SCHEDULE
14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
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Preliminary Information Statement
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Confidential, for Use of the Commission Only (as
permitted by Rule 14c-5(d)(2))
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Definitive Information Statement
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COMPETITIVE COMPANIES
, INC.
(Name
of Registrant as Specified In Its Charter)
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No fee required.
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Fee computed on table below per
Exchange Act Rules 14c-5(g) and 0-11
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Title of each class of securities to which
transaction applies:
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Aggregate number of securities to which transaction
applies:
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Per unit price or other underlying value of
transaction computed pursuant to Exchange Act rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was determined):
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part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the Form or Schedule
and the date of its filing.
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Date Filed:
COMPETITIVE
COMPANIES, INC.
19206
Huebner Road, Suite 202
San
Antonio, Texas 78258
NOTICE
OF ACTION TO BE TAKEN BY
THE
SHAREHOLDERS
December
9, 2016
To The
Shareholders of Competitive Companies, Inc.
William H.
Gray, an individual and the chief executive officer of Competitive Companies,
Inc., a Nevada corporation (also referred to as "we," "us," "our," "CCI" and
the "Company"), is entitled to vote a total of 1,740,000 shares of our common
stock and all 100,000 shares of our issued and outstanding Series D Preferred Stock
(with 51% of the votes), or approximately 51.26% of the total votes of our
issued and outstanding voting stock, Tina Bagley, an individual and an employee
of a subsidiary of the Company, is entitled to vote a total of 3,830,606 shares
of our common stock, or approximately 0.56% of the total votes of our issued
and outstanding voting stock, and Angus Davis, an individual and an officer and
director of the Company, is entitled to vote a total of 3,316,342 shares of our
common stock, or approximately 0.49% of the total votes of our issued and outstanding
voting stock (collectively, the "Majority Shareholders"). The Majority
Shareholders intend to adopt a resolution by written consent in lieu of a
meeting pursuant to the General Corporation Law of the State of Nevada to authorize
a spin-off of our subsidiary, Wytec International, Inc. ("Wytec"), by
distributing to the holders of our common stock, on a pro rata basis, all of the
outstanding shares of Wytec common stock and Wytec common stock purchase
warrants owned by the Company.
We
encourage you to read the attached Information Statement carefully for further
information regarding these actions. In accordance with Rule 14c-2 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
CCI shareholder authorization for the distribution of Wytec shares and warrants
to our stockholders will be deemed effective on a date that is expected to be
on or after January 7, 2017, and is required to be at least 20 days after the
date this Information Statement has been mailed or furnished to our
stockholders. This Information Statement is first being mailed or furnished to
stockholders on or about December 27, 2016. The actual distribution of the Wytec shares and warrants to our shareholders will not occur until after
Wytec's Registration Statement on Form S-1 for the spin-off is reviewed and
declared effective by the Securities and Exchange Commission.
William
H. Gray, Chief Executive Officer
___________
WE ARE NOT ASKING YOU FOR A CONSENT OR A PROXY AND YOU
ARE
REQUESTED NOT TO SEND US A PROXY.
___________
COMPETITIVE
COMPANIES, INC.
19206
Huebner Road, Suite 202
San
Antonio, Texas 78258
DECEMBER
9, 2016
SHAREHOLDERS
ACTION
The Majority Shareholders submitted their consent to the
shareholder resolutions described in this Information Statement on or about October
26, 2016 to be effective upon satisfaction by Competitive Companies, Inc. of
all applicable filing and notification requirements of the Securities and
Exchange Commission. As of October 26, 2016, the Majority Shareholders are entitled
to vote of record a total of 8,886,948 shares of our common stock, par value
$0.001 per share, and 100,000 shares of our Series D Preferred Stock, par value
$0.001 per share (with approximately 51% of the total outstanding votes), or
approximately 52.31% of the total votes of the issued and outstanding voting
stock of Competitive Companies, Inc. The remaining outstanding shares of our common
stock are held of record by approximately 478 other shareholders, not including
shares held in "street name" in brokerage accounts which is unknown.
The Majority Shareholders are William H. Gray, our chairman
and chief executive officer, Angus Davis, an officer and director of the
Company, and Tina Bagley, an employee of a subsidiary of the Company.
Holders of the common stock of record as of December 12,
2016 are entitled to submit their consent to the shareholder resolutions
described in this Information Statement, although no shareholder consents other
than those of the Majority Shareholders are required to be submitted in order
for the resolution to be adopted.
We are not soliciting consents or proxies and shareholders
have no obligation to submit either of them. Whether or not shareholders
submit consents should not affect their rights as shareholders or the prospects
of the proposed shareholder resolutions being adopted. The Majority
Shareholders have consented to all of the shareholder resolutions described in
this Information Statement. Other shareholders who desire to submit their
consents must do so by January 17, 2017 and once submitted will not be
revocable. The affirmative vote of the holders of a majority of the
outstanding preferred and common voting stock of Competitive Companies, Inc. on
a combined basis voting as a single class is required to adopt the resolutions
described in this Information Statement. Nevada law does not require that the
proposed transactions be approved by a majority of the disinterested
shareholders. A total of approximately 332,752,068 shares of common stock will
be entitled to vote on our proposed transactions described in this Information Statement.
We Are Not Asking You
for a Proxy and You are Requested Not to Send Us a Proxy.
THE COMPANY AND THE TRANSACTION
Proposed
Shareholder Action
Our executive offices are located at 19206 Huebner Road,
Suite 202, San Antonio, Texas 78258, and our telephone number is (210) 233-8980.
As described in the accompanying NOTICE OF ACTION TO BE TAKEN BY THE
SHAREHOLDERS, we propose to distribute to our stockholders (the "Spin-Off" or
the "Distribution") (i) all the shares of common stock, par value $0.001 per
share (the "Common Stock"), of Wytec International, Inc. ("Wytec") owned by us,
and (ii) all of the common stock purchase warrants (the "Warrants") of Wytec owned
by us immediately prior to the Spin-Off. Immediately prior to the time of the
Distribution, we will hold 95% of the outstanding shares of Common Stock and approximately
25% of the outstanding warrants of Wytec. Immediately following the Spin-Off,
Wytec's businesses, assets and liabilities will consist of ownership of
Capaciti Networks, Inc., a marketing and sales firm, ownership of the WyQuote
system, ownership of five patents and one patent application pending for the
LPN-16 technology, as well as ownership of three built wireless "diamond ring"
back haul transmission networks in Columbus, Ohio, San Antonio, Texas, and Denver,
Colorado, with an inventory of related equipment. We will retain the remainder
of our businesses, assets, and liabilities held by us at the time of the
Spin-Off, including our Wireless Wisconsin, LLC, ICM, Inc. and ICM, LLC wholly
owned subsidiaries. After the Spin-Off, it is expected that Wytec will focus
on urban and suburban markets (i.e. generally with populations exceeding
250,000) in the United States and eventually in other countries, in which to sell
internet Wi-Fi access services primarily to small and medium size enterprises
using the WyQuote system, while the Company will address rural and semi-rural
markets using Wytec's WyQuote system in its marketing and service campaigns.
We expect to license the WyQuote system for our markets from Wytec after the
Spin-Off on a royalty-free, worldwide basis, renewable annually. The Company
also plans to eventually provide financing for customers of CCI and Wytec
through ICM, LLC, to the extent that it raises sufficient capital for that
purpose. Wytec plans to continue building "diamond ring" backhaul transmission
networks in major cities, and eventually deploying or otherwise commercializing
its LPN-16 technology.
As a holder of our common stock, you will receive 0.0026
shares of Wytec Common Stock and two Warrants for every share of Wytec Common
Stock you receive on the record date for the Spin-Off (the "Record Date"), which
date will be determined by the board of directors of CCI.
The Securities and Exchange Commission ("SEC") has
conditions that must be met when a parent is spinning off a subsidiary and not
immediately registering the shares:
1. The parent shareholders do not provide consideration
for the spun-off shares;
2. The spin-off is pro rata;
3. The parent
must provide adequate information to its shareholders and the trading markets;
4. The parent has a valid business reason for the
spin-off; and
5. If the parent
is spinning off restricted securities, the parent must have either: (i) held
the restricted shares for two years or (ii) have formed the subsidiary, rather
than having acquired it from a third-party. (We formed Wytec several years
ago.)
We plan to register the Common Stock, Warrants, and common
stock underlying the Warrants on a Form S-1 Registration Statement prior to the
Distribution. Stockholders of CCI will receive book entry shares and Warrants
and will be notified of such entry. The shares of Wytec Common Stock and
Warrants distributed will be registered, and therefore will be free trading
(the Warrants themselves are not expected to trade), and will not have a Rule
144 restrictive transfer legend on them.
-2-
QUESTIONS
AND ANSWERS ABOUT THE SPIN-OFF
What
do stockholders need to do to participate in the Spin-Off?
Nothing. You are not required to take any action to receive
Common Stock and Warrants in the Spin-Off, although we urge you to read this
entire document carefully. The Spin-Off has been approved by the Majority Shareholders
and we are not soliciting consents or proxies.
Do I
have to pay anything for the shares of Common Stock or Warrants?
No. You do not have to pay anything for the shares of Common
Stock or Warrants you receive in the Distribution. The Distribution is in
effect a dividend of certain property owned by the Company to its stockholders.
Do I
have to send in my Competitive Companies, Inc. stock certificate?
No. You do not have to do anything to receive the shares of
Common Stock and Warrants. If you are a Competitive Companies, Inc.
stockholder as of the Record Date of the Distribution, you will automatically be
credited with shares of Wytec International, Inc. Common Stock and Warrants.
How many shares of Common Stock and
Warrants will I receive?
You will receive approximately 0.0026 shares of Wytec Common
Stock for every share of Company common stock owned by you on the Record Date, and
two Warrants for every share of Wytec Common Stock you receive on the Record
Date, which date will be determined by the board of directors of CCI.
Will I get a stock certificate?
No. You will not automatically initially receive a paper
certificate for your shares of Wytec Common Stock and Warrants. Prior to the
effective date of the Distribution, our transfer agent will create an account
for each CCI stockholder. On the effective date of the Distribution, which is
expected to be on or within 20 days after the effective date of our planned
Registration Statement on Form S-1 for the shares of Common Stock and shares
underlying the Warrants, the transfer agent will credit the shares of Wytec
Common Stock and Warrants issued to each registered stockholder to their
respective accounts with the transfer agent. This is called a "book-entry"
system. Stockholders of CCI will receive book entry shares of Common Stock and
Warrants and will be notified of such entry. The effectiveness of the planned
Registration Statement on Form S-1 is subject to review by the Securities and
Exchange Commission, and therefore the timing of its effectiveness is
uncertain.
How
will fractional shares be treated in the Distribution?
The transfer agent will round up fractional shares of the Common
Stock in connection with the Spin-Off to the nearest whole number of shares of
Common Stock.
If I
sell my shares of CCI common stock on or before the Distribution Date, will I
still be entitled to receive shares of the Common Stock and Warrants in the
Distribution?
If you hold shares of CCI common stock on the Record Date
and decide to sell them on or before the Distribution Date, you may choose to
sell your CCI common stock with or without your entitlement to our Common Stock
or Warrants. You should discuss these alternatives with your bank, broker or
other nominee.
-3-
Will
my CCI common stock continue to be publicly traded?
Yes. The CCI common stock
will continue to be traded on the OTC-Pink Sheets Market.
Will
the shares of Common Stock I receive in the Distribution be publicly traded?
Yes, subject to approval of our trading symbol application
by the Financial Industry Regulatory Authority (FINRA), to be filed after we
file our Registration Statement for the Distribution with the SEC. Wytec will
file a Registration Statement on Form S-1 with the SEC to become a reporting
company prior to the Distribution. Wytec will also select a registered
broker-dealer to sponsor its trading symbol application with FINRA. Wytec will
apply for a trading symbol for its Common Stock and Common Stock issuable upon
the exercise of the Warrants, but not for the Warrants themselves.
RISK
FACTORS RELATING TO THE DISTRIBUTION
Certain adverse tax consequences could arise by reason
of the Distribution
. It is possible that our stockholders could
recognize a taxable gain on the difference between the fair market value of the
Common Stock and Warrants of Wytec they receive, if it is greater than the
stockholder's tax basis in CCI common stock. The Company will distribute a
Form 1099 to its stockholders reporting the fair value of the Dividend. It
will be up to each stockholder to determine his (her) basis in his (her) CCI
shares against the value of the shares of Common Stock and Warrants received.
Furthermore, if the IRS successfully challenges the tax-free status of the Distribution,
those CCI stockholders who receive Wytec Common Stock and Warrants in the
Distribution may suffer adverse tax consequences resulting from the
characterization of the Distribution as a taxable dividend to such stockholders.
Management expects that the spin-off may be taxable to CCI, which would be
offset by our net operating loss carry forward, but not taxable to shareholders.
General risks associated with the Distribution.
The Distribution is subject to other risks and uncertainties, including but not
limited to (i) Wytec will have the added expense of being a separate public
reporting company with the SEC, (ii) Wytec must have a sponsoring registered
market maker that is a member of FINRA in order to apply for a trading symbol
for its common stock, of which there is no assurance, (iii) FINRA must approve
Wytec's application for a trading symbol for its common stock to trade on a
public securities trading market, of which there is no assurance, (iv) even if
Wytec's common stock is granted a trading symbol and approved for trading, there
is no assurance that a liquid trading market for its common stock will develop
or be sustained, (v) if a securities trading market develops for Wytec's common
stock, there is no assurance that its stock price will not decline, (vi) there
is no assurance that Wytec will become profitable as a separate entity, as it
has not been profitable as a subsidiary of the Company since its inception,
(vii) there is no assurance that Wytec or CCI will be able to continue to raise
sufficient capital or financing to fund its business operations or that it will
have sufficient funds for that purpose, (viii) Wytec's independent certified
public accountants have given Wytec and CCI a going concern qualification to their
audit reports, meaning there is no assurance that Wytec or CCI can sustain its
operations financially over the next 12 months, (ix) there is no assurance that
Wytec or CCI will successfully implement its business plan or perform as
expected, (x) Wytec and CCI are subject to intense competition in the internet provisioning
industry, (xi) Wytec's technology may not be proprietary, (xii) CCI
shareholders will incur substantial dilution of their ownership of Wytec after
the Distribution, (xiii) the SEC must review the Registration Statement before
the Spin-Off can be effected, and therefore its effectiveness and the timing of
the Distribution are uncertain, (xv) CCI and its shareholders may incur taxable
income as a result of the Distribution, and (xvi) other risks inherent in a
late development stage business.
Forward Looking Statements
.
This Information Statement contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements other than statements of
historical facts included in this Information Statement are
-4-
forward-looking statements. Words such
as "believes, "projects "anticipates," "plans," "expects," "may," "will,"
"should," "intends," and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are based on
the Company's current beliefs and expectations, and involve known and unknown
risks, uncertainties and other factors that may cause our actual results, levels
of activity, performance or achievements to be materially different from those
expressed or implied by these forward-looking statements. Investors should
not place any undue reliance on forward-looking statements since they involve
known and unknown risks, uncertainties and other factors which are, in some
cases, beyond the Company's control and which could, and likely will, materially
affect actual results, levels of activity, performance or achievements. Any
forward-looking statement reflects the Company's current views with respect to
future events and is subject to these and other risks, uncertainties and
assumptions affecting operations, results of operations, growth strategy,
liquidity, and litigation, if any. Such risks which could impact the Company are
included in the Company's filings with the SEC, including the Company's Form
10-Ks, Form 10-Qs, Form 8-Ks, Proxy Statements and other filings. The Company
assumes no obligation to publicly update or revise these forward-looking
statements for any reason, or to update the reasons that actual results could
differ materially from those anticipated in these forward-looking statements,
even if new information becomes available in the future.
APPROVAL
BY THE BOARD OF DIRECTORS
Commencing in 2016, the Company's management has discussed
with members of the Company's board of directors (the "Board") how to best
allocate the Company's limited resources and focus management's efforts to
finance and implement the business plan for Wytec International, Inc. ("Wytec").
After much consideration, particularly in view of the Company's limited
capital to finance Wytec, the Board unanimously voted on October 26, 2016 to conduct
the Spin-Off of Wytec based on the belief that Wytec will better be able to
raise capital, attract investment and finance its operations as a separate
entity.
EXPLANATION
OF ACTIONS TO BE TAKEN FOR THE SPIN-OFF
The Board has adopted a resolution to Spin-Off its
subsidiary, Wytec International, Inc. Our Board considered the following
potential benefits in deciding to pursue the Spin-Off:
-
We
believe the Spin-Off will enhance the ability of the Company and Wytec to focus
on their respective strategies.
-
Our
near-term goals for our business include providing the rural and other smaller
markets with carrier-class wireless Wi-Fi network service, which Wytec focuses
on in the larger urban and suburban markets. Achieving these goals will likely
require acquisitions or mergers funded, in part, with capital raises and
strategic alliances with other companies. Our business will be separate and
distinct from Wytec's business and, accordingly, we believe that pursuing such
growth opportunities will be greatly facilitated with a capital structure that
is tailored for Wytec's needs, separate from those of the Company.
-
The
Spin-Off is expected to establish Wytec as an independent publicly traded
corporation, which we believe will meaningfully enhance its industry market
perception, thereby providing greater growth opportunities for us than our
consolidated operation as a division of CCI.
Management believes that separation of the companies will
benefit both companies' businesses and their stockholders. Therefore, to focus
and better implement these strategies, the Board unanimously approved the Spin-Off.
-5-
Record shareholders of the Company as of the Record Date will
receive approximately 0.0026 shares of Wytec Common Stock for every share of
Company common stock owned by them, and two Warrants for every share of Wytec
Common Stock received by them on the Record Date, which date will be determined
by the Board. The Distribution will be based upon approximately 332,904,768
shares of the Company common stock that are issued and outstanding as of the
Record Date. The shares of Common Stock and Warrants will be distributed to the
Company stockholders in book entry on or within 20 days after the effective
date of our planned Registration Statement on Form S-1 for the shares of Wytec Common
Stock and shares underlying the Warrants.
Record shareholders of CCI will not automatically receive a
paper certificate for shares of Common Stock or for Warrants. Prior to the
effective date of the Distribution, our transfer agent will create an account
for each CCI stockholder. On the effective date of the Distribution, the
transfer agent will credit the shares of Common Stock and Warrants issued to
each registered stockholder to his (her) respective accounts with the transfer
agent. This is called a "book-entry" system.
The Business of CCI
. The Company will retain
its wholly-owned subsidiaries, Wireless Wisconsin, LLC, ICM, LLC and ICM, Inc. The
Company will license the WyQuote system from Wytec on a royalty-free basis for
rural and other small markets, and sell carrier-class wireless Wi-Fi service to
small businesses in those markets. CCI plans to eventually be a source of
financing for its and Wytec's customers as a profit-making service, to the
extent it can raise capital for that purpose through ICM, LLC and ICM, Inc.
CCI will primarily be a marketing company, while Wytec plans to continue to
build "diamond ring" backhaul transmission networks in major cities, and
commercialize its LPN-16 technology for small cell Wi-Fi infrastructure to
eventually support 5-G and mobile internet service capability throughout the
United States.
The Business of Wytec
. Wytec designs,
manufactures, and installs carrier-class wireless Wi-Fi networks, and provides
carrier-class Wi-Fi service through other carriers' networks, too. It markets
its services through its proprietary WyQuote system, designed to find the best
service and pricing solutions for customers. Wytec currently owns five (5)
patents related to local multipoint distribution service ("LMDS") operating on
millimeter wave spectrum. Wytec utilizes point to point millimeter wave
technology in conjunction with point to multi-point 5 GHz radios to achieve its
initial backhaul design. Wytec plans to offer its backhaul design, called the
"Diamond Ring," initially in 30 markets in the United States (three markets of
which are already built) for commercial and enterprise data transport services
as well as for the extension of its "small cell" infrastructure called the
"LPN-16." Wytec has a provisional patent application pending for its LPN-16
proprietary technology. In March 2015, Wytec filed an International Patent Cooperation
Treaty ("PCT") application to expand its patent protection rights in multiple
countries outside the United States.
No
Dissenter's Rights
.
Under Nevada Law, our
dissenting shareholders are not entitled to appraisal rights with respect to
this dividend subsidiary spin-off, and we will not independently provide our
shareholders with any such right.
U.S.
Federal Income Tax Consequences
.
You are urged to consult
a tax advisor to determine the particular tax consequences of the Spin-Off to
you, including the effect of any federal, state, local and any other tax laws. See
"Risk Factors Relating to the Distribution."
Financial
and Other Information
.
The following documents,
filed by us with the SEC, are incorporated herein by reference:
-
Our Annual Report
filed on Form 10-K, filed with the SEC on March 30, 2016, for the fiscal year
ended December 31, 2015;
-
Our Quarterly Report
filed on Form 10-Q with the SEC on May 12, 2016, for the three-month period
ended March 31, 2016; and
-6-
-
Our Quarterly Report
filed on Form 10-Q with the SEC on August 12, 2016, for the six-month period
ended June 30, 2016.
-
Our Quarterly Report
filed on Form 10-Q with the SEC on November 14, 2016, for the nine month period
ended September 30, 2016.
Any statement
contained in a document incorporated or deemed to be incorporated in this
Information Statement shall be deemed to be modified or superseded for purposes
of this Information Statement to the extent that a statement contained herein
or in any other subsequently filed document that is deemed to be incorporated
by reference modifies or supersedes such statement.
A copy of the
documents incorporated herein by reference (excluding exhibits unless such
exhibits are specifically incorporated by reference into the information incorporated
herein) that are not presented with this document or delivered herewith, will
be provided without charge to each person, including any beneficial owner, to
whom an Information Statement is delivered, upon oral or written request of any
such person and by first-class mail or other equally prompt means. Requests
should be directed to the Company at 19206 Huebner Road, Suite 202, San
Antonio, Texas 78258.
Pro-Forma
Financial Information
.
CCI and Subsidiaries, Consolidated
and Pro-Forma Consolidated Balance Sheets (Unaudited), showing CCI as it exists
on September 30, 2016, and as it would look on September 30, 2016 on a pro
forma basis if the Distribution were effected on that date:
|
|
September 30,
|
|
|
Effects of
|
|
|
Post
|
|
|
2016
|
|
|
Dividend
|
|
|
Dividend
|
|
|
(Unaudited)
|
|
|
Spin-Off(1)
|
|
|
Spin-Off
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
|
$
|
2,920,024
|
|
$
|
(2,915,708)
|
|
$
|
4,316
|
Accounts receivable, net
|
|
8,215
|
|
|
(3,903)
|
|
|
4,312
|
Prepaid expense
|
|
1,183
|
|
|
(600)
|
|
|
583
|
Total current assets
|
|
2,929,422
|
|
|
(2,920,211)
|
|
|
9,211
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
692,429
|
|
|
(666,250)
|
|
|
26,179
|
|
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Construction in process
|
|
357,890
|
|
|
(357,890)
|
|
|
-
|
Deposits and other assets
|
|
43,155
|
|
|
(1,465)
|
|
|
41,690
|
|
|
401,045
|
|
|
(359,355)
|
|
|
41,690
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
4,022,896
|
|
$
|
(3,945,816)
|
|
$
|
77,080
|
-7-
Liabilities and Stockholders' (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
63,311
|
|
$
|
(33,682)
|
|
$
|
29,629
|
Accrued expenses
|
|
30,146
|
|
|
(9,881)
|
|
|
20,265
|
Deferred revenues, net of commissions
|
|
2,210,000
|
|
|
(2,210,000)
|
|
|
-
|
Related party payable
|
|
-
|
|
|
56,996
|
|
|
56,996
|
Stock subscriptions payable
|
|
765,000
|
|
|
(765,000)
|
|
|
-
|
Convertible debentures
|
|
5,000
|
|
|
-
|
|
|
5,000
|
Total current liabilities
|
|
3,073,457
|
|
|
(2,961,567)
|
|
|
111,890
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
3,073,457
|
|
|
(2,961,567)
|
|
|
111,890
|
|
|
|
|
|
|
|
|
|
Stockholders' (deficit):
|
|
|
|
|
|
|
|
|
Controlling interest:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value 100,000,000 shares authorized:
|
|
|
|
|
|
|
|
|
Class A convertible, no shares issued and outstanding
|
|
-
|
|
|
-
|
|
|
-
|
with no liquidation value
|
|
|
|
|
|
|
|
|
Class B convertible, 1,495,436 shares issued and
|
|
1,495
|
|
|
-
|
|
|
1,495
|
outstanding with no liquidation value
|
|
|
|
|
|
|
|
|
Class C convertible, 1,000,000 shares issued and
|
|
1,000
|
|
|
-
|
|
|
1,000
|
outstanding with no liquidation value
|
|
|
|
|
|
|
|
|
Class D convertible, 100,000 shares issued and
|
|
100
|
|
|
-
|
|
|
100
|
outstanding with no liquidation value
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 500,000,000 shares
|
|
337,164
|
|
|
-
|
|
|
337,164
|
authorized, 337,167,991 shares issued and 333,054,768
|
|
|
|
|
|
|
|
|
share and 334,410,828 shares outstanding at September
|
|
|
|
|
|
|
|
|
30, 2016 and December 31, 2015
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
6,141,638
|
|
|
-
|
|
|
6,141,638
|
Accumulated (deficit)
|
|
(19,250,530)
|
|
|
12,842,541
|
|
|
(6,407,989)
|
Treasury Stock, at cost, 4,113,223 shares and 2,757,163
|
|
|
|
|
|
|
|
|
shares at September 30, 2016 and December 31, 2015,
|
|
(108,218)
|
|
|
`-
|
|
|
(108,218)
|
respectively
|
|
|
|
|
|
|
|
|
Noncontrolling interest
|
|
13,826,790
|
|
|
(13,826,790)
|
|
|
-
|
Total stockholders' (deficit)
|
|
949,439
|
|
|
(984,249)
|
|
|
(34,810)
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' (deficit)
|
$
|
4,022,896
|
|
$
|
(3,945,816)
|
|
$
|
77,080
|
-
The unaudited pro forma condensed balance sheet is derived from the September 30,
2016 condensed balance sheets of CCI and Wytec. The pro forma presentation
represents the effect of the proposed Distribution of all Wytec Common Stock
and Warrants owned by CCI to the shareholders of CCI. The resulting "Post Dividend
Spin-Off" presents the pro forma balance sheet of CCI after the Distribution of
the Wytec shares of Common Stock and Warrants as if the Distribution had occurred
on September 30, 2016. Includes the effect of the acquisition of Capaciti
Networks, Inc. by Wytec from CCI, which occurred on November 17, 2016 and the
issuance of 1,731,104 common stock purchase warrants to CCI, which occurred on
October 17, 2016.
-8-
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth the names of our executive
officers and directors and all persons known by us to beneficially own 5% or
more of the issued and outstanding common stock of Competitive Companies, Inc.
at October 26, 2016. Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission. In computing the number of
shares beneficially owned by a person and the percentage of ownership of that
person, shares of common stock subject to options held by that person that are
currently exercisable or become exercisable within 60 days of October 26, 2016
are deemed outstanding even if they have not actually been exercised. Those
shares, however, are not deemed outstanding for the purpose of computing the
percentage ownership of any other person. The percentage ownership of each
beneficial owner is based on 332,752,068 outstanding shares of common stock as
of October 26, 2016. Except as otherwise listed below, the address of each
person is c/o Competitive Companies, Inc., 19206 Huebner Road, Suite 202, San
Antonio, Texas 78258. Except as indicated, each person listed below has sole
voting and investment power with respect to the shares set forth opposite such
person's name as of October 26, 2016.
|
Name, Title, and Address
of Stockholder
|
Number of Shares
Beneficially Owned (1)
|
Percentage Ownership
|
|
|
|
|
William H. Gray, Chief Executive Officer
and Chairman
|
9,740,000 (2)
|
2.86% (2)(3)
|
|
|
|
Angus Davis, Director
|
3,316,342
|
1.00% (3)
|
|
|
|
All Current Directors and
|
13,056,342 (2)
|
3.83% (2)(3)
|
Executive
Officers as a Group (2 persons)
|
|
|
|
|
|
|
*Indicates
beneficial ownership of less than one percent.
-
Except as pursuant to applicable
community property laws, the persons named in the table have sole voting and
investment power with respect to all shares of common stock beneficially owned.
The total number of issued and outstanding shares and the total number of
shares owned by each person does not include unexercised warrants and stock
options, and is calculated as of October 26, 2016.
-
Includes 8,000,000 outstanding stock
options to purchase 8,000,000 shares of the Company's common stock which are
exercisable at an exercise price of $0.025 per share within 60 days of October
26, 2016. Does not include 2,000,000 stock options to purchase 2,000,000
shares of the Company's common stock at an exercise price of $0.025 that are
not exercisable within 60 days of October 26, 2016. Does not include
87,571,429 unvested warrants to purchase 87,571,429 shares of the Company's
common stock at an exercise price of $0.025 per share that are not exercisable
within 60 days of October 26, 2016. Does not include 100,000 shares of our
Series D Preferred Stock issued to Mr. Gray on August 15, 2013. The shares
were issued as $100 in compensation expense. The Series D Preferred Stock has
the equivalent of 51% of all outstanding votes. The Series D Preferred Stock
is not convertible into the Company's common stock and has no rights to
dividends and virtually no rights to liquidation preference. The liquidation
preference of each share of the Series D Preferred Stock is its par value,
$0.001 per share.
-
Does not reflect the voting power
that Mr. Gray has by virtue of his ownership of 100,000 shares of Series D
Preferred Stock conferring upon him the right to vote the equivalent of 51% of
all outstanding voting power.
-9-
Executive
Compensation
Compensation
Discussion and Analysis
The following
Compensation Discussion and Analysis describes the material elements of
compensation for our executive officer identified in the Summary Compensation
Table ("Named Executive Officer"), and executive officers that we may hire in
the future. As more fully described below, our board of directors makes all decisions for the total direct
compensation of our executive officers, including William H. Gray, our Named
Executive Officer. We do not have a compensation committee, so all
decisions with respect to management compensation are made by the whole board.
Compensation Program Objectives and Rewards
Our compensation philosophy is
based on the premise of attracting, retaining, and motivating exceptional
leaders, setting high goals, working toward the common objectives of meeting
the expectations of customers and stockholders, and rewarding outstanding
performance. Following this philosophy, in determining executive compensation,
we consider all relevant factors, such as the competition for talent, our
desire to link pay with performance in the future, the use of equity to align
executive interests with those of our stockholders, individual contributions,
teamwork and performance, and each executive's total compensation package. We
strive to accomplish these objectives by compensating all executives with total
compensation packages consisting of a combination of competitive base salary
and incentive compensation.
We expect to grow and hire
additional executives in the future. Our Named Executive Officer has been with
us since 2009 and his compensation has basically been static with some
fluctuation, based primarily on the level at which we can afford to retain him
and his responsibilities and individual contributions. To date, we have not
applied a formal compensation program to determine the compensation of the
Named Executives Officer and executive officers that we may hire in the
future. In the future, as we and our management team expand, our board of
directors expects to add independent members, form a compensation committee
comprised of independent directors, and apply the compensation philosophy and
policies described in this section of the Form 10-K.
The primary purpose of the
compensation and benefits described below is to attract, retain, and motivate
highly talented individuals when we do hire, who will engage in the behaviors
necessary to enable us to succeed in our mission while upholding our values in
a highly competitive marketplace. Different elements are designed to engender
different behaviors, and the actual incentive amounts which may be awarded to
each Named Executive Officer are subject to the annual review of the board of directors.
The following is a brief description of the key elements of our planned
executive compensation structure.
-
Base salary and benefits are designed
to attract and retain employees over time.
-
Incentive compensation awards are
designed to focus employees on the business objectives for a particular year.
-
Equity incentive awards, such as stock
options and non-vested stock, focus executives' efforts on the behaviors within
the recipients' control that they believe are designed to ensure our long-term
success as reflected in increases to our stock prices over a period of several
years, growth in our profitability and other elements.
-
Severance and change in control plans
are designed to facilitate a company's ability to attract and retain executives
as we compete for talented employees in a marketplace where such protections
are commonly offered. We currently have not given separation benefits to our
Name Executive Officer.
Benchmarking
We have not yet adopted
benchmarking but may do so in the future. When making compensation decisions,
our board of directors may compare each element of compensation paid to our
Name Executive Officer against a report showing comparable compensation metrics
from a group that includes both publicly-traded and privately-held companies.
Our board believes that while such peer group benchmarks are a point of
reference for measurement, they are not necessarily a determining factor in
setting executive compensation as each executive officer's compensation
relative to the benchmark varies based on scope of responsibility and time in
the position. We have not yet formally established our peer group for this
purpose.
-10-
The Elements of Our Compensation Program
Base Salary
. Executive officer base
salaries are based on job responsibilities and individual contribution. The
board reviews the base salaries of our executive officers, including our Named
Executive Officer, considering factors such as corporate progress toward
achieving objectives (without reference to any specific performance-related
targets) and individual performance experience and expertise. As of September
30, 2016, our Named Executive Officer does not have an employment agreement
with us, and remains employed without a formal agreement. The Company has an "at
will" employment agreement with Angus Davis. Additional factors reviewed by the
board of directors in determining appropriate base salary levels and raises
include subjective factors related to corporate and individual performance.
For the year ended December 31, 2015, all executive officer base salary
decisions were approved by the board of directors.
Our
board of directors determines base salaries for our executive officers,
including the Named Executive Officer, at the beginning of each fiscal year,
and the board proposes new base salary amounts, if appropriate, based on its
evaluation of individual performance and expected future contributions. We do
not have a 401(k) Plan, but if we adopt one in the future, base salary would be
the only element of compensation that would be used in determining the amount
of contributions permitted under the 401(k) Plan.
Incentive Compensation Awards
. The Named Executive
Officer has not been paid a bonus since 2014 and our board of directors has not
yet established a formal compensation policy for the determination of bonuses.
If our revenue grows and bonuses become affordable and justifiable, we expect
to use the following parameters in justifying and quantifying bonuses for our
Named Executive Officer and other officers of the Company: (1) the growth in
our revenue, (2) the growth in our earnings before interest, taxes,
depreciation and amortization, as adjusted ("EBITDA"), and (3) our stock
price. The board has not adopted specific performance goals and target bonus
amounts for any of our fiscal years, but may do so in the future.
Equity Incentive Awards
. Our board has adopted
an equity incentive plan. Stock options have been granted to our Named
Executive Officer, and certain other employees. In the future we plan to grant
stock options and make restricted stock awards to members of management, which
would not be assignable during the executive's life, except for certain gifts
to family members or trusts that benefit family members. These equity
incentive awards, we believe, would motivate our employees to work to improve
our business and stock price performance, thereby further linking the interests
of our senior management and our stockholders. The board will consider several
factors in determining whether awards are granted to an executive officer,
including those previously described, as well as the executive's position, his
or her performance and responsibilities, and the amount of options or other
awards, if any, currently held by the officer and their vesting schedule. Our
policy will prohibit backdating options or granting them retroactively.
Benefits and Prerequisites
.
At this stage of our business we have limited benefits and
no prerequisites for our employees other than health insurance and vacation
benefits that are generally comparable to those offered by other small private
and public companies or as may be required by applicable state employment
laws. We do not have a 401(k) Plan or any other retirement plan for our Named
Executive Officer or for executive officers that we may hire in the future. We
may adopt these plans and confer other fringe benefits for our executive
officers in the future if our business grows sufficiently to enable us to
afford them.
Separation and Change in
Control Arrangements
. We do not have any employment agreements with any executive
officer or employee of the Company except for an "at will" agreement with Angus
Davis, which expired on July 20, 2015. None of them are eligible for specific
benefits or payments if their employment or engagement terminates in a
separation or if there is a change of control.
-11-
Executive Officer Compensation
The following table sets forth the total compensation paid
in all forms to the executive officers and directors of Competitive Companies,
Inc. during the periods indicated:
Summary Compensation Table
Name and Principal Position
|
Year
|
Salary
|
Bonus
|
Stock Awards ($)
|
Option Awards ($)
|
All Other Compensation
|
Total
|
|
|
|
|
|
|
|
|
William Gray, Chief Executive Officer, President,
Chief Financial Officer and Corporate Secretary(1)
|
2015
2014
|
$90.309
$128,400
|
-0-
$15,000
|
-0-
-0-
|
-0-
-0-
|
$85,000
$22.087
|
$175,309
$165,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Angus Davis, Chief Strategy Officer of Wytec (2)
|
2015
2014
|
$88,002
$80,250
|
-0-
-0-
|
-0-
-0-
|
-0-
-0-
|
$1,707
$1,812
|
$89,709
$82,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tina Bagley, Former Corporate Secretary (3)
|
2015
2014
|
$93,997
$85,867
|
-0-
-0-
|
-0-
-0-
|
-0-
-0-
|
$1,724
$1,797
|
$95,721
$87,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Merola, Former Chief Technical Officer of
Wytec (4)
|
2015
2104
|
$96,207
$125,190
|
-0-
$15,000
|
-0-
-0-
|
-0-
-0-
|
$6,742
$2,308
|
$102,949
$142,498
|
-
Mr. Gray was appointed
as Chief Executive Officer on February 10, 2009. Commencing August 1, 2010, Mr.
Gray began to receive annual compensation of $120,000 and an automobile
allowance of $500 per month. Mr. Gray was entitled to be issued shares of our
common stock pursuant to the acquisition by the Company from him of new
businesses on April 2, 2009. On February 11, 2010, 3,000,000 of those shares
were issued, of which Mr. Gray subsequently exchanged 500,000 shares in a
private transaction. The remaining 542,871 shares were issued on June 30,
2010. The shares were not issued as compensation expense. On or about August
15, 2013, Mr. Gray was issued 100,000 shares of the Company's Series D
Preferred Stock. The shares were issued as $100 in compensation expense. On
April 17, 2014, Mr. Gray was granted 10,000,000 stock options to purchase
10,000,000 shares of the Company's common stock, exercisable on a cash or
cashless basis at $0.025 per share on a three year vesting schedule, expiring
on April 17, 2019. On April 17, 2014, Mr. Gray was also issued 90,000,000
warrants to purchase 90,000,000 shares of the Company's common stock,
exercisable on a cash or cashless basis at $0.025 per share, vesting only upon
the achievement of certain milestones by the Company. During 2015, the Company
repurchased 2,428,571 of the 90,000,000 unvested warrants in exchange for
$51,000, and as of December 31, 2015, only 87,571,429 of the original unvested
warrants remain.
-
On January 28, 2014,
Mr. Angus Davis was appointed as the chief strategy officer of Wytec. Mr.
Davis receives an annual salary of $80,250, owns 4,650,000 shares of the
Company's common stock, and was issued 1,000,000 stock options to purchase
1,000,000 shares of the Company's common stock on October 10, 2012. The stock
options are exercisable at an exercise price of $0.01 per share until July 20,
2016 and vest according to the following schedule: 500,000 on July 20, 2013,
250,000 on July 20, 2014, and then 250,000 on July 20, 2015. These stock
options expired on July 20, 2016.
-12-
-
On April 4, 2014, Ms.
Tina Bagley was appointed as the corporate secretary of the Company and Wytec.
Ms. Bagley receives an annual salary of $85,867, owns 4,500,000 shares of the
Company's common stock and was granted 1,000,000 stock options to purchase
1,000,000 shares of the Company's common stock on October 10, 2012. The stock
options are exercisable at an exercise price of $0.01 per share until March 19,
2016 and vest according to the following schedule: 500,000 on March 19, 2013,
250,000 on March 19, 2014, and then 250,000 on March 19, 2015. Ms. Bagley
resigned her positions as the corporate secretary and a director of the Company
and Wytec, effective November 1, 2015. Since November 1, 2015, she has been
the vice president of operations of the Company.
-
On January 28, 2014,
Mr. Robert Merola was appointed as the chief technical officer of Wytec. Mr.
Merola received an annual salary of $125,190, owns 3,390,000 shares of the
Company's common stock, and was issued 1,000,000 stock options to purchase
1,000,000 shares of the Company's common stock on October 10, 2012. Mr. Merola
resigned his positions as the chief technical officer and a director of Wytec
and as a director of the Company, effective August 25, 2015. He is no longer
employed with the Company and his stock options expired on November 25, 2015.
Although discretionary bonuses
have been granted as indicated on the table, our board of directors has not yet
established a formal compensation policy for the determination of bonuses.
Employment
Agreements
We have not entered into any employment agreements with our
Named Executive Officer to date, but we do have "at-will" employment agreements
with certain of our employees. We may enter into an employment agreement with
our Named Executive Officer in the future.
Outstanding Equity Awards at Fiscal Year End
On August 20, 2013, we issued 100,000 shares of our Series D
Preferred Stock to our chief executive officer. The shares were issued as $100
in compensation expense. Each share of Series D Preferred Stock has a par value
of $0.001. The outstanding Series D Preferred Stock is nontransferable and has
the equivalent of 51% of the total outstanding voting power of the Company's
shareholders. The Series D Preferred Stock is not convertible into the
Company's common stock and has no rights to dividends and virtually no rights
to liquidation preference. The liquidation preference of each share of the
Series D Preferred Stock is its par value.
Name and Principal
Position
|
Number of Securities Underlying Unexercised Options
Exercisable
|
Number of Securities Underlying Unexercised Options
Unexercisable
|
Option Exercise Price
|
Option Expiration Date
|
|
|
|
|
|
William Gray, Chief Executive Officer , President,
Chief Financial Officer and Corporate Secretary
|
8,000,000
|
2,000,000
|
$0.025
|
April
17, 2019
|
|
|
|
|
|
|
|
|
|
|
Angus Davis, Chief Strategy Officer of Wytec
|
1,000,000
|
-0-
|
$0.01
|
July
20, 2016
|
|
|
|
|
|
|
|
|
|
|
Tina Bagley, Former Corporate Secretary
|
1,000,000
|
-0-
|
$0.01
|
March
19, 2016
|
|
|
|
|
|
|
|
|
|
|
Robert Merola, Former Chief Technical Officer of
Wytec
|
-0-
|
-0-
|
N/A
|
N/A
|
-13-
Option Awards
During the year ended December 31, 2015, we did not grant
any stock options or other equity awards to our officers or directors.
Option
Exercises and Stock Vested
None of our executive officers exercised any stock options
or acquired stock through vesting of an equity award during the fiscal year
ended December 31, 2015.
Director
Compensation
As a result of having limited resources during most of 2015,
we did not provide compensation to our board of directors.
Additional
Information
Additional information regarding the Company, its business,
its capital stock, and its financial condition are included in the Company's
Form 10-K annual report and its Form 10-Q quarterly reports. Copies of the
Company's Form 10-K for its fiscal year ending December 31, 2015 as well as the
Company's Form 10-Q for the quarters ending March 31, 2016, June 30, 2016, and
September 30, 2016 are available upon request to: William H. Gray, Chief
Executive Officer, Competitive Companies, Inc., 19206 Huebner Road, Suite 202, San
Antonio, Texas 78258.
OTHER
MATTERS
The Board of Directors of the Company is not aware that any
matter other than those described in this Information Statement is to be
presented for the consent of the shareholders.
UPON WRITTEN
REQUEST BY ANY SHAREHOLDER TO WILLIAM H. GRAY, CHIEF EXECUTIVE OFFICER OF THE
COMPANY, AT COMPETITIVE COMPANIES, INC., 19206 HUEBNER ROAD, SUITE 202, SAN
ANTONIO, TEXAS 78258, TELEPHONE
(
210) 233-8980. A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K WILL BE PROVIDED WITHOUT CHARGE.
-14-