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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-K/A

(Amendment No. 1)



(Mark One)ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended December 31, 2013o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Transition Period
From                                    to


Commission File No. 000-22400

SPECIAL DIVERSIFIED OPPORTUNITIES INC.(Exact name of Registrant as specified in its charter)



Delaware(State or other jurisdiction of
incorporation or organization)

56-1581761(I.R.S. Employer
identification no.)1521 Concord Pike, Suite 301
Wilmington, Delaware(Address of principal executive offices)

19803(Zip Code)


Registrant's
telephone number, including area code:(302) 824-7062



Securities
registered pursuant to Section 12(b) of the Act:

Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.01 par value

None


Securities
registered pursuant to Section 12(g) of the Act:

None



Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o    No ý

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes o    No ý

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes ý    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the
definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o

Accelerated Filer o

Non-Accelerated Filer o (Do not check if a
smaller reporting company)

Smaller Reporting Company ý


Indicate
by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ý    No o

The aggregate market value of the common stock held by non-affiliates of the Registrant was $15,400,000, calculated by using the number of shares outstanding and
the closing price of the common stock on June 30, 2013 (the last business day of the Registrant's most recently completed second fiscal quarter).

As
of April 18, 2014 there were 21,027,640 shares outstanding of the Registrant's common stock, par value $0.01 per share.

DOCUMENTS INCORPORATED BY REFERENCE

None in this Amendment No. 1 on Form 10-K/A (the Form 10-K/A).





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EXPLANATORY NOTE

Special Diversified Opportunities Inc. (SDOI) is filing this Form 10-K/A to amend its Annual Report on Form 10-K
for the fiscal year ended December 31, 2013 (the Form 10-K), which was filed with the Securities and Exchange Commission (the SEC) on March 31, 2014. The purpose of this
Form 10-K/A is to disclose the information required in Part III, items 10 through 14 of the Form 10-K. Accordingly, SDOI hereby amends and replaces in their entirety
items 10 through 14 of the Form 10-K. In addition, as required by rule 12b-15, SDOI's Principal Executive Officer and Principal Financial and Accounting Officer are providing
Rule 13a-14(a)/15(d)-14(a) certifications. Accordingly, SDOI is also amending item 15 of the Form 10-K to include such currently dated certifications as exhibits.

Except
as described above, this Form 10-K/A does not amend, update or change any other items or disclosures in the Form 10-K, including any of the financial information
disclosed in Parts II and IV of the 10-K.

In
the following text the terms "we", "our", "our company" and "us" may refer, as the context requires, to SDOI or collectively to SDOI and its subsidiaries.

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TABLE OF CONTENTS



PART IIIItem 10.

Directors, Executive Officers and Corporate Governance


3Item 11.

Executive Compensation


10Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


15Item 13.

Certain Relationships and Related Transactions, and Director Independence


16Item 14.

Principal Accounting Fees and Services


16PART IVItem 15.

Exhibits and Financial Statement Schedules


17


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PART III



Item 10.    Directors, Executive Officers and Corporate Governance

Directors

The Company's Board currently consists of five members. As provided by the Certificate of Incorporation, the Board is divided into two
classes of directors with each director serving a two-year term. Each year one class of directors is elected by a stockholder vote. Our Class II Directors, whose terms will expire at the 2014
annual meeting of our stockholders, are Richard van den Broek and Wayne P. Yetter. The terms of our Class I Directors, Steven R. Becker, Thomas A. Bologna and David M. Wurzer,
will expire at the annual meeting of our stockholders to be held in 2015.

The
following table sets forth the name, age and principal occupation of each director, or nominee for director, and the year in which he became a director, if applicable.

Name and Principal Occupation

Age

Director
SinceSteven Becker


47


2008Chairman of the Board of DirectorsFounder and Managing PartnerBecker Drapkin ManagementThomas A. Bologna


65


2010CEOResponse Genetics, Inc.Richard van den Broek


48


2008Managing PartnerHSMR Advisors, LLCDavid M. Wurzer


55


2010Executive Vice President and Chief Investment OfficerConnecticut InnovationsWayne P. Yetter


68


2010Retired Pharmaceutical and Healthcare Executive


Background of Directors

Steven R. Beckerjoined the Company as a director in March 2008 and has been Chairman
of the Board since May 2012. Since 2004, Mr. Becker has served as the managing partner and founder of Becker Drapkin Management, a Dallas-based small cap investment fund. Prior to founding
Becker Drapkin, Mr. Becker was a partner at the Special Situations Funds, a New York City-based asset manager. Mr. Becker joined Special Situations in April 1997 and ran the Special
Situations Private Equity Fund since its inception. Prior to joining Special Situations, Mr. Becker was a part of the distressed debt and leveraged equities research team at Bankers Trust
Securities. He began his career at Manley Fuller Asset Management in New York as a small cap analyst. Mr. Becker currently serves as a director of Tuesday Morning Corp., a publicly traded
closeout retailer, and EMCORE Corporation, a supplier of semiconductor-based products. In addition, he previously served on the board of directors of PLATO Learning, Inc., Ruby
Tuesday, Inc., Hot Topic, Inc. and Pixelworks, Inc. Mr. Becker received a B.A. from Middlebury College and a J.D. from the University of Florida.

Thomas A. Bolognajoined the Company as a director in February 2010 and was Chairman of the Board from February 2011 until May 2012. Since
December 2011, Mr. Bologna has been Chairman and CEO of Response Genetics, Inc., a diagnostics company. From 2006 through 2011, Mr. Bologna was President and Chief Executive
Officer and a member of the Corporate Board of Directors of Orchid Cellmark, Inc., a leading international DNA testing company with its headquarters in Princeton, New Jersey. Prior to joining
Orchid Cellmark, Inc., Mr. Bologna served as President, CEO and a director of Quorex Pharmaceuticals, Inc. Mr. Bologna also served as Chairman of the Board, President and
Chief

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Executive
Officer of Ostex International, Inc., President, CEO and a director of Scriptgen Pharmaceuticals, Inc. and Chairman of the Board, President and Chief Executive Officer of
Gen-Probe Incorporated. Mr. Bologna also serves on the Board of Quotient Biodiagnostics and the business advisory board of The Epilepsy Project. Mr. Bologna has a proven track record of
over 20 years leading venture-backed private and public biotechnology companies, turnarounds, and highly profitable healthcare divisions and subsidiaries of Fortune 500 companies.
Mr. Bologna holds an MBA and Bachelor of Science degrees from New York University.

Richard van den Broekjoined the Company as a director in March 2008. Since 2004, Mr. van den Broek has been Managing Partner of
HSMR Advisors, LLC, an investment fund focused on the biotechnology industry. From 2000-2003 he was a Partner at Cooper Hill Partners, LLC, an investment fund focused on the healthcare
sector. Prior to that Mr. van den Broek had a ten year career as a biotech analyst, starting at Oppenheimer & Co., then Merrill Lynch, and finally at Hambrecht & Quist. He
serves as a director of Pharmacyclics, a drug development company, Response Genetics, a diagnostics company and Pharmaxis (an Australian public company). Mr. van den Broek is a graduate of
Harvard University and is a Chartered Financial Analyst.

David M. Wurzerjoined the Company as a director in February 2010. Since 2009, Mr. Wurzer has served as Managing Director,
Investments, Senior Managing Director, Investments, and beginning April 2014, as Executive Vice President and Chief Investment Officer at Connecticut Innovations (CI), the State's "venture capital
arm." He is responsible for oversight of the CI Ventures venture capital portfolio and team, as well as sourcing and analyzing investment opportunities, leading CI investments in entrepreneurial
high-tech ventures and advising portfolio companies. Prior to joining Connecticut Innovations, Mr. Wurzer most recently served as Executive Vice President, Treasurer and Chief Financial Officer
of CuraGen Corporation, a biopharmaceutical development company, from September 1997 through December 2007. He has over 30 years of financial experience with growth-oriented companies,
including direct involvement with raising capital, strategic transactions and mergers & acquisitions, for both start-up companies and publicly-held entities. Mr. Wurzer serves on the
boards of Axerion Therapeutics, CyVek, Emme E2MS LLC, NovaTract Surgical Inc., SmartPay Newco, LLC, Thetis Pharmaceuticals, LLC, and ZetrOZ, Inc., which are
privately held, and on the board of Response Genetics. Mr. Wurzer holds a BBA degree in Accountancy from the University of Notre Dame.

Wayne P. Yetterjoined the Company as a director in May 2010. Mr. Yetter served as Chief Executive Officer of Verispan LLC,
a joint venture of McKesson Corp. and Quintiles Transnational, a leading provider of healthcare information and marketing services to the pharmaceutical industry, from September 2005 to August 2008
when the company was acquired by SDI Health. Mr. Yetter had a 30 year career in the pharmaceutical industry and held executive positions at Pfizer, Merck, Astra-Merck (now AstraZeneca)
and Novartis. His roles included Vice President, Marketing Operations (global) and Vice President, Far East and Pacific at Merck, founding Chief Executive Officer of Astra-Merck, and President and
Chief Executive Officer of Novartis Pharmaceuticals Corporation, the US division of Novartis AG. He also served as Chief Operating Officer of IMS Health, a market research data company from 1999 until
2000, when he became Chairman and Chief Executive Officer of
Synavant, Inc. (a Nasdaq listed spin-out of IMS). Synavant was acquired by Dendrite International in 2003. Mr. Yetter currently serves as a director of InfuSystem Holdings, Inc.
Previously, he served as Chairman of Noven Pharmaceuticals, Chairman of Transkaryotic Therapies, Chairman of NuPathe Inc., Lead Independent Director of Matria Healthcare (each of these
companies was acquired) and as a director of Synvista Therapeutics, Inc. He also served on the Executive Committee of PhRMA, the pharmaceutical industry association, from 1997-1999.
Mr. Yetter holds a B.A. in Biology from Wilkes University and received an M.B.A from Bryant University.

4

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Experience, Qualifications, Attributes and Skills

The Board of Directors believes that the Board, as a whole, should possess a combination of skills, professional experience and
diversity of backgrounds necessary to oversee the Company's business. With respect to their consideration of diversity of background, neither the Nominating & Corporate Governance Committee nor
the full Board of Directors has a formal policy of assessing diversity with respect to any particular qualities or attributes. In addition, the Board believes that there are certain attributes that
every director should possess, as reflected in the Board's membership criteria. Accordingly, the Board and the Nominating & Corporate Governance Committee consider the qualifications of
directors and director candidates individually and in the broader context of the Board's overall composition and the Company's current and future needs.

All
of our current Board members share certain qualifications and attributes consistent with these criteria, which are set forth in the Company's Corporate & Governance Guidelines
and Policies, including unquestioned personal ethics and integrity and possessing skills and experience aligned with our strategic direction and operating challenges and that complement the overall
composition of the Board. In addition, each Board member has demonstrated certain core business competencies, including high achievement and a record of success, financial literacy, a history of
making good business decisions and exposure to best practices.

The
following highlights the specific experience, qualifications, attributes and skills of our individual Board members that have led the Nominating & Corporate Governance
Committee to conclude that these individuals should continue to serve on our Board:

Mr. Beckerbrings extensive insight into asset and investment management in the healthcare and technology industries. He also helps
provide important guidance regarding various financial matters.

Mr. Bolognahas several years of senior leadership in biotechnology companies, including public and privately held firms. His
experience in change management and business process is of importance to the Company.

Mr. van den Broekhas significant investment research experience in the biotechnology and healthcare industries. His proven skills
as a financial analyst and fund manager are valuable to the Company.

Mr. Wurzerhas years of senior-level management experience in growing companies. His wealth of knowledge in the investment arena is
of importance to the Company as it continues to pursue opportunities for partnerships, alliances and future growth.

Mr. Yetterbrings strong experience in senior leadership in pharmaceutical and healthcare-related companies, including public and
privately held firms. His experience in these industries is of importance to the Company.

Mr. Wurzer
is considered an "audit committee financial expert" under the criteria adopted by the SEC and brings to the Audit Committee exceptional experience and understanding in
the auditing and accounting fields.

Executive Officers

The executive officers of the Company, their positions with the Company, their ages and a brief biography for each are as follows:

Name

Age

PositionPhilip T. Blazek


46

PresidentKevin J. Bratton


65

VPFinance, Chief Financial Officer and Corporate Secretary


5

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Philip T. Blazekhas served as President (in which capacity he serves as the Company's Principal Executive Officer) since July 2013.
Mr. Blazek has a broad financial, strategic and investment background working with companies in a range of industries. Prior to joining the Company, in 2012 Mr. Blazek was a Managing
Director at Korenvaes Management, a Dallas based debt/equity investment fund. From 2008 through 2011, he was President and Chief Investment Officer of Blazek Crow Holdings Capital, an equity
investment fund he founded in partnership with the Crow Holdings Family Office in Dallas, which focused on small cap U.S. companies across several industries. From 2005 to 2008, Mr. Blazek
worked at Greenway Capital, investing and providing new capital to small cap companies. Mr. Blazek received a Harvard University AB, 1990; Harvard Business School MBA, 1996.

Kevin J. Brattonjoined SDIX in June 2009 as Vice PresidentFinance and Chief Financial Officer. Mr. Bratton was Senior
Vice President Business Operations for EUSA Pharma (USA), Inc. in Langhorne, Pennsylvania from May 2008 until May 2009. Mr. Bratton had been Senior Vice President and Chief Financial
Officer of Cytogen Corporation in Princeton, New Jersey from November 2006 until its acquisition by EUSA Pharma, Inc. in May 2008. Mr. Bratton has over 35 years of experience in
all phases of multi-national financial operations across the healthcare, biotechnology and technology industries, including developing strategic plans and annual budgets as well as financing
negotiations and merger & acquisition transactions. Prior to joining Cytogen, Mr. Bratton was Chief Financial Officer at Metrologic Instruments, Inc., a global technology company,
from July 2002 until November 2006, where he directed the company's finance operations during a period of significant growth in sales, net income, cash flow from operations, and working capital.
Previously, Mr. Bratton began his career with the public accounting firm Touche Ross & Co. (now Deloitte & Touche LLP). He has a bachelor of science in business and
accounting from Northeastern University.

CORPORATE GOVERNANCE

Board Risk Oversight

The Board of Directors, acting mainly through the Audit Committee, is actively involved in the oversight of the significant risks
affecting the Company's operations and strategic initiatives. Our risk analysis efforts are designed to identify the most significant risks that confront the Company, though these risks may vary from
time to time. Overall, the risks we assess encompass enterprise, operational, compliance and financial risks.

Management
and our internal audit function periodically report to the Audit Committee and the Board of Directors on their assessment of risks facing the Company and mitigation activities
designed to facilitate the maintenance of risk within acceptable levels.

Independence of Directors

The Board has determined that each member of the Board is independent as determined in accordance with the applicable listing standards
of the NASDAQ Global Market. While the Company's Common Stock is no longer listed on that market, we continue to use the standards of that market to determine the independence of our directors.

Compensation of Directors

Directors are entitled to receive compensation for their services as determined by a majority of the Board, based on the recommendation
of the Compensation Committee. However, directors who are employees, and who receive compensation for their services as such, are not entitled to receive any compensation for their services as a
director of the Company.
Board members are entitled to reimbursement for travel-related expenses incurred in attending meetings of the Board and of the committees.

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Pursuant
to the director compensation policy adopted in May 2003 and amended in May 2009 and May 2011, upon their election to the Board, non-employee directors receive a non-statutory
option to purchase shares of Common Stock with an aggregate value of $30,000, with an exercise price equal to the greater of (A) the amount that is 10% greater than the trailing average closing
price of the Common Stock for the five consecutive trading days ending on the date of grant, or (B) the closing price of the Common Stock on the date of grant. This initial option is
immediately vested with respect to one-third of the option shares, and the remaining shares subject to such option grant vest in a series of two (2) successive equal annual installments upon
the optionee's completion of each year of service as a Board member over the two-year period measured from the option grant date.

Each
non-employee Board member shall also receive annual compensation in such amount as is determined, by a majority of Board, from time to time to be appropriate. Such compensation is
currently established as set forth below:



Chairman of the Board

$
20,000Lead Outside Director (if any)

$
10,000Audit Committee Chair

$
10,000Compensation, Strategy and Nominating & Corporate Governance Committee Chairs

$
6,000Committee Membership (non-Chair)

$
3,000


In
October 2013, the Board reduced the foregoing cash payments by 50%.

On
the date of each annual meeting of stockholders, each individual who is to continue to serve as a non-employee Board member following that meeting is granted (i) a
non-statutory option to purchase 10,000 shares of Common Stock with a term of seven years and an exercise price per share equal to the greater of (A) the amount that is 10% greater than the
trailing average closing price of the Common Stock for the five consecutive trading days ending on the date of grant, or (B) the closing price of the Common Stock on the date of grant; and
(ii) 2,500 shares of the Common Stock. Such options and restricted stock shall vest in two (2) successive equal annual installments upon the first two anniversaries of the date of grant.
If directors are appointed during a year, they receive prorated equity grants as described in this paragraph with respect for their service during the remainder of the year ending with the next annual
meeting of stockholders. In October 2013, the Board revised the policies on equity compensation for 2013. On the date of the 2013 annual meeting of shareholders, each individual continuing to serve as
a non-employee Board member received a non-statutory option to purchase 25,000 shares of the Company's common stock with an exercise price of $1.25 per share.

7

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Table of Contents

The
following table shows the compensation paid to the members of the Company's Board of Directors for the year ended December 31, 2013.

Name

Fees
Earned or
Paid in
Cash

Share
Awards(1)

Option
Awards(1)

All Other
Compensation

TotalThomas A. Bologna

$
27,350

$


$
5,500




$
32,850Steven R. Becker

$
44,517

$


$
5,500




$
50,017C. Geoffrey Davis(2)

$
21,900

$


$
0




$
21,900Richard van den Broek

$
25,000

$


$
5,500




$
30,500Stephen L. Waechter(2)

$
24,367

$


$
0




$
24,367David M. Wurzer

$
29,075

$


$
5,500




$
34,575Wayne P. Yetter

$
30,550

$


$
5,500




$
36,050


(1)The
aggregate numbers of restricted shares and shares issuable upon the exercise of options to purchase shares for the directors outstanding as of
December 31, 2013 are as follows: Mr. Bologna (7,5000 shares; options to purchase 71,574 shares); Mr. Becker (25,730 shares, options to purchase 81,021 shares); Mr. van den
Broek (25,730 shares; options to purchase 81,021 shares); Mr. Wurzer (7,5000 shares; options to purchase 71,574 shares); and Mr. Yetter (7,5000 shares; options to purchase 71,304
shares). Options were granted with an exercise price of $1.25 per share. All grants were immediately exercisable.(2)Mr. Davis
resigned from the Board effective as of July 23, 2013 and Mr. Waechter resigned from the Board effective as of
July 24, 2013.


Stock Ownership Guidelines and Mandatory Retirement

The Company has no stock ownership requirements for directors, though directors are encouraged to buy and hold shares of the Company's
common stock.

Each
Board member is required to retire from such position not later than the Annual Meeting immediately following such person's 75th birthday.

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Meetings of the Board of Directors and Committees

The Board held 15 meetings during the fiscal year ended December 31, 2013. Each of the directors attended at least 80% of the
aggregate of the total number of meetings of the Board and of the committees of which he was a member which were held during the period he was a director or committee member.

The
Board of Directors has a standing Audit Committee, Compensation Committee and Nominating & Corporate Governance Committee.The Company also had a Strategy Committee that was
dissolved in July 2013 following the consummation of the Asset Sale. The following table shows the current membership of each committee, each committee's functions and the number of meetings each
committee held during the year ended December 31, 2013.

Committee and Members

Functions of Committee

Number of
Meetings
in 2013Audit(1)

 Selects the Company's
independent auditors


4Thomas A. Bologna
David M. Wurzer*(2)
Wayne P. Yetter

 Reviews the results and scope
of the annual audit and the services provided by the Company's independent auditors Reviews the recommendations of the Company's independent auditors with respect to the accounting system and controlsCompensation

 Reviews and approves salaries
for all corporate officers


2Steven R. Becker
David M. Wurzer
Wayne P. Yetter*

 Reviews and approves all
incentive and special compensation plans and programs Reviews and approves management succession planning Conducts special competitive studies Retains compensation consultants as
necessary and appropriate Reviews
and recommends to the Board compensation for non-employee directorsNominating & Corporate Governance(1)

 Identifies individuals
eligible to become members of the Board of Directors


1Steven R. Becker
Thomas A. Bologna
Wayne P. Yetter

 Select and recommend to the
Board the director nominees for the Board for the next annual meeting of shareholders Oversee the evaluation of the BoardStrategy

 Provide oversight regarding
the Company's strategic direction


1Steven R. Becker*
Thomas A. Bologna
Richard van den Broek

 Review, discuss and suggest
revisions when necessary to management's vision Understand, identify and discuss key issues, assumptions, risks and opportunities that relate to the development and implementation of appropriate strategies for the
Company


*Chairman(1)Stephen
A Waechter resigned from the Board effective July 24, 2013. Prior to that time, he was chair of the Audit Committee. C. Geoffrey Davis
resigned from the Board effective July 23, 2013. Prior to that time, he was Chair of the Nominating & Corporate Governance Committee.(2)Audit
Committee Financial Expert


The
charters of the Audit, Compensation, and Nominating & Corporate Governance Committees are all available in the Investor Relations/Corporate Governance section of the Company's
website at www.sdoi.com.

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Item 11.    Executive Compensation

Summary Compensation Table

The following table shows, for the years ended December 31, 2013 and 2012, the compensation paid or accrued by the Company to
our named executive officers.

Name and Principal Position



Salary
($)

Bonus
($)

Stock
Awards
($)(1)

Option
Awards
($)(2)

Non-Equity
Incentive Plan
Compensation
($)

All Other
Compensation
($)(3)

Total
($)Philip T. Blazek(4)


2013


134,769


35,000














169,769PresidentFrancis M. DiNuzzo


2013


205,961





148,500








645,432


999,893Former President and


2012


350,000


78,750


157,500


87,820





10,365


686,265Chief Executive Officer(5)Kevin J. Bratton


2013


252,144


20,000


99,000








130,091


501,235Vice President and


2012


252,144


52,549


40,306


34,614





8,805


388,236Chief Financial Officer


(1)The
amounts shown for stock awards are equal to the grant date fair value of the awards, calculated in accordance with Financial Accounting Standards Board
Accounting Standards Codification ("ASC") Topic 718. The assumptions used in determining the amounts in this column are set forth in note 8 to our consolidated financial statements in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed with the Securities and Exchange Commission.(2)These
amounts are based upon the grant date fair value of the option awards calculated in accordance with ASC Topic 718. The assumptions used in determining
the amounts in the column are set forth in note 8 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed with
the Securities and Exchange Commission.(3)All
other compensation includes Company matching contributions to 401(k) accounts and payments of $250,000 and $125,000 to Mr. DiNuzzo and
Mr. Bratton, respectively in connection with the consummation of the Asset Sale .(4)Mr. Blazek
commenced employment with the Company on May 31, 2013.(5)Mr. DiNuzzo's
employment terminated in July 2013 following the consummation of the sale of the Company's Life Science assets to SDIX LLC and
OriGene Technologies, Inc. Included in all other compensation are payments of $350,000 for severance and $38,365 for accrued vacation time.


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Outstanding Equity Awards at Fiscal Year-End

The following table shows all outstanding equity awards held by our named executive officers on December 31, 2013.

Option Awards

Stock AwardsNumber of
Shares
Underlying Unexercised
Options





Number of
of Shares or
Units or Stock
That Have
Not
Vested

Market Value
of Shares or
Units of
Stock that
Have Not
Vested(1)Option
Exercise
Price

Option
Expiration
DateName

Exercisable

UnexercisablePhilip T. Blazek





150,000

$
1.25


5/31/2020


150,000


174,000


200,000

$
1.50


5/31/2020


200,000


232,000Francis M. DiNuzzo


60,000




$
4.60


7/24/2014





25,000




$
3.70


7/24/2014





250,000




$
1.50


7/24/2014





68,000




$
1.66


7/24/2014





125,000




$
2.19


7/24/2014





Kevin J. Bratton


75,000




$
1.50


6/1/2019





25,000




$
1.69


6/1/2020





50,000




$
2.19


3/1/2021





15,000




$
2.10


2/28/2022








(1)Value
is calculated by multiplying the number of shares subject to vesting by $1.16, the closing price of the common shares on the OTC Bulletin Board on
December 31, 2013.


Equity Compensation

The table below presents certain information as of December 31, 2013 concerning securities issuable in connection with equity
compensation plans that have been approved by the Company's stockholders and that have not been approved by the Company's stockholders.

Plan Category

Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
(a)

Weighted-average
exercise price of
outstanding
options, warrants
and rights
(b)

Number of securities
remaining available
for issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)Equity compensation plan approved by security holders


1,404,494

$
1.86


3,141,087Equity compensation not approved by security holders


75,000

$
1.50


​
​
​
​
​
​
​
​
​
​
​Total


1,479,494

$
1.84


3,141,087​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​


The
75,000 shares underlying options and unvested restricted shares granted under equity compensation not approved by security holders were granted in connection with the Company's
hiring, on June 1, 2009, of its Chief Financial Officer, Kevin Bratton. The grants to Mr. Bratton are 75,000 shares in a ten year non-qualified stock option grant at an exercise
price of $1.50 per share.

The
total securities to be issued relate to 1,479,494 of stock options with a weighted average exercise price of $1.84 per share.

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Table of Contents

Executive Employment Agreements

Prior to his departure in July 2013, the Company maintained an employment agreement dated as of October 13, 2008 with
Mr. DiNuzzo, which provided for compensation at an annual rate of $325,000 with annual increases determined by the Compensation Committee. Under this agreement, Mr. DiNuzzo was granted
options to purchase 250,000 shares of Common Stock, vesting at a rate of 25% annually beginning on the first anniversary of the grant date. This agreement was for an initial three-year term and is
automatically extended for subsequent one-year terms unless otherwise terminated by Mr. DiNuzzo or the Board by giving not less than 30 days written notice. Mr. DiNuzzo was
entitled to receive salary and benefits then in effect for eleven months after termination of the agreement by Mr. DiNuzzo for good reason (as defined in the agreement) or by the Company
without cause. In connection with Mr. DiNuzzo's termination following the consummation of the Asset Sale, the Company paid him $350,000 as required under his employment agreement.

The
Company maintains an offer letter with Mr. Bratton, dated as of May 18, 2009, which outlines the terms of his employment. This letter provides for compensation at an
annual rate of $240,000 with annual increases as determined by the Compensation Committee. Under this agreement, Mr. Bratton received options to purchase 75,000 shares of Common Stock, vesting
at a rate of 25% annually
beginning on the first anniversary of the grant date. Mr. Bratton was also granted 25,000 restricted shares of Common Stock, which were granted with the same terms as the options.

In
July 2013, following the consummation of the Asset Sale and the departure of Mr. DiNuzzo, Philip T. Blazek was appointed by the Board as President of the Company. The Company
maintains an offer letter with Mr. Blazek, dated as of May 29, 2013, which outlines the terms of his employment. This letter provides for compensation at an annual rate of $240,000.
Under this agreement, Mr. Blazek received an option to purchase 150,000 shares of Common Stock with an exercise price of $1.25 per share and an option to purchase 200,000 shares of Common Stock
with an exercise price of $1.50 per share. These options vest upon the sale of the Company or the completion of a strategic transaction.

Stock-Based Award Grant Practices

We follow certain practices for the grant of stock-based awards. Among other things, these practices encompass the following
principles:



Change of Control Severance Plan

We have a Change of Control Severance Plan pursuant which our named executive officers and certain other key employees are eligible to
receive benefits upon their termination of employment, under certain circumstances, if such termination follows, or is shortly prior to, a Change of Control (as defined in the plan). Specific aspects
of this plan are described under "Change of Control Severance Plan and Potential Payments Upon Change of Control," below. Subject to the terms and conditions of

12

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Table of Contents

this
plan, participants are entitled to: (1) a lump sum cash payment or salary continuation equal to the participant's then current annual base salary, prorated for partial periods,
(2) extension of medical and dental benefits for the applicable severance period, (3) a prorated bonus under the variable pay program for the year in which the termination occurs,
(4) extension of the exercise time period for outstanding stock options to the date that is one year following the participant's date of termination and (5) executive outplacement
services. In certain circumstances, participants may also receive an additional payment relating to income taxes on their severance benefits if the total payments to any of our named executive
officers under the terms of the management severance plan are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code. See "Tax Considerations" below for further
information regarding the excise tax reimbursement.

Tax Considerations

Under Section 162(m) of the Internal Revenue Code, a publicly-held corporation may not deduct more than $1 million in a
taxable year for certain forms of compensation made to the chief executive officer and other officers listed in the summary compensation table. Our policy is generally to preserve the federal income
tax deductibility of compensation paid to our executives, and certain of our equity awards have been structured to preserve deductibility under Section 162(m). Nevertheless, we retain the
flexibility to authorize compensation that may not be deductible if we believe it is in the best interests of our company. While we believe that all compensation paid to our executives in 2013 was
deductible, it is possible that some portion of compensation paid in future years will be non-deductible, particularly in those years in which restricted share awards vest.

As
noted above, under the Change of Control Severance Plan, we may in certain circumstances make additional payments to our named executive officers if payments to them resulting from a
change of control are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code. We included this provision in the Change of Control Severance Plan in order to enhance the
motivation of our named executive officers to further increase stockholder value while remaining employed by us. We believe that these incentives would be frustrated by the possible imposition of the
need for our executive officers to pay an excise tax upon the receipt of their change of control benefit under the Change of Control Severance Plan, and we do not believe that the provisions of the
Change of Control Severance Plan should provide even a potential disincentive to our named executive officers' pursuit of a change of control that otherwise might be in the best interests of the
Company and its stockholders. Accordingly, we determined to provide payment to reimburse our named executive officers for any excise taxes payable in connection with the change of control payment, as
well as any taxes that accrue as a result of our reimbursement.

Role of Executive Officers in Determining Executive Compensation for Named Executive Officers

Our Named Executive Officers did not receive increases in their 2013 compensation.

Perquisites and Other Personal Benefits

In addition to the components noted above, our total executive compensation program also includes various benefits, such as health
insurance plans, other insured benefits, paid leave and retirement plans in which substantially all of the Company's employees participate. At the present time, the only plans in effect are health,
dental, life and disability insurance plans and the severance plan for certain senior officers of the Company described under "Change of Control Severance Plan."

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Table of Contents

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

Our named executive officers are entitled to receive certain payments and other benefits in connection with certain separations from
employment or following a change in control of the Company. Those payments or benefits are provided by the terms of our plans or by the terms of their employment agreements, as reflected in the table
below.

Among
other things, these payments arise under the Company's Change of Control Severance Agreement (the "Severance Agreement").

Pursuant
to the Plan, Mr DiNuzzo (prior to his departure) and Mr. Bratton and certain other key employees (the "Participants") are or were, as applicable, eligible to
receive benefits upon the Participant's termination of employment, under certain circumstances, if such termination follows, or is shortly prior to, a Change of Control (as defined in the Severance
Agreement).

Subject
to the terms and conditions of the Severance Agreement, Participants are entitled to: (1) a lump sum cash payment or salary continuation equal to the Participant's then
current annual base salary, prorated for partial periods (twelve months for Messrs. DiNuzzo and Bratton), (2) extension of medical and dental benefits for the applicable severance
period, (3) a prorated bonus under the Company's Annual Incentive Plan for the year in which the termination occurs, payment of which shall be made at the same time and under the same terms and
conditions as bonuses are paid to employees of the Company (provided that such bonus shall equal no less than the average of the bonuses awarded to the named executive officer for the three
(3) years (or lesser number of years for which the named executive officer was employed by the Company) preceding the year in which the named executive officer's termination occurs),
(4) extension of the exercise time period for outstanding stock options to the date that is one year following the Participant's date of termination and (5) executive outplacement
services. In certain circumstances, Participants may also receive an additional payment relating to income taxes on their severance benefits.

Mr. DiNuzzo
received compensation of $350,000 under this Plan as a result of his termination in July 2013 following the consummation ofthe Asset Sale.

Had
a Change of Control occurred with an effective date of December 31, 2013, the executives named below would have received approximately the amounts set forth as follows:

Name

Approximate Payment
Amount ($)Kevin J. Bratton

$
272,144


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Table of Contents

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT

The following table presents, as of April 15, 2014, information as to (i) the persons or entities known to the Company to
be beneficial owners of more than 5% of the Common Stock, (ii) each director and director nominee, (iii) each of the named executive officers appearing in the Summary Compensation Table
under "Executive Compensation" below and (iv) all directors and executive officers of the Company as a group, based on representations of executive officers and directors of the Company and
filings received by the Company on Schedule 13D or 13G promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As of April 15, 2014, the Company had 21,027,640 shares of the Common Stock issued and outstanding. Unless otherwise
indicated, the number of shares beneficially owned by the persons or entities named in the table and by all executive officers and directors as a group are presented in accordance with
Rule 13d-3 under the Exchange Act and include, in addition to shares issued and outstanding, unissued shares which are subject to issuance upon exercise of options or warrants within
60 days after April 15, 2014. Such unissued shares are also included in computing the percent of class beneficially owned by such person, but are not included in computing the percent of
class beneficially owned by any other person. The address of the individual beneficial owners is in care of the Company at its address listed on the first page of this Proxy Statement unless otherwise
noted.

Name and Address of Beneficial Owner

Amount and Nature of
Beneficial Ownership(1)

Options Exercisable
Within 60 Days After
Record Date

Total Beneficial
Ownership

Percent of
ClassSteven R. Becker


7,173,733
(2)

81,021


7,254,754


34.4
%Francis M. DiNuzzo


138,288


528,000


666,288


3.1
%Richard van den Broek


235,630
(3)

81,021


316,651


1.5
%Stephen L. Waechter


86,490





86,490


*Kevin J. Bratton


90,225


165,000


255,225


*C. Geoffrey Davis


26,596





26,596


*David M. Wurzer


12,500


71,574


84,074


*Thomas Bologna


10,000


71,574


81,574


*Wayne P. Yetter


7,500


71,304


78,804


*Philip T. Blazek











*All officers and directors as a group (10 persons)


7,780,962


1,069,494


8,850,456


40.1
%Becker Drapkin Management, LLC


7,008,344
(4)




7,008,344


33.3
%300 Crescent Court, Suite 111
Dallas, Texas 75201


*Represents
less than 1%.(1)Unless
otherwise indicated, each of the stockholders has sole voting and investment power with respect to the securities shown to be owned by such
stockholder. The inclusion herein of securities listed as beneficially owned does not constitute an admission of beneficial ownership.(2)Includes7,008,962
shares held by Becker Drapkin Management, of which Mr. Becker is a co-managing partner.(3)Includes
200,000 shares held by HSMR Advisors, LLC, of which Mr. van den Broek is the managing partner.(4)The
Company has relied solely on Form 4 dated February 18, 2014 for this information.


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Table of Contents

Item 13.    Certain Relationships and Related Transactions, and Director Independence

Related Party Transactions and Approval Policy

Our Code of Ethics mandate that officers and directors bring promptly to the attention of our Compliance Officer, currently our Chief
Financial Officer, any transaction or series of transactions that may result in a conflict of interest between that person and the Company. Following any disclosure, our Compliance Officer will then
review with the Chairman of our Audit Committee the relevant facts disclosed by the officer or director in question. After this review, the Chairman of the Audit Committee and the Compliance Officer
determine whether the matter should be brought to the Audit Committee or the full Board of Directors for approval. In considering any such transaction, the Audit Committee or the Board of Directors,
as the case may be, will consider various relevant factors, including, among others, the reasoning for the Company to engage in the transaction, whether the terms of the transaction are arm's length
and the overall fairness of the transaction to the Company. If a member of the Audit Committee or the Board is involved in the transaction, he or she will not participate in any of the discussions or
decisions about the transaction. The transaction must be approved in advance whenever practicable, and if not practicable, must be ratified as promptly as practicable.

Item 14.    Principal Accounting Fees and Services

Audit Fees.Fees billed to the Company by KPMG LLP during 2013 and 2012 for audit services rendered by KPMG LLP for the audit
of the
Company's annual financial statements for such years, for the review of those financial statements included in the Company's Quarterly Reports on Form 10-Q during such years, and for services
that are normally provided by KPMG LLP in connection with statutory and regulatory filings or engagements, totaled $175,000 and $271,000, respectively.

Tax Fees.Fees billed to the Company by KPMG LLP during 2013 and 2012 for professional services rendered for tax compliance, tax
advice and
tax planning totaled $88,420 and $93,045, respectively.

All Other Fees.There were no additional fees billed to the Company by KPMG LLP during 2013 or 2012 for products and services,
other than
services reported in the two preceding paragraphs.

All
of the services described in the preceding paragraphs were approved by the Audit Committee pursuant to applicable regulations.

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Table of Contents

PART IV

Item 15.    Exhibits and Financial Statement Schedules

1.     Exhibits

Exhibit
Number

Description

Reference2.1

Agreement and Plan of Merger among the Company, AZUR Acquisition Corp. and AZUR Environmental dated May 4, 2001

(1)2.2

Asset Purchase Agreement, dated as of November 10, 2011, by and among Strategic Diagnostics Inc., a Delaware corporation, Modern Water Inc., a Delaware corporation, and MW Monitoring IP Limited, a
limited liability company incorporated under the laws of England and Wales.@

(20)2.3

Amendment No. 1 to Asset Purchase Agreement, dated as of December 8, 2011, by and among Strategic Diagnostics Inc., a Delaware corporation, Modern Water Inc., a Delaware corporation, and MW
Monitoring IP Limited, a limited liability company incorporated under the laws of England and Wales.@.

(21)2.4

Asset Purchase Agreement, dated as of September 28, 2012 by and between Strategic Diagnostics Inc., a Delaware corporation and Romer Labs Technology, Inc., a Delaware corporation.

(22)2.5

Asset Purchase Agreement, dated as of April 5, 2013 by and between Strategic Diagnostics Inc., a Delaware corporate and SDIX, LLC, a Delaware limited liability company, and OriGene Technologies,
 Inc., a Delaware corporation.

(23)2.6

Amendment No. 1 to Asset Purchase Agreement, dated as of July 12, 2013 by and between Strategic Diagnostics Inc., SDIX, LLC and OriGene Technologies, Inc.

(24)3.1

Fourth Amended and Restated Certificate of Incorporation of the Company

(2)3.2

Amendment of Fourth Amended and Restated Certificate of Incorporation of the Company

(25)3.3

Second Amended and Restated Bylaws of the Company

(26)4.1

Forms of Warrants to Purchase Common Stock of the Company

(2)10.3

EnSys Environmental Products, Inc. 1993 Stock Incentive Plan*

(3)10.4

Amended and Restated EnSys Environmental Products, Inc. 1995 Stock Incentive Plan*

(4)10.5

EnSys Environmental Products, Inc. 401(k) Plan Adoption Agreement

(3)10.11

Agreement and Plan of Merger by and between EnSys and Strategic Diagnostics Inc. dated as of October 11, 1996

(2)10.22

1998 Employee Stock Purchase Plan

(10)10.23

2000 Stock Incentive Plan*

(13)10.35

Strategic Diagnostics Inc. Change of Control Severance Agreement*

(12)10.36

Agreement, dated as of March 12, 2008, by and among the Company and Steven R. Becker, BC Advisors, LLC, SRB Management, L.P. and Richard van den Broek

(14)


17

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Table of Contents

Exhibit
Number

Description

Reference10.38

Employment Agreement, dated as of October 13, 2008, between Strategic Diagnostics Inc. and Francis M. DiNuzzo*

(16)10.42

Form of Nonqualified Stock Option Agreement*

(19)10.43

Form of Restricted Stock Grant Agreement*

(19)21.1

Subsidiaries of the Company

(27)23.1

Consent of KPMG LLP, Independent Registered Public Accounting Firm

(27)31.1

Certifications of the Principal Executive Officer of Strategic Diagnostics Inc. required by Rule 13a-14(a) under the Securities Exchange Act of 1934 (filed herewith)31.2

Certifications of the Principal Financial Officer of Strategic Diagnostics Inc. required by Rule 13a-14(a) under the Securities Exchange Act of 1934 (filed herewith)32.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (filed herewith)32.2

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (filed herewith)


(1)Incorporated
by reference to the designated exhibit of the Company's 10-Q for the fiscal quarter ended September 30, 2001.(2)Incorporated
by reference to the designated exhibit of the EnSys Registration Statement on Form S-4 (No. 333-17505) filed on
December 9, 1996.(3)Incorporated
by reference to the designated exhibit of the EnSys Registration Statement on Form S-1 (No. 33-68440) filed on
September 3, 1993.(4)Incorporated
by reference to Appendix F to the Joint Proxy Statement/Prospectus contained in the EnSys Registration Statement on Form S-4
(No. 333-17505) filed on December 9, 1996.(5)Incorporated
by reference to the designated exhibit of the EnSys Form 10-K for the fiscal year ended December 31, 1994.(6)Incorporated
by reference to the designated exhibit of the EnSys Form 10-Q for the fiscal quarter ended March 31, 1996.(7)Incorporated
by reference to the designated exhibit of the Company's Form 10-K for the fiscal year ended December 31, 1997.(8)Incorporated
by reference to the identically numbered exhibit contained in the Company's Form 8-K filed on May 26, 1999.(9)Incorporated
by reference to the designated exhibit of the Company's 10-Q for the fiscal quarter ended June 30, 2000.(10)Incorporated
by reference to the designated exhibit of the Company's Registration Statement on Form S-8 (No. 333- 68107) filed on
November 30, 1998.(11)Incorporated
by reference to the designated exhibit of the Company's Form 10-Q for the fiscal quarter ended September 30, 2003.


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Table of Contents

(12)Incorporated
by reference to the designated exhibit of the Company's Form 10-Q for the fiscal quarter ended September 30, 2005.(13)Incorporated
by reference to Appendix A of the Company's Definitive Proxy Statement filed with the Securities and Exchange Commission on
March 24, 2004.(14)Incorporated
by reference to Exhibit 99.1 of the Company's Form 8-K filed March 18, 2008.(15)Incorporated
by reference to Exhibit 99.1 of the Company's Form 8-K filed June 6, 2008.(16)Incorporated
by reference to Exhibit 99.1 of the Company's Form 8-K filed October 16, 2008.(17)Incorporated
by reference to Exhibit 99.1 of the Company's Form 8-K filed December 9, 2008.(18)Incorporated
by reference to Exhibit 10.1 of the Company's Form 10-Q for the fiscal quarter ended March 31, 2009.(19)Incorporated
by reference to the designated exhibit of the Company's Form 10-k for the fiscal year ended December 31, 2009.(20)Incorporated
by reference to Exhibit 99.1 of the Company's Form 8-K filed November 16, 2011.(21)Incorporated
by reference to Exhibit 99.1 of the Company's Form 8-K filed December 13, 2011.(22)Incorporated
by reference to Exhibit 2.1 of the Company's Form 8-K filed October 22, 2012.(23)Incorporated
by reference to Exhibit 1.01 of the Company's Form 8-K filed April 10, 2013.(24)Incorporated
by reference to Exhibit 10.1 of the Company's Form 8-K filed July 15, 2013.(25)Incorporated
by reference to Exhibit 3.1 of the Company's Form 8-K filed July 15, 2013.(26)Incorporated
by reference to Exhibit 3.2 of the Company's Form 8-K filed July 15, 2013.(27)Previously
filed.*Management
contract or compensatory plan.+Confidential
treatment has been granted as to certain portions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.@Schedules
and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company undertakes to furnish
supplementally copies of any of the omitted schedules and exhibits upon request by the U.S. Securities and Exchange Commission.


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Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

SPECIAL DIVERSIFIED OPPORTUNITIES INC.Date: April 30, 2014

/s/ PHILIP T. BLAZEK Philip T. Blazek President


Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.

Date: April 30, 2014

/s/ STEVEN BECKER Steven Becker Chairman of the Board of DirectorsDate: April 30, 2014

/s/ PHILIP T. BLAZEK Philip T. Blazek President
(Principal Executive Officer)Date: April 30, 2014

/s/ KEVIN J. BRATTON Kevin J. Bratton Vice PresidentFinance and Chief Financial Officer
(Principal Financial and Accounting Officer)Date: April 30, 2014

/s/ THOMAS A. BOLOGNA Thomas A. Bologna DirectorDate: April 30, 2014

/s/ RICHARD VAN DEN BROEK Richard van den Broek DirectorDate: April 30, 2014

/s/ DAVID M. WURZER David M. Wurzer DirectorDate: April 30, 2014

/s/ WAYNE P. YETTER Wayne P. Yetter Director


20

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