As filed with the Securities and Exchange Commission on Sepember 17, 2008.
Registration No. 333-152881
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 2 TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COMPETITIVE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 6794 36-2664428
(State or other juris- (Primary Standard (I.R.S. Employer
diction of incorpor- Industrial Classification Identification Number)
ation or organization) Code Number)
777 COMMERCE DRIVE, SUITE 100
FAIRFIELD, CONNECTICUT 06825
(203) 368-6044
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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JOHN B. NANO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
COMPETITIVE TECHNOLOGIES, INC.
777 COMMERCE DRIVE, SUITE 100
FAIRFIELD, CONNECTICUT 06825
(203) 368-6044
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With a copy to:
M. RICHARD CUTLER, ESQ.
CUTLER LAW GROUP
3206 WEST WIMBLEDON DRIVE
AUGUSTA, GEORGIA 30909
TELEPHONE: (706) 737-6600
FACSIMILE: (706) 738-1966
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, 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, please check the following box and list
the Securities Act 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(c) under
the Securities Act, check the following box and list the Securities Act
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, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [x]
(Do not check if a smaller
reporting company)
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM
CLASS OF AMOUNT OFFERING AGGREGATE AMOUNT OF
SECURITIES TO TO BE PRICE OFFERING REGISTRATION
BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE
---------------- ---------- ------------- ----------- -------------
Common Stock,
par value $0.01
per share 1,605,467 $ 2.38 $ 3,821,011 $ 150.24
---------------- ---------- ------------- ----------- -------------
(1)
Estimated pursuant to Rule 457(c), solely for the purpose of
calculating the registration fee based on the average of the high and low
prices for the common stock, as reported on the American Stock Exchange on
July 25, 2008. Under the common stock purchase agreement, Fusion Capital
has agreed to purchase up to $5.0 million of newly issued CTT common stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT HAS FILED A
FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED _________________.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE 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 WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
*
*****
**-----**
**----- COMPETITIVE
****---- TECHNOLOGIES
**===== Unlocking the Potential of Innovation (R)
**=====**
*****
* (R) Technology Transfer and Licensing Services
PROSPECTUS
COMPETITIVE TECHNOLOGIES, INC.
1,605,467 Shares of Common Stock
This prospectus relates to the sale of up to 1,605,467 shares of our common
stock by Fusion Capital Fund II, LLC. Fusion Capital is sometimes referred to
in this prospectus as the selling shareholder. The prices at which Fusion
Capital may sell the shares will be determined by the prevailing market price
for the shares or in negotiated transactions. We will not receive proceeds from
the sale of our shares by Fusion Capital.
Our common stock is registered under Section 12(g) of the Securities Exchange
Act of 1934 and quoted on the American Stock Exchange under the symbol "CTT."
On August 3, 2008 the last reported sale price for our common stock as reported
on the American Stock Exchange was $2.34 per share. We have applied to have the
shares of common stock offered pursuant to this prospectus approved for listing
on the American Stock Exchange.
____________________
INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 3 FOR A DISCUSSION OF THESE RISKS.
____________________
The selling shareholder is an "underwriter" within the meaning of the Securities
Act of 1933, as amended.
____________________
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
____________________
The date of this Prospectus is September 17, 2008
TABLE OF CONTENTS
Prospectus Summary 1
Risk Factors 4
Incorporation by Reference 12
Forward-Looking Statements 13
Use of Proceeds 14
The Fusion Capital Transaction 15
Selling Stockholder 20
Plan of Distribution 21
Legal Matters 23
Experts 23
Where You Can Find More Information 23
Disclosure of Commission Position on Securities Matters 24
You may rely only on the information provided or incorporated by reference in
this Prospectus. Neither we nor the selling stockholder have authorized anyone
to provide information different from that contained in this Prospectus.
Neither the delivery of this Prospectus nor the sale of the securities means
that the information contained in this Prospectus is correct after the date of
this Prospectus. This Prospectus is not an offer to sell or solicitation to buy
the securities in any circumstances under which the offer or solicitation is
unlawful.
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PROSPECTUS SUMMARY
The following summary highlights information contained elsewhere in this
Prospectus. It may not contain all of the information that is important to you.
You should read the entire Prospectus carefully, especially the discussion
regarding the risks of investing in CTT common stock under the heading "Risk
Factors," before investing in CTT common stock. In this Prospectus, "CTT," "we,"
"us," and "our" refer to Competitive Technologies, Inc.
BUSINESS
We are a Delaware corporation incorporated in 1971 to succeed an Illinois
business corporation incorporated in 1968.
We provide technology transfer and licensing services focused on the technology
needs of our customers and matching those requirements with commercially viable
solutions. We identify, develop, and commercialize innovative technologies in
life, digital, nano and physical sciences developed by universities, companies,
independent research institutions and individual inventors.
We seek to maximize the value of intellectual property for the benefit of our
customers, clients and stockholders by selling, licensing or otherwise
commercializing technologies from our clients' or our portfolio of intellectual
property rights. We obtain customers' technology requirements and match them
with effective technology solutions, bridging the gap between market demand and
raw innovation. In a few cases, we are enforcing our clients' and our patent
rights with respect to certain of our technologies.
Our customers (licensees) pay license and royalty fees for licensed rights to
use our clients' and our technologies. We also realize revenues by sharing in
the profits of manufacturing and distribution, as well as from court awarded
judgments and settlements of patent enforcement actions. We share these fees,
judgments and settlements with our clients under our respective agreements with
them.
Our life science portfolio includes pharmaceuticals, biotechnologies, and
medical devices. We include communications, semiconductors, Internet,
e-commerce and consumer electronics technologies in our digital portfolio. Our
physical science portfolio targets display, environmental and nano-technologies
and smart/novel materials.
CORPORATE INFORMATION
CTT is incorporated under the laws of the State of Delaware. Our principal
executive offices are located at 777 Commerce Drive, Suite 100, Fairfield,
Connecticut 06825. Our telephone number is (203) 368-6044. The address of our
website is www.competitivetech.net. Information on our web site is not part of
-----------------------
this Prospectus.
CTT COMMON STOCK
CTT common stock trades on the American Stock Exchange under the symbol "CTT.
1
THE OFFERING
On July 22, 2008, we entered into a Purchase Agreement with Fusion Capital Fund
II, an Illinois limited liability company. Under the Purchase Agreement, Fusion
Capital is obligated, under certain conditions, to purchase shares from us in an
aggregate amount of $5.0 million from time to time over a twenty-four (24) month
period. Under the terms of the Purchase Agreement, Fusion Capital has received
a commitment fee consisting of 63,280 shares of our common stock. Also, we will
issue to Fusion Capital an additional 42,187 shares as a commitment fee pro rata
as we receive the $5.0 million of future funding. As of July 25, 2008 there
were 8,243,152 shares outstanding (7,823,860 shares held by non-affiliates)
excluding the 1,500,000 shares offered by Fusion Capital pursuant to this
Prospectus which it has not yet purchased from us, as well as the 42,187 shares
to be issued as a commitment fee pro rata. If all of such 1,500,000 shares
offered hereby were issued and outstanding as of the date hereof, the 1,500,000
shares would represent approximately 15.4% of the total common stock outstanding
or approximately 16.1% of the non-affiliates shares outstanding as of the date
hereof. In the event that under the agreement we decide to issue more than
1,635,156, i.e. greater than 19.99% of our outstanding shares of common stock as
of the date of the agreement, we would first be required to seek shareholder
approval in order to be in compliance with the American Stock Exchange rules.
We currently do not intend to seek shareholder approval to issue shares to
Fusion Capital in excess of 1,635,156. The number of shares ultimately offered
for sale by Fusion Capital is dependent upon the number of shares purchased by
Fusion Capital under the Purchase Agreement.
Under the Purchase Agreement and the Registration Rights Agreement we are
required to register and have included in the offering pursuant to this
Prospectus (1) 63,280 shares which have already been issued, (2) an additional
42,187 shares which we may issue in the future as a commitment fee pro rata as
we receive the $5.0 million of future funding and (3) at least 1,500,000 shares
which we may sell to Fusion Capital after this registration statement is
declared effective (18.34% of our outstanding on July 22, 2008, the date of our
agreement). All 1,605,467 shares are being offered pursuant to this Prospectus.
Under the Purchase Agreement, we have the right but not the obligation to sell
more than the 1,500,000 shares to Fusion Capital. As of the date hereof, we do
not have any plans or intent to sell to Fusion Capital any shares beyond the
1,500,000 shares offered hereby. However, if we elect to sell more than the
1,500,000 shares (which we have the right but not the obligation to do), we must
first register under the Securities Act any additional shares we may elect to
sell to Fusion Capital before we can sell such additional shares, which could
cause substantial dilution to our shareholders.
We do not have the right to commence any sales of our shares to Fusion Capital
until the SEC has declared effective the registration statement of which this
Prospectus is a part. After the SEC has declared effective such registration
statement, generally we have the right but not the obligation from time to time
to sell our shares to Fusion Capital in amounts between $50,000 and $1.0 million
depending on certain conditions. We have the right to control the timing and
amount of any sales of our shares to Fusion Capital. The purchase price of the
shares will be determined based upon the market price of our shares without any
fixed discount at the time of each sale. Fusion Capital shall not have the
right nor the obligation to purchase any shares of our common stock on any
business day that the price of our common stock is below $1.00. There are no
negative covenants, restrictions on future fundings, penalties or liquidated
damages in the Purchase Agreement or the Registration Rights Agreement. The
Purchase Agreement provides that neither party has the ability to amend the
Purchase Agreement. The Purchase Agreement does not permit Fusion Capital to
waive any condition or provision of the agreement and the obligations of both
parties are non-transferable. The Purchase Agreement contains reasonable and
customary events of default, all of which are outside the control of Fusion
Capital. See - "The Fusion Capital Transaction - Events of Default." The
agreement does not permit Fusion Capital to waive any event of default. The
Purchase Agreement may be terminated by us at any time at our discretion without
any cost to us.
2
We do not currently have sufficient financial resources to fund our operations
or those of our subsidiaries. If we are unable to commercialize and sell or
license enough of our products, and even if we are able to commercialize and
sell our products but not sufficiently timely, we will need to raise additional
funding in order to satisfy our working capital needs and to continue our
operations. See - "Risk Factors -We may require additional financing to sustain
our operations and without it we may not be able to continue operations." The
extent to which we rely on Fusion Capital as a source of funding will depend on
a number of factors including, the prevailing market price of our common stock
and the extent to which we are able to secure working capital from other sources
such as through revenues from the sale or licensing of our products and to the
extent that we are able to and choose to sell our debt and equity securities in
other transactions with parties other than Fusion Capital. In February 2004, we
entered into a prior common stock purchase agreement with Fusion Capital,
pursuant to which we sold an aggregate of 997,733 shares for total gross
proceeds of $5.0 million. The prior transaction was substantially similar to
the transaction set forth herein. We believe that it is reasonable to expect
that we will be able to access the full $5.0 million under the common stock
purchase agreement with Fusion Capital. However, no assurance can be given that
we will be able to access the full $5.0 million.
3
RISK FACTORS
You should carefully consider the risks described below before purchasing our
common stock. Our most significant risks and uncertainties are described below;
however, they are not the only risks we face. If any of the following risks
actually occur, our business, financial condition, or results or operations
could be materially adversely affected, the business of our common stock could
decline, and you may lose all or part of your investment therein. You should
acquire shares of our common stock only if you can afford to lose your entire
investment.
The risk factors described below are not all inclusive. All risk factors should
be considered carefully when evaluating our business, results of operations, and
financial position. We undertake no obligation to update forward-looking
statements or risk factors. There may be other risks and uncertainties not
highlighted herein that may become material factors affecting our financial
condition and business operations.
IN THREE OF THE LAST FIVE FISCAL YEARS, WE INCURRED SIGNIFICANT NET LOSSES AND
NEGATIVE CASH FLOWS, AND OUR ABILITY TO FINANCE FUTURE LOSSES IS LIMITED, AND
MAY SIGNIFICANTLY AFFECT EXISTING STOCKHOLDERS.
The table below summarizes our consolidated results of operations and cash flows
for the five years ended July 31, 2007:
2007 2006 2005 2004 2003
------------ ------------ ---------- ----------- ------------
Net income
(loss) $(8,893,946) $(2,377,224) $5,701,787 $2,954,529 $(1,935,301)
Net cash flows
from:
Operating
activities (5,437,443) (3,527,318) 5,006,936 2,328,684 (1,604,910)
Investing
activities (978,217) (141,644) 803,220 499,663 221,910
Financing
activities 78,425 2,298,726 4,159,711 (22,962) --
Net increase
(decrease)
in cash and
cash equiv-
alents $(6,337,235) $(1,370,236) $9,969,867 $2,805,385 $(1,383,000)
Our current recurring revenue stream is insufficient for us to be profitable
with our present cost structure. We incurred an operating loss of $1,010,795
for our most recently reported fiscal quarter which ended April 30, 2008. In
2005 and 2004, we were in part profitable because of unusually large, upfront
license fees received related to our homocysteine technology that did not recur
in 2007 or 2006. Without these revenues, we would have incurred a loss in both
years, and for each of the five years ended July 31, 2007. To return to and
sustain profitability, we must increase recurring revenues by successfully
licensing technologies with current and long-term revenue streams, and continue
to build our portfolio of innovative technologies. Over the last six months we
significantly reduced overhead with reductions in staff across all functional
departments of the company, reduced extraneous litigations, and obtained new
technologies to build revenue. We will continue to monitor our cost structure,
and expect to operate within our generated revenue and cash balances. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. The Company's continuation as a going concern is dependent upon
our ability to develop other sources of revenue or obtain other sources of
financing.
Future royalty revenues, obtaining rights to new technologies, granting
licenses, enforcing intellectual property rights, and profits or losses, are
subject to many factors outside our control, or that we cannot anticipate,
including technological changes and developments, economic cycles, and the
ability of our licensees to commercialize our technologies successfully.
Consequently, we may not be able to generate
4
sufficient revenues to be profitable, and may not have sufficient cash flow to
fund operating expenses beyond third quarter fiscal 2009.
Other than our agreement with Fusion Capital which is described in this
Prospectus, we have no outstanding debt or available credit facility, and
believe it would be difficult to obtain additional debt financing due or other
equity financing to the current composition of our balance sheet, and
unpredictable nature of our annual cash flows. Our financing options are
limited, and we must primarily rely on cash on hand and cash flows from
operations, though this situation could change in the future. We continue to
review financing options for our business, which may in the future include more
equity financing. Through the Fusion Capital offering and any other equity
financing arrangement in the future, pursuant to which we sell shares of our
common stock to raise cash to operate the business, existing holders of our
common stock will suffer significant dilution to their equity position.
WE MAY REQUIRE ADDITIONAL FINANCING TO SUSTAIN OUR OPERATIONS AND WITHOUT IT WE
MAY NOT BE ABLE TO CONTINUE OPERATIONS
At April 30, 2008 we had total working capital of $2,392,246 as compared to
$7,313,017 at April 30, 2007. We had a net loss of $8,893,846 for the fiscal
year ended July 31, 2007, and a net loss of $4,569,759 for the nine months ended
April 30, 2008. We do not currently have sufficient financial resources to fund
our operations or those of our subsidiaries. Therefore, we need additional
funds to continue these operations.
We only have the right to receive $50,000 every three business days under the
agreement with Fusion Capital unless our stock price equals or exceeds $3.00, in
which case we can sell greater amounts to Fusion Capital as the price of our
common stock increases. Fusion Capital shall not have the right nor the
obligation to purchase any shares of our common stock on any business day that
the market price of our common stock is less than $1.00. Since we registered
1,500,000 shares for sale by Fusion Capital pursuant to this prospectus, the
selling price of our common stock to Fusion Capital will have to average at
least $3.33 per share for us to receive the maximum proceeds of $5.0 million.
Assuming a purchase price of $2.35 per share (the closing sale price of the
common stock on July 25, 2008) and the purchase by Fusion Capital of the full
1,500,000 shares under the common stock purchase agreement, proceeds to us would
only be $3,525,000 unless we choose to register more than 1,500,000 shares,
which we have the right, but not the obligation, to do. Subject to approval by
our board of directors, we have the right but not the obligation to issue more
than 1,500,000 shares to Fusion Capital. In the event we elect to issue more
than 1,500,000 shares offered hereby, we will be required to file a new
registration statement and have it declared effective by the U.S. Securities &
Exchange Commission.
We have authorized the sale and issuance of 1,500,000 shares of our common stock
(18.34% of our outstanding on July 22, 2008) to Fusion Capital under the common
stock purchase agreement. We estimate that the maximum number of shares we will
sell to Fusion Capital under the common stock purchase agreement will be
1,500,000 shares (exclusive of the 63,280 shares issued to Fusion Capital as a
commitment fee and the 42,187 shares issueable to Fusion Capital pro rata as we
receive the $5.0 million funding) assuming Fusion Capital purchases all $5.0
million of common stock. In the event that we decide to issue more than
1,635,156 (19.99% of our outstanding shares of common stock as of the date of
our agreement), we would first be required to seek shareholder approval in order
to be in compliance with the American Stock Exchange rules.
The extent we rely on Fusion Capital as a source of funding will depend on a
number of factors including, the prevailing market price of our common stock and
the extent to which we are able to secure working capital from other sources,
such as through revenues from the sale or licensing of our products.
Specifically, Fusion Capital shall not have the right nor the obligation to
purchase any shares of our
5
common stock on any business days that the market price of our common stock is
less than $1.00. If obtaining sufficient financing from Fusion Capital were to
prove unavailable or prohibitively dilutive and if we are unable to
commercialize and sell or license enough of our products, we will need to secure
another source of funding in order to satisfy our working capital needs. Even if
we are able to access the full $5.0 million under the common stock purchase
agreement with Fusion Capital, we may still need additional capital to fully
implement our business, operating and development plans. Should the financing we
require to sustain our working capital needs be unavailable or prohibitively
expensive when we require it, the consequences could be a material adverse
effect on our business, operating results, financial condition and prospects.
THE SALE OF OUR COMMON STOCK TO FUSION CAPITAL MAY CAUSE DILUTION AND THE SALE
OF THE SHARES OF COMMON STOCK ACQUIRED BY FUSION CAPITAL COULD CAUSE THE PRICE
OF OUR COMMON STOCK TO DECLINE
In connection with entering into the agreement, we authorized the sale to Fusion
Capital of up to 1,500,000 shares of our common stock. The number of shares
ultimately offered for sale by Fusion Capital under this prospectus is dependent
upon the number of shares purchased by Fusion Capital under the agreement. The
purchase price for the common stock to be sold to Fusion Capital pursuant to the
common stock purchase agreement will fluctuate based on the price of our common
stock. All 1,605,467 shares registered in this offering are expected to be
freely tradable. It is anticipated that shares registered in this offering will
be sold over a period of up to 24 months from the date of this prospectus.
Depending upon market liquidity at the time, a sale of shares under this
offering at any given time could cause the trading price of our common stock to
decline. Fusion Capital may ultimately purchase all, some or none of the
1,500,000 shares of common stock not yet issued but registered in this offering.
After it has acquired such shares, it may sell all, some or none of such shares.
Therefore, sales to Fusion Capital by us under the agreement may result in
substantial dilution to the interests of other holders of our common stock. The
sale of a substantial number of shares of our common stock under this offering,
or anticipation of such sales, could make it more difficult for us to sell
equity or equity-related securities in the future at a time and at a price that
we might otherwise wish to effect sales. However, we have the right to control
the timing and amount of any sales of our shares to Fusion Capital and the
agreement may be terminated by us at any time at our discretion without any cost
to us.
THE MARKET PRICE OF OUR COMMON STOCK IS HIGHLY VOLATILE.
The market price of our common stock has been and is expected to continue to be
highly volatile. Factors, including announcements of technological innovations
by us or other companies, regulatory matters, new or existing products or
procedures, concerns about our financial position, operating results,
litigation, government regulation, developments or disputes relating to
agreements, patents or proprietary rights, may have a significant impact on the
market price of our stock. In addition, potential dilutive effects of future
sales of shares of common stock by shareholders and by the Company, including
Fusion Capital pursuant to this prospectus and subsequent sale of common stock
by the holders of warrants and options could have an adverse effect on the
market price of our shares.
WE DERIVED MORE THAN 75% OF OUR RETAINED ROYALTIES IN FISCAL 2007 FROM ONE
TECHNOLOGY.
We derived approximately $2,037,000, or 75%, of 2007 retained royalties from our
homocysteine assay technology. In fiscal 2006, we derived approximately 70% of
our retained royalties from this same technology.
6
Our U.S. patent for the homocysteine assay expired in July 2007, and although we
will not receive significant revenues from this technology after that date, we
expect to receive revenue for sales made prior to that date. In addition, we
are in litigation with Carolina Liquid Chemistries Corporation to recover funds
that we believe are due us for homocysteine assays kits manufactured, sold or
offered for sale in infringement of our patent.
A concentration of revenues makes our operations vulnerable to patent changes or
expiration, especially the homocysteine assay, and could have a significant
adverse impact on our financial position.
CERTAIN OF OUR LICENSED PATENTS HAVE RECENTLY EXPIRED OR WILL EXPIRE IN THE NEAR
FUTURE AND WE MAY NOT BE ABLE TO REPLACE THEIR ROYALTY REVENUES.
In 2007, we earned retained royalties from licenses for 17 patented
technologies. Royalties from 10 of those patented technologies have or will
expire between 2007 and 2012. Those patented technologies represented
approximately 88% of our retained royalties in 2007. Retained royalties of
approximately $2,072,533, or 76%, $25,992, or 1%, $267,527, or 10% and $29,007,
or 1%, were from patents expiring in fiscal 2007, 2008, 2009 and 2011,
respectively. The loss of these royalties, especially from the homocysteine
assay, will materially, adversely affect our operating results if we are unable
to replace them with revenues from other licenses or other sources. Since it
often takes two or more years for a technology to produce significant revenues,
we must continuously seek new sources of future revenues.
WE DEPEND ON RELATIONSHIPS WITH INVENTORS TO GAIN ACCESS TO NEW TECHNOLOGIES AND
INVENTIONS. IF WE FAIL TO MAINTAIN EXISTING RELATIONSHIPS OR TO DEVELOP NEW
RELATIONSHIPS, WE MAY HAVE FEWER TECHNOLOGIES AND INVENTIONS AVAILABLE TO
GENERATE REVENUES. TECHNOLOGY CAN CHANGE RAPIDLY AND INDUSTRY STANDARDS
CONTINUALLY EVOLVE, OFTEN MAKING PRODUCTS OBSOLETE, OR RESULTING IN SHORT
PRODUCT LIFECYCLES. OUR PROFITABILITY DEPENDS ON OUR LICENSEES' ABILITY TO
ADAPT TO SUCH CHANGES.
We do not invent new technologies or products. We depend on relationships with
universities, corporations, government agencies, research institutions,
inventors, and others to provide technology-based opportunities that we can
develop into profitable royalty-bearing licenses. Failure to maintain these
relationships or to develop new relationships could adversely affect our
operating results and financial condition. If we are unable to forge new
relationships or to maintain current relationships, we may be unable to identify
new technology-based opportunities and enter into royalty-bearing licenses. We
also are dependent on our clients' abilities to develop new technologies,
introduce new products, and adapt to changes in technology and economic needs.
We cannot be certain that current or new relationships will provide the volume
or quality of available new technologies necessary to sustain our business. In
some cases, universities and other sources of new technologies may compete
against us as they seek to develop and commercialize these technologies
themselves, or through entities that they develop, finance and/or control. In
other cases, universities receive financing for basic research from companies in
exchange for the exclusive right to commercialize any resulting inventions.
These and other strategies may reduce the number of technology sources,
potential clients, to whom we can market our services. If we are unable to
secure new sources of technology, it could have a material adverse effect on our
operating results and financial condition.
7
WE RECEIVE MOST OF OUR REVENUES FROM CUSTOMERS OVER WHOM WE HAVE NO CONTROL.
We rely on royalties received from our customers for revenues. The royalties we
receive from customers depend on their efforts and expenditures over which we
have no control. Additionally, customers' development of new products involves
great risk since many new technologies do not become commercially profitable
products despite extensive development efforts. Our license agreements do not
require customers to advise us of problems they may encounter in attempting to
develop commercial products, and they usually treat such information as
confidential. We expect that our customers will encounter problems frequently.
Our customers' failure to resolve such problems may result in a material adverse
effect on our operating results and financial condition.
STRONG COMPETITION WITHIN OUR INDUSTRY MAY REDUCE OUR CLIENT BASE.
We compete with universities, law firms, venture capital firms and other
technology commercialization firms for technology licensing opportunities. Many
organizations offer some aspect of technology transfer services, and some are
well established and have more financial and human resources than we do. This
market is highly fragmented and participants frequently focus on a specific
technology area.
FRANK R. MCPIKE, JR., A FORMER PRESIDENT AND CHIEF EXECUTIVE OFFICER OF CTT, CTT
AND OTHER INDIVIDUALS HAVE BEEN NAMED IN A CIVIL SUIT FILED BY THE SEC.
On August 11, 2004, the SEC filed a civil suit in the United States District
Court for the District of Connecticut, naming Frank R. McPike, Jr., former
President and CEO of CTT, and six individual brokers, alleging that from at
least July 1998 to June 2001, the defendants were involved in a scheme to
manipulate the price of our stock. The case relates to our 1998 stock
repurchase program.
We filed suit against our directors' and officers' insurance carrier to obtain
reimbursement of our costs to defend us and our directors and officers. As part
of an October 2004 settlement, our insurance carrier acknowledged that the
deductible under our insurance policy had been satisfied relating to the SEC's
civil suit. As a result, defense costs incurred in 2005 and thereafter, have
been covered by our insurance carrier.
On October 10, 2007, we agreed to a settlement of this case without the Company
admitting or denying the allegation of the complaint, and consenting to be
permanently restrained and enjoined from violating Sections 9(a) and 10(b) of
the Securities Exchange Act of 1934, and rule 10b-5 thereunder. No fines or
penalties were imposed on the Company by the SEC in connection with this
settlement. The settlement agreement has been approved by the SEC and on
October 26, 2007 was accepted by the Connecticut Federal District Court. This
will close the SEC's investigation and proceedings against the Company. No
members of CTT's current Board or management held positions with the Company
during the period of 1998-2001.
Frank R. McPike, who was charged separately from the Company but covered under
the Company's insurance, personally agreed on a settlement with the SEC, which
was accepted by the court on October 31, 2007. The Company incurred no costs in
connection with Mr. McPike's settlement. The penalty phase review for Mr.
McPike has now been completed between Mr. McPike, the SEC and the Court. This
case has now been settled regarding CTT and Mr. McPike.
8
OUR BY-LAWS PROVIDE THAT WE INDEMNIFY OUR DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS IN CERTAIN CIRCUMSTANCES. WE CARRY DIRECTORS AND OFFICERS LIABILITY
INSURANCE, SUBJECT TO DEDUCTIBLES, TO REDUCE THESE FINANCIAL OBLIGATIONS.
Our directors, officers, employees and agents may claim indemnification in
certain circumstances. We are currently exposed to potential indemnification
claims by a former executive in connection with a civil suit filed by the SEC.
WE ARE INVOLVED IN LAWSUITS THAT HISTORICALLY HAVE INVOLVED SIGNIFICANT LEGAL
EXPENSES. IF THE COURTS OR REGULATORY AGENCIES IN THESE SUITS OR ACTIONS DECIDE
AGAINST US, THIS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, RESULTS
OF OPERATIONS AND FINANCIAL CONDITION. LEGAL FEES AND OTHER COSTS WE INCURRED
IN 2007 RELATING TO THESE CASES WERE SIGNIFICANT, AND THE AMOUNT OF COSTS WE
INCUR IN THE FUTURE MAY BE SIGNIFICANT.
A complete description of all of the lawsuits that we are involved in is hereby
incorporated by reference from our Form 10-K/A filed on November 6, 2008 and our
most recent Form 10-Q filed on June 12, 2008.
OUR REVENUE GROWTH DEPENDS ON OUR ABILITY TO UNDERSTAND THE TECHNOLOGY
REQUIREMENTS OF OUR CUSTOMERS IN THE CONTEXT OF THEIR MARKETS. IF WE FAIL TO
UNDERSTAND THEIR TECHNOLOGY NEEDS OR MARKETS, WE LIMIT OUR ABILITY TO MEET THOSE
NEEDS AND TO GENERATE REVENUES.
We believe that by focusing on the technology needs of our customers, we are
better positioned to generate revenues by providing technology solutions to
them. The market demands of our customers drive our revenues. The better we
understand their markets and requirements, the better we are able to identify
and obtain effective technology solutions for our customers. We rely on our
professional staff and contract business development consultants to understand
our customers' technical, commercial, and market requirements and constraints,
and to identify and obtain effective technology solutions for them.
OUR SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL.
Our success depends on the knowledge, efforts and abilities of a small number of
key personnel. John B. Nano is our Chairman, President, Chief Executive Officer
and Interim Chief Financial Officer and Aris D. Despo is our Executive Vice
President, Business Development. We rely on our professional staff and contract
business development consultants to identify intellectual property opportunities
and technology solutions, and to negotiate and close license agreements.
Competition for personnel with the necessary range and depth of experience is
intense. We cannot be certain that we will be able to continue to attract and
retain qualified personnel. If we are unable to hire and retain highly
qualified professionals and consultants, especially with our small number of
staff, our revenues, prospects, financial condition and future activities could
be materially adversely affected.
OUR CUSTOMERS, AND WE, DEPEND ON GOVERNMENT APPROVALS TO COMMERCIALLY DEVELOP
CERTAIN LICENSED PRODUCTS.
Commercial development of some licensed patents may require the approval of
governmental regulatory agencies, especially in the life sciences area, and
there is no assurance that those agencies will grant such approvals. In the
United States, the principal governmental agency involved is the U.S. Food and
Drug Administration ("FDA"). The FDA's approval process is rigorous, time
consuming and costly. Unless and until a licensee obtains approval for a
product requiring such approval, the licensee may not sell the product in the
U.S., and therefore we will not receive royalty income based on U.S. sales of
the product.
9
IF OUR CLIENTS AND WE ARE UNABLE TO PROTECT THE INTELLECTUAL PROPERTY UNDERLYING
OUR LICENSES, OR TO ENFORCE OUR PATENTS ADEQUATELY, WE MAY BE UNABLE TO DEVELOP
SUCH LICENSED PATENTS OR TECHNOLOGIES SUCCESSFULLY.
Our success in earning revenues from licenses is subject to the risk that issued
patents may be declared invalid, that a patent may not be issued on a patent
application, or that competitors may circumvent or infringe our licensed patents
and thereby render our licensed patents not commercially viable. In addition,
when all patents underlying a license expire, our royalties from that license
cease, and there can be no assurance that we will be able to replace those
royalties with royalty revenues from new or other licenses.
PATENT LITIGATION HAS INCREASED; IT CAN BE EXPENSIVE AND MAY DELAY OR PREVENT
OUR CUSTOMERS' PRODUCTS FROM ENTERING THE MARKET.
Our clients and/or we may pursue patent infringement litigation or interference
proceedings against sellers of products that we believe infringe our patent
rights. Holders of conflicting patents or sellers of competing products also
may challenge our patents in patent infringement litigation or interference
proceedings.
We cannot be certain that our clients and/or we will be successful in any such
litigation or proceeding, and the results and costs may materially adversely
affect our business, operating results and financial condition.
DEVELOPING NEW PRODUCTS, CREATING EFFECTIVE COMMERCIALIZATION STRATEGIES FOR
TECHNOLOGIES, AND ENHANCING THOSE PRODUCTS AND STRATEGIES ARE SUBJECT TO
INHERENT RISKS. RISKS INCLUDE UNANTICIPATED DELAYS, UNRECOVERABLE EXPENSES,
TECHNICAL PROBLEMS OR DIFFICULTIES, AND THE POSSIBILITY THAT DEVELOPMENT FUNDS
WILL BE INSUFFICIENT. THE OCCURRENCE OF ANY ONE OR MORE OF THESE RISKS COULD
CAUSE US TO ABANDON OR SUBSTANTIALLY CHANGE OUR TECHNOLOGY COMMERCIALIZATION
STRATEGY.
Our success depends on, among other factors, our clients developing new or
improved technologies, our customers' products meeting targeted cost and
performance objectives for large-scale production, and our customers' ability to
adapt technologies to satisfy industry standards, and consumer expectations and
needs, and bringing their products to market before market saturation. They may
encounter unanticipated problems that result in increased costs or substantial
delays in introducing and marketing new products. Products may not be reliable
or durable under actual operating conditions or commercially viable and
competitive. New products may not meet price or other performance objectives
when introduced in the marketplace. Any of these events would adversely affect
our realization of royalties from new products.
WE HAVE NOT PAID DIVIDENDS ON OUR COMMON STOCK.
We have not paid cash dividends on our common stock since 1981, and, our Board
of Directors does not currently have plans to declare or pay cash dividends in
the future. The decision to pay dividends is solely at the discretion of our
Board of Directors based upon factors that they deem relevant, and may change at
any time.
AS A PUBLICLY HELD COMPANY, WE HAVE SIGNIFICANTLY HIGHER ADMINISTRATIVE COSTS.
The Sarbanes-Oxley Act of 2002, as well as new rules implemented by the SEC and
new listing requirements adopted by the American Stock Exchange in response to
the Sarbanes-Oxley Act of 2002, has required changes in corporate governance
practices, internal control policies and audit committee practices of public
companies. These new rules, regulations, and requirements have increased our
legal,
10
audit, financial, compliance and administrative costs, and have made certain
other activities more time consuming and costly. The additional costs are
expected to continue. These new rules and regulations may make it more difficult
and more expensive for us to obtain directors and officers liability insurance
in the future, and could make it more difficult for us to attract and retain
qualified members for our Board of Directors, particularly to serve on our audit
committee.
IN DEVELOPING NEW PRODUCTS WE ARE AFFECTED BY PATENT LAWS AND REGULATIONS.
Patent laws and regulations are constantly being reviewed for possible revision.
We cannot be certain how we will be affected by revisions.
11
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" much of the information we file
with, which means that we can disclose important information to you by referring
you to those publicly available documents. The information that we incorporate
by reference is considered to be part of this prospectus, and any of our
subsequent filings with the SEC will automatically update and supersede this
information. This prospectus incorporates by reference the documents listed
below and any future filings made by us with the SEC under Section 13(a), 13(c),
14 or 15(d) of the Exchange Act, until the filing of a post-effective amendment
to this prospectus which indicates that all securities registered have been sold
or which deregisters all securities then remaining unsold:
- our annual report on Form 10-K for the fiscal year ended July 31, 2007,
filed on October 30, 2007, as amended and filed on November 6, 2007;
- our quarterly report on Form 10-Q for the fiscal quarter ended October 31,
2007 filed with the SEC on December 14, 2007;
- our quarterly report on Form 10-Q for the fiscal quarter ended January 31,
2008 filed with the SEC on March 17, 2008;
- our quarterly report on Form 10-Q for the fiscal quarter ended April 30,
2008 filed with the SEC on June 12, 2008;
- our current reports on Form 8-K filed with the SEC on January 28, 2008,
July 25, 2008 and August 1, 2008;
- any future filings we will make with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act until this offering is complete or
terminated, other than information furnished pursuant to Item 2.02 or Item
7.01 of Form 8-K
You may request a copy of any or all of these filings, at no cost, by writing or
telephoning us at: Competitive Technologies, Inc., 777 Commerce Drive, Suite
100, Fairfield, Connecticut 06825, (203) 368-6044, attention: Investor
Relations. These filings may also be obtained through the Company's website
located at http://www.competitivetech.net.
------------------------------
You should rely only on the information incorporated by reference or provided in
this prospectus or any supplement. We have not authorized anyone else to
provide you with different information. You should not assume that information
in this prospectus or any supplement is accurate as of any date other than the
date on the front of these documents.
In accordance with these rules, we have incorporated by reference the
description of our business, our securities, our properties, any legal
proceedings, market price of and dividend's with respect to our common stock,
our financial statements and our management's discussion and analysis of our
financial condition and results of operations. We have also incorporated by
reference disclosure with respect to our officers and directors, their
compensation structure, any related transactions with our officers and directors
and our shareholders
The Company advises that there have been no material changes in the Company's
affairs which have occurred since the end of the latest fiscal year for which
audited financial statements were included in the latest Form 10-K and that have
not been described in a Form 10-Q or Form 8-K filed under the Exchange Act.
12
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking statements
include statements regarding, among other things, (a) our projected sales and
profitability, (b) our growth strategies, (c) anticipated trends in our
industry, (d) our future financing plans, and (e) our anticipated needs for
working capital. Forward-looking statements, which involve assumptions and
describe our future plans, strategies, and expectations, are generally
identifiable by use of the words "may," "will," "should," "expect,"
"anticipate," "estimate," "believe," "intend," or "project" or the negative of
these words or other variations on these words or comparable terminology. This
information may involve known and unknown risks, uncertainties, and other
factors that may cause our actual results, performance, or achievements to be
materially different from the future results, performance, or achievements
expressed or implied by any forward-looking statements. These statements may be
found under "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business," as well as in this prospectus generally.
Actual events or results may differ materially from those discussed in
forward-looking statements as a result of various factors, including, without
limitation, the risks outlined under "Risk Factors" and matters described in
this prospectus generally. In light of these risks and uncertainties, there can
be no assurance that the forward-looking statements contained in this filing
will in fact occur. In addition to the information expressly required to be
included in this filing, we will provide such further material information, if
any, as may be necessary to make the required statements, in light of the
circumstances under which they are made, not misleading.
The information contained in this Prospectus, as well as in our SEC filings,
identifies important factors that could adversely affect actual results and
performance. Prospective investors are urged to carefully consider such factors.
All forward-looking statements attributable to CTT are expressly qualified in
their entirety by the foregoing cautionary statements.
13
USE OF PROCEEDS
This prospectus relates to shares of our common stock that may be offered and
sold from time to time by the selling shareholder. We will receive no proceeds
from the sale of shares of common stock in this offering. However, we may
receive up to $5.0 million in proceeds from the sale of our common stock to
Fusion Capital under the common stock purchase agreement. Any proceeds from
Fusion Capital we receive under the common stock purchase agreement will be used
for working capital and general corporate purposes.
14
THE FUSION TRANSACTION
GENERAL
On July 22, 2008, we entered into a Purchase Agreement with Fusion Capital, an
Illinois limited liability company. Under the Purchase Agreement, Fusion
Capital is obligated, under certain conditions, to purchase shares from us in an
aggregate amount of $5.0 million from time to time over a twenty-four (24) month
period. Under the terms of the Purchase Agreement, Fusion Capital has received
a commitment fee consisting of 63,280 shares of our common stockAlso, we will
issue to Fusion Capital an additional 42,187 shares as a commitment fee pro rata
as we receive the $5.0 million of future funding. As of July 25, 2008 there
were 8,243,152 shares outstanding (7,823,680 shares held by non-affiliates)
excluding the 1,500,000 shares offered by Fusion Capital pursuant to this
Prospectus which it has not yet purchased from us as well as the additional
42,187 shares to be issued as a commitment fee pro rata. If all of such
1,500,000 shares offered hereby were issued and outstanding as of the date
hereof, the 1,500,000 shares would represent 15.4% of the total common stock
outstanding or 16.1% of the non-affiliates shares outstanding as of the date
hereof. In the event that under the agreement we decide to issue more than
1,635,156, i.e. greater than 19.99% of our outstanding shares of common stock as
of the date of the agreement, we would first be required to seek shareholder
approval in order to be in compliance with the American Stock Exchange rules.
We currently do not intend to seek shareholder approval to issue shares to
Fusion Capital in excess of 1,635,156. The number of shares ultimately offered
for sale by Fusion Capital is dependent upon the number of shares purchased by
Fusion Capital under the Purchase Agreement.
Under the Purchase Agreement and the Registration Rights Agreement we are
required to register and have included in the offering pursuant to this
Prospectus (1) 63,280 shares which have already been issued, (2) an additional
42,187 shares which we may issue in the future as a commitment fee pro rata as
we receive the $5.0 million of future funding and (3) at least 1,500,000 shares
which we may sell to Fusion Capital after this registration statement is
declared effective (18.34% of our outstanding on July 22, 2008, the date of our
agreement). All 1,605,467 shares are being offered pursuant to this Prospectus.
Under the Purchase Agreement, we have the right but not the obligation to sell
more than the 1,500,000 shares to Fusion Capital. As of the date hereof, we do
not have any plans or intent to sell to Fusion Capital any shares beyond the
1,500,000 shares offered hereby. However, if we elect to sell more than the
1,500,000 shares (which we have the right but not the obligation to do), we must
first register under the Securities Act any additional shares we may elect to
sell to Fusion Capital before we can sell such additional shares, which could
cause substantial dilution to our shareholders.
We do not have the right to commence any sales of our shares to Fusion Capital
until the SEC has declared effective the registration statement of which this
Prospectus is a part. After the SEC has declared effective such registration
statement, generally we have the right but not the obligation from time to time
to sell our shares to Fusion Capital in amounts between $50,000 and $1.0 million
depending on certain conditions. We have the right to control the timing and
amount of any sales of our shares to Fusion Capital. The purchase price of the
shares will be determined based upon the market price of our shares without any
fixed discount at the time of each sale. Fusion Capital shall not have the
right nor the obligation to purchase any shares of our common stock on any
business day that the price of our common stock is below $1.00. There are no
negative covenants, restrictions on future fundings, penalties or liquidated
damages in the Purchase Agreement or the Registration Rights Agreement. The
Purchase Agreement provides that neither party has the ability to amend the
Purchase Agreement. The Purchase Agreement does not permit Fusion Capital to
waive any condition or provision of the agreement and the obligations of both
parties are non-transferable. The Purchase Agreement contains reasonable and
customary events of default, all of which are outside the control of Fusion
Capital. See - "The Fusion Capital Transaction - Events of Default." The
agreement does not permit Fusion Capital to waive an
15
event of default. The Purchase Agreement may be terminated by us at any time at
our discretion without any cost to us.
We do not currently have sufficient financial resources to fund our operations
or those of our subsidiaries. If we are unable to commercialize and sell or
license enough of our products, and even if we are able to commercialize and
sell our products but not sufficiently timely, we will need to raise additional
funding in order to satisfy our working capital needs and to continue our
operations. See - "Risk Factors -We may require additional financing to sustain
our operations and without it we may not be able to continue operations." The
extent to which we rely on Fusion Capital as a source of funding will depend on
a number of factors including, the prevailing market price of our common stock
and the extent to which we are able to secure working capital from other sources
such as through revenues from the sale or licensing of our products and to the
extent that we are able to and choose to sell our debt and equity securities in
other transactions with parties other than Fusion Capital. In February 2004, we
entered into a prior common stock purchase agreement with Fusion Capital,
pursuant to which we sold an aggregate of 997,733 shares for total gross
proceeds of $5.0 million. The prior transaction was substantially similar to
the transaction set forth herein. We believe that it is reasonable to expect
that we will be able to access the full $5.0 million under the common stock
purchase agreement with Fusion Capital. However, no assurance can be given that
we will be able to access the full $5.0 million.
PURCHASE OF SHARES UNDER THE COMMON STOCK PURCHASE AGREEMENT
Under the common stock purchase agreement, on any business day selected by us,
we may direct Fusion Capital to purchase up to $50,000 of our common stock. The
purchase price per share is equal to the lesser of:
- the lowest sale price of our common stock on the purchase date; or
- the average of the three (3) lowest closing sale prices of our common
stock during the twelve (12) consecutive business days prior to the date of a
purchase by Fusion Capital.
The purchase price will be equitably adjusted for any reorganization,
recapitalization, non-cash dividend, stock split, or other similar transaction
occurring during the business days used to compute the purchase price. We may
direct Fusion Capital to make multiple purchases from time to time in our sole
discretion; no sooner than every three (3) business days.
OUR RIGHT TO INCREASE THE AMOUNT TO BE PURCHASED
In addition to purchases of up to $50,000 from time to time, we may also from
time to time elect on any single business day selected by us to require Fusion
Capital to purchase our shares in an amount up to $100,000 provided that our
share price is not below $3.00 during the three (3) business days prior to and
on the purchase date. We may increase this amount to up to $250,000 if our
share price is not below $6.00 during the three (3) business days prior to and
on the purchase date. This amount may also be increased to up to $500,000 if
our share price is not below $10.00 during the three (3) business days prior to
and on the purchase date. This amount may also be increased to up to $1.0
million if our share price is not below $15.00 during the three (3) business
days prior to and on the purchase date. We may direct Fusion Capital to make
multiple large purchases from time to time in our sole discretion; however, at
least two (2) business days must have passed since the most recent large
purchase was completed. The price at which our common stock would be purchased
in this type of larger purchases will be the lesser of (i) the lowest sale price
of our common stock on the purchase date and (ii) the lowest purchase price (as
described above) during the previous ten (10) business days prior to the
purchase date.
16
MINIMUM PURCHASE PRICE
Under the common stock purchase agreement, we have set a minimum purchase price
("floor price") of $1.00. However, Fusion Capital shall not have the right nor
the obligation to purchase any shares of our common stock in the event that the
purchase price would be less than the floor price. Specifically, Fusion Capital
shall not have the right or the obligation to purchase shares of our common
stock on any business day that the market price of our common stock is below
$1.00.
EVENTS OF DEFAULT
Generally, Fusion Capital may terminate the common stock purchase agreement
without any liability or payment to the Company upon the occurrence of any of
the following events of default:
- the effectiveness of the registration statement of which this
prospectus is a part of lapses for any reason (including, without
limitation, the issuance of a stop order) or is unavailable to Fusion
Capital for sale of our common stock offered hereby and such lapse or
unavailability continues for a period of ten (10) consecutive business
days or for more than an aggregate of thirty (30) business days in any
365-day period;
- suspension by our principal market of our common stock from
trading for a period of three (3) consecutive business days;
- the de-listing of our common stock from our principal market
provided our common stock is not immediately thereafter trading on the
OTC Bulletin Board Market, the Nasdaq Global Market, the Nasdaq
Capital Market, or the New York Stock Exchange;
- the transfer agent's failure for five (5) business days to issue
to Fusion Capital shares of our common stock which Fusion Capital is
entitled to under the common stock purchase agreement;
- any material breach of the representations or warranties or
covenants contained in the common stock purchase agreement or any
related agreements which has or which could have a material adverse
effect on us subject to a cure period of five (5) business days; or
- any participation or threatened participation in insolvency or
bankruptcy proceedings by or against us; or
- a material adverse change in our business; or
- the issuance of an aggregate of 1,635,156 shares to Fusion
Capital under our agreement if we fail to obtain the requisite
shareholder approval.
17
OUR TERMINATION RIGHTS
We have the unconditional right at any time for any reason to give notice to
Fusion Capital terminating the common stock purchase agreement without any cost
to us.
NO SHORT-SELLING OR HEDGING BY FUSION CAPITAL
Fusion Capital has agreed that neither it nor any of its affiliates shall engage
in any direct or indirect short-selling or hedging of our common stock during
any time prior to the termination of the common stock purchase agreement.
EFFECT OF PERFORMANCE OF THE COMMON STOCK PURCHASE AGREEMENT ON OUR STOCKHOLDERS
All 1,605,467 shares registered in this offering are expected to be freely
tradable. It is anticipated that shares registered in this offering will be
sold over a period of up to 24 months from the date of this prospectus. The
sale by Fusion Capital of a significant amount of shares registered in this
offering at any given time could cause the market price of our common stock to
decline and to be highly volatile. Fusion Capital may ultimately purchase all,
some or none of the 1,500,000 shares of common stock not yet issued but
registered in this offering. After it has acquired such shares, it may sell
all, some or none of such shares. Therefore, sales to Fusion Capital by us
under the agreement may result in substantial dilution to the interests of other
holders of our common stock. However, we have the right to control the timing
and amount of any sales of our shares to Fusion Capital and the agreement may be
terminated by us at any time at our discretion without any cost to us.
In connection with entering into the agreement, we authorized the sale to Fusion
Capital of up to 1,500,000 shares of our common stock (18.34% of our outstanding
on July 22, 2008 the date of our agreement). We estimate that we will sell no
more than 1,500,000 shares to Fusion Capital under the common stock purchase
agreement (exclusive of the 63,280 shares issued to Fusion Capital as the
commitment fee and 42,187 shares which we may issue in the future as a
commitment fee pro rata as we receive the $5.0 million), all of which are
included in this offering. We have the right to terminate the agreement without
any payment or liability to Fusion Capital at any time, including in the event
that all 1,500,000 shares are sold to Fusion Capital under the common stock
purchase agreement. Subject to approval by our board of directors, we have the
right but not the obligation to sell more than 1,500,000 shares to Fusion
Capital. In the event we elect to sell more than the 1,500,000 shares offered
hereby, we will be required to file a new registration statement and have it
declared effective by the U.S. Securities & Exchange Commission. The number of
shares ultimately offered for sale by Fusion Capital under this prospectus is
dependent upon the number of shares purchased by Fusion Capital under the
agreement. The following table sets forth the amount of proceeds we would
receive from Fusion Capital from the sale of shares at varying purchase prices:
18
PERCENTAGE OF PROCEEDS FROM THE
OUTSTANDING SALE OF SHARES TO
ASSUMED NUMBER OF SHARES AFTER FUSION CAPITAL
AVERAGE SHARES TO BE GIVING EFFECT UNDER THE COMMON
PURCHASE ISSUED IF TO THE ISSUANCE STOCK PURCHASE
PRICE FULL PURCHASE TO FUSION CAPITAL(1) AGREEMENT
$ 1.00 1,500,000 15.4% $ 1,500,000
$ 1.50 1,500,000 15.4% $ 2,250,000
$ 2.00 1,500,000 15.4% $ 3,000,000
$ 2.35(2) 1,500,000 15.4% $ 3,525,000
$ 2.75 1,500,000 15.4% $ 4,125,000
$ 3.00 1,500,000 15.4% $ 4,500,000
$ 4.00 1,250,000 13.1% $ 5,000,000
---------------
(1) The denominator is based on 8,243,152 shares outstanding as of July 25,
2008, which includes the 63,280 shares previously issued to Fusion Capital, the
corresponding pro rata commitment shares issued based on the proceeds received
in column 4, and the number of shares set forth in the adjacent column. The
numerator is based on the number of shares issuable under the common stock
purchase agreement at the corresponding assumed purchase price set forth in the
adjacent column.
(2) Closing sale price of our shares on July 25, 2008.
19
THE SELLING STOCKHOLDER
The following table presents information regarding the selling stockholder.
Neither the selling stockholder nor any of its affiliates has held a position
or office, or had any other material relationship, with us. However, in
February 2004 we entered into a prior common stock purchase agreement with
Fusion Capital, pursuant to which we sold an aggregate of 997,733 shares for
total gross proceeds of $5.0 million. The prior transaction was substantially
similar to the transaction set forth herein.
SHARES TO BE
SOLD IN THE
PERCENTAGE OF OFFERING ASSUMING
OUTSTANDING THE COMPANY PERCENTAGE OF
SHARES SHARES ISSUES THE OUTSTANDING
BENEFICIALLY BENEFICIALLY MAXIMUM NUMBER SHARES
OWNED OWNED OF SHARES BENEFICIALLY
SELLING BEFORE BEFORE UNDER THE PURCHASE OWNED AFTER
STOCKHOLDER OFFERING OFFERING (1) AGREEMENT (1) OFFERING
------------ ------------- -------------- ------------------- --------------
Fusion
Capital Fund
II, LLC (2) 64,280(3) 0.8% 1,605,467 0%
------------ ------------- -------------- ------------------- --------------
____________
(1) Applicable percentage of ownership is based on 8,243,152 shares of our
common stock outstanding as of August 3, 2008 (reflecting issuance and delivery
of 63,280 shares as a commitment fee) together with securities exercisable or
convertible into shares of Common Stock within sixty (60) days of August 3, 2008
for the selling stockholder. Beneficial ownership is determined in accordance
with the rules of the SEC and generally includes voting or investment power with
respect to securities. Shares of common stock are deemed to be beneficially
owned by the person holding such securities for the purpose of computing the
percentage of ownership of such person, but are not treated as outstanding for
the purpose of computing the percentage ownership of any other person.
(2) Steven G. Martin and Joshua B. Scheinfeld, the principals of Fusion
Capital, are deemed to be beneficial owners of all of the shares of common stock
owned by Fusion Capital. Messrs. Martin and Scheinfeld have shared voting and
disposition power over the shares being offered under this Prospectus.
(3) As of the date hereof, 64,280 shares of our common stock have been
previously acquired by Fusion Capital under the Purchase Agreement, consisting
of 63,280 shares we issued to Fusion Capital as a commitment fee and 1,000
shares that were owned prior to the common stock purchase agreement. The
Company may elect in its sole discretion to sell to Fusion Capital up to an
additional 1,500,000 shares under the Purchase Agreement and an additional
42,187 shares that we may issue in the future as a commitment fee pro rata as we
receive the $5.0 million of future funding, but Fusion Capital does not
presently beneficially own those shares as determined in accordance with the
rules of the SEC.
20
PLAN OF DISTRIBUTION
The common stock offered by this prospectus is being offered by Fusion Capital
Fund II, LLC, the selling shareholder. The common stock may be sold or
distributed from time to time by the selling stockholder directly to one or more
purchasers or through brokers, dealers, or underwriters who may act solely as
agents at market prices prevailing at the time of sale, at prices related to the
prevailing market prices, at negotiated prices, or at fixed prices, which may be
changed. The sale of the common stock offered by this Prospectus may be
effected in one or more of the following methods:
- ordinary brokers' transactions;
- transactions involving cross or block trades;
- through brokers, dealers, or underwriters who may act solely as agents
- "at the market" into an existing market for the common stock;
- in other ways not involving market makers or established business markets,
including direct sales to purchasers or sales effected through agents;
- in privately negotiated transactions; or
- any combination of the foregoing.
In order to comply with the securities laws of certain states, if applicable,
the shares may be sold only through registered or licensed brokers or dealers.
In addition, in certain states, the shares may not be sold unless they have been
registered or qualified for sale in the state or an exemption from the
registration or qualification requirement is available and complied with.
Brokers, dealers, underwriters, or agents participating in the distribution of
the shares as agents may receive compensation in the form of commissions,
discounts, or concessions from the selling shareholder and/or purchasers of the
common stock for whom the broker-dealers may act as agent. The compensation
paid to a particular broker-dealer may be less than or in excess of customary
commissions.
Fusion Capital is an "underwriter" within the meaning of the Securities Act.
Neither we nor Fusion Capital can presently estimate the amount of compensation
that any agent will receive. We know of no existing arrangements between Fusion
Capital, any other shareholder, broker, dealer, underwriter, or agent relating
to the sale or distribution of the shares offered by this Prospectus. At the
time a particular offer of shares is made, a prospectus supplement, if required,
will be distributed that will set forth the names of any agents, underwriters,
or dealers and any compensation from the selling shareholder, and any other
required information.
We will pay all of the expenses incident to the registration, offering, and sale
of the shares to the public other than commissions or discounts of underwriters,
broker-dealers, or agents. We have also agreed to indemnify Fusion Capital and
related persons against specified liabilities, including liabilities under the
Securities Act.
21
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers, and controlling persons, we have been
advised that in the opinion of the SEC this indemnification is against public
policy as expressed in the Securities Act and is therefore, unenforceable.
Fusion Capital and its affiliates have agreed not to engage in any direct or
indirect short selling or hedging of our common stock during the term of the
common stock purchase agreement.
We have advised Fusion Capital that while it is engaged in a distribution of the
shares included in this Prospectus it is required to comply with Regulation M
promulgated under the Securities Exchange Act of 1934, as amended. With certain
exceptions, Regulation M precludes the selling shareholder, any affiliated
purchasers, and any broker-dealer or other person who participates in the
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete. Regulation M also prohibits any bids
or purchases made in order to stabilize the price of a security in connection
with the distribution of that security. All of the foregoing may affect the
marketability of the shares offered hereby this Prospectus.
This offering will terminate on the date that all shares offered by this
Prospectus have been sold by Fusion Capital.
22
LEGAL MATTERS
The validity of the common stock offered by this Prospectus will be passed upon
for us by Cutler Law Group, Augusta, Georgia. M. Richard Cutler, one of the
partners of the law firm of Cutler Law Group is the owner of 25,000 shares of
our common stock. In addition, Cutler Law Group has an agreement with the
Company pursuant to which 50% of its legal fees are payable in common stock of
the Company, including the legal fees relating to this offering.
EXPERTS
The financial statements of Competitive Technologies, Inc. as of July 31, 2007
incorporated by reference in this Prospectus have been so included in reliance
on the report of Mahoney Cohen & Company, CPA, P.C., independent registered
public accounting firm, given on the authority of said firm as experts in
auditing and accounting.
The financial statements of Competitive Technologies, Inc. as of July 31, 2006
and for each of the two years in the period ended July 31, 2006 incorporated by
reference in this Prospectus have been so included in reliance on the reports of
BDO Seidman, LLP, independent registered public accounting firm appearing
elsewhere herein, given on the authority of said firm as experts in auditing and
accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act of 1933, relating to the shares
of our common stock being offered by this prospectus. For further information
pertaining to our common stock and the shares of common stock being offering by
this prospectus, reference is made to such registration statement. This
prospectus constitutes the prospectus we filed as a part of the registration
statement and it does not contain all information in the registration statement,
certain portions of which have been omitted in accordance with the rules and
regulations of the Securities and Exchange Commission and certain portions of
which have been incorporated by reference to our reports filed with the
Securities and Exchange Commission.
In addition, we are subject to the informational requirements of the Securities
Exchange Act of 1934, and, in accordance with such requirements, we file
reports, proxy statements and other information with the Securities and Exchange
Commission relating to our business, financial statements and other matters.
Reports and proxy and information statements filed under Section 14(a) and 14(c)
of the Securities Exchange Act of 1934 and other information filed with the
Securities and Exchange Commission as well as copies of the registration
statement can be inspected and copied at the public reference facilities
maintained by the Securities and Exchange Commission at Room 1024, Judiciary
Plaza, 100 F Street, N.E., Washington, D.C. 20549. Copies of such material can
also be obtained at prescribed rates from the Public Reference Section of the
Securities and Exchange Commission at its principal office at Judiciary Plaza,
100 F Street, N.E., Washington, D.C. 20549. Please call the Securities and
Exchange Commission at 1.800.SEC.0330 for further information on the operation
of the public reference room. Such material may also be obtained electronically
by visiting the SEC's web site on the Internet at http://www.sec.gov. Our
common stock is traded on American Stock Exchange under the symbol "CTT".
Copies of our filings with the Securities and Exchange Commission are also
available, free of charge, on our corporate website at
http://www.competitivetech.net. The other information found on our website is
not incorporated by reference into this prospectus.
23
You should rely only on the information contained in this Prospectus or the
documents incorporated by reference. Neither CTT nor the selling shareholder
has authorized anyone to provide you with any information that is different from
that contained in this Prospectus. The information contained in this Prospectus
is accurate as of the date of this Prospectus. You should not assume that there
have been no changes in the affairs of the Company since the date of this
Prospectus or that the information in this Prospectus is correct as of any time
after the date of this Prospectus, regardless of the time that this Prospectus
is delivered or any sale of the common stock offered by this Prospectus is made.
This Prospectus is not an offer to sell or a solicitation of an offer to buy the
shares covered by this Prospectus in any jurisdiction where the offer or
solicitation is unlawful.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Delaware General Corporation Law, Section 102(b)(7), enables a corporation in
its original certificate of incorporation, or an amendment thereto validly
approved by stockholders, to eliminate or limit personal liability of members of
its Board of Directors for monetary damages for breach of fiduciary duty as a
director. However, the elimination or limitation shall not apply where there
has been a breach of the duty of loyalty, failure to act in good faith,
intentional misconduct or a knowing violation of a law, the payment of a
dividend or approval of a stock repurchase which is deemed illegal or an
improper personal benefit that is obtained. Our Certificate of Incorporation
includes language limiting the liability of, and providing indemnification for,
directors.
The provision in the Certificate of Incorporation does not eliminate the
director's fiduciary duty, and in appropriate circumstances equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under Delaware law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to our Company for acts
or omissions not in good faith or involving intentional misconduct, for knowing
violations of law, for actions leading to improper personal benefit to the
director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws.
To the extent that indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling our
Company as discussed in the foregoing provisions, we have been informed that in
the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act of 1933, and is therefore unenforceable. We
believe that our Certificate of Incorporation provisions are necessary to
attract and retain qualified persons as directors and officers.
24
--------------------------------------------------------------------------------
No dealer, salesperson, or other person has been authorized to give any
information or to make any representation not contained in this Prospectus, and,
if given or made, such information and representation should not be relied upon
as having been authorized by Competitive Technologies, Inc. or the selling
shareholder. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered by this Prospectus
in any jurisdiction or to any person to whom it is unlawful to make such offer
or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create an implication that there has
been no change in the facts set forth in this Prospectus or in the affairs of
Competitive Technologies, Inc. since the date hereof.
1,605,467 SHARES
*
*****
**-----**
**----- COMPETITIVE
****---- TECHNOLOGIES
**===== Unlocking the Potential of Innovation (R)
**=====**
*****
* (R) Technology Transfer and Licensing Services
COMPETITIVE TECHNOLOGIES, INC.
COMMON STOCK
PROSPECTUS
SEPTEMBER 17, 2008
Dealer Prospectus Delivery Obligation: Until ___________, 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.
25
PART II-INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses payable by the Registrant in connection with the issuance and
distribution of the securities being registered (other than underwriting
discounts and commissions, if any) are set forth below. Each item listed is
estimated, except for the Securities and Exchange Commission registration fee
and the American Stock Exchange additional listing fee.
Securities and Exchange Commission registration fee $ 150
American Stock Exchange Additional listing fees 32,109
Accounting fees and expenses 20,000
Legal fees and expenses 50,000
Registrar and transfer agent's fees and expenses 1,000
Printing and engraving expenses 2,000
Miscellaneous 4,741
-----
Total expenses $110,000
========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to our bylaws we have the power to 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 (other than an action by or in the right of CTT) by reason of the
fact that such person is or was one of our directors, officers, employees or
agents, or is or was serving at our request 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 such person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
our best interests, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe the person's conduct was unlawful.
Our bylaws also give us the power to 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 our right to procure a judgment in our favor by reason
of the fact that such person is or was one of our directors, officers, employees
or agents, or is or was serving at our request as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection with the defense or settlement of such
action or suit if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to our best interests and except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of such person's duty to us unless and only to the
extent that the Court of Chancery of Delaware or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such Court of Chancery or such other court shall deem proper.
Our bylaws also provide that to the extent that one of our directors, officers,
employees or agents has been successful on the merits or otherwise in the
defense of any action, suit or proceeding, or in defense of any claim, issue or
matter therein, such person shall be indemnified against
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expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
Our bylaws further provide that our Board of Directors may authorize, by a vote
of a majority of the full Board of Directors, us to purchase and maintain
insurance on behalf of any person who is or was one of our directors, officers,
employees or agents, or is or was serving at our request as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against such person and incurred
by such person in any such capacity, or arising out of such person's status as
such, whether or not we would have the power to indemnify such person against
liability under the provisions of our bylaws.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since July 25, 2005, CTT has made the following sales of securities that were
not registered under the Securities Act of 1933, as amended (the "Securities
Act"):
In July 2008, the Company issued to Fusion Capital 63,280 shares of common stock
as the initial commitment shares in consideration of the equity financing of up
to $5.0 million which is being provided to the Company by Fusion Capital. These
securities were issued by the Company without registration in reliance upon an
exemption under Section 4(2) of the Securities Act because the offer and sale
was made in a privately negotiated transaction. The share certificate issued to
Fusion Capital has been appropriately legended. The Company ascertained that
Fusion Capital is an accredited investor and otherwise took steps to assure
compliance with private placement requirements.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
3.1 Unofficial restated certificate of incorporation of the registrant as
amended to date filed (on April 1, 1998) as Exhibit 4.1 to registrant's
Registration Statement on Form S-8, File Number 333-49095 and hereby
incorporated by reference.
3.2 By-laws of the registrant as amended effective October 14, 2005, filed
(on December 12, 2005) as Exhibit 3.2 to registrant's Quarterly Report on Form
10-Q for the quarterly period ended October 31, 2005, and hereby incorporated by
reference.
5.1 Opinion of Cutler Law Group as to the legality of the shares of CTT
common stock being registered. Incorporated by reference to Amendment No. 1 to
this Registration Statement filed on September 5, 2008.
10.1 Registrant's Restated Key Employees' Stock Option Plan filed (on
January 29, 2003) as Exhibit 4.3 to registrant's Registration Statement on Form
S-8, File Number 33-87756, and hereby incorporated by reference.
10.2 Registrant's Annual Incentive Plan filed (on November 25, 2005) as
Exhibit 99.1 to registrant's Current Report on Form 8-K dated November 22, 2005,
and hereby incorporated by reference.
10.3 Registrant's 2000 Directors Stock Option Plan as amended January 24,
2003, filed (on January 29, 2003) as Exhibit 4.4 to registrant's Registration
Statement on Form S-8, File Number 333-102798 and hereby incorporated by
reference.
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10.4 Registrant's 1996 Directors' Stock Participation Plan as amended
January 14, 2005, filed (on January 21, 2005) as Exhibit 10.2 to registrant's
Current Report on Form 8-K, and hereby incorporated by reference.
10.5 Registrant's 1997 Employees' Stock Option Plan as amended January 14,
2005, filed (on January 21, 2005) as Exhibit 4.3 to registrant's Current Report
on Form 8-K, and hereby incorporated by reference.
10.6 Severance Agreement and General Release between registrant and Frank R.
McPike, Jr. effective November 1, 2003, filed (on March 16, 2004) as Exhibit
10.2 to registrant's Form 10-Q for the quarterly period ended January 31, 2004,
and hereby incorporated by reference.
10.7 Common Stock Purchase Agreement between the registrant and Fusion
Capital Fund II, LLC dated February 25, 2004 filed (on February 27, 2004) as
Exhibit 10.1 to registrant's Current Report on Form 8-K dated February 25, 2004,
and hereby incorporated by reference.
10.8 Registration Rights Agreement between the registrant and Fusion Capital
Fund II, LLC dated February 25, 2004 filed (on February 27, 2004) as Exhibit
10.2 to registrant's Current Report on Form 8-K dated February 25, 2004, and
hereby incorporated by reference.
10.9 Amended and Restated Employment Agreement by and between registrant and
Donald J. Freed effective October 1, 2005, filed (on October 13, 2005) as
Exhibit 10.22 to registrant's Annual Report on Form 10-K for the year ended July
31, 2005, and hereby incorporated by reference.
10.10 Amendment number one made February 15, 2006, to Amended and Restated
Employment Agreement, dated as of October 1, 2005, between registrant and Donald
J. Freed, filed (on February 23, 2006) as Exhibit 10.1 to registrant's Current
Report on Form 8-K dated February 23, 2006, and hereby incorporated by
reference.
10.11 Employment Agreement dated as of February 15, 2006 between registrant
and Michael E. Kiley, filed (on February 23, 2006) as Exhibit 10.1 to
registrant's Current Report on Form 8-K dated February 23, 2006, and hereby
incorporated by reference.
10.12 Lease agreement dated April 28, 2006, between 1375 Kings Highway/777
Commerce Drive Associates, LLC, and 14 Mamaroneck Avenue Reinvestment
Associates, LLC, and Competitive Technologies, Inc. filed (on June 9, 2006) as
Exhibit 10.27 to registrant's Quarterly Report on Form 10-Q for the quarterly
period ended April 30, 2006, and hereby incorporated by reference.
10.13 Amendment to Lease made July 20, 2006 by and between 1375 Kings
Highway/777 Commerce Drive Associates, LLC, and 14 Mamaroneck Avenue
Reinvestment Associates, LLC, and Competitive Technologies, Inc., filed (on
October 30, 2006) as Exhibit 10.17 to registrant's Annual Report on Form 10-K
for the year ended July 31, 2006, and hereby incorporated by reference.
10.14 Employment Agreement dated February 2, 2007 between registrant and
John B. Nano, filed (on February 6, 2007) as Exhibit 10.1 to registrant's
Current Report on Form 8-K dated February 6, 2007, and hereby incorporated by
reference.
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10.15 Stock Purchase Agreement dated April 17, 2007 between registrant and
Betty Rios Valencia, and Agrofrut E.U. filed on April 19, 2007 as Exhibit 10.1
to registrant's Current Report on Form 8-K dated April 19, 2007, and hereby
incorporated by reference.
10.16 Second Amendment to Lease made July 20, 2006 by and between 1375 Kings
Highway/777 Commerce Drive Associates, LLC, and 14 Mamaroneck Avenue
Reinvestment Associates, LLC and Competitive Technologies, Inc., and hereby
incorporated by reference.
10.17 Common Stock Purchase Agreement, dated as of July 22, 2008, by and
between the Company and Fusion Capital Fund II, LLC. Filed (on July 25, 2008) as
Exhibit 10.1 to registrant's Current Report on Form 8-K dated July 25, 2008, and
hereby incorporated by reference.
10.2 Registration Rights Agreement, dated as of July 22, 2008, by and
between the Company and Fusion Capital Fund II, LLC. Filed (on July 25, 2008) as
Exhibit 10.2 to registrant's Current Report on Form 8-K dated July 25, 2008, and
hereby incorporated by reference.
21 Subsidiaries of registrant. Incorporated by reference to the original
filing of this Registration Statement on Form S-1.
23.1 Consent of Mahoney Cohen & Company, CPA, P.C.
23.2 Consent of BDO Seidman, LLP.
23.3 Consent of Cutler Law Group (included in opinion filed as Exhibit 5.1).
Incorporated by reference to Amendment No. 1 to this Registration Statement
filed on September 5, 2008.
23.4 Power of Attorney of Directors of Competitive Technologies, Inc.
(included on the signature page of the original filing of this Registration
Statement on Form S-1).
(b) Financial Statement Schedules
No financial statement schedules are required.
II-4
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, 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 prospectus
filed with the Commission pursuant to Rule 424(b) (Sec. 230.424(b) of this
chapter) if, in the aggregate, the changes in 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) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, That:
(A) Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply
if the registration statement is on Form S-8 (Sec. 230.16b of this chapter), and
the information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Commission by
the Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) that are incorporated by
reference in this registration statement; and
(B) Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section
do not apply if the registration statement is on Form S-3 (Sec. 239.13 of this
chapter) or Form F-3 (Sec. 239.33 of this chapter) and the information required
to be included in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement, or is contained in a
form of prospectus filed pursuant to Rule 424(b) (Sec. 230.424(b) of this
chapter) that is part of the registration statement.
(C) Provided further, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the registration statement is for an offering of
asset-backed securities on Form S-1 (Sec. 239.11 of this chapter) or Form S-3
(Sec. 239.13 of this chapter), and the information required to be included in a
post-effective amendment is provided pursuant to Item 1100(c) of Regulation AB
(Sec. 229.1100(c)).
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(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser, each prospectus filed by the Registrant pursuant
to Rule 424(b) as part of this registration statement relating to an offering
shall be deemed to be part of and included in this registration statement as of
the date it is first used after effectiveness. Provided, however, that no
statement made in this registration statement or prospectus that is part of this
registration statement or made in a document incorporated or deemed incorporated
by reference into this registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of contract of sale
prior to such first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration statement
or made in any such document immediately prior to such date of first use.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) 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
II-6
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 its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Fairfield, Connecticut on September
17, 2008
COMPETITIVE TECHNOLOGIES, INC.
By: \s\ John B. Nano
----------------
JOHN B. NANO, CHAIRMAN, PRESIDENT AND CEO
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 Title Date
--------- ----- ----
\s\ John B. Nano Chairman, President and September 17, 2008
---------------- CEO, Interim CFO (Principal
John B. Nano Executive, Financial and
Accounting Officer)
\s\ John B. Nano Director September 17, 2008
----------------
Rustin Howard*
\s\ John B. Nano Director September 17, 2008
----------------
William L. Reali*
\s\ John B. Nano Director September 17, 2008
----------------
Richard D. Hornidge, Jr.*
\s\ John B. Nano Director September 17, 2008
----------------
Ralph S. Torello*
\s\ John B. Nano Director September 17, 2008
----------------
Joel M. Evans, MD*
* By John B. Nano, power of attorney
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