UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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by
the Registrant x
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Preliminary
Proxy Statement
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Confidential,
for Use of The Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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x
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Soliciting
Material Pursuant to
§240.14a-12
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Competitive
Technologies, Inc.
(Name
of
Registrant as Specified in Its Charter)
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
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December 20, 2006 |
Dear
Fellow Shareholder,
A
group
called the “The Committee to Restore Shareholder Value” (the “Nano Group”) has
filed preliminary proxy material with the Securities and Exchange Commission
(“SEC”). That group is affiliated with John B. Nano, a former President and
Chief Executive Officer (“CEO”) of Competitive Technologies, Inc. (the
“Company”), who was terminated by the Company in June 2005, and who is currently
involved in litigation with the Company. The Nano Group indicated that it
intends to solicit your proxy. The Board of Directors of the Company believes
that this action IS
NOT
in your
best interest and URGES
YOU NOT
to sign
or return any proxy card that the Nano Group may send to you.
According
to the Nano Group’s preliminary proxy statement filed with the SEC, if the Nano
Group were to prevail, Mr. Nano would get his old job back, and
furthermore, would agree to resolve his pending litigation with the
Company. SUCH
A RESOLUTION, HOWEVER, WOULD COME AT A STEEP PRICE
and
would include an
immediate payout to Mr. Nano in the amount of at least $2.5 million,
including
alleged back salary, bonus and payment of substantial legal fees. We
do not believe that paying Mr. Nano $2.5 million in cash is in the best interest
of your Company. We
can
better use these funds to build revenues.
Competitive
Technologies’ Strategy
Our
goal
for the Company is to create shareholder value by a continuous increase in
our
recurring revenue and by expanding our technology pipeline, while at the
same
time replacing revenue from expiring patents and developing new sources of
revenue. We believe that a broad revenue base is the key to our success.
Previously, the Company’s business model was built around the hoped-for success
of a very limited number of technologies. While that approach resulted in
periods of success and profitability as we won certain patent lawsuits or
were
able to commercialize individual technologies for a period of time, it also
meant that we were subject to significant volatility and risk.
Under
the
prior strategy, with almost all of the Company’s attention focused on a single
technology, the Company was left vulnerable to decreased royalties from expiring
patents and a risky reliance upon litigation success that we ultimately may
not
have won. That approach resulted in a technology pipeline practically devoid
of
commercially viable technologies at the time our current CEO, Dr. D.J. Freed,
was appointed. Over the past 18 months, we have focused our efforts on creating
an infrastructure that we believe will provide the foundation to turn your
Company around. As
we have consistently reported to you over the past year, this will take time
and
effort, but our pipeline of technologies is starting to fill, and we are
encouraged by our progress.
In
addition, the Board of Directors has authorized the retention of First Analysis
Securities Corporation to develop additional options beyond our corporate
model
to assist in providing new revenue sources and increased shareholder
value.
Our
balance sheet is strong and debt free.
Our
strategic plan is designed to broaden our revenue base, increase recurring
revenues and lower our dependence on a single “home-run” technology. We believe
we are taking the appropriate steps to achieve sustainable growth and
profitability and, in turn, increase shareholder value.
777
Commerce Drive Suite 100 Fairfield, CT 06825 t:203.368.6044 f: 203.368-5399
www.competitivetech.net
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The
Nano Group
Within
weeks of his termination in June 2005, Mr. Nano sued the Company in an effort
to
obtain severance benefits beyond those provided for in his employment agreement.
We
believe that his claims against the Company are entirely without merit.
Moreover, the Company has sued Mr. Nano for breach of contractual obligations
and breach of his fiduciary duty to the Board of Directors and to the
shareholders, along with misappropriation and theft of confidential Company
information and Company funds.
Furthermore,
during the 8-day period following his termination as CEO,
Mr.
Nano
sold virtually his entire holdings of the Company’s stock worth more than $2.3
million,
with apparent utter disregard for the impact those sales would have on the
Company’s other shareholders. The stock price fell approximately 20% from the
day before he started selling to the day after he finished,
on
volume
that was approximately five times the average in the same period immediately
prior to his trading.
According
to the Nano Group’s preliminary proxy statement filed with the SEC, its proposed
slate of directors owns in the aggregate just 62,022 shares of the Company’s
stock. Of
that amount, Mr. Nano owns a total of 22
shares and four of the proposed Nano Group director nominees own absolutely
NO
shares of the Company’s stock.
The
Nano
Group provides various reasons for their solicitation of your proxy.
However, the reasons cited by the Nano Group do not provide an accurate or
complete statement of the facts. We suggest that you consider the
following:
| · |
While
the Company’s results in 2006 declined from 2005, a substantial portion of
the revenues realized in 2004 and 2005, directly or indirectly stemmed
from lawsuits initiated in 1993 and 1999, long
before Mr. Nano joined the Company.
For example, the Materna case was initiated in 1993 and reached a
final,
non-appealable judgment in April 2004, when we received our award
of
several million dollars. The case involving Laboratory Corporation
of
America Holdings (“LabCorp”) was initiated in 1999 when LabCorp was sued
for infringing the Company’s homocysteine patent. The decisions of two
courts, the District Court in December 2001 and the Court of Appeals
for
the Federal Circuit in August 2004, both upheld the validity of our
patent, and the August 2004 decision was essential to our ability
to
pursue other infringers. The result was dramatically increased
revenues in fiscal year 2005.
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The
Nano Group claims in its proxy material that Mr. Nano was largely
responsible for strong stock price appreciation during 2004. We believe
that the real reason for the appreciation in our stock price was
from the
substantial revenue and cash the Company realized from the judgments
rendered in our favor in connection with lawsuits commenced prior
to Mr.
Nano’s hiring.
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Over
the past calendar year, we have added a significant number of new
technologies to our development portfolio that are available for
licensing.
Some of these exciting new technologies will be highlighted in our
annual
report, which you will receive shortly.
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| · |
We
have added service offerings that build on our core expertise in
technology transfer, intellectual property and licensing.
During
fiscal 2006, we launched our IP Valuation and Market Assessment services,
as well as a Technology Sourcing business. These are important parts
of
our strategy as they complement our core
business.
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The
fruits of our labor will take time to surface as the nature of our
business is such that there is an 18 to 36-month period from the
point of
identifying a new technology to the point of realizing any revenue,
a fact
that we have consistently reported to you on our quarterly conference
calls and in press releases. The infrastructure referred to above
is one
of the most important components of our strategy and one that we
believe
can assure sustainable sources of revenue for the
Company.
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The
next
few years should be an exciting time as we believe we will begin to see the
tangible results of the hard work and efforts now underway. We have a focused
and energetic management team and a talented group of business professionals.
We
are confident that the Company has the ability and fortitude to transform
into a
business that delivers consistent profitability which we believe, in turn,
will
drive shareholder value.
Thank
you
for your continued support.
Sincerely,
Your
Board of Directors and fellow shareholders of Competitive
Technologies,
| Richard E. Carver | Maria Maccecchini, Ph.D. |
| George W. Dunbar, Jr. | Charles J. Philippin |
| D.J. Freed, Ph.D. | John. M. Sabin |
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Statements
about our 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. If and when used herein,
the
words “may,” “will,” “should,” “anticipate,” “believe,” “intend,” “plan,”
“expect,” “estimate,” “approximate,” and similar expressions, as they relate to
us or our business or management, are intended to identify such forward-looking
statements. These statements involve risks and uncertainties related to our
ability to obtain rights to market technologies, market acceptance of and
competition for our licensed technologies, growth strategies and strategic
plans, operating performance and financing of our operations, industry trends,
and other risks and uncertainties inherent in our business, including those
set
forth in Item 1A under the caption “Risk Factors,” in our most recent Annual
Report on Form 10-K for the year ended July 31, 2006, filed with the SEC
on
October 30, 2006, and other factors that may be described in our other filings
with the SEC, and are subject to change at any time. Our actual results could
differ materially from these forward-looking statements. We undertake no
obligation to update publicly any forward-looking statement.
Important
Additional Information Will Be Filed with the SEC
The
Company will be filing with the SEC a proxy statement with a WHITE proxy
card
for the election of directors nominated by the Board of Directors. COMPANY
STOCKHOLDERS ARE URGED TO READ THE PRELIMINARY PROXY STATEMENT ALREADY FILED
WITH THE SEC, AND THE DEFINITIVE PROXY STATEMENT WHEN IT BECOMES AVAILABLE,
BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain
free copies of the proxy statements through the website maintained by the
SEC at
www.sec.gov.
In
addition, investors will be able to obtain free copies of the proxy statements
from the Company by contacting Secretary, c/o Competitive Technologies, Inc.,
777 Commerce Drive, Suite 100, Fairfield, Connecticut, 06825.
Competitive
Technologies, Inc., its directors and named executive officers may be deemed
to
be participants in the solicitation of the Company’s security holders in
connection with its 2007 Annual Meeting of Stockholders. Security holders
may
obtain information regarding the names, affiliations and interests of such
individuals in the Company’s preliminary proxy statement which was filed with
the SEC on December 8, 2006, as such information may be supplemented by the
Company’s definitive proxy statement when it is filed with the
SEC.