10-Q October 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-8696
COMPETITIVE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2664428
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1960 Bronson Road
P.O. Box 340
Fairfield, Connecticut 06430
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (203) 255-6044
1465 Post Road East, P.O. Box 901, Westport, CT 06881-0901
Former name, former address and former fiscal year, if
changed since last report
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X . No .
Common Stock outstanding as of December 1, 1996 5,905,329 shares
Exhibit Index on sequentially numbered page 16 of 18.
Page 1 of 18 sequentially numbered pages
COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1. Condensed Financial Statements
A. Financial Statements
Consolidated Balance Sheets at
October 31, 1996 and July 31, 1996 3
Consolidated Statements of Operations for the
three months ended October 31, 1996 and 1995 4
Consolidated Statement of Changes in
Shareholders' Interest for the three
months ended October 31, 1996 5
Consolidated Statements of Cash Flows for the
three months ended October 31, 1996 and 1995 6
Notes to Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10-15
PART II. OTHER INFORMATION
Item 2. Changes in Securities 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
PART I. FINANCIAL INFORMATION
COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
October 31, and July 31, 1996
(Unaudited)
October 31, July 31,
1996 1996
ASSETS
Current assets:
Cash and cash equivalents $ 1,648,966 $ 560,640
Short-term investments, at market 3,476,351 3,820,990
Receivables, including $73,622 and $19,910
receivable from related parties in
October and July, respectively 592,887 1,088,030
Prepaid expenses and other current assets 182,285 218,903
Total current assets 5,900,489 5,688,563
Property and equipment, net 169,623 144,360
Investments 356,149 321,145
Intangible assets acquired, principally
licenses and patented technologies 1,754,469 1,794,795
Directors' escrow account 325,000 325,000
Other assets 74,075 94,277
TOTAL ASSETS $ 8,579,805 $ 8,368,140
LIABILITIES AND SHAREHOLDERS' INTEREST
Current liabilities:
Accounts payable, including $10,184 and
$9,365 payable to related parties
in October and July, respectively $ 153,474 $ 83,571
Accrued liabilities, including $3,040
payable to related parties in October 1,331,541 794,250
Current portion of purchase obligation 550,000 550,000
Total current liabilities 2,035,015 1,427,821
Noncurrent portion of purchase obligation,
net of unamortized discount 680,995 652,367
Commitments and contingencies
Shareholders' interest:
5% preferred stock, $25 par value 60,675 60,675
Common stock, $.01 par value 59,303 59,258
Capital in excess of par value 25,023,568 24,993,926
25,000 shares of treasury stock, at cost (174,713) (174,713)
Net unrealized holding gains on
available-for-sale securities 31,035 10,605
Accumulated deficit (19,136,073) (18,661,799)
Total shareholders' interest 5,863,795 6,287,952
TOTAL LIABILITIES AND SHAREHOLDERS'
INTEREST $ 8,579,805 $ 8,368,140
See accompanying notes
PART I. FINANCIAL INFORMATION (Continued)
COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
for the three months ended October 31, 1996 and 1995
(Unaudited)
1996 1995
Revenues:
Retained royalties $ 241,201 $ 201,450
Revenues under service contracts
and grants, including $56,466,
and $37,106 from related parties in
1996 and 1995, respectively 261,200 117,779
502,401 319,229
Costs of technology management
services, of which $5,762 and $1,627
were paid to related parties in 1996
and 1995, respectively 654,359 263,013
General and administration expenses,
of which $21,287 and $25,591
were paid to related parties in 1996
and 1995, respectively 343,721 309,827
998,080 572,840
Operating loss (495,679) (253,611)
Interest income 40,447 54,896
Interest expense (28,628) --
Income (losses) related to equity
method affiliates 20,004 30,841
Other income (expense), net (3,918) 666
Loss before income taxes (467,774) (167,208)
Provision for income taxes 6,500 7,000
Net loss $ (474,274) $ (174,208)
Net loss per share
(primary and fully diluted): $ (0.08) $ (0.03)
Weighted average number of common and
common equivalent shares outstanding
(primary and fully diluted) 5,903,100 5,813,952
See accompanying notes
PART I. FINANCIAL INFORMATION (Continued)
COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Shareholders' Interest
For the three months ended October 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Net
unrealized
holding
Preferred Stock gains (losses)
Shares Common Stock Capital in on available-
issued and Shares excess of Treasury Stock for-sale Accumulated
outstanding Amount issued Amount par value Shares held Amount securities Deficit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance - July 31, 1996 2,427 $60,675 5,925,829 $59,258 $24,993,926 (25,000) $(174,713) $ 10,605 $(18,661,799)
Exercise of common
stock options . . . . 4,500 45 29,642
Net change in
unrealized holding
gains on available-
for-sale securities . 20,430
Net loss. . . . . . . . (474,274)
Balance - October 31, 1996 2,427 $60,675 5,930,329 $59,303 $25,023,568 (25,000) $(174,713) $ 31,035 $(19,136,073)
</TABLE>
See accompanying notes
PART I. FINANCIAL INFORMATION (Continued)
COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
for the three months ended October 31, 1996 and 1995
(Unaudited)
1996 1995
Cash flow from operating activities:
Loss from continuing operations $ (474,274) $ (174,208)
Noncash items included in loss
from continuing operations:
Depreciation and amortization 92,668 47,456
(Income) losses related to equity
method affiliates (20,004) (30,841)
Directors' stock and stock retirement
plan accruals 41,550 15,000
Amortization of discount on purchase
obligation 28,628 --
Other noncash items 5,414 4,466
Other -- 15,476
Net changes in various operating
accounts:
Receivables 495,143 270,980
Prepaid expenses and other current
assets 14,201 (16,649)
Accounts payable and accrued
liabilities 560,230 (165,168)
Net cash flow (used in) from operating
activities 743,556 (33,488)
Cash flow from investing activities:
Purchases of property and equipment, net (40,644) (17,607)
Proceeds from sales of short-term
investments 365,069 290,671
Investments in affiliates and subsidiaries (9,342) --
Net cash flow from investing activities 315,083 273,064
Cash flow from financing activities:
Proceeds from issuance of common stock, net 29,687 28,750
Net cash flow from financing activities 29,687 28,750
Net increase in cash and cash
equivalents 1,088,326 268,326
Cash and cash equivalents, beginning
of period 560,640 336,098
Cash and cash equivalents, end of period $ 1,648,966 $ 604,424
Supplemental cash flow information:
Cash paid for income taxes $ 20,900 $ 17,298
There were no noncash investing or financing activities during the three
months ended October 31, 1996 and 1995.
See accompanying notes
PART I. FINANCIAL INFORMATION (Continued)
COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1. Interim Financial Statements
Interim financial information presented in the accompanying
financial statements and notes hereto is unaudited.
The year end balance sheet data was derived from audited
financial statements but does not include all disclosures required by
generally accepted accounting principles.
In the opinion of management, all adjustments which are necessary
to present the financial statements fairly in conformity with
generally accepted accounting principles, consisting only of normal
recurring adjustments, have been made.
Certain amounts have been reclassified to conform with the
presentation in the financial statements for fiscal 1997.
The interim financial statements and notes thereto as well as the
accompanying Management's Discussion and Analysis of Financial
Condition and Results of Operations should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended July 31,
1996.
2. Acquisition of USET
On January 31, 1996, the Company purchased the remaining
interests in USET (see Note 2 to Consolidated Financial Statements in
the Company's Annual Report on Form 10-K for the year ended July 31,
1996). The following unaudited pro forma summary information presents
the consolidated results of operations of the Company as if this
acquisition had occurred on August 1, 1994 (in thousands, except per
share amounts). The unaudited pro forma amounts are based on
assumptions and estimates the Company believes are reasonable;
however, such amounts do not necessarily represent results which would
have occurred if the acquisition had taken place on the basis assumed,
nor are they indicative of the results of future combined operations.
For the quarter
ended
October 31, 1995
Total revenues $ 617
Operating loss (87)
Loss from continuing operations (60)
Per share loss from continuing
operations $(0.01)
3. Short-term Investments
As of October 31, 1996 the components of the Company's available-
for-sale securities are as follows (in thousands):
Gross Gross
Unrealized Unrealized
Aggregate Holding Holding Amortized Maturity
Security Type Fair Value Gains Losses Cost Basis Grouping
U.S. Treasury Within
Bills $ 1,491 $31 -- $ 1,460 1 year
Other U.S.
government Within
debt 1,985 -- -- 1,985 1 year
securities
2018
Total $ 3,476 $31 -- $ 3,445
For the quarter ended October 31, 1996 proceeds from the sale of
available-for-sale securities were $365,069 with no gain or loss
realized. For the quarter ended October 31, 1995 proceeds from the
sale of available-for-sale securities were $290,671 which resulted in
gross realized gains of $948. Cost is based on specific
identification in computing realized gains.
4. Receivables
Receivables comprise:
October 31, July 31,
1996 1996
Royalties $351,266 $ 879,380
Government contracts 57,817 74,978
Other 183,804 133,672
$592,887 $1,088,030
5. Accrued Liabilities
Accrued liabilities were:
October 31, July 31,
1996 1996
Accrued compensation $ 177,802 $ 125,256
Royalties payable 861,025 417,656
Deferred revenues 102,315 16,587
Other accrued liabilities 190,399 234,751
$1,331,541 $ 794,250
6. Contingencies
In November 1991, a suit was filed in Connecticut against CTI,
its wholly-owned subsidiary, Genetic Technology Management, Inc.
("GTM"), its majority-owned subsidiary, University Optical Products
Co. ("UOP"), and several current and former directors on behalf of the
59 limited partners of Optical Associates, Limited Partnership
("OALP"). The complaint alleges, among other things, that the January
1989 sale of UOP's assets to Unilens Corp. USA ("Unilens") violated
the partnership agreement and that OALP is entitled to the full
proceeds of the sale to Unilens. The complaint claims, among other
things, money damages and treble and punitive damages in an
unspecified amount and attorneys' fees. The Company believes that the
asserted claims are without merit and intends to defend vigorously the
action instituted by plaintiffs. Through October 31, 1996, the
Company had received aggregate cash proceeds of approximately
$1,011,000 from the January 1989 sale of UOP's assets to Unilens. As
cash proceeds were received, the Company paid a 4% commission to OALP,
its joint venture partner. Further hearings in this case have been
adjourned to dates in calendar 1997.
PART I. FINANCIAL INFORMATION (Continued)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Condition and Liquidity
Cash and cash equivalents of $1,648,966 at October 31, 1996
are $1,088,326 higher than cash and cash equivalents of $560,640 at
July 31, 1996. Operating activities provided $743,556, investing
activities provided $315,083 and financing activities provided
$29,687.
Competitive Technologies, Inc. ("CTI") and its majority owned
subsidiaries' ("the Company") loss of $474,274 for the three months
ended October 31, 1996 included the following noncash items:
depreciation and amortization of approximately $93,000, income
related to equity method affiliates of approximately $20,000,
amortization of discount on purchase obligation of approximately
$29,000 and accruals of approximately $47,000.
In general, changes in various operating accounts result from
changes in the timing and amounts of cash flows before and after
the end of the period. Approximately $971,000 of cash provided by
operations is from the decrease in royalties receivable and the
increase in royalties payable. This reflects the normal cycle of
royalty collections and payments with the consolidation of
University Science, Engineering and Technology, Inc. ("USET").
Approximately $30,000 of property and equipment purchases in
this quarter relate to improving and furnishing CTI's principal
office. CTI relocated its principal office on November 8, 1996 and
expects additional purchases to complete those improvements and
furnishings during the next quarter.
Proceeds from sales of short-term investments of approximately
$365,000 are from the Company's sales of U.S. government debt
securities.
The Company received $29,687 during the quarter from employ-
ees' exercising stock options to purchase 4,500 shares of common
stock at prices from $6.5625 to $6.6250.
The Company carries liability insurance, directors' and
officers' liability insurance and casualty insurance for owned or
leased tangible assets. It does not carry key person life insur-
ance. There are no legal restrictions on payments of dividends by
CTI.
At October 31, 1996, CTI had outstanding commitments for
capital expenditures of approximately $57,000 in connection with
improving and furnishing its new principal office. In addition,
the Company expects to pay approximately $550,000 of the USET
purchase obligation on January 31, 1997.
The Company continues to pursue additional university and
corporate technology management opportunities. If and when these
opportunities are consummated, the Company expects to commit
capital resources to these operations.
The Company does not believe that inflation had a significant
impact on its operations during 1996 or 1995 or that it will have
a significant impact on operations during the next twelve-month
operating period.
Vector Vision, Inc. ("VVI"), CTI's 52.8% owned subsidiary,
continues to seek additional financing to support its continuing
development. Without additional outside financing, VVI's develop-
ment activities will proceed at a minimum level. The Company is
not obligated to provide additional funding to VVI. VVI's
operating activities during the quarter were funded primarily by
the approximately $36,000 remaining on its Small Business Innova-
tion Research ("SBIR") contract awarded in April, 1996.
With more than $5,125,000 in cash, cash equivalents and short-
term investments at October 31, 1996, the Company anticipates that
currently available funds will be sufficient to finance cash needs
over the next two to four years for its current operating activi-
ties as well as for expansion of its technology management business
operations, including related investments in start-up companies.
This anticipation is based upon the Company's current expectations.
However, expansion of the Company's services and related invest-
ments in start-up companies (with resulting increases in operating
expenses) is subject to many factors which are outside the
Company's control and to presently unanticipated opportunities that
may arise in the future. Accordingly, there can be no assurance
that the Company's current expectations regarding the sufficiency
of currently available funds will prove to be accurate.
Results of Operations - Three Months Ended October 31, 1996 vs.
Three Months Ended October 31, 1995
Through January 31, 1996, the Company accounted for its
investment in USET on the equity method and recorded 20% of USET's
net income. The Company has consolidated USET's results of
operations for all periods since February 1, 1996.
Consolidated revenues for the quarter ended October 31, 1996
were $183,172 (57%) higher than for the quarter ended October 31,
1995. Retained royalties were $39,751 (20%) higher. However,
excluding USET's effect, retained royalties were $83,237 (41%)
lower. Up-front license fees for a plasma display energy recovery
technology of approximately $97,000 for the quarter ended October
31, 1995 were non-recurring and this decrease was only partially
offset by other royalty increases in the quarter ended October 31,
1996, including modest increases in royalties on sales of Renova
and Ethyol (see Item 7 in the Company's Annual Report on Form 10-K
for the year ended July 31, 1996). The consolidation of USET's
retained royalties increased retained royalties for the quarter
ended October 31, 1996 by $122,988.
Revenues under service contracts were $261,200, $151,205
higher than in the quarter ended October 31, 1995. This increase
includes VVI's SBIR contract ($36,000), intercorporate service
contracts ($106,000) and other collaborative service contracts.
Approximately $50,000 of the increase in intercorporate service
contracts was from international contracts. Expansion of the
Company's focus to include providing technology management services
to corporations is beginning to generate revenues. VVI's SBIR
contract was completed in October, 1996 and the Company expects to
complete its $800,000 contract with the Department of the Air Force
in November, 1996. Revenues from this contract were similar in the
quarters ended October 31, 1996 and 1995.
There were no grant revenues in the fiscal 1997 quarter
compared with approximately $8,000 in support of VVI's development
activities in the fiscal 1996 quarter.
Costs of technology management services were $391,346 (149%)
higher in fiscal 1997 than in fiscal 1996 as more fully discussed
below.
Costs related to retained royalties were approximately
$169,000 higher in the first quarter of fiscal 1997. This increase
reflects inclusion of USET's domestic and foreign patent expenses
($21,000) and amortization of the cost of intangible assets
acquired ($35,000) in the fiscal 1997 quarter. It also reflects
increased costs for consultants retained to assist in evaluating
and marketing corporate technologies ($26,000), domestic patent
costs on a new university technology ($14,000) and lower recoveries
of foreign patent costs against university royalties ($19,000). In
addition, personnel costs (including benefits and overheads)
associated with patenting and licensing services were higher
($55,000) in the fiscal 1997 quarter as a result of hiring
employees after the fiscal 1996 quarter to evaluate and market
corporate technologies. These costs include domestic and foreign
patent prosecution, maintenance and litigation expenses. The
Company carefully evaluates the future revenue potential of each
technology before it incurs substantial patent or enforcement
expenses. The Company expects costs related to retained royalties
to continue to increase during fiscal 1997 as it expands its
technology management services to corporations and universities.
Costs related to service contracts (including direct charges
for subcontractors' services and personnel costs associated with
service contracts) were approximately $92,000 higher in the first
quarter of fiscal 1997 than in the first quarter of fiscal 1996.
This increase includes costs in connection with VVI's SBIR contract
($36,000), direct costs related to new corporate client service
contracts ($27,000) and increased personnel costs (including
benefits and overheads) associated with corporate and collaborative
service contracts.
Costs related to grant revenues decreased approximately $8,000
in proportion to the reduction in grant revenues.
Costs associated with new client development (principally
personnel costs, including benefits and overheads) increased
approximately $138,000 over the first quarter of fiscal 1996. The
Company's strategic decision to expand its focus to include
providing technology management services to corporations required
hiring experienced employees to identify and develop new opportuni-
ties into client relationships. These employees were added after
the first quarter of fiscal 1996. The Company expects this effort
to result in royalty and service contract revenues in the future.
The Company expects this process to continue to generate additional
service and royalty revenues for the future as it has for this
fiscal quarter.
General and administration expenses were approximately $34,000
(11%) higher in the fiscal 1997 quarter. This increase included
operating expenses supporting the Company's and USET's ongoing
operations. As the Company continues to develop its domestic and
international licensing and contract services operations, it
expects these expenses to continue to increase. In addition, the
Company has signed a new five-year office lease beginning in
November, 1996 and incurred relocation expenses in November, 1996,
which are expected to increase other operating expenses in the
second quarter of fiscal 1997.
The net effect of these increases in operating revenues and
expenses was to increase the Company's operating loss by $242,068
(95%) compared to the first quarter of fiscal 1996.
Interest income decreased $14,449 (26%) because of lower
average invested balances and lower interest rates in the quarter
ended October 31, 1996. Interest expense of $28,628 in the fiscal
1997 quarter relates to the debt incurred in connection with the
acquisition of USET.
In the fiscal 1997 first quarter, net income related to equity
method affiliates was principally CTI's equity in the net income of
Equine Biodiagnostics, Inc. ("EBI") ($22,000) offset by CTI's
equity in other net losses. At October 31, 1996, CTI owned 33.7%
of the outstanding common stock of Knowledge Solutions, Inc. (KSI")
and has loaned KSI $50,000 under a subordinated secured convertible
note (see Note 4 to Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the year ended July 31,
1996), but has no further obligation to provide additional funding
to KSI. CTI's investment in KSI has been reduced to zero. In the
quarter ended October 31, 1995, net income related to equity method
affiliates included the Company's 20% equity in the net income of
USET ($32,000), its 35.9% equity in the net loss of KSI ($19,000)
and its 37.5% equity in the net income of EBI ($18,000).
Other expense for the quarter ended October 31, 1996 was legal
expenses incurred in connection with a suit brought against CTI,
some of its subsidiaries and directors as more fully detailed in
Note 16 to Consolidated Financial Statements in the Company's
Annual Report on Form 10-K for the year ended July 31, 1996.
Further hearings in this case have been adjourned to dates in
calendar 1997. CTI is unable to estimate the related legal
expenses which may be incurred in the remaining quarters of 1997.
Unilens made no payments in either quarter of fiscal 1997 or 1996.
Since CTI carries this receivable at zero value, any collections
will be recorded in the period collected. Through October 31,
1996, the Company had received aggregate cash proceeds of approxi-
mately $1,011,000 from the January 1989 sale of UOP's assets to
Unilens. As cash proceeds were received, CTI paid a 4% commission
to Optical Associates, L.P., its joint venture partner.
The Company has net operating loss carryforwards for Federal
income tax purposes. Provision was made in each quarter for
estimated state income taxes.
The Company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation,"
effective August 1, 1996 and will disclose the pro forma effects
fair value accounting would have had on net income and earnings per
share in its consolidated financial statements for the year ending
July 31, 1997. It has not had a material effect on the accompany-
ing financial statements.
The Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-lived
Assets and for Long-lived Assets to be Disposed of," effective
August 1, 1996. It has not had a material effect on the accompany-
ing financial statements.
Results of Operations - Three Months Ended October 31, 1996 vs.
Three Months Ended July 31, 1996
Consolidated revenues for the quarter ended October 31, 1996
were $338,465 (40%) lower than for the quarter ended July 31, 1996.
Historically, retained royalties in the first fiscal quarter are
lower than in the fourth quarter because of licensees who report
semiannually. Retained royalties were $391,912 (62%) lower than in
the fourth quarter of fiscal 1996. Revenues under service
contracts were $53,447 (26%) higher in the first quarter of fiscal
1997. Although revenues from VVI's SBIR and from CTI's contract
with the Department of the Air Force declined approximately
$46,000, the Company's revenues from contract services to corporate
and other clients increased approximately $97,000.
Total operating expenses of $998,080 in the first quarter of
fiscal 1997 were approximately $69,000 (7%) higher than in the
fourth quarter of fiscal 1996. In the first quarter costs of
technology management services were approximately $110,000 (20%)
higher and general and administration expenses were approximately
$41,000 (11%) lower than in the fourth quarter. While costs
related to retained royalties were similar in both quarters, both
costs related to service contracts and costs associated with new
client development increased as the Company continued its efforts
to expand its services to corporate clients and to grow its
corporate client base.
The combined effect of the reduction in consolidated revenues
and the increase in operating expenses in the first quarter of
fiscal 1997 resulted in an increased operating loss which accounted
for nearly the entire increase in the Company's net loss.
PART II - OTHER INFORMATION
Item 2. Changes in Securities
(c) As of September 17, 1996, the registrant issued to Falls
River Group (FRG) non-transferrable warrants to purchase 3,000
shares of the registrant's common stock at $9.875 (the mean between
the high and low prices on the American Stock Exchange on September
17, 1996). The warrants were issued in consideration of FRG's
assistance in establishing the registrant's office and operations
in Cleveland, Ohio. The warrants become exercisable in March,
1997, and expire five years from issuance. There were no under-
writers involved in the transaction. The warrants and the common
stock underlying the warrants were exempt from registration under
Section 4(2) of the Securities Act of 1933. The warrants con-
tained, and the shares issuable upon exercise will contain,
restrictive legends.
Item 6. Exhibits and Reports on Form 8-K Page
A) Exhibits
11.1 Schedule of computation of earnings per share
for the three months ended October 31,
1996 and 1995. 18
27.1 Financial Data Schedule (EDGAR only).
B) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which
this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: December 16, 1996 By: s/ Frank R. McPike, Jr.
Frank R. McPike, Jr.
Vice President, Finance,
Treasurer, Chief Financial
Officer and Authorized Signer
Exhibit 11.1
COMPETITIVE TECHNOLOGIES, INC.
Schedule of Computation of Earnings Per Share
(Unaudited)
Quarter
ended October 31,
1996 1995
Net loss applicable to common stock $ (474,274) $ (174,208)
Common and common equivalent shares -
primary:
Weighted average common shares
outstanding 5,903,100 5,813,952
Adjustments for assumed exercise of
stock options 68,006* 5,255*
Adjustments for assumed exercise of
stock warrants 22,685* --
Weighted average number of common and
common equivalent shares outstanding 5,993,791 5,819,207
Common and common equivalent shares -
fully diluted:
Weighted average common shares
outstanding 5,903,100 5,813,952
Adjustments for assumed exercise of
stock options 81,214* 14,924*
Adjustments for assumed exercise of
stock warrants 27,609* --
Weighted average number of common and
common equivalent shares outstanding 6,011,923 5,828,876
Primary and fully diluted $ (0.08) $ (0.03)
* Anti-dilutive.
These calculations are submitted in accordance with Regulation S-K item 601
(b) (11) which differs from the requirements of paragraph 40 of Accounting
Principles Board Opinion No. 15 because they produce an anti-dilutive result.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule for Form 10-Q for October 31, 1996
</LEGEND>
<CIK> 0000102198
<NAME> COMPETITIVE TECHNOLOGIES, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> OCT-31-1996
<CASH> 1,648,966
<SECURITIES> 3,476,351
<RECEIVABLES> 592,887
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,900,489
<PP&E> 415,850
<DEPRECIATION> 246,227
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0
60,675
<COMMON> 59,303
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<INCOME-PRETAX> (467,774)
<INCOME-TAX> 6,500
<INCOME-CONTINUING> (474,274)
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<NET-INCOME> (474,274)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
