EX-99.1 2 v045080_ex99-1.htm

Exhibit 99.1


For Immediate Release

COMPETITIVE TECHNOLOGIES, INC. REPORTS
THIRD QUARTER FISCAL 2006 RESULTS

Fairfield, CT (June 9, 2006) - Competitive Technologies, Inc. (AMEX: CTT) today announced a net loss of $1.1 million, or $0.14 per share, for its fiscal third quarter ended April 30, 2006. This compares to net income of $0.4 million, or $0.05 per diluted share, for the third quarter of the prior fiscal year. For the nine months ended April 30, 2006, we incurred a net loss of approximately $2.0 million, or $0.27 per share, compared to net income during the same period of the prior year of approximately $5.3 million, or $0.73 per diluted share.

Retained royalties for the quarter ended April 30, 2006, were approximately $1.0 million, a decrease of $1.1 million, or 50%, compared to approximately $2.1 million of retained royalties for the same period in the prior year. Retained royalties for the prior year included an aggregate of approximately $0.8 million from the settlement of back royalties relating to an expired license, and upfront license fees relating to new homocysteine testing licenses granted in the prior year. Excluding these items, retained royalties for the quarter ended April 30, 2006, would have decreased $0.2 million, or approximately 19% over the same period of the prior year, due to timing of receipts on one license, and a decrease in the number of homocysteine assays sold by one large licensee. Total revenues for the quarter ended April 30, 2006, were approximately $1.2 million, compared to approximately $2.5 million in the same period of the prior year, due to the decrease in retained royalties, and the absence in the current year of legal awards and dividends, as happened in the prior year, partially offset by an increase in interest income due to higher interest rates and higher average cash balances in the current quarter compared to the prior year quarter.

Expenses overall were flat for the quarter ended April 30, 2006, compared to the prior year quarter. Personnel and other direct expenses related to revenues increased approximately $0.2 million. General and administrative expenses decreased approximately $0.4 million compared to the prior year, principally due to a decrease in legal costs incurred in the prior year to defend the company against a whistleblower claim that was later dismissed, and a reduction in costs related to the documentation, testing and audit of internal controls required pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. Patent enforcement expenses, net of reimbursements, increased approximately $0.3 million compared to the prior year, principally due to net costs incurred in defense of our homocysteine patent at the U.S. Supreme Court.

“We are focused on our goal of significantly growing our recurring revenues. To accomplish our goal, we first need to increase our portfolio of available technologies, and must continually bring in new technology to keep our pipeline full,” said Michael D. Davidson, CTT’s Vice President and Chief Financial Officer. “Prior to the formation of the current management team, not enough new technologies were acquired, and we are paying for this now. But we are aggressively pursuing new technology and have added staff to accelerate this process. We expect our efforts to pay off within the next eighteen to thirty-six months.”

Dr. D. J. Freed, CTT’s President and Chief Executive Officer added, “Due to our long revenue cycle, which we estimate to be two to three years from technology sign-up to recurring revenue, it is important that we stay active on both the acquisition and licensing sides of our business. This was a significant past weakness in our operations that we identified and we have made, and are continuing to make, the investments that we believe are needed to secure our Company’s future. These investments have cost us in the short term, but we believe that they will be well worth it over time. Our strong balance sheet means that we won’t sacrifice our long-term goals for short term results. We are optimistic that the people we have, and our strategic plans will be successful.”

 
Retained royalties for the nine months ended April 30, 2006, were approximately $3.4 million, compared to approximately $9.5 million in the prior year. The principal reason for the decrease in retained royalties was upfront license fees received on homocysteine licenses granted in the prior year that did not recur in the same magnitude in the current year, and the settlement in the prior year of the back royalties described above. Total revenues for the nine months ended April 30, 2006, were approximately $3.8 million, compared to approximately $11.7 million for the same period of the prior fiscal year. In addition to the decrease in retained royalties, during the prior year period an aggregate of approximately $1.8 million of revenue was received from legal awards and two dividends from one of our investments, neither of which recurred in the current year.

Total expenses for the nine months ended April 30, 2006, decreased $0.5 million, to approximately $5.9 million from approximately $6.4 million incurred during the same period of the prior year. Personnel and other direct costs decreased approximately $0.9 million, principally due to less commission and bonus accrued in the current year compared to the prior year, partially offset by increased costs related to the addition of new business development staff. General and administrative expenses increased approximately $0.3 million compared to the prior year, principally due to an increase in legal costs related to claims filed against us by our former President and Chief Executive Officer, and costs related to our claim filed against him for damages for breach of contract, breach of fiduciary duty, statutory theft and other claims. Patent enforcement expenses, net of reimbursements, increased approximately $0.1 million.

CTT will hold a conference call at 11:00 a.m. EDT on June 9, 2006 to discuss results and provide a strategic overview. Investors and others are invited to listen to the broadcast live and ask questions by dialing in at (800) 406-5356 (U.S./Canada) or (913) 981-5572 (International). The call will be web cast live over the Internet at http://www.competitivetech.net in the Investor Relations section. A replay of the call will be available the following day on our website.
 
Direct inquiries to:     
  Company Contact:    Investor Inquiries:
  Jennifer Carberry, Director of Marketing   Johnnie D. Johnson,
  Competitive Technologies, Inc.   Strategic IR, Inc 
  Tel: 203-255-6044   Tel: 212-754-6565
  Email: jcarberry@competitivetech.net   Email: jdjohnson@strategic-ir.com 
  Web: www.competitivetech.net    
 
About Competitive Technologies, Inc.

Competitive Technologies, established in 1968, is a full service technology transfer and licensing provider, focused on bringing the intellectual property assets of its clients to the marketplace. CTT specializes in identifying, developing and commercializing innovative technologies in a variety of areas, including life and physical sciences, electronics, and nanotechnologies. Through its global distribution platform, CTT maximizes the value of its clients’ intellectual property assets. For more information, please visit: www.competitivetech.net.

Statements about our future expectations, including development and regulatory plans, and all other statements in this press release, other than historical facts, are “forward-looking statements” within the meaning of applicable Federal Securities Laws, and are not guarantees of future performance. If and when used herein, the words “may,” “will,” “should,” “anticipate,” “believe,” “intend,” “plan,” “expect,” “estimate,” “approximate,” and similar expressions, as they relate to us or our business or management, are intended to identify such forward-looking statements. These statements involve risks and uncertainties related to market acceptance of and competition for our licensed technologies, growth strategies, operating performance, industry trends, and other risks and uncertainties inherent in our business, including those set forth in Item 7 under the caption “Risk Factors,” in our most recent Annual Report on Form 10-K for the year ended July 31, 2005, filed with the Securities and Exchange Commission (“SEC”) on October 13, 2005, and other factors that may be described in our other filings with the SEC, and are subject to change at any time. Our actual results could differ materially from these forward-looking statements. We undertake no obligation to update publicly any forward-looking statement.
 
 
COMPETITIVE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except share amounts)
 
   
Three months ended
  
Nine months ended
  
   
April 30,
  
April 30,
  
                   
   
2006
  
2005
  
2006
  
2005
  
                   
Revenues
                          
Retained royalties
  
$
1,043
  
$
2,078
  
$
3,433
  
$
9,520
  
Royalty legal awards
    
-
   
221
   
-
   
1,037
 
Dividends received
    
-
   
104
   
-
   
784
 
Investment income
    
156
   
93
   
391
   
306
 
Other income
    
-
   
37
   
12
   
100
 
     
1,199
   
2,533
   
3,836
   
11,747
 
                           
Expenses
                          
Personnel and other direct expenses
                          
relating to revenues
    
1,354
   
1,170
   
3,348
   
4,289
 
General and administrative expenses
    
624
   
1,030
   
2,155
   
1,845
 
Patent enforcement expenses, net of
                          
reimbursements
    
275
   
7
   
373
   
291
 
     
2,253
   
2,207
   
5,876
   
6,425
 
                           
Income (loss) before income taxes
    
(1,054
)
  
326
   
(2,040
)
  
5,322
 
Provision (benefit) for income taxes
    
-
   
(34
)
  
(12
)
  
37
 
Net income (loss)
  
$
(1,054
)
$
360
  
$
(2,028
)
$
5,285
  
                           
Net income (loss) per common share:
                          
Basic
  
$
(0.14
)
$
0.05
  
$
(0.27
)
$
0.80
  
Diluted
  
$
(0.14
)
$
0.05
  
$
(0.27
)
$
0.73
  
                           
Weighted average number of common
                          
shares outstanding:
                          
Basic
    
7,710
   
6,868
   
7,565
   
6,631
 
Diluted
    
7,710
   
7,685
   
7,565
   
7,242
 
 

COMPETITIVE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share amounts)
 
   
April 30,
  
July 31,
  
   
2006
  
2005
  
ASSETS
              
Current assets:
              
Cash and cash equivalents
  
$
14,461
  
$
14,280
  
Receivables
    
4,054
   
4,086
 
Equity securities
    
368
   
-
 
Prepaid expenses and other current assets
    
244
   
272
 
Total current assets
    
19,127
   
18,638
 
               
Equity securities
    
625
   
558
 
Prepaid royalties
    
250
   
75
 
Deferred equity financing costs, net
    
-
   
96
 
Intangible assets, net
    
24
   
39
 
Property and equipment, net
    
65
   
35
 
TOTAL ASSETS
  
$
20,091
  
$
19,441
  
               
               
LIABILITIES AND SHAREHOLDERS' INTEREST
              
Current liabilities:
              
Accounts payable
  
$
811
  
$
643
  
Accrued expenses and other liabilities
    
3,687
   
4,690
 
Total current liabilities
    
4,498
   
5,333
 
               
Non current royalties payable
    
1,169
   
-
 
               
Commitments and contingencies
              
Shareholders' interest:
              
5% preferred stock, $25 par value, 35,920
shares authorized, 2,427 shares issued and outstanding
    
61
   
61
 
Common stock, $.01 par value, 20,000,000
shares authorized, 7,787,669 and 7,326,749
shares issued, respectively
    
78
   
73
 
Capital in excess of par value
    
33,485
   
31,285
 
Accumulated deficit
    
(19,072
)
  
(17,044
)
Accumulated other comprehensive loss
    
(128
)
  
(267
)
Total shareholders' interest
    
14,424
   
14,108
 
               
TOTAL LIABILITIES AND SHAREHOLDERS'
              
INTEREST
  
$
20,091
  
$
19,441