10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-08696

COMPETITIVE TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	36-2664428
(State or other jurisdiction of incorporation or organization)	(I. R. S. Employer Identification No.)

1375 Kings Highway East, Suite 400, Fairfield, CT	06824
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (203) 368-6044

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

Title of each class	Name of each exchange on which registered
Common Stock ($0.01 par value)	OTCQX

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

None

(Title of Class)

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.	Yes ¨  No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.	Yes ¨  No x
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 ¨  No x
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 x  No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) 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.	¨

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.

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  ¨ (Do not check if a smaller reporting company)	Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes ¨  No x

State the aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates, based on the closing price of $0.27 as reported by the OTCQX Market, as of the last business day of the registrant’s most recently completed second quarter (June 30, 2013).	$4,415,797
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.	22,577,907

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Proxy Statement for the 2014 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant's fiscal year ended December 31, 2013.

Competitive Technologies, Inc.

TABLE OF CONTENTS

Part I
Forward-Looking Statements		3
Item 1.	Business	3
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	13
Item 2.	Properties	13
Item 3.	Legal Proceedings	13
Item 4.	Mine Safety Disclosures	15
Part II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16
Item 6.	Selected Financial Data	17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 8.	Financial Statements and Supplementary Data	27
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	56
Item 9A.	Controls and Procedures	56
Item 9B.	Other Information	57
Part III
Item 10.	Directors and Executive Officers and Corporate Governance	58
Item 11.	Executive Compensation	58
Item 12.	Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters	58
Item 13.	Certain Relationships and Related Transactions, and Director Independence	58
Item 14.	Principal Accounting Fees and Services	58
Part IV
Item 15.	Exhibits, Financial Statement Schedules	59
Signatures		60
Exhibit Index		61

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PART I

Forward-Looking Statements

Statements about our future expectations are "forward-looking statements" within the meaning of applicable Federal Securities Laws, and are not guarantees of future performance. When used herein, the words "may," "will," "should," "anticipate," "believe," "appear," "intend," "plan," "expect," "estimate," "approximate," and similar expressions are intended to identify such forward-looking statements. These statements involve risks and uncertainties inherent in our business, including those set forth in Item 1A under the caption "Risk Factors," in this Annual Report on Form 10-K for the year ended December 31, 2013, and other filings with the SEC, and are subject to change at any time. Our actual results could differ materially from these forward-looking statements. We undertake no obligation to update publicly any forward-looking statement.

Item 1. Business

Overview:

Competitive Technologies, Inc. ("CTI" or “the Company”) was incorporated in Delaware in 1971, succeeding an Illinois corporation incorporated in 1968. CTI and its majority-owned subsidiary, Vector Vision, Inc., (collectively, "we," "our," or "us"), provide distribution, patent and technology transfer, sales and licensing services focusing on the needs of our customers, matching those requirements with commercially viable technology or product solutions. We develop relationships with universities, companies, inventors and patent or intellectual property holders to obtain the rights or a license to their intellectual property (collectively, the "technology" or "technologies"), or to their product. They become our clients, for whom we find markets to sell or further develop or distribute their technology or product. We also develop relationships with those who have a need or use for technologies or products. They become our customers, usually through a license or sublicense, distribution agreement, or sales contract.

We earn revenue in two ways: retained royalties from licensing our clients' and our own technologies to our customer licensees, and sales of finished products. We record revenue when the terms of the sales arrangement are accepted by all parties including a fee that is fixed and determinable, delivery has occurred and our customer has taken title, and collectability is reasonably assured.

Since 2011 the Company has controlled the sales process for its Calmare^® medical device. We are the primary obligor, responsible for delivering devices as well as for training our customers in the proper use of the device. We deal directly with customers, setting pricing and providing training; work directly with the inventor of the technology to develop specifications and any changes thereto and to select and contract with manufacturing partners; and retain significant credit risk for amounts billed to customers. Therefore, all product sales are recorded following a gross revenue methodology.

Our revenue fluctuates due to fluctuations in the medical device market for our Calmare^® pain therapy device, as well as changes in revenue of our customers, upfront license fees, new licenses granted, new distribution agreements, expiration of existing licenses or agreements, and/or the expiration or economic obsolescence of patents underlying licenses or products.

We acquire rights to commercialize a technology or product on an exclusive or non-exclusive basis, worldwide or limited to a specific geographic area. When we license or sublicense those rights to our customers, we may limit rights to a defined field of use. Technologies can be early, mid, or late stage . Products we evaluate must be working prototypes or finished products. We establish channel partners based on forging relationships with mutually aligned goals and matched competencies to deliver solutions that benefit the ultimate end-user.

The Company has incurred operating losses since fiscal 2006 and has a working capital deficiency at December 31, 2013. We continue to seek revenue from new technologies or products to mitigate the concentration of revenues, and replace revenues from expiring licenses. At current reduced spending levels, the Company may not have sufficient cash flow to fund operations through 2014.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company's continuation as a going concern is dependent upon its developing other recurring revenue streams sufficient to cover operating costs. If necessary, we will meet anticipated operating cash requirements by further reducing costs, issuing debt or equity, and/or pursuing sales of certain assets and technologies while we pursue licensing and distribution opportunities for our remaining portfolio of technologies. The Company does not have any significant individual cash or capital requirements in the budget going forward. Failure to develop a recurring revenue stream sufficient to cover operating expenses would negatively affect the Company’s financial position.

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On September 3, 2010, the Company’s securities began trading on the OTCQB marketplace under the ticker symbol CTTC, having been delisted from the NYSE Amex (the "Exchange"). The delisting followed an 18-month period during which the Company sought to regain compliance with the Exchange's continued listing standards as set forth in Part 10 of the Exchange Company Guide. As noted in Section 1003 of the Exchange Company Guide, companies with stockholders' equity of less than $2 million, and losses from continuing operations and net losses in two out of its three most recent fiscal years, or with stockholders' equity of less than $4 million and losses from continuing operations and net losses in three out of its four most recent fiscal years are non-compliant. We were only non-compliant with the stockholders’ equity component.

Despite arguments made at an oral hearing at which the Company sought to remain listed, the Exchange Listing Qualifications Panel affirmed the Exchange Staff’s determination to delist the Company’s securities. After trading on the OTCQB for a month, on October 5, 2010, the Company’s securities began trading on the OTC market's top tier, the OTCQX.

Product Distribution Services

Our services are beneficial to the inventor, manufacturer and distributor of the product. We evaluate a working prototype or finished product for marketability. We find opportunities through industry connections and contacts, and trade shows. We select products we will represent, negotiate with potential domestic and international distributors, and sign agreements on a country and/or area exclusive basis. We earn revenue on a per-unit basis through product distribution agreements. We share the revenue with the product inventor, and/or manufacturer. For some products, we will act as the distributor in specific geographic areas, again sharing the revenue with product inventor and/ or manufacturer.

Technology Commercialization Services

Our services are beneficial to the provider and user of the technology. The technology client can focus on research and development, rather than selling and marketing, as we effectively become their marketing department. The technology customer can focus on selling and marketing, rather than research and development. We maintain and enforce our clients' and our technology patent rights, by monitoring and addressing infringement. We maximize the value of technologies for the benefit of our clients, customers and shareholders.

We identify and commercialize innovative technologies in life and physical sciences, electronics, and nano science. Life sciences include medical testing, diagnostics, pharmaceuticals, biotechnologies, medical devices and other medical or biological applications. Physical sciences include chemical, display, and environmental applications. Electronics include communications, semiconductors, Internet related, e-commerce and consumer electronics applications. Nanotechnologies are the manipulation of microscopic particles into useful arrangements, and smart or novel materials; a nano particle is one thousand times smaller than the width of a human hair. We have technologies in each area, with a concentration in life sciences.

Portfolio Acquisition and Maintenance

We continue to maintain relationships with universities and inventors, managing the clients, products and technologies we represent, as a premier technology commercialization and product distribution company. The goal is to have a pipeline of technologies and distribution products that will generate a long-term recurring revenue stream.

We evaluate potential technologies based on the strength of the intellectual property, our ability to protect it, its life stage, further development time needed, compatibility with existing technology in our portfolio, marketability, market size, and potential profitability.

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We evaluate potential products for distribution based on their capability to fulfill an unmet market need and/or social responsibility. We focus on products that improve quality-of-life. The goal is to acquire products for distribution that have a competitive advantage, proprietary know-how and/or regulatory approval. We seek exclusive rights to manufacture, market and distribute the products. Both products and technologies have the potential to produce different levels of revenue throughout the life of the agreement. We regularly review the revenue potential of our product and technology portfolio to generate a long-term recurring revenue stream.

A non-disclosure agreement signed with a prospective client allows us access to confidential information about the product or technology. We require similar non-disclosure agreements from prospective customers when we commercialize the product or technology. We include mutual non-disclosure provisions about the product or technology in agreements granted to protect value, for CTI, our clients and our customers. As a result of these obligations, as well as federal regulations for disclosure of confidential information, we may only be able to disclose limited information about licenses and sublicenses granted for products or technologies we evaluate, as is necessary for an understanding of our financial results.

Marketing Technologies and Products

We commercialize technologies and products through contacts in research and development, legal firms, major corporations, seminars and trade shows. We determine the most likely users of the technologies or distributors of products, and contact prospective customers.

Technology Protection and Litigation

Protecting our technologies from unintentional and willful patent infringement, domestically and internationally, is an important part of our business. We sometimes assist in preparation of initial patent applications, and often are responsible for prosecuting and maintaining patents. Unintentional infringement, where the infringer usually does not know that a patent exists, can often be resolved by the granting of a license. In cases of willful infringement, certain infringers will continue to infringe absent legal action, or, companies may successfully find work-arounds to avoid paying proper monies to us and our clients for use of our technologies. We defend our technologies on behalf of ourselves, our clients and licensees, and pursue patent infringement cases through litigation, if necessary. Such cases, even if settled out of court, may take several years to resolve, with expenses borne by our clients, us, or shared. Proceeds from the case are usually shared in proportion to the costs. As a result, we may incur significant expenses in some years and be reimbursed through proceeds of awards or settlements several years later. In cases of willful infringement, patent law provides for the potential of treble damages at the discretion of the Court.

Revenue Generation

We license technologies to generate revenue based on usage or sales of the technologies, or by sharing in the profits of distribution. When our customers pay us, we share the revenue with our clients.

Revenue for 2013 primarily represented the sale of Calmare medical devices to end users in the United States. It also includes rental income from situations where we rented Calmare medical devices to end-users in the United States

Product distribution. We have established a business model for appropriate technologies that allows us to share in the profits of distribution. Distribution terms are set in written agreements for products, and are generally signed for exclusive area parameters.

Sales of Inventory. We currently maintain an inventory of our Calmare pain therapy medical device and we recognize revenue from the sale of inventory as devices are shipped to our customers. The Calmare device is a technologically advanced solution for chronic pain management, which has been shown to be highly effective in the treatment of chemotherapy induced peripheral neuropathy (CIPN), drug-resistant cancer pain and chronic neuropathic pain including failed back surgery syndrome (FBSS), sciatic and lumbar pain, phantom limb syndrome, postherpetic neuralgia (PHN), brachial plexus neuropathy, and low back pain (LBP); having long-lasting effects — an important benefit for both patients and their physicians.

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Sales of our Calmare device continue to be the major source of revenue for the Company. The Company initially acquired the exclusive, worldwide rights to the Scrambler Therapy^® technology in 2007. The Company's 2007 agreement with Giuseppe Marineo ("Marineo"), an inventor of Scrambler Therapy technology, and Delta Research and Development ("Delta"), authorized CTI to manufacture and sell worldwide the device developed from the patented Scrambler Therapy technology. The Scrambler Therapy technology is patented in Italy and in the U.S., effective in February 2013. Applications for patents have been filed internationally as well and are pending approval. The Calmare device has CE Mark certification from the European Union as well as U.S. FDA 510(k) clearance.

In 2011, the Company negotiated an extension to the agreement Marineo and Delta. This agreement extended the Company’s exclusive, worldwide rights to the Scrambler Therapy^® technology until March 31, 2016.

The agreement with Marineo and Delta enabled the Company to establish an agreement with GEOMC Co., Ltd. ("GEOMC", formerly Daeyang E & C Co., Ltd.) of Seoul, South Korea, to manufacture the Calmare pain therapy medical device, based on Marineo's Scrambler Therapy technology. This original GEOMC agreement is for a period of ten (10) years, through 2017, and outlines each company's specific financial obligations.

In 2010, the Company became its own distributor for the Calmare device in the U.S, contracting with commissioned sales representatives to sell devices. During 2011 and 2012, the Company and its representatives developed plans to increase awareness of the Calmare device among critical medical specialties and began to implement those plans targeting specific customers and locations in 2012. Over the past 30 months, the Company has entered into several sales agreements for the Calmare device, including sales to U.S. government entities within the U.S. Department of Defense and the U.S. Department of Veterans Affairs. Sales to these physicians and medical practices and to others with whom the Company had existing sales agreements continue to generate revenue for the Company.

We record revenue from the sales of inventory when the terms of the sales arrangement are accepted by all parties including a fee that is fixed and determinable, delivery has occurred and our customer has taken title, and collectability is reasonably assured. We are the primary obligor, responsible for delivering devices as well as for training our customers in the proper use of the device. We deal directly with customers, setting pricing and providing training; work directly with the inventor of the technology to develop specifications and any changes thereto and to select and contract with manufacturing partners; and retain significant credit risk for amounts billed to customers. Therefore, all product sales are recorded following a gross revenue methodology.

Technology royalties Client and customer agreements are generally for the duration of the technology life, which usually is determined by applicable patent law. When we receive customer reports of sales or payments, whichever occurs first, we record revenue for our portion, and record our obligation to our clients for their portion. For early stage technologies that may not be ready for commercial development without further research, we may receive annual minimum payments and/or milestone payments based on research progress or subsequent sublicense or joint venture proceeds. In certain sublicense or license agreements, we may receive an upfront fee upon execution of the license. Our fees are generally non-refundable, and, except for annual minimums, are usually not creditable against future royalties. In certain cases, the first year or several years' royalties may be waived in consideration for an upfront fee. We may apply the upfront fee or initial fees to reimburse patent prosecution and/or maintenance costs incurred by either party. In these cases, payments are recorded as a reduction of expense, and not as revenue. If the reimbursement belongs solely to our client, we record no revenue or expense. As a result, a new technology may not generate significant revenue in its early years.

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Licensing terms are documented in written agreements with customers. We generally enter into single element agreements with customers, under which we have no additional obligations other than patent prosecution and maintenance. We may enter into multiple element agreements under which we have continuing service obligations. All revenue from multiple element agreements is deferred until delivery of all verifiable required elements. In milestone billing agreements we recognize non-refundable, upfront fees ratably over the life of the agreement, and milestone payments as the specified milestone is achieved. We evaluate billing agreements on a case-by-case basis, and record revenue as appropriate. We do not have multiple element or milestone billing agreements at this time, but have had such agreements in the past, and could have in the future.

In 2013, we had a significant concentration of revenue from our Calmare medical device. We actively market other technologies, and seek new technologies to mitigate this concentration of revenue and provide a steady future revenue stream. However, Calmare device was the only technology that produced revenue equal to or exceeding 15% of our total revenue in 2013 and 2012.

We receive revenue from legal awards that result from successful patent enforcement actions and/or out of court settlements. Such awards or settlements may be significant, are non-recurring and may include punitive damages, attorneys' fees, court costs and interest. No such awards were received in 2013 or 2012.

Other technologies in our life sciences portfolio, many of which are subject to testing, clinical trials and approvals, include:

· Nano particle bone cement biomaterial with a broad range of potential applications, including dental, spinal and other orthopedic and trauma related applications, available for licensing for all applications;

· Sunless tanning agent, a skin-pigment enhancer being researched as a skin cancer preventative, and therapeutic for vitiligo, albinism and psoriasis, exclusively licensed to Clinuvel Pharmaceuticals, Ltd. (Australia);

· Sexual Dysfunction technology, CTI's joint venture with Xion Corporation announced in September 2009 is conducting an extended research program in support of the commercialization of our patented melanocortin analogues for treating male and female sexual dysfunction and obesity.

Our applied science/electronics portfolio includes:

· Encryption technology that operates at high speeds with low memory requirements to secure applications used on the Internet, telecommunications, smart cards and e-commerce;

· Video and audio signal processing technology licensed in the Motion Picture Electronics Group visual patent portfolio pool (MPEG 4 Visual), and used in streaming video products for personal computers and wireless devices, including mobile phones;

· Structural Steel Fissure Detection Paint contains a built-in, self-activating, crack-indicating or warning capability effective coincident with application of the paint to the structure, and requiring minimum training for its use.

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Employees

As of April 11, 2014, we employed the full-time equivalent of five (5) people. We also had independent consultants under contract to provide financial management services, business development services, and sales management services. In addition to the diverse technical, intellectual property, legal, financial, marketing and business expertise of our professional team, from time to time we rely on advice from outside specialists to fulfill unique technology and other needs.

Changes in Leadership in the Company

On September 12, 2013, Mr. Carl O’Connell, the Chief Executive Officer of the Company notified the Company’s Board of Directors of his resignation from his position as Chief Executive Officer, effective September 26, 2013. Mr. O’Connell will remain a member of the Board of Directors. The resignation of Mr. O’Connell was not a result of any disagreements relating to the Company’s operations, policies or practices.

On September 30, 2013, the Board of Directors removed Johnnie D. Johnson as the Company’s Chief Financial Officer.

On September 27, 2013, the Board of Directors of the Company appointed Conrad Mir as the Company’s new Chief Executive Officer, and President and elected him as a member of the Board of Directors. On September 30, 2013, in connection with Mr. Johnson’s removal, Mr. Mir was appointed as the Company’s interim Chief Financial Officer.

The Company entered into a formal employment agreement with Mr. Mir on October 1, 2013. This employment agreement is attached to this Form 10-K, filed as Exhibit 10.43.

Corporate Governance

CTI's Corporate Governance Principles, Corporate Code of Conduct, the Committee Charters for the Audit and Nominating Committees of the Board of Directors, the unofficial restated Certificate of Incorporation and the By-Laws are available on our website at www.competitivetech.net/investors/governance.html.

Available Information

We make available without charge copies of our Annual Report, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those, and other reports filed with the Securities and Exchange Commission ("SEC") on our website, www.competitivetech.net, as soon as reasonably practicable after they are filed. Our website's content is not intended to be incorporated by reference into this report or any other report we file with the SEC. You may request a paper copy of materials we file with the SEC by calling us at (203) 368-6044.

You may read and copy materials we file with the SEC on the SEC's website at www.sec.gov, or at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling (800) 732-0330.

Fiscal Year

Our fiscal year ends December 31, and our first, second, third and fourth quarters end March 31, June 30, September 30 and December 31, respectively.

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Item 1A. Risk Factors

Risks Related to our Business and the Market Environment

The risk factors described below are not all-inclusive. All risk factors should be carefully considered when evaluating our business, results of operations, and financial position. We undertake no obligation to update forward-looking statements or risk factors. There may be other risks and uncertainties not highlighted herein that may affect our financial condition and business operations.

We derived more than 85% of our total revenue in 2013 from one technology.

Total revenue consists of revenue from product sales, retained royalties, and other income. We derived approximately $653,000, or 85%, of 2013 revenue from sales of our Calmare pain therapy medical device technology. An additional 4% of revenue derived indirectly from that technology through sales of supplies and training, rental payments and the sale of rental assets. A concentration of revenue makes our operations vulnerable to patent changes or expiration, or to variability in the medical device market, or to the development of new and competing technologies and could have a significant adverse impact on our financial position.

In the last five fiscal years, we incurred significant net losses and negative cash flows, and our ability to finance future losses is limited, and may significantly affect existing stockholders.

The Company has incurred operating losses since fiscal 2006 and has a working capital deficiency at December 31, 2013. At current reduced spending levels, the Company may not have sufficient cash flow to fund operations through 2014. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include adjustments to reflect the possible future effect of the recoverability and classification of assets or amounts and classifications of liabilities that may result from the outcome of this uncertainty.

The Company's continuation as a going concern is dependent upon its developing other recurring revenue streams sufficient to cover operating costs. If necessary, we will meet anticipated operating cash requirements by further reducing costs, issuing debt or equity, and/or pursuing sales of certain assets and technologies while we pursue licensing and distribution opportunities for our remaining portfolio of technologies. The company does not have any significant individual capital requirements in the budget going forward. Failure to develop a recurring revenue stream sufficient to cover operating expenses would negatively affect the Company’s financial position.

Our current recurring revenue stream is insufficient for us to be profitable with our present cost structure. To return to and sustain profitability, we must increase recurring revenue by successfully licensing technologies with current and long-term revenue streams, and continue to build our portfolio of innovative technologies. We significantly reduced overhead costs with staff reductions across all company departments, reduced extraneous litigations, and obtained new technologies to build revenue. We will continue to monitor our cost structure, and expect to operate within our generated revenue and cash balances.

Future revenue, obtaining rights to new technologies, granting licenses, and enforcing intellectual property rights are subject to many factors beyond our control. These include technological changes, economic cycles, and our licensees' ability to successfully commercialize our technologies. Consequently, we may not be able to generate sufficient revenue to be profitable. Although we cannot be certain that we will be successful in these efforts, we believe the combination of our cash on hand, and revenue from successfully executing our strategy will be sufficient to meet our obligations of current and anticipated operating cash requirements.

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We depend on relationships with inventors to gain access to new technologies and inventions. If we fail to maintain existing relationships or to develop new relationships, we may have fewer technologies and inventions available to generate revenue. Technology can change rapidly and industry standards continually evolve, often making products obsolete, or resulting in short product lifecycles. Our profitability depends on our licensees' ability to adapt to such changes.

We do not invent new technologies or products. We depend on relationships with universities, corporations, government agencies, research institutions, inventors, and others to provide technology-based opportunities that can develop into profitable licenses, and/or allow us to share in the profits of distribution. Failure to maintain or develop relationships could adversely affect operating results and financial conditions. We are dependent upon our clients' abilities to develop new technologies, introduce new products, and adapt to technology and economic changes.

We cannot be certain that current or new relationships will provide the volume or quality of technologies necessary to sustain our business. In some cases, universities and other technology sources may compete against us as they seek to develop and commercialize technologies. Universities may receive financing for basic research in exchange for the exclusive right to commercialize resulting inventions. These and other strategies may reduce the number of technology sources, potential clients, to whom we can market our services. If we are unable to secure new sources of technology, it could have a material adverse effect on our operating results and financial condition.

We receive most of our revenue from customers over whom we have no control.

We rely on our customers for revenue. Development of new products utilizing our technologies involves risk. Many technologies do not become commercially profitable products despite extensive development efforts. Our license agreements do not require customers to advise us of problems they encounter in development of commercial products, and usually treat such information as confidential. Their failure to resolve problems may result in a material adverse effect on our operating results and financial condition.

Strong competition within our industry may reduce our client base.

We compete with universities, law firms, venture capital firms and other technology commercialization firms. Many organizations offer some aspect of technology transfer services, and are well established with more financial and human resources than we provide. This market is highly fragmented and participants frequently focus on a specific technology area.

From time-to-time we are involved in lawsuits, and in particular, patent litigations, that historically have involved significant legal expenses. If the courts or regulatory agencies in these suits or actions decide against us, this could have a material adverse effect on our business, results of operations and financial condition.

Our clients and/or we may pursue patent infringement litigation or interference proceedings against holders of conflicting patents or sellers of competing products that we believe infringe our patent rights. We cannot be certain that our clients and/or we will be successful in any litigation or proceeding. The costs and outcome may materially adversely affect our business, operating results and financial condition.

For a complete description of all lawsuits in which we are currently involved, see “Item 3. Legal Proceedings.”

Our revenue growth depends on our ability to understand the technology requirements of our customers in the context of their markets. If we fail to understand their technology needs or markets, we limit our ability to meet those needs and generate revenues.

By focusing on the technology needs of our customers, we are better positioned to generate revenue by providing technology solutions. The market demands of our customers drive our revenue. The better we understand their markets, the better we are able to identify and obtain effective technology solutions for our customers. We rely on our professional staff and contract business development consultants to understand our customers' technical, commercial, and market requirements and constraints, to identify and obtain effective technology solutions for them.

Our customers, and we, depend on government approvals to commercially develop certain licensed products.

Commercial development of some licensed patents may require the approval of foreign or domestic governmental regulatory agencies, especially in the life sciences area, and there is no assurance that those agencies will grant such approvals. In the United States, the principal governmental agency involved is the U.S. Food and Drug Administration ("FDA"). The FDA's approval process is rigorous, time consuming and costly. Until a licensee obtains approval for a product requiring such approval, the licensee may not sell the product in the U.S., and therefore we will not receive revenue based on U.S. sales.

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We and our customers depend on government and private insurance reimbursement to develop commercially viable medical products.

Successful commercialization of medical products demands appropriate reimbursement rates from government and private medical insurance programs. In the US, the Centers for Medicare and Medicaid Services (CMS) sets reimbursement rates for medical procedures. Private insurance companies independently develop reimbursement rates for medical procedures as well. There is no assurance that rates will be set on the schedule or at the rates that we and our customers prefer. A lack of sufficient insurance reimbursement may cause customers to delay purchases of a new medical technology, pending the availability of reimbursement.

If we, and our clients, are unable to protect the intellectual property underlying our licenses, or to enforce our patents adequately, we may be unable to develop such licensed patents or technologies successfully.

License revenue is subject to the risk that issued patents may be declared invalid, may not be issued upon application, or that competitors may circumvent or infringe our licensed patents rendering them commercially inadequate. When all patents underlying a license expire, our revenue from that license ceases, and there can be no assurance that we will be able to replace it with revenue from new or existing licenses.

Developing new products and creating effective commercialization strategies for technologies are subject to inherent risks that include unanticipated delays, unrecoverable expenses, technical problem, and the possibility that development funds will be insufficient. The occurrence of any one or more of these risks could cause us to abandon or substantially change our technology commercialization strategy.

Our success depends upon, among other factors, our clients' ability to develop new or improved technologies, and our customers' products meeting targeted cost and performance objectives for large-scale production, adapting technologies to satisfy industry standards and consumer expectations and needs, and bringing the product to market before saturation. They may encounter unanticipated problems that result in increased costs or substantial delays in the product launch. Products may not be reliable or durable under actual operating conditions, or commercially viable and competitive. They may not meet price or other performance objectives when introduced into the marketplace. Any of these events may adversely affect our realization of revenue from new products.

In developing new products we are affected by patent laws and regulations.

Patent laws and regulations are continuously reviewed for possible revision. We cannot be certain how we will be affected by revisions.

Risks Related to Our Common Stock

We have not paid dividends on our common stock.

We have not paid cash dividends on our common stock since 1981, and, our Board of Directors does not currently have plans to declare or pay cash dividends in the future. The decision to pay dividends is solely at the discretion of our Board of Directors based upon factors that they deem relevant, and may change at any time.

Our shares are listed for trading on the OTC Bulletin Board, and our shares will likely be classified as a “penny stock” as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price less than $5.00.  Our shares will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.

We are subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to its customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our stockholders to sell their securities.

Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser’s written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $1,000,000, or annual income exceeding $200,000 individually, or $300,000 together with his or her spouse, is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:

· Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;

· Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;

· Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account, the account’s value and information regarding the limited market in penny stocks;

· Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction, prior to conducting any penny stock transaction in the customer’s account.

Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling stockholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities. In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules and our stockholders will, in all likelihood, find it difficult to sell their securities.

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Our common stock is subject to price volatility unrelated to our operations.

The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting us or our competitors. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.

Sales of substantial amounts of our common stock in the public market could depress the market price of our common stock.

The sale of a substantial amount of common stock in the public market, or the perception that such sales may occur, could cause the market price of our common stock to decline.  

The OTC Bulletin Board, or the OTCBB, is a quotation system, not an issuer listing service, market or exchange.  Therefore, buying and selling stock on the OTCBB is not as efficient as buying and selling stock through an exchange.  As a result, it may be difficult for you to sell your common stock or you may not be able to sell your common stock for an optimum trading price.

The OTCBB is a regulated quotation service that displays real-time quotes, last sale prices and volume limitations in over-the-counter securities.  Our common stock is traded on the OTC QX Marketplace, or OTCQX, which is the trading tier on the OTCBB with the most demanding listing standards.  Nevertheless, because trades and quotations on the OTCBB involve a manual process, the market information for such securities cannot be guaranteed.  In addition, quote information, or even firm quotes, may not be available.  The manual execution process may delay order processing and intervening price fluctuations may result in the failure of a limit order to execute or the execution of a market order at a significantly different price.  Execution of trades, execution reporting and the delivery of legal trade confirmations may be delayed significantly.  Consequently, one may not be able to sell shares of our common stock at the optimum trading prices.

When fewer shares of a security are being traded on the OTCBB, volatility of prices may increase and price movement may outpace the ability to deliver accurate quote information.  Lower trading volumes in a security may result in a lower likelihood of an individual’s orders being executed, and current prices may differ significantly from the price one was quoted by the OTCBB at the time of the order entry.  Orders for OTCBB securities may be canceled or edited like orders for other securities.  All requests to change or cancel an order must be submitted to, received and processed by the OTCBB.  Due to the manual order processing involved in handling OTCBB trades, order processing and reporting may be delayed, and an individual may not be able to cancel or edit his order.  Consequently, one may not be able to sell shares of common stock at the optimum trading prices.

The dealer’s spread (the difference between the bid and ask prices) may be large and may result in substantial losses to the seller of securities on the OTCBB if the common stock or other security must be sold immediately.  Further, purchasers of securities may incur an immediate “paper” loss due to the price spread.  Moreover, dealers trading on the OTCBB may not have a bid price for securities bought and sold through the OTCBB.  Due to the foregoing, demand for securities that are traded through the OTCBB may be decreased or eliminated.

We anticipate the need to sell additional authorized shares in the future.  This will result in a dilution to our existing shareholders and a corresponding reduction in their percentage ownership in the Company.

We may seek additional funds through the sale of our common stock. This will result in a dilution effect to our shareholders whereby their percentage ownership interest in the Company is reduced. The magnitude of this dilution effect will be determined by the number of shares we will have to issue in the future to obtain the funds required.  The sale of additional stock to new shareholders will reduce the ownership position of the current shareholders.  The price of each share outstanding common share may decrease in the event we sell additional shares.

Since our securities are subject to penny stock rules, you may have difficulty reselling your shares.

Our shares are “penny stocks” and are covered by Section 15(d) of the Securities Exchange Act of 1934 which imposes additional sales practice requirements on broker/dealers who sell our securities including the delivery of a standardized disclosure document; disclosure and confirmation of quotation prices; disclosure of compensation the broker/dealer receives; and, furnishing monthly account statements. For sales of our securities, the broker/dealer must make a special suitability determination and receive from its customer a written agreement prior to making a sale. The imposition of the foregoing additional sales practices could adversely affect a shareholder's ability to dispose of his stock.

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Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Company leases approximately 2,700 square feet of office space in Fairfield, CT. Effective October 2013, the Company extended the term of the lease through February 2017 with an average annual cost of approximately $76,000.

In January 2011, the Company entered into a two-year lease effective February 1, 2011 for additional office space for training staff in Charlotte, NC. Obligations under this lease average $27,000 per year for the two-year term. In July 2012, the Company closed the North Carolina office and agreed to pay the landlord $15,000.

Item 3. Legal Proceedings

Carolina Liquid Chemistries Corporation, et al. (Case pending) – On August 29, 2005, we filed a complaint against Carolina Liquid Chemistries Corporation ("Carolina Liquid") in the United States District Court for the District of Colorado, alleging patent infringement of our patent covering homocysteine assays, and seeking monetary damages, punitive damages, attorneys’ fees, court costs and other remuneration at the option of the court. As we became aware of other infringers, we amended our complaint to add as defendants Catch, Inc. ("Catch") and the Diazyme Laboratories Division of General Atomics ("Diazyme"). On September 6, 2006, Diazyme filed for declaratory judgment in the Southern District of California for a change in venue and a declaration of non-infringement and invalidity. On September 12, 2006, the District Court in Colorado ruled that both Catch and Diazyme be added as defendants to the Carolina Liquid case.

On October 23, 2006, Diazyme requested the United States Patent and Trademark Office (the "USPTO") to re-evaluate the validity of our patent and this request was granted by the USPTO on December 14, 2006. On July 30, 2009, the U.S. Patent and Trademark Office’s Board of Patent Appeals and Interferences (“BPAI”) upheld the homocysteine patent. In September 2008, the examiner had denied the patent, but that denial was overruled by the BPAI. While the examiner had appealed that BPAI decision, delaying further action, that appeal was also denied by the BPAI on December 13, 2010. In June 2011, the examiner once again appealed the BPAI decision, and was again denied. In addition to responding to this new appeal, the Company had petitioned the Director of the USPTO to help expedite further action on the case within the USPTO, which was to have been handled with special dispatch according to USPTO requirements for handling reexamination proceedings of patents involved in litigation.

On March 13, 2012, the USPTO issued the Ex Parte Reexamination Certificate confirming the patentability of claims examined. The Company has begun collecting unpaid amounts from various obligated companies.

Employment matters – former employee (case pending)  – In September 2003, a former employee filed a whistleblower complaint with OSHA alleging that the employee had been terminated for engaging in conduct protected under the Sarbanes Oxley Act of 2002 (“SOX”). In February 2005, OSHA found probable cause to support the employee’s complaint and the Secretary of Labor ordered reinstatement and back wages since the date of termination and CTI requested de novo review and a hearing before an administrative law judge (“ALJ”). In July 2005, after the close of the hearing on CTI’s appeal, the U.S. District Court for Connecticut enforced the Secretary’s preliminary order of reinstatement and back pay under threat of contempt and the Company rehired the employee with back pay.

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On October 5, 2005, the ALJ who conducted the hearing on CTI’s appeal of the OSHA findings ruled in CTI’s favor and recommended dismissal of the employee’s complaint. Although the employee abandoned his position upon notice of the ALJ’s decision, he nevertheless filed a request for review by the DOL Administrative Review Board ("ARB").

In May 2006, the U.S. Court of Appeals for the Second Circuit vacated the order of the District Court enforcing the Secretary’s preliminary order of reinstatement and back pay. The employee also filed a new SOX retaliation complaint with OSHA based on alleged black listing action by CTI following his termination. OSHA dismissed the complaint and the employee filed a request for a hearing by an administrative law judge. Ultimately, the employee voluntarily dismissed the appeal.

In March 2008, the ARB issued an order of remand in the employee’s appeal of the October 2005 dismissal of his termination complaint, directing the ALJ to clarify her analysis utilizing the burden-shifting standard articulated by the ARB. In January 2009, the ALJ issued a revised decision again recommending dismissal and once again the employee appealed the ruling to the ARB. On September 30, 2011, the ARB issued a final decision and order affirming the ALJ’s decision on remand and dismissing the employee’s complaint. The employee has appealed the ARB's decision before the U.S. Court of Appeals for the Second Circuit and filed his opening brief on May 31, 2012. Response briefs by the Solicitor's Office of the U.S. Department of Labor and CTI were submitted in August 2012. In March 2013, the U.S Court of Appeals for the Second Circuit upheld the ARB’s decision dismissing the former employee’s complaint and denied the employee’s appeal from that order. In April 2013, the Second Circuit terminated proceedings in that court.

John B. Nano vs. Competitive Technologies, Inc. - Arbitration (case completed) – On September 3, 2010, the Board of Directors of CTI found cause consisting of violation of fiduciary duties to the Corporation and violation of the CTI Corporate Code of Conduct and removed John B. Nano as an Officer of the Corporation, in all capacities. On September 13, 2010, the Board of Directors also found cause consisting of violation of fiduciary duties to the Corporation and violation of the CTI Corporate Code of Conduct removed John B. Nano as a Director of the Corporation, in all capacities, for cause, consisting of violation of his fiduciary duties. Details of these actions are outlined in Form 8-K filings with the SEC on September 13, 2010, and September 17, 2010. Mr. Nano was previously the Chairman of the Board of Directors, President and Chief Executive Officer of CTI.

On September 13, 2010, Mr. Nano brought an arbitration claim to the American Arbitration Association against CTI. Mr. Nano's employment contract with the Company had called for arbitration, which Mr. Nano had demanded to resolve this conflict. Mr. Nano sought $750,000 that he claimed was owed under his contract and claimed that he had been terminated without cause.

On September 23, 2010 the Company was served notice that John B. Nano, CTI's former Chairman, President and CEO had filed a Notice of Application for Prejudgment Remedy/Claim of $750,000 and an Application for an Order Pendente Lite claiming we had breached Mr. Nano’s employment contract with us. The applications were filed in the State of Connecticut Superior Court in Bridgeport, CT. In November 2010, the Company funded $750,000 as a Prejudgment Remedy held in escrow with the Company's counsel and has included this amount as restricted cash on the December 31, 2011 and December 31, 2010 balance sheets. The Company did not believe it was liable to the former Chairman, President and CEO, believing he was terminated for cause. The case proceeded through the arbitration process. The initial arbitration hearing began in April 2011 and additional hearing dates were held in May and June 2011.  At the conclusion of the arbitration hearing dates, in July 2011, each party submitted a summary stating their positions.

Prior to the conclusion of the arbitration hearings, the Company filed suit in Federal Court against the American Arbitration Association. The Company requested a temporary restraining order to halt the arbitration, which was denied by the court. The Company also requested a hearing before the court to review the arbitration proceedings. In August 2011, the American Arbitration Association's assigned arbitrator gave award to the Company's former Chairman, President and CEO, despite the Company's strongly held belief that the Board of Directors properly exercised its reasonable discretion under the employment agreement in finding that the former executive engaged in willful misconduct and gross negligence and that the executive’s actions were cause for employment termination under the employment agreement and governing law. The former executive had requested a payment of $750,000, which he believed was due under his employment agreement. Following the notification of award, the former employee filed a motion with the State of Connecticut Superior Court in Bridgeport, Connecticut to have the award confirmed. CTI followed with a motion to vacate the award. A hearing on those two motions was held before a judge in October 2011.

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In January 2012, the judge denied the Company's motion to vacate the arbitration award in favor of its former CEO John B. Nano and granted Mr. Nano's application to confirm the award. Following the decision, CTI settled all disputes with its former Chairman and CEO John B. Nano. Pursuant to the settlement, CTI has released to Mr. Nano from escrow the $750,000 deposited by CTI following Mr. Nano's application for a prejudgment remedy. CTI paid an additional $25,000 as settlement of additional amounts of statutory interest. These amounts ($775,000) had been accrued at December 31, 2011. The settlement includes mutual general releases of any and all claims either party has or had against the other. The settlement agreement also includes a provision that neither CTI nor Mr. Nano would disparage the other. Should any such disparagement occur and litigation ensue, they further agreed that the prevailing party would be entitled to recover its costs and expenses, including reasonable attorney's fees. CTI's payments to Mr. Nano have been completed.

Unfair Trade Practices; U.S. District Court of Connecticut (case completed) – In September 2011, the Company filed a complaint against an individual in U.S. District Court of Connecticut for (1) violation of the Connecticut Unfair Trade Practices Act, (2) tortious interference with business and economic expectancy, (3) libel and (4) injunctive relief. The complaint noted that the individual named in the civil action has, for more than a year, engaged in a systematic campaign to destroy the Company's trades and business, interfere with the Company's expectations and contracts and libel the Company by disseminating materially false and libelous statements about the Company on message boards throughout the Internet and otherwise. The Company sought punitive damages from the individual for his alleged unfair trade practices and wrongful interference with the Company's business. The case was concluded in March 2012. By the parties’ stipulation settling the matter, the defendant agreed to cease his posting any statements on the Internet or publishing any statements elsewhere, orally or in writing, concerning CTI, CTI’s officers, directors, and employees, the Calmare device, Marineo (the inventor of the Calmare device), or any other person or entity in connection with their purchase or use of the Calmare device.

General Litigation – We may be a party to other legal actions and proceedings from time to time. We are unable to estimate legal expenses or losses we may incur, if any, or possible damages we may recover, and have not recorded any potential judgment losses or proceeds in our financial statements to date, with the exception of the accrued expenses related to the Nano case, previously disclosed. We record expenses in connection with these suits as incurred.

We believe we carry adequate liability insurance, directors and officers insurance, casualty insurance, for owned or leased tangible assets, and other insurance as needed to cover us against potential and actual claims and lawsuits that occur in the ordinary course of our business. However, an unfavorable resolution of any or all matters, and/or our incurrence of significant legal fees and other costs to defend or prosecute any of these actions and proceedings may, depending on the amount and timing, have a material adverse effect on our consolidated financial position, results of operations or cash flows in a particular period.

Item 4. Mine Safety Disclosures (Not Applicable)

Not Applicable.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock had been traded on the NYSE Amex under the ticker symbol CTT since April 25, 1984. On September 3, 2010, our stock was delisted from the NYSE Amex and began trading on the OTCQB under the ticker symbol CTTC. On October 5, 2010, our stock began trading on the OTC market's top tier, the OTCQX. The following table sets forth for the periods indicated, the quarterly high and low trading prices for our common stock, as reported the OTCQX.

Year Ended December 31, 2013					Year Ended December 31, 2012
	High		Low			High		Low
First Quarter	$	0.63	$	0.28	First Quarter	$	1.29	$	1.01
Second Quarter	$	0.42	$	0.13	Second Quarter	$	1.24	$	0.70
Third Quarter	$	0.29	$	0.06	Third Quarter	$	1.04	$	0.44
Fourth Quarter	$	0.48	$	0.05	Fourth Quarter	$	0.77	$	0.35

Holders of Common Stock. At April 11, 2014, there were 450 holders of record of our common stock.

Dividend Policy. We have not declared or paid cash dividends on our common stock since 1981, and do not anticipate paying any cash dividends in the foreseeable future. We expect to retain available cash to finance ongoing operations and the potential growth of our business. Any future determination to pay dividends on our common stock will be at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects and other factors our board of directors may deem relevant.

Equity Compensation Plan Information

The following table summarizes securities available under our equity compensation plans as of December 31, 2013.

	Weighted average per share exercise price of stock options		Shares issuable upon exercise of outstanding stock options		Shares issuable upon vesting of outstanding restricted stock units		Total shares Issuable Under Current Outstanding awards		Number of Securities available for future issuance
Equity compensation plans approved by security holders:
None										-
Equity compensation plans not approved by security holders:
1997 Employee Stock Option Plan	$	2.74		87,000		-		87,000		-
2000 Directors’ Stock Option Plan	$	1.57		120,000		-		120,000		-
2011 Employees’, Directors’ and Consultants’ Stock Option Plan	$	0.23		1,165,000		-		1,165,000		335,000

Issuer Repurchases of Equity Securities

None.

Unregistered Sales of Equity Securities

Series A 15% Original Issue Discount Convertible Notes and Warrants

During the quarter ended December 31, 2013, the Company did a private offering of two tranches of convertible notes and warrants, under which it issued $283,648 of convertible promissory notes for consideration of $241,100, the difference between the proceeds from the notes and the principal amount consists of $42,548 of original issue discount. The notes are convertible at initial conversion prices ranging from $0.20 to $0.25 per share any time after issuance thereby having an embedded beneficial conversion feature. The note holders were also issued market-related warrants for 170,354 in shares of common stock. The warrants have exercise prices that range from $0.40 to $0.60 and a 2-year term.

Stock Options Issued to the CEO

During the quarter ended December 31, 2013, the Company granted 1,000,000 options to the current CEO. As approved by the Board of Directors, these options vest over a four (4) year period, with 200,000 options vested upon issuance.

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COMPETITIVE TECHNOLOGIES, INC.

Item 6. Selected Financial Data ^{(1) (2)}

	Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011			Five Months Ended December 31, 2010			Year Ended July 31, 2010
Statement of Operations Summary:
Total revenues (3)	$	771,868		$	1,069,713		$	3,444,761		$	187,742		$	2,009,682
Net loss (3) (4)	$	(2,672,154	)	$	(3,004,097	)	$	(3,595,764	)	$	(2,407,544	)	$	(2,708,534	)
Net loss per share:
Basic	$	(0.16	)	$	(0.20	)	$	(0.26	)	$	(0.18	)	$	(0.25	)
Assuming dilution	$	(0.16	)	$	(0.20	)	$	(0.26	)	$	(0.18	)	$	(0.25	)
Weighted average number of common shares outstanding:
Basic		16,977,027			15,007,852			14,115,651			13,824,944			10,832,043
Assuming dilution		16,977,027			15,007,852			14,115,651			13,824,944			10,832,043

Year-end Balance Sheet Summary:	At December 31,											At July 31,
	2013			2012			2011			2010		2010
Cash and cash equivalents	$	57,009		$	74,322		$	28,485		$	557,018	$	907,484
Total assets		4,566,332			4,771,387			5,144,824			3,195,543		4,949,923
Total long-term obligations		-			-			-			-		66,369
Total shareholders' interest (deficit)		(5,944,470	)		(4,029,070	)		(1,626,857	)		651,360		2,608,502

(1) This summary should be read in conjunction with our Consolidated Financial Statements and Notes thereto. All amounts in these notes are rounded to thousands.

(2) No cash dividends were declared or paid in any year presented.

(3) Year ended December 31, 2013, year ended December 31, 2012, year ended December 31, 2011, five months ended December 31, 2010 and year ended July 31, 2010 include $653,000, $913,000, $3,329,000, $164,000 and $1,941,000, respectively, from sales of our pain therapy medical device.

(4) Year ended December 31, 2013, year ended December 31, 2012, year ended December 31, 2011, five months ended December 31, 2010 and year ended July 31, 2010 includes $273,000, $366,000, $1,464,000, $28,000 and $516,000, respectively, of cost of sales for our pain therapy medical device. Year ended December 31, 2011 includes $775,000 accrued for legal settlement with former CEO.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation

Forward-Looking Statements

Statements about our future expectations are "forward-looking statements" within the meaning of applicable Federal Securities Laws, and are not guarantees of future performance. When used herein, the words "may," "will," "should," "anticipate," "believe," "appear," "intend," "plan," "expect," "estimate," "approximate," and similar expressions are intended to identify such forward-looking statements. These statements involve risks and uncertainties inherent in our business, including those set forth in Item 1A under the caption "Risk Factors," in this Annual Report on Form 10-K for the year ended December 31, 2013, and other filings with the SEC, and are subject to change at any time. Our actual results could differ materially from these forward-looking statements. We undertake no obligation to update publicly any forward-looking statement.

Overview

Competitive Technologies, Inc. ("CTI") was incorporated in Delaware in 1971, succeeding an Illinois corporation which had incorporated in 1968. CTI and its majority-owned subsidiary (collectively, "we", "our", or "us") provide distribution, patent and technology transfer, sales and licensing services focusing on the needs of our customers, matching those requirements with commercially viable technology or product solutions. We develop relationships with universities, companies, inventors and patent or intellectual property holders to obtain the rights or a license to their intellectual property or to their product. They become our clients, for whom we find markets to sell or further develop or distribute their technology or product. We also develop relationships with those who have a need or use for technologies or products. They become our customers, usually through a license or sublicense, distribution agreement or sales contract.

Our revenue fluctuates due to changes in revenue of our customers, upfront license fees, new licenses granted, new distribution agreements, expiration of existing licenses or agreements, and/or the expiration or economic obsolescence of patents underlying licenses or products.

We acquire rights to commercialize a technology or product on an exclusive or non-exclusive basis, worldwide or limited to a specific geographic area. When we license or sublicense those rights to our customers, we may limit rights to a defined field of use. Technologies can be early, mid, or late stage. Products we evaluate must be working prototypes or finished products. We establish channel partners based on forging relationships with mutually aligned goals and matched competencies to deliver solutions that benefit the ultimate end-user.

We earn revenue in two ways: retained royalties from licensing our clients' and our own technologies to our customer licensees, and sales of finished products. We record revenue when the terms of the sales arrangement are accepted by all parties including a fee that is fixed and determinable, delivery has occurred and our customer has taken title, and collectability is reasonably assured.

Since 2011 the Company has controlled the sales process for its Calmare^® medical device. We are the primary obligor, responsible for delivering devices as well as training our customer in the proper use of the device. We deal directly with customers, setting pricing and providing training; work directly with the inventor of the technology to develop specifications and any changes thereto and to select and contract with manufacturing partners; and retain significant credit risk for amounts billed to customers. Therefore, all product sales are recorded following a gross revenue methodology. We record in product sales, the total funds earned from customers and record the costs of the device as cost of product sales, with gross profit from product sales being the result.

Sales of our Calmare device continue to be the major source of revenue for the Company. The Company initially acquired the exclusive, worldwide rights to the Scrambler Therapy^® technology in 2007. The Company's 2007 agreement with Giuseppe Marineo ("Marineo"), an inventor of Scrambler Therapy technology, and Delta Research and Development ("Delta"), authorizes CTI to manufacture and sell worldwide the device developed from the patented Scrambler Therapy technology. The Scrambler Therapy technology is patented in Italy and in the U.S., effective in February 2013. Applications for patents have been filed internationally as well and are pending approval. The Calmare device has CE Mark certification from the European Union as well as U.S. FDA 510(k) clearance.

Page 18

In 2011, the Company negotiated an extension to the agreement Marineo and Delta. This agreement extended the Company’s exclusive, worldwide rights to the Scrambler Therapy^® technology until March 31, 2016.

In July 2012, the Company attempted to negotiate a five-year extension to the agreement with Marineo and Delta (the “2012 Amendment”). However, a valid contract was never formed as the 2012 Amendment was not executed by Marineo and Delta.

In 2010, the Company became its own distributor for the Calmare device in the U.S, contracting with 15 commissioned sales representatives. During 2011 and 2012, the Company and its representatives developed plans to increase awareness of the Calmare device among critical medical specialties and began to implement those plans targeting specific customers and locations in 2012. Over the past 30 months, the Company has entered into several sales agreements for the Calmare device, including sales to U.S. government entities within the U.S. Department of Defense and the U.S. Department of Veterans Affairs. Sales to these physicians and medical practices and to others with whom the Company had existing sales agreements continue to generate revenue for the Company.

Reliance on one revenue source. In 2013, we had a significant concentration of revenue from our pain therapy medical device technology. We continue to seek revenue from new and existing technology licenses to mitigate the concentration of revenue, and replace revenue from expiring licenses.

Presentation. All amounts in this Item 7 have been rounded to the nearest thousand dollars.

The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our financial condition and results of operations. This discussion and analysis should be read in conjunction with our Consolidated Financial Statements and Notes thereto.

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Changes in Leadership in the Company

On September 12, 2013, Mr. Carl O’Connell, the Chief Executive Officer of the Company notified the Company’s Board of Directors of his resignation from his position as Chief Executive Officer, effective September 26, 2013. Mr. O’Connell will remain a member of the Board of Directors. The resignation of Mr. O’Connell was not a result of any disagreements relating to the Company’s operations, policies or practices.

On September 30, 2013, the Board of Directors removed Johnnie D. Johnson as the Company’s Chief Financial Officer.

On September 27, 2013, the Board of Directors of the Company appointed Conrad Mir as the Company’s new Chief Executive Officer, and President and elected him as a member of the Board of Directors. On September 30, 2013, in connection with Mr. Johnson’s removal, Mr. Mir was appointed as the Company’s interim Chief Financial Officer.

The Company entered into a formal employment agreement with Mr. Mir on October 1, 2013. This employment agreement is attached to this Form 10-K, filed as Exhibit 10.43.

Results of Operations – 2013 versus 2012

Summary of Results

Our net loss, for 2013, decreased to $2,672,000 or $0.16 per basic and diluted share as compared with a net loss of $3,004,000 or $0.20 per basic and diluted share for 2012.  This net loss decrease is attributable to a decrease across multiple expense areas, including a decrease of $320,000 or 23% in personnel and consulting expenses, partially offset by a decrease in total revenues and an increase in interest expense.

Revenue and Gross Profit from Sales

Revenue from the sale and shipment of Calmare® pain therapy medical devices (the “Devices”), for 2013, decreased 28% or $260,000 to $653,000 as compared with $913,000 for 2012.

Cost of product sales, for 2013, decreased 25% or $93,000 to $273,000 as compared with $366,000 for 2012. The decrease is consistent with the decrease in revenues during the same period.

Device sales, for 2013 we had nine (9) Device sales as compared with fourteen (14) Device sales for 2012.

Other Revenue

Retained royalties, for 2013 decreased by 65% or $69,000, to $37,000 as compared with the $106,000 of retained royalties for 2012. The 2012 amount included the receipt of a $40,000 royalty payment received for 2011, which was greater than management’s original internal estimates.

Other income, for 2013, increased 61% or $31,000 to $82,000 as compared with $51,000 for 2012. Other income includes:

	2013		2012
Training payments and the sale of supplies such as electrodes and cables for use with our Calmare® devices	$	15,000	$	18,000
Rental income from customers renting Calmare® pain therapy medical devices	$	29,000	$	33,000

In addition to the aforedescribed break-down, the Company received a one-time payment in 2013 from one of our insurance companies for its conversion to a stock insurance company totaling $38,000.

Expenses

Total expenses, for 2013, decreased 14% or $536,000 to $3,171,000 as compared with $3,707,000 for 2012.

Selling expenses, for 2013, decreased 59% or $232,000 to $159,000 compared with $391,000 for 2012.  The decrease primarily reflects the following:

a) $75,000 decrease in commission expenses due to fewer Device sales and a restructuring of certain commission agreements; and

b) $145,000 decrease in patent and translation fees related to the Device as a result of transferring the contractual obligation to pay patent costs back to the inventor of the Device.

Page 20

Personnel and consulting expenses, for 2013, decreased 23% or $320,000 to $1,100,000 as compared with $1,420,000 for 2012.  Personnel expenses, for 2013, increased 47% or $287,000 to $901,000, as compared with $614,000 for 2012. This substantive increase was primarily due to the addition of Mr. O’Connell as the Company’s CEO in March 2013, whose compensation package included cash and employee options, a portion of which vested immediately. Mr. O’Connell was subsequently replaced by Mr. Mir in September 2013. There was no Company-employed CEO in 2012. Additionally, no options were granted to employees in 2012. The increase in personnel expenses were offset by a significant reduction in consulting fees. Consulting expenses, for 2013, decreased 75% or $607,000 to $199,000, as compared with $806,000 for 2012. The significant decrease in consulting fees included: 1) a $245,000 decrease related to the termination of services related to obtaining private insurance and Medicare reimbursement approval for the Company’s flagship Device, 2) a $231,000 decrease related to the termination of the contract for the managing director for International Business Development who provided international sales and other support for the Device, and 3) a $112,000 decrease related to the supplanting of management services provided to the Company by a retained consultant CEO, Mr. Johnson, for a full-time, Company-employed CEO, Mr. O’Connell, in November 2012.

General and administrative expenses, for 2013, were substantially unchanged at $1,761,000 compared to $1,760,000 for 2012.  The change reflects a net effect of:

(a)          $119,000 decrease in directors’ fees and expenses, primarily due to the timing and number of extensions awarded to resigning directors;

(b)          $43,000 increase in travel expenses stemming from overseas travel related to product manufacturing and distribution issues in 2013;

(c)          $19,000 increase in audit and tax services fees related to the timing of activities;

(d)          $61,000 decrease in investor and public relations expenses attributable to the discontinuation of consulting services by the monthly-retained, consultant CEO;

(e)          $23,000 decrease in rent and associated expenses due to the closing of the North Carolina office in 2012; and

(f)           $19,000 decrease in marketing expenses, similarly attributable to the discontinuation of consulting services by the monthly-retained, consultant CEO.

(g)          $158,000 increase in finance costs, primarily related the Southridge transaction.

Interest expense, for 2013, increased 154% or $127,000 to $210,000 as compared with $83,000 for 2012. This increase is due to increased use of debt financing.

Unrealized (gain) loss on derivative instruments, for 2013, was a gain of $59,000 as compared with a $54,000 loss recorded for 2012.  The change reflects the movement in the Company’s common share price on the Company’s Class C Preferred Stock at the end of each period as well as the addition of a derivative instrument associated with the Tonaquint Convertible Note (see Note 13 for details).

In current and prior years, we generated significant federal and state income and alternative minimum tax ("AMT") losses, and these net operating losses ("NOLs") were carried forward for income tax purposes to be used against future taxable income. In the years ended December 31, 2013 and 2012, we incurred additional losses but did not record a benefit since the benefit was fully reserved (see below).

The NOLs are an asset to us if we can use them to offset or reduce future taxable income and therefore reduce the amount of both federal and state income taxes to be paid in future years. Previously, since we were incurring losses and could not be sure that we would have future taxable income to be able to use the benefit of our NOLs, we recorded a valuation allowance against the asset, reducing its book value to zero. In 2013 and 2012, the benefit from our net loss was offset completely by a valuation allowance recorded against the asset. We did not show a benefit for income taxes. We will reverse the valuation allowance or portions thereof when we determine it is more likely than not that our NOL’s will be utilized. We have substantial federal and state NOLs and to use against future regular taxable income. In addition, we can use our NOLs to reduce our future AMT liability. A significant portion of the remaining NOLs at December 31, 2013, approximately $4,196,000, was derived from income tax deductions related to the stock options exercises. The tax effect of these deductions will be credited against capital in excess of par value at the time they are utilized for book purposes, and not credited to income. We will never receive a benefit for these NOLs in our statement of operations.

Page 21

Financial Condition and Liquidity

Our liquidity requirements arise principally from our working capital needs, including funds needed to find and market new or existing technologies or products, and protect and enforce our intellectual property rights, if necessary.  We fund our liquidity requirements with a combination of cash on hand and cash flows from operations, if any, including royalty legal awards, short term debt, and sales of common stock. At December 31, 2013, we had outstanding debt, in the form of promissory notes with a total principal amount of $3,151,000 and a carrying value of $2,934,000.

Our future cash requirements depend on many factors, including results of our operations and marketing efforts, results and costs of our legal proceedings, and our equity financing.  To achieve and sustain profitability, we are implementing a corporate reengineering effort, which commenced on September 26, 2013 under the direction of CTI’s new president & CEO, Mr. Conrad Mir. This plan design will change the inherent design of the current distributor network and focus on opportunities within the US Departments of Defense (the “DOD”) and Veterans Affairs (“VA”), and set out to upgrade CTI’s current U.S. Food and Drug Administration (“FDA”) clearance designation for the Calmare Pain Device to approval. Although we cannot be certain that we will be successful in these efforts, we believe the combination of our cash on hand and revenue from executing our strategic plan will be sufficient to meet our obligations of current and anticipated operating cash requirements.

In fiscal 2010, the Company incorporated revenue from the sale of inventory into its revenue stream.  That source of revenue is expected to continue as sales of its Calmare pain therapy medical device continue to expand and other products are added to the Company's portfolio of technologies.

At December 31, 2013, cash was $57,000, as compared with $74,000 at December 31, 2012. Net cash used in operating activities was $(1,566,000) for 2013 as compared to $(1,371,000) for 2012, primarily reflecting the decrease in the net loss in 2013 compared to 2012, offset by adverse changes in restricted cash, accounts payable and accrued expenses. There was minimal investing activity in 2013 and 2012. Net cash provided by financing activities was $1,549,000 for 2013 as compared to $1,435,000 for 2012 primarily as a result of the Company’s debt financing activities in both years.

We currently have the benefit of using a portion of our accumulated NOLs to eliminate any future regular federal and state income tax liabilities. We will continue to receive this benefit until we have utilized all of our NOLs, federal and state. However, we cannot determine when and if we will be profitable and thus able to utilize the benefit of the remaining NOLs before they expire.

At December 31, 2013, we had aggregate federal net operating loss carryforwards of approximately $39,371,000, which expire at various times through 2033. A majority of our federal NOLs can be used to reduce taxable income used in calculating our AMT liability. We also have state net operating loss carry forwards of approximately $37,812,000 that expire through 2033.

A significant portion of the NOLs remaining at December 31, 2013, approximately $4,196,000, was derived from income tax deductions related to the exercise of stock options.

Going Concern

The Company has incurred operating losses since fiscal 2006 and has a working capital deficiency at December 31, 2013.  During 2013 and 2012, we had a significant concentration of revenues from our Calmare® pain therapy medical device technology.  We continue to seek revenue from new and existing technologies or products to mitigate the concentration of revenues, and replace revenues from expiring licenses on other technologies.

Although we have taken steps to significantly reduce operating expenses going forward, even at these reduced spending levels, should the anticipated increase in revenue from sales of Calmare® medical devices and other technologies not occur, the Company may not have sufficient cash flow to fund operations through 2014 .  These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Page 22

The Company's continuation as a going concern is dependent upon its developing recurring revenue streams sufficient to cover operating costs. The Company does not have any significant individual cash or capital requirements in the budget going forward.  During the transitional period ended December 31, 2010, the Company undertook a major reduction of its operating expenses through staff reductions and reduced office space costs.  If necessary, the Company will meet anticipated operating cash requirements by further reducing costs, issuing debt and /or equity, and / or pursuing sales of certain assets and technologies while we pursue licensing and distribution opportunities for our remaining portfolio of technologies.  There can be no assurance that the Company will be successful in such efforts.  Failure to develop a recurring revenue stream sufficient to cover operating expenses would negatively affect the Company’s financial position.

Funding and Capital Requirements

Debt Financing

Notes payable as of December 31, 2013 consists of the following:

	Principal Amount		Carrying Value			Cash Interest Rate			Common Stock Conversion Price		Maturity Date
90 day Convertible Notes (Chairman of the Board)	$	2,518,000	$	2,518,000			6	%	$	1.05	Various 2014
24 month Convertible Notes ($100,000 to Board member)		225,000		225,000			6	%		1.05	March 2014 – June 2014
Tonaquint 9% OID Convertible Notes and Warrants		112,500		87,705			7	%		0.30	May 2014
Southridge Convertible Note		12,000		12,000			None			75% of closing bid	June 2014
Series A1 15% OID Convertible Notes and Warrants		149,412		81,415			None			0.20	August 2014
Series A2 15% OID Convertible Notes and Warrants		134,236		69,571			None			0.25	September 2014
Notes Payable, gross	$	3,151,148		2,933,691
Less LPA amount				(505,000	)
Notes Payable, net			$	2,488,691

90 day Convertible Notes

The Company has issued 90-day notes payable to borrow funds from a director, now the chairman of our Board, as follows:

2013	$	1,208,000
2012		1,210,000
2011		100,000
Total	$	2,518,000

Page 23

These notes have been extended several times and all bear 6.00% simple interest.  A conversion feature was added to the Notes when they were extended, which allows for conversion of the eligible principal amounts to common stock at any time after the six month anniversary of the effective date –the date the funds are received – at a rate of $1.05 per share.  Additional terms have been added to all Notes to include additional interest payments to all Notes if extended beyond their original maturity dates and to provide the lender with a security interest in unencumbered inventory and intangible assets of the Company other than proceeds relating to the Calmare device and accounts receivable.

A total of $505,000 of the aforementioned notes issued between December 1, 2012 and March 31, 2013 fall under the liabilities purchase agreement with ASC Recap, and are expected to be repaid using the process as described in Note 11.  Because there can be no assurance that the Company will be successful in completing this process, the Company retains ultimate responsibility for this debt, until fully paid down.  As a result, the Company continues to accrue interest on these notes and they remain convertible as described above.

24 month Convertible Notes

In March 2012, the Company issued a 24-month convertible promissory note to borrow $100,000. Additional 24-month convertible promissory notes were issued in April 2012 ($25,000) and in June 2012 ($100,000). All of the notes bear 6.00% simple interest. Conversion of the eligible principal amounts to common stock is allowed at any time after the six month anniversary of the effective date of each note at a rate of $1.05 per share.

Tonaquint 9% Original Issue Discount Convertible Notes and Warrants

During the quarter ended September 30, 2013, the Company entered into a securities purchase agreement with Tonaquint, Inc., under which it was issued a $112,500 convertible promissory note in consideration for $100,000, the difference between the proceeds from the Note and the principal amount consists of a $10,000 original issue discount and a carried transaction expense of $2,500. The original issue discounted is amortized over the life of the note. The note is convertible at an initial conversion price of $0.30 per share at any time, and contains a “down-round protection” feature that requires the valuation of a derivative liability associated with the note. The note bears interest at 7% and is due in May 2014; with five monthly installment payments of principal, accrued interest and any outstanding fees or allowed expenses beginning in January 2014. Tonaquint was also issued a market-related warrant for $112,500 in shares of common stock with a “cashless” exercise feature. The warrant has a $0.35 exercise price, a 5-year term and includes a “down-round protection” feature that requires it to be classified as a liability rather than as equity (see Note 9).

Subsequent to December 31, 2013, the Company settled the Note and Warrants with Tonaquint.

Southridge

During 2013 the Company had issued a convertible promissory note payable to Southridge as part of its EPA in the amount of $65,000, which during 2013, Southridge converted to 260,000 shares of common stock.

During 2013, the Company issued a six-month $12,000 convertible note payable to Southridge to cover legal expenses as part of the LPA (see Note 11). The convertible note is convertible into the Company’s common stock at 75% of the lowest closing bid price during the twenty (20) trading days prior to conversion and is due June 2014.

Series A 15% Original Issue Discount Convertible Notes and Warrants

During the quarter ended December 31, 2013, the Company did a private offering of two tranches of convertible notes and warrants, under which it issued $283,648 of convertible promissory notes for consideration of $241,100, the difference between the proceeds from the notes and the principal amount consists of $42,548 of original issue discount. The notes are convertible at initial conversion prices ranging from $0.20 to $0.25 per share anytime after issuance thereby having an embedded beneficial conversion feature. The note holders were also issued market-related warrants for 170,354 in shares of common stock. The warrants have exercise prices that range from $0.40 to $0.60 and a 2-year term. The beneficial conversion feature and the warrants were recorded to additional paid-in-capital. The total debt discount is amortized over the life of the notes to interest expense.

Page 24

Capital requirements

We continue to seek revenue from new technology licenses to mitigate the concentration of revenue, and replace revenue from expiring licenses. We have created a new business model for appropriate technologies that allows us to move beyond our usual royalty arrangement and share in the profits of distribution.

For 2014, we expect our capital expenditures to be less than $100,000.

Contractual Obligations and Contingencies

At December 31, 2013, our contractual obligations were:

Contractual Obligations	Total		Within 1 year		1-3 years		3-5 years		More than 5 years
Operating lease obligations, principally rent (1)	$	228,000	$	62,000	$	153,000	$	13,000	$	-

(1) The current lease expires February 2017.

Contingencies. Our directors, officers, employees and agents may claim indemnification in certain circumstances. We seek to limit and reduce potential obligations for indemnification by carrying directors and officers liability insurance, subject to deductibles.

We also carry liability insurance, casualty insurance, for owned or leased tangible assets, and other insurance as needed to cover us against potential and actual claims and lawsuits that occur in the ordinary course of business.

Many of our license and service agreements provide that upfront license fees, license fees and/or royalties we receive are applied against amounts that our clients or we have incurred for patent application, prosecution, issuance and maintenance costs. We expense such costs as incurred, and reduce expense if reimbursed from future fees and/or royalties. If the reimbursement belongs to our client, we record no revenue or expense.

We have engaged R.F. Lafferty & Co. to seek an acquisition partner from a limited number of companies for our nano particle bone biomaterial patents, among other assets and/or securities.  The Company would pay Lafferty a 10% finder's fee in the event an acquisition partner is found, which Management has deemed to be an immaterial and contingent obligation.

As of December 31, 2013, CTI and its majority owned subsidiary, Vector Vision, Inc. ("VVI"), have remaining obligations, contingent upon receipt of certain revenues, to repay up to $165,788 and $199,334, respectively, in consideration of grant funding received in 1994 and 1995. CTI also is obligated to pay at the rate of 7.5% of its revenues, if any, from transferring rights to certain inventions supported by the grant funds. VVI is obligated to pay at rates of 1.5% of its net sales of supported products or 15% of its revenues from licensing supported products, if any. We recognize these obligations only if we receive revenues related to the grant funds. We recognized approximately $1,577 in the year ended December 31, 2013 and $1,749 in the year ended December 31, 2012.

Critical Accounting Estimates

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires that we make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, the reported amounts of revenue and expenses for the reporting period, and related disclosures. We base our estimates on information available at the time, and assumptions we believe are reasonable. By their nature, estimates, assumptions and judgments are subject to change at any time, and may depend on factors we cannot control. As a result, if future events differ from our estimates, assumptions and judgments, we may need to adjust or revise them in later periods.

Page 25

We believe the following significant estimates, assumptions, and judgments we used in preparing our consolidated financial statements are critical to understanding our financial condition and operations.

Deferred tax assets. In assessing the realization of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. As a result of uncertainty of achieving sufficient taxable income in the future, a full valuation allowance against its deferred tax asset has been recorded. If these estimates and assumptions change in the future, the Company may be required to reverse the valuation allowance against deferred tax assets, which could result in additional income tax income.

Share-based compensation. We account for share-based compensation on a fair value basis. Share-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the service (vesting) period. Determining the fair value of share-based awards at the grant date requires judgment, including, estimating the expected life of the stock option, volatility, and the amount of share-based awards that can be expected to be forfeited. Our estimates were based on our historical experience with stock option awards.

Related Party Transactions

Our board of directors determined that when a director's services are outside the normal duties of a director, we compensate the director at the rate of $1,000 per day, plus expenses, which is the same amount we pay a director for attending a one-day Board meeting. We classify these amounts as consulting expenses, included in personnel and consulting expenses.

At December 31, 2013, $2,618,000 of the outstanding Notes were Notes payable to related parties; $2,518,000 to the chairman of our Board, Peter Brennan, and $100,000 to another director, Stan Yarbro.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable for smaller reporting company.

Page 26

Item 8. Financial Statements and Supplementary Data

Description	Page
Report of Independent Registered Public Accounting Firm	28
Consolidated Balance Sheets	29
Consolidated Statements of Operations	30
Consolidated Statements of Changes in Shareholders’ Deficit	31
Consolidated Statements of Cash Flows	32-33
Notes to Consolidated Financial Statements	34-55

Page 27

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Competitive Technologies, Inc.

Fairfield, CT

We have audited the accompanying consolidated balance sheets of Competitive Technologies, Inc. and Subsidiary as of December 31, 2013 and 2012 and the related consolidated statements of operations, changes in shareholders’ deficit and cash flows for the years then ended.  These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Competitive Technologies, Inc. and Subsidiary at December 31, 2013 and 2012, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that Competitive Technologies, Inc. and Subsidiary will continue as a going concern. As more fully described in Note 1, at December 31, 2013, the Company has incurred operating losses since fiscal year 2006 and has a working capital deficiency at December 31, 2013. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

/s/ Mayer Hoffman McCann CPAs

(The New York Practice of Mayer Hoffman McCann P.C.)

New York, New York

April 15, 2014

Page 28

COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARY

Consolidated Balance Sheets

	December 31, 2013			December 31, 2012
ASSETS
Current Assets:
Cash	$	57,009		$	74,322
Receivables, net of allowance of $101,154 at December 31, 2013 and 2012		143,330			216,365
Inventory		4,278,220			4,360,156
Prepaid expenses and other current assets		65,167			78,727
Total current assets		4,543,726			4,729,570
Security Deposits		15,000			15,000
Property and equipment, net		7,606			26,817
TOTAL ASSETS	$	4,566,332		$	4,771,387
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable	$	692,251		$	1,806,346
Liabilities under claims purchase agreement		2,093,303			-
Accounts payable, GEOMC		4,183,535			4,181,225
Accrued expenses and other liabilities		582,987			773,364
Deferred revenue		6,400			9,600
Notes payable		2,488,691			1,310,000
Warrant liability		8,227			-
Series C convertible preferred stock liability		375,000			375,000
Series C convertible preferred stock derivative liability		80,408			119,922
Total current liabilities		10,510,802			8,575,457
Long term notes payable		-			225,000
Commitments and contingencies
Shareholders' deficit:
5% preferred stock, $25 par value, 35,920 shares authorized, 2,427 shares issued and outstanding		60,675			60,675
Series B preferred stock, $0.001 par value, 20,000 shares authorized, no shares issued and outstanding		-			-
Series C convertible preferred stock, $1,000 par value, 750 shares authorized, 375 shares issued and outstanding		-			-
Common stock, $.01 par value, 40,000,000 shares authorized, 19,952,907 shares issued and outstanding at December 31, 2013 and 15,237,304 shares issued and outstanding at December 31, 2012		199,529			152,373
Capital in excess of par value		46,077,394			45,367,796
Accumulated deficit		(52,282,068	)		(49,609,914	)
Total shareholders’ deficit		(5,944,470	)		(4,029,070	)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$	4,566,332		$	4,771,387

See accompanying notes

Page 29

COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARY

Consolidated Statements of Operations

	Year ended December 31, 2013			Year ended December 31, 2012
Revenue
Product sales	$	652,792		$	912,548
Cost of product sales		272,736			366,409
Gross profit from product sales		380,056			546,139
Other Revenue
Retained royalties		37,007			105,850
Other income		82,069			51,315
Total other revenue		119,076			157,165
Expenses
Selling expenses		159,245			391,435
Personnel and consulting expenses		1,100,041			1,419,887
General and administrative expenses		1,760,585			1,759,777
Interest expense		209,953			82,557
Unrealized (gain) loss on derivative instruments		(58,538	)		53,745
Total Expenses		3,171,286			3,707,401
Loss before income taxes		(2,672,154	)		(3,004,097	)
Provision (benefit) for income taxes		-			-
Net loss	$	(2,672,154	)	$	(3,004,097	)
Basic loss per share	$	(0.16	)	$	(0.20	)
Basic weighted average number of common shares outstanding:		16,977,027			15,007,852
Diluted loss per share	$	(0.16	)	$	(0.20	)
Diluted weighted average number of common shares outstanding:		16,977,027			15,007,852

See accompanying notes

Page 30

COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Shareholders' Deficit

	Preferred Stock				Common Stock
	Shares outstanding		Amount		Shares outstanding		Amount		Capital in excess of par value			Accumulated deficit			Total Shareholders’ Deficit
Balance – January 1, 2012		2,427	$	60,675		14,715,789	$	147,157	$	44,771,128		$	(46,605,817	)	$	(1,626,857	)
Net loss		-		-		-		-		-			(3,004,097	)		(3,004,097	)
Stock option compensation expense		-		-		-		-		138,630			-			138,630
Common shares issued to settle accounts payable and accrued expenses		-		-		474,415		4,745		423,509			-			428,254
Share based consulting fees, Common stock		-		-		47,100		471		34,529			-			35,000
Balance – December 31, 2012		2,427		60,675		15,237,304		152,373		45,367,796			(49,609,914	)		(4,029,070	)
Net loss		-		-		-		-		-			(2.672,154	)		(2.672,154	)
Stock option compensation expense		-		-		-		-		116,365			-			116,365
Common shares issued for legal services		-		-		1,300,000		13,000		250,000			-			263,000
Common stock issued in accordance with escrow agreement		-		-		1,000,000		10,000		(10,000	)		-			-
Common stock issued in accordance with liability purchase agreement		-		-		1,618,235		16,182		(16,182	)		-			-
Common stock issued as part of equity purchase agreement and/or liability purchase agreement		-		-		710,000		7,100		215,400			-			222,500
Common stock issued to directors		-		-		87,368		874		33,228			-			34,102
Warrants and beneficial conversion feature on notes payable		-		-		-		-		120,787			-			120,787
Balance – December 31, 2013		2,427	$	60,675		19,952,907	$	199,529	$	46,077,394		$	(52,282,068	)	$	(5,944,470	)

See accompanying notes

Page 31

COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

	Year ended December 31, 2013			Year ended December 31, 2012
Cash flows from operating activities:
Net loss	$	(2,672,154	)	$	(3,004,097	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		11,147			14,534
Stock option compensation expense		116,365			138,630
Share-based compensation – common stock		7,655			-
Stock based expense for legal and consulting services		-			35,000
Accrued stock contribution (directors’ stock expense)		-			17,154
Loss on disposal of property and equipment		-			4,818
Bad debt expense		8,588			-
Unrealized (gain) loss on derivative instrument		(58,538	)		53,746
Debt discount amortization		63,480			-
Noncash finance charges		216,650			-
Changes in assets and liabilities:
Restricted cash		-			750,000
Receivables		64,447			(173,894	)
Prepaid expenses and other current assets		276,560			38,354
Inventory		90,000			(150,000	)
Accounts payable, accrued expenses and other liabilities		307,341			907,517
Deferred revenue		(3,200	)		(3,200	)
Net cash used in operating activities		(1,566,413	)		(1,371,438	)
Cash flows from investing activities:
Purchases of property and equipment		-			(20,000	)
Decrease  in security deposits		-			2,275
Net cash used in investing activities		-			(17,725	)
Cash flows from financing activities:
Proceeds from issuance of notes payable		1,549,100			1,700,200
Principal payments of note payable		-			(265,200	)
Net cash provided by financing activities		1,549,100			1,435,000
Net increase in cash		17,313			45,837
Cash at beginning of year		74,322			28,485
Cash at end of year	$	57,009		$	74,322
Supplemental Cash Flow Information
Cash Paid for interest	$	15,304		$	4,907

See accompanying notes

Page 32

Supplemental disclosure of non-cash transactions:

During December 2013, the Company issued 66,118 shares of its common stock to directors at $0.40 per share to settle $26,447 of accrued liabilities.

During December 2013, Southridge converted its $65,000 note for 260,000 shares of the Company’s common stock (see Note 13).

During December 2013, the Company issued 450,000 shares of its common stock valued at $157,500 in connection with the Equity Purchase Agreement and Liability Purchase Agreement (see Notes 5 and 11).

During December 2013, the Company issued 66,118 shares of its common stock to directors at $0.40 per share to settle $26,447 of accrued liabilities.

During November and December 2013, the Company allocated $120,787 of convertible note proceeds for the fair value of warrants and beneficial conversion feature to additional paid-in capital.

During September 2013, the Company issued 1,618,235 shares of its common stock as the first tranche in its Liabilities Purchase Agreement (see Note 11).

During September 2013, the Company issued 1,000,000 shares of its common stock at $0.18 per share for legal services to its former legal team, Cutler Law Group (“CLG”), for services to be billed in the 2013-2014 fiscal year. As the Company has since changed counsel, management has requested the return of 950,000 shares, while the remaining 50,000 shares priced at $ 0.18 will cure any outstanding issues. As of April 15, 2014, CLG has neither returned the 1,000,000 shares nor accepted the 50,000 shares.

During July 2013, the Company allocated $45,100 of proceeds from the Tonaquint, Inc. note payable (see Note 13) to a warrant and conversion feature derivative liability.

During July 2013, the Company issued 200,000 shares of its common stock at $0.20 per share for legal services.

During 2013, the Company transferred a rental asset with a net book value (“NBV”) of approximately $8,000 to inventory.

During May 2013, the Company issued 500,000 shares of its common stock into escrow, pending the completion of potential financing with a European investment group.

During March 2013, the Company issued 150,000 shares of its common stock into escrow, pending the completion of potential financing with a European investment group.

During March 2013, the Company issued 100,000 shares of its common stock at $0.43 per share for legal services.

During January 2013, the Company issued 350,000 shares of its common stock into escrow, pending the completion of potential financing with a European investment group.

During July 2012, the Company issued 240,000 common shares at $0.8333 per share to settle $200,000 of accrued liabilities.

During June 2012, the Company issued 120,000 common shares at $0.8333 per share to settle $3,178 of accrued liabilities and to prepay $96,822 in legal expenses.

During March 2012, the Company issued 100,000 common shares at $1.111 per share to settle $111,100 of accrued liabilities.

During February 2012, the Company issued 14,415 shares at $1.19 per share to settle $17,154 of accrued liabilities.

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COMPETITIVE TECHNOLOGIES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

1. Business AND BASIS OF PRESENTATION

Competitive Technologies, Inc. ("CTI") and its majority-owned (56.1%) subsidiary, Vector Vision, Inc. ("VVI"), (collectively, the "Company", "we" or "us") is a biotechnology company developing and commercializing innovative products and technologies. The Company is the licensed distributor of the non-invasive Calmare® pain therapy medical device, which incorporates the biophysical “Scrambler Therapy”® technology developed to treat neuropathic and cancer-derived pain by Professor Giuseppe Marineo.

The consolidated financial statements include the accounts of CTI, and VVI. Inter-company accounts and transactions have been eliminated in consolidation.

The Company has incurred operating losses since fiscal 2006 and has a working capital deficiency at December 31, 2013. During the years ended December 31, 2013 and December 31, 2012, we had a significant concentration of revenues from our pain therapy medical device technology. We continue to seek revenue from new technologies or products to mitigate the concentration of revenues, and replace revenues from expiring licenses. At current reduced spending levels, the Company may not have sufficient cash flow to fund operations through 2014. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include adjustments to reflect the possible future effect of the recoverability and classification of assets or amounts and classifications of liabilities that may result from the outcome of this uncertainty.

The Company's continuation as a going concern is dependent upon its developing other recurring revenue streams sufficient to cover operating costs. If necessary, we will meet anticipated operating cash requirements by further reducing costs, issuing debt or equity, and/or pursuing sales of certain assets and technologies while we pursue licensing and distribution opportunities for our remaining portfolio of technologies. The Company does not have any significant capital requirements in the budget going forward. There can be no assurance that the Company will be successful in such efforts. Failure to develop a recurring revenue stream sufficient to cover operating expenses would negatively affect the Company’s financial position.

Our liquidity requirements arise principally from our working capital needs, including funds needed to find and obtain new technologies or products, and protect and enforce our intellectual property rights, if necessary. We fund our liquidity requirements with a combination of cash on hand, debt and equity financing, and cash flows from operations, if any, including royalty legal awards. At December 31, 2013, we had outstanding debt, in the form of promissory notes with a total principal amount of $3,151,000 and a carrying value of $2,934,000.

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Since October 5, 2010, the Company’s securities have traded on the OTC market's top tier, the OTCQX.

The Company acquired the exclusive, worldwide rights to the Scrambler Therapy^® technology in 2007. The Company's original 2007 agreement with Giuseppe Marineo (the “Scrambler Therapy Agreement”), an inventor of Scrambler Therapy technology, and Delta Research and Development, authorized CTI to manufacture and sell worldwide the device developed from the patented Scrambler Therapy technology. The original agreement was amended in 2011 to provide the Company was exclusive rights to the Scrambler Therapy technology through March 31, 2016. In July 2012, the Company attempted to negotiate a five-year extension to the agreement with Marineo and Delta (the “2012 Amendment”). However, a valid contract was never formed as the 2012 Amendment was not executed by Marineo and Delta. The Scrambler Therapy technology is patented in Italy and the U.S. Additional applications for patents have been filed internationally and are pending approval. The Calmare® device has CE Mark certification from the European Union as well as U.S. FDA 510(k) clearance. CTI's partner, GEOMC Co., Ltd. of Korea, is manufacturing the product commercially under a ten (10) year agreement through 2017. Sales of these devices are expected to provide a significant proportion of the Company’s revenue for the next several years.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires that we make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and disclosure of contingent assets and liabilities. Actual results could differ significantly from our estimates.

Revenue Recognition

We earn revenue in two ways: retained royalties from licensing our clients' and our own technologies to our customer licensees, and sales of finished products. We record revenue when the terms of the sales arrangement are accepted by all parties including a fee that is fixed and determinable, delivery has occurred and our customer has taken title, and collectability is reasonably assured, net of sales tax.

Since 2011 the Company has taken greater control of the sales process. We are the primary obligor, responsible for delivering devices as well as for training our customers in the proper use of the device. We deal directly with customers, setting pricing and providing training; work directly with the inventor of the technology to develop specifications and any changes thereto and to select and contract with manufacturing partners; and retain significant credit risk for amounts billed to customers. Therefore, all product sales are recorded following a gross revenue methodology.

Revenue from foreign sources was not significant compared to total revenue in 2013 or 2012.

Retained royalties or distribution fees earned are of the following types:

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Non-refundable, upfront license fee – We record our share of non-refundable, upfront license fees upon execution of a license, sublicense or distribution agreement. Once delivery is complete, and the fee is collected, we have no continuing obligation. No upfront fees were received during the years ended December 31, 2013 or 2012.

Royalty or per unit fees – The royalty or per unit rate is fixed in the license or distribution agreement, with the amount earned contingent upon our customer's usage of our technology or sale of our product. Some agreements may contain stipulated minimum monthly or annual fee payments to CTI. We determine the amount of revenue to record when we can estimate the amount earned for a period. We receive payment or royalty reports on a monthly, quarterly or semi-annual basis indicating usage or sales of licensed technologies or products to determine the revenue earned in the period. Revenue may fluctuate from one quarter to another based on receipt of reports from customers.

Royalty legal awards – We earn non-recurring revenues from royalty legal awards, principally from patent infringement actions filed on behalf of our clients and/or us. Patent infringement litigation cases generally occur when a customer or another party ignores our patent rights, or challenges the legal standing of our clients' or our technology rights. These cases, even if settled out of court, may take several years to complete, and the expenses may be borne by our clients, by us, or shared. We share royalty legal awards in accordance with the agreement we have with our clients, usually after reimbursing each party for their related legal expenses. We recognize royalty legal award revenue when our rights to litigation awards are final and unappealable and we have assurance of collecting those awards, or when we have collected litigation awards in cash from the adverse party, or by sale of our rights to another party without recourse, and we have no obligation or are very unlikely to be obligated to repay such collected amounts. Proceeds from cases settled out of court are recorded as retained royalties.

Legal awards in patent infringement cases usually include accrued interest through the date of payment, as determined by the court. The court awards interest for unpaid earned income. Interest may also be included in other settlements with customers. Interest included in an award or settlement is generally recorded as interest income when received.

Unless otherwise specified, we record all other revenue, as earned.

Concentration of Revenues

Total revenue consists of revenue from product sales, retained royalties, and other income. During the year ended December 31, 2013, we derived approximately $653,000 or 85% of total revenue from sales of our Calmare pain therapy medical device technology. An additional 4% of revenue derived indirectly from that technology through sales of supplies and training, rental payments and the sale of rental assets. Of this amount approximately $160,000 or 25% of total revenue from sales of our Calmare pain therapy medical device technology came from one customer in 2013.

During the year ended December 31, 2012, we derived approximately $913,000 or 85% of total revenue from sales of our Calmare pain therapy medical device technology. An additional 5% of revenue derived indirectly from that technology through sales of supplies and training, rental payments and the sale of rental assets. Of this amount approximately $120,000 or 13% of total revenue from sales of our Calmare pain therapy medical device technology came from one customer in 2012, and an additional $100,000 or 11% of total revenue from sales of our Calmare pain therapy medical device technology came from one other customer in 2012.

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Expenses

We recognize expenses related to evaluating, patenting and licensing inventions, and enforcing intellectual property rights in the period incurred.

Cost of product sales includes contractual payments to inventor and manufacturer relating to our Calmare pain therapy medical device. Expenses associated with shipping devices are also included in cost of product sales.

Selling expenses include commission expenses related to sales of inventory (Calmare devices) technologies, domestic and foreign patent legal filing, prosecution and maintenance expenses, net of reimbursements, royalty audits, and other direct costs

Personnel and consulting expenses include employee salaries and benefits, marketing and consulting expenses related to technologies and specific revenue initiatives, and other direct costs.

General and administrative expenses include directors' fees and expenses, public company related expenses, professional services, including financing, audit and legal services, rent and other general business and operating expenses.

Fair Value of Financial Instruments

The Company believes the carrying amounts of cash, accounts receivable, deferred revenue, preferred stock liability and note payable approximate fair value due to their short-term maturity.

Inventory

Inventory consists of finished product of our pain therapy device. Inventory is stated at lower of cost (first in, first out) or market.

Property and Equipment

Property and equipment are carried at cost net of accumulated depreciation. Expenditures for normal maintenance and repair are charged to expense as incurred. The costs of depreciable assets are charged to operations on a straight-line basis over their estimated useful lives, three to five years for equipment, or the terms of the related lease for leasehold improvements. The cost and related accumulated depreciation or amortization of property and equipment are removed from the accounts upon retirement or other disposition, and any resulting gain or loss is reflected in earnings.

Impairment of Long-lived Assets

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the estimated fair value is less than the carrying amount of the asset, we record an impairment loss. If a quoted market price is available for the asset or a similar asset, we use it to determine estimated fair value. We re-evaluate the remaining useful life of the asset and adjust the useful life accordingly. There were no impairment indicators identified during the years ended December 31, 2013 and 2012.

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Income Taxes

Income taxes are accounted for under an asset and a liability approach that requires recognition of deferred income tax assets and liabilities for the expected future consequences of events that have been recognized in the Company's consolidated financial statements and income tax returns. The Company provides a valuation allowance for deferred income tax assets when it is considered more likely than not that all or a portion of such deferred income tax assets will not be realized.

Net Income (Loss) Per Share

We calculate basic net income (loss) per share based on the weighted average number of common shares outstanding during the period without giving any effect to potentially dilutive securities. Net income (loss) per share, assuming dilution, is calculated giving effect to all potentially dilutive securities outstanding during the period.

Share-Based Compensation

The Company accounts for its share-based compensation in accordance with the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") 718 – "Compensation – Stock Compensation." Accordingly, the Company recognizes compensation expense equal to the fair value of the stock awards at the time of the grant over the requisite service period.

Our accounting for share-based compensation has resulted in our recognizing non-cash compensation expense related to stock options granted to employees, which is included in personnel and consulting expenses, and stock options granted to our directors, which is included in general and administrative expenses.

Recent Accounting Pronouncements

No new accounting pronouncements issued or effective during the year ended December 31, 2013 has had or is expected to have a material impact on the consolidated financial statements.

3. INCOME TAXES

In current and prior years, we generated significant federal and state income and alternative minimum tax losses, and these net operating losses ("NOLs") were carried forward for income tax purposes to be used against future taxable income.

A reconciliation of our effective income tax rate compared to the U.S. federal statutory rate is as follows:

	Year ended December 31, 2013			Year ended December 31, 2012
Provision (benefit) at U.S. federal statutory rate		(35.0	)%		(35.0	)%
State provision (benefit), net of U.S. federal tax		(4.9	)		(4.8	)
Permanent differences		(0.3	)		(0.2	)
Other items		5.0			5.2
Deferred tax valuation allowance		(35.2	)		(34.8	)
Effective income tax rate		0.0	%		0.0	%

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Net deferred tax assets consist of the following:

	December 31, 2013			December 31, 2012
Net federal and state operating loss carryforwards	$	15,748,253		$	14,785,650
Impairment of investments		531,470			531,470
Other, net		687,426			680,637
Deferred tax assets		16,967,149			15,997,757
Valuation allowance		(16,967,149	)		(15,997,757	)
Net deferred tax assets	$	-		$	-

At December 31, 2013, we had aggregate federal net operating loss carryforwards of approximately $39,371,000, which expire at various times through 2033. A majority of our federal NOLs can be used to reduce taxable income used in calculating our alternative minimum tax liability. We also have state net operating loss carryforwards of approximately $37,812,000 that expire at various times through 2033.

Approximately $4,196,000 of our NOL carryforward remaining at December 31, 2013 was derived from income tax deductions related to the exercise of stock options. The tax effect of these deductions will be credited against capital in excess of par value at the time they are utilized for book purposes, and not credited to income. We will never receive a benefit for these NOLs in our statement of operations.

Changes in the valuation allowance were as follows:

	Year ended December 31, 2013		Year ended December 31, 2012
Balance, beginning of year	$	15,997,757	$	14,651,435
Change in temporary differences		6,789		157,164
Change in net operating and capital losses		962,603		1,189,158
Balance, end of year	$	16,967,149	$	15,997,757

Our ability to derive future tax benefits from the net deferred tax assets is uncertain and therefore we continue to provide a full valuation allowance against the assets, reducing the carrying value to zero. We will reverse the valuation allowance if future financial results are sufficient to support a carrying value for the deferred tax assets.

At December 31, 2013 and December 31, 2012, we had no uncertain tax positions.

We include interest and penalties on the underpayment of income taxes in income tax expense.

We file income tax returns in the United States and Connecticut. The Internal Revenue Service has completed audits for the periods through the fiscal year ended July 31, 2005. Our open tax years for review are fiscal years ended July 31, 2010 through year ended December 31, 2013. The Company's returns filed with Connecticut are subject to audit as determined by the statute of limitations.

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4. NET INCOME (LOSS) PER COMMON SHARE

The following sets forth the denominator used in the calculations of basic net income (loss) per share and net income (loss) per share assuming dilution:

	Year ended December 31, 2013		Year ended December 31, 2012
Denominator for basic net income (loss) per share, weighted average shares outstanding		16,977,027		15,007,852
Dilutive effect of common stock options		N/A		N/A
Dilutive effect of Series C convertible preferred stock and convertible debt		N/A		N/A
Denominator for net income (loss) per share, assuming dilution		16,977,027		15,007,852

Due to the net loss incurred for the years ended December 31, 2013, and December 31, 2012, the denominator used in the calculation of basic net loss per share was the same as that used for net loss per share, assuming dilution, since the effect of any options, convertible preferred shares, convertible debt or warrants would have been anti-dilutive. Options to purchase 1,372,000 and 317,000 shares of our common stock were outstanding at December 31, 2013 and 2012, respectively, 375 shares outstanding of Series C Convertible Preferred Stock, at December 31, 2013 and 2012, outstanding convertible debt of $2,934,000 and $1,535,000 at December 31, 2013 and 2012, respectively and the warrants outstanding at December 31, 2013 were not included in the computation of diluted net income (loss) per share because they were also anti-dilutive.

5. SHAREHOLDERS’ INTEREST

Common Stock

During 2013, the Company entered into an Equity Purchase Agreement (“EPA”) with Southridge Partners II, L.P. (“Southridge”). Under the terms of the EPA, which was filed with the SEC on February 26, 2013, Southridge will purchase, at the Company's election, up to $10,000,000 of the Company's registered common stock (the "Shares"). During the two year term of the EPA, the Company may at any time in its sole discretion deliver a "put notice" to Southridge thereby requiring Southridge to purchase a certain dollar amount of the Shares. Simultaneous with the delivery of such Shares, Southridge shall deliver payment for the Shares. Subject to certain restrictions, the purchase price for the Shares shall be equal to ninety percent of the lowest closing bid price for the Company's common stock during the ten-day trading period immediately after the Shares specified in the Put Notice are delivered to Southridge.

The number of Shares sold to Southridge shall not exceed the number of such shares that, when aggregated with all other shares of common stock of the Company then beneficially owned by Southridge, would result in Southridge owning more than 9.99% of all of the Company's common stock then outstanding. Additionally, Southridge may not execute any short sales of the Company's common stock.

Under the terms of the EPA, the Company had issued a convertible promissory note in the amount of $65,000 to Southridge which, during 2013 Southridge converted to 260,000 shares of common stock. In addition, during 2013, the Company negotiated a liabilities purchase agreement (“LPA”) with Southridge (see Note 11).

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Under the terms of the LPA, the Company issued 200,000 shares of its common stock at $0.35, or $70,000, and a convertible note in the amount of $12,000 Southridge as a fee.

Additionally, under the terms of the EPA and LPA, the Company issued 250,000 shares of its common stock at $0.35,or $87,500, to Southridge for expenses associated with the EPA and LPA.

During 2013 the Company issued 1,000,000 shares of its common stock into escrow, pending the completion of potential financing with a European investment group.

Preferred Stock

Holders of 5% preferred stock are entitled to receive, if, as, and when declared by the Board of Directors, out of funds legally available therefore, preferential non-cumulative dividends at the rate of $1.25 per share per annum, payable quarterly, before any dividends may be declared or paid upon or other distribution made in respect of any share of common stock. The 5% preferred stock is redeemable, in whole at any time or in part from time to time, on 30 days' notice, at the option of the Company, at a redemption price of $25. In the event of voluntary or involuntary liquidation, the holders of preferred stock are entitled to $25 per share in cash before any distribution of assets can be made to holders of common stock.

Each share of 5% preferred stock is entitled to one vote. Holders of 5% preferred stock have no preemptive or conversion rights. The preferred stock is not registered to be publicly traded.

At its December 2, 2010 meeting, the CTI Board of Directors declared a dividend distribution of one right (each, a “Right”) for each outstanding share of common stock, par value $0.01, of the Company (the “Common Shares”). The dividend was payable to holders of record as of the close of business on December 2, 2010 (the “Record Date”). Issuance of the dividend may be triggered by an investor purchasing more than 20% of the outstanding shares of common stock.

On December 15, 2010 the Company issued a $400,000 promissory note. The promissory note was scheduled to mature on December 31, 2012 with an annual interest rate of 5%.

On December 15, 2010, the Company's Board of Directors authorized the issuance of 750 shares of Series C Convertible Preferred Stock ($1,000 par value) with a 5% cumulative dividend to William R. Waters, Ltd. of Canada. On December 30, 2010, 750 shares were issued. The Company converted the above $400,000 promissory note into 400 shares and received cash of $350,000 for the remaining 350 shares.

Effective June 16, 2011, William R. Waters, Ltd. of Canada converted one half of its Series C Convertible Preferred Stock, or 375 shares, to 315,126 shares of common stock.

The rights of the Series C Convertible Preferred Stock are as follows:

a) Dividend rights – The shares of Series C Convertible Preferred Stock accrue a 5% cumulative dividend on a quarterly basis and is payable on the last day of each fiscal quarter when declared by the Company’s Board. As of December 31, 2013 dividends declared were $65,700, of which $18,750 were declared during the year ended December 31, 2013 and $46,952 have not been paid and are shown in accrued and other liabilities at December 31, 2013.

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b) Voting rights – Holders of these shares of Series C Convertible Preferred Stock shall have voting rights equivalent to 1,000 votes per $1,000 par value Series C Convertible Preferred share voted together with the shares of Common Stock

c) Liquidation rights – Upon any liquidation these Series C Convertible Preferred Stock shares shall be treated as equivalent to shares of Common stock to which they are convertible.

d) Redemption rights – The redemption rights were associated with the $750,000 that had been held in escrow by the Company in the event that the funds were released and returned to CTI.  However, the funds were withdrawn from escrow and paid out in accordance with the settlement agreement.  Therefore the redemption rights no longer apply to the remaining Series C Convertible Preferred Stock.

e) Conversion rights – Holder has right to convert each share of Series C Convertible Preferred Stock at any time into shares of the Company's common stock at a conversion price for each share of common stock equal to 85% of the lower of (1) the closing market price at the date of notice of conversion or (2) the mid-point of the last bid price and the last ask price on the date of the notice of conversion. The variable conversion feature creates an embedded derivative that was bifurcated from the Series C Convertible Preferred Stock on the date of issuance and was recorded at fair value. The derivative liability will be recorded at fair value on each reporting date with any change recorded in the Statement of Operations as an unrealized gain (loss) on derivative instrument.

On the date of conversion of the 375 shares of Series C Convertible Preferred Stock the Company calculated the value of the derivative liability to be $81,933. Upon conversion, the $81,933 derivative liability was reclassified to equity.

The Company recorded a convertible preferred stock derivative liability of $80,408 and $119,922, associated with the 375 shares of Series C Convertible Preferred Stock outstanding at December 31, 2013 and, 2012, respectively.

The Company has classified the Series C Convertible Preferred Stock as a liability at December 31, 2013 and, 2012 because the variable conversion feature may require the Company to settle the conversion in a variable number of its common shares.

6. RECEIVABLES

Receivables consist of the following:

	December 31, 2013		December 31, 2012
Calmare sales receivable	$	132,850	$	212,774
Royalties, net of allowance of $101,154 at December 31, 2013 and 2012		10,086		-
Other		394		3,591
Total	$	143,330	$	216,365

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7. PROPERTY AND EQUIPMENT, NET

Property and equipment, net, consist of the following:

	December 31, 2013			December 31, 2012
Property and equipment, gross	$	177,537		$	189,633
Accumulated depreciation and amortization		(169,931	)		(162,816	)
Property and equipment, net	$	7,606		$	26,817

In July 2012, the Company closed its Charlotte, NC office and disposed of the property and equipment at that location at a loss of $4,818.

Depreciation and amortization expense was $11,147 and $14,534 for the years ended December 31, 2013 and 2012, respectively.

8. AVAILABLE-FOR-SALE AND EQUITY SECURITIES

	December 31, 2013		December 31, 2012		Number of shares		Type
Security Innovation, Inc.		—		—		223,317	Common stock
Xion Pharmaceutical Corporation		—		—		60	Common stock

In prior years, we acquired 3,129,509 shares of NTRU Cryptosystems, Inc. ("NTRU") common stock, and certain preferred stock that later was redeemed, in exchange for cash and a reduction in our future royalty rate on sales of NTRU's products. NTRU was a privately held company that sold encryption software for security purposes, principally in wireless markets. There was no public market for NTRU shares. In 2003, we wrote down the value of NTRU to $0, but we continued to own the shares. On July 22, 2009, all NTRU assets were acquired by Security Innovation, an independent provider of secure software located in Wilmington, MA. We received 223,317 shares of stock in the privately held Security Innovation for our shares of NTRU.

In September 2009 we announced the formation of a joint venture with Xion Corporation for the commercialization of our patented melanocortin analogues for treating sexual dysfunction and obesity. We received 60 shares of privately held Xion Pharmaceutical Corporation common stock in June 2010. CTI currently owns 30% of the outstanding stock of Xion Pharmaceutical Corporation.

9. FAIR VALUE MEASUREMENTS

The Company measures fair value in accordance with Topic 820 of the FASB ASC, Fair Value Measurement ("ASC 820"), which provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described as follows:

Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2 - Inputs to the valuation methodology include:

• Quoted prices for similar assets or liabilities in active markets;

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• Quoted prices for identical or similar assets or liabilities in inactive markets;

• Inputs other than quoted prices that are observable for the asset or liability;

• Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset's or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company values its derivative liability associated with the variable conversion feature on its Series C Convertible Preferred Stock (Note 5) based on the market price of its common stock.  For each reporting period the Company calculates the amount of potential common stock that the Series C Preferred Stock could convert into based on the conversion formula (incorporating market value of our common stock) and multiplies those converted shares by the market price of its common stock on that reporting date.  The total converted value is subtracted by the consideration paid to determine the fair value of the derivative liability. The Company classified the derivative liability of $80,000 and $120,000 at December 31, 2013 and December 31, 2012, respectively, in Level 2 of the fair value hierarchy.

The warrant issued in connection with the Tonaquint Note (the “Tonaquint Warrants,” see Note 13) are measured at fair value and liability-classified because the Tonaquint Warrants contain “down-round” protection and therefore do not meet the scope exception under FASB ASC 815, Derivatives and Hedging (“ASC 815”). Since “down-round” protection is not an input to the fair value of the warrants, the warrants cannot be considered indexed to the Company’s own stock which is a requirement for the scope exception as outlined under ASC 815.  The Company valued the warrants at $8,000 at December 31, 2013, and $26,000 upon issuance at July 16, 2013, in Level 3 of the fair value hierarchy.

Similarly, the conversion feature of the Tonaquint Note (Note 13) also contains “down-round” protection and therefore does not met the scope exception under FASB ASC 815.  The Company classified the derivative liability of $0 at December 31, 2013, and $19,000 upon issuance at July 16, 2013, in Level 3 of the fair value hierarchy.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation method is appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value could result in a different fair value measurement at the reporting date.

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10. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other assets consist of the following:

	December 31, 2013		December 31, 2012
Prepaid insurance	$	16,802	$	17,473
Prepaid legal fees		-		46,813
Other		48,365		14,441
Prepaid expenses and other current assets	$	65,167	$	78,727

11. LIABILITIES ASSIGNED TO LIABILITY PURCHASE AGREEMENT

During third quarter of 2013, the Company negotiated a LPA with Southridge. The LPA takes advantage of a provision in the Securities Act of 1933, Section 3(a)(10), that allows the exchange of claims, securities, or property for stock when the arrangement is approved for fairness by a court proceeding. The process, approved by the court in August 2013, has the potential to eliminate nearly $2.1 million of our financial obligations to existing creditors who agreed to participate and executed claims purchase agreements with Southridge’s affiliate ASC Recap, LLC (“ASC Recap”) accounting for $2,093,303 of existing payables, accrued expenses and other current liabilities, and notes payable. The process began with the issuance in September 2013 of 1,618,235 shares of the Company’s common stock to ASC Recap, however at December 31, 2013, no creditors had yet been paid from the proceeds.

There can be no assurance that the Company will be successful in completing this process with Southridge, and the Company retains ultimate responsibility for this debt, until fully paid.

12. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consist of the following:

	December 31, 2013		December 31, 2012
Royalties payable	$	127,708	$	182,052
Accrued audit fee		82,141		80,000
Over advance, fees LSQ Funding		-		77,464
Commissions payable		21,975		48,722
Accrued interest payable		216,518		85,184
Accrued consulting fees		2,000		167,726
Other		132,645		132,216
Accrued expenses and other liabilities, net	$	582,987	$	773,364

Excluded above is approximately $244,000 of accrued expenses and other liabilities that fall under the LPA with ASC Recap, and are expected to be repaid using the process as described in Note 11.  Because there can be no assurance that the Company will be successful in completing this process, the Company retains ultimate responsibility for these liabilities, until fully paid down.

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13. NOTES PAYABLE

Notes payable as of December 31, 2013 consists of the following:

	Principal Amount		Carrying Value			Cash Interest Rate			Common Stock Conversion Price		Maturity Date
90 day Convertible Notes (Chairman of the Board)	$	2,518,000	$	2,518,000			6	%	$	1.05	Various 2014
24 month Convertible Notes ($100,000 to Board member)		225,000		225,000			6	%		1.05	March 2014 – June 2014
Tonaquint 9% OID Convertible Notes and Warrants		112,500		87,705			7	%		0.30	May 2014
Southridge Convertible Note		12,000		12,000			None			75% of closing bid	June 2014
Series A1 15% OID Convertible Notes and Warrants		149,412		81,415			None			0.20	August 2014
Series A2 15% OID Convertible Notes and Warrants		134,236		69,571			None			0.25	September 2014
Notes Payable, gross	$	3,151,148		2,933,691
Less LPA amount				(505,000	)
Notes Payable, net			$	2,488,691

90 day Convertible Notes

The Company has issued 90-day notes payable to borrow funds from a director, now the chairman of our Board, as follows:

2013	$	1,208,000
2012		1,210,000
2011		100,000
Total	$	2,518,000

These notes have been extended several times and all bear 6.00% simple interest.  A conversion feature was added to the Notes when they were extended, which allows for conversion of the eligible principal amounts to common stock at any time after the six month anniversary of the effective date –the date the funds are received – at a rate of $1.05 per share.  Additional terms have been added to all Notes to include additional interest payments to all Notes if extended beyond their original maturity dates and to provide the lender with a security interest in unencumbered inventory and intangible assets of the Company other than proceeds relating to the Calmare device and accounts receivable.

A total of $505,000 of the aforementioned notes issued between December 1, 2012 and March 31, 2013 fall under the LPA with ASC Recap, and are expected to be repaid using the process as described in Note 11.  Because there can be no assurance that the Company will be successful in completing this process, the Company retains ultimate responsibility for this debt, until fully paid down.  As a result, the Company continues to accrue interest on these notes and they remain convertible as described above.

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24 month Convertible Notes

In March 2012, the Company issued a 24-month convertible promissory note to borrow $100,000. Additional 24-month convertible promissory notes were issued in April 2012 ($25,000) and in June 2012 ($100,000). All of the notes bear 6.00% simple interest. Conversion of the eligible principal amounts to common stock is allowed at any time after the six month anniversary of the effective date of each note at a rate of $1.05 per share.

Tonaquint 9% Original Issue Discount Convertible Notes and Warrants

During the quarter ended September 30, 2013, the Company entered into a securities purchase agreement with Tonaquint, Inc., under which it was issued a $112,500 convertible promissory note in consideration for $100,000, the difference between the proceeds from the Note and the principal amount consists of a $10,000 original issue discount and a carried transaction expense of $2,500. The original issue discount is amortized over the life of the note. The note is convertible at an initial conversion price of $0.30 per share at any time, and contains a “down-round protection” feature that requires the valuation of a derivative liability associated with the note. The note bears interest at 7% and is due in May 2014; with five monthly installment payments of principal, accrued interest and any outstanding fees or allowed expenses beginning in January 2014. Tonaquint was also issued a market-related warrant for $112,500 in shares of common stock with a “cashless” exercise feature. The warrant has a $0.35 exercise price, a 5-year term and includes a “down-round protection” feature that requires it to be classified as a liability rather than as equity (see Note 9).

We estimated the fair value of each component on the issue date and the conversion date using a Black-Scholes pricing model with the following assumptions:

	Warrant - July 16, 2013			Warrant – December 31, 2013			Derivative – July 16, 2013			Derivative – December 31, 2013
Expected term		5 years			4.54 years			0.83 years			0.38 years
Volatility		124.51	%		139.93	%		192.87	%		230.46	%
Risk Free Rate		1.38	%		1.75	%		0.10	%		0.70	%

The proceeds of the Note were allocated to the three components as follows:

	Proceeds allocated at issue date – July 16, 2013		Value at December 31, 2013
Tonaquint Note	$	57,400	$	87,705
Tonaquint Warrant	$	26,076	$	8,227
Embedded conversion option derivative liability	$	19,024	$	-
Total	$	102,500	$	95,932

Subsequent to December 31, 2013, the Company settled the note and Warrant with Tonaquint ( see Note 18.).

Southridge

During 2013 the Company had issued a convertible promissory note payable to Southridge as part of its EPA in the amount of $65,000, which during 2013 Southridge converted to 260,000 shares of common stock.

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During 2013, the Company issued a six-month $12,000 convertible note payable to Southridge to cover legal expenses as part of the LPA (see Note 11). The convertible note is convertible into the Company’s common stock at 75% of the lowest closing bid price during the twenty (20) trading days prior to conversion and is due in June 2014.

Series A 15% Original Issue Discount Convertible Notes and Warrants

During the quarter ended December 31, 2013, the Company did a private offering of two tranches of convertible notes and warrants, under which it issued $283,648 of convertible promissory notes for consideration of $241,100, the difference between the proceeds from the notes and the principal amount consists of $42,548 of original issue discount. The notes are convertible at initial conversion prices ranging from $0.20 to $0.25 per share anytime after issuance thereby having an embedded beneficial conversion feature. The note holders were also issued market-related warrants for 170,354 in shares of common stock. The warrants have exercise prices that range from $0.40 to $0.60 and a 2-year term. The beneficial conversion feature and the warrants were recorded to additional paid-in-capital. The Company allocated the proceeds received to the notes, the beneficial conversion feature and the warrants on a relative fair value basis at the time of issuance. The total debt discount is amortized over the life of the notes to interest expense.

The beneficial conversion feature was valued at the intrinsic value on the issuance date. The intrinsic value represents the difference between the conversion price and the fair value of the common stock multiplied by the number of share into which the note is convertible. We estimated the fair value of the warrants on the issue date using a Black-Scholes pricing model with the following assumptions:

	Warrants (Tranche 1)- November 15, 2013			Warrants (Tranche 2)- December 30, 2013
Expected term		2 years			2 years
Volatility		180.02	%		184.38	%
Risk Free Rate		0.31	%		0.39	%

The proceeds of the Notes were allocated to the components as follows:

	Proceeds allocated at issue date
Private Offering Notes	$	120,313
Private Offering Warrants		76,429
Beneficial Conversion feature		44,358
Total	$	241,100

14. STOCK-BASED COMPENSATION PLANS

2011 Employees', Directors' and Consultants' Stock Option Plan – In May 2011, the Board of Directors approved a new option plan for employees, directors and consultants. Pursuant to this plan which is administered by a Committee appointed by the Board of Directors, we could grant to qualified employees, directors and consultants either incentive options or nonstatutory options (as defined by the Internal Revenue Service). The stock options granted per written option agreements approved by the Committee, must have exercise prices not less than 100% of the Fair Market Value of our common stock on the date of the grant. Up to 1,500,000 common shares are available for grants under this plan. No options may be granted under this plan after December 31, 2015.

The following information relates to the 2011 Option Plan:

	December 31, 2013		December 31, 2012
Common shares reserved for issuance on exercise of options		1,165,000		110,000
Shares available for future option grants		335,000		890,000

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1997 Employee Stock Option Plan – Pursuant to our 1997 Employees' Stock Option Plan, as amended (the "1997 Option Plan"), we could grant to employees either incentive stock options or nonqualified stock options (as defined by the Internal Revenue Service). The stock options had to be granted at exercise prices not less than 100% of the fair market value of our common stock at the grant date. The maximum life of stock options granted under this plan is ten years from the grant date. The Compensation Committee or the Board of Directors determined vesting provisions when stock options were granted, and stock options granted generally vested over three or four years. No options could be granted under this plan after September 30, 2007.

The following information relates to the 1997 Option Plan:

	December 31, 2013		December 31, 2012
Common shares reserved for issuance on exercise of options		87,000		87,000
Shares available for future option grants		-		-

2000 Director's Stock Option Plan – Pursuant to our Directors' Stock Option Plan (the "Directors' Option Plan"), we could grant each non-employee director 10,000 fully vested, nonqualified common stock options when the director first is elected, and 10,000 common stock options on the first business day of January thereafter, as long as the individual is a director. All such stock options are granted at an option price not less than 100% of the fair market value of the common stock at the grant date. The maximum life of options granted under this plan is ten years from the grant date. No options could be granted after January 4, 2010.

The following information relates to the 2000 Directors' Stock Option Plan:

	December 31, 2013		December 31, 2012
Common shares reserved for issuance on exercise of options		120,000		120,000
Shares available for future option grants		-		-

Summary of Common Stock Options – The total fair value of shares vested in the years ended December 31, 2013 and December 31, 2012 was $116,365 and $138,630, respectively, of non-cash compensation expense. Of these amounts, $84,550 and $0 was included in personnel and consulting expenses, from stock options granted to employees, and vesting during the year ended December 31, 2013 and 2012, respectively.

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Also $14,895 and $58,630 of noncash compensation expense was included in general and administrative expenses, from stock options granted to directors pursuant to the Directors Option Plan in the years ended December 31, 2013 and 2012, respectively. Since these stock options are fully vested upon grant, the full fair value of the stock options is recorded as expense at the date of grant. During the year ended December 31, 2013, the Company granted 50,000 options to non-employee directors which were fully vested upon issuance, and 5,000 options which were fully vested upon issuance to two non-employee directors who had served as chairman, as approved by the Board of Directors. During the years ended December 31, 2013 and 2012, the Board of Directors extended the expiration dates for all options previously granted to one and two, respectively, departing Board members in recognition for service. Those options will expire per their original term specified in each individual option agreement, typically either 5 or 10 years from the date of granting, rather than expiring within the specified time period, typically 90 or 180 days following the Board members’ termination dates. The Company considered the extension as a modification to the option agreements recording incremental compensation expense of $16,920 and $80,000 for the years ended December 31, 2013 and 2012, respectively.

During the quarter ended March 31, 2013, the Company granted 1,000,000 options to the then-CEO. As approved by the Board of Directors, these options granted were expected to vest over a four (4) year period, with 200,000 options vesting upon issuance. Since his resignation on September 26, 2013, expense for the quarters ended March 31, 2013 and June 30, 2013 has been reversed. The 200,000 vested options all expired 90 days from his resignation, per the Option Agreement.

During the quarter ended December 31, 2013, the Company granted 1,000,000 options to the current CEO. As approved by the Board of Directors, these options vest over a four (4) year period, with 200,000 options vested upon issuance.

No options were granted to employees during the year ended December 31, 2012.

We estimated the fair value of each option on the grant date using a Black-Scholes option-pricing model with the following weighted average assumptions:

	Year ended December 31, 2013			Year ended December 31, 2012
Dividend yield (1)		0.0	%		0.0	%
Expected volatility (2)		99.2% - 110.2	%		86.7% - 87.1	%
Risk-free interest rates (3)		1.02	%		0.89	%
Expected lives (2)		2-5 years			5 years

(1) We have not paid cash dividends on our common stock since 1981, and currently do not have plans to pay or declare cash dividends. Consequently, we used an expected dividend rate of zero for the valuations.

(2) Estimated based on our historical experience. Volatility was based on historical experience over a period equivalent to the expected life in years.

(3) Based on the U.S. Treasury constant maturity interest rate with a term consistent with the expected life of the options granted.

A summary of the status of all our common stock options as of December 31, 2013 and 2012, and changes during the periods then ended is presented below.

	Year ended December 31, 2013							Year ended December 31, 2012
	Shares			Weighted Average Exercise Price		Aggregate Intrinsic Values		Shares			Weighted Average Exercise Price		Aggregate Intrinsic Values
Outstanding at beginning of period		317,000		$	1.85	$			313,000		$	2.11
Granted		2,055,000			0.29				70,000			1.24
Forfeited		(1,000,000	)		0.50				(66,000	)		2.44
Exercised		-							-
Expired or terminated		-							-
Outstanding at end of year		1,372,000		$	0.50	$	240,750		317,000		$	1.85
Vested at end of year		572,000		$	1.10	$	48,750		317,000		$	1.85
Nonvested at end of year		800,000		$	0.08	$	192,000
Weighted average fair value per share of options issued during the year				$	0.21						$	1.18

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Generally, we issue new shares of common stock to satisfy stock option exercises.

15. 401(k) PLAN

We have an employee-defined contribution plan qualified under section 401(k) of the Internal Revenue Code (the "Plan"), for all employees age 21 or over, and meeting certain service requirements. The Plan has been in effect since January 1, 1997. Participation in the Plan is voluntary. Employees may defer compensation up to a specific dollar amount determined by the Internal Revenue Service for each calendar year. We do not make matching contributions, and employees are not allowed to invest in our stock under the Plan.

Our directors may authorize a discretionary contribution to the Plan, allocated according to the provisions of the Plan, and payable in shares of our common stock valued as of the date the shares are contributed. No contributions were accrued or made in the years ended December 31, 2013 and 2012.

16. COMMITMENTS AND CONTINGENCIES

Operating Leases –

Future minimum rental payments required under operating leases with remaining non-cancelable lease terms as of December 31, 2013 are as follows:

More than 5 years	$	-
3-5 years		13,076
1-3 years		153,279
Within 1 year		62,085
Total	$	228,440

Total rental expense for all operating leases was:

	Year ended December 31, 2013		Year ended December 31, 2012
Minimum rental payments	$	60,038	$	84,242
Less: Sublease rentals		3,594		7,188
Net rent expense		56,444		77,054
Deferred rent charge		5,248		-
	$	61,692	$	77,054

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Contingencies – Revenue based

As of December 31, 2013, CTI and its majority owned subsidiary, VVI, have remaining obligations, contingent upon receipt of certain revenues, to repay up to $165,788 and $199,334, respectively, in consideration of grant funding received in 1994 and 1995. CTI also is obligated to pay at the rate of 7.5% of its revenues, if any, from transferring rights to certain inventions supported by the grant funds. VVI is obligated to pay at rates of 1.5% of its net sales of supported products or 15% of its revenues from licensing supported products, if any. We recognize these obligations only if we receive revenues related to the grant funds. We recognized approximately $1,577 in the year ended December 31, 2013 and $1,749 in the year ended December 31, 2012.

We have engaged R.F. Lafferty & Co. to seek an acquisition partner from a limited number of companies for our nano particle bone biomaterial patents, among other assets and/or securities.  The Company would pay Lafferty a 10% finder's fee in the event an acquisition partner is found, which Management has deemed to be an immaterial and contingent obligation.

Contingencies – Litigation

Carolina Liquid Chemistries Corporation, et al. (case pending) – On August 29, 2005, we filed a complaint against Carolina Liquid Chemistries Corporation ("Carolina Liquid") in the United States District Court for the District of Colorado, alleging patent infringement of our patent covering homocysteine assays, and seeking monetary damages, punitive damages, attorneys’ fees, court costs and other remuneration at the option of the court. As we became aware of other infringers, we amended our complaint to add as defendants Catch, Inc. ("Catch") and the Diazyme Laboratories Division of General Atomics ("Diazyme"). On September 6, 2006, Diazyme filed for declaratory judgment in the Southern District of California for a change in venue and a declaration of non-infringement and invalidity. On September 12, 2006, the District Court in Colorado ruled that both Catch and Diazyme be added as defendants to the Carolina Liquid case.

On October 23, 2006, Diazyme requested the United States Patent and Trademark Office (the "USPTO") to re-evaluate the validity of our patent and this request was granted by the USPTO on December 14, 2006. On July 30, 2009, the U.S. Patent and Trademark Office’s Board of Patent Appeals and Interferences (“BPAI”) upheld the homocysteine patent. In September 2008, the examiner had denied the patent, but that denial was overruled by the BPAI. While the examiner had appealed that BPAI decision, delaying further action, that appeal was also denied by the BPAI on December 13, 2010. In June 2011, the examiner once again appealed the BPAI decision. In addition to responding to this new appeal, the Company petitioned the Director of the USPTO to help expedite further action on the case within the USPTO, which was to have been handled with special dispatch according to USPTO requirements for handling reexamination proceedings of patents involved in litigation.

On March 13, 2012, the USPTO issued the Ex Parte Reexamination Certificate confirming the patentability of claims examined. The company has begun collecting unpaid amounts from various obligated companies.

Employment matters – former employee (case pending) – In September 2003, a former employee filed a whistleblower complaint with the Occupational Safety and Health Administration of the Department of Labor (OSHA) alleging that the employee had been terminated for engaging in conduct protected under the Sarbanes Oxley Act of 2002 (SOX). In February 2005, OSHA found probable cause to support the employee’s complaint and the Secretary of Labor ordered reinstatement and back wages since the date of termination and CTCC requested de novo review and a hearing before an administrative law judge (“ALJ”). In July 2005, after the close of the hearing on CTI’s appeal, the U.S. district court for Connecticut enforced the Secretary’s preliminary order of reinstatement and back pay under threat of contempt and the Company rehired the employee with back pay.

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On October 5, 2005, the ALJ who conducted the hearing on CTI’s appeal of the OSHA findings ruled in CTI’s favor and recommended dismissal of the employee’s complaint. Although the employee abandoned his position upon notice of the ALJ’s decision, he nevertheless filed a request for review by the DOL Administrative Review Board ("ARB").

In May 2006, the U.S. Court of Appeals for the Second Circuit vacated the order of the district court enforcing the Secretary’s preliminary order of reinstatement and back pay. The employee also filed a new SOX retaliation complaint with OSHA based on alleged black listing action by CTI following his termination. OSHA dismissed the complaint and the employee filed a request for a hearing by an administrative law judge. Ultimately, the employee voluntarily dismissed the appeal.

In March 2008, the ARB issued an order of remand in the employee’s appeal of the October 2005 dismissal of his termination complaint, directing the ALJ to clarify her analysis utilizing the burden-shifting standard articulated by the ARB. In January 2009, the ALJ issued a revised decision again recommending dismissal and once again the employee appealed the ruling to the ARB. On September 30, 2011, the ARB issued a final decision and order affirming the ALJ’s decision on remand and dismissing the employee’s complaint. The employee has appealed the ARB's decision before the U.S. Court of Appeals for the Second Circuit which has ordered the employee to file his opening brief by May 31, 2012. Response briefs by the Solicitor's Office of the U.S. Department of Labor and CTI were submitted in August 2012. In March 2013, the U.S Court of Appeals for the Second Circuit upheld the ARB’s decision dismissing the former employee’s complaint and denied the employee’s appeal from that order. In April 2013, the Second Circuit terminated proceedings in that court.

John B. Nano vs. Competitive Technologies, Inc. - Arbitration (case completed ) – On September 3, 2010, the Board of Directors of CTI found cause consisting of violation of fiduciary duties to the Corporation and violation of the CTI Corporate Code of Conduct and removed John B. Nano as an Officer of the Corporation, in all capacities. On September 13, 2010, the Board of Directors also found cause consisting of violation of fiduciary duties to the Corporation and violation of the CTI Corporate Code of Conduct removed John B. Nano as a Director of the Corporation, in all capacities, for cause, consisting of violation of his fiduciary duties. Details of these actions are outlined in Form 8-K filings with the SEC on September 13, 2010, and September 17, 2010. Mr. Nano was previously the Chairman of the Board of Directors, President and Chief Executive Officer of CTI.

On September 13, 2010, Mr. Nano brought an arbitration claim to the American Arbitration Association against CTI. Mr. Nano's employment contract with the Company had called for arbitration, which Mr. Nano had demanded to resolve this conflict. Mr. Nano sought $750,000 that he claimed was owed under his contract and claimed that he had been terminated without cause.

On September 23, 2010 the Company was served notice that John B. Nano, CTI's former Chairman, President and CEO had filed a Notice of Application for Prejudgment Remedy/Claim of $750,000 and an Application for an Order Pendente Lite claiming we had breached Mr. Nano’s employment contract with us. The applications were filed in the State of Connecticut Superior Court in Bridgeport, CT. In November 2010, the Company funded $750,000 as a Prejudgment Remedy held in escrow with the Company's counsel and has included this amount as restricted cash on the December 31, 2011 and December 31, 2010 balance sheets. The Company did not believe it was liable to the former Chairman, President and CEO, believing he was terminated for cause. The case proceeded through the arbitration process. The initial arbitration hearing began in April 2011; additional hearing dates were held in May and June 2011.  In July 2011, each party submitted a summary limited in length stating their positions.

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Prior to the conclusion of the arbitration hearings, the Company filed suit in Federal Court against the American Arbitration Association. The Company requested a temporary restraining order to halt the arbitration, which was denied by the court. The Company also requested a hearing before the court to review the arbitration proceedings. In August 2011, the American Arbitration Association's assigned arbitrator gave award to the Company's former Chairman, President and CEO, despite the Company's strongly held belief that the Board of Directors properly exercised its reasonable discretion under the employment agreement in finding that the former executive engaged in willful misconduct and gross negligence and that the executive’s actions were cause for employment termination under the employment agreement and governing law. The former executive had requested a payment of $750,000, which he believed was due under his employment agreement. Following the notification of award, the former employee filed a motion with the State of Connecticut Superior Court in Bridgeport, CT to have the award confirmed. CTI followed with a motion to vacate the award. A hearing on those two motions was held before a judge in October 2011.

In January 2012, the judge denied the Company's motion to vacate the arbitration award in favor of its former CEO John B. Nano and granted Mr. Nano's application to confirm the award. Following the decision, CTI settled all disputes with its former Chairman and CEO John B. Nano. Pursuant to the settlement, CTI has released to Mr. Nano from escrow the $750,000 deposited by CTI following Mr. Nano's application for a prejudgment remedy. CTI paid an additional $25,000 as settlement of additional amounts of statutory interest. These amounts ($775,000) had been accrued at December 31, 2011. The settlement includes mutual general releases of any and all claims either party has or had against the other. The settlement agreement also includes a provision that neither CTI nor Mr. Nano would disparage the other. Should any such disparagement occur and litigation ensue, they further agreed that the prevailing party would be entitled to recover its costs and expenses, including reasonable attorney's fees. CTI's payments to Mr. Nano have been completed.

Unfair Trade Practices; U.S. District Court of Connecticut (Case completed)  – In September 2011, the Company filed a complaint against an individual in U.S. District Court of Connecticut for (1) violation of the Connecticut Unfair Trade Practices Act, (2) tortious interference with business and economic expectancy, (3) libel and (4) injunctive relief. The complaint noted that the individual named in the civil action has, for more than a year, engaged in a systematic campaign to destroy the Company's trades and business, interfere with the Company's expectations and contracts and libel the Company by disseminating materially false and libelous statements about the Company on message boards throughout the Internet and otherwise. The Company sought punitive damages from the individual for his alleged unfair trade practices and wrongful interference with the Company's business. The case was concluded in March 2012. By the parties’ stipulation settling the matter, the defendant agreed to cease his posting any statements on the Internet or publishing any statements elsewhere, orally or in writing, concerning CTI, CTI’s officers, directors, and employees, the Calmare device, Marineo (the inventor of the Calmare device), or any other person or entity in connection with their purchase or use of the Calmare device.

Summary – We may be a party to other legal actions and proceedings from time to time. We are unable to estimate legal expenses or losses we may incur, if any, or possible damages we may recover, and we have not recorded any potential judgment losses or proceeds in our financial statements to date, with the exception of the accrued expenses related to the Nano case, previously disclosed. We record expenses in connection with these suits as incurred.

We believe that we carry adequate liability insurance, directors and officers insurance, casualty insurance, for owned or leased tangible assets, and other insurance as needed to cover us against potential and actual claims and lawsuits that occur in the ordinary course of our business. However, an unfavorable resolution of any or all matters, and/or our incurrence of significant legal fees and other costs to defend or prosecute any of these actions and proceedings may, depending on the amount and timing, have a material adverse effect on our consolidated financial position, results of operations or cash flows in a particular period.

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17. RELATED PARTY TRANSACTIONS

Our board of directors determined that when a director's services are outside the normal duties of a director, we compensate the director at the rate of $1,000 per day, plus expenses, which is the same amount we pay a director for attending a one-day Board meeting. We classify these amounts as consulting expenses, included in personnel and consulting expenses.

At December 31, 2013, $2,618,000 of the outstanding Notes were payable to related parties; $2,518,000 to the chairman of our Board, Peter Brennan, and $100,000 to another director, Stan Yarbro.

18. SUBSEQUENT EVENTS

Tonaquint

During the first quarter of 2014 the Company executed a debt settlement agreement with Tonaquint related to the note and warrant described in Note 13. In summary, the Company and Tonaquint agreed to settle the warrant for $98,000 and the note and all related interest for $144,000 all to paid by April 18, 2014.

Additional financing

During the first quarter of 2014 the Company raised additional working capital of approximately $600,000 through the issuance of debt and equity instruments.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

N/A

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company's management, including the Company’s chief executive officer ("CEO"), and chief financial officer ("CFO"), as appropriate to allow timely decisions regarding required disclosure.

Each fiscal quarter the Company carries out an evaluation, under the supervision and with the participation of the Company's management, including the Company’s CEO, and CFO, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based on this evaluation, our management, with the participation of the CEO, and CFO, concluded that, as of December 31, 2013, our disclosure controls and procedures were not effective.

Changes in Internal Control over Financial Reporting

During the year ended December 31, 2013, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management's Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). A system of internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our CEO, and CFO, we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2013. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. A material weakness is a control deficiency, or a combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management has identified the following material weakness as of December 31, 2013:

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· The Company did not maintain an effective control environment because Mr. Johnnie Johnson (“Johnson”), the Company’s former chief financial officer and consultant, may have acted contrary to the best interests of Company and its stockholders in connection to certain contracts, agreements, initiatives or other actions Johnson entered into on behalf of the Company without obtaining the Board’s approval (the “Actions”) and may have breached fiduciary duties owed to the Company and its stockholders.

To protect the best interest of the Company and its stockholders, the Board further determined that Johnson did not have the authority to act on behalf of the Company in connection to the Actions and rendered such Actions rejected, null and void. The Board also authorized certain officers to take all measures appropriate and necessary to nullify the Actions.

Additionally, the material weakness above could result in a material misstatement to the Company's interim or annual consolidated financial statements and disclosures which would not be prevented or detected.

As a result of the material weakness described above, management has concluded that, as of December 31, 2013, the Company's internal control over financial reporting was not effective based on the criteria in Internal Control-Integrated Framework issued by the COSO.

The Company has engaged in substantial remediation efforts to address the material weakness in its internal control over financial reporting related to its control environment described above, including:

· Certain key individuals in senior management positions have left the Company, been terminated, or been replaced.

· Certain key service provider relations have been terminated or been replaced.

· Ongoing communication between the Board and management has been expanded

Notwithstanding the material weakness, management believes the consolidated financial statements included in this Annual Report on Form 10-K fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

This annual report does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

Item 9B. Other Information

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item is incorporated by reference to our Proxy Statement for the2014Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission (SEC) within 120 days of the fiscal year endedDecember 31, 2013. The information can be found under the headings “Election of Directors,” “Corporate Governance and Other Matters,” “Executive Officers,” and “Section 16(a) Beneficial Ownership Reporting Compliance,” and is incorporated herein by reference.

We have adopted a Code of Conduct that applies to our officers, directors and employees which is available on our internet website at www.competitivetech.net. The Code of Conduct contains general guidelines for conducting the business of our company consistent with the highest standards of business ethics, and is intended to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K. In addition, we intend to promptly disclose (1) the nature of any amendment to our Code of Conduct that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions and (2) the nature of any waiver, including an implicit waiver, from a provision of our code of ethics that is granted to one of these specified officers, the name of such person who is granted the waiver and the date of the waiver on our website in the future.

Item 11. Executive Compensation

The information required by this item is incorporated by reference to our Proxy Statement for the2014Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year endedDecember 31, 2013.

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

The information required by this item is incorporated by reference to our Proxy Statement for the 2014 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2013.

Item 13. Certain Relationships, Related Transactions and Director Independence

The information required by this item is incorporated by reference to our Proxy Statement for the2014Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year endedDecember 31, 2013.

Item 14. Principal Accounting Fees and Services

The information required by this item is incorporated by reference to our Proxy Statement for the2014Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year endedDecember 31, 2013.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) List of financial statements and schedules.

The following consolidated financial statements of Competitive Technologies, Inc. and Subsidiary are included herein by reference to the pages listed in "Item 8. Financial Statements and Supplementary Data":

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2013 and 2012

Consolidated Statements of Operations for the years ended December 31, 2013 and December 31, 2012

Consolidated Statements of Changes in Shareholders’ Deficit for the years ended December 31, 2013 and December 31, 2012

Consolidated Statements of Cash Flows for the years ended December 31, 2013 and December 31, 2012

Notes to Consolidated Financial Statements

(b) List of exhibits: See Exhibit Index immediately preceding exhibits.

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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.

COMPETITIVE TECHNOLOGIES, INC.
(the registrant)
By	/s/ Conrad Mir
Conrad Mir
President, Chief Executive Officer and interim Chief Financial Officer (Duly Authorized Officer, Principal Executive Officer, and Principal Financial Officer and Principal Accounting Officer)
Date: April 15, 2014

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.

Name	Title	)	Date
		)
/s/ Conrad Mir	President, Chief Executive Officer and	)	April 15, 2014
Conrad Mir	interim Chief Financial Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)	) )
/s/ Peter Brennan	Chairman	)	April 15, 2014
Peter Brennan		)
/s/ Rustin Howard	Director	)	April 15, 2014
Rustin Howard		)
/s/ Robert Moussa	Director	)	April 15, 2014
Robert Moussa		)
/s/ Stan Yarbro	Director	)	April 15, 2014
Stan Yarbro		)

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EXHIBIT INDEX

Exhibit
No.	Description
3.1	Unofficial restated certificate of incorporation of the registrant as amended to date filed (on April 1, 1998) as Exhibit 4.1 to registrant’s Registration Statement on Form S-8, File Number 333-49095 and hereby incorporated by reference.
3.2	By-laws of the registrant as amended, filed (on December 12, 2005) as Exhibit 3.2 to registrant's Quarterly Report on Form 10-Q for the quarterly period ended October 31, 2005 and amended pursuant to the Current Report on Form 8-K filed March 31, 2012 , and hereby incorporated by reference.
10.3*	Registrant's 2000 Directors Stock Option Plan as amended January 24, 2003, filed (on January 29, 2003) as Exhibit 4.4 to registrant’s Registration Statement on Form S-8, File Number 333-102798 and hereby incorporated by reference.
10.5*	Registrant's 1997 Employees' Stock Option Plan as amended January 14, 2005, filed (on January 21, 2005) as Exhibit 4.3 to registrant's Current Report on Form 8-K, and hereby incorporated by reference.
10.14	Employment Agreement dated February 2, 2007 between registrant and John B. Nano, filed (on February 6, 2007) as Exhibit 10.1 to registrant's Current Report on Form 8-K dated February 6, 2007, and hereby incorporated by reference.
10.20	Distribution Agreement between the registrant and Life Episteme srl, dated February 24, 2009 filed (on February 26, 2009) as Exhibit 10.1 to registrant's Current Report on Form 8-K Dated February 26, 2009, and hereby incorporated by reference.
10.22	License Agreement between Competitive Technologies, Inc. and Daeyand E&C Co., Ltd. (now GEOMC Co., Ltd.), dated September 25, 2007. filed (on March 4, 2011) as Exhibit 10.1 to registrant's Current Report on Form 8-K dated March 4, 2011, and hereby incorporated by reference.
10.23	Distributor Appointment Agreement between Competitive Technologies, Inc. and GEOMC Co., Ltd. dated August 22, 2008 granting rights in South Korea, filed (on March 4, 2011) as Exhibit 10.2 to registrant's Current Report on Form 8-K dated March 4, 2011, and hereby incorporated by reference.
10.24	Memorandum of understanding between Competitive Technologies, Inc. and GEOMC Co., Ltd. dated January 18, 2010, filed (on March 4, 2011) as Exhibit 10.3 to registrant's Current Report on Form 8-K dated March 4, 2011, and hereby incorporated by reference.
10.25	Distributor Appointment Agreement between Competitive Technologies, Inc. and GEOMC Co., Ltd. dated February 4, 2011 granting rights in Japan filed (on March 4, 2011) as Exhibit 10.4 to registrant's Current Report on Form 8-K dated March 4, 2011, and hereby incorporated by reference.

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10.27	Lease Agreement between Competitive Technologies, Inc. and 1375 Kings Highway LLC dated November 22, 2010, and filed (February 11, 2011) as Exhibit 10.1 to registrant's Current Report on Form 8-K dated February 11, 2011, and hereby incorporated by reference
10.28	Registration Rights Agreement dated December 2, 2010 and filed (December 14, 2010) as Exhibit 4.1 to registrant's Current Report on Form 8-K dated December 14, 2010, and hereby incorporated by reference
10.29	Preferred Stock Certification for Class C Convertible Preferred Stock issued December 30, 2011, and filed as Exhibit 4.1 to registrant's Quarterly Report on Form 10-Q for the period ended December 31, 2010 filed on February 20, 2011, and hereby incorporated by reference.
10.30	Settlement Agreement between Competitive Technologies, Inc. and Life Episteme srl (LEG) dated March 31, 2011 and filed (April 18, 2011) as Exhibit 10.2 to registrant's Current Report on Form 8-K dated April 18, 2011, and hereby incorporated by reference
10.31	Distribution Agreement between Competitive Technologies, Inc. and Life Episteme Italia dated March 31, 2011 and filed (April 18, 2011) as Exhibit 10.1 to registrant's Current Report on Form 8-K dated April 18, 2011, and hereby incorporated by reference
10.35	Amended, Restated and Extended Services and Representation Agreement among Competitive Technologies, Inc., Professor Giuseppe Marineo, and Delta Research & Development dated May 24, 2011 and effective April 1, 2011, and filed (May 31, 2011) as Exhibit 10.1 to registrant's Current Report on Form 8-K dated May 31, 2011, and hereby incorporated by reference.
10.36	2011 Employees' Directors' and Consultants' Stock Option Plan dated May 2, 2011, and filed as Exhibit 10.1 to registrant's Registration Statement on Form S-8 dated May 26, 2011, and hereby incorporated by reference.
10.37	Factoring Agreement between Competitive Technologies, Inc. and Versant Funding LLC Entered into on September 28, 2011 and Effective September 9, 2011, filed (October 3, 2011) as Exhibit 10.1 to registrant's Current Report on Form 8-K dated October 3, 2011, and hereby incorporated by reference.
10.38	Security Agreement between Competitive Technologies, Inc. and Versant Funding LLC Entered into on September 28, 2011 and Effective September 9, 2011, and filed (October 3, 2011) as Exhibit 10.2 to registrant's Current Report on Form 8-K dated October 3, 2011, and hereby incorporated by reference.
10.39	Settlement Agreement between Competitive Technologies, Inc. and John B. Nano dated January 24, 2012, and filed Exhibit 10.1 to registrant's Current Report on Form 8-K dated February 1, 2012, and hereby incorporated by reference.
10.40	Amended, Restated and Extended Services and Representation Agreement among Competitive Technologies, Inc., Professor Giuseppe Marineo, and Delta Research & Development dated July 3, 2012, and filed as Exhibit 10.1 to registrant's Current Report on Form 8-K dated July 6, 2012, and hereby incorporated by reference.

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10.41	Carl O’Connell Employment Agreement effective October 25, 2012, and filed as Exhibit 10.1 to registrant's Current Report on Form 8-K dated October 31. 2012, and hereby incorporated by reference.
10.42^	Factoring and Security Agreement with LSQ Funding, LLC effective September 18, 2012, and filed as Exhibit 10.1 to the registrant’s Annual Report on Form 10-K dated May 31, 2013, and hereby incorporated by reference.
10.43	Conrad Mir Employment Agreement, effective October 1, 2013.
21^	Subsidiary of registrant, and filed as Exhibit 21 to registrant’s Annual Report on Form 10-K dated April 16, 2012, and hereby incorporated by reference
31.1^	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
32.1^	Certification by the Chief Executive Officer and Chief Financial Officer of Competitive Technologies, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
101^	Interactive Data Files.

* Management Contract or Compensatory Plan

^ Filed herewith

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www.competitivetech.net

Page 64

EX-10.43

EMPLOYMENT SERVICES AGREEMENT

This Employment Services Agreement (the “Agreement”) is entered into as of the 1^st day of October 2013 by and between Competitive Technologies, Inc., a Delaware corporation, with a business address of 1375 Kings Highway East, Fairfield, CT 06824 (the “Company”), and Conrad Mir (“Executive”).

INTRODUCTION

WHEREAS, the Company desires to employ the Executive under the title and capacity set forth on Schedule A hereto and the Executive desires to be employed by the Company in such capacity, subject to the terms of this Agreement;

AGREEMENT

NOW, THEREFORE, in consideration of the premises and mutual promises herein below set forth, the parties hereby agree as follows:

1. Employment Period. The term of the Executive’s employment by the Company pursuant to this Agreement (the “Employment Period”) shall commence upon the date hereof (the “Effective Date”) and shall continue for that period of calendar months from the Effective Date set forth on Schedule A hereto. Thereafter, the Employment Period shall be renewed by mutual agreementunless either party shall have given to the other at least thirty (30) days’ prior written notice of their intention not to renew the Executive’s employment prior to the end of the Employment Period or the then applicable renewal term, as the case may be. In any event, the Employment Period may be terminated as provided herein.

2. Employment; Duties.

(a) General. Subject to the terms and conditions set forth herein, the Company shall employ the Executive to act for the Company during the Employment Period in the capacity set forth on Schedule A hereto, and the Executive hereby accepts such employment. The duties and responsibilities of the Executive shall include such duties and responsibilities appropriate to such office as the Company’s Board of Directors (the “Board”) may from time to time reasonably assign to the Executive, as initially specified on Schedule A attached hereto, with such authority and responsibilities, including Company-wide executive, administrative and finance functions as are normally associated with and appropriate for such position.

(b) Executive recognizes that during the period of Executive's employment hereunder, Executive owes an undivided duty of loyalty to the Company, and Executive will use Executive's good faith efforts to promote and develop the business of the Company and its subsidiaries (the Company’s subsidiaries from time to time, together with any other affiliates of the Company, the “Affiliates”). Executive shall devote all of Executive’s business time, attention and skills to the performance of Executive’s services as an executive of the Company. Recognizing and acknowledging that it is essential for the protection and enhancement of the name and business of the Company and the goodwill pertaining thereto, Executive shall perform the Executive’s duties under this Agreement professionally, in accordance with the applicable laws, rules and regulations and such standards, policies and procedures established by the Company and the industry from time to time.

(c) However, the parties agree that, subject to Board approval: (i) Executive may devote a reasonable amount of his time to civic, community, or charitable activities and may serve as a director of other corporations (provided that any such other corporation is not a competitor of the Company, as determined by the Board) and to other types of business or public activities not expressly mentioned in this paragraph and (ii) Executive may participate as a non-employee director and/or investor in other companies and projects as described by Executive to the Board, so long as Executive’s responsibilities with respect thereto do not conflict or interfere with the faithful performance of his duties to the Company.

(d) Place of Employment. The Executive’s services shall be performed at the Company’s offices located in 1375 Kings Highway East, Fairfield, Connecticut 06824, and any other locus where the Company now or hereafter has a business facility, and at any other location where Executive’s presence is necessary to perform his duties at his sole discretion. The parties acknowledge, however, that the Executive may be required to travel in connection with the performance of her duties hereunder.

3. Base Salary. The Executive shall be entitled to receive a salary from the Company during the Employment Period at a rate per year indicated on Schedule A hereto (the “Base Salary”). Once the Board has established the Base Salary, such Base Salary may be increased on each anniversary of the Effective Date, at the Board’s sole discretion.

4. Bonus. (a) The Company shall pay the Executive an annual bonus (the “Annual Bonus”), at such time as may be determined by the Board in its sole discretion in the amount specified in Schedule A hereto. The Board may or may not determine that all or any portion of the Annual Bonus shall be earned upon the achievement of operational, financial or other milestones (“Milestones”) established by the Board in consultation with the Executive and that all or any portion of any Annual Bonus shall be paid in cash, securities or other property. The Company may pay the Executive an additional bonus (the “Additional Bonus Incentives”), at such time and amount as specific in Schedule A hereto based on specified milestones (the “Additional Milestones”).

(b) The Executive shall be eligible to participate in any other bonus or incentive program established by the Company for executives of the Company.

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5. Other Benefits

(a) Stock Option Grant. The Executive shall be entitled to receive those stock options under the Company’s Equity Incentive Plan as specified in Schedule A hereto. Any additional option grants to the Executive shall be at the option of the Board.

(b) Insurance and Other Benefits. During the Employment Period, the Executive and the Executive’s dependents shall be entitled to participate in the Company’s insurance programs and any ERISA benefit plans, as the same may be adopted and/or amended from time to time (the “Benefits”). The Executive shall be entitled to paid personal days on a basis consistent with the Company’s other senior executives, as determined by the Board. The Executive shall be bound by all of the policies and procedures established by the Company from time to time. However, in case any of those policies conflict with the terms of this Agreement, the terms of this Agreement shall control.

(c) Vacation. During the Employment Period, the Executive shall be entitled to an annual vacation of at least that number of working days set forth on Schedule A hereto.

(d) Expense Reimbursement. The Company shall reimburse the Executive for all reasonable business, promotional, travel and entertainment expenses incurred or paid by the Executive during the Employment Period in the performance of Executive’s services under this Agreement, provided that the Executive furnishes to the Company appropriate documentation required by the Internal Revenue Code in a timely fashion in connection with such expenses and shall furnish such other documentation and accounting as the Company may from time to time reasonably request.

6. Termination; Compensation Due. The Executive's employment hereunder may terminate, and the Executive’s right to compensation for periods after the date the Executive’s employment with the Company terminates shall be determined, in accordance with the provisions of paragraphs (a) through (e) below:

(a) Voluntary Resignation; Termination without Cause.

(i) Voluntary Resignation. The Executive may terminate his employment at any time upon thirty (30) days prior written notice to the Company. In the event of the Executive’s voluntary termination of his employment other than for Good Reason (as defined below), the Company may be obligated to make payments to the Executive in accordance with the provisions of Sections 0 or 0 above, and as required by this Agreement or by applicable law.

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(ii) Termination without Cause. The Company may terminate the Executive’s employment with the Company at any time with or without cause, by delivery to the Executive of a written notice of termination from the Chairman of the Board of Directors of the Company.

(A)    If the Executive’s employment is terminated by the Company without Cause, the Company shall (x) continue to pay the Executive the Base Salary (at the rate in effect on the date the Executive’s employment is terminated) until the end of the Severance Period (as defined in Section 6(e) below), (y) with respect to the Annual Bonus, to the extent the Milestones are achieved, pay the Executive a pro rata portion of the Annual Bonus for the year of the Employment Period on the date such Annual Bonus would have been payable to the Executive had the Executive remained employed by the Company, and (z) pay any other accrued compensation and Benefits. The Executive shall not have any further rights under this Agreement or otherwise to receive any other compensation or benefits after such termination of employment.

(B)    If, following a termination of employment without Cause, the Executive breaches the provisions of Sections Error! Reference source not found., 8 or 9 hereof, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 6 (a)(ii), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease.

(b) Discharge for Cause. Upon written notice to the Executive, the Company may terminate the Executive’s employment for “Cause” if any of the following events shall occur:

(i) any act or omission that constitutes a material breach by the Executive of any of his obligations under this Agreement;

(ii) the willful and continued failure or refusal of the Executive to satisfactorily perform the duties reasonably required of him as an employee of the Company;

(iii) the Executive’s conviction of, or plea of nolo contendere to, (i) any felony or (ii) a crime involving dishonesty or moral turpitude or which could reflect negatively upon the Company or otherwise impair or impede its operations;

(iv) the Executive’s engaging in any misconduct, negligence, act of dishonesty (including, without limitation, theft or embezzlement), violence, threat of violence or any activity that could result in any violation of federal securities laws, in each case, that is injurious to the Company or any of its Affiliates;

(v) the Executive’s material breach of a written policy of the Company or the rules of any governmental or regulatory body applicable to the Company;

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(vi) the Executive’s refusal to follow the directions of the Board;

(vii) any other willful misconduct by the Executive which is materially injurious to the financial condition or business reputation of the Company or any of its Affiliates, or

(viii) the Executive’s breach of his obligations under Section 7, 8 or 9 of this Agreement.

In the event the Executive is terminated for Cause, the Company shall have no obligation to make payments to the Executive in accordance with the provisions of Sections 0 or 0 above, or, except as otherwise required by law, to provide the benefits described in Section 5 above, for periods after the Executive's employment with the Company is terminated on account of the Executive's discharge for Cause except for the then applicable Base Salary accrued through the date of such termination.

(c) Disability. The Company shall have the right, but shall not be obligated to terminate the Executive's employment hereunder in the event the Executive becomes disabled such that he is unable to discharge his duties to the Company for a period of ninety (90) consecutive days or one hundred twenty (120) days in any one hundred eighty (180) consecutive day period, provided longer periods are not required under applicable local labor regulations (a “Permanent Disability”). In the event of a termination of employment due to a Permanent Disability, the Company shall be obligated to continue to make payments to the Executive in an amount equal to the then applicable Base Salary for the Severance Period (as defined below) after the Executive’s employment with the Company is terminated due to a Permanent Disability. A determination of a Permanent Disability shall be made by a physician satisfactory to both the Executive and the Company; provided, however, that if the Executive and the Company do not agree on a physician, the Executive and the Company shall each select a physician and those two physicians together shall select a third physician, whose determination as to a Permanent Disability shall be binding on all parties.

(d) Death. The Executive's employment hereunder shall terminate upon the death of the Executive. The Company shall have no obligation to make payments to the Executive in accordance with the provisions of Sections 0 or 0 above, or, except as otherwise required by law or the terms of any applicable benefit plan, to provide the benefits described in Section 5 above, for periods after the date of the Executive's death except for then applicable Base Salary earned and accrued through the date of death, payable to the Executive or his successor.

(e) Termination for Good Reason. The Executive may terminate this Agreement at any time for Good Reason. In the event of termination under this Section 0(e), the Company shall pay to the Executive severance in an amount equal to the then applicable Base Salary for a period equal to the number of months set forth on Schedule A hereto (the “Severance Period”), subject to the Executive’s continued compliance with Sections 7, 8 and 9 of this Agreement for the applicable Severance Period following the Executive’s termination, and subject to the Company’s regular payroll practices and required withholdings. Such severance shall be reduced by any cash remuneration paid to the Executive because of the Executive’s employment or self-employment during the Severance Period. The Executive shall continue to receive all Benefits during the Severance Period. The Executive shall not have any further rights under this Agreement or otherwise to receive any other compensation or benefits after such resignation. For the purposes of this Agreement, “Good Reason” shall mean any of the following (without Executive’s express written consent):

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(i) the assignment to the Executive of duties that are significantly different from, and that result in a substantial diminution of, the duties that he assumed on the Effective Date;

(ii) removal of the Executive from his position as indicated on Schedule A hereto, or the assignment to the Executive of duties that are significantly different from, and that result in a substantial diminution of, the duties that he assumed under this Agreement, within twelve (12) months after a Change of Control (as defined below);

(iii) the taking of any action by the Company that would, directly or indirectly, materially reduce the Executive’s benefits, unless said reductions are pari passu with other senior executives of the Company; or

(iv) a breach by the Company of any material term of this Agreement that is not cured by the Company within 30 days following receipt by the Company of written notice thereof.

For purposes of this Agreement, “Change of Control” shall mean the occurrence of any one or more of the following: (i) the accumulation, whether directly, indirectly, beneficially or of record, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) of 50% or more of the shares of the outstanding equity securities of the Company, (ii) a merger or consolidation of the Company in which the Company does not survive as an independent company or upon the consummation of which the holders of the Company’s outstanding equity securities prior to such merger or consolidation own less than 50% of the outstanding equity securities of the Company after such merger or consolidation, or (iii) a sale of all or substantially all of the assets of the Company; provided, however, that the following acquisitions shall not constitute a Change of Control for the purposes of this Agreement: (A) any acquisitions of common stock or securities convertible into common stock directly from the Company, or (B) any acquisition of common stock or securities convertible into common stock by any employee benefit plan (or related trust) sponsored by or maintained by the Company.

(f)    Notice of Termination.    Any termination of employment by the Company or the Executive shall be communicated by a written “Notice of Termination” to the other party hereto given in accordance with Section 0 of this Agreement. In the event of a termination by the Company for Cause, the Notice of Termination shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) specify the date of termination, which date shall be the date of such notice. The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

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(g)    Resignation from Directorships and Officerships.    The termination of the Executive’s employment for any reason will constitute the Executive’s resignation from (i) any director, officer or employee position the Executive has with the Company or any of its Affiliates, and (ii) all fiduciary positions (including as a trustee) the Executive holds with respect to any employee benefit plans or trusts established by the Company. The Executive agrees that this Agreement shall serve as written notice of resignation in this circumstance, unless otherwise required by any plan or applicable law.

7. Inventions and Patents. The Executive acknowledges that all inventions, innovations, improvements, know-how, plans, development, methods, designs, analyses, specifications, software, drawings, reports and all similar or related information (whether or not patentable or reduced to practice) which related to any of the Company’s actual or proposed business activities and which are created, designed or conceived, developed or made by the Executive during the Executive’s past or future employment by the Company or any Affiliates, or any predecessor thereof (“Work Product”), belong to the Company, or its Affiliates, as applicable. Any copyrightable work falling within the definition of Work Product shall be deemed a “work made for hire” and ownership of all right title and interest shall rest in the Company. The Executive hereby irrevocably assigns, transfers and conveys, to the full extent permitted by law, all right, title and interest in the Work Product, on a worldwide basis, to the Company to the extent ownership of any such rights does not automatically vest in the Company under applicable law. The Executive will promptly disclose any such Work Product to the Company and perform all actions requested by the Company (whether during or after employment) to establish and confirm ownership of such Work Product by the Company (including without limitation, assignments, consents, powers of attorney and other instruments).

8. Confidentiality Covenants.

(a) The Executive understands that the Company and/or its Affiliates, from time to time, may impart to the Executive confidential information, whether such information is written, oral or graphic.

For purposes of this Agreement, “Confidential Information” means information, which is used in the business of the Company or its Affiliates and (i) is proprietary to, about or created by the Company or its Affiliates, (ii) gives the Company or its Affiliates some competitive business advantage or the opportunity of obtaining such advantage or the disclosure of which could be detrimental to the interests of the Company or its Affiliates, (iii) is designated as Confidential Information by the Company or its Affiliates, is known by the Executive to be considered confidential by the Company or its Affiliates, or from all the relevant circumstances should reasonably be assumed by the Executive to be confidential and proprietary to the Company or its Affiliates, or (iv) is not generally known by non-Company personnel. Such Confidential Information includes, without limitation, the following types of information and other information of a similar nature (whether or not reduced to writing or designated as confidential):

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(i) Internal personnel and financial information of the Company or its Affiliates, vendor information (including vendor characteristics, services, prices, lists and agreements), purchasing and internal cost information, internal service and operational manuals, and the manner and methods of conducting the business of the Company or its Affiliates;

(ii) Marketing and development plans, price and cost data, price and fee amounts, pricing and billing policies, bidding, quoting procedures, marketing techniques, forecasts and forecast assumptions and volumes, and future plans and potential strategies (including, without limitation, all information relating to any acquisition prospect and the identity of any key contact within the organization of any acquisition prospect) of the Company or its Affiliates which have been or are being discussed;

(iii) Names of customers and their representatives, contracts (including their contents and parties), customer services, and the type, quantity, specifications and content of products and services purchased, leased, licensed or received by customers of the Company or its Affiliates; and

(iv) Confidential and proprietary information provided to the Company or its Affiliates by any actual or potential customer, government agency or other third party (including businesses, consultants and other entities and individuals).

The Executive hereby acknowledges the Company’s exclusive ownership of such Confidential Information.

(b) The Executive agrees as follows: (1) only to use the Confidential Information to provide services to the Company and its Affiliates; (2) only to communicate the Confidential Information to fellow employees, agents and representatives on a need-to-know basis; and (3) not to otherwise disclose or use any Confidential Information, except as may be required by law or otherwise authorized by the Board. Upon demand by the Company or upon termination of the Executive’s employment, the Executive will deliver to the Company all manuals, photographs, recordings and any other instrument or device by which, through which or on which Confidential Information has been recorded and/or preserved, which are in the Executive’s possession, custody or control.

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9. Representation. The Executive hereby represents that the Executive’s entry into this Employment Agreement and performance of the services hereunder will not violate the terms or conditions of any other agreement to which the Executive is a party.

10. Arbitration. In the event of any breach arising from the performance of this Agreement, either party may request arbitration. In such event, the parties will submit to arbitration by a qualified arbitrator with the definition and laws of the State of New York. Such arbitration shall be final and binding on both parties.

11. Governing Law/Jurisdiction. This Agreement and any disputes or controversies arising hereunder shall be construed and enforced in accordance with and governed by the internal laws of the State of New York without regard to the conflicts of laws principles thereof.

12. Public Company Obligations. Executive acknowledges that the Company is a public company whose Common Stock has been registered under the US Securities Act of 1933, as amended (the “Securities Act”), and registered under the Exchange Act, and that this Agreement may be subject to the public filing requirements of the Exchange Act. Executive acknowledges and agrees that the applicable insider trading rules, transaction reporting rules, limitations on disclosure of non-public information and other requirements set forth in the Securities Act, the Exchange Act and rules and regulations promulgated by the SEC may apply to this Agreement and Executive’s employment with the Company. Executive (on behalf of himself, as well as the Executive’s executors, heirs, administrators and assigns), absolutely and unconditionally agrees to indemnify and hold harmless the Company and all of its past, present and future affiliates, executors, heirs, administrators, shareholders, employees, officers, directors, attorneys, accountants, agents, representatives, predecessors, successors and assigns from any and all claims, debts, demands, accounts, judgments, causes of action, equitable relief, damages, costs, charges, complaints, obligations, controversies, actions, suits, proceedings, expenses, responsibilities and liabilities of every kind and character whatsoever (including, but not limited to, reasonable attorneys’ fees and costs) in the event of Executive’s breach of any obligation of Executive under the Securities Act, the Exchange Act, any rules promulgated by the SEC and any other applicable federal, state or foreign laws, rules, regulations or orders.

13. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and thereof and supersedes and cancels (i) any and all previous agreements, written and oral, regarding the subject matter hereof between the parties hereto. This Agreement shall not be changed, altered, modified or amended, except by a written agreement signed by both parties hereto.

14. Notices. All notices, requests, demands and other communications called for or contemplated hereunder shall be in writing and shall be deemed to have been given when delivered to the party to whom addressed or when sent by telecopy (if promptly confirmed by registered or certified mail, return receipt requested, prepaid and addressed) to the parties, their successors in interest, or their assignees at the following addresses, or at such other addresses as the parties may designate by written notice in the manner aforesaid:

9

(a)	to the Company:
	Competitive Technologies, Inc.
	1375 Kings Highway East
	Fairfield, Connecticut 06824
	Phone:	(203) 368-6044
	Fax:	(203) 368-5399
	Attn:	Peter Brennan
		Chairman of the Board of Directors
	with a copy to:
	Szaferman, Lakind, Blumstein & Blader, P.C.
	101 Grovers Mill Road, Second Floor
	Lawrenceville, New Jersey 08648
	Attn:	Gregg Jaclin. Esq.
	Fax:	(609) 275-4511
(b)	to the Executive:
	Address listed on Schedule A attached hereto.

All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided for in this Section, be deemed given upon facsimile confirmation, (iii) if delivered by mail in the manner described above to the address as provided for in this Section, be deemed given on the earlier of the third business day following mailing or upon receipt and (iv) if delivered by overnight courier to the address as provided in this Section, be deemed given on the earlier of the first business day following the date sent by such overnight courier or upon receipt (in each case regardless of whether such notice, request or other communication is received by any other person to whom a copy of such notice is to be delivered pursuant to this Section). Either party may, by notice given to the other party in accordance with this Section, designate another address or person for receipt of notices hereunder.

15. Severability. If any term or provision of this Agreement, or the application thereof to any person or under any circumstance, shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such terms to the persons or under circumstances other than those as to which it is invalid or unenforceable, shall be considered severable and shall not be affected thereby, and each term of this Agreement shall be valid and enforceable to the fullest extent permitted by law. The invalid or unenforceable provisions shall, to the extent permitted by law, be deemed amended and given such interpretation as to achieve the economic intent of this Agreement.

10

16. Waiver. The failure of any party to insist in any one instance or more upon strict performance of any of the terms and conditions hereof, or to exercise any right or privilege herein conferred, shall not be construed as a waiver of such terms, conditions, rights or privileges, but same shall continue to remain in full force and effect. Any waiver by any party of any violation of, breach of or default under any provision of this Agreement by the other party shall not be construed as, or constitute, a continuing waiver of such provision, or waiver of any other violation of, breach of or default under any other provision of this Agreement.

17. Successors and Assigns. This Agreement shall be binding upon the Company and any successors and assigns of the Company. Neither this Agreement nor any right or obligation hereunder may be assigned by the Executive. The Company may assign this Agreement and its right and obligations hereunder, in whole or in part.

18. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

19. Headings. Headings in this Agreement are for reference purposes only and shall not be deemed to have any substantive effect.

20. Opportunity to Seek Advice. The Executive acknowledges and confirms that he has had the opportunity to seek such legal, financial and other advice and representation as he has deemed appropriate in connection with this Agreement, that the Executive is fully aware of its legal effect, and that Executive has entered into it freely based on the Executive’s judgment and not on any representations or promises other than those contained in this Agreement.

21. Withholding and Payroll Practices. All salary, severance payments, bonuses or benefits payments made by the Company under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law and shall be paid in the ordinary course pursuant to the Company’s then existing payroll practices.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

11

[The next page is the signature page]

12

EXECUTIVE:

/s/ Conrad Mir

Conrad Mir

COMPETITIVE TECHNOLOGIES, INC.

By:	/s/ Peter Brennan
Name: Peter Brennan
Title: Chairman of the Board of Directors

13

Schedule A 

1. Employment Period: Eighteen (18) calendar months, renewable by mutual agreement.

2. Employment:

a. Title: President and Chief Executive Officer

b. Executive Duties: Perform such services and duties as are normally and customarily associated with the positions of President and Chief Executive Officer as well as such other associated duties as the Company’s Board of Directors shall reasonably determine. Executive shall devote sufficient time, attention and energies during regular business hours to effectively perform his duties and obligations hereunder.

3. Base Salary: $270,000 per year.

4. Bonus: 100% of the Base Salary, payable semi-annually in Year-One and subject to mutually agreed upon Milestones. All years thereafter, bonus is paid in cash and on the year-end anniversary date.

5. Additional Bonus Incentives:

a. First 90 days: 10% of Base Salary upon achievement of fundraising for bridge capital of $1,000,000.

b. Second 90 days: 10% of Base Salary if all second quarter milestones are achieved.

c. Third 90 days: 30% of Base Salary if secondary funding for investment capital of $2,500,000 additionally is raised.

d. Fourth 90 days: 10% of the net proceeds to the Company of the sale of bone substitute technology and wound care.

6. Initial Stock Option Grant: 1,000,000 options that will vest over a five (5) year period and priced at the closing on the date of employment, and will be subject to the following leak-out provision:

a. Leak-out Provision: For a period of twenty four (24) months from October 1, 2013, Holder shall not sell, transfer, assign, convey, donate, pledge, encumber, alienate, or in any way dispose of (collectively "Sell") any of the Shares or any portion, right or interest therein, except in compliance with the terms and conditions of the Agreement. Any purported or attempted transfer or assignment, whether voluntary or involuntary, of any Shares of the Company in violation of this Agreement shall be null and of no legal effect. Upon registration of the underlying Shares or upon compliance with, preparation, filing and clearing of appropriate documents required under Rule 144, on the first date of each month thereafter until the date of termination of this Agreement, Holder shall be permitted to sell the greater of (i) 20,000 shares per day or (i) that number of shares calculated by the total of 5% of the prior days trading volume (i.e., if the prior days trading volume is 300,000 shares, then the Holder shall be entitled to sell 15,000 shares on that day). Holder acknowledges that no sales may occur at a posted bid price on the stock.

14

7. Vacation: Five (5) weeks.

8. Severance Period: Four (4) months, applicable upon completion of bridge financing or secondary funding; and after a year of employment

9. Executive Contact Information: Conrad Mir, 19 New Brier Lane, Clifton, NJ 07012

15

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER,

PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Conrad Mir, certify that:

1. I have reviewed this Annual Report on Form 10-K of Competitive Technologies, Inc.;

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

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

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

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

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Dated: April 14, 2014	By:	/s/ Conrad Mir
		Conrad Mir President, Chief Executive Officer and interim Chief Financial Officer (Duly Authorized Officer, Principal Executive Officer, and Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.SC. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Competitive Technologies, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Conrad Mir, chief executive officer of the Company, certifies, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:

(1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 14, 2014	By:	/s/ Conrad Mir
		Conrad Mir President, Chief Executive Officer and interim Chief Financial Officer (Duly Authorized Officer, Principal Executive Officer, and Principal Financial Officer and Principal Accounting Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. 

XML

INCOME TAXES (Reconciliation of Tax Rate) (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
INCOME TAXES [Abstract]
Provision (benefit) at U.S. federal statutory rate	(35.00%)	(35.00%)
State provision (benefit), net of U.S. federal tax	(4.90%)	(4.80%)
Permanent differences	(0.30%)	(0.20%)
Other items	5.00%	5.20%
Deferred tax valuation allowance	(35.20%)	(34.80%)
Effective income tax rate	0.00%	0.00%

XML

NOTES PAYABLE (Summary of Fair Value Assumptions) (Details)	1 Months Ended
	Dec. 31, 2013 Tonaquint 9% Original Issue Discount Convertible Notes and Warrants [Member] Warrant [Member]	Jul. 31, 2013 Tonaquint 9% Original Issue Discount Convertible Notes and Warrants [Member] Warrant [Member]	Dec. 31, 2013 Tonaquint 9% Original Issue Discount Convertible Notes and Warrants [Member] Derivative [Member]	Jul. 31, 2013 Tonaquint 9% Original Issue Discount Convertible Notes and Warrants [Member] Derivative [Member]	Nov. 15, 2013 Series A1 15% Original Issue Discount Convertible Notes and Warrants [Member] Warrant [Member]	Dec. 31, 2013 Series A2 15% Original Issue Discount Convertible Notes and Warrants [Member] Warrant [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Expected term	4 years 6 months 15 days	5 years	4 months 17 days	9 months 29 days	2 years	2 years
Volatility	139.93%	124.51%	230.46%	192.87%	180.02%	184.38%
Risk Free Rate	1.75%	1.38%	0.70%	0.10%	0.31%	0.39%

XML

FAIR VALUE MEASUREMEMENTS (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Warrant liability	$ 8,227
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	80,000	120,000
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	0	19,000
Warrant liability	$ 8,000	$ 26,000

XML

NOTES PAYABLE (Schedule of Note Allocation) (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013 Tonaquint 9% Original Issue Discount Convertible Notes and Warrants [Member]	Jul. 16, 2013 Tonaquint 9% Original Issue Discount Convertible Notes and Warrants [Member]	Dec. 31, 2013 Series A 15% Original Issue Discount Convertible Notes and Warrants [Member]	Jul. 16, 2013 Series A 15% Original Issue Discount Convertible Notes and Warrants [Member]
Proceeds allocated
Proceeds allocated, Note				$ 57,400		$ 120,313
Proceeds allocated, Warrants				26,076		76,429
Proceeds allocated, Benevicial Conversion Feature				19,024		44,358
Total	3,151,148		112,500	102,500	283,648	241,100
Value
Value, Note	2,488,691		87,705
Value, Warrant	8,227		8,227
Value, Embedded conversion option derivative liability
Total			$ 95,932

XML

PROPERTY AND EQUIPMENT, NET (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
PROPERTY AND EQUIPMENT, NET [Abstract]
Property and equipment, gross	$ 177,537	$ 189,633
Accumulated depreciation and amortization	(169,931)	(162,816)
Property and equipment, net	7,606	26,817
Loss on disposal of property and equipment		(4,818)
Depreciation and amortization expense	$ 11,147	$ 14,534

XML

NOTES PAYABLE (Tables)

12 Months Ended

Dec. 31, 2013

Accounts, Notes, Loans and Financing Receivable [Line Items]

Schedule of Notes Payable

Notes payable as of December 31, 2013 consists of the following:

	Principal Amount		Carrying Value			Cash Interest Rate			Common Stock Conversion Price		Maturity Date
90 day Convertible Notes (Chairman of the Board)	$	2,518,000	$	2,518,000			6	%	$	1.05	Various 2014
24 month Convertible Notes ($100,000 to Board member)		225,000		225,000			6	%		1.05	March 2014 - June 2014
Tonaquint 9% OID Convertible Notes and Warrants		112,500		87,705			7	%		0.30	May 2014
Southridge Convertible Note		12,000		12,000			None			75% of closing bid	June 2014
Series A1 15% OID Convertible Notes and Warrants		149,412		81,415			None			0.20	August 2014
Series A2 15% OID Convertible Notes and Warrants		134,236		69,571			None			0.25	September 2014
Notes Payable, gross	$	3,151,148		2,933,691
Less LPA amount				(505,000	)
Notes Payable, net			$	2,488,691

Schedule of 90 day Convertible Notes

The Company has issued 90-day notes payable to borrow funds from a director, now the chairman of our Board, as follows:

2013	$	1,208,000
2012		1,210,000
2011		100,000
Total	$	2,518,000

Tonaquint Original Issue Discount Convertible Notes And Warrants [Member]

Accounts, Notes, Loans and Financing Receivable [Line Items]

Schedule of Estimated Fair Value of Notes Assumptions

We estimated the fair value of each component on the issue date and the conversion date using a Black-Scholes pricing model with the following assumptions:

	Warrant - July 16, 2013			Warrant - December 31, 2013			Derivative - July 16, 2013			Derivative - December 31, 2013
Expected term		5 years			4.54 years			0.83 years			0.38 years
Volatility		124.51	%		139.93	%		192.87	%		230.46	%
Risk Free Rate		1.38	%		1.75	%		0.10	%		0.70	%

Schedule of Proceeds of Notes Allocation

The proceeds of the Note were allocated to the three components as follows:

	Proceeds allocated at issue date - July 16, 2013		Value at December 31, 2013
Tonaquint Note	$	57,400	$	87,705
Tonaquint Warrant	$	26,076	$	8,227
Embedded conversion option derivative liability	$	19,024	$	-
Total	$	102,500	$	95,932

Series A 15% Original Issue Discount Convertible Notes and Warrants [Member]

Accounts, Notes, Loans and Financing Receivable [Line Items]

Schedule of Estimated Fair Value of Notes Assumptions

We estimated the fair value of the warrants on the issue date using a Black-Scholes pricing model with the following assumptions:

	Warrants (Tranche 1)- November 15, 2013			Warrants (Tranche 2)- December 30, 2013
Expected term		2 years			2 years
Volatility		180.02	%		184.38	%
Risk Free Rate		0.31	%		0.39	%

Schedule of Proceeds of Notes Allocation

The proceeds of the Notes were allocated to the components as follows:

	Proceeds allocated at issue date
Private Offering Notes	$	120,313
Private Offering Warrants	$	76,429
Beneficial Conversion feature		44,358
Total	$	241,100

XML

STOCK-BASED COMPENSATION PLANS (Stock Option Plans) (Details) (USD $)	12 Months Ended										3 Months Ended			12 Months Ended				12 Months Ended			12 Months Ended				12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013 Stock Options [Member]	Dec. 31, 2012 Stock Options [Member]	Dec. 31, 2013 Stock Options [Member] Personnel and Consulting Expenses [Member]	Dec. 31, 2012 Stock Options [Member] Personnel and Consulting Expenses [Member]	Dec. 31, 2013 Stock Options [Member] General and Administrative Expense [Member]	Dec. 31, 2012 Stock Options [Member] General and Administrative Expense [Member]	Dec. 31, 2013 Stock Options [Member] Director [Member]	Dec. 31, 2013 Stock Options [Member] Chairman [Member]	Dec. 31, 2013 Stock Options [Member] CEO [Member]	Dec. 25, 2013 Stock Options [Member] CEO [Member]	Mar. 31, 2013 Stock Options [Member] CEO [Member]	Dec. 31, 2013 Stock Options [Member] Minimum [Member]	Dec. 31, 2013 Stock Options [Member] Maximum [Member]	Dec. 31, 2013 Stock Options [Member] 2011 Option Plan [Member]	Dec. 31, 2012 Stock Options [Member] 2011 Option Plan [Member]	Dec. 31, 2013 Stock Options [Member] 2011 Option Plan [Member] Minimum [Member]	Dec. 31, 2013 Stock Options [Member] 1997 Employee Stock Option Plan [Member]	Dec. 31, 2012 Stock Options [Member] 1997 Employee Stock Option Plan [Member]	Dec. 31, 2013 Stock Options [Member] 1997 Employee Stock Option Plan [Member] Minimum [Member]	Dec. 31, 2013 Stock Options [Member] 1997 Employee Stock Option Plan [Member] Maximum [Member]	Dec. 31, 2013 Stock Options [Member] 2000 Directors' Stock Option Plan [Member]	Dec. 31, 2012 Stock Options [Member] 2000 Directors' Stock Option Plan [Member]	Dec. 31, 2013 Stock Options [Member] 2000 Directors' Stock Option Plan [Member] Director [Member]	Dec. 31, 2013 Stock Options [Member] 2000 Directors' Stock Option Plan [Member] Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issuable when director is first elected																									10,000
Shares issuable to director on first business day of January																									10,000
Percentage of Fair Market Value																		100.00%			100.00%					100.00%
Options granted			2,055,000	70,000					50,000	5,000	1,000,000		1,000,000
Vesting period of stock options											4 years		4 years								3 years	4 years
Options vested									50,000	5,000	200,000		200,000
Options expired												200,000
Maximum life of stock options														5 years	10 years				10 years				10 years
Maximum shares available for grants																1,500,000
Common shares reserved for issuance on exercise of options																1,165,000	110,000		87,000	87,000			120,000	120,000
Shares available for future option grants																335,000	890,000
Fair value of shares vested			$ 116,365	$ 138,630	$ 84,550	$ 0
Stock option compensation expense	116,365	138,630					14,895	58,630
Incremental non-cash compensation			$ 16,920	$ 80,000

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2013

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires that we make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and disclosure of contingent assets and liabilities. Actual results could differ significantly from our estimates.

Revenue Recognition

Revenue Recognition

We earn revenue in two ways: retained royalties from licensing our clients' and our own technologies to our customer licensees, and sales of finished products. We record revenue when the terms of the sales arrangement are accepted by all parties including a fee that is fixed and determinable, delivery has occurred and our customer has taken title, and collectability is reasonably assured, net of sales tax.

Since 2011 the Company has taken greater control of the sales process. We are the primary obligor, responsible for delivering devices as well as for training our customers in the proper use of the device. We deal directly with customers, setting pricing and providing training; work directly with the inventor of the technology to develop specifications and any changes thereto and to select and contract with manufacturing partners; and retain significant credit risk for amounts billed to customers. Therefore, all product sales are recorded following a gross revenue methodology.

Revenue from foreign sources was not significant compared to total revenue in 2013 or 2012.

Retained royalties or distribution fees earned are of the following types:

Non-refundable, upfront license fee - We record our share of non-refundable, upfront license fees upon execution of a license, sublicense or distribution agreement. Once delivery is complete, and the fee is collected, we have no continuing obligation. No upfront fees were received during the years ended December 31, 2013 or 2012.

Royalty or per unit fees - The royalty or per unit rate is fixed in the license or distribution agreement, with the amount earned contingent upon our customer's usage of our technology or sale of our product. Some agreements may contain stipulated minimum monthly or annual fee payments to CTI. We determine the amount of revenue to record when we can estimate the amount earned for a period. We receive payment or royalty reports on a monthly, quarterly or semi-annual basis indicating usage or sales of licensed technologies or products to determine the revenue earned in the period. Revenue may fluctuate from one quarter to another based on receipt of reports from customers.

Royalty legal awards - We earn non-recurring revenues from royalty legal awards, principally from patent infringement actions filed on behalf of our clients and/or us. Patent infringement litigation cases generally occur when a customer or another party ignores our patent rights, or challenges the legal standing of our clients' or our technology rights. These cases, even if settled out of court, may take several years to complete, and the expenses may be borne by our clients, by us, or shared. We share royalty legal awards in accordance with the agreement we have with our clients, usually after reimbursing each party for their related legal expenses. We recognize royalty legal award revenue when our rights to litigation awards are final and unappealable and we have assurance of collecting those awards, or when we have collected litigation awards in cash from the adverse party, or by sale of our rights to another party without recourse, and we have no obligation or are very unlikely to be obligated to repay such collected amounts. Proceeds from cases settled out of court are recorded as retained royalties.

Legal awards in patent infringement cases usually include accrued interest through the date of payment, as determined by the court. The court awards interest for unpaid earned income. Interest may also be included in other settlements with customers. Interest included in an award or settlement is generally recorded as interest income when received.

Unless otherwise specified, we record all other revenue, as earned.

Concentration of Revenues

Concentration of Revenues

Total revenue consists of revenue from product sales, retained royalties, and other income. During the year ended December 31, 2013, we derived approximately $653,000 or 85% of total revenue from sales of our Calmare pain therapy medical device technology. An additional 4% of revenue derived indirectly from that technology through sales of supplies and training, rental payments and the sale of rental assets. Of this amount approximately $160,000 or 25% of total revenue from sales of our Calmare pain therapy medical device technology came from one customer in 2013.

During the year ended December 31, 2012, we derived approximately $913,000 or 85% of total revenue from sales of our Calmare pain therapy medical device technology. An additional 5% of revenue derived indirectly from that technology through sales of supplies and training, rental payments and the sale of rental assets. Of this amount approximately $120,000 or 13% of total revenue from sales of our Calmare pain therapy medical device technology came from one customer in 2012, and an additional $100,000 or 11% of total revenue from sales of our Calmare pain therapy medical device technology came from one other customer in 2012.

Expenses

Expenses

We recognize expenses related to evaluating, patenting and licensing inventions, and enforcing intellectual property rights in the period incurred.

Cost of product sales includes contractual payments to inventor and manufacturer relating to our Calmare pain therapy medical device. Expenses associated with shipping devices are also included in cost of product sales.

Selling expenses include commission expenses related to sales of inventory (Calmare devices) technologies, domestic and foreign patent legal filing, prosecution and maintenance expenses, net of reimbursements, royalty audits, and other direct costs

Personnel and consulting expenses include employee salaries and benefits, marketing and consulting expenses related to technologies and specific revenue initiatives, and other direct costs.

General and administrative expenses include directors' fees and expenses, public company related expenses, professional services, including financing, audit and legal services, rent and other general business and operating expenses.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company believes the carrying amounts of cash, accounts receivable, deferred revenue, preferred stock liability and note payable approximate fair value due to their short-term maturity.

Inventory

Inventory

Inventory consists of finished product of our pain therapy device. Inventory is stated at lower of cost (first in, first out) or market.

Property and Equipment

Property and Equipment

Property and equipment are carried at cost net of accumulated depreciation. Expenditures for normal maintenance and repair are charged to expense as incurred. The costs of depreciable assets are charged to operations on a straight-line basis over their estimated useful lives, three to five years for equipment, or the terms of the related lease for leasehold improvements. The cost and related accumulated depreciation or amortization of property and equipment are removed from the accounts upon retirement or other disposition, and any resulting gain or loss is reflected in earnings.

Impairment of Long-lived Assets

Impairment of Long-lived Assets

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the estimated fair value is less than the carrying amount of the asset, we record an impairment loss. If a quoted market price is available for the asset or a similar asset, we use it to determine estimated fair value. We re-evaluate the remaining useful life of the asset and adjust the useful life accordingly. There were no impairment indicators identified during the years ended December 31, 2013 and 2012.

Income Taxes

Income Taxes

Income taxes are accounted for under an asset and a liability approach that requires recognition of deferred income tax assets and liabilities for the expected future consequences of events that have been recognized in the Company's consolidated financial statements and income tax returns. The Company provides a valuation allowance for deferred income tax assets when it is considered more likely than not that all or a portion of such deferred income tax assets will not be realized.

Net Income (Loss) Per Share

Net Income (Loss) Per Share

We calculate basic net income (loss) per share based on the weighted average number of common shares outstanding during the period without giving any effect to potentially dilutive securities. Net income (loss) per share, assuming dilution, is calculated giving effect to all potentially dilutive securities outstanding during the period.

Share-Based Compensation

Share-Based Compensation

The Company accounts for its share-based compensation in accordance with the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") 718 - "Compensation - Stock Compensation." Accordingly, the Company recognizes compensation expense equal to the fair value of the stock awards at the time of the grant over the requisite service period.

Our accounting for share-based compensation has resulted in our recognizing non-cash compensation expense related to stock options granted to employees, which is included in personnel and consulting expenses, and stock options granted to our directors, which is included in general and administrative expenses.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

No new accounting pronouncements issued or effective during the year ended December 31, 2013 has had or is expected to have a material impact on the consolidated financial statements.

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LIABILITIES ASSIGNED TO LIABILITY PURCHASE AGREEMENT (Details) (USD $)				1 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Sep. 30, 2013 Liabilities Purchase Agreement [Member]	Sep. 30, 2013 Liabilities Purchase Agreement [Member] Common stock [Member]
Liabilities Assigned To Liability Purchase Agreement [Line Items]
Financial obligations to existing creditors			$ 2,100,000
Liabilities under claims purchase agreement	$ 2,093,303		$ 2,093,303
Common stock issued in accordance with liability purchase agreement, shares				1,618,235

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NET INCOME (LOSS) PER COMMON SHARE (Calculation of Net Income (Loss) Per Common Share) (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
NET INCOME (LOSS) PER COMMON SHARE [Abstract]
Denominator for basic net income (loss) per share, weighted average shares outstanding	16,977,027	15,007,852
Dilutive effect of common stock options
Dilutive effect of Series C convertible preferred stock and convertible debt
Denominator for net income (loss) per share, assuming dilution	16,977,027	15,007,852

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BUSINESS AND BASIS OF PRESENTATION (Details) (USD $)	Dec. 31, 2013
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Principal amount	$ 3,151,148
Carrying amount	2,933,691
Promissory Notes [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Principal amount	3,151,000
Carrying amount	$ 2,934,000
Vector Vision, Inc. [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Ownership percentage	56.10%

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NOTES PAYABLE (Schedule of Notes Payable) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Jul. 16, 2013
Composition of Notes Payable:
Principal Amount	$ 3,151,148
Notes Payable, gross	2,933,691
Less LPA amount	(505,000)
Notes Payable, net	2,488,691
90 day Convertible Notes (Chairman of the Board) [Member]
Composition of Notes Payable:
Principal Amount	2,518,000
Notes Payable, net	2,518,000
Cash Interest Rate	6.00%
Common Stock Conversion Price	$ 1.05
Matruity Date, narrative	Various 2014
24 month Convertible Notes ($100,000 to Board member) [Member]
Composition of Notes Payable:
Principal Amount	225,000
Notes Payable, net	225,000
Cash Interest Rate	6.00%
Common Stock Conversion Price	$ 1.05
Maturity Date, starting date	Mar. 31, 2014
Maturity Date, ending date	Jun. 30, 2014
Notes Payable (Parenthetical):
Due to Board Member	100,000
Tonaquint 9% OID Convertible Notes and Warrants [Member]
Composition of Notes Payable:
Principal Amount	112,500	102,500
Notes Payable, net	87,705
Cash Interest Rate	7.00%
Common Stock Conversion Price	$ 0.30
Maturity Date	May 31, 2014
Notes Payable (Parenthetical):
OID, yield percentage	9.00%
Southridge Convertible Note [Member]
Composition of Notes Payable:
Principal Amount	12,000
Notes Payable, net	12,000
Cash Interest Rate
Common Stock Conversion Price, narrative	75% of closing bid
Maturity Date	Jun. 30, 2014
Notes Payable (Parenthetical):
Debt conversion, Common Stock Conversion Price, percent of closing bid	75.00%
Series A1 15% OID Convertible Notes and Warrants [Member]
Composition of Notes Payable:
Principal Amount	149,412
Notes Payable, net	81,415
Cash Interest Rate
Common Stock Conversion Price	$ 0.20
Maturity Date	Aug. 31, 2014
Notes Payable (Parenthetical):
OID, yield percentage	15.00%
Series A2 15% OID Convertible Notes and Warrants [Member]
Composition of Notes Payable:
Principal Amount	134,236
Notes Payable, net	$ 69,571
Cash Interest Rate
Common Stock Conversion Price	$ 0.25
Maturity Date	Sep. 30, 2014
Notes Payable (Parenthetical):
OID, yield percentage	15.00%

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COMMITMENTS AND CONTINGENCIES (Future Minimum Rental Payments) (Details) (USD $)	Dec. 31, 2013
COMMITMENTS AND CONTINGENCIES [Abstract]
More than 5 years
3-5 years	13,076
1-3 years	153,279
Within 1 year	62,085
Total	$ 228,440

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AVAILABLE-FOR-SALE AND EQUITY SECURITIES (Details) (USD $)	Dec. 31, 2003 NTRU [Member]	Dec. 31, 2013 Security Innovation, Inc. [Member]	Dec. 31, 2012 Security Innovation, Inc. [Member]	Dec. 31, 2013 Xion Pharmaceutical Corporation [Member]	Dec. 31, 2012 Xion Pharmaceutical Corporation [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, fair value	$ 0
Number of shares held	3,129,509	223,317		60
Percentage of shares outstanding owned				30.00%

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INCOME TAXES

12 Months Ended

Dec. 31, 2013

INCOME TAXES [Abstract]

INCOME TAXES

3. INCOME TAXES

In current and prior years, we generated significant federal and state income and alternative minimum tax losses, and these net operating losses ("NOLs") were carried forward for income tax purposes to be used against future taxable income.

A reconciliation of our effective income tax rate compared to the U.S. federal statutory rate is as follows:

	Year ended December 31, 2013			Year ended December 31, 2012
Provision (benefit) at U.S. federal statutory rate		(35.0	)%		(35.0	)%
State provision (benefit), net of U.S. federal tax		(4.9	)		(4.8	)
Permanent differences		(0.3	)		(0.2	)
Other items		5.0			5.2
Deferred tax valuation allowance		(35.2	)		(34.8	)
Effective income tax rate		0.0	%		0.0	%

Net deferred tax assets consist of the following:

	December 31, 2013			December 31, 2012
Net federal and state operating loss carryforwards	$	15,748,253		$	14,785,650
Impairment of investments		531,470			531,470
Other, net		687,426			680,637
Deferred tax assets		16,967,149			15,997,757
Valuation allowance		(16,967,149	)		(15,997,757	)
Net deferred tax assets	$	-		$	-

At December 31, 2013, we had aggregate federal net operating loss carryforwards of approximately $39,371,000, which expire at various times through 2033. A majority of our federal NOLs can be used to reduce taxable income used in calculating our alternative minimum tax liability. We also have state net operating loss carryforwards of approximately $37,812,000 that expire at various times through 2033.

Approximately $4,196,000 of our NOL carryforward remaining at December 31, 2013 was derived from income tax deductions related to the exercise of stock options. The tax effect of these deductions will be credited against capital in excess of par value at the time they are utilized for book purposes, and not credited to income. We will never receive a benefit for these NOLs in our statement of operations.

Changes in the valuation allowance were as follows:

	Year ended December 31, 2013		Year ended December 31, 2012
Balance, beginning of year	$	15,997,757	$	14,651,435
Change in temporary differences		6,789		157,164
Change in net operating and capital losses		962,603		1,189,158
Balance, end of year	$	16,967,149	$	15,997,757

Our ability to derive future tax benefits from the net deferred tax assets is uncertain and therefore we continue to provide a full valuation allowance against the assets, reducing the carrying value to zero. We will reverse the valuation allowance if future financial results are sufficient to support a carrying value for the deferred tax assets.

At December 31, 2013 and December 31, 2012, we had no uncertain tax positions.

We include interest and penalties on the underpayment of income taxes in income tax expense.

We file income tax returns in the United States and Connecticut. The Internal Revenue Service has completed audits for the periods through the fiscal year ended July 31, 2005. Our open tax years for review are fiscal years ended July 31, 2010 through year ended December 31, 2013. The Company's returns filed with Connecticut are subject to audit as determined by the statute of limitations.

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COMMITMENTS AND CONTINGENCIES (Total Rental Expense) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
COMMITMENTS AND CONTINGENCIES [Abstract]
Minimum rental payments	$ 60,038	$ 84,242
Less: Sublease rentals	3,594	7,188
Net rent expense	56,444	77,054
Deferred rent charge	5,248
Total rent expense	$ 61,692	$ 77,054

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NET INCOME (LOSS) PER COMMON SHARE (Narrative) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Outstanding convertible debt	$ 2,934,000	$ 1,535,000
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share	1,372,000	317,000
Series C convertible preferred stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share	375	375

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PROPERTY AND EQUIPMENT, NET (Tables)

12 Months Ended

Dec. 31, 2013

PROPERTY AND EQUIPMENT, NET [Abstract]

Schedule of Property and Equipment, Net

Property and equipment, net, consist of the following:

	December 31, 2013			December 31, 2012
Property and equipment, gross	$	177,537		$	189,633
Accumulated depreciation and amortization		(169,931	)		(162,816	)
Property and equipment, net	$	7,606		$	26,817

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RECEIVABLES (Tables)

12 Months Ended

Dec. 31, 2013

RECEIVABLES [Abstract]

Schedule of Receivables

Receivables consist of the following:

	December 31, 2013		December 31, 2012
Calmare sales receivable	$	132,850	$	212,774
Royalties, net of allowance of $101,154 at December 31, 2013 and 2012		10,086		-
Other		394		3,591
Total	$	143,330	$	216,365

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NOTES PAYABLE (Narrative) (Details) (USD $)	12 Months Ended									12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013 90 day Convertible Notes [Member]	Dec. 31, 2013 24 month Convertible Notes [Member]	Dec. 31, 2013 24 month Convertible Notes [Member] Debt issuance, March 2012 [Member]	Dec. 31, 2013 24 month Convertible Notes [Member] Debt issuance, April 2012 [Member]	Dec. 31, 2013 24 month Convertible Notes [Member] Debt issuance, June 2012 [Member]	Dec. 31, 2013 Tonaquint 9% Original Issue Discount Convertible Notes and Warrants [Member]	Jul. 16, 2013 Tonaquint 9% Original Issue Discount Convertible Notes and Warrants [Member]	Dec. 31, 2013 Southridge [Member]	Dec. 31, 2013 Southridge [Member] Debt issuance, EPA [Member]	Dec. 31, 2013 Series A 15% Original Issue Discount Convertible Notes and Warrants [Member]	Jul. 16, 2013 Series A 15% Original Issue Discount Convertible Notes and Warrants [Member]	Dec. 31, 2013 Series A 15% Original Issue Discount Convertible Notes and Warrants [Member] Minimum [Member]	Dec. 31, 2013 Series A 15% Original Issue Discount Convertible Notes and Warrants [Member] Maximum [Member]
Short-term Debt [Line Items]
Note issuance date				Mar. 31, 2012	Mar. 31, 2012	Apr. 30, 2012	Jun. 30, 2012	Sep. 30, 2013				Dec. 31, 2013
Notes payable, term			90 days	24 months	24 months	24 months	24 months			6 months
Interest rate			6.00%	6.00%	6.00%	6.00%	6.00%	7.00%
Principal amount	$ 3,151,148		$ 2,518,000	$ 225,000				$ 112,500	$ 102,500	$ 12,000	$ 65,000	$ 283,648	$ 241,100
Conversion price			$ 1.05	$ 1.05	$ 1.05	$ 1.05	$ 1.05	$ 0.30						$ 0.20	$ 0.25
Notes payable, portion attributable to LPA	505,000
Proceeds from notes payable	1,549,100	1,700,200						100,000				241,100
Debt discount								10,000				42,548
Transaction expenses								2,500
Note maturity date								May 31, 2014		Jun. 30, 2014
Frequency of periodic payment								monthly
Debt payments, start date								Jan. 31, 2014
Value of common stock called by warrant								$ 112,500
Number of shares called by warrants												170,354
Exercise price of warrants								$ 0.35						$ 0.40	$ 0.60
Term of warrant								5 years				2 years
Debt conversion, shares issued											260,000
Debt conversion, Common Stock Conversion Price, percent of closing bid										75.00%

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SHAREHOLDERS' INTEREST (Details) (USD $)	12 Months Ended		12 Months Ended		0 Months Ended	12 Months Ended			0 Months Ended					12 Months Ended				12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013 5% Preferred stock [Member]	Dec. 31, 2012 5% Preferred stock [Member]	Dec. 30, 2010 Series C convertible preferred stock [Member]	Dec. 31, 2013 Series C convertible preferred stock [Member]	Dec. 31, 2012 Series C convertible preferred stock [Member]	Jun. 16, 2011 Series C convertible preferred stock [Member]	Dec. 15, 2010 Promissory note [Member]	Dec. 30, 2010 Promissory note [Member] Series C convertible preferred stock [Member]	Dec. 15, 2010 Southridge [Member] Series C convertible preferred stock [Member]	Jun. 16, 2011 William R. Waters, Ltd. of Canada [Member] Series C convertible preferred stock [Member]	Dec. 30, 2010 William R. Waters, Ltd. of Canada [Member] Series C convertible preferred stock [Member]	Dec. 31, 2013 Equity Purchase Agreement [Member] Southridge [Member]	Dec. 31, 2013 Equity Purchase Agreement [Member] Southridge [Member] Convertible promissory note [Member]	Dec. 31, 2013 Liabilities Purchase Agreement [Member] Southridge [Member]	Dec. 31, 2013 Liabilities Purchase Agreement [Member] Southridge [Member] Convertible note - LPA [Member]	Dec. 31, 2013 Equity and Liabilities Purchase Agreement [Member] Southridge [Member]
Stockholders Equity [Line Items]
Amount of stock to be purchased, value														$ 10,000,000
Term of agreement														2 years
Percentage of shares outstanding owned														9.99%
Principal Amount	3,151,148								400,000						65,000		12,000
Debt conversion, shares issued										400					260,000
Common stock issued in accordance with liability purchase agreement, shares																200,000
Common stock issued as part of equity purchase agreement and/or liability purchase agreement, shares																		250,000
Shares issued, price per share																$ 0.35		$ 0.35
Common stock issued in accordance with liability purchase agreement																70,000
Common stock issued as part of equity purchase agreement and/or liability purchase agreement	222,500																	87,500
Common stock issued in accordance with escrow agreement, shares	1,000,000
Percentage of cumulative dividend rate			5.00%								5.00%
Preferential non-cumulative dividends (in dollars per share)			$ 1.25
Preferred stock redemption period			30 days
Preferred stock redemption price (in dollars per share)			$ 25
Preferred stock liquidation preference price (in dollars per share)			$ 25
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Dividend declared, date of record			Dec. 02, 2010
Trigger for issuance of dividends, percentage of outstanding common shares purchased			20.00%
Maturity date									Dec. 31, 2012
Interest rate									5.00%
Preferred stock, shares authorized			35,920	35,920		750	750				750
Preferred stock, par value (in dollars per shares)			$ 25	$ 25		$ 1,000	$ 1,000				$ 1,000
Preferred stock, shares issued			2,427	2,427	350	375	375						750
Proceeds from preferred stock issued					350,000
Preferred stock converted												375
Common stock issued upon preferred stock conversion												315,126
Dividends declared						65,700
Dividends declared during year						18,750
Dividends declared and unpaid						46,952
Preferred stock, voting rights						Holders of these shares of Series C Convertible Preferred Stock shall have voting rights equivalent to 1,000 votes per $1,000 par value Series C Convertible Preferred share voted together with the shares of Common Stock
Amount held in escrow						750,000
Preferred stock, threshold percentage of stock price trigger						85.00%
Derivative liability						$ 80,408	$ 119,926	$ 81,933
Preferred stock, shares outstanding (in shares)			2,427	2,427		375	375

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AVAILABLE-FOR-SALE AND EQUITY SECURITIES (Tables)

12 Months Ended

Dec. 31, 2013

AVAILABLE-FOR-SALE AND EQUITY SECURITIES [Abstract]

Schedule of Available-for-Sale Securities

	December 31, 2013		December 31, 2012		Number of shares		Type
Security Innovation, Inc.		-		-		223,317	Common stock
Xion Pharmaceutical Corporation		-		-		60	Common stock

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PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables)

12 Months Ended

Dec. 31, 2013

PREPAID EXPENSES AND OTHER CURRENT ASSETS [Abstract]

Schedule of Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:

	December 31, 2013		December 31, 2012
Prepaid insurance	$	16,802	$	17,473
Prepaid legal fees		-		46,813
Other		48,365		14,441
Prepaid expenses and other current assets	$	65,167	$	78,727

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2013

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires that we make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and disclosure of contingent assets and liabilities. Actual results could differ significantly from our estimates.

Revenue Recognition

We earn revenue in two ways: retained royalties from licensing our clients' and our own technologies to our customer licensees, and sales of finished products. We record revenue when the terms of the sales arrangement are accepted by all parties including a fee that is fixed and determinable, delivery has occurred and our customer has taken title, and collectability is reasonably assured, net of sales tax.

Since 2011 the Company has taken greater control of the sales process. We are the primary obligor, responsible for delivering devices as well as for training our customers in the proper use of the device. We deal directly with customers, setting pricing and providing training; work directly with the inventor of the technology to develop specifications and any changes thereto and to select and contract with manufacturing partners; and retain significant credit risk for amounts billed to customers. Therefore, all product sales are recorded following a gross revenue methodology.

Revenue from foreign sources was not significant compared to total revenue in 2013 or 2012.

Retained royalties or distribution fees earned are of the following types:

Non-refundable, upfront license fee - We record our share of non-refundable, upfront license fees upon execution of a license, sublicense or distribution agreement. Once delivery is complete, and the fee is collected, we have no continuing obligation. No upfront fees were received during the years ended December 31, 2013 or 2012.

Royalty or per unit fees - The royalty or per unit rate is fixed in the license or distribution agreement, with the amount earned contingent upon our customer's usage of our technology or sale of our product. Some agreements may contain stipulated minimum monthly or annual fee payments to CTI. We determine the amount of revenue to record when we can estimate the amount earned for a period. We receive payment or royalty reports on a monthly, quarterly or semi-annual basis indicating usage or sales of licensed technologies or products to determine the revenue earned in the period. Revenue may fluctuate from one quarter to another based on receipt of reports from customers.

Royalty legal awards - We earn non-recurring revenues from royalty legal awards, principally from patent infringement actions filed on behalf of our clients and/or us. Patent infringement litigation cases generally occur when a customer or another party ignores our patent rights, or challenges the legal standing of our clients' or our technology rights. These cases, even if settled out of court, may take several years to complete, and the expenses may be borne by our clients, by us, or shared. We share royalty legal awards in accordance with the agreement we have with our clients, usually after reimbursing each party for their related legal expenses. We recognize royalty legal award revenue when our rights to litigation awards are final and unappealable and we have assurance of collecting those awards, or when we have collected litigation awards in cash from the adverse party, or by sale of our rights to another party without recourse, and we have no obligation or are very unlikely to be obligated to repay such collected amounts. Proceeds from cases settled out of court are recorded as retained royalties.

Legal awards in patent infringement cases usually include accrued interest through the date of payment, as determined by the court. The court awards interest for unpaid earned income. Interest may also be included in other settlements with customers. Interest included in an award or settlement is generally recorded as interest income when received.

Unless otherwise specified, we record all other revenue, as earned.

Concentration of Revenues

Total revenue consists of revenue from product sales, retained royalties, and other income. During the year ended December 31, 2013, we derived approximately $653,000 or 85% of total revenue from sales of our Calmare pain therapy medical device technology. An additional 4% of revenue derived indirectly from that technology through sales of supplies and training, rental payments and the sale of rental assets. Of this amount approximately $160,000 or 25% of total revenue from sales of our Calmare pain therapy medical device technology came from one customer in 2013.

During the year ended December 31, 2012, we derived approximately $913,000 or 85% of total revenue from sales of our Calmare pain therapy medical device technology. An additional 5% of revenue derived indirectly from that technology through sales of supplies and training, rental payments and the sale of rental assets. Of this amount approximately $120,000 or 13% of total revenue from sales of our Calmare pain therapy medical device technology came from one customer in 2012, and an additional $100,000 or 11% of total revenue from sales of our Calmare pain therapy medical device technology came from one other customer in 2012.

Expenses

We recognize expenses related to evaluating, patenting and licensing inventions, and enforcing intellectual property rights in the period incurred.

Cost of product sales includes contractual payments to inventor and manufacturer relating to our Calmare pain therapy medical device. Expenses associated with shipping devices are also included in cost of product sales.

Selling expenses include commission expenses related to sales of inventory (Calmare devices) technologies, domestic and foreign patent legal filing, prosecution and maintenance expenses, net of reimbursements, royalty audits, and other direct costs

Personnel and consulting expenses include employee salaries and benefits, marketing and consulting expenses related to technologies and specific revenue initiatives, and other direct costs.

General and administrative expenses include directors' fees and expenses, public company related expenses, professional services, including financing, audit and legal services, rent and other general business and operating expenses.

Fair Value of Financial Instruments

The Company believes the carrying amounts of cash, accounts receivable, deferred revenue, preferred stock liability and note payable approximate fair value due to their short-term maturity.

Inventory

Inventory consists of finished product of our pain therapy device. Inventory is stated at lower of cost (first in, first out) or market.

Property and Equipment

Property and equipment are carried at cost net of accumulated depreciation. Expenditures for normal maintenance and repair are charged to expense as incurred. The costs of depreciable assets are charged to operations on a straight-line basis over their estimated useful lives, three to five years for equipment, or the terms of the related lease for leasehold improvements. The cost and related accumulated depreciation or amortization of property and equipment are removed from the accounts upon retirement or other disposition, and any resulting gain or loss is reflected in earnings.

Impairment of Long-lived Assets

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the estimated fair value is less than the carrying amount of the asset, we record an impairment loss. If a quoted market price is available for the asset or a similar asset, we use it to determine estimated fair value. We re-evaluate the remaining useful life of the asset and adjust the useful life accordingly. There were no impairment indicators identified during the years ended December 31, 2013 and 2012.

Income Taxes

Income taxes are accounted for under an asset and a liability approach that requires recognition of deferred income tax assets and liabilities for the expected future consequences of events that have been recognized in the Company's consolidated financial statements and income tax returns. The Company provides a valuation allowance for deferred income tax assets when it is considered more likely than not that all or a portion of such deferred income tax assets will not be realized.

Net Income (Loss) Per Share

We calculate basic net income (loss) per share based on the weighted average number of common shares outstanding during the period without giving any effect to potentially dilutive securities. Net income (loss) per share, assuming dilution, is calculated giving effect to all potentially dilutive securities outstanding during the period.

Share-Based Compensation

The Company accounts for its share-based compensation in accordance with the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") 718 - "Compensation - Stock Compensation." Accordingly, the Company recognizes compensation expense equal to the fair value of the stock awards at the time of the grant over the requisite service period.

Our accounting for share-based compensation has resulted in our recognizing non-cash compensation expense related to stock options granted to employees, which is included in personnel and consulting expenses, and stock options granted to our directors, which is included in general and administrative expenses.

Recent Accounting Pronouncements

No new accounting pronouncements issued or effective during the year ended December 31, 2013 has had or is expected to have a material impact on the consolidated financial statements.

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ACCRUED EXPENSES AND OTHER LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2013

ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]

Schedule of Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consist of the following:

	December 31, 2013		December 31, 2012
Royalties payable	$	127,708	$	182,052
Accrued audit fee		82,141		80,000
Over advance, fees LSQ Funding		-		77,464
Commissions payable		21,975		48,722
Accrued interest payable		216,518		85,184
Accrued consulting fees		2,000		167,726
Other		132,645		132,216
Accrued expenses and other liabilities, net	$	582,987	$	773,364

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INCOME TAXES (Net Deferred Tax Assets) (Details) (USD $)				12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Federal [Member]	Dec. 31, 2013 State [Member]
Net deferred tax assets:
Net federal and state operating loss carryforwards	$ 15,748,253	$ 14,785,650
Impairment of investments	531,470	531,470
Other, net	687,426	680,637
Deferred tax assets	16,967,149	15,997,757
Valuation allowance	(16,967,149)	(15,997,757)	(14,651,435)
Net deferred tax assets
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards				39,371,000	37,812,000
Net operating loss carryforwards, expiration date				Dec. 31, 2033	Dec. 31, 2033
Net operating loss carryforwards from exercise of stock options	$ 4,196,000

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NOTES PAYABLE (Summary of Issuances of Notes Payable) (Details) (90 day Convertible Notes (Chairman of the Board) [Member], USD $)	12 Months Ended			36 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013
90 day Convertible Notes (Chairman of the Board) [Member]
Short-term Debt [Line Items]
Notes Payable, amount borrowed during period	$ 1,208,000	$ 1,210,000	$ 100,000	$ 2,518,000

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Consolidated Balance Sheets (USD $)	Dec. 31, 2013	Dec. 31, 2012
Current Assets:
Cash	$ 57,009	$ 74,322
Receivables, net of allowance of $101,154 at December 31, 2013 and 2012	143,330	216,365
Inventory	4,278,220	4,360,156
Prepaid expenses and other current assets	65,167	78,727
Total current assets	4,543,726	4,729,570
Security Deposits	15,000	15,000
Property and equipment, net	7,606	26,817
TOTAL ASSETS	4,566,332	4,771,387
Current Liabilities:
Accounts payable	692,251	1,806,346
Liabilities under claims purchase agreement	2,093,303
Accounts payable, GEOMC	4,183,535	4,181,225
Accrued expenses and other liabilities	582,987	773,364
Deferred revenue	6,400	9,600
Notes payable	2,488,691	1,310,000
Warrant liability	8,227
Series C convertible preferred stock liability	375,000	375,000
Series C convertible preferred stock derivative liability	80,408	119,922
Total current liabilities	10,510,802	8,575,457
Long term notes payable		225,000
Commitments and contingencies
Shareholders' deficit:
Preferred stock	60,675	60,675
Common stock, $.01 par value, 40,000,000 shares authorized, 19,952,907 shares issued and outstanding at December 31, 2013 and 15,237,304 shares issued and outstanding at December 31, 2012	199,529	152,373
Capital in excess of par value	46,077,394	45,367,796
Accumulated deficit	(52,282,068)	(49,609,914)
Total shareholders' deficit	(5,944,470)	(4,029,070)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	4,566,332	4,771,387
Series B Preferred Stock [Member]
Shareholders' deficit:
Preferred stock	60,675	60,675
Series C convertible preferred stock [Member]
Shareholders' deficit:
Preferred stock
5% Preferred stock [Member]
Shareholders' deficit:
Preferred stock

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RECEIVABLES (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
RECEIVABLES [Abstract]
Calmare sales receivable	$ 132,850	$ 212,774
Royalties, net of allowance of $101,154 at December 31, 2013 and 2012	10,086
Other	394	3,591
Total receivables	143,330	216,365
Receivables, net of allowance	$ 101,154	$ 101,154

XML

Consolidated Statements of Cash Flows (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities:
Net loss	$ (2,672,154)	$ (3,004,097)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	11,147	14,534
Stock option compensation expense	116,365	138,630
Share-based compensation - common stock	7,655
Stock based expense for legal and consulting services		35,000
Accrued stock contribution (directors' stock expense)		17,154
Loss on disposal of property and equipment		4,818
Bad debt expense	8,588
Unrealized (gain) loss on derivative instrument	(58,538)	53,745
Debt discount amortization	63,480
Noncash finance charges	216,650
Changes in assets and liabilities:
Restricted cash		750,000
Receivables	64,447	(173,894)
Prepaid expenses and other current assets	276,560	38,354
Inventory	90,000	(150,000)
Accounts payable, accrued expenses and other liabilities	307,341	907,517
Deferred revenue	(3,200)	(3,200)
Net cash used in operating activities	(1,566,413)	(1,371,438)
Cash flows from investing activities:
Purchases of property and equipment		(20,000)
Decrease in security deposits		2,275
Net cash used in investing activities		(17,725)
Cash flows from financing activities:
Proceeds from issuance of notes payable	1,549,100	1,700,200
Principal payments of note payable		(265,200)
Net cash provided by financing activities	1,549,100	1,435,000
Net increase in cash	17,313	45,837
Cash at beginning of period	74,322	28,485
Cash at end of period	57,009	74,322
Supplemental Cash Flow Information:
Cash Paid for interest	$ 15,304	$ 4,907

XML

STOCK-BASED COMPENSATION PLANS (Summary of Stock Option Activity) (Details) (Common Stock Options [Member], USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Common Stock Options [Member]
Shares
Outstanding at beginning of period	317,000	313,000
Granted	2,055,000	70,000
Forfeited	(1,000,000)	(66,000)
Exercised
Expired or terminated
Outstanding at end of year	1,372,000	317,000
Vested at end of year	572,000	317,000
Nonvested at end of year	800,000
Weighted Average Exercise Price
Outstanding at beginning of period	$ 1.85	$ 2.11
Granted	$ 0.29	$ 1.24
Forfeited	$ 0.50	$ 2.44
Exercised
Expired or terminated
Outstanding at end of year	$ 0.50	$ 1.85
Vested at end of year	$ 1.10	$ 1.85
Nonvested at end of year	$ 0.08
Weighted average fair value per share of options issued during the year	$ 0.21	$ 1.18
Aggregate Intrinsic Values
Outstanding at end of year	$ 240,750
Vested at end of year	48,750
Nonvested at end of year	$ 192,000

XML

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2013

COMMITMENTS AND CONTINGENCIES [Abstract]

Schedule of Future Minimum Rental Payments

Future minimum rental payments required under operating leases with remaining non-cancelable lease terms as of December 31, 2013 are as follows:

More than 5 years	$	-
3-5 years		13,076
1-3 years		153,279
Within 1 year		62,085
Total	$	228,440

Schedule of Total Rental Expenses

Total rental expense for all operating leases was:

	Year ended December 31, 2013		Year ended December 31, 2012
Minimum rental payments	$	60,038	$	84,242
Less: Sublease rentals		3,594		7,188
Net rent expense		56,444		77,054
Deferred rent charge		5,248		-
	$	61,692	$	77,054

XML

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2013

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

16. COMMITMENTS AND CONTINGENCIES

Operating Leases -

Future minimum rental payments required under operating leases with remaining non-cancelable lease terms as of December 31, 2013 are as follows:

More than 5 years	$	-
3-5 years		13,076
1-3 years		153,279
Within 1 year		62,085
Total	$	228,440

Total rental expense for all operating leases was:

	Year ended December 31, 2013		Year ended December 31, 2012
Minimum rental payments	$	60,038	$	84,242
Less: Sublease rentals		3,594		7,188
Net rent expense		56,444		77,054
Deferred rent charge		5,248		-
	$	61,692	$	77,054

Contingencies - Revenue based

As of December 31, 2013, CTI and its majority owned subsidiary, VVI, have remaining obligations, contingent upon receipt of certain revenues, to repay up to $165,788 and $199,334, respectively, in consideration of grant funding received in 1994 and 1995. CTI also is obligated to pay at the rate of 7.5% of its revenues, if any, from transferring rights to certain inventions supported by the grant funds. VVI is obligated to pay at rates of 1.5% of its net sales of supported products or 15% of its revenues from licensing supported products, if any. We recognize these obligations only if we receive revenues related to the grant funds. We recognized approximately $1,577 in the year ended December 31, 2013 and $1,749 in the year ended December 31, 2012.

We have engaged R.F. Lafferty & Co. to seek an acquisition partner from a limited number of companies for our nano particle bone biomaterial patents, among other assets and/or securities.  The Company would pay Lafferty a 10% finder's fee in the event an acquisition partner is found, which Management has deemed to be an immaterial and contingent obligation.

Contingencies - Litigation

Carolina Liquid Chemistries Corporation, et al. (case pending) - On August 29, 2005, we filed a complaint against Carolina Liquid Chemistries Corporation ("Carolina Liquid") in the United States District Court for the District of Colorado, alleging patent infringement of our patent covering homocysteine assays, and seeking monetary damages, punitive damages, attorneys' fees, court costs and other remuneration at the option of the court. As we became aware of other infringers, we amended our complaint to add as defendants Catch, Inc. ("Catch") and the Diazyme Laboratories Division of General Atomics ("Diazyme"). On September 6, 2006, Diazyme filed for declaratory judgment in the Southern District of California for a change in venue and a declaration of non-infringement and invalidity. On September 12, 2006, the District Court in Colorado ruled that both Catch and Diazyme be added as defendants to the Carolina Liquid case.

On October 23, 2006, Diazyme requested the United States Patent and Trademark Office (the "USPTO") to re-evaluate the validity of our patent and this request was granted by the USPTO on December 14, 2006. On July 30, 2009, the U.S. Patent and Trademark Office's Board of Patent Appeals and Interferences ("BPAI") upheld the homocysteine patent. In September 2008, the examiner had denied the patent, but that denial was overruled by the BPAI. While the examiner had appealed that BPAI decision, delaying further action, that appeal was also denied by the BPAI on December 13, 2010. In June 2011, the examiner once again appealed the BPAI decision. In addition to responding to this new appeal, the Company petitioned the Director of the USPTO to help expedite further action on the case within the USPTO, which was to have been handled with special dispatch according to USPTO requirements for handling reexamination proceedings of patents involved in litigation.

On March 13, 2012, the USPTO issued the Ex Parte Reexamination Certificate confirming the patentability of claims examined. The company has begun collecting unpaid amounts from various obligated companies.

Employment matters - former employee (case pending) - In September 2003, a former employee filed a whistleblower complaint with the Occupational Safety and Health Administration of the Department of Labor (OSHA) alleging that the employee had been terminated for engaging in conduct protected under the Sarbanes Oxley Act of 2002 (SOX). In February 2005, OSHA found probable cause to support the employee's complaint and the Secretary of Labor ordered reinstatement and back wages since the date of termination and CTCC requested de novo review and a hearing before an administrative law judge ("ALJ"). In July 2005, after the close of the hearing on CTI's appeal, the U.S. district court for Connecticut enforced the Secretary's preliminary order of reinstatement and back pay under threat of contempt and the Company rehired the employee with back pay.

On October 5, 2005, the ALJ who conducted the hearing on CTI's appeal of the OSHA findings ruled in CTI's favor and recommended dismissal of the employee's complaint. Although the employee abandoned his position upon notice of the ALJ's decision, he nevertheless filed a request for review by the DOL Administrative Review Board ("ARB").

In May 2006, the U.S. Court of Appeals for the Second Circuit vacated the order of the district court enforcing the Secretary's preliminary order of reinstatement and back pay. The employee also filed a new SOX retaliation complaint with OSHA based on alleged black listing action by CTI following his termination. OSHA dismissed the complaint and the employee filed a request for a hearing by an administrative law judge. Ultimately, the employee voluntarily dismissed the appeal.

In March 2008, the ARB issued an order of remand in the employee's appeal of the October 2005 dismissal of his termination complaint, directing the ALJ to clarify her analysis utilizing the burden-shifting standard articulated by the ARB. In January 2009, the ALJ issued a revised decision again recommending dismissal and once again the employee appealed the ruling to the ARB. On September 30, 2011, the ARB issued a final decision and order affirming the ALJ's decision on remand and dismissing the employee's complaint. The employee has appealed the ARB's decision before the U.S. Court of Appeals for the Second Circuit which has ordered the employee to file his opening brief by May 31, 2012. Response briefs by the Solicitor's Office of the U.S. Department of Labor and CTI were submitted in August 2012. In March 2013, the U.S Court of Appeals for the Second Circuit upheld the ARB's decision dismissing the former employee's complaint and denied the employee's appeal from that order. In April 2013, the Second Circuit terminated proceedings in that court.

John B. Nano vs. Competitive Technologies, Inc. - Arbitration (case completed ) - On September 3, 2010, the Board of Directors of CTI found cause consisting of violation of fiduciary duties to the Corporation and violation of the CTI Corporate Code of Conduct and removed John B. Nano as an Officer of the Corporation, in all capacities. On September 13, 2010, the Board of Directors also found cause consisting of violation of fiduciary duties to the Corporation and violation of the CTI Corporate Code of Conduct removed John B. Nano as a Director of the Corporation, in all capacities, for cause, consisting of violation of his fiduciary duties. Details of these actions are outlined in Form 8-K filings with the SEC on September 13, 2010, and September 17, 2010. Mr. Nano was previously the Chairman of the Board of Directors, President and Chief Executive Officer of CTI.

On September 13, 2010, Mr. Nano brought an arbitration claim to the American Arbitration Association against CTI. Mr. Nano's employment contract with the Company had called for arbitration, which Mr. Nano had demanded to resolve this conflict. Mr. Nano sought $750,000 that he claimed was owed under his contract and claimed that he had been terminated without cause.

On September 23, 2010 the Company was served notice that John B. Nano, CTI's former Chairman, President and CEO had filed a Notice of Application for Prejudgment Remedy/Claim of $750,000 and an Application for an Order Pendente Lite claiming we had breached Mr. Nano's employment contract with us. The applications were filed in the State of Connecticut Superior Court in Bridgeport, CT. In November 2010, the Company funded $750,000 as a Prejudgment Remedy held in escrow with the Company's counsel and has included this amount as restricted cash on the December 31, 2011 and December 31, 2010 balance sheets. The Company did not believe it was liable to the former Chairman, President and CEO, believing he was terminated for cause. The case proceeded through the arbitration process. The initial arbitration hearing began in April 2011; additional hearing dates were held in May and June 2011.  In July 2011, each party submitted a summary limited in length stating their positions.

Prior to the conclusion of the arbitration hearings, the Company filed suit in Federal Court against the American Arbitration Association. The Company requested a temporary restraining order to halt the arbitration, which was denied by the court. The Company also requested a hearing before the court to review the arbitration proceedings. In August 2011, the American Arbitration Association's assigned arbitrator gave award to the Company's former Chairman, President and CEO, despite the Company's strongly held belief that the Board of Directors properly exercised its reasonable discretion under the employment agreement in finding that the former executive engaged in willful misconduct and gross negligence and that the executive's actions were cause for employment termination under the employment agreement and governing law. The former executive had requested a payment of $750,000, which he believed was due under his employment agreement. Following the notification of award, the former employee filed a motion with the State of Connecticut Superior Court in Bridgeport, CT to have the award confirmed. CTI followed with a motion to vacate the award. A hearing on those two motions was held before a judge in October 2011.

In January 2012, the judge denied the Company's motion to vacate the arbitration award in favor of its former CEO John B. Nano and granted Mr. Nano's application to confirm the award. Following the decision, CTI settled all disputes with its former Chairman and CEO John B. Nano. Pursuant to the settlement, CTI has released to Mr. Nano from escrow the $750,000 deposited by CTI following Mr. Nano's application for a prejudgment remedy. CTI paid an additional $25,000 as settlement of additional amounts of statutory interest. These amounts ($775,000) had been accrued at December 31, 2011. The settlement includes mutual general releases of any and all claims either party has or had against the other. The settlement agreement also includes a provision that neither CTI nor Mr. Nano would disparage the other. Should any such disparagement occur and litigation ensue, they further agreed that the prevailing party would be entitled to recover its costs and expenses, including reasonable attorney's fees. CTI's payments to Mr. Nano have been completed.

Unfair Trade Practices; U.S. District Court of Connecticut (Case completed)  - In September 2011, the Company filed a complaint against an individual in U.S. District Court of Connecticut for (1) violation of the Connecticut Unfair Trade Practices Act, (2) tortious interference with business and economic expectancy, (3) libel and (4) injunctive relief. The complaint noted that the individual named in the civil action has, for more than a year, engaged in a systematic campaign to destroy the Company's trades and business, interfere with the Company's expectations and contracts and libel the Company by disseminating materially false and libelous statements about the Company on message boards throughout the Internet and otherwise. The Company sought punitive damages from the individual for his alleged unfair trade practices and wrongful interference with the Company's business. The case was concluded in March 2012. By the parties' stipulation settling the matter, the defendant agreed to cease his posting any statements on the Internet or publishing any statements elsewhere, orally or in writing, concerning CTI, CTI's officers, directors, and employees, the Calmare device, Marineo (the inventor of the Calmare device), or any other person or entity in connection with their purchase or use of the Calmare device.

Summary - We may be a party to other legal actions and proceedings from time to time. We are unable to estimate legal expenses or losses we may incur, if any, or possible damages we may recover, and we have not recorded any potential judgment losses or proceeds in our financial statements to date, with the exception of the accrued expenses related to the Nano case, previously disclosed. We record expenses in connection with these suits as incurred.

We believe that we carry adequate liability insurance, directors and officers insurance, casualty insurance, for owned or leased tangible assets, and other insurance as needed to cover us against potential and actual claims and lawsuits that occur in the ordinary course of our business. However, an unfavorable resolution of any or all matters, and/or our incurrence of significant legal fees and other costs to defend or prosecute any of these actions and proceedings may, depending on the amount and timing, have a material adverse effect on our consolidated financial position, results of operations or cash flows in a particular period.

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Supplemental Disclosure of Non-cash Transactions (USD $)	1 Months Ended	2 Months Ended	12 Months Ended				1 Months Ended																0 Months Ended	1 Months Ended
	Jul. 31, 2013	Dec. 31, 2013	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013 Liabilities Purchase Agreement [Member] Southridge [Member]	Dec. 31, 2013 Equity and Liabilities Purchase Agreement [Member] Southridge [Member]	Dec. 31, 2013 Common stock [Member]	Jul. 31, 2013 Common stock [Member]	May 31, 2013 Common stock [Member]	Mar. 31, 2013 Common stock [Member]	Jan. 31, 2013 Common stock [Member]	Jul. 31, 2012 Common stock [Member]	Jun. 30, 2012 Common stock [Member]	Mar. 31, 2012 Common stock [Member]	Feb. 29, 2012 Common stock [Member]	Dec. 31, 2013 Common stock [Member] Accrued Liabilities [Member]	Jul. 31, 2012 Common stock [Member] Accrued Liabilities [Member]	Jun. 30, 2012 Common stock [Member] Accrued Liabilities [Member]	Mar. 31, 2012 Common stock [Member] Accrued Liabilities [Member]	Feb. 29, 2012 Common stock [Member] Accrued Liabilities [Member]	Jun. 30, 2012 Common stock [Member] Prepaid Legal Expenses [Member]	Dec. 31, 2013 Common stock [Member] Southridge [Member] Convertible promissory note [Member]	Apr. 11, 2014 Common stock [Member] Cutler Law Group [Member]	Sep. 30, 2013 Common stock [Member] Cutler Law Group [Member]	Sep. 30, 2013 Common stock [Member] Liabilities Purchase Agreement [Member]	Dec. 31, 2013 Common stock [Member] Equity and Liabilities Purchase Agreement [Member]
Common stock issued to directors, shares							66,118
Common stock issued to directors			$ 34,102													$ 26,447
Debt conversion, value of note converted																						65,000
Debt conversion, shares issued																						260,000
Common stock issued as part of equity purchase agreement and/or liability purchase agreement, shares						250,000																				450,000
Common stock issued as part of equity purchase agreement and/or liability purchase agreement			222,500			87,500																				157,500
Allocation of proceeds from convertible note for the fair value of warrants and beneficial conversion feature to additional paid-in capital		120,787	120,787
Common stock issued in accordance with liability purchase agreement, shares					200,000																				1,618,235
Common shares issued for legal services, shares								200,000		100,000														1,000,000
Number of shares requested to be returned																								950,000
Number of shares to cure outstanding issues																								50,000
Number of shares not returned																							1,000,000
Number of shares not accepted																							50,000
Allocation of note payable to warrant and conversion feature derivative liablility	45,100
Transfer of rental asset to inventory			8,000
Common stock issued in accordance with escrow agreement, shares			1,000,000						500,000	150,000	350,000
Common shares issued to settle accounts payable and accrued expenses, shares												240,000	120,000	100,000	14,415
Common shares issued to settle accounts payable and accrued expenses				$ 428,254													$ 200,000	$ 3,178	$ 111,100	$ 17,154	$ 96,822
Shares issued, price per share					$ 0.35	$ 0.35	$ 0.40	$ 0.20		$ 0.43		$ 0.8333	$ 0.8333	$ 1.111	$ 1.19									$ 0.18

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2013

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

18. SUBSEQUENT EVENTS

Tonaquint

During the first quarter of 2014 the Company executed a debt settlement agreement with Tonaquint related to the note and warrant described in Note 13. In summary, the Company and Tonaquint agreed to settle the warrant for $98,000 and the note and all related interest for $144,000 all to paid by April 18, 2014.

Additional financing

During the first quarter of 2014 the Company raised additional working capital of approximately $600,000 through the issuance of debt and equity instruments.

XML

BUSINESS AND BASIS OF PRESENTATION

12 Months Ended

Dec. 31, 2013

BUSINESS AND BASIS OF PRESENTATION [Abstract]

BUSINESS AND BASIS OF PRESENTATION

1. Business AND BASIS OF PRESENTATION

Competitive Technologies, Inc. ("CTI") and its majority-owned (56.1%) subsidiary, Vector Vision, Inc. ("VVI"), (collectively, the "Company", "we" or "us") is a biotechnology company developing and commercializing innovative products and technologies. The Company is the licensed distributor of the non-invasive Calmare® pain therapy medical device, which incorporates the biophysical "Scrambler Therapy"® technology developed to treat neuropathic and cancer-derived pain by Professor Giuseppe Marineo.

The consolidated financial statements include the accounts of CTI, and VVI. Inter-company accounts and transactions have been eliminated in consolidation.

The Company has incurred operating losses since fiscal 2006 and has a working capital deficiency at December 31, 2013. During the years ended December 31, 2013 and December 31, 2012, we had a significant concentration of revenues from our pain therapy medical device technology. We continue to seek revenue from new technologies or products to mitigate the concentration of revenues, and replace revenues from expiring licenses. At current reduced spending levels, the Company may not have sufficient cash flow to fund operations through 2014. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include adjustments to reflect the possible future effect of the recoverability and classification of assets or amounts and classifications of liabilities that may result from the outcome of this uncertainty.

The Company's continuation as a going concern is dependent upon its developing other recurring revenue streams sufficient to cover operating costs. If necessary, we will meet anticipated operating cash requirements by further reducing costs, issuing debt or equity, and/or pursuing sales of certain assets and technologies while we pursue licensing and distribution opportunities for our remaining portfolio of technologies. The Company does not have any significant capital requirements in the budget going forward. There can be no assurance that the Company will be successful in such efforts. Failure to develop a recurring revenue stream sufficient to cover operating expenses would negatively affect the Company's financial position.

Our liquidity requirements arise principally from our working capital needs, including funds needed to find and obtain new technologies or products, and protect and enforce our intellectual property rights, if necessary. We fund our liquidity requirements with a combination of cash on hand, debt and equity financing, and cash flows from operations, if any, including royalty legal awards. At December 31, 2013, we had outstanding debt, in the form of promissory notes with a total principal amount of $3,151,000 and a carrying value of $2,934,000.

Since October 5, 2010, the Company's securities have traded on the OTC market's top tier, the OTCQX.

The Company acquired the exclusive, worldwide rights to the Scrambler Therapy^® technology in 2007. The Company's original 2007 agreement with Giuseppe Marineo (the "Scrambler Therapy Agreement"), an inventor of Scrambler Therapy technology, and Delta Research and Development, authorized CTI to manufacture and sell worldwide the device developed from the patented Scrambler Therapy technology. The original agreement was amended in 2011 to provide the Company was exclusive rights to the Scrambler Therapy technology through March 31, 2016. In July 2012, the Company attempted to negotiate a five-year extension to the agreement with Marineo and Delta (the "2012 Amendment"). However, a valid contract was never formed as the 2012 Amendment was not executed by Marineo and Delta. The Scrambler Therapy technology is patented in Italy and the U.S. Additional applications for patents have been filed internationally and are pending approval. The Calmare® device has CE Mark certification from the European Union as well as U.S. FDA 510(k) clearance. CTI's partner, GEOMC Co., Ltd. of Korea, is manufacturing the product commercially under a ten (10) year agreement through 2017. Sales of these devices are expected to provide a significant proportion of the Company's revenue for the next several years.

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Consolidated Balance Sheets (Parentheticals) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Receivables, net of allowance	$ 101,154	$ 101,154
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	19,952,907	15,237,304
Common stock, shares outstanding (in shares)	19,952,907	15,237,304
Series B Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	20,000	20,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Series C convertible preferred stock [Member]
Preferred stock, par value (in dollars per share)	$ 1,000	$ 1,000
Preferred stock, shares authorized (in shares)	750	750
Preferred stock, shares issued (in shares)	375	375
Preferred stock, shares outstanding (in shares)	375	375
5% Preferred stock [Member]
Preferred stock, par value (in dollars per share)	$ 25	$ 25
Preferred stock, shares authorized (in shares)	35,920	35,920
Preferred stock, shares issued (in shares)	2,427	2,427
Preferred stock, shares outstanding (in shares)	2,427	2,427

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LIABILITIES ASSIGNED TO LIABILITY PURCHASE AGREEMENT

12 Months Ended

Dec. 31, 2013

Liabilities Assigned To Liability Purchase Agreement [Abstract]

LIABILITIES ASSIGNED TO LIABILITY PURCHASE AGREEMENT

11. LIABILITIES ASSIGNED TO LIABILITY PURCHASE AGREEMENT

During third quarter of 2013, the Company negotiated a LPA with Southridge. The LPA takes advantage of a provision in the Securities Act of 1933, Section 3(a)(10), that allows the exchange of claims, securities, or property for stock when the arrangement is approved for fairness by a court proceeding. The process, approved by the court in August 2013, has the potential to eliminate nearly $2.1 million of our financial obligations to existing creditors who agreed to participate and executed claims purchase agreements with Southridge's affiliate ASC Recap, LLC ("ASC Recap") accounting for $2,093,303 of existing payables, accrued expenses and other current liabilities, and notes payable. The process began with the issuance in September 2013 of 1,618,235 shares of the Company's common stock to ASC Recap, however at December 31, 2013, no creditors had yet been paid from the proceeds.

There can be no assurance that the Company will be successful in completing this process with Southridge, and the Company retains ultimate responsibility for this debt, until fully paid.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2013	Apr. 15, 2014	Jun. 30, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	COMPETITIVE TECHNOLOGIES INC
Entity Central Index Key	0000102198
Document Type	10-K
Document Period End Date	Dec. 31, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 4,415,797
Entity Common Stock, Shares Outstanding		22,577,907
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2013

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ACCRUED EXPENSES AND OTHER LIABILITIES

12 Months Ended

Dec. 31, 2013

ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]

ACCRUED EXPENSES AND OTHER LIABILITIES

12. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consist of the following:

	December 31, 2013		December 31, 2012
Royalties payable	$	127,708	$	182,052
Accrued audit fee		82,141		80,000
Over advance, fees LSQ Funding		-		77,464
Commissions payable		21,975		48,722
Accrued interest payable		216,518		85,184
Accrued consulting fees		2,000		167,726
Other		132,645		132,216
Accrued expenses and other liabilities, net	$	582,987	$	773,364

Excluded above is approximately $244,000 of accrued expenses and other liabilities that fall under the LPA with ASC Recap, and are expected to be repaid using the process as described in Note 11.  Because there can be no assurance that the Company will be successful in completing this process, the Company retains ultimate responsibility for these liabilities, until fully paid down.

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Consolidated Statements of Operations (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Revenue
Product sales	$ 652,792	$ 912,548
Cost of product sales	272,736	366,409
Gross profit from product sales	380,056	546,139
Other Revenue
Retained royalties	37,007	105,850
Other income	82,069	51,315
Total other revenue	119,076	157,165
Expenses
Selling expenses	159,245	391,435
Personnel and consulting expenses	1,100,041	1,419,887
General and administrative expenses	1,760,585	1,759,777
Interest expense	209,953	82,557
Unrealized (gain) loss on derivative instrument	(58,538)	53,745
Total Expenses	3,171,286	3,707,401
Loss before income taxes	(2,672,154)	(3,004,097)
Provision (benefit) for income taxes
Net loss	$ (2,672,154)	$ (3,004,097)
Basic loss per share	$ (0.16)	$ (0.20)
Basic weighted average number of common shares outstanding	16,977,027	15,007,852
Diluted loss per share	$ (0.16)	$ (0.20)
Diluted weighted average number of common shares outstanding:	16,977,027	15,007,852

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RECEIVABLES

12 Months Ended

Dec. 31, 2013

RECEIVABLES [Abstract]

RECEIVABLES

6. RECEIVABLES

Receivables consist of the following:

	December 31, 2013		December 31, 2012
Calmare sales receivable	$	132,850	$	212,774
Royalties, net of allowance of $101,154 at December 31, 2013 and 2012		10,086		-
Other		394		3,591
Total	$	143,330	$	216,365

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SHAREHOLDERS' INTEREST

12 Months Ended

Dec. 31, 2013

SHAREHOLDERS' INTEREST [Abstract]

SHAREHOLDERS' INTEREST

5. SHAREHOLDERS' INTEREST

Common Stock

During 2013, the Company entered into an Equity Purchase Agreement ("EPA") with Southridge Partners II, L.P. ("Southridge"). Under the terms of the EPA, which was filed with the SEC on February 26, 2013, Southridge will purchase, at the Company's election, up to $10,000,000 of the Company's registered common stock (the "Shares"). During the two year term of the EPA, the Company may at any time in its sole discretion deliver a "put notice" to Southridge thereby requiring Southridge to purchase a certain dollar amount of the Shares. Simultaneous with the delivery of such Shares, Southridge shall deliver payment for the Shares. Subject to certain restrictions, the purchase price for the Shares shall be equal to ninety percent of the lowest closing bid price for the Company's common stock during the ten-day trading period immediately after the Shares specified in the Put Notice are delivered to Southridge.

The number of Shares sold to Southridge shall not exceed the number of such shares that, when aggregated with all other shares of common stock of the Company then beneficially owned by Southridge, would result in Southridge owning more than 9.99% of all of the Company's common stock then outstanding. Additionally, Southridge may not execute any short sales of the Company's common stock.

Under the terms of the EPA, the Company had issued a convertible promissory note in the amount of $65,000 to Southridge which, during 2013 Southridge converted to 260,000 shares of common stock. In addition, during 2013, the Company negotiated a liabilities purchase agreement ("LPA") with Southridge (see Note 11).

Under the terms of the LPA, the Company issued 200,000 shares of its common stock at $0.35, or $70,000, and a convertible note in the amount of $12,000 Southridge as a fee.

Additionally, under the terms of the EPA and LPA, the Company issued 250,000 shares of its common stock at $0.35,or $87,500, to Southridge for expenses associated with the EPA and LPA.

During 2013 the Company issued 1,000,000 shares of its common stock into escrow, pending the completion of potential financing with a European investment group.

Preferred Stock

Holders of 5% preferred stock are entitled to receive, if, as, and when declared by the Board of Directors, out of funds legally available therefore, preferential non-cumulative dividends at the rate of $1.25 per share per annum, payable quarterly, before any dividends may be declared or paid upon or other distribution made in respect of any share of common stock. The 5% preferred stock is redeemable, in whole at any time or in part from time to time, on 30 days' notice, at the option of the Company, at a redemption price of $25. In the event of voluntary or involuntary liquidation, the holders of preferred stock are entitled to $25 per share in cash before any distribution of assets can be made to holders of common stock.

Each share of 5% preferred stock is entitled to one vote. Holders of 5% preferred stock have no preemptive or conversion rights. The preferred stock is not registered to be publicly traded.

At its December 2, 2010 meeting, the CTI Board of Directors declared a dividend distribution of one right (each, a "Right") for each outstanding share of common stock, par value $0.01, of the Company (the "Common Shares"). The dividend was payable to holders of record as of the close of business on December 2, 2010 (the "Record Date"). Issuance of the dividend may be triggered by an investor purchasing more than 20% of the outstanding shares of common stock.

On December 15, 2010 the Company issued a $400,000 promissory note. The promissory note was scheduled to mature on December 31, 2012 with an annual interest rate of 5%.

On December 15, 2010, the Company's Board of Directors authorized the issuance of 750 shares of Series C Convertible Preferred Stock ($1,000 par value) with a 5% cumulative dividend to William R. Waters, Ltd. of Canada. On December 30, 2010, 750 shares were issued. The Company converted the above $400,000 promissory note into 400 shares and received cash of $350,000 for the remaining 350 shares.

Effective June 16, 2011, William R. Waters, Ltd. of Canada converted one half of its Series C Convertible Preferred Stock, or 375 shares, to 315,126 shares of common stock.

The rights of the Series C Convertible Preferred Stock are as follows:

a) Dividend rights - The shares of Series C Convertible Preferred Stock accrue a 5% cumulative dividend on a quarterly basis and is payable on the last day of each fiscal quarter when declared by the Company's Board. As of December 31, 2013 dividends declared were $65,700, of which $18,750 were declared during the year ended December 31, 2013 and $46,952 have not been paid and are shown in accrued and other liabilities at December 31, 2013.

b) Voting rights - Holders of these shares of Series C Convertible Preferred Stock shall have voting rights equivalent to 1,000 votes per $1,000 par value Series C Convertible Preferred share voted together with the shares of Common Stock

c) Liquidation rights - Upon any liquidation these Series C Convertible Preferred Stock shares shall be treated as equivalent to shares of Common stock to which they are convertible.

d) Redemption rights - The redemption rights were associated with the $750,000 that had been held in escrow by the Company in the event that the funds were released and returned to CTI.  However, the funds were withdrawn from escrow and paid out in accordance with the settlement agreement.  Therefore the redemption rights no longer apply to the remaining Series C Convertible Preferred Stock.

e) Conversion rights - Holder has right to convert each share of Series C Convertible Preferred Stock at any time into shares of the Company's common stock at a conversion price for each share of common stock equal to 85% of the lower of (1) the closing market price at the date of notice of conversion or (2) the mid-point of the last bid price and the last ask price on the date of the notice of conversion. The variable conversion feature creates an embedded derivative that was bifurcated from the Series C Convertible Preferred Stock on the date of issuance and was recorded at fair value. The derivative liability will be recorded at fair value on each reporting date with any change recorded in the Statement of Operations as an unrealized gain (loss) on derivative instrument.

On the date of conversion of the 375 shares of Series C Convertible Preferred Stock the Company calculated the value of the derivative liability to be $81,933. Upon conversion, the $81,933 derivative liability was reclassified to equity.

The Company recorded a convertible preferred stock derivative liability of $80,408 and $119,922, associated with the 375 shares of Series C Convertible Preferred Stock outstanding at December 31, 2013 and, 2012, respectively.

The Company has classified the Series C Convertible Preferred Stock as a liability at December 31, 2013 and, 2012 because the variable conversion feature may require the Company to settle the conversion in a variable number of its common shares.

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2013

RELATED PARTY TRANSACTIONS [Abstract]

RELATED PARTY TRANSACTIONS

17. RELATED PARTY TRANSACTIONS

Our board of directors determined that when a director's services are outside the normal duties of a director, we compensate the director at the rate of $1,000 per day, plus expenses, which is the same amount we pay a director for attending a one-day Board meeting. We classify these amounts as consulting expenses, included in personnel and consulting expenses.

At December 31, 2013, $2,618,000 of the outstanding Notes were payable to related parties; $2,518,000 to the chairman of our Board, Peter Brennan, and $100,000 to another director, Stan Yarbro.

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NOTES PAYABLE

12 Months Ended

Dec. 31, 2013

NOTES PAYABLE [Abstract]

NOTES PAYABLE

13. NOTES PAYABLE

Notes payable as of December 31, 2013 consists of the following:

	Principal Amount		Carrying Value			Cash Interest Rate			Common Stock Conversion Price		Maturity Date
90 day Convertible Notes (Chairman of the Board)	$	2,518,000	$	2,518,000			6	%	$	1.05	Various 2014
24 month Convertible Notes ($100,000 to Board member)		225,000		225,000			6	%		1.05	March 2014 - June 2014
Tonaquint 9% OID Convertible Notes and Warrants		112,500		87,705			7	%		0.30	May 2014
Southridge Convertible Note		12,000		12,000			None			75% of closing bid	June 2014
Series A1 15% OID Convertible Notes and Warrants		149,412		81,415			None			0.20	August 2014
Series A2 15% OID Convertible Notes and Warrants		134,236		69,571			None			0.25	September 2014
Notes Payable, gross	$	3,151,148		2,933,691
Less LPA amount				(505,000	)
Notes Payable, net			$	2,488,691

90 day Convertible Notes

The Company has issued 90-day notes payable to borrow funds from a director, now the chairman of our Board, as follows:

2013	$	1,208,000
2012		1,210,000
2011		100,000
Total	$	2,518,000

These notes have been extended several times and all bear 6.00% simple interest.  A conversion feature was added to the Notes when they were extended, which allows for conversion of the eligible principal amounts to common stock at any time after the six month anniversary of the effective date -the date the funds are received - at a rate of $1.05 per share.  Additional terms have been added to all Notes to include additional interest payments to all Notes if extended beyond their original maturity dates and to provide the lender with a security interest in unencumbered inventory and intangible assets of the Company other than proceeds relating to the Calmare device and accounts receivable.

A total of $505,000 of the aforementioned notes issued between December 1, 2012 and March 31, 2013 fall under the LPA with ASC Recap, and are expected to be repaid using the process as described in Note 11.  Because there can be no assurance that the Company will be successful in completing this process, the Company retains ultimate responsibility for this debt, until fully paid down.  As a result, the Company continues to accrue interest on these notes and they remain convertible as described above.

24 month Convertible Notes

In March 2012, the Company issued a 24-month convertible promissory note to borrow $100,000. Additional 24-month convertible promissory notes were issued in April 2012 ($25,000) and in June 2012 ($100,000). All of the notes bear 6.00% simple interest. Conversion of the eligible principal amounts to common stock is allowed at any time after the six month anniversary of the effective date of each note at a rate of $1.05 per share.

Tonaquint 9% Original Issue Discount Convertible Notes and Warrants

During the quarter ended September 30, 2013, the Company entered into a securities purchase agreement with Tonaquint, Inc., under which it was issued a $112,500 convertible promissory note in consideration for $100,000, the difference between the proceeds from the Note and the principal amount consists of a $10,000 original issue discount and a carried transaction expense of $2,500. The original issue discount is amortized over the life of the note. The note is convertible at an initial conversion price of $0.30 per share at any time, and contains a "down-round protection" feature that requires the valuation of a derivative liability associated with the note. The note bears interest at 7% and is due in May 2014; with five monthly installment payments of principal, accrued interest and any outstanding fees or allowed expenses beginning in January 2014. Tonaquint was also issued a market-related warrant for $112,500 in shares of common stock with a "cashless" exercise feature. The warrant has a $0.35 exercise price, a 5-year term and includes a "down-round protection" feature that requires it to be classified as a liability rather than as equity (see Note 9).

We estimated the fair value of each component on the issue date and the conversion date using a Black-Scholes pricing model with the following assumptions:

	Warrant - July 16, 2013			Warrant - December 31, 2013			Derivative - July 16, 2013			Derivative - December 31, 2013
Expected term		5 years			4.54 years			0.83 years			0.38 years
Volatility		124.51	%		139.93	%		192.87	%		230.46	%
Risk Free Rate		1.38	%		1.75	%		0.10	%		0.70	%

The proceeds of the Note were allocated to the three components as follows:

	Proceeds allocated at issue date - July 16, 2013		Value at December 31, 2013
Tonaquint Note	$	57,400	$	87,705
Tonaquint Warrant	$	26,076	$	8,227
Embedded conversion option derivative liability	$	19,024	$	-
Total	$	102,500	$	95,932

Subsequent to December 31, 2013, the Company settled the note and Warrant with Tonaquint ( see Note 18.).

Southridge

During 2013 the Company had issued a convertible promissory note payable to Southridge as part of its EPA in the amount of $65,000, which during 2013 Southridge converted to 260,000 shares of common stock.

During 2013, the Company issued a six-month $12,000 convertible note payable to Southridge to cover legal expenses as part of the LPA (see Note 11). The convertible note is convertible into the Company's common stock at 75% of the lowest closing bid price during the twenty (20) trading days prior to conversion and is due in June 2014.

Series A 15% Original Issue Discount Convertible Notes and Warrants

During the quarter ended December 31, 2013, the Company did a private offering of two tranches of convertible notes and warrants, under which it issued $283,648 of convertible promissory notes for consideration of $241,100, the difference between the proceeds from the notes and the principal amount consists of $42,548 of original issue discount. The notes are convertible at initial conversion prices ranging from $0.20 to $0.25 per share anytime after issuance thereby having an embedded beneficial conversion feature. The note holders were also issued market-related warrants for 170,354 in shares of common stock. The warrants have exercise prices that range from $0.40 to $0.60 and a 2-year term. The beneficial conversion feature and the warrants were recorded to additional paid-in-capital. The Company allocated the proceeds received to the notes, the beneficial conversion feature and the warrants on a relative fair value basis at the time of issuance. The total debt discount is amortized over the life of the notes to interest expense.

The beneficial conversion feature was valued at the intrinsic value on the issuance date. The intrinsic value represents the difference between the conversion price and the fair value of the common stock multiplied by the number of share into which the note is convertible. We estimated the fair value of the warrants on the issue date using a Black-Scholes pricing model with the following assumptions:

	Warrants (Tranche 1)- November 15, 2013			Warrants (Tranche 2)- December 30, 2013
Expected term		2 years			2 years
Volatility		180.02	%		184.38	%
Risk Free Rate		0.31	%		0.39	%

The proceeds of the Notes were allocated to the components as follows:

	Proceeds allocated at issue date
Private Offering Notes	$	120,313
Private Offering Warrants	$	76,429
Beneficial Conversion feature		44,358
Total	$	241,100

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FAIR VALUE MEASUREMEMENTS

12 Months Ended

Dec. 31, 2013

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

9. FAIR VALUE MEASUREMENTS

The Company measures fair value in accordance with Topic 820 of the FASB ASC, Fair Value Measurement ("ASC 820"), which provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described as follows:

Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2 - Inputs to the valuation methodology include:

• Quoted prices for similar assets or liabilities in active markets;

• Quoted prices for identical or similar assets or liabilities in inactive markets;

• Inputs other than quoted prices that are observable for the asset or liability;

• Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset's or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company values its derivative liability associated with the variable conversion feature on its Series C Convertible Preferred Stock (Note 5) based on the market price of its common stock.  For each reporting period the Company calculates the amount of potential common stock that the Series C Preferred Stock could convert into based on the conversion formula (incorporating market value of our common stock) and multiplies those converted shares by the market price of its common stock on that reporting date.  The total converted value is subtracted by the consideration paid to determine the fair value of the derivative liability. The Company classified the derivative liability of $80,000 and $120,000 at December 31, 2013 and December 31, 2012, respectively, in Level 2 of the fair value hierarchy.

The warrant issued in connection with the Tonaquint Note (the "Tonaquint Warrants," see Note 13) are measured at fair value and liability-classified because the Tonaquint Warrants contain "down-round" protection and therefore do not meet the scope exception under FASB ASC 815, Derivatives and Hedging ("ASC 815"). Since "down-round" protection is not an input to the fair value of the warrants, the warrants cannot be considered indexed to the Company's own stock which is a requirement for the scope exception as outlined under ASC 815.  The Company valued the warrants at $8,000 at December 31, 2013, and $26,000 upon issuance at July 16, 2013, in Level 3 of the fair value hierarchy.

Similarly, the conversion feature of the Tonaquint Note (Note 13) also contains "down-round" protection and therefore does not met the scope exception under FASB ASC 815.  The Company classified the derivative liability of $0 at December 31, 2013, and $19,000 upon issuance at July 16, 2013, in Level 3 of the fair value hierarchy.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation method is appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value could result in a different fair value measurement at the reporting date.

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COMMITMENTS AND CONTINGENCIES (Narrative) (Details) (USD $)	12 Months Ended		0 Months Ended		1 Months Ended		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Sep. 23, 2010 John B. Nano vs. Competitive Technologies, Inc [Member]	Sep. 13, 2010 John B. Nano vs. Competitive Technologies, Inc [Member]	Jan. 31, 2012 John B. Nano vs. Competitive Technologies, Inc [Member]	Dec. 31, 2011 John B. Nano vs. Competitive Technologies, Inc [Member]	Dec. 31, 2013 VVI [Member] Supported Products [Member]	Dec. 31, 2013 VVI [Member] Licensing Supported Products [Member]	Dec. 31, 2013 Grant funding received in 1994 [Member]	Dec. 31, 2013 Grant funding received in 1995 [Member]
Loss Contingencies [Line Items]
Funding repayment obligation									$ 165,788	$ 199,334
Percentage of revenues obligation	7.50%						1.50%	15.00%
Obligation recognized	1,577	1,749
Finders' fee	10.00%
Damages sought				750,000
Amount (placed in) released from escrow		750,000	(750,000)		750,000
Additional damages paid to plaintiff as statutory interest					25,000
Accrued litigation costs						775,000
Total damages paid to plaintiff					$ 775,000

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PROPERTY AND EQUIPMENT, NET

12 Months Ended

Dec. 31, 2013

PROPERTY AND EQUIPMENT, NET [Abstract]

PROPERTY AND EQUIPMENT, NET

7. PROPERTY AND EQUIPMENT, NET

Property and equipment, net, consist of the following:

	December 31, 2013			December 31, 2012
Property and equipment, gross	$	177,537		$	189,633
Accumulated depreciation and amortization		(169,931	)		(162,816	)
Property and equipment, net	$	7,606		$	26,817

In July 2012, the Company closed its Charlotte, NC office and disposed of the property and equipment at that location at a loss of $4,818.

Depreciation and amortization expense was $11,147 and $14,534 for the years ended December 31, 2013 and 2012, respectively.

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AVAILABLE-FOR-SALE AND EQUITY SECURITIES

12 Months Ended

Dec. 31, 2013

AVAILABLE-FOR-SALE AND EQUITY SECURITIES [Abstract]

AVAILABLE-FOR-SALE AND EQUITY SECURITIES

8. AVAILABLE-FOR-SALE AND EQUITY SECURITIES

	December 31, 2013		December 31, 2012		Number of shares		Type
Security Innovation, Inc.		-		-		223,317	Common stock
Xion Pharmaceutical Corporation		-		-		60	Common stock

In prior years, we acquired 3,129,509 shares of NTRU Cryptosystems, Inc. ("NTRU") common stock, and certain preferred stock that later was redeemed, in exchange for cash and a reduction in our future royalty rate on sales of NTRU's products. NTRU was a privately held company that sold encryption software for security purposes, principally in wireless markets. There was no public market for NTRU shares. In 2003, we wrote down the value of NTRU to $0, but we continued to own the shares. On July 22, 2009, all NTRU assets were acquired by Security Innovation, an independent provider of secure software located in Wilmington, MA. We received 223,317 shares of stock in the privately held Security Innovation for our shares of NTRU.

In September 2009 we announced the formation of a joint venture with Xion Corporation for the commercialization of our patented melanocortin analogues for treating sexual dysfunction and obesity. We received 60 shares of privately held Xion Pharmaceutical Corporation common stock in June 2010. CTI currently owns 30% of the outstanding stock of Xion Pharmaceutical Corporation.

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PREPAID EXPENSES AND OTHER CURRENT ASSETS

12 Months Ended

Dec. 31, 2013

PREPAID EXPENSES AND OTHER CURRENT ASSETS [Abstract]

PREPAID EXPENSES AND OTHER CURRENT ASSETS

10. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other assets consist of the following:

	December 31, 2013		December 31, 2012
Prepaid insurance	$	16,802	$	17,473
Prepaid legal fees		-		46,813
Other		48,365		14,441
Prepaid expenses and other current assets	$	65,167	$	78,727

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SUBSEQUENT EVENTS (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Subsequent Event [Line Items]
Working capital raised through debt and equity issuances	$ 600,000
Subsequent Event [Member]
Subsequent Event [Line Items]
Working capital raised through debt and equity issuances	600,000
Subsequent Event [Member] | Tonaquint 9% OID Convertible Notes and Warrants [Member]
Subsequent Event [Line Items]
Debt settlement, amount to settle Warrant	98,000
Debt settlement, amount to settle debt principle and accrued interest	$ 144,000

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RELATED PARTY TRANSACTIONS (Details) (USD $)	12 Months Ended
	Dec. 31, 2013
Related Party Transaction [Line Items]
Director's service charges per day	$ 1,000
Notes payable to related parties	2,618,000
Chairman [Member]
Related Party Transaction [Line Items]
Notes payable to related parties	2,518,000
Board of Directors [Member]
Related Party Transaction [Line Items]
Notes payable to related parties	$ 100,000

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STOCK-BASED COMPENSATION PLANS (Tables)

12 Months Ended

Dec. 31, 2013

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Assumptions used to Estimate Fair Value of Share Options

We estimated the fair value of each option on the grant date using a Black-Scholes option-pricing model with the following weighted average assumptions:

	Year ended December 31, 2013			Year ended December 31, 2012
Dividend yield (1)		0.0	%		0.0	%
Expected volatility (2)		99.2% - 110.2	%		86.7% - 87.1	%
Risk-free interest rates (3)		1.02	%		0.89	%
Expected lives (2)		2-5 years			5 years

(1) We have not paid cash dividends on our common stock since 1981, and currently do not have plans to pay or declare cash dividends. Consequently, we used an expected dividend rate of zero for the valuations.

(2) Estimated based on our historical experience. Volatility was based on historical experience over a period equivalent to the expected life in years.

(3) Based on the U.S. Treasury constant maturity interest rate with a term consistent with the expected life of the options granted.

Summary of Stock Option Activity under Stock Options

A summary of the status of all our common stock options as of December 31, 2013 and 2012, and changes during the periods then ended is presented below.

	Year ended December 31, 2013							Year ended December 31, 2012
	Shares			Weighted Average Exercise Price		Aggregate Intrinsic Values		Shares			Weighted Average Exercise Price		Aggregate Intrinsic Values
Outstanding at beginning of period		317,000		$	1.85	$			313,000		$	2.11
Granted		2,055,000			0.29				70,000			1.24
Forfeited		(1,000,000	)		0.50				(66,000	)		2.44
Exercised		-							-
Expired or terminated		-							-
Outstanding at end of year		1,372,000		$	0.50	$	240,750		317,000		$	1.85
Vested at end of year		572,000		$	1.10	$	48,750		317,000		$	1.85
Nonvested at end of year		800,000		$	0.08	$	192,000
Weighted average fair value per share of options issued during the year				$	0.21						$	1.18

2011 Option Plan [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Stock Option Plan

The following information relates to the 2011 Option Plan:

	December 31, 2013		December 31, 2012
Common shares reserved for issuance on exercise of options		1,165,000		110,000
Shares available for future option grants		335,000		890,000

1997 Employee Stock Option Plan [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Stock Option Plan

The following information relates to the 1997 Option Plan:

	December 31, 2013		December 31, 2012
Common shares reserved for issuance on exercise of options		87,000		87,000
Shares available for future option grants		-		-

2000 Directors' Stock Option Plan [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Stock Option Plan

The following information relates to the 2000 Directors' Stock Option Plan:

	December 31, 2013		December 31, 2012
Common shares reserved for issuance on exercise of options		120,000		120,000
Shares available for future option grants		-		-

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ACCRUED EXPENSES AND OTHER LIABILITIES (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]
Royalties payable	$ 127,708	$ 182,052
Accrued audit fee	82,141	80,000
Over advance, fees LSQ Funding		77,464
Commissions payable	21,975	48,722
Accrued interest payable	216,518	85,184
Accrued consulting fees	2,000	167,726
Other	132,645	132,216
Accrued expenses and other liabilities, net	582,987	773,364
Accrued expenses and other liabilities - LPA	$ 244,000

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401(k) PLAN

12 Months Ended

Dec. 31, 2013

401(k) PLAN [Abstract]

401(k) PLAN

15. 401(k) PLAN

We have an employee-defined contribution plan qualified under section 401(k) of the Internal Revenue Code (the "Plan"), for all employees age 21 or over, and meeting certain service requirements. The Plan has been in effect since January 1, 1997. Participation in the Plan is voluntary. Employees may defer compensation up to a specific dollar amount determined by the Internal Revenue Service for each calendar year. We do not make matching contributions, and employees are not allowed to invest in our stock under the Plan.

Our directors may authorize a discretionary contribution to the Plan, allocated according to the provisions of the Plan, and payable in shares of our common stock valued as of the date the shares are contributed. No contributions were accrued or made in the years ended December 31, 2013 and 2012.

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2013

INCOME TAXES [Abstract]

Reconciliation of Tax Rate

A reconciliation of our effective income tax rate compared to the U.S. federal statutory rate is as follows:

	Year ended December 31, 2013			Year ended December 31, 2012
Provision (benefit) at U.S. federal statutory rate		(35.0	)%		(35.0	)%
State provision (benefit), net of U.S. federal tax		(4.9	)		(4.8	)
Permanent differences		(0.3	)		(0.2	)
Other items		5.0			5.2
Deferred tax valuation allowance		(35.2	)		(34.8	)
Effective income tax rate		0.0	%		0.0	%

Schedule of Deferred Tax Assets

Net deferred tax assets consist of the following:

	December 31, 2013			December 31, 2012
Net federal and state operating loss carryforwards	$	15,748,253		$	14,785,650
Impairment of investments		531,470			531,470
Other, net		687,426			680,637
Deferred tax assets		16,967,149			15,997,757
Valuation allowance		(16,967,149	)		(15,997,757	)
Net deferred tax assets	$	-		$	-

Changes in the Valuation Allowance

Changes in the valuation allowance were as follows:

	Year ended December 31, 2013		Year ended December 31, 2012
Balance, beginning of year	$	15,997,757	$	14,651,435
Change in temporary differences		6,789		157,164
Change in net operating and capital losses		962,603		1,189,158
Balance, end of year	$	16,967,149	$	15,997,757

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PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
PREPAID EXPENSES AND OTHER CURRENT ASSETS [Abstract]
Prepaid insurance	$ 16,802	$ 17,473
Prepaid legal fees		46,813
Other	48,365	14,441
Prepaid expenses and other current assets	$ 65,167	$ 78,727

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INCOME TAXES (Changes in Valuation Allowance) (Details) (USD $)				12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Change in temporary differences [Member]	Dec. 31, 2012 Change in temporary differences [Member]	Dec. 31, 2013 Change in net operating and capital losses [Member]	Dec. 31, 2012 Change in net operating and capital losses [Member]
Valuation Allowance [Line Items]
Balance, beginning of year	$ 16,967,149	$ 15,997,757	$ 14,651,435
Change in valuation allowance				6,789	157,164	962,603	1,189,158
Balance, end of year	$ 16,967,149	$ 15,997,757	$ 14,651,435

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Consolidated Statements of Changes in Shareholders' Deficit (USD $)	Total	Preferred Stock [Member]	Common Stock [Member]	Capital in excess of par value [Member]	Accumulated deficit [Member]
Balance at Dec. 31, 2011	$ (1,626,857)	$ 60,675	$ 147,157	$ 44,771,128	$ (46,605,817)
Balance, shares at Dec. 31, 2011		2,427	14,715,789
Net loss	(3,004,097)				(3,004,097)
Stock option compensation expense	138,630			138,630
Common shares issued to settle accounts payable and accrued expenses	428,254		4,745	423,509
Common shares issued to settle accounts payable and accrued expenses, shares			474,415
Share based consulting fees, Common stock	35,000		471	34,529
Share based consulting fees, Common stock, shares			47,100
Balance at Dec. 31, 2012	(4,029,070)	60,675	152,373	45,367,796	(49,609,914)
Balance, shares at Dec. 31, 2012		2,427	15,237,304
Net loss	(2,672,154)				(2,672,154)
Stock option compensation expense	116,365			116,365
Common shares issued for legal services	263,000		13,000	250,000
Common shares issued for legal services, shares			1,300,000
Common stock issued in accordance with escrow agreement			10,000	(10,000)
Common stock issued in accordance with escrow agreement, shares	1,000,000		1,000,000
Common stock issued in accordance with liability purchase agreement			16,182	(16,182)
Common stock issued in accordance with liability purchase agreement, shares			1,618,235
Common stock issued as part of equity purchase agreement and/or liability purchase agreement	222,500		7,100	215,400
Common stock issued as part of equity purchase agreement and/or liability purchase agreement, shares			710,000
Common stock issued to directors	34,102		874	33,228
Common stock issued to directors, shares			87,368
Warrants and beneficial conversion feature on notes payable	120,787			120,787
Balance at Dec. 31, 2013	$ (5,944,470)	$ 60,675	$ 199,529	$ 46,077,394	$ (52,282,068)
Balance, shares at Dec. 31, 2013		2,427	19,952,907

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NET INCOME (LOSS) PER COMMON SHARE

12 Months Ended

Dec. 31, 2013

NET INCOME (LOSS) PER COMMON SHARE [Abstract]

NET INCOME (LOSS) PER COMMON SHARE

4. NET INCOME (LOSS) PER COMMON SHARE

The following sets forth the denominator used in the calculations of basic net income (loss) per share and net income (loss) per share assuming dilution:

	Year ended December 31, 2013		Year ended December 31, 2012
Denominator for basic net income (loss) per share, weighted average shares outstanding		16,977,027		15,007,852
Dilutive effect of common stock options		N/A		N/A
Dilutive effect of Series C convertible preferred stock and convertible debt		N/A		N/A
Denominator for net income (loss) per share, assuming dilution		16,977,027		15,007,852

Due to the net loss incurred for the years ended December 31, 2013, and December 31, 2012, the denominator used in the calculation of basic net loss per share was the same as that used for net loss per share, assuming dilution, since the effect of any options, convertible preferred shares, convertible debt or warrants would have been anti-dilutive. Options to purchase 1,372,000 and 317,000 shares of our common stock were outstanding at December 31, 2013 and 2012, respectively, 375 shares outstanding of Series C Convertible Preferred Stock, at December 31, 2013 and 2012, outstanding convertible debt of $2,934,000 and $1,535,000 at December 31, 2013 and 2012, respectively and the warrants outstanding at December 31, 2013 were not included in the computation of diluted net income (loss) per share because they were also anti-dilutive.

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STOCK-BASED COMPENSATION PLANS (Weighted Average Assumptions) (Details) (Common Stock Options [Member])	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yield	0.00%	[1]	0.00%	[1]
Expected volatility, minimum	99.20%	[2]	86.70%	[2]
Expected volatility, maximum	110.20%	[2]	87.10%	[2]
Risk-free interest rate	1.02%	[3]	0.89%	[3]
Expected lives			5 years	[2]
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected lives	2 years	[2]
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected lives	5 years	[2]

[1] We have not paid cash dividends on our common stock since 1981, and currently do not have plans to pay or declare cash dividends. Consequently, we used an expected dividend rate of zero for the valuations.

[2] Estimated based on our historical experience. Volatility was based on historical experience over a period equivalent to the expected life in years.

[3] Based on the U.S. Treasury constant maturity interest rate with a term consistent with the expected life of the options granted.

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NET INCOME (LOSS) PER COMMON SHARE (Tables)

12 Months Ended

Dec. 31, 2013

NET INCOME (LOSS) PER COMMON SHARE [Abstract]

Calculation of Net Earnings Per Share

The following sets forth the denominator used in the calculations of basic net income (loss) per share and net income (loss) per share assuming dilution:

	Year ended December 31, 2013		Year ended December 31, 2012
Denominator for basic net income (loss) per share, weighted average shares outstanding		16,977,027		15,007,852
Dilutive effect of common stock options		N/A		N/A
Dilutive effect of Series C convertible preferred stock and convertible debt		N/A		N/A
Denominator for net income (loss) per share, assuming dilution		16,977,027		15,007,852

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Equipment [Member] | Minimum [Member]
Accounting Policies [Line Items]
Estimated useful life	3 years
Equipment [Member] | Maximum [Member]
Accounting Policies [Line Items]
Estimated useful life	5 years
Calmare pain therapy medical device technology [Member] | Revenues [Member]
Accounting Policies [Line Items]
Revenue	$ 653,000	$ 913,000
Percentage of revenue	85.00%	85.00%
Calmare pain therapy medical device technology [Member] | Revenues [Member] | Customer One [Member]
Accounting Policies [Line Items]
Revenue	160,000	120,000
Percentage of revenue	25.00%	13.00%
Calmare pain therapy medical device technology [Member] | Revenues [Member] | Customer Two [Member]
Accounting Policies [Line Items]
Revenue		$ 100,000
Percentage of revenue		11.00%
Calmare pain therapy medical device technology [Member] | Sales of supplies and training, rental payments and the sale of rental assets [Member]
Accounting Policies [Line Items]
Percentage of revenue	4.00%	5.00%

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STOCK-BASED COMPENSATION PLANS

12 Months Ended

Dec. 31, 2013

STOCK-BASED COMPENSATION PLANS [Abstract]

STOCK-BASED COMPENSATION PLANS

14. STOCK-BASED COMPENSATION PLANS

2011 Employees', Directors' and Consultants' Stock Option Plan - In May 2011, the Board of Directors approved a new option plan for employees, directors and consultants. Pursuant to this plan which is administered by a Committee appointed by the Board of Directors, we could grant to qualified employees, directors and consultants either incentive options or nonstatutory options (as defined by the Internal Revenue Service). The stock options granted per written option agreements approved by the Committee, must have exercise prices not less than 100% of the Fair Market Value of our common stock on the date of the grant. Up to 1,500,000 common shares are available for grants under this plan. No options may be granted under this plan after December 31, 2015.

The following information relates to the 2011 Option Plan:

	December 31, 2013		December 31, 2012
Common shares reserved for issuance on exercise of options		1,165,000		110,000
Shares available for future option grants		335,000		890,000

1997 Employee Stock Option Plan - Pursuant to our 1997 Employees' Stock Option Plan, as amended (the "1997 Option Plan"), we could grant to employees either incentive stock options or nonqualified stock options (as defined by the Internal Revenue Service). The stock options had to be granted at exercise prices not less than 100% of the fair market value of our common stock at the grant date. The maximum life of stock options granted under this plan is ten years from the grant date. The Compensation Committee or the Board of Directors determined vesting provisions when stock options were granted, and stock options granted generally vested over three or four years. No options could be granted under this plan after September 30, 2007.

The following information relates to the 1997 Option Plan:

	December 31, 2013		December 31, 2012
Common shares reserved for issuance on exercise of options		87,000		87,000
Shares available for future option grants		-		-

2000 Director's Stock Option Plan - Pursuant to our Directors' Stock Option Plan (the "Directors' Option Plan"), we could grant each non-employee director 10,000 fully vested, nonqualified common stock options when the director first is elected, and 10,000 common stock options on the first business day of January thereafter, as long as the individual is a director. All such stock options are granted at an option price not less than 100% of the fair market value of the common stock at the grant date. The maximum life of options granted under this plan is ten years from the grant date. No options could be granted after January 4, 2010.

The following information relates to the 2000 Directors' Stock Option Plan:

	December 31, 2013		December 31, 2012
Common shares reserved for issuance on exercise of options		120,000		120,000
Shares available for future option grants		-		-

Summary of Common Stock Options - The total fair value of shares vested in the years ended December 31, 2013 and December 31, 2012 was $116,365 and $138,630, respectively, of non-cash compensation expense. Of these amounts, $84,550 and $0 was included in personnel and consulting expenses, from stock options granted to employees, and vesting during the year ended December 31, 2013 and 2012, respectively.

Also $14,895 and $58,630 of noncash compensation expense was included in general and administrative expenses, from stock options granted to directors pursuant to the Directors Option Plan in the years ended December 31, 2013 and 2012, respectively. Since these stock options are fully vested upon grant, the full fair value of the stock options is recorded as expense at the date of grant. During the year ended December 31, 2013, the Company granted 50,000 options to non-employee directors which were fully vested upon issuance, and 5,000 options which were fully vested upon issuance to two non-employee directors who had served as chairman, as approved by the Board of Directors. During the years ended December 31, 2013 and 2012, the Board of Directors extended the expiration dates for all options previously granted to one and two, respectively, departing Board members in recognition for service. Those options will expire per their original term specified in each individual option agreement, typically either 5 or 10 years from the date of granting, rather than expiring within the specified time period, typically 90 or 180 days following the Board members' termination dates. The Company considered the extension as a modification to the option agreements recording incremental compensation expense of $16,920 and $80,000 for the years ended December 31, 2013 and 2012, respectively.

During the quarter ended March 31, 2013, the Company granted 1,000,000 options to the then-CEO. As approved by the Board of Directors, these options granted were expected to vest over a four (4) year period, with 200,000 options vesting upon issuance. Since his resignation on September 26, 2013, expense for the quarters ended March 31, 2013 and June 30, 2013 has been reversed. The 200,000 vested options all expired 90 days from his resignation, per the Option Agreement.

During the quarter ended December 31, 2013, the Company granted 1,000,000 options to the current CEO. As approved by the Board of Directors, these options vest over a four (4) year period, with 200,000 options vested upon issuance.

No options were granted to employees during the year ended December 31, 2012.

We estimated the fair value of each option on the grant date using a Black-Scholes option-pricing model with the following weighted average assumptions:

	Year ended December 31, 2013			Year ended December 31, 2012
Dividend yield (1)		0.0	%		0.0	%
Expected volatility (2)		99.2% - 110.2	%		86.7% - 87.1	%
Risk-free interest rates (3)		1.02	%		0.89	%
Expected lives (2)		2-5 years			5 years

(1) We have not paid cash dividends on our common stock since 1981, and currently do not have plans to pay or declare cash dividends. Consequently, we used an expected dividend rate of zero for the valuations.

(2) Estimated based on our historical experience. Volatility was based on historical experience over a period equivalent to the expected life in years.

(3) Based on the U.S. Treasury constant maturity interest rate with a term consistent with the expected life of the options granted.

A summary of the status of all our common stock options as of December 31, 2013 and 2012, and changes during the periods then ended is presented below.

	Year ended December 31, 2013							Year ended December 31, 2012
	Shares			Weighted Average Exercise Price		Aggregate Intrinsic Values		Shares			Weighted Average Exercise Price		Aggregate Intrinsic Values
Outstanding at beginning of period		317,000		$	1.85	$			313,000		$	2.11
Granted		2,055,000			0.29				70,000			1.24
Forfeited		(1,000,000	)		0.50				(66,000	)		2.44
Exercised		-							-
Expired or terminated		-							-
Outstanding at end of year		1,372,000		$	0.50	$	240,750		317,000		$	1.85
Vested at end of year		572,000		$	1.10	$	48,750		317,000		$	1.85
Nonvested at end of year		800,000		$	0.08	$	192,000
Weighted average fair value per share of options issued during the year				$	0.21						$	1.18

Generally, we issue new shares of common stock to satisfy stock option exercises.