SECURITIES AND EXCHANGE
COMMISSION


WASHINGTON, D.C. 20549





FORM
10-K





þANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





For
the Fiscal Year Ended December 31, 2009





OR





oTRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES 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. YesoNo þ





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 o   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. 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
            oNon-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  No þ





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant on April 15, 2010, based on a closing price of
$0.0745 was approximately $5,996,250.





The
number of shares of Common Stock, $0.001 par value, outstanding on April 15,
2010, was 106,187,001 shares.













COMPETITIVE
COMPANIES, INC.


FOR
THE FISCAL YEAR ENDED


DECEMBER
31, 2009





Index
to Report on Form 10-K





PART
      I
            PageItem
      1.
            Business
            2Item
      1A.
            Risk
      Factors
            8Item
      1B.
            Unresolved
      Staff Comments
            11Item
      2.
            Properties
            11Item
      3.
            Legal
      Proceedings
            11Item
      4.
            (Removed
      and Reserved)
            11PART
      IIItem
      5.
            Market
      for Registrant’s Common Equity and Related Stockholder Matters and Issuer
      Purchases of Equity Securities
            12Item
      6.
            Selected
      Financial Data
            14Item
      7.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            14Item
      7A.
            Quantitative
      and Qualitative Disclosures About Market Risk
            18Item
      8.
            Financial
      Statements and Supplementary Data
            19Item
      9.
            Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
            19Item
      9A (T)
            Control
      and Procedures
            19Item
      9B.
            Other
      Information
            20PART
      IIIItem
      10.
            Directors,
      Executive Officers and Corporate Governance
            21Item
      11.
            Executive
      Compensation
            24Item
      12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
            25Item
      13.
            Certain
      Relationships and Related Transactions, and Director
      Independence
            26Item
      14
            Principal
      Accounting Fees and Services
            27PART
      IVItem
      15.
            Exhibits,
      Financial Statement Schedules
            28

















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 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;


·
            Our
      ability to market our services to new
  subscribers;


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


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


·
            Changes
      in U.S. GAAP or in the legal, regulatory and legislative environments in
      the markets in which we operate;


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


·
            Loss
      of customers or sales weakness;


·
            Technological
      innovations;


·
            Inability
      to efficiently manage our
operations;


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


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


·
            Key
      management or other unanticipated personnel
  changes;


·
            The
      unavailability of funds for capital expenditures;
  and


·
            The
      other risks and uncertainties detailed in this
  report.





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





Throughout
this Annual Report references to “CCI,” “the Company,” “we,” “us,” and “our” and
similar terms refer to Competitive Companies, Inc. and its wholly owned
subsidiaries.





AVAILABLE
INFORMATION





Any
annual, quarterly, special reports and other information filed with the SEC can
be inspected and copied at the public reference facility maintained by the SEC
at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0405. Information
regarding the public reference facilities may be obtained from the SEC by
telephoning 1-800-SEC-0330. The Company’s filings are also available through the
SEC’s Electronic Data Gathering Analysis and Retrieval System which is publicly
available through the SEC’s website (www.sec.gov). Copies of such materials may
also be obtained by mail from the public reference section of the SEC at 100 F
Street, N.E., Room 1580, Washington, D.C. 20549-0405 at prescribed
rates.






-1-





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.
(“Competitive
Communications”), an approved and regulated local and long distance
telephone company, CCI Residential Services Inc. (“CCI Residential”), a
non-regulated telephone company providing local and long distance telephone
service, high-speed Internet and cable television service, DiscoverNet, Inc.
(“DiscoverNet”), a Company providing web hosting, dial-up, wireless and DSL
internet services to businesses and residents within various markets throughout
Wisconsin, the United States and Puerto Rico, DiscoverNet of Wisconsin, LLC,
(“DiscoverNet, LLC”), a dormant entity available for future projects, Innovation
Capital Management, Inc., (“ICM, Inc.”), an investment company that focuses on
raising capital and developing joint ventures and acquisitions, and Innovation
Capital Management, LLC (“ICM, LLC”), a Company that maintains management office
operations. CCI, and their aforementioned subsidiaries (collectively referred to
as the “Company”) provide
telephone, cable television, long distance/inter-exchange, wireless, dial up and
high-speed internet connections and e-mail services.





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) in exchange for stock on a
10 to 1 basis, resulting in the issuance of 31,102,740 shares.  The
fair market value of the shares was $1,555,137 based on the closing stock price
on April 2, 2009, the date of grant.





On May 5,
2009, DiscoverNet, Inc., a wholly owned subsidiary of Competitive Companies,
Inc. which was acquired on April 2, 2009 as described in Note 3 below, filed for
bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code.




On
January 12, 2010 the Company acquired Voice Vision, Inc. (“VVI”), a voice over
internet protocol (“VOIP”) company organized under the laws of the State of
California, through a share exchange agreement consisting of the acquisition of
one hundred percent (100%) of the outstanding capital stock, or ownership
interest of VVI, in exchange for a total of 10,000,000 shares of common stock of
Competitive Companies, Inc. valued at $300,000 based on the fair market value of
the Company’s common stock.





Current
Business Operations





During
the year ended December 31, 2009, we provided telecommunications products and
services that included local telephone services, domestic and international long
distance services, enhanced voice, data and Internet services, and Cable TV
service primarily to residents of apartment complexes, retail businesses and
residential users, as well as, Dial-up, Wireless and DSL Internet services to
businesses and residents within various markets throughout Wisconsin, the United
States and Puerto Rico.  We operate in both a regulated and
non-regulated environment.  It is our intention in the future to
provide bundled services to our customers and expand our revenue sources in the
telecommunications industry.  During 2009 we discontinued our services
provided exclusively to apartment complexes.





Principal
Products and Services





During
the year ended December 31, 2009, CCI provided telecommunications services to
residents of apartment complexes, retail businesses and residential users, in
primary and secondary metropolitan areas of California and
Alabama.  CCI provided telephone service to approximately 300
customers at seven apartment complexes, provided television service to
approximately 350 customers at four properties, and provided DSL services to
approximately 150 customers at five properties.  CCI also provided
dial-up services to approximately 800 customers, DSL services to approximately
150 customers, wireless services to approximately 50 customers and web hosting
services to approximately 25 customers through the DiscoverNet
subsidiary.






-2-







During
the year ended December 31, 2009, CCI operated as a regulated Competitive Local
Exchange Carrier (“CLEC”) and as an
Interexchange Carrier (“IXC”), owning and
operating Class 4 tandem switches and providing telephone service to residences,
businesses, and Shared Tenant Services (“STS”) providers using
a Hub Concept.





Under the
Telecommunications Act of
1996, CCI’s regulated subsidiary, Competitive Communications, receives
significantly discounted prices from the existing or traditional local phone
companies and long distance carriers, thereby reducing their
costs.  As a regulated telecommunications provider, the company is
required to negotiate agreements for resale services from the local exchange
carriers, to file telephone rate tariffs with state public utilities
commissions, and is subject to the state public utilities commission rules
regarding telecommunications carriers.  The company is currently
approved as an operating telephone company in California and Alabama, and
operates as an approved public utility by each state’s Public Service
Commissions.  Competitive Communications has completed wholesale
interconnect agreements with SBC, now known as “AT&T,” Verizon, BellSouth,
and QWEST.  These agreements allow us to purchase wholesale local and
long distance telephone service and nationwide Internet service at discounted
prices and resell those services at retail rates to businesses and residential
users.





The
subsidiary, CCI Residential,operates under shared
tenant services provisions within each state and is a non-regulated
company.  As such, it is not required to file tariffs with state
public utilities commissions and does not have to comply with commission rules
regarding local exchange carriers, thus legally avoiding the more onerous rate
filing requirements of the regulated subsidiaries and other regulated
carriers.  CCI Residentialcan sign individual
agreements with property owners allowing for commission payments to the property
owner consisting of a portion of the revenue the subsidiary receives from
apartment complex residents on the owner’s property.  As a shared
tenant service provider, CCI Residentialis required by each
state’s public utilities commission to provide regulated carriers with equal
access to the apartment complexes it services.





The
Company intends to negotiate definitive agreements to create new strategic
alliances and acquisitions that would provide new services and products.
Specifically, the Company hopes to provide wireless high speed internet,
nationwide dial-up, broadband DSL, broadband satellite, web design services,
discount cellular services, VoIP services and other similar services in the
telecommunications industry.





Competitive Communications,
Inc.





This
subsidiary offered the following services in most of their markets during the
year ended December 31, 2009:  local and long distance telephone
services, toll-free or (800) service, and dedicated Internet and DSL services to
business and non-apartment complex residential customers.





To offer
these services, Competitive Communications must secure certification from a
state regulator and typically must file rates or price lists for the services
that it will offer.  The certification process varies from state to
state; however, the fundamental requirements are largely the
same.  State regulators require new entrants to demonstrate that they
have secured adequate financial resources to establish and maintain good
customer service.  New entrants must show that they possess the
knowledge and ability required to establish and operate a telecommunications
network.  CCI currently has all necessary agreements in place in
California and Alabama, but does not expect to renew these agreements and has
ceased to provide services in these markets.





Services
were sold as bundled or unbundled, depending on the customer’s preference.
Competitive Communicationsalso sold services to
CCI Residential,which then sold those
services to apartment residents under shared tenant services
provisions.  Nearly all of Competitive Communications’ sales were
attributed to CCI Residential, and only a small portion was from direct sales of
telephone and Internet services to retail residential and business
customers.





CCI Residential
Services





CCI
Residentialprovided the following
products and services: local and long distance services, high-speed Internet,
cable television, and toll-free or (800) service in California and
Alabama.




-3-







To offer
these services to apartment complex customers, CCI Residential had to sign a
contract with the apartment owner.  These multi-year contracts
typically ranged from five (5) to twenty (20) years.  They provided
for the apartment owner to share in a percentage of the revenue received from
servicing the complex.  The percentage received varied from 0% to 11%,
based on the total revenue received, the types of services provided, the term of
the contract and other negotiated factors.  If the complex was under
construction, CCI Residential had to plan for, have approved, and install
underground cabling.  If the complex was already built, it had to
survey the cabling needs and negotiate the use of the cable with the
owner.  It also had to secure state approval to conduct business in
the state and establish service from Competitive Communications, if available,
or if Competitive Communications is not yet certified, from the traditional
local telephone companies.  CCI Residential marketed to the MDU
(multiple-dwelling units) market as it was able to provide bundled services in a
cost effective manner.





Services
sold by CCI Residential could be bundled or unbundled depending on the
customer’s preference.  Competitive Communications sold unbundled
telephone, cable television, and Internet services to CCI Residential at,
Competitive Communications’ cost.  CCI Residential then sold these
services to apartment complex customers at competitive market
prices.  By having all outside service agreements under Competitive
Communications, it was possible to negotiate better terms and discounts based on
the combined volume of the customer bases of Competitive Communications and CCI
Residential.





When
tenants moved into an apartment complex serviced by CCI Residential, the leasing
agent informed them that the complex had a private telephone service provider
and a private cable television provider (in those locations where CCI provided
the cable television service).  Tenants had to contact CCI Residential
in order to activate their telephone and cable television
service.  Those tenants who preferred to receive service from the
local telephone company could do so; however, their telephone line had to be
cross-connected from CCI Residential to the local telephone
company.  This took the telephone company from a few days to two weeks
to accomplish and the installation charges were assessed to the
tenant.  In most cases, telephone service to the tenants that selected
CCI Residential for their service was activated while they were still on the
line placing their orders.  On average, more than 30% of tenants
decided to use CCI Residential telephone service when offered at the
complex.  Those who did not use the CCI Residential could select a
local carrier, use their cell phones only, or choose not to have any telephone
service.  Over 70% of tenants used CCI Residential to provide cable
television service at those complexes where CCI Residential offered the
service.  Those who did not use CCI Residential either used satellite
television dishes for service or did not have television service at
all.  Approximately 20% of tenants used DSL Internet service provided
by CCI Residential.





Of the
total revenue generated by CCI Residential, approximately 40% was from
telephone-related service, approximately 40% was from cable television service,
and approximately 20% was from internet service to tenants of apartment
complexes serviced by the Company.





As CCI
Residential purchased its services from Competitive Communications, CCI
Residentialdid
not need or have the same connection services agreements required of Competitive
Communications.





DiscoverNet,
Inc.





DiscoverNet
provides web hosting, dial-up, wireless and DSL internet services to businesses
and residents within various markets throughout Wisconsin, the United States and
Puerto Rico.  The Company operates primarily in rural
markets.





Long Distance
Services





The
company offers a full range of domestic and international long distance
services. These services include “1+” outbound calling and inbound toll free
service.





Competitive
Communications, Inc. has negotiated an agreement with QWEST Communications for
volume discounts for long distance resale.  Prior to signing with
QWEST, the Company had long distance service providers that were more expensive
than QWEST and provided inferior service.  Periodically, the Company
reviews proposals from other long distance providers to ensure that it is
receiving the best possible rates.  Should better rates with
comparable service be found, a request revision of the QWEST agreement would be
initiated or the more cost effective provider would be selected and transition
made to the new provider.





The
agreement with QWEST allows CCI to offer long distance telephone service in all
fifty (50) states.




-4-







Internet
Services





CCI had
been installing and offering high-speed internet service to selected apartment
complex customers since May of 2002.  It offered high-speed internet
access services via digital subscriber line (DSL).  After accepting
bids from other carriers, based on price and service quality, QWEST was selected
as the carrier to provide internet service telephone lines at selected apartment
complexes.





As a
result of the acquisition with DiscoverNet, Inc., we have been able to integrate
and expand our current internet services by providing “wireless” broadband
internet services as well web design services and network design
services.  This expansion has allowed us to reach a much broader
market than we previously serviced.





Voice-over-Internet
Protocol





VoIP uses
the traditional technology of sending data packets over the internet to now
transmit voices, through the compression of sound into data packets which are
transmitted over data networks.  Instead of establishing a specific
connection between two devices and sending a message in “one piece,” VoIP
separates the message into smaller fragments called packets.  These
packets are transmitted separately over a decentralized network and upon
reaching its final destination, are reassembled into the original
message.





Discount Cellular
Services





We have
been able to expand our services to include cellular services as a result of the
acquisition with DiscoverNet, Inc.  In addition, we anticipate being
able to offer AT&T, Verizon and T-mobile cellular services.





Principal
Suppliers





During
the year ended December 31, 2009, CCI had various suppliers for its telephone,
cable television, long distance/inter-exchange, and dial up and high-speed
internet connections and e-mail services.  More specifically, it had
contracts with QWEST to supply its long distance and DSL services, AT&T for
local telephone services, and Direct TV for cable services.





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 revenues.  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 markets its ability to offer lower pricing
and bundled packages of services with one bill and one point of
contact.





CCI 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 such as our subsidiary, Competitive Communications, 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.






-5-





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.





Voice-over-Internet
Protocol





VoIP
services first emerged in the mid 1990s but were not typically used for
transmitting voice signals due to the potential for data packets to be delayed
or lost, preventing a real-time transmission and possibly resulting in poor
sound quality.  Due to these glitches, VoIP did not receive a positive
response early on and most consumers were not attracted to the idea of
VoIP.  However, as bandwidth increased and improvements in the packet
technology occurred, the quality and reliability of VoIP were
enhanced.





With new
improvements, VoIP now allows a much higher volume of telecommunications traffic
to flow at much higher speeds than do traditional circuits, while at a
significantly lower cost.  VoIP networks are less capital intensive to
construct and much less expensive to maintain.  VoIP networks are
based on internet protocol and therefore can interface with web-based services,
such as virtual portals, interactive voice response, and unified messaging
packages.  A VoIP network utilizes intellectual property to transmit a
call from its origination point to CCI’s servers.  The ability to
minimize the use of established telecommunication lines reduces the cost of
transmitting telephone calls for CCI and ultimately the customer.





Today,
VoIP is increasingly used by residential and business users and offered through
a wide array of service providers.  Vonage and Skype are the most
advertised and well-known of these VoIP providers.  Some other
providers are long distance phone companies, cable companies, and internet
service providers.  These types of providers differ in the type of
networks used and the characteristics and features offered for VoIP
communications services.  However, we believe future competition could
come from a variety of enterprises both in the internet and telecommunications
industry and the existing competitors are likely to continue to expand their
service offerings.





Customers




During
the year ended December 31, 2009, two apartment complexes that we service
accounted for approximately 22% of our annual sales.  The complex of
Colonial Village in Trussville, Alabama accounted for 15%, or $38,000 in revenue
and the complex of Durham Greens in Fremont, California accounted for 7%, or
$18,000 in revenue.





Intellectual
Property





CCI’s
Hartline system enters, schedules, provisions, and tracks a customer’s order
from the point of sale to the installation and testing of service.  It
also interfaces with trouble management, inventory, billing, collection and
customer service systems.





Personnel





As of
December 31, 2009, we had ten 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 executed LOIs, 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.






-6-





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 telecommunication services business offered during the year
ended December 31, 2009, 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 (“FCC”), 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.






-7-





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, 2009 and 2008 was $1,005,927
and $420,556, respectively. As of December 31, 2009, we only had $10,133 in
cash available to finance our operations and a working capital deficit of
$709,413.  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 and if we do obtain additional financing our then existing stockholders
may suffer substantial dilution.





We will
require additional funds to expand our operations and believe the current cash
on hand and the other sources of liquidity will not be sufficient enough to fund
our operations through fiscal 2010.  We anticipate that we will
require approximately $400,000 to $500,000 to fund our continued operations for
fiscal 2010 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 business as recently noted with
executed LOIs. 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.




-8-







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, 2009, 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.





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 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.






-9-





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





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. As defined in Exchange Act Rule 13a-15(f),
internal control over financial reporting is a process designed by, or under the
supervision of, the principal executive and principal financial officer and
effected by the board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that: (i) pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and dispositions of the
assets of 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 may be inadequate or ineffective,
which could cause our financial reporting to be unreliable and lead to
misinformation being disseminated to the public. Investors relying upon this
misinformation may make an uninformed investment decision.





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





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





·
            Deliver
      to the customer, and obtain a written receipt for, a disclosure
      document;


·
            Disclose
      certain price information about the
stock;


·
            Disclose
      the amount of compensation received by the broker-dealer or any associated
      person of the broker-dealer;


·
            Send
      monthly statements to customers with market and price information about
      the penny stock; and


·
            In
      some circumstances, approve the purchaser’s account under certain
      standards and deliver written statements to the customer with information
      specified in the rules.





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





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





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






-10-





Item
1B.  Unresolved Staff Comments.





None.





Item
2.  Properties.





Our
corporate headquarters are in San Antonio, Texas, where we lease approximately
1,750 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.





One of
our subsidiary’s operations is located in Eau Claire, WI, where we lease
approximately 1,650 square feet of office and warehouse space for approximately
$3,174 per month.  The lease expired on October 31, 2009, and has been
extended on a month to month basis.





One of
our subsidiary’s operations is located in Riverside, CA, where we lease
approximately 2,134 square feet of office and warehouse space for approximately
$2,460 per month.  The lease is for five years and expires in December
2011.  Pursuant to the lease we have minimal annual rental increase
for the duration of the five years, culminating at $2,945 for the last year of
the lease.  The Company is in default on the lease payments, has
vacated the property and is in negotiations to settle the outstanding balance of
unpaid lease payments and remaining lease obligations.





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, (the
“Debtor”) filed petitions for relief under Chapter 11 of the federal bankruptcy
laws in the United States Bankruptcy Court for the Western District of Wisconsin
(the “Bankruptcy Court”). Under Chapter 11, certain claims against the Debtor in
existence prior to the filing of the petitions for relief under the federal
bankruptcy laws are stayed while the Debtor 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 the
Debtor’s assets (“secured claims”) 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 the Debtor’s property, plant, and
equipment.





The
Debtor has received approval from the Bankruptcy Court to pay or otherwise honor
certain of its prepetition obligations, including employee wages and product
warranties. The Debtor 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, the debtor has
discontinued accruing interest on these obligations. Refer to Note 7 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 has
not yet been developed and accepted by the Bankruptcy Court.





Item
4.  (Removed and Reserved).




-11-












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. Therefore, the
following table lists the quotations for the high and low bid prices as reported
by a Quarterly Trade and Quote Summary Report of the OTC Bulletin
Board.  The quotations from the OTC Bulletin Board reflect
inter-dealer prices without retail mark-up, mark-down, or commissions and may
not represent actual transactions.





December
      31, 2009
            
            
            December
      31, 2008High
            
            
            Low
            
            
            High
            
            
            Low1st
      Quarter
            
            $
            0.110
            
            
            $
            0.030
            
            
            $
            0.050
            
            
            $
            0.0202nd
      Quarter
            
            $
            0.061
            
            
            $
            0.035
            
            
            $
            0.050
            
            
            $
            0.0153rd
      Quarter
            
            $
            0.160
            
            
            $
            0.035
            
            
            $
            0.055
            
            
            $
            0.0154th
      Quarter
            
            $
            0.090
            
            
            $
            0.030
            
            
            $
            0.200
            
            
            $
            0.007





Holders
of Common Stock





As of
April 15, 2009, we had approximately 550 stockholders of the 106,187,001 shares
outstanding.





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.





Securities
Authorized for Issuance under Equity Compensation Plans





Consultant and Employee
Stock Compensation Plan





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, 2009, regarding outstanding options granted under
the plan and options reserved for future grant under the plan.




-12-







Plan
      Category
            
            Number
              of
      shares to be issued upon exercise of outstanding options, warrants and
      rights
              (a)
            
            Weighted-average
      exercise price of outstanding options, warrants and rights
              (b)
            
            Number
      of shares remaining available for future issuance under equity
      compensation plans (excluding shares reflected in column (a))
              (c)Equity
      compensation plans approved by stockholders
            
            -0-
            
            -0-
            
            -0-Equity
      compensation plans not approved by stockholders
            
            6,672,000
            
            $0.10
            
            3,328,000Total
            
            6,672,000
            
            $0.10
            
            3,328,000





Under
CCI’s Employee Stock Incentive 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, 2009, 3,328,000 shares remain available for issuance
under this stock option plan.





Recent
Sales of Unregistered Securities





During
the fourth quarter of 2009, the Company sold a total of 1,317,904 shares of its
common stock for proceeds of approximately $51,175 to a total of eight (8)
accredited investors.  Of these sales, 873,571 shares were issued
during the first quarter of 2010.





We
believe the issuance of the shares is exempt from the registration and
prospectus delivery requirement of the Securities Act of 1933 by virtue of
Section 4(2) and/or Regulation D, Rule 506.  The shares were issued
directly by us and did not involve a public offering or general
solicitation.  The recipients of the shares were afforded an
opportunity for effective access to our files and records of that contained the
relevant information needed to make their investment decision, including our
financial statements and 34 Act reports. We reasonably believed that the
recipients had such knowledge and experience in the Company’s financial and
business matters that they were capable of evaluating the merits and risks of
his investment.





Subsequent
Issuances





During
the first quarter of 2010, the Company sold 3,867,617 shares of its common stock
for proceeds of approximately $98,950 to a total number of seventeen (17)
accredited investors.




We
believe the issuance of the shares is exempt from the registration and
prospectus delivery requirement of the Securities Act of 1933 by virtue of
Section 4(2) and/or Regulation D, Rule 506.  The shares were issued
directly by us and did not involve a public offering or general
solicitation.  The recipients of the shares were afforded an
opportunity for effective access to our files and records of that contained the
relevant information needed to make their investment decision, including our
financial statements and 34 Act reports. We reasonably believed that the
recipients had such knowledge and experience in the Company’s financial and
business matters that they were capable of evaluating the merits and risks of
his investment.





On April
2, 2010, the Company cancelled 100,000 shares of its common stock formerly held
by a related party.





Issuer
Purchases of Equity Securities





The
Company did not repurchase any of its equity securities during the fourth
quarter ended December 31, 2009.






-13-





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, Competitive Communications, Inc. (“Competitive
Communications”), which is an approved and regulated local and long
distance telephone company, and CCI Residential Services Inc. (“CCI Residential”),
which is a non-regulated telephone company providing local and long distance
telephone service, high-speed Internet and cable television service to large
apartment complexes, DiscoverNet, Inc. (“DiscoverNet”), a Company providing web
hosting, dial-up, wireless and DSL internet services to businesses and residents
within various markets throughout Wisconsin, the United States and Puerto Rico,
DiscoverNet of Wisconsin, LLC, (“DiscoverNet, LLC”), a dormant entity available
for future projects, Innovation Capital Management, Inc., (“ICM, Inc.”), an
investment company that focuses on raising capital and developing joint ventures
and acquisitions, and Innovation Capital Management, LLC (“ICM, LLC”), a Company
that maintains management office operations.





The
telecommunications products and services provided by the company and its
subsidiaries include local telephone services, domestic and international long
distance services, and enhanced voice, data and internet services, and cable TV
service, as well as, web hosting, dial-up, wireless and DSL internet services
primarily to residents of apartment complexes, retail businesses and residential
users.  It is our intention in the future to provide bundled services
to our customers as well as expand to customers beyond apartment complexes by
providing additional services and options in addition to our current
products.





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.





On
January 12, 2010 we acquired Voice Vision, Inc. (“VVI”) in an effort to expand
our voice over internet protocol (“VoIP”) services.  The acquisition
is expected to enable us to expand our services to our existing customers and
compete in a rapidly changing technological market place.  VVI has
developed a video VoIP product that we expect to be able to bring to market in
the near term.





For the
years ended December 31, 2009 and 2008, we incurred net losses of $1,071,545 and
$428,606, respectively.  Our accumulated deficit at the end of
December 31, 2009 was $4,271,122.  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, 2009 and 2008





The
following income and operating expenses tables summarize selected items from the
statement of operations for the year ended December 31, 2009 compared to the
year ended December 31, 2008.









-14-





INCOME:




The
      Year Ended
                December
      31,
              
              
              Increase/

                (Decrease)2009
              
              
              2008
              
              
              %Revenues
              
              $
              254,549
              
              
              $
              665,144
              
              
              
              (62
              %)Cost
      of Sales
              
              
              391,921
              
              
              
              389,590
              
              
              
              1
              %Gross
      Profit
              
              $
              (137,372
              )
              
              $
              275,554
              
              
              
              (150
              %)Gross
      Profit Percentage of Revenue
              
              
              (54%
              )
              
              
              41
              %
              
              
              (95
              %)





Revenues





Revenues
for the year ended December 31, 2009 was $254,549 compared to revenues of
$665,144 for the year ended December 31, 2008. This resulted in a decrease in
revenues of $410,595, or 62%.





During
2007, regulations governed by the Federal Communications Commission were changed
that allowed direct competitors to our telephone and cable services to compete
with our customers in the apartment complexes that we serviced.  As a
result, we were unable to remain competitive with larger competitors and our
customer base steadily diminished as customers’ switched providers, ultimately,
resulting in the closure of our office in California.  Our
acquisitions in April of 2009 enabled us to extend our operations to other
regions, including Texas and Wisconsin.





Due to
this change in the regulatory environment of our traditional business
operations, we have begun to pursue and investigate alternative revenue
sources.





Cost
of sales





Cost of
sales for the year ended December 31, 2009 was $391,921, an increase of $2,331,
or 1%, from $389,590 for the year ended December 31, 2008.  We were
unable to reduce cost of sales as our revenues declined during the year ended
December 31, 2009 due to the nature of our fixed circuit costs.  We
expect cost of sales to decline significantly in 2010 with the closure of our
California office.





Gross
profit





Gross
profit as a percentage of revenue decreased from 41% for the year ended December
31, 2008 to (54%) for the year ended December 31, 2009.  Our gross
profit has decreased as a result of not being able to better manage our cost of
sales in relation to our overall decrease in revenues.





OPERATING
EXPENSES:





The
      Year Ended
              December
      31,
            
            
            Increase/
              (Decrease)2009
            
            
            2008
            
            
            %General
      and administrative expenses
            
            
            533,031
            
            
            $
            326,065
            
            
            
            64
            %Salaries
      and wages
            
            
            227,376
            
            
            
            200,048
            
            
            
            14
            %Consulting
      fees
            
            
            12,590
            
            
            
            122,208
            
            
            
            (90
            %)Depreciation
            
            
            36,916
            
            
            
            33,296
            
            
            
            11
            %Bad
      Debt
            
            
            58,642
            
            
            
            14,493
            
            
            
            305
            %Net
      operating loss
            
            $
            (1,005,927
            )
            
            $
            (420,556
            )
            
            
            (139
            %)









-15-





General
and Administrative expenses





General
and administrative expenses were $533,031 for the year ended December 31, 2009,
as compared to $326,065 for the year ended December 31, 2008.  This
resulted in an increase of $206,966 or 64%.  The increase was due
primarily to the additional general and administrative expenses incurred by the
subsidiaries that were acquired on April 2, 2009.





Salaries
and Wages





Salary
and wage expenses were $227,376 for the year ended December 31, 2009, versus
$200,048 of salary and wage expenses for the year ended December 31, 2008, which
resulted in an increase of $27,328, or 14%.  Our salaries and wages
increased due to the additional employees that were acquired in April of 2009,
which were necessary to operate the expanded regional operations in Wisconsin
and Texas.  We expect that we may need to increase our personnel in
the future and ultimately experience higher salaries and wages as we expand our
operations and finalize potential acquisitions and alternative revenue
sources.





Consulting
Fees





Consulting
fees were $12,590 for the year ended December 31, 2009, compared to $122,208
consulting fees for the year ended December 31, 2008, which resulted in a
decrease of $109,618, or 90%.  The significant decrease in consulting
fees was a result of stock-based compensation being paid for professional
services in the pursuit of finding financing and merger & acquisition
candidates as well as a significant increase in professional fees during 2008,
which we did not similarly experience in 2009.





Depreciation





Depreciation
expenses were $36,916 for the year ended December 31, 2009, versus $33,296 for
the year ended December 31, 2008, resulting in an increase of $3,620 or
11%.  During the 2009 year we acquired depreciable fixed assets with
the acquisitions on April 2, 2009.  We anticipate our depreciation
expenses to remain stable as we steadily replace aging fixed
assets.





Bad
Debt





Bad debt
expenses for the year ended December 31, 2009 were $58,642 as compared to
$14,493 for the same period of 2008, which resulted in an increase of
$44,149.  Our bad debt expenses increased significantly due to write
offs of uncollectible accounts receivable, as well as, significant increases in
management’s estimate of allowances for doubtful accounts.





Net
Operating (Loss)





The net
operating loss for the year ended December 31, 2009 was $1,005,927, versus a net
operating loss of $420,556 for the year ended December 31, 2008.  This
resulted in a decrease of 139% when compared to the same period of
2008.  Although we had a significant decrease in our consulting fees
during the 2009 year, we were unable to decrease our overall operating loss with
all our other expenses.  Our $410,595 reduction in revenues was not
supported with equivalent reductions in operating costs.  We expect
significant improvements in our cost reduction efforts in 2010.





Liquidity
and Capital Resources





The
following table summarizes total current assets, liabilities and working capital
at December 31, 2009 compared to December 31, 2008.




December
      31,
              
              
              December
      31,
              
              
              Increase/ (Decrease)2009
              
              
              2008
              
              
              $
              
              
              %Current
      Assets
              
              $
              26,594
              
              
              $
              108,851
              
              
              $
              82,257
              
              
              
              (76
              %)Current
      Liabilities
              
              $
              736,007
              
              
              $
              263,577
              
              
              $
              472,430
              
              
              
              179
              %Working
      (Deficit)
              
              $
              (709,413
              )
              
              $
              (154,726
              )
              
              $
              554,687
              
              
              
              (358
              %)






-16-





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, 2009, we had a working capital deficit of
$709,413.  Current liabilities increased significantly due to the
acquisition of $448,254 of current liabilities held by our newly acquired
subsidiaries.  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.





From time
to time we have received loans from our Chief Executive Officer, William H.
Gray.  These unsecured, interest free loans are due on
demand.  The balance due was $1,474 as of December 31,
2009.





On
December 2, 2009 we received $30,000 in exchange for an unsecured promissory
note that carries an 8% interest rate, maturing on March 2, 2010





On July
17, 2009 we received $50,000 in exchange for an unsecured convertible promissory
note that 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.





On June
26, 2009 we received $10,000 in exchange for an unsecured convertible promissory
note that 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.





On June
15, 2009 we received $10,000 in exchange for an unsecured convertible promissory
note that 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.





On June
15, 2009 we received $5,000 in exchange for an unsecured convertible promissory
note that 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.





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.





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.






-17-





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 $4,271,122 and a working capital
deficit of $709,413 at December 31, 2009, and have reported negative cash flows
from operations over the last four years.  In addition, we do not
currently have the cash resources to meet our operating commitments for the next
twelve months.  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.





Recently
Issued Accounting Standards





In June
2009, the Financial Accounting Standards Board (“FASB”) issued the FASB
Accounting Standards Codification (the “ASC”). The ASC has become the single
source of non-governmental accounting principles generally accepted in the
United States (“GAAP”) recognized by the FASB in the preparation of financial
statements. The ASC does not supersede the rules or regulations of the
Securities and Exchange Commission (“SEC”), therefore, the rules and
interpretive releases of the SEC continue to be additional sources of GAAP for
the Company. The Company adopted the ASC as of July 1, 2009. The ASC does not
change GAAP and did not have an effect on the Company’s financial position,
results of operations or cash flows.





In May
2009, the FASB issued ASC 855-10 entitled “Subsequent Events”. Companies are now
required to disclose the date through which subsequent events have been
evaluated by management. Public entities (as defined) must conduct the
evaluation as of the date the financial statements are issued, and provide
disclosure that such date was used for this evaluation. ASC 855-10 provides that
financial statements are considered “issued” when they are widely distributed
for general use and reliance in a form and format that complies with GAAP. ASC
855-10 is effective for interim and annual periods ending after June 15, 2009
and must be applied prospectively. The adoption of ASC 855-10 upon inception did
not have a significant effect on the Company’s financial statements as of that
date or for the period then ended. In connection with preparing the accompanying
consolidated financial statements for the year ended December 31, 2009,
management evaluated subsequent events through the date that such financial
statements were issued (filed with the Securities and Exchange
Commission).


Item
7A.  Quantitative and Qualitative Disclosures About Market
Risk.
 
 Not
applicable.
   -18-
 
 Item
8.  Financial Statements and Supplementary Data.


COMPETITIVE
COMPANIES, INC
 
 INDEX TO
FINANCIAL STATEMENTS
 
 YEARS
ENDED DECEMBER 31, 2009 AND 2008
 
 
 PAGESREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                  F-2CONSOLIDATED
      BALANCE SHEETS
                  F-3CONSOLIDATED
      STATEMENTS OF OPERATIONS
                  F-4CONSOLIDATED
      STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
                  F-5CONSOLIDATED
      STATEMENTS OF CASH FLOWS
                  F-6NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
                  F-7
      – F-18
    F-1
 
 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, 2009 and 2008 and the related statements of operations, changes in
stockholders’ equity (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, 2009 and 2008, and the results of its operations, changes in
stockholders’ equity (deficit) and cash flows for the periods then in conformity
with accounting principles generally accepted in the United States of
America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has insufficient working capital, which raises
substantial doubt about its ability to continue as a going concern. Management’s
plans regarding those matters also are described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
 
 
 /s/
M&K CPAS, PLLC
 www.mkacpas.com
 Houston,
Texas
 April
15, 2010
  F-2


Competitive
      Companies, Inc.(Debtor-in-Possession)Consolidated
      Balance SheetsDecember
      31,
            
            
            December
      31,2009
            
            
            2008AssetsCurrent
      assets:Cash
            
            $
            10,133
            
            
            $
            23,340Account
      receivable, net of allowance of $18,000 and $77,472
            
            
            13,611
            
            
            
            82,514Prepaid
      expenses
            
            
            2,850
            
            
            
            2,997Total
      current assets
            
            
            26,594
            
            
            
            108,851Property
      and equipment, net
            
            
            29,745
            
            
            
            56,425Other
      assets:Deposits
            
            
            1,366
            
            
            
            1,366Total
      assets
            
            $
            57,705
            
            
            $
            166,642Liabilities
      and Stockholders' EquityLiabilities
      Not Subject to CompromiseCurrent
      liabilities:Accounts
      payable
            
            $
            441,078
            
            
            $
            162,812Accrued
      expenses
            
            
            57,984
            
            
            
            32,025Customer
      deposits
            
            
            39,913
            
            
            
            44,670Deferred
      revenues
            
            
            38,552
            
            
            
            -Current
      maturities of notes payable
            
            
            68,480
            
            
            
            11,700Current
      maturities of long term debt, net of discounts of $-0-and
      $2,630 at December 31, 2009 and 2008, respectively
            
            
            90,000
            
            
            
            12,370Total
      current liabilities
            
            
            736,007
            
            
            
            263,577Liabilities
      Subject to Compromise (a)
            
            
            390,075
            
            
            
            -Notes
      payable, less current maturities
            
            
            -
            
            
            
            8,476Total
      liabilities
            
            
            1,126,082
            
            
            
            272,053Stockholders'
      equity:Preferred
      stock, $0.001 par value 10,000,000 shares authorized:Class
      A convertible, no shares issued andoutstanding
      with no liquidation value
            
            
            -
            
            
            
            -Class
      B convertible, 1,495,436 shares issued andoutstanding
      with no liquidation value
            
            
            1,495
            
            
            
            1,495Class
      C convertible, 1,000,000 shares issued andoutstanding
      with no liquidation value
            
            
            1,000
            
            
            
            1,000Common
      stock, $0.001 par value, 500,000,000 sharesauthorized,
      98,745,813 and 64,187,630 shares issuedand
      outstanding at December 31, 2009 and 2008, respectively
            
            
            98,746
            
            
            
            64,188Additional
      paid-in capital
            
            
            2,710,583
            
            
            
            2,913,469Subscription
      payable, 8,194,506 and 2,180,280 sharesat
      December 31, 2009 and 2008, respectively
            
            
            390,921
            
            
            
            114,014Accumulated
      (deficit)
            
            
            (4,271,122
            )
            
            
            (3,199,577
            )Total
      stockholders' (deficit)
            
            
            (1,068,377
            )
            
            
            (105,411
            )Total
      liabilities and stockholders' (deficit)
            
            $
            57,705
            
            
            $
            166,642(a)
      Liabilities subject to compromise consist of the
following:Secured
      debt, 2.25% above "Money Rates",secured
      by a $250,000 life insurance policy
            
            $
            142,009Subordinated
      debentures, 8.5%
            
            
            15,686Subordinated
      debentures, 5%
            
            
            10,000Trade
      payables and other miscellaneous claims
            
            
            222,380$
            390,075The
      accompanying notes are an integral part of these financial
      statements.




F-3







Competitive
      Companies, Inc.(Debtor-in-Possession)Consolidated
      Statements of OperationsFor
      the years endedDecember
      31,2009
            
            
            2008Revenue
            
            $
            254,549
            
            
            $
            665,144Cost
      of sales
            
            
            391,921
            
            
            
            389,590Gross
      profit (loss)
            
            
            (137,372
            )
            
            
            275,554Expenses:General
      and administrative
            
            
            533,031
            
            
            
            326,065Salaries
      and wages
            
            
            227,376
            
            
            
            200,048Consulting
      fees
            
            
            12,590
            
            
            
            122,208Depreciation
            
            
            36,916
            
            
            
            33,296Bad
      debts
            
            
            58,642
            
            
            
            14,493Total
      operating expenses
            
            
            868,555
            
            
            
            696,110Net
      operating loss
            
            
            (1,005,927
            )
            
            
            (420,556
            )Other
      income (expenses):Other
      income
            
            
            23,985
            
            
            
            -Other
      expense
            
            
            (1,950
            )
            
            
            -Loss
      on disposal of fixed assets
            
            
            (44,497
            )
            
            
            -Interest
      expense
            
            
            (31,156
            )
            
            
            (8,050
            )Total
      other income (expenses)
            
            
            (53,618
            )
            
            
            (8,050
            )Net
      loss before reorganization items
            
            
            (1,059,545
            )
            
            
            (428,606
            )Professional
      fees
            
            
            (12,000
            )
            
            
            -Net
      loss
            
            $
            (1,071,545
            )
            
            $
            (428,606
            )Weighted
      average number of common sharesoutstanding
      - basic and fully diluted
            
            
            85,233,678
            
            
            
            59,409,944Net
      loss per share - basic and fully diluted
            
            $
            (0.01
            )
            
            $
            (0.01
            )The
      accompanying notes are an integral part of these financial
      statements.






F-4




Competitive
      Companies, Inc.(Debtor-in-Possession)Consolidated
      Statement of Stockholders' EquityClass
      A
            
            
            Class
      B
            
            
            Class
      C
            
            
            
            
            
            
            
            
            
            
            
            TotalCommon
      Stock
            
            
            Preferred
      Stock
            
            
            Preferred
      Stock
            
            
            Preferred
      Stock
            
            
            Additional
            
            
            Subscriptions
            
            
            Accumulated
            
            
            Stockholders'Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Paid-in
            
            
            Payable
            
            
            (Deficit)
            
            
            EquityBalance,
      December 31, 2007
            
            
            56,707,050
            
            
            $
            56,707
            
            
            
            -
            
            
            $
            -
            
            
            
            1,495,436
            
            
            $
            1,495
            
            
            
            1,000,000
            
            
            $
            1,000
            
            
            $
            2,661,782
            
            
            $
            14,000
            
            
            $
            (2,770,971
            )
            
            $
            (35,987
            )Shares
      issued for cash
            
            
            1,250,000
            
            
            
            1,250
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            67,250
            
            
            
            100,014
            
            
            
            -
            
            
            
            168,514Shares
      issued for services
            
            
            6,230,580
            
            
            
            6,231
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            180,687
            
            
            
            -
            
            
            
            -
            
            
            
            186,918Beneficial
      conversion of convertible debt
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,750
            
            
            
            -
            
            
            
            -
            
            
            
            3,750Net
      loss for the year endedDecember
      31, 2008
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (428,606
            )
            
            
            (428,606
            )Balance,
      December 31, 2008
            
            
            64,187,630
            
            
            $
            64,188
            
            
            
            -
            
            
            $
            -
            
            
            
            1,495,436
            
            
            $
            1,495
            
            
            
            1,000,000
            
            
            $
            1,000
            
            
            $
            2,913,469
            
            
            $
            114,014
            
            
            $
            (3,199,577
            )
            
            $
            (105,411
            )Shares
      issued for cash
            
            
            8,153,093
            
            
            
            8,153
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            387,085
            
            
            
            (89,139
            )
            
            
            -
            
            
            
            306,099Shares
      issued for services
            
            
            2,623,282
            
            
            
            2,623
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            126,041
            
            
            
            -
            
            
            
            -
            
            
            
            128,664Shares
      issued for acquisitions
            
            
            23,781,808
            
            
            
            23,782
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,165,309
            
            
            
            366,046
            
            
            
            -
            
            
            
            1,555,137Beneficial
      conversion of convertible debt
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            8,919
            
            
            
            -
            
            
            
            -
            
            
            
            8,919Consideration
      paid in excess offair
      value of acquisitions
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,890,240
            )
            
            
            -
            
            
            
            -
            
            
            
            (1,890,240
            )Net
      loss for the year endedDecember
      31, 2009
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,071,545
            )
            
            
            (1,071,545
            )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
            )The
      accompanying notes are an integral part of these financial
      statements.








F-5






Competitive
      Companies, Inc.(Debtor-in-Possession)Consolidated
      Statements of Cash FlowsFor
      the years endedDecember
      31,2009
            
            
            2008Cash
      flows from operating activitiesNet
      (loss) before reorganization items
            
            $
            (1,059,545
            )
            
            $
            (428,606
            )Adjustments
      to reconcile net (loss) tonet
      cash (used in) operating activities:Provision
      for bad debts (recoveries)
            
            
            58,642
            
            
            
            14,493Depreciation
            
            
            36,916
            
            
            
            33,296Loss
      on disposal of fixed assets
            
            
            44,497
            
            
            
            -Share-based
      compensation
            
            
            128,664
            
            
            
            186,918Amortization
      of beneficial conversion feature
            
            
            11,549
            
            
            
            1,120Decrease
      (increase) in assets:Accounts
      receivable
            
            
            36,700
            
            
            
            (7,583
            )Prepaid
      expenses
            
            
            2,952
            
            
            
            (436
            )Increase
      (decrease) in liabilities:Accounts
      payable
            
            
            271,618
            
            
            
            45,449Accrued
      expenses
            
            
            18,866
            
            
            
            19,243Customer
      deposits
            
            
            (4,757
            )
            
            
            810Deferred
      revenues
            
            
            38,552
            
            
            
            -Net
      cash (used in) operating activitiesbefore
      reorganization items
            
            
            (415,346
            )
            
            
            (135,296
            )Professional
      fees paid for services rendered inconnection
      with the Chapter 11 proceeding
            
            
            (12,000
            )
            
            
            -Net
      cash (used in) operating activities
            
            
            (427,346
            )
            
            
            (135,296
            )Cash
      flows from investing activitiesPurchase
      of equipment
            
            
            (9,987
            )
            
            
            (1,640
            )Cash
      acquired in merger
            
            
            25,273
            
            
            
            -Net
      cash provided by investing activities
            
            
            15,286
            
            
            
            (1,640
            )Cash
      flows from financing activitiesProceeds
      from long term debt
            
            
            112,751
            
            
            
            15,000Principal
      payments on long term debt
            
            
            (9,197
            )
            
            
            (27,147
            )Proceeds
      from sale of common stock
            
            
            306,099
            
            
            
            168,514Principal
      payments on prepetition debt
            
            
            (10,800
            )
            
            
            -Net
      cash provided by financing activities
            
            
            398,853
            
            
            
            156,367Net
      (decrease) in cash
            
            
            (13,207
            )
            
            
            19,431Cash
      - beginning
            
            
            23,340
            
            
            
            3,909Cash
      - ending
            
            $
            10,133
            
            
            $
            23,340Supplemental
      disclosures:Interest
      paid
            
            $
            12,279
            
            
            $
            2,733Income
      taxes paid
            
            $
            -
            
            
            $
            -Non-cash
      investing and financing activities:Shares
      issued for services
            
            $
            128,664
            
            
            $
            186,918The
      accompanying notes are an integral part of these financial
      statements.


F-6


Note
1 – Summary of Significant Accounting Policies





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) in exchange for stock on a
10 to 1 basis, resulting in the issuance of 31,102,740 shares.  The
fair market value of the shares was $1,555,137 based on the closing stock price
on April 2, 2009, the date of grant (See Note 4).





On May 5,
2009, DiscoverNet, Inc., a wholly owned subsidiary of Competitive Companies,
Inc. which was acquired on April 2, 2009 as described in Note 3 below, filed for
bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code.





CCI, with
their wholly-owned subsidiaries; COMM, CCIR, DNI, ICMI, ICML, and DNL
(collectively referred to as the "Company") provide dial up and high-speed
broadband internet services, mainly to customers in rural markets throughout
Wisconsin, San Antonio, TX and Puerto Rico. The Company's operations are located
in San Antonio, Texas and substantially all of its customers are Wisconsin and
Texas residents.




Reclassifications




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




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.




F-7









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.




Basis
of Accounting




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





Principles of
Consolidation




The
consolidated financial statements include the accounts of CCI, and its
wholly-owned subsidiaries, COMM, CCIR, DNI, ICMI, ICML, and DNL. All significant
inter-company balances and transactions have been eliminated.  CCI,
COMM, CCIR, DNI, ICMI, ICML, and DNL will be collectively referred herein to as
the “Company”.




Revenue
Recognition


Our
revenue is recognized when (1) persuasive evidence of an arrangement exists; (2)
delivery of our services has occurred; (3) our price to our customer is fixed or
determinable; and (4) collectability of the sales price is reasonably assured.
As such, we recognize revenues 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.





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 $18,000 and
$77,472 at December 31, 2009 and 2008, respectively.




Fixed
assets




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
      yearsTelecommunication
      equipment and computers
            5 – 10
    yearsLeasehold
      Improvements
            7
  years







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





Impairment
of long-lived assets




Long-lived
assets held and used by 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
did not incur any impairment losses for the years ended December 31, 2009 and
2008.







F-8






Basic
and diluted loss per share




The basic
net loss per common share is computed by dividing the net loss by the weighted
average number of common shares outstanding.  Diluted net loss per
common share is computed by dividing the net loss adjusted on an “as if
converted” basis, by the weighted average number of common shares outstanding
plus potential dilutive securities.  For 2009 and 2008, potential
dilutive securities had an anti-dilutive effect and were not included in the
calculation of diluted net loss per common share.




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, 2009 and 2008 we had
no goodwill or other intangible assets.  The Company did not incur any
impairment losses for the years ended December 31, 2009 and 2008.




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.




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 $128,664 and $186,918 for the
years ended December 31, 2009 and 2008, respectively.




Advertising


We
expense advertising costs as they are incurred. These expenses approximated
$2,160 and $-0- for the years ended December 31, 2009 and 2008,
respectively.





Recently Issued Accounting
Pronouncements


In June
2009, the Financial Accounting Standards Board (“FASB”) issued the FASB
Accounting Standards Codification (the “ASC”). The ASC has become the single
source of non-governmental accounting principles generally accepted in the
United States (“GAAP”) recognized by the FASB in the preparation of financial
statements. The ASC does not supersede the rules or regulations of the
Securities and Exchange Commission (“SEC”), therefore, the rules and
interpretive releases of the SEC continue to be additional sources of GAAP for
the Company. The Company adopted the ASC as of July 1, 2009. The ASC does not
change GAAP and did not have an effect on the Company’s financial position,
results of operations or cash flows.





In May
2009, the FASB issued ASC 855-10 entitled “Subsequent Events”. Companies are now
required to disclose the date through which subsequent events have been
evaluated by management. Public entities (as defined) must conduct the
evaluation as of the date the financial statements are issued, and provide
disclosure that such date was used for this evaluation. ASC 855-10 provides that
financial statements are considered “issued” when they are widely distributed
for general use and reliance in a form and format that complies with GAAP. ASC
855-10 is effective for interim and annual periods ending after June 15, 2009
and must be applied prospectively. The adoption of ASC 855-10 upon inception did
not have a significant effect on the Company’s financial statements as of that
date or for the period then ended. In connection with preparing the accompanying
consolidated financial statements for the year ended December 31, 2009,
management evaluated subsequent events through the date that such financial
statements were issued (filed with the Securities and Exchange
Commission).





F-9





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 $4,271,122 and a working capital
deficit of $709,413 at December 31, 2009, and have reported negative cash flows
from operations over the last six 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
ability to continue as a going concern is dependent on our ability to generate
sufficient cash from operations to meet our cash needs and/or to raise funds to
finance ongoing operations and repay debt. However, there can be no assurance
that we will be successful in our efforts to raise additional debt or equity
capital and/or that our cash generated by our operations will be adequate to
meet our needs. These factors, among others, indicate that we may be unable to
continue as a going concern for a reasonable period of time.





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




Note
3 – Petition for Relief under Chapter 11





On May 5,
2009, DiscoverNet, Inc., a wholly owned subsidiary of the Company, (the
"Debtor") 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 the Debtor in existence
prior to the filing of the petitions for relief under the federal bankruptcy
laws are stayed while the Debtor 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 executory 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 the
Debtor's assets ("secured claims") 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 the Debtor's property, plant, and
equipment.





The
Debtor has received approval from the Bankruptcy Court to pay or otherwise honor
certain of its prepetition obligations, including employee wages and product
warranties. The Debtor 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, the debtor has
discontinued accruing interest on these obligations. Refer to Note 7 for a
discussion of the credit arrangements entered into subsequent to the Chapter 11
filings. A plan of reorganization has not yet been developed and accepted by the
bankruptcy court.


As such,
the Company has presented the financial statements and disclosures as a
Debtor-in-Possession in accordance with FASB ASC 852-10-15, “Financial Reporting
by Entities in Reorganization Under the Bankruptcy Code”.




F-10





Note
4 – Business Combination





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) in exchange for stock on a
10 to 1 basis, resulting in the issuance of 31,102,740 shares.  The
fair market value of the shares was $1,555,137 based on the closing stock price
on April 2, 2009, the date of grant.





The
merger provides CCI with valuable assets, sound management and a solid investor
base that is an integral part of our business.





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





April
      2, 2009Consideration:Equity
      instruments (31,102,740 shares issued of CCI1)
              
              $
              1,555,137Fair
      value of total consideration exchanged
              
              $
              1,555,137Recognized
      amounts of identifiable assetsacquired
      and liabilities assumed:Cash
              
              $
              25,273Accounts
      receivable and intercompany loans
              
              
              40,328Equipment
              
              
              44,746Other
      current assets
              
              
              2,804Accounts
      payable and accrued expenses
              
              
              (249,964
              )Long
      term debt
              
              
              (198,290
              )Consideration
      paid in excess of fair value
              
              
              1,890,240Total
      identifiable net assets
              
              $
              1,555,137
  1
            The
      fair value of the 31,102,740 common shares issued as consideration paid
      for 100% of DNI, ICMI, ICML & DNL was determined on the basis of the
      closing market price of CCI’s common shares on the issuance date of April
      2, 2009.2
            The
      consideration paid in excess of the fair value of assets acquired and
      liabilities assumed has been allocated towards additional paid in capital
      due to the related party nature of the companies acquired (under common
      management by the Company’s CEO, Bill
Gray).





The
unaudited supplemental pro forma results of operations of the combined entity
had the acquisition date been January 1, 2009 or January 1, 2008 are as
follows:






F-11





Combined
      Pro Forma:For
      the year ended December 31, 2009
            
            
            For
      the year ended December 31, 2008Expenses:Revenue
            
            $
            367,343
            
            
            $
            1,116,919Cost
      of sales
            
            
            488,160
            
            
            
            847,734Gross
      profit
            
            
            (120,817
            )
            
            
            269,185Operating
      expenses
            
            
            1,156,332
            
            
            
            1,436,916Net
      operating (loss)
            
            
            (1,277,149
            )
            
            
            (1,167,731
            )Other
      income (expense)
            
            
            (58,517
            )
            
            
            (160,111
            )Net
      (loss)
            
            $
            (1,335,666
            )
            
            $
            (1,327,842
            )Weighted
      average number of common sharesOutstanding
      – basic and fully diluted
            
            
            92,418,220
            
            
            
            81,262,927Net
      (loss) per share – basic and fully diluted
            
            $
            (0.01
            )
            
            $
            (0.02
            )





Management
believes the communications network, management team and other assets acquired
will enable the Company to enhance their business model and enable the Company
to take advantage of opportunities in the fast changing telecommunications
industry.





Note
5 – Related Party





On
January 30, 2009, during the annual meeting of shareholders, a new CEO was
elected. Mr. William Gray was elected to replace Jerald L. Woods. During the
meeting a new board of directors was elected by a majority of the shareholders.
The following board members were elected:




William
      Gray
            Ray
      PowersJerald
      Woods
            David
      HewittLarry
      Griffin
            Michael
      Benbow*Tonni
      Lyn Smith-Atkins**
            (*
      Resigned June 15, 2009)(**
      Resigned March 17, 2009)





On August
1, 2009, the board of directors appointed former CEO, Henri Hornby to serve on
the Board of Directors. Mr. Hornby subsequently resigned on October 27,
2009.





On April
2, 2009 we consummated an acquisition of four companies under common control by
our CEO, William H. Gray. The following companies became wholly owned
subsidiaries of Competitive Companies, Inc. and are consolidated in these
financial statements:




DiscoverNet,
      Inc.
            ICM,
      Inc.ICM,
      LLC
            DiscoverNet,
      LLC





On
January 7, 2009, the Company capitalized website development costs in the amount
of $9,987. The website development services were provided by DiscoverNet, Inc.,
a company under common control by the CEO, Bill Gray. The Company believes this
to have taken place in an arm’s length transaction prior to the acquisition, and
the amount capitalized represents the equivalent purchase price from a third
party vendor.





From time
to time the Company has received loans from the Officer, Bill Gray. The total of
the unsecured loans, interest free, demand notes was $1,474 at December 31,
2009.





During
2008 the Company received loans from the former Officer and current board
member, Jerald L. Woods. The total of these unsecured demand loans, carrying an
18% interest rate, were $4,500 at December 31, 2008 and were repaid in full
during 2009, along with accrued interest of $5,996.





During
2009 Jerald L. Woods was also repaid $6,754 for unreimbursed expenses that he
previously paid on behalf of the Company. An unpaid accounts payable balance of
$4,325 remains outstanding as of December 31, 2009.






F-12








Note
6 – Property and Equipment





Property
and equipment consist of the following:





December
      31,2009
            
            
            2008Telecommunication
      equipment and computers
            
            $
            29,666
            
            
            $
            274,419Furniture
      and fixtures
            
            
            47,383
            
            
            
            -Software
            
            
            19,647
            
            
            
            -96,696
            
            
            
            274,419Less
      accumulated depreciation
            
            
            (66,951
            )
            
            
            (217,994
            )$
            29,745
            
            
            $
            56,425





Depreciation
expense totaled $36,916 and $33,296 for 2009 and 2008, respectively. The Company
disposed of $284,406 and $21,670 of fixed assets that were no longer in service
during 2009 and 2008, respectively. A loss of $44,497 and $-0- resulted from the
disposal as of December 31, 2009 and 2008, respectively.





Note
7 – Notes Payable




Notes
payable consists of the following at December 31, 2009 and 2008,
respectively:





December
      31,
            
            
            December
      31,2009
            
            
            2008Related
      party, unsecured promissory note, interest free, due on
      demand.
            
            $
            1,474
            
            
            $
            -Unsecured
      promissory note carries an 8% interest rate, maturing on March 2,
      2010.
            
            
            30,000
            
            
            
            -Unsecured
      promissory note carries an 8% interest rate, matured on June 15, 2009.
      Currently in default.
            
            
            10,000
            
            
            
            -Unsecured
      promissory note carries an 8% interest rate, matured on June 15, 2009.
      Currently in default.
            
            
            10,000
            
            
            
            -Secured
      line of credit, including accrued interest, carries a variable interest
      rate at 2.25% above “Money Rates”. The line matured on March 17, 2009, and
      the debt is currently under the protection of the bankruptcy petition. The
      Chapter 11 Reorganization Plan has not yet been submitted for approval
      from the bankruptcy court therefore, the Company has not yet entered into
      credit arrangements with the lender. The note carries an additional 5%
      default rate, and is secured by a $250,000 life insurance policy on the
      CEO.
            
            
            142,009
            
            
            
            -Unsecured
      promissory note, including accrued interest, carries an 8.5% interest
      rate, maturing on October 1, 2010. The debt is currently under the
      protection of the bankruptcy petition. The Chapter 11 Reorganization Plan
      has not yet been submitted for approval from the bankruptcy court
      therefore, the Company has not yet entered into credit arrangements with
      the lender.
            
            
            15,686
            
            
            
            -   F-13
  Unsecured,
      interest free promissory note carries a 5% late fee penalty in the event
      the Company is more than 10 days late with monthly payments of $1,000
      beginning on September 1, 2008, matured on June 6, 2009. Currently in
      default and under the protection of the bankruptcy petition. The Chapter
      11 Reorganization Plan has not yet been submitted for approval from the
      bankruptcy court therefore, the Company has not yet entered into credit
      arrangements with the lender.
            
            
            10,000
            
            
            
            -Related
      party, unsecured promissory note carries an 18% interest rate, due on
      demand. Interest expense of $863 and $5,133 accrued during the years ended
      December 31, 2009 and 2008, respectively.
            
            
            -
            
            
            
            4,500Unsecured
      note payable in default to a stockholder, with interest at 8%, and monthly
      principal and interest payments of $683, maturing on February 23, 2011.
      Currently in default.
            
            
            17,006
            
            
            
            15,676Total
      notes payable
            
            
            236,175
            
            
            
            20,176Less:
      liabilities subject to compromise
            
            
            167,695
            
            
            
            -Less:
      current portion
            
            
            68,480
            
            
            
            11,700Notes
      payable, less current portion
            
            $
            -
            
            
            $
            8,476




Note
8 – Convertible Debt




Notes
payable consists of the following at December 31, 2009 and 2008,
respectively:





December
      31,
            
            
            December
      31,2009
            
            
            2008Unsecured
      convertible promissory note carries an 8.75% interest rate, matured on
      July 16, 2009. The principal is convertible into shares of common stock at
      the discretion of the note holder at a price equal to eighty percent (80%)
      of the volume weighted average price of the Company’s common stock for the
      twenty two (22) trading days prior to the conversion date, or $0.06 per
      share, whichever is greater. Currently in default.
            
            $
            50,000
            
            
            $
            -Unsecured
      convertible promissory note carries an 8.75% interest rate, matured on
      December 26, 2009. The principal is convertible into shares of common
      stock at the discretion of the note holder at a price equal to eighty
      percent (80%) of the volume weighted average price of the Company’s common
      stock for the twenty two (22) trading days prior to the conversion date,
      or $0.001 per share, whichever is greater. Currently in
      default.
            
            
            10,000
            
            
            
            -Unsecured
      convertible promissory note carries an 8.75% interest rate, matured on
      December 15, 2009. The principal is convertible into shares of common
      stock at the discretion of the note holder at a price equal to eighty
      percent (80%) of the volume weighted average price of the Company’s common
      stock for the twenty two (22) trading days prior to the conversion date,
      or $0.001 per share, whichever is greater. Currently in
      default.
            
            
            10,000
            
            
            
            -   F-14
  Unsecured
      convertible promissory note carries an 8.75% interest rate, matured on
      December 15, 2009. The principal is convertible into shares of common
      stock at the discretion of the note holder at a price equal to eighty
      percent (80%) of the volume weighted average price of the Company’s common
      stock for the twenty two (22) trading days prior to the conversion date,
      or $0.001 per share, whichever is greater. Currently in
      default.
            
            
            5,000
            
            
            
            -Unsecured
      convertible promissory note carries an 8.75% interest rate, matured on May
      11, 2009. The principal is convertible into shares of common stock at the
      discretion of the note holder at a price equal to eighty percent (80%) of
      the volume weighted average price of the Company’s common stock for the
      twenty two (22) trading days prior to the conversion date, or $0.001 per
      share, whichever is greater. Currently in default.
            
            
            10,000
            
            
            
            10,000Unsecured
      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
            
            
            
            5,000Total
      convertible debt
            
            
            90,000
            
            
            
            15,000Less:
      discount on beneficial conversion feature
            
            
            -
            
            
            
            2,630Convertible
      debt
            
            $
            90,000
            
            
            $
            12,370





In
addition, the Company recognized and measured the embedded beneficial conversion
feature present in the convertible debt by allocating a portion of the proceeds
equal to the intrinsic value of the feature to additional paid-in-capital. The
intrinsic value of the feature was calculated on the commitment date using the
effective conversion price of the convertible debt. This intrinsic value is
limited to the portion of the proceeds allocated to the convertible
debt.





The
aforementioned accounting treatment resulted in a total debt discount equal to
$12,669. The discount was amortized over a six month period, from the date of
issuance until the stated redemption date of the debt.





According
to the terms of the Convertible Promissory Notes, the number of shares that
would be received upon conversion was 3,531,401 shares at December 31,
2009.





During
the year ended December 31, 2009, the Company recorded financial expenses in the
amount of $11,549 attributed to the amortization of the aforementioned debt
discount.





As of
December 31, 2009, no shares were issued pursuant to debt
conversion.





The
Company recorded interest expense in the amount of $31,156 and $8,050 for the
years ended December 31, 2009 and 2008, respectively.







F-15







Note
9 – Stockholders’ Equity





On
January 30, 2009, the shareholders of the Company voted to increase the
authorized common shares of the Company from 70,000,000 authorized shares of
common stock to 500,000,000 authorized shares of common
stock.  Additionally, the shareholders voted to increase the
authorized preferred shares of the Company from 10,000,000 authorized shares of
preferred stock to 100,000,000 authorized shares of preferred stock. As a result
of this vote, the Company filed an amendment to its Articles of Incorporation to
reflect this change.





Convertible Class A
Preferred Stock


In
consummation of the merger in Note 1, the Company repurchased 4,000,000 Class
“A” preferred stock for $40,000 during 2005. Therefore, there was no outstanding
Class “A” preferred stock at December 31, 2009 or 2008,
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


On
December 18, 2009 the Company sold 320,000 shares of common stock as a
subscription payable to an investor in exchange for proceeds of $8,000. The
shares were issued on March 12, 2010.





On
November 18, 2009 the Company sold 200,000 shares of common stock to an investor
in exchange for proceeds of $5,000.





On
November 16, 2009 the Company sold 33,330 shares of common stock to an investor
in exchange for proceeds of $1,000.





On
November 14, 2009 the Company sold 150,000 shares of common stock as a
subscription payable to an investor in exchange for proceeds of $3,750. The
shares were issued on March 12, 2010.





On
November 12, 2009 the Company sold 100,000 shares of common stock as a
subscription payable to an investor in exchange for proceeds of $2,500. The
shares were issued on January 15, 2010.





On
October 30, 2009 the Company sold 142,857 shares of common stock as a
subscription payable to an investor in exchange for proceeds of $5,000. The
shares were issued on March 12, 2010.





On
October 29, 2009 the Company sold 142,857 shares of common stock as a
subscription payable to an investor in exchange for proceeds of $5,000. The
shares were issued on March 12, 2010.





On
October 29, 2009 the Company sold 400,000 shares of common stock to an investor
in exchange for proceeds of $10,000.





On
October 29, 2009 the Company issued 1,000,000 shares of common stock pursuant to
the share exchange agreement dated April 2, 2009.





On
October 27, 2009 the Company issued 250,000 free trading (S-8) shares of common
stock for accounting services rendered. The fair market value of the shares was
$10,000 based on the closing stock price on the grant date.






F-16





On
October 16, 2009 the Company sold 17,857 shares of common stock as a
subscription payable to an investor in exchange for proceeds of $625. The shares
were issued on March 12, 2010.





On
October 15, 2009 the Company sold 25,000 shares of common stock to an investor
in exchange for proceeds of $1,000.





On
October 13, 2009 the Company sold 75,000 shares of common stock to an investor
in exchange for proceeds of $9,300.





On
September 18, 2009 the Company sold 510,564 shares of common stock to an
investor in exchange for proceeds of $25,528.





On
September 18, 2009 the Company sold 100,000 shares of common stock to an
investor in exchange for proceeds of $5,000.





On August
24, 2009 the Company sold 100,000 shares of common stock to an investor in
exchange for proceeds of $5,000.





On August
24, 2009, the Company issued 50,000 shares of common stock to an investor that
had purchased the Company’s common stock on January 19, 2009 in exchange for
proceeds of $2,500.





On August
24, 2009 the Company issued 643,115 shares of common stock pursuant to the share
exchange agreement dated April 2, 2009.





On August
21, 2009 the Company sold 1,048,439 shares of common stock to an investor in
exchange for proceeds of $52,422.





On August
21, 2009 the Company sold 20,000 shares of common stock to an investor in
exchange for proceeds of $1,000.





On August
21, 2009 the Company sold 20,000 shares of common stock to an investor in
exchange for proceeds of $1,000.





On August
17, 2009 the Company sold 100,000 shares of common stock to an investor in
exchange for proceeds of $5,000





On August
14, 2009 the Company sold 40,000 shares of common stock to an investor in
exchange for proceeds of $2,000.





On August
14, 2009 the Company sold 60,000 shares of common stock to an investor in
exchange for proceeds of $3,000.





On August
13, 2009 the Company sold 100,000 shares of common stock to an investor in
exchange for proceeds of $5,000.





On August
10, 2009 the Company sold 160,000 shares of common stock to an investor in
exchange for proceeds of $8,000.





On August
4, 2009 the Company sold 100,000 shares of common stock to an investor in
exchange for proceeds of $5,000.





On July
29, 2009 the Company sold 150,000 shares of common stock to an investor in
exchange for proceeds of $6,000.





On July
29, 2009 the Company sold 400,000 shares of common stock to an investor in
exchange for proceeds of $20,000.






F-17





On July
15, 2009 the Company issued a total of 910,000 free trading (S-8) shares of
common stock for accounting services rendered. The fair market value of the
shares was $45,500 based on the closing stock price on the grant
date.





On July
15, 2009 the Company issued a total of 1,463,282 free trading (S-8) shares of
common stock for legal services rendered. The fair market value of the shares
was $73,164 based on the closing stock price on the grant date.





On July
15, 2009 the Company issued 285,710 shares of common stock pursuant to the share
exchange agreement dated April 2, 2009.





On May 1,
2009 the Company issued 21,852,983 of the 31,102,740 shares granted as part of
the share exchange agreement on April 2, 2009.





On April
12, 2009 the Company sold 124,000 shares of common stock to an investor in
exchange for proceeds of $6,200.





On April
10, 2009 the Company issued 100,000 shares of common stock to an individual
investor that had purchased the Company’s common stock on March 28, 2007, which
was previously recorded as a stock subscription payable in the total amount of
$10,000.





On April
2, 2009 the Company authorized the issuance of 31,102,740 shares of common stock
in exchange for a total of 3,110,274 shares (10:1) of four private companies,
representing 100% of their outstanding equity as part of a share exchange
agreement. The four acquired entities are consolidated in the financial
statements herein. The total fair value of the common stock was
$1,555,137.





On March
31, 2009 the Company issued a total of 2,080,280 shares of common stock to seven
individual investors that had purchased the Company’s common stock during the
year ending December 31, 2008, which was previously recorded as stock
subscriptions payable in the total amount of $104,014.





On March
25, 2009 the Company sold 100,000 shares of common stock as a subscription
payable to an investor in exchange for proceeds of $5,000. The shares were
issued on April 10, 2009.





On March
25, 2009 the Company sold 100,000 shares of common stock as a subscription
payable to an investor in exchange for proceeds of $5,000. The shares were
issued on April 10, 2009.





On March
18, 2009 the Company sold 23,480 shares of common stock as a subscription
payable to an investor in exchange for proceeds of $1,174. The shares were
issued on April 10, 2009.





On March
3, 2009 the Company sold 100,000 shares of common stock as a subscription
payable to an investor in exchange for proceeds of $5,000. The shares were
issued on April 10, 2009.





On March
3, 2009 the Company sold 70,000 shares of common stock as a subscription payable
to an investor in exchange for proceeds of $3,500. The shares were issued on
April 10, 2009.





On
February 27, 2009 the Company sold 400,000 shares of common stock as a
subscription payable to an investor in exchange for proceeds of $20,000. The
shares were issued on April 10, 2009.





On
February 5, 2009 the Company sold 400,000 shares of common stock to an investor
in exchange for proceeds of $20,000.





On
January 19, 2009 the Company sold 160,000 shares of common stock to an investor
in exchange for proceeds of $8,000. On August 24, 2009 the Company issued 50,000
shares, and the remaining 110,000 shares were issued on November 16,
2009.






F-18





On
January 14, 2009 the Company sold 540,000 shares of common stock to an investor
in exchange for proceeds of $27,000.





On
January 5, 2009 the Company sold 60,000 shares of common stock to an investor in
exchange for proceeds of $3,000.





On
January 5, 2009 the Company sold 120,000 shares of common stock to an investor
in exchange for proceeds of $6,000.





On
January 1, 2009 the Company sold 22,000 shares of common stock to an investor in
exchange for proceeds of $1,100.





On
various dates between December 10, 2008 and December 19, 2008, CCI received a
total of $99,014 in exchange for 1,980,280 shares of its $.001 par value common
stock from five different individual investors. As of December 31, 2008 the
shares had not yet been issued and were recorded as subscriptions
payable.





On
December 8, 2008, CCI received $5,000 in exchange for 100,000 shares of its
$.001 par value common stock from an individual investor.





On
December 6, 2008, CCI received $10,000 in exchange for 200,000 shares of its
$.001 par value common stock from an individual investor.





On
December 5, 2008, CCI received $5,000 in exchange for 100,000 shares of its
$.001 par value common stock from an individual investor.





On
December 3, 2008, CCI received $5,000 in exchange for 200,000 shares of its
$.001 par value common stock from an individual investor. As of December 31,
2008 the shares had not yet been issued.  Accordingly, the $5,000
received has been presented as Subscriptions Payable at December 31,
2008.





On
November 18, 2008 the Company issued 40,000 shares of common stock to an
investor that had purchased the Company’s common stock on April 16, 2007, which
was previously recorded as a stock subscription payable in the amount of
$4,000.





On
October 1, 2008, the Company issued 1,000,000 unrestricted, S-8 shares under the
2008 Non-Qualified Consultants Stock Compensation Plan to a consultant for
consulting services rendered in the pursuit of obtaining a potential merger
candidate over the three month period ending December 31, 2008. The fair market
value of the shares was $30,000.





On
September 10, 2008, CCI received $20,000 in exchange for 400,000 shares of its
$.001 par value common stock from an individual investor.





On
September 2, 2008, CCI received $5,000 in exchange for 100,000 shares of its
$.001 par value common stock from an individual investor.





On August
14, 2008, CCI filed a form S-8 with the United States Securities and Exchange
Commission which authorizes the Company to issue a total of 7,730,580
unrestricted shares of the Company’s common stock, of which, 5,500,000 are to be
issued to consultants and 2,230,580 are to be issued as payment for professional
services rendered.





On July
30, 2008, the Company issued 1,230,580 of these S-8 shares for legal services
rendered. The fair market value of the shares was $36,918.





On July
30, 2008, the Company issued 1,000,000 of these S-8 shares to a consulting firm
for accounting services rendered. The fair market value of the shares was
$30,000.






F-19





On July
30, 2008, the Company granted 3,000,000 of these S-8 shares to a consultant for
consulting services rendered in the pursuant of obtaining a potential merger
candidate. The fair market value of the shares was $90,000.





On May
14, 2008, CCI received $6,500 in exchange for 130,000 shares of its $.001 par
value common stock from an individual investor.





On April
16, 2008, CCI received $5,000 in exchange for 50,000 shares of its $.001 par
value common stock from the Company’s CEO.





On April
1, 2008, CCI received $3,000 in exchange for 30,000 shares of its $.001 par
value common stock from an individual investor.




Note
10 – Common Stock Options





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 $.10 in 2005, which was equal to the
exercise price.  No further options were granted during 2009 and
2008.





Shares
      UnderlyingShares
      Underlying Options Outstanding
            
            Options
      ExercisableWeightedShares
            
            Average
            
            Weighted
            
            Shares
            
            WeightedUnderlying
            
            Remaining
            
            Average
            
            Underlying
            
            AverageRange
      of
            
            Options
            
            Contractual
            
            Exercise
            
            Options
            
            ExerciseExercise
      Prices
            
            Outstanding
            
            Life
            
            Price
            
            Exercisable
            
            Price$
            0.10
            
            
            6,672,000
            
            10
            
            $
            0.10
            
            
            
            6,672,000
            
            $
            0.10




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




WeightedAverageNumber
            
            ExerciseOf
      Shares
            
            PriceBalance,
      December 31, 2007
            
            
            6,672,000
            
            
            $
            0.10Options
      cancelled
            
            
            -
            
            
            
            -Options
      granted
            
            
            -
            
            
            
            -Options
      exercised
            
            
            -
            
            
            
            -Balance,
      December 31, 2008
            
            
            6,672,000
            
            
            $
            0.10Options
      cancelled
            
            
            -
            
            
            
            -Options
      granted
            
            
            -
            
            
            
            -Options
      exercised
            
            
            -
            
            
            
            -Balance,
      December 31, 2009
            
            
            6,672,000
            
            
            $
            0.10Exercisable,
      December 31, 2009
            
            
            6,672,000
            
            
            $
            0.10








F-20




Note
11 – 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, 2009 and 2008, 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,
2009, the Company had approximately $4,987,000 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:





As
      of December 31,
            
            
            As
      of December 31,2009
            
            
            2008Deferred
      tax assets:Net
      operating loss carry forwards
            
            $
            1,745,500
            
            
            $
            1,594,250Total
      deferred tax assets
            
            
            1,745,500
            
            
            
            1,594,250Net
      deferred tax assets before valuation allowance
            
            
            1,745,500
            
            
            
            1,594,250Less:
      Valuation allowance
            
            
            (1,745,500
            )
            
            
            (1,594,250
            )Net
      deferred tax assets
            
            $
            -0-
            
            
            $
            -0-





Based on
the available objective evidence, including the Company’s history of its loss,
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, 2009 and
2008.





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:





2009
            
            
            2008Federal
      and state statutory rate
            
            
            35
            %
            
            
            35
            %Change
      in valuation allowance on deferred tax assets
            
            
            (35
            %)
            
            
            (35
            %)-0-
            
            
            
            -0-






F-21








Note
12 – Fair Value of Financial Instruments





The
Company adopted FASB ASC 820-10 on January 1, 2008. Under FASB ASC 820-10-5,
fair value is defined as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants at the measurement date (an exit price). The standard outlines a
valuation framework and creates a fair value hierarchy in order to increase the
consistency and comparability of fair value measurements and the related
disclosures. Under GAAP, certain assets and liabilities must be measured at fair
value, and FASB ASC 820-10-50 details the disclosures that are required for
items measured at fair value.





The
Company has various financial instruments that must be measured under the new
fair value standard including: cash and debt. The Company currently does not
have non-financial assets or non-financial liabilities that are required to be
measured at fair value on a recurring basis, with the exception of intangible
assets. 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.
The fair value of the Company’s cash is based on quoted prices and therefore
classified as Level 1.




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 table provides a summary of the fair values of assets and
liabilities:




Carrying
                Value
              
              
              
              
              
              Fair
      Value Measurements atDecember
      31,
              
              
              
              
              
              December
      31,20092009
              
              
              Level
      1
              
              
              Level
      2
              
              
              Level
      3Assets:Cash
              
              $
              10,133
              
              
              $
              10,133
              
              
              $
              -
              
              
              $
              -Liabilities:Notes
      payable
              
              $
              68,480
              
              
              $
              -
              
              
              $
              -
              
              
              $
              68,480Long
      term debt
              
              
              90,000
              
              
              
              
              
              
              
              
              
              
              
              90,000Total
              
              $
              168,613
              
              
              $
              10,133
              
              
              $
              -
              
              
              $
              158,480





The
Company believes that the market rate of interest as at December 31, 2009 was
not materially different to the rate of interest at which the debts were issued.
Accordingly, the Company believes that the fair value of the debt approximated
their carrying value at December 31, 2009.




Note
13 – Subsequent Events





On
January 11, 2010 the Company sold 300,000 shares of common stock to an investor
in exchange for proceeds of $4,500.





On
January 12, 2010 the Company acquired Voice Vision, Inc. (“VVI”), a voice over
internet protocol (“VOIP”) company organized under the laws of the State of
California, through a share exchange agreement consisting of the acquisition of
one hundred percent (100%) of the outstanding capital stock, or ownership
interest of VVI, in exchange for a total of 10,000,000 shares of common stock of
Competitive Companies, Inc. valued at $300,000 based on the fair market value of
the Company’s common stock.






F-22





On
January 13, 2010 the Company sold 333,333 shares of common stock to an investor
in exchange for proceeds of $5,000.





On
January 13, 2010 the Company sold 350,000 shares of common stock to an investor
in exchange for proceeds of $5,250.





On
January 15, 2010 the Company issued 100,000 shares of common stock to an
individual investor that had purchased the Company’s common stock during the
year ended December 31, 2009, which was previously recorded as stock
subscriptions payable in the amount of $2,500.





On
January 19, 2010 the Company sold 500,000 shares of common stock to an investor
in exchange for proceeds of $10,000.





On
January 21, 2010 the Company sold 333,333 shares of common stock to an investor
in exchange for proceeds of $5,000.





On
January 26, 2010 the Company sold 71,429 shares of common stock to an investor
in exchange for proceeds of $2,500.





On
January 28, 2010 the Company sold 142,857 shares of common stock to an investor
in exchange for proceeds of $5,000.





On
January 29, 2010 the Company sold 183,333 shares of common stock to an investor
in exchange for proceeds of $5,500.





On
February 11, 2010 the Company issued 3,000,000 shares of common stock pursuant
to the share exchange agreement dated April 2, 2009. The shares were valued at
$150,000 and were included in subscriptions payable at December 31,
2009.





On
February 12, 2010 the Company sold 71,429 shares of common stock to an investor
in exchange for proceeds of $2,500.





On
February 19, 2010 the Company sold 142,857 shares of common stock to an investor
in exchange for proceeds of $5,000.





On
February 19, 2010 the Company sold 142,857 shares of common stock to an investor
in exchange for proceeds of $5,000.





On
February 25, 2010 the Company sold 71,429 shares of common stock to an investor
in exchange for proceeds of $2,500.





On
February 26, 2010 the Company sold 142,857 shares of common stock to an investor
in exchange for proceeds of $5,000.





On March
4, 2010 the Company received $50,000 in exchange for an 8% Secured Convertible
Note maturing on December 5, 2010.  The note is convertible into 58%
of the average of the lowest three (3) trading prices for the common stock
during the ten (10) trading day period ending one trading day prior to the
conversion request, and is secured by 5,172,414 shares of the Company’s unissued
common stock, which has been reserved in the event of default. The note converts
to a 22% interest rate in the event of default.





On March
5, 2010 the Company sold 120,000 shares of common stock to an investor in
exchange for proceeds of $4,200.




F-23







On March
8, 2010 the Company sold 142,857 shares of common stock to an investor in
exchange for proceeds of $5,000.





On March
10, 2010 the Company sold 142,857 shares of common stock to an investor in
exchange for proceeds of $5,000.





On March
11, 2010 the Company sold 200,000 shares of common stock to an investor in
exchange for proceeds of $7,000. The shares remain unissued as of April 15,
2010.





On March
12, 2010 the Company issued a total of 773,571 shares of common stock to five
individual investors that had purchased the Company’s common stock during the
year ended December 31, 2009, which was previously recorded as stock
subscriptions payable in the total amount of $22,375.





On March
19, 2010 the Company sold 333,332 shares of common stock to an investor in
exchange for proceeds of $10,000.





On April
2, 2010 the Company sold 142,857 shares of common stock to an investor in
exchange for proceeds of $5,000.





On April
2, 2010, the Company cancelled 100,000 shares of its common stock formerly held
by a related party.





In
accordance with ASC 855-10, all subsequent events have been reported through the
filing date of April 15, 2010.


F-24
   Item
9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.


On April
21, 2009, Lawrence Scharfman & Co., CPA P.C. (“Scharfman”) resigned as the
principal independent accountants for the Company.





On August 11, 2009, the PCAOB revoked
the registration of Scharfman because of deficiencies in the conduct of certain
of its audits and its procedures, none of which pertain to the
Registrant.





Scharfman
had been the Company’s principal independent accountants and had reported on the
financial statements for the years ended December 31, 2008 and December 31,
2007. Except as described below, the audit report of Scharfman on the
consolidated financial statements of the Company as of and for the year ended
December 31, 2008, did not contain an adverse opinion or a disclaimer of
opinion, and was not qualified or modified as to audit scope or accounting
principles.  Scharfman’s 2008 audit report relating to the audit of
the Company’s financial statements for the year ended December 31, 2008,
included an emphasis paragraph relating to an uncertainty as to the Company’s
ability to continue as a going concern in light of their lack of revenues and
history of losses.





In
connection with the audits of the Registrant’s consolidated financial statements
for the years ended December 31, 2008, and through April 21, 2009, there were:
(1) no disagreements between the Company and Scharfman on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures, which disagreements, if not resolved to the satisfaction of
Scharfman, would have caused Scharfman to make reference to the subject matter
of the disagreement in their report on the Company’s consolidated financial
statements for such year, and (2) no reportable events within the meaning set
forth in Item 304 of Regulation S-K.


Item
9A(T).  Controls and Procedures.
 
 Our Chief
Executive Officer and Principal Financial Officer during the year ended December
31, 2009, 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.
   -19-
 
 There
were no changes in our internal control over financial reporting that occurred
during our most recent fiscal quarter that have materially affected, or
reasonably likely to materially affect, our internal control over financial
reporting.





Management’s
Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control, as is defined in the Securities Exchange Act of 1934.  These
internal controls are designed to provide reasonable assurance that the reported
financial information is presented fairly, that disclosures are adequate and
that the judgments inherent in the preparation of financial statements are
reasonable.  There are inherent limitations in the effectiveness of
any system of internal controls, including the possibility of human error and
overriding of controls.  Consequently, an effective internal control
system can only provide reasonable, not absolute, assurance with respect to
reporting financial information.





Our
internal control over financial reporting includes policies and procedures that:
(i) pertain to maintaining records that in reasonable detail accurately and
fairly reflect our transactions; (ii) provide reasonable assurance that
transactions are recorded as necessary for preparation of our financial
statements in accordance with generally accepted accounting principles and the
receipts and expenditures of company assets are made and in accordance with our
management and directors authorization; and (iii) provide reasonable assurance
regarding the prevention or timely detection of unauthorized acquisition, use or
disposition of assets that could have a material effect on our financial
statements.





Management
has undertaken an assessment of the effectiveness of our internal control over
financial reporting based on the framework and criteria established in the
Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”).  Based upon this
evaluation, management concluded that our internal control over financial
reporting was not effective as of December 31, 2009 for the following
reasons.




·
              The
      Company does not have an independent board of directors or audit committee
      or adequate segregation of duties;
 ·
              All
      of our financial reporting is carried out by our financial
      consultant;
 ·
                We
      do not have an independent body to oversee our internal controls over
      financial reporting and lack segregation of duties due to the limited
      nature and resources of the
Company.


We 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.





The
material weaknesses identified did not result in the restatement of any
previously reported financial statements or any other related financial
disclosures, nor does management believe that it had any effect on the accuracy
of our financial statements for the current reporting period.





This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to the temporary rules of the Securities and Exchange
Commission that permit the company to provide only management’s report in this
annual report.





Item
9B.  Other Information.





On
October 27, 2009, Henry Hornby submitted his resignation of his position on the
Company’s Board of Directors.  Mr. Hornby’s resignation was not a
result of any disagreement with management, or the Board of
Directors.  Currently, Mr. Hornby’s position on the Board of Directors
remains vacant.
 During
the fourth quarter of 2009, the Company sold a total of 1,317,904 shares of its
common stock for proceeds of approximately $51,175 to a total of eight (8)
accredited investors.  Of these sales, 873,571 shares were issued
during the first quarter of 2010.
 
 We
believe the issuance of the shares is exempt from the registration and
prospectus delivery requirement of the Securities Act of 1933 by virtue of
Section 4(2) and/or Regulation D, Rule 506.  The shares were issued
directly by us and did not involve a public offering or general
solicitation.  The recipients of the shares were afforded an
opportunity for effective access to our files and records of that contained the
relevant information needed to make their investment decision, including our
financial statements and 34 Act reports. We reasonably believed that the
recipients had such knowledge and experience in the Company’s financial and
business matters that they were capable of evaluating the merits and risks of
his investment.




-20-






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
            POSITIONWilliam
      H. Gray (2)
            59
            Chief
      Executive Officer, Current DirectorJerald
      Woods (1)
            61
            Former
      Chief Executive Officer, Current DirectorDavid
      Hewitt
            64
            DirectorLarry
      Griffin
            57
            DirectorRay
      Powers (3)
            63
            Current
      President and Director





(1)
            On
      February 10, 2009, Mr. Woods resigned from his position as Chief Executive
      Officer.





(2)
            Mr.
      Gray was appointed as Chief Executive Officer and Principal Accounting
      Officer upon Mr. Woods resignation.





(3)
            Dr.
      Ray Powers was appointed President on February 10,
  2009.





Duties,
Responsibilities and Experience





William
Gray became a Director upon the resignation of Mr. Henri Hornby in
November 2008.  Mr. Gray became the Company’s Chief Executive Officer
on February 10, 2009 upon the resignation of Mr. Woods.  Additionally,
Mr. Gray is the founder of Innovation Capital Management, Inc. (ICM), a Delaware
Corporation that was incorporated 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 of
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.  Most recently, the Company has
developed a proprietary propagation software capable of designing tier one
wireless networks via the web.  ICM intends to offer this unique
software to other Wireless Internet Service Providers (WISP) 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 memorandum.  Mr. Gray has managed
investment securities exceeding $100 million.





David
Hewitt has been a Director since December 2001 and became a director
as a result of the merger with Huntington Telecommunications
Partners.  Prior to joining the Company through the merger with
Huntington Telecommunications, Inc., he was the Co-Founder and President of
Huntington Partners, Inc., which was a development and investment company
providing capital and management for real estate and business venture
investments as well as an affiliate to the general partner of Huntington
Telecommunicaitons.  Currently, Mr. Hewitt is the Managing Member of
Southwind Realty Group, LLC, which focuses on the acquisition and redevelopment
of infill residential properties in Southern California.  From 1999 to
2005, Mr. Hewitt was a founder, Chairman, and a Director of Silverwood
Investments, LLC, a real estate investment company focused on apartment property
development throughout California.  From 1989 to 1992, he was
Co-Founder and Managing Director of Trilateral Company, a real estate firm. He
has an MBA with Distinction from Amos Tuck School of Business Administration at
Dartmouth College and a BA from University of Rochester.






-21-





Larry
Griffin has been 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.





Jerald
Woods served as the Chief Executive Officer from November 2007 to
February 2009.  Prior to becoming the CEO, Mr. Woods was the Vice
President and Director of CA Networks, Inc. and subsequent to the merger of CCI
and CA Networks, Inc. he had remained in those positions.  Prior to
the merger, Mr. Woods served as a telecommunications consultant for Competitive
Companies.  Additionally, Mr. Woods has been a director of CCI since
1998.  From 1994 to 2000 he was an Officer and Director of APMSAFE.COM
(American Privacy Management, Inc.), a private company engaged in the computer
encryption business.  From 1988 to 1994, he was Chairman and Director
for American Digital Communications, Inc.  From 1984 to 1989, he
hosted and produced “Breakthroughs in Technology,” an investment program
specializing in high technology companies.  He currently is President
of JLW Communications Services.  Mr. Woods has served as a director
for several private companies as well as owning his own investment banking and
advertising companies.





Dr.
Ray Powers was appointed to the Company’s Board of Directors on November
25, 2008 and later President on February 10, 2009.  Mr. Powers’ business
leadership experience spans over 30 years in a Fortune 200 corporate environment
of AT&T/US West/Quest followed by accomplishments in a variety of enterprise
scenarios.  Dr. Powers began his career at AT&T in 1965 and continued
to work in various capacities for AT&T and its successors until 1996. 
Currently, Dr. Powers is the chief consultant for Strategic Alliance
Enterprises, Inc., which provides new technology communications products and
services and serves in a consulting role in project management, development of
business plans and process improvement initiatives.  Prior to his
consulting work, from 2004 to 2006, Dr. Powers served as the Executive Vice
President and Chief Operating Officer of Corban Networks, Inc., which is a
communications industry service provider specializing in wireless
communications.  From 1998 to 2004, Dr. Powers served as the President and
Chief Executive Officer of Compass Corporate Holdings, Inc., which through its
subsidiaries provided technology services, technology management and project
management consulting.  Dr. Powers has served on several companies’ Board
of Directors and currently sits on the Board of Strategic Alliance Enterprises,
Inc., Worldwide Communications Associates, Inc., and the Executive Initiative
Institute.  Dr. Powers holds a Bachelor of Science from Arizona State
University, a MBA in Technology Management and a Doctorate in Educational
Leadership from the University of Phoenix.  Dr. Powers is also an adjunct
professor for both undergraduate and graduate level courses at the University of
Phoenix.





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 Corporation 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 Corporation 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 Corporation is the subject of any
pending legal proceedings.






-22-





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,
2009, 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.





Corporate
Governance





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.





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, 2009, 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:





1.
            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;


2.
            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;




-23-








3.
            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


4.
            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 2009, the Company received no
recommendation for Directors from its stockholders.





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.





Shareholder
Communications





Any
shareholder communications to the Board should be forwarded to the attention of
the Company’s Secretary at our offices at 19206 Huebner Rd., Suite 202, San
Antonio, TX, 78258.  Our Secretary will review any communication
received from a stockholder, and all material communications from stockholders
will be forwarded to the Chairman of the Board, the Board of Directors, or other
individual directors as appropriate.





Item
11.  Executive Compensation.





The
following table sets forth the compensation of our executive officers for the
years ended December 31, 2009 and 2008 respectively:





Summary
      Compensation TableName
      and Principal Position
            Year
            Salary
            Stock
              Awards
      (4)
            All
      Other
              Compensation
            TotalWilliam
      Gray, CEO and/or Principal Executive Officer, Director (1)
            2009
              2008
            $79,099
              $-0-
            $-0-
              $-0-
            $-0-
              $-0-
            $79,099
              $-0-Jerald
      Woods,  Former Chief Executive Officer, Director
    (2)
            2009
              2008
            $-0-
              $-0-
            $-0-
              $-0-
            $11,006
              $-0-
            $11,006
              $-0-Ray
      Powers, President, Director (3)
            2009
              2008
            $-0-
              S-0-
            $-0-
              $-0-
            $19,500
              $-0-
            $19,500
              $-0-






-24-





(1)
            On
      February 10, 2009, Mr. Woods resigned from his position as Chief Executive
      Officer.





(2)
            Mr.
      Gray was appointed as Chief Executive Officer and Principal Accounting
      Officer upon Mr. Woods resignation.





(3)
            Dr.
      Ray Powers was appointed President on February 10,
  2009.





(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 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 have not
      yet been issued.  The shares were not issued as compensation
      expense.





Employment
Agreement





During
the year ended December 31, 2009, we did not have any employment agreements or
understandings in place with our executive officers.





Termination
of Employment





There are
no compensatory plans or arrangements, including payments to be received from
the Company, with respect to any person associated with the Company which would
in any way result in payments to any such person because of his resignation,
retirement, or other termination of such person’s employment with the Company or
its subsidiaries, or any change in control of the Company, or a change in the
person’s responsibilities following a change in control of the
Company.





Compensation
Committee





We
currently do not have a compensation committee on the board of
directors.  Until a formal committee is established our entire board
of directors will review all forms of compensation provided to our executive
officers, directors, consultants, and employees, including stock
compensation.





Equity
Awards





During
the year ended December 31, 2009, we did not grant any equity awards to our
officers and/or directors.





Director
Compensation and Other Arrangements





As a
result of having limited resources during most of 2009, 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 December 31, 2009, 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 98,745,813 shares of common stock
outstanding as of December 31, 2009.





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 December 31,
2009, 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.




-25-







Name
      of Officer or Director (1)
            
            Number
              of
      Common Shares
            
            Percent
      Beneficially Owned (2)Henri
      R. Hornby, Former Chief Executive Officer and Former Director
      (6)
            
            10,266,666
            
            10%Jerald
      Woods, Former Chief Executive Officer, Current Director
(3)
            
            7,198,886
            
            7%William
      Gray, Current Chief Executive Officer and Director (4)
            
            6,234,858
            
            6%Ray
      Powers (5)
            
            1,000,000
            
            1%David
      Hewitt
            
            1,000,000
            
            1%Larry
      Griffin
            
            0
            
            0%Michael
      Benbow
            
            0
            
            0%All
      Officers and Directors as a Group
            
            25,700,410
            
            24%





**
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.


(3)
            On
      February 10, 2009, Mr. Woods resigned from his position as Chief Executive
      Officer.


(4)
            On
      February 10, 2009, Mr. Gray was appointed the Company’s Chief Executive
      Officer upon Mr. Woods’ resignation.  Innovation Capital
      Management, Inc. purchased 100,000 shares pursuant to a private
      placement.  Mr. William Gray has the authority to exercise
      dispositive and voting power over the shares of common stock for
      Innovation Capital Management, Inc. Mr. Gray cancelled the shares and
      returned them to treasury on April 2, 2010.  Mr. Gray was also
      granted 6,734,858 shares of common stock pursuant to the acquisition on
      April 2, 2009, of these, 3,000,000 shares were issued on February 11,
      2010, of which Mr. Gray subsequently exchanged 500,000 shares in a private
      transaction. The remaining 3,734,858 shares have not yet been
      issued.


(5)
            Dr.
      Ray Powers was appointed as the Company’s President on February 10,
      2009.  On October 29, 2009, Mr. Ray Powers received 1,000,000
      shares of common stock pursuant to the acquisition on April 2,
      2009.


(6)
            Mr.
      Hornby resigned as the Company’s Chief Executive Officer on November 12,
      2007, and as Director on October 27,
2009.


(7)
            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 have not
      yet been issued.





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





From time
to time we have received loans from our Chief Executive Officer, William H.
Gray.  These unsecured, interest free loans are due on
demand.  The balance due was $1,474 as of December 31,
2009.





CCI’s
former Chief Executive Officer, Mr. Woods, loaned the Company $4,500 and $25,000
during the 2008 and 2007 years, respectively.  As of December 31,
2009, the Company has repaid all outstanding notes payable, and related accrued
interest, at a rate of 18% per annum in full. The Company recorded interest
expense to Mr. Woods in the amount of $-0- and $5,133 for the years ended
December 31, 2009 and 2008. Mr. Woods is also owed a total of $4,325 for
unreimbursed expenses as included in accounts payable at December 31,
2009.





On April
2, 2009 we consummated an acquisition of four companies under common control by
our CEO, William H. Gray. The following companies became wholly owned
subsidiaries of Competitive Companies, Inc. and are consolidated in these
financial statements:




-26-







DiscoverNet,
      Inc.
            ICM,
      Inc.ICM,
      LLC
            DiscoverNet,
      LLC




As a
result of the shares exchanged in this transaction, Mr. Gray was granted
6,734,858 shares of common stock, of these, 3,000,000 shares were issued on
February 11, 2010, of which Mr. Gray subsequently exchanged 500,000 shares in a
private transaction. The remaining 3,734,858 shares have not yet been
issued.  In addition, on October 29, 2009 the Company’s President and
Director, Mr. Ray Powers, was issued a total of 1,000,000 shares as a result of
these acquisitions.





Item
14.  Principal Accounting Fees and Services.





(1) 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-Q or services that are normally provided by
the accountant in connection with statutory and regulatory filings or
engagements for fiscal years 2009 and 2008 were $37,500 and $-0-,
respectively.





The
aggregate fees billed for professional services rendered by Lawrence Scharfman
& Co., CPA P.C., for the audit of our annual financial statements and review
of the financial statements included in our Form 10-Q or services that are
normally provided by the accountant in connection with statutory and regulatory
filings or engagements for fiscal years 2009 and 2008 were $15,000 and $27,500,
respectively.





(2)
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 2009 and 2008 were $-0- and $-0-, respectively.





The
aggregate fees billed by Lawrence Scharfman & Co., CPA P.C., 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 2009 and 2008 were $-0- and $-0-,
respectively.





(3) Tax
Fees





The
aggregate fees billed by M&K CPAs, PLLC for professional services rendered
by the principal accountant for the fiscal years 2009 and 2008 were $-0- and
$-0-, respectively.





The
aggregate fees billed by Lawrence Scharfman & Co., CPA P.C. for professional
services rendered by the principal accountant for the fiscal years 2009 and 2008
were $-0- and $-0-, respectively.





(4) All
Other Fees





There
were no other fees to be billed by M&K CPAs, PLLC for the fiscal years 2009
and 2008 other than the fees described above.





There
were no other fees to be billed by Lawrence Scharfman & Co., CPA P.C. for
the fiscal years 2009 and 2008 other than the fees described above.





(5) Audit
Committee Policies and Procedures





We do not
have an audit committee.





(6) If
greater than 50%, disclose the percentage of hours expended on the principal
accountant’s engagement to audit the registrant’s financial statements for the
most recent fiscal year that were attributed to work performed by persons other
than the principal accountant’s full-time, permanent employees.





Not
applicable.




-27-






PART
IV





Item
15.  Exhibits, Financial Statement Schedules.





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





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


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


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





(b) Exhibits





Incorporated
      by referenceExhibit
            Exhibit
      Description
            Filed
      herewith
            Form
            Period
      ending
            Exhibit
            Filing
      date2.1
            Plan
      and agreement of reorganization between Huntington Telecommunications
      Partners, LP and Competitive Companies Holdings, Inc. and Competitive
      Companies, Inc.
            
            SB-2
            
            2
            01/11/022.2
            Plan
      and agreement of reorganization between Huntington Telecommunications
      Partners, LP and Competitive Companies Holdings, Inc. and Competitive
      Companies, Inc.
            
            SB-2/A
            
            2.2
            08/02/022.3
            Plan
      and agreement of reorganization between Huntington Telecommunications
      Partners, LP and Competitive Companies Holdings, Inc. and Competitive
      Companies, Inc.
            
            SB-2/A
            
            2.2
            04/24/032.4
            Plan
      and agreement of reorganization between Competitive Companies, Inc. and
      CCI Acquisition Corp
            
            8-K
            
            10.1
            05/09/053(i)
            Articles
      of Competitive Companies, as amended
            
            SB-2
            
            3(I)
            01/11/023(ii)
            Bylaws
      of Competitive Companies
            
            SB-2
            
            3(II)
            01/11/024
            Rights
      and Preferences of Preferred Stock
            
            SB-2
            
            4
            01/11/0231.1
            Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act
            X31.2
            Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act
            X32.1
            Certification
      of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act
            X32.2
            Certification
      of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act
            X






-28-




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 15, 2010
              By:
              /s/ William
      GrayWilliam
      GrayChief
      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
            April
      15, 2010William
      Gray
            Accounting
      Officer and Director/s/
      Ray Powers
            Current
      President, Director
            April
      15, 2010Ray
      Powers/s/
      Jerald Woods
            Director
            April
      15, 2010Jerald
      Woods/s/
      Larry Griffin
            Director
            April
      15, 2010Larry
      Griffin/s/
      David Hewitt
            Director
            April
      15, 2010David
      Hewitt








-29-