1. Nature of Business and Significant Accounting Policies

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Nature of Business and Significant Accounting Policies

Description of Business

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

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

		State of	Relationship	Relationship
Name of Entity (1)	Form of Entity	Incorporation	December 31, 2016	December 31, 2015
Competitive Companies, Inc.	Corporation	Nevada	Parent	Parent
Wireless Wisconsin LLC	Limited Liability Company	Wisconsin	Subsidiary (2)	Subsidiary (2)
Innovation Capital Management, Inc.	Corporation	Delaware	Subsidiary (2)	Subsidiary (2)
Innovation Capital Management, LLC	Limited Liability Company	Texas	Subsidiary (2)	Subsidiary (2)
Wytec International, Inc.	Corporation	Nevada	Subsidiary (3)	Subsidiary (3)
Wylink, Inc.	Corporation	Texas	Subsidiary (4)	Subsidiary (4)
Capaciti Networks, Inc.	Corporation	Texas	Subsidiary (5)	Subsidiary (5)

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

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

⁽³⁾ As of December 31, 2015, CCI owned an 86% interest in Wytec and consolidated under the voting interest model. As of December 31, 2016, CCI owned an 11% interest in Wytec and consolidated under the variable interest entity model.

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

⁽⁵⁾ As of December 31, 2015, CCI wholly owned Capaciti. During 2016, Capaciti was sold, in full, to Wytec.

The operations of each subsidiary is further detailed below:

· Wireless Wisconsin LLC (“Wireless WI”) – Internet access services in rural markets

· Innovation Capital Management, Inc. (“ICM”) – Managing capital raising

· Innovation Capital Management LLC (“ICMLLC”) – Strategic marketing relationships

· Wytec International, Inc. (“Wytec”) – Building wireless internet access serviced infrastructures, and providing internet access services primarily to the SMB market

· Wylink, Inc. (“Wylink”) - Applying for and registering links.

· Capaciti Networks, Inc. (“Capaciti”) – Using Wyquote system to market internet access services

Use of Estimates

The preparation of consolidated financial statements in accordance with generally accepted accounting principles in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent asset and liabilities at the date of the consolidated financial statements. The reported amounts of revenue and expenses during the reporting period may be affected by the estimates and assumptions we are required to make. Actual results could differ significantly from our estimates.

Principles of Consolidation and Variable Interest Entities

The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries, after elimination of all material intercompany accounts, transactions, and profits.

The Company accounts for the investments it makes in certain legal entities in which equity investors do not have (1) sufficient equity at risk for the legal entity to finance its activities without additional subordinated financial support, or (2) as a group, the holders of the equity investment at risk do not have either the power, through voting or similar rights, to direct the activities of the legal entity that most significantly impact the entity’s economic performance, or (3) the obligation to absorb the expected losses of the legal entity or the right to receive expected residual returns of the legal entity. These certain legal entities are referred to as “variable interest entities” or “VIEs.”

The Company consolidates the results of any such entity in which it determined that it had a controlling financial interest. The Company is deemed to have a “controlling financial interest” in such an entity if the Company has both the power to direct the activities that most significantly affect the VIE’s economic performance and the obligation to absorb the losses of, or right to receive benefits from, the VIE that could be potentially significant to the VIE. On a quarterly basis, the Company reassesses whether it has a controlling financial interest in any investments it has in these certain legal entities.

Revenue Recognition

Revenue through the Company’s subsidiary, Capaciti, is from the sale of both wired and wireless services, including products, wireless data cards, back office platform and rate plans to their commercial and enterprise clients. Capaciti recognizes revenues from wired and wireless internet services in the month in which services are provided. Services provided but not billed by the end of the year are reflected as unbilled receivables in the accompanying consolidated balance sheets; likewise, services billed in advance for future months are reflected in deferred revenues in the accompanying consolidated balance sheets.

Revenue from the Company’s subsidiary, Wireless WI is recognized when persuasive evidence of an arrangement exists; delivery of services has occurred; the price to the customer is fixed or determinable; and collectability of the sales price is reasonably assured. Wireless WI recognizes revenues from dial-up and broadband internet services in the month in which services are provided. Services provided but not billed by the end of the year are reflected as unbilled receivables in the accompanying consolidated balance sheets; likewise, services billed in advance for future months are reflected in deferred revenues in the accompanying consolidated balance sheets.

Wylink’s revenue on sales of FCC register links is recognized once the link has been registered on behalf of the customer and the necessary equipment has been installed and is ready for use. Revenue is not recognized on the link sales until the link construction is completed and the link has been placed in service. Amounts collected prior to completion of all obligations to the customer are recorded as deferred revenue. Commission expense is a period cost and is recorded in the period in which the commission from the sale has been earned and paid, even though the revenue from the sale may not be recognized until a future period. Commissions are payable at collection of funds from link sale and are not dependent upon successful installation and operation of the link.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is evaluated on a regular basis through periodic reviews of the collectability of the receivables in light of historical experience, adverse situations that may affect our customers' ability to repay, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Accounts receivable are determined to be past due based on how recently payments have been received and those considered uncollectible are charged against the allowance account in the period they are deemed uncollectible. The allowance was $6,273 and $6,380 at December 31, 2016 and 2015.

Construction in Process

Construction in process consists of equipment and materials to be used to construct network, plant property and equipment.

Property and Equipment

Property and equipment are stated at the lower of cost or estimated net recoverable amount. The cost of property and equipment is depreciated using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based on the following life expectancy:

Furniture and fixtures	5 years
Telecommunication equipment and computers	5 – 10 years

Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which have extended the useful life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. When assets are retired, or sold, the cost and related accumulated depreciation and amortization are eliminated and any resulting gain or loss is reflected in operations.

Deferred Revenue

Deferred revenue consists of amounts billed and collected before services have been completed.

Basic and Diluted Loss per Share

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For 2016 and 2015, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

Stock-Based Compensation

All share-based payments to service providers or employees, including grants of employee stock options, are recognized in the income statement based upon their fair values determined using the grant date Black-Scholes method. Stock and stock options were issued for services and compensation was $41,045 and $42,750 for the years ended December 31, 2016 and 2015, respectively.

Advertising

Advertising costs are expensed as incurred. These expenses approximated $615 and $13,640 for the years ended December 31, 2016 and 2015, respectively.

Income Taxes

The Company files an income tax return in the U.S. federal jurisdiction, as well as in the states of Texas, Florida, Wisconsin, and Ohio.

CCI recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. CCI provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.

Uncertain Tax Positions

In accordance with ASC 740, “Income Taxes” (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09 entitled Revenue from Contracts with Customers (Topic 606). The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects consideration to which the entity expects to be entitled in exchange for those goods or services. We are subject to this guidance effective with financial statements we issue for the year ending December 31, 2018, and the quarterly periods during that year. The effect of the new standard is not expected to materially influence the company’s financial statement.

In February 2016, FASB issued ASU No. 2016-02, Leases, requiring entities that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. For leases which meet the criteria of short-term, lessees may elect an accounting policy to not recognize lease assets and liabilities and expense lease payments on a straight-line basis. A short-term lease is one in which the lease term is 12 months or less and there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. Under current GAAP, lessees apply a classification test to determine the accounting for the lease arrangements as either capital leases, whereby the lease assets and liabilities would be recognized on the balance sheet, or operating leases, whereby the lessees would not recognize lease assets and liabilities. This ASU will be effective for the Company for its fiscal year beginning after December 15, 2018, and for interim periods therein. The Company is currently evaluating the effects the adoption of this guidance will have on its consolidated financial statements.