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Positiveid Corp – ‘S-1’ on 8/29/11

On:  Monday, 8/29/11, at 5:44pm ET   ·   Accession #:  1398432-11-699   ·   File #:  333-176545

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/29/11  Positiveid Corp                   S-1                    5:288K                                   Int’l Print Group/FA

Document/Exhibit                   Description                      Pages   Size 

 1: S-1         Registration Statement (General Form)               HTML    232K 
 2: EX-5.1      Opinion re: Legality                                HTML      9K 
 3: EX-10.55    Material Contract                                   HTML     12K 
 4: EX-21.1     Subsidiaries of the Registrant                      HTML      7K 
 5: EX-23.1     Consent of Experts or Counsel                       HTML      7K 

As filed with the Securities and Exchange Commission on August 29, 2011

File No. 333-      

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM S-1

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

_________________

PositiveID Corporation

(Exact name of registrant as specified in its charter)

_________________

_________________

1690 South Congress Avenue, Suite 200
Delray Beach, Florida 33445
(561) 805-8008
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)

William J. Caragol
Chief Executive Officer
PositiveID Corporation
1690 South Congress Avenue, Suite 200
Delray Beach, Florida 33445
Phone: (561) 805-8008
Fax: (561) 805-8001

(Address, including zip code, and telephone number, including area code, of agent for service)

Copies of all correspondence to:

Tammy Knight, Esq.
Holland & Knight LLP
515 East Las Olas Boulevard, Suite 1200
Fort Lauderdale, Florida 33301
Phone: (954) 525-1000
Fax: (954) 463-2030

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.  x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

CALCULATION OF REGISTRATION FEE

(1)         This Registration Statement covers the offering of common stock of the Company and the common stock underlying Series G Preferred Stock of the Company according to a stock purchase agreement for sale by the selling stockholder named in this prospectus.   The Company is making a good faith estimate on the number of shares that it may issue under the agreement. 

(2)         Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457 under the Securities Act of 1933, as amended.  The price per share and aggregate offering price are based on the average of the high and low prices of the registrant’s common stock on August 25, 2011, as reported on the NASDAQ Capital Market.

(3) This amount represents the maximum aggregate value of common stock that may be drawn under this registration statement pursuant to the terms and conditions of the stock purchase agreement between the selling stockholder and the registrant.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED AUGUST 29, 2011

PROSPECTUS

POSITIVEID CORPORATION

11,500,000
Shares of
Common Stock

This prospectus relates to the sale of up to 11,500,000 shares of our common stock by Ironridge Global Technology, a division of Ironridge Global IV, Ltd., or Ironridge, pursuant to a Stock Purchase Agreement entered into between us and Ironridge on July 27, 2011. The total amount of shares of common stock which may be sold pursuant to this prospectus would constitute 25% of our issued and outstanding common stock as of August 26, 2011. As of August 26, 2011, the closing bid price of a share of our common stock was $0.26.  

Pursuant to the Stock Purchase Agreement, we may deliver a notice to Ironridge exercising our right to require Ironridge to purchase up to $4 million in shares of our redeemable, convertible Series G Preferred Stock, or the Series G Preferred Stock, at $1,000 per share, and up to $5.75 million in shares of our common stock at a price per share equal to 102% of the closing bid price of our common stock as reported on the principal trading exchange or market for our common stock at the time, which we refer to as the Trading Market, on the trading day immediately before the date we deliver notice to Ironridge to purchase shares of Series G Preferred Stock.  The Trading Market is defined as the OTC Bulletin Board, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, the NYSE Amex, or the New York Stock Exchange, but does not include the Pink Sheets inter-dealer electronic quotation and trading system.  The Series G Preferred Stock is only convertible at our option. This prospectus relates to the shares of our common stock issuable upon conversion of the Series G Preferred Stock and the common stock issuable under the Stock Purchase Agreement. The number of shares Ironridge is able to beneficially own at any given time is limited to 9.99% of our total common stock then outstanding.

We have been advised by Ironridge that the resale of any shares will be made by means of ordinary brokers’ transactions on the Trading Market or otherwise at market prices prevailing at the time of sale or at prices related to the prevailing market prices. For additional information on the possible methods of sale that may be used by Ironridge, you should refer to the section entitled “Plan of Distribution” beginning on page 18 of this prospectus. We will not receive any of the proceeds from the sale of these shares. However, we will receive proceeds from our initial sale of these shares to Ironridge. We have and will continue to bear the costs relating to the registration of these shares.

Ironridge is an "underwriter" within the meaning of the Securities Act of 1933, as amended, in connection with the resale of our common stock acquired under the Stock Purchase Agreement.

Our shares of common stock are currently listed on the NASDAQ Capital Market under the symbol “PSID.” However, we anticipate that our common stock will be delisted from the NASDAQ Capital Market and quoted on the OTC Bulletin Board on or about August 31, 2011. On August 26, 2011, the last reported sale price of our common stock was $0.26 per share.

Our principal executive offices are located at 1690 South Congress Avenue, Suite 200, Delray Beach, Florida 33445, and our telephone number is (561) 805-8008.

INVESTING IN THESE SECURITIES INVOLVES RISKS. YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 5 OF THIS PROSPECTUS BEFORE PURCHASING THE COMMON STOCK.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this prospectus is _________, 2011.

Table of Contents

PROSPECTUS SUMMARY

  1

RISK FACTORS

  5

Risks Related to the Offering

  7

INFORMATION REGARDING FORWARD LOOKING STATEMENTS

10

USE OF PROCEEDS

13

DILUTION

13

MARKET FOR REGISTRANT’S COMMON EQUITY

14

IRONRIDGE TRANSACTION

15

SELLING SECURITY HOLDERS

17

PLAN OF DISTRIBUTION

18

LEGAL MATTERS

20

EXPERTS

20

WHERE YOU CAN FIND MORE INFORMATION ABOUT US

20

DOCUMENTS INCORPORATED BY REFERENCE

20

i

PROSPECTUS SUMMARY

The following is a brief summary of certain information contained elsewhere in this prospectus. This summary is not intended to be a complete description of the matters covered in this prospectus and is qualified in its entirety by reference to the more detailed information contained in this prospectus. You are urged to read this prospectus in its entirety, including the financial statements and related notes and the “Risk Factors” section. Unless the context requires otherwise, “we,” “us,” “our,” “PositiveID” and the “Company” and similar terms collectively refer to PositiveID Corporation and its wholly subsidiaries.

The SEC allows us to “incorporate by reference” certain information that we file with it, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus. Any statement contained in a document incorporated or deemed to be incorporated by reference into this prospectus shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or in any other document which also is or is deemed to be incorporated by reference into this prospectus modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus. You should read the following summary together with the more detailed information regarding our Company, our common stock and our financial statements and notes to those statements appearing elsewhere in this prospectus or incorporated herein by reference.

Overview

We have historically developed, marketed and sold radio frequency identification, frequently referred to as RFID, systems used for the identification of people in the healthcare market. Beginning in the fourth quarter of 2009, with the acquisition of Steel Vault Corporation, or Steel Vault, we focused our strategy to provide unique health and security identification tools to protect consumers and businesses, operating in two key segments: HealthID and ID Security.  Beginning in early 2011, we further focused our strategy on the growth of our HealthID segment, including the continued development of our GlucoChip, our Easy Check breath glucose detection device, our iglucose wireless communication system, and potential strategic acquisition opportunities of businesses that are complementary to our HealthID business.

In May 2011 and consistent with this strategy, we acquired MicroFluidic Systems, or MicroFluidic, pursuant to which MicroFluidic became a wholly-owned subsidiary of the Company. MicroFluidic specializes in the production of automated instruments for a wide range of applications in the detection and processing of biological samples, ranging from rapid medical testing to airborne pathogen detection for homeland security. Since its inception, MicroFluidic has received over $45 million in U.S. Government contracts, primarily from the Department of Homeland Security. MicroFluidic’s substantial portfolio of intellectual property related to sample preparation and rapid medical testing applications are complementary to our portfolio of virus detection and diabetes management products.

As a result of the sale of our NationalCreditReport.com business in July 2011 as further discussed below and MicroFluidic having no active contracts, we currently have no revenue or gross profit from continuing operations.

HealthID Segment

Our HealthID segment is currently focused on the development of three products: (1) the GlucoChip, a glucose-sensing microchip, based on our proprietary intellectual property which is being developed in conjunction with Receptors LLC, or Receptors, (2) iglucose, a stand-alone, self-contained unit that automatically queries a diabetic user’s data-capable glucometer for blood glucose data and sends that data via machine-to-machine technology to the iglucose online database, and (3) Easy Check, a non-invasive breath glucose detection system, based on the correlation of acetone in exhaled breath to blood glucose levels.

In July 2011, we submitted a 510(k) pre-market notification application for our iglucose wireless communication system to the U.S. Food and Drug Administration, or FDA. We expect to obtain clearance by the FDA by the end of 2011 and to launch iglucose commercially in early 2012.

Our HealthID segment also includes the VeriMed system, which uses an implantable passive RFID microchip (the “VeriChip”) that is used in patient identification applications. Each implantable microchip contains a unique verification number that is read when it is scanned by our scanner. In October 2004, the FDA cleared our

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VeriMed system for use in medical applications in the United States. We have not actively marketed the VeriMed system since early 2008.

ID Security Segment

Our ID Security segment included our Identity Security suite of products, sold through our NationalCreditReport.com brand and our Health Link personal health record, or PHR, business. Our NationalCreditReport.com business was acquired in conjunction with the acquisition of Steel Vault in November 2009. NationalCreditReport.com offered consumers a variety of identity security products and services primarily on a subscription basis. These services helped consumers protect themselves against identity theft or fraud and understand and monitor their credit profiles and other personal information, which included credit reports, credit monitoring and credit scores. In the first quarter of 2010, the Company re-launched its Health Link PHR business. The Company focused its marketing efforts on partnering with health care providers and exchanges, physicians groups, Electronic Medical Record system vendors, and insurers to use Health Link as PHR provided to their patients. We are not currently actively marketing the Health Link PHR business.

Beginning in early 2011, in connection with our focus on our HealthID businesses, we began to limit our activities in our ID Security segment.  In early 2011, we ceased acquiring new subscribers to our NationalCreditReport.com business, and in the second quarter of 2011 we began actively marketing the business for sale. In July 2011, we completed the sale of substantially all of the assets of NationalCreditReport.com for $750,000 in cash.

As a result of the sale of our NationalCreditReport.com business in July 2011, we now operate in one segment (HealthID). In connection with our decision to sell the NationalCreditReport.com business, its results of operations have been presented as discontinued operations in our consolidated financial statements commencing the quarter ended June 30, 2011.

Stock Purchase Agreement

On July 27, 2011, we entered into the Stock Purchase Agreement with Ironridge under which Ironridge is committed to purchase for cash up to $4 million in shares of Series G Preferred Stock at $1,000 per share in ten transactions of $400,000 each and up to $5.75 million in shares of our common stock at a price per share equal to 102% of the closing bid price of our common stock as reported on the principal trading exchange or market for our common stock at the time, which we refer to as the Trading Market, on the trading day immediately before the date we deliver notice to Ironridge to purchase shares of Series G Preferred Stock.  Ironridge will have an additional obligation to purchase shares of our common stock in ten transactions of $575,000 each whenever we present Ironridge with a notice to purchase the Series G Preferred Stock.  The financing under the Stock Purchase Agreement is subject to the filing and effectiveness of this and subsequent registration statements.

Preferred Stock Purchase Agreement

On July 27, 2011, we entered into a Preferred Stock Purchase Agreement, with Ironridge Global III, LLC, or Ironridge Global, concurrently with the Stock Purchase Agreement.  Ironridge Global is an affiliate of Ironridge.  Under the Preferred Stock Purchase Agreement, Ironridge Global is committed to purchase up to $1.5 million in shares of our redeemable, convertible Series F Preferred Stock, or the Series F Preferred Stock, at $1,000 per share. The Series F Preferred Stock is convertible six months after the date of issuance at the option of the holder at a fixed conversion price of $0.50 per share, which represented a premium of 32% over the closing price of our common stock on the trading day immediately before the date we announced the entry into the Preferred Stock Purchase Agreement.  The conversion price for the holder is fixed with no adjustment mechanisms, resets, or anti-dilution covenants.  The conversion price if we elect to convert the Series F Preferred Stock is subject to adjustment based on the market price of our common stock and any applicable early redemption price at the time we convert.

On July 28, 2011, we presented Ironridge Global with a notice to purchase $1.5 million of Series F Preferred Stock in cash.  On August 15, 2011, we closed on the first tranche under the Preferred Stock Agreement and issued 500 shares of Series F Preferred Stock to Ironridge Global for a purchase price of $500,000.

Common Stock Purchase Agreement

On July 27, 2011, we entered into a Common Stock Purchase Agreement with Ironridge, concurrently with the Stock Purchase Agreement and the Preferred Stock Purchase Agreement.  Under the Common Stock Purchase Agreement we may deliver a notice to Ironridge exercising our right to require Ironridge to purchase up to $2.5 million of our common stock at a price per share equal to $0.367.   Ironridge may pay the purchase price for the

2

shares, at Ironridge's option, in cash or a secured promissory note, except that at least $250,000 of the purchase price must be paid in cash.

On July 28, 2011, we presented Ironridge with a notice to purchase $2.5 million shares of our common stock under the Common Stock Purchase Agreement.  Ironridge Global paid $250,000 in cash and the remaining $2.25 million in a promissory note.  To date, we have issued 4,417,000 shares of our common stock to Ironridge in connection with the July 28, 2011 notice and may issue an additional 2,391,279 shares of our common stock in connection with this portion of the financing.

Reverse Stock Split and Delisting

At our annual meeting of stockholders held on August 26, 2011, our stockholders approved a proposal to authorize our Board of Directors to amend our Second Amended and Restated Certificate of Incorporation, as amended, to effect a reverse stock split of our issued and outstanding common stock at a ratio in the range of 1-for-2 to 1-for-8. Approval of this proposal by stockholders at the meeting granted the Board of Directors the authority, without further action by the stockholders, to carry out such action any time prior to our annual meeting of stockholders in 2012, with the exact exchange ratio and timing to be determined at the discretion of the Board of Directors. The exchange ratio range of 1-for-2 to 1-for-8 was based on the trading price of our common stock over the last six months.

The Board of Directors intended to take such action only if necessary for our common stock to regain compliance with the $1.00 per share minimum bid price requirement, one of the continued listing requirements of the Nasdaq Capital Market, on which our common stock is currently listed, and only upon a determination by the Board of Directors that such action would be in our and our stockholders’ best interests.

The Board of Directors has determined, in its discretion, not to take such action. In view of the Board of Director’s decision to not effect a reverse stock split and our consequent continued non-compliance with the minimum bid price requirement, we expect that the Nasdaq Stock Market will provide prompt written notice that our common stock will be scheduled for delisting from the Nasdaq Capital Market and will be suspended effective as of the opening of trading on or about August 31, 2011. Following the delisting, we expect that our common stock will be quoted on the OTC Bulletin Board (provided, that one or more market makers in our common stock submits a Form 211 to the OTC Compliance Unit of FINRA, and such application is cleared). However, we cannot give any assurance that our common stock will be available for such quotation immediately following the delisting and suspension of trading from the Nasdaq Capital Market. In the event that our common stock is not available for quotation on the OTC Bulletin Board or other quotation service, there will be no trading market for our common stock.

We will continue to file periodic reports with the SEC in accordance with the requirements of Section 12(g) of the Exchange Act.

Address

Our principal executive offices are located at PositiveID Corporation, 1690 South Congress Avenue, Suite 200, Delray Beach, Florida 33445, and our telephone number is (561) 805-8008.

3

The Offering

⁽¹⁾   The number of shares of our common stock outstanding after this offering is based on 45,122,076 shares outstanding as of August 26, 2011, which excludes:

· 3,343,992 shares of our common stock issuable upon exercise of outstanding stock options having a weighted average exercise price of $1.97 per share, under and outside of our stock plans;  

· 1,166,019 additional shares of our common stock reserved for future issuance under the VeriChip Corporation 2002 Flexible Stock Plan, VeriChip Corporation 2005 Flexible Stock Plan, VeriChip Corporation 2007 Stock Incentive Plan, VeriChip Corporation 2009 Stock Incentive Plan, and SysComm International Corporation 2001 Flexible Stock Plan;

· 304,000 shares of our common stock issuable upon exercise of outstanding warrants having a weighted average exercise price of $0.65 per share; and

· Shares of our common stock issuable upon conversion of outstanding shares of Series C Preferred Stock and Series F Preferred Stock.

Unless otherwise stated, outstanding share information throughout this prospectus excludes such outstanding preferred stock and options and warrants to purchase shares of common stock and shares available for issuance.

4

RISK FACTORS

An investment in our securities involves a high degree of risk. Before making an investment decision you should carefully consider the risks described below and the risks and uncertainties described in our Form 10-K for the year ended December 31, 2010 and Form 10-Q for the quarterly period ended June 30, 2011, which are incorporated by reference herein, and the other information set forth or incorporated by reference in this prospectus. Additional risks and uncertainties that we are unaware of or that we believe are not material at this time could also materially adversely affect our business, financial condition or results of operations. In any case, the value of our common stock could decline, and you could lose all or part of your investment. You should also refer to our financial statements and the notes to those statements, which are incorporated by reference in this prospectus. See also the information contained under the heading “Information Regarding Forward Looking Statements” immediately below.

Risks Related to our Common Stock

We have failed to meet applicable NASDAQ Stock Market listing requirements and as a result we expect our stock will be delisted by the NASDAQ Stock Market. If delisting occurs, it could adversely affect the market liquidity of our common stock and harm our business.

We have been out of compliance with NASDAQ’s minimum bid price requirement since the fall of 2010.  In an effort to maintain our listing on the NASDAQ Capital Market, we requested a hearing before a Panel, which was held on April 28, 2011.  The Panel provided us with an exception period to regain compliance with the continued listing requirements, as follows:

·        Minimum Bid Price Requirement.  On or before September 12, 2011, our common stock must evidence a closing price of $1.00 or more for a minimum of 10 consecutive days.   

·       Stockholders’ Equity Requirement.  On or before August 15, 2011, we had to file with the SEC (i) a current report on Form 8-K with pro forma financial statements giving effect to our acquisition of MicroFluidic Systems (a transaction which closed on May 23, 2011), and (ii) our quarterly report on Form 10-Q for the second quarter of 2011, including interim financial statements which reflect that we have stockholders’ equity in excess of $2.5 million.

In addition, the Panel, in its discretion, determined to appoint a Hearings Panel Monitor to monitor our maintenance of compliance with the stockholders’ equity requirement through May 31, 2012.  During this period, we will be obligated to notify the Panel in the event that our stockholders’ equity falls below $2.5 million or if we cease to comply with any other applicable continued listing requirement.  If we did not regain, and maintain during the monitor period, compliance with the continued listing requirements of the NASDAQ Capital Market, it is possible we would not be afforded the additional time provided by applicable NASDAQ Listing Rules and, as such, may be subject to delisting on a more expedited basis than would otherwise be the case.

On August 8, 2011, we filed a Current Report on Form 8-K/A with pro forma financial statements giving effect to our acquisition of MicroFluidic Systems.

On August 11, 2011, we received a letter from the NASDAQ staff stating the Panel will waive an event of non-compliance with the $2.5 million stockholders' equity requirement upon the filing of our Quarterly Report on Form 10-Q for the second quarter of 2011 given that pro forma numbers will demonstrate more than $2.5 million in stockholders' equity. The Panel is willing to extend the listing of our common stock on the NASDAQ Capital Market contingent upon us demonstrating by September 26, 2011 that we have met and can maintain compliance with the stockholder's equity requirement. The extension was granted subject to the following conditions:

·     On or before August 15, 2011, we must file our Quarterly Report on Form 10-Q for the quarter ending June 30, 2011, which must include pro forma financial statements giving effect to the Ironridge financing (as further described in "Note 4. Financing Agreements - Ironridge Financing" to our unaudited condensed consolidated financial statements for the quarterly period ended June

5

30, 2011) and equity drawdown, and demonstrating in excess of $2.5 million in stockholders' equity. On August 15, 2011, we filed our Quarterly Report on Form 10-Q for the quarter ending June 30, 2011, satisfying this requirement.

·        On or before August 26, 2011, we must secure approval for a reverse stock split in a ratio sufficient to raise our bid price over $1.00. At our annual meeting of stockholders held on August 26, 2011, our stockholders were asked to vote on and approved a proposal to authorize our board of directors to amend our Second Amended and Restated Certificate of Incorporation, as amended, to effect a reverse stock split of our issued and outstanding common stock at a ratio in the range of 1-for-2 to 1-for-8.

·        On or before September 12, 2011, we must evidence a closing bid price of $1.00 or more for a minimum of ten consecutive trading days.

·        On September 26, 2011, we must file a Current Report on Form 8-K representing that as of September 26, 2011, we had in excess of $2.5 million in stockholders' equity and must provide to the NASDAQ Panel projections demonstrating that our stockholders' equity will remain above $2.5 million through May 31, 2012.

The exception dates of September 12, 2011 and September 26, 2011 represent the full extent of the NASDAQ Panel's authority to grant an exception to the bid price deficiency and the equity deficiency and allow continued listing while we remain deficient.

With regards to the reverse stock split, approval of this proposal by stockholders at the annual meeting granted our Board of Directors the authority, without further action by the stockholders, to carry out such action any time prior to our annual meeting of stockholders in 2012, with the exact exchange ratio and timing to be determined at the discretion of the Board of Directors. The exchange ratio range of 1-for-2 to 1-for-8 was based on the trading price of our common stock over the last six months. The Board of Directors intended to take such action only if necessary for our common stock to regain compliance with the $1.00 per share minimum bid price requirement and only upon a determination by the Board of Directors that such action would be in our and our stockholders’ best interests.

The Board of Directors has determined, in its discretion, not to take such action. In view of the Board of Director’s decision not to effect a reverse stock split and our consequent continued non-compliance with the minimum bid price requirement, we expect that the Nasdaq Stock Market will provide prompt written notice that our common stock will be scheduled for delisting from the Nasdaq Capital Market and will be suspended effective as of the opening of trading on or about August 31, 2011. Following the delisting, we expect that our common stock will be quoted on the OTC Bulletin Board (provided, that one or more market makers in our common stock submits a Form 211 to the OTC Compliance Unit of FINRA, and such application is cleared). However, we cannot give any assurance that our common stock will be available for such quotation immediately following the delisting and suspension of trading from the Nasdaq Capital Market. In the event that our common stock is not available for quotation on the OTC Bulletin Board or other quotation service, there will be no trading market for our common stock.

Delisting could adversely affect the market liquidity of our common stock and harm our business and may hinder or delay our ability to consummate potential strategic transactions or investments. Such delisting could also adversely affect our ability to obtain financing for the continuation of our operations and could result in the loss of confidence by investors, suppliers and employees.

We do not anticipate declaring any cash dividends on our common stock.

In July 2008 we declared, and in August 2008 we paid, a special cash dividend of $15.8 million on our capital stock. Any future determination with respect to the payment of dividends will be at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, capital requirements, general business conditions, terms of financing arrangements and other factors that our board of directors may deem relevant. In addition, our Certificates of Designation for shares of Series C, Series F and Series G Preferred Stock prohibit the payment of cash dividends on our common stock while any such shares of preferred stock are outstanding.

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The success and timing of development efforts, clinical trials, regulatory approvals, product introductions, collaboration and licensing arrangements, any termination of development efforts and other material events could cause volatility in our stock price.

Volatility in our stock price will depend on many factors, including:

·      success or lack of success of the development partnership between us and Receptors and related development costs;

·      success or lack of success and timing of regulatory filings and approvals for the in vivo glucose-sensing RFID microchip, the Easy Check breath glucose detection system, and the iglucose wireless communication device;

·      success or lack of success and timing of commercialization and product introductions of the in vivo glucose-sensing RFID microchip, the Easy Check breath glucose detection system, and the iglucose wireless communication device;

·      introduction of competitive products into the market;

·      results of clinical trials for the in vivo glucose-sensing RFID microchip, the Easy Check breath glucose detection system, and the iglucose wireless communication device;

·      a finding that Receptors’ patented AFFINITY by DESIGN^TM CARA^TM platform, the Easy Check breath glucose detection system, or the iglucose wireless communication device is invalid or unenforceable;

·      a finding that the in vivo glucose-sensing RFID microchip, the Easy Check breath glucose detection system, and the iglucose wireless communication device infringes the patents of a third party;

·      our ability to obtain a patent on the Easy Check breath glucose detection system and the iglucose wireless communication device;

·      payment of any royalty payments under licensing agreements;

·      unfavorable publicity regarding us, Receptors, or either of the companies’ products or competitive products;

·      termination of development efforts for the GlucoChip, which is the in vivo glucose-sensing RFID microchip, the Easy Check breath glucose detection system, or the iglucose wireless communication device;

·      timing of expenses we may incur with respect to any license or acquisition of products or technologies; and

·      termination of development efforts of any product under development or any development or collaboration agreement.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also significantly affect the market price of our common stock.

Risks Related to the Offering

There can be no assurance as to when or if we will receive any cash proceeds from the sale of our common stock since the purchase price can be paid for at Ironridge's option in cash or a promissory note.

Under the terms of the Stock Purchase Agreement, Ironridge may purchase up to $5.75 million in shares of our common stock in ten transactions of $575,000 each. Ironridge may pay for the shares of common stock by issuing secured promissory notes to us.  Therefore, it is possible that we will not receive the full cash proceeds from

7

the sale of our common stock on closing.  It is also possible that the note may not be paid upon maturity, and that we may be unable to perfect or collect upon some or all of the underlying collateral.  

We cannot be assured that we will be able to raise the full amount of cash proceeds expected from the sale of Series G Preferred Stock and common stock under the Stock Purchase Agreement.

The issuance of the Series G Preferred Stock and receipt of cash in payment for the Series G Preferred Stock and the common stock under the Stock Purchase Agreement is subject to the condition that the price of our common stock has not fallen below 70% of the closing bid price of our common stock on the trading day immediately preceding the date we deliver a notice to Ironridge to purchase Series G Preferred Stock.  

Based on the closing bid price of $0.26 per common share on August 26, 2011, this offering of approximately $3.1 million of our common stock would result in an offer and sale of 11,500,000 shares of common stock and, assuming the minimum conversion price of $0.50 per share, 4,243,200 shares of common stock upon conversion of the Series G Preferred Stock, which represents in the aggregate an increase of approximately 35% in our outstanding shares of common stock as of such date. We may sell additional shares of common stock, and securities exercisable or convertible into shares of our common stock, pursuant to the Common Stock Purchase Agreement and the Preferred Stock Agreement, and potential additional issuances in the future to satisfy our capital and operating needs. If we sell shares in the future, the prices at which we sell these future shares will vary, and these variations may be significant. Purchasers of the shares we sell pursuant to future offerings, as well as our existing stockholders, will experience significant dilution if we sell these future shares at prices significantly below the price at which previous stockholders invested.

Future sales of our common stock may depress the market price of our common stock and cause stockholders to experience dilution.

The market price of our common stock could decline as a result of sales of substantial amounts of our common stock in the public market, including shares issued to Ironridge in this offering and pursuant to the Preferred Stock Purchase Agreement and upon conversion of the Series C, Series F and Series G Preferred Stock. We may seek additional capital through one or more additional equity transactions in 2011; however, such transactions will be subject to market conditions and there can be no assurance any such transaction will be completed.

You will experience immediate dilution in the book value per share of the common stock you purchase.

 Because the price per share of our common stock being offered is substantially higher than the book value per share of our common stock, you will suffer substantial dilution in the net tangible book value of the common stock you purchase in this offering. After giving effect to our sale of 11,500,000 shares of common stock in this offering, and based on an offering price of $0.265 per share in this offering and a pro forma net tangible book value of our common stock of $1.1 million as of June 30, 2011, if you purchase common stock in this offering, you will suffer immediate and substantial dilution of $0.27 per share in the net tangible book value of the common stock purchased. See “Dilution” on page 13 for a more detailed discussion of the dilution you will incur in connection with this offering.

The issuance of our common stock pursuant to the Stock Purchase Agreement may have a significant dilutive effect.

Depending on the number of shares of our common stock that we issue pursuant to the Stock Purchase Agreement, it could have a significant dilutive effect upon our existing stockholders.  Although the number of shares that we may issue will vary based on the closing bid price of a share of our common stock, the information set forth below indicates the potential dilutive effect to our stockholders, based on different potential future stock prices, if the full amount of the Ironridge financing is exercised and all shares of Series G Preferred Stock are converted, assuming the minimum conversion price of $0.50 per share.

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For example:

(1) Based on total $4.0 million drawdown of Series G Preferred Stock under the Stock Purchase Agreement.

(2) Based on total $5.75 million drawdown of our common stock under the Stock Purchase Agreement.

(3) Based on 45,122,076 shares of our common stock outstanding as of August 26, 2011. See page 14 of this prospectus for information regarding our outstanding preferred stock, options and warrants not taken into account in the number of shares of our common stock outstanding.

If our share price continues to decline as we draw down against the equity line, the dilution percentage could become significantly larger.  However, this current registration is only for up to 11,500,000 shares to be registered.

The amount we can draw down under the Stock Purchase Agreement may be affected by a limitation on the percentage of beneficial ownership by Ironridge.

Pursuant to the Stock Purchase Agreement, the number of shares Ironridge is able to beneficially own at any given time is limited to 9.99% of the total common stock then outstanding. If Ironridge's beneficial ownership reaches the 9.99% limit, we may not be able to secure any further advances from Ironridge.

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INFORMATION REGARDING FORWARD LOOKING STATEMENTS

This prospectus and the documents that are incorporated by reference into this prospectus contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different than the results, performance or achievements expressed or implied by the forward-looking statements.

Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Forward-looking statements can generally be identified by forward-looking words and phrases such as “anticipate,” “believe,” “could,” “potential,” “continues,” “estimate,” “seek,” “predict,” “designed,” “expect,” “intend,” “plan,” “may,” “should,” “will,” “would,” “project,” and other similar expressions that denote expectations of future or conditional events rather than statement of fact. Forward-looking statements also may relate to strategies, plans and objectives for, and potential results of, future operations, financial results, financial condition, business prospects, growth strategy and liquidity, and are based upon management’s current plans and beliefs or current estimates of future results or trends. Specifically, this prospectus and the documents incorporated by reference into this prospectus contain forward-looking statements regarding:

·       that we expect that our common stock will be delisted from the NASDAQ Capital Market and thereafter quoted on the OTC Bulletin Board;

·       that we expect to obtain clearance by the U.S. Food and Drug Administration of our 510(k) pre-market notification application for our iglucose wireless communication system by the end of 2011 and expect to launch the iglucose product commercially in early 2012;

·       the expectation that operating losses will continue through 2012, and that until we are able to achieve profits, we intend to continue to seek to access the capital markets to fund the development of our HealthID products;

·       that we seek to structure our research and development on a project basis to allow management of costs and results on a discreet short term project basis, the expectation that doing so may result in quarterly expenses that rise and fall depending on the underlying project status, and the expectation that this method of managing projects may allow us to minimize our firm fixed commitments at any given point in time;

·       that based on our review of the correspondence and evaluation of the supporting detail involving the Canada Revenue Agency audit, we do not believe that the ultimate resolution of this dispute will have a material negative impact on our historical tax liabilities, our current financial position or results of operations;

·       that we intend to continue to explore strategic acquisition opportunities of businesses that are complementary to ours;

·       that we believe that with our current working capital, our expected access to capital under the Ironridge financing agreement, and, if necessary, delaying and/or reducing certain research, development and related activities and costs, that we will have sufficient funds available to meet our working capital requirements through at least June 30, 2012;

·       that the interface between a radio frequency, or RF, powered resonant electromechanical drive and the fluids in the interstitial space of a patient for continuous detection of glucose levels in a patient

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represents the next evolution in the development of an implantable glucose sensor that relies on passive RF technology to continuously monitor in vivo glucose levels over an extended period of time;

·       that the development of a single-use capsule containing a proprietary chemical reagent may enable us to accelerate the development of the Easy Check breath glucose detection system and produce a prototype device during the third quarter of 2011;

·       that we intend to continue to explore strategic transactions with third parties in the healthcare, identification, animal health, and other sectors;

·       our ability to improve diabetics’ lives while helping them manage their healthy glucose levels, thereby decreasing the risk of diabetes-related complications and reducing medical costs;

·       that the successful development and commercialization of our glucose-sensing microchip could negate the need for diabetics to draw blood samples multiple times each day;

·       that our Phase II development program will optimize candidate glucose-sensing systems for sensitivity and selectivity incorporating model matrices into the screen and workflow process and that Phase II will optimize the binding environment and competitor agent synthesis, test cut-off membrane technology and demonstrate a bench-scale fluorescence system prototype;

·       that if any of our manufacturers or suppliers were to cease supplying us with system components, we would be able to procure alternative sources without material disruption to our business, and that we plan to continue to outsource any manufacturing requirements of our current and under development products;

·       that patients implanted with our glucose-sensing microchip, if successfully developed, could get a rapid reading of their blood sugar with a simple wave of a handheld scanner;

·       the ability of iglucose to provide next generation, real time data to improve diabetes management and help ensure patient compliance, data accuracy and insurance reimbursement;

·       the iglucose wireless communication device being the first to address the Medicare requirement for durable medical equipment manufacturers and pharmacies to maintain glucose level logs and records for the millions of high-frequency diabetes patients;

·       that the use of a heavy molecule to generate a chemical reaction that can be reliably measured may prove the close correlation between acetone concentration found in a patient’s exhaled breath and glucose found in his or her blood and the possible elimination of a patient’s need to prick his or her finger multiple times per day to get a blood sugar reading; and

·       that we expect commercial sale of our new 8 millimeter microchips in 2012.

These forward-looking statements are based upon information currently available to us and are subject to a number of risks, uncertainties, and other factors that could cause our actual results, performance, prospects, or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Important factors that could cause our actual results to differ materially from the results referred to in the forward-looking statements include:

·       our ability to successfully consider, review, and if appropriate, implement other strategic opportunities;

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·       our expectation that we will incur losses, on a consolidated basis, for the foreseeable future;

·       our ability to fund our operations and continued development of our products, including the GlucoChip glucose-sensing microchip, the Easy Check breath glucose detection system and the iglucose wireless communication system, and the operations of our subsidiary, MicroFluidic Systems;

·       our ability to obtain and maximize the amount of capital that we will have available to pursue business opportunities in the healthcare sector;

·       our ability to successfully develop and commercialize the Easy Check breath glucose detection system and the iglucose wireless communication device and the glucose-sensing microchip, and the market acceptance of these devices;

·       our ability to obtain patents on our products, including the Easy Check breath glucose detection system and the iglucose wireless communication device, the validity, scope and enforceability of our patents, and the protection afforded by our patents;

·       the potential for costly product liability claims and claims that our products infringe the intellectual property rights of others;

·       our ability to comply with current and future regulations relating to our businesses;

·       the likelihood that one or more market makers in our common stock submits a Form 211 to the OTC Compliance Unit of FINRA, and such application is cleared to allow our common stock to be quoted on the OTC Bulletin Board;

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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘S-1’ Filing		Date		First		Last			Other Filings
		6/30/12		16					10-Q,  10-Q/A,  NT 10-Q
		5/31/12		11		12			8-K,  DEF 14A
		12/31/11		20					10-K,  10-K/A
		9/30/11		20					10-Q,  8-K,  PRE 14A
		9/26/11		11		12
		9/12/11		11		12
		8/31/11		5		25			4,  8-K
Filed on:		8/29/11		1		37			8-K
		8/26/11		5		23			3,  8-K
		8/25/11		2
		8/15/11		8		36			10-Q
		8/12/11		36
		8/11/11		11
		8/8/11		11		27			8-K/A
		7/29/11		27					424B5,  8-K/A
		7/28/11		8		37			424B5,  8-K,  SC 13G
		7/27/11		4		36			8-K,  8-K/A
		7/25/11		27		33			8-K
		7/22/11		33					8-K
		7/15/11		27					DEF 14A
		6/30/11		8		27			10-Q,  10-Q/A
		6/3/11		27					8-K,  D
		5/31/11		30					4
		5/25/11		27		33			4,  8-K
		5/23/11		11		33			8-K,  8-K/A
		5/12/11		27		33			8-K
		5/9/11		33					8-K
		4/28/11		11
		4/1/11		27					8-K
		3/31/11		20		26			10-Q
		3/25/11		26		36			10-K
		3/18/11		27					8-K,  D/A,  SC 13D/A
		3/14/11		27		36			424B3,  8-K
		3/1/11		27					8-K
		2/24/11		30		36			8-K
		2/4/11		27					3,  8-K
		1/28/11		29					424B5
		1/26/11		27					8-K
		1/24/11		36					8-K
		1/13/11		29					424B5
		12/31/10		11		26			10-K
		12/13/10		29					4
		11/12/10		35					10-Q
		11/11/10		35
		9/30/10		20					10-Q
		9/20/10		30
		7/26/10		29
		6/30/10		20					10-Q
		5/12/10		29					4
		5/6/10		36					10-Q,  4
		5/4/10		29					4
		4/30/10		29
		4/29/10		36					424B3,  424B5,  8-K
		4/28/10		29		36			8-K,  S-3MEF
		4/22/10		29		36
		3/31/10		20					10-Q
		3/19/10		33		36			10-K,  4,  4/A,  8-K
		3/16/10		33
		3/15/10		29
		2/26/10		29		36			4
		2/11/10		29
		12/31/09		20					10-K,  3,  4
		11/12/09		34		36			10-Q,  4,  S-8,  S-8 POS
		11/10/09		33					4,  4/A,  8-K
		10/6/09		29		36			8-K,  D
		10/1/09		33					4,  425,  8-K,  DFAN14A,  SC 13D/A
		9/30/09		20					10-Q,  10-Q/A,  425
		9/29/09		29		36			4,  424B3,  425,  8-K,  SC 13G
		9/21/09		29		36			425,  8-K
		9/8/09		33					425,  8-K
		9/4/09		33					8-K
		8/13/09		35					10-Q
		6/30/09		20					10-Q
		6/4/09		35					3,  8-K
		5/14/09		34		35			10-Q
		3/31/09		20					10-Q
		3/30/09		35					8-K
		3/27/09		35					8-K
		3/20/09		35		36
		3/17/09		35					8-K
		3/3/09		29		35			8-K
		2/12/09		34					10-K
		11/14/08		33					10-Q,  4
		11/12/08		33					3,  4
		5/16/08		33		35			8-K,  DEFA14A
		5/15/08		33		35			10-Q,  3,  8-K,  DEFA14A
		11/8/07		34					10-Q
		8/8/07		34					10-Q
		4/2/07		33		34			10-K
		2/6/07		27					8-A12B,  8-A12B/A
		12/21/06		33
		12/18/06		33
		12/12/05		33
									List all Filings

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Filing Submission 0001398432-11-000699   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

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