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| [X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|-----|--------------------------------------------------------------------------------------|

| [   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|-----------------|------------------------------------------------------------------------------------------|

| Delaware                                                                                          |   | 33-0224167                          |
|---------------------------------------------------------------------------------------------------|--------|-------------------------------------|
| (State or other jurisdiction ofincorporation or organization)                                     |   | (I.R.S. EmployerIdentification No.) |
|                                                                                              |   |
| 10815 Rancho Bernardo Road, Suite 310,San Diego, CA 92127(Address of principal executive offices) |
|  (858) 673-8600(Registrant’s Telephone Number, Including Area Code)                    |

| Large accelerated filer                                | [   ]      | Accelerated filer                | [X]             |
|------------------------------------------------------------------|-----------------|-------------------------------------------------|-----------------|
| Non-accelerated filer(Do not check if smaller reporting company) | [   ] | Smaller Reporting Company   | [   ] |

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EPO

|          |                                                                                           | Page Number |   |
|---------------|------------------------------------------------------------------------------------------------|------------------|--------|
| PART III |
| Item 10. | Directors, Executive Officers and Corporate Governance                                         | 1                |   |
| Item 11. | Executive Compensation                                                                         | 4                |   |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 11               |   |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence                      | 14               |   |
| Item 14. | Principal Accounting Fees and Services                                                         | 15               |   |
| PART IV       |
| Item 15.      | Exhibits and Financial Statement Schedules                                                     | 16               |   |
| Signatures    |                                                                                           |             |

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AR

CUTI

| Name                               |   | Age    |   | Principal Occupation/Position Held With the Company |
|------------------------------------|--------|--------|--------|------------------------------------------------------------------------------|
| Mr. S. James Miller, Jr. |   |   | 61     |                                                                         | Chief Executive Officer and Chairman of the Board of Directors |
| Mr. Wayne Wetherell           |   |   | 62     |                                                                         | Sr. Vice President, Chief Financial Officer, Secretary and Treasurer |
| Mr. David Harding                  |   |   | 45     |                                                                         | Vice President, Chief Technical Officer |
| Mr. Jeff Harris                    |   |   | 50     |                                                                         | Sr. Vice President of Sales and Marketing |
| Mr. David Carey               |   |   | 70     |                                                                         | Director |
| Mr. Guy Steve Hamm            |   |   | 67     |                                                                         | Director |
| Mr. David Loesch              |   |   | 70     |                                                                         | Director |
| Mr. John Cronin               |   |   | 60     |                                                                         | Director |
| Mr. Neal Goldman                   |   |   | 70     |                                                                         | Director |
| Mr. Charles Crocker                |   |   | 76     |                                                                         | Director |

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XEC

| ● | achieve or exceed our annual financial plan and be profitable;  |
|---------|----------------------------------------------------------------------|

| ● | make continuous progression towards achieving our long-term strategic objectives to be a high-growth company with growing profitability; and  |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | increase our share price to provide greater value to our stockholders. |
|---------|------------------------------------------------------------------------|

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| ● | base salary;  |
|---------|--------------------|

| ● | annual incentive compensation (in the form of bonuses or otherwise);  |
|---------|----------------------------------------------------------------------------|

| ● | equity awards pursuant to the terms and conditions of the 1999 Plan;  |
|---------|----------------------------------------------------------------------------|

| ● | upon the hiring of key executives and other personnel;  |
|---------|--------------------------------------------------------------|

| ● | annually, when we review progress against corporate and personal goals; and  |
|---------|-----------------------------------------------------------------------------------|

| ● | when we believe that competitive forces or economic conditions threaten to cause our key executives to lose their motivation and/or where retention of these key executives is in jeopardy. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   |   | The Compensation Committee of the Board of Directors: |
|--------|--------|-------------------------------------------------------|
|   |   |  David Carey (Chairman)John CroninNeal Goldman   |

| Name and Principal Position       | Year   |   | Salary |    |   | Stock Awards |   |   | Option Awards(1)(2)(3) |   |   | All Other Compensation |   |   | Total  |   |
|--------------------------------------------------|--------|--------|--------|---------|--------|--------------|--------|--------|------------------------|--------|--------|-----------------------------|--------|--------|--------|--------|
|                                             |   |   |   |    |   |         |   |   |                   |   |   |                        |   |   |   |   |
| S. James Miller, Jr.                             | 2014   |   | $      | 356,699 |   |         | $      | -      |                   |   | $      | 189,385                     |   |   | $      | 21,310 | (4) |   | $ | 567,394 |   |
| Chairman of the Board andChief Executive Officer | 2013   |   | $      | 358,857 |   |         | $      | -      |                   |   | $      | 212,906                     |   |   | $      | 18,191 |   |   | $ | 589,954 |   |
|                                             | 2012   |   | $      | 352,915 |   |         | $      | -      |                   |   | $      | 211,019                     |   |   | $      | 16,474 |   |   | $ | 580,408 |   |
|                                             |   |   |   |    |   |         |   |   |                   |   |   |                        |   |   |   |   |   |   |   |   |   |
| Wayne G. Wetherell                               | 2014   |   | $      | 207,333 |   |         | $      | -      |                   |   | $      | 32,114                      |   |   | $      | 13,534 | (5) |   | $ | 252,981 |   |
| Senior Vice PresidentChief Financial Officer,    | 2013   |   | $      | 211,320 |   |         | $      | -      |                   |   | $      | 25,277                      |   |   | $      | 12,100 |   |   | $ | 248,697 |   |
| Secretary, and Treasurer                         | 2012   |   | $      | 211,146 |   |         | $      | -      |                   |   | $      | 45,585                      |   |   | $      | 11,575 |   |   | $ | 268,306 |   |
|                                             |   |   |   |    |   |         |   |   |                   |   |   |                        |   |   |   |   |   |   |   |   |   |
| David Harding                                    | 2014   |   | $      | 230,000 |   |         | $      | -      |                   |   | $      | 146,087                     |   |   | $      | 3,757  |   |   | $ | 379,844 |   |
| Vice President andChief Technical Officer        | 2013   |   | $      | 230,160 |   |         | $      | -      |                   |   | $      | 105,044                     |   |   | $      | -      |   |   | $ | 335,204 |   |
|                                             | 2012   |   | $      | 227,257 |   |         | $      | -      |                   |   | $      | 114,826                     |   |   | $      | -      |   |   | $ | 342,083 |   |

| (1)    |   | All option awards were granted under the 1999 Stock Award Plan (the “1999 Plan”).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (2)    |   | The amounts presented in this column do not reflect the cash value or realizable value of option grants to the named executive officers during the year ended December 31, 2014.  During the year ended December 31, 2014, no named executive officer exercised an option and therefore no value was realized during the reporting period.  The amounts reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2014, in accordance with the provisions of ASC 718 and thus may include amounts from awards granted prior to 2014. We have elected to use the Black-Scholes option-pricing model, which incorporates various assumptions including volatility, expected life, and interest rates. We are required to make various assumptions in the application of the Black-Scholes option-pricing model and have determined that the best measure of expected volatility is based on the historical weekly volatility of our common stock. Historical volatility factors utilized in our Black-Scholes computations range from 71% to 103%. We have elected to estimate the expected life of an award based upon the SEC approved “simplified method” noted under the provisions of Staff Accounting Bulletin No. 110. The expected term used by the Company during the years ended December 31, 2014 and 2013 was 5.9 years. The difference between the actual historical expected life and the simplified method was immaterial.  The interest rate used is the risk free interest rate and is based upon U.S. Treasury rates appropriate for the expected term. Interest rates used in the Company’s Black-Scholes calculations for the years ended December 31, 2014 and 2013 was 2.6%. Dividend yield is zero, as we do not expect to declare any dividends on our common shares in the foreseeable future. In addition to the key assumptions used in the Black-Scholes model, the estimated forfeiture rate at the time of valuation is a critical assumption. We have estimated an annualized forfeiture rate of 0% for corporate officers, 4.1% for members of the Board of Directors and 6.0% for all other employees. We review the expected forfeiture rate annually to determine if that percent is still reasonable based on historical experience. |

| (3) |   | The amounts reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2014, 2013 and 2012, in accordance with the provisions of ASC 718 and thus may include amounts from awards granted prior to 2014, 2013 and 2012. Assumptions used in the calculation of these amounts are included in Note 2 of the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2014. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)    |   | This amount includes premiums on life insurance and disability insurance of $8,912, matching 401(k) contributions of $10,400, and other perquisites of $1,998.. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                            |
| (5)    |   | This amount includes premiums on life insurance and disability insurance of $3,146, matching 401(k) contributions of $8,390, and other perquisites of $1,998.   |

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|                          |        Grant Date |   | All Other Option Awards: Number of Securities Underlying Options(#) |   |   |     Exercise or Base Price of Option Awards($/Share)(1) |   |   |  Grant Date Fair Value of Stock and Option Awards($) (2) |   |
|-------------------------------|------------------------------------------------------|--------|--------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------|--------|
| S. James Miller, Jr.          | 12/15/2014                                           |   |                                                                     | 50,000 |   |                                                                        |   | 2.29   |                                                          |   | $ | 189,385 |   |
| Wayne  G. Wetherell | 12/15/2014                                           |   |                                                                     | 10,000 |   |                                                                        |   | 2.29   |                                                          |   | $ | 32,114 |   |
| David Harding                 | 12/15/2014                                           |   |                                                                     | 50,000 |   |                                                                        |   | 2.29   |                                                          |   | $ | 8,925 |   |

| (1) |   | Each option was granted at an exercise price equal to the fair market value of our common stock on the grant date which was equal to the closing price of a share of our common stock, as reported by the OTCQB, on the date of grant. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) |   | The amounts reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2014, in accordance with the provisions of ASC 718 and thus may include amounts from awards granted prior to 2014. Assumptions used in the calculation of these amounts are included in Note 2 of the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2014. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                      |   | Option Awards                                                   |   | Stock Awards                                                           |
|---------------------------|--------|----------------------------------------------------------------------|--------|------------------------------------------------------------------------|
| Name                      |   | Number ofSecuritiesUnderlyingUnexercisedOptions:Exercisable (#) |   | Number ofSecuritiesUnderlyingUnexercisedOptions:Unexercisable (#) |   | OptionExercisePrice($) |   | OptionExpirationDate |   | Number of Shares That Have NotVested (#) |   |  MarketValue of Shares That Have Not Vested ($) |
| S. James Miller, Jr. |   | 100,000                                                              |   | -                                                                      |   | $ | 0.20 |   | 1/27/2019 |   | - |   | $ | - |
|                      |   | 183,000                                                              |   | -                                                                      |   | $ | 0.73 |   | 1/29/2020 |   | - |   | $ | - |
|                      |   | 225,000                                                              |   | -                                                                      |   | $ | 1.11 |   | 3/10/2021 |   | - |   | $ | - |
|                      |   | 412,500                                                              |   | 37,500                                                                 |   | $ | 0.92 |   | 2/2/2022 |   | - |   | $ | - |
|                      |   | 58,375                                                               |   | 41,625                                                                 |   | $ | 0.93 |   | 2/8/2023 |   | - |   | $ | - |
|                      |   | 33,400                                                               |   | 66,600                                                                 |   | $ | 1.93 |   | 10/29/2023 |   | - |   | $ | - |
|                      |   | -                                                                    |   | 50,000                                                                 |   | $ | 2.29 |   | 12/15/2024 |   | - |   | $ | - |
|                      |   |                                                                 |   |                                                                   |   |   |   |   |   |   |   |   |   |   |
| Wayne G. Wetherell        |   | 60,000                                                               |   | -                                                                      |   | $ | 0.20 |   | 1/27/2019 |   | - |   | $ | - |
|                      |   | 60,000                                                               |   | -                                                                      |   | $ | 0.73 |   | 1/29/2020 |   | - |   | $ | - |
|                      |   | 91,675                                                               |   | 8,325                                                                  |   | $ | 0.92 |   | 2/2/2022 |   | - |   | $ | - |
|                      |   | 3,336                                                                |   | 6,664                                                                  |   | $ | 1.93 |   |   |   | - |   | $ | - |
|                      |   | -                                                                    |   | 10,000                                                                 |   | $ | 2.29 |   | 12/15/2024 |   | - |   | $ | - |
|                      |   |                                                                 |   |                                                                   |   |   |   |   |   |   |   |   |   |   |
| David Harding             |   | 50,000                                                               |   | -                                                                      |   | $ | 0.20 |   | 1/27/2019 |   | - |   | $ | - |
|                      |   | 80,000                                                               |   | -                                                                      |   | $ | 0.73 |   | 1/29/2020 |   | - |   | $ | - |
|                      |   | 297,917                                                              |   | 27,083                                                                 |   | $ | 0.92 |   | 2/2/2022 |   | - |   | $ | - |
|                      |   | 58,375                                                               |   | 41,625                                                                 |   | $ | 0.93 |   | 2/8/2023 |   | - |   | $ | - |
|                      |   | 25,000                                                               |   | 50,000                                                                 |   | $ | 1.93 |   | 10/29/2023 |   | - |   | $ | - |
|                      |   | -                                                                    |   | 50,000                                                                 |   | $ | 2.29 |   | 12/15/2024 |   | - |   | $ | - |
|                      |   |                                                                 |   |                                                                   |   |   |   |   |   |   |   |   |   |   |
|                      |   |                                                                 |   |                                                                   |   |   |   |   |   |   |   |   |   |   |

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| Plan category                                          | Number of securities to be issued upon exercise of outstanding options, warrants and rights |   | Weighted-Average exercise price of outstanding options, warrants and rights |   |   | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) |   |
|-------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                        | (a)                                                                                                                            |   | (b)                                                                                        |   |   | (c)                                                                                                                                                                      |   |
| Equity compensation plans approved by security holders:     |                                                                                                                           |   |                                                                                       |   |   |                                                                                                                                                                     |   |
| 1999 Stock Award Plan, as amended and restated              | 4,048,796                                                                                                                      |   | $                                                                                          | 1.06   |   |                                                                                                                                                                     |   | 2,651,932 |   |
|                                                        |                                                                                                                           |   |                                                                                       |   |   |                                                                                                                                                                     |   |   |   |
| Equity compensation plans not approved by security holders: |                                                                                                                           |   |                                                                                       |   |   |                                                                                                                                                                     |   |   |   |
| 2001 Equity Incentive Plan                                  | 8,500                                                                                                                          |   | $                                                                                          | 2.74   |   |                                                                                                                                                                     |   | - |   |
|                                                        |                                                                                                                           |   |                                                                                       |   |   |                                                                                                                                                                     |   |   |   |
| Total                                                       | 4,057,296                                                                                                                      |   | $                                                                                          | 1.06   |   |                                                                                                                                                                     |   | 2,651,932 |   |

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|            |   | Fees Earned orPaid in Cash ($) |   |   | StockAwards ($) |   |   | OptionAwards($) (2) |   |   | All OtherCompensation($) |   |   | Total ($) |   |
|-----------------|--------|-----------------------------------------------|--------|--------|-----------------|--------|--------|--------------------------|--------|--------|--------------------------|--------|--------|----------------|--------|
| Guy Steve Hamm  |   | $                                             | 5,500  |   |            | $      | 39,696 | (1)                      |   | $      | 6,608                    |   |   | $              |   |   |   | $ | 51,804 |   |
|            |   |                                          |   |   |            |   |   |                     |   |   |                     |   |   |           |   |   |   |   |   |   |
| David Carey     |   | $                                             | 7,500  |   |            | $      | 39,696 | (1)                      |   | $      | 6,608                    |   |   | $              |   |   |   | $ | 53,804 |   |
|            |   |                                          |   |   |            |   |   |                     |   |   |                     |   |   |           |   |   |   |   |   |   |
| David Loesch    |   | $                                             | 2,500  |   |            | $      | 39,696 | (1)                      |   | $      | 6,608                    |   |   | $              |   |   |   | $ | 48,804 |   |
|            |   |                                          |   |   |            |   |   |                     |   |   |                     |   |   |           |   |   |   |   |   |   |
| John Cronin     |   | $                                             | 2,500  |   |            | $      | 39,696 | (1)                      |   | $      | 18,452                   |   |   | $              |   |   |   | $ | 60,648 |   |
|            |   |                                          |   |   |            |   |   |                     |   |   |                     |   |   |           |   |   |   |   |   |   |
| Neal Goldman    |   | $                                             | 2,500  |   |            | $      | 39,696 | (1)                      |   | $      | 6,561                    |   |   | $              |   |   |   | $ | 48,757 |   |
|            |   |                                          |   |   |            |   |   |                     |   |   |                     |   |   |           |   |   |   |   |   |   |
| Charles Crocker |   | $                                             | -      |   |            | $      | 39,696 | (1)                      |   | $      | 18,373                   |   |   | $              |   |   |   | $ | 58,069 |   |

| (1) | Represents the monthly vesting in 2014 of 20,568 restricted shares granted on October 29, 2013.  The restricted shares vest monthly over fourteen months ending December 31, 2014. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The amounts reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2014, in accordance with the provisions of ASC 718 and thus may include amounts from awards granted prior to 2014. Assumptions used in the calculation of these amounts are included in Notes to the Consolidated Financial Statements. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS |
|----------|-------------------------------------------------------------------------------------------------|

| (i)   | Each of our officers and directors;                                                                                                                                                                                                                                                                                                                         |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  | All officer and directors as a group; and                                                                                                                                                                                                                                                                                                                   |
| (iii) | Each person known by us to beneficially own five percent or more of the outstanding shares of our common stock, Series B Preferred and Series E Preferred.  Percent ownership is calculated based on 239,400 shares of Series B Preferred, 12,000 shares of Series E Preferred, and 93,551,733 shares common stock outstanding at April 15, 2015. |

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| Name, Address and Title (if applicable) |   | Series B Convertible Preferred Stock (1) |   | % Ownership of Class (1) |   |
|-----------------------------------------|--------|------------------------------------------|--------|------------------------------------|--------|
| Darrelyn Carpenter                      |   |                                     | 28,000 |                               | 12     | %  |
|                                    |   |                                     |   |                               |   |   |
| Frederick C. Orton                      |   |                                     | 20,000 |                               | 8      | %  |
|                                    |   |                                     |   |                               |   |   |
| Howard Harrison                         |   |                                     | 20,000 |                               | 8      | %  |
|                                    |   |                                     |   |                               |   |   |
| Wesley Hampton                          |   |                                     | 16,000 |                               | 7      | %  |

| (1) | Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.   |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Name, Address and Title (if applicable)      |   | Series E Convertible Preferred Stock (1) |   | % Ownership of Class (1) |   |
|----------------------------------------------|--------|------------------------------------------|--------|-------------------------------|--------|
| Charles L. Frischer                          |   |                                     | 2,636  |                          | 22     | %  |
|                                         |   |                                     |   |                          |   |   |
| Neal Goldman                                 |   |                                     | 2,278  |                          | 19     | %  |
|                                         |   |                                     |   |                          |   |   |
| CF Special Situation Fund I LP(2)            |   |                                     | 2,286  |                          | 19     | %  |
|                                         |   |                                     |   |                          |   |   |
| Wynnefield Partners Small Cap Value, LP I(3) |   |                                     | 1,500  |                          | 12.5   | %  |

| (1)    | Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.                                                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                              |
| (2)    | Includes 120 shares held in the name of CF Special Situation Fund II, LP, and 286 shares held by Robert T. Clutterbuck.  Mr. Clutterbuck has shared voting and dispositive power of these shares.  |
| (3)    | Includes 450 shares held in the name of Wynnefield Partners Small Cap Value, LP and 300 shares held by Wynnefield Small Cap Value Offshore Fund Ltd.                                                              |

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| Name and Address                                                              |   | Number of Shares (1) |   | Percent of Class (2) |   |
|-------------------------------------------------------------------------------|--------|--------------------------------|--------|--------------------------------|--------|
|                                                                          |   |                           |   |                           |   |   |
| Directors and Named Executive Officers:                                       |   |                           |   |                           |   |   |
|                                                                          |   |                           |   |                           |   |   |
| S. James Miller, Jr. (3)                                                 |   | 1,911,762                      |   |                           | 2.0    |  % |
| Chairman, Chief Executive Officer                                             |   |                           |   |                           |   |   |
|                                                                          |   |                           |   |                           |   |   |
| David Carey (4)                                                          |   | 126,689                        |   |                           |   | * |
| Director                                                                      |   |                           |   |                           |   |   |
|                                                                          |   |                           |   |                           |   |   |
| G. Steve Hamm (5)                                                        |   | 141,775                        |   |                           |   | * |
| Director                                                                      |   |                           |   |                           |   |   |
|                                                                          |   |                           |   |                           |   |   |
| David Loesch (6)                                                         |   | 169,897                        |   |                           |   | * |
| Director                                                                      |   |                           |   |                           |   |   |
|                                                                          |   |                           |   |                           |   |   |
| Neal I. Goldman (7)                                                      |   | 34,841,692                     |   |                           | 36.7   | %  |
| Director                                                                      |   |                           |   |                           |   |   |
|                                                                          |   |                           |   |                           |   |   |
| John Cronin (8)                                                          |   | 102,189                        |   |                           |   | * |
| Director                                                                      |   |                           |   |                           |   |   |
|                                                                          |   |                           |   |                           |   |   |
| Charles Crocker (9)                                                      |   | 373,023                        |   |                           |   | * |
| Director                                                                      |   |                           |   |                           |   |   |
|                                                                          |   |                           |   |                           |   |   |
| Wayne Wetherell (10)                                                     |   | 536,202                        |   |                           |   | * |
| SVP of Administration, Chief Financial Officer, Secretary                     |   |                           |   |                           |   |   |
|                                                                          |   |                           |   |                           |   |   |
| David Harding (11)                                                       |   | 672,525                        |   |                           |   | * |
| Chief Technical Officer                                                       |   |                           |   |                           |   |   |
|                                                                          |   |                           |   |                           |   |   |
| Jeff Harris (12)                                                              |   | -                              |   |                           |   | * |
| SVP of Sales and Marketing                                                    |   |                           |   |                           |   |   |
|                                                                          |   |                           |   |                           |   |   |
| Total beneficial ownership of directors and officers as a group (10 persons): |   | 38,875,754                     |   |                           | 40.0   | % |
|                                                                          |   |                           |   |                           |   |   |
| 5% Stockholders:                                                              |   |                           |   |                           |   |   |
|                                                                          |   |                           |   |                           |   |   |
| Traditional Investment Fund, LTD (13)(14)                                |   | 6,000,000                      |   |                           | 6.7    | % |

| (1) | All entries exclude beneficial ownership of shares issuable pursuant to options that have not vested or that are not otherwise exercisable as of the date hereof or which will not become vested or exercisable within 60 days of April 15, 2015. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)              | Percentages are rounded to nearest one-tenth of one percent. Percentages are based on 93,551,733 shares of common stock outstanding as of April 15, 2015. Options that are presently exercisable or exercisable within 60 days of April 15, 2015 are deemed to be beneficially owned by the stockholder holding the options for the purpose of computing the percentage ownership of that stockholder, but are not treated as outstanding for the purpose of computing the percentage of any other stockholder.                                                  |
|----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (3)                        | Includes 75,201 shares held jointly with spouse, 1,083,075 shares issuable upon exercise of stock options, each exercisable within 60 days of April 15, 2015.                                                                                                                                                                                                                                                                                                                                                                                                         |
|                       |
| (4)                        | Includes 40,003 shares issuable upon exercise of stock options exercisable within 60 days of April 15, 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (5)                        | Includes 42,503 shares issuable upon exercise of stock options exercisable within 60 days of April 15, 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (6)                        | Includes 40,003 shares issuable upon exercise of stock options, each exercisable within 60 days of April 15, 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (7)                        | Includes 1,198,947 shares issuable upon the conversion of Series E Preferred Stock and 12,503 shares issuable upon exercise of stock options, each exercisable within 60 days of April 15, 2015. Mr. Goldman exercises sole voting and dispositive power over 25,811,692 shares, and shared voting and dispositive power over 9,030,000 reported shares, of which 6,000,000 shares are owed by Goldman Partners, LP, 3,000,000 shares are owned by the Goldman Family 2012 GST Trust and 30,000 shares are owed by The Neal and Marlene Goldman Foundation. |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (8)                        | Includes 62,503 shares issuable upon exercise of stock options exercisable within 60 days of April 15, 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (9)                        | Includes 58,337 shares issuable upon exercise of stock options exercisable within 60 days of April 15, 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (10)                       |  Includes 225,002 shares issuable upon exercise of stock options exercisable within 60 days of April 15, 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (11)                       | Includes 567,525 shares issuable upon exercise of stock options exercisable within 60 days of April 15, 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (12)                       | As Mr. Harris is new to the management team no stock options are exercisable within 60 days of April 15, 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (13)                       | Address for this beneficial owner is 795 Ridge Lake Blvd., Suite 106, Memphis Tennessee 38120.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (14)                       | Based on ownership information from the Schedule 13G filed by Traditional Investment Fund, LTD (“Traditional Investment”) on February 6, 2013. Mr. Thomas Wallace, manager of Traditional Investment, has shared voting and dispositive power of these shares.                                                                                                                                                                                                                                                                                            |
|  * less than 1%  |

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NC

|               |   | Fiscal Year Ended |    |
|--------------------|--------|-------------------|---------|
|               |   | 2014              |    |   | 2013 |   |
|               |   |              |    |   |   |   |   |   |
| Audit fees         |   | $                 | 193,000 |   |   | $ | 211,000 |   |
|               |   |              |    |   |   |   |   |   |
| Audit-related fees |   | $                 | -       |   |   | $ |   - |   |
|               |   |              |    |   |   |   |   |   |
| Tax fees           |   | $                 | -       |   |   | $ |   - |   |
|               |   |              |    |   |   |   |   |   |
| All other fees     |   | $                 | -       |   |   | $ | - |   |
|               |   |              |    |   |   |   |   |   |
| Total Fees         |   | $                 | 193,000 |   |   | $ | 211,000 |   |

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AR

| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
|---------------|--------------------------------------------|

| (a) | The following documents are filed as part of this annual report: |
|-----|------------------------------------------------------------------|

| Exhibit No. |   | Description                                                                                                                                                                                                                                 |
|-------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1         |   | Agreement and Plan of Merger, dated October 27, 2005 (incorporated by reference to Annex A to the Company’s Definitive Proxy Statement on Schedule 14A, filed November 15, 2005).                                           |
| 3.1         |   | Certificate of Incorporation (incorporated by reference to Annex B to the Company’s Definitive Proxy Statement on Schedule 14A, filed November 15, 2005).                                                                        |
| 3.2         |   | Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed October 14, 2011).                                                                       |
| 3.3         |   | Bylaws (incorporated by reference to Annex C to the Company’s Definitive Proxy Statement on Schedule 14A, filed November 15, 2005).                                                                                              |
| 3.4         |   | Certificate of Designations, Preferences and Rights of the Series E Convertible Preferred Stock (incorporated by reference to Exhibit 3.1  to the Company’s Current Report on Form 8-K, filed February 2, 2015).            |
| 4.1         |   | Form of Warrant to Purchase Common Stock dated September 5, 2008 (incorporated by reference to Exhibit 4.19 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                     |
| 4.2         |   | Warrant, dated March 12, 2014 (incorporated by reference to the Company’s Current Report on Form 8-K, filed March 13, 2014).                                                                                                          |
| 4.3         |   | Warrant to Purchase Common Stock, dated February 12, 2009, issued by the Company to BET Funding, LLC (incorporated by reference to Exhibit 4.22 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                |
| 4.4         |   | Warrant to Purchase Common Stock, dated June 22, 2009, issued by the Company to BET Funding, LLC (incorporated by reference to Exhibit 4.24 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                    |
| 4.5         |   | Warrant to Purchase Common Stock, dated October 5, 2009, issued by the Company to BET Funding, LLC (incorporated by reference to Exhibit 4.25 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                  |
| 4.6         |   | Warrant to Purchase Common Stock, dated December 12, 2011(incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on December 21, 2011).                                                                |
| 4.7         |   | Registration Rights Agreement, dated December 12, 2011, by and between the Company and certain accredited investors (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed December 21, 2011). |

| 4.8   |   | Form of Amendment to Warrant, dated December 14, 2011 (incorporated by reference to Exhibit 4.15 to the Company’s Current Report on Form 10-K, filed January 17, 2012).                                                                                                                 |
|-------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.9   |   | Form of Amendment to Warrant, dated March 21, 2012, (incorporated by reference to Exhibit 4.16 to the Company's Annual Report on Form 10-K, filed April 4, 2012).                                                                                                                             |
| 4.10  |   | Warrant to Purchase Common Stock, dated March 28, 2013 issued by the Company to Neal Goldman (incorporated by reference to Exhibit 4.15 to the Company's Annual Report on Form 10-K, filed April 1, 2013).                                                                               |
| 4.11  |   | Warrant, dated March 12, 2014 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed March 13, 2014).                                                                                                                                                   |
| 10.1  |   | Employment Agreement, dated September 27, 2005, between the Company and S. James Miller (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed September 30, 2005).                                                          |
| 10.2  |   | Form of Indemnification Agreement entered into by the Company with its directors and executive officers (incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form SB-2 (No. 333-93131), filed December 20, 1999, as amended). |
| 10.3  |   | Amended and Restated 1999 Stock Plan Award (incorporated by reference to Appendix B of the Company’s Definitive Proxy Statement on Schedule 14A, filed November 21, 2007).                                                                                                         |
| 10.4  |   | Form of Stock Option Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed July 14, 2005).                                                                                                                        |
| 10.5  |   | 2001 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-QSB, filed November 14, 2001).                                                                                                                        |
| 10.6  |   | Securities Purchase Agreement, dated September 25, 2007, by and between the Company and certain accredited investors (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed September 26, 2007).                             |
| 10.7  |   | Office Space Lease between I.W. Systems Canada Company and GE Canada Real Estate Equity, dated July 25, 2008 (incorporated by reference to Exhibit 10.39 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                          |
| 10.8  |   | Form of Securities Purchase Agreement, dated August 29, 2008 by and between the Company and certain accredited investors (incorporated by reference to Exhibit 10.40 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                              |
| 10.9  |   | Change of Control and Severance Benefits Agreement, dated September 27, 2008, between Company and Charles Aubuchon (incorporated by reference to Exhibit 10.41 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                         |
| 10.10 |   | Change of Control and Severance Benefits Agreement, dated September 27, 2008, between Company and David Harding (incorporated by reference to Exhibit 10.42 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                            |
| 10.11 |   | First Amendment to Employment Agreement, dated September 27, 2008, between the Company and S. James Miller (incorporated by reference to Exhibit 10.43 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                                 |
| 10.12 |   | Form of Convertible Note dated November 14, 2008 (incorporated by reference to Exhibit 10.45 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                                                                                           |
| 10.13 |   | Second Amendment to Employment Agreement, dated April 6, 2009, between the Company and S. James Miller (incorporated by reference to Exhibit 10.50 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                                     |
| 10.14 |   | Office Space Lease between the Company and Allen W. Wooddell, dated July 25, 2008 (incorporated by reference to Exhibit 10.54 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                                                     |
| 10.15 |   | Third Amendment to Employment Agreement, dated December 10, 2009, between the Company and S. James Miller (incorporated by reference to Exhibit 10.60 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                                  |
| 10.16 |   | Securities Purchase Agreement, dated December 12, 2011, by and between the Company and certain accredited investors (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed December 21, 2011).                                                   |

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| 10.17    |   | Note Exchange Agreement, dated December 12, 2011, by and between the Company and certain accredited investors (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed December 21, 2011). |
|----------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.18    |   | Fourth Amendment to Employment Agreement, dated March 10, 2011, between the Company and S. James Miller, (incorporated by reference to Exhibit 10.40 to the Company’s Annual Report on Form 10-K, filed January 17, 2012).      |
| 10.19    |   | Fifth Amendment to Employment Agreement, dated January 31, 2012, between the Company and S. James Miller, Jr., (incorporated by reference to Exhibit 10.44 to the Company’s Annual Report on Form 10-K, filed April 4, 2012.    |
| 10.20    |   | Employment Agreement, dated January 1, 2013, between the Company and Wayne Wetherell (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed March 7, 2013).                                    |
| 10.21    |   | Employment Agreement, dated January 1, 2013, between the Company and Charles AuBuchon (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed March 7, 2013).                                   |
| 10.22    |   | Employment Agreement, dated January 1, 2013, between the Company and David Harding (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed March 7, 2013).                                      |
| 10.23    |   | Convertible Promissory Note dated March 27, 2013 issued by the Company to Neal Goldman (incorporated by reference to Exhibit 10.41 to the Company's Annual Report on Form 10-K, filed April 1, 2013).                                 |
| 10.24    |   | Amendment to Convertible Promissory Note, dated March 12, 2014 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed March 13, 2014).                                                         |
| 10.25    |   | Note Exchange Agreement, dated January 29, 2015 (incorporated by reference to the Company’s Current Report on Form 8-K, filed February 2, 2015).                                                                                |
| 10.26    |   | Seventh Amendment to Employment Agreement, by and between S. James Miller, Jr. and the Company, dated January 9, 2015 (incorporated by reference to the Company’s Current Report on Form 8-K, filed January 15, 2015).          |
| 10.27    |   | Second Amendment to Employment Agreement, by and between Wayne Wetherell and the Company, dated January 9, 2015 (incorporated by reference to the Company’s Current Report on Form 8-K, filed January 15, 2015).                |
| 10.28    |   | Second Amendment to Employment Agreement, by and between David E. Harding and the Company, dated January 9, 2015 (incorporated by reference to the Company’s Current Report on Form 8-K, filed January 15, 2015).               |
| 10.29    |   | Amendment No. 3 to Convertible Promissory Note, dated December 8, 2014 (incorporated by reference to the Company’s Current Report on Form 8-K, filed December 10, 2014).                                                        |
| 21.1     |   | List of Subsidiaries (incorporated by referenced to Exhibit 21.1 to the Company’s Annual Report on Form 10-K filed February 24, 2010).                                                                                          |
| 23.1*    |   | Consent of Independent valuation firm.                                                                                                                                                                                                |
| 23.2*    |   | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                             |
| 31.1     |   | Certification of CEO as Required by Rule 13a-14(a)/15d-14, filed herewith.                                                                                                                                                       |
| 31.2     |   | Certification of CFO as Required by Rule 13a-14(a)/15d-14, filed herewith.                                                                                                                                                       |
| 101.INS* |   | XBRL Instance Document                                                                                                                                                                                                                |
| 101.SCH* |   | XBRL Taxonomy Extention Schema                                                                                                                                                                                                        |
| 101.CAL* |   | XBRL Taxonomy Extention Calculation Linkbase                                                                                                                                                                                          |
| 101.DEF* |   | XBRL Taxonomy Extention Definition Linkbase                                                                                                                                                                                           |
| 101.LAB* |   | XBRL Taxonomy Extention Label Linkbase                                                                                                                                                                                                |
| 101.PRE* |   | XBRL Taxonomy Extention Presentation Linkbase                                                                                                                                                                                         |

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AT

| Registrant Date: April 23, 2015 |   | ImageWare Systems, Inc. /s/ S. James Miller, Jr.            |
|--------------------------------------|--------|------------------------------------------------------------------|
|                                 |   | S. James Miller, Jr.                                             |
|                                 |   | Chief Executive Officer (Principal Executive Officer), President |