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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

þ   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the Fiscal Year Ended December 31, 2012

 

OR

 

o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

  COMPETITIVE COMPANIES, INC.  
  (Exact name of registrant as specified in its charter)  

  

Nevada   333-76630   65-1146821

(State or other jurisdiction of

incorporation or organization)

  (Commission File Number)  

(I.R.S. Employer

Identification Number)

 

19206 Huebner Rd., Suite 202

San Antonio, TX 78258

(Address of principal executive offices, including zip code)

 

(210) 233-8980

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:   None

 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock, $0.001 par value

 

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. 

Yes o No þ

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. 

Yes o No þ

 

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

Yes  þ No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

Yes  þ No o

 

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 

Yes o No þ

 

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

   

Large accelerated filer o Accelerated filer o
Non-accelerated filer o Smaller reporting company þ

   

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

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on December 31, 2012, based on a closing price of $0.007 was approximately $2,182,453 (computed by reference to the last sale price of a share of the registrant’s common stock on that date as reported by OTC Bulletin Board).

 

The number of shares of common stock, $0.001 par value, outstanding on March 05, 2013 was 326,804,045 shares.

 

 

 
 

 

FORWARD-LOOKING STATEMENTS

 

This document contains “forward-looking statements.”  All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

 

Forward-looking statements may include the words “May,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.  Additionally, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 most likely do not apply to our forward-looking statements as a result of us being a penny stock issuer.  You should, however, consult further disclosures we make in future filings of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

 

Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements.  Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.  The factors impacting these risks and uncertainties include, but are not limited to:

 

· Our current deficiency in working capital;

     

· Increased competitive pressures from existing competitors and new entrants;

 

· Inability to market our services to new customers;

 

· Inability to locate additional revenue sources and integrate new revenue sources into our organization;

 

· Adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

 

· Changes in U.S. generally accepted accounting principles (“GAAP”) or in the legal, regulatory and legislative environments in the markets in which we operate;

 

· Consumer acceptance of price plans and bundled offering of our services;

 

· Loss of customers or sales weakness;

 

· Technological innovations causing our technology to become obsolete;

 

· Inability to efficiently manage our operations;

 

· Inability to achieve future sales levels or other operating results;

  

· Inability of management to effectively implement our strategies and business plan;

 

· Inability to protect or commercialize our proprietary technology;

 

· Key management or other unanticipated personnel changes;

 

· Shareholders may incur substantial dilution in their ownership of us as the result of the issuance of additional securities by us or through the conversion of outstanding convertible notes and the exercise of outstanding warrants;

 

· The unavailability of funds for capital or operating expenditures; and

 

· The other risks and uncertainties detailed in this report or inherent in our business.

 

For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see “Item 1A. Risk Factors” in this document.

 

 
 

 

COMPETITIVE COMPANIES, INC.

FOR THE FISCAL YEAR ENDED

DECEMBER 31, 2012

 

Index to Report on Form 10-K

 

  Page
PART I  
Item 1 Business 1
Item 1A Risk Factors 9
Item 1B Unresolved Staff Comments 13
Item 2 Properties 13
Item 3 Legal Proceedings 13
Item 4 Mine Safety Disclosures 13
     
PART II  
Item 5 Market for Registrant’s Common Equity and Related Stockholder Matters, and Issuer Purchases of Equity Securities 14
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 15
Item 8 Financial Statements and Supplementary Data 19
Item 9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 20
Item 9A Control and Procedures 20
Item 9B Other Information 21
     
PART III  
Item 10 Directors, Executive Officers, and Corporate Governance 22
Item 11 Executive Compensation 26
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 28
Item 13 Certain Relationships and Related Transactions, and Director Independence 28
Item 14 Principal Accounting Fees and Services 28
     
PART IV  
Item 15 Exhibits, Financial Statement Schedules 30
SIGNATURES   31

 

 
 

 

PART I

 

Item 1.  Business.

 

The Company

 

Competitive Companies, Inc. (the “Company” or “CCI”) was originally incorporated in the state of Nevada in October 2001 and acts as a holding company for its operating subsidiaries, Competitive Communications, Inc., Wytec International, Inc., Wytec International, Inc., Wylink, Inc., Wireless Wisconsin LLC (formerly DiscoverNet, Inc.), Innovation Capital Management, Inc. (ICM) and Innovation Capital Management LLC (ICMLLC) (collectively, the “Subsidiaries”). The Company and its Subsidiaries (sometimes also collectively referred to as “CCI”) are involved in providing next generation fixed and mobile wireless broadband Internet services nationally and internationally to both wholesale and retail customers. However, the Company’s recent developments in municipal and governmental relationships, patent portfolio development and new leadership in key personnel, we are shifting a significant balance of our focus to delivering an aggregation of unique services. These services are in support of the expanding concept of “intelligent/smart city” development. Included in these unique services are the Company’s optimization strategies for assisting municipalities in leveraging current assets for maximum utilization to their communities.

 

We accomplish these objectives by applying proprietary carrier-grade technology while maintaining a vendor agnostic position. The benefits of this position allow CCI to continually perform its in-depth due-diligence and constantly assess next generation technology. This allows the Company to meet one of its primary Core Values of “delivering tomorrow’s solutions today”.

 

CCI is currently in high-level discussions with seven U.S. city governments including Columbus, Ohio where the Company is constructing a 4G Wi-Fi Pilot Project in conjunction with the Department of Technology utilizing key buildings in Columbus including the Center of Science and Industry (COSI). This is the second phase of a three phase Project. The first phase, which occurred on December 5, 2012, involved a 4G Wi-Fi “speed test” which resulted in the delivery of mobile 4G Internet speeds in excess of 100 megabits per second (Mbit/s) for high mobility communication to a smart phone and smart device. In addition to its record breaking 4G mobile broadband speeds, CCI’s network infrastructure is capable of delivering bandwidth services ranging from 5 megabits per second up to 1.5 gigabits per second to midsize and large corporate operations located in Tier One, Tier Two, and Tier three cities throughout the United States. CCI deploys next generation millimeter wave technology in the design of its backbone configuration to support its overall network objectives. As a result of our successful 4G speed test, interest was initiated by two major carriers through the City of Columbus requesting additional information on test capabilities. Carrier capability interest included throughput speeds in a mobile environment, load balancing for multiple users and a “seamless” handoff of customer activity with preservation of data collection. The final results are being incorporated into the current WiFi Pilot Program and will help in the ultimate design of a “carrier offload” service.

 

Wireless Wisconsin, LLC provides high speed wireless Internet connections to residents in rural communities, as well as some dial-up internet services to businesses and residents within various markets throughout rural Wisconsin.  We operate in both a regulated and non-regulated environment. Our current plan now includes the delivery of 4G mobile broadband services via WiFi in major and rural markets throughout the United States.

 

Wytec International, Inc. designs, manufactures and installs next generation “proprietary” carrier-class Wi-Fi solutions to Mobile Service Operations (MSO’s), National Telecommunications Operators (NTO’s) and corporate enterprises. Wytec owns five world class patents held in a partnership with General Patent Corporation focused on high capacity millimeter wave technology. The Company plans to develop its future network infrastructure utilizing the third generation of its multi-channeling patented technology known as Causeway III™ representing over fifteen years of design, development and installation. The Company has most recently engaged Southwest Research Institute, one of the largest research facilities in the world, to assist in the design of its next generation of millimeter wave enhancements utilizing multi-channeling technology.

 

1
 

 

Wylink Inc., a wholly owned subsidiary of Wytec, operates and manages a unique sales organization engaged in the sale of FCC Registered Links participating in the 70 and 80 gigahertz licensed frequency program (the “Program”). The Program allows qualified individuals to own a segment of the “backhaul” infrastructure of the Company’s city-wide business deployment. A total of eight cities have been chosen for initial deployment of the Company’s Registered Link Program. The first market, Columbus, Ohio has most recently sold out of its Registered Links representing 52 Links averaging $25,000 per Link totaling $1,300,000 in sales. Sales for markets two through eight have already begun with enthused participation. Each market is chosen carefully with multiple considerations including local government acceptance and select city participation. Participation includes access point real estate and fiber optics positioning. Wylink’s management estimates Wylink’s total sales for 2013 will be 200 Registered Links in eight markets averaging $28,000 per Link totaling approximately $5,600,000 of projected revenue. There is no assurance, however, as to whether or not Wylink will sell more Registered Links or how many Registered Links Wylink will sell in 2013. Furthermore, with each Registered Link it sells, Wylink incurs liability to provide and install telecommunications equipment at its cost for the Link owner, and monthly lease payments for access to a portion of the Link’s capacity.

 

Innovation Capital Management, Inc., (“ICM, Inc.”) operates as the Company’s private equity placement division focused on raising capital and developing joint ventures and acquisitions while Innovation Capital Management, LLC (“ICM LLC”) focuses on structuring strategic marketing relationships for the Company’s products and services. ICM is currently managing the issuance of a five (5) million dollar private placement offering for Wytec International, Inc. The offering consists of Convertible Secured Notes of Wytec and is secured by an unperfected security interest in Wytec’s share of net proceeds from the licensing, enforcement and commercial use of its five (5) patents covering Local Multipoint Distribution Service (LMDS) technology. The conversion price is $0.01 per share and the notes bear simple interest at the rate of 12% per annum. As of March 1, 2013, Wytec had issued $430,000 of its convertible notes and expects to fully subscribe the offering by August 2013, although there is no assurance as to how much capital Wytec will raise from its offering of notes.

 

Products

 

Wireless Wisconsin LLC

 

CCI, through its wholly owned subsidiary, Wireless Wisconsin LLC, currently provides residential customers in Western Wisconsin dial-up, DSL, and wireless broadband services.  Both DSL and dial-up internet are provided via a wholesale relationship with Ikano Wholesale.  This wholesale relationship provides multiple territory access to many markets throughout North America and allows CCI to expand its coverage nationwide.  The Company’s local “fixed” broadband wireless services are currently restricted to areas located in western Wisconsin with plans to include mobile 4G Internet access and expand to other Wisconsin markets utilizing millimeter wave backhaul technology.

   

Wytec International, Inc.

 

Product sales for CCI are performed through its wholly owned subsidiary, Wytec International, Inc. and include proprietary equipment under the Company’s Original Equipment Manufacturer (OEM) relationships. Future equipment sales will include the Company’s patented multi-channeling technology for both licensed and unlicensed spectrum configured for both point to point and point to multipoint network configuration. Primary sales are currently being achieved through Wytec’s wholly owned subsidiary, Wylink, Inc., designed to promote the business opportunity afforded under the FCC 70-80 GHz allocation program. In essence, Wylink promotes and sells the opportunity for a qualified applicant to own and operate its own Registered Link established as a part of the CCI backhaul network. Link Owners receive income from subscribers of the Link including CCI’s commitment to support its Wi-Fi network. To date, Wylink has sold 57 Registered Links at $25,000 per Link representing total sales to date of $1,425,000 with total funded sales of 42 Registered Links at $1,050,000. Each sale consists of point to point OEM equipment, installation and lease for up to 25% of the capacity of the Link. The Company has authorized a total of 200 Links to be sold for the eight selected markets for an average Link price of $28,500 which would represent approximately $5,700,000 in projected Registered Link sales if all 200 links were sold.

 

2
 

 

Currently CCI’s primary service product consists of Wylink’s FCC Registered Link application and registration service for the 70 and 80 Gigahertz FCC “protected frequency” supporting the backbone of CCI’s 4G Wi-Fi network. In addition to supporting its 4G mobile service, the network provides high capacity Internet to fixed wireless commercial Internet service providers. FCC Registered Links are capable of delivering at least one (1) Gigabyte or more of data throughput to multiple points throughout the network. This enables each point within the network to deliver 100 Mbps or more to the end user including mobile and fixed wireless customers. Service products include 4G Wi-Fi service to Mobile Service Operators (MSO’s), also known as “carriers”, hot spots, hot spot aggregators, hot zones such as special sports events and other large data capacity users.

 

Wylink, Inc.

 

As a subsidiary of Wytec International, Inc., Wytec, Inc. was developed as a partnership with General Patent Corporation (GPC) to hold the interest of Wytec’s five (5) world class patents involving multi-channeling technology and to provide protection and enforcement services to the value of its intellectual property. To date, no patent enforcement has been applied to Wytec’s interest in its patent portfolio.

 

Services

 

Mobile Service Operator (MSO)

As part of its network infrastructure planning and services to municipal governments, CCI has become a premier participant in the emerging $2.2 billion MSO Offload Services Industry. This Industry has only begun to be recognized over the past few years as a result of the massive data usage created by the continued advancement in smart phones and smart devices. As a result, MSO’s have begun experiencing unprecedented service interruptions (dropped calls) and slower internet speed due to the lack of licensed spectrum necessary to support the additional data demand. As mobile service quality has decreased, MSO’s have begun looking for solutions to overcome the lack of licensed spectrum. For the first time in the history of the telecommunications industry, MSO’s have now accepted unlicensed Wi-Fi spectrum as part of the solution. Thus Wi-Fi offload services have become a serious consideration to address the MSO licensed spectrum shortage.

 

CCI has embraced the accelerating offload services Industry with the development of its own proprietary Wi-Fi offload service to include both its patented LMDS backhaul technology and its exclusive Original Equipment Manufacturer (OEM) relationships to design, deploy and manage the fastest and most reliable network in America. Preliminary tests have now proven that the resulting CCI network will support end user speeds exceeding 100 Megabits per Second (Mbps) for a mobile device.

 

Consequently, what was considered a distance choice of consideration; Wi-Fi Offload, has become a primary consideration to remedy the data consumption issue. Carriers such as AT&T have now incorporated the Wi-Fi alternative with the development of more than 20,000 Hot Spots from which to “offload” its data traffic. Most, if not all other carriers, are following suit by offloading their data traffic to Hot Spot Aggregators who have accumulated relationships with multiple Hot Spot locations through data management software. It has been reported that carriers need to “offload” approximately 35% of their data traffic to deliver a quality experience to their 4G customers. Even with the Hot Spot offloading alternative, studies have shown that only about 3% of the 35% offload needs are being accomplished through Hot Spot alternatives.

 

CCI, through one of its operating subsidiaries, has developed another offloading alternative through the development of a city-wide “carrier-grade” Wi-Fi network utilizing a strategic approach involving a carrier agnostic relationship with city management. This agnostic relationship approach allows the utilization of key access point (AP) locations throughout the city for the expansion of data capacity through micro-cell development essential for carriers to deliver “true” 4G services throughout their entire coverage area. Additionally, it allows CCI to offer the same service to multiple carriers simultaneously through its unique 16 Service Set Identifier (SSID) technology. Currently, no other provider in the U.S. can offer this capability outside of CCI, giving the Company a unique differentiator and barrier to entry from its closest competitor. On December 5, 2012, CCI established a historical event in being the first in the United States to perform a true 4G delivery in Columbus, Ohio by transmitting 117 Mbps of throughput to a mobile device. This has now set the standard and caught the interest of multiple major carriers throughout the United States in considering CCI for its unique offload services. CCI management believes securing carrier interest to the level of securing a Wi-Fi offload service contract could still be a year in development. This is due to the fact that an acceptable business case for carrier offload charges are still in its infancy and requires sophisticated software to establish the case and the price charged for the service. CCI is in the process of developing this software and expects to complete it by the end of the second quarter of 2013.

 

3
 

 

Internet Services

 

CCI had been installing and offering high-speed internet service to selected apartment complex customers since May 2002.  It offered high-speed internet access services via DSL.  However, through open access rights provided to cable operators in early 2008, the Company was unable to compete with better capitalized cable providers and discontinued this service in 2009. Today the Company is primarily focused on delivering 4G mobile broadband utilizing millimeter wave technology rural markets across North America.

   

Principal Suppliers

 

During the year ended December 31, 2012, CCI, through its various subsidiaries had various suppliers for its dial up and high-speed internet connections offered through Ikano Wholesale.  More specifically, it has contracts with Ikano to supply its DSL and dial-up services while its circuits supporting its wireless access are provided by Charter.

 

Hot Spots, Hot Spot Aggregators and Hot Zones

 

New innovations in Wi-Fi have allowed the emergence of Hot Spots, defined generally as small commercial locations such as coffee shops, book stores and other retail locations in which a few or multiple people congregate for a relatively short period of time desiring an Internet connection to communicate or link with social or business needs while away from work. Hot Spots have become exceedingly popular over the past five years and now represent over one million locations across the world and estimated to exceed five million by 2015. Most recently, Hot Spots have become an acceptable data “offload” solution as MSO’s are experiencing an increase in dropped calls and voice degradation. As millions of Hot Spots are created throughout North America and internationally, new operators have emerged called Hot Spot Aggregators merging thousands of Hot Spots together utilizing software integration tools such as “Passport ™”. Passport enables Hot Spot subscribers to “roam” from one Hot Spot to another without losing connection. Though this has become an alternative solution to the MSO’s data capacity issues, it introduces an undesirable problem to the carriers in that when their customer utilizes this type of offload solution, the MSO loses contact with their customer and prevents the collection of valuable data characteristics desired by the MSO. Wi-Fi has also developed attractive options to providing high speed Internet solutions to large areas covering thousands of simultaneous connections for short periods of time such as sporting events, concerts and airports. These are known as Hot Zones and represent a lucrative market for Wi-Fi operators such as CCI. Management is already desined its network configuration to support Hot Spots, Hot Spot Aggregators and Hot Zones with a 1 to 1.5 gigabyte throughput service through its millimeter backhaul design thereby providing its award winning 4G service to all end users including MSO’s. Though CCI could directly work with an individual Hot Spot in providing high capacity Internet (throughput above 25 Mbps per customer), management believes it can secure a contract with one or more Hot Spot Aggregators representing several hundred Hot Spots into one contract.

 

In January of 2013, CCI contracted the consulting services of McKenna Long & Aldridge (http://www.mckennalong.com/practices-Global-Infrastructure-Public-Private-Partnerships.html) involving a unique Public-Private Partnership Program allowing CCI to rapidly expand its Central Business District deployment plan to include fifteen (15) U.S. cities by the end of 2013. Subsequently, CCI began working with Level 3 Communication to provide fiber optic access to all fifteen selected cities within the same time period. Level 3 Communications provides fiber optic access in 500 global markets in North America, EMEA, Latin America and Asia consisting of more than 100,000 fiber optic route miles.

 

4
 

 

Commercial Internet Services

 

Typically fiber optics is the primary delivery mechanism for high capacity Internet throughput exceeding 50 Megabits of Internet service to a commercial customer. With the latest advancement in millimeter wave service, however, a gigabit of Internet throughput is now available to more commercial users not able to receive fiber optic connections. Additionally, CCI is able to substantially reduce the cost of gigabit Internet service to commercial customers as compared to fiber optics due to the low cost of millimeter wave delivery and its unique city relationship program lowering the cost of access location expense. CCI plans to begin its pre-sale program to prospective high capacity Internet users in the first of its eight selected markets targeted to the Central Business District (CBD) in beginning in April of 2013. High capacity service sales will begin with those prospective commercial customers located within the backhaul network utilizing commercial buildings selected through its Registered Link Program. CCI believes that it can sell approximately 400 commercial clients within the eight selected cities averaging $500 per month per client representing total sales in 2013 of $1,800,000. There is no assurance, however, as to the amount of such sales, if any, that will be made by the Company in the future.

 

Millimeter Wave Technology

 

Wylink, Inc., a subsidiary of a CCI subsidiary, is in the business of preparing and filing with the Federal Communications Commission (“FCC”), Form 601-FCC Applications for Radio Service Authorization (“Application”) for the purpose of obtaining the use of “millimeter wave” spectrum in the 71-76 GHz, 81-86 GHz and 92-95 GHz bands on a shared basis with Federal Government operations. The FCC adopted a flexible and innovative regulatory framework for the 71-95 GHz bands that would not require traditional frequency coordination among non-Federal Government users. Rights with regard to specific links will be established based upon the date and time of “Link Registration.” Once a license has been obtained under the Registered Link Program, the license holder must register GPS coordinates on a Point to Point Link with an FCC Certified Database Manager to receive FCC frequency protection under the Link registration. Frequency holders may register as many Links as desired but must establish an “operating” link, determined by connecting proper radio equipment at each end of the Link, within one (1) year of registration. Wylink, Inc. performs at its expense the license and registration of Links on behalf of Link Holders and agrees to establish a lease on a minimum portion of its capacity.

 

Wylink has now organized its operations to 1) prepare and file one or more applications for the 70-80 GHz license, 2) register Link (s) utilizing point to point coordinates, and 3) provide necessary telecommunications equipment to secure FCC frequency protection under the Link Program.

 

Wylink, Inc. is a wholly owned subsidiary of Wytec International, Inc., a developer and owner of five (5) world class patents directly related to LMDS technology and currently developing its next generation of point to point and point to multipoint millimeter equipment technology in the multiple millimeter frequencies 71-76, 81-86 and 92-95 GHz bands. When it becomes available, Wylink plans to include Wytec International, Inc. along with two (2) other qualified equipment vendors operating in the aforementioned millimeter bands as an equipment supplier for prospective link holders, including its parent company, CCI.

 

There are currently multiple service providers and bandwidth brokers operating in the millimeter spectrum desiring broadband capacity for delivery on a point to point and point to multipoint connection.

 

5
 

 

Competition and Market Overview

 

CCI is transitioning into providing professional, technical and management telecommunications support services to a wide range of market types including municipalities, governments, education, large venues, transportation and similar sectors desirous and/or planning a “Smart/Intelligent” City infrastructure. The telecommunications industry is highly competitive, rapidly evolving, and subject to technology changes. Additionally, there are numerous telecommunications service companies that conduct extensive advertising campaigns to capture market share. CCI believes that the principal competitive factors affecting its business will be the continued advancement of private/public partnership development, competitive pricing levels, network performance, speed and data capacity efficiency, customer service, and the variety of data plans offered. Its ability to compete effectively will depend upon its continued ability to maintain high-quality, market-driven services at prices generally equal to or below those charged by competitors. To maintain a competitive posture, CCI believes that it must be in a position to reduce its prices in order to meet reductions in rates, if any, by others. Any such reductions could reduce profitability and make it cost prohibitive to continue as a going concern. Many of CCI’s current and potential competitors have financial, personnel, and other resources, including brand name recognition, greater than ours, as well as other competitive advantages.

 

Within the telecommunications industry sector, CCI competes principally with traditional local phone companies serving an area, such as AT&T, BellSouth, and Verizon. While these types of providers have name recognition, CCI utilizes next generation technology to offer competitive pricing in various products and services related to 4G mobile broadband services. The Company is currently marketing these products through Wylink but has not achieved and does not expect to achieve a significant market share for any of its resale services in the short run. Recent regulatory initiatives allow newer local phone companies to connect with traditional local phone company facilities. Although this provides increased business opportunities for CCI, such connection opportunities have been, and likely will continue to be, accompanied by increased pricing flexibility for and relaxation of regulatory oversight of the traditional local telephone companies.

 

Traditional local telephone companies have long-standing relationships with regulatory authorities at the federal and state levels. While recent FCC administrative decisions and initiatives provide for increased business opportunities to telecommunication providers such as CCI, they also provide the traditional local telephone companies with increased pricing flexibility for their private line, special access and switched access services. However, Wireless Internet and VoIP services are currently non-regulated and cost much less than the standard hardwire services offered by the local phone companies.

 

6
 

 

Mobile 4G Broadband

 

Mobile 4G Broadband has become a $30 billion Industry and projected to surpass $50 billion by 2015. The uptake of this growing industry has put substantial strain on the existing spectrum infrastructure necessary to support the growth of the industry. According to the Federal Communications Commission's estimates, the US will consume its entire available spectrum by 2013.  Lack of new spectrum being made available is a serious concern to wireless data carriers as this will directly affect their growth plans and dynamics of the industry. A spectrum crunch will adversely affect the smartphone data traffic, which is growing exponentially beyond its capacity to support new customers.

 

The spectrum crunch also threatens to affect the service quality as it may lead to an increase in the number of dropped calls, slow down data speeds and raise customers' prices. Even though the US still has a slight spectrum surplus, the demand will inevitably exceed the available spectrum in a couple of years.  

 

A significant portion of the solution to this growing problem is being recognized by numerous experts as greater involving in millimeter technology representing the “upper band” frequencies between 29 GHz to 300 GHz. CCI’s patented technology involves development in these ranges and plans to introduce new technology capable of accepting a significant portion of the data traffic contributing to the Spectrum Crisis. CCI is now introducing new network designs utilizing its 70-90 GHz backhaul solutions connected to “microcell” networks capable of receiving “off-load” traffic from the major carriers in hopes of reducing the stress on voice traffic.

 

Customers

 

During the years ended December 31, 2012 and 2011, virtually all revenues were derived from internet access services provided by Wireless Wisconsin in Eau Claire, Wisconsin, with total sales in 2011 of $118,941 and $85,889 in 2012. Sales of $727,500 for Registered Link sales in 2012 are deferred at December 31, 2012 until all services to the customer are completed.

 

Intellectual Property

 

CCI, through its acquisition of 100% of the shares of Wytec International, Inc., owns five (5) patents directly related to LMDS or millimeter technology. The Company is currently in the process of developing its generation of the technology to include substantial improvements in software integration and multiple millimeter frequencies. The Company, through its acquisition of Innovation Capital Management, acquired 100% of its proprietary software rights to its RUS Application Program. This program essentially automates the application process for submission to RUS funding offered through the Department of Agriculture. To date, it has only submitted one application to RUS which was subsequently declined. However, the Company is making modifications to the software and expects to submit new applications with better results in the future.

  

Personnel

 

As of December 31, 2012, we had six (6) full-time employees.  Currently, there are no organized labor agreements or union agreements between us and our employees.

 

Assuming we are able to pursue additional revenue through acquisitions and/or strategic alliances with those companies we have planned for 2013, we anticipate an increase of personnel and may need to hire additional employees. In the interim, we intend to use the services of independent consultants and contractors to perform various professional services when appropriate. We believe the use of third-party service providers may enhance our ability to control general and administrative expenses and operate efficiently.

 

7
 

 

Governmental Approval and Regulation

 

CCI generally is subject to all of the governmental regulations that regulate businesses generally such as compliance with regulatory requirements of federal, state, and local agencies and authorities, including regulations concerning workplace safety, labor relations, and disadvantaged businesses.  In addition, the Company’s operations are affected by federal and state laws relating to marketing practices in the telecommunications industry.

 

Traditionally, telephone services have been subject to extensive state regulation, while internet services have been subject to much less regulation. VoIP has elements that resemble traditional telephone companies as well as those that resemble the internet. Therefore, VoIP did not fit into either existing framework of regulation and until recently operated in an environment that was largely free of regulation.

 

However, the Federal Communications Commission, U.S. Congress, and various state regulatory bodies have begun to assert regulatory authority over VoIP providers and on a continuous basis are evaluating how VoIP will be regulated in the future.  Some of the existing regulations for VoIP are applicable to the entire industry, while other rulings are limited to specific companies and/or categories of service.  At this point in time, the application of rules to CCI and its competitors is speculative.

 

Federal Regulation

 

The FCC has authority to regulate and implement provisions of the Telecommunications Act of 1996.  One of the provisions enacted by the FCC was the Universal Service Order, which requires telecommunications carriers providing interstate telecommunications services to periodically contribute to universal service support programs administered by the FCC.  The periodic contribution requirements to the Universal Service Funds are currently assessed based on a percentage of each contributor’s interstate end user telecommunications revenues reported to the FCC. The contribution rate factors are determined quarterly and carriers are billed for their contribution requirements each month based on projected interstate and international end-user telecommunications revenues, subject to periodic reconciliation.  We pass these contributions through as a part of our services.

 

The FCC is considering several proposals that would fundamentally alter the basis upon which the Universal Service Fund contributions are determined and the means by which contributions can be recovered from customers .  This may impact our service fees and the ability to recoup these contributions from our customers.

 

State Regulation

 

State regulatory agencies have jurisdiction when facilities and services are used to provide intrastate services. A portion of CCI’s current traffic may be classified as intrastate and therefore subject to state regulation.  CCI expects to offer more intrastate services as its business and product lines expand and state regulations are modified to allow increased local services competition. For other than shared tenant services, in order to provide intrastate services, CCI generally must obtain a certificate of public convenience and necessity from the state regulatory agency and comply with state requirements for telecommunications utilities, including state rate requirements.

   

State agencies require that CCI file periodic reports, pay various fees and assessments, and comply with rules governing quality of service, consumer protection, and similar issues. Although the specific requirements vary from state to state, they tend to be more detailed than the FCC’s regulation because of the strong public interest in the quality of basic local exchange service.  CCI will comply with all applicable state regulations, and as a general matter does not expect that these requirements of industry-wide applicability will harm the business. However, new regulatory burdens in a particular state may affect the profitability of services in that state.

 

8
 

 

Local Regulation

 

CCI’s networks are subject to numerous local regulations such as building codes and licensing.  Such regulations vary on a city-by-city and county-by-county basis.  If CCI decides in the future to install its own fiber optic transmission facilities, it will need to obtain rights-of-way to publicly owned land.  Since CCI is an approved public utility, such rights-of-way may be available to the Company on economically reasonable or advantageous terms.

 

Item 1A.  Risk Factors.

 

Risks Relating with Our Business and Marketplace

 

We have incurred losses since inception and expect to incur losses for the foreseeable future. In addition, our poor financial condition raises substantial doubt about our ability to continue as a going concern.

 

Our net operating losses for the years ended December 31, 2012 and 2011 was $1,180,587 and $542,001, respectively.  As of December 31, 2012, we only had $184,195 in cash available to finance our operations and a working capital deficit of $1,653,657.  Capital requirements have been and will continue to be significant, and our cash requirements have exceeded cash flow from operations since inception.  We are in need of additional capital to continue our operations and have been dependent on the proceeds of private placements of securities, issuances of convertible notes, and recent loans to from an officer to satisfy working capital requirements.  We will continue to be dependent upon the proceeds of future offerings or public offerings to fund development of products, short-term working capital requirements, marketing activities and to continue implementing the current business strategy.  There can be no assurance that we will be able to raise the necessary capital to continue operations.

 

Our ability to continue as a going concern is dependent on our ability to raise funds to finance ongoing operations; however we may not be able to raise sufficient funds to do so. Our independent auditors have indicated that there is substantial doubt about our ability to continue as a going concern over the next twelve months.  Because of these factors, an investor cannot determine if and when we will become profitable and therefore runs the risk of losing their investment.

 

If we are unable to obtain additional funding, our business operations will be harmed and our existing stockholders may suffer substantial dilution.

 

We may consider acquisitions of assets or other businesses. Any acquisition involves a number of risks that could fail to meet our expectations and adversely affect our profitability. For example:

 

· The acquired assets or business may not achieve expected results;
· We may incur substantial, unanticipated costs, delays or other operational or financial problems when integrating the acquired assets;
· We may not be able to retain key personnel of an acquired business;
· Our management’s attention may be diverted; or
· Our management may not be able to manage the acquired assets or combined entity effectively or to make acquisitions and grow our business internally at the same time.

 

If these problems arise we may not realize the expected benefits of an acquisition.

 

Without realization of additional capital, it would be unlikely for us to continue as a going concern.

 

As a result of our deficiency in working capital at December 31, 2012, and other factors, our auditors have included an explanatory paragraph in their audit report regarding substantial doubt about our ability to continue as a going concern.  The financial statements do not include any adjustments as a result of this uncertainty.  The going concern qualification may adversely impact our ability to raise the capital necessary for the continuation of operations.

 

9
 

 

Our limited resources may prevent us from retaining key employees or inhibit our ability to hire and train a sufficient number of qualified management, professional, technical and regulatory personnel.

 

Our success may also depend on our ability to attract and retain other qualified management and personnel familiar in telecommunications industry.  Currently, we have a limited number of personnel that are required to perform various roles and duties as a result of our limited financial resources.  We intend to use the services of independent consultants and contractors to perform various professional services, when appropriate to help conserve our capital.  However, if and when we determine to acquire additional personnel, we will compete for such persons with other companies and other organizations, some of which have substantially greater capital resources than we do.  We cannot provide any assurance that we will be successful in recruiting or retaining personnel of the requisite caliber or in adequate numbers to enable us to conduct our business.

 

We must adapt quickly to changes in technology .

 

Telecommunications is a rapidly evolving technology.  We must keep abreast of this technological evolution.  To do so, we must continually improve the performance, features and reliability of our equipment and related products.  If we fail to maintain a competitive level of technological expertise, then we will not be able to compete in our market.

 

Our inability to respond timely to technological advances could have an adverse effect on our business .

 

We must be able to respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis.  We can offer no assurance that we will be able to successfully use new technologies effectively or adapt our products in a timely manner to a competitive standard.  If we are unable to adapt in a timely manner to changing technology, market conditions or customer requirements, then we may not be able to successfully compete in our market.

 

We may not be able to repay our indebtedness .

 

We have substantial indebtedness to related parties and to unaffiliated third parties, as disclosed in more detail in our reports, financial statements and notes to financial statements filed with the Securities and Exchange Commission.  We cannot assure that we will be able to repay all or any of our indebtedness, or that the indebtedness does not and will not continue to have a material adverse impact on our financial condition, operating results and business performance, including but not limited to our ability to continue as a going concern.

 

We cannot assure that we will achieve profitability .

 

We cannot assure that we will be able operate profitability in the future.  We may not be able to successfully transition from our current stage of business to a stabilized operation having sufficient revenues to cover expenses.  While attempting to make this transition, we will be subject to all the risks inherent in a small business, including the needs to adequately service and expand our customer base and to maintain and enhance our current services.  Our future profitability will be affected by all the risk factors described herein.

  

We are exposed to various possible claims relating to our business and our insurance may not fully protect us.

 

We cannot assure that we will not incur uninsured liabilities and losses as a result of the conduct of our business.  We generally do not maintain theft or casualty insurance and have modest liability and property insurance coverage, along with workmen’s compensation and related insurance.  However, should uninsured losses occur, our shareholders could lose their invested capital.

 

10
 

 

We may face litigation in the future.

 

We may be involved in litigation in the future. The adverse resolution of such litigation to us could impair our ability to continue in business if judgment holders were to seek to liquidate our business through levy and execution.  We may incur substantial legal fees and costs in connection with future litigation.  If we fail in our defense to future pending actions, or become subject to a levy and execution on our assets and business, we could be forced to liquidate or to file for bankruptcy and be unable to continue in our business.  Investors who purchase shares of our common stock will be subject to the risk of total loss if the risks described herein are realized, because there may be insufficient assets with which to pay our debts, which would leave shareholders with no recovery.

 

The loss of the services of any or our management or key executives could adversely affect our business .

 

Our success is substantially dependent on the performance of our executive officers and key employees.  The loss of an officer or director could have a material adverse impact on us.  We are generally dependent upon our executive officer, William H. Gray, for the direction, management and daily supervision of our operations.

 

Our ability to protect our intellectual property is uncertain .

 

We own patents and may apply for additional patents in the future. There are no assurances that these applications will be approved or that any other person will not challenge the patents or attempt to infringe upon our proprietary rights.  If we are unable to protect our proprietary rights or if such rights infringe on the rights of others, our business would be materially adversely affected.

 

Competition from companies with already established marketing links and brand recognition to our potential customers may adversely affect our ability to introduce and market our products.

 

The telecommunications industry is highly competitive. Many of our current and potential competitors have financial, personnel and other resources, including brand name recognition, substantially greater than ours, as well as other competitive advantages over us.  Certain competitors may be able to secure product from vendors on more favorable terms, devote greater resources to marketing and promotional campaigns, and adopt more aggressive pricing than we will.  There can be no assurance we will be able to compete successfully against these competitors, which ultimately may have a materially adverse effect on our business, results of operations, financial condition and potential products in the future.

 

We may not be able to provide our products and services if we do not connect or continue to connect with the traditional carriers, our primary competitors.

 

As a competitive carrier, we must coordinate with traditional carriers so that we can provide local service to customers on a timely and competitive basis.  The Telecommunications Act created incentives for regional Bell operating companies to cooperate with competitive carriers and permit access to their facilities by denying such companies the ability to provide in-region long distance services until they have satisfied statutory conditions designed to open their local markets to competition.  The regional Bell operating companies in our markets are not yet permitted by the FCC to offer long distance services. These companies may not be accommodating once they are permitted to offer long distance service.  Currently AT&T is permitted to offer both local and long distance service in some of our mutual service areas, but we have not yet noticed any impact on our markets.

  

Many competitive carriers, including us, have experienced difficulties in working with traditional carriers with respect to initiating, connecting, and implementing the systems used by these competitive carriers to order and receive network elements and wholesale services and locating equipment in the offices of the traditional carriers.

 

If we cannot obtain the cooperation of a regional Bell operating company in a region, whether or not we have been authorized to offer long distance service, our ability to offer local services in such region on a timely and cost-effective basis will be harmed.

 

11
 

 

Risks Relating To Our Common Stock

 

If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

 

Companies trading on the OTC Bulletin Board, such as us, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board.  More specifically, FINRA has enacted Rule 6530, which determines eligibility of issuers quoted on the OTC Bulletin Board by requiring an issuer to be current in its filings with the Commission.  Pursuant to Rule 6530(e), if we file our reports late with the Commission three times in a two-year period or our securities are removed from the OTC Bulletin Board for failure to timely file twice in a two-year period then we will be ineligible for quotation on the OTC Bulletin Board for one year.  As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

   

Our internal controls are inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of CCI; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of CCI are being made only in accordance with authorizations of management and directors of CCI, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of CCI’s assets that could have a material effect on the financial statements.

 

We have a limited number of personnel that are required to perform various roles and duties. Furthermore, we have one individual, our Chief Executive Officer, who is responsible for monitoring and ensuring compliance with our internal control procedures. As a result, our internal controls are inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.

 

Because our common stock is deemed a low-priced “Penny” Stock, an investment in our common stock should be considered high risk and subject to marketability restrictions.

 

Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment of our common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:

   

· Deliver to the customer, and obtain a written receipt for, a disclosure document;
· Disclose certain price information about the stock;
· Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;
· Send monthly statements to customers with market and price information about the penny stock; and
· In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.

 

12
 

 

Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.

 

FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

 

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

 

Shareholders will experience dilution in their ownership of us.

 

Our board of directors has the authority to cause the Company to issue additional securities and convertible securities at such prices and on such terms as it determines in its discretion without the consent of the stockholders, including without limitation common stock, preferred stock, warrants and convertible notes.  The Company has issued securities to investors that have variable conversion prices, anti-dilution provisions and other adjustments for certain potentially dilutive transactions.  These provisions may be triggered, causing adjustments resulting in lower conversion prices and more securities outstanding, thereby causing existing shareholders to experience more dilution than originally anticipated when those securities were first issued by the Company.  Consequently, our shareholders are subject to the risk that their ownership in the Company will be substantially diluted in the future.

  

Item 1B.  Unresolved Staff Comments.

 

None.

  

Item 2.  Properties.

 

Our corporate headquarters are in San Antonio, Texas, where we lease approximately 3,395 square feet of office space for approximately $5,100 per month.  The lease expires on October 31, 2015, and has the Company has the ability to be extended on month to month basis at the end of the current lease term .

 

Our subsidiary’s operations are located in Eau Claire, Wisconsin, where we lease approximately 860 square feet of office and warehouse space for approximately $800 per month.  The lease expires on September 30, 2013, and we intend to re-lease the space.  

 

We do not intend to renovate, improve, or develop properties.  However, if and when definitive agreements are executed with potential acquisitions, we may expand our office space and/or locations.

 

We are not subject to competitive conditions for property and currently have no property to insure.  We have no policy with respect to investments in real estate or interests in real estate and no policy with respect to investments in real estate mortgages.  Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities.

  

Item 3.  Legal Proceedings.

 

None.

    

Item 4.  Mine Safety Disclosures.

 

Not Applicable.

 

13
 

 

PART II

 

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

 

Market Information

 

CCI’s common stock was approved for trading on the Financial Industry Regulatory Authority’s Over-the-Counter Bulletin Board market (OTC:BB) under the symbol CCOP on March 8, 2006.  Our common stock has traded infrequently on the OTC:BB, which severely limits our ability to locate accurate high and low bid prices for each quarter within the last two fiscal years. The range of high and low bid quotations for each fiscal quarter within the last two fiscal years was as follows:

 

  December 31, 2012 December 31, 2011
  High Low High Low
1 st Quarter $0.020 $0.005 $0.014 $0.008
2 nd Quarter $0.019 $0.004 $0.014 $0.004
3 rd Quarter $0.023 $0.002 $0.021 $0.002
4 th Quarter $0.012 $0.003 $0.017 $0.007

   

The above quotations reflect inter-dealer prices, without retail markup, mark-down, or commission and may not necessarily represent actual transactions.

 

As of March 05, 2013, there were approximately 674 record holders of our common stock, not including shares held in “street name” in brokerage accounts which is unknown. As of March 05, 2013, there were 326,804,045 shares of common stock outstanding on record.

 

We have never declared or paid dividends on our Common Stock and have no plan to do so in the immediate future.  

 

Equity Compensation Plan Information

 

We currently maintain a stock incentive plan in which common stock may be granted to employees, directors, and consultants.   The following table sets forth information as of December 31, 2012, regarding outstanding options granted under the plan and options reserved for future grant under the plan.

 

Plan Category   Number of shares to be issued upon exercise of outstanding stock options   Weighted-average exercise price of outstanding stock options   Number of shares remaining available for future issuance under equity compensation plans
             
Equity compensation plans approved by stockholders   -0-   -0-   -0-
             
Equity compensation plans not approved by stockholders   8,672,000   $0.09   1,328,000
             
Equity compensation plans not approved by stockholders   3,000,000   $0.01   30,000
             
Total   11,672,000   $0.07   1,358,000

 

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This plan is intended to encourage directors, officers, employees and consultants to acquire ownership of CCI’s common stock.  The opportunity is intended to foster in participants a strong incentive to put forth maximum effort for the Company’s continued success and growth, to aid in retaining individuals who put forth such effort, and to assist in attracting the best available individuals to CCI in the future.  

 

Unregistered Issuance of Equity Securities

 

The following are issuance of securities by us during the fiscal year ending December 31, 2012 in transactions exempt from registration that were not previously included in a Quarterly Report on Form 10-Q or in a 4Q Current Report on Form 8-K, all of which were issued for debt conversions: we issued 20,155,949 shares for conversions of $41,000 of debt from October 1 through December 17, 2012.

  

Issuer Purchases of Equity Securities

 

The Company repurchased a total of 2,570,000 of its equity securities during the fourth quarter ended December 31, 2011, of which 2,020,000 shares were on hand as of December 31, 2011. These shares were subsequently sold in January and February of 2012.

 

There were no similar transactions in 2012.

   

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

  

Overview of Current Operations

 

For the years ended December 31, 2012 and 2011, we incurred net losses of $1,035,566 and $1,024,814 respectively.  Our accumulated deficit at the end of December 31, 2012 was $7,196,846.  These conditions raise substantial doubt about our ability to continue as a going concern over the next twelve months.

 

Result of Operations for the Years Ended December 31, 2012 and 2011  

 

Revenues for the year ended December 31, 2012 was $85,889 compared to revenues of $118,941 for the year ended December 31, 2011. This resulted in a decrease in revenues of $33,052, or 28%.  Our revenues decreased in 2012 compared to 2011 due to the loss of market share to competing companies from cellular and satellite based technologies.  

 

Cost of sales for the year ended December 31, 2012 was $59,805, a decrease of $4,641, or 8%, from $55,164 for the year ended December 31, 2011.  Our cost of sales increased primarily due to costs incurred in the preparation of our forthcoming Registered Links Program from which we have not yet recognized revenues.

 

General and administrative expenses were $872,024 for the year ended December 31, 2012, as compared to $315,187 for the year ended December 31, 2011.  This resulted in an increase of $556,837 or 177%.  The increase in our general and administrative expenses was largely a result of developing new technologies that we expect will help increase future revenues and due to increased costs associated with our valuation of embedded derivatives within our convertible debentures.

 

15
 

 

Salary and wage expenses were $329,444 for the year ended December 31, 2012, versus $248,200 of salary and wage expenses for the year ended December 31, 2011, which resulted in an increase of $81,244, or 33%.  The increase in salary and wages is due to the increase in compensation of the current employees, along with the addition of higher level employees throughout the Company.

 

Depreciation and amortization expenses were $3,903 for the year ended December 31, 2012, versus $3,170 for the year ended December 31, 2011, resulting in a decrease of $733 or 23%.  The decreases are principally due to certain assets reaching the end of their depreciable life cycle.  We anticipate the replacement of these assets in the near future as funds become available.  

 

Other income is $321,248 for the year ended December 31, 2012, versus $-0- for the year ended December 31, 2011, resulting in an increase of $321,248 or 100%.  The increases are principally due to the write off of prior years outstanding payables.   We do not anticipate the occurrence of any payable writes offs in the future.  

 

Impairment of intangible assets for the year ended December 31, 2011 was $22,880. Our increase in impairment of intangible assets for the year ended December 31, 2011 is due to uncertainties in our ability to recognize future economic benefit from patents that were acquired in November of 2011 with the acquisition of Wytec International, Inc.  

 

Liquidity and Capital Resources

 

While we have raised capital to meet our working capital and financing needs in the past, additional financing is required in order to meet our current and projected cash flow deficits from operations and development of alternative revenue sources.  As of December 31, 2012, we had a working capital deficit of $1,653,657.  Our poor financial condition raises substantial doubt about our ability to continue as a going concern and we have incurred losses since inception and may incur future losses.

 

In 2011 we received a total of $589,500 in exchange for convertible debentures, coupled with 13,490,000 detachable common stock warrants with strike prices ranging from $0.0030 to $0.0210.

 

In 2012 we received a total of $491,000 in exchange for convertible debentures, coupled with 11,107,000 detachable common stock warrants with strike prices ranging from $0.0030 to $0.0210.

 

However, should we not be able to continue to secure additional financing when needed, we may be required to slow down or suspend our growth or reduce the scope of our current operations, any of which would have a material adverse effect on our business.

  

During the year ended December 31, 2011, the Company repurchased a total of 2,020,000 shares of common stock, at an aggregate cost of $15,624, of this amount, 1,800,000 shares totaling $14,580 was repurchased by a shareholder. The shares were subsequently delivered to the shareholder on February 23, 2012, as such, the $14,580 is presented within subscriptions payable on December 31, 2011. The Company improperly traded its own securities. When the impropriety was discovered the Company had liquidated its holdings, accounted for as treasury stock, and closed its brokerage account that was used to conduct the trades.  

 

Our future capital requirements will depend on many factors, including the expansion of our wireless internet services in rural markets; VoIP services; additional marketing of the (800) services; the cost and availability of third-party financing for development; addition of new revenue sources; and administrative and legal expenses.

 

We anticipate that we will incur operating losses in the next twelve months. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development.  Such risks for us include, but are not limited to, an evolving and unpredictable business model; recognition of additional revenue sources; and the management of growth. To address these risks, we must, among other things, expand our customer base, implement and successfully execute our business and marketing strategy, respond to competitive developments, and attract, retain and motivate qualified personnel.  There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

 

16
 

 

Going Concern

 

Our consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations, have an accumulated deficit of $7,196,846 and a working capital deficit of $1,606,419 at December 31, 2012, and have reported negative cash flows from operations over the last five years.  In addition, we do not currently have the cash resources to meet our operating commitments for the next twelve months.  The Company’s ability to continue as a going concern must be considered in light of the problems, expenses, and complications frequently encountered by entrance into established markets and the competitive nature in which we operate.

 

Our ability to continue as a going concern is dependent on our ability to generate sufficient cash from operations to meet our cash needs and/or to raise funds to finance ongoing operations and repay debt. However, there can be no assurance that we will be successful in our efforts to raise additional debt or equity capital and/or that our cash generated by our operations will be adequate to meet our needs. These factors, among others, indicate that we may be unable to continue as a going concern for a reasonable period of time.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Significant Accounting Policies

 

Revenue Recognition

Our main source of revenue currently is through the Company’s subsidiary, WW. Our revenue is recognized when persuasive evidence of an arrangement exists; delivery of our services has occurred; our price to our customer is fixed or determinable; and collectability of the sales price is reasonably assured. As such, we recognize revenues from our dial-up and broadband internet services in the month in which we provide services. Services provided but not billed by the end of the year are reflected as unbilled receivables in the accompanying consolidated balance sheets; likewise, services billed in advance for future months are reflected in deferred revenues in the accompanying consolidated balance sheets.

 

A secondary source of revenue is through the Company’s subsidiary, Wylink, where the sales of FCC Registered Links sales, as well as the necessary equipment and installation of the equipment, are sold to qualified individuals. Revenue is recognized once the link has been registered on behalf of the customer and the necessary equipment has been installed and is ready for use.

 

Property and Equipment

Property and equipment are stated at the lower of cost or estimated net recoverable amount. The cost of property and equipment is depreciated using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based on the following life expectancy:

 

Furniture and fixtures 5 years
Telecommunication equipment and computers 5 – 10 years
Leasehold improvements 7 years

 

17
 

 

Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which have extend the useful life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation and amortization are eliminated and any resulting gain or loss is reflected in operations.

 

Impairment of Long-Lived Assets

Long-lived assets held and used by the Company are reviewed for possible impairment whenever events or circumstances indicate the carrying amount of an asset may not be recoverable or is impaired. Recoverability is assessed using undiscounted cash flows based upon historical results and current projections of earnings before interest and taxes. Impairment is measured using discounted cash flows of future operating results based upon a rate that corresponds to the cost of capital. Impairments are recognized in operating results to the extent that carrying value exceeds discounted cash flows of future operations. The Company incurred impairment losses on intangible assets of $-0- and $22,880 for the years ended December 31, 2012 and 2011, respectively.

 

Derivative Financial Instruments

The Company utilizes various types of financing to fund our business needs, including convertible debts with conversion features and other instruments not indexed to our stock. The convertible notes include fluctuating conversion rates. The Company uses a lattice model for valuation of the derivative described in Note 11. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and then re-valued periodically, with changes in the fair value reported in income in accordance with ASC 815. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net cash settlement of the derivative instrument could be required within the 12 months of the balance sheet date.

 

Stock-Based Compensation

All share based-based payments to service providers or employees, including grants of employee stock options, are recognized in the income statement based upon their fair values. Stock issued for services and compensation was $31,684 and $34,991 for the year ended December 31, 2012 and 2011, respectively.

 

18
 

  
Item 8.  Financial Statements and Supplementary Data

 

COMPETITIVE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

 

CONTENTS

 

    

Reports of Independent Registered Public Accounting Firms F-1
   
Consolidated Balance Sheets as of December 31, 2012 and 2011 F-2
   
Consolidated Statements of Operations for the years ended December 31, 2012 and 2011 F-3
   
Consolidated Statement of Stockholders’ (Deficit) for the years ended December 31, 2012 and 2011 F-4
   
Consolidated Statements of Cash Flows for the years ended December 31, 2012 and 2011 F-5
   
Notes to Consolidated Financial Statements F-6

 

 

 

 

 

 

 

 

19
 

 

Report of Independent Registered Public Accounting Firm



To the Board of Directors and Stockholders
Competitive Companies, Inc.


We have audited the accompanying consolidated balance sheet of Competitive Companies, Inc. and subsidiaries (collectively, the “Company”) as of December 31, 2012, and the related consolidated statements of operations, stockholders' (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Competitive Companies, Inc. and subsidiaries as of December 31, 2012, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has insufficient working capital and stockholders’ deficit, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ Padgett, Stratemann & Co., L.L.P.
San Antonio, Texas 

March 27, 2013

 

F-1
 

  

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  

To the Board of Directors

Competitive Companies, Inc.

 

We have audited the accompanying balance sheet of Competitive Companies, Inc. as of December 31, 2011 and the related statements of operations, changes in stockholders’ (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Competitive Companies, Inc. as of December 31, 2011, and the results of its operations, changes in stockholders’ (deficit) and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has insufficient working capital, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

April 16, 2012

 

F-2
 

 

COMPETITIVE COMPANIES, INC.

CONSOLIDATED BALANCE SHEETS

  

   December 31,   December 31, 
   2012   2011 
 Assets          
           
 Current assets:          
 Cash  $184,195   $142,474 
 Accounts receivable, net   1,620    1,542 
 Prepaid expenses       20,708 
Total current assets   185,815    164,724 
           
 Property and equipment, net   40,335    5,651 
           
 Other assets:          
 Deposits and other assets   6,903    3,003 
           
Total assets  $233,053   $173,378 
           
           
 Liabilities and Stockholders' (Deficit)          
           
 Current liabilities:          
 Accounts payable  $84,610   $343,430 
 Accrued expenses   169,918    166,406 
 Customer deposits       39,913 
 Deferred revenues, net of commissions   727,500    4,482 
 Notes payable   67,006    67,006 
 Convertible debentures, net   693,796    409,236 
 Derivative liabilities   96,642    392,519 
 Total current liabilities   1,839,472    1,422,992 
           
Total liabilities   1,839,472    1,422,992 
           
 Stockholders' (deficit):          
Preferred stock, $0.001 par value 100,000,000 shares authorized:          
Class A convertible, no shares issued and outstanding with no liquidation value        
Class B convertible, 1,495,436 shares issued and outstanding with no liquidation value   1,495    1,495 
Class C convertible, 1,000,000 shares issued and outstanding with no liquidation value   1,000    1,000 
Common stock, $0.001 par value, 500,000,000 shares authorized, 311,779,045 and 207,837,771 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively   311,778    207,838 
Additional paid-in capital   5,276,154    4,682,337 
Subscriptions payable, 0 shares and 3,910,000 shares at December 31, 2012 and December 31, 2011, respectively       34,620 
Accumulated (deficit)   (7,196,846)   (6,161,280)
Treasury stock, at cost, -0- and 2,020,000 shares at December 31, 2012 and December 31, 2011, respectively       (15,624)
Total stockholders' (deficit)   (1,606,419)   (1,249,614)
           
Total liabilities and stockholders' (deficit)  $233,053   $173,378 

 

See accompanying notes to financial statements.

 

F-3
 

 

COMPETITIVE COMPANIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

  

   For the Years 
   Ended December 31, 
   2012   2011 
         
Revenue  $85,889   $118,941 
Cost of sales   59,805    55,164 
           
Gross profit   26,084    63,777 
           
Expenses:          
General and administrative   872,024    315,187 
Salaries and wages   329,444    248,200 
Depreciation and amortization   3,903    3,170 
Bad debts   1,300    16,341 
Impairment of intangible assets       22,880 
Total operating expenses   1,206,671    605,778 
           
Net operating loss   (1,180,587)   (542,001)
           
Other income (expense):          
Interest income       238 
Interest expense   (232,791)   (212,537)
Other income   321,248     
Change in fair market value of derivative liabilities   56,564    (270,514)
Total other income (expense)   145,021    (482,813)
           
Net loss  $(1,035,566)  $(1,024,814)
           
Weighted average number of common shares outstanding - basic and fully diluted   258,393,503    154,279,533 
           
Net loss per share - basic and fully diluted  $   $(0.01)

 

See accompanying notes to financial statements.

 

F-4
 

 

COMPETITIVE COMPANIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

  

   For the Year 
   Ended December 31, 
   2012   2011 
         
Cash flows from operating activities          
Net loss  $(1,035,566)  $(1,024,814)
Adjustments to reconcile net loss to net cash used in operating activities:          
 Amortization of convertible notes payable discounts   199,560    175,368 
 Bad debts expense (recoveries)   1,300    16,341 
 Impairment of intangible assets       22,880 
 Change in fair market value of derivative liability   (56,564)   270,514 
 Common stock issued for services   31,684    34,991 
 Depreciation and amortization   3,903    3,170 
 Decrease (increase) in assets:          
 Accounts receivable   (1,378)   (15,069)
 Prepaid expenses   20,708    (17,913)
 Increase (decrease) in liabilities:          
 Accounts payable   (258,820)   (3,112)
 Accrued expenses   3,512    95,428 
 Customer deposits   (39,913)    
 Deposits and other assets   (3,900)    
 Deferred revenues   723,018    (5,070)
Net cash used in operating activities   (412,456)   (447,286)
           
Cash flows from investing activities          
 Purchases of property and equipment   (38,587)    
 Payments on acquisition of intangible assets       (18,900)
Net cash used in investing activities   (38,587)   (18,900)
           
Cash flows from financing activities          
 Proceeds from short term and convertible debts   491,000    589,500 
 Sale (purchase) of treasury stock   1,764    (964)
Net cash provided by financing activities   492,764    588,536 
           
Net increase in cash   41,721    122,350 
Cash - beginning   142,474    20,124 
Cash - ending  $184,195   $142,474 
           
Supplemental disclosures:          
 Interest paid  $232,791   $2,000 
 Income taxes paid  $   $ 
           
Non-cash investing and financing activities:          
 Value of shares issued for conversion of debt  $325,046   $200,033 
 Shares issued for rescission of Voice Vision agreement  $   $2,000 
 Warrants purchased for purchase of intangible assets  $   $4,398 
 Treasury stock purchased with common stock payable  $   $14,580 
 Value of derivative adjustment due to debt conversions  $320,367   $326,130 
 Debt discounts  $80,954   $263,543 

 

See accompanying notes to financial statements.

 

F-5
 

 

COMPETITIVE COMPANIES, INC.

CONDENSED STATEMENT OF STOCKHOLDERS' (DEFICIT)

 

    Common Stock    

Class A

Preferred Stock

   

Class B

Preferred Stock

   

Class C

Preferred Stock

   

Treasury Stock

    Additional      Subscriptions      Accumulated     Total Stockholders’  
    Shares     Amount     Shares     Amount      Shares     Amount     Shares     Amount     Shares     Amount    

Paid-in
   

Payable
   

(Deficit)
   

 (Deficit)
 
Balance, December 31, 2010     130,263,732     $ 130,264           $       1,495,436     $ 1,495       1,000,000     $ 1,000           $     $ 4,216,717     $ 2,000       (5,136,466 )   $ (784,990 )
                                                                                                                 
Shares issued for conversion of debts     75,924,039       75,924                                                         124,109                   200,033  
                                                                                                                 
Shares issued for services     1,650,000       1,650                                                         15,301       18,040             34,991  
                                                                                                                 
Adjustment to derivative liability due to debt conversions                                                                   326,130                   326,130  
                                                                                                                 
Purchase of treasury stock                                                       2,020,000       (156,524 )     80       14,580             (964 )
                                                                                                                 
Net loss for the year ended December 31, 2011                                                                               (1,024,814 )     (1,024,814 )
                                                                                                                 
Balance, December 31, 2011     207,837,771     $ 207,838           $       1,495,436     $ 1,495       1,000,000     $ 1,000       2,020,000       (15,624 )   $ 4,682,337     $ 34,620       (6,161,280 )   $ (1,249,614 )
                                                                                                                 
Shares issued for conversion of debts     97,073,466       97,072                                                       222,484       5,490             325,046  
                                                                                                                 
Shares issued for services     4,150,000       4,150                                                       27,534                   31,684  
                                                                                                                 
Shares Issued for Subscription Payable     2,717,808       2,718                                                       22,812       (25,530 )            
                                                                                                                 
Adjustment to derivative liability due to debt conversions                                                                 320,267                   320,267  
                                                                                                                 
Sale of treasury stock                                                     (2,020,000 )     15,624       720       (14,580 )           1,764  
                                                                                                                 
Net loss for the year ended December 31, 2012                                                                             (1,035,566 )     (1,035,566 )
                                                                                                                 
Balance, December 31, 2012     311,779,045     $ 311,778           $       1,495,436     $ 1,495       1,000,000     $ 1,000           $     $ 5,276,154     $     $ (7,196,846 )   $ (1,606,419 )

 

See accompanying notes to financial statements.

 

F-6
 

 

Note 1 – Nature of Business and Significant Accounting Policies

 

Description of Business

Through the Company’s subsidiary, Wisconsin Wireless, LLC, the Company’s primary operations consist of providing high speed wireless Internet connections to residents in rural communities, as well as some dial-up internet services to businesses and residents within various markets throughout rural Wisconsin. The Company operates in both a regulated and non-regulated environment.

 

The Company's headquarters are located in San Antonio, Texas.

 

Use of Estimates

The preparation of consolidated financial statements in accordance with generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent asset and liabilities at the date of the consolidated financial statements. The reported amounts of revenue and expenses during the reporting period may be affected by the estimates and assumptions we are required to make. Actual results could differ significantly from our estimates.

 

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the following entities:

  

        State of       Abbreviated
Name of Entity (1)   Form of Entity   Incorporation   Relationship (2)   Reference
Competitive Companies, Inc.   Corporation   Nevada   Parent   CCI
Competitive Communications, Inc.(3)   Corporation   California   Subsidiary   COMM
CCI Residential, Inc.(3)   Corporation   California   Subsidiary   CCIR
Innovation Capital Management, Inc.   Corporation   Delaware   Subsidiary   ICMI
Innovation Capital Management, LLC   Limited Liability Corporation   Delaware   Subsidiary   ICML
Wireless Wisconsin, LLC   Limited Liability Corporation   Wisconsin   Subsidiary   WW
Wytec International, Inc.   Corporation   Texas   Subsidiary   WYTECI
Wylink, Inc.   Corporation   Texas   Subsidiary   WYLINK

 

(1) Certain non-operational holding companies have been excluded.

(2) All subsidiaries are wholly-owned .

(3) Inactive since discontinuing its operations in California in 2009

 

The consolidated financial statements herein contain the operations of the wholly owned subsidiaries listed above. All significant inter-company transactions have been eliminated in the preparation of these financial statements. The parent company, CCI and subsidiaries will be collectively referred to herein as the “Company”, or “CCI”.

 

On March 5, 2012, the Board of Directors approved the formation of a wholly owned subsidiary of one of the Company’s wholly owned subsidiaries, Wytec International, Inc. under the laws of the State of Texas. The entity, named “Wylink, Inc.”, was formed to develop a Registered Links Program, whereby we intend to sell point to point links between two known GPS coordinates that make up a part of a backhaul network feeding into a microcell mobile broadband network.

 

Revenue Recognition

Our main source of revenue currently is through the Company’s subsidiary, WW. Our revenue is recognized when persuasive evidence of an arrangement exists; delivery of our services has occurred; our price to our customer is fixed or determinable; and collectability of the sales price is reasonably assured. As such, we recognize revenues from our dial-up and broadband internet services in the month in which we provide services. Services provided but not billed by the end of the year are reflected as unbilled receivables in the accompanying consolidated balance sheets; likewise, services billed in advance for future months are reflected in deferred revenues in the accompanying consolidated balance sheets.

 

F-7
 

 

A secondary source of revenue is through the Company’s subsidiary, Wylink, where the sales of FCC Registered Links sales, as well as the necessary equipment and installation of the equipment, are sold to qualified individuals. Revenue is recognized once the link has been registered on behalf of the customer and the necessary equipment has been installed and is ready for use.

 

Allowance for Doubtful Accounts

We evaluate the allowance for doubtful accounts on a regular basis through periodic reviews of the collectability of the receivables in light of historical experience, adverse situations that may affect our customers' ability to repay, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Accounts receivable are determined to be past due based on how recently payments have been received and those considered uncollectible are charged against the allowance account in the period they are deemed uncollectible. The allowance for doubtful accounts was $4,100 and $2,800 at December 31, 2012 and 2011, respectively.

 

Property and Equipment

Property and equipment are stated at the lower of cost or estimated net recoverable amount. The cost of property and equipment is depreciated using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based on the following life expectancy:

 

Furniture and fixtures 5 years
Telecommunication equipment and computers 5 – 10 years
Leasehold improvements 7 years

 

Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which have extend the useful life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation and amortization are eliminated and any resulting gain or loss is reflected in operations.

 

Impairment of Long-Lived Assets

Long-lived assets held and used by the Company are reviewed for possible impairment whenever events or circumstances indicate the carrying amount of an asset may not be recoverable or is impaired. Recoverability is assessed using undiscounted cash flows based upon historical results and current projections of earnings before interest and taxes. Impairment is measured using discounted cash flows of future operating results based upon a rate that corresponds to the cost of capital. Impairments are recognized in operating results to the extent that carrying value exceeds discounted cash flows of future operations. The Company incurred impairment losses on intangible assets of $-0- and $22,880 for the years ended December 31, 2012 and 2011, respectively.

 

Fair Value of Financial Instruments

FASB ASC 820-10-05 establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The carrying amounts of cash, accounts payable and accrued expenses reported on the balance sheets are estimated by management to approximate fair value primarily due to the short term nature of the instruments. The Company had derivative liabilities that required fair value measurement on a recurring basis during the years ended December 31, 2012 and 2011.

 

Derivative Financial Instruments

The Company utilizes various types of financing to fund our business needs, including convertible debts with conversion features and other instruments not indexed to our stock. The convertible notes include fluctuating conversion rates. The Company uses a lattice model for valuation of the derivative described in Note 11. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and then re-valued periodically, with changes in the fair value reported in income in accordance with ASC 815. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net cash settlement of the derivative instrument could be required within the 12 months of the balance sheet date.

 

F-8
 

 

Basic and Diluted Loss per Share

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For 2012 and 2011, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

 

Stock-Based Compensation

All share based-based payments to service providers or employees, including grants of employee stock options, are recognized in the income statement based upon their fair values. Stock issued for services and compensation was $31,684 and $34,991 for the year ended December 31, 2012 and 2011, respectively.

 

Advertising

We expense advertising costs as they are incurred. These expenses approximated $51,626 and $23,927 for the years ended December 31, 2012 and 2011, respectively, of which $6,700 and $-0- consisted of stock based compensation pursuant to the issuance of a total of 1,000,000 and -0- shares, respectively.

 

Income Taxes

CCI recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. CCI provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.

 

Uncertain Tax Positions

In accordance with ASC 740, “Income Taxes” (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

 

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

 

Recent Accounting Pronouncements

The Company has reviewed the updates issued by the Financial Accounting Standards Board (“FASB”) during the year ended December 31, 2012, and determined that the updates are either not applicable to the Company or will not have a material impact on the Company.

  

Note 2 – Going Concern  

 

Our consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations, have an accumulated deficit of $7,196,846 and a working capital deficit of $1,653,657 at December 31, 2012, and have reported negative cash flows from operations over the previous seven years. In addition, we do not currently have the cash resources to meet our operating commitments for the next twelve months, and we expect to have ongoing requirements for capital investment to implement our business plan. Finally, our ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established markets and the competitive environment in which we operate.

 

F-9
 

 

Since inception, our operations have primarily been funded through private equity financing, and we expect to continue to seek additional funding through private or public equity and debt financing.

 

Our ability to continue as a going concern is dependent on our ability to generate sufficient cash from operations to meet our cash needs and/or to raise funds to finance ongoing operations and repay debt. However, there can be no assurance that we will be successful in our efforts to raise additional debt or equity capital and/or that our cash generated by our operations will be adequate to meet our needs. These factors, among others, indicate that we may be unable to continue as a going concern for a reasonable period of time.

 

Our consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

  

Note 3 – Asset Purchase Acquisitions  

 

On November 8, 2011, the Company entered into a stock purchase agreement (“SPA”) with MediaG3, Inc. (“MediaG3”) and its wholly owned subsidiary, Wytec, Incorporated (“Wytec”) (collectively, the “Seller”), pursuant to which CCI agreed to purchase 100% of the outstanding shares of Wytec International, Inc.’s (“Wytec International”) common stock from the Seller in consideration for (1) the issuance of a warrant to MediaG3 to purchase a number of shares of CCI’s common stock equal to a maximum of 45% of CCI’s total issued and outstanding shares of common stock on a fully diluted basis at an exercise price of $0.001 per share, exercisable on a cashless basis, subject to possible downward adjustment (the “Seller Warrant”), and (2) up to $1,000,000 of cash by an investment by CCI into MediaG3 of up to $1,000,000 for shares of the common stock of Media3G in a private placement. The number of shares of CCI common stock underlying the Seller Warrant was determined to be in the amount of 1,820,110 shares on April 9, 2012, based on a market appraisal (the “Valuation Report”) of the intellectual property owned by Wytec (the “Intellectual Property”). The Company has several convertible notes with embedded derivatives which cause the equity environment to be tainted and all convertible notes and warrants are included in the value of the derivative. As such, the warrant payment provided within the asset purchase agreement was included in the determination of our embedded derivative valuation.

 

Cash component of purchase price

The cash portion of the acquisition was valued at $18,900 based on the Buyer’s Investment Commitment Amount using the fair value of the patents as obtained by a qualified independent valuation specialist. As the fair value of the patents was determined to be less than $10 million, the number of MediaG3 Shares (“MDGC”) which the Company was obligated to purchase was determined by dividing $1 million by 90%of the average closing last sale price of Mediag3, Inc.’s common stock on the five trading days immediately prior to the valuation specialist’s report date, which resulted in a purchase price of $0.00058 per share and 32,586,207 shares of MDGC common stock, which totalled $18,900. The shares have not yet been delivered and there can be no assurance that they will, as a result, the fair value of any common stock receivable from Mediag3’s common stock was disregarded.

 

Warrant component of purchase price

The number of shares of the Company’s common stock underlying the warrants was determined on the valuation report date based on 45% of the total number of issued and outstanding shares of CCI’s common stock on the valuation report date, subject to certain limitations which adjusted the amount of warrant shares downward on a pro rata bsis to be equal to 0.8505% of the Company’s outstanding shares, or 1,820,110 shares, exercisable for 2 years from the report date at an exercise price of $0.001 per share. The fair value of the warrants was determined to be $4,398 using a Lattice model pursuant to embedded derivative valuations.

 

The fair market value of the warrants to purchase 1,820,110 shares at an exercise price of $0.001 was $4,398 as of December 31, 2011. Pursuant to the terms of the agreement, the cash portion of the acquisition was valued at $18,900, resulting in a combined purchase price of $23,298. The Company recognized $418 of amortization expense on the combined value of cash and warrants, of $23,298 during the year ended December 31, 2011. The remaining $22,880 was determined to be impaired due to uncertainties in the realization of a future economic benefit from the patents, and was expensed on December 31, 2011. This acquisition established Wytec International, Inc. as a wholly-owned subsidiary of Competitive Companies, Inc. and was accounted for as an asset purchase, given that Wytec’s sole assets consisted of the patent agreements and no other operations had been conducted within Wytec International, Inc. prior to the acquisition. No goodwill was recognized in accordance with accounting for the purchase of an asset.

 

The Company recognized $418 of amortization expense on the combined value of cash and warrants, of $23,298 during the year ended December 31, 2011. The remaining $22,880 was determined to be impaired due to uncertainties in the realization of a future economic benefit from the patents, and was expensed on December 31, 2011.

  

As part of the SPA, Wytec agreed to provide Media3G with a royalty free worldwide non-exclusive, non-transferrable, non-assignable, non-sublicensable license to use its patents in perpetuity in consideration for Media3G assisting Wytec with managing past, present, and future research and development of its patents; provided, all patent enhancements, improvements, and derivatives existing on the closing date of the SPA and developed in the future will be owned by Wytec and the Seller agreed to take any and all action necessary to assign such existing and future enhancements, improvements, and derivatives to Wytec.

  

 

F-10
 

 

Note 4 – Related Party

 

Treasury stock

During 2011, and for the first two months of 2012, the Company’s CEO bought and sold the Company’s own shares of common stock in the open market. These illegal trades were not considered arm-length transactions and the practice was terminated with the closure of the trading account in February of 2012. The trades have been recognized in treasury stock during the year ended December 31, 2011.

 

Employment agreements

On August 1, 2010, CCI entered into a three year employment agreement with the Company’s CEO, William Gray.  The terms of the agreement include a fixed annual salary of $120,000, payable bi-monthly, with annual increases of 7%, effective on January 1st of each year. In addition, Mr. Gray was granted a monthly automobile allowance of $500. The Company may elect to satisfy payment in shares of common stock in lieu of cash on a monthly basis using the average closing price for the 20 consecutive trading days immediately preceding the end of the month.

 

On July 1, 2010, CCI entered into an employment agreement with the Company’s President, Dr. Raymond Powers. The terms of the agreement included a fixed annual salary of $60,000, payable bi-monthly. Dr. Powers’ employment is “at will” and is terminable by either party upon notice. The employment agreement was terminated on August 15, 2011 commensurate with Mr. Powers’ resignation.

 

On August 15, 2011 Ray Powers resigned as President and Director. The Company has not yet appointed a replacement for Mr. Powers. Upon his resignation he was paid a one time payment $2,000 as a consultant.

 

Note 5 – Fair Value of Financial Instruments

 

Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

 

The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

 

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

 

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

 

Non-recurring Level 3 assets consist of Notes receivable as adjusted for a non-recurring adjustment of $18,105 for the impairment due to uncertainties regarding the future economic benefit during the year ended December 31, 2011, and the unamortized portion of intangible assets of $22,880 as adjusted on December 31, 2011 for a non-recurring impairment adjustment. Both of these assets were received pursuant to our acquisition of Wytec International, Inc. on November 8, 2011.

 

The Company’s derivative liabilities are measured at fair value and are classified as Level 3 in the fair value hierarchy. The fair value of the derivative liabilities was $96,642 and $392,519 at December 31, 2012 and 2011, respectively.

 

Note 6 – Notes Receivable  

 

In September 2011, the Company paid a total of $22,315 on investments in two convertible promissory notes to Mediag3, Inc. (MDGC.PK). The notes are due on demand and carry interest at 10% per annum. The principal and outstanding accrued interest is convertible into common stock of Mediag3, Inc. at a conversion price equal to one tenth of one cent ($0.001) per share. On November 10, 2011 the Company was partially repaid approximately $4,210 of principal when the proceeds were applied as a partial payment on an asset acquisition with Mediag3, Inc. in which Competitive Companies received the right to certain assets called the Wytec Assets. In accordance with ASC 310-10-35-17, we applied normal loan review procedures and determined it was probable all amounts due from our loan would not be collected due to the financial condition of the debtor. As a result, we recognized bad debts expense on the remaining balance of $18,105 during the year ended December 31, 2011.

 

F-11
 

 

On October 19, 2011 the Company paid $2,000 to Mediag3, Inc. (MDGC.PK) in exchange for an unsecured convertible promissory note that bears interest at 10% per annum and matures on November 17, 2012. The principal is convertible into shares of common stock at the discretion of the Company at a price equal to one tenth of one cent ($0.001). On November 10, 2011 the Company was repaid in full and the proceeds were applied as a partial payment on an asset acquisition with Mediag3, Inc. in which Competitive Companies received the right to certain assets called the Wytec Assets.

 

On October 26, 2011 the Company paid $5,000 to Mediag3, Inc. (MDGC.PK) in exchange for an unsecured convertible promissory note that bears interest at 10% per annum and matures on November 24, 2012. The principal is convertible into shares of common stock at the discretion of the Company at a price equal to one tenth of one cent ($0.001). On November 10, 2011 the Company was repaid in full and the proceeds were applied as a partial payment on an asset acquisition with Mediag3, Inc. in which Competitive Companies received the right to certain assets called the Wytec Assets.

 

We recognized interest income of $238 on these notes receivable during the year ended December 31, 2011.

 

The following depicts our note receivable activities during the year ended December 31, 2012 and 2011:

 

   December 31,   December 31, 
   2012   2011 
           
September 21, 2011, convertible note receivable due on demand, carrying interest at 10%, convertible into shares of Mediag3, Inc.’s common stock (MDGC.PK) at $0.001 per share.  $10,000   $10.000 
           
September 29, 2011, convertible note receivable due on demand, carrying interest at 10%, convertible into shares of Mediag3, Inc.’s common stock (MDGC.PK) at $0.001 per share. (1)   12,315    12,315 
           
October 19, 2011, convertible note receivable due on demand, carrying interest at 10%, convertible into shares of Mediag3, Inc.’s common stock (MDGC.PK) at $0.001 per share. (2)   2,000    2,000 
           
October 26, 2011, convertible note receivable due on demand, carrying interest at 10%, convertible into shares of Mediag3, Inc.’s common stock (MDGC.PK) at $0.001 per share. (2)   5,000    5,000 
Total notes receivable originated  $29,315   $29,315 
Notes receivable applied towards purchase price of Wytec International, Inc. (1)(2)   (11,210)   (11,210)
Allowance for doubtful notes receivable due to collection uncertainties   (18,105)   (18,105)
Fair market value of notes receivable  $   $ 

 

(1) Accepted partial repayment of $4,210 on note as consideration towards purchase price of Wytec International, Inc. on November 8, 2011 in lieu of cash.
(2) Accepted complete repayment on note as consideration towards purchase price of Wytec International, Inc. on November 8, 2011 in lieu of cash.

 

F-12
 

 

The following is a reconciliation of our purchase of Wytec International, Inc. on November 8, 2011:

 

   Acquisition 
   Payments 
      
Partial application of payment of September 29, 2011, convertible note receivable in lieu of cash (1)  $4,210 
Application of payment of October 19, 2011, convertible note receivable in lieu of cash (2)   2,000 
Application of payment of October 26, 2011, convertible note receivable in lieu of cash (2)   5,000 
Application of interest receivable on convertible notes receivable in lieu of cash   238 
Cash payments   7,452 
Total cash component of purchase price  $18,900 
Fair value of warrants component of purchase price, 1,820,110 warrants at an exercise price of $0.001 (3)(4)   4,398 
Total purchase price of acquisition of Wytec International, Inc. and related patents (5)  $23,298 

 

(1) Accepted partial repayment of $4,210 on note as consideration towards purchase price of Wytec International, Inc. on November 8, 2011 in lieu of cash.
(2) Accepted complete repayment on note as consideration towards purchase price of Wytec International, Inc. on November 8, 2011 in lieu of cash.
(3) Number of warrants determined pursuant to valuation using an Income approach pursuant to the terms of the Wytec International, Inc. acquisition agreement.
(4) Fair value determined using Lattice Model pursuant to derivative valuations.
(5) Purchase price was subsequently impaired at December 31, 2011 due to uncertainties regarding the future economic benefit of the patents.

 

Note 7 – Property and Equipment

 

Property and equipment consist of the following:

 

   December 31, 
   2012   2011 
         
Telecommunication equipment and computers  $7,497   $4,611 
Furniture and fixtures   44,851    9,150 
    52,347    13,761 
Less accumulated depreciation   (12,013)   (8,110)
   $40,335   $5,651 

 

Depreciation expense totaled $3,903 and $2,752 for the year end of December 31, 2012 and 2011, respectively.

 

F-13
 

 

Note 8 – Intangible Assets

 

On November 8, 2011, we acquired five patents pursuant to a stock purchase agreement in exchange for cash and warrants (Wytec International, Inc. acquisition”). The fair market value of the patents acquired via the Wytec International, Inc. acquisition was determined to be $189,000 using the Income approach based on management’s projections of future cash flows. The fair value of the patents was then used, pursuant to the terms of the acquisition agreement, to determine the two components of the purchase price (cash and warrant components).

 

Cash component of purchase price

The cash portion of the acquisition was valued at $18,900 based on the Buyer’s Investment Commitment Amount using the fair value of the patents as obtained by a qualified independent valuation specialist. As the fair value of the patents was determined to be less than $10 million, the number of MediaG3 Shares (“MDGC”) which the Company was obligated to purchase was determined by dividing $1 million by 90%of the average closing last sale price of Mediag3, Inc.’s common stock on the five trading days immediately prior to the valuation specialist’s report date, which resulted in a purchase price of $0.00058 per share and 32,586,207 shares of MDGC common stock, which totalled$18,900. The shares have not yet been delivered and there can be no assurance that they will, as a result, the fair value of any common stock receivable from Mediag3’s common stock was disregarded.

 

Warrant component of purchase price

The number of shares of the Company’s common stock underlying the warrants was determined on the valuation report date based on 45% of the total number of issued and outstanding shares of CCI’s common stock on the valuation report date, subject to certain limitations which adjusted the amount of warrant shares downward on a pro rata basis to be equal to 0.8505% of the Company’s outstanding shares, or 1,820,110 shares, exercisable for 2 years from the report date at an exercise price of $0.001 per share. The fair value of the warrants was determined to be $4,398 using a Lattice model pursuant to embedded derivative valuations.

 

The fair market value of the warrants to purchase 1,820,110 shares at an exercise price of $0.001 was $4,398 as of December 31, 2011. Pursuant to the terms of the agreement, the cash portion of the acquisition was valued at $18,900, resulting in a combined purchase price of $23,298. The Company recognized $418 of amortization expense on the combined value of cash and warrants, of $23,298 during the year ended December 31, 2011. The remaining $22,880 was determined to be impaired due to uncertainties in the realization of a future economic benefit from the patents, and was expensed on December 31, 2011.

 

As of December 31, 2011, the Company has the following amounts related to intangible assets:

 

     Balance at December 31,
2010
    Additions    Amortization    Impairments   Balance at December 31,
2011
 
 Patents    $   $23,298   $(418)  $(22,880)  $ 

 

During the year ended December 31, 2011, the Company recorded amortization expense related to purchased intangibles of $418, which is included in Depreciation & amortization in the Consolidated Statement of Operations.

 

No activity occurred in 2012 related to intangible assets.

 

F-14
 

 

Note 9– Notes Payable

 

Notes payable consists of the following at December 31, 2012 and 2011, respectively:

 

   December 31,   December 31, 
   2012   2011 
           
Unsecured promissory note carries an 8% interest rate, matured on March 2, 2010. Currently in default.  $30,000   $30,000 
           
Unsecured promissory note carries an 8% interest rate, matured on June 15, 2009. Currently in default.   10,000    10,000 
           
Unsecured promissory note carries an 8% interest rate, matured on June 15, 2009. Currently in default.   10,000    10,000 
           
Unsecured promissory note carries an 8% interest rate, matured on February 23, 2011. Currently in default.   17,006    17,006 
Total notes payable   67,006    67,006 
Less: current portion   67,006    67,006 
Notes payable, less current portion  $   $ 

 

The Company recorded interest expense on short term debt in the amount of $5,396 and $5,412 for the years ended December 31, 2012 and 2011 respectively.

 

Note 10– Convertible Debentures  

 

   December 31, 
   2011 
      
Unsecured convertible promissory note carries an 8.75% interest rate, matured on July 16, 2009. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the volume weighted average price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or $0.06 per share, whichever is greater. Currently in default.  $50,000 
      
Unsecured convertible promissory note carries an 8.75% interest rate, matured on December 26, 2009. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the volume weighted average price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or $0.001 per share, whichever is greater. Currently in default.   10,000 
      
Unsecured convertible promissory note carries an 8.75% interest rate, matured on December 15, 2009. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the volume weighted average price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or $0.001 per share, whichever is greater. Currently in default.   10,000 
      
Unsecured convertible promissory note carries an 8.75% interest rate, matured on December 15, 2009. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the volume weighted average price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or $0.001 per share, whichever is greater. Currently in default.   5,000 
      
Unsecured convertible promissory note carries an 8.75% interest rate, matured on May 11, 2009. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the volume weighted average price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or $0.001 per share, whichever is greater. Currently in default.   10,000 
      
Unsecured convertible promissory note carries an 8.75% interest rate, matured on April 30, 2009. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the volume weighted average price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or $0.001 per share, whichever is greater. Currently in default.   5,000 

 

 

F-15
 

 

      
Secured convertible promissory note carried an 8.00% interest rate in the original principal amount of $25,000, matured on February 11, 2011. The principal was convertible into shares of common stock at the discretion of the note holder at a price equal to fifty five percent (55%) of the average of the three lowest trading bid prices of the Company’s common stock over the ten (10) trading days prior to the conversion notice, or the greater of $0.0001 per share. This conversion ratio was modified and amended to thirty seven percent (37%) on May 3, 2011 with the additional funding of another convertible note in the amount of $35,000 with similar terms. The note was secured by a reserve of authorized and issuable shares of three times the number of shares that were actually issuable upon full conversion of the note. The note carried a twenty two percent (22%) interest rate in the event of default, and the debt holder was limited to owning 4.99% of the Company’s issued and outstanding shares. The debt and accrued interest has been converted into common stock in full as of the end of 2011.    
      
Secured convertible promissory note carried an 8.00% interest rate, matured on March 28, 2011. The principal was convertible into shares of common stock at the discretion of the note holder at a price equal to fifty percent (50%) of the average of the three lowest trading bid prices of the Company’s common stock over the ten (10) trading days prior to the conversion notice, or the greater of $0.001 per share. This conversion ratio was modified and amended to thirty seven percent (37%) on May 3, 2011 with the additional funding of another convertible note in the amount of $35,000 with similar terms. The note was secured by a reserve of authorized and issuable shares of three times the number of shares that were actually issuable upon full conversion of the note. The note carried a twenty two percent (22%) interest rate in the event of default, and the debt holder was limited to owning 4.99% of the Company’s issued and outstanding shares. The debt and accrued interest has been converted into common stock in full as of the end of 2011.    
     
Unsecured convertible promissory note carries an 8% interest rate, matured on August 24, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to fifty percent (50%) of the average of the three lowest trading bid prices of the Company’s common stock for the ten (10) trading days prior to the conversion date, or $0.0001 per share, whichever is greater. This conversion ratio was modified and amended to thirty seven percent (37%) on May 3, 2011 with the additional funding of another convertible note in the amount of $35,000 with similar terms. The debt and accrued interest has been converted into common stock in full as of the end of 2011.    
      
Unsecured convertible promissory note carries an 8% interest rate, matured on October 13, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to fifty percent (50%) of the average of the three lowest trading bid prices of the Company’s common stock for the ten (10) trading days prior to the conversion date, or $0.0001 per share, whichever is greater. This conversion ratio was modified and amended to thirty seven percent (37%) on May 3, 2011 with the additional funding of another convertible note in the amount of $35,000 with similar terms. The debt and accrued interest has been converted into common stock in full as of the end of 2011.    
      
Unsecured convertible promissory note carries a 12.5% interest rate, matured on July 2, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the volume weighted average price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. Currently in default. In addition, detachable warrants to purchase 25,000 shares of common stock were granted at a strike price of $0.0129 per share, exercisable over a 2 year period from the grant date. Currently in default.   2,500 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matured on July 3, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the volume weighted average price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. Currently in default. In addition, detachable warrants to purchase 1,500,000 shares of common stock were granted at a strike price of $0.0125 per share, exercisable over a 2 year period from the grant date. Currently in default.   10,000 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matured on July 9, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the volume weighted average price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. Currently in default. In addition, detachable warrants to purchase 100,000 shares of common stock were granted at a strike price of $0.0120 per share, exercisable over a 2 year period from the grant date. Currently in default.   10,000 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matured on July 19, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the volume weighted average price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. Currently in default. In addition, detachable warrants to purchase 1,000,000 shares of common stock were granted at a strike price of $0.0115 per share, exercisable over a 2 year period from the grant date. Currently in default.   10,000 
     

 

F-16
 

 

 

      
Unsecured convertible promissory note carries a 12.5% interest rate, matured on September 4, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the volume weighted average price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. Currently in default. In addition, detachable warrants to purchase 10,000 shares of common stock were granted at a strike price of $0.0092 per share, exercisable over a 2 year period from the grant date. Currently in default.   1,000 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matured on September 17, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the volume weighted average price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. Currently in default. In addition, detachable warrants to purchase 100,000 shares of common stock were granted at a strike price of $0.0095 per share, exercisable over a 2 year period from the grant date. Currently in default.   10,000 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matured on September 24, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the volume weighted average price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. Currently in default. In addition, detachable warrants to purchase 50,000 shares of common stock were granted at a strike price of $0.0120 per share, exercisable over a 2 year period from the grant date. Currently in default.   5,000 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matured on September 26, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the volume weighted average price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. Currently in default.In addition, detachable warrants to purchase 30,000 shares of common stock were granted at a strike price of $0.0120 per share, exercisable over a 2 year period from the grant date. Currently in default.   3,000 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matured on September 28, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. Currently in default. In addition, detachable warrants to purchase 1,000,000 shares of common stock were granted at a strike price of $0.0115 per share, exercisable over a 2 year period from the grant date. Currently in default.   10,000 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matured on October 12, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the average closing price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. Currently in default. In addition, detachable warrants to purchase 250,000 shares of common stock were granted at a strike price of $0.0080 per share, exercisable over a 2 year period from the grant date. Currently in default.   2,500 
      
Unsecured convertible promissory note carries an 8% interest rate, matures on February 5, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to thirty seven percent (37%) of the average of the three lowest trading bid prices of the Company’s common stock for the ten (10) trading days prior to the conversion date, or $0.0001 per share, whichever is greater. The debt and accrued interest has been converted into common stock in full as of the end of 2011.    
     

 

 

F-17
 

 

      
Unsecured convertible promissory note carries a 12.5% interest rate, matured on November 13, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the average closing price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. Currently in default. In addition, detachable warrants to purchase 50,000 shares of common stock were granted at a strike price of $0.0060 per share, exercisable over a 2 year period from the grant date. Currently in default.   5,000 
      
Unsecured convertible promissory note in the amount of $5,000, carried a 12.5% interest rate, with a December 4, 2011 maturity date. The principal was convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the average closing price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever was greater. In addition, detachable warrants to purchase 50,000 shares of common stock were granted at a strike price of $0.0050 per share, exercisable over a 2 year period from the grant date. The outstanding debt of $5,110, including $110 of accrued interest, was converted on August 8, 2011 pursuant to the terms of the note, in exchange for a subscription payable of $5,110. The subscription payable was subsequently satisfied in exchange for 690,019 shares of common stock on November 11, 2011.    
      
Unsecured convertible promissory note in the amount of $2,500, carried a 12.5% interest rate, with a December 12, 2011 maturity date. The principal was convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever was greater. In addition, detachable warrants to purchase 25,000 shares of common stock were granted at a strike price of $0.0080 per share, exercisable over a 2 year period from the grant date. The outstanding debt of $2,558, including $58 of accrued interest, was converted on August 22, 2011 pursuant to the terms of the note, in exchange for a subscription payable of $2,558. The subscription payable was subsequently satisfied in exchange for 381,881 shares of common stock on November 11, 2011.    
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on December 12, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 25,000 shares of common stock were granted at a strike price of $0.0080 per share, exercisable over a 2 year period from the grant date. Currently in default.   2,500 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on December 12, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 25,000 shares of common stock were granted at a strike price of $0.0080 per share, exercisable over a 2 year period from the grant date. Currently in default.   2,500 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on December 13, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 25,000 shares of common stock were granted at a strike price of $0.0085 per share, exercisable over a 2 year period from the grant date. Currently in default.   2,500 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on December 13, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 30,000 shares of common stock were granted at a strike price of $0.0085 per share, exercisable over a 2 year period from the grant date. Currently in default.   3,000 

 

F-18
 

 

 

      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on December 13, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 25,000 shares of common stock were granted at a strike price of $0.0085 per share, exercisable over a 2 year period from the grant date. Currently in default.   2,500 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on December 14, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 25,000 shares of common stock were granted at a strike price of $0.0082 per share, exercisable over a 2 year period from the grant date. Currently in default.   2,500 
      
Unsecured convertible promissory note in the amount of $5,000, carried a 12.5% interest rate, with a December 21, 2011 maturity date. The principal was convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever was greater. In addition, detachable warrants to purchase 50,000 shares of common stock were granted at a strike price of $0.0061 per share, exercisable over a 2 year period from the grant date. The outstanding debt of $5,104, including $104 of accrued interest, was converted on August 24, 2011 pursuant to the terms of the note, in exchange for a subscription payable of $5,104. The subscription payable was subsequently satisfied in exchange for 601,869 shares of common stock on November 11, 2011.    
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on December 25, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 25,000 shares of common stock were granted at a strike price of $0.0061 per share, exercisable over a 2 year period from the grant date. Currently in default.   2,500 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on December 26, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 50,000 shares of common stock were granted at a strike price of $0.0061 per share, exercisable over a 2 year period from the grant date. Currently in default.   5,000 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on December 28, 2011. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 50,000 shares of common stock were granted at a strike price of $0.0078 per share, exercisable over a 2 year period from the grant date. Currently in default.   5,000 
     
Unsecured convertible promissory note carries a 12.5% interest rate, matures on January 1, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 50,000 shares of common stock were granted at a strike price of $0.0098 per share, exercisable over a 2 year period from the grant date. Currently in default.   5,000 

 

 

F-19
 

 

      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on January 3, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 25,000 shares of common stock were granted at a strike price of $0.0095 per share, exercisable over a 2 year period from the grant date. Currently in default.   2,500 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on January 4, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (80%) of the average closing price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 25,000 shares of common stock were granted at a strike price of $0.0095 per share, exercisable over a 2 year period from the grant date. Currently in default.   2,500 
      
Unsecured convertible promissory note in the amount of $3,000, carried a 12.5% interest rate, with a January 26, 2012 maturity date. The principal was convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever was greater. In addition, detachable warrants to purchase 30,000 shares of common stock were granted at a strike price of $0.0038 per share, exercisable over a 2 year period from the grant date. The outstanding debt of $3,004, including $4 of accrued interest, was converted on September 6, 2011 pursuant to the terms of the note, in exchange for a subscription payable of $3,004. The subscription payable was subsequently satisfied in exchange for 424,729 shares of common stock on November 11, 2011.    
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on February 4, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. Currently in default.   5,000 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on February 7, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater.In addition, detachable warrants to purchase 25,000 shares of common stock were granted at a strike price of $0.0030 per share, exercisable over a 2 year period from the grant date. Currently in default.
   2,500 
      
Unsecured convertible promissory note in the amount of $10,000, carried a 12.5% interest rate, with a February 7, 2011 maturity date. The principal was convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever was greater. In addition, detachable warrants to purchase 1,000,000 shares of common stock were granted at a strike price of $0.0030 per share, exercisable over a 2 year period from the grant date. The outstanding debt of $10,072, including $72 of accrued interest, was converted on September 1, 2011 pursuant to the terms of the note, in exchange for a subscription payable of $10,072. The subscription payable was subsequently satisfied in exchange for 2,438,131 shares of common stock on November 11, 2011.    
     

 

 

F-20
 

 

      
Unsecured convertible promissory note in the amount of $2,500, carried a 12.5% interest rate, with a February 7, 2011 maturity date. The principal was convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever was greater. In addition, detachable warrants to purchase 25,000 shares of common stock were granted at a strike price of $0.0030 per share, exercisable over a 2 year period from the grant date. The outstanding debt of $2,519, including $19 of accrued interest, was converted on September 2, 2011 pursuant to the terms of the note, in exchange for a subscription payable of $2,519. The subscription payable was subsequently satisfied in exchange for 568,844 shares of common stock on November 11, 2011.    
      
Unsecured convertible promissory note in the amount of $5,000, carried a 12.5% interest rate, with a February 12, 2011 maturity date. The principal was convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (80%) of the average closing price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever was greater. In addition, detachable warrants to purchase 50,000 shares of common stock were granted at a strike price of $0.0030 per share, exercisable over a 2 year period from the grant date. The outstanding debt of $5,034, including $34 of accrued interest, was converted on September 6, 2011 pursuant to the terms of the note, in exchange for a subscription payable of $5,034. The subscription payable was subsequently satisfied in exchange for 869,034 shares of common stock on November 11, 2011.    
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on February 13, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (80%) of the average closing price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 100,000 shares of common stock were granted at a strike price of $0.0030 per share, exercisable over a 2 year period from the grant date. Currently in default.   10,000 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on February 28, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (80%) of the average closing price of the Company’s common stock for the twenty two (22) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 100,000 shares of common stock were granted at a strike price of $0.0062 per share, exercisable over a 2 year period from the grant date. Currently in default.   10,000 
      
Unsecured convertible promissory note in the amount of $3,000, carried a 12.5% interest rate, with a February 29, 2012 maturity date. The principal was convertible into shares of common stock at the discretion of the note holder at a price equal to eighty percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever was greater. In addition, detachable warrants to purchase 30,000 shares of common stock were granted at a strike price of $0.0180 per share, exercisable over a 2 year period from the grant date. The outstanding debt of $3,082, including $82 of accrued interest, was converted on September 2, 2011 pursuant to the terms of the note, in exchange for a subscription payable of $3,082. The subscription payable was subsequently satisfied in exchange for 432,689 shares of common stock on November 11, 2011.    
     
Unsecured convertible promissory note carries a 12.5% interest rate, matures on February 29, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 25,000 shares of common stock were granted at a strike price of $0.0180 per share, exercisable over a 2 year period from the grant date. Currently in default.   2,500 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on March 4, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 50,000 shares of common stock were granted at a strike price of $0.0210 per share, exercisable over a 2 year period from the grant date. Currently in default.   5,000 

 

F-21
 

 

      
Unsecured convertible promissory note carries an 8% interest rate, matures on June 12, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to fifty percent (50%) of the average of the three lowest trading bid prices of the Company’s common stock for the ten (10) trading days prior to the conversion date, or $0.0001 per share, whichever is greater.   50,000 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on April 3, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 50,000 shares of common stock were granted at a strike price of $0.0095 per share, exercisable over a 2 year period from the grant date. Currently in default.   5,000 
      
Unsecured convertible promissory note carries an 8% interest rate, matures on July 20, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to fifty percent (37%) of the average of the three lowest trading bid prices of the Company’s common stock for the ten (10) trading days prior to the conversion date, or $0.0001 per share, whichever is greater.   42,500 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on April 30, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 60,000 shares of common stock were granted at a strike price of $0.0175 per share, exercisable over a 2 year period from the grant date.   6,000 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on May 5, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 100,000 shares of common stock were granted at a strike price of $0.0175 per share, exercisable over a 2 year period from the grant date.   10,000 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on May 27, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 25,000 shares of common stock were granted at a strike price of $0.0124 per share, exercisable over a 2 year period from the grant date.   2,500 
     
Unsecured convertible promissory note carries a 12.5% interest rate, matures on June 6, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (90%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater.   5,500 
      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on June 11, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (65%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 5,200,000 shares of common stock were granted at a strike price of $0.0079 per share, exercisable over a 2 year period from the grant date.   130,000 

 

 

F-22
 

 

      
Unsecured convertible promissory note carries a 12.5% interest rate, matures on June 12, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to ninety percent (65%) of the average closing price of the Company’s common stock for the ten (10) trading days prior to the conversion date, or 110% of the average closing price as of the Closing Date of the Note, whichever is greater. In addition, detachable warrants to purchase 2,000,000 shares of common stock were granted at a strike price of $0.0076 per share, exercisable over a 2 year period from the grant date.   50,000 
      
Unsecured convertible promissory note carries an 8% interest rate, matures on October 30, 2012. The principal is convertible into shares of common stock at the discretion of the note holder at a price equal to fifty three percent (53%) of the average of the three lowest trading bid prices of the Company’s common stock for the ten (10) trading days prior to the conversion date, or $0.0001 per share, whichever is greater.   50,000 
      
Total convertible debentures   583,500 
Less: debt discounts   (174,264)
Total convertible debentures, net of discounts   409,236 

 

During the year ended December 31, 2012, the Company issued 15 convertible promissory notes totaling $491,000. The notes bear interest at rates ranging from 8.0% to 12.5% per annum. The notes mature at various times from through December 2014. A total of 41 convertible notes remain outstanding at December 31, 2012.

 

The principal balance of each note is convertible into shares of the Company’s common stock. The conversion terms of each note can vary, but in general, the notes are convertible at a rate equal to a specified percentage (most range from 80% to 90%) of the Company’s average common stock closing price for a short period of time prior to conversion. During the year ended December 31, 2012, a total of $315,500 of these notes, plus accrued interest, were converted to common stock, leaving a remaining principal balance of $759,000 at that date.

 

Certain convertible promissory notes also carry detachable warrants. As of December 31, 2012, warrants to purchase 14,277,000 shares of the Company’s common stock were outstanding. The warrants have exercise prices ranging from $0.003 to $0.021 per share and are exercisable for a two-year period from the grant date.

 

In accordance with ASC 470-20 Debt with Conversion and Other Options, the Company recorded a discount of $80,954 and $263,543 for the variable conversion feature and warrants issued in the year ended December 31, 2012 and year ended December 31, 2011 respectively. The discounts will be amortized to interest expense over the term of the debentures. The Company recorded $199,560 and $175,363 of interest expense pursuant to the amortization of the note discounts during the year ended December 31, 2012 and 2011, respectively. At December 31, 2012 a total of $65,204 of unamortized debt discount remained.

 

The following is a summary of activity of outstanding common stock warrants:

 

       Weighted 
       Average 
   Number   Exercise 
   of Shares   Price 
           
Balance, December 31, 2010      $ 
Warrants expired        
Warrants cancelled        
Warrants granted   27,310,110    0.0088 
Warrants exercised        
           
Balance, December 31, 2011   27,310,110   $0.0088 
Warrants expired        
Warrants cancelled        
Warrants granted   387,000    0.0080 
Warrants exercised        
           
Balance, December 31, 2012   27,697,110   $0.0088 
           
Exercisable, December 31, 2012   27,697,110   $0.0088 

 

 

F-23
 

 

Note 11– Derivative Liabilities

 

As discussed in Note 10 under Convertible Debentures, the Company issued convertible notes payable that provide for the issuance of convertible notes with variable conversion provisions. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. As of December 31, 2012 and 2011, the number of shares of common stock issuable upon conversion of promissory notes and warrants exceeds the Company’s maximum number of authorized common shares. Due to the fact that the number of shares of common stock issuable exceeds the Company’s authorized share limit, the equity environment is tainted and all additional convertible debentures and warrants are included in the value of the derivative. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion option and warrants and shares to be issued were recorded as derivative liabilities on the issuance date.

 

In accordance with ASC 815-15, the Company determined that the variable conversion feature and the warrants and shares to be issued represented embedded derivative features, and these are shown as derivative liabilities on the balance sheet. The Company estimated the fair value of the compound embedded derivatives associated with the convertible debentures at December 31, 2012 and 2011.

 

The fair values of the Company’s derivative liabilities were estimated at the issuance date and are revalued at each subsequent reporting date, using a lattice model. The Company recorded current derivative liabilities of $96,642 and $392,519 at December 31, 2012 and 2011, respectively. The change in fair value of the derivative liabilities for the year ended December 31, 2012 resulted in a gain of $56,564, and for the year ended December 31, 2011 resulted in a loss of $270,514, which were reported as other income/(expense) in the consolidated statements of operations.

 

The following presents the derivative liability value by instrument type at December 31, 2012 and 2011, respectively:

 

   December 31,   December 31, 
   2012   2011 
           
Convertible debentures  $96,642   $301,446 
Common stock warrants   -0-    91,073 
   $96,642   $392,519 

  

The following is a summary of changes in the fair market value of the derivative liability during the years ended December 31, 2012 and 2011, respectively:

 

   Derivative 
   Liability 
   Total 
      
Balance, December 31, 2010  $180,194 
Increase in derivative value due to issuances of convertible promissory notes and warrants   267,941 
Promissory notes converted during the period   (326,130)
Change in fair market value of derivative liabilities   270,514 
      
Balance, December 31, 2011  $392,519 
Increase in derivative value due to issuances of convertible promissory notes and warrants   80,954 
Promissory notes converted during the period   (320,267)
Change in fair market value of derivative liabilities   (56,564)
      
Balance, December 31, 2012  $96,642 

  

F-24
 

 

Key inputs and assumptions used to value the convertible debentures and warrants issued during the years ended December 31, 2012 and December 31, 2011:

 

  · Stock prices on all measurement dates were based on the fair market value and would fluctuate with projected volatility.
  · The warrant exercise prices ranged from $0.003 to $0.0210.
  · The holders of the securities would convert monthly to the ownership limit starting at 4.99% increasing by 10% per month.
  · The holders would automatically convert the note at the maximum of 3 times the conversion price if the Company was not in default.
  · The monthly trading volume would reflect historical averages and would increase at 1% per month.

  · The Company would redeem the notes based on availability of alternative financing, increasing 2% monthly to a maximum of 10%.
  · The holder would automatically convert the note at maturity if the registration was effective and the Company was not in default.
  · The computed volatility was projected based on historical volatility.

  

Note 12– Stockholders’ Equity

 

The Company has 500,000,000 authorized shares of common stock and 100,000,000 authorized shares of preferred stock as of December 31, 2012.

 

Convertible Class A Preferred Stock

In consummation of the May 5, 2005 merger with CA Networks as disclosed in Note 1, the Company repurchased 4,000,000 Class “A” preferred stock for $40,000. Therefore, there was no outstanding Class “A” preferred stock at December 31, 2010 or 2009, respectively.

 

Convertible Class B Preferred Stock

We currently have 1,495,436 shares of Class B convertible preferred stock issued and outstanding which can be converted into shares of our common stock.

 

Convertible Class C Preferred Stock

We currently have 1,000,000 shares of Class C convertible preferred stock issued and outstanding which can be converted into shares of our common stock. All of the shares are held by one stockholder.

 

Common Stock Issuances

On January 10, 2011, CCI issued 2,812,500 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $18,000, which consisted of $17,000 of principal and $1,000 of accrued interest. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On March 15, 2011, CCI issued 3,243,243 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $12,000, which consisted of $12,000 of principal. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On April 28, 2011, the Company issued 500,000 shares of restricted common stock to a law firm for legal services rendered. The total fair value of the common stock was $3,500 based on the closing price of the Company’s common stock on the date of grant.

 

On May 2, 2011, CCI issued 4,000,000 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $10,000, which consisted of $10,000 of principal. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On May 27, 2011, the Company issued a total of 450,000 shares of restricted common stock amongst three employees for services rendered. The total fair value of the common stock was $2,700 based on the closing price of the Company’s common stock on the date of grant.

 

On June 7, 2011, CCI issued 2,666,667 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $4,000, which consisted of $3,000 of principal, and $1,000 of accrued interest. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On June 13, 2011, CCI issued 4,062,500 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $6,500, which consisted of $6,500 of principal. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On July 5, 2011, CCI issued 5,000,000 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $10,000, which consisted of $10,000 of principal. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

F-25
 

 

 

On August 8, 2011, a note holder converted $5,110 of outstanding debt, consisting of $5,000 of principal and $110 of accrued interest pursuant to the terms of a convertible debenture in exchange for 690,019 shares of common stock. The common stock was subsequently issued on November 11, 2011. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On August 22, 2011, CCI issued 7,000,000 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $7,000, which consisted of $7,000 of principal. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On August 22, 2011, a note holder converted $2,582 of outstanding debt, consisting of $2,500 of principal and $58 of accrued interest pursuant to the terms of a convertible debenture in exchange for 381,881 shares of common stock. The common stock was subsequently issued on November 11, 2011 with the issuance of 381,881 shares of common stock. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On August 24, 2011, a note holder converted $5,104 of outstanding debt, consisting of $5,000 of principal and $104 of accrued interest pursuant to the terms of a convertible debenture in exchange for 601,869 shares of common stock. The common stock was subsequently issued on November 11, 2011 with the issuance of 601,869 shares of common stock. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On August 29, 2011, CCI issued 3,181,818 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $3,500, which consisted of $3,500 of principal. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On August 30, 2011, a note holder converted $3,032 of outstanding debt, consisting of $3,000 of principal and $32 of accrued interest pursuant to the terms of a convertible debenture in exchange for 432,689 shares of common stock. The common stock was subsequently issued on November 11, 2011 with the issuance of 432,689 shares of common stock. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On September 1, 2011, a note holder converted $10,072 of outstanding debt, consisting of $10,000 of principal and $72 of accrued interest pursuant to the terms of a convertible debenture in exchange for 2,438,131 shares of common stock. The common stock was subsequently issued on November 11, 2011 with the issuance of 2,438,131 shares of common stock. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On September 2, 2011, a note holder converted $2,519 of outstanding debt, consisting of $2,500 of principal and $19 of accrued interest pursuant to the terms of a convertible debenture in exchange for 568,844 shares of common stock. The common stock was subsequently issued on November 11, 2011 with the issuance of 568,844 shares of common stock. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On September 2, 2011, CCI issued 5,454,545 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $6,000, which consisted of $6,000 of principal. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On September 6, 2011, a note holder converted $5,034 of outstanding debt, consisting of $5,000 of principal and $34 of accrued interest pursuant to the terms of a convertible debenture in exchange for 869,924 shares of common stock. The common stock was subsequently issued on November 11, 2011 with the issuance of 869,924 shares of common stock. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On September 6, 2011, a note holder converted $3,004 of outstanding debt, consisting of $3,000 of principal and $4 of accrued interest pursuant to the terms of a convertible debenture in exchange for 424,769 shares of common stock. The common stock was subsequently issued on November 11, 2011 with the issuance of 424,769 shares of common stock. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

F-26
 

 

On September 6, 2011, CCI issued 1,538,462 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $2,000, which consisted of $2,000 of principal. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On October 17, 2011, CCI issued 3,125,000 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $10,000, which consisted of $10,000 of principal. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On November 7, CCI issued 500,000 shares of its $.001 par value common stock to David Hewitt in exchange for his services as a member of our Board of Directors.  The shares were valued at $8,750 based on the fair market value on the date of grant.

 

On November 11, 2011, CCI issued 200,000 shares of its $.001 par value common stock pursuant to a subscription payable related to the previous rescission of the VVI acquisition.  The shares were valued at $2,000 based on the fair market value on the date of grant.

 

On November 11, 2011, The Company issued a total of 6,408,086 shares of common stock in satisfaction of total subscriptions payable of $36,433 amongst a total of eight debt holders that elected to convert their outstanding convertible notes payable during the three months ended September 30, 2011.

 

On November 28, 2011, CCI issued 4,518,519 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $12,200, which consisted of $10,000 of principal and $2,200 of accrued interest. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On November 30, 2011, CCI issued 3,703,704 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $10,000, which consisted of $10,000 of principal. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On December 2, 2011, CCI issued 5,925,926 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $16,000, which consisted of $15,000 of principal and $1,000 of accrued interest. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On December 12, 2011, CCI issued 5,357,143 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $15,000, which consisted of $15,000 of principal. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

On December 21, 2011, CCI issued 7,925,926 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $21,400, which consisted of $20,000 of principal and $1,400 of accrued interest. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

 

During the year end ended December 31, 2012, the Company issued 97,073,466 shares of common stock as a result of conversion of $319,556 of convertible notes’ principal, plus accrued interest, totaling $325,046.

 

During the year ended December 31, 2012, the Company issued 4,150,000 shares of common stock in exchange for legal and consulting services, totaling $31,684.

 

During the year ended December 31, 2012, the Company issued 2,717,808 shares of treasury stock and common stock in exchange for a subscription payable of $25,530.

 

Note 13– Treasury Stock

 

During the year ended December 31, 2011, the Company repurchased a total of 2,570,000 shares of common stock, at an aggregate cost of $21,014, of this amount, 2,020,000 shares with a cost value of $15,624 were held in treasury at December 31, 2011, and 1,800,000 shares totaling $14,580 was repurchased by a shareholder, but not yet delivered. The shares were subsequently delivered to the shareholder on February 23, 2012, as such, the $14,580 is presented within subscriptions payable on December 31, 2011.

 

During the year ended December 31, 2011, the Company sold a total of 550,000 shares of common stock previously held in treasury for a total of $5,500. The aggregate sales price of the treasury shares sold exceeded the aggregate purchase price by $80 and has been charged to “Additional paid-in capital”.

 

The Company did not follow the proper rules and regulations to trade its own securities. When the impropriety was discovered the Company liquidated its holdings, accounted for as treasury stock, and closed its brokerage account that was used to conduct the trades.

 

F-27
 

 

  

Note 14– Common Stock Options

 

Common Stock Options Granted

 

During the year ended December 31, 2005, the Company adopted 2005 Stock Option Plan (the “Plan”). The Plan authorizes the issuance of stock options and other awards to acquire up shares of the Company’s common stock (less the number of shares issuable upon exercise of options granted by the Company under all other stock incentive plans on the date of any grant under the Plan). The Plan provides for the grant of incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended), options that are not incentive stock options, stock appreciation rights and various other stock-based grants.

 

During the year ended December 31, 2012, the Company adopted 2012 Stock Incentive Plan (the “Plan”). The Plan authorizes the issuance of stock options to acquire up shares of the Company’s common stock (less the number of shares issuable upon exercise of options granted by the Company under all other stock incentive plans on the date of any grant under the Plan). The Plan provides for the grant of incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended), options that are not incentive stock options, stock appreciation rights and various other stock-based grants.

 

On October 10, 2012, the Company granted employees options to purchase 3,000,000 shares of common stock exercisable at $0.01 with a three year vesting schedule and expiration dates between three years and four years. The stock-based compensation expense for 2012 was insignificant.

 

The following is a summary of activity of outstanding stock options under the 2005 and 2012 Stock Option Plans:

 

       Weighted 
       Average 
   Number   Exercise 
   of Shares   Price 
           
Balance, December 31, 2010   8,672,000   $0.09 
Options expired        
Options cancelled        
Options granted        
Options exercised        
           
Balance, December 31, 2011   8,672,000   $0.09 
Options expired        
Options cancelled        
Options granted   3,000,000    0.01 
Options exercised        
           
Balance, December 31, 2012   11,672,000   $0.07 
Exercisable, December 31, 2012   8,672,000   $0.09 

 

F-28
 

 

Note 15– Income Taxes

 

For the years ended December 31, 2012 and 2011, the Company incurred net operating losses and, accordingly, no current provision for income taxes has been recorded. In addition, no benefit for deferred income taxes has been recorded due to the uncertainty of the realization of any tax assets. At December 31, 2012, the Company had approximately $8,142,324 of federal and state net operating loss carryforwards. The net operating loss carry forwards, if not utilized, will begin to expire in 2026.

 

The components of the Company’s deferred tax asset are as follows:

 

   December 31,   December 31, 
   2012   2011 
Deferred tax assets:        
Net operating loss carry forwards  $3,046,400   $2,210,250 
Total deferred tax assets   3,046,400    2,210,250 
           
Net deferred tax assets before valuation allowance   3,046,400    2,210,250 
Less: Valuation allowance   (3,046,400)   (2,210,250)
Net deferred tax assets  $   $ 

 

The federal income tax benefit expected by the application of a 34% corporate income tax rate to pre-tax net loss differs from the actual benefit recorded due to the valuation allowance recorded for 2012 and 2011. Based on the available objective evidence, including the Company’s history of losses, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2012 and 2011. 

 

In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions. The tax years 2008 through 2011 remain open to examination by the taxing jurisdictions in which we file returns.

  

Note 16 – Commitments and Contingencies

 

The Company leases its office space in San Antonio, Texas and Eau Claire, Wisconsin. The Company renewed its current lease agreement on November 1, 2012 and the lease is good for three years. The future lease payments for the office space for 2013 is $76,004, for 2014 is $62,632 and for 2015 is $53,060.

  

Note 17– Subsequent Events

 

In March 2013, the Company designated 100,000 shares of its authorized preferred stock as Class D Preferred Stock. No shares of Class D Preferred Stock have been issued as of the date of this report. Holders of Class D Preferred Stock will not participate with respect to any dividends which may be declared by the Board of Directors. The holders of Class D Preferred Stock will vote with the holders of common stock as one class.

 

 

 

 

 

 

 

 

F-29
 

 

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

None.

 

Item 9A.  Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Our principal executive officer and principal financial officer during the year ended December 31, 2012, William Gray, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report.  Based on that evaluation, Mr. Gray concluded that our disclosure controls and procedures are not effective, which are discussed below in more detail, in timely alerting him to material information relating to us required to be included in our periodic SEC filings and in ensuring that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  The conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in internal control over financial reporting as identified below under the heading “Management’s Report on Internal Control over Financial Reporting.” Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

 

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.  Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.  To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles.  Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

 

30
 

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended.  Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012.  In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework.   Based upon this evaluation, management concluded that our internal control over financial reporting was not effective as of December 31, 2012 for the following reasons.

 

· The Company does not have an independent board of directors or audit committee or adequate segregation of duties;
· All of our financial reporting is carried out by our financial consultant
· We do not have an independent body to oversee our internal controls over financial reporting and lack segregation of duties due to the limited nature and resources of the Company.
· Inadequate closing process to ensure all material misstatements are corrected in the financial statements.  

 

We intend to rectify these weaknesses by implementing an independent board of directors and hiring of additional accounting personnel once we have additional resources to do so.

 

Changes in Internal Control Over Financial Reporting

 

There have been no changes in our internal control over financial reporting through the date of this report or during the quarter ended December 31, 2012, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

No Attestation Report by Independent Registered Accountant

 

The effectiveness of our internal control over financial reporting as of December 31, 2012 has not been audited by our independent registered public accounting firm by virtue of our exemption from such requirement as a smaller reporting company.

   

Item 9B.  Other Information.

 

 

 

31
 

 

PART III

  

Item 10.  Directors, Executive Officers, and Corporate Governance.

 

The members of the board of directors of the Company will serve until the next annual meeting of stockholders, or until their successors have been elected.  The officers serve at the pleasure of the board of directors.  Officers are elected by the board of directors and their terms of office are, except to the extent governed by employment contract, at the discretion of the board.  Information as to the directors and executive officers of the Company is as follows:

 

NAME AGE POSITION
William H. Gray 62 Chief Executive Officer and Director
Larry Griffin 60 Director

 

Duties, Responsibilities, and Experience

 

William Gray has been a director of CCI since November 2008 and the Chief Executive Officer of CCI since February 10, 2009.  Additionally, Mr. Gray is the founder of Innovation Capital Management, Inc. (“ICM”), a Delaware Corporation formed in May 2008.  ICM is involved in managing investment securities design and development.  ICM is also the owner of ICM LLC and DiscoverNet, Inc.  DiscoverNet, Inc. is a full service Internet Service Provider currently deploying wireless broadband Internet throughout western Wisconsin and was incorporated in July 1996.  Mr. Gray has been the President and Chief Executive Officer of DiscoverNet since May of 1997 and has been chiefly responsible for the funding of DiscoverNet since inception. DiscoverNet was the developer of proprietary propagation software capable of designing wireless networks via the web.  Its initial purpose was to offer the software to other Wireless Internet Service Providers as part of its planned investment and acquisition program.  Mr. Gray is highly skilled and experienced in designing investment securities, developing financial forecast, structuring mergers and acquisitions, writing business plans and drafting private placement memorandums.  Mr. Gray has monitored investment security portfolios exceeding $100 million.

 

Mr. Gray’s qualifications:

   

· Leadership experience – Mr. Gray has been our chairman and chief executive officer since February 2009 and is the founder of Wytec International, Inc. Wylink, Inc., Innovation Capital Management, Inc., Innovation Capital Management LLC., and Wireless Wisconsin LLC.
· Finance experience – Mr. Gray has designed and developed multiple securities investment products and programs as well as complex financial projections and proforma models. He has extensive knowledge with billing and accounting systems such as QuickBooks and Platypus. Additionally, he has substantial experience with Industry billing systems and financial software integration. Mr. Gray has setup and established the Company’s accounting, billing and merchant integration systems for the Company.
· Industry experience – Mr. Gray has more than sixteen (16) years of experience and been intricately involved in the Internet Industry since inception starting in 1995.
· Education experience - Mr. Gray attended Navarro Jr. College, Howard Payne University and Texas A&M University majoring in Psychology.

 

Larry Griffin has been a director of CCI since 2009.  Mr. Griffin is the IT Director for Diamondback Management, Inc. since 2005 and prior to that worked as an independent contractor from 1998 to 2005.  Additionally, he was the Director of Network Development O.S. for WorldCom from 1988 to 1997.  At WorldCom, Mr. Griffin was responsible for WorldCom’s redesign and development of its integrated billing systems during the Company’s accelerated telecom acquisitions in the mid 1990’s.  Mr. Griffin was the chief architect with the sub-system of the DEX (Digital Switch) switches to allow account codes to be validated against a common database from any switch in the DEX network.  He led the design and development of a switch update and CDR collection systems for the DEX network.  Mr. Griffin hopes to advise CCI on its integrated billing systems for future subscriber acquisitions.

 

32
 

 

Election of Directors and Officers

 

Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified.  Officers are appointed to serve until the meeting of the board of directors following the next annual meeting of stockholders and until their successors have been elected and qualified.

 

Involvement in Certain Legal Proceedings

 

No Executive Officer or Director of the Company has been the subject of any order, judgment, or decree of any Court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring suspending or otherwise limiting him from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.

 

No Executive Officer or Director of the Company has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending.

 

No current Executive Officer or Director of the Company is the subject of any pending legal proceedings.

 

Limitation of Liability and Indemnification of Officers and Directors

 

Under Nevada General Corporation Law and our articles of incorporation, our directors will have no personal liability to us or our stockholders for monetary damages incurred as the result of the breach or alleged breach by a director of his “duty of care.”  This provision does not apply to the directors’ (i) acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, (ii) acts or omissions that a director believes to be contrary to the best interests of the corporation or its shareholders or that involve the absence of good faith on the part of the director, (iii) approval of any transaction from which a director derives an improper personal benefit, (iv) acts or omissions that show a reckless disregard for the director’s duty to the corporation or its shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director’s duties, of a risk of serious injury to the corporation or its shareholders, (v) acts or omissions that constituted an unexcused pattern of inattention that amounts to an abdication of the director’s duty to the corporation or its shareholders, or (vi) approval of an unlawful dividend, distribution, stock repurchase or redemption. This provision would generally absolve directors of personal liability for negligence in the performance of duties, including gross negligence.

 

The effect of this provision in our articles of incorporation is to eliminate the rights of CCI and our stockholders (through stockholder’s derivative suits on behalf of CCI) to recover monetary damages against a director for breach of his fiduciary duty of care as a director (including breaches resulting from negligent or grossly negligent behavior) except in the situations described in clauses (i) through (vi) above.  This provision does not limit nor eliminate the rights of CCI or any stockholder to seek non-monetary relief such as an injunction or rescission in the event of a breach of a director’s duty of care.  In addition, our Articles of Incorporation provide that if Nevada law is amended to authorize the future elimination or limitation of the liability of a director, then the liability of the directors will be eliminated or limited to the fullest extent permitted by the law, as amended.  Nevada General Corporation Law grants corporations the right to indemnify their directors, officers, employees and agents in accordance with applicable law. Our bylaws provide for indemnification of such persons to the full extent allowable under applicable law.  These provisions will not alter the liability of the directors under federal securities laws.

 

We intend to enter into agreements to indemnify our directors and officers, in addition to the indemnification provided for in our bylaws.  These agreements, among other things, indemnify our directors and officers for certain expenses (including attorneys’ fees), judgments, fines, and settlement amounts incurred by any such person in any action or proceeding, including any action by or in the right of CCI, arising out of such person’s services as a director or officer of CCI, any subsidiary of CCI or any other company or enterprise to which the person provides services at the request of CCI.  We believe that these provisions and agreements are necessary to attract and retain qualified directors and officers.

 

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Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling CCI pursuant to the foregoing provisions, CCI has been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

 

Board Committees

 

Director Independence .   The board of directors has analyzed the independence of each director and has concluded that currently Messrs. Hewitt  and Griffin are considered independent directors in accordance with the director independence standards of the NYSE Amex Equities, and has determined that they have not had a material relationship with CCI that would impair their independence from management.

 

Audit Committee.   Currently, we do not have an audit committee.  At this time, the board of directors will perform the necessary functions of an audit committee, such as: recommending an independent registered public accounting firm to audit the annual financial statements; reviewing the independence of the independent registered public accounting firm; review of the financial statements and other required regulatory financial reporting; and reviewing management’s policies and procedures in connection with its internal control over financial reporting.

 

Additionally, we do not have a financial expert. We believe the cost related to retaining a financial expert at this time is prohibitive.  However, at such time the Company has the financial resources a financial expert will be hired.

 

Compensation Committee.   We currently do not have a compensation committee of the board of directors.  Until a formal committee is established our board of directors will review all forms of compensation provided to our executive officers, directors, consultants and employees, including stock compensation.  The board makes all compensation decisions for the Executives and approves recommendation regarding equity awards to all elected officers of CCI. Decisions regarding the non-equity compensation of other executive officers are made by the board.

 

Nominating Committee.   We do not have a Nominating Committee or Nominating Committee Charter.  Our board of directors performs some of the functions associated with a Nominating Committee.  We elected not to have a Nominating Committee during the year ended December 31, 2012, in that we had limited operations and resources.

 

Director Nomination Procedures .   Generally, nominees for Directors are identified and suggested by the members of the board or management using their business networks.  The board has not retained any executive search firms or other third parties to identify or evaluate director candidates in the past and does not intend to in the near future.  In selecting a nominee for director, the board or management considers the following criteria:

 

· whether the nominee has the personal attributes for successful service on the board, such as demonstrated character and integrity; experience at a strategy/policy setting level; managerial experience dealing with complex problems; an ability to work effectively with others; and sufficient time to devote to the affairs of the Company;
   
· whether the nominee has been the chief executive officer or senior executive of a public company or a leader of a similar organization, including industry groups, universities or governmental organizations;
   
· whether the nominee, by virtue of particular experience, technical expertise or specialized skills or contacts relevant to the Company’s current or future business, will add specific value as a board member; and
   
· whether there are any other factors related to the ability and willingness of a new nominee to serve, or an existing board member to continue his service.

 

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The board or management has not established any specific minimum qualifications that a candidate for director must meet in order to be recommended for board membership.  Rather, the board or management will evaluate the mix of skills and experience that the candidate offers, consider how a given candidate meets the board’s current expectations with respect to each such criterion and make a determination regarding whether a candidate should be recommended to the stockholders for election as a Director. During 2012, the Company received no recommendation for Directors from its stockholders.

  

Report of the Audit Committee

 

Our board of directors has reviewed and discussed our audited financial statements for the fiscal year ended December 31, 2012 with senior management.  The board of directors has also discussed with Padgett, Stratemann & Co., L.L.P. (PS&Co.),, our independent auditors, the matters required to be discussed by the statement on Auditing Standards No. 61 (Communication with Audit Committees) and received the written disclosures and the letter from PS& Co. required by Independence Standards Board Standard No. 1 (Independence Discussion with Audit Committees). The board of directors has discussed with PS&Co. the independence of PS&Co. as our auditors.  

  

BOARD OF DIRECTORS

William H. Gray

Larry Griffin

  

Notwithstanding anything to the contrary set forth in any of our previous or future filings under the United States Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate this report in future filings with the Securities and Exchange Commission, in whole or in part, the foregoing report shall not be deemed to be incorporated by reference into any such filing.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires executive officers and directors, and persons who beneficially own more than ten percent of an issuer’s common stock, which has been registered under Section 12 of the Exchange Act, to file initial reports of ownership and reports of changes in ownership with the SEC.  Executive officers, directors and greater-than-ten-percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.  Based upon a review of the copies of such forms furnished to us and written representations from our executive officers and directors, we believe that as of December 31, 2012, they were not all current in their filings.

  

Code of Ethics

 

A code of ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote:

 

· Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
· Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Commission and in other public communications made by an issuer;
· Compliance with applicable governmental laws, rules and regulations;
· The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
· Accountability for adherence to the code.

 

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On December 18, 2005, we adopted a written code of ethics that governs all of our officers, and more specifically our principal executive officer, principal financial officer and principal accounting officer directors, employees and contractors. The code of ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote the above mentioned objectives.  Anyone can obtain a copy of the Code of Ethics by contacting the Company.  The Company will post any amendments to the Code of Ethics, as well as any waivers that are required to be disclosed by the rules of either the Securities and Exchange Commission or FINRA.

   

Item 11.  Executive Compensation.

 

Compensation Discussion and Analysis

 

The following Compensation Discussion and Analysis describes the material elements of compensation for our executive officers identified in the Summary Compensation Table (“Named Executive Officers”), and executive officers that we may hire in the future.  As more fully described below, our board of directors makes all decisions for the total direct compensation of our executive officers, including the Named Executive Officers.  We do not have a compensation committee, so all decisions with respect to management compensation are made by the whole board.

 

The Elements of Our Compensation Program

 

Base Salary

 

Executive officer base salaries are based on job responsibilities and individual contribution.  Our board of directors reviews the base salaries of our executive officers, including our Named Executive Officers, considering factors such as corporate progress toward achieving objectives (without reference to any specific performance-related targets) and individual performance experience and expertise.  None of our Named Executive Officers have employment agreements with us.  Additional factors reviewed by our board of directors in determining appropriate base salary levels and raises include subjective factors related to corporate and individual performance.  For the year ended December 31, 2012, all executive officer base salary decisions were approved by the board of directors.

 

Our board of directors determines base salaries for the Named Executive Officers at the beginning of each fiscal year, and the board proposes new base salary amounts, if appropriate, based on its evaluation of individual performance and expected future contributions.  We do not have a 401(k) Plan, but if we adopt one in the future, base salary would be the only element of compensation that would be used in determining the amount of contributions permitted under the 401(k) Plan.

 

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Executive Officer Compensation

 

The following table sets forth the compensation of our executive officers for the years ended December 31, 2012, 2011 and 2010 respectively:

    

Summary Compensation Table

   

Name and Principal Position   Year   Salary    

Stock

Awards (1)(4)

   

All Other

Compensation

    Total  
                             
William Gray, (4)   2012   $ 120,000             $ 39,734     $ 159,734  
Chief Executive Officer and Chairman   2011   $ 94,034     $ -0-     $ 6,000 (2)   $ 100,034  
                                     
Ray Powers, (5)   2011   $ -0-     $ -0-     $ -0- (3)   $ -0-  
Former President and Director   2010   $ 17,500     $ -0-     $ 17,500 (3)   $ 17,500  
                                     
Jerald Woods,     2012   $ -0-     $ -0-     $ -0-     $ -0-  
Former Chief Executive Officer   2011   $ -0-     $ -0-     $ -0-     $ -0-

  

 

(1) Mr. Gray was granted 6,734,858 shares of common stock pursuant to the acquisition on April 2, 2009.  On February 11, 2010 there were 3,000,000 shares issued, of which Mr. Gray subsequently exchanged 500,000 shares in a private transaction. The remaining 3,734,858 shares were issued on June 30, 2010.  The shares were not issued as compensation expense.
(2) Commencing August 1, 2010, Mr. Gray began to receive annual compensation of $120,000 and an automobile allowance of $500 per month.
(3) Commencing July 1, 2010, Mr. Powers began to receive annual compensation of $60,000 and an automobile allowance of $250 per month.
(4) Mr. Gray was appointed as Chief Executive Officer on February 10, 2009.
(5) Dr. Ray Powers was appointed President on February 10, 2009 and resigned on August 15, 2011.

   

The Named Executives have not been paid bonuses and our board of directors has not yet established a formal compensation policy for the determination of bonuses.

 

Employment Agreements

 

During the year ended December 31, 2012, we had two employment agreements or understandings in place with our executive officers.  The agreement with the Company’s CEO calls for annual compensation of $120,000 and an annual auto allowance of $6,000, payable in monthly installments of $500.  The Company also had an agreement with its former President with annual compensation of $60,000 and an annual auto allowance of $3,000, payable in semi-monthly installments of $2,625 which ended as of December 31, 2011.  

 

Outstanding Equity Awards

 

During the year ended December 31, 2012, we did not grant any equity awards to our officers and/or directors.  

 

Option Exercises and Stock Vested

 

None of our executive officers exercised any stock options or acquired stock through vesting of an equity award during the fiscal year ended December 31, 2012.

  

Director Compensation and Other Arrangements

 

As a result of having limited resources during most of 2012, we did not provide compensation to our board of directors.

 

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Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

The following table presents information, to the best of our knowledge, about the beneficial ownership of our common stock on March 05, 2013, held by those persons known to beneficially own more than 5% of our capital stock and by our directors and executive officers.  The percentage of beneficial ownership for the following table is based on 326,804,045 shares of common stock outstanding as of March 05, 2013.

 

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock over which the stockholder has sole or shared voting or investment power. It also includes (unless footnoted) shares of common stock that the stockholder has a right to acquire within 60 days after March 05, 2013, through the exercise of any option, warrant or other right. The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the Securities and Exchange Commission, that only the person or entity whose ownership is being reported has converted options or warrants into shares of our common stock.

 

Name of Officer or Director (1)   Number of Common Shares   Percent Beneficially Owned (2)  
William Gray, Chief Executive Officer and Director   6,234,858   2.8%  
Larry Griffin   -   -  
All Officers and Directors as a Group (2 persons)   6,234,858   2.8%  

 

 

(1) As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., thepower to dispose of, or to direct the disposition of, a security).  The address of each person is in the care of the Company.
(2) Figures are rounded to the nearest percent.

 

Item 13.  Certain Relationships and Related Transactions, and Director Independence.

   

Item 14.  Principal Accounting Fees and Services.

 

Audit Fees

 

The aggregate fees billed for professional services rendered by Padgett, Stratemann & Co, L.L.P. for the audit of our annual financial statements and review of the financial statements included in our Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for 2012 was $27,000.

 

The aggregate fees billed for professional services rendered by M&K CPAS, PLLC for the audit of our annual financial statements and review of the financial statements included in our Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for 2011 and for the first quarter of 2012 was $10,000.

  

Audit-Related Fees

 

No audit-related fees were paid to Padgett, Stratemann & Co., L.L.P. or M&K CPAS, PLLC during 2012 or 2011.

  

Tax Fees

 

No tax fees were paid to Padgett, Stratemann & Co., L.L.P. or M&K CPAS, PLLC during 2012 or 2011.

 

All Other Fees

 

No other fees were paid to Padgett, Stratemann & Co., L.L.P. or M&K CPAS, PLLC during 2012 or 2011.

 

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Pre-Approval Policies and Procedures of Audit and Non-Audit Services of Independent Registered Public Accounting Firm

 

Until we appoint an audit committee, our board of directors’ policy in the future is to pre-approve, typically at the beginning of our fiscal year, all audit and non-audit services, other than de minimis non-audit services, to be provided by an independent registered public accounting firm.  These services may include, among others, audit services, audit-related services, tax services and other services and such services are generally subject to a specific budget.  The independent registered public accounting firm and management are required to periodically report to the full board of directors regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date.  As part of the board’s review, the board will evaluate other known potential engagements of the independent auditor, including the scope of work proposed to be performed and the proposed fees, and approve or reject each service, taking into account whether the services are permissible under applicable law and the possible impact of each non-audit service on the independent auditor’s independence from management.  At board meetings throughout the year, the auditor and management may present subsequent services for approval.  Typically, these would be services such as due diligence for an acquisition, that would not have been known at the beginning of the year.

 

Our board of directors has considered the provision of non-audit services provided by our independent registered public accounting firm to be compatible with maintaining their independence.  Until we appoint an audit committee, our board of directors will continue to approve all audit and permissible non-audit services provided by our independent registered public accounting firm.

 

 

 

 

 

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PART IV

 

Item 15.  Exhibits, Financial Statement Schedules.

 

(a) The following documents are filed as a part of this report of Form 10-K:

 

  1. The financial statements listed in the “Index to Financial Statements” at page F-1 are filed as part of this report.

 

  2. Financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

 

  3. Exhibits included or incorporated herein: See index to Exhibits.

 

(b) Exhibits

 

        Incorporated by reference
Exhibit   Exhibit Description Filed herewith Form Period ending Exhibit Filing date
2.1   Plan and agreement of reorganization between Huntington Telecommunications Partners, LP and Competitive Companies Holdings, Inc. and Competitive Companies, Inc.   SB-2   2 01/11/02
2.2   Plan and agreement of reorganization between Huntington Telecommunications Partners, LP and Competitive Companies Holdings, Inc. and Competitive Companies, Inc.   SB-2/A   2.2 08/02/02
2.3   Plan and agreement of reorganization between Huntington Telecommunications Partners, LP and Competitive Companies Holdings, Inc. and Competitive Companies, Inc.   SB-2/A   2.2 04/24/03
2.4   Plan and agreement of reorganization between Competitive Companies, Inc. and CCI Acquisition Corp   8-K   10.1 05/09/05
3(i)   Articles of Competitive Companies, as amended   SB-2   3(I) 01/11/02
3(ii)   Bylaws of Competitive Companies   SB-2   3(II) 01/11/02
4   Rights and Preferences of Preferred Stock   SB-2   4 01/11/02
31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act X        
31.2   Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act X        
32.1   Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act X        
32.2   Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act X        
101.INS   XBRL Instance Document X        
101.SCH   XBRL Schema Document X        
101.CAL   XBRL Calculation Linkbase Document X        
101.DEF   XBRL Definition Linkbase Document X        
101.LAB   XBRL Label Linkbase Document X        
101.PRE   XBRL Presentation Linkbase Document X        

 

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SIGNATURES

 

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

 

  COMPETITIVE COMPANIES, INC.  
       
Date: March 29, 2013 By: /s/ William Gray  
    William Gray, Chief Executive Officer  
       
       

  

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

Signature   Title   Date
         
         
/s/ William Gray   Chief Executive Officer, Principal Accounting Officer, and Director   March 29, 2013
William Gray        
         
         
/s/ Larry Griffin   Director   March 29, 2013
Larry Griffin        

 

 

 

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