As filed with the Securities and Exchange Commission on July 14, 2010.
Registration No. 33-167273
================================================================================
--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------
Amendment No. 3 to
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COMPETITIVE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
------------
DELAWARE 6794 36-2664428
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification Number)
organization) Code Number)
777 COMMERCE DRIVE
FAIRFIELD, CONNECTICUT 06825
(203) 368-6044
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------
JOHN B. NANO
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
COMPETITIVE TECHNOLOGIES, INC.
777 COMMERCE DRIVE
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
3355 W ALABAMA, STE 1150
HOUSTON, TX 77098
TELEPHONE: (713) 888-0040
FACSIMILE: (800) 836-0714
------------
i
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: 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: [ ]
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
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE
--------------------------------------------------------------------------------
Common Stock, par value
0.01 per share 2,000,000 $ 2.70 $5,389,000 $ 384.24
Common Stock, par value
0.01 per share 75,000 (2) $ 3.17 $ 237,750 $ 16.95
Total 2,075,000 $5,626,750 $ 401.19
--------------------------------------------------------------------------------
(1) Estimated pursuant to Rule 457(c), solely for the purpose of calculating
the registration fee based on 85% of the closing price for the common
stock, as reported on the NYSE Amex Equities Stock Exchange on May 28,
2010. Under the common stock purchase agreement, Crisnic Fund SA has agreed
to purchase 2,000,000 shares of newly issued CTT common stock at a
price equal to 85% of the current volume weighted average market price.
(2) The Registrant has agreed to issue an additional 75,000 shares of newly
issued CTT common stock to Crisnic Fund SA as a fee.
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.
ii
--------------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED July 14, 2010
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.
2,075,000 Shares of Common Stock
This prospectus relates to the sale of 2,075,000 shares of our common
stock by Crisnic Fund SA. Crisnic Fund SA is sometimes referred to in this
prospectus as the selling shareholder. The prices at which Crisnic Fund SA 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 Crisnic Fund SA.
Our common stock is registered under Section 12(g) of the Securities
Exchange Act of 1934 and quoted on the NYSE Amex Equities stock market under the
symbol "CTT." On July 9, 2010 the last reported sale price for our common stock
as reported on the NYSE Amex Equities stock market was $2.65 per share. We have
applied to have the shares of common stock offered pursuant to this prospectus
approved for listing on the NYSE Amex Equities stock market.
____________________
INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 6 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 ________________, 2010
1
TABLE OF CONTENTS
Prospectus Summary 3
Forward-Looking Statements 5
Risk Factors 6
Incorporation by Reference 12
Use of Proceeds 14
The Crisnic Fund SA Transaction 15
Selling Stockholder 17
Plan of Distribution 18
Legal Matters 20
Experts 20
Where You Can Find More Information 20
Disclosure of Commission Position on Securities Matters 21
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.
--------------------------------------------------------------------------------
2
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 provide distribution, patent and technology transfer, sales and
licensing services focusing on the needs of our customers, matching those
requirements with commercially viable technology or product solutions. We
develop relationships with universities, companies, inventors and patent or
intellectual property holders to obtain the rights or a license to their
intellectual property (collectively, the "technology" or "technologies"), or to
their product. They become our clients, for whom we find markets to sell or
further develop or distribute their technology or product. We also develop
relationships with those who have a need or use for technologies or products.
They become our customers, usually through a license or sublicense, or
distribution agreement.
We earn revenue in two ways, from licensing our clients' and our own
technologies to our customer licensees, and in a business model that allows us
to share in the profits of distribution of finished products. Our customers pay
us license fees, royalties based on usage of the technology, or per unit fees,
and we share that revenue with our clients. Our revenue fluctuates due to
changes in revenue of our customers, upfront license fees, new licenses granted,
new distribution agreements, expiration of existing licenses or agreements,
and/or the expiration or economic obsolescence of patents underlying licenses or
products.
We acquire rights to commercialize a technology or product on an exclusive
or non-exclusive basis, worldwide or limited to a specific geographic area.
When we license or sublicense those rights to our customers, we may limit rights
to a defined field of use. Technologies can be early, mid, or late stage.
Products we evaluate must be a working prototype or finished product. We
establish channel partners based on forging relationships with mutually aligned
goals and matched competencies, to deliver solutions that benefit the ultimate
end-user.
CORPORATE INFORMATION
We are a Delaware corporation. 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
Our common stock trades on the NYSE Amex Equities stock market under the
symbol "CTT."
3
THE OFFERING
On June 1, 2010, we entered into a Common Stock Purchase Agreement and a
Registration Rights Agreement with Crisnic Fund SA, a Costa Rican investment
corporation. Under the Purchase Agreement, Crisnic Fund SA is obligated upon
effectiveness of the Registration Statement of which this prospectus is a part,
to purchase at a price equal to 85% of the weighted average volume price of our
common stock on the date of such effectiveness, 2,000,000 shares from us upon
approval and effectiveness of this Registration Statement. Under the terms of
the Purchase Agreement, upon approval from the NYSE Amex Equities stock market,
Crisnic Fund SA will also receive a fee consisting of 75,000 shares of our
common stock. As of June 1, 2010, there were 11,517,262 shares outstanding
(11,322,900 shares held by non-affiliates) excluding the 2,075,000 shares
offered pursuant to this Prospectus which have not yet been issued by us. If
all of such 2,075,000 shares offered hereby were issued and outstanding as of
the date hereof, the 2,075,000 shares would represent approximately 15.3% of the
total common stock outstanding or approximately 15.5% of the non-affiliates
shares outstanding as of the date hereof. The number of shares ultimately
offered for sale by Crisnic Fund SA is dependent upon the number of shares sold
by us to Crisnic Fund SA 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) 75,000 shares which will be issued upon approval from the NYSE
Amex Equities stock market to Crisnic Fund as a fee, and (2) 2,000,000 shares
which we may sell to Crisnic Fund SA after this registration statement is
declared effective (17.37% of our outstanding shares on June 1, 2010, the date
of the Purchase Agreement). All 2,075,000 shares are being offered pursuant to
this Prospectus. Under the Purchase Agreement, we have the right but not the
obligation to sell 2,000,000 shares to Crisnic Fund SA.
We do not have the right to commence any sales of our shares to Crisnic
Fund SA 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 to
sell 2,000,000 of our shares to Crisnic Fund SA at a purchase price equal to 85%
of the volume weighted average price of our common stock on the date this
Registration Statement is declared effective. 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 may be
terminated by us at any time at our discretion without any cost to us.
4
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.
5
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.
WE HAVE BEEN NOTIFIED BY THE NYSE AMEX, LLC THAT OUR STOCK MAY BE DELISTED
As expected by the Company and as required by the rules of the NYSE Amex,
LLC (the "Exchange"), on June 4, 2010 the Exchange notified the Company that the
Exchange intended to file a delisting application with the Securities and
Exchange Commission ("SEC") to strike the listing of our securities from the
Exchange pursuant to Section 1009(d) of the NYSE Amex Company Guide. As
anticipated, however, the Company has filed an appeal of the delisting
determination and is seeking an oral hearing before a Listing Qualifications
Panel of the Exchange (the "Panel"). On June 15, 2010 the Company received
notification from the Exchange that the hearing before the panel is scheduled
for Thursday, July 22, 2010 at the offices of the Exchange. The notice also
advised that the staff's delisting action has been stayed pending the outcome of
the review.
Pursuant to the stock purchase agreement with Crisnic Fund referenced
throughout this Prospectus, upon effectiveness of the Registration Statement
underlying this prospectus the Company intends to sell 2 million shares of
equity to Crisnic Fund, S.A. In its notification letter, the Exchange advised
the Company that the delisting determination was based upon the Company's
noncompliance with Sections 1003(a)(i) and (ii) of the Company Guide relating to
the low stockholders' equity in light of prior losses from continued operations.
Specifically, the Company is not in compliance with stockholders' equity of not
less than $4,000,000 given the Company's net losses in three of its four most
recent fiscal years. Staff from the Exchange noted in their letter that under
their rules they were not permitted to extend the compliance period further.
While there are no guarantees that the Company will successfully close the
Crisnic Fund S.A. transaction, closing on those funds would be expected to
resolve this stockholders' equity deficiency.
There can be no assurance that the Panel of the Exchange will grant the
Company's request for continued listing. If the Panel does not grant the relief
sought by the Company, its securities will be delisted from the Exchange in
which event the Company would expect them be quoted on the OTC or on another
exchange upon application by the Company and approval by any such exchange.
6
IN THE LAST THREE 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 three fiscal years ended July 31, 2009:
2009 2008 2007
------------ ------------ ------------
Net income (loss) $(3,479,824) $(5,966,454) $(8,893,946)
Net cash flows from:
Operating activities (3,491,630) (4,994,411) (5,437,443)
Investing activities (1,490) 792,539 (978,217)
Financing activities 2,008,096 (133,109) 78,425
Net increase (decrease)
in cash and cash
equivalents $(1,485,024) $(4,334,981) $(6,337,235)
Our current recurring revenue stream is insufficient for us to be
profitable with our present cost structure. We incurred an operating loss of
$745,098 for our most recently reported fiscal quarter which ended January 31,
2010. To return to and sustain profitability, we must increase recurring
revenues by successfully licensing technologies, including our recently FDA
approved pain management device, with current and long-term revenue streams, and
continue to build our portfolio of innovative technologies. Our revenues have
not been sufficient to sustain our operations. Our profitability will require
the successful commercialization of our pain management device. No assurances
can be given when this will occur or that we will ever be profitable.
Other than our agreement with Crisnic Fund SA which is described in this
Prospectus, as well as an agreement we have with Fusion Capital Fund II to put
certain shares of our common stock, 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 Crisnic Fund SA 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.
7
WE MAY REQUIRE ADDITIONAL FINANCING TO SUSTAIN OUR OPERATIONS AND WITHOUT IT WE
MAY NOT BE ABLE TO CONTINUE OPERATIONS
At April 30, 2010 we had positive total working capital of $493,490, as
compared to working capital deficit of $76,931 at April 30, 2009. We had a net
loss of $3,479,824 for the fiscal year ended July 31, 2009, and a net loss of
$739,465for the three months ended April 30, 2010. 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 have authorized the sale and issuance of 2,000,000 shares of our common
stock (17.37% of our outstanding on June 1, 2010) to Crisnic Fund SA under the
Purchase Agreement. We estimate that the maximum number of shares we will sell
to Crisnic Fund SA under the Purchase Agreement will be such 2,000,000 shares
(which do not include 75,000 additional shares issuable to Crisnic Fund SA as a
fee).
The extent we rely on Crisnic Fund SA as a source of funding will depend on
a number of factors including, the prevailing market price of our common stock,
our desire to maintain sufficient stockholder equity to maintain a listing on
the NYSE Amex Equities Market, and the extent to which we are able to secure
working capital from other sources, such as through the sale of our products
(including our pain management device). If obtaining sufficient financing from
Crisnic Fund SA were to prove unavailable or prohibitively dilutive and if we
are unable to commercialize and sell 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 proceeds from the full 2,000,000 shares sold
under the Purchase Agreement with Crisnic Fund SA, 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 CRISNIC FUND SA MAY CAUSE DILUTION AND THE SALE
OF THE SHARES OF COMMON STOCK ACQUIRED BY CRISNIC FUND SA COULD CAUSE THE PRICE
OF OUR COMMON STOCK TO DECLINE
In connection with entering into the agreement, we authorized the sale to
Crisnic Fund SA of 2,000,000 shares of our common stock and the issuance of an
additional 75,000 shares of our common stock as a fee. The number of shares
ultimately offered for sale by Crisnic Fund SA under this Prospectus is
dependent upon the number of shares purchased by Crisnic Fund SA under the
Purchase Agreement. The purchase price for the common stock to be sold to
Crisnic Fund SA pursuant to the Purchase Agreement is 85% of the volume weighted
average market price of our common stock at the close of business on the date
this Registration Statement becomes effective. All 2,075,000 shares registered
in this offering are expected to be freely tradable. 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. Crisnic Fund SA
may ultimately purchase all, some or none of the 2,075,000 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
Crisnic Fund SA by us under the Purchase 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
8
timing and amount of any sales of our shares to Crisnic Fund SA and the Purchase
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
Crisnic Fund SA 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.
CERTAIN OF OUR LICENSED PATENTS HAVE EXPIRED AND WE MAY NOT BE ABLE TO REPLACE
THEIR ROYALTY REVENUES.
In 2009, we earned retained royalties from licenses for 12 patented
technologies. The patents for six of those patented technologies have or will
expire between 2009 and 2011. Those patented technologies represented
approximately 32% of our retained royalties in 2009. Retained royalties of
approximately $50,000, or 19%, $15,000, or 6%, and $18,000, or 7%, were from
patents expiring in fiscal, 2009, 2010 and 2011, respectively. The loss of this
revenue will materially and adversely affect our operating results if we are
unable to replace it with revenue from other licenses or sources. Since it
often takes two or more years for a technology to produce significant revenue,
we continuously seek new sources of future revenue
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
9
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.
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.
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 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.
A complete description of all of the lawsuits that we are involved in is
hereby incorporated by reference from our Form 10-K for the fiscal year ended
July 31, 2009 which was filed on October 27, 2009 and our most recent Form 10-Q
for the quarter ended April 30, 2010 which was filed on June 14, 2010.
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
10
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.
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.
11
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, 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.
12
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. This
prospectus incorporates by reference the documents listed below :
- our annual report on Form 10-K for the fiscal year ended July 31, 2009,
filed on October 27, 2009;
- our quarterly report on Form 10-Q for the fiscal quarter ended October 31,
2009 filed with the SEC on December 15, 2009;
- our quarterly report on Form 10-Q for the fiscal quarter ended January 31,
2010 filed with the SEC on March 16, 2010;
- our quarterly report on Form 10-Q for the fiscal quarter ended April 30,
2010 filed with the SEC on June 14, 2010;
- our periodic report on Form 8-K as filed on July 30, 2009;
- our periodic report on Form 8-K as filed on August 5, 2009;
- our periodic report on Form 8-K as filed on August 7, 2009;
- our periodic report on Form 8-K/A as filed on September 29, 2009;
- our periodic report on Form 8-K as filed on June 2, 2010;
- our periodic report on Form 8-K as filed on June 10, 2010;
- our periodic report on Form 8-K as filed on June 16, 2010;
- our definitive Proxy Statement on Schedule 14A filed on February 25, 2010.
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.
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 by Crisnic Fund SA of common stock registered
in this offering. However, upon closing, we will receive an estimated
$3,638,000 in proceeds from the sale of our common stock to Crisnic Fund SA
under the common stock Purchase Agreement (estimated based on 85% of the closing
price of our common stock on June 29, 2010). Any proceeds from Crisnic Fund SA
we receive under the Purchase Agreement will be used for working capital and
general corporate purposes.
14
THE CRISNIC FUND SA TRANSACTION
GENERAL
On June 1, 2010, we entered into a Common Stock Purchase Agreement and a
Registration Rights Agreement with Crisnic Fund SA, a Costa Rican investment
corporation. Under the Purchase Agreement, we have the right but not the
obligation to sell to Crisnic Fund SA, 2,000,000 shares from us upon
effectiveness of this Registration Statement. Crisnic Fund SA is obligated to
buy the 2,000,000 shares from us upon effectiveness of the Registration
Statement of which this Prospectus is a part. Under the terms of the Purchase
Agreement, upon approval from the NYSE Amex Equities stock market, Crisnic Fund
SA will also receive a fee consisting of 75,000 shares of our common stock. As
of June 1, 2010, there were 11,517,262 shares outstanding (11,322,900 shares
held by non-affiliates) excluding the 2,075,000 shares offered pursuant to this
Prospectus which have not yet been issued by us. If all of such 2,075,000 shares
offered hereby were issued and outstanding as of the date hereof, the 2,075,000
shares would represent approximately 15.3% of the total common stock outstanding
or approximately 15.5% of the non-affiliates shares outstanding as of the date
hereof. The number of shares ultimately offered for sale by Crisnic Fund SA is
dependent upon the number of shares purchased by Crisnic Fund SA 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) 75,000 shares which will be issued upon approval from the NYSE
Amex Equities stock market to Crisnic Fund as a fee, and (2) 2,000,000 shares
which we may sell to Crisnic Fund SA after this registration statement is
declared effective (17.37% of our outstanding shares on June 1, 2010, the date
of the Purchase Agreement). All 2,075,000 shares are being offered pursuant to
this Prospectus.
We do not have the right to sell shares to Crisnic Fund SA 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 to sell 2,000,000 shares to
Crisnic Fund SA at a purchase price equal to 85% of the volume weighted average
market price on the date this registration statement is effective. We have the
right to control the timing and amount of any sales of our shares to Crisnic
Fund SA. 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 may be terminated by us at any time at
our discretion without any cost to us.
In an amendment to the Common Stock Purchase Agreement on June 2, 2010,
Crisnic Fund agreed to pay us for the shares sold on that date which is the
earlier of 14 days from the effective date of the registration statement for the
shares or 24 hours after receipt by Crisnic Fund of proceeds from sale of the
shares.
MINIMUM SALES PRICE
Under the Purchase Agreement, we have set a minimum sales price for sales
by Crisnic Fund SA without our consent of our shares of the market ("floor
price") of $1.00. Specifically, Crisnic Fund SA shall not have the right to
sell shares of our common stock on any business day that the closing price of
our common stock is below $1.00.
15
OUR TERMINATION RIGHTS
We have the unconditional right at any time for any reason to give notice
to Crisnic Fund SA terminating the Purchase Agreement without any cost to us.
NO SHORT-SELLING OR HEDGING BY CRISNIC FUND SA
Crisnic Fund SA 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 Purchase Agreement.
EFFECT OF PERFORMANCE OF THE COMMON STOCK PURCHASE AGREEMENT ON OUR STOCKHOLDERS
All 2,075,000 shares registered in this offering are expected to be freely
tradable. The sale by Crisnic Fund SA 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. Crisnic Fund SA may
ultimately acquire all, some or none of the 2,075,000 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 Crisnic Fund
SA by us under the Purchase 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 Crisnic Fund SA and
the Purchase 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
Crisnic Fund SA of 2,000,000 shares of our common stock (17.37% of our
outstanding shares on June 1, 2010, the date of the Purchase Agreement). We
anticipate that we will sell the 2,000,000 shares to Crisnic Fund SA under the
Purchase Agreement (exclusive of the 75,000 shares issuable to Crisnic Fund SA
as a fee), all of which are included in this offering. We have the right to
terminate the Purchase Agreement without any payment or liability to Crisnic
Fund SA at any time. The number of shares ultimately offered for sale by Crisnic
Fund SA is dependent upon the number of shares purchased by Crisnic Fund SA
under the Purchase Agreement.
16
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.
SHARES TO BE SOLD
IN THE OFFERING
PERCENTAGE OF ASSUMING THE PERCENTAGE OF
SHARES OUTSTANDING COMPANY ISSUES OUTSTANDING
BENEFICIALLY SHARES THE MAXIMUM SHARES
OWNED BENEFICIALLY NUMBER OF SHARES BENEFICIALLY
SELLING BEFORE OWNED BEFORE UNDER THE PURCHASE OWNED AFTER
STOCKHOLDER OFFERING OFFERING (1) AGREEMENT (1) OFFERING
--------------- ------------ ------------- ------------------ --------------
Crisnic Fund SA 75,000(3) 0.65% 2,000,000 0.65%
--------------- ------------ ------------- ------------------ --------------
____________
(1) Applicable percentage of ownership is based on 11,517,262 shares of our
common stock outstanding as of June 1, 2010 together with securities
exercisable or convertible into shares of Common Stock within sixty (60)
days of June 1, 2010 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) Anthony Salvatore Gentile, the principal investment advisor, manager and
President of Crisnic Fund SA, is deemed to be beneficial owner of all of
the shares of common stock owned by Crisnic Fund SA. Mr. Gavridge Perez
Porras and Mr. Marvin Brines Porras are the two shareholders and directors
of Crisnic Fund SA and may be deemed to share beneficial ownership of the
shares of common stock owned by Crisnic Fund SA.
(3) Under the terms of the Purchase Agreement, upon approval from the NYSE Amex
Equities stock market, Crisnic Fund SA will receive a fee consisting of
75,000 shares of our common stock. The Company may elect in its sole
discretion to sell to Crisnic Fund SA an additional 2,000,000 shares under
the Purchase Agreement. Crisnic Fund SA does not presently beneficially own
any of those shares as determined in accordance with the rules of the SEC.
17
PLAN OF DISTRIBUTION
The common stock offered by this prospectus is being offered by Crisnic
Fund SA, 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.
Crisnic Fund SA is an "underwriter" within the meaning of the Securities
Act.
Neither we nor Crisnic Fund SA can presently estimate the amount of
compensation that any agent will receive. We know of no existing arrangements
between Crisnic Fund SA, 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
Crisnic Fund SA and related persons against specified liabilities, including
liabilities under the Securities Act.
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.
18
Crisnic Fund SA 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 Crisnic Fund SA 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 Crisnic Fund SA.
19
LEGAL MATTERS
The validity of the common stock offered by this Prospectus will be passed
upon for us by Cutler Law Group P.C., Houston, Texas.
EXPERTS
The financial statements of Competitive Technologies, Inc. as of July 31,
2009 have been incorporated by reference in this Prospectus in reliance on the
report of Mayer Hoffman McCann CPAs, the New York Practice of Mayer Hoffman
McCann 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, 2008 have been
incorporated by reference in this Prospectus in reliance on the report of 25 MAD
LIQUIDATION CPA, P.C. (formerly known as Mahoney Cohen & Company, CPA, P.C.),
independent registered public accounting firm, 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 NYSE Amex Equities stock market 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.
20
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.
21
--------------------------------------------------------------------------------
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.
*
*****
**-----**
**----- COMPETITIVE
****---- TECHNOLOGIES
**===== Unlocking the Potential of Innovation (R)
**=====**
*****
* (R) Technology Transfer and Licensing Services
2,075,000 SHARES
COMPETITIVE TECHNOLOGIES, INC.
COMMON STOCK
PROSPECTUS
July 14, 2010
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.
22
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 $ 95
NYSE Amex Equities Additional listing fees 41,500
Accounting fees and expenses 20,000
Legal fees and expenses 40,000
Registrar and transfer agent's fees and expenses 1,000
Miscellaneous 405
--------
Total expenses $103,000
========
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.
II-1
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 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 June 1, 2007, CTT has made the following sales of securities that
were not registered under the Securities Act of 1933, as amended (the
"Securities Act"):
As of June 1, 2010, the Company has agreed to issue to Crisnic Fund SA
75,000 shares of common stock as a fee in consideration of the equity financing
of the sale of 2,000,000 shares which is being provided to the Company by
Crisnic Fund SA. These securities will be issued upon approval of the listing
application for these shares with the NYSE Amex Equities stock market. These
securities will be 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 to be
issued to Crisnic Fund SA will be appropriately legended. The Company
ascertained that Crisnic Fund SA 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.
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.
II-2
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.
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.
10.7 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.
10.10 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.
10.12 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.
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.
II-3
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.
10.19 Distribution Agreement between the registrant and Excel Life Sciences,
Inc. dated July 29, 2008 filed (on August 1, 2008) as Exhibit 10.1 to
registrant's Current Report on Form 8-K dated July 29, 2008, and hereby
incorporated by reference.
10.20 Distribution Agreement between the registrant and Life Episteme srl
dated February 24th, 2009 filed (on February 26, 2009) as Exhibit 10.1 to
registrant's Current Report on Form 8-K dated February 24, 2009, and hereby
incorporated by reference.
10.21 Distribution Agreement between the registrant and Innovative Medical
Therapies, Inc. dated July 29th, 2009 filed (on July 30, 2009) as Exhibit 10.1
to registrant's Current Report on Form 8-K dated July 30, 2009, and hereby
incorporated by reference. Portions of this exhibit relative to wholesale
pricing have been omitted and filed with the Securities and Exchange Commission
separately pursuant to a request for confidential treatment
10.22 Common Stock Purchase Agreement, dated as of August 6, 2009, by and
between the Company and Fusion Capital Fund II, LLC filed (on August 7, 2009) as
Exhibit 10.1 to registrant's Current Report on Form 8-K dated August 7, 2009,
and hereby incorporated by reference.
10.23 Registration Rights Agreement, dated as of August 6, 2009, by and
between the Company and Fusion Capital Fund II, LLC filed (on August 7, 2009) as
Exhibit 10.2 to registrant's Current Report on Form 8-K dated August 7, 2009,
and hereby incorporated by reference.
10.24 Common Stock Purchase Agreement, dated as of June 1, 2010, by and
between the Company and Crisnic Fund SA. filed (on June 2, 2010) as Exhibit 10.1
to registrant's Current Report on 8-K dated June 2, 2010, and hereby
incorporated by reference.
10.24 Amendment No. 1 to Common Stock Purchase Agreement, dated as of
June 2, 2010, by and between the Company and Crisnic Fund SA. filed (on June 2,
2010) as Exhibit 10.2 to registrant's Current Report on 8-K dated June 2, 2010,
and hereby incorporated by reference.
10.25 Registration Rights Agreement, dated as of June 1, 2010, by and
between the Company and Crisnic Fund SA. filed (on June 2, 2010) as Exhibit 10.3
to registrant's Current Report on 8-K dated June 2, 2010, and hereby
incorporated by reference.
21 Subsidiaries of registrant, filed (on June 2, 2010) as Exhibit 21 to the
original Registration Statement on Form S-1 which is amended hereby.
23.1 Consent of Mayer Hoffman McCann CPAs, filed as Exhibit 23.1 to
Amendment No. 2 to this Registration Statement
23.2 Consent of 25 MAD LIQUIDATION CPA, P.C (formerly known as Mahoney Cohen
& Company, CPA, P.C), filed as Exhibit 23.2 to Amendment No. 2 to this
Registration Statement.
II-4
23.3 Consent of Cutler Law Group (included in opinion filed as Exhibit 5),
filed as Exhibit 5 to Amendment No. 2 to this Registration Statement.
23.4 Power of Attorney of Directors of Competitive Technologies, Inc.
(included on the signature page of this Registration Statement on Form S-1).
(b) Financial Statement Schedules
No financial statement schedules are required.
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)).
II-5
(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.
(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 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.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this amendment no. 1 to the registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in Fairfield,
Connecticut on July 14, 2010.
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 July 14, 2010
------------------------------ CEO, Interim CFO (Principal
John B. Nano Executive, Financial and
Accounting Officer)
/s/ John B. Nano Director July 14, 2010
------------------------------
Rustin Howard*
/s/ John B. Nano Director July 14, 2010
------------------------------
William L. Reali*
/s/ John B. Nano Director July 14, 2010
------------------------------
Richard D. Hornidge, Jr.*
/s/ John B. Nano Director July 14, 2010
------------------------------
Joel M. Evans, MD*
*pursuant to power of attorney
II-7