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 January 31, 2005
                 -----------------------------------------------

                                       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)

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

                                      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]

The number of shares of the registrant's common stock outstanding as of March 1,
2005 was 6,821,648 shares.

<PAGE>

<TABLE>
                         COMPETITIVE TECHNOLOGIES, INC.
                         ------------------------------

                     INDEX TO QUARTERLY REPORT ON FORM 10-Q
                     --------------------------------------


<S>                                                                                                      <C>
PART I.  FINANCIAL INFORMATION                                                                      Page No.
                                                                                                    --------
Item 1.    Condensed Consolidated Financial Statements (Unaudited)

           Consolidated Balance Sheets at January 31, 2005 and July 31, 2004..............................3

           Consolidated Statements of Operations for the
              three months ended January 31, 2005 and 2004................................................4

           Consolidated Statements of Operations for the
              six months ended January 31, 2005 and 2004..................................................5

           Consolidated Statement of Changes in Shareholders' Interest
              for the six months ended January 31, 2005...................................................6

           Consolidated Statements of Cash Flows for the
              six months ended January 31, 2005 and 2004..................................................7

           Notes to Consolidated Financial Statements................................................8 - 16

Item 2.    Management's Discussion and Analysis of Financial Condition
              and Results of Operations.............................................................16 - 25

Item 3.    Quantitative and Qualitative Disclosures About Market Risk....................................25

Item 4.    Controls and Procedures.......................................................................25


PART II.  OTHER INFORMATION

Item 1.    Legal Proceedings.............................................................................26

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds...................................26

Item 4.    Submission of Matters to a Vote of Security Holders......................................26 - 27

Item 6.    Exhibits......................................................................................27


Signatures...............................................................................................28
</TABLE>

                                     Page 2

<PAGE>


<TABLE>
                          PART I. FINANCIAL INFORMATION

Item 1.      Financial Statements

                         COMPETITIVE TECHNOLOGIES, INC.
                          Consolidated Balance Sheets

                                                                         January 31,              July 31,
                                                                            2005                    2004
                                                                         (Unaudited)                 *
                                                                     --------------------    -------------------
<S>                                                                         <C>                     <C>
ASSETS
Current assets:
  Cash and cash equivalents                                                 $ 14,136,402            $ 4,309,680
  Receivables                                                                  2,069,981                829,996
  Prepaid expenses and other current assets                                      813,704                209,154
                                                                     --------------------    -------------------
    Total current assets                                                      17,020,087              5,348,830

Deferred equity financing costs, net                                             234,473                866,302
Non-current receivable, net                                                            -                394,133
Intangible assets acquired, net                                                   45,360                 52,150
Property and equipment, net                                                       39,486                 19,392
                                                                     --------------------    -------------------
      TOTAL ASSETS                                                          $ 17,339,406            $ 6,680,807
                                                                     ====================    ===================

LIABILITIES AND SHAREHOLDERS' INTEREST
Current liabilities:
  Accounts payable                                                             $ 262,039              $ 162,913
  Accrued expenses and other liabilities                                       5,781,344              1,579,376
                                                                     --------------------    -------------------
    Total current liabilities                                                  6,043,383              1,742,289
                                                                     --------------------    -------------------
Commitments and contingencies                                                          -                      -
Shareholders' interest:
  5% preferred stock, $25 par value, 35,920                                       60,675                 60,675
    shares authorized, 2,427 shares issued and outstanding
  Common stock, $.01 par value, 20,000,000                                        68,109                 63,492
    shares authorized, 6,810,896 and 6,349,189
    shares issued, respectively
  Capital in excess of par value                                              29,031,369             27,560,312
  Accumulated deficit                                                        (17,820,793)           (22,745,961)
  Accumulated other comprehensive income                                           3,073                      -
                                                                     --------------------    -------------------
                                                                              11,342,433              4,938,518
  Treasury stock, at cost, 4,248 shares                                          (46,410)                     -
                                                                     --------------------    -------------------

    Total shareholders' interest                                              11,296,023              4,938,518

      TOTAL LIABILITIES AND SHAREHOLDERS'
        INTEREST                                                            $ 17,339,406            $ 6,680,807
                                                                     ====================    ===================

                                              See accompanying notes

* Balances were derived from the July 31, 2004 audited balance sheet.
</TABLE>

                                     Page 3

<PAGE>

<TABLE>

                            PART I. FINANCIAL INFORMATION (Continued)
                            -----------------------------------------

                                 COMPETITIVE TECHNOLOGIES, INC.
                              Consolidated Statements of Operations
                                           (Unaudited)


                                                                  Three months ended
                                                                       January 31,
                                                                  2005                    2004
                                                      -----------------       -----------------
<S>                                                        <C>                       <C>
Revenues
Retained royalties                                         $ 6,686,588               $ 698,055
Royalty settlements and awards                                       -                 231,986
Settlement with Unilens, net                                         -                  86,487
Interest income                                                 64,287                  21,175
Other income                                                    32,512                       -
                                                      -----------------       -----------------
                                                             6,783,387               1,037,703
                                                      -----------------       -----------------

Expenses
Personnel and other direct expenses
  relating to revenues                                       2,095,467                 588,085
General and administrative expenses                            566,891                 371,157
Patent enforcement expenses, net of
  reimbursements                                               113,711                  14,174
                                                      -----------------       -----------------
                                                             2,776,069                 973,416
                                                      -----------------       -----------------

Income before income taxes                                   4,007,318                  64,287
Provision for income taxes                                      49,975                       -
                                                      -----------------       -----------------
Net income                                                 $ 3,957,343                $ 64,287
                                                      =================       =================

Net income per common share:
  Basic                                                         $ 0.60                  $ 0.01
                                                      =================       =================
  Assuming dilution                                             $ 0.54                  $ 0.01
                                                      =================       =================

Weighted average number of common shares outstanding:
  Basic                                                      6,633,440               6,207,631
  Assuming dilution                                          7,352,821               6,398,726

                                    See accompanying notes
</TABLE>

                                     Page 4

<PAGE>

                    PART I. FINANCIAL INFORMATION (Continued)
                    -----------------------------------------

                         COMPETITIVE TECHNOLOGIES, INC.
                      Consolidated Statements of Operations
                                   (Unaudited)

                                                      Six months ended
                                                         January 31,
                                                     2005                 2004
                                          -----------------    -----------------

Revenues
Retained royalties                             $ 7,442,357          $ 1,084,954
Royalty settlements and awards                     815,492            1,067,773
Stock dividend                                     679,149                    -
Settlement with Unilens, net                             -              160,236
Interest income                                    212,845               87,849
Other income                                        64,561                    -
                                          -----------------    -----------------
                                                 9,214,404            2,400,812
                                          -----------------    -----------------

Expenses
Personnel and other direct expenses
  relating to revenues                           3,119,206            1,146,894
General and administrative expenses                814,871              797,327
Patent enforcement expenses, net of
  reimbursements                                   284,424               47,011
                                          -----------------    -----------------
                                                 4,218,501            1,991,232
                                          -----------------    -----------------

Income before income taxes                       4,995,903              409,580
Provision for income taxes                          70,735                    -
                                          -----------------    -----------------
Net income                                     $ 4,925,168            $ 409,580
                                          =================    =================

Net income per common share:
  Basic                                             $ 0.76               $ 0.07
                                          =================    =================
  Assuming dilution                                 $ 0.70               $ 0.07
                                          =================    =================

Weighted average number of common
shares outstanding:
  Basic                                          6,516,872            6,204,488
  Assuming dilution                              7,027,121            6,300,036

               See accompanying notes



                                     Page 5

<PAGE>

<TABLE>

                                     PART I. FINANCIAL INFORMATION (Continued)
                                     -----------------------------------------

                                          COMPETITIVE TECHNOLOGIES, INC.
                            Consolidated Statement of Changes in Shareholders' Interest
                                     For the six months ended January 31, 2005
                                                    (Unaudited)


                  Preferred Stock     Common Stock
              -------------------- -------------------                             Accumulated
                   Shares                                Capital                     other                                Total
               issued and            Shares            in excess of  Accumulated  comprehensive              Treasury  Shareholders'
              outstanding  Amount    issued   Amount     par value     Deficit       income       Subtotal     Stock      Interest
              ----------- -------- ---------- -------- ------------ ------------- ------------- ------------ --------- -------------
<S>                <C>    <C>      <C>        <C>      <C>          <C>                     <C>  <C>               <C>   <C>

Balance -
 August 1,
 2004              2,427  $60,675  6,349,189  $63,492  $27,560,312  $(22,745,961)           $-   $4,938,518        $-    $4,938,518

Exercise of
 common stock
 options               -        -    109,699    1,097      566,890             -             -      567,987         -       567,987
Common stock
 received on
 exercise of
 common stock
 options               -        -          -        -            -             -             -            -   (46,410)      (46,410)
Exercise of
 common stock
 warrants              -        -     37,171      372         (372)            -             -            -         -             -
Stock issued
 under 401(k)
 Plan                  -        -     25,056      251       99,722             -             -       99,973         -        99,973
Stock issued
 to Directors          -        -      6,920       69       74,931             -             -       75,000         -        75,000
Sales and
 issuances of
 stock in equity
 financing             -        -    282,861    2,828    1,409,711             -             -    1,412,539         -     1,412,539
Amortization
 of deferred
 equity financing
 costs                 -        -          -        -     (679,825)            -             -     (679,825)        -      (679,825)
Net unrealized
 gain on
 securities            -        -          -        -            -             -         3,073        3,073         -         3,073
Net income             -        -          -        -            -     4,925,168             -    4,925,168         -     4,925,168
              ----------- -------- ---------- -------- ------------ ------------- ------------- ------------ --------- -------------
Balance -
 January 31, 2005  2,427  $60,675  6,810,896  $68,109  $29,031,369  $(17,820,793)       $3,073  $11,342,433  $(46,410)  $11,296,023
              =========== ======== ========== ======== ============ ============= ============= ============ ========= =============

        See accompanying notes

</TABLE>

                                     Page 6

<PAGE>


<TABLE>
                    PART I. FINANCIAL INFORMATION (Continued)
                    -----------------------------------------

                         COMPETITIVE TECHNOLOGIES, INC.
                      Consolidated Statements of Cash Flows
                                   (Unaudited)

                                                           Six months ended
                                                               January 31,
                                                         2005               2004
                                                  ---------------     --------------
<S>                                                   <C>                  <C>
Cash flows from operating activities:
Net income                                            $4,925,168           $409,580
 Noncash and other expenses (income)
    included in net income:
      Depreciation and amortization                       17,874             30,875
      Stock compensation accrued                          87,500             33,266
      Stock dividend                                    (679,149)                 -
      Other                                              (33,085)          (154,070)
 (Increase) decrease in current assets:
      Receivables                                     (1,146,814)            59,994
      Prepaid expenses and other current assets           77,672            122,885
 Increase (decrease) in current liabilities:
      Accounts payable and accrued expenses
        and other liabilities                          4,339,492           (599,072)
                                                  ---------------     --------------
Net cash provided by (used in) operating
 activities                                            7,588,658            (96,542)
                                                  ---------------     --------------

Cash flows from investing activities:
  Purchases of property and equipment                    (31,178)                 -
  Collection on Unilens receivable, net                  335,126            160,235
  Other                                                        -              2,364
                                                  ---------------     --------------
Net cash provided by investing activities                303,948            162,599
                                                  ---------------     --------------

Cash flows from financing activities:
  Proceeds from exercises of stock options               521,577             26,958
  Proceeds from sales of common stock                  1,412,539                  -
                                                  ---------------     --------------
Net cash provided by financing activities              1,934,116             26,958
                                                  ---------------     --------------

Net increase in cash and cash equivalents              9,826,722             93,015
Cash and cash equivalents at beginning of year         4,309,680          1,504,295
                                                  ---------------     --------------
Cash and cash equivalents at end of period           $14,136,402         $1,597,310
                                                  ===============     ==============
              See accompanying notes
</TABLE>

                                     Page 7

<PAGE>

                    PART I. FINANCIAL INFORMATION (Continued)

                         COMPETITIVE TECHNOLOGIES, INC.

                   Notes to Consolidated Financial Statements
                                   (Unaudited)


1.       Basis of Presentation
         ---------------------

         The interim consolidated financial information presented in the
accompanying condensed consolidated financial statements and notes hereto is
unaudited.

         Competitive Technologies, Inc. ("CTT") and its majority owned
subsidiary (collectively, "we" or "us") provide patent and technology licensing
and commercialization services throughout the world (with concentrations in the
U.S.A. and Asia) with respect to a broad range of life, electronic, physical,
and nano (microscopic particles) science technologies originally invented by
various individuals, corporations and universities. We are compensated for our
services primarily by sharing in the license and royalty fees generated from our
successful licensing of our clients' technologies. The consolidated financial
statements include the accounts of CTT and its subsidiary. Intercompany accounts
and transactions have been eliminated in consolidation. Certain amounts in the
prior year accompanying unaudited consolidated financial statements have been
reclassified to conform to the current year's presentation.

         We believe we have made all adjustments, primarily normal and recurring
adjustments, which are necessary to present the unaudited consolidated financial
statements fairly in conformity with accounting principles generally accepted in
the United States of America. The results for the three and six months ended
January 31, 2005, are not necessarily indicative of the results that can be
expected for the full year.

         You should read the interim unaudited consolidated financial statements
and notes thereto, as well as the accompanying Management's Discussion and
Analysis of Financial Condition and Results of Operations, in conjunction with
our Annual Report on Form 10-K for the year ended July 31, 2004. This report is
available on our website at www.competitivetech.net.


2.       Legal Settlements and New Licenses Granted
         ------------------------------------------

         Abbott Laboratories, Inc.

         In December 2004, we granted Abbott Laboratories, Inc. ("Abbott") a
license to sell tests used to measure homocysteine levels. The license settled
litigation we filed previously against Abbott in the U.S. District Court for the
District of Colorado, alleging infringement of our patents covering homocysteine
assays. (The litigation was dismissed with prejudice on December 20, 2004, after
the license was signed.) The license relieves Abbott's customers from their
obligation to pay us royalties on tests performed using the Abbott assay. The
license also releases Abbott's customers of any obligation to pay royalties to
us for homocysteine tests performed using Abbott assays in the past, but does
not entitle them to any refund of any royalties previously paid to us. The term
of the license is through July 2007, the expiration date of the patent, with
certain limited exceptions.

         Pursuant to the license, Abbott agreed to pay us an upfront license
fee, certain "Milestone Fees" (as defined in the license), and per test
royalties on homocysteine assay sales in the U.S. after January 1, 2006. In
January 2005, upon receipt, we recorded $5.2 million in retained royalties,
representing our share of the upfront license fee. This fee is non-refundable
and is not creditable against future royalties. Milestone Fees, our share of
which is $800,000 each, will be paid to us on January 31, 2006 and 2007, as long
as our patent is valid and enforceable. We are accruing the present value of the
aggregate of the Milestone Fees in retained royalties in calendar 2005.
No per test royalties are payable in calendar 2005.

                                     Page 8

<PAGE>

         Diagnostic Products Corporation

         Effective November 1, 2004, we granted Diagnostic Products Corporation
("DPC") a license to sell tests used to measure homocysteine levels. The license
relieves DPC's customers from their obligation to pay us royalties on tests
performed using DPC's products. The license also releases DPC's customers of any
obligation to pay royalties to us for homocysteine tests performed using DPC's
assays in the past, but does not entitle them to any refund of any royalties
previously paid to us. Pursuant to the license, DPC paid us an upfront gross
license fee of $1,375,000. This fee is non-refundable and is not creditable
against future royalties. In addition, DPC is paying per test royalties on sales
of homocysteine assays from November 1, 2004. We recorded our share of the
upfront license fee and accrued royalties during the quarter ended January 31,
2005. The term of the license is through July 2007, the expiration date of the
patent, with certain limited exceptions.

         Bayer Corporation

         On October 21, 2004, we granted Bayer Corporation, et al, ("Bayer") a
license under which Bayer agreed to pay us an upfront license fee and royalties
on sales of homocysteine assays beginning July 1, 2004. This fee is
non-refundable and is not creditable against future royalties. This license
settled a complaint we filed previously against Bayer alleging infringement of
our patent covering homocysteine assays. (The litigation was dismissed with
prejudice after the license was signed.) We recorded our share of the license
fee in the quarter ended October 31, 2004, and have recorded royalties
when they were earned.

         Other

         New licenses signed in the current fiscal year relating to homocysteine
testing generally provide for a royalty to be paid to us based on a fixed fee
per test. The amount of the fixed fee is determined based on estimated volume.

         Federal Insurance Company

         Effective October 13, 2004, Federal Insurance Company ("Federal")
agreed to pay us $167,500 and acknowledged that the deductible under our
insurance policy was deemed satisfied for purposes of a civil suit filed against
CTT by the Securities and Exchange Commission ("SEC"). We recorded the payment
as a reduction of litigation expenses, which are included in general and
administrative expenses, in the quarter ended October 31, 2004. In addition, on
September 15, 2004, the Chubb Group of Insurance Companies, on behalf of
Federal, agreed to accept coverage for losses, including defense costs, as a
result of the SEC's civil suit, according to the terms of the policy.
Accordingly, we have not recorded any significant costs in the current fiscal
year relating to the SEC civil suit.

                                     Page 9

<PAGE>


3.       Royalty Settlements and Awards
         ------------------------------

         On August 5, 2004, the U.S. Court of Appeals for the Federal Circuit
("CAFC") denied the petition of Laboratory Corporation of America Holdings d/b/a
LabCorp ("LabCorp") for a rehearing or a rehearing en banc (rehearing by the
full CAFC) of a June 8, 2004 decision affirming a November 2002 decision in
favor of Metabolite Laboratories, Inc. and us (collectively, the "Plaintiffs").
As a result of this decision, on August 16, 2004, the Plaintiffs received
approximately $6.7 million. Our share of the $6.7 million payment was $920,552,
and we recorded $815,492 in royalty settlements and awards and $105,060 in
interest income during the quarter ended October 31, 2004. The payment did not
include attorneys' fees or court costs previously awarded to the Plaintiffs that
were under appeal with the court. On January 24, 2005, the CAFC issued a
summary dismissal of LabCorp's appeal of the court's award of attorneys' fees
and court costs from the original case; however, we have not yet received
payment. Our claim for additional attorneys' fees and court costs related to the
appeals process is still pending.

         On November 3, 2004, LabCorp filed a petition for a writ of certiorari
with the U.S. Supreme Court (the "Court") relating to the November 2002
decision. (A writ of certiorari is a petition requesting the Court to hear an
appeal.) On February 28, 2005, we announced that the Court had invited the
Solicitor General's Office (the "SGO") to file a brief in this case expressing
its views on the question of the patentability of method patents of this type.
The SGO's decision is not expected for several months. They may elect to file a
brief or may opt not to file a brief. If the Court denies LabCorp's petition,
then LabCorp will have no further avenues of appeal. If the Court agrees to hear
LabCorp's appeal, and remands the case to the District Court, and then if the
original judgment is subsequently reversed, LabCorp may attempt to recover
amounts paid to the Plaintiffs, including royalties paid to us as part of a
January 2003 stipulated court order (the "Stipulated Order"). (Pursuant to the
Stipulated Order, the court had stayed execution of a monetary judgment and a
permanent injunction that prevented LabCorp from performing homocysteine assays,
and LabCorp had agreed to pay us a percentage of their homocysteine assay sales
during their appeals process.) LabCorp's ability to recover any amounts paid to
the Plaintiffs would depend on the extent and reason for the reversal. From
January 2003 through January 31, 2005, LabCorp paid us an aggregate of
$1,909,276 under the Stipulated Order, including both our retained amounts and
amounts paid or payable to our clients. We believe that the probability that
LabCorp will recover any amounts paid is remote.

         In the prior year, effective November 17, 2003, we sold $312,500 plus
subsequent interest of a patent infringement judgment award to a shareholder for
$250,000 in cash. As a result of this transaction, we recorded $231,986 in
royalty settlements and awards and $18,014 in interest income in November 2003.
Effective October 30, 2003, we sold $1,125,000 plus subsequent interest of the
same patent infringement judgment award to an outside party for $900,000 in
cash. As a result of this transaction, we recorded $835,787 in royalty
settlements and awards and $64,213 in interest income in October 2003.


4.       Stock Dividend
         --------------

         In October 2004, our investee, Melanotan Corporation ("MelanoTan"), in
which we have a 20.9% ownership, paid its shareholders a dividend in the form of
shares of common stock of EpiTan Limited (Australia) ("EpiTan"), MelanoTan's
investee. As a result, we received 1,252,346 shares of EpiTan common stock. We
previously licensed our rights to a sunless tanning technology to MelanoTan and
MelanoTan sublicensed the rights to EpiTan (MelanoTan has no operations of its
own). MelanoTan also received shares of EpiTan. The technology may prevent or
lessen skin cancer caused by unprotected sun exposure, and EpiTan is in the
process of testing and evaluating the technology for future commercialization.
EpiTan common stock is traded on the Australian Stock Exchange (quoted in
Australian dollars) under the symbol EPT. As a condition to receiving the
dividend, we agreed not to sell, transfer or otherwise dispose of the shares
before October 21, 2005.

                                    Page 10

<PAGE>

         We estimated the fair value of the EpiTan stock dividend using the
closing price of the shares ($0.93 per share, Australian dollars) and the
exchange rate for converting Australian dollars to U.S. dollars ($0.7289
Australian dollars to $1.00 U.S. dollar) on the date that MelanoTan's board of
directors approved the dividend. We then discounted the value of the shares
using a 20% discount factor to recognize the estimated impact of the sale
restriction and the high risk associated with an investment in EpiTan stock,
since EpiTan has minimal revenues and has incurred substantial current and
accumulated net losses. We recorded the estimated value of the shares, $679,149,
as dividend income and included the asset in prepaid expenses and other current
assets, since we are restricted from trading the shares. Unrealized market price
and foreign exchange gains or losses relating to the shares have been included
in other comprehensive income in shareholders' interest. Other comprehensive
income (loss) was ($13,603) and $3,073, respectively, for the three and six
months ended January 31, 2005, and comprehensive income was $3,943,740 and
$4,928,241, respectively, for the three and six months ended January 31, 2005.


5.       Net Income Per Common Share
         ---------------------------

<TABLE>
         The following sets forth our computations of basic and diluted net
income per common share.

                                                      Three months ended                   Six months ended
                                                          January 31,                         January 31,
                                                 -----------------------------      -----------------------------
                                                        2005             2004              2005             2004
                                                 ------------     ------------      ------------     ------------
<S>                                                <C>              <C>               <C>              <C>
Denominator for basic net income per common
share, weighted average common shares
outstanding                                        6,633,440        6,207,631         6,516,872        6,204,488

Dilutive effect of warrants and employees' and
directors' common stock options
                                                     719,381          191,095           510,249           95,548
                                                 ------------     ------------      ------------     ------------

Denominator for net income per common share,
assuming dilution                                  7,352,821        6,398,726         7,027,121        6,300,036
                                                 ============     ============      ============     ============
</TABLE>

         At January 31, 2005 and 2004, respectively, stock options and warrants
to purchase 114,500 and 573,428 shares of common stock were outstanding but were
not included in the computation of earnings per share because the exercise
prices were greater than the weighted average share prices for the quarters,
making them anti-dilutive (total options and warrants outstanding were 1,278,096
and 1,113,717, respectively).

                                    Page 11

<PAGE>

6.       Stock-Based Compensation
         ------------------------

         We account for grants of stock options using the intrinsic value method
pursuant to Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations. Accordingly, since the
exercise price of the stock options granted under our stock option plans to
employees and directors was at least equal to the market value of the underlying
common stock on the grant date, we have not recorded any compensation expense
for stock options granted.

         Under the provisions of Financial Accounting Standards Board Statement
No. 123, "Accounting for Stock-Based Compensation," we are required to disclose
the impact on net income if we had used a fair value method, as defined, to
account for grants of stock options. Using the fair value method, as defined,
our results would have been:

<TABLE>
                                                          Three months ended                           Six months ended
                                                              January 31,                                 January 31,
                                                 --------------------------------------     --------------------------------------
                                                            2005                 2004                  2005                2004
                                                 -----------------     ----------------     ----------------      ----------------

<S>                                                <C>                   <C>                 <C>                    <C>
Net income, as reported                            $   3,957,343         $     64,287        $    4,925,168         $    409,580

Deduct:  Pro forma compensation expense for
stock options granted using a fair value method
                                                        (92,422)            (125,206)              (189,147)            (224,405)
                                                 -----------------     ----------------     -----------------     ----------------

Pro forma net income (loss)                        $   3,864,921         $   (60,919)        $    4,736,021         $    185,175
                                                 =================     ================     =================     ================

Basic income (loss) per common share:
         As reported                               $        0.60         $       0.01        $         0.76         $       0.07
                                                 =================     ================     =================     ================
         Pro forma                                 $        0.58         $      (0.01)       $         0.73         $       0.03
                                                 =================     ================     =================     ================

Income (loss) per common share, assuming dilution:
         As reported                               $        0.54         $       0.01        $         0.70         $       0.07
                                                 =================     ================     =================     ================
         Pro forma                                 $        0.53         $      (0.01)       $         0.67         $       0.03
                                                 =================     ================     =================     ================
</TABLE>


         We estimated the fair value of stock options at the grant date using
the Black-Scholes option-pricing model. The Black-Scholes option-pricing model
was developed for use in estimating the fair value of traded options that have
no vesting restrictions and are fully transferable. In addition, option
valuation models require highly subjective input assumptions, including expected
stock price volatility and expected stock option lives. Because our stock
options are not publicly traded and have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions affect the fair value estimate, we do not believe that option
valuation models necessarily provide a reliable single measure of the fair value
of our stock options.

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


                                    Page 12

<PAGE>

7.       Common Stock Sales Pursuant to Equity Financing
         -----------------------------------------------

         Pursuant to our equity financing agreement with Fusion Capital Fund II
("Fusion Capital"), we sold and issued the following shares to Fusion Capital
since July 31, 2004:

<TABLE>
                                                   Cash        Shares       Shares          Total
                                               Received          Sold       Issued         Shares
                                         ---------------   -----------    ---------     ----------
<S>                                       <C>                 <C>            <C>           <C>
Three months ended October 31, 2004       $   350,007         94,558         2,480         97,038
Three months ended January 31, 2005         1,062,532        178,296         7,527        185,823
                                         ---------------   -----------    ---------     ----------

Six months ended January 31, 2005          $1,412,539        272,854        10,007        282,861
                                         ===============   ===========    =========     ==========
</TABLE>

         We are using the proceeds for general working capital needs. The
aggregate proceeds through January 31, 2005 from sales to Fusion Capital
pursuant to the equity financing agreement are approximately $1,613,000. In
addition, we amortized $511,374 and $679,825, respectively, for the three and
six months ended January 31, 2005, of deferred equity financing costs against
capital in excess of par value. (During the three months ended January 31, 2005,
we also increased deferred equity financing costs by $47,996.) We will amortize
the remaining net balance of deferred equity financing costs of $234,473 against
capital in excess of par value as we sell common stock to Fusion Capital in the
future.

         On January 20, 2005, our advisor for the Fusion Capital financing
exercised their warrant to acquire 57,537 shares of our common stock. We had
issued the warrant to them on February 25, 2004 as part of their consideration
for their assistance in arranging the transaction with Fusion Capital. Our
advisor elected a cashless exercise pursuant to the terms of the warrant, and we
issued 37,171 shares of common stock to them, after withholding 20,366 shares
tendered as payment for the exercise price of the warrant. We determined the
number of shares to withhold based on a per share price of $12.275 (the average
per share price on January 20, 2005, the exercise date), as provided in the
warrant. These shares are restricted for resale since they have not been
registered under the Securities Act of 1933, and have been appropriately
legended.


8.       Receivables
         -----------

         Receivables consist of the following:

                                       January 31,                 July 31,
                                              2005                     2004
                              ---------------------    ---------------------

Royalties                      $         1,431,852      $           453,138
Unilens receivable, net                    450,236                  357,064
Other                                      187,893                   19,794
                              ---------------------    ---------------------

Receivables                    $         2,069,981      $           829,996
                              =====================    =====================

                                    Page 13

<PAGE>

9.       Accrued expenses and other liabilities
         --------------------------------------

         Accrued expenses and other liabilities consist of the following:

                                              January 31,             July 31,
                                                     2005                 2004
                                         -----------------    -----------------

Accrued royalties payable                 $     3,881,669      $       625,908
Accrued compensation                            1,497,101              534,945
Accrued professional fees                         283,795              294,100
Accrued other                                     118,779              124,423
                                         -----------------    -----------------

Accrued expenses and other liabilities    $     5,781,344      $     1,579,376
                                         =================    =================

         The increase in royalties payable since July 31, 2004 is the result of
increased royalties from new homocysteine licenses collected on behalf of our
clients. In February 2005, we paid approximately $2,700,000 of accrued royalties
payable to our clients at January 31, 2005.


10.      Contingencies
         -------------

         Occupational Safety and Health Administration ("OSHA")

         On February 2, 2005, OSHA issued a finding that there was probable
cause to believe that CTT had violated Section 806 of the Corporate and Criminal
Fraud Accountability Act of 2002, 18 U.S.C. 1514A, by terminating Wil Jacques
and Scott Bechtel in June 2003. Jacques and Bechtel contend that they were
improperly terminated for raising concerns about financial reporting. CTT
contends that Jacques and Bechtel did not raise protected concerns and were
terminated for lawful, non-discriminatory reasons, that OSHA failed to fairly
investigate and consider all relevant facts, and that the conclusions drawn by
OSHA are legally erroneous. Based on the finding, OSHA ordered that the
complainants be reinstated and that CTT pay damages totaling approximately
$827,000. CTT denies that it is liable to the complainants in any amount.

         The OSHA finding does not constitute a final agency order. In
accordance with law and regulation, on February 11, 2005, we filed timely
objections and requested a de novo hearing before an Administrative Law Judge of
the U.S. Department of Labor. The hearing preliminarily is scheduled to begin in
mid April 2005. We welcome the opportunity to conduct full discovery of the
complainants' claims and alleged damages, and to vigorously present our case
before a neutral fact finder. We cannot predict the amount of legal fees or
other expenses that we will incur relating to this matter.

         Axis-Shield

         On February 1, 2005, we filed a complaint alleging infringement of our
patent covering homocysteine assays against Axis-Shield plc and Axis-Shield,
ASA, (collectively, "Axis-Shield"), in the U.S. District Court for the District
of Colorado, seeking monetary damages, punitive damages, attorneys fees, court
costs and other remuneration at the option of the court. Axis-Shield was served
notice of our complaint on February 7, 2005. Also on February 7, 2005, we were
served notice that Axis-Shield had filed a complaint against CTT on November 10,
2004, in the U.S. District Court for the District of Connecticut seeking
declaratory relief that our patent covering homocysteine assays was invalid and
that Axis-Shield has not infringed and is not infringing on our patent covering
homocysteine assays. In addition, Axis-Shield alleges that CTT has engaged in
unfair competition by threats of and actual litigation in the health industry,
and seeks general, compensatory and exemplary damages, and attorneys fees, court
costs and other remuneration at the option of the court. We do not believe that
the Axis-Shield complaint has any merit. Further action in these cases is
pending.

                                    Page 14

<PAGE>

         Bio-Rad Laboratories, Inc.

         On December 23, 2004, we filed a complaint alleging infringement of our
patent covering homocysteine assays against Bio-Rad Laboratories, Inc.,
("BioRad"), in the U.S. District Court for the District of Colorado, seeking
monetary damages, punitive damages, attorneys fees, court costs and other
remuneration at the option of the court. BioRad was served notice of our
complaint in January 2005. Further action in this case is pending.

         Palatin Technologies, Inc.

         On October 27, 2004, we notified Palatin Technologies, Inc. ("Palatin")
that we were demanding arbitration as a result of our belief that Palatin was in
material breach of their license agreement with us for their exclusive use of
our technology in developing their experimental therapeutic treatment for male
and female sexual dysfunction. Under the terms of our license agreement with
Palatin, we are entitled to receive 20% of any sublicense fee that Palatin
receives. On August 13, 2004, Palatin announced that they had granted a
co-exclusive license to King Pharmaceuticals, Inc. ("King"), included in a $20
million Collaborative Development and Marketing Agreement between Palatin and
King. On August 18, 2004, Palatin announced that they had received the $20
million from King, but we have not received any funds from Palatin relating to
this sublicense. Our license with Palatin provides for binding arbitration of
disputes. The arbitration hearing tentatively is scheduled to begin in June
2005.

         Fujitsu

         On March 1, 2005, the University of Illinois appealed the summary
judgment that was granted on July 1, 2004, in favor of Fujitsu. On September 20,
2004, the judge in the Fujitsu litigation entered a stipulated order staying
certain issues relating to the case, including the counterclaims, pending
resolution of the appeal of the summary judgment. Further action in this case is
pending.

         We cannot predict the final outcomes to our legal actions and
proceedings, nor are we able to estimate the legal expenses or potential losses
we may incur, or possible damages we may recover in any of these legal actions
and proceedings, if any. We have not recorded any potential losses or income in
our financial statements to date. We record expenses in connection with these
matters as they are incurred. An unfavorable resolution of any or all matters
where we are a defendant, and/or our incurrence of significant legal fees and
other costs to defend or prosecute any of these actions and proceedings may,
depending upon the amount and timing, have a material adverse effect on our
consolidated financial position, results of operations or cash flows in a
particular period.

         We believe that we carry adequate liability insurance, directors' and
officers' insurance, casualty insurance (for owned or leased tangible assets),
and other insurance to cover us against potential claims that occur in the
normal course of our business.

                                    Page 15

<PAGE>

11.      Recently Issued Accounting Pronouncements
         -----------------------------------------

         In December 2004, the Financial Accounting Standards Board issued
Statement No. 123 (revised 2004), "Share-Based Payment." This Statement
established standards for accounting for transactions in which an entity
exchanges its equity instruments for goods or services, focusing primarily on
employee services exchanged for share-based payments. It requires entities to
expense the estimated fair value of employee stock options and similar awards
over the requisite service period (generally the vesting period). We will adopt
the provisions of this statement beginning August 1, 2005, and are currently
evaluating the transition method to use and considering the effects that
adopting this statement will have on our financial statements. Upon adoption
beginning August 1, 2005, we will recognize compensation expense for the
estimated fair value of new awards and of any awards modified, repurchased or
cancelled after June 15, 2005, over their respective requisite service periods.
We also will recognize compensation expense for awards previously issued and
outstanding but vesting after August 1, 2005, over their respective remaining
vesting periods. For outstanding but unvested awards at January 31, 2005, we
expect to record compensation expense of $172,000 and $76,000, respectively, in
fiscal 2006 and 2007. Recognizing compensation expense for share-based payments
awarded on or after August 1, 2005, will reduce our net income in the future,
but we cannot estimate the amount of that reduction, which will depend on the
number of stock options awarded, option vesting periods, and other factors used
in estimating the fair value of awards granted in the future.


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

Forward-Looking Statements
--------------------------

         Certain statements about our 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. When used in this Form 10-Q, the words "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 market acceptance of and competition for our licensed
technologies, growth strategies, operating performance, industry trends, and
other risks and uncertainties inherent in our business, including those set
forth in Item 7 under the caption "Risk Factors," in our Annual Report on Form
10-K for the year ended July 31, 2004, filed with the Securities and Exchange
Commission ("SEC") on October 29, 2004, 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.

Overview
--------

         We are a full service technology transfer and licensing provider
focused on the technology needs of our customers and transforming those
requirements into commercially viable solutions. We develop relationships with
universities, companies, inventors and patent or intellectual property holders
to obtain the rights or a license to their technologies, and they become our
clients, for whom we find markets for the technologies. We also develop
relationships with those who have a need or use for specific technologies, and
they become our customers, usually through a license or sublicense. We identify
and commercialize innovative technologies in life, electronic, nano, and
physical sciences developed by universities, companies and inventors, and match
our customers' needs with our clients' technologies. Our goal is to maximize the
value of intellectual assets for the benefit of our clients, customers and
shareholders.

                                    Page 16

<PAGE>

         We earn revenues primarily from licensing our clients' and our
intellectual property rights, principally patents and inventions (collectively,
the "Technology"), to our customers (licensees). Our customers pay us royalties
based on their use of the Technology, and we share those royalties with our
clients. We determine the amount of royalty revenue to record when we can
estimate the amount of royalties we have earned for a period, which occurs when
we receive periodic royalty reports from our customers listing their sales of
licensed products and the royalties we earned in the period. We receive these
reports monthly, quarterly, or semi-annually. Since reports are not received on
the same frequency, revenues will fluctuate from one quarter to another.

         For the three and six months ended January 31, 2005, we had a
concentration of revenues derived from homocysteine assays, on which the patent
expires in July 2007. Revenues relating to licenses for the homocysteine assay,
excluding upfront license fees, continue to grow, and we believe that this trend
will continue, but we cannot predict the magnitude of growth or if or when we
will succeed in closing additional license agreements and enforcing our patent
rights. In December 2004, we filed a complaint alleging infringement of our
homocysteine assay patent against Bio-Rad Laboratories, Inc. ("BioRad") in the
U.S. District Court for the District of Colorado. In February 2005, we also
filed a complaint alleging infringement of our homocysteine assay patent against
Axis-Shield plc and Axis-Shield, ASA, (collectively "Axis-Shield") in the U.S.
District Court for the District of Colorado. Also in February 2005, we were
served notice that Axis-Shield had filed a complaint against us on November 10,
2004, in the U.S. District Court for the District of Connecticut claiming that
our homocysteine assay patent is invalid, that Axis-Shield has not infringed and
does not infringe our homocysteine assay patent, and that we have engaged in
unfair competition by threats of and actual litigation in the health industry.
We do not believe that the Axis-Shield complaint has any merit. Further action
in these cases is pending.

         Because we have rounded all amounts in this Item 2 to the nearest
thousand dollars, certain amounts may not total precisely. In addition, all
periods discussed in this Item 2 relate to our fiscal year 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 January 31, 2005 (Second Quarter
2005) vs. Three Months Ended January 31, 2004 (Second Quarter 2004)
---------------------------------------------------------------------------

Summary of Results

         Net income for the second quarter 2005 was $3,957,000, or $0.54 per
diluted share, compared to net income of $64,000, or $0.01 per diluted share,
for the second quarter 2004, an improvement of $3,893,000, or $0.53 per diluted
share.

         Revenues
         --------

         In the second quarter 2005, total revenues were $6,783,000, compared to
$1,038,000 for the second quarter 2004, an increase of $5,745,000, or 554%.

         Retained royalties for the second quarter 2005 were $6,687,000, which
was $5,989,000, or 858% higher than the $698,000 reported in the second quarter
2004. The following compares retained royalty revenues by Technology in the
second quarter 2005 with the second quarter 2004.

<TABLE>
                                               For the three months ended January 31,
                            ----------------------------------------------------------------------
                                                                          Increase     % Increase
                                         2005               2004        (Decrease)     (Decrease)
                            ------------------  -----------------  ---------------- --------------

<S>                           <C>                 <C>               <C>                   <C>
Homocysteine assay            $     6,359,000     $      135,000    $   6,224,000         4,610%
Gallium arsenide                      133,000            105,000           28,000            27%
Ethyol                                     --            300,000         (300,000)         (100%)
All other Technologies                195,000            158,000           37,000            23%
                            ------------------  -----------------  ----------------
  Total retained royalties    $     6,687,000     $      698,000    $   5,989,000           858%
                            ==================  =================  ================
</TABLE>

                                    Page 17

<PAGE>

         The increase in revenues from the homocysteine assay was due
principally to our $5.2 million share of an upfront license fee received in
January 2005 from the license we granted to Abbott Laboratories, Inc. ("Abbott")
in December 2004, and an upfront license fee from the license we granted to
Diagnostic Products Corporation ("DPC") in November 2004. In addition, revenues
increased from royalties earned on those licenses and the license we granted to
Bayer Corporation ("Bayer") in October 2004. We expect to report Ethyol
royalties in the third and fourth quarters 2005 rather than the second and third
quarters, as in 2004. The increase in gallium arsenide revenues resulted
principally from a decrease in the Japanese tax withholding rate pursuant to a
change in the tax treaty between the U.S.A. and Japan. For revenues from all
other technologies, higher royalties from a recently producing license more than
offset royalty reductions due to expired licenses.

         Approximately 95% of our retained royalties for second quarter 2005 was
from the homocysteine assay Technology, on which the patent expires in July
2007. In addition, a significant portion of these homocysteine royalties was
from nonrecurring, upfront license fees. We continue to seek licenses to new
Technologies to mitigate this concentration of revenues, to replace revenues
from expiring licenses and to provide future revenues.

         Royalty settlements and awards in the second quarter 2004 were from our
sale of a portion of the pending Materna(TM) litigation award to generate
$250,000 of cash, including $18,000 in interest income. There were no
settlements and awards in the second quarter 2005.

         Settlement with Unilens, net, in the second quarter 2004, was from the
second installment from Unilens Corp. USA ("Unilens") under our October 2003
settlement of an old receivable from Unilens. Due to Unilens' financial
condition and the uncertainty of collecting the installments due from the
settlement, we recorded revenue, net of related expenses, in fiscal 2004 when we
received payments from Unilens. At July 31, 2004, we reviewed Unilens' financial
condition and determined that the entire remaining balance of the receivable was
collectible, and recorded the net present value of the receivable and related
settlement income at July 31, 2004. Thus, in fiscal 2005 we will record only
minimal interest income related to the settlement.

         Interest income in the second quarter 2005 was higher than in the
second quarter 2004 principally due to significantly higher cash balances. In
the second quarter 2004, interest income included $18,000 in connection with our
sale of a portion of the pending Materna litigation award, and interest earned
on our invested cash and cash equivalents.

<TABLE>
         Expenses
         --------
                                                                For the three months ended January 31,
                                              ---------------------------------------------------------------------
                                                                                        Increase        % Increase
                                                       2005             2004          (Decrease)        (Decrease)
                                              --------------    -------------     ---------------    --------------
<S>                                             <C>              <C>               <C>                      <C>
Personnel and other direct expenses
   relating to revenues                         $ 2,095,000      $   588,000       $   1,507,000            256%
General and administrative expenses                 567,000          371,000             196,000             53%
Patent enforcement expenses, net of
   reimbursements                                   114,000           14,000             100,000            714%
                                              --------------    -------------     ---------------
  Total expenses                                $ 2,776,000      $   973,000       $   1,803,000            185%
                                              ==============    =============     ===============
</TABLE>

                                    Page 18

<PAGE>

         Personnel and other direct expenses relating to revenues increased due
to several factors. Personnel expenses for the second quarter 2005 increased
$1,419,000 over the prior year. The increase was due principally to estimated
bonus and commission accruals recorded pursuant to our Incentive Compensation
Plan that increased $1,166,000 compared with the second quarter 2004. Our
personnel expenses also increased because we have more employees, and for
certain salary increases. In addition, other direct expenses increased $88,000
due to costs incurred in connection with efforts to collect disputed royalties
determined by a royalty audit, costs related to licensing our homocysteine assay
to others and other costs to maintain certain technologies.

         General and administrative expenses increased principally due to
increases of $62,000 in public company expenses, $57,000 in directors' fees and
expenses, and $40,000 in travel expenses. Public company expenses include costs
relating to our annual report, proxy, and annual meeting, all of which increased
in the current year compared to the prior year. In addition, we incurred
increased costs for investor relations and travel to present CTT to current and
potential investors across the country. The principal reason for the increase in
directors' fees and expenses was the reversal of a $44,000 overaccrual in the
prior year that we did not have in the current year. We accrue the estimated
stock compensation expense relating to our 1996 Directors' Stock Participation
Plan during the calendar year. In January we record the difference between the
estimated expense and the actual expense when we issue the shares to the
directors. The estimate will differ from the actual if our share price on the
first business day of January is less than $6.00 per share.

         Patent enforcement expenses, net of reimbursements, increased
principally due to our lawsuits against Laboratory Corporation of America
Holdings d/b/a LabCorp ("LabCorp"), Abbott, BioRad and Axis-Shield to
enforce our homocysteine assay patent rights, and our demand for arbitration of
our dispute with Palatin Technologies, Inc. ("Palatin"). The level of patent
enforcement expenses relates to our legal strategy and varies depending on the
stage of the litigation. Activity related to homocysteine assay patent rights
was higher in the second quarter 2005 compared to 2004, and we initiated the
Palatin arbitration in early fiscal 2005.

         Provision for income taxes
         --------------------------

         In prior years, we generated significant federal and state income tax
losses, and these net operating losses ("NOLs") were carried forward for income
tax purposes. Due to our current year income before income taxes, we will
utilize a portion of our NOLs against our current year regular federal and state
taxable income, effectively eliminating our regular income tax liabilities for
fiscal 2005. However, since we expect to be subject to the federal alternative
minimum income tax ("AMT"), we provided $50,000 in the second quarter of 2005
principally for our estimated federal AMT liability.

         The NOLs are an asset to us since we can use them to offset or reduce
future taxable income and therefore reduce the amount of both federal and state
income taxes to be paid in future years. Previously, since we were incurring
losses and could not be sure that we would have future taxable income to be able
to use the benefit of our NOLs, we recorded a valuation allowance against the
asset, reducing its book value to zero. As a result of the income we earned for
the six months ended January 31, 2005, we reversed $1,814,000 of the valuation
allowance in the second quarter of 2005 and recorded a provision for income
taxes of the same amount. The effective tax rate of the provision for the second
quarter of 2005 was 45.3%. We expect our effective tax rate for fiscal year 2005
will be approximately 36.3%. The difference between the actual rate and the
effective rate for the second quarter of 2005 was due principally to intraperiod
tax allocation.

                                    Page 19

<PAGE>

Results of Operations - Six Months Ended January 31, 2005 (First Half of 2005)
vs. Six Months Ended January 31, 2004 (First Half of 2004)
------------------------------------------------------------------------------

Summary of Results

         Net income for the first half 2005 was $4,925,000, or $0.76 per diluted
share, compared to net income of $410,000, or $0.07 per diluted share, for the
first half of 2004, an improvement of $4,515,000, or $0.69 per diluted share.

         Revenues
         --------

         In the first half of 2005, total revenues were $9,214,000, compared to
$2,401,000 for the first half of 2004, an increase of $6,814,000, or 284%.

         Retained royalties for the first half of 2005 were $7,442,000, which
was $6,357,000, or 586% higher than the $1,085,000 reported in the first half of
2004. The following compares retained royalty revenues by Technology in the
first half of 2005 with the first half of 2004.

<TABLE>
                                                 For the six months ended January 31,
                            ------------------------------------------------------------------
                                                                      Increase     % Increase
                                         2005              2004      (Decrease)    (Decrease)
                            ------------------ ----------------- ---------------- ------------
<S>                           <C>                <C>              <C>               <C>
Homocysteine assay            $     7,035,000    $      401,000   $   6,634,000     1,654%
Gallium arsenide                      138,000           112,000          26,000        23%
Ethyol                                     --           300,000        (300,000)     (100%)
All other Technologies                269,000           272,000          (3,000)       (1%)
                            ------------------ ----------------- ----------------
  Total retained royalties    $     7,442,000    $    1,085,000   $   6,357,000       586%
                            ================== ================= ================
</TABLE>

         The increase in revenues from the homocysteine assay was due
principally to our $5.2 million share of the upfront license fee received in
January 2005 from the license we granted to Abbott in December 2004, and upfront
license fees from the licenses we granted to DPC and Bayer. Revenues also
increased from royalties earned to date on those licenses. We expect to report
Ethyol royalties in the third and fourth quarters of 2005 rather than the second
and third quarters, as in 2004. The increase in gallium arsenide revenues
resulted principally from a decrease in the Japanese tax withholding rate
pursuant to a change in the tax treaty between the U.S.A. and Japan. For
revenues from all other technologies, higher royalties from a recently producing
license were offset by royalty reductions due to expired licenses.

         Approximately 95% of our retained royalties for first half of 2005 was
from the homocysteine assay Technology, on which the patent expires in July
2007. In addition, a significant portion of these homocysteine royalties was
from nonrecurring, upfront license fees. We continue to seek licenses to new
Technologies to mitigate this concentration of revenues, to replace revenues
from expiring licenses and to provide future revenues.

         Royalty settlements and awards of $815,000 in the first half of 2005
were from our share of an award received from LabCorp. (The LabCorp litigation
confirmed the validity of our homocysteine assay patent rights.) In addition to
the award, we received $105,000 of interest income. On November 3, 2004, LabCorp
filed a petition for a writ of certiorari with the U.S. Supreme Court relating
to this case, and on February 28, 2005, the Court invited the Solicitor
General's Office to file a brief in this case expressing its views on the
question of the patentability of method patents of this type. For further
discussion, see Note 3 to the accompanying unaudited condensed consolidated
financial statements.

                                    Page 20

<PAGE>

         In the first half of 2004 our royalty settlements and awards of
$1,068,000 were from our sale of a portion of our share of the pending Materna
litigation award to generate $1,150,000 of cash, including $82,000 recorded in
interest income.

         Stock dividend of $679,000 in the first half of 2005 was from our
receipt of a dividend from our investee, Melanotan Corporation ("MelanoTan"), in
which we have a 20.9% ownership. In October 2004, Melanotan paid its
shareholders a dividend in the form of shares of stock of EpiTan Limited
(Australia) ("EpiTan"), MelanoTan's investee. As a result, we received 1,252,346
shares of EpiTan common stock. We previously licensed our rights to a sunless
tanning technology to MelanoTan and MelanoTan sublicensed the rights to EpiTan
(MelanoTan has no operations of its own). MelanoTan also received shares of
EpiTan. The technology may prevent or lessen skin cancer caused by unprotected
sun exposure, and EpiTan is in the process of testing and evaluating the
technology for future commercialization. EpiTan common stock is traded on the
Australian Stock Exchange (quoted in Australian dollars) under the symbol EPT.
As a condition to receiving the dividend, we agreed not to sell, transfer or
otherwise dispose of the shares before October 21, 2005.

         We estimated the fair value of our EpiTan stock dividend using the
closing price of the shares ($0.93 per share, Australian dollars) and the
exchange rate for converting Australian dollars to U.S. dollars ($0.7289
Australian dollars to $1.00 U.S. dollar) on the date MelanoTan's board of
directors approved the dividend. We then discounted the value of the shares
using a 20% discount factor to recognize the estimated impact of the sale
restriction and the high risk associated with an investment in EpiTan stock,
since EpiTan has minimal revenues and has incurred substantial current and
accumulated net losses.

         Settlement with Unilens, net, in the first half of 2004, was from
installments from Unilens under our October 2003 settlement of an old receivable
from Unilens. Due to Unilens' financial condition and the uncertainty of
collecting the installments due from the settlement, we recorded revenue, net of
related expenses, in fiscal 2004 when we received payments from Unilens. At July
31, 2004, we reviewed Unilens' financial condition and determined that the
entire remaining balance of the receivable was collectible, and recorded the net
present value of the receivable and related settlement income at July 31, 2004.
Thus, in fiscal 2005 we will record only minimal interest income related to the
settlement.

         Interest income in the first half of 2005 includes $105,000 in
connection with the LabCorp litigation award and interest earned on our invested
cash and cash equivalents. In the first half of 2004, interest income included
$82,000 in connection with our sales of portions of our share of the pending
Materna litigation award, and interest earned on our invested cash and cash
equivalents. The increase in interest income earned from invested cash and cash
equivalents in the current year compared to the prior year is due principally to
significantly higher cash balances this year.

<TABLE>
         Expenses
         --------
                                                      For the six months ended January 31,
                                     ------------------------------------------------------------------------
                                                                                 Increase         % Increase
                                                2005                2004       (Decrease)         (Decrease)
                                     ----------------    ----------------    -------------     --------------
<S>                                    <C>                <C>                 <C>                     <C>
Personnel and other direct
  expenses relating to revenues        $   3,119,000      $   1,147,000       $ 1,972,000             172%
General and administrative expenses          815,000            797,000            18,000               2%
Patent enforcement expenses, net
  of reimbursements                          284,000             47,000           237,000             504%
                                     ----------------    ----------------    -------------
  Total expenses                       $   4,218,000      $   1,991,000       $ 2,227,000             112%
                                     ================    ================    =============
</TABLE>

                                    Page 21

<PAGE>

         Personnel and other direct expenses relating to revenues increased due
to several factors. Personnel expenses for the first half of 2005 increased
$1,828,000 from the prior year. This was due principally to estimated bonus and
commission accruals recorded pursuant to our Incentive Compensation Plan that
increased $1,280,000 compared to the first half 2004. Our personnel expenses
also increased because we have more employees, and for certain salary increases.
In addition, other direct expenses increased $144,000 due to costs incurred in
connection with efforts to collect disputed royalties determined by a royalty
audit, a one-time charge for technical services to support licensing a
Technology (which costs are partially recoverable from future licensing
revenues, if any), costs related to licensing our homocysteine assay to others
and other costs to maintain certain technologies.

         General and administrative expenses increased slightly, with increases
in public company and travel expenses substantially offset by a $168,000 payment
received in October 2004 from our directors' and officers' liability insurance
carrier as settlement of our claim for reimbursement of amounts incurred in
connection with an investigation by the SEC. Costs related to the investigation
previously were expensed as incurred. Our insurance carrier also acknowledged
that we had met our deductible under our policy relating to this matter, and
confirmed that they will provide coverage (in accordance with the terms of the
policy) for losses incurred in the SEC civil suit filed in August 2004.
Accordingly, we have not recorded any significant costs in the current fiscal
year relating to the SEC civil suit. In addition, we incurred increased costs
for investor relations and travel to present CTT to current and potential
investors across the country.

         Patent enforcement expenses, net of reimbursements, increased
principally due to our lawsuits against LabCorp, Abbott, Bayer, BioRad and
Axis-Shield to enforce our homocysteine assay patent rights, and our demand for
arbitration of our dispute with Palatin. The level of patent enforcement
expenses relates to our legal strategy and varies depending on the stage of the
litigation. Activity related to homocysteine assay patent rights was
considerably higher in the first half of 2005 compared to 2004, and we initiated
the Palatin arbitration in early fiscal 2005, but the Fujitsu case was less
active in the first half of 2005.

         Provision for income taxes
         --------------------------

         We provided $71,000 in the first half of 2005 principally for our
estimated federal AMT liability.

         As a result of the income we earned for the six months ended January
31, 2005, we reversed $1,814,000 of the valuation allowance we recorded
previously against the NOL asset and recorded a provision for income taxes of
the same amount at an estimated effective combined federal and state tax rate of
36.3%, which is the rate we expect for the full fiscal year.

Financial Condition and Liquidity
---------------------------------

         Our liquidity requirements arise principally from our working capital
needs, including funds needed to find, obtain and license new Technologies, and
to protect and enforce our intellectual property rights, if necessary. We fund
our liquidity requirements with a combination of cash flows from operations,
including legal settlements and awards, and cash on hand. In addition, we have
the ability to fund our requirements through sales of common stock under an
equity financing arrangement (see below). At January 31, 2005, we had no
outstanding debt or credit facility.

         Cash and cash equivalents consist of demand deposits and highly liquid,
interest earning investments with maturities when purchased of three months or
less, including overnight bank deposits and money market funds. We carry cash
equivalents at cost, which approximates fair value.

                                    Page 22

<PAGE>

         At January 31, 2005, cash and cash equivalents were $14,136,000,
compared to $4,310,000 at July 31, 2004. Cash provided by operating activities
during the six months ended January 31, 2005, was $7,589,000, compared to a use
of cash of $97,000 during the same period of the prior year. The increase in
cash from operating activities in the current year compared to the prior year
was due principally to significantly higher net income this year, as a result of
receiving upfront license fees and royalties from the new Abbott, DPC and Bayer
homocysteine licenses, our receipt of a total of $921,000 from the LabCorp
litigation award, and higher royalties payable to our clients, partially offset
by higher receivables. (In February 2005, we paid approximately $2,700,000 of
accrued royalties payable to our clients at January 31, 2005.) Cash provided by
investing activities in the current six months was $304,000, compared to
$163,000 in the same period of the prior year. In the current year we collected
more cash on our receivable from Unilens. Cash provided by financing activities
in the current year was $1,934,000, from sales of our common stock to Fusion
Capital Fund II, LLC ("Fusion Capital") (see below) and from exercises of stock
options.

         In addition to fluctuations in the amounts of royalties and our
clients' shares of royalty settlements and awards, changes in royalties
receivable and payable reflect our normal cycle of royalty collections and
payments, and fluctuate depending on when royalty receipts and payments are due
under our agreements with clients and customers.

         Funding and capital requirements

Equity Financing

         In February 2004, we entered into an equity financing agreement with
Fusion Capital, pursuant to which we can sell to Fusion Capital up to $5 million
of our common stock, at our option. During the six months ended January 31,
2005, we sold approximately $1,413,000 of common stock to Fusion Capital. We
will use the proceeds for general working capital needs. The aggregate proceeds
through January 31, 2005 from sales to Fusion Capital pursuant to the equity
financing agreement are approximately $1,613,000. Although we have the ability
to sell up to $5 million of our common stock to Fusion Capital, we currently
estimate that we will sell $2 million in total to Fusion Capital pursuant to the
equity financing agreement. However, this estimate could change at any time. In
addition, we have the option of entering into another equity financing agreement
with Fusion Capital for an additional $5 million upon termination of the current
agreement.

Income taxes

         We currently have the benefit of using a portion of our accumulated
NOLs to eliminate our regular federal and state income tax liabilities for
fiscal 2005. We expect that we will be liable to pay only the federal AMT for
fiscal 2005. Our rate for the AMT liability is much less than if we had to pay
income taxes at our estimated effective income tax rate of 36.3%. We will
continue to receive this benefit until we have utilized all of our NOLs. We
cannot determine when we will utilize the remainder of our NOLs.

General

         The amounts and timing of our future cash requirements will depend on
many factors, including the results of our operations and marketing efforts, the
results and costs of legal proceedings, and our equity financing. To sustain
profitability, we must license Technologies with sufficient current and
long-term revenue streams, and continually add new licenses. However, obtaining
rights to new Technologies, granting rights to licensees, enforcing intellectual
property rights, and collecting royalty revenues are subject to many factors
beyond our control or that we cannot currently anticipate. Although there can be
no assurance that we will be successful in our efforts, we believe that the
combination of our cash on hand, revenues from executing our strategic plan, and
the ability to raise funds from sales of our common stock pursuant to our equity
financing agreement will be sufficient to meet our current and anticipated
operating cash requirements at least through our fiscal year ending July 31,
2006.

                                    Page 23

<PAGE>


         Contingencies

         We are a party to several legal actions and proceedings, both as a
plaintiff and as a defendant, for which we cannot predict the final outcomes.
These matters have been detailed herein and in prior filings with the SEC.
Depending upon the amount and timing, an unfavorable resolution of any or all
matters where we are a defendant and/or our incurrence of significant legal fees
and other costs to defend or prosecute any of these actions and proceedings may
have a material adverse effect on our consolidated financial position, results
of operations or cash flows in a particular period.

Other matters

         We believe that we carry adequate liability insurance, directors' and
officers' insurance, casualty insurance (for owned or leased tangible assets),
and other insurance to cover us against potential claims that occur in the
normal course of our business.

Critical Accounting Estimates
-----------------------------

         There have been no significant changes in our accounting estimates
described under the caption "Critical Accounting Estimates," included in Item 7,
"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, 2004.

         We estimated the fair value of our EpiTan stock dividend using the
closing price of the shares and the exchange rate for converting Australian
dollars to U.S. dollars on the date MelanoTan's board of directors approved the
dividend. We then discounted the value of the shares using a 20% discount factor
to recognize the estimated impact of the sale restriction and the high risk
associated with an investment in EpiTan stock, since EpiTan has minimal revenues
and has incurred substantial current and accumulated net losses.

         The bonus and commission compensation accruals were estimated based on
our performance to date and the provisions of our Incentive Compensation Plan.


Recently Issued Accounting Pronouncements
-----------------------------------------

         In December 2004, the Financial Accounting Standards Board issued
Statement No. 123 (revised 2004), "Share-Based Payment." This Statement
established standards for accounting for transactions in which an entity
exchanges its equity instruments for goods or services, focusing primarily on
employee services exchanged for share-based payments. It requires entities to
expense the estimated fair value of employee stock options and similar awards
over the requisite service period (generally the vesting period). We will adopt
the provisions of this statement beginning August 1, 2005, and are currently
evaluating the transition method to use and considering the effects that
adopting this statement will have on our financial statements. Upon adoption
beginning August 1, 2005, we will recognize compensation expense for the
estimated fair value of new awards and of any awards modified, repurchased or
cancelled after June 15, 2005, over their respective requisite service periods.
We also will recognize compensation expense for awards previously issued and
outstanding but vesting after August 1, 2005, over their respective remaining
vesting periods. For outstanding but unvested awards at January 31, 2005, we
expect to record compensation expense of $172,000 and $76,000, respectively, in
fiscal 2006 and 2007. Recognizing compensation expense for share-based payments
awarded on or after August 1, 2005, will reduce our net income in the future,
but we cannot estimate the amount of that reduction, which will depend on the
number of stock options awarded, option vesting periods, and other factors used
in estimating the fair value of awards granted in the future.

                                    Page 24

<PAGE>

Related Party Transactions
--------------------------

         We previously disclosed that our board of directors had determined that
when a director's services are outside the normal duties of a director, we
should compensate the director at the rate of $1,000 per day, plus expenses
(which is the same amount that we pay a director for attending a one-day Board
meeting).

         We incurred $2,543 and $13,018, respectively, during the three and six
months ended January 31, 2005, of costs, including expenses, (reported in
personnel and other direct expenses relating to revenues) related to consulting
services provided by one of our directors. At January 31, 2005, accounts payable
included $1,399 due to related parties.


Item 3.      Quantitative and Qualitative Disclosures About Market Risk
             ----------------------------------------------------------

         We do not have any significant market risk to the valuation of our
assets other than risks related to our shares of EpiTan common stock. The value
of the stock is subject to market fluctuations in the per share price of EpiTan
stock as well as foreign currency fluctuations, since EpiTan common stock is
traded on the Australian Stock Exchange and the price per share of the stock is
quoted in Australian dollars. We received the shares during the quarter ended
October 31, 2004, and the net unrealized gain from the date of receipt to
January 31, 2005 has not been significant.


Item 4.      Controls and Procedures
             -----------------------

         (a)      Evaluation of Disclosure Controls and Procedures
                  ------------------------------------------------

         Our management, including our 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-15(e) and 15d-15(e)) as of January 31, 2005. Our disclosure controls and
procedures are designed to ensure that information required to be disclosed by
us in reports filed under the Securities Exchange Act of 1934 is recorded,
processed, summarized, and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms. Based on this evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that the
disclosure controls and procedures were effective as of January 31, 2005.

         (b)      Change in Internal Controls
                  ---------------------------

         There were no significant changes in our internal control over
financial reporting during the quarter ended January 31, 2005, that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

                                    Page 25

<PAGE>

                           PART II - OTHER INFORMATION

Item 1.      Legal Proceedings
             -----------------

         See Notes 2, 3 and 10 to the accompanying unaudited condensed
consolidated financial statements in Part I of this Quarterly Report on Form
10-Q.


Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds
             -----------------------------------------------------------

         The following table lists sales and issuances of our common stock to
Fusion Capital during the three months ended January 31, 2005, pursuant to the
$5 million equity financing arrangement with Fusion Capital as described in Part
I, Item 2, "Management's Discussion and Analysis of Financial Condition and
Results of Operations." We issued all of these securities without registration
in reliance on an exemption under Section 4(2) of the Securities Act of 1933
because we made the offers and sales in private placements.

                                       Number of
                                     shares sold             Total cash
                        Month         and issued               received
       -----------------------    ---------------    -------------------

                November 2004            118,767        $      575,012
                December 2004             67,056               487,520
                 January 2005                 --                    --
                                  ---------------    -------------------

                                         185,823        $    1,062,532
                                  ===============    ===================


Item 4.      Submission of Matters to a Vote of Security Holders
             ---------------------------------------------------

         At the Company's annual meeting of stockholders held January 14, 2005,
stockholders elected the following directors:

         Name                                Votes For         Votes Withheld
         ----                                ---------         --------------
         Richard E. Carver                   5,567,872                563,861
         George W. Dunbar, Jr.               5,033,488              1,098,245
         Dr. Donald J. Freed                 5,831,349                300,384
         Dr. Maria-Luisa Maccecchini         5,817,969                313,764
         John B. Nano                        5,866,861                264,872
         Charles J. Philippin                5,539,463                592,270
         John M. Sabin                       5,107,140              1,024,593

         There were no broker non-votes and no abstentions in respect of the
election of directors.

         Stockholders also approved a proposal to increase the number of shares
of common stock available for stock option grants under the 1997 Employees'
Stock Option Plan by 500,000 shares. After this approval, an aggregate of
1,525,000 shares may be granted to employees under this Plan. There were
2,247,005 shares voted for and 1,032,346 shares voted against this proposal, and
121,569 shares abstained. There were 2,730,813 broker non-votes on this matter.

                                    Page 26

<PAGE>

         In addition, stockholders approved a proposal to extend the 1996
Directors' Stock Participation Plan by five (5) years and to increase the number
of shares of common stock available for issuance under this Plan by 80,000
shares. After this approval, an aggregate of 180,000 shares may be issued to
directors under this Plan through the first business day of 2011. There were
2,254,245 shares voted for and 1,012,941 shares voted against this proposal, and
133,734 shares abstained. There were also 2,730,813 broker non-votes on this
matter.


<TABLE>
Item 6.  Exhibits

A) Exhibits                                                                                             Page
                                                                                                        ----
<S>        <C>                                                                                            <C>
           3.1        By-laws of the registrant as amended effective January 14,
                      2005, filed as Exhibit 3.2 to registrant's Form 10-Q for
                      the quarter ended October 31, 2004, and hereby incorporated
                      by reference.

           10.1       Registrant's 1997 Employees' Stock Option Plan as amended
                      January 14, 2005, filed (on January 21, 2005) as Exhibit
                      10.1 to registrant's Current Report on Form 8-K dated
                      January 14, 2005, and hereby incorporated by reference.

           10.2       Registrant's 1996 Directors' Stock Participation Plan as
                      amended January 14, 2005, filed (on January 21, 2005) as
                      Exhibit 10.2 to registrant's Current Report on Form 8-K
                      dated January 14, 2005, and hereby incorporated by
                      reference.

           31.1       Certification by the Principal Executive Officer of Competitive
                      Technologies, Inc. pursuant to Section 302 of the Sarbanes-Oxley
                      Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).                                     29

           31.2       Certification by the Principal Financial Officer of Competitive
                      Technologies, Inc. pursuant to Section 302 of the Sarbanes-Oxley
                      Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).                                     30

           32.1       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) (furnished herewith).                                  31

           32.2       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) (furnished herewith).                                  32

</TABLE>

                            [Signature page follows]


                                     Page 27
<PAGE>




                                   SIGNATURES
                                   ----------

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


                              COMPETITIVE TECHNOLOGIES, INC.
                              (the registrant)

                              By /s/ John B. Nano
                              -----------------------------------
                              John B. Nano
                              President, Chief Executive
Date: March 17, 2005          Officer and Authorized Signer


                              COMPETITIVE TECHNOLOGIES, INC.
                              (the registrant)

                              By /s/ Michael D. Davidson
                              -----------------------------------
                              Michael D. Davidson
                              Chief Financial Officer, Chief Accounting Officer
Date: March 17, 2005          and Authorized Signer


                                    Page 28