Composite Technology Corp – ‘424B3’ on 9/13/06

On:  Wednesday, 9/13/06, at 6:43pm ET   ·   As of:  9/14/06   ·   Accession #:  1144204-6-38300   ·   File #:  333-134652

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Prospectus   —   Rule 424(b)(3)
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Document/Exhibit                   Description                      Pages   Size 

 1: 424B3       Prospectus                                            30    127K 

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                                                Filed Pursuant to Rule 424(b)(3)
                                                  Commission File No. 333-134652

PROSPECTUS                                                                      

COMPOSITE TECHNOLOGY CORPORATION

7,692,810 SHARES OF COMMON STOCK

This prospectus covers the resale by selling shareholders of up to 7,692,810    
shares of our common stock, $0.001 par value. The securities will be offered for
sale by the selling shareholders identified in this prospectus in accordance    
with the terms described in the section of this prospectus entitled "Plan of    
Distribution." We will not receive any of the proceeds from the sale of the     
common stock by the selling shareholders.                                       

Our securities are not listed on any national securities exchange or the Nasdaq 
Stock Market. Our common stock is quoted on the OTC Bulletin Board under the    
symbol "CPTC." On May 31, 2006, the closing sale price of our common stock on   
the OTC Bulletin Board was $1.16 per share.                                     

INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD        
PURCHASE OUR SECURITIES ONLY IF YOU CAN AFFORD LOSING YOUR ENTIRE INVESTMENT.   
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF THESE AND OTHER      
RISKS.                                                                          

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES         
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS   
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A     
CRIMINAL OFFENSE.                                                               

The date of this prospectus is September 13, 2006.                              

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 TABLE OF CONTENTS

                                                                            PAGE

SUMMARY                                                                       1 
RISK FACTORS                                                                  7 
USE OF PROCEEDS                                                              19 
SELLING SHAREHOLDERS                                                         19 
PLAN OF DISTRIBUTION                                                         22 
INTERESTS OF NAMED EXPERTS AND COUNSEL                                       25 
WHERE YOU CAN FIND MORE INFORMATION                                          25 

 About This Prospectus

You should rely only on the information contained in this prospectus. We have   
not authorized anyone to provide you with information different from that       
contained in this prospectus. The information in this prospectus is accurate    
only as of the date of this prospectus, regardless of the time of delivery of   
this prospectus or any sale of our common stock. You should not consider any    
information in this prospectus or in the documents incorporated by reference    
herein to be investment, legal or tax advice. Consult your own counsel,         
accountant and other advisors for legal, tax, business, financial and related   
advice regarding the purchase of our common stock.                              

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 SUMMARY

This summary contains basic information about us and this offering. You should  
read the entire prospectus carefully, including the "Risk Factors" section and  
the documents incorporated by reference into this prospectus, including our     
financial statements and the related notes included in those documents before   
making an investment decision. Some of the statements contained in this         
prospectus and the documents incorporated herein by reference are               
forward-looking statements and may involve a number of risks and uncertainties. 
Our actual results and future events may differ significantly from these        
predictions based upon factors, including, but not limited to, those set forth  
below in the section entitled "Risk Factors". You should not put undue reliance 
on the forward-looking statements in this document, which speak only as of the  
date on the cover of this prospectus.                                           

In this prospectus, we refer to Composite Technology Corporation and its        
subsidiaries as "we," "our," or "CTC," or "the Company." We refer to our        
subsidiaries collectively as "Subsidiaries."                                    

Recent Developments                                                             

On February 28, 2006, we entered into a letter of intent (the "Letter") with EU 
Energy plc, a United Kingdom corporation ("EU Energy"), and stockholders holding
more than 70% of EU Energy share capital ("Major EU Energy Stockholders"), by   
which the parties have agreed to negotiate in good faith towards execution of a 
mutually satisfactory agreement with respect to our proposed acquisition of the 
entire share capital of EU Energy.                                              

Subject to the terms and conditions of the Letter, the total purchase price will
be approximately USD $60.7 million to be paid by us by issuing one-and-a-half   
shares of our unregistered, restricted common stock for each outstanding share  
of capital stock of EU Energy. Based on EU Energy's representation that it has  
no more than 26,113,110 shares of capital stock outstanding, we expect to issue 
39,169,665 shares of our common stock in the proposed acquisition. The deemed   
price for our common stock is USD $1.55 per share.                              

Should the parties enter into a definitive, legally binding, written agreement  
("Definitive Agreement"), each Major EU Energy Stockholder of EU Energy will be 
required to sign a lock-up agreement prohibiting any sales, transfers or other  
dispositions of their shares for a period of 12 months following the closing of 
the proposed acquisition, except for estate planning purposes and sales that    
constitute the lesser of 5% of his shares or 500,000 shares during any calendar 
quarter of the 12-month lock-up period on a cumulative basis. In addition, no   
Major EU Energy Stockholder, officer and director of EU Energy may transfer more
than 1,500,000 shares during any calendar quarter.                              

Commencing on February 28, 2006, we and our advisors are entitled to conduct a  
reasonable investigation of information and materials related to EU Energy's    
financial, business and legal condition, which terminates 45 days thereafter,   
unless we and EU Energy agree to extend this due diligence period, which we have
done.                                                                           

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The Letter provides that the proposed acquisition will be subject to several    
closing conditions, including but not limited to obtaining, to the extent       
required, consents or approvals of shareholders (to the extent applicable),     
governmental bodies, lenders, lessors and other third parties and compliance    
with other legal or contractual requirements for or preconditions to the        
execution and consummation of the Definitive Agreement, absence of material     
pending or threatened litigation relating to EU Energy or its respective        
material assets, business and liabilities or the Definitive Agreement,          
satisfactory completion of our due diligence investigation, no material adverse 
change in the business, properties, financial condition or prospects of EU      
Energy or its respective businesses and assets shall have occurred, evidence    
that the proposed acquisition will not materially affect the terms of EU        
Energy's existing contracts, execution of five-year non-competition agreements  
by and between each Major EU Energy Stockholder and officer and director of EU  
Energy, on the one hand, and us, on the other, and delivery of closing          
certificates and other documentation, including without limitation, legal       
opinion of EU Energy's counsel.                                                 

Subject to the terms and conditions of the Letter, EU Energy agrees that, for   
the period of time from February 28, 2006 to May 29, 2006, unless automatically 
extended for 30 days if EU Energy's audit of its fiscal year ended March 31,    
2006 is delayed, the Major EU Energy Stockholders and EU Energy shall not, and  
shall cause its affiliates, officers, directors, employees or other agents to   
not, directly or indirectly, take any action to encourage, solicit or initiate  
any offer or proposal for, or indication of interest in, any acquisition of EU  
Energy or any of its assets (other than in the ordinary course of business),    
whether by way of a merger, consolidation, or other business combination, or the
acquisition of fifteen percent or more of EU Energy's voting securities (on a   
fully-diluted basis) ("Alternative Proposal") or respond to, continue, initiate 
or engage in discussions or negotiations concerning any Alternative Proposal    
with, or disclose in connection with any Alternative Proposal any non public    
information relating to EU Energy or afford access to the properties, books or  
records of EU Energy to, any person, corporation, partnership, limited liability
company or other entity (except us and our representatives). In addition, during
this period, the Major EU Energy Stockholders and EU Energy shall provide to us 
with notice of and copies of any Alternative Proposal received by such Major EU 
Energy Stockholder or EU Energy (or a summary of the terms thereof in the case  
of oral proposals) not later than twenty-four hours after receipt.              

We and EU Energy further agreed pursuant to the terms of the Letter that Michael
Porter will continue to serve as Chief Executive Officer of EU Energy, which    
will be operated as our wholly-owned subsidiary after the closing of the        
proposed acquisition, and that Mr. Porter will be appointed to serve on our     
board of directors. In addition, prior to and as a condition to closing of the  
proposed acquisition, EU Energy will complete an audit of all necessary         
financial statements in accordance with generally accepted accounting principles
applicable in the UK and Germany and also reported in the United States of      
America.                                                                        

We agreed with EU Energy to each be solely responsible for our own respective   
expenses incurred in connection with the Letter or pursuing or consummating the 
Definitive Agreement, the proposed acquisition and the transactions contemplated
thereby.                                                                        

Unless the Letter is automatically extended for a 30-day period if the closing  
of the proposed acquisition cannot occur due to delays with the audit of EU     
Energy's financial statements for its fiscal year ended March 31, 2006, the     
Letter terminates as follows: 90 days after the date of acceptance of this      
Letter without any further action by the parties, at any time by mutual written 
consent of both parties, upon the closing of the proposed acquisition, or by    
either us or EU Energy by written notice to the other party if there has been a 
material breach of this Letter by the other party.                              

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Our Company                                                                     

We develop, manufacture and market products incorporating composite technologies
to the global electric utility industry. Our products are designed to improve   
the performance and capacity of electrical transmission and distribution grids. 
We provide connecting hardware, line design assistance, proprietary software for
line design, a comprehensive long term warranty for our cables and supporting   
services related to the installation and design of power lines using our        
products.                                                                       

Our principal product is our proprietary patent pending composite reinforced    
bare overhead conductor known as Aluminum Conductor Composite Core, or ACCC. Our
innovative use of a strong composite core effectively eliminates most of the    
cable sag resulting from the heat generated by the electrical resistance of the 
cable as it carries electrical current. Our cable can transmit more power than  
conventional cables of the same diameter and weight. The lightweight            
high-strength composite core also allows more conductive aluminum to be wound   
around it, thereby creating energy savings through less line losses under       
comparable operating conditions. Our bare overhead conductor cables have unique 
properties that provide them with significantly improved product characteristics
over traditional bare overhead conductor cables known as ACSR.                  

We were incorporated in Florida on February 26, 1980 and reincorporated in      
Nevada on June 27, 2001. We maintain our principal offices at 2026 McGaw Avenue,
Irvine, California 92614. Our telephone number at that address is (949)         
428-8500. Our Web site address is www.compositetechcorp.com. The information    
contained on our Web site is not a part of this prospectus. Further, our        
reference to this website is intended to be inactive textual reference only.    

2005 Bankruptcy Proceedings                                                     

On May 5, 2005 we filed a voluntary reorganization plan and disclosure statement
under the provisions of Title 11 of the Federal Bankruptcy Code in the United   
States Bankruptcy Court for the Central District of California under case number
SA 05-13107 JR. The Bankruptcy Court established August 9, 2005 as the bar date 
for the filing of claims for liabilities or damages that existed prior to May 5,
2005. The order approving our bankruptcy plan was entered November 18, 2005. As 
of December 11, 2005, all allowed general unsecured claims under the plan were  
paid in full. Substantially all claims filed have been resolved.                

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We have two remaining unresolved claims relating to our Chapter 11 Bankruptcy   
filing as of the date of this prospectus. First, Patricia vanMidde, a former    
consultant to the Company, claims that we did not issue 250,000 shares of common
stock alleged to have been promised in 2004 for services rendered. We believe   
that there was no promise of such a share issuance and that the claim is without
merit. Second, the holders of $15 million August, 2004 Debentures reserved their
right to make a claim in the bankruptcy against the Company for liquidated      
damages allegedly resulting from a delay in the registration of the common      
shares issuable in the event the Debentures and warrants were converted. We     
believe that no damages are due under this potential claim principally because  
the registration was delayed as a result of questions relating to the bankruptcy
and thus the shares could never have been registered on time. Delays due to the 
bankruptcy were expressly excluded under the revised Debenture agreement. A     
hearing on this claim is scheduled for June 6, 2006 in front of the bankruptcy  
court.                                                                          

We filed for voluntary reorganization because multiple lawsuits were taxing the 
Company's managerial, operational and financial resources and threatened to     
divert management from their duties of running the business. One of these       
lawsuits had resulted in an attachment of more than $2.5 million of the         
Company's funds. We believed that the bankruptcy filing would release cash for  
the operation of our business, give us a reprieve from burdensome litigation so 
that management could focus on marketing and sales, and stay attempts to        
collect, secure or enforce remedies with respect to most pre-petition claims. We
also chose to have these lawsuits heard by the Bankruptcy Court as part of the  
reorganization to provide a fair and reasonable means of addressing each claim  
and affording the same treatment to each claim. Had the lawsuits proceeded in   
different jurisdictions there would have been a possibility of inconsistent     
judgments.                                                                      

Shares Registered in this Prospectus                                            

Private Placement of Shares of Common Stock underlying Convertible Notes and    
Warrants                                                                        

On March 2, 2006, we closed a financing transaction in which we sold 14.0%      
convertible notes to select institutional accredited investors, in order to     
raise a total of $3,500,000. The convertible notes mature on September 3, 2006. 
Interest on the notes started accruing on March 2, 2006 and is payable in       
arrears, in cash, on the last day of each month during the time period from     
March 3, 2006 until the notes mature. The investors also received warrants to   
purchase an aggregate of 2,750,000 shares of common stock ("shares") for a term 
of 36 months, 750,000 of which shares can be purchased at a warrant exercise    
price of $1.55 per share and the balance of which can be purchased at an        
exercise price of $2.00 per share.                                              

The investors may convert the notes into our common stock for $1.55 per share   
prior to September 2, 2006. The investors, however, may not voluntarily convert 
the notes if after giving effect to such conversion, an investor would          
beneficially own in excess of 4.99% of the number of shares of our common stock 
outstanding, unless they provide 60 days prior written notice to us that they   
wish to increase such percentage, and in any case, may not convert a note if    
after giving effect to such conversion, an investor would beneficially own in   
excess of 9.99% of the number of shares of our common stock outstanding.        

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Lane Capital Markets acted as our exclusive placement agent and financial       
advisor in connection with the placement of the notes. In consideration for Lane
Capital's services, it received a fee comprising a cash payment in an amount of 
six percent of the face value of the Notes, together with a warrant to purchase 
up to 150,000 shares of common stock of the Company with an exercise price per  
share of $1.55 exercisable during a three year term.                            

Shares included in this prospectus due to the March 2006 private placement      
include:                                                                        

   o     2,258,068 shares issuable upon conversion of 14.0% Senior Secured
          Convertible Notes we issued to certain of the selling shareholders
on March 2, 2006 in a private placement transaction;    

    o     2,750,003 shares issuable upon exercise of warrants that we issued
            to those selling shareholders in the March 2, 2006 private placement
transaction; and                                        

o     500,815 shares that we are required to register pursuant to   
         agreements with those selling shareholders that we would register
            110% of the number of shares of common stock expected to be issuable
           upon conversion of the Notes and exercise of the Warrants, to cover
           our contingent obligations to issue additional shares are triggered
due to events such as dilutive issuances.               

Other Shares                                                                    

In addition to the shares included in this prospectus based on the March 2006   
private placement, this prospectus covers:                                      

   o     1,308,142 shares held by other selling shareholders that acquired
them in a January 30, 2006 settlement;                  

    o     863,420 shares including 600,000 shares issuable upon the exercise
      of warrants held by a selling shareholder that acts as a media
relations consultant; and                               

o     12,362 shares of common stock underlying warrants issued for  
     services rendered in conjunction with obtaining capital lease
financing.                                              

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The January 30, 2006 settlement related to 6% Senior Convertible Notes in the   
aggregate principal amount of $6,000,000 and related warrants issued on October 
13, 2005. The holders of these notes converted their principal into 3,870,872   
shares of stock registered in connection with our bankruptcy under Bankruptcy   
Code Section 1145. The additional 1,208,142 shares registered hereby were issued
in return for the holders voluntarily converting the principal and amending and 
modifying the Senior Convertible Notes and related warrants to allow us to raise
additional funds. We issued 78,489 shares of common stock, valued at $135,000,  
to Lane Capital to facilitate the settlement. Upon the closing of the October   
13, 2005 financing, Lane Capital received 232,258 shares of our common stock,   
warrants to purchase 96,774 shares of our common stock at an exercise price of  
$1.78 per share and warrants to purchase 96,774 shares of our common stock at an
exercise price of $1.94 per share.                                              

The Offering                                                                    

Common Stock offered by the                                                     
selling shareholders                 7,692,810 shares                           
Shares of our Common Stock                                                      
outstanding as of May 31, 2006       136,368,543 shares                         
Selling Shareholders                 See "Selling Shareholders" for more        
                                 information on the selling shareholders
             in this transaction

Use of Proceeds                      We will not receive any proceeds from the  
                         sale of shares in this offering

Trading symbol                       CPTC                                       

We agreed with the selling shareholders that received equity from the March 2006
private placement to keep this prospectus effective until the earlier of: (i)   
the date on which the shares may be resold by such selling shareholders without 
restriction pursuant to Rule 144(k) (or any successor thereto) promulgated under
the Securities Act of 1933, as amended, or any other rule of similar effect, or 
(ii) all of the shares have been sold pursuant to the prospectus or Rule 144    
under the Securities Act or any other rule of similar effect.                   

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RISK FACTORS

An investment in the common stock offered under this prospectus involves a high 
degree of risk. In addition to the other information in this prospectus and the 
documents incorporated by reference in this prospectus, the following risk      
factors should be considered carefully in evaluating CTC and our business. All  
forward-looking statements are inherently uncertain as they are based on current
expectations and assumptions concerning future events or future performance of  
CTC. Do not place undue reliance on the forward-looking statements in this      
document, which are only predictions and speak only as of the date on the cover 
of this prospectus. In evaluating such statements, prospective investors should 
review carefully various risks and uncertainties identified in this prospectus, 
including the matters set forth below and in our other SEC filings which are    
incorporated in this prospectus by reference. These risks and uncertainties     
could cause our actual results to differ materially from those indicated in the 
forward-looking statements. We undertake no obligation to update or publicly    
announce revisions to any forward-looking statements to reflect future events or
developments, except as required by law.                                        

FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS                                

OUR TITLE 11 PROCEEDINGS MAY RESULT IN A NEGATIVE PUBLIC PERCEPTION OF US THAT  
MAY ADVERSELY AFFECT OUR RELATIONSHIPS WITH CUSTOMERS, AS WELL AS OUR BUSINESS, 
RESULTS OF OPERATIONS AND FINANCIAL CONDITION.                                  

Although our plan of reorganization was confirmed by the Bankruptcy Court and   
has been substantially consummated, our Title 11 filing may hinder our ongoing  
business activities and our ability to operate, fund and execute our business   
plan by:                                                                        

(i) impairing relations with existing and potential customers;      

   (ii) negatively impacting our ability to attract, retain and compensate
key executives and associates and to retain employees generally;                

(iii) limiting our ability to obtain additional funding; and        

    (iv) impairing present and future relationships with strategic partners.

BECAUSE WE ARE IN AN EARLY STAGE OF COMMERCIALIZATION, OUR LIMITED HISTORY OF   
OPERATIONS MAKES EVALUATION OF OUR BUSINESS AND FUTURE GROWTH PROSPECTS         
DIFFICULT.                                                                      

Since the reorganization of the Company in 2001, we have had a limited operating
history and are at an early stage of commercialization of a new technology      
product to a market unused to using new technologies. We made our ACCC available
and entered into our first commercial agreement in 2003. Our technology is a    
relatively new advance for the electrical utility industry technology and has   
not yet achieved widespread adoption. We do not have enough experience in       
selling our products at a level consistent with broad market acceptance and do  
not know whether we can do so and generate a profit. As a result of these       
factors, it is difficult to evaluate our prospects, and our future success is   
more uncertain than if we had a longer or more proven history of operations.    

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WE EXPECT FUTURE LOSSES AND OUR FUTURE PROFITABILITY IS UNCERTAIN.              

Prior to acquiring Transmission Technology Corporation, or TTC, in November     
2001, we were a shell corporation having no operating history, revenues from    
operations, or assets since December 31, 1989. We have recorded approximately   
$1.0 million in ACCC product sales since inception. Historically, we have       
incurred substantial losses and we may experience significant quarterly and     
annual losses for the foreseeable future.                                       

We may not ever become profitable. If we do achieve profitability, we may not be
able to sustain or increase profitability on a quarterly or annual basis. We    
expect the need to significantly increase our general administrative and product
prototype and equipment prototype production expenses, as necessary. As a       
result, we will need to generate significant revenues to achieve and maintain   
profitability.                                                                  

OUR INDEPENDENT AUDITORS HAVE ISSUED A QUALIFIED REPORT AS OF AND FOR THE YEAR  
ENDED SEPTEMBER 30, 2005 WITH RESPECT TO OUR ABILITY TO CONTINUE AS A GOING     
CONCERN, AND WE MAY NEVER ACHIEVE PROFITABILITY.                                

Since inception, our accountants have issued a report relating to our           
audited financial statements which contains a qualification with respect to our 
ability to continue as a going concern because, among other things, our ability 
to continue as a going concern is dependent upon our ability to generate        
profitable operations in the future or to obtain the necessary financing to meet
our obligations and repay our liabilities from normal business operations when  
they come due. There is no guarantee that the product will be accepted or       
provide a marketable advantage, and therefore, no guarantee that the            
commercialization will ever be profitable.                                      

For the six months ended March 31, 2006, we had a net loss of $13,753,555 and   
negative cash flows from operations of $9,682,336. For the fiscal year ended    
September 30, 2005, we had a net loss of $40,163,407 and negative cash flows    
from operations of $2,439,151. For the fiscal years ended September 30, 2004 and
2003, we had net losses of $14,687,874 and $6,771,252 respectively. For the same
periods, we had negative cash flows from operations of $18,735,430 and          
$2,022,935, respectively.                                                       

As of March 31, 2006, our accumulated deficit was $80,356,318.                  

WE HAVE EXPERIENCED DIFFICULTIES IN COLLECTING ACCOUNTS RECEIVABLE, WHICH COULD 
HARM OUR BUSINESS AND RESULT IN HIGHER LOSSES THAN ANTICIPATED.                 

Our management believed the $2.5 million receivable to be collectible from      
Global American Energy for work carried out between March 31, 2003 and September
30, 2004 as of the original filing date of our annual report for the year ended 
September 30, 2004 through the date that the initial payment from Global        
American Energy was returned for insufficient funds. We recorded the entire     
balance outstanding of $2,500,000 as services revenue in fiscal 2004 and        
included it in our accounts receivable balance as of September 30, 2004. As of  
August 9, 2005, all payments made to us were returned for insufficient funds and
no additional payments have been received. As such, we recorded into the quarter
ending June 30, 2005 an allowance for uncollectible accounts in the amount of   
$2.5 million that remained uncollectible as of March 31, 2006.                  

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Accounts receivable may not result in actual revenue because we have experienced
issues surrounding payment for our services. Consequently, we may have to       
maintain significant allowances for uncollectible or doubtful accounts. If we   
fail to realize revenue from our accounts receivable or we do not recognize that
revenue on our anticipated timeframe, our operating results in future reporting 
periods may be materially impacted due to decreased revenue. Failure to         
recognize our accounts receivable may result in higher losses than anticipated  
and have an adverse impact or our cash flow.                                    

OUR INABILITY TO RAISE ADDITIONAL WORKING CAPITAL AT ALL OR TO RAISE IT IN A    
TIMELY MANNER COULD NEGATIVELY IMPACT OUR ABILITY TO FUND OUR OPERATIONS, TO    
GENERATE REVENUES, AND TO OTHERWISE EXECUTE OUR BUSINESS PLAN, LEADING TO THE   
REDUCTION OR SUSPENSION OF OUR OPERATIONS AND ULTIMATELY OUR GOING OUT OF       
BUSINESS.                                                                       

While we have raised significant capital in the past through our debt offerings 
and private equity placements, we anticipate that the sales of our ACCC cable   
will not be sufficient enough to sustain our operations, and further anticipate 
that we will continue to incur net losses due to our costs exceeding our        
revenues for an indefinite period of time. For these reasons, we believe that we
will need to raise additional capital until such time, if any, as we become     
cash-flow positive. It is highly likely that we will continue to seek to raise  
money through public or private sales of our securities, debt financing or      
short-term loans, corporate collaborations or a combination of the foregoing.   
Our ability to raise additional funds in the public or private markets will be  
adversely affected if the results of our business operations are not favorable, 
if any products developed are not well-received or if our stock price or trading
volume is low. Moreover, additional funding may not be available on favorable   
terms to us, or at all. To the extent that money is raised through the sale of  
our securities, the issuance of those securities could result in dilution to our
existing shareholders. If we raise money through debt financing, we may be      
required to secure the financing with all of our business assets, which could be
sold or retained by the creditor should we default in our payment obligations.  
Should the financing we require to sustain our working capital needs be         
unavailable or prohibitively expensive when we require it, we may not be able to
complete the commercialization of any products that we may have developed. As a 
result, we may be required to discontinue our operations without obtaining any  
value for our products under development, which could eliminate shareholder     
equity, or we could be forced to relinquish rights to some or all of our        
products in return for an amount substantially less than we expended to develop 
such products.                                                                  

IF OUR PRODUCT IS NOT ACCEPTED BY OUR POTENTIAL CUSTOMERS, IT IS UNLIKELY THAT  
WE WILL EVER BECOME PROFITABLE.                                                 

The electrical utility industry has historically used a variety of technologies,
including a variety of technologies involving steel cable. Compared to these    
conventional technologies, our technology is relatively new, and the number of  
companies using our technology is limited. The commercial success of our product
will depend upon the widespread adoption of our technology as a preferred method
by major utility companies to transmit electricity. In order to be successful,  
our product must meet the technical and cost requirements for electric          
transmission within the electric utility industry. Market acceptance will depend
on many factors, including:                                                     

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     (i)   the willingness and ability of customers to adopt new technologies;

      (ii)  our ability to convince prospective strategic partners and customers
        that our technology is an attractive alternative to conventional
methods used by the electric utility industry;          

     (iii) our ability to change our customers' evaluation of the economics of
        powerline construction, changing their focus on limiting initial
            capital costs to evaluating the cost and benefit of the full life of
          a line liberating capital funding to acquire our products that can
overall reduce costs in power transmission; and         

(iv)  our ability to sell sufficient quantities of our products.    

Because of these and other factors, our product may not gain market acceptance  
or become the industry standard for the electrical utility industry. The failure
of utility companies to purchase our products would have a material adverse     
effect on our business, results of operations and financial condition.          

IF WE FAIL TO PROPERLY MANAGE OUR GROWTH EFFECTIVELY, OUR BUSINESS COULD BE     
ADVERSELY AFFECTED.                                                             

The transition from a small company focused on research and development of our  
products to a company with the additional focus on commercial production,       
marketing, and sales has placed and will continue to place a significant strain 
on our managerial, operational, and financial resources. Although we rely       
significantly on the General Cable sales force pursuant to the recent agreements
that we entered into with General Cable, the failure to manage our sales and    
growth effectively could have a material adverse effect on our business, results
of operations and financial condition. Significant additional growth will be    
necessary for us to achieve our plan of operation.                              

Failure to adequately protect our proprietary rights could enable third parties 
to use our technology, or very similar technology, and could reduce our ability 
to compete in the market, and any proprietary rights litigation could be time   
consuming and expensive to prosecute and defend.                                

Due to the importance of proprietary technology in the electrical utility       
industry, establishment of patents and other proprietary rights is important to 
our success and our competitive position. Performance in the electrical utility 
industry can depend, among other factors, on patent protection. Accordingly, we 
have filed patent applications in the U.S. and internationally for all aspects  
of our composite materials, products and processes, including aspects of our    
product other than the core, and intend to devote substantial resources to the  
establishment and protection of patents and other proprietary rights. Despite   
our efforts to establish and protect our patents or other proprietary rights,   
unauthorized parties may attempt to copy aspects of our technology or to obtain 
and use information that we regard as proprietary. In addition, the laws of some
foreign countries do not protect our proprietary rights to as great an extent as
do the laws of the United States. Our means of establishing and protecting our  
proprietary rights may not be adequate and our competitors may independently    
develop similar technology, duplicate our products or design around our patents 
or our other proprietary rights.                                                

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As a result, our business involves a risk of overlap with third party patents   
and subsequent litigation with competitors or patent-holders. Any claims, with  
or without merit, could be time-consuming, result in costly litigation, or cause
us to enter into licensing agreements.                                          

WE OCCASIONALLY MAY BECOME SUBJECT TO LEGAL DISPUTES THAT COULD HARM OUR        
BUSINESS.                                                                       

We are currently the subject of, and may from time to time become engaged in,   
legal disputes such as claims by consultants or other third parties. These      
disputes could result in monetary damages or other remedies that could adversely
impact our financial position or operations. We believe these claims are without
merit and intend to vigorously defend against them. However, even if we prevail 
in disputes such as this, the defense of these disputes will be expensive and   
time-consuming and may distract our management from operating our business.     

WE DEPEND ON KEY PERSONNEL IN A COMPETITIVE MARKET FOR SKILLED EMPLOYEES AND    
FAILURE TO ATTRACT AND RETAIN QUALIFIED EMPLOYEES COULD SUBSTANTIALLY HARM OUR  
BUSINESS.                                                                       

We rely to a substantial extent on the management, marketing and product        
development skills of our key employees, particularly Benton H Wilcoxon, our    
Chief Executive Officer, and Marv Sepe, President of our Cable Division. If Mr. 
Wilcoxon or Mr. Sepe were unable to provide services to us for whatever reason, 
our business would be adversely affected. Neither Mr. Wilcoxon nor Mr. Sepe has 
entered into an employment agreement with the Company.                          

In addition, our ability to develop and market our products and to achieve      
profitability will depend on our ability to attract and retain highly talented  
personnel. We face intense competition for personnel from other companies in the
electrical utility industry. The loss of the services of our key personnel or   
the inability to attract and retain the additional, highly-talented employees   
required for the development and commercialization of our products, may         
significantly delay or prevent the achievement of product development and could 
have a material adverse effect on us.                                           

A FAILURE TO ESTABLISH AND MAINTAIN RELATIONSHIPS WITH STRATEGIC PARTNERS MAY   
HARM OUR BUSINESS.                                                              

We have entered into purchase and distribution agreements with General Cable to 
manufacture and distribute our ACCC product in the United States and Canada. Our
success is dependent upon establishing and maintaining relationships with       
strategic partners, such as our relationship with General Cable. We face        
numerous risks in successfully obtaining suitable partners on terms consistent  
with our business model, including, among others:                               

(i)   we must typically undergo a lengthy and expensive process of  
            building a relationship with a potential partner before there is any
assurance of an agreement with such party;              

    (ii)  we must persuade cable manufacturers with significant resources to
          rely on us for critical technology on an ongoing basis rather than
trying to develop similar technology internally;        

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(iii) we must persuade potential partners to bear retooling costs   
associated with producing our products; and             

   (iv)  we must successfully transfer technical know-how to our partners.

Moreover, the success of our business model also depends on the acceptance of   
our products by the utility companies who have historically been conservative in
their adoption of new products and technologies into their infrastructure.      
Further, our partners will be selling our products that may compete with their  
existing or future cable products. Our partners are not required to sell our    
products and they are not prohibited from discounting the prices of their       
products below our prices.                                                      

Our business could be seriously harmed if: (i) we cannot obtain suitable        
partners; (ii) our partners fail to achieve significant sales of ACCC cable or  
products incorporating our technology; or (iii) we otherwise fail to implement  
our business strategy successfully.                                             

WE CANNOT CONTROL THE COST OF OUR RAW MATERIALS, WHICH MAY ADVERSELY AFFECT OUR 
BUSINESS.                                                                       

Our principal raw materials are glass and carbon fibers, plus various polymer   
resins and aluminum. The prices for these raw materials are subject to market   
forces largely beyond our control, including energy costs, organic chemical feed
stocks, market demand, and freight costs. The prices for these raw materials    
have varied significantly and may vary significantly in the future. We may not  
be able to adjust our product prices, especially in the short-term, to recover  
the costs of increases in these raw materials. Our future profitability may be  
adversely affected to the extent we are unable to pass on higher raw material   
and energy costs to our customers.                                              

INTERRUPTIONS OF SUPPLIES FROM OUR KEY SUPPLIERS MAY AFFECT OUR RESULTS OF      
OPERATIONS AND FINANCIAL PERFORMANCE.                                           

Interruptions or shortages of supplies from our key suppliers of raw materials  
could disrupt production or impact our ability to increase production and sales.
We use a limited number of sources for most of the other raw materials that we  
use. We do not have long-term or volume purchase agreements with most of our    
suppliers, and may have limited options in the short-term for alternative supply
if these suppliers fail, for any reason, including their business failure or    
financial difficulties, to continue the supply of materials or components.      
Moreover, identifying and accessing alternative sources may increase our costs. 

WE ARE CONTROLLED BY A SMALL NUMBER OF SHAREHOLDERS, WHOSE INTERESTS MAY DIFFER 
FROM OTHER SHAREHOLDERS.                                                        

As of May 30, 2006, Benton H Wilcoxon, our Chairman of the Board, Chief         
Executive Officer and Acting Chief Financial Officer, and C. William Arrington, 
our former COO and former director, in the aggregate beneficially own or control
approximately 29% of the outstanding common stock. As a result, these persons   
have controlling influence in determining the outcome of any corporate matters  
submitted to our shareholders for approval, including mergers, consolidations   
and the sale of all or substantially all of our assets, election of directors   
and other significant corporate actions. They also have the power to prevent or 
cause a change in control. The interests of these shareholders may differ from  
the interests of the other shareholders, and may limit the ability of other     
shareholders to affect our management and affairs.                              

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WE WILL LIKELY EXPERIENCE CUSTOMER CONCENTRATION, WHICH MAY EXPOSE US TO ALL OF 
THE RISKS FACED BY OUR POTENTIAL MATERIAL CUSTOMERS.                            

Until and unless we secure multiple customer relationships, it is likely that we
will experience periods during which we will be highly dependent on one or a    
limited number of customers. Dependence on a single or a few customers will make
it difficult to satisfactorily negotiate attractive prices for our products and 
will expose us to the risk of substantial losses if a single dominant customer  
stops conducting business with us. Moreover, to the extent that we may be       
dependent on any single customer, we could be subject to the risks faced by that
customer to the extent that such risks impede the customer's ability to stay in 
business and make timely payments to us.                                        

OUR BUSINESS MAY BE SUBJECT TO INTERNATIONAL RISKS.                             

We are pursuing international business opportunities, including in China,       
Mexico, Brazil, Europe, the Middle East, certain far eastern countries and      
Africa. As to international business in the Middle East, our current target     
markets include Saudi Arabia, Qatar, United Arab Emirates, Oman, Bahrain, Libya,
Iraq, Afghanistan and Jordan. Of these the only countries that we believe pose a
particular problem are Iraq and Afghanistan as a result of additional           
instability. In Africa we are actively pursuing South Africa and Kenya as well  
as engaging in discussions with engineering companies that bid on trans-African 
projects. There are no special additional risks related to these countries that 
are not disclosed in the list of risks affecting most international business. To
date, we have not engaged in any transactions on these countries. Our business  
model has been implemented only in the United States and Canada where we produce
the ACCC core for delivery to General Cable under a manufacturing agreement and 
for ACCC cable orders in China. Expansion internationally will depend on our    
adaptation of this model to international markets and may be costly and time    
consuming. Risks inherent in international operations in general include:       

(i)      unexpected changes in regulatory requirements, export
   restrictions, tariffs and other trade barriers;

  (ii)     challenges in staffing and managing foreign operations;

   (iii)    differences in technology standards, employment laws and
business practices;                         

    (iv)     longer payment cycles and problems in collecting accounts
receivable;                                 

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(v)      political instability;                               

(vi)     changes in currency exchange rates;                  

(vii)    currency exchange controls; and                      

(viii)   potentially adverse tax consequences.                

In particular, certain of our target markets in the Middle East include Iraq and
Afghanistan in which there is considerable violent instability that may affect  
our ability to operate in those markets.                                        

COMPLIANCE WITH ENVIRONMENTAL REGULATIONS COULD INCREASE OUR OPERATING COSTS,   
WHICH WOULD ADVERSELY AFFECT THE COMMERCIALIZATION OF OUR TECHNOLOGY.           

Our intended operations are subject to various federal, state, and local laws   
and regulations relating to the protection of the environment. These            
environmental laws and regulations, which have become increasingly stringent,   
are implemented principally by the Environmental Protection Agency and          
comparable state agencies, and govern the management of hazardous wastes, the   
discharge of pollutants into the air and into surface and underground waters,   
and the manufacture and disposal of certain substances. There are no material   
environmental claims currently pending or, to our knowledge, threatened against 
us. In addition, we believe our planned operations will be implemented in       
compliance with the current laws and regulations. We estimate that any expenses 
incurred in maintaining compliance with current laws and regulations will not   
have a material effect on our earnings or capital expenditures. However, there  
can be no assurance that current regulatory requirements will not change, that  
currently unforeseen environmental incidents will not occur, or that past       
non-compliance with environmental laws will not be discovered.                  

CHANGES IN INDUSTRY STANDARDS AND REGULATORY REQUIREMENTS MAY ADVERSELY AFFECT  
OUR BUSINESS.                                                                   

As a manufacturer and distributor of wire and cable products we are subject to a
number of industry standard-setting authorities, such as the Institute of       
Electrical and Electronic Engineers, the European based International Council on
Large Electric Systems, the American Society of Testing and Materials and the   
Canadian Standards Association. In addition, many of our products may become    
subject to the requirements of federal, state and local or foreign regulatory   
authorities. Changes in the standards and requirements imposed by such          
authorities could have an adverse effect on us. In the event we are unable to   
meet any such standards when adopted our business could be adversely affected.  
In addition, changes in the legislative environment could affect the growth and 
other aspects of important markets served by us. While certain legislative bills
and regulatory rulings are pending in the energy and telecommunications sectors 
which could improve our markets, any delay or failure to pass such legislation  
and regulatory rulings could adversely affect our opportunities and anticipated 
prospects may not arise. It is not possible at this time to predict the impact  
that any such legislation or regulation or failure to enact any such legislation
or regulation, or other changes in laws or industry standards that may be       
adopted in the future, could have on our financial results, cash flows or       
financial position.                                                             

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WE EXPERIENCE COMPETITION FROM OTHER COMPANIES IN THE ELECTRICAL UTILITY        
INDUSTRY, WHICH COULD RENDER OUR PRODUCTS OBSOLETE OR SUBSTANTIALLY LIMIT THE   
VOLUME OF PRODUCTS THAT WE SELL. THIS WOULD LIMIT OUR ABILITY TO COMPETE AND    
ACHIEVE PROFITABILITY.                                                          

The market in which we compete is intensely competitive. Our competitors include
makers of traditional bare overhead wire and other companies with               
developmental-stage products that may be marketing or developing products that  
compete with our products or would compete with them if developed. There is no  
certainty that our competitors will not be better able access to capital or     
achieve unique technological advances that render our products obsolete. We     
believe our competitors will continue to improve the design and performance of  
their products and to introduce new products with competitive price and         
performance characteristics. We expect that we will be required to continue to  
invest in product development, productivity improvements and customer service   
and support in order to compete in our markets. Such competitors could develop a
more efficient product or undertake more aggressive and costly marketing        
campaigns than us which may adversely affect our marketing strategies and could 
have a material adverse effect on our business, results of operations or        
financial condition. In addition, as we introduce new products, we will compete 
directly with a greater number of companies. There is no assurance that we will 
compete successfully against current or future competitors nor can there be any 
assurance that competitive pressures faced by us will not result in increased   
marketing costs, loss of market share or otherwise will not materially adversely
affect our business, results of operations and financial condition.             

Risks Related To Our Securities                                                 

THERE IS CURRENTLY A LIMITED TRADING MARKET FOR OUR COMMON STOCK, SO YOU MAY BE 
UNABLE TO LIQUIDATE YOUR SHARES IF YOU NEED MONEY.                              

Our common stock is traded in the OTC market through the OTC Bulletin Board.    
There is currently an active trading market for the common stock; however there 
can be no assurance that an active trading market will be maintained. Trading of
securities on the OTC Bulletin Board is generally limited and is effected on a  
less regular basis than that effected on other exchanges or quotation systems,  
such as the NASDAQ Stock Market, and accordingly investors who own or purchase  
common stock will find that the liquidity or transferability of the common stock
is limited. Additionally, a shareholder may find it more difficult to dispose   
of, or obtain accurate quotations as to the market value, of common stock. There
can be no assurance that the common stock will ever be included for trading on  
any stock exchange or through any other quotation system, including, without    
limitation, the NASDAQ Stock Market.                                            

THE APPLICATION OF THE PENNY STOCK RULES COULD ADVERSELY AFFECT THE MARKET PRICE
OF OUR COMMON STOCK.                                                            

As long as the trading price of our common stock is below $5.00 per share, the  
open-market trading of our common stock will be subject to the penny stock      
rules. The penny stock rules impose additional sales practice requirements on   
broker-dealers who sell securities to persons other than established customers  
and accredited investors, generally those with assets in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 together with their spouse. For    
transactions covered by these rules, the broker-dealer must make a special      
suitability determination for the purchase of securities and have received the  
purchaser's written consent to the transaction before the purchase.             
Additionally, for any transaction involving a penny stock, unless exempt, the   
broker-dealer must deliver, before the transaction, a disclosure schedule       
prescribed by the Securities and Exchange Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the  
securities. Finally, monthly statements must be sent disclosing recent price    
information on the limited market in penny stocks. These additional burdens     
imposed on broker-dealers may restrict the ability of broker-dealers to sell the
common stock and may affect a shareholder's ability to resell the common stock. 

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Shareholders should be aware that, according to Securities and Exchange         
Commission Release No. 34-29093, dated April 17, 1991, the market for penny     
stocks has suffered in recent years from patterns of fraud and abuse. Such      
patterns include: (i) control of the market for the security by one or a few    
broker-dealers that are often related to the promoter or issuer; (ii)           
manipulation of prices through prearranged matching of purchases and sales and  
false and misleading press releases; (iii) boiler room practices involving      
high-pressure sales tactics and unrealistic price projections by inexperienced  
sales persons; (iv) excessive and undisclosed bid-ask differential and markups  
by selling broker-dealers; and (v) the wholesale dumping of the same securities 
by promoters and broker-dealers after prices have been manipulated to a desired 
level, along with the resulting inevitable collapse of those prices and with    
consequent investor losses.                                                     

THE PRICE OF OUR COMMON STOCK IS VOLATILE. VOLATILITY MAY INCREASE IN THE       
FUTURE, WHICH COULD AFFECT OUR ABILITY TO RAISE CAPITAL IN THE FUTURE OR MAKE IT
DIFFICULT FOR INVESTORS TO SELL THEIR SHARES.                                   

The market price of our common stock may be subject to significant fluctuations 
in response to our operating results, announcements of new products or market   
expansions by us or our competitors, changes in general conditions in the       
economy, the financial markets, the electrical power transmission and           
distribution industry, or other developments and activities affecting us, our   
customers, or our competitors, some of which may be unrelated to our            
performance. The sale or attempted sale of a large amount of common stock into  
the market may also have a significant impact on the trading price of our common
stock. During the last 12 months, the closing bid prices for our common stock   
have fluctuated from a high of $3.17 to a low of $0.75. Fluctuations in the     
trading price or liquidity of our common stock may adversely affect our ability 
to raise capital through future equity financings.                              

WE DO NOT ANTICIPATE PAYING DIVIDENDS IN THE FORESEEABLE FUTURE. THE LACK OF    
DIVIDENDS MAY REDUCE YOUR RETURN ON AN INVESTMENT IN OUR COMMON STOCK.          

To the extent we have earnings, we plan to use them to fund our operations. We  
have not paid dividends on the common stock and do not anticipate paying such   
dividends in the foreseeable future. We cannot guarantee that we will, at any   
time, generate sufficient surplus cash that would be available for distribution 
as a dividend to the holders of our common stock. Therefore, any return on your 
investment would derive from an increase in the price of our stock, which may or
may not occur.                                                                  

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In the past, following periods of volatility in the market price of a company's 
securities, securities class action litigation has often been instituted. If a  
securities class action suit is filed against us, we would incur substantial    
legal fees and our management's attention and resources would be diverted from  
operating our business in order to respond to the litigation.                   

WE ISSUED DULY AUTHORIZED SHARES TO EMPLOYEES AND CONSULTANTS UNDER OUR 2002    
NON-QUALIFIED STOCK COMPENSATION PLAN UNDER THE INCORRECT ASSUMPTION THAT WE HAD
REGISTERED THE SHARES PURSUANT TO FEDERAL SECURITIES LAWS. HOWEVER, WE          
SUBSEQUENTLY REALIZED THAT THESE SHARES HAD NOT BEEN REGISTERED PRIOR TO        
ISSUANCE. AS A RESULT, OUR ISSUANCE MAY HAVE VIOLATED FEDERAL AND STATE         
SECURITIES LAWS, AND MAY RESULT IN OUR LIABILITY TO CERTAIN SUBSEQUENT          
PURCHASERS OF THESE SHARES.                                                     

Between March 18, 2003 and February 4, 2004 we issued common stock and options  
representing 1,504,780 shares of common stock to nine employees and consultants 
in satisfaction of bona fide services rendered and valued at an aggregate amount
of $880,266 pursuant to our 2002 Non-Qualified Stock Compensation Plan. Although
we believed that we and our counsel had filed the appropriate registration      
statement on Form S-8, it came to our attention in February, 2004 in connection 
with the preparation of a registration statement that an appropriate Form S-8   
had not been filed. It may be determined that such issuances were not exempt    
from registration or qualification under federal and state securities laws, and 
we did not obtain the required registrations or qualifications. As a result, we 
may be subject to contingent liabilities from these investors, as well as       
subsequent purchasers of the shares directly and indirectly issued. These       
liabilities may include an obligation to make a rescission offer to the holders 
of these shares and options. If rescission is required and accepted, we could be
required to make payments to the holders of these shares and options. In        
addition, federal securities laws do not expressly provide that a rescission    
offer will terminate a purchaser's right to rescind a sale of stock that was not
registered as required. If rescission is required, and any or all of the        
offerees reject the rescission offer, we may continue to be liable under federal
and state securities laws.                                                      

AS OF MAY 31, 2006 5,716,582 COMMON SHARES ARE ISSUABLE UPON EXERCISE OF ALL    
OUTSTANDING OPTIONS, WARRANTS AND CONVERSION OF CONVERTIBLE NOTES FOR LESS THAN 
THE MARKET PRICE OF $1.16 PER SHARE. CASH PROCEEDS RESULTING FROM THE FULL      
EXERCISE AND CONVERSION OF THESE SECURITIES WOULD BE APPROXIMATELY $3,224,324.  
THE EXERCISE OR CONVERSION OF THESE SECURITIES COULD RESULT IN THE SUBSTANTIAL  
DILUTION OF THE COMPANY IN TERMS OF A PARTICULAR PERCENTAGE OWNERSHIP IN THE    
COMPANY AS WELL AS THE BOOK VALUE OF THE COMMON SHARES. THE SALE OF A LARGE     
AMOUNT OF COMMON SHARES RECEIVED UPON EXERCISE OF THESE OPTIONS OR WARRANTS ON  
THE PUBLIC MARKET TO FINANCE THE EXERCISE PRICE OR TO PAY ASSOCIATED INCOME     
TAXES, OR THE PERCEPTION THAT SUCH SALES COULD OCCUR, COULD SUBSTANTIALLY       
DEPRESS THE PREVAILING MARKET PRICES FOR OUR SHARES. FULL CONVERSION OF SUCH    
SHARES WOULD INCREASE THE OUTSTANDING COMMON SHARES BY 4.2% TO APPROXIMATELY    
142,085,000 SHARES.                                                             

The exercise price or conversion price of outstanding options, warrants and     
convertible notes may be less than the current market price for our common      
shares. In the event of the exercise of these securities, a shareholder could   
suffer substantial dilution of his, her or its investment in terms of the       
percentage ownership in us as well as the book value of the common shares held. 
At the May 31, 2006 market price of $1.16 per share, 5,716,582 shares would be  
exercisable or convertible for less than the market prices. Full exercise and   
conversion of these below market shares would result in us receiving cash       
proceeds of $3,224,324 and would increase the outstanding common shares by 4.2% 
to approximately 142,085,000 shares.                                            

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OUR FUTURE REVENUE IS UNPREDICTABLE AND COULD CAUSE OUR OPERATING RESULTS TO    
FLUCTUATE SIGNIFICANTLY FROM QUARTER TO QUARTER.                                

Our quarterly revenue and operating results are difficult to predict and may    
fluctuate significantly from quarter to quarter. Because we have not had any    
substantial ACCC product revenues to date, we can have no assurance that our    
revenues will materialize. Since our revenues may fluctuate and are difficult to
predict, and our expenses are largely independent of revenues in any particular 
period, it is difficult for us to accurately forecast revenues and              
profitability.                                                                  

OUR BUSINESS IS SUBJECT TO A VARIETY OF ADDITIONAL RISKS, WHICH COULD MATERIALLY
ADVERSELY AFFECT QUARTERLY AND ANNUAL OPERATING RESULTS, INCLUDING:             

     (i)      market acceptance of our composite technologies by utility
companies;                                  

      (ii)     significant delays in sales that could adversely impact our
                  cash flow relating to the potential lengthy lead times for the
                 implementation of new lines or the reconductoring of existing
lines;                                      

   (iii)    the loss of a strategic relationship or termination of a
                  relationship with a cable partner, specifically General Cable;

         (iv)     announcements or introductions of new technologies or products
by us or our competitors;                   

   (v)      delays or problems in the introduction or performance of
            enhancements or of future generations of our technology;

(vi)     failures or problems in our utility cable product,   
               particularly during the early stages of the introduction of
the product;                                

         (vii)    delays in the adoption of new industry standards or changes in
                market perception of the value of new or existing standards;

(viii)   competitive pressures resulting in lower revenues;   

      (ix)     personnel changes, particularly those involving engineering
and technical personnel;                    

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      (x)      costs associated with protecting our intellectual property;

    (xi)     potential failures by customers including Global American
  Energy to make payments under their contracts;

   (xii)    market-related issues, including lower ACCC Cable demand
                  brought on by excess cable inventory and lower average selling
          prices for ACCC cable as a result of market surpluses;

      (xiii)   increased costs or shortages of key raw materials including
aluminum, carbon fiber and glass fiber;     

(xiv)    regulatory developments; and                         

(xv)     general economic trends and other factors.           

RISKS RELATED TO THE PROPOSED EU ENERGY ACQUISITION                             

COMPOSITE TECHNOLOGY CORPORATION MAY NOT SUCCESSFULLY                           
CLOSE THE PROPOSED EU ENERGY, PLC ACQUISITION.                                  

Composite Technology Corporation does not have a binding definitive agreement to
acquire EU Energy, PLC (EUE) and the original time limit on the letter of intent
that prevents EUE from soliciting other offers has expired prior to the filing  
of this document. Composite Technology Corporation may not successfully         
negotiate a purchase agreement or the conditions precedent to completing the    
acquisition may not be met by Composite Technology Corporation or EUE resulting 
in considerable legal expense, lost management time, and a negative financial   
impact to Composite Technology Corporation or its market price per share.       

COMPOSITE TECHNOLOGY CORPORATION MAY NOT REALIZE ANY                            
BENEFITS FROM THE PROPOSED ACQUISITION OF EU ENERGY.                            

If the proposed EU Energy acquisition were to be consummated, Composite         
Technology Corporation will be integrating EUE's products and services          
offerings. If Composite Technology Corporation cannot integrate the products    
effectively or if management spends too much time on integration issues, it     
could harm the combined company's business, financial condition and results of  
operations. The difficulties, costs and delays involved in integrating the      
companies, which could be substantial, include the following:                   

-     distraction of management and other key personnel from the business of the
combined company;                                                   

-     integrating technology, product lines, services and development plans;    

-     inability to demonstrate to customers and suppliers that the business     
  combination will not result in adverse changes in product standards or
business focus;                                                     

-     inability to retain and integrate key personnel;                          

-     disruptions in the combined sales forces that may result in a loss of     
current customers or the inability to close sales with potential    
customers;                                                          

-     expending time, money and attention on integration that would otherwise be
spent on developing either company's own products and services;     

-     additional financial resources that may be needed to fund the combined    
operations; and                                                     

-     impairment of relationships with employees and customers as a result of   
changes in management.                                              

Composite Technology Corporation has no experience in integrating operations on 
the scale represented by the proposed acquisition, and we are not certain that  
Composite Technology Corporation and EU Energy can be successfully integrated in
a timely or efficient manner or that any of the anticipated benefits of the     
proposed acquisition will be realized. Failure to do so could have a material   
adverse effect on the business, financial condition and operating results of the
combined company.                                                               

IF THE COSTS OF THE PROPOSED BUSINESS ACQUISITION EXCEED THE BENEFITS REALIZED, 
THE COMBINED COMPANY MAY EXPERIENCE CONTINUED AND INCREASED LOSSES.             

If the benefits of the proposed acquisition do not exceed the associated costs, 
the combined company could be adversely affected by incurring additional or     
increased losses from its operations. The survival of Composite Technology      
Corporation during this post-acquisition period depends on making the combined  
operations profitable through increased revenues and reduced expenses.          

SALES OF SUBSTANTIAL AMOUNTS OF COMPOSITE TECHNOLOGY CORPORATION COMMON STOCK   
AFTER THE PROPOSED ACQUISITION COULD MATERIALLY ADVERSELY AFFECT THE MARKET     
PRICE OF COMPOSITE TECHNOLOGY CORPORATION COMMON STOCK.                         

The EUE shareholders, as a condition of the proposed acquisition will acquire   
approximately 39,170,000 shares of unregistered, restricted Composite Technology
Corporation common stock. The shares to be issued carry piggyback registration  
rights. As a condition precedent to closing, the majority shareholders will     
enter into contractual arrangements that limit the amount of shares of Composite
Technology Corporation common stock that they may sell into the public market   
after closing of the proposed acquisition. The specific limits are currently    
under negotiation but are generally leak out provisions extending at least      
twelve months from the date of registration.                                    

The issuance of the stock represents 22.3% of the issued and outstanding common 
shares of Composite Technology Corporation after the issuance of the proposed   
acquisition shares and 19.1% of the fully diluted shares, assuming full         
conversion and exercise of all convertible debt, and common stock options and   
warrants. The sale of substantial amounts of Composite Technology Corporation   
common stock following the proposed acquisition may cause substantial           
fluctuations in the public market price of Composite Technology Corporation     
common stock.                                                                   

THE PROPOSED ACQUISITION OF EU ENERGY MAY RESULT IN ADDITIONAL SARBANES-OXLEY   
ISSUES AND MATERIAL WEAKNESSES IN THE CONTROL STRUCTURE OF COMPOSITE TECHNOLOGY 
CORPORATION.                                                                    

EU Energy is a UK company that has not been subject to the requirements of the  
Sarbanes-Oxley Act of 2002. The operations of EU Energy are expected to be      
material to the results of the post-acquisition combined entity and management  
may not have sufficient time to document, assess, test, and remedy the control  
structure of EU; to identify any material control weaknesses; and to disclose   
any such weaknesses in time to comply with the reporting requirements of        
Sarbanes-Oxley.                                                                 

 USE OF PROCEEDS

We will not receive any proceeds from the sale of the shares by the selling     
shareholders. All proceeds from the sale of the shares offered under this       
prospectus will be for the account of the selling shareholders, as described    
below in the sections entitled "Selling Shareholders" and "Plan of              
Distribution." With the exception of any brokerage fees and commission which are
the obligation of the selling shareholders, we are responsible for the fees,    
costs and expenses of this offering which are estimated to be $22,120.89,       
inclusive of our legal and accounting fees, printing costs and filing and other 
miscellaneous fees and expenses.                                                

SELLING SHAREHOLDERS

Of the shares of common stock being offered by the selling shareholders, up to  
5,508,886 shares are issuable upon conversion of the convertible notes and upon 
exercise of the warrants issued in the private placement that closed on March 3,
2006. For additional information regarding the issuance of those convertible    
notes and warrants, see "Summary of the Offering-- Shares Registered in this    
Prospectus--Private Placement of Shares of Common Stock, Convertible Notes and  
Warrants" above. The first six lines in the table below relate to the selling   
shareholders that received securities in the March 3, 2006 private placement.   
The remaining 2,183,924 shares were issued in the other transactions described  
in Summary of the Offering-- Shares Registered in this Prospectus--Other Shares"
above.                                                                          

We are registering the shares of common stock in order to permit the selling    
shareholders to offer the shares for resale from time to time. The selling      
shareholders have not had any material relationship with us within the past     
three years, other than the ownership of the securities registered hereby. Lane 
Capital Markets has assisted us in the March 3, 2006 private placement, the     
January 30, 2006 settlement, the October, 2005 Debtor in Possession private     
placement, and our August, 2004 Debenture offering as our exclusive placement   
agent and financial advisor.                                                    

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The table below lists the selling shareholders and other information regarding  
the beneficial ownership of the shares of common stock by each of the selling   
shareholders. We have obtained this information from the selling shareholders.  
The second column lists the number of shares of common stock beneficially owned 
by each selling shareholder. In the case of selling shareholders that own       
convertible notes and warrants, the column assumes conversion of all convertible
notes and exercise of the warrants held by the selling shareholder on that date,
without regard to any limitations on conversions or exercise.                   

The third column lists the shares of common stock being offered by this         
prospectus by the selling shareholders.                                         

In accordance with the terms of a registration rights agreements with the       
selling shareholders that received securities in the March 3, 2006 private      
placement, this prospectus covers the resale of at least the sum of (i) 110% of 
the number of shares of common stock issuable upon conversion of the convertible
notes as of the trading day immediately preceding the date the registration     
statement is initially filed with the SEC and (ii) 110% of the number of shares 
of common stock issuable upon exercise of the related warrants as of the trading
day immediately preceding the date the registration statement is initially filed
with the SEC. Because the conversion price of the convertible notes and the     
exercise price of the warrants may be adjusted, and because the entire principal
of the notes may not be converted and because not all warrants may be exercised,
the number of shares that will actually be issued may be more or less than the  
number of shares being offered by this prospectus.                              

The fourth column assumes the sale of all of the shares offered by the selling  
shareholders pursuant to this prospectus.                                       

Under the terms of the convertible notes and the warrants issued in the March 3,
2006 private placement, a selling shareholder may not convert the convertible   
notes or exercise the warrants to the extent such conversion or exercise would  
cause such selling shareholder, together with its affiliates, to beneficially   
own a number of shares of common stock which would exceed 4.99% of our then     
outstanding shares of common stock following such conversion or exercise,       
excluding for purposes of such determination shares of common stock issuable    
upon conversion of the convertible notes which have not been converted and upon 
exercise of the warrants which have not been exercised. The number of shares in 
the second column does not reflect these limitations.                           

The selling shareholders may sell all, some or none of their shares in this     
offering. See "Plan of Distribution."                                           

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                                                        [Enlarge/Download Table]

                                                                       PERCENTAGE OF  
                                SHARES BENEFICIALLY  SHARES TO BE      OUTSTANDING    
                                   OWNED SHARES        SOLD IN      BENEFICIALLY OWNED
     SELLING SECURITY HOLDER      BEFORE OFFERING    THE OFFERING     AFTER OFFERING  

                                                                                      
Hudson Bay Fund LP                      2,360,947    2,360,947(1)           *         
Enable Growth Partners LP               1,478,252    1,323,414(2)           *         
Enable Opportunity Partners LP            271,193      232,484(3)           *         
Pierce Diversified Strategy               236,097      236,097(4)           *         
Master Fund LLC                                                                       
Capital Ventures International          1,259,173    1,259,173(5)           *         
Lane Capital Markets                      736,832      314,795(6)           *         
Bushido Capital Master Fund               526,867      109,012(7)           *         
Gamma Opportunity Capital                 318,691       54,506(8)           *         
Partners Class A                                                                      
Gamma Opportunity Capital                 318,691       54,506(9)           *         
Partners Class C                                                                      
SRG Capital LLC                           823,143      436,047(10)          *         
Midsummer Investment, Ltd               4,440,462      436,047(11)          *         
Media Relations Strategy                1,126,840      863,420(12)          *         
IFC Capital Leasing                       116,362       12,362(13)          *         

               Total                   14,050,129    7,692,810              *         

*Less than 1%.                                                                  

(1) Shares being registered include up to 1,064,517 shares of common stock      
underlying the March 3, 2006 notes upon conversion or at maturity and up to     
1,296,430 shares of common stock underlying warrants. The cash received for the 
March 3, 2006 notes was $1,500,000 and the value assigned to the warrants was   
$892,543. Hudson Bay Fund L.P. is affiliated with XTF Market Making LLC and XTF 
Capital LLC, both registered broker-dealers. Sander Gerber is the Managing      
Member of XTF Market Making LLC and XTF Capital LLC and is also a Managing      
Member in Hudson Bay Fund L.P.'s general partner. Hudson Bay Fund LP is         
purchasing shares of Composite Technology Corporation the fund's limited        
partners, and with no pre-existing, current or future intent to distribute      
shares of Composite Technology Corporation. through XTF Market Making LLC or XTF
Capital LLC. Yoav Roth and John Doscas share voting and investment power over   
these securities. Both Yoav Roth and John Doscas disclaim beneficial ownership  
of the securities held by Hudson Bay Fund LP.                                   

(2) Shares being registered include up to 518,065 shares of common stock        
underlying the March 3, 2006 notes upon conversion or at maturity, 174,419      
shares of common stock issued as an inducement to the conversion of $800,000 of 
convertible notes in January, 2006, and up to 630,930 shares of common stock    
underlying warrants. The cash received for the March 3, 2006 notes was $730,000,
the value of the inducement shares was $300,000 and the value assigned to the   
warrants was $434,371. Brendan O'Neil is the Principal & Portfolio Manager of   
Enable Growth Partners LP and as such has voting and investment control over    
these securities.                                                               

(3) Shares being registered include up to 85,162 shares of common stock         
underlying the March 3, 2006 notes upon conversion or at maturity, 43,605 shares
of common stock issued as an inducement to the conversion of $250,000 of        
convertible notes in January, 2006, and up 103,717 shares of common stock       
underlying warrants. The cash received for the March 3, 2006 notes was $120,000,
the value of the inducement shares was $75,000 and the value assigned to the    
warrants was $71,403. Brendan O'Neil is the Principal & Portfolio Manager of    
Enable Opportunity Partners LP and as such has voting and investment control    
over these securities.                                                          

(4) Shares being registered include up to 106,453 shares of common stock        
underlying the March 3, 2006 notes upon conversion or at maturity and up 129,644
shares of common stock underlying warrants. The cash received for the March 3,  
2006 notes was $150,000 and the value assigned to the warrants was $89,254.     
Brendan O'Neil is the Principal & Portfolio Manager of Pierce Diversified       
Strategy Master Fund LLC and as such has voting and investment control over     
these securities.                                                               

(5) Shares being registered include up to 516,130 shares of common stock        
underlying the March 3, 2006 notes upon conversion or at maturity and up 691,430
shares of common stock underlying warrants. The cash received for the March 3,  
2006 notes was $800,000 and the value assigned to the warrants was $476,023.    
Martin Kobinger is the Investment Manager over Capital Ventures International   
and as such has voting and investment control over these securities.            

(6) Shares being registered include up to 141,937 shares of common stock        
underlying the March 3, 2006 notes upon conversion or at maturity and up 172,858
shares of common stock underlying warrants. The cash received for the March 3,  
2006 notes was $200,000 and the value assigned to the warrants was $119,006.    
Ryan Lane is the Partner for Lane Capital Markets and as such has voting and    
investment control over these securities.                                       

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(7) Shares being registered include 109,012 shares of common stock issued as an 
inducement to the conversion of $500,000 of convertible notes in January, 2006  
and valued at $187,500 on the date of issuance. Christopher Rossman is the      
Managing Director of Bushido Capital Master Fund and as such has voting and     
investment control over these securities.                                       

(8) Shares being registered include 54,506 shares of common stock issued as an  
inducement to the conversion of $250,000 of convertible notes in January, 2006  
and valued at $93,750 on the date of issuance. Jonathan P. Knight is the        
President and Director of Gamma Opportunity Capital Partners Class A and as such
has voting and investment control over these securities.                        

(9) Shares being registered include 54,506 shares of common stock issued as an  
inducement to the conversion of $250,000 of convertible notes in January, 2006  
and valued at $93,750 on the date of issuance. Jonathan P. Knight is the        
President and Director of Gamma Opportunity Capital Partners Class C and as such
has voting and investment control over these securities.                        

(10) Shares being registered include 436,047 shares of common stock issued as an
inducement to the conversion of $2,000,000 of convertible notes in January, 2006
and valued at $750,000 on the date of issuance. SRG is affiliated with XTF      
Market Making LLC and XTF Capital LLC, both registered broker-dealers. Sander   
Gerber is the Managing Member of XTF Market Making LLC and XTF Capital LLC and  
is also a Managing Member in Hudson Bay Fund L.P.'s general partner. Hudson Bay 
Fund LP is purchasing shares of Composite Technology Corporation. for the sole  
benefit of the fund's limited partners, and with no pre-existing, current or    
future intent to distribute shares of Composite Technology Corporation. through 
XTF Market Making LLC or XTF Capital LLC. Mr. Edwin MeCabe and Tai May Lee      
control voting and disposition of shares of Composite Technology Corporation    
common stock held by SRG Capital LLC. Messrs. MeCabe and Lee disclaim beneficial
ownership of the shares.                                                        

(11) Shares being registered include 436,047 shares of common stock issued as an
inducement to the conversion of $2,000,000 of convertible notes in January, 2006
and valued at $750,000 on the date of issuance. Midsummer Capital, LLC is the   
investment manager to Midsummer Investment Ltd. By virtue of such relationship, 
Midsummer Capital, LLC may be deemed to have dispositive power over the shares  
owned by Midsummer Investment Ltd. Midsummer Capital, LLC disclaims beneficial  
ownership of such shares. Mr. Michel Amsalem and Mr. Scott Kaufman have         
delegated authority from the members of Midsummer Capital, LLC with respect to  
the shares of common stock owned by Midsummer Investment Ltd. Messrs. Amsalem   
and Kaufman may be deemed to share dispositive power over the shares of our     
common stock owned by Midsummer Investment Ltd. Messrs. Amsalem and Kaufman     
disclaim beneficial ownership of such shares of our common stock and neither    
person has any legal right to maintain such delegated authority.                

(12) Includes up to 1,126,840 shares of common stock, of which 263,420 are being
registered in the registration statement that contains this prospectus, which we
issued to Media Relations Strategy, Inc. on May 11, 2006 as partial payment in  
exchange for marketing services rendered to us and up to 600,000 shares of      
common stock underlying warrants. Martin L. Goldberg is the controlling person  
of Media Relations Strategy, Inc. The value received for the 263,420 shares was 
$418,835.                                                                       

(13) Shares being registered include up to 12,362 shares of common stock        
underlying Series U warrants issued for services rendered in conjunction with   
obtaining capital lease financing. The value of the Series U warrants issued was
$12,900. The warrants were granted on November 4, 2004 and issued on March 6,   
2006 with an exercise price of $1.83 per share.                                 

PLAN OF DISTRIBUTION

     We are registering the shares of Common Stock issuable upon conversion of
the convertible notes and upon exercise of the warrants to permit the resale of 
these shares of Common Stock by the holders of the convertible notes and        
warrants from time to time after the date of this prospectus. We will not       
receive any of the proceeds from the sale by the selling shareholders of the    
shares of Common Stock. We will bear all fees and expenses incident to our      
obligation to register the shares of Common Stock.                              

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      The selling shareholders may sell all or a portion of the shares of Common
Stock beneficially owned by them and offered hereby from time to time directly  
or through one or more underwriters, broker-dealers or agents. If the shares of 
Common Stock are sold through underwriters or broker-dealers, the selling       
shareholders will be responsible for underwriting discounts or commissions or   
agent's commissions. The shares of Common Stock may be sold in one or more      
transactions at fixed prices, at prevailing market prices at the time of the    
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions, which may involve crosses or block 
transactions,                                                                   

   o     on any national securities exchange or quotation service on which
   the securities may be listed or quoted at the time of sale;

o     in the over-the-counter market;                               

    o     in transactions otherwise than on these exchanges or systems or in
the over-the-counter market;                            

    o     through the writing of options, whether such options are listed on
an options exchange or otherwise;                       

o     ordinary brokerage transactions and transactions in which the 
broker-dealer solicits purchasers;                      

  o     block trades in which the broker-dealer will attempt to sell the
          shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;             

o     purchases by a broker-dealer as principal and resale by the   
broker-dealer for its account;                          

o     an exchange distribution in accordance with the rules of the  
applicable exchange;                                    

o     privately negotiated transactions;                            

o     short sales;                                                  

o     sales pursuant to Rule 144;                                   

     o     broker-dealers may agree with the selling securityholders to sell a
        specified number of such shares at a stipulated price per share;

o     a combination of any such methods of sale; and                

o     any other method permitted pursuant to applicable law.        

     If the selling shareholders effect such transactions by selling shares of
Common Stock to or through underwriters, broker-dealers or agents, such         
underwriters, broker-dealers or agents may receive commissions in the form of   
discounts, concessions or commissions from the selling shareholders or          
commissions from purchasers of the shares of Common Stock for whom they may act 
as agent or to whom they may sell as principal (which discounts, concessions or 
commissions as to particular underwriters, broker-dealers or agents may be in   
excess of those customary in the types of transactions involved). In connection 
with sales of the shares of Common Stock or otherwise, the selling shareholders 
may enter into hedging transactions with broker-dealers, which may in turn      
engage in short sales of the shares of Common Stock in the course of hedging in 
positions they assume. The selling shareholders may also sell shares of Common  
Stock short and deliver shares of Common Stock covered by this prospectus to    
close out short positions and to return borrowed shares in connection with such 
short sales. The selling shareholders may also loan or pledge shares of Common  
Stock to broker-dealers that in turn may sell such shares.                      

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    The selling shareholders may pledge or grant a security interest in some
or all of the convertible notes or warrants or shares of Common Stock owned by  
them and, if they default in the performance of their secured obligations, the  
pledgees or secured parties may offer and sell the shares of Common Stock from  
time to time pursuant to this prospectus or any amendment to this prospectus    
under Rule 424(b)(3) or other applicable provision of the Securities Act of     
1933, as amended, amending, if necessary, the list of selling shareholders to   
include the pledgee, transferee or other successors in interest as selling      
shareholders under this prospectus. The selling shareholders also may transfer  
and donate the shares of Common Stock in other circumstances in which case the  
transferees, donees, pledgees or other successors in interest will be the       
selling beneficial owners for purposes of this prospectus.                      

The selling shareholders and any broker-dealer participating in the 
distribution of the shares of Common Stock may be deemed to be "underwriters"   
within the meaning of the Securities Act, and any commission paid, or any       
discounts or concessions allowed to, any such broker-dealer may be deemed to be 
underwriting commissions or discounts under the Securities Act. At the time a   
particular offering of the shares of Common Stock is made, a prospectus         
supplement, if required, will be distributed which will set forth the aggregate 
amount of shares of Common Stock being offered and the terms of the offering,   
including the name or names of any broker-dealers or agents, any discounts,     
commissions and other terms constituting compensation from the selling          
shareholders and any discounts, commissions or concessions allowed or reallowed 
or paid to broker-dealers.                                                      

    Under the securities laws of some states, the shares of Common Stock may
be sold in such states only through registered or licensed brokers or dealers.  
In addition, in some states the shares of Common Stock may not be sold unless   
such shares have been registered or qualified for sale in such state or an      
exemption from registration or qualification is available and is complied with. 

   There can be no assurance that any selling shareholder will sell any or
all of the shares of Common Stock registered pursuant to the registration       
statement, of which this prospectus forms a part.                               

The selling shareholders and any other person participating in such 
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder, including,   
without limitation, Regulation M of the Exchange Act, which may limit the timing
of purchases and sales of any of the shares of Common Stock by the selling      
shareholders and any other participating person. Regulation M may also restrict 
the ability of any person engaged in the distribution of the shares of Common   
Stock to engage in market-making activities with respect to the shares of Common
Stock. All of the foregoing may affect the marketability of the shares of Common
Stock and the ability of any person or entity to engage in market-making        
activities with respect to the shares of Common Stock.                          

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      We will pay all expenses of the registration of the shares of Common Stock
pursuant to the registration rights agreement, estimated to be $37,848 in total,
including, without limitation, Securities and Exchange Commission filing fees   
and expenses of compliance with state securities or "blue sky" laws; provided,  
however, that a selling shareholder will pay all underwriting discounts and     
selling commissions, if any. We will indemnify the selling shareholders against 
liabilities, including some liabilities under the Securities Act, in accordance 
with the registration rights agreements, or the selling shareholders will be    
entitled to contribution. We may be indemnified by the selling shareholders     
against civil liabilities, including liabilities under the Securities Act, that 
may arise from any written information furnished to us by the selling           
shareholder specifically for use in this prospectus, in accordance with the     
related registration rights agreements, or we may be entitled to contribution.  

Once sold under the registration statement, of which this prospectus forms a    
part, the shares of Common Stock will be freely tradable in the hands of persons
other than our affiliates.                                                      

INTERESTS OF NAMED EXPERTS AND COUNSEL

The consolidated financial statements incorporated in this registration         
statement by reference to the Annual Report on Form 10-K of Composite Technology
Corporation, a Nevada corporation, for the year ended September 30, 2005 have   
been so incorporated in the reliance on the report of Singer Lewak Greenbuam &  
Goldstein LLP, an independent registered public accounting firm, given on the   
authority of said firm as experts in auditing and accounting. The validity of   
the issuance of our common shares to be sold by the selling shareholders under  
this prospectus was passed upon for us by Richardson & Patel LLP. Nimish Patel, 
a partner of Richardson & Patel LLP, holds 191,466 common shares and Richardson 
& Patel LLP holds warrants to purchase 191,466 common shares at an exercise     
price of $2.00 per share as of June 1, 2006.                                    

 WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other       
information with the Securities and Exchange Commission. You may read and copy  
materials that we have filed with the SEC at the following SEC public reference 
room:                                                                           

100 F Street, N.E.
 Room 1024
Washington, D.C. 20549

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Please call the SEC at 1-800-SEC-0330 for further information on the public     
reference room. The SEC maintains an internet site that contains reports, proxy 
and information statements and other information regarding issuers that file    
electronically with the SEC; our SEC filings are also available to that site:   
http://www.sec.gov.                                                             

We incorporate by reference into this prospectus the documents listed below and 
any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended (the Exchange Act), including
any filings after the date of this prospectus, until the offering is completed. 
The information incorporated by reference is an important part of this          
prospectus. Any statement in a document incorporated by reference into this     
prospectus will be deemed to be modified or superseded to the extent a statement
contained in (1) this prospectus or (2) any other subsequently filed document   
that is incorporated by reference into this prospectus modifies or supersedes   
such statement.                                                                 

    o     Our Annual Report on Form 10-K for our fiscal year ended September
30, 2005, as amended.                                   

  o     Our Quarterly Reports on Form 10-Q for our fiscal quarters ended
        December 31, 2005, March 31, 2006 and June 30, 2006, as amended.

      o     Our Current Reports on Form 8-K, as filed December 21, 2005, January
       5, 2006, January 12, 2006, January 30, 2006, March 6, 2006, May
            11, 2006, May 31, 2006, June 8, 2006, and July 10, 2006, as amended.

    o     The description of our common stock, contained in our Registration
        Statement on Form 10-SB12-G filed on June 9, 2000, under Section
            12(g) of the Exchange Act, and any further amendment or report filed
   hereafter for the purpose of updating any such information.

You may request a copy of these filings, at no cost, by writing to us at the    
following address or calling us at Composite Technology Corporation, 2026 McGaw 
Avenue, Irvine, California 92614, (949) 428-8500.                               

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES

Our Articles of Incorporation limit the liability of our directors to the       
fullest extent permitted under Section 78.037 of the Nevada General Corporation 
Law. As permitted by Section 78.037 of the Nevada General Corporation Law, our  
Bylaws and Articles of Incorporation also include provisions that eliminate the 
personal liability of each of its officers and directors for any obligations    
arising out of any acts or conduct of such officer or director performed for or 
on behalf of CTC. To the fullest extent allowed by Section 78.751 of the Nevada 
General Corporation Law, we will defend, indemnify and hold harmless its        
directors or officers from and against any and all claims, judgments and        
liabilities to which each director or officer becomes subject to in connection  
with the performance of his or her duties and will reimburse each such director 
or officer for all legal and other expenses reasonably incurred in connection   
with any such claim of liability. However, we will not indemnify any officer or 
director against, or be reimburse for, any expense incurred in connection with  
any claim or liability arising out of the officer's or director's own gross     
negligence or willful misconduct.                                               

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The provisions of our Bylaws and Articles of Incorporation regarding            
indemnification are not exclusive of any other right of CTC to indemnify or     
reimburse our officers or directors in any proper case, even if not specifically
provided for in our charter or Bylaws.                                          

Insofar as indemnification for liabilities arising under the Securities Act of  
1933, as amended, may be permitted to our directors, officers or controlling    
persons, pursuant to the foregoing provisions, or otherwise, we have been       
advised that, in the opinion of the SEC, such indemnification is against public 
policy as expressed in the Securities Act of 1933, as amended, and is,          
therefore, unenforceable.                                                       

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COMPOSITE TECHNOLOGY CORPORATION

PROSPECTUS

7,692,810 SHARES OF COMMON STOCK

September 13, 2006

YOU SHOULD RELY ONLY ON THE  INFORMATION  CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS OR A PROSPECTUS  SUPPLEMENT TO MAKE YOUR INVESTMENT DECISION.
NO PERSON IS AUTHORIZED TO GIVE ANY  INFORMATION  OR TO MAKE ANY  REPRESENTATION
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,  AND IF MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN GIVEN OR AUTHORIZED.  THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES  OTHER THAN THE SECURITIES  OFFERED BY THIS  PROSPECTUS OR AN
OFFER  TO SELL OR A  SOLICITATION  OF AN  OFFER  TO BUY  THE  SECURITIES  IN ANY
JURISDICTION  TO ANY  PERSON  TO  WHOM IT IS  UNLAWFUL  TO MAKE  SUCH  OFFER  OR
SOLICITATION IN SUCH JURISDICTION. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN
THIS  PROSPECTUS OR THE  PROSPECTUS  SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER
THAN THE DATE ON THE FRONT OF THE  DOCUMENT,  REGARDLESS OF THE TIME OF DELIVERY
OF PROSPECTUS OR ANY SALE OF THE SHARES.                                        

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B3’ Filing		Date		First		Last			Other Filings
Filed as of:		9/14/06							8-K/A
Filed on:		9/13/06		1		30
		9/3/06		6
		9/2/06		6
		7/10/06		28					8-K
		6/30/06		28					10-Q,  10-Q/A
		6/8/06		28					8-K
		6/6/06		6
		6/1/06		27					10-Q/A,  S-3
		5/31/06		1		28			8-K
		5/30/06		14
		5/29/06		4
		5/11/06		24		28			424B3,  8-K
		3/31/06		4		28			10-Q,  10-Q/A
		3/6/06		24		28			8-K
		3/3/06		6		23
		3/2/06		6		7
		2/28/06		3		4
		1/30/06		7		28			8-K
		1/12/06		28					8-K,  PRE 14A
		1/5/06		28					8-K
		12/31/05		28					10-Q,  10-Q/A
		12/21/05		28					8-K,  POS AM
		12/11/05		5
		11/18/05		5					8-K
		10/13/05		8					8-K
		9/30/05		10		28			10-K,  10-K/A
		8/9/05		5		10			10-Q,  POS AM,  S-3/A
		6/30/05		10					10-Q,  S-3/A
		5/5/05		5					8-K
		11/4/04		24
		9/30/04		10					10KSB,  10KSB/A
		2/4/04		19					10KSB,  10QSB/A
		9/30/03		10					10KSB,  NT 10-K
		3/31/03		10					10QSB,  10QSB/A
		3/18/03		19
		6/27/01		5
		6/9/00		28					10SB12G
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