Edgar Filing: COMPETITIVE COMPANIES INC

Unassociated Document

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, 2011

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 June 30, 2011, based on a closing price of $0.008 was approximately $1,126,110 (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 April 13, 2012 was 220,803,969 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. 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, 2011

Index to Report on Form 10-K

		Page
PART I
Item 1	Business	1
Item 1A	Risk Factors	6
Item 1B	Unresolved Staff Comments	9
Item 2	Properties	10
Item 3	Legal Proceedings	10
Item 4	Mine Safety Disclosures	10

PART II
Item 5	Market for Registrant’s Common Equity and Related Stockholder Matters, and Issuer Purchases of Equity Securities	11
Item 6	Selected Financial Data	12
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 8	Financial Statements and Supplementary Data	19
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	21
Item 9A	Control and Procedures	21
Item 9B	Other Information	22

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	29
Item 13	Certain Relationships and Related Transactions, and Director Independence	29
Item 14	Principal Accounting Fees and Services	29

PART IV
Item 15	Exhibits, Financial Statement Schedules	31
SIGNATURES		32

PART I

Item 1. Business.

General Business Development

Competitive Companies, Inc. (“CCI”) was originally incorporated in the state of Nevada in March 1998. CCI currently acts as a holding company for its operating subsidiaries, Competitive Communications, Inc., CCI Residential Services Inc., Innovation Capital Management, Inc., Innovation Capital Management LLC, Wytec International, Inc., Wylink, Inc., and Wireless Wisconsin LLC (formerly DiscoverNet, Inc.), (“Subsidiaries”), collectively involved in delivering high speed wireless Internet services throughout North America on both a wholesale and retail basis. 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. CCI and its subsidiaries (collectively referred to as the “Company,” “we,” or “us”) provide microwave backhaul services to corporations and wireless Internet Service Providers, develop community wide WiFi networks delivering next generation mobile broadband access while continuing to provide DSL, fixed wireless and dial-up internet connections to commercial and residential customers.

On April 2, 2009, the Company entered into an acquisition agreement and plan of merger whereby the Company acquired 100% of the outstanding interest of four private companies under common control by the chief executive officer of Competitive Companies, Inc. Pursuant to the share exchange agreement, Competitive Companies, Inc. acquired 100% of the combined equity of DiscoverNet, Inc ICM, Inc. and ICM, LLC, in exchange for stock on a 10 to 1 basis, resulting in the issuance of 31,102,740 shares of CCI. The fair market value of the shares was $1,555,137 based on the closing stock price on April 2, 2009, the date of issuance.

On May 5, 2009, DiscoverNet filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. The Company attempted to file a reorganization plan that included the right to sell debtor notes. The Trustee reviewed the Plan and subsequently denied the Plan and on April 21, 2010 the U.S. Trustee filed a motion to convert the Chapter 11 to Chapter 7. DiscoverNet accepted the motion to convert and allowed an orderly dissolution of the Company’s assets. It was determined that Associated Bank essentially had first lien on all assets and was able to recover the assets under the Chapter 7 liquidation rule. The final decree of liquidation of DiscoverNet, Inc. and DiscoverNet of Wisconsin, LLC under Chapter 7 of the federal bankruptcy laws in the United States Bankruptcy Court for the Western District of Wisconsin was effective on October 21, 2010.

On July 23, 2010, Wireless Wisconsin, LLC, was formed as a wholly owned subsidiary of Competitive Companies, Inc. to offer dial up and high-speed broadband internet services, mainly to customers in rural markets throughout Wisconsin and San Antonio, TX.

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 (the “Report Date”), 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 totaled $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. 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.

Current Business Operations

Through the Company’s subsidiary, Wireless Wisconsin, LLC, we provided 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.

Principal Products and Services

During the years ended December 31, 2011 and 2010, CCI’s principal products and services included dial-up, DSL, and wireless broadband internet in the rural markets of Western Wisconsin. CCI plans to expand its footprint of DSL and wireless internet services throughout North America utilizing funding resources generated through its wholly owned subsidiary, Innovation Capital Management (“ICM”). Essentially ICM was developed to organize capital resources utilizing its parent public status and applying for various government funding programs established by the Rural Utility Services under the Department of Agriculture (DOA). Though the Program under the DOA is essentially funded, certain rural markets still have funding opportunity under this and other NTIA sponsored Programs. The Company intends to review this and other government programs available and/or becoming available in the future for low cost funding opportunities in conjunction with its current funding programs.

Additionally, the Company intends to negotiate definitive agreements to create new strategic alliances and acquisitions that could enhance or provide new services and products. Specifically, the Company’s revised business plan includes provisions for wireless backhaul services to commercial customers and other wireless Internet Service Providers (WISP) desiring high speed internet and mobile 4G access. The Company is currently involved in the development of supplying backhaul services to Wireless Wisconsin (CCI Subsidiary) utilizing “millimeter” wave technology capable of delivering at least one (1) Gigabyte of Internet throughput. The Company plans to expand this backhaul technology to its commercial clients.

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.

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 to Tier one, Tier Two and most rural markets across North America.

Principal Suppliers

During the year ended December 31, 2011, 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.

Millimeter Wave Technology

Millimeter wave technology is more commonly known as LMDS or Local Multipoint Distribution Service and utilized in broadband wireless access technology originally designed for digital television transmission (DTV). It was conceived as a fixed wireless, point-to-multipoint technology for utilization in the last mile on a fixed wireless basis. LMDS commonly operates on microwave frequencies across the 26 GHz and 29 GHz bands. In the United States, frequencies from 31.0 through 31.3 GHz are also known as Millimeter wave frequencies. Currently millimeter wave frequencies are primarily used in point to point network architecture vs. a point to multipoint configuration. Technology is quickly evolving in point to multipoint network design utilizing millimeter spectrum as lower band frequencies become less available. The Company has most recently received FCC approval to operate in the 70-90 GHz millimeter spectrum and is currently engaged in qualifying Registered Links utilizing this spectrum under the FCC “Protected” Registered Link Program.

Establishment of Registered Links

Wylink, Inc., 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 “frequency” 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 registered. 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 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 multiple millimeter frequencies the 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.

Acquisition of Wytec International, Inc.

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 (the “Report Date”), based on a market appraisal (the “Valuation Report”) of the intellectual property owned by Wytec (the “Intellectual Property”). Pursuant to the terms of the agreement, the Valuation Report also established the cash portion of the acquisition at $18,900. 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 the Company was created for the specific purpose of housing intangible assets, consisting of a total of five patents, and there were no other operations conducted within Wytec International, Inc. prior to the acquisition. As of the date of this filing, there have been no operations associated with these patents.

Competition and Market Overview

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 pricing levels and clear pricing policies, customer service, and the variety of services 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 as well as other competitive advantages.

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 services through Wylink but has not achieved and does not expect to achieve a significant market share for any of its resale services. 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. Therefore, CCI hopes to be able to move the majority of its business from the regulated arena and compete competitively with the traditional companies.

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, 2011 and 2010, virtually all revenues were derived from the Company’s internet operations in Eau Claire, Wisconsin.

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, 2011, we had five (5) 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 2012, 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.

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.

More specifically, CCI’s past telecommunication services business offered during the year ended December 31, 2010, were subject to state and local regulation. 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.

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, 2011 and 2010 was $542,001 and $1,321,696, respectively. As of December 31, 2011, we only had $142,474 in cash available to finance our operations and a working capital deficit of $1,258,268. 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.

If we are unable to obtain additional funding, our business operations will be harmed our 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 to fund our operations through fiscal 2012. We anticipate that we will require approximately $500,000 to $750,000 to fund our continued operations for fiscal 2012 as well as be able to close on the intended acquisitions, 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.

We may acquire assets or other businesses in the future.

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, 2011, 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.

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 has 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.

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.

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.

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 1,565 square feet of office space for approximately $2,800 per month. The lease expired on November 30, 2009, and has been extended on a month to month basis. For a period of time, the Company was unable to pay full rent and accrued $22,500 in arrears. Subsequently the Company negotiated an additional payment of $1,500 per month until arrears are paid in full, and has been current with rent and the additional payment since January of 2012.

Our subsidiary’s operations are located in Eau Claire, Wisconsin, where we lease approximately 860 square feet of office and warehouse space for approximately $785 per month. The lease expires on September 30, 2012, 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.

On May 5, 2009, DiscoverNet, Inc., a wholly owned subsidiary of the Company, filed petitions for relief under Chapter 11 of the federal bankruptcy laws in the United States Bankruptcy Court for the Western District of Wisconsin. Under Chapter 11, certain claims against DiscoverNet in existence prior to the filing of the petitions for relief under the federal bankruptcy laws are stayed while DiscoverNet continues business operations as debtor-in-possession. These claims are reflected in the December 31, 2009, balance sheet as “liabilities subject to compromise.” Additional claims (liabilities subject to compromise) may arise subsequent to the filing date resulting from rejection of executor contracts, including leases, and from the determination by the court (or agreed to by parties in interest) of allowed claims for contingencies and other disputed amounts. Claims secured against DiscoverNet’s assets also are stayed, although the holders of such claims have the right to move the court for relief from the stay. Secured claims are secured primarily by liens on DiscoverNet’s property, plant, and equipment.

DiscoverNet has received approval from the court to pay or otherwise honor certain of its prepetition obligations, including employee wages and product warranties. DiscoverNet has determined that there is insufficient collateral to cover the interest portion of scheduled payments on its prepetition debt obligations. Contractual interest on those obligations amounts to $6,549, which is $1,096 in excess of reported interest expense; therefore, DiscoverNet has discontinued accruing interest on these obligations. Refer to Note 3 of the notes to the financial statements for a discussion of the credit arrangements entered into subsequent to the Chapter 11 filings. A plan of reorganization was not adopted and DiscoverNet was subsequently converted to a Chapter 7 in September 2010 in which essentially all assets were liquidated and retrieved by Associated Bank.

Item 4. Mine Safety Disclosures.

Not Applicable.

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, 2011		December 31, 2010
	High	Low	High	Low
1st Quarter	$0.014	$0.008	$0.110	$0.030
2nd Quarter	$0.014	$0.004	$0.120	$0.060
3rd Quarter	$0.021	$0.002	$0.105	$0.030
4th Quarter	$0.017	$0.007	$0.030	$0.010

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

As of March 31, 2012, there were approximately 662 record holders of our common stock, not including shares held in “street name” in brokerage accounts which is unknown. As of March 31, 2012, there were approximately 220,803,969 shares of common stock outstanding on record.

Dividends

We have never declared or paid dividends on our Common Stock. We intend to follow a policy of retaining earnings, if any, to finance the growth of the business and do not anticipate paying any cash dividends in the foreseeable future. The declaration and payment of future dividends on the Common Stock will be at the sole discretion of the board of directors and will depend on our profitability and financial condition, capital requirements, statutory and contractual restrictions, future prospects and other factors deemed relevant.

Any cash dividends in the future to common stockholders will be payable when, as and if declared by our board of directors, based upon the board’s assessment of:

·	our financial condition;

earnings;

·	need for funds;

·	capital requirements;

·	prior claims of preferred stock to the extent issued and outstanding; and

·	other factors, including any applicable laws.

Therefore, there can be no assurance that any dividends on the common stock will ever be paid.

Equity Compensation Plan Information

We currently maintain a stock incentive plan in which common stock may be granted to employees, directors, and consultants. During the year ended December 31, 2005, we cancelled 3,435,000 options which were previously outstanding as of December 31, 2004 and adopted our 2005 Stock Option Plan, whereby we then reissued 3,435,000 options plus an additional 3,237,000 options. All of the options, totaling 6,672,000, vest immediately with an exercise price of $0.10 per share and are exercisable through December 15, 2015. The stock option plan was adopted by our board of directors and has not been approved by our stockholders. The following table sets forth information as of December 31, 2011, 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

Total	8,672,000	$0.09	1,328,000

Under our 2005 Stock Option Plan, adopted on December 2, 2005, an aggregate of 10,000,000 shares of common stock are reserved for issuance. 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. As of December 31, 2011, 1,328,000 shares remain available for issuance under this stock option plan.

Unregistered Issuance of Equity Securities

The following is a list of the issuance of securities by us during the fiscal year ending December 31, 2011 in transactions exempt from registration that were not previously included in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K, the proceeds of which were generally used for working capital:

Number of Shares		Dollar Amount/Value of Consideration		Services or Other Consideration	Date of Sale	Exemption from Registration
	3,125,000	$	10,000	Debt Conversions	October 17, 2011	Section 4(2)
	500,000	$	8,750	Services	November 2, 2011	Section 4(2)
	690,019	$	5,110	Debt Conversions	November 11, 2011	Section 4(2)
	381,881	$	2,558	Debt Conversions	November 11, 2011	Section 4(2)
	601,869	$	5,104	Debt Conversions	November 11, 2011	Section 4(2)
	432,689	$	3,032	Debt Conversions	November 11, 2011	Section 4(2)
	2,438,131	$	10,072	Debt Conversions	November 11, 2011	Section 4(2)
	568,844	$	2,519	Debt Conversions	November 11, 2011	Section 4(2)
	424,729	$	3,004	Debt Conversions	November 11, 2011	Section 4(2)
	869,924	$	5,034	Debt Conversions	November 11, 2011	Section 4(2)
	200,000	$	2,000	Debt Conversions	November 11, 2011	Section 4(2)
	4,518,519	$	12,200	Debt Conversions	November 28, 2011	Section 4(2)
	3,703,704	$	10,000	Debt Conversions	November 30, 2011	Section 4(2)
	5,925,926	$	16,000	Debt Conversions	December 2, 2011	Section 4(2)
	5,357,143	$	15,000	Debt Conversions	December 12, 2011	Section 4(2)
	7,925,926	$	21,400	Debt Conversions	December 21, 2011	Section 4(2)

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.

Item 6. Selected Financial Data

Not applicable.

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

Overview

CCI is a Nevada corporation that acts as a holding company for its operating subsidiaries, as follows: (a) Competitive Communications, Inc. (“Competitive Communications”), (b) CCI Residential Services Inc. (“CCI Residential”), (c) DiscoverNet, Inc. (“DiscoverNet”), a company that provided web hosting, dial-up, wireless and DSL Internet services prior to being discharged in bankruptcy on October 21, 2010, (d) DiscoverNet of Wisconsin, LLC (“DiscoverNet, LLC”), a dormant entity that was discharged in bankruptcy on October 21, 2010, (e) Innovation Capital Management, Inc. (“ICM, Inc.”), a company that focuses on raising capital and developing joint ventures and acquisitions, and (f) Innovation Capital Management, LLC (“ICM, LLC”), a company that focuses on developing marketing relationships, (g) Wireless Wisconsin, LLC (“WW”), a company that provides web hosting, dial-up, wireless and DSL Internet services to businesses and residents within various markets throughout Wisconsin and the United States, and (h) Wytec International, Inc., a currently non-operational company acquired on November 8, 2011 which houses certain patents.

The telecommunications products and services provided by us and our subsidiaries include web hosting, e-mail services, dial-up, DSL and wireless internet services to rural residential users and retail businesses. It is our intention in the future to include “mobile” 4G services to our current customers as well as expand to new customers beyond our rural markets.

Overview of Current Operations

Due to increased competition and our customers’ expanded use of cellular telephones as their primary home telephone, we discontinued servicing apartment complexes in California and Alabama during 2009. As a result, we closed our office in California and moved our headquarters to San Antonio, Texas. The transition has enabled us to shift our focus to more contemporary revenue sources, such as, web hosting, dial-up, wireless and DSL internet services with our most recent focus on Mobile 4G services utilizing LMDS as a backhaul solution.

On April 2, 2009, we entered into an acquisition agreement and plan of merger whereby the Company acquired 100% of the outstanding interest of four private companies under common control by the Chief Executive Officer of CCI. Pursuant to the share exchange agreement, CCI acquired 100% of the combined equity of DiscoverNet, Inc., ICM, Inc., ICM, LLC and DiscoverNet, LLC. DiscoverNet, Inc. and DiscoverNet, LLC were subsequently discharged in bankruptcy under Chapter 7 on October 21, 2010.

On November 8, 2011, the Company acquired Wytec International, Inc., a non-operational company that houses certain currently unused patents. There have been no operations conducted within Wytec International, Inc. and the only current impact on our statement of operations is from the acquisition, amortization and subsequent impairment of the intangible assets.

Management continues to seek mergers that will complement our business model and help us grow.

For the years ended December 31, 2011 and 2010, we incurred net losses of $1,024,814 and $865,344, respectively. Our accumulated deficit at the end of December 31, 2011 was $6,161,280. 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, 2011 and 2010

The following income and operating expenses tables summarize selected items from the statement of operations for the year ended December 31, 2011 compared to the year ended December 31, 2010.

INCOME:

	The Year Ended December 31,					Increase/ (Decrease)
	2011		2010			$			%
Revenues	$	118,941	$	190,408		$	(71,467	)		(38%)

Cost of Sales		55,164		201,488		$	(146,324	)		(73%)

Gross Profit (Loss)	$	63,777	$	(11,080	)	$	74,857			(676%)

Percentage of Revenue		54%		(6%)

Revenues

Revenues for the year ended December 31, 2011 was $118,941 compared to revenues of $190,408 for the year ended December 31, 2010. This resulted in a decrease in revenues of $71,467, or 38%. Our revenues decreased in 2011 compared to 2010 due to the loss of market share to competing companies from cellular and satellite based technologies.

Cost of sales

Cost of sales for the year ended December 31, 2011 was $55,164, a decrease of $146,624, or 72.6%, from $201,488 for the year ended December 31, 2010. The decrease was largely a result of the discontinuation of our entities discharged in bankruptcy during the 4th quarter of 2010. We have made continued efforts to continually manage and reduce costs, where applicable.

Gross profit as a percentage of revenue

Gross profit as a percentage of revenue increased from (6%) for the year ended December 31, 2010 to 54% for the year ended December 31, 2011. Gross profit as a percentage of revenue increased due to our ability to reduce cost of sales on more than a pro rata basis with our reduction in revenues. Our fixed costs supporting the infrastructure of our telephone and cable services were reduced by completely cutting off services to our apartment complexes in California. In addition, the expanded operations from California to Wisconsin, as adopted with our acquisitions, have enabled us to operate at better margins than we were able to obtain in California. Overall our gross profit has improved as a result of being able to better manage our cost of sales in relation to our decrease in revenues.

EXPENSES:

	For the Year Ended December 31,						Increase / Decrease 2011 Compared to 2010
	2011			2010			$			%
Expenses:
General and administrative	$	315,187		$	1,220,862		$	(905,675	)		(74%)
Salaries and wages		248,200			62,960			185,240			294%
Depreciation and amortization		3,170			13,387			(10,217	)		(76%)
Bad debts expense (recoveries)		16,341			(3,338	)		19,679			590%
Impairment of intangible assets		22,880			-			22,880			100%
Total operating expenses		605,778			1,300,696			(688,093	)		(53%)

Net operating (loss)		(542,001	)		(1,311,776	)		762,950			(58%)

Other income (expense):
Interest income		238			-			238			100%
Interest expense		(212,537	)		(128,116	)		(84,421	)		66%
Change in fair market value of derivative liabilities		(270,514	)		(77,075	)		(193,439	)		251%
Total other income (expense)		(482,813	)		(205,191	)		277,622			135%

Gain on discontinued operations, net		-			644,798			644,798			100%

Net (loss)	$	(1,024,814	)	$	(865,344	)	$	(159,470	)		18%

General and Administrative expenses

General and administrative expenses were $315,187 for the year ended December 31, 2011, as compared to $1,220,862 for the year ended December 31, 2010. This resulted in a decrease of $905,675 or (74%). The decrease in our general and administrative expenses was largely a result of the discontinuation of our entities discharged in bankruptcy during the 4th quarter of 2010.

Salaries and Wages

Salary and wage expenses were $248,200 for the year ended December 31, 2011, versus $62,960 of salary and wage expenses for the year ended December 31, 2010, which resulted in an increase of $185,240, or 294%. The increase in salary expense was a result of employment agreements we entered into employment agreements with our management team on July 1, and August 1, 2010. We previously paid management salaries as funds were available with no right to future remuneration. Accrued officer compensation was $31,341 at December 31, 2011.

Depreciation and Amortization

Depreciation and amortization expenses were $3,170 for the year ended December 31, 2011, versus $13,387 for the year ended December 31, 2010, resulting in a decrease of $10,217 or 76%. 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.

Bad Debt Expense (Recoveries)

Bad debt expenses for the year ended December 31, 2011 were $16,341 as compared to $(3,338) for the same period of 2010, which resulted in an increase of $19,679, or 590%. Our increase in bad debts expense for the year ended December 31, 2011 is primarily a result of changes in our provision for doubtful accounts as we recognized impairment on notes receivable of $18,105 due to uncertainties in our ability to recognize future economic benefit from the note holder.

Impairment of intangible assets

Impairment of intangible assets for the year ended December 31, 2011 were $22,880 as compared to $-0- for the same period of 2010, which resulted in an increase of $22,880, or 100%. 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.

Net Operating (Loss)

The net operating loss for the year ended December 31, 2011 was $542,001 versus a net operating loss of $1,304,951 for the year ended December 31, 2010. This resulted in a decrease of $762,950, or 58%, when compared to the same period of 2010. Our reduced net operating loss was primarily a result of the discontinuation of our entities discharged in bankruptcy during the 4th quarter of 2010. We expect significant improvements in our cost reduction efforts in 2012.

Liquidity and Capital Resources

The following table summarizes total current assets, liabilities and working capital at December 31, 2011 compared to December 31, 2010.

							Increase / (Decrease)
	December 31, 2011			December 31, 2010			$			%

Current Assets	$	164,724		$	25,738		$	138,986			540%

Current Liabilities	$	1,422,992		$	822,134		$	600,858			73%

Working (Deficit)	$	(1,258,268	)	$	(796,396	)	$	(461,872	)		58%

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, 2011, we had a working capital deficit of $(1,258,268). 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, exercisable over 2 years from the date of issuance.

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.

Treasury Stock

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.

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 $6,161,280 and a working capital deficit of $1,258,268 at December 31, 2011, 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 fixed broadband and wireless broadband 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.

Property and Equipment

Fixed assets are stated at the lower of cost or estimated net recoverable amount. The cost of property, plant 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
Intangible assets	9 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 Competitive 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 $22,880 and $-0- for the years ended December 31, 2011 and 2010, respectively.

Fair Value of Financial Instruments

Under FASB ASC 820-10-05, the Financial Accounting Standards Board 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 adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. 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, 2011 and 2010.

Goodwill and Other Intangible Assets

Goodwill and indefinite life intangible assets are recorded at fair value and not amortized, but are reviewed for impairment annually or more frequently if impairment indicators arise. As of December 31, 2011 and 2010 we had no goodwill or other intangible assets. The Company recognized impairment losses on goodwill of $-0- and $373,018 for the years ended December 31, 2011 and 2010, respectively.

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 2011 and 2010, 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

The Company adopted FASB guidance on stock based compensation upon inception at August 13, 2009. Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. Stock issued for services totaled $34,991 and $647,349 for the years ended December 31, 2011 and 2010, respectively.

Advertising

We expense advertising costs as they are incurred. These expenses approximated $23,927 and $598,930 for the years ended December 31, 2011 and 2010, respectively, of which, $-0- and $598,930 consisted of stock based compensation pursuant to the issuance of a total of -0- and 6,621,500 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.

Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.

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.

Recently Issued Accounting Standards

In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which is effective for annual reporting periods beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on January 1, 2012. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive income or separately in consecutive statements of income and comprehensive income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial position or results of operations.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”, which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on January 1, 2012. We are currently evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our financial statements.

In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”. This amendment explains which modifications constitute troubled debt restructurings (“TDR”). Under the new guidance, the definition of a troubled debt restructuring remains essentially unchanged, and for a loan modification to be considered a TDR, certain basic criteria must still be met. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructuring occurring on or after the beginning of the fiscal year of adoption. The Company does not expect that the guidance effective in future periods will have a material impact on its consolidated financial statements.

Item 8. Financial Statements and Supplementary Data.

COMPETITIVE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

CONTENTS

Report of Independent Registered Public Accounting Firm	F-1

Consolidated Balance Sheets as of December 31, 2011 and 2010	F-2

Consolidated Statements of Operations for the years ended December 31, 2011 and 2010	F-3

Consolidated Statement of Stockholders’ (Deficit) for the years ended December 31, 2011 and 2010	F-4

Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2010	F-5

Notes to Consolidated Financial Statements	F-6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Competitive Companies, Inc.

We have audited the accompanying balance sheets of Competitive Companies, Inc. as of December 31, 2011 and 2010 and the related statements of operations, changes in stockholders’ (deficit), and cash flows for the years 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 audits.

We conducted our audits 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 audits 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 audits provide 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 2010, and the results of its operations, changes in stockholders’ (deficit) and cash flows for the years 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.

As discussed in Note 4 to the financial statements, the Company has restated its financial statements as of and for the year ended December 31, 2010 to recognize derivative liabilities embedded in its convertible promissory notes.

/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

April 16, 2012

F-1

COMPETITIVE COMPANIES, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2011			2010
				(Restated)
Assets
Current assets:
Cash	$	142,474		$	20,124
Accounts receivable, net of allowance of $2,800 and $4,500		1,542			2,814
Prepaid expenses		20,708			2,800
Total current assets		164,724			25,738

Property and equipment, net		5,651			8,403

Other assets:
Deposits		3,003			3,003

Total assets	$	173,378		$	37,144


Liabilities and Stockholders' (Deficit)

Current liabilities:
Accounts payable	$	343,430		$	346,542
Accrued expenses		166,406			78,011
Customer deposits		39,913			39,913
Deferred revenues		4,482			9,552
Notes payable		67,006			67,006
Convertible debentures, net of discounts of $174,264 and $86,084		409,236			100,916
Derivative liabilities		392,519			180,194
Total current liabilities		1,422,992			822,134

Total liabilities		1,422,992			822,134

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, 207,837,771 and 130,263,732 shares issued and outstanding at December 31, 2011 and 2010, respectively		207,838			130,264
Additional paid-in capital		4,682,337			4,216,717
Subscriptions payable, 3,910,000 and 200,000 shares at December 31, 2011 and 2010, respectively		34,620			2,000
Accumulated (deficit)		(6,161,280	)		(5,136,466	)
Treasury stock, at cost, 2,020,00 and -0- shares at December 31, 2011 and 2010, respectively		(15,624	)		-
Total stockholders' (deficit)		(1,249,614	)		(784,990	)

Total liabilities and stockholders' (deficit)	$	173,378		$	37,144

The accompanying notes are an integral part of these financial statements.

F-2

COMPETITIVE COMPANIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Years
	Ended December 31,
	2011			2010
				(Restated)
Revenue	$	118,941		$	190,408
Cost of sales		55,164			201,488

Gross profit (loss)		63,777			(11,080	)

Expenses:
General and administrative		315,187			1,220,862
Salaries and wages		248,200			62,960
Depreciation and amortization		3,170			13,387
Bad debts expense (recoveries)		16,341			(3,338	)
Impairment of intangible assets		22,880			-
Total operating expenses		605,778			1,293,871

Net operating loss		(542,001	)		(1,304,951	)

Other income (expense):
Interest income		238			-
Interest expense		(212,537	)		(128,116	)
Change in fair market value of derivative liabilities		(270,514	)		(77,075	)
Total other income (expense)		(482,813	)		(205,191	)

Net loss before discontinued operations		(1,024,814	)		(1,510,142	)

Discontinued operations:
Gain from discontinued operations of DiscoverNet component, net		-			654,718
Loss from operations of discontinued Voice Vision, Inc. component, net		-			(9,920	)
Gain on discontinued operations		-			644,798


Net loss	$	(1,024,814	)	$	(865,344	)

Weighted average number of common shares outstanding - basic and fully diluted		154,279,533			113,691,468

Net loss per share - basic and fully diluted	$	(0.01	)	$	(0.01	)

The accompanying notes are an integral part of these financial statements.

F-3

COMPETITIVE COMPANIES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)



					Class A				Class B				Class C																	Total
	Common Stock				Preferred Stock				Preferred Stock				Preferred Stock				Treasury Stock					Additional		Subscriptions			Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount			Paid-in		Payable			(Deficit)			(Deficit)

Balance, December 31, 2009		98,745,813	$	98,746		-	$	-		1,495,436	$	1,495		1,000,000	$	1,000		-	$	-		$	2,710,583	$	390,921		$	(4,271,122	)	$	(1,068,377	)

Shares issued for cash		11,605,543		11,606		-		-		-		-		-		-		-		-			375,718		(24,874	)		-			362,450

Shares issued for acquisitions		7,320,935		7,321		-		-		-		-		-		-		-		-			358,726		(366,047	)		-			-

Shares issued for conversion of debts		5,734,226		5,734		-		-		-		-		-		-		-		-			54,266		-			-			60,000

Shares issued for services		6,857,215		6,857		-		-		-		-		-		-		-		-			638,501		2,000			-			647,358

Adjustment to derivative liability due to debt conversions		-		-		-		-		-		-		-		-		-		-			64,178		-			-			64,178

Options issued as consideration for recission of acquisitions		-		-		-		-		-		-		-		-		-		-			14,745		-			-			14,745

Net loss for the year ended December 31, 2010		-		-		-		-		-		-		-		-		-		-			-		-			(865,344	)		(865,344	)

Balance, December 31, 2010 (Restated)		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		(15,624	)		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	)

The accompanying notes are an integral part of these financial statements.

F-4

COMPETITIVE COMPANIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years
	Ended December 31,
	2011			2010
				(Restated)
Cash flows from operating activities
Net (loss)	$	(1,024,814	)	$	(865,344	)
Adjustments to reconcile net (loss) to net cash used in operating activities:
Provision for bad debt expense (recoveries)		16,341			(3,338	)
Depreciation and amortization		3,170			13,387
Impairment of intangible assets		22,880			-
Debt forgiveness		-			(150,412	)
Change in fair market value of derivative liabilities		270,514			77,075
Amortization of convertible note payable discounts		175,368			81,213
Common stock issued for services		34,991			647,358
Common stock options issued for services		-			14,745
Decrease (increase) in assets:
Accounts receivable		(15,069	)		14,135
Prepaid expenses		(17,913	)		50
Deposits		-			(1,637	)
Increase (decrease) in liabilities:
Accounts payable		(3,112	)		(313,916	)
Accounts payable, related party		-			(3,000	)
Accrued expenses		95,428			22,109
Deferred revenues		(5,070	)		(29,000	)
Net cash used in operating activities		(447,286	)		(496,575	)

Cash flows from investing activities
Purchase of equipment		-			(4,611	)
Payments on acquisition of intangible assets		(18,900	)		-
Net cash used in investing activities		(18,900	)		(4,611	)

Cash flows from financing activities
Proceeds from short term and convertible debts		589,500			157,000
Principal payments on short term debt		-			(3,473	)
Proceeds from sale of common stock		-			362,450
Principal payments on prepetition debt		-			(4,800	)
Purchase of treasury stock		(964	)		-
Net cash provided by financing activities		588,536			511,177

Net increase (decrease) in cash		122,350			9,991
Cash - beginning		20,124			10,133
Cash - ending	$	142,474		$	20,124

Supplemental disclosures:
Interest paid	$	2,000		$	3,248
Income taxes paid	$	-		$	-

Non-cash investing and financing activities:
Value of shares issued for conversion of debt	$	200,033		$	60,000
Value of shares issued for subscriptions payable	$	-		$	390,922
Cancellation of common stock	$	-		$	(100	)
Shares issued for rescission of Voice Vision agreement	$	2,000		$	-
Warrants issued for purchase of intangible assets	$	4,398		$	-
Value of derivative adjustment doe to debt conversions	$	326,130		$	-
Debt discounts	$	263,543		$	-
Treasury stock purchased with common stock payable	$	14,580		$	-

The accompanying notes are an integral part of these financial statements.

F-5

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Note 1 – Summary of Significant Accounting Policies

Basis of Presentation and Organization

Competitive Companies, Inc. ("CCI") was originally incorporated under the laws of the state of Nevada in March 1998, and shortly thereafter acquired all of the assets and assumed all of the liabilities of Competitive Communications, Inc. ("COMM"), which was incorporated under the laws of the state of California in February 1996. In January 2000, CCI Residential Services, Inc. ("CCIR") was formed. This entity, which is also a wholly owned subsidiary of CCI was formed to expand on residential services provided by COMM, while COMM focused on developing revenue streams from other services.

COMM and CCIR provided telephone, cable television, long distance/inter - exchange, and dial up and high-speed Internet connections and e-mail services, mainly to customers who lived in multi-tenant residential buildings. The Company's operations were located in Riverside, California and substantially all of its customers were California residents. COMM and CCIR ceased services to their California residents in 2009.

On May 5, 2005 the Company merged with CA Networks, Inc. ("CAN"), which was a development stage enterprise that was in the process of developing a business model in the same industry as Competitive. CAN was formed under the laws of the state of Wyoming on January 14, 2004. The combined companies maintained the name of CCI.The merged company (collectively "we", "us", "ours") continued to be a provider of local telephone, long distance service and high speed internet service through Wireless Internet networks in all states it operates in, and also offered cellular service nationwide until 2006 when the assets of CAN were sold and operations were halted in Kentucky and Wyoming.

On April 2, 2009, the Company entered into an acquisition agreement and plan of merger whereby the Company acquired 100% of the outstanding interest of four private companies under common control by the CEO of Competitive Companies, Inc. Pursuant to the share exchange agreement, Competitive Companies, Inc. (CCI) acquired 100% of the combined equity of DiscoverNet, Inc. (DNI), ICM, Inc. (ICMI), ICM, LLC (ICML), and DiscoverNet, LLC (DNL).

On May 5, 2009, DiscoverNet, Inc. and DiscoverNet of Wisconsin, LLC, wholly owned subsidiaries of Competitive Companies, Inc. which were acquired on April 2, 2009 as described in Note 3 below, filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code., and were subsequently converted to Chapter 7. The bankruptcies were closed on October 21, 2010, and all matters relating to these entities were fully discharged.

On July 23, 2010, Wisconsin Wireless, LLC, was formed as a wholly owned subsidiary of Competitive Companies, Inc. to offer dial up and high-speed broadband internet services, mainly to customers in rural markets throughout Wisconsin and San Antonio, TX.

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 (the “Report Date”), based on a market appraisal (the “Valuation Report”) of the intellectual property owned by Wytec (the “Intellectual Property”).Pursuant to the terms of the agreement, the Valuation Report also established the cash portion of the acquisition at $18,900. 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 the Company was created for the specific purpose of housing intangible assets, consisting of a total of five patents, and there were no other operations conducted within Wytec International, Inc. prior to the acquisition. As of the date of this filing, there have been no operations associated with these patents.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

F-6

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Use of Estimates

The preparation of consolidated financial statements in accordance with accounting principles 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 assets and liabilities at the date of the consolidated financial statements. The reported amounts of revenues 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.

Cash and Cash Equivalents

CCI maintains a cash balances in interest and non-interest-bearing accounts, which do not currently exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents on hand at December 31, 2011 and 2010.

Basis of Accounting

Our consolidated financial statements are prepared using the accrual method of accounting.

Principles of Consolidation

The accompanyingconsolidated financial statements include the accounts of the following entities, all of which are under common control and ownership:

		State of		Abbreviated
Name of Entity(1)	Form of Entity	Incorporation	Relationship(2)	Reference
Competitive Companies, Inc.	Corporation	Nevada	Parent	CCI
Competitive Communications, Inc.(4)	Corporation	California	Subsidiary	COMM
CCI Residential, Inc.(4)	Corporation	California	Subsidiary	CCIR
Innovation Capital Management, Inc.	Corporation	Delaware	Subsidiary	ICMI
Innovation Capital Management, LLC	Limited Liability Corporation	Delaware	Subsidiary	ICML
DiscoverNet Inc.(3)	Corporation	Wisconsin	Subsidiary	DNETI
DiscoverNet of Wisconsin, LLC(3)	Limited Liability Corporation	Wisconsin	Subsidiary	DNETL
Wisconsin Wireless, LLC	Limited Liability Corporation	Wisconsin	Subsidiary	WW
Wytec International, Inc.	Corporation	Texas	Subsidiary	WYTECI

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

(2)All subsidiaries are wholly-owned subsidiaries.

(3)Subsidiary previously dissolved in bankruptcy proceedings.

(4)Subsidiary has been 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, COMM, CCIR, ICMI, ICML, DNETI, DNETL, WW and WYTECI will be collectively referred herein to as the “Company”, or “CCI”.The Company's headquarters are located in San Antonio, Texas and substantially all of its customers are Wisconsin and Texas residents.The Company provides dial up and high-speed broadband internet services, mainly to customers in rural markets throughout Wisconsin, San Antonio, TX and Puerto Rico through its Wisconsin Wireless, LLC subsidiary.

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.

Revenue Recognition

Our only source of revenue currently is through the Company’s subsidiary, Wisconsin Wireless, LLC, whereas we provide 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.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.

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 $2,800 and $4,500 at December 31, 2011 and 2010, respectively.

F-7

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Property and Equipment

Furniture and fixtures	5 years
Telecommunication equipment and computers	5 – 10 years
Leasehold improvements	7 years
Intangible assets	9 years

Impairment of Long-Lived Assets

Long-lived assets held and used by Competitive 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 incurredimpairment losses on intangible assetsof $22,880 and $-0- for the years ended December 31, 2011 and 2010, respectively.

Fair Value of Financial Instruments

Goodwill and Other Intangible Assets

Goodwill and indefinite life intangible assets are recorded at fair value and not amortized, but are reviewed for impairment annually or more frequently if impairment indicators arise.As of December 31, 2011 and 2010 we had no goodwill or other intangible assets.The Company recognized impairment losses on goodwill of $-0- and $373,018 for the years ended December 31, 2011 and 2010, respectively.

Derivative Financial Instruments

The Company generally does not use derivative financial instruments to hedge exposures to cash-flow risks or market-risks that may affect the fair values of its 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. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and then re-valued at each reporting date, 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.

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 2011 and 2010, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

F-8

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Stock-Based Compensation

The Company adopted FASB guidance on stock based compensation upon inception at August 13, 2009. Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. Stock issued for services totalled $34,991 and $647,349 for the years ended December 31, 2011 and 2010, respectively.

Advertising

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

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.

Recently Issued Accounting Pronouncements

F-9

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

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 $6,161,280 and a working capital deficit of $1,258,268 at December 31, 2011, and have reported negative cash flows from operations over the last 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.

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 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.

F-10

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Note 3 – Discontinued Operations

On October 21, 2010 the Company discontinued the operations of its wholly-owned subsidiaries,DiscoverNet, Inc. & DiscoverNet of Wisconsin, LLC, (the “Debtors”) were discharged in bankruptcy under Chapter 7 of the federal bankruptcy laws in the United States Bankruptcy Court for the Western District of Wisconsin.The original petition was filed on May 5, 2009 under Chapter 11, whereby certain claims against the Debtor in existence prior to the filing of the petitions for relief under the federal bankruptcy laws were stayed while the Debtor continued business operations as a Debtor-in-Possession. Claims secured against the Debtor's assets ("secured claims") were discharged in full on October 21, 2010.

The following table summarizes the liquidation of DiscoverNet, Inc. and DiscoverNet of Wisconsin, LLC under Chapter 7 of the federal bankruptcy laws in the United States Bankruptcy Court for the Western District of Wisconsin on October 21, 2010:

	DiscoverNet of Wisconsin, LLC			DiscoverNet, Inc.			Total
Gain (loss) on reorganization under
Chapter7 bankruptcy, net	$	(9,837	)	$	658,712		$	649,221

Assets and liabilities
liquidated in bankruptcy:
Cash	$	-		$	(75	)	$	(75	)
Property and equipment, net		(9,837	)		(2,646	)		(12,483	)
Deposits		-			(50	)		(50	)
Accounts payable		-			495,340			495,340
Deferred revenues		346			-			346
Notes payable		-			166,143			166,143
Net (assets) and liabilities
Liquidated in bankruptcy	$	(9,491	)	$	658,712		$	649,221
Forgiveness of debt under Chapter 11		-			8,097			8,097
Professional fees		-			(2,600	)		(2,600	)

Loss from discontinued operations of DiscoverNet component, net	$	(9,491	)	$	664,209		$	654,718

On December 31, 2011 the Company and management of Voice Vision, Inc. mutually agreed to rescind the acquisition of Voice Vision, Inc., as depicted in Note 5.

The following table summarizes the deconsolidation of Voice Vision, Inc. on December 31, 2010 pursuant to the rescission agreement:

	Voice Vision, Inc.
Assets and liabilities deconsolidated
in rescission:
Cash	$	(25	)
Accounts payable		78,032
Accrued expenses		1,836
Common stock		1,211,362
Additional paid in capital		18,532
Retained earnings		(1,302,912	)
Net (assets) and liabilities
Deconsolidated in rescission	$	6,825
Common stock granted in consideration of rescission, 200,000 shares		(2,000	)
Common stock options granted in consideration of rescission, 2,000,000 shares at $0.07 per share		(14,745	)

Loss from operation of discontinued Voice Vision, Inc. component, net	$	(9,920	)

F-11

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Note 4 - Correction of Errors

We have restatedour previously issued December 31, 2010 financial statements for previously unrecognized embedded derivative accounting treatment related to certain convertible promissory notes obtained in 2010. The accompanying financial statements for the year ended December 31, 2010 have been restated to reflect the corrections in accordance with Accounting Standards Codification topic250, “Accounting Change and Error Corrections”. The following is a summary of the restatements for December 31, 2010:

Increase of previously unreported derivative liabilities and corresponding decrease in previously reported beneficial conversion feature on convertible debentures:

Increase of previously unreported derivative liabilities:
- Understated value of derivative liability	$	180,194
- Understated debt discount on value of derivative liability	$	(86,084	)
Decrease of previously reported debt discount on beneficial conversion feature in error:
- Overstated debt discount recognized on beneficial conversion feature	$	59,306

The net effect of these changes resulted in an increased net loss of $76,387 in the statement of operations from other expense of $77,075 from the change in the fair market of the derivative liabilities during 2010, along with a reduction in interest expense of $688.

The effect on the Company’s previously issued December 31, 2010 financial statements are summarized as follows:

Balance Sheet as of December 31, 2010:

	Previously			Net
	Reported			Change			Restated
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	346,542		$	-		$	346,542
Accrued expenses		78,011			-			78,011
Customer deposits		39,913			-			39,913
Deferred revenues		9,552			-			9,552
Notes payable		67,006			-			67,006
Convertible debentures		187,000			-			187,000
Discounts on convertible debentures		(59,306	)		(26,778	)		(86,084	)
Derivative liabilities		-			180,194			180,194
Total current liabilities		668,718			153,416			822,134

Stockholders’ equity (deficit)
Preferred stock, classes A, B & C		2,495			-			2,495
Common stock		130,264			-			130,264
Additional paid-in capital		4,293,746			(77,029	)		4,216,717
Subscriptions payable		2,000			-			2,000
Accumulated (deficit)		(5,060,079	)		(76,387	)		(5,136,466	)
Total stockholders’ equity (deficit)		(631,574	)		(153,416	)		(784,990	)

Total liabilities and stockholders’ equity (deficit)	$	37,144		$	-		$	37,144

F-12

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Statement of Operations as of December 31, 2010:

	Previously			Net
	Reported			Change			Restated

Revenue	$	190,408			-		$	190,408
Cost of sales		201,488			-			201,488
Gross profit (loss)		(11,080	)					(11,080	)

Expenses:
General and administrative		1,237,607			(16,745	)		1,220,862
Salaries and wages		62,960			-			62,960
Depreciation and amortization		13,387			-			13,387
Bad debts expense (recoveries)		(3,338	)		-			(3,338	)
Total operating expenses		1,310,616			(16,745	)		1,293,871

Net operating loss	$	(1,321,696	)	$	(16,745	)	$	(1,304,951	)

Other income (expense):
Interest expense		(128,804	)		688			(128,116	)
Change in fair market value of derivative liabilities		-			77,075			(77,075	)
Total other income (expense)		(121,979	)		77,763			(205,191	)

Net loss before discontinued operations		(1,443,675	)		66,467			(1,510,142	)

Gain on discontinued operations, net		654,718			(9,920	)		644,798

Net loss		(788,957	)		76,387			(865,344	)

Net loss per share – basic and fully diluted	$	(0.01	)	$	(0.00	)	$	(0.01	)

In addition, the statement of stockholders’ equity reflected a $64,178 adjustment to derivative liability due to debt conversions in additional paid in capital, and the removal of previously reported debt discounts of $141,207 pursuant to beneficial conversion features in convertible debentures issued during 2010.

Quarterly results for past affected periods will be restated in future filings.

Note 5 – Business Combinations

Acquisition – January 12, 2010(Rescinded on December 31, 2010)

On January 12, 2010, the Company entered into a share exchange agreement and plan of merger whereby the Company acquired 100% of the outstanding interest of Voice Vision, Inc., a California corporation in the Voice over internet Protocol business (“VoiP”). Pursuant to the share exchange agreement, Competitive Companies, Inc. (“CCI”) acquired 100% of the outstanding equity of Voice Vision, Inc. (“VVI”) in exchange for ten million (“10,000,000”) shares of CCI’s common stock on a 1.91245 to 1 basis (i.e. one share of CCI common stock for every 1.91245 outstanding shares of VVI’s common stock). The fair market value of the CCI shares was $300,000 based on the closing stock price on the January 12, 2010 grant date, however, the acquisition was mutually rescinded on December 31, 2010 prior to the issuance of the shares.

In accordance with the rescission agreement, CCI granted to VVI 200,000 shares of common stock, which were issued during the year ended December 31, 2011, as well as, options to purchase 2,000,000 shares of common stock. The options are exercisable until December 31, 2012 at an exercise price of $0.07 per share. The total estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 317% and a call option value of $0.0074, was $14,745.

The Company had recognized the identifiable assets acquired and liabilities assumed as follows:

	January 12, 2010
Consideration:
Equity instruments (10,000,000 shares issued of CCI 1)	$	300,000
Fair value of total consideration exchanged	$	300,000

Recognized amounts of identifiable assets
acquired and liabilities assumed:
Cash	$	-
Accounts payable and accrued expenses		(73,018	)
Consideration paid in excess of fair value 2		373,018
Total identifiable net assets	$	300,000


1 The fair value of the 10,000,000 shares of common stock issued as consideration paid for 100% of VVI was determined on the basis of the closing market price of CCI’s common shares on the grant date of January 12, 2010.

2 The consideration paid in excess of the fair value of assets acquired and liabilities assumed has been recorded as goodwill and expensed due to impairment.

F-13

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Note 6 – Asset Purchase Acquisitions

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.

Note 7 – Related Party

Treasury stock

During 2011, and for the first two months of 2012, the Company’s CEObought 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.

F-14

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

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 $2,000 as a consultant.

On August 16, 2010 the Company issued 5,250,000 shares of restricted common stock to a former CEO for business development services provided. The total fair value of the common stock was $577,500 based on the closing price of the Company’s common stock on the date of grant.

On June 30, 2010, CCI issued 3,734,858 shares to the Company’s CEO, William H. Gray, in satisfaction of the remaining outstanding shares owed to Mr. Gray in accordance with the April 2, 2009 acquisition of four entities under Mr. Gray’s control.

On April 8, 2010, CCI cancelled and returned to treasury 100,000 shares of its $0.001 par value common stock previously held by a wholly owned subsidiary.

On February 11, 2010, CCI issued 3,000,000 shares to the Company’s CEO, William H. Gray, in partial satisfaction of the April 2, 2009 acquisition of four entities under Mr. Gray’s control.

Subsidiary formation

On July 23, 2010, the Board of Directors approved the formation of a wholly owned subsidiary of Competitive Companies, Inc. under the laws of the State of Wisconsin. The entity, named “Wireless Wisconsin LLC”, was formed to extend wireless internet services to rural Wisconsin residents.

Board of director resignation

On July 21, 2010, the former CEO, Jerald L. Woods, resigned from the Board of Directors. No replacement has been identified as of the date of this filing.

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.

Note 8 – Fair Value of Financial Instruments

Under FASB ASC 820-10-05, the Financial Accounting Standards Board 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 adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, accounts payable and accrued expenses reported on the balance sheet are estimated by management to approximate fair value primarily due to the short term nature of the instruments. The Company measures certain financial assets and liabilities at fair value on a recurring basis, including its derivative liabilities.

At December 31, 2011 and 2010, the Company recorded liabilities related to the variable maturity feature and the future issuance of warrants and shares in connection with its convertible debentures, and the common stock and warrants issued during the years ended December 31, 2011 and 2010 at the aggregate fair market value of $392,519 and $180,194, respectively, utilizing unobservable inputs.The change in fair market value of these liabilities is included in other income (expense) in the consolidated statements of operations.The assumptions used in the Monte-Carlo simulation used to value the derivative liabilities involve expected volatility in the Company’s common stock, estimated probabilities related to the occurrence of a future financing, and interest rates. As all the assumptions employed to measure this liability are based on management’s judgment using internal and external data, this fair value determination is classified in Level 3 of the valuation hierarchy.

F-15

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

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.

The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of December 31, 2011 and 2010:

	Fair Value Measurements at December 31, 2011
	Level 1			Level 2			Level 3
Liabilities
Derivative liabilities		$	-		$	-		$	392,519
		$	-		$	-		$	392,519

	Fair Value Measurements at December 31, 2010
	Level 1			Level 2			Level 3
Liabilities
Derivative liabilities		$	-		$	-		$	180,194
		$	-		$	-		$	180,194

There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the years ended December 31, 2011 and 2010.

The following schedule summarizes the valuation of financial instruments at fair value on a non-recurring basis in the balance sheets as of December 31, 2011 and 2010:

Fair Value Measurements at December 31, 2011

Level 1

Level 2

Level 3

Assets

Notes receivable

Intangible assets, patents

Fair Value Measurements at December 31, 2010

Level 1

Level 2

Level 3

Assets

Notes receivable

Intangible assets, patents

Non-recurring Level 3 assets consist of Notes receivable as adjusted for a non-recurring adjustment of $18,105for the impairment due to uncertainties regarding the future economic benefit during the year ended December 31, 2011, and the unamortized portion ofintangible 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.

F-16

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Note 9 – Notes Receivable

In September 2011, the Company paid a total of $22,315on 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 Wytech 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.

On October 19, 2011 the Company paid $2,000to 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 Wytech Assets.

On October 26, 2011 the Company paid $5,000to 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 Wytech Assets.

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

The following depicts our note receivable activitiesduring the year ended December 31, 2011:

	December 31,			December 31,
	2011			2010

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		$	-

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			-

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			-

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			-
Total notes receivable originated	$	29,315		$	-
Notes receivable applied towards purchase price of Wytech International, Inc.(1)(2)		(11,210	)		-
Allowance for doubtful notes receivable due to collection uncertainties		(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.

The following is a reconciliation of our purchase of Wytec International, Inc. onNovember 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.

F-17

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Note 10 – Property and Equipment

Property and equipment consist of the following:

	December 31,
	2011			2010

Telecommunication equipment and computers	$	4,611		$	4,611
Furniture and fixtures		9,150			9,150
		13,761			13,761
Less accumulated depreciation		(8,110	)		(5,358	)
	$	5,651		$	8,403

Depreciation expense totaled $2,752 and $13,387 for 2010 and 2010, respectively. The Company disposed of $-0- and $16,448of fixed assets that were no longer in service during 2011 and 2010, respectively. A loss of $-0- and $-0- resulted from the disposal as of December 31, 2011 and 2010, respectively.

Note 11 – 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 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.

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

	Balance at										Balance at
	December 31										December 31.
	2010		Additions		Amortization			Impairments			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.

F-18

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

No significant residual value is estimated for these intangible assets. Aggregate amortization expense for the years ended December 31, 2011, and December 31, 2010, totaled $418 and $-0-, respectively. There is no estimated amortization of intangible assets for the five succeeding years pursuant to the recognition of impairment on December 31, 2011.

The following is a reconciliation of our purchase of Wytec International, Inc. onNovember 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 12– Notes Payable

Notes payable consists of the following at December 31, 2011and 2010, respectively:

	December 31,		December 31,
	2011		2010

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 note payable in default to a stockholder, with interest at 8%, and monthly principal and interest payments of $683, 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 $5,412 and $5,406 for the years ended December 31, 2011 and 2010 respectively.

F-19

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Note 13– Convertible Debentures

Convertible debentures consist of the following at December 31, 2011 and 2010, respectively:

	December 31,		December 31,
	2011		2010

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	$	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		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		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		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		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		5,000

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 this period.		-		17,000

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 this period.		-		25,000

F-20

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements


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 this period.	-	55,000

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 this period.	-	-

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-21

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements


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 this period.	-	-

F-22

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements


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	-

F-23

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

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	-

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 a12.5% 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	-

F-24

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements


Unsecured convertible promissory note carries a12.5% 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	-

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-25

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements


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.	-	-

F-26

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements


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	-

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	-

F-27

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements


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		-

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		187,000
Less: debt discounts	(174,264	)	(86,084	)
Total convertible debentures, net of discounts	409,236		100,916

In accordance with ASC 470-20 Debt with Conversion and Other Options, the Company recorded a discount of $263,543 and $167,297 for the variable conversion feature and warrants issued in the years ended December 31, 2011 and 2010, respectively. The discounts will be amortized to interest expense over the term of the Notes using the effective interest method. The Company recorded $175,363 and $81,213 of interest expense pursuant to the amortization of the note discounts during the years ended December 31, 2011 and 2010, respectively.

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 calculated the fair value of the compound embedded derivatives associated with the convertible debentures utilizing a lattice model.

The following presents components of interest expense by instrument type at December 31, 2011 and 2010, respectively:

	December 31,		December 31,
	2011		2010

Notes payable	$	5,412	$	5,406
Convertible debentures		30,266		12,928
Amortization of debt discounts		175,363		81,213
Vendor finance charges, accounts payable		1,496		28,569
	$	212,537	$	128,116

F-28

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Note 14– Derivative Liabilities

As discussed in Note 12 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, 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.

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 $392,519 and $180,194 at December 31, 2011 and 2010, respectively. The change in fair value of the derivative liabilities for the year ended December 31, 2011 resulted in a loss of $270,514, and for the year ended December 31, 2010 resulted in a loss of $77,075, 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, 2011 and 2010, respectively:

	December 31,		December 31,
	2011		2010

Convertible debentures	$	301,446	$	180,194
Common stock warrants		91,073		-
	$	392,519	$	180,194

The following is a summary of changes in the fair market value of the derivative liability during the years ended December 31, 2011 and 2010, respectively:

	Derivative
	Liability
	Total

Balance, December 31, 2009	$	-
Increase in derivative value due to issuances of convertible promissory notes and warrants		167,297
Promissory notes converted during the period		(64,178	)
Change in fair market value of derivative liabilities		77,075

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

Key inputs and assumptions used to value the convertible debentures and warrants issued during the year ended December 31, 2011 and December 31, 2010:

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 $0.001 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.

F-29

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Note 15– Stockholders’ Equity

The Company has 500,000,000 authorized shares of common stock and 100,000,000 authorized shares of preferred stock.

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 (2011)

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 threeemployees 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.

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.

F-30

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

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.

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 $36,433amongst a total of eight debt holders that elected to convert their outstanding convertible notes payable during the three months ended September 30, 2011.

F-31

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

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.

Common Stock Issuances (2010)

On January 12, 2010, CCI issued a subscription payable for 10,000,000 shares as payment on the acquisition of Voice Vision, Inc. The fair market value of the shares totaled $300,000 based on the closing stock price on the date of grant. The subscription payable was cancelled with the rescission of the acquisition on December 31, 2010.

On February 11, 2010, CCI issued 3,000,000 shares to the Company’s CEO, William H. Gray, in partial satisfaction of the April 2, 2009 acquisition of four entities under Mr. Gray’s control. The Company issued the remaining 3,734,858 shares to Mr. Gray on June 30, 2010 as part of the acquisition.

During the three months ending March 31, 2010, CCI received subscriptions payable of $17,000 from a total of two individual investors in exchange for a total of 533,332 shares of its $0.001 par value common stock. The shares were subsequently issued in April of 2010.

During the three months ending March 31, 2010, CCI received $76,949 in exchange for a total of 3,191,428 shares of its $0.001 par value common stock from a total of twenty one individual investors.

During the three months ending March 31, 2010 the Company issued a total of 873,571 shares of common stock to six individual investors that had purchased the Company’s common stock prior to December 31, 2009, which was previously recorded as stock subscriptions payable in the total amount of $24,875.

On April 1, 2010 the Company issued 250,000 shares of restricted common stock to a consultant for business development services provided. The total fair value of the common stock was $15,000 based on the closing price of the Company’s common stock on the date of grant.

On April 8, 2010, CCI cancelled and returned to treasury 100,000 shares of its $0.001 par value common stock previously held by a wholly owned subsidiary.

During the three months ending June 30, 2010 the Company issued a total of 533,332 shares of common stock to two individual investors that had purchased the Company’s common stock prior to March 31, 2010, which was previously recorded as stock subscriptions payable in the total amount of $17,000.

During the three months ending June 30, 2010, CCI received $60,000 in exchange for a total of 1,285,714 shares of its $0.001 par value common stock from a total of eight individual investors.

During the three months ending June 30, 2010, CCI received subscriptions payable of $8,500 from a total of two individual investors in exchange for a total of 187,500 shares of its $0.001 par value common stock. The shares were subsequently issued in August of 2010.

F-32

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

On June 30, 2010, CCI issued a total of 532,862 shares to three individuals in accordance with the April 2, 2009 acquisition of four entities under Mr. Gray’s control that had been outstanding as subscriptions payable.

On July 6, 2010, CCI sold 500,000 shares of its $0.001 par value common stock for proceeds of $25,000 to an individual investor.

On July 6, 2010, CCI sold 400,000 shares of its $0.001 par value common stock for proceeds of $20,000 to an individual investor.

On July 7, 2010, the Company issued 285,715 shares of free trading common stock to the Company’s securities counsel for legal services rendered. The total fair value of the common stock was $31,429 based on the closing price of the Company’s common stock on the date of grant.

On July 7, 2010, CCI sold 400,000 shares of its $0.001 par value common stock for proceeds of $20,000 to an individual investor.

On July 8, 2010, CCI sold 80,000 shares of its $0.001 par value common stock for proceeds of $5,000 to an individual investor.

On July 22, 2010, CCI sold 90,000 shares of its $0.001 par value common stock for proceeds of $5,400 to an individual investor.

On July 26, 2010, CCI sold 92,000 shares of its $0.001 par value common stock for proceeds of $4,600 to an individual investor.

On July 30, 2010, CCI sold 125,000 shares of its $0.001 par value common stock for proceeds of $5,000 to an individual investor.

On July 30, 2010, CCI sold 100,000 shares of its $0.001 par value common stock for proceeds of $5,000 to an individual investor.

On August 1, 2010, CCI issued 87,500 shares of its $0.001 par value common stock previously outstanding as a subscription payable in the amount of $5,000.

On August 5, 2010, CCI sold 100,000 shares of its $0.001 par value common stock for proceeds of $5,000 to an individual investor.

On August 16, 2010, CCI sold 125,000 shares of its $0.001 par value common stock for proceeds of $5,000 to an individual investor.

On August 16, 2010, CCI issued 100,000 shares of its $0.001 par value common stock previously outstanding as a subscription payable in the amount of $3,500.

On August 16, 2010, CCI issued 53,215 shares to an individual in accordance with the April 2, 2009 acquisition of four entities under Mr. Gray’s control that had been outstanding as subscriptions payable. All unissued shares pursuant to the acquisition have now been issued with this final issuance.

On August 25, 2010, CCI sold 125,000 shares of its $0.001 par value common stock for proceeds of $5,000 to an individual investor.

On September 16, 2010, CCI issued 428,571 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $6,000.

On September 20, 2010, CCI issued 428,571 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $6,000.

On September 24, 2010, CCI sold 950,570 shares of its $0.001 par value common stock for proceeds of $25,000 to an individual investor.

F-33

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

On October 6, 2010, CCI issued 471,698 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $7,500.

On October 13, 2010, CCI sold 446,428 shares of its $0.001 par value common stock for proceeds of $10,000 to an individual investor.

On October 18, 2010, CCI issued 539,568 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $7,500.

On October 21, 2010 the Company issued 1,071,500 shares of restricted common stock to a company for public relation services provided. The total fair value of the common stock was $21,430 based on the closing price of the Company’s common stock on the date of grant.

On October 29, 2010, CCI issued 646,552 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $7,500.

On November 5, 2010, CCI sold 1,250,000 shares of its $0.001 par value common stock for proceeds of $25,000 to an individual investor.

On November 10, 2010, CCI issued 1,138,614 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $11,500.

On November 23, 2010, CCI sold 250,000 shares of its $0.001 par value common stock for proceeds of $5,000 to an individual investor.

On December 8, 2010, CCI issued 1,269,841 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $8,000.

On December 21, 2010, CCI issued 810,811 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $6,000.

On December 31, 2010, CCI issued 810,811 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $6,000.

On December 31, 2010, CCI granted 200,000 shares of its $0.001 par value common stock as compensation for the rescission of an acquisition agreement entered into on January 12, 2010. The shares have not been issued as of the date of this report and are recorded as a subscription payable in the amount of $2,000 based on the closing price of the Company’s common stock on the date of grant.

Subscriptions Payable

On October 21, 2011, a consultant was granted 510,000 shares of common stock in exchange for referral services provided. The total fair value of the common stock was $6,120 based on the closing price of the Company’s common stock on the date of grant. The common stock was subsequently issued on January 7, 2012 and was presented as a subscription payable as of December 31, 2011.

On December 20, 2011, our attorney was granted 1,600,000 shares of common stock in exchange for legal services provided. The total fair value of the common stock was $13,920 based on the closing price of the Company’s common stock on the date of grant. The common stock was subsequently issued on January 2, 2012 and was presented as a subscription payable as of December 31, 2011.

Note 16– 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 aggregatesales 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-34

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Note 17– Common Stock Options

Common Stock Options Granted

On December 31, 2010 the Company issued options to purchase 2,000,000 shares of common stock as part of the rescission agreement which rescinded the January 12, 2010 acquisition of Voice Vision, Inc. The options are exercisable until December 31, 2012 at an exercise price of $0.07 per share. The total estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 317% and a call option value of $0.0074, was $14,745.

During the year ended December 31, 2005, Company cancelled 3,435,000 options outstanding at December 31, 2004 and adopted 2005 Stock Option Plan (the “Plan”). The Plan authorizes the issuance of stock options and other awards to acquire up to a maximum 10,000,000 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 December 15, 2005, the Company granted employees and directors options to purchase 6,672,000 shares of common stock exercisable at $0.10 with a ten-year life.Because the Company stock was not trading at the grant date, and the Company issued all shares at $0.10 in 2005, which was equal to the exercise price. The Company granted -0- and 2,000,000 options during the years ended December 31, 2011and2010, respectively.

Common Stock Options Cancelled

No options were cancelled during the years ended December 31, 2011 and 2010.

Common Stock Options Expired

No options expired during the years ended December 31, 2011 and 2010.

Common Stock Options Exercised

No options were exercised during the years ended December 31, 2011 and 2010.

The following is a summary of information about the Common Stock Options outstanding at December 31, 2011.

Shares Underlying

Shares Underlying Options Outstanding

Options Exercisable

Weighted

Average

Weighted

Range of

Underlying

Remaining

Average

Underlying

Average

Exercise

Options

Contractual

Exercise

Options

Exercise

Prices

Outstanding

Life

Price

Exercisable

Price

$0.07 - $0.10

8,672,000

3.28 years

0.09

8,672,000

0.09

F-35

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

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

			Weighted
			Average
	Number		Exercise
	of Shares		Price

Balance, December 31, 2009		6,672,000	$	0.10
Options expired		-		-
Options cancelled		-		-
Options granted		2,000,000		0.07
Options exercised		-		-

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

Exercisable, December 31, 2011		8,672,000	$	0.09

Note 18– Common Stock Warrants

Common Stock Warrants Granted (2011)

During the three month period ended March 31, 2011, the Company sold a total of $51,500 of unsecured convertible promissory notes carrying a 12.5% interest rate, maturing on various dates between July 2, 2011 and September 26, 2011, along with detachable warrants to purchase a total of 2,815,000 shares of common stock were granted at various strike prices between $0.0092 per share and $0.0129 per share, exercisable over a 2 year period from the grant date, amongst eight different investors. The value of these warrants was included in the derivative valuation at the date of issuance.

During the three month period ended June 30, 2011, the Company sold a total of $53,000 of unsecured convertible promissory notes carrying a 12.5% interest rate, maturing on various dates between September 28, 2011 and December 26, 2011, along with detachable warrants to purchase a total of 1,655,000 shares of common stock were granted at various strike prices between $0.0050 per share and $0.0115 per share, exercisable over a 2 year period from the grant date, amongst eight different investors. The value of these warrants were included in the derivative valuation at the date of issuance.

During the three month period ended September 30, 2011, the Company sold a total of $68,500 of unsecured convertible promissory notes carrying a 12.5% interest rate, maturing on various dates between December 28, 2011 and March 4, 2012, along with detachable warrants to purchase a total of 1,585,000 shares of common stock were granted at various strike prices between $0.0030 per share and $0.0210 per share, exercisable over a 2 year period from the grant date, amongst eight different investors. The value of these warrants were included in the derivative valuation at the date of issuance.

During the three month period ended December 31, 2011, the Company sold a total of $203,500 of unsecured convertible promissory notes carrying a 12.5% interest rate, maturing on various dates between April 3, 2012 and June 12, 2012, along with detachable warrants to purchase a total of 7,435,000 shares of common stock were granted at various strike prices between $0.0076 per share and $0.0175 per share, exercisable over a 2 year period from the grant date, amongst eight different investors. The value of these warrants were included in the derivative valuation at the date of issuance.

Pursuant to the acquisition of Wytec International, Inc., the Company granted a total of 1,820,110 warrants to purchase the Company’s common stock, exercisable until April 9, 2014 at a strike price of $0.001 per share. The fair market value of the common stock was $4,398 using a lattice model as included in our embedded derivative valuation analysis.

Common Stock Warrants Granted (2010)

No warrants were granted during the year ended December 31, 2010.

Common Stock Warrants Cancelled

No warrants were cancelled during the years ended December 31, 2011 and 2010.

Common Stock Warrants Expired

No warrants expired during the years ended December 31, 2011 and 2010.

Common Stock Warrants Exercised

No warrants were exercised during the years ended December 31, 2011 and 2010.

F-36

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

The following is a summary of information about the Common Stock Warrants outstanding at December 31, 2011.

Shares Underlying

Shares Underlying Warrants Outstanding

Warrants Exercisable

Weighted

Average

Weighted

Range of

Underlying

Remaining

Average

Underlying

Average

Exercise

Warrants

Contractual

Exercise

Warrants

Exercise

Prices

Outstanding

Life

Price

Exercisable

Price

$0.0010 - $0.0210

27,310,110

1.82 years

0.0088

27,310,110

0.0088

The weighted average fair value of warrants granted with exercise prices at the current fair value of the underlying stock during the year ended December 31, 2011 was approximately $0.0088 per warrant.

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

			Weighted
			Average
	Number		Exercise
	of Shares		Price

Balance, December 31, 2009		-	$	-
Warrants expired		-		-
Warrants cancelled		-		-
Warrants granted		-		-
Warrants exercised		-		-

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

Exercisable, December 31, 2011		27,310,110	$	0.0088

Note 19– Income Taxes

The Company accounts for income taxes under FASB ASC 740-10, which requires use of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.

For the years ended December 31, 2011 and 2010, the Company incurred net operating losses and, accordingly, no provision for income taxes has been recorded.In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At December 31, 2011, the Company had approximately $6,315,000 of federal and state net operating losses. The net operating loss carry forwards, if not utilized, will begin to expire in 2025.

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

	December 31,			December 31,
	2011			2010
Deferred tax assets:
Net operating loss carry forwards	$	2,210,250		$	2,093,950
Total deferred tax assets		2,210,250			2,093,950

Net deferred tax assets before valuation allowance		2,210,250			2,093,950
Less: Valuation allowance		(2,210,250	)		(2,093,950	)
Net deferred tax assets	$	-		$	-

F-37

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

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, 2011 and 2010.

A reconciliation between the amounts of income tax benefit determined by applying the applicable U.S. and State statutory income tax rate to pre-tax loss is as follows:

	December 31,	December 31,
	2011	2010

Federal and state statutory rate	35%	35%
Change in valuation allowance on deferred tax assets	(35%)	(35%)

In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions.

Note 20 – Commitments and Contingencies

The Company leases its office space in San Antonio, Texas. The Company is in default under this lease agreement. As a result, the lessors have the right to evict the Company if they do not submit payment on the lease payments required under the lease agreements. Because the lease payments have since been made and are expected to be made in a timely manner, the Company does not expect that the lessors will assert this right under these lease agreements, and all unpaid lease payments are fully accrued for in accounts payable.

Note 21– Subsequent Events

Convertible Debentures and Warrants

Unsecured convertible promissory note, signed on January 17, 2012, in the amount of $2,500 carries a 12.5% interest rate, matures on October 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 (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 equal to 80% of the average closing price of the Company’s Common Stock as quoted on the OTC Bulletin Board or other primary public securities trading market on which such Common Stock is then traded for the ten (10) trading days immediately preceding the date of the exercise of the Warrant, but not less than $0.01 per share, exercisable over a 2 year period from the grant date. The proceeds received were allocated between the debt and warrants on a relative fair value basis.

Unsecured convertible promissory note, signed on January 17, 2012, in the amount of $25,000carries a 12.5% interest rate, matures on October 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 (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 250,000 shares of common stock were granted at a strike price equal to 80% of the average closing price of the Company’s Common Stock as quoted on the OTC Bulletin Board or other primary public securities trading market on which such Common Stock is then traded for the ten (10) trading days immediately preceding the date of the exercise of the Warrant, but not less than $0.01 per share, exercisable over a 2 year period from the grant date. The proceeds received were allocated between the debt and warrants on a relative fair value basis.

Unsecured convertible promissory note, signed on January 18, 2012, in the amount of $5,000 carries a 12.5% interest rate, matures on October 14, 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 equal to 80% of the average closing price of the Company’s Common Stock as quoted on the OTC Bulletin Board or other primary public securities trading market on which such Common Stock is then traded for the ten (10) trading days immediately preceding the date of the exercise of the Warrant, but not less than $0.01 per share, exercisable over a 2 year period from the grant date. The proceeds received were allocated between the debt and warrants on a relative fair value basis.

Unsecured convertible promissory note, signed on January 24, 2012, in the amount of $2,500 carries a 12.5% interest rate, matures on October 20, 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 equal to 80% of the average closing price of the Company’s Common Stock as quoted on the OTC Bulletin Board or other primary public securities trading market on which such Common Stock is then traded for the ten (10) trading days immediately preceding the date of the exercise of the Warrant, but not less than $0.01 per share, exercisable over a 2 year period from the grant date. The proceeds received were allocated between the debt and warrants on a relative fair value basis.

F-38

COMPETITIVE COMPANIES, INC.

Notes to Financial Statements

Unsecured convertible promissory note, signed on March 20, 2013, in the amount of $29,000, carries an 8% interest rate, matures on December 26, 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.

Common Stock Issuances

On January 2, 2012, the Company issued1,600,000 shares of common stock in satisfaction of a subscriptions payable for legal services granted on December 20, 2011. The total fair value of the common stock was $13,920 based on the closing price of the Company’s common stock on the date of grant.

On January 6, 2012, the Company issued 744,561 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $11,147, which consisted of $10,000 of principal and $1,147 of accrued interest. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

On January 7, 2012, the Company issued 510,000 shares of common stock in satisfaction of a subscriptions payable for referral services granted on October 21, 2011. The total fair value of the common stock was $6,120 based on the closing price of the Company’s common stock on the date of grant.

On January 12, 2012, the Company issued 730,771 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $5,334, which consisted of $5,000 of principal and $334 of accrued interest. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

On January 25, 2012, the Company issued a total of 2,000,000 shares of restricted common stock in exchange for legal services rendered. The total fair value of the common stock was $20,000 based on the closing price of the Company’s common stock on the date of grant.

On January 31, 2012, the Company issued 481,569 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $3,226, which consisted of $3,000 of principal and $226 of accrued interest. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

On January 31, 2012, the Company issued a total of 100,000 shares of restricted common stock in exchange for valuation services rendered. The total fair value of the common stock was $800 based on the closing price of the Company’s common stock on the date of grant.

On March 6, 2012, the Company issued 3,000,000 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 March 29, 2012, the Company issued 3,191,489 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $3,191, which consisted of $20,000 of principal. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

On March 29, 2012, the Company issued 303,904 shares of its $0.001 par value common stock pursuant to a convertible debenture conversion request in the amount of $2,745, which consisted of $2,500 of principal and $245 of accrued interest. The note was converted in accordance with the conversion terms, therefore no gain or loss has been recognized.

Treasury Stock

On February 23, 2012, the Company transferred a total of 1,800,000 shares of treasury stock, at an aggregate cost of $14,580 that was repurchased by a shareholder and presented as subscriptions payable during the year ended December 31, 2011.

At various dates between January 1, 2012 and February 23, 2012, the Company sold a total of 220,000 shares of treasury stock.

F-39

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, 2011, 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.

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, 2011. 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, 2011 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; and

·	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. This was evidenced by the fact that there were audit adjustments and restatements of 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, 2011, 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, 2011 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.

On December 14, 2010, the Company and Voice Vision, Inc. mutually rescinded the acquisition agreement pursuant to which the Company was to have acquired 100% of the outstanding equity of Voice Vision, Inc. The closing of that transaction had not occurred.

DiscoverNet, Inc. Bankruptcy

On May 5, 2009, DiscoverNet, Inc. entered in a voluntary Chapter 11 Bankruptcy. On April 21, 2010, the Trustee issued a motion to convert the Chapter 11 to Chapter 7 liquidation. The motion was passed and DiscoverNet was ordered to liquidate its assets. Essentially all assets were encumbered by Associated Bank and claimed.

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	61	Chief Executive Officer and Director
Larry Griffin	59	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 fifteen (15) 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.

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.

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, 2010, 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.

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 2011, 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, 2011 with senior management. The board of directors has also discussed with M&K CPAS, PLLC, 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 M&K required by Independence Standards Board Standard No. 1 (Independence Discussion with Audit Committees). The board of directors has discussed with M&K the independence of M&K as our auditors. Finally, in considering whether the independent auditors provision of non-audit services to us is compatible with the auditors’ independence for M&K, our board of directors has recommended that our audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 for filing with the United States Securities and Exchange Commission. Our board of directors did not submit a formal report regarding its findings.

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, 2011, 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.

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.

Compensation Program Objectives and Rewards

Our compensation philosophy is based on the premise of attracting, retaining, and motivating exceptional leaders, setting high goals, working toward the common objectives of meeting the expectations of customers and stockholders, and rewarding outstanding performance. Following this philosophy, we consider all relevant factors in determining executive compensation, including the competition for talent, our desire to link pay with performance, the use of equity to align executive interests with those of our stockholders, individual contributions, teamwork, and each executive’s total compensation package. We strive to accomplish these objectives by compensating all executives with compensation packages consisting of a combination of competitive base salary and incentive compensation.

The compensation received by our Named Executive Officers is based primarily on the levels at which we can afford to retain them and their responsibilities and individual contributions. Our compensation policy also reflects our strategy of minimizing general and administration expenses and utilizing independent professional consultants. To date, we have not applied a formal compensation program to determine the compensation of the Named Executives Officers. In the future, as we and our management team expand, our board of directors expects to form a compensation committee comprised of independent directors and apply the compensation philosophy and policies described in this section of the 10K.

The primary purpose of the compensation and benefits we consider is to attract, retain, and motivate highly talented individuals who will engage in the behavior necessary to enable us to succeed in our mission, while upholding our values in a highly competitive marketplace. Different elements are designed to engender different behaviors, and the actual incentive amounts which may be awarded to each Named Executive Officer are subject to the annual review of our compensation committee who will make recommendations regarding compensation to our board of directors. The following is a brief description of the key elements of our planned executive compensation structure.

·	Base salary and benefits are designed to attract and retain employees over time.

·	Incentive compensation awards are designed to focus employees on the business objectives for a particular year.

Equity incentive awards, such as stock options and non-vested stock, focus executives’ efforts on the behaviors within the recipients’ control that they believe are designed to ensure our long-term success as reflected in increases to our stock prices over a period of several years, growth in our profitability and other elements.

Severance and change in control plans are designed to facilitate a company’s ability to attract and retain executives as we compete for talented employees in a marketplace where such protections are commonly offered. We currently have not given separation benefits to any of our Name Executive Officers.

Benchmarking

We have not yet adopted benchmarking but may do so in the future. When making compensation decisions, our board of directors may compare each element of compensation paid to our Named Executive Officers against a report showing comparable compensation metrics from a group that includes both publicly-traded and privately-held companies. Our board believes that while such peer group benchmarks are a point of reference for measurement, they are not necessarily a determining factor in setting executive compensation. Each executive officer’s compensation relative to the benchmark varies based on the scope of responsibility and time in the position. We have not yet formally established our peer group for this purpose.

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, 2011, 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.

Incentive Compensation Awards

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. If our revenue grows and bonuses become affordable and justifiable, we expect to use the following parameters in justifying and quantifying bonuses for our Named Executive Officers and other officers of CCI: (1) the growth in our revenue, (2) the growth in our earnings before interest, taxes, depreciation and amortization, as adjusted (“EBITDA”), and (3) our stock price. The board has not adopted specific performance goals and target bonus amounts for any of its fiscal years, but may do so in the future.

Equity Incentive Awards

Effective December 2, 2005, our board of directors adopted our. 2005 Stock Option Plan under which a total of 10,000,000 shares of our common stock have been reserved for issuance as restricted stock or pursuant to the grant and exercise of stock options. Our 2005 Stock Option Plan has not been approved by our shareholders. We believe equity incentive awards motivate our employees to work to improve our business and stock price performance, thereby further linking the interests of our senior management and our stockholders. The board considers several factors in determining whether awards are granted to an executive officer, including those previously described, as well as the executive’s position, his or her performance and responsibilities, and the amount of options or other awards, if any, currently held by the officer and their vesting schedule. Our policy prohibits backdating options or granting them retroactively.

Benefits and Prerequisites

At this stage of our business we have limited benefits and no prerequisites for our employees other than health insurance and vacation benefits that are generally comparable to those offered by other small private and public companies or as may be required by applicable state employment laws. We do not have a 401(k) Plan or any other retirement plan for our Named Executive Officers. We may adopt these plans and confer other fringe benefits for our executive officers in the future.

Separation and Change in Control Arrangements

We do not have any employment agreements with our Named Executive Officers or any other executive officer or employee of CCI. None of them are eligible for specific benefits or payments if their employment or engagement terminates in a separation or if there is a change of control.

Executive Officer Compensation

The following table sets forth the compensation of our executive officers for the years ended December 31, 2011, 2010 and 2009 respectively:

Summary Compensation Table

Name and Principal Position	Year	Salary		Stock Awards(1)(4)		All Other Compensation			Total

William Gray,(5)	2011	$	94,034	$	-0-	$	6,000	(2)	$	100,034
Chief Executive Officer and Chairman	2010	$	93,375	$	-0-	$	2,500	(2)	$	95,875
	2009	$	79,099	$	-0-	$	-0-		$	79,099

Ray Powers,(6)	2011	$	17,500	$	-0-	$	17,500	(3)	$	17,500
Former President and Director	2010	$	27,500	$	-0-	$	-0-	(3)	$	27,500
	2009	$	-0-	$	-0-	$	19,500		$	19,500

Jerald Woods,(7)	2011	$	-0-	$	-0-	$	-0-		$	-0-
Former Chief Executive Officer	2010	$	-0-	$	-0-	$	-0-		$	-0-
	2009	$	-0-	$	-0-	$	11,006		$	11,006

(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)	On October 29, 2009, Mr. Ray Powers received 1,000,000 shares of common stock pursuant to the acquisition on April 2, 2009. The shares were not issued as compensation expense.

(5)	Mr. Gray was appointed as Chief Executive Officer on February 10, 2009.

(6)	Dr. Ray Powers was appointed President on February 10, 2009 and resigned on August 15, 2011.

(7)	On February 10, 2009, Mr. Woods resigned from his position as Chief Executive Officer.

Employment Agreements

During the year ended December 31, 2011, 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 semi-monthly installments of $5,250. 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.

Outstanding Equity Awards

During the year ended December 31, 2011, 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, 2011.

Director Compensation and Other Arrangements

As a result of having limited resources during most of 2011, we did not provide compensation to our board of directors.

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 31, 2012, 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 220,803,969 shares of common stock outstanding as of March 31, 2012.

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 31, 2012, 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%

* Denotes less than 1%.

(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 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 fiscal years 2011 and 2010 were $28,500 and $38,500, respectively.

Audit-Related Fees

The aggregate fees billed by M&K CPAS, PLLC for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the registrant’s financial statements for the fiscal years 2011 and 2010 were $-0- and $-0-, respectively.

Tax Fees

The aggregate fees billed by M&K CPAS, PLLC for professional services rendered by the principal accountant for the fiscal years 2011 and 2010 were $-0- and $-0-, respectively.

All Other Fees

There were no other fees to be billed by M&K CPAS, PLLC for the fiscal years 2011 and 2010 other than the fees described above.

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.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

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

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

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

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

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: April 16, 2012	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	April 16, 2012
William Gray


/s/ Larry Griffin	Director	April 16, 2012
Larry Griffin