UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended: June 30, 2017

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ___________ to____________

Commission File Number: 000-50668

Competitive Companies, Inc.

(Exact Name of registrant as specified in its charter)

Nevada	65-1146821
(State or other jurisdiction of	(IRS Employer I.D. No.)
incorporation)

19206 Huebner Rd., Suite 202

San Antonio, TX 78258

(Address of principal executive offices and Zip Code)

(210) 233-8980

(Registrant’s telephone number, including area code)

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 past 12 months, and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No ¨

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 ý No ¨

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

Large accelerated filer  o	Accelerated filer  o
Non-accelerated filer  o	Smaller reporting company  x
Emerging growth company  o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No ý

As of August 11, 2017, there were 331,965,221 shares outstanding of the registrant’s common stock.

COMPETITIVE COMPANIES, INC.

FORM 10-Q

June 30, 2017

Table of Contents

PART I - FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Condensed Consolidated Balance Sheets as of June 30, 2017 (unaudited) and December 31, 2016	3
	Condensed Consolidated Statements of Operations for the Three and Six Months ended June 30, 2017 and June 30, 2016 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2017 and June 30, 2016 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	10
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	14
ITEM 4.	CONTROLS AND PROCEDURES	14
PART II - OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	15
ITEM 1a.	RISK FACTORS	15
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	15
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	15
ITEM 4.	MINE SAFETY DISCLOSURES	15
ITEM 5.	OTHER INFORMATION	15
ITEM 6.	EXHIBITS	16

SIGNATURES 17

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

COMPETITIVE COMPANIES, INC.

CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2017			2016
	(Unaudited)			(Audited)
Assets
Current assets:
Cash	$	2,940,499		$	2,777,313
Accounts receivable, net		4,908			6,542
Prepaid expense		6,396			12,853
Total current assets		2,951,803			2,796,708
Property and equipment, net		504,062			603,397
Other assets:
Construction in process		364,634			363,779
Deposits and other assets		28,146			25,905
		392,780			389,684
Total assets	$	3,848,645		$	3,789,789
Liabilities and Stockholders' (Deficit)
Current liabilities:
Accounts payable	$	66,270		$	166,372
Accrued expenses		106,654			40,748
Deferred revenues, net of commissions		1,895,000			1,930,000
Total current liabilities		2,067,924			2,137,120
Total liabilities		2,067,924			2,137,120
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 outstanding with no liquidation value		1,495			1,495
Class C convertible, 1,000,000 shares issued and outstanding with no liquidation value		1,000			1,000
Class D convertible, 100,000 shares issued and outstanding with no liquidation value		100			100
Common stock, $0.001 par value, 500,000,000 shares authorized, 337,167,991 shares issued and 332,365,221 share and 332,752,068 shares outstanding at June 30, 2017 and December 31, 2016		337,164			337,164
Additional paid-in capital		18,678,735			18,504,176
Accumulated (deficit)		(19,029,405	)		(18,522,585	)
Treasury Stock, at cost, 4,802,770 shares and 4,415,923 shares at June 30, 2017 and December 31, 2016, respectively		(128,174	)		(118,174	)
Noncontrolling interest		1,919,806			1,449,493
Total stockholders' (deficit)		1,780,721			1,652,669
Total liabilities and stockholders' (deficit)	$	3,848,645		$	3,789,789

See accompanying notes to consolidated financial statements.

3

COMPETITIVE COMPANIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months						For the Six Months
	Ended June 30,						Ended June 30,
	2017			2016			2017			2016
Revenue	$	17,263		$	34,504		$	35,009		$	52,989
Cost of sales		5,832			12,307			14,768			22,482
Gross profit (loss)		11,431			22,197			20,241			30,507
Expenses:
General and administrative		549,097			614,835			897,859			1,156,799
Research and development		–			103			5,333			4,623
Salaries and wages		255,906			205,114			743,509			402,836
Depreciation		54,884			52,868			109,681			105,732
Total operating expenses		859,887			872,920			1,756,382			1,669,990
Net operating loss		(848,456	)		(850,723	)		(1,736,141	)		(1,639,483	)
Other income (expense):
Interest expense		–			(11,805	)		–			(12,081	)
Interest income		47			8			94			16
Other income		40			–			40			3
Gain on disposal of asset		737			–			1,014			–
Total other income (expense)		824			(11,797	)		1,148			(12,062	)
Net loss		(847,632	)		(862,520	)		(1,734,993	)		(1,651,545	)
Net loss attributable to the noncontrolling interest		(737,947	)		(76,279	)		(1,228,172	)		(140,805	)
Net loss attributable to Competitive Companies, Inc.	$	(109,685	)	$	(786,241	)	$	(506,821	)	$	(1,510,740	)
Weighted average number of common shares outstanding - basic and fully diluted		332,382,225			333,869,042			332,566,125			333,881,665
Net loss per share - basic and fully diluted	$	–		$	–		$	–		$	–

See accompanying notes to consolidated financial statements.

4

COMPETITIVE COMPANIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited)

	For the Six Months
	Ended June 30,
	2017			2016
Cash flows from operating activities
Net loss	$	(1,734,993	)	$	(1,651,545	)
Adjustments to reconcile net loss to Net cash used in operating activities:
Stock-based compensation		20,250			20,250
Warrants issued for services and debt conversion		16,037			14,355
Depreciation and amortization		109,681			105,732
Gain on disposal of asset		(277	)		–
Decrease (increase) in assets:
Accounts receivable		1,634			(1,024	)
Prepaid expenses		6,457			5,567
Equipment held for installation		–			(2,245	)
Deposits and other assets		(2,241	)		–
Increase (decrease) in liabilities:
Accounts payable		(100,102	)		(157,798	)
Accrued expenses		65,906			(8,036	)
Deferred revenues		–			70,000
Net cash used in operating activities		(1,617,648	)		(1,604,744	)
Cash flows from investing activities
Purchases of property and equipment		(10,069	)		–
Purchase of construction in process equipment		(855	)		–
Net cash used in investing activities		(10,924	)		–
Cash flows from financing activities
Principal payments on nonconvertible debt		–			(13,500	)
Proceeds from issuance of Wytec common stock		1,681,758			–
Proceeds from issuance of Wytec Series B preferred stock		120,000			2,104,355
Purchase of treasury stock		(10,000	)		(17,000	)
Net cash provided by financing activities		1,791,758			2,073,855
Net increase in cash		163,186			469,111
Cash - beginning		2,777,313			1,085,113
Cash - ending	$	2,940,499		$	1,554,224
Supplemental disclosures:
Interest paid	$	–		$	7,421
Non-cash investing and financing activities:
Conversion of Wytec Series A preferred stock to Wytec common stock	$	135,000		$	–
Conversion of Wytec Series B preferred stock to Wytec common stock	$	35,000		$	–
Wytec International, Inc. preferred stock issued to satisfy deferred revenue	$	35,000		$	–

See accompanying notes to consolidated financial statements.

5

COMPETITIVE COMPANIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

Note 1 – Nature of Business and Basis of Presentation

The condensed consolidated interim financial statements included herein, presented in accordance with United States generally accepted accounting principles, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein. It is suggested that these condensed consolidated interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2016 and notes thereto included in the Company's Form 10-K annual report. The Company follows the same accounting policies in the preparation of interim reports.

Results of operations for the interim period are not indicative of annual results.

Competitive Companies, Inc. (the “Company” or “CCI”) was incorporated in the state of Nevada in October 2001 and acts as a holding company for its operating subsidiaries. The Company's headquarters are located in San Antonio, Texas. The Company is involved in providing next generation fixed and mobile wireless broadband Internet services nationally and internationally to wholesale, retail and enterprise customers with a special focus on the small medium business market.

The accompanying condensed consolidated interim financial statements include the accounts of the following entities. All significant inter-company transactions have been eliminated in the preparation of these financial statements.

		State of	Relationship
Name of Entity (1)	Form of Entity	Incorporation	June 30, 2017
Competitive Companies, Inc.	Corporation	Nevada	Parent
Wireless Wisconsin LLC	Limited Liability Company	Wisconsin	Subsidiary (2)
Innovation Capital Management, Inc.	Corporation	Delaware	Subsidiary (2)
Innovation Capital Management, LLC	Limited Liability Company	Texas	Subsidiary (2)
Wytec International, Inc.	Corporation	Nevada	Subsidiary (3)
Wylink, Inc.	Corporation	Texas	Subsidiary (4)
Capaciti Networks, Inc.	Corporation	Texas	Subsidiary (5)

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

⁽²⁾ Wholly-owned subsidiary of Competitive Companies, Inc.

⁽³⁾ As of June 30, 2017, CCI owned a 9% interest in Wytec on an “as converted basis” with respect to Wytec’s Series A and Series B Preferred Stock consolidated under the variable interest entity model.

⁽⁴⁾ Wholly-owned subsidiary of Wytec International, Inc.

⁽⁵⁾ During 2016, Capaciti was sold, in full, from CCI to Wytec and as of June 30, 2017, Capaciti is a wholly owned subsidiary of Wytec.

6

The operations of each consolidated subsidiary are further detailed below:

· Wireless Wisconsin LLC (“Wireless WI”) – Provided high speed wireless Internet connections to residents in rural communities, as well as some DSL internet services to businesses and residents within certain markets in rural Wisconsin. The company operates in both a regulated and non-regulated environment.

· Innovation Capital Management, Inc. (“ICM”) – Formed to manage capital raising activities.

· Innovation Capital Management, LLC (“ICMLLC”) – Formed to engage in strategic marketing relationships.

· Wytec International, Inc. (“Wytec”) – Provider of wireless internet access service infrastructures and provides internet access services primarily to the small and medium business market.

· Wylink, Inc. (“Wylink”) – Applies for and registers links (each a “Registered Link”).

· Capaciti Networks, Inc. (“Capaciti”) – Provides the WyQuote system to market internet access services

In October 2016, the Company entered into an agreement with Wytec pursuant to which the Company agreed to exchange shares of Wytec common stock owned by the Company in consideration for the cancellation of intercompany debts. After consummation of the transaction, the Company’s percentage ownership of Wytec decreased to 11% on an “as converted” basis with respect to Wytec’s outstanding convertible Preferred Stock Wytec is now consolidated with the Company as a variable interest entity. The Company is the primary beneficiary of Wytec and controls it through its governing board and continuity of management.

The condensed consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred continuous losses from operations, has an accumulated deficit of $19,029,405 at June 30, 2017, and has reported negative cash flows from operations in most periods over the last seven years. In addition, the Company does not currently have the cash resources to meet its 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 of the industry in which the Company operates.

The Company’s ability to continue as a going concern is dependent on the Company’s ability to generate sufficient cash from operations to meet its cash needs and/or to raise funds to finance ongoing operations and repay debt. There can be no assurance that the Company will be successful in its efforts to raise additional debt or equity capital and/or that cash generated by operations will be adequate to meet the Company’s needs. These factors, among others, indicate that the Company may be unable to continue as a going concern for a reasonable period of time. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note 2 – Property and Equipment

Property and equipment consist of the following:

	June 30, 2017			December 31, 2016
Telecommunication equipment and computers	$	1,095,191		$	1,070,838
Furniture and fixtures		44,746			61,702
		1,139,937			1,132,540
Less accumulated depreciation		(635,875	)		(529,143	)
	$	504,062		$	603,397

Note 3 – Construction in Process

The cost of equipment and materials purchased, and contract labor incurred, for the construction of network, plant property and equipment, and the installation of registered links on behalf of customers is held in Construction in Process until construction is completed. No depreciation or amortization is applied to Construction in Process. Once construction is complete and network element is placed in service, the costs are either capitalized or expensed as cost of goods sold as appropriate.

7

Note 4 – Warrants

As of June 30, 2017, Wytec has a total of 5,887,879 common stock purchase warrants outstanding to purchase a total of 5,887,879 shares of Wytec common stock exercisable until various dates through December 31, 2017, 1,731,104 of which are exercisable at an exercise price of $5.00 per share, 2,958,275 of which are exercisable at an exercise price of $1.50 per share, 75,000 of which are exercisable at an exercise price of $1.45 per share, 373,500 of which are exercisable at an exercise price of $1.25 per share, and 750,000 of which are exercisable at an exercise price of $1.00 per share.

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

	Number of CCI Warrants		Number of Wytec Warrants
Balance, December 31, 2015		87,571,429		2,805,672
Warrants granted		–		4,680,608
Warrants exercised		–		207,000
Warrants repurchased		87,571,429		–
Warrants expired		–		170,000
Balance, December 31, 2016		–		7,109,280
Warrants granted		–		69,000
Warrants exercised		–		1,126,674
Warrants repurchased		–		–
Warrants expired		–		163,727
Balance, June 30, 2017		–		5,887,879
Exercisable, June 30, 2017		–		5,887,879

Note 5 – Changes in Stockholders’ Equity (Deficit)

In October 2012, the Company granted employees options to purchase 3,000,000 shares of common stock exercisable at $0.01 per share with a three year vesting schedule and expiration dates four years from the grant date. In August 2015, one of the employees resigned from the Company and forfeited his 1,000,000 stock options. As of December 31, 2016, the remaining 2,000,000 stock options expired.

In April 2014, the Company granted 10,000,000 stock options to purchase 10,000,000 shares of its common stock to the Company’s chief executive officer, exercisable at $0.025 per share with a three year vesting schedule and an expiration date of April 17, 2019. For the six month periods ended June 30, 2017 and 2016, the stock-based compensation related to these option grants was $17,000 and $17,000, respectively.

In September 2014, the Company granted employees options to purchase 1,500,000 shares of common stock each exercisable at $0.02 per share with a three year vesting schedule and an expiration date of September 1, 2018. In July 2015, one of the employees was terminated from the Company and forfeited his 750,000 stock options prior to the first vesting milestone. For the six month periods ended June 30, 2017 and 2016, the stock-based compensation related to these option grants was $1,250 and $1,250, respectively.

In May 2015, the Company granted 750,000 options to one employee to purchase 750,000 shares of common stock, exercisable at $0.02 per share with a three year vesting schedule and an expiration date of May 14, 2019. For the six month periods ended June 30, 2017 and 2016, the stock-based compensation related to these option grants was $2,000 and $2,000, respectively.

8

During the six months ending June 30, 2016, Wytec issued 713,952 shares of Wytec Series B Preferred Stock and 713,952 common stock purchase warrants for $2,141,855 in cash.

During the six months ending June 30, 2016, Wytec refunded $37,500 that had been received for the purpose of issuing 12,500 shares of Wytec Series B Preferred Stock to one investor. The shares of Wytec Series B Preferred Stock were never issued to the investor, and the funds were returned.

During the six months ended June 30, 2017 Wytec issued 40,000 shares of Wytec Series B Preferred Stock and 40,000 Wytec common stock purchase warrants for $120,000 in cash and 10,000 shares of Wytec Series B Preferred Stock and 10,000 Wytec common stock purchase warrants in exchange for one Registered Link.

During the six months ending June 30, 2017, Wytec issued 1,126,674 shares of Wytec common stock in exchange for the exercise of 1,126,674 common stock purchase warrants and $1,681,758 in cash, and Wytec received $60,000 in cash for the purpose of exercising additional common stock purchase warrants but the holder has not yet executed the required documents, and Wytec issued 110,000 shares of Wytec common stock upon conversion of 100,000 shares of Wytec Series A Preferred Stock and 10,000 shares of Wytec Series B Preferred Stock.

During the six months ending June 30, 2017, the Company purchased 386,847 shares of its common stock from a director for a cash payment of $10,000.

Note 6 –Wytec International, Inc. and Subsidiaries Registration Statement

In October 2016, the Company’s board of directors and majority shareholders authorized a planned spin-off of Wytec (“Spin-Off”). As of June 30, 2017, CCI owns 865,552 shares, approximately9%, of the outstanding common stock of Wytec, (assuming all outstanding shares of Wytec’s Series A and Series B Preferred Stock are converted into Wytec common stock) and 1,731,104 Wytec common stock purchase warrants.

On December 9, 2016, CCI filed an information statement on schedule 14C and on January 10, 2017, Wytec filed a registration statement on form S-1 with the Securities and Exchange Commission (the “SEC”). These filings describe in detail the terms and conditions of the Spin-Off. Upon the S-1 Registration Statement being declared effective by the SEC, Wytec will no longer be owned by the Company, as the Company will distribute 100% of its remaining shares of Wytec common stock and Wytec common stock purchase warrants to its shareholders. Wireless WI, ICM, and ICM LLC, will continue to be wholly owned subsidiaries of the Company.

Note 7 – Subsequent Events

In July 2017, the Company purchased 400,000 shares of its common stock from a director for a cash payment of $10,186.80.

In July 2017, Wytec issued 9,500 warrants to purchase 9,500 shares of common stock to one unrelated service provider. The warrants are exercisable at a price of $1.50 per share until December 31, 2017.

In July 2017, Wytec issued 163,727 warrants to purchase 163,727 shares of common stock to seventeen investors for consideration. The warrants are exercisable at a price of $3.00 per share until December 31, 2017.

In July 2017, Wytec issued 20,000 shares of series B preferred stock and 20,000 warrants to purchase common stock in exchange for two links there were included in deferred revenue.

In July 2017, the Company extended for consideration the expiration date from December 31, 2017 to December 31, 2018 on 1,731,104 warrants to purchase 1,731,104 shares of common stock. These warrants are held by CCI to be distributed at Spin-Off and are exercisable at $5.00 per share

In July 2017, the Company and Wytec agreed to transfer related party unsecured non-interest bearings loans, owed by the Company to Wytec, into an interest bearing revolving line of credit when the line of credit is formalized upon approval by the SEC of the Spin-off of Wytec. As of August 10, 2017, this loan amount totaled $386,214.,

In August 2017, Wytec issued 27,500 shares of Wytec common stock to two investors pursuant to the exercise of warrants.

In August 2017, Wytec issued 9,500 warrants to purchase 9,500 shares of common stock to one unrelated service provider. The warrants are exercisable at a price of $1.50 per share until December 31, 2017.

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and plan of operations together with our financial statements and related notes appearing elsewhere in this Quarterly Report. Various statements have been made in this Quarterly Report on Form 10-Q that may constitute “forward-looking statements.” Forward-looking statements may also be made in Competitive Companies, Inc.’s other reports filed with or furnished to the United States Securities and Exchange Commission (the “SEC”) and in other documents. In addition, from time to time, Competitive Companies, Inc. (“CCI,” “we,” “us,” “our,” or the “Company”) through its management may make oral forward-looking statements. The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from such statements.   The most important facts that could prevent us from achieving our stated goals include, but are not limited to, the following:

(a) volatility or decline of our stock price;

(b) potential fluctuation in quarterly results;

(c) our failure of to earn revenues or profits;

(d) inadequate capital to continue or expand its business;

(e) insufficient revenues to cover operating costs;

(f) inability to raise additional capital or financing to implement its business plans;

(g) dilution experienced by our shareholders in their ownership of the Company and its subsidiaries because of the issuance of additional securities by us, or the exercise of outstanding convertible securities;

(h) inability to complete research and development of our technology with little or no current revenue;

(i) failure to further commercialize our technology or to make sales;

(j) loss of customers and reduction in demand for our products and services;

(k) rapid and significant changes in markets;

(l) technological innovations causing our technology to become obsolete;

(m) increased competition from existing competitors and new entrants in the market;

(n) litigation with or legal claims and allegations by outside parties, reducing revenue and increasing costs;

(o) inability to start or acquire new businesses, or lack of success of new businesses started or acquired by us, if any;

(p) failure of the Company to successfully spin off Wytec;

(q) failure to develop and implement a revenue model that will produce revenues and profits;

(r) inability to obtain patent or other protection for our proprietary intellectual property, and the expiration of some of our existing patents

(s) uncollectible accounts and the need to incur expenses to collect amounts owed to us; and

(t) we do not have an Audit Committee nor any independent directors.

There is no assurance that we will be profitable, we may not be able to successfully develop, manage or market our products and services, we may not be able to attract or retain qualified executives and technology personnel, we may not be able to obtain customers for our products or services or successfully compete, our products and services may become obsolete, government regulation may hinder our business, additional dilution in outstanding stock ownership may be incurred due to the issuance of more shares, warrants, and stock options, the exercise of outstanding warrants and stock options, or other risks inherent in our businesses. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The cautionary statements contained or referred to in this section should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this Form 10-Q, or to reflect the occurrence of unanticipated events.

10

Business

Competitive Companies, Inc. (the “Company”) was originally incorporated in the state of Nevada in October 2001 and acts as a holding company for its operating subsidiaries, Wytec International, Inc. (“Wytec”), Wylink, Inc., Wireless Wisconsin LLC, Capaciti Networks, Inc., Innovation Capital Management, Inc., and Innovation Capital Management LLC (collectively, the “Subsidiaries”). Capaciti Networks, Inc. is now a wholly owned subsidiary of Wytec. The Company and its Subsidiaries (also collectively referred to as “CCI”) are involved in providing next generation fixed and mobile wireless broadband Internet services nationally and internationally to wholesale, retail and enterprise customers.

Due to developments in our intellectual property and the continued development of our municipal and governmental relationships along with the addition of key personnel and consultants, management intended to enter into 30 markets by year-end 2015. This strategy was redesigned to reduce market entry costs and enhance marketing capabilities along with the development of a commissioned based agent sales channel and telemarketing. Included in our market entry schedule are new products and services for small and medium businesses and our continued optimization strategies for assisting municipalities in leveraging current assets such as utility poles for maximum utilization related to the provisioning of telecommunications and machine to machine (“M2M”) services.

Our current business strategy incorporates the use of millimeter wave technology utilizing wireless frequencies from 5GHz to 80GHz spectrum. Wytec, has constructed the use of these spectrums in three (3) markets including San Antonio, Texas, Columbus, Ohio and Denver, Colorado and has commercialized a broadband Internet service directed to the small medium business (known as “SMB”) in two of three markets. The initial focus of service is directed to highly concentrated areas such as the Central Business District (CBD) of each market and to expand the service to high density business zones outside of the CBD. The Company plans to eventually utilize its patent pending LPN-16 Micro Cell technology to provide enhanced coverage to these zones.

We believe the use of millimeter wave spectrum is a key component to the development of a 5G network and further support to what has now become popularized as the “Smart City”. Smart Cities are designed to advance multiple mobile communications services, including but not limited to, public safety, first responder, machine to machine, and carrier offload services.

Currently our network design is capable of delivering bandwidth services of up to 1.5 gigabits per second to a wide range of customers including small, midsize and large corporate operations located in Tier One, Tier Two, and Tier Three (the term “Tier” defines the population size of the link location) cities throughout the United States. Our millimeter wave technology serves as the backbone for our platform networks capable of supporting a host of high capacity data throughput objectives.

On December 18, 2015, Wytec performed an outside speed test on the first LPN-16 working prototype and produced record performance speeds in excess of 500 Mbps to a smart phone and 600 Mbps to a laptop computer. Earlier speed tests and network demonstrations enabled us, through Wytec, to consummate our first services agreement with the City of Columbus on July 7, 2014. Wytec has now substantially completed its footprint coverage of the Central Business District (“CBD”) of Columbus, Ohio in preparation for the Company’s new marketing and sales strategy.

Overview of Current Operations

We continue to shift our focus away from our past revenue sources, such as, web hosting, dial-up, wireless, DSL, and wired internet services, and move toward the design, development, and implementation of 4G/5G networks with an accelerated concentration towards the development of our “Smart City” concept. We believe recent national and international relationships have facilitated the progression of our “Smart City” development in conjunction with the growing relationships with city and state governments.

On November 8, 2011, we acquired Wytec, a company that owns three current and two expired U.S. patents related to LMDS. LMDS deals primarily in the transmission of point-to-point and point-to-multipoint data distribution utilizing millimeter wave spectrum. Though the patents are currently unusable in our current 4G/5G backhaul configuration, we intend to advance a derivative of the technology for usage in future 5G millimeter backhaul deployments. Millimeter wave technology continues to grow as the predominate choice in gigabyte data transmission for the future 5G network. .

Wytec’s current product development involves the design of a “micro cell” solution called the LPN-16 designed to meet the stringent bandwidth needs of both government “first responder” services as well as “carrier offload” services. Management believes the LPN-16 solution is the first of its kind specifically developed to participate in the Small Cells as a Service (“SCaaS”) market which has been forecasted by SNS Research to reach $15 billion globally by 2020. In addition to the SCaaS market, management believes the LPN-16 will support the needs of the massive growth of the machine to machine (“M2M”) market forecasted by SNS Research to account for nearly $196 billion in global revenues by the end of 2020.

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Wytec’s LPN-16 is proprietary intellectual property of Wytec International, Inc for which management has applied for U.S. patent protection rights in the second quarter of 2014 and is a significant part of Wytec’s Intelligent Community Wi-Fi Network (“IWiN”). We intend to file international patent applications for the technology in the near future. Design and engineering of the LPN-16 have been completed with development of the first units being tested in an outdoor environment in San Antonio, Texas.

On June 9, 2012, our then wholly owned subsidiary, Wytec, formed a wholly owned subsidiary, Wylink, Inc., a Texas corporation, to market and sell millimeter wave spectrum in the licensed 60 & 90 Gigahertz frequency channels. The Federal Communications Commission (“FCC”) has developed a unique application program giving the ability for qualified applicants to own millimeter spectrum under a program known as the Registered Link Program Until January 2016, we sold point-to-point registered links (“Registered Links”) as part of our backhaul solution in support of our 4G/5G Wi-Fi network. The cash received from the sale of our Registered Links is recorded as “deferred revenue” and will be recorded as revenue once the telecommunication equipment is installed for the link owners. Management closed the Wylink application program in January 2016, and has repurchased all but 69 outstanding Links which are still owned by outside third party buyers.

Management now focuses its primary business on the development of Smart City broadband networks utilizing 4G/5G technologies capable of delivering speeds that are many times faster than current cellular networks and which can be utilized for a range of services for carriers, governmental and business applications.

Most recently, CCI management has developed a strategic business plan to spin-off of Wytec into the public market. On December 9, 2016 CCI filed an Information Statement on Schedule 14C and on January 10, 2017, Wytec filed a Registration Statement on Form S-1 with the Securities and Exchange Commission. These filings describe, in detail, the terms and conditions of the spin-off. We anticipate that each CCI shareholder will receive approximately one share of Wytec common stock for every 388 shares of CCI common stock owned (“Spin-Off Shares”) and two Wytec common stock purchase warrants (“Spin-Off Warrants”) for each share of Wytec common stock received. The Spin-Off Warrants will be exercisable until June 30, 2018 at an exercise price of the higher of (i) $5.00 per share, or (ii) 85% of the average closing price of Wytec’s common stock quoted on the public securities trading market on which Wytec’s common stock is then trading with the highest volume, during the five (5) consecutive trading days immediately preceding the Measure Date, which is March 30, 2018 (if Wytec’s common stock is not then publicly trading, then the amount per share will be $5.00). The distribution of the Spin-Off Shares and Spin-Off Warrants is expected to occur after the date Wytec’s Registration Statement on Form S-1 becomes effective with the Securities and Exchange Commission.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations, including the discussion on liquidity and capital resources, are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management re-evaluates its estimates and judgments, particularly those related to the determination of the estimated recoverable amounts of trade accounts receivable, impairment of long-lived assets, revenue recognition and deferred tax assets. We believe the following critical accounting policies require more significant judgment and estimates used in the preparation of the financial statements.

We maintain an allowance for doubtful accounts for estimated losses that may arise if any of our customers are unable to make required payments. Management specifically analyzes the age of customer balances, historical bad debt experience, customer credit-worthiness, and changes in customer payment terms when making estimates of the uncollectability of our trade accounts receivable balances. If we determine that the financial conditions of any of our customers deteriorated, whether due to customer specific or general economic issues, increases in the allowance may be made. Accounts receivable are written off when all collection attempts have failed.

We follow the provisions of Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial Statements" for revenue recognition and SAB 104. Under Staff Accounting Bulletin 101, four conditions must be met before revenue can be recognized: (i) there is persuasive evidence that an arrangement exists, (ii) delivery has occurred or service has been rendered, (iii) the price is fixed or determinable and (iv) collection is reasonably assured.

Income taxes are accounted for under the asset and liability method. Under this method, to the extent that we believe that the deferred tax asset is not likely to be recovered, a valuation allowance is provided. In making this determination, we consider estimated future taxable income and taxable timing differences expected in the future. Actual results may differ from those estimates.

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Result of Operations for the Six Months Ended June 30, 2017 and 2016

Revenue for the six months ended June 30, 2017 was $35,009, as compared to revenue of $52,989 for the six months ended June 30, 2016. This decrease in revenue of $17,980 or 34% was primarily due to decreases in sales from Wireless Wisconsin, LLC.

Cost of sales for the six months ended June 30, 2017 was $14,768, a decrease of $7,714, or 34%, from $22,482 for the six months ended June 30, 2016. Our cost of sales decreased primarily due to managing costs related to our sales operations.

General and administrative expenses were $897,859 for the six months ended June 30, 2017, as compared to $1,156,799 for the six months ended June 30, 2016. This resulted in a decrease of $258,940 or 22% compared to the same period in 2016. The decrease in our general and administrative expenses was largely a result of decreased activity related to our link program costs during the six months ended June 30, 2017, as sales of the program ceased in January 2016.

Research and development costs were $5,333 for the six months ended June 30, 2017, as compared to $4,623 of research and development costs for the six months ended June 30, 2016. An increase of $710, or 15% was due to an increase in expenses related to the development of Wytec’s LPN-16.

Salary and wage expenses were $743,509 for the six months ended June 30, 2017, as compared to $402,836 for the six months ended June 30, 2016, which resulted in an increase of $340,673, or 85% compared to the same period in 2016. The increase in salary and wages is due a bonus paid to the chief executive officer of the Company to settle an outstanding small business administrative loan that had been personally guaranteed by the officer related to a former subsidiary that is no longer in operation.

Liquidity and Capital Resources

While we have raised capital to meet our working capital and financing needs in the past, additional financing will be required in order to meet our current and projected cash requirements for operations. As of June 30, 2017, $1,895,000 of our current liabilities is deferred revenue on Link sales that have been funded by the customer, for which obligations to the customer have not yet been completed.

We anticipate that we will incur operating losses in the next twelve months. Our revenue is not expected to exceed our investment and operating costs 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 operations. To address these risks, we must, among other things, seek growth opportunities through investment and acquisitions, effectively monitor and manage our claims for payments that are owed to us, implement and successfully execute our business strategy, respond to competitive developments, and attract, retain and motivate qualified personnel. We cannot assure that we will be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business prospects, financial condition and results of operations.

Satisfaction of Our Cash Obligations for the Next 12 Months.

As of June 30, 2017, our cash balance was $2,940,499. Our plan for satisfying our cash requirements for the next twelve months is through sales-generated income, private placements of Wytec’s capital stock, third party financing, and/or traditional bank financing. We anticipate sales-generated income during that same period of time, but do not anticipate generating sufficient revenue to meet our working capital requirements. Consequently, we intend to attempt to find sources of additional capital in the future to fund our growth and expansion through additional equity or debt financing or credit facilities. There is no assurance that we would be able to meet our working capital requirements through the private placement of equity or debt or from any other source.

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 of operations, liquidity, capital expenditures or capital resources that are material to investors.

Recently Issued Accounting Standards

The Company has reviewed the updates issued by the Financial Accounting Standards Board (“FASB”) during the six month period ended June 30, 2017, and determined that the updates are either not applicable to the Company or will not have a material impact on the Company.

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Item 3. Quantitative and Qualitative Disclosure About Market Risk.

Not Applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

Our chief executive officer and principal financial officer, William Gray, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on this evaluation, our chief executive officer and principal financial officer has concluded that our disclosure controls and procedures were not effective as of June 30, 2017. Specifically, our disclosure controls and procedures were not effective in timely alerting our management to material information relating to us (including our consolidated subsidiaries) required to be included in our periodic SEC filings and ensuring that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure, for the following reasons:

·     We do not have an independent board of directors or audit committee or adequate segregation of duties.

·     All of our financial reporting is generated by our financial consultant.

·     We do not have an independent body to oversee our internal controls over financial reporting and  we lack segregation of duties due to the limited nature and resources of the Company.

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

Internal Control Over Financial Reporting

Our chief executive officer and principal financial officer is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

The Company may be involved in legal actions and claims arising in the ordinary course of business from time to time. As of the date of the report, there are no legal matters of which management is aware.

Item 1A. Risk Factors.

While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. Item 1A, Part I of our 2016 Annual Report on Form 10-K describes some of the risks and uncertainties associated with our business that have the potential to materially affect our business, financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities.

On April 7, 2017, the Company purchased 386,847 shares of its common stock from a director for a cash payment in the amount of $10,000.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

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Item 6. Exhibits.

Exhibit	Exhibit Description	Filed herewith	Form	Filing date
2.1	Plan and agreement of reorganization between Huntington Telecommunications Partners, LP and Competitive Companies Holdings, Inc. and Competitive Companies, Inc.		SB-2	01/11/02
2.2	Plan and agreement of reorganization between Huntington Telecommunications Partners, LP and Competitive Companies Holdings, Inc. and Competitive Companies, Inc.		SB-2/A	08/02/02
2.3	Plan and agreement of reorganization between Huntington Telecommunications Partners, LP and Competitive Companies Holdings, Inc. and Competitive Companies, Inc.		SB-2/A	04/24/03
2.4	Plan and agreement of reorganization between Competitive Companies, Inc. and CCI Acquisition Corp		8-K	05/09/05
3.1(i)	Articles of Competitive Companies, Inc. as amended		SB-2	01/11/02
3.2	Certificate of Correction of Competitive Companies, Inc.		10-Q	11/14/16
3.3	Bylaws of Competitive Companies, Inc.		SB-2	01/11/02
3.4	Series D Preferred Stock Certificate of Designation of Competitive Companies, Inc.		10-Q	11/14/16
3.5	Series C Preferred Stock Certificate of Designation of Wytec International, Inc.		8-K	07/25/16
4.1	Form of Warrant to be issued by Competitive Companies, Inc. to MediaG3, Inc.		8-K	11/15/11
4.2	Form of Warrant to be issued by Competitive Companies, Inc.		8-K	04/25/14
4.3	Stock Option Agreement issued by Competitive Companies, Inc.		8-K	04/25/14
10.1	Stock Purchase Agreement by and among Competitive Companies, Inc., a Nevada corporation, Wytec International, Inc., a Nevada corporation, MediaG3, Inc., a Delaware corporation, and its wholly owned subsidiary, Wytec, Incorporated, a California corporation		8-K	11/15/11
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act *	X
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act *	X
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act *	X
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act *	X
101.INS	XBRL Instance Document *	X
101.SCH	XBRL Schema Document *	X
101.CAL	XBRL Calculation Linkbase Document *	X
101.DEF	XBRL Definition Linkbase Document *	X
101.LAB	XBRL Label Linkbase Document *	X
101.PRE	XBRL Presentation Linkbase Document *	X

* Filed herewith. Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

COMPETITIVE COMPANIES, INC.

By: /S/ William H. Gray

William H. Gray, Chairman, Chief Executive Officer,

President, and Chief Financial Officer (Principal

Executive Officer/Principal Accounting Officer)

Date: August 14, 2017

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