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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-30365-C
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CCC GLOBALCOM CORPORATION
(Name of Small Business Issuer as specified in its charter)
Nevada 36-3693936
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization identification No.)
16350 Park Ten Place, Suite 241, Houston, Texas 77084
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(Address of principal executive offices)
Registrant's telephone no., including area code: (281) 599-7878
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Not Applicable
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Former name, former address, and former fiscal year,
if changed since last report.
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
.
Common Stock outstanding at November 13, 2000 - 31,592,412 shares of $.001 par
value Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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FORM 10-QSB
FINANCIAL STATEMENTS AND SCHEDULES
CCC GLOBALCOM CORPORATION
For the Quarter ended September 30, 2000
The following financial statements and schedules of the registrant are
submitted herewith:
PART I - FINANCIAL INFORMATION
Page of
Form 10-QSB
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Item 1. Financial Statements:
Condensed Consolidated Balance Sheet--September 30, 2000 3
Condensed Consolidated Statements of Operations--for the 4
three months and nine months ended September 30, 2000 and
September 30, 1999
Condensed Consolidated Statements of Cash Flows--for the
nine months ended September 30, 2000 and September 30, 1999 5
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II - OTHER INFORMATION
Page
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Item 1. Legal Proceedings 13
Item 2. Changes in the Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Results of Votes of Security Holders 13
Item 5. Other Information 13
Item 6(a). Exhibits 14
Item 6(b). Reports on Form 8-K 14
2
CCC GLOBALCOM CORPORATION
Condensed Consolidated Balance Sheet
September 30, 2000
(Unaudited)
_______________________________________________________________________________
Assets
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Current assets:
Cash $ 554,547
Accounts receivable, net 547,764
Inventory 375
Prepaid expenses 14,250
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Total current assets 1,116,936
Property and equipment, net 121,497
Intangible asset, net 396,100
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Total assets $ 1,634,533
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Liabilities and Stockholders' Equity
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Current liabilities:
Accounts payable $ 617,119
Accrued liabilities 49,840
Short-term notes payable 272,034
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Total current liabilities 938,993
Long-term note payable 8,025
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Total liabilities 947,018
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Stockholders' equity:
Common stock - par value $.001 per share. Authorized
100,000,000 shares; issued and outstanding 31,693,435
shares 31,693
Additional paid-in capital 2,441,353
Accumulated deficit (1,785,531)
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Total stockholders' equity 687,515
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Total liabilities and stockholders' equity $ 1,634,533
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See accompanying Notes to Condensed Consolidated Financial Statements.
3
CCC GLOBALCOM CORPORATION
Condensed Consolidated Statement of Operations
(Unaudited)
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Three Months Ended Nine Months Ended
September 30, September 30,
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2000 1999 2000 1999
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Revenue $ 653,822 $ 29,009 $1,279,458 $ 30,530
Cost of goods sold 483,812 14,515 924,660 22,547
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Gross margin 170,010 14,494 354,798 7,983
General and administrative
expenses (952,839) (225,095) (1,414,799) (483,512)
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Loss from operations (782,829) (210,601) (1,060,001) (475,529)
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Other income (expense):
Interest expense - (11) (2,575) (11)
Interest income 5,792 4,220 7,670 4,220
Other income (expense) 1,592 - (2,817) -
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7,384 4,209 2,278 4,209
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Loss before income tax (775,445) (206,392) (1,057,723) (471,320)
Income tax benefit - - - -
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Net loss $ (775,445) $ (206,392) $(1,057,723) $(471,320)
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Net loss per share -
basic and diluted $ (.02) $ (.01) $ (.03) $ (.02)
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Weighted average shares -
basic and diluted 31,693,000 21,200,000 31,167,000 21,200,000
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See accompanying Notes to Condensed Consolidated Financial Statements.
4
CCC GLOBALCOM CORPORATION
Condensed Consolidated Statement of Cash Flows
(Unaudited)
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Nine Months Ended
September 30,
2000 1999
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Cash flows from operating activities:
Net loss $(1,057,723) $ (471,320)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 67,610 19,341
(Increase) decrease in:
Accounts receivable (525,582) (12,767)
Inventory - (375)
Prepaid expenses (11,892) (17,696)
Other assets 5,000
Increase (decrease) in:
Accounts payable 562,826 95,490
Accrued liabilities (13,785) 1,115
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Net cash used in
operating activities (973,546) (386,212)
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Cash flows from investing activities-
Purchase of property and equipment (72,499) (88,550)
Acquisition of intangible assets (116,690) (90,200)
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Net cash used in
operating activities (189,189) (178,750)
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Cash flows from financing activities:
Payments on short-term notes payable (43,476) -
Proceeds from issuance of stock 1,644,046 589,000
Payments on long-term debt (18,364) -
Proceeds from long-term debt - 18,330
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Net cash provided by
financing activities 1,582,206 607,330
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Net increase in cash 419,471 42,368
Cash, beginning of period 135,076 -
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Cash, end of period $ 554,547 $ 42,368
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See accompanying Notes to Condensed Consolidated Financial Statements.
5
CCC GLOBALCOM CORPORATION
Condensed Consolidated Statement of Cash Flows
Continued
Unaudited)
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Supplemental disclosure of non cash investing and financing activities:
During the nine months ended September 30, 2000, CCC Globalcom purchased the
assets of Virtual Network Company & Local Network, Inc. for cash plus a note
payable totaling $283,200.
Nine Months Ended
September 30,
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2000 1999
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Supplemental disclosure of cash flow information:
Interest paid $ 2,575 $ 11
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Income taxes paid $ - $ -
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See accompanying Notes to Condensed Consolidated Financial Statements.
6
CCC GLOBALCOM CORPORATION
Notes to Condensed Consolidated Financial Statements
(1) On June 9, 2000, CCC Globalcom (formerly Emerald Capital Investments, Inc.)
(Emerald) merged in CCC Globalcom (CCC) (a nonoperating entity which had
previously merged in Ciera Network Systems, Inc. (Ciera) (the Operating
Company) (the Acquiree) (collectively the Company). The terms of the
agreement provide that the stockholders of the Acquiree received 30,250,000
shares (post reverse split) of Emerald common stock.
The condensed consolidated financial statements at September 30, 2000 & 1999
assume the acquisition of Emerald by the Acquiree, occurred January 1,
1999. Because the shares issued in the acquisition of the Acquiree
represent control of the total shares of Emerald's common stock issued and
outstanding immediately following the acquisition, the Acquiree is deemed
for financial reporting purposes to have acquired Emerald in a reverse
acquisition. The business combination has been accounted for as a
recapitalization of Emerald giving effect to the acquisition of 100% of the
outstanding common shares of the Acquiree. The surviving entity reflects
the assets and liabilities of Emerald and the Acquiree at their historical
book value and the historical operations of the Company is that of the
Acquiree's. The issued common stock is that of Emerald and the accumulated
deficit is that of the Acquiree. The statement of operations is that of the
Acquiree for the three and nine month periods ended September 30, 2000 and
1999 and that of Emerald from June 9, 2000 (date of acquisition) through
September 30, 2000. Separate breakout of operations for Emerald have not
been presented as the amounts not related to the Acquiree are immaterial.
(2) During the period ended September 30, 2000 the Company had a reverse stock
split of 1 share for 20 shares. All earnings (loss) per share reflect the
reverse stock split as if it had taken place January 1, 1999.
(3) The unaudited financial statements include the accounts of CCC Globalcom,
Inc. and subsidiaries and include all adjustments (consisting of normal
recurring items) which are, in the opinion of management, necessary to
present fairly the financial position as of September 30, 2000 and the
results of operations and changes in financial position for the three month
and nine month periods ended September 30, 2000. The results of operations
for the nine months ended September 30, 2000 are not necessarily indicative
of the results to be expected for the entire year.
(4) Loss per common share is based on the weighted average number of shares
outstanding during the period. Common stock equivalents are not included in
the diluted earnings per share calculation because the effect would have
been anti-dilutive.
(5) Subsequent to the period ended September 30, 2000 the Company completed a
private stock placement in which 633,200 shares of common stock were issued
at a price of $3.00 per share. Gross proceeds were $1,899,600. The proceeds
will be used by the Company to meet general working capital requirements.
(6) Subsequent to the year ended September 30, 2000 the Company entered into an
agreement to purchase 100% of the preferred and common stock of Telecom
Network Systems International, Inc. (TNS). If the acquisition is completed
as currently planned, the Company will be required to pay approximately
$400,000 in cash and issue 1,018,182 shares of CCC Globalcom common stock.
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
CCC Globalcom Corporation (the "Company") was, prior to June 12, 2000,
named Emerald Capital Investments, Inc. On June 9, 2000, the Company commenced
operations in the telecommunications industry through the acquisition of CCC
Globalcom, Inc. 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"). Ciera commenced operations in 1999. Currently, all of the
Company's operations are conducted by Ciera. The Company's acquisition of CCC
Texas, and as result of such acquisition, the acquisition of Ciera, is accounted
for as a reverse merger. Accordingly, for accounting purposes, Ciera is deemed
to be the survivor of such acquisitions and the financial statements included in
this Form 10-QSB for quarters in 1999 are the financial statements of Ciera. The
financial statements for the three and nine month periods in 2000 are
consolidated financial statements of CCC Texas and Ciera for the entire period
and the financial statements of Emerald since June 9, 2000, the date of the
merger.
We have only recently commenced operations in the telecommunications
industry, and we are a switchless or non-facilities based company offering
residential customers and small to medium sized businesses a wide variety of
bundled voice and data telecommunications services. We are primarily a reseller
of voice and data telecommunications services. Our services include but are not
limited to, the following:
o local telephone service,
o long distance telephone services;
o internet service;
o paging;
o voice messaging; and
o archive data backup and recovery.
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We intend to expand our operations through acquisitions of other
telecommunications companies located in the United States, South and Central
America and elsewhere. The key elements of our business strategy are to:
o focus on residential and small and medium-sized business customers in
select United States and foreign markets;
o develop a flexible, technologically advanced telecommunications network
in a capital-efficient manner through reselling telecommunication
services and products in a seemless method;
o provide our customers a complete telecommunications solution at a
competitive price with superior customer service;
o maintain customer loyalty;
o employ a team sales approach to cross-sell multiple products and
services; and
o expand through acquiring other operating telecommunications companies
or their assets.
Results of Operations
Our revenues are derived from the sale of telecommunications services to
residential and business customers. Currently we have a limited number of
customers and are primarily conducting operations in the State of Texas. Our
business plan includes plans for expansion into states and various Latin
American countries. Although our subsidiary Ciera commenced operations in 1999,
we continue to be in early stages of development and our future revenues are
dependent upon our ability to expand our customer base either through internally
generated growth or through acquisitions. Effective June 30, 2000, we have
acquired the customer base of Virtual Network Company. This customer base
consists of approximately 4,000 customers.
In October 2000, we entered into an agreement to purchase Telecom Network
Systems, Inc. ("TNS"). The assets of TNS include telecommunications switches,
earth stations and debit card platforms. TNS current has approximately 6,000
customers. TNS offers a variety of prepaid telecommunications services such as
prepaid calling cards, long distance, internet and voice mail. TNS also offers
telecommunications services which are not prepaid but which are paid for after
billing statements are sent to customers. The acquisition of TNS is subject to a
number of conditions and there can be no assurance that the acquisition will be
closed.
9
Because we have been operating in the telecommunication industry only
since January, 1999, and because we are still in the early stages of pursuing
our business plan, the comparative numbers between 1999 and 2000 are not a
meaningful indication of future results.
Net Revenues for the three months ended September 30, 2000 were $653,822
compared to $29,009 for the three months ended September 30, 1999. Net revenues
for the nine months ended September 30, 2000 were $1,279,458 compared to $30,530
for the nine months ended September 30, 1999. Revenues are derived from the sale
of telecommunications services. The increase in net revenues for both the three
months and nine months ended September 30, 2000 compared to the three and nine
months ended June 30, 1999 was primarily attributed to the fact that 1999 was a
period of start-up while operations in 2000, included internally generated
customer growth attributing to increased revenues.
Cost of Sales. For the three months ended September 30, 2000, our cost of
sales were $483,812 compared to $14,515 for the three months ended September 30,
1999.. For the nine months ended September 30, 2000, our cost of sales were
$924,660 compared to $22,547 for the nine months ended September 30, 1999. The
increase in costs of sales for both the three months and nine months ended
September 30, 2000 compared to the three and nine months ended June 30, 1999 was
primarily attributed to the fact that 1999 was a period of start-up while
operations in 2000, included internally generated customer growth attributing to
increased revenues with attendant increased costs of sales.
Gross Margins. Gross margins were $170,010 for the three months and
$354,798 for the nine months ended September 30, 2000 compared to $14,494 for
the three months and $7,983 for the nine months ended September 30, 1999. This
significant increase is the result of a significant increase in revenues
relating to the startup of our operations during the last year.
General and Administrative Expenses. General and administrative (G&A)
expenses were 146% of revenue for the three months ended September 30, 2000 and
111% of revenue for the nine months ended September 30, 2000. G & A expenses
increased from $225,095 for the three months ended September 30, 1999 to
$952,839 to the three months ended September 30, 2000 and from $483,512 for the
nine months ended September 30, 1999 to $1,414,799 to the nine months ended
September 30, 2000. The increase in G & A expenses was attributed to an overall
increase in operations, other activities, staffing and professional fees. We
anticipate that the total dollar amount of G & A expenses will continue to
increase as operations increase through acquisitions or internal growth.
Net Loss. We had a net loss of $775,445 for the three months and
$1,057,723 for the nine months ended September 30, 2000 compared to a net loss
of $206,392 for the three months and $471,320 for the nine months ended
September 30, 1999. The increase in total net loss was
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the result of overall increased operations related to the increase of our
overall operations during the last year.
Liquidity and Capital Resources
At September 30, 2000, our working capital was $177,943. In June, 2000, we
completed a private placement of our common stock pursuant to which we received
$1,500,000 in gross offering proceeds. In October 2000 we completed a second
round of equity financing which we received gross offering proceeds of
$1,894,600.
At September 30, 2000, we had total assets of $1,634,533, total
liabilities of $947,018 and stockholders equity of $687,515. Our total assets
included $396,100 attributed to intangible assets. Our intangible assets
principally consisted of the customer list purchased from Virtual Network
Company.
Our primary needs for capital are to fund acquisitions, purchase
equipment, and fund operations until we operate at a profit. We anticipate that
we will continue to operate at a deficit for at least the first or second
quarter of fiscal 2001.
With the net proceeds received in our most recent private placement, we
anticipate we can fund our current operations for approximately nine months. We
will be required to obtain capital in order to continue to operate subsequent to
that date.
We do not currently have a line of credit or other access to debt
financing and our ability to expand will, at least for the foreseeable future,
be dependent upon our ability to sell shares of our common stock, of which there
can be no assurance.
In order for us to commence profitable operations we need to increase our
revenues. We believe that one of the most effective way of increasing revenues
is to acquire existing operating telecommunication companies. Acquisitions will
require the issuance of securities, which will dilute the percentage share
ownership fo existing shareholders.
If the acquisition of TNS (described above) is completed, we will be
required to pay approximately $400,000 in cash and 1,018,182 shares of CCC
Globalcom Common Stock to purchase the capital stock of TNS. The purchase price
is subject to Buyer due diligence and could change.
Forward-Looking Statements
This Quarterly Report contains "forward-looking statements" within the
meaning of the securities laws. These forward-looking statements are subject to
a number of risks and
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uncertainties, many of which are beyond our control. All statements included in
this Quarterly Report, other than statements of historical facts, are
forward-looking statements, including the statements under "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding our strategy, future operations, financial position, projected costs,
prospects, plans and objectives of management.
Certain statements contained in this Quarterly Report, including without
limitation, statements containing the words "will," "anticipate," "believe,"
"intend," "estimate," "expect," "project" and words of similar import,
constitute forward-looking statements, although not all forward-looking
statements contain such identifying words. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
our actual results, performance or achievements to be materially different from
any future results, performance or achievements expressed or implied by such
forward-looking statements. Such risks, uncertainties and other factors include,
among others, the following:
o our limited operating history and expectation of operating losses;
o the availability and terms of the significant additional capital
required to fund our expansion;
o our reliance on third party vendors and suppliers;
o the extensive competition we expect to face in each of our markets;
o our dependence on sophisticated information and processing systems;
o our ability to manage growth;
o our ability to access markets and obtain any required governmental
authorizations, franchises and permits, in a timely manner, at
reasonable costs and on satisfactory terms and conditions;
o our ability to attract customers away from their existing
telecommunications providers;
o technological change; and
o changes in, or the failure to comply with, existing government
regulations.
All forward-looking statements speak only as of the date of this Quarterly
Report. We do not undertake any obligation to update or revise publicly any
forward-looking statements,
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whether as a result of new information, future events or otherwise. Although we
believe that our plans, intentions and expectations reflected in or suggested by
the forward-looking statements made in this Quarterly Report are reasonable, we
can give no assurance that such plans, intentions or expectations will be
achieved. Given these uncertainties, prospective investors are cautioned not to
place undue reliance on such forward-looking statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. To the best knowledge of the Company's
management, the Company is not a party to any legal proceeding or litigation.
Item 2. Changes in Securities and Use of Proceeds. During the quarter ended
June 30, 2000, the Company sold 1,000,000 shares of its common stock at the
price of $1.50 per share. Gross offerings proceeds were $1,500,000. The Company
paid the Placement Agent, ACAP Financial, a ten percent commission totaling
$150,000. Additional offering costs for legal, accounting, printing and other
expenses attributed to the offering were approximately $46,000 leaving net
proceed of approximately $1,304,000. The net proceeds are being used by the
company as general working capital.
In October 2000, we completed a second private placement in which we sold
633,200 shares of our common stock at the price of $3.00 per share. Gross
offerings proceeds were $1,899,600. The Company paid the Placement Agent, ACAP
Financial, an eight percent commission totaling $151,968. Additional offering
costs for legal, accounting, printing and other expenses attributed to the
offering were approximately $40,032 leaving net proceed of approximately
$1,707,600. The net proceeds are being used by the company as general working
capital.
Substantially all of the purchasers of the shares sold in the two private
placements described in this Item 2 were accredited investors as that term is
defined in Regulation D promulgated by the Securities and Exchange Commission.
Both of the private placements described in this Item are believed to be exempt
from registration under Rule 506 of Regulation D as securities sold in a
non-public offering.
Item 3. Defaults by the Company on its Senior Securities. None.
Item 4. Submission of Matters to Vote of Security Holders. None.
Item 5. Other Information. On October 30, 2000, Gary A. Allcorn was
appointed as the Company's Chief Financial Officer. Mr. Allcorn most recently
served as the Senior Vice President and Chief Financial Officer of DXP
Enterprises, Inc. Mr. Allcorn is a licensed CPA and he earned his accounting
degree and MBA degree from Texas A & M University.
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Item 6(a) Exhibits. Schedule 27 - Financial Data Schedule.
Item 6(b). Reports on Form 8-K. .None filed during the quarter ended
September 30, 2000.
SIGNATURE
Pursuant to the requirements of the Exchange Act, the Company has caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Dated: November 13, 2000 CCC GLOBALCOM CORPORATION
By: /s/ Ziad A. Hakim
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Ziad A. Hakim
CEO/Principal Executive Officer
By: /s/ Gary A. Allcorn
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Gary A. Allcorn
CFO/Principal Financial Officer
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