FAIRFIELD, Conn., June 14, 2002 (PRIMEZONE) -- Competitive Technologies, Inc. (AMEX:CTT) today announced its fiscal results for the three and nine months ended April 30, 2002.
CTT revenues for the third quarter of fiscal 2002 were $547,278 compared with $416,562 in the third quarter of fiscal 2001. Revenues for the nine months ended April 30, 2002 were $1,754,206 compared with $2,441,338 in the nine months ended April 30, 2001.
Retained royalties of $547,278 for the third quarter of fiscal 2002 were $130,716 (31%) higher than retained royalties of $416,562 in the third quarter of fiscal 2001. Retained royalties of $1,729,206 for the nine months ended April 30, 2002 were $708,613 (29%) lower than retained royalties of $2,437,819 in the nine months ended April 30, 2001.
Retained royalties from Ethyol(tm) (a chemotherapy protective agent), Retin-A(tm) (a skin photo aging and wrinkle retardant) and the gallium arsenide semiconductor inventions together were $222,000 higher in the third quarter of fiscal 2002. This increase includes $77,000 in one-time additional past Retin-A royalties determined in a royalty audit. Offsetting these increases were approximately $88,000 of lower retained royalties from homocysteine and expiring Vitamin B12 assay patents.
Retained royalties from the gallium arsenide semiconductor inventions for the nine months ended April 30, 2002, were approximately $623,000 and accounted for reductions of approximately $672,000 from approximately $1,295,000 in the nine months ended April 30, 2001. Also lower were retained royalties from homocysteine and expiring Vitamin B12 assay patents. In addition, a licensee of our herpes simplex virus vaccine technology (which previously had been paying $100,000 minimum annual retained royalties in the second quarter of prior fiscal years) terminated its license in the second quarter of fiscal 2002.
Total operating expenses for the third quarter of fiscal 2002, including $602,345 in net patent enforcement expenses, were $1,564,624, which was $28,926 (2%) lower than in the third quarter of fiscal 2001. Total operating expenses for the nine months ended April 30, 2002, including $1,786,982 in net patent enforcement expenses, were $4,502,741, which was $979,054 (28%) higher than in the nine months ended April 30, 2001. Higher corporate legal, shareholder and various other expenses partially offset lower net patent enforcement expenses in the third quarter of fiscal 2002 compared with the third quarter of fiscal 2001. Net patent enforcement expenses (patent enforcement expenses net of reimbursements), personnel and related expenses, corporate legal expenses and recruiting expenses were higher in the nine months of fiscal 2002, while consultants' fees and expenses and directors' stock expense were lower compared with the same period of fiscal 2001.
Operating loss for the third quarter of fiscal 2002 was $1,017,346 compared with operating loss of $1,176,988 for the third quarter of fiscal 2001. Operating loss for the nine months ended April 30, 2002 was $2,748,535 compared with operating loss of $1,082,349 for the nine months ended April 30, 2001.
Net loss for the third quarter of fiscal 2002 was $1,031,879, ($0.17) per share, compared with net loss of $1,103,268, ($0.18) per share, for the third quarter of fiscal 2001. Net loss for the nine months ended April 30, 2002 was $3,237,978, ($0.53) per share, compared with net loss of $794,205, ($0.13) per share, for the nine months ended April 30, 2001. The net loss for the three and nine months ended April 30, 2002, includes a $50,000 impairment loss to write off CTT's entire investment in Digital Ink, Inc. (obtained in exchange for services) offset by a $21,598 partial recovery of advances to Micro-ASI, Inc. which we previously wrote off in the fourth quarter of fiscal 2001.
For the third quarter of fiscal 2002, net patent enforcement expenses, principally related to the legal actions in which CTT and its clients have sued to enforce their patent rights, were $189,535 (24%) lower than in the third quarter of fiscal 2001. For the nine months ended April 30, 2002, net patent enforcement expenses increased $629,225 (54%) over the nine months ended April 30, 2001. In the third quarter of fiscal 2002, we paid a client $201,058 as a reimbursement of certain of our previously deducted patent enforcement expenses. If and when the related enforcement action is settled, we are entitled to withhold these and additional litigation expenses we have then incurred from any recovery we receive as a result of the litigation and from subsequent income from the related patents.
CTT is currently involved in several patent enforcement litigations: LabCorp, Fujitsu, and Materna(tm).
In November 2001, a jury heard the Laboratory Corporation of America Holdings (LabCorp) case brought by CTT and its licensee, Metabolite Laboratories, Inc. The jury upheld the validity of CTT's patent, found that LabCorp had infringed it, and found that LabCorp's infringement was willful. The Court has not yet entered a final judgment and post-trial motions are pending.
The Fujitsu case is currently pending in the U.S. District Court for the Northern District of California.
A favorable preliminary opinion issued in July 2001 in the Materna(tm) case of CTT's client, the University of Colorado, against American Cyanamid regarding royalties due on sales of Materna still awaits final resolution, including matters of attorney fees, costs, interest on delayed payments and punitive damages.
Through a series of bridge financing agreements, as of April 30, 2002 CTT had loaned $1,056,300 to E. L. Specialists, Inc. (ELS) ($956,300 in cash and $100,000 in services) of which $750,000 was in default and the remainder was payable on demand. ELS has been unable to arrange other financial support necessary to continue operating. In June 2002, CTT began foreclosure proceedings on its security interest in ELS's intellectual property to recover its advances to ELS. In the second quarter of fiscal 2002, CTT recorded an impairment loss of $519,200 against its notes receivable from ELS.
Frank R. McPike, Jr., President and CEO of CTT said: "Our overall results reflect the cost of litigating some significant intellectual property cases. Generally accepted accounting principles require that we record these expenses as we incur them. Upon a successful resolution, if the courts determine that we will be reimbursed for the litigation fees we have incurred or if and when we recover them from future royalties, we will record the reimbursement as a reduction of our patent enforcement expenses."
"It is imperative we protect intellectual property rights of our clients," Mr. McPike continued. "The homocysteine royalty reduction has been intensified by LabCorp's position; some other licensees have withheld their royalties pending the court decision in the LabCorp case. Should the courts find favorably for CTT, we believe the delinquent licensees will again pay past and future license fees."
Richard E. Carver, Chairman of CTT's Board of Directors, commented: "It undermines the value of the patent system when corporations are unwilling to pay properly for benefiting from the fruits of intellectual creativity, e.g. a patented technology. The three court cases are very important to CTT and all owners of intellectual property. It is quite easy to understand why many inventors are discouraged when patent violators disregard their ownership rights."
"On another topic," Mr. Carver added, "the Board is highly focused on locating the correct individual to be our new Chief Executive Officer. This person will strengthen our management team to focus on corporate growth and shareholder value. Based on the quality of our candidates, I expect the individual to be identified shortly."
About Competitive Technologies, Inc.
Competitive Technologies is a global leader in identifying, developing and commercializing innovative life sciences, physical sciences and digital technologies. Competitive Technologies' specialized expertise and experience make it a valuable partner for inventors, companies and universities of all sizes. CTT has been responsible for closing hundreds of licensing agreements. CTT clients and licensees include: Sony, Matsushita Electric Industrial, the University of Arizona, the University of Colorado, the University of Illinois, NTRU Cryptosystems, Inc., Palatin Technologies, Inc. and Ribozyme Pharmaceuticals, Inc. Competitive Technologies, Inc. is based in Fairfield, Connecticut and has affiliates in Osaka, Japan and London, England.
Statements about the Company's future expectations, including development and regulatory plans, and all other statements in this document other than historical facts are "forward-looking statements" within the meaning of applicable Federal Securities Laws and are not guarantees of future performance. These statements involve risks and uncertainties related to market acceptance of and competition for the Company's licensed technologies and other risks and uncertainties inherent in CTT's business, including those set forth in Item 1 of the Company's most recent Form 10-K and other factors that may be described in CTT's filings with the SEC, and are subject to change at any time. The Company's actual results could differ materially from these forward-looking statements. The Company undertakes no obligation to update publicly any forward-looking statement.
Direct inquiries to: Johnnie D. Johnson Strategic IR, Inc. 800 Third Avenue, Suite 3700 New York, NY 10022 Tel. (212) 754-6565, Fax (212) 754-4333 E-mail: jdjohnson@strategic-ir.com E-mail: ctt@competitivetech.net Web site: http://www.competitivetech.net COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (Unaudited) Third Quarter ended Nine Months ended April 30, April 30, 2002 2001 2002 2001 ----------- ----------- ----------- ----------- Revenues: Retained royalties $ 547,278 $ 416,562 $ 1,729,206 $ 2,437,819 Other revenues -- -- 25,000 3,519 ----------- ----------- ----------- ----------- Total revenues 547,278 416,562 1,754,206 2,441,338 ----------- ----------- ----------- ----------- Operating expenses Patent enforcement expenses, net of reimbursements 602,345 791,880 1,786,982 1,157,757 Other costs of technology management services 592,228 514,316 1,617,024 1,233,018 General and administration expenses 370,051 287,354 1,098,735 1,132,912 ----------- ----------- ----------- ----------- Total operating expenses 1,564,624 1,593,550 4,502,741 3,523,687 ----------- ----------- ----------- ----------- Operating loss $(1,017,346) $(1,176,988) $(2,748,535) $(1,082,349) =========== =========== =========== =========== Impairment loss on loans to E. L. Specialists, Inc.$ -- $ -- $ (519,200) $ -- =========== =========== =========== =========== Impairment loss on investment in Digital Ink, Inc.$ (50,000) $ -- $ (50,000) $ -- =========== =========== =========== =========== Recovery of advances to Micro-ASI, Inc. $ 21,598 $ -- $ 21,598 $ -- =========== =========== =========== =========== Loss before minority interest $(1,031,879) $(1,103,268) $(3,211,042) $ (794,205) =========== =========== =========== =========== Net loss $(1,031,879) $(1,103,268) $(3,237,978) $ (794,205) =========== =========== =========== =========== Net loss per share Basic and diluted $ (0.17) $ (0.18) $ (0.53) $ (0.13) =========== =========== =========== =========== Weighted average number of common shares outstanding: Basic and diluted 6,154,351 6,120,677 6,145,889 6,161,868 Other Financial Data Cash and cash equivalents $ 787,522 $ 741,100 =========== =========== Short-term investments $ 2,625,867 $ 6,546,818 =========== =========== Royalties receivable $ 546,131 $ 247,209 =========== =========== Total assets $ 6,661,927 $10,904,357 =========== =========== Royalties payable $ 1,045,646 $ 1,065,388 =========== =========== Total liabilities $ 2,890,834 $ 2,331,192 =========== =========== Shareholders' equity $ 3,771,093 $ 8,573,165 =========== ===========