form10_q.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-Q
x QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For
the quarterly period ended June 30,
2008
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Commission
file number 333-76630
COMPETITIVE
COMPANIES, INC
(Exact
name of registrant as specified in its charter)
Nevada
|
|
65-1146821
|
(State
or other jurisdiction of incorporation or organization)
|
|
(I.R.S.
Employer Identification No.)
|
3751
Merced Drive, Suite A
|
|
|
Riverside,
CA
|
|
92503
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
Registrant's
telephone
number: (951)
687-6100
Copies
of Communication to:
Stoecklein
Law Group
4695
MacArthur Court,
Eleventh
Floor
Newport
Beach, CA 92660
(949)
798-5541
(949)
258-5112
Indicate
by check mark whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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 x No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Ruble 12b-2 of the Exchange
Act.
Large
accelerated filer
|
Accelerated
filer
|
|
|
Non-accelerated
filer (Do not check if a smaller reporting
company)
|
Smaller
reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes No x
The
number of shares of Common Stock, $0.001 par value, outstanding on August 13,
2008, was 56,757,050 shares.
PART
I – FINANCIAL INFORMATION
Item
1. Financial Statements.
Competitive
Companies, Inc
|
Consolidated
Balance Sheets
|
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
Assets
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
$ |
8,338 |
|
|
$ |
3,909 |
|
Account
receivable, net of allowance for
|
|
|
|
|
|
|
|
|
doubtful
accounts of $85,229 and $75,913
|
|
|
84,430 |
|
|
|
89,424 |
|
Prepaid
expenses
|
|
|
2,719 |
|
|
|
2,561 |
|
Total
current assets
|
|
|
93,487 |
|
|
|
95,894 |
|
|
|
|
|
|
|
|
|
|
Fixed
assets, net
|
|
|
72,615 |
|
|
|
88,081 |
|
|
|
|
|
|
|
|
|
|
Other
assets:
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
1,366 |
|
|
|
1,366 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
167,468 |
|
|
$ |
185,341 |
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
188,337 |
|
|
$ |
117,363 |
|
Accrued
expenses
|
|
|
32,983 |
|
|
|
12,782 |
|
Customer
deposits
|
|
|
45,110 |
|
|
|
43,860 |
|
Note
payable, related party
|
|
|
33,000 |
|
|
|
25,000 |
|
Current
maturities of long term debt
|
|
|
6,645 |
|
|
|
6,648 |
|
Total
current liabilities
|
|
|
306,075 |
|
|
|
205,653 |
|
|
|
|
|
|
|
|
|
|
Long
term debt, net of current maturities
|
|
|
12,421 |
|
|
|
15,675 |
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity (deficit):
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.001 par value 10,000,000 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, 100,000,000 shares
|
|
|
|
|
|
|
|
|
authorized,
56,757,050 and 56,707,050 shares issued and outstanding
|
|
|
|
|
|
|
|
|
at
June 30, 2008 and December 31, 2007
|
|
|
56,757 |
|
|
|
56,707 |
|
Subscription
payable (235,000 and 140,000 shares)
|
|
|
23,500 |
|
|
|
14,000 |
|
Additional
paid-in capital
|
|
|
2,666,732 |
|
|
|
2,661,782 |
|
Accumulated
(deficit)
|
|
|
(2,900,512 |
) |
|
|
(2,770,971 |
) |
|
|
|
(151,028 |
) |
|
|
(35,987 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
167,468 |
|
|
$ |
185,341 |
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements.
Competitive
Companies, Inc
|
|
Consolidated
Statements of Operations
|
|
(unaudited)
|
|
|
|
For
the three months ended
|
|
|
For
the six months ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
180,256 |
|
|
$ |
225,860 |
|
|
$ |
359,576 |
|
|
$ |
459,801 |
|
Cost
of sales
|
|
|
84,223 |
|
|
|
113,668 |
|
|
|
205,222 |
|
|
|
241,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
96,033 |
|
|
|
112,192 |
|
|
|
154,354 |
|
|
|
218,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
73,700 |
|
|
|
160,947 |
|
|
|
150,233 |
|
|
|
297,304 |
|
Salaries
and wages
|
|
|
52,374 |
|
|
|
114,637 |
|
|
|
104,960 |
|
|
|
237,462 |
|
Consulting
fees
|
|
|
454 |
|
|
|
456 |
|
|
|
874 |
|
|
|
11,050 |
|
Depreciation
|
|
|
8,553 |
|
|
|
8,475 |
|
|
|
17,106 |
|
|
|
16,684 |
|
Bad
debt
|
|
|
(2,440 |
) |
|
|
(3,309 |
) |
|
|
6,826 |
|
|
|
17,236 |
|
Total
operating expenses
|
|
|
132,641 |
|
|
|
281,206 |
|
|
|
279,999 |
|
|
|
579,736 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
operating (loss)
|
|
|
(36,608 |
) |
|
|
(169,014 |
) |
|
|
(125,645 |
) |
|
|
(361,629 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(2,178 |
) |
|
|
(544 |
) |
|
|
(3,896 |
) |
|
|
(1,112 |
) |
Total
other income (expenses)
|
|
|
(2,178 |
) |
|
|
(544 |
) |
|
|
(3,896 |
) |
|
|
(1,112 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
$ |
(38,786 |
) |
|
$ |
(169,558 |
) |
|
$ |
(129,541 |
) |
|
$ |
(362,741 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding
- basic and fully diluted
|
|
|
56,748,259 |
|
|
|
53,428,717 |
|
|
|
56,727,654 |
|
|
|
54,188,717 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) per share - basic and fully diluted
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.01 |
) |
The
accompanying notes are an integral part of these financial
statements.
Competitive
Companies, Inc
|
Consolidated
Statements of Cash Flows
|
(unaudited)
|
|
|
For
the six months ended
|
|
|
|
June
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
Net
(loss)
|
|
$ |
(129,541 |
) |
|
$ |
(193,183 |
) |
Adjustments
to reconcile net (loss) to
|
|
|
|
|
|
|
|
|
net
cash (used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
17,106 |
|
|
|
8,209 |
|
Share-based
compensation
|
|
|
- |
|
|
|
10,000 |
|
Provision
for bad debt
|
|
|
9,316 |
|
|
|
20,545 |
|
Decrease
(increase) in assets:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(2,322 |
) |
|
|
3,170 |
|
Prepaid
expenses
|
|
|
(158 |
) |
|
|
- |
|
Increase
(decrease) in liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
70,974 |
|
|
|
(52,863 |
) |
Accrued
expenses
|
|
|
20,201 |
|
|
|
12,174 |
|
Customer
deposits
|
|
|
1,250 |
|
|
|
3,050 |
|
Net
cash (used in) operating activities
|
|
|
(13,174 |
) |
|
|
(188,898 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
Purchased
of fixed assets
|
|
|
(1,640 |
) |
|
|
(2,218 |
) |
Net
cash (used in) investing activities
|
|
|
(1,640 |
) |
|
|
(2,218 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
Proceeds
from note payable, related party
|
|
|
25,000 |
|
|
|
- |
|
Payments
on note payable, related party
|
|
|
(17,000 |
) |
|
|
- |
|
Principal
payments on notes payable
|
|
|
(3,257 |
) |
|
|
(1,489 |
) |
Proceeds
from issuance of common stock
|
|
|
14,500 |
|
|
|
235,000 |
|
Net
cash provided by financing activities
|
|
|
19,243 |
|
|
|
233,511 |
|
|
|
|
|
|
|
|
|
|
Net
increase in cash
|
|
|
4,429 |
|
|
|
42,395 |
|
Cash
- beginning
|
|
|
3,909 |
|
|
|
4,337 |
|
Cash
- ending
|
|
$ |
8,338 |
|
|
$ |
46,732 |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures:
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$ |
866 |
|
|
$ |
568 |
|
Income
taxes paid
|
|
$ |
- |
|
|
$ |
- |
|
The
accompanying notes are an integral part of these financial
statements.
Competitive
Companies, Inc
Notes
to Consolidated Financial Statements
Note
1 - Basis of Presentation
The
condensed consolidated interim financial statements included herein, presented
in accordance with United States generally accepted accounting principles and
stated in US dollars, have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading.
These
statements reflect all adjustments, consisting of normal recurring adjustments,
which in the opinion of management are necessary for fair presentation of the
information contained therein. It is suggested that these consolidated interim
financial statements be read in conjunction with the financial statements of the
Company for the year ended December 31, 2007 and notes thereto included in the
Company's Form 10-KSB annual report. The Company follows the same accounting
policies in the preparation of interim reports.
Results
of operation for the interim period are not indicative of annual
results
Reclassifications
Certain
reclassifications have been made to prior year amounts to conform to the current
year presentation.
Note
2 – Going Concern
The
Company’s 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. The Company has incurred
continuous losses from operations, has an accumulated deficit of $2,900,512 and
a working capital deficit of $212,588 at June 30, 2008, and has reported
negative cash flows from operations over the last three years. In addition, the
Company does not currently have the cash resources to meet their 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 environment in which they operate.
The
Company’s ability to continue as a going concern is dependent on their ability
to generate sufficient cash from operations to meet their cash needs and/or to
raise funds to finance ongoing operations and repay debt. However, there can be
no assurance that the
Company
will be successful in their efforts to raise additional debt or equity capital
and/or that our cash generated by operations will be adequate to meet their
needs. These factors, among others, indicate that they may be unable to continue
as a going concern for a reasonable period of time.
The
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 – Property and Equipment
Property
and equipment consist of the following:
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Telecommunication
equipment and computers
|
|
$ |
279,197 |
|
|
$ |
277,557 |
|
Furniture
& Fixtures
|
|
|
3,353 |
|
|
|
3,353 |
|
Leasehold
Improvements
|
|
|
13,539 |
|
|
|
13,539 |
|
|
|
|
296,089 |
|
|
|
294,449 |
|
|
|
|
|
|
|
|
|
|
Less
accumulated depreciation
|
|
|
(223,474 |
) |
|
|
(206,368 |
) |
|
|
$ |
72,615 |
|
|
$ |
88,081 |
|
Depreciation
expense totaled $17,106 and $16,684 for the six months ended June 30, 2008 and
2007, respectively.
Note
4 – Notes Payable, Related Party
The
Company had unsecured notes payable outstanding to the Company’s CEO of $33,000
in total as of June 30, 2008 and $25,000 as of December 31, 2007 for short term
loans to fund the Company’s operations. The notes bear interest at 18% and are
due on demand. Interest expense of $3,030 and $863 has been recorded as of June
30, 2008, and December 31, 2007, respectively.
Note
5 – Long Term Debt
Long-term
debt consists of the following at June 30, 2008 and December 31,
2007:
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
Unsecured
note payable to a stockholder, in original amount of $56,276, bearing
interest at 8%, and carrying monthly principal and interest payments of
$683 maturing February 23, 2011.
|
|
$ |
19,066 |
|
|
$ |
22,323 |
|
Less:
current portion
|
|
|
6,645 |
|
|
|
6,648 |
|
Long-term
debt, less current portion
|
|
$ |
12,421 |
|
|
$ |
15,675 |
|
Future
maturities of long-term debt are as follows as of June 30:
2009
|
|
$ |
6,645 |
|
2010
|
|
|
7,345 |
|
2011
|
|
|
5,076 |
|
|
|
$ |
19,066 |
|
Interest
expense totaled $866 and $1,112 for the six months ended June 30, 2008 and 2007,
respectively.
Note
6 – Commitments
The
Company leases its operating facility in Riverside California under a
non-cancelable 5-year operating lease expiring December 14, 2011. The lease
provides for increases in future minimum annual rental payments based on defined
annual increases beginning with monthly payments of $2,433 and culminating in a
monthly payment of $2,945 in 2011. Lease expense totaled $15,621 and $13,650
during the six months ending June 30, 2008 and 2007, respectively.
Future
minimum lease payments required are as follow:
Year
|
|
Amount
|
|
2008
|
|
$ |
15,237 |
|
2009
|
|
|
32,394 |
|
2010
|
|
|
33,931 |
|
2011
|
|
|
32,394 |
|
Total
|
|
$ |
113,956 |
|
Note
7 – Stockholders’ equity (deficit)
Common
stock
On
April 1, 2008, CCI received $3,000 in exchange for a subscription agreement
totaling 30,000 shares of its $.001 par value common stock from an individual
investor. The shares remain un-issued as of the date of this
report.
On
April 16, 2008, CCI received $5,000 in exchange for a subscription agreement
totaling 50,000 shares of its $.001 par value common stock from the Company’s
CEO.
On
May 14, 2008, CCI received $6,500 in exchange for a subscription agreement
totaling 130,000 shares of its $.001 par value common stock from an individual
investor. The shares remain un-issued as of the date of this
report.
Note
8 – Subsequent Events
On
July 23, 2008 the Company entered into a consulting agreement to receive
business development services over a four month term in exchange for 3,000,000
shares of the Company’s common stock. The fair market value of the shares was
$90,000 and will be amortized over the four month term of the agreement. The
shares remain unissued as of the date of this report.
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. 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;
|
·
|
Our
ability to market our services to new
subscribers;
|
·
|
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. 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;
|
·
|
Inability
to efficiently manage our
operations;
|
·
|
Inability
to achieve future sales levels or other operating
results;
|
·
|
Key
management or other unanticipated personnel
changes;
|
·
|
The
unavailability of funds for capital expenditures;
and
|
·
|
The
other risks and uncertainties detailed in this
report.
|
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 and in our Annual Report on Form 10-K for the year
ended December 31, 2007.
AVAILABLE
INFORMATION
We
file annual, quarterly and special reports and other information with the SEC
that can be inspected and copied at the public reference facility maintained by
the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0405.
Information regarding the public reference facilities may be obtained from the
SEC by telephoning 1-800-SEC-0330. The Company’s filings are also available
through the SEC’s Electronic Data Gathering Analysis and Retrieval System which
is publicly available through the SEC’s website (www.sec.gov). Copies of such
materials may also be obtained by mail from the public reference section of the
SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0405 at prescribed
rates.
Item
2. Management’s Discussion and Analysis and Plan of Operation
OVERVIEW
OF CURRENT OPERATIONS
CCI
is a Nevada corporation that acts as a holding company for its operating
subsidiaries, Competitive Communications, Inc. (“Competitive Communications”),
which is an approved and regulated local and long distance telephone company,
and CCI Residential Services Inc. (“CCI Residential”), which is a non-regulated
telephone company providing local and long distance telephone service,
high-speed Internet and cable television service to large apartment
complexes. CCI, Competitive Communications and CCI Residential
(collectively referred to as the “Company”) provide telephone, cable television,
long distance/inter - exchange, and dial up and high-speed Internet connections
and e-mail services, mainly to customers who live in multi-tenant residential
buildings. The Company’s operations are located in Riverside, California and
substantially all of its customers are California residents with a smaller
percentage residing in Alabama and Mississippi.
On
May 5, 2005, the Company merged with CA Networks, Inc. (“CAN”), which was a
development stage enterprise in the process of developing a business model in
the same industry as CCI. CAN was formed under the laws of the state of Wyoming
on January 14, 2004 and provided retail local and long distance telephone
service and DSL Internet service in Kentucky. The combined
companies maintained the name of CCI. As of June 30, 2006, we no
longer have operations within Kentucky and have focused on continuing its
operations of providing telecommunications services to California, Alabama, and
Mississippi.
CURRENT
OPERATIONS
The
telecommunications products and services provided by the company and its
subsidiaries include local telephone services, domestic and international long
distance services, and enhanced voice, data and Internet services, and Cable TV
service primarily to residents of apartment complexes, retail businesses and
residential users. We operate in both a regulated and non-regulated
environment. It is our intention in the future to provide bundled
services to our
customers
as well as expand to customers beyond apartment complexes by providing VoIP
services. However, as of the date of this filing we have not been
able to implement these services partly due to a lack of financing.
During
the quarter ended March 31, 2008, we announced the appointment of a Chief
Technical Officer who is going to help facilitate the expansion and advertising
of our (800) telephone service. Subsequent to the quarter ended June
30, 2008, we also announced the launch of a new website
(www.ccidirectwholesale.com) that will be dedicated to selling various
electronic, household, business, and clothing and jewelry items at significant
discounts. It is anticipated that products will be available to be
shipped directly to customers within 2 to 3 business days. Both of
these additions are expansions into new revenue sources and the Company hopes to
create a wider customer base from that of just servicing of large apartment
complexes.
Results
of Operations for the three and six months ended June 30, 2008
The
following tables summarize selected items from the statement of operations for
the three and six months ended June 30, 2008 compared to the three and six
months ended June 30, 2007.
INCOME:
|
|
Three
Months Ended
|
|
|
Increase/
(Decrease)
|
|
|
Six
Months Ended
|
|
|
Increase/
(Decrease)
|
|
|
|
2008
|
|
|
2007
|
|
|
%
|
|
|
2008
|
|
|
2007
|
|
|
%
|
|
Revenues
|
|
$ |
180,256 |
|
|
$ |
225,860 |
|
|
|
(20 |
%) |
|
$ |
359,576 |
|
|
$ |
459,801 |
|
|
|
(22 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of Sales
|
|
|
84,223 |
|
|
|
113,668 |
|
|
|
(26 |
%) |
|
|
205,222 |
|
|
|
241,694 |
|
|
|
(15 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
$ |
89,510 |
|
|
$ |
112,192 |
|
|
|
(20 |
%) |
|
$ |
147,831 |
|
|
$ |
218,107 |
|
|
|
(32 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit Percentage of Revenue
|
|
|
50 |
% |
|
|
50 |
% |
|
|
0 |
% |
|
|
41 |
% |
|
|
47 |
% |
|
|
(6 |
%) |
Revenues
Revenues
for the three months ended June 30, 2008 was $173,722 compared to revenues of
$225,860 for the three months ended June 30, 2007. This resulted in a decrease
in revenues of $45,604, or 20%, when compared to one year
ago. Revenues for the six months ended June 30, 2008 was $353,053 as
compared to $459,801 for the six months ended June 30, 2007. We also
experienced a decrease of $100,225, or 22% when compared to the same period one
year ago. During 2007, regulations governed by the Federal
Communications Commission were changed that allowed direct competitors to our
telephone and cable services to compete with our customers in the apartment
complexes that we service. As a result, we were unable to
remain
competitive
with larger competitors and some of our customers switched providers and
ultimately, we have begun to experience a decrease in revenues.
Due
to this change in the regulatory environment of our traditional business
operations, we have begun to pursue and investigate alternative revenue
sources. During the end of the first quarter of 2008, we
announced a new revenue source of offering a competitive (800)
service. During the quarter ended June 30, 2008, we announced our
intention to expand into the direct sales of various products through a newly
established website. We hope these services will provide additional
revenues while maintaining a continuous focus on our core business.
Cost
of sales
Cost
of sales for the three months ended June 30, 2008 was $84,223, a decrease of
$29,445, or 26%, from $113,668 for the three months ended June 30,
2007. Cost of sales also decreased from $241,694 for the six months
ended June 30, 2007 to $205,222 for the six months ended June 30,
2008. Beginning in 2007, we began eliminating underutilized circuits
and have made continued efforts to continually manage and reduce costs, where
applicable. During the six months ended June 30, 2008, we experienced
decreased revenues which reduced some of our cost of sales. In addition, some of
our contracts with apartment complexes have expired which reduced our
commissions expenses.
Gross
profit
Gross
profit as a percentage of revenue decreased from 47% for the six months ended
June 30, 2007 to 41% for the six months ended June 30, 2008. However,
our gross profits as a percentage of revenue did not fluctuate from the three
months ended June 30, 2007 when compared to the three months ended June 30,
2008. Our gross profit for the six months ended June 30, 2008
decreased as a result of not being able to better manage our cost of sales in
relation to our decrease in revenues.
EXPENSES:
|
|
Three
Months Ended
|
|
|
Increase/
(Decrease)
|
|
|
Six
Months Ended
|
|
|
Increase/
(Decrease)
|
|
|
|
2008
|
|
|
2007
|
|
|
%
|
|
|
2008
|
|
|
2007
|
|
|
%
|
|
General
and administrative expenses
|
|
$ |
73,700 |
|
|
$ |
160,947 |
|
|
|
(54 |
%) |
|
$ |
150,233 |
|
|
$ |
297,304 |
|
|
|
(49 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and wages
|
|
|
52,374 |
|
|
|
114,637 |
|
|
|
(53 |
%) |
|
|
104,960 |
|
|
|
237,462 |
|
|
|
(56 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
fees
|
|
|
454 |
|
|
|
456 |
|
|
|
0 |
% |
|
|
874 |
|
|
|
11,050 |
|
|
|
(92 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
8,553 |
|
|
|
8,475 |
|
|
|
(1 |
%) |
|
|
17,106 |
|
|
|
16,684 |
|
|
|
(3 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bad
Debt
|
|
|
(2,440 |
) |
|
|
(3,309 |
) |
|
|
(26 |
%) |
|
|
6,826 |
|
|
|
17,236 |
|
|
|
(60 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
operating (loss)
|
|
$ |
(36,608 |
) |
|
$ |
(169,014 |
) |
|
|
(78 |
%) |
|
$ |
(125,645 |
) |
|
$ |
(361,629 |
) |
|
|
(65 |
%) |
General
and Administrative expenses
General
and administrative expenses were $73,700 for the three months ended June 30,
2008 versus $160,947 for the three months ended June 30, 2007, which resulted in
a decrease of $87,247 or 54%. General and administrative expenses
also decreased 49% for the six months ended June 30, 2008 as compared to the six
months ended June 30, 2007. The decrease was due primarily to a
decrease in the Company’s advertising and promotional costs, as well as, an
overall effort to trim non-essential overhead costs.
Salaries
and Wages
Salary
and wage expenses were $52,374 for the three months ended June 30, 2008 versus
$114,637 of salary and wage expenses for the three months ended June 30,
2007. Salary and wage expenses also decreased 56% for the six months
ended June 30, 2008 of $104,960 to $237,462 for the six months ended June 30,
2007. During the first six months of 2007, we had increased
management’s salaries, which the Company has since ceased payment of as a result
of no longer having the same management as of a year
ago. Additionally, our current CEO, does not have an employment
agreement in place and therefore we have not paid any compensation during the
six months ended June 30, 2008 to him. We expect that we may need to
increase our personnel in the future as we expand our operations, if and when we
enter into the VoIP field as well as the anticipated expansion into different
revenue sources.
Consulting
Fees
Consulting fees were $454 for the three
months ended June 30, 2008 compared to $456 consulting fees for the three
months ended June 30, 2007. Consulting fees were $874 for the
six months ended June 30, 2008 compared to $11,050 for the six months ended June
30, 2007. The majority of our consulting fees during the six months ended
June 30, 2007, were a result of issuances of common stock as compensation in
exchange for consulting services. During the first six months of
2008, we did not have similar expenses.
Depreciation
Depreciation
expenses were $8,553 for the three months ended June 30, 2008 versus $8,475 for
the three months ended June 30, 2007. During the six months ended
June 30, 2008, we had depreciation expenses of 17,106 compared to $16,684 for
the six months ended June 30, 2007. This resulted in a minimal
increase of 3% for the six months ended June 30, 2008 when compared to the same
time period in 2007. During 2007 we acquired some additional assets
which accounts for the depreciation expenses and at this point in time we
anticipate our depreciation expenses to remain stable.
Bad
Debt
Bad
debt expenses for the six months ended June 30, 2008 were $6,826 as compared to
$17,236 for the same period in 2007, which resulted in a decrease of
$10,410. We were able to decrease our allowance of bad debt as a
result of having fewer accounts likely being sent to a third party collection
agency.
Net
Operating (Loss)
The
net operating loss for the three months ended June 30, 2008 was $36,608, versus
a net operating loss of $169,014 for the three months ended June 30,
2007. The net operating loss for the six months ended June 30,
2008 was $125,645, versus a net operating loss of $361,629. For the
three months ended June 30, 2008, we were able to reduce our net loss by 78% and
for the six months ended June 30, 2008, we were able to reduce our net loss by
65%. This decrease in net loss is primarily attributable to the
significant reduction in our consulting expenses, salaries and wages, and
general and administrative expenses for the six months ended June 30,
2008.
LIQUIDITY
AND CAPITAL RESOURCES
The
following table summarizes total current assets, liabilities and working capital
at June 30, 2008 compared to December 31, 2007.
|
|
June
30,
|
|
|
December
31,
|
|
|
Increase
/ (Decrease) |
|
|
|
2008
|
|
|
2007
|
|
|
$
|
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
$ |
93,487 |
|
|
$ |
95,894 |
|
|
$ |
(2,407 |
) |
|
|
(3 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
$ |
306,075 |
|
|
$ |
205,653 |
|
|
$ |
100,422 |
|
|
|
49 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
(Deficit)
|
|
$ |
(212,588 |
) |
|
$ |
(109,759 |
) |
|
$ |
102,829 |
|
|
|
(94 |
%) |
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. As of
June 30, 2008, we had current assets of $93,487 and current liabilities of
$306,075, which resulted in a working capital deficit of
$212,588. 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.
Our
future capital requirements will depend on many factors, including the expansion
of our VoIP services; actual usage of Waylinks’ antennas; additional marketing
of the (800) services; the expansion of new website and product offerings; the
cost and availability of third-party financing for development; addition of new
revenue sources; and administrative and legal
expenses. We
conducted private placements of equity shares at $0.10 per share during the
fiscal 2007 year, whereby we sold approximately 4,030,000 shares and had raised
a total of $403,000. During the second quarter of 2008, we sold a
total of 210,000 shares of our common stock for a total of $14,500.
As
of the year ended December 31, 2007, we entered into an unsecured note payable
with our Chief Executive Officer totaling $25,000 and as of the six months ended
June 30, 2008 we had unsecured notes payable in the amount of
$33,000. These notes bear an annual interest rate of 18% and are
payable upon demand. 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.
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.
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 $2,900,512 and a working capital
deficit of $212,588 at June 30, 2008, and have reported negative cash flows from
operations over the last four 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.
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.
Critical
Accounting Policies and Estimates
The
preparation of our consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires us to
make estimates and judgments that affect our reported assets, liabilities,
revenues, and expenses, and the disclosure of contingent assets and liabilities.
We base our estimates and judgments on historical experience and on various
other assumptions we believe to be reasonable under the circumstances. Future
events, however, may differ markedly from our current expectations and
assumptions.
Recent Accounting
Pronouncements
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS
No. 159 allows the company to choose to measure many financial assets and
financial liabilities at fair value. Unrealized gains and losses on items for
which the fair value option has been elected are reported in earnings. SFAS 159
is effective for fiscal years beginning after November 15, 2007. The adoption of
SFAS 159 is not expected to have a material impact on the Company’s financial
position, results of operation or cash flows.
In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements”. This statement amends ARB 51 to establish
accounting and reporting standards for the non-controlling (minority) interest
in a subsidiary and for the de-consolidation of a subsidiary. It clarifies that
a non-controlling interest in a subsidiary is equity in the consolidated
financial statements. SFAS No. 160 is effective for fiscal years and interim
periods beginning after December 15, 2008. The adoption of SFAS 160 is not
expected to have a material impact on the Company’s financial position, results
of operation or cash flows.
In
December 2007, the FASB issued SFAS No. 141 (Revised), “Business Combinations”.
SFAS 141 (Revised) establishes principals and requirements for how an acquirer
of a business recognizes and measures in its financial statements, the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree. This statement also provides guidance for recognizing
and measuring the goodwill acquired in the business combination and determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. The
guidance will become effective for the fiscal year beginning after December 15,
2008.
Item
3. Quantitative and Qualitative Disclosure About Market Risk
This item in not applicable as we are
currently considered a smaller reporting company.
Item
4T. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
Our
Chief Executive Officer and Principal Financial Officer, Mr. Jerald Woods, has
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 annual report. Based on
the evaluation, Mr. Woods concluded that our disclosure controls and procedures
are not effective, for the reasons discussed below, in timely alerting him to
material information relating to us (including our consolidated subsidiaries)
required to be included in our periodic SEC filings, 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.
|
We
plan 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 were no changes in our internal
control over financial reporting that occurred during our most recent fiscal
quarter that have materially affected, or reasonably likely to materially
affect, our internal control over financial reporting.
PART
II – OTHER INFORMATION
Item
1. Legal Proceedings
From
time to time, we may become involved in various lawsuits and legal proceedings
which arise in the ordinary course of business. However, litigation is subject
to inherent uncertainties, and an adverse result in these or other matters may
arise from time to time that may harm our business. We are not presently a party
to any material litigation, nor to the knowledge of management is any litigation
threatened against us, which may materially affect us.
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 six months ended June 39, 2008 was $36,608 and
$438,426 for the year ended December 31, 2007. As of June 30, 2008, we only
had $8,338 in cash available to finance our operations and a working capital
deficit of $102,829. 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 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.
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 June 30, 2008 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.
If
we are unable to obtain additional funding, our business operations will be
harmed and if we do obtain additional financing our then existing stockholders
may suffer substantial dilution.
We will require additional funds to
expand our operations and believe the current cash on hand and the other sources
of liquidity will not be sufficient enough to fund our operations through fiscal
2008. We anticipate that we will require up to approximately
$250,000 to fund
our continued operations for the next twelve months, depending on revenue from
operations.
Additional
capital will be required to effectively support the operations and to otherwise
implement our overall business strategy. There can be no assurance
that financing will be available in amounts or on terms acceptable to us, if at
all. The inability to obtain additional capital will restrict our
ability to grow and may reduce our ability to continue to conduct business
operations. If we are unable to obtain additional financing, we will
likely be required to curtail our marketing and development plans and possibly
cease our operations. Any additional equity financing may involve
substantial dilution to our then existing stockholders.
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 give you 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.
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.
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. We have had one late filing and have once been removed from
the OTC Bulletin Board in the last two years. Therefore, we must not
have two more late filings within the two year period or have our securities
removed from the OTC Bulletin Board again, within the two year period, otherwise
we will be in jeopardy of being dequoted from the OTC Bulletin Board for a one
year period. 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 may be 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 Competitive Companies; (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 Competitive Companies are being made only in
accordance with authorizations of management and directors of Competitive
Companies, and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of Competitive
Companies’ 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 CEO, who is responsible for
monitoring and ensuring compliance with our internal control procedures. As a
result, our internal controls may be 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.
|
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.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
On
April 1, 2008, we authorized the issuance of 30,000 shares of our common stock
to an accredited investor in exchange for a subscription agreement totaling
$3,000. As of the date of this report, the shares have not been
issued.
On
April 16, 2008, we authorized the issuance of 50,000 shares of our common stock
to our CEO in exchange for receiving $5,000.
On
May 14, 2008, we authorized the issuance of 130,000 shares of our common stock
to an accredited investor in exchange for a subscription agreement totaling
$6,500. As of the date of this report, the shares have not been
issued.
We
believe the issuance of the shares is exempt from the registration and
prospectus delivery requirement of the Securities Act of 1933 by virtue of
Section 4(2). The shares were issued directly by us and did not
involve a public offering or general solicitation. The recipients of
the shares were afforded an opportunity for effective access to our files and
records of that contained the relevant information needed to make their
investment decision, including our financial statements and 34 Act reports. We
reasonably believed that the recipients had such knowledge and experience in the
Company’s financial and business matters that they were capable of evaluating
the merits and risks of his investment.
Subsequent
Issuances
On August 14, 2008, we filed a
registration statement on Form S-8, whereby we registered a total of 7,730,580
shares. The following list shows the shares issued from that Registration
Statement on Form S-8. As of the date of this filing, we have
1,500,000 shares of our common stock available to be issued under the Consultant
Stock Plan.
Person
Issued to
|
Number
of Shares
|
Stoecklein
Law Group
|
1,230,580
|
Accuity
Financial, Inc.
|
1,000,000
|
Thomas
Mahoney
|
3,000,000
|
Zachery
Bluestein
|
500,000
|
Tonni
Smith-Adkins
|
500,000
|
Issuer
Purchases of Equity Securities
We did not repurchase any of our
securities during the quarter ended June 30, 2008.
Item
3. Defaults Upon Senior Securities
None.
Item
4. Submission of Matters to a Vote of Security Holders
We did not submit any matters to a vote
of our security holders during the second quarter of 2008.
Item
5. Other Information
None.
|
|
|
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
|
Certification of Jerald Woods pursuant to
Section 302 of the Sarbanes-Oxley Act
|
X
|
|
|
|
|
32
|
Certification of Jerald Woods pursuant to
Section 906 of the Sarbanes-Oxley Act
|
X
|
|
|
|
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
COMPETITIVE COMPANIES,
INC.
(Registrant)
By:
/s/ Jerald
Woods
Jerald
Woods, President &
Chief
Executive Officer (On behalf of
the
registrant and as principal accounting
officer)
Date:
August 19, 2008