----

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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.) |

| Large accelerated filer  [   ] | Accelerated filer  [   ] | Non-accelerated filer  [   ] | Smaller reporting company  [X] |
|---------------------------------------------------------|----------------------------------------------|--------------------------------------------------|-----------------------------------------------|

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|              |                                                                                           | Page Number |   |
|-------------------|------------------------------------------------------------------------------------------------|------------------|--------|
| PART III     |
| Item 10.     | Directors, Executive Officers and Corporate Governance                                         | 1                |   |
| Item 11.     | Executive Compensation                                                                         | 5                |   |
| Item 12.     | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 9                |   |
| Item 13.     | Certain Relationships and Related Transactions, and Director Independence                      | 12               |   |
| Item 14.     | Principal Accounting Fees and Services                                                         | 13               |   |
| Signatures        |                                                                                           |             |
| Index to Exhibits | 14                                                                                             |             |

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| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
|---------------|--------------------------------------------------------|

| Name                               |   | Age |   | Principal Occupation/Position Held With the Company |
|------------------------------------|--------|-----|--------|-------------------------------------------------------------------------|
| Mr. S. James Miller, Jr. |   | 59  |   | Chief Executive Officer and Chairman of the Board of Directors          |
| Mr. Wayne Wetherell           |   | 60  |   | Sr. Vice President, Chief Financial Officer, Secretary and Treasurer    |
| Mr. David Harding                  |   | 43  |   | Vice President, Chief Technical Officer                                 |
| Mr. David Carey               |   | 68  |   | Director                                                                |
| Mr. Guy Steve Hamm            |   | 65  |   | Director                                                                |
| Mr. David Loesch              |   | 68  |   | Director                                                                |
| Mr. John Cronin               |   | 57  |   | Director                                                                |
| Mr. Neal Goldman                   |   | 68  |   | Director                                                                |
| Mr. Charles Crocker                |   | 73  |   | Director                                                                |

----

----

----

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| ITEM 11. | EXECUTIVE COMPENSATION |
|---------------|------------------------|

| Name and Principal Position                                              |   | Year   |   | Salary  |    | Stock Awards |   | Option Awards(1)(2) |   |    | All Other Compensation |   |   | Total  |   |
|-----------------------------------------------------------------------------------------|--------|--------|--------|---------|---------|--------------|--------|---------------------|--------|---------|-----------------------------|--------|--------|--------|--------|
|                                                                                    |   |   |   |    |    |         |   |                |   |    |                        |   |   |   |   |
| S. James Miller, Jr.Chairman of the Board andChief Executive Officer               |   | 2012   |   | $       | 352,915 |         | $      | -                   |   | $       | 211,019                     |   |   | $      | 16,474 |   |   | $ | 580,408 |   |
|                                                                                    | 2011   |   |   | 331,428 |    |         | -      |                |   | 100,565 |                        |   |   | 16,745 |   |   |   | 448,738 |   |
|                                                                                    |   |   |   |    |    |         |   | -                   |   |    |                        |   |   |   |   |   |   |   |   |   |
| Wayne G. WetherellSenior Vice PresidentChief Financial Officer,Secretary, and Treasurer |   | 2012   |   |    | 211,146 |         |   |                |   |    | 45,585                      |   |   |   | 11,575 |   |   |   | 68,306 |   |
|                                                                                    | 2011   |   |   | 198,291 |    |         | -      |                |   | 24,836  | (3)                         |   |   | -      |   |   |   | 223,127 |   |
|                                                                                    |   |   |   |    |    |         |   |                |   |    |                        |   |   |   |   |   |   |   |   |   |
| David HardingVice President andChief Technical Officer                                  |   | 2012   |   |    | 227,257 |         |   |                |   |    | 114,826                     |   |   |   |   |   |   |   | 342,083 |   |
|                                                                                    | 2011   |   |   | 191,000 |    |         | -      |                |   | 20,719  | (3)                         |   |   | -      |   |   |   | 211,719 |   |

| (1)    |   | All option awards were granted under the 1999 Stock Award Plan (the “1999 Plan”).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (2)    |   | The amounts reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2012, in accordance with the provisions of ASC 718 and thus may include amounts from awards granted prior to 2012. 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 99% to 135%. 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, 2012 and 2011 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, 2012 and 2011 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, 2012 and 2011, in accordance with the provisions of ASC 718 and thus may include amounts from awards granted prior to 2012 and 2011. Assumptions used in the calculation of these amounts are included in Note 2 of the Consolidated Financial Statements. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                      | Option Awards                                                                         |   | Stock Awards                                                                                                                    |
|---------------------------|--------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|
| Name                      | Number ofSecuritiesUnderlyingUnexercisedUnearnedOptions:Exercisable (#)               |   | Number ofSecuritiesUnderlyingUnexercisedUnearnedOptions:Unexercisable (#)                                                  |   | OptionExercisePrice($) |   | OptionExpirationDate |   | Number of Shares That Have NotVested (#) |   |   |  MarketValue of Shares That Have Not Vested ($) |
| S. James Miller, Jr. | 100,000                                                                                    |   | 0                                                                                                                               |   | $ | 0.20 |   | 1/27/2019 |   | 26,385 |   | $ | $22,427 |
|                      | 167,750                                                                                    |   | 15,250                                                                                                                          |   | $ | 0.73 |   | 1/29/2020 |   |   |   |   |   |
|                      | 131,250                                                                                    |   | 93,750                                                                                                                          |   | $ | 1.11 |   | 3/10/2021 |   |   |   |   |   |
|                      | 0                                                                                          |   | 450,000                                                                                                                         |   | $ | 0.92 |   | 2/2/2022 |   |   |   |   |   |
|                      |                                                                                       |   |                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Wayne G. Wetherell        |               60,000 |   |                      0 |   | $ |             0.20 |   | 1/27/2019 |   |        13,630 |   | $ | $11,586 |
|                      | 55,000                                                                                     |   | 5,000                                                                                                                           |   | $ | 0.73 |   | 1/29/2020 |   |   |   |   |   |
|                      | 0                                                                                          |   | 100,000                                                                                                                         |   | $ | 0.92 |   | 2/2/2022 |   |   |   |   |   |
|                      |                                                                                       |   |                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| David Harding             | 50,000                                                                                     |   | 0                                                                                                                               |   | $ | 0.20 |   | 1/27/2019 |   | 8,750 |   | $ | $7,438 |
|                      | 73,333                                                                                     |   | 6,667                                                                                                                           |   | $ | 0.73 |   | 1/29/2020 |   |   |   |   |   |
|                      | 0                                                                                          |   | 325,000                                                                                                                         |   | $ | 0.92 |   | 2/2/2022 |   |   |   |   |   |

----

----

|               | Year   |   | Fees Earned orPaid in Cash ($) |   | StockAwards ($) |   | Option Awards($) (9) |   | All OtherCompensation ($) |   | Total ($) |
|--------------------|--------|--------|------------------------------------------|--------|-----------------|--------|----------------------|--------|---------------------------|--------|-----------|
| John Callan(1)     | 2012   |   |                                     | 41,000 |            | -      |  (2)            |   | 5,540                     |   | -         |   | 46,540 |
|               | 2011   |   |                                     | 41,000 |            | -      |  (2)            |   | 1,871                     |   | -         |   | 42,871 |
|               |   |   |                                     |   |            |   |                 |   |                      |   |      |   |   |
| Guy Steve Hamm     | 2012   |   |                                     | 41,500 |            | -      |  (3)            |   | 5,540                     |   | -         |   | 46,540 |
|               | 2011   |   |                                     | 41,500 |            | -      |  (3)            |   | 2,411                     |   | -         |   | 43,911 |
|               |   |   |                                     |   |            |   |                 |   |                      |   |      |   |   |
| David Carey        | 2012   |   |                                     | 40,792 |            | -      |  (4)            |   | 5,540                     |   | -         |   | 46,332 |
|               | 2011   |   |                                     | 38,500 |            | -      |  (4)            |   | 1,871                     |   | -         |   | 40,371 |
|               |   |   |                                     |   |            |   |                 |   |                      |   |      |   |   |
| David Loesch       | 2012   |   |                                     | 38,500 |            | -      |  (5)            |   | 5,540                     |   | -         |   | 44,040 |
|               | 2011   |   |                                     | 38,500 |            | -      |  (5)            |   | 1,871                     |   | -         |   | 40,371 |
|               |   |   |                                     |   |            |   |                 |   |                      |   |      |   |   |
| John Cronin(6)     | 2012   |   |                                     | 33,743 |            | -      |                 |   | 11,891                    |   | -         |   | 45,634 |
|               | 2011   |   |                                     | -      |            | -      |                 |   | -                         |   | -         |   | - |
|               |   |   |                                     |   |            |   |                 |   |                      |   |      |   |   |
| Neal Goldman(7)    | 2012   |   |                                     | 16,422 |            | -      |                 |   | -                         |   | -         |   | 16,422 |
|               | 2011   |   |                                     | -      |            | -      |                 |   | -                         |   | -         |   | - |
|               |   |   |                                     |   |            |   |                 |   |                      |   |      |   |   |
| Charles Crocker(8) | 2012   |   |                                     | 11,500 |            | -      |                 |   | 5,906                     |   | -         |   | 17,406 |
|               | 2011   |   |                                     | -      |            | -      |                 |   | -                         |   | -         |   | - |

| (1) | Mr. Callan resigned from the Company’s Board of Directors on January 29, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Represents the quarterly vesting of 25,521 restricted shares granted on January 11, 2010.  In January 2010, the Compensation Committee approved a proposal that certain members of management and board members holding stock options be offered restricted stock awards in exchange for the cancellation of the stock options they held with strike prices of $1.45 or more.  The restricted stock awards were offered on a 3 for 5 basis (for each 5 stock options surrendered, 3 shares of restricted stock are granted).  The shares of restricted stock vest over three years on a quarterly basis with the participant to receive 1/12 of the shares on each three-month anniversary of the date of grant.  As the fair value of the stock options exchanged exceeded the fair value of the restricted shares issued, no incremental compensation expense is incurred for the restricted shares.  |

| (3) | Represents the quarterly vesting of 16,200 restricted shares granted on January 11, 2010.  The restricted shares vest quarterly over three years ending January 11, 2013. In January 2010, the Compensation Committee approved a proposal that certain members of management and board members holding stock options be offered restricted stock awards in exchange for the cancellation of the stock options they held with strike prices of $1.45 or more.  The restricted stock awards were offered on a 3 for 5 basis (for each 5 stock options surrendered, 3 shares of restricted stock are granted).  The shares of restricted stock vest over three years on a quarterly basis with the participant to receive 1/12 of the shares on each three-month anniversary of the date of grant.  As the fair value of the stock options exchanged exceeded the fair value of the restricted shares issued, no incremental compensation expense is incurred for the restricted shares.  |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Represents the quarterly vesting of 12,000 restricted shares granted on January 11, 2010.  The restricted shares vest quarterly over three years ending January 11, 2013. In January 2010, the Compensation Committee approved a proposal that certain members of management and board members holding stock options be offered restricted stock awards in exchange for the cancellation of the stock options they held with strike prices of $1.45 or more.  The restricted stock awards were offered on a 3 for 5 basis (for each 5 stock options surrendered, 3 shares of restricted stock are granted).  The shares of restricted stock vest over three years on a quarterly basis with the participant to receive 1/12 of the shares on each three-month anniversary of the date of grant.  As the fair value of the stock options exchanged exceeded the fair value of the restricted shares issued, no incremental compensation expense is incurred for the restricted shares.  |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) | Represents the quarterly vesting of 28,200 restricted shares granted on January 11, 2010.  The restricted shares vest quarterly over three years ending January 11, 2013. In January 2010, the Compensation Committee approved a proposal that certain members of management and board members holding stock options be offered restricted stock awards in exchange for the cancellation of the stock options they held with strike prices of $1.45 or more.  The restricted stock awards were offered on a 3 for 5 basis (for each 5 stock options surrendered, 3 shares of restricted stock are granted).  The shares of restricted stock vest over three years on a quarterly basis with the participant to receive 1/12 of the shares on each three-month anniversary of the date of grant.  As the fair value of the stock options exchanged exceeded the fair value of the restricted shares issued, no incremental compensation expense is incurred for the restricted shares.  |
| (6) | Mr. Cronin joined the Board of Directors in February 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (7) | Mr. Goldman joined the Board in August 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (8) | Mr. Crocker joined the Board in September 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (9) | The amounts reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2012 and 2011, in accordance with the provisions of ASC 718 and thus may include amounts from awards granted prior to 2012 and 2011. 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 STOCKHOLDER MATTERS |
|---------------|------------------------------------------------------------------------------------------------|

| Name and Address                                                             | Number of Shares (1) |   | Percent of Class (2) |         |
|------------------------------------------------------------------------------|----------------------|--------|----------------------|--------------|
|                                                                         |                 |   |                 |         |   |
| Directors and Named Executive Officers:                                      |                 |   |                 |         |   |
|                                                                         |                 |   |                 |         |   |
| S. James Miller, Jr. (3)                                                     | 1,497,686            |   |                 | 1.9          | % |
| Chairman, Chief Executive Officer                                            |                 |   |                 |         |   |
|                                                                         |                 |   |                 |         |   |
| David Carey (4)                                                              | 50,750               |   |                 |         | * |
| Director                                                                     |                 |   |                 |         |   |
|                                                                         |                 |   |                 |         |   |
| G. Steve Hamm (5)                                                            | 88,736               |   |                 |         | * |
| Director                                                                     |                 |   |                 |         |   |
|                                                                         |                 |   |                 |         |   |
| David Loesch (6)                                                             | 114,236              |   |                 |         | * |
| Director                                                                     |                 |   |                 |         |   |
|                                                                         |                 |   |                 |         |   |
| Neal I. Goldman (7)                                                          | 33,512,777           |   |                 | 40.5         | %  |
| Director                                                                     |                 |   |                 |         |   |
|                                                                         |                 |   |                 |         |   |
| John Cronin                                                                  | 20,838               |   |                 |         | * |
| Director                                                                     |                 |   |                 |         |   |
|                                                                         |                 |   |                 |         |   |
| Charles Crocker                                                              | 0                    |   |                 |         | * |
| Director                                                                     |                 |   |                 |         |   |
|                                                                         |                 |   |                 |         |   |
| Wayne Wetherell (8)                                                          | 494,175              |   |                 |         | * |
| SVP of Administration, Chief Financial Officer, Secretary                    |                 |   |                 |         |   |
|                                                                         |                 |   |                 |         |   |
| Charles AuBuchon (9)                                                         | 563,979              |   |                 |         | * |
| VP of Business Development                                                   |                 |   |                 |         |   |
|                                                                         |                 |   |                 |         |   |
| David Harding (10)                                                           | 370,419              |   |                 |         | * |
| Chief Technical Officer                                                      |                 |   |                 |         |   |
|                                                                         |                 |   |                 |         |   |
| Total beneficial ownership of directors and officers as a group (9 persons): | 36,807,868           |   |                 | 44.8         | % |
|                                                                         |                 |   |                 |         |   |
| 5% Stockholders:                                                             |                 |   |                 |         |   |
|                                                                         |                 |   |                 |         |   |
| Gruber & McBaine Capital Management LLC (11)(12)(13)                     | 7,371,016            |   |                 | 9.46         | % |
|                                                                         |                 |   |                 |         |   |
|  J. Patterson McBaine (11)(14)(15)                                      | 8,954,482       |   |                 |   11.50 |  % |
|                                                                         |                 |   |                 |         |   |
| Jon D. Gruber (11)(16)(17)                                                   | 7,546,198            |   |                 | 9.69         | % |
|                                                                         |                 |   |                 |         |   |
| Bruce Toll (18)(19)(20)                                                      | 6,600,738            |   |                 | 8.47         | % |
|                                                                         |                 |   |                 |         |   |
| Traditional Investment Fund, LTD (21)(22)(23)                                | 6,000,000            |   |                 | 7.70         | % |
|                                                                         |                 |   |                 |         |   |
| Revelation Capital Management Ltd. (24)(25)(26)                              | 4,663,870            |   |                 | 5.84         | % |

----

| (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, 2013. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |

| (2)    | Percentages are rounded to nearest one-tenth of one percent. Percentages are based on 77,892,824 shares of common stock outstanding as of April 15, 2013. Options that are presently exercisable or exercisable within 60 days of April 15, 2013 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 and 639,250 options exercisable within 60 days of April 15, 2013.  Also includes 122,727 warrants and notes convertible into 68,365 shares of common stock.                                                                                                                                                                                                                                                                                            |
|                  |
|                  |
| (4)                   | Includes of 18,750 options exercisable within 60 days of April 15, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (5)                   | Includes of 21,250 options exercisable within 60 days of April 15, 2013.  Also includes 27,271 warrants and notes convertible into 24,015 shares of common stock.                                                                                                                                                                                                                                                                                                                                           |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (6)                   | Includes of 18,750 options exercisable within 60 days of April 15, 2013. Also includes 27,271 warrants and notes convertible into 24,015 shares of common stock.                                                                                                                                                                                                                                                                                                                                                      |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (7)                   | Includes 4,777,632 shares issuable upon exercise of warrants.   Mr. Goldman exercises sole voting and dispositive power over 13,831,700 shares, and shared voting and dispositive power over 19,691,077 reported shares, of which 10,661,077 shares are owned by Goldman Capital Management, Inc., 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 167,975 options exercisable within 60 days of April 15, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (9)                   | Includes 196,725 options exercisable within 60 days of April 15, 2013.  Also includes 122,727 warrants and notes convertible into 58,527 shares of common stock.                                                                                                                                                                                                                                                                                                                                            |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (10)                  | Includes 265,419 options exercisable within 60 days of April 15, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (11)                  | Address for these beneficial owners is 50 Osgood Place Penthouse, San Francisco California 94133.                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (12)                  | Based on ownership information from the Form 4 filed by Gruber & McBaine Capital Management LLC (“Gruber & McBaine”) on March 25, 2013, and Company records. Both Jon D. Gruber and J. Patterson McBaine have shared voting and dispositive power over these shares, based on information from the Schedule 13G filed by Gruber & McBaine on February 12, 2013.                                                                                                                               |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (13)                  | Includes 153,471 shares issuable within 60 days of April 15, 2013 upon exercise of warrants held by Gruber & McBaine.                                                                                                                                                                                                                                                                                                                                                                                             |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (14)                  | Mr. McBaine has sole voting and dispositive power over 1,583,466 shares, and shared voting and dispositive power over 7,371,016 as disclosed in Note 12 above.                                                                                                                                                                                                                                                                                                                                                        |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (15)                  | Includes 79,578 shares issuable within 60 days of April 15, 2013 upon exercise of warrants held by Mr. McBaine.                                                                                                                                                                                                                                                                                                                                                                                                       |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (16)                  | Mr. Gruber has sole voting and dispositive power over 175,182 shares, and shared voting and dispositive power over 7,371,016 as disclosed in Note 12 above.                                                                                                                                                                                                                                                                                                                                                           |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (17)                  | Includes 79,578 shares issuable within 60 days of April 15, 2013 upon exercise of warrants held by Mr. Gruber.                                                                                                                                                                                                                                                                                                                                                                                                        |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (18)                  | Address for this beneficial owner is 3103 Philmont Avenue, Huntingdon Pennsylvania 19006.                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (19)                  | Based on ownership information from the Schedule 13D filed by Bruce Toll on September 5, 2012, and Company records. This figure includes 4,917,134 shares held by BET Funding LLC, of which Mr. Toll is the majority owner.                                                                                                                                                                                                                                                                                           |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (20)                  | Includes 3,400,000 shares issuable within 60 days of April 15, 2013 upon exercise of held by BET Funding LLC.                                                                                                                                                                                                                                                                                                                                                                                                         |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (21)                  | Address for this beneficial owner is 795 Ridge Lake Blvd., Suite 106, Memphis Tennessee 38120.                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (22)                  | 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.                                                                                                                                                                                                                                            |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (23)                  | Includes 2,000,000 shares issuable within 60 days of April 15, 2013 upon exercise of warrants.                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (24)                  | Address for this beneficial owner is Canon's Court, 22 Victoria Street, Hamilton D0 HM 11.                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (25)                  | Based on ownership information from the Schedule 13G/A filed by Revelation Special Situations Fund Ltd. (“Revelation Fund”) on April 23, 2013. Mr. Chris Kuchanny, Chairman and Chief Financial Officer of Revelation Capital Management Ltd. (“Revelation”) has shared voting and dispositive power of these shares.                                                                                                                                                                         |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (26)                  | Includes 2,015,280 shares issuable within 60 days of April 15, 2013 upon exercise of warrants.                                                                                                                                                                                                                                                                                                                                                                                                                        |
| * less than 1%   |

----

| Plan category                                               | Number of securitiesto be issuedupon exercise ofoutstandingoptions, warrantsand rights |   |      | Weighted-average exerciseprice ofoutstandingoptions, warrantsand rights |   |   | Number of securitiesremaining availablefor future issuanceunder equitycompensation plans(excluding securitiesreflected incolumn (a) |   |
|------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|--------|-----------|---------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                             | (a)                                                                                                                            |   |      | (b)                                                                                         |   |   | (c)                                                                                                                                                                                   |   |
| Equity compensation plans approved by security holders:          |                                                                                                                           |   |      |                                                                                        |   |   |                                                                                                                                                                                  |   |
| 1999 Stock Award Plan amended and restated as of October 5, 2011 |                                                                                                                           |   | 3,002,721 |                                                                                        |   | $      | 0.80                                                                                                                                                                                  |   |   |   | 955,934 |   |
|                                                             |                                                                                                                           |   |      |                                                                                        |   |   |                                                                                                                                                                                  |   |   |   |   |   |
| Equity compensation plans not approved by security holders:      |                                                                                                                           |   |      |                                                                                        |   |   |                                                                                                                                                                                  |   |   |   |   |   |
| 2001 Equity Incentive Plan                                       |                                                                                                                           |   | 28,500    |                                                                                        |   | $      | 2.41                                                                                                                                                                                  |   |   |   | —  |   |
|                                                             |                                                                                                                           |   |      |                                                                                        |   |   |                                                                                                                                                                                  |   |   |   |   |   |
| Total                                                            |                                                                                                                           |   | 3,031,221 |                                                                                        |   | $      | 0.82                                                                                                                                                                                  |   |   |   | 955.934 |   |

----

| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
|---------------|---------------------------------------------------------------------------|

----

| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
|---------------|----------------------------------------|

|               |   | Fiscal Year Ended |     |
|--------------------|--------|-------------------|----------|
|               |   | 2012              |     |   | 2011 |   |
|               |   |              |     |   |   |   |   |   |
| Audit fees         |   | $                 | 145,000  |   |   | $ | 159,000 |   |
|               |   |              |     |   |   |   |   |   |
| Audit-related fees |   | $                 |   - |   |   | $ |   - |   |
|               |   |              |     |   |   |   |   |   |
| Tax fees           |   | $                 |   - |   |   | $ |   - |   |
|               |   |              |     |   |   |   |   |   |
| All other fees     |   | $                 |   - |   |   | $ |   - |   |
|               |   |              |     |   |   |   |   |   |
| Total Fees         |   | $                 | 161,424  |   |   | $ | 159,000 |   |

----

| 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 of Preferences, Rights and Limitations of Series C 8% Convertible Preferred Stock dated November 2, 2006 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed November 20, 2006).             |
| 3.5         |   | Certificate of Designations of Preferences, Rights and Limitations of Series C 8% Convertible Preferred Stock dated November 2, 2006, as amended (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed November 20, 2006). |
| 3.6         |   | Certificate of Designations of Preferences, Rights and Limitations of Series C 8% Convertible Preferred Stock, as amended (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed October 14, 2011).                                                    |
| 3.7         |   | Certificate of Designations of Preferences, Rights and Limitations of Series D 8% Convertible Preferred Stock dated March 8, 2007 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed March 15, 2007).                   |
| 3.8         |   | Certificate of Designations of Preferences, Rights and Limitations of Series D 8% Convertible Preferred Stock, as amended, dated February 10, 2009, (incorporated by reference to Exhibit 3.8 to the Company’s Current Report on Form 10-K, filed January 17, 2012).             |
| 3.9         |   | Certificate of Designations of Preferences, Rights and Limitations of Series D 8% Convertible Preferred Stock, as amended (incorporated by reference to Exhibit 3.3 to the Company's Current Report on Form 8-K filed October 14, 2011).                                                    |
| 4.1         |   | Warrant to Purchase Common Stock in favor of Imperial Bank, dated January 15, 1998 (incorporated by reference to Exhibit 10.42 to the Company’s Registration Statement on Form SB-2 (No. 333-93131), filed December 20, 1999, as amended).                        |
| 4.2         |   | Registration Rights Agreement, dated March 9, 2007, 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 March 15, 2007).                                         |
| 4.3         |   | Registration Rights Agreement, dated September 25, 2007, 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 September 26, 2007).                                |
| 4.4         |   | Form of Warrant to Purchase Common Stock dated September 25, 2007 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed September 26, 2007).                                                                              |
| 4.5         |   | 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).                                                                                          |
| 4.6         |   | Form of Warrant to Purchase Common Stock dated November 14, 2008 (incorporated by reference to Exhibit 4.20 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                                                                               |
| 4.7         |   | Registration Rights Agreement, dated February 12, 2009, between the Company and BET Funding, LLC (incorporated by reference to Exhibit 4.21 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                                               |
| 4.8         |   | 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).                                                           |
| 4.9         |   | 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).                                                                |
| 4.10        |   | 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).                                                             |
| 4.11        |   | 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).                                                                                                                     |
| 4.12        |   | 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).                                            |
| 4.13        |   | 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).                                                                                                                   |
| 4.14        |   | Form of Amendment to Warrant, dated March 21, 2012, filed herewith.                                                                                                                                                                                                                              |
| 4.15        |   | Warrant to Purchase Common Stock, dated March 28, 2013 issued by the Company to Neal Goldman, filed herewith.                                                                                                                                                                          |
| 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        |   | Employment Agreement, dated September 27, 2005, between the Company and Wayne G. Wetherell (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed September 30, 2005).                                                          |
| 10.3        |   | Change of Control and Severance Benefits Agreement, dated October 31, 2005, between Company and Charles Aubuchon (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed November 3, 2005).                                      |
| 10.4        |   | 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).    |
| 10.5        |   | 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).                                                                                                            |
| 10.6        |   | 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).                                                                                                                           |
| 10.7        |   | 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).                                                                                                                           |
| 10.8        |   | 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).                                |
| 10.9        |   | 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).                                              |
| 10.10       |   | 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).                                 |
| 10.11       |   | 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).                                            |
| 10.12       |   | 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).                                               |
| 10.13       |   | 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).                                                    |
| 10.14       |   | First Amendment to Employment Agreement, dated September 27, 2008, between the Company and Wayne Wetherell (incorporated by reference to Exhibit 10.44 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                                    |
| 10.15       |   | 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).                                                                                                              |
| 10.16       |   | Second Amendment to Change of Control and Severance Benefits Agreement, dated April 6, 2009, between Company and Charles Aubuchon (incorporated by reference to Exhibit 10.48 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                             |
| 10.17       |   | Second Amendment to Change of Control and Severance Benefits Agreement, dated April 6, 2009, between Company and David Harding (incorporated by reference to Exhibit 10.49 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                |
| 10.18       |   | 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).                                                        |
| 10.19       |   | Second Amendment to Employment Agreement, dated April 6, 2009, between the Company and Wayne Wetherell (incorporated by reference to Exhibit 10.51 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                                        |
| 10.20       |   | 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).                                                                        |
| 10.21       |   | Third Amendment to Change of Control and Severance Benefits Agreement, dated December 10, 2009, between Company and Charles Aubuchon (incorporated by reference to Exhibit 10.58 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                          |
| 10.22       |   | Third Amendment to Change of Control and Severance Benefits Agreement, dated December 10, 2009, between Company and David Harding (incorporated by reference to Exhibit 10.59 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                             |
| 10.23       |   | 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).                                                     |
| 10.24       |   | Third Amendment to Employment Agreement, dated December 10, 2009, between the Company and Wayne Wetherell (incorporated by reference to Exhibit 10.61 to the Company’s Annual Report on Form 10-K, filed February 24, 2010).                                                     |
| 10.25       |   | 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).                                                      |
| 10.26       |   | 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).                                                            |
| 10.27       |   | 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).                                                                 |
| 10.28       |   | Fourth Amendment to Employment Agreement, dated March 10, 2011, between the Company and Wayne Wetherell, (incorporated by reference to Exhibit 10.41 to the Company’s Annual Report on Form 10-K, filed January 17, 2012).                                                                 |
| 10.29       |   | Fourth Amendment to Employment Agreement, dated March 10, 2011, between the Company and David Harding, (incorporated by reference to Exhibit 10.42 to the Company’s Annual Report on Form 10-K, filed January 17, 2012).                                                                   |
| 10.30       |   | Fourth Amendment to Employment Agreement, dated March 10, 2011, between the Company and Charles Aubuchon, (incorporated by reference to Exhibit 10.43 to the Company’s Annual Report on Form 10-K, filed January 17, 2012).                                                                |
| 10.31       |   | 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.                                                               |
| 10.32       |   | Fifth Amendment to Employment Agreement, dated January 31, 2012, between the Company and Wayne Wetherell, (incorporated by reference to Exhibit 10.45 to the Company’s Annual Report on Form 10-K, filed April 4, 2012.                                                                    |
| 10.33       |   | Fifth Amendment to Employment Agreement, dated January 31, 2012, between the Company and Charles AuBuchon, (incorporated by reference to Exhibit 10.46 to the Company’s Annual Report on Form 10-K, filed April 4, 2012.                                                                   |
| 10.34       |   | Fifth Amendment to Employment Agreement, dated January 31, 2012, between the Company and David Harding, (incorporated by reference to Exhibit 10.47 to the Company’s Annual Report on Form 10-K, filed April 4, 2012.                                                                      |
| 10.35       |   | Sixth Amendment to Employment Agreement, dated July 9, 2012, between the Company and Charles AuBuchon, (incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K, filed July 10, 2012).                                                                             |
| 10.36       |   | Sixth Amendment to Employment Agreement, dated July 9, 2012, between the Company and David Harding, (incorporated by reference to Exhibit 99.2 to the Company's Current Report on Form 8-K, filed July 10, 2012).                                                                                |
| 10.37       |   | Sixth Amendment to Employment Agreement, dated July 9, 2012, between the Company and Wayne Wetherell, (incorporated by reference to Exhibit 99.3 to the Company's Current Report on Form 8-K, filed July 10, 2012).                                                                              |
| 10.38       |   | 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).                                                                                               |
| 10.39       |   | 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).                                                                                              |
| 10.40       |   | 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).                                                                                                 |
| 10.41       |   | 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).                                                                                            |
| 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.                                                                                                                                                                                                                  |
| 32.1        |   | Certification of CEO as Required by Rule 13a-14(a) and Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code, filed herewith.                                                                                      |
| 32.2        |   | Certification of CFO as Required by Rule 13a-14(a) and Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code, 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** |

----

| Registrant Date: April 30, 2013 |   | ImageWare Systems, Inc. /s/ S. James Miller, Jr.            |   |
|--------------------------------------|--------|------------------------------------------------------------------|--------|
|                                 |   | S. James Miller, Jr.                                             |   |
|                                 |   | Chief Executive Officer (Principal Executive Officer), President |   |