PositiveID Corp. PSIDD

Primary Symbol: PSID

"PositiveID Corp develops molecular diagnostic systems for bio-threat detection and rapid medical testing. It also develops fully automated pathogen detection systems and assays to detect biological threats."

OTCPK:PSID - Post by User

PositiveID Corp.

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Post by zamani11on Jan 25, 2013 12:21pm

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Post# 20890668

This company is almost bankrupt - No asset left -

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2012

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

For the transition period from to

Commission File Number: 001-33297

POSITIVEID CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE		06-1637809
(State or other jurisdiction of incorporation or		(I.R.S. Employer Identification No.)
organization)

1690 South Congress Avenue, Suite 201
Delray Beach, Florida 33445		(561) 805-8008
(Address of principal executive offices,		(Registrant’s telephone number, including area code)
including zip code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No 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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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

The number of shares outstanding of each of the issuer’s classes of common stock as of the close of business on November 5, 2012 is as follows:

Class		Number of Shares
Common Stock: $0.01 Par Value		203,879,818

POSITIVEID CORPORATION

TABLE OF CONTENTS


PART I —FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets — September 30, 2012 (unaudited) and December 31, 2011	1

Unaudited Condensed Consolidated Statements of Operations — Three and Nine Months Ended September 30, 2012 and 2011	2

Unaudited Condensed Consolidated Statement of Stockholders’ Deficit — Nine Months Ended September 30, 2012	3

Unaudited Condensed Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2012 and 2011	4

Notes to Unaudited Condensed Consolidated Financial Statements	5

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	23

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	31

ITEM 4. CONTROLS AND PROCEDURES	31

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS	31

ITEM 1A. RISK FACTORS	32

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	32

ITEM 5. OTHER INFORMATION	32

ITEM 6. EXHIBITS	32

SIGNATURES	33

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

POSITIVEID CORPORATION

Condensed Consolidated Balance Sheets

(In thousands, except share data)

	September 30, 2012			December 31, 2011
	(unaudited)

Assets
Current Assets:
Cash and cash equivalents	$	186		$	28
Prepaid expenses and other current assets		108			82
Total Current Assets		294			110

Equipment, net		29			44
Prepaid tax advance to Stanley		738			—
Goodwill		510			510
Intangibles, net		1,081			1,385
Other assets		38			417
Total Assets	$	2,690		$	2,466

Liabilities and Stockholders’ Deficit
Current Liabilities:
Accounts payable	$	1,259		$	1,020
Accrued expenses and other current liabilities		1,767			1,775
Current portion of liability to Stanley		569			—
Short term debt		272			—
Warrant Liability		49			—
Note payable		850			—
Accrued preferred stock dividends payable		84			24
Total Current Liabilities		4,850			2,819

Liability to Stanley		491			—
Contingent earn-out liability		615			538
Stock obligation to related party (see Note 8)		274			4,879
Total Liabilities		6,230			8,236

Commitments and contingencies

Stockholders’ Deficit:
Preferred stock, 5,000,000 shares authorized, $.001 par value; Series F Preferred – 876 and 1,500 shares issued and outstanding, liquidation preference of $960 and $1,524, at September 30, 2012 and December 31, 2011		600			—
Common stock, 470,000,000 shares authorized, $.01 par value; 173,080,051 and 53,997,779 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively		1,731			540
Additional paid-in capital		102,410			82,042
Accumulated deficit		(107,733	)		(86,102	)
		(2,922	)		(3,520	)
Subscription Receivable		(34	)
Note receivable for shares issued		(514	)		(2,250	)
Total Stockholders’ Deficit		(3,540	)		(5,770	)
Total Liabilities and Stockholders’ Deficit	$	2,690		$	2,466

See accompanying notes to unaudited condensed consolidated financial statements.

POSITIVEID CORPORATION

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenue	$	—		$	—		$	—		$	—
Cost of sales		—			—			—			—
Gross profit		—			—			—			—

Operating expenses:
Selling, general and administrative		1,836			2,830			5,912			8,082
Research and development		35			134			258			618
Impairment of development costs		342			—			342			—
Stock compensation to related party (see Note 9)		—			3,394			—			3,394
Total operating expenses		2,213			6,358			6,512			12,094
Operating loss from continuing operations		(2,213	)		(6,358	)		(6,512	)		(12,094	)

Other income (expense), net		(116	)		4			(55	)		80
Loss from continuing operations		(2,329	)		(6,354	)		(6,567	)		(12,014	)

Discontinued operations:
Income (loss) from discontinued operations		—			28			—			498
Impairment of goodwill		—			—			—			(555	)
Total loss from discontinued operations		—			28			—			(57	)
Net loss		(2,329	)		(6,326	)		(6,567	)		(12,071	)

Preferred stock dividends		(13	)		(40	)		(60	)		(201	)
Beneficial conversion dividend on preferred stock		(10,168	)		—			(15,063	)		—
Net loss attributable to common stockholders	$	(12,510	)	$	(6,366	)	$	(21,690	)	$	(12,272	)

Loss from continuing operations per common share attributable to common stockholders	$	(0.09	)	$	(0.16	)	$	(0.19	)	$	(0.35	)
Loss from discontinued operations per common share		—			—			—			—
Loss per common share attributable to common stockholders – basic and diluted	$	(0.09	)	$	(0.16	)	$	(0.19	)	$	(0.35	)

Weighted average shares outstanding – basic and diluted		146,298			39,049			112,624			35,117

See accompanying notes to unaudited condensed consolidated financial statements.

POSITIVEID CORPORATION

Condensed Consolidated Statement of Stockholders’ Deficit

For the Nine Months Ended September 30, 2012

(In thousands, except share data)

(Unaudited)

										Additional						Note Receivable For						Total Stockholders’
	Preferred Stock					Common Stock				Paid-in			Accumulated			Shares			Subscription			Equity
	Shares			Amount		Shares		Amount		Capital			Deficit			Issued			Receivable			(Deficit)

Balance at January 1, 2012		1,500		$	—		53,997,779	$	540	$	82,042		$	(86,102	)	$	(2,250	)	$	—		$	(5,770	)

Issuance of Series F Preferred shares		600			600		—		—		(500	)		—			—			—			100
Issuance of Series H Preferred shares		500			—		500,000		5		381			—			—			—			386
Conversion of Series F Preferred shares and repayment of Ironridge note receivable		(1,224	)		—		37,816,418		379		12,918			(13,355	)		1,736			—			1,678
Conversion of Series H Preferred shares		(500	)		—		14,725,404		147		1,562			(1,709	)		—			—			—
Issuance of Common Stock pursuant to Ironridge stock purchase agreement		—			—		15,000,000		150		48			—			—			(34	)		164
Issuance of Common Stock pursuant to acquisition of MicroFluidic Systems		—			—		460,150		4		65			—			—			—			69
Issuance of Common Stock in satisfaction of related party stock obligations		—			—		34,080,300		341		5,000			—			—			—			5,341
Issuance of Common Stock for Optimus loaned shares		—			—		3,500,000		35		(35	)		—			—			—			—
Debt discount related to JMJ financing agreement		—			—		—		—		33			—			—			—			33
Issuance of warrant pursuant to JMJ financing agreement		—			—		—		—		(49	)		—			—			—			(49	)
Stock-based compensation		—			—		13,000,000		130		1,005			—			—			—			1135
Accrual of preferred stock dividends		—			—		—		—		(60	)		—			—			—			(60	)
Net loss		—			—		—		—		—			(6,567	)		—			—			(6,567	)

Balance at September 30, 2012		876		$	600		173,080,051	$	1,731	$	102,410		$	(107,733	)	$	(514	)	$	(34	)	$	(3,540	)

See accompanying notes to unaudited condensed consolidated financial statements.

POSITIVEID CORPORATION

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2012			2011

Cash flows from operating activities:
Net loss	$	(6,567	)	$	(12,071	)
Add: Loss from discontinued operations		—			57
Loss from continuing operations		(6,567	)		(12,014	)
Adjustments to reconcile loss from continuing operations to net cash used in operating activities:
Depreciation and amortization		323			163
Stock-based compensation		1,135			2,219
Stock issued to advisor for acquisition		69			365
Stock compensation to related party (see Note 9)		—			3,394
In-process research and development allocation from asset purchase		—			114
Impairment of capitalized development cost		342			—
Impairment of goodwill		—			555
Non-cash interest expense		4			—
Changes in operating assets and liabilities:
(Increase) in prepaid expenses and other current assets		(67	)		(202	)
Increase in accounts payable and accrued expenses		2,296			284
Net cash used in discontinued operations		—			(540	)
Net cash used in operating activities		(2,465	)		(5,662	)
Cash flows from investing activities:
Acquisition of MicroFluidic Systems		—			(24	)
Proceeds from sale of NationalCreditReport.com		—			675
Proceeds from sale of equipment		—			46
Purchase of equipment		(5	)		(18	)
Net cash (used in) provided by investing activities		(5	)		679
Cash flows from financing activities:
Proceeds from loans		300			—
Proceeds from equity financings, net of fees		2,328			3,691
Net cash provided by financing activities		2,628			3,691
Net increase (decrease) in cash and cash equivalents		158			(1,292	)
Cash and cash equivalents, beginning of period		28			1,764
Cash and cash equivalents, end of period	$	186		$	472

See accompanying notes to unaudited condensed consolidated financial statements.

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

1. Business and Basis of Presentation

PositiveID Corporation (the “Company” or “PositiveID”) is a Delaware corporation formed in 2001. The Company commenced operations in 2002 as VeriChip Corporation. In 2007, the Company completed an initial public offering of its common stock.

In July 2008, the Company completed the sale of all of the outstanding capital stock of Xmark Corporation (“Xmark”), which at the time was principally all of the Company’s operations. The sale transaction was closed for $47.9 million in cash, which consisted of the $45 million purchase price plus a balance sheet adjustment of approximately $2.9 million, which was adjusted to $2.8 million at settlement of the escrow. Under the terms of the stock purchase agreement, $43.4 million of the proceeds were paid at closing and $4.4 million was released from escrow in July 2009. Following the completion of the sale, the Company retired all of its outstanding debt for a combined payment of $13.5 million and settled all contractual payments to Xmark’s and the Company’s officers and management for $9.1 million. In August 2008, the Company paid a special dividend to its stockholders of $15.8 million.

In November 2008, the Company entered into an Asset Purchase Agreement (“APA”) with Digital Angel Corporation and Destron Fearing Corporation, a wholly-owned subsidiary of Digital Angel Corporation, which corporations are collectively referred to as “Digital Angel.” The terms of the APA included the purchase of patents related to an embedded bio-sensor system for use in humans, and the assignment of any rights of Digital Angel under a development agreement associated with the development of an implantable glucose sensing microchip (“GlucoChip”). The Company also received covenants from Digital Angel and Destron Fearing that permit the use of intellectual property of Digital Angel related to the Company’s health care business without payment of ongoing royalties.

In September 2009, VeriChip Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of the Company (the “Acquisition Subsidiary”), and Steel Vault Corporation, a Delaware corporation (“Steel Vault”), entered into an Agreement and Plan of Reorganization (the “Merger Agreement”), as amended, pursuant to which the Acquisition Subsidiary was merged with and into Steel Vault in November 2009, with Steel Vault surviving and becoming a wholly-owned subsidiary of the Company (the “Merger”). At the closing of the Merger, the Company’s name was changed from VeriChip Corporation to PositiveID Corporation.

In February 2010, the Company acquired the assets of Easy Check Medical Diagnostics, LLC (“Easy Check”), which included the Easy Check breath glucose detection system and the iglucose wireless communication system. The purchase agreement provides for certain contingent payments and cash royalties based on future revenues. (See Note 2)

In May 2011, the Company entered into a Stock Purchase Agreement to acquire MicroFluidic Systems, a California corporation (“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. (See Note 2)

In July 2011, the Company completed the sale of substantially all of the assets of NationalCreditReport.com, which had been acquired in connection with the Merger. (See Note 3)

In January 2012, the Company sold certain assets and liabilities related to its VeriChip business, as well as all of the assets and liabilities relating to its Health Link business, to VeriTeQ Acquisition Corporation, a related party. The Company had ceased actively marketing the VeriChip business in January 2008 and the Health Link business in September 2010. The term “VeriChip business” does not include the GlucoChip or any product or application involving blood glucose detection or diabetes management. (See Note 9)

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

The accompanying condensed consolidated balance sheet as of December 31, 2011 has been derived from the Company’s audited financial statements included in its Annual Report on Form 10-K/A for the year ended December 31, 2011. The accompanying unaudited condensed consolidated financial statements as of September 30, 2012 and for the three and nine months ended September 30, 2012 and 2011 have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. In the opinion of the Company’s management, all adjustments (including normal recurring adjustments) necessary for a fair presentation for the periods presented have been reflected as required by Regulation S-X, Rule 10-01.

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the entire year. These statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2011.

Going Concern

The Company’s condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of September 30, 2012, the Company had a working capital deficiency of approximately $4.5 million and an accumulated deficit of approximately $108 million. The Company has incurred operating losses prior to and since the merger that created PositiveID. The current operating losses are the result of selling, general and administrative expenses and research and development expenses. The Company expects its operating losses to continue through at least the middle of 2013.

The Company’s ability to continue as a going concern is dependent upon its ability to obtain financing to fund the operations of Microfluidic, continued development of its diabetes management products, and working capital requirements. Until the Company is able to achieve operating profits, it will continue to seek to access the capital markets. Since December 31, 2011, the Company raised approximately $2.6 million under certain financing facilities.

In July 2012, the Company executed an equity line financing of up to $10,000,000. On July 20, 2012, the Company filed a registration statement on Form S-1 registering up to 34,000,000 shares of the Company’s common stock. That registration statement was declared effective August 12, 2012. As of November 12, 2012, the Company had issued 23,000,000 shares and had received approximately $380,000. As of November 12, 2012 the Company also had 276 shares of Series F Preferred Stock outstanding, held by Ironridge, and convertible at the Company’s option, which if converted, requires Ironridge to repay note receivable of approximately $400,000. The Ironridge financing facility is subject to certain conditions being met, including but not limited to us maintaining an effective registration statement which registers Ironridge’s resale of any shares purchased by it under the facility, and the amount of funding available under the facility overall is largely dependent upon the Company’s share price and trading volume.

On August 31, 2011, the Company received notification that its stock was being delisted from the Nasdaq Capital Market ("Nasdaq") and on September 1, 2011 the Company’s stock began trading on the OTC Bulletin Board. The delisting from Nasdaq could adversely affect the market liquidity of the Company’s common stock and harm the business and may hinder or delay the Company’s ability to consummate potential strategic transactions or investments. Such delisting could also adversely affect the Company’s ability to obtain financing for the continuation of its operations and could result in the loss of confidence by investors, suppliers and employees.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management intends to continue to access the capital markets to provide funds to meet its working capital requirements for the near-term future. In addition and if necessary, the Company could reduce and/or delay certain discretionary research, development and related activities and costs. However, there can be no assurances that the Company will be able to derive sufficient funding or be successful in negotiating additional sources of equity or credit for its long-term capital needs. The Company’s inability to have access to such financing at reasonable costs, or at all, could materially and adversely impact its financial condition, results of operations and cash flows, and result in significant dilution to the Company’s existing stockholders. The Company’s condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Discontinued Operations

In connection with the Company’s sale of its NationalCreditReport.com business in July 2011, the results of its operations have been presented as discontinued operations in the accompanying unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2011 (see Note 3).

Loss per Common Share

Basic and diluted loss per common share for all periods presented is calculated based on the weighted average common shares outstanding for the period. The following potentially dilutive securities were outstanding as of September 30, 2012 and 2011 and were not included in the computation of dilutive loss per common share because the effect would have been anti-dilutive (in thousands):

	September 30,
	2012		2011
Convertible preferred stock		1,752		4,760
Stock options		10,482		4,474
Warrants		3,082		304
Unvested shares of restricted common stock		375		4,385
		15,961		13,923

Segment Information

Through the second quarter of 2011, the Company operated in two business segments: HealthID and ID Security. Beginning in 2011, with the sale of the ID Security segment, that segment is presented as discontinued operations in the accompanying condensed consolidated financial statements and effective in 2011, the Company now reports its operations as a single segment (see Note 3).

The Company’s business is comprised of its MicroFluidic subsidiary and its diabetes management products: (1) the GlucoChip, a glucose-sensing microchip, based on the Company’s proprietary intellectual property which is being developed in conjunction with Receptors LLC (“Receptors”), (2) Easy Check, a non-invasive breath glucose detection system, based on the correlation of acetone in exhaled breath to blood glucose levels, and (3) 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. Beginning in the third quarter of 2012, the Company began discussions with strategic partners about the sale or license of the iglucose product line. In conjunction with the Company’s decision to seek a strategic alternative such as the sale or license of the iglucose product, including its associated intellectual property, the Company recorded an impairment charge of $0.3 million. Any proceeds from a future sale or license transaction will be recorded as income in future periods.

The Company’s prior ID Security segment included its Identity Security suite of products, sold through NationalCreditReport.com and the Company’s Health Link personal health record (“PHR”) business. The NationalCreditReport.com business 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. Since the sale of NationalCreditReport.com, the Company is not currently generating revenue.

2. Acquisitions

Easy Check Asset Purchase

In February 2010, the Company purchased the assets of Easy Check, which was comprised of the intellectual property related to the Easy Check breath glucose measurement device and the iglucose wireless communication system. The Company issued 300,000 shares of common stock in connection with the purchase with a fair value of $351,000 based on a stock price of $1.17 per share. The Company did not purchase any tangible assets from Easy Check.

In February 2011 the Company amended the purchase agreement and paid the seller of the assets an additional 200,000 shares of its common stock valued at $114,000, based on a stock price of $0.57 per share. The agreement lowered the potential royalty on future income from these products from 25% to 10%. The additional consideration was expensed as in-process research and development as the related projects had not yet reached technological feasibility at the time of the amendment.

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

MicroFluidic Acquisition

On May 23, 2011, the Company acquired all of the outstanding capital stock of MicroFluidic in a transaction accounted for using the purchase method of accounting (the “Acquisition”). Since MicroFluidic's inception, its key personnel have had an important role in developing technologies to automate the process of biological pathogen detection. MicroFluidic’s substantial portfolio of intellectual property related to sample preparation and rapid medical testing applications is complementary to the Company’s portfolio of diabetes management products in development and its development of a rapid diagnostic product for influenza.

As consideration for the consummation of the Acquisition, the Company paid $250,000 to fund certain accounts payable of MicroFluidic (of which approximately $24,000 was paid to selling shareholders) and issued 2,375,000 shares of common stock of the Company (the “Stock Consideration”). The Company issued a total of 971,429 shares of common stock in 2011 to its advisors for brokerage services rendered in conjunction with the Acquisition. The Company incurred a nonrecurring charge in 2011 of approximately $550,000 related to the direct costs of the Acquisition, consisting of the $365,000 value of the shares of common stock issued to its advisors and $185,000 of cash costs. The Company issued an additional 460,150 shares of common stock to the advisors during the first quarter of 2012, pursuant to which a charge of approximately $69,000 was recorded.

In connection with the Acquisition, the Company is also required to make certain earn-out payments, up to a maximum of $7,000,000 payable in shares of the Company’s common stock, upon certain conditions over the next three years (the “Earn-Out Payment”). The earn-out for 2011 was based upon the value of contracts obtained by MicroFluidic through December 31, 2011, subject to a maximum Earn-Out Payment of $2,000,000. MicroFluidic did not obtain any contracts as of December 31, 2011 and thus no earn-out payment was required for 2011. The earn-out for years 2012-2014 is based on MicroFluidic achieving certain earnings targets for the respective year, subject to a maximum Earn-Out Payment of $2,000,000 per year and an overall cumulative maximum Earn-Out Payment of $7,000,000 subject to a stock price floor of $0.32 per share related to 68% of the total earn out. However, the Company is prohibited from making any Earn-Out Payment until stockholder approval is obtained if the aggregate number of shares to be issued exceeds 19.99% of the Company’s common stock outstanding immediately prior to the closing. In the event the Company is unable to obtain any required stockholder approval, the Company is obligated to pay the applicable Earn-Out Payment in cash to the sellers. In addition, the Company may pay any applicable Earn-Out Payment in cash at its option.

The estimated purchase price of the Acquisition totaled approximately $1,653,000, comprised of (i) $24,000 in cash, (ii) Stock Consideration of $879,000 based on a stock price of $0.37 per share, and (iii) contingent consideration of approximately $750,000. The fair value of the contingent consideration was estimated based upon the present value of the probability-weighted expected future payouts under the earn-out arrangement. On October 31, 2011, the Company entered into an agreement with two of the selling MicroFluidic shareholders pursuant to which the two individuals waived their right to any earn-out compensation for 2011 in settlement of the closing working capital adjustment provisions of the purchase agreement. The two individuals represented approximately 68% of the selling shareholder interests, and thus any earn-out for 2011 was to be reduced by such percentage. As no earn-out was achieved for 2011, the fair value of the contingent consideration was reassessed and reduced to approximately $538,000 as of December 31, 2011, and was increased to approximately $615,000 as of September 30, 2012 to reflect an increase in the present value of the estimated future payouts.

Under the purchase method of accounting, the estimated purchase price of the Acquisition was allocated to MicroFluidic’s net tangible and identifiable intangible assets and liabilities assumed based on their estimated fair values as of the date of the completion of the Acquisition, as follows (in thousands):

Assets acquired:
Net tangible assets	$	125
Customer contracts and relationships		230
Patents		1,223
Non-compete agreement		169
Goodwill		510
		2,257
Liabilities assumed:
Current liabilities		(604	)
Total estimated purchase price	$	1,653

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The estimated fair values of certain assets and liabilities have been determined by management based upon a third-party valuation. No portion of the intangible assets, including goodwill, is expected to be deductible for tax purposes.

The following supplemental pro forma information for the three and nine months ended September 30, 2011 assumes that the Acquisition had occurred as of January 1, 2011 (in thousands except per share data):

	Three Months Ended September 30, 2011		Nine Months Ended September 30, 2011
Revenue	$	—	$	235
Net loss	$	(6,326)	$	(12,678)
Loss per common share – basic and diluted	$	(0.16)	$	(0.35)

The pro forma financial information is not necessarily indicative of the results that would have occurred if the Acquisition had occurred on the date indicated or that may result in the future. The pro forma revenue reflected relates to revenue reported by MicroFluidic, substantially all of which was generated under two contracts with an agency of the U.S. Government. The two contracts were completed by March 31, 2011, and as of September 30, 2012 MicroFluidic had no current revenue-generating contracts.

3. Discontinued Operations

Beginning at the end of 2010, in conjunction with the Company’s focus on its HealthID businesses, including the development of the GlucoChip, the Easy Check breath glucose detection system, and iglucose wireless communication system, the Company began to limit the activities of its ID Security segment, which included its wholly-owned NationalCreditReport.com subsidiary. In early 2011, the Company ceased acquiring new subscribers for its NationalCreditReport.com business, and in the second quarter of 2011 the Company began actively marketing the business for sale. On July 22, 2011, the Company completed the sale of substantially all of the assets of NationalCreditReport.com for $750,000 in cash. The buyer retained $75,000 from the purchase price pending the final determination of indemnification obligations for a period of eighteen months from the closing date. Subsequent to quarter end, the Company and the buyer agreed to settle all indemnities for $63,000, which the Company collected. In connection with the decision to sell the NationalCreditReport.com business, the carrying value of the subsidiary’s net assets was written down to their estimated fair value, determined based upon the proceeds realized upon the sale in July 2011. As a result, an impairment of the carrying value of goodwill of approximately $555,000 was recognized during the second quarter of 2011.

Historical revenue related to the NationalCreditReport.com business and included in the income from discontinued operations in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2011 totaled approximately $44,000 and $988,000, respectively.

4. Financing Agreements

Optimus Financing

On September 29, 2009, the Company entered into a Convertible Preferred Stock Purchase Agreement (the “Optimus Purchase Agreement”) with Optimus Technology Capital Partners, LLC (“Optimus”) under which Optimus was committed to purchase up to $10 million in shares of convertible Series A Preferred Stock of the Company in one or more tranches.

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

To facilitate the transactions contemplated by the Optimus Purchase Agreement, R & R Consulting Partners, LLC (“R&R”), a company controlled by Scott R. Silverman, the Company’s former chairman and chief executive officer, loaned shares of common stock of the Company to Optimus equal to 135% of the aggregate purchase price for each tranche pursuant to stock loan agreements between R & R and Optimus. R & R was paid a $100,000 fee in October 2009 plus was to be paid 2% as interest for the fair value of the loaned shares for entering into the stock loan arrangement. R & R could demand return of some or all of the borrowed shares (or an equal number of freely tradable shares of common stock) at any time on or after the six-month anniversary date such borrowed shares were loaned to Optimus, but no such demand could be made if there are any shares of Series A Preferred Stock then outstanding. If a permitted return demand was made, Optimus was required to return the borrowed shares (or an equal number of freely tradable shares of common stock) within three trading days after such demand. Optimus could return the borrowed shares in whole or in part, at any time or from time to time, without penalty or premium. On September 29, 2009, October 8, 2009, and October 21, 2009, R & R loaned Optimus 1.3 million, 800,000 and 600,000 shares, respectively, of Company common stock.

On September 29, 2009, the Company exercised the first tranche of the Optimus financing, pursuant to which it issued 296 shares of Series A Preferred Stock, for a purchase price of approximately $3.0 million. In support of this tranche, R & R loaned Optimus 1.3 million shares of common stock. The tranche closed on October 13, 2009, and the Company received proceeds of approximately $3.0 million, less the fees due on the entire financing commitment of $800,000. On November 5, 2009, the Company closed the second tranche of this financing, issuing 166 shares of Series A Preferred Stock, for a purchase price of approximately $1.7 million. In support of this tranche, R & R loaned Optimus approximately 1.4 million shares of common stock.

On May 12, 2010, R & R demanded the return of 2.7 million shares loaned to Optimus. Also on May 12, 2010, the Company sent Optimus a notice of its election to convert all of the outstanding shares of Series A Preferred Stock into 2,729,452 shares of Company common stock. Optimus returned these shares to R & R in repayment of the loan. The conversion of the Series A Preferred Stock was determined by a fixed conversion price that was determined at the time of the two tranche closings, which were approximately $3.07 and $1.60 per share, respectively. The Company was required to issue make-whole shares to Optimus equal to 35% of the Series A Liquidation Value ($10,000 per share of Series A Preferred Stock) because the Series A Preferred Stock was redeemed prior the first anniversary of the issuance date. On October 13, 2010, the Company filed a Certificate of Elimination with the Secretary of State of the State of Delaware effecting the elimination of the Certificate of Designation of Preferences, Rights and Limitations of Series A Preferred Stock. No shares of Series A Preferred Stock remained outstanding as of December 31, 2010.

On March 14, 2011, the Company entered into an Amended and Restated Convertible Preferred Stock Purchase Agreement (the “Amended Optimus Purchase Agreement”) with Optimus. The Amended Optimus Purchase Agreement amended and restated the Optimus Purchase Agreement, and, among other things, specifically (i) replaced the Series A Preferred Stock issuable under the Purchase Agreement with Series C Preferred Stock with substantially similar terms, and (ii) reduced the maximum amount of preferred stock issuable to Optimus under the Optimus Purchase Agreement from $10 million to $8.7 million, of which $4.7 million was previously issued in 2009 as described above.

Under the terms of the Amended Optimus Purchase Agreement, from time to time and at the Company’s sole discretion, the Company could present Optimus with a notice to purchase shares of Series C Preferred Stock (the “Notice”). Optimus was obligated to purchase such Series C Preferred Stock on the twentieth trading day after any Notice date, subject to satisfaction of certain closing conditions, including (i) that the Company is listed for and trading on a trading market, such as the Nasdaq or the over the counter bulletin board, (ii) the representations and warranties of the Company set forth in the Amended Optimus Purchase Agreement are true and correct as if made on each tranche date, and (iii) that no such purchase would result in Optimus and its affiliates beneficially owning more than 9.99% of the Company’s common stock. In the event the closing bid price of the Company’s common stock during any one or more of the nineteen trading days following the delivery of a Notice were to fall below 75% of the closing bid price on the trading day prior to the Notice date and Optimus determined not to complete the tranche closing, then the Company could, at its option, proceed to issue some or all of the applicable shares, provided that the conversion price for the Preferred Stock that is issued would reset at the lowest closing bid price for such nineteen trading day period.

On March 14, 2011, the Company delivered a Notice to Optimus to sell 140 shares of Series C Preferred Stock for a purchase price of approximately $1.4 million. In support of this tranche, R & R loaned 2,729,452 shares, Mr. Silverman loaned 70,548 shares and William Caragol, the Company’s current chairman and chief executive officer, loaned 700,000 shares of Company common stock to Optimus (the “Loaned Shares”). On April 12, 2011, the tranche closed and the Company received proceeds of approximately $1.4 million, less $100,000 paid to Optimus to waive the requirement under the Amended Optimus Purchase Agreement that the conversion price of the Series C Preferred Stock issued in the tranche be reset at the lowest closing bid price for the nineteen trading days following the tranche notice date, which was March 14, 2011, due to the closing bid price of a share of the Company’s common stock falling below 75% during such nineteen trading day period.

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

On October 12, 2011, R & R, Mr. Caragol and Mr. Silverman demanded the return of the Loaned Shares from Optimus. Also on October 12, 2011, the Company sent Optimus a notice of its election to convert all of the outstanding shares of Series C Preferred Stock into 3,500,000 shares of common stock. The conversion of the Series C Preferred Stock was determined by a fixed conversion price that was determined at the time of the tranche closing, which was approximately $0.40 per share. On October 17, 2011, Optimus failed to return the Loaned Shares within three trading days of the demand by R & R, Mr. Silverman and Mr. Caragol as required under the terms of the Amended Optimus Purchase Agreement. No shares of Series C Preferred Stock remained outstanding as of December 31, 2011.

On January 27, 2012, the Company issued an aggregate of 3,500,000 shares of common stock to R & R Consulting Partners, LLC, Mr. Silverman and Mr. Caragol in exchange for the Loaned Shares. The securities that were originally issued upon conversion remain outstanding but have no voting, dividend, distribution or other rights of common stockholders. Further, Optimus has indicated in a public filing the absence of beneficial ownership of the 3,500,000 shares of common stock. The Company believes that, while the transfer agent has not yet cancelled the original 3,500,000 shares, no requirements exist that legally prevent such cancellation from being effectuated.

The Company believes that the transactions undertaken with Optimus as discussed herein were in compliance with applicable securities laws at the time of the financing transactions, including Section 5 of the Securities Act. If a violation did occur in connection with Optimus' resale of the common stock it received in connection with these financings, security holders who purchased these securities would have certain remedies available to them, including the right to rescind the purchase of those securities within the applicable statute of limitations, which under the Securities Act is one year commencing on the date of violation of the federal registration requirements. The Company believes that the federal statute of limitations on sales of shares of the Company’s common stock has expired for sales made under the 2009 Optimus transactions, and that the federal statute of limitations on sales of shares of the Company’s common stock will expire in 2012 for sales made under the March 2011 Optimus transaction. Statutes of limitations under state laws vary by state, with the limitation time period under many state statutes not typically beginning until the facts giving rise to a violation are known. The Company is applying a contingency accounting model in determining whether a liability exists for this matter. Under this model, the Company evaluates whether a violation of the applicable securities laws has occurred resulting in a rescission right and whether a claim for a potential violation will be asserted. The Company has determined that there is a remote likelihood as to whether a violation has occurred. If the Company were required to pay security holders for rescission of their purchase of such securities, it could have a material adverse effect on the Company’s financial condition and results of operations. The Company is not presently able to accurately determine an estimated amount for any potential rescission liability associated with the resale of the loaned shares by Optimus in the event that the transaction were to be found to violate Section 5 of the Securities Act as it does not have knowledge of the amount and timing of such resales, nor information regarding the state or states in which such resales may have occurred. The Company believes that the range of prices at which Optimus sold the loaned shares was between $0.50-$3.22 per share related to the 2009 Optimus transactions and between $0.11-$0.63 per share related to the 2011 Optimus transaction. No adjustment has been made in the accompanying condensed consolidated financial statements related to the outcome of this contingency.

Socius Financing

On April 28, 2010, the Company entered into a Preferred Stock Purchase Agreement (the “Socius Preferred Purchase Agreement”) with Socius Capital Group, LLC, doing business as Socius Technology Capital Group, LLC (“Socius Technology”) under which Socius Technology was committed to purchase up to $4.2 million in shares of non-convertible Series B Preferred Stock of the Company (the “Preferred Stock”) in one or more tranches (each a “Preferred Tranche”), at $10,000 per share. Under the terms of the Socius Preferred Purchase Agreement, from time to time and at the Company’s sole discretion, the Company could present Socius Technology with a notice to purchase such Preferred Stock (“Preferred Notice”). Socius Technology was obligated to purchase such Series B Preferred Stock on the third trading day after the Preferred Notice date, subject to satisfaction of certain closing conditions, including (i) that the Company’s common stock is listed and trading on a trading market, (ii) the representations and warranties of the Company set forth in the Socius Preferred Purchase Agreement are true and correct as if made on each Preferred Tranche date, and (iii) Socius Technology shall have received a commitment fee of $105,000 payable on the first tranche closing date (collectively, the “Closing Conditions”).

Commencing on the date of issuance of any such shares of Series B Preferred Stock, holders of Series B Preferred Stock were entitled to receive dividends on each outstanding share of Series B Preferred Stock, which accrues in shares of Series B Preferred Stock at a rate equal to 10% per annum from the date of issuance. Accrued dividends were to be payable upon redemption of the Series B Preferred Stock.

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

On April 28, 2010, the Company also entered into a Stock Purchase Agreement (the “Socius Stock Agreement”) with Socius CG II, Ltd., a Bermuda exempted company (“Socius”) under which Socius was committed to purchase in connection with any Preferred Tranche, up to that number of shares of common stock equal in dollar amount to 100% of the applicable Preferred Tranche amount (the “Common Tranche”), at a per share price equal to the average of the individual daily volume weighted average price calculated over the ten trading days preceding the applicable tranche notice of the common stock on the date the Company provides notice of such tranche (the “Investment Price”). Under the Agreement, the Company also agreed to issue in connection with any Common Tranche, two-year warrants to purchase shares of common stock equal in dollar amount to 35% of the applicable Common Tranche, at an exercise price per share equal to the Investment Price.

Socius could pay the Investment Price for the common stock, at Socius’ option, in cash or a secured promissory note. Socius could pay the warrant exercise price, at Socius’ option, in cash, a secured promissory note, or, if applicable, by cashless exercise. The promissory note bears interest at 2.0% per year calculated on a simple interest basis. The entire principal balance and interest thereon was due and payable on the fourth anniversary of the date of the promissory note, but no payments were due so long as the Company was in default under the Socius Preferred Purchase Agreement or the warrants, or if there were any shares of Series B Preferred Stock issued or outstanding. The promissory note was secured by the borrower’s right, title and interest in all outstanding shares of the Company’s common stock and other securities with a fair market value equal to the principal amount of the promissory note. The Company’s right to deliver a tranche notice to Socius pursuant to the Agreement was subject to the Closing Conditions and also that no purchase would result in Socius and its affiliates beneficially owning more than 9.99% of the Company’s common stock. Unless the Company obtained stockholder approval or Socius obtained an opinion of counsel that stockholder approval was not required, Socius could not exercise a warrant if, as a result of such exercise, the aggregate number of shares of common stock issued upon exercise of all warrants it held plus the aggregate number of shares of common stock issued under the Socius Stock Agreement would exceed 19.99% of the Company’s outstanding common stock.

On April 29, 2010, the Company presented Socius Technology with a Preferred Notice to purchase $2.3 million of Series B Preferred Stock in a Preferred Tranche. Upon the closing of the Preferred Tranche, the Company issued 230 shares of Series B Preferred Stock. In connection with the Preferred Notice, the Company also presented Socius with a notice to purchase $2.3 million of common stock. The Company issued 1,716,417 shares of common stock at an Investment Price of $1.34 per share, paid in the form of a secured promissory note, and warrants to purchase 600,746 shares of common stock to Socius, at an exercise price equal to the Investment Price of $1.34 per share, which warrants Socius exercised on April 29, 2010 and paid in the form of a secured promissory note. The promissory note was secured by the shares of Series B Preferred Stock issued to Socius.

On January 13, 2011, the Company presented Socius Technology with a Preferred Notice to purchase approximately $1.7 million of Series B Preferred Stock in a Preferred Tranche. Upon the closing of the Preferred Tranche, the Company issued 168 shares of Series B Preferred Stock. In connection with the Preferred Notice the Company also presented Socius with a notice to purchase $1.7 million of common stock. The Company issued 2,434,783 shares of common stock at an Investment Price of $0.69 per share, paid in the form of a secured promissory note, and warrants to purchase 852,174 shares of common stock to Socius, at an exercise price equal to the Investment Price of $0.69 per share, which warrants Socius exercised on January 13, 2011 and paid in the form of a secured promissory note. The promissory note was secured by the shares of Series B Preferred Stock issued to Socius.

On January 28, 2011, the Company presented Socius Technology with a Preferred Notice to purchase approximately $0.2 million of Series B Preferred Stock in a Preferred Tranche. Upon the closing of the Preferred Tranche, the Company issued 22 shares of Series B Preferred Stock. In connection with the Preferred Notice, the Company also presented Socius with a notice to purchase $0.2 million of common stock. The Company issued 285,714 shares of common stock at an Investment Price of $0.77 per share, paid in the form of a secured promissory note, and warrants to purchase 100,000 shares of common stock to Socius, at an exercise price equal to the Investment Price of $0.77 per share, which warrants Socius exercised on January 28, 2011 and paid in the form of a secured promissory note. The promissory note was secured by the shares of Series B Preferred Stock issued to Socius.

On May 11, 2011, the Company presented Socius with a notice of redemption of the 420 shares of Series B Preferred Stock held by Socius for a redemption price of $4.2 million and a premium for early redemption of $1.3 million. The consideration for the redemption was the cancelation of the promissory notes which were equal to the value of the Series B Preferred Stock held by Socius and any accrued dividends due and owing on the shares redeemed. On August 11, 2011, the Company filed a Certificate of Elimination with the Secretary of State of the State of Delaware effecting the elimination of the Certificate of Designation of Preferences, Rights and Limitations of Series B Preferred Stock.

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

2011 Ironridge Financings

On July 27, 2011, the Company entered into a Preferred Stock Purchase Agreement (the “Series F Agreement”) with Ironridge Global III, LLC (“Ironridge Global”), under which Ironridge Global was committed to purchase for cash up to $1.5 million in shares of the Company’s redeemable, convertible Series F Preferred Stock (the “Series F Preferred Stock”) at $1,000 per share of Series F Preferred Stock. The Series F Preferred Stock is convertible into shares of the Company’s common stock at the option of the holder at a fixed conversion price of $0.50 per common share. The conversion price if the Company elects to convert the Series F Preferred Stock is subject to adjustment based on the market price of the Company's common stock and any applicable early redemption price at the time the Company converts.

The Company may redeem the Series F Preferred Stock, for cash or by an offset against any outstanding note receivable from Ironridge Global to the Company, as follows. The Company may redeem any or all of the Series F Preferred Stock at any time after the seventh anniversary of the issuance date at the redemption price per share, equal to $1,000 per share of Series F Preferred Stock, plus any accrued but unpaid dividends with respect to such shares of Series F Preferred Stock (the “Series F Liquidation Value”). Prior to the seventh anniversary of the issuance of the Series F Preferred Stock, the Company may redeem the shares at any time after six months from the issuance date at a make-whole price per share equal to the following with respect to such redeemed Series F Preferred Stock: (i) 149.99% of the Series F Liquidation Value if redeemed prior to the first anniversary of the issuance date, (ii) 141.6% of the Series F Liquidation Value if redeemed on or after the first anniversary but prior to the second anniversary of the issuance date, (iii) 133.6% of the Series F Liquidation Value if redeemed on or after the second anniversary but prior to the third anniversary of the issuance date, (iv) 126.1% of the Series F Liquidation Value if redeemed on or after the third anniversary but prior to the fourth anniversary of the issuance date, (v) 119.0% of the Series F Liquidation Value if redeemed on or after the fourth anniversary but prior to the fifth anniversary of the issuance date, (vi) 112.3% of the Series F Liquidation Value if redeemed on or after the fifth anniversary but prior to the sixth anniversary of the issuance date, and (vii) 106.0% of the Series F Liquidation Value if redeemed on or after the sixth anniversary but prior to the seventh anniversary of the issuance date.

Ironridge Global's obligation to purchase the Series F Preferred Stock was subject to satisfaction of certain closing conditions, including (i) that the Company’s common stock is listed and trading on a trading market, (ii) no uncured default exists under the Series F Agreement, (iii) the Company’s representations and warranties set forth in the Series F Agreement are true and correct in all material respects; and (iv) the trading price of the Company’s common stock has not fallen below 70% of the closing price on the trading day immediately before the date it announced that it entered into the Series F Agreement (the “Condition”).

Under the terms of the Series F Agreement, as amended on August 12, 2011 (the “Waiver”), and from time to time and at the Company’s sole discretion, the Company may present Ironridge Global with a notice to purchase such Series F Preferred Stock. Upon receipt of a notice, Ironridge Global was obligated to purchase the Series F Preferred Stock in installments as follows: (i) $500,000 on August 15, 2011; (ii) $500,000 on the earlier of (1) 20 trading days after August 15, 2011 and (2) the number of trading days necessary for an aggregate of $2.0 million of the Company’s common stock to trade on the Nasdaq Capital Market; and (iii) $500,000 on the earlier of (1) 20 trading days after the closing of the second tranche above, (2) the number of trading days necessary for an aggregate of $2.0 million of the Company’s common stock to trade on the Nasdaq Capital Market subsequent to the closing of the second tranche above, and (3) September 26, 2011, with the requirement that cash for that tranche be received by the Company on or before September 30, 2011. On August 15, 2011, Ironridge funded the first $500,000 installment, pursuant to which the Company issued 500 shares of Series F Preferred Stock to Ironridge.

On September 16, 2011, the Company entered into a First Amendment to Preferred Stock Purchase Agreement (the “First Amendment”) with Ironridge Global, which superseded the Waiver. Pursuant to the First Amendment, Ironridge was obligated to purchase the Series F Preferred Stock in installments as follows: (1) 130 preferred shares on the trading day (“First Closing”) following the later of (i) 10 trading days after September 7, 2011 and (ii) the trading day that aggregate trading volume of the Company's common stock after September 7, 2011, as reported by Bloomberg, equals or exceeds $500,000; (2) 290 preferred shares on the trading day (“Second Closing”) the earlier of (i) 10 trading days after the First Closing and (ii) the trading day that aggregate trading volume of the Company's common stock after the First Closing, as reported by Bloomberg, equals or exceeds $1 million; (3) 290 preferred shares on the trading day (“Third Closing”) following the earlier of (i) 10 trading days after the Second Closing and (ii) the trading day that aggregate trading volume of the Company's common stock after the Second Closing, as reported by Bloomberg, equals or exceeds $1 million; and (4) 290 preferred shares on the trading day (“Fourth Closing”) following the earlier of (i) 10 trading days after the Third Closing and (ii) the trading day that aggregate trading volume of the Company's common stock after the Third Closing, as reported by Bloomberg, equals or exceeds $1 million (each of the First, Second, Third and Fourth Closings, a “Purchase Closing”). Each of the respective time periods between each Purchase Closing and the prior Purchase Closing shall be the respective “Calculation Period.”

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

If the sole condition precedent to a Purchase Closing not satisfied is that the Condition is not met, the Company could, at its sole option, elect at any time to proceed with an alternate Purchase Closing, in which case, with respect to such Purchase Closing:

The Condition will not apply with respect to that Purchase Closing;

The Calculation Period will (i) commence on the trading day after Ironridge Global receives written notice of Company’s election, and (ii) exclude any trading day on which the Company’s common stock trades below $0.20 per share; and

The price per preferred share will be equal to the lesser of (a) $1,000, and (b) an amount equal to (i) $1,000, multiplied by (ii) 85% of the average of the daily volume-weighted average prices (the “VWAP”) during the Calculation Period, divided by (iii) $0.257.

Pursuant to the First Amendment, the price per preferred share with respect to the First Closing was equal to the lesser of: (a) $1,000; and (b) an amount, not below zero, equal to (i) $1,000, multiplied by (ii) 85% of the average of the VWAPs during the period between September 7, 2011 through the First Closing minus $0.20, divided by (iii) $0.057. The First Closing occurred on September 20, 2011, pursuant to which the Company issued 130 shares of Series F Preferred Stock to Ironridge for a nominal purchase price.

On November 14, 2011, the Second Closing occurred, pursuant to which the Company issued 290 shares of Series F Preferred Stock to Ironridge for a purchase price of approximately $193,000. On November 18, 2011, the Third Closing occurred, pursuant to which the Company issued 290 shares of Series F Preferred Stock to Ironridge for a purchase price of approximately $243,000. On December 5, 2011, the Fourth Closing occurred, pursuant to which the Company issued 290 shares of Series F Preferred Stock to Ironridge for a purchase price of approximately $188,000. Overall, the Company issued a total of 1,500 shares of Series F Preferred Stock to Ironridge under the Series F Agreement.

Through September 30, 2012, the Company had converted a total of 1,224 shares of Series F Preferred Stock, pursuant to which the Company had issued 37.8 million shares of common stock and was obligated to issue an additional 33.5 million shares of common stock to Ironridge (21.4 million of which have been issued subsequent to quarter end). In connection with the conversions, the Company recorded a beneficial conversion dividend during the three and nine months ended September 30, 2012 totaling approximately $8.7 million and $13.4 million, respectively, representing the excess of the fair value of the Company’s common stock at the date of issuance of the converted Series F Preferred Stock over the effective conversion rate, multiplied by the common shares issued upon conversion.

On July 27, 2011, the Company also entered into a Common Stock Purchase Agreement (the “Common Stock Agreement”) with Ironridge Global Technology, a division of Ironridge Global IV, Ltd. (“Ironridge”), under which the Company could deliver a notice to Ironridge exercising its right to require Ironridge to purchase shares up to $2.5 million of its common stock at a price per share equal to $0.367. The purchase price was equal to 102% of the per share closing bid price of the Company’s common stock as reported on the Nasdaq Capital Market on the trading day immediately before the date the Company announced that it entered into the Common Stock Agreement, which was July 27, 2011.

Ironridge could pay the purchase price for the shares, at Ironridge's option, in cash or a secured promissory note, except that at least $250,000 of the purchase price was required to be paid in cash. The promissory note bears interest at 1.6% per year calculated on a simple interest basis. The entire principal balance and interest thereon is due and payable seven and one-half years from the date of the promissory note, but no payments are due so long as the Company is in default under the Common Stock Agreement or the Series F Agreement or if there are any shares of Series F Preferred Stock issued or outstanding. The promissory note is secured by Ironridge's right, title and interest in all shares legally or beneficially owned by Ironridge or an affiliate, common stock and other securities with a fair market value equal to the principal amount of the promissory note.

The Company’s right to deliver a tranche notice to Ironridge pursuant to the Common Stock Agreement was subject to satisfaction of certain closing conditions, including (i) that the Company’s common stock is listed and trading on a trading market, (ii) no uncured default exists under the Common Stock Agreement, and (iii) the Company’s representations and warranties set forth in the Common Stock Agreement are true and correct in all material respects. The Company may not deliver a notice to Ironridge to purchase shares of its common stock if the total number of shares of common stock owned or deemed beneficially owned by Ironridge and its affiliates would result in Ironridge owning or being deemed to beneficially own more than 9.99% of all such common stock and other voting securities as would be outstanding on the date of exercise.

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

On July 28, 2011, the Company presented Ironridge with a notice to purchase $2.5 million of its common stock under the Common Stock Agreement. Ironridge Global paid $250,000 in cash and the remaining $2.25 million in a promissory note, the terms of which are described above. The Company issued an aggregate of 6,811,989 shares of its common stock to Ironridge in connection with the July 28, 2011 notice. No further shares may be sold under the Common Stock Agreement. In connection with the conversions of Series F Preferred Stock discussed above, a total of $1.7 million of the promissory note was repaid through September 30, 2012, and an additional $0.1 million has been repaid subsequent to September 30, 2012.

2012 Ironridge Financings

On January 13, 2012, the Company, entered into a Preferred Stock Purchase Agreement (the “Series H Agreement”) with Ironridge, under which Ironridge was committed to purchase for cash $500,000 in shares of the Company’s redeemable, convertible Series H Preferred Stock (the “Series H Preferred Stock”) at $1,000 per share of Series H Preferred Stock.

Each share of Series H Preferred Stock is convertible into shares of the Company’s common stock at any time by the holder at a conversion price of $0.15 per share. The Series H Preferred Stock will accrue dividends in the amount of 4.5% per annum, subject to increase if the closing price of the Company’s common stock falls below $0.125 per share, up to a maximum rate of 10% per annum. The dividends are payable quarterly, at the Company’s option, in cash or shares of the Company’s common stock. The holder of the Series H Preferred Stock may convert the Series H Preferred Stock into shares of the Company’s common stock at any time at an initial conversion price of $0.15 per share plus a make-whole adjustment equal to accrued but unpaid dividends and dividends that otherwise would be due through the tenth anniversary of the Series H Preferred Stock. The Company may convert the Series H Preferred Stock if the closing price of the Company’s common stock exceeds 200% of the conversion price, and certain other conditions are met. The holder will be prohibited, however, from converting the Series H Preferred Stock into shares of the Company’s common stock if, as a result of such conversion, the holder together with its affiliates, would own more than 9.99% of the total number of shares of the Company’s common stock then issued and outstanding.

The Company may redeem any or all of the Series H Preferred Stock for cash at any time after the tenth anniversary of the issuance date at the redemption price per share, equal to $1,000 per share of Series H Stock, plus any accrued but unpaid dividends with respect to such shares of Series H Preferred Stock (the “Series H Liquidation Value”). Prior to the tenth anniversary of the issuance of the Series H Stock, the Company may, at its option, redeem the shares at any time after the issuance date at a price per share equal to the Series H Liquidation Value plus the total cumulative amount of dividends that otherwise would have been payable through the tenth anniversary of the issuance date, less any dividends that have been paid.

Ironridge's obligation to purchase the Series H Preferred Stock was subject to satisfaction of certain closing conditions, including (i) that the Company’s common stock is listed for and trading on a trading market, (ii) no uncured default exists under the Series H Agreement, and (iii) the Company’s representations and warranties set forth in the Series H Agreement are true and correct in all material respects. On January 17, 2012, Ironridge funded the $500,000 purchase price, pursuant to which the Company issued 500 shares of Series H Preferred Stock to Ironridge. Through September 30, 2012, Ironridge had converted all 500 shares of Series H Preferred Stock, pursuant to which the Company issued a total of 14,725,404 shares of common stock to Ironridge. In connection with the conversions, the Company recorded a beneficial conversion dividend during the three and nine months ended September 30, 2012 totaling approximately $1.5 million and $1.7million, respectively, representing the excess of the fair value of the Company’s common stock at the date of issuance of the converted Series H Preferred Stock over the effective conversion rate, multiplied by the common shares issued upon conversion.

On July 12, 2012, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Ironridge whereby Ironridge agreed to purchase up to $10 million of shares of the Company’s common stock from time to time over a 24-month period. Under the terms of the Stock Purchase Agreement, Ironridge will not be obligated to purchase shares of the Company’s common stock unless and until certain conditions are met, including but not limited to the Company maintaining an effective Registration Statement (the “Ironridge Registration Statement”) on Form S-1which registers Ironridge’s resale of any shares purchased by it under the facility, including the Commitment Fee Shares (as defined below). The customary terms and conditions associated with Ironridge’s registration rights are set forth in a Registration Rights Agreement that was also entered into by the parties on July 12, 2012 (the “Registration Rights Agreement”).

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

On August 13, 2012, the Ironridge Registration Statement was declared effective by the SEC. Fifteen (15) trading days after the Ironridge Registration Statement effective date, the Company has the right to sell and issue to Ironridge, and Ironridge will be obligated to purchase from the Company, up to $10 million of shares of the Company’s common stock over a 24-month period beginning on such date (the “Commitment Period”). Ironridge will do continuous drawdowns of 2,000,000 shares under the facility until the Company sends a notice suspending the draw down notice. The draw down pricing period is the number of consecutive trading days necessary for 6,000,000 shares of the Company’s stock to trade. Only one draw down will be allowed in each draw down pricing period. The purchase price for the shares will be 90% of the average of the daily VWAP on each trading day during the draw down pricing period preceding such current draw down pricing period, not to exceed the arithmetic average of any three daily VWAPs during the draw down pricing period preceding such current draw down pricing period. For purposes of a recommencement following a suspension, the purchase price shall be the lower of the foregoing and the closing price of the Company’s common stock on the trading day prior to the recommencement date; and for purposes of the first draw down the purchase price shall mean the VWAP for the 15 consecutive trading days after the effective date of the Ironridge Registration Statement. The Company will deliver the shares sold to Ironridge by the third trading day following the draw down pricing period. Ironridge is entitled to liquidate damages in connection with certain delays in the delivery of any draw down shares. The Stock Purchase Agreement also provides for a commitment fee to Ironridge of 3,000,000 shares of the Company’s common stock (the “Commitment Fee Shares”). During the three and nine months ended September 30, 2012, the Company issued 15,000,000 shares to Ironridge under the equity line (inclusive of the commitment shares), for which it received $163,000 in proceeds. Subsequent to the quarter end, the Company issued 10,000,000 shares under the equity line and had received $216,000 in proceeds.

Conditions to Ironridge’s obligation to purchase shares including the following: trading in the Company’s common stock must not be suspended by the SEC or other applicable trading market; the Company must not have experienced a material adverse effect; all liquidated damages and other amounts owing to Ironridge must be paid in full; the Ironridge Registration Statement must be effective with respect to Ironridge’s resale of all shares purchased under the facility; there must be a sufficient number of authorized but unissued shares of the Company’s common stock; and the issuance must not cause Ironridge to own more than 9.99% of the then outstanding shares of the Company’s common stock.

The Stock Purchase Agreement will terminate if the Company’s common stock is not listed on one of several specified trading markets (which include the NYSE AMEX, OTC Bulletin Board and Pink Sheets, among others) or if the Company files for protection from its creditors. The Company may terminate the Stock Purchase Agreement with three days’ notice if Ironridge fails to fund any properly noticed draw down with five trading days.

Under the Registration Rights Agreement the Company granted to Ironridge certain registration rights related to the shares issuable in accordance with the Stock Purchase Agreement. Under the Registration Rights Agreement, the Company agreed to prepare and file with the SEC one or more registration statements for the purpose of registering the resale of the maximum shares of common stock issuable pursuant to the Stock Purchase Agreement (the “Registrable Securities”). The Company is also required to amend such registration statement or file with the SEC such additional registration statement(s) as necessary to allow the continued registered resale of all of the Registrable Securities.

On July 12, 2012, the Company also entered into an agreement with Ironridge pursuant to which 500 shares of Series F Preferred Stock were issued to Ironridge. The Series F Preferred Stock were issued in satisfaction of any obligation of the Company to issue the Success Fee Shares provided for (and defined) in the Securities Purchase Agreement entered into between the Company and Ironridge dated January 13, 2012, which terminated on April 26, 2012. The $500,000 value which represent the fair value of the preferred shares was recorded as a charge to stockholder’s equity.

On September 12, 2012, the Company also entered into an agreement with Ironridge pursuant to which 100 shares of Series F Preferred Stock were issued to Ironridge. The Series F Preferred Stock were issued as a waiver to satisfy any penalties resulting from the Company’s late delivery of shares under a conversion of Series F Preferred Stock by Ironridge. The $100,000 value which represent the fair value of the preferred shares was recorded as other expense in the statement of operations.

Other Financing

On August 14, 2012, the Company entered into a financing arrangement pursuant to which it may borrow up to $400,000 in convertible, unsecured debt, at the discretion of the lender. The Company issued a promissory note in favor of a lender with a principal sum of $445,000 (with a $45,000 original issue discount). The debt is to be issued at a 10% discount, matures twelve months from the date funded, has one time 10% interest charge if not paid within 90 days, and is convertible at the option of the lender into shares of the Company’s common stock at the lesser of $0.02 per share or 75% of the lowest closing price in the 25 trading days prior to conversion. The note might be accelerated if an event of default occurs under the terms of the note, including the Company’s failure to pay principal and interest when due, certain bankruptcy events or if the Company is delinquent in its SEC filings.

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

On August 15, 2012, the Company borrowed an initial $100,000 under the arrangement, in connection with which it issued to the lender immediately exercisable warrants to purchase 2,777,777 shares of common stock at an initial exercise price of $0.018 per share. The debt was recorded at a discount in the amount of $32,888, representing the relative fair value of the warrants. The debt shall accrete in value over its one year term to its face value of approximately $111,000. Additionally, a liability of $49,000 has been recorded as the fair value of the warrant as a result of a down round adjustment to the exercise price of the warrants. In connection with the issuance of $100,000 note there is a beneficial conversion feature of approximately $25,000, which will be amortized over the one year term of the note. The impact of the amortization for the three months ended September 30, 2012 was nominal.

On November 8, 2012, the Company borrowed an additional $100,000 under the agreement, in connection with which it issued the lender immediately exercisable warrants to purchase 2,500,000 shares of common stock at an initial exercise price of $0.02 per share. As an inducement to enter into the loan the Company issued the lender 1,850,000 shares of common stock.

On September 7, 2012, the Company issued a Secured Promissory Note (the “Caragol Note”) in the principal amount of $200,000 to William J. Caragol (“Caragol”), the Company’s Chairman and Chief Executive Officer, in connection with a $200,000 loan to the Company by Caragol. The Caragol Note accrues interest at a rate of 5% per annum, and principal and interest on the Caragol Note are due and payable on September 6, 2013. The Company has agreed to accelerate the repayment of principal and interest in the event that the Company raises at least $1,500,000 from any combination of equity sales, strategic agreements, or other loans, with no prepayment penalty for any paydown prior to maturity. The Caragol Note is secured by a subordinated security interest in substantially all of the assets of the Company pursuant to a Security Agreement between the Company and Caragol dated September 7, 2012 (the “Caragol Security Agreement”). The Caragol Note may be accelerated if an event of default occurs under the terms of the Caragol Note or the Caragol Security Agreement, or upon the insolvency, bankruptcy, or dissolution of the Company.

Authorized Common Stock

As of December 31, 2011, the Company was authorized to issue 70 million shares of common stock, $0.01 par value. On January 27, 2012, the Company’s stockholders approved an increase in the number of authorized shares of common stock of the Company from 70 million shares to 175 million shares. On May 31, 2012, the Company’s stockholders approved a further increase in the number of authorized shares of common stock of the Company from 175 million shares to 470 million shares.

5. Stock-Based Compensation

On August 26, 2011, as amended on May 31, 2012, the Company’s stockholders approved and adopted the PositiveID Corporation 2011 Stock Incentive Plan (the “2011 Plan”). The 2011 Plan provides for awards of incentive stock options, nonqualified stock options, restricted stock awards, performance units, performance shares, SARs and other stock-based awards to employees and consultants. Under the 2011 Plan, up to 25 million shares of common stock may be granted pursuant to awards.

A summary of option activity under the Company’s stock incentive plans as of September 30, 2012, and changes during the nine months then ended is presented below (in thousands, except per share amounts):

	Number of Options		Weighted Average Exercise Price Per Share
Outstanding at January 1, 2012		4,149	$	1.60
Granted		6,815	$	0.04
Exercised		—	$	—
Forfeited		(482)	$	0.57
Outstanding at September 30, 2012		10,482	$	0.63
Exercisable at September 30, 2012		5,518	$	1.71

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The Black-Scholes model, which the Company uses to determine compensation expense, requires the Company to make several key judgments including:

the value of the Company’s common stock;

the expected life of issued stock options;

the expected volatility of the Company’s stock price;

the expected dividend yield to be realized over the life of the stock option; and

the risk-free interest rate over the expected life of the stock options.

The Company’s computation of the expected life of issued stock options was determined based on historical experience of similar awards giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations about employees’ future length of service. The interest rate was based on the U.S. Treasury yield curve in effect at the time of grant. The computation of volatility was based on the historical volatility of the Company’s common stock.

A summary of restricted stock outstanding under the Company’s stock incentive plans as of September 30, 2012 and changes during the nine months then ended is presented below (in thousands):

Unvested at January 1, 2012			4,540
Issued			5,648
Vested			(9,788)
Forfeited			(25)
Unvested at September 30, 2012			375

The Company recorded compensation expense related to stock options and restricted stock of approximately $376,000 and $1,135,000 for the three and nine months ended September 30, 2012, respectively, and approximately $669,000 and $2,219,000 for the three and nine months ended September 30, 2011, respectively.

6. Income Taxes

The Company had an effective tax rate of nil for the three and nine months ended September 30, 2012 and 2011. The Company incurred losses before taxes for the three and nine months ended September 30, 2012 and 2011. However, it has not recorded a tax benefit for the resulting net operating loss carryforwards, as the Company has determined that a full valuation allowance against its net deferred tax assets was appropriate based primarily on its historical operating results.

In July 2008, the Company completed the sale of all of the outstanding capital stock of Xmark to Stanley Canada Corporation (“Stanley”). In January 2010, Stanley received a notice from the Canadian Revenue Agency (“CRA”) that the CRA would be performing a review of Xmark’s Canadian tax returns for the periods 2005 through 2008. The Company has complied with all of Stanley’s information requests. This review covers all periods that the Company owned Xmark.

In February 2011, and as revised on November 9, 2011, Stanley received a notice from the CRA that the CRA completed its review of the Xmark returns and was questioning certain deductions attributable to allocations from related companies on the tax returns under review. In November and December 2011, the CRA and the Ministry of Revenue of the Province of Ontario issued notices of reassessment confirming the proposed adjustments. The total amount of the income tax reassessments for the 2006-2008 tax years, including both provincial and federal reassessments, plus interest, was approximately $1.4 million. In addition, on March 28, 2012 Stanley received assessments for withholding taxes on deemed dividend payments in respect of the disallowed management fees totaling approximately $0.2 million.

On January 20, 2012, the Company received an indemnification claim notice from Stanley related to the matter. The Company does not agree with the position taken by the CRA, and filed a formal appeal related to the matter on March 8, 2012. In connection with the filing of the appeal, Stanley was required to remit an upfront payment of a portion of the tax reassessment totaling approximately $950,000. The Company also filed a formal appeal related to the withholding tax assessments, pursuant to which Stanley was required to remit and upfront payment of approximately $220,000. The Company has agreed to repay Stanley for the upfront payments, plus interest at the rate of five percent per annum, in 24 equal monthly payments commencing on July 1, 2012. To the extent that the Company and Stanley reach a successful resolution of the matter through the appeals process, the upfront payment (or a portion thereof) will be returned to Stanley or the Company as applicable. Based on the Company’s review of the correspondence and evaluation of the supporting detail, it does not believe that the ultimate resolution of this matter will have a material negative impact on the Company’s historical tax liabilities or results of operations. The Company had established an accrual of $400,000 for this contingency as of December 31, 2011, which management believes is adequate. In connection with the upfront payments made by Stanley, this accrual was reclassified to a liability to Stanley, and a prepaid tax advance to Stanley in the amount of $738,000 has been recorded as of September 30, 2012.

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

7. Legal Proceedings

The Company is a party to certain legal actions, as either plaintiff or defendant, arising in the ordinary course of business, none of which is expected to have a material adverse effect on the Company’s business, financial condition or results of operations. However, litigation is inherently unpredictable, and the costs and other effects of pending or future litigation, governmental investigations, legal and administrative cases and proceedings, whether civil or criminal, settlements, judgments and investigations, claims or charges in any such matters, and developments or assertions by or against the Company relating to the Company or to the Company’s intellectual property rights and intellectual property licenses could have a material adverse effect on the Company’s business, financial condition and operating results.

8. Employment Contracts and Stock Compensation to Related Parties

On September 30, 2011, the Company entered into a First Amendment to Employment and Non-Compete Agreement (the “First Silverman Amendment”) with Mr. Silverman in connection with Mr. Silverman’s ceasing to be the Company’s Chief Executive Officer. The First Silverman Amendment amended the Employment and Non-Compete Agreement dated November 11, 2010 between the Company and Mr. Silverman and provided for, among other things, the issuance of restricted stock of the Company to Mr. Silverman in the aggregate amount of approximately $3.4 million (the “Restricted Stock”) in lieu of contractually-committed cash salary and bonus for 2012 through 2015. The Restricted Stock was to be issued based upon the average daily volume-weighted average price of the Company’s common stock for the five trading days preceding the date of the First Silverman Amendment. The Restricted Stock was subject to registration rights and price protection provisions, and was to be granted upon the earlier of (i) a reverse stock split or (ii) the receipt of stockholder approval to increase the number of authorized shares of common stock of the Company to at least 175 million shares. The Restricted Stock was price protected through the date on which the registration statement registering such shares becomes effective, such that if the value of the Restricted Stock at such time is less than the average daily volume-weighted average price of the Company’s common stock for the five trading days preceding the date of the First Silverman Amendment, additional shares will be issued to subsidize any shortfall. In connection with the execution of the First Silverman Amendment, a non-cash charge of approximately $3.4 million was recorded in the third quarter of 2011, for which a corresponding liability had been established in the accompanying condensed consolidated balance sheet as of December 31, 2011. On January 27, 2012, the Company issued the Restricted Stock to Mr. Silverman, totaling 18.1 million shares.

On December 6, 2011, the Compensation Committee approved an Amended and Restated Employment, Consulting and Non-Compete Agreement (the “Amended and Restated Agreement”) between the Company and Mr. Silverman in connection with Mr. Silverman’s negotiated departure from the Board of Directors of the Company as of December 6, 2011 and his continued service as consultant to the Company until March 1, 2012. The Amended and Restated Agreement amends and restates the Employment and Non-Compete Agreement dated November 11, 2010 between the Company and Mr. Silverman and the First Silverman Amendment, and provides for, among other things, clarification of the terms of Mr. Silverman’s separation from the Company and continued vesting of Mr. Silverman’s unvested stock grants. The Company also granted Mr. Silverman a security interest in substantially all of the Company’s assets (the “Security Agreement”) until such time as the stock obligations under the Amended and Restated Agreement were fulfilled.

Under the Amended and Restated Agreement, the Company agreed to satisfy certain contractual obligations totaling approximately $462,000, which was recorded in accrued liabilities at December 31, 2011 (the “Contractual Obligations”), through the issuance of 2,468,118 shares of common stock from the 2011 Plan to Mr. Silverman (the “Contractual Obligations Stock”) on January 2, 2012. On January 2, 2012, the Company issued the Contractual Obligations Stock to Mr. Silverman. The Company filed a registration statement on Form S-1 for resale of the Restricted Stock (the “Registration Statement”) with the SEC on January 31, 2012, as amended on February 2, 2012 and as further amended on February 13, 2012.

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

On March 23, 2012, the Board of Directors approved a First Amendment to the Amended and Restated Agreement (the “First Amendment to Amended and Restated Employment Agreement”) between the Company and Mr. Silverman in connection with the elimination of any and all price protection provisions under the Amended and Restated Agreement and any other further registration rights obligations. Under the First Amendment to Amended and Restated Agreement, the Company agreed to issue 13.5 million shares of restricted stock of the Company to Mr. Silverman on March 23, 2012 (the “Price Protection Shares”). The Price Protection Shares were issued in order to (i) eliminate any and all price protection provisions under the Amended and Restated Agreement, including, but not limited to, any price protection provisions relating to a reverse stock split, and (ii) any further registration rights obligations. The Price Protection Shares were included on a pre-effective amendment to the Registration Statement filed with the SEC on March 28, 2012, which Registration Statement went effective on April 10, 2012. Upon effectiveness of the Registration Statement, the Security Agreement terminated. In connection with the issuance of the Price Protection Shares, a non-cash charge of approximately $1.5 million was recorded in the fourth quarter of 2011, based on the fair value of the shares at the date of issuance and for which a corresponding liability had been established in the accompanying condensed consolidated balance sheet as of December 31, 2011.

On December 6, 2011, the Compensation Committee approved a First Amendment to Employment and Non-Compete Agreement (the “First Caragol Amendment”) between the Company and Mr. Caragol in connection with Mr. Caragol’s assumption of the position of Chairman of the Board of the Company effective December 6, 2011. The First Caragol Amendment amends the Employment and Non-Compete Agreement dated November 11, 2010, between the Company and Mr. Caragol and provides for, among other things, the elimination of any future guaranteed raises and bonuses, other than a 2011 bonus of $375,000 to be paid beginning January 1, 2012 in twelve (12) equal monthly payments. If in the reasonable discretion of the Board, the Company is unable to make the scheduled cash bonus payments, the Company shall have the option of (i) delaying payment(s), (ii) paying Mr. Caragol in restricted stock of the Company, or (iii) reaching some other mutually agreeable resolution with Mr. Caragol. The First Caragol Amendment obligates the Company to grant to Mr. Caragol an aggregate of 12.5 million shares of restricted stock over a four-year period as follows: (i) 2.5 million shares upon execution of the First Caragol Amendment, which shall vest on January 1, 2014, (ii) 2.5 million shares on January 1, 2012, which shall vest on January 1, 2015, (iii) 2.5 million shares on January 1, 2013, which shall vest on January 1, 2015, (iv) 2.5 million shares on January 1, 2014, which shall vest on January 1, 2016, and (v) 2.5 million shares on January 1, 2015, which shall vest on January 1, 2016. The Company and Mr. Caragol have agreed to delay the issuance of the first and second restricted share grants, for a total of 5 million shares, until the Company has available shares under a stock incentive plan. Stock compensation expense related to the first and second restricted share grants totaled approximately $87,000 and $259,000 for the three and nine months ended September 30, 2012, respectively, and for which a total liability of approximately $274,000 has been reflected in the accompanying condensed consolidated balance sheet as of September 30, 2012.

Effective September 28, 2012, the employment of Bryan D. Happ (“Happ”), the Company’s former Chief Financial Officer, terminated. In connection with the termination of Happ’s Employment and Non-Compete Agreement dated September 30, 2011, the Company and Happ entered into a Separation Agreement and General Release (the “Separation Agreement”) on September 28, 2012. Pursuant to the Separation Agreement, Happ will receive payments totaling $404,423 (the “Compensation”), consisting of past-due accrued and unpaid salary and bonus amounts plus termination compensation. Of the Compensation, $100,000 will be paid in common stock of the Company and $304,423 will be paid in cash. The cash balance of $304,423 will be repaid at a rate of $3,700 per bi-weekly pay period, subject to accelerated payment under certain events tied to significant cash receipts by the Company. During the three months ended September 30, 2012, the Company recorded a charge of $289,000, to record the equity and cash components of this obligation. Additionally, the Company recorded a charge of $67,341 to reflect the accelerated vesting of Happ’s stock options.

Also effective September 28, 2012, the Company appointed William J. Caragol, the Company’s Chairman and Chief Executive Officer, as the Company’s Acting Chief Financial Officer.

9. Sale of Subsidiary to Related Party

On January 11, 2012, the Company contributed certain assets and liabilities related to its VeriChip business, as well as all of the assets and liabilities relating to its Health Link business, to its wholly-owned subsidiary, PositiveID Animal Health (“Animal Health”). The Company had ceased actively marketing the VeriChip business in January 2008 and the Health Link business in September 2010. The term “VeriChip business” does not include the GlucoChip or any product or application involving blood glucose detection or diabetes management.

On January 11, 2012, VeriTeQ Acquisition Corporation (“VeriTeQ”), which is owned and controlled by Mr. Silverman, purchased all of the outstanding capital stock of Animal Health in exchange for a secured promissory note in the amount of $200,000 (the “Note”) and 4 million shares of common stock of VeriTeQ representing a 10% ownership interest, to which no value was ascribed. The Note accrues interest at 5% per annum. Payments under the Note begin January 11, 2013 and are due and payable monthly, and the Note matures on January 11, 2015. The Note is secured by substantially all of the assets of Animal Health pursuant to a Security Agreement dated January 11, 2012. The Company has not recorded the Note or any accrued interest in its balance sheet as of September 30, 2012, and currently plans to recognize the $200,000 gain represented by the Note as the Note is collected.

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

In connection with the sale, the Company entered into a license agreement with VeriTeQ (the “Original License Agreement”) which grants VeriTeQ a non-exclusive, perpetual, non-transferable, license to utilize the Company’s bio-sensor implantable radio frequency identification (RFID) device that is protected under United States Patent No. 7,125,382, “Embedded Bio Sensor System” (the “Patent”) for the purpose of designing and constructing, using, selling and offering to sell products or services related to the VeriChip business, but excluding the GlucoChip or any product or application involving blood glucose detection or diabetes management. Pursuant to the Original License Agreement, the Company will receive royalties in the amount of 10% on all gross revenues arising out of or relating to VeriTeQ’s sale of products, whether by license or otherwise, specifically relating to the patent, and a royalty of 20% on gross revenues that are generated under the Development and Supply Agreement between the Company and Medical Components, Inc. (“Medcomp”) dated April 2, 2009. The Company’s right to the Medcomp royalty payments will terminate three years following written clearance by the FDA of the Medcomp product that incorporates the VeriChip product.

The Company also entered into a shared services agreement with VeriTeQ on January 11, 2012 (the “Shared Services Agreement”), pursuant to which the Company agreed to provide certain services to VeriTeQ in exchange for $30,000 per month. The term of the Shared Services Agreement commenced on January 23, 2012. The first payment for such services is not payable until VeriTeQ receives gross proceeds of a financing of at least $500,000. The balance due from VeriTeQ under the Shared Services Agreement, including certain expenses paid by the Company on behalf of VeriTeQ, totaled approximately $160,000 as of May 31, 2012, which was not recorded in the Company’s balance sheet and was to be recorded on a cash basis as collected. On June 25, 2012, the Shared Services Agreement was amended, pursuant to which all amounts owed to the Company under the Shared Services Agreement as of May 31, 2012 were converted into 2,285,779 shares of common stock of VeriTeQ, to which no value was ascribed. In addition, effective June 1, 2012, the monthly charge for the shared services under the Shared Services Agreement was reduced from $30,000 to $12,000. Furthermore, on June 26, 2012, the License Agreement was amended pursuant to which the license was converted from a non-exclusive license to an exclusive license, subject to VeriTeQ meeting certain minimum royalty requirements as follows: 2013 - $400,000; 2014 - $800,000; and 2015 and thereafter - $1,600,000.

On August 28, 2012, the Company entered into an Asset Purchase Agreement with VeriTeQ (the “VeriTeQ Asset Purchase Agreement”), whereby VeriTeQ purchased all of the intellectual property, including patents and patents pending, related to the Company’s embedded biosensor portfolio of intellectual property. There were no proceeds received in connection with this sale and the intellectual property had a book value of nil. Under the VeriTeQ Asset Purchase Agreement, the Company is to receive royalties in the amount of ten percent (10%) on all gross revenues arising out of or relating to VeriTeQ’s sale of products, whether by license or otherwise, specifically relating to the embedded biosensor intellectual property, to be calculated quarterly with royalty payments due within 30 days of each quarter end. In 2012, there are no minimum royalty requirements. Minimum royalty requirements thereafter, and through the remaining life of any of the patents and patents pending, are identical to the minimum royalties due under the License Agreement.

The Company is also to receive a royalty payment of twenty percent (20%) of gross revenues from products or services sold to Medcomp pursuant to the Medcomp Agreement, and any successor agreements with Medcomp, to be calculated quarterly with royalty payments due within 30 days of each quarter end. The total cumulative royalty payments under the Medcomp Agreement shall not exceed $600,000.

Simultaneously with the VeriTeQ Asset Purchase Agreement, the Company entered into a License Agreement with VeriTeQ granting the Company an exclusive, perpetual, transferable, worldwide and royalty-free license to the Patent and patents pending that are a component of the GlucoChip in the fields of blood glucose monitoring and diabetes management. In connection with the VeriTeQ Asset Purchase Agreement, the Original License Agreement, as amended June 26, 2012, was terminated. Also on August 28, 2012, the Security Agreement was amended, pursuant to which the assets sold by the Company to VeriTeQ under the VeriTeQ Asset Purchase Agreement and the related royalty payments were added as collateral under the Security Agreement.

On August 28, 2012, the Shared Services Agreement was further amended, pursuant to which, effective September 1, 2012, the monthly charge for the shared services under the Shared Services Agreement was reduced from $12,000 to $5,000.

POSITIVEID CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

10. Conversion of Liability to Secured Note

On July 9, 2012, the Company issued a Secured Promissory Note (the “Note”) in the principal amount of $849,510 to Holland & Knight LLP (“Holland & Knight”), its external legal counsel, in support of amounts due and owing to Holland & Knight as of June 30, 2012. The Note is non-interest bearing, and principal on the Note is due and payable as soon as practicably possible by the Company. The Company has agreed to remit payment against the Note immediately upon each occurrence of any of the following events: (a) completion of an acquisition or disposition of any of the Company’s assets or stock or any of the Company’s subsidiaries’ assets or stock with gross proceeds in excess of $750,000, (b) completion of any financing with gross proceeds in excess of $1,500,000, (c) receipt of any revenue in excess of $750,000 from the licensing or development of any of the Company’s or the Company’s subsidiaries’ products, or (d) any liquidation or reorganization of the Company’s assets or liabilities. The amount of payment to be remitted by the Company shall equal one-third of the gross proceeds received by the Company upon each occurrence of any of the above events, until the principal is repaid in full. If the Company receives $3,000,000 in gross proceeds in any one financing or licensing arrangement, the entire Principal balance shall be paid in full.

The Note is secured by substantially all of the Company’s assets pursuant to a Security Agreement between the Company and Holland & Knight dated July 9, 2012.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Forward-looking statements include, without limitation, statements about our market opportunities, our business and growth strategies, our projected revenue and expense levels, possible future consolidated results of operations, the adequacy of our available cash resources, our financing plans, our competitive position and the effects of competition and the projected growth of the industries in which we operate, as well as the following statements:

	?	the expectation that operating losses will continue through at least mid-2013, 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 products;
	?	that our inability to have access to such financing at reasonable costs could materially and adversely impact our financial condition, results of operations and cash flows, and result in significant dilution to our existing stockholders;

	?	that we seek to structure our research and development on a project basis to allow management of costs and results on a discrete 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 or results of operations;
	?	that we intend to continue to explore strategic acquisition opportunities of businesses that are complementary to ours;
	?	that we intend to continue to access capital to provide funds to meet our working capital requirements for the near-term future and, if necessary, could reduce and/or delay certain discretionary research, development and related activities and costs;
	?	that our ability to continue as a going concern is dependent upon our ability to obtain financing to fund the continued development of our diabetes management products, the operations of MicroFluidic and working capital requirements ;
	?	that MicroFluidic is planning to pursue the Department of Homeland Security (“DHS”) third generation BioWatch program (for the development of networked, autonomous, bioagent detection system) of which DHS estimated the first contract period to be five years;

	?	that we are currently evaluating strategic alternatives with respect to iglucose , including the possible sale or license of the technology; and
	?	that the pursuit of the license or sale of iglucose and its intellectual property will allow us to focus our efforts on the products and markets that management believes provides the best opportunity to maximize return for shareholders;
	?	that until one or more of our products under development is successfully brought to market, we do not anticipate generating significant revenue or gross profit; and
	?	that we will receive royalties in the amount of ten percent on all gross revenues arising out of or relating to VeriTeQ’s sale of products, whether by license or otherwise, specifically relating to the United States Patent No. 7,125,382, “Embedded Bio Sensor System”, and a royalty of twenty percent on gross revenues generated under the Development and Supply Agreement between us and Medcomp dated April 2, 2009.

This Quarterly Report on Form 10-Q also contains forward-looking statements attributed to third parties relating to their estimates regarding the size of the future market for products and systems such as our products and systems, and the assumptions underlying such estimates. Forward-looking statements include all statements that are not historical facts and can be identified by forward-looking statements such as “may,” “might,” “should,” “could,” “will,” “intends,” “estimates,” “predicts,” “projects,” “potential,” “continue,” “believes,” “anticipates,” “plans,” “expects” and similar expressions. Forward-looking statements are only predictions based on our current expectations and projections, or those of third parties, about future events and involve risks and uncertainties.

Although we believe that the expectations reflected in the forward-looking statements contained in this Quarterly Report on Form 10-Q are based upon reasonable assumptions, no assurance can be given that such expectations will be attained or that any deviations will not be material. In light of these risks, uncertainties and assumptions, the forward-looking statements, events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Important factors that could cause our actual results, level of performance or achievements to differ materially from those expressed or forecasted in, or implied by, the forward-looking statements we make in this Quarterly Report on Form 10-Q are discussed under “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K/A for the year ended December 31, 2011 and include:

	?	our ability to continue as a going concern;

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


	?	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 potential for patent infringement claims to be brought against us asserting that we are violating another party’s intellectual property rights;


	?	our ability to complete Phase III of the glucose-sensing microchip development program;


	?	our ability to be awarded government contracts on which MicroFluidic Systems bids;


	?	our ability to integrate the business of MicroFluidic Systems;


	?	our ability to establish and maintain proper and effective internal accounting and financial controls;

	?	our ability to receive royalties under the License Agreement with VeriTeQ;

	?	our ability to receive payments from the Shared Services Agreement with VeriTeQ;

	?	our beliefs regarding certain legal actions and the impact on the Company thereof;

	?	our belief regarding the potential securities laws violations in connection with the Optimus transaction and the potential impact on the Company thereof; and

	?	the impact on our ability to access the capital markets due to the delisting of our common stock from the Nasdaq.

You should not place undue reliance on any forward-looking statements. In addition, past financial or operating performance is not necessarily a reliable indicator of future performance, and you should not use our historical performance to anticipate future results or future period trends. Except as otherwise required by federal securities laws, we disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based. All forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report on Form 10-Q and under the section entitled “Risk Factors” in our Annual Report on Form 10-K/A for the year ended December 31, 2011. These are factors that could cause our actual results to differ materially from expected results. Other factors besides those listed could also adversely affect us.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying financial statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q as well as our Annual Report on Form 10-K/A for the year ended December 31, 2011.

Overview

Our business is focused on our molecular diagnostic and diabetes management technologies and products. Beginning in early 2011, with the acquisition of Microfluidic Systems and exit from our ID Security business, we have focused our strategy on the development of our products and markets for our M-BAND (Microfluidic Bioagent Networked Detection system) and Dragonfly (microfluidic cartridge) products, and the continued development of our GlucoChip, and our Easy Check breath glucose detection device. During the first nine months of 2012, we have been exploring strategic alternatives for all other product lines including our iglucose FDA cleared wireless communication system, and our VeriChip and VeriMed businesses. The VeriChip and VeriMed sale has been completed and the Company is currently pursuing the license or sale of iglucose products and its intellectual property. This will allow the Company to focus its efforts on the products and markets that management believes provides the best opportunity to maximize return for shareholders.

In May 2011, we acquired MicroFluidic Systems (“MicroFluidic”), pursuant to which MicroFluidic became our wholly-owned subsidiary. 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. MicroFluidic’s substantial portfolio of intellectual property related to sample preparation and rapid medical testing applications are complementary to our portfolio of diabetes management products. Since its inception, MicroFluidic has received over $45 million in U.S. Government contracts, primarily from DHS. Since our acquisition of MicroFluidic, we have submitted, and are in the process of submitting, bids on various potential U.S. Government contracts, and are planning to pursue the DHS’s third generation BioWatch program (for the development of networked, autonomous, bioagent detection systems). DHS has estimated the first contract period to be five years and has projected the draft request for proposal for this program will be issued during the fourth quarter of 2012. From May 2011 through September 30, 2012, Microfluidic has not earned any revenue.

In July 2011, we submitted a 510(k) pre-market notification application for our iglucose wireless communication system to the FDA. In November 2011, we obtained FDA clearance for iglucose . In the first quarter of 2012, we launched initial marketing of iglucose through trial programs with healthcare companies. At the same time, we have been evaluating strategic alternatives with respect to iglucose , including the possible sale or license of the technology. This decision was made based on management’s intention to partner with an expert in manufacturing, sales and distribution of a wireless medical device, such as iglucose and to enable management to focus on M-BAND and our other products, which are currently under development.

Through the end of 2011, our business also included the VeriMed system, which uses an implantable passive RFID microchip 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 VeriMed system for use in medical applications in the United States. We had not actively marketed the VeriMed system since early 2008. On January 11, 2012, we contributed certain assets and liabilities related to the VeriChip business including VeriMed, as well as all of our assets and liabilities relating to our Health Link business, which is a patient-controlled, online repository to store personal health information, to our wholly-owned subsidiary Animal Health. We ceased actively marketing the VeriChip business in January 2008 and the Health Link business in September 2010. The term “VeriChip business” does not include the GlucoChip or any product or application involving blood glucose detection or diabetes management.

On January 11, 2012, we entered into a Stock Purchase Agreement with VeriTeQ Acquisition Corporation (“VeriTeQ”), a Florida corporation owned and controlled by Scott R. Silverman, our former chairman and chief executive officer (the “VeriTeQ Stock Purchase Agreement”), whereby VeriTeQ purchased all of the outstanding capital stock of PositiveID Animal Health (“Animal Health”) in exchange for a secured promissory note in the amount of $200,000 (the “Note”) and 4 million shares of common stock of VeriTeQ representing a 10% ownership interest at the time. The Animal Health business included certain assets and liabilities relating to our implantable passive radio-frequency identification microchip business (the “VeriChip Business”), as well as all of the assets and liabilities relating to our Health Link business, which is a patient-controlled, online repository to store personal health information. The term “VeriChip Business” did not include the GlucoChip, a glucose-sensing microchip based on our proprietary embedded biosensor intellectual property, or any product or application involving blood glucose detection or diabetes management (the “Restricted Applications”). The Note is secured by substantially all of the assets of Animal Health pursuant to a Security Agreement dated January 11, 2012 (the “Security Agreement”).

In connection with the VeriTeQ Stock Purchase Agreement, we entered into a License Agreement with VeriTeQ dated January 11, 2012 (the “Original License Agreement”), whereby we granted VeriTeQ a non-exclusive, perpetual, non-transferable, license to utilize our bio-sensor implantable radio frequency identification (RFID) device that is protected under United States Patent No. 7,125,382, “Embedded Bio Sensor System” (the “Patent”) for the purpose of designing and constructing, using, selling and offering to sell products or services related to the VeriChip Business, but excluding the Restricted Applications. Under the Original License Agreement, we were to receive royalties in the amount of ten percent (10%) on all gross revenues arising out of or relating to VeriTeQ’s sale of products, whether by license or otherwise, specifically relating to the Patent, and a royalty of twenty percent (20%) on gross revenues generated under that certain Development and Supply Agreement between us and Medical Components, Inc. (“Medcomp”) dated April 2, 2009 (the “Medcomp Agreement”). Our right to the Medcomp royalty payments was to terminate three (3) years following written clearance by the United States Food and Drug Administration of the Medcomp product that incorporates the VeriChip product. On June 26, 2012, the Original License Agreement was amended pursuant to which the license was converted from a non-exclusive license to an exclusive license, subject to VeriTeQ meeting certain minimum royalty requirements.

On August 28, 2012, we entered into an Asset Purchase Agreement with VeriTeQ (the “VeriTeQ Asset Purchase Agreement”), whereby VeriTeQ purchased all of the intellectual property, including patents and patents pending, related to our embedded biosensor portfolio of intellectual property. There were no proceeds received in connection with this sale and the intellectual property had a book value of nil. Under the VeriTeQ Asset Purchase Agreement, we are to receive royalties in the amount of ten percent (10%) on all gross revenues arising out of or relating to VeriTeQ’s sale of products, whether by license or otherwise, specifically relating to the embedded biosensor intellectual property, to be calculated quarterly with royalty payments due within 30 days of each quarter end. In 2012, there are no minimum royalty requirements. Minimum royalty requirements thereafter, and through the remaining life of any of the patents and patents pending, are as follows:

2013 - $400,000;

2014 - $800,000; and

2015 -through expiration of the patents (patents granted and pending) - $1,600,000.

We are also to receive a royalty payment of twenty percent (20%) of gross revenues from products or services sold to Medcomp pursuant to the Medcomp Agreement, and any successor agreements with Medcomp, to be calculated quarterly with royalty payments due within 30 days of each quarter end. The total cumulative royalty payments under the Medcomp Agreement shall not exceed $600,000.

Simultaneously with the VeriTeQ Asset Purchase Agreement, we entered into a License Agreement (the “License Agreement") with VeriTeQ granting us an exclusive, perpetual, transferable, worldwide and royalty-free license to the Patent and patents pending that are a component of the GlucoChip in the fields of blood glucose monitoring and diabetes management. In connection with the VeriTeQ Asset Purchase Agreement, the Original License Agreement, as amended June 26, 2012, was terminated. Also on August 28, 2012, the Security Agreement was amended, pursuant to which the assets sold by us to VeriTeQ under the VeriTeQ Asset Purchase Agreement and the related royalty payments were added as collateral under the Security Agreement.

On June 25, 2012, the Shared Services Agreement was amended, pursuant to which, effective June 1, 2012, the monthly charge for the shared services under the Shared Services Agreement was reduced from $30,000 to $12,000. On August 28, 2012, the Shared Services Agreement was further amended, pursuant to which, effective September 1, 2012, the monthly charge for the shared services under the Shared Services Agreement was reduced from $12,000 to $5,000.

Our former ID Security business included our Identity Security suite of products, sold through the NationalCreditReport.com brand and our Health Link PHR business. We acquired the NationalCreditReport.com business 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. Beginning in early 2011, we ceased acquiring new subscribers to the identity security and credit reporting businesses, and on July 22, 2011, we completed the sale of the identity security and credit reporting business for total consideration of $750,000.

As a result of our sale of the NationalCreditReport.com business in July 2011, we now operate in one segment and are not currently generating revenue.

Results of Operations

Overview

In connection with our decision to sell the ID Security business in the second quarter of 2011, we have presented its results of operations as discontinued operations in our condensed consolidated statements of operations for all periods presented in this Quarterly Report on Form 10-Q. Since the sale of the business comprising that segment, we are not currently generating revenue.

Three Months Ended September 30, 2012 Compared to Three Months Ended September 30, 2011

Revenue and Gross Profit

We reported no revenue or gross profit from continuing operations for the three months ended September 30, 2012 and 2011. MicroFluidic has reported no revenue or gross profit during the period from the date of our acquisition of in May 2011 through September 30, 2012 as it had no active contracts during this period. MicroFluidic has submitted, or is the process of submitting, bids on various potential new U.S. Government contracts and other opportunities; however, there can be no assurance that we will be successful in obtaining any such new or other contracts. Until we are awarded one of these contracts or until one of our diabetes management products is successfully brought to market, we do not anticipate significant revenue or gross profit.

Selling, General and Administrative Expense

Selling, general and administrative expense consists primarily of compensation for employees in executive, sales, marketing and operational functions, including finance and accounting and corporate development, and also including stock-based compensation. Other significant costs include depreciation and amortization, professional fees for accounting and legal services, consulting fees and facilities costs.

Selling, general and administrative expense decreased by approximately $1.0 million, or 35%, for the three months ended September 30, 2012 compared to the three months ended September 30, 2011. The decrease was primarily attributable to decrease in payroll expense, both cash based and stock based, during the 2012 period, resulting from the reduction of management headcount.

Stock-based compensation included in selling, general and administrative expense totaled approximately $0.3 million and $0.7 million for the three months ended September 30, 2012 and 2011, respectively.

Research and Development Expense

Our research and development expense consists primarily of costs associated with various projects, including testing, developing prototypes and related expenses. Our research and development costs include payments to our project partners and acquisition of in-process research and development. We seek to structure our research and development on a project basis to allow the management of costs and results on a discreet, short-term project basis. This may result in quarterly expenses that rise and fall depending on the underlying project status. We expect this method of managing projects to allow us to minimize our firm fixed commitments at any given point in time. Research and development expense totaled approximately $35,000 and $134,000 of the three months ended September 30, 2012 and 2011 respectively. This decrease is the result of three development products being in process during 2011 versus two products in 2012.

Impairment of Development Cost

In conjunction with the Company’s decision to seek a strategic alternative such as the sale or license of the iglucose product and its associated intellectual property, the Company recorded an impairment charge of $0.3 million. Any proceeds from a future sale or license transaction will be recorded as income in future periods.

Loss from Discontinued Operations

Loss from discontinued operations relates to the NationalCreditReport.com business sold in July 2011, and totaled approximately $0.4 million for the three months ended September 30, 2011. Historical revenue related to the NationalCreditReport.com business and included in income from discontinued operations for the three months ended September 30, 2011 totaled approximately $28,000.

In connection with the decision to sell the NationalCreditReport.com business, the carrying value of the subsidiary’s net assets was written down to their estimated fair value, determined based upon the proceeds realized upon the sale in July 2011. As a result, an impairment of the carrying value of intangible assets of approximately $0.6 million was recognized during the quarter ended September 30, 2011 and is included in the loss from discontinued operations for the three months ended September 30, 2011.

Beneficial Conversion Dividend on Preferred Stock

During the three months ended September 30, 2012, we recorded a charge for the beneficial conversion dividend on preferred stock of $10.2 million. This charge represents the excess of the fair value of our common stock at the date of issuance of the converted Series F and Series H Preferred Stock over the effective conversion rate, multiplied by the common shares issued upon conversion.

Nine Months Ended September 30, 2012 Compared to Nine Months Ended September 30, 2011

Revenue and Gross Profit

We reported no revenue or gross profit from continuing operations for the nine months ended September 30, 2012 and 2011. MicroFluidic reported no revenue or gross profit during the period from the date of our acquisition of MicroFluidic on May 23, 2011 through September 30, 2012 as it had no active contracts during this period. MicroFluidic has submitted, or is the process of submitting, bids on various potential new U.S. Government contracts; however, there can be no assurance that we will be successful in obtaining any such new or other contracts. Until we are awarded one of these contracts or until one of our diabetes management products is successfully brought to market, we do not anticipate significant revenue or gross profit.

Selling, General and Administrative Expense

Selling, general and administrative expense decreased by approximately $2.2 million, or 27%, for the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011. The decrease was primarily attributable to decrease in payroll expense, both cash based and stock-based, during the 2012 period.

Stock-based compensation included in selling, general and administrative expense totaled approximately $0.7 million and $2.1 million for the nine months ended September 30, 2012 and 2011, respectively.

Research and Development Expense

Our research and development expense consists primarily of costs associated with various projects, including testing, developing prototypes and related expenses. Our research and development costs include payments to our project partners and acquisition of in-process research and development. We seek to structure our research and development on a project basis to allow the management of costs and results on a discreet, short-term project basis. This may result in quarterly expenses that rise and fall depending on the underlying project status. We expect this method of managing projects to allow us to minimize our firm fixed commitments at any given point in time. Research and development expense totaled approximately $0.3 million for the nine months ended September 30, 2012 compared to approximately $0.6 million for the nine months ended September 30, 2011. This decrease is the result of three development products being in process during 2011 versus two products in 2012.

Impairment of Development Cost

Loss from Discontinued Operations

Loss from discontinued operations relates to the NationalCreditReport.com business sold in July 2011, and totaled approximately $0.1 million for the nine months ended September 30, 2011. Historical revenue related to the NationalCreditReport.com business and included in income from discontinued operations for the nine months ended September 30, 2011 totaled approximately $1.0 million.

In connection with the decision to sell the NationalCreditReport.com business, the carrying value of the subsidiary’s net assets was written down to their estimated fair value, determined based upon the proceeds realized upon the sale in July 2011. As a result, an impairment of the carrying value of intangible assets of approximately $0.6 million was recognized during the quarter ended June 30, 2011 and is included in the loss from discontinued operations for the nine months ended September 30, 2011.

Beneficial Conversion Dividend on Preferred Stock

During the nine months ended September 30, 2012, we recorded a charge for the beneficial conversion dividend on preferred stock of $15.1 million. This charge represents the excess of the fair value of our common stock at the date of issuance of the converted Series F and Series H Preferred Stock over the effective conversion rate, multiplied by the common shares issued upon conversion.

Liquidity and Capital Resources

As of September 30, 2012, cash and cash equivalents totaled approximately $186,000 compared to cash and cash equivalents of approximately $28,000 at December 31, 2011.

Cash Flows from Operating Activities

Net cash used in operating activities totaled approximately $2.4 million and $5.7 million during the nine months ended September 30, 2012 and 2011, respectively, primarily to fund operating losses, which was partially offset by an approximately $2.3 million increase in accounts payable and accrued expenses in the 2012 period. Net cash used in discontinued operations was approximately $0.5 million during the nine months ended September 30, 2011. The improvement in our operating cash flows is attributed to a decrease in our operating expenses, primarily compensation, and an increase in accounts payable balance.

Cash Flows from Investing Activities

Net cash used in investing activities was nil million during the nine months ended September 30, 2012. Net cash provided by investing activities was $0.7 million during the nine months ended September 30, 2011 primarily the result of proceeds from the sale of NationalCreditReport.com. Net cash used in the purchase of equipment was not significant for the nine months ended September 30, 2012 or 2011.

Cash Flows from Financing Activities

Financing activities provided cash of approximately $2.6 million and $3.7 million during the nine months ended September 30, 2012 and 2011, respectively, primarily related to proceeds from the issuance of preferred stock under the Socius financing agreement in the 2011 period, and from the issuance of Series H Preferred Stock to Ironridge and conversion of Series F Preferred Stock and related repayment of the Ironridge note receivable in the 2012 period.

Financial Condition

As of September 30, 2012, we had a working capital deficiency of approximately $4.5 million and an accumulated deficit of approximately $108 million, compared to working capital deficiency of approximately $2.7 million and an accumulated deficit of approximately $86 million as of December 31, 2011. We have incurred operating losses prior to and since the merger that created PositiveID. The current operating losses are the result of selling, general and administrative expenses and research and development expenses. We expect our operating losses to continue through at least the middle of 2013.

Our ability to continue as a going concern is dependent upon our ability to obtain financing to fund the operations of Microfluidic, continued development of our diabetes management products, and working capital requirements. Until we are able to achieve operating profits, we will continue to seek to access the capital markets. Since December 31, 2011, we raised approximately $2.6 million under certain financing facilities.

In July 2012, we executed an equity line financing of up to $10,000,000. On July 20, 2012, we filed a registration statement on Form S-1 registering up to 34,000,000 shares of our common stock. That registration statement was declared effective August 12, 2012. As of November 12, 2012, we had issued 23,000,000 shares and had received approximately $380,000. As of November 12, 2012 we also had 276 shares of Series F Preferred Stock outstanding, held by Ironridge, and convertible at our option, which if converted, requires Ironridge to repay note receivable of approximately $400,000. The Ironridge financing facility is subject to certain conditions being met, including but not limited to us maintaining an effective registration statement which registers Ironridge’s resale of any shares purchased by it under the facility, and the amount of funding available under the facility overall is largely dependent upon our share price and trading volume.

In July 2008, we completed the sale of all of the outstanding capital stock of Xmark to Stanley Canada Corporation (“Stanley”). In January 2010, Stanley received a notice from the Canadian Revenue Agency (“CRA”) that the CRA would be performing a review of Xmark’s Canadian tax returns for the periods 2005 through 2008, which covers all periods that we owned Xmark. In February 2011, and as revised on November 9, 2011, Stanley received a notice from the CRA that the CRA completed its review of the Xmark returns and was questioning certain deductions attributable to allocations from related companies on the tax returns under review. In November and December 2011, the CRA and the Ministry of Revenue of the Province of Ontario issued notices of reassessment confirming the proposed adjustments. The total amount of the income tax reassessments for the 2006-2008 tax years, including both provincial and federal reassessments, plus interest, was approximately $1.4 million. In addition, on March 28, 2012 Stanley received assessments for withholding taxes on deemed dividend payments in respect of the disallowed management fees totaling approximately $0.2 million.

On January 20, 2012, we received an indemnification claim notice from Stanley related to the matter. We do not agree with the position taken by the CRA, and filed a formal appeal related to the matter on March 8, 2012. In connection with the filing of the appeal, Stanley was required to remit an upfront payment of a portion of the tax reassessment totaling approximately $950,000. We also filed a formal appeal related to the withholding tax assessments, pursuant to which Stanley was required to remit and upfront payment of approximately $220,000. We have agreed to repay Stanley for the upfront payments, plus interest at the rate of five percent per annum, in 24 equal monthly payments beginning on July 1, 2012. To the extent that we and Stanley reach a successful resolution of the matter through the appeals process, the upfront payment (or a portion thereof) will be returned to Stanley or us as applicable. Based on our review of the correspondence and evaluation of the supporting detail, we do not believe that the ultimate resolution of this matter will have a material negative impact on our historical tax liabilities or results of operations.

On August 31, 2011 we received notification that our stock was being delisted from the Nasdaq Capital Market (“Nasdaq”) and on September 1, 2011 our stock began trading on the OTC Bulletin Board. The delisting from Nasdaq could adversely affect the market liquidity of our common stock and harm the 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.

On July 9, 2012, we issued a Secured Promissory Note (the “H&K Note”) in the principal amount of $849,510 to Holland & Knight LLP (“Holland & Knight”), our external legal counsel, in support of amounts due and owing to Holland & Knight as of June 30, 2012. The H&K Note is non-interest bearing, and principal on the H&K Note is due and payable as soon as practicably possible by us. We have agreed to remit payment against the H&K Note immediately upon each occurrence of any of the following events: (a) completion of an acquisition or disposition of any of our assets or stock or any of our subsidiaries’ assets or stock with gross proceeds in excess of $750,000, (b) completion of any financing with gross proceeds in excess of $1,500,000, (c) receipt of any revenue in excess of $750,000 from the licensing or development of any of our or our subsidiaries’ products, or (d) any liquidation or reorganization of our assets or liabilities. The amount of payment to be remitted by us shall equal one-third of the gross proceeds received by us upon each occurrence of any of the above events, until the principal is repaid in full. If we receive $3,000,000 in gross proceeds in any one financing or licensing arrangement, the entire Principal balance shall be paid in full.

The H&K Note is secured by substantially all of our assets pursuant to a Security Agreement between us and Holland & Knight dated July 9, 2012.

On August 14, 2012, we entered into a financing arrangement pursuant to which we may borrow up to $400,000 in convertible, unsecured debt, at the discretion of the lender. We issued a promissory note in favor of a lender with a principal sum of $445,000 (with a $45,000 original issue discount).The debt is to be issued at an 10% discount, matures twelve months from the date funded, has a one time 10% interest charge if not paid within 90 days, and is convertible at the option of the lender into shares of our common stock at the lesser of $0.02 per share or 75% of the lowest closing price in the 25 trading days prior to conversion. The note might be accelerated if an event of default occurs under the terms of the note, including the Company’s failure to pay principal and interest when due, certain bankruptcy events or if the Company is delinquent in its SEC filings. On August 15, 2012, we borrowed an initial $100,000 under the arrangement. In connection with which we issued to the lender immediately exercisable warrants to purchase 2,777,777 shares of common stock at an initial exercise price of $0.018 per share.

On September 7, 2012, we issued a Secured Promissory Note (the “Caragol Note”) in the principal amount of $200,000 to William J. Caragol (“Caragol”), our Chairman and Chief Executive Officer, in connection with a $200,000 loan to us by Caragol. The Caragol Note accrues interest at a rate of 5% per annum, and principal and interest on the Caragol Note are due and payable on September 6, 2013. We have agreed to accelerate the repayment of principal and interest in the event that we raise at least $1,500,000 from any combination of equity sales, strategic agreements, or other loans, with no prepayment penalty for any paydown prior to maturity. The Caragol Note is secured by a subordinated security interest in substantially all of our assets pursuant to a Security Agreement between us and Caragol dated September 7, 2012 (the “Caragol Security Agreement”). The Caragol Note may be accelerated if an event of default occurs under the terms of the Caragol Note or the Caragol Security Agreement, or upon our insolvency, bankruptcy, or dissolution.

These conditions raise substantial doubt about our ability to continue as a going concern. We intend to continue to access capital to provide funds to meet our working capital requirements for the near-term future. In addition and if necessary, we could reduce and/or delay certain discretionary research, development and related activities and costs. However, there can be no assurances that we will be able to derive sufficient funding or be successful in negotiating additional sources of equity or credit for our long-term capital needs. Our inability to have access to such financing at reasonable costs could materially and adversely impact our financial condition, results of operations and cash flows, and result in significant dilution to our existing stockholders. Our condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a “Smaller Reporting Company,” we are not required to provide the information required by this item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Evaluation of Disclosure Controls . We evaluated the effectiveness of the design and operation of our “disclosure controls and procedures” as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of September 30, 2012. This evaluation (the “disclosure controls evaluation”) was done under the supervision and with the participation of management, including the person(s) performing the function of our chief executive officer (“CEO”) and chief financial officer (“CFO”). Rules adopted by the SEC require that in this section of our Quarterly Report on Form 10-Q we present the conclusions of the CEO and CFO about the effectiveness of our disclosure controls and procedures as of September 30, 2012 based on the disclosure controls evaluation.

Objective of Controls. Our disclosure controls and procedures are designed so that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives, and management necessarily is required to use its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

Conclusion . Based upon the disclosure controls evaluation, our CEO and Acting CFO have concluded that, as of September 30, 2012, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 under the Exchange Act that occurred during the quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

We are a party to certain legal actions, as either plaintiff or defendant, arising in the ordinary course of business, none of which is expected to have a material adverse effect on our business, financial condition or results of operations. However, litigation is inherently unpredictable, and the costs and other effects of pending or future litigation, governmental investigations, legal and administrative cases and proceedings, whether civil or criminal, settlements, judgments and investigations, claims or charges in any such matters, and developments or assertions by or against us relating to the Company or to our intellectual property rights and intellectual property licenses could have a material adverse effect on our business, financial condition and operating results.

Item 1A. Risk Factors.

Item 1A to Part I of our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2011 includes a detailed discussion of risk factors that could materially affect our business, financial condition or future results.

Item 2. Unregistered Sale of Equity Securities .

During the three months ended September 30, 2012, we issued shares of our common stock that were not registered under the Securities Act of 1933, as amended, and were not previously disclosed in a Current Report on Form 8-K as follows:

1)	On July 17, 2012, we issued 250,000 shares of our common stock to Dawn Van Zant in connection with an advertising and marketing agreement.

2)	On July 17, 2012, we issued 250,000 shares of our common stock to Callan Van Zant in connection with an advertising and marketing agreement.

3)	On August 2, 2012, we issued 1,000,000 shares of our common stock to SmallCapVoice.com, Inc. in connection with a financial public relations agreement.

4)	On August 2, 2012, we issued 1,000,000 shares of our common stock to First Equity Group, Inc. in connection with the execution of a consulting agreement.

5)	On August 15, 2012, we issued warrants to purchase 2,777,777 shares of our common stock to JMJ Financial in connection with the issuance of a promissory note.

The shares of common stock described in this Item 2 were issued without registration in reliance upon the exemption provided, among others, by Section 4(2) of the Securities Act of 1933, as amended, as a transaction not involving any public offering.

Item 5. Other Information.

On August 14, 2012, we entered into a financing arrangement pursuant to which we may borrow up to $400,000 in convertible, unsecured debt, at the discretion of the lender. We issued a promissory note in favor of a lender with a principal sum of $445,000 (with a $45,000 original issue discount). The debt is to be issued at an 10% discount, matures twelve months from the date funded, has a one time 10% interest charge if not paid within 90 days, and is convertible at the option of the lender into shares of our common stock at the lesser of $0.02 per share or 75% of the lowest closing price in the 25 trading days prior to conversion. The note might be accelerated if an event of default occurs under the terms of the note, including the Company’s failure to pay principal and interest when due, certain bankruptcy events or if the Company is delinquent in its SEC filings. On August 15, 2012, we borrowed an initial $100,000 under the arrangement. In connection with which we issued to the lender immediately exercisable warrants to purchase 2,777,777 shares of common stock at an initial exercise price of $0.018 per share. A copy of the promissory note is attached as an Exhibit to this Quarterly Report on Form 10-Q.

On November 8, 2012, we borrowed an additional $100,000 under the agreement, in connection with which we issued the lender immediately exercisable warrants to purchase 2,500,000 shares of common stock at an initial exercise price of $0.02 per share. As an inducement to enter into the loan we issued the lender 1,850,000 shares of common stock. The shares were issued in a private placement in reliance upon the exemption from the registration requirements under Section 4(2) of the Securities Act, as amended, and the rules promulgated by the SEC thereunder.

Item 6. Exhibits.

We have listed the exhibits by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K on the Exhibit list attached to this report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	POSITIVEID CORPORATION (Registrant)

Date: November 16, 2012	By:	/s/ William J. Caragol
		William J Caragol
		Chairman, Chief Executive Officer, and Acting Chief Financial Officer (Principal Executive and Financial Officer)

Exhibit Index

Exhibit
Number		Description
3.1		Second Amended and Restated Certificate of Incorporation of PositiveID Corporation filed with the Secretary of State of Delaware on December 18, 2006, as amended on November 10, 2009, January 27, 2012 and May 31, 2012 (1)
3.2		Amended and Restated By-laws of PositiveID Corporation adopted as of December 12, 2005, as amended on March 16, 2010 (2)
4.1		Form of Specimen Common Stock Certificate (2)
4.2	*	Common Stock Purchase Warrant, dated August 15, 2012, issued to JMJ Financial
4.3	*	Common Stock Purchase Warrant, dated November 8, 2012, issued to JMJ Financial
10.1		Stock Purchase Agreement, dated July 12, 2012, between PositiveID Corporation and Ironridge Technology Co. (3)
10.2		Registration Rights Agreement, dated July 12, 2012, between PositiveID Corporation and Ironridge Technology Co. (3)
10.3		Secured Promissory Note, dated July 9, 2012, between PositiveID Corporation and Holland & Knight LLP (4)
10.4		Security Agreement, dated July 9, 2012, between PositiveID Corporation and Holland & Knight LLP (4)
10.5		Purchase Agreement, dated July 12, 2012, between PositiveID Corporation and Ironridge Technology Co. (4)
10.6		Amendment No. 1 to Preferred Stock Purchase Agreement, dated July 12, 2012, between PositiveID Corporation and Ironridge Global III, LLC (4)
10.7	*	Asset Purchase Agreement, dated August 28, 2012, between PositiveID Corporation and VeriTeQ Acquisition Corporation
10.8	*	License Agreement, dated August 28, 2012, between PositiveID Corporation and VeriTeQ Acquisition Corporation
10.9	*	First Amendment to Security Agreement, dated August 28, 2012, between PositiveID Corporation and VeriTeQ Acquisition Corporation
10.10	*	Second Amendment to Shared Services Agreement, dated August 28, 2012, between PositiveID Corporation and VeriTeQ Acquisition Corporation
10.11	*	Secured Promissory Note, dated September 7, 2012, executed by PositiveID Corporation in favor of William J. Caragol
10.12	*	Security Agreement, dated September 7, 2012, between PositiveID Corporation and William J. Caragol
10.13	*	Purchase Agreement, dated September 12, 2012, between PositiveID Corporation and Ironridge Technology Co., a division of Ironridge Global IV, Ltd.
10.14	*	Separation Agreement and General Release, dated September 28, 2012 between PositiveID Corporation and Bryan D. Happ
10.15	*	Promissory Note, dated August 14, 2012, issued in favor of JMJ Financial
10.16	*	Securities Purchase Agreement, dated November 8, 2012, between PositiveID Corporation and JMJ Financial
31.1	*	Certification by President, Chief Executive Officer and Chief Financial Officer, pursuant to Exchange Act Rules 13A-14(a) and 15d-14(a)
32.1	*	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	**	XBRL Instance Document
101.SCH	**	XBRL Taxonomy Extension Schema Document
101.CAL	**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	**	XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.
**	Furnished herewith.

(1)	Incorporated by reference to the Form S-1/A previously filed by PositiveID Corporation on June 5, 2012.
(2)	Incorporated by reference to the Form 10-K previously filed by PositiveID Corporation on March 19, 2010.
(3)	Incorporated by reference to the Form 8-K previously filed by PositiveID Corporation on July 13, 2012.
(4)	Incorporated by reference to the Form 10-Q previously filed by PositiveID Corporation on August 20, 2012.

Exhibit 4.2

THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR APPLICABLE EXEMPTION OR SAFE HARBOR PROVISION.

COMMON STOCK PURCHASE WARRANT

DOCUMENT W-08152012

POSITIVEID CORPORATION

Warrant Shares: 2,777,777

Initial Exercise Date: August 15, 2012

Aggregate Exercise Amount: $50,000

THIS COMMON STOCK PURCHASE WARRANT (the “ Warrant ”) certifies that, for consideration of (i) $1,000 cash payment by wire transfer and (ii) entry into the $445,000 Promissory Note effective and closed on August 15, 2012 (the “Note”), JMJ Financial, its Principal, or its assigns (the “ Holder ”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “ Initial Exercise Date ”) and on or prior to the close of business on the five (5) year anniversary of the Initial Exercise Date (as subject to adjustment hereunder, the “ Termination Date ”), to subscribe for and purchase from PositiveID Corporation, a Delaware corporation (the “ Company ”), up to 2,777,777 shares (as subject to adjustment herein, the “ Warrant Shares ”) of common stock of the Company (the “ Common Stock ”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 1.2.

ARTICLE 1 EXERCISE RIGHTS

The Holder will have the right to exercise this Warrant to purchase shares of Common Stock as set forth below.

1.1 Exercise of Warrant . Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, from and after the Initial Exercise Date, and then at any time, by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile or emailed copy of the Notice of Exercise form annexed hereto. Within three (3) business days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or check drawn on a United States bank unless the cashless exercise procedure specified in Section 1.3 below is specified in the applicable Notice of Exercise. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder by an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise form within 24 hours of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

1.2 Exercise Price . The exercise price per share of Common Stock under this Warrant shall be $0.018 per share, subject to adjustment hereunder (the “ Exercise Price ”).

1.3 Cashless Exercise . If at any time after the earlier of (i) the six (6) month anniversary of the date of the Note and (ii) the completion of the then-applicable holding period required by Rule 144, or any successor provision then in effect, there is no effective Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the VWAP on the trading day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

1.4 Termination . On the Termination Date, if all or any portion of this Warrant remains unexercised, the Termination Date shall be automatically extended for two years.

1.5 Delivery of Warrant Shares . Warrant Shares purchased hereunder will be delivered to Holder by 2:30 pm EST within two (2) business days of Notice of Exercise and receipt of the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise (unless being exercised by cashless exercise) by “DWAC/FAST” electronic transfer (such date, the “ Warrant Share Delivery Date ”). For example, if Holder delivers a Notice of Exercise and remits the aggregate Exercise Price (if applicable), to the Company at 5:15 pm eastern time on Monday January 1 st , the Company’s transfer agent must deliver shares to Holder’s broker via “DWAC/FAST” electronic transfer by no later than 2:30 pm eastern time on Wednesday January 3 rd . The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date of delivery of the Notice of Exercise and payment of the aggregate Exercise Price (if applicable). Holder may assess penalties or liquidated damages (both referred to herein as “penalties”) as follows. For each exercise, in the event that shares are not delivered by the third business day (inclusive of the day of exercise), the Company shall pay the Holder in cash a penalty of $2,000 per day for each day after the third business day (inclusive of the day of exercise) until share delivery is made. The Company will not be subject to any penalties once its transfer agent correctly processes the shares to the DWAC system. The Company will make its best efforts to deliver the Warrant Shares to the Holder the same day or next day. Holder is aware that without an effective registration statement or an exemption from resale restrictions, it is not possible to deliver restricted shares by DWAC/FAST electronic transfer, and in the case that the Holder converts into restricted stock, delivery can be made by a stock certificate bearing a restrictive legend.

1.6 Delivery of Warrant . The Holder shall not be required to physically surrender this Warrant to the Company. If the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, this Warrant shall automatically be cancelled without the need to surrender the Warrant to the Company for cancellation. If this Warrant shall have been exercised in part, the Company shall, at the request of Holder and upon surrender of this Warrant, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant and, for purposes of Rule 144, shall tack back to the original date of this Warrant.

1.7 Warrant Exercise Rescission Rights . If the Warrant Shares are not delivered by DWAC/FAST electronic transfer or in accordance with the timeframe stated in Section 1.5, Holder may, at any time prior to selling those Warrant Shares rescind such exercise, in whole or in part, in which case the Company must, within three (3) days of receipt of notice from the Holder, repay to the Holder the portion of the exercise price so rescinded and reinstate the portion of the Warrant and equivalent number of Warrant Shares for which the exercise was rescinded and, for purposes of Rule 144, such reinstated portion of the Warrant and the Warrant Shares shall tack back to the original date of this Warrant. If Warrant Shares were issued to Holder prior to Holder’s rescission notice, upon return of payment from the Company, Holder will, within three (3) days of receipt of payment, commence procedures to return the Warrant Shares to the Company.

1.8 Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise . In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder the Warrant Shares on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “ Buy-In ”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions and other fees, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either (x) reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded), (y) deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder, or (z) pay in cash to the Holder the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.

1.9 Make-Whole for Market Loss after Exercise . At the Holder’s election, if the Company fails for any reason to deliver to the Holder the Warrant Shares by DWAC/FAST electronic transfer (such as by delivering a physical certificate) and if the Holder incurs a Market Price Loss, then at any time subsequent to incurring the loss the Holder may provide the Company written notice indicating the amounts payable to the Holder in respect of the Market Price Loss and the Company must make the Holder whole as follows:

Market Price Loss = [(High trade price on the day of exercise) x (Number of Warrant Shares)] – [(Sales price realized by Holder) x (Number of Warrant Shares)]

The Company must pay the Market Price Loss by cash payment, and any such cash payment must be made by the third business day from the time of the Holder’s written notice to the Company.

1.10 Make-Whole for Failure to Deliver Loss . At the Holder’s election, if the Company fails for any reason to deliver to the Holder the Warrant Shares by the Warrant Share Delivery Date and if the Holder incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:

Failure to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of Warrant Shares)]

The Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day from the time of the Holder’s written notice to the Company.

1.11 Choice of Remedies . Nothing herein, including, but not limited to, Holder’s electing to pursue its rights under Sections 1.9 or 1.10 of this Warrant, shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

1.12 Charges, Taxes and Expenses . Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder. The Company shall pay all transfer agent fees required for same-day processing of any Notice of Exercise.

1.13 Holder’s Exercise Limitations . Unless otherwise agreed in writing by both the Company and the Holder, at no time will the Holder exercise any amount of this Warrant to purchase Common Stock that would result in the Holder owning more than 4.99% of the Common Stock outstanding of the Company (the “ Beneficial Ownership Limitation ”). Upon the written or oral request of Holder, the Company shall within twenty-four (24) hours confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.

ARTICLE 2 ADJUSTMENTS

2.1 Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 2.1 shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

2.2 Subsequent Equity Sales . If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or any security entitling the holder thereof (including sales or grants to the Holder) to acquire Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock (a “ Common Stock Equivalent ”), at an effective price per share less than the Exercise Price then in effect (such lower price, the “ Base Share Price ” and such issuances collectively, a “ Dilutive Issuance ”) (it being understood and agreed that if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance at such effective price regardless of whether such holder has received or ever receives shares at such effective price), then simultaneously with the consummation of each Dilutive Issuance the Exercise Price shall be reduced and only reduced to equal the Base Share Price and consequently the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder, in writing, no later than the business day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section 2.2, indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “ Dilutive Issuance Notice ”). In addition, the Company shall provide the Holder, whenever the Holder requests at any time while this Warrant is outstanding, a schedule of all issuances of Common Stock or Common Stock Equivalents since the date of the Note , including the applicable issuance price, or applicable reset price, exchange price, conversion price, exercise price and other pricing terms. The term issuances shall also include all agreements to issue, or prospectively issue Common Stock or Common Stock Equivalents, regardless of whether the issuance contemplated by such agreement is consummated. The Company shall notify the Holder in writing of any issuances within twenty-four (24) hours of such issuance. For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 2.2, upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. If the Company enters into a Variable Rate Transaction, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised. “ Variable Rate Transaction ” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price. Notwithstanding the foregoing, this Section 2.2 shall not apply in respect of an Exempt Issuance. An “ Exempt Issuance ” means the issuance of (a) shares of Common Stock or options to employees, consultants, officers or directors of the Company pursuant to the Company’s stock or option plans or any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, and (b) shares of Common Stock issued to employees, consultants, officers or directors of the Company in lieu of cash compensation for services rendered to the Company.

2.3 Subsequent Rights Offerings . In addition to any adjustments pursuant to Section 2.1 or 2.2 above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “ Purchase Rights ”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

2.4 Pro Rata Distributions . If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 2.3), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness or rights or warrants so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

2.5 Notice to Holder . Whenever the Exercise Price is adjusted pursuant to any provision of this Article 2, the Company shall promptly notify the Holder (by written notice) setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

ARTICLE 3 COMPANY COVENANTS

3.1 Reservation of Shares . As of the issuance date of this Warrant and for the remaining period during which the Warrant is exercisable, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares (at least 7,500,000 shares) to provide for the issuance of Warrant Shares upon the full exercise of this Warrant. The Company represents that upon issuance, such Warrant Shares will be duly and validly issued, fully paid and non-assessable. The Company agrees that its issuance of this Warrant constitutes full authority to its officers, agents and transfer agents who are charged with the duty of executing and issuing shares to execute and issue the necessary Warrant Shares upon the exercise of this Warrant. No further approval or authority of the stockholders of the Board of Directors of the Company is required for the issuance of the Warrant Shares.

3.2 No Adverse Actions . Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

ARTICLE 4 MISCELLANEOUS

4.1 Representation by the Holder . The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

4.2 Transferability . Subject to compliance with any applicable securities laws, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, by a written assignment of this Warrant duly executed by the Holder or its agent or attorney. If necessary to obtain a new warrant for any assignee, the Company, upon surrender of this Warrant, shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and such new Warrants, for purposes of Rule 144, shall tack back to the original date of this Warrant. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

4.3 Assignability . The Company may not assign this Warrant. This Warrant will be binding upon the Company and its successors, and will inure to the benefit of the Holder and its successors and assigns, and may be assigned by the Holder to anyone of its choosing without the Company’s approval.

4.4 Notices . Any notice required or permitted hereunder must be in writing and either personally served, sent by facsimile or email transmission, or sent by overnight courier. Notices will be deemed effectively delivered at the time of transmission if by facsimile or email, and if by overnight courier the business day after such notice is deposited with the courier service for delivery.

4.5 Governing Law . This Warrant will be governed by, and construed and enforced in accordance with, the laws of the State of Florida, without regard to the conflict of laws principles thereof. Any action brought by either party against the other concerning the transactions contemplated by this Warrant shall be brought only in the state courts of Florida or in the federal courts located in Miami-Dade County, in the State of Florida. Both parties and the individuals signing this warrant agreement agree to submit to the jurisdiction of such courts.

4.6 Delivery of Process by Holder to the Company . In the event of any action or proceeding by Holder against the Company, and only by Holder against the Company, service of copies of summons and/or complaint and/or any other process which may be served in any such action or proceeding may be made by Holder via U.S. Mail, overnight delivery service such as FedEx or UPS, email, fax, or process server, or by mailing or otherwise delivering a copy of such process to the Company at its last known address or to its last known attorney set forth in its most recent SEC filing.

4.7 No Rights as Stockholder Until Exercise . This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 1.1. So long as this Warrant is unexercised, this Warrant carries no voting rights and does not convey to the Holder any “control” over the Company, as such term may be interpreted by the SEC under the Securities Act or the Exchange Act, regardless of whether the price of the Company’s Common Stock exceeds the Exercise Price.

4.8 No Shorting . Holder agrees that so long as this Warrant from the Company to the Holder remains outstanding, Holder will not enter into or effect “short sales” of the Common Stock or hedging transactions that establish a net short position with respect to the Common Stock of the Company. The Company acknowledges and agrees that upon delivery of a Notice of Exercise and payment of the aggregate Exercise Price (if applicable) by Holder, Holder immediately owns the shares of Common Stock described in the Notice of Exercise and any sale of those shares issuable under such Notice of Exercise would not be considered short sales.

4.9 Limitation of Liability . No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

4.10 Attorney Fees . In the event any attorney is employed by either party to this Warrant with regard to any legal or equitable action, arbitration or other proceeding brought by such party for the enforcement of this Warrant or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Warrant, the prevailing party in such proceeding will be entitled to recover from the other party reasonable attorneys’ fees and other costs and expenses incurred, in addition to any other relief to which the prevailing party may be entitled.

4.11 Opinion of Counsel . In the event that an opinion of counsel is needed for any matter related to this Warrant, Holder has the right to have any such opinion provided by its counsel. Holder also has the right to have any such opinion provided by the Company’s counsel.

4.12 Nonwaiver . No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies.

4.13 Amendment Provision . The term “Warrant” and all references thereto, as used throughout this instrument, means this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

	POSITIVEID CORPORATION

	By:	/s/ William J. Caragol
		William J. Caragol
		Chief Executive Officer


	HOLDER:


	/s/ Justin Keener
	JMJ Financial / Its Principal

NOTICE OF EXERCISE

TO: POSITIVEID CORPORATION

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in Section 1.3, to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in Section 1.3.

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

(4) Accredited Investor . The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name: _______________________________________

Date: ________________________________________

Exhibit 4.3

COMMON STOCK PURCHASE WARRANT

DOCUMENT W-11082012

POSITIVEID CORPORATION

Warrant Shares: 2,500,000

Initial Exercise Date: November 8, 2012

Aggregate Exercise Amount: $50,000

THIS COMMON STOCK PURCHASE WARRANT (the “ Warrant ”) certifies that, for consideration of (i) $500 cash payment by wire transfer and (ii) payment on the date hereof of $100,000 under the $445,000 Promissory Note effective and closed on August 15, 2012 (the “Note”), JMJ Financial, its Principal, or its assigns (the “ Holder ”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “ Initial Exercise Date ”) and on or prior to the close of business on the five (5) year anniversary of the Initial Exercise Date (as subject to adjustment hereunder, the “ Termination Date ”), to subscribe for and purchase from PositiveID Corporation, a Delaware corporation (the “ Company ”), up to 2,500,000 shares (as subject to adjustment herein, the “ Warrant Shares ”) of common stock of the Company (the “ Common Stock ”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 1.2.

ARTICLE 1 EXERCISE RIGHTS

The Holder will have the right to exercise this Warrant to purchase shares of Common Stock as set forth below.

1.2 Exercise Price . The exercise price per share of Common Stock under this Warrant shall be $0.02 per share, subject to adjustment hereunder (the “ Exercise Price ”).

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

1.4 Termination . On the Termination Date, if all or any portion of this Warrant remains unexercised, the Termination Date shall be automatically extended for two years.

1.5 Delivery of Warrant Shares . Warrant Shares purchased hereunder will be delivered to Holder by 2:30 pm EST within two (2) business days of Notice of Exercise and receipt of the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise (unless being exercised by cashless exercise) by “DWAC/FAST” electronic transfer (such date, the “ Warrant Share Delivery Date ”). For example, if Holder delivers a Notice of Exercise and remits the aggregate Exercise Price (if applicable) to the Company at 5:15 pm eastern time on Monday January 1 st , the Company’s transfer agent must deliver shares to Holder’s broker via “DWAC/FAST” electronic transfer by no later than 2:30 pm eastern time on Wednesday January 3 rd . The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date of delivery of the Notice of Exercise and payment of the aggregate Exercise Price (if applicable). Holder may assess penalties or liquidated damages (both referred to herein as “penalties”) as follows. For each exercise, in the event that shares are not delivered by the third business day (inclusive of the day of exercise), the Company shall pay the Holder in cash a penalty of $2,000 per day for each day after the third business day (inclusive of the day of exercise) until share delivery is made. The Company will not be subject to any penalties once its transfer agent correctly processes the shares to the DWAC system. The Company will make its best efforts to deliver the Warrant Shares to the Holder the same day or next day. Holder is aware that without an effective registration statement or an exemption from resale restrictions, it is not possible to deliver restricted shares by DWAC/FAST electronic transfer, and in the case that the Holder converts into restricted stock, delivery can be made by a stock certificate bearing a restrictive legend.

1.7 Warrant Exercise Rescission Rights . If the Warrant Shares are not delivered by DWAC/FAST electronic transfer or in accordance with the timeframe stated in Section 1.5, Holder may, at any time prior to selling those Warrant Shares rescind such exercise, in whole or in part, in which case the Company must, within three (3) days of receipt of notice from the Holder, repay to the Holder the portion of the exercise price so rescinded and reinstate the portion of the Warrant and equivalent number of Warrant Shares for which the exercise was rescinded and, for purposes of Rule 144, such reinstated portion of the Warrant and the Warrant Shares shall tack back to the original date of this Warrant. If Warrant Shares were issued to Holder prior to Holder’s rescission notice, upon receipt of payment from the Company, Holder will, within three (3) days of receipt of payment, commence procedures to return the Warrant Shares to the Company.

Market Price Loss = [(High trade price on the day of exercise) x (Number of Warrant Shares)] – [(Sales price realized by Holder) x (Number of Warrant Shares)]

The Company must pay the Market Price Loss by cash payment, and any such cash payment must be made by the third business day from the time of the Holder’s written notice to the Company.

Failure to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of Warrant Shares)]

The Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day from the time of the Holder’s written notice to the Company.

ARTICLE 2 ADJUSTMENTS

ARTICLE 3 COMPANY COVENANTS

ARTICLE 4 MISCELLANEOUS

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

	POSITIVEID CORPORATION


	By:	/s/ William J. Caragol
		William J. Caragol
		Chief Executive Officer


	HOLDER:


	/s/ Justin Keener
	JMJ Financial / Its Principal

Exhibit 10.7

ASSET PURCHASE AGREEMENT

THIS AGREEMENT made as of the 28th day of August, 2012 (the “Effective Date”), by and among PositiveID Corporation, a Delaware corporation (“Seller”), and VeriTeQ Acquisition Corporation, a Delaware corporation (“Buyer”). (The Seller and the Buyer may hereinafter be collectively referred to as the “Parties” or individually as the “Party”).

R E C I T A L S

WHEREAS , in the past, the Seller’s business has included the manufacture and sale of implantable passive radio-frequency identification microchips (“RFID Chip”), and components related thereto, including readers, transponders, implanters, packaging devices and related services (the “Business”);

WHEREAS , Buyer intends to develop, market, and sell RFID systems used to identify, locate and protect people, medical devices and other applications, which systems use the RFID Chip and components related thereto, including readers, transponders, implanters and packaging devices, and which future systems, products, components and services developed by or on behalf of Buyer may use the RFID Chip or portions thereof (“RFID Field”);

WHEREAS , Seller desires to sell and deliver to Buyer, and Buyer desires to purchase and receive from Seller all, right, title and interest in and to certain Seller’s assets used or useful in connection with the operation of the Business in the RFID Field, so as to permit Buyer to independently pursue the development and improvement of the Business in the RFID Field; and

WHEREAS , Seller, in conjunction with its development partner Receptors LLC, has developed the GlucoChip™, a product designed to measure blood glucose levels in vivo. This product is based on the intellectual property (patents, patents pending and other intellectual property) being sold to Buyer as a part of this agreement. Simultaneously with the execution of this agreement, the parties will enter into a License Agreement whereby Buyer will grant a license to Seller regarding and including the GlucoChip™. Such license shall be exclusive, perpetual, transferable, royalty free, worldwide and shall cover all GlucoChip™ intellectual property related to blood glucose measurement and diabetes management.

IT IS THEREFORE AGREED:

ARTICLE I.

ASSETS TO BE PURCHASED

1.1. Description of Assets . Upon the terms and subject to the conditions hereof, on the Closing Date (as defined in Section 9.1) Seller shall sell, transfer, assign and deliver to Buyer, and Buyer shall purchase from Seller, all of Seller’s right, title and interest in and to all of Seller’s assets that are limited to the operation of the Business in the RFID Field, including, without limitation, the following assets (collectively referred to as the “Purchased Assets”) which shall be conveyed in the manner described:

(a) The patents and patent applications, including divisions, continuations, renewals, reissuances, and extensions of the foregoing (as applicable) listed on Schedule 1.1 shall be transferred and assigned to Buyer (“the Assigned Patents”), pursuant to an assignment of patent, and Seller shall receive from Buyer a full and irrevocable covenant not to sue for Seller's use of such patents and patent applications pursuant to the License Agreement between Seller and Buyer dated August 28, 2012.

1.2. Certain Agreements . Upon Closing, the parties agree to terminate, assign, or enter into certain agreements, as follows:

(a) License Agreement . The Buyer and Seller will execute a License Agreement, simultaneously with this Asset Purchase Agreement, granting Seller an exclusive, perpetual, transferable (with prior written consent of Buyer, of which consent shall not be unreasonably withheld), royalty free, and worldwide license to all of the intellectual property covered in this Agreement and the Stock Purchase Agreement, dated January 11, 2012, related the Seller’s GlucoChip™, in the fields of blood glucose measurement and diabetes management.

(b) Shared Services Agreement . Simultaneously with the execution of this Agreement, the Parties shall enter into a Second Amendment to Shared Services Agreement, reducing the shared service fee owed to Seller from Buyer from $12,000 (twelve thousand and 00/100 dollars) to $5,000 (five thousand and 00/100 dollars), per month. This fee change will become effective September 1, 2012.

(c) License Agreement dated January 11, 2012. The License Agreement between the parties dated January 11, 2012, as amended June 26, 2012, is hereby terminated.

(d) First Amendment to Security Agreement . The Security Agreement between the parties dated January 11, 2012, is being amended, effective as of the date of this Agreement, to include a secured interest in the assets included in Schedule 1.1 , and in the performance of the obligations described in Article III of this Agreement.

(e) Letter Agreement . The parties are entering into a Letter Agreement dated August 28, 2012 to memorialize additional terms that may or may not be included in this Agreement or one of the aforementioned agreements.

ARTICLE II.

ASSUMPTION OF LIABILITIES AND OBLIGATIONS

2.1 Other than assuming Seller’s obligations to perform under applicable assigned agreements, and any obligations related to the VeriChip, VeriMed or HealthLink businesses (all as specified and defined in the Stock Purchase Agreement between Seller and Buyer dated January 11, 2012), Buyer shall have no responsibility for any liabilities or other obligations of Seller.

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ARTICLE III.

PURCHASE PRICE

3.1 Consideration . The aggregate consideration to be paid by Buyer to Seller for the Purchased Assets that are the subject of this Agreement, shall be payable in the form of royalties which shall be earned as follows:

(i)

Bio Sensor Royalties – Buyer shall pay the Seller a royalty of 10% of all gross revenues from products or services related to the patents and patents pending specified in Schedule 1.1 . Royalties will be calculated quarterly, using U.S. GAAP, with royalty payments due within 30 days of any quarter end. In 2012 there will be no minimum royalties due. Minimum royalties thereafter, and through the remaining life of any of the patents or patents pending included in Schedule 1.1 , will be as follows:

Minimum royalty in 2013 –

$400,000

Minimum royalty in 2014 –

$800,000

Minimum royalty in 2015 and through

expiration of the patents –

(patents granted or pending)

$1,600,000

(ii)

Medcomp Royalties – Buyer shall pay the Seller a royalty of 20% of all gross revenues from products or services sold to Medcomp pursuant to the Development and Supply Agreement with Medcomp dated April 2, 2009, and any successor agreements with Medcomp. Royalties will be calculated quarterly, using U.S. GAAP, with royalty payments due within 30 days of any quarter end. The total cumulative royalty payments from Buyer to Seller pursuant to this Section 3.1(ii) as related to the Medcomp agreement shall not exceed $600,000 (six-hundred thousand and 00/100 dollars) and upon reaching said amount, all future royalty payments shall be terminated.

3.2 Payment of Royalties . Payment of royalties will be made based on U.S. GAAP (generally accepted accounting principles) revenue for each quarter. All royalties due will be reported and paid to Seller on a net 30 basis after each calendar quarter end. In the event of dispute over royalties the Parties agree to full access for their respective independent auditors and to arbitration in Palm Beach County, Florida. The Party not to prevail in the arbitration will pay all legal, audit and arbitration costs.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

OF SELLER

As an inducement to Buyer to enter into and perform its obligations under this Agreement, Seller hereby represents, warrants and covenants to Buyer as follows:

4.1. Organization; Enforceability . Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The execution and delivery of this Agreement, and consummation of the transactions contemplated herein, have been duly and validly authorized by the Board of Directors of Seller. This Agreement will, upon execution and delivery, be a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally.

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4.2. No Breach or Default . The execution and delivery of this Agreement, and the consummation of the transactions herein provided will not:

(a) Result in the breach of any of the terms or conditions of, or constitute a default under, or in any manner release Seller from any obligations under, or accelerate any mortgage, note, bond, contract, indenture, agreement, license or other instrument or obligation of any kind or nature to which Seller is now a party or by which any of its properties or assets may be bound or affected;

(b) Violate any order, writ, injunction or decree of any court, administrative agency or governmental body or require the approval, consent or permission of any governmental body or agency which has not been heretofore obtained; or

4.3. Bankruptcy and Insolvency . No petition in bankruptcy (voluntary or otherwise), assignment for the benefit of creditors or petition seeking reorganization or arrangement or other action under federal or state bankruptcy laws is pending on behalf of or against Seller.

4.4. Title to Assets . All of the Purchased Assets are owned by Seller. On the Closing Date, Seller will convey to Buyer good and marketable title to all of the Purchased Assets, free and clear of all leases, security interests, liens, encumbrances on title, mortgages, pledges, conditional sale and other title-retention agreements, covenants, restrictions, easements, reservations and other burdens or charges of title every kind and nature (collectively, “Liens”).

4.5. Intellectual Property .

(a) As of the Closing Date, Seller is the owner of all right, title and interest in and to each of the Assigned Patents and each such Assigned Patent is free and clear of any Liens.

(b) To the knowledge of Seller, the use, operation or other exploitation of the Purchased Assets transferred to Buyer hereunder by Seller prior to the date hereof does not infringe or misappropriate any of the intellectual property rights of any other person or entity, and Seller has not received written notice from any person or entity claiming that such Purchased Assets infringes or misappropriates any of the intellectual property rights of any person or entity. To the knowledge of Seller, the use, operation or other exploitation of the Purchased Assets in the RFID Field does not infringe or misappropriate any of the intellectual property rights of any other person or entity. Seller has not licensed from any third party any intellectual property rights that would be necessary for Buyer’s manufacture, sale and exploitation of the RFID Chips as of the date of this Agreement.

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(d) To the knowledge of Seller, none of the Assigned Patents is subject to any proceeding or outstanding decree, order, judgment or settlement agreement or stipulation that restricts in any manner the use, transfer or licensing thereof by Seller or may affect the validity, use (as contemplated by this Agreement) or enforceability of such Assigned Patents.

(e) To the knowledge of Seller, the Know-How is not subject to any proceeding or outstanding decree, order, judgment or settlement agreement or stipulation that restricts in any manner the use, transfer or licensing thereof by Seller or may affect the use (as contemplated by this Agreement) of such Know-How (as contemplated by this Agreement).

4.6. Litigation and Governmental Action . There are no suits, actions or claims, legal, administrative or arbitration proceedings pending or, to Seller’s knowledge, threatened against Seller, or to which Seller is a party (whether or not covered by insurance) which in any manner relate to or affect the Purchased Assets. To Seller’s knowledge, no claims or suits will arise as a direct or indirect result of this transaction. To Seller’s knowledge, there is not outstanding any notice, order, writ, injunction or decree of any court, governmental agency or arbitration tribunal relating to or affecting the Purchased Assets.

4.7 Additional Seller Covenants . Seller, on behalf of itself, its Affiliates, and its successors and assigns covenants and agrees that it shall not transfer, assign, sublicense or otherwise grant to any third party, rights to use any of the rights under the Retained Patents, Assigned Patents or Know-How in the RFID Field.

4.8 Know-How . Seller hereby grants to Buyer a license to use the Know-How. Buyer shall have the right to copy, make derivative works of, improve, modify, sublicense, and distribute the Know-How.

4.9 Chip Storage . Seller currently is storing RFID Chips that are owned by Buyer. Buyer agrees to take possession of such RFID Chips at no cost to Seller and at a date that is mutually agreeable between the Parties, but no later than October 1, 2012

4.10 No Disputes . There are no contracts or material disputes between the Seller and any third party with respect to the Retained Patents, Assigned Patents and Know-How under which there is any material dispute regarding the scope of the contract or regarding performance under the contract.

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ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF BUYER

As an inducement to Seller to enter into and perform its obligations under this Agreement, Buyer hereby represents, warrants and covenants to Seller as follows:

5.1. Organization; Enforceability . Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The execution and delivery of this Agreement, and consummation of the transactions contemplated herein, have been duly and validly authorized by the Board of Directors of Buyer. This Agreement will, upon execution and delivery, be a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally.

5.2. No Breach or Default . The execution and delivery of this Agreement, and the consummation of the transactions herein provided will not:

(a) Result in the breach of any of the terms or conditions of, or constitute a default under, or in any manner release Buyer from any obligations under, or accelerate any mortgage, note, bond, contract, indenture, agreement, license or other instrument or obligation of any kind or nature to which Buyer is now a party or by which any of its properties or assets may be bound or affected;

5.3. Bankruptcy and Insolvency . No petition in bankruptcy (voluntary or otherwise), assignment for the benefit of creditors or petition seeking reorganization or arrangement or other action under federal or state bankruptcy laws is pending on behalf of or against Buyer.

5.4 Buyer's Covenant Not to Sue . For the life of the Assigned Patents, Buyer agrees and covenants not to bring any legal or administrative proceeding whatsoever against Seller for any and all past, present, or future claims of infringement of the Assigned Patents arising from the manufacture, use, sale, offer for sale or import of any product in the animal applications field, which such product, but for the covenant not to sue granted herein, would directly infringe, induce infringement of, or contribute to the infringement of a viable claim of the Assigned Patents (the “Buyer Covenant Not to Sue”). This Buyer Covenant Not to Sue does not grant to Seller a license, implied license or any other right to any of the Assigned Patents.

ARTICLE 6.

AS IS, WHERE IS

6.1 Except for the representations and warranties of Seller expressly set forth in this Agreement, Buyer agrees that the Purchased Assets are being acquired "as is, where is" at Closing, and in their condition at Closing "with all faults," and that buyer is relying on its own examination of the Purchased Assets. Without limiting the generality of the foregoing and except for the representations and warranties expressly set forth in this Agreement, Buyer understands and agrees that Seller expressly disclaims any representations or warranties as to the title, condition, value or quality of the Purchased Assets, and any representation or warranty of merchantability, usage, suitability or fitness for any particular purpose with respect to the Purchased Assets or any part thereof, or as to the workmanship thereof or the absence of any defects therein, whether latent or patent. Except for the representations and warranties of Seller expressly set forth in this Agreement, Buyer further agrees that no information or material provided by or communication made by Seller, or by any representative of Seller, will constitute, create or otherwise cause to exist any representation or warranty.

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ARTICLE 7.

CONDITIONS PRECEDENT TO BUYER’S OBLIGATIONS

Unless waived by Buyer, the obligations of Buyer under this Agreement with respect to the Closing are subject to the fulfillment of each of the following conditions precedent:

7.1 Seller’s Closing Documents . Seller shall have executed (as appropriate) and delivered to Buyer all of the documents to be provided by it pursuant to Article 9 hereof which are to be delivered to Buyer.

7.2 Authorization . Seller shall have provided evidence that execution of the Agreement and consummation of all transactions contemplated herein have been duly authorized.

7.3 Conveyance Instruments . Warranty bills of sale and other sufficient instruments of conveyance and transfer as shall be effective to vest in Buyer all of Seller’s title to and interest in the Purchased Assets.

ARTICLE 8.

CONDITIONS PRECEDENT TO SELLER’S OBLIGATIONS

Unless waived by Seller, the obligations of Seller under this Agreement with respect to the Closing are subject to the fulfillment of each of the following conditions precedent:

8.1 Buyer’s Closing Documents . Buyer shall have executed (as appropriate) and delivered to Seller all of the documents to be provided by it pursuant to Article 9 hereof which are to be delivered to Seller.

8.2 Authorization . Buyer shall have provided evidence that execution of the Agreement and consummation of all transactions contemplated herein have been duly authorized.

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ARTICLE 9.

CLOSING

9.1 Closing . The consummation of the purchase and sale of the Purchased Assets and the related transactions and deliveries provided for herein (“Closing”) shall take place upon satisfaction of all conditions set forth in Sections 7 and 8 of this Agreement (“Closing Date”) on August___, 2012 or such other date as the parties may mutually agree.

9.2 Documents to be Delivered by Seller. At the Closing, the following instruments and documents shall be delivered or provided to Buyer by Seller:

(i)

Warranty bills of sale and other sufficient instruments of conveyance and transfer as shall be effective to vest in Buyer all of Seller’s title and interest in the Purchased Assets;

(ii)

Assignment of Patents;

(iii)

License Agreement dated August 28, 2012;

(iv)

First Amendment to Security Agreement dated August 28, 2012

(v)

Second Amendment to Shared Service Agreement dated August 28, 2012

(vi)

Letter Agreement dated August 28, 2012

9.3 Documents to be Delivered by Buyer. At the Closing, the following instruments and documents shall be delivered or provided by Buyer to the party or parties indicated:

(i)

License Agreement dated August 28, 2012;

(ii)

First Amendment to Security Agreement dated August 28, 2012

(iii)

Second Amendment to Shared Service Agreement dated August 28, 2012

(iv)

Letter Agreement dated August 28, 2012

ARTICLE 10.

CONFIDENTIAL INFORMATION

10.1 Confidentiality . Each Party agrees to keep the Confidential Information confidential. Each Party shall limit disclosure of the Confidential Information to its employees, directors, officers, consultants, contractors, attorneys, advisors and agents who otherwise have a need to know the Confidential Information in connection with its business and provided that are advised of and agree to the obligations contained in this Section 10.1. Each Party shall use at least the same degree of care in handling the Confidential Information as it uses with regard to its other confidential information, and, at a minimum, shall use reasonable care to protect the Confidential Information. The obligations of this Section 10.1 are continuing in nature and shall survive termination or expiration of this Agreement.

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ARTICLE 11.

POST-CLOSING OBLIGATIONS OF THE PARTIES

On and after the Closing Date:

11.1 Each Party shall execute all certificates, instruments and other documents and take all actions reasonably requested by the other Party to effectuate the purposes of this Agreement and to consummate and evidence the consummation of the transactions herein provided for.

11.2 Seller shall take all actions reasonably necessary or appropriate to put the Buyer in immediate actual possession and operating control of all of the Purchased Assets.

11.3 The Seller agrees to hold harmless, defend, and indemnify the Buyer and its officers, directors, subsidiaries, affiliates, employees, agents, attorneys, representatives, successors and assigns (collectively the “ Buyer Indemnified Parties ”) from and against, and pay to the applicable Buyer Indemnified Parties the amount of any and all losses, liabilities, claims, obligations, deficiencies, demands, judgments, damages (including incidental and consequential damages), interest, fines, penalties, claims, suits, actions, causes of action, assessments, awards, costs and expenses (including the costs of investigation and defense and attorneys’ and other professionals’ fees), whether or not involving a third party claim arising out of or relating to (individually, a “ Loss ” and collectively, the “ Losses ”):

(a)

any breach of a representation or warranty or covenant made by Seller in this Agreement, in any exhibit or schedule attached to this Agreement, or in any agreement, instrument, or document provided to Buyer by or on behalf of Seller in connection with the transactions contemplated hereby;

(b)

the failure of any of the representations or warranties made by the Seller in this Agreement to be true and correct in all respects at and as of the Effective Date; and

(c)

the breach of any covenant or other agreement on the part of the Seller under this Agreement.

11.4 The Buyer agrees to hold harmless, defend, and indemnify the Seller and its officers, directors, subsidiaries, affiliates, employees, agents, attorneys, representatives, successors and assigns (collectively the “ Seller Indemnified Parties ”) from and against, and pay to the applicable Seller Indemnified Parties the amount of any and all losses, liabilities, claims, obligations, deficiencies, demands, judgments, damages (including incidental and consequential damages), interest, fines, penalties, claims, suits, actions, causes of action, assessments, awards, costs and expenses (including the costs of investigation and defense and attorneys’ and other professionals’ fees), whether or not involving a third party claim arising out of or relating to (individually, a “ Loss ” and collectively, the “ Losses ”):

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(a)

the failure of any of the representations or warranties made by the Buyer in this Agreement to be true and correct in all respects at and as of the Effective Date;

(b)

the breach of any covenant or other agreement on the part of the Buyer under this Agreement;

(c)

any claims or demands against any Seller Indemnified Party arising out of or resulting to Buyer’s ownership, lease, use or operation of the Company after the closing;

(d)

any claims or demands arising out of or relating to that certain Amended and Restated Supply, License and Development Agreement between the Seller and Digital Angel Corporation dated December 27, 2005, as amended;

(e)

any claims or demands arising out of or relating to that certain Asset Purchase Agreement among the Seller, Digital Angel Corporation, and Destron Fearing Corporation dated November 12, 2008; and

(f)

any claims or demands arising out of or relating to that certain Letter Agreement between the Seller and Digital Angel Corporation dated May 15, 2008.

ARTICLE 12.

TERMINATION

12.1 Termination . This Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing:

(a)

by mutual written consent of Buyer and Seller;

(b)

by Buyer or Seller if (i) there shall be a final non-appealable order of a federal or state court in effect preventing consummation of the transactions contemplated hereby; or (ii) there shall be any statute, rule, regulation or order enacted, promulgated or issued or deemed applicable to the transactions contemplated by this Agreement by any governmental entity that would make consummation of the transactions contemplated by this Agreement illegal;

(c)

by Buyer if it is not in material breach of its obligations under this Agreement and there has been a material breach of any material representation, warranty, covenant or agreement contained in this Agreement on the part of Seller and such breach has not been cured within ten (10) calendar days after written notice to Seller; or

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(d)

by Seller if it is not in material breach of its obligations under this Agreement and there has been a material breach of any material representation, warranty, covenant or agreement contained in this Agreement on the part of any Buyer and such breach has not been cured within ten (10) calendar days after written notice to Buyer.

ARTICLE 13.

WAIVERS; AMENDMENTS; ASSIGNMENT; SUCCESSORS AND ASSIGNS

13.1 Effect of Waiver . Any waiver of any term or condition of this Agreement, or of the breach of any covenant, representation or warranty contained herein, in any one instance, shall not operate as or be deemed to be or construed as a further or continuing waiver of any other breach of such term, condition, covenant, representation or warranty, nor shall any failure at any time or times to enforce or require performance of any provision hereof operate as a waiver of or affect in any manner such Party’s right at a later time to enforce or require performance of such provision or of any other provision hereof.

13.2 Modification of Agreement . This Agreement may not be amended, nor shall any waiver, change, modification, consent or discharge be effected, except by an instrument in writing executed by or on behalf of the Party against whom enforcement of any amendment, waiver, change, modification, consent or discharge is sought.

13.3 Assignment; Successors and Assigns. Except as otherwise specifically set forth in this Agreement, this Agreement shall not be assignable by any Party without the prior written consent of the other, of which consent shall not be unreasonably withheld; notwithstanding the foregoing, this Agreement may be transferred by the Buyer in connection with a merger, consolidation, or the sale of substantially all of its assets. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement is not intended and shall not be construed to create any rights in or to be enforceable in any part by persons other than the Parties hereto.

ARTICLE 14.

MISCELLANEOUS PROVISIONS

14.1 Severability . If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision with any constitution or statute or rule of public policy or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case.

14.2 Binding Effect . The Covenants Not to Sue set forth in Section 5.4 above inure to the benefit of, and are binding on, the successors, transferees, and/or assignees of (a) the Parties, (b) substantially the entire business of each of the Parties, and (c) any of the Assigned Patents or Retained Patents.

14.3 Additional Third-Party Beneficiaries . The Covenants Not to Sue set forth in Section 5.4 above inure to the benefit of the customers, distributors, dealers and users, officers, agents, employees, and/or other authorized representatives of the Parties hereto.

14.4 Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and in pleading or proving any provision of this Agreement it shall not be necessary to produce more than one such counterpart.

14.5 Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if sent by facsimile or delivered via certified or registered mail, or recognized courier, delivery confirmation or return receipt requested:

(a)

If to Seller, to:

POSITIVEID CORPORATION

1690 South Congress Avenue, Suite 200

Delray Beach, Florida 33445

Attention: William J. Caragol

Facsimile: 561-805-8001

(b)

If to Buyer, to:

VERITEQ ACQUISITION CORPORATION

1690 South Congress Avenue, Suite 200

Delray Beach, Florida 33445

Attention: Scott R. Silverman

Facsimile: 561-805-8001

or to such other person(s) and address(es) as either Party shall have specified in writing to the other.

14.6 Entire Agreement . Seller and Buyer agree that this Agreement and its Exhibits and Schedules and the other contracts and deeds referenced in and required by this Agreement, constitute the Entire Agreement among the Parties with respect to the subject matter hereof and supersedes all prior understandings and agreements with respect thereto.

14.7 Governing Law and Venue . This Agreement shall be governed by and construed and enforced in accordance with the law (other than the law governing conflict of law questions) of the State of Florida. Any action to enforce the terms of this Agreement shall be brought in a court of competent jurisdiction located in Palm Beach County, Florida.

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14.8 Captions and Headings . Captions and Section headings used herein are for convenience only and are not a part of this Agreement and shall not be used in construing it.

14.9 Time of the Essence . Time shall be of the essence of this Agreement and of every part hereof.

14.10 Expenses . Each of the Parties shall pay all costs and expenses incurred or to be incurred by it in negotiating and preparing this Agreement and in closing and carrying out the transactions contemplated by this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF , Seller and Buyer have caused this Agreement to be duly executed as of the date first above written.

SELLER :

POSITIVEID CORPORATION

By: /s/ William J. Caragol

William J. Caragol

Chief Executive Officer

BUYER :

VERITEQ ACQUISITION CORPORATION

By: /s/ Scott R. Silverman

Scott R. Silverman

Chief Executive Officer

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SCHEDULE 1.1 - ASSIGNED PATENTS

Patent #	Title
7,125,382	“Embedded Bio-Sensor System”
7,297,112	“Embedded Bio-Sensor System”
2008/0033273	“Embedded Bio-Sensor System”
7,241,266	“Transponder for Embedded Bio-Sensor using Body Energy as a Power Source”

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Exhibit 10.8

LICENSE AGREEMENT

This License Agreement (this “Agreement”) is entered into as of August 28, 2012 (the “Effective Date”), by and between PositiveID Corporation, a Florida corporation (the “Licensee” or “PositiveID”), and VeriTeQ Acquisition Corporation, a Delaware corporation (“VeriTeQ”) (PositiveID and VeriTeQ may hereinafter be collectively referred to as the “Parties” or individually as the “Party”).

A. VeriTeQ owns Patent Rights (as defined below) to certain implantable passive radio frequency microchip technology, as described in Appendix A.

B. Simultaneously herewith, VeriTeQ and PositiveID are entering into an Asset Purchase Agreement, whereby VeriTeQ is purchasing all of the assets subject to this Agreement.

C. PositiveID, in conjunction with its development partner Receptors LLC, has developed the GlucoChip™, a product designed to measure blood glucose levels in vivo. This product is based on the intellectual property (patents, patents pending and other intellectual property) owned by VeriTeQ.

D. PositiveID wishes to obtain from VeriTeQ an exclusive, perpetual, transferable (with prior written consent of VeriTeQ, of which consent shall not be unreasonably withheld), worldwide, and royalty free license to utilize the Patent Rights for the purpose of designing, using, manufacturing, marketing and selling the GlucoChip™, or any similar product in the field of blood glucose measurement and/or diabetes management.

Now therefore, in consideration of the mutual covenants and agreements set forth below, the parties agree as follows:

1. Definitions

As used in this Agreement, the following terms shall have the following meanings:

1.1

“Field” means the fi eld of methods and products related to the measurement of blood glucose and communication through implantable radio frequency identification (“RFID”) device .

1.2

“Licensed Method” means: (i) any method that is claimed in the Patent Rights (as herein defined below) and/or the use of which would constitute, but for the grant of a license under the Patent Rights within the Field, an infringement of any Valid Claim in the country in which such method is used or in the country in which the resulting products are sold; and (ii) any method that includes or results from VeriTeQ's technology included in Appendix A.

1.3

“Licensed Product” means: (i) any implantable RFID product or device that is covered by any pending or issued claim within the Patent Rights and/or the use, production or sale of which would constitute, but for the grant of a license under the Patent Rights within the Field, an infringement of any Valid Claim (as herein defined below) in the country in which such product is used, produced or sold; (ii) any implantable RFID product or device that is produced according to or through the use of a Licensed Method; (iii) any implantable RFID product or device sold for use predominantly in the performance of a Licensed Method; and (iv) any implantable RFID product or device that includes or results from VeriTeQ’s technology included in Appendix A.

1.4

“Markets” means blood glucose measurement, health care, diabetes management, and related fields for use in the Field.

1.5

“ Patent Rights” means: (i) The patents and patent applications listed in Appendix A and any patent that issues or grants from any patent application listed in Appendix A; (ii) any patent or patent application that is a divisional, continuation, national or regional patent or application, reissue, renewal, reexamination, substitution or extension of the patents and applications identified in (i); and (iii) any claim of a continuation-in-part application or patent, directed to the subject matter specifically described in the patents or patent applications identified in (i).

1.6

“Sublicense” means a grant of a license under the Patent Rights by Licensee to any third party.

1.7

“Sublicensee” means any third party who is granted a license under the Patent Rights by the Licensee.

1.8

“Territory” means Worldwide.

1.9

“Valid Claim” means: either (i) a claim of an issued and unexpired patent included within the Patent Rights that has not been held permanently revoked, unenforceable, or invalid by a decision of an agency or a court of competent jurisdiction, that is unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through surrender, disclaimer or otherwise; or (ii) a claim of a pending patent application included within the Patent Rights that was filed with a good faith belief in its patentability and that has not been abandoned or finally rejected without the possibility of appeal or refiling.

2. Grant of License

2.1 Grant of License . Subject to the terms and conditions of this Agreement, VeriTeQ agrees to grant to PositiveID, and PositiveID agrees to accept:

(a) an exclusive, perpetual, transferable (with prior written consent of VeriTeQ, of which consent shall not be unreasonably withheld), license under the Patent Rights to design and construct, use, sell and offer to sell Licensed Products for the Markets in the Field in the Territory; and

(b) the right to grant Sublicenses under the Patent Rights, subject to the terms and conditions of Section 4 of this Agreement (Section 2.1(a) and (b) shall be collectively, the “License”).

3. Royalties

3.1 This License is royalty free for the entire life of the patents and patents pending on Appendix A.

4. Sublicenses

4.1 Licensee may grant Sublicenses under the License.

4.2 To the extent applicable, Sublicenses must include all of the rights of and obligations due to VeriTeQ under this Agreement.

5. Patent Prosecution and Infringement

5.1 Patent Prosecution . VeriTeQ shall control the preparation, filing, prosecution and maintenance (including, without limitation, conducting or participating in interferences or oppositions), of any and all VeriTeQ patents related to the Licensed Product, all at VeriTeQ's expense.

5.2 Infringement of VeriTeQ Patents by Third Parties .

(a) PositiveID agrees to inform VeriTeQ promptly in writing of any suspected infringement of the VeriTeQ patents or Patent Rights by a third party.

(b) VeriTeQ shall have the sole right and authority to institute suit against any third party suspected of infringing any VeriTeQ patent or Patent Right. If VeriTeQ does not notify PositiveID of its intent to pursue legal action within thirty (30) days after giving notice of any infringement of the VeriTeQ patents or Patent Rights, PositiveID may institute suit; provided that VeriTeQ shall have the right, in its sole discretion, to join any such suit as a plaintiff and be represented by separate counsel of its own selection. In any event, VeriTeQ and PositiveID shall each bear their own fees and expenses related to such litigation. In the event that the infringement is based on an application related to the Field, any recovery or settlement will accrue solely to PositiveID. Any recovery or settlement related to an application other than in the Field will accrue solely to VeriTeQ. Any recovery or settlement, related to multiple applications, in excess of litigation costs and reasonable attorney fees shall be shared between VeriTeQ and PositiveID, based on their respective investments to date in each of the applications/products .

5.3 Infringement of Third Party Rights . Each Party shall promptly notify the other in writing of any allegation by a third party that the activity of either of VeriTeQ or PositiveID pursuant to this Agreement infringes or may infringe the intellectual property rights of such third party (“Third Party Claim”). Subject to the following sentence, VeriTeQ shall have the sole right to control any defense of any such Third Party Claim by VeriTeQ’s activities at its own expense and by counsel of its own choice. If any Third Party Claim alleges that the manufacture, use or sale of a Licensed Product infringes such third party’s patent rights, then PositiveID shall have the first right to control any defense of any such claim at its expense and by counsel of its own choice, and VeriTeQ shall have the right, at its own expense, to be represented in any such action by counsel of their own choice; provided that if PositiveID does not defend against any such Third Party Claim, then VeriTeQ may assume such defense at its expense and using counsel of its own choice, in which case VeriTeQ shall keep PositiveID fully informed with regard to the defense of such Third Party Claim. VeriTeQ shall have the sole right to control any defense of any such Third Party Claim by VeriTeQ’s activities at its own expense and by counsel of its own choice. Neither VeriTeQ nor PositiveID shall have the right to settle any patent infringement litigation under this Section 5.3 in a manner that diminishes the rights or interests of the other Party without first consulting the other Party.

5.4 Invalidity of Patent Rights . If a declaratory judgment action is brought naming PositiveID as a defendant and alleging invalidity of any of the Patent Rights, PositiveID may elect to take over the sole defense of the action at its own expense. PositiveID shall consult with VeriTeQ in such action, and VeriTeQ shall have an opportunity to provide comment; however, final decision-making authority shall vest in PositiveID. VeriTeQ shall cooperate fully with PositiveID in connection with any such action.

6. Termination of Agreement

6.1 Term . This Agreement, unless terminated as provided herein, shall remain in effect until the last patent or patent application in the Patent Rights has expired or been abandoned.

6.2 Termination by VeriTeQ . VeriTeQ may terminate this Agreement as follows:

(a)

If PositiveID sells any products or enters into any agreements outside of the Field, pursuant to (c) below.

(b)

If it is judicially determined that PositiveID has infringed the intellectual property rights of a third party by manufacturing, using, or selling Licensed Products, pursuant to (c) below.

(c)

If PositiveID defaults in the performance of any obligations under this Agreement and the default has not been remedied within ninety (90) days after the date of notice in writing of such default by VeriTeQ.

6.3 Termination by PositiveID. PositiveID may terminate this Agreement as follows:

(a)

If VeriTeQ shall make an assignment for the benefit of creditors, or shall have a petition in bankruptcy filed for or against it. Such termination shall be effective immediately upon PositiveID giving written notice to VeriTeQ.

(b)

Except as provided in subparagraph (a) above, if VeriTeQ defaults in the performance of any obligations under this Agreement and the default has not been remedied within ninety (90) days after the date of notice in writing of such default by PositiveID.

(c)

By giving ninety (90) days advance written notice of termination to VeriTeQ.

6.4 Survival of Sublicenses. PositiveID shall provide, in all sublicenses granted by it under this Agreement, that a sublicensee’s interest in such sublicenses shall survive a termination of this Agreement.

6.5 Survival . Sections 6, 7, 8, 9, and 10 shall survive the termination of this Agreement.

7. Warranty

7.1 VeriTeQ does not warrant the validity of the Patent Rights licensed hereunder and makes no representations whatsoever with regard to the scope of the licensed Patent Rights or that such Patent Rights may be exploited by PositiveID or any sublicensee without infringing other patents.

7.2 VERITEQ EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE PATENT RIGHTS OR INFORMATION SUPPLIED BY VERITEQ, LICENSED METHODS OR LICENSED PRODUCTS CONTEMPLATED BY THIS AGREEMENT.

8. Indemnification

8.1 PositiveID shall indemnify, defend and hold harmless VeriTeQ and its current or former directors, officers, and employees, and their respective successors, heirs and assigns from and against any claims, based upon or arising out of a breach of the terms of this Agreement by PositiveID .

8.2 VeriTeQ shall indemnify, defend and hold harmless PositiveID and its current or former directors, officers, and employees, and their respective successors, heirs and assigns from and against any claims, based upon or arising out of a breach of the terms of this Agreement by VeriTeQ .

8.3 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFITS OR EXPECTED SAVINGS OR OTHER ECONOMIC LOSSES, OR FOR INJURY TO PERSONS OR PROPERTY) ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ITS SUBJECT MATTER, REGARDLESS OF WHETHER VERITEQ KNOWS OR SHOULD KNOW OF THE POSSIBILITY OF SUCH DAMAGES. VERITEQ’S AGGREGATE LIABILITY FOR ALL DAMAGES OF ANY KIND RELATING TO THIS AGREEMENT OR ITS SUBJECT MATTER SHALL NOT EXCEED THE AMOUNT PAID BY POSITIVEID TO VERITEQ UNDER THIS AGREEMENT. The foregoing exclusions and limitations shall apply to all claims and actions of any kind, whether based on contract, tort (including, but not limited to, negligence), or any other grounds.

9. Use of Names and Product Labeling . PositiveID shall not use VeriTeQ’s name or insignia, or any adaptation of them, or the name of any of VeriTeQ’s employees in any advertising, promotional or sales literature, including without limitation, press releases, without the prior written consent of VeriTeQ.

10. Miscellaneous

10.1 Transfer; Successors and Assigns . The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the Parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any of the Parties hereto without the prior written consent of the other Party, of which consent shall not be unreasonably withheld.

10.2 Covenants .

(a) PositiveID shall comply with all applicable laws and regulations. In particular, it is understood and acknowledged that the transfer of certain commodities and technical data is subject to United States laws and regulations controlling the export of such commodities and technical data, including all Export Administration Regulations of the United States Department of Commerce. These laws and regulations among other things, prohibit or require a license for the export of certain types of technical data to certain specified countries. PositiveID hereby agrees and gives written assurance that it will comply with all United States laws and regulations controlling the export of commodities and technical data, that it will be solely responsible for any violation of such by PositiveID , and that it will defend and hold VeriTeQ harmless in the event of any legal action of any nature occasioned by such violation. PositiveID shall, in each sublicense, include terms that provide that sublicense shall comply with all such laws and regulations, shall be solely responsible for any violation of same by sublicensee, and shall defend and hold VeriTeQ harmless in the event of any legal action of any nature occasioned by such violation.

(b) PositiveID and any sublicensee(s) shall obtain all regulatory approvals required for the manufacture and sale of Licensed Products .

(d) PositiveID shall register or record this Agreement as is required by law or regulation in any country where the License is in effect.

10.3 Governing Law; Jurisdiction and Venue . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida applicable to contracts executed in and to be performed in that state. The Parties acknowledge that all of the negotiations, anticipated performance and execution of this Agreement occurred or shall occur in the State of Florida, and that, therefore, without limiting the jurisdiction or venue of any other federal or state courts, each of the Parties irrevocably and unconditionally (a) agrees that any suit, action or legal proceeding arising out of or relating to this Agreement may be brought in the state or federal courts of record of the State of Florida in Palm Beach County; (b) consents to the jurisdiction of each such court in any suit, action or proceeding; (c) waives any objection which it may have to the laying of venue of any such suit, action or proceeding in any of such courts; and (d) agrees that service of any court paper may be effected on such Party by mail, as provided in this Agreement, or in such other manner as may be provided under applicable laws or court rules in said state.

10.4 Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. Delivery of an executed counterpart of this Agreement via facsimile or portable document format shall be effective as delivery of a manually executed counterpart of this Agreement.

10.5 Titles and Subtitles . The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

10.6 Notices . Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by facsimile (upon customary confirmation of receipt), or 48 hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, to the following addresses:

If to VeriTeQ:

Scott R. Silverman

Chief Executive Officer

VeriTeQ Acquisition Corporation

1690 South Congress Avenue

Suite 200

Delray Beach, FL 33445

Facsimile: (561) 805-8001

If to PositiveID :

William J. Caragol

Chief Executive Officer

PositiveID Corporation

1690 South Congress Avenue

Suite 200

Delray Beach, FL 33445

Facsimile: (561) 805-8001

10.7 Fees and Expenses . Each Party shall pay all of its own fees and expenses of experts, consultants and the like and other expenses incurred in connection with performing due diligence with respect to this Agreement, the documents referred to herein and the transactions contemplated hereby.

10.8 Attorney’s Fees . If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of this Agreement, the prevailing Party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such Party may be entitled.

10.9 Amendments and Waivers . Any term of this Agreement may be amended or waived only with the written consent of VeriTeQ and PositiveID. Any amendment or waiver effected in accordance with this section shall be binding upon VeriTeQ and PositiveID and each sublicensee.

10.10 Severability . If one or more provisions of this Agreement are held to be unenforceable under applicable law, the Parties agree to renegotiate such provision in good faith. In the event that the Parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the Agreement shall be enforceable in accordance with its terms.

10.11 Delays or Omissions . No delay or omission to exercise any right, power or remedy accruing to any Party under this Agreement, upon any breach or default of any other Party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting Party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Party of any breach or default under this Agreement, or any waiver on the part of any Party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any Party, shall be cumulative and not alternative.

10.12 Entire Agreement . This Agreement, and the documents referred to herein constitute the entire agreement between the Parties pertaining to the subject matter, and any and all other written or oral agreements relating to the subject matter existing between the Parties are expressly canceled.

10.13 Confidentiality . VeriTeQ and PositiveID each agree that, except with the prior written permission of the other Party, it shall at all times hold in confidence and trust and not use or disclose the terms of this Agreement. Notwithstanding the foregoing, VeriTeQ or PositiveID each may disclose the terms of this Agreement: (a) as required by any court or other governmental body, provided that VeriTeQ or PositiveID provides the other Party with prompt notice of such court order or requirement to enable the other Party to seek a protective order or otherwise to prevent or restrict such disclosure; (b) to legal counsel or the financial advisor of VeriTeQ or PositiveID; (c) in connection with the enforcement of this Agreement or rights under this Agreement; or (d) to comply with applicable law. The provisions of this section shall survive the termination of this Agreement.

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

	VERITEQ ACQUISITION CORPORATION By: /s/ Scott Silverman Name: Scott Silverman Title: Chief Executive Officer

	POSITIVEID CORPORATION By: /s/ William J. Caragol Name: William J. Caragol Title: Chief Executive Officer

Appendix A

Patents and Patent Applications

U.S. Patents

Patent #	Title
7,125,382	“Embedded Bio-Sensor System”
7,297,112	“Embedded Bio-Sensor System”
2008/0033273	“Embedded Bio-Sensor System”
7,241,266	“Transponder for Embedded Bio-Sensor using Body Energy as a Power Source”

U.S. Patent Application No.

“Wireless Molecular Sensor System and Process” (Application Number 20110282175)

Exhibit 10.9

FIRST AMENDMENT TO SECURITY AGREEMENT

This FIRST AMENDMENT TO SECURITY AGREEMENT is an amendment to the Security Agreement (the “Security Agreement”), dated January 11, 2012, between VeriTeQ Acquisition Corporation, a Florida corporation (“Debtor”), and PositiveID Corporation, a Delaware corporation (the “Secured Party”, collectively, the “Parties”, or each individually, the “Party”).

BACKGROUND

Debtor has issued to the Secured Party a promissory note, pursuant to the terms of that certain Stock Purchase Agreement, dated January 11, 2012, between the Secured Party and Debtor (the “Stock Purchase Agreement”), in the principal amount of Two Hundred Thousand Dollars ($200,000.00) (the “Note”). Debtor has also purchased certain intellectual property from Secured Party pursuant to an Asset Purchase Agreement (the “APA”), dated August 28, 2012, which includes certain royalty payments as consideration for that transaction. Pursuant to the terms herein, this Security Agreement secures the obligation of Debtor to satisfy Debtor’s obligations under the Note and the APA. Accordingly, in consideration of the mutual covenants and agreements set forth below, the Parties agree as follows:

TERMS

1. Grant of Security Interest.

b. Notwithstanding the grant by Debtor to Secured Party of a Security Interest in the Collateral as noted above, Secured Party agrees, after being requested therefore, to not unreasonably withhold consent to the subordination of its Security Interest in the Collateral to the rights of any bank, potential investor, or other financing source who makes available to Debtor a loan or lending facility which includes the Collateral as part of the security securing that loan, up to $2,000,000. Such subordination will include Secured Party taking no action to enforce its Security Interest with regard to such Collateral unless and until the lender has taken action to enforce its first lien with regard to such security or in the event Debtor declares bankruptcy. Any consent by Secured Party to subordination of its Security Interest in the Collateral shall be given without further payment or consideration to Secured Party. Secured Party further agrees that its first perfected lien will be second in priority to the lien of the lender and agrees to promptly execute a document mutually acceptable to Secured Party and the lender reflecting such subordination.

2. Assurances; Covenants. Debtor hereby agrees that:

a. The Collateral is and will be free of all liens and security interests of every kind and nature, except as may be in effect on the date hereof or have been the result of actions of the Secured Party;

b. Debtor will not assign, transfer, sell, convey, hypothecate, pledge, or in any other way dispose of or encumber the Collateral while this Security Agreement is in effect;

c. Debtor will warrant and defend the Collateral and the Secured Party’s Security Interest against the claims and demands of all persons;

d. Debtor will not, without the prior written consent of the Secured Party, borrow from anyone on the security of the Collateral, or otherwise permit any liens, encumbrances, security interests, or adverse claims against the Collateral, and will not permit the Collateral to be levied upon under any legal process; and

e. Debtor authorizes the Secured Party to file financing statements, including amendments or continuations thereof, describing the Collateral, and from time to time at the request of the Secured Party, will execute such other documents, and will do such other acts and things, all as the Secured Party may reasonably request, to establish and maintain a valid first, perfected security interest in the Collateral and to enable the Secured Party to enforce its rights and remedies hereunder with respect to the Collateral. Notwithstanding the foregoing, Debtor agrees to file the financing statement describing the Collateral and perfecting Secured Party’s Security Interest promptly following the execution of this Security Agreement with the appropriate state recording officer. Debtor shall deliver to the Secured Party filed marked and date stamped copies of the financing statements within three (3) calendar days from the day Debtor receives them from the state recording office.

3 . Representations and Warranties. Debtor represents and warrants to the Secured Party as follows:

a. Debtor is a corporation duly organized, validly existing, and in good standing and active status under the laws of the state of Florida;

b. Debtor has all requisite power to own and operate its properties and to carry on its business as now being conducted, and has all necessary rights to conduct its business;

c. Debtor has the power, authority, and legal right to execute and deliver this Security Agreement, and to perform its obligations hereunder, and has taken all action necessary to authorize the execution, delivery, and performance of this Security Agreement and to authorize the transactions contemplated hereby;

d. The principal place of business and chief executive office of Debtor is located as follows: 1690 South Congress Avenue, Suite 200, Delray Beach, Florida 33445;

e. The execution, delivery, and performance by Debtor of this Security Agreement will not (i) contravene, conflict with, result in the breach of, or constitute a violation of or default under the organizational documents of Debtor, any applicable law, rule, regulation, judgment, order, writ, injunction, or decree of any court or governmental authority, or any agreement or instrument to which Debtor is a party or by which Debtor or its property may be bound or affected, or (ii) result in the creation of any lien, charge, or encumbrance upon any property or assets of Debtor pursuant to any of the foregoing, except the liens created by this Security Agreement;

f. This Security Agreement constitutes a legal, valid, and binding agreement enforceable against Debtor and the Collateral in accordance with its terms and, without limiting the foregoing, this Security Agreement grants the Secured Party a valid, perfected, first Security Interest in the Collateral; and

g. Debtor is the owner of and has good and marketable title to all of the Collateral, free and clear of all liens, encumbrances, security interests, and adverse claims whatsoever. None of the Collateral is subject to any prohibition against encumbering, pledging, hypothecating or assigning the same or requires notice or consent in connection therewith.

4. Additional Covenants. Debtor hereby further covenants and agrees that, until full and final payment of and performance under the Note, Debtor shall adhere to the following provisions, unless Secured Party shall otherwise consent in writing:

a. Liability and Property Insurance . Maintain at Debtor’s expense public liability and third party property damage insurance with such insurers, in such amounts and with such deductibles as are satisfactory to Secured Party, and maintain at Debtor’s expense insurance on the Collateral with such insurers, against such risks, in such amounts and with such deductibles as are satisfactory to Secured Party (including without limitation, insurance against fire, explosion, theft, burglary, pilferage and all other hazards and risks ordinarily insured against by other owners or users of such properties in similar businesses), which insurance shall be evidenced by policies:

(i)

in form and substance reasonably satisfactory to Secured Party;

(ii)

for such insured values as Secured Party may reasonably require in order to replace the property in the event of actual or constructive total loss;

(iii)

designating Secured Party and its assignees as additional co-insureds or loss payees as their interests may appear from time to time;

(iv)

containing a “breach of warranty clause” whereby the insurer agrees that a breach of the insuring conditions or any negligence of Debtor or any other person shall not invalidate the insurance as to Secured Party and his assigns; and

(v)

requiring at least thirty (30) days prior written notice to Secured Party and his assigns before cancellation or any material change shall be effective.

Upon execution, Debtor shall deliver to Secured Party a certificate of insurance evidencing insurance required by this Section 4, together with proof of payment of all premiums and adding Secured Party as an additional insured party. In the event of loss or damage, Debtor shall notify Secured Party and file proofs of loss satisfactory to Secured Party with the appropriate insurer, and, upon receipt, endorse and deliver insurance proceeds to Secured Party.

b. Change of Name or Business . Notify Secured Party within a reasonable period of time if there is any change in the location of (i) books and records relative to the accounts and inventory stated in subsection 3(e) of this Security Agreement; (ii) the principal place of business or chief executive office of Debtor stated in subsection 3(e) of this Security Agreement; or (iv) Debtor conducts any of their business or operations in or from any new office or location.

c. Transfer of Accounts . Not sell, assign, transfer, discount or otherwise dispose of any promissory note or other instrument payable to Debtor, except for collection without recourse in the ordinary course of business.

d. Sale of Equipment or Collateral . Not sell, assign, lease, transfer or otherwise dispose of any substantial part of the equipment or inventory, other than by sales of inventory in Debtor’s ordinary course of business.

e. Settlements Relating to Collateral . Not compromise, settle or adjust any claim in a material amount relating to the Collateral, other than in Debtor’s ordinary course of business.

f. Removal of Collateral . Not remove, or cause or permit to be removed, any of the Collateral from their present location except for sales in the ordinary course of business.

5. Default. Each of the following shall, after receipt by Debtor of written notice from the Secured Party and after a cure period of ten (10) business days with respect to Section 5(a) - 5(d) below, constitute an event of default under this Security Agreement (each, an “Event of Default”):

a. Any representation or warranty made by any Debtor under this Security Agreement or any report, certificate, financial statement, or other information provided by Debtor to the Secured Party in connection herewith is false or misleading in any material respect when made or deemed made;

b. Debtor fails to fully and promptly perform when due any agreement or covenant under this Security Agreement or any related document (and such failure continues beyond the expiration of any applicable grace or cure period);

c. If a default occurs (and continues beyond the expiration of an applicable grace or cure period) under any other agreement, undertaking or instrument relating to any obligation of Debtor to Secured Party; or

d. If Debtor is declared to be in default of any loan or other obligation to Secured Party (and such default continues beyond the expiration of any applicable grace or cure period).

In the event that Debtor substantially cures such default within the applicable cure period, such default shall not constitute an Event of Default.

6. Remedies Upon the Occurrence of an Event of a Default.

a. Upon the occurrence and continuance of an Event of Default under this Security Agreement, the Secured Party will have the right at any time and from time to time, without further notice or demand to Debtor, to exercise the rights and remedies upon default that are granted to a secured party under the Uniform Commercial Code and/or that are otherwise available to the Secured Party under this Security Agreement or otherwise available to secured creditors at law and/or in equity under applicable law, including without limitation:

(i) Enforce Debtor’s rights against account debtors and notify any and all account debtors or other parties against which Debtor has a claim under the Collateral that such Collateral has been assigned by Debtor and that the Secured Party has a security interest therein and, if desired by the Secured Party, that all payments should be made to the Secured Party.

(ii) Receive and endorse the name of Debtor upon any instruments of payment (including payments made under any policy of insurance) that may come into the possession of the Secured Party.

b. Upon the occurrence or continuation of an Event of Default:

(i) Secured Party may require Debtor, at Debtor’s expense, to marshal and assemble the Collateral and make it available to the Secured Party at a place to be designated by the Secured Party, which is reasonable and convenient to all parties.

(ii) Secured Party may, with or without judicial process, sell, lease or otherwise dispose of, in a commercially reasonable manner, any or all of the Collateral at public or private sale or proceedings, by one or more contracts, in one or more parcels, at the same or different times and places, with or without having the Collateral at the place of sale or other disposition, to such persons or entities, for cash or credit or for future delivery, and upon such other terms, as Secured Party may in its discretion deem best in each such matter. The purchaser of any of the Collateral at any such sale shall hold the same free of any equity of redemption or other right or claim of Debtor all of which, together with all rights of stay, exemption or appraisal under any statute or other law now or hereafter in effect, Debtor hereby unconditionally waives to the fullest extent permitted by law. If any of the Collateral is sold on credit or for future delivery, Secured Party shall not be liable for the failure of the purchaser to pay for same and, in the event of such failure, Secured Party may resell such Collateral.

(iii) Debtor further agrees that notice of the time after which any private sale or other intended disposition or action relating to any of the Collateral is to be made or taken, shall be deemed commercially reasonable notice thereof, and shall satisfy the requirements of any applicable statute or other law, if such notice is delivered or mailed not less than five (5) business days prior to the date of the sale, disposition or other action to which the notice is related. Secured Party shall not be obligated to make any sale or other disposition or take other action pursuant to such notice and may, without other notice or publication, adjourn or postpone any public or private sale or other disposition or action by announcement at the time and place fixed therefor, and such sale, disposition or action may be held or accomplished at any time or place to which the same may be so adjourned or postponed.

(iv) Secured Party may at its discretion retain any or all of the Collateral and apply the retained Collateral in satisfaction of part or all of the Note.

(v) Any cash proceeds of sale, lease or other disposition of Collateral shall be applied as follows:

First : To the expenses of collecting, enforcing, safeguarding, holding and disposing of Collateral, and to other expenses of Secured Party in connection with the enforcement of this Security Agreement or any other documents including, without limitation, court costs and the fees of attorneys, accountants and appraisers;

Second : Any surplus then remaining to the payment of interest and then principal of the Note, in such order as Secured Party elects; and

Third : Any surplus then remaining to Debtor or whomever may be lawfully entitled thereto.

c. The net proceeds realized by the Secured Party upon a sale or other disposition of the Collateral, or any part thereof, after deduction of the expenses of retaking, holding, preparing for sale, selling or the like, and reasonable attorneys’ fees and other expenses incurred by the Secured Party, shall be applied to payment of (or held as a reserve against) the Liabilities, whether or not then due, and in such order of application as the Secured Party may from time to time elect.

7. Termination . This Security Agreement and the Security Interest granted pursuant to this Security Agreement shall immediately terminate when the Note and any accrued but unpaid interest thereon has been paid in full. Upon such termination, Debtor may take any action and file all documents necessary to terminate all effective financing statements in the Secured Party’s favor that are then on file or recorded with respect to the Collateral described in this Security Agreement. Secured Party will agree to sign any reasonably required and reasonable documents within three (3) business days of termination of this Security Agreement.

8. Assignment. Neither this Security Agreement nor any of the rights, interests, or obligations arising under this Security Agreement may be assigned by Debtor without the prior written consent of the Secured Party, of which consent shall not be unreasonably withheld.

9. Binding Effect. Subject to Section 8 above, this Security Agreement shall be binding upon and inure to the benefit of the Secured Party, its respective successors and assigns, and shall be binding upon Debtor and its successors and assigns and shall bind all persons who become bound as a Debtor to this Security Agreement.

10. Severability. Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction only, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Security Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. If any provision of this Security Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only as broad as is enforceable.

11. Titles. The titles and headings preceding the text of the sections of this Security Agreement have been inserted solely for convenience of reference and do not constitute a part of this Security Agreement or affect its meaning, interpretation, or effect.

12. Waiver. The failure of any Party to insist in any one or more instances upon performance of any terms or conditions of this Security Agreement shall not be construed as a waiver of future performance of any such term, covenant, or condition, and the obligations of either Party with respect to such term, covenant, or condition shall continue in full force and effect.

13. Entire Agreement. This Security Agreement contains the final, complete, and exclusive expression of the understanding of Debtor and the Secured Party with respect to the transactions contemplated in this Security Agreement, and supersedes any prior or other contemporaneous agreement or representation by or among the Parties related to the subject matter of this Security Agreement.

14. Amendment. This Security Agreement may not be amended, modified, or changed in any respect and no waiver of any requirement hereof will be effective except by an agreement in writing signed by Debtor and the Secured Party.

15. Notices. All notices, requests, demands, claims and other communications under this Security Agreement will be in writing. Any notice, request, demand, claim or other communication under this Security Agreement shall be deemed duly given if it is sent: (a) by personal delivery, or (b) by commercial delivery or overnight courier service that requires a signature as evidence of delivery, and, in each case, addressed to the intended recipient as set forth below, or to any other or additional persons and addresses as the parties may from time to time designate in a writing delivered in a writing in accordance with this Section 15:

If to Debtor:

VeriTeQ Acquisition Corporation

1690 South Congress Avenue, Suite 200

Delray Beach, Florida 33445

Attn: Scott Silverman

If to the Secured Party:

PositiveID Corporation

1690 South Congress Avenue, Suite 200

Delray Beach, Florida 33445

Attn: William Caragol

16. Governing Law/Venue. The validity, construction, enforcement, and interpretation of this Security Agreement are governed by the laws of the State of Florida and the federal laws of the United States of America, excluding the laws of those jurisdictions pertaining to resolution of conflicts with laws of other jurisdictions. The Debtor and the Secured Party (a) consent to the personal jurisdiction of the state and federal courts having jurisdiction in Palm Beach County, Florida; (b) stipulate that the proper, exclusive, and convenient venue for any legal proceeding arising out of this Security Agreement is Palm Beach County, Florida, for state court proceedings, and the Southern District of Florida, for federal district court proceedings; and (c) waive any defense, whether asserted by a motion or pleading, that Palm Beach County, Florida, or the Southern District of Florida, is an improper or inconvenient venue.

17. Relationship. This Security Agreement does not create or evidence a partnership or joint venture between Debtor and the Secured Party.

18. Interpretation. Neither this Security Agreement nor any uncertainty or ambiguity in this Security Agreement shall be construed or resolved against any Party, whether under any rule of construction or otherwise. No Party to this Security Agreement shall be considered the draftsman. The Parties acknowledge and agree that this Security Agreement has been reviewed, negotiated, and accepted by all the Parties and their attorneys and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the Parties.

19. Time. Time shall be of the essence with respect to all of the provisions of this Security Agreement.

20. Counterparts. This Security Agreement may be executed (including by facsimile transmission or portable document format) in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

21. Enforcement of Security Agreement. The parties agree that irreparable damage will occur if any of the provisions of this Security Agreement are not performed in accordance with its specific terms or are otherwise breached. It is therefore agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Security Agreement and to specifically enforce the terms and provisions of this Security Agreement in any court of the United States or any state having jurisdiction, in addition to any other remedy to which they are entitled.

22. Remedies Cumulative. The rights and remedies provided in this Security Agreement are cumulative and not exclusive of any rights or remedies provided by law, and the warranties, representations, covenants, and other provisions of this Security Agreement shall be cumulative.

23. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT.

IN WITNESS WHEREOF, the undersigned have executed this First Amendment to Security Agreement as of August 28, 2012.

POSITIVEID CORPORATION

By: /s/ William J. Caragol

Name: William J. Caragol

Title: Chief Executive Officer

VERITEQ ACQUISITION CORPORATION

By: /s/ Scott Silverman

Name: Scott Silverman

Title: Chief Executive Officer

Exhibit 10.10

Second Amendment to Shared Services Agreement

This Second Amendment to Shared Services Agreement dated as of August 28, 2012 (the “Effective Date”) and entered into between PositiveID Corporation, a Delaware corporation (“PSID”), and VeriTeQ Acquisition Corporation, a Florida corporation (“VeriTeQ”) is an amendment to the Shared Services Agreement between PSID and VeriTeQ dated January 11, 2012, and as further amended June 25, 2012.

The amendments are as follows:

Effective September 1, 2012 the monthly charge for shared services as outlined in Section 1.2(a)(i) of the Shared Services Agreement shall be reduced from $12,000 (twelve thousand and 00/100 dollars) to $5,000 (five thousand and 00/100 dollars).

All other terms of the Shared Services Agreement dated January 11, 2012, as further amended June 25, 2012, not specifically amended herein shall remain as originally written.

IN WITNESS WHEREOF, the parties have executed this Agreement as of August 28, 2012.

POSITIVEID CORPORATION

By:	/s/ William Caragol
Name:	William Caragol
Title:	Chief Executive Officer
Date:	August 28, 2012

VERITEQ ACQUISITION CORPORATION

By:	/s/ Scott R. Silverman
Name:	Scott R. Silverman
Title:	Chief Executive Officer
Date:	August 28, 2012

Exhibit 10.11

SECURED PROMISSORY NOTE

	Delray Beach, Florida
$200,000.00	September 7, 2012

FOR VALUE RECEIVED, the undersigned PositiveID Corporation, a Florida corporation ("Maker") promises to pay to the order of William J. Caragol, Jr., an individual ("Payee") or his, assigns or designees, at Payee's corporate offices located at 1690 South Congress Avenue, Suite 200, Delray Beach, Florida 33445, or such other place as the holder hereof may from time to time designate in writing, the principal sum of Two Hundred Thousand Dollars and 00/100 ($200,000.00) in lawful money of the United States of America.

Interest on this Promissory Note (“Note”) shall accrue on the principal at a rate of 5% per annum until paid in full. Interest shall be calculated and charged daily on the basis of actual days elapsed over a three hundred sixty (360) day banking year, on the unpaid principal balance outstanding from time to time. Principal and interest on the Note shall be due one year from the origination of the loan (on September 6, 2013). In the event the Maker raises at least $1.5 million (cumulative) from any combination of equity sales, strategic agreements, or other loans, the Maker agrees to accelerate the repayment of principal and interest and pay all principal and interest owed to the Payee within three business days of raising $1.5 million of cumulative proceeds from equity sales, loans, and/or strategic agreements. There will be no prepayment penalties for any principal paydowns prior to maturity.

The Note is issued under, and is subject to, the Security Agreement, dated September 7, 2012, between the Maker and the Payee, as it may be amended from time to time (the “Security Agreement”) and the payment of all obligations under this Note is secured according to the provisions contained in the Security Agreement. The Payee is entitled to all of the benefits and rights of the Payee under the Security Agreement. However, neither this reference to the Security Agreement nor any provision thereof shall impair the absolute and unconditional obligation of the undersigned to pay the principal on the Note as herein provided.

The word “holder,” as used in the Note, shall mean the Payee or endorsee of the Note who is in possession of it.

The indebtedness evidenced by the Note is secured by the Security Agreement. Any default by the Maker under this Note between Maker and Payee shall constitute a default under the Note entitling the holder to declare the entire principal amount of the indebtedness evidenced hereby immediately due and payable.

It is further agreed hereby that if any payment of principal shall not be made as and when due as above provided; or upon the insolvency, bankruptcy or dissolution of the Maker; then, in any or all such events, the entire amount of principal of the Note with all interest then accrued, shall, at the option of the holder of the Note and without notice (Maker hereby expressly waives notice of such default), become and be due and collectible, time being of the essence for all sums due under the Note. If the Note shall not be paid at maturity or according to the tenor thereof and strictly as above provided, it may be placed in the hands of an attorney at law for collection, and in that event, each party liable for the payment thereof, as Maker, endorser, guarantor, or otherwise, hereby agrees jointly and severally, to pay the holder hereof in addition to the sums above stated, a reasonable sum as an attorney's fee, which shall include attorney's fees at the trial level and on appeal, together with all reasonable costs incurred.

After maturity or default, the Note shall bear interest at the highest rate permitted under then applicable law; provided, however, in the event said highest rate is otherwise indeterminable, the parties agree that the applicable rate shall be eighteen percent (18%) per annum; provided further, however, that in no event shall such rate exceed the highest rate permissible under the applicable law.

Provided Payee has not exercised its right to accelerate the Note as hereinabove provided, in the event any required payment on the Note is not received by Payee within three (3) days after said payment is due, Maker shall pay Payee a late charge of eight percent (8%) of the payment not so received, the parties agreeing that said charge is a fair and reasonable charge for the late payment and shall not be deemed a penalty.

No delay or omission on the part of the Payee in exercising any right, privilege or remedy shall impair such right, privilege or remedy or be construed as a waiver thereof or of any other right, privilege or remedy. No waiver of any right, privilege or remedy or any amendment to the Note shall be effective unless made in writing and signed by the Payee. Under no circumstances shall an effective waiver of any right, privilege or remedy on any one occasion constitute or be construed as a bar to the exercise of or a waiver of such right, privilege or remedy on any future occasion. The acceptance by the Payee hereof of any payment after any default hereunder shall not operate to extend the time of payment of any amount then remaining unpaid hereunder or constitute a waiver of any rights of the Payee hereof under the Note. The unenforceability or invalidity of any provision of this Note as to any person or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable.

All rights and remedies of the Payee, whether granted herein or otherwise, shall be cumulative and may be exercised singularly or concurrently, and the Payee shall have, in addition to all other rights and remedies, the rights and remedies of a secured party under the Uniform Commercial Code of Florida. The Payee shall have no duty as to the collection or protection of the Collateral (as defined in the Security Agreement) or of any income thereon, or as to the preservation of any rights pertaining thereto beyond the safe custody thereof. Surrender of the Note, upon payment or otherwise, shall not affect the right of the Payee to retain the Collateral (as defined in the Security Agreement) as security for the payment and performance of any liability of the undersigned to the Payee.

All persons now or at any time liable for payment of the Note hereby waive presentment, protest, notice of protest, and notice of dishonor. The Maker expressly consents to any extensions and renewals of the Note, in whole or in part, and all delays in time of payment or other performance under the Note which Payee may grant at any time and from time to time, without limitation and without any notice or further consent of the Maker.

The Maker and such other parties authorize and employ the Payee, in its sole discretion, at any time after the occurrence of a default hereunder to appropriate and, in such order as the Payee may elect, apply any such money, deposits or property to the payment hereof or to the payment of any and all indebtedness, liabilities and obligations of such parties to the Payee or any of the Payee's affiliates, whether now existing or hereafter created or arising or now owned or howsoever after acquired by the Payee or any of the Payee's affiliates (whether such indebtedness, liabilities and obligations are or will be joint or several, direct or indirect, absolute or contingent, liquidated or unliquidated, matured or unmatured).

The Note and the provisions hereof shall be binding upon the Maker and the Maker’s administrators, successors, and assigns and shall inure to the benefit of the Payee, the Payee’s administrators, successors, and assigns. The Maker may not assign its rights or obligations under the Note.

The Note may not be amended, changed or modified in any respect except by a written document that has been executed by each party. The Note is to be construed according to the applicable laws of the State of Florida, without regard to its conflicts of law principles. Any action brought upon the enforcement of this Note is hereby authorized to be instituted and prosecuted in the state and federal courts located in Palm Beach County, Florida, at Payee’s election.

In any action or proceeding in connection with or to enforce this Note, the Maker irrevocably consents to and confers personal jurisdiction on the courts of the State of Florida, or the United States courts located within the State of Florida, in the county of Palm Beach, expressly waives any objections as to venue in any of such courts, and agrees that service of process may be made on him by mailing a copy of the summons and complaint by registered or certified mail, return receipt requested, to his address set forth herein (or otherwise expressly provided in writing). Alternatively, in any such action or proceeding in any such court, service of any legal process may be made upon the Maker or any other obligor (regardless of any other appointment by such person of any other process agent) by mailing or delivery of such process to such person, or such other agent which such person may have appointed and the Maker has approved as the person’s agent for these purposes. The Maker hereby irrevocably waives, to the fullest extent he may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. Nothing contained herein shall, however, prevent the Payee from bringing any action or exercising any rights within any other state or jurisdiction or from obtaining personal jurisdiction by any other means available by applicable law.

MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT MAKER, OR ANY OTHER PERSON MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THE NOTE AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PAYEE ACCEPTING THIS NOTE.

IN WITNESS WHEREOF, the undersigned has executed this Note on the date set forth above.

	POSITIVEID CORPORATION


	By:	/s/Allison Tomek
	Name:	Allison Tomek
	Title:	Secretary

Exhibit 10.12

SECURITY AGREEMENT

This is a Security Agreement (the “Security Agreement”), dated September 7, 2012, between PositiveID Corporation, a Delaware corporation (the “Debtor”) and William J. Caragol, Jr. (the “Secured Party”).

BACKGROUND

Debtor has issued to the Secured Party a promissory note, dated September 7, 2012, between the Secured Party and Debtor, in the principal amount of Two Hundred Thousand Dollars ($200,000.00) (the “Note”), secured by a subordinated security interest in all of the assets of the Debtor (subject to the prior-perfected, and first-priority security interest in all of the assets of Debtor in favor of Holland & Knight LLP) (collectively, the “Senior Lender”); and

Pursuant to the terms herein, this Security Agreement secures the obligation of Debtor to satisfy Debtor’s obligations under the Note. Accordingly, in consideration of the mutual covenants and agreements set forth below, the parties agree as follows:

TERMS

1. Grant of Security Interest.

a. For good and valuable consideration received, the sufficiency of which is hereby acknowledged and agreed, in order to secure Debtor’s (a) performance under the Note and (b) payment of all costs and expenses, including attorney’s fees, incurred in connection with realizing the value of the security provided by this Security Agreement following an Event of Default (as defined herein) (collectively, the “Liabilities”), Debtor grants to the Secured Party a first lien and first priority security interest (the “Security Interest”) in all of Debtor’s assets, including, but not limited to, collateral, accounts receivable, chattel paper, instruments, documents, inventory, equipment, general intangibles, intellectual property (to include all patents, patents pending, copyrights and trademarks), and all other present and future tangible and intangible property of Debtor, whether now owned or existing or hereafter acquired or arising, including additions, accessions and substitutions thereof, and all cash and non-cash proceeds and products thereof (collectively, the “Collateral”). This Security Interest given to Secured Party shall also attach to all replacements and proceeds and all proceeds of any sale or transfers of the Collateral.

2. Assurances; Covenants. Debtor hereby agrees that:

a. (i) The Collateral is and will be free of all liens and security interests of every kind and nature, except as may be in effect on the date hereof or have been the result of actions of the Secured Party; (ii) Debtor will not assign, transfer, sell, convey, hypothecate, pledge, or in any other way dispose of or encumber the Collateral while this Security Agreement is in effect; and (iii) Debtor will warrant and defend the Collateral and the Secured Party’s Security Interest against the claims and demands of all persons.

b. Debtor will not, without the prior written consent of the Secured Party, borrow from anyone on the security of the Collateral, or otherwise permit any liens, encumbrances, security interests, or adverse claims against the Collateral, and will not permit the Collateral to be levied upon under any legal process.

c. Debtor authorizes the Secured Party to file financing statements, including amendments or continuations thereof, describing the Collateral, and from time to time at the request of the Secured Party, will execute such other documents, and will do such other acts and things, all as the Secured Party may reasonably request, to establish and maintain a valid first, perfected security interest in the Collateral and to enable the Secured Party to enforce its rights and remedies hereunder with respect to the Collateral. Notwithstanding the foregoing, Debtor agrees to file the financing statement describing the Collateral and perfecting Secured Party’s Security Interest promptly following the execution of this Security Agreement with the appropriate state recording officer. Debtor shall deliver to the Secured Party filed marked and date stamped copies of the financing statements within three (3) calendar days from the day Debtor receives them from the state recording office.

3 . Representations and Warranties. Debtor represents and warrants to the Secured Party as follows:

a. Debtor is a corporation duly organized, validly existing, and in good standing and active status under the laws of the state of Delaware;

b. Debtor has all requisite power to own and operate its properties and to carry on its business as now being conducted, and has all necessary rights to conduct its business;

d. None of the equipment or inventory constituting part of the Collateral pursuant to this Security Agreement is or will be located in or on any premises other than at the principal place of business of Debtor as disclosed in subparagraph (e).

e. The principal place of business and chief executive office of Debtor is located as follows: 1690 South Congress Avenue, Suite 200, Delray Beach, Florida 33445;

f. The execution, delivery, and performance by Debtor of this Security Agreement will not (i) contravene, conflict with, result in the breach of, or constitute a violation of or default under the organizational documents of Debtor, any applicable law, rule, regulation, judgment, order, writ, injunction, or decree of any court or governmental authority, or any agreement or instrument to which Debtor is a party or by which Debtor or its property may be bound or affected, or (ii) result in the creation of any lien, charge, or encumbrance upon any property or assets of Debtor pursuant to any of the foregoing, except the liens created by this Security Agreement;

g. Debtor has granted a first priority security interest in the Collateral to Holland & Knight in the principal amount of $849,510.

h. This Security Agreement constitutes a legal, valid, and binding agreement enforceable against Debtor and the Collateral in accordance with its terms and, without limiting the foregoing, this Security Agreement grants the Secured Party a valid, perfected, Security Interest in the Collateral, subordinate only to the first priority security interest referred to in 3.g. above; and

i. Debtor is the owner of and has good and marketable title to all of the Collateral, free and clear of all liens, encumbrances, security interests, and adverse claims whatsoever. None of the Collateral is subject to any prohibition against encumbering, pledging, hypothecating or assigning same or requires notice or consent in connection therewith, other than the H&K first security position referred to in 3.g. above.

4. Additional Covenants. Debtor hereby further covenants and agrees that, until full and final payment of and performance under the Note, Debtor shall, unless Secured Party shall otherwise consent in writing:

(i)

in form and substance reasonably satisfactory to Secured Party;

(ii)

for such insured values as Secured Party may reasonably require in order to replace the property in the event of actual or constructive total loss;

(iii)

designating Secured Party and its assignees as additional co-insureds or loss payees as their interests may appear from time to time;

(iv)

(v)

requiring at least thirty (30) days prior written notice to Secured Party and his assigns before cancellation or any material change shall be effective.

Upon execution hereof, Debtor shall deliver to Secured Party a certificate of insurance evidencing insurance required by this Section 4, together with evidence of payment of all premiums therefor and adding Secured Party as an additional insured thereon. In the event of loss or damage, Debtor shall forthwith notify Secured Party and file proofs of loss satisfactory to Secured Party with the appropriate insurer, and forthwith upon receipt, endorse and deliver insurance proceeds to Secured Party.

b. Change of Name or Business . Immediately notify Secured Party if there is any change in the location of (i) books and records relative to the accounts and inventory stated in subsection 3(e) of this Security Agreement; (ii) any equipment constituting part of the Collateral if it becomes located in or on any premises other than those identified in subsection 3(e) of this Security Agreement; (iii) the principal place of business or chief executive office of Debtor stated in subsection 3(e) of this Security Agreement; or (iv) Debtor conducts any of their business or operations in or from any new office or location.

e. Settlements Relating to Collateral . Not compromise, settle or adjust any claim in a material amount relating to the Collateral, other than in Debtor’s ordinary course of business.

f. Removal of Collateral . Not remove, or cause or permit to be removed, any of the Collateral from their present location except for sales in the ordinary course of business.

g. Change of Location or Name . Not change any of the following: (i) the location of the principal place of business or chief executive office of Debtor; or (ii) the name under which Debtor conducts any of its business or operations.

d. If Debtor is declared to be in default of any loan or other obligation to any other secured party (and such default continues beyond the expiration of any applicable grace or cure period).

In the event that Debtor substantially cures such default within the applicable cure period, such default shall not constitute an Event of Default.

6. Remedies Upon the Occurrence of an Event of a Default.

a. Subject to the subordination of this security interest to the security interest of the Senior Lender. Upon the occurrence and continuance of an Event of Default under this Security Agreement, the Secured Party will have the right at any time and from time to time, without further notice or demand to Debtor to exercise the rights and remedies upon default that are granted to a secured party under the Uniform Commercial Code and/or that are otherwise available to the Secured Party under this Security Agreement or otherwise available to secured creditors at law and/or in equity under applicable law, including without limitation:

(ii) Receive and endorse the name of Debtor upon any instruments of payment (including payments made under any policy of insurance) that may come into the possession of the Secured Party;

b. Upon the occurrence or continuation of an Event of Default:

(i) the Secured Party may require Debtor, at Debtor’s expense, to marshal and assemble the Collateral and make it available to the Secured Party at a place to be designated by the Secured Party, which is reasonable and convenient to all parties.

(ii) Secured Party may, with or without judicial process, sell, lease or otherwise dispose of, in a commercially reasonable manner, any or all of the collateral at public or private sale or proceedings, by one or more contracts, in one or more parcels, at the same or different times and places, with or without having the Collateral at the place of sale or other disposition, to such persons or entities, for cash or credit or for future delivery, and upon such other terms, as Secured Party may in its discretion deem best in each such matter. The purchaser of any of the Collateral at any such sale shall hold the same free of any equity of redemption or other right or claim of Debtor all of which, together with all rights of stay, exemption or appraisal under any statute or other law now or hereafter in effect, Debtor hereby unconditionally waives to the fullest extent permitted by law. If any of the collateral is sold on credit or for future delivery, Secured Party shall not be liable for the failure of the purchaser to pay for same and, in the event of such failure, Secured Party may resell such Collateral.

(iii) Debtor hereby further agrees that notice of the time after which any private sale or other intended disposition or action relating to any of the Collateral is to be made or taken, shall be deemed commercially reasonable notice thereof, and shall satisfy the requirements of any applicable statute or other law, if such notice is delivered or mailed not less than five (5) business days prior to the date of the sale, disposition or other action to which the notice is related. Secured Party shall not be obligated to make any sale or other disposition or take other action pursuant to such notice and may, without other notice or publication, adjourn or postpone any public or private sale or other disposition or action by announcement at the time and place fixed therefor, and such sale, disposition or action may be held or accomplished at any time or place to which the same may be so adjourned or postponed.

(iv) Secured Party may at its discretion retain any or all of the Collateral and apply the retained Collateral in satisfaction of part or all of the Note.

(v) Any cash proceeds of sale, lease or other disposition of Collateral shall be applied as follows:

Second : Any surplus then remaining to the payment of interest and then principal of the Note, in such order as Secured Party elects; and

Third : Any surplus then remaining to Debtor or whomever may be lawfully entitled thereto.

b. The net proceeds realized by the Secured Party upon a sale or other disposition of the Collateral, or any part thereof, after deduction of the expenses of retaking, holding, preparing for sale, selling or the like, and reasonable attorneys’ fees and other expenses incurred by the Secured Party, shall be applied to payment of (or held as a reserve against) the Liabilities, whether or not then due, and in such order of application as the Secured Party may from time to time elect.

7. Termination . This Security Agreement and the Security Interest granted pursuant to this Security Agreement shall immediately terminate when the Note and any accrued but unpaid interest thereon has been paid in full. Upon such termination, Debtor may take any action and file all documents necessary to terminate all effective financing statements in the Secured Party’s favor that are then on file or recorded with respect to the Collateral described in this Security Agreement. Secured Party will agree to sign any reasonably required and reasonable documents within 3 business days of termination of this Security Agreement.

12. Waiver. The failure of any party to insist in any one or more instances upon performance of any terms or conditions of this Security Agreement shall not be construed as a waiver of future performance of any such term, covenant, or condition, and the obligations of either party with respect to such term, covenant, or condition shall continue in full force and effect.

13. Entire Agreement. This Security Agreement contains the final, complete, and exclusive expression of the understanding of Debtor and the Secured Party with respect to the transactions contemplated in this Security Agreement, and supersedes any prior or other contemporaneous agreement or representation by or among the parties related to the subject matter of this Security Agreement.

If to Debtor:

1690 South Congress Avenue, Suite 200

Delray Beach, Florida 33445

Attn: Allison Tomek

If to the Secured Party:

William J. Caragol

6357 NW 33 rd Ave.

Boca Raton, Florida 33496

16 Governing Law/Venue. The validity, construction, enforcement, and interpretation of this Security Agreement are governed by the laws of the State of Florida and the federal laws of the United States of America, excluding the laws of those jurisdictions pertaining to resolution of conflicts with laws of other jurisdictions. The Debtor and the Secured Party (a) consent to the personal jurisdiction of the state and federal courts having jurisdiction in Palm Beach County, Florida, (b) stipulate that the proper, exclusive, and convenient venue for any legal proceeding arising out of this Security Agreement is Palm Beach County, Florida, for state court proceedings, and the Southern District of Florida, for federal district court proceedings, and (c) waive any defense, whether asserted by a motion or pleading, that Palm Beach County, Florida, or the Southern District of Florida, is an improper or inconvenient venue.

17. Relationship. This Security Agreement does not create or evidence a partnership or joint venture between Debtor and the Secured Party.

18. Interpretation. Neither this Security Agreement nor any uncertainty or ambiguity in this Security Agreement shall be construed or resolved against any party, whether under any rule of construction or otherwise. No party to this Security Agreement shall be considered the draftsman. The parties acknowledge and agree that this Security Agreement has been reviewed, negotiated, and accepted by all the parties and their attorneys and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties.

19. Time. Time shall be of the essence with respect to all of the provisions of this Security Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Security Agreement as of the date and year first above written.

	POSITIVEID CORPORATION


	By:	/s/Allison Tomek
	Name:	Allison Tomek
	Title:	Secretary

	SECURED PARTY


	By:	/s/ William J. Caragol
	Name:	William J. Caragol

Exhibit 10.13

PURCHASE AGREEMENT

This Purchase Agreement (this “ Agreement ”) is made and entered into as of September 12, 2012, by and between PositiveID Corporation, a Delaware corporation (the “ Company ”), and Ironridge Technology Co., a division of Ironridge Global IV, Ltd., a British Virgin Islands business company (the “ Purchaser ”).

Recitals

A. The parties made and entered into a Preferred Stock Purchase Agreement (“ SPA ”) as of July 27, 2011. Capitalized terms used in this Agreement and not otherwise defined shall have the meanings ascribed to them in the SPA.

B. Pursuant to Section I.G.3.c of the Certificate of Designations, Company was required to issue an additional number of Conversion Shares to Purchaser on August 9, 2012, in connection with a Corporation Conversion Notice, and Company did not do so until September 6, 2012.

C. The parties desire to resolve all issues between them in relation to the foregoing, in accordance with the terms of this Agreement.

Agreement

In consideration of the foregoing, and the promises and covenants herein contained, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the Company and Purchaser, intending to be legally bound, hereby agree as follows:

ARTICLE I.

SHARE ISSUANCE

1.1 In full and complete satisfaction of any and all liability of Company in connection with any alleged breach or default arising out of or relating to any alleged failure to timely issue Conversion Shares pursuant to the SPA, the Company shall promptly issue to Purchaser 100 shares of Series F Preferred Stock (the “ Series F Preferred Stock ”) of Company (the “ Shares ”).

1.2 This Agreement shall constitute the Preferred Stock Purchase Agreement pursuant to which the Shares are issued to the Purchaser, and the “ Announcement Date ” with respect to a share of Series F Preferred Stock shall mean the Trading Day immediately following that Trading Day, during the 20 Trading Day period immediately following the date of receipt of a Conversion Notice with respect to such share of Series F Preferred Stock, on which the Closing Price of a share of Common Stock is closest to, without going over, the arithmetic average of the individual daily volume weighted average prices for the lowest three Trading Days during such 20 Trading Day period, as reported by Bloomberg.

ARTICLE II.

REPRESENTATIONS AND WARRANTIES

2.1 Representations and Warranties of the Company . The Company hereby represents and warrants to, and as applicable covenants with, Purchaser as of the date hereof:

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(a) Organization and Qualification . The Company is an entity duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation or default of any of the provisions of its certificate of incorporation, bylaws or other organizational or charter documents.

(b) Authorization; Enforcement . The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further consent or action is required by the Company. This Agreement has been, or upon delivery will be, duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except (a) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (c) insofar as indemnification and contribution provisions may be limited by applicable law .

(c) No Conflicts . The execution, delivery and performance of this Agreement by Company, the issuance and sale of the Shares, and the shares of Common Stock into which they are convertible (the “ Conversion Shares ,” and collectively with the Shares, the “ Securities ”), and the consummation by the Company of the other transactions contemplated hereby do not and will not (a) conflict with or violate any provision of the Company’s certificate of incorporation, bylaws or other organizational or charter documents, or (b) conflict with or result in a violation of any material law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of Company is bound or affected, except in the case of clause (b), such as could not have or reasonably be expected to result in a Material Adverse Effect.

(d) Litigation . T here is no action, suit, inquiry, notice of violation, Proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign), which could adversely affect or challenges the legality, validity or enforceability of this Agreement or the Securities.

(e) Filings, Consents and Approvals . The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of this Agreement, other than the required federal and state securities filings and such filings and approvals as are required to be made or obtained under the applicable Trading Market rules in connection with the transactions contemplated hereby, each of which has been, or if not yet required to be filed will be, timely filed.

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(f) Issuance of the Shares . The Securities are duly authorized and, when issued in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. The Company will reserve from its duly authorized capital stock a number of shares of Common Stock for issuance of the Conversion Shares at least equal to the number of Conversion Shares which could be issued pursuant to the terms of the Shares.

(g) Disclosure; Non-Public Information . Except with respect to the information that will be, and to the extent that it actually is timely publicly disclosed by the Company, and notwithstanding any other provision, neither the Company nor any other Person acting on its behalf has provided Purchaser or its agents or counsel with any information that constitutes or might constitute material, non-public information, including without limitation this Agreement. There is no adverse material information regarding the Company that has not been publicly disclosed prior to the date of this Agreement. The Company understands and confirms that Purchaser will rely on the foregoing representations and covenants in effecting transactions in securities of Company.

(h) No Integrated Offering . Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company that cause a violation of the Securities Act or any applicable stockholder approval provisions.

(i) Private Placement . Assuming the accuracy of the Purchaser representations and warranties set forth in Section 2.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser as contemplated hereby.

(j) No General Solicitation . Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Shares by any form of general solicitation or general advertising. The Company has offered the Shares for sale only to the Purchaser.

(k) Investment Company . The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Shares, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company will conduct its business in a manner so that it will not become subject to the Investment Company Act.

2.2 Representations and Warranties of the Purchaser . Purchaser hereby represents and warrants as of the date hereof to the Company as follows:

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(a) Organization; Authority . Purchaser is an entity validly existing and in good standing under the laws of the jurisdiction of its organization with full right, company power and authority to enter into and to consummate the transactions contemplated by the Agreement and otherwise to carry out its obligations thereunder. The execution, delivery and performance by Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary company or similar action on the part of Purchaser. This Agreement has been, or will be, duly executed by Purchaser, and when delivered by Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of Purchaser, enforceable against it in accordance with its terms, except (a) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies, and (c) insofar as indemnification and contribution provisions may be limited by applicable law.

(b) Own Account . Purchaser understands that the Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Shares in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Shares (this representation and warranty not limiting the Purchaser’s right to sell the Shares pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws) in violation of the Securities Act or any applicable state securities law. Purchaser is acquiring the Shares hereunder in the ordinary course of its business.

(c) Purchaser Status . At the time the Purchaser was offered the Shares, it was, and on the date hereof it is, either: (i) an “accredited investor” as defined in Rule 501(a) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

(d) Experience of Purchaser . Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment. Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

(e) General Solicitation . Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

(f) Short Sales . The Purchaser has never maintained a short position in the Common Stock and does not currently maintain a short position in the Common Stock. For so long as the Purchaser holds any Shares, the Purchaser will not effect any Short Sale that would create a net short position for the Purchaser.

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ARTICLE III.

OTHER AGREEMENTS OF THE PARTIES

3.1 Transfer Restrictions .

(a) The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of the Purchaser under this Agreement, as to issued Securities only.

(b) The Purchaser agrees to the imprinting, so long as is required by this Section 3.1, of a legend on any of the Securities in the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

(c) Certificates evidencing the Conversion Shares shall not contain any legend (including the legend set forth in Section 3.1(b)), (i) while a registration statement covering the resale of such Conversion Shares is effective under the Securities Act, or (ii) following any sale of Conversion Shares pursuant to Rule 144, or (iii) if such Conversion Shares are eligible for sale under Rule 144 by a non-Affiliate of the Company without restriction, or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Company’s transfer agent promptly after a legend is no longer required if required by the Company’s transfer agent to effect the removal of the legend hereunder. The Company agrees that at such time as such legend is no longer required under this Section 3.1(c), it will, no later than 3 Trading Days following the delivery by the Purchaser to the Company or the Company’s transfer agent of a certificate representing Conversion Shares issued with a restrictive legend (such third Trading Day, the “ Legend Removal Date ”), deliver or cause to be delivered to the Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section. Certificates for Conversion Shares subject to legend removal hereunder shall be transmitted by the transfer agent of the Company to the Purchaser by crediting the account of the Purchaser’s prime broker with the DTC system.

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(d) In addition to the Purchaser’s other available remedies, the Company shall pay to the Purchaser, in cash, as partial liquidated damages and not as a penalty, for each $1,000 of Securities (based on the Closing Price of the Common Stock on the date such Securities are submitted to the Company’s transfer agent) delivered for removal of the restrictive legend and subject to Section 3.1(c), the lesser of (i) $10 per Trading Day (increasing to $20 per Trading Day, 5 Trading Days after such damages have begun to accrue) for each Trading Day after the Legend Removal Date until such certificate is delivered without a legend, and (ii) the difference in the VWAP of the Common Stock on the Legend Removal Date and on the date the certificate is delivered without a legend; provided, however, that such delay in the legend removal is the direct result of the actions of the Company and provided further, that the VWAP of the Common Stock has decreased from the Legend Removal Date to the date the certificate is delivered without the legend. Nothing herein shall limit the Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required by the Transaction Documents, and the Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

(e) Purchaser agrees that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 3.1 is predicated upon the Company’s reliance that the Purchaser will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein.

3.2 Furnishing of Information . As long as Purchaser owns any Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. As long as the Purchaser owns any Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchaser and make publicly available in accordance with Rule 144(c) such information as is required for the Purchaser to sell the Securities under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act within the requirements of the exemption provided by Rule 144.

3.3 Integration . The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchaser or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require stockholder approval prior to the closing of such other transaction unless stockholder approval is obtained before the closing of such subsequent transaction.

3.4 Shareholder Rights Plan . No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that the Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchaser.

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3.5 Non-Public Information . Except with respect to the material terms and conditions of the transactions contemplated by this Agreement, the Company covenants and agrees that neither it nor any other Person acting on its behalf will provide the Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information. The Company understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions in securities of the Company.

3.6 Indemnification of Purchaser . Subject to the provisions of this Section 3.6, the Company will indemnify and hold the Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “ Purchaser Party ”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any the Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser, or any of its Affiliates, by any stockholder of the Company who is not an Affiliate of the Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of the Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings the Purchaser may have with any such stockholder or any violations by the Purchaser of state or federal securities laws or any conduct by the Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, the Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of the Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (i) for any settlement by the Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by the Purchaser Party in this Agreement or in the other Transaction Documents.

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3.7 Reservation of Common Stock . The Company will reserve and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue the Conversion Shares pursuant to this Agreement.

3.8 L isting of Common Stock . The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common Stock on a Trading Market, and as soon as reasonably practicable to list or quote all of the Conversion Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will include in such application all of the Conversion Shares, and will take such other action as is necessary to cause all of the Conversion Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

ARTICLE IV.

MISCELLANEOUS

4.1 Fees and Expenses . Except as otherwise provided in this Agreement, each party will pay the fees and expenses of its own advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of the Transaction Documents. The Company acknowledges and agrees that Purchaser’s counsel solely represents Purchaser, and does not represent the Company or its interests in connection with the Transaction Documents or the transactions contemplated thereby. The Company will pay all stamp and other taxes and duties levied in connection with the sale of the Shares, if any.

4.2 Notice . Unless a different time of day or method of delivery is set forth in the Transaction Documents, any and all notices or other communications or deliveries required or permitted to be provided hereunder will be in writing and will be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile prior to 5:00 pm (New York time) on a Trading Day and an electronic confirmation of delivery is received by the sender, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered later than 5:00 pm (New York time) or on a day that is not a Trading Day, (c) the next Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses for such notices and communications are those set below, or such other address as may be designated in writing hereafter, in the same manner, by such Person.

If to Purchaser:		If to the Company:

Ironridge Technology Co.		PositiveID Corporation
Harbour House, Waterfront Drive		1690 South Congress Avenue
PO Box 972, Road Town		Suite 200
Tortola, British Virgin Islands		Delray Beach, Florida 33445
Attn: David Sims		Attn: William J. Caragol
Facsimile: 284-494-4771		Facsimile: 561-805-8001

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4.3 Amendments; Waivers . No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment or waiver, by the Company and Purchaser. No waiver of any default with respect to any provision, condition or requirement of this Agreement will be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor will any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

4.4 Headings . The headings herein are for convenience only, do not constitute a part of this Agreement and will not be deemed to limit or affect any of the provisions hereof.

4.5 Successors and Assigns . This Agreement will be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of Purchaser, which consent will not be unreasonably withheld. Purchaser may not assign its rights under this Agreement.

4.6 No Third-Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 3.6.

4.7 Governing Law . All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents will be governed by and construed and enforced in accordance with the laws of the State of New York, without regard to the principles of conflicts of law that would require or permit the application of the laws of any other jurisdiction. The parties hereby waive all rights to a trial by jury. If either party will commence an action or Proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding will be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses reasonably incurred in connection with the investigation, preparation and prosecution of such action or proceeding.

4.8 Survival . The representations and warranties contained herein shall survive each Closing and the delivery of the Shares for a period of one (1) year.

4.9 Execution . This Agreement may be executed in two or more counterparts, all of which when taken together will be considered one and the same agreement and will become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by portable document format, facsimile or electronic transmission, such signature will create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.

4.10 Severability . If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement will not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, will incorporate such substitute provision in this Agreement.

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4.11 Replacement of Securities . If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, Company will issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances will also pay any reasonable third-party costs associated with the issuance of such replacement certificates.

4.12 Arbitration . Any dispute, controversy, claim or action of any kind arising out of or relating to this Agreement, or in any way involving the Company and Purchaser or their respective Affiliates, will be resolved by final and binding arbitration before a retired judge at JAMS (www.jamsadr.com), or its successor, in Santa Monica, pursuant to its most Streamlined Arbitration Rules and Procedures and the Final Offer (or Baseball) Arbitration Option. Any interim or final award may be entered and enforced by any court of competent jurisdiction. The final award will include the prevailing party’s reasonable arbitration, expert witness and attorney fees, costs and expenses.

4.13 Remedies . In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of Purchaser and the Company will be entitled to specific performance under the Transaction Documents, and injunctive relief to prevent any actual or threatened breach under the Transaction Documents, to the full extent permitted under federal and state securities laws.

4.14 Payment Set Aside . To the extent that the Company makes a payment or payments to Purchaser pursuant to any Transaction Document or Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law, including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action, then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied will be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

4.15 Time of the Essence . Time is of the essence with respect to all provisions of the Transaction Documents that specify a time for performance.

4.16 Construction . The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party will not be employed in the interpretation of the Transaction Documents or any amendments hereto. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

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4.17 Entire Agreement . This Agreement contains the entire agreement and understanding of the parties, and supersedes all prior and contemporaneous agreements, term sheets, letters, discussions, communications and understandings, both oral and written, which the parties acknowledge have been merged into this Agreement. No party, representative, attorney or agent has relied upon any collateral contract, agreement, assurance, promise, understanding or representation not expressly set forth hereinabove. The parties hereby expressly waive all rights and remedies, at law and in equity, directly or indirectly arising out of or relating to, or which may arise as a result of, any Person’s reliance on any such assurance.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Company:

POSITIVEID CORPORATION

By:	/s/ Bryan Happ
Name:	Bryan Happ
Title:	Chief Financial Officer

Purchaser:

IRONRIDGE TECHNOLOGY CO.,

a division of IRONRIDGE GLOBAL IV, LTD.

By:	/s/ Peter Cooper
Name:	Peter Cooper
Title:	Director

Page 11

Exhibit 10.14

SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (this "Agreement") is being entered into between PositiveID Corporation, a Delaware corporation (the "Company") and Bryan D. Happ ("Employee") as of the date of Employee's execution of this Agreement.

WHEREAS , the Company and Employee entered into an Employment and Non-Compete Agreement dated September 30, 2011 (the "Employment Agreement");

WHEREAS , Employee has been employed by the Company since July 2011 and has been Chief Financial Officer since August 2011;

WHEREAS , the Employment Agreement shall be terminated as provided below; and

NOW, THEREFORE, Employee and the Company agree as follows:

1. Employee's Termination .

A. Employee acknowledges the termination of his employment from any and all positions within the Company or any of its subsidiaries or affiliates, as an employee, director and officer, effective as of September 28, 2012 (the "Separation Date"). Employee understands that, except as expressly provided in this Agreement, he is giving up any right or claim to compensation or benefits of employment with the Company beyond the Separation Date.

B. Employee agrees that he has returned to the Company all property (including keys, access cards, computer software, etc.) and documents (including all copies of documents) which Employee obtained from the Company or from any of its subsidiaries, affiliates, customers, or vendors. Notwithstanding the foregoing, employee shall be entitled to retain his laptop computer and related peripherals.

C. Employee covenants that he will not make any malicious, disparaging or false remarks about the Company. Employee further agrees to refrain from making any negative statements regarding the Company to any third parties or any statements which could be construed as having or causing a diminishing effect on the Company's reputation, goodwill or business. The Company covenants that none of its officers or directors will make any malicious, disparaging, or false remarks about Employee. The Company further agrees to refrain from making any negative statements regarding Employee to any third parties or any statements which could be construed as having or causing a diminishing effect on Employee’s reputation.

2. The Company's Obligations to Employee .

A. The Company will pay to or provide to Employee the following:

i. A payment of $404,423.16 (the "Compensation"), which is equal to the amount of accrued and unpaid salary and bonus through September 7, 2012 in the amount of $115,423.16 plus termination compensation representing one year of salary and annualized bonus in the amount of $289,000 and which Compensation shall be payable as follows:

(1) Of the Compensation, $100,000 will be paid in common stock of the Company and $304,423.16 will be paid in cash.

(2) The cash balance of $304,423.16 will be repaid as follows:

(a) $3,700 per pay period on the normal bi-weekly Company payroll cycle, commencing with the pay period ending October 5, 2012. To the extent that any cash obligation remains as of December 31, 2014, the remaining obligation will be satisfied in full on December 31, 2014;

(b) If the Company closes a secured debt transaction and the gross proceeds of such transaction exceed $2.5 million and the Compensation has not yet been paid in full, Employee will receive an accelerated payment of $70,000. To the extent the gross proceeds are less than $2.5 million, the acceleration payment will be reduced pro rata. For example, if the gross proceeds are $2.0 million, Employee will receive an accelerated payment of $56,000. Any such accelerated payment hereunder will be paid within five (5) days of closing of the transaction. Notwithstanding the foregoing, no accelerated payments will be due until at least $1.0 million of gross proceeds has been received by the Company under a secured debt transaction, or series of transactions;

(c) If the Company receives proceeds from a debt transaction in addition to the secured debt transaction referenced above, an equity transaction (other than an equity line drawdown), an exclusive or non-exclusive license, a joint venture investment, or any other strategic transaction or investment, and the Compensation has not yet been paid in full, Employee will receive an accelerated payment equal to 8% of any gross proceeds within five (5) days of closing of the transaction. Gross proceeds from any such additional debt transaction will be calculated net of any debt repayments;

(d) If the Company raises a cumulative $4.5 million of gross proceeds from any sources (inclusive of subsections (b) and (c) herein), any remaining Compensation owed to Employee will be paid in full within five (5) days of closing of the transaction resulting in such cumulative proceeds; and

(e) Cash payments hereunder will cease when the cumulative payments have reached $304,423.16.

ii. COBRA Payments/Benefits . For up to twelve (12) months following the Separation Date, the Company agrees to pay the premiums for Employee’s continued health and dental insurance coverage under the provisions of the Comprehensive Omnibus Budget Reform Act (“COBRA”). At the end of such twelve-month period, Employee shall be solely responsible for making any required COBRA payments to continue Employee’s health insurance coverage. Employee agrees that the Company’s obligation to make the payments required by this Section 2(A)(ii) during the twelve-month period following the Separation Date shall immediately terminate upon the date that Employee becomes eligible under a comparable, employer-paid health and/or dental insurance plan of Employee’s new employer. For up to the earlier of twelve (12) months following the Separation Date or until such time as Employee becomes eligible for such other comparable, employer-paid benefits from another employer, the Company shall utilize its commercially reasonable efforts to obtain and maintain, at its sole cost and expense, such other benefits, including group term life, AD&D and disability insurance coverage consistent with the benefits provided to other executives of the Company; provided, however, that the Company shall not be required to provide and/or reimburse Employee for supplemental long-term disability insurance coverage to Employee after December 31, 2012 if the Company no longer offers such insurance to other executives after such date.

iii. Exercisability of Stock Options . The following outstanding stock options currently held by Employee shall become immediately vested and exercisable as of the Separation Date and remain exercisable for the life of the options:

900,000 options granted on August 31, 2011 with an exercise price of $0.23 per share;

150,000 options granted on April 24, 2012 with an exercise price of $0.07 per share; and

1,350,000 options granted on June 6, 2012 with an exercise price of $0.04 per share.

iv. The $100,000 owed in stock will be settled through the issuance of 5,000,000 shares of the Company’s common stock (price of $0.02 per share) on the Separation Date. Employee understands that the Chief Executive Officer may be converting certain accrued and unpaid salary amounts owed to him during 2012. To the extent that the price of the shares of the Company’s common stock issued to the Chief Executive Officer in connection with such conversion is less than $0.02 per share, Employee will receive additional shares of common stock such that the $100,000 liability will have been settled at the same price as the Chief Executive Officer of the Company. The shares will be restricted shares, and Employee agrees to vote those shares in accordance with the recommendation of the Board of Directors on any matter validly brought before any annual or special meeting of stockholders, or execute a written consent or consents if stockholders of the Company are requested to vote their shares through the execution of an action by written consent in lieu of any such annual or special meeting of stockholders of the Company, for as long as Employee beneficially owns such shares.

B. With the exception of any financial obligations of the Company under that certain Indemnification Agreement between the Company and Employee dated May 15, 2012 (the “Indemnification Agreement”), which remains in full force and effect and is neither superseded, extinguished, compromised, nor invalidated by this Agreement, the payments set forth in Section 2A of this Agreement are the sole and exclusive financial obligations of the Company to Employee under this Agreement or otherwise in connection with Employee's employment or termination of his employment.

C. The Company shall withhold from any payment or benefit under this Section 2 of this Agreement any and all withholding taxes as are required by applicable law, and to otherwise take all actions it believes necessary to satisfy its obligations to pay such withholding taxes.

3. Employee' release of the Company .

A. Employee agrees to and hereby does freely, finally, fully and forever release and discharge the "Company Releasees", consisting of the Company, its subsidiary and affiliate corporations, and each of their respective past and present parents, subsidiaries, affiliates, associates, owners, directors, officers, employees, accountants, representatives, attorneys and all persons acting by, through, under, or in concert with them, or any of them, from any and all claims, charges, actions and causes of action of any kind or nature that Employee once had or now has against the Company Releasees (hereinafter called the "Claims"), including any and all claims arising out of his employment with the Company, whether such claims are now known or unknown to Employee. The Claims released hereunder include, without limitation, any disputes with the officers, employees and directors of the Company, any dispute concerning the financial statements and related documents of the Company and any alleged violation of any federal, state, or local statute or ordinance including without limitation, Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act of 1967, as amended; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act; the Civil Rights Act of 1866, as amended; and the Employee Retirement and Income Security Act of 1974. The Claims released do not include (i) any claims arising from events occurring after Employee signs this Agreement and (ii) any claims which by law may not be released by Employee, and (iii) any claims which Employee has against the Company arising under the Indemnification Agreement. Moreover, this release shall not apply to the Company's financial or other obligations hereunder or to Employee's rights to indemnification under applicable law, the Indemnification Agreement, and the Company's certificate of incorporation, bylaws, insurance policies or other governing documents for claims brought against Employee arising out of his services as an employee, representative, officer and/or director of the Company. Employee represents and warrants to the Company Releasees that there has been no assignment or other transfer of any interest in any Claim that Employee may have against the Company Releasees or any of them.

B. Employee agrees and expressly acknowledges that this Agreement includes a waiver and release of all claims which he has or may have under the Age Discrimination in Employment Act of 1967, as amended ("ADEA"). The following terms and conditions apply to and are part of the waiver and release of the ADEA claims under this Agreement: (i) this Section 3B and this Agreement are written in a manner calculated to be understood by him; (ii) the waiver and release of claims under the ADEA contained in this Agreement does not cover rights or claims that may arise after the date on which he signs this Agreement; (iii) this Agreement provides for consideration in addition to anything of value to which he is already entitled; (iv) Employee has been advised to consult an attorney before signing this Agreement; (v) Employee has been granted twenty-one days after he is presented with this Agreement to decide whether or not to sign this Agreement and if he executes this Agreement prior to the expiration of such period, he does so voluntarily and after having had the opportunity to consult with an attorney and hereby waives the remainder of the twenty-one day period; and (vi) Employee has the right to revoke this general release within seven days of signing this Agreement and in the event this general release is revoked, this Agreement will be null and void in its entirety. If he wishes to revoke this Agreement, Employee shall deliver written notice stating his intent to revoke this Agreement to the Company (attention: Chief Executive Officer) on or before 5:00 p.m. on the seventh day after the date on which he signs this Agreement.

4. Confidentiality .

A. Employee agrees that, unless compelled by applicable law, Employee will not at any time use or talk about, write about, disclose in any manner or publicize the existence or terms of this Agreement or its negotiation, execution, or implementation.

B. Employee acknowledges that, except for information that from time to time has been properly disclosed by the Company in public filings and announcements and commercial dealings, the Company has or may have a legitimate need for and/or interest in protecting the confidentiality of all information and data pertaining to the business and affairs of the Company and its subsidiaries, including without limitation, information and data relating to: (i) research and development projects, (ii) information and data processing technologies, and (iii) strategic and tactical plans and initiatives (all such information and data, other than that which has been properly disclosed as aforesaid, being hereinafter referred to as "Confidential Information"). Employee also acknowledges that, in the course of his employment, (i) he has participated in the development of Confidential Information, (ii) he has been involved in the use and application of Confidential Information for corporate purposes, and (iii) he otherwise has been given access and entrusted with Confidential Information for corporate purposes.

C. Employee agrees that at all times, he (i) shall continue to treat the Confidential Information as proprietary to the Company, and (ii) shall not make use of, or divulge to any third party, all or, any part of the Confidential Information unless and except to the extent so authorized in writing by the Company or required by judicial, legislative or regulatory process. Employee also agrees to inform all prospective employers and consulting clients of the content of this Section 4 of this Agreement prior to his acceptance of employment and consulting engagements.

D. If Employee is subpoenaed or is required to testify about the Company or his employment by the Company, Employee agrees to contact the Company's Chief Executive Officer to notify the Company of the subpoena or the demand that Employee testify (i) within 72 hours of receiving the subpoena or demand or (ii) before the date of the proposed testimony, whichever is earlier. Further, Employee agrees to meet with and cooperate with the Company’s attorneys in preparation for any such testimony, for which Employee will be compensated at a rate of $100 per hour incurred for related travel and meeting time (and, of course, he will at all times testify truthfully). The Company agrees to pay any reasonable expenses necessarily incurred by Employee in the course of testimony or preparation for testimony in any proceeding in which the Company is a party but Employee is not a party and in which he has been subpoenaed/required to testify.

E. It will not be considered a violation of Section 4A for Employee to report the remuneration being paid by the Company pursuant to this Agreement on his tax returns or to inform his spouse or professional advisors of the amount or nature of those amounts so long as Employee takes reasonable steps to ensure that the information will not be further disclosed by those persons, including without limitation, Employee informing any spouse and professional advisors that such information is confidential and must not be disclosed to others unless such information becomes publicly available.

F. Employee agrees that, if he receives an inquiry from any representative of the media about the Company or his employment with the Company or the end of that employment, Employee will not respond but will make a reasonable effort to contact the Company's Chief Executive Officer within 24 hours to inform the Company of the media inquiry.

5. Employee' informed, voluntary signature. Employee agrees he has had a full and fair opportunity to review this “Separation Agreement and General Release” and signs it knowingly, voluntarily, and without duress or coercion. Further, in executing this Agreement, Employee agrees he has not relied on any representation or statement not set forth in this Agreement, with the specific exception of those representations and statements in the Indemnification Agreement, which remains in full force and effect following the execution of this Agreement.

6. Miscellaneous.

A. This Agreement shall be interpreted and enforced in accordance with the laws of the United States and the State of Florida. Any litigation between the parties must be brought in a court having jurisdiction in Palm Beach County, Florida, unless it is necessary for Employee to institute suit in another jurisdiction to obtain injunctive relief to enforce the terms of this Agreement.

B. With the exception of the Indemnification Agreement, this Agreement represents the sole and entire agreement between the parties and supersedes any and all prior agreements, negotiations and discussions between the parties with respect to Employee' employment or the end of that employment with the Company.

C. If either party initiates proceedings related to Employee's employment by the Company, the prevailing party shall recover its/his attorneys’ fees and costs, including such fees and costs on any enforcement or appeal proceedings.

D. The parties agree that this “Separation Agreement and General Release” does not constitute any admission by Employee or by the Company of any (i) violation of any statute, law, regulation, order or other applicable authority, (ii) breach of contract, actual or implied, or (iii) commission of any tort.

F. If one or more Section(s) of this Agreement are ruled invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision of this Agreement, which shall remain in full force and effect.

G. This Agreement may not be modified orally but only by a writing signed by both Employee and the Company.

H. This Agreement shall inure to the benefit of and shall be binding upon the Company, its successors and assigns, and shall inure to the benefit of and shall be binding upon Employee’s representatives, agents, successors, and heirs. Employee's obligations and duties hereunder are personal and not assignable.

I. Employee agrees to cooperate with and provide reasonable assistance to the Company and its employees in the transition of Employee’s ongoing projects and duties to other the Company employees. Employee agrees to respond to reasonable requests of the Company for such assistance in a timely manner, and, during the 30 day period following the date of this Agreement, Employee agrees to be reasonably available by telephone to the Company for such purpose.

J. Employee and the Company agree that Sections 9 (Confidential Information) and 11 (Indemnification; Litigation) of the Employment Agreement shall remain in continued force and effect. The provisions and obligations contained in Sections 9 and 11 of the Employment Agreement are specifically incorporated into this Agreement. Except as expressly set forth in this Section 6J, no other provisions of the Employment Agreement shall continue beyond the Separation Date.

K. This Agreement shall be construed in a manner consistent with the applicable requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the formal guidance issued thereunder (“Section 409A”), and the Company, with the consent of Employee, may amend the provisions of this Agreement if and to the extent the Company determines that such amendment is necessary or appropriate to comply with the applicable requirements of 409A. If a payment date that complies with Section 409A is not otherwise provided herein for any payment (in cash or in-kind) or reimbursement that would otherwise constitute “deferred compensation” under Section 409A, then such payment or reimbursement, to the extent such payment or reimbursement becomes due hereunder, shall in all events be made not later than two and one-half (2½) months after the end of the later of the fiscal year or the calendar year in which the payment or reimbursement is no longer subject to a substantial risk of forfeiture.

	Bryan D. Happ

Date: September 28, 2012	/s/ Bryan D. Happ

	PositiveID Corporation

Date: September 28, 2012	By:	/s/ William J. Caragol
	Name:	William J. Caragol
	Title:	Chief Executive Officer

Exhibit 10.15

PSID	Interest free if paid in full within 3 months

$445,000 PROMISSORY NOTE

FOR VALUE RECEIVED, PositiveID Corporation , a Delaware corporation (the “Borrower”) with at least 135,000,000 common shares issued and outstanding, promises to pay to JMJ Financial or its Assignees (the “Lender”) the Principal Sum along with the Interest Rate and any other fees according to the terms herein. This Note will become effective only upon execution by both parties and delivery of the first payment of Consideration by the Lender (the “Effective Date”).

The Principal Sum is $445,000 (four hundred forty-five thousand) plus accrued and unpaid interest and any other fees. The Consideration is $400,000 (four hundred thousand) payable by wire (there exists a $45,000 original issue discount (the “OID”)). The Lender shall pay $100,000 of Consideration upon closing of this Note. The Lender may pay additional Consideration to the Borrower in such amounts and at such dates as Lender may choose in its sole discretion. THE PRINCIPAL SUM DUE TO LENDER SHALL BE PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY LENDER (PLUS AN APPROXIMATE 10% ORIGINAL ISSUE DISCOUNT THAT IS PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY THE LENDER AS WELL AS ANY OTHER INTEREST OR FEES) SUCH THAT THE BORROWER IS ONLY REQUIRED TO REPAY THE AMOUNT FUNDED AND THE BORROWER IS NOT REQUIRED TO REPAY ANY UNFUNDED PORTION OF THIS NOTE . The Maturity Date is one year from the Effective Date of each payment (the “Maturity Date”) and is the date upon which the Principal Sum of this Note, as well as any unpaid interest and other fees, shall be due and payable. The Conversion Price is the lesser of $0.02 or 75% of the lowest closing price in the 25 trading days previous to the conversion (In the case that conversion shares are not deliverable by DWAC an additional 5% discount will apply; and if the shares are chilled for deposit into the DTC system and only eligible for Xclearing deposit an additional 7.5% discount shall apply). Unless otherwise agreed in writing by both parties, at no time will the Lender convert any amount of the Note into common stock that would result in the Lender owning more than 4.99% of the common stock outstanding.

1. ZERO Percent Interest for the First Three Months . The Borrower may repay this Note at any time on or before 90 days from the Effective Date, after which the Borrower may not make further payments on this Note prior to the Maturity Date without written approval from Lender. If the Borrower repays the Note on or before 90 days from the Effective Date, the Interest Rate shall be ZERO PERCENT (0%). If Borrower does not repay the Note on or before 90 days from the Effective Date, a one-time Interest charge of 10% shall be applied to the Principal Sum. Any interest payable is in addition to the OID, and that OID (or prorated OID, if applicable) remains payable regardless of time and manner of payment by Borrower.

2. Conversion . The Lender has the right, at any time from 90 days after the Effective Date, at its election, to convert all or part of the outstanding and unpaid Principal Sum and accrued interest (and any other fees) into shares of fully paid and non-assessable shares of common stock of the Borrower as per this conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. Conversions may be delivered to Borrower by method of Lender’s choice (including but not limited to email, facsimile, mail, overnight courier, or personal delivery), and all conversions shall be cashless and not require further payment from the Lender. If no objection is delivered from Borrower to Lender regarding any variable or calculation of the conversion notice within 24 hours of delivery of the conversion notice, the Borrower shall have been thereafter deemed to have irrevocably confirmed and irrevocably ratified such notice of conversion and waived any objection thereto. The Borrower shall deliver the shares from any conversion to Lender (in any name directed by Lender) within 3 (three) business days of conversion notice delivery.

3. Conversion Delays . If Borrower fails to deliver shares in accordance with the timeframe stated in Section 2, Lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part, of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion shares returned to the Borrower (under Lender’s and Borrower’s expectations that any returned conversion amounts will tack back to the original date of the Note). In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $2,000 per day will be assessed for each day after the third business day (inclusive of the day of the conversion) until share delivery is made; and such penalty will be added to the Principal Sum of the Note (under Lender’s and Borrower’s expectations that any penalty amounts will tack back to the original date of the Note).

4. Reservation of Shares . At all times during which this Note is convertible, the Borrower will reserve from its authorized and unissued Common Stock to provide for the issuance of Common Stock upon the full conversion of this Note. The Borrower will at all times reserve at least 50,000,000 shares of Common Stock for conversion.

5. Piggyback Registration Rights . The Borrower shall include on the next registration statement the Borrower files with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of this Note. Failure to do so will result in liquidated damages of 25% of the outstanding principal balance of this Note, but not less than $25,000, being immediately due and payable to the Lender at its election in the form of cash payment or addition to the balance of this Note.

6. Terms of Future Financings . So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Lender in this Note, then the Borrower shall notify the Lender of such additional or more favorable term and such term, at Lender’s option, shall become a part of the transaction documents with the Lender. The types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited to, terms addressing conversion discounts, conversion lookback periods, interest rates, original issue discounts, stock sale price, private placement price per share, and warrant coverage.

7. Default . The following are events of default under this Note: (i) the Borrower shall fail to pay any principal under the Note when due and payable (or payable by conversion) thereunder; or (ii) the Borrower shall fail to pay any interest or any other amount under the Note when due and payable (or payable by conversion) thereunder; or (iii) a receiver, trustee or other similar official shall be appointed over the Borrower or a material part of its assets and such appointment shall remain uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; or (iv) the Borrower shall become insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any; or (v) the Borrower shall make a general assignment for the benefit of creditors; or (vi) the Borrower shall file a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); or (vii) an involuntary proceeding shall be commenced or filed against the Borrower; or (viii) the Borrower shall lose its status as “DTC Eligible” or the borrower’s shareholders shall lose the ability to deposit (either electronically or by physical certificates, or otherwise) shares into the DTC System; or (ix) the Borrower shall become delinquent in its filing requirements as a fully-reporting issuer registered with the SEC.

8. Remedies . In the event of any default, the outstanding principal amount of this Note, plus accrued but unpaid interest, liquidated damages, fees and other amounts owing in respect thereof through the date of acceleration, shall become, at the Lender’s election, immediately due and payable in cash at the Mandatory Default Amount. The Mandatory Default Amount means the greater of (i) the outstanding principal amount of this Note, plus all accrued and unpaid interest, liquidated damages, fees and other amounts hereon, divided by the Conversion Price on the date the Mandatory Default Amount is either demanded or paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on the date the Mandatory Default Amount is either demanded or paid in full, whichever has a higher VWAP, or (ii) 150% of the outstanding principal amount of this Note, plus 100% of accrued and unpaid interest, liquidated damages, fees and other amounts hereon. Commencing five (5) days after the occurrence of any event of default that results in the eventual acceleration of this Note, the interest rate on this Note shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. In connection with such acceleration described herein, the Lender need not provide, and the Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and the Lender may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Lender at any time prior to payment hereunder and the Lender shall have all rights as a holder of the note until such time, if any, as the Lender receives full payment pursuant to this Section 8. No such rescission or annulment shall affect any subsequent event of default or impair any right consequent thereon. Nothing herein shall limit Lender’s right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Borrower’s failure to timely deliver certificates representing shares of Common Stock upon conversion of the Note as required pursuant to the terms hereof.

9. No Shorting . Lender agrees that so long as this Note from Borrower to Lender remains outstanding, Lender will not enter into or effect “short sales” of the Common Stock or hedging transaction which establishes a net short position with respect to the Common Stock of Borrower. Borrower acknowledges and agrees that upon delivery of a conversion notice by Lender, Lender immediately owns the shares of Common Stock described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales.

10. Assignability . The Borrower may not assign this Note. This Note will be binding upon the Borrower and its successors and will inure to the benefit of the Lender and its successors and assigns and may be assigned by the Lender to anyone of its choosing without Borrower’s approval.

11. Governing Law . This Note will be governed by, and construed and enforced in accordance with, the laws of the State of Florida, without regard to the conflict of laws principles thereof. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of Florida or in the federal courts located in Miami-Dade County, in the State of Florida. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction of such courts.

12. Delivery of Process by Lender to Borrower . In the event of any action or proceeding by Lender against Borrower, and only by Lender against Borrower, service of copies of summons and/or complaint and/or any other process which may be served in any such action or proceeding may be made by Lender via U.S. Mail, overnight delivery service such as FedEx or UPS, email, fax, or process server, or by mailing or otherwise delivering a copy of such process to the Borrower at its last known attorney as set forth in its most recent SEC filing.

13. Attorney Fees . In the event any attorney is employed by either party to this Note with regard to any legal or equitable action, arbitration or other proceeding brought by such party for the enforcement of this Note or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Note, the prevailing party in such proceeding will be entitled to recover from the other party reasonable attorneys' fees and other costs and expenses incurred, in addition to any other relief to which the prevailing party may be entitled.

14. Opinion of Counsel . In the event that an opinion of counsel is needed for any matter related to this Note, Lender has the right to have any such opinion provided by its counsel. Lender also has the right to have any such opinion provided by Borrower’s counsel.

15. Notices . Any notice required or permitted hereunder (including Conversion Notices) must be in writing and either personally served, sent by facsimile or email transmission, or sent by overnight courier. Notices will be deemed effectively delivered at the time of transmission if by facsimile or email, and if by overnight courier the business day after such notice is deposited with the courier service for delivery.

[Signature Page to Follow]

Borrower:		Lender:


/s/ William J. Caragol		/s/ Justin Keener
William J. Caragol		JMJ Financial
PositiveID Corporation		Its Principal
Chief Executive Officer



Date:	August 13, 2012	Date:	August 14, 2012

[Signature Page to $445,000 Promissory Note]

Exhibit 10.16

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (“Agreement”), dated November 8, 2012, is by and between PositiveID Corporation (the “Company”) and JMJ Financial (“JMJ”).

WHEREAS, the Company and JMJ entered into a $445,000 Promissory Note effective on August 15, 2012 (the “Note”);

WHEREAS, in consideration for $1,000 cash payment and for entering into the Note, the Company issued a Common Stock Purchase Warrant Document W-08152012 with an Aggregate Exercise Amount of $50,000 and an Exercise Price of $0.018 per share; and

WHEREAS, the Company desires that JMJ accelerate the next payment and pay an additional $100,000 under the Note.

NOW, THEREFORE, the parties agree as follows:

Payment on the Note. On the Effective Date, JMJ shall pay $100,000 to the Company under the Note by wire transfer of immediately available funds. In consideration for this accelerated payment and the $1,000 total additional consideration as described in Section 2 and 3 below, the Company shall issue a Common Stock Purchase Warrant and 1,850,000 shares of common stock of the Company as provided herein.

Issuance of Warrant. On the Effective Date, JMJ shall pay $500 to the Company by wire transfer of immediately available funds and the Company shall execute and deliver to JMJ a Common Stock Purchase Warrant in the form attached to this Agreement with an Initial Exercise Date of November 8, 2012, an Aggregate Exercise Amount of $50,000, and an Exercise Price of $0.02 per share (2,500,000 shares, subject to adjustment as described therein).

Issuance of Common Stock. On the Effective Date, JMJ shall pay $500 to the Company by wire transfer of immediately available funds and the Company shall deliver to JMJ, within ten days of the Effective Date, 1,850,000 duly and validly issued, fully-paid and non-assessable shares of common stock of the Company.

Effective Date. This Agreement will become effective only upon occurrence of the two following events: execution and delivery of this Agreement and the Warrant by both the Company and JMJ, and delivery of the payment by JMJ set forth in Sections 1, 2, and 3 hereof (the “Effective Date”)

Please indicate acceptance and approval of this Agreement by signing below:


/s/ William J. Caragol			/s/ Justin Keener
William J. Caragol			JMJ Financial
Chief Executive Officer			Its Principal
PositiveID Corporation

Exhibit 31.1

Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, William J. Caragol, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of PositiveID Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
	a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
		a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
		b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 16, 2012	/s/ William J. Caragol
	William J. Caragol
	Chairman, Chief Executive Officer, and Acting Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PositiveID Corporation (the “Company”) on Form 10-Q for the period ending September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William J. Caragol, Chairman, Chief Executive Officer, and Acting Chief Financial of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)		The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)		The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

	/s/ William J. Caragol
	William J. Caragol
	Chairman, Chief Executive Officer, and Acting Chief Financial Officer

	Date: November 16, 2012

A signed original of this written statement required by Section 906 has been provided to PositiveID Corporation and will be retained by PositiveID Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

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