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 Number333-40954
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 |