UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 28, 1999
COMPETITIVE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-8696 36-2664428
(State or other (Commission file (IRS employer
jurisdiction number) identification No.
of incorporation)
1960 Bronson Road, P.O. Box 340, Fairfield, Connecticut 06430
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 255-6044
N/A
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets
Effective May 28, 1999, Competitive Technologies, Inc. ("CTT"
or "the registrant") sold its 14.5% interest in NovaNET Learning,
Inc. ("NLI") in connection with the acquisition of NLI by National
Computer Systems, Inc. ("NCSI"), for $2,472,602 in cash. From
February 15, 1995, through May 28, 1999, CTT accounted for its
$159,375 investment in NovaNET Learning, Inc. under the cost
method. CTT will recognize its $2,313,227 gain in the quarter
ending July 31, 1999. Capital loss carryforwards will
substantially shelter the gain from Federal and state income taxes.
The cash proceeds are available to support CTT's future operating
requirements or investment opportunities as determined by its
management and directors.
At a special meeting on May 26, 1999, NLI's shareholders
approved NCSI's purchase of all the issued and outstanding stock,
options and warrants of NLI pursuant to an agreement and plan of
merger dated as of May 4, 1999. The purchase price of $2.9732 per
share payable in cash was agreed in arms' length negotiations
between NLI's management and representatives of NCSI. The total
purchase price was approximately $19.2 million. Under the plan of
merger, NLI will become an indirect wholly-owned subsidiary of
NCSI. There is no relationship between the registrant or any of
its officers, directors or affiliates and NCSI.
Item 7. Financial Statements and Exhibits
A. Financial Statements of Businesses Acquired
Not applicable.
B. Pro Forma Financial Information (Unaudited)
Pro Forma Consolidated Balance Sheet as of January 31,
1999
Pro Forma Consolidated Statement of Operations for the
year ended July 31, 1998
Notes to Pro Forma Consolidated Financial Statements
C. Exhibits
None.
COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Pro Forma Financial Information
(Unaudited)
The following pro forma balance sheet as of January 31, 1999,
reflects the registrant's sale of its interest in NovaNET Learning,
Inc. as if it had occurred on August 1, 1998.
The following pro forma statement of operations for the year
ended July 31, 1998, reflects the registrant's sale of its interest
in NovaNET Learning, Inc. as if it had occurred on August 1, 1997.
No proforma statement of operations for the six months ended
January 31, 1999, is presented here. If the registrant had sold
its interest in NovaNET Learning, Inc. on August 1, 1997, its
statement of operations for the six months ended January 31, 1999,
would have been as it was reported in the historical statement of
operations. The only difference would have been that the
registrant would have had additional funds available for investment
or other use during the six months. If the registrant had invested
the sale proceeds in short-term investments on August 1, 1997, at
the registrant's weighted average interest rate for the six months
ended January 31, 1999, the registrant would have earned
approximately $69,400 more interest income than the $84,733
reported in the historical statement of operations.
The unaudited pro forma financial information should be read
in conjunction with the financial statements of the registrant
included in its Quarterly Report on Form 10-Q for the quarterly
period ended January 31, 1999, and its Annual Report on Form 10-K
for the year ended July 31, 1998. The unaudited pro forma
statements of operations are not necessarily indicative of what the
actual results of operations of the registrant would have been if
the sale had occurred on August 1, 1997, nor do they purport to
represent the results of operations for future periods.
COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Pro Forma Consolidated Balance Sheet
January 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma
Balance Pro Forma Balance
Sheet Adjustments Sheet
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 213,591 $ 2,472,602 A $ 2,686,193
Short-term investments, at
market 2,070,905 2,070,905
Receivables, including
$10,076 receivable from
related parties 1,539,256 1,539,256
Prepaid expenses and other
current assets 79,322 79,322
Total current assets 3,903,074 2,472,602 6,375,676
Property and equipment, net 135,738 135,738
Investments 208,689 (159,375) A 49,314
Intangible assets acquired,
principally licenses and
patented technologies, net 1,374,678 1,374,678
TOTAL ASSETS $ 5,622,179 $ 2,313,227 $ 7,935,406
LIABILITIES AND SHAREHOLDERS' INTEREST
Current liabilities:
Accounts payable, including
$291 payable to related
parties $ 87,437 $ 87,437
Accrued liabilities 1,452,749 1,452,749
Total current liabilities 1,540,186 -- 1,540,186
Commitments and contingencies
Shareholders' interest:
5% preferred stock, $25 par
value 60,675 60,675
Common stock, $.01 par value 60,032 60,032
Capital in excess of par
value 25,626,938 25,626,938
Treasury stock (common),
at cost; 20,965 shares (108,206) (108,206)
Accumulated other
comprehensive loss (12,499) (12,499)
Accumulated deficit (21,544,947) 2,313,227 A (19,231,720)
Total shareholders'
interest 4,081,993 2,313,227 6,395,220
TOTAL LIABILITIES AND
SHAREHOLDERS'INTEREST $ 5,622,179 $ 2,313,227 $ 7,935,406
</TABLE>
See accompanying notes
COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations
For the year ended July 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma
Statement of Pro Forma Statement of
Operations Adjustments Operations
<S> <C> <C> <C>
Revenues:
Retained royalties $ 2,400,534 $ $ 2,400,534
Revenues under services
contracts and grants,
including $101,281 from
related parties 211,300 211,300
2,611,834 -- 2,611,834
Costs of technology
management services 2,087,234 2,087,234
General and administration
expenses, of which $6,504
was paid to related
parties 1,606,503 1,606,503
Contract settlement expense 300,000 300,000
3,993,737 -- 3,993,737
Operating loss (1,381,903) (1,381,903)
Gain on sale of investment
in NovaNET Learning, Inc. -- 2,313,227 B 2,313,227
Interest income 170,051 C 170,051
Interest expense (37,688) (37,688)
Income related to equity
method affiliates, net 182 182
Other expense, net (8,852) (8,852)
Income (loss) before
minority interest (1,258,210) 2,313,227 1,055,017
Minority interest in
losses of subsidiary 22,721 22,721
Net income (loss) $(1,235,489) $ 2,313,227 $ 1,077,738
Net income (loss) per share:
Basic and diluted $ (0.21) $ 0.18
Weighted average number
of common shares
outstanding:
Basic 5,969,434 5,969,434
Diluted 6,011,506 6,011,506
</TABLE>
See accompanying notes
COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Pro Forma Financial Statements
(Unaudited)
A. This pro forma adjustment reflects the sale of the
registrant's 14.5% interest in NovaNET Learning, Inc. for
$2,472,602 in cash as if it had occurred on January 31, 1999.
It reflects the addition of the cash proceeds of $2,472,602
and the reduction of investments for the registrant's $159,375
carrying value on January 31, 1999. It also reflects the
registrant's gain of $2,313,227 as a reduction of the
accumulated deficit. Since capital loss carryforwards would
have substantially sheltered the gain from Federal and state
income taxes, no tax effect has been reflected.
B. This pro forma adjustment reflects the sale of the
registrant's 14.5% interest in NovaNET Learning, Inc. for
$2,472,602 in cash as if it had occurred on August 1, 1997. It
reflects the registrant's gain of $2,313,227 on the sale.
Since capital loss carryforwards would have substantially
sheltered the gain from Federal and state income taxes, no tax
effect has been reflected.
C. This pro forma statement of operations reflects no pro forma
adjustment for an assumed investment of the cash proceeds. If
the registrant had invested the sale proceeds in short-term
investments on August 1, 1997, at the registrant's weighted
average interest rate for the year ended July 31, 1998, the
registrant would have earned approximately $138,000 more
interest income than the $170,051 reported in the historical
statement of operations for the year ended July 31, 1998, and
approximately $69,400 more interest income than the $84,733
reported in the historical statement of operations for the six
months ended January 31, 1999.
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 hereunto duly authorized.
COMPETITIVE TECHNOLOGIES, INC.
Registrant
Date: June 11, 1999 S/ Frank R. McPike, Jr.
By: Frank R. McPike, Jr.
President, Chief Operating
Officer, Chief Financial Officer
and Authorized Signer
