-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F/FMPwBI7cpv091lYnyJxJW0dknfIkM3B9c3t0+ZBy24gnr0AdHT1XszqLiDOsvn gvA0hXgMmNg961sZkly0OA== 0000096313-04-000087.txt : 20040414 0000096313-04-000087.hdr.sgml : 20040414 20040414163423 ACCESSION NUMBER: 0000096313-04-000087 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CCC GLOBALCOM CORP CENTRAL INDEX KEY: 0000854164 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 363693936 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-30365-C FILM NUMBER: 04733441 BUSINESS ADDRESS: STREET 1: 1250 WOOD BRANCH PARK DRIVE STREET 2: 6TH FLOOR CITY: HOUSTON STATE: TX ZIP: 77079 BUSINESS PHONE: 2815997878 MAIL ADDRESS: STREET 1: 536 N. 100 W. CITY: HEBER CITY STATE: UT ZIP: 84032 FORMER COMPANY: FORMER CONFORMED NAME: EMERALD CAPITAL INVESTMENTS INC /DE DATE OF NAME CHANGE: 19960518 FORMER COMPANY: FORMER CONFORMED NAME: EMERALD CAPITAL INC /DE/ DATE OF NAME CHANGE: 19920703 10KSB 1 cccglobal10ksb.txt ================================================================================ U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------- FORM 10-KSB |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2003 OR | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 033-30365C ----------- CCC GLOBALCOM CORPORATION (Name of Small Business Issuer as specified in its charter) Nevada 36-3693936 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1250 Wood Branch Park Drive, 4th Floor Houston, Texas 77079 (Address of principal executive offices) Issuer's telephone number, including area code: (281) 759-5535 Securities registered pursuant to Section 12(b) of the Exchange Act: None Securities registered pursuant to Section 12(g) of the Exchange Act: None ----------- Check whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of Issuer's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. Yes |X| No |_| The Issuer's revenues for the fiscal year ended December 31, 2003 were $0. As of April 14, 2004, 32,774,490 shares of the Issuer's common stock were issued and outstanding of which 19,709,213 were held by nonaffiliates. As of December 31, 2003, the aggregate market value of shares held by nonaffiliates (based upon the average of the closing ask and bid prices reported on the Pink Sheets of $0.03) was approximately $591,276. DOCUMENTS INCORPORATED BY REFERENCE: NONE CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Form 10-KSB contains certain statements, such as statements regarding CCC GlobalCom Corporation's ("CCC GlobalCom's") future plans, that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, including certain statements contained under "Management's Discussion and Analysis of Financial Condition and Results of Operations" with regard to certain statements contained under "Business" concerning our future business plans. The following statements are or may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995: (i) any statements contained or incorporated herein regarding possible or assumed future results of operations of CCC GlobalCom's business, anticipated cost savings or other synergies, the markets for CCC GlobalCom's services and products, anticipated capital expenditures, regulatory developments or competition; (ii) any statements preceded by, followed by, or that include the words "intends", "estimates", "believes", "expects", "anticipates", "should", "could", or similar expressions; and (iii) other statements contained or incorporated by reference herein regarding matters that are not historical facts. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements; factors that could cause actual results to differ materially include, but are not limited to: o the filing of bankruptcy by our operating subsidiaries; o the Company has discontinued its operating activities; o the impact of technological change on our business, alternative technologies, and dependence on availability of transmission facilities; o the loss of any significant numbers of customers; o changes in business strategy or development plans; o the cost of pursuing acquisitions and new business and initiatives; o our significant indebtedness; o the availability and terms of capital to fund our operations and the expansion of our business; o risks of international business; o regulatory risks in the United States and internationally; o contingent liabilities; o risks associated with debt service requirements and our financial leverage; o uncertainties associated with the success of acquisitions; o the ongoing war on terrorism; o and other factors referenced in this Report; and o the other risks referenced from time to time in CCC GlobalCom's filings with the Securities and Exchange Commission. Potential purchasers of CCC GlobalCom capital stock are cautioned not to place undue reliance on such statements, which speak only as of the date thereof. 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 may be issued by CCC GlobalCom or persons acting on its behalf. We undertake no duty to update these forward-looking statements, even though our situation may change in the future. TABLE OF CONTENTS ITEM 1. DESCRIPTION OF BUSINESS.......................................... GENERAL.......................................................... ACQUISITIONS..................................................... DIVESTITURES..................................................... ITEM 2. PROPERTIES....................................................... ITEM 3. LEGAL PROCEEDINGS................................................ ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............. ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS.......................................... ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS FOR PLAN OF OPERATION....... GENERAL.......................................................... RESULTS OF OPERATIONS............................................ LIQUIDITY AND CAPITAL RESOURCES.................................. LIQUIDITY ASSESSMENT............................................. INFLATION........................................................ FORWARD OUTLOOK AND RISKS........................................ CRITICAL ACCOUNTING POLICIES..................................... NEW ACCOUNTING PRONOUNCEMENTS.................................... CERTAIN RELATED PARTY TRANSACTIONS............................... ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...................... ITEM 8. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE......................................... ITEM 8(a). CONTROLS AND PROCEDURES.......................................... ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT....... ITEM 10. EXECUTIVE COMPENSATION........................................... COMPENSATION SUMMARY............................................. OPTIONS/SAR GRANTS IN LAST FISCAL YEAR........................... AGGREGATE OPTION EXERCISES AND NUMBER/VALUE OF UNEXERCISED OPTIONS.......................................................... COMPENSATION OF DIRECTORS........................................ EMPLOYMENT AGREEMENTS............................................ 2001 STOCK INCENTIVE PLAN........................................ LONG-TERM INCENTIVE PLAN AWARDS.................................. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT... ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS............. EMPLOYMENT AGREEMENTS-CCC GLOBALCOM OFFICERS..................... STOCK BONUS TO OFFICERS.......................................... CONSULTING AGREEMENT WITH SHAREHOLDER............................ STOCK GRANTS FOR SERVICES PROVIDED BY SHAREHOLDERS............... ITEM 13. EXHIBITS, AND REPORTS ON FORM 8-K............................... Exhibit 31.1 Section 302 of the Sarbanes Oxley Act of 2002 - Certification of Chief Executive Officer and Principal Financial Officer Exhibit 32.1 Section 906 of the Sarbanes Oxley Act of 2002 - Certification of Chief Executive Officer and Principal Financial Officer PART I ITEM 1. DESCRIPTION OF BUSINESS General CCC GlobalCom Corporation, a Nevada corporation, has been an Integrated Communications Provider (ICP) that has provided a range of communication services to both U.S. and international residential and business customers. We were primarily a switch-based company, which means we used a strategic deployment of network switches to provide communication services to our long-distance customers. We also purchased local telephone communication services from Incumbent Local Exchange Carriers (ILECs) on a wholesale basis. In most cases, these other providers from which we purchased services, were transparent to our customers. The use of our own switches reduced our overall service costs. Our core business has been communication services and communications products, which includes long-distance voice and data, local service, long-distance debit cards, and prepaid cellular cards. The telecommunications industry has experienced a great deal of instability during the past several years. During the 1990s, forecasts of very high levels of future demand brought a significant number of new entrants and new capital investments into the industry. However, those forecasts have not materialized, many industry participants have gone through bankruptcy, telecommunications capacity now far exceeds actual demand and, as a result, the marketplace is characterized by fierce price competition as traditional and next generation carriers and Integrated Communications Providers compete to secure market share. Resulting lower prices have eroded margins and have kept many industry participants, including the Company, from attaining ongoing positive cash flow from operations. Many industry participants and their customers have gone and are undergoing reorganizations through bankruptcy, contemplating bankruptcy, or experiencing significant operating losses while consuming much of their remaining liquidity. During the past twelve months, the Company has discontinued operating as a provider of long-distance voice and data and local service. Financial constraints caused by negative cash flows, decreasing revenues and an inability to pay vendors, creditors and taxes has required the Company to file for Chapter 7 Bankruptcy protection for its Ciera Network Systems, Inc. (Ciera) operating subsidiary (see more detailed information under the section headed "Textron Loan Matters/Ciera Network Systems, Inc.". On January 4, 2004, the Company filed for Chapter 11 bankruptcy protection for its subsidiary, EqualNet, Inc. The Company's inability to pay its vendors and creditors and discontinuation of service by its principal vendor required the Company to file for the bankruptcy protection. On February 18, 2004, Textron Financial Corporation, EqualNet Inc's., significant creditor, foreclosed on its asset based collateral including cash, accounts receivable and customer base. On February 25, 2004, the U.S. Bankruptcy Court dismissed EqualNet Inc's., Chapter 11 bankruptcy petition. The Company is currently evaluating its options including filing a Chapter 7 bankruptcy petition for EqualNet, Inc. The Company has discontinued all telecommunications operations including Ciera Network Systems, Inc.'s long-distance voice and data and local services, EqualNet, Inc.'s long-distance debit cards and prepaid cellular cards, and CCC GlobalCom Corporation's long-distance switches. The Company has no intention of reentering any of the telecommunications markets at this time. The Company has incurred significant recurring operating losses since inception, has a working capital deficit, has a stockholders' deficit and has discontinued all of its current operations. The auditors' opinion on our consolidated financial statements as of December 31, 2003, calls attention to substantial doubts about our ability to continue as a going concern. This means that they question whether we can continue in business. Subsequent to December 31, 2003, the Company raised $140,000 in equity financing through the issuance of 7,000,000 shares of common stock. We serve as a holding company for our subsidiaries' operations. References herein to CCC GlobalCom, "Company", "we", "our", or "us" include CCC GlobalCom Corporation and our subsidiaries, unless the context otherwise requires. 1 Acquisitions CCC GLOBALCOM CORPORATION. We were, prior to June 12, 2000, named Emerald Capital Investments, Inc. On June 9, 2000, we commenced operations in the telecommunications industry through the acquisition of CCC GlobalCom Corporation, a Texas corporation ("CCC Texas"). CCC Texas was formed in 1999 to commence operations in the telecommunications industry. CCC Texas has conducted no operations except for its acquisition of Ciera Network Systems, Inc. ("Ciera"). The Company's acquisition of CCC Texas, and as a result of such acquisition, the acquisition of Ciera, was accounted for as a reverse merger. EQUALNET COMMUNICATIONS CORP. On April 5, 2001, we acquired certain assets of EqualNet Communications Corp., EqualNet Corporation and USC Telecom, Inc. (collectively referred to as "Equalnet"). The assets purchased included various fixed assets, contracts, receivables and other tangible and intangible assets related to Equalnet's long-distance business, customer service business, and telephone debit, sales and service business. The purchase price of $8,161,511 was paid with available cash and proceeds from a revolving credit facility of $7,500,000 from RFC Capital, a division of Textron Financial. In a related transaction, CCC GlobalCom purchased three switches used in the Equalnet long-distance business for $750,000 from d-Tel Network, L.L.C., a company controlled by the Chairman of the Board of Equalnet. At the time of the acquisition of these assets, Equalnet was subject to the jurisdiction of the United States Bankruptcy Court and the purchase transaction was approved by such court. EqualNet, Inc. was not part of the group of companies collectively known as Equalnet, but was formed separately during 2003 to acquire the assets of Tele-Direct. (See below). OMNIPLEX COMMUNICATIONS, LLC. On September 11, 2001 we acquired certain assets of Omniplex Communications Corporation. The assets purchased included various fixed assets, contracts, receivables and other tangible and intangible assets related to Omniplex's commercial local and long-distance telecommunications business. The purchase price of $8,298,704 was paid with proceeds of $8,125,000 from a revolving credit facility from RFC Capital, a division of Textron Financial, and the balance with available cash. In connection with the acquisition, a term sheet was drafted whereby the lender agreed in principle to exchange $1,000,000 of its debt for warrants to purchase our common stock at $4.00 per share. The details of the warrants were finalized in March 2002 and effective on September 7, 2001. In March 2002, debt to RFC was reduced $500,000 pursuant to the terms of the warrant agreement. At the time of the acquisition of these assets, Omniplex was subject to the jurisdiction of the United States Bankruptcy Court and the purchase transaction was approved by such court. INCOMNET COMMUNICATIONS CORPORATION. On November 30, 2001, we acquired substantially all of the assets of Incomnet Communications Corporation (Incomnet). Incomnet was a long-distance service reseller authorized to conduct business in 49 states. In addition to long-distance telephone service, Incomnet offered, through a strategic partnership with Qwest, high-speed Internet access and web hosting, Virtual Private Networks, Frame Relay/ATM, Internet-based unified messaging, ISDN and xDSL services. The purchase price for the acquired assets was $6,028,695, payable as follows: (1) $1,750,000 cash at closing from the proceeds of a revolving line of credit with RFC Capital; (2) a note payable for $750,000, bearing interest at 8% maturing on May 30, 2002; (3) 125,000 shares of CCC GlobalCom common stock; and (4) the assumption of certain liabilities which totaled $3,028,695. TELE-DIRECT, INC. On May 30, 2003, the Company's subsidiary Equalnet, Inc. acquired certain assets of Tele-Direct, Inc. (Tele-Direct) an affiliate of Telefyne, Inc. (Telefyne) The assets purchased included various fixed assets, inventory, customer contracts, and other intangible assets related to Tele-Direct's business of reselling common carrier telecommunications, including both domestic and international services and cellular services. The purchase price of $600,000 was paid with available cash of $140,000, proceeds from Textron Financial Corporation of $260,000 and a $200,000 note payable to Telefyne. Divestitures CCC GLOBALTEL de COLOMBIA, SA. On March 18, 2003, we entered into an agreement with Teleinversiones Ltda., a limited liability company organized under the laws of Colombia and domiciled in Bogota, Colombia, to sell 100% of our interest in CCC GlobalTel de Colombia. The terms of the agreement call for Teleinversiones to pay CCC GlobalCom $170,000 (less 15% - Colombian income and remittance tax) immediately and additional payments of $10,000 on the first and second anniversary dates of the signed agreement. A gain of approximately $183,000 was recorded as a gain on the disposition of discontinued operations in the financial results for the year ended December 31, 2003. An allowance for $20,000 for the outstanding notes receivable balance was recorded in the fourth quarter 2003 due to uncertainty of collecting the receivable. 2 Business The Company has discontinued all telecommunications operations as of the date of this report and has no intention of reentering the telecommunications market. The Company has no business operations at this time. Employees The Company had one employee as of the date of this filing. ITEM 2. PROPERTIES The Company leases approximately 5,000 spuare feet at 1250 Wood Branch Park Drive, Suite 400, Houston, TX 77079. The Company pays $3,331 monthly and the lease expires December 31, 2004. ITEM 3. LEGAL PROCEEDINGS MCI WorldCom vs. Ciera Network Systems, Inc., Case No. 03-CV-55-P(C), in the Federal District Court for the Northern District of Oklahoma, filed January 15, 2003. MCI has sued Ciera claiming Ciera owes MCI $2,560,000 for long-distance services which were resold by Ciera. The case was recently filed. Ciera has denied that it owes MCI the amounts alleged due to over billing practices and MCI's failure to provide rates and consolidation of three contracts as promised, which would lower the overall cost of the service. Ciera is currently in Chapter 7 bankruptcy. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to our shareholders for a vote during the last quarter of the year ended December 31, 2003. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS Our Common Stock is listed on the OTC Electronic Bulletin Board under the symbol "CCGC." There has been limited activity in the market transactions in our common stock. The following table sets forth on a per share basis, the high and low bid prices per share for our common stock as reported on the OTC Electronic Bulletin Board for the periods indicated. The high and low bid prices were the same for all periods presented for the year ended December 31, 2001. The following prices reflect interdealer prices, without retail mark-up, mark down or commission and may not represent actual prices: High/Low Bid Year ended December 31, 2001: First quarter $ 4.00 Second quarter 4.05 Third quarter 2.00 Fourth quarter 2.01 Year ended December 31, 2002: First quarter $ 3.50/1.22 Second quarter 1.73/0.93 Third quarter 0.42/0.10 Fourth quarter 0.07/0.05 Year ended December 31, 2003: First quarter $ 0.02/0.02 Second quarter 0.02/0.02 Third quarter 0.02/0.02 Fourth quarter 0.02/0.02 3 Shares Issued in Unregistered Transactions During the last four fiscal years, CCC GlobalCom issued shares of its common stock in nonregistered transactions pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended. The shares issued in such transactions (all with restrictive legends) were as follows:
Number of Date Title Underwriters Offer Price Discount/Commission Securities ---- ----- ------------ ----------- ------------------- ---------- May 11, 2000 First Private Placement Memorandum ACAP Financial, Inc. $1.50 $150,000 1,000,000 June 14, 2000 Second Private Placement Memorandum ACAP Financial, Inc. $3.00 $151,968 2,033,624 January 30, 2001 Third Private Placement Memorandum ACAP Financial, Inc. $3.25 $252,996 795,293
All shares issued in the transactions detailed above were eligible to have restrictions removed as of January 31, 2003. In addition, during 2001, 2002, and 2003 CCC GlobalCom issued 1,805,147, 2,287,768, and 500,000 shares of common stock respectively, to certain Directors, Officers, vendors, and lenders for services and goods. The issuance of these shares has been accounted for in the consolidated financial statements by recording an expense for the fair value of such shares based on the market price at the date of the transaction. The shares issued in such transactions were as follows: Number of Shares 2001 ---------------- - ---- Stock Issued for: Services 460,127 Incomnet Acquisition 125,000 Stock Bonus Awarded to: Officers / Directors 1,200,000 Employee 20,020 --------- Total Shares Issued - 2001 1,805,147 ========= 2002 - ---- Stock Issued for: Satisfaction of Stock Payable 912,768 Services 400,000 Equipment 50,000 Stock Bonus Awarded to: Officers / Directors 500,000 Employee 300,000 Exercise of Warrant 125,000 --------- Total Shares Issued - 2002 2,287,768 ========= 4 2003 - ---- Stock Bonus Awarded to: Officers / Directors 500,000 ------- Total Shares Issued - 2003 500,000 ======= See Consolidated Statement of Changes in Shareholders' Deficit and accompanying notes to consolidated financial statements for additional disclosure. Holders As of March 30, 2004, there were 32,774,490 shares of common stock outstanding and approximately 550 stockholders of record of common stock. The number of stockholders of record does not include an indeterminate number of stockholders whose shares are held by brokers in "street name." Management believes there are in excess of 500 beneficial stockholders of our common stock. Dividends We have not paid any cash dividends since our inception and do not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of our business. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS FOR PLAN OF OPERATION General The following discussion and analysis relates to our financial condition and results of operations for the years ended December 31, 2003 and 2002. This information should be read in conjunction with the consolidated financial statements and notes thereto contained herein, as well as the "Cautionary Statement Regarding Forward-Looking Statements" in this Form 10-KSB. We were, prior to June 12, 2000, named Emerald Capital Investments, Inc. On June 9, 2000 we commenced operations in the telecommunications industry through the acquisition of CCC GlobalCom Corporation, a Texas corporation ("CCC Texas"). CCC Texas was formed in 1999 to commence operations in the telecommunications industry. CCC Texas conducted no operations except for its acquisition of Ciera Network Systems, Inc. ("Ciera"). Our acquisition of CCC Texas, and as a result of such acquisition, the acquisition of Ciera was accounted for as a reverse merger. On April 5, 2001, the Company acquired certain assets of EqualNet Communications Corp., EqualNet Corporation and USC Telecom, Inc. (collectively referred to as "Equalnet"). The assets purchased included various fixed assets, contracts, receivables and other tangible and intangible assets related to Equalnet's long-distance resale business, customer service business, and telephone debit and sales and service business. The purchase price of $8,161,511 was paid with available cash and proceeds from a revolving credit facility of approximately $7,500,000 from RFC Capital, a division of Textron Financial. In a related transaction, CCC GlobalCom purchased three switches used in the Equalnet long-distance business for $750,000 from d-Tel Network, L.L.C., a company controlled by the Chairman of the Board of Equalnet. As a result of the Equalnet acquisition, we increased our customer base by approximately 30,000, acquired voice switches, and obtained back office operations based in Houston, Texas. On September 11, 2001 we acquired certain assets of Omniplex Communications Corporation (Omniplex). The assets purchased included various fixed assets, contracts, receivables and other tangible and intangible assets related to Omniplex's commercial local and long-distance telecommunications business. The purchase price of $8,298,704 was paid with proceeds of $8,125,000 from a revolving credit facility from RFC Capital, a division of Textron Financial, and the balance with available cash. In connection with the acquisition, a term sheet was drafted whereby the lender agreed in principle to exchange $1,000,000 of its debt for warrants to purchase our common stock at $4.00 per share. The details of the warrants were finalized in March 2002 and the warrant was effective on September 7, 2001. As a result of the Omniplex acquisition, we increased our customer base by approximately 5,000, enhanced our local service product offering, and obtained distribution channels based in St. Louis, MO, Kansas City, MO and Cape Girardeau, MO. 5 On November 30, 2001, we acquired substantially all of the assets of Incomnet Communications Corporation (Incomnet). The purchase price for the acquired assets was $6,028,695, payable as follows: (1) $1,750,000 cash at closing from the proceeds from a revolving line of credit from RFC Capital; (2) a note payable for $750,000, bearing interest at 8% and maturing on May 30, 2002; (3) 125,000 shares of CCC GlobalCom common stock; and (4) the assumption of certain liabilities which totaled $3,028,695. As a result of the Incomnet acquisition, we increased our customer base by approximately 52,000, obtained new distribution channels, and obtained back office operations in Irvine, CA. On March 18, 2003, we entered into an agreement with Teleinversiones Ltda., a limited liability company organized under the laws of Colombia and domiciled in Bogota, Colombia, to sell 100% of our interest in CCC GlobalTel de Colombia. The terms of the agreement call for Teleinversiones to pay CCC GlobalCom $170,000 (less 15% - Colombian income and remittance tax) immediately and additional payments of $10,000 on the first and second anniversary dates of the signed agreement. A gain of approximately $183,000 was recorded in the financial results for the year ended December 31, 2003. An allowance for $20,000 for the outstanding notes receivable balance was recorded in the fourth quarter 2003 due to uncertainty of collection of the receivable. On May 30, 2003, the Company's subsidiary Equalnet, Inc. acquired certain assets of Tele-Direct, Inc. (Tele-Direct) an affiliate of Telefyne, Inc. The assets purchased included various fixed assets, inventory, customer contracts, and other intangible assets related to Tele-Direct's business of reselling common carrier telecommunications, including both domestic and international services and cellular services. The purchase price of $600,000 was paid with available cash of $140,000, proceeds from Textron Financial Corporation of $260,000 and a $200,000 note payable to Telefyne. In December 2003, management decided to discontinue the operations relating to the assets acquired from Tele-Direct due to the inability to service the debt and to pay carriers. On January 4, 2004 Equalnet, Inc. filed for Chapter 11 bankruptcy. By Mid-January, Equalnet, Inc. had ceased operations. On February 18, 2004 Textron foreclosed on the assets of Equalnet, Inc. due to nonpayment on the note payable. Textron Loan Matters/Ciera Network Systems, Inc. We have conducted operations primarily through our subsidiaries. Most of our operations have been conducted through our subsidiary, Ciera Network Systems, Inc. ("Ciera"). On December 31, 2002, we signed an Amended and Restated Loan Agreement ("Loan Agreement") with Textron Financial Corporation ("Textron"), as successor to RFC Financial Corporation that provided for a revolving line of credit. Under the Loan Agreement, Textron has a security interest in and lien on Ciera Network Systems, Inc. assets, including inventory, accounts receivable, intangibles, equipment, furniture and fixtures, trade names and marks, intellectual property, customer base, deposit accounts, and insurance proceeds. Under the Loan Agreement the principal amount of the revolving line of credit was not to exceed the lesser of (a) $6,000,000 or (b) the Availability Formula. We borrowed in excess of the full amount available under the Availability Formula. In addition, we were able to refinance $14,000,000 of the line of credit to term notes. The notes have a number of loan covenants, one of which requires the Company to pay all required federal and state taxes in a timely manner. The Company has remained delinquent in the payment of federal and state excise taxes. The Company was in violation of the loan covenants of the Textron notes. At June 30, 2003, Ciera owed $16,098,962, to Textron Financial Corporation pursuant to the Amended and Restated Loan Agreement (the "Loan Agreement"). On July 2, 2003, we received a notice of an Event of Default under the Loan Agreement from Textron. Textron demanded that Ciera immediately pay or cause to be paid to Textron the sum of $1,214,222, which was the amount of the outstanding over advance per the Loan Agreement as of July 2, 2003. Neither Ciera nor CCC GlobalCom had the financial ability to pay or cause to be paid to Textron the amount demanded. To facilitate the impending foreclosure action to be taken by Textron Financial Corporation and with the approval of Textron Financial Corporation, on July 3, 2003, Ciera Network Systems, Inc. signed a management services agreement with New Access Communications giving New Access Communications complete control of the existing Ciera customer base. New Access Communications was to provide all telecommunications services to the customers and also commenced billing and collecting from the customers. Ciera layed off the majority of its workforce upon signing the management services agreement with New Access Communications. On August 5, 2003, Textron Financial Corporation sent notice in accordance with provisions of Section 9-610 et seq. of the Uniform Commercial Code as in effect in the State of Texas to certain vendors and taxing authorities of its intent to conduct a public foreclosure sale of its Collateral under the Loan Agreement on August 18, 2003. Upon completion of this foreclosure sale, Ciera had no operating assets. Ciera had vendor liabilities, tax liabilities and other liabilities of approximately $22,800,000 at June 30, 2003, exclusive of the $16,098,962 amount owed to Textron. Ciera did not have existing liquidity sufficient to satisfy all amounts owed. 6 In lieu of going through the foreclosure proceeding, the Company voluntarily surrendered all of the collateral securing Ciera's and CCC GlobalCom's obligations under the Loan Agreement. In consideration for our voluntarily agreeing to surrender the assets of Ciera to Textron in lieu of the foreclosure, Textron agreed to adjust all claims, disputes and causes for action that had arisen or could have arisen as to the Loan Documents and events prior to the execution of this Mutual Limited Release. Upon execution of the Mutual Limited Release with Textron Financial, the Company's assets were reduced by the amount of approximately $2,611,000, representing the transfer of all of Ciera's assets to Textron in lieu of a foreclosure, and our liabilities were reduced by approximately $15,920,000 representing the amount we owed Textron under the Loan Agreement and unearned revenue. The Company has recorded a net gain of approximately $13,309,000 for the forgiveness of the Textron Financial debt and the foreclosure of certain Ciera Network Systems, Inc.'s assets. Financial results and remaining assets and liabilities related to Ciera Network Systems, Inc. are presented as Discontinued Operations in the Company financial results for the year ended December 31, 2003. Prior year results have been restated for Discontinued Operations for comparative purposes. On August 28, 2003, subsequent to executing the Mutual Limited Release with Textron Financial Corporation, Ciera Network Systems, Inc. filed for Chapter 7 bankruptcy protection in the U.S. Bankruptcy Court of the Southern District of Texas (Houston). All employees of Ciera Network Systems, Inc. were terminated and Ciera is no longer an operating entity. The Company remains under Chapter 7 bankruptcy protection. The Company, through it's EqualNet, Inc. subsidiary, remained liable for $260,000 payable to Textron related to the acquisition of certain assets of Tele-Direct Inc., which is further described below. Restructuring Since December 31, 2002, we have taken significant restructuring steps to reduce our expenses, eliminate debt and restructure our size applicable to our remaining business. Since December 31, 2002, the Company and its subsidiaries have reduced the number of employees to one as of the date of this filing. We have closed the Chairman's office at 16350 Park Ten Place, Houston, Texas and we have moved to significantly smaller facilities with significantly lower rent expense at 1250 Wood Branch Park Drive, Houston, Texas. However, these restructuring steps do not ensure that we will continue as a going concern. On May 30, 2003, the Company's subsidiary, EqualNet, Inc. acquired certain assets of Tele-Direct, Inc. (Tele-Direct) an affiliate of Telefyne, Inc. The assets purchased included various fixed assets, inventory, customer contracts, and other intangible assets related to Tele-Direct's business of reselling common carrier telecommunications, including both domestic and international services and cellular services. The purchase price of $600,000 was paid with available cash of $140,000 and loan proceeds from Textron Financial Corporation of $260,000. The Company was to also pay to Telefyne a percentage of a certain customer's collected revenues for a specific period of time. Subsequent to the acquisition date, the Company and Telefyne, Inc. negotiated a fixed amount of $200,000 in place of a percentage of a certain customer's collected revenues. As a result of the Tele-Direct acquisition, the Company entered the debit card and prepaid cellular card business with a distribution channel of over 2,500 convenience stores throughout the U.S. Purchases of telecommunications services were from Telefyne, Inc. including i) network services, ii) switching services, iii) use of software required to make, track, and manage calls, iv) Point of Sale (POS) equipment and software, and v) provision of technical and management personnel to ensure that calls are carried and terminated with quality of no less than industry standards. Prior to December 31, 2003, management decided to discontinue the operations of the Company's operating subsidiary, EqualNet, Inc., because of EqualNet's inability to service its vendor and creditor debt. EqualNet filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court, Southern District (Houston) on January 4, 2004. On February 18, 2004, Textron Financial Corporation, EqualNet's significant creditor, foreclosed on its asset based collateral including cash, accounts receivable and customer base. On February 25, 2004, the U.S. Bankruptcy Court dismissed EqualNet's Chapter 11 bankruptcy petition. The Company is currently evaluating its options including filing a Chapter 7 bankruptcy petition for EqualNet, Inc. As of December 31, 2003 the Company did not have any continuing operations except for those to maintain the status of the public Company. 7 Management Changes During the year ended December 31, 2003, Doug Morris, Garry Bolinder, and Robert Livingston were elected to serve as Directors of the Company to fill vacant Directors' positions. In addition, during the year ended December 31, 2003, Z. A. Hakim, Ray Klentzman, Dr. Charles Wisdom, Gilbert Gertner, and James Rash resigned their positions as Directors of the Company. In addition, Z.A. Hakim resigned as an officer of the Company. The Company and Mr. Hakim mutually agreed to terminate Mr. Hakim's employment agreement dated February 16, 2001. In March of 2004 Mario Hernandez, the Chief Financial Officer of the Company, resigned to pursue other opportunities. Other Matters During the year ended December 31, 2003, one of our major shareholders returned to us for cancellation 11,939,428 of his shares of our common stock. This shareholder also agreed to give up to an additional 3,000,000 of his shares of our common stock to another significant shareholder as reimbursement of shares given to certain other shareholders who had purchased shares of the Company's common stock in previous periods. As of December 31, 2003, approximately 2,413,000 shares had been distributed. The distribution of shares was treated as a preferential dividend. Going Concern Our consolidated financial statements have been prepared assuming that we will continue as a going concern. We have incurred losses since inception and have a working capital deficit as of December 31, 2003. Additionally, we have had recurring negative cash flows from operations. For the reasons stated in Liquidity and Capital Resources and subject to the risks referred to in Liquidity and Capital Resources, we cannot assure you that we can raise the money necessary to fund future operations. Our History of Operating Losses and Deficiencies in Cash Flows We have incurred operating losses and deficiencies in operating cash flows in each year since our inception. Our operating losses were $15,831,916, $17,881,001 and $1,816,901 for the years ended December 31, 2002, 2001 and 2000, respectively. We have an operating loss from continuing operations of $500,580 for the year ended December 31, 2003 and a working capital deficit from continuing operations of $159,088 at December 31, 2003. Results of Operations The significant changes in operating results from continuing operations primarily arose from discontinuing all telecommunications operations from our two operating subsidiaries, Ciera Network Systems, Inc. and EqualNet, Inc. and the inherent reduction of overhead operating expenses. The following table sets forth for the periods indicated our statements of operations: 8 For the years ended December 31, 2003 2002 ---- ---- Net sales $ 0 $ 0 Cost of services 0 0 Selling, general and administrative expenses (500,867) (1,682,764) Loss from operations (500,867) (1,682,764) Other income (expense): Interest income 287 6,179 Interest expense 0 (762) Other, Net 0 6,994 Loss before benefit for income taxes (500,580) (1,670,353) Income taxes --- --- Net loss from continuing operations (500,580) (1,670,353) Discontinued Operations Loss from discontinued operations, net of income taxes (5,711,748) (18,040,608) Gain on disposition of discontinued operations, net of income taxes 13,074,682 0 Income (loss) from discontinued operations 7,362,934 (18,040,608) Net income (loss) $6,862,354 $(19,710,961) 2003 Compared to 2002 - --------------------- SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative (SG&A) expenses for the year ended December 31, 2003 were $500,867. SG&A expenses consist of costs to provide parent company support to the operating companies. Costs include management salaries, professional services, rent, telephone, and general office expenses. Selling, general and administrative (SG&A) expenses for the year ended December 31, 2002 were $1,682,764. SG&A expenses consist of costs to provide parent company support to the operating companies. Costs include management salaries, professional services, rent, telephone, and general office expenses. The decrease in selling general and administrative is due to efforts by management to cut costs, particularly compensation related expenses, rent and costs associated with being a public company. OTHER INCOME/(EXPENSES). Other income/(expenses) consists of interest income of $267. For 2002, other income of $12,411 consisted of interest income of $6,179, interest expense of ($762) and other income of $6,994. The decrease in other income and expenses is due to the general decline in the operations of the Company. DISCONTINUED OPERATIONS. Discontinued operations consist of loss from discontinued operations and gain on the disposition of discontinued operations. Operating results of Ciera Network Systems, Inc. and EqualNet, Inc. are being 9 reported as discontinued operations. Ciera ceased conducting business in July 2003 when its major creditor foreclosed on all of Ciera's assets. Ciera filed for chapter 7-bankruptcy protection in August of 2003. Management decided to discontinue the operations of Equalnet, Inc. in December 2003 due to the inability to pay vendors and service debt. Equalnet, Inc. ceased conducting business in January 2004 when its major vendor discontinued providing network services for EqualNet. In February 2004, EqualNet's major creditor foreclosed on all of EqualNet's assets. The loss from discontinued operations for the year ended December 31, 2003 was $5,711,748. The gain on the disposition of discontinued operations for the year ended December 31, 2004 was $13,074, 682. The net gain on the disposition of discontinued operations consists of a net gain on the forgiveness of Textron Financial debt and the foreclosure of certain Ciera assets of $13,309,006, gain on the sale of our interest in GlobalTel of $183,052, and a loss on the disposal of fixed assets of $417,376. The Company's operating results for year ended December 31, 2002 have been restated for discontinuing operations because of reasons stated previously (see 2003 Results of Operations). The loss from discontinued operations for the year ended December 31, 2002 was $18,040,608. The decrease in loss from discontinued operations is due to the decline in the number of customers of Ciera, the sale of the Ciera customer base in July 2003 along with the efforts of management to cut costs. Liquidity and Capital Resources During the year ended December 31, 2003, we had negative cash flow from operations of approximately $135,000. The amount of cash used is a result of losses from continuing operations and discontinued operations incurred during the period offset by the timing of cash receipts from our customers and the nonpayment of monies owed to our vendors and taxing authorities. We have historically operated with negative cash flows and have funded those losses and deficits through the issuance of debt, the completion of private equity placements, and delaying payments to vendors and taxing authorities. During the year ended December 31, 2003, the Company acquired approximately $32,000 in equipment that was not financed through capital lease or financing arrangements. Additional cash outflows included payments of approximately $234,000 towards our capital lease obligations and notes payable and $140,000 cash paid in the Tele-Direct asset purchase. Altogether, our net operating, investing and financing activities during the year used approximately $205,000 in cash. Our working capital deficit at December 31, 2003 was approximately $159,000 excluding assets and liabilities of discontinued operations. The working capital deficit inclusive of discontinued operations assets and liabilities was approximately $23,394,000 at December 31, 2003. Our current liabilities include a total of approximately $117,000 owed to various vendors. Our current liabilities include approximately $23,712,000 of net liabilities from discontinued operations, Ciera Network Systems, Inc and EqualNet, Inc. Ciera filed for chapter 7 bankruptcy protections on August 28, 2003. We currently do not have sufficient cash or operations to bring our vendors back to current terms. Liquidity Assessment The Company's assets have been reduced by the amount of approximately $2,611,000, representing the transfer of all of Ciera's assets to Textron in lieu of a foreclosure, and our liabilities were reduced by approximately $15,920,000, representing the amount we owed Textron under the Loan Agreement. The Company has no significant income-producing assets at this time. Inflation Inflation continues to apply modest, upward pressure on the cost of services provided by CCC GlobalCom. Forward Outlook and Risks From time to time, CCC GlobalCom may publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological development, new products, research and development activities and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply 10 with the terms of the safe harbor, CCC GlobalCom notes that a variety of factors could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in any of our forward-looking statements. The risks and uncertainties that may affect the operations, performance, development and results of CCC GlobalCom's business include, but are not limited to, the following: (a) the failure to obtain additional borrowed and/or equity capital on favorable terms for acquisitions and expansion; (b) adverse changes in federal and state laws, to government reimbursement policies, to private industry reimbursement policies and to other matters affecting CCC GlobalCom's industry and business; (c) the availability of appropriate acquisition candidates and the successful completion of acquisitions; (d) the demand for our products and services; and (e) other risks detailed in our Securities and Exchange Commission filings. This Form 10-QSB contains and incorporates by reference certain "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act with respect to results of operations and businesses of CCC GlobalCom. All statements, other than statements of historical facts, included in this Form 10-KSB, including those regarding market trends, CCC GlobalCom's financial position, business strategy, projected costs, and plans and objectives of management for future operations, are forward-looking statements. In general, such statements are identified by the use of forward-looking words or phrases including, but not limited to, "intended", "will", "should", "may", "expects", "expected", "anticipates", and "anticipated" or the negative thereof or variations thereon or similar terminology. These forward-looking statements are based on CCC GlobalCom's current expectations. Although we believe that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Because forward-looking statements involve risks and uncertainties, CCC GlobalCom's actual results could differ materially. Important factors that could cause actual results to differ materially from our expectations are disclosed hereunder and elsewhere in this Form 10-KSB. These forward-looking statements represent our judgment as of the date of this Form 10-KSB. All subsequent written and oral forward-looking statements attributable to CCC GlobalCom are expressly qualified in their entirety by the Cautionary Statements. CCC GlobalCom disclaims, however, any intent or obligation to update its forward-looking statements. Ability to Continue as a Going Concern. As a result of our financial condition, our independent auditor included an explanatory paragraph in its report on our financial statements for the period ended December 31, 2003, with respect to our ability to continue as a going concern. Our ability to continue in the normal course of business is dependent upon its access to additional capital and the success of future operations. Uncertainties as to these matters raised substantial doubt about our ability to continue as a going concern at the date of such report. We Have a History of Operating Losses, and We May Not Be Profitable in the Future. We have incurred significant operating and net losses in the past and have discontinued all telecommunications operations. Management has no intention of reentering the telecommunications market. Currently, the Company has no significant income-producing assets. Additional Capital Required. Our business plan provides that we will attempt to complete additional acquisitions or merge with another entity. We believe that we will be required to raise additional capital in order to fund our business plan in the future. There can be no assurance that additional financing would be available to us or, if available, that it could be obtained on acceptable terms. We have previously financed our operations almost exclusively through the private sales of securities, debt and by delaying payments to vendors. Critical Accounting Policies Our discussion and analysis of our financial condition and results of operations is based upon our consolidated 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 assumptions about the effect of matters that are inherently uncertain. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities that exist at the date of our financial statements. While we believe our estimates are appropriate, actual results can, and often do, differ from those estimates. Our critical accounting policies are discussed below. Each of these areas involves complex situations and a high degree of judgment either in the application and interpretation of existing literature or in the development of estimates that impact our financial statements. Revenue Recognition. We recognize revenue in accordance with all applicable U.S. Generally Accepted Accounting Principles including SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB 101), which provides additional guidance on revenue recognition, as well as criteria for when revenue is realized and earned and related costs are incurred. The application of SAB 101 requires management's judgment on the amount and timing of revenue recognition. Should changes in conditions cause management to determine the revenue recognition criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected. 11 Accounts Receivable. A considerable amount of judgment is required in assessing the ultimate realization of our accounts receivable. We evaluate the collectability of our accounts receivable based on a combination of factors. We recognize allowances for doubtful accounts based on the length of time the receivables are past due, the current business environment and our historical experience. In circumstances where we are aware of a specific customer's inability to meet its financial obligations to us, we record a specific allowance against amounts due to reduce the net recognized receivable to the amount we reasonably believe will be collected. If the financial condition of our customers were to deteriorate or if economic conditions worsened, additional allowances may be required in the future. Goodwill and Intangibles. We had significant intangible assets related to goodwill and other acquired intangibles. The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgment by management. We periodically evaluate acquired businesses for potential impairment indicators. Our judgments regarding the existence of impairment are based on market conditions, legal factors and operational performance of our acquired businesses. Impairment of Long-Lived Assets. The Company reviews its long-lived assets for impairment when circumstances indicate that the book value of an asset may not be fully recovered by the undiscounted net cash flow generated over the remaining life of the related asset or group of assets. If the cash flows generated by the asset are not sufficient to recover the remaining book value of the asset, the Company is required to write down the value of the asset. In evaluating whether the asset will generate sufficient cash flow to recover its book value, the Company estimates the amount of cash flow that will be generated by the asset and the remaining life of the asset. In making our estimate, the Company considers the performance trends related to the asset, the likelihood that the trends will continue or change, both at the asset level as well as at the national economic level, and the length of time that we expect to retain the asset. Other Matters. We do not have any of the following: o Off-balance sheet financial arrangements; o Trading activities that include nonexchange traded contracts accounted for at fair value; or o Relationships and transactions with persons or entities that derive benefits from any nonindependent relationship other than the related party transactions discussed below. New Accounting Pronouncements We continually monitor and revise our accounting policies as developments occur. The following recently issued accounting pronouncements may impact the future presentation of our financial condition and results of operations. In November 2002, the EITF reached a consensus on Issue No. 00-21, Revenue Arrangements with Multiple Deliverables. EITF Issue No. 00-21 provides guidance on how to account for certain arrangements that involve the delivery or performance of multiple products, services and/or rights to use assets. The provisions of EITF Issue No. 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of EITF Issue No. 00-21 did not have a material impact on operating results or the financial condition of the Company. In December 2003, the FASB issued Interpretation No. 46 ("FIN 46R") (revised December 2003), Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51 ("ARB 51"), which addresses how a business enterprise should evaluate whether it has a controlling interest in an entity though means other than voting rights and accordingly should consolidate the entity. FIN 46R replaces FASB Interpretation No. 46 (FIN 46), which was issued in January 2003. Before concluding that it is appropriate to apply ARB 51 voting interest consolidation model to an entity, an enterprise must first determine that the entity is not a variable interest entity (VIE). As of the effective date of FIN 46R, an enterprise must evaluate its involvement with all entities or legal structures created before February 1, 2003, to determine whether consolidation requirements of FIN 46R apply to those entities. There is no grandfathering of existing entities. Public companies must apply either FIN 46 or FIN 46R immediately to entities created after January 31, 2003 and no later than the end of the first reporting period that ends after March 15, 2004. The adoption of FIN 46 had no effect on the Company's consolidated financial position, results of operations or cash flows. 12 In April 2003, FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS 133, Accounting for Derivatives and Hedging Activities. SFAS 149 is generally effective for derivative instruments, including derivative instruments embedded in certain contracts, entered into or modified after June 30, 2003. The adoption of SFAS 149 did not have a material impact on the operating results or financial condition of the Company. In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS 150 clarifies the accounting for certain financial instruments with characteristics of both liabilities and equity and requires that those instruments be classified as liabilities in statements of financial position. Previously, many of those financial instruments were classified as equity. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. On November 7, 2003, FASB Staff Position 150-3 was issued, which indefinitely deferred the effective date of SFAS 150 for certain mandatory redeemable non-controlling interests. As the Company does not have any of these financial instruments, the adoption of SFAS 150 did not have any impact on the Company's consolidated financial statements. In December 2003, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition. SAB 104 revises or rescinds portions of the interpretive guidance included in Topic 13 of the codification of staff accounting bulletins in order to make this interpretive guidance consistent with current authoritative accounting and auditing guidance and SEC rules and regulations. The adoption of SAB 104 did not have a material effect on the Company's results of operations or financial condition. Certain Related Party Transactions See Item 13 of this Annual Report on Form 10-KSB. ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Financial Statements and notes thereto are included elsewhere in this Annual Report on Form 10-KSB as follows: Page ---- Report of Tanner + Co................................................. F-1 Consolidated Balance Sheet............................................ F-2 Consolidated Statement of Operations.................................. F-3 Consolidated Statement of Changes in Stockholders' Deficit............ F-4 Consolidated Statement of Cash Flows.................................. F-5 Notes to Consolidated Financial Statements............................ F-6 ITEM 8. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 8(a). CONTROLS AND PROCEDURES The Registrant's Chief Executive Officer, President and Chief Financial Officer (the "Certifying Officer"), is responsible for establishing and maintaining disclosure controls and procedures for the Registrant. The Certifying Officer has concluded (based on the evaluation of these controls and procedures as of the end of the period covered by this report) that the design and operation of the Registrant's disclosure controls and procedures (as defined in Rule 15d-15(e) under the Securities Exchange Act of 1934) are effective. No significant changes were made in the Registrant's internal controls or in other factors that could significantly affect those controls subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. 13 PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT A. Identification of Directors and Executive Officers. The directors and officers of CCC GlobalCom, who will serve until the next annual meeting of shareholders or until their successors are elected or appointed and qualified, are set forth below:
Name Age Director Since Expiration of Term Position with CCC GlobalCom - ---- --- -------------- ------------------ --------------------------- Paul E. Licata............. 54 June 2000 June 2004 Chief Executive Officer/President/Director Robert W. Livingston....... 57 October 2003 June 2004 Director Joseph P. Tate............. 59 August 2002 June 2003 Director Douglas Morris............. xx June 2003 June 2004 Director Garry Bolinder............. xx June 2003 June 2004 Director
Paul E. Licata. Mr. Licata has been President, Director and Vice Chairman of the Board of CCC GlobalCom since June 2000. On August 8, 2002, Mr. Licata was elected Chief Executive Officer of the Company. From August 1999 to June 2000 Mr. Licata was President and Director of CCC GlobalCom, a privately-held company. Mr. Licata has practiced law in Houston, Texas for the past 26 years. His practice has included business and corporate law matters as well as litigation. He earned his undergraduate degree from the University of Texas and his law degree from the University of Houston. During his legal career Mr. Licata has represented various corporations, both foreign and domestic, and has headed foreign companies' investments into the U.S. real estate market. Mr. Licata has also been instrumental in U.S. companies obtaining licenses to do telecommunications business in South America. Mr. Licata is licensed in the Supreme Court of Texas and all federal courts in Texas, including the Court of Appeals. Robert W. Livingston. Mr. Livingston has been a director since October 2003. He is currently President of Cypress Telecommunications Corporation. Prior to leaving the Company in April 2003, Mr. Livingston served as Executive Vice President of CCC GlobalCom. In addition, Mr. Livingston served as the Chief Executive Officer of Ciera from December 1998. Mr. Livingston formed Ciera in December 1998, which was acquired by CCC GlobalCom in June 2000. Mr. Livingston was a Director of Ciera since its inception in December 1998 until April 2003 when he left the Company. From 1997 to 1998 he was Chief Operating Officer of Wireless Communications Technology, Inc., a cellular telephone operator in Africa. From 1996 to 1997 he was a Vice President of GST Telecommunications, a publicly-traded telecommunications company. From 1987 to 1995 he was CEO of Texas-Ohio Communications, a switchless reseller of long-distance telephone service. Mr. Livingston holds a Bachelor of Business Administration in Accounting and Finance from Sam Houston State University. Joseph P. Tate. Mr. Tate has been a director since August 2002. He is currently President and CEO of Tate Investments. Mr. Tate has more than 35 years of entrepreneurial experience. In 1967, Mr. Tate founded Valley Sanitation, a two-truck waste hauling business in Fort Atkinson, Wisconsin. In 1993, Mr. Tate merged what had become a 12-location business with 10 others to form Superior Services, Inc., a solid waste, special waste and hazardous waste business serving the Midwest. By 1999, Superior had a successful initial public offering, a secondary offering and finally sold to Vivendi, a French conglomerate. Mr. Tate is also a board member of Second Harvest Food Bank, co-chair of the Second Harvest Foundation and board member of Next Door Foundation. Mr. Tate holds a Bachelor of Science Management and Administration from Indiana University. Douglas P. Morris. Mr. Morris, is an investor in a privately-held business consulting firm. The firm is engaged in consulting with privately-held and publicly-held companies relating to management, debt financing and equity financing. Mr. Morris is an officer of Celtic Investment, Inc., a publicly held company engaged in the financial services business. From 1984, to 1988, Mr. Morris was self-employed in managing his own investments. Mr. Morris received his Masters Degree in Public Administration at the University of Southern California in 1982, and his Bachelor of Arts Degree in Judicial Administration from Brigham Young University in 1978. B. Significant Employees. The Company has one employee as of the date of this filing. 14 C. Family Relationships. There are no family relationships among CCC GlobalCom's officers and directors. D. Other Involvement in Certain Legal Proceedings. There have been no criminal proceedings and no judgments or injunctions material to the evaluation of the ability and integrity of any director or executive officer during the last five years. Compliance with Section 16(a). CCC GlobalCom is not a reporting company under either Section 12(b) or Section 12(g) of the Securities and Exchange Act of 1934 and accordingly, is not subject to Section 16(a) of such Act. E. Board of Director Committees The Board of Directors has not appointed any standing committees at this time. There is no separately-designated standing audit committee at this time and the entire Board of Directors acts as the Company's audit committee. The Board of Directors does not have an independent "financial expert" because it does not believe the scope of the Company's activities to date have justified the expenses involved in obtaining such a financial expert. In addition, the Company's Common Stock is not listed on a national exchange and the Company is not subject to the special corporate governance requirements of such exchanges. F. Code of Ethics The Company has not adopted a code of ethics that applies to its executive officers. The Company does not currently have a plan in place to prepare and adopt a code of ethics since significantly all of the operations of the Company have been discontinued. ITEM 10. EXECUTIVE COMPENSATION Compensation Summary The following table sets forth a summary of all compensation during the last three fiscal years for (1) CCC GlobalCom's Chief Executive Officer, and (2) the executive officers of CCC GlobalCom whose aggregate annual salary and bonus exceed $100,000 for the year ended December 31, 2003, 2002 or 2001 (the "named executive officers"). 15
Securities Name and Principal Annual Other Restricted Underlying All Other Position Year Ended Dec. 31, Salary Bonus Annual Comp Stock Award(s) Options /SARs Comp Note - ------------------ ------------------- -------- ----- ----------- -------------- ------------- --------- ----- Paul E. Licata 2003 $207,284 $2,000 50,000 (1) Chief Executive 2002 $208,893 $7,200 $60,000 500,000 (2) Officer and President 2001 $192,000 $21,000 600,000 (3) Mario H. Hernandez 2003 $124,343 (4) Controller 2002 $62,500 - ----------
(1) Mr. Licata was awarded on October 9, 2002, 50,000 shares of restricted stock pursuant to board resolution to issue 50,000 shares of common stock to each of the current board members (at that date) as additional compensation. The shares were issued in 2003. (2) Mr. Licata was awarded August 19, 2002, 500,000 shares of restricted common stock pursuant to his Addendum to Employment Contract upon elected Chief Executive Officer of CCC GlobalCom. (3) Mr. Licata was awarded 600,000 shares of restricted common stock, under terms of an Escrow Agreement that was fulfilled November 30, 2001 when the Company purchased the assets of Incomnet Communications Corp. These shares have been valued at $0.035 per share based upon an independent appraisal report. (4) Mr. Hernandez resigned from the Company during the first quarter 2004 to pursue other opportunities. Options/SAR Grants in Last Fiscal Year The following table sets forth the stock option grants that have been awarded to executive officers of CCC GlobalCom.
Number of Securities Underlying Options/SARs Percent of Total Options/SARs Exercise or Base Name Granted Granted to Employees Price ($/Share) Expiration Date Notes - ---- ----------------------- ----------------------------- ---------------- --------------- ----- Mario H. Hernandez 25,000 3% $1.00 11/18/12 (1)
- ----------- (1) Options issued under CCC GlobalCom's 2001 Stock Incentive Plan. See 2001 Stock Incentive Plan disclosure below for more information. Aggregate Option Exercises and Number/Value of Unexercised Options None. Compensation of Directors On October 9, 2002 the board resolved to issue 50,000 shares of common stock to each of the current board members of the Company as additional compensation. The shares were issued during 2003 to the board members named in the resolution. Employment Agreements In February 2001 CCC GlobalCom entered into an employment agreement with Mr. Licata that expires February 16, 2006. The agreement is automatically extended each year for an additional year, unless either party gives written notice 60 days in advance of the anniversary date. The agreement provides the 16 officer/director with an annual base salary of $192,000, business expense reimbursement, certain employee benefits or equivalent compensation, vacation and paid holidays, office space and eligibility for: 1) 500,000 sign-on shares 2) bonuses; 3) other benefit programs which may be offered by CCC GlobalCom to its employees; 4) a lump sum termination payment of 300% of the officer's/director's gross income for the year preceding termination. In the event the officer/director is terminated for other than cause, the officer/director will be entitled to receive all or part of the items noted above; including a bonus, if paid in the year preceding termination for the remaining term of the agreement as if employment had not terminated. The agreement must be assigned to acquiring or successor entities and termination of the officer/director must be approved by a majority of the directors of the Company. In August 2002 Mr. Licata's employment agreement was amended upon his election to Chief Executive Officer of CCC GlobalCom Corporation. All terms of the employment agreement remain the same except for annual base salary and an additional issuance of shares of stock. Mr. Licata's annual base salary was changed from $192,000 to $220,000. In addition, Mr. Licata was also awarded 500,000 shares of restricted stock. See Executive Compensation disclosure above for more information. 2001 Stock Incentive Plan On June 22, 2001 the shareholders approved CCC GlobalCom's 2001 Stock Incentive Plan (the "2001 Plan") which provides for the issuance of a maximum 4,000,000 shares of common stock pursuant to the exercise of options granted under the 2001 Plan or pursuant to stock awards granted under the 2001 Plan. The Options granted under the 2001 Plan may be Incentive Stock Options pursuant to Section 422 of the Internal Revenue Code of 1986 ("ISOs") or Nonqualified Stock Options ("NSOs"). The Board of Directors administers the Plan. The Option price and terms is to be set for each Option by the Committee administering the Plan. NSO options granted under the Plan may have a term not exceeding ten years. ISO options granted under the Plan may have a term not exceeding five years. The Committee may grant options to employees (including officers and directors, or consultants). At December 31, 2003, 68,520 stock options had been issued under the 2001 Plan to employees of the Company at an exercise price of $1.00. All other stock options that had been issued as of December 31, 2003, were issued outside the current stock options plan. No stock options were issued in 2004. Long-term Incentive Plan Awards Other than its 2001 Stock Incentive Plan, we do not maintain any long-term incentive plans. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT a. The following table sets forth a summary of security ownership of certain beneficial owners. Any person (including any "group") that is known to be the beneficial owner of more than five percent of CCC GlobalCom's common stock as of March 31, 2003. Amount and Nature of Percent Name and Address of Beneficial Owner Beneficial Ownership(1) of Class - ------------------------------------ ------------------------ -------- Paul E. Licata(1) 10802 Hunters Forest, Houston TX 2,816,666 11% Z. A. Hakim(2) 1114 Dominion Drive, Katy, TX 1,797,613 7% - ----------- (1) A total of 1,266,666 of these shares are owned by Paul Licata, P.C. and 1,000,000 of these shares are owned by 1999 DC Trust, both of which are affiliates of Mr. Licata. Mr. Licata is the owner of 550,000 shares. (2) Mr. Hakim is the owner of 1,797,613 shares. A total of 23,000 shares are owned by AMT Trading Inc. and 23,000 shares are owned by CCC Communications LTD. Both entities are affiliates of Mr. Hakim. b. The following table details the security ownership of management of CCC GlobalCom as of March 30, 2004, beneficially owned by all directors and each of the named executives and directors and executive officers as a group. 17 Amount and Nature Percent Name and Address of Beneficial Owner of Beneficial Ownership(1) of Class - ------------------------------------ -------------------------- ------- Paul E. Licata 10802 Hunters Forest, Houston TX 2,766,666 7% Robert W. Livingston(2) 3930 Bolivia, Pasadena, TX 1,361,677 4% Douglas Morris 340 East 400 South Salt Lake City, UT 776,523 3% Garry Bolinder 1250 Wood Branch Park Drive 660,411 3% Houston, TX Joseph P. Tate 3252 North Lake Drive, Milwaukee WI 750,000 3% Directors and Executive Officers 6,065,277 24% - ----------- (1) See notes to the first table for details of the beneficial ownership of Mr. Hakim and Mr. Licata. c. Changes in Control. No changes in control of CCC GlobalCom are currently contemplated. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Employment Agreements-CCC GlobalCom Officers In February 2001 CCC GlobalCom entered into employment agreements with two members of executive management, who were also officers, directors and shareholders, that expire February 16, 2006. The agreements automatically extended each year for an additional year unless either party gives written notice 60 days in advance of the anniversary date. The agreements provide the officer/director with an annual base salary, business expense reimbursement, certain employee benefits or equivalent compensation, vacation and paid holidays, office space and eligibility for: 1) sign-on shares; 2) bonuses; 3) other benefit programs which may be offered by CCC GlobalCom to its employees; 4) a lump sum termination payment of 300% of the officer's/director's gross income for the year preceding termination. In the event the officer/director is terminated for other than cause, the officer/director will be entitled to receive all or part of the items noted above; including a bonus, if paid in the year preceding termination, for the remaining term of the agreement as if employment had not terminated. The agreement must be assigned to acquiring or successor entities and termination of the officer/director must be approved by a majority of the directors of CCC GlobalCom. In August 2002 Mr. Licata's employment agreement was amended upon his election to Chief Executive Officer of CCC GlobalCom Corporation. All terms of the employment agreement remain the same except for annual base salary and an additional issuance of shares of stock. Mr. Licata's annual base salary was changed from $192,000 to $220,000. In addition, Mr. Licata was also awarded 500,000 shares of restricted stock. See Executive Compensation disclosure above for more information. During 2003, one of the members of Executive management left the Company and entered into an agreement with the Company to terminate the agreement without any further obligation by either party. During the years ended December 31, 2003 and 2002, the Company paid consulting fees to a board member totaling approximately $54,000 and $64,000, respectively. The Company also paid office rent for that board member totaling approximately $14,000 and $33,000, respectively for the years ended December 31, 2003 and 2002. Stock Bonus to Officers On August 31, 2001 CCC GlobalCom granted to an officer/director a stock bonus of 600,000 shares, under terms of an Escrow Agreement that was fulfilled November 30, 2001 when CCC GlobalCom purchased the assets of Incomnet. These shares have been valued at a price of $0.035 per share based upon an independent appraisal and related compensation expense of $42,000 has been recorded in our 2001 results. 18 Consulting Agreement with Shareholder In January 2001 CCC GlobalCom entered into a consulting agreement with a company that is a shareholder and an affiliate of a current shareholder and a director. This agreement engaged the consultant to assist CCC GlobalCom with shareholder relations, financial public relations, review of CCC GlobalCom's business plan, introductions to lending institutions and securities brokers, and assisting the Company in evaluating and structuring potential mergers or acquisitions. The term of the agreement expired January 9, 2002 and CCC GlobalCom compensated the consulting firm $90,000 during 2001 for services performed under this agreement. The agreement included a covenant not to compete provision that extended through January 2004 that restricts the consultant from engaging in a business that competes with CCC GlobalCom. The Company issued 400,000 shares of common stock valued at $48,000 which was the fair market value of the common stock during the year ended December 31, 2002 for services performed under this agreement. Stock Grants for Services Provided by Shareholders CCC GlobalCom entered into consulting agreements with a company that is a shareholder and an affiliate of a director and an individual that is a shareholder. The agreements called for consulting to be provided to CCC GlobalCom in exchange for stock. CCC GlobalCom issued 112,768 shares of common stock in 2002 for services performed under these consulting agreements. The Company recorded consulting expense of approximately $366,000 in 2001 related to these agreements. ITEM 13. EXHIBITS, AND REPORTS ON FORM 8-K Exhibit Number Document Description ------- -------------------- 3.1 Articles of Incorporation-incorporated herein by reference to Exhibit 3.1 to Registration Statement on Form S-18 (SEC File No. 33-30365-C). 3.2 Bylaws-incorporated herein by reference to Exhibit 3.2 to Registration Statement on Form S-18 (SEC File No. 33-30365C). 10.1 CCC GlobalCom Corporation 2001 Stock Incentive Plan-incorporated herein by reference to Exhibit 10.2 on Form 10QSB Filed on August 10, 2001 (SEC File No. 33-30365-C). 10.3 Employment Agreement between CCC GlobalCom Corporation and Paul E. Licata-incorporated herein by reference to Exhibit 10.3 on Form 10-KSB Filed on April 3, 2000 (SEC File No. 33-30365-C). 10.4 Employment Agreement Addendum between CCC GlobalCom Corporation and Paul E. Licata-incorporated herein by reference to Exhibit 10.4 on Form 10-KSB on April 15, 2003 (SEC File No. 33-3-365-C). 10.6 Second Amended and Restated Loan and Security Agreement between Ciera Network Systems, Inc., CCC GlobalCom Corporation and RFC Financial Corporation-incorporated herein by reference to Exhibit 10.6 on Form 10-KSB Filed on April 15, 2003 (SEC File No. 33-30365-C). 10.12 Settlement agreement between CCC GlobalCom Corporation and Z. Hakim-incorrporated herein by reference to Exhibit 10.12 on Form 10-QSB filed August 22, 2004 (SEC File No. 33-30365-C). 10.13 Mutual Limited Release between Ciera Network Sytems, Inc and CCC GlobalCom Corporation and Textron Financial Corporation-incorporated herein by reference to Exhibit 10.13 on Form 10-QSB filed on August 22, 2004 (SEC File No. 33-30365-C). 31.1 Certification of Chief Executive Officer/Principal Financial Officer 32.1 Certification of Chief Executive Officer/Principal Financial Officer 19 Reports on Form 8-K: (1) Pursuant to the requirements of Section 13 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. SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CCC GLOBALCOM CORPORATION Date: April 14, 2004 By /s/ Paul E. Licata ------------------ Paul E. Licata, CEO and President Principal Executive and Principal Financial Officer In accordance with the Securities Exchange Act, this report has been signed below by the following persons on behalf of CCC GlobalCom and in the capacities and on the dates indicated. Signature Capacity Date --------- -------- ---- /s/ Paul E. Licata Principal Executive Officer/ April 14, 2004 - ------------------------ Principal Financial Paul E. Licata Officer/Director /s/ Robert Livingston Director April 14, 2004 - ------------------------ Robert Livingston /s/ Douglas Morris Director April 14, 2004 - ------------------------ Douglas Morris /s/ Garry Bolinder Director April 14, 2004 - ------------------------ Garry Bolinder /s/ Joseph P. Tate Director April 14, 2004 - ------------------------ Joseph P. Tate 20 CCC GLOBALCOM CORPORATION Consolidated Financial Statements December 31, 2003 and 2002 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of CCC GlobalCom Corporation and Subsidiaries We have audited the consolidated balance sheet of CCC GlobalCom Corporation and Subsidiaries (the Company) as of December 31, 2003, and the related consolidated statements of operations, stockholders' deficit, and cash flows for the years ended December 31, 2003 and 2002. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of CCC GlobalCom Corporation and Subsidiaries as of December 31, 2003, and the results of their operations and their cash flows for the years ended December 31, 2003 and 2002 in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has a deficit in working capital, a stockholders' deficit at December 31, 2003, has incurred substantial losses from operations and has discontinued the operations of its operating subsidiaries. As discussed in Note 2 to the consolidated financial statements, there is substantial doubt about the ability of the Company to continue as a going concern. Management's plans in regard to that matter are also described in note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/Tanner + Co. Salt Lake City, Utah February 27, 2004 CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Consolidated Balance Sheet December 31, 2003 - -------------------------------------------------------------------------------- Assets ------ Current assets: Cash and cash equivalents $ 7,758 Prepaid expense and other current assets 24,413 Assets from discontinued operations 476,277 --------------- Total current assets $ 508,448 --------------- - -------------------------------------------------------------------------------- Liabilities and Stockholders' Deficit ------------------------------------- Current liabilities: Accounts payable $ 116,989 Accrued expenses 74,270 Liabilities from discontinued operations 23,711,669 --------------- Total current liabilities 23,902,928 --------------- Commitments and contingencies - Stockholders' deficit: Common stock, $.001 par value, authorized 100,000,000 shares; issued and outstanding 25,774,490 shares 25,775 Additional paid-in capital 10,786,763 Accumulated deficit (34,207,018) --------------- Total stockholders' deficit (23,394,480) --------------- $ 508,448 --------------- - -------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements. F-1
CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Consolidated Statement of Operations Years Ended December 31, - ------------------------------------------------------------------------------------------------ 2003 2002 ------------------------------------ Revenues $ - $ - General and administrative expenses 500,867 1,682,764 ------------------------------------ Loss from operations (500,867) (1,682,764) ------------------------------------ Other income (expense): Interest income 287 6,179 Interest expense - (762) Other, net - 6,994 ------------------------------------ 287 12,411 ------------------------------------ Loss from continuing operations before provision for income taxes (500,580) (1,670,353) Income taxes - - ------------------------------------ Net loss from continuing operations (500,580) (1,670,353) ------------------------------------ Discontinued operations: Loss from discontinued operations, net of income taxes (5,711,748) (18,040,608) Gain on disposition of discontinued operations, net of income taxes 13,074,682 - ------------------------------------ Income (loss) from discontinued operations 7,362,934 (18,040,608) ------------------------------------ Net income (loss) 6,862,354 (19,710,961) Preferential dividend (50,669) - ------------------------------------ Net income (loss) applicable to common shareholders $ 6,811,685 $ (19,710,961) ------------------------------------ Net loss per share from continuing operations $ (0.02) $ (0.54) Net income (loss) per share from discontinued operations $ 0.25 $ - ------------------------------------ Net income (loss) per share - basic and diluted $ 0.23 $ (0.54) ------------------------------------ Weighted average shares - basic and diluted 29,554,000 36,207,000 ------------------------------------ - ------------------------------------------------------------------------------------------------ See accompanying notes to consolidated financial statements. F-2
CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Consolidated Statement of Changes in Stockholders' Deficit Years Ended December 31, 2003 and 2002 - ------------------------------------------------------------------------------------------------------------------------------------ Common Stock Additional ------------------------------ Paid in Accumulated Stockholders' Shares Amount Capital Deficit Deficit ---------------------------------------------------------------------------------------- Balance, January 1, 2002 34,926,150 $ 34,926 $ 8,234,947 $ (21,307,742) $ (13,037,869) Stock issued for: Satisfaction of payable 912,768 913 393,584 - 394,497 Services 400,000 400 47,600 - 48,000 Equipment 50,000 50 162,450 - 162,500 Stock bonus awarded to: Officers/directors 500,000 500 59,500 - 60,000 Employee 300,000 300 311,700 - 312,000 Exercise of warrant 125,000 125 499,875 - 500,000 Warrants issued related to debt - - 975,000 - 975,000 Net loss - - - (19,710,961) (19,710,961) ---------------------------------------------------------------------------------------- Balance, December 31, 2002 37,213,918 37,214 10,684,656 (41,018,703) (30,296,833) Stock issued for services 500,000 500 39,499 - 39,999 Shares returned by shareholder (11,939,428) (11,939) 11,939 - - Preferential dividend - - 50,669 (50,669) - Net income - - - 6,862,354 6,862,354 ---------------------------------------------------------------------------------------- Balance, December 31, 2003 25,774,490 $ 25,775 $ 10,786,763 $ (34,207,018) $ (23,394,480) ---------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ See accompanying notes to consolidated financial statements. F-3
CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Consolidated Statement of Cash Flows Years Ended December 31, - ------------------------------------------------------------------------------------------------- 2003 2002 ------------------------------------- Cash flows from operating activities: Net income (loss) $ 6,862,354 $ (19,710,961) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Depreciation and amortization 1,703,923 3,726,980 Bad debt expense 466,903 - Impairment loss 257,878 - Stock issued for compensation - 372,000 Stock issued for services 39,999 48,000 Loss on sale/abandonment of fixed assets 507,088 2,312,266 Amortization of warrant costs 103,600 198,000 Gain from disposal of subsidiary (183,052) - Gain from disposal of debt (13,309,006) - (Increase) decrease in: Restricted cash 107,543 21,193 Accounts receivable 1,269,322 2,263,465 Inventory 14,465 - Prepaid expenses 94,489 491,716 Other assets 194,089 108,693 Increase (decrease) in: Cash overdraft 45,916 - Accounts payable 1,644,183 8,547,429 Accrued compensation and other (376,272) (186,012) Excise taxes payable 884,810 1,214,958 Accrued expenses (784,513) 1,577,223 Deferred revenue 321,749 (103,039) ------------------------------------- Net cash (used in) provided by operating activities (134,532) 881,911 ------------------------------------- Cash flows from investing activities: Proceeds from sale of subsidiary 170,000 - Purchase of property and equipment (32,086) (125,808) Net cash paid in acquisition (140,000) - ------------------------------------- Net cash used in investing activities (2,086) (125,808) ------------------------------------- Cash flows from financing activities: Payments on long-term debt (234,032) (217,852) Net decrease on line of credit 165,678 (972,577) ------------------------------------- Net cash used in financing activities (68,354) (1,190,429) ------------------------------------- Net change in cash (204,972) (434,326) Cash and cash equivalents at beginning of year 212,730 647,056 ------------------------------------- Cash and cash equivalents at end of year $ 7,758 $ 212,730 ------------------------------------- Supplemental disclosure of cash flow information: Cash paid during the year for: Interest $ 247,697 $ 1,285,444 ------------------------------------- Income taxes $ - $ - ------------------------------------- - ------------------------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements. F-4
CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2003 and 2002 - -------------------------------------------------------------------------------- 1. Organization Organization and CCC GlobalCom Corporation, a Nevada corporation ("CCC Significant GlobalCom" or the "Company"), conducted operations in Accounting the telecommunications industry through its wholly-owned Policies subsidiaries, Ciera Network Systems, Inc. ("Ciera"), Equalnet, Inc. ("Equalnet") and Equalnet, LLC. The subsidiaries provided local, long-distance and prepaid communications services in the United States. During the current year, management discontinued all of the telecommunications industry operations. On August 28, 2003 Ciera filed for Chapter 7 bankruptcy. On January 4, 2004 Equalnet filed for Chapter 11 bankruptcy. The Company is currently exploring other business opportunities. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Ciera Network Systems, Inc, Equalnet, Inc. and Equalnet LLC. All significant intercompany balances and transactions have been eliminated in consolidation. In as much as the Company discontinued all operations relating to the telecommunications industry the financial statements reflect those operations as discontinued operations. Expenses not included in discontinued operations are general and administrative costs. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities to the Company of three months or less to be cash equivalents. Revenue Recognition Revenues are derived primarily from sales of local and long-distance telephone services to residential and commercial customers, prepaid calling cards, and prepaid cellular cards. Revenues for sales of local and long-distance telephone services to residential and commercial customers and prepaid calling cards are recognized as services are provided to customers that have entered into binding agreements with a price that is fixed and determinable and when collection is reasonably assured. Deferred revenues arise primarily from pre-billing for local telephone services. These amounts are recognized over the period for which the services are provided. - -------------------------------------------------------------------------------- F-5 CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 1. Organization Revenue Recognition - Continued and Revenues for prepaid cellular cards are recognized at Significant the time of the sale of the card since the Company is Accounting acting as a pass-through agent for the cellularcarrier Policies and has no further obligation after the sale is made. At Continued the time of the sale of the prepaid cellular card, the Company has provided its service, a binding agreement has been entered into, a price is fixed and determinable and collection is reasonably assured. Stock Based Compensation The Company accounts for stock-based compensation under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in the net loss as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net loss and loss per share if the company had applied the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation. Years Ended December 31, ---------------------------------- 2003 2002 ---------------------------------- Net income (loss) - as reported $ 6,811,685 $ (19,710,961) Less: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects. - (328,000) ---------------------------------- Net income (loss) - pro forma $ 6,811,685 $ (20,038,961) ---------------------------------- Income (loss) per share - as reported $ .23 $ (.54) ---------------------------------- Income (loss) per share - pro forma $ .23 $ (.55) ---------------------------------- - -------------------------------------------------------------------------------- F-6 CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 1. Organization The fair value of each option grant is estimated in the and date of grant using the Black-Scholes option pricing Significant model with the following assumptions: Accounting Policies Continued December 31, ---------------------------------- 2003 2002 ---------------------------------- Expected dividend yield - - Expected price volatility 143% 143% Risk-free interest rate 3.07 4.25 Expected life of options 5 years 5 years The weighted average fair value of options granted during is $0.05 per share. There were no options issued during 2003. Income Taxes The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Loss Per Common Share The computation of basic earnings (loss) per common share is based on the weighted average number of shares outstanding during each year. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year, plus the common stock equivalents that would arise from the exercise of stock options and warrants outstanding, using the treasury stock method and the average market price per share during the year. Options to purchase 78,000 shares and 1,702,000 shares of common stock at a range of $1.00 to $3.75 per share were outstanding at December 31, 2003 and 2002 respectively. There were no common stock equivalents as of December 31, 2003 and 2002. - -------------------------------------------------------------------------------- F-7 CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 1. Organization Impairment of Long-Lived Assets and The Company reviews its long-lived assets for impairment Significant whenever events or changes in circumstances indicate Accounting that the carrying amount of the assets may not be Policies recoverable through undiscounted future cash flows. If Continued it is determined that an impairment loss has occurred based on expected cash flows, such loss is recognized in the statement of operations. Concentration of Credit Risk and Significant Customers Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of trade receivables. In the normal course of business, the Company provides credit terms to its customers. Accordingly, the Company performs ongoing credit evaluations of its customers and maintains allowances for possible losses which, when realized, have been within the range of management's expectations. The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts. Accordingly, actual results could differ from those estimates. Reclassifications Some balances in the 2002 financial statements have been reclassified to conform to the current year presentation. 2. Going The accompanying consolidated financial statements have Concern been prepared assuming the Company will continue as a going concern. However, the Company has incurred significant recurring net losses, has a working capital deficit, has a stockholders' deficit and has discontinued all of its current operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. - -------------------------------------------------------------------------------- F-8 CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 2. Going Management's plans with respect to this uncertainty Concern include, among other matters, (1) raising capital Continued through issuance of equity, (2) finding an operating company to merge with that can generate cash flows from operations. There can be no assurance that management's plans will be successful. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. 3. Acquisition On May 30, 2003, the Company acquired certain assets of Tele-Direct, Inc. (Tele-Direct) an affiliate of Telefyne, Inc. The assets purchased included various fixed assets, inventory, customer contracts, and other intangible assets related to Tele-Direct's business of reselling common carrier telecommunications, including both domestic and international services and cellular services. The purchase price of $600,000 was paid with available cash of $140,000, proceeds from Textron Financial Corporation of $260,000 and a $200,000 note payable to Tele-Direct. The acquisition was accounted for using the purchase method of accounting. No amount of the purchase price was allocated to goodwill. Approximately $575,000 was allocated to the customer base. The consolidated financial statements reflect the operations of the acquired assets from the date of the acquistion. A breakdown of the acquisition is as follows: Customer base $ 574,835 Furniture and equipment 10,700 Inventory 14,465 Note payable (200,000) Advance from line of credit (260,000) ----------------- Net cash paid in acquisition $ 140,000 ----------------- - -------------------------------------------------------------------------------- F-9 CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 4. Discontinued In July 2003, one of the creditors of Ciera foreclosed Operations on all of the assets of Ciera, causing the local and long-distance service operations of the Company to cease. At that time, management determined to discontinue the operations of Ciera and on August 28, 2003, Ciera filed Chapter 7 Bankruptcy. In December 2003 management discontinued the operations of Equalnet due to the inability of the Company to service its debt. Equalnet filed for Chapter 11 bankruptcy on January 4, 2004. In addition, Telefyne, Inc. foreclosed February 18, 2004 on the assets sold to the Company on May 30, 2003 due to nonpayment of the note payable to Tele-Direct. The operations of Equalnet, Inc. from May 30, 2003 to December 31, 2003 are included in discontinued operations. Management has discontinued all operations related to telecommunications. Assets from discontinued operations consist of the following as of December 31, 2003: Non Bankruptcy Bankruptcy Post Total Prepetition Petition ----------------------------------------- Restricted cash $ 132,852 $ 132,852 $ - Accounts receivable, net 129,750 - 129,750 Prepaid expenses 28,675 28,675 - Property and equipment, net 35,700 - 35,700 Intangible assets, net 149,300 - 149,300 ----------------------------------------- Assets from discontinued operations $ 476,277 $ 161,527 $ 314,750 ----------------------------------------- - -------------------------------------------------------------------------------- F-10 CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 4. Discontinued Liabilities from discontinued operations consist of the Operations following as of December 31, 2003: Continued Non Bankruptcy Bankruptcy Post Total Prepetition Petition --------------------------------------------- Cash overdraft $ 45,916 $ 45,916 $ - Accounts payable 15,957,744 15,722,779 234,965 Accrued compensation 19,412 19,412 - Excise taxes payable 3,342,506 3,342,506 - Other accrued expenses 1,702,090 1,701,801 289 Deferred income 368,419 - 368,419 Notes payable 2,275,582 1,966,164 309,418 --------------------------------------------- Liabilities from discontinued operations $ 23,711,669 $ 22,798,578 $ 913,091 --------------------------------------------- Condensed discontinued operations consist of the following for the years ended December 31: 2003 2002 ------------------------------------ Revenue $ 12,169,241 $ 26,722,393 Costs and expenses (17,880,989) (44,763,001) ------------------------------------ Loss before income taxes (5,711,748) (18,040,608) Income taxes - deferred - - ------------------------------------ Net loss $ (5,711,748) $ (18,040,608) ------------------------------------ 5. Stock-Based As of December 31, 2003 and 2002, the Company had 78,000 Compensation and 1,702,000 options outstanding, respectively, to purchase shares of the Company's common stock. The options are exercisable at amounts in the range of $1.00 to $3.75 and are fully vested by the end of 2003. The options expire beginning at various dates through November 2012. - -------------------------------------------------------------------------------- F-11 CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 5. Stock-Based Changes in stock options were as follows: Compensation Continued Shares Exercise Underlying Price Options Range ------------------------------------ Outstanding at January 1, 2002 915,000 $ 3.50 - 5.00 Granted 842,000 1.00 Expired or canceled (55,000) 5.00 ------------------------------------ Outstanding at December 31, 2002 1,702,000 $ 1.00 - 3.75 Expired or canceled (1,624,000) $ 1.00 - 3.75 ------------------------------------ Outstanding at December 31, 2003 78,000 $ 1.00 ------------------------------------ Exercisable at December 31, 2003 78,000 $ 1.00 ------------------------------------ The following table summarizes information about stock options outstanding at December 31, 2003: Options and Warrants Options and Warrants Outstanding Exercisable ---------------------------------------------------------------- Weighted Average Number Remaining Weighted Number Weighted Range of Outstanding Contractual Average Exercisable Average Exercise At Life Exercise At Exercise Prices 12/31/03 (Years) Price 12/31/03 Price ----------------------------------------------------------------------------- $ 1.00 78,000 8.88 $ 1.00 78,000 $ 1.00 ------------------------------------------------------------------------------ The Company has a Stock Option Plan (the Option Plan) which reserves 4,000,000 shares of the Company's authorized but unissued common stock for the granting of stock options. The Option Plan provides for the grant of incentive stock options and non-statutory stock options to employees, non-employee directors of the Company and consultants. The Option Plan is administered by the Board of Directors or a Compensation Committee, which determines the terms of options granted including the exercise price, the number of shares subject to the option, and the exercisability of the option. At December 31, 2003, 842,000 stock options had been issued under the stock option plan. All other stock options that had been issued as of December 31, 2003 were issued outside of the current stock option plan. - -------------------------------------------------------------------------------- F-12 CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 6. Commitments Operating Leases and The Company has noncancellable operating leases, Contingencies primarily for its various office space and equipment. Rental expense for these operating leases for the years ended December 31, 2003 and 2002 was approximately $768,000 and $1,034,000. Future minimum lease payments under noncancellable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2003 are approximately: Years Ending December 31, ------------------------- 2004 $ 594,000 2005 210,000 2006 177,000 2007 7,000 Thereafter - ------------------ $ 988,000 ------------------ Taxes There is a possibility that the Company could be contingently liable for tax liabilities of its subsidiaries that are currently in Chapter 7 and Chapter 11 bankruptcy. Management cannot estimate the liklihood of future liabilities to the Company arising from the tax liabilities of its bankrupt subsidiaries. 7. Litigation The Company is involved in litigation which arise during the ordinary course of business. Management believes that the defenses have merit and is vigorously defending its positions. It is not possible to determine the outcome of this litigation. These financial statements do not reflect any amount should the litigation be resolved against the Company. - -------------------------------------------------------------------------------- F-13 CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 8. Related Party Consulting Services Provided by a Board Member Transactions During the years ended December 31, 2003 and 2002, the Company paid consulting fees to a board member totaling approximately $54,000 and $64,000, respectively. The Company also paid office rent for that board member totaling approximately $14,000 and $33,000 respectively for the years ended December 31, 2003 and 2002. 9. Supplemental During the year ended December 31, 2003, the Company: Disclosure of Cash Flow o Had 11,939,428 shares of the Company's common Information stock returned by a major shareholder causing an increase in additional paid-in-capital and a decrease in common stock of $11,939. o Recorded a preferential dividend of $50,669 caused by a major shareholder giving shares of stock to certain other shareholders. The shares were valued at the fair market price on the date of the agreement. o Sold it's interest in GlobalTel in exchange for cash of $170,000 and a note receivable of $20,000 included on the Company's balance sheet under the caption other assets. o The Company gave up assets from discontinued operations totaling $2,611,189 in satisfaction of liabilities from discontinued operations totaling $15,920,195. A gain on disposition of discontinued operations of $13,309,006 was recognized. o Acquired certain assets of Tele-Direct as follows: Customer base $ 574,835 Furniture and equipment 10,700 Inventory 14,465 Note payable (200,000) Advance from line of credit (260,000) ---------------- Net cash paid in acquisition $ 140,000 ---------------- - -------------------------------------------------------------------------------- F-14 CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 9. Supplemental During the year ended December 31, 2002, the Company: Disclosure of Cash Flow o Refinanced $14,000,000 of the line of credit Information to term notes. Continued o Sold a portion of a customer base totaling $100,000 in exchange for satisfaction of a payable. o Acquired equipment with common stock valued at $162,500. o Satisfied accrued expenses of $394,497 by issuing the common stock. o Reduced the line of credit by $500,000 through the exercise of common stock warrants. o Decreased long-term debt by $777,000 as a result of the issuance of a warrant. o Acquired property and equipment of $442,440 through a capital lease. 10. Income The provision for income taxes differs from the amounts Taxes which would be provided by applying the statutory federal income tax rate to net loss before provision for income taxes for the following reasons: Years Ended December 31, ------------------------------------ 2003 2002 ------------------------------------ Federal income tax (provision) benefit at statutory rate $ (2,560,000) 8,255,000 Change in valuation allowance 2,428,000 (8,255,000) Permanent difference in discontinued operations 132,000 - ------------------------------------ $ - $ - ------------------------------------ - -------------------------------------------------------------------------------- F-15 CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 10. Income Deferred tax assets (liabilities) at December 31, 2003 Taxes are comprised of the following: Continued Net operating loss carry forward $ 13,529,000 Depreciation and amortization 149,000 Deferred revenue 137,000 Non-deductible accrued expense 8,000 ---------------------- 13,823,000 Valuation allowance (13,823,000) ---------------------- $ - ---------------------- A valuation allowance has been recorded for the full amount of the deferred tax asset due to the uncertaintly surrounding its ultimate realization caused by recurring losses. At December 31, 2003, the Company has approximately $36,269,000 of net operating loss carry forwards to offset future taxable income. These carry forwards begin expiring in 2020. 11. Fair Value The Company's financial instruments consist of cash, of Financial receivables, payables, and notes payable. The carrying Instruments amount of cash, receivables, and payables approximates fair value because of the short-term nature of these items. The carrying amount of notes payable approximates fair value as the individual borrowings bear interest at market interest rates. 12. Recent In November 2002, the EITF reached a consensus on Issue Accounting No. 00-21, Revenue Arrangements with Multiple Pronounce- Deliverables. EITF Issue No. 00-21 provides guidance on ments how to account for certain arrangements that involve the delivery or performance of multiple products, services and/or rights to use assets. The provisions of EITF Issue No. 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of EITF Issue No. 00-21 did not have a material impact on operating results or the financial condition of the Company. - -------------------------------------------------------------------------------- F-16 CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 12. Recent In December 2003, the FASB issued Interpretation No. 46 Accounting ("FIN 46R") (revised December 2003), Consolidation of Pronounce- Variable Interest Entities, an Interpretation of ments Accounting Research Bulletin No. 51 ("ARB 51"), which Continued addresses how abusiness enterprise should evaluate whether it has a controlling interest in an entity though means other than voting rights and accordingly should consolidate the entity. FIN 46R replaces FASB Interpretation No. 46 (FIN 46), which was issued in January 2003. Before concluding that it is appropriate to apply ARB 51 voting interest consolidation model to an entity, an enterprise must first determine that the entity is not a variable interest entity (VIE). As of the effective date of FIN 46R, an enterprise must evaluate its involvement with all entities or legal structures created before February 1, 2003, to determine whether consolidation requirements of FIN 46R apply to those entities. There is no grandfathering of existing entities. Public companies must apply either FIN 46 or FIN 46R immediately to entities created after January 31, 2003 and no later than the end of the first reporting period that ends after March 15, 2004. The adoption of FIN 46 had no effect on the Company's consolidated financial position, results of operations or cash flows. In April 2003, FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS 133, Accounting for Derivatives and Hedging Activities. SFAS 149 is generally effective for derivative instruments, including derivative instruments embedded in certain contracts, entered into or modified after June 30, 2003. The adoption of SFAS 149 did not have a material impact on the operating results or financial condition of the Company. - -------------------------------------------------------------------------------- F-17 CCC GLOBALCOM CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 12. Recent In May 2003, the FASB issued SFAS 150, Accounting for Accounting Certain Financial Instruments with Characteristics of Pronounce- Both Liabilities and Equity. SFAS 150 clarifies the ments accounting for certain financial instruments with Continued characteristics of both liabilities and equity and requires that those instruments be classified as liabilities in statements of financial position. Previously, many of those financial instruments were classified as equity. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. On November 7, 2003, FASB Staff Position 150-3 was issued, which indefinitely deferred the effective date of SFAS 150 for certain mandatory redeemable non-controlling interests. As the Company does not have any of these financial instruments, the adoption of SFAS 150 did not have any impact on the Company's consolidated financial statements. In December 2003, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition. SAB 104 revises or rescinds portions of the interpretive guidance included in Topic 13 of the codification of staff accounting bulletins in order to make this interpretive guidance consistent with current authoritative accounting and auditing guidance and SEC rules and regulations. The adoption of SAB 104 did not have a material effect on the Company's results of operations or financial condition. 13. Subsequent On January 4, 2004 Equalnet filed for protection under Events Chapter 11 of the U.S. Bankruptcy Code. On February 18, 2004 Telefyne, Inc. foreclosed and took possession of the assets previously sold to the Company on May 30, 2003 (see Note 3) due to nonpayment by the Company on the note payable to Tele-Direct. On February 25, 2004 Equalnet's Chapter 11 bankruptcy was dismissed. Subsequent to December 31, 2003, the Company has raised $140,000 in equity financing through the issuance of 7,000,000 shares of common stock. - -------------------------------------------------------------------------------- F-18 EX-31 3 cccglobal10ksbexh311.txt Exhibit 31.1 ------------ CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Paul E. Licata, certify that: 1. I have reviewed this annual report on Form 10-KSB of CCC GlobalCom Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. By /s/ Paul E. Licata - ---------------------- Paul E. Licata Principal Executive Officer and Principal Financial Officer April 14, 2004 EX-32 4 cccglobal10ksbexh321.txt EXHIBIT 32.1 ------------ CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. ss. 1350, AS ADOPTED PURUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of CCC GlobalCom Corporation on form 10KSB for the period ending December 31, 2003, as filed with the Securities and Exchange Commission on the date hereof, I, Paul E. Licata, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) the Report complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and (2) the information in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. By /s/ Paul E. Licata - ------------------------- Paul E. Licata Principal Executive Officer and Principal Financial Officer April 14, 2004 -----END PRIVACY-ENHANCED MESSAGE-----