10QSB 1 q3wfinancials.htm Converted by FileMerlin

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-QSB


(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED        September 30, 2005

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD From _______ to           .


Commission File Number 333-40954


CCI GROUP, INC.

(Exact name of registrant as specified in its charter)


Utah

   87-0648148

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)


405 Park Avenue, 10th Floor,

New York, New York     10022

(Address of principal executive officers)

(212) 421-1400

(Registrant’s telephone number, including area code)


Indicate by check mark whether the registrant (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports),  [X] Yes [ ] No; and (2) has been subject to such filing requirements for the past 90 days:  [X] Yes [ ] No


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [X] Yes [ ] No


Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by the court. Yes  No    Not Applicable


The number of shares issued and outstanding of our common stock, no par value, as of November 21, 2005 was 9,732,907.


INDEX


CCI Group, Inc.

For The Quarter Ending September 30, 2005


Part I.  Financial Information


Item

1.

Financial Statements

Condensed Consolidated Balance Sheets (Unaudited) – September 30, 2005 and

  December 31, 2004

4


Condensed Consolidated Statements of Operations (Unaudited ) for the

Three and Nine Months ended June 30, 2005 and 2004, and for the Period from

  January 11, 2001 (Date of Inception) through September 30, 2005

6


Condensed Consolidated Statements of Cash Flows (Unaudited) for the

Three and Nine Months Ended September 30, 2005 and 2004, and for the Period from

  January 11, 2001 (Date of Inception) through September 30, 2005

7


Notes to Condensed Consolidated Financial Statements (Unaudited)

9



Item

2.

Management’s Discussion and Analysis of Financial Condition

and Results of Operations

13


Item

3.

Controls and Procedures.

16


Part II.  Other Information


Item

1.

Legal Proceedings

16


Item

2.

Changes in Securities and Use of Proceeds

16


Item

4.

Submission of Matters to a Vote of Security Holders

17


Item

5.

Other Matters

17


Item

6.

Exhibits and Reports on Form 8-K

17


Signatures

18

Part I – Financial Information

Item I.  Financial Statements:


The condensed financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

CCI GROUP, INC. AND SUBSIDIARIES

(A Development Stage Company)

Condensed Consolidated Balance Sheets

(Unaudited)


ASSETS

   

September 30,

 

December 31,

   

2005

 

2004

CURRENT ASSETS

     
 

Cash

 

 $166,649

 

 $178,848

 

Accounts receivable

 

 86,059

 

 29,597

 

Prepaid expenses and other current assets

 

 1,307

 

 16,093

  

Total Current Assets

 254,015

 

 224,538

      
 

Property and equipment, Net

 

 3,723,376

 

 3,910,659

      

OTHER ASSETS

     
 

Deposits

 

 265,900

 

 115,900

 

Deferred financing costs, net of accumulated amortization of

    
  

$2,703,146 and $1,010,347, respectively

 4,469,987

 

 5,836,649

 

Land lease rights, net of accumulated amortization of $115,750

    
  

and $74,080, respectively

 1,884,250

 

 1,925,920

  

Total Other Assets

 6,620,137

 

 7,878,469

      
  

TOTAL ASSETS

 $10,597,528

 

 $12,013,666

      

LIABILITIES AND STOCKHOLDERS' DEFICIT

      

CURRENT LIABILITIES

     
 

Accounts payable

 

 $544,519

 

 $421,329

 

Reservation deposits

 

 279,174

 

 284,060

 

Commission payable

 

 17,010

 

 41,355

 

Accrued expenses

 

 733,242

 

 283,079

 

Current portion of notes payable

 

 1,413,822

 

 1,054,390

 

Current portion of capital lease payable

 

 -   

 

 261,111

  

Total Current Liabilities

 2,987,767

 

 2,345,324

      

NONCURRENT LIABILITIES

     
 

Notes payable, net of amortized discount of $995,785 and

    
  

$1,031,820, respectively

 10,564,083

 

 4,537,380

 

Capital lease payable, net of current portion

 

 -   

 

 3,928,987

  

Total Noncurrent Liabilities

 10,564,083

 

 8,466,367

      

STOCKHOLDERS' EQUITY

     
      
 

Preferred stock - $25 par value; 600,000 shares authorized;

    
  

17,800 and 0 shares outstanding, respectively

 445,000

 

 -   

 

Common stock - no par value; 50,000,000 shares authorized;

    
  

9,721,907 and 9,661,907 shares outstanding, respectively

 11,410,433

 

 11,029,968

 

Deficit accumulated during the development stage

 

 (14,809,755)

 

 (9,827,993)

  

Total Stockholders' Deficit

 (2,954,322)

 

 1,201,975

      
  

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

 $10,597,528

 

 $12,013,666


See notes to condensed consolidated financial statements



CCI GROUP, INC. AND SUBSIDIARIES

(A Development Stage Company)

Condensed Consolidated Statements of Operations

(Unaudited)

            
            
           

For the period

   

For the Three

 

For the Nine

 

January 11, 2001

   

Months Ended

 

Months Ended

 

(Date of Inception)

   

September 30,

 

September 30,

 

through

   

2005

 

2004

 

2005

 

2004

 

September 30, 2005

REVENUE

  

 $264,737

 

 $68,521

 

 $1,268,700

 

 $75,015

 

 $1,562,366

            

OPERATING COSTS AND EXPENSES

           
            
 

Cost of sales

 

 41,192

   

 175,690

   

 264,501

 

Direct and operating expenses

 

 347,713

   

 1,054,375

   

 2,705,140

 

General and administrative expenses

 

 829,615

 

 812,157

 

 2,261,468

 

 2,718,509

 

 8,566,756

            
  

Total Operating Costs

 1,218,520

 

 812,157

 

 3,491,533

 

 2,718,509

 

 11,536,397

            

LOSS FROM OPERATIONS

  

 (953,783)

 

 (743,636)

 

 (2,222,833)

 

 (2,643,494)

 

 (9,974,031)

            

OTHER INCOME (EXPENSES)

           
            
 

Interest expense

 

 (846,274)

 

 (622,887)

 

 (2,846,958)

 

 (1,090,695)

 

 (4,961,612)

 

Interest income

 

 7,041

 

 1,691

 

 83,184

 

 1,707

 

 118,829

 

Foreign currency exchange gain

 

 (419)

 

 29,301

 

 4,844

 

 40,147

 

 7,059

            
  

Total Other Income (Expenses)

 (839,652)

 

 (591,895)

 

 (2,758,930)

 

 (1,048,841)

 

 (4,835,724)

            

NET LOSS

  

 $(1,793,435)

 

 $(1,335,531)

 

 $(4,981,763)

 

 $(3,692,335)

 

 $(14,809,755)

            
 

Basic and Diluted Loss per Share

 

 $(0.18)

 

 $(0.14)

 

 $(0.51)

 

 $(0.39)

  
            
 

Weighted Average Number of

          
 

Common Shares Outstanding

 

 9,721,907

 

 9,661,907

 

 9,699,709

 

 9,540,009

  


See notes to condensed consolidated financial statements




CCI GROUP, INC. AND SUBSIDIARIES

(A Development Stage Company)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

       

For the period

   

For the Nine

 

January 11, 2001

   

Months Ended

 

(Date of Inception)

   

September 30,

 

through

   

2005

 

2004

 

September 30, 2005

CASH FLOWS FROM OPERATING ACTIVITIES

       

Net Loss

  

 $(4,981,763)

 

 $(3,692,335)

 

 $(14,809,755)

Adjustments to reconcile net loss to net cash from operating activities:

       
 

Depreciation

 

 283,093

 

 166,642

 

 549,830

 

Issuance of common stock and warrants for services

 

 24,850

 

 300,000

 

 2,768,176

 

Amortization of deferred offering costs, discount

      
  

on notes payable and land lease rights

 1,838,913

 

 664,711

 

 3,207,736

 

Gain on foreign currency exchange

 

 4,844

 

 (40,147)

 

 2,629

Changes in operating assets and liabilities

       
 

Receivables

 

 (56,464)

 

 (13,630)

 

 (86,060)

 

Employee advance

 

 -   

 

 -   

 

 -   

 

Prepaid expenses and other current assets

 

 14,787

 

 -   

 

 (1,307)

 

Deposits

 

 (150,000)

 

 (100,000)

 

 (265,900)

 

Accounts payable

 

 118,346

 

 240,123

 

 529,137

 

Reservation deposits

 

 (4,886)

 

 43,916

 

 279,174

 

Accrued expenses

 

 713,344

 

 128,030

 

 870,566

  

Net Cash Used by Operating Activities

 (2,194,936)

 

 (2,302,690)

 

 (6,955,774)

        

CASH FLOWS FROM INVESTING ACTIVITIES

       
 

Cash paid for property and equipment

 

 (95,808)

 

 (772,203)

 

 (1,773,205)

 

Issuance of note receivable

 

 -   

 

 -   

 

 (400,000)

 

Payments received on note receivable

 

 -   

 

 -   

 

 400,000

  

Net Cash Used by Investing Activities

 (95,808)

 

 (772,203)

 

 (1,773,205)

        

CASH FLOWS FROM FINANCING ACTIVITIES

       
 

Proceeds from issuance of notes payable and warrants

 

 2,168,802

 

 3,564,500

 

 8,376,502

 

Proceeds from issuance of preferred stock

 

 445,000

   

 445,000

 

Cash paid for offering and financing costs

 

 (193,854)

 

 (268,591)

 

 (858,393)

 

Principle payments on capital lease

 

 (141,403)

 

 (246,897)

 

 (451,305)

 

Issuance of common stock for exercise of warrants

 

 -   

 

 -   

 

 690

 

Proceeds from issuance of common stock

 

 -   

 

 -   

 

 1,348,626

 

Contribution of capital with no issuance of shares

 

 -   

 

 -   

 

 2,200

 

Cash received in purchase of Kinship

 

 -   

 

 -   

 

 32,308

  

Net Cash Provided by Financing Activities

 2,278,545

 

 3,049,012

 

 8,895,628

        
 

NET INCREASE IN CASH

 

 (12,199)

 

 (25,881)

 

 166,649

        
 

CASH AT BEGINNING OF PERIOD

 

 178,848

 

 303,968

 

 -   

        
 

CASH AT END OF PERIOD

 

 $166,649

 

 $278,087

 

 $166,649