  (loss) divided by the weighted  average number of common shares
       outstanding during each period.  Diluted earnings (loss) per common share
       is computed based upon net loss divided by the weighted average number of
       common shares  outstanding  during each period adjusted for the effect of
       dilutive  potential  common shares  calculated  using the treasury  stock
       method.  The basic and diluted  earnings  (loss) per common share are the
       same since the Company had a net loss for 2000 and 1999 and the inclusion
       of stock options and warrants would be anti-dilutive.


                                      -10-

<PAGE>


5.     NOTES PAYABLE

       In February and March 2000,  the Company  obtained  bridge loans totaling
       $275,000  through the issuance of 14%  promissory  notes to 10 accredited
       investors.  The  terms of the  financing  additionally  provided  for the
       issuance of five-year warrants to purchase an aggregate of 137,500 shares
       of the  Company's  common  stock at $0.01 per  share,  and  provided  for
       certain   registration  rights.  The  promissory  notes  require  monthly
       interest  payments,  mature in six  months,  and are  extendible  for two
       90-day  periods upon issuance of an additional  warrants for an aggregate
       137,500 shares exercisable at $0.01 per share for each extension. None of
       the warrants were exercised as of March 31,2000.

       In March 2000,  the  Company  obtained  bridge  loans  totaling  $500,000
       through the issuance of 14% promissory notes to two accredited investors.
       The terms of the  financing  additionally  provided  for the  issuance of
       five-year  warrants to purchase  100,000  shares of the Company's  common
       stock at $0.01 per share, and provided for certain  registration  rights.
       The promissory notes require quarterly interest  payments,  mature in six
       months,  and are  extendible  for two 90 day  periods  upon  issuance  of
       additional  warrants for an aggregate 10,000 shares  exercisable at $0.01
       per share for each extension. On March 8, 2000, the bridge loan investors
       exercised their warrants and purchased  100,000 shares of common stock of
       the Company at an aggregate  exercise price of $1,000. The 100,000 shares
       have not  been  issued  as of March  31,  2000  and are  included  in the
       accompanying balance sheet as common stock issuable.

       A portion of the proceeds of the bridge  loans has been  allocated to the
       warrants and accounted for as additional paid-in capital.  The allocation
       was based on the  estimated  relative fair values of the bridge loans and
       the  warrants and resulted in a discount on the bridge loans of $401,000.
       This discount is being amortized as interest expense over the life of the
       bridge loans using the interest method.

6.     ACQUISITIONS

       On January 25, 2000, the Company entered into an Asset Purchase Agreement
       with FullNet of Tahlequah,  Inc.,  an Oklahoma  corporation  ("FOT"),  in
       which the Company purchased substantially all of FOT's assets,  including
       approximately 400 individual and business  Internet access accounts.  The
       Company paid FOT an aggregate amount of $97,735,  comprised of $35,890 in
       cash and a note  payable  for  $61,845.  The note is payable in  eighteen
       monthly installments.

       On February 4, 2000, the Company entered into an Asset Purchase Agreement
       with David Looper,  d/b/a FullNet of  Bartlesville  ("FOB"),  an Oklahoma
       sole  proprietorship.  Pursuant  to the  Asset  Purchase  Agreement,  the
       Company   purchased   substantially   all  of  FOB's  assets,   including
       approximately 400 individual and business  Internet access accounts.  The
       Company  paid FOB an  aggregate  amount of  $178,400,  payable  in 42,744
       shares  of  the  Company's  common  stock  (valued  for  purposes  of the
       acquisition at $3.00 per share) and a note payable for $50,168.  The note
       bears an interest  rate of 8% per annum,  with the principal and interest
       thereon payable on the earlier to occur of (a) the closing of any private
       equity  placement  in  excess  of  $351,000,   (b)  the  closing  of  any
       underwritten offering of the Company's common stock, or (c) one year from
       the closing date of the Asset Purchase Agreement.

                                      -11-

<PAGE>

       On February 29, 2000,  the Company  entered into an Agreement and Plan of
       Merger  (the  "Merger  Agreement")  with  Harvest  Communications,   Inc.
       ("Harvest"),  an Oklahoma  corporation,  pursuant to which Harvest merged
       with and into FullNet.  Harvest had  approximately  2,500  individual and
       business dial-up Internet access  accounts,  15 wireless  Internet access
       accounts and 35 Web hosting accounts. Pursuant to the terms of the Merger
       Agreement,  the Company  paid the  shareholders  of Harvest an  aggregate
       amount of $1,912,500,  payable in 537,500 shares of the Company's  common
       stock  (valued for  purposes  of the merger at $3.00 per  share),  a note
       payable for  $175,000  and  $125,000 in cash.  The note bears an interest
       rate of 8% per annum,  with the principal and interest thereon payable on
       the  earlier to occur of (a) the closing of any single  funding  (whether
       debt or equity)  obtained  by the Company  subsequent  to the date of the
       Merger Agreement in an aggregate amount of at least  $2,000,000,  (b) the
       closing of any  underwritten  offering of the Company's  common stock, or
       (c) March 6, 2001.

       These  acquisitions  were  accounted  for  as  purchases.  The  aggregate
       purchase price has been allocated to the underlying net assets  purchased
       or net  liabilities  assumed based on their  estimated fair values at the
       respective acquisition date. This allocation results in cost in excess of
       net assets of businesses acquired of $2,327,000, which is being amortized
       over the estimated periods benefited of three to five years. Prior to the
       acquisitions,  each  of  FOT,  FOB  and  Harvest  was a  customer  of the
       Company's Internet access services.

       The unaudited pro forma combined  historical  results, as if the entities
       listed above  (excluding  FOT) had been  acquired at the beginning of the
       three months ended March 31, 2000 and 1999, respectively, are included in
       the table below.

                                                        Three Months Ended
                                                             March 31,
                                                       2000            1999
                                                       ----            ----

              Revenue                              $   470,379     $   455,369
              Net loss                             $  (564,989)    $  (209,757)
              Basic and diluted loss per share     $     (0.19)    $     (0.11)

       The pro forma results above include amortization of cost in excess of net
       assets of businesses acquired and interest expense on debt assumed issued
       to finance the  acquisitions.  The pro forma results are not  necessarily
       indicative of what actually would have occurred if the  acquisitions  had
       been  completed  as of  the  beginning  of  each  of the  fiscal  periods
       presented,  nor are they  necessarily  indicative of future  consolidated
       results.




                                      -12-

<PAGE>


Item 2.  Management's Discussion and Analysis or Plan of Operation

         The  following  discussion  is  qualified  in its  entirety by the more
detailed  information in the Company's Annual Report on Form 10-KSB for the Year
Ended December 31, 1999 under "ITEM  6--MANAGEMENT'S  DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION," the financial  statements  contained therein,  including the
notes thereto,  and the Company's other periodic reports and all Current Reports
on Form 8-K filed with the Securities and Exchange Commission since December 31,
1999  (collectively  referred  to  as  the  "Disclosure   Documents").   Certain
forward-looking  statements  contained  herein and in such Disclosure  Documents
regarding  the  Company's   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.  The Company's  ability to achieve such results is
subject to certain risks and uncertainties,  such as those inherent generally in
the Internet service provider and competitive local exchange carrier industries,
the impact of competition  and pricing,  changing market  conditions,  and other
risks. Any forward-looking  statements  contained herein represent the Company's
judgment as of the date hereof.  The Company disclaims,  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. As
used herein,  the word  "Company"  means  FullNet  Communications,  Inc. and its
wholly  owned  subsidiaries,  FullNet,  Inc.  ("FullNet"),  FullSolutions,  Inc.
("FullSolutions"),  FullTel, Inc. ("FullTel") and FullWeb,  Inc. ("FullWeb"),  a
wholly  owned  subsidiary  of   FullSolutions,   unless  the  context  indicates
otherwise.

Overview

         FullNet  Communications  Inc. (the "Company") is a regional  integrated
communications  provider ("ICP") offering integrated  communications and network
solutions to individuals, businesses,  organizations,  educational institutions,
and government  agencies.  Through its  subsidiaries,  the Company provides high
quality,  reliable  and  scalable  Internet,  telephony,  and network  solutions
designed to meet its  customers'  needs.  The Company's  overall  strategy is to
become the dominant ICP,  Internet service provider  ("ISP"),  network solutions
and  broadband  backbone  provider  for  residents  and  small  to  medium-sized
businesses in Oklahoma and contiguous states.

         References  to the  Company in this Form 10-QSB  include the  Company's
direct and indirect  subsidiaries:  FullNet,  Inc.  ("FullNet"),  FullTel,  Inc.
("FullTel"),   FullSolutions,   Inc.   ("FullSolutions")   and   FullWeb,   Inc.
("FullWeb").  The Company's principal executive offices are located at 200 North
Harvey Avenue,  Suite 1704,  Oklahoma City,  Oklahoma  73102,  and its telephone
number is (405)  232-0958.  The Company also  maintains an Internet  site on the
World Wide Web ("WWW") at www.fullnet.net. However, information contained on the
Company's  Web site is not,  and should not be deemed to be, a part of this Form
10-QSB.

Company History

         The  Company  was  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.  The Company
changed its name to FullNet  Communications,  Inc. in December 1995, and shifted
its focus from  offering  dial-up  services to providing  wholesale  and private
label network  connectivity and related services to other ISPs.  During 1995 and
1996,  the Company  furnished  wholesale and private label network  connectivity
services to ISPs in Bartlesville,  Cushing, Durant, Perry, Tahlequah, and Tulsa.
During 1996, the Company sold its ISP operations in Enid, Oklahoma and began ISP
operations in Ponca City, Oklahoma.

                                      -13-

<PAGE>

         In 1997 the Company continued its focus on being a backbone provider by
upgrading and acquiring more  equipment.  The Company also started  offering its
own ISP brand access and services to its  wholesale  customers.  As of March 31,
2000,  there were three ISPs in Oklahoma  that used the FullNet brand name where
the Company  provides the backbone to the Internet.  There are an additional two
ISPs that use a private  label  brand name,  where the  Company is their  access
backbone and provides  their  technical  support,  managing and operating  their
systems on an outsource basis.  Additionally,  the Company  provides  high-speed
broadband  connectivity,  website  hosting,  network  management  and consulting
solutions to over 50 businesses in Oklahoma.

         In 1998  the  Company's  gross  revenues  exceeded  $1,000,000  and the
Company made the Metro Oklahoma City Top 50 Fastest  Growing  Companies list. In
1998 the  Company  commenced  the  process of  organizing  a  competitive  local
exchange carrier ("CLEC") through FullTel,  and acquired Animus  Communications,
Inc. ("Animus"),  a wholesale Web-service company,  thereby enabling the Company
to become a total  solutions  provider to  individuals  and companies  seeking a
"one-stop shop" in Oklahoma. Animus was renamed FullWeb in January 2000.

         With the  incorporation of FullTel and the acquisition of FullWeb,  the
Company's  current  business  strategy is to become the dominant ICP in Oklahoma
and  surrounding  states,  focusing on rural areas.  The Company expects to grow
through the  acquisition  of ISPs and network  solutions  providers,  as well as
through a marketing campaign, the design and implementation of which is expected
to be completed  in the second  quarter  2000.  During the first three months of
2000, the Company has completed  three separate  acquisitions  of ISP companies,
operating in,  respectively,  Tahlequah,  Oklahoma,  Bartlesville,  Oklahoma and
Enid, Oklahoma.

         During the month of February  2000,  the  Company's  common stock began
trading on the OTC  Bulletin  Board under the symbol FULO.  While the  Company's
common stock currently is quoted on the OTC Bulletin  Board,  the market for the
common stock remains limited. Hence, there can be no assurance that stockholders
will be able to sell their shares should they desire to do so. Any



                                      -14-

<PAGE>

<TABLE>

<CAPTION>

Results of Operations

         The following table sets forth certain  statement of operations data as
a percentage of revenues for the three months ended March 31, 2000 and 1999:

                                                                Three Months Ended
                                                   ----------------------------------------------
                                                    March 31, 2000             March 31, 1999
                                                   -----------------         --------------------
<S>                                                <C>                       <C>
Revenues:
  Access service revenues                                   51.8%                     50.7%
  Network solution and other revenues                       48.2                      49.3
                                                      ----------                ----------
Total revenues                                             100.0                     100.0

Cost of access service revenues                             25.6                      18.7
Cost of network solution and other revenues                 18.2                      18.5
Selling, general and administrative expenses               136.5                      56.4
Depreciation and amortization                               38.3                      11.6
                                                      ----------                ----------
Total operating costs and expenses                         218.6                     105.3

Loss from operations                                      (118.6)                     (5.3)

Interest expense                                           (18.3)                     (9.2)
Other expense                                               (1.3)                     (6.1)
                                                      ----------                ----------

Net loss                                                  (138.3)%                   (20.5)%
                                                      ==========                ==========

</TABLE>

Three Months Ended March 31, 2000 compared to Three Months Ended March 31, 1999

Revenues

         Access  service  revenues  increased  $47,000 to $176,000 for the three
months  ended March 31, 2000 from  $129,000 for the three months ended March 31,
1999.  This  additional  revenue is due to the  acquisition of three ISPs in the
first quarter 2000.

         Network solution and other revenues  increased  $39,000 to $164,000 for
the three months ended March 31, 2000, compared to $125,000 for the three months
ended  March 31,  1999.  This  increase  is due to the  acquisition  of  Harvest
Communications,  Inc., in February  2000.  Network  solution and other  revenues
attributable   to  the  Harvest   acquisition   were  $15,000  for  March  2000.
Additionally,  co-location  revenues  represented an increase of $20,000 in 2000
over the prior comparative quarter.

Operating costs and expenses

         Cost of access service  revenues  increased  $40,000 to $87,000 for the
three  months  ended March 31,  2000,  compared to $47,000 for the three  months
ended March 31, 1999. The increase in costs is attributable primarily to $30,000
of connectivity  costs incurred in conjunction with the access service customers
acquired  during  the  first  quarter  2000  in  three  Oklahoma  towns:   Enid,
Bartlesville, and Tahlequah.

         Cost of network  solutions and other  revenues  increased  $15,000 from
$47,000  for the three  months  ended  March 31,  1999 to $62,000  for the three
months ended March 31, 2000.  This  increase is primarily due to the increase in
costs of bandwidth of $13,000 incurred by FullWeb for the increase in the number
of web hosting and co-location customers over the prior comparative quarter.

                                      -15-

<PAGE>

         Selling,  general and  administrative  expenses  increased  $321,000 to
$464,000 for the three months ended March 31, 2000, compared to $143,000 for the
three months ended March 31, 1999. This increase is comprised  principally of an
increase  in payroll  costs of  $155,000  related  to the  hiring of  additional
personnel and $131,000 of  professional  service fees for attorneys,  investment
bankers,  and consultants.  The Company also incurred additional rent expense of
$14,000 over the prior comparative  quarter related to the new office space that
was rented in January  2000 which will house the  Company's  Network  Operations
Center. An increase in miscellaneous  fees of $15,000 over the prior comparative
quarter includes amounts paid for various annual memberships.

         Depreciation and amortization  expense increased  $101,000 from $29,000
for the three months ended March 31, 1999 to $130,000 for the three months ended
March 31, 2000. Of this increase, $53,000 is attributable to the amortization of
cost in excess of net assets of  businesses  acquired  relating to the three ISP
acquisitions  closed in 2000. An increase of $43,000 of  amortization of cost in
excess of net assets of  businesses  acquired is  attributable  to the effect of
shortening   the   estimated   period  of  benefit  to  three  and  five  years,
respectively,  for two  acquisitions  made in 1997 and 1998 that were originally
being amortized over fifteen years.

Interest Expense

         Interest  expense  increased  $39,000 to $62,000  for the three  months
ended March 31,  2000,  compared to $23,000 for the three months ended March 31,
1999. This increase is due to $38,000 of interest expense recorded for the three
months ended March 31, 2000  associated  with  amortization of the loan discount
relating to bridge financing issued with warrants.

Acquisitions

         The Company's acquisition strategy is designed to leverage its existing
network  backbone  and  internal  operations  to enable the Company to enter new
markets in Oklahoma,  Arkansas and Kansas,  as well as to expand its presence in
existing markets, and to benefit from economies of scale.

         The Company has acquired three Internet service provider  businesses in
Oklahoma during the three months ended March 31, 2000.

         On  January  25,  2000,  the  Company  entered  into an Asset  Purchase
Agreement with FullNet of Tahlequah,  Inc. ("FOT"), an Oklahoma corporation,  in
which  the  Company  purchased  substantially  all of  FOT's  assets,  including
approximately 400 individual and business Internet access accounts.  The Company
paid FOT an aggregate amount of $97,735, comprised of $35,890 in cash and a note
payable for $61,845. The note is payable in eighteen monthly installments.

         On  February  4,  2000,  the  Company  entered  into an Asset  Purchase
Agreement with David Looper, d/b/a FullNet of Bartlesville  ("FOB"), an Oklahoma
sole  proprietorship.  Pursuant  to the Asset  Purchase  Agreement,  the Company
purchased  substantially  all  of  FOB's  assets,  including  approximately  400
individual  and  business  Internet  access  accounts.  The Company  paid FOB an
aggregate  amount of $178,400,  payable in 42,744 shares of the Company's common
stock  (valued for  purposes of the  acquisition  at $3.00 per share) and a note
payable for $50,168.  The note bears an interest rate of 8% per annum,  with the
principal  and  interest  thereon  payable  on the  earlier  to occur of (a) the
closing of any private equity  placement in excess of $351,000,  (b) the closing
of any underwritten offering of the Company's common stock, or (c) one year from
the closing date of the Asset Purchase Agreement.

                                      -16-

<PAGE>

         On February 29, 2000, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Harvest  Communications,  Inc., ("Harvest")
an Oklahoma corporation, pursuant to which Harvest merged with and into FullNet.
Harvest had approximately  2,500 individual and business dial up Internet access
accounts,  15 wireless  Internet  access  accounts and 35 Web hosting  accounts.
Pursuant to the terms of the Merger Agreement, the Company paid the shareholders
of Harvest an aggregate  amount of $1,912,500  payable in 537,500  shares of the
Company's common stock (valued for purposes of the merger at $3.00 per share), a
note payable for $175,000 and $125,000 in cash.  The note bears an interest rate
of 8% per annum,  with the principal and interest thereon payable on the earlier
to occur of (a) the  closing  of any  single  funding  (whether  debt or equity)
obtained by the Company  subsequent  to the date of the Merger  Agreement  in an
aggregate  amount of at least  $2,000,000,  (b) the closing of any  underwritten
offering of the Company's common stock, or (c) March 6, 2001.

         These  acquisitions  were  accounted  for as  purchases.  The aggregate
purchase price has been allocated to the underlying net assets  purchased or net
liabilities  assumed  based on their  estimated  fair  values at the  respective
acquisition  date.  This  allocation  results in cost in excess of net assets of
businesses  acquired of $2,327,000,  which is being amortized over the estimated
periods  benefited of three to five years.  Prior to the  acquisitions,  each of
FOT, FOB and Harvest was a customer of the Company's ISP access services.

         The Company is currently in various levels of discussions with a number
of Internet  service  providers in targeted  markets in Oklahoma  and  Arkansas.
However,  there can be no assurance that the Company will successfully  complete
any of the acquisitions it is currently evaluating.

Liquidity and Capital Resources

         The Company used $400,000 and $69,000 of cash for operating  activities
for the three months ended March 31, 2000 and 1999, respectively, as a result of
a net loss for the periods.  As of March 31,  2000,  the Company had $351,000 in
cash and  $1,300,000  in  current  liabilities,  including  $775,000  of  bridge
financing  that was  negotiated  with six month  terms and  $148,000 of deferred
revenues which will not require settlement in cash.

         Capital  expenditures  relating to  acquisitions  were $123,000 for the
three months ended March 31, 2000.  In addition,  computer  equipment  purchases
amounted to $46,000 for the three months ended March 31, 2000.

         Net cash provided by financing  activities was $907,000 and $64,000 for
the three months ended March 31, 2000 and 1999, respectively.  The cash provided
in 2000 is due primarily to the issuance of bridge notes payable and the sale of
equity securities  pursuant to Rule 504 of Regulation D of the Securities Act of
1933.  The Company  received net proceeds of $722,000  from the bridge loans and
$123,000 from the 504 offering.

         The  planned   expansion  of  the   Company's   business  will  require
significant  capital to fund capital  expenditures,  working capital needs, debt
service and the cash flow deficits  generated by operating losses. The Company's
principal capital expenditure requirements will include:

     *    the completion of the Company's Network Operations Center
     *    the  purchase  and  installation  of  telephone  switches in Oklahoma,
          Arkansas and Kansas
     *    purchase  and   installation  of  wireless  and  DSL  Internet  access
          equipment
     *    mergers and acquisitions
     *    further  development of operations support systems and other automated
          back office systems
     *    domain name registration startup costs

                                      -17-

<PAGE>

         The Company  expects to make capital  outlays of between $3 million and
$4 million during 2000 in order to continue activities called for in its current
business plan and to fund expected  operating  losses.  As the Company's cost of
developing new networks and services,  funding other  strategic  initiatives and
operating  its business  will depend on a variety of factors  (including,  among
other  things,  the  number  of  subscribers  and the  service  for  which  they
subscribe,  the nature and  penetration  of services  that may be offered by the
Company, regulatory changes, and actions taken by competitors in response to the
Company's  strategic  initiatives),  it is almost  certain that actual costs and
revenues will vary from expected amounts,  very likely to a material degree, and
that  such  variations  are  likely  to  affect  the  Company's  future  capital
requirements. Current cash balances will not be sufficient to fund the Company's
current  business  plan beyond the next year. As a  consequence,  the Company is
currently  seeking  additional  debt  and/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  raise  additional  capital  on
satisfactory terms or at all.

         In the event  that the  Company  is unable  to obtain  such  additional
capital  or to obtain  it on  acceptable  terms or in  sufficient  amounts,  the
Company will be required to delay the  development  of its network or take other
actions.  This could have a material  adverse effect on the Company's  business,
operating results and financial  condition and its ability to achieve sufficient
cash flow to service debt requirements.

         The ability of the Company to fund the capital  expenditures  and other
costs  contemplated  by its business  plan and to make  scheduled  payments with
respect to borrowings will depend upon, among other things,  its ability to seek
and obtain additional  financing within the next year. Capital will be needed in
order to implement its business plan, deploy its network,  expand its operations
and obtain and retain a significant  number of customers in its target  markets.
Each of these  factors is, to a large  extent,  subject to economic,  financial,
competitive,  political,  regulatory and other factors, many of which are beyond
the Company's control.

         No  assurance  can be given  that the  Company  will be  successful  in
developing and  maintaining a level of cash flow from  operations  sufficient to
permit it to pay the  principal  of, and  interest  and any other  payments  on,
outstanding  indebtedness.  If the Company is unable to generate sufficient cash
flow from  operations  to service  its  indebtedness,  it may have to modify its
growth  plans,  limit its capital  expenditures,  restructure  or refinance  its
indebtedness or seek additional capital or liquidate its assets. There can be no
assurance  (i) that any of these  strategies  could be effected on  satisfactory
terms, if at all, or (ii) that any such strategy would yield sufficient proceeds
to service the Company's debt or otherwise adequately fund operations.

Financing Activities

         In February and March 2000, the Company  obtained bridge loans totaling
$275,000  through  the  issuance  of  14%  promissory  notes  to  10  accredited
investors.  The terms of the financing additionally provided for the issuance of
five-year  warrants to purchase an aggregate of 137,500  shares of the Company's
common stock at $0.01 per share, and provided for certain  registration  rights.
The promissory  notes require monthly interest  payments,  mature in six months,
and are  extendible  for two  90-day  periods  upon  issuance  of an  additional
warrants for an aggregate 137,500 shares exercisable at $0.01 per share for each
extension. None of the warrants were exercised as of March 31,2000.

                                      -18-

<PAGE>

         In March 2000,  the Company  obtained  bridge loans  totaling  $500,000
through the issuance of 14% promissory  notes to two accredited  investors.  The
terms of the  financing  additionally  provided  for the  issuance of  five-year
warrants to purchase  100,000 shares of the Company's  common stock at $0.01 per
share,  and provided  for certain  registration  rights.  The  promissory  notes
require quarterly  interest  payments,  mature in six months, and are extendible
for two 90 day periods  upon  issuance of  additional  warrants for an aggregate
10,000 shares  exercisable  at $0.01 per share for each  extension.  On March 8,
2000, the bridge loan investors  exercised their warrants and purchased  100,000
shares of common stock of the Company at an aggregate  exercise price of $1,000.
The 100,000 shares have not been issued as of March 31, 2000 and are included in
the accompanying balance sheet as common stock issuable.

         In  February  2000,  the  Company  raised an  aggregate  $135,600 in an
offering of its common  stock.  The offering  was made  pursuant to an exemption
from the registration requirements of the Securities Act pursuant to Rule 504 of
Regulation D of such act.

         Proceeds  from the  bridge  loans  and the 504  offering  were used for
acquisitions, working capital and general corporate purposes.

Year 2000 Issue

         Prior to entering the year 2000,  or Y2K, the Company  developed  plans
for implementing,  testing and completing any necessary modifications to its key
computer  systems and equipment with embedded chips to ensure that they were Y2K
compliant.  Subsequent to entering the year 2000, the Company has tested its key
computer  systems and to date, it has not  encountered  any material Y2K related
disruptions or failures of its systems or services,  nor has it been notified of
any disruptions or failures in the systems of any of its third parties with whom
it deals.  There is an ongoing risk that Y2K related  problems could still occur
and the Company  will  continue to evaluate  these risks.  However,  the Company
believes that the Y2K issue will not pose any significant  operational  problems
for it.


                            PART II-OTHER INFORMATION

Item 2.  Changes in Securities.

       See  "Item  2.   Management's   Discussion   and   Analysis  or  Plan  of
Operation-Financing   Activities"  of  this  Report,   incorporated   herein  by
reference.



                                      -19-

<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

        Exhibit
        Number                Exhibit
        -------   --------------------------------------------------------------
         4.1*     Form of Warrant Agreement
         4.2*     Form of Warrant Certificate for Florida Investors
         4.3*     Form of Promissory Note for Florida Investors
         4.4*     Form of Warrant Certificate for Georgia Investors
         4.5*     Form of Promissory Note for Georgia Investors
         4.6*     Form of Warrant Certificate for Illinois Investors
         4.7*     Form of Promissory Note for Illinois Investors
         4.8*     Form of Warrant Agreement
         4.9*     Form of Warrant Certificate
         4.10*    Form of Promissory Note
        10.1*     Registrar  Accreditation Agreement effective February 8, 2000,
                   by and between Internet
        27.1*     Financial Data Schedule
- ------------------------
*Filed electronically herewith


(b)      Reports on Form 8-K

         On February 9, 2000,  the Company filed a Form 8-K  reporting  that, on
January 25, 2000,  the Company  entered into an Asset  Purchase  Agreement  with
FullNet  of  Tahlequah,  Inc.,  an  Oklahoma  corporation  ("Seller"),  and  the
shareholders of Seller in which the Company  purchased  substantially all of the
Seller's assets.

         On February 18, 2000,  the Company filed a Form 8-K reporting  that, on
February 4, 2000,  the Company  entered into an Asset  Purchase  Agreement  with
David Looper,  d/b/a FullNet of  Bartlesville,  an Oklahoma sole  proprietorship
("Seller"), in which the Company purchased substantially all of Seller's assets.

         On March 9, 2000,  the  Company  filed a Form 8-K  reporting  that,  on
February 29, 2000, the Company entered into an Agreement and Plan of Merger with
Harvest Communications,  Inc., ("Harvest") an Oklahoma corporation,  pursuant to
which Harvest merged with and into FullNet,  Inc., a wholly owned  subsidiary of
the Company.

                                      -20-

<PAGE>


                                   SIGNATURES


       Pursuant  to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                      FULLNET COMMUNICATIONS, INC.,
                                      An Oklahoma corporation


Date:  May 15, 2000                   /s/ Timothy J. Kilkenny
                                      ------------------------------------------
                                      Timothy J. Kilkenny
                                      Chairman of the Board of Directors;
                                      President and Chief Executive Officer

Date: May 15, 2000                    /s/ Travis Lane
                                      ------------------------------------------
                                      Travis Lane
                                      Vice-President and Chief Financial Officer
                                      (Chief Accounting Officer)











                                      -21-





                          FULLNET COMMUNICATIONS, INC.
                            (an Oklahoma corporation)

                                WARRANT AGREEMENT

                                                          ___________ ____, 2000

- --------------------------

- --------------------------

- --------------------------

- ---------------

         FullNet Communications,  Inc., an Oklahoma corporation (the "Company"),
agrees to issue to you  warrants  (the  "Warrants")  to  purchase  the number of
shares of common stock,  par value $0.00001 per share (the "Common  Stock"),  of
the  Company set forth  herein,  subject to the terms and  conditions  contained
herein.

         1. Issuance of Warrants;  Exercise Price. The Warrants,  which shall be
certificated  in the form  attached  hereto as EXHIBIT  "A,"  (each,  a "Warrant
Certificate")  shall be issued to you concurrently  with the execution hereof in
consideration of the Promissory Loan in the amount of $____________  pursuant to
the terms of the 14%  Promissory  Note dated of even date herewith (the "Note").
The  Warrants  shall  provide  that you, or such other  holder or holders of the
Warrants to whom transfer is  authorized  in  accordance  with the terms of this
Agreement,  shall have the right to purchase an aggregate of ________  shares of
Common  Stock  for an  exercise  price  equal to $.01 per share  (the  "Exercise
Price"); provided,  however, that in the event the Company desires to extend for
ninety (90) days the maturity  date of the Note,  the Company shall issue to you
the right to  purchase  an  additional  ________  shares of Common  Stock at the
Exercise  Price.  The Company shall have the option to extend for two (2) ninety
(90) day  periods  the  maturity  date of the Note,  subject in each case to the
grant of additional Warrants as set forth in the preceding sentence.

         2.  Exercise of  Warrants.  At any time and from time to time after the
date hereof and expiring on the fifth  anniversary of the effective date of this
Agreement at 5:00 p.m.,  Central Standard Time,  Warrants may be exercised as to
all or any portion of the whole number of shares of Common Stock  covered by the
Warrants by the holder  thereof by surrender of the Warrants,  accompanied  by a
subscription  for shares to be  purchased  in the form  attached to each Warrant
Certificate  and  by  payment  to  the  Company  as set  forth  in  the  Warrant
Certificate  in the amount  required  for purchase of the shares as to which the
Warrant is being exercised,  delivered to the Company at its principal office at
200 North Harvey Avenue,  Suite 1704, Oklahoma City, Oklahoma 73102,  Attention:
President.  Upon the  exercise  of a Warrant,  in whole or in part,  the Company
will, within ten (10) days thereafter,  at its expense (including the payment by
the Company of any applicable  issue or transfer  taxes),  cause to be issued in
the name of and delivered to the holder a certificate  or  certificates  for the
number of fully  paid and  non-assessable  shares of Common  Stock to which such
holder is entitled  upon  exercise of the  Warrant.  In the event such holder is
entitled to a fractional  share,  in lieu  thereof,  such holder shall be paid a
cash  amount  equal  to such  fraction,  multiplied  by the  Current  Value  (as
hereafter  defined) of one full share of Common  Stock on the date of  exercise.
Certificates  for shares of Common  Stock  issuable by reason of the exercise of
the Warrant or Warrants shall be dated and shall be effective as the date of the
surrendering  of the  certificates  for the shares so purchased.  In the event a
Warrant  is  exercised,  as to less than the  aggregate  amount of all shares of
Common Stock  issuable upon  exercise of all Warrants  held by such person,  the
Company  shall  issue a new  Warrant to the holder of the  Warrant so  exercised
covering the  aggregate  number of shares of Common  Stock as to which  Warrants
remain unexercised.

                                      -1-

<PAGE>

                  For purposes of this section,  Current Value is defined (i) in
the case for which a public  market  exists for the Common  Stock at the time of
such  exercise,  the average of the daily closing prices of the Common Stock for
twenty (20)  consecutive  business  days  commencing  thirty (30)  business days
before the date of exercise, and (ii) in the case no public market exists at the
time of  such  exercise,  at the  Appraised  Value.  For  the  purposes  of this
Agreement,  "Appraised  Value" is the value  determined in  accordance  with the
following  procedures.  For a period of five (5) days after the date of an event
(a "Valuation Event") requiring determination of Current Value at a time when no
public market exists for the Common Stock (the "Negotiation Period"), each party
to this Agreement  agrees to negotiate in good faith to reach agreement upon the
Appraised  Value of the  securities or property at issue,  as of the date of the
Valuation  Event,  which will be the fair  market  value of such  securities  or
property,  without  premium  for  control or discount  for  minority  interests,
illiquidity  or  restrictions  on  transfer.  In the event that the  parties are
unable to agree upon the Appraised Value of such securities or other property by
the end of the Negotiation  Period,  then the Appraised Value of such securities
or property  will be determined  for purposes of this  Agreement by a recognized
appraisal or investment  banking firm  mutually  agreeable to the holders of the
Warrants and the Company (the  "Appraiser").  If the holders of the Warrants and
the Company cannot agree on an Appraiser  within two (2) business days after the
end of the Negotiation  Period, the Company, on the one hand, and the holders of
the Warrants,  on the other hand, will each select an Appraiser  within ten (10)
business  days  after  the  end of the  Negotiation  Period  and  those  two (2)
Appraisers will select ten (10) days after the end of the Negotiation  Period an
independent  Appraiser to determine the fair market value of such  securities or
property,  without premium for control or discount for minority interests.  Such
independent  Appraiser  will be directed to determine  fair market value of such
securities as soon as  practicable,  but in no event later than thirty (30) days
from the date of its selection.  The  determination  by an Appraiser of the fair
market value will be conclusive  and binding on all parities to this  Agreement.
Appraised  Value of each share of Common stock at a time when (i) the Company is
not a reporting  company under the Exchange Act and (ii) the Common Stock is not
traded in the organized securities markets, will, in all cases, be calculated by
determining  the  Appraised  Value of the  entire  Company  taken as a whole and
dividing  that value by the number of shares of Common  Stock then  outstanding,
without premium for control or discount for minority  interests,  illiquidity or
restrictions  on  transfer.  The  costs  of the  Appraiser  will be borne by the
Company.  In no event will the Appraised  Value of the Common Stock be less than
the per share  consideration  received or receivable  with respect to the Common
Stock or securities  or property of the same class in connection  with a pending
transaction   involving  a  sale,  merger,   recapitalization,   reorganization,
consolidation,  or share exchange,  dissolution of the Company, sale or transfer
of all or a majority of its assets or revenue or income generating capacity,  or
similar transaction.

                                      -2-

<PAGE>

         3.     Registration Rights.
                --------------------

                  (a) S-3  Registration  Rights.  The Company will  register the
         shares of Common Stock  underlying the Warrants (the "Warrant  Shares")
         within thirty (30) days following the date upon which the Company shall
         become  eligible  to  register  its  securities  on Form S-3  under the
         Securities  Act of  1933,  as  amended  (the  "Securities  Act") or any
         successor  to such form in a manner  that  will,  upon  being  declared
         effective,  constitute a "shelf"  registration for purposes of Rule 415
         under the Securities  Act,  pursuant to which the Warrant Shares may be
         sold from time to time and in such amounts as the holder(s) thereof may
         hereafter  determine,  all in a manner  consistent  with all applicable
         provisions of the Securities Act; provided,  however, if at the time of
         such S-3  eligibility,  the Company has formulated plans to file within
         60 days thereof a  registration  statement  covering the sale of any of
         its  securities  in a public  offering  under the  Securities  Act,  no
         registration  of the  Warrant  Shares  shall be  initiated  under  this
         Section  3(a)  until  90  days  after  the   effective   date  of  such
         registration  statement  unless  the  Company  is no longer  proceeding
         diligently to secure the effectiveness of such registration  statement;
         provided that the Company shall provide the Warrant holder(s) the right
         to  participate  in such public  offering  pursuant to, and subject to,
         Section  3(b).  The Company  will use its best efforts to have the Form
         S-3  declared  effective.  At its  expense,  the Company will keep such
         registration effective for a period of one hundred eighty (180) days or
         until the holder or holders have completed the  distribution  described
         in the registration statement relating thereto, whichever first occurs;
         and furnish such number of prospectuses  and other  documents  incident
         thereto as a holder from time to time may reasonably request.

                  (b) Piggyback  Registration  Rights. At any time following the
         date hereof, whenever the Company proposes to register any Common Stock
         for its own or the  account of others  under the  Securities  Act for a
         public offering,  other than (i) any shelf registration of shares to be
         used as consideration for acquisitions of additional  businesses by the
         Company and (ii) registrations  relating to employee benefit plans, the
         Company  shall give each Warrant  holder prompt  written  notice of its
         intent to do so. Upon the written  request of any Warrant  holder given
         within 15 business days after receipt of such notice, the Company shall
         cause  to be  included  in such  registration  all  Warrant  Securities
         (including  any shares of Common  Stock  issued as a dividend  or other
         distribution  with respect to, or in exchange for, or in replacement of
         such Warrant  Securities) which any Warrant holder requests;  provided,
         however,  if the  Company  is  advised  in writing in good faith by any
         managing  underwriter  of an  underwritten  offering of the  securities
         being offered pursuant to any registration statement under this Section
         3(b) that the  number of shares to be sold by  persons  other  than the
         Company is greater  than the number of such shares which can be offered
         without  adversely  affecting the offering,  the Company may reduce pro
         rata the number of shares  offered  for the  accounts  of such  persons
         (based  upon the  number of  shares  held by such  person)  to a number
         deemed satisfactory by such managing underwriter.

                  (c) Lock-up  Agreement.  In  consideration  for the  Company's
         agreeing to its  obligations  under this Section 3, each Warrant holder
         agrees that,  effective upon the request of the  underwriters  managing
         the Company's initial public offering,  such holder shall be obligated,
         so long as all  executive  officers  and  directors  of the Company are
         bound by a comparable obligation,  not to sell, make any short sale of,
         loan, grant any option for the purchase of, or otherwise dispose of any
         shares of Common  Stock  underlying  the  Warrants  (other  than  those
         included in the registration) without the prior written consent of such
         underwriters, for such period of time (not to exceed one hundred eighty
         (180) days) from the effective date of such initial public  offering as
         the underwriters may specify.

         4. Specific  Performance.  The Company stipulates that remedies at law,
in money damages, available to the holder of a Warrant, or of a holder of Common
Stock issued  pursuant to exercise of a Warrant,  in the event of any default or
threatened  default by the Company in the  performance of or compliance with any
of the terms of this Agreement are not and will not be adequate.  Therefore, the
Company agrees that the terms of this Agreement may be specifically  enforced by
a decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.

         5.  Successors and Assigns;  Binding  Effect.  This Agreement  shall be
binding  upon  and  insure  to the  benefit  of you and the  Company  and  their
respective successors and permitted assigns.

                                      -3-

<PAGE>

         6.  Notices.  Any  notice  hereunder  shall be given by  registered  or
certified  mail,  if to the Company,  at its  principal  office,  and, if to the
holders, to the respective addresses shown in the Warrant ledger of the Company,
provided  that any holder may at any time on three (3) days'  written  notice to
the Company designate or substitute another address where notice is to be given.
Notice  shall be deemed  given and  received  after a  certified  or  registered
letter, properly addressed with postage prepaid, is deposited in the U.S. mail.

         7.  Severability.  Every  provision of this Agreement is intended to be
severable.  If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the remainder of this
Agreement.

         8. Assignment;  Replacement of Warrants. If the Warrant or Warrants are
assigned,  in  whole or in  part,  the  Warrants  shall  be  surrendered  at the
principal  office  of the  Company,  and  thereupon,  in the  case of a  partial
assignment,  a new Warrant  shall be issued to the holder  thereof  covering the
number of shares not assigned,  and the assignee  shall be entitled to receive a
new Warrant covering the number of shares so assigned.  Upon receipt of evidence
reasonably  satisfactory  to the  Company of the loss,  theft,  destruction,  or
mutilation of any Warrant and appropriate  bond or  indemnification  protection,
the Company  shall issue a new Warrant of like tenor.  The Warrants  will not be
transferred,  sold, or otherwise hypothecated by you or any other person and the
Warrants will be  nontransferable,  except to (i) one or more  persons,  each of
which on the date of transfer is an  officer,  shareholder,  or employee of you;
(ii) a  partnership  or  partnerships,  the partners of which are you and one or
more persons, each of whom on the date of transfer is an officer of you; (iii) a
successor  to  you in  merger  or  consolidation;  (iv)  a  purchaser  of all or
substantially  all of your assets;  or (v) a person that receives a Warrant upon
death of a holder pursuant to will, trust, or the laws of intestate succession.

         9.  Governing  Law. This  Agreement  shall be governed and construed in
accordance  with the laws of the State of Oklahoma  without giving effect to the
principles of choice of laws thereof.

         10.  Definition.  All  references  to the word "you" in this  Agreement
shall be deemed to apply with equal  effect to any  persons or  entities to whom
Warrants have been  transferred in accordance with the terms hereof,  and, where
appropriate,  to any persons or entities holding shares of Common Stock issuable
upon exercise of Warrants.

         11.  Headings.  The headings  herein are for purposes of reference only
and shall not limit or  otherwise  affect the  meaning of any of the  provisions
hereof.

         12.  Counterparts.  This  Agreement  may be  executed  in  two or  more
counterparts,  and it will not be necessary  that the  signatures of all parties
hereto be contained on any one  counterpart  hereof.  Each  counterpart  will be
deemed an original,  but all  counterparts  together will constitute one and the
same instrument.  The parties agree that a facsimile of this Agreement signed by
the parties will  constitute an agreement in accordance with the terms hereof as
if all of the parties had executed an original of this Agreement.

                                    Very truly yours,

                                    FULLNET COMMUNICATIONS, INC.


                                    By:
                                       ---------------------------------------
                                        Timothy J. Kilkenny, President and CEO




ACCEPTED AS OF THE ________ DAY OF ____________, 2000:



_________________________________________




                                      -4-




                               WARRANT CERTIFICATE


THE WARRANTS  REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES  ISSUABLE
UPON  EXERCISE  THEREOF  MAY NOT BE OFFERED OR SOLD  EXCEPT  PURSUANT  TO (i) AN
EFFECTIVE  REGISTRATION  STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT  APPLICABLE,  RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES),  OR (iii) AN OPINION OF COUNSEL,  IF
SUCH OPINION SHALL BE REASONABLY  SATISFACTORY TO THE ISSUER,  THAT AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.

THESE  SECURITIES HAVE NOT BEEN REGISTERED  UNDER THE FLORIDA  SECURITIES ACT IN
RELIANCE UPON EXEMPTION  PROVISIONS CONTAINED THEREIN.  ss.517.061(11)(a)(5)  OF
THE FLORIDA SECURITIES AND INVESTOR  PROTECTION ACT (THE "FLORIDA ACT") PROVIDES
THAT ANY PURCHASER OF SECURITIES IN FLORIDA WHICH ARE EXEMPTED FROM REGISTRATION
UNDER  ss.517.061(11) OF THE FLORIDA ACT MAY WITHDRAW HIS PURCHASE AND RECEIVE A
FULL REFUND OF ALL MONIES  PAID,  WITHIN  THREE  BUSINESS  DAYS AFTER HE TENDERS
CONSIDERATION FOR SUCH SECURITIES. THEREFORE, ANY FLORIDA RESIDENT WHO PURCHASES
SECURITIES  IS ENTITLED TO EXERCISE THE  FOREGOING  STATUTORY  RESCISSION  RIGHT
WITHIN THREE BUSINESS DAYS AFTER TENDERING  CONSIDERATION  FOR THE SECURITIES BY
TELEPHONE, TELEGRAM, OR LETTER NOTICE TO THE COMPANY AT THE ADDRESS OR TELEPHONE
NUMBER SET FORTH IN THIS  AGREEMENT.  ANY  TELEGRAM OR LETTER  SHOULD BE SENT OR
POSTMARKED PRIOR TO THE END OF THE THIRD BUSINESS DAY. A LETTER SHOULD BE MAILED
BY  CERTIFIED  MAIL,  RETURN  RECEIPT  REQUESTED,  TO ENSURE ITS  RECEIPT AND TO
EVIDENCE THE TIME OF MAILING. ANY ORAL REQUESTS SHOULD BE CONFIRMED IN WRITING.

THE  TRANSFER OR EXCHANGE OF THE WARRANTS  REPRESENTED  BY THIS  CERTIFICATE  IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.


                          FULLNET COMMUNICATIONS, INC.


No.:  W-00-0___                                                ________ Warrants
Date:    ___________ _____, 2000

         THIS IS TO CERTIFY that __________________ or his assigns, as permitted
in that certain Warrant Agreement (the "Warrant agreement"),  dated of even date
herewith,  by  and  among  FullNet  Communications,  Inc.  (the  "Company")  and
_________________ is entitled to purchase at any time or from time to time on or
after the date hereof,  until 5:00 p.m.,  Central  Standard Time on ____________
_____,  2005,  an aggregate of  _____________________________________  shares of
common  stock,  par value  $0.00001 per share,  of the Company,  for an exercise
price per share of $.01 per share as set forth in the Warrant Agreement referred
to herein.  This Warrant is issued  pursuant to the Warrant  Agreement,  and all
rights of the holder of this Warrant are further governed by, and subject to the
terms and  provisions of such Warrant  Agreement,  copies of which are available
upon request to the Company.  The holder of this Warrant and the shares issuable
upon  the  exercise  hereof  shall  be  entitled  to the  benefits,  rights  and
privileges and subject to the obligations,  duties and liabilities  provided for
in the Warrant Agreement.

                              WARRANT CERTIFICATE
                                   Page 1 of 4

<PAGE>

         The issuance of this Warrant and the shares  issuable  upon the due and
timely  exercise  hereof have not been  registered  under the  Securities Act of
1933, as amended (the "Act"),  or any similar state  securities law or act, and,
as such,  no public  offering  of either  this  Warrant  or any of the shares of
common stock issuable upon exercise of this Warrant may be made other than under
an  exemption  under  the  Act or  until  the  effectiveness  of a  registration
statement  under such Act covering  such  offering.  Transfer of this Warrant is
restricted pursuant to the terms of Section 8 of the Warrant Agreement.

         Subject to the  provisions of the Act, of the Warrant  Agreement and of
this Warrant,  this Warrant and all rights hereunder are transferable,  in whole
or in part,  only to the extent  expressly  permitted in such documents and then
only at the  office of the  Company  at 200 North  Harvey  Avenue,  Suite  1704,
Oklahoma City, Oklahoma 73102, Attention President, by the holder hereof or by a
duly authorized attorney-in-fact,  upon surrender of this Warrant duly endorsed,
together with the Assignment hereof duly endorsed.  Until transfer hereof on the
books of the Company,  the Company may treat the registered holder hereof as the
owner hereof for all purposes.


THIS WARRANT CERTIFICATE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE  RIGHTS OF THE  COMPANY  AND THE HOLDER  HEREOF  SHALL BE  GOVERNED  BY, THE
INTERNAL  LAWS OF THE STATE OF OKLAHOMA,  WITHOUT  REGARD TO THE CONFLICT OF LAW
PRINCIPLES OF OKLAHOMA LAW.

         IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed
and its corporate seal to be hereunto affixed by its proper  corporate  officers
thereunto duly authorized.

                                       FULLNET COMMUNICATIONS, INC.


                                       By:______________________________________
                                          Timothy J. Kilkenny, President and CEO

(SEAL)

Attest:


- ----------------------------------
Jeanette C. Timmons, Secretary




                              WARRANT CERTIFICATE
                                   Page 2 of 4

<PAGE>


                          FULLNET COMMUNICATIONS, INC.

                                  SUBSCRIPTION
                                  ------------

      To Be Signed Only Upon Exercise (in whole or in part) of the Warrants

TO:                 FULLNET COMMUNICATIONS, INC.
                    200 North Harvey, Suite 1704
                    Oklahoma City, Oklahoma 73102
                    Attention:  President

         1. The undersigned, _________________________________,  pursuant to the
provisions of the Warrant Agreement dated as of  ______________  _____, 2000 and
the attached Warrant Certificate, hereby agrees to subscribe for the purchase of
_______ shares of the common stock of FullNet  Communications,  Inc.  covered by
the attached  Warrant  Certificate,  and makes payment  therefore in full at the
price per share provided by the Warrant Agreement.

         2. The  undersigned  Holder elects to pay the aggregate  purchase price
for such shares of common stock (i) by lawful money of the United  States or the
enclosed  certified or official bank check  payable in United States  dollars to
the  order of the  Company  in the  amount of  $______________,  or (ii) by wire
transfer of United  States  funds to the account of the Company in the amount of
$___________,  which  transfer has been made before or  simultaneously  with the
delivery of this Subscription pursuant to the instructions of the Company.

         3. Please issue a stock  certificate or certificates  representing  the
appropriate  number of shares of common stock in the name of the  undersigned or
in such other name(s) as is specified below:

- --------------------------------------    --------------------------------------
(Name)                                    (Social Security or Fed ID #)

- --------------------------------------    --------------------------------------
(Signature)                               (Address)

- --------------------------------------    --------------------------------------
(Date)                                    (Address)


                              WARRANT CERTIFICATE
                                   Page 3 of 4

<PAGE>

                                   ASSIGNMENT
                                   ----------

         FOR VALUE RECEIVED  ____________________________  hereby sells, assigns
and transfer unto  ______________________  the foregoing  Warrant and all rights
evidenced    thereby,    and   does    irrevocably    constitute   and   appoint
________________________,  attorney,  to transfer  said  Warrant on the books of
FullNet Communications, Inc.

- -----------------------------------    ----------------------------------------
(Name)                                 (Name of Assignee)

- -----------------------------------    ----------------------------------------
(Signature)                            (Signature of Assignee)

- -----------------------------------    ----------------------------------------
(Social Security or Fed ID #)          (Social Security or Fed ID # of Assignee)

- -----------------------------------    ----------------------------------------

- -----------------------------------    ----------------------------------------
(Address)                              (Address of Assignee)

- -----------------------------------
(Date)

                               PARTIAL ASSIGNMENT
                               ------------------

         FOR VALUE RECEIVED  ____________________________  hereby sells, assigns
and transfer unto  ______________________  the right to purchase _____ shares of
the common stock of FullNet Communications, Inc. by the foregoing Warrant, and a
proportionate  part of said Warrant and the rights evidenced  thereby,  and does
irrevocably  constitute  and  appoint  ________________________,   attorney,  to
transfer that part of said Warrant on the books of FullNet Communications, Inc.

- -----------------------------------    ----------------------------------------
(Name)                                 (Name of Assignee)

- -----------------------------------    ----------------------------------------
(Signature)                            (Signature of Assignee)

- -----------------------------------    ----------------------------------------
(Social Security or Fed ID #)          (Social Security or Fed ID # of Assignee)

- -----------------------------------    ----------------------------------------

- -----------------------------------    ----------------------------------------
(Address)                              (Address of Assignee)

- -----------------------------------
(Date)



                               WARRANT CERTIFICATE
                                   PAGE 4 OF 4



THIS PROMISSORY  NOTE HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "ACT"),  NOR UNDER ANY  STATE  SECURITIES  LAW AND MAY NOT BE
PLEDGED,  SOLD,  ASSIGNED,  HYPOTHECATED  OR OTHERWISE  TRANSFERRED  UNTIL (1) A
REGISTRATION  STATEMENT WITH RESPECT  THERETO IS EFFECTIVE UNDER THE ACT AND ANY
APPLICABLE  STATE  SECURITIES  LAW OR (2) THE  COMPANY  RECEIVES  AN  OPINION OF
COUNSEL TO THE  COMPANY OR OTHER  COUNSEL TO THE HOLDER OF SUCH NOTE WHICH OTHER
COUNSEL IS REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH NOTE MAY BE PLEDGED,
SOLD,  ASSIGNED,  HYPOTHECATED OR TRANSFERRED WITHOUT AN EFFECTIVE  REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

THESE  SECURITIES HAVE NOT BEEN REGISTERED  UNDER THE FLORIDA  SECURITIES ACT IN
RELIANCE UPON EXEMPTION  PROVISIONS CONTAINED THEREIN.  ss.517.061(11)(a)(5)  OF
THE FLORIDA SECURITIES AND INVESTOR  PROTECTION ACT (THE "FLORIDA ACT") PROVIDES
THAT ANY PURCHASER OF SECURITIES IN FLORIDA WHICH ARE EXEMPTED FROM REGISTRATION
UNDER  ss.517.061(11) OF THE FLORIDA ACT MAY WITHDRAW HIS PURCHASE AND RECEIVE A
FULL REFUND OF ALL MONIES  PAID,  WITHIN  THREE  BUSINESS  DAYS AFTER HE TENDERS
CONSIDERATION FOR SUCH SECURITIES. THEREFORE, ANY FLORIDA RESIDENT WHO PURCHASES
SECURITIES  IS ENTITLED TO EXERCISE THE  FOREGOING  STATUTORY  RESCISSION  RIGHT
WITHIN THREE BUSINESS DAYS AFTER TENDERING  CONSIDERATION  FOR THE SECURITIES BY
TELEPHONE, TELEGRAM, OR LETTER NOTICE TO THE COMPANY AT THE ADDRESS OR TELEPHONE
NUMBER SET FORTH IN THIS  AGREEMENT.  ANY  TELEGRAM OR LETTER  SHOULD BE SENT OR
POSTMARKED PRIOR TO THE END OF THE THIRD BUSINESS DAY. A LETTER SHOULD BE MAILED
BY  CERTIFIED  MAIL,  RETURN  RECEIPT  REQUESTED,  TO ENSURE ITS  RECEIPT AND TO
EVIDENCE THE TIME OF MAILING. ANY ORAL REQUESTS SHOULD BE CONFIRMED IN WRITING.

                          FULLNET COMMUNICATIONS, INC.
                               14% Promissory Note


DATED:                                                     _________ _____, 2000

PRINCIPAL AMOUNT (US$):    $________


FULLNET COMMUNICATIONS, INC., an Oklahoma corporation (the "Company"), for value
received,    hereby   promises   to   pay   to   _____________,    residing   at
______________________________________________________________________________
or  registered  assigns  (the  "Payee" or "Holder")  upon due  presentation  and
surrender  of this  Note on the  Repayment  Date (as  hereinafter  defined)  the
principal amount of  __________________________________________________________,
and accrued interest thereon as hereinafter provided.

                                  Page 1 of 6

<PAGE>


1.       PAYMENT OF PRINCIPAL AND INTEREST; METHOD OF PAYMENT.

         1.1 Payment. Payment of the principal and accrued interest on this Note
shall be made in such coin or currency of the United States of America as at the
time of  payment  shall be legal  tender for the  payment of public and  private
debts.  Interest (computed for the actual number of days elapsed on the basis of
a year  consisting of 365 days) on the unpaid portion of said  principal  amount
from  time to time  outstanding  shall  be paid by the  Company  at the  rate of
fourteen  percent (14%) per annum (the "Stated  Interest  Rate"),  said interest
payable to the Payee on the 10th day following  the end of each calendar  month.
The  principal  shall be due and payable on the  Repayment  Date,  which payment
shall be made only upon  presentation  and surrender of this Note to the Company
at its address set forth  herein.  The Company  will pay or cause to be paid all
sums  becoming  due  hereon  for  principal  and  interest  by check sent to the
Holder's  above address or to such other address as the Holder may designate for
such purpose from time to time by written notice to the Company,

         1.2      Repayment Date.

                  (a) For purposes hereof,  unless sooner repaid by the Company,
         the "Repayment Date" shall mean the earlier of the following dates: (i)
         the date  which is  within  five  (5) days of  receipt  of funds by the
         Company of any  offering  raising  gross  proceeds to the Company of at
         least $1,250,000  (which offering the Company intends to conduct but of
         which there is no assurance);  provided,  however,  if funds related to
         any such offering are received in tranches,  "Repayment  Date" shall be
         deemed to mean the date  which is within  five (5) days of  receipt  of
         first funds received by the Company,  or (ii) the date which is six (6)
         months after the above-stated  issuance date of this Note (the "Initial
         Six-Month Term"), unless extended pursuant to Section 1.2(b) hereunder.

                  (b) The Company  may, by written  notice to the Holder  within
         ten (10) days prior to the end of the  Initial  Six-Month  Term and the
         delivery  to Holder with such notice of  __________  Warrants  (as such
         term is defined in Section 1.3 hereof),  extend the Repayment  Date for
         an  additional  ninety  (90)  days  (the  "First  Extension   Period");
         provided,  however,  that the  Company  may,  by written  notice to the
         Holder  within  ten (10) days  prior to the end of the First  Extension
         Period and the delivery to Holder with such notice of another _________
         Warrants  (as such term is defined in Section 1.3  hereof),  extend the
         Repayment  Date  for a  second  ninety  (90) day  period  (the  "Second
         Extension  Period"),  in which case all  principal  and any accrued and
         unpaid interest thereon shall be due and payable on the last day of the
         Second Extension Period.

         1.3  Issuance of Common  Stock  Purchase  Warrants.  In addition to the
interest  payable  pursuant to Section 1.1 above, the Company agrees to issue to
the Holder as additional compensation, __________ common stock purchase warrants
(the  "Warrants"),  giving  the Holder the right to  purchase  from the  Company
_________ shares of the Company's $.00001 common stock ("Common Stock"),  at the
per share price and on the terms set forth in the  Warrants,  a form of which is
attached  hereto as Exhibit "A." The  Warrants are deemed  earned on the initial
advance by the Holder under this Agreement and will not terminate on the payment
or prepayment of this Note.

                                  Page 2 of 6

<PAGE>

         1.4  Prepayment.  The  Note  may be  prepaid  in full or in part by the
Company at any time prior to the  Repayment  Date.  Any  prepayment of this Note
shall be applied first to any accrued but unpaid interest, then to the principal
amount of the Note.

2.       RANKING OF NOTE.

         2.1 Junior to Existing  Debt. The Company,  for itself,  its successors
and assigns,  covenants and agrees,  and the Payee and each successive Holder by
acceptance of this Note,  likewise  covenants and agrees that the payment of the
principal of and interest on this Note ranks  junior and is  subordinate  to all
existing indebtedness, including trade debt.

         2.2 Indebtedness. "Indebtedness" means (a) any liability of the Company
(i) for borrowed  money, or (ii) evidenced by a note,  debenture,  bond or other
instrument of  indebtedness  (including,  without  limitation,  a purchase money
obligation),  given in connection  with the  acquisition of property,  assets or
services, (iii) for the payment of rent or other amounts relating to capitalized
lease  obligations,  or (iv) trade  accounts  payable and trade credit;  (b) any
liability of others  described in the preceding clause (a) which the Company has
guaranteed or which is otherwise its legal liability;  and (c) any modification,
renewal, extension,  replacement or refunding of any such liability described in
the preceding clauses (a) and (b) except that Indebtedness.

         2.3  Further Actions.  The Holder agrees to execute such  subordination
agreements, instruments or waivers as may be reasonably necessary to reflect the
subordination of this Note to the Indebtedness.

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to the Holder that the Company:

                  (a)      is a corporation  duly  organized,  validly  existing
         and in good standing under the laws of the State of Oklahoma;

                  (b) has all  requisite  power and  authority and all necessary
         licenses and permits to own and operate its  properties and to carry on
         its  business  as  now  conducted  and  as  presently  proposed  to  be
         conducted,  the  failure  of which  would not have a  material  adverse
         effect  on  the  business,  operations,   properties,   liabilities  or
         condition (financial or otherwise) of the Company; and

                  (c) has  adequate  authority,  power and legal  right to enter
         into, execute and deliver the Note. On execution and delivery, the Note
         will  be  a  legal,   valid  and  binding  obligation  of  the  Company
         enforceable in accordance with its terms.

                                  Page 3 of 6

<PAGE>

4.       EVENTS OF DEFAULT.

         It shall be an Event of  Default  with  respect  to this  Note upon the
occurrence and continuation uncured of any of the following events:

         4.1      Default in Payment, Etc.

                  (a) A default in the  payment  of any  interest  or  principal
         payments on this Note,  and such  default  shall  continue  uncured for
         fifteen (15) days after due date and notice is received  from Holder of
         such default for the making of such interest or principal payment; or

                  (b)  default  in the  performance,  or  breach,  of any  other
         covenant of the Company in this Note and continuance of such default or
         breach uncured for a period of thirty (30) days after receipt of notice
         as to such  breach or after the  Company  knew or should  have known of
         such breach.

         4.2  Bankruptcy.  The  entry  of a decree  or  order by a court  having
jurisdiction  adjudging  the Company a bankrupt  or  insolvent,  or  approving a
petition seeking reorganization, arrangement, adjustment or composition of or in
respect of the  Company,  under  federal  bankruptcy  law,  as now or  hereafter
constituted, or any other applicable federal or state bankruptcy,  insolvency or
other similar law, and the  continuance of any such decree or order unstayed and
in effect for a period of sixty (60) days; or the commencement by the Company of
a voluntary case under federal bankruptcy law, as now or hereafter  constituted,
or any  other  applicable  Federal  or state  bankruptcy,  insolvency,  or other
similar law, or the consent by it to the institution of bankruptcy or insolvency
proceedings  against  it, or the filing by it of a petition or answer or consent
seeking  reorganization  or relief  under  federal  bankruptcy  law or any other
applicable  Federal  or state  law,  or the  consent by it to the filing of such
petition or to the  appointment of a receiver,  liquidator,  assignee,  trustee,
sequestrator or similar  official of the Company or of any  substantial  part of
its property, or the making by it of an assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in furtherance
of any such action.

5.       REMEDIES UPON DEFAULT.

         5.1  Acceleration.  Upon an Event of Default and at any time during the
continuation thereof, the Holder, by notice in writing given to the Company, may
declare the entire principal of this Note then outstanding to be due and payable
immediately,  and upon any such declaration the same shall become and be due and
payable immediately, anything herein contained to the contrary notwithstanding.

         5.2  Proceedings and Actions.  During the  continuation of any Event of
Default,  the Holder may institute  such actions or proceedings in law or equity
as it shall deem  expedient  for the  protection of its rights and may prosecute
and enforce its claims against all assets of the Company, and in connection with
any such action or  proceeding  shall be  entitled  to receive  from the Company
payment of the principal  amount of this Note plus accrued  interest to the date
of payment plus reasonable expenses of collection including, without limitation,
attorney's fees and expenses.

                                  Page 4 of 6

<PAGE>

6.       RESTRICTIONS ON TRANSFER.

         6.1 The Holder  acknowledges  that he has been  advised by the  Company
that this  Note has not been  registered  under the Act,  that the Note is being
issued on the basis of the statutory  exemption  provided by section 4(2) of the
Act and/or  Regulation D promulgated  thereunder  relating to transactions by an
issuer  not  involving  any public  offering,  and that the  Company's  reliance
thereon  is based in part  upon the  representations  made by the  Holder in the
Holder's Investor  Representation  Letter,  previously furnished to the Company.
The Holder  acknowledges  that he has been  informed  by the  Company  of, or is
otherwise  familiar with, the nature of the  limitations  imposed by the Act and
the  rules  and  regulations  thereunder  on  the  transfer  of  securities.  In
particular,  the Holder agrees that no sale,  assignment or transfer of the Note
shall be valid or  effective,  and the Company shall not be required to give any
effect to any such sale, assignment or transfer, unless (i) the sale, assignment
or transfer of the Note is registered  under the Act, it being  understood  that
the Note is not  currently  registered  for sale  and  that the  Company  has no
obligation  or  intention  to so register  the Notes,  or (ii) the Note is sold,
assigned or transferred in accordance with all the  requirements and limitations
of Rule 144 under the Act, it being understood that Rule 144 is not available at
the  present  time for the sale of the Note and that  there can be no  assurance
that Rule 144 sales will be available  at any time in the future,  or (iii) such
sale,  assignment,  or transfer is otherwise exempt from registration  under the
Act. The Holder of this Note and each  transferee  hereof further agrees that if
any  distribution  of this Note is proposed to be made by them otherwise than by
delivery of a prospectus meeting the requirements of Section 10 of the Act, such
action  shall be taken only  after  submission  to the  Company of an opinion of
counsel, reasonably satisfactory in form and substance to the Company's counsel,
to the effect that the proposed distribution will not be in violation of the Act
or of applicable state law. Furthermore, it shall be a condition to the transfer
of this Note that any  transferee  thereof  deliver to the  Company  his written
agreement to accept and be bound by all of the terms and conditions contained in
this Note.

7.       MISCELLANEOUS.

         7.1 No Recourse. No recourse whatsoever, either directly or through the
Company or any trustee,  receiver or  assignee,  shall be had in any event or in
any manner against any past, present or future stockholder,  director or officer
of the Company for the payment of the  principal  of or interest on this Note or
for any claim based thereon or otherwise in respect this Note, this Note being a
corporate obligation only.

         7.2 Notices.  All communications provided hereunder shall be in writing
and, if to the Company,  delivered  or mailed by  registered  or certified  mail
addressed to FullNet Communications,  Inc., 200 North Harvey Avenue, Suite 1704,
Oklahoma    City,    Oklahoma    73102    or,    if   to    the    Holder,    at
_____________________________________.


                                  Page 5 of 6

<PAGE>

         7.3  Lost,  Stolen  or  Mutilated  Note.  In case  this  Note  shall be
mutilated, lost, stolen or destroyed, the Company may, in its discretion,  issue
and  deliver in  exchange  and  substitution  for and upon  cancellation  of the
mutilated Note, or in lieu of and  substitution  for the Note,  lost,  stolen or
destroyed,  a new Note of like tenor and  representing  an  equivalent  right or
interest,  but only upon receipt of evidence satisfactory to the Company of such
loss, theft or destruction and an indemnity, if requested,  also satisfactory to
it.

         7.4 Course of Dealing. No course of dealing between the Company and the
Holder hereof shall operate as a waiver of any right of any Holder  hereof,  and
no delay on the part of the Holder in exercising  any right  hereunder  shall so
operate.

         7.5 Amendments.  This Note may be amended only by a written  instrument
executed by the Company and the Holder hereof.  Any amendment  shall be endorsed
upon this Note, and all future holders shall be bound thereby.

         7.6 Governing Law.  This Note shall be construed in accordance with and
governed by the laws of the State of Oklahoma, without giving effect to conflict
of laws principles.

         DATED the date first written above.


                                FULLNET COMMUNICATIONS, INC.



                                By:________________________________________
                                      Timothy J. Kilkenny,
                                      President and Chief Executive Officer
(SEAL)

Attest:


________________________________________
Jeanette C. Timmons, Secretary





                                  Page 6 of 6




                               WARRANT CERTIFICATE
                               -------------------

THE WARRANTS  REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES  ISSUABLE
UPON  EXERCISE  THEREOF  MAY NOT BE OFFERED OR SOLD  EXCEPT  PURSUANT  TO (i) AN
EFFECTIVE  REGISTRATION  STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT  APPLICABLE,  RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES),  OR (iii) AN OPINION OF COUNSEL,  IF
SUCH OPINION SHALL BE REASONABLY  SATISFACTORY TO THE ISSUER,  THAT AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.

THESE  SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF CODE
SECTION  10-5-9 OF THE "GEORGIA  SECURITIES ACT OF 1973," AND MAY NOT BE SOLD OR
TRANSFERRED  EXCEPT IN A TRANSACTION  WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT
TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.

THE  TRANSFER OR EXCHANGE OF THE WARRANTS  REPRESENTED  BY THIS  CERTIFICATE  IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.


                          FULLNET COMMUNICATIONS, INC.


No.:   W-00-01                                                __________Warrants
Date:  February __, 2000

         THIS IS TO CERTIFY that  ____________  or its assigns,  as permitted in
that certain  Warrant  Agreement (the "Warrant  agreement"),  dated of even date
herewith,  by  and  among  FullNet  Communications,  Inc.  (the  "Company")  and
___________ is entitled to purchase at any time or from time to time on or after
February __, 2001, until 5:00 p.m.,  Central Standard Time on February __, 2004,
an aggregate of __________________________________________________ (___________)
shares of common stock,  par value  $0.00001 per share,  of the Company,  for an
exercise price per share of $.01 per share as set forth in the Warrant Agreement
referred to herein.  This Warrant is issued  pursuant to the Warrant  Agreement,
and all  rights of the  holder of this  Warrant  are  further  governed  by, and
subject to the terms and provisions of such Warrant  Agreement,  copies of which
are  available  upon request to the Company.  The holder of this Warrant and the
shares  issuable  upon the exercise  hereof  shall be entitled to the  benefits,
rights and privileges  and subject to the  obligations,  duties and  liabilities
provided for in the Warrant Agreement.

         The issuance of this Warrant and the shares  issuable  upon the due and
timely  exercise  hereof have not been  registered  under the  Securities Act of
1933, as amended (the "Act"),  or any similar state  securities law or act, and,
as such,  no public  offering  of either  this  Warrant  or any of the shares of
common stock issuable upon exercise of this Warrant may be made other than under
an  exemption  under  the  Act or  until  the  effectiveness  of a  registration
statement  under such Act covering  such  offering.  Transfer of this Warrant is
restricted pursuant to the terms of Section 8 of the Warrant Agreement.

                               WARRANT CERTIFICATE
                                   Page 1 of 4

<PAGE>

         Subject to the  provisions of the Act, of the Warrant  Agreement and of
this Warrant,  this Warrant and all rights hereunder are transferable,  in whole
or in part,  only to the extent  expressly  permitted in such documents and then
only at the  office of the  Company  at 200 North  Harvey  Avenue,  Suite  1704,
Oklahoma City, Oklahoma 73102, Attention President, by the holder hereof or by a
duly authorized attorney-in-fact,  upon surrender of this Warrant duly endorsed,
together with the Assignment hereof duly endorsed.  Until transfer hereof on the
books of the Company,  the Company may treat the registered holder hereof as the
owner hereof for all purposes.

THIS WARRANT CERTIFICATE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE  RIGHTS OF THE  COMPANY  AND THE HOLDER  HEREOF  SHALL BE  GOVERNED  BY, THE
INTERNAL  LAWS OF THE STATE OF OKLAHOMA,  WITHOUT  REGARD TO THE CONFLICT OF LAW
PRINCIPLES OF OKLAHOMA LAW.

         IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed
and its corporate seal to be hereunto affixed by its proper  corporate  officers
thereunto duly authorized.

                                  FULLNET COMMUNICATIONS, INC.


                                  By:_______________________________________
                                     Timothy J. Kilkenney, President and CEO

(SEAL)

Attest:


_______________________________________
Jeanette C. Timmons, Secretary






                               WARRANT CERTIFICATE
                                   Page 2 of 4


<PAGE>

                          FULLNET COMMUNICATIONS, INC.

                                  SUBSCRIPTION
                                  ------------

      To Be Signed Only Upon Exercise (in whole or in part) of the Warrants

TO:                    FULLNET COMMUNICATIONS, INC.
                       200 North Harvey, Suite 1704
                       Oklahoma City, Oklahoma 73102
                       Attention:  President

         1. The undersigned, _________________________________,  pursuant to the
provisions  of the  Warrant  Agreement  dated as of  February  __,  2000 and the
attached  Warrant  Certificate,  hereby  agrees to subscribe for the purchase of
_______ shares of the common stock of FullNet  Communications,  Inc.  covered by
the attached  Warrant  Certificate,  and makes  payment  therefor in full at the
price per share provided by the Warrant Agreement.

         2. The  undersigned  Holder elects to pay the aggregate  purchase price
for such shares of common stock (i) by lawful money of the United  States or the
enclosed  certified or official bank check  payable in United States  dollars to
the  order of the  Company  in the  amount of  $______________,  or (ii) by wire
transfer of United  States  funds to the account of the Company in the amount of
$___________,  which  transfer has been made before or  simultaneously  with the
delivery of this Subscription pursuant to the instructions of the Company.

         3. Please issue a stock  certificate or certificates  representing  the
appropriate  number of shares of common stock in the name of the  undersigned or
in such other name(s) as is specified below:

- --------------------------------------   --------------------------------------
(Name)                                   (Social Security or Fed ID #)

- --------------------------------------   --------------------------------------
(Signature)                              (Address)

- --------------------------------------   --------------------------------------
(Date)                                   (Address)




                               WARRANT CERTIFICATE
                                   Page 3 of 4

<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED  ____________________________  hereby sells, assigns
and transfer unto  ______________________  the foregoing  Warrant and all rights
evidenced    thereby,    and   does    irrevocably    constitute   and   appoint
________________________,  attorney,  to transfer  said  Warrant on the books of
FullNet Communications, Inc.

- ------------------------------------  ----------------------------------------
(Name)                                (Name of Assignee)

- ------------------------------------  ----------------------------------------
(Signature)                           (Signature of Assignee)

- ------------------------------------  ----------------------------------------
(Social Security or Fed ID #)         (Social Security or Fed ID # of Assignee)

- ------------------------------------  ----------------------------------------

- ------------------------------------  ----------------------------------------
(Address)                             (Address of Assignee)

- ------------------------------------
(Date)

                               PARTIAL ASSIGNMENT
                               ------------------

         FOR VALUE RECEIVED  ____________________________  hereby sells, assigns
and transfer unto  ______________________  the right to purchase _____ shares of
the common stock of FullNet Communications, Inc. by the foregoing Warrant, and a
proportionate  part of said Warrant and the rights evidenced  thereby,  and does
irrevocably  constitute  and  appoint  ________________________,   attorney,  to
transfer that part of said Warrant on the books of FullNet Communications, Inc.

- ------------------------------------  ----------------------------------------
(Name)                                (Name of Assignee)

- ------------------------------------  ----------------------------------------
(Signature)                           (Signature of Assignee)

- ------------------------------------  ----------------------------------------
(Social Security or Fed ID #)         (Social Security or Fed ID # of Assignee)

- ------------------------------------  ----------------------------------------

- ------------------------------------  ----------------------------------------
(Address)                             (Address of Assignee)

- ------------------------------------
(Date)



                               WARRANT CERTIFICATE
                                   Page 4 of 4



THIS PROMISSORY  NOTE HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "ACT"),  NOR UNDER ANY  STATE  SECURITIES  LAW AND MAY NOT BE
PLEDGED,  SOLD,  ASSIGNED,  HYPOTHECATED  OR OTHERWISE  TRANSFERRED  UNTIL (1) A
REGISTRATION  STATEMENT WITH RESPECT  THERETO IS EFFECTIVE UNDER THE ACT AND ANY
APPLICABLE  STATE  SECURITIES  LAW OR (2) THE  COMPANY  RECEIVES  AN  OPINION OF
COUNSEL TO THE  COMPANY OR OTHER  COUNSEL TO THE HOLDER OF SUCH NOTE WHICH OTHER
COUNSEL IS REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH NOTE MAY BE PLEDGED,
SOLD,  ASSIGNED,  HYPOTHECATED OR TRANSFERRED WITHOUT AN EFFECTIVE  REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

THESE  SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF CODE
SECTION  10-5-9 OF THE "GEORGIA  SECURITIES ACT OF 1973," AND MAY NOT BE SOLD OR
TRANSFERRED  EXCEPT IN A TRANSACTION  WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT
TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.


                          FULLNET COMMUNICATIONS, INC.
                              14% Promissory Note


DATED:                                                    ___________ ____, 2000

PRINCIPAL AMOUNT (US$):    $________


FULLNET COMMUNICATIONS, INC., an Oklahoma corporation (the "Company"), for value
received,  hereby  promises  to pay to  _________________________,  residing  at
_____________________________________________________ or registered assigns (the
"Payee" or "Holder")  upon due  presentation  and  surrender of this Note on the
Repayment   Date   (as   hereinafter    defined)   the   principal   amount   of
____________________________,   and  accrued  interest  thereon  as  hereinafter
provided.

1.       PAYMENT OF PRINCIPAL AND INTEREST; METHOD OF PAYMENT.

         1.1 Payment. Payment of the principal and accrued interest on this Note
shall be made in such coin or currency of the United States of America as at the
time of  payment  shall be legal  tender for the  payment of public and  private
debts.  Interest (computed for the actual number of days elapsed on the basis of
a year  consisting of 365 days) on the unpaid portion of said  principal  amount
from  time to time  outstanding  shall  be paid by the  Company  at the  rate of
fourteen  percent (14%) per annum (the "Stated  Interest  Rate"),  said interest
payable to the Payee on the 10th day following  the end of each calendar  month.
The  principal  shall be due and payable on the  Repayment  Date,  which payment
shall be made only upon  presentation  and surrender of this Note to the Company
at its address set forth  herein.  The Company  will pay or cause to be paid all
sums  becoming  due  hereon  for  principal  and  interest  by check sent to the
Holder's  above address or to such other address as the Holder may designate for
such purpose from time to time by written notice to the Company,

                                  Page 1 of 6

<PAGE>

         1.2      Repayment Date.

                  (a) For purposes hereof,  unless sooner repaid by the Company,
         the "Repayment Date" shall mean the earlier of the following dates: (i)
         the date  which is  within  five  (5) days of  receipt  of funds by the
         Company of any  offering  raising  gross  proceeds to the Company of at
         least $1,250,000  (which offering the Company intends to conduct but of
         which there is no assurance);  provided,  however,  if funds related to
         any such offering are received in tranches,  "Repayment  Date" shall be
         deemed to mean the date  which is within  five (5) days of  receipt  of
         first funds received by the Company,  or (ii) the date which is six (6)
         months after the above-stated  issuance date of this Note (the "Initial
         Six-Month Term"), unless extended pursuant to Section 1.2(b) hereunder.

                  (b) The Company  may, by written  notice to the Holder  within
         ten (10) days prior to the end of the  Initial  Six-Month  Term and the
         delivery to Holder with such notice of ________  Warrants (as such term
         is defined in Section 1.3  hereof),  extend the  Repayment  Date for an
         additional ninety (90) days (the "First Extension  Period");  provided,
         however,  that the Company may, by written  notice to the Holder within
         ten (10) days  prior to the end of the First  Extension  Period and the
         delivery to Holder with such notice of another  _________  Warrants (as
         such term is defined in Section 1.3 hereof),  extend the Repayment Date
         for a second ninety (90) day period (the "Second Extension Period"), in
         which case all  principal and any accrued and unpaid  interest  thereon
         shall  be due and  payable  on the  last  day of the  Second  Extension
         Period.

         1.3  Issuance of Common  Stock  Purchase  Warrants.  In addition to the
interest  payable  pursuant to Section 1.1 above, the Company agrees to issue to
the Holder as additional  compensation,  ________ common stock purchase warrants
(the  "Warrants"),  giving  the Holder the right to  purchase  from the  Company
________ shares of the Company's $.00001 common stock ("Common  Stock"),  at the
per share price and on the terms set forth in the  Warrants,  a form of which is
attached  hereto as Exhibit "A." The  Warrants are deemed  earned on the initial
advance by the Holder under this Agreement and will not terminate on the payment
or prepayment of this Note.

         1.4  Prepayment.  The  Note  may be  prepaid  in full or in part by the
Company at any time prior to the  Repayment  Date.  Any  prepayment of this Note
shall be applied first to any accrued but unpaid interest, then to the principal
amount of the Note.

2.       RANKING OF NOTE.

         2.1 Junior to Existing  Debt. The Company,  for itself,  its successors
and assigns,  covenants and agrees,  and the Payee and each successive Holder by
acceptance of this Note,  likewise  covenants and agrees that the payment of the
principal of and interest on this Note ranks  junior and is  subordinate  to all
existing indebtedness, including trade debt.

                                  Page 2 of 6

<PAGE>

         2.2 Indebtedness. "Indebtedness" means (a) any liability of the Company
(i) for borrowed  money, or (ii) evidenced by a note,  debenture,  bond or other
instrument of  indebtedness  (including,  without  limitation,  a purchase money
obligation),  given in connection  with the  acquisition of property,  assets or
services, (iii) for the payment of rent or other amounts relating to capitalized
lease  obligations,  or (iv) trade  accounts  payable and trade credit;  (b) any
liability of others  described in the preceding clause (a) which the Company has
guaranteed or which is otherwise its legal liability;  and (c) any modification,
renewal, extension,  replacement or refunding of any such liability described in
the preceding clauses (a) and (b) except that Indebtedness.

         2.3 Further  Actions.  The Holder agrees to execute such  subordination
agreements, instruments or waivers as may be reasonably necessary to reflect the
subordination of this Note to the Indebtedness.

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to the Holder that the Company:

                  (a) is a corporation  duly organized,  validly existing and in
         good standing under the laws of the State of Oklahoma;

                  (b) has all  requisite  power and  authority and all necessary
         licenses and permits to own and operate its  properties and to carry on
         its  business  as  now  conducted  and  as  presently  proposed  to  be
         conducted,  the  failure  of which  would not have a  material  adverse
         effect  on  the  business,  operations,   properties,   liabilities  or
         condition (financial or otherwise) of the Company; and

                  (c) has  adequate  authority,  power and legal  right to enter
         into, execute and deliver the Note. On execution and delivery, the Note
         will  be  a  legal,   valid  and  binding  obligation  of  the  Company
         enforceable in accordance with its terms.

4.       EVENTS OF DEFAULT.

         It shall be an Event of  Default  with  respect  to this  Note upon the
occurrence and continuation uncured of any of the following events:

         4.1      Default in Payment, Etc.

                  (a) A default in the  payment  of any  interest  or  principal
         payments on this Note,  and such  default  shall  continue  uncured for
         fifteen (15) days after due date and notice is received  from Holder of
         such default for the making of such interest or principal payment; or

                  (b)  default  in the  performance,  or  breach,  of any  other
         covenant of the Company in this Note and continuance of such default or
         breach uncured for a period of thirty (30) days after receipt of notice
         as to such  breach or after the  Company  knew or should  have known of
         such breach.

                                  Page 3 of 6

<PAGE>

         4.2  Bankruptcy.  The  entry  of a decree  or  order by a court  having
jurisdiction  adjudging  the Company a bankrupt  or  insolvent,  or  approving a
petition seeking reorganization, arrangement, adjustment or composition of or in
respect of the  Company,  under  federal  bankruptcy  law,  as now or  hereafter
constituted, or any other applicable federal or state bankruptcy,  insolvency or
other similar law, and the  continuance of any such decree or order unstayed and
in effect for a period of sixty (60) days; or the commencement by the Company of
a voluntary case under federal bankruptcy law, as now or hereafter  constituted,
or any  other  applicable  Federal  or state  bankruptcy,  insolvency,  or other
similar law, or the consent by it to the institution of bankruptcy or insolvency
proceedings  against  it, or the filing by it of a petition or answer or consent
seeking  reorganization  or relief  under  federal  bankruptcy  law or any other
applicable  Federal  or state  law,  or the  consent by it to the filing of such
petition or to the  appointment of a receiver,  liquidator,  assignee,  trustee,
sequestrator or similar  official of the Company or of any  substantial  part of
its property, or the making by it of an assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in furtherance
of any such action.

5.       REMEDIES UPON DEFAULT.

         5.1  Acceleration.  Upon an Event of Default and at any time during the
continuation thereof, the Holder, by notice in writing given to the Company, may
declare the entire principal of this Note then outstanding to be due and payable
immediately,  and upon any such declaration the same shall become and be due and
payable immediately, anything herein contained to the contrary notwithstanding.

         5.2  Proceedings and Actions.  During the  continuation of any Event of
Default,  the Holder may institute  such actions or proceedings in law or equity
as it shall deem  expedient  for the  protection of its rights and may prosecute
and enforce its claims against all assets of the Company, and in connection with
any such action or  proceeding  shall be  entitled  to receive  from the Company
payment of the principal  amount of this Note plus accrued  interest to the date
of payment plus reasonable expenses of collection including, without limitation,
attorney's fees and expenses.

6.       RESTRICTIONS ON TRANSFER.

         6.1 The Holder  acknowledges  that he has been  advised by the  Company
that this  Note has not been  registered  under the Act,  that the Note is being
issued on the basis of the statutory  exemption  provided by section 4(2) of the
Act and/or  Regulation D promulgated  thereunder  relating to transactions by an
issuer  not  involving  any public  offering,  and that the  Company's  reliance
thereon  is based in part  upon the  representations  made by the  Holder in the
Holder's Investor  Representation  Letter,  previously furnished to the Company.

                                  Page 4 of 6

<PAGE>

The Holder  acknowledges  that he has been  informed  by the  Company  of, or is
otherwise  familiar with, the nature of the  limitations  imposed by the Act and
the  rules  and  regulations  thereunder  on  the  transfer  of  securities.  In
particular,  the Holder agrees that no sale,  assignment or transfer of the Note
shall be valid or  effective,  and the Company shall not be required to give any
effect to any such sale, assignment or transfer, unless (i) the sale, assignment
or transfer of the Note is registered  under the Act, it being  understood  that
the Note is not  currently  registered  for sale  and  that the  Company  has no
obligation  or  intention  to so register  the Notes,  or (ii) the Note is sold,
assigned or transferred in accordance with all the  requirements and limitations
of Rule 144 under the Act, it being understood that Rule 144 is not available at
the  present  time for the sale of the Note and that  there can be no  assurance
that Rule 144 sales will be available  at any time in the future,  or (iii) such
sale,  assignment,  or transfer is otherwise exempt from registration  under the
Act. The Holder of this Note and each  transferee  hereof further agrees that if
any  distribution  of this Note is proposed to be made by them otherwise than by
delivery of a prospectus meeting the requirements of Section 10 of the Act, such
action  shall be taken only  after  submission  to the  Company of an opinion of
counsel, reasonably satisfactory in form and substance to the Company's counsel,
to the effect that the proposed distribution will not be in violation of the Act
or of applicable state law. Furthermore, it shall be a condition to the transfer
of this Note that any  transferee  thereof  deliver to the  Company  his written
agreement to accept and be bound by all of the terms and conditions contained in
this Note.

7.       MISCELLANEOUS.

         7.1 No Recourse. No recourse whatsoever, either directly or through the
Company or any trustee,  receiver or  assignee,  shall be had in any event or in
any manner against any past, present or future stockholder,  director or officer
of the Company for the payment of the  principal  of or interest on this Note or
for any claim based thereon or otherwise in respect this Note, this Note being a
corporate obligation only.

         7.2 Notices. All communications  provided hereunder shall be in writing
and, if to the Company,  delivered  or mailed by  registered  or certified  mail
addressed to FullNet Communications,  Inc., 200 North Harvey Avenue, Suite 1704,
Oklahoma    City,    Oklahoma    73102    or,    if   to    the    Holder,    at
- -------------------------------------------.

         7.3  Lost,  Stolen  or  Mutilated  Note.  In case  this  Note  shall be
mutilated, lost, stolen or destroyed, the Company may, in its discretion,  issue
and  deliver in  exchange  and  substitution  for and upon  cancellation  of the
mutilated Note, or in lieu of and  substitution  for the Note,  lost,  stolen or
destroyed,  a new Note of like tenor and  representing  an  equivalent  right or
interest,  but only upon receipt of evidence satisfactory to the Company of such
loss, theft or destruction and an indemnity, if requested,  also satisfactory to
it.

         7.4 Course of Dealing. No course of dealing between the Company and the
Holder hereof shall operate as a waiver of any right of any Holder  hereof,  and
no delay on the part of the Holder in exercising  any right  hereunder  shall so
operate.

         7.5 Amendments.  This Note may be amended only by a written  instrument
executed by the Company and the Holder hereof.  Any amendment  shall be endorsed
upon this Note, and all future holders shall be bound thereby.

                                  Page 5 of 6

<PAGE>

         7.6 Governing Law. This Note shall be construed in accordance  with and
governed by the laws of the State of Oklahoma, without giving effect to conflict
of laws principles.

         DATED the date first written above.


                               FULLNET COMMUNICATIONS, INC.



                               By:________________________________________
                                     Timothy J. Kilkenney,
                                     President and Chief Executive Officer
(SEAL)

Attest:


________________________________________
Jeanette C. Timmons, Secretary





                                  Page 6 of 6



                               WARRANT CERTIFICATE
                               -------------------


THE WARRANTS  REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES  ISSUABLE
UPON  EXERCISE  THEREOF  MAY NOT BE OFFERED OR SOLD  EXCEPT  PURSUANT  TO (i) AN
EFFECTIVE  REGISTRATION  STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT  APPLICABLE,  RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES),  OR (iii) AN OPINION OF COUNSEL,  IF
SUCH OPINION SHALL BE REASONABLY  SATISFACTORY TO THE ISSUER,  THAT AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.

THE  TRANSFER OR EXCHANGE OF THE WARRANTS  REPRESENTED  BY THIS  CERTIFICATE  IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.


                          FULLNET COMMUNICATIONS, INC.


No.:  W-00-0___                                               _________ Warrants
Date: _________ ____, 2000

         THIS IS TO CERTIFY that  _________________ or its assigns, as permitted
in that certain Warrant Agreement (the "Warrant agreement"),  dated of even date
herewith,  by  and  among  FullNet  Communications,  Inc.  (the  "Company")  and
__________________  is  entitled to purchase at any time or from time to time on
or  after  the  date  hereof,   until  5:00  p.m.,   Central  Standard  Time  on
_______________  ____, 2005, an aggregate of  __________________________________
shares of common stock,  par value  $0.00001 per share,  of the Company,  for an
exercise price per share of $.01 per share as set forth in the Warrant Agreement
referred to herein.  This Warrant is issued  pursuant to the Warrant  Agreement,
and all  rights of the  holder of this  Warrant  are  further  governed  by, and
subject to the terms and provisions of such Warrant  Agreement,  copies of which
are  available  upon request to the Company.  The holder of this Warrant and the
shares  issuable  upon the exercise  hereof  shall be entitled to the  benefits,
rights and privileges  and subject to the  obligations,  duties and  liabilities
provided for in the Warrant Agreement.

         The issuance of this Warrant and the shares  issuable  upon the due and
timely  exercise  hereof have not been  registered  under the  Securities Act of
1933, as amended (the "Act"),  or any similar state  securities law or act, and,
as such,  no public  offering  of either  this  Warrant  or any of the shares of
common stock issuable upon exercise of this Warrant may be made other than under
an  exemption  under  the  Act or  until  the  effectiveness  of a  registration
statement  under such Act covering  such  offering.  Transfer of this Warrant is
restricted pursuant to the terms of Section 8 of the Warrant Agreement.

         Subject to the  provisions of the Act, of the Warrant  Agreement and of
this Warrant,  this Warrant and all rights hereunder are transferable,  in whole
or in part,  only to the extent  expressly  permitted in such documents and then
only at the  office of the  Company  at 200 North  Harvey  Avenue,  Suite  1704,
Oklahoma City, Oklahoma 73102, Attention President, by the holder hereof or by a
duly authorized attorney-in-fact,  upon surrender of this Warrant duly endorsed,
together with the Assignment hereof duly endorsed.  Until transfer hereof on the
books of the Company,  the Company may treat the registered holder hereof as the
owner hereof for all purposes.

                               WARRANT CERTIFICATE
                                   Page 1 of 4

<PAGE>

THIS WARRANT CERTIFICATE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE  RIGHTS OF THE  COMPANY  AND THE HOLDER  HEREOF  SHALL BE  GOVERNED  BY, THE
INTERNAL  LAWS OF THE STATE OF OKLAHOMA,  WITHOUT  REGARD TO THE CONFLICT OF LAW
PRINCIPLES OF OKLAHOMA LAW.

         IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed
and its corporate seal to be hereunto affixed by its proper  corporate  officers
thereunto duly authorized.

                                    FULLNET COMMUNICATIONS, INC.


                                    By:_______________________________________
                                       Timothy J. Kilkenney, President and CEO

(SEAL)

Attest:


___________________________________
Jeanette C. Timmons, Secretary









                              WARRANT CERTIFICATE
                                   Page 2 of 4


<PAGE>



                          FULLNET COMMUNICATIONS, INC.

                                  SUBSCRIPTION
                                  ------------

      To Be Signed Only Upon Exercise (in whole or in part) of the Warrants

TO:                   FULLNET COMMUNICATIONS, INC.
                      200 North Harvey, Suite 1704
                      Oklahoma City, Oklahoma 73102
                      Attention:  President

         1. The undersigned, _________________________________,  pursuant to the
provisions of the Warrant Agreement dated as of _____________ ____, 2000 and the
attached  Warrant  Certificate,  hereby  agrees to subscribe for the purchase of
_______ shares of the common stock of FullNet  Communications,  Inc.  covered by
the attached  Warrant  Certificate,  and makes payment  therefore in full at the
price per share provided by the Warrant Agreement.

         2. The  undersigned  Holder elects to pay the aggregate  purchase price
for such shares of common stock (i) by lawful money of the United  States or the
enclosed  certified or official bank check  payable in United States  dollars to
the  order of the  Company  in the  amount of  $______________,  or (ii) by wire
transfer of United  States  funds to the account of the Company in the amount of
$___________,  which  transfer has been made before or  simultaneously  with the
delivery of this Subscription pursuant to the instructions of the Company.

         3. Please issue a stock  certificate or certificates  representing  the
appropriate  number of shares of common stock in the name of the  undersigned or
in such other name(s) as is specified below:

- --------------------------------------  --------------------------------------
(Name)                                  (Social Security or Fed ID #)

- --------------------------------------  --------------------------------------
(Signature)                             (Address)

- --------------------------------------  --------------------------------------
(Date)                                  (Address)



                              WARRANT CERTIFICATE
                                   Page 3 of 4

<PAGE>


                                   ASSIGNMENT
                                   ----------

         FOR VALUE RECEIVED  ____________________________  hereby sells, assigns
and transfer unto  ______________________  the foregoing  Warrant and all rights
evidenced    thereby,    and   does    irrevocably    constitute   and   appoint
________________________,  attorney,  to transfer  said  Warrant on the books of
FullNet Communications, Inc.

- ------------------------------------   ----------------------------------------
(Name)                                 (Name of Assignee)

- ------------------------------------   ----------------------------------------
(Signature)                            (Signature of Assignee)

- ------------------------------------   ----------------------------------------
(Social Security or Fed ID #)          (Social Security or Fed ID # of Assignee)

- ------------------------------------   ----------------------------------------

- ------------------------------------   ----------------------------------------
(Address)                              (Address of Assignee)

- ------------------------------------
(Date)

                               PARTIAL ASSIGNMENT
                               ------------------

         FOR VALUE RECEIVED  ____________________________  hereby sells, assigns
and transfer unto  ______________________  the right to purchase _____ shares of
the common stock of FullNet Communications, Inc. by the foregoing Warrant, and a
proportionate  part of said Warrant and the rights evidenced  thereby,  and does
irrevocably  constitute  and  appoint  ________________________,   attorney,  to
transfer that part of said Warrant on the books of FullNet Communications, Inc.

- ------------------------------------   ----------------------------------------
(Name)                                 (Name of Assignee)

- ------------------------------------   ----------------------------------------
(Signature)                            (Signature of Assignee)

- ------------------------------------   ----------------------------------------
(Social Security or Fed ID #)          (Social Security or Fed ID # of Assignee)

- ------------------------------------   ----------------------------------------

- ------------------------------------   ----------------------------------------
(Address)                              (Address of Assignee)

- ------------------------------------
(Date)




                               WARRANT CERTIFICATE
                                   PAGE 4 OF 4




THIS PROMISSORY  NOTE HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "ACT"),  NOR UNDER ANY  STATE  SECURITIES  LAW AND MAY NOT BE
PLEDGED,  SOLD,  ASSIGNED,  HYPOTHECATED  OR OTHERWISE  TRANSFERRED  UNTIL (1) A
REGISTRATION  STATEMENT WITH RESPECT  THERETO IS EFFECTIVE UNDER THE ACT AND ANY
APPLICABLE  STATE  SECURITIES  LAW OR (2) THE  COMPANY  RECEIVES  AN  OPINION OF
COUNSEL TO THE  COMPANY OR OTHER  COUNSEL TO THE HOLDER OF SUCH NOTE WHICH OTHER
COUNSEL IS REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH NOTE MAY BE PLEDGED,
SOLD,  ASSIGNED,  HYPOTHECATED OR TRANSFERRED WITHOUT AN EFFECTIVE  REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.


                          FULLNET COMMUNICATIONS, INC.
                               14% Promissory Note


DATED:                                                     __________ ____, 2000

PRINCIPAL AMOUNT (US$):    $_________


FULLNET COMMUNICATIONS, INC., an Oklahoma corporation (the "Company"), for value
received,   hereby   promises   to  pay  to   _________________,   residing   at
__________________________________________________  or  registered  assigns (the
"Payee" or "Holder")  upon due  presentation  and  surrender of this Note on the
Repayment   Date   (as   hereinafter    defined)   the   principal   amount   of
_________________________________,  and accrued  interest thereon as hereinafter
provided.

1.       PAYMENT OF PRINCIPAL AND INTEREST; METHOD OF PAYMENT.

         1.1 Payment. Payment of the principal and accrued interest on this Note
shall be made in such coin or currency of the United States of America as at the
time of  payment  shall be legal  tender for the  payment of public and  private
debts.  Interest (computed for the actual number of days elapsed on the basis of
a year  consisting of 365 days) on the unpaid portion of said  principal  amount
from  time to time  outstanding  shall  be paid by the  Company  at the  rate of
fourteen  percent (14%) per annum (the "Stated  Interest  Rate"),  said interest
payable to the Payee on the 10th day following  the end of each calendar  month.
The  principal  shall be due and payable on the  Repayment  Date,  which payment
shall be made only upon  presentation  and surrender of this Note to the Company
at its address set forth  herein.  The Company  will pay or cause to be paid all
sums  becoming  due  hereon  for  principal  and  interest  by check sent to the
Holder's  above address or to such other address as the Holder may designate for
such purpose from time to time by written notice to the Company,

                                  Page 1 of 6

<PAGE>

         1.2      Repayment Date.

                  (a) For purposes hereof,  unless sooner repaid by the Company,
         the "Repayment Date" shall mean the earlier of the following dates: (i)
         the date  which is  within  five  (5) days of  receipt  of funds by the
         Company of any  offering  raising  gross  proceeds to the Company of at
         least $1,250,000  (which offering the Company intends to conduct but of
         which there is no assurance);  provided,  however,  if funds related to
         any such offering are received in tranches,  "Repayment  Date" shall be
         deemed to mean the date  which is within  five (5) days of  receipt  of
         first funds received by the Company,  or (ii) the date which is six (6)
         months after the above-stated  issuance date of this Note (the "Initial
         Six-Month Term"), unless extended pursuant to Section 1.2(b) hereunder.

                  (b) The Company  may, by written  notice to the Holder  within
         ten (10) days prior to the end of the  Initial  Six-Month  Term and the
         delivery to Holder with such notice of  ___________  Warrants  (as such
         term is defined in Section 1.3 hereof),  extend the Repayment  Date for
         an  additional  ninety  (90)  days  (the  "First  Extension   Period");
         provided,  however,  that the  Company  may,  by written  notice to the
         Holder  within  ten (10) days  prior to the end of the First  Extension
         Period  and  the  delivery  to  Holder  with  such  notice  of  another
         ___________  Warrants  (as such term is defined in Section 1.3 hereof),
         extend the  Repayment  Date for a second  ninety  (90) day period  (the
         "Second Extension Period"), in which case all principal and any accrued
         and unpaid interest thereon shall be due and payable on the last day of
         the Second Extension Period.

         1.3  Issuance of Common  Stock  Purchase  Warrants.  In addition to the
interest  payable  pursuant to Section 1.1 above, the Company agrees to issue to
the Holder as additional compensation, __________ common stock purchase warrants
(the  "Warrants"),  giving  the Holder the right to  purchase  from the  Company
___________  shares of the Company's $.00001 common stock ("Common  Stock"),  at
the per share price and on the terms set forth in the Warrants,  a form of which
is attached hereto as Exhibit "A." The Warrants are deemed earned on the initial
advance by the Holder under this Agreement and will not terminate on the payment
or prepayment of this Note.

         1.4  Prepayment.  The  Note  may be  prepaid  in full or in part by the
Company at any time prior to the  Repayment  Date.  Any  prepayment of this Note
shall be applied first to any accrued but unpaid interest, then to the principal
amount of the Note.

2.       RANKING OF NOTE.

         2.1 Junior to Existing  Debt. The Company,  for itself,  its successors
and assigns,  covenants and agrees,  and the Payee and each successive Holder by
acceptance of this Note,  likewise  covenants and agrees that the payment of the
principal of and interest on this Note ranks  junior and is  subordinate  to all
existing indebtedness, including trade debt.

                                  Page 2 of 6

<PAGE>

         2.2 Indebtedness. "Indebtedness" means (a) any liability of the Company
(i) for borrowed  money, or (ii) evidenced by a note,  debenture,  bond or other
instrument of  indebtedness  (including,  without  limitation,  a purchase money
obligation),  given in connection  with the  acquisition of property,  assets or
services, (iii) for the payment of rent or other amounts relating to capitalized
lease  obligations,  or (iv) trade  accounts  payable and trade credit;  (b) any
liability of others  described in the preceding clause (a) which the Company has
guaranteed or which is otherwise its legal liability;  and (c) any modification,
renewal, extension,  replacement or refunding of any such liability described in
the preceding clauses (a) and (b) except that Indebtedness.

         2.3 Further  Actions.  The Holder agrees to execute such  subordination
agreements, instruments or waivers as may be reasonably necessary to reflect the
subordination of this Note to the Indebtedness.

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to the Holder that the Company:

                  (a) is a corporation  duly organized,  validly existing and in
         good standing under the laws of the State of Oklahoma;

                  (b) has all  requisite  power and  authority and all necessary
         licenses and permits to own and operate its  properties and to carry on
         its  business  as  now  conducted  and  as  presently  proposed  to  be
         conducted,  the  failure  of which  would not have a  material  adverse
         effect  on  the  business,  operations,   properties,   liabilities  or
         condition (financial or otherwise) of the Company; and

                  (c) has  adequate  authority,  power and legal  right to enter
         into, execute and deliver the Note. On execution and delivery, the Note
         will  be  a  legal,   valid  and  binding  obligation  of  the  Company
         enforceable in accordance with its terms.

4.       EVENTS OF DEFAULT.

         It shall be an Event of  Default  with  respect  to this  Note upon the
occurrence and continuation uncured of any of the following events:

         4.1      Default in Payment, Etc.

                  (a) A default in the  payment  of any  interest  or  principal
         payments on this Note,  and such  default  shall  continue  uncured for
         fifteen (15) days after due date and notice is received  from Holder of
         such default for the making of such interest or principal payment; or

                  (b)  default  in the  performance,  or  breach,  of any  other
         covenant of the Company in this Note and continuance of such default or
         breach uncured for a period of thirty (30) days after receipt of notice
         as to such  breach or after the  Company  knew or should  have known of
         such breach.

                                  Page 3 of 6

<PAGE>

         4.2  Bankruptcy.  The  entry  of a decree  or  order by a court  having
jurisdiction  adjudging  the Company a bankrupt  or  insolvent,  or  approving a
petition seeking reorganization, arrangement, adjustment or composition of or in
respect of the  Company,  under  federal  bankruptcy  law,  as now or  hereafter
constituted, or any other applicable federal or state bankruptcy,  insolvency or
other similar law, and the  continuance of any such decree or order unstayed and
in effect for a period of sixty (60) days; or the commencement by the Company of
a voluntary case under federal bankruptcy law, as now or hereafter  constituted,
or any  other  applicable  Federal  or state  bankruptcy,  insolvency,  or other
similar law, or the consent by it to the institution of bankruptcy or insolvency
proceedings  against  it, or the filing by it of a petition or answer or consent
seeking  reorganization  or relief  under  federal  bankruptcy  law or any other
applicable  Federal  or state  law,  or the  consent by it to the filing of such
petition or to the  appointment of a receiver,  liquidator,  assignee,  trustee,
sequestrator or similar  official of the Company or of any  substantial  part of
its property, or the making by it of an assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in furtherance
of any such action.

5.       REMEDIES UPON DEFAULT.

         5.1  Acceleration.  Upon an Event of Default and at any time during the
continuation thereof, the Holder, by notice in writing given to the Company, may
declare the entire principal of this Note then outstanding to be due and payable
immediately,  and upon any such declaration the same shall become and be due and
payable immediately, anything herein contained to the contrary notwithstanding.

         5.2  Proceedings and Actions.  During the  continuation of any Event of
Default,  the Holder may institute  such actions or proceedings in law or equity
as it shall deem  expedient  for the  protection of its rights and may prosecute
and enforce its claims against all assets of the Company, and in connection with
any such action or  proceeding  shall be  entitled  to receive  from the Company
payment of the principal  amount of this Note plus accrued  interest to the date
of payment plus reasonable expenses of collection including, without limitation,
attorney's fees and expenses.

6.       RESTRICTIONS ON TRANSFER.

         6.1 The Holder  acknowledges  that he has been  advised by the  Company
that this  Note has not been  registered  under the Act,  that the Note is being
issued on the basis of the statutory  exemption  provided by section 4(2) of the
Act and/or  Regulation D promulgated  thereunder  relating to transactions by an
issuer  not  involving  any public  offering,  and that the  Company's  reliance
thereon  is based in part  upon the  representations  made by the  Holder in the
Holder's Investor  Representation  Letter,  previously furnished to the Company.
The Holder  acknowledges  that he has been  informed  by the  Company  of, or is
otherwise  familiar with, the nature of the  limitations  imposed by the Act and
the  rules  and  regulations  thereunder  on  the  transfer  of  securities.  In
particular,  the Holder agrees that no sale,  assignment or transfer of the Note
shall be valid or  effective,  and the Company shall not be required to give any
effect to any such sale, assignment or transfer, unless (i) the sale, assignment
or transfer of the Note is registered  under the Act, it being  understood  that
the Note is not  currently  registered  for sale  and  that the  Company  has no
obligation  or  intention  to so register  the Notes,  or (ii) the Note is sold,
assigned or transferred in accordance with all the  requirements and limitations
of Rule 144 under the Act, it being understood that Rule 144 is not available at
the  present  time for the sale of the Note and that  there can be no  assurance
that Rule 144 sales will be available  at any time in the future,  or (iii) such
sale,  assignment,  or transfer is otherwise exempt from registration  under the
Act. The Holder of this Note and each  transferee  hereof further agrees that if
any  distribution  of this Note is proposed to be made by them otherwise than by
delivery of a prospectus meeting the requirements of Section 10 of the Act, such
action  shall be taken only  after  submission  to the  Company of an opinion of
counsel, reasonably satisfactory in form and substance to the Company's counsel,
to the effect that the proposed distribution will not be in violation of the Act
or of applicable state law. Furthermore, it shall be a condition to the transfer
of this Note that any  transferee  thereof  deliver to the  Company  his written
agreement to accept and be bound by all of the terms and conditions contained in
this Note.

                                  Page 4 of 6

<PAGE>

7.       MISCELLANEOUS.

         7.1 No Recourse. No recourse whatsoever, either directly or through the
Company or any trustee,  receiver or  assignee,  shall be had in any event or in
any manner against any past, present or future stockholder,  director or officer
of the Company for the payment of the  principal  of or interest on this Note or
for any claim based thereon or otherwise in respect this Note, this Note being a
corporate obligation only.

         7.2 Notices. All communications  provided hereunder shall be in writing
and, if to the Company,  delivered  or mailed by  registered  or certified  mail
addressed to FullNet Communications,  Inc., 200 North Harvey Avenue, Suite 1704,
Oklahoma    City,    Oklahoma    73102    or,    if   to    the    Holder,    at
- -----------------------------------------------.

         7.3  Lost,  Stolen  or  Mutilated  Note.  In case  this  Note  shall be
mutilated, lost, stolen or destroyed, the Company may, in its discretion,  issue
and  deliver in  exchange  and  substitution  for and upon  cancellation  of the
mutilated Note, or in lieu of and  substitution  for the Note,  lost,  stolen or
destroyed,  a new Note of like tenor and  representing  an  equivalent  right or
interest,  but only upon receipt of evidence satisfactory to the Company of such
loss, theft or destruction and an indemnity, if requested,  also satisfactory to
it.

         7.4 Course of Dealing. No course of dealing between the Company and the
Holder hereof shall operate as a waiver of any right of any Holder  hereof,  and
no delay on the part of the Holder in exercising  any right  hereunder  shall so
operate.

         7.5 Amendments.  This Note may be amended only by a written  instrument
executed by the Company and the Holder hereof.  Any amendment  shall be endorsed
upon this Note, and all future holders shall be bound thereby.

         7.6 Governing Law. This Note shall be construed in accordance  with and
governed by the laws of the State of Oklahoma, without giving effect to conflict
of laws principles.


                                  Page 5 of 6

<PAGE>

         DATED the date first written above.


                                    FULLNET COMMUNICATIONS, INC.



                                    By:________________________________________
                                          Timothy J. Kilkenney,
                                          President and Chief Executive Officer
(SEAL)

Attest:


________________________________
Jeanette C. Timmons, Secretary






                                  Page 6 of 6




                          FULLNET COMMUNICATIONS, INC.
                            (an Oklahoma corporation)

                                WARRANT AGREEMENT

                                                       _____________ _____, 2000

- -------------------------------

- -------------------------------

- -------------------------------

- ----------------:

         FullNet Communications,  Inc., an Oklahoma corporation (the "Company"),
agrees to issue to you  warrants  (the  "Warrants")  to  purchase  the number of
shares of common stock,  par value $0.00001 per share (the "Common  Stock"),  of
the  Company set forth  herein,  subject to the terms and  conditions  contained
herein.

         1. Issuance of Warrants;  Exercise Price. The Warrants,  which shall be
certificated  in the form  attached  hereto as EXHIBIT  "A,"  (each,  a "Warrant
Certificate")  shall be issued to you concurrently  with the execution hereof in
consideration of the Promissory Loan in the amount of $____________  pursuant to
the terms of the 14%  Promissory  Note dated of even date herewith (the "Note").
The  Warrants  shall  provide  that you, or such other  holder or holders of the
Warrants to whom transfer is  authorized  in  accordance  with the terms of this
Agreement, shall have the right to purchase an aggregate of _____________ shares
of Common  Stock for an exercise  price  equal to $.01 per share (the  "Exercise
Price"); provided,  however, that in the event the Company desires to extend for
ninety (90) days the maturity  date of the Note,  the Company shall issue to you
the right to  purchase  an  additional  ________  shares of Common  Stock at the
Exercise  Price.  The Company shall have the option to extend for two (2) ninety
(90) day  periods  the  maturity  date of the Note,  subject in each case to the
grant of additional Warrants as set forth in the preceding sentence.

         2.  Exercise of  Warrants.  At any time and from time to time after the
date hereof and expiring on the fifth  anniversary of the effective date of this
Agreement at 5:00 p.m.,  Central Standard Time,  Warrants may be exercised as to
all or any portion of the whole number of shares of Common Stock  covered by the
Warrants by the holder  thereof by surrender of the Warrants,  accompanied  by a
subscription  for shares to be  purchased  in the form  attached to each Warrant
Certificate  and  by  payment  to  the  Company  as set  forth  in  the  Warrant
Certificate  in the amount  required  for purchase of the shares as to which the
Warrant is being exercised,  delivered to the Company at its principal office at
200 North Harvey Avenue,  Suite 1704, Oklahoma City, Oklahoma 73102,  Attention:
President.  Upon the  exercise  of a Warrant,  in whole or in part,  the Company
will, within ten (10) days thereafter,  at its expense (including the payment by
the Company of any applicable  issue or transfer  taxes),  cause to be issued in
the name of and delivered to the holder a certificate  or  certificates  for the
number of fully  paid and  non-assessable  shares of Common  Stock to which such
holder is entitled  upon  exercise of the  Warrant.  In the event such holder is
entitled to a fractional  share,  in lieu  thereof,  such holder shall be paid a
cash  amount  equal  to such  fraction,  multiplied  by the  Current  Value  (as
hereafter  defined) of one full share of Common  Stock on the date of  exercise.
Certificates  for shares of Common  Stock  issuable by reason of the exercise of
the Warrant or Warrants shall be dated and shall be effective as the date of the
surrendering  of the  certificates  for the shares so purchased.  In the event a
Warrant  is  exercised,  as to less than the  aggregate  amount of all shares of
Common Stock  issuable upon  exercise of all Warrants  held by such person,  the
Company  shall  issue a new  Warrant to the holder of the  Warrant so  exercised
covering the  aggregate  number of shares of Common  Stock as to which  Warrants
remain unexercised.

                                      -1-

<PAGE>

                  For purposes of this section,  Current Value is defined (i) in
the case for which a public  market  exists for the Common  Stock at the time of
such  exercise,  the average of the daily closing prices of the Common Stock for
twenty (20)  consecutive  business  days  commencing  thirty (30)  business days
before the date of exercise, and (ii) in the case no public market exists at the
time of  such  exercise,  at the  Appraised  Value.  For  the  purposes  of this
Agreement,  "Appraised  Value" is the value  determined in  accordance  with the
following  procedures.  For a period of five (5) days after the date of an event
(a "Valuation Event") requiring determination of Current Value at a time when no
public market exists for the Common Stock (the "Negotiation Period"), each party
to this Agreement  agrees to negotiate in good faith to reach agreement upon the
Appraised  Value of the  securities or property at issue,  as of the date of the
Valuation  Event,  which will be the fair  market  value of such  securities  or
property,  without  premium  for  control or discount  for  minority  interests,
illiquidity  or  restrictions  on  transfer.  In the event that the  parties are
unable to agree upon the Appraised Value of such securities or other property by
the end of the Negotiation  Period,  then the Appraised Value of such securities
or property  will be determined  for purposes of this  Agreement by a recognized
appraisal or investment  banking firm  mutually  agreeable to the holders of the
Warrants and the Company (the  "Appraiser").  If the holders of the Warrants and
the Company cannot agree on an Appraiser  within two (2) business days after the
end of the Negotiation  Period, the Company, on the one hand, and the holders of
the Warrants,  on the other hand, will each select an Appraiser  within ten (10)
business  days  after  the  end of the  Negotiation  Period  and  those  two (2)
Appraisers will select ten (10) days after the end of the Negotiation  Period an
independent  Appraiser to determine the fair market value of such  securities or
property,  without premium for control or discount for minority interests.  Such
independent  Appraiser  will be directed to determine  fair market value of such
securities as soon as  practicable,  but in no event later than thirty (30) days
from the date of its selection.  The  determination  by an Appraiser of the fair
market value will be conclusive  and binding on all parities to this  Agreement.
Appraised  Value of each share of Common stock at a time when (i) the Company is
not a reporting  company under the Exchange Act and (ii) the Common Stock is not
traded in the organized securities markets, will, in all cases, be calculated by
determining  the  Appraised  Value of the  entire  Company  taken as a whole and
dividing  that value by the number of shares of Common  Stock then  outstanding,
without premium for control or discount for minority  interests,  illiquidity or
restrictions  on  transfer.  The  costs  of the  Appraiser  will be borne by the
Company.  In no event will the Appraised  Value of the Common Stock be less than
the per share  consideration  received or receivable  with respect to the Common
Stock or securities  or property of the same class in connection  with a pending
transaction   involving  a  sale,  merger,   recapitalization,   reorganization,
consolidation,  or share exchange,  dissolution of the Company, sale or transfer
of all or a majority of its assets or revenue or income generating capacity,  or
similar transaction.

         3.       Registration Rights.

                  (a) S-3  Registration  Rights.  The Company will  register the
         shares of Common Stock  underlying the Warrants (the "Warrant  Shares")
         within thirty (30) days following the date upon which the Company shall
         become  eligible  to  register  its  securities  on Form S-3  under the
         Securities  Act of  1933,  as  amended  (the  "Securities  Act") or any
         successor  to such form in a manner  that  will,  upon  being  declared
         effective,  constitute a "shelf"  registration for purposes of Rule 415
         under the Securities  Act,  pursuant to which the Warrant Shares may be
         sold from time to time and in such amounts as the holder(s) thereof may
         hereafter  determine,  all in a manner  consistent  with all applicable
         provisions of the Securities Act; provided,  however, if at the time of
         such S-3  eligibility,  the Company has formulated plans to file within
         60 days thereof a  registration  statement  covering the sale of any of
         its  securities  in a public  offering  under the  Securities  Act,  no
         registration  of the  Warrant  Shares  shall be  initiated  under  this
         Section  3(a)  until  90  days  after  the   effective   date  of  such
         registration  statement  unless  the  Company  is no longer  proceeding
         diligently to secure the effectiveness of such registration  statement;
         provided that the Company shall provide the Warrant holder(s) the right
         to  participate  in such public  offering  pursuant to, and subject to,
         Section  3(b).  The Company  will use its best efforts to have the Form
         S-3  declared  effective.  At its  expense,  the Company will keep such
         registration effective for a period of one hundred eighty (180) days or
         until the holder or holders have completed the  distribution  described
         in the registration statement relating thereto, whichever first occurs;
         and furnish such number of prospectuses  and other  documents  incident
         thereto as a holder from time to time may reasonably request.

                                      -2-

<PAGE>

                  (b) Piggyback  Registration  Rights. At any time following the
         date hereof, whenever the Company proposes to register any Common Stock
         for its own or the  account of others  under the  Securities  Act for a
         public offering,  other than (i) any shelf registration of shares to be
         used as consideration for acquisitions of additional  businesses by the
         Company and (ii) registrations  relating to employee benefit plans, the
         Company  shall give each Warrant  holder prompt  written  notice of its
         intent to do so. Upon the written  request of any Warrant  holder given
         within 15 business days after receipt of such notice, the Company shall
         cause  to be  included  in such  registration  all  Warrant  Securities
         (including  any shares of Common  Stock  issued as a dividend  or other
         distribution  with respect to, or in exchange for, or in replacement of
         such Warrant  Securities) which any Warrant holder requests;  provided,
         however,  if the  Company  is  advised  in writing in good faith by any
         managing  underwriter  of an  underwritten  offering of the  securities
         being offered pursuant to any registration statement under this Section
         3(b) that the  number of shares to be sold by  persons  other  than the
         Company is greater  than the number of such shares which can be offered
         without  adversely  affecting the offering,  the Company may reduce pro
         rata the number of shares  offered  for the  accounts  of such  persons
         (based  upon the  number of  shares  held by such  person)  to a number
         deemed satisfactory by such managing underwriter.

                  (c) Lock-up  Agreement.  In  consideration  for the  Company's
         agreeing to its  obligations  under this Section 3, each Warrant holder
         agrees that,  effective upon the request of the  underwriters  managing
         the Company's initial public offering,  such holder shall be obligated,
         so long as all  executive  officers  and  directors  of the Company are
         bound by a comparable obligation,  not to sell, make any short sale of,
         loan, grant any option for the purchase of, or otherwise dispose of any
         shares of Common  Stock  underlying  the  Warrants  (other  than  those
         included in the registration) without the prior written consent of such
         underwriters, for such period of time (not to exceed one hundred eighty
         (180) days) from the effective date of such initial public  offering as
         the underwriters may specify.

         4. Specific  Performance.  The Company stipulates that remedies at law,
in money damages, available to the holder of a Warrant, or of a holder of Common
Stock issued  pursuant to exercise of a Warrant,  in the event of any default or
threatened  default by the Company in the  performance of or compliance with any
of the terms of this Agreement are not and will not be adequate.  Therefore, the
Company agrees that the terms of this Agreement may be specifically  enforced by
a decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.

         5.  Successors and Assigns;  Binding  Effect.  This Agreement  shall be
binding  upon  and  insure  to the  benefit  of you and the  Company  and  their
respective successors and permitted assigns.

         6.  Notices.  Any  notice  hereunder  shall be given by  registered  or
certified  mail,  if to the Company,  at its  principal  office,  and, if to the
holders, to the respective addresses shown in the Warrant ledger of the Company,
provided  that any holder may at any time on three (3) days'  written  notice to
the Company designate or substitute another address where notice is to be given.
Notice  shall be deemed  given and  received  after a  certified  or  registered
letter, properly addressed with postage prepaid, is deposited in the U.S. mail.

                                      -3-

<PAGE>

         7.  Severability.  Every  provision of this Agreement is intended to be
severable.  If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the remainder of this
Agreement.

         8. Assignment;  Replacement of Warrants. If the Warrant or Warrants are
assigned,  in  whole or in  part,  the  Warrants  shall  be  surrendered  at the
principal  office  of the  Company,  and  thereupon,  in the  case of a  partial
assignment,  a new Warrant  shall be issued to the holder  thereof  covering the
number of shares not assigned,  and the assignee  shall be entitled to receive a
new Warrant covering the number of shares so assigned.  Upon receipt of evidence
reasonably  satisfactory  to the  Company of the loss,  theft,  destruction,  or
mutilation of any Warrant and appropriate  bond or  indemnification  protection,
the Company  shall issue a new Warrant of like tenor.  The Warrants  will not be
transferred,  sold, or otherwise hypothecated by you or any other person and the
Warrants will be  nontransferable,  except to (i) one or more  persons,  each of
which on the date of transfer is an  officer,  shareholder,  or employee of you;
(ii) a  partnership  or  partnerships,  the partners of which are you and one or
more persons, each of whom on the date of transfer is an officer of you; (iii) a
successor  to  you in  merger  or  consolidation;  (iv)  a  purchaser  of all or
substantially  all of your assets;  or (v) a person that receives a Warrant upon
death of a holder pursuant to will, trust, or the laws of intestate succession.

         9.  Governing  Law. This  Agreement  shall be governed and construed in
accordance  with the laws of the State of Oklahoma  without giving effect to the
principles of choice of laws thereof.

         10.  Definition.  All  references  to the word "you" in this  Agreement
shall be deemed to apply with equal  effect to any  persons or  entities to whom
Warrants have been  transferred in accordance with the terms hereof,  and, where
appropriate,  to any persons or entities holding shares of Common Stock issuable
upon exercise of Warrants.

         11.  Headings.  The headings  herein are for purposes of reference only
and shall not limit or  otherwise  affect the  meaning of any of the  provisions
hereof.

         12.  Counterparts.  This  Agreement  may be  executed  in  two or  more
counterparts,  and it will not be necessary  that the  signatures of all parties
hereto be contained on any one  counterpart  hereof.  Each  counterpart  will be
deemed an original,  but all  counterparts  together will constitute one and the
same instrument.  The parties agree that a facsimile of this Agreement signed by
the parties will  constitute an agreement in accordance with the terms hereof as
if all of the parties had executed an original of this Agreement.

                                  Very truly yours,

                                  FULLNET COMMUNICATIONS, INC.


                                  By: _______________________________________
                                      Timothy J. Kilkenny, President and CEO



ACCEPTED AS OF THE ______ DAY OF _______________, 2000:


_______________________________________



                                      -4-



                               WARRANT CERTIFICATE
                               -------------------


THE WARRANTS  REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES  ISSUABLE
UPON  EXERCISE  THEREOF  MAY NOT BE OFFERED OR SOLD  EXCEPT  PURSUANT  TO (i) AN
EFFECTIVE  REGISTRATION  STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT  APPLICABLE,  RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES),  OR (iii) AN OPINION OF COUNSEL,  IF
SUCH OPINION SHALL BE REASONABLY  SATISFACTORY TO THE ISSUER,  THAT AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.

THESE  SECURITIES HAVE NOT BEEN REGISTERED  UNDER THE FLORIDA  SECURITIES ACT IN
RELIANCE UPON EXEMPTION  PROVISIONS CONTAINED THEREIN.  ss.517.061(11)(a)(5)  OF
THE FLORIDA SECURITIES AND INVESTOR  PROTECTION ACT (THE "FLORIDA ACT") PROVIDES
THAT ANY PURCHASER OF SECURITIES IN FLORIDA WHICH ARE EXEMPTED FROM REGISTRATION
UNDER  ss.517.061(11) OF THE FLORIDA ACT MAY WITHDRAW HIS PURCHASE AND RECEIVE A
FULL REFUND OF ALL MONIES  PAID,  WITHIN  THREE  BUSINESS  DAYS AFTER HE TENDERS
CONSIDERATION FOR SUCH SECURITIES. THEREFORE, ANY FLORIDA RESIDENT WHO PURCHASES
SECURITIES  IS ENTITLED TO EXERCISE THE  FOREGOING  STATUTORY  RESCISSION  RIGHT
WITHIN THREE BUSINESS DAYS AFTER TENDERING  CONSIDERATION  FOR THE SECURITIES BY
TELEPHONE, TELEGRAM, OR LETTER NOTICE TO THE COMPANY AT THE ADDRESS OR TELEPHONE
NUMBER SET FORTH IN THIS  AGREEMENT.  ANY  TELEGRAM OR LETTER  SHOULD BE SENT OR
POSTMARKED PRIOR TO THE END OF THE THIRD BUSINESS DAY. A LETTER SHOULD BE MAILED
BY  CERTIFIED  MAIL,  RETURN  RECEIPT  REQUESTED,  TO ENSURE ITS  RECEIPT AND TO
EVIDENCE THE TIME OF MAILING. ANY ORAL REQUESTS SHOULD BE CONFIRMED IN WRITING.

THE  TRANSFER OR EXCHANGE OF THE WARRANTS  REPRESENTED  BY THIS  CERTIFICATE  IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.


                          FULLNET COMMUNICATIONS, INC.


No.:  W-00-0____                                              _________ Warrants
Date: _____________ ___, 2000

         THIS  IS TO  CERTIFY  that  _____________________  or its  assigns,  as
permitted in that certain Warrant Agreement (the "Warrant agreement"),  dated of
even date herewith,  by and among FullNet  Communications,  Inc. (the "Company")
and _____________________,  is entitled to purchase at any time and from time to
time after the date hereof until 5:00 p.m.,  Central  Standard  Time on ________
___,  2005,  an  aggregate  of  ______________________________  shares of common
stock,  par value $0.00001 per share, of the Company,  for an exercise price per
share  of $.01 per  share as set  forth in the  Warrant  Agreement  referred  to
herein. This Warrant is issued pursuant to the Warrant Agreement, and all rights
of the holder of this Warrant are further  governed by, and subject to the terms
and  provisions of such Warrant  Agreement,  copies of which are available  upon
request to the Company.  The holder of this Warrant and the shares issuable upon
the exercise hereof shall be entitled to the benefits, rights and privileges and
subject to the obligations,  duties and liabilities  provided for in the Warrant
Agreement.

                               WARRANT CERTIFICATE
                                   Page 1 of 4

<PAGE>

         The issuance of this Warrant and the shares  issuable  upon the due and
timely  exercise  hereof have not been  registered  under the  Securities Act of
1933, as amended (the "Act"),  or any similar state  securities law or act, and,
as such,  no public  offering  of either  this  Warrant  or any of the shares of
common stock issuable upon exercise of this Warrant may be made other than under
an  exemption  under  the  Act or  until  the  effectiveness  of a  registration
statement  under such Act covering  such  offering.  Transfer of this Warrant is
restricted pursuant to the terms of Section 8 of the Warrant Agreement.

         Subject to the  provisions of the Act, of the Warrant  Agreement and of
this Warrant,  this Warrant and all rights hereunder are transferable,  in whole
or in part,  only to the extent  expressly  permitted in such documents and then
only at the  office of the  Company  at 200 North  Harvey  Avenue,  Suite  1704,
Oklahoma City, Oklahoma 73102, Attention President, by the holder hereof or by a
duly authorized attorney-in-fact,  upon surrender of this Warrant duly endorsed,
together with the Assignment hereof duly endorsed.  Until transfer hereof on the
books of the Company,  the Company may treat the registered holder hereof as the
owner hereof for all purposes.

THIS WARRANT CERTIFICATE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE  RIGHTS OF THE  COMPANY  AND THE HOLDER  HEREOF  SHALL BE  GOVERNED  BY, THE
INTERNAL  LAWS OF THE STATE OF OKLAHOMA,  WITHOUT  REGARD TO THE CONFLICT OF LAW
PRINCIPLES OF OKLAHOMA LAW.

         IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed
and its corporate seal to be hereunto affixed by its proper  corporate  officers
thereunto duly authorized.

                                 FULLNET COMMUNICATIONS, INC.


                                 By:______________________________________
                                    Timothy J. Kilkenny, President and CEO

(SEAL)

Attest:


___________________________________
Jeanette C. Timmons, Secretary



                               WARRANT CERTIFICATE
                                   Page 2 of 4

<PAGE>

                          FULLNET COMMUNICATIONS, INC.

                                  SUBSCRIPTION
                                  ------------

      To Be Signed Only Upon Exercise (in whole or in part) of the Warrants

TO:                 FULLNET COMMUNICATIONS, INC.
                    200 North Harvey, Suite 1704
                    Oklahoma City, Oklahoma 73102
                    Attention:  President

         1. The undersigned, ________________________________________,  pursuant
to the provisions of the Warrant  Agreement dated as of ____________  ____, 2000
and the  attached  Warrant  Certificate,  hereby  agrees  to  subscribe  for the
purchase of _______ shares of the common stock of FullNet  Communications,  Inc.
covered by the attached Warrant Certificate,  and makes payment therefor in full
at the price per share provided by the Warrant Agreement.

         2. The  undersigned  Holder elects to pay the aggregate  purchase price
for such shares of common stock (i) by lawful money of the United  States or the
enclosed  certified or official bank check  payable in United States  dollars to
the  order of the  Company  in the  amount of  $______________,  or (ii) by wire
transfer of United  States  funds to the account of the Company in the amount of
$___________,  which  transfer has been made before or  simultaneously  with the
delivery of this Subscription pursuant to the instructions of the Company.

         3. Please issue a stock  certificate or certificates  representing  the
appropriate  number of shares of common stock in the name of the  undersigned or
in such other name(s) as is specified below:

- --------------------------------------   -------------------------------------
(Name)                                   Social Security or Fed ID #)

- --------------------------------------   -------------------------------------
(Signature)                              Address)

- --------------------------------------   -------------------------------------
(Date)                                   Address)



WARRANT CERTIFICATE
                                   Page 3 of 4

<PAGE>

                                   ASSIGNMENT
                                   ----------

         FOR VALUE RECEIVED  ____________________________  hereby sells, assigns
and transfer unto  ______________________  the foregoing  Warrant and all rights
evidenced    thereby,    and   does    irrevocably    constitute   and   appoint
________________________,  attorney,  to transfer  said  Warrant on the books of
FullNet Communications, Inc.

- ------------------------------------   ----------------------------------------
(Name)                                 (Name of Assignee)

- ------------------------------------   ----------------------------------------
(Signature)                            (Signature of Assignee)

- ------------------------------------   ----------------------------------------
(Social Security or Fed ID #)          (Social Security or Fed ID # of Assignee)

- ------------------------------------   ----------------------------------------

- ------------------------------------   ----------------------------------------
(Address)                              (Address of Assignee)

- ------------------------------------
(Date)

                               PARTIAL ASSIGNMENT
                               ------------------

         FOR VALUE RECEIVED  ____________________________  hereby sells, assigns
and transfer unto  ______________________  the right to purchase _____ shares of
the common stock of FullNet Communications, Inc. by the foregoing Warrant, and a
proportionate  part of said Warrant and the rights evidenced  thereby,  and does
irrevocably  constitute  and  appoint  ________________________,   attorney,  to
transfer that part of said Warrant on the books of FullNet Communications, Inc.

- ------------------------------------   ----------------------------------------
(Name)                                 (Name of Assignee)

- ------------------------------------   ----------------------------------------
(Signature)                            (Signature of Assignee)

- ------------------------------------   ----------------------------------------
(Social Security or Fed ID #)          (Social Security or Fed ID # of Assignee)

- ------------------------------------   ----------------------------------------

- ------------------------------------   ----------------------------------------
(Address)                              (Address of Assignee)

- ------------------------------------
(Date)



                              WARRANT CERTIFICATE
                                  PAGE 4 OF 4



THIS PROMISSORY  NOTE HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "ACT"),  NOR UNDER ANY  STATE  SECURITIES  LAW AND MAY NOT BE
PLEDGED,  SOLD,  ASSIGNED,  HYPOTHECATED  OR OTHERWISE  TRANSFERRED  UNTIL (1) A
REGISTRATION  STATEMENT WITH RESPECT  THERETO IS EFFECTIVE UNDER THE ACT AND ANY
APPLICABLE  STATE  SECURITIES  LAW OR (2) THE  COMPANY  RECEIVES  AN  OPINION OF
COUNSEL TO THE  COMPANY OR OTHER  COUNSEL TO THE HOLDER OF SUCH NOTE WHICH OTHER
COUNSEL IS REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH NOTE MAY BE PLEDGED,
SOLD,  ASSIGNED,  HYPOTHECATED OR TRANSFERRED WITHOUT AN EFFECTIVE  REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

THESE  SECURITIES HAVE NOT BEEN REGISTERED  UNDER THE FLORIDA  SECURITIES ACT IN
RELIANCE UPON EXEMPTION  PROVISIONS CONTAINED THEREIN.  ss.517.061(11)(a)(5)  OF
THE FLORIDA SECURITIES AND INVESTOR  PROTECTION ACT (THE "FLORIDA ACT") PROVIDES
THAT ANY PURCHASER OF SECURITIES IN FLORIDA WHICH ARE EXEMPTED FROM REGISTRATION
UNDER  ss.517.061(11) OF THE FLORIDA ACT MAY WITHDRAW HIS PURCHASE AND RECEIVE A
FULL REFUND OF ALL MONIES  PAID,  WITHIN  THREE  BUSINESS  DAYS AFTER HE TENDERS
CONSIDERATION FOR SUCH SECURITIES. THEREFORE, ANY FLORIDA RESIDENT WHO PURCHASES
SECURITIES  IS ENTITLED TO EXERCISE THE  FOREGOING  STATUTORY  RESCISSION  RIGHT
WITHIN THREE BUSINESS DAYS AFTER TENDERING  CONSIDERATION  FOR THE SECURITIES BY
TELEPHONE, TELEGRAM, OR LETTER NOTICE TO THE COMPANY AT THE ADDRESS OR TELEPHONE
NUMBER SET FORTH IN THIS  AGREEMENT.  ANY  TELEGRAM OR LETTER  SHOULD BE SENT OR
POSTMARKED PRIOR TO THE END OF THE THIRD BUSINESS DAY. A LETTER SHOULD BE MAILED
BY  CERTIFIED  MAIL,  RETURN  RECEIPT  REQUESTED,  TO ENSURE ITS  RECEIPT AND TO
EVIDENCE THE TIME OF MAILING. ANY ORAL REQUESTS SHOULD BE CONFIRMED IN WRITING.

                          FULLNET COMMUNICATIONS, INC.
                               14% Promissory Note


DATED:                                                  ______________ ___, 2000

PRINCIPAL AMOUNT (US$):    $_________


FULLNET COMMUNICATIONS, INC., an Oklahoma corporation (the "Company"), for value
received,   hereby   promises   to  pay   to   __________________   located   at
_____________________________________________________,   or  registered  assigns
(the "Payee" or "Holder")  upon due  presentation  and surrender of this Note on
the  Repayment   Date  (as   hereinafter   defined)  the  principal   amount  of
________________________________,  and accrued  interest  thereon as hereinafter
provided.

                                  Page 1 of 6

<PAGE>

1.       PAYMENT OF PRINCIPAL AND INTEREST; METHOD OF PAYMENT.

         1.1 Payment. Payment of the principal and accrued interest on this Note
shall be made in such coin or currency of the United States of America as at the
time of  payment  shall be legal  tender for the  payment of public and  private
debts.  Interest (computed for the actual number of days elapsed on the basis of
a year  consisting of 365 days) on the unpaid portion of said  principal  amount
from  time to time  outstanding  shall  be paid by the  Company  at the  rate of
fourteen  percent (14%) per annum (the "Stated  Interest  Rate"),  said interest
payable to the Payee on the tenth (10) day  following  the end of each three (3)
month period  (quarterly) from the  above-stated  issuance date of the Note. The
principal shall be due and payable on the Repayment Date, which payment shall be
made only upon  presentation  and  surrender  of this Note to the Company at its
address  set forth  herein.  The  Company  will pay or cause to be paid all sums
becoming  due hereon for  principal  and  interest by check sent to the Holder's
above  address or to such other  address  as the Holder may  designate  for such
purpose from time to time by written notice to the Company,

         1.2      Repayment Date.

                  (a) For purposes hereof,  unless sooner repaid by the Company,
         the "Repayment Date" shall mean the earlier of the following dates: (i)
         the date  which is  within  five  (5) days of  receipt  of funds by the
         Company of any single offering raising gross proceeds to the Company of
         at least $3,000,000  (which offering the Company intends to conduct but
         of which there is no assurance); provided, however, if funds related to
         any such offering are received in tranches,  "Repayment  Date" shall be
         deemed to mean the date  which is within  five (5) days of  receipt  of
         first funds received by the Company,  or (ii) the date which is six (6)
         months after the above-stated  issuance date of this Note (the "Initial
         Six-Month Term"), unless extended pursuant to Section 1.2(b) hereunder.

                  (b) The Company  may, by written  notice to the Holder  within
         ten (10) days prior to the end of the  Initial  Six-Month  Term and the
         delivery to Holder with such notice of  ____________  Warrants (as such
         term is defined in Section 1.3 hereof),  extend the Repayment  Date for
         an  additional  ninety  (90)  days  (the  "First  Extension   Period");
         provided,  however,  that the  Company  may,  by written  notice to the
         Holder  within  ten (10) days  prior to the end of the First  Extension
         Period  and  the  delivery  to  Holder  with  such  notice  of  another
         ____________  Warrants (as such term is defined in Section 1.3 hereof),
         extend the  Repayment  Date for a second  ninety  (90) day period  (the
         "Second Extension Period"), in which case all principal and any accrued
         and unpaid interest thereon shall be due and payable on the last day of
         the Second Extension Period.

         1.3  Issuance of Common  Stock  Purchase  Warrants.  In addition to the
interest  payable  pursuant to Section 1.1 above, the Company agrees to issue to
the Holder as additional compensation,  _________ common stock purchase warrants
(the  "Warrants"),  giving  the Holder the right to  purchase  from the  Company
____________  shares of the Company's $.00001 common stock ("Common Stock"),  at
the per share price and on the terms set forth in the Warrants,  a form of which
is attached hereto as Exhibit "A." The Warrants are deemed earned on the initial
advance by the Holder under this Agreement and will not terminate on the payment
or prepayment of this Note.

                                  Page 2 of 6

<PAGE>

         1.4  Prepayment.  The  Note  may be  prepaid  in full or in part by the
Company at any time prior to the  Repayment  Date.  Any  prepayment of this Note
shall be applied first to any accrued but unpaid interest, then to the principal
amount of the Note.

2.       RANKING OF NOTE.

         2.1 Junior to Existing  Debt. The Company,  for itself,  its successors
and assigns,  covenants and agrees,  and the Payee and each successive Holder by
acceptance of this Note,  likewise  covenants and agrees that the payment of the
principal of and interest on this Note ranks  junior and is  subordinate  to all
existing indebtedness, including trade debt.

         2.2 Indebtedness. "Indebtedness" means (a) any liability of the Company
(i) for borrowed  money, or (ii) evidenced by a note,  debenture,  bond or other
instrument of  indebtedness  (including,  without  limitation,  a purchase money
obligation),  given in connection  with the  acquisition of property,  assets or
services, (iii) for the payment of rent or other amounts relating to capitalized
lease  obligations,  or (iv) trade  accounts  payable and trade credit;  (b) any
liability of others  described in the preceding clause (a) which the Company has
guaranteed or which is otherwise its legal liability;  and (c) any modification,
renewal, extension,  replacement or refunding of any such liability described in
the preceding clauses (a) and (b) except that Indebtedness.

         2.3 Further  Actions.  The Holder agrees to execute such  subordination
agreements, instruments or waivers as may be reasonably necessary to reflect the
subordination of this Note to the Indebtedness.

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to the Holder that the Company:

                  (a) is a corporation  duly organized,  validly existing and in
         good standing under the laws of the State of Oklahoma;

                  (b) has all  requisite  power and  authority and all necessary
         licenses and permits to own and operate its  properties and to carry on
         its  business  as  now  conducted  and  as  presently  proposed  to  be
         conducted,  the  failure  of which  would not have a  material  adverse
         effect  on  the  business,  operations,   properties,   liabilities  or
         condition (financial or otherwise) of the Company; and

                  (c) has  adequate  authority,  power and legal  right to enter
         into, execute and deliver the Note. On execution and delivery, the Note
         will  be  a  legal,   valid  and  binding  obligation  of  the  Company
         enforceable in accordance with its terms.

                                  Page 3 of 6

<PAGE>

4.       EVENTS OF DEFAULT.

         It shall be an Event of  Default  with  respect  to this  Note upon the
occurrence and continuation uncured of any of the following events:

         4.1      Default in Payment, Etc.

                  (a) A default in the  payment  of any  interest  or  principal
         payments on this Note,  and such  default  shall  continue  uncured for
         fifteen (15) days after due date and notice is received  from Holder of
         such default for the making of such interest or principal payment; or

                  (b)  default  in the  performance,  or  breach,  of any  other
         covenant of the Company in this Note and continuance of such default or
         breach uncured for a period of thirty (30) days after receipt of notice
         as to such  breach or after the  Company  knew or should  have known of
         such breach.

         4.2  Bankruptcy.  The  entry  of a decree  or  order by a court  having
jurisdiction  adjudging  the Company a bankrupt  or  insolvent,  or  approving a
petition seeking reorganization, arrangement, adjustment or composition of or in
respect of the  Company,  under  federal  bankruptcy  law,  as now or  hereafter
constituted, or any other applicable federal or state bankruptcy,  insolvency or
other similar law, and the  continuance of any such decree or order unstayed and
in effect for a period of sixty (60) days; or the commencement by the Company of
a voluntary case under federal bankruptcy law, as now or hereafter  constituted,
or any  other  applicable  Federal  or state  bankruptcy,  insolvency,  or other
similar law, or the consent by it to the institution of bankruptcy or insolvency
proceedings  against  it, or the filing by it of a petition or answer or consent
seeking  reorganization  or relief  under  federal  bankruptcy  law or any other
applicable  Federal  or state  law,  or the  consent by it to the filing of such
petition or to the  appointment of a receiver,  liquidator,  assignee,  trustee,
sequestrator or similar  official of the Company or of any  substantial  part of
its property, or the making by it of an assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in furtherance
of any such action.

5.       REMEDIES UPON DEFAULT.

         5.1  Acceleration.  Upon an Event of Default and at any time during the
continuation thereof, the Holder, by notice in writing given to the Company, may
declare the entire principal of this Note then outstanding to be due and payable
immediately,  and upon any such declaration the same shall become and be due and
payable immediately, anything herein contained to the contrary notwithstanding.

         5.2  Proceedings and Actions.  During the  continuation of any Event of
Default,  the Holder may institute  such actions or proceedings in law or equity
as it shall deem  expedient  for the  protection of its rights and may prosecute
and enforce its claims against all assets of the Company, and in connection with
any such action or  proceeding  shall be  entitled  to receive  from the Company
payment of the principal  amount of this Note plus accrued  interest to the date
of payment plus reasonable expenses of collection including, without limitation,
attorney's fees and expenses.

                                  Page 4 of 6

<PAGE>

6.       RESTRICTIONS ON TRANSFER.

         6.1 The Holder  acknowledges  that he has been  advised by the  Company
that this  Note has not been  registered  under the Act,  that the Note is being
issued on the basis of the statutory  exemption  provided by section 4(2) of the
Act and/or  Regulation D promulgated  thereunder  relating to transactions by an
issuer  not  involving  any public  offering,  and that the  Company's  reliance
thereon  is based in part  upon the  representations  made by the  Holder in the
Holder's Investor  Representation  Letter,  previously furnished to the Company.
The Holder  acknowledges  that he has been  informed  by the  Company  of, or is
otherwise  familiar with, the nature of the  limitations  imposed by the Act and
the  rules  and  regulations  thereunder  on  the  transfer  of  securities.  In
particular,  the Holder agrees that no sale,  assignment or transfer of the Note
shall be valid or  effective,  and the Company shall not be required to give any
effect to any such sale, assignment or transfer, unless (i) the sale, assignment
or transfer of the Note is registered  under the Act, it being  understood  that
the Note is not  currently  registered  for sale  and  that the  Company  has no
obligation  or  intention  to so register  the Notes,  or (ii) the Note is sold,
assigned or transferred in accordance with all the  requirements and limitations
of Rule 144 under the Act, it being understood that Rule 144 is not available at
the  present  time for the sale of the Note and that  there can be no  assurance
that Rule 144 sales will be available  at any time in the future,  or (iii) such
sale,  assignment,  or transfer is otherwise exempt from registration  under the
Act. The Holder of this Note and each  transferee  hereof further agrees that if
any  distribution  of this Note is proposed to be made by them otherwise than by
delivery of a prospectus meeting the requirements of Section 10 of the Act, such
action  shall be taken only  after  submission  to the  Company of an opinion of
counsel, reasonably satisfactory in form and substance to the Company's counsel,
to the effect that the proposed distribution will not be in violation of the Act
or of applicable state law. Furthermore, it shall be a condition to the transfer
of this Note that any  transferee  thereof  deliver to the  Company  his written
agreement to accept and be bound by all of the terms and conditions contained in
this Note.

7.       MISCELLANEOUS.

         7.1 No Recourse. No recourse whatsoever, either directly or through the
Company or any trustee,  receiver or  assignee,  shall be had in any event or in
any manner against any past, present or future stockholder,  director or officer
of the Company for the payment of the  principal  of or interest on this Note or
for any claim based thereon or otherwise in respect this Note, this Note being a
corporate obligation only.

         7.2 Notices. All communications  provided hereunder shall be in writing
and, if to the Company,  delivered  or mailed by  registered  or certified  mail
addressed to FullNet Communications,  Inc., 200 North Harvey Avenue, Suite 1704,
Oklahoma    City,    Oklahoma    73102    or,    if   to    the    Holder,    at
- ------------------------------------------.

                                  Page 5 of 6

<PAGE>

         7.3  Lost,  Stolen  or  Mutilated  Note.  In case  this  Note  shall be
mutilated, lost, stolen or destroyed, the Company may, in its discretion,  issue
and  deliver in  exchange  and  substitution  for and upon  cancellation  of the
mutilated Note, or in lieu of and  substitution  for the Note,  lost,  stolen or
destroyed,  a new Note of like tenor and  representing  an  equivalent  right or
interest,  but only upon receipt of evidence satisfactory to the Company of such
loss, theft or destruction and an indemnity, if requested,  also satisfactory to
it.

         7.4 Course of Dealing. No course of dealing between the Company and the
Holder hereof shall operate as a waiver of any right of any Holder  hereof,  and
no delay on the part of the Holder in exercising  any right  hereunder  shall so
operate.

         7.5 Amendments.  This Note may be amended only by a written  instrument
executed by the Company and the Holder hereof.  Any amendment  shall be endorsed
upon this Note, and all future holders shall be bound thereby.

         7.6 Governing Law. This Note shall be construed in accordance  with and
governed by the laws of the State of Oklahoma, without giving effect to conflict
of laws principles.

         DATED the date first written above.


                                    FULLNET COMMUNICATIONS, INC.



                                    By:________________________________________
                                          Timothy J. Kilkenny,
                                          President and Chief Executive Officer
(SEAL)

Attest:


________________________________
Jeanette C. Timmons, Secretary






                                  Page 6 of 6



                        REGSITRAR ACCREDITATION AGREEMENT

                                Table of Contents

I.     DEFINITIONS

II.    TERMS AND CONDITIONS OF AGREEMENT

         A.  Accreditation.
         B.  Registrar Use of ICANN Name.
         C.  General Obligations of ICANN.
         D.  General Obligations of Registrar.
         E.  Submission of SLD Holder Data to Registry.
         F.  Public Access to Data on SLD Registrations.
         G.  Retention of SLD Holder and Registration Data.
         H.  Rights in Data.
         I.  Data Escrow.
         J.  Business Dealings, Including with SLD Holders.
         K.  Domain-Name Dispute Resolution.
         L.  Accreditation Fees.
         M.  Specific Performance.
         N.  Termination of Agreement.
         O.  Term of Agreement; Renewal; Right to Substitute Updated Agreement.
         P.  Resolution of Disputes Under This Agreement.
         Q.  Limitations on Monetary Remedies for Violations of this Agreement.
         R.  Handling by ICANN of Registrar-Supplied Data.
         S.  Miscellaneous.
________________________________________________________________________________

This  REGISTRAR  ACCREDITATION  AGREEMENT  ("Agreement")  is by and  between the
Internet   Corporation  for  Assigned  Names  and  Numbers,   a   not-for-profit
corporation, and FullWeb, Inc., d/b/a FullNic f/k/a Animus Communications,  Inc.
("Registrar"),  a corporation,  and shall be deemed made on February 8, 2000, at
Los Angeles, California, USA.

I. DEFINITIONS

As used in  this  Agreement,  the  following  terms  shall  have  the  following
meanings:

A. "Accredit" means to identify and set minimum standards for the performance of
registration   functions,   to  recognize  persons  or  entities  meeting  those
standards,  and to enter  into an  accreditation  agreement  that sets forth the
rules and procedures applicable to the provision of registration services.

B. A "Consensus Policy" is one adopted by ICANN as follows:

     1.  "Consensus  Policies"  are those  adopted  based on a  consensus  among
     Internet stakeholders  represented in the ICANN process, as demonstrated by
     (1) the  adoption  of the  policy by the ICANN  Board of  Directors,  (2) a
     recommendation  that the policy should be adopted, by at least a two-thirds
     vote of the  council  of the  ICANN  Supporting  Organization  to which the
     matter is  delegated,  and (3) a written  report and  supporting  materials
     (which  must  include  all   substantive   submissions  to  the  Supporting
     Organization  relating to the  proposal)  that (i)  documents the extent of
     agreement  and  disagreement  among  impacted  groups,  (ii)  documents the
     outreach  process used to seek to achieve  adequate  representation  of the
     views of groups that are likely to be  impacted,  and (iii)  documents  the
     nature and  intensity of reasoned  support and  opposition  to the proposed
     policy.


                                      -1-

<PAGE>

     2. In the event that  Registrar  disputes the presence of such a consensus,
     it shall  seek  review  of that  issue  from an  Independent  Review  Panel
     established under ICANN's bylaws. Such review must be sought within fifteen
     working days of publication of the Board's action adopting the policy.  The
     decision of the panel shall be based on the report and supporting materials
     required by Section I.B.1 above.  In the event that Registrar  seeks review
     and the Panel sustains the Board's  determination  that the policy is based
     on a  consensus  among  Internet  stakeholders  represented  in  the  ICANN
     process, then Registrar must implement such policy unless it promptly seeks
     and obtains a stay or injunctive relief under Section II.P.

     3. In the event,  following  a decision  by the  Independent  Review  Panel
     convened  under  Section I.B.2 above,  that  Registrar  still  disputes the
     presence  of such a  consensus,  it may seek  further  review of that issue
     within  fifteen  working days of  publication of the decision in accordance
     with the  dispute-resolution  procedures  set forth in Section  II.P below;
     provided,  however,  that  Registrar  must continue to implement the policy
     unless it has obtained a stay or injunctive  relief under Section II.P or a
     final  decision is rendered in  accordance  with the  provisions of Section
     II.P that relieves  Registrar of such obligation.  The decision in any such
     further  review  shall be  based on the  report  and  supporting  materials
     required by Section I.B.1 above.

     4. A policy  adopted by the ICANN Board of Directors on a temporary  basis,
     without  a prior  recommendation  by the  council  of an  ICANN  Supporting
     Organization,  shall also be considered to be a Consensus Policy if adopted
     by the ICANN Board of  Directors  by a vote of at least  two-thirds  of its
     members,  and if immediate temporary adoption of a policy on the subject is
     necessary to maintain the stability of the Internet or the operation of the
     domain name system,  and if the proposed policy is as narrowly  tailored as
     feasible to achieve  those  objectives.  In adopting  any policy under this
     provision,  the ICANN Board of Directors shall state the period of time for
     which the policy is  temporarily  adopted and shall  immediately  refer the
     matter to the appropriate  Supporting  Organization  for its evaluation and
     review  with  a  detailed  explanation  of its  reasons  for  adopting  the
     temporary  policy and why the Board  believes the policy should receive the
     consensus support of Internet stakeholders. If the period of time for which
     the  policy is  adopted  exceeds  45 days,  the Board  shall  reaffirm  its
     temporary adoption every 45 days for a total period not to exceed 180 days,
     in order to maintain  such policy in effect until such time as it meets the
     standard set forth in Section  I.B.1.  If the standard set forth in Section
     I.B.1 above is not met within the temporary period set by the Board, or the
     council of the Supporting  Organization to which it has been referred votes
     to reject the temporary policy, it will no longer be a "Consensus Policy."

     5.  For all  purposes  under  this  Agreement,  the  policies  specifically
     identified          by         ICANN         on         its         website
     (www.icann.org/general/consensus-policies.htm)   at  the   date   of   this
     Agreement as having been adopted by the ICANN Board of Directors before the
     date of this  Agreement  shall be treated  in the same  manner and have the
     same effect as "Consensus Policies" and accordingly shall not be subject to
     review under Section I.B.2.

     6. In the event  that,  at the time the ICANN Board  adopts a policy  under
     Section  I.B.1  during the term of this  Agreement,  ICANN does not have in
     place an Independent  Review Panel  established  under ICANN's bylaws,  the
     fifteen-working-day period allowed under Section I.B.2 to seek review shall
     be  extended  until  fifteen  working  days  after  ICANN does have such an
     Independent  Review Panel in place and Registrar  shall not be obligated to
     comply with the policy in the interim.

                                      -2-

<PAGE>

C. "DNS" refers to the Internet domain-name system.

D. "ICANN" refers to the Internet  Corporation for Assigned Names and Numbers, a
party to this Agreement.

E. An "ICANN-adopted  policy" (and references to ICANN  "adopt[ing]" a policy or
policies)  refers to a Consensus  Policy adopted by ICANN (i) in conformity with
applicable  provisions of its articles of  incorporation  and bylaws and Section
II.C of this  Agreement and (ii) of which  Registrar has been given notice and a
reasonable period in which to comply.

F. "IP" means Internet Protocol.

G. "Personal Data" refers to data about any identified or  identifiable  natural
person.

H. The word "Registrar,"  when appearing with an initial capital letter,  refers
to FullWeb,  Inc.  d/b/a FullNic f/k/a Animus  Communications,  Inc., a party to
this Agreement.

I. The word  "registrar,"  when  appearing  without an initial  capital  letter,
refers to a person or entity  that  contracts  with SLD  holders and a registry,
collecting  registration  data about the SLD  holders and  submitting  zone file
information for entry in the registry database.

J. A "Registry" is the person(s) or entity(ies) then responsible,  in accordance
with an  agreement  between  ICANN and that person or entity  (those  persons or
entities) or, if that agreement is terminated or expires,  in accordance with an
agreement  between the US Government and that person or entity (those persons or
entities), for providing registry services.

K. An "SLD" is a second-level domain of the DNS.

L. An SLD  registration  is  "sponsored" by the registrar that placed the record
associated  with  that  registration   into  the  registry.   Sponsorship  of  a
registration  may be changed at the express  direction  of the SLD holder or, in
the event a registrar  loses  accreditation,  in  accordance  with  then-current
ICANN-adopted policies.

M. A "TLD" is a top-level domain of the DNS.

II. TERMS AND CONDITIONS OF AGREEMENT

The parties agree as follows:


A.  Accreditation.  During  the  term of this  Agreement,  Registrar  is  hereby
accredited  by  ICANN to act as a  registrar  (including  to  insert  and  renew
registration  of SLDs in the registry  database)  for the .com,  .net,  and .org
TLDs.

B.  Registrar  Use of ICANN Name.  Registrar is hereby  granted a  non-exclusive
worldwide  license  to  state  during  the  term  of this  Agreement  that it is
accredited  by ICANN as a registrar in the .com,  .net,  and .org TLDs. No other
use of ICANN's  name is  licensed  hereby.  This  license may not be assigned or
sublicensed by Registrar.

                                      -3-

<PAGE>

C.  General  Obligations  of ICANN.  With respect to all matters that impact the
rights,  obligations,  or role of Registrar, ICANN shall during the Term of this
Agreement:

     1. exercise its responsibilities in an open and transparent manner;

     2. not  unreasonably  restrain  competition  and,  to the extent  feasible,
     promote and encourage robust competition;

     3. not apply  standards,  policies,  procedures  or practices  arbitrarily,
     unjustifiably,  or  inequitably  and not single out Registrar for disparate
     treatment  unless  justified by substantial  and reasonable  cause;  and 4.
     ensure,  through  its  reconsideration  and  independent  review  policies,
     adequate  appeal  procedures for  Registrar,  to the extent it is adversely
     affected by ICANN standards, policies, procedures or practices.

D. General Obligations of Registrar.

     1. During the Term of this Agreement:

         a.  Registrar  agrees that it will operate as a registrar  for TLDs for
         which it is accredited by ICANN in accordance with this Agreement;

         b. Registrar shall comply,  in such operations,  with all ICANN-adopted
         Policies insofar as they:

              i.  relate to one or more of the  following:  (A) issues for which
              uniform or  coordinated  resolution  is  reasonably  necessary  to
              facilitate  interoperability,  technical reliability and/or stable
              operation of the Internet or  domain-name  system,  (B)  registrar
              policies  reasonably  necessary  to implement  Consensus  Policies
              relating to the Registry,  or (C) resolution of disputes regarding
              the  registration  of domain  names (as opposed to the use of such
              domain names), and

              ii. do not unreasonably restrain competition.

     2. To the extent that Consensus  Policies are adopted in  conformance  with
     Section II.C of this  Agreement,  the measures  permissible  under  Section
     II.D.1.b.i shall include, without limitation:

         i.  principles     for    allocation    of     SLD     names     (e.g.,
         first-come/first-served,   timely   renewal,   holding   period   after
         expiration);

         ii.  prohibitions  on  warehousing of or speculation in domain names by
         registrars;

         iii.  reservation of SLD names that may not be registered  initially or
         that  may not be  renewed  due to  reasons  reasonably  related  to (a)
         avoidance of confusion among or misleading of users,  (b)  intellectual
         property,  or (c) the  technical  management of the DNS or the Internet
         (e.g., "example.com" and single-letter/digit names);

         iv.  the  allocation  among  continuing  registrars  of the  SLD  names
         sponsored in the registry by a registrar losing accreditation;

                                      -4-

<PAGE>

         v.  the  transfer  of  registration  data  upon a change  in  registrar
         sponsoring the registration; and

         vi.  dispute  resolution  policies  that take into account the use of a
         domain name.

Nothing  in this  Section  II.D  shall  limit or  otherwise  affect  Registrar's
obligations as set forth elsewhere in this Agreement.

E. Submission of SLD Holder Data to Registry. During the term of this Agreement:

     1. As part of its  registration  of SLDs in the .com,  .net, and .org TLDs,
     Registrar shall submit to, or shall place in the registry database operated
     by Registry the following data elements  concerning SLD registrations  that
     Registrar processes:

         a. The name of the SLD being registered;

         b.  The  IP  addresses  of  the  primary   nameserver   and   secondary
         nameserver(s) for the SLD;

         c. The corresponding names of those nameservers;

         d. Unless automatically  generated by the registry system, the identity
         of the registrar;

         e.  Unless   automatically   generated  by  the  registry  system,  the
         expiration date of the registration; and

         f.  Other  data  required  as a result of  further  development  of the
         registry system by the Registry.

     2. Within five (5) business  days after  receiving any updates from the SLD
     holder to the data elements  listed in Sections  II.E.1.b and c for any SLD
     registration  Registrar  sponsors,  Registrar shall submit the updated data
     elements  to,  or shall  place  those  elements  in the  registry  database
     operated by Registry.

     3. In order to allow  reconstitution  of the registry database in the event
     of  an  otherwise  unrecoverable  technical  failure  or a  change  in  the
     designated  Registry  permitted  by the  contract  Registry  has with ICANN
     and/or the United  States  Department  of Commerce,  within ten days of any
     such  request  by ICANN  Registrar  shall  submit  an  electronic  database
     containing the data elements listed in Sections  II.F.1.a through d for all
     active  records  in  the  registry  sponsored  by  Registrar,  in a  format
     specified by ICANN, to the Registry for the appropriate TLD.

F.  Public  Access  to  Data  on SLD  Registrations.  During  the  term  of this
Agreement:

     1. At its expense,  Registrar  shall provide an interactive  web page and a
     port  43  Whois  service  providing  free  public   query-based  access  to
     up-to-date  (i.e.  updated at least daily) data  concerning  all active SLD
     registrations  sponsored by  Registrar in the registry for the .com,  .net,
     and .org TLDs.  The data  accessible  shall  consist of  elements  that are
     designated from time to time according to an  ICANN-adopted  policy.  Until
     ICANN otherwise  specifies by means of an ICANN-adopted  policy,  this data
     shall  consist  of the  following  elements  as  contained  in  Registrar's
     database:

                                      -5-

<PAGE>

         a.  The  name  of the SLD  being  registered  and  the  TLD  for  which
         registration is being requested;

         b.  The  IP  addresses  of  the  primary   nameserver   and   secondary
         nameserver(s) for the SLD;

         c. The corresponding names of those nameservers;

         d. The identity of Registrar (which may be provided through Registrar's
         website);

         e. The original creation date of the registration;

         f. The expiration date of the registration;

         g. The name and postal address of the SLD holder;

         h. The name,  postal address,  e-mail address,  voice telephone number,
         and (where  available) fax number of the technical contact for the SLD;
         and

         i. The name,  postal address,  e-mail address,  voice telephone number,
         and (where available) fax number of the administrative  contact for the
         SLD.

     2. Upon  receiving  any  updates to the data  elements  listed in  Sections
     II.F.1.b  through d and f through i from the SLD  holder,  Registrar  shall
     promptly update its database used to provide the public access described in
     Section II.F.1.

     3.  Registrar may  subcontract  its obligation to provide the public access
     described in Section II.F.1 and the updating  described in Section  II.F.2,
     provided  that  Registrar  shall  remain fully  responsible  for the proper
     provision of the access and updating.

     4.  Registrar  shall  abide  by  any  ICANN-adopted  Policy  that  requires
     registrars  to  cooperatively   implement  a  distributed  capability  that
     provides query-based Whois search  functionality across all registrars.  If
     the Whois service  implemented by registrars  does not in a reasonable time
     provide reasonably robust,  reliable, and convenient access to accurate and
     up-to-date  data,  the Registrar  shall abide by any  ICANN-adopted  Policy
     requiring  Registrar,  if  reasonably  determined  by ICANN to be necessary
     (considering such possibilities as remedial action by specific registrars),
     to supply data from Registrar's database to facilitate the development of a
     centralized  Whois  database  for the  purpose of  providing  comprehensive
     Registrar Whois search capability.

     5. In providing  query-based public access to registration data as required
     by  Sections  II.F.1  and  II.F.4,  Registrar  shall not  impose  terms and
     conditions  on  use  of  the  data  provided  except  as  permitted  by  an
     ICANN-adopted  policy.  Unless and until ICANN  adopts a different  policy,
     Registrar  shall  permit use of data it provides in response to queries for
     any lawful purposes except to: (a) allow,  enable, or otherwise support the
     transmission of mass unsolicited,  commercial  advertising or solicitations
     via  e-mail  (spam);  or (b)  enable  high  volume,  automated,  electronic
     processes that apply to Registrar (or its systems).

     6. In addition, Registrar shall provide third-party bulk access to the data
     subject to public access under Section II.F.1 under the following terms and
     conditions:

                                      -6-

<PAGE>

         a.  Registrar  shall  make a  complete  electronic  copy  of  the  data
         available at least one time per week for download by third  parties who
         have entered into a bulk access agreement with Registrar.

         b.  Registrar  may charge an annual fee, not to exceed  US$10,000,  for
         such bulk access to the data.

         c. Registrar's  access agreement shall require the third party to agree
         not to use  the  data  to  allow,  enable,  or  otherwise  support  the
         transmission   of   mass   unsolicited,   commercial   advertising   or
         solicitations via e-mail (spam).

         d.  Registrar's  access  agreement may require the third party to agree
         not to use  the  data  to  enable  high-volume,  automated,  electronic
         processes that apply to Registrar (or its systems).

         e.  Registrar's  access  agreement may require the third party to agree
         not to sell or  redistribute  the data  except  insofar  as it has been
         incorporated  by the third party into a value-added  product or service
         that does not permit the  extraction  of a  substantial  portion of the
         bulk data from the  value-added  product  or  service  for use by other
         parties.

         f. Registrar may enable SLD holders who are individuals to elect not to
         have Personal Data concerning  their  registrations  available for bulk
         access for marketing  purposes based on Registrar's  "Opt-Out"  policy,
         and if Registrar  has such a policy  Registrar  shall require the third
         party to abide by the terms of that Opt-Out policy; provided,  however,
         that  Registrar  may not use such data subject to opt-out for marketing
         purposes in its own value-added product or service.

     7.  Registrar's  obligations  under  Section  II.F.6 shall remain in effect
     until the  earlier  of (a)  replacement  of this  policy  with a  different
     ICANN-adopted  policy  governing  bulk access to the data subject to public
     access under Section II.F.1, or (b)  demonstration,  to the satisfaction of
     the United States  Department of Commerce,  that no individual or entity is
     able to exercise market power with respect to registrations or with respect
     to  registration  data used for  development  of  value-added  products and
     services by third parties.

     8. To  comply  with  applicable  statutes  and  regulations  and for  other
     reasons,  ICANN may from time to time adopt policies establishing limits on
     the Personal Data  concerning  SLD  registrations  that  Registrar may make
     available to the public through a public-access  service  described in this
     Section II.F and on the manner in which  Registrar may make them available.
     In the event ICANN adopts any such policy, Registrar shall abide by it.

G. Retention of SLD Holder and Registration Data.

     1. During the term of this  Agreement,  Registrar  shall  maintain  its own
     electronic database, as updated from time to time, containing data for each
     active SLD registration sponsored by it in the registry for the .com, .net,
     and .org  TLDs.  The data for each  such  registration  shall  include  the
     elements  listed in  Sections  II.F.1.a  through i, as well as the name and
     (where available) postal address,  e-mail address,  voice telephone number,
     and fax number of the billing contact.

     2.  During  the term of this  Agreement  and for  three  years  thereafter,
     Registrar  (itself or by its agent) shall  maintain the  following  records
     relating to its dealings with the Registry and SLD holders:

                                      -7-

<PAGE>

         a. In electronic  form, the submission  date and time, and the content,
         of all registration  data (including  updates)  submitted in electronic
         form to the Registry;

         b. In electronic,  paper, or microfilm form, all written communications
         constituting registration applications,  confirmations,  modifications,
         or  terminations  and related  correspondence  with actual SLD holders,
         including registration contracts; and

         c. In electronic form,  records of the accounts of all SLD holders with
         Registrar, including dates and amounts of all payments and refunds.

     Registrar  shall make these records  available for inspection by ICANN upon
     reasonable  notice.  ICANN  shall  not  disclose  such  records  except  as
     expressly permitted by an ICANN-adopted policy.

H. Rights in Data.  Registrar disclaims all rights to exclusive ownership or use
of the  data  elements  listed  in  Sections  II.E.1.a  through  c for  all  SLD
registrations  submitted  by Registrar  to, or  sponsored  by Registrar  in, the
registry database for the .com, .net, and .org TLDs. Registrar does not disclaim
rights in the data elements listed in Sections  II.E.1.d  through f and II.F.1.d
through i concerning  active SLD  registrations  sponsored by it in the registry
for  the  .com,  .net,  and  .org  TLDs,  and  agrees  to  grant  non-exclusive,
irrevocable, royalty-free licenses to make use of and disclose the data elements
listed in Sections  II.F.1.d  through i for the  purpose of  providing a service
(such  as  a  Whois  service  under  Section  II.F.4)   providing   interactive,
query-based  public access.  Upon a change in sponsorship  from Registrar of any
SLD  registration in the registry for the .com,  .net, and .org TLDs,  Registrar
acknowledges that the registrar gaining  sponsorship shall have the rights of an
owner to the data  elements  listed  in  Sections  II.E.1.d  and e and  II.F.1.d
through i concerning that registration, with Registrar also retaining the rights
of an owner in that data. Nothing in this Section II.H prohibits  Registrar from
(1) restricting bulk public access to data elements in a manner  consistent with
any ICANN-adopted policies or (2) transferring rights it claims in data elements
subject to the provisions of this Section II.H.

I. Data  Escrow.  During the term of this  Agreement,  on a schedule,  under the
terms, and in the format specified in the then-current  ICANN-adopted  policy on
registrar escrow requirements,  Registrar shall submit an electronic copy of the
database described in Section II.G.1 to ICANN or, at Registrar's election and at
its expense,  to a reputable  escrow agent  mutually  approved by Registrar  and
ICANN,  such approval also not to be unreasonably  withheld by either party. The
data shall be held under an agreement  among  Registrar,  ICANN,  and the escrow
agent (if any) providing that (1) the data shall be received and held in escrow,
with no use other than  verification  that the deposited data is complete and in
proper  format,  until  released to ICANN;  (2) the data shall be released  from
escrow upon expiration without renewal or termination of this Agreement; and (3)
ICANN's rights under the escrow  agreement shall be assigned with any assignment
of this  Agreement.  The escrow  shall  provide  that in the event the escrow is
released  under  this  Section  II.I,  ICANN  (or  its  assignee)  shall  have a
non-exclusive,   irrevocable,   royalty-free   license  to  exercise  (only  for
transitional  purposes)  or have  exercised  all  rights  necessary  to  provide
registrar services.

J. Business Dealings, Including with SLD Holders.

     1.  In the  event  ICANN  adopts  a  policy  supported  by a  consensus  of
     ICANN-accredited registrars establishing or approving a Code of Conduct for
     such registrars, Registrar shall abide by that Code.

     2. Registrar shall abide by applicable laws and governmental regulations.

                                      -8-

<PAGE>

     3. Registrar shall not represent to any actual or potential SLD holder that
     Registrar  enjoys  access to a registry for which  Registrar is  accredited
     that is  superior  to that  of any  other  registrar  accredited  for  that
     registry.

     4. Registrar shall not activate any SLD registration unless and until it is
     satisfied  that it has  received a  reasonable  assurance of payment of its
     registration  fee. For this  purpose,  a charge to a credit  card,  general
     commercial  terms extended to  creditworthy  customers,  or other mechanism
     providing a similar  level of  assurance  of payment  shall be  sufficient,
     provided that the obligation to pay becomes final and  non-revocable by the
     SLD holder upon activation of the registration.

     5. Registrar shall register SLDs to SLD holders only for fixed periods.  At
     the conclusion of the registration  period,  failure by or on behalf of the
     SLD  holder to pay a renewal  fee  within  the time  specified  in a second
     notice or  reminder  shall,  in the absence of  extenuating  circumstances,
     result in cancellation of the registration.  In the event that ICANN adopts
     a policy  concerning  procedures for handling  expiration of registrations,
     Registrar shall abide by that policy.

     6.  Registrar  shall not insert or renew any SLD name in any  registry  for
     which  Registrar  is  accredited  by  ICANN  in a  manner  contrary  to  an
     ICANN-adopted  policy stating a list or specification of excluded SLD names
     that is in effect at the time of insertion or renewal.

     7.  Registrar  shall require all SLD holders to enter into an electronic or
     paper  registration   agreement  with  Registrar  including  at  least  the
     following provisions:

         a. The SLD holder  shall  provide to  Registrar  accurate  and reliable
         contact details and promptly correct and update them during the term of
         the SLD registration,  including: the full name, postal address, e-mail
         address, voice telephone number, and fax number if available of the SLD
         holder;  name of authorized  person for contact purposes in the case of
         an SLD holder that is an organization, association, or corporation; and
         the data elements listed in Section II.F.1.b, c, and h through i above.

         An  SLD  holder's   willful   provision  of  inaccurate  or  unreliable
         information,   its  willful  failure  promptly  to  update  information
         provided  to  Registrar,  or its  failure to respond  for over  fifteen
         calendar  days to  inquiries by  Registrar  concerning  the accuracy of
         contact  details  associated with the SLD holder's  registration  shall
         constitute a material breach of the SLD  holder-registrar  contract and
         be a basis for cancellation of the SLD registration.

         Any SLD holder that  intends to license use of a domain name to a third
         party is nonetheless  the SLD holder of record and is  responsible  for
         providing  its own  full  contact  information  and for  providing  and
         updating  accurate  technical and  administrative  contact  information
         adequate to facilitate  timely resolution of any problems that arise in
         connection  with  the  SLD.  An  SLD  holder  licensing  use  of an SLD
         according to this provision  shall accept  liability for harm caused by
         wrongful use of the SLD,  unless it promptly  discloses the identity of
         the licensee to a party providing the SLD holder reasonable evidence of
         actionable harm.

         b.  Registrar  shall  provide  notice to each new or renewed SLD holder
         stating:

              i. The  purposes for which any Personal  Data  collected  from the
              applicant are intended;

                                      -9-

<PAGE>

              ii. The intended  recipients  or  categories  of recipients of the
              data  (including the Registry and others who will receive the data
              from Registry);

              iii.  Which  data are  obligatory  and  which  data,  if any,  are
              voluntary; and

              iv.  How the SLD  holder  or  data  subject  can  access  and,  if
              necessary, rectify the data held about them.

         c. The SLD holder shall consent to the data  processing  referred to in
         Section II.J.7.b.

         d. The SLD  holder  shall  represent  that  notice  has  been  provided
         equivalent  to  that  described  in  Section  II.J.7.b.  above  to  any
         third-party  individuals  whose Personal Data are supplied to Registrar
         by the SLD  holder,  and  that  the SLD  holder  has  obtained  consent
         equivalent  to  that  referred  to in  Section  II.J.7.c  of  any  such
         third-party individuals.

         e.  Registrar  shall agree that it will not process the  Personal  Data
         collected from the SLD holder in a way  incompatible  with the purposes
         and other  limitations  about which it has  provided  notice to the SLD
         holder in accordance with Section II.J.7.b, above.

         f. Registrar  shall agree that it will take  reasonable  precautions to
         protect  Personal  Data  from  loss,  misuse,  unauthorized  access  or
         disclosure, alteration, or destruction.

         g. The SLD holder shall represent that, to the best of the SLD holder's
         knowledge and belief,  neither the registration of the SLD name nor the
         manner in which it is directly or indirectly  used  infringes the legal
         rights of a third party.

         h. For the  adjudication of disputes  concerning or arising from use of
         the SLD name, the SLD holder shall submit,  without  prejudice to other
         potentially applicable jurisdictions, to the jurisdiction of the courts
         (1) of the SLD holder's domicile and (2) where Registrar is located.

         i. The SLD holder  shall  agree that its  registration  of the SLD name
         shall be subject to suspension,  cancellation,  or transfer pursuant to
         any  ICANN-adopted  policy,  or pursuant to any  registrar  or registry
         procedure not inconsistent with an ICANN-adopted policy, (1) to correct
         mistakes by Registrar or the  Registry in  registering  the name or (2)
         for the resolution of disputes concerning the SLD name.

         j. The SLD holder shall  indemnify  and hold  harmless the Registry and
         its directors, officers, employees, and agents from and against any and
         all  claims,  damages,  liabilities,  costs,  and  expenses  (including
         reasonable  legal fees and  expenses)  arising out of or related to the
         SLD holder's domain name registration.

     8. Registrar shall abide by any ICANN-adopted policies requiring reasonable
     and commercially practicable (a) verification, at the time of registration,
     of contact  information  associated with an SLD  registration  sponsored by
     Registrar or (b) periodic  re-verification  of such information.  Registrar
     shall,  upon  notification  by any person of an  inaccuracy  in the contact
     information  associated  with an SLD  registration  sponsored by Registrar,
     take reasonable steps to investigate that claimed inaccuracy.  In the event
     Registrar learns of inaccurate contact  information  associated with an SLD
     registration it sponsors,  it shall take  reasonable  steps to correct that
     inaccuracy.

                                      -10-

<PAGE>

     9.  Registrar  shall  abide  by any  ICANN-adopted  policy  prohibiting  or
     restricting warehousing of or speculation in domain names by registrars.

     10.  Registrar  shall  maintain  in  force  commercial   general  liability
     insurance with policy limits of at least  US$500,000  covering  liabilities
     arising  from  Registrar's  registrar  business  during  the  term  of this
     Agreement.

     11. Nothing in this Agreement prescribes or limits the amount Registrar may
     charge SLD holders for registration of SLD names.

K. Domain-Name Dispute Resolution. During the term of this Agreement,  Registrar
shall have in place a policy and procedure for resolution of disputes concerning
SLD names.  In the event that ICANN adopts a policy or procedure for  resolution
of  disputes  concerning  SLD names  that by its  terms  applies  to  Registrar,
Registrar shall adhere to the policy or procedure.

L.  Accreditation  Fees. As a condition of  accreditation,  Registrar  shall pay
accreditation  fees  to  ICANN.  These  fees  consist  of  yearly  and  on-going
components.

     1. The yearly  component for the term of this Agreement shall be US $5,000.
     Payment of the yearly component shall be due upon execution by Registrar of
     this Agreement and upon each  anniversary  date after such execution during
     the term of this Agreement (other than the expiration date).

     2. Registrar  shall pay the on-going  component of Registrar  accreditation
     fees adopted by ICANN in  accordance  with the  provisions  of Section II.C
     above,  provided such fees are  reasonably  allocated  among all registrars
     that contract with ICANN and that any such fees must be expressly  approved
     by registrars  accounting,  in aggregate,  for payment of two-thirds of all
     registrar-level  fees. Registrar shall pay such fees in a timely manner for
     so long as all material  terms of this  Agreement  remain in full force and
     effect, and  notwithstanding  the pendency of any dispute between Registrar
     and ICANN.

     3. On reasonable notice given by ICANN to Registrar,  accountings submitted
     by Registrar  shall be subject to  verification  by an audit of Registrar's
     books and records by an  independent  third-party  that shall  preserve the
     confidentiality  of such books and records  (other than its  findings as to
     the accuracy of, and any necessary corrections to, the accountings).

M. Specific  Performance.  While this  Agreement is in effect,  either party may
seek  specific  performance  of any  provision  of this  Agreement in the manner
provided in Section II.P below,  provided the party seeking such  performance is
not in material breach of its obligations.

N.  Termination  of  Agreement.  This  Agreement  may be  terminated  before its
expiration  by Registrar by giving ICANN thirty days written  notice.  It may be
terminated before its expiration by ICANN in any of the following circumstances:

     1.  There  was  a  material  misrepresentation,   material  inaccuracy,  or
     materially   misleading   statement   in   Registrar's    application   for
     accreditation or any material accompanying the application.

                                      -11-

<PAGE>

     2. Registrar:

         a. is  convicted  of a  felony  or other  serious  offense  related  to
         financial  activities,  or is judged by a court to have committed fraud
         or  breach  of  fiduciary  duty,  or  is  the  subject  of  a  judicial
         determination that ICANN reasonably deems as the substantive equivalent
         of any of these; or

         b.  is  disciplined  by the  government  of its  domicile  for  conduct
         involving dishonesty or misuse of funds of others.

     3. Any officer or director of  Registrar  is  convicted of a felony or of a
     misdemeanor  related to  financial  activities,  or is judged by a court to
     have  committed  fraud or breach of fiduciary  duty, or is the subject of a
     judicial  determination  that ICANN deems as the substantive  equivalent of
     any of these;  provided,  such  officer or  director is not removed in such
     circumstances.

     4.  Registrar  fails to cure any  breach of this  Agreement  (other  than a
     failure to comply  with a policy  adopted by ICANN  during the term of this
     Agreement  as to which  Registrar  is  seeking,  or still has time to seek,
     review  under  Section  I.B.2 of whether a  consensus  is  present)  within
     fifteen working days after ICANN gives Registrar notice of the breach.

     5. Registrar  fails to comply with a ruling granting  specific  performance
     under Sections II.M and II.P.

     6.  Registrar  continues  acting  in a manner  that  ICANN  has  reasonably
     determined endangers the stability or operational integrity of the Internet
     after receiving three days notice of that determination.

     7. Registrar becomes bankrupt or insolvent.

This  Agreement may be terminated in  circumstances  1 through 6 above only upon
fifteen  days  written  notice  to  Registrar  (in the  case of  circumstance  4
occurring  after  Registrar's  failure to cure),  with Registrar  being given an
opportunity  during  that time to initiate  arbitration  under  Section  II.P to
determine the appropriateness of termination under this Agreement.  In the event
Registrar initiates litigation or arbitration  concerning the appropriateness of
termination by ICANN, the termination  shall be stayed an additional thirty days
to allow Registrar to obtain a stay of termination  under Section II.P below. If
Registrar  acts in a manner  that  ICANN  reasonably  determines  endangers  the
stability  or  operational  integrity  of the  Internet and upon notice does not
immediately cure, ICANN may suspend this Agreement for five working days pending
ICANN's application for more extended specific  performance or injunctive relief
under Section II.P. This Agreement may be terminated  immediately upon notice to
Registrar in circumstance 7 above.

                                      -12-

<PAGE>

O. Term of Agreement;  Renewal;  Right to  Substitute  Updated  Agreement.  This
Agreement shall have an initial term until  [specific date to be inserted:  five
years for most  agreements;  for agreements  substituting for the prior one-year
agreements the inserted date will be the existing (one year) termination date of
those  agreements,  as required by Section  III.M of those  agreements],  unless
sooner terminated. Thereafter, if Registrar seeks to continue its accreditation,
it may  apply  for  renewed  accreditation,  and shall be  entitled  to  renewal
provided it meets the  ICANN-adopted  policy on  accreditation  criteria then in
effect, is in compliance with its obligations under this Agreement,  as amended,
and agrees to be bound by the  then-current  Registrar  accreditation  agreement
(which may differ from those of this  Agreement) that ICANN adopts in accordance
with  Sections  II.C and II.D (as  Section  II.D  may have  been  amended  by an
ICANN-adopted policy). In connection with renewed accreditation, Registrar shall
confirm  its  assent  to the  terms  and  conditions  of the  such  then-current
Registrar  accreditation  agreement by signing that accreditation  agreement. In
the event that,  during the term of this Agreement,  ICANN posts on its web site
an updated form of registrar  accreditation  agreement  applicable to accredited
registrars  in the .com,  .net,  or .org TLDs,  Registrar  (provided  it has not
received  (1) a notice  of  breach  that it has not  cured  or (2) a  notice  of
termination  of this  Agreement  under Section II.N above) may elect,  by giving
ICANN written notice, to enter an agreement in the updated form in place of this
Agreement.  In the event of such  election,  Registrar and ICANN shall  promptly
sign a new  accreditation  agreement that contains the provisions of the updated
form  posted on the web  site,  with the  length of the term of the  substituted
agreement as stated in the updated form posted on the web site, calculated as if
it commenced on the date this  Agreement was made,  and this  Agreement  will be
deemed terminated.

P.  Resolution of Disputes Under this  Agreement.  Disputes  arising under or in
connection  with this  Agreement,  including  (1) disputes  arising from ICANN's
failure  to  renew  Registrar's  accreditation  and (2)  requests  for  specific
performance,  shall be resolved in a court of competent  jurisdiction or, at the
election  of either  party,  by an  arbitration  conducted  as  provided in this
Section II.P  pursuant to the  International  Arbitration  Rules of the American
Arbitration  Association  ("AAA"). The arbitration shall be conducted in English
and shall occur in Los Angeles  County,  California,  USA.  There shall be three
arbitrators:   each  party  shall  choose  one  arbitrator  and,  if  those  two
arbitrators do not agree on a third arbitrator, the third shall be chosen by the
AAA.  The  parties  shall  bear the costs of the  arbitration  in equal  shares,
subject to the right of the  arbitrators  to reallocate the costs in their award
as provided in the AAA rules.  The parties shall bear their own attorneys'  fees
in connection with the  arbitration,  and the arbitrators may not reallocate the
attorneys' fees in conjunction  with their award.  The arbitrators  shall render
their decision within ninety days of the conclusion of the arbitration  hearing.
In the event Registrar  initiates  arbitration to contest the appropriateness of
termination  of this  Agreement by ICANN,  Registar may at the same time request
that the arbitration panel stay the termination  until the arbitration  decision
is rendered,  and that request shall have the effect of staying the  termination
until  the  arbitration   panel  has  granted  an  ICANN  request  for  specific
performance  and Registrar  has failed to comply with such ruling.  In the event
Registrar  initiates  arbitration  to  contest  an  Independent  Review  Panel's
decision under Section I.B.2 sustaining the Board's  determination that a policy
is  supported  by  consensus,  Registar  may at the same time  request  that the
arbitration  panel stay the requirement that it comply with the policy until the
arbitration  decision is  rendered,  and that  request  shall have the effect of
staying the requirement  until the decision or until the  arbitration  panel has
granted an ICANN  request for lifting of the stay. In all  litigation  involving
ICANN  concerning  this Agreement  (whether in a case where  arbitration has not
been elected or to enforce an  arbitration  award),  jurisdiction  and exclusive
venue  for  such  litigation  shall  be  in a  court  located  in  Los  Angeles,
California,  USA;  however,  the parties  shall also have the right to enforce a
judgment of such a court in any court of competent jurisdiction. For the purpose
of aiding the arbitration and/or preserving the rights of the parties during the
pendency of an  arbitration,  the parties shall have the right to seek temporary
or  preliminary  injunctive  relief  from  the  arbitration  panel or in a court
located in Los  Angeles,  California,  USA,  which shall not be a waiver of this
arbitration agreement.

Q.  Limitations on Monetary  Remedies for Violations of this Agreement.  ICANN's
aggregate  monetary  liability for violations of this Agreement shall not exceed
the amount of  accreditation  fees paid by Registrar to ICANN under Section II.L
of this  Agreement.  Registrar's  monetary  liability to ICANN for violations of
this Agreement shall be limited to accreditation  fees owing to ICANN under this
Agreement.  In no event  shall  either  party be liable for  special,  indirect,
incidental,  punitive,  exemplary, or consequential damages for any violation of
this Agreement.

                                      -13-

<PAGE>

R. Handling by ICANN of  Registrar-Supplied  Data. Before receiving any Personal
Data from  Registrar,  ICANN shall  specify to Registrar in writing the purposes
for and conditions under which ICANN intends to use the Personal Data. ICANN may
from  time  to time  provide  Registrar  with a  revised  specification  of such
purposes and conditions,  which  specification  shall become  effective no fewer
than thirty days after it is provided to Registrar. ICANN shall not use Personal
Data provided by Registrar for a purpose or under conditions  inconsistent  with
the  specification  in effect when the Personal Data were provided.  ICANN shall
take  reasonable  steps  to avoid  uses of the  Personal  Data by third  parties
inconsistent with the specification.

S. Miscellaneous.

     1. Assignment. Either party may assign or transfer this Agreement only with
     the  prior  written  consent  of  the  other  party,  which  shall  not  be
     unreasonably withheld,  except that ICANN may, with the written approval of
     the United States  Department of Commerce,  assign this agreement by giving
     Registrar  written notice of the assignment.  In the event of assignment by
     ICANN, the assignee may, with the approval of the United States  Department
     of Commerce,  revise the  definition  of  "Consensus  Policy" to the extent
     necessary  to  meet  the  organizational  circumstances  of  the  assignee,
     provided the revised  definition  requires that Consensus Policies be based
     on a demonstrated consensus of Internet stakeholders.

     2. No Third-Party  Beneficiaries.  This Agreement shall not be construed to
     create any obligation by either ICANN or Registrar to any non-party to this
     Agreement, including any SLD holder.

     3. Notices, Designations, and Specifications. All notices to be given under
     this Agreement  shall be given in writing at the address of the appropriate
     party as set forth below, unless that party has given a notice of change of
     address in writing.  Any notice  required by this Agreement shall be deemed
     to have  been  properly  given  when  delivered  in  person,  when  sent by
     electronic  facsimile,  or when  scheduled for delivery by  internationally
     recognized courier service.  Designations and specifications by ICANN under
     this  Agreement  shall be effective  when written  notice of them is deemed
     given to Registrar.

              If to ICANN, addressed to:

              Internet Corporation for Assigned Names and Numbers
              Registrar Accreditation
              4676 Admiralty Way, Suite 330
              Marina Del Rey, California 90292
              Telephone: 1/310/823-9358
              Facsimile: 1/310/823-8649

              If to Registrar, addressed to:

              FullWeb, Inc. d/b/a FullNic
              200 N. Harvey
              Suite 1704
              Oklahoma City, OK 73102
              Attention:  Jason Ayers
              Telephone Number: +1/405/236-8200
              Facsimile Number: +1/405/236/8201
              E-mail Address: [email protected]
                              -----------------

     4. Dates and Times.  All dates and times  relevant to this Agreement or its
     performance  shall be computed  based on the date and time  observed in Los
     Angeles, California, USA.

     5. Language. All notices,  designations, and specifications made under this
     Agreement shall be in the English language.

                                      -14-

<PAGE>

     6. Entire Agreement.  Except for any written transition  agreement that may
     be  executed   concurrently   herewith  by  both  parties,  this  Agreement
     constitutes  the entire  agreement of the parties hereto  pertaining to the
     subject matter hereof and supersedes all prior agreements,  understandings,
     negotiations and discussions, whether oral or written, of the parties.

     7.  Amendments and Waivers.  No amendment,  supplement,  or modification of
     this Agreement or any provision  hereof shall be binding unless executed in
     writing by both parties. No waiver of any provision of this Agreement shall
     be  binding  unless  evidenced  by a writing  signed  by the party  waiving
     compliance with such provision.  No waiver of any of the provisions of this
     Agreement  shall be  deemed  or shall  constitute  a  waiver  of any  other
     provision hereof,  nor shall any such waiver constitute a continuing waiver
     unless otherwise expressly provided.

     8.   Counterparts.   This   Agreement  may  be  executed  in  one  or  more
     counterparts,  each of which shall be deemed an original,  but all of which
     together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their duly authorized representatives.

INTERNET CORPORATION FOR ASSIGNED NAMES AND NUMBERS


By:__________________________
         Michael M. Roberts
         President and CEO


FULLWEB, INC. d/b/a FULLNIC
f/k/a ANIMUS COMMUNICATIONS, INC.



By:__________________________
         Jason Ayers
         President




                                      -15-


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<NAME>                        FullNet Communications, Inc
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