COMPETITIVE TECHNOLOGIES INC - 10-Q Quarterly Report

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UNITED STATES
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 April 30, 2003

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
Fairfield, Connecticut 06824
(Address of principal executive (Zip Code)
offices)

Registrant's telephone number, including area code: (203) 255-6044

N/A
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 .

Indicate by check mark whether the registrant is an accelerated filer
(as defined in rule 12b-2 of the Exchange Act). Yes ____. No X.

Common Stock outstanding as of June 1, 2003 - 6,201,345 shares

Exhibit Index on sequentially numbered page 28 of 39.

Page 1 of 39 sequentially numbered pages

COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES

INDEX

PART I. FINANCIAL INFORMATION Page No.

Item 1. Financial Statements

A. Condensed Financial Statements (Unaudited)

Consolidated Balance Sheets at
April 30, 2003 and July 31, 2003 3

Consolidated Statements of Operations for the
three months ended April 30, 2003 and 2002 4

Consolidated Statements of Operations for the
nine months ended April 30, 2003 and 2002 5

Consolidated Statement of Changes in
Shareholders' Interest for the nine
months ended April 30, 2003 6

Consolidated Statements of Cash Flows for the
nine months ended April 30, 2003 and 2002 7

Notes to Consolidated Financial Statements 8-15

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 16-26

Item 3. Quantitative and Qualitative Disclosures
About Market Risk 27

Item 4. Controls and Procedures 27

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 27-28

Item 6. Exhibits and Reports on Form 8-K 28

Signatures 29

Certifications 30-33

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
April 30, 2003 and July 31, 2002
(Unaudited)

April 30, July 31,
2003 2002
ASSETS

Current assets:
Cash and cash equivalents $ 434,378 $ 750,421
Short-term investments 1,103,170 2,136,874
Accounts receivable 932,368 1,199,483
Notes receivable - E. L. Specialists, Inc. -- 200,000
Prepaid expenses and other current assets 284,314 261,198
Total current assets 2,754,230 4,547,976

Property and equipment, at cost, net 35,906 42,877
Investments, at cost 42,996 1,075,684
Intangible assets acquired, net 664,713 733,246
TOTAL ASSETS $ 3,497,845 $ 6,399,783

LIABILITIES AND SHAREHOLDERS' INTEREST

Accounts payable $ 276,263 $ 1,726,237
Accrued liabilities 1,293,699 1,680,903
Total current liabilities 1,569,962 3,407,140

Commitments and contingencies (Note 9) --

Shareholders' interest:
5% preferred stock, $25 par value 60,675 60,675
Common stock, $.01 par value 62,013 61,907
Capital in excess of par value 26,747,229 26,893,287
Treasury stock, at cost; 36,434
shares at July 31, 2002 -- (258,037)
Accumulated deficit (24,942,034) (23,765,189)

Total shareholders' interest 1,927,883 2,992,643

TOTAL LIABILITIES AND SHAREHOLDERS'
INTEREST $ 3,497,845 $ 6,399,783

See accompanying notes

PART I. FINANCIAL INFORMATION (Continued)

COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
for the three months ended April 30, 2003 and 2002
(Unaudited)

2003 2002

Revenue $ 659,455 $ 547,278

Patent enforcement expenses, net of
reimbursements 193,948 602,345
Personnel and other direct expenses
relating to revenue, of which
$47,900 were to related parties in 2002 707,358 542,435
General and administrative expenses 307,862 419,844
1,209,168 1,564,624
Operating loss (549,713) (1,017,346)

Impairment loss:
On investment in Digital Ink, Inc. -- (50,000)
Recovery of advances to Micro-ASI, Inc. -- 21,598
Interest income 3,984 13,869

Net loss $ (545,729) $(1,031,879)

Net loss per share:
Basic and diluted $ (0.09) $ (0.17)

Weighted average number of common
shares outstanding:
Basic and diluted 6,201,345 6,154,351

See accompanying notes

PART I. FINANCIAL INFORMATION (Continued)

COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
for the nine months ended April 30, 2003 and 2002
(Unaudited)

2003 2002

Revenue $ 1,874,217 $ 1,754,206

Patent enforcement expenses, net of
reimbursements 347,453 1,786,982
Personnel and other direct expenses
relating to revenue, of which
$6,122 and $112,630 were to
related parties in 2003 and 2002,
respectively 2,118,026 1,588,347
General and administrative expenses 1,247,643 1,127,412
3,713,122 4,502,741
Operating loss (1,838,905) (2,748,535)

Reversal of accounts payable exchanged
for contingent note payable 1,583,445 --
Impairment losses:
On investment in NTRU (944,000) --
On loans to E. L. Specialists, Inc. -- (519,200)
On investment in Digital Ink, Inc. -- (50,000)
Recovery of advances to Micro-ASI, Inc. -- 21,598
Interest income 22,926 85,494
Other income (expense), net (311) (399)

Loss before minority interest (1,176,845) (3,211,042)
Minority interest in losses of subsidiary -- (26,936)

Net loss $(1,176,845) $(3,237,978)

Net loss per share:
Basic and diluted $ (0.19) $ (0.53)

Weighted average number of common
shares outstanding:
Basic and diluted 6,176,359 6,145,889

See accompanying notes

PART I. FINANCIAL INFORMATION (Continued)

COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Shareholders' Interest
For the nine months ended April 30, 2003
(Unaudited)

See accompanying notes

PART I. FINANCIAL INFORMATION (Continued)

COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
for the nine months ended April 30, 2003 and 2002
(Unaudited)

2003 2002
Cash flow from operating activities:
Net loss $(1,176,845) $(3,237,978)
Noncash items included in net loss:
Depreciation and amortization 141,971 151,577
Minority interest -- 26,936
Stock compensation 81,099 77,976
Reversal of accounts payable exchanged
for contingent note payable (1,583,445) --
Impairment losses on investments and 944,000 569,200
loans
Recovery of advances to Micro-ASI, Inc. -- (21,598)
Other 311 (1,425)
Net changes in various operating accounts:
Receivables 267,115 2,205,958
Prepaid expenses and other current
assets (23,116) (51,550)
Accounts payable and accrued
liabilities (222,747) (818,944)
Net cash flow from operating activities (1,571,657) (1,099,848)

Cash flow from investing activities:
Purchases of property and equipment, net (16,467) (47,204)
Purchase of intangible assets (50,000) --
Proceeds from other short-term investments 1,033,704 2,167,574
Investments in and loans to cost-
method affiliates -- (100,000)
Proceeds from (advances to)
E. L. Specialists, Inc. 200,000 (330,500)
Proceeds from NTRU Cryptosystems, Inc.
preferred stock 88,377 --
Other, net -- (26,936)
Net cash flow from investing activities 1,255,614 1,662,934

Net increase (decrease) in cash and cash
equivalents (316,043) 563,086
Cash and cash equivalents,(A) beginning
of period 750,421 224,436
Cash and cash equivalents,(B) end of period $ 434,378 $ 787,522

(A) Does not include short-term investments of $2,136,874 and $4,793,441
in 2003 and 2002, respectively.

(B) Does not include short-term investments of $1,103,170 and $2,625,867
in 2003 and 2002, respectively.

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 were derived from audited
financial statements but do not include all disclosures required by
accounting principles generally accepted in the United States of
America. Certain amounts, including operating expenses, have been
reclassified to conform with the presentation in financial
statements for fiscal 2003.

In the opinion of management, all adjustments that are
necessary to present the financial statements fairly in conformity
with accounting principles generally accepted in the United States
of America, consisting only of normal recurring adjustments, have
been made.

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, 2002.

The Company has incurred substantial losses and negative cash
flows from operations for the periods ended April 30, 2003 and 2002,
respectively. For the year ended July 31, 2002, the Company
incurred a net loss of approximately $4,016,000 and negative cash
flows from operating activities of approximately $1,666,000. If we
do not obtain sufficient additional cash resources before early July
2003, management plans to reduce cash expenses sufficiently to
sustain the Company until it obtains additional cash from revenues,
potential litigation awards or other funding sources. However, we
cannot assure you that the Company will be able to obtain additional
cash resources. Under this plan, the Company will implement certain
cost reductions and cost containment actions to reduce operating
costs.

2. Per Share Computations

The computation of per share amounts in each period presented is
based on the weighted average number of common shares outstanding in
the period. At April 30, 2003 and 2002, respectively, options and
warrants to purchase 955,767 and 650,267 shares of common stock were
outstanding but were not included in the computation of earnings per
share because they were anti-dilutive.

3. Stock-Based Compensation

The Company accounts for its stock-based compensation at its
intrinsic value under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related
Interpretations. Accordingly, the Company has recognized no
compensation expense for options granted under its employees and
directors stock option plans since the exercise price of all options
granted under those plans was at least the market value of the
underlying common stock on the grant date.

If CTT had determined compensation expense for its option grants
under its employees and directors stock option plans using the fair
value method of Financial Accounting Standards Board Statement No.
123, "Accounting for Stock-Based Compensation," the Company's
results would have been:

The pro forma information above may not be representative of pro
forma fair value compensation effects in future years.

4. Notes Receivable

E. L. Specialists, Inc.

Through a series of bridge financing agreements, the Company
loaned $1,056,300 ($956,300 in cash and $100,000 in services) to
E. L. Specialists, Inc. (ELS).

Effective August 5, 2002, CTT sold and transferred all its
interests related to ELS to MRM Acquisitions, LLC (MRM) for $200,000
cash. The transferred interests include CTT's notes receivable in
the face amount of $1,056,300 (plus interest) from ELS, its related
security interest in ELS' intellectual property, all its other
interests under agreements in connection with its notes receivable
from ELS and CTT's interest in a technology servicing agreement
related to ELS's intellectual property.

CTT collected $200,000 from MRM on August 5, 2002, after which
CTT had no remaining interest in ELS.

5. Receivables

Receivables were:
April 30, July 31,
2003 2002

Royalties $ 806,775 $1,158,685
For NTRU preferred stock 88,377 --
Other 37,216 40,798
$ 932,368 $1,199,483

6. Investment in NTRU Cryptosystems, Inc.

In April 2003, NTRU Cryptosystems, Inc. (NTRU) redeemed all
outstanding shares of its Series A and Series B Preferred Stock
(NTRU Preferred Stock) in exchange for cash or NTRU common stock.

Competitive Technologies, Inc. (CTT) is a minority investor in
NTRU and currently owns 3,129,509 shares of NTRU common stock,
including 76,509 shares received in April, 2003 (approximately 10%
of NTRU's outstanding common stock.) At July 31 and October 31,
2002, CTT carried its investment in NTRU on the cost method at
$1,034,381.

CTT recorded a charge of $944,000 in its second quarter ended
January 31, 2003 due to the uncertain timing and amount of CTT's
expected future cash flows from its investment in NTRU's common
stock after its recapitalization. CTT exchanged its NTRU Preferred
Stock for $88,377 in cash (included in receivables at April 30,
2003; received May 5, 2003) and 76,509 shares of NTRU common stock.

CTT continues to hold a seat and participate actively on NTRU's
Board of Directors. CTT's management continues to believe NTRU's
encryption technology has value and these actions provide NTRU an
opportunity to allow applications to evolve to meet its customers'
needs.

7. Intangible Assets Acquired

The Company purchased additional patents during the first
three quarters of fiscal 2003 for $50,000. These patents are being
amortized on a straight-line basis over their estimated remaining
lives, approximately 18 years.

The Company reported amortization expense of $118,533 in the
first three quarters of fiscal 2003 and expects to record annual
amortization expense of approximately $158,000 for fiscal 2003,
2004, 2005, 2006, $111,000 for fiscal 2007, and $3,000 for fiscal
2008.

April 30, July 31,
2003 2002
Intangible assets acquired,
principally licenses and
patented technologies,
at adjusted cost $ 1,687,067 $1,637,067
Accumulated amortization (1,022,354) (903,821)
$ 664,713 $ 733,246

8. Accrued Liabilities

Accrued liabilities were:
April 30, July 31,
2003 2002

Royalties payable $ 965,666 $1,308,381
Accrued professional fees 155,000 65,162
Accrued compensation 118,873 157,416
Deferred revenues -- 106,667
Other 54,160 43,277
$1,293,699 $1,680,903

The exclusive licensee terminated its license for the
electrochromic display during the third quarter of fiscal 2003. As
a result, we recognized $107,000 previously deferred revenue on this
license and $50,000 in license termination fees.

9. Contingencies

Contingent Obligation

On October 28, 2002, the Company signed an agreement making any
further payments to our former patent litigation counsel in the
Fujitsu matter completely contingent on future receipts from
Fujitsu. This contingent obligation is reflected in a promissory
note payable to our former patent litigation counsel for $1,683,349
plus simple interest at the annual rate of 11% from the agreement
date (approximately $93,000 at April 30, 2003) payable only from
future receipts in a settlement or other favorable outcome of the
litigation against Fujitsu, if any. Accordingly, in the first
quarter of fiscal 2003, we reversed from accounts payable $1,583,445
that was accrued at July 31, 2002. Since interest is also
contingently payable, the Company has recorded no interest expense
with respect to this note.

Litigation

Fujitsu

In December 2000, (coincident with filing a complaint with the
United States International Trade Commission (ITC) that was
withdrawn in August 2001) CTT and the University of Illinois filed a
complaint against Fujitsu Limited, Fujitsu General Limited, Fujitsu
General America, Fujitsu Microelectronics, Inc. and Fujitsu Hitachi
Plasma Display Ltd. (Fujitsu et al.) in the United States District
Court for the Central District of Illinois seeking damages for past
infringements and an injunction against future sales of plasma
display panels (PDPs) that infringe two U. S. patents held by CTT's
client, the University of Illinois. The two patents cover energy
recovery in flat plasma display panels. In July 2001, CTT
reactivated this complaint to pursue legal remedies (damages for
past infringing sales and possibly damages for willfulness) that are
not available at the ITC. In May 2002, the District Court granted
defendants' motion to transfer this case to the Northern District of
California. The trial in this case is currently scheduled for March
2004.

Effective July 23, 2002, CTT and the University of Illinois
agreed that the University of Illinois would take the lead in this
litigation and assume the cost of new lead counsel. Before this
agreement, CTT bore the entire cost of lead counsel in this
litigation. In December 2002, CTT was dismissed as co-plaintiff
from this litigation but retains its economic interest in any
potential favorable outcome.

In September 2001, Fujitsu et al. filed suit against CTT and
Plasmaco, Inc. in the United States District Court for the District
of Delaware. This lawsuit alleged, among other things, that CTT
misappropriated confidential information and trade secrets supplied
by Fujitsu during the course of the ITC action. It also alleged
that, with Plasmaco's assistance, CTT abused the ITC process to
obtain information to which it otherwise would not have been
entitled and which it will use in the action against Fujitsu in the
United States District Court for the Central District of Illinois
(now in the Northern District of California). The Delaware District
Court dismissed this action at the request of Fujitsu who
subsequently re-instituted the case in the Northern District of
California.

CTT is unable to estimate the legal expenses or the loss it may
incur or the possible damages it may recover in these suits, if any,
and has recorded no potential judgment proceeds in its financial
statements to date. The Company records expenses in connection with
this suit as they are incurred.

LabCorp

On May 4, 1999, Metabolite Laboratories, Inc. (MLI) and CTT
(collectively plaintiffs) filed a complaint and jury demand against
Laboratory Corporation of America Holdings d/b/a LabCorp (LabCorp)
in the United States District Court for the District of Colorado.
The complaint alleged, among other things, that LabCorp owes
plaintiffs royalties for homocysteine assays performed beginning in
the summer of 1998 using methods falling within the claims of a
patent owned by CTT. CTT licensed the patent non-exclusively to MLI
and MLI sublicensed it to LabCorp. Plaintiffs claimed LabCorp's
actions constitute breach of contract and patent infringement. The
claim sought an injunction ordering LabCorp to perform all its
obligations under its agreement, to cure past breaches, to provide
an accounting of wrongfully withheld royalties and to refrain from
infringing the patent. Plaintiffs also sought unspecified money and
exemplary damages and attorneys' fees, among other things. LabCorp
filed an answer and counterclaims alleging noninfringement, patent
invalidity and patent misuse.

The jury that heard this case in November 2001 confirmed the
validity of CTT's patent rights and found that LabCorp willfully
contributed to and induced infringement and breached its contract.
In December 2001, the Court entered judgment affirming the jury's
verdict.

In November 2002, the Court confirmed its judgment in favor of
CTT and MLI. The Court's amended judgment awarded CTT approximately
$1,019,000 damages, $1,019,000 enhanced damages, and $132,000
prejudgment interest. If the Court's judgment is upheld in post-
trial motions and on appeal, CTT will retain approximately
$1,000,000 of damages awarded and post-judgment interest at the
statutory rate. This judgment is pending appeal and post-trial
motions relating to awarding attorneys' fees to CTT.

CTT is unable to estimate the legal expenses it may incur or
the possible damages it may ultimately recover in this suit, if any.
CTT has not recorded revenue in its financial statements to date for
awarded damages, awarded enhanced damages or awarded interest from
the Court's November 2002 judgment. The Company records expenses in
connection with this suit as they are incurred.

In a January 2003 Stipulated Order, LabCorp agreed to post a
bond for all damages awarded in the November 2002 judgment and to
pay CTT a percentage of sales of homocysteine tests performed since
November 1, 2002 through final disposition of this case. In
addition, pursuant to this order, LabCorp agreed to pay $250,000 (in
twelve monthly installments of $20,824 each) for homocysteine assays
performed from November 1, 2001 through October 31, 2002 (of which
it has paid approximately $104,000). In exchange, this Stipulated
Order stayed execution of the monetary judgment and the permanent
injunction against LabCorp in the Court's November 2002 judgment.
This Stipulated Order is without prejudice to any party's position
on appeal. At April 30, 2003, CTT had recorded total royalties of
$514,735 (revenues of $205,894 (of which $99,954 relate to assays
performed from November 1, 2001 through October 31, 2002) and
royalties paid or payable of $308,841) from LabCorp pursuant to this
January 2003 Stipulated Order. LabCorp has appealed the November
2002 judgment in favor of CTT. If the judgment is reversed on
appeal, LabCorp's ability to recover amounts paid to CTT will depend
on the extent and reason for the reversal. CTT's management
believes the probability that LabCorp will recover such amounts is
very unlikely.

Materna(TM)

The University of Colorado Foundation, Inc., the University of
Colorado, the Board of Regents of the University of Colorado, Robert
H. Allen and Paul A. Seligman, plaintiffs, previously filed a
lawsuit against American Cyanamid Company (a subsidiary of Wyeth),
defendant, in the United States District Court for the District of
Colorado. This case involved a patent for an improved formulation
of Materna, a prenatal vitamin compound sold by defendant. While
the Company was not and is not a party to this case, the Company had
a contract with the University of Colorado to license University of
Colorado inventions to third parties. As a result of this contract,
the Company is entitled to share 18.2% of damages awarded to the
University of Colorado, if any, after deducting the legal expenses
of this suit.

On July 7, 2000, the District Court concluded that Robert H.
Allen and Paul A. Seligman were the sole inventors of the
reformulation of Materna that was the subject of the patent and that
defendant is liable to them and the other plaintiffs on their claims
for fraud and unjust enrichment.

On August 13, 2002, the District Court judge awarded
approximately $54 million, plus certain interest from January 1,
2002, to the plaintiffs, of which CTT's share would be approximately
$6 million plus its proportionate share of interest.

The defendant has appealed to the U.S. Court of Appeals for the
Federal Circuit (CAFC) and posted a $59 million bond and plaintiffs
have responded. The CAFC heard oral arguments in this appeal in
June 2003. CTT is unable to predict when this lawsuit will finally
be settled or when it will receive its share of damages finally
awarded, if any.

CTT has recorded no potential judgment proceeds in its
financial statements to date. The Company records expenses in
connection with this suit as they are incurred. See Note 11 to
these Consolidated Financial Statements.

10. Related Party Transactions

During the nine months ended April 30, 2003 and 2002, CTT
incurred charges of approximately $6,000 and $113,000, respectively,
for consulting services (including expenses and use taxes) provided
by one and two directors in the respective periods.

11. Subsequent Events

Sale of potential Materna award

Effective May 19, 2003, CTT sold to LawFinance Group, Inc. a
portion of its potential $6 million from the patent infringement
judgment against American Cyanamid Company in the Materna lawsuit.
CTT received $600,000 cash in exchange for the first $1,290,000
(plus court awarded interest from May 19, 2003) of CTT's share of
the potential award. CTT has no financial obligation to repay
LawFinance. If CTT's share of the potential award is less than the
amount sold to LawFinance, the entire amount would be paid to
LawFinance and LawFinance would be paid in full. CTT granted
LawFinance a security interest in CTT's share of the potential
award. CTT retains the remaining anticipated approximately
$4,710,000 proceeds from the potential award in addition to the
$600,000 already received.

CTT will include this $600,000 in revenue in its fourth quarter
of fiscal 2003.

Optical Associates, Limited Partnership (OALP)

This lawsuit (described in detail in Note 16 to the
Consolidated Financial Statements in the Company's Annual Report on
Form 10-K for the year ended July 31, 2002) was dismissed on May 16,
2003.

CTT incurred no legal expenses related to this suit in the
first three quarters of either fiscal year.

12. Recently Issued Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB)
issued Statement No. 142, "Goodwill and Other Intangible Assets."
This statement establishes financial accounting and reporting for
acquired goodwill and other intangible assets acquired individually
or with a group of other assets but not acquired in a business
combination. The Company's adoption of this statement on August 1,
2002, did not have a material effect on its financial condition or
results of operations.

In August 2001, the FASB issued Statement No. 144, "Accounting
for the Impairment or Disposal of Long-lived Assets." This
statement establishes a single accounting model for the impairment
of long-lived assets. The Company has recognized impairment charges
on investments in fiscal 2002 and 2003. However, the Company's
adoption of this statement on August 1, 2002, did not affect the
amount or timing of those impairment charges.

In December 2002, the FASB issued Statement No. 148, "Accounting
for Stock-Based Compensation - Transition and Disclosure." This
statement amends Statement No. 123, "Accounting for Stock-Based
Compensation," to provide alternative transition methods for a
voluntary change to the fair value method of accounting for stock-
based employee compensation. This statement also requires prominent
disclosures in annual and interim financial statements about the
method of accounting for stock-based employee compensation and its
effect on reported results. The disclosure provisions of this
statement are effective for the Company's third quarter ended April
30, 2003; the Company made these disclosures in Note 3 above.

PART I. FINANCIAL INFORMATION (Continued)

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations

We have rounded all amounts in this Item 2 to the nearest
thousand dollars. In addition, all periods discussed in this Item 2
relate to our fiscal years ending July 31 (first, second, third and
fourth quarters ending October 31, January 31, April 30 and July 31
respectively).

Results of Operations - Three Months Ended April 30, 2003 (Third
Quarter of 2003) vs. Three Months Ended April 30, 2002 (Third
Quarter of 2002)

Financial Results

Our net loss for the third quarter of 2003 was $546,000
compared with $1,032,000 for the third quarter of fiscal 2002, an
improvement of $486,000.

Revenues

Our revenues for the third quarter of 2003 were $659,000, which
was $112,000 (20%) higher than in the third quarter of 2002.

In the third quarter of 2003, $532,000 (81%) of our retained
royalties were from three technologies: $277,000 (42%) from
Ethyol(TM) (a chemotherapeutic mitigation agent); $157,000 (24%)
from the electrochromic display (a thin, flexible, low power
flashing graphic display); and $99,000 (15%) from the homocysteine
assay. Increases in royalties from these three technologies more
than offset decreases in royalties from gallium arsenide
semiconductors, Retin-A, vitamin B12 and other technologies.

We recorded $277,000 royalties from Ethyol in the third quarter
of fiscal 2003. These royalties are limited to $500,000 per
calendar year.

The exclusive licensee terminated its license for the
electrochromic display during the third quarter of fiscal 2003. As
a result, we recognized $107,000 previously deferred revenue on this
license and $50,000 in license termination fees.

The increase in homocysteine assay royalties results from
assays performed by LabCorp and other recently licensed clinical
laboratories. (See Note 9 to the accompanying consolidated
financial statements.)

The decrease in royalties from gallium arsenide semiconductors
was principally due to expired licenses.

The third quarter of fiscal 2002 included additional Retin-A
royalties from a royalty audit.

The last vitamin B12 assay patent expired in November 2002.

Other changes in retained royalty revenues reflect changes in
the timing of royalties reported by licensees and in licensees'
sales of licensed products. Historically, the Company's royalty
revenues in its first and third quarters have been lower than in its
second and fourth quarters.

Since much of our retained royalty revenue depends on our
licensees' sales of licensed products, current economic conditions
may affect our royalties from them. However, we cannot predict
either the timing or the amount of such potential changes, if any.

Operating expenses

Patent enforcement expenses, net of reimbursements, in the
third quarter of 2003 were $194,000, which was $408,000 (68%) lower
than in the third quarter of 2002. Our July 23, 2002, agreement
with the University of Illinois (for the University to take the lead
and assume the cost of new lead counsel in the litigation against
Fujitsu) substantially reduced our net patent enforcement expenses
in the third quarter of 2003. Patent enforcement expenses are
principally for outside litigation counsels' services in patent
litigations where our clients and we have sued to enforce their and
our patent rights. We have included details of progress and status
in these cases in Note 9 to the accompanying consolidated financial
statements.

We have reclassified certain 2002 amounts between personnel and
other direct expenses relating to revenue and general and
administrative expenses to conform to the presentation for 2003. We
classify domestic and foreign patent legal expenses (net of
reimbursements), amortization of intangible assets acquired,
employee salaries and benefits, marketing and consulting expenses
related to technologies and specific revenue initiatives as
personnel and other direct expenses relating to revenue. We
classify directors' fees and expenses, public company expenses,
professional service expenses (including corporate legal, litigation
and audit), rent, and other general business and operating expenses
as general and administrative expenses.

Personnel and other direct expenses relating to revenue were
$707,000 for the third quarter of 2003, which was $165,000 (30%)
higher than in the third quarter of 2002. We incurred higher
expenses for salaries and consulting services in order to increase
revenues by developing new revenue opportunities and strategic
relationships and alliances. In the third quarter of 2003, we had
approximately 15 full time equivalents compared with approximately
14 in the third quarter of 2002. Partially offsetting these
increases was the absence of recruiting expenses. We incurred
recruiting expenses in the third quarter of fiscal 2002 but not in
the third quarter of fiscal 2003.

General and administrative expenses for the third quarter of
2003 were $308,000, which was $112,000 (27%) lower than in the third
quarter of 2002. This decrease reflects decreases in directors'
fees and expenses due to our reduction to five independent directors
compared to six in 2002, corporate legal and professional service
expenses.

Interest income

Interest income of $4,000 for the third quarter of 2003 was
$10,000 (71%) lower than in the third quarter of 2002. Our average
invested balance was approximately 49% lower and our weighted
average interest rate was approximately 0.9% per annum compared with
approximately 1.5% per annum in fiscal 2002.

Income taxes

The Company has substantial net operating and capital loss
carryforwards for Federal income tax purposes. See Note 9 to
Consolidated Financial Statements in the Company's Annual Report on
Form 10-K for the year ended July 31, 2002.

Results of Operations - Nine Months Ended April 30, 2003 (Three
Quarters of 2003) vs. Nine Months Ended April 30, 2002 (Three
Quarters of 2002)

Financial Results

Our net loss for the three quarters of 2003 was $1,177,000
compared with $3,238,000 for the three quarters of fiscal 2002, an
improvement of $2,061,000. Our operating results improved $910,000
in addition to other improvements discussed below.

Revenues

Our total revenues for the three quarters of 2003 were
$1,874,000, which was $120,000 (7%) higher than in the three
quarters of 2002.

In the three quarters of 2003, $1,315,000 (70%) of our retained
royalties were from four technologies: $423,000 (23%) from Ethyol,
$420,000 (22%) from the homocysteine assay, $315,000 (17%) from
gallium arsenide semiconductors, and $157,000 (8%) from the
electrochromic display. Increases in royalties from the
homocysteine assay and Ethyol more than offset decreases in
royalties from gallium arsenide semiconductors and vitamin B12
assays.

Ethyol's royalty base is higher since October 2001 when the
licensee began selling Ethyol directly in the United States rather
than through a distributor. We expect our retained royalties from
Ethyol to reach our $500,000 per calendar year maximum for calendar
2003 in fiscal 2003.

The increase in homocysteine assay royalties includes amounts
for assays performed in several quarters by LabCorp ($206,000 under
a stipulated order in the LabCorp litigation) and other clinical
laboratories ($106,000 under license agreements made in the second
quarter of 2003). LabCorp has appealed the judgment in favor of
CTT. If the judgment is reversed on appeal, LabCorp's ability to
recover amounts paid to CTT will depend on the extent and reason for
the reversal. CTT's management believes the probability that
LabCorp will recover such amounts is very unlikely. See also Note 9
to the accompanying consolidated financial statements.

We discussed the increase in electrochromic display royalties
and decreases in royalties from gallium arsenide semiconductors,
vitamin B12 assays and other technologies in the third quarter
results above.

Operating expenses

Patent enforcement expenses, net of reimbursements, in the
three quarters of 2003 were $347,000, which was $1,440,000 (81%)
lower than in the three quarters of 2002. Our July 23, 2002,
agreement with the University of Illinois, our client, (for the
University to take the lead and assume the cost of new lead counsel
in the litigation against Fujitsu) substantially reduced our net
patent enforcement expenses in the three quarters of 2003. The
level of patent enforcement expenses varies depending on the stage
of the litigation. We have included details of progress and status
in these cases in Note 9 to the accompanying consolidated financial
statements.

Personnel and other direct expenses relating to revenue were
$2,118,000 for the three quarters of 2003, which was $530,000 (33%)
higher than in the three quarters of 2002. A reduction in
recruiting expense partially offset increases in expenses for
salaries and consultants we engaged to assist us in developing
specific revenue opportunities and strategic alliances and
relationships. In the three quarters of 2003 we had approximately
16 full time equivalents compared with approximately 13 in the three
quarters of 2002. During the first quarter of 2003, we paid
discretionary bonuses (which were both approved and paid in the
first quarter of 2003) in lieu of increasing base salaries for our
professional staff.

General and administrative expenses for the three quarters of
2003 were $1,248,000, which was $120,000 (11%) higher than in the
three quarters of 2002. Expenses that increased were investor
relations, travel, marketing, public company and corporate
litigation expenses directly related to the SEC investigation (see
Item 3 "Legal Proceedings" in our Annual Report on Form 10-K for the
year ended July 31, 2002 and Item 1 "Legal Proceedings" in Part II
of this Quarterly Report on Form 10-Q for the quarter ended April
30, 2003). During the three quarters of 2003, we participated in
five international marketing events. Directors' fees and expenses
and professional services expenses decreased.

Reversal of accounts payable exchanged for contingent note payable

On October 28, 2002, the Company signed an agreement making
future payments to our former patent litigation counsel in the
Fujitsu matter completely contingent on future receipts from
Fujitsu. This contingent promissory note payable is for $1,683,000
plus simple interest at the annual rate of 11% from the agreement
date ($93,000 at April 30, 2003) payable only from future receipts
in a settlement or other favorable outcome of the litigation against
Fujitsu, if any. Accordingly, in the first quarter of 2003, we
reversed from accounts payable $1,583,000 that was accrued at July
31, 2002. This one-time reversal constituted income in the first
quarter of 2003 and increased shareholders' interest.

Impairment loss on investment in NTRU Cryptosystems, Inc. (NTRU)

In April 2003, NTRU redeemed all outstanding shares of its
Series A and Series B Preferred Stock (NTRU Preferred Stock) in
exchange for cash or NTRU common stock.

Competitive Technologies, Inc. is a minority investor in NTRU
and currently owns 3,129,509 shares of NTRU common stock, including
76,509 shares received in April 2003 (approximately 10% of NTRU's
outstanding common stock). At July 31 and October 31, 2002, CTT
carried its investment in NTRU on the cost method at $1,034,000.
CTT exchanged its NTRU Preferred Stock for $88,377 in cash (included
in receivables at April 30, 2003; received May 5, 2003) and 76,509
shares of NTRU common stock.

CTT recorded a charge of $944,000 in its second quarter ended
January 31, 2003 due to the uncertain timing and amount of CTT's
expected future cash flows from its investment in NTRU's common
stock after its recapitalization.

CTT continues to hold a seat and participate actively on NTRU's
Board of Directors. CTT's management continues to believe NTRU's
encryption technology has value and these actions provide NTRU an
opportunity to allow applications to evolve to meet customer's needs
for strong encryption, a small footprint and low processing
requirements.

Other Items in 2002

In the second quarter of 2002, CTT recorded an impairment loss
of $519,200 against its notes receivable from E. L. Specialists,
Inc. In the third quarter of 2002, CTT recorded a $50,000
impairment loss on its investment in Digital Ink, Inc. and recovery
of $22,000 of advances to Micro-ASI, Inc.

Interest income

Interest income of $23,000 for the three quarters of 2003 was
$63,000 (73%) lower than in the three quarters of 2002. Our average
invested balance was approximately 52% lower and our weighted
average interest rate was approximately 1.3% per annum compared with
approximately 2.3% per annum in fiscal 2002.

Financial Condition and Liquidity

At April 30, 2003, the Company had no outstanding debt or
available credit facility.

On August 13, 2002, the District Court judge in the Materna(TM)
case awarded the plaintiffs approximately $54 million plus certain
interest from January 1, 2002, of which CTT's share would be
approximately $6 million plus its proportionate share of interest.
The defendant has appealed to the U.S. Court of Appeals for the
Federal Circuit (CAFC) and posted a $59 million bond and plaintiffs
have responded. The CAFC heard oral arguments in this appeal in
June 2003. We cannot predict when this lawsuit will finally be
settled or when we will receive our share of damages finally
awarded, if any. We have included details of progress and status in
this case in Note 9 to the accompanying consolidated financial
statements.

Effective May 19, 2003, CTT sold to LawFinance Group, Inc. a
portion of its potential $6 million from the patent infringement judgment
against American Cyanamid Company in the MaternaTM lawsuit. CTT
received $600,000 cash in exchange for the first $1,290,000 (plus
court awarded interest from May 19, 2003) of CTT's share of the
potential award. CTT has no financial obligation to repay
LawFinance. If CTT's share of the potential award is less than the
amount sold to LawFinance, the entire amount would be paid to
LawFinance and LawFinance would be paid in full. CTT granted
LawFinance a security interest in CTT's share of the potential
award. CTT retains the remaining anticipated approximately
$4,710,000 proceeds from this potential award in addition to the
$600,000 already received.

CTT will include this $600,000 in revenue in its fourth quarter
of fiscal 2003. Since this transaction closed after April 30, 2003,
it has not been reflected in the accompanying consolidated financial
statements or the following discussion, which is as of April 30,
2003.

At April 30, 2003, cash and cash equivalents of $434,000 were
$316,000 lower than cash and cash equivalents of $750,000 at July
31, 2002. Operating activities used $1,572,000 and investing
activities provided $1,256,000 in the three quarters of 2003.

In addition, the Company held $1,103,000 in short-term
investments at April 30, 2003 compared with $2,137,000 at July 31,
2002. These investments are available for our current operating,
investing and financing needs.

The Company's net loss for the three quarters of 2003 included
noncash charges of $1,167,000 comprising $944,000 for the impairment
loss on investment in NTRU Cryptosystems, Inc., $142,000 for
depreciation and amortization and $81,000 for stock compensation.
In addition, the reversal of accounts payable of $1,583,000
exchanged for a contingent note payable was a noncash credit.

The most substantial changes in operating accounts were the
$352,000 (30%) decrease in royalties receivable, the $1,450,000
(84%) decrease in accounts payable and the $343,000 (26%) decrease
in royalties payable. At April 30, 2003, amounts related to LabCorp
under the stipulated order discussed in the three quarters results
above included $146,000 royalties receivable and $266,000 royalties
payable. In addition to fluctuations in the amounts of royalties
reported, the changes in royalties receivable and payable reflect
the Company's normal cycle of royalty collections and payments.

During the nine months ended April 30, 2003, the Company sold
$1,034,000 of short-term investments to support its operating and
investing activities.

In November 2002, the Company purchased certain intangible
assets for $50,000 cash.

Effective August 5, 2002, CTT sold and transferred all its
interests related to E. L. Specialists, Inc. to MRM Acquisitions,
LLC for $200,000 cash it collected on August 5, 2002.

At April 30, 2003, the Company's purchase commitments were less
than $5,000.

In October 2002, we retained an investment banker to advise and
assist the Company in obtaining additional debt and/or equity
funding. Under this retainer (which either party currently may
terminate at any time), the Company committed to pay $10,000 per
month plus out-of-pocket expenses for six months plus certain fees
payable only if CTT completes a financing transaction. The
investment banker is assisting the Company in offering notes,
warrants or other Company securities in an offering exempt from
registration under the Securities Act of 1933 pursuant to Rule 506
of Regulation D promulgated under the Securities Act. These
securities will be sold only to "accredited investors" within the
meaning of Rule 501 under the Securities Act. The Company will use
the net proceeds of this offering for working capital and other
general corporate purposes including funding CTT's technology
commercialization strategy. There can be no assurance that this
offering will be successful.

At April 30, 2003, we had net working capital of $1,184,000,
which was $43,000 more than at July 31, 2002. Our accounts payable
at July 31, 2002, included $1,583,000 of invoices we reversed in
October 2002, as discussed above under "Reversal of accounts payable
exchanged for contingent note payable."

In addition to seeking debt and/or equity funding and
exchanging a portion of our share of the potential Materna award for
$600,000 in cash (both discussed in detail above), we seek to
increase our cash resources by obtaining up-front license fees in
potential new licenses, by collecting additional amounts we believe
are due to us and by selling future royalty streams from our
portfolio. Although the CAFC heard oral arguments in the Materna
appeal in June 2003, we cannot predict when we might receive our
anticipated approximately $4,710,000 potential award (which is net
of the $1,290,000 sold to LawFinance), if at all. While receipt of
that award would satisfy our cash requirements and fund our current
level of operations until we could generate revenues to sustain our
operations, we cannot rely on it for our near-term cash
requirements.

If we do not obtain sufficient additional cash resources before
early July 2003, management plans to reduce cash expenses
sufficiently to sustain the Company until it obtains additional cash
from revenues, potential litigation awards or other funding sources.
Under this plan, the Company will implement certain cost reductions
and cost containment actions to reduce operating costs. The Company
would continue to focus sales and marketing resources to identify
and license technologies with near-term revenue potential. However,
royalty revenues, obtaining rights to new technologies, granting
licenses, and enforcing intellectual property rights are subject to
many factors outside our control or that we cannot currently
anticipate. If our initial reductions are insufficient or if our
sales and marketing efforts do not generate sufficient cash,
management would make further necessary reductions. Although we
cannot assure you that we will be successful in these efforts,
management believes that its plan will sustain the Company through
at least fiscal 2005.

At April 30, 2003, CTT's shareholders' interest was $1,928,000.
Under American Stock Exchange (AMEX) listing standards, if CTT
sustains a net loss in 2003 and has less than $4,000,000
shareholders' interest at July 31, 2003, or if CTT has less than
$2,000,000 shareholders' interest before July 31, 2003, the AMEX may
consider suspending dealings in or de-listing CTT's common stock.
With the $600,000 transaction on May 19, 2003, we believe we
currently meet the $2,000,000 AMEX listing requirement. However, we
cannot assure you that we will continue to meet AMEX listing
requirements.

Other Matters

The Company carries liability insurance, directors' and
officers' liability insurance and casualty insurance for owned or
leased tangible assets.

The Company is involved in three pending patent enforcement
litigation matters. They are detailed in Note 9 to the accompanying
consolidated financial statements. The lawsuit described under
"Optical Associates, Limited Partnership (OALP)" in Note 16 to
Consolidated Financial Statements in our Annual Report on Form 10-K
for the year ended July 31, 2002, was dismissed on May 16, 2003.

Critical Accounting Policies

Preparation of our consolidated financial statements in
conformity with accounting principles generally accepted in the
United States of America requires that we make estimates and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, the reported
amounts of revenues and expenses for the reporting period, and
related disclosures. We base our estimates on the information
available at the time and assumptions we believe are reasonable.

We believe that significant estimates, assumptions and
judgments affect the following critical accounting policies used in
preparing our consolidated financial statements. Our audit
committee has reviewed their selection, application and disclosure.

Revenue Recognition

We derive revenues primarily from patent and technology license
and royalty fees. Since these revenues result from our
representation agreements with owners and assignees of intellectual
property rights, we record revenues net of the owners' and
assignees' shares of license and royalty fees. We stipulate the
terms of our licensing arrangements in written agreements with the
owners, assignees and licensees.

Single element arrangements

Since we usually have no significant obligations after we
execute license agreements, they are generally single element
arrangements. Under the terms of our license agreements, we
generally receive an upfront license fee and a royalty stream
based on the licensee's sales of products applying the licensed
technology.

License fees under single element arrangements

We recognize upfront, nonrefundable license fees when our
licensee executes the license agreement and pays the license
fee. When these two events occur, we have persuasive evidence
of an arrangement, no continuing obligations, completed
delivery, and assurance of collection.

Royalty fees under single element arrangements

Although we fix the royalty rate (e.g., percentage of
sales or rate per unit sold) in the license agreement, the
amount of earned royalties is contingent upon the amount of
licensed product the licensee sells. Royalties earned in each
reporting period are contingent on the outcome of events (i.e.,
the licensee's sales of licensed products) occurring within
that period that are not within our control and are not
directly tied to our providing services. Therefore, we
recognize this royalty revenue when the contingency is resolved
and we can estimate the amount of royalty fees earned, which is
upon our receipt of the licensee's royalty report.

Other arrangements

In limited instances, we enter into multiple element
arrangements with continuing service obligations. Based upon
the limited verifiable objective evidence available, we
generally defer all revenue from such multiple element
arrangements until we deliver all elements.

In limited instances, we enter into milestone billing
arrangements, which we evaluate on a case-by-case basis. In
these arrangements, we generally defer upfront fees and
recognize the related revenue and other services revenue as
earned over the entire arrangement.

Impairment of Intangible Assets and Long-Term Investments

We review intangible assets and investments in equity
securities that do not have readily determinable fair values for
impairment when events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. If the sum of
expected future undiscounted cash flows is less than the carrying
amount of the asset, we recognize an impairment loss measured by the
amount the asset's carrying value exceeds its fair value and re-
evaluate the remaining useful life of the asset. If a quoted market
price is available for the asset or a similar asset, we use it in
determining fair value. If not, we determine fair value as the
present value of estimated cash flows based on reasonable and
supportable assumptions.

We regularly apply this policy to our equity investments in
privately held companies. We consider the investee's financial
health (including cash position), business outlook (including
product stage and viability to continue operations), recent funding
activities, and business plan (including historical and forecast
financial information). These investments are not readily
transferable and our opportunities to liquidate them are limited and
subject to many factors beyond our control, including circumstances
internal to the investee and broader economic conditions.

We also apply this policy regularly to all acquired intangible
assets.

See Notes 3, 7 and 14 to Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and
Results of Operations in our Annual Report on Form 10-K for the year
ended July 31, 2002, for complete discussions of the results of
applying this policy in prior fiscal years. See Note 6 to the
accompanying consolidated financial statements and Management's
Discussion and Analysis of Financial Condition and Results of
Operations in this Quarterly Report on Form 10-Q for complete
discussions of the results of applying this policy in the current
fiscal year.

Impairment of Loans

We review loans for impairment when events or changes in
circumstances indicate that the carrying amount of the loan may not
be recoverable. We determine the present value of expected future
cash flows under the loan (discounted at the loan's effective
interest rate) or the fair value of the collateral if the loan is
collateral dependent. If the fair value of the loan is less than
its carrying amount, we recognize an impairment loss based on the
fair value of the loan. This policy is consistent with Statement of
Financial Accounting Standards No. 114, "Accounting by Creditors for
Impairment of a Loan - an amendment of Statements No. 5 and 15."

See Notes 3 and 14 to Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and
Results of Operations in our Annual Report on Form 10-K for the year
ended July 31, 2002, for discussion of the results of applying this
policy in prior fiscal years.

Recently Issued Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB)
issued Statement No. 142, "Goodwill and Other Intangible Assets."
This statement establishes financial accounting and reporting for
acquired goodwill and other intangible assets acquired individually
or with a group of other assets but not acquired in a business
combination. The Company's adoption of this statement on August 1,
2002, did not have a material effect on its financial condition or
results of operations.

In August 2001, the FASB issued Statement No. 144, "Accounting
for the Impairment or Disposal of Long-lived Assets." This
statement establishes a single accounting model for the impairment
of long-lived assets. The Company has recognized impairment charges
on investments in fiscal 2002 and 2003. However, the Company's
adoption of this statement on August 1, 2002, did not affect the
amount or timing of those impairment charges.

In December 2002, the FASB issued Statement No. 148, "Accounting
for Stock-Based Compensation - Transition and Disclosure." This
statement amends Statement No. 123, "Accounting for Stock-Based
Compensation," to provide alternative transition methods for a
voluntary change to the fair value method of accounting for stock-
based employee compensation. This statement also requires prominent
disclosures in annual and interim financial statements about the
method of accounting for stock-based employee compensation and its
effect on reported results. The disclosure provisions of this
statement are effective for the Company's third quarter ended April
30, 2003; the Company made these disclosures in Note 3 to the
accompanying Consolidated Financial Statements.

Forward-Looking Statements

Statements about the Company's future expectations, including
development and regulatory plans, and all other statements in this
Quarterly Report on Form 10-Q 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
the Company's business, including those set forth in Item 1 of the
Company's Annual Report on Form 10-K for the year ended July 31,
2002 under the caption "Risk Factors," and other factors that may be
described in the Company's filings with the Securities and Exchange
Commission, 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures

The Company's Chief Executive Officer and Chief Financial
Officer evaluated the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14(c) and 15d-14(c)) as of April 30, 2003. The Company's
disclosure controls and procedures are designed to ensure that
information required to be disclosed in reports filed under the
Securities Exchange Act of 1934 is recorded, processed, summarized,
and reported as specified in the Securities and Exchange
Commission's rules and forms. Based on this evaluation, the
Company's Chief Executive Officer and Chief Financial Officer
concluded that these controls were effective as of April 30, 2003.

(b) Change in Internal Controls

There have been no significant changes in the Company's
internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.
There were no significant deficiencies or material weaknesses in our
internal controls.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company is involved in three pending litigation matters.
They are fully detailed in Note 9 to the accompanying consolidated
financial statements. The lawsuit formerly described under "Optical
Associates, Limited Partnership (OALP)" was dismissed on May 16,
2003.

By letters dated April 16, 2003, Richard E. Carver, George W.
Dunbar, Jr., Charles J. Philippin, John M. Sabin, currently CTT
directors, and Michael G. Bolton and Robert H. Brown, Jr., former
CTT directors, each received a subpoena from the SEC seeking
documents from July 1, 1998 to date in connection with the SEC's
private investigation (detailed under Item 3 "Legal Proceedings" in
our Annual Report on Form 10-K for the year ended July 31, 2002) and
setting dates for each named director or former director to testify
before officers of the SEC. All named directors and former
directors have produced the subpoenaed documents and completed
testimony before the SEC. The Company has assumed responsibility
for these directors' and former directors' related legal fees in the
matter, which were approximately $27,000 to April 30, 2003.

As reported in the Company's Quarterly Report on Form 10-Q for
the period ended January 31, 2003, by letter of January 6, 2003,
George C. J. Bigar, a former director of CTT, also received a
subpoena from the SEC seeking documents from July 1, 1998 to date in
connection with the SEC's private investigation referenced above and
setting a date for Mr. Bigar to testify before officers of the SEC.
Mr. Bigar has produced the subpoenaed documents and completed his
testimony before the SEC. The Company has assumed responsibility
for Mr. Bigar's legal fees in this matter, which were approximately
$24,000 to April 30, 2003.

Item 6. Exhibits and Reports on Form 8-K Page

A) Exhibits

10.1 Registrant's Annual Incentive Compensation
Plan adopted March 28, 2003 34-37

99.1 Additional Exhibit - Certification by the
Principal Executive Officer of
Competitive Technologies, Inc. pursuant
to Section 906 of the Sarbanes-Oxley Act
of 2002 (18 U.S.C. 1350). 38

99.2 Additional Exhibit - Certification by the
Principal Financial Officer of
Competitive Technologies, Inc. pursuant
to Section 906 of the Sarbanes-Oxley Act
of 2002 (18 U.S.C. 1350). 39

B) Reports on Form 8-K

On February 21, 2003, the Company filed a report on Form 8-
K (date of earliest event reported February 7, 2003) under
Item 5 to report a potential substantial write-down of its
investment in NTRU.

On May 28, 2003, the Company filed a report on Form 8-K
(date of earliest event reported May 19, 2003) under Item
2, Item 5 and Item 7 to report the sale to LawFinance
Group, Inc. of a $1,290,000 (plus court awarded interest
from May 19, 2003) portion of its potential $6 million
patent infringement judgment against American Cyanamid
Company in the Materna(TM) lawsuit for $600,000 cash.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

COMPETITIVE TECHNOLOGIES, INC. COMPETITIVE TECHNOLOGIES, INC.
(the Company) (the Company)

By /s/ John B. Nano By /s/ Frank R. McPike, Jr.
John B. Nano Frank R. McPike, Jr.
President, Chief Executive Executive Vice President,
Officer and Authorized Signer Chief Financial Officer and
Authorized Signer

Date: June 11, 2003

CERTIFICATIONS

I, John B. Nano, President and Chief Executive Officer of
Competitive Technologies, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of
Competitive Technologies, Inc.;

2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.

Date: June 11, 2003

/s/ John B. Nano
John B. Nano, President
and Chief Executive Officer
Competitive Technologies, Inc.

I, Frank R. McPike, Jr., Executive Vice President and Chief
Financial Officer of Competitive Technologies, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of
Competitive Technologies, Inc.;

2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.

Date: June 11, 2003

/s/ Frank R. McPike, Jr.
Frank R. McPike, Jr.
Executive Vice President and
Chief Financial Officer of
Competitive Technologies, Inc.