As filed with the Securities and Exchange Commission on April 3, 2017

Registration No. 333-212589

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________

Amendment No. 6
to
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

_________________

ACTIVECARE, INC.
(Exact name of registrant as specified in its charter)

_________________

Delaware		3669		87-0578125
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

1365 West Business Park Drive
Suite 100
Orem, Utah 84058
(877) 219-6050
(Address, including zip code, and telephone number including
area code, of Registrant’s principal executive offices)

_________________

Jeffrey Peterson
Chief Executive Officer
1365 West Business Park Drive
Suite 100
Orem, Utah 84058
(877) 219-6050
(Name, address, including zip code, and telephone number
including area code, of agent for service)

_________________

With copies to:

Joseph M. Lucosky, Esq.
Lawrence Metelitsa, Esq.
Lucosky Brookman LLP
101 Wood Avenue South, 5th Floor
Woodbridge, NJ 08830
Tel. No.: (732) 395-4400
Fax No.: (732) 395-4401

Steven D. Uslaner, Esq.
Mark F. Coldwell, Esq.
Littman Krooks LLP
655 Third Avenue, 20th Floor
New York, NY 10017
Tel. No.: (212) 490-2020
Fax No.: (212) 490-2990

_________________

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.

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

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

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

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

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 ¨

Accelerated Filer ¨

Non-Accelerated Filer ¨

Smaller Reporting Company x

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered		Proposed Maximum Aggregate Offering Price⁽¹⁾			Amount of Registration Fee⁽¹⁾
Class A Units⁽²⁾	$	18,400,000	⁽³⁾	$	2,132.56
Common Stock, par value $0.00001, included in the units⁽⁴⁾			⁽⁶⁾			⁽⁶⁾
Warrants to Purchase Common Stock, included in the units⁽⁵⁾			⁽⁶⁾			⁽⁶⁾
Shares of Common Stock issuable upon exercise of the Warrants included in the units⁽⁴⁾⁽⁵⁾		23,000,000	⁽³⁾		2,665.70
Representatives’ Warrant to Purchase Common Stock⁽⁷⁾		N/A			N/A
Series H Preferred Stock⁽⁸⁾
Common Stock issuable upon conversion of Series C preferred stock		—			—
Shares of Common Stock issuable upon exercise of Representatives’ Warrant⁽⁴⁾⁽⁷⁾		1,150,000			133.29
Total	$	42,550,000		$	4,931.55	⁽⁹⁾

____________

(1) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”).

(2) Each unit consists of one share of common stock, $0.0001 par value per share, and one warrant to purchase one share of common stock, $0.0001 par value per share.

(3) Includes units and shares of common stock the underwriters have the option to purchase to cover over-allotments, if any.

(4) Pursuant to Rule 416 under the Securities Act, the securities being registered hereunder include such indeterminate number of additional shares of common stock as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions.

(5) The warrants are exercisable at a per share price equal to 125% of the public offering price.

(6) Included in the price of the units. No fee required pursuant to Rule 457(g) under the Securities Act.

(7) In accordance with Rule 457(g) under the Securities Act, because the shares of the Registrant’s common stock underlying the Warrants and Representative’s warrants are registered hereby, no separate registration fee is required with respect to the warrants registered hereby.

(8) No separate fee required pursuant to Rule 457 under the Securities Act of 1933

(9) Previously Paid.

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

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

PRELIMINARY PROSPECTUS

SUBJECT TO COMPLETION

DATED APRIL 3, 2017

Class A units consisting of common stock and warrants and Class B units consisting of shares of Series H Preferred Stock and warrants (and an aggregate of ______ shares of common stock underlying (i) shares of Series H Preferred Stock and (ii) warrants).

ActiveCare, Inc.

We are offering up to units, each unit consisting of one share of our common stock, $0.00001 par value per share, and one warrant to purchase one share of our common stock (the “Class A units”). We anticipate a public offering price between $5.00 and $6.00 per Class A unit. The warrants included within a Class A unit are exercisable immediately and have an exercise price of $6.88 per share (125% of the public offering price based on an assumed initial offering price of $5.50 per Class A Unit, the mid-point of the estimated offering price range) and expire five years from the date of issuance. The Class A units will not be issued or certificated. Purchasers will receive only shares of common stock and warrants. The shares of common stock and warrants may be transferred separately, immediately upon issuance. The offering also includes the shares of common stock issuable from time to time upon exercise of the warrants.

We are also offering to those purchasers, whose purchase of Class A units in this offering would result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock following the consummation of this offering, the opportunity to purchase, in lieu of the number of Class A units that would result in ownership in excess of 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock, a unit (“Class B unit”) consisting of (i) one share of Series H convertible preferred stock, par value $.00001 per share (the “Series H Preferred Stock”), convertible at any time at the holder’s option into a number of shares of common stock equal to $1,000 divided by $_____, the public offering price per Class A unit (the “Conversion Price”) and (ii) warrants to purchase a number of shares of common stock equal to the number of shares of common stock issuable upon conversion of one share of Series H Preferred Stock at a public offering price of $1,000 per Class B unit. The warrants included in the Class B units will have the same terms as the warrants included in the Class A units.

Our common stock is quoted on OTC Markets Group Inc. OTCQB quotation system (the “OTCQB”) under the trading symbol “ACAR”. We have applied to have our common stock and warrants listed on The Nasdaq Capital Market under the symbols “ACAR” and “ACARW,” respectively. No assurance can be given that our application will be approved. On March 31, 2017, the last reported sale price for our common stock on the OTCQB was $15.00 per share after giving effect to the 1-for-500 reverse stock split of our common stock which was effectuated on January 27, 2017 in order to facilitate NASDAQ listing approval. There is no established public trading market for the warrants or the Series H Preferred Stock. No assurance can be given that a trading market will develop for the warrants or the Series H Preferred Stock. Quotes for shares of our common stock on the OTCQB may not be indicative of the market price on a national securities exchange, such as The Nasdaq Capital Market.

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 15 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per Class A Unit(1)	Per Class B Unit(1)	Total
Public offering price	$	$	$
Underwriting discounts and commissions(2)	$	$	$
Proceeds to us, before expenses	$	$	$

____________

(1) The public offering price and underwriting discount corresponds to (i) in respect of the Class A units (a) a public offering price per share of common stock of $___ and (b) a public offering price per warrant of $__, and (ii) in respect of the Class B units, (a) a public offering price per share of Series H Preferred Stock of $__ and (ii) a public offering price per warrant of $____

(2) Does not include a non-accountable expense allowance equal to 1% of the gross proceeds of this offering payable to Joseph Gunnar & Co., LLC, the representative of the underwriters. See “Underwriting” for a description of compensation payable to the Underwriters

We have granted the representative of the underwriters a 45-day option to purchase up to ______ additional shares of common stock and/or additional warrants to purchase up to _____ shares of common stock (15% of the shares (including the number of shares of common stock issuable upon conversion of the Series H Preferred Stock) issued in this offering) and 15% of the warrants issued in the offering), in any combination thereof, from us at the offering price for each security, less underwriting discounts and commissions, to cover over-allotments, if any. The over-allotment option may be used to purchase shares of common stock, warrants, or any combination thereof, as determined by the representative of the underwriters. The shares and/or warrants issuable upon exercise of the over-allotment option are identical to those offered by this prospectus. If the underwriters exercise this option in full, the total underwriting discounts and commissions payable by us will be $__, and the total proceeds to us, before expenses, will be $18,400,000.

The underwriters expect to deliver our securities to purchasers in the offering on or about ______, 2017.

Joseph Gunnar & Co.

Axiom Capital Management, Inc.

The date of this prospectus is , 2017

TABLE OF CONTENTS

Prospectus Summary		1
Risk Factors		15
Use of Proceeds		29
Market for Our Common Stock and Related Stockholder Matters		30
Capitalization		31
Dilution		33
Management’s Discussion and Analysis of Financial Condition and Results of Operations		37
Business		47
Directors and Executive Officers		59
Executive Compensation		64
Security Ownership of Certain Beneficial Owners and Management		70
Certain Relationships and Related Party Transactions		72
Description of Capital Stock		74
Underwriting		81
Transfer Agent and Registrar		90
Legal Matters		90
Experts		90
Where You Can Find More Information		90
Index to Consolidated Financial Statements		F-1

You should rely only on information contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. We have not, and the underwriters have not, authorized anyone to provide you with additional information or information different from that contained in this prospectus or in any free writing prospectus. Neither the delivery of this prospectus nor the sale of our securities means that the information contained in this prospectus or any free writing prospectus is correct after the date of this prospectus or such free writing prospectus. This prospectus is not an offer to sell or the solicitation of an offer to buy our securities in any circumstances under which the offer or solicitation is unlawful or in any state or other jurisdiction where the offer is not permitted.

No person is authorized in connection with this prospectus to give any information or to make any representations about us, the securities offered hereby or any matter discussed in this prospectus, other than the information and representations contained in this prospectus. If any other information or representation is given or made, such information or representation may not be relied upon as having been authorized by us.

Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than the United States. You are required to inform yourself about, and to observe any restrictions relating to, this offering and the distribution of this prospectus.

We have registered certain of our trademarks with the United States Patent and Trademark Office, including ActiveCare®, ActiveOne®, ActiveOne+® and ActiveHome®.

We also use certain trademarks, trade names, and logos that have not been registered. We claim common law rights to these unregistered trademarks, trade names and logos.

PROSPECTUS SUMMARY

This summary highlights selected information appearing elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information you should consider before investing in our securities. You should read this prospectus carefully, especially the risks and other information set forth under the heading “Risk Factors”; “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus, before making an investment decision. Our fiscal year end is September 30 and our fiscal years ended September 30, 2015 and 2016 are sometimes referred to herein as fiscal years 2015 and 2016, respectively. Some of the statements made in this prospectus discuss future events and developments, including our future strategy and our ability to generate revenue, income and cash flow. These forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from those contemplated in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements”. Unless otherwise indicated or the context requires otherwise, the words “we,” “us,” “our,” the “Company” or “our Company” and “ActiveCare” refer to ActiveCare, Inc., a Delaware corporation, and its wholly owned subsidiaries.

Except as otherwise indicated in this prospectus, all common stock and per share information and all exercise prices with respect to our warrants reflect, on a retroactive basis, a 1-for-500 reverse stock split of our common stock, which became effective in the OTC Marketplace on January 27, 2017. This prospectus assumes the over-allotment option of the underwriters has not been exercised, unless otherwise indicated.

Overview

We believe we offer a unique approach to caring for chronic illnesses such as diabetes by adding a “human touch” and monitoring component to traditional disease management. To that end, we have created a “CareCenter” where our highly trained “CareSpecialists” reach out to engage members so that they can monitor their condition on a regular and real-time basis. Our personalized and active monitoring approach allows for the necessary action to be taken today to avoid major and costly events in the future. We provide our solution to self-insured companies (“SICs”) through third party administrators (“TPAs”) and a network of health insurance brokers. The members who directly engage with our CareCenter specialists are diabetic patients employed by these SICs.

Our CareSpecialists maintain consistent contact with our members helping them through the ups and downs of managing their glucose levels. For example, when test results exceed certain thresholds or a certain amount of time has passed without testing, members receive a prompt call from a CareSpecialist who will then triage the member and, if necessary, contact emergency personnel. This “live” and timely intervention provides the platform of insight for members to modify their behavior while reinforcing goals to better manage their disease. With real-time data, the CareSpecialists provide proactive support and encouragement to members before they become high risk. Our approach is designed to improve the health and wellness of our members while also lowering the overall costs of medical care paid by their employers.

Competitive Advantages/Operational Strengths

Unique Solution: The challenge facing the healthcare system is how to motivate people with diabetes to monitor their glucose levels to improve their lives. In order to address this challenge, information is needed to determine who is actually testing or not testing and who has readings that are outside of acceptable parameters. Outside of our approach, we are not aware of any companies providing a service utilizing real-time information to help patients manage diabetes and reduce future medical costs.

Real-Time Visibility: Without actionable and reliable information being available, healthcare professionals have typically relied on a diabetic’s A1C (90-day blood glucose average) test results. These reports are unable to show the daily high and low blood glucose events. We believe that our solution focusing on consistent

communications with patients and real time monitoring is highly preferable. Our state-of-the-art cellular glucometer allows for test results to automatically be sent wirelessly to our CareSpecialists immediately following each test. The only thing our member needs to do is test themselves and our CareSpecialists maintain consistent contact to provide advice, answer questions and to engage emergency personnel, if needed.

Proactive Approach of our CareCenter: We believe that our 24/7 CareCenter sets us apart from all other diabetes management programs. Historically, diabetics would be contacted by disease management personnel after incurring high medical costs and being classified as high risk. This method is reactionary and does nothing to prevent diabetics from becoming high risk in the first place. With real-time data, the CareCenter provides proactive support and encouragement to our members before they become high risk.

Engagement Strategy and Reward Program: The entire experience of how our CareSpecialists interact with members has been retooled and refocused on increasing engagement. This engagement strategy is designed to foster increased testing through positive reinforcement involving an on-going testing rewards program, regular educational events and increased coordination with the group’s clinical team. Our rewards program is designed to incentivize members to test more often through monetary reward. This innovative program transforms testing into an exciting and fun activity and has the effect of significantly increasing the incidence of testing.

Management Team and Key Personnel Experience: Our management team and key personnel have significant technical and entrepreneurial experience, with over 20 years of experience in the remote monitoring industry.

In summary, our monitoring program and related services provide caregivers, physicians, disease management and wellness coordinators with real-time visibility into a member’s health. Our unique approach in caring for diabetes patients is designed to improve the health and wellness of our members while also lowering the overall costs of medical care paid by their employers. We believe our approach of combining monitoring technology with a human service touch will create a paradigm shift to increase testing and improve the health of those living with diabetes.

Our Risks and Challenges

An investment in our securities involves a high degree of risk including risks related to the following:

WE HAVE A HISTORY OF ACCUMULATED DEFICITS, RECURRING LOSSES AND NEGATIVE CASH FLOWS. IN ORDER FOR US TO REMOVE SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN, WE MUST ACHIEVE PROFITABILITY, GENERATE POSITIVE CASH FLOWS FROM OPERATING ACTIVITIES OR OTHERWISE OBTAIN NECESSARY DEBT OR EQUITY FUNDING.

DUE TO OUR DEPENDENCE ON A LIMITED NUMBER OF CUSTOMERS, WE ARE SUBJECT TO A CONCENTRATION OF CREDIT RISK.

WE CURRENTLY DEPEND UPON A SINGLE SOURCE SUPPLIER FOR OUR PRODUCTS MAKING US VULNERABLE TO SUPPLY PROBLEMS AND PRICE FLUCTUATIONS, WHICH COULD HARM OUR BUSINESS.

Our profitability depends upon achieving success in our future operations through implementing our business plan, increasing sales, and expanding our customer base, for which no assurance can be given.

The commercial success of our products will depend upon the degree of market acceptance by physicians, hospitals, third-party payors, and others in the medical community.

SOME OF Our products are not based entirely on technology that is proprietary to us, which means that we do not have a technological advantage over our competitors WITH RESPECT TO CERTAIN OF OUR PRODUCTS, and that we must rely on the owners of the proprietary technology that is the basis for THESE products to protect that technology. We have no control over such protection.

SOME OF Our products are subject to the risks and uncertainties associated with the protection of intellectual property and related proprietary rights. We believe that our success depends in part on our ability to obtain and enforce patents, maintain trade secrets and operate without infringing on the proprietary rights of others in the United States and in other countries.

We also rely on trade secrets laws to protect portions of our technology for which patent protection has not yet been pursued or is not believed to be appropriate or obtainable.

In February 2016, we entered into A Loan and Security Agreement with PARTNERS FOR GROWTH IV, L.P., and issued certain notes payable. THESE obligations are secured by the grant of a security interest in all of our assets. upon a default the lender may foreclose on all of our assets.

We are subject to a number of additional risks which you should be aware of before you buy our securities in this offering. These risks are discussed more fully in the section entitled “Risk Factors” following this prospectus summary.

Recent Developments

Telecare Note Conversion

Effective April 1, 2017, the Company entered into a letter agreement (the “Telecare Letter Agreement”), with Telecare Medical Supply, LLC, the sole supplier of our cellular glucometers and other testing supplies (“Telecare”), and the payee of a certain Non-Negotiable Promissory Note in the original principal amount of approximately $2,524,000 (the “Amended and Restated Telecare Note”). Pursuant to the Telcare Letter Agreement, Telecare has agreed to convert all monies due it from the Company pursuant to the Telecare Note into restricted shares of common stock (the “Telecare Conversion Shares”), all contingent upon the completion of this offering. As of March 31, 2016, Telecare is owed the principal amount of $1,773,937 (“Telecare Principal Amount”), along with accrued interest of $3,675 through March 31, 2017 (the “Telecare Interest Amount” and, together with the Principal Amount, the “Telecare Note Obligation”). As incentive to enter into the Telecare Letter Agreement, the Company agreed to add approximately $502,388 to the Telecare Note Obligation effectively making the total obligation due to Telecare an aggregate of $2,280,000 (the “Total Telecare Obligation”). Pursuant to the Telecare Letter Agreement, the Total Telecare Obligation will automatically convert upon consummation of this offering into the Telecare Conversion Shares at the combined price per share and warrant paid by investors in this offering (the “Conversion Price”). As a result of the foregoing, the Company will be issuing an aggregate of 414,546 Telecare Conversion Shares upon the consummation of this Offering in consideration of the conversion of the Total Telecare Obligation. The foregoing assumes a conversion price of $5.50, the mid-point of the estimated offering price range described on the cover of this prospectus.

Greene Loan Agreement

On March 21, 2017, the Company entered into a Loan Agreement (the “Loan Agreement”) with Jeff Greene (“Greene”). Pursuant to the terms of the Loan Agreement, Greene loaned the Company $300,000 (the “Loan”). The Loan is unsecured. The Loan (i) bears interest at the rate of 12.75% per annum, (ii) matures on June 15, 2017 (the “Maturity Date”), (iii) requires payment of a $3,000 closing fee, (iv) is subordinated to the Partners for Growth IV, L.P., a Delaware limited partnership (“PFG”) Loan and Security Agreement (as defined below), and (v) requires payment of a fee of $50,000 for each thirty days that the loan is outstanding.

Stock Option Plan

Effective November 1, 2016, the Board approved the 2016 Incentive Stock Option (the “2016 Plan”) providing for the issuance of options to purchase up to 377,250 shares. The key terms of the 2016 Plan are set forth on page 66.

Reverse Stock Split

On November 1, 2016, we filed a Certificate of Amendment to our Certificate of Incorporation (the “Amendment”) to effectuate a 1-for-500 reverse stock split (the “Reverse Split”). On January 27, 2017, the Reverse Stock Split was approved by the Financial Industry Regulatory Authority and was effected on the OTC Marketplace. Unless otherwise noted, all warrant, option, share and per share information in this prospectus gives effect for such Reverse Split.

Partners for Growth IV, L.P. Loan Forbearance and Related Matters

On September 9, 2016, the Company and its senior secured lender, PFG entered into a Forbearance Loan and Security Agreement (the “September Forbearance Agreement”). Pursuant to the terms of the September Forbearance Agreement, PFG will forbear from exercising remedies (the “Forbearance”) with regard to certain breaches of agreements between the Company and PFG, including the Loan and Security Agreement, dated as of February 19, 2016, between the Company and PFG, and those certain security agreements entered into in connection therewith (collectively, the “Existing PFG Agreements”). Additionally, pursuant to the September Forbearance Agreement, PFG has provided the Company with the consent required under the Existing PFG Agreements to enter into the Purchase Agreement with JMJ Financial as described below and issue the Note and the Warrant thereunder. The Forbearance as set forth in the September Forbearance Agreement was in effect through October 31, 2016.

On September 9, 2016, in connection with the September Forbearance Agreement, the Company, PFG, SVB Financial Group, and PFG Equity Investors, LLC (the “Warrant Holders”) entered into a Conditionally-Effective Warrant Cancellation Agreement (the “Warrant Cancellation Agreement”). Pursuant to the terms of the Warrant Cancellation Agreement, upon the Company’s consummation of an equity financing of at least $15,000,000, the Warrant Holders agree to terminate and cancel the warrants they currently hold. As an inducement to enter into the Warrant Cancellation Agreement, the Warrant Holders will receive upon termination and cancelation of the warrants an aggregate of 10,800 shares of the Company’s common stock, which will be subject to a 6 month lock-up agreement. Additionally, if the Warrant Holders terminate and cancel the warrants, the Company will issue PFG a new unsecured promissory note (the “PFG Note”) with an initial principal amount of $180,000 and will not bear cash interest and will have a three year term. In lieu of cash interest, the principal of the PFG Note will increase in the amount $3,333 each month not to exceed a maximum of $300,000.

Effective November 1, 2016, the Company and PFG entered into a Forbearance and Consent Under Loan and Security Agreement (the “November Forbearance Agreement”). Pursuant to the terms of the November Forbearance Agreement, PFG will forbear from exercising remedies (the “November Forbearance”) with regard to certain breaches of agreements between the Company and PFG, including the Existing PFG Agreements as well as the September Forbearance Agreement.

Additionally, pursuant to the November Forbearance Agreement, PFG has provided the Company with the consent required under the Existing PFG Agreements and September Forbearance Agreement to make certain payments from the proceeds of this offering. These payments include, but are not limited to (i) payments to holders of the Company’s Series E Preferred Stock, (ii) third party note and receivable payments and (iii) repayment of the bridge loan to JMJ Financial. PFG also consented to the issuance of the Company’s Series G Preferred Stock to certain affiliates of the Company. See “USE OF PROCEEDS” and “Authorization and Issuance of Series G Preferred Stock” below. In consideration for the November Forbearance, the Company has agreed to issue PFG warrants to purchase 130,000 shares of common stock at an exercise price equal to the per share price of the common stock in this offering, which shall be subject to a 12-month lock-up agreement. The Forbearance set forth in the November Forbearance Agreement will be in effect through December 31, 2016.

Effective December 31, 2016, the Company and PFG entered into a Forbearance and Consent under Loan and Security Agreement (the “December Forbearance”). Pursuant to the terms of the December Forbearance, PFG will forbear from exercising its rights and remedies under the Existing PFF Agreements. Additionally, pursuant to the December Forbearance, PFG has provided the Company with the consent required under the Existing PFG Agreements, September Forbearance and November Forbearance to make certain payments from the proceeds of this offering. In consideration for the December Forbearance, the Company has agreed to issue PFG warrants to purchase 10,000 shares of common stock at an exercise price equal to the per share

price of the common stock in this offering and $50,000 of common stock at 80% of the per share issue price of the common stock in this offering, which shall be subject to a 12-month lock-up agreement. The forbearance set forth in the December Forbearance was initially in effect through February 15, 2017 and was subsequently extended to be effective through April 10, 2017.

On March 20, 2017, the Company and PFG entered into Modification No. 1 to the Loan Agreement and Security Agreement (the “Modification”). Pursuant to the terms of the Modification, PFG will lend the Company up to an additional $300,000 (the “Additional Loan”). On March 20, 2017, PFG provided the Company $300,000 representing the maximum amount of the Additional Loan. The Additional Loan (i) bears interest at the rate of 12.25% per annum, payable monthly, (ii) is due May 31, 2017, (iii) requires payment of a $3,000 modification fee and (iv) requires payment of a monthly fee of up to $50,000 for each month the Additional Loan remains outstanding. The Additional Loan is secured by all of the Company’s assets.

Conversion of Convertible Debentures, Promissory Notes and Accounts Payable

On January 12, 2017, the Company entered into letter agreements (together the “Debenture Holder Letter Agreements”), as amended, with eight (8) investors (each a “Debenture Holder” and together the “Debenture Holders”) holding convertible debentures (collectively the “Debentures”) whereby the Debenture Holders agreed to convert all monies due them under the Debentures into restricted shares of common stock (the “Debenture Conversion Shares”) and warrants to purchase common stock (the “Debenture Conversion Warrants” and together with the Debenture Conversion Shares, the “Debenture Conversion Securities”), all contingent upon the completion of this offering. As of December 31, 2016, the Debenture Holders were due the aggregate sum of $6,410,795, including principal and interest (the “Debenture Obligation”). As incentive to enter into the Debenture Holder Letter Agreements, the Company agreed to add approximately $1,589,205 to the Debenture Obligation effectively making the total obligation due to Debenture Holders an aggregate of $8,000,000 (the “Total Debenture Obligation”). Pursuant to the Debenture Holder Letter Agreements, the Total Debenture Obligation will automatically convert upon consummation of this offering into the Debenture Conversion Securities at the combined price per share and warrant paid by investors in this offering (the “Conversion Price”). The terms of the Debenture Conversion Warrants will be substantially similar to the warrants being included in this offering, except such Debenture Conversion Warrants will be a restricted security and will not publicly trade on NASDAQ. As a result of the foregoing, the Company will be issuing an aggregate of 1,454,549 Debenture Conversion Shares and Debenture Conversion Warrants to purchase 1,454,549 shares of Common Stock to the Debenture Holders upon the consummation of this Offering in consideration of the conversion of the Total Debenture Obligation assuming a conversion price of $5.50, the mid point of the estimated offering price range described on the cover of this prospectus. In addition, the Debenture Holders currently hold warrants to purchase an aggregate of 11,070 shares that will be terminated upon the consummation of this offering. In consideration for such termination, the Debenture Holders will be issued new warrants to purchase an identical number of shares of common stock at an exercise price equal to the Conversion Price. Each person entering into the Debenture Holder Letter Agreements have entered into lock-up agreements prohibiting the sale or other transfer of any securities of the Company owned by such persons for a period of 6 months.

On January 12, 2017, the Company entered into a letter agreement (the “GG Letter Agreement”), as amended, with a third party (referred to herein as “GG”), whereby GG agreed to convert all monies due him under that certain subordinated promissory note dated January 10, 2013 (“GG Note”) into common stock of the Company, contingent upon the completion of this offering. As of December 31, 2016, the aggregate amount of $104,729 (“GG Obligation”) was owed to GG pursuant to the GG Note. Pursuant to the GG Letter Agreement, the GG Obligation, together with interest accruing subsequent to December 31, 2016, will automatically convert upon consummation of this offering into such number of restricted shares of the Company’s common stock calculated by dividing the GG Obligation by 80% of the per share price of the common stock in this offering. GG has entered into a lock-up agreement prohibiting the sale or other transfer of all securities of the Company owned by him for a period of 6 months.

On January 12, 2017, the Company entered into a letter agreement (the “JG Letter Agreement”), as amended, with a third party (referred to herein as “JG”), whereby JG agreed to convert all monies due him under that certain subordinated promissory note dated March 18, 2016 (“JG Note”) into common stock of the Company, contingent upon the completion of this offering. As of December 31, 2016, the aggregate amount of $273,178 (“JG Obligation”) was owed to JG pursuant to the JG Note. Pursuant to the JG Letter Agreement, the JG

Obligation, together with interest accruing subsequent to December 31, 2016, will automatically convert upon consummation of this offering into such number of restricted shares of the Company’s common stock calculated by dividing the JG Obligation by 80% of the per share price of the common stock in this offering. JG has entered into a lock-up agreement prohibiting the sale or other transfer of all securities of the Company owned by him for a period of 6 months.

On January 12, 2017, the Company entered into a letter agreement the (“M Vendor Letter Agreement”), as amended, with a third party vendor (herein referred to as “M Vendor”), whereby such entity agreed to convert all monies due it from the Company pursuant to certain accounts payable (“M Vendor Account Payable”) into common stock of the Company, contingent upon the completion of this offering. As of December 31, 2016, the aggregate amount of $73,667 (“M Vendor Obligation”) was owed to M Vendor pursuant to the M Vendor Account Payable. Pursuant to the M Vendor Letter Agreement, the M Vendor Obligation will automatically convert upon consummation of this offering into such number of restricted shares of the Company’s common stock calculated by dividing the M Vendor Obligation by the per share price of the common stock in this offering. M Vendor has entered into a lock-up agreement prohibiting the sale or other transfer of all securities of the Company owned by it for a period of 6 months.

Related Party Conversions

On January 12, 2017, the Company entered into a letter agreement with Robert Welgos, a director of the Company (the “Welgos Letter Agreement”), as amended, whereby Mr. Welgos agreed to convert all amounts due him from the Company from unpaid board service fees (“Welgos Board Service Payable”) into common stock of the Company, contingent upon the completion of this offering. As of December 31, 2016, the aggregate amount of $42,500 (“Welgos Obligation”) was owed to Welgos under the Welgos Board Service Payable. Pursuant to the Welgos Letter Agreement, the Welgos Obligation will automatically convert upon consummation of this offering into such number of restricted shares of the Company’s common stock calculated by dividing the Welgos Board Service Payable by $17.50 or 2,429 shares. Mr. Welgos has entered into a lock-up agreement prohibiting the sale or other transfer of all securities of the Company owned by him for a period of 12 months.

On January 12, 2017, the Company entered into a second letter agreement with Robert Welgos (the “Welgos Preferred Stock Letter Agreement”), as amended, whereby Mr. Welgos agreed to convert 13,843 shares of Series E Preferred Stock of the Company owned by him into common stock of the Company, contingent upon the completion of this offering. As of December 31, 2016, the aggregate amount of $181,297 consisting of accrued dividends, royalty and interest was owed to Welgos with respect to his Series E Preferred Stock (“Welgos Preferred Stock Obligation”). Pursuant to the Welgos Preferred Stock Letter Agreement, the Welgos Preferred Stock Obligation will automatically convert upon consummation of this offering into such number of restricted shares of the Company’s common stock calculated by dividing the Welgos Preferred Stock Obligation by $17.72 or 10,233 shares. Mr. Welgos has entered into a lock-up agreement prohibiting the sale or other transfer of all securities of the Company owned by him for a period of 12 months.

On January 12, 2017, the Company entered into a letter agreement, as amended on March 27, 2017, with several entities affiliated with Jeffrey Peterson, the Company’s Chief Executive Officer and Mr. Peterson, individually (the “Peterson Letter Agreement”), as amended, whereby each of such parties agreed to convert all amounts due pursuant to three separate promissory notes (“Peterson Notes”) into common stock of the Company, contingent upon the completion of this offering. As of December 31, 2016, the aggregate amount of $4,021,507 (“Peterson Obligation”) was owed to such parties pursuant to the Peterson Notes. Pursuant to the Peterson Letter Agreement, the Peterson Obligation, together with interest accruing subsequent to December 31, 2016, will automatically convert upon consummation of this offering into such number of restricted shares of the Company’s common stock calculated by dividing the Peterson Obligation by $6.00, or 670,252 shares, exclusive of interest accruing subsequent to December 31, 2016. Each of the parties subject to the Peterson Letter Agreement have entered into a lock-up agreement prohibiting the sale or other transfer of all securities of the Company owned by such parties for a period of 12 months.

On January 12, 2017, the Company entered into a letter agreement with ADP Management, LLC, an entity controlled by David Derrick, the Company’s former Executive Chairman and a current consultant to the Company (the “ADP Letter Agreement”), as amended, whereby ADP Management agreed to convert all monies due it under that certain promissory note dated February 18, 2016 (“ADP Note”) into common stock

of the Company, contingent upon the completion of this offering. As of December 31, 2016, the aggregate amount of $626,736 (“ADP Obligation”) was owed to ADP Management pursuant to the ADP Note. Pursuant to the ADP Letter Agreement, the ADP Obligation, together with interest accruing subsequent to December 31, 2016, will automatically convert upon consummation of this offering into such number of restricted shares of the Company’s common stock calculated by dividing the ADP Obligation by the per share price of the common stock in the offering, exclusive of interest accruing subsequent to December 31, 2016. ADP Management has entered into a lock-up agreement prohibiting the sale or other transfer of all securities of the Company owned by it for a period of 6 months.

Conversion of Series D Convertible Preferred Stock by Related Party and Non-Related Party

On January 12, 2017, the Company entered into a second letter agreement with GG (the “GG Preferred Stock Letter Agreement”), as amended, whereby GG agreed to convert 20,000 shares of Series D Preferred Stock of the Company owned by it into common stock of the Company based on current redemption value contingent upon the completion of this offering. As of the date hereof, the current redemption value of GG’s Series D Preferred Stock was $72,000 (“GG Preferred Stock Obligation”). Pursuant to the GG Preferred Stock Letter Agreement, the GG Preferred Stock Obligation will automatically convert upon consummation of this offering into such number of restricted shares of the Company’s common stock calculated by dividing the GG Preferred Stock Obligation by 80% of the per share price of the common stock in this offering. GG has entered into a lock-up agreement prohibiting the sale or other transfer of all securities of the Company owned by him for a period of 12 months.

On January 12, 2017, the Company entered into a letter agreement with Tyumen Holdings, LLC, an entity affiliated with Jeffrey Peterson, the Company’s Chief Executive Officer (the “Tyumen Preferred Stock Letter Agreement”), as amended, whereby Tyumen Holdings agreed to convert 25,000 shares of Series D Preferred Stock of the Company owned by it into common stock of the Company based on current redemption value, contingent upon the completion of this offering. As of the date hereof, the current redemption value of Tyumen’s Series D Preferred Stock was $300,000 (“Tyumen Preferred Stock Obligation”). Pursuant to the Tyumen Preferred Stock Letter Agreement, the Tyumen Preferred Stock Obligation will automatically convert upon consummation of this offering into such number of restricted shares of the Company’s common stock calculated by dividing the Tyumen Preferred Stock Obligation by $6.00 or 50,000 shares. Tyumen has entered into a lock-up agreement prohibiting the sale or other transfer of all securities of the Company owned by it for a period of 12 months.

Redemption of Series E Preferred Stock

As of December 31, 2016, the aggregate amount of $513,074, consisting of dividends and royalties payable was owed to holders of the Company’s Series E Preferred Stock. The Company anticipates redeeming these shares with proceeds from this offering.

Authorization and Issuance of Series G Preferred Stock.

On January 31, 2017, the Company filed a certificate of designations, preferences and rights (the “Certificate of Designation”) with the Secretary of State of the State of Delaware with respect to a newly authorized class of its Series G Preferred Stock (the “Series G Preferred”). The Stated Value of one share of Series G Preferred is $500.

The Series G Preferred will automatically convert (“Automatic Conversion”) the Stated Value of such shares (the “Conversion Amount”) into fully paid and non-assessable shares of common stock of the Company (“Series G Conversion Shares”) upon (i) the Company’s receipt of Fifty Million Dollars (US$50,000,000) or more in gross revenue in a single fiscal year, (ii) the sale of the Company via asset purchase, stock sale, merger or other business combination in which the Company and/or its stockholders receive aggregate gross proceeds of Twenty-Five Million Dollars (US$25,000,000) or more, or (iii) the closing of an underwritten offering (the “Qualified Offering”) by the Company pursuant to which the Company receives aggregate gross proceeds of at least Ten Million Dollars (US$10,000,000) in consideration of the purchase of shares of common stock and/or which results in the listing of the Company’s common stock on the Nasdaq National Market, the Nasdaq Capital Market, the New York Stock Exchange, or the NYSE MKT. The number of Series G Conversion Shares issuable upon conversion of the Conversion Amount shall

equal the Conversion Amount divided by the Conversion Price then in effect. The “Conversion Price” of the Series G Preferred is $22.50. Upon the trigger of an Automatic Conversion, all of the shares of Series G Preferred owned by such Holders will convert into common stock at the Conversion Price then in effect.

On January 31, 2017, the Company issued 32,415 shares of Series G Preferred to Tyumen Holdings, LLC, an entity affiliated with Jeffrey Peterson, the Company’s Chief Executive Officer and 10,805 shares of Series G Preferred to Jim Dalton, the Company’s former Chief Executive Officer and a consultant to the Company. The consideration for such issuance relates to services rendered to the Company. As a result of the foregoing, the Series G Preferred held by Tyumen Holdings and Mr. Dalton will convert to an aggregate of 960,445 shares of common stock upon the consummation of this offering. Each of Tyumen Holdings and Jim Dalton have entered into lock-up agreements, as amended, prohibiting the sale or other transfer of the Common Shares issued pursuant to the conversion of the Series G Preferred securities of the Company owned by each of them for the longer of (i) 18 months or (ii) the date the Company first has annual gross revenues in an amount of at least $20,000,000.

JMJ Financing

On September 19, 2016, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with JMJ Financial, a Nevada sole proprietorship (“JMJ”, and together with the Company, the “Parties”). Pursuant to the Purchase Agreement, as amended on November 17, 2016 and January 30, 2017, JMJ purchased from the Company (i) a Promissory Note in the aggregate principal amount of up to $1,500,000 (the “Note”) due and payable on the earlier of March 15, 2017 or the third business day after the closing of this offering, and (ii) a Common Stock Purchase Warrant (the “Warrant”) to purchase up to 60,000 shares (100% warrant coverage) of the Company’s common stock at an exercise price per share equal to the lesser of (i) 80% of the per share price of the common stock in this offering, (ii) $25 per share, (iii) 80% of the unit price in this offering (if applicable), or (iv) the exercise price of any warrants issued in this offering. Upon the closing of this offering the number of shares issuable under the warrant will reset to an amount of shares equal to the aggregate exercise amount of the warrants (as defined therein) divided by the exercise price then in effect. The warrants expire in September 2021 and may be settled in a cashless exercise. The warrants may only be exercised to the extent the holder would own a maximum of 9.99% of the Company’s common stock after exercise. The Company anticipates recognizing the fair value as a debt discount, which will be amortized over the life of the borrowing. Additionally, pursuant to the Purchase Agreement, the Company will issue JMJ common stock (“Origination Shares”) on the 5th trading day after the pricing of this offering. The number of Origination Shares will equal 20% of the consideration paid by JMJ Financial to the Company under the Note divided by the lowest of (i) the lowest daily closing price of the common stock during the ten days prior to delivery of the Origination Shares or during the ten days prior to the date of the Purchase Agreement (in each case subject to adjustment for stock splits), (ii) 80% of the common stock offering price of this offering, (iii) 80% of the unit price offering price of this offering (if applicable), or (iv) 80% of the exercise price of any warrants issued in this offering.

Effective March 3, 2017, the parties entered into a third amendment to the Purchase Agreement and the Note. Pursuant to the terms of Amendment, the maximum principal sum of the Note increased from $1,500,000 to $2,000,000. On March 3, 2017, JMJ paid an additional $200,000 in consideration to the Company, increasing the principal sum currently due to $1,700,000. In connection with the additional consideration, pursuant to the terms of the Purchase Agreement, on March 3, 2017, the Company issued JMJ a warrant to purchase up to 8,000 shares of common stock at the exercise price described above and subject to the reset provisions also described above.

Effective March 27, 2017, the parties entered into a fourth amendment to the Purchase Agreement and the Note. Pursuant to the terms of this Amendment, the Maturity Date was amended to be the earlier of April 15, 2017 or the third business day after the closing of this offering and JMJ agreed to enter into a lock up agreement as described below.

In accordance with its terms, the Purchase Agreement became effective (the “Effective Date”) upon (i) execution by the Parties of the Purchase Agreement Note, the Warrant, and (ii) delivery of an initial advance pursuant to the Note of $500,000, which occurred on September 19, 2016 (the “Initial Advance”). As of the date hereof, a total of $1,700,000 has been funded by JMJ under the Note and, as a result, warrants exercisable for a total of 68,000 are required to be issued to JMJ. JMJ may, at its election, exercise the Warrant pursuant to a cashless exercise.

If the Company fails to repay the balance due under the Note, or issues a Variable Security (as defined in the Note) up to and including the date of the closing of this offering, JMJ has the right to convert all or any portion of the outstanding Note into shares of common stock, subject to the terms and conditions set forth

in the Note. All amounts due under the Note become immediately due and payable upon the occurrence of an event of default as set forth in the Note.

JMJ and its principal have agreed to enter into a lock-up agreement prohibiting the sale or other transfer of all securities of the Company owned by them for a period of 6 months. In consideration for entering into the lock-up agreement the Company has agreed to pay JMJ a $340,000 fee, payable in shares of common stock at a rate of the lowest of (i) 80% of the common stock offering price of the Public Offering, (ii) 80% of the unit price offering price of the Public Offering (if applicable), or (iii) 80% of the exercise price of any warrants issued in the Public Offering.

History and Corporate Information

ActiveCare, Inc. was formed March 5, 1998 as a wholly owned subsidiary of Track Group (OTCQX: TRCK), a Utah corporation, formerly known as SecureAlert, Inc. (“Track Group”). We were spun off from Track Group in February 2009. Effective July 15, 2009, we changed our name to ActiveCare, Inc., and our state of incorporation to Delaware. The address of our principal office is 1365 West Business Park Drive, Suite 100, Orem, Utah 84058 and our telephone number is (877) 219-6050. Our web site is located at www.activecare.com. Our website and the information contained in, or accessible through, our website will not be deemed to be incorporated by reference into this prospectus and does not constitute part of this prospectus.

The Offering

Issuer:		ActiveCare, Inc.

Class A units offered by us:		We are offering Class A units, each consisting of one share of common stock and one warrant to purchase one share of common stock. The warrants included within the Class A units are exercisable immediately, have an assumed exercise price of $6.88 per share (125% of the public offering price of one Class A unit based on an assumed initial offering price of $5.50 per Class A Unit, the mid-point of the estimated offering price range described on the cover page of this prospectus) and expire five years from the date of issuance.

Assumed Price per Class A unit:		$5.50 per unit, which is the mid-point of the estimated offering price range described on the cover of this prospectus⁽¹⁾

Class B units offered by us		We are also offering to those purchasers, whose purchase of Class A units in this offering would result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock following the consummation of this offering, the opportunity to purchase, in lieu of the number of Class A units that would result in ownership in excess of 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock, Class B units. Each Class B unit will consist of one share of Series H Preferred Stock into a number of shares of common stock equal to $1,000 divided by $____, the public offering price per Class A unit (the “Conversion Price”), and warrants to purchase a number of shares of common stock equal to the number of shares of common stock issuable upon conversion of one share of Series H Preferred Stock (together with the shares of common stock underlying such shares of Series H Preferred Stock preferred stock and such warrants).

Assumed Price per Class B unit		$1,000.00

Description of Series H Preferred Stock:		Each share of Series H Preferred is convertible at any time at the holder’s option into a number of shares of common stock equal to $1,000 divided by the Conversion Price. Notwithstanding the foregoing, we shall not effect any conversion of Series H Preferred Stock, with certain exceptions, to the extent that, after giving effect to an attempted conversion, the holder of shares of Series H Preferred Stock (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of such holder’s affiliates) would beneficially own a number of shares of our common stock in excess of 4.99%(or, at the election of the purchaser, 9.99%) of the shares of our common stock then outstanding after giving effect to such exercise. For additional information, see “Description of Capital Stock — Series H Preferred Stock” in this prospectus.

Common stock outstanding before the offering:		232,100 Shares

Common stock to be outstanding after the offering and Series H Preferred Stock conversions:		7,109,954 which includes the 2,909,091 shares of common stock underlying the Class A units and Class B units sold in the offering (including shares of common stock to be issued upon conversion of Series H Preferred), along with an additional 3,968,763 shares that will be issued at the closing of the offering in connection with the conversion of preferred stock, debt and other liabilities, as well as other obligations to issue shares at closing as further described below. Excludes 2,909,091 shares issuable upon exercise of the warrants sold in this offering and any securities that would be issued if the underwriters’ over-allotment option is exercised.

Overallotment option:		We have granted the underwriters a 45 day option to purchase up to _____ additional shares of our common stock at a public offering price of $___ per share and/or warrants to purchase up to ___ additional shares of our common stock at a public offering price of $0.01 per warrant, solely to cover over-allotments, if any.

Use of Proceeds:		We intend to use the net proceeds of this offering for research and development activities; sales and marketing, purchase of inventory, repayment of certain indebtedness and for general working capital purposes. See “Use of Proceeds.”

Risk Factors:		Investing in our securities is highly speculative and involves a high degree of risk. You should carefully consider the information set forth in the “Risk Factors” section beginning on page 15 before deciding to invest in our securities.

No listing of Series H Preferred Stock:		We do not intend to apply for listing of the shares of Series H Preferred Stock on any exchange or other trading system.

Trading Symbol:		Our common stock is currently quoted on the OTCQB under the trading symbol “ACAR”. We have applied to the NASDAQ Capital Market to list our common stock under the symbol “ACAR” and our warrants under the symbol “ACARW.” No assurance can be given that our applications will be approved. In order to obtain NASDAQ listing approval we effected a 1 for 500 reverse split of our common stock effective January 27, 2017.

Lock-up:		We and our directors, officers and principal stockholders have agreed with the underwriters not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of our common stock or securities convertible into common stock for a period of 365 days after the date of this prospectus, in the case of our directors and officers, and 90 days after the date of this prospectus, in the case of certain of our principal stockholders. See “Underwriting” section on page 81.

____________

(1) The assumed public offering price of $5.50 per unit, the mid-point of the range described on the cover of this prospectus. The actual number of units we will offer will be determined based on the actual public offering price.

NASDAQ listing requirements include, among other things, a stock price threshold. As a result, prior to effectiveness, on November 1, 2016 we filed a Certificate of Amendment to our Certificate of Incorporation (the “Amendment”) to effectuate a 1-for-500 reverse stock split (the “Reverse Split”). On January 27, 2017, the Reverse Stock Split was approved by the Financial Industry Regulatory Authority and was effected on the OTC Marketplace.

The common stock to be outstanding after this offering is based on 232,100 shares outstanding as of March 30, 2017, and excludes the following as of such date:

The 7,109,954 shares of common stock to be outstanding after this offering is based on 232,100 shares outstanding as of March 30, 2017, plus the following shares to be issued at the closing of the offering, based upon an estimated public offering price of $5.50 per share, the mid-point of the estimated offering price range described on the cover of this prospectus:

• 154,546 shares issuable to JMJ Financial, See “SUMMARY — Recent Developments — JMJ Financing”;

• 10,800 shares issuable upon cancellation of warrants held by PFG and its affiliates;

• 11,364 additional shares issuable to PFG and its affiliates;

• 1,284,639 shares of common stock issuable upon the conversion of the aggregate principal amount plus accrued interest calculated through December 31, 2016 on unsecured convertible and non-convertible promissory notes described under “Recent Developments” above;

• 1,454,549 shares of common stock issuable upon the conversion of the aggregate principal amount plus accrued interest calculated through December 31, 2016 on unsecured convertible debentures described under “Recent Developments” above;

• 66,364 shares of common stock issuable upon the conversion of Series D Preferred Stock as described under “Recent Developments” above;

• 10,233 shares of common stock issuable upon the conversion of Series E Preferred Stock as described under “Recent Developments” above;

• 960,445 shares of common stock issuable upon the conversion of Series G Preferred Stock as described under “Recent Developments” above;

• 15,823 shares of common stock issuable upon the conversion of certain accounts payable and other obligations as described under “Recent Developments” above;

The 7,109,954, shares of common stock to be outstanding after this offering excludes the following:

• 30,308 shares to be issued upon conversion of unsecured convertible promissory notes for accrued interest from January 1, 2017 through an assumed closing date of March 31, 2017.

• 6,012 shares issuable upon exercise of outstanding warrants with a weighted average exercise price of $212.92;

• 386,364 shares issuable upon exercise of warrants held by JMJ Financial at an exercise price of $20.00, subject to adjustment;

• 140,000 shares issuable upon exercise of warrants held by PFG and its affiliates at an exercise price of $ ;

• 11,070 shares of common stock issuable upon the exercise of warrants that are being issued to holders of unsecured convertible debentures in connection with their conversion of such debentures as described under “Recent Developments” above;

• 1,454,549 shares of common stock issuable upon the exercise of warrants issuable upon the conversion of the aggregate principal amount plus accrued interest calculated through December 31, 2016 on unsecured convertible debentures described under “Recent Developments” above;

• 377,250 shares of common stock reserved for issuance pursuant to the 2016 Plan;

• 145,455 shares of common stock issuable upon exercise of warrants to be issued to the underwriters in connection with this offering; and

• 2,909,091 shares of common stock issuable upon exercise of outstanding warrants sold in this offering.

Unless otherwise stated, all information in this prospectus assumes no exercise of the underwriters’ over-allotment option to purchase additional shares and/or warrants.

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The following summary consolidated statements of operations data for the years ended September 30, 2016 and 2015 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The historical financial data presented below is not necessarily indicative of our financial results in future periods, and the results for the three months ended December 31, 2016 are not necessarily indicative of our operating results to be expected for the full fiscal year ending September 30, 2017 or any other period. You should read the summary consolidated financial data in conjunction with those financial statements and the accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our consolidated financial statements are prepared and presented in accordance with United States generally accepted accounting principles, or U.S. GAAP. Our unaudited condensed consolidated financial statements have been prepared on a basis consistent with our audited financial statements and include all adjustments, consisting only of normal and recurring adjustments that we consider necessary for a fair presentation of the financial position and results of operations as of and for such periods. Except as otherwise noted, all share and per share data for the periods shown have been adjusted, on a retroactive basis, to reflect a 1-for-500 reverse stock split, which became effective on January 27, 2017, but not the automatic conversion of all of 115,070 outstanding shares of preferred stock and the conversion of the aggregate principal amount, plus accrued interest, of unsecured convertible promissory notes and convertible accrued liabilities, into shares of common stock, which will occur upon consummation of the offering.

SUMMARY STATEMENTS OF OPERATIONS DATA

	For the Three Months Ended December 31, 2016						Fiscal Years Ended September 30,*
	(unaudited)			(unaudited)
	2016			2015			2016			2015
Total revenues	$	1,861,594		$	2,087,670		$	7,464,146		$	6,597,981
Cost of revenues		1,300,150			1,593,356			(5,334,172	)		(5,196,827	)
Gross profit (loss)		561,444			494,314			2,129,974			1,401,154
General and administrative expenses		1,210,294			2,346,705			(8,194,678	)		(10,358,410	)
Research and development expenses		167,608			22,909			(248,441	)		(106,526	)
Other income (expense), net		(3,537,577	)		(444,238	)		(2,809,415	)		(2,277,655	)
Discontinued operations		—			—			—			(186,232	)
Net loss		(4,354,036	)		(2,319,538	)		(9,122,560	)		(11,527,669	)
Net loss to common shareholders	$	(4,388,214	)	$	(2,723,086	)	$	(16,338,456	)	$	(12,823,749	)
Basic net loss per common share:	$	(18.91	)	$	(17.27	)	$	(84.50	)	$	(124.63	)
Diluted net loss per common share:	$	(18.91	)	$	(17.27	)	$	(92.78	)	$	(124.63	)
Weighted average common shares outstanding – basic		232,100			157,652			193,365			102,897
Weighted average common shares outstanding – diluted		232,100			157,652			196,122			102,897

____________

* derived from audited consolidated financial statements

The following table presents consolidated balance sheet data as of December 31, 2016 on:

• an actual basis;

• a pro forma basis, giving effect to the sale by us of shares of common stock offered by this prospectus at an assumed public offering price of $ per share less and $ per warrant less the underwriting discounts and commissions and estimated offering expenses payable by us.

The pro forma information will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.

	Actual			Pro Forma⁽¹⁾
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	292,724		$	12,563,409
Working capital (deficit)		(17,484,150	)		8,287,300
Total assets		2,490,458			14,307,942
Total liabilities		26,977,920			6,380,017
Total stockholders’ equity (deficit)		(24,487,462	)		7,927,925

____________

(1) A $1.00 increase or decrease in the assumed public offering price per share would increase or decrease our cash and cash equivalents, working capital (deficit), total assets and total stockholders’ equity (deficit) by approximately $2,909,091, assuming the number of units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us.

RISK FACTORS

Investing in our common stock involves a great deal of risk. Careful consideration should be made of the following factors as well as other information included in this prospectus before deciding to purchase our common stock. There are many risks that affect our business and results of operations, some of which are beyond our control. Our business, financial condition or operating results could be materially harmed by any of these risks. This could cause the trading price of our common stock to decline, and you may lose all or part of your investment. Additional risks that we do not yet know of or that we currently think are immaterial may also affect our business and results of operations.

Risks Related To Our Business

BECAUSE OF OUR HISTORY OF ACCUMULATED DEFICITS, RECURRING LOSSES, NEGATIVE CASH FLOWS FROM OPERATING ACTIVITIES, NEGATIVE TOTAL EQUITY AND CERTAIN DEBT BEING IN DEFAULT, WE MUST ACHIEVE PROFITABILITY AND MAY BE REQUIRED TO OBTAIN ADDITIONAL FINANCING IF WE ARE TO CONTINUE AS A “GOING CONCERN.”

We incurred negative cash flows from operating activities and recurring net losses for the three months ended December 31, 2016 and in fiscal years 2016 and 2015. We had negative working capital at the end of each of those years. As of September 30, 2016 and 2015, our accumulated deficit was $108,178,614 and $91,840,158, respectively. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements included in this prospectus do not include any adjustments that might result from the outcome of this uncertainty. In order for us to remove substantial doubt about our ability to continue as a going concern, we must achieve profitability, generate positive cash flows from operating activities and obtain necessary debt or equity funding. If we are unable to increase revenues or obtain additional financing, we will be unable to continue the development of our products and services and we may have to cease operations.

Our financial statements have been prepared on the assumption that we will continue as a going concern. Our independent registered public accounting firm has included an explanatory paragraph in its opinion on our financial statements for the fiscal years ended September 30, 2016 and 2015 stating that our recurring losses, negative cash flows from operating activities, negative working capital, negative total equity and certain debt that is in default, and other conditions, raise substantial doubt about our ability to continue as a going concern. It has been necessary to rely upon debt and the sale of our equity securities to sustain operations. Our management anticipates that we will require additional capital to fund ongoing operations without taking into account the proceeds from this offering. There can be no guarantee that we will be able to obtain such funds, or obtain them on satisfactory terms, and that such funds would be sufficient. If such additional funding is not obtained, we may be required to scale back or cease operations.

IF WE ARE UNABLE TO OBTAIN ADDITIONAL FINANCING, BUSINESS OPERATIONS WILL BE HARMED AND IF WE DO OBTAIN ADDITIONAL FINANCING THEN EXISTING SHAREHOLDERS MAY SUFFER SUBSTANTIAL DILUTION.

As of December 31, 2016, we had cash of $292,724. We expect the net proceeds from this offering, along with our current cash position, will enable us to fund our operating expenses and capital expenditure requirements for at least the next 24 months. Thereafter, unless we achieve profitability, we anticipate that we will need to raise additional capital to fund our operations and to otherwise implement our overall business strategy. We currently do not have any contracts or commitments for additional financing. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail and possibly cease operations. In addition, any additional equity financing may involve substantial dilution to then existing shareholders.

DUE TO OUR DEPENDENCE ON A LIMITED NUMBER OF CUSTOMERS, WE ARE SUBJECT TO A CONCENTRATION OF CREDIT RISK.

For the three months ended December 31, 2016, three customers accounted for 68% of our total revenues. For the fiscal year ended September 30, 2016, two customers accounted for 64% of our 2016 total revenues. For the fiscal year ended September 30, 2015, revenues from three customers represented 69% of our 2015

total revenues. Revenues from one of these customers, Rx Benefits, have declined to under 15% over the past six months and we anticipate revenues from Rx Benefits will fall below 5% of revenues in the future.

The loss of any of significant customers, other than Rx Benefits, would likely have a material adverse effect on our business, financial condition and results of operations. In addition, in the case of insolvency of any of our significant customers, receivables from that customer might not be collectible, might not be fully collectible, or might be collectible over longer than normal terms, each of which could have a material adverse effect on our business, financial condition, liquidity and results of operations.

WE CURRENTLY DEPEND UPON A SINGLE SOURCE SUPPLIER FOR OUR PRODUCTS, MAKING US VULNERABLE TO SUPPLY PROBLEMS AND PRICE FLUCTUATIONS, WHICH COULD HARM OUR BUSINESS.

During the three months ended December 31, 2016 and for fiscal years 2016 and 2015, we purchased substantially all of our products and supplies from one third-party vendor. We expect to rely on this single source third-party vendor for the manufacture of our Chronic Illness Monitoring products such as our current glucometer and the test strips required for that device until such time as we develop our own testing products. Although there are other vendors who manufacture similar products and supplies, our systems would need to be modified to accommodate those products and supplies. Consequently, we are dependent on this contract manufacturer for the production of our products and will depend on third-party manufacturing resources to manufacture products we may add to our product line in the future.

Our reliance on this vendor also subjects us to risks that could harm our business, including:

• we may not be able to obtain adequate supply in a timely manner or on commercially reasonable terms;

• we may have difficulty locating and qualifying alternative suppliers;

• our supplier manufactures products for a range of customers, and fluctuations in demand for the products it supplies for others may affect its ability to deliver product to us in a timely manner; and

• our supplier may encounter financial hardships unrelated to our demand for product, which could inhibit its ability to fulfill our orders and meet our requirements.

Any interruption or delay in the supply of products or materials, or our inability to obtain product from alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and cause them to cancel orders or switch to competitive products, and could therefore have a material adverse effect on our business, financial condition, operating results and cash flows.

Our profitability depends upon MANY FACTORS for which no assurance CAN BE given.

Profitability depends upon many factors, including the ability to develop and maintain valuable product and monitoring solutions, our ability to identify and obtain the rights to additional products to add to our existing product line, success and expansion of our sales programs, expansion of our customer base, obtaining the right balance of expense levels and the overall success of our business activities. We anticipate that we will generate operating income in the next 12 months although no assurance can be given in this regard. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the value of our company and could impair our ability to raise capital, expand our business, maintain our research and development efforts, diversify our product offerings or even continue our operations. A decline in the value of our stock could also cause you to lose all or part of your investment.

The commercial success of our products will depend upon the degree of market acceptance by physicians, hospitals, third-party PAYERS, and others in the medical community.

Ultimately, none of our current products or products in development, even if they receive approval, may ever gain market acceptance by physicians, hospitals, third-party payers or others in the medical community.

If these products do not achieve an adequate level of acceptance, we may not generate significant product revenue and we may not become profitable. The degree of market acceptance of our products, will depend on a number of factors, including:

• the efficacy and potential advantages over alternative treatments;

• the ability to offer our products and services for sale at competitive prices;

• the willingness of the target population to accept and adopt our products and services;

• the strength of marketing and distribution support and the timing of market introduction of competitive products and services; and

• publicity concerning our products and services or competing products and services.

Even if a potential product displays a favorable profile, market acceptance of the product will not be known until after it is launched. Our efforts to educate the medical community and third-party payers on the benefits of our products and services may require significant resources and may never be successful. Such efforts to educate the marketplace may require more resources than are required by conventional technologies marketed by our competitors.

Our products utilize technology based in part on patents that have been licensed to us for use within our markets. Our success in adding to our existing product line will depend on our ability to acquire or otherwise license competitive technologies and products and to operate without infringing the proprietary rights of others, both in the United States and internationally. No assurance can be given that any licenses required from third parties will be made available on terms acceptable to us, or at all. If we do not obtain such licenses, we could encounter delays in product introductions while we attempt to adopt alternate sources. We could also find that the manufacture or sale of products requiring such licenses is not possible. Litigation may be necessary to defend against claims of infringement, to protect trade secrets or know-how owned by us, or to determine the scope and validity of the proprietary rights of others. Such litigation could have an adverse and material impact on us and on our operations.

Recent changes in insurance and health care laws have created uncertainty in the health care industry.

The Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act, each enacted in March 2010, generally known as the Health Care Reform Law, significantly expanded health insurance coverage to uninsured Americans and changed the way health care is financed by both governmental and private payers. We expect expansion of access to health insurance to increase the demand for our products and services, but other provisions of the Health Care Reform Law could affect us adversely. Additionally, further federal and state proposals for health care reform are likely. We cannot predict what further reform proposals, if any, will be adopted, when they may be adopted, or what impact they may have on us.

The collection, retention and disclosure of personal information and patient health information is regulated by law and subjects us and our business associates to potential liability for unauthorized disclosure and other use of such information.

State, federal and foreign laws, such as the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), regulate the confidentiality of sensitive personal information and the circumstances under which such information may be released. These measures may govern the disclosure and use of personal

and patient medical record information and may require users of such information to implement specified security measures, and to notify individuals in the event of privacy and security breaches. Evolving laws and regulations in this area could restrict the ability of our customers to obtain, use or disseminate patient information, or could require us to incur significant additional costs to re-design our products in a timely manner to reflect these legal requirements, either of which could have an adverse impact on our results of operations. Other health information standards, such as regulations under HIPAA, establish standards regarding electronic health data transmissions and transaction code set rules for specified electronic transactions, for example, transactions involving claims submissions to third-party payers. These also continue to evolve and are often unclear and difficult to apply. In addition, under the federal Health Information Technology for Economic and Clinical Health Act (HITECH Act), which was passed in 2009, some of our business that was previously only indirectly subject to federal HIPAA privacy and security rules became directly subject to such rules because we may serve as “business associates” to persons or entities that are subject to these rules. On January 17, 2013, the Office for Civil Rights of the Department of Health and Human Services released a final rule implementing the HITECH Act and making certain other changes to HIPAA privacy and security requirements. Compliance with the rule was required by September 23, 2013, and increased the requirements applicable to some of our business. Failure to maintain the confidentiality of sensitive personal information in accordance with the applicable regulatory requirements, or to abide by electronic health data transmission standards, could expose us to breach of contract claims, fines and penalties, costs for remediation and harm to our reputation.

Our industry is fragmented, and we MAY experience intense competition from a variety of sources, many of which MAY BE better financed and better managed than we are.

We face, and will continue to face, competition in the Chronic Illness Monitoring market. Many of our competitors and potential competitors may have greater access to capital and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Moreover, many of our competitors may have greater name recognition and experience in the Chronic Illness Monitoring industry. Smaller and other early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. There can be no assurance that competition from other companies will not render our products and services noncompetitive.

THE LOSS OF ONE OR MORE MEMBERS OF OUR SENIOR MANAGEMENT OR KEY EMPLOYEES MAY ADVERSELY AFFECT OUR ABILITY TO IMPLEMENT OUR STRATEGY.

Our success depends to a significant extent upon the continued services of Mr. Jeffrey Peterson. The loss of the services of Mr. Peterson could have a material adverse effect on our growth, revenues, and prospective business. This individual is committed to the Company and willing to devote a large amount of time and energy to the Company. This employee could leave us with little or no prior notice. We do not have “key person” life insurance policies covering any of our employees. Additionally, there are a limited number of qualified technical personnel with significant experience in the design, development, manufacture, and sale of our products, and we may face challenges hiring and retaining these types of employees.

We depend on our experienced management team and the loss of one or more key executives could have a negative impact on our business. We also depend on our ability to retain and motivate key employees and attract qualified new employees. If we lose a member of the management team or a key employee, we may not be able to replace him or her. Integrating new employees into our management team and training new employees with no prior experience in our industry could prove disruptive to our operations, require a disproportionate amount of resources and management attention and ultimately prove unsuccessful. An inability to attract and retain sufficient technical and managerial personnel could limit or delay our development efforts, which could have a material adverse effect on our business, financial condition and results of operations.

Our NEWLY HIRED Chief Financial Officer WILL BE WORKING PART TIME FOR US RESULTING IN A potential lack of availability DUE TO OTHER ComMitments.

Mr. Eric Robinson, our newly hired Chief Financial Officer, Secretary and Treasurer, will be devoting two days a week in the performance of his duties to the Company. Mr. Robinson also has other commitments and obligations, which may result in a lack of availability when needed. It is anticipated that Mr. Robinson will be joining the Company on a full time basis in the future and is currently negotiating the terms of such engagement in good faith.

From time to time, we may be subject to expensive claims relating to product liability; our ability to insure against this risk is limited.

The use of any of our existing or potential products in clinical settings may expose us to liability claims. These claims could be made directly by persons who assert that inaccuracies or deficiencies in their test results were caused by defects in our products. Alternatively, we could be exposed to liability indirectly by being named as a third-party defendant in actions brought against companies or persons who have purchased our products. We have obtained limited product liability insurance coverage and we intend to expand our insurance coverage on an as needed basis as sales revenue increases. However, insurance coverage is becoming increasingly expensive, and no assurance can be given that we will be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. There can also be no assurance that we will be able to obtain commercially reasonable product liability insurance for any products added to our product line in the future. A successful product liability claim or series of claims brought against us could have a material adverse effect on our business, financial condition and results of operations.

FUTURE CASH FLOW FLUCTUATIONS MAY AFFECT OUR ABILITY TO FUND OUR WORKING CAPITAL REQUIREMENTS OR ACHIEVE OUR BUSINESS OBJECTIVES IN A TIMELY MANNER.

Our working capital requirements and cash flows historically have been, and are expected to continue to be, subject to quarterly and yearly fluctuations, depending on such factors as timing and size of capital expenditures, levels of sales, timing of deliveries and collection of receivables, inventory levels, customer payment terms and supplier terms and conditions. We expect the net proceeds from this offering, along with our current cash position and cash available under our line of credit, will enable us to fund our operating expenses and capital expenditure requirements for at least the next 24 months. However, a greater than expected slow-down in capital spending by our customers may require us to adjust our current business model. As a result, our revenues and cash flows may be materially lower than we expect and we may be required to reduce our capital expenditures and investments or take other measures in order to meet our cash requirements. We may seek additional funds from liquidity-generating transactions and other conventional sources of external financing (which may include a variety of debt, convertible debt and/or equity financings). We cannot provide any assurance that our net cash requirements will be as we currently expect. Our inability to manage cash flow fluctuations resulting from the above factors could have a material adverse effect on our ability to fund our working capital requirements from operating cash flows and other sources of liquidity or to achieve our business objectives in a timely manner.

OUR DEBT FINANCING IS secured by the grant of a security interest in all of our assets and upon a default the lender may foreclose on all of our assets.

In February 2016, we entered into a loan and security agreement with Partners for Growth IV, L.P. (the “Loan and Security Agreement”) and issued certain notes payable in connection therewith (the “PFG Notes” together with the Loan and Security Agreement, the “PFG Obligations”). The PFG Obligations, which have an outstanding balance of principal and interest in the aggregate of $2,441,750 as of December 31, 2016, are secured by the grant of a security interest in all of the Company’s assets. In the event of the Company’s failure to make such payments or to comply with the terms of the working capital line of credit under the Loan and Security Agreement or the PFG Notes, PFG can declare a default and seek to foreclose on the Company’s assets. The Company and PFG entered into the December Forbearance Agreement, pursuant to which PFG agreed to forbear, through March 31, 2017, from exercising remedies with regard to certain breaches of agreements between the Company and PFG, under the Existing PFG Agreements. The forbearance set forth in the December Forbearance was initially in effect through February 15, 2017 and was subsequently extended to be effective through April 10, 2017.

If the Company is unable to repay or refinance its indebtedness to PFG it may be forced to cease operations and the holders of the Company’s common stock may lose their entire investment. also “Prospectus Summary — Recent Developments — “Partners for Growth IV, L.P. Loan Forbearance and Related Matters.”

OUR BUSINESS MAY BE MATERIALLY AND ADVERSELY AFFECTED BY INCREASED LEVELS OF DEBT.

In order to finance our business or to finance possible acquisitions we may incur significant levels of debt compared to historical levels, and we may need to secure additional sources of funding, which may include debt or convertible debt financing, in the future. A high level of debt, arduous or restrictive terms and conditions relating to accessing certain sources of funding, failure to meet the financial and/or other covenants in our credit and/or support facilities and any significant reduction in, or access to, such facilities, poor business performance or lower than expected cash inflows could have adverse consequences on our ability to fund our business operations. Other effects of a high level of debt include the following:

• we may have difficulty borrowing money in the future or accessing sources of funding;

• we may need to use a large portion of our cash flows from operating activities to pay principal and interest on our indebtedness, which would reduce the amount of cash available to finance our operations and other business activities;

• a high debt level, arduous or restrictive terms and conditions, or lower than expected cash flows would make us more vulnerable to economic downturns and adverse developments in our business; and

• if operating cash flows are not sufficient to meet our operating expenses, capital expenditures and debt service requirements as they become due, we may be required, in order to meet our debt service obligations, to delay or reduce capital expenditures or the introduction of new products and services, sell assets and/or forego business opportunities including acquisitions, research and development projects or product design enhancements.

WE MUST BE ABLE TO ESTABLISH AND MAINTAIN REQUIRED DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING AND TO MEET THE PUBLIC REPORTING AND THE FINANCIAL REQUIREMENTS FOR OUR BUSINESS.

Our management has a legal and fiduciary duty to establish and maintain disclosure controls and control procedures in compliance with the securities laws, including the requirements mandated by the Sarbanes-Oxley Act of 2002. The standards that must be met for management to assess the internal control over financial reporting as effective are complex, and require significant documentation, testing and possible remediation to meet the detailed standards. Because we have limited resources, we may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting, and disclosure controls and procedures, if required. In addition, if we are required to obtain attestation by our independent registered public accounting firm, we may encounter problems or delays in completing the implementation of any requested improvements and receiving an attestation of our assessment by our independent registered public accounting firm. If we cannot assess our internal control over financial reporting as effective or provide adequate disclosure controls or implement sufficient control procedures, or our independent registered public accounting firm is unable to provide an unqualified attestation report on such assessment if required, investor confidence and share value may be negatively impacted.

RAPID GROWTH COULD RESULT IN A STRAIN ON OUR RESOURCES.

Because of our size, growth will likely place a significant strain on our financial, technical, operational and management resources. The failure to continue to upgrade our technical, administrative, operating and financial control systems or the occurrence of unexpected expansion difficulties, including the recruitment and retention of experienced managers, could have a material adverse effect on our business, financial condition and results of operations and our ability to timely execute this aspect of our business plan.

Risks Related to Our Intellectual Property

SOME OF Our products MAY BE subject to the risks and uncertainties associated with the protection of intellectual property and related proprietary rights. We believe that our success depends in part on our ability to obtain and enforce patents, maintain trade secrets and operate without infringing on the proprietary rights of others in the United States and in other countries.

We own or have license rights under several patents; we have also applied for several additional patents and those applications are awaiting action by the United States Patent Office. There is no assurance those patents will issue or that when they do issue they will include all of the claims currently included in the applications. Even if they do issue, those new patents and our existing patents must be protected against possible infringement. The enforcement of patent rights can be uncertain and involve complex legal and factual questions. The scope and enforceability of patent claims are not systematically predictable with absolute accuracy. The strength of our own patent rights depends, in part, upon the breadth and scope of protection provided by the patent and the validity of our patents, if any.

We also rely on trade secrets laws to protect portions of our technology for which patent protection has not yet been pursued or is not believed to be appropriate or obtainable.

These laws may protect us against the unlawful or unpermitted disclosure of any information of a confidential and proprietary nature, including but not limited to our know-how, trade secrets, methods of operation, names and information relating to vendors or suppliers and customer names and addresses. We intend to protect this unpatentable and unpatented proprietary technology and processes, in addition to other confidential and proprietary information in part, by entering into confidentiality agreements with employees, collaborative partners, consultants and certain contractors. There can be no assurance that these agreements will not be breached, that we will have adequate remedies for any breach, or that our trade secrets and other confidential and proprietary information will not otherwise become known or be independently discovered or reverse-engineered by competitors.

WE MAY BE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, WHICH COULD AFFECT OUR ABILITY TO COMPETE.

There can be no assurance that trade secrets and other intellectual property will not be challenged, invalidated, misappropriated or circumvented by third parties. In some instances, we have augmented our technology base by licensing the proprietary intellectual property of others. In the future, we may not be able to obtain necessary licenses on commercially reasonable terms. We enter into confidentiality and invention assignment agreements with our employees and enter into non-disclosure agreements with our suppliers and appropriate customers so as to limit access to and prevent disclosure of our proprietary information. These measures may not suffice to deter misappropriation or third-party development of similar technologies. Moreover, the laws concerning intellectual property vary among nations and the protection provided to our intellectual property by the laws and courts of foreign nations may not be as advantageous to us as the protection available under U.S. law.

Costly litigation may be necessary to protect our intellectual property rights and we may be subject to claims alleging the violation of the intellectual property rights of others.

We may face significant expense and liability as a result of litigation or other proceedings relating to patents and intellectual property rights of others. In the event that another party has also filed a patent application or been issued a patent relating to an invention or technology claimed by us in pending applications, we may be required to participate in an interference proceeding declared by the United States Patent and Trademark Office to determine priority of invention, which could result in substantial uncertainties and costs for us, even if the eventual outcome was favorable to us. We, or our licensors, also could be required to participate in interference proceedings involving issued patents and pending applications of another entity. An adverse outcome in an interference proceeding could require us to cease using the technology, substantially modify it or to license rights from prevailing third parties.

The cost to us of any patent litigation or other proceeding relating to our licensed patents or patent applications, even if resolved in our favor, could be substantial, especially given our early stage of development. Our ability to enforce our patent protection could be limited by our financial resources, and may be subject to lengthy delays. A third party may claim that we are using inventions claimed by their patents and may go to court to stop us from engaging in our normal operations and activities, such as research, development and the sale of any future products and services. Such lawsuits are expensive and would consume significant time and other resources. There is a risk that a court will decide that we are infringing the third party’s patents and will order us to stop the activities claimed by the patents. In addition, there is a risk that a court will order us to pay the other party damages for having infringed their patents.

Moreover, there is no guarantee that any prevailing patent owner would offer us a license so that we could continue to engage in activities claimed by the patent, or that such a license, if made available to us, could be acquired on commercially acceptable terms. In addition, third parties may, in the future, assert other intellectual property infringement claims against us with respect to our services, technologies or other matters.

We have limited foreign intellectual property rights and may not be able to protect our intellectual property rights throughout the world.

We have limited intellectual property rights outside the United States. Filing, prosecuting and defending patents on devices in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property to the same extent as laws in the United States. Consequently, we may not be able to prevent third parties from mimicking our inventions in all countries outside the United States, or from selling or importing products made using our inventions into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patents to develop their own products and further, may export otherwise infringing products to territories where we have patents, but enforcement is not as strong as that in the United States.

Many companies have encountered significant problems in protecting and defending intellectual property in foreign jurisdictions. The legal systems of certain countries, particularly China and certain other developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property, particularly those relating to medical devices and biopharmaceutical products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. To date, we have not sought to enforce any issued patents in these foreign jurisdictions. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. The requirements for patentability may differ in certain countries, particularly developing countries. Certain countries in Europe and developing countries, including China and India, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In those countries, we and our licensors may have limited remedies if patents are infringed or if we or our licensors are compelled to grant a license to a third party, which could materially diminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

THIRD PARTIES MAY CLAIM IN THE FUTURE THAT WE ARE INFRINGING DIRECTLY OR INDIRECTLY UPON THEIR INTELLECTUAL PROPERTY RIGHTS, AND THIRD PARTIES MAY INFRINGE UPON OUR INTELLECTUAL PROPERTY RIGHTS.

Many of the markets we serve are characterized by vigorous protection and pursuit of intellectual property rights, which may result in protracted and expensive litigation. Third parties may claim in the future that we are infringing directly or indirectly upon their intellectual property rights, and we may be found to be infringing or to have infringed directly or indirectly upon those intellectual property rights. Claims of

intellectual property infringement might also require us to enter into costly royalty or license agreements. Moreover, we may not be able to obtain royalty or license agreements on terms acceptable to us, or at all. We also may be subject to significant damages or injunctions against development and sale of certain of our products, services and solutions. Our success depends in large part on our proprietary technology. We rely on a combination of patents, copyrights, trademarks, trade secrets, know-how, confidentiality provisions and licensing arrangements to establish and protect our intellectual property rights. If we fail to successfully protect and enforce these rights, our competitive position could suffer. Our pending patent and trademark registration applications may not be allowed, or competitors may challenge the validity or scope of our patents or trademark registrations. In addition, our patents may not provide us a significant competitive advantage. We may be required to spend significant resources to monitor and police our intellectual property rights. We may not be able to detect infringement and our competitive position may be harmed before we do so. In addition, competitors may design around our technology or develop competing technologies.

Risks Relating to Ownership of our Common Stock

WE CURRENTLY DO NOT INTEND TO PAY DIVIDENDS ON OUR COMMON STOCK. AS A RESULT, YOUR ONLY OPPORTUNITY TO ACHIEVE A RETURN ON YOUR INVESTMENT IS IF THE PRICE OF OUR COMMON STOCK APPRECIATES.

We currently do not expect to declare or pay dividends on our common stock. In addition, in the future we may enter into agreements that prohibit or restrict our ability to declare or pay dividends on our common stock. As a result, your only opportunity to achieve a return on your investment will be if the market price of our common stock appreciates and you sell your shares at a profit.

YOU MAY EXPERIENCE DILUTION OF YOUR OWNERSHIP INTEREST DUE TO THE FUTURE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK.

We are in a capital intensive business and we do not have sufficient funds to finance the growth of our business or to support our projected capital expenditures. As a result, we will require additional funds from future equity or debt financings, including sales of preferred shares or convertible debt, to complete the development of new projects and pay the general and administrative costs of our business. We may in the future issue our previously authorized and unissued securities, resulting in the dilution of the ownership interests of holders of our common stock. We are currently authorized to issue 200,000,000 shares of common stock and 10,000,000 shares of preferred stock. Additionally, the Board of Directors may subsequently approve increases in authorized common stock. The potential issuance of such additional shares of common or preferred stock or convertible debt may create downward pressure on the trading price of our common stock. We may also issue additional shares of common stock or other securities that are convertible into or exercisable for common stock in future public offerings or private placements for capital raising purposes or for other business purposes. The future issuance of a substantial number of common shares into the public market, or the perception that such issuance could occur, could adversely affect the prevailing market price of our common shares. A decline in the price of our common shares could make it more difficult to raise funds through future offerings of our common shares or securities convertible into common shares.

Our Amended and Restated Certificate of Incorporation allows for our board of directors to create new series of preferred stock without further approval by our stockholders, which could have an anti-takeover effect and could adversely affect holders of our common stock.

Our authorized capital includes preferred stock issuable in one or more series. Our board of directors has the authority to issue preferred stock and determine the price, designation, rights, preferences, privileges, restrictions and conditions, including voting and dividend rights, of those shares without any further vote or action by stockholders. The rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of holders of any preferred stock that may be issued in the future. The issuance of additional preferred stock, while providing desirable flexibility in connection with possible financings and acquisitions and other corporate purposes, could make it more difficult for a third party to acquire a majority of the voting power of our outstanding voting securities, which could deprive our

holders of common stock of a premium that they might otherwise realize in connection with a proposed acquisition of our company.

There can be no assurances that our shares AND/OR WARRANTS will be listed on the NASDAQ Capital Market and, if they are, our shares will be subject to potential delisting if we do not meet or continue to maintain the listing requirements of the NASDAQ Capital Market.

We intend to apply to list the shares of our common stock on the NASDAQ Capital Market, or NASDAQ. An approval of our listing application by NASDAQ will be subject to, among other things, our fulfilling all of the listing requirements of NASDAQ. In addition, NASDAQ has rules for continued listing, including, without limitation, minimum market capitalization and other requirements. Failure to maintain our listing, or de-listing from NASDAQ, would make it more difficult for shareholders to sell our common stock and more difficult to obtain accurate price quotations on our common stock. This could have an adverse effect on the price of our common stock. Our ability to issue additional securities for financing or other purposes, or otherwise to arrange for any financing we may need in the future, may also be materially and adversely affected if our common stock is not traded on a national securities exchange.

THERE IS CURRENTLY ONLY A LIMITED PUBLIC MARKET FOR OUR COMMON STOCK AND NO PUBLIC MARKET FOR OUR WARRANTS. FAILURE TO DEVELOP OR MAINTAIN A TRADING MARKET COULD NEGATIVELY AFFECT THEIR VALUE AND MAKE IT DIFFICULT OR IMPOSSIBLE FOR YOU TO SELL YOUR SHARES.

There is currently only a limited public market for our common stock and no market for our warrants and the public offering price of the units may bear no relationship to the price at which our common stock and warrants will trade after this offering. An active public market for our common stock and/or warrants may not develop or be sustained. Failure to develop or maintain an active trading market could make it difficult for you to sell your shares or warrants without depressing the market price for such securities or recover any part of your investment in us. Even if an active market for our common stock and warrants does develop, the market price of such securities may be highly volatile. In addition to the uncertainties relating to future operating performance and the profitability of operations, factors such as variations in interim financial results or various, as yet unpredictable, factors, many of which are beyond our control, may have a negative effect on the market price of our securities. Further, quotes for shares of our common stock on the OTCQB may not be indicative of the market price on a national securities exchange, such as The Nasdaq Capital Market.

THE SERIES H PREFERRED STOCK WILL BE AN UNLISTED SECURITYAND AS SUCH THERE WILL NOT BE PUBLIC MARKET FOR SUCH SECURITIES.

There is no established public trading market for the Series H Preferred Stock, and we do not expect a market to develop. In addition, the Series H Preferred Stock is not listed, and we do not intend to apply for listing of the Series H Preferred Stock on any securities exchange or trading system. Without an active market, the liquidity of the Series H Preferred Stock is limited, and investors may be unable to liquidate their investments in the Series H Preferred Stock.

If and when a larger trading market for our SECURITIES develops, the market price of SUCH SECURITIES is still likely to be highly volatile and subject to wide fluctuations, and you may be unable to resell your sECURITIES at or above the price at which you acquired them.

The stock market in general and the market for smaller health service companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. The market price for our securities may be influenced by many factors that are beyond our control, including, but not limited to:

• variations in our revenue and operating expenses;

• market conditions in our industry and the economy as a whole;

• actual or expected changes in our growth rates or our competitors’ growth rates;

• developments or disputes concerning patent applications, issued patents or other proprietary rights;

• developments in the financial markets and worldwide or regional economies;

• variations in our financial results or those of companies that are perceived to be similar to us;

• announcements by the government relating to regulations that govern our industry;

• the recruitment or departure of key scientific or management personnel;

• sales of our common stock or other securities by us or in the open market;

• changes in the market valuations of other comparable companies;

• general economic, industry and market conditions; and

• the other factors described in this “Risk Factors” section.

The trading price of our shares might also decline in reaction to events that affect other companies in our industry, even if these events do not directly affect us. Each of these factors, among others, could harm the value of your investment in our securities. In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, operating results and financial condition.

Efforts to comply with the applicable provisions of Section 404 of the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with Section 404 of the Sarbanes-Oxley Act may adversely affect us and the market price of our common stock.

Under current SEC rules, we have been required to report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, and related rules and regulations of the SEC. We will be required to review on an annual basis our internal control over financial reporting, and on a quarterly and annual basis to evaluate and disclose changes in our internal control over financial reporting. This process may result in a diversion of management’s time and attention and may involve significant expenditures. We cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations, and we may not be able to ensure that the process is effective or that our internal control over financial reporting is or will be effective in a timely manner. In the event that we are unable to maintain or achieve compliance with the applicable provisions of Section 404 of the Sarbanes-Oxley Act and related rules, we and the market price of our common stock may be adversely affected.

If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of our company and may affect the trading price of our common stock and warrants.

We are a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change in control would be beneficial to our existing stockholders. In addition, our certificate of incorporation and bylaws may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable. Our certificate of incorporation and bylaws:

• authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to thwart a takeover attempt;

• provide that vacancies on our Board of Directors, including newly created directorships, may be filled by a majority vote of directors then in office;

• place restrictive requirements (including advance notification of stockholder nominations and proposals) on how special meetings of stockholders may be called by our stockholders;

• do not provide stockholders with the ability to cumulate their votes; and

• provide that our Board of Directors or a majority of our stockholders may amend our bylaws.

Risks Related to the Offering

Investors in this offering will experience immediate and substantial dilution in net tangible book value.

The public offering price per unit will be substantially higher than the net tangible book value per share of our outstanding shares of common stock. As a result, investors in this offering will incur immediate dilution of $4.16 per share, based on the assumed public offering price of $5.50 per unit, the mid-point of the estimated offering price range described on the cover of this prospectus. Investors in this offering will pay a price per unit that substantially exceeds the book value of our assets after subtracting our liabilities. See “Dilution” for a more complete description of how the value of your investment will be diluted upon the completion of this offering.

In the event that our common stock AND WARRANTS ARE listed on the NASDAQ our stock price could fall and we could be delisted in which case broker-dealers may be discouraged from effecting transactions in shares of our common stock because they may be considered penny stocks and thus be subject to the penny stock rules.

The SEC has adopted a number of rules to regulate “penny stocks” that restricts transactions involving stock which is deemed to be penny stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended. These rules may have the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market if current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our securities have in the past constituted, and may again in the future constitute, “penny stock” within the meaning of the rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in shares of our common stock, which could severely limit the market liquidity of such shares and impede their sale in the secondary market.

A U.S. broker-dealer selling penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the

broker-dealer or the transaction is otherwise exempt. In addition, the “penny stock” regulations require the U.S. broker-dealer to deliver, prior to any transaction involving a “penny stock”, a disclosure schedule prepared in accordance with SEC standards relating to the “penny stock” market, unless the broker-dealer or the transaction is otherwise exempt. A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price information with respect to the “penny stock” held in a customer’s account and information with respect to the limited market in “penny stocks”.

Stockholders should be aware that, according to the SEC, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, resulting in investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.

Speculative nature of warrants.

The warrants offered in this offering do not confer any rights of common stock ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire shares of our common stock at a fixed price for a limited period of time. Specifically, commencing on the date of issuance, holders of the warrants may exercise their right to acquire the common stock and pay an exercise price of ___ per share, prior to five years from the date of issuance, after which date any unexercised warrants will expire and have no further value. Moreover, following this offering, the market value of the warrants is uncertain and there can be no assurance that the market value of the warrants will equal or exceed their public offering price. There can be no assurance that the market price of the common stock will ever equal or exceed the exercise price of the warrants, and consequently, whether it will ever be profitable for holders of the warrants to exercise the warrants.

We may need additional capital, and the sale of additional shares or equity or debt securities could result in additional dilution to our stockholders.

We believe that our existing cash, together with the net proceeds from this offering, will be sufficient to meet our anticipated cash needs for at least the next 24 months. We may, however, require additional cash resources due to changed business conditions or other future developments. If these resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain one or more credit facilities. The sale of additional equity securities could result in additional dilution to our stockholders and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. It is uncertain whether financing will be available in amounts or on terms acceptable to us, if at all.

If we raise additional funds through government or other third-party funding, collaborations, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue stream or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market products that we would otherwise prefer to develop and market ourselves.

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

Our management will have broad discretion in the application of the net proceeds, including for any of the purposes described in the section of this prospectus entitled “Use of Proceeds.” You will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the net proceeds are being used appropriately. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, cause the price of our securities to decline and delay the development of our product candidates. Pending the application of these funds, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

Sales of a substantial number of shares of our common stock following this offering may adversely affect the market price of our common stock and the issuance of additional shares will dilute all other stockholders.

Sales of a substantial number of shares of our common stock in the public market or otherwise following this offering, or the perception that such sales could occur, could adversely affect the market price of our common stock. After completion of this offering at an assumed offering price of $5.50 per unit, the mid-point of the estimated offering price range described on the cover of this prospectus, our existing stockholders will own approximately % of our common stock assuming there is no exercise of the underwriters’ over-allotment option.

After completion of this offering at an assumed offering price of $5.50 per unit, the mid-point of the estimated offering price range described on the cover of this prospectus, there will be shares of our common stock outstanding. In addition, our certificate of incorporation, as amended, permits the issuance of up to approximately additional shares of common stock after the completion of this offering. Thus, we have the ability to issue substantial amounts of common stock in the future, which would dilute the percentage ownership held by the investors who purchase shares of our common stock in this offering.

We and our officers, directors and certain stockholders have agreed, subject to customary exceptions, not to, without the prior written consent of Joseph Gunnar & Co., LLC, the representative of the underwriters, during the period ending 365 days from the date of this offering in the case of us and our certain directors and officers, 90-180 days from the date of this offering in the case of our stockholders who beneficially own more than 5% of our common stock (See “Conversion of Convertible Debentures, Promissory Notes and Accounts Payable”), directly or indirectly, offer to sell, sell, pledge or otherwise transfer or dispose of any of shares of our common stock, enter into any swap or other derivatives transaction that transfers to another any of the economic benefits or risks of ownership of shares of our common stock, make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of common stock or securities convertible into or exercisable or exchangeable for common stock or any other securities of the Company or publicly disclose the intention to do any of the foregoing.

After the lock-up agreements with certain of our principal stockholders pertaining to this offering expire, up to of the shares that had been locked up will be eligible for future sale in the public market. After the lock-up agreements with our directors and officers pertaining to this offering expire, up to of the shares (net of any shares also restricted by lock-up agreements with our principal stockholders) that had been locked up will be eligible for future sale in the public market. After the lock-up agreements with certain directors, officers and principal stockholders pertaining to this offering expire 12 months from the date of this offering unless waived earlier by the managing underwriter, up to of the shares (net of any shares also restricted by lock-up agreements with our principal stockholders) that had been locked up will be eligible for future sale in the public market. Sales of a significant number of these shares of common stock in the public market could reduce the market price of the common stock.

USE OF PROCEEDS

We estimate that the net proceeds from the sale of the units that we are offering will be approximately $ million, based on an assumed public offering price of $5.50 per unit, the mid-point of the estimated offering price range described on the cover of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses, or $ million if the underwriters exercise their over-allotment option in full.

We currently expect to use the net proceeds of this offering primarily for the following purposes:

• approximately $3,000,000 for research and development for new products and improvements to existing products including but not limited to our proprietary glucometer and development of behavior predictive software;

• approximately $2,000,000 for the purchase of inventory;

• approximately $1,000,000 to upgrade sales and marketing capabilities including but not limited to professional relations and adding additional staff;

• *approximately $4,007,574 for the repayment of certain vendor payables, dividends and royalties due to holders of Series E Preferred Stock, debt, and other obligations; and

• the remainder for working capital and other general corporate purposes.

*Consisting of the following approximate amounts: (i) vendor payables in the amount of $590,000, (ii) payments to holders of the Series E Preferred Stock in the amount $513,074, (iii) reimbursements of employee expenses in the aggregate amount of $59,000, and (iv) non-interest bearing notes payable to JMJ Financial, LLC in the anticipated amount of $1,700,000 which matures on the earlier of March 15, 2017 or five days following the Company raising $10,000,000 in gross proceeds from an equity financing, (v) note payable to Green Wire, LLC in the amount of $370,000, which obligation bears interest at the rate of 12% per annum and is currently due, (vi) related-party notes payable to three past employees totaling $55,500, (vii) repayment of promissory note to Greene in the approximate amount of $360,000 and (viii) repayment of an advance by PFG in the approximate amount of $360,000.

We believe that the expected net proceeds from this offering and our existing cash and cash equivalents, together with interest thereon, will be sufficient to fund our operations for at least the next 24 months, although we cannot assure you that this will occur.

The amount and timing of our actual expenditures will depend on numerous factors, including the status of our development efforts, sales and marketing activities and the amount of cash generated or used by our operations. We may find it necessary or advisable to use portions of the proceeds for other purposes, and we will have broad discretion and flexibility in the application of the net proceeds. Pending these uses, the proceeds will be invested in short-term bank deposits.

MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Market and Other Information

Our common stock is quoted on the OTC Markets Group Inc.’s OTCQB Link quotation platform (the “OTCQB”) under the trading symbol “ACAR”. We have applied to the NASDAQ Capital Market to list our common stock under the symbol “ACAR” and our warrants under the symbol “ACARW.”

On January 27, 2017, we completed a 1-for-500 reverse split of our common stock. All share and per share information in the table below gives effect, retroactively, to the reverse stock split but not the conversion of our preferred stock into common stock upon consummation of the offering.

Immediately following the offering, we expect to have one class of common stock, and no preferred stock outstanding. As of December 31, 2016, there were approximately 2,183 registered holders of record of our common stock, and the last reported sale price of our common stock on the OTCQB was $23.50 per share on March 30, 2017.

Our common stock was initially quoted on the OTCQB in 2009 and the following table sets forth the high and low sales price of our common stock on the OTCQB for the periods set forth below. These prices are based on inter-dealer bid and asked prices, without markup, markdown, commissions, and may not represent actual transactions.

	U.S. $
PERIOD	High		Low
Fiscal Year Ending September 30, 2017:
Quarter Ended March 31, 2017	$	175.00	$	2.02
Quarter Ended December 31, 2016		35.00		10.00
Fiscal Year Ending September 30, 2016:
Quarter Ended September 30, 2016	$	32.50	$	12.50
Quarter Ended June 30, 2016		55.00		20.00
Quarter Ended March 31, 2016		90.00		13.00
Quarter Ended December 31, 2015		67.50		11.50
Fiscal Year Ending September 30, 2015:
Quarter Ended September 30, 2015		139.95		56.30
Quarter Ended June 30, 2015		175.00		100.00
Quarter Ended March 31, 2015		212.50		25.00
Quarter Ended December 31, 2014		220.00		60.00

Dividend Policy

To date, we have not paid any dividends on our common stock and do not anticipate paying any dividends in the foreseeable future. The declaration and payment of dividends on the common stock is at the discretion of our board of directors and will depend on, among other things, our operating results, financial condition, capital requirements, contractual restrictions or such other factors as our board of directors may deem relevant. We currently expect to use all available funds to finance the future development and expansion of our business and do not anticipate paying dividends on our common stock in the foreseeable future. In addition, the payment of cash dividends is prohibited under our current financing agreements.

CAPITALIZATION

The following table sets forth our consolidated cash and capitalization as of December 31, 2016. Such information is set forth on the following basis:

• actual basis (giving effect, on a retroactive basis, to a 1-for-500 reverse stock split which was consummated on January 27, 2017);

• on a pro forma basis, giving effect to (a) the conversion 45,000 shares of Series D Preferred Stock into approximately 66,364 shares of common stock, the conversion of 13,843 shares of Series E Preferred Stock into 10,233 shares of common stock and the conversion of 43,220 shares of Series G Preferred Stock into 960,445 shares of common stock, (b) the conversion of $13,716,945 in the aggregate principal amount of unsecured convertible and non-convertible promissory notes and debentures, plus accrued interest and $1,783,564 of additional consideration, into 2,739,188 shares of common stock and warrants for 1,454,549 shares of common stock (based upon amounts owing at December 31, 2016), (c) the conversion of an aggregate $116,167 of accounts payable into 15,823 shares of common stock in each case, upon consummation of this offering, (d) the issuance of 154,546 shares to JMJ Financial upon consummation of this offering, (e) the cancellation of warrants held by PFG in exchange for approximately 10,800 shares of common stock and $180,000 of notes payable, (f) the issuance of 11,364 shares of common stock and warrants for the purchase of 140,000 shares of common stock to PFG for forbearance fees, (g) the cash buyout of all remaining shares of Series E Preferred Stock for $513,074 and (h) the payoff of $1,480,294 in the aggregate principal amount of unsecured convertible promissory notes, plus accrued interest; and

• on a pro forma basis, based upon an assumed offering price of $5.50 per share of common stock and corresponding warrant, to give effect to the sale of 2,909,091 shares of common stock in this offering, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Based on the assumed offering price of $5.50 per Class A unit, and no Class B units are sold, which is mid-point of the estimated offering price range described on the cover of this prospectus, we allocated the $16 million aggregate consideration to common stock. The pro forma information below is illustrative only and our capitalization following the completion of this offering will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. You should read this table together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited and unaudited consolidated financial statements and the related notes appearing elsewhere in this prospectus.

	Actual			Pro Forma⁽¹⁾⁽²⁾
Cash and cash equivalents	$	292,724		$	12,563,409
Total liabilities		26,977,920			6,380,017
Stockholders’ equity (deficit):
Preferred stock, $0.00001 par value: 10,000,000 shares authorized; 45,000 and 0 shares of Series D; and 70,070 and 0 shares of Series E outstanding, respectively		1			—
Common stock, $0.00001 par value; 200,000,000 shares authorized; 232,100 shares issued and outstanding actual, 7,109,954 shares issued and outstanding pro forma		2			71
Additional paid-in capital, common and preferred		88,079,363			120,869,724
Accumulated deficit		(112,566,828	)		(112,941,869	)
Accumulated other comprehensive loss		—			—
Total stockholders’ equity (deficit)		(24,487,462	)		7,927,925

____________

(1) Excludes (i) 6,012 shares of our common stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $212.92 per share as of December 31, 2016, (ii) 11,070 shares of common stock underlying the warrants to be returned and issued to certain lenders upon the closing of this offering, (iii) 145,455 shares of common stock underlying the warrants to be issued to the underwriters in connection with this offering,

(iv) 386,367 shares of our common stock issuable upon exercise of warrants held by JMJ Financial, (v) 1,454,549 shares of our common stock issuable upon exercise of warrants issuable upon the conversion of the aggregate principal amount plus accrued interest and additional consideration of the Total Debenture Obligation, (vi) 140,000 shares of our common stock issuable upon exercise of warrants issued to PFG upon the closing of the offering, (vii) 436,364 shares of common stock issuable upon the exercise of the underwriters’ over-allotment option and (viii) 436,364 shares of common stock issuable upon the exercise of warrants issuable upon the exercise of the underwriters’ over-allotment option.

(2) A $1.00 increase or decrease in the assumed public offering price per unit would increase or decrease our pro forma cash, additional paid-in capital, total stockholders’ equity (deficit) and total capitalization by approximately $2,909,091 assuming the number of Class A units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us.

DILUTION

If you invest in our securities, your investment will be diluted immediately to the extent of the difference between the public offering price you pay in this offering, and the pro forma net tangible book value per share of common stock immediately after this offering.

Net tangible book value dilution per share represents the difference between the amount per unit paid by the investors who purchased units in this offering and the pro forma net tangible book value per share of common stock immediately after completion of this offering as of December 31, 2016, after giving effect to (a) the conversion of 45,000 shares of Series D Preferred Stock into 66,364 shares of common stock, the conversion of 13,843 shares of Series E Preferred Stock into 10,233 shares of common stock and the conversion of 43,220 shares of Series G Preferred Stock into approximately 960,445 shares of common stock, (b) the conversion of $11,436,945 in the aggregate principal amount of unsecured convertible promissory notes and debentures, plus accrued interest and $1,589,205 of additional consideration, into 2,324,642 shares of common stock and warrants exercisable for 1,454,549 shares of common stock (based upon amounts owing at December 31, 2016), (c) the conversion of an aggregate $116,167 of accounts payable into 15,823 shares of common stock in each case, upon consummation of this offering, (d) the issuance of 154,546 shares to JMJ Financial upon consummation of this offering, (e) the cancellation of warrants held by PFG in exchange for approximately 10,800 shares of common stock and $180,000 of notes payable, (f) the issuance of 11,364 shares of common stock and warrants for the purchase of 140,000 shares of common stock to PFG for forbearance fees, (g) the cash buyout of all remaining shares of Series E Preferred Stock for $513,074 and (h) the payoff of $1,480,294 in the aggregate principal amount of unsecured convertible promissory notes, plus accrued interest. As of December 31, 2016, our actual net tangible deficit value was $25,141,614 and our net tangible book deficit per share was $107.67. The calculation of pro forma net tangible book value as of December 31, 2016 assumes the conversion of certain convertible debts and accounts payable as well as Series D and Series E preferred stock into common stock at the conversion rates in effect at December 31, 2016.

After giving effect to the sale of shares of common stock at the assumed public offering price of $5.50 per share, the mid-point of the estimated offering price range described on the cover of this prospectus, included in the Class A units we are offering by this prospectus, and after deducting the underwriting discount and commission and estimated offering expenses, and assuming no Class B unit is sold, our pro forma net tangible book value (deficit) as of December 31, 2016 would have been $7,726,974 or $1.09 per share. This represents an immediate increase in pro forma net tangible book value (deficit) of $108.76 per share to existing stockholders and an immediate dilution of $4.41 per share to new investors purchasing shares in the offering.

The following table illustrates this per share dilution:

	As of
	December 31,
	2016⁽¹⁾			Pro Forma⁽²⁾
Assumed public offering price per unit				$	5.50
Net tangible book value per share as of December 31, 2016	$	(107.67	)	$	(107.67	)
Increase in pro forma net tangible book value per share attributable to new investors				$	108.76
Pro forma net tangible book value per share after giving effect to this offering				$	1.09
Dilution in net tangible book value per share to new investors				$	4.41

____________

(1) The calculation of net tangible book value (deficit) as of December 31, 2016 (assumes the conversion of Series D and Series E preferred stock into common stock at the conversion rates in effect at December 31, 2016).

(2) Calculated on a pro forma basis, giving effect to the conversion of all our outstanding shares of preferred stock into common stock.

As of December 31, 2016, the total number of shares of our common stock outstanding after this offering assuming no Class B units are sold, is 7,109,954 which includes the 2,909,091 shares of common stock underlying the Class A units sold in the offering, along with an additional 3,968,763 shares that will be issued at the closing of the offering in connection with the conversion of preferred stock, debt and other liabilities, as well as other obligations to issue shares at closing and excludes the following:

• 6,012 shares of our common stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $212.92 per share as of December 31, 2016,

• 11,070 shares of common stock underlying the warrants to be returned and issued to certain lenders upon the closing of this offering;

• 1,454,549 shares of our common stock issuable upon exercise of warrants issuable upon the conversion of the aggregate principal amount plus accrued interest and additional consideration under our Total Debenture Obligation;

• 386,364 shares of our common stock issuable upon exercise of warrants held by JMJ Financial;

• 140,000 shares of our common stock issuable upon exercise of underlying warrants issued to PFG upon the closing of the offering;

• 145,455 shares of common stock (167,273 shares of common stock if over-allotment is exercised in full) underlying the warrants to be issued to the underwriters in connection with this offering;

• 436,364 shares of common stock issuable upon the exercise of the underwriters’ over-allotment option; and

• 436,364 shares of common stock issuable upon the exercise of warrants issuable upon the exercise of the underwriters’ over-allotment option.

If the underwriter’s overallotment option is exercised in full, our adjusted pro forma net tangible book value following the offering will be $1.34 per share, and the dilution to new investors in the offering will be $4.16 per share.

A $1.00 increase or decrease in the assumed public offering price per unit would increase or decrease our pro forma as adjusted net tangible book value after this offering by approximately $2,909,091, and dilution per share to new investors by approximately $0.41 for an increase of $1.00, or $(0.82) for a decrease of $1.00, after deducting the underwriting discount and estimated offering expenses payable by us.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. Forward-looking statements present our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties and include statements regarding, among other things, our projected revenue growth and profitability, our growth strategies and opportunity, anticipated trends in our market and our anticipated needs for working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plans,” “potential,” “projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend” or the negative of these words or other variations on these words or comparable terminology. These statements may be found under the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” as well as in this prospectus generally. In particular, these include statements relating to future actions, prospective products, market acceptance, future performance or results of current and anticipated products, sales efforts, expenses, and the outcome of contingencies such as legal proceedings and financial results.

Examples of forward-looking statements in this prospectus include, but are not limited to, our expectations regarding our business strategy, business prospects, operating results, operating expenses, working capital, liquidity and capital expenditure requirements. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products and services, the cost, terms and availability of components, pricing levels, the timing and cost of capital expenditures, competitive conditions and general economic conditions. These statements are based on our management’s expectations, beliefs and assumptions concerning future events affecting us, which in turn are based on currently available information. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect.

Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include, but are not limited to:

• changes in the market acceptance of our products and services;

• increased levels of competition;

• changes in political, economic or regulatory conditions generally and in the markets in which we operate;

• our relationships with our key customers;

• adverse conditions in the industries in which our customers operate;

• our ability to retain and attract senior management and other key employees;

• our ability to quickly and effectively respond to new technological developments;

• our ability to protect our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others from infringing on the proprietary rights of the Company; and

• other risks, including those described in the “Risk Factors” discussion of this prospectus.

We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those

contained in any forward-looking statement. The forward-looking statements in this prospectus are based on assumptions management believes are reasonable. However, due to the uncertainties associated with forward-looking statements, you should not place undue reliance on any forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly update any of them in light of new information, future events, or otherwise.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with the “Summary Statements of Operations Data” and our consolidated financial statements and the notes to those statements appearing elsewhere in this prospectus. This discussion and analysis contains forward-looking statements reflecting our management’s current expectations that involve risks, uncertainties and assumptions. Our actual results and the timing of events may differ materially from those described in or implied by these forward-looking statements due to a number of factors, including those discussed below and elsewhere in this prospectus particularly on page 15 entitled “Risk Factors”.

Overview

ActiveCare, Inc. is a Delaware corporation, formed March 5, 1998. Our fiscal year ends on September 30.

Our focus is on the monitoring of individuals with diabetes. Diabetes is a pandemic that, as of 2014, affected approximately 9% of the U.S. population or 29 million Americans. Studies have shown that the annual cost of treating an individual with diabetes and the comorbidities associated with the disease is approximately $13,700 per year. This combination costs the U.S. health system up to $245 billion annually. A major driver of diabetic-related claims is the lack of adherence to regular glucose monitoring. It is estimated that less than 20% of diabetics monitor their blood glucose levels on a regular basis, despite physician recommendations. ActiveCare offers what it believes to be a unique approach to caring for chronic illnesses such as diabetes by adding a “human touch” and monitoring component to traditional disease management. To that end, ActiveCare has created a “CareCenter” where its highly trained staff reaches out to assist its members in real-time. Historically, disease management, such as diabetes has been reserved for only the extreme high risk and high claim members. However, the ActiveCare solution brings clarity and light to the diabetic population, identifying who needs help today. Knowing who to worry about allows for the necessary action to be taken today to avoid major and costly events in the future.

Going Concern

We have financed operations primarily through the sale of equity securities, long-term debt and short-term debt. Until revenues are sufficient to meet our needs, we will continue to attempt to secure financing through equity or debt securities, including the sale of securities in this offering. We continue to incur negative cash flows from operating activities and net losses. We had minimal cash, negative working capital, and negative total equity as of December 31, 2016 and September 30, 2016, and are in default with respect to certain debt. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements included in this prospectus do not include any adjustments that might result from the outcome of this uncertainty.

In order for us to eliminate substantial doubt about our ability to continue as a going concern, we must achieve profitability, generate positive cash flows from operating activities and obtain the necessary debt or equity funding to meet our projected capital investment requirements. Our management’s plans with respect to this uncertainty consist of raising additional capital by issuing debt or equity securities and increasing the sales of our products and services. If we are successful in completing the offering, we believe the net proceeds of the offering together with anticipated growth of the business will be sufficient to eliminate substantial doubt about our ability to continue as a going concern. There can be no assurance, however, that we will be able to complete the offering, raise sufficient additional capital or that revenues will increase rapidly enough to offset operating losses. If we are unable to increase revenues or obtain additional financing, we will be unable to continue the development of our products and services and may have to cease operations.

Research and Development Program

During the three months ended December 31, 2016, we spent approximately $168,000, compared to $23,000 during the comparable period from the prior year, on research and development related to chronic illness monitoring. The research and development program focuses on ongoing improvements to methods and systems along with new technologies for the capture and analysis of data, as well as scalable architectures to migrate to production applications and deployments.

Critical Accounting Policies

Our consolidated financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (or US GAAP).

This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with US GAAP. The preparation of these consolidated financial statements requires making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenues and expenses for the reporting periods. On an ongoing basis, we evaluate such estimates and judgments. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ (perhaps significantly) from these estimates under different assumptions or conditions. The following summary includes accounting policies that we deem to be most critical to our business. Management considers an accounting estimate to be critical if:

• It requires assumptions to be made that were uncertain at the time the estimate was made, and

• Changes in the estimate or different estimates that could have been selected could have a material impact on the consolidated results of operations or financial condition.

Our significant accounting policies are described in Note 2 to our audited consolidated financial statements appearing elsewhere in this prospectus and are hereby incorporated by reference.

Liability Related to Options and Warrants

The fair value of each stock option or warrant is estimated on the date of grant using a binomial option-pricing model or the Monte Carlo valuation model. The expected life of stock options or warrants represents the period of time that the stock options or warrants are expected to be outstanding, based on the simplified method. Expected volatilities are based on historical volatility of the Company’s common stock, among other factors. The Company uses the simplified method within the binomial option-pricing valuation model due to the Company’s short trading history and limited history of exercises of stock options or warrants. The risk-free rate related to the expected term of the stock options or warrants is based on the US Treasury yield curve in effect at the time of grant. The dividend yield is zero.

During the three months ended December 31, 2016, the Company measured the fair value of warrants classified as liabilities on the date of issuance and on each re-measurement date using the Monte Carlo valuation model. For this liability, the Company and valuation specialists developed their own assumptions that do not have observable inputs or available market data to support the fair value. This method of valuation involves using inputs such as the fair value of the Company’s common stock, stock price volatility, the contractual term of the warrants, risk–free interest rates and dividend yields. Due to the nature of these inputs, the valuation of the warrants uses Level 3 measurements.

Fair Value of Financial Instruments

We measure the fair values of our assets and liabilities using the US GAAP hierarchy. The carrying amounts reported in the condensed consolidated balance sheets for cash, accounts receivable, accounts payable, and accrued liabilities approximate fair values due to the short-term nature and liquidity of these financial instruments. Derivative financial instruments are recorded at fair value based on current market pricing models. The carrying amounts reported for notes payable approximate fair value because the underlying instruments are at interest rates which approximate current market rates.

Accounts Receivable

Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts. Specific reserves are estimated by management based on certain assumptions and variables, including the customer’s financial condition, age of the customer’s receivables and changes in payment histories.

Accounts receivable are written off when management determines the likelihood of collection is remote. A receivable is considered to be past due if any portion of the receivable balance has not been received by the contractual payment date.

Inventory

Inventory consists of glucometers and diabetic supplies and is recorded at the lower of cost or market, cost being determined using the first-in, first-out (“FIFO”) method. Inventory held by distributors is reported as inventory until the supplies are shipped to the end user by the distributor. We estimate an inventory reserve for obsolescence and excessive quantities. Due to competitive pressures and technological innovation, it is possible that estimates of net realizable values could change in the near term.

Goodwill

Goodwill is reviewed for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. Our annual testing date is September 30. The estimates of fair value are based on the best information available as of the date of the assessment, which primarily incorporates management assumptions about expected future cash flows and the Company’s overall market capitalization. Future cash flows can be affected by changes in industry or market conditions. Goodwill was impaired by $826,000 as of September 30, 2015, due, in part, to a potentially long-term reduction in the market capitalization of the Company subsequent to September 30, 2015. As a result, the Company no longer presents goodwill as an asset in its balance sheets.

Impairment of Long-Lived Assets

Purchased intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives of the assets, which range from two to twenty years. Long-lived assets, including intangible assets with finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. No long-lived assets were considered to be impaired as of December 31, 2016.

Extinguishment of Debt

We compare the cash flows of a modified note payable on the date of modification to the original terms of the note payable. The original note is derecognized and a gain or loss on the extinguishment is recognized if the present value of the cash outflows of the original note payable is 10% or more than the modified note payable.

Revenue Recognition

During the three months ended December 31, 2016 and the comparable period from 2015, revenues came from Chronic Illness Monitoring products and services. Information regarding revenue recognition policies relating to Chronic Illness Monitoring is contained in the following paragraphs.

Chronic Illness Monitoring

Chronic Illness Monitoring revenues are recognized when persuasive evidence of an arrangement exists, delivery of the product or service to the end user has occurred, prices are fixed or determinable, and collection is reasonably assured.

We enter into agreements with insurance companies, disease management companies, third-party administrators, and self-insured companies (collectively, the customers) to lower medical expenses by distributing diabetic testing products and supplies to employees (end users) covered by their health plans or the health plans they manage. Cash is due from the customer or the end user’s health plan as the products and supplies are deployed to the end user. We also monitor the end user’s test results in real-time with our 24x7 CareCenter. Customers who are billed separately for monitoring are obligated to pay as the service is performed and revenue is recognized ratably over the period of the contract. The term of these contracts is generally one year and, unless terminated by either party, will automatically renew annually until terminated. Collection terms are net 30 days after claims are submitted. There is no contingent revenue in these contracts.

We also enter into agreements with distributors who take title to products and distribute those products to the end user. Delivery is considered to occur when the supplies are delivered by the distributor to the end user. Cash is due from the distributor, the customer or the end user’s health plan as initial products are deployed to the end user. Subsequent sales (resupplies) are shipped directly from us to the end user and cash is due from the customer or the end user’s health plan.

Shipping and handling fees are typically not charged to end users. The related freight costs and supplies directly associated with shipping products to end users are included as a component of cost of revenues.

Multiple-Element Arrangements

Sales of Chronic Illness Monitoring products and services contain multiple elements. We evaluate each element in a multiple-element arrangement to determine whether it represents a separate unit of accounting. In order to account for elements in a multiple-element arrangement as separate units of accounting, the deliverables must have stand-alone value upon delivery. In determining whether monitoring services have stand-alone value, the nature of our monitoring services, whether we sell supplies to new customers without monitoring services, and availability of monitoring services from the other vendors are factors that are considered.

When multiple elements included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified separate units of accounting based on the relative selling prices. Multiple-element arrangements accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting. Vendor-specific objective evidence (VSOE) of selling price, based on the price at which the item is regularly sold by the vendor on a stand-alone basis, should be used if it exists. If VSOE of selling price is not available, third-party evidence (TPE) of selling price is used to establish the selling price if it exists. If VSOE of selling price and TPE of selling price are not available, then the best estimate of selling price is to be used. Total consideration under our multiple-element contracts is allocated to supplies and monitoring through application of the relative fair value method or selling price.

Stock-Based Compensation

We measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized in the statement of operations over the period during which the employee is required to provide service in exchange for the award — the requisite service period. The grant-date fair values of the equity instruments are estimated using option-pricing models adjusted for the unique characteristics of those instruments.

Results of Operations

Three Months Ended December 31, 2016 and 2015

Revenues

Revenues for the three months ended December 31, 2016 were $1,862,000 compared to $2,088,000 for the same period in 2015, a decrease of $226,000, or 11%. The decrease is primarily due to the Company focusing on completing the Offering and a lower number of new members joined during the three months ended December 31, 2016 compared to the same period in 2015.

Cost of Revenues

Cost of revenues for the three months ended December 31, 2016 was $1,300,000, compared to $1,593,000 for the same period in 2015, a decrease of $293,000, or 18%. The decrease in cost of revenues is primarily due to fewer new members during the three months ended December 31, 2016 compared to the same period in 2015.

Gross Profit

Gross profit for the three months ended December 31, 2016 was $561,000, compared to $494,000 for the same period in 2015, an increase of $67,000 as a result in reduction in the cost of revenues. We expect

gross profit to improve throughout the remainder of fiscal year 2017 as we acquire more Chronic Illness Monitoring members and retain existing members.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended December 31, 2016 were $1,210,000, compared to $2,347,000 for the same period in 2015, a decrease of $1,137,000. Included in selling, general and administrative expenses is $12,000 and $1,180,000 of stock-based compensation incurred during the three months ended December 31, 2016 and 2015, respectively. The decrease in expenses incurred due primarily to decreases in stock-based compensation expense and travel expense, offset, in part, by an increase in payroll expense.

Research and Development Expenses

Research and development expenses for the three months ended December 31, 2016 were $168,000, compared to $23,000 for the same period in 2015, an increase of $145,000. The increase was due to continued investing in research and development as we develop new products and platforms for Chronic Illness Monitoring. We expect to continue invest into innovating new products as funds become available.

Gain on Derivatives Liability

Gain on derivatives liability for the three months ended December 31, 2016 was $22,000, compared to a gain of $46,000 for the same period in 2015. The derivative liability recorded as of December 31, 2016 relates to variable conversion price adjustments on outstanding notes payable and warrants. The derivatives liability recorded as of December 31, 2015 relates to a variable conversion feature at a 15% discount from the fair value of the Company’s common stock on the maturity date.

Interest Expense

Interest expense for the three months ended December 31, 2016 was $1,555,000, compared to $491,000 for the same period in 2015, an increase of $1,064,000. The increase is primarily due to additional notes payable issued and modifications made to existing notes payable during the fiscal year ended September 30, 2016 and the three months ended December 31, 2016.

Loss on Extinguishment of Debt

During the three months ended December 31, 2016 we recognized a loss on extinguishment of debt of $2,004,000. This loss result from a gain of $40,000 on the partial extinguishment of a derivative on a note payable as payments were made and a loss of $2,044,000 related to the extinguishment of debt related to the forbearance agreement on a secured note payable and related line of credit.

Net Loss

Net loss for the three months ended December 31, 2016, was $4,354,000, compared to a net loss of $2,320,000 for the same period in 2015, for the reasons described above.

Dividends on Preferred Stock

Dividends on preferred stock for the three months ended December 31, 2016, were $34,000, compared to $404,000 for the same period in 2015. The decrease was primarily due to the conversion of Series F Preferred into convertible notes payable and common stock during February 2016 and the reduction in the Series E Preferred dividend rate.

Results of Operations

Fiscal Year 2016 Compared to Fiscal Year 2015

Net Revenues

Net revenues for fiscal year 2016 were $7,464,000, compared to $6,598,000 for fiscal year 2015, an increase of $866,000, or 13%. The increase is primarily due to resupply shipments to end users who were newly enrolled during fiscal years 2016 and 2015, an increase in the frequency of resupply shipments, and sales to new customers.

Cost of Revenues

Cost of revenues for fiscal year 2016 was $5,334,000, compared to $5,197,000 for fiscal year 2015, an increase of $137,000. The increase in cost of revenues is due to increased revenues during fiscal year 2016 and an increase in warranty liability, offset, in part, by a decrease in the reserve for inventory obsolescence.

Gross Profit

Gross profit for fiscal year 2016 was $2,130,000, compared to $1,401,000 for fiscal year 2015 for the reasons described above. We expect gross profit to improve in fiscal year 2017 as we acquire more Chronic Illness Monitoring members and retain existing members. We do not expect that the reduction in revenues from Rx Benefits will cause a decline in our aggregate gross revenues.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for fiscal year 2016 were $8,195,000, compared to $10,358,000 for fiscal year 2015, a decrease of $2,163,000, or 21%. The decrease in expenses incurred due primarily to decreases in stock-based compensation expense, payroll expense, investor relations expense, depreciation and amortization expense, and travel expense, offset, in part, by an increase in legal and professional fees expense.

Research and Development Expenses

Research and development expenses for fiscal year 2016 were $248,000, compared to $107,000 for fiscal year 2015, an increase of $141,000. We expect to continue investing in research and development as we develop new products and platforms for Chronic Illness Monitoring as funds become available.

Gain on Derivatives Liability

Gain on derivatives liability for fiscal year 2016 was $3,405,000, compared to $129,000 for fiscal year 2015. The derivative liability recorded as of September 30, 2016 relates to variable conversion price adjustments on outstanding notes payable and warrants. The derivatives liability recorded as of September 30, 2015 relates to a variable conversion feature at a 15% discount from the fair value of the Company’s common stock on the maturity date.

Gain on Liability Settlements

During fiscal year 2016 we entered into agreements which settled payables due to third parties, which resulted in gains totaling $297,000, compared to $261,000 for fiscal year 2015.

Gain on Lease Termination

During June 2015, a non-cancelable operating lease for office space was terminated resulting in a gain of $92,000 related primarily to the straight-line accounting for the lease agreement.

Impairment of Goodwill

The Company made an $826,000 adjustment to fully impair its goodwill as of September 30, 2015.

Loss on Induced Conversion of Debt and Sale of Common Stock

During February 2016, we converted notes payable with outstanding principal balances totaling approximately $233,000 into 11,600 shares of common stock, at $20.00 per common share, which was below the fair value of the Company’s common stock on the date of conversion, which resulted in a loss on induced conversion of debt of $231,000.

During February 2016, we converted notes payable with outstanding principal balances totaling $350,000 plus accrued interest of $16,000 into 18,576 shares of common stock, at $20.00 per common share, which was below the fair value of the stock on the date of conversion. The conversion resulted in a loss on induced conversion of debt of $148,000 and a gain on extinguishment of debt of $64,000.

Interest Expense

Interest expense for fiscal year 2016 was $2,964,000, compared to $977,000 for fiscal year 2015. The increase is primarily due to additional notes payable issued and modifications made to existing notes payable during the fiscal years ended September 30, 2016 and 2015.

Loss on Extinguishment of Debt

During February 2016, we terminated notes payable to third parties with outstanding principal, net of discounts, of $697,000 and accrued interest of $39,000, for $1,123,000 in cash, and incurred fees of $50,000 to third parties and $75,000 to a related party, which resulted in a loss on extinguishment of debt of $512,000 in connection with these terminations.

During February 2016, we modified notes payable to related parties to subordinate to notes payable also issued during February 2016. The modifications also reduced the conversion price to $30.00 per common share, which was below the fair value of the stock on the date of the modifications, and limited conversion to a maximum of 58,500 shares of common stock. The modifications resulted in a loss on extinguishment of debt of $2,032,000. Also during February 2016, we modified a note payable to subordinate to notes payable also issued during February 2016, reducing the conversion price to $30.00 per common share, which resulted in a loss on extinguishment of debt of $381,000.

During February 2016, we modified a note payable to related parties to bifurcate the note into two notes payable. We assigned the majority bifurcated note and part of the smaller bifurcated note to a third party, which then converted the amounts into a convertible note payable. The fair value of the conversion feature was recorded as a derivative liability and resulted in a loss on extinguishment of debt of $182,000.

During February 2016, notes payable with outstanding principal balances totaling $350,000 plus accrued interest of $16,000 were converted into 18,576 shares of common stock, at $20.00 per common share, which was below the fair value of the stock on the date of conversion. The conversion resulted in a loss on induced conversion of debt of $148,000 and a gain on extinguishment of debt of $64,000.

During June 2016, $14,000 of principal and $11,000 of accrued interest converted into 952 shares of common stock, pursuant to the terms of a note payable, which resulted in a loss on extinguishment of debt of $15,000.

During August 2016, $65,000 of principal and $10,000 of accrued interest converted into 9,203 shares of common stock, pursuant to the terms of a note payable, which resulted in a loss on extinguishment of debt of $104,000.

During fiscal year 2015, we entered into settlement agreements on notes payable and accounts payable with related and unrelated parties that resulted in new notes. In connection therewith, a loss on extinguishment of debt of $928,000 was recorded. See Notes 9 and 10 to the consolidated financial statements.

Discontinued Operations

During December 2014, we sold substantially all of our customer contracts and equipment leased to customers associated with our CareServices segment. Additional equipment held in stock was sold to the buyer pursuant to a written invoice. The purchase price included a cash receipt of $412,000 for the

customer contracts and $66,000 for the leased equipment. During fiscal year 2015 we recognized a loss from discontinued operations of $186,000.

Net Loss

Net loss for fiscal year 2016 was $9,123,000, compared to $11,528,000 fiscal year 2015 for the reasons described above.

Deemed Dividends on Redemption of Preferred Stock

During February 2016, we redeemed all 5,361 outstanding shares of our Series F preferred stock and related accrued dividends in exchange for 20,005 shares of common stock and notes payable of $5,900,000. We also exchanged warrants held by Series F preferred stockholders for the purchase 11,069 shares of common stock for new warrants for the purchase of the same number of shares with new terms. We recorded a deemed dividend of $6,484,000 as a result of these transactions.

Dividends on Preferred Stock

Dividends on preferred stock for fiscal year 2016 were $732,000, compared to $995,000 for fiscal year 2015. The decrease was primarily due to the conversion of Series F preferred stock into convertible notes payable and common stock during February 2016 and the reduction in the Series E preferred stock dividend rate, offset, in part, by an increase in the dividend rate of the Series F preferred stock from 8% to 25%, as provided by the certificate of designation of the Series F preferred stock.

Deemed Dividends on Conversion of Accrued Dividends to Common Stock

During fiscal year 2015, $944,000 of common stock was issued for the conversion of $572,000 of dividends payable and $71,000 of common stock was issued for the prepayment of dividends related to Series F preferred stock. The agreed-upon conversion rate per common share issued was less than the fair value of the common stock as of the conversion date, therefore, the additional fair value of $301,000 was recorded as a deemed dividend.

Liquidity and Capital Resources

Our primary sources of liquidity are the proceeds from the sale of our equity securities and debt. We have not historically financed operations from cash flows from operating activities. We anticipate that we will continue to seek funding, including through the Offering, to supplement revenues from the sale of our products and services through the sale of equity and debt securities until we achieve positive cash flows from operating activities.

Our cash balance as of December 31, 2016, was $292,724. At that time, we had a working capital deficit of $17,484,150, compared to a working capital deficit of $12,871,220 as of September 30, 2016. The increase in working capital deficit is primarily due to additions to accounts payable, accrued liabilities, notes payable, and derivatives liabilities related to the issuance of notes payable, offset, in part, by additions to accounts receivable.

Operating activities for the three months ended December 31, 2016, used cash of $47,985, compared to $502,588 for the same period in 2015. The decrease in cash used in operating activities is primarily due to the increase in accounts payable during the three months ended December 31, 2016, compared to the same period in 2015, offset, in part, by the increase in accounts receivable and inventory during the three months ended December 31, 2016, compared to the increase in accounts receivable and decrease in inventory the same period in 2015.

Investing activities did not use cash or have cash proceeds for the three months ended December 31, 2016. Investing activities used cash used of $2,074 for the same period in 2015. The decrease in cash used by investing activities is primarily due to the purchase and sale of property and equipment during the three months ended December 31, 2015 and none during the same period in 2016.

Financing activities for the three months ended December 31, 2016, provided cash of $172,972, compared to $547,564 for the same period in 2015. The decrease in cash provided by financing activities is primarily due to a net increase in principal payments on debt during the three months ended December 31, 2016, compared to the same period in fiscal year 2015, offset, in part, by the net increase in proceeds from the issuance of debt during the three months ended December 31, 2016, compared to the same period in fiscal year 2015.

We had an accumulated deficit as of December 31, 2016, of $112,566,828, compared to $108,178,614 as of September 30, 2016. Our total stockholders’ deficit as of December 31, 2016, was $24,487,462 compared to $20,111,201 as of September 30, 2016. These changes were primarily due to our net loss during the three months ended December 31, 2016.

Off Balance Sheet Arrangements

We are not a party to any off balance sheet arrangements.

Impact of Inflation

Our results of operations and financial condition are presented based on historical cost. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we believe the effects of inflation, if any, on our results of operations and financial condition have been immaterial.

Recent Accounting Pronouncements

A discussion of recent accounting pronouncements is described in Note 2 to our audited consolidated financial statements appearing elsewhere in this prospectus and is hereby incorporated by reference.

Subsequent Events

In addition to the subsequent events described in the Prospectus Summary under the heading “Recent Developments” the following subsequent events occurred after our fiscal year end.

On January 3, 2017, the Company terminated a secured note payable with a principal balance of $162,539 as of September 30, 2016. No additional consideration was given as part of the termination.

On January 27, 2017, the Company sold $280,000 of future customer receipts to a third party for $200,000 in cash. The $80,000 difference between the future customer receipts and cash received by the Company is being amortized to interest expense over the term of the note. The note is subordinated to another note.

On February 14, 2017, the Company amended a note payable with principal balance of $334,464 to extend the maturity date to the earlier of the closing of the offering or April 30, 2017.

During January 2017, the Company amended a note payable to an entity controlled by the Chief Executive Officer with principal balance of $25,463 to extend the maturity date to February 15, 2017. The note was further amended during February 2017 to extend the maturity date to April 30, 2017.

The Company repaid all $135,000 of a cash advance from ADP in full satisfaction of such advance.

The Company sold $210,000 of future customer receipts to a third party for $150,000 in cash. The $60,000 difference between the future customer receipts and cash received by the Company is being amortized to interest expense over the term of the note. The note is subordinated to the secured note issued in favor of PFG.

The Company sold $560,000 of future customer receipts to a third party for $400,000 in cash. The $160,000 difference between the future customer receipts and cash received by the Company is being amortized to interest expense over the term of the note. The note is subordinated to secured note issued in favor of PFG.

The Company received cash advances from third parties in the amount of $917,500 and repaid $332,000, inclusive of fees.

The Company amended a convertible note payable to a third party to extend the maturity date month-by-month through no later than April 30, 2017 for a fee of $5,000 per month.

The Company sold $225,750 of future customer receipts to a third party for $175,000 in cash. The $50,750 difference between the future customer receipts and cash received by the Company is being amortized to interest expense over the term of the note. The note is subordinated to another note.

The Company terminated a secured note payable with a principal balance of $110,533 as of January 3, 2017. No additional consideration was given as part of the termination.

The Company sold $280,000 of future customer receipts to a third party for $200,000 in cash. The $80,000 difference between the future customer receipts and cash received by the Company is being amortized to interest expense over the term of the note. The note is subordinated to the Company’s senior secured note with PFG.

On March 13, 2017, the Company sold $490,000 of future customer receipts to a third party for $350,000 in cash. The $140,000 difference between the future customer receipts and cash received by the Company is being amortized to interest expense over the term of the note. The note is subordinated to another note.

BUSINESS

Overview

We believe we offer a unique approach to caring for individuals with diabetes by adding a “human touch” and monitoring component to traditional disease management. We have created a “CareCenter” where our “CareSpecialists” reach out to engage members while monitoring their condition on a regular and real-time basis. Our personalized and active monitoring approach allows for issues to be addressed promptly, avoiding major and costly future health complications.

The Problem: Diabetes and its Effect on Healthcare

Diabetes is a condition in which the body does not properly process food for use as energy. Most of the food we eat is turned into glucose, or sugar, for our bodies to use as energy. In order to do so, our pancreas produces a hormone called insulin to help glucose be absorbed by the cells of our bodies. Diabetes results from the body not producing sufficient levels of insulin needed to convert sugar, starches and other food into energy needed for daily life. In some instances, the body does not respond appropriately to insulin, a condition called “insulin resistance,” resulting in elevated blood glucose levels. With heightened glucose levels, the blood thickens becoming concentrated, almost “gel-like,” causing the heart and other organs to work harder in order to pump and circulate the blood throughout the body.

Diabetes can cause serious health complications including heart disease, blindness, kidney failure and lower extremity amputations. The National Diabetes Statistics Report for 2014, published by the Center for Disease Control and Prevention, estimates that 29.1 million people or 9.3% of the U.S. population is suffering from diabetes, comprised of 21 million diagnosed cases and 8.1 million undiagnosed cases. Diabetes is the seventh leading cause of death in the United States.

There are two types of diabetes:

Type I Diabetes — Accounting for between 5% – 10% of all diagnosed cases of diabetes as reported by the Centers for Disease Control and Prevention, type I diabetes is a chronic disease that usually appears during childhood or the teenage years in which the pancreas does not produce insulin. For unknown reasons, the immune system of people with type I diabetes attacks various cells in the body, including the insulin-producing ones of the pancreas. As a result, the body has a total depletion of the insulin hormone. The body’s process of converting sugar into energy is disrupted when insulin is not present. This disruption causes the build-up of sugar in the blood, leading to complications such as dehydration, weight loss and ultimately serious damage to the body. There is no cure for type I diabetes and it is not preventable.

Type II Diabetes — Type II diabetes accounts for between 90% – 95% of all diagnosed cases of diabetes and differs from type I diabetes in that the body cannot use insulin properly, a condition called insulin resistance. At first, a patient’s pancreas makes extra insulin to make up for it. Over time the pancreas is not able to keep up and cannot make enough insulin to keep blood glucose at normal levels. Type II diabetes can develop at any age, most commonly becoming apparent during adulthood. However, type II diabetes in children is rising.

Whereas type I diabetes cannot be prevented, type II diabetes can be prevented or delayed with proper management. Proper management and control begins with adherence to treatment plans prescribed by medical providers. These plans are a combination of lifestyle changes, medication and regular testing (the American Diabetes Association recommends 3-4 tests per day). By testing at least 3 times per day, an individual with type II diabetes can learn how to control their chronic illness through proper food intake, weight control and exercise.

If diabetics do not properly manage their disease, their blood will thicken. This causes the heart and other organs to work harder in order to pump and circulate blood and leads to the following comorbidities:

• Blindness — diabetes is a leading cause of blindness.

• Stroke — diabetics are 1.5 times as likely to have a stroke as compared to non-diabetics.

• Heart attack — diabetics are 1.8 times as likely to have a heart attack as compared to non-diabetics.

• Kidney disease — diabetes is the leading cause of kidney failure.

• Amputation — diabetes is the leading cause of non-traumatic lower limb amputations.

A problem with diabetics’ management of their disease is clearly evident: between 50-80% of those with diabetes remain non-compliant with their treatment plans. Traditional programs remain ineffective because they provide no real-time visibility to medical professionals. Vital readings and information into a patient’s daily health and behaviors remain on the meter or testing devices and are often never shared or seen by a qualified medical professional.

With actionable and reliable information unavailable, healthcare professionals rely mainly on patients’ self-reporting and their A1C (90 day blood glucose average) test results. While these data points provide some historic insight, they are unable to show the daily high and low blood glucose events. We believe that something different is needed to effect and change behavior.

Healthcare professionals lack data on their diabetic patient’s daily health, there is no way to effectively monitor an individual’s condition. Without active monitoring, there is no way to know if an individual requires attention before their situation becomes critical and requires medical intervention either through the emergency room or a patient hospital stay. In our estimation, current diabetes management programs lack the ability to share and transfer information in “real-time.” This results in a reactionary approach that focuses and supports individuals after they have had a high cost claim and are considered high risk.

The ActiveCare Solution

The ActiveCare solution is focused on getting diabetic patients to test and manage their chronic illness on a regular and real-time basis. ActiveCare provides its solution to self-insured companies (“SICs”) through third party administrators (“TPAs”) and a network of health insurance brokers. In accordance with HIPAA regulations, a SIC cannot administer its own health plan due to privacy regulation and a SIC must have an unaffiliated third party administer the healthcare plan. The members that directly engage with our CareCenter specialists (or CareSpecialists) are diabetic patients employed by these SICs.

An ActiveCare member’s introduction to our program begins his/her receipt of a state-of-the-art cellular glucometer and testing supplies. Our CareSpecialist will then walk the new member through how to use the new device and direct the member to register on a private and secure website that records all of the member’s readings. From that point forward, the CareSpecialist establishes a personal working relationship with the diabetic member — encouraging testing; helping the member better understand their test results and how to respond to high or low readings — all on a real-time basis. It is this relationship that facilitates better health for our members, while ultimately saving the healthcare provider significant amounts in reduced claims.

As part of these efforts, we have staffed our CareCenter with highly trained “CareSpecialists” that maintain consistent contact with our members helping them through the ups and downs of managing their glucose levels. For example, when test results exceed certain thresholds (e.g., glucose readings being too high or too low) or a certain amount of time has passed without testing, members receive a prompt call from a CareSpecialist who will triage the member and, if necessary, contact emergency personnel. This “live” and timely intervention provides the platform of insight for members to modify their behavior while reinforcing goals to better manage their disease. Based on our internal data, we believe that each CareSpecialist can handle approximately 2,000 active diabetic members and make 300 outbound calls per week, as well as respond to emergency calls when readings are out of stated parameters. With real-time data, the CareSpecialists provide proactive support and encouragement to members before they become

high risk. Our approach is designed to improve the health and wellness of members while also lowering the overall costs of medical care paid by their employers.

Our CareCenter is centrally located at our headquarters in Orem, Utah and can monitor diabetics throughout the United States. Our CareCenter location is also an ideal location for locating and training our CareSpecialists as it is within a five mile radius of some of the top universities with access to over 70,000 graduating students to draw from as CareSpecialists. If we desire to expand our service offerings in other countries, we would set up additional CareCenters in such regions as needed, in order to meet the appropriate dialect, customs and regulations required to support the end member.

Training of our CareSpecialists

CareSpecialists receive extensive initial and on-going training comparable to the training received by 911 emergency dispatchers (National Academy of Emergency Dispatchers). Upon being hired, a CareSpecialist goes through a two week course, in which they have classroom training on the ActiveCare solution; what diabetes is; corporate culture, opportunities within the Company; meeting Company personnel; how to on-board members and how to handle compliance calls and alert calls. This classroom training takes place for the first week, with half of each day dedicated to the classroom, and the remaining half day shadowing a team lead. The second week trainees perform calls while a team leader is there to assist and intervene if needed. During the following 90 days, the new hire is on probation and their phone calls are heavily audited, a review of attendance, production and behavior is analyzed and 911 certification is obtained. Further training continues throughout the employment of a CareSpecialist which includes but is not limited to the following:

• How to coach and handle diabetics.

- Proper diet

- Proper testing

- Managing the disease, including various motivating techniques to change the patient’s behavior

- Communicating with doctors and nurses.

• Emergency Medical Dispatch training.

- Instructions in life-threatening situations.

- Certified through the National Academy of Emergency Dispatch.

• Software training in helping diabetics understand their charts and goals.

Strategy and Results

The ActiveCare solution brings forth a strategy that utilizes real-time information to immediately improve a patient’s outcome. With real-time data, the CareSpecialists provide proactive support and encouragement to members before they become high risk. To this end, we provide documentation of progress of individuals or populations over time. In the form of regular reports, members, employers, disease management providers and channel partners are provided relevant data detailing the progress of any group, sub-group, or individual in the ActiveCare program.

The outcomes of the ActiveCare approach have been significant. Based on our internal data, testing trends for ActiveCare members show that the more frequently a member tests, the blood sugar can be better managed and kept within a normal range. Without testing, there is no way for a member with diabetes to monitor and control their condition. Regular testing allows members to better monitor and modify behaviors to improve their health. The American Diabetes Association has advocated for years that the best way to control diabetes is by testing at least three times per day.

A peer-reviewed study funded by ActiveCare (the “ActiveCare Study”) documented the efficacy of the ActiveCare program and was published in the January 2014 edition of US Endocrinology. The ActiveCare Study began with half of program participants actively engaged in the program as the study group, and

those choosing not to participate as the control group. In a year-over-year comparison, the diabetics who did not actively engage in the ActiveCare diabetes management program saw an average increase in medical costs of $282 per person which we believe is directly correlated to costs associated with complications that may have been avoided through proper testing. The diabetics in the study group who regularly tested their blood sugar levels and actively participated in our diabetes program showed a year-over-year reduction of medical costs of $3,384. We believe that these results suggest that through ActiveCare’s engagement programs, including but not limited to incentives and points systems (as described below) combined with comprehensive real time monitoring, result in healthier patients and lower overall costs of care.

Competitive Advantages/Operational Strengths

Unique Solution

The challenge facing the healthcare system is not whether to implement proper glucose monitoring and control, but rather how to motivate people with diabetes to monitor their glucose levels to improve their lives. In order to address this challenge, information indicating who is actually testing or not testing and who has readings that are outside of acceptable parameters is needed. Outside of our approach, we are not aware of any companies providing a service utilizing real-time information to help patients manage diabetes, reduce future medical costs and ultimately provide the information needed to address the challenge of ensuring individuals continue to properly test themselves.

Real-Time Visibility

Without the availability of actionable and reliable information, healthcare professionals have typically relied on a diabetic’s A1C (90-day blood glucose average) test results. While A1C test results provide some historic insight, these reports do not to show daily high and low blood glucose levels. We believe that our solution, with its emphasis on consistent communications with patients and real time monitoring is preferable to reliance on A1C test results. Our state-of-the-art cellular glucometer and testing supplies allow for test results to automatically be sent wirelessly to ActiveCare immediately following each test. The only thing a member of our service needs to do is test themselves and our CareSpecialists maintain regular contact to provide advice, answer questions and to engage emergency personnel if needed. ActiveCare provides caregivers, physicians, disease management, and wellness coordinators with real-time visibility into a member’s health.

Proactive Approach of our CareCenter

We believe that our 24/7 Care Center sets us apart from all other diabetes management programs. Historically, diabetics would be contacted by disease management personnel only after incurring high medical costs and being classified as high risk. This method is reactionary and does nothing to prevent diabetics from becoming high risk in the first place. With real-time data, the CareCenter provides proactive support and encouragement to our members before they become high risk. In addition, this “live” and timely intervention provides the platform of insight for members to modify their behavior while reinforcing goals to better manage their disease.

Engagement Strategy and Reward Program

The entire experience of how CareSpecialists interact with members has been retooled and refocused on increasing engagement. This engagement strategy is designed to foster increased testing through positive reinforcement involving an on-going testing rewards program, regular educational events and increased coordination with the group’s clinical team. Our rewards program is designed to incentivize members to test more often through monetary reward. Similar to other rewards programs from credit cards or airlines, members will earn points for each test they take, which accumulates in the members’ rewards account over the course of the year. Members can redeem the points through a rewards catalog within their account. This innovative program transforms testing into an exciting and fun activity and has the effect of significantly increasing the incidence of testing.

Management Team and Key Personnel Experience

Our management team and key personnel have significant technical and entrepreneurial experience, with over 20 years of experience in the remote monitoring industry.

We believe our unique approach of combining monitoring technology with a human service touch will create a paradigm shift to increase testing and improve the health of those living with diabetes.

Growth Strategy

Increase Marketing and Sales Force

We market our products and services through a channel partner approach by establishing relationships with insurance companies, disease management companies, third-party administrators (“TPAs”) and self-insured companies (“SICs”). TPAs administer the claims, payments, co-pays, and medical coding for SICs and effectively act as the medical benefits administrators for their customers, who typically are not large enough to justify a fully operational in-house department. Disease management companies are hired by insurance companies and SICs to actively engage with members and employees with the goal that more interaction will reduce significant health care claims. Through TPAs and broker networks, we have serviced over 26,000 individuals with diabetes from over 800 SICs.

As our Company continues to evolve, we will seek to expand our channel partner strategy with the goal of increasing revenues. The expansion of existing SICs secured through this model provides us with a high volume of members to accomplish these goals. In addition to this channel partner strategy, we also anticipate initiating in the near future a direct sales model. In this model, we anticipate that sales executives with existing relationships and a regional market presence will call directly on large SICs (with over 2,000 employees). This direct sales model will allow the ActiveCare value proposition to be promoted directly by the sales executive to SICs and will provide direct insight to the Company’s executives on the progress of the sale.

Increase Testing and Membership

The key to the ActiveCare strategy is member engagement. When ActiveCare brings on a new client, the number of members of that client with diabetes who are testing is usually around 18%. Currently with ActiveCare’s engagement strategy, that figure typically more than doubles to 40%. Part of the ActiveCare strategy is to increase that percentage to 60% through various incentive programs that will also increase daily testing to three times per day.

These programs are coordinated with our customers (SICs) and include the following:

• Financial rewards to member for their initial adoption

• Financial rewards for testing multiple times per day

• Onsite events to help train and educate members

• Mailers, emails and videos that motivate and educate the member

We expect this engagement to not only increase the health of the diabetic population that uses the testing and monitoring services provided by our CareCenters, but also to increase our revenues and gross profits in a significant manner. This increase is achieved by increasing members testing behavior and the sales of test strips. Members are resupplied test strips on an as-needed basis as they test. As ActiveCare facilitates members to test more frequently, its revenues should increase on the increased sales of test strips alone. More importantly, increased monitoring is expected to result in our diabetic customers statistically having lower claims. This aligns ActiveCare’s increased sales goals with that of the healthcare provider who has a significant interest in improving the health of its members thereby reducing the attendant medical costs.

Data Mining

The CareCenter is the real-time recipient of all test results which are delivered using the cellular glucometers that we provide to members. In addition to the real-time monitoring performed by our CareSpecialists, we also have in-house statisticians who analyze the test results data and provide written reports to our clients. This information is gathered, sorted and analyzed by ActiveCare, which in turn produces reports to the given groups (SICs, TPAs or Disease Management personnel). With this information, disease management personnel are offered real time visibility into the daily health of the members they are treating. The ultimate objective is to increase the percentage of diabetics who are regularly testing, which has been proven to be a major factor in reducing the cost of claims based on statistical data derived from the ActiveCare Study.

Technological Innovation/Product Development

Hardware

ActiveCare currently purchases all of it glucometers from a third-party vendor and provides these glucometers to its members at no cost upon their enrollment in our program. However, ActiveCare is in the process of building its own proprietary glucometer with custom designed functions that we believe will increase member engagement and CareCenter interaction. To that end, we have engaged with a third-party manufacturer with specific expertise in manufacturing and applying for FDA approval of glucometers.

Our proprietary glucometer is contemplated to have the following new functionalities:

• Voice communication through the glucometer. At the touch of a button the diabetic can be in instant contact with ActiveCare’s CareCenter where he/she can be coached on how to manage his/her diabetic problems.

• Touch screen technology which will simplify the diabetic’s usage of the glucometer.

• Built-in reminders that alert the diabetic member that it is time to test.

In addition, since over 57% of all diabetics suffer from complications and other chronic conditions caused by diabetes such as heart disease, congestive heart failure and obesity, our growth strategy specifically contemplates that our glucometer will be equipped with technology allowing other chronic conditions to be monitored by us. This would include the monitoring of blood pressure, blood oxygen levels, weight and heart rate measurements. This will allow us to further improve the health of our members and has the potential to broaden ActiveCare’s revenue base from our existing members.

Software

For the past four years, our R&D/IT expenditures were focused on developing a secured web based platform that allow our members, SICs, TPAs and disease management specialists the best experience possible in managing diabetes. In order to further develop these tools given the highly sensitive environment of cybersecurity surrounding HIPAA, we have continued to develop our own proprietary software solutions in which we are able to identify diabetics, produce statistical reports, and most importantly, continually improve the portal in which our members, SICs, TPAs, and others can set up their own alerting parameters to help the member succeed in their goals they have set with their doctor or disease management personnel. It is when a member is able to connect with others, and garner their support that life-changing actions can occur. We believe that our software and personnel facilitate these changes.

Chronic Illness Monitoring of other diseases

We plan to invest in research and development and patent filings, as we broaden the services we offer. We will continue to look for ways to provide solutions for other chronic illness and disease states markets. Our ultimate objective is to become a chronic illness monitoring company measuring not only blood sugar for diabetics, but also blood pressure, weight, and blood oxygen levels. Once we have proven our full turn-key

solution within the diabetes disease market, we believe that our clients will want to engage our services to monitor other chronic diseases. We have found that the human touch factor, coupled with innovating technologies, allows us to connect with our members and provide them the support and coaching they need to understand the disease which they have, and how to live a healthy life. Roughly one in every four Americans suffers from a chronic illness like diabetes. Approximately 84 million people in this country suffer from some form of cardiovascular disease. One in every three adults suffers from high blood pressure. Nearly 3.7 million people per year are admitted to the hospital with heart disease. Since we already provide our diabetes monitoring services to over 800 SICs, expanding the Company’s monitoring capabilities to other chronic illnesses is a logical extension of building out our business and increasing revenues.

Material Customers

ActiveCare has two significant clients that accounted for 64% of our total revenues for our 2016 fiscal year as follows:

• Office of Group Benefits (OGB), State of Louisiana — OGB accounted for 42% of 2015 revenues and 39% of 2016 revenues.

• Rx Benefits — Rx Benefits accounted for 12% of 2015 revenues and 25% of 2016 revenues, however, over the past six months, Rx Benefits’ percentage of revenues has declined to under 15% and we anticipate revenues from Rx Benefits will fall below 5% of revenues in the future.

In addition, Key Benefits accounted for 15% of 2015 revenues. Key Benefits accounted for less than 10% of 2016 revenues.

Research and Development

Technology to facilitate data-driven chronic illness monitoring consists of three components: (1) biometric monitoring products and supplies, (2) medical and claims data aggregation, and (3) algorithms for the analysis of the data.

Biometric monitoring products and supplies are provided by numerous medical hardware providers and deliver a wide range of features and functionality. ActiveCare is agnostic to any specific device requirement, and has the ability to integrate and capture data from any 510(k) or HL7 compliant monitoring device. See “Regulatory Matters.”

We are currently in the process of building our own proprietary glucometer with custom designed functions that we believe will strengthen member engagement and CareCenter interaction. As mentioned above, our proprietary glucometer is expected to incorporate an easy to use touch screen interface, voice communication technology, testing notifications and reminders, as well the technology to sync with other future devices and analyze data related to other chronic conditions.

During fiscal year 2016, we spent approximately $248,000, compared to $107,000 in fiscal year 2015, on research and development related to chronic illness monitoring. In addition to costs incurred in connection with our proposed and proprietary glucometer, the research and development program focused on ongoing improvements to methods and systems for the capture and analysis of data, as well as scalable architectures to migrate to production applications and deployments during fiscal year 2015 that were developed during fiscal years 2013 and 2012.

Sales and Marketing

We currently service over 800 SICs through relationships with TPAs, our health insurance broker network, disease management companies and others. We market directly to TPAs and healthcare brokers through participation in healthcare fairs and events as well as through direct contact with our staff and direct mailings of our marketing materials. We plan to continue to mine our existing network of SICs for members as we further prove out our business model and the efficacy of our programs.

Additionally, we are looking to deploy, upon consummation of this offering, a direct sales model to market directly to SICs. We anticipate that sales executives with existing relationships and a regional market presence will call directly on large SICs (with over 2,000 employees), which will effectively decrease our reliance on our relationship with TPAs and other third parties. Increasing our salesforce personnel will enable us to have a greater localized presence in the given geographic regions.

Competition

Over the past decade, technology device manufacturers have rushed to provide peripheral devices to capture data related to chronic health conditions rather than provide any assessment or intelligence regarding the data being captured. In most cases the data captured remains static on the peripheral device or data capture system, providing little to no perspective on the current and recent condition of the patient. In cases in which the data is utilized, the application of that data is typically limited to the “point of care” or physician’s office. The ActiveCare solution is a complex combination of components that provide an overall care system. ActiveCare’s combination of state-of-the-art technology including a cellular glucometer that sends test results to ActiveCare in real-time, along with its 24/7 CareCenter and engagement programs, provides a comprehensive and unique solution in the market. This real-time information allows ActiveCare’s 24/7 CareCenter to reach out to members moments after a dangerous reading. We believe that this real-time intervention along with ActiveCare’s proactive approach to engagement sets ActiveCare apart in the industry.

Our primary competitors are:

• Livongo — Relatively new to the market, Livongo provides a cellular glucometer that reports to an online record. Generally, the focus of Livongo is with small pilot groups, in which it captures the members’ data who were already previously managing their disease.

• GenesisHealth Technologies — Focused solely on the technology, GenesisHealth Technologies (“Genesis”) provides a cellular meter that sends results to an online record. Similar to traditional solutions focused solely on supplies, we do not believe that Genesis provides any solutions to increase engagement (i.e., get members testing) and therefore improve the health of members necessary to significantly reduce medical claims.

• Telcare — Similar to GenesisHealth, Telcare is focused solely on the technology, in which they provide a cellular meter that sends results to an online record. Similar to traditional solutions focused solely on supplies, we do not believe that Telecare provides any solutions to increase engagement and therefore improve the health of members necessary to significantly reduce medical claims.

Intellectual Property

Trademarks

We have registered certain of our trademarks with the United States Patent and Trademark Office, including ActiveCare®, ActiveOne®, ActiveOne+®, and ActiveHome®. We also use certain trademarks, trade names, and logos that have not been registered. We claim common law rights to these unregistered trademarks, trade names and logos. We also own domain names, including www.activecare.com, and we claim ownership of certain unregistered copyrights of our website content. We also rely on a variety of proprietary rights that we license from third parties as described below.

Patents

We own the following patents and patent applications:

Patent or Application No.	Country	Issue/Filing Date	Title of Patent
9,161,198	United States	Issued 10/13/15	Systems and Devices for Emergency Tracking and Health Monitoring

8,942,676	United States	Issued 1/27/15	Systems and Devices for Emergency Tracking and Health Monitoring

14,286,695	United States	Pending 5/24/2014	System and Method for Identifying, Tracking and Treating Chronic Illness Using Real-time Biometric Data

7,251,471	United States	Issued 7/31/2007	Emergency Phone with Single Button Activation

We have exclusive licenses for the use of the following patents:

8,797,210	United States	Issued 8/5/2014	Remote Tracking Device and System and Method for Two-Way Voice Communication Between Device and a Monitoring Center

7,545,318	United States	Issued 6/9/2009	Remote Tracking System and Device with Variable Sampling and Sending Capabilities Based on Environmental Factors

We have non-exclusive licenses for the use of the following patents:

6,612,985	United States	Issued 9/2/2003	Method and System for Monitoring and Treating a Patient

6,307,481	United States	Issued 10/23/2001	Systems Within A Communication Device For Evaluating Movement Of A Body And Methods Of Operating The Same

6,501,386	United States	Issued 12/31/2002	Systems Within A Communication Device For Evaluating Movement Of A Body And Methods Of Operating The Same

6,661,347	United States	Issued 12/09/2003	Systems Within A Communication Device For Evaluating Movement Of A Body And Methods Of Operating The Same

6,703,939	United States	Issued 3/9/2004	System and Method For Analyzing Activity of A Body

6,864,796	United States	Issued 3/8/2005	Systems Within A Communication Device For Evaluating Movement Of A Body And Methods Of Operating The Same

7,095,331	United States	Issued 8/22/2006	System and Method For Analyzing Activity of A Body

7,145,461	United States	Issued 12/05/2006	System and Method For Analyzing Activity of A Body

Trade Secrets

We own certain intellectual property, including trade secrets, which we seek to protect, in part, through confidentiality agreements with employees and other parties. Even where these agreements exist, there can be no assurance that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets will not otherwise become known to or independently developed by competitors.

Regulatory Matters

The testing, manufacture, distribution, advertising and marketing of medical devices in the United States is subject to extensive regulation by federal, state and local governmental authorities, including the Food & Drug Administration (“FDA”). Certain of our products may be subject to and required to receive regulatory clearances or approvals, as the case may be, before we may market them. Under United States law, a medical device is an article, which, among other things, is intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment or prevention of disease, in man or other animals (see Food, Drug & Cosmetic Act (the “Act”) § 201(h)).

Devices are subject to varying levels of regulatory control, the most comprehensive of which requires that a clinical evaluation be conducted before a device receives clearance or approval for commercial distribution. The FDA classifies medical devices into one of three classes. Class I devices are relatively simple and can be manufactured and distributed with general controls. Class II devices are somewhat more complex and require greater scrutiny. Class III devices are new and frequently help sustain life. Examples of the varying levels of regulatory control are described in the following paragraphs.

In the United States, a company generally can obtain permission to distribute a new device in two ways — through a Section 510(k) premarket notification application (“510(k) submission”), or through a Section 515 premarket approval (“PMA”) application. The 510(k) submission applies to any device that is substantially equivalent to a “Predicate Device” (a device first marketed prior to May 28, 1976 or a device marketed after that date which was substantially equivalent to a pre-May 28, 1976 device). These devices are either Class I or Class II devices. Under the 510(k) submission process, the FDA will issue an order finding substantial equivalence to a Predicate Device and permitting commercial distribution of that device for its intended use. A 510(k) submission must provide information supporting its claim of substantial equivalence to the Predicate Device. The FDA permits certain low risk medical devices to be marketed without requiring the manufacturer to submit a premarket notification. In other instances, the FDA may not only require that a premarket notification be submitted, but also that such notification be accompanied by clinical data. If clinical data from human experiences are required to support the 510(k) submission, these data must be gathered in compliance with Integral Device Exemption (“IDE”) regulations for clinical trials performed in the United States. The FDA review process for premarket notifications submitted pursuant to section 510(k) should take about 90 days on average, but it can take substantially longer if the FDA has concerns. Furthermore, there is no guarantee that the FDA will “clear” the device for marketing, in which case the device cannot be distributed in the United States. There is no guarantee that the FDA will deem the device subject to the 510(k) process, as opposed to the more time-consuming, resource intensive and problematic process described below.

We do not currently manufacture our own chronic disease monitoring devices. We are currently working with a third party to manufacture our own proprietary cellular glucometer and strips. Manufacturers of medical devices are required to register with the FDA before they begin to manufacture devices for commercial distribution. As a result, any entity that manufactures products on our behalf will be subject to periodic inspection by the FDA for compliance with the FDA’s Quality System Regulation (“QSR”) requirements and other regulations. These regulations require us and our manufacturers to manufacture products and maintain documents in a prescribed manner with respect to design, manufacturing, testing and control activities. Further, we are required to comply with various FDA and other agency requirements for labeling and promotion. The Medical Device Reporting regulations require that we provide information to the FDA whenever there is evidence to reasonably suggest that a device may have caused or contributed to a death or serious injury or, if a malfunction were to occur, could cause or contribute to a death or serious injury. In addition, the FDA prohibits us from promoting a medical device for unapproved indications.

In the United States, Health Insurance Portability and Accountability Act (“HIPAA”) regulations require national standards for some types of electronic health information transactions and the data elements used in those transactions, security standards to ensure the integrity and confidentiality of health information and standards to protect the privacy of individually identifiable health information. Covered entities under HIPAA, which include health care organizations such as our clients, our employer clinic business model and our claims processing, transmission and submission services, are required to comply with the privacy standards, the transaction regulations and the security regulations. As a business associate of our clients who are covered entities, we are generally required by contract to comply with the HIPAA regulations as they pertain to handling of covered client data. However, the extension of these HIPAA obligations to business associates by law has created additional liability risks related to the privacy and security of individually identifiable health information.

In the United States, the federal Health Insurance Portability and Accountability Act of 1996, Public Law 104-191 (the “HIPAA Statute”), and its related “Privacy Rules” (45 C.F.R. Part 164 Subparts A and E) and “Security Rules” (45 C.F.R. Part 164 Subpart C) and “Breach Notification Rules” (45 C.F.R. Part 164 Subpart D) as amended by the Health Information Technology for Economic and Clinical Health Act (the “HITECH Statute”) and any regulations promulgated thereunder (collectively, “HIPAA”), impose minimum requirements for the confidentiality, integrity and availability of individuals’ health information under certain conditions. Briefly, HIPAA requires “Covered Entities” as defined under HIPAA to comply with all applicable HIPAA requirements.

HIPAA also requires “Business Associates” to comply with the Security Rules as well as any additional specific obligations under HIPAA depending upon the services provided to “Covered Entities”. As a “Business Associate” of our clients who are “Covered Entities”, we are required to comply with the Security Rules in connection with our clients’ “Protected Health Information” or “PHI” as such terms are defined under HIPAA. Our obligations under the Security Rules and other applicable provisions of HIPAA are also imposed pursuant to contract with our “Covered Entity” clients. Such obligations under the Security Rules, other applicable requirements under HIPAA as well as contracts with “Covered Entity” clients (or with clients who are “Business Associates” where we would be deemed to be a “Subcontractor” under HIPAA) create liability risks for failure to abide by maintaining the confidentiality, integrity and availability of “PHI” in accordance with HIPAA and the contracts with “Covered Entity” (and “Business Associate”) clients.

Employees

As of March 30, 2017, we had thirty-seven (37) full-time and one (1) part-time employee. None of these employees are represented by a labor union or subject to a collective bargaining agreement. We have never experienced a work stoppage and our management believes that our relations with employees are good.

Legal Proceedings

On May 28, 2015, an investor in the Company, filed a lawsuit against the Company, James Dalton, our former CEO and Chairman, ADP Management, an entity controlled by David Derrick, our former Executive Chairman, and 4G Biometrics, a wholly owned subsidiary of the Company in the District Court of Utah-Central Division (Case No. 2:15-CV-00373-BCW). The lawsuit alleges a breach of contract, breach of the implied covenant of good faith and fair dealing, fraud and conspiracy to commit fraud and seeks damages in excess of $1,000,000, exclusive of interest and costs. The Company has engaged legal counsel regarding the matter. At this time, it is not possible to predict the outcome of the matter. The Company intends to vigorously dispute the litigation and believes it has meritorious defenses to the claims.

On November 4, 2015, the Company received a demand for payment of $275,000 from a former employee of the Company and former principal of 4G Biometrics who was terminated for cause in regards to his employment agreement. On December 4, 2015, the Company filed a complaint in the Third Judicial District Court in Salt Lake County, State of Utah (Case No. 150908531) against Kenith Lewis, a former employee, Randall K. Gardner, a former employee, and Darrell Meador, our President of Sales, all of

whom are the former owners of 4G Biometrics, seeking damages in excess of $300,000 related to alleged misrepresentations made to induce ActiveCare to acquire 4G Biometrics. In February 2016, the Company entered into settlement agreements with each of Kenith Lewis and Randall K. Gardner and Darrell Meador whereby all parties released all claims against each other.

With the exception of the foregoing, the Company is not involved in any disputes and does not have any litigation matters pending.

DIRECTORS AND EXECUTIVE OFFICERS

As of the date of this prospectus, our directors, executive officers and significant employees are as follows:

Name	Age	Position
Jeffrey Peterson	39	Executive Chairman (Director) and Chief Executive Officer
Bradley Robinson	47	Director
Robert J. Welgos	78	Director
Chad Olsen	45	Director Nominee*
David Hall	48	Director Nominee*
Eric Robinson	50	Chief Financial Officer, In-House Counsel, Secretary and Treasurer

____________

* Chad Olsen and David Hall have been appointed to the Board, pending the effectiveness of this registration statement.

Jeffrey S. Peterson — Chief Executive Officer and Chairman

Mr. Jeffrey Peterson was appointed as our Chief Executive Officer and Chairman on July 7, 2016. As a founding investor, Mr. Peterson was our Chief Financial Officer from September 2015 through July 7, 2016 and joined our Board of Directors in April 2014. He has been involved in numerous early stage ventures in the public and private sectors, with an emphasis in healthcare and technology. Mr. Peterson served in various capacities within ActiveCare from July 2011 through the present, including Director of Investor Relations and V.P. of Finance and Chief Financial Officer. From January 2010 until July 2012, he was the Director of Investor Relations for Track Group. Prior to Track Group, Mr. Peterson was a co-owner of a stock brokerage firm in Utah, where his roles included broker, market maker, AML officer and communications officer, while holding numerous FINRA security licenses.

He graduated from the University of Utah with a Bachelor of Arts Degree in Finance and Business Administration and is a founding member of the University Venture Fund. Mr. Peterson also currently holds board observation seats with Juneau Biosciences and CoNextions Medical.

In evaluating Mr. Peterson’s specific experience, qualifications, attributes and skills in connection with his appointment to our board, we took into account his numerous years of experience in finance, and his proven track record of success in such endeavors.

Bradley Robinson — Director

Mr. Bradley Robinson joined our Board of Directors in July 2016. Since March 2015 he has served as CEO of Predictive Technology Group, Inc. (PRED). PRED develops and commercializes discoveries and technologies involved in novel molecular diagnostic and stem cell/pharmaceutical therapeutic products. PRED has developed and/or acquired a number of technologies that open a window into the origin of human disease and the role that genes and their related proteins play in the disease’s onset and progression. Mr. Robinson has been a founding member of three such ventures in healthcare, one of which (Specialized Health Products International, Inc. was publicly traded until its acquisition in March 2008 by C.R. Bard. Mr. Robinson was the CEO and co-founder of Infusive Technologies, LLC from November 2004 until September 2008 when it was acquired by Sagent Pharmaceuticals, Inc. As part of the acquisition, Mr. Robinson became President of the medical device division of Sagent Pharmaceuticals. Sagent Pharmaceuticals is a specialty injectable pharmaceutical products company. He left Sagent Pharmaceuticals to become Vice President of Business Development of Juneau BioSciences in May 2010. Juneau develops and commercializes genetic tests related to women’s healthcare. He was responsible for developing strategic partnerships and the company’s capitalization. From March 2011 until September 2013 he was Chief Executive Officer and President of LifeCord Genetics, LLC. Mr. Robinson earned an MBA/MIM from the Graduate School of International Management (Thunderbird).

We believe Mr. Robinson is qualified to serve on our Board of Directors because of his experience with the early stage structuring of ventures in the areas of pharmaceuticals, medical devices and information technology.

Eric Robinson — Chief Financial Officer, In-House Counsel, Secretary and Treasurer

Mr. Eric Robinson joined ActiveCare part-time as Chief Financial Officer, In-House Counsel, Secretary and Treasurer in July 2016. We expect Mr. Robinson to join us full-time in the future. Mr. Robinson spent fourteen years in private practice as a corporate attorney, including eleven years as a partner in the Salt Lake City, Utah law firm of Blackburn & Stoll, LC. Mr. Robinson’s law practice focused on securities, corporate and other business transactions. During the past five years, Mr. Robinson has been principally employed as (i) General Counsel, Chief Financial Officer and director of MicroPower Global Limited, a company in the semiconductor business since 2009, (ii) as the General Counsel, Chief Financial Officer and a director of Juneau Biosciences, LLC, a genetic research company, from 2008 until 2015 and (iii) a private attorney. Mr. Robinson also acts as a director and chairman of the audit committee of ClearOne, Inc. (NasdaqCM: CLRO). His legal practice includes working with companies in connection with public and private offerings of securities, corporate partnering, mergers and acquisitions, licensing and technology transfer and compensation planning. He graduated from the University of Utah with honors with a B.S. degree in accounting and he subsequently passed the CPA exam (unlicensed). He graduated from Vanderbilt University with a J.D. where he graduated Order of the Coif.

Robert J. Welgos — Director

Mr. Welgos joined our Board of Directors in June 2009. He has a Bachelor of Science in engineering from the Newark College of Engineering (1962), and worked for 38 years with Allied Signal Corp (now Honeywell International), in various technical department management positions, including being responsible for operations of Customer Technical Service Dept., Design Engineering, Testing Laboratories, and Process Laboratories. He also served as the Manager, North American Distributor Sales and Director of International Operations, where he established distribution networks throughout the Pacific Rim and South America. During this period, he was instrumental in the creation of joint ventures with Lucky Goldstar in Korea and Japan Synthetic Rubber in Japan. Mr. Welgos retired from Allied Signal Corp in 2000. Mr. Welgos is the Chairman of our board’s Compensation and Audit Committees. Among other things, Mr. Welgos’ education and extensive experience in the industries described above qualify him to advise management in our research and development agenda and customer service solutions. In addition, his experience in Asia is important as we source our products and manufacturing.

Chad Olsen — Director Nominee

Mr. Olsen has been appointed to the Board of Directors pending the effectiveness of this registration statement. Since May 2016, Mr. Olsen has served as the Chief Financial Officer and Chief Operating Officer of Search Group Partners, Inc., a premier recruiting firm that offers professional talent acquisition and consulting services to both local and nation-wide searches with its headquarters located in Salt Lake City, Utah. Previously, he provided accounting and consulting services as the founder and president of Acreal, LLC from May 2014 to May 2016. Prior to Acreal, he served for four years as Chief Financial Officer for Track Group, Inc. from January 2010 to May 2014, which provided electronic monitoring services as a lower-cost alternative to incarceration. Previous to his appointment as CFO, he served as Track Group’s corporate controller from September 2001 to January 2010. Additionally, he served as Track Group’s corporate secretary from January 2010 to November 2011. From 1997 to 2001, Mr. Olsen worked at Kartchner and Purser, P.C., a certified public accounting firm in performing tax, auditing, and business advisory services. From 1992 to 1996, Mr. Olsen worked in the banking industry with Universal Community Credit Union where he supervised teller and member services employees. Mr. Olsen received a Bachelor of Science Degree in Accounting from Brigham Young University. In evaluating Mr. Olsen’s experience and qualifications, we took into account Mr. Olsen’s extensive financial background, experience with general management, corporate governance and talent acquisitions.

David Hall — Director Nominee

Mr. Hall has been appointed to the Board of Directors pending the effectiveness of this registration statement. Mr. Hall is the founder and President of HSA Health Insurance Company (a.k.a HSA Heath Plan), a health insurance company that offers HSA based health plans exclusively to the fully insured group market and

the self-funded group market. Prior to HSA Heath Plan, in 2003 Mr. Hall co-founded HealthEquity, Inc. (NASDAQ: HQY), a leader in the Consumer Directed Healthcare space HealthEquity with over $4 billion of assets under management and over 2.2 million HSAs. Prior to co-founding HealthEquity, Mr. Hall worked with Peppers & Rogers Group, a firm specializing in Customer Relationship Management strategy from May 2000 through January 2003. In addition to these business ventures, Mr. Hall served as President from May 1999 to May 2000 of TimeMarker, Inc., a company that helped other businesses leverage the Internet to sell their time-perishable inventory using a proprietary wireless exchange platform. Prior to this, he worked for Ernst & Young LLP in its Strategic Advisory Services group from May 1997 through May 1999. Mr. Hall received a master of business administration from Brigham Young University and a bachelor’s in English from Weber State University. In evaluating Mr. Hall’s experience we took into account his extensive management experience as well as background in health insurance which we believe to be synergistic with our business.

Family Relationships

Mr. Bradley Robinson and Mr. Eric Robinson are brothers. There are no other family relationships among any of our directors or executive officers.

Board Composition and Director Independence

Our board of directors consists of three members: Mr. Jeffrey Peterson, Mr. Robert J. Welgos and Mr. Bradley Robinson. Additionally, on November 1, 2016, we appointed Chad Olsen and David Hall to the Board, pending effectiveness of this registration statement. The directors will serve until our next annual meeting and until their successors are duly elected and qualified. The Company defines “independent” as that term is defined in Rule 5605(a)(2) of the NASDAQ Capital Market listing standards.

In making the determination of whether a member of the board is independent, our board considers, among other things, transactions and relationships between each director and his immediate family and the Company, including those reported under the caption “Related Party Transactions.” The purpose of this review is to determine whether any such relationships or transactions are material and, therefore, inconsistent with a determination that the directors are independent. On the basis of such review and its understanding of such relationships and transactions, our board affirmatively determined that Messrs. Hall, Olsen and Welgos are qualified as independent and do not have any material relationships with us that might interfere with his exercise of independent judgment.

Board Committees

Upon effectiveness of this registration statement, our board of directors will establish an audit committee and a nominating and corporate governance committee and our compensation committee will be reorganized. Upon effectiveness of this registration statement, each committee will have its own charter, which will be available on our website at www.activecare.com. Information contained on our website is not incorporated herein by reference. Each of the board committees will have the composition and responsibilities described below.

Members will serve on these committees until their resignation or until otherwise determined by our Board of Directors.

Audit Committee

Upon the effectiveness of this registration statement, we will have a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act of 1934, as amended (the “Exchange Act”). The Committee will consist of three “independent” members, within the meaning of Rule 10A-3 under the Exchange Act and the NASDAQ Stock Market Rules. The Committee will consist of Director Nominee Chad Olsen (chair), Director Nominee David Hall and Mr. Robert Welgos. Our board has determined that Chad Olsen is currently qualified as an “audit committee financial expert”, as such term is defined in Item 407(d)(5) of Regulation S-K.

The Audit Committee will oversee our accounting and financial reporting processes and oversee the audit of our financial statements and the effectiveness of our internal control over financial reporting. The specific functions of this Committee include, but are not limited to:

• selecting and recommending to our board of directors the appointment of an independent registered public accounting firm and overseeing the engagement of such firm;

• approving the fees to be paid to the independent registered public accounting firm;

• helping to ensure the independence of the independent registered public accounting firm;

• overseeing the integrity of our financial statements;

• preparing an audit committee report as required by the SEC to be included in our annual proxy statement;

• resolving any disagreements between management and the auditors regarding financial reporting;

• reviewing with management and the independent auditors any correspondence with regulators and any published reports that raise material issues regarding the Company’s accounting policies;

• reviewing and approving all related-party transactions; and

• overseeing compliance with legal and regulatory requirements.

Compensation Committee

Upon the effectiveness of this registration statement, the members of our Compensation Committee will consist of three members, Director Nominee Chad Olsen, Director Nominee David Hall and Mr. Robert Welgos (Chair). Each such member will be “independent” within the meaning of the NASDAQ Stock Market Rules. In addition, each member of our Compensation Committee will qualify as a “non-employee director” under Rule 16b-3 of the Exchange Act. Our Compensation Committee assists the board of directors in the discharge of its responsibilities relating to the compensation of the board of directors and our executive officers.

The Committee’s compensation-related responsibilities include, but are not limited to:

• reviewing and approving on an annual basis the corporate goals and objectives with respect to compensation for our Chief Executive Officer;

• reviewing, approving and recommending to our board of directors on an annual basis the evaluation process and compensation structure for our other executive officers;

• determining the need for and the appropriateness of employment agreements and change in control agreements for each of our executive officers and any other officers recommended by the Chief Executive Officer or board of directors;

• providing oversight of management’s decisions concerning the performance and compensation of other company officers, employees, consultants and advisors;

• reviewing our incentive compensation and other equity-based plans and recommending changes in such plans to our board of directors as needed, and exercising all the authority of our board of directors with respect to the administration of such plans;

• reviewing and recommending to our board of directors the compensation of independent directors, including incentive and equity-based compensation; and

• selecting, retaining and terminating such compensation consultants, outside counsel or other advisors as it deems necessary or appropriate.

Nominating and Corporate Governance Committee

Upon the effectiveness of this registration statement, there will be three members of our Nominating and Corporate Governance Committee. Each such member will be “independent” within the meaning of the NASDAQ Stock Market Rules. The Committee will consist of Director Nominee Chad Olsen, Director Nominee David Hall (chair) and Mr. Robert Welgos. The purpose of the Nominating and Corporate Governance Committee is to recommend to the board nominees for election as directors and persons to be elected to fill any vacancies on the board, develop and recommend a set of corporate governance principles and oversee the performance of the board.

The Committee’s responsibilities include:

• recommending to the board of directors nominees for election as directors at any meeting of stockholders and nominees to fill vacancies on the board;

• considering candidates proposed by stockholders in accordance with the requirements in the Committee charter;

• overseeing the administration of the Company’s code of business conduct and ethics;

• reviewing with the entire board of directors, on an annual basis, the requisite skills and criteria for board candidates and the composition of the board as a whole;

• the authority to retain search firms to assist in identifying board candidates, approve the terms of the search firm’s engagement, and cause the Company to pay the engaged search firm’s engagement fee;

• recommending to the board of directors on an annual basis the directors to be appointed to each committee of the board of directors;

• overseeing an annual self-evaluation of the board of directors and its committees to determine whether it and its committees are functioning effectively; and

• developing and recommending to the board a set of corporate governance guidelines applicable to the Company.

The Nominating and Corporate Governance Committee may delegate any of its responsibilities to subcommittees as it deems appropriate. The Nominating and Corporate Governance Committee is authorized to retain independent legal and other advisors, and conduct or authorize investigations into any matter within the scope of its duties.

Code of Business Conduct and Ethics

We have adopted a code of business conduct and ethics applicable to our principal executive, financial and accounting officers and all persons performing similar functions. A copy of that code is available on our corporate website at www.activecare.com. We expect that any amendments to such code, or any waivers of its requirements, will be disclosed on our website.

EXECUTIVE COMPENSATION

The following table summarizes information concerning the compensation awarded to, earned by, or paid to, our Chief Executive Officer (Principal Executive Officer or PEO) and our two most highly compensated executive officers other than the Principal Executive Officer during fiscal years 2016 and 2015 (collectively, the “Named Executive Officers”) who were serving in such capacities as of September 30, 2016, as well as James Dalton who served as our Chief Executive Officer from April 2015 through June 2016 and Michael Jones who served as our Principal Executive Officer from September 2014 to March 2015.

Summary Compensation Table

Name and principal	Year ended	Salary		Bonus		Stock awards		Warrant awards		All other compensation		Total
position (a)	9/30 (b)	($) (c)		($) (d)		($) (e)		($) (f)		($) (i)		($) (j)
Jeffrey Peterson	2016	$	270,000	$	270,000	$	1,018,516	$	—	$	17,892	$	1,576,408
PEO. Former Chief Financial Officer	2015	$	60,000	$	—	$	1,245,941	$	—	$	3,035	$	1,308,976

James J. Dalton	2016	$	360,000	$	—	$	703,900	$	—	$	38,445	$	1,102,345
Former PEO	2015	$	120,000	$	—	$	954,828	$	20,472	$	982	$	1,096,282

Darrell Meador,	2016	$	136,550	$	—	$	25,163	$	—	$	5,312	$	167,025
Former President of Sales	2015	$	135,000	$	50,000	$	197,162	$	12,569	$	19,769	$	414,500

Michael Jones	2016	$	—	$	—	$	—	$	—	$	—	$	—
Former PEO	2015	$	67,500	$	—	$	240,550	$		$	7,947	$	315,997

____________

(1) Column (i) includes post-employment consulting fees, health, dental, vision, term life and prescription insurance. The amounts included in that column, representing premiums paid by us for the applicable insurance policies.

(2) All amounts except those reported in column (c) and column (i) are non-cash amounts and represent stock or warrants to purchase common stock.

(3) Amounts in column (e) represent non-cash compensation expense of stock grants based on the market value of the stock on the grant date.

During fiscal year 2016, we granted shares of common stock as compensation for past and future service. The schedule below includes stock granted during fiscal year 2016. The granted stock does not include stock quantities, values or deferred balances for accrued amounts or stock granted in prior years being amortized during fiscal year 2016.

	Stock granted	Value of granted stock		Amount deferred		Amount recognized		Amortization of past deferrals		Total stock awards
Jeffrey Peterson	—	$	—	$	—	$	—	$	1,018,516	$	1,018,516
PEO. Former Chief Financial Officer

James J. Dalton	927	$	13,900	$	—	$	13,900	$	690,000	$	703,900
Former PEO

Michael Jones,	—	$	—	$	—	$	—	$	—	$	—
Former PEO

Darrell Meador,	1,090	$	25,163	$	—	$	25,163	$	—	$	25,163
Former President of Sales

The 927 shares issued to Mr. Dalton were issued as incentive bonus for meeting a certain milestone. The 1,090 shares issued to Mr. Meador were issued in lieu of salary.

During the fiscal year ended September 30, 2015, we granted Mr. Dalton 4,000 shares for his consulting services provided prior to his role as Chief Executive Officer that vested monthly through December 31, 2016; 10,564 shares were issued in lieu of salary and among the shares 8,000 in lieu of salary, which vest monthly over two years through June 2017; 741 shares were issued as incentive bonus for meeting a certain milestone; 612 shares were issued for prepaid future services. We granted Mr. Peterson 5,477 shares in lieu of salary, among the shares, 4,000 shares vest monthly over two years through June 2017. Of the shares issued to Mr. Meador, 513 shares were issued in lieu of salary, and 500 shares were issued as incentive bonus for meeting sales goals.

During the fiscal year ended September 30, 2014, we granted Mr. Peterson, 153 shares in lieu of salary, which vest quarterly over two years, and 7,992 shares for continued service, which also vest quarterly over two years.

Amounts in column (f) represent non-cash compensation expense of warrants to purchase common stock granted based on the fair value calculated using a binomial option-pricing model. During 2016 and 2015, we did not grant any options to purchase shares of common stock to the officers named in this schedule. During 2015, we reduced the exercise price of Mr. Dalton’s options to purchase 1,022 shares of common stock from $500 per share to $150 per share and we recognized an additional $20,472 of compensation expense. The warrant awards related to Mr. Meador’s compensation are related to the amortization of 867 warrants issued in 2012 and a related modification in 2014.

Compensation-Setting Process/Role of Our Compensation Committee

Although we established a compensation committee in 2014, the committee has not met and does not currently meet NASDAQ listing standards. During 2016, our board of directors was responsible for overseeing our executive compensation program, establishing our executive compensation philosophy, and determining specific executive compensation, including cash and equity. Upon effectiveness of this registration statement, we intend to reorganize our compensation committee, which will consist of three independent directors. Unless otherwise stated, the discussion and analysis below is based on decisions by the board of directors.

During 2016, our board of directors considered one or more of the following factors when setting executive compensation, as further explained in the discussions of each compensation element below:

• the experiences and individual knowledge of the members of our board of directors regarding executive compensation, as we believe this approach helps us to compete in hiring and retaining the best possible talent while at the same time maintaining a reasonable and responsible cost structure;

• corporate and/or individual performance, as we believe this encourages our executive officers to focus on achieving our business objectives;

• the executive’s existing equity award and stock holdings; and

• internal pay equity of the compensation paid to one executive officer as compared to another — that is, that the compensation paid to each executive should reflect the importance of his or her role to the company as compared to the roles of the other executive officers, while at the same time providing a certain amount of parity to promote teamwork.

With our transition to being a company listed on NASDAQ, our compensation program following this offering may, over time, vary significantly from our historical practices. For example, we expect that following this offering, in setting executive compensation, the new compensation committee may review and consider, in addition to the items above, factors such as the achievement of predefined milestones, tax deductibility of compensation, the total compensation that may become payable to executive officers in various hypothetical scenarios, the performance of our common stock and compensation levels at public peer companies.

Executive Compensation Program Components

Base Salary

We provide base salary as a fixed source of compensation for our executive officers, allowing them a degree of certainty when having a meaningful portion of their compensation “at risk” in the form of equity awards covering the shares of a company for whose shares there has been limited liquidity to date. The board of directors recognizes the importance of base salaries as an element of compensation that helps to attract highly qualified executive talent.

Base salaries for our executive officers were established primarily based on individual negotiations with the executive officers when they joined us and reflect the scope of their anticipated responsibilities, the individual experience they bring, the board members’ experiences and knowledge in compensating similarly situated individuals at other companies, our then-current cash constraints, and a general sense of internal pay equity among our executive officers.

The board does not apply specific formulas in determining base salary increases. In determining base salaries for 2016 for our continuing named executive officers, no adjustments were made to the base salaries of any of our named executive officers as the board determined, in their independent judgment and without reliance on any survey data, that existing base salaries, taken together with other elements of compensation, provided sufficient fixed compensation for retention purposes.

Outstanding Equity Awards at September 30, 2016

The following table summarizes the outstanding equity award holdings held by our named executive officers at September 30, 2016.

Name (a)	Number of Securities Underlying Unexercised Warrants (#) Exercisable (b)	Number of Securities Underlying Unexercised Warrants (#) Unexercisable (c)	Warrant Exercise Price ($) (e)		Warrant Expiration Date (f)	Number of Shares or Units of Stock That Have Not Vested (#) (g)	Market Value of Shares or Units of Stock That Have Not Vested ($) (h)
Jeffrey Peterson
PEO. Former Chief Financial Officer	—	—	$	—	—	1,500	$	48,750

James J. Dalton
Former PEO	720	—	$	150	10/3/2016	3,000	$	97,500

Michael Jones,
Former PEO	—	—	$	—	—	—	$	—

Darrell Meador,
Former President of Sales	347	520	$	250	6/20/2017	—	$	—

____________

(1) Column (c) includes warrants to purchase shares of common stock with various vesting periods.

(2) Column (g) includes unvested shares of common stock that vest quarterly over a remaining period of 9 months and will be completely vested on June 23, 2017 or will vest immediately in the event of a change in control.

2016 Incentive Stock Option Plan

Effective November 1, 2016, the Board approved, authorized and adopted the ActiveCare, Inc. 2016 Incentive Stock Option Plan (the “2016 Plan”) and certain forms of ancillary agreements to be used in connection with the issuance of stock and/or options pursuant to the Plan (the “Plan Agreements”). The Company will be seeking stockholder approval of the 2016 Plan so that compensation attributable to grants under the 2016 Plan may qualify for an exemption from the $1,000,000 deduction limit under Section 162(m) of the Internal Revenue Code of 1986.

The purpose of awards under the 2016 Plan is to attract and retain talented employees and the services of select non-employees, further align employee and stockholder interests and closely link employee compensation with Company performance. Eligible participants under the 2016 Plan will be such full or part-time officers and other employees, directors, consultants and key persons of the Company and any Company subsidiary who are selected from time to time by the Board or committee of the Board authorized to administer the 2016 Plan, as applicable, in its sole discretion.

The Plan provides for the issuance of up to 377,250 shares of common stock of the Company through the grant of non-qualified options (the “Non-qualified Options”), incentive options (the “Incentive Options” and together with the Non-qualified Options, the “Options”) and restricted stock (the “Restricted Stock”) to directors, officers, consultants, attorneys, advisors and employees. The Board believes that such shares should be sufficient to cover grants through at least the end of the fiscal year 2018.

It is intended for the 2016 Plan to be administered by the Company’s newly formed Compensation Committee, which will be implemented upon the effectiveness of this registration statement. The Compensation Committee will consist of at least two independent, non-employee and outside directors (the “Compensation Committee”). In the absence of such a Committee, the Board shall administer the 2016 Plan.

Options are subject to the following conditions:

(i) The Committee determines the strike price of Incentive Options at the time the Incentive Options are granted. The assigned strike price must be no less than 100% of the Fair Market Value (as defined in the Plan) of the Company’s common stock. In the event that the recipient is a Ten Percent Owner (as defined in the Plan), the strike price must be no less than 110% of the Fair Market Value of the Company.

(ii) The strike price of each Non-qualified Option will be at least 100% of the Fair Market Value of such share of the Company’s common stock on the date the Non-qualified Option is granted.

(iii) The Committee fixes the term of Options, provided that Options may not be exercisable more than ten years from the date the Option is granted, and provided further that Incentive Options granted to a Ten Percent Owner may not be exercisable more than five years from the date the Incentive Option is granted.

(iv) The Committee may designate the vesting period of Options and may accelerate at any time the exercisability or vesting of all or any portion of any Option granted.

(v) Options are not transferable and Options are exercisable only by the Options’ recipient, except upon the recipient’s death.

(vi) To the extent required for “incentive stock option” treatment under Section 422 of the Internal revenue Code of 1986, as amended (the “Code”), the aggregate Fair Market Value (determined as of the grant date) of the shares with respect to which Incentive Stock Options granted under the Plan and any other plan of the Company or its parent and any Subsidiary that become exercisable for the first time by an optionee during any calendar year shall not exceed $150,000 or such other limit as may be in effect from time to time under Section 422 of the Code. To the extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.

(vii) Beginning on the date that the Company becomes subject to Section 162(m) of the Code, Options with respect to no more than 26,408 Shares shall be granted to any one individual in any calendar year period and no more than 30,000 Shares shall be granted to any one individual in any calendar year period.

(viii) Shares may be issued up to such maximum number pursuant to any type or types of Award, and no more than 108,624 shares may be issued pursuant to Incentive Stock Options.

Awards of Restricted Stock are subject to the following conditions:

(i) The Committee grants Restricted Stock Options and determines the restrictions on each Restricted Stock Award (as defined in the Plan). Upon the grant of a Restricted Stock Award and the payment of any applicable purchase price, grantee is considered the record owner of the Restricted Stock and entitled to vote the Restricted Stock if such Restricted Stock is entitled to voting rights.

(ii) Restricted Stock may not be delivered to the grantee until the Restricted Stock has vested.

(iii) Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as provided in the Plan or in the Award Agreement (as defined in the 2016 Plan).

Director Compensation

The following table summarizes the compensation paid by us to non-employee directors for the year ended September 30, 2016. Mr. Peterson did not receive additional compensation for his service as a director and Mr. Brad Robinson did not join the board until July 2016.

	Fees Earned or Paid in Cash		Stock Awards		Warrant Awards		Non-Equity Incentive Plan Compensation		All Other Compensation ($)		Total ($)
Robert Welgos	$	30,000	$	—	$	—	$	—	$	—	$	30,000
Brad Robinson	$	7,500	$	—	$	—	$	—	$	—	$	7,500

Employment Agreements

During April 2015, James J. Dalton was appointed Executive Chairman of the Board of Directors and Chief Executive Officer. On September 23, 2015, we entered into a written Employment Agreement containing compensation and other terms related to Mr. Dalton’s appointment effective July 1, 2015. The term of the Employment Agreement was one year.

The compensation payable to Mr. Dalton under the Employment Agreement included a base salary of $40,000 per month, 15% fee for any loans that Mr. Dalton personally guarantees for the Company, plus member bonus upon the achievement of certain milestones up through and inclusive of December 31, 2015. We also granted Mr. Dalton 9,953 shares of common stock as a signing bonus, of which 1,953 shares were vested immediately, and 8,000 shares to be vested monthly over a two-year period starting July 2015. During fiscal year 2015, we granted 11,112 shares of common stock with a fair value of $1,000,016 to Mr. Dalton according to the Employment Agreement as a signing bonus, loan guarantee fees, and a bonus for achievement of certain milestones. Prior to the Employment Agreement, we also entered into a written Consulting Agreement with Mr. Dalton. The compensation payable to Mr. Dalton under the Consulting Agreement included a base salary of $25,000 per month starting January 2015, 4,000 shares of common stock, plus a member bonus upon the achievement of certain milestones. During fiscal year 2015, we vested 4,000 shares of the common stock, however, we did not grant any shares for the member bonus due to the limitation of the milestones related to the Consulting Agreement. During fiscal year 2015, $2,057,516 was recognized as compensation expense, and $540,000 as deferred compensation, which was amortized monthly through June 2016. During fiscal year 2015, we also granted Mr. Dalton 612 shares of common stock with a fair value of $55,000 for future services.

Mr. Dalton resigned from his position as Chief Executive Officer on July 7, 2016, terminating his employment agreement with the Company. On July 7, 2016, Mr. Dalton entered into a consulting agreement with the Company the details of which are provided below. The Company has paid Mr. Dalton severance of $20,000 per month for a period of six months in addition to the consulting agreement described below.

On July 7, 2016, the Company appointed Eric Robinson as its new Chief Financial Officer, Secretary and Treasurer. Mr. Robinson currently devotes 2 days per week to the Company and is compensated at a rate of $120,000 per year. The Company is negotiating the terms of an employment agreement for full time employment in good faith and expects to enter into an agreement with Mr. Robinson shortly after effectiveness of this registration statement.

Consulting Agreements

ADP Management

On February 29, 2016, the Company entered into an amended and restated consulting agreement with ADP Management (“ADP”), an entity controlled by the former Executive Chairman of the Board of Directors

David Derrick (the “ADP Agreement”). Pursuant to the ADP Agreement, ADP shall provide consulting services to the Company for an initial period of one (1) year, and shall automatically renew for consecutive one (1) month periods unless terminated by the Company or ADP. As consideration for ADP providing consulting services to the Company, the Company shall pay ADP at a rate of $250 per hour. ADP’s consulting services include but are not limited to developing business plans, making introductions to potential customers and/or suppliers, identifying qualified employees or other service providers, sales, marketing, manufacturing and other operating activities, and meeting with the Company’s and its affiliates’ respective managers, officers, employees, agents, and other service providers regarding the business, prospects and affairs of the Company and its affiliates. ADP shall not be entitled to any fees or consideration for (i) negotiating the purchase and/or sale of Company securities, (ii) making recommendations regarding transactions involving Company securities, (iii) or any other matters involving transactions of Company securities. The ADP Agreement will not terminate until all debt obligations of the Company owed to ADP or its affiliates have been repaid in full.

Bluestone Advisors, LLC

On September 23, 2015, the Company entered into a consulting agreement with Bluestone Advisors, LLC (“Bluestone”), an entity controlled by Jeffrey Peterson, the Company’s former Chief Financial Officer and current Chief Executive Officer (the “Bluestone Agreement”). The Bluestone Agreement provided that Bluestone would provide consulting services to the Company for an initial period of one (1) year, and automatically renew for consecutive one (1) month periods unless terminated by the Company or Bluestone. As consideration for Bluestone providing consulting services to the Company, the Company agreed to pay Bluestone a monthly fee of $20,000. Additionally, the Company agreed to issue Bluestone 4,000 shares of the Company’s common stock and may issue additional securities on terms to be negotiated (the “Bluestone Issuances”). The Bluestone Issuances vested in 24 equal monthly installments, and fully vest immediately upon the death of Jeffrey Peterson, termination of the Bluestone Agreement, or a change in control.

On July 7, 2016, Mr. Peterson was appointed as the Company’s Chief Executive Officer and is now working for the Company in the capacity of an employee rather than an independent contractor. The Company is currently negotiating the terms of an employment agreement with Mr. Peterson in good faith and expects to enter into an agreement with Mr. Peterson prior to the closing of this offering. It is currently contemplated that Mr. Peterson will receive a base salary of $360,000 and other benefits pursuant to the terms of this new employment agreement. Until such time as the Company can come to terms on an employment agreement, Mr. Peterson will be compensated at the same rate as he was being compensated under the Bluestone Agreement. The Bluestone Agreement will be terminated at such time as the new employment agreement is signed.

Dalton Consulting Agreement

On July 7, 2016, the Company entered into a Consulting Agreement with James Dalton, former Executive Chairman and Chief Executive Officer of the Company (the “Dalton Consulting Agreement”), pursuant to which Mr. Dalton shall provide certain consulting services to the Company including, but not limited to (i) developing business plans, (ii) making introductions to potential customers and/or suppliers, (iii) identifying qualified employees and other service providers, (iv) sales, marketing, manufacturing and other operating activities, and (v) meeting with the Company’s and its affiliates’ respective managers, officers, employees, agents, and other service providers regarding the business, prospects and affairs of the Company and its affiliates (the “Services”). Mr. Dalton is currently performing such Services as the Company’s Director of Sales.

The Dalton Consulting Agreement is for an initial period of one (1) year, and shall automatically renew for consecutive one (1) month periods unless terminated by the Company or Mr. Dalton. As consideration for the Services, the Company shall pay Mr. Dalton at the rate of $250 per hour, but such compensation may not exceed $20,000 during any calendar month.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following tables set forth information as of March 30, 2017 (the “Table Date”) by:

• each person or group who is known by us to own beneficially more than 5% of our outstanding shares of common stock;

• each of our Named Executive Officers serving as of such date;

• each of our directors; and

• all of the executive officers and directors as a group.

Beneficial ownership for the purposes of the following table is determined in accordance with the rules and regulations of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof or has the right to acquire such powers within 60 days. Common stock subject to warrants that are currently exercisable or exercisable within 60 days of the Table Date is deemed to be outstanding and beneficially owned by the person holding the warrants. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Outstanding voting stock and percentage of beneficial ownership of voting stock before close of offering is based on a total of 232,100 shares of common stock, 45,000 shares of Series D Preferred Stock and 43,220 shares of Series G Preferred Stock. Outstanding voting stock and percentage of beneficial ownership of voting stock at the close of offering is based on a total of 7,109,954 shares of common stock, which includes 3,968,763 shares will be issued at the closing of the offering in connection with the conversion of preferred stock, debt and other liabilities and 2,909,091 shares that may be issued in this offering and assumes no Class B units are sold. Except as disclosed in the footnotes to this table and subject to applicable community property laws, we believe that each stockholder identified in the table possesses sole voting and investment power over all shares of common stock shown as beneficially owned by the stockholder. Unless otherwise indicated in the table or footnotes below, the address for each beneficial owner is c/o ActiveCare, Inc., 1365 West Business Park Drive, Suite 100, Orem, Utah 84058.

Title of Class	Name and Address of Beneficial Owner	Outstanding Before Close of Offering		Percentage of Ownership Before Close of Offering		Outstanding at Close of Offering		Percentage of Ownership at Close of Offering
	5% Beneficial Shareholders
Common Stock	Advance Technology Investors LLC⁽¹⁾	24,185		9.99	%	27,361		*	%
	154 Rock Hill Road Spring Valley, NY 10977

Common Stock	Justin Keener⁽²⁾ c/o ActiveCare, Inc. 1365 West Business Park Drive, Suite 100, Orem, UT 84058	25,552		9.99	%	540,910		7.2	%

Common Stock	James Dalton c/o ActiveCare, Inc., 1365 West Business Park Drive, Suite 100, Orem, UT 84058	18,074	⁽⁶⁾	7.8	%	258,185	⁽⁶⁾	3.6	%

Series G Preferred	James Dalton	10,805		25	%	—		—

Common Stock	Partners for Growth IV, L.P. 1660 Tiburon Blvd., Suite D, Tiburon California 94920 1365 West Business Park Drive, Suite 100, Orem, UT 84058	24,032	⁽⁷⁾	9.4	%	162,164	⁽⁷⁾	2.2	%

Title of Class	Name and Address of Beneficial Owner	Outstanding Before Close of Offering		Percentage of Ownership Before Close of Offering		Outstanding at Close of Offering		Percentage of Ownership at Close of Offering
Common Stock	Telecare, Inc. 4350 East West Highway, #1111 Bethesda, MD 20814	—		—		414,546		5.8	%
	Officers and Directors
Common Stock	Eric Robinson⁽³⁾ Chief Financial Officer, Secretary and Treasurer	4			*	4			*

Common Stock	Robert Welgos⁽³⁾⁽⁴⁾ Director	744	⁽⁴⁾		*	13,201	⁽⁴⁾		*

Common Stock	Bradley Robinson⁽³⁾ Director	—		—		—		—

Common Stock	Jeffrey Peterson⁽³⁾⁽⁵⁾ Chief Executive Officer, Chairman	81,834	⁽⁵⁾	30.1	%	1,482,420	⁽⁵⁾	20.9	%

Series D Preferred		25,000	⁽⁵⁾	56	%	—		—

Series G Preferred		32,415	⁽⁵⁾	75	%	—		—

____________

* Less than 1%

(1) Includes 14,235 shares of common stock and warrants to purchase 900 shares of common stock, owned by Advanced Technology Investors LLC (“ATI”) and its related entity and a convertible promissory note (the “ATI Note”) that is currently convertible into approximately 12,226 shares of common stock. Due to a provision in the ATI Note, it may not vote or take delivery of common shares that would result in ATI becoming the beneficial owner of more than 9.99% of the issued and outstanding common stock of the Company at any given time.

(2) Pre-close includes warrants exercisable for 68,000 shares of common stock. Post-close includes warrants exercisable for 386,364 shares of common stock and 154,546 shares of common stock. Mr. Keener’s ownership is limited 9.99% of total outstanding common stock as further described in a Schedule 13/G filed February 1, 2017.

(3) The address of each Officer and Director is c/o ActiveCare, Inc., 1365 West Business Park Drive, Suite 100, Orem, UT 84058.

(4) Pre-close includes 205 shares of common stock issuable upon conversion of 13,843 shares of Series E Preferred Stock which is non-voting Preferred Stock. Post-Close includes 10,233 shares of common stock issuable upon conversion of 13,843 shares of Series E Preferred Stock and 2,429 shares of common stock issuable upon conversion of unpaid Board service fees.

(5) Of the total shares of common stock owned or controlled by Mr. Peterson, 25,849 shares are held by Tyumen Holdings, LLC, 1,958 shares by Wynnman’s Hill, LLC, 12,639 shares by Bluestone Advisors, LLC, 756 shares by Keystone Partners, LLC, 590 shares by Rimrock Capital, LLC, 41 shares by Banyan Investment Company, LLC and 1 share by Blackhawk, LLC. Pre-close the common stock does not include shares issuable upon conversion of the Series G Preferred Stock or the Series D Preferred Stock. Post-close includes 50,000 shares of common stock issuable to Tyumen Holdings, LLC upon conversion of 25,000 shares of Series D Preferred Stock. Further, Jeff Peterson et al. are able to obtain 40,000 shares of common stock issuable under a convertible promissory note pre-close and 670,252 shares of common stock post-close. Lastly, post-close includes 720,334 shares of common stock issuable upon conversion of 32,415 shares of Series G Preferred Stock.

(6) Pre-close the common stock does not include shares issuable upon conversion of the Series G Preferred Stock. Post-closing includes 240,111 shares of common stock issuable upon conversion of 10,805 shares of Series G Preferred Stock.

(7) Pre-close includes warrants exercisable for 24,032 shares of common stock. Post-close includes 140,000 shares of common stock issuable upon exercise of warrants to be issued in connection with the offering, 10,800 shares of common stock issuable upon cancellation of warrants and 11,364 shares of common stock issuable upon closing of the offering.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Related Party Transactions

In addition to the transactions referenced in the Subsequent Events in the Management’s Discussion and Analysis of Financial Condition and Results of Operations, the following related-party transactions have occurred.

Related-Party Notes Payable

As of December 31, 2016, we owe an aggregate of $4,787,495 of notes payable and applicable interest to one of our officers, two of our former board members, and two of our former officers, or entities controlled by each, with annual interest rates ranging from 12% to 18%. The $4,787,495 is described in more detail in the following paragraphs.

Seven entities controlled by Jeffrey S. Peterson, Chairman and Chief Executive Officer; namely, Blackhawk Properties, LLC, Banyan Investment Company, LLC, Keystone Partners, LLC, The Mark and Nancy Peterson Foundation, Rimrock Capital, LLC, Tyumen Holdings, LLC and Bluestone Advisors, LLC; and Mr. Peterson, individually, were owed notes payable and accrued interest totaling $4,053,085 as of December 31, 2016.Pursuant to the Peterson Letter Agreement, $4,021,507 of the foregoing obligation, together with interest accruing subsequent to December 31, 2016, will automatically convert upon consummation of this offering into such number of restricted shares of the Company’s common stock calculated by dividing $4,021,507 by $6.00 or 670,252 shares, exclusive of interest accruing subsequent to December 31, 2016.

On August 14, 2013, the Company entered into a Loan Conversion Agreement with Michael Jones, former interim Chief Executive Officer (the “Jones Loan Agreement”). Pursuant to the Jones Loan Agreement, $250,000 of previously outstanding debt owed to Michael Jones by the Company (the “First Jones Loan”) was converted into 667 shares of common stock. Outstanding accrued interest of $13,644 under the First Jones Loan was memorialized in the Jones Loan Agreement as outstanding and accruing interest at a rate of 12% per annum. As of December 31, 2016, $2,431 was outstanding, including applicable interest, under the Jones Loan Agreement.

On February 18, 2016, the Company issued ADP Management Corp (“ADP”), an entity controlled by David Derrick, the Company’s former Executive Chairman and a current consultant to the Company, a Promissory Note in the aggregate amount of $542,005 (the “ADP Note”). The ADP Note bears interest at a rate of 18% per annum and is convertible at ADP’s sole discretion into common stock at a conversion price of $30 per share, up to a maximum of 18,500 shares of common stock. The ADP Note, as extended, has a maturity date of April 30, 2017. As of December 31, 2016, an aggregate of $626,736 was outstanding under the ADP Note (the “ADP Obligation”). Pursuant to the ADP Letter Agreement, the ADP Obligation, together with interest accruing subsequent to December 31, 2016, will automatically convert upon consummation of this offering into such number of restricted shares of the Company’s common stock calculated by dividing the ADP Obligation by the per share price of the common stock in the offering, exclusive of interest accruing subsequent to December 31, 2016. In addition, during fiscal year 2015, ADP converted $291,667 of secured borrowings along with $25,000 of loan origination fee into an unsecured note payable, which is included in the ADP Note.

On August 19, 2016, the Company received a cash advance from ADP in the amount of $135,000 which was subsequently repaid.

On May 10, 2012, the Company entered into a Loan Agreement with Michael Acton, former Chief Financial Officer of the Company (the “Acton Loan Agreement”). Under the Acton Loan Agreement, Michael Acton made advances to the Company up to an aggregate principal amount of $30,000. All advances made under the Acton Loan Agreement were to be paid by June 30, 2012. The Acton Loan Agreement pays interest at a rate of 15% per annum. On May 10, 2012 and pursuant to the Acton Loan Agreement, the Company issued Michael Acton a Promissory Note (the “Acton Note”) in the principal amount of $30,000 and 1,000 shares of Series D preferred stock as a loan origination fee. The Acton Note had a maturity date of June 30, 2012

and accrues interest at a rate of 15% per annum. As of December 31, 2016, the Acton Note is in default with an aggregate of $11,863 currently outstanding.

On May 14, 2013, the Company entered into a Loan Agreement with William Martin, a former director of the Company (the “Martin Loan Agreement”). Under the Martin Loan Agreement, William Martin made advances to the Company up to an aggregate principal amount of $26,721. All advances made under the Martin Loan Agreement were to be repaid by September 30, 2013. The Martin Loan Agreement pays interest at a rate of 12% per annum and is convertible into shares of common stock at a conversion rate of $375 per share. Mr. Martin was issued 5 shares of common stock as a loan origination fee. As of December 31, 2016, the Martin Loan Agreement is in default and an aggregate of $38,379 is currently outstanding.

During February 2015, we modified the exercise price of warrants previously issued to the former Executive Chairman of the Board of Directors from $500 to $150 per share, according to an agreement entered into prior to his appointment as the Executive Chairman, and recognized additional expense of $20,472.

Related-Party Contracts

During fiscal year 2015, Purizer Corporation, an entity controlled by David Derrick, the Company’s former Executive Chairman and a current consultant to the Company, introduced and helped us enter into an agreement with a customer. In connection with the sales contract, we granted Purizer Corporation 500 shares of common stock with fair value of $53,500. We also agreed to pay Purizer Corporation 8.5% of revenue from this customer as long as the sales contract remains in full force.

On February 29, 2016, the Company entered into an amended and restated consulting agreement with ADP, an entity controlled by David Derrick. See “Executive Compensation — Consulting Agreements” above. In addition, between November 2015 and February 2016, the Company accrued and subsequently paid as a bonus to ADP fees of $180,000 related to a debt financing transaction with Prestige Capital which was consummated on November 2, 2015.

During September 2015, the Company entered into a one-year consulting agreement with Bluestone Advisors, LLC, an entity controlled by Mr. Jeffrey S. Peterson, who assumed a new role as Chief Financial Officer of the Company. See “Executive Compensation — Consulting Agreements” above. The Company also issued 719 shares of common stock to Bluestone in connection with a guaranty of certain obligations of the Company.

Also see the transactions reported under the heading “Subsequent Events” in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Policy on Future Related-Party Transactions

All future transactions between us and our officers, directors, principal stockholders and their affiliates will be approved by the audit committee, or a similar committee consisting of entirely independent directors, according to the terms of our Code of Business Conduct and Ethics and our Related-Party Transaction Policies and Procedures.

DESCRIPTION OF CAPITAL STOCK

Introduction

In the discussion that follows, we have summarized selected provisions of our certificate of incorporation, bylaws and the Delaware General Corporation Law relating to our capital stock. This summary is not complete. This discussion is subject to the relevant provisions of Delaware law and is qualified by reference to our certificate of incorporation and our bylaws. You should read the provisions of our certificate of incorporation and our bylaws as currently in effect for provisions that may be important to you.

Class A Units

Each unit consists of one share of common stock, $0.00001 par value per share, and one warrant to purchase one Class A share of our common stock, each as described further below. The common stock and warrants will be immediately separable and will be issued separately.

Authorized Capital Stock

We are currently authorized to issue up to 210,000,000 shares of capital stock consisting of: 200,000,000 shares of common stock, par value $0.00001 per share and 10,000,000 shares of preferred stock, par value of $0.00001 per share. As of March 30, 2017, 232,100 shares of common stock were issued and outstanding and 158,290 shares of preferred stock were issued and outstanding which are convertible into 961,856 shares of common stock.

On January 27, 2017, we effected a 1-for-500 reverse stock split of our outstanding common stock, which caused our then outstanding common stock to be decreased from 115,112,802 to 232,100 shares while keeping our authorized capitalization unchanged.

Common Stock

Each holder of our common stock is entitled to one vote for each share held of record. Holders of our common stock have no preemptive, subscription, conversion, or redemption rights. Upon liquidation, dissolution or winding-up, the holders of common stock are entitled to receive our net assets pro rata. Each holder of common stock is entitled to receive ratably any dividends declared by our board of directors out of funds legally available for the payment of dividends. We have not paid any dividends on our common stock and do not contemplate doing so in the foreseeable future. We anticipate that any earnings generated from operations will be used to finance our growth.

Warrants Offered Hereby

The following summary of certain terms and provisions of the warrants offered hereby is not complete and is subject to, and qualified in its entirety by, the provisions of the form of the warrant, which is filed as an exhibit to the registration statement of which this prospectus is a part of. Prospective investors should carefully review the terms and provisions set forth in the form of warrant.

Exercisability. The warrants are exercisable immediately upon issuance and at any time up to the date that is five years from the date of issuance. The warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise (except in the case of a cashless exercise as discussed below). Unless otherwise specified in the warrant, the holder will not have the right to exercise any portion of the warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the warrants.

Cashless Exercise. In the event that a registration statement covering shares of common stock underlying the warrants, is not available for the issuance of such shares of common stock underlying the warrants, the holder may, in its sole discretion, exercise the warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, elect instead to receive upon such exercise the net number of shares of common stock determined

according to the formula set forth in the warrant. In no event shall we be required to make any cash payments or net cash settlement to the registered holder in lieu of issuance of common stock underlying the warrants.

Certain Adjustments. The exercise price and the number of shares of common stock purchasable upon the exercise of the warrants are subject to adjustment upon the occurrence of specific events, including stock dividends, stock splits, combinations and reclassifications of our common stock.

Transferability. Subject to applicable laws, the warrants may be transferred at the option of the holders upon surrender of the warrants to our Transfer Agent together with the appropriate instruments of transfer.

Warrant Agent and Exchange Listing. The warrants will be issued in registered form under a warrant agency agreement between American Stock Transfer and Trust Company, as warrant agent, and us.

Fundamental Transactions. If, at any time while the warrants are outstanding, (1) we consolidate or merge with or into another corporation and we are not the surviving corporation, (2) we sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of our assets, (3) any purchase offer, tender offer or exchange offer (whether by us or another individual or entity) is completed pursuant to which holders of our shares of common stock are permitted to sell, tender or exchange their shares of common stock for other securities, cash or property and has been accepted by the holders of 50% or more of our outstanding shares of common stock, (4) we effect any reclassification or recapitalization of our shares of common stock or any compulsory share exchange pursuant to which our shares of common stock are converted into or exchanged for other securities, cash or property, or (5) we consummate a stock or share purchase agreement or other business combination with another person or entity whereby such other person or entity acquires more than 50% of our outstanding shares of common stock, each a “Fundamental Transaction,” then upon any subsequent exercise of the warrants, the holder thereof will have the right to receive the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of warrant shares then issuable upon exercise of the warrant, and any additional consideration payable as part of the Fundamental Transaction.

Rights as a Stockholder. Except as otherwise provided in the warrants or by virtue of such holder’s ownership of shares of our common stock, the holder of a warrant does not have the rights or privileges of a holder of our common stock, including any voting rights, until the holder exercises the warrant.

Beneficial Ownership Limitation. Holder’s exercise shall be limited 4.99% of the Company’s outstanding common stock (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of shares of the common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon exercise. The Holder, upon notice to the Company, may increase or decrease the beneficial ownership limitation provided that the beneficial ownership limitation in no event exceeds 9.99% of the number of shares of the common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of the warrant held by the Holder Any increase in the beneficial ownership limitation will not be effective until the 61st day after such notice is delivered to the Company.

Governing Law. The warrants and the warrant agency agreement are governed by New York law.

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock, with a par value of $0.00001 per share. Pursuant to the Company’s Certificate of Incorporation, the Board of Directors has the authority to amend the Company’s Certificate of Incorporation, without further stockholder approval, to designate and determine the preferences, limitations and relative rights of the preferred stock before any issuance of the preferred stock and to create one or more series of preferred stock, fix the number of shares of each such series, and determine the preferences, limitations and relative rights of each series of preferred stock, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, and liquidation preferences. Our certificate of incorporation provides that only holders of an affected series of preferred stock have the ability to vote on an amendment to the certificate of incorporation that solely relates to the terms of such preferred stock.

Series A Convertible Preferred Stock

The rights and preferences of the Series A Preferred are as contained in the First Amended and Restated Designation of Rights and Preferences of the Series A Preferred (the “Series A Designation”) filed with the Secretary of State of Delaware by the Company on March 24, 2010. There are no shares of Series A Preferred issued and outstanding.

Series B Convertible Preferred Stock

The rights and preferences of the Series B Preferred are as contained in the Designation of Rights and Preferences of the Series B Preferred (the “Series B Designation”) filed with the Secretary of State of Delaware on March 24, 2010. There are no shares of Series B Preferred issued and outstanding.

Series C Convertible Preferred Stock

The rights and preferences of the Series C Preferred are as contained in the Amended and Restated Designation of Rights and Preferences of the Series C Convertible Preferred Stock of the Company (the “Series C Designation”) filed with the Secretary of State of Delaware on April 27, 2010. There were no shares of Series C Preferred issued and outstanding.

Series D Convertible Preferred Stock

The Company is authorized to issue up to 1,000,000 shares of Series D convertible preferred stock (“Series D preferred stock”). As of May 9, 2016, the Company had 45,000 shares of Series D preferred stock issued and outstanding. Series D preferred stock is convertible into common stock at $500 per share, the conversion price is adjustable if there are distributions of common stock or stock splits by the Company. The Series D preferred stock votes on an as-converted basis. The Series D preferred stock has a dividend rate of 8%, payable quarterly.

Pursuant to the Series D Letter Agreements with GG and Tyumen, we anticipate that we will have no outstanding shares of Series D Preferred upon completion of this offering. See also “SUMMARY — Recent Developments — Conversion of Series D Convertible Preferred Stock by Related Party and Non-Related Party.”

Series E Convertible Preferred Stock

The Company is authorized to issue up to 400,000 shares of Series E convertible preferred stock (“Series E Preferred”). As of the date hereof, the Company had 70,070 shares of Series E Preferred issued and outstanding. Series E Preferred is convertible into common stock at $500 per share, the conversion price is adjustable if there are distributions of common stock or stock splits by the Company. The designation also provides that the Series E Preferred is non-voting and receives a monthly dividend of 3.322% for 25 to 32 months. In addition, the convertibility and the redemption price of the Series E Preferred is gradually reduced by dividend payments over 25 to 32 months. After the dividend payment term, the redemption price of Series E Preferred is $0, the Series E Preferred has no convertibility to common stock and the holders are entitled to receive a pro-rata share of cumulative royalties totaling 4% of the Company’s gross profits payable quarterly for a two-year period.

The Company intends to pay all amounts owed as of September 30, 2016 to the holders of the Series E Preferred Stock with offering proceeds.

After such repayment, no Series E Preferred shares will be outstanding.

Series F Variable Rate Convertible Preferred Stock

The rights and preferences of the Series F Preferred are as contained in the Amended and Restated Designation of Rights and Preferences of the Series F Variable Rate Convertible Preferred Stock of the Company (the “Series F Designation”) filed with the Secretary of State of Delaware on March 27, 2014. There were no shares of Series F Preferred issued and outstanding.

Series G Preferred Stock

The rights and preferences of the Series G Preferred Stock are as contained in the Designation of Rights and Preferences of the Series G Preferred Stock of the Company filed with the Secretary of State of Delaware on January 31, 2017. The Company is authorized to issue up to forty-three thousand two hundred twenty (43,220) shares of Series G Preferred. As of the date hereof, the Company had 43,220 shares of Series G Preferred issued and outstanding. Each share of Series G Preferred has a stated value equal to $500 (as may be adjusted for any stock dividends, combinations or splits with respect to such shares).

The Series G Preferred will automatically convert the Stated Value of such shares (the “Conversion Amount”) into fully paid and non-assessable shares of common stock of the Company (“Series G Conversion Shares”) upon (i) the Company’s receipt of Fifty Million Dollars (US$50,000,000) or more in gross revenue in a single fiscal year, (ii) the sale of the Company via asset purchase, stock sale, merger or other business combination in which the Company and/or its stockholders receive aggregate gross proceeds of Twenty-Five Million Dollars (US$25,000,000) or more, or (iii) the closing of an underwritten offering by the Company pursuant to which the Company receives aggregate gross proceeds of at least Ten Million Dollars (US$10,000,000) in consideration of the purchase of shares of common stock and/or which results in the listing of the Company’s common stock on the Nasdaq National Market, the Nasdaq Capital Market, the New York Stock Exchange, or the NYSE MKT. The number of Series G Conversion Shares issuable upon conversion of the Conversion Amount shall equal the Conversion Amount divided by the Conversion Price then in effect. The “Conversion Price” of the Series G Preferred is $22.50. Upon the trigger of an Automatic Conversion, all of the shares of Series G Preferred owned by such Holders will convert into common stock at the Conversion Price then in effect.

Series H Preferred Stock Issued in this Offering

Our board of directors shall have designated _____ shares of our preferred stock as Series H Preferred Stock, none of which are currently issued and outstanding. The preferences and rights of the Series H Preferred Stock will be as set forth in a Certificate of Designation (the “Series H Certificate of Designation”) filed as an exhibit to the registration statement of which this prospectus is a part.

Pursuant to a transfer agency agreement between us and American Stock Transfer, as transfer agent, the Series H Preferred Stock will be issued in book-entry form and shall initially be represented only by one or more global certificates deposited with The Depository Trust Company, or DTC, and registered in the name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC.

In the event of a liquidation, the holders of Series H Preferred Stock are entitled to participate on an as-converted-to-common stock basis with holders of the common stock in any distribution of assets of the Company to the holders of the common stock. The Series H Certificate of Designation provides, among other things, that we shall not pay any dividends on shares of common stock (other than dividends in the form of common stock) unless and until such time as we pay dividends on each Series H Preferred share on an as-converted basis. Other than as set forth in the previous sentence, the Series H Certificate of Designation provides that no other dividends shall be paid on Series H Preferred Stock.

With certain exceptions, as described in the Series H Certificate of Designation, the Series H Preferred Stock has no voting rights. However, as long as any shares of Series H Preferred stock remain outstanding, the Series H Certificate of Designation provides that we shall not, without the affirmative vote of holders of a majority of the then-outstanding Series H Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series H Preferred Stock or alter or amend the Series H Certificate of Designation, (b) increase the number of authorized shares of Series H Preferred Stock or (c) amend our certificate of incorporation in any manner that adversely affects the rights of holders of Series H Preferred Stock.

Each Series H Preferred share is convertible at any time at the holder’s option into a number of shares of common stock equal to $1,000 divided by the Series H Conversion Price. The “Series H Conversion Price” is initially $ and is subject to adjustment for stock splits, stock dividends, distributions, subdivisions and combinations. Notwithstanding the foregoing, the Series H Certificate of Designation further provides that we shall not effect any conversion of Series H Preferred Stock, with certain exceptions, to the extent that, after giving effect to an attempted conversion, the holder of Series H Preferred Stock (together with

such holder’s affiliates, and any persons acting as a group together with such holder or any of such holder’s affiliates) would beneficially own a number of shares of Common Stock in excess of 4.99% (or, at the election of the holder, 9.99%) of the shares of our Common Stock then outstanding after giving effect to such exercise (the “preferred stock Beneficial Ownership Limitation”); provided, however, that upon notice to the Company, the holder may increase or decrease the preferred stock Beneficial Ownership Limitation, provided that in no event shall the preferred stock Beneficial Ownership Limitation exceed 9.99% and any increase in the preferred stock Beneficial Ownership Limitation will not be effective until 61 days following notice of such increase from the holder to us.

We do not intend to apply for listing of the Series H Preferred Stock on any securities exchange or other trading system.

Anti-Takeover Effects of Provisions of the DGCL and our Certificate of Incorporation and Bylaws

Provisions of the DGCL and our certificate of incorporation and bylaws could make it more difficult to acquire us by means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. These provisions, summarized below, are expected to discourage certain types of coercive takeover practices and takeover bids that our board of directors may consider inadequate and to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation of these proposals could result in improved terms for our stockholders.

Delaware Anti-Takeover Statute. We were subject to Section 203 of the DGCL, an anti-takeover statute. In general, Section 203 of the DGCL prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the time the person became an interested stockholder, unless the business combination or the acquisition of shares that resulted in a stockholder becoming an interested stockholder is approved in a prescribed manner. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status did own) 15% or more of a corporation’s voting stock. The existence of this provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by stockholders.

As of November, 2016 we are not subject to Section 203 of the DGCL because we do not have a class of voting stock that is listed on a national securities exchange or held of record by more than 2,000 stockholders and we have not elected by a provision in our original certificate of incorporation to be governed by Section 203. Unless we adopt an amendment of our certificate of incorporation by action of our stockholders expressly electing not to be governed by Section 203, we would generally become subject to Section 203 of the DGCL at such time that we have a class of voting stock that is either listed on a national securities exchange or held of record by more than 2,000 stockholders, except that the restrictions contained in Section 203 would not apply if the business combination is with an interested stockholder who became an interested stockholder before the time that we have a class of voting stock that is either listed on a national securities exchange or held of record by more than 2,000 stockholders.

Amendments to Our Certificate of Incorporation. Under the DGCL, the affirmative vote of a majority of the outstanding shares entitled to vote thereon and a majority of the outstanding stock of each class entitled to vote thereon is required to amend a corporation’s certificate of incorporation. Under the DGCL, the holders of the outstanding shares of a class of our capital stock shall be entitled to vote as a class upon a proposed amendment, whether or not entitled to vote thereon by the certificate of incorporation, if the amendment would:

• increase or decrease the aggregate number of authorized shares of such class;

• increase or decrease the par value of the shares of such class; or

• alter or change the powers, preferences or special rights of the shares of such class so as to affect them adversely.

If any proposed amendment would alter or change the powers, preferences or special rights of one or more series of any class of our capital stock so as to affect them adversely, but shall not so affect the entire class, then only the shares of the series so affected by the amendment shall be considered a separate class for the purposes of this provision.

Vacancies in the Board of Directors. Our certificate of incorporation and bylaws provide that, subject to limitations, any vacancy occurring in our board of directors for any reason may be filled by a majority of the remaining members of our board of directors then in office, even if such majority is less than a quorum. Each director so elected shall hold office until the expiration of the term of the other directors. Each such directors shall hold office until his or her successor is elected and qualified, or until the earlier of his or her death, resignation or removal.

Special Meetings of Stockholders. Under our bylaws, special meetings of stockholders may be called by a majority of the directors or by the President or upon written request of the holders of 10% of the outstanding shares entitled to vote. Under the DGCL, written notice of any special meeting must be given not less than 10 nor more than 60 days before the date of the special meeting to each stockholder entitled to vote at such meeting.

No Cumulative Voting. The DGCL provides that stockholders are denied the right to cumulate votes in the election of directors unless our certificate of incorporation provides otherwise. Our certificate of incorporation does not provide for cumulative voting.

Authorized but Unissued Shares

Our authorized but unissued shares of common stock and preferred stock will be available for future issuance without shareholder approval, except as may be required under the listing rules of any stock exchange on which our common stock is then listed. We may use additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

Limitation on Directors’ Liability

Delaware law authorizes Delaware corporations to limit or eliminate the personal liability of their directors to them and their stockholders for monetary damages for breach of a director’s fiduciary duty of care. The duty of care requires that, when acting on behalf of the corporation, directors must exercise an informed business judgment based on all material information reasonably available to them. Absent the limitations Delaware law authorizes, directors of Delaware corporations are accountable to those corporations and their stockholders for monetary damages for conduct constituting gross negligence in the exercise of their duty of care. Delaware law enables Delaware corporations to limit available relief to equitable remedies such as injunction or rescission. Our certificate of incorporation limits the liability of our directors to us and our stockholders to the fullest extent Delaware law permits. Specifically, no director will be personally liable for monetary damages for any breach of the director’s fiduciary duty as a director, except for liability:

• for any breach of the director’s duty of loyalty to us or our stockholders;

• for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

• for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; and

• for any transaction from which the director derived an improper personal benefit.

This provision could have the effect of reducing the likelihood of derivative litigation against our directors and may discourage or deter our stockholders or management from bringing a lawsuit against our directors for breach of their duty of care, even though such an action, if successful, might otherwise have benefited us and our stockholders. Our bylaws provide indemnification to our officers and directors and other specified persons with respect to their conduct in various capacities.

Our certificate of incorporation also provides that if Delaware law is amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law, as so amended. This limitation of liability does not apply to liabilities arising under the federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.

Our certificate of incorporation also provides that we shall have the power to indemnify our employees and agents to the fullest extent permitted by law and also permits us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in this capacity, regardless of whether our amended and restated bylaws would permit indemnification. We obtained directors’ and officers’ liability insurance, effective June 24, 2016.

We entered into separate indemnification agreements with our directors and executive officers, in addition to indemnification provided for in our restated certificate of incorporation and amended and restated bylaws. These agreements, among other things, provide for indemnification of our directors and executive officers for certain expenses, judgments, fines and settlement amounts, among others, incurred by such person in any action or proceeding arising out of such person’s services as a director or executive officer in any capacity with respect to any employee benefit plan or as a director, partner, trustee or agent of another entity at our request. We believe that these provisions in our restated certificate of incorporation and amended and restated bylaws and indemnification agreements are necessary to attract and retain qualified persons as directors and executive officers.

The above description of the indemnification provisions of our restated certificate of incorporation and our indemnification agreements is not complete and is qualified in its entirety by reference to these documents, each of which is incorporated by reference as an exhibit to this prospectus.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or person controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is therefore unenforceable.

UNDERWRITING

Joseph Gunnar & Co., LLC is acting as representative of the underwriters (the “Representative”). Subject to the terms and conditions of an underwriting agreement between us and the Representative, we have agreed to sell to each underwriter named below, and each underwriter named below has severally agreed to purchase, at the public offering price less the underwriting discounts set forth on the cover page of this prospectus, the number of Class A units and Class B units listed next to its name in the following table:

Name of Underwriter	Class A Units		Class B Units
Joseph Gunnar & Co., LLC
Axiom Capital Management, Inc.
Total	2,909,091	*

____________

* Assuming no Class B units are sold.

The underwriters are committed to purchase all the units offered by us other than those covered by the over-allotment option described below, if any, are purchased. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased or the offering may be terminated. The underwriters are not obligated to purchase the units covered by the underwriters’ over-allotment option described below. The underwriters are offering the units, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer’s certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

Discounts and Commissions

The underwriters propose initially to offer the units to the public at the public offering price set forth on the cover page of this prospectus and to dealers at those prices less a concession not in excess of $[ ] per unit. If all of the units offered by us are not sold at the public offering price, the underwriters may change the offering price and other selling terms by means of a supplement to this prospectus.

The following table shows the public offering price, underwriting discounts and commissions and proceeds before expenses to us. The information assumes either no exercise or full exercise of the over-allotment option we granted to the representatives of the underwriters.

Per Class A
Unit

Per Class B
Unit

Total Without Over-Allotment
Option

Total With Full Over-Allotment
Option

Public offering price

Underwriting discount

Non-accountable expense allowance

Proceeds, before expenses, to us

We have agreed to pay a non-accountable expense allowance to the representative of the underwriters equal to 1% of the gross proceeds received at the closing of the offering (excluding any proceeds received upon any subsequent exercise of the over-allotment option).

We have also agreed to pay the representative’s expenses relating to the offering, including (a) all actual filing fees incurred in connection with the review of this offering by the Financial Industry Regulatory Authority, or FINRA, and all fees and expenses relating to the listing of our shares of common stock and warrants on NASDAQ; (b) all fees, expenses and disbursements relating to background checks of our officers and directors in an amount not to exceed $5,000 in the aggregate; (c) all actual fees, expenses and disbursements relating to the registration or qualification of securities offered under state securities laws, or “blue sky” laws, or under the securities laws of foreign jurisdictions designated by the representative, including reasonable fees and disbursements of “blue sky” counsel not to exceed $5,000; (d) all actual fees, expenses and disbursements relating to the registration, qualification or exemption of our shares of common stock and warrants under the securities laws of such foreign jurisdictions as the representative

may reasonably designate; (e) the costs of all mailing and printing of the underwriting documents as the representative may reasonably deem necessary; (f) the costs associated with two sets of bound volumes of the public offering materials as well as commemorative mementos and lucite tombstones, not to exceed the sum of $3,000; (g) the fees and expenses of the representative’s legal counsel not to exceed $75,000, $25,000 of which has been paid in advance and will be returned to us to the extent that offering expenses are not actually incurred in compliance with FINRA Rule 5110(f)(2)(C); (h) $29,500 for the underwriters’ use of Ipreo’s book-building, prospectus tracking and compliance software for this offering; (i) up to $15,000 of the representative’s actual accountable road show expenses for the offering and (j) the representatives’ cost of mailing prospectuses to potential investors, provided, however, that expenses that are set forth in clauses (b), (f), (g) and (i) above shall not exceed $98,000 in the aggregate.

We estimate that the total expenses of the offering payable by us, excluding the total underwriting discount and non-accountable expense allowance, will be approximately $_____.

Over-Allotment Option

We have granted the underwriters an over-allotment option. This option, which is exercisable for up to 45 days after the date of this prospectus, permits the underwriters to purchase up to _____ additional shares of our common stock and/or warrants to purchase up to ___ shares of our common stock from us (15% of the shares (including the number of shares of Common Stock issuable upon conversion of the Series H Preferred Stock) and 15% of the warrants sold in this offering), to cover over-allotments. If the underwriters exercise all or part of this option, they will purchase shares and/or warrants included in the units covered by the option at the public offering price per share or warrant that appears on the cover page of this prospectus, less the underwriting discount. If this option is exercised in full, the total price to the public will be $_____ and the total net proceeds, before expenses, to us will be $________.

Representative’s Warrants

We have agreed to issue to the representative the representative’s warrants to purchase up to ______ shares of common stock (5% of the shares of common stock sold in this offering, plus 5% of any shares of common stock sold upon exercise of the over-allotment option, if any in both cases, including shares issuable upon conversion of the Series H Preferred Stock). We are registering hereby the issuance of the representative’s warrants and the shares of common stock issuable upon exercise of the warrants. The representative’s warrants are exercisable for cash or on a cashless basis at a per share exercise price equal to 125% of the public offering price per share of common stock in the offering and expiring on a date which is no more than five years from the effectiveness of the offering. Except as described above or as summarized below, the representative’s warrants will be in substantially the same form as the warrants included in this offering except that the representative’s warrants will expire on the fifth anniversary of the date of effectiveness of the registration statement of which this prospectus forms a part. The representative’s warrants and the shares of common stock underlying the warrants have been deemed compensation by FINRA and are, therefore, subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA. The representatives (or permitted assignees under the Rule) will not sell, transfer, assign, pledge or hypothecate these warrants or the securities underlying these warrants, nor will it engage in any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of these warrants or the underlying securities for a period of 180 days after the effective date. The exercise price and number of shares of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary cash dividend or our recapitalization, reorganization, merger or consolidation. However, the warrant exercise price or underlying shares will not be adjusted for issuances of shares of common stock at a price below the warrant exercise price.

Discretionary Accounts

The underwriters do not intend to confirm sales of the securities offered hereby to any accounts over which they have discretionary authority.

Lock-Up Agreements

Pursuant to “lock-up” agreements, we, our executive officers and directors, and certain of our stockholders, have agreed, without the prior written consent of the Representative not to directly or indirectly, offer to sell, sell, pledge or otherwise transfer or dispose of any of shares of (or enter into any transaction or device that is designed to, or could be expected to, result in the transfer or disposition by any person at any time in the future of) our common stock, enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of our common stock, make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of common stock or securities convertible into or exercisable or exchangeable for common stock or any other securities of the Company or publicly disclose the intention to do any of the foregoing, subject to customary exceptions, for a period of 365 days from the date of this prospectus, in the case of our directors and officers, 90 days from the date of this prospectus, in the case of certain of our principal stockholders.

Right of First Refusal

We have granted the representatives a right of first refusal, for a period of twenty four months after the closing of the offering, to act as sole and exclusive investment banker, book-runner, financial advisor, underwriter and/or placement agent, at the Representative’s sole and exclusive discretion, for each and every future public and private equity and debt offering, including all equity linked financings (each, a “Subject Transaction”), during such twenty-four (24) month period, of the Company, or any successor to or subsidiary of the Company, on terms and conditions customary to the Representative for such Subject Transactions.

Warrant Exercise Fee

We have agreed to pay the representative a warrant exercise fee equal to 5% of the gross proceeds received by us from any exercise of the warrants that occur commencing twelve (12) months from the closing date of this offering.

Indemnification

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make for these liabilities.

OTCQB and NASDAQ Capital Market

Our shares of common are quoted on the OTCQB under the symbol “ACAR.” We have applied to list our common stock and warrants on The NASDAQ Capital Market under the symbol “ACAR” and “ACARW,” respectively, prior to the completion of this offering. In order to obtain NASDAQ Capital Market listing approval we effected a 1 for 500 reverse split of our common stock that was effective on January 27, 2017. No assurance can be given that such listings will be approved; however, it is a condition of the underwriters’ obligation that our shares of common stock and warrants have been approved for listing on The NASDAQ Capital Market.

Stabilization

In connection with this offering, the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate-covering transactions, penalty bids and purchases to cover positions created by short sales.

• Stabilizing transactions permit bids to purchase securities so long as the stabilizing bids do not exceed a specified maximum, and are engaged in for the purpose of preventing or retarding a decline in the market price of the securities while the offering is in progress.

• Over-allotment transactions involve sales by the underwriters of securities in excess of the number of securities that underwriters are obligated to purchase. This creates a syndicate short position which may be either a covered short position or a naked short position. In a covered short position, the number of securities over-allotted by the underwriters is not greater than the number of securities that they may purchase in the over-allotment option. In a naked short position, the number of securities involved is greater than the number of securities in the over-allotment option. The underwriters may close out any short position by exercising their over-allotment option and/or purchasing securities in the open market.

• Syndicate covering transactions involve purchases of securities in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of securities to close out the short position, the underwriters will consider, among other things, the price of securities available for purchase in the open market as compared with the price at which they may purchase securities through exercise of the over-allotment option. If the underwriters sell more securities than could be covered by exercise of the over-allotment option and, therefore, have a naked short position, the position can be closed out only by buying securities in the open market. A naked short position is more likely to be created if the underwriters are concerned that after pricing there could be downward pressure on the price of the securities in the open market that could adversely affect investors who purchase in the offering.

• Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the securities originally sold by that syndicate member are purchased in stabilizing or syndicate covering transactions to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our securities or preventing or retarding a decline in the market price of our securities. As a result, the price of our securities in the open market may be higher than it would otherwise be in the absence of these transactions. Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of our securities. These transactions may be effected on the The Nasdaq Capital Market, in the over-the-counter market or otherwise and, if commenced, may be discontinued at any time.

Passive Market Making

In connection with this offering, underwriters and selling group members may engage in passive market making transactions in our common stock on the The Nasdaq Capital Market or on the OTCQB in accordance with Rule 103 of Regulation M under the Exchange Act, during a period before the commencement of offers or sales of the securities and extending through the completion of the distribution. A passive market maker must display its bid at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive market maker’s bid, then that bid must then be lowered when specified purchase limits are exceeded.

Electronic Offer, Sale and Distribution of Shares

A prospectus in electronic format may be made available on the websites maintained by one or more underwriters or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of shares of securities to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representative to underwriters and selling group members that may make internet distributions on the same basis as other allocations. Other than the prospectus in electronic format, the information on the underwriters’ websites and any information contained in any other website maintained by the underwriters is not part of this prospectus or the registration statement of which this prospectus forms a part.

Other Relationships

From time to time, certain of the underwriters and their affiliates have provided, and may provide in the future, various advisory, investment and commercial banking and other services to us in the ordinary

course of business, for which they have received and may continue to receive customary fees and commissions. However, except as disclosed in this prospectus, we have no present arrangements with any of the underwriters for any further services.

Market Information

Prior to this offering, our common stock traded on the OTCQB Marketplace with very limited daily trading volume. The public offering price will be determined by discussions between us and the representatives of the underwriters. In addition to prevailing market conditions, the factors to be considered in these discussions will include:

• an assessment of our management and the underwriters as to the price at which investors might be willing to participate in this offering;

• the price and trading history (including trading volume of our common stock on the OTCQB Marketplace);

• the history of, and prospects for, our company and the industry in which we compete;

• our past and present financial information;

• our past and present operations, and the prospects for, and timing of, our future revenues;

• the present state of our development; and

• the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours.

An active trading market for the shares may not develop. It is also possible that after the offering the shares will not trade in the public market at or above the public offering price.

Offer Restrictions Outside the United States

Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

Australia

This prospectus is not a disclosure document under Chapter 6D of the Australian Corporations Act, has not been lodged with the Australian Securities and Investments Commission and does not purport to include the information required of a disclosure document under Chapter 6D of the Australian Corporations Act. Accordingly, (i) the offer of the securities under this prospectus is only made to persons to whom it is lawful to offer the securities without disclosure under Chapter 6D of the Australian Corporations Act under one or more exemptions set out in section 708 of the Australian Corporations Act, (ii) this prospectus is made available in Australia only to those persons as set forth in clause (i) above, and (iii) the offeree must be sent a notice stating in substance that by accepting this offer, the offeree represents that the offeree is such a person as set forth in clause (i) above, and, unless permitted under the Australian Corporations Act, agrees not to sell or offer for sale within Australia any of the securities sold to the offeree within 12 months after its transfer to the offeree under this prospectus.

Canada

The securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the securities must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws. Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor. Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

China

The information in this document does not constitute a public offer of the securities, whether by way of sale or subscription, in the People’s Republic of China (excluding, for purposes of this paragraph, Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan). The securities may not be offered or sold directly or indirectly in the PRC to legal or natural persons other than directly to “qualified domestic institutional investors.”

European Economic Area — Belgium, Germany, Luxembourg and Netherlands

The information in this document has been prepared on the basis that all offers of securities will be made pursuant to an exemption under the Directive 2003/71/EC (“Prospectus Directive”), as implemented in Member States of the European Economic Area (each, a “Relevant Member State”), from the requirement to produce a prospectus for offers of securities.

An offer to the public of securities has not been made, and may not be made, in a Relevant Member State except pursuant to one of the following exemptions under the Prospectus Directive as implemented in that Relevant Member State:

(a) to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity that has two or more of (i) an average of at least 250 employees during its last fiscal year; (ii) a total balance sheet of more than €43,000,000 (as shown on its last annual unconsolidated or consolidated financial statements) and (iii) an annual net turnover of more than €50,000,000 (as shown on its last annual unconsolidated or consolidated financial statements);

(c) to fewer than 100 natural or legal persons (other than qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive) subject to obtaining the prior consent of the Company or any underwriter for any such offer; or

(d) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of securities shall result in a requirement for the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive.

France

This document is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers) in France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code monétaire et financier) and Articles 211-1 et seq. of the General Regulation of the French Autorité des marchés financiers (“AMF”). The securities have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France.

This document and any other offering material relating to the securities have not been, and will not be, submitted to the AMF for approval in France and, accordingly, may not be distributed or caused to distributed, directly or indirectly, to the public in France.

Such offers, sales and distributions have been and shall only be made in France to (i) qualified investors (investisseurs qualifiés) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2° and D.411-1 to D.411-3, D. 744-1, D.754-1 and D.764-1 of the French Monetary and Financial Code and any implementing regulation and/or (ii) a restricted number of non-qualified investors (cercle restreint d’investisseurs) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2° and D.411-4, D.744-1, D.754-1 and D.764-1 of the French Monetary and Financial Code and any implementing regulation.

Pursuant to Article 211-3 of the General Regulation of the AMF, investors in France are informed that the securities cannot be distributed (directly or indirectly) to the public by the investors otherwise than in accordance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 to L.621-8-3 of the French Monetary and Financial Code.

Ireland

The information in this document does not constitute a prospectus under any Irish laws or regulations and this document has not been filed with or approved by any Irish regulatory authority as the information has not been prepared in the context of a public offering of securities in Ireland within the meaning of the Irish Prospectus (Directive 2003/71/EC) Regulations 2005 (the “Prospectus Regulations”). The securities have not been offered or sold, and will not be offered, sold or delivered directly or indirectly in Ireland by way of a public offering, except to (i) qualified investors as defined in Regulation 2(l) of the Prospectus Regulations and (ii) fewer than 100 natural or legal persons who are not qualified investors.

Israel

The securities offered by this prospectus have not been approved or disapproved by the Israeli Securities Authority (the ISA), nor have such securities been registered for sale in Israel. The shares may not be offered or sold, directly or indirectly, to the public in Israel, absent the publication of a prospectus. The ISA has not issued permits, approvals or licenses in connection with the offering or publishing the prospectus; nor has it authenticated the details included herein, confirmed their reliability or completeness, or rendered an opinion as to the quality of the securities being offered. Any resale in Israel, directly or indirectly, to the public of the securities offered by this prospectus is subject to restrictions on transferability and must be effected only in compliance with the Israeli securities laws and regulations.

Italy

The offering of the securities in the Republic of Italy has not been authorized by the Italian Securities and Exchange Commission (Commissione Nazionale per le Societ—$$—Aga e la Borsa, “CONSOB” pursuant to the Italian securities legislation and, accordingly, no offering material relating to the securities may be distributed in Italy and such securities may not be offered or sold in Italy in a public offer within the meaning of Article 1.1(t) of Legislative Decree No. 58 of 24 February 1998 (“Decree No. 58”), other than:

• to Italian qualified investors, as defined in Article 100 of Decree no. 58 by reference to Article 34-ter of CONSOB Regulation no. 11971 of 14 May 1999 (“Regulation no. 1197l”) as amended (“Qualified Investors”); and

• in other circumstances that are exempt from the rules on public offer pursuant to Article 100 of Decree No. 58 and Article 34-ter of Regulation No. 11971 as amended.

Any offer, sale or delivery of the securities or distribution of any offer document relating to the securities in Italy (excluding placements where a Qualified Investor solicits an offer from the issuer) under the paragraphs above must be:

• made by investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with Legislative Decree No. 385 of 1 September 1993 (as amended),

Decree No. 58, CONSOB Regulation No. 16190 of 29 October 2007 and any other applicable laws; and

• in compliance with all relevant Italian securities, tax and exchange controls and any other applicable laws.

Any subsequent distribution of the securities in Italy must be made in compliance with the public offer and prospectus requirement rules provided under Decree No. 58 and the Regulation No. 11971 as amended, unless an exception from those rules applies. Failure to comply with such rules may result in the sale of such securities being declared null and void and in the liability of the entity transferring the securities for any damages suffered by the investors.

Japan

The securities have not been and will not be registered under Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948), as amended (the “FIEL”) pursuant to an exemption from the registration requirements applicable to a private placement of securities to Qualified Institutional Investors (as defined in and in accordance with Article 2, paragraph 3 of the FIEL and the regulations promulgated thereunder). Accordingly, the securities may not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan other than Qualified Institutional Investors. Any Qualified Institutional Investor who acquires securities may not resell them to any person in Japan that is not a Qualified Institutional Investor, and acquisition by any such person of securities is conditional upon the execution of an agreement to that effect.

Portugal

This document is not being distributed in the context of a public offer of financial securities (oferta pública de valores mobiliários) in Portugal, within the meaning of Article 109 of the Portuguese Securities Code (Código dos Valores Mobiliários). The securities have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in Portugal. This document and any other offering material relating to the securities have not been, and will not be, submitted to the Portuguese Securities Market Commission (Comissão do Mercado de Valores Mobiliários) for approval in Portugal and, accordingly, may not be distributed or caused to distributed, directly or indirectly, to the public in Portugal, other than under circumstances that are deemed not to qualify as a public offer under the Portuguese Securities Code. Such offers, sales and distributions of securities in Portugal are limited to persons who are “qualified investors” (as defined in the Portuguese Securities Code). Only such investors may receive this document and they may not distribute it or the information contained in it to any other person.

Sweden

This document has not been, and will not be, registered with or approved by Finansinspektionen (the Swedish Financial Supervisory Authority). Accordingly, this document may not be made available, nor may the securities be offered for sale in Sweden, other than under circumstances that are deemed not to require a prospectus under the Swedish Financial Instruments Trading Act (1991:980) (Sw. lag (1991:980) om handel med finansiella instrument). Any offering of securities in Sweden is limited to persons who are “qualified investors” (as defined in the Financial Instruments Trading Act). Only such investors may receive this document and they may not distribute it or the information contained in it to any other person.

Switzerland

The securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering material relating to the securities may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering material relating to the securities have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of securities will not be supervised by, the Swiss Financial Market Supervisory Authority (FINMA).

This document is personal to the recipient only and not for general circulation in Switzerland.

United Arab Emirates

Neither this document nor the securities have been approved, disapproved or passed on in any way by the Central Bank of the United Arab Emirates or any other governmental authority in the United Arab Emirates, nor has the Company received authorization or licensing from the Central Bank of the United Arab Emirates or any other governmental authority in the United Arab Emirates to market or sell the securities within the United Arab Emirates. This document does not constitute and may not be used for the purpose of an offer or invitation. No services relating to the securities, including the receipt of applications and/or the allotment or redemption of such shares, may be rendered within the United Arab Emirates by the Company.

No offer or invitation to subscribe for securities is valid or permitted in the Dubai International Financial Centre.

United Kingdom

Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Services Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets Act 2000, as amended (“FSMA”)) has been published or is intended to be published in respect of the securities. This document is issued on a confidential basis to “qualified investors” (within the meaning of section 86(7) of FSMA) in the United Kingdom, and the securities may not be offered or sold in the United Kingdom by means of this document, any accompanying letter or any other document, except in circumstances which do not require the publication of a prospectus pursuant to section 86(1) FSMA. This document should not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed by recipients to any other person in the United Kingdom.

Any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) received in connection with the issue or sale of the securities has only been communicated or caused to be communicated and will only be communicated or caused to be communicated in the United Kingdom in circumstances in which section 21(1) of FSMA does not apply to the Company.

In the United Kingdom, this document is being distributed only to, and is directed at, persons (i) who have professional experience in matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (“FPO”), (ii) who fall within the categories of persons referred to in Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the FPO or (iii) to whom it may otherwise be lawfully communicated (together “relevant persons”). The investments to which this document relates are available only to, and any invitation, offer or agreement to purchase will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, 59 Maiden Lane, Plaza Level, New York, NY 11219.

LEGAL MATTERS

The validity of the securities offered hereby has been passed upon for us by Lucosky Brookman LLP. Certain legal matters in connection with this offering have been passed upon for the underwriters by Littman Krooks LLP.

EXPERTS

The consolidated balance sheets of ActiveCare, Inc. as of September 30, 2016 and 2015, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended, have been audited by Tanner LLC, an independent registered public accounting firm, as set forth in its report appearing herein and are included in reliance upon such report given on the authority of said firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information in the registration statement and the exhibits of the registration statement. For further information with respect to us and the securities being offered under this prospectus, we refer you to the registration statement, including the exhibits and schedules thereto.

You may read and copy the registration statement of which this prospectus is a part at the SEC’s Public Reference Room, which is located at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of the registration statement by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the SEC’s Public Reference Room. In addition, the SEC maintains an Internet web site, which is located at www.sec.gov, which contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. You may access the registration statement of which this prospectus is a part at the SEC’s Internet web site. We are subject to the information reporting requirements of the Exchange Act, and we will file reports, proxy statements and other information with the SEC.

ACTIVECARE, INC.

Condensed Consolidated Financial Statements for the Three Month Ended December 31, 2016

Index to Consolidated Financial Statements

		Page
Condensed Consolidated Balance Sheets (Unaudited)		F-2
Condensed Consolidated Statements of Operations (Unaudited)		F-3
Condensed Consolidated Statements of Cash Flows (Unaudited)		F-4
Notes to Condensed Consolidated Financial Statements		F-5

F-1

ActiveCare, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

	December 31, 2016		September 30, 2016
Assets
Current assets:
Cash	$	292,724	$	167,737
Accounts receivable, net		1,023,365		487,001
Inventory		391,383		204,736
Prepaid expenses and other		680,425		644,857

Total current assets		2,387,897		1,504,331

Property and equipment, net		75,599		86,734
Deposits and other assets		17,846		17,846
Domain name, net		9,116		9,295

Total assets	$	2,490,458	$	1,618,206

Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	3,078,550	$	1,700,448
Accounts payable, related party		285,448		291,753
Accrued expenses		4,793,854		2,101,711
Current portion of notes payable		4,562,248		3,722,899
Notes payable, related party		3,882,718		3,898,124
Dividends payable		640,723		606,545
Derivatives liability		2,628,506		2,054,071

Total current liabilities		19,872,047

ACTIVECARE, INC. S-1/A