COMPETITIVE COMPANIES INC (Form: SB-2/A, Received: 08/02/2002 11:39:08)

ITEM 1. Front of Registration Statement and Outside Front Cover of Prospectus

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM SB-2

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Competitive Companies, Inc.
(Name of small business issuer in our charter)

Nevada 7389 65-1146821
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)

3751 Merced Drive, Suite A Riverside, CA 92503
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 909.687.6100

3751 Merced Drive, Suite A Riverside, CA 92503
(Address of principal place of business or intended principal place of business)

Corporate Creations Network, Inc
8275 South Eastern Avenue, Suite 200 Las Vegas NV 89123
1 305 672 0686
(Name, address and telephone number of agent for service)

Copies to:

M.T. Williams, Esq.
Williams Law Group, P.A.
2503 W. Gardner Ct.
Tampa FL 33611
Phone: 813.831.9348
Fax: 813.832.5284

SHARES ARE BEING OFFERED BY SELLING SHAREHOLDERS AS FOLLOWS:

Common stock, $.001 2,559,361
par value
Maximum shares of common stock 2,990,872
convertible under Class B Preferred
Maximum shares of common stock 2,000,000
convertible under Class C Preferred

Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.

If any of the Securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box: [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act of 1933 registration number of the
earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

Proposed maximum Proposed maximum
Title of each class of offering price per aggregate offering Amount of
securities to be registered Amount to be unit (1) price registration
registered fee (3)

Common stock, $.001 par value 2,559,361 (2) $3.00 $7,678,083.00 $706.38

Maximum shares of common stock 2,990,872 $1.00 $2,991,000 $275.17
convertible under Class B
Preferred

Maximum shares of common stock 2,000,000 $.001 $2,000.00 $184
convertible under Class C
Preferred

________________________

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) Selling shareholders hold all of the shares that we are registering. These
shares will be sold at negotiated prices. We will not receive proceeds from the
sale of shares from the selling shareholders.
(3) No additional fee is paid with this filing as the fee previously paid is in
excess of the total amount due.
We hereby amend this registration statement on such date or dates as may be
necessary to delay our effective date until we will file a further amendment
which specifically states that this Registration Statement shall thereafter
become effective in accordance with Section 8(a) of the Securities Act of 1933

or until this Registration Statement shall become effective on such date as the
Commission, acting pursuant to Section 8(a) may determine.

ITEM 1. Front of Registration Statement and Outside Front Cover of Prospectus

THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. OUR SELLING SHAREHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.

PRELIMINARY PROSPECTUS
COMPETITIVE COMPANIES, INC.

SUBJECT TO COMPLETION, DATED JANUARY 7, 2001

Our selling shareholders are offering:

2,559,361 shares of our common stock, $.001 par value
Up to 2,990,872 shares of common stock convertible under Class B preferred stock

Up to 2,000,000 shares of common stock convertible under Class C preferred stock

The selling shareholders currently owning common stock will offer their shares
of common stock at $3.00 per share until the shares are quoted on the OTC
Bulletin Board and thereafter at prevailing market prices or privately
negotiated prices. The selling shareholders owning shares of common stock issued
upon conversion of Class B and Class C stock may offer their shares of preferred
stock at $3.00 per share until the shares are quoted on the OTC Bulletin Board
and thereafter at prevailing market prices or privately negotiated prices.
We will pay all expenses of registering the securities.

Our common stock is not now qualified for quotation on the Over-the-Counter
Bulletin Board or listed on any national securities exchange or the NASDAQ stock
market.

These securities involve a high degree of risk and should be considered only by
persons who can afford the loss of their entire investment. See "Risk Factors"
beginning on page 14.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.

Offering Information

Price to Public (1) Underwriting Estimated Offering Proceeds to
Discounts and Expenses (3) Company (4)
Commissions (2)
Per Share
Common $3.00 N/A N/A N/A
Stock
Class B Preferred $.01 N/A N/A N/A
Stock
Class C Preferred $.01 N/A N/A N/A
Stock

Total $0.0 $0.0 $0.0 $0.0

(1) The offering price has been arbitrarily determined and does not bear any
relationship to our assets, results of operations, or book value, or to any
other generally accepted criteria of valuation. Prior to this offering, there
has been no market for our securities. The offering price for the selling
shareholders' shares has been determined solely by management.
(2) Selling Shareholders hold all of the shares that we are registering. Because
we are not selling any of our shares, there are no underwriting commissions
involved in this offering.
(3) Does not include offering costs, including filing, legal, and accounting
estimated at $50,000. We have agreed to pay all the costs of this offering.
Selling security holders will pay no offering expenses.
(4) We will not receive proceeds from the sale of shares from the selling
shareholders.

The date of this preliminary prospectus is January 7, 2001.

ITEM 2. Inside Front and Outside Back Cover Pages of Prospectus

TABLE OF CONTENTS

ITEM 1. FRONT OF REGISTRATION STATEMENT AND OUTSIDE FRONT COVER OF PROSPECTUS....1
ITEM 1. FRONT OF REGISTRATION STATEMENT AND OUTSIDE FRONT COVER OF PROSPECTUS....4
OFFERING INFORMATION.............................................................5
ITEM 2. INSIDE FRONT AND OUTSIDE BACK COVER PAGES OF PROSPECTUS..................7
ITEM 3. RISK FACTORS.............................................................14
WE HAVE INCURRED LOSSES SINCE INCEPTION, CONSIDERED ON A PRO FORMA
BASIS AFTER OUR RECENT REORGANIZATION, AND MAY INCUR FUTURE LOSSES.
YOU WILL BE UNABLE TO DETERMINE WHETHER WE WILL EVER BECOME PROFITABLE
WHICH SUBJECTS YOU TO THE RISK OF LOSS ON YOUR
INVESTMENT...............................................................14
IF WE NEED FINANCING TO SUPPORT OUR EXPANSION PLANS BUT ARE UNABLE TO
OBTAIN IT, WE WILL HAVE TO CURTAIL OUR EXPANSION PLANS AND THE VALUE
OF YOUR INVESTMENT MAY BE REDUCED........................................14
WE MAY NOT BE ABLE TO PROVIDE OUR PRODUCTS AND SERVICES IF WE DO NOT
CONNECT OR CONTINUE TO CONNECT WITH THE TRADITIONAL CARRIERS, OUR
PRIMARY COMPETITORS......................................................14
WE MAY LOSE THE ASSETS OF HUNTINGTON PARTNERS ACQUIRED IN THE
REORGANIZATION IF WE DO NOT SATISFY CERTAIN CONDITIONS WITHIN 210 DAYS
OF THE CLOSING OF THE REORGANIZATION, WHICH WOULD REDUCE OUR REVENUES....15
DAY-TO-DAY MANAGEMENT DECISIONS ARE MADE BY OUR CHIEF FINANCIAL
OFFICER, LARRY HALSTEAD, AND OUR SIGNIFICANT EMPLOYEES, DAVID BOWER,
MANAGEMENT INFORMATION SYSTEMS DIRECTOR AND JUDY KLINE, CUSTOMER
SERVICE MANAGER. IF WE LOSE THE SERVICES OF MR. HALSTEAD, MR. BOWER OR
MS. KLINE, DEVELOPMENT OF OUR BUSINESS PLAN MAY BE SLOWER THAN
ANTICIPATED..............................................................16
OUR OPERATIONS ARE SUBJECT TO POSSIBLE CONFLICTS OF INTEREST; THERE
ARE NO ASSURANCES THAT WE WILL RESOLVE THESE CONFLICTS IN A MANNER
FAVORABLE TO OUR MINORITY SHAREHOLDERS...................................16
OUR MANAGEMENT HAS SIGNIFICANT CONTROL OVER STOCKHOLDER MATTERS, WHICH
MAY AFFECT THE ABILITY OF MINORITY STOCKHOLDERS TO INFLUENCE OUR
ACTIVITIES...............................................................16
BECAUSE OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, ANY INVESTMENT
IN OUR COMMON STOCK IS CONSIDERED A HIGH-RISK INVESTMENT AND IS
SUBJECT TO RESTRICTIONS ON MARKETABILITY; YOU MAY BE UNABLE TO SELL
YOUR SHARES..............................................................17
CERTAIN NEVADA CORPORATION LAW PROVISIONS COULD PREVENT A POTENTIAL
TAKEOVER OF US WHICH COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR
COMMON STOCK OR DEPRIVE YOU OF A PREMIUM OVER THE MARKET PRICE...........18
ITEM 4. USE OF PROCEEDS..........................................................18
ITEM 5. DETERMINATION OF OFFERING PRICE..........................................18
ITEM 6. DILUTION.................................................................19
ITEM 7. SELLING SECURITY HOLDERS.................................................19
ITEM 8. PLAN OF DISTRIBUTION.....................................................22
ITEM 9. LEGAL PROCEEDINGS........................................................24
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS...........24
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..........26
ITEM 12. DESCRIPTION OF SECURITIES...............................................27
PREFERRED STOCK..........................................................27
ITEM 13. INTEREST OF NAMED EXPERTS AND COUNSEL...................................31
ITEM 14. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
LIABILITIES.............................................................31
ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS.....................................31
ITEM 16. BUSINESS................................................................32
ITEM 17. MANAGEMENTS DISCUSSION AND ANALYSIS.....................................42
ITEM 18. DESCRIPTION OF PROPERTY.................................................52
ITEM 19. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..........................52
ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS................53
ITEM 21. EXECUTIVE COMPENSATION..................................................57
ITEM 22. FINANCIAL STATEMENTS....................................................61

ITEM 23. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE....................................................84
PART II..........................................................................86
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS...............................86
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.............................88
ITEM 25. RECENT SALES OF UNREGISTERED SECURITIES.................................88

ITEM 27. EXHIBITS................................................................89

ITEM 28. UNDERTAKINGS............................................................90

ITEM 3. SUMMARY INFORMATION AND RISK FACTORS

PROSPECTUS SUMMARY

You should carefully read all information in the prospectus, including the
financial statements and their explanatory notes, under the Financial Statements
section beginning on page F-1 prior to making an investment decision.

Our Company

Competitive Companies, Inc. is the name of the company formed in October 2001
solely to facilitate a December 2001 reorganization which included an
acquisition of the assets of Huntington Telecommunications Partners, LP, a
California limited partnership and a merger with a company formerly known as of
Competitive Companies, Inc. - now known as Competitive Companies Holdings, Inc.,
a Nevada corporation originally formed March 1998.

As a result of the reorganization, Competitive Companies owns the assets of
Huntington Partners and has as a wholly owned subsidiary Competitive Holdings.
Competitive Holdings has two wholly owned subsidiaries:

o Competitive Communications, Inc. which was incorporated under the laws of the
state of California in February 1996.
o CCI Residential Services, Inc. which was incorporated under the laws of the
state of California in January 2000.

Our principal executive offices are located at 3751 Merced Drive, Suite A,
Riverside, CA 92503. Our telephone number is 909.687.6100.

We are authorized to issue 70,000,000 shares of common stock of which 5,912,061
shares are outstanding. We are authorized to issue 10,000,000 shares of
preferred stock in Classes A, B, and C. There are 4,000,000 shares of the Class
A preferred stock outstanding, 1,495,436 shares of the Class B preferred stock
outstanding, and 1,000,000 shares of the Class C preferred stock outstanding.

Upon conversion into the maximum number of shares possible, the Class A, B, and
C preferred stock will convert into the following number of shares:

o Class A - 20,000,000
o Class B - 2,990,872
o Class C - 2,000,000

This means that if all these shares are converted into the maximum amount, we
would have 30,902,932 shares of common stock outstanding. If no shares of Class
A preferred stock are converted but all shares of Class B and Class C stock were
converted at the maximum possible number of shares, we would have 10,902,932
shares of common stock outstanding.

The Class A, B and C preferred stock each contain requirements for conversion
which may not be satisfied either in whole or in part. If none of these
conditions occur, no additional shares of common stock would be issued. For a
discussion of these conversion factors and the possible number of common shares
to be issued upon conversion events, please see "Description of Securities -
Preferred Stock," at page 37.

Our Business

We primarily provide local and long distance telephone services, cable
television services, and Internet access services to apartment complexes. As a
competitive local and long distance telecommunications company, we also offer
local and long distance telephone services and Internet access services to other
residential customers as well as business customers. Our operations are located
in Riverside, California, and approximately 80% of our customers are located in
California.

Our operating losses considered on a pro forma basis after our recent
reorganization from inception to March 31, 2002, totaled $17,719,192. As of
March 31, 2002 considered on a pro forma basis after our recent reorganization,
we had a combined stockholders' equity of $1,198,767. As of March 31, 2002, we
only had $5,924 in current cash available to finance our operations and planned
expansion. We anticipate that we will be able to generate sufficient operating
cash flow to finance continued operations during the next 12 months.

The Offering

This offering is comprised entirely of shares of our common stock held by our
selling shareholders. Our selling shareholders are offering:

2,559,361 shares of our common stock, $.001 par value
Up to 2,990,872 shares of common stock convertible under Class B preferred stock
Up to 2,000,000 shares of common stock convertible under Class C preferred stock

We will not receive any of the proceeds from the sale of the shares of common
stock offered by the selling shareholders. We will pay all offering expenses. We
anticipate offering expenses of approximately $50,000.

Financial Summary

Because this is only a financial summary, it does not contain all the financial
information that may be important to you. Therefore, you should carefully read
all the information in this prospectus, including the financial statements and
their explanatory notes before making an investment decision.

Selected Historical Financial Information

The following selected historical financial information of Competitive Companies
has been derived from its respective historical financial statements, and should
be read in conjunction with the financial statements and the notes, which are
included in this prospectus/consent solicitation.

COMPETITIVE COMPANIES

SELECTED HISTORICAL FINANCIAL INFORMATION

Three Months Three Months
ended ended Year Ended Year Ended
March 31, March 31, December 31, December 31,
2002 2001 2001 2000
Statement of operations data:
Revenues $ 395,590 $ 366,576 $ 1,396,377 $ 1,555,799
Operating Expenses 483,114 395,430 1,573,770 1,740,551
Loss before taxes (87,524) (28,854) (177,393) (184,752)
Income tax expense 0 0 0 0
Net loss (87,524) (28,854) (177,393) (184,752)
Common Share Data:
Net loss per share (0.01) (0.01) (0.04) (0.04)

Weighted average common
shares outstanding 5,912,061 4,912,061 4,923,020 4,912,061
Period end shares outstanding 5,912,061 5,912,061
Balance Sheet Data:
Total assets $ 1,681,565 $ 1,800,258
Working Capital (Deficit) (34,757) (32,038)
Shareholders' Equity 1,198,767 1,286,291

This page left intentionally blank

RISK FACTORS

In addition to the other information provided in this prospectus, you should
carefully consider the following risk factors in evaluating our business before
purchasing any of our common stock.

We have incurred losses since inception, considered on a pro forma basis after
our recent reorganization, and may incur future losses. You will be unable to
determine whether we will ever become profitable which subjects you to the risk
of loss on your investment.

We have not yet generated a profit from operations. Our operating losses
considered on a pro forma basis after our recent reorganization from inception
to March 31, 2002, totaled $17,719,192. As of March 31, 2002, considered on a
pro forma basis after our recent reorganization, we had a combined stockholders'
equity of $1,198,767. As of March 31, 2002, we only had $5,924 incurrent cash
available to finance our operations and planned expansion. We anticipate that we
will be able to generate sufficient operating cash flow to finance continued
operations during the next 12 months.

Our poor financial condition could inhibit our ability to achieve our business
plan. Because we have for a significant period operated at a substantial loss,
an investor cannot determine if we will ever become profitable.

If we need financing to support our expansion plans but are unable to obtain it,
we will have to curtail our expansion plans and the value of your investment may
be reduced.

Our future business will involve substantial costs, primarily those costs
associated with the following:

o High speed internet service with local & long distance package-business
& residential
o Affinity (charitable) and agent programs
o Pay off open leases, system purchase, and notes payable
o Acquire new apartment complexes for telephone, cable television, and
internet service

We need approximately $15,000,000 to finance all of our expansion plans. We do
not anticipate that our revenues will be sufficient to finance these activities.
Accordingly, we will need traditional bank financing or financing from debt or
equity offerings. However, if we are unable to obtain financing when needed, we
may be forced to curtail our operations and our future growth plans, which could
reduce our revenues and potential profitability and the value of your
investment.

We may not be able to provide our products and services if we do not connect or
continue to connect with the traditional carriers, our primary competitors.

Traditional carriers are established providers of local telephone services to
all or virtually all telephone subscribers within their respective service
areas. Many competitive carriers, including us, have experienced difficulties in
working with the traditional carriers with respect to initiating, connecting,
and implementing the systems used by these competitive carriers to order and
receive network elements and wholesale services and locating the competitive
carriers' equipment in the offices of the traditional carriers.

Competitive Communications entered into a connection agreement with BellSouth
which became effective October 1, 1996, and covers nine states including:
Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina,
South Carolina, and Tennessee. This agreement has been renewed. In February 2000
it entered into connection agreements with PacBell and GTE in California and is
now operating as a newer local phone company in California. The agreement with
PacBell expires in June 2002, provided that notice of termination is given at
least 120 days prior to the expiration date. If no notice is given, the
agreement continues until ended with 45 days advance written notice by either
party. No notice of termination was given and the agreement has continued. The
agreement with GTE automatically renews each year unless either party gives
prior written notice of termination. In Mississippi we must upgrade our switch
to accommodate required features and have rates approved in order to commence
operating.

As a competitive carrier, we must coordinate with traditional carriers so that
we can provide local service to customers on a timely and competitive basis. The
Telecommunications Act created incentives for regional Bell operating companies
to cooperate with competitive carriers and permit access to their facilities by
denying such companies the ability to provide in-region long distance services
until they have satisfied statutory conditions designed to open their local
markets to competition. The regional Bell operating companies in our markets are
not yet permitted by the FCC to offer long distance services. These companies
may not be accommodating once they are permitted to offer long distance service.
Currently Verizon is permitted to offer both local and long distance service in
some our mutual service areas, but we have not yet noticed any impact on our
markets.

If we cannot obtain the cooperation of a regional Bell operating company in a
region, whether or not we have been authorized to offer long distance service,
our ability to offer local services in such region on a timely and
cost-effective basis will be harmed.

Because many of our competitors have financial, personnel and other resources,
including brand name recognition, substantially greater than ours, we may not be
able to compete effectively, which could reduce our revenues.

The telecommunications industry is highly competitive. Many of our current and
potential competitors have financial, personnel and other resources, including
brand name recognition, substantially greater than ours, as well as other
competitive advantages over us. This could reduce our revenues.

Because our principal competitors are also our suppliers, our revenues may be reduced.

In each of the markets we target, we will compete principally with the
traditional local phone companies serving that area, such as PacBell, BellSouth
or Southwestern Bell. We must purchase telecommunications services we offer from
these or similar carriers. Our suppliers could charge less than we do which
could reduce our revenues.

We may lose the assets of Huntington Partners acquired in the reorganization if
we do not satisfy certain conditions within 390 days of the closing of the
reorganization, which would reduce our revenues.

The reorganization agreement with Huntington Partners gives them rescission
rights if we do not satisfy certain conditions within 390 days of the closing of
the reorganization. These conditions include:

o Having this registration statement declared effective
o Securing a qualification for quotation for our securities on the over
the counter bulletin board

Any rescission would result in our losing the revenue producing assets we
acquired, which would reduce our revenues.

Day-to-day management decisions are made by our Chief Financial Officer, Larry
Halstead, and our significant employees, David Bower, management information
systems director and Judy Kline, customer service manager. If we lose the
services of Mr. Halstead, Mr. Bower or Ms. Kline, development of our business
plan may be slower than anticipated.

The success of our business is dependent upon the expertise of our Chief
Financial Officer, Larry Halstead, who will continue to control our day-to-day
business affairs after this offering. It is also dependent upon two significant
employees, David Bower and Judy Kline. Because they are essential to our
operations, you must rely on their management decisions. We have not entered
into any agreement with them that would prevent them from leaving us, nor have
we obtained any key man life insurance relating to them. If we lose their
services, we may not be able to hire and retain another Chief Financial Officer,
management information systems director or customer service manager with
comparable experience. As a result, the loss of any of these individual's
services could reduce our revenues.

Our president, Mr. David Kline II, will devote less than full time to our
business, which may reduce our revenues.

Our president, Mr. David Kline II, devotes approximately 5% of his time to our
business. Mr. Kline may not be able to devote the time necessary to our business
to assure successful implementation of our business plan. Further, Mr. Klein is
subject to a conflict of interest as to whether to spend his time on our or
other's activities.

Our management has significant control over stockholder matters, which may
affect the ability of minority stockholders to influence our activities.

Collectively, our officers and directors beneficially own approximately 60% of
our outstanding common stock. In addition, they own 4,125,000 options or
warrants which are exercisable to purchase additional shares of common stock at
an average price of $0.19 during the next five years. They also own 4,000,000
shares of Class A convertible preferred stock which may be converted into
20,000,000 additional shares of common stock for no additional consideration
under certain circumstances in the future. As such, our officers/ directors and
their family members control the outcome of all matters submitted to a vote by
the holders of our common stock, including the election of our directors,
amendments to our certificate of incorporation and approval of significant
corporate transactions. Additionally, our officers and directors could delay,
deter or prevent a change in our control that might be beneficial to our other
stockholders.

The offering price of $3.00 per share has been arbitrarily set by our board of
directors and accordingly does not indicate the actual value of our business.

The offering price of $3.00 per share is not based upon earnings or operating
history, does not reflect the our actual value, and bears no relation to our
earnings, assets, book value, net worth or any other recognized criteria of
value. No independent investment banking firm has been retained to assist in
determining the offering price for the shares. Accordingly, the offering price
should not be regarded as an indication of any future market price of our stock.

Because there is not now and may never be a public market for our common stock,
investors may have difficulty in reselling their shares.

Our common stock is currently not quoted on any market. No market may ever
develop for our common stock, or if developed, may not be sustained in the
future. Accordingly, our shares should be considered totally illiquid, which
inhibits investors' ability to resell their shares.

Because our common stock is considered a penny stock, any investment in our
common stock is considered a high-risk investment and is subject to restrictions
on marketability; you may be unable to sell your shares.

If our common stock becomes tradable in the secondary market, we may be subject
to the penny stock rules adopted by the Securities and Exchange Commission that
require brokers to provide extensive disclosure to its customers prior to
executing trades in penny stocks. These disclosure requirements may cause a
reduction in the trading activity of our common stock, which in all likelihood
would make it difficult for our shareholders to sell their securities. For
additional details concerning the disclosure requirements under the penny stock
rules, see the section entitled Penny Stock Considerations at page 68 below.

In the future, our stock may trade on the over-the-counter bulletin board;
because the bulletin board does not operate under the same rules and standards
as the Nasdaq stock market, our stockholders may have greater difficulty in
selling their shares when they want and for the price they want.

The over-the-counter bulletin board is separate and distinct from the Nasdaq
stock market. Nasdaq has no business relationship with issuers of securities
quoted on the over-the-counter bulletin board. The SEC's order handling rules,
which apply to Nasdaq-listed securities don't apply to securities quoted on the
bulletin board.

Although the Nasdaq stock market has rigorous listing standards to ensure the
high quality of its issuers, and can delist issuers for not meeting those
standards, the over-the-counter bulletin board has no listing standards. Rather,
it is the market maker who chooses to quote a security on the system, files the
application and is obligated to comply with keeping information about the issuer
in its files. The NASD cannot deny an application by a market maker to quote the
stock of a company. The only requirement for inclusion in the bulletin board is
that the issuer be current in its reporting requirements with the SEC.

Because stocks traded on the bulletin board are usually thinly traded, highly
volatile, have fewer market makers and are not followed by analysts, our
stockholders may have greater difficulty in selling their shares when they want
and for the price they want.

Investors may have greater difficulty in getting orders filled because it is
anticipated that if our stock trades on a public market, it initially will trade
on the over-the-counter bulleting board rather than on Nasdaq. Investors' orders
may be filled at a price much different than expected when an order is placed.
Trading activity in general is not conducted as efficiently and effectively as
with Nasdaq-listed securities.

Investors must contact a broker dealer to trade bulletin board securities.
Investors do not have direct access to the bulletin board service. For bulletin
board securities, there only has to be one market maker.

Bulletin board transactions are conducted almost entirely manually. Because
there are no automated systems for negotiating trades on the bulletin board,
they are conducted via telephone. In times of heavy market volume, the
limitations of this process may result in a significant increase in the time it
takes to execute investor orders. Therefore, when investors place market orders
- an order to buy or sell a specific number of shares at the current market
price - it is possible for the price of a stock to go up or down significantly
during the lapse of time between placing a market order and getting execution.

Because bulletin board stocks are usually not followed by analysts, there may be
lower trading volume than for Nasdaq-listed securities.

Because certain states require us to seek a qualification for our shareholders
to be able to resell their shares in any public market that develops,
shareholders may be prevented from selling their shares in the open market to
residents of these states if this qualification is not obtained.

We intend to seek qualification for secondary trading by obtaining a listing in
Standard and Poor's. This will qualify our securities for trading in the
following states: Alaska, Arizona, Arkansas, California, Colorado, Connecticut,
Delaware, District of Columbia, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas,
Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nebraska,
Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma,
Oregon, Rhode Island, South Carolina, Texas, Utah, Washington, West Virginia,
and Wyoming.

We currently do not intend to and may not be able to qualify securities for
resale in other states with require shares to be qualified before they can be
resold by our shareholders. This may inhibit our shareholders ability to resell
their shares if a public market does develop for our stock.

Certain Nevada corporation law provisions could prevent a potential takeover of
us which could adversely affect the market price of our common stock or deprive
you of a premium over the market price.

We are incorporated in the State of Nevada. Certain provisions of Nevada
corporation law could adversely affect the market price of our common stock.
Because Nevada corporation law requires board approval of a transaction
involving a change in our control, it would be more difficult for someone to
acquire control of us. Nevada corporate law also discourages proxy contests
making it more difficult for you and other shareholders to elect directors other
than the candidates nominated by our board of directors.

SPECIAL INFORMATION REGARDING FORWARD LOOKING STATEMENTS

Some of the statements in this prospectus are "forward-looking statements".
These forward-looking statements involve certain known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by these forward-looking statements. These
factors include, among others, the factors set forth above under "Risk Factors".
The words "believe," "expect," "anticipate," "intend," "plan," and similar
expressions identify forward-looking statements. We caution you not to place
undue reliance on these forward-looking statements. We undertake no obligation
to update and revise any forward-looking statements or to publicly announce the
result of any revisions to any of the forward-looking statements in this
document to reflect any future or developments. However, the Private Securities
Litigation Reform Act of 1995 is not available to us as a non-reporting issuer.

ITEM 4. USE OF PROCEEDS

Not Applicable. We will not receive any proceeds from the sale of the securities
by the selling shareholders.

ITEM 5. DETERMINATION OF OFFERING PRICE

Our management has determined the offering price for the selling shareholders'
shares. The offering price has been arbitrarily determined and does not bear any
relationship to our assets, results of operations, or book value, or to any
other generally accepted criteria of valuation. Prior to this offering, there
has been no market for our securities.

ITEM 6. DILUTION

We are not offering any shares in this registration statement. All shares are
being registered on behalf of our selling shareholders.

Under the terms of our Class B preferred stock, we must issue additional shares
of common stock upon conversion for no additional consideration if the average
of the opening bid and ask price on the over the counter bulletin board is less
than $3.00. In addition, under the terms of our Class C preferred stock, we must
issue additional shares of common stock upon conversion for no additional
consideration if the average of first 5 days trading bid and ask price on the
over the counter bulletin board is less than $3.00, subject to adjustment. If
this occurs, it could significantly dilute the value of your shares.

ITEM 7. SELLING SECURITY HOLDERS

The selling security holders named below are selling the securities. The table
assumes that all of the securities will be sold in this offering. However, any
or all of the securities listed below may be retained by any of the selling
security holders, and therefore, no accurate forecast can be made as to the
number of securities that will be held by the selling security holders upon
termination of this offering. We believe that the selling security holders
listed in the table have sole voting and investment powers with respect to the
securities indicated. We will not receive any proceeds from the sale of the
securities by the selling shareholders.

Selling Shareholders with Common Stock and Class B Preferred Stock

Additional Shares of Common
Stock if
Number Preferred Stock
Of Number of Shares is Converted
Shareholders Name of Stockholder Note of Common Stock Minimum-Maximum
===========================================================================================================
1 Albright, Lee B. 10,000 0-20,000
1 Beck, Michael W. 5,000 0-10,000
1 Bedan, Debra 1,000 0-2,000
1 Betourne, Richard A. & Irma M. 30,000 0-60,000
Joint Tenants
1 Bohan, Brian 10,000 0-20,000
1 Claussen, Richard 5,000 0-10,000
1 DATALECT, INC. 1 5,000 0-10,000
1 Deromedi, Patrick J. 30,000 0-60,000
1 Dinero, Gina M. 5,000 0-10,000
1 Frasco, Dennis 1,000 0-2,000
1 Frasco, Karen K. 3,000 0-6,000
1 Frasco, Michael 1,000 0-2,000
1 Frederic, Douglas 1,000 0-2,000
1 Freeman, Wynne K. 20,000 0-40,000
1 Gooden, Donald R. 10,000 0-20,000
1 Gray, Mary 10,000 0-20,000

1 Gutierrez, Michael & Lisa
Joint Tenants 5,000 0-10,000
1 Hammer, James E. 106,250 0-212,500
1 Hammer, Paul H. & Valerie
Joint Tenants 63,158 0-126,316
1 Hammer, Susan 75,000 0-150,000
1 Hannah, Robert 10,000 0-20,000
1 Hartwell, James H. & Patricia
Joint Tenants 10,000 0-20,000
1 I. Robert Beton Trust 2 10,000 0-20,000
1 Isaac, Odell & Day, Amy, Joint
Tenants 50,000 0-100,000
1 James J. Healey Group 3 46,500 0-93,000
1 Johnson, Barbara 10,000 0-20,000
1 Johnson, Leslie 5,000 0-10,000
1 Johnson, Robert 10,000 0-20,000
1 KELLYSHARES, LTD. 4 30,000 0-60,000
1 Klein, Andrew 56,000 0-112,000
1 Klein, Jonathan & Jane Joint
Tenants 20,000 0-40,000
1 Krasovich, Edward J. TRUST 5 5,000 0-10,000
1 Landis, Lyle D. & Mary T.
Joint Tenants 10,000 0-20,000
1 Lewis, David E. 10,000 0-20,000
1 Madsen Holdings, Ltd. 6 200,000 0-400,000
1 Manufactured Home Lots, Inc. 7 20,000 0-40,000
1 Martin, Lee J. & Alison Joint
Tenants 15,000 0-30,000
1 McClendon, Paul 10,000 0-20,000
1 McKnight, Dana Alan 10,000 0-20,000
1 Middelhede, Carsten 20,000 0-40,000
1 Mongrain, Raymond E. &
Veltkamp, Darrell R. 10,000 0-20,00
1 Moore, Richard & Denise E. 85,500 0-171,000
Joint Tenants
1 Nist, John E. 5,000 0-10,000
1 Nowick, Martin E. MD PC Profit 8 40,000 0-80,000
Sharing Plan Restated
1 O'Shaughnessy, Brian J. 50,000 0-100,000
1 O'Shaughnessy, Daniel 25,000 0-50,000
1 O'Shaughnessy, Kevin 5,000 0-10,000
1 Rancho Coastal Realty Inc. 9 10,000 0-20,000
1 Reding, David 114,444 0-228,888

1 Ruff, Christopher D. & Cydney 17,500 0-35,000
J. Joint Tenants
1 Rusty Bartell Weiss-TTEE, The
Weiss Rev. Trust 10 10,000 0-20,000
1 Simon, Howard M. 20,000 0-40,000
1 Simone, Ed 10,000 0-20,000
1 Steinhauser, Gregg 20,000 0-40,000
1 Sterling Trust Company, 8 10,000 0-20,000
Trustee; FBO: Martin E.
Nowick, Acct. No. 052424
1 Sterling Trust Company,
Trustee; FBO: Susan K. Nowick,
Acct. No. 052425 11 10,000 0-20,000
1 T. BABA & Co. 12 39,084 0-78,168
1 The Kaites Family Trust 13 30,000 0-60,000
1 Van Lanen, David 10,000 0-20,000
1 Wanderer, H. J. 10,000 0-20,000
1 Xavier, Frank 10,000 0-20,000
TOTAL 1,495,436 0-2,990,872

Selling Shareholders with Common Stock Only

Additional Shares of Common
Stock if
Number Preferred Stock
Of Foot Number of Shares is Converted
Shareholders Name of Stockholder note of Common Stock Minimum-Maximum
===========================================================================================================
1 Bilcorp, Inc. 2,000 0-0
1 Boettcher, Harry G. 12,300 0-0
1 Halstead, Dean S. 14 4,500 0-0
O'Shaughnessy, Brian J. 40,125 0-0
1 Woods, Jerald 15 5,000 0-0
5 SUB-TOTAL 63,925 0-0

Selling Shareholders with Common Stock and Class C Preferred Stock

1 SUB-TOTAL 1,000,000 0-2,000,000

66 TOTAL ALL CLASSES 2,559,361 0-4,990,872

Notes:
1 Business: Software development. Voting or Control: Donald Krueger, President.
2 Business: Trust. Voting or Control: I. Robert Benton, Trustee.
3 Business: Investor group. Voting or Control: James Healey, Sr. Partner & Partner.
4 Business: Sales & Marketing. Voting or Control: David E. Lewis, Administrative Director.
5 Business: Trust. Voting or Control: Ed Krasovich, Manager.
6 Business: Trust. Voting or Control: Mr. & Mrs. Richard Madsen, General Partners.
7 Business: Real estate. Voting or Control: Milton Alsum, President.
8 Business: Medical practice. Voting or Control: Martin Nowick, MD.
9 Business: Real estate. Voting or Control: Brian Bohan, President.
10 Business: Trust. Voting or Control: Rusty Bartell Weiss, Trustee.
11 Business: Medical practice. Voting or Control: Susan K. Nowick.
12 Business: Avocado farming. Voting or Control: Thomas Sera, Partner.
13 Business: Trust. Voting or Control: John Kaites, Trustee.
14 Relationship to company: Son of Larry Halstead.
15 Relationship to company: Director.
16 Business: Telecommunications. Voting or Control: David Hewitt, General Partner.
Relationship to company: Director.

We intend to seek qualification for sale of the shares in those states where the
shares will be offered. That qualification is necessary to resell the shares in
the public market and only if the shares are qualified for sale or are exempt
from qualification in the states in which the selling shareholders or proposed
purchasers reside. There is no assurance that the states in which we seek
qualification will approve resales of the shares.

ITEM 8. PLAN OF DISTRIBUTION

Our selling shareholders are offering 2,559,361 shares of our common stock,
$.001 par value per share; 1,495,436 shares of Class B preferred stock, $.001
par value; 1,000,000 shares of Class C preferred stock, $.001 par value.

The securities offered by this prospectus will be sold by the selling
shareholders or by those to whom such shares are transferred. We are not aware
of any underwriting arrangements that have been entered into by the selling
security holders. The distribution of the securities by the selling shareholders
may be effected in one or more transactions that may take place in the
over-the-counter market, including broker's transactions, privately negotiated
transactions or through sales to one or more dealers acting as principals in the
resale of these securities.

Any of the selling shareholders, acting alone or in concert with one another,
may be considered statutory underwriters under the Securities Act of 1933, if
they are directly or indirectly conducting an illegal distribution of the
securities on behalf of our corporation. For instance, an illegal distribution
may occur if any of the selling shareholders were to provide us with cash
proceeds from their sales of the securities. If any of the selling shareholders
are determined to be underwriters, they may be liable for securities violations
in connection with any material misrepresentations or omissions made in this
prospectus. In addition, the selling shareholders and any brokers and dealers
through whom sales of the securities are made, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, and the
commissions or discounts and other compensation paid to such persons may be
regarded as underwriters' compensation.

The selling shareholders may pledge all or a portion of the securities owned as
collateral for margin accounts or in loan transactions, and the securities may
be resold pursuant to the terms of such pledges, margin accounts or loan
transactions. Upon default by such selling shareholders, the pledgee in such
loan transaction would have the same rights of sale as the selling shareholders
under this prospectus. The selling shareholders may also enter into exchange
traded listed option transactions, which require the delivery of the securities
listed under this prospectus. The selling shareholders may also transfer
securities owned in other ways not involving market makers or established
trading markets, including directly by gift, distribution, or other transfer
without consideration, and upon any such transfer the transferee would have the
same rights of sale as such selling shareholders under this prospectus.

In addition to the above, each of the selling shareholders and any other person
participating in a distribution will be affected by the applicable provisions of
the Securities Exchange Act of 1934, including, without limitation, Regulation
M, which may limit the timing of purchases and sales of any of the securities by
the selling shareholders or any such other person.

Upon this registration statement being declared effective, the selling
shareholders may offer and sell their shares from time to time until all of the
shares registered are sold; however, this offering may not extend beyond two
years from the initial effective date of this registration statement.

There can be no assurances that the selling shareholders will sell any or all of
the securities. In order to comply with state securities laws, if applicable,
the securities will be sold in jurisdictions only through registered or licensed
brokers or dealers. In various states, the securities may not be sold unless
these securities have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied with.
Under applicable rules and regulations of the Securities Exchange Act of 1934,
as amended, any person engaged in a distribution of the securities may not
simultaneously engage in market-making activities in these securities for a
period of one or five business days prior to the commencement of such
distribution.

All of the foregoing may affect the marketability of our securities. Pursuant to
the various agreements we have with the selling shareholders, we will pay all
the fees and expenses incident to the registration of the securities, other than
the selling security holders' pro rata share of underwriting discounts and
commissions, if any, which is to be paid by the selling shareholders.

Should any substantial change occur regarding the status or other matters
concerning the selling shareholders, we will file a Rule 424(b) prospectus
disclosing such matters.

Until a market develops, if any sales are consummated at a price different than
$3 per share, you will report each such sale on:

o A prospectus supp1ement, if within 20%; or
o A post-effective amendment, if more than 20%.

ITEM 9. LEGAL PROCEEDINGS

We are not aware of any pending or threatened legal proceedings, in which we are
involved.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS

The board of directors elects our executive officers annually. A majority vote
of the directors who are in office is required to fill vacancies. Each director
shall be elected for the term of one year, and until his successor is elected
and qualified, or until his earlier resignation or removal. There are no family
relationships between any of the directors and executive officers. Our directors
and executive officers are as follows:

NAMEAGETITLESERVED SINCE

David Kline II 40 Chairman, C.E.O, President, 1985
C.O.O. & Director

Larry Halstead 58 Sec./Treas., C.F.O. &
Director 1996

Michael Godfree 60 V.P., Business Development
& Director 1997

Jerald Woods 53 V.P. & Director 1997

David Hewitt 56 Director 2001

The following is a brief summary of the business experience of these individuals:

David "DK" Kline II, has served as president, chief operating officer and
director since inception, but since March 1999 has served in such capacities on
a very limited basis. In December 1999 he became the chairman of the board and
chief executive officer. From 1996 to the present DK has served as the president
of Competitive Communications, Inc., our wholly owned subsidiary, and commenced
serving as president of CCI Residential Services, Inc. upon its incorporation in
January 2000. From 1992 to 1996, DK served as president of Western Telephone &
Television, Riverside, California. From December 2001 to the present he has been
Account Executive for Qwest Communications. From March 1999 to December 2001 he
was Regional Account Manager with Electric Lightwave, Inc. It is anticipated

that he will reassume his duties on a full-time basis if and when we secure
additional capital for the implementation of our future plans. DK has a Bachelor
of Arts in Chemistry from California Lutheran University, 1984.

Larry Halstead has been Secretary/Treasurer, Chief Financial Officer and
Director since inception. He has served in the same capacity for Competitive
Communications, Inc. since 1996 and of CCI Residential Services, Inc. since
January 2000. From 1994 to 1996 he was Executive Consultant Sales and Marketing
for Integrated Cargo Management Systems, Inc., of San Antonio, Texas. From 1987
to 1993 he was Vice President Sales & Marketing and Partner for Compu-Source of
El Toro, California. From 1982 to 1987 he worked for Standard Logic, Inc.,
Corona, California, as Marketing Vice President. From 1977 to 1982 he was
Marketing Service Manager and Planning Manager for EECO, Inc. Hotel Systems
Division of Santa Ana, California. From 1972 to 1977 he was Sales and Data
Processing Manager for I/O Computing of Long Beach, California. From 1966 to
1997, Mr. Halstead held a number of command and other key positions in the U.S.
Army and the Army Reserve, achieving the rank of Colonel upon retirement in
1997. From 1988 to 1991, he was Deputy Chief of Staff for Logistics for the 63rd
Army Reserve Command. From 1994 to 1997, he was the Army's Emergency
Preparedness Liaison Officer for Texas. Mr. Halstead received a Bachelor of
Science in Biology from the University of California, Irvine, 1977. He is a
graduate of Air War College in 1987, and is certified as a Logistician by the
U.S. Army.

Michael Godfree has been Vice President, Business Development and Director since
1998. Since 1995 Mr. Godfree has been president and a major stockholder of
APMSAFE.COM (American Privacy Management, Inc.). In 2000 he became a director of
Biometric Verification Inc., and Biometric Verification Holdings Inc. From 1986
to 1995 he was president of TSC. In 1984 he founded, and from 1984 to 1986, he
was president of American National Cellular. Mr. Godfree was educated at
Newbattle Abbey College, Dalkeith, Edinburgh, Scotland; Occidental College, Los
Angeles; and the University of Sussex, Brighton, England, from which he holds a
Bachelor of Arts Degree in Law.

Jerald Woods has been Vice President and Director since 1998. From 1994 to 2000
he was an officer and director of APMSAFE.COM (American Privacy Management,
Inc.). From 1988 to 1994 he was chairman and director for American Digital
Communications, Inc. From 1984 to 1989 he hosted and produced "Breakthroughs in
Technology," an investment program specializing in high technology companies. He
currently is President of JLW Communications Services. He also serves as a
director for Pico Medical located in Bethesda, Maryland.

David Hewitt has been a Director since December 2001. From 1994 to date, he has
been Co-Founder and President of Huntington Partners, Inc. From 1989 to 1992, he
was Co-Founder and Managing Director of Trilateral Company, a real estate firm.
He has an MBA with Distinction from Amos Tuck School of Business Administration
at Dartmouth College and an AB from University of Rochester.

Election of Directors

Our bylaws provide that the board of directors shall consist of five members
until changed by amendment to the articles of incorporation or by amendment to
the applicable section of the bylaws, adopted by the majority of the voting
power of the corporation.

Family Relationships

Ms. Judy Kline is the mother of Mr. David Kline II.

Significant Employees

Since inception in 1996, Judy Kline has been Customer Service Manager of
Competitive Communications, Inc., a wholly owned subsidiary of Competitive
Companies, Inc. From 1985 to 1996 she served in the same capacity at Western
Telephone & Television, the forerunner of Competitive Communications, Inc. From
1978 to 1984 she was Assistant Controller at Sav-On Drugs in Anaheim,

California. She has been active in many philanthropic organizations including
the Assistance League of Long Beach and Nightingales of Memorial Hospital. She
is the mother of the Company's chairman of the board, chief executive officer
and president David Kline II. In 2001 she was elected to the board of directors
of CCI Residential Service, Inc., a wholly owned subsidiary of Competitive
Communications, Inc.

David Bower, MIS Manager, has been with the Company since inception in 1996. In
1996 he was promoted from senior Analyst to MIS Manager and is responsible for
maintaining and upgrading the Hartline billing system, liaison with telephone
providers, technical support on the Company's telephone, cable television, and
internet services, and technical assistance to customer service. From 1994 to
1996 he served as Programmer/Analyst and Programmer at Western Telephone &
Television, the forerunner of Competitive Communications, Inc. From 1990 to 1994
he was a Computer Analyst/Data Entry Specialist at Pot O' Gold Inc., Irvine,
California. In 2001, Mr. Bower was elected to the board of directors of
Competitive Communications, Inc., a wholly owned subsidiary of Competitive
Companies, Inc. In 1995, he received a Bachelor of Arts in Mathematics from the
University of California, Riverside.

Legal Proceedings

No officer, director, or persons nominated for such positions, promoter or
significant employee has been involved in legal proceedings that would be
material to an evaluation of our management.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables set forth the ownership, as of the date of this
registration statement, of our common stock by each person known by us to be the
beneficial owner of more than 5% of our outstanding common stock each of our
directors all executive officers and our directors as a group. To the best of
our knowledge, all persons named have sole voting and investment power with
respect to such shares, except as otherwise noted. There are not any pending or
anticipated arrangements that may cause a change in control of our company.

NameNumber of SharesPercentage
Michael Godfree 275,000 4.7
Larry Halstead 315,000 5.3
David Kline II 1,750,000 29.6
Jerald Woods 188,600 3.2
Huntington 1,000,000 16.7

Telecommunications Partners, L.P. (1)
All directors and named executive 3,528,600 59.4
officers (as a group of 5 persons)

(1) Mr. David Hewitt is the president of the corporate general partner of
Huntington Telecommunications Partners, L.P.

This table is based upon information derived from our stock records. Unless
otherwise indicated in the footnotes to this table and subject to community
property laws where applicable, we believe that each of the shareholders named
in this table has sole or shared voting and investment power with respect to the
shares indicated as beneficially owned. Applicable percentages are based upon
5,912,061 shares of common stock outstanding.

ITEM 12. DESCRIPTION OF SECURITIES

The following description as a summary of the material terms of the
provisions of our articles of incorporation and bylaws, is qualified in its
entirety. The articles of incorporation and bylaws have been filed as exhibits
to the registration statement of which this prospectus is a part.

Authorized Capital StockShares Of Capital Stock
Outstanding
Common 70,000,000 5,912,061

Preferred 10,000,000 4,000,000 - Class A
1,495,436 - Class B
1,000,000 - Class C

Common stock

We are authorized to issue 70,000,000 shares of no par common stock. There are
5,912,061 of common stock held of record by 125 stockholders.

All shares of common stock outstanding are, and the common stock to be
outstanding upon completion of this offering will be, validly issued, fully paid
and non-assessable.

Each share of common stock entitles the holder to one vote, either in person or
by proxy, at meetings of shareholders. The holders are not permitted to vote
their shares cumulatively. Accordingly, the shareholders of our common stock who
hold, in the aggregate, more than fifty percent of the total voting rights can
elect all of our directors and, in such event, the holders of the remaining
minority shares will not be able to elect any of the such directors. The vote of
the holders of a majority of the issued and outstanding shares of common stock
entitled to vote thereon is sufficient to authorize, affirm, ratify or consent
to such act or action, except as otherwise provided by law.

Holders of common stock are entitled to receive ratably such dividends, if any,
as may be declared by the board of directors out of funds legally available. We
have not paid any dividends since our inception, and we presently anticipate
that all earnings, if any, will be retained for development of our business. Any
future disposition of dividends will be at the discretion of our Board of
Directors and will depend upon, among other things, our future earnings,
operating and financial condition, capital requirements, and other factors.

Holders of our common stock have no preemptive rights or other subscription
rights, conversion rights, redemption or sinking fund provisions. Upon our
liquidation, dissolution or winding up, the holders of our common stock will be
entitled to share ratably in the net assets legally available for distribution
to shareholders after the payment of all of our debts and other liabilities.
There are not any provisions in our Articles of Incorporation or our by-laws
that would prevent or delay change in our control.

Preferred stock

We are authorized to issue 10,000,000 shares of preferred stock

Class A preferred stock

below with the achievement of the following events for a period commencing on
the date such event was achieved and ending on December 31, 2010.

The conversion events are as follows:

Number of shares of
common stock issued
Eventupon conversion

Achieving 100% increase in the combined number of owned 10,000,000
apartment complex passings plus non-apartment complex customers

Achieving 10,000 customers in the combined number of owned 5,000,000
apartment complex passings and non-apartment complex customers

Achieving 20,000 customers in the combined number of owned 5,000,000
apartment complex passings and non-apartment complex customers

o An apartment complex passing is an individual apartment under direct
contract with it for telephone, television or Internet service.

o A non-apartment complex customer is a non-apartment residential or
business customer that is counted once for each major service to which
they subscribe.

Conversion events are based on customer base existing as of December 9, 1999.

Class B convertible preferred shares

We have issued 1,495,436 shares of Class B convertible preferred stock entitling
persons owning the Class B shares the following:

The stock shall convert into such number or fraction thereof shares of common
stock based upon the following:

1- the fraction: [average of opening bid and ask price on the over the counter bulletin board/$3.00]
divided by
the fraction: [average of opening bid and ask price on the over the counter bulletin board/$3.00]

For example, assume average opening bid/ask of $2.00. 1 - 2/3 = 1/3. 1/3 divided
by 2/3 = .5 additional share of common stock issued upon conversion.

If the average opening bid/ask price is more than $3.00 per share, no shares of
common stock shall be issued and the rights of the preferred stockholders will
terminate. Further, under no circumstances will the shares convert into more
than 2,990,872 shares of common stock.

Depending upon the average opening bid/ask price, there will be from zero to
2,990,872 shares of common stock issued un conversion of the Class B convertible
preferred shares.

Class C convertible preferred shares

We have issued 1,000,000 shares of Class C convertible preferred stock entitling
persons owning the Class C shares the following:

The stock shall convert into such number or fraction of shares of common stock
based upon the following:

If the average of the closing bid price for the common stock for first
five business day period immediately following the closing of the
reorganization agreement during which the common stock is qualified
for quotation on the over the counter bulletin board is less than
$3.00 per share, the number of shares of common stock to be issued
upon conversion of the Class C preferred stock shall be the product
obtained by multiplying the following conversion ratio by the
1,000,000 shares of Class C preferred stock held by Huntington
Partners. The conversion ratio shall be one minus the adjusted price
divided by the adjusted price. The adjusted price shall be determined
by dividing the closing bid price for the common stock for first five
business day period immediately following the closing of the
reorganization agreement during which the common stock is qualified
for quotation on the over the counter bulletin board by $3.00. For
purposes of determining the closing bid price for the common stock for
first five business day period immediately following the closing of
the reorganization agreement during which the common stock is
qualified for quotation on the over the counter bulletin board,
purchases of our common stock by us or our affiliates or persons
controlled by us or our affiliates shall be disregarded. In addition,
if trades have not been executed on at least three of those five days,
the adjustment period shall be extended until our common stock shall
have been traded on at least three days, and the average closing bid
price for those three trading days shall be the price used in the
formula.

For example, assume average of first 5 days closing bid of $2.00, and no other
adjustments under the formula. The conversion would occur as follows:

o 1 - 2/3 = 1/3.

o 1/3divided by 2/3 = .5.

o .5 x 1,000,000 = 500,000.

Accordingly, 500,000 shares of common stock would be issued to Huntington
Partners upon conversion of the Class C preferred stock.

If the average of first 5 days closing bid is more than $3.00 per share, no
shares of common stock shall be issued and the rights of the preferred
stockholders will terminate. Further, under no circumstances will the shares
convert into more than 2,000,000 shares of common stock.

Depending upon the average opening bid/ask price, there will be from zero to
2,000,000 shares of common stock issued upon conversion of the Class B
convertible preferred shares.
Conversion of both Class B and Class C preferred stock

The following table sets forth information concerning number of shares issued
upon conversion and total number of shares outstanding after conversion for the
Class B and Class C preferred stock combined, with no conversion of Class A
preferred stock:

Total number of shares of
common stock outstanding
Additional Additional assuming no conversion
Average Opening Number of common Number of common of Class A preferred and
Bid/Ask Price per time stock issued upon stock issued upon conversion of both
period of conversion conversion of Class B conversion of Class C Class B and Class C
formula preferred stock preferred stock preferred stock

$3.00 or more 0 0 5,912,061
$2.50 299,087 200,000 6,411,148
$2.00 747,718 500,000 7,159,779
$1.50 1,495,436 1,000,000 8,407,497
$1.00 or less 2,990,872 2,000,000 10,902,933

Other matters related to preferred stock

If we at any time after the date of the reorganization we effect a subdivision
of our outstanding common stock or preferred stock, the conversion ratios as
determined above will be proportionately adjusted. Holders of the all classes of
preferred shares are not entitled to preferential dividend rights, redemption or
voting rights.

We presently have no plans to issue any additional shares of preferred stock.
However, preferred stock may be issued with preferences and designations as the
board of directors may from time to time determine. The board may, without
stockholders approval, issue preferred stock with voting, dividend, liquidation
and conversion rights that could dilute the voting strength of our common
stockholders and may assist management in impeding and unfriendly takeover or
attempted changes in control.

There are no restrictions on our ability to repurchase or reclaim our preferred
shares while there is any arrearage in the payment of dividends on our preferred
stock.

Options

We have 5,040,000 outstanding non-statutory options to the following:

Name Number of Option Exercise Price Number Currently Exercisable

Officers, Directors & Affiliates:

Larry Halstead 1,000,000 $0.001 600,000
Jerald Woods 500,000 $1.00 0
Judy Kline (1) 2,625,000 $0.001 1,575,000

Sub-Total4,125,0002,175,000

Others:

Employees 445,000 $0.001 347,000
Employees 300,000 $0.85 0
Employees 70,000 $1.00 0
James Gibson 50,000 $1.00 0
James Healey 50,000 $1.00 0

Sub-Total915,000347,000

Total5,040,0002,522,000

(1) Judy Kline is an employee of Competitive Companies and mother Mr. David
Kline II, Competitive Companies' Chairman, C.E.O., President, C.O.O. & Director.
As Mr. Kline is over 21 years of age and does not live with his mother, he
disclaims beneficial ownership of the shares underlying Ms. Kline's options.

The general terms to exercise the options for all except James Healey, James
Gibson and Jerald Woods are the same. Exercise dates and amounts which can be
exercised vary. No options may be exercised until two years after initial grant
of the individual option. Options are normally exercisable over a five-year
period as follows: at the end of:

o First year - 0%,
o Second year - 40%
o Third through fifth year - 20% each year.

Mr. Healey and Mr. Gibson are independent agents for the sale of our products.
The options granted them and Mr. Woods require certain levels of performance
from them in order for them to exercise each level.

Dividends

Holders of common stock are entitled to receive ratably such dividends, if any,
as may be declared by our board of directors out of funds legally available.
Holders of preferred stock are not entitled to receive dividends. We have not
paid any dividends since our inception and presently anticipate that all
earnings, if any, will be retained for development of our business. Any future
disposition of dividends will be at the discretion of our Board of Directors and
will depend upon, among other things, our future earnings, operating and
financial condition, capital requirements, and other factors.

Transfer Agent and Registrar

We are the transfer agent and registrar for our preferred and common stock.

ITEM 13. INTEREST OF NAMED EXPERTS AND COUNSEL

Not Applicable

ITEM 14. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
LIABILITIES

Our bylaws, subject to the provisions of Nevada law, contain provisions which
allow the corporation to indemnify any person against liabilities and other
expenses incurred as the result of defending or administering any pending or
anticipated legal issue in connection with service to it if it is determined
that person acted in good faith and in a manner which he reasonably believed was
in the best interest of the corporation. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to our
directors, officers and controlling persons, we have been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.

ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS

preferred stock based upon the fact that the at the time of the agreement
Competitive Communications had annual revenues of approximately $1,000,000. The
parties agreed to a value of $1 per share for the 3,302,700 shares of common
stock and 5,000,000 shares of common stock underlying the preferred stock and
agreed upon a formula of 8 times approximate annual revenues.

Upon completion of the transaction, Mr. Kline II owned approximately 53% of the
issued and outstanding stock and 16 other shareholders, all officers, directors
and employees, owned the remainder. Mr. Kline II surrendered a percentage of
ownership in the business in other to secure the involvement of other
individuals he felt necessary to grow the business as shareholders.

ITEM 16. BUSINESS

We provide telecommunications services primarily to residents of apartment
complexes, and other users, including business and residential, in primary and
secondary metropolitan areas in California, Alabama, and Mississippi, and
anticipate offering these services across the United States as our business
expands. We offer a set of telecommunications products and services including:

o Local telephone services
o Domestic and international long distance services
o Enhanced voice, data and internet services

In addition, we have developed our own billing and back office systems we call
Hartline that enables us to enter, schedule and track a customer's order from
the point of sale to the installation and testing of service. Apartment complex
customers are serviced completely by our proprietary Hartline system.

We generally price our services at a discount of 5% to 10% below the prices
charged by the traditional local phone companies.

The business was founded in 1985 by a management team led by David Kline, Sr.,
the former President, Chief Operating Officer and co-founder of Superior
Communications, Inc, and is now led by his son, David Kline II.

As of September 30, 2001, we were operational in 10 apartment complexes in
California, Mississippi, and Alabama using 8 of our own telephone switches.

Subsidiaries

Unlike many of our competitors, we operate with both a regulated and
non-regulated company. One of our subsidiaries, Competitive Communications,
Inc., is regulated and our other subsidiary CCI Residential Services, Inc. is
unregulated.

Under the Telecommunications Act of 1996, our regulated subsidiary, Competitive
Communications, can receive significantly discounted prices from the existing or
traditional local phone companies and long distance carriers, thereby reducing
our costs compared to the prices we would have to pay without having this
status. As a regulated telecommunications provider Competitive Communications is
required to negotiate agreements for services from the local exchange carrier,
to file telephone rate tariffs with state public utilities commissions, and is
subject to the state public utilities commission rules regarding
telecommunications carriers. The tariff filing and update requirements and
compliance with commission rules require significant amount of time and cost in
order to ensure compliance with filing and commission rules. Currently
Competitive Communications is a regulated carrier in California and Mississippi.

Our other subsidiary, CCI Residential Services, operating under shared tenant
services provisions within each state, is a non-regulated company and is not
required to file tariffs with state public utilities commissions and does not
have to comply with commission rules regarding local exchange carriers. CCI
Residential Services can sign individual agreements with property owners
allowing for payments to the property owner of a portion of the revenue CCI
Residential receives from the apartment complex residents on the owner's
property, and legally avoid the more onerous rate filing requirements of its
regulated subsidiary and other regulated carriers. As a shared tenant service
provider CCI Residential Services is required by each state's public utilities
commission to provide regulated carriers with equal access to the apartment
complexes it services. CCI Residential Services accounts for approximately 95%
of Competitive Companies' revenue.

Competitive Communications buys or leases telephone-switching equipment and
leases transmission capacity from other carriers and then provides
telecommunications services to our non-regulated subsidiary, CCI Residential
Services, which in turn provides these services to residents of apartment
complexes. Competitive Communications also directly offers these services to
other residential and business customers. During 2001 Competitive Communications
accounted for approximately 5% of Competitive Companies' revenue. We anticipate
that this percentage will increase in the future as we increase our residential
and business customer base and move from a re-seller of the local telephone
carriers' services to sharing a portion of the local telephone carriers'
switches. This move will significantly reduce our costs from the local telephone
carrier, but will require significant up-front costs to implement.

Huntington Telecommunications Partners. L.P./Competitive Companies, Inc. Asset Acquisition

Competitive Companies, Inc. is currently the name of the company formed in
October 2001 solely to facilitate a December 2001 reorganization by which it
acquired the assets of Huntington Telecommunications Partners, LP, a California
limited partnership.

The assets of Huntington Partners are part of the private telephone and cable
television systems owned by Huntington Partners and installed under right of
entry agreements at four apartment complexes in California. Right of entry
agreements include private telephone service to residents at all four complexes
that is provided under telephone and cable television services for residents at
two of the four complexes.

The purchase price paid to Huntington Partners at closing was one million shares
of common stock of Competitive Companies. The initial purchase price will be
increased, if at all, as provided in the one million shares of Class C preferred
stock to be issued as additional payment for the assets.

The fair market value of Huntington Partners was determined during arm's length
negotiations with Huntington Partners. During the negotiations, several
historical and projected measures such as combined cash flows were considered in
determining the number of shares Huntington would receive. A combination of
these factors plus each party's subjective analysis of the worth of the assets
vs. the worth of the consideration received resulted in the determination of the
number of shares to issue. Mr. David Hewitt is President of the corporation
which is the General Partner of Huntington Partners.

o Having this registration statement declared effective

o Securing a qualification for quotation for our securities on the over
the counter bulletin board

Competitive Holdings, Inc. [f/k/a Competitive Companies, Inc.]/Competitive Companies, Inc. merger.

In December 2001, Competitive Holdings, Inc. [f/k/a Competitive Companies,
Inc.], a Nevada corporation originally formed March 1998 merged into a
wholly-owned subsidiary of Competitive Companies, Inc. and changed its name to
Competitive Holdings, Inc.

Competitive Holdings has two wholly owned subsidiaries:

o Competitive Communications, Inc. which was incorporated under the laws
of the state of California in February 1996.

o CCI Residential Services, Inc. which was incorporated under the laws
of the state of California in January 2000.

The amount of shares issued to Competitive Companies was determined by issuing
one share of common stock, Class A preferred stock, and Class B preferred stock
of Competitive Companies for each outstanding share of common stock, Class A
preferred stock, and Class B preferred stock of Competitive Companies. In
addition, options on the same terms and conditions as existed in Competitive
Companies prior to the merger were issued to the option holders at the time of
the merger.

How the reorganization was effected

The reorganization was effected as follows:

StepAction
1. Competitive Companies Holdings, Inc. was formed to facilitate the reorganization
2. Competitive Companies Holdings formed CCH Acquisition, a subsidiary to
acquire Competitive Companies
3. Competitive Companies merged into CCH Acquisition, with Competitive Companies
as the surviving company
4. Competitive Companies Holdings acquired the assets of Huntington Partners
5. Competitive Companies Holdings changed its name to Competitive Companies
6. CCH Acquisition changed its name to Competitive Holdings

As a result of the reorganization, Competitive Companies owns the assets of
Huntington Partners and has as a wholly owned subsidiary Competitive Holdings.

Reasons for entering into the transaction as structured

o Huntington Partners - Huntington Partners entered into these
transactions in order to divest its interest in telecommunications
assets and pursue other investment opportunities.

o Competitive Holdings - Competitive Holdings [f/k/a Competitive
Companies] entered into these transactions in order to have the assets
and cash flow of Huntington Partners reflected in its financial
statements.

o Acquisition companies - Competitive Companies Holdings and CCH
Acquisition had no assets or earnings and were used to facilitate the
structure of the reorganization, which structure was required under
the terms of the reorganization agreements.

Services

Competitive Communications

Competitive Communications offers the following services in most of its markets:

o Local and long distance services to business and non-apartment complex
residential customers

o Calling cards to business and non-apartment complex residential
customers

o Internet services to business and non-apartment complex residential
customers

o Local area network connection

o Resale of traditional phone company services

To offer these services, Competitive Communications generally must secure
certification from a state regulator and typically must file rates or price
lists for the services that it will offer. The certification process varies from
state to state; however, the fundamental requirements are largely the same.
State regulators require new entrants to demonstrate that they have secured
adequate financial resources to establish and maintain good customer service.
New entrants must show that they possess the knowledge and ability required to
establish and operate a telecommunications network.

In addition, Competitive Communications must enter into connection agreements
with traditional carriers. Competitive Communications entered into a connection
agreement with BellSouth which became effective October 1, 1996, and covers nine
states including: Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi,
North Carolina, South Carolina, and Tennessee. This agreement has been renewed.
In February 2000 it entered into connection agreements with PacBell and GTE in
California and are now operating as a newer local phone companies in California.
The agreement with PacBell expires in June 2002, provided that notice of
termination is given at least 120 days prior to the expiration date. If no
notice is given, the agreement continues until ended with 45 days advance
written notice by either party. The agreement with GTE automatically renews each
year unless either party gives prior written notice of termination. In
Mississippi we must upgrade our switch to accommodate required features and have
rates approved in order to commence operating.

Services are sold as bundled or unbundled depending on the customer's
preference. Presently services are sold directly by Competitive Communications.
Most customers are added from direct solicitation, yellow pages advertising,
referrals from other customers, and conversion of customers who leave apartment
complexes serviced by CCI Residential Services. In the future, the company plans
to add commissioned sales agents to target small to medium size businesses and
residential customers. Initially, we plan to add these agents in California then
subsequently in other western states as we become an authorized local exchange
carrier in those states. We anticipate that the small to medium size businesses
will provide better gross margins than the residential market since the business
customers normally make more long distance calls, create less bad debt than
residential customers, and are more apt to subscribe to high speed Internet
services that we offer. Presently over 99% of Competitive Communications
business is from telephone service to residential and business customers and
less than 1% from Internet services. We anticipate the percentage of Internet
services will increase in the future as we expand our Internet service offering
to our business and residential customers.

CCI Residential Services

CCI Residential Services provide the following products and services:

o Local and long distance services to apartment complex customers

o Calling cards to apartment complex customers

o Internet services to apartment complex customers

o Internet content control software

o Cable/satellite television services to apartment complex customers

o Wake-up call service

o Music on hold

To offer these services to apartment complex customers, CCI Residential Services
must sign a contract with the apartment owner. These are multi-year contracts
normally range from 10 to 20 years. They provide for the owner to share in a
percentage of the revenue we receive from servicing the complex. The percentage
received may vary for 0% to 11%, based on the total revenue received, the types
of services provided, the term of the contract and other negotiated factors. If
the complex is being built, CCI Residential must plan for, have approved, and
install underground cabling. If the complex is already built, it must survey the
cabling needs and negotiate the use of the cable with the owner. It must secure
state approval to conduct business in the state, establish service from
Competitive Communications if available or with the traditional local phone
companies until Competitive Communications is certified.

Services are sold as bundled or unbundled depending on the customer's
preference. Presently services are sold directly by Competitive Communications.
When tenants move into an apartment complex serviced by the company, the leasing
agent informs them that the complex has a private telephone service provider and
a private cable television provider (in those locations where we provide the
cable television service). The tenant must contact us in order to activate their
telephone and cable television service. If the tenant prefers to receive service
from the local telephone company instead of us, they may do so. However, their
telephone line must be cross-connected from us to the local telephone company.
This may take the telephone company from a few days to two weeks to accomplish
and cost the tenant for the work. If the tenant selects our service, in most
cases we can activate their telephone service while they are still on the line.
On an average more than 75% of the tenants decide to use our telephone service.
Those who do not use our telephone service either select a local carrier, use
their cell phones only or do not have telephone service. Over 74% of tenants use
our cable television service at those complexes where we offer the service.
Those who do not use our services either use satellite television dishes for
service or do not have television service. Presently, approximately 79% of CCI
Residential Services' revenue is from telephone related service, approximately
19% is from cable television service, and approximately 2% is from Internet
service to tenants of apartment complexes serviced by the company. We anticipate
the percentage of Internet services will increase in the future as we expand our
internet service offering to additional complexes that we service and
penetration increases.

Local Telephone Services

Both subsidiaries offer local telephone services, including local telephone
calls as well as other features such as:

o Call forwarding

o Call waiting

o Dial back

o Caller ID

o Speed dialing

o Calling cards

o Three way calling

o E-911

o Voice mail

Competitive Communications has negotiated agreements with the major local
telephone carrier in each of its markets to provide discounted telephone
service. In California, as a competitive local exchange carrier Competitive
Communications has signed an agreement with both Pacific Bell and Verizon as a
re-seller of services. Under the Telecom Act, this gives the company additional
discounts over previous rates. The company plans to sign an agreement with both
Pacific Bell and Verizon to lease portions of their switches which will
approximately double the discounts over the current rates.

Long Distance Services

We offer a full range of domestic and international long distance services.
These services include "1+" outbound calling, inbound toll free service, and
such services as calling cards, operator assistance, and conference calling.

Competitive Communications has negotiated an agreement with Qwest Communications
for volume discounts for long distance re-sale. Prior to signing with Qwest the
company had previous long distance service providers that were more expensive
than Qwest and provided very poor service. Periodically the company reviews
proposals from other long distance providers to ensure that its is receiving the
best possible rates. Should the company find better rates with comparable
service, the company would either request revision of the Qwest agreement or
select the more cost effective provider and transition to the new provider.

Internet Services

We offer dial-up Internet access services via conventional modem connections,
and software that can be used to filter out selected materials, i.e.,
pornographic and hate oriented material. Commencing in May 2002 we began
installing and offering high speed Internet service to selected apartment
complex customers. In the future we plan to offer high-speed Internet service to
our residential, business and other apartment complex customers. After accepting
bids from five other carriers, based on price and service quality, Qwest was
selected as carrier to provide our Internet service telephone lines at selected
apartment complexes that we service. Since Qwest does not provide ubiquitous
dial-up and high-speed internet service in our business and residential market
areas, we also have Internet re-sale agreements with Covad Communications and
digzip.com that cover most of our selected business and residential markets.

Markets

Our business plan covers most of the primary and secondary metropolitan areas in
the U.S. Initially; we will concentrate on the western, southwestern, and
southern United States. The order in which we develop our market will depend on
where we acquire the most financially beneficial contracts with apartment
complex owners.

Each month we receive requests from owners of apartment complexes from all over
the United States that meet the installation criteria for our switches and
service. Signing these contracts is contingent on having sufficient capital to
provide for the cost of installing the switching equipment and covering initial
negative cash flow until the subscriber base is high enough to cover operating
costs. Business and residential access lines will be added in the areas near

these switches and services either through our own switches or through resale
agreements with the traditional local phone companies.

Customers

We have chosen to focus primarily on three market segments:

o Apartment tenants who reside in apartment complexes of 300 units or more
that we can service under shared tenant services. This is accomplished by
signing agreements with the apartment complex owners to provide their
tenants with telephone, cable television, and Internet services. For
signing a long-term agreement to promote us as the provider of these
services at the complex, the owner receives a share of the revenue from the
services we provide to the tenants and some free services for the leasing
office and managers that reside at the complex. We also install telephone,
cable television and Internet equipment at the complex to provide these
services. We intend to use the switches that we install to terminate long
distance traffic from long distance carriers and eventually as facilities
to provide local telephone service to the area near the complexes. When
implemented, this could provide significant additional revenue for the
company.

o Residential telephone and Internet customers in large to medium size
markets. This is presently being done in California by using re-sale local
telephone service agreements with Pacific Bell and Verizon and long
distance re-sale from Qwest Communications. We also have Internet re-sale
agreements with Covad Communications and digzip.com that cover most of our
selected markets. In the future we intend to lease in selected areas a
portion of Pacific Bell's and Verizon's telephone switches in order to
provide local telephone service at a significantly discounted cost. To help
distinguish us from competitors who have adopted a similar strategy, we
offer potential customers one-stop shopping services through a single point
of contact.

o Small to medium size business telephone and Internet customers in large and
medium size markets. This is presently being done in California by using
re-sale local telephone service agreements with Pacific Bell and Verizon
and long distance re-sale from Qwest Communications. We also have Internet
re-sale agreements with Covad Communications and digzip.com that cover most
of our selected markets. In the future we intend to lease in selected areas
a portion of Pacific Bell's and Verizon's telephone switches in order to
provide local telephone service at a significantly discounted cost. To help
distinguish us from competitors who have adopted a similar strategy, we
offer potential customers one-stop shopping services through a single point
of contact.

Sales and Customer Support

We use the following approaches in our three primary targeted market segments:

o Apartment complex owners (CCI Residential Services)---We use direct sales,
trade journal advertising, referrals, and exhibitor trade shows.
o Small/medium/large businesses customers (Competitive Communications)---We use
primarily direct sales including direct telephone solicitation, flyers, and
yellow pages. In the future we expect to add professional sales agents that have
established business relationships with the prospective customer as well as
local media advertising.
o Residential customers (Competitive Communications)---We use primarily direct
sales including direct telephone solicitation, flyers, yellow pages and
conversion of apartment complex customers moving from one of our shared tenant
services locations. In the future we expect to use local media advertising.

We offer comprehensive package of communications services together with
traditional local and long distance services and Internet services. The package
of comprehensive services we offer is generally not available from the
traditional local phone companies, or available only at higher prices.

Depending upon our ability to finance our planned expansion, we anticipate
developing an agent program to sell to business and residential customers. We
believe that we can attract and retain highly qualified sales agents by offering
them the opportunity to:

o Participate in the potential economic returns made available through a
results-oriented commission package and stock options

o Market a comprehensive set of products and services and customer care options

o Work with an experienced, success-proven, and customer service oriented
company

In addition, we intend to implement a charity donation program in which
customers can specify their charity to which we will pay 5% of their long
distance payment. We intend to market this to charities directly or through the
anticipated future sales agency network.

Customer Service

We believe we are one of the few telecommunications service providers not using
automated attendants and voice mail in lieu of real people to answer our
customer service lines. We plan to maintain this human touch for quality
customer service, communications and problem solving for all of our apartment
complex, business, and residential customers.

Infrastructure

Equipment

We will continue to pursue what we refer to as a limited build strategy. Under
this strategy, we will

o Purchase and install certain switches in apartment complexes where we have
contracts with the owner of the apartment complex;

o Locate our hub equipment, switches, in or near one of our apartment complex
sites or the central office facilities of traditional local phone
companies; and

o Lease network elements from the traditional local phone companies or resell
services until growth justifies our ownership of additional network
equipment.

We believe that this limited build strategy offers a number of economic benefits.

o It allows us to enter into a new market in a six-to nine-month time frame,
less than half the 18-24 months generally required under the traditional
build first, sell later approach required before the Telecommunications Act
established a framework for newer local phone companies to acquire network
elements.

o It reduces the initial capital requirements in each market, allowing us to
focus our initial capital resources on the critical areas of sales,
marketing and operations support systems, instead of on constructing
extensive fiber optic networks to each customer.

We are implementing this limited build strategy in the three states where we are
now operating: California, Mississippi, and Alabama. We lease circuits to
connect the central office facilities of traditional local phone companies with
our apartment complex switches. In addition, we have deployed 8 of our own
switches to serve 10 apartment complexes. As our business develops, subject to
obtaining the necessary financing, we will purchase more equipment ourselves.

Hartline Billing and Automated Back Office System

Our Hartline system enters, schedules, provisions, and tracks a customer's order
from the point of sale to the installation and testing of service. It also
interfaces with trouble management, inventory, billing, collection and customer
service systems.

For our apartment complex customers, our processes are automated. For our
non-apartment complex customers, we intend to automate most of the processes
involved in switching a customer to our networks. Our goal is to accelerate the
time between customer order and service installation, reduce overhead costs and
provide exceptional customer service. To achieve this goal, we are continuing to
develop and enhance our Hartline system to support the growth of our operations
into the non-apartment complex markets.

Regulation

Our telecommunications services business is subject to federal, state and local
regulation.

Federal Regulation

The FCC regulates interstate and international telecommunications services,
including the use of local telephone facilities to originate and end interstate
and international calls. We operate under the 1996 Telecommunications Act, that
allows any entity to enter any telecommunications market, subject to reasonable
state regulation of safety, quality and consumer protection.

With respect to our domestic service offerings, Competitive Communications, Inc.
has filed rates with the FCC stating the rates, terms and conditions for our
interstate services. Our rates are generally not subject to pre-effective review
by the FCC, and can be amended on one day's notice. Our interstate services are
provided in competition with the traditional local phone, regional and national
companies. With limited exceptions, the current policy of the FCC for most
interstate access services dictates that traditional local phone companies
charge all customers the same price for the same service. Thus, the traditional
local phone companies generally cannot lower prices to those customers likely to
contract for their services without lowering charges for the same service to all
customers in the same geographic area, including those whose telecommunications
requirements would not justify the use of such lower prices. The FCC may,
however, alleviate this constraint on the traditional local phone companies and
permit them to offer special rate packages to very large customers, as we have
done in a few cases, or permit other forms of rate flexibility. The FCC has
adopted some proposals that significantly lessen the regulation of traditional
local phone companies that are subject to competition in their service areas and
provide such traditional local phone companies with additional flexibility in
pricing their interstate switched and special access on a central office
specific basis; and is considering expanding such flexibility.

Under authority granted by the FCC, we will resell the international
telecommunications services of other common carriers between the United States
and international points. In connection with such authority, our subsidiary,
Competitive Communications, Inc., has filed rates with the FCC stating the
rates, terms and conditions for our international services.

State Regulation

State regulatory agencies have regulatory jurisdiction when our facilities and
services are used to provide intrastate services. A portion of our current
traffic may be classified as intrastate and therefore subject to state
regulation. We expect to offer more intrastate services as our business and
product lines expand and state regulations are modified to allow increased local
services competition. For other than shared tenant services, in order to provide
intrastate services, we generally must obtain a certificate of public
convenience and necessity from the state regulatory agency and comply with state
requirements for telecommunications utilities, including state rate
requirements.

Similar to the FCC, state agencies require us to file periodic reports, pay
various fees and assessments, and comply with rules governing quality of
service, consumer protection, and similar issues. Although the specific
requirements vary from state to state, they tend to be more detailed than the
FCC's regulation because of the strong public interest in the quality of basic
local exchange service. We intend to comply with all applicable state
regulations, and as a general matter do not expect that these requirements of
industry-wide applicability will harm our business. However, new regulatory
burdens in a particular state may affect the profitability of our services in
that state.

Local Regulation

Our networks are subject to numerous local regulations such as building codes
and licensing. Such regulations vary on a city-by-city and county-by-county
basis. If we decide in the future to install our own fiber optic transmission
facilities, we will need to obtain rights-of-way over private and publicly owned
land. Such rights-of-way may not be available to us on economically reasonable
or advantageous terms.

Competition

The telecommunications industry is highly competitive. We believe that the
principal competitive factors affecting our business will be pricing levels and
clear pricing policies, customer service, and to a lesser extent the variety of
services offered. Our ability to compete effectively will depend upon our
continued ability to maintain high quality, market-driven services at prices
generally equal to or below those charged by our competitors. To maintain our
competitive posture, we believe that we must be in a position to reduce our
prices in order to meet reductions in rates, if any, by others. Any such
reductions could reduce our revenues. Many of our current and potential
competitors have financial, personnel and other resources, including brand name
recognition, substantially greater than those, as well as other competitive
advantages over us.

In each of the markets we target, we will compete principally with the
traditional local phone companies serving that area, such as PacBell, BellSouth
or Southwestern Bell. We believe the regional Bell operating companies' primary
agenda is to be able to offer long distance service in their service
territories.

As a recent entrant in the integrated telecommunications services industry, we
have not achieved and do not expect to achieve a significant market share for
any of our services. Recent regulatory initiatives allow newer local phone
companies such as our subsidiary, Competitive Communications, to connect with
traditional local phone companies facilities. Although this provides increased
business opportunities for us, such connection opportunities have been and
likely will continue to be accompanied by increased pricing flexibility for and
relaxation of regulatory oversight of the traditional local phone companies.

Traditional local phone companies have long-standing relationships with
regulatory authorities at the federal and state levels. While recent FCC
administrative decisions and initiatives provide increased business
opportunities to telecommunications providers such as us, they provide the
traditional local phone companies with increased pricing flexibility for their
private line and special access and switched access services.

Other Market Entrants

We face, and expect to continue to face, competition from other current and
potential market entrants, including long distance carriers seeking to enter,
reenter or expand entry into the local exchange market such as AT&T, Time
Warner, MCI WorldCom, Verizon and Sprint, and from other newer local phone
companies, resellers of local exchange services, competitive providers, cable
television companies, electric utilities, microwave carriers, wireless telephone
system operators and private networks built by large end users.

A number of companies similar to ours have entered or announced their intention
to enter into one or more of the same markets as us. We believe that not all of
them, however, are pursuing the same target customers as us.

We expect to increasingly face competition from companies offering long distance
data and voice services over the Internet. Such companies could enjoy a
significant cost advantage because they do not pay carrier access charges or
universal service fees.

Data/Internet Service Providers

The Internet services market is highly competitive, and we expect that
competition will continue to intensify. Our competitors in this market will
include other Internet service providers, other telecommunications companies,
online services providers and Internet software providers. Many of these
competitors have greater financial, technological and marketing resources than
those available to us.

Employees

As of March 31, 2002, we had 8 full-time, of which 2 are management, 3 are
technical and 3 are administrative, and 4 part-time employees, of which 1 is
management, 1 is technical and 2 are administrative. None of our employees are
represented by a collective bargaining agreement. We believe that we enjoy good
relationships with our employees.

ITEM 17. MANAGEMENTS DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS-COMPETITIVE COMPANIES, INC.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

Revenues. Total revenues decreased $159,422, or 10.3%, to $1,396,377 for
the year ending December 31, 2001 from $1,555,799 for the year ending December
31, 2000.

Apartment Complexes Telephone and Cable Television. Revenue from apartment
complex customers decreased by $163,359 or 11.0% to 1,321,484 from $1,484,843.
This revenue was derived principally from the sale of long distance and local
telephone service and cable television to apartment complex unit subscribers and
consisted of:

o the monthly recurring charge for basic telephone and/or cable television
service;

o usage based charges for local and long distance calls;

o charges for services, such as call waiting and call forwarding; and

o to a lesser extent, non-recurring charges, such as charges for additional
lines for an existing customer.

The high-end apartment complexes that we service have experienced lower
occupancy rates because of economic conditions in the later part of 2001
resulting in fewer apartment customers being serviced. With the special free
long distance calling plans and free local calling minutes being offered by most
cellular telephone companies, some apartment complex customers have decided to
use their cellular telephones as their only telephone. With the special offers
being made by satellite dish television providers, some residents have decided
to use those services. The combined affect resulted in an aggregate of 5.5%
fewer telephone customers and 3.2% fewer cable television customers at our
serviced apartment complexes. We believe that the apartment complexes will
experience lower occupancy rates over at least the next six months that may
slightly reduce future revenue from telephone and television services to
apartment complexes. To increase telephone revenue and customers served and
reduce transition of customers to cellular-only telephone service by other
providers, in May 2002 we began installing and providing high speed Internet
service to our telephone customers at selected apartment complexes. Our initial
penetration has exceeded our initial forecasts by almost 100%. For customers to
use our Internet service, they must also subscribe to our telephone service. In
January 2002 we began enhancing the television services we offer by adding
channels to the line-up and enhancing picture quality. Our pricing for telephone
service, cable television service, and high speed Internet service is
competitive with major providers. In December 2001 we completed the
reorganization agreement with Huntington Telecommunications Partners. We
anticipate this agreement will increase our net sales to telephone and
television customers, but will be partially offset by a reduction in our
administration and billing to Huntington Telecommunications Partners and an
increase in direct labor expense. We anticipate seeing the positive results of
these efforts in the first and second quarter 2002.

Future acquisition of new contracts with apartment owners for telephone,
television, and high speed Internet services to their complexes and addition of
cellular telephone service are contingent on uncertain future financing to
acquire the required equipment. We would prefer financing be done through equity
investment in our company in order to minimize capital lease funding and their
integral multi-year fixed terms and high interest rates.

Business and Residential Telephone Revenue. Sales to non-apartment unit
business and residential customers under our status as a competitive local
exchange carrier re-seller, increased by $3,937 or 5.6% to $74,893 from $70,956.
Due to the low margins associated with re-sale of the major local exchange
carrier services and high bad debt associated with business and residential
telephone customers compared to apartment complex customers, we postponed
attempting to gain significant numbers of customers in this market. Most sales
have been through conversions of more credit-worthy apartment complex customers
who convert to our re-sale telephone service when they move out of the apartment
complexes we service. Prior to aggressively soliciting for business and
residential telephone customers and implementing a program to market through
charitable organizations, we intend to complete negotiations with the major
local exchange carriers in our selected markets to increase our discount
percentage by approximately 30% under the Unbundled Network Element-P program.
This program allows us to rent a portion of their switches in our serviced
areas. We must also negotiate with a contract provider to acquire interface
services for this program until we can pay the approximately $100,000 for the
software and commence processing directly with the switch providers. Although we
plan to have all negotiations complete and commence sales of both bundled and
unbundled services in the third quarter 2002, commencement is contingent on
funding from as yet unidentified sources adequate enough to cover contract
provider start-up expenses. We have recently completed negotiations with two
national Internet service providers so we may offer dial-up and high-speed
Internet services as part of a bundled local and long distance telephone service
and Internet service for our business and residential telephone customers.

Gross Margin. Gross profit decreased $49,691, or 13.0%, to $331,142 for the
year ending December 31, 2001 from $380,833 for the year ending December 31,
2000. Overall gross margin as a percentage of total revenues decreased only
slightly (approximately 0.8%) to 23.7% in 2001 from 24.5% in 2000.

Apartment Complexes Telephone, and Cable Television Gross Margin. Gross
profit decreased $49,085, or 13% to $331,142 for the year ending December 31,
2001 from $380,833 for the year ending December 31, 2000. Gross margin decreased
approximately 0.7% to 24.5% during 2001 compared to 25.2% in 2000. This was
related to the combined reduction of approximately 4.9% of apartment complex
unit telephone and television subscribers. The fixed expense to service these
subscribers remained approximately the same, but had to be spread over slightly
fewer customers which slightly impacted the overall gross margin. In addition,
apartment customers made more non-billable local zone calls. In some areas we
are charged by the local service provider at per-minute, tariffed, business zone
rates and provide the apartment customer with residential rates that include
some zones at no charge. When apartment customers in some areas increase their
local, un-billable call time our expense increases without offsetting revenue.

In the fourth quarter 2001, we re-negotiated with our major long distance
carrier to reduce our long distance rates by approximately $3,000 (15%) per
month, signed an agreement with one of the local, traditional carriers for
service for rate reductions of approximately $500 (18%) per month, and signed
with another local carrier to provide service at selected apartment complexes at
a reduction of approximately $4,250 (23.6%) lower than the expense of using our
past traditional local carrier. Since we maintain very competitive pricing,
these expense reductions did not require any offsetting reduction in prices for
service to our subscribers. Most of these changes will not begin to favorably
impact gross margins until the second quarter 2002. Although the merger with
Huntington Telecommunications Partners may increase revenue and cash flow
commencing the first quarter 2002, we anticipate that it may negatively impact
gross margin since it will eliminate the administration and billing revenue we
charged the partnership prior to the merger for managing their telephone and
television systems.

Business and Residential Telephone Gross Margin. Gross profit increased
slightly by $394, or 5.6% to $$7,489 for the year ending December 31, 2001 from
$7,096 for the year ending December 31, 2000. Gross margin for business and
residential customers remained relatively the same during 2000 and 2001 at 10%
since we are re-selling these services from the local major telephone carrier.
Compared to the margin for apartment unit customers this margin is significantly
lower and results in an overall lower gross margin, but produces increased
revenue for us. We have been able to prevent reduction in gross margin related
to the sales to business and residential customers by being able to assimilate
these without additional customer service representatives, technical support,
on-site technicians or management personnel. We believe that gross margin for
business and residential customers can be increased during 2002 by the
implementation of the Unbundled Network Element-P agreements with the local
major telephone carrier and sale of bundled and unbundled local and long
distance telephone and Internet services primarily through commissioned agents.

Other Operating Expenses. Other operating expenses decreased $57,050, or
10.1%, to $508,535 for the year ending December 31, 2001, compared to $565,585
for the year ending December 31, 2000.

Increases were experienced in provision for bad debts ($29,407 or 73.2%) and
other operating expenses ($47,896 or 134.5%). Approximately 65% ($19,100) of the
increase in provision for bad debts was to reserve for potential bad debts from
business and residential customers. The remaining approximately 35% ($10,307)
was reserved for potential bad debts from apartment complex customers. In order
to try and reduce bad debts from business and residential customers, we
implemented a policy of requiring a deposit from new customers who are not
transferring from another telephone company's service or from one of our
services apartment complexes. Since we control the last mile access for the
apartments we have under contract, we can more readily control these customers'
access to other carriers. If these customers have an unpaid account, we can
refuse to allow access through our switch to other carriers. Since we do not
have control to this extent over business and residential customers, we expect
the bad debts related to these customers to be higher than it is for serviced
apartment complex customers. Even with the higher reserve for business and
residential customers' bad debts, the provision for bad debts of 5% of revenue
($69,590) is within normal industry expectations of 4-6% of revenues. Other
operating expense increases were primarily due to credits issued in 2000 for commission
expense of prior years of approximately $62,689 in year ending 2000. Minor increases
in credit card processing, corporate filing fees,

bank service charges, taxes, and travel and entertainment were more than offset
by reductions in other categories including advertising, travel miscellaneous
sales, dues and subscriptions, telephone expenses, and supplies. As we grow, we
anticipate that other operating expenses, and provision for bad debts will
increase as additional customers are added and expenses are incurred.

Decreases were experienced in employee compensation ($4,331 or -1.9%), stock
based compensation (to zero from $60,000), interest expense ($4,627 or -9.2%),
occupancy and equipment ($11,207 or -20.1%), and professional fees ($54,188 or
-56.8%). We anticipate employee compensation, and occupancy and equipment will
increase as additional personnel are hired, as built-in facilities lease
increases occur, and as new equipment is added. We anticipate that interest
expense will be significantly reduced as all current major capital leases will
be paid off no later than July 2002, and only smaller capital leases in the near
future are anticipated. Since the negotiations for the buyout, acquisition, and
reorganization of all partnerships has been completed, we do not anticipate any
significant, additional professional fees associated with these efforts. We do
anticipate increases in future professional fees associated with expenses
related to our efforts to become a publicly trading company and on-going
professional fees for auditing and legal services if and when that occurs, and
increases in stock based compensation incentives for employees and agents.
However, we will attempt to provide any such future stock based compensation in
a manner that will affect the financials as minimally as possible.

The buyout of the last partnership system for $250,000 occurred as expected in
the first quarter of 2001 and used approximately 97% of our cash available at
that time. We believe that the increases in cash flow from the anticipated
addition of more business and residential customers, the acquisition of the last
partnership, combined with the positive cash flow anticipated from the
reorganization with Huntington Telecommunications Partners, and the anticipated
results from the recent expense reduction actions we have taken will be
sufficient to maintain operational cash flow needs. However, the anticipated
positive cash flow will not be sufficient to grow the business and contract with
apartment complex owners to install telephone switches, cable services, and
high-speed Internet services for their apartment complexes. Although the
apartment complexes require significant, initial capital investment, the gross
margins, customer penetration, and bad debt are significantly better than the
business and residential customer market.

Net Loss. As a result of the foregoing, the total net loss, decreased by
$7,359 for the year ended December 31, 2001 to $177,393, from a net loss of
$184,752 for the year ended December 31, 2000. This resulted in a 4.0% decrease
in total net loss for 2001 compared to 2000. During 2001 we completed two of our
capital leases and purchased the equipment for $1 buyouts. As other capital
leases reach maturity, we intend to exercise our buyout rights. During the first
seven months of 2002, we will be able to positively affect profitability and
cash flow as all but one of the currently remaining capital leases come to term
and are paid off thus eliminating approximately $8,100 in monthly cash outlay
associated with capital leases and notes payable. Except for two remaining
capital leases (one is scheduled for pay off in July 2002), as of June 30, 2002,
all other capital leases have been paid off. This will help to offset the
reduction in interest income previously realized from the cash reserve that was
used in the first quarter of 2001 to purchase the last partnership system and is
expected to commensurately improve cash flow. To acquire additional systems in
the future, we may use a combination of: (1) cash flow from operations, (2)
additional capital leases and/or, (3) funding through as yet unidentified
sources.

Although EBITDA (Earnings before Interest Taxes Depreciation and Amortization)
is not a GAAP measure and our EBITDA may not be comparable to similarly titled
measures reported by other companies, many securities analysts use the measure
of earnings before deducting interest, taxes, depreciation and amortization,
also commonly referred to as EBITDA, as a way of evaluating telecommunications
companies and other companies that have inherently high initial capital
investment requirements. Telecommunications companies initial capital
investments are high due to the expenses incurred in developing their network of
switches, securing interconnection agreements, and meeting regulatory
requirements. Our EBITDA for 2001 improved significantly over 2000 by decreasing
68.0% to -$10,317 in 2001 versus -$32,141 for 2000. We anticipate EBITDA from
current operations, the reorganization, future additional business, and
expense-cutting actions will continue to improve.

RESULTS OF OPERATIONS-COMPETITIVE COMPANIES, INC.

THREE MONTHS ENDED MARCH 30, 2002 COMPARED TO THREE MONTHS ENDED MARCH 30, 2001

Revenues. Total revenues increased $29,014, or 7.9%, to $395,590 for the
first quarter of 2002 from $366,576 for the first quarter of 2001. This revenue
was derived principally from the sale of long distance and local telephone
service and cable television to apartment complex unit subscribers.

Apartment Complexes Telephone Cable Television, and Internet Revenue.
Revenue from apartment complex customers increased by $26,987 (93% of the
$29,014 increase). This increase was due primarily to the increase in revenue
from the merger with Huntington Telecommunication Partners. The high-end
apartment complexes that we service have experienced lower occupancy rates
because of economic conditions that started in the later part of 2001 resulting
in fewer apartment customers being serviced. With the special free long distance
calling plans and free local calling minutes being offered by most cellular
telephone companies, some apartment complex customers have decided to use their
cellular telephones as their only telephone. With the special offers being made
by satellite dish television providers, some residents have decided to use those
services. These have resulted in our serving approximately 7% fewer customers as
of the end of the first quarter of 2002 compared to the end of the first quarter
2001. We believe that the apartment complexes will experience lower occupancy
rates at least through the second quarter 2002 that may slightly reduce future
revenue from telephone and television services to apartment complexes. In May
2002 we began installing and providing high-speed Internet service to our
telephone customers at selected apartment complexes to increase telephone
revenue and customers served and reduce transition of customers to other
land-line telephone service providers and cellular-only telephone service by
other providers. Our initial penetration has exceeded our initial forecasts by
almost 100% and has begun to positively contribute to cash flow. For customers
to use our high-speed Internet service, they must also subscribe to our
telephone service. In January 2002 we began enhancing the television services we
offer by adding channels to the line-up and enhancing picture quality. Our
pricing for telephone service, cable television service, and high-speed Internet
service is competitive with major providers. We anticipate further increase in
revenue during 2002 resulting from additional high-speed Internet customers at
the serviced apartment complexes, increases in telephone surcharges, and
increases in television service charges related to additional channels being
provided. Acquisition of new contracts with apartment owners for telephone,
television, and high-speed internet services to their complexes is contingent on
potential additional financing from as yet unidentified sources to acquire the
required equipment.

Business and Residential Telephone Revenue. Sales to business and
residential customers under our status as a competitive local exchange carrier
increased by 11% ($2,027) compared to the first quarter of 2001 and provided
$23,011 (6%) of the total revenue for the first quarter of 2002 compared to
$20,984 (6%) for the first quarter 2001. Due to the low margins associated with
re-sale of the major local exchange carrier services and higher bad debt
associated with business and residential telephone customers compared to
apartment complex customers, we postponed attempting to gain significant numbers
of customers in this market. Most sales have been through conversions of more
credit-worthy apartment complex customers who convert to our re-sale telephone
service when they move out of the apartment complexes we service. Prior to
aggressively soliciting for business and residential telephone customers and
implementing a program to market through charitable organizations, we intend to
complete negotiations with the major local exchange carriers in our selected
markets to increase our discount percentage by approximately 30% under the
Unbundled Network Element-P program. This program allows us to rent a portion of
their switches in our serviced areas. We must also negotiate with a contract
provider to acquire interface services for this program until we can pay the
approximately $100,000 for the software and commence processing directly with
the switch providers. Although we plan to have all negotiations complete and
commence sales of both bundled and unbundled services in the third quarter 2002,
commencement is contingent on funding from as yet unidentified sources adequate
enough to cover contract provider start-up expenses. In preparation for
providing dial-up and high-speed Internet services as part of a bundled local

and long distance telephone service and Internet service for our business and
residential telephone customers, we have recently completed negotiations with
two national Internet service providers.

Gross Margin. Gross profit decreased $47,758, or 49.2%, $49,261 for the
first quarter of 2002. Overall gross margin as a percentage of total revenues
decreased to 12.5% for the first quarter of 2002 compared to 26.5% in the first
quarter 2001. This was related to the combined reduction of approximately 7% of
apartment complex unit telephone and television subscribers. The fixed expense
to service these subscribers remained approximately the same, but had to be
spread over slightly fewer customers which impacted the overall gross margin. In
addition, apartment customers made more non-billable local zone calls. In some
areas we are charged by the local service provider at per-minute, tariffed,
business zone rates and provide the apartment customer with residential rates
that include some zones at no charge. When apartment customers in some areas
increase their local, un-billable call time our expense increases without
offsetting revenue. Less than 10% of the reduction in gross margin was due to
lower margins on sales to non-apartment unit business and residential customers.
The margin for business and residential customers compared to the margin for
apartment unit customers is significantly lower resulting in an overall lower
gross margin, but produces increased revenue for us. We were able to prevent
additional reduction in gross margin related to the sales to business and
residential customers by being able to assimilate these without additional
customer service representatives, technical support, on-site technicians or
management personnel although some increases in direct labor expenses for
current employees did contribute to the increased expense and resultant lower
gross margin. We believe that gross margin can be increased over the next year
if we are able to obtain the Unbundled Network Element-P discounts, acquire
additional systems and customers, and can increase the number of customers
serviced without a directly correlated increase in personnel. However, gross
margin as a percent of sales may decrease if too many of the additional
customers are non-apartment complex business and residential customers, since
the gross margin is less on these types of customers. During the third quarter
of 2001 we observed occupancy at serviced apartment complexes trending downward.
Realizing that we had fixed expenses associated with apartment complexes, we
investigated additional ways to improve margin and cash flow. In this endeavor,
we established expense-cutting milestones and other actions to improve sales,
gross margin, and reduce operating expenses. These are described in detail in
the above Results from Operations for the Year Ending 2001. We anticipate that
these expense reductions coupled with the reorganization with Huntington
Telecommunications Partners will begin showing significant improvement in
operating profit, gross margin and cash flow during the second and third
quarters of 2002.

Other Operating Expenses. Other operating expenses increased $10,912, or
8.7%, to $136,785 in the first quarter of 2002 from $125,873 in the same period
in 2001. Increases were experienced in non-direct labor employee compensation
and benefits ($6,173 or 11.3%), occupancy and equipment ($1,032), and other
expenses ($20,098 or 74.7%). We anticipate employee compensation and benefits
will continue to increase in the future as employee compensation increases,
additional personnel are hired, as additional customers are added, and expenses
are incurred as we grow. The increase in occupancy and equipment was due to
programmed increases in the office space we leased for our operations. These
will continue to increase through the end of the current lease (November 2002)
and with either a renewal at that time or relocation to other facilities. As we
grow we also expect additional increases in facilities expenses. The increase in
other expenses was related to the amortization over 36 months of intangible
revenue rights of contracts with apartment owners. This expense is expected to
continue until completely amortized. We anticipate that any new contracts with
apartment owners will be amortized in a similar manner. Provision for bad debts
also increased $3,504, or 138.7%, to $6,030 during the first quarter of 2002
compared to $2,526 during the same period in 2001. The increased provision for
bad debts was primarily due to the increases in business and residential
customers and in anticipation of the down turn in the overall economy. As more
non-apartment complex unit customers are added we anticipate that bad debt may
increase, so we have increased provision for bad debt accordingly. Since we
control the last mile access for the apartments we have under contract, we can
more readily control these customers' access to other carriers provided they
remain tenants of the complex. If these current tenant customers have an unpaid
account, we can refuse to allow access through our switch to other carriers.
Since we do not have control to this extent over business and residential

customers or apartment unit customers that move off-site, we anticipate the bad
debt related to these customers will be higher than it is for current apartment
complex customers given the current and expected economic conditions. Our
provision for bad debts during the first quarter of 2002 was approximately 1.6%
of revenue compared to approximately .7% for the first quarter of 2001. This is
well below the 4-6% normally experienced by the telephone service industry.
During the first quarter of 2002 compared to the first quarter of 2001,
decreases occurred in interest expenses ($1,466 or 15.0%) and professional fees
($18,429 or 91.8%). Since the negotiations for the buyout, acquisition, and
reorganization of all partnerships has been completed, we do not anticipate any
significant, additional professional fees associated with these efforts. We do
anticipate increases in future professional fees associated with expenses
related to our efforts to become a publicly trading company and on-going
professional fees for auditing and legal services if and when that occurs.
Although there were no expenses associated with stock based compensation, we
expect to incur increases in stock based compensation incentives for employees
and agents. However, we will attempt to provide any such future stock based
compensation in a manner that will affect the financials as minimally as
possible and provide performance incentives for the recipients.

Net Loss. As a result of the foregoing, the total net loss increased by
$58,670 or 203.3% for the first quarter 2002 to $87,524, from a net loss of
$28,854 for the first quarter 2001. This resulted in a 203.0% increase in total
net loss for the first quarter 2002 compared to the first quarter 2001. During
2001 we completed two of our capital leases and purchased the equipment for $1
buyouts. As other capital leases reach maturity, we intend to exercise our
buyout rights. During the first seven months of 2002, we will be able to
positively affect cash flow as the currently remaining capital leases come to
term and are paid off thus eliminating approximately $8,100 in monthly cash
outlay associated with capital leases and notes payable. Except for two
remaining capital lease (one is scheduled for pay off in July 2002), as of June
30, 2002, all other capital leases have been paid off. This will help to offset
the reduction in interest income previously realized from the cash reserve that
was used in the first quarter of 2001 to purchase the last partnership system
and is expected to commensurately improve cash flow. To acquire additional
systems in the future, we may use a combination of: (1) cash flow from
operations, (2) additional capital leases and/or, (3) funding through as yet
unidentified sources.

Although EBITDA is not a GAAP measure and our EBITDA may not be comparable to
similarly titled measures reported by other companies, many securities analysts
use the measure of earnings before deducting interest, taxes, depreciation and
amortization, also commonly referred to as EBITDA, as a way of evaluating
telecommunications companies and other companies that have inherently high
initial capital investment requirements. Telecommunications companies initial
capital investments are high due to the expenses incurred in developing their
network of switches, securing interconnection agreements, and meeting regulatory
requirements. Our EBITDA for the first quarter 2002 decreased by 166% over the
first quarter of 2001 to -$5,887 versus $8,915. However, it has improved on an
annualized basis over year-end 2001 by 43%. We anticipate EBITDA from current
operations, the reorganization, future additional business, and expense-cutting
actions will continue to improve.

During the second quarter of 2002, we will be able to positively affect net
profit and cash flow as the currently remaining capital leases come to term and
are paid off thus eliminating approximately $8,100 in monthly cash outlay
associated with capital leases and notes payable. This will help to offset the
reduction in interest income previously realized from the cash reserve that was
used in the first quarter of 2001 to purchase the last partnership system. To
acquire additional systems in the future, we may use a combination of: (1) cash
flow from operations, (2) additional capital leases and/or, (3) funding through
as yet unidentified sources.

We believe that the increases in cash flow from the additional non-apartment
unit customers, the acquisition of the last partnership, the reorganization with
Huntington Telecommunications Partners, and the anticipated results from the
recent expense reduction actions we have taken and future capital lease buy-outs
will be sufficient to maintain operational cash flow needs. However, the
anticipated positive cash flow will not be sufficient to grow the business and
contract with apartment complex owners to install telephone switches, cable
services, and high-speed Internet services for their apartment complexes.
Although the apartment complexes require significant, initial capital

investment, the gross margins, customer penetration, and bad debt are
significantly better than the business and residential customer market.

LIQUIDITY AND CAPITAL RESOURCES

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

Cash received from operations was primarily from telephone and cable subscriber
revenue generated by our telephone and cable TV service at apartment complexes,
and administration and billing revenue from management functions we performed
for properties owned by partnerships. Additional revenue was generated from
residential and business telephone.

Net cash provided by operating activities for 2001 totaled $154,001. This is a
significant improvement (1,469%) over the $9,817 net cash provided by operating
activities for 2000.

Net cash used for investing activities for 2001 totaled $241,128 versus $24,237
for 2000. All but $3,876 of the 2001 expenditure was to purchase total ownership
of the last remaining partnership system that we managed and which serviced 376
telephone and 376 television passings (apartments). The remaining $3,876 was
used to upgrade cable television facilities at the purchased property. The 2001
expenditures were made in support of operations to expand the number of cable
television channels for selected apartment unit customers.

Net cash used in financing activities for 2001 totaled $143,171, a $12,783
(8.2%) reduction compared to the $155,954 for 2000. These were primarily for
monthly payments on outstanding notes and capital leases. No proceeds from the
issuance of common stock were received during 2001.

Cash available at the end of 2001 was zero versus $230,298 cash available at the
end of 2000. During 2001 we used all available cash to buyout the last remaining
partnership and pay down outstanding capital leases. Although we anticipated
lower cash flow during the last two quarters of 2001 due to lower market
penetration related primarily to reduced occupancy, cell-phone-only use at our
serviced apartment complexes, and lower margins on our business and residential
customers, we believe that the cash flow from operations will improve in 2002
due to third and fourth quarter 2001 operation expense reductions and revenue
increases associated with lower negotiated prices from our telephone and
satellite/cable television vendors; increases in our customer base through
addition of resale residential and business customers telephone customers;
increases in service charges, products and services to our apartment customers;
addition of high-speed Internet service at some of our serviced apartment
complexes; and expense avoidance through the reorganization with Huntington
Telecommunications Partnership.

THREE MONTHS ENDED MARCH 30, 2002 COMPARED TO THREE MONTHS ENDED MARCH 30, 2001

Net cash provided by operating activities for the first quarter of 2002 totaled
$25,278. This is a reduction of 66% over the $74,852 net cash provided by
operating activities for the first quarter of 2001.

Cash provided by investing activities for the first quarter of 2002 was $2,091
versus -$250,000 used during the first quarter of 2001. The $250,000 expenditure
in 2001 was used to purchase the last outstanding apartment complex contract and
equipment. We anticipate future purchases of equipment as we grow. Significant

equipment purchases cannot be funded from cash flow, but will require additional
capital infusion through possible future additional financing from as yet
unidentified sources or third-party leasing arrangements.

Net cash used in financing activities for the first quarter of 2002 totaled
$21,445, a 41% reduction compared to the $36,405 for the same period in 2001.
These were primarily for monthly payments on outstanding notes and capital
leases. No proceeds from the issuance of common stock were received in the first
quarter of 2002. We intend to use leasing financing in the future as one method
of adding new equipment and services to both existing and future customers.

Cash flow for the first quarter of 2002 totaled $5,924 versus a cash flow of
$18,745 during the first quarter of 2001. Cash flow was reduced primarily due to
the $52,574 (66%) reduction of cash provided by operations. We believe that the
cash flow from operations will improve during the remainder of 2002 due to
previously discussed operation expense reductions and revenue increases
associated with lower negotiated prices from our telephone and satellite/cable
television vendors, increases in our customer base through addition of resale
residential and business customers telephone customers, increases in service
charges and products and services to our apartment customers, and expense
avoidance through the reorganization with Huntington Telecommunications
Partnership.

We expect to incur additional expenses in 2002 as we increase our cable
television line-up, upgrade our telephone systems, and provide high speed
Internet service to some of our apartment complexes. We expect to be able to pay
for most of these expenses from cash flow and from minor capital leases. For
future growth, additional financing from as yet unidentified sources and capital
lease financing of telephone switching installations and cable television
headend equipment will be needed over the next 18 months to meet our working
capital needs related to our intended expansion.

We expect current cash flow and improvements in cash flow through some of our
milestones to be able to support current operations during the next year and
with the addition of minor capital leases fund some of our milestones. Current
milestones that we anticipate will improve cash flow and that have or can be
accomplished without significant funding include:

o Reduction of telephone vendor expenses through renegotiation of
contracts and selection of other more cost effective vendors. These
were completed between January and February 2002 resulting in
approximately $4,975 in reduced monthly expenses commencing between
January and May 2002.
o Increase in surcharge to apartment complex customers. The first
increase was completed in December 2001 and resulted in approximately
$2,000 in increased revenue commencing in January 2002. The second
increase is planned for July 2002 and will increase revenue by
approximately $1,300 per month.
o Improve television service to currently services apartment complex
customers. By changing providers and equipment we improve picture
quality and provide additional channels for viewing. Funds to purchase
the equipment were from cash flow, sale of replaced equipment, and
minor capital leases. An increase in monthly subscriber charges in
planned for September 2002. This will increase revenue by
approximately $1,360 per month.
o Pay off capital leases. With one exception, all capital leases will be
paid off from cash flow during the period January 2002 through July
2002. This will result in reducing expenses approximately $8,100 per
month by August 2002.
o Provide high-speed Internet service to selected apartment complexes.
Equipment is being financed through small capital leases and installed
commencing in March 2002 with an August 2002 anticipated completion
time. We anticipate that the service will be profitable commencing
with the first installation and will provide approximately $5,000 per
month in cash flow.
o Re-rate country rates to customers. By modifying rates charge for long
distance from one rate for each country to rates for selected cities
within each country, our long distance prices will be more competitive
with other carriers who currently rate by city. Our in-house personnel
will make the required modification of our software to accomplish

this. We anticipate this should positively impact customer retention.
o Subscribe to NECA collect call re-billing system. This allows us to
increase our revenue for re-billing collect calls from other carriers
through NECA services, and should improve revenue by approximately
$150 per month commencing in January 2002. Expense for the interface
software will be covered by cash flow.

FUTURE NEEDS

In order to finance our major expansion plans and accomplish the following
milestones, we need approximately $15,000,000. Implementation of the following
major plans would commence immediately upon receipt of the needed funds and take
approximately 12 months to complete. Base on accomplishing these goals, we
project an increase in sales of $7-8 million within the first year after receipt
of funding. Based on these projections we expect to produce a pre-tax income of
approximately $250,000 by the end of the first 12 months after receipt of funds
and $2,000,000 for the second 12-month period. By selecting complexes based on
our criteria and controlling expansion growth in both our apartment complex
market, and business and residential services market, we anticipate we can
increase profitability in subsequent years. The following are integral to our
expansion plans and projections:

o Installation of telephone, television, and high-speed Internet systems
in apartment complexes or acquisition of already installed systems
from other providers. We plan to add up to 35 serviced apartment
complexes to service approximately 8,000 more apartment customers
within the first year of acquiring the funding. Funding required:
approximately $12,250,000 would be used for equipment purchase,
installation, and to cover initial 2-4 months of negative cash flow
for each complex until penetration is sufficient to be profitable.
o Addition of personnel to accommodate our growth. We intend to add
personnel as growth occurs. Funding required: approximately $990,000.
o Implementation of Unbundled Network Element-P program. This will
provide us with additional 30% discount in expenses from local major
telephone carriers. We expect the added 30% discount in expense will
allow us to implement an agent program in order to add approximately
5,000 business and residential telephone customers primarily through
agents and an affinity program (charitable donation program), and add
cellular telephone service to our available products for both
apartment complex customers, and business and residential customers.
Funding required: approximately $106,000.
o Pay off a current capital lease and notes. This will reduce monthly
expenses by approximately $5,412 and retire high interest accounts.
Funding required: approximately $288,450.
o Upgrade current apartment complex telephone switching equipment.
Upgrading our current switches will allow us to terminate long
distance calls from other long distance carriers and under reciprocal
agreements should reduce our outgoing long distance calling expenses
which will reduce our cost of goods and allow us to offer lower rates
to our customers and improve gross margin. Funding required:
approximately $750,000.
o Cash reserve for general working capital. Funding required:
approximately $615,000.

Other than the operating cash flow and minor capital leases which are not
anticipated to be available to fund the above major expansion plans, we have no
sources of financing identified. Even if we identify sources for such financing:

o Additional financing may not be available on commercially reasonable
terms or available at all
o Additional financing may result in dilution to existing and future
equity holders; and
o If we issue debt instruments, we will be subject to increased debt
obligations that will impose a greater financial strain upon our
operations.

If we do not secure the required funding from equity investment or additional
financing, the major expansion planned milestones may not be achieved within the
anticipated time period, if at all. We believe that the current level of
operations being currently supported can be supported in the future by cash flow
from the current level of operations.

ITEM 18. DESCRIPTION OF PROPERTY

We are headquartered in Riverside, California, where we lease approximately
3,100 square feet of offices and warehouse space for approximately $2,300 per
month. The lease expires in 2002. We generally are provided minimal space at no
charge, from 100 to 200 square feet, for our telecommunications equipment at
each of the apartment complexes where we have systems installed.

Our offices are in good condition and are sufficient to conduct our operations.
We believe that our leased facilities are adequate to meet our needs for the
next 12 months. However, as we begin to deploy additional systems and build our
networks, we will need to increase our headquarters office space, add equipment
rooms at newly contracted apartment complexes, and contract for co-location of
switching facilities at traditional carriers. We anticipate such facilities are
available to meet our development and expansion needs in existing and projected
target markets for the foreseeable future.

ITEM 19. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Competitive Communications

In 1998, Competitive Companies, Inc. was formed to acquire the stock of
Competitive Communications, Inc. from Mr. David Kline II. Mr. Kline II owned a
100% equity interest in Competitive Communications. Mr. Kline II negotiated the
transaction for Competitive Communications and Mr. Halstead negotiated the
transaction for Competitive Companies. The parties agreed upon a price of
3,302,700 shares of common stock 1,000,000 shares of Class A convertible
preferred stock based upon the fact that the at the time of the agreement
Competitive Communications had annual revenues of approximately $1,000,000. The
parties agreed to a value of $1 per share for the 3,302,700 shares of common
stock and 5,000,000 shares of common stock underlying the preferred stock and
agreed upon a formula of 8 times approximate annual revenues.

ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

There is no established public trading market for our securities. No market
exists for our securities and a regular trading market may not develop, or if
developed, may not be sustained. A shareholder in all likelihood, therefore,
will not be able to resell his or her securities should he or she desire to do
so when eligible for public resales. Furthermore, it is unlikely that a lending
institution will accept our securities as pledged collateral for loans unless a
regular trading market develops. Although we have held preliminary discussions
with one market maker concerning the NASD requirements for qualifying our
securities for quotation on the Over-the-Counter Bulletin Board, we have no
plans, proposals, arrangements, or understandings with any person with regard to
the development of a trading market in any of our securities.

Options, Warrants, Convertible Securities

Preferred stock

We are authorized to issue 10,000,000 shares of preferred stock.

Class A preferred stock

4,000,000 shares of Class A convertible preferred stock were issued by us to
various founding stockholders and management in December 1999. These 4,000,000
shares are convertible into 20,000,000 shares of common stock. Conversion may
occur at any time, in whole or in part up to the number of shares set forth
below with the achievement of the following events for a period commencing on
the date such event was achieved and ending on December 31, 2010.

The conversion events are as follows:

Number of shares of
common stock issued
Eventupon conversion

Achieving 100% increase in the combined number of owned 10,000,000
apartment complex passings plus non-apartment complex customers

Achieving 10,000 customers in the combined number of owned 5,000,000
apartment complex passings and non-apartment complex customers

Achieving 20,000 customers in the combined number of owned 5,000,000
apartment complex passings and non-apartment complex customers

o An apartment complex passing is an individual apartment under direct
contract with it for telephone, television or Internet service.

o A non-apartment complex customer is a non-apartment residential or
business customer that is counted once for each major service to which
they subscribe.

Conversion events are based on customer base existing as of December 9, 1999.

Class B convertible preferred shares

We have issued 1,495,436 shares of Class B convertible preferred stock entitling
persons owning the Class B shares the following:

The stock shall convert into such number or fraction thereof shares of common
stock based upon the following:

1 -
the fraction: [average of opening bid and ask price on the over the counter bulletin board/$3.00]
divided by
the fraction: [average of opening bid and ask price on the over the counter bulletin board/$3.00]

For example, assume average opening bid/ask of $2.00. 1 - 2/3 = 1/3. 1/3 divided
by 2/3 = .5 additional share of common stock issued upon conversion.

Class C convertible preferred shares

We have issued 1,000,000 shares of Class C convertible preferred stock entitling
persons owning the Class C shares the following:

The stock shall convert into such number or fraction of shares of common stock
based upon the following:

1 -
the fraction: [average of first 5 days trading bid and ask price on the over the counter bulletin board/$3.00]
divided by
the fraction: [average of first 5 days trading bid and ask price on the over the counter bulletin board/$3.00]

For example, assume average of first 5 days trading bid/ask of $2.00. 1 - 2/3 =
1/3. 1/3 divided by 2/3 = .5 additional share of common stock issued upon
conversion.

The conversion rate for all classes is subject to proportional adjustment in the
event of a stock split, stock dividend or similar recapitalization event
affecting such shares. Holders of the all classes f preferred shares are not
entitled to preferential dividend rights, redemption or voting rights.

Issuance of preferred stock with voting and conversion rights may reduce the
voting power of the holders of common stock, including voting rights of the
holders of common stock. In certain circumstances, an issuance of preferred
stock could have the effect of decreasing the market price of the common stock.
We have no plans to issue any shares of preferred stock in the future.

Options

We have 5,040,000 outstanding non-statutory options to the following:

Name Number of Option Exercise Price Number Currently Exercisable

Officers, Directors & Affiliates:

Larry Halstead 1,000,000 $0.001 600,000
Jerald Woods 500,000 $1.00 0
Judy Kline (1) 2,625,000 $0.001 1,575,000

Sub-Total4,125,0002,175,000

Others:

Employees 445,000 $0.001 347,000
Employees 300,000 $0.85 0
Employees 70,000 $1.00 0
James Gibson 50,000 $1.00 0
James Healey 50,000 $1.00 0

Sub-Total915,000347,000

Total5,040,0002,522,000

o First year - 0%,
o Second year - 40%
o Third through fifth year - 20% each year.

Sales under Rule 144

There are 824,100 shares of our common stock held by non-affiliates and
3,528,600 shares of our common stock held by affiliates that Rule 144 of the
Securities Act of 1933 defines as restricted securities. The remaining 1,559,361
shares are held by non-affiliates but are not restricted securities and are
eligible for resale under the provisions of Rule 144. No shares have been sold
pursuant to Rule 144 of the Securities Act of 1933 and no shares are eligible to
be resold pursuant to Rule 144. We have agreed to register all of the shares
held by our existing non-affiliate selling shareholders and 1,000,000 shares
held by an affiliate. We have also issued and intend to issue in the future
common stock subject to an employee benefit plan.

Once this registration statement is effective, the shares of our common stock
being offered by our selling shareholders will be freely tradable without
restrictions under the Securities Act of 1933, except for any shares held by our
"affiliates," which will be restricted by the resale limitations of Rule 144
under the Securities Act of 1933 except as registered under this registration
statement.

In general, under Rule 144 as currently in effect, any of our affiliates and any
person or persons whose sales are aggregated who has beneficially owned his or
her restricted shares for at least one year, may be entitled to sell in the open
market within any three-month period a number of shares of common stock that
does not exceed the greater of (i) 1% of the then outstanding shares of our
common stock, or (ii) the average weekly trading volume in the common stock
during the four calendar weeks preceding such sale. Sales under Rule 144 are
also affected by limitations on manner of sale, notice requirements, and

availability of current public information about us. Non-affiliates who have
held their restricted shares for one year may be entitled to sell their shares
under Rule 144 without regard to any of the above limitations, provided they
have not been affiliates for the three months preceding such sale.

Further, Rule 144A as currently in effect, in general, permits unlimited resales
of restricted securities of any issuer provided that the purchaser is an
institution that owns and invests on a discretionary basis at least $100 million
in securities or is a registered broker-dealer that owns and invests $10 million
in securities. Rule 144A allows our existing stockholders to sell their shares
of common stock to such institutions and registered broker-dealers without
regard to any volume or other restrictions. Unlike under Rule 144, restricted
securities sold under Rule 144A to non-affiliates do not lose their status as
restricted securities.

As a result of the provisions of Rule 144, all of the restricted securities
could be available for sale in a public market, if developed, beginning 90 days
after the date of this prospectus. The availability for sale of substantial
amounts of common stock under Rule 144 could reduce prevailing market prices for
our securities.

Penny Stock Considerations

Our shares will be "penny stocks" as that term is generally defined in the
Securities Exchange Act of 1934 to mean equity securities with a price of less
than $5.00. Our shares thus will be subject to rules that impose sales practice
and disclosure requirements on broker-dealers who engage in certain transactions
involving a penny stock.

Under the penny stock regulations, a broker-dealer selling a penny stock to
anyone other than an established customer or accredited investor must make a
special suitability determination regarding the purchaser and must receive the
purchaser's written consent to the transaction prior to the sale, unless the
broker-dealer is otherwise exempt. Generally, an individual with a net worth in
excess of $1,000,000 or annual income exceeding $100,000 individually or
$300,000 together with his or her spouse is considered an accredited investor.
In addition, under the penny stock regulations the broker-dealer is required to:

o Deliver, prior to any transaction involving a penny stock, a disclosure
schedule prepared by the Securities and Exchange Commissions relating to the
penny stock market, unless the broker-dealer or the transaction is otherwise
exempt;
o Disclose commissions payable to the broker-dealer and our registered
representatives and current bid and offer quotations for the securities;
o Send monthly statements disclosing recent price information pertaining to the
penny stock held in a customer's account, the account's value and information
regarding the limited market in penny stocks; and
o Make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement to
the transaction, prior to conducting any penny stock transaction in the
customer's account.

Because of these regulations, broker-dealers may encounter difficulties in their
attempt to sell shares of our common stock, which may affect the ability of
selling shareholders or other holders to sell their shares in the secondary
market and have the effect of reducing the level of trading activity in the
secondary market. These additional sales practice and disclosure requirements
could impede the sale of our securities, if our securities become publicly
traded. In addition, the liquidity for our securities may be decreased, with a
corresponding decrease in the price of our securities. Our shares in all
probability will be subject to such penny stock rules and our shareholders will,
in all likelihood, find it difficult to sell their securities.

Holders

As of the date of this registration statement, we had 125 holders of record of
our common stock. We have one class of common stock outstanding and three
classes of preferred stock outstanding.

Dividends

We have not declared any cash dividends on our common stock since our inception
and do not anticipate paying such dividends in the foreseeable future. We plan
to retain any future earnings for use in our business. Any decisions as to
future payments of dividends will depend on our earnings and financial position
and such other facts as the board of directors deems relevant. We are not
limited in our ability to pay dividends on our securities.

Reports to Shareholders

As a result of this offering, we will become subject to the information and
reporting requirements of the Securities Exchange Act of 1934 and will file
periodic reports, proxy statements and other information with the Securities and
Exchange Commission.

Where You Can Find Additional Information

We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2 with respect to the common stock in this offering. This
prospectus, which constitutes a part of the registration statement, does not
contain all the information set forth in the registration statement. For further
information about us and the shares of common stock to be sold in the offering,
please refer to the registration statement and the exhibits and schedules
thereto. The registration statement and exhibits may be inspected, without
charge, and copies may be obtained at prescribed rates, at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The registration statement and other information filed
with the SEC is also available at a web site maintained by the SEC at
http://www.sec.gov.

ITEM 21. EXECUTIVE COMPENSATION

Executive Compensation

The following table sets forth summary information concerning the compensation
received for services rendered to us during the years ended December 31, 2000
and 1999, respectively by the Chief Executive Officer. No other executive
officers received aggregate compensation during our last fiscal year which
exceeded, or would exceed on an annualized basis, $100,000. Other annual
compensation consists of health and life insurance premiums and automobile lease
payments.

Summary Compensation Table

Annual Compensation

Name and All Other Annual
Principal PositionYearSalary (1)BonusCompensation
David Kline II 2000 $ 1,022 $ - $ 4,270
President 2001 $ 10,218 $ - $ 3,222
Chief Executive Officer &
President

As of March 31, 2002, David Kline II received no salary, no bonus, and no other
compensation. We have agreed with Mr, Kline II that he will not receive any pay
or compensation during the remainder of 2002 until such time that we have sufficient
funding available to initiate our growth plans and ask Mr. Kline II to return on
a full time basis.

No other annual compensation, including a bonus or other form of compensation;
and no long-term compensation, including restricted stock awards, securities
underlying options, LTIP payouts, or other form of compensation, were paid to
David Kline II during these periods.

On December 23, 1999, the board of directors appointed David Kline II to assume
the duties of Chairman of the Board and Chief Executive Officer. This was in
addition to his duties as President. This appointment resulted from the sudden
death of David Kline, Sr. on December 23, 1999.

Employment Agreements

We have entered into five-year employment agreements with our president and CFO
which require initial annual base salary of approximately $77,000 and $68,000
respectively, and unless earlier ended, are subject to automatic extension for
an additional period of two years. The officers' annual base salaries will be
increased to $130,000 and $115,000, respectively if we are able to raise
$1,000,000 of investment capital. The president has deferred compensation
payable under his employment agreement until he begins to devote full time to
the business.

In addition to their annual base salary, both of the executives are entitled to
amounts under an executive bonus plan in any fiscal year in which our earnings
before taxes and charitable contributions, called PT-PC, is $1,000,000 or more.
Under the plan, 6% of the PT-PC is available for executive officers and an
additional 6% for non-executive officers to be paid as cash bonuses no less
often than annually. Through December 31, 1999, no amounts have been awarded
under this plan.

In addition to the base salary, the president and CFO shall be entitled during
the employment period to receive such additional benefits as may be provided for
them or to which they may become entitled because his position, tenure, salary,
age, health or other qualifications make them eligible to participate.
Additional benefits means

o Participation in bonus and incentive compensation plans or pools,
stock option, bonus, award or purchase plans, retirement plans, and
other benefit plans, if any;
o Life, health, medical, dental, accident, and other personal insurance
coverage provided for employees or their dependents;

o Directors' and officers' liability insurance coverage and charter or
bylaw provisions or contracts providing for indemnification of
corporate personnel or elimination or limitation of their liabilities
as such;
o Automobile or related compensation per guidelines approved by the
board of directors;
o Use of our property and facilities and other perquisites of
employment;
o Paid vacation, leave or holidays;
o Any and all other compensation, benefits and perquisites of employment
with us, if any, other than base salary; and
o Reasonable moving and personal expenses in connection with company
required relocations.

The employment of the president and CFO ends on the date of the occurrence of
any of the following events:

o Expiration of the employment period

o The death of the president or CFO, respectively

o Fifteen days after the date on which we have given the president or
CFO written notice of the termination of employment by reason of
permanent physical or mental incapacity that prevents him from
performing the essential elements of his respective position for a
period of six consecutive months or more as determined by a medical
professional selected by us, in our sole discretion, and by us acting
in good faith

o After five days' written notice to the president or CFO for cause,
which shall include only the following:

o Intentional misconduct or gross negligence by the president or CFO in
the course of employment

o The commission or perpetration by the president or CFO of any fraud
against us or others in connection with his employment

o The commission by the president or CFO of such acts or dishonesty,
fraud or misrepresentation or other acts of moral turpitude as would
prevent the effective performance of his duties

o Knowingly causing or permitting us to violate any law, which violation
shall have a material effect on us

o The failure to perform, breach, or violation by the president or CFO
of any of his material obligations under the agreement which continues
after fifteen days' written notice has been given to him by us
specifying the failure to perform, breach, or violation

o Upon at least sixty days' advance written notice by the president or
CFO

o Upon at least sixty days' advance written notice by us based solely on
concurrence of a minimum of 4/5th of the board of directors

In the event the president's or CFO's employment under the employment agreement
is ended for the reasons set forth in bullet points 3 or 6 above, we shall pay
the president or CFO an amount equal his then base salary multiplied by
twenty-four months and shall continue to provide his medical insurance for a
period of twenty four months following such termination.

Upon any termination

o The president's or CFO's estate in the case of death shall immediately
be paid all accrued base salary which would otherwise be due and
payable and accrued vacation pay, all to the date of termination.

o Benefits accrued under our benefit plans, if any, will be paid in
accordance with such plans.

o Bonuses shall be paid at the end of the fiscal year if earned, with
the amount prorated by the number of days during the fiscal year the
president or CFO was employed.

The president or CFO have agreed that during the term of their respective
employment, they will not engage, directly or indirectly, or be interested as
director, officer, partner, consultant, principal, shareholder, or otherwise in
any firm, corporation, or other entity in the business of developing, producing,
distributing, or selling any product competitive with our products in any
geographic area in which we engage in the same or similar business without our
express written consent.

Compensation of Directors

We have not agreed to pay our directors who are not officers or employees any
stated salary, but by resolution of the board a fixed sum and expense of
attendance, if any, may be allowed for attendance at each regular and special
meeting of the board or our committees. On the date of appointment to the board,
each board member or employee board member shall be granted an option to
purchase at the fair market value an aggregate of 5,000 shares of Class A common
stock. The option shall vest and become exercisable at the rate of 20% per year
after the expiration of the first year following the date on which the option is
granted and shall be exercisable in full only after the expiration of five 5
years following the date the option was granted.

Executive Bonus Plan (ExBP)

The ExBP Plan for Competitive Communications was adopted in April 1996. The plan
is intended to enables us to recruit, reward, retain and motivate employees and
to attract and retain outside directors, agents and consultants on a basis
competitive with industry practices. Under the plan, 6% of
pre-tax-pre-charitable contribution (PT-PC) for executive officers and an
additional 6% PT-PC for non-executive officers will be paid as cash bonuses no
less often than annually.

The ExBP Plan will be administered by the board of directors or the compensation
committee of the board of directors. The committee has sole authority and
discretion under the ExBP Plan to designate eligible participants and determine
the conditions and limitations applicable to such awards, if any. The awards may
be granted singly or together with other awards, or as replacement of, in
combination with, or as alternatives to, grants or rights under the ExBP Plan or
other employee benefit plans. Awards under the ExBP Plan may be issued based on
past performance, as an incentive for future efforts or contingent upon the
future performance. No amounts have been awarded under the Plan.

ITEM 22. FINANCIAL STATEMENTS

COMPETITIVE COMPANIES, INC.
AND SUBSIDIARIES

Consolidated Financial Statements as of
and for the three months ended
March 31, 2002 and 2001
(Unaudited)

COMPETITIVE COMPANIES, INC.
AND SUBSIDIARIES

TABLE OF CONTENTS

_______________________________________________________________________________________

Page
Consolidated Financial Statements (Unaudited):

Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001 63

Consolidated Statements of Operations for the three months ended
March 31, 2002 and 2001 64

Consolidated Statements of Cash Flows for the three months ended
March 31, 2002 and 2001 65

Condensed notes to Consolidated Financial Statements 66

_______________________________________________________________________________________

COMPETITIVE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
________________________________________________________________________________________________

March 31, 2002 December 31,
ASSETS (Unaudited) 2001

CURRENT ASSETS:
Cash and cash equivalents $ 5,924 $ -
Receivables:
Accounts, net of allowance for doubtful accounts
of $100,194 and $108,142, respectively 133,312 143,352
Unbilled 31,796 52,707
Prepaid expenses and other current assets 7,052 7,052
Total current assets 178,084 203,111

PROPERTY AND EQUIPMENT - NET 1,161,468 1,229,864

OTHER ASSETS:
Intangible contract revenue rights, net of accumulated
amortization of $25,209 and $0 respectively 277,291 302,500
Prepaid supplies 44,376 44,375
Employee note receivable 8,376 8,438
Other 11,970 11,970

TOTAL $ 1,681,565 $ 1,800,258
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Due to bank $ - $ 16,227
Accounts payable 138,161 134,897
Current maturities of long-term debt 40,430 44,416
Accrued and other liabilities 34,250 39,609
Total current liabilities 212,841 235,149

LONG-TERM DEBT (net of current maturities) 269,957 278,818

Total liabilities 482,798 513,967

STOCKHOLDERS' EQUITY:
Class A convertible preferred stock, $0.001 par value;
10,000,000 shares authorized, 4,000,000 shares issued
and outstanding with a liquidation value of $40,000 4,000 4,000
Class A common stock, $0.001 par value; 70,000,000 shares
authorized, 5,912,061 shares issued and outstanding 5,912 5,912
Additional paid-in capital 17,719,192 17,719,192
Deficit (16,530,337) (16,442,813)
Total stockholders' equity 1,198,767 1,286,291

TOTAL $ 1,681,565 $ 1,800,258
============= =============

________________________________________________________________________________________________

See condensed notes.

COMPETITIVE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

________________________________________________________________________________________________

For the For the
Three-Months Ended Three-Months Ended
March 31, 2002March 31, 2001

REVENUES $ 395,590 $ 366,576

COSTS OF REVENUES 346,329 269,557

GROSS PROFIT 49,261 97,019

OTHER OPERATING EXPENSES:
Employee compensation and benefits 60,838 54,665
Stock based consulting expense - -
Provision for bad debts 6,030 2,526
Interest expense 8,296 9,762
Occupancy and equipment 12,997 11,965
Professional fees 1,637 20,066
Other 46,987 26,889
Total other operating expenses 136,785 125,873

NET LOSS $ (87,524) $ (28,854)
============= =============

NET LOSS PER SHARE:
Basic and diluted $ (0.01) $ (0.01)
============= =============

Weighted average number of shares
outstanding - basic and diluted 5,912,061 4,912,061
============= =============

________________________________________________________________________________________________

See condensed notes.

COMPETITIVE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

________________________________________________________________________________________________________

For the For the
Three-Months Three-Months
Ended March 31, Ended March 31,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (87,524) $ (28,854)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 73,341 28,007
Provision for bad debts 6,030 2,526
Loss on disposal of assets 18,173 -
Changes in assets and liabilities, net:
Decrease in receivables 24,921 1,724
Decrease in other assets 63 -
Decrease in due to bank (16,227) -
Increase in accounts payable 3,264 13,254
Increase in due to affiliate - 43,167
Increase in accrued and other liabilities 3,237 15,028
NET CASH PROVIDED BY OPERATING ACTIVITIES 25,278 74,852

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (4,849) (250,000)
Proceeds from sale of equipment 6,940 -
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 2,091 (250,000)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (12,848) (18,285)
Repayments of capital lease obligations (8,597) (18,120)
NET CASH USED IN FINANCING ACTIVITIES (21,445) (36,405)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,924 (211,553)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 230,298

CASH AND EQUIVALENTS, END OF PERIOD $ 5,924 $ 18,745
=============== =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ - $ 12,203
=============== =============
Taxes paid $ - $ -
=============== =============

________________________________________________________________________________________________________

See condensed notes.

COMPETITIVE COMPANIES, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

________________________________________________________________________________

NOTE A - FORMATION AND OPERATIONS OF THE COMPANY

Competitive Companies, Inc. (the "Parent") was originally incorporated under the
laws of the state of Nevada in March 1998, and shortly thereafter acquired all
of the assets and assumed all of the liabilities of Competitive Communications,
Inc. ("CCI"), which was incorporated under the laws of the state of California
in February 1996. CCI is the successor to Western Telephone & Television, which
was founded in 1985.

In January 2000, CCI Residential Services, Inc. ("CCIR") was formed. This
entity, which is a wholly owned subsidiary of the Parent, expands on the
residential services currently being provided by CCI, while CCI will focus on
developing revenue streams from other services.

CCI, CCIR and their Parent (collectively, "we" "us" "our") provide telephone,
cable television, long distance/interexchange, and public telephone service,
mainly to customers who live in multi-tenant residential buildings. Our
operations are located in Riverside, California and approximately 80% of our
customers are California residents.

Use of Estimates

The preparation of consolidated financial statements in accordance with
accounting principles generally accepted 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 assets and liabilities
at the date of the consolidated financial statements. The reported amounts of
revenues 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.

________________________________________________________________________________

COMPETITIVE COMPANIES, INC.
AND SUBSIDIARIES

Consolidated Financial Statements as of
December 31, 2001 and for the years ended
December 31, 2001 and 2000 and
Independent Auditors' Report

COMPETITIVE COMPANIES, INC.
AND SUBSIDIARIES

TABLE OF CONTENTS

________________________________________________________________________________

Page

Independent Auditors' Report 69

Consolidated Financial Statements:

Consolidated Balance Sheet as of December 31, 2001 70

Consolidated Statements of Operations for the years ended
December 31, 2001 and 2000 71

Consolidated Statements of Stockholders' Equity for the years
ended December 31, 2001 and 2000 72

Consolidated Statements of Cash Flows for the years ended
December 31, 2001 and 2000 73

Notes to Consolidated Financial Statements 74

________________________________________________________________________________

INDEPENDENT AUDITORS' REPORT

To the Stockholders of Competitive Companies, Inc. and subsidiaries:

We have audited the accompanying consolidated balance sheet of Competitive
Companies, Inc. and subsidiaries (the "Company") as of December 31, 2001, and
the related consolidated statements of operations, stockholders' equity and cash
flows for the years ended December 31, 2001 and 2000. 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 audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated 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 financial position of the Company as of
December 31, 2001, and the results of its operations and cash flows for the
years ended December 31, 2001 and 2000 in conformity with accounting principles
generally accepted in the United States of America.

June 24, 2002

COMPETITIVE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2001
________________________________________________________________________________

ASSETS

CURRENT ASSETS:
Receivables:
Accounts, net of allowance for doubtful
accounts of $108,142 $ 143,352
Unbilled 52,707
Prepaid expenses and other current assets 7,052
Total current assets 203,111

PROPERTY AND EQUIPMENT - NET 1,229,864

OTHER ASSETS:
Intangible contract revenue rights 302,500
Prepaid supplies 44,375
Employee note receivable 8,438
Other 11,970

TOTAL $ 1,800,258
=============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Due to bank $ 16,227
Accounts payable 134,897
Current maturities of long-term debt 44,416
Accrued and other liabilities 39,609
Total current liabilities 235,149

LONG-TERM DEBT (net of current maturities) 278,818

Total liabilities 513,967

STOCKHOLDERS' EQUITY:
Class A convertible preferred stock, $0.001 par value;
10,000,000 shares authorized, 4,000,000 shares
issued and outstanding with a liquidation value
of $40,000 4,000
Class A common stock, $0.001 par value, 70,000,000
shares authorized; 5,912,061 shares issued and
outstanding 5,912
Additional paid-in capital 17,719,192
Deficit (16,442,813)
Total stockholders' equity 1,286,291

TOTAL $ 1,800,258
=============

________________________________________________________________________________

See notes to consolidated financial statements.

COMPETITIVE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

________________________________________________________________________________

20012000

REVENUES $ 1,396,377 $ 1,555,799

COSTS OF REVENUES 1,065,235 1,174,966

GROSS PROFIT 331,142 380,833

OTHER OPERATING EXPENSES:
Employee compensation and benefits 224,098 228,429
Stock based consulting expense - 60,000
Provision for bad debts 69,590 40,183
Interest expense 45,577 50,204
Occupancy and equipment 44,495 55,702
Professional fees 41,256 95,444
Other 83,519 35,623
Total other operating expenses 508,535 565,585

NET LOSS $ (177,393) $ (184,752)
============ ============

NET LOSS PER SHARE:
Basic and diluted $ (0.04) $ (0.04)
============ ============

Weighted average number of shares outstanding -
basic and diluted 4,923,020 4,912,061
============ ============

________________________________________________________________________________

See notes to consolidated financial statements.

COMPETITIVE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

_____________________________________________________________________________________________________________________________________________

Class A Class A Additional
Preferred Stock Common Stock Paid-In Subscription
SharesAmountSharesAmountCapitalDeficitReceivableTotal

Balances, December 31, 1999 4,000,000 $ 4,000 4,852,061 $ 4,852 $16,642,221 (16,080,668) $ (57,500) $ 512,905

Issuance of common stock
for services rendered
- - 60,000 60 59,940 - - 60,000

Collection of receivable - - - - - - 57,500 57,500

Net loss - - - - - (184,752) - (184,752)

Balances, December 31,
2000 4,000,000 4,000 4,912,061 4,912 16,702,161 (16,265,420) - 445,653

Issuance of common stock
in connection with
acquisition - - 1,000,000 1,000 1,017,031 - - 1,018,031

Net loss - - - - - (177,393) - (177,393)

Balances, December 31,
2001 4,000,000 $ 4,000 5,912,061 $ 5,912 $17,719,192 $ (16,442,813) $ - $ 1 ,286,291
========= ======== ========= ======= =========== ============== ========== =============

_____________________________________________________________________________________________________________________________________________

See notes to consolidated financial statements.

COMPETITIVE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
__________________________________________________________________________________________

20012000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (177,393) $ (184,752)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 121,499 102,407
Provision for bad debts 69,590 40,183
Stock based consulting expense - 60,000
Changes in assets and liabilities, net:
(Increase) decrease in receivables (70,410) (35,667)
(Increase) decrease in prepaid expenses
and other current assets (2,850) 6,375
Decrease (increase) in other assets 1,563 (20,261)
Increase in due to bank 16,227 -
Increase (decrease) in accounts payable 55,493 (30,314)
Decrease in due to affiliate 127,503 61,334
Increase in accrued and other liabilities 12,779 10,512
NET CASH PROVIDED BY OPERATING ACTIVITIES 154,001 9,817

CASH FLOWS FROM INVESTING ACTIVITIES-
Purchases of property and equipment (241,128) (24,237)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - 57,500
Repayments of long-term debt (54,442) (75,796)
Repayments of capital lease obligations (88,729) (101,892)
Repayments of stockholder advances - (35,766)
NET CASH USED IN FINANCING ACTIVITIES (143,171) (155,954)

NET DECREASE IN CASH AND CASH EQUIVALENTS (230,298) (170,374)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 230,298 400,672

CASH AND EQUIVALENTS, END OF YEAR $ - $ 230,298
============ =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION :
Interest paid $ 45,577 $ 50,206
============ =============
Taxes paid $ - $ -
============ =============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Vehicle financed under long-term debt agreement $ 21,932 $ -
============ =============

Acquisition of net assets of Huntington Telecommunication Partners, L.P.
(see Note C) $ 1,018,031 $ -
============ =============

__________________________________________________________________________________________

See notes to consolidated financial statements.

COMPETITIVE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

________________________________________________________________________________

NOTE A - FORMATION AND OPERATIONS OF THE COMPANY

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

Our consolidated financial statements are prepared using the accrual method of
accounting.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the
Parent, Competitive Holdings, Inc., CCI and CCIR . Significant inter-company
balances and transactions have been eliminated in consolidation.

Revenue Recognition

Revenues are recognized in the month in which the service is provided. Amounts
that are not billed by the end of the year are classified as unbilled
receivables in the accompanying consolidated balance sheet.

Use of Estimates

Financial Instruments

We believe the book value of our cash and cash equivalents, receivables,
accounts payable and accrued and other liabilities approximates their fair
values due to their short-term nature. In addition, we believe the book values
of our notes payable approximates their fair values as the current interest
rates on such obligations approximates rates at which similar types of
arrangements could be currently negotiated by us.

Long-Lived Assets

We periodically review our long-lived assets for indications of impairment. If
the value of an asset is considered impaired, an impairment loss would be
recognized. At December 31, 2001, we believe all of our long-term assets are
recoverable.

Property and Equipment

Property and equipment are stated at cost. Major additions are capitalized,
while minor additions and maintenance and repairs, which do not extend the
useful life of an asset, are expensed as incurred. Depreciation and amortization
are computed using the straight-line method over the assets' estimated useful
lives of five to ten years.

Intangible Assets

Intangible contract revenue rights acquired in the acquisition of Huntington
Telecommunication Partners, L.P. ("HTP")- See Note C, are being amortized on a
straight-line basis over the average remaining terms of the contracts of three
years.

Income Taxes

We compute income taxes in accordance with Financial Accounting Standards
Statement No. 109 "Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109,
deferred taxes are recognized for the tax consequences of temporary differences
by applying enacted statutory rates applicable to future years to differences
between the tax bases of assets and liabilities and their financial statement
carrying amounts. Also, the effect on deferred taxes of a change in tax rates is
recognized in income in the period that included the enactment date. Temporary
differences between financial and taxable reporting arise primarily from certain
stock based compensation relating to the grant of certain options and
differences in providing for bad debts and depreciation.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations
of credit risk consist principally of cash and cash equivalents, and
receivables. With respect to cash and cash equivalents, during the year ended
December 31, 2001, we maintained all of our cash and cash equivalents in deposit
accounts with one financial institution, which deposit accounts at times may
have exceeded federally insured limits. We have not experienced any losses in
such accounts.

Substantially all of our revenues, accounts and unbilled receivables arise
primarily from agreements to provide telecommunications and cable services to
customers in eight apartments buildings in southern California. The agreements
expire between 2003 and 2005. We perform ongoing credit evaluations of our
customers and generally do not require collateral as we believe we have certain
collection measures in-place to limit the potential for significant losses.

Substantially all of the receivables included in the accompanying consolidated
balance sheet were recovered subsequent to December 31, 2001.

We purchase a significant portion of our local line capacity from two vendors,
our long distance line capacity from one vendor, and our cable television
capacity from three vendors. We perform ongoing negotiations with other vendors
and believe that given the competitive nature of the industry we could obtain
similar agreements with other vendors.

Advertising

Advertising costs are expensed as incurred.

Loss Per Common Share

We compute net loss per share in accordance with Statement of Financial
Accounting Standards Board Statement No. 128 "Earnings per Share" ("SFAS No.
128") and SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under the provisions
of SFAS No. 128 and SAB 98, basic net loss per share is computed by dividing the
net loss available to common stockholders for the period by the weighted average
number of common shares outstanding during the periods. Diluted net loss per
share is computed by dividing the net loss for the period by the number of
common and common equivalent shares outstanding during the period. Common stock
equivalents existing at December 31, 2001 and 2000, which consist primarily of
preferred stock and common stock options (see Note E), are not included in the
per share calculations because they are anti-dilutive. Accordingly, basic and
diluted net loss per share are identical for each of the years ending December
31, 2001 and 2000.

Stock-Based Compensation

We have adopted SFAS No 123, "Accounting for Stock-Based Compensation" which
requires us to recognize as expense the fair value of all stock-based awards on
the date of grant, or continue to apply the provisions of Accounting Principles
Board Opinion No. 25 and provide pro-forma net income (loss) earnings per share
disclosure for employee stock option grants and all other stock-based
compensation as if the fair-value-based method defined in SFAS 123 had been
applied.

Statement of Cash Flows

For purposes of the statement of cash flows, we consider all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents.

Recent Pronouncements

In July 2001 the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations". This statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This Statement applies to all entities. It
applies to legal obligations associated with the retirement of long-lived assets
that result from the acquisition, construction, development and (or) the normal
operation of a long-lived asset, except for certain obligations of lessees. This
Statement is effective for financial statements issued for fiscal years
beginning after June 15, 2002. We do not believe the adoption of this standard
will have a material impact on our consolidated financial statements.

In August 2001 the FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". This statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
FASB Statement 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of". The provisions of the statement are
effective for financial statements issued for fiscal years beginning after
December 15, 2001. We do not believe the adoption of this standard will have a
material impact on our consolidated financial statements.

NOTE C - ACQUISITION

On December 28, 2001, primarily to expand our customer base, we acquired all of
the assets and assumed all of the liabilities of HTP, a California limited
partnership in exchange for 1,000,000 shares of our common stock. In addition to
such consideration, if the average closing bid price of our common stock is less
than $3.00 per share for the first five days of trading subsequent to the
registration of such shares with the Securities and Exchange Commission, we will
be obligated to issue additional shares of our common stock to the previous
shareholders of HTP. For example, if the average closing bid price of our common
stock is $1.00 per share, we will be required to issue an additional 2,000,000
shares of our common stock. In accordance with the provisions of SFAS No. 141,
"Business Combinations" the cost of these shares has not been included in the
determination of the purchase price because the number of shares that may
ultimately be issued as a result of this contingency is not determinable beyond
a reasonable doubt.

We accounted for this transaction using the purchase method of accounting. The
results of operations have been included in the accompanying consolidated
statement of operations since the date of the acquisition. Based on the fair
market value of the net assets received, the value of the common shares issued
to effect the acquisition, aggregated $1,018,031 (or $1.018 per share which
price approximates the price at which the last sales of our common stock
occurred - $1.00 per share in 1999).

The purchase price was allocated as follows:

Amounts

Property and equipment $ 526,694
Intangible contract revenue rights 302,500
Receivables, net 215,274
Accounts payable (26,437)

Total $ 1,018,031
=============

We had a 5% ownership interest in HTP prior to the acquisition. Because of this,
property and equipment were recorded at 95% of fair market value and 5% of
historical cost. We valued the intangible contract revenue rights at fair market
value based on the discounted cash flows of the estimated revenue stream from
various contracts to provide telecommunications services which we acquired. The
remaining assets acquired and liabilities assumed were recorded at the
historical cost basis of HTP as such basis approximated the fair values of HTP's
assets and liabilities at the date of acquisition.

The following unaudited pro forma information presents the summarized results of
consolidated operations assuming the acquisition had occurred on January 1,
2001. This information is provided for informational purposes only, and should
not be considered to (1) be indicative of our results of operations had the
acquisition been consummated on the date assumed or (2) to represent a
projection of our results of operations for any future period.

Amounts

Net sales $ 1,852,107
=============

Net loss $ (51,132)
=============

Net loss per share - basic and fully diluted $ (.01)
=============

HTP has the right to rescind this acquisition agreement if we are not successful
in securing a qualification for quotation for our common shares on the over the
counter bulletin board ("OTC-BB")-See Note J, by January 13, 2002, as extended.
Any rescission would result in our losing the revenue producing assets we
acquired.

NOTE D - PROPERTY AND EQUIPMENT-NET

Property and equipment consists of the following at December 31, 2001:

Amounts
Telecommunications equipment and computers (including
equipment leased under capital leases of $177,500) $ 1,558,086
Vehicles 26,069
Furniture, fixtures and improvements 21,290
Subtotal 1,605,445
Less accumulated depreciation and amortization (375,581)

Property and equipment-net $ 1,229,864
=============

Accumulated depreciation and amortization includes $79,875 of accumulated
amortization of leased equipment.

NOTE E - STOCKHOLDERS' EQUITY

During the year ended December 31, 2000, we issued 60,000 shares of our common
stock in exchange for services provided to us. Because the fair value of the
stock at the time of issuance was considered to be $1.00 per share (based on our
last sales of common stock), $60,000 has been recorded as stock-based
compensation expense in the accompanying consolidated statement of operations.

The Board of Directors has reserved 7,500,000 shares of our common stock for
issuance under our Incentive and Non-Statutory Stock Option Plan (the "Plan").
Generally, incentive options are granted at an exercise price equal to the fair
value of our common stock (as determined by the Board of Directors) at the date
of grant, require two-years of continued employment before exercise and have 20%
vesting schedules. As of December 31, 2001, we have granted 5,040,000 shares at
exercise prices from $ .001 to $5.00 per share. The status of our stock options
is summarized below:

Weighted
Average
Number of SharesExercise Price

Options outstanding at December 31, 1999 4,420,000 $ 0.093

Granted 50,000 3.000
Exercised - -
Canceled - -

Options outstanding at December 31, 2000 4,470,000 0.125

Granted 570,000 1.000
Exercised - -
Canceled - -

Options outstanding at December 31, 2001 5,040,000 $ 0.224
========= ===========

Options becoming exercisable during the years
ended:

December 31, 2001 2,522,000 $ 0.041
December 31, 2002 874,000 0.059
December 31, 2003 902,000 0.088
December 31, 2004 214,000 0.773
December 31, 2005 114,000 1.000
December 31, 2006 and thereafter 414,000 1.483

Total options exercisable 5,040,000 $ 0.224
========= ===========

Each of the options expires on the earlier of the date specified in the option
agreement, or the tenth anniversary of the date of grant. Any incentive option
not subject to this provision is designated as being a non-statutory option.
Whenever an outstanding option is terminated (other than by exercise), the
shares of common stock relating to such option are to be restored to the Plan
and be available for the grant of other options under the Plan.

We account for our stock-based compensation using the intrinsic value method
prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees". Had our compensation expense for stock-based compensation
plans been determined based upon fair values at the grant dates for awards under
this plan in accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation," our net loss and pro forma net loss per share amounts would have
increased as follows:

20012000
Net loss:
As reported $ (177,393) $ (184,752)
============= ============

Pro forma $ (397,760) $ (518,268)
============= ============

Loss per share:
As reported $ (.04) $ (.04)
============= ============

Pro forma $ (.08) $ (.11)
============= ============

The weighted average minimum value of options granted during 2001 and 2000,
estimated on the date of grant using the Black-Scholes option-pricing model,
ranged from approximately $.23 - $ .31. The minimum value of options granted was
estimated on the dates of the grants using the following approximate
assumptions: dividend yield of 0 %, expected volatility of 0%, risk-free
interest rate of 4.9% - 5.3%, and an expected life of 5-7 years.

Preferred Stock

At the option of the holder, upon meeting certain performance requirements, each
share of our preferred stock may be converted to five shares of our Class A
common stock.

NOTE F- LONG-TERM DEBT

Long-term debt consists of the following at December 31, 2001:

Note payable to Frontier Communications Services, Inc., bearing
interest at 10% with monthly principal and interest payments of $3,046
through March 15, 2003. The note is secured by the telecommunications
equipment purchased with the proceeds from the note. $ 42,784

Unsecured note payable to stockholder, bearing interest at 8.0% and
requiring monthly principal and interest payments of $683 through
February 23, 2011. 52,777

Note payable to Ford Credit, bearing interest at 2.9% with monthly
principal and interest payments of $393 through August 6, 2006. The
note is secured by the vehicle purchased with the proceeds from the
note. 20,223

Note payable to GST Universal, Inc., bearing interest at 10% and
requiring interest payments only of $1,729 through May 10, 2004 at
which time all principal and unpaid interest is due in full. The note
is secured by the telecommunications equipment purchased with the

proceeds from the note. 207,450
323,234
Less current maturities (44,416)

Long-term debt $ 278,818
===========

Scheduled maturities of long-term debt as of December 31, 2001 are as follows:

Years Ending
December 31,Amounts

2002 $ 44,416
2003 15,025
2004 216,675
2005 9,754
2006 8,740
Thereafter 28,624

Total $ 323,234
===========

NOTE G- OTHER RELATED PARTY TRANSACTIONS

Prior to December 28, 2001, we provided billing, collection and certain other
administrative services, as well as certain telephone and cable services, to
HTP. As consideration for such services, we received approximately $69,600 and
$78,000 for the years ended December 31, 2001 and 2000, respectively.
Additionally, we sold approximately $94,800 and $235,500 in long distance
services to HTP during the years ended December 31, 2001 and 2000, respectively.

NOTE H- INCOME TAXES

During the years ended December 31, 2001 and 2000, we recognized losses for both
financial and tax reporting purposes. Accordingly, no provisions for income
taxes have been provided for in the accompanying consolidated statements of
operations. The significant components of the net deferred income tax assets and
liabilities as of December 31, 2001 (assuming an effective income tax rate of
39%) are approximately as follows:

Current deferred income tax asset:

Allowance for doubtful accounts $ 43,000
Less valuation allowance (43,000)

Current deferred income tax asset $ -
============

Non-current deferred income tax asset:

Net operating loss carryforwards $ 381,800
Stock based compensation 97,600
Accumulated depreciation and amortization (7,300)
Other 100
Subtotal 472,200
Less valuation allowance (472,200)

Non-current deferred income tax asset $ -
============

The provisions for income taxes for the years ended December 31, 2001 and 2000
are made up of the following:

20012000

Current $ - $ -
Deferred 70,351 43,417
Change in valuation reserve (70,351) (43,417)

Provision for income taxes $ - $ -
=========== ===========

At December 31, 2001, we had total net operating loss carryforwards of
approximately $ 958,400 for income tax purposes. The significant difference
between our deficit and net operating loss carryforwards are primarily
attributable to the effect of permanent differences arising from the grant of
certain options. These carryforwards are available to offset future taxable
income through the year ended December 31, 2021. The current and non-current
deferred income tax assets are not recorded in the accompanying balance sheet
because we established a valuation allowance to fully reserve such assets, as
their realization did not meet the required asset recognition standard
established by SFAS 109. The valuation allowance increased by a total of
approximately $70,351 during the year ended December 31, 2001.

NOTE I - COMMITMENTS AND CONTINGENCIES

Operating Leases

We lease our operating facility and certain equipment under non-cancelable
operating leases. Future minimum lease payments required for the year ended
December 31, 2002 are $30,438.

Total rent expense for 2001 and 2000 approximated $26,500 and $27,500,
respectively.

Employment Agreements

We currently have employment agreements with our President and Secretary that
expire in 2003 and 2004, respectively (unless extended as allowed by the
agreements). Depending upon certain performance measures, future base salary
commitments under these agreements will range as follows:

Years endingMinimumMaximum
December 31,

2002 $ 145,000 $ 245,000
2003 $ 93,700 $ 158,300
2004$ 45,300$ 76,700

Total $ 284,000 $ 480,000
=========== ==========

In addition to their annual base salary, both of the executives are entitled to
amounts under an executive bonus plan in any fiscal year in which our earnings
before taxes and charitable contributions ("PT-PC") are $1,000,000 or more.
Under the plan, 6% of the PT-PC is available for executive officers and an
additional 6% for non-executive officers to be paid as cash bonuses no less
often than annually. Through December 31, 2001, no amounts have been awarded and
/or accrued under this plan.

NOTE J - PROPOSED COMMON STOCK OFFERING

We have filed a registration statement with the Securities and Exchange
Commission, which will enable various shareholders to offer to sell shares of
the common stock they own in our company (we will not receive any part of the
proceeds from the sale of any of these shares). We have agreed to pay all
expenses associated with the registration of the shares and the printing of the
prospectus.

In connection with the common stock offering, we have set aside 1,495,436
convertible Class B preferred stock options for potential issuance to certain of
our shareholders, in the event that the opening trading price of our common
stock in the secondary market does not meet the following requirements. If the
average opening bid price of our common stock is less than $3.00 per share, we
will be obligated to issue additional shares to holders of 1,495,436 shares of
our common stock so that the fair market value of shares held by these
stockholders is $3.00 (for example, if the opening bid price of our common stock
is $1.00 per share, we would be obligated to issue an additional 2,990,872
shares of our common stock).

________________________________________________________________________________

ITEM 23. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

PRELIMINARY PROSPECTUS
COMPETITIVE COMPANIES, INC.
SUBJECT TO COMPLETION, DATED DECEMBER ***, 2001

This offering is comprised solely of shares being offered by our selling shareholders.

Our selling shareholders are offering:

2,559,361 shares of our common stock, $.001 par value per share
1,495,436 shares of Class B preferred stock, $.001 par value
1,000,000 shares of Class C preferred stock, $.001 par value

Our common stock is not now qualified for quotation on the Over-the-Counter
Bulletin Board or listed on any national securities exchange or the NASDAQ stock
market.

The selling shareholders may offer their shares at any price.

Dealer Prospectus Delivery Obligation
Until _________ (90 days from the date of this prospectus) all dealers that
effect transactions in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the
dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.

PART II

ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS

Our Articles of Incorporation and By-laws, subject to the provisions of Nevada
law, contain provisions which allow the corporation to indemnify any person
under certain circumstances.

Nevada law provides the following:

NRS 78.7502 Discretionary and mandatory indemnification of officers, directors,
employees and agents: General provisions.

1. A corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, except an
action by or in the right of the corporation, by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with the action, suit or proceeding if he acted in good faith and in a manner
which he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.

2. A corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.

3. To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections 1 and 2, or in defense of any claim, issue
or matter therein, the corporation shall indemnify him against expenses,
including attorneys' fees, actually and reasonably incurred by him in connection
with the defense.
(Added to NRS by 1997, 694)

NRS 78.751 Authorization required for discretionary indemnification;
advancement of expenses; limitation on indemnification and advancement of
expenses.
1. Any discretionary indemnification under NRS 78.7502 unless ordered by a

court or advanced pursuant to subsection 2, may be made by the corporation only
as authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances. The
determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting
of directors who were not parties to the action, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were
not parties to the action, suit or proceeding so orders, by independent
legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the
action, suit or proceeding cannot be obtained, by independent legal counsel
in a written opinion.
2. The articles of incorporation, the bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
3. The indemnification and advancement of expenses authorized in or ordered
by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the articles of
incorporation or any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, for either an action in his official capacity or an
action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to NRS 78.7502 or for the
advancement of expenses made pursuant to subsection 2, may not be made to or on
behalf of any director or officer if a final adjudication establishes that his
acts or omissions involved intentional misconduct, fraud or a knowing violation
of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
(Added to NRS by 1969, 118; A 1987, 83; 1993, 976; 1997, 706)

NRS 78.752 Insurance and other financial arrangements against liability of
directors, officers, employees and agents.

1. A corporation may purchase and maintain insurance or make other
financial arrangements on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise for any
liability asserted against him and liability and expenses incurred by him in his
capacity as a director, officer, employee or agent, or arising out of his status
as such, whether or not the corporation has the authority to indemnify him
against such liability and expenses.
2. The other financial arrangements made by the corporation pursuant to
subsection 1 may include the following:
(a) The creation of a trust fund.
(b) The establishment of a program of self-insurance.
(c) The securing of its obligation of indemnification by granting a
security interest or other lien on any assets of the corporation.
(d) The establishment of a letter of credit, guaranty or surety.
No financial arrangement made pursuant to this subsection may provide protection
for a person adjudged by a court of competent jurisdiction, after exhaustion of
all appeals therefrom, to be liable for intentional misconduct, fraud or a
knowing violation of law, except with respect to the advancement of expenses or
indemnification ordered by a court.

3. Any insurance or other financial arrangement made on behalf of a person
pursuant to this section may be provided by the corporation or any other person
approved by the board of directors, even if all or part of the other person's
stock or other securities is owned by the corporation.
4. In the absence of fraud:
(a) The decision of the board of directors as to the propriety of the terms
and conditions of any insurance or other financial arrangement made pursuant to
this section and the choice of the person to provide the insurance or other
financial arrangement is conclusive; and
(b) The insurance or other financial arrangement:
(1) Is not void or voidable; and
(2) Does not subject any director approving it to personal liability
for his action, even if a director approving the insurance or other
financial arrangement is a beneficiary of the insurance or other financial
arrangement.
5. A corporation or its subsidiary which provides self-insurance for itself
or for another affiliated corporation pursuant to this section is not subject to
the provisions of Title 57 of NRS.
(Added to NRS by 1987, 80)

Our Articles and By-Laws also provide for indemnification to the fullest extent
permitted under Nevada law.

With regard to the foregoing provisions, or otherwise, we have been advised that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by us of expenses incurred or
paid by a director, officer or controlling person of the Corporation in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by a controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by us is against
public policy as expressed in the Securities Act of 1933, as amended, and will
be governed by the final adjudication of such case.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table is an itemization of all expenses, without
consideration to future contingencies, incurred or expected to be incurred by
our Corporation in connection with the issuance and distribution of the
securities being offered by this prospectus. Items marked with an asterisk (*)
represent estimated expenses. We have agreed to pay all the costs and expenses
of this offering. Selling shareholders will pay no offering expenses.

ITEM AMOUNT
SEC Registration Fee $ 2,500
Legal Fees and Expenses $17,500
Accounting Fees and Expenses* $10,000
Miscellaneous* $20,000
Total* $50,000

* Estimated Figure

ITEM 25. RECENT SALES OF UNREGISTERED SECURITIES

In connection with the asset acquisition from Huntington Partners, we issued
1,000,000 shares of Common Stock and 1,000,000 shares of Class C Preferred
Stock.

In connection with the merger with Competitive Companies, we issued 5,912,061
shares of common stock, 4,000,000 shares of Class A preferred stock, and
1,495,436 shares of Class B preferred stock.

These shares were issued in reliance upon Section 4(2) of the 1933 Act in view
of the following:

o None of these issuances involved underwriters, underwriting discounts
or commissions.
o Restrictive legends are placed on all certificates issued.
o The distribution did not involve general solicitation or advertising.
o No cash consideration was involved
o Except for Huntington Partners, all shareholders receiving stock were
already shareholders of Competitive Companies
o The distributions were made only to accredited investors or investors
who were believed to be sophisticated enough to evaluate the risks of
the investment, particularly in view of the fact that no cash
consideration was involved.

ITEM 27. EXHIBITS

2.1 Plan and agreement of reorganization
2.2 Amendment to plan and agreement of reorganization *
3.1 Articles of Competitive Companies, as amended
3.11 By-laws of Competitive Companies
4.1 Rights and preferences of Preferred Stock
5.1 Legal Opinion

10.01 Partnership Agreement - D. Greens
10.02 Partnership Agreement - A. Gardens
10.03 Partnership Agreement - C. Hills
10.04 Partnership Agreement - Rollingwood
10.05a Partnership Agreement - Trussville
10.5b Supply, Services and Management Agreement Trussville
10.06a Acquisition Agreement - GST
10.6b Acquisition Agreement- GST
10.6c Acquisition Agreement- GST
10.07 Employment Agreement - L. Halstead
10.08 OPEN
10.09 Employment Agreement - DK
10.10 Agreement with LCI Quest
10.11 Agreement with Inet
10.12 Sample Option Agreement - employees
10.13 Sample Option Agreement - consultants
10.14 Sample Subscription Agreement - Common Stock
10.15 Lease Agreement - Office
10.16 Competitive Local Exchange Carriers License Approval Letter - MS
10.17 Competitive Local Exchange Carriers License Approval Letter - Ca
10.18 Convertible Note - T. Baba & addendum
10.19 Sample Note Conversion Addendum
10.21 Master Option Agreement

23.1 Consent of Accountants - KCH
23.2 Consent of Accountants - KCH
23.5 Consent of Counsel (provided in 5.1)

*filed herewith

All other Exhibits called for by Rule 601 of Regulation SB-2 or SK are not
applicable to this filing.

ITEM 28. UNDERTAKINGS

Information pertaining to our common stock is contained in our Articles of
Incorporation and By-Laws. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes to:

1. File, during any period in which we offer or sell securities, a
post-effective amendment to this registration statement to:

i. Include any prospectus required by section 10(a)(3) of the Securities
Act;

ii. Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement; and Notwithstanding the forgoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation From the low or high end of the estimated maximum offering range
may be reflected in the form of prospects filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.

iii. Include any additional or changed material information on the plan of distribution.

2. For determining liability under the Securities Act, treat each post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide offering.

3. File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on our behalf by the
undersigned, thereunto duly authorized, in Riverside California on July 26,
2002.

Competitive Companies, Inc.

Title Name Date Signature
Principal Executive Officer David Kline II 7-26-02 /s/ David Kline II
Principal Accounting Officer Larry Halstead 7-26-02 /s/ Larry Halstead
Principal Financial Officer Larry Halstead 7-26-02 /s/ Larry Halstead

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.

SIGNATURE NAME TITLE DATE
/s/ David Kline II David Kline II Director 7-26-02
/s/ Michael Godfree Michael Godfree Director 7-26-02
/s/ Larry Halstead Larry Halstead Director 7-26-02
/s/ Jerald Woods Jerald Woods Director 7-26-02
/s/ David Hewitt David Hewitt Director 7-26-02


               AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION

        This Amendment is an amendment dated July 25, 2002 to the AGREEMENT AND
PLAN OF REORGANIZATION ["Agreement"], dated as of December 19, 2001, by and
among Huntington Telecommunications Partners, L.P., a California limited
partnership ("HTP"), Competitive Companies Holdings, Inc., a Nevada corporation
("CCH"), and Competitive Companies, Inc., a Nevada corporation ("CCI").

Section 6.15 of the Agreement is amended to read as follows:

6.15 Registration of Shares. HTP shall have the right to rescind this transaction
if the following shall occur:

        (a) within 390 days following the Closing Date, the SEC (i) has not
declared effective the Form SB-2 registering the CCH Common Stock to be received
by HTP as the Initial Purchase Price pursuant to the Reorganization; (ii) has
issued a stop order suspending the effectiveness of the Form SB-2 or any part
thereof; or (iii) has initiated or threatened to issue a stop order suspending
the effectiveness of the Form SB-2 or any part thereof;

All other terms and conditions of the Agreement remain in full force and effect.


        IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly
authorized.



                    HTP:      Huntington Telecommunications Partners, L.P.

                    By:       KBL Investment Co.
                    Its:      General Partner


                    By:/s/David C. Hewitt
                    Name:     David C. Hewitt
                    Title:    President


                    CCH:      Competitive Companies Holdings, Inc.


                                       1



                    By:/s/Larry Halstead
                    Name:     Larry Halstead
                    Title:    President


                    CCI:



                    By:/s/Larry Halstead
                    Name:     Larry Halstead
                    Title:    Chief Financial Officer

                                       2





[LETTERHEAD of Letterhead of Kingery Crouse & Hohl P.A.]



CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the use in the prospectus constituting part of this
Registration Statement on Form SB-2/A of our report dated June 24, 2002, with
respect to the financial statements of Competitive Companies, Inc., as of
December 31, 2001 and for the years ended December 31, 2001 and 2000 filed with
the Securities and Exchange Commission.

/s/ KINGERY, CROUSE & HOHL, P.A.
Tampa, Florida
July 26, 2002