10-K

  UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-K

(Mark One)
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2015
OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________to ____________

Commission file number: 0-53570

ActiveCare, Inc.

 (Exact name of registrant as specified in its charter)

Delaware	87-0578125
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1365 West Business Park Drive, Suite 100, Orem, Utah  84058 (Address of principal executive offices, Zip Code)

(877) 219-6050 (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.00001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☑

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ☑    No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.      ☐

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 ☑

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

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of March 31, 2015 was approximately $6 million, based on the average bid and asked price ($0.25 per share) and a total of 23,315,602 shares issued and outstanding to non-affiliates on that date.

There were 79,486,873 shares of the registrant's common stock outstanding as of January 11, 2016.

Documents Incorporated by Reference

None.

ACTIVECARE, INC.

FORM 10-K

For the Fiscal Year Ended September 30, 2015

INDEX

		Page
	Part I
Item 1	Business	1
Item 1A	Risk Factors	9
Item 2	Properties	14
Item 3	Legal Proceedings	14
Item 4	Mine Safety Disclosures (omitted)
	Part II
Item 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15
Item 6	Selected Financial Data (omitted)
Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 7A	Quantitative and Qualitative Disclosures About Market Risk (omitted)
Item 8	Financial Statements and Supplementary Data	24
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	24
Item 9A	Controls and Procedures	24
Item 9B	Other Information	25
	Part III
Item 10	Directors, Executive Officers and Corporate Governance	26
Item 11	Executive Compensation	28
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	33
Item 13	Certain Relationships and Related Transactions, and Director Independence	34
Item 14	Principal Accounting Fees and Services	37
	Part IV
Item 15	Exhibits, Financial Statement Schedules	38
Signatures		39

PART I

Disclosure Regarding Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, relating to our operations, results of operations, and other matters that are based on our current expectations, estimates, assumptions, and projections.  Words such as "may," "will," "should," "likely," "anticipates," "expects," "intends," "plans," "projects," "believes," "estimates," and similar expressions are used to identify these forward-looking statements.  These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict.  Forward-looking statements are based upon assumptions as to future events that might not prove to be accurate.  Actual outcomes and results could differ materially from what is expressed or forecast in these forward-looking statements.  Risks, uncertainties, and other factors that might cause such differences, some of which could be material, include, but are not limited to, the factors discussed under Item 1A of this report entitled "Risk Factors."

Item 1.  Business

Background

ActiveCare, Inc. ("we," "us," "our," the "Company" or "ActiveCare") was formed March 5, 1998 as a wholly owned subsidiary of Track Group [OTCQX: TRCK], a Utah corporation, formerly known as Track Group, 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. Our fiscal year ends on September 30.

In this Annual Report on Form 10-K, unless indicated otherwise, references to "dollars" and "$" are to United States dollars.

We own or have rights to trademarks, service marks or trade names that we use in connection with the operation of our business, including, without limitation, "CareCenter," "4G," "ActiveOne," "ActiveOne+," "ActiveHome," "ActiveCare" and the stylized "ActiveCare" logo.  Solely for convenience, some of the trademarks, service marks and trade names referred to in this report are listed without the ©, ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our copyrights, trademarks, service marks, trade names and domain names. The trademarks, service marks and trade names of other companies appearing in this report are, to our knowledge, the property of their respective owners.

General

Our focus is on markets addressing chronic conditions and disease states.  Remote patient monitoring ("RPM") is a technology to enable monitoring of patient vital signs and physical functions outside of conventional clinical settings (e.g., in the home, work or travel).  Physiological data such as blood sugar levels, blood pressure, pulse rate, and blood oxygen levels are collected by sensors on medical peripheral devices.  Examples of these devices include glucometers, blood pressure cuffs, weight scales, and pulse oximeters.  The data is stored for future assessment or transmitted to healthcare providers or third parties via wireless telecommunication devices.  Disease states targeted by RPM technology providers typically include diabetes, congestive heart failure, sleep apnea, activity monitoring, and diet management.  Since the launch of our Chronic Illness Monitoring segment in 2012, its primary focus has been on those patients diagnosed with diabetes.  We believe that we can improve the lives of the chronically ill through the use of technology, while reducing the cost of care.  Central to these efforts is our "CareCenter."  This service is designed to monitor and track patients' health conditions and chronic illnesses on a real time basis.  As part of these efforts we have staffed this CareCenter with trained specialists to assist the chronically ill in managing their daily lives; 24 hours per day, seven days per week.  In order for the CareCenter to service our customers, we have developed and continue to develop products and technologies designed to improve the health of the chronically ill.

There are obvious problems associated with aging and patients diagnosed with chronic conditions.  According to a 2004 presentation to the American Telemedicine Association, approximately one in every four Americans suffers from a chronic illness, which typically becomes more severe and prominent with age.  The demographics of chronic illnesses include over 29 million people with diabetes (according to the Centers for Disease Control and Prevention's 2015 National Diabetes Statistics Report) and close to 14 million with coronary heart disease (according to reports published by the American Heart Association), as well as over 10 million with osteoporosis (according to a study by the University of Maryland Medical Center).  All of these reports and studies, as well as those cited elsewhere in this report, are on file with the Company. 

1

According to a 2010 analysis from the Centers for Disease Control and Prevention ("CDC"), as many as one in three U.S. adults could have diabetes by 2050 if current trends continue.  Diabetes currently affects approximately 9% of the overall U.S. population or 29 million people.  According to a 2012 diabetes fact sheet the annual cost of treating an individual diagnosed with diabetes, and the comorbidities associated with the disease, can range from $12,000 to $16,000 per year.  This combination costs the U.S. health system up to $245 billion annually.  A major driver of the diabetic related claims is the lack of adherence to regular blood glucose monitoring.  It is estimated by the National Center for Biotechnology Information that less than 30% of diabetics monitor their blood glucose levels on a regular basis.

With U.S. healthcare costs increasing annually, we believe that cost containment is a primary issue facing the industry. These escalating costs will only intensify as the baby-boom generation ages.  As of 2000, 35 million Americans were 65 years of age or older, and this number is projected to increase to 55 million by the year 2020, according to a study by the U.S. Department of Health and Human Services.  By that year, one in six Americans will be over the age of 65 and by the middle of the century, the number of elderly could reach more than 86 million people, more than double the present number.  According to an article published in the National Review Online and the sources cited therein, approximately 80% of healthcare costs occur in the last two years of life.  This combined with an aging population supports the assertion that the nation is in dire need of viable cost-saving options for health care.

We believe the ability to monitor chronic illness in your own home will mitigate health care costs for the chronically ill and the elderly. Through the technologies we are developing, we believe we can both enhance lives of and provide peace of mind with the knowledge that their vital signs are being monitored.  At the same time we believe we can save millions of dollars in the health care sector as we identify problems and issues before they become crises.

We believe that through the technologies we have already developed and are continuing to develop, we can enhance the lives not only of the growing diabetic segment of today's population, but also the lives of other segments of the population, such as those with other chronic illnesses.  The CareCenter is staffed around the clock with advisors that receive calls originating from our clients who utilize our products.  We can immediately communicate with them and emergency personnel in times of need and communicate their location and an abbreviated medical history.

Our Product and Service Strategy

During the fiscal year 2015, our product/service strategy fell into two distinctly different categories; chronic illness monitoring and care services ("CareServices") or personal emergency response systems ("PERS").  In December 2014, we sold substantially all of our customer contracts and equipment leased to customers associated with our CareServices segment.  The sale of our CareServices contracts allows us to focus solely on our Chronic Illness Monitoring segment.

Chronic Illness Monitoring

Chronic illness monitoring involves the use of biometric monitoring devices in combination with proprietary data and algorithms to assess the wellbeing of an individual under care.  Individual care profiles are created through the aggregation of personal health and medical claims information from multiple data sources.  Real-time biometric readings for blood glucose levels, blood pressure, heart rate, weight, tidal volume and other vital readings can be captured over time and added to the existing personal information.  This unique data set may now be used for proactive care protocols, care provider alerts to elevated readings, and behavioral intervention prior to crisis events.

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 as a core competency the ability to integrate and capture data from any 510(k) or HL7 compliant monitoring device (see "Regulatory Matters" on page 8 of this report).  Strategic relationships have been created with technology and market leaders, and evaluation of new and emerging technology partners is ongoing.  Medical and claims data is aggregated from multiple source providers using a proprietary application programmatic interface and data storage architecture.  This data is analyzed to identify individual care needs of those entering the program.  Monitoring alerts, predictive informatics and individual care plans are created and managed using the ActiveCare technology platform.  Care for chronic conditions may now be performed in real-time, and outcomes may be measured on both a medical and claims cost basis.

2

During the fiscal year ended September 30, 2015, we spent approximately $107,000 on research and development for chronic illness monitoring related to 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 that were developed during fiscal years 2013 and 2012.  We will continue to identify claims and medical data sets as well as analytical and informatics technologies that advance our ability to provide unique services.  Core competency will continue to evolve in the methods and technologies for data analytics and predictive informatics. 

Care Services

We have developed products that incorporate GPS, cellular capability, and fall detection, all of which are connected to our 24-hour CareCenter with the push of a button.  The transmitter can be worn on a neck pendant or belt clip, or carried in a purse, and sends a cellular signal to our CareCenter.  When the wearer of the device pushes the button, the staff at the CareCenter evaluate the situationand decide whether to call emergency services or a designated friend or family member.

CareCenter

The central point of our product offerings is our CareCenter.  Our CareCenter is staffed 24x7 with CareCenter specialists who are 911-certified and trained.  In addition, we have nurses on duty and on call that are available to assist with medical issues or questions.  Our CareCenter specialists and CareCenter provide monitoring related to chronic illness test results, contact testers who have not tested when scheduled, and onboard new users to our services.  We focus on our outreach initiatives in respect of engagement programs, which assist end users with the importance of monitoring their health.

In contrast to a typical monitoring center, our CareCenter is equipped to respond to real-time alerts and data to better assist users of our services.  In addition, the CareCenter's software will identify the caller, access the individual's medical information, and assist with emergency dispatch.  We believe the CareCenter is a cornerstone of our business and will support current technology as well as evolve to support the integration of future technologies.

Recent Developments

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 attempt to secure financing through equity or debt securities.  We continue to incur negative cash flows from operating activities and net losses.  We had negative working capital and negative total equity as of September 30, 2015 and September 30, 2014 and are in default with respect to certain debt.  We determined that our goodwill of $825,894 was impaired during the fourth quarter of 2015 and it was expensed.  These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements included in this Form 10-K 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.  There can be no assurance that we will be able to 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.

In December 2014, we sold substantially all of our customer contracts and equipment leased to customers associated with our CareServices segment.  Additional equipment that we held in stock was sold to the buyer pursuant to a written invoice.  The purchase price included a cash payment of $412,280 for the customer contracts and $66,458 for the equipment held in stock.  The sale of the CareServices segment allows us to focus our resources solely on Chronic Illness Monitoring.

3

Our Growth Strategy

Our plan is to continue to focus on addressing the diabetic population and to execute our existing business plan serving this chronic illness market during fiscal year 2016.  We market our products through insurance companies, disease management companies, third-party administrators ("TPAs"), and self-insured companies.  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 strategy is to develop relationships with these various customers.  TPAs administer the claims, payments, co-pays, and medical coding for self-insured companies.  They effectively act as the medical benefits administrators for their customers, most of which are not large enough to justify a fully operational in-house department.  Disease management companies are hired by insurance companies and self-insured companies to actively engage with members and employees with the goal that more interaction will reduce significant health care claims.  Our strategy is achieved by providing specific information related to the benefits to be realized by all parties, which, in most cases is substantial to the self-insured companies and the insurance companies.  The key to monetary savings is the CareCenter, which operates 24x7 and is integral to chronic illness monitoring. The CareCenter is the real-time recipient of all test results which are delivered using cellular glucometers. This information is gathered, sorted and reported.  This information, which the customers have generally never before seen, is then delivered to the customers. 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 history. Once the customers recognize the benefits to be realized from this information for one or more patients, it is a natural progression to add the rest of the customer's members or clients to the ActiveCare solution.

Our ultimate objective is to become a chronic illness monitor for all of our customer's members, measuring not only blood sugar for diabetics, but also blood pressure, weight, and blood oxygen levels.

Research and Development Program

During fiscal year 2015, we spent approximately $107,000, compared to $215,000 in fiscal year 2014, on research and development related to chronic illness monitoring.  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.

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 are 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.  The analysis of the competitive landscape will focus on six primary market segments representing the primary components of our system, noting the implications for us resulting from the strengths of the leaders in each segment.

Legacy Consumer Oriented Monitoring and Communications Device Providers

Overview – While not a primary threat to our business model, several leading providers of health care technologies have targeted the patient monitoring market and made significant investments in pursuing the segment.  The primary business focus of these companies is high-end diagnostics equipment, point of care technologies, and health information technologies.  While the investments in telehealth technologies have totaled significant dollars they represent a very small component of these competitors' overall business in the health care segment.  The approach to entering the market has typically been to acquire an existing technology and attempt to distribute that technology through existing distribution channels in complementary offerings.  Examples of providers in this segment include:

· Philips – Telestation

· Bosch - HealthStation

· Honeywell – Genesis

4

Strengths – The strengths of this segment are the competitors' overall position in the health care market, existing distribution channels and availability of capital to fund and pursue future opportunities.

Weaknesses – The value proposition of the providers in this segment has been focused on providing a consumer-based platform for "telemedicine," or providing care to a patient not at the same location as the provider of care.  Solutions have been an extension of the videophone concept, and in some cases have included connectivity to blood pressure and blood oxygen measuring peripherals. The weaknesses in the execution of this approach include:

· The market / product strategy has been as a tertiary complement to the core business, lacking focus on execution.

· The business model has been hardware based, focusing on the product as a "part" of the primary hardware business.

· Solutions have been limited to facilitating the moment of care, and do not capture or make data available for later assessment.

· Products have been based on legacy technologies, lacking ease of use and rich functionality.

· Revenue models have been based on sources outside of the primary economics of health care; federal and state funded grants, patient payer, and as a bundled component of a sponsoring product line or business.

Summary – We do not directly compete with the offerings in this segment.  The possible threat is based on the competitors' reassessment of strategy in this market and the ability to fund and customize products.  If they follow past patterns, we believe that we would be a prime candidate for partner relationship or acquisition by one of these competitors to gain an immediate presence in a more viable business model.

Current Consumer Peripheral Monitoring Device Providers

Overview – Competitors in this segment have specialized in the delivery of low cost diagnostic peripherals for measuring blood pressure, weight, pulse rate, blood sugar and activity.  Examples include:

· A and D Medical

· Telcare

Strengths – These competitors have refined the product requirements to meet the needs of the market.  Products are easy to use and accurately capture vitals and metrics.  In the past five years significant effort has been made to lower the cost of products as they compete more on cost rather than functionality or other benefits.

Weaknesses – These products continue to evolve as commodity offerings, differentiating on price rather than any other feature.  Solutions have been targeted on facilitating the moment of care, and lack complementing strategies to make data for later assessment.

Summary – Currently this segment provides us with some key partnerships.  They facilitate the means of capturing patient data with an easy to use, low cost offering.  While some devices have been innovative, the strategies continue to focus primarily on the manufacture and sale of hardware components.

Next Generation Monitoring Device Providers

Overview – The past five years have seen a proliferation of consumer-oriented devices to monitor individuals' physical activity, sleep patterns and pulse rate.  The strategy of those in this segment has also been focused on integration with smartphones and other consumer devices.  Examples include:

· Activity monitoring 

o MisFit

o Striiv

o Lark

· Consumer vital signs monitoring 

o iHealth

o Digifit

· Sleep and diet monitoring 

o FitBit

5

Strengths – The rapid evolution of product and strategy has been fueled by the culture and investors that innovated the technology segment.  Companies such as Apple, Google, Frog Design and Stanford Research Institute (SRI) are directly or indirectly funding and leading efforts of innovation.  Designs are state-of-the-art and are focused on attracting use by consumers in daily activity.  The segment has a strong first adopter appeal.

Weaknesses – To date, the business models of the products in the segment have been an evolution of the products produced by traditional monitoring device companies, with one notable exception; products are not yet qualified for clinical data capture and are relegated to providing consumers with the most basic of physical monitoring data.  Providers in this segment have noted intentions to become more robust, capturing clinical data type and securing federal 510(k) medical device certification in future products.  It has also been forecasted by technology thought leaders that the segment strategy will fail unless it adds complementing user value and revenue opportunities.

Summary – Competitors in this segment are expected to become strategic partners for our business model as they evolve their ability to capture and transmit clinical data.  We expect to expand into strategic market segments complementing the strengths of these technologies, offering data analytics, and personal fitness planning and wellness management services.

Health / Insurance Data Service Providers

Overview – Health data informatics has become a strategic focus of health care providers and payer organizations over the past 30 years.  Aggregation, analytics, informatics and predictive modeling have enabled service providers to differentiate and better manage the process of health care.  Traditionally providers specialized in offering information or services based on a vertical focus of EHR patient data, geographic and regional health care information, or insurance claims processing data.  Examples include:

· CareFX – recently acquired by Harris Healthcare

· Medicity –acquired by Aetna

· Certify Data Systems

· Benefit Informatics

Strengths – Data aggregation and utilization are core competencies of the companies in this segment.  Product and service offerings have been successfully marketed to insurance companies and health plan providers.

Weaknesses – Sources of the data driving the product strategy of these competitors is becoming increasingly available, forcing an evolution of the business model in two directions; to become a provider of advanced services (rather than data), or to be acquired by large insurance and care groups to mine that specific groups' data.  While significant federal and state funding has driven the efforts to create regional health information organizations, projects have become graveyards for careers and future funding.  The fallout of this effort has had a significant impact on the viability of several major data services providers.

Summary – This segment presents us with direct competition and business opportunities.  Forced to rapidly evolve their strategies, competitors are recognizing the value of real-time and "prior to care event" data.  Increasing efforts are being made to facilitate data at the point of care and make that data available to the entire care and reimbursement cycle. Having the ability to capture and assess the data upstream of current offerings strategically differentiates our business, giving visibility to health risks in advance of change of condition and cost.  Partnering with leaders in this segment should enable us to further gain expertise in this field as well as complement our data repository. Having data of past care from these partners in combination with data of current patient conditions allows for extremely valuable predictive modeling and services.

Dependence on Major Customers and Vendor

During fiscal year 2015, we had three customers that accounted for 69% of total revenue. During fiscal year 2014, we had two customers that accounted for 67% of total revenue.  Although we are able to integrate and capture data from multiple devices, during fiscal years 2015 and 2014 we purchased substantially all of our products and supplies from one vendor.  See Note 2 to the consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations.

6

Intellectual Property

Trademarks.  We have registered certain of our trademarks with the United States Patent and Trademark Office, including ActiveCare®, ActiveOne®, and ActiveOne+®.  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, for our primary trademarks and we claim ownership of certain unregistered copyrights of our website content.  We rely as well on a variety of property rights that we license from third parties as described below.

Patents.  We own the exclusive, irrevocable, perpetual, worldwide, transferable, sublicensable license of all rights conferred by the patents, patent applications, and provisional patent applications listed in the table below.

Patent or	Country	Issue/Filing Date	Title of Patent
Application No.
11/486,989	United States	Pending 7/14/2006	Remote Tracking Device and System and Method for Two-Way Voice Communication Between Device and a Monitoring Center
11/486,991	United States	Pending 7/14/2006	Remote Tracking System and Device with Variable Sampling
11/830,398	United States	Pending 7/30/2007	Methods for Establishing Emergency Communications Between a Communications Device and a Response Center
12/614,242	United States	7/23/2015	Systems and Devices for Emergency Tracking and Health Monitoring
61/827,454	United States	Pending 5/24/2014	System and Method for Identifying, Tracking and Treating Chronic Illness Using Real-time Biometric Data
6,044,257	United States	3/28/2000	Panic Button Phone
6,636,732	United States	10/21/2003	Emergency Phone with Single Button Activation
6,226,510	United States	5/1/2001	Emergency Phone for Automatically Summoning Multiple Emergency Response Services
7,092,695	United States	8/15/2006	Emergency Phone with Alternate Number Calling Capability
7,251,471	United States	7/31/2007	Emergency Phone with Single Button Activation

Exclusive License
1/629,722	United States	Pending 12/15/2015	Nanosensors
1/501,466	United States	Pending 8/9/2006	Nanoscale Sensors
CT/US2007/006545	International	Pending 3/15/2007	Nonobioelectronics
CT/US2007/013700	International	Pending 7/11/2007	Nanosensors and Related Technologies
CT/US2007/024126	International	Pending 11/19/2007	High-Sensitivity Nanoscale Wire Sensors

7

Non-Exclusive License
10/588.833	United States	Pending 08/09/06	Nanostructures Containing Metal-Semiconductor Compounds
PCT/US2007/008540	International	Pending 04/06/07	Nanoscale Wires Methods and Devices
PCT/US2007/024222	International	Pending 11/20/06	Millimeter-Long Nanowires
PCT/US2007/021602	International	Pending 10/10/07	Liquid Films Containing Nanostructured Materials
6612985	International	9/2/2003	Method and System for Monitoring and Treating a Patient

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, although some employees who are involved in research and development activities have not entered into these agreements. 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 manufacture our own devices.  We have contracted with a third party to manufacture the device for us.  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.

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Employees

As of September 30, 2015, we had thirty four full-time and three part-time employees in the U.S.  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.

Additional Available Information

We maintain executive offices and principal facilities at 1365 West Business Park Drive, Suite 100, Orem, Utah, 84058.  Our telephone number is (877) 219-6050. We maintain a website at www.activecare.com. The information on our website should not be considered part of this report.  We make available, free of charge at our corporate website, copies of our annual reports filed under the Exchange Act with the United States Securities and Exchange Commission ("SEC") on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and all amendments to these reports, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act.  We also provide copies of our Forms 8-K, 10-K, 10-Q, proxy and annual report at no charge to investors upon request.

All reports filed with the SEC are available free of charge through the SEC website at www.sec.gov.  In addition, the public may read and copy materials we have filed with the SEC at the SEC's public reference room located at 450 Fifth St., N.W., Washington, D.C. 20549.  

Item 1A.  Risk Factors  

We have identified the following important factors that could cause actual results to differ materially from those projected in any forward looking statements we may make from time to time.  We operate in a continually changing business environment in which new risk factors emerge from time to time.  We can neither predict these new risk factors, nor can we assess the impact, if any, of these new risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statement.  If any of these risks, or combination of risks, actually occur, our business, financial condition and results of operations could be seriously and materially harmed, and the trading price of our common stock could decline.

Investors should also be aware that while we do, from time to time, communicate with securities analysts, it is against our policy to disclose to them any material non-public information or other confidential commercial information.  Accordingly, stockholders should not assume that we agree with any statement or report issued by any analyst, regardless of the content of the statement or report.  Furthermore, we do not confirm financial forecasts or projections issued by others.  Thus, to the extent that reports issued by securities analysts contain any projections, forecasts, or opinions, such reports are not the responsibility of ActiveCare.

Because of our history of accumulated deficits, recurring losses and negative cash flows from operating activities, we must improve profitability and may be required to obtain additional funding if we are to continue as a "going concern."

We incurred negative cash flows from operating activities and recurring net losses in fiscal years 2015 and 2014.  We had negative working capital at the end of each of those years.  As of September 30, 2015 and 2014, our accumulated deficit was $91,840,158 and $78,327,447, respectively.  These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements included with this report 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 issued its report dated January 13, 2016, which includes an explanatory paragraph 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 over the next 12 months to fund ongoing operations.  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 discontinue operations.

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

Profitability depends upon many factors, including the success of our sales program, our ability to identify and obtain the rights to additional products to add to our existing product line, expansion of our customer base, maintenance or reduction of expense levels and the success of our business activities.  We anticipate that we will generate operating income in the next 12 months.  Our ability to achieve profitable operations will depend on our success in developing and maintaining valuable product and monitoring solutions, sales strategies, and strategic partnerships.  There can be no assurance that we will be able to develop and maintain adequate resources to fund these goals.  If adequate funds are not available, we may be required to materially curtail or cease operations.

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, and that we must rely on the owners of the proprietary technology that is the basis for our products to protect that technology.  We have no control over such protection.

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.

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 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.

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.

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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 experience intense competition from a variety of sources, many of which are better financed and better managed than we are.

We face, and will continue to face, competition in the Chronic Illness Monitoring market.  Many, if not most, of our competitors and potential competitors are much larger and consequently have greater access to capital.  Moreover, many of our competitors have far greater name recognition and experience in the Chronic Illness Monitoring industry.  There can be no assurance that competition from other companies will not render our products noncompetitive.

We are highly dependent on our executive officers and certain of our sales, technical and operations employees.

We depend heavily on our executive officers and certain sales, technical, and operations employees.  The loss of services of any of these individuals could impede the achievement of our objectives.  There can be no assurance that we will be able to attract and retain qualified executives, sales, or technical personnel on acceptable terms.

We rely on third parties to manufacture our product line.

We do not own or operate manufacturing facilities for the manufacture of our Chronic Illness Monitoring products.  Consequently, we are dependent on these contract manufacturers 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.  During fiscal years 2015 and 2014, we purchased substantially all of our products and supplies from one vendor. Although there are other vendors who manufacture similar products and supplies, our systems would need to be modified to accommodate those products and supplies. A change in suppliers could cause a delay in providing products and services to customers and a possible loss of sales.  In the event we are unable to obtain or retain third-party manufacturing, we will not be able to continue operations as they relate to the sale of products.

From time to time, we may be subject to expensive claims relating to product liability law; 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.

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Ineffective internal controls could impact our business and operating results.

Our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud.  Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.  If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business and operating results may be harmed and we could fail to meet our financial reporting obligations.

Risks Related to Ownership of Our Common Stock

Concentration of ownership among our existing executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions.

Our executive officers, directors and principal stockholders own, in the aggregate, approximately 39% of our outstanding common stock.  In addition, certain of our officers and our directors have been granted warrants to purchase common stock and own convertible Series D and Series E preferred stock.  The exercise of such warrants and conversion of preferred stock might also result in substantial dilution to our existing stockholders.  As a result of the ownership of the shares currently held, their ownership and potential exercise of these options and preferred stock, these stockholders may be able to exercise significant control over matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation and approval of significant corporate transactions and will have significant control over our management and policies.  The interests of these stockholders may not be consistent with the interests of all other stockholders.

This control or the potential for such control may have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management, or limiting the ability of our other stockholders to approve transactions that they may deem to be in our best interests.

Penny stock regulations may impose certain restrictions on marketability of our securities. 

The SEC has adopted regulations which generally define a "penny stock" to be any equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions.  As a result, our common stock is subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse).  For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's written consent to the transaction prior to the purchase.  Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market.  The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market.  Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.  Consequently, the "penny stock" rules may restrict the ability of broker-dealers to sell our securities and may affect the ability of investors to sell our securities in the secondary market and the price at which such purchasers can sell any such securities. 

Investors 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:

• Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

• Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

• "Boiler room" practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

• Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

• The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

Our management is aware of the abuses that have occurred historically in the penny stock market.

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Our stock price may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the price you paid for them.

The market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including:

• Market conditions or trends in our industry or the economy as a whole and, in particular, in the retail sales environment;

• Timing of promotional events;

• Changes in key personnel;

• Entry into new markets;

• Announcements by us or our competitors of new product offerings or significant acquisitions;

• Actions by competitors;

• The level of expenses associated with new product development and marketing;

• Changes in operating performance and stock market valuations of competitors;

• The public's response to press releases or other public announcements by us or third parties, including our filings with the SEC;

• The financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

• Changes in financial estimates by any securities analysts who follow our common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our common stock;

• The development and sustainability of an active trading market for our common stock;

• Future sales of our common stock by our officers, directors and significant stockholders;

• Other events or factors, including those resulting from war, acts of terrorism, natural disasters or responses to these events; and

• Changes in accounting principles.

In addition, the stock markets have recently experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many retail companies.  In the past, stockholders in some companies have instituted securities class action litigation following periods of market volatility.  If we were involved in securities litigation, we could incur substantial costs and our resources, and the attention of management could be diverted from our business.

Anti-takeover provisions in our charter documents and Delaware law might discourage or delay acquisition attempts.

Our certificate of incorporation and bylaws contain provisions that may make the acquisition of our Company more difficult without the approval of our Board of Directors. These provisions:

· Authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock; and

· Establish advance notice requirements for nominations for elections to our Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

These anti-takeover provisions and other provisions under Delaware law could discourage, delay, or prevent a transaction involving a change in control of our Company, even if doing so would benefit our stockholders. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.

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If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our stock price and trading volume could decline.

Any future trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business.  We do not currently have and may never obtain research coverage by securities and industry analysts.  If no securities or industry analysts commence coverage of us, the trading price for our common stock would be negatively impacted.  If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our common stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline.  If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our common stock could decrease, which could cause our stock price and trading volume to decline.  

We do not expect to pay any cash dividends on our common stock for the foreseeable future.

The continued operation and expansion of our business will require substantial funding.  Accordingly, we do not anticipate that we will pay any cash dividends on shares of our common stock for the foreseeable future.  Any determination to pay dividends on the common stock in the future will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, contractual restrictions, including our senior secured credit facility and other indebtedness we may incur, restrictions imposed by applicable law and other factors our Board of Directors deems relevant.  No dividends may be paid on the common stock unless and until all accrued and unpaid dividends are paid on the preferred stock.  Accordingly, if you purchase or own shares of our common stock, realization of a gain on your investment will depend on the appreciation of the price of our common stock, which may never occur. Investors seeking cash dividends in the foreseeable future should not purchase our common stock.

Item 2.  Properties

We sublease office facilities of approximately 6,900 square feet located at 1365 West Business Park Drive, Suite 100, Orem, Utah, 84058.  This lease expires in July 2018 and the monthly rent is approximately $10,300 subject to annual adjustments.

Management believes the facilities described above are adequate to accommodate presently expected growth and needs of our operations.

Item 3.  Legal Proceedings

On May 28, 2015, Fouzi, Al-Fouzan, an investor in the Company, filed a lawsuit against the Company, James Dalton, our Executive 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 and seeks damages of $1,000,000 exclusive of interest and costs.  The Company has engaged legal counsel regarding the matter.  As the lawsuit is in its early stages, 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 principle 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, 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.  As the lawsuit is in its early stages, it is not possible to predict the outcome of the matter. 

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PART II

Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock has traded on the OTCQB under the symbol "ACAR."  The following table sets forth the range of high and low market prices of our common stock as reported for the periods indicated.  The information is available online at http://finance.yahoo.com.

Fiscal Year Ended	High		Low
September 30, 2014
First Quarter	$	1.45	$	0.80
Second Quarter	$	1.00	$	0.60
Third Quarter	$	0.75	$	0.35
Fourth Quarter	$	0.61	$	0.22
Fiscal Year Ended	High		Low
September 30, 2015
First Quarter	$	0.44	$	0.12
Second Quarter	$	0.43	$	0.05
Third Quarter	$	0.35	$	0.20
Fourth Quarter	$	0.28	$	0.11
Fiscal Year Ended	High		Low
September 30, 2016
First Quarter	$	0.13	$	0.03

Holders

As of January 7, 2016, there were approximately 1,700 holders of record of our common stock and 79,486,837 shares of common stock outstanding. We have granted options and warrants for the purchase of 10,830,884 shares of common stock.  We have issued and outstanding 70,070 shares of Series E preferred stock, 45,000 shares of Series D preferred stock, and 5,361 shares of Series F preferred stock.  There are two holders of Series D preferred stock, 11 holders of Series E preferred stock and eight holders of Series F preferred stock.  These shares of preferred stock are convertible into a total of 16,768,158 shares of common stock subject to the terms and conditions of their respective Designation of Rights and Preferences.

Dividends

Since incorporation, we have not declared any cash dividends on our common stock.  We do not anticipate declaring cash dividends on our common stock for the foreseeable future.   Our Series D preferred stock carries an 8% annual dividend rate.  Our Series E preferred stock carries a 3.322% monthly dividend rate.  Our Series F preferred stock carries an 8% annual dividend rate until April 30, 2015, 16% from May 1, 2015 until July 31, 2015, 20% from August 1, 2015 until October 31, 2015, and 25% thereafter.

Dilution

The Board of Directors determines when and under what conditions and at what prices to issue stock.  In addition, a significant number of shares of common stock are reserved for issuance upon the exercise of stock options and warrants.  The issuance of any shares of common stock for any reason will result in dilution of the equity and voting interests of existing stockholders. 

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.

Equity Compensation Plans

Under management agreements in fiscal years 2012, 2013 and 2014, we granted our former Chief Executive Officers, former directors, and current officers equity compensation in the form of restricted stock and warrants for the purchase of common stock.  The following table summarizes certain information concerning equity plan awards outstanding as of September 30, 2015.

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Equity Compensation Plan Information

								Number of securities
								remaining available for
	Number of securities to							future issuance under
	be issued upon				Weighted- average			equity compensation
	exercise of				exercise price of			plans (excluding
	outstanding options,				outstanding options,			securities reflected in
	warrants, and rights				warrants, and rights			the first column)
Plan Category(1)		(#	)		($)
Equity compensation plans approved by security holders		-				$	-		-
Equity compensation plans not approved by security holders		9,497,551					0.91		-
Totals		9,497,551		(1)		$	0.91		-

(1)      Includes 511,200 shares of common stock issuable upon exercise of outstanding warrants granted to our Chief Executive Officers, 195,000 shares of common stock issuable upon exercise of outstanding warrants granted to former members of our Board of Directors, and 115,000 shares of common stock issuable upon exercise of outstanding warrants granted to former officers.

Recent Sales of Unregistered Securities

The following discussion summarizes sales and issuances of our common stock and other equity securities during the fiscal year ended September 30, 2015 not previously reported by the Company, including securities issued in exchange for property, services or other securities, and new securities resulting from the modification of outstanding securities without registration of the offer and sale of such securities under the Securities Act of 1933 (the "Securities Act") in reliance upon exemptions from registration pursuant to rules and regulations promulgated under the Securities Act.  We did not repurchase any securities during the fiscal year ended September 30, 2015.

During the three months ended September 30, 2015, we issued the following securities without registration under the Securities Act:

· 500,000 shares on August 6, 2015, to ADP Management as severance, the value on the date of grant was $130,000;

· 250,000 shares on August 6, 2015, to ADP Management for guarantees made on behalf of the Company, the value on the date of grant was $65,000;

· 620,200 shares on September 23, 2015, to certain employees for bonuses, the value on the date of grant was $115,636;

· 750,000 shares on August 6, 2015, to certain employees for bonuses, the value on the date of grant was $210,000;

· 568,750 shares on September 23, 2015, to James Dalton and Bluestone Advisors for guarantees made on behalf of the Company, the value on the date of grant was $102,375;

· 976,068 shares on September 23, 2015, to James Dalton, for per employment agreement bonus, the value on the date of grant was $175,692;

· 870,969 shares on September 23, 2015, to certain employees of the Company for employee compensation for past services rendered in lieu of cash, the value on the date of grant was $215,873

· 59,644 shares on September 23, 2015, to the holders of our Series D preferred stock in lieu of cash dividends, the value on the date of grant was $12,434;

· 275,000 shares on September 23, 2015 to Alliance Advisors as part of a settlement agreement on accounts payable, the value on the date of grant was $68,750;

· 3,000,000 shares on September 23, 2015 to  Advance Technology Investors as part of a settlement agreement on notes payable and accounts payable that resulted in a new note payable, the value on the date of grant was $780,000 which is included in loss on extinguishment of debt;

· 4,000,000 shares on September 23, 2015 to James Dalton, the Executive Chairman of the Board of Directors for future services, according to an employment agreement entered into for further appointment as the Chief Executive Officer.  The value on the date of grant was $720,000.  The shares vest monthly over two years;

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· 305,556 shares on September 23, 2015 to the James Dalton, Executive Chairman of the Board of Directors for a future bonus to be earned for additional end users (300 shares for each new end user).  The value on the date of grant was $55,000.  Additional shares may be issued to the Executive Chairman of the Board of Directors for additional end users acquired through December 2015;

· 2,000,000 shares on September 23, 2015 to Jeffrey Peterson, the Chief Financial Officer for future services according to a consulting agreement, the value on the date of grant was $360,000.  The shares vest monthly over two years;

· 1,000,000 shares on September 23, 2015 to Meyers Associates, independent consultants, for services provided to the Company, the value on the date of grant was $280,000;

· 250,000 shares on September 23, 2015 to R.C.C. Ventures, independent consultants, for services provided to the Company, the value on the date of grant was $50,000;

· 250,000 shares on September 23, 2015 to Purizer Corporation, an entity controlled by David Derrick, the former Executive Chairman of the Board of Directors for services provided, the value of the shares on the date of grant was $53,500.

· 250,000 shares on September 23, 2015 to Hallmark Investments, Inc. for future services to be provided as an independent consultant, the value at the date of grant was $45,000;

· 250,000 shares on September 1, 2015 to the holders of our convertible debenture as origination fees, the value on the date of grant was $50,000;

· 34,996 shares on September 1, 2015 to Meyers Associates, independent consultants, for services provided to the Company, the value on the date of grant was $4,889;

· 174,980 shares on September 18, 2015 to the holders of our convertible debenture as origination fees, the value on the date of grant was $24,497;

· 50,000 shares on September 18, 2015 to Meyers Associates, independent consultants, for services provided to the Company, the value on the date of grant was $4,899;

· 6,000,000 shares on September 23, 2015 to Bluestone Advisors, an entity controlled by Jeffrey Peterson, an executive officer of the Company for related-party notes payable origination fees, the value on the date of grant was $1,080,000.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations

The following Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader better understand our Company, our operations and our present business environment.  This information is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements for the fiscal years ended September 30, 2015 and 2014 and the accompanying notes thereto contained in this report.

Key Business Indicators

In assessing the performance of our business, we consider a variety of performance and financial measures.  The key measures for determining how our business is performing are net income (loss), net revenues, gross profit (loss) and levels of selling, general and administrative expenses.

Net Income (Loss)

Net income (loss) constitute gross profit (loss) net of selling, general and administrative expenses, research and development expenses, and other income (expenses).

Net Revenues

Net revenues constitute gross revenues net of any returns and merchandise discounts.

Gross Profit (Loss)

Gross profit (loss) is equal to our net revenues minus our cost of revenues. Gross margin measures gross profit (loss) as a percentage of our net revenues.  Cost of revenues includes the direct costs of purchased merchandise, inventory allowances, commissions, distribution costs, freight costs and purchasing costs. 

Our cost of revenues is substantially higher in higher volume quarters because cost of revenues generally increases as net revenues increase.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include administration, stock-based compensation (discussed below) and occupancy costs.  These expenses do not generally vary proportionately with net revenues.  As a result, selling, general and administrative expenses as a percentage of net sales are usually higher in lower volume quarters and lower in higher volume quarters.

Stock-based Compensation Expense

During fiscal year 2015, we granted 19,022,659 shares of common stock to our employees and consultants.  Stock-based compensation expense for fiscal year 2015 was approximately $5,763,000. See "Critical Accounting Policies" below.

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Fiscal Year 2015 Compared to Fiscal Year 2014

Net Revenues

Net revenues for fiscal year 2015 were $6,598,000 compared to $6,108,000 for fiscal year 2014, an increase of $490,000 or 8%.   The increase is primarily due to resupply shipments to end users who were newly enrolled during fiscal year 2015 and 2014 and increased sales to new customers offset, in part, by the deferral of monitoring revenue.

Cost of Revenues

Cost of revenues for fiscal year 2015 was $5,197,000, compared to $6,438,000 for fiscal year 2014, a decrease of $1,241,000.  The decrease in cost of revenues is due to the cost of an obsolescence reserve for inventory during fiscal year 2014 not being repeated to the same extent in fiscal year 2015.

Gross Profit (Loss)

Gross profit for fiscal year 2015 was $1,401,000, compared to a gross loss for fiscal year 2014 of $330,000, an increase of $1,731,000.  The increase in gross profit primarily resulted from the absence of a reserve for inventory obsolescence in 2015 that was needed in the prior fiscal year.  We expect gross profit to improve in fiscal year 2016 as we acquire more Chronic Illness Monitoring customers, retain existing customers and manage inventory.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for fiscal year 2015 were $10,358,000, compared to $9,800,000 for fiscal year 2014, an increase of $558,000, or 6%.  The increase in expenses was primarily due to increases in stock-based compensation of $2,177,000, offset, in part, by a decrease in legal and professional expenses of $588,000 and depreciation and amortization expense of $832,000.

Research and Development Expenses

Research and development expenses for fiscal year 2015 were $107,000, compared to $215,000 for fiscal year 2014, a decrease of $109,000.  We expect to continue investing in research and development as we develop new platforms for Chronic Illness Monitoring.

Loss on Extinguishment of Debt

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 8 and 9 to the consolidated financial statements.

Gain on Derivatives Liability

Gain on derivatives liability for fiscal year 2015 was $129,000, compared to a gain on derivatives liability of $373,000 for fiscal year 2014.  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.  The derivatives liability recorded as of September 30, 2014 relates to a variable conversion feature for the Series F preferred stock related to a potential milestone adjustment.  The derivatives liability as of September 30, 2014 was eliminated due to the milestone adjustment occurring during the quarter ended December 31, 2014.  This adjustment eliminated the variable conversion feature of Series F preferred stock.

Loss on Induced Conversion of Debt and Sale of Common Stock

In order to induce the conversion of certain debt to common stock, during 2014, we offered a conversion rate to all debt holders of $0.75 of debt per share of common stock, which was below the market price of the stock.  During the fiscal year ended September 30, 2014, debt and accrued interest of approximately $541,000, were converted to shares of common stock.  During fiscal year 2014, debt and accrued interest due to related parties of approximately $1,786,000 were converted to shares of common stock at $0.60 per share of common stock, which was below the market price of the stock.  The difference between the offered price and the market price of all common stock was issued is recorded as a loss on induced conversion of debt of approximately $114,000.  We believe this improved our balance sheet and positioned us to invest more resources in growing the Chronic Illness Monitoring business.

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Gain on Liability Settlements

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

Interest Expense

Interest expense for fiscal year 2015 was $977,000, compared to $1,936,000 for fiscal year 2014.  The decrease is mainly due to stock based loan origination fees of $813,000 related to short-term debts, debt conversions, and late payment fees during fiscal year 2014.  During fiscal year 2015, other loan origination fees related to short- term debts, debt conversion, and late payment fees totaled $120,000.

Impairment of Goodwill

Subsequent to fiscal year 2015, our market capitalization experienced a significant decrease for an extended period of time.  As a result, the Company impaired its goodwill by $825,894 as of September 30, 2015.

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 $412,280 for the customer contracts and $66,458 for the leased equipment.  During fiscal years 2015 and 2014, we recognized a loss from discontinued operations of $186,000 and $1,453,000, respectively.

Net Loss

Net loss for fiscal year 2015 was $11,528,000, compared to $13,462,000 for fiscal year 2014 for the reasons described above.

Dividends on Preferred Stock

Dividends on preferred stock for fiscal year 2015 were $995,000, compared to $737,000 for fiscal year 2014.  The increase is due an increase in the dividend rate from 8% to 20% for dividends on Series F preferred stock, which was issued during fiscal year 2014.

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 to supplement revenues from the sale of our products and services through the sale of equity securities and debt until we achieve positive cash flows from operating activities.

Our cash balance as of September 30, 2015 was $172,000.  At that time, we had a working capital deficit of $5,424,000, compared to a working capital deficit of $6,011,000 as of September 30, 2014.  The reduction in working capital deficit is primarily due to conversions of related-party accounts payable and modifications of current related party notes into long-term related party notes payable and the reductions in accrued expenses, offset, in part, by reductions in accounts receivable due to customer collections, the sale of substantially all of our customer contracts and equipment leased to customers associated with CareServices.

Operating activities in fiscal year 2015 used cash of $779,000, compared to $4,413,000 in fiscal year 2014.  The decrease in cash used in operating activities is primarily due to the decrease in net loss and the decrease in  cash payments to vendors.

Investing activities in fiscal year 2015 provided cash of $464,000, compared to $99,000 in fiscal year 2014.  The increase in cash provided by investing activities is primarily due to the sale of substantially all of our customer contracts and equipment leased to customers associated with CareServices in December 2014.

Financing activities in fiscal year 2015 provided cash of $290,000, compared to $4,485,000 in fiscal year 2014. The decrease in cash provided from financing activities is primarily due to the net increase in proceeds from the sale of preferred stock and issuance of debt during fiscal year 2014 over 2015, offset, in part by, a net decrease in principal payments on debt during fiscal year 2015 compared to fiscal year 2014.

We had an accumulated deficit as of September 30, 2015 of $91,840,000, compared to $78,327,000 as of September 30, 2014.  Our total stockholders' deficit as of September 30, 2015 was $8,608,000 compared to $5,144,000 as of September 30, 2014.  These changes were primarily due to our net loss for fiscal year 2015.

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Going Concern

We incurred negative cash flows from operating activities and recurring net losses in fiscal years 2015 and 2014.  We had negative working capital and negative total equity, and had certain debt that was in default as of September 30, 2015 and 2014.  These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements included in this Form 10-K do not include any adjustments that might result from the outcome of this uncertainty.

In order for us to eliminate substantial doubt about its ability to continue as a going concern, it must achieve profitability, generate positive cash flows from operating activities and obtain the necessary debt or equity funding to meet its projected capital investment requirements.  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.  There can be no assurance that we will be able to 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.

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

In April 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 states that only disposals representing strategic shifts in operations that have, or will have, a major effect on an entity's operations should be reported as discontinued operations when any of the following occurs: The component of an entity or group of components of an entity is classified as held for sale, the component of an entity or group of components of an entity is disposed of by sale, or the component of an entity or group of components of an entity is disposed of other than by sale. ASU 2014-08 is effective for annual periods beginning on or after December 15, 2014, and interim periods therein, which will be effective for the Company for the quarter ending December 31, 2015.  Early adoption is not permitted.  We are assessing the impact, if any, of implementing this guidance on our consolidated financial position and results of operations.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under US GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing US GAAP. In August 2015, the FASB voted to defer the effective date of the new revenue standard by one year. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, which will be effective for the Company for the quarter ending December 31, 2018. We are assessing the impact, if any, of implementing this guidance on our consolidated financial position, results of operations and liquidity.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. This standard sets forth management's responsibility to evaluate, each reporting period, whether there is substantial doubt about the Company's ability to continue as a going concern, and if so, to provide related footnote disclosures. The standard is effective for annual reporting periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016, which will be effective for the Company for the quarter ending December 31, 2017. We are assessing the impact, if any, of implementing this guidance on our assessment of going concern.

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In November 2014, the FASB issued ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The ASU clarifies how current guidance should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of a host contract. The ASU is effective for fiscal years and interim periods beginning after December 15, 2015, which will be effective for the Company for the quarter ending December 31, 2016. We are assessing the impact, if any, of implementing this guidance on our consolidated financial position, results of operations and liquidity.

In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements. The purpose of this ASU is to clarify guidance, correct unintended application of guidance, or make minor improvements to guidance. The ASU is effective for fiscal years and interim periods beginning after December 15, 2015, which will be effective for the Company for the quarter ending December 31, 2016. We are assessing the impact, if any, of implementing this guidance on our consolidated financial position, results of operations and liquidity.

In July 2015, the FASB issued ASU 2015-11, Inventory: Simplifying the Measurement of Inventory. The purpose of this ASU is to more closely align the measurement of inventory in U.S. GAAP with the measurement of inventory in International Financial Reporting Standards. This ASU requires entities to measure most inventory at the "lower of cost and net realizable value." Additionally, some of the amendments are designed to more clearly articulate the requirements for the measurement and disclosure of inventory. The ASU is effective for fiscal years and interim periods beginning after December 15, 2016, which will be effective for the Company for the quarter ending December 31, 2017. We are assessing the impact, if any, of implementing this guidance on our consolidated financial position, results of operations and liquidity.

Critical Accounting Policies

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.

Fair Value of Financial Instruments

We measured the fair values of our assets and liabilities using the US GAAP hierarchy.  The carrying amounts reported in the 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 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.

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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 $825,894 as of September 30, 2015.  The impairment of goodwill was due to a potentially long-term reduction in the market capitalization of the Company subsequent to September 30, 2015.  Goodwill was not impaired as of September 30, 2014.

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 impaired as of September 30, 2015.  We impaired our CareServices customer contracts by $89,460 and patents by $408,332 as of September 30, 2014, which were recorded as part of discontinued operations related to the CareServices segment for the fiscal year ended September 30, 2014.  The impairment of the customer contracts is due to the sales price being lower than their net book value as of the date of sale.  The patents impaired were solely related to the CareServices segment that provide no future cash flows after the CareServices customer contracts and equipment leased to customers were sold in December 2014.  Our other long-lived assets were not impaired as of September 30, 2014.

Extinguishment of Debt

We compare the cash flow 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 outflow of the original note payable is 10% or more different than the modified note payable.

Revenue Recognition

For the years presented, revenues came from two sources: (1) sales of Chronic Illness Monitoring products and services; and (2) sales from CareServices.  The CareServices segment was sold in December 2014.  Information regarding revenue recognition policies relating to the Chronic Illness Monitoring and CareServices business segments 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 for another year.  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.

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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.  Sales of Chronic Illness Monitoring products and services contain multiple elements.

Multiple-Element Arrangements

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.

During the three months ended June 30, 2014, we began to provide enhanced monitoring services to a key customer, which pays a separate monthly monitoring fee.  Beginning in the three months ended June 30, 2015, our sales initiatives under the direction of new executive management became focused on the monitoring of end users.  This monitoring is accounted for as an element with stand-alone value.

CareServices

CareServices included contracts in which we leased monitoring devices and provided monitoring services to end users.  We typically entered into contracts on a month-to-month basis with end users that used CareServices.  These contracts could be cancelled by either party at any time with 30-days' notice.  Under a standard contract, the device and service became billable on the date the end user ordered the device, and remained billable until the device was returned to the Company.  Revenues were recognized at the end of each month the service had been provided.  In those circumstances in which payment was received in advance, we recorded deferred revenue.

CareServices revenue was recognized when persuasive evidence of an arrangement existed, delivery of the device or service had occurred, prices were fixed or determinable, and collection was reasonably assured.  Shipping and handling fees were included as part of net revenues.  The related freight costs and supplies directly associated with shipping products to end users were included as a component of cost of revenues.  All CareServices sales were made with net 30-day payment terms.

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.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain written and oral statements made by us in this report are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934 as amended (the Exchange Act).  Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain words such as "believe," "anticipate," "expect," "estimate," "project," or words or phrases of similar meaning.  In our reports and filings we may make forward-looking statements regarding our expectations about future sales growth, future training and consulting sales activity, renewal of existing contracts, anticipated expenses, the adequacy of existing capital resources, projected cost reduction and strategic initiatives, expected levels of depreciation and amortization expense, expectations regarding tangible and intangible asset valuation expenses, future compliance with the terms and conditions of our debt obligations, the expected repayment of our liabilities in future periods, expectations regarding income tax expenses as well as tax assets and credits and the amount of cash expected to be paid for income taxes, estimated capital expenditures, and cash flow estimates used to determine the fair value of long-lived assets.  These, and other forward-looking statements, are subject to certain risks and uncertainties that may cause actual results to differ materially from the forward-looking statements.  These risks and uncertainties are disclosed from time to time in reports filed by us with the SEC, including reports on Forms 8-K, 10-Q, and 10-K.  Such risks and uncertainties include, but are not limited to, the matters discussed in Item 1A of this annual report on Form 10-K for the fiscal year ended September 30, 2015, entitled "Risk Factors."  

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The risks included in this report are not exhaustive.  Other sections of this report may include additional factors that could adversely affect our business and financial performance.  Moreover, we operate in a very competitive and rapidly changing environment.  New risk factors may emerge and it is not possible for our management to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any single factor, or combination of factors, may cause actual results to differ materially from those contained in forward-looking statements.  Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results.

The market price of our common stock has been and may remain volatile.  In addition, the stock markets in general have experienced increased volatility.  Factors such as quarter-to-quarter variations in revenues and earnings or losses and our failure to meet expectations could have a significant impact on the market price of our common stock.  In addition, the price of our common stock can change for reasons unrelated to our performance.  Due to our low market capitalization, the price of our common stock may also be affected by conditions such as a lack of analyst coverage and fewer potential investors.

Forward-looking statements are based on management's expectations as of the date made, and we do not undertake any responsibility to update any of these statements in the future except as required by law.  Actual future performance and results will differ and may differ materially from those contained in or suggested by forward-looking statements as a result of the factors set forth in this Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in our filings with the SEC.

Item 8.  Financial Statements and Supplementary Data

The consolidated financial statements are included beginning on page F-1 of this report.

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

During the years ended September 30, 2015 and 2014, there were no: (i) disagreements with our independent registered public accounting firm on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to such firm's satisfaction, would have caused the independent registered public accounting firm to make reference to the subject matter thereof in connection with their reports for such years; or (ii) reportable events, as described under Item 304(a)(1)(v) of Regulation S-K, except for the material weaknesses noted in Item 9A.

Item 9A.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2015, our disclosure controls and procedures were not effective.  During the audit process, material weaknesses were identified as discussed below in the Report of Management on Internal Control over Financial Reporting.

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Report of Management on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

(i)	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
(ii)	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
(iii)	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement to our annual or interim financial statements will not be prevented or detected.

In the course of management's assessment, it identified the following material weaknesses in internal control over financial reporting as of September 30, 2015:

· Ineffective controls over the accounting for debt extinguishments and impairment of goodwill

· Ineffective controls over segregation of access to the accounting information system and the payroll system

We did not maintain an effective financial reporting process to prepare financial statements in accordance with U.S. generally accepted accounting principles. Specifically, we did not adequately evaluate goodwill for impairment or assess certain modifications of notes payable for extinguishment accounting.

We are in the process of improving our internal control over financial reporting in an effort to eliminate these material weaknesses through improved supervision and training of our staff. Our management, audit committee, and directors will continue to work to ensure that our controls and procedures become adequate and effective.

This annual report on Form 10-K does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to the rules of the SEC that permit the Company to provide only management's report in this annual report on Form 10-K.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2015, management improved procedures related to manual journal entries and trained staff to improve internal controls over financial reporting.

Inherent Limitations on the Effectiveness of Internal Controls

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to completely eliminate misconduct. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.

Item 9B.  Other Information

None.

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PART III

Item 10.  Directors, Executive Officers and Corporate Governance

Set forth below are the name, age, position and a description of the business experience of each of our executive officers, directors and other key employees as of September 30, 2015.

Name	Age	Position
James J. Dalton	73	Executive Chairman (Director) and Chief Executive Officer
Jeffrey S. Peterson	38	Director, Chief Financial Officer, and Secretary-Treasurer
Robert J. Welgos	77	Director
Darrell Meador	52	President of Sales

James J. Dalton – Chief Executive Officer and Chairman

Mr. Dalton was appointed as our Chief Executive Officer in April 2015.  Mr. Dalton also served as a consultant from January to March 2015.  Mr. Dalton joined us as a director on October 1, 2004.  He was our Chief Executive Officer and Chairman from June 16, 2008 until October 17, 2011.  Mr. Dalton was a director and President of Track Group from August 2003 until June 2008.  Prior to joining Track Group, Mr. Dalton was the owner and President of Dalton Development, a real estate development company.  He served as the President and coordinated the development of The Pinnacle, an 86-unit condominium project located at Deer Valley Resort in Park City, Utah.  Mr. Dalton also served as the president of Club Rio Mar in Puerto Rico, a 680-acre beach front property that includes 500 condominiums, beach club, numerous restaurants, pools and a Fazio-designed golf course.  He was also a founder and owner of the Deer Valley Club, where he oversaw the development of 25 high-end condominiums with a "ski-in and ski-out" feature.  We believe that Mr. Dalton's prior experience as a president and director of a public company, and in particular, of our Company, provides him with unique understanding of and experience with our business development and objectives.  This background qualifies him to serve on our board and provides him with insight into the specific challenges facing smaller public companies.  We believe that his experience helps him as he directs our response to meet the needs of our business, including our need to access capital markets and sources of financing.  Mr. Dalton's real estate development and sales experience also prepared him to advise us in the development and marketing of our ActiveOne™ solutions and products and related services.

On October 24, 2014, Mr. Dalton settled allegations with the Securities and Exchange Commission. The SEC (File No. 3-16214) alleged that during the period Mr. Dalton was an officer and director of Track Group (then known as SecureAlert, Inc.), Mr. Dalton and David G. Derrick, also an officer and director of Track Group, failed to disclose personal guarantees related to the sale of equipment by Track Group, and that the non-disclosures resulted in material misstatements of $2 million in overstated revenue in Track Group's financial statements for fiscal years 2007 and 2008 in that company's Forms 10-KSB, 10-KSB/A, 10-QSB, and 10-QSB/A filed from September 2007 through January 2010. As part of the settlement, Mr. Dalton agreed, without admitting or denying the SECs allegations, to an injunction from future violations of Sections 17(a)(2) and (3) of the Securities Act and Sections , 13(b)(2)(A) and (B), and 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder; and to pay a civil penalty in the amount of $65,000.

Jeffrey S. Peterson – Director, Chief Financial Officer, and Secretary-Treasurer

Mr. Peterson was appointed as our Chief Financial Officer during September 2015.  He 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 while assisting such companies in advisory and investment initiatives.  Mr. Peterson served in various capacities within ActiveCare from July 2011 until July 2012.  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, 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 observatory seats with Juneau Biosciences and CoNextions Medical.

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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 Audit Committee.  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.

Darrell Meador – President of Sales

Mr. Meador joined us as President of Sales in March 2012 and has spent the last 15 years involved in healthcare technology and new business initiatives.  He was one of the founders of 4G Biometrics, the predecessor of ActiveCare Biometrics and was previously the Vice-President of Marketing and Sales for a leader in the healthcare monitoring industry and started and built their telehealth business segment.  Mr. Meador served as the President for an innovative managed care organization focused on diabetes for five years and was the founder and President of a start-up consulting firm specializing in technology, management and education for healthcare and related companies for two years. He was also the co-founder and President of a provider of distance learning and communication services to the healthcare industry for seven years.  Mr. Meador received his Bachelor or Arts Degree from the University of North Texas in 1986 and was an Academic All-American at Panola Junior College while on a baseball scholarship.  Mr. Meador is currently involved in a complaint against the former owners of 4G Biometrics, as disclosed in Item 13.

Director Compensation

The table below summarizes the compensation we paid to our non-employee directors for their services as directors for the fiscal year ended September 30, 2015.

	Fees Earned  or Paid in Cash		Stock Awards		Option Awards		Non-Equity Incentive Plan Compensation		Change in Pension Value and Nonqualified Deferred Compensation Earnings		All Other Compensation		Total
Name	($)		($)		($)		($)		($)		($)		($)
(a)	(b)		(c)		(d)		(e)		(f)		(g)		(h)
David G. Derrick (1)	$	-	$	370,000	$	-	$	-	$	-	$	16,857	$	386,857
Robert J. Welgos (2)	$	30,000	$	-	$	-	$	-	$	-	$	-	$	30,000

(1)

Mr. Derrick is a former Executive Chairman of the Board of Directors.  He resigned from the Board of Directors in April 2015.  Mr. Derrick received 1,379,258 shares with fair value of $370,000 as compensation for his service as a director during fiscal year 2015.  On October 9, 2015, Mr. Derrick settled allegations with the Securities and Exchange Commission. The SEC (File No. 3-16213) alleged that during the period Mr. Derrick was an officer and director of Track Group (then known as SecureAlert, Inc.), Mr. Derrick and Mr. Dalton, as executive officers and directors failed to disclose personal guarantees related to the sale of equipment by Track Group, and that the non-disclosures resulted in material misstatements of $2 million in overstated revenue in Track Group's financial statements for fiscal years 2007 and 2008 in that company's Forms 10-KSB, 10-KSB/A, 10-QSB, and 10-QSB/A filed from September 2007 through January 2010. As part of the settlement, Mr. Derrick agreed, without admitting or denying the SEC's allegations, to an injunction to cease and desist from committing or causing violations, and any future violations, of Section 17(a) of the Securities Act and Sections 10(b), 13(a), 13(b)(2)(A) and (B),and 13(b)(5) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13a-14, 13b2-1, and 13b2-2 thereunder; to be barred from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act; and to pay a civil penalty in the amount of $232,500.

(2)

Mr. Welgos earned $30,000 of compensation for serving on the Board of Directors during fiscal year 2015.

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Item 11.  Executive Compensation

Section 162(m) Compliance

Section 162(m) of the Internal Revenue Code ("Code"), limits us to a deduction for federal income tax purposes of no more than $1,000,000 of compensation paid to certain executive officers in a taxable year. Compensation in excess of $1,000,000 may be deducted if it is "performance-based compensation" within the meaning of the Code.

Compensatory Arrangement with Executive Chairman

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 4,976,068 shares of common stock as a signing bonus, of which 976,068 shares were vested immediately, and 4,000,000 shares to be vested monthly over a one-year period starting July 2015.  During fiscal year 2015, we granted 5,555,643 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, 2,000,000 shares of common stock, plus a member bonus upon the achievement of certain milestones.  During fiscal year 2015, we vested 2,000,000 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 will be amortized monthly through June 2016.  During fiscal year 2015, we also granted Mr. Dalton 305,556 shares of common stock with a fair value of $55,000 for future services.

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Summary Compensation Table

The following table summarizes information concerning the compensation awarded to, earned by, or paid to, our Chief Executive Officer (Principal Executive Officer) and our two most highly compensated executive officers other than the Principal Executive Officer during fiscal years 2015 and 2014 (collectively, the "Named Executive Officers") who were serving in such capacities as of September 30, 2015, as well as Michael Jones, who served as our Chief Executive Officer from April 2014 until March 1, 2015.

Name and principal position	Year ended September 30	Salary		Bonus		Stock awards		Option awards		Nonequity incentive plan compensation		Nonqualified deferred compensation earnings		All other compensation		Total
		($)		($)		($)		($)		($)		($)		($)		($)
(a)	(b)	(c)		(d)		(e)		(f)		(g)		(h)		(i)		(j)
Michael Jones,	2015	$	67,500		-	$	250,670	$	-		-		-	$	7,947	$	326,117
PEO	2014	$	158,918		-	$	42,016	$	-		-		-	$	25,654	$	226,588
James J. Dalton	2015	$	120,000		-	$	1,104,828	$	20,472		-		-	$	982	$	1,246,282
Chief Executive Officer, Executive Chairman
Jeffrey Peterson	2015	$	60,000		-	$	330,065	$	-		-		-	$	3,035	$	393,100
Chief Financial Officer, Vice President of Finance	2014	$	114,450		-	$	424,190	$	5,165		-		-		-	$	543,805
Darrell Meador,	2015	$	135,000		50,000	$	164,848	$	-		-		-	$	19,769	$	369,617
President of Sales	2014	$	158,918		-	$	129,791	$	109,138		-		-	$	25,683	$	423,530

 (1) Column (i) includes long-term care insurance and other personal benefits. The amounts included in that column, representing premiums paid by us for the applicable insurance policies, include the following:

Year Ended September 30		Health  Insurance		Dental, Vision, & Term Life Insurance
Michael Jones,	2015	$	7,496	$	451
PEO	2014	$	24,897	$	757
James J. Dalton	2015	$	-	$	982
Chief Executive Officer, Executive Chairman
Jeffrey Peterson	2015	$	2,755	$	280
Chief Financial Officer, Vice President of Finance	2014	$	-	$	-
Darrell Meador,	2015	$	18,160	$	1,609
President of Sales	2014	$	24,916	$	767

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(2	)	All amounts except those reported in column (c) and column (i) are non-cash amounts and represent stock or option grants.
(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 2015, we granted shares of common stock as compensation for past and future service. The schedule below includes stock granted during fiscal year 2015. 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 2015.

	Stock granted		Value  of granted stock		Amount deferred		Amount recognized		Amortization of past  deferrals		Total  stock awards
Michael Jones,		399,815	$	99,470	$	-	$	99,470	$	151,200	$	250,670
PEO
James J. Dalton		7,957,380	$	1,699,828	$	595,000	$	1,104,828	$	-	$	1,104,828
Chief Executive Officer, Executive Chairman
Jeffrey Peterson		2,738,297	$	561,084	$	270,000	$	291,084	$	38,981	$	330,065
Chief Financial Officer, Vice President of Finance
Darrell Meador,		506,123	$	129,158	$	-	$	129,158	$	35,690	$	164,848
President of Sales

		Of the shares issued to Mr. Jones, 399,815 shares were issued in lieu of salary. Of the shares issued to Mr. Dalton, 2,000,000 shares were issued for his consulting services provided prior to his role as Chief Executive Officer; 5,281,624 shares were issued in lieu of salary and among the shares 4,000,000 shares will vest monthly over one year; 370,200 shares were issued as incentive bonus for meeting a certain milestone; 305,556 shares were issued for prepaid future services. Of the shares issued to Mr. Peterson, 2,738,297 shares were issued in lieu of salary, among the shares, 2,000,000 shares vest monthly over one year. Of the shares issued to Mr. Meador, 256,123 shares were issued in lieu of salary, and 250,000 shares were issued as incentive bonus for meeting sales goals. During the fiscal year ended September 30, 2014, we granted Mr. Jones, 21,450 shares in lieu of salary and 360,000 shares for continued service which vest quarterly over two years. We granted Mr. Peterson, 76,334 shares in lieu of salary, which vest quarterly over two years, and 3,996,000 shares for continued service, which also vest quarterly over two years. We also granted Mr. Meador 21,450 shares in lieu of salary.
(4	)	Amounts in column (f) represent non-cash compensation expense of options to purchase common stock granted based on the fair value calculated using a binomial option-pricing model. During 2015, we did not grant any options to purchase shares of common stock to the officers named in this schedule. We reduced the exercise price of Mr. Dalton's options to purchase 511,200 shares of common stock from $1.00 per share to $0.30 per share and we recognized an additional $20,472 of compensation expense. During 2014, we did not grant any options to purchase shares of common stock to the officers named in this schedule. We reduced the exercise price of Mr. Meador's options to purchase 433,333 shares of common stock from $1.00 per share to $0.50 per share and we recognized an additional $20,946 of compensation expense and $672 of deferred compensation to be amortized in the same manner as the related options. We reduced the exercise price of Mr. Peterson's options to purchase 650,000 shares of common stock from $1.10 per share to $0.50 per share. The options were exercised upon reduction and the 650,000 shares of common stock issued vest quarterly over two years. We recognized an additional $5,165 of compensation expense and $36,157 of deferred compensation to be amortized ratably over two years.

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Outstanding Equity Awards at Fiscal Year-End

The following table summarizes information regarding options and other equity awards owned by the Named Executive Officers as of September 30, 2015.  See footnotes following the table below:

	Number of Securities Underlying Unexercised Options (#)		Number of Securities Underlying Unexercised Options (#)		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned  Options			Option  Exercise Price		Option Expiration		Number of Shares or Units of Stock That  Have Not  Vested			Market Value  of Shares or Units of Stock That  Have Not  Vested		Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That  Have Not Vested			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or  Other Rights That Have  Not Vested
Name	Exercisable		Unexercisable			(#	)	($)		Date			(#	)	($)			(#	)	($)
(a)	(b)		(c)		(d)			(e)		(f)		(g)			(h)		(i)			(j)
Michael Jones,
PEO		-		-		-		$	-		-		-		$	-		-		$	-
James J. Dalton
Chief Executive Officer, Executive Chairman		511,200		-		-		$	0.30	6/21/2016 10/3/2016			3,500,000		$	420,000		-		$	-
Jeffrey Peterson
Chief Financial Officer, Vice President of Finance		-		-		-		$	-		-		1,750,000		$	210,000		-		$	-
Darrell Meador,
President of Sales		173,333		260,000		-		$	0.50	6/20/2017			-		$	-		-		$	-

(1)	Column (c) includes options to purchase shares of common stock with various vesting periods. The unexercisable options held by Mr. Meador to purchase 260,000 shares of common stock vest at the rate of 43,333 shares for every 5,000 members added.
(2)	Column (g) includes unvested shares of common stock that vest quarterly over a remaining period of 21 months and will be completely vested on June 23, 2017 or will vest immediately in the event of a change in control.

Options Exercised and Vested

During the fiscal year ended September 30, 2015, warrants for the purchase of 100,000 shares of common stock were vested and no options for the purchase of shares of common stock were exercised.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act requires our officers, directors, and persons who beneficially own more than 10 percent of our common stock to file reports of ownership and changes in ownership with the SEC.  Officers, directors, and greater-than-ten-percent shareholders are also required by the SEC to furnish us with copies of all Section 16(a) forms that they file.

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Based solely upon a review of these forms that were furnished to us, we believe that all reports required to be filed by these individuals and persons under Section 16(a) were filed during fiscal year 2015 and that such filings were timely except the following which were filed late:

· Mr. Derrick, our former Executive Chairman, filed three Forms 4 reporting six transactions

· ADP Management Corporation, an entity controlled by Mr. Derrick, our former Executive Chairman, filed one Form 3

· Mr. Peterson, a director, Chief Financial Officer, and our Vice President of Finance, filed three Forms 4 reporting nine transactions, and filed one Form 3

· Mr. Dalton, our Executive Chairman, filed one Form 3

· Tyumen Holdings, LLC, an entity controlled by Mr. Peterson, a director and our Vice President of Finance, filed one Form 3

· Mr. Welgos, a director, filed one Form 4 reporting 12 transactions

· Mr. Martin, a former director, filed one Form 4 reporting 14 transactions

· Mr. Johnson, a former director, filed one Form 4 reporting six transactions

· Mr. Jones, our former interim Chief Executive Officer, filed two Forms 4 reporting five transactions, and filed one Form 3

· Mr. Bratsman, our former Chief Financial Officer, filed two Forms 4 reporting two transactions

· Mr. Meador, our President of Sales, filed two Forms 4 reporting four transactions

· Mr. Olson, our former Chief Technology Officer and Chief Operating Officer, filed one Form 4 reporting four transactions, and filed one Form 3

Indemnification of Officers and Directors

Our certificate of incorporation provides that we will indemnify our directors and officers to the fullest extent permitted by the Delaware General Corporation Law, or DGCL.  We expect to obtain directors' and officers' liability insurance that insures such persons against the costs of defense, settlement or payment of a judgment under certain circumstances.

In addition, our certificate of incorporation provides that our directors will not be liable for monetary damages for breach of fiduciary duty.

We have entered into indemnification agreements with each of our current executive officers and directors.  The indemnification agreements provide the executive officers and directors with contractual rights to indemnification, expense advancement and reimbursement, to the fullest extent permitted under the DGCL.

James Dalton, our Executive Chairman and Chief Executive Officer, is named in a lawsuit with an investor, as discussed in Item 13, and is subject to indemnification.  There is no other pending litigation or proceeding naming any of our directors or officers to which indemnification is being sought, and we are not aware of any other pending or threatened litigation that may result in claims for indemnification by any director or officer.

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

Board of Directors

Election and Vacancies

Directors hold office until the next annual meeting of the stockholders and until their successors have been elected or appointed and duly qualified.  Vacancies on the board which are created by the retirement, resignation or removal of a director may be filled by the vote of the remaining members of the board, with such new director serving the remainder of the term or until his successor shall be elected and qualify.

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Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following tables set forth information as of January 7, 2016 (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 options 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 options.  These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Percentage of beneficial ownership is based on 79,486,738 shares of common stock outstanding as of the table date.  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.

5% Stockholders
Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percent of Class
Common	Advance Technology Investors LLC (1)		7,017,675		8.83	%
	154 Rock Hill Road
	Spring Valley, NY 10977
Common	David G Derrick (2)		5,387,148		6.78	%
	1401 North 1075 West, Suite 240
	Farmington, UT 84025
Executive Officers and Directors
Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percent  of Class
Common	Jeffrey Peterson (3)		21,681,662		27.28	%
Common	James Dalton (4)		8,147,787		10.25	%
Common	Darrell Meador (5)		1,031,130		1.30	%
Common	Robert Welgos (6)		269,403		0.34	%
All executive officers and directors as a group (4 persons)			31,129,982		39.16	%

(1)	Includes 6,567,675 shares of common stock, and options to purchase 450,000 shares of common stock, owned by Advanced Technology Investors LLC ("ATI") and its related entity. By agreement, ATI 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)	Includes 5,237,148 shares of common stock, and options to purchase 150,000 shares of common stock owned by Mr. David G. Derrick, a former member of our Board of Directors, and entities that are controlled by him.  Of the total shares of common stock owned or controlled by Mr. Derrick, 5,951,272 shares are held by ADP Management Corporation, 250,000 shares by Purizer Corporation, and 35,876 shares by Mr. Derrick.
(3)	Includes 21,556,662 shares of common stock and 25,000 shares of Series D preferred stock, which are convertible to 125,000 shares of common stock, owned by Mr. Jeffrey S. Peterson, a director and our Chief Financial Officer, and entities that are controlled by him.  Of the total shares of common stock owned or controlled by Mr. Peterson, 12,680,388 shares are held by Tyumen Holdings, LLC, 2,862,966 shares by Wynnman's Hill, LLC, 5,319,708 shares by Bluestone Advisors, LLC, 378,148 shares by Keystone Partners, LLC, 295,139 shares by Rimrock Capital, LLC, 20,270 shares by Banyan Investment Company, LLC and 43 shares by Blackhawk Properties, LLC.
(4)	Includes 8,147,787 shares of common stock and options to purchase 511,200 shares of common stock, owned by Mr. James Dalton, Chairman of our Board of Directors and Chief Executive Officer.
(5)	Includes 857,797 shares of common stock, and options to purchase 173,333 shares of common stock, owned by Mr. Darrell Meador, our President of Sales.
(6)	Includes 269,403 shares of common stock and 13,843 shares of Series E preferred stock convertible to 13,843 shares of common stock, owned by Mr. Robert J. Welgos, a member of our Board of Directors.

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Item 13.Certain Relationships and Related Transactions, and Director Independence

Related-Party Transactions

Related-Party Notes Payable

As of September 30, 2015, we owed $3,840,746 of notes payable 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%.  Five entities controlled by Jeffrey S. Peterson, Vice President of Finance and Chief Financial Officer, (Banyan Investment Company, LLC, Keystone Partners, LLC, The Mark and Nancy Peterson Foundation, Rimrock Capital, LLC, and Bluestone Advisors, LLC) were owed notes payable totaling $3,049,698.  Michael Jones, former interim Chief Executive Officer, was owed a note payable of $13,644.  An entity under control of David Derrick, former Executive Chairman of the Board of Directors, ADP Management Corporation, was owed notes payable totaling $720,683.  Michael Acton, our former Chief Financial Officer, was owed a note payable of $30,000.  Bill Martin, a former director, was owed a note payable of $26,721.  During February 2015, we modified the exercise price of options and warrants previously issued to the Executive Chairman of the Board of Directors from $1.00 to $0.30 per share, according to an agreement entered into prior to his appointment as the Executive Chairman, and recognized additional expense of $20,472.

During fiscal year 2015, ADP Management Corporation, an entity controlled by Mr. Derrick, converted $291,667 of secured borrowings along with $25,000 of loan origination fee into an unsecured note payable, which is included in the $720,683.

Related Party Contracts

During fiscal year 2015, Purizer Corporation, an entity controlled by Mr. Derrick, introduced and helped us enter into an agreement with a customer.  In connection with the sales contract, we granted Purizer Corporation 250,000 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.

During September 2015, the Company entered into consulting agreements with ADP Management, an entity controlled by Mr. David Derrick.  The Company agreed to pay for Mr. Derrick's healthcare insurance premiums plus $6,000 per month for his consulting services.  The Company also agreed to pay as a bonus to ADP Management a fee equal to 15% of the funds raised less payments to third parties owed in regards to the funds raised.

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.  The Company agreed to pay Bluestone Advisors, LLC $20,000 per month and 2,000,000 shares of Common Stock with a fair value of $360,000 as compensation to Mr. Peterson.

34

Certain Legal Proceedings

On October 9, 2015, Mr. Derrick, a former executive officer and director of the Company, settled allegations with the Securities and Exchange Commission. The SEC (File No. 3-16213) alleged that during the period Mr. Derrick was an officer and director of Track Group (then known as SecureAlert, Inc.), Mr. Derrick and Mr. Dalton, as executive officers and directors failed to disclose personal guarantees related to the sale of equipment by Track Group, and that the non-disclosures resulted in material misstatements of $2 million in overstated revenue in Track Group's financial statements for fiscal years 2007 and 2008 in that company's Forms 10-KSB, 10-KSB/A, 10-QSB, and 10-QSB/A filed from September 2007 through January 2010.  No restatements were made by Track Group as a result.  As part of the settlement, Mr. Derrick agreed, without admitting or denying the SEC's allegations, to an injunction to cease and desist from committing or causing violations, and any future violations, of Section 17(a) of the Securities Act and Sections 10(b), 13(a), 13(b)(2)(A) and (B),and 13(b)(5) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13a-14, 13b2-1, and 13b2-2 thereunder; to be barred from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act; and to pay a civil penalty in the amount of $232,500.

On October 24, 2014, Mr. Dalton settled allegations with the Securities and Exchange Commission (File No. 3-16214). As part of the settlement, Mr. Dalton agreed, without admitting or denying the SEC's allegations, to an injunction from future violations of Sections 17(a)(2) and (3) of the Securities Act and Sections, 13(b)(2)(A) and (B), and 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder; and to pay a civil penalty in the amount of $65,000.

Procedures for Related-Party Transactions

Under our code of business conduct and ethics adopted in June 2009, our employees, officers and directors are discouraged from entering into any transaction that may cause a conflict of interest for us.  In addition, they must report any potential conflict of interest, including related-party transactions, to their managers or our corporate counsel who then reviews and summarizes the proposed transaction for our audit committee.  Pursuant to its charter, our audit committee is required to then approve any related-party transactions, including those transactions involving our directors. In approving or rejecting such proposed transactions, the audit committee will be required to consider the relevant facts and circumstances available and deemed relevant to the audit committee, including the material terms of the transactions, risks, benefits, costs, availability of other comparable services or products and, if applicable, the impact on a director's independence.  Our audit committee will approve only those transactions that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as our audit committee determines in the good faith exercise of its discretion.  A copy of our code of business conduct and ethics and audit committee charter are available on our corporate website at www.activecare.com.

Under our code of business conduct and ethics adopted in June 2009, our employees, officers and directors are discouraged from entering into any transaction that may cause a conflict of interest for us.  In addition, they must report any potential conflict of interest, including related-party transactions, to their managers or our corporate counsel who then reviews and summarizes the proposed transaction for our audit committee.  Pursuant to its charter, our audit committee is required to then approve any related-party transactions, including those transactions involving our directors. In approving or rejecting such proposed transactions, the audit committee will be required to consider the relevant facts and circumstances available and deemed relevant to the audit committee, including the material terms of the transactions, risks, benefits, costs, availability of other comparable services or products and, if applicable, the impact on a director's independence.  Our audit committee will approve only those transactions that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as our audit committee determines in the good faith exercise of its discretion.  A copy of our code of business conduct and ethics and audit committee charter are available on our corporate website at www.activecare.com.

Corporate Governance and Director Independence

Board Composition

Our business and affairs are managed under the direction of our Board of Directors.  Our Board of Directors is comprised of three directors.  The Board of Directors has determined that Mr. Welgos is independent within the meaning of the Nasdaq Marketplace Rules.  This means that the Board of Directors has determined that this director (1) is not an officer or employee of ActiveCare or its subsidiary and (2) has no direct or indirect relationship with ActiveCare that would interfere with the exercise of his independent judgment in carrying out the responsibilities of a director.

Board Committees

Our Board of Directors does not presently have a functioning audit committee.  We do have a compensation committeeof the Board.  It is our intention to reconstitute the audit committee once we have increased the size of the Board to include additional independent directors.

The current composition and responsibilities of each committee are described below.  Members serve on these committees until their resignation or until otherwise determined by our Board of Directors.  

Audit Committee

Although we do not presently have an audit committee of the Board, Mr. Welgos, who served previously as chair of the audit committee is considered by the Board of Directors to be a financial expert.  Our Board of Directors and the Company plan to add additional independent directors to fill vacant positions on the audit committee.  Until that time, the full Board of Directors will undertake to fulfill the responsibilities of the audit committee.

35

When functioning, the audit committee has responsibility for, among other things:

· selecting and hiring our independent registered public accounting firm, and approving the audit and non-audit services to be performed by and the fees to be paid to our independent registered public accounting firm;

· evaluating the qualifications, performance and independence of our independent registered public accounting firm;

· monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters;

· reviewing the adequacy and effectiveness of our internal control policies and procedures;

· discussing the scope and results of the audit with the independent registered public accounting firm and reviewing with management and the independent registered public accounting firm our interim and year-end operating results; and

· preparing the audit committee report required by the SEC, to be included in our annual proxy statement.

As indicated above, our Board of Directors has affirmatively determined that Mr. Welgos meets the definition of "independent director" for purposes of serving on an audit committee under applicable SEC rules, and we intend to comply with these independence requirements within the time periods specified.  In addition, the Board of Directors has determined that Mr. Welgos meets the standards established by the SEC to qualify as a "financial expert" under Item 407 of Regulation S-K under the Securities Act.  Our Board of Directors has adopted a written charter for our audit committee, which is available on our corporate website at www.activecare.com.

Compensation Committee

Our compensation committee consists of two directors: Mr. Welgos, an independent director, and Mr. Peterson, who is also our Chief Financial Officer and Vice President of Finance.  Mr. Welgos serves as chair of the compensation committee.  Our Board of Directors and the Company plan to add additional independent directors to fill vacant positions on the compensation committee.  The compensation committee is responsible for, among other things:  

· reviewing and approving compensation of our executive officers including annual base salary, annual incentive bonuses, specific goals, equity compensation, employment agreements, severance and change in control arrangements, and any other benefits, compensation or arrangements;

· reviewing succession planning for our executive officers;

· reviewing and recommending compensation goals, bonus and stock compensation criteria for our employees;

· preparing the compensation committee report required by the SEC to be included in our annual proxy statement; and

· administering, reviewing and making recommendations with respect to our equity compensation plans.

Our Board of Directors has adopted a written charter for our compensation committee, which is available on our corporate website at www.activecare.com.

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.

Meetings of the Board of Directors and Committees

The Board of Directors is elected by and is accountable to our stockholders.  The Board establishes policy and provides our strategic direction, oversight, and control.  The Board met eight times during fiscal year 2015.  All directors attended 100% of the meetings of the Board and the Board committees of which they are members.  The Board performed acts by unanimous written consent in lieu of a meeting four times during fiscal year 2015.

36

Item 14.Principal Accounting Fees and Services

Audit Services Fees, Audit Related Fees, Tax Fees, and All Other Fees

Audit services consist of the audit of our annual consolidated financial statements, and other services related to filings and registration statements filed by us and other pertinent matters.

During the years ended September 30, 2015 and 2014, Tanner LLC ("Tanner") performed audit and audit related services including the audit of the annual consolidated financial statements of the Company and its subsidiaries, reviews of the quarterly financial information and quarterly reports on Form 10-Q and current reports on Form 8-K.  Tanner did not perform any financial information systems design and implementation services for the Company.

Tanner incurred fees of $191,600 and $286,800 for audit services and $0 and $0 for audit-related services with respect to the years ended September 30, 2015 and 2014, respectively.  Tanner performed no audit-related, tax or other services for those years.

Auditor Independence

Our audit committee considered that the work done for us in fiscal year 2015 by Tanner was compatible with maintaining that firm's independence.

Tanner has advised us that it has no direct or indirect financial interest in the Company or in any of its subsidiaries and that it has had, during the last four years, no connection with the Company or any of its subsidiaries, other than as independent auditors.

Report of the Audit Committee

The Audit Committee oversees the Company's financial reporting process on behalf of the Board of Directors.  Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal control. The director who serves on the Audit Committee is independent for purposes of applicable SEC Rules.  The Audit Committee operates under a written charter that has been adopted by the Board of Directors.

We have reviewed and discussed with management and Tanner the audited financial statements for the year ended September 30, 2015.  The Audit Committee has discussed with Tanner the matters that are required to be discussed under PCAOB standards.  Tanner has provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent registered public accounting firm's communications with the Audit Committee concerning independence, and the committee has discussed with Tanner that firm's independence.  The Audit Committee has concluded that Tanner is independent from the Company and its management.

Based on our review and discussions referred to above, we have recommended to the Board of Directors that the audited financial statements of the Company be included in the Company's Annual Report on Form 10-K for the year ended September 30, 2015, for filing with the Securities and Exchange Commission.

Respectfully submitted by the Audit Committee:

Robert J. Welgos, Chair

37

PART IV

Item 15.  Exhibits, Financial Statement Schedules

(a) The following documents are filed as part of this Form:
1.Financial Statements—all consolidated financial statements of the Company as set forth under Item 8, of this Form 10-K.

2. Financial Statement Schedules.    [N/A, because the required information is included in the Consolidated Financial Statements or Notes thereto, or is not applicable.]

3. Exhibits. The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Commission: 

Exhibit Number	Description
(3)(i)(1)	Articles of Incorporation*
(3)(i)(2)	Articles of Amendment to Articles of Incorporation*
(3)(i)(3)	Articles of Amendment to Articles of Incorporation for Change of Name**
(3)(i)(4)	Certificate of Incorporation filed with Delaware July 15, 2009**
(3)(i)(5)	Designation of Rights and Preferences for Series A Convertible Preferred Stock***
(3)(i)(6)	Amended and Restated Certificate of Designation of Rights and Preferences for Series A Convertible Preferred Stock+
(3)(i)(7)	Certificate of Designation of Rights and Preferences of Series B Convertible Preferred Stock+
(3)(i)(8)	Certificate of Designation of Rights and Preferences of Series C Preferred Stock [?]
(3)(i)(9)	Certificate of Designation of Rights and Preferences of Series D Preferred Stock [?]
(3)(i)(10)	Certificate of Designation of Rights and Preferences of Series E Preferred Stock [?]
(3)(i)(11)	Certificate of Designations of Preferences, Rights and Limitations of Series F Variable Rate Convertible Preferred Stock++
(3)(i)(12)	Amendment to Certificate of Designations of Preferences, Rights and Limitations of Series F Variable Rate Convertible Preferred Stock+++
(3)(ii)(1)	Bylaws*
(3)(ii)(2)	Amended and Restated Bylaws**
(4)	Specimen of common stock certificate*
(4)(i)	Form of Stock Purchase Warrant *
(10)(i)	Secured debt addendum *
(10)(ii)	Employment agreement with chief executive officer
(10)(iii)	Consulting agreement for chief financial officer
(10)(iv)	Form of indemnification agreements
(10)(v)	Consulting agreement with ADP Management
(10)(vi)	Settlement agreement with Bluestone Advisors
(10)(vii)	Note payable agreement with ADP Management
(10)(viii)	Settlement agreement with Advance Technology Investors
(10)(ix)	Corporate office sublease agreement
31.1	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*	Previously filed
**	Previously filed as exhibit to 10-K for the year ended September 30, 2009
***	Previously filed as exhibit to 8-K, September 11, 2009
+	Previously filed as exhibit to 8-K, March 29, 2010
++	Previously filed as exhibit to 8-K, December 18, 2013
+++	Previously filed as part of Definitive Information Statement on Form 14C, May 21, 2014

38

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

ActiveCare, Inc.

By:   /s/  James J. Dalton

      James J. Dalton, Chief Executive Officer

      (Principal Executive Officer)

Date: January 13, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ James J. Dalton
James J. Dalton	Director, Chairman, and Chief Executive Officer	January 13, 2016
	(Principal Executive Officer)
/s/ Jeffrey S. Peterson
Jeffrey Peterson	Director, Chief Financial Officer, and Vice President of Finance (Principal Financial Officer)	January 13, 2016
	(Principal Accounting Officer)
/s/ Robert J. Welgos
Robert J. Welgos	Director	January 13, 2016

39

Index to Consolidated Financial Statements
	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of September 30, 2015 and 2014	F-3
Consolidated Statements of Operations for the Years Ended September 30, 2015 and 2014	F-5
Consolidated Statements of Stockholders' Deficit for the Years Ended September 30, 2015 and 2014	F-6
Consolidated Statements of Cash Flows for the Years Ended  September 30, 2015 and 2014	F-8
Notes to Consolidated Financial Statements	F-10

F - 1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders of ActiveCare, Inc.

We have audited the accompanying consolidated balance sheets of ActiveCare, Inc. and subsidiaries (collectively, the Company) as of September 30, 2015 and 2014, and the related consolidated statements of operations, stockholders' deficit, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ActiveCare, Inc. and subsidiaries as of September 30, 2015 and 2014, and the results of their operations and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company has recurring losses, negative cash flows from operating activities, negative working capital, negative total equity, and certain debt that is in default.  These conditions, among others, raise substantial doubt about its ability to continue as a going concern.  Management's plans regarding these matters are also discussed in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Tanner LLC

Salt Lake City, Utah

January 13, 2016.

F - 2

ActiveCare, Inc.
Consolidated Balance Sheets
As of September 30, 2015 and 2014
	2015			2014
Assets
Current assets:
Cash		$	172,436		$	197,027
Accounts receivable, net			936,866			1,635,660
Inventory			742,471			1,649,320
Prepaid expenses and other			523,561			141,087
Assets of discontinued operations			-			712,403
Total current assets			2,375,334			4,335,497
Goodwill			-			825,894
Property and equipment, net			135,770			220,076
Deposits and other assets			17,846			29,594
Domain name, net			10,010			10,724
Total assets		$	2,538,960		$	5,421,785

See accompanying notes to consolidated financial statements.

F - 3

ActiveCare, Inc.
Consolidated Balance Sheets (continued)
As of September 30, 2015 and 2014
	2015			2014
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable	$	4,493,211		$	4,549,451
Accounts payable, related party		162,797			1,109,775
Accrued expenses		743,967			1,451,331
Current portion of notes payable		1,259,916			1,212,937
Current portion of notes payable, related party		492,495			1,669,620
Dividends payable		567,350			246,738
Derivatives liability		79,347			106,444
Total current liabilities		7,799,083			10,346,296
Notes payable, related party, net of current portion		3,348,251			-
Notes payable, net of current portion		-			219,048
Total liabilities		11,147,334			10,565,344
Stockholders' deficit:
Preferred stock, $.00001 par value: 10,000,000 shares authorized; 45,000 shares of Series D; 70,070 shares of Series E; and 5,361 shares of Series F outstanding		1			1
Common stock, $.00001 par value: 200,000,000 shares authorized; 78,113,971 and 45,815,351 shares outstanding, respectively		781			458
Additional paid-in capital, common and preferred		83,231,002			73,183,429
Accumulated deficit		(91,840,158	)		(78,327,447	)
Total stockholders' deficit		(8,608,374	)		(5,143,559	)
Total liabilities and stockholders' deficit	$	2,538,960		$	5,421,785

See accompanying notes to consolidated financial statements.

F - 4

ActiveCare, Inc.
Consolidated Statements of Operations
For the Years Ended September 30, 2015 and 2014
	2015			2014
Chronic illness monitoring revenues	$	6,597,981		$	6,107,941
Chronic illness monitoring cost of revenues		5,196,827			6,437,943
Gross profit (loss)		1,401,154			(330,002	)
Operating expenses:
Selling, general and administrative (including $5,762,755, and $3,585,379, respectively, of stock-based compensation)		10,358,410			9,800,374
Research and development		106,526			215,074
Total operating expenses		10,464,936			10,015,448
Loss from operations		(9,063,782	)		(10,345,450	)
Other income (expense):
Gain on liability settlements		260,830			-
Gain on derivatives liability		128,942			373,293
Gain on lease termination		91,692			-
Other income		14,129			55,368
Loss on induced conversion of debt		-			(114,098	)
Loss on disposal of property and equipment		(42,336	)		(42,094	)
Impairment of goodwill		(825,894	)		-
Loss on extinguishment of debt		(927,784	)		-
Interest expense, net		(977,234	)		(1,936,039	)
Total other expense		(2,277,655	)		(1,663,570	)
Loss from continuing operations		(11,341,437	)		(12,009,020	)
Loss from discontinued operations		(186,232	)		(1,452,567	)
Net loss		(11,527,669	)		(13,461,587	)
Dividends on preferred stock		(994,983	)		(737,138	)
Deemed dividends on conversion of accrued dividends to common stock		(301,097	)		-
Deemed dividends on conversion of preferred stock to common stock		-			(2,234,924	)
Net loss attributable to common stockholders	$	(12,823,749	)	$	(16,433,649	)
Net loss per common share - basic and diluted
Continuing operations	$	(0.25	)	$	(0.43	)
Discontinued operations		(0.00	)		(0.04	)
Net loss per common share	$	(0.25	)	$	(0.47	)
Weighted average common shares outstanding – basic and diluted		51,444,000			35,010,000

See accompanying notes to consolidated financial statements.

F - 5

ActiveCare, Inc.
Consolidated Statements of Stockholders' Deficit
For the Years Ended September 30, 2015 and 2014
	Preferred Stock
	Series C							Series D							Series E					Series F					Common Stock					Additional				Accumulated
	Shares			Amount				Shares			Amount				Shares		Amount			Shares		Amount			Shares		Amount			Paid-in Capital				Deficit				Total
Balance, September 30, 2013		480,000			$	5			938,218			$	9			61,723		$	1		-		$	-		21,775,303		$	218		$	62,519,544			$	(64,817,684	)		$	(2,297,907	)
Issuance of common stock for:
Services		-				-			-				-			-			-		-			-		10,896,970			109			749,896				-				750,005
Finance fees		-				-			-				-			-			-		-			-		349,822			3			41,888				-				41,891
Loan origination fees		-				-			-				-			-			-		-			-		161,738			1			163,069				-				163,070
Debt conversions		-				-			-				-			-			-		-			-		3,712,549			37			2,447,889				-				2,447,926
Dividends and related interest		-				-			-				-			-			-		-			-		271,343			3			148,241				-				148,244
Option exercises		-				-			-				-			-			-		-			-		1,723,100			17			541,222				-				541,239
Conversion of Series C preferred stock		(480,000	)			(5	)		-				-			-			-		-			-		672,000			7			(2	)			-				-
Conversion of Series D preferred stock		-				-			(893,218	)			(9	)		-			-		-			-		6,252,526			63			(54	)			-				-
Issuance of Series E preferred stock for debt conversions		-				-			-				-			8,347			-		-			-		-			-			83,473				-				83,473
Issuance of Series F preferred stock for:
Debt conversions		-				-			-				-			-			-		858			-		-			-			574,592				-				574,592
Cash, net		-				-			-				-			-			-		4,503			-		-			-			2,175,002				1,405,769				3,580,771
Stock-based compensation		-				-			-				-			-			-		-			-		-			-			2,051,758				-				2,051,758
Issuance of options for:
Debt conversions		-				-			-				-			-			-		-			-		-			-			590,887				-				590,887
Services		-				-			-				-			-			-		-			-		-			-			263,117				-				263,117
Beneficial conversion features on debt		-				-			-				-			-			-		-			-		-			-			116,100				-				116,100
Amortization of Series F preferred stock as dividends		-				-			-				-			-			-		-			-		-			-			716,807				(716,807	)			-
Net loss		-				-			-				-			-			-		-			-		-			-			-				(13,461,587	)			(13,461,587	)
Dividends on preferred stock		-				-			-				-			-			-		-			-		-			-			-				(737,138	)			(737,138	)
Balance, September 30, 2014		-			$	-			45,000			$	-			70,070		$	1		5,361		$	-		45,815,351		$	458		$	73,183,429			$	(78,327,447	)		$	(5,143,559	)

See accompanying notes to consolidated financial statements.

F - 6

ActiveCare, Inc.

Consolidated Statements of Stockholders' Deficit

For the Years Ended September 30, 2015 and 2014

	Preferred Stock
	Series C					Series D					Series E					Series F					Common Stock					Additional			Accumulated
	Shares		Amount			Shares		Amount			Shares		Amount			Shares		Amount			Shares		Amount			Paid-in Capital			Deficit				Total
Balance, September 30, 2014		-		$	-		45,000		$	-		70,070		$	1		5,361		$	-		45,815,351		$	458		$	73,183,429		$	(78,327,447	)		$	(5,143,559	)
Issuance of common stock for:
Services		-			-		-			-		-			-		-			-		22,047,659			220			4,088,675			-				4,088,895
Finance fees		-			-		-			-		-			-		-			-		509,976			5			89,392			-				89,397
Loan origination fees		-			-		-			-		-			-		-			-		6,250,000			63			1,129,937			-				1,130,000
Dividends and related interest		-			-		-			-		-			-		-			-		3,490,985			35			975,433			(301,097	)			674,371
Stock-based compensation		-			-		-			-		-			-		-			-		-			-			3,032,304			-				3,032,304
Issuance of options for services		-			-		-			-		-			-		-			-		-			-			42,870			-				42,870
Amortization of Series F preferred stockas dividends		-			-		-			-		-			-		-			-		-			-			688,962			(688,962	)			-
Net loss		-			-		-			-		-			-		-			-		-			-			-			(11,527,669	)			(11,527,669	)
Dividends on preferred stock		-			-		-			-		-			-		-			-		-			-			-			(994,983	)			(994,983	)
Balance, September 30, 2015		-		$	-		45,000		$	-		70,070		$	1		5,361		$	-		78,113,971		$	781		$	83,231,002		$	(91,840,158	)		$	(8,608,374	)

See accompanying notes to consolidated financial statements.

F - 7

ActiveCare, Inc.
Consolidated Statements of Cash Flows
For the Years Ended September 30, 2015 and 2014
	2015			2014
Cash flows from operating activities:
Net loss	$	(11,527,669	)	$	(13,461,587	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		4,864,864			3,378,938
Loss on extinguishment of debt		927,784			-
Stock and warrants issued for services		897,891			206,441
Impairment of goodwill		825,894			-
Stock and warrants issued for interest expense		647,679			883,118
Depreciation and amortization		290,700			1,122,862
Loss on disposal of property and equipment		42,336			61,239
Gain on lease termination		(91,692	)		-
Gain on derivatives liability		(128,942	)		(373,293	)
Gain on liability settlements		(260,830	)		-
Inventory reduction for obsolescence		-			1,660,729
Amortization of debt discounts		-			919,032
Impairment of long-lived assets		-			497,792
Loss on induced conversion of debt and sale of common stock		-			114,098
Changes in operating assets and liabilities:
Accounts receivable		698,794			216,668
Inventory		906,849			1,367,477
Prepaid expenses and other		20,400			(48,494	)
Accounts payable		892,170			(1,193,106	)
Accrued expenses		215,054			157,652
Deposits and other assets		-			77,355
Net cash used in operating activities		(778,718	)		(4,413,079	)
Cash flows from investing activities:
Proceeds from sale of discontinued operations		478,738			-
Proceeds from sale of property and equipment		938			-
Purchases of property and equipment		(15,289	)		(70,043	)
Cash used to dispose of property and equipment		-			(29,078	)
Net cash provided by (used in) investing activities		464,387			(99,121	)
Cash flows from financing activities:
Proceeds from issuance of notes payable, net		1,262,490			680,000
Principal payments on notes payable		(957,750	)		(1,036,809	)
Principal payments on related-party notes payable		(15,000	)		(1,204,166	)
Proceeds from sale of preferred stock, net		-			3,580,771
Proceeds from issuance of related-party notes payable, net		-			2,801,166
Payment of dividends		-			(335,570	)
Net cash provided by financing activities		289,740			4,485,392
Net decrease in cash		(24,591	)		(26,808	)
Cash, beginning of the year		197,027			223,835
Cash, end of the year	$	172,436		$	197,027

See accompanying notes to consolidated financial statements.

F - 8

ActiveCare, Inc.
Consolidated Statements of Cash Flows (continued)
For the Years Ended September 30, 2015 and 2014
	2015		2014
Supplemental Cash Flow Information:
Cash paid for interest	$	24,883	$	219,717
Non-Cash Investing and Financing Activities:
Conversion of related-party accounts payable and accrued liabilities to related-party notes payable	$	1,839,214	$	-
Issuance of stock for dividends		975,468		144,642
Dividends on preferred stock and related interest		994,983		737,138
Issuance of common stock for prepaid consulting services		645,000		-
Conversion of accounts payable to notes payable		100,000		-
Issuance of stock and stock options for loan origination fees		89,397		370,633
Conversion of related-party notes payable to common stock		-		1,782,738
Conversion of notes payable to preferred stock		-		633,254
Conversion of notes payable to common stock		-		325,000
Liability to issue shares of common stock for loan origination fees		-		234,793

See accompanying notes to consolidated financial statements.

F - 9

ActiveCare, Inc.

Notes to Consolidated Financial Statements

September 30, 2015 and 2014

1.Organization and Nature of Operations

ActiveCare, Inc. ("ActiveCare" or the "Company") was formed March 5, 1998.  In July 2009, ActiveCare was reincorporated in Delaware.  The Company provides products and services to those diagnosed with chronic illnesses, provides real-time visibility to health conditions and risk, and has a unique active approach in caring for members.

Going Concern

The Company continues to incur negative cash flows from operating activities and net losses.  The Company had negative working capital and negative total equity as of September 30, 2015 and 2014 and is in default with respect to certain debt.  These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In order for the Company to eliminate substantial doubt about its ability to continue as a going concern, it must achieve profitability, generate positive cash flows from operating activities and obtain the necessary debt or equity funding to meet its projected capital investment requirements.  Management's plans with respect to this uncertainty consist of raising additional capital by issuing debt or equity securities and increasing the sales of the Company's services and products.  There can be no assurance that the Company will be able to raise sufficient additional capital or that revenues will increase rapidly enough to achieve operating profits.  If the Company is unable to increase revenues or obtain additional financing, it will be unable to continue the development of its products and services and may have to cease operations.

2.             Summary of Significant Accounting Policies

Principles of Accounting and Consolidation

These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("US GAAP").  The consolidated financial statements include the accounts of ActiveCare and its wholly owned subsidiaries.  All significant intercompany balances and transactions have been eliminated.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet dates and the reported amounts of revenues and expenses for the reporting periods. Actual results could differ from these estimates.

Discontinued Operations

In December 2014, the Company sold substantially all of its customer contracts and equipment leased to customers associated with its CareServices segment to a third party.  Additional equipment held in stock was sold to another third party pursuant to a written invoice.  The purchase price included a cash payment of $412,280 for the customer contracts and $66,458 for the equipment held in stock.  During fiscal years 2015 and 2014, the Company recognized a loss from discontinued operations related to CareServices of $186,232    and $1,452,567, respectively.

Fair Value of Financial Instruments

The Company measures the fair values of its assets and liabilities using the US GAAP hierarchy.  The carrying amounts reported in the 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.

F - 10

Concentrations of Credit Risk

The Company has cash in bank accounts that, at times, may exceed federally insured limits.  The Company has not experienced any losses in these accounts.

In the normal course of business, the Company provides credit terms to its customers and requires no collateral.  The Company performs ongoing credit evaluations of its customers' financial condition.  The Company maintains an allowance for doubtful accounts receivable based upon management's specific review and assessment of each account at year end.

For fiscal year 2015, the Company had revenues from three significant customers which represented 69% of total revenues.  For fiscal year 2014, the Company had revenues from two significant customers which represented 67% of total revenues.  As of September 30, 2015 and 2014, accounts receivable from significant customers represented 66%and 80% of total accounts receivable, respectively.

For fiscal years 2015 and 2014, the Company purchased substantially all of its products and supplies from one vendor.

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.  Interest is not charged on accounts receivable that are past due.  The Company recorded an allowance for doubtful accounts of $30,495 and $115,994 as of September 30, 2015 and 2014, respectively.

Inventory

Inventory is recorded at the lower of cost or market, cost being determined using the first-in, first-out ("FIFO") method. Inventory consists of diabetic supplies.  Inventory held by distributors is reported as inventory until the supplies are shipped to the end user by the distributor.  The Company estimates 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.  Inventory consists of the following as of September 30:

	2015			2014
Finished goods	$	206,038		$	589,423
Finished goods held by distributors		1,350,368			2,720,626
Total inventory		1,556,406			3,310,049
Inventory reserve		(813,935	)		(1,660,729	)
Net inventory	$	742,471		$	1,649,320

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization.  Depreciation and amortization are determined using the straight-line method over the estimated useful lives of the assets, which range from 3 to 7 years.  Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the terms of the lease.  Expenditures for maintenance and repairs are expensed as incurred.  Upon the sale or disposal of property and equipment, any gains or losses are included in the results of operations.

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.  The annual testing date is September 30.  The identification and measurement of goodwill impairment involves the estimation of the fair value 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 $825,894 as of September 30, 2015.  The impairment of goodwill was due to a potentially long-term reduction in the market capitalization of the Company subsequent to September 30, 2015.  Goodwill was not impaired as of September 30, 2014.

Impairment of Long-Lived Assets

Purchased intangible assets with finite lives were 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 impaired as of September 30, 2015.  The Company impaired its CareServices customer contracts by $89,460 and patents by $408,332 as of September 30, 2014, which were recorded as part of discontinued operations related to the CareServices segment for the fiscal year ended September 30, 2014.  The impairment of the customer contracts was due to their sales price being lower than the net book value as of the date of sale.  The patents impaired were solely related to the CareServices segment and provided no future cash flows after the CareServices customer contracts and equipment leased to customers were sold in December 2014. 

Revenue Recognition

For the years presented, revenues came from two sources: (1) sales of Chronic Illness Monitoring products and services; and (2) sales from CareServices.  The CareServices segment was sold in December 2014.  Information regarding revenue recognition policies relating to these business segments 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.

The Company enters 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.  The Company also monitors the end user's test results in real-time with the Company's 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 for another year.  Collection terms are net 30 days after claims are submitted.  There is no contingent revenue in these contracts.

The Company also enters 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 the Company 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.  Sales of Chronic Illness Monitoring products and services contain multiple elements.

F - 11

Multiple-Element Arrangements

The Company evaluates 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 the Company's monitoring services, whether the Company sells 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 the Company's multiple-element contracts is allocated to supplies and monitoring through application of the relative fair value method.

During the three months ended June 30, 2014, the Company began to provide enhanced monitoring services to a key customer, which pays a separate monthly monitoring fee.  Beginning in the three months ended June 30, 2015, the Company's sales initiatives under the direction of new executive management became focused on the monitoring of end users.  This monitoring is accounted for as an element with stand-alone value.

CareServices

CareServices included contracts in which the Company leased monitoring devices and provided monitoring services to end users.  The Company typically entered into contracts on a month-to-month basis with end users that used CareServices.  These contracts could be cancelled by either party at any time with 30-days' notice.  Under a standard contract, the device and service became billable on the date the end user ordered the device, and remained billable until the device was returned to the Company.  Revenues were recognized at the end of each month the service had been provided.  In those circumstances in which payment was received in advance, the Company recorded deferred revenue.

CareServices revenue was recognized when persuasive evidence of an arrangement existed, delivery of the device or service had occurred, prices were fixed or determinable and collection was reasonably assured.  Shipping and handling fees were included as part of net revenues.  The related freight costs and supplies directly associated with shipping products to end users were included as a component of cost of revenues.  All CareServices sales were made with net 30-day payment terms.

Research and Development Costs

All expenditures for research and development are charged to expense as incurred.  Research and development expenses for fiscal years 2015 and 2014 were $106,526 and $215,074 respectively. The expenditures for fiscal year 2015 and 2014 were for ongoing software improvements for the Chronic Illness Monitoring operating system and customer portal.

Advertising Costs

The Company expenses advertising costs as incurred.  Advertising expenses for fiscal years 2015 and 2014 were $30,551 and $48,778, respectively.  Advertising expenses primarily related to the Company's Chronic Illness Monitoring segment for the fiscal years ended 2015 and 2014.

Income Taxes

The Company recognizes deferred income tax assets or liabilities for the expected future tax consequences of events that have been recognized in the financial statements or income tax returns. Deferred income tax assets or liabilities are determined based upon the difference between the financial reporting bases and tax reporting bases of assets and liabilities using enacted tax rates expected to apply when the differences are expected to be settled or realized.  Deferred income tax assets are reviewed periodically for recoverability and valuation allowances are provided as necessary.  As of September 30, 2015, management has provided a 100% allowance against deferred income tax assets as it is more likely than not these assets will not be realized.  Interest and penalties related to income tax liabilities, when incurred, are classified in interest expense and income tax provision, respectively.

F - 12

Warrant Exercises and Note Conversions

The Company issues common shares in connection with warrant exercises when it has received verification that the proceeds have been deposited and when it has received an exercise letter from the warrant holder.  The Company issues common shares in connection with note conversions after it verifies the outstanding note balance and the eligibility of conversion, and has received a conversion letter from the lender.

Stock-Based Compensation

The Company measures 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 statements 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.

Net Loss Per Common Share

Basic net loss per common share ("Basic EPS") is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the year.

Diluted net loss per common share ("Diluted EPS") is computed by dividing net loss available to common stockholders by the sum of the weighted average number of common shares outstanding and the weighted-average dilutive common share equivalents outstanding.  The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect.

Common share equivalents consist of shares issuable upon the exercise of common stock warrants and options, shares issuable from restricted stock grants, and shares issuable from convertible notes and convertible Series D, Series E and Series F preferred stock.  As of September 30, 2015 and 2014, there were 39,111,621 and 17,199,080 outstanding common share equivalents, respectively, that were not included in the computation of Diluted EPS as their effect would be anti-dilutive.  The common stock equivalents outstanding consist of the following as of September 30:

	2015		2014
Common stock options and warrants		9,497,551		10,991,576
Series D convertible preferred stock		225,000		225,000
Series E convertible preferred stock		477,830		477,830
Series F convertible preferred stock		16,065,328		5,361,000
Convertible debt		12,838,412		133,924
Restricted shares of common stock		7,500		9,750
Total common stock equivalents		39,111,621		17,199,080

Recent Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 states that only disposals representing strategic shifts in operations that have, or will have, a major effect on an entity's operations should be reported as discontinued operations when any of the following occurs: The component of an entity or group of components of an entity is classified as held for sale, the component of an entity or group of components of an entity is disposed of by sale, or the component of an entity or group of components of an entity is disposed of other than by sale. ASU 2014-08 is effective for annual periods beginning on or after December 15, 2014, and interim periods therein, which is effective for the Company for the quarter ending December 31, 2015.  Early adoption is not permitted.  The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position and results of operations.

F - 13

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under US GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing US GAAP. In August 2015, the FASB voted to defer the effective date of the new revenue standard by one year. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, which will be effective for the Company for the quarter ending December 31, 2018. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. This standard sets forth management's responsibility to evaluate, each reporting period, whether there is substantial doubt about the Company's ability to continue as a going concern, and if so, to provide related disclosures. The standard is effective for annual reporting periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016, which will be effective for the Company for the quarter ending December 31, 2017. The Company is assessing the impact, if any, of implementing this guidance on its evaluation of going concern.

In November 2014, the FASB issued ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The ASU clarifies how current guidance should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of a host contract. The ASU is effective for fiscal years and interim periods beginning after December 15, 2015, which will be effective for the Company for the quarter ending December 31, 2016. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements. The purpose of this ASU is to clarify guidance, correct unintended application of guidance, or make minor improvements to guidance. The ASU is effective for fiscal years and interim periods beginning after December 15, 2015, which will be effective for the Company for the quarter ending December 31, 2016. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

In July 2015, the FASB issued ASU 2015-11, Inventory: Simplifying the Measurement of Inventory. The purpose of this ASU is to more closely align the measurement of inventory in U.S. GAAP with the measurement of inventory in International Financial Reporting Standards. This ASU requires entities to measure most inventory at the "lower of cost and net realizable value." Additionally, some of the amendments are designed to more clearly articulate the requirements for the measurement and disclosure of inventory. The ASU is effective for fiscal years and interim periods beginning after December 15, 2016, which will be effective for the Company for the quarter ending December 31, 2017. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

3. Discontinued Operations

In December 2014, the Company sold substantially all of its customer contracts and equipment leased to customers associated with its CareServices segment.  Additional equipment held in stock was sold to the buyer pursuant to a written invoice.  The purchase price included a cash payment of $412,280 for the customer contracts and $66,458 for the equipment held in stock.  The sale included all segment assets that generated revenue related to the CareServices segment.  The Company no longer holds any ownership interest in these assets and has ceased incurring costs related to the operations and development of the CareServices segment.  This segment was engaged in the business of developing, distributing and marketing mobile health monitoring and concierge services to distributors and consumers.  The debt secured by the CareServices customer contracts was amended in January 2015 and remains an obligation of the Company (see Note 8).  There were no material liabilities of discontinued operations.  Assets of discontinued operations consist of the following as of September 30:

	2015		2014
Customer contracts, net	$	-	$	569,250
Equipment leased to customers, net		-		111,435
Patents, net		-		31,718
Total assets of discontinued operations	$	-	$	712,403

F - 14

As a result of the sale of the CareServices assets, the Company has reflected this segment as discontinued operations in the consolidated financial statements for fiscal years 2015 and 2014.  The following table summarizes certain operating data for discontinued operations for fiscal years 2015 and 2014:

	2015			2014
Revenues	$	152,686		$	1,003,238
Cost of revenues		127,709			881,753
Gross profit		24,977			121,485
Selling, general and administrative expenses		(211,209	)		(1,047,629	)
Impairment of long-lived assets		-			(497,792	)
Loss on disposal of property and equipment		-			(18,746	)
Other expense		-			(9,885	)
Loss from discontinued operations	$	(186,232	)	$	(1,452,567	)

4. Customer Contracts

The Company was amortizing Chronic Illness Monitoring customer contracts acquired during 2012 over their estimated useful lives (through 2014).  As of September 30, 2015 and 2014, the cost associated with these customer contracts was $214,106 and the accumulated amortization was $214,106. Amortization expense related to these contracts for fiscal years 2015 and 2014 was $0 and $57,220, respectively.

The Company sold substantially all of the CareServices customer contracts during December 2014.  The Company impaired the CareServices customer contracts as of September 30, 2014 by $89,460, which was included as part of discontinued operations for fiscal year 2014.  As of September 30, 2015 and 2014, customer contracts totaled $0 and $2,066,316, respectively, and the related accumulated amortization was $0 and $1,497,067, respectively.  Amortization expense related to the CareServices segment for fiscal years 2015 and 2014 was $179,648 and $718,592, respectively.

F - 15

5. Property and Equipment

Property and equipment consist of the following as of September 30:

	2015			2014
Software	$	100,574		$	100,574
Leasehold improvements		98,023			151,287
Furniture		68,758			69,776
Equipment		59,754			54,732
Total property and equipment		327,109			376,369
Accumulated depreciation and amortization		(191,339	)		(156,293	)
Property and equipment, net	$	135,770		$	220,076

Assets to be disposed of are reported at the lower of the carrying amounts or fair values, less the estimated costs to sell or dispose.  During fiscal years 2015 and 2014, the Company recorded a loss on the disposal of assets of $42,336 and $61,239, respectively.  During December 2014, the Company sold all of its equipment leased to customers (see Note 3).  Depreciation expense for fiscal years 2015 and 2014 was $56,321 and $219,465, respectively.

6. Patents

During fiscal year 2009, the Company licensed the use of certain patents from a third party.  Under the license agreement, the Company was required to pay $300,000 plus a 5% royalty on the net sales of all licensed products. As of September 30, 2009, the Company capitalized the initial license fee as a long-term asset.

During fiscal year 2012, the Company agreed to purchase the related patents and settle amounts owed under the license agreement by issuing 600,000 shares of common stock and 480,000 shares of Series C preferred stock.  The patents were valued at $922,378, based on a valuation performed by an independent third party.  The value of the common stock issued was $240,000, based on the market price of the common stock on the date of issuance. The implied value of the Series C was $682,378, which was based on the difference between the value of the patents and the common stock issued in settlement of the existing liability. 

Amortization expense for fiscal years 2015 and 2014 was $31,718 and $126,870, respectively.  The Company impaired the patents as of September 30, 2014 by $408,332, which was included as part of discontinued operations for the fiscal year ended September 30, 2014 (see Note 3).  As of September 30, 2015 and 2014, the cost associated with the patents was $514,046 and the accumulated amortization was $514,046 and $482,328, respectively.

F - 16

7. Accrued Expenses

Accrued expenses consist of the following as of September 30:

	2015		2014
Payroll expense	$	270,974	$	308,529
Interest		190,045		59,091
Deferred revenue		147,344		18,534
Commissions and fees		64,432		453,744
Liability to issue common stock		40,000		522,087
Other		31,172		-
Deferred rent		-		89,346
Total accrued expenses	$	743,967	$	1,451,331

8. Notes Payable

The Company had the following notes payable outstanding as of September 30:

	2015		2014
Secured borrowings from a third party that purchased $693,000 of customer receipts for $550,000, with due dates ranging from November 2015 to September 2016 and payable in daily payments ranging from $955 to $1,909.  The $143,000 difference between the customer receipts and cash received is being amortized to interest expense over the term of the respective notes.  The secured borrowings are guaranteed by two officers of the Company.	$	421,413	$	-
Note payable previously secured by CareServices customer contracts.  In January 2015, the note was amended to reduce the outstanding principal to $375,000, interest at 9%, and payable in 15 monthly installments beginning in February 2015.  The amendment released the collateralized customer contracts and the note payable is guaranteed by both a former Executive Chairman of the Board of Directors and a member of the Board of Directors.  A gain on the extinguishment of the old note of $769,449 was recorded in other income.		303,212		1,103,841
Unsecured note payable with interest at 12%, due November 2015 (extended to February 2016 subsequent to year end).  In connection with the issuance of the note, the Company repriced previously issued warrants to purchase shares of common stock.  The $22,397 increase in relative fair value of the warrants was included as a loss on the extinguishment of the old note in other expense.  The note also required a payment of 3,000,000 shares of common stock.  The fair value of $780,000 was included as a loss on the extinguishment of the old note in other expense.		300,000		-
Secured borrowings from third parties that purchased a $337,600 customer receivable for $200,000, in default.  The Company was able to buy back the receivable for $233,333 less cash received by the third parties before June 2015.  The $33,333 difference between the buyback and cash received plus $20,000 of commission paid to a related party, was amortized to interest expense through June 2015.		233,333		233,333

F - 17

	2015			2014
Unsecured notes payable with interest at 12%, due March 2016 and convertible into common stock at a 15% discount from the 10-day volume adjusted weighted average closing price per share upon maturity.  In connection with the issuance of the notes, the Company issued 509,976 shares of common stock.  The $89,397 fair value of the stock is being amortized to interest expense over the term of the notes.  The notes included loan origination fees of $21,249, which are being amortized to interest expense over the term of the notes.  The Company recorded a derivative in connection with the convertible feature of the notes (see Note 12) and is amortizing the initial $101,884 fair value of the derivatives liability over the life of the notes.	$	212,490		$	-
Unsecured notes with interest at 18%, due April 2013, in default.  The Company issued 20,000 shares of Series D preferred stock as loan origination fees.  The $195,000 fair value of the preferred stock was amortized over the original term of the note.   Principal of $50,000 and accrued interest of $13,333 were converted to common stock in December 2013.		64,261			64,261
Unsecured note payable with no interest, due March 2015.  In connection with the issuance of the note, the Company issued warrants to purchase 450,000 shares of common stock.  The $143,634 relative fair value of the warrants was amortized to interest expense through March 2015.  The note also required a payment of the greater of 667,000 shares of common stock or shares of common stock equal to $500,000 at the end of the term (relative fair value of $230,293).  In May 2015, the note and other payables were converted into an unsecured note payable to the same party.  The conversion resulted in a gain on extinguishment of debt of $230,293.		-			200,000
Total notes payable before discount		1,534,709			1,601,435
Less discount		(274,793	)		(169,450	)
Total notes payable		1,259,916			1,431,985
Less current portion		(1,259,916	)		(1,212,937	)
Notes payable, net of current portion	$	-		$	219,048

As of September 30, 2015, scheduled principal payments on notes payable are as follows:

Year Ending September 30,
2016	$	1,534,709

F - 18

9. Related-Party Notes Payable

The Company had the following related-party notes payable outstanding as of September 30:

	2015		2014
Secured borrowings from entities controlled by an officer that purchased a $2,813,175 customer receivable for $1,710,500.  The Company was able to buy back the receivable for $1,950,000 less cash received by the entities through March 2015.  The $239,500 difference between the buyback and cash received plus $253,500 of loan origination fees was amortized to interest expense through March 2015.  In September 2015, the note was modified to extend the maturity date to January 2017 with interest at 18%.  The Company added $81,600 of extension fees and issued 3,000,000 shares of common stock as part of the modification and the note is convertible into common stock at $0.30 per share.  The $540,000 fair value of the common stock was recognized as a loss on extinguishment of debt	$	1,721,100	$	1,639,500
Unsecured note payable to an entity controlled by an officer with interest at 18%, due January 2017, convertible into common stock at $0.30 per share.  The Company issued 3,000,000 shares of common stock as loan origination fees.  The $540,000 fair value of the common stock was recognized as a loss on extinguishment of debt		1,303,135		-
Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors with no interest (18% in the event of default), due on demand and in default. The former Executive Chairman demanded payment by May 15, 2015.		396,667		-
Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors with interest at 18%, due January 2017.		324,016		-
Unsecured note payable to a former officer with interest at 15%, due June 2012, in default.  The note included a $3,000 loan origination fee added to the principal and is convertible into common stock at $0.50 per share.		30,000		30,000
Unsecured note payable to a former officer with interest at 12%, due September 2013, in default, and convertible into common stock at $0.75 per share.		26,721		26,721
Unsecured note payable to an entity controlled by an officer with interest at 18%, due upon demand.		25,463		-
Unsecured note payable to a former officer with interest at 12%, due on demand.		13,644		13,644

F - 19

	2015			2014
Secured borrowings from a former Executive Chairman of the Board of Directors who purchased a $422,000 customer receivable for $250,000.  The Company was able to buy back the receivable for $291,667 less cash received by the former Executive Chairman before June 2015.  The $41,667 difference between the buyback and cash received plus $25,000 of loan origination fees was to be amortized to interest expense over the buyback term.  In November 2014, the secured borrowings and other advances were converted into an unsecured note payable to the same related party and the remaining discount balance of  $45,129 was recognized as a loss on extinguishment of debt.	$	-		$	291,667
Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors, interest at 12%, due on demand, and convertible into common stock at $0.75 per share.  The Company issued 17,500 shares of common stock as loan origination fees.  The $26,250 fair value of the common stock was amortized to interest expense over the original term of the note, (through September 2013).  In December 2013, $160,000 of the note was converted to common stock.  In September 2015, $15,000 of principal and $10,469 of interest with other payables were converted into an unsecured note payable to the same party.		-			15,000
Total notes payable, related-party, before discount		3,840,746			2,016,532
Less discount		-			(346,912	)
Total notes payable, related-party		3,840,746			1,669,620
Less current portion		(492,495	)		(1,669,620	)
Notes payable, related party, net of current portion	$	3,348,251		$	-

As of September 30, 2015, scheduled principal payments on related-party notes payable are as follows:

Years Ending September 30,
2016	$	492,495
2017		3,348,251

10. Loss on Induced Conversion of Debt and Sale of Common Stock

During the fiscal year ended September 30, 2014, the Company offered a favorable, below market rate to all debt holders of $0.75 of debt per share of common stock to induce conversion of debt to equity.  Debt and accrued interest of approximately $381,000 was converted to shares of common stock.  In addition, debt and accrued interest due to related parties of approximately $1,946,000 was converted to shares of common stock at $0.60 of debt per share of common stock.  The Company also offered the private placement of common stock to existing investors at $0.75 per share, which was below the market price.  The difference between the offered price and the market price of all common stock issued was approximately $114,000 and was recorded as a loss on induced conversion of debt.

11. Fair Value Measurements

The Company measures the fair values of its assets and liabilities using the US GAAP hierarchy levels as follows:

Level 1	The Company does not have any Level 1 inputs available to measure its assets.
Level 2	The Company's embedded derivative liabilities are measured on a recurring basis using Level 2 inputs.
Level 3	The Company's goodwill is measured using Level 3 inputs.

The Company's embedded derivatives liability is re-measured to fair value as of each reporting date until the contingency is resolved.  See Note 12 for more information about derivatives and the inputs used for calculating fair value.

F - 20

12. Derivatives Liability

The derivatives liability as of September 30, 2015 and 2014 was $79,347 and $106,444, respectively.  The derivatives liability as of September 30, 2014 was related to a variable conversion price adjustment on the Series F preferred stock.  The derivatives liability as of December 31, 2014 was eliminated due to the conversion price on Series F preferred stock being adjusted from $1.00 to $0.3337 based on the number of subscribers as of December 31, 2014.  The derivatives liability as of September 30, 2015 is related to a variable conversion price adjustment on outstanding notes payable.

During the fiscal year ended September 30, 2014, the Company estimated the fair value of the embedded derivatives prior to their conversion and elimination using a binomial option-pricing model with the following assumptions, according to the instrument: exercise price of $0.35 per share; risk free interest rate of 0.060%; expected life of 0.50 years; expected dividends of 0%; a volatility factor of 104%; and a stock price of $0.24.  During the fiscal year ended September 30, 2015, the Company estimated the fair value of the embedded derivatives prior to their conversion and elimination using a binomial option-pricing model with the following assumptions, according to the instrument: exercise prices ranging from $0.12 to $0.33 per share; risk free interest rates ranging from 0.010% to 0.260%; expected lives ranging from 0.001 to 0.50 years; expected dividends of 0%; volatility factors ranging from 0.01% to 138.68%; and stock prices ranging from $0.12 to $0.33.  The expected lives of the instruments were equal to the average term of the conversion option.  The expected volatility is based on the historical price volatility of the Company's common stock.  The risk-free interest rate represents the U.S. Treasury constant maturities rate for the expected life of the related conversion option. The dividend yield represents anticipated cash dividends to be paid over the expected life of the conversion option.  The Company recognized a gain on derivatives liability for fiscal years ended 2015 and 2014 of $128,942 and $373,293, respectively.

13. 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.

Series C Convertible Preferred Stock

As of September 30, 2013, the Company had 480,000 shares of Series C convertible preferred stock issued and outstanding ("Series C preferred stock").  In December 2013, all 480,000 shares of Series C preferred stock were converted to 672,000 shares of common stock.  The conversion rate of 1.4 shares of common stock was greater than the designated conversion rate of one share of common stock and, therefore, the fair value of the additional 192,000 shares was recorded as a deemed dividend. During fiscal year 2014, the Company accrued $11,367 of dividends on Series C preferred stock and settled the accrued dividends by issuing 11,599 shares of common stock.  The Series C preferred stock was non-voting.

Series D Convertible Preferred Stock

The Board of Directors has designated 1,000,000 shares of preferred stock as Series D convertible preferred stock ("Series D preferred stock").  The Series D preferred stock is voting on an as-converted basis.  The Series D preferred stock has a dividend rate of 8%, payable quarterly.  The Company may redeem the Series D preferred shares at a redemption price equal to 120% of the original purchase price with 15 days' notice. In December 2013, 893,218 shares of Series D preferred stock were converted to 6,252,526 shares of common stock.   The conversion rate of 7 shares of common stock was greater than the designated conversion rate of 5 shares of common stock and, therefore, the fair value of the additional 1,786,436 shares was recorded as a deemed dividend. During fiscal year 2015, the Company accrued $24,800 of dividends on Series D preferred stock and settled $31,051 of accrued dividends by issuing 118,068 shares of common stock.

During fiscal year 2014, the Company accrued $84,212 of dividends on Series D preferred stock and settled $77,961 of the accrued dividends by issuing 85,477 shares of common stock.

F - 21

Series E Convertible Preferred Stock

During fiscal year 2013, the Board of Directors designated shares of preferred stock as Series E convertible preferred stock ("Series E preferred stock").  Series E preferred stock is convertible into common stock at $1.00 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 stock 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 stock is gradually reduced by dividend payments over 25 to 32 months.  After the dividend payment term, the redemption price of Series E preferred stock is $0, the Series E preferred stock 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.

During fiscal year 2014, $83,473 of debenture loans and accrued interest converted into 8,347 shares of Series E preferred stock.  During fiscal years 2015 and 2014, the Company accrued dividends of $326,863 and $320,071, respectively, to Series E preferred shareholders.  During fiscal years 2015 and 2014, the Company paid dividends of $0 and $258,284, respectively, to Series E preferred shareholders.  As of September 30, 2015 and 2014, the redemption price for the Series E preferred stock was $477,829.

Series F Convertible Preferred Stock

During fiscal year 2014, the Board of Directors designated 7,803 shares of preferred stock as Series F convertible preferred stock ("Series F preferred stock").  In April 2014, the Company increased the authorized shares of Series F preferred stock to 10,000.  Series F preferred stock is non-voting, has a stated value of $1,000 and is convertible into common stock at $0.3337 per share (see Note 12).  The Series F preferred stock has a dividend rate, payable quarterly, of 8% until April 30, 2015, 16% from May 1, 2015 to July 31, 2015, 20% from August 1, 2015 to October 31, 2015 and 25% thereafter.

During fiscal year 2014, the Company issued 5,361 shares of Series F preferred stock for net proceeds of $3,580,771, after considering $675,229 of related costs, and the conversion of $574,592 of debt and accrued interest.  During fiscal years 2015 and 2014, the Company accrued dividends of $643,320 and $322,730 to Series F preferred shareholders.  During fiscal year 2015, the Company settled $643,320 of dividends on Series F preferred stock by issuing 3,372,917 shares of common stock.  The conversion rate of $0.19 per common share was greater than the designated conversion rate and, therefore, the additional fair value of $301,097 was recorded as a deemed dividend.  During fiscal year 2014, the Company settled $144,030 of dividends plus $3,601 of accrued interest on Series F preferred stock by paying $73,815 in cash and issuing 184,541 shares of common stock.

Liquidation Preference

Upon any liquidation, dissolution or winding up of the Company, before any distribution or payment may be made to the holders of the common stock, the holders of the Series D preferred stock, Series E preferred stock, and Series F preferred stock are entitled to be paid out of the assets an amount equal to $1.00 per share plus all accrued but unpaid dividends.  If the assets of the Company are insufficient to make payment in full to all holders of preferred stock, then the assets shall be distributed among the holders of preferred stock ratably in proportion to the full amounts to which they would otherwise be entitled.

14. Common Stock

In April 2014, the Company amended its Certificate of Incorporation increasing the total number of authorized shares of common stock from 50,000,000 shares to 200,000,000 shares.

F - 22

During fiscal year 2015, the Company issued the following shares of common stock:

· 290,000 shares to the former Interim Chief Executive Officer for future services, the value on the date of grant was $69,600.  The shares originally vested quarterly over two years, but fully vested upon the mutual resignation of the former Interim Chief Executive Officer during March 2015;

· 7,177,103 shares for employee compensation for past services and bonuses, the value on the date of grant was $1,761,606;

· 118,068 shares to settle accrued dividends for Series D preferred stock, the value on the date of grant was $31,051;

· 275,000 shares as part of a settlement agreement on accounts payable, the value on the date of grant was $68,750;

· 3,000,000 shares as part of a settlement agreement on notes payable and accounts payable that resulted in a new note payable, the value on the date of grant was $780,000 which is included in loss on extinguishment of debt;

· 2,000,000 shares to the Executive Chairman of the Board of Directors for services for the calendar year 2015, according to an agreement entered into prior to appointment as the Executive Chairman, the value on the date of grant was $600,000;

· 4,000,000 shares to the Executive Chairman of the Board of Directors for future services, according to an employment agreement entered into for further appointment as the Chief Executive Officer.  The value on the date of grant was $720,000.  The shares vest monthly over two years;

· 305,556 shares to the Executive Chairman of the Board of Directors for a future bonus to be earned for additional end users (300 shares for each new end user). The value on the date of grant was $55,000.  Additional shares may be issued to the Executive Chairman of the Board of Directors for additional end users acquired through December 2015;

· 2,000,000 shares to the Chief Financial Officer for future services according to a consulting agreement, the value on the date of grant was $360,000.  The shares vest monthly over two years;

· 3,372,917 shares to settle accrued dividends for Series F preferred stock, the value on the date of grant was $944,417;

· 2,750,000 shares for services provided by independent consultants, the value on the date of grant was $770,000;

· 250,000 shares to an entity controlled by the former Executive Chairman of the Board of Directors for services provided, the value of the shares on the date of grant was $53,500.

· 250,000 shares for future services to be provided by an independent consultant, the value at the date of grant was $45,000;

· 509,976 shares for notes payable origination fees, the value on the date of grant was $89,397;

· 6,000,000 shares to an entity controlled by an officer of the Company for related-party notes payable origination fees, the value on the date of grant was $1,080,000.

The fair value of unvested common stock as of September 30, 2015 was $2,607,016.

15. Common Stock 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.  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 valuation model due to the Company's short trading history.  The risk-free rate related to the expected term of the stock options or warrants is based on the U.S. Treasury yield curve in effect at the time of grant.  The dividend yield is zero.

F - 23

During fiscal years 2015 and 2014, the Company measured the fair value of the warrants using a binomial valuation model with the following assumptions:

	2015		2014
Exercise price	$	0.30 - $1.00	$	0.50 - $1.40
Expected term (years)		1 - 2		1 - 3
Volatility		228% - 302%		101% - 216%
Risk-free rate		0.22% - 0.63%		0.11% - 0.92%
Dividend rate		0%		0%

During the fiscal year ended September 30, 2015, the Company did not grant any common stock options or warrants.  During February 2015, the Company modified the exercise price of options and warrants previously issued to the Executive Chairman of the Board of Directors from $1.00 to $0.30 per share, according to an agreement entered into prior to appointment as the Executive Chairman, and recognized additional expense of $20,472.  During April 2015, the Company modified the exercise price of options and warrants previously issued to a note holder from $1.00 to $0.40 per share as part of a settlement agreement and conversion of an existing note payable and other payables into a new note payable.  The additional expense of $22,397 was recorded as a loss on extinguishment of debt.

During the fiscal year ended September 30, 2014, the Company modified the exercise price of options and warrants previously issued to current employees and officers to $0.50 per share.  The Company recognized additional expense of $71,942 and deferred $7,960 over the remaining vesting period of the options and warrants.

The following table summarizes information about stock options and warrants outstanding as of September 30, 2015:

Options and Warrants	Number of Options and Warrants			Weighted- Average  Exercise Price
Outstanding as of October 1, 2014		10,991,576		$	1.05
Granted		-
Exercised		-
Forfeited		(1,494,025	)		1.52
Outstanding as of September 30, 2015		9,497,551			0.91
Exercisable as of September 30, 2015		7,667,551			1.01

As of September 30, 2015, the outstanding warrants have an aggregate intrinsic value of $0, the weighted average remaining term of the warrants was 2.91 years, and the fair value of unvested stock options and warrants was $154,522.

16. Segment Information

The Company operated two business segments during fiscal year 2014 and a portion of fiscal year 2015 based primarily on the nature of the Company's products. The Chronic Illness Monitoring segment is engaged in the business of developing, distributing and marketing mobile monitoring of patient vital signs and physical activity to insurance companies, disease management companies, third-party administrators, and self-insured companies.  The customer contracts and equipment leased to customers of the CareServices segment were sold in December 2014.  The CareServices segment was engaged in the business of developing, distributing and marketing mobile health monitoring and concierge services to distributors and consumers.

At the corporate level, the Company raises capital and provides for the administrative operations of the Company as a whole.

F - 24

The following table reflects certain financial information relating to each reportable segment for fiscal years 2015 and 2014:

	Corporate			Chronic  Illness  Monitoring			CareServices (Discontinued Operations)			Total
As of September 30, 2015 and for the Fiscal
Year Then Ended
Sales to external customers	$	-		$	6,597,981		$	152,686		$	6,750,667
Segment income (loss)		(10,757,547	)		(583,890	)		(186,232	)		(11,527,669	)
Interest expense, net		977,234			-			-			977,234
Segment assets		767,302			1,771,658			-			2,538,960
Property and equipment purchases		15,289			-			-			15,289
Depreciation and amortization		57,036			-			233,664			290,700
As of September 30, 2014 and for the Fiscal
Year Then Ended
Sales to external customers	$	-		$	6,107,941		$	1,003,238		$	7,111,179
Segment loss		(9,957,268	)		(2,051,752	)		(1,452,567	)		(13,461,587	)
Interest expense, net		1,936,039			-			-			1,936,039
Segment assets		550,370			4,134,403			737,012			5,421,785
Property and equipment purchases		70,603			-			-			70,603
Depreciation and amortization		92,823			57,220			972,819			1,122,862

17. Income Taxes

As of September 30, 2015, the Company had net operating loss carryforwards available to offset future taxable income, if any, of approximately $77,700,000, which will begin to expire in 2027.  The utilization of the net operating loss carryforwards is dependent upon the tax laws in effect at the time the net operating loss carryforwards can be utilized.  The Internal Revenue Code contains provisions that likely could reduce or limit the availability and utilization of these net operating loss carryforwards.  For example, limitations are imposed on the utilization of net operating loss carryforwards if certain ownership changes have taken place or will take place.  The Company will perform an analysis to determine whether any such limitations have occurred as the net operating losses are utilized.

The amount and ultimate realization of the benefits from the net operating loss carryforwards are dependent, in part, upon the tax laws in effect, the Company's future earnings, and other future events, the effects of which cannot be determined.  The Company has established a valuation allowance against all deferred income tax assets not offset by deferred income tax liabilities due to the uncertainty of their realization.  Accordingly, there is no benefit for income taxes in the accompanying statements of operations.

Deferred income taxes are determined based on the estimated future effects of differences between the consolidated financial reporting and income tax reporting bases of assets and liabilities given the provisions of currently enacted tax laws and the tax rates expected to be in place. 

F - 25

The deferred income tax assets (liabilities) were comprised of the following as of September 30:

	2015			2014
Net operating loss carryforwards	$	29,000,000		$	23,858,000
Depreciation, amortization and reserves		721,000			1,515,000
Stock-based compensation		1,728,000			2,007,000
Accrued vacation		28,000			53,000
Valuation allowance		(31,477,000	)		(27,433,000	)
Total	$	-		$	-

Reconciliations between the benefit for income taxes at the federal statutory income tax rate and the Company's benefit for income taxes for fiscal years 2015 and 2014 were as follows:

	2015			2014
Federal income tax benefit at statutory rate	$	3,919,000		$	4,577,000
State income tax benefit, net of federal income tax effect		380,000			444,000
Non-deductible expenses		(367,000	)		67,000
Other		112,000			135,000
Change in valuation allowance		(4,044,000	)		(5,223,000	)
Benefit for income taxes	$	-		$	-

During fiscal years 2015 and 2014, the Company recognized no interest or penalties, and there were no changes in unrecognized tax benefits from tax positions taken or from lapsed statutes of limitations.  There were no settlements with taxing authorities.  As of September 30, 2015, the Company had no unrecognized tax benefits that, if recognized, would affect the effective tax rate, and there are no positions that are anticipated to significantly increase or decrease.  The Company had no tax examinations beginning, ending, or remaining in process as of and for the years ended September 30, 2015 and 2014.  Tax returns for fiscal years subsequent to 2011 remain subject to examination.

18. Commitments and Contingencies

During fiscal year 2015, the Company leased office space under a non-cancelable operating lease, which was terminated during June 2015.  In February 2015, the Company entered into a sublease agreement for part of the office space under the non-cancelable operating lease through the end of the original lease period.  Payments under the sublease were made by the sublessee directly to the Company's landlord.  During the fiscal year ended September 30, 2015, the Company recognized $42,438 of sublease income as part of other expense, net.

The Company's rent expense for facilities under the terminated operating lease for the nine months ended June 30, 2015 and fiscal year ended September 30, 2014 was approximately $226,000 and $279,000, respectively.

During June 2015, the Company entered into a new non-cancelable operating lease for its existing office space, excluding the previously subleased space, and with payments beginning in July 2015.  Future minimum rental payments under the non-cancelable operating lease as of September 30, 2015 were as follows:

Years Ending September 30,
2016	$	126,249
2017		130,036
2018		111,340
	$	367,625

F - 26

The Company's rent expense under the new non-cancelable operating lease for fiscal year 2015 was approximately $31,000.

On May 28, 2015, an investor of the Company filed a lawsuit claiming damages of $1,000,000 exclusive of interest and costs against the Company, its Executive Chairman, an entity controlled by its former Executive Chairman, and 4G Biometrics, a wholly owned subsidiary of the Company for a breach of contract.  The Company has engaged legal counsel regarding the matter.  As the lawsuit is in its early stages, 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 principle of 4G Biometrics who was terminated for cause in regards to his employment agreement.  On December 4, 2015, the Company filed a complaint against the former owners of 4G Biometrics, including this former employee, seeking damages in excess of $300,000 related to alleged misrepresentations made to induce ActiveCare to acquire 4G Biometrics.  As the lawsuit is in its early stages, it is not possible to predict the outcome of the matter.

19. Related Party Transactions Not Otherwise Disclosed

During fiscal year 2015, Purizer Corporation, an entity controlled by the Company's former Executive Chairman of the Board of Directors, consulted with the Company to enter into an agreement with a customer.  The Company granted Purizer Corporation 250,000 shares of common stock with a fair value of $53,500.  The Company also agreed to pay Purizer Corporation 8.5% of revenue from this customer as long as the sales contract remains in full force.

During September 2015, the Company entered into consulting agreements with ADP Management, an entity controlled by the former Executive Chairman of the Board of Directors.  The Company agreed to pay for the former Executive Chairman's healthcare insurance cost plus $6,000 per month for consulting services.  The Company also agreed to pay as a bonus to ADP Management a fee equal to 15% of the funds raised less payments to third parties owed in regards to the funds raised.

During September 2015, the Company entered into a one-year consulting agreement with Bluestone Advisors, LLC, an entity controlled by Mr. Jeffrey Peterson, who assumed a new role as Chief Financial Officer of the Company.  The Company agreed to pay Bluestone Advisors, LLC $20,000 per month and 2,000,000 shares of common stock with a fair value of $360,000

20. Subsequent Events

Subsequent to September 30, 2015, the Company entered into the following agreements and transactions:

(1)	In October 2015, the Company entered into a consulting agreement with a third party in which it issued 250,000 shares of common stock.
(2)	In October 2015, the Company received funding under convertible debentures of $138,000 in which it issued 331,200 shares of common stock.
(3)	In November 2015, the Company entered into a factoring agreement in which it may factor $2,000,000 of receivables at any given time.  In connection with the execution of this agreement, the Company issued 791,666 shares of common stock.
(4)	In November 2015, the Company altered certain terms and conditions of a previously executed factor agreement in which that agreement was subordinated to the factor agreement described in (3) above.
(5)	In December 2015, the Company entered into a factoring agreement in which the Company was advanced $200,000.
(6)	In December 2015, the Company entered into a convertible loan agreement with an existing debt holder at 10% and is due December 2017, which incorporated $303,212 of principal and $31,380 of accrued interest of a previous note payable.  All or part of the principal, interest and any late fees of the note payable is convertible into a shares of the Company's common stock at a 5-day volume weighted average of the closing sales price.  The convertible note is guaranteed by the Company's chief financial officer and former Executive Chairman.

F - 27

EX-10.2

Exhibit 10.2

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") executed this 23^rd day of September, 2015 with an effective date as of the ____ day of July 2015 (the "Effective Date"), by and between ACTIVECARE, INC., a Delaware corporation having its principal place of business in Salt Lake City, Utah (the "Company"), and JAMES DALTON, a resident of Utah (the "Executive" and, together with the Company, the "Parties").

R E C I T A L S:

WHEREAS, the Company has agreed to employ Executive in exchange for Executive's compliance with the terms and conditions contained herein.

A G R E E M E N T:

NOW, THEREFORE, in consideration of the covenants contained herein, the above recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.Definitions.  For purposes of this Agreement, all initially capitalized words and phrases used in this Agreement have the following meanings:

"Affiliate" shall mean, with respect to any individual or entity, any other individual or entity who, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such individual or entity.

"Agreement" shall have the meaning set forth in the introductory paragraph above.

"Application" shall have the meaning set forth in Section 7.

"Base Salary" shall have the meaning set forth in Section 4.

"Board" shall mean the Board of Directors of the Company.

"Bonus" shall have the meaning set forth in Section 4.

"Business" shall mean the business of the Company, wherever located or operated, involving the marketing of health diagnostic and monitoring services and devices.

"Cause" shall mean that Executive has (a) continually and willfully failed to substantially perform his duties to the Company (other than any such failure resulting from incapacity due to physical or mental illness); or (b) been grossly negligent in the discharge of his duties to the Company (in any case, other than by reason of a Disability, physical or mental illness or analogous condition); or (c) been convicted of or pled nolo contendere to a felony or a misdemeanor with respect to which fraud or dishonesty is a material element; or (d) materially breached any material Company policy or agreement with the Company. provided, however, except for a failure, breach or refusal which, by its nature, cannot reasonably be expected to be cured, the Executive shall have thirty (30) business days from the delivery of written notice by the Company within which to cure any acts constituting Cause.  For purposes of this provision, no act or failure to act on the part of Executive shall be considered "willful" unless it is done, or omitted to be done, by Executive in bad faith or without reasonable belief that Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company.  Termination of the Executive's employment shall not be deemed to be for Cause unless and until the Company delivers to Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the Board (after reasonable written notice is provided to Executive and Executive is given an opportunity, together with counsel, to be heard before the Board), finding that Executive has engaged in the conduct described in any of (a)-(d) above.

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"Code" means the Internal Revenue Code of 1986, as amended.

"Company" shall have the meaning set forth in the introductory paragraph above.

"Confidential Information" means (a) information of the Company or any Subsidiary thereof, to the extent not considered a Trade Secret under applicable law, that (i) relates to the Business of the Company or any Subsidiary thereof; (ii) possesses an element of value to the Company or any Subsidiary thereof; (iii) is not generally known to the Company's competitors; and (iv) would damage the Company, or any Subsidiary thereof, if disclosed, and (b) information of any third party provided to the Company which the Company is obligated to treat as confidential. Confidential Information includes, but is not limited to, future business plans, the composition, description, schematic or design of products, future products or equipment of the Company or any Subsidiary thereof, communication systems, audio systems, system designs and related documentation, advertising or marketing plans, information regarding independent contractors, Employees, clients and Customers of the Company or any Subsidiary thereof, and information concerning the Company's financial structure and methods and procedures of operation.  Confidential Information shall not include any information that is or becomes generally available to the public other than as a result of an unauthorized disclosure, has been independently developed and disclosed by others without violating this Agreement or the legal rights of any Party or otherwise enters the public domain through lawful means.

"Contact" means any interaction between Executive and a Customer which (a) takes place in an effort to establish, maintain and/or further a business relationship on behalf of the Company, or any Subsidiary thereof, and (b) occurs during the last year of Executive's employment with the Company.

"Customer" means any person or entity to which the Company or any Subsidiary thereof, has sold or has solicited to sell its products or services.

"Defense Costs" has the meaning set forth in Section 11.

"Disability" means a physical or mental condition entitling Executive to benefits under the applicable long-term disability plan of the Company or any of its Subsidiaries, or if no such plan exists, a "permanent and total disability" (within the meaning of Code Section 22(e)(3)) or as determined by the Company in accordance with applicable laws. Notwithstanding the foregoing, to the extent that (i) any payment under this Agreement is payable solely upon the Executive's Disability and (ii) such payment is treated as "deferred compensation" for purposes of Code Section 409A, Disability shall have the meaning provided in Section 1.409A-3(i)(4) of the Treasury Regulations.

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"Duties" means, solely for purposes of this Agreement, functioning as the Company's President and Chief Executive Officer as specified in the attached Exhibit A and the Company's Bylaws, and as prescribed by the Board from time to time.

"Effective Date" shall have the meaning set forth in the introductory paragraph above.

"Employee" means any person who (a) is employed by the Company, or any Subsidiary thereof, at the time Executive's employment with the Company terminates; (b) was employed by the Company, or any Subsidiary thereof, during the last year of Executive's employment with the Company; or (c) is employed by the Company, or any Subsidiary thereof, during the Restricted Period.

"Employment Period" shall have the meaning set forth in Section 3.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

"Executive" shall have the meaning set forth in the introductory paragraph above.

 "Fiscal Year" shall mean the 12-month period ending September 30 each year or such other period as the Company may hereafter elect as its Fiscal Year for financial reporting purposes.

"Incentive Plans" means the Company's (i) 2010 Equity Compensation Plan, and (ii) 2013 Equity Compensation Plan, each as amended from time to time.

"Licensed Materials" means any materials that Executive utilizes for the benefit of the Company (or any Subsidiary thereof), or delivers to the Company or the Company's Customers, which (a) do not constitute Work Product, (b) are created by Executive or of which Executive is otherwise in lawful possession and (c) Executive may lawfully utilize for the benefit of, or distribute to, the Company or the Company's Customers.

"Parties" shall have the meaning set forth in the introductory paragraph above.

"Person" shall mean a "person" as defined in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (a) the Company (or any Subsidiary thereof), (b) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, (c) an underwriter temporarily holding securities pursuant to an offering of such securities, or (d) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

"Restricted Period" means the period of time encompassing Executive's employment with the Company and eighteen (18) months after termination of Executive's employment with the Company.

"Subsidiary" means a corporation, partnership or other entity of which a majority of the voting interests of such corporation, partnership or other entity are at the time owned directly or indirectly through one or more intermediaries or Subsidiaries, or both, by the Company.

"Territory" means the continental United States.

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"Trade Secrets" means information of the Company (or any Subsidiary thereof), and its licensors, suppliers, clients and Customers, without regard to form, including, but not limited to, technical or non-technical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans or a list of actual or potential Customers or suppliers which is not commonly known by or available to the public and which information (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

"Work Product" means (a) any data, databases, materials, documentation, computer programs, inventions (whether or not patentable), designs and/or works of authorship, including but not limited to, discoveries, ideas, concepts, properties, formulas, compositions, methods, programs, procedures, systems, techniques, products, improvements, innovations, writings, pictures, audio, video, images of Executive and artistic works, and (b) any subject matter protected under patent, copyright, proprietary database, trademark, trade secret, rights of publicity, confidential information or other property rights, including all worldwide rights therein, that is or was conceived, created or developed in whole or in part by Executive while employed by the Company and that either (i) is created within the scope of Executive's employment; (ii) is based on, results from or is suggested by any work performed within the scope of Executive's employment and is directly or indirectly related to the Business of the Company or a line of business that the Company may reasonably be interested in pursuing; (iii) has been or will be paid for by the Company; or (iv) was created or improved in whole or in part by using the Company's time, resources, data, facilities or equipment.

2.Employment and Duties.

(a)The Company shall employ Executive as President and Chief Executive Officer.  Executive shall perform all duties that are consistent with this position and that may otherwise be assigned to Executive by the Board and shall report directly to the Board from time to time.

(b)Executive agrees to (i) devote all necessary working time required of Executive's position; (ii) devote Executive's best efforts, skill and energies to promote and advance the Business and/or interests of the Company and its Subsidiaries; and (iii) fully perform Executive's obligations under this Agreement.

(c)During Executive's employment Executive may (i) engage in community, charitable and educational activities; (ii) manage Executive's personal investments; (iii) with prior written consent of a majority of the Board (or a designated committee thereof), act as a consultant or advisor with or without pay; and (iv) with prior written consent of a majority of the Board (or a designated committee thereof), serve on corporate boards or committees of up to two (2) public companies other than the Company and a reasonable number of privately held companies including companies operated or controlled by the Executive or a relative or family member of the Executive; provided, however, that such activities do not conflict or interfere with the performance of Executive's obligations under this Agreement or conflict with the interests of the Company.

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(d)Executive agrees to comply with the policies and procedures of the Company as may be adopted and changed from time to time, including without limitation, those described in the Company's employee handbook and Code of Business Conduct and Ethics. If this Agreement conflicts with such policies or procedures, this Agreement will control.

(e)As an officer of the Company, Executive owes a duty of care and loyalty to the Company as well as a duty to perform such duties in a manner that is in the best interests of the Company.

3.Term of Agreement.  The term of this Agreement shall be for a period of one (1) year, commencing on the Effective Date and terminating on the first anniversary of the Effective Date (the "Employment Period"), provided, however, that the restrictive covenants applicable to and all post-termination obligations of Executive contained in Section 6 of this Agreement shall survive termination of this Agreement. 

4.Compensation.  During the Employment Period, the compensation of the Executive shall be as provided by this Section 4.

(a)Signing Bonus.  Upon execution of this Agreement as of the Effective Date, Company shall issue to the Executive 4,976,068 shares of the Company's common stock (the "Common Stock"), of which 976,068 shall vest immediately, along with 140 shares of the Company's Series G Management Preferred Stock; all such shares to vest in 24 equal amounts over each month, and shall vest immediately upon death, termination or a change in control.

(b)Salary.  The Company shall pay Executive a monthly salary of $40,000.

(c)Member Bonuses.  During the Employment Period, Executive will be eligible to receive bonuses (each a "Bonus") upon the achievement of certain milestones up through and inclusive of December 31, 2015, at which time the following formula shall be revisited:

(i)300 shares of Common Stock for each new member under contract with the Company for the September 2015 and December 2015 quarters.

(d)Guarantees.  All guarantee investments into the Company by Mr. Dalton shall be paid equally 15% of the guaranteed amount, payable in Common Stock valued at $.30 per share.  Executive has made certain guarantees as listed in Exhibit B attached hereto.  As of the date of this agreement, the share issuance amounts as it relates to these guarantees equals 209,375 shares of Common Stock which will be issued herewith.

(e)Welfare Benefits. Company shall not pay any amounts for or provide Executive and/or the Executive's family, as the case may be, any benefits under welfare benefit plans, practices, policies and programs generally provided by the Company (including without limitation, medical, prescription, dental, disability, employee life, group life, dependent life, accidental death and travel accident insurance plans and programs).

(f)Expenses.  Executive shall be entitled to receive prompt reimbursement for all reasonable employment-related expenses which are incurred by the Executive.  The Executive shall be reimbursed upon the Company's receipt of accountings in accordance with practices, policies and procedures applicable to senior executives of the Company.  Executive may retain all frequent traveler benefits accrued, including reimbursements as allowed by Company policy for the use of such benefits for work-related corporate travel.

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(g)Office and Support Staff.  Executive shall be entitled to an office, furnishings, supplies, and other appointments, commensurate with the position occupied by Executive, all of which shall be adequate for the performance of the Executive's duties. Executive may hire staff to assist Executive in his duties.  Executive may use furnished supplies and equipment for reasonable non-business purposes.

5.Termination.  This Agreement and Executive's employment may be terminated by any of the following events:

(a)Expiration of the Employment Period;

(b)Mutual written agreement between Executive and the Company at any time;

(c)Executive's death;

(d)Executive's Disability which renders Executive unable to perform the essential functions of Executive's job even with reasonable accommodation; or

(e)By the Company for Cause.

6.Executive's Post-Termination Obligations.

(a)Return of Materials.  Upon the termination of Executive's employment for any reason, Executive shall return to the Company all of the Company's property, including, but not limited to, keys, passcards, credit cards, customer lists, rolodexes, tapes, software, computer files, marketing and sales materials and any other property, record, document or piece of equipment belonging to the Company.

(b)Set-Off.  If Executive has any outstanding obligations to the Company upon the termination of Executive's employment for any reason, Executive hereby authorizes the Company to deduct any amounts owed to the Company from Executive's final paycheck and/or any amounts that would otherwise be due to Executive, but only to the extent such set-off is made in accordance with Treasury Regulation 1.409A-3(j)(4)(xiii).  No other set-off shall be permitted under this Agreement.

(c)Non-Disparagement. During Executive's employment and upon the termination of Executive's employment with the Company for any reason, Executive shall not make any disparaging or defamatory statements, whether written or verbal, regarding the Company.

(d)Restrictive Covenants. Executive acknowledges that the restrictions contained in this Section 6 are reasonable and necessary to protect the legitimate business interests of the Company and will not impair or infringe upon Executive's right to work or earn a living after Executive's employment with the Company terminates.

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(e)Trade Secrets and Confidential Information.

(i)Executive represents and warrants that Executive (A) is not subject to any legal or contractual duty or agreement that would prevent or prohibit Executive from performing the duties contemplated by this Agreement or otherwise complying with this Agreement, and (B) is not in breach of any legal or contractual duty or agreement, including any agreement concerning trade secrets or confidential information owned by any other party.

(ii)Executive agrees that Executive will not (A) use, disclose or reverse engineer Trade Secrets or Confidential Information for any purpose other than the Company's Business, except as authorized in writing by the Company; (B) during Executive's employment with the Company, use, disclose or reverse engineer (1) any confidential information or trade secrets of any former employer or third party or (2) any works of authorship developed in whole or in part by Executive during any former employment or for any other party, unless authorized in writing by the former employer or third party; or (C) upon Executive's resignation or termination with the Company (1) retain Trade Secrets or Confidential Information, including any copies existing in any form (including electronic form), which are in Executive's possession or control or (2) destroy, delete or alter Trade Secrets or Confidential Information without the Company's prior written consent.

(iii)The obligations under this Section 6 shall remain in effect as long as Trade Secrets and Confidential Information constitute trade secrets or confidential information under applicable law.  The confidentiality, property and proprietary rights protections available in this Agreement are in addition to, and not exclusive of, any and all other rights to which the Company is entitled under federal and state law, including, but not limited to, rights provided under copyright laws, trade secret and confidential information laws and laws concerning fiduciary duties.

(f)Non-Competition.  During the Restricted Period, Executive agrees that Executive shall not perform services which are substantially similar and/or equivalent to the Duties, individually or on behalf of any person, firm, partnership, association, business organization, corporation or entity engaged in the Business within the Territory.  The Parties agree and acknowledge that (i) the periods of restriction and Territory of restriction contained in this Agreement are fair and reasonable in that they are reasonably required for the protection of the Company and that the Territory is the area in which Executive performs services for the Company and (ii) by having access to information concerning Employees and actual or prospective Customers of the Company or any of its Subsidiaries, Executive shall obtain a competitive advantage as to the Company.

(g)Non-Solicitation of Customers.  During the Restricted Period, Executive will not, directly or indirectly, solicit any Customer of the Company for the purpose of providing any goods or services competitive with the Business within the Territory.  The restrictions set forth in this Section 6(g) apply only to the Customers with whom Executive had Contact.

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(h)Non-Recruitment of Employees.  During the Restricted Period, Executive will not, directly or indirectly, solicit, recruit or induce any Employee to (i) terminate his or her employment relationship with the Company or any of its Subsidiaries or (ii) work for any other person or entity engaged in the Business.

(i)Resignation.  Upon the termination of Executive's employment with the Company for any reason and upon the request of the Company, Executive shall deliver to the Company a written resignation from all offices, membership on the Board and fiduciary positions in which Executive serves for the Company and each of its Subsidiaries and Affiliates.

7.Work Product.  Executive's employment duties may include creating, developing and/or inventing in areas directly or indirectly related to the Business of the Company or to a line of business that the Company may reasonably be interested in pursuing.  If ownership of all right, title and interest to the legal rights in and to the Work Product will not vest exclusively in the Company, then, without further consideration, Executive assigns all presently-existing Work Product to the Company and agrees to assign, and automatically assigns, all future Work Product to the Company.  The Company will have the right to obtain, and hold in its own name, copyrights, patents, design registrations, proprietary database rights, trademarks, rights of publicity and any other protection available in the Work Product. At the Company's request, Executive agrees to perform, during or after Executive's employment with the Company, any acts to transfer, perfect and defend the Company's ownership of the Work Product, including, but not limited to (a) executing all documents (including a formal assignment to the Company) necessary for filing an application or registration for protection of the Work Product (an "Application"); (b) explaining the nature of the Work Product to persons designated by the Company; (c) reviewing Applications and other related papers; or (d) providing any other assistance reasonably required for the orderly prosecution of Applications.  Executive agrees to provide the Company with a written description of any Work Product in which Executive is involved (solely or jointly with others) and the circumstances attendant to the creation of such Work Product.

8.License.  During Executive's employment and after Executive's employment with the Company terminates, Executive grants to the Company an irrevocable, nonexclusive, worldwide, royalty-free license to (a) make, use, sell, copy, perform, display, distribute or otherwise utilize copies of the Licensed Materials; (b) prepare, use and distribute derivative works based upon the Licensed Materials; and (c) authorize others to do the same.  Executive shall notify the Company in writing of any Licensed Materials Executive delivers to the Company.

9.Release.  During Executive's employment and after Executive's employment with the Company terminates, the Company may, upon receiving Executive's prior written consent, which consent will not be unreasonably withheld, use Executive's image, likeness, voice or other characteristics in the Company's products or services.  Executive shall release the Company from any causes of action that Executive may have arising out of the use, distribution, adaptation, reproduction, broadcast or exhibition of such characteristics, provided that the Company obtains Executive's prior written consent as described herein.

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10.Injunctive Relief.  Executive agrees that, if Executive breaches Section 6 of this Agreement, (a) the Company would suffer irreparable harm; (b) damages would be difficult to determine, and money damages alone would be an inadequate remedy for the injuries suffered by the Company; and (c) if the Company seeks injunctive relief to enforce this Agreement, Executive hereby waives and will not (i) assert any defense that the Company has an adequate remedy at law with respect to the breach; (ii) require that the Company submit proof of the economic value of any Trade Secret or Confidential Information; or (iii) require the Company to post a bond or any other security.  Nothing contained in this Agreement shall limit the Company's right to any other remedies at law or in equity.

11.Payment of Defense Costs.  If Executive is individually named as a defendant in a lawsuit relating to or arising out of Executive's employment with the Company, then the Company agrees to pay the reasonable attorneys' fees and expenses Executive incurs in defending such lawsuit (the "Defense Costs"), subject to the terms and conditions of any applicable directors' and officers' insurance maintained by the Company.  The Company will not pay any damages or any other sums or relief for which Executive is held personally liable.  If Executive is held liable, then Executive agrees to reimburse the Company for all Defense Costs the Company paid to Executive or on Executive's behalf.  The Company's obligation under this Section 11 shall not apply to any claim or lawsuit brought by the Company against Executive. Payment of the Defense Costs shall be the Company's only obligation under this Section 11; provided, however, that nothing in this Section 11 shall be construed to limit either Party's rights or obligations under any indemnification agreement or the Company's organizational documents, as applicable.

12.Clawback.  Notwithstanding anything herein to the contrary, the Executive agrees that incentive compensation, as defined under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and such regulations as are promulgated thereunder from time to time ("Dodd-Frank"), payable to him under the Company's Incentive Plans, this Agreement or any other plan, arrangement or program established or maintained by the Company shall be subject to any clawback policy adopted or implemented by the Company in respect of Dodd-Frank, or in respect of any other applicable law or regulation.

13.Severability.  The provisions of this Agreement are severable.  If any provision of this Agreement is determined to be unenforceable, in whole or in part, then such provision shall be modified so as to be enforceable to the maximum extent permitted by law.  If such provision cannot be modified to be enforceable, the provision shall be severed from this Agreement to the extent unenforceable.  The remaining provisions and any partially enforceable provisions shall remain in full force and effect.

14.Attorneys' Fees.  In the event of litigation relating to this Agreement, the prevailing Party shall be entitled to recover attorneys' fees and costs of litigation in addition to all other remedies available at law or in equity.

15.Waiver.  Either Party's failure to enforce any provision of this Agreement shall not act as a waiver of that or any other provision.  Either Party's waiver of any breach of this Agreement shall not act as a waiver of any other breach.

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16.Entire Agreement.  This Agreement, together with the New Option Agreement, constitutes the entire agreement between the Parties concerning the subject matter of this Agreement.  This Agreement supersedes any prior communications, agreements or understandings, whether oral or written, between the Parties relating to the subject matter of this Agreement, including without limitation the Prior Agreement.  Other than the terms of this Agreement, no other representation, promise or agreement has been made with Executive to cause Executive to sign this Agreement.

17.Amendments.  This Agreement may not be amended or modified except in a writing signed by both Parties.

18.Successors and Assigns.  This Agreement shall be assignable to, and shall inure to the benefit of, the Company's successors and assigns, including, without limitation, successors through merger, name change, consolidation or sale of a majority of the Company's stock or assets and shall be binding upon Executive. Executive shall not have the right to assign Executive's rights or obligations under this Agreement.  The covenants contained in Section 8 of this Agreement shall survive the termination of Executive's employment with the Company, regardless of which Party causes the termination or the reason for the termination.

19.Governing Law.  The laws of the State of Utah shall govern this Agreement. If Utah's conflict of law rules would apply another state's laws, the Parties agree that Utah law shall still govern.

20.No Strict Construction.  If there is a dispute about the language of this Agreement, the fact that one Party drafted this Agreement shall not be considered in its interpretation.

21.Notices.  Whenever any notice is required, it shall be given in writing addressed as follows:

If to the Company:	ACTIVECARE, INC.
	1365 West Business Park Drive Orem, UT 84058
If to the Executive:	James Dalton, at Executive's most recent address on the records of the Company

Notice shall be deemed given and effective when deposited in the U.S. mail, sent to the receiving Party by electronic means or when actually received.  Either Party may change the address to which notices shall be delivered or mailed by notifying the other Party of such change in accordance with this Section.

22.Consent to Jurisdiction and Venue.  Executive agrees that any claim arising out of or relating to this Agreement shall be brought in a state or federal court of competent jurisdiction in Utah.  Executive consents to the personal jurisdiction of the state and/or federal courts located in Utah.  Executive waives (a) any objection to jurisdiction or venue, or (b) any defense claiming lack of jurisdiction or improper venue in any action brought in such courts.

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23.Affirmation.  Executive acknowledges that Executive has carefully read this Agreement, Executive knows and understands its terms and conditions and Executive has had the opportunity to ask the Company any questions Executive may have had prior to signing this Agreement.

24.Tax Responsibilities.  Should executive receive compensation through payroll, all tax responsibility shall be paid through such services as Company regularly employs.  However, should Executive receive compensation outside of payroll, he individually shall be responsible for all tax ramifications associated with such compensation.

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IN WITNESS WHEREOF the Parties have executed this Agreement on the date first written above.

ACTIVECARE, INC.,

a Delaware corporation

By: ______________________________ 

Name: ___________________________

 Title: ____________________________

JAMES DALTON,

an individual

James Dalton

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EXHIBIT A

Responsibilities and Authority of President and Chief Executive Officer (CEO)

· Overall strategic planning, corporate direction and implementation of strategic plan. 

· General deployment of corporate assets. 

· Hiring of Company officers and other employees. 

o Establishment of incentive programs for Company officers and employees.

o Approves capital expenditures for budget categories (as approved by the Board) or up to $50,000 if not included in annual budget.

· Approval of major Company Policies and Procedures and exceptions to the same. 

· Interfaces with stock brokerages. 

· Approval of all corporate communications. 

· Assures compliance with all applicable laws and regulations (domestic/international) pertinent to the Company. 

· Review and Approval of all legal agreements to which the Company is a party. 

o Represents Company in strategic business transactions subject to the approval of the Board.

· Management Team Chair. 

· Oversees implementation and compliance with Quality Systems. 

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EXHIBIT B

Guarantees

James Dalton, as of the date of this agreement, has the following guarantees outstanding:

Party	Amount		% of Guarantee
Factor (Rafi)	$	250,000		50	%
Factor (Rafi)	$	250,000		50	%
Factor (Rafi)	$	337,500		50	%
Total Personally Guaranteed: $418,750
15% shall be paid in total between all signees, payable in shares at $.30
Party	Amount		Compensation			Shares Issued
Factor (Rafi)	$	250,000		7.5	%		62,500
Factor (Rafi)	$	250,000		7.5	%		62,500
Factor (Rafi)	$	337,500		7.5	%		84,375
Total Issuance							209,375

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EX-10.3

Exhibit 10.3

CONSULTING AGREEMENT

By and Between:

ACTIVECARE, INC.a Delaware corporation(the "Company")

and

BLUESTONE ADVISORS, LLCa Utah limited liability company(the "Consultant")

September 23, 2015

		Page
1	Engagement.	1
(a)	Services	1
(b)	Performance of the Services.	2
(c)	No Conflict of Interest	2
2	Independent Contractor Relationship	3
3	Compensation	3
(a)	Consulting Fee	3
(b)	Bonuses.	3
(c)	Expenses	4
4	Term and Termination.	4
(a)	Term.	4
(b)	Termination	4
(c)	Effect of Termination	5
5	Confidentiality.	5
(a)	Confidential Information	5
(b)	Restrictions on Use	6
(c)	Exclusions	6
(d)	Equitable Relief	6
(e)	Return of Materials	6
(f)	Disclaimer	7
6	Warranties	7
7	Deliverables	7
8	Indemnification	7
9	Miscellaneous.	8
(a)	Entire Agreement	8
(b)	Severability	8
(c)	Governing Law	8
(d)	Jurisdiction and Venue	8
(e)	WAIVER OF JURY TRIAL	8
(f)	Fees and Costs	9
(g)	Waiver	9
(h)	Modification	9
(i)	Assignment	9
(j)	Remedies	9
(k)	Notices	9
(l)	Construction	10
(m)	Exhibits	10
(n)	Counterparts	10
(o)	Relationship of Parties	10
(p)	Parties in Interest	10

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT ("Agreement") is executed this 23^rd day of September, 2015 with an effective date as of July ____, 2015 (the "Effective Date"), by and between ActiveCare, Inc., a Delaware corporation (the "Company"), and BlueStone Advisors, LLC, a Utah limited liability company (the "Consultant").

RECITALS

A.The Company is in the business of marketing health monitoring and related products.

B.Consultant, has provided the Company and its affiliates with certain consulting services (collectively, the "Services"), and the Company desires to continue to receive such services subject to the terms and conditions set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants, agreements and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.Engagement.

(a)Services.  The Company hereby engages the Consultant to perform the Services, as more particularly set forth on Exhibit A attached hereto (as such exhibit may be amended or supplemented pursuant to the terms of the Agreement from time to time), and the Consultant hereby accepts such engagement and agrees to provide the Services.  The Consultant and the Company will mutually agree upon the method, details and means of performing the Services.  For purposes of this Agreement, Consultant has designated Mr. Jeffrey Peterson, as Consultant's representative to undertake the day-to-day administration and management hereunder on behalf of Consultant.

(b)Performance of the Services.

(i)For each month during the Term (as defined below), the Consultant commits to dedicate its best efforts to render the Services, provided, that the Consultant shall work as many hours as may be reasonably necessary to timely render the Services pursuant to this Agreement.

(ii)The Consultant shall render to the Company and certain of its affiliates the Services in a timely and professional manner consistent with industry standards, in accordance with this Agreement.

(iii)If any services, functions or responsibilities not specifically described in this Agreement are required for the proper performance and provision of the Services, they shall be deemed to be included within the scope of Services to the same extent as if specifically described in this Agreement.

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(iv)The Consultant may not subcontract or otherwise delegate its obligations under this Agreement without the Company's prior written consent.  In performing the Services, the Consultant agrees to provide his own personnel, equipment, tools and other materials at his own expense.  In connection with providing the Services, the parties hereby agree that, unless otherwise consented to in writing by the Company, the only person that will render the Services shall be the Consultant.

(v)The Company shall make its facilities and equipment available to the Consultant as reasonably necessary in connection with the Services.  For any work performed on the Company's or any of its affiliates' premises, the Consultant shall comply with all security, confidentiality, safety and health policies of the Company and such affiliates.

(vi)Subject to compliance with the Consultant's obligations hereunder, the Consultant shall retain the sole control and discretion to determine the methods by which the Consultant performs the Services and the places at which, the equipment and supplies with which, and the hours during which such Services are to be rendered.

(c)No Conflict of Interest.  The Consultant agrees during the Term not to, directly or indirectly, on the Consultant's own behalf or in the service or on behalf of others, accept work or enter into any agreement or accept any obligation that is inconsistent or incompatible with the Consultant's obligations under this Agreement or the scope of Services rendered to the Company and its affiliates.  The Consultant represents and warrants that, to the best of his knowledge, there is no other existing agreement or duty on the Consultant's part inconsistent with this Agreement.

2.Contractor Relationship.  The Consultant's relationship with the Company and its affiliates shall be that of a contractor and nothing in this Agreement should be construed to create a partnership, joint venture, agency or employer-employee relationship between the parties.  Further, should consultant be paid through payroll, the Company shall withhold taxes as appropriate and customarily performed.  Should Consultant be paid directly from the Company, Consultant shall be responsible for all tax allocations received in such manner.

3.Compensation.

(a)Consulting Fee.  In consideration of the Services to be rendered pursuant to this Agreement beginning as of the effective date, with respect to each calendar month during the Term (each such month, a "Consulting Month"), the Company shall pay the Consultant a monthly fee of Twenty Thousand Dollars ($20,000) (the "Consulting Fee").  Further, for assuming the role of CFO/COO the Company shall issue 2,000,000 shares of Common Stock ("Common Stock") plus 70 shares of Series G Management Preferred Stock, all of which shall vest in 24 equal amounts over each month, and shall fully vest immediately upon death, termination or a change in control.

(b)Expenses.  The Company shall reimburse Consultant for all reasonable travel, lodging, communications, and out-of-pocket expenses incurred by the Consultant in connection with providing the Services; provided any such expenses shall be approved in advance in writing by the Company and shall be reasonably documented.  The Consultant shall submit to the Company, on a monthly basis, an invoice for all expenses incurred during the prior month.  All amounts payable by the Company hereunder shall be due and payable fifteen (15) days from receipt by the Company of such invoice.  If the Company disputes an invoice, it may withhold the disputed portion but shall pay the undisputed portion.

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(c)Guarantees.  The Consultant or its affiliates have given personal guarantees of certain obligations of the Company. In consideration of such exposure, Company shall issue and deliver to Consultant 359,375 shares of Common Stock upon execution of this Agreement.

4.Term and Termination.

(a)Term.  This Agreement shall commence on the Effective Date and continue in effect for an initial period of one (1) year (the "Initial Term").  Thereafter, this Agreement shall automatically renew for additional consecutive one (1) month periods (each, a "Renewal Term"), unless terminated by either party upon at least thirty (30) days written notice to the other party prior to the end of the Initial Term or any Renewal Term.  Notwithstanding the foregoing to the contrary, however, this Agreement shall not terminate until all outstanding debt obligations of the Company payable to Consultant or its affiliates have been paid in full.  For purposes hereof, "Term" means the period commencing on the Effective Date and ending on the termination or expiration of this Agreement.

(b)Termination.  Notwithstanding Section 4(a), this Agreement may be terminated in accordance with any of the following:

(i)Upon the mutual written agreement of the parties, effective on the date so mutually agreed;

(ii)By either party, effective immediately upon written notice to the other party, if the other party materially breaches any term or provision of this Agreement and fails to cure such breach within ten (10) days after receipt of written notice of the breach;

(iii)By either party, effective immediately upon written notice thereof, if it becomes illegal or impossible for any party to perform its obligations under the terms of this Agreement for any reason whatsoever; or

(iv)Automatically upon the first to occur of any of the following events: (A) the bankruptcy or insolvency of either party; (B) the sale of all or substantially all of the assets of the Company; and (C) the complete liquidation of the Company.

(c)Effect of Termination.  The termination or expiration of this Agreement shall in no way affect or impair any right which has accrued to either party hereto prior to the date when such termination or expiration became effective. Upon the effective date of any termination or expiration of this Agreement, the Consultant shall immediately cease performing the Services.  The Company shall pay the Consultant for all Services performed up through the date of termination or expiration.  The provisions of Sections 2, 5, 6, 7, 8 and 9, and this Section 4(c) shall survive any expiration or other termination of this Agreement.  Termination of this Agreement by either party shall not act as a waiver of any breach of this Agreement and shall not act as a release of either party from any liability for breach of such party's obligations under this Agreement.  Neither party shall be liable to the other for damages of any kind solely as a result of terminating or expiration of this Agreement in accordance with its terms, and termination of this Agreement by a party shall be without prejudice to any other right or remedy of such party under this Agreement or applicable law.

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5.Confidentiality.

(a)Confidential Information.  By virtue of this Agreement, the Consultant will have access to confidential, proprietary and trade secret information and materials of the Company (or its affiliates, suppliers, vendors, customers or any other third party to whom the Company owes a duty of confidentiality), in whatever form, tangible or intangible, whether disclosed orally, in writing or otherwise, that is provided to the Consultant before or after the execution of this Agreement under circumstances reasonably indicating that it is confidential or proprietary (collectively, the "Confidential Information").  Confidential Information includes, without limitation, any trade secrets and know-how, and any:

(i)information, ideas or materials of a technical or creative nature, such as inventions, improvements, discoveries, developments, techniques, processes, research and development plans and results, reports, drawings, designs, specifications, works of authorship, data, formulas, files, HTML, computer source and object code, patent applications, and other materials and concepts relating to the Company's business, services, processes or technology;

(ii)information, ideas or materials of a business nature, such as development plans, marketing and sales plans and forecasts, budgets and unpublished financial statements, and other information regarding finances, profits, costs, marketing, purchasing, sales, operations, policies, procedures, personnel, salaries, customers, suppliers and contract terms;

(iii)all personal property, including, without limitation, books, manuals, records, files, reports, notes, contracts, lists, blueprints and other documents or materials, or copies thereof, received by the Consultant or prepared for the Company in the course of the Consultant's rendering of Services to the Company; and

(iv)any other trade secrets, information, ideas or materials of or relating in any way to the past, present, planned or foreseeable business, products, developments, technology or activities of the Company (or its affiliates, employees, licensors, suppliers, vendors, clients, customers or any other third parties to whom the Company owes a duty of confidentiality).

Confidential Information does not include that which (A) is already in the Consultant's possession at the time of disclosure to the Company, (B) is or becomes part of public knowledge other than as a result of any action or inaction of the Consultant, (C) is obtained by the Consultant from an unrelated third party without a duty of confidentiality, or (D) is independently developed by the Consultant other than in connection with this Services.

(b)Restrictions on Use.  The Consultant shall not use Confidential Information for any purpose other than in furtherance of this Agreement and the activities described herein.  The Consultant shall not disclose Confidential Information to any third parties except as otherwise permitted hereunder.  The Consultant shall maintain Confidential Information with at least the same degree of care it uses to protect its own proprietary information of a similar nature or sensitivity, but no less than reasonable care under the circumstances.  The Consultant shall promptly advise the Company in writing of any misappropriation or misuse of Confidential Information of which the Consultant becomes aware.

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(c)Exclusions.  Notwithstanding the foregoing, this Agreement shall not prevent the Consultant from disclosing Confidential Information to the extent required by a judicial order or other legal obligation, provided that, in such event, the Consultant shall promptly notify the Company to allow intervention (and shall cooperate with the Company) to contest or minimize the scope of the disclosure (including application for a protective order).  Further, the Consultant may disclose the terms and conditions of this Agreement: (i) in confidence, to legal counsel; (ii) in confidence, to accountants; and (iii) in connection with the enforcement of this Agreement or any rights hereunder.

(d)Equitable Relief.  The Consultant acknowledges that the Company considers the Confidential Information to contain trade secrets and that any unauthorized use or disclosure of such information would cause the Company irreparable harm for which its remedies at law would be inadequate.  Accordingly, the Consultant acknowledges and agrees that the Company will be entitled, in addition to any other remedies available to it at law or in equity, to the issuance of injunctive relief, without bond, enjoining any breach or threatened breach of the Consultant's obligations hereunder with respect to the Confidential Information, and such further relief as any court of competent jurisdiction may deem just and proper.

(e)Return of Materials.  Upon termination of this Agreement, the Consultant will immediately return to the Company all Confidential Information embodied in tangible (including electronic) form or, at the Consultant's discretion, destroy all such Confidential Information and certify in writing to the Company that all such Confidential Information has been destroyed.

(f)Disclaimer.  The Company hereby disclaims all warranties of any kind, whether express, implied, statutory or otherwise, with respect to any Confidential Information or other information or materials supplied by the Company to the Consultant hereunder.

6.Warranties.  The Consultant represents, warrants and covenants to the Company that: (a) the Consultant has the full power and authority to enter into this Agreement and to perform his obligations hereunder, without the need for any consents, approvals or immunities not yet obtained; (b) the Consultant has the right to grant the rights and assignments granted herein, without the need for any assignments, releases, consents, approvals, immunities or other rights not yet obtained; (c) the Services, including, without limitation, any Deliverables (as defined below) required hereunder, shall be free from material errors or other defects and shall substantially conform to any specifications for such Services and/or deliverables; and (d) any deliverables or other materials delivered to the Company or any of its affiliates in connection with this Agreement (the "Deliverables") (and the exercise of the rights granted herein with respect thereto) do not and shall not infringe, misappropriate or violate any patent, copyright, trademark, trade secret, publicity, privacy or other rights of any third party, and are not and shall not be defamatory or obscene.

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7.Deliverables.  The Company is and shall be, the sole and exclusive owner of all rights, title and interest throughout the world in and to the results and proceeds of the Services performed un this Agreement, including but not limited to any Deliverables.  The Consultant hereby agrees that the Deliverables are hereby deemed a "work made for hire" as defined in 17 U.S.C. §101 for the Company.   If, for any reason, any of the Deliverables do not constitute a "work made for hire", the Consultant hereby irrevocably assigns to the Company, in each case without additional consideration, all of his right, title and interest throughout the world in and to the Deliverables.  Any assignment of copyrights under this Agreement includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as "moral rights" (collectively, "Moral Rights").  The Consultant hereby irrevocably waives, to the extent permitted by applicable law, any and all claims you may now or hereafter have in any jurisdiction to any Moral Rights with respect to the Deliverables.  The Consultant hereby acknowledges and agrees that (a) he has no right or license to use, publish, reproduce, prepare derivative works based upon, distribute, perform, or display any Deliverables, and (b) he has no right or license to use the Company's trademarks, service marks, trade names, trade names, logos, symbols or brand names.

8.Indemnification.  The Consultant shall indemnify and hold harmless, and at the Company's request defend, the Company and its affiliates, successors and assigns (and its and their officers, managers, employees, customers and agents) from and against any and all claims, losses, liabilities, damages, settlements, expenses and costs (including, without limitation, attorneys' fees and court costs) which arise out of or relate to (a) any breach (or claim or threat thereof that, if true, would be a breach) of this Agreement by the Consultant, including, without limitation, any breach or alleged breach of any representation or warranty of the Consultant set forth in Section 6; or (b) any third party claim or threat thereof that the Services (or the exercise of the rights granted herein with respect thereto) infringe, misappropriate or violate any patent, copyright, trademark, trade secret, publicity, privacy or other rights of any third party, or are defamatory or obscene.

9.Miscellaneous.

(a)Entire Agreement.  This Agreement is the final, complete and exclusive agreement between the parties relating to the subject matter hereof, and supersedes all prior or contemporaneous discussions, proposals, negotiations, understandings, representations, warranties, promises, agreements and other communications, whether oral or written, between the parties relating to such subject matter and all past courses of dealing or industry customs.

(b)Severability.  If the application of any provision of this Agreement to any particular facts or circumstances shall for any reason be held to be invalid, illegal or unenforceable by a court, arbitration panel or other tribunal of competent jurisdiction, then (i) the validity, legality and enforceability of such provision as applied to any other particular facts or circumstances, and the other provisions of this Agreement, shall not in any way be affected or impaired thereby, and (ii) such provision shall be enforced to the maximum extent possible so as to effect the intent of the parties.  If, moreover, any provision contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent compatible with applicable law.

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(c)Governing Law.  This Agreement is to be construed in accordance with and governed by the internal laws of the State of Utah without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Utah to the rights and duties of the parties.

(d)Jurisdiction and Venue.  Any legal suit, action or proceeding arising out of or relating to this Agreement shall be commenced in a federal or state court located in the County of Utah, Utah, and each party hereto (i) irrevocably submits to the exclusive jurisdiction and venue of any such court in any such suit, action or proceeding, and (ii) irrevocably waives (to the extent permitted by applicable law) any objection which it now or hereafter may have to the laying of venue of any such action or proceeding brought in any of the foregoing courts in and of the State of Utah, and any objection on the ground that any such action or proceeding in any such court has been brought in an inconvenient forum.

(e)WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY AGAINST THE OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.  EACH OF THE PARTIES AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT WITHOUT A JURY.  WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

(f)Fees and Costs.  The prevailing party or parties in any arbitration, mediation, court action, or other adjudicative proceeding arising out of or relating to this Agreement shall be reimbursed by the party or parties who do not prevail for their reasonable attorneys', accountants', and experts' fees and for the costs of such proceeding.  For purposes of this Section 9(f), "prevailing party" includes, without limitation, a party who agrees to dismiss an action or proceeding upon the other's payment of sums allegedly due or performance of the covenants allegedly breached, or who obtains substantially the relief sought.  The provisions set forth in this Section 9(f) shall survive the merger of these provisions into any judgment.

(g)Waiver.  The waiver by either party of a breach of or a default under any provision of this Agreement shall not be effective unless in writing and shall not be construed as a waiver of any subsequent breach of or default under the same or any other provision of this Agreement, nor shall any delay or omission on the part of either party to exercise or avail itself of any right or remedy that it has or may have hereunder operate as a waiver of any right or remedy.

(h)Modification.  No amendment or modification to this Agreement shall be valid or binding upon the parties unless in writing and signed by each party.

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(i)Assignment.  The Consultant acknowledges that the Company has entered into this Agreement on the basis of the particular abilities of the Consultant.  Accordingly, the Company shall be entitled to assign, sell, transfer, delegate or otherwise dispose of, whether voluntarily or involuntarily, by operation of law or otherwise, this Agreement and any of its rights or obligations of this Agreement, but the Consultant shall not and shall not have the right to assign, sell, transfer, delegate or otherwise dispose of, whether voluntarily or involuntarily, by operation of law or otherwise, this Agreement or any of its rights or obligations under this Agreement without the prior written consent of the Company.  Except as provided herein, any purported assignment, sale, transfer, delegation or other disposition by the Consultant, except as permitted herein, shall be null and void.  Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors and permitted assigns.

(j)Remedies.  All rights and remedies hereunder shall be cumulative, may be exercised singularly or concurrently and, unless otherwise stated herein, shall not be deemed exclusive.

(k)Notices.  All notices, invoices, payments, and other communications made under this Agreement (each, a "Notice") shall be in writing and sent to the appropriate party at the address set forth for such party on the signature page below, or at such other address as such party may designate by ten (1) days  advanced Notice to the other party in accordance with this Section 9(k).  Notice shall be given when received on a business day by the addressee.  In the absence of proof of the actual receipt date, the following presumptions will apply: (i) Notices sent by electronic means, including facsimile and electronic mail shall be deemed to have been received upon the sending Party's receipt of its confirmation of successful transmission, such as facsimile machine's confirmation or the "return receipt requested" function for electronic mail, provided, that if the day on which such electronic communication is received is not a business day or is after five (5:00) p.m. local time at the recipient party's address to where deliver is made, then such electronic communication shall be deemed to have been received on the next following business day; (ii) Notice sent by overnight mail or courier shall be deemed to have been received on the next business day after it was sent or such earlier time as confirmed by the receiving party or courier; and (iii) Notice sent by first class mail, postage prepaid, shall be deemed received five (5) business days after mailing.

(l)Construction.  The captions and section and paragraph headings used in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement.  The construction of this Agreement shall not take into consideration the party who drafted or whose representative drafted any portion of this Agreement, and no canon of construction shall be applied that resolves ambiguities against the drafter of the document.

(m)Exhibits.  All Exhibits attached hereto are hereby incorporated by reference into, and made a part of, this Agreement.

(n)Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Agreement, but all of which together shall constitute one and the same instrument.  This Agreement may be executed and delivered by facsimile, or by email in portable document format (.pdf) and delivery of the executed signature page by such method will be deemed to have the same effect as if the original signature had been delivered to other the parties.

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(o)Relationship of Parties.  This Agreement shall not be construed as creating an agency, partnership, joint venture or any other form of association, for tax purposes or otherwise, between the parties, and the parties shall at all times be and remain independent contractors.  Except as expressly agreed by the parties in writing, neither party shall have any right or authority, express or implied, to assume or create any obligation of any kind, or to make any representation or warranty, on behalf of the other party or to bind the other party in any respect whatsoever.

(p)Parties in Interest.  Except as otherwise specifically provided herein to the contrary, nothing in this Agreement shall confer any rights or remedies under or by reason of this Agreement on any person other than the parties hereto and their respective permitted successors and assigns nor shall anything in this Agreement relieve or discharge the obligation or liability of any third person to any party to this Agreement, nor shall any provision give any third person any right of subrogation or action over or against any party to this Agreement.  The parties hereby designate the Company's affiliates who are the recipient of the Services as third party beneficiaries hereto with the right to enforce the terms hereof.

[SIGNATURES TO FOLLOW]

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

"COMPANY"

ACTIVECARE, INC.,

a Delaware corporation

By:

Name:

Title:

Attn:

Telephone:  (___)

Facsimile: (___) _____________

Email:

"CONSULTANT"

BlueStone Advisors, LLC

By:

Its:

Address:

Telephone:

  Facsimile:

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EXHIBIT A

DESCRIPTION OF THE SERVICES

1.Any services reasonably requested by the Company that are necessary or useful for the operation and growth of the Business.

2.Providing advice and assistance regarding the Company's and its affiliates' businesses, including without limitation, developing business plans, making introductions to potential customers and/or suppliers, identifying qualified employees and other service providers, meeting with the Company's and its affiliates' respective managers, officers, employees, agents, investors and other financial sources, and other service providers regarding the business, prospects and affairs of the Company and its affiliates.

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EX-10.3

Exhibit 10.4

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (the "Agreement") is made and entered into this ___ day of _______ 2014, between ActiveCare, Inc., a Delaware corporation (the "Company"), and ______________ ("Indemnitee").

RECITALS

A.Indemnitee, as a member of the Company's Board of Directors and/or an officer of the Company, performs valuable services for the Company.

B.The Company and Indemnitee recognize the continued difficulty in obtaining liability insurance for corporate directors, officers, employees, controlling persons, agents and fiduciaries, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance.

C.The Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors, officers, employees, controlling persons, agents and fiduciaries to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited.

D.The Company's Certificate of Incorporation ("Certificate") provides for the indemnification of the officers, directors, agents and employees of the Company to the maximum extent authorized by Section 145 of the Delaware General Corporation Law, as amended ("DGCL").

E.Indemnitee does not regard the current protection available for the Company's directors, officers, employees, controlling persons, agents and fiduciaries as adequate under the present circumstances, and Indemnitee and other directors, officers, employees, controlling persons, agents and fiduciaries of the Company may not be willing to serve or continue to serve in such capacities without additional protection.

F.The Certificate and the DGCL, by their non-exclusive nature, permit contracts between the Company and its directors, officers, employees, controlling persons, agents or fiduciaries with respect to indemnification of such directors.

G.The Company (i) desires to attract and retain the involvement of highly qualified individuals, such as Indemnitee, to serve the Company and, in part, in order to induce Indemnitee to be involved with the Company, and (ii) wishes to provide for the indemnification and advancing of expenses to Indemnitee to the maximum extent permitted by law.

H.In view of the considerations set forth above, the Company desires that Indemnitee be indemnified by the Company as set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of Indemnitee's service to the Company, the parties hereto agree as follows:

1.Indemnity of Indemnitee.  The Company hereby agrees to indemnify Indemnitee to the fullest extent permitted by applicable law. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Delaware corporation to indemnify a member of its Board of Directors or an officer, employee, controlling person, agent or fiduciary, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change. In the event of any change in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify a member of its Board of Directors or an officer, employee, agent or fiduciary, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties' rights and obligations hereunder except as set forth in Section 9(a) hereof.

2.Additional Indemnity.  The Company hereby agrees to hold harmless and indemnify the Indemnitee:

(a)against any and all expenses incurred by Indemnitee, as set forth in Section 3(a) below; and

(b)otherwise to the fullest extent not prohibited by the Certificate, the Company's Bylaws or the DGCL.

3.Indemnification Rights.

(a)Indemnification of Expenses.  The Company shall indemnify and hold harmless Indemnitee, together with Indemnitee's partners, affiliates, employees, agents and spouse and each person who controls any of them or who may be liable within the meaning of Section 15 of the Securities Act of 1933, as amended (the "Securities Act"), or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to the fullest extent permitted by law if Indemnitee was or is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, or any hearing, inquiry or investigation that Indemnitee in good faith reasonably believes might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, investigative or other (hereinafter a "Claim") against (i) any and all expenses (including attorneys' fees and all other costs, expenses and obligations incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in, any such Claim), (ii) judgments, fines, penalties and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) of any Claim and (iii) any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement (collectively, hereinafter "Expenses"), including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, incurred by Indemnitee by reason of (or arising in part out of) any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, controlling person, agent or fiduciary of the Company or any subsidiary of the Company, or is or was serving at the request of the Company as a director, officer, employee, controlling person, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action or inaction on the part of Indemnitee while serving in such capacity including, without limitation, any and all losses, claims, damages, expenses and liabilities, joint or several (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit, proceeding or any claim asserted) under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, which relate directly or indirectly to the registration, purchase, sale or ownership of any securities of the Company or to any fiduciary obligation owed with respect thereto (hereinafter an "Indemnification Event").  The Company shall make such payment of Expenses as soon as practicable but in any event no later than 25 days after written demand by Indemnitee therefor is presented to the Company.

(b)Reviewing Party.  Notwithstanding the foregoing, (i) the obligations of the Company under Section 2 shall be subject to the condition that the Reviewing Party (as described in Section 11(e) hereof) shall not have determined (in a written opinion, in any case in which the Independent Legal Counsel as defined in Section 11(d) hereof is involved) that Indemnitee would not be permitted to be indemnified under applicable law, and (ii) and Indemnitee acknowledges and agrees that the obligation of the Company to make an advance payment of Expenses to Indemnitee pursuant to Section 4(a) (an "Expense Advance") shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for the amount of such Expense Advance theretofore paid; provided, however, that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed) and until such time, Indemnitee shall be entitled to receive interim payments of expenses pursuant to Section 3(a).  Indemnitee's obligation to reimburse the Company for any Expense Advance shall be unsecured and no interest shall be charged thereon.  If there has not been a Change in Control (as defined in Section 11(c) hereof), the Reviewing Party shall be selected by the Board of Directors, and if there has been such a Change in Control (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control), the Reviewing Party shall be the Independent Legal Counsel referred to in Section 3(e) hereof.  If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, including the legal or factual bases therefor, and the Company hereby consents to service of process and to appear in any such proceeding.  Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee.

(c)Contribution.  If the indemnification provided for in Section 3(a) above is for any reason held by a court of competent jurisdiction to be unavailable to an Indemnitee in respect of any losses, claims, damages, expenses or liabilities referred to therein (after a final judicial determination is made with respect thereto, and as to which all rights of appeal therefrom have been exhausted or lapsed), then the Company, in lieu of indemnifying Indemnitee thereunder, shall contribute to the amount paid or payable by Indemnitee as a result of such losses, claims, damages, expenses or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and Indemnitee, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and Indemnitee in connection with the action or inaction which resulted in such losses, claims, damages, expenses or liabilities, as well as any other relevant equitable considerations.  In connection with the registration of the Company's securities, the relative benefits received by the Company and Indemnitee shall be deemed to be in the same respective proportions that the net proceeds from the offering (before deducting expenses) received by the Company and the Indemnitee, in each case as set forth in the table on the cover page of the applicable prospectus, bear to the aggregate public offering price of the securities so offered.  The relative fault of the Company and Indemnitee shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or Indemnitee and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

The Company and Indemnitee agree that it would not be just and equitable if contribution pursuant to this Section 3(c) were determined by pro rata or per capita allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph.  In connection with the registration of the Company's securities, in no event shall an Indemnitee be required to contribute any amount under this Section 3(c) in excess of the lesser of (i) that proportion of the total of such losses, claims, damages or liabilities indemnified against equal to the proportion of the total securities sold under such registration statement which is being sold by Indemnitee or (ii) the proceeds received by Indemnitee from its sale of securities under such registration statement.  No person found guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Securities Act) shall be entitled to contribution from any person who was not found guilty of such fraudulent misrepresentation.

(d)Survival Regardless of Investigation.  The indemnification and contribution provided for herein will remain in full force and effect regardless of any investigation made by or on behalf of Indemnitee or any officer, director, employee, agent or controlling person of Indemnitee.

(e)Change in Control.  After the date hereof, the Company agrees that if there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control) then, with respect to all matters thereafter arising concerning the rights of Indemnitee to payments of Expenses under this Agreement or any other agreement or under the Company's Certificate or Bylaws as now or hereafter in effect, Independent Legal Counsel (as defined in Section 11(d) hereof) shall be selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld).  Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent Indemnitee would be permitted to be indemnified under applicable law.  The Company agrees to abide by such opinion and to pay the reasonable fees of the Independent Legal Counsel referred to above and to fully indemnify such counsel against any and all reasonable expenses (including attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

(f)Mandatory Payment of Expenses.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in the defense of any action, suit, proceeding, inquiry or investigation referred to in Section 3(a) hereof or in the defense of any claim, issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred by Indemnitee in connection herewith.

4.Expenses; Indemnification Procedure.

(a)Advancement of Expenses.  The Company shall advance all Expenses incurred by Indemnitee.  The advances to be made hereunder shall be paid by the Company to Indemnitee as soon as practicable but in any event no later than twenty five days after written demand by Indemnitee therefor to the Company.

(b)Notice/Cooperation by Indemnitee.  Indemnitee shall give the Company notice in writing in accordance with Section 15 of this Agreement as soon as practicable of any Claim made against Indemnitee for which indemnification will or could be sought under this Agreement.

(c)No Presumptions; Burden of Proof.  For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law.  In addition, neither the failure of the Reviewing Party to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by the Reviewing Party that Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of legal proceedings by Indemnitee to secure a judicial determination that Indemnitee should be indemnified under applicable law, shall be a defense to Indemnitee's claim or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall be on the Company to establish that Indemnitee is not so entitled.

(d)Notice to Insurers.  If, at the time of the receipt by the Company of a notice of a Claim pursuant to Section 4(b) hereof, the Company has liability insurance in effect which may cover such Claim, the Company shall give prompt notice of the commencement of such Claim to the insurers in accordance with the procedures set forth in each of the Company's policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such action, suit, proceeding, inquiry or investigation in accordance with the terms of such policies.

(e)Selection of Counsel.  In the event the Company shall be obligated hereunder to pay the Expenses of any Claim, the Company shall be entitled to assume the defense of such Claim, with counsel approved by the Indemnitee (which approval shall not be unreasonably withheld) upon the delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Claim; provided that (i) Indemnitee shall have the right to employ Indemnitee's counsel in any such Claim at Indemnitee's expense and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there is a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not continue to retain such counsel to defend such Claim, then the fees and expenses of Indemnitee's counsel shall be at the expense of the Company.

5.Nonexclusivity.  The indemnification provided by this Agreement shall be in addition to any rights to which Indemnitee may be entitled under the Company's Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested directors, the DGCL, or otherwise. The indemnification provided under this Agreement shall continue as to Indemnitee for any action Indemnitee took or did not take while serving in an indemnified capacity even though Indemnitee may have ceased to serve in such capacity.

6.No Duplication of Payments.  The Company shall not be liable under this Agreement to make any payment in connection with any Claim made against any Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, Certificate of Incorporation, Bylaws or otherwise) of the amounts otherwise indemnifiable hereunder.

7.Partial Indemnification.  If any Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for any portion of Expenses incurred in connection with any Claim, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

8.Mutual Acknowledgement.  The Company and Indemnitee acknowledge that in certain instances, Federal law or applicable public policy may prohibit the Company from indemnifying its directors, officers, employees, controlling persons, agents or fiduciaries under this Agreement or otherwise. Each Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company's rights under public policy to indemnify Indemnitee.

9.Exceptions.  Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:

(a)Claims Initiated by Indemnitee.  To indemnify or advance expenses to any Indemnitee with respect to Claims initiated or brought voluntarily by Indemnitee and not by way of defense, except (i) with respect to actions or proceedings to establish or enforce a right to indemnify under this Agreement or any other agreement or insurance policy or under the Company's Certificate of Incorporation or Bylaws now or hereafter in effect relating to Claims for Indemnifiable Events, (ii) in specific cases if the Board of Directors has approved the initiation or bringing of such Claim, or (iii) as otherwise required under Section 145 of the DGCL, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expense payment or insurance recovery, as the case may be; or

(b)Claims Under Section 16(b).  To indemnify Indemnitee for expenses and the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Exchange Act or any similar successor statute; or

(c)Claims Excluded Under Section 145 of the Delaware General Corporation Law.  To indemnify Indemnitee if (i) Indemnitee did not act in good faith or in a manner reasonably believed by such Indemnitee to be in or not opposed to the best interests of the Company, or (ii) with respect to any criminal action or proceeding, Indemnitee had reasonable cause to believe Indemnitee's conduct was unlawful, or (iii) Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent the court in which such action was brought shall permit indemnification as provided in Section 145(b) of the DGCL.

10.Period of Limitations.  No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against any Indemnitee, any Indemnitee's estate, spouse, heirs, executors or personal or legal representatives after the expiration of five years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such five-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.

11.Construction of Certain Phrases.

(a)For purposes of this Agreement, references to the "Company" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees, agents or fiduciaries, so that if Indemnitee is or was a director, officer, employee, agent, control person, or fiduciary of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee, control person, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

(b)For purposes of this Agreement, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on any Indemnitee with respect to an employee benefit plan; and references to "serving at the request of the Company" shall include any service as a director, officer, employee, agent or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or its beneficiaries; and if any Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interests of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the best interests of the Company" as referred to in this Agreement.

(c)For purposes of this Agreement a "Change in Control" shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, who becomes the "beneficial owner" (as defined in Rule 13d-3 under said Exchange Act), directly or indirectly, of securities of the Company representing more than 20% of the total voting power represented by the Company's then outstanding Voting Securities, (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of transactions) all or substantially all of the Company's assets.

(d)For purposes of this Agreement, "Independent Legal Counsel" shall mean an attorney or firm of attorneys, selected in accordance with the provisions of Section 3(e) hereof, who shall not have otherwise performed services for the Company or any Indemnitee within the last three years (other than with respect to matters concerning the right of any Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements).

(e)For purposes of this Agreement, a "Reviewing Party" shall mean any appropriate person or body consisting of a member or members of the Company's Board of Directors or any other person or body appointed by the Board of Directors who is not a party to the particular Claim for which Indemnitee is seeking indemnification, or Independent Legal Counsel.

(f)For purposes of this Agreement, "Voting Securities" shall mean any securities of the Company that vote generally in the election of directors.

(g) For purposes of this Agreement, "Indemnitee" shall include spouses, heirs and estates.

12.Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall constitute an original.

13.Binding Effect; Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company, spouses, heirs, and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. This Agreement shall continue in effect with respect to Claims relating to Indemnifiable Events regardless of whether any Indemnitee continues to serve as a director, officer, employee, agent, controlling person, or fiduciary of the Company or of any other enterprise, including subsidiaries of the Company, at the Company's request.

14.Attorneys' Fees.  In the event that any action is instituted by an Indemnitee under this Agreement or under any liability insurance policies maintained by the Company to enforce or interpret any of the terms hereof or thereof, any Indemnitee shall be entitled to be paid all Expenses incurred by Indemnitee with respect to such action (including, without limitation, attorney's fees), regardless of whether Indemnitee is ultimately successful in such action, and shall be entitled to the advancement of Expenses with respect to such action, unless, as a part of such action, a court of competent jurisdiction over such action determines that the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous, provided, however, that until such determination is made, Indemnitee shall be entitled to receive payment of Expense Advances hereunder with respect to such action. In the event of an action instituted by or in the name of the Company under this Agreement to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all Expenses incurred by Indemnitee in defense of such action (including costs and expenses incurred with respect to Indemnitee counterclaims and cross-claims made in such action), and shall be entitled to the advancement of Expenses with respect to such action, unless, as a part of such action, a court having jurisdiction over such action determines that each of the Indemnitee's material defenses to such action was made in bad faith or were frivolous.

15.Notice.  All notices and other communications required or permitted hereunder shall be in writing, shall be effective when given, and shall in any event be deemed to be given (a) five calendar days after deposit with the U.S. Postal Service or other applicable postal service, if delivered by first class mail, postage prepaid, (b) upon delivery, if delivered by hand, (c) one business day after the business day of deposit with Federal Express or similar overnight courier, freight prepaid, or (d) one day after the business day of delivery by facsimile transmission, if deliverable by facsimile transmission, with copy by first class mail, postage prepaid, and shall be addressed if to Indemnitee, at Indemnitee's address as set forth beneath Indemnitee's signature to this Agreement and if to the Company at the address of its principal corporate offices (attention: Chief Executive Officer) or at such other address as such party may designate by ten calendar days' advance written notice to the other party hereto.

16.Consent to Jurisdiction.  The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of Utah for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be commenced, prosecuted and continued only in the federal and state courts located in Salt Lake County in the State of Utah, which shall be the exclusive and only proper forum for adjudicating such a claim.

17.Severability.  The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitations, each portion of this Agreement containing any provision held to be invalid, void or otherwise unenforceable, that is not itself invalid, void or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

18.Choice of Law.  This Agreement shall be governed by and its provisions construed and enforced in accordance with the laws of the State of Delaware, as applied to contracts between Delaware residents, entered into and to be performed entirely within the State of Delaware, without regard to the conflict of laws principles thereof.

19.Subrogation.  In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.

20.Amendment and Termination.  No amendment, modification, termination or cancellation of this Agreement shall be effective unless it is in writing signed by all parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

21.Integration and Entire Agreement.  This Agreement sets forth the entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter hereof between the parties hereto.

22.No Construction as Employment Agreement.  Nothing contained in this Agreement shall be construed as giving the Indemnitee any right to be retained in the employ of the Company or any of its subsidiaries.

23.Corporate Authority.  The Board of Directors of the Company has approved the terms of this Agreement.

 [Signature page follows.]

IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement on and as of the day and year first above written.

COMPANY:

ActiveCare, Inc.,

a Delaware corporation

By:

Name:

Title:

INDEMNITEE:

________________

EX-10.5

Exhibit 10.5

CONSULTING AGREEMENT

By and Between:

ACTIVECARE, INC.a Delaware corporation(the "Company")

and

ADP MANAGEMENT CORPORATIONa Utah corporation(the "Consultant")

September 23, 2015

TABLE OF CONTENTS

Page

1.ENGAGEMENT.

(a)Services

(b)Performance of the Services.

(c)No Conflict of Interest

2.INDEPENDENT CONTRACTOR RELATIONSHIP

3.COMPENSATION

(a)Consulting Fee

(b)Expenses

4.TERM AND TERMINATION.

(a)Term.

(b)Termination

(c)Effect of Termination

5.CONFIDENTIALITY.

(a)Confidential Information

(b)Restrictions on Use

(c)Exclusions

(d)Equitable Relief

(e)Return of Materials

(f)Disclaimer

6.WARRANTIES

7.DELIVERABLES

8.INDEMNIFICATION

9.MISCELLANEOUS.

(a)Entire Agreement

(b)Severability

(c)Governing Law

(d)Jurisdiction and Venue

(e)WAIVER OF JURY TRIAL

(f)Fees and Costs

(g)Waiver

(h)Modification

(i)Assignment

(j)Remedies

(k)Notices

(l)Construction

(m)Exhibits

(n)Counterparts

(o)Relationship of Parties

(p)Parties in Interest

* * * * *

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CONSULTING AND AGREEMENT

THIS CONSULTING AGREEMENT ("Agreement") is entered into this 23^rd day of September, 2015 and effective as of the _____ day of _____________, 2015 (the "Effective Date"), by and between ActiveCare, Inc., a Delaware corporation (the "Company"), and ADP Management Corporation, a Utah corporation (the "Consultant").

RECITALS

A.The Company is in the business of marketing health monitoring and related products.

B.Consultant, has provided the Company and its affiliates with certain consulting services (collectively, the "Services"), and the Company desires to continue to receive such services subject to the terms and conditions set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants, agreements and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.Engagement.

(a)Services.  The Company hereby engages the Consultant to perform the Services, as more particularly set forth on Exhibit A attached hereto (as such exhibit may be amended or supplemented pursuant to the terms of the Agreement from time to time), and the Consultant hereby accepts such engagement and agrees to provide the Services.  The Consultant and the Company will mutually agree upon the method, details and means of performing the Services.  For purposes of this Agreement, Consultant has designated Mr. David G. Derrick, as Consultant's representative to undertake the day-to-day administration and management hereunder on behalf of Consultant.

(b)Performance of the Services.

(i)For each month during the Term (as defined below), the Consultant commits to dedicate its best efforts to render the Services, provided, that the Consultant shall work as many hours as may be reasonably necessary to timely render the Services pursuant to this Agreement.

(ii)The Consultant shall render to the Company and certain of its affiliates the Services in a timely and professional manner consistent with industry standards, in accordance with this Agreement.

(iii)If any services, functions or responsibilities not specifically described in this Agreement are required for the proper performance and provision of the Services, they shall be deemed to be included within the scope of Services to the same extent as if specifically described in this Agreement.

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(iv)The Consultant may not subcontract or otherwise delegate its obligations under this Agreement without the Company's prior written consent.  In performing the Services, the Consultant agrees to provide his own personnel, equipment, tools and other materials at his own expense.  In connection with providing the Services, the parties hereby agree that, unless otherwise consented to in writing by the Company, the only person that will render the Services shall be the Consultant.

(v)The Company shall make its facilities and equipment available to the Consultant as reasonably necessary in connection with the Services.  For any work performed on the Company's or any of its affiliates' premises, the Consultant shall comply with all security, confidentiality, safety and health policies of the Company and such affiliates.

(vi)Subject to compliance with the Consultant's obligations hereunder, the Consultant shall retain the sole control and discretion to determine the methods by which the Consultant performs the Services and the places at which, the equipment and supplies with which, and the hours during which such Services are to be rendered.

(c)No Conflict of Interest.  The Consultant agrees during the Term not to, directly or indirectly, on the Consultant's own behalf or in the service or on behalf of others, accept work or enter into any agreement or accept any obligation that is inconsistent or incompatible with the Consultant's obligations under this Agreement or the scope of Services rendered to the Company and its affiliates.  The Consultant represents and warrants that, to the best of his knowledge, there is no other existing agreement or duty on the Consultant's part inconsistent with this Agreement.

2.Independent Contractor Relationship.  The Consultant's relationship with the Company and its affiliates shall be that of an independent contractor and nothing in this Agreement should be construed to create a partnership, joint venture, agency or employer-employee relationship between the parties.  The Consultant is not the agent of the Company or any of its affiliates and is not authorized and shall not have any authority to make any representation, contract or commitment on behalf of the Company or its affiliates, or otherwise bind the Company or its affiliates in any respect whatsoever.  For the avoidance of doubt, Consultant is not authorized to make any representation, contract or commitment on behalf of the Company or its affiliates for the purchase or sale of natural gas or other hydrocarbons.  Further, except as otherwise specifically provided herein, it is not the intention of this Agreement or of the parties hereto to confer a third party beneficiary right of action upon any third party or entity whatsoever, and nothing in this Agreement shall be construed to confer upon any third party other than the parties hereto a right of action under this Agreement or in any manner whatsoever.  The Consultant (and his employees and agents) shall not be entitled to any of the benefits the Company may make available to its employees, such as group insurance, profit-sharing or retirement benefits.  The Consultant shall be solely responsible for all tax returns and payments required to be filed with or made to any federal, state or local tax authority with respect to the Consultant's performance of the Services and receipt of fees under this Agreement.  The Company may regularly report amounts paid to the Consultant with the Internal Revenue Service as required by law.  Because Consultant is an independent contractor, the Company shall not withhold or make payments for social security, make unemployment insurance or disability insurance contributions, or obtain worker's compensation insurance on the Consultant's (or his employees' or agents') behalf.  The Consultant shall comply with, and agrees to accept exclusive liability for non-compliance with, all applicable state and federal laws, rules and regulations, including, without limitation, obligations such as payment of all taxes, social security, disability and other contributions based on fees paid to the Consultant, his agents or employees under this Agreement.  The Consultant hereby agrees to indemnify, hold harmless and defend the Company against any and all such liability, taxes or contributions, including, without limitation, penalties and interest.

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3.Compensation.

(a)Consulting Fees.  The Company may, as it deems fit, and from time to time require Consultant to perform Consulting Services to the Company on matters of finance, operations, etc.  For such services the Company agrees to pay the healthcare insurance costs for Mr. Derrick and his assistant.  In addition, the Company will pay consultant $6,000 per month for such consulting services ("Consulting Fee").

(b)Bonus.  In its role as a financial consultant to the Company, Consultant shall receive a bonus based on funds raised on behalf of the Company pursuit to Consultant's efforts.  The bonus will be calculated as follows:  For funds raised on behalf of the Company, Consultant will receive a bonus equal to the remainder of 15% of the funds raised less payments to third parties owed in regards to said raise (the "Bonus").

(c)Expenses.  The Company shall reimburse the Consultant for all reasonable travel, lodging, communications, and out-of-pocket expenses incurred by the Consultant in connection with providing the Services; provided any such expenses shall be approved in advance in writing by the Company and shall be reasonably documented.  The Consultant shall submit to the Company, on a monthly basis, an invoice for all expenses incurred during the prior month.  All amounts payable by the Company hereunder shall be due and payable fifteen (15) days from receipt by the Company of such invoice.  If the Company disputes an invoice, it may withhold the disputed portion but shall pay the undisputed portion.

4.Term and Termination.

(a)This Agreement shall commence on the Effective Date and continue in effect for an initial period of one (1) year (the "Initial Term").  Thereafter, this Agreement shall automatically renew for additional consecutive one (1) month periods (each, a "Renewal Term"), unless terminated by either party upon at least thirty (30) days written notice to the other party prior to the end of the Initial Term or any Renewal Term.  Notwithstanding the foregoing to the contrary, however, this Agreement shall not terminate until all outstanding debt obligations of the Company payable to Consultant or its affiliates have been paid in full.  For purposes hereof, "Term" means the period commencing on the Effective Date and ending on the termination or expiration of this Agreement.

(b)Termination.  Notwithstanding Section 4, this Agreement may be terminated in accordance with any of the following:

(i)Upon the mutual written agreement of the parties, effective on the date so mutually agreed;

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(ii)By either party, effective immediately upon written notice to the other party, if the other party materially breaches any term or provision of this Agreement and fails to cure such breach within ten (10) days after receipt of written notice of the breach;

(iii)By either party, effective immediately upon written notice thereof, if it becomes illegal or impossible for any party to perform its obligations under the terms of this Agreement for any reason whatsoever; or

(iv)Automatically upon the first to occur of any of the following events: (A) the bankruptcy or insolvency of either party; (B) the sale of all or substantially all of the assets of the Company; and (C) the complete liquidation of the Company.

(c)Effect of Termination.  The termination or expiration of this Agreement shall in no way affect or impair any right which has accrued to either party hereto prior to the date when such termination or expiration became effective. Upon the effective date of any termination or expiration of this Agreement, the Consultant shall immediately cease performing the Services.  The Company shall pay the Consultant for all Services performed up through the date of termination or expiration.  The provisions of Sections 2, 3(b), 5, 6, 7, 8 and 9, and this Section 4(c) shall survive any expiration or other termination of this Agreement.  Termination of this Agreement by either party shall not act as a waiver of any breach of this Agreement and shall not act as a release of either party from any liability for breach of such party's obligations under this Agreement.  Neither party shall be liable to the other for damages of any kind solely as a result of terminating or expiration of this Agreement in accordance with its terms, and termination of this Agreement by a party shall be without prejudice to any other right or remedy of such party under this Agreement or applicable law.

5.Confidentiality.

(a)Confidential Information.  By virtue of this Agreement, the Consultant will have access to confidential, proprietary and trade secret information and materials of the Company (or its affiliates, suppliers, vendors, customers or any other third party to whom the Company owes a duty of confidentiality), in whatever form, tangible or intangible, whether disclosed orally, in writing or otherwise, that is provided to the Consultant before or after the execution of this Agreement under circumstances reasonably indicating that it is confidential or proprietary (collectively, the "Confidential Information").  Confidential Information includes, without limitation, any trade secrets and know-how, and any:

(i)information, ideas or materials of a technical or creative nature, such as inventions, improvements, discoveries, developments, techniques, processes, research and development plans and results, reports, drawings, designs, specifications, works of authorship, data, formulas, files, HTML, computer source and object code, patent applications, and other materials and concepts relating to the Company's business, services, processes or technology;

(ii)information, ideas or materials of a business nature, such as development plans, marketing and sales plans and forecasts, budgets and unpublished financial statements, and other information regarding finances, profits, costs, marketing, purchasing, sales, operations, policies, procedures, personnel, salaries, customers, suppliers and contract terms;

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(iii)all personal property, including, without limitation, books, manuals, records, files, reports, notes, contracts, lists, blueprints and other documents or materials, or copies thereof, received by the Consultant or prepared for the Company in the course of the Consultant's rendering of Services to the Company; and

(iv)any other trade secrets, information, ideas or materials of or relating in any way to the past, present, planned or foreseeable business, products, developments, technology or activities of the Company (or its affiliates, employees, licensors, suppliers, vendors, clients, customers or any other third parties to whom the Company owes a duty of confidentiality).

Confidential Information does not include that which (A) is already in the Consultant's possession at the time of disclosure to the Company, (B) is or becomes part of public knowledge other than as a result of any action or inaction of the Consultant, (C) is obtained by the Consultant from an unrelated third party without a duty of confidentiality, or (D) is independently developed by the Consultant other than in connection with this Services.

(b)Restrictions on Use.  The Consultant shall not use Confidential Information for any purpose other than in furtherance of this Agreement and the activities described herein.  The Consultant shall not disclose Confidential Information to any third parties except as otherwise permitted hereunder.  The Consultant shall maintain Confidential Information with at least the same degree of care it uses to protect its own proprietary information of a similar nature or sensitivity, but no less than reasonable care under the circumstances.  The Consultant shall promptly advise the Company in writing of any misappropriation or misuse of Confidential Information of which the Consultant becomes aware.

(c)Exclusions.  Notwithstanding the foregoing, this Agreement shall not prevent the Consultant from disclosing Confidential Information to the extent required by a judicial order or other legal obligation, provided that, in such event, the Consultant shall promptly notify the Company to allow intervention (and shall cooperate with the Company) to contest or minimize the scope of the disclosure (including application for a protective order).  Further, the Consultant may disclose the terms and conditions of this Agreement: (i) in confidence, to legal counsel; (ii) in confidence, to accountants; and (iii) in connection with the enforcement of this Agreement or any rights hereunder.

(d)Equitable Relief.  The Consultant acknowledges that the Company considers the Confidential Information to contain trade secrets and that any unauthorized use or disclosure of such information would cause the Company irreparable harm for which its remedies at law would be inadequate.  Accordingly, the Consultant acknowledges and agrees that the Company will be entitled, in addition to any other remedies available to it at law or in equity, to the issuance of injunctive relief, without bond, enjoining any breach or threatened breach of the Consultant's obligations hereunder with respect to the Confidential Information, and such further relief as any court of competent jurisdiction may deem just and proper.

(e)Return of Materials.  Upon termination of this Agreement, the Consultant will immediately return to the Company all Confidential Information embodied in tangible (including electronic) form or, at the Consultant's discretion, destroy all such Confidential Information and certify in writing to the Company that all such Confidential Information has been destroyed.

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(f)Disclaimer.  The Company hereby disclaims all warranties of any kind, whether express, implied, statutory or otherwise, with respect to any Confidential Information or other information or materials supplied by the Company to the Consultant hereunder.

6.Warranties.  The Consultant represents, warrants and covenants to the Company that: (a) the Consultant has the full power and authority to enter into this Agreement and to perform his obligations hereunder, without the need for any consents, approvals or immunities not yet obtained; (b) the Consultant has the right to grant the rights and assignments granted herein, without the need for any assignments, releases, consents, approvals, immunities or other rights not yet obtained; (c) the Services, including, without limitation, any Deliverables (as defined below) required hereunder, shall be free from material errors or other defects and shall substantially conform to any specifications for such Services and/or deliverables; and (d) any deliverables or other materials delivered to the Company or any of its affiliates in connection with this Agreement (the "Deliverables") (and the exercise of the rights granted herein with respect thereto) do not and shall not infringe, misappropriate or violate any patent, copyright, trademark, trade secret, publicity, privacy or other rights of any third party, and are not and shall not be defamatory or obscene.

7.Deliverables.  The Company is and shall be, the sole and exclusive owner of all rights, title and interest throughout the world in and to the results and proceeds of the Services performed un this Agreement, including but not limited to any Deliverables.  The Consultant hereby agrees that the Deliverables are hereby deemed a "work made for hire" as defined in 17 U.S.C. §101 for the Company.   If, for any reason, any of the Deliverables do not constitute a "work made for hire", the Consultant hereby irrevocably assigns to the Company, in each case without additional consideration, all of his right, title and interest throughout the world in and to the Deliverables.  Any assignment of copyrights under this Agreement includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as "moral rights" (collectively, "Moral Rights").  The Consultant hereby irrevocably waives, to the extent permitted by applicable law, any and all claims you may now or hereafter have in any jurisdiction to any Moral Rights with respect to the Deliverables.  The Consultant hereby acknowledges and agrees that (a) he has no right or license to use, publish, reproduce, prepare derivative works based upon, distribute, perform, or display any Deliverables, and (b) he has no right or license to use the Company's trademarks, service marks, trade names, trade names, logos, symbols or brand names.

8.Indemnification.  The Consultant shall indemnify and hold harmless, and at the Company's request defend, the Company and its affiliates, successors and assigns (and its and their officers, managers, employees, customers and agents) from and against any and all claims, losses, liabilities, damages, settlements, expenses and costs (including, without limitation, attorneys' fees and court costs) which arise out of or relate to (a) any breach (or claim or threat thereof that, if true, would be a breach) of this Agreement by the Consultant, including, without limitation, any breach or alleged breach of any representation or warranty of the Consultant set forth in Section 6; or (b) any third party claim or threat thereof that the Services (or the exercise of the rights granted herein with respect thereto) infringe, misappropriate or violate any patent, copyright, trademark, trade secret, publicity, privacy or other rights of any third party, or are defamatory or obscene.

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9.Miscellaneous.

(a)Entire Agreement.  This Agreement is the final, complete and exclusive agreement between the parties relating to the subject matter hereof, and supersedes all prior or contemporaneous discussions, proposals, negotiations, understandings, representations, warranties, promises, agreements and other communications, whether oral or written, between the parties relating to such subject matter and all past courses of dealing or industry customs.

(b)Severability.  If the application of any provision of this Agreement to any particular facts or circumstances shall for any reason be held to be invalid, illegal or unenforceable by a court, arbitration panel or other tribunal of competent jurisdiction, then (i) the validity, legality and enforceability of such provision as applied to any other particular facts or circumstances, and the other provisions of this Agreement, shall not in any way be affected or impaired thereby, and (ii) such provision shall be enforced to the maximum extent possible so as to effect the intent of the parties.  If, moreover, any provision contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent compatible with applicable law.

(c)Governing Law.  This Agreement is to be construed in accordance with and governed by the internal laws of the State of Utah without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Utah to the rights and duties of the parties.

(d)Jurisdiction and Venue.  Any legal suit, action or proceeding arising out of or relating to this Agreement shall be commenced in a federal or state court located in the County of Utah, Utah, and each party hereto (i) irrevocably submits to the exclusive jurisdiction and venue of any such court in any such suit, action or proceeding, and (ii) irrevocably waives (to the extent permitted by applicable law) any objection which it now or hereafter may have to the laying of venue of any such action or proceeding brought in any of the foregoing courts in and of the State of Utah, and any objection on the ground that any such action or proceeding in any such court has been brought in an inconvenient forum.

(e)WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY AGAINST THE OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.  EACH OF THE PARTIES AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT WITHOUT A JURY.  WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

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(f)Fees and Costs.  The prevailing party or parties in any arbitration, mediation, court action, or other adjudicative proceeding arising out of or relating to this Agreement shall be reimbursed by the party or parties who do not prevail for their reasonable attorneys', accountants', and experts' fees and for the costs of such proceeding.  For purposes of this Section 9(f), "prevailing party" includes, without limitation, a party who agrees to dismiss an action or proceeding upon the other's payment of sums allegedly due or performance of the covenants allegedly breached, or who obtains substantially the relief sought.  The provisions set forth in this Section 9(f) shall survive the merger of these provisions into any judgment.

(g)Waiver.  The waiver by either party of a breach of or a default under any provision of this Agreement shall not be effective unless in writing and shall not be construed as a waiver of any subsequent breach of or default under the same or any other provision of this Agreement, nor shall any delay or omission on the part of either party to exercise or avail itself of any right or remedy that it has or may have hereunder operate as a waiver of any right or remedy.

(h)Modification.  No amendment or modification to this Agreement shall be valid or binding upon the parties unless in writing and signed by each party.

(i)Assignment.  The Consultant acknowledges that the Company has entered into this Agreement on the basis of the particular abilities of the Consultant.  Accordingly, the Company shall be entitled to assign, sell, transfer, delegate or otherwise dispose of, whether voluntarily or involuntarily, by operation of law or otherwise, this Agreement and any of its rights or obligations of this Agreement, but the Consultant shall not and shall not have the right to assign, sell, transfer, delegate or otherwise dispose of, whether voluntarily or involuntarily, by operation of law or otherwise, this Agreement or any of its rights or obligations under this Agreement without the prior written consent of the Company.  Except as provided herein, any purported assignment, sale, transfer, delegation or other disposition by the Consultant, except as permitted herein, shall be null and void.  Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors and permitted assigns.

(j)Remedies.  All rights and remedies hereunder shall be cumulative, may be exercised singularly or concurrently and, unless otherwise stated herein, shall not be deemed exclusive.

(k)Notices.  All notices, invoices, payments, and other communications made under this Agreement (each, a "Notice") shall be in writing and sent to the appropriate party at the address set forth for such party on the signature page below, or at such other address as such party may designate by ten (1) days  advanced Notice to the other party in accordance with this Section 9(k).  Notice shall be given when received on a business day by the addressee.  In the absence of proof of the actual receipt date, the following presumptions will apply: (i) Notices sent by electronic means, including facsimile and electronic mail shall be deemed to have been received upon the sending Party's receipt of its confirmation of successful transmission, such as facsimile machine's confirmation or the "return receipt requested" function for electronic mail, provided, that if the day on which such electronic communication is received is not a business day or is after five (5:00) p.m. local time at the recipient party's address to where deliver is made, then such electronic communication shall be deemed to have been received on the next following business day; (ii) Notice sent by overnight mail or courier shall be deemed to have been received on the next business day after it was sent or such earlier time as confirmed by the receiving party or courier; and (iii) Notice sent by first class mail, postage prepaid, shall be deemed received five (5) business days after mailing.

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(l)Construction.  The captions and section and paragraph headings used in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement.  The construction of this Agreement shall not take into consideration the party who drafted or whose representative drafted any portion of this Agreement, and no canon of construction shall be applied that resolves ambiguities against the drafter of the document.

(m)Exhibits.  All Exhibits attached hereto are hereby incorporated by reference into, and made a part of, this Agreement.

(n)Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Agreement, but all of which together shall constitute one and the same instrument.  This Agreement may be executed and delivered by facsimile, or by email in portable document format (.pdf) and delivery of the executed signature page by such method will be deemed to have the same effect as if the original signature had been delivered to other the parties.

(o)Relationship of Parties.  This Agreement shall not be construed as creating an agency, partnership, joint venture or any other form of association, for tax purposes or otherwise, between the parties, and the parties shall at all times be and remain independent contractors.  Except as expressly agreed by the parties in writing, neither party shall have any right or authority, express or implied, to assume or create any obligation of any kind, or to make any representation or warranty, on behalf of the other party or to bind the other party in any respect whatsoever.

(p)Parties in Interest.  Except as otherwise specifically provided herein to the contrary, nothing in this Agreement shall confer any rights or remedies under or by reason of this Agreement on any person other than the parties hereto and their respective permitted successors and assigns nor shall anything in this Agreement relieve or discharge the obligation or liability of any third person to any party to this Agreement, nor shall any provision give any third person any right of subrogation or action over or against any party to this Agreement.  The parties hereby designate the Company's affiliates who are the recipient of the Services as third party beneficiaries hereto with the right to enforce the terms hereof.

[SIGNATURES TO FOLLOW]

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

"COMPANY"

ACTIVECARE, INC.,

a Delaware corporation

By:

Name:

Title:

Address: 1365 West Business Park Drive

Orem, UT 84058

Attn:  James Dalton

Telephone:  877-219-6050

Facsimile: 855-864-2511

Email:  jim@activecare.com

"CONSULTANT"

ADP Management Corporation

a Utah corporation

By:

Its:

Address: 1401 North 1075 West

Suite 240

Farmington, UT 84025

Telephone:  801-451-5742

Facsimile: 801-451-5736

Email: dderrick@connect2.com

SIGNATURE PAGE

TO THE

CONSULTING AGREEMENT

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EXHIBIT A

DESCRIPTION OF THE SERVICES

1.Any services reasonably requested by the Company that are necessary or useful for the operation and growth of the Business.

2.Providing advice and assistance regarding the Company's and its affiliates' businesses, including without limitation, developing business plans, making introductions to potential customers and/or suppliers, identifying qualified employees and other service providers, meeting with the Company's and its affiliates' respective managers, officers, employees, agents, investors and other financial sources, and other service providers regarding the business, prospects and affairs of the Company and its affiliates.

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EX-10.6

Exhibit 10.6

SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") executed this 23^rd day of September, 2015 with an effective date as of the ____ day of July, 2015 by and between the Bluestone Advisors, LLC ("Bluestone"), Blackhawk Properties, LLC ("Blackhawk"), Banyan Investment Company LLC ("Banyan"), The Mark and Nancy Peterson Foundation ("Foundation"), Tyumen Holdings, LLC ("Tyumen") and with Jeffrey Peterson ("Peterson") collectively ("Peterson Affiliates"), and the ActiveCare, Inc., a Delaware corporation ("ActiveCare" or "Company"), is entered into effective as of the date indicated in Section 5, below.  Each of BlueStone, Peterson and ActiveCare are sometimes referred to as a "Party" and collectively they are sometimes referred to as the "Parties".

RECITALS

WHEREAS, From March 2014 through June 2014, Peterson Affiliates loaned or advanced to the Company under a factor agreement, cash in the aggregate amount outstanding principal and additional extensions of $1,721,100 which amounts are currently in default ("Factor Default") and,

WHEREAS, Peterson Affiliates made additional cash advances on behalf of the Company in the aggregate amount outstanding of $1,303,135, which amounts are currently in default ("Default Advances"); and

WHEREAS, the Company owes Bluestone unpaid contract amounts of $25,462 (the "Contract Amounts"); and

WHEREAS, ActiveCare and Peterson Affiliates now wish fully and finally to settle and resolve any and all actual or potential disputes in connection with the payments owed Peterson Affiliates as described herein, on the conditions and terms contained in this Agreement.

NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties enter into this Agreement, and agree as follows:

1.Incorporation of the Recitals.  All of the recitals set forth above are made a part of this Agreement and incorporated herein as if set at length in the text of this Agreement.

2.Settlement Payments.  In consideration of the issuance of a total of 6,000,000 shares of ActiveCare common stock ("Common Stock") to Tyumen Holdings, LLC upon execution of this Agreement, Peterson Affiliates agree to make the following concessions and agreements:

The Factor Default totaling $1,721,100 in principal ("Note 1") shall be issued 2,000,000 shares of Common Stock for being moved to default status, along with 1,000,000 shares issued to extend due date as described below, the Default Advances totaling $1,303,135 in principal ("Note 2") shall be issued 2,000,000 of Common Stock for advancing such funds, along with 1,000,000 shares of Common Stock issued to extend due date as described below; and the Contract Amounts totaling $25,462 ("Note 3") and, with Notes 1, 2 and 3 shall be and hereby are amended as follows:

(a)the due date for payment of all amounts due and owing under the Note 1 and Note 2 is hereby extended to January 1, 2017;

(b)interest on the unpaid principal and accrued interest under the Note 1, Note 2, and Note 3 shall continue to accrue from September 1, 2015 until paid in full at the rate of 18% per annum;

(c)in the event of a default under any Note, all unpaid principal and accrued interest thereunder shall accrue interest from the date of default to a default rate of 24% per annum until paid in full.

(d)The principle and interest which shall accrue and is owing under Note 1 and Note 2 shall be convertible, at the option of the holder, at $.30 per common share, in whole or in part.

3.Notices.  Any notice, request, direction or demand given or made under this Agreement shall be in writing, shall be sent to the Parties at their respective addresses set forth below and shall be delivered personally, by Federal Express or other reputable overnight national courier service, by electronic mail, or by certified U.S. Mail, return receipt requested, and shall be deemed given upon (i) actual receipt, in the case of personal delivery or electronic mail, (ii) the fourth business day after being deposited in the U.S. mail, in the case of certified U.S. Mail, return receipt requested delivery, or (iii) the next business day after being deposited with Federal Express or another reputable overnight courier:

To BlueStone and Peterson:

c/o Jeff Peterson

539 Blackhawk Lane

Alpine, UT 84004

bluestonecapital@gmail.com

To ActiveCare:

ActiveCare, Inc.

Attention: President/CEO

1365 West Business Park Drive

Orem, UT 84058

Any Party hereto may, at any time, change its above-noted contact information by remitting to the other Party hereto, seven (7) days' written notice of such new contact information to be used for the purpose of this Agreement.

4.Effective Date.  The effective date of this Agreement shall be the date on which it has been fully executed by all of the Parties.

5.Entire Agreement, Amendment, Severability and Choice of Law.  This Agreement constitutes the sole and complete understanding and agreement between the Parties.  The Parties acknowledge that, in executing this Agreement, they are not relying on any representation or statement made to them by any person with regard to any obligations under or provisions of this Agreement, except as explicitly set forth in this Agreement.  This Agreement may not be amended except in writing signed by the Parties or their authorized attorneys.  This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of Utah, without regard to its conflicts of laws provisions.  The Parties submit to and recognize the jurisdiction of the courts of the State of Utah over any action or other proceeding arising out of or in connection with this Agreement.  If any provision of this Agreement herewith conflicts with applicable law, such provision shall be deemed severed from this Agreement, and the balance thereof shall remain in full force and effect.

6.Headings.  The headings used herein are for the convenience of the Parties only and shall not be used to interpret the terms of this Agreement.

7.Voluntary Agreement.  The Parties agree and acknowledge that (a) they have each had an adequate opportunity to review this Agreement and all of its terms, and have been represented and advised by legal counsel of their choice with respect to this Agreement; (b) they understand all of the terms of this Agreement, and agree and acknowledge that such terms are fair, reasonable, and are not the result of any fraud, duress, coercion, pressure, or undue influence exercised by or on behalf of any of the Parties; and (c) they have agreed to and entered into this Agreement and all of the terms hereof knowingly, freely, and voluntarily.

8.Authority to Bind.  The signatories to this Agreement each warrant, represent, and promise that they each possess the power and authority to execute this Agreement on behalf of, and as such, to bind, the individuals and/or entities on whose behalf they have executed this Agreement.

9.Limitation on Remedies.  In the event of any breach of this Agreement by any Party hereto, no Party shall be entitled to rescission or punitive damages, it being agreed that the sole remedy shall be for actual damages incurred.

10.Construction.  It is the intent of the Parties hereto that no part of this Agreement is to be construed against any Party because of the identity of the drafter.

11.Counterparts.  This Agreement may be executed in one or more counterparts by some or all of the Parties hereto, and (i) each such counterpart shall be considered an original, and all of which together shall constitute a single Agreement, (ii) the exchange of executed copies of this Agreement by Portable Document Format (PDF) transmission shall constitute effective execution and delivery of this Agreement as to the Parties for all purposes, and (iii) signatures of the Parties transmitted by PDF shall be deemed to be their original signatures for all purposes.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.

Dated:  July ____, 2015ActiveCare, Inc.

By:

Its:

Dated:  July ___, 2015BlueStone Advisors, LLC

By:

Its:

Dated:  July ___, 2015Jeffrey Peterson (et. al.)

EX-10.7

Exhibit 10.7

PROMISSORY NOTE

U.S. $339,015.55   September 2, 2015

The undersigned, ActiveCare, Inc., a Delaware corporation ("Borrower"), promises to pay ADP Management Corporation, a Utah corporation ("Lender"), at 1401 North 1075 West, Suite 240, Farmington, Utah 84025 or at such other place as Lender may designate in writing, the original principal sum of $339,015.55 together with other amounts which may become due in accordance with the following provisions of this Promissory Note (this "Note").

1. Transfer of Advances. Lender advanced to Borrower the aggregate sum of $339,015.55 including interest between June 1, 2013 and July 10, 2015 as delineated in Exhibit A attached hereto. Borrower and Lender desire that the owed amount be repaid to Lender on the terms set forth in this Note.

2. Interest Rate. Interest shall accrue at 18% annually; commencing September 1, 2015 compounding daily until paid in full.

3. Payment of Principal and Maturity Date. This Note shall be due along with interest on January 1, 2017 (the "Maturity Date").

4. Prepayment. Borrower shall have the right to prepay the indebtedness, in full or in part and without penalty or payment of any fee or premium, at any time prior to the Maturity Date upon fifteen (15) days of written notice to Lender.

5. Severability. If any term or condition of this Note shall be held to be invalid or unenforceable, the rest of this Note shall be enforced without the invalid or the unenforceable provision.

6. Notice. Notices which are given pursuant to this Note shall be as follows:

Lender:

ADP Management Corporation

1401 North 1075 West, Suite 240

Farmington, Utah 84025

Borrower:

ActiveCare, Inc.

1365 West Business Park Drive

Orem, Utah 84058

7. References. Whenever used herein, the words "Borrower" and "Lender" shall be deemed to include their respective heirs, devisees, personal representatives, successors and assigns.

8. Governing Law.  This Note shall be construed according to and governed by the laws of the State of Utah.  The parties consent to the exclusive jurisdiction of any court of competent jurisdiction located in the State of Utah.

9. Unconditional Obligation; No Offset. Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable obligation of Borrower not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset it now has or may have hereafter against Lender, its successors and assigns, and agrees to make the payments called for herein in accordance with the terms of this Note.

10. Waiver. No waiver of any provision of this Note shall be effective unless it is in the form of a writing signed by the party granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in writing.

11. Payment of Collection Costs. If this Note is placed in the hands of an attorney for collection or enforcement prior to commencing arbitration or legal proceedings, or is collected or enforced through any arbitration or legal proceeding, or Lender otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note, then Borrower shall pay the costs incurred by Lender for such collection, enforcement or action including, without limitation, attorneys' fees and disbursements.

12. Amendments. The prior written consent of both parties hereto shall be required for any change or amendment to this Note.

13. Assignments. Borrower may not assign this Note without the prior written consent of Lender. This Note may be offered, sold, assigned, pledged, encumbered or transferred by Lender without the consent of Borrower.

14. Arbitration of Claims. Borrower and Lender shall submit all Claims (as defined in Exhibit A) arising under this Note or other agreements between them and their affiliates to binding arbitration pursuant to the arbitration provisions set forth in Exhibit A attached hereto (the "Arbitration Provisions"). Borrower and Lender hereby acknowledge and agree that the Arbitration Provisions are unconditionally binding on the parties hereto and are severable from all other provisions of this Note. Any capitalized term not defined in the Arbitration Provisions shall have the meaning set forth in this Note. By executing this Note, Borrower represents, warrants and covenants that Borrower has reviewed the Arbitration Provisions carefully, consulted with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration Provisions are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations set forth in the Arbitration Provisions, and that Borrower will not take a position contrary to the foregoing representations. Borrower acknowledges and agrees that Lender may rely upon the foregoing representations and covenants of Borrower regarding the Arbitration Provisions.

15. Waiver of Jury Trial. EACH PARTY TO THIS NOTE IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS NOTE OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY'S RIGHT TO DEMAND TRIAL BY JURY.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the Exchange Date.

Borrower:ActiveCare, Inc.

By: _________________________

           Jeff Peterson, CFO

Lender:ADP Management Corporation

By: __________________________

         Marsha Derrick, President

[Signature page to Promissory Note]

EXHIBIT A

12/02/14	Factor Commission	$	4,000
12/03/14	Short Swing Liability		(625	)
1/21/15	Advance	$	40,000
4/1/15	Mintz Advance	$	95,000
6/19/15	Advance	$	75,000
7/10/15	Advance	$	100,000
2013	Note Payable	$	15,000
6/30/15	Interest	_$10,640.55
Total		$	339,015.55

EX-10.8

Exhibit 10.8

SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is made effective this 20th day of May, 2015 by and between ActiveCare, Inc., a Delaware corporation (the "Company"), and Advance Technology Investors, LLC ("ATI").

WHEREAS,    the Company and ATI entered into that certain Distribution Agreement dated October 3, 2013 (the "Distribution Agreement") and attached hereto as Exhibit A wherein ATI was granted an Exclusive Distributorship to the territory of New York, New Jersey and Connecticut by ATI paying the Company the sum of $495,500; and

WHEREAS,    the terms and conditions of the Distribution Agreement require the Company to make minimum payments of $30,000 per month into perpetuity unless terminated by one of the parties; and

WHEREAS,    the Company made a total of 10 monthly payments or $300,000 on the Distribution Agreement and is currently in default on the Distribution Agreement and owes ATI $300,000 in accrued payments ("Accrued Payments"); and

WHEREAS,    ATI received 450,000 Company warrants exercisable at $1 per share with an expiration date of September 30, 2018 (the "Warrants"); and

WHEREAS,    Company has the right to terminate the Distribution Agreement by paying aggregated payments to ATI of $500,000 (of which it has currently paid $300,000) plus shares equal to $500,000 divided by the previous average seven day closing price of the Company which is $.22 per share as to the effective date of this Agreement; and

WHEREAS,     the Company and ATI desire to settle and terminate the distribution Agreement.

NOW, THEREFORE,    in consideration of the foregoing, and the agreements set forth below, the parties agree as follows:

1.Termination of Distribution Agreement.    The parties hereby mutually agree to the termination of the Distribution Agreement.

2.Payment of Purchase of Distribution Agreement.    As consideration for the early termination of the Distribution Agreement by ATI and as a default penalty for not paying the Accrued Payments, the Company shall issue to ATI 3,000,000 common shares of the Common Stock of the Company ("Common Shares").  In addition, the Company will issue a promissory note in the principal amount of $300,000 with interest at 12% payable upon an equity raise in excess of $3,000,000 and with the ability to convert at anytime into common shares at $.30 per share (the "Promissory Note").  A copy of the Promissory Note is attached hereto as Exhibit B.  In addition, the Company agrees to pay the annual renewal premium on the key man life insurance policy with ATI as the owner and beneficiary.  Also, the Company agrees to lower the exercise price of the Warrants to $.40 per share and extend the expiration date to March 31, 2020.

3.ATI Ownership of Common Shares.    Notwithstanding anything to the contrary set forth in the applicable Settlement Agreement and/or the Warrant Agreement, ATI and Company agree that unless ATI delivers to the Company at least sixty-five (65) days advance written notice of its desire and intent to beneficially own 10% or more of the Company's Common Stock, the Company will not issue and deliver any portion of the Common Shares to ATI if and to the extent that such issuance would result in ATI becoming the beneficial owner (as determined in accordance with Section 13 (d) of the Exchange Act) of more than 9.99% of the issued and outstanding Common Stock of the Company.

4. Release.

4.1.  In consideration of the promises and covenants contained herein, and upon receipt of the consideration provided by Section 2 hereof, ATI hereby releases and forever discharges the Company and its officers, director, representatives, agents, attorneys, successors and assigns (all of whom are collectively referred to herein as the "Company Releasees") of and from any and all claims, actions, causes of action, rights, demands, debts, obligations, or damages, of whatever nature or kind, known or unknown, at law or in equity, which they, or one or more of them, have or purport to have against the said Company Releasees, or one or more of them, arising or occurring prior to the effective date of this Agreement.  The claims released herein include, without limitation, any claims in any way arising out of, based upon, or relating to any acts, omissions, transactions or events could have or reasonably should have been raised or asserted in any action, and any other tort, contract or statutory claim.

4.2.  Notwithstanding the release of claims contained in paragraph 3.1 above, the parties agree that ATI is not releasing any claims that may arise in the future based upon any breach by the Company of any obligation owed under this Agreement.

5. Other Provisions.

5.1.            Notices.  Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid.  Any such notice shall be deemed given when so delivered personally, telegraphed, telexed, or sent by facsimile transmission or, if mailed, five (5) days after the date of deposit in the United States Mail, as follows:

(i) If to the Company, to:

ActiveCare, Inc.

1365 West Business Park Dr.

Orem, Utah 84058

With a copy (which shall not constitute notice hereunder) to:

Durham Jones & Pinegar, P.C.

Attention:  Kevin R. Pinegar, Esq.

111 East Broadway, Suite 900

Salt Lake City, Utah 84111

(ii) If to ATI:

Advance Technology Investors, LLC

C/O Steven Weidman

154 Rock Hill Road

Spring Valley, New York 10977

Any party may change its address for notice hereunder by notice to the other parties hereto.

5.2.            Entire Agreement.  This agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto.

5.3.            Governing Law:  Venue.  The Agreement shall be governed and construed in accordance with the laws of the State of Utah applicable to agreements made and to be performed entirely within such state.  The parties submit themselves to the jurisdiction of the Federal and State courts located in Utah and agree to commence any lawsuit arising under or relating to this Agreement in such courts.

5.4.            Assignment.  This Agreement and any rights and obligations hereunder, may not be assigned by any party hereto without the prior written consent of the other party.

5.5.            Headings.  The headings of this Agreement are for reference only and shall not in any way affect the meaning or interpretation of this Agreement.

5.6.            Indemnification.  The Company hereby indemnifies and holds ATI harmless from and against any and all losses, claims, damages, and law suits (including costs of investigation and reasonable legal fees, and expenses at trial or on appeal) which arise out of or result from ATI's association with the Company through this Agreement as long as the event, act, omission is not directly attributable to a misdeed or misrepresentation of ATI.

[Signatures on following page.]

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

ActiveCare, Inc.Advance Technology Investors, LLC

By: ________________________________By: _________________________________

Its: ________________________________Its: _________________________________

EX-10.9

Exhibit 10.9

SUBLEASE AGREEMENT

This sublease made the 10^th day of June, 2015, between ActiveCare, Inc hereinafter referred to as sublessee and Humaneyezed LLC, Domega Inc. and LandVoice Data, LLC hereinafter referred to as sublessor.

WITNESSETH; that the sublessor hereby subleases to the sublessee, and the sublessee hereby hires and takes from the sublessor, the following premises; approximately 6,900 rentable square feet of office space in the building 1365 West Business Park Drive, Orem, UT 84058 (See Exhibit A)

The premises are to be used and occupied by the sublessee as Office space on thirty seven (37) month and 21 day term. The sublease shall commence on the 10th day of June, 2015 and to end on the 31st day of July 2018, unless sooner provided, with rent payable in advance on the first day of each and every calendar month during said term, beginning 10th day of June, 2015.

The said premises are the same premises referred to in a lease between Countryview Properties, LLC, as the lessor and ActiveCare Inc. as the lessee, dated the 9th day of February 2013, assigned by Countryview  Properties,  LLC("Assignor")  to  Fackrell  Holdings,  LLC ("New Landlord"),  dated  the    day of the 10th day of June, 2015.  As per the lease Assumption agreement with ActiveCare Inc. (Assignor) and Humaneyezed LLC, Domega Inc. and LandVoice Data, LLC (Assignee), ActiveCare Inc. is released from obligations under the lease transferred to Fackrell Holdings as indicated herein.

The terms, covenants, provisions and conditions of said Sublease are hereby incorporated herein shall be binding upon both parties hereto, those applying to the Landlord therein shall apply to the lessor herein but only to the extent Landlord performs such terms and conditions, and those applying to the Tenant therein shall apply to the lessee herein and with the following exceptions:

a. Sublessee shall pay rent according to the following rental schedule on 6,900 Square Feet, which payment shall be made directly to Humaneyezed LLC, Domega Inc. and LandVoice Data.

Size				PSF Price		Monthly Base Rent
	6,900	7/1/2015	2/28/2016	$	17.98	$	10,339.80
	6,900	3/1/2016	2/28/2017	$	18.52	$	10,649.99
	6,900	3/1/2017	2/28/2018	$	19.08	$	10,969.49
	6,900	3/1/2018	7/31/2018	$	19.65	$	11,298.57

The monthly rent payable hereunder shall be Ten thousand three hundred thirty nine dollars and eighty cents ($10,339.80) per month Full Service. Sublessor shall be responsible for gas, and electric. Sublessor will cover property taxes, building insurance and common area maintenance fees. Sublessee will be responsible to pay for their personal phone, internet, and in suite janitorial. There shall be 3% increases per annum according to the following schedule:

b. SERVICE OF NOTICES: Any and all notices and demands shall be in writing and shall be validly given or made if served if either personally or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice or demand is served personally, service shall be conclusively deemed made upon date indicated upon the return receipt.

c. Any notice of demand to lessor shall be addressed to Humaneyezed LLC, Domega Inc. and

LandVoice Data,  LLC.  Any party hereto may change its address for the purpose of receiving notices, payments or demands as herein provided by a written notice given in the manner aforesaid to the other party hereto.

d. All payments for rent will be made to Humaneyezed LLC, Domega Inc. and LandVoice Data, LLC, bylessee to Humaneyezed LLC, Domega Inc. and LandVoice Data, LLC, by lessee to 1365 West Business Park Drive Orem, UT 84058.

e. Security Deposit. Concurrently with sublessee's execution of this Sublease, sublessee shall depositwith sublessor the sum of ten thousand nine hundred sixty nine dollars and ninety nine cents ($10,969.99)(hereinafter the "Security Deposit"). The Security Deposit shall be held by sublessor for the faithful performance by sublessee of all of the terms, covenants, and conditions of this sublease to be kept and performed by sublessee during the term of this sublease. If sublessee defaults with respect to any provision of this sublease, including but not limited to the provisions relating to the payment of Monthly Base Rent, and any costs, expenses, and charges payable under the provisions of this sublease, sublessor may, but shall not be obligated to use, apply or retain all or a part of the Security Deposit for the payment of any amount which sublessor may spend by reason of sublessee's default or to compensate sublessor for any other loss or damage which sublessor may suffer by reason of sublessee's default. If any portion of the Security Deposit is so used or applied, sublessee shall, within ten (10) days after written demand, deposit with sublessor an amount sufficient to restore the Security Deposit to its original amount; and sublessee's failure to do so shall be a material breach of this sublease. Sublessor shall not be required to keep the Security Deposit separate from sublessor's general funds, and sublessee shall not be entitled to interest on the Security Deposit. If sublessee shall fully and faithfully perform every provision of this sublease to be performed by sublessee, the Security Deposit or any balance thereof shall be returned to sublessee or, at sublessor's option, to the last permitted assignee of sublessee's interest under this sublease within thirty (30) days of the expiration of the term of this sublease and after sublessee or sublessee's permitted assignee has vacated the Premises or within fifteen (15) days of receipt of sublessee's new mailing address, whichever is later. In the event of termination of sublessor's interest in this sublease, sublessor shall transfer the Security Deposit to sublessor's successor in interest whereupon sublessee agrees to release sublessor from liability for the return of the Security Deposit or any accounting therefore.

f. Sublessee shall have the use of 4.5 parking stalls per 1,000 Square Feet of the subleased premises.

g. Sublessee shall have the first right of refusal on the 3,100 SF space on the main floor. Sublessee shall have 5 business days after receiving written notification of an accepted offer to determine if they would like to match the offer.

h. This sublease shall be contingent upon the Buyer, Fackrell Holdings, LLC Closing on the property.

IN WITNESS WHEREOF, the parties hereto have executed this sublease in duplicate the day and year first above written.

SUBLESSOR: Humaneyezed LLC, Domega Inc. and LandVoice Data, LLC

By:

Its:

SUBLESSEE: ActiveCare, Inc.

By:

Its:

LESSOR: Fackrell Holdings, LLC

By:

Its:

EXHIBIT A

EX-31

Exhibit 31.1

CERTIFICATION

I, James J. Dalton, certify that:

1.           I have reviewed this annual report on Form 10-K of ActiveCare, Inc.

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.           Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.           Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.           The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ James J. Dalton                                                      

Name:         James J. Dalton

Title:           Chief Executive Officer (Principal Executive Officer)

Date:           January 13, 2016

EX-31.2

 Exhibit 31.2

CERTIFICATION

I, Jeffrey S. Peterson, certify that:

1.           I have reviewed this annual report on Form 10-K of ActiveCare, Inc.

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.           Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.           Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.           The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Jeffrey S. Peterson

Name:         Jeffrey S. Peterson

Title:           Chief Financial Officer (Principal Accounting and Financial Officer)

Date:           January 13, 2016

EX-32.1

 Exhibit 32.1

CERTIFICATION OF PERIODIC REPORT

I, James J. Dalton, Chief Executive Officer of ActiveCare, Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1)           the Annual Report on Form 10-K of the Company for the year ended September 30, 2015  (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2)           the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: January 13, 2016

/s/ James J. Dalton                                                      

James J. Dalton

Chief Executive Officer

(Principal Executive Officer)

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

EX-32.2

Exhibit 32.2

CERTIFICATION OF PERIODIC REPORT

I, Jeffrey S. Peterson, Chief Financial Officer of ActiveCare, Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1)           the Annual Report on Form 10-K of the Company for the year ended September 30, 2015 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2)           the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: January 13, 2016

/s/ Jeffrey S. Peterson

Jeffrey S. Peterson

Chief Financial Officer

(Principal Financial and Accounting Officer)

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

XML

Document and Entity Information - USD ($)	12 Months Ended
	Sep. 30, 2015	Jan. 07, 2016	Mar. 31, 2015
Document and Entity Information:
Entity Registrant Name	ACTIVECARE, INC.
Document Type	10-K
Document Period End Date	Sep. 30, 2015
Trading Symbol	acar
Amendment Flag	false
Entity Central Index Key	0001429896
Current Fiscal Year End Date	--09-30
Entity Common Stock, Shares Outstanding		79,486,873
Entity Public Float			$ 23,315,602
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY

XML

Consolidated Balance Sheets - USD ($)	Sep. 30, 2015	Sep. 30, 2014
Current assets:
Cash	$ 172,436	$ 197,027
Accounts receivable, net	936,866	1,635,660
Inventory	742,471	1,649,320
Prepaid expenses and other	523,561	141,087
Assets of discontinued operations	0	712,403
Total current assets	2,375,334	4,335,497
Goodwill	0	825,894
Property and equipment, net	135,770	220,076
Deposits and other assets	17,846	29,594
Domain name, net	10,010	10,724
Total assets	2,538,960	5,421,785
Current liabilities:
Accounts payable	4,493,211	4,549,451
Accounts payable, related party	162,797	1,109,775
Accrued expenses	743,967	1,451,331
Current portion of notes payable	1,259,916	1,212,937
Current portion of notes payable, related party	492,495	1,669,620
Dividends payable	567,350	246,738
Derivatives liability	79,347	106,444
Total current liabilities	7,799,083	10,346,296
Notes payable, related party, net of current portion	3,348,251	0
Notes payable, net of current portion	0	219,048
Total liabilities	11,147,334	10,565,344
Stockholders' deficit:
Preferred stock, $.00001 par value: 10,000,000 shares authorized;45,000 shares of Series D; 70,070shares of Series E; and 5,361shares of Series F outstanding	1	1
Common stock, $.00001 par value: 200,000,000 shares authorized;78,113,971 and 45,815,351 shares outstanding, respectively	781	458
Additional paid-in capital, common and preferred	83,231,002	73,183,429
Accumulated deficit	(91,840,158)	(78,327,447)
Total stockholders' deficit	(8,608,374)	(5,143,559)
Total liabilities and stockholders' deficit	$ 2,538,960	$ 5,421,785

XML

Consolidated Balance Sheets Parenthetical - $ / shares	Sep. 30, 2015	Sep. 30, 2014
Consolidated Balance Sheets Parenthetical
Preferred stock par value	$ 0.00001	$ 0.00001
Preferred stock shares authorized	10,000,000	10,000,000
Preferred stock shares outstanding	120,431	120,431
Common stock par value	$ 0.00001	$ 0.00001
Common stock shares authorized	200,000,000	200,000,000
Common stock shares outstanding	78,113,971	45,815,351

XML

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Consolidated Statements of Operations
Chronic Illness Monitoring Revenue	$ 6,597,981	$ 6,107,941
Chronic Illness Monitoring Cost of Revenue	5,196,827	6,437,943
Gross profit (loss)	1,401,154	(330,002)
Operating expenses:
Selling, general and administrative (including $5,762,755, and $3,585,379, respectively, of stock-based compensation)	10,358,410	9,800,374
Research and development	106,526	215,074
Total operating expenses	10,464,936	10,015,448
Loss from operations	(9,063,782)	(10,345,450)
Other income (expense):
Gain on liability settlements	260,830	0
Gain on derivatives liability	128,942	373,293
Gain on lease termination	91,692	0
Other income	14,129	55,368
Loss on induced conversion of debt	0	(114,098)
Loss on disposal of property and equipment	(42,336)	(42,094)
Impairment of goodwill	(825,894)	0
Loss on extinguishment of debt	(927,784)	0
Interest expense, net	(977,234)	(1,936,039)
Total other expense	(2,277,655)	(1,663,570)
Loss from continuing operations	(11,341,437)	(12,009,020)
Loss from discontinued operations	(186,232)	(1,452,567)
Net loss	(11,527,669)	(13,461,587)
Dividends on preferred stock	(994,983)	(737,138)
Deemed dividends on conversion of accrued dividends to common stock	(301,097)	0
Deemed dividends on conversion of preferred stock to common stock	0	(2,234,924)
Net loss attributable to common stockholders	$ (12,823,749)	$ (16,433,649)
Net loss per common share - basic and diluted
Continuing operations	$ (0.25)	$ (0.43)
Discontinued operations	(0.00)	(0.04)
Net loss per common share	$ (0.25)	$ (0.47)
Weighted average common shares outstanding - basic and diluted	51,444,000	35,010,000

XML

Consolidated Statements of Operations Parenthetical - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Consolidated Statements of Operations Parenthetical
Compensation expense paid in stock or amortization of stock options and warrants	$ 5,762,755	$ 3,585,379

XML

Consolidated Statements of Stockholders' Deficit - USD ($)	Series C Preferred Stock	Series D Preferred Stock	Series E Preferred Stock	Series F Preferred Stock	Common stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at Sep. 30, 2013	$ 5	$ 9	$ 1		$ 218	$ 62,519,544	$ (64,817,684)	$ (2,297,907)
Balance - shares at Sep. 30, 2013	480,000	938,218	61,723		21,775,303
Issuance of common stock for services					$ 109	749,896		750,005
Issuance of common stock for services - shares					10,896,970
Issuance of common stock for finance fees					$ 3	41,888		41,891
Issuance of common stock for finance fees - shares					349,822
Issuance of common stock for loan origination fee					$ 1	163,069		163,070
Issuance of common stock for loan origination fee - shares					161,738
Issuance of common stock for debt conversion					$ 37	2,447,889		2,447,926
Issuance of common stock for debt conversion - shares					3,712,549
Issuance of common stock for option exercises					$ 17	541,222		541,239
Issuance of common stock for option exercises - shares					1,723,100
Issuance of common stock for dividends and related interest					$ 3	148,241		148,244
Issuance of common stock for dividends and related interest - shares					271,343
Conversion of Series C preferred stock	$ (5)				$ 7	(2)
Conversion of Series C preferred stock - shares	(480,000)				672,000
Conversion of Series D preferred stock		$ (9)			$ 63	(54)
Conversion of Series D preferred stock - shares		(893,218)			6,252,526
Issuance of Series E preferred stock for debt conversions						83,473		83,473
Issuance of Series E preferred stock for debt conversions - shares			8,347
Issuance of Series F preferred stock for debt conversions						574,592		574,592
Issuance of Series F preferred stock for debt conversions - shares				858
Issuance of Series F preferred stock for cash, net						2,175,002	1,405,769	3,580,771
Issuance of Series F preferred stock for cash, net - shares				4,503
Stock based compensation						2,051,758		2,051,758
Issuance of options for Debt conversions						590,887		590,887
Issuance of options for services						263,117		263,117
Beneficial conversion features on debt						116,100		116,100
Amortization of Series F preferred stock as dividends						716,807	(716,807)
Net loss							(13,461,587)	(13,461,587)
Dividends on preferred stock							(737,138)	(737,138)
Balance at Sep. 30, 2014			$ 1		$ 458	73,183,429	(78,327,447)	(5,143,559)
Balance - shares at Sep. 30, 2014		45,000	70,070	5,361	45,815,351
Issuance of common stock for services					$ 220	4,088,675		4,088,895
Issuance of common stock for services - shares					22,047,659
Issuance of common stock for finance fees					$ 5	89,392		89,397
Issuance of common stock for finance fees - shares					509,976
Issuance of common stock for loan origination fee					$ 63	1,129,937		1,130,000
Issuance of common stock for loan origination fee - shares					6,250,000
Issuance of common stock for dividends and related interest					$ 35	975,433	(301,097)	674,371
Issuance of common stock for dividends and related interest - shares					3,490,985
Stock based compensation						3,032,304		3,032,304
Issuance of options for services						42,870		42,870
Amortization of Series F preferred stock as dividends						688,962	(688,962)
Net loss							(11,527,669)	(11,527,669)
Dividends on preferred stock							(994,983)	(994,983)
Balance at Sep. 30, 2015			$ 1		$ 781	$ 83,231,002	$ (91,840,158)	$ (8,608,374)
Balance - shares at Sep. 30, 2015		45,000	70,070	5,361	78,113,971

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Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net loss	$ (11,527,669)	$ (13,461,587)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	4,864,864	3,378,938
Loss on extinguishment of debt	(927,784)	0
Stock and warrants issued for services	897,891	206,441
Impairment of goodwill	(825,894)	0
Stock and warrants issued for interest expense	647,679	883,118
Depreciation and amortization	290,700	1,122,862
Loss on disposal of property and equipment	(42,336)	(42,094)
Gain on lease termination	91,692	0
Gain on derivatives liability	(128,942)	(373,293)
Gain on liability settlements	260,830	0
Inventory reduction for obsolescence	0	1,660,729
Amortization of debt discounts	0	919,032
Impairment of long-lived assets	0	497,792
Loss on induced conversion of debt and sale of common stock	0	114,098
Changes in operating assets and liabilities:
Change in accounts receivable	698,794	216,668
Change in inventory	906,849	1,367,477
Change in prepaid expenses and other	20,400	(48,494)
Change in accounts payable	892,170	(1,193,106)
Change in accrued expenses	215,054	157,652
Change in deposits and other assets	0	77,355
Net cash used in operating activities	(778,718)	(4,413,079)
Cash flows from investing activities:
Proceeds from sale of discontinued operations	478,738	0
Proceeds from sale of property and equipment	938	0
Purchases of property and equipment	(15,289)	(70,043)
Cash used to dispose of property and equipment	0	(29,078)
Net cash used in investing activities	464,387	(99,121)
Cash flows from financing activities:
Proceeds from issuance of notes payable, net	1,262,490	680,000
Principal payments on notes payable	(957,750)	(1,036,809)
Principal payments on related-party notes payable	(15,000)	(1,204,166)
Proceeds from sale of preferred stock, net	0	3,580,771
Proceeds from issuance of related-party notes payable, net	0	2,801,166
Payment of dividends	0	(335,570)
Net cash provided by financing activities	289,740	4,485,392
Net decrease in cash	(24,591)	(26,808)
Cash, beginning of the year	197,027	223,835
Cash, end of the year	172,436	197,027
Supplemental Cash Flow Information:
Cash paid for interest	24,883	219,717
Non-Cash Investing and Financing Activities:
Conversion of related-party accounts payable and accrued liabilities to related-party notes payable	1,839,214	0
Issuance of stock for dividends	975,468	144,642
Dividends on preferred stock and related interest	994,983	737,138
Issuance of common stock for prepaid consulting services	645,000	0
Conversion of accounts payable to notes payable	100,000	0
Issuance of stock and stock options for loan origination fees	89,397	370,633
Conversion of related-party notes payable to common stock	0	1,782,738
Conversion of notes payable to preferred stock	0	633,254
Conversion of notes payable to common stock	0	325,000
Liability to issue shares of common stock for loan origination fees	$ 0	$ 234,793

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1. Organization and Nature of Operations

12 Months Ended

Sep. 30, 2015

Notes

1. Organization and Nature of Operations

1.             Organization and Nature of Operations

ActiveCare, Inc. (“ActiveCare”) was formed March 5, 1998 as a wholly owned subsidiary of SecureAlert, Inc. dba Track Group [OTCQB: SCRA], a Utah corporation, formerly known as RemoteMDx, Inc. (“SecureAlert”).  ActiveCare was spun off from SecureAlert in February 2009 and SecureAlert retained no ownership interest in ActiveCare.  In July 2009, ActiveCare was reincorporated in Delaware.  ActiveCare (the “Company”) provides products and services to those diagnosed with chronic illnesses, provides real-time visibility to health conditions and risk, and has a unique active approach in caring for members.

                Going Concern

The Company continues to incur negative cash flows from operating activities and net losses.  The Company had negative working capital and negative total equity as of September 30, 2015 and 2014 and is in default with respect to certain debt.  These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In order for the Company to eliminate substantial doubt about its ability to continue as a going concern, it must achieve profitability, generate positive cash flows from operating activities and obtain the necessary debt or equity funding to meet its projected capital investment requirements.  Management’s plans with respect to this uncertainty consist of raising additional capital by issuing debt or equity securities and increasing the sales of the Company’s services and products.  There can be no assurance that the Company will be able to raise sufficient additional capital or that revenues will increase rapidly enough to offset operating losses.  If the Company is unable to increase revenues or obtain additional financing, it will be unable to continue the development of its products and services and may have to cease operations. 

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2. Summary of Significant Accounting Policies

12 Months Ended

Sep. 30, 2015

Notes

2. Summary of Significant Accounting Policies

2.             Summary of Significant Accounting Policies

Principles of Accounting and Consolidation

These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”).  The consolidated financial statements include the accounts of ActiveCare and its wholly owned subsidiaries.  All significant intercompany balances and transactions have been eliminated. 

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet dates and the reported amounts of revenues and expenses for the reporting periods. Actual results could differ from these estimates.

Discontinued Operations

In December 2014, the Company sold substantially all of its customer contracts and equipment leased to customers associated with its CareServices segment to a third party.  Additional equipment in stock was sold to another third party pursuant to a written invoice.  The purchase price included a cash payment of $412,280 for the customer contracts and $66,458 for the equipment in stock.  During fiscal years 2015 and 2014, the Company recognized a loss from discontinued operations related to CareServices of $186,232 and $1,452,567, respectively.

Fair Value of Financial Instruments

The Company measured the fair values of its assets and liabilities using the US GAAP hierarchy.  The carrying amounts reported in the 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.

Concentrations of Credit Risk

The Company has cash in bank accounts that, at times, may exceed federally insured limits.  The Company has not experienced any losses in these accounts.

In the normal course of business, the Company provides credit terms to its customers and requires no collateral.  The Company performs ongoing credit evaluations of its customers’ financial condition.  The Company maintains an allowance for doubtful accounts receivable based upon management’s specific review and assessment of each account at the period end.

During fiscal year 2015, the Company had revenues from three significant customers which represented 69% of total revenues.  During fiscal year 2014, the Company had revenues from two significant customers which represented 67% of total revenues.  As of September 30, 2015 and 2014 accounts receivable from significant customers represented 66% and 80% of total accounts receivable, respectively.

During the fiscal years 2015 and 2014, the Company purchased substantially all of its products and supplies from one vendor.

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.  Interest is not charged on accounts receivable that are past due.  The Company recorded an allowance for doubtful accounts of $30,495 and $115,994 as of September 30, 2015 and 2014, respectively.

Inventory

Inventory is recorded at the lower of cost or market, cost being determined using the first-in, first-out (“FIFO”) method. Inventory is for the Chronic Illness Monitoring segment and consists of diabetic supplies.  Inventory held by distributors is reported as inventory until the supplies are shipped to the end user by the distributor.  The Company estimates 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.  Inventory consists of the following as of September 30:

	2015	2014
Finished goods	$    206,038	$     589,423
Finished goods held by distributors	1,350,368	2,720,626
Total inventory	1,556,406	3,310,049
Inventory reserve	(813,935)	(1,660,729)
Net inventory	$    742,471	$    1,649,320

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization.  Depreciation and amortization are determined using the straight-line method over the estimated useful lives of the assets, which range between 3 and 7 years.  Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the terms of the lease.  Expenditures for maintenance and repairs are expensed as incurred.  Upon the sale or disposal of property and equipment, any gains or losses are included in operations.

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.  The annual testing date is September 30.  The identification and measurement of goodwill impairment involves the estimation of the fair value of our reporting units.  The estimates of fair value of reporting units are based on the best information available as of the date of the assessment, which primarily incorporate management assumptions about expected future cash flows and the Company’s market cap.  Future cash flows can be affected by changes in industry or market conditions.  Goodwill was impaired by $825,894 as of September 30, 2015.  The impairment of goodwill was due to a potentially long-term reduction in the market capitalization of the Company subsequent to September 30, 2015.  Goodwill was not impaired as of September 30, 2014. 

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 impaired as of September 30, 2015.  The Company impaired its CareServices customer contracts by $89,460 and patents by $408,332 as of September 30, 2014, which were recorded as part of discontinued operations related to the CareServices segment for the fiscal year ended September 30, 2014.  The impairment of the customer contracts is due to their sales price being lower than the net book value as of the date of sale.  The patents impaired were solely related to the CareServices segment and provide no future cash flows after the CareServices customer contracts and equipment leased to customers were sold in December 2014. 

Revenue Recognition

For the years presented, revenues came from two sources: (1) sales of Chronic Illness Monitoring products and services; (2) sales from CareServices.  The CareServices segment was sold in December 2014.  Information regarding revenue recognition policies relating to these business segments 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.

The Company enters 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.  The Company also monitors 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 for another year.  Collection terms are net 30 days after claims are submitted.  There is no contingent revenue in these contracts.

The Company also enters 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 the Company 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.  Sales of Chronic Illness Monitoring products and services contain multiple elements.

Multiple-Element Arrangements

The Company evaluates 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.

During the three months ended June 30, 2014, we began to provide enhanced monitoring services to a key customer, which pays a separate monthly monitoring fee.  Beginning in the three months ended June 30, 2015, our sales initiatives under the direction of new executive management became focused on the monitoring of end users.  This monitoring is accounted for as an element with stand-alone value.

CareServices

CareServices included contracts in which we leased monitoring devices and provided monitoring services to end users.  The Company typically entered into contracts on a month-to-month basis with end users that used CareServices.  These contracts could be cancelled by either party at any time with 30-days’ notice.  Under a standard contract, the device and service became billable on the date the end user ordered the device, and remained billable until the device was returned to the Company.  Revenues were recognized at the end of each month the service had been provided.  In those circumstances in which payment was received in advance, we recorded deferred revenue.

CareServices revenue was recognized when persuasive evidence of an arrangement existed, delivery of the device or service had occurred, prices were fixed or determinable and collection was reasonably assured.  Shipping and handling fees were included as part of net revenues.  The related freight costs and supplies directly associated with shipping products to end users were included as a component of cost of revenues.  All CareServices sales were made with net 30-day payment terms.

Research and Development Costs

All expenditures for research and development are charged to expense as incurred.  Research and development expenses for fiscal years 2015 and 2014 were $106,526 and $215,074 respectively. The expenditures for fiscal year 2015 and 2014 were for ongoing software improvements for the Chronic Illness Monitoring operating system and customer portal.

Advertising Costs

The Company expenses advertising costs as incurred.  Advertising expenses for fiscal years 2015 and 2014 were $30,551 and $48,778, respectively.  Advertising expenses primarily related to the Company’s Chronic Illness Monitoring segment for the fiscal years ended 2015 and 2014.

Income Taxes

The Company recognizes deferred income tax assets or liabilities for the expected future tax consequences of events that have been recognized in the financial statements or income tax returns. Deferred income tax assets or liabilities are determined based upon the difference between the financial reporting bases and tax reporting bases of assets and liabilities using enacted tax rates expected to apply when the differences are expected to be settled or realized.  Deferred income tax assets are reviewed periodically for recoverability and valuation allowances are provided as necessary.  As of September 30, 2015, management has provided a 100% allowance against deferred income tax assets as it is more likely than not these assets will not be realized.  Interest and penalties related to income tax liabilities, when incurred, are classified in interest expense and income tax provision, respectively.

Warrant Exercises and Note Conversions

The Company issues common shares in connection with warrant exercises when it has received verification that the proceeds have been deposited and when it has received an exercise letter from the warrant holder.  The Company issues common shares in connection with note conversions after it verifies the outstanding note balance and the eligibility of conversion, and has received a conversion letter from the lender.

Stock-Based Compensation

The Company measures 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 statements 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.

Net Loss Per Common Share

Basic net loss per common share (“Basic EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the year.

Diluted net loss per common share (“Diluted EPS”) is computed by dividing net loss available to common stockholders by the sum of the weighted average number of common shares outstanding and the weighted-average dilutive common share equivalents outstanding.  The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect.

Common share equivalents consist of shares issuable upon the exercise of common stock warrants, shares issuable from restricted stock grants, and shares issuable from convertible notes and convertible Series D, Series E and Series F preferred stock.  As of September 30, 2015 and 2014, there were 39,111,621 and 17,199,080 outstanding common share equivalents, respectively, that were not included in the computation of Diluted EPS as their effect would be anti-dilutive.  The common stock equivalents outstanding consist of the following as of September 30:

	2015	2014
Common stock options and warrants	9,497,551	10,991,576
Series D convertible preferred stock	225,000	225,000
Series E convertible preferred stock	477,830	477,830
Series F convertible preferred stock	16,065,328	5,361,000
Convertible debt	12,838,412	133,924
Restricted shares of common stock	7,500	9,750
Total common stock equivalents	39,111,621	17,199,080

Recent Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 states that only disposals representing strategic shifts in operations that have, or will have, a major effect on an entity’s operations should be reported as discontinued operations when any of the following occurs: The component of an entity or group of components of an entity is classified as held for sale, the component of an entity or group of components of an entity is disposed of by sale, or the component of an entity or group of components of an entity is disposed of other than by sale. ASU 2014-08 is effective for annual periods beginning on or after December 15, 2014, and interim periods therein, which will be effective for the Company for the quarter ending December 31, 2015.  Early adoption is not permitted.  The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position and results of operations.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under US GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing US GAAP. In August 2015, the FASB voted to defer the effective date of the new revenue standard by one year. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, which will be effective for the Company for the quarter ending December 31, 2018. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This standard sets forth management’s responsibility to evaluate, each reporting period, whether there is substantial doubt about the Company’s ability to continue as a going concern, and if so, to provide related footnote disclosures. The standard is effective for annual reporting periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016, which will be effective for the Company for the quarter ending December 31, 2017. The Company is assessing the impact, if any, of implementing this guidance on its assessment of going concern.

In November 2014, the FASB issued ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The ASU clarifies how current guidance should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of a host contract. The ASU is effective for fiscal years and interim periods beginning after December 15, 2015, which will be effective for the Company for the quarter ending December 31, 2016. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements. The purpose of this ASU is to clarify guidance, correct unintended application of guidance, or make minor improvements to guidance. The ASU is effective for fiscal years and interim periods beginning after December 15, 2015, which will be effective for the Company for the quarter ending December 31, 2016. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

In July 2015, the FASB issued ASU 2015-11, Inventory: Simplifying the Measurement of Inventory. The purpose of this ASU is to more closely align the measurement of inventory in U.S. GAAP with the measurement of inventory in International Financial Reporting Standards. This ASU requires entities to measure most inventory at the “lower of cost and net realizable value.” Additionally, some of the amendments are designed to more clearly articulate the requirements for the measurement and disclosure of inventory. The ASU is effective for fiscal years and interim periods beginning after December 15, 2016, which will be effective for the Company for the quarter ending December 31, 2017. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

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3. Discontinued Operations

12 Months Ended

Sep. 30, 2015

Notes

3. Discontinued Operations

3.                   Discontinued Operations

In December 2014, the Company sold substantially all of its customer contracts and equipment leased to customers associated with its CareServices segment.  Additional equipment in stock was sold to the buyer pursuant to a written invoice.  The purchase price included a cash payment of $412,280 for the customer contracts and $66,458 for the equipment in stock.  The sale included all segment assets that generated revenue related to the CareServices segment.  The Company no longer holds any ownership interest in these assets and has ceased incurring costs related to the operations and development of the CareServices segment.  This segment was engaged in the business of developing, distributing and marketing mobile health monitoring and concierge services to distributors and consumers.  The debt secured by the CareServices customer contracts was amended in January 2015 and remains an obligation of the Company (see Note 8).  There were no material liabilities of discontinued operations.  Assets of discontinued operations consist of the following as of September 30:

	2015	2014
Customer contracts, net	$      -	$    569,250
Equipment leased to customers, net	-	111,435
Patents, net	-	31,718
Total assets of discontinued operations	$       -	$    712,403

As a result of the sale of the CareServices assets, the Company has reflected this segment as discontinued operations in the consolidated financial statements for fiscal years 2015 and 2014.  The following table summarizes certain operating data for discontinued operations for fiscal years 2015 and 2014:

	2015	2014
Revenues	$    152,686	$     1,003,238
Cost of revenues	127,709	881,753
Gross profit	24,977	121,485
Selling, general and administrative expenses	(211,209)	(1,047,629)
Impairment of long-lived assets	-	(497,792)
Loss on disposal of property and equipment	-	(18,746)
Other expense	-	(9,885)
Loss from discontinued operations	$     (186,232)	$     (1,452,567)

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4. Customer Contracts

12 Months Ended

Sep. 30, 2015

Notes

4. Customer Contracts

4.                   Customer Contracts

The Company was amortizing Chronic Illness Monitoring customer contracts acquired during 2012 over their estimated useful lives (through 2014).  As of September 30, 2015 and 2014, the cost associated with these customer contracts was $214,106 and the accumulated amortization was $214,106. Amortization expense related to these contracts for fiscal years 2015 and 2014 was $0 and $57,220, respectively.

The Company sold substantially all of the CareServices customer contracts during December 2014.  The Company impaired the CareServices customer contracts as of September 30, 2014 by $89,460, which has been included as part of discontinued operations for the fiscal year ended September 30, 2014.  As of September 30, 2015 and 2014, customer contracts totaled $0 and $2,066,316, respectively, and the related accumulated amortization was $0 and $1,497,067, respectively.  Amortization expense related to the CareServices segment for fiscal years 2015 and 2014 was $179,648 and $718,592, respectively.

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5. Property, Plant and Equipment Disclosure

12 Months Ended

Sep. 30, 2015

Notes

5. Property, Plant and Equipment Disclosure

5.                   Property and Equipment

Property and equipment consist of the following as of September 30:

	2015	2014
Software	$     100,574	$    100,574
Leasehold improvements	98,023	151,287
Furniture	68,758	69,776
Equipment	59,754	54,732
Total property and equipment	327,109	376,369
Accumulated depreciation and amortization	(191,339)	(156,293)
Property and equipment, net	$   135,770	$   220,076

Assets to be disposed of are reported at the lower of the carrying amounts or fair values, less the estimated costs to sell or dispose.  During fiscal years 2015 and 2014, the Company recorded a loss on the disposal of assets of $42,336 and $42,094, respectively.  During December 2014, the Company sold all of its equipment leased to customers (see Note 3).  Depreciation expense for fiscal years 2015 and 2014 was $56,321 and $219,465, respectively.

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6. Patent License Agreement

12 Months Ended

Sep. 30, 2015

Notes

6. Patent License Agreement

6.                   Patent License Agreement

During fiscal year 2009, the Company licensed the use of certain patents from a third party.  Under the license agreement, the Company was required to pay $300,000 plus a 5% royalty on the net sales of all licensed products. As of September 30, 2009, the Company had capitalized the initial license fee as a long-term asset and had recorded a corresponding current liability as the fee was not yet paid.

During fiscal year 2012, the Company agreed to purchase the related patents and settle amounts owed under the license agreement by issuing 600,000 shares of common stock and 480,000 shares of Series C preferred stock.  The patents were valued at $922,378, based on a valuation performed by an independent third party.  The value of the common stock issued was $240,000, based on the market price of the common stock on the date of issuance. The implied value of the Series C was $682,378, which was based on the difference between the value of the patents and the common stock issued in settlement of the existing liability.

The Company is amortizing the patents over their remaining useful lives.  Amortization expense for fiscal years 2015 and 2014 was $31,718 and $126,870, respectively.  The Company impaired the patents as of September 30, 2014 by $408,332, which has been included as part of discontinued operations for the fiscal year ended September 30, 2014 (see Note 3).  As of September 30, 2015 and 2014, the cost associated with the patents was $514,046 and the accumulated amortization was $514,046 and $482,328, respectively.

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7. Accrued Expenses

12 Months Ended

Sep. 30, 2015

Notes

7. Accrued Expenses

7.                   Accrued Expenses

Accrued expenses consist of the following as of September 30:

	2015	2014
Payroll expense	$      270,974	$     308,529
Interest	190,045	59,091
Deferred revenue	147,344	18,534
Commissions and fees	64,432	453,744
Liability to issue common stock	40,000	522,087
Other	31,172	-
Deferred rent	-	89,346
Total accrued expenses	$     743,967	$   1,451,331

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8. Notes Payable

12 Months Ended

Sep. 30, 2015

Notes

8. Notes Payable

8.                   Notes Payable

The Company had the following notes payable outstanding as of September 30:

	2015	2014
Secured borrowings from a third party that purchased $693,000 of customer receipts for $550,000, with due dates ranging from November 2015 to September 2016 and payable in daily payments ranging from $955 to $1,909.  The $143,000 difference between the customer receipts and cash received is being amortized to interest expense over the term of the respective notes.  The secured borrowings are guaranteed by two officers of the Company.	$            421,413	$                     -
Note payable previously secured by CareServices customer contracts.  In January 2015, the note was amended to reduce the outstanding principal to $375,000, interest at 9%, and payable in 15 monthly installments beginning in February 2015.  The amendment released the collateralized customer contracts and the note payable is guaranteed by both a former Executive Chairman of the Board of Directors and a member of the Board of Directors.  A gain on the extinguishment of the old note of $769,449 was recorded in other income.	303,212	1,103,841
Unsecured note payable with interest at 12%, due November 2015 (extended to February 2016 subsequent to year end).  In connection with the issuance of the note, the Company repriced previously issued warrants to purchase shares of common stock.  The $22,397 increase in relative fair value of the warrants was included as a loss on the extinguishment of the old note in other expense.  The note also required a payment of 3,000,000 shares of common stock.  The fair value of $780,000 was included as a loss on the extinguishment of the old note in other expense.	300,000	-
Secured borrowings from third parties that purchased a $337,600 customer receivable for $200,000, in default.  The Company was able to buy back the receivable for $233,333 less cash received by the third parties before June 2015.  The $33,333 difference between the buyback and cash received plus $20,000 of commission paid to a related party, was amortized to interest expense through June 2015.	233,333	233,333
Unsecured notes payable with interest at 12%, due March 2016 and convertible into common stock at a 15% discount from the 10-day volume adjusted weighted average closing price per share upon maturity.  In connection with the issuance of the notes, the Company issued 509,976 shares of common stock.  The $89,397 fair value of the stock is being amortized to interest expense over the term of the notes.  The notes included loan origination fees of $21,249, which are being amortized to interest expense over the term of the notes.  The Company recorded a derivative in connection with the convertible feature of the notes (see Note 12) and is amortizing the initial $101,884 fair value of the derivatives liability over the life of the notes.	212,490	-
Unsecured notes with interest at 18%, due April 2013, in default.  The Company issued 20,000 shares of Series D preferred stock as loan origination fees.  The $195,000 fair value of the preferred stock was amortized over the original term of the note.   Principal of $50,000 and accrued interest of $13,333 were converted to common stock in December 2013.	64,261	64,261
Unsecured note payable with no interest, due March 2015.  In connection with the issuance of the note, the Company issued warrants to purchase 450,000 shares of common stock.  The $143,634 relative fair value of the warrants was amortized to interest expense through March 2015.  The note also required a payment of the greater of 667,000 shares of common stock or shares of common stock equal to $500,000 at the end of the term (relative fair value of $230,293).  In May 2015, the note and other payables were converted into an unsecured note payable to the same party.  The conversion resulted in a gain on extinguishment of debt of $230,293.	-	200,000
Total notes payable before discount	1,534,709	1,601,435
Less discount	(274,793)	(169,450)
Total notes payable	1,259,916	1,431,985
Less current portion	(1,259,916)	(1,212,937)
Notes payable, net of current portion	$                     -	$            219,048

As of September 30, 2015, scheduled principal payments on notes payable are as follows:

Year Ending September 30,
2016	$         1,534,709

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9. Related-party Notes Payable

12 Months Ended

Sep. 30, 2015

Notes

9. Related-party Notes Payable

9.                   Related-Party Notes Payable

The Company had the following related-party notes payable outstanding as of September 30:

	2015	2014
Secured borrowings from entities controlled by an officer that purchased a $2,813,175 customer receivable for $1,710,500.  The Company was able to buy back the receivable for $1,950,000 less cash received by the entities through March 2015.  The $239,500 difference between the buyback and cash received plus $253,500 of loan origination fees was amortized to interest expense through March 2015.  In September 2015, the note was modified to extend the maturity date to January 2017 with interest at 18%.  The Company added $81,600 of extension fees and issued 3,000,000 shares of common stock as part of the modification and the note is convertible into common stock at $0.30 per share.  The $540,000 fair value of the common stock was recognized as a loss on extinguishment of debt	$         1,721,100	$         1,639,500
Unsecured note payable to an entity controlled by an officer with interest at 18%, due January 2017, convertible into common stock at $0.30 per share.  The Company issued 3,000,000 shares of common stock as loan origination fees.  The $540,000 fair value of the common stock was recognized as a loss on extinguishment of debt	1,303,135	-
Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors with no interest (18% in the event of default), due on demand and in default. The former Executive Chairman demanded payment by May 15, 2015.	396,667	-
Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors with interest at 18%, due January 2017.	324,016	-
Unsecured note payable to a former officer with interest at 15%, due June 2012, in default.  The note included a $3,000 loan origination fee added to the principal and is convertible into common stock at $0.50 per share.	30,000	30,000
Unsecured note payable to a former officer with interest at 12%, due September 2013, in default, and convertible into common stock at $0.75 per share.	26,721	26,721
Unsecured note payable to an entity controlled by an officer with interest at 18%, due upon demand.	25,463	-
Unsecured note payable to a former officer with interest at 12%, due on demand.	13,644	13,644
Secured borrowings from a former Executive Chairman of the Board of Directors who purchased a $422,000 customer receivable for $250,000.  The Company was able to buy back the receivable for $291,667 less cash received by the former Executive Chairman before June 2015.  The $41,667 difference between the buyback and cash received plus $25,000 of loan origination fees was to be amortized to interest expense over the buyback term.  In November 2014, the secured borrowings and other advances were converted into an unsecured note payable to the same related party and the remaining discount balance of $45,129 was recognized as a loss on extinguishment of debt.	-	291,667
Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors, interest at 12%, due on demand, and convertible into common stock at $0.75 per share.  The Company issued 17,500 shares of common stock as loan origination fees.  The $26,250 fair value of the common stock was amortized to interest expense over the original term of the note, (through September 2013).  In December 2013, $160,000 of the note was converted to common stock.  In September 2015, $15,000 of principal and $10,469 of interest with other payables were converted into an unsecured note payable to the same party.	-	15,000
Total notes payable, related-party, before discount	3,840,746	2,016,532
Less discount	-	(346,912)
Total notes payable, related-party	3,840,746	1,669,620
Less current portion	(492,495)	(1,669,620)
Notes payable, related party, net of current portion	$         3,348,251	$                     -

As of September 30, 2015, scheduled principal payments on related-party notes payable are as follows:

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10. Loss On Induced Conversion of Debt and Sale of Common Stock

12 Months Ended

Sep. 30, 2015

Notes

10. Loss On Induced Conversion of Debt and Sale of Common Stock

10.                Loss on Induced Conversion of Debt and Sale of Common Stock

During the fiscal year ended September 30, 2014, the Company offered an induced conversion rate to all debt holders of $0.75 of debt per share of common stock, which was below the market price of the stock.  Debt and accrued interest of approximately $381,000 was converted to shares of common stock.  In addition, debt and accrued interest due to related parties of approximately $1,946,000 was converted to shares of common stock at $0.60 of debt per share of common stock, which was below the market price of the stock.  The Company also offered the private placement of common stock to existing investors at $0.75 per share, which was below the market price.  The difference between the offered price and the market price of all common stock issued was approximately $114,000114,098 and is recorded as a loss on induced conversion of debt. 

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11. Fair Value Measurements

12 Months Ended

Sep. 30, 2015

Notes

11. Fair Value Measurements

11.                Fair Value Measurements

The Company measured the fair values of its assets and liabilities using the US GAAP hierarchy levels as follows:

Level 1	The Company does not have any Level 1 inputs available to measure its assets.
Level 2	The Company’s embedded derivative liabilities are measured on a recurring basis using Level 2 inputs.
Level 3	The Company’s goodwill is measured using Level 3 inputs.

The Company’s embedded derivatives liability is re-measured to fair value as of each reporting date until the contingency is resolved.  See Note 12 for more information about derivatives and the inputs used for calculating fair value.

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12. Derivatives Liability

12 Months Ended

Sep. 30, 2015

Notes

12. Derivatives Liability

12.                Derivatives Liability

The derivatives liability as of September 30, 2015 and 2014 was $79,347 and $106,444, respectively.  The derivatives liability as of September 30, 2014 is related to a variable conversion price adjustment on the Series F preferred stock.  The derivatives liability as of December 31, 2014 was eliminated due to the conversion price on Series F preferred stock being adjusted from $1.00 to $0.3337 based on the number of subscribers as of December 31, 2014.  The derivatives liability as of September 30, 2015 is related to a variable conversion price adjustment on outstanding notes payable.

During the fiscal year ended September 30, 2014, the Company estimated the fair value of the embedded derivatives prior to their conversion and elimination using a binomial option-pricing model with the following assumptions, according to the instrument: exercise price of $0.35 per share; risk free interest rate of 0.060%; expected life of 0.50 years; expected dividends of 0%; a volatility factor of 104%; and a stock price of $0.24.  During the fiscal year ended September 30, 2015, the Company estimated the fair value of the embedded derivatives prior to their conversion and elimination using a binomial option-pricing model with the following assumptions, according to the instrument: exercise prices ranging from $0.12 to $0.33 per share; risk free interest rates ranging from 0.010% to 0.260%; expected lives ranging from 0.001 to 0.50 years; expected dividends of 0%; volatility factors ranging from 0.01% to 138.68%; and stock prices ranging from $0.12 to $0.33.  The expected lives of the instruments were equal to the average term of the conversion option.  The expected volatility is based on the historical price volatility of the Company’s common stock.  The risk-free interest rate represents the U.S. Treasury constant maturities rate for the expected life of the related conversion option. The dividend yield represents anticipated cash dividends to be paid over the expected life of the conversion option.  The Company recognized a gain on derivatives liability for the fiscal years ended September 30, 2015 and 2014 of $128,942 and $373,293, respectively.

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13. Preferred Stock

12 Months Ended

Sep. 30, 2015

Notes

13. Preferred Stock

13.                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.

Series C Convertible Preferred Stock

As of September 30, 2013, the Company had 480,000 shares of Series C convertible preferred stock issued and outstanding (“Series C preferred stock”).  In December 2013, all 480,000 shares of Series C preferred stock were converted to 672,000 shares of common stock.  The conversion rate of 1.4 shares of common stock was greater than the designated conversion rate of one share of common stock and, therefore, the fair value of the additional 192,000 shares was recorded as a deemed dividend. During fiscal year 2014, the Company accrued $11,367 of dividends on Series C preferred stock and settled the accrued dividends by issuing 11,599 shares of common stock.  The Series C preferred stock was non-voting.

Series D Convertible Preferred Stock

The Board of Directors has designated 1,000,000 shares of preferred stock as Series D convertible preferred stock (“Series D preferred stock”).  The Series D preferred stock is voting on an as-converted basis.  The Series D preferred stock has a dividend rate of 8%, payable quarterly.  The Company may redeem the Series D preferred shares at a redemption price equal to 120% of the original purchase price with 15 days notice. In December 2013, 893,218 shares of Series D preferred stock were converted to 6,252,526 shares of common stock.  The conversion rate of 7 shares of common stock was greater than the designated conversion rate of 5 shares of common stock and, therefore, the fair value of the additional 1,786,436 shares was recorded as a deemed dividend. During fiscal year 2015, the Company accrued $24,800 of dividends on Series D preferred stock and settled $31,051 of accrued dividends by issuing 118,068 shares of common stock.

During fiscal year 2014, the Company accrued $84,212 of dividends on Series D preferred stock and settled $77,961 of the accrued dividends by issuing 85,477 shares of common stock.

Series E Convertible Preferred Stock

During fiscal year 2013, the Board of Directors designated shares of preferred stock as Series E convertible preferred stock (“Series E preferred stock”).  Series E preferred stock is convertible into common stock at $1.00 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 stock 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 stock is gradually reduced by dividend payments over 25 to 32 months.  After the dividend payment term, the redemption price of Series E preferred stock is $0, the Series E preferred stock 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. 

During fiscal year 2014, $83,473 of debenture loans and accrued interest converted into 8,347 shares of Series E preferred stock.  During fiscal years 2015 and 2014, the Company accrued dividends of $326,863 and $320,071, respectively, to Series E shareholders.  During fiscal years 2015 and 2014, the Company paid dividends of $0 and $258,284, respectively, to Series E shareholders.  As of September 30, 2015 and 2014, the redemption price for the Series E preferred stock was $477,829.    

Series F Convertible Preferred Stock

During fiscal year 2014, the Board of Directors designated 7,803 shares of preferred stock as Series F convertible preferred stock (“Series F preferred stock”).  In April 2014, the Company increased the authorized shares of Series F preferred stock to 10,000.  Series F preferred stock is non-voting, has a stated value of $1,000 and is convertible into common stock at $0.3337 per share (see Note 12).  The Series F preferred stock has a dividend rate, payable quarterly, of 8% until April 30, 2015, 16% from May 1, 2015 to July 31, 2015, 20% from August 1, 2015 to October 31, 2015 and 25% thereafter.

During the fiscal year ended September 30, 2014, the Company issued 5,361 shares of Series F preferred stock for net proceeds of $3,580,771, after considering $675,229 of related costs, and the conversion of $574,592 of debt and accrued interest.  During fiscal years 2015 and 2014, the Company accrued dividends of $643,320 and $322,730 to Series F shareholders.  During fiscal year 2015, the Company settled $643,320 of dividends on Series F preferred stock by issuing 3,372,917 shares of common stock.  The conversion rate of $0.19 per common share was greater than the designated conversion rate and, therefore, the additional fair value of $301,097 was recorded as a deemed dividend.  During fiscal year 2014, the Company settled $144,030 of dividends plus $3,601 of accrued interest on Series F preferred stock by paying $73,815 in cash and issuing 184,541 shares of common stock.

Liquidation Preference

Upon any liquidation, dissolution or winding up of the Company, before any distribution or payment may be made to the holders of the common stock, the holders of the Series C preferred stock, Series D preferred stock, Series E preferred stock, and Series F preferred stock are entitled to be paid out of the assets an amount equal to $1.00 per share plus all accrued but unpaid dividends.  If the assets of the Company are insufficient to make payment in full to all holders of preferred stock, then the assets shall be distributed among the holders of preferred stock ratably in proportion to the full amounts to which they would otherwise be entitled.

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14. Common Stock

12 Months Ended

Sep. 30, 2015

Notes

14. Common Stock

14.                Common Stock

In April 2014, the Company amended its Certificate of Incorporation increasing the total number of authorized shares of common stock from 50,000,000 shares to 200,000,000 shares.

During fiscal year 2015, the Company issued the following shares of common stock:

·         290,000 shares to the former Interim Chief Executive Officer for future services, the value on the date of grant was $69,600.  The shares originally vested quarterly over two years, but fully vested upon the mutual resignation of the former Interim Chief Executive Officer during March 2015;

·         7,177,103 shares for employee compensation for past services and bonuses, the value on the date of grant was $1,761,606;

·         118,068 shares to settle accrued dividends for Series D preferred stock, the value on the date of grant was $31,051;

·         275,000 shares as part of a settlement agreement on accounts payable, the value on the date of grant was $68,750;

·         3,000,000 shares as part of a settlement agreement on notes payable and accounts payable that resulted in a new note payable, the value on the date of grant was $780,000 which is included in loss on extinguishment of debt;

·         2,000,000 shares to the Executive Chairman of the Board of Directors for services for the calendar year 2015, according to an agreement entered into prior to appointment as the Executive Chairman, the value on the date of grant was $600,000;

·         4,000,000 shares to the Executive Chairman of the Board of Directors for additional future services, according to an employment agreement entered into for further appointment as the Chief Executive Officer.  The value on the date of grant was $720,000.  The shares vest monthly over two years;

·         305,556 shares to the Executive Chairman of the Board of Directors for a future bonus to be earned for additional end users.  The value on the date of grant was $55,000.  Additional shares may be issued to the Executive Chairman of the Board of Directors for additional end users acquired through December 2015;

·         2,000,000 shares to the Chief Financial Officer for future services according to a consulting agreement, the value on the date of grant was $360,000.  The shares vest monthly over two years;

·         3,372,917 shares to settle accrued dividends for Series F preferred stock, the value on the date of grant was $944,417;

·         2,750,000 shares for services provided by independent consultants, the value on the date of grant was $770,000;

·         250,000 shares to an entity controlled by the former Executive Chairman of the Board of Directors for services provided, the value of the shares on the date of grant was $53,500.

·         250,000 shares for future services to be provided by an independent consultant, the value at the date of grant was $45,000;

·         509,976 shares for notes payable origination fees, the value on the date of grant was $89,397;

·         6,000,000 shares to an entity controlled by an officer of the Company for related party notes payable origination fees, the value on the date of grant was $1,080,000.

The fair value of unvested common stock as of September 30, 2015 was $2,607,016.

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15. Common Stock Options and Warrants

12 Months Ended

Sep. 30, 2015

Notes

15. Common Stock Options and Warrants

15.                Common Stock 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.  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 valuation model due to the Company’s short trading history.  The risk-free rate related to the expected term of the stock option or warrants is based on the U.S. Treasury yield curve in effect at the time of grant.  The dividend yield is zero. 

During fiscal years 2015 and 2014, the Company measured the fair value of the warrants using a binomial valuation model with the following assumptions:

	2015	2014
Exercise price	$0.30 - $1.00	$0.50 - $1.40
Expected term (years)	1 - 2	1 - 3
Volatility	228% - 302%	101% - 216%
Risk-free rate	0.22% - 0.63%	0.11% - 0.92%
Dividend rate	0%	0%

During the fiscal year ended September 30, 2015, the Company did not grant any common stock options or warrants.  During February 2015, the Company modified the exercise price of options and warrants previously issued to the Executive Chairman of the Board of Directors from $1.00 to $0.30 per share, according to an agreement entered into prior to appointment as the Executive Chairman, and recognized additional expense of $20,472.  During April 2015, the Company modified the exercise price of options and warrants previously issued to a note holder from $1.00 to $0.40 per share as part of a settlement agreement and conversion of an existing note payable and other payables into a new note payable.  The additional expense of $22,397 was recorded as a loss on extinguishment of debt.

During the fiscal year ended September 30, 2014, the Company modified the exercise price of options and warrants previously issued to current employees and officers to $0.50 per share.  The Company recognized additional expense of $71,942 and deferred $7,960 over the remaining vesting period of the options and warrants.

The following table summarizes information about stock options and warrants outstanding as of September 30, 2015:

Options and Warrants	Number of Options and Warrants	Weighted-Average Exercise Price
Outstanding as of October 1, 2014	10,991,576	$                  1.05
Granted	-
Exercised	-
Forfeited	(1,494,025)	1.52
Outstanding as of September 30, 2015	9,497,551	0.91
Exercisable as of September 30, 2015	7,667,551	1.01

As of September 30, 2015, the outstanding warrants have an aggregate intrinsic value of $0, the weighted average remaining term of the warrants was 2.91 years, and the fair value of unvested stock options and warrants was $154,522.

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16. Segment Information

12 Months Ended

Sep. 30, 2015

Notes

16. Segment Information

16.                Segment Information

The Company operated two business segments during fiscal year 2015 based primarily on the nature of the Company’s products. The Chronic Illness Monitoring segment is engaged in the business of developing, distributing and marketing mobile monitoring of patient vital signs and physical activity to insurance companies, disease management companies, third-party administrators, and self-insured companies.  The customer contracts and equipment leased to customers of the CareServices segment were sold in December 2014.  The CareServices segment was engaged in the business of developing, distributing and marketing mobile health monitoring and concierge services to distributors and consumers.

At the corporate level, the Company raises capital and provides for the administrative operations of the Company as a whole. 

The following table reflects certain financial information relating to each reportable segment for fiscal years 2015 and 2014:

	Corporate	Chronic Illness Monitoring	CareServices (Discontinued Operations)	Total
As of September 30, 2015 and for the Fiscal
Year Then Ended
Sales to external customers	$                    -	$     6,597,981	$        152,686	$     6,750,667
Segment income (loss)	(10,757,547)	(583,890)	(186,232)	(11,527,669)
Interest expense, net	977,234	-	-	977,234
Segment assets	767,302	1,771,658	-	2,538,960
Property and equipment purchases	15,289	-	-	15,289
Depreciation and amortization	57,036	-	233,664	290,700
As of September 30, 2014 and for the Fiscal
Year Then Ended
Sales to external customers	$                    -	$     6,107,941	$     1,003,238	$     7,111,179
Segment loss	(9,957,268)	(2,051,752)	(1,452,567)	(13,461,587)
Interest expense, net	1,936,039	-	-	1,936,039
Segment assets	550,370	4,134,403	737,012	5,421,785
Property and equipment purchases	70,603	-	-	70,603
Depreciation and amortization	92,823	57,220	972,819	1,122,862

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17. Income Taxes

12 Months Ended

Sep. 30, 2015

Notes

17. Income Taxes

17.                Income Taxes

As of September 30, 2015, the Company had net operating loss carryforwards available to offset future taxable income, if any, of approximately $77,700,000, which will begin to expire in 2027.  The utilization of the net operating loss carryforwards is dependent upon the tax laws in effect at the time the net operating loss carryforwards can be utilized.  The Internal Revenue Code contains provisions that likely could reduce or limit the availability and utilization of these net operating loss carryforwards.  For example, limitations are imposed on the utilization of net operating loss carryforwards if certain ownership changes have taken place or will take place.  The Company will perform an analysis to determine whether any such limitations have occurred as the net operating losses are utilized.

The amount and ultimate realization of the benefits from the net operating loss carryforwards are dependent, in part, upon the tax laws in effect, the Company’s future earnings, and other future events, the effects of which cannot be determined.  The Company has established a valuation allowance against all deferred income tax assets not offset by deferred income tax liabilities due to the uncertainty of their realization.  Accordingly, there is no benefit for income taxes in the accompanying statements of operations. 

Deferred income taxes are determined based on the estimated future effects of differences between the consolidated financial reporting and income tax reporting bases of assets and liabilities given the provisions of currently enacted tax laws and the tax rates expected to be in place.  For fiscal years 2015 and 2014, the Company’s expected federal tax rate was 34%.

The deferred income tax assets (liabilities) were comprised of the following as of September 30:

	2015	2014
Net operating loss carryforwards	$     29,000,000	$     23,858,000
Depreciation, amortization and reserves	721,000	1,515,000
Stock-based compensation	1,728,000	2,007,000
Accrued vacation	28,000	53,000
Valuation allowance	(31,477,000)	(27,433,000)
Total	$                       -	$                    -

Reconciliations between the benefit for income taxes at the federal statutory income tax rate and the Company’s benefit for income taxes for fiscal years 2015 and 2014 were as follows:

	2015	2014
Federal income tax benefit at statutory rate	$       3,919,000	$     4,577,000
State income tax benefit, net of federal
income tax effect	380,000	444,000
Non-deductible expenses	(367,000)	67,000
Other	112,000	135,000
Change in valuation allowance	(4,044,000)	(5,223,000)
Benefit for income taxes	$                       -	$                   -

During fiscal years 2015 and 2014, the Company recognized no interest or penalties, and there were no changes in unrecognized tax benefits from tax positions taken or from lapsed statutes of limitations.  There were no settlements with taxing authorities.  As of September 30, 2015, the Company had no unrecognized tax benefits that, if recognized, would affect the effective tax rate, and there are no positions that are anticipated to significantly increase or decrease.  The Company had no tax examinations beginning, ending, or remaining in process as of and for the years ended September 30, 2015 and 2014.  Tax returns for fiscal years subsequent to 2011 remain subject to examination.

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18. Commitments and Contingencies

12 Months Ended

Sep. 30, 2015

Notes

18. Commitments and Contingencies

18.                Commitments and Contingencies

During the fiscal year ended September 30, 2015, the Company leased office space under a non-cancelable operating lease, which was terminated during June 2015.  In February 2015, the Company entered into a sublease agreement for part of the office space under the non-cancelable operating lease through the end of the original lease period.  Payments under the sublease were made by the sublessee directly to the Company’s landlord.  During the fiscal year ended September 30, 2015, the Company recognized $42,438 of sublease income as part of other expense, net.

The Company’s rent expense for facilities under the terminated operating lease for the nine months ended June 30, 2015 and fiscal year ended September 30, 2014 was approximately $226,000 and $279,000, respectively.

During June 2015, the Company entered into a new non-cancelable operating lease for its existing office space, excluding the previously subleased space, and with payments beginning in July 2015.  Future minimum rental payments under the non-cancelable operating lease as of September 30, 2015 were as follows:

Years Ending September 30,
2016	$            126,249
2017	130,036
2018	111,340
	$            367,625

The Company’s rent expense for under the new non-cancelable operating lease for fiscal year 2015 was approximately $31,000.

On May 28, 2015, an investor of the Company filed a lawsuit for $1,000,000 exclusive of interest and costs against the Company, its Executive Chairman, an entity controlled by its former Executive Chairman, and 4G Biometrics, a wholly owned subsidiary of the Company claiming a breach of contract in the District Court of Utah-Central Division.  The Company has engaged legal counsel regarding the matter.  As the lawsuit is in its early stages, 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 principle of 4G Biometrics who was terminated for cause in regards to his employment agreement.  On December 4, 2015, the Company filed a complaint against the former owners of 4G Biometrics, including this former employee, seeking damages in excess of $300,000 related to alleged misrepresentations made to induce ActiveCare to acquire 4G Biometrics.  As the lawsuit is in its early stages, it is not possible to predict the outcome of the matter.  The Company intends to vigorously support the complaint and believes it has meritorious support for the complaint.

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19. Related Party Transactions Not Otherwise Disclosed

12 Months Ended

Sep. 30, 2015

Notes

19. Related Party Transactions Not Otherwise Disclosed

19.                Related Party Transactions Not Otherwise Disclosed

During fiscal year 2015, Purizer Corporation, an entity controlled by David Derrick, the Company’s former Executive Chairman of the Board of Directors, introduced and helped us entered into agreement with a customer.  Along with the sales contract, the Company granted Purizer Corporation 250,000 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.  

During September 2015, the Company entered into consulting agreements with ADP Management, an entity controlled by Mr. David Derrick.  The Company agreed to pay for Mr. Derrick’s healthcare insurance cost plus $6,000 per month for his consulting services.  The Company also agreed to pay as a bonus to ADP Management a fee equal to 15% of the funds raised less payments to third parties owed in regards to the fund raised.

During September 2015, the Company entered into a one-year consulting agreement with Bluestone Advisors, LLC, an entity controlled by Mr. Jeffrey Peterson, who assumed a new role as Chief Financial Officer of the Company.  The Company agreed to pay Bluestone Advisors, LLC $20,000 per month and 2,000,000 shares of Common Stock with fair value of $360,000 as Mr. Jeffrey’s services compensation.

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20. Subsequent Events

12 Months Ended

Sep. 30, 2015

Notes

20. Subsequent Events

20.                Subsequent Events

Subsequent to September 30, 2015 and through the release date of this report, the Company entered into the following agreements and transactions:

(1)    In October 2015, the Company entered into a consulting agreement with a third party in which it issued 250,000 shares of common stock.

(2)    In October 2015, the Company received funding under convertible debentures of $138,000 in which it issued 331,200 shares of common stock.

(3)    In November 2015, the Company entered into a factoring agreement in which it is able to factor $2 million of receivables at any given time.  In connection with the execution of this agreement, the Company issued 791,666 shares of common stock and 1,333,333 warrants to purchase shares of common stock.

(4)    In November 2015, the Company altered certain terms and conditions of a previously executed factor agreement in which it subordinated to the factor agreement as put forth in paragraph 3 above.

(5)    In December 2015, the Company entered into a factoring agreement in which the Company was advanced $200,000.

(6)    In December 2015, the Company entered into a convertible loan agreement with an existing debt holder at 10% and is due December 2014, which incorporated $303,212 of principal and $31,380 of accrued interest of a previous note payable.  All or part of the prinipal, interest and any late fees of the note payable is convertile into a share of the Company’s common stock at a 5-day volume weighted average of the closing sales price.  The convertible note is guaranteed by the Company’s chief financial officer and former Executive Chairman.

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1. Organization and Nature of Operations: Going Concern (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Going Concern

                Going Concern

The Company continues to incur negative cash flows from operating activities and net losses.  The Company had negative working capital and negative total equity as of September 30, 2015 and 2014 and is in default with respect to certain debt.  These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In order for the Company to eliminate substantial doubt about its ability to continue as a going concern, it must achieve profitability, generate positive cash flows from operating activities and obtain the necessary debt or equity funding to meet its projected capital investment requirements.  Management’s plans with respect to this uncertainty consist of raising additional capital by issuing debt or equity securities and increasing the sales of the Company’s services and products.  There can be no assurance that the Company will be able to raise sufficient additional capital or that revenues will increase rapidly enough to offset operating losses.  If the Company is unable to increase revenues or obtain additional financing, it will be unable to continue the development of its products and services and may have to cease operations. 

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2. Summary of Significant Accounting Policies: Use of Estimates in The Preparation of Financial Statements (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Use of Estimates in The Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet dates and the reported amounts of revenues and expenses for the reporting periods. Actual results could differ from these estimates.

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2. Summary of Significant Accounting Policies: Discontinued Operations, Policy (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Discontinued Operations, Policy

Discontinued Operations

In December 2014, the Company sold substantially all of its customer contracts and equipment leased to customers associated with its CareServices segment to a third party.  Additional equipment in stock was sold to another third party pursuant to a written invoice.  The purchase price included a cash payment of $412,280 for the customer contracts and $66,458 for the equipment in stock.  During fiscal years 2015 and 2014, the Company recognized a loss from discontinued operations related to CareServices of $186,232 and $1,452,567, respectively.

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2. Summary of Significant Accounting Policies: Fair Value of Financial Instruments (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company measured the fair values of its assets and liabilities using the US GAAP hierarchy.  The carrying amounts reported in the 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.

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2. Summary of Significant Accounting Policies: Concentrations of Credit Risk (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Concentrations of Credit Risk

Concentrations of Credit Risk

The Company has cash in bank accounts that, at times, may exceed federally insured limits.  The Company has not experienced any losses in these accounts.

In the normal course of business, the Company provides credit terms to its customers and requires no collateral.  The Company performs ongoing credit evaluations of its customers’ financial condition.  The Company maintains an allowance for doubtful accounts receivable based upon management’s specific review and assessment of each account at the period end.

During fiscal year 2015, the Company had revenues from three significant customers which represented 69% of total revenues.  During fiscal year 2014, the Company had revenues from two significant customers which represented 67% of total revenues.  As of September 30, 2015 and 2014 accounts receivable from significant customers represented 66% and 80% of total accounts receivable, respectively.

During the fiscal years 2015 and 2014, the Company purchased substantially all of its products and supplies from one vendor.

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2. Summary of Significant Accounting Policies: Accounts Receivable (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Accounts Receivable

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.  Interest is not charged on accounts receivable that are past due.  The Company recorded an allowance for doubtful accounts of $30,495 and $115,994 as of September 30, 2015 and 2014, respectively.

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2. Summary of Significant Accounting Policies: Inventory (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Inventory

Inventory

Inventory is recorded at the lower of cost or market, cost being determined using the first-in, first-out (“FIFO”) method. Inventory is for the Chronic Illness Monitoring segment and consists of diabetic supplies.  Inventory held by distributors is reported as inventory until the supplies are shipped to the end user by the distributor.  The Company estimates 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.  Inventory consists of the following as of September 30:

	2015	2014
Finished goods	$    206,038	$     589,423
Finished goods held by distributors	1,350,368	2,720,626
Total inventory	1,556,406	3,310,049
Inventory reserve	(813,935)	(1,660,729)
Net inventory	$    742,471	$    1,649,320

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2. Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Property, Plant and Equipment, Policy

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization.  Depreciation and amortization are determined using the straight-line method over the estimated useful lives of the assets, which range between 3 and 7 years.  Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the terms of the lease.  Expenditures for maintenance and repairs are expensed as incurred.  Upon the sale or disposal of property and equipment, any gains or losses are included in operations.

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2. Summary of Significant Accounting Policies: Goodwill (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Goodwill

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.  The annual testing date is September 30.  The identification and measurement of goodwill impairment involves the estimation of the fair value of our reporting units.  The estimates of fair value of reporting units are based on the best information available as of the date of the assessment, which primarily incorporate management assumptions about expected future cash flows and the Company’s market cap.  Future cash flows can be affected by changes in industry or market conditions.  Goodwill was impaired by $825,894 as of September 30, 2015.  The impairment of goodwill was due to a potentially long-term reduction in the market capitalization of the Company subsequent to September 30, 2015.  Goodwill was not impaired as of September 30, 2014. 

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2. Summary of Significant Accounting Policies: Impairment of Long-lived Assets (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Impairment of Long-lived Assets

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 impaired as of September 30, 2015.  The Company impaired its CareServices customer contracts by $89,460 and patents by $408,332 as of September 30, 2014, which were recorded as part of discontinued operations related to the CareServices segment for the fiscal year ended September 30, 2014.  The impairment of the customer contracts is due to their sales price being lower than the net book value as of the date of sale.  The patents impaired were solely related to the CareServices segment and provide no future cash flows after the CareServices customer contracts and equipment leased to customers were sold in December 2014. 

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2. Summary of Significant Accounting Policies: Revenue Recognition (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Revenue Recognition

Revenue Recognition

For the years presented, revenues came from two sources: (1) sales of Chronic Illness Monitoring products and services; (2) sales from CareServices.  The CareServices segment was sold in December 2014.  Information regarding revenue recognition policies relating to these business segments 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.

The Company enters 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.  The Company also monitors 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 for another year.  Collection terms are net 30 days after claims are submitted.  There is no contingent revenue in these contracts.

The Company also enters 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 the Company 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.  Sales of Chronic Illness Monitoring products and services contain multiple elements.

Multiple-Element Arrangements

The Company evaluates 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.

During the three months ended June 30, 2014, we began to provide enhanced monitoring services to a key customer, which pays a separate monthly monitoring fee.  Beginning in the three months ended June 30, 2015, our sales initiatives under the direction of new executive management became focused on the monitoring of end users.  This monitoring is accounted for as an element with stand-alone value.

CareServices

CareServices included contracts in which we leased monitoring devices and provided monitoring services to end users.  The Company typically entered into contracts on a month-to-month basis with end users that used CareServices.  These contracts could be cancelled by either party at any time with 30-days’ notice.  Under a standard contract, the device and service became billable on the date the end user ordered the device, and remained billable until the device was returned to the Company.  Revenues were recognized at the end of each month the service had been provided.  In those circumstances in which payment was received in advance, we recorded deferred revenue.

CareServices revenue was recognized when persuasive evidence of an arrangement existed, delivery of the device or service had occurred, prices were fixed or determinable and collection was reasonably assured.  Shipping and handling fees were included as part of net revenues.  The related freight costs and supplies directly associated with shipping products to end users were included as a component of cost of revenues.  All CareServices sales were made with net 30-day payment terms.

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2. Summary of Significant Accounting Policies: Research and Development Costs (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Research and Development Costs

Research and Development Costs

All expenditures for research and development are charged to expense as incurred.  Research and development expenses for fiscal years 2015 and 2014 were $106,526 and $215,074 respectively. The expenditures for fiscal year 2015 and 2014 were for ongoing software improvements for the Chronic Illness Monitoring operating system and customer portal.

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2. Summary of Significant Accounting Policies: Advertising Costs (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Advertising Costs

Advertising Costs

The Company expenses advertising costs as incurred.  Advertising expenses for fiscal years 2015 and 2014 were $30,551 and $48,778, respectively.  Advertising expenses primarily related to the Company’s Chronic Illness Monitoring segment for the fiscal years ended 2015 and 2014.

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2. Summary of Significant Accounting Policies: Income Taxes (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Income Taxes

Income Taxes

The Company recognizes deferred income tax assets or liabilities for the expected future tax consequences of events that have been recognized in the financial statements or income tax returns. Deferred income tax assets or liabilities are determined based upon the difference between the financial reporting bases and tax reporting bases of assets and liabilities using enacted tax rates expected to apply when the differences are expected to be settled or realized.  Deferred income tax assets are reviewed periodically for recoverability and valuation allowances are provided as necessary.  As of September 30, 2015, management has provided a 100% allowance against deferred income tax assets as it is more likely than not these assets will not be realized.  Interest and penalties related to income tax liabilities, when incurred, are classified in interest expense and income tax provision, respectively.

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2. Summary of Significant Accounting Policies: Stock-based Compensation (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Stock-based Compensation

Stock-Based Compensation

The Company measures 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 statements 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.

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2. Summary of Significant Accounting Policies: Net Loss Per Common Share (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Net Loss Per Common Share

Net Loss Per Common Share

Basic net loss per common share (“Basic EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the year.

Diluted net loss per common share (“Diluted EPS”) is computed by dividing net loss available to common stockholders by the sum of the weighted average number of common shares outstanding and the weighted-average dilutive common share equivalents outstanding.  The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect.

Common share equivalents consist of shares issuable upon the exercise of common stock warrants, shares issuable from restricted stock grants, and shares issuable from convertible notes and convertible Series D, Series E and Series F preferred stock.  As of September 30, 2015 and 2014, there were 39,111,621 and 17,199,080 outstanding common share equivalents, respectively, that were not included in the computation of Diluted EPS as their effect would be anti-dilutive.  The common stock equivalents outstanding consist of the following as of September 30:

	2015	2014
Common stock options and warrants	9,497,551	10,991,576
Series D convertible preferred stock	225,000	225,000
Series E convertible preferred stock	477,830	477,830
Series F convertible preferred stock	16,065,328	5,361,000
Convertible debt	12,838,412	133,924
Restricted shares of common stock	7,500	9,750
Total common stock equivalents	39,111,621	17,199,080

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2. Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies)

12 Months Ended

Sep. 30, 2015

Policies

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 states that only disposals representing strategic shifts in operations that have, or will have, a major effect on an entity’s operations should be reported as discontinued operations when any of the following occurs: The component of an entity or group of components of an entity is classified as held for sale, the component of an entity or group of components of an entity is disposed of by sale, or the component of an entity or group of components of an entity is disposed of other than by sale. ASU 2014-08 is effective for annual periods beginning on or after December 15, 2014, and interim periods therein, which will be effective for the Company for the quarter ending December 31, 2015.  Early adoption is not permitted.  The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position and results of operations.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under US GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing US GAAP. In August 2015, the FASB voted to defer the effective date of the new revenue standard by one year. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, which will be effective for the Company for the quarter ending December 31, 2018. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This standard sets forth management’s responsibility to evaluate, each reporting period, whether there is substantial doubt about the Company’s ability to continue as a going concern, and if so, to provide related footnote disclosures. The standard is effective for annual reporting periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016, which will be effective for the Company for the quarter ending December 31, 2017. The Company is assessing the impact, if any, of implementing this guidance on its assessment of going concern.

In November 2014, the FASB issued ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The ASU clarifies how current guidance should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of a host contract. The ASU is effective for fiscal years and interim periods beginning after December 15, 2015, which will be effective for the Company for the quarter ending December 31, 2016. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements. The purpose of this ASU is to clarify guidance, correct unintended application of guidance, or make minor improvements to guidance. The ASU is effective for fiscal years and interim periods beginning after December 15, 2015, which will be effective for the Company for the quarter ending December 31, 2016. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

In July 2015, the FASB issued ASU 2015-11, Inventory: Simplifying the Measurement of Inventory. The purpose of this ASU is to more closely align the measurement of inventory in U.S. GAAP with the measurement of inventory in International Financial Reporting Standards. This ASU requires entities to measure most inventory at the “lower of cost and net realizable value.” Additionally, some of the amendments are designed to more clearly articulate the requirements for the measurement and disclosure of inventory. The ASU is effective for fiscal years and interim periods beginning after December 15, 2016, which will be effective for the Company for the quarter ending December 31, 2017. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

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2. Summary of Significant Accounting Policies: Inventory: Schedule of Utility Inventory (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of Utility Inventory

	2015	2014
Finished goods	$    206,038	$     589,423
Finished goods held by distributors	1,350,368	2,720,626
Total inventory	1,556,406	3,310,049
Inventory reserve	(813,935)	(1,660,729)
Net inventory	$    742,471	$    1,649,320

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2. Summary of Significant Accounting Policies: Net Loss Per Common Share: Schedule of common stock equivalents (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of common stock equivalents

	2015	2014
Common stock options and warrants	9,497,551	10,991,576
Series D convertible preferred stock	225,000	225,000
Series E convertible preferred stock	477,830	477,830
Series F convertible preferred stock	16,065,328	5,361,000
Convertible debt	12,838,412	133,924
Restricted shares of common stock	7,500	9,750
Total common stock equivalents	39,111,621	17,199,080

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3. Discontinued Operations: Schedule of Assets Classified as Discontinued Operations (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of Assets Classified as Discontinued Operations

	2015	2014
Customer contracts, net	$      -	$    569,250
Equipment leased to customers, net	-	111,435
Patents, net	-	31,718
Total assets of discontinued operations	$       -	$    712,403

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3. Discontinued Operations: Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures

	2015	2014
Revenues	$    152,686	$     1,003,238
Cost of revenues	127,709	881,753
Gross profit	24,977	121,485
Selling, general and administrative expenses	(211,209)	(1,047,629)
Impairment of long-lived assets	-	(497,792)
Loss on disposal of property and equipment	-	(18,746)
Other expense	-	(9,885)
Loss from discontinued operations	$     (186,232)	$     (1,452,567)

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5. Property, Plant and Equipment Disclosure: Schedule of Property and Equipment (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of Property and Equipment

	2015	2014
Software	$     100,574	$    100,574
Leasehold improvements	98,023	151,287
Furniture	68,758	69,776
Equipment	59,754	54,732
Total property and equipment	327,109	376,369
Accumulated depreciation and amortization	(191,339)	(156,293)
Property and equipment, net	$   135,770	$   220,076

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7. Accrued Expenses: Schedule of Accrued Expenses (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of Accrued Expenses

	2015	2014
Payroll expense	$      270,974	$     308,529
Interest	190,045	59,091
Deferred revenue	147,344	18,534
Commissions and fees	64,432	453,744
Liability to issue common stock	40,000	522,087
Other	31,172	-
Deferred rent	-	89,346
Total accrued expenses	$     743,967	$   1,451,331

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8. Notes Payable: Schedule of Debt (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of Debt

	2015	2014
Secured borrowings from a third party that purchased $693,000 of customer receipts for $550,000, with due dates ranging from November 2015 to September 2016 and payable in daily payments ranging from $955 to $1,909.  The $143,000 difference between the customer receipts and cash received is being amortized to interest expense over the term of the respective notes.  The secured borrowings are guaranteed by two officers of the Company.	$            421,413	$                     -
Note payable previously secured by CareServices customer contracts.  In January 2015, the note was amended to reduce the outstanding principal to $375,000, interest at 9%, and payable in 15 monthly installments beginning in February 2015.  The amendment released the collateralized customer contracts and the note payable is guaranteed by both a former Executive Chairman of the Board of Directors and a member of the Board of Directors.  A gain on the extinguishment of the old note of $769,449 was recorded in other income.	303,212	1,103,841
Unsecured note payable with interest at 12%, due November 2015 (extended to February 2016 subsequent to year end).  In connection with the issuance of the note, the Company repriced previously issued warrants to purchase shares of common stock.  The $22,397 increase in relative fair value of the warrants was included as a loss on the extinguishment of the old note in other expense.  The note also required a payment of 3,000,000 shares of common stock.  The fair value of $780,000 was included as a loss on the extinguishment of the old note in other expense.	300,000	-
Secured borrowings from third parties that purchased a $337,600 customer receivable for $200,000, in default.  The Company was able to buy back the receivable for $233,333 less cash received by the third parties before June 2015.  The $33,333 difference between the buyback and cash received plus $20,000 of commission paid to a related party, was amortized to interest expense through June 2015.	233,333	233,333
Unsecured notes payable with interest at 12%, due March 2016 and convertible into common stock at a 15% discount from the 10-day volume adjusted weighted average closing price per share upon maturity.  In connection with the issuance of the notes, the Company issued 509,976 shares of common stock.  The $89,397 fair value of the stock is being amortized to interest expense over the term of the notes.  The notes included loan origination fees of $21,249, which are being amortized to interest expense over the term of the notes.  The Company recorded a derivative in connection with the convertible feature of the notes (see Note 12) and is amortizing the initial $101,884 fair value of the derivatives liability over the life of the notes.	212,490	-
Unsecured notes with interest at 18%, due April 2013, in default.  The Company issued 20,000 shares of Series D preferred stock as loan origination fees.  The $195,000 fair value of the preferred stock was amortized over the original term of the note.   Principal of $50,000 and accrued interest of $13,333 were converted to common stock in December 2013.	64,261	64,261
Unsecured note payable with no interest, due March 2015.  In connection with the issuance of the note, the Company issued warrants to purchase 450,000 shares of common stock.  The $143,634 relative fair value of the warrants was amortized to interest expense through March 2015.  The note also required a payment of the greater of 667,000 shares of common stock or shares of common stock equal to $500,000 at the end of the term (relative fair value of $230,293).  In May 2015, the note and other payables were converted into an unsecured note payable to the same party.  The conversion resulted in a gain on extinguishment of debt of $230,293.	-	200,000
Total notes payable before discount	1,534,709	1,601,435
Less discount	(274,793)	(169,450)
Total notes payable	1,259,916	1,431,985
Less current portion	(1,259,916)	(1,212,937)
Notes payable, net of current portion	$                     -	$            219,048

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8. Notes Payable: Schedule of principal payments on notes payable (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of principal payments on notes payable

Year Ending September 30,
2016	$         1,534,709

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9. Related-party Notes Payable: Schedule of related party notes payable (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of related party notes payable

	2015	2014
Secured borrowings from entities controlled by an officer that purchased a $2,813,175 customer receivable for $1,710,500.  The Company was able to buy back the receivable for $1,950,000 less cash received by the entities through March 2015.  The $239,500 difference between the buyback and cash received plus $253,500 of loan origination fees was amortized to interest expense through March 2015.  In September 2015, the note was modified to extend the maturity date to January 2017 with interest at 18%.  The Company added $81,600 of extension fees and issued 3,000,000 shares of common stock as part of the modification and the note is convertible into common stock at $0.30 per share.  The $540,000 fair value of the common stock was recognized as a loss on extinguishment of debt	$         1,721,100	$         1,639,500
Unsecured note payable to an entity controlled by an officer with interest at 18%, due January 2017, convertible into common stock at $0.30 per share.  The Company issued 3,000,000 shares of common stock as loan origination fees.  The $540,000 fair value of the common stock was recognized as a loss on extinguishment of debt	1,303,135	-
Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors with no interest (18% in the event of default), due on demand and in default. The former Executive Chairman demanded payment by May 15, 2015.	396,667	-
Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors with interest at 18%, due January 2017.	324,016	-
Unsecured note payable to a former officer with interest at 15%, due June 2012, in default.  The note included a $3,000 loan origination fee added to the principal and is convertible into common stock at $0.50 per share.	30,000	30,000
Unsecured note payable to a former officer with interest at 12%, due September 2013, in default, and convertible into common stock at $0.75 per share.	26,721	26,721
Unsecured note payable to an entity controlled by an officer with interest at 18%, due upon demand.	25,463	-
Unsecured note payable to a former officer with interest at 12%, due on demand.	13,644	13,644
Secured borrowings from a former Executive Chairman of the Board of Directors who purchased a $422,000 customer receivable for $250,000.  The Company was able to buy back the receivable for $291,667 less cash received by the former Executive Chairman before June 2015.  The $41,667 difference between the buyback and cash received plus $25,000 of loan origination fees was to be amortized to interest expense over the buyback term.  In November 2014, the secured borrowings and other advances were converted into an unsecured note payable to the same related party and the remaining discount balance of $45,129 was recognized as a loss on extinguishment of debt.	-	291,667
Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors, interest at 12%, due on demand, and convertible into common stock at $0.75 per share.  The Company issued 17,500 shares of common stock as loan origination fees.  The $26,250 fair value of the common stock was amortized to interest expense over the original term of the note, (through September 2013).  In December 2013, $160,000 of the note was converted to common stock.  In September 2015, $15,000 of principal and $10,469 of interest with other payables were converted into an unsecured note payable to the same party.	-	15,000
Total notes payable, related-party, before discount	3,840,746	2,016,532
Less discount	-	(346,912)
Total notes payable, related-party	3,840,746	1,669,620
Less current portion	(492,495)	(1,669,620)
Notes payable, related party, net of current portion	$         3,348,251	$                     -

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15. Common Stock Options and Warrants: Schedule of fair value assumptions (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of fair value assumptions

	2015	2014
Exercise price	$0.30 - $1.00	$0.50 - $1.40
Expected term (years)	1 - 2	1 - 3
Volatility	228% - 302%	101% - 216%
Risk-free rate	0.22% - 0.63%	0.11% - 0.92%
Dividend rate	0%	0%

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15. Common Stock Options and Warrants: Schedule of Share-based Compensation, Activity (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of Share-based Compensation, Activity

Options and Warrants	Number of Options and Warrants	Weighted-Average Exercise Price
Outstanding as of October 1, 2014	10,991,576	$                  1.05
Granted	-
Exercised	-
Forfeited	(1,494,025)	1.52
Outstanding as of September 30, 2015	9,497,551	0.91
Exercisable as of September 30, 2015	7,667,551	1.01

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16. Segment Information: Schedule of Segment Reporting Information, by Segment (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of Segment Reporting Information, by Segment

	Corporate	Chronic Illness Monitoring	CareServices (Discontinued Operations)	Total
As of September 30, 2015 and for the Fiscal
Year Then Ended
Sales to external customers	$                    -	$     6,597,981	$        152,686	$     6,750,667
Segment income (loss)	(10,757,547)	(583,890)	(186,232)	(11,527,669)
Interest expense, net	977,234	-	-	977,234
Segment assets	767,302	1,771,658	-	2,538,960
Property and equipment purchases	15,289	-	-	15,289
Depreciation and amortization	57,036	-	233,664	290,700
As of September 30, 2014 and for the Fiscal
Year Then Ended
Sales to external customers	$                    -	$     6,107,941	$     1,003,238	$     7,111,179
Segment loss	(9,957,268)	(2,051,752)	(1,452,567)	(13,461,587)
Interest expense, net	1,936,039	-	-	1,936,039
Segment assets	550,370	4,134,403	737,012	5,421,785
Property and equipment purchases	70,603	-	-	70,603
Depreciation and amortization	92,823	57,220	972,819	1,122,862

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17. Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of Deferred Tax Assets and Liabilities

	2015	2014
Net operating loss carryforwards	$     29,000,000	$     23,858,000
Depreciation, amortization and reserves	721,000	1,515,000
Stock-based compensation	1,728,000	2,007,000
Accrued vacation	28,000	53,000
Valuation allowance	(31,477,000)	(27,433,000)
Total	$                       -	$                    -

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17. Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of Components of Income Tax Expense (Benefit)

	2015	2014
Federal income tax benefit at statutory rate	$       3,919,000	$     4,577,000
State income tax benefit, net of federal
income tax effect	380,000	444,000
Non-deductible expenses	(367,000)	67,000
Other	112,000	135,000
Change in valuation allowance	(4,044,000)	(5,223,000)
Benefit for income taxes	$                       -	$                   -

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18. Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Tables)

12 Months Ended

Sep. 30, 2015

Tables/Schedules

Schedule of Future Minimum Rental Payments for Operating Leases

Years Ending September 30,
2016	$            126,249
2017	130,036
2018	111,340
	$            367,625

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2. Summary of Significant Accounting Policies: Discontinued Operations, Policy (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Gain (loss) from discontinued operations	$ 186,232	$ 1,452,567
CareServices
Gain (loss) from discontinued operations	$ 186,232	$ 1,452,567

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2. Summary of Significant Accounting Policies: Concentrations of Credit Risk (Details)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Details
Concentration Risk, Customer	the Company had revenues from three significant customers which represented 69% of total revenues
Concentration Risk, Accounts Receivable	66.00%	80.00%

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2. Summary of Significant Accounting Policies: Accounts Receivable (Details) - USD ($)	Sep. 30, 2015	Sep. 30, 2014
Details
Allowance for Doubtful Accounts Receivable	$ 30,495	$ 115,994

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2. Summary of Significant Accounting Policies: Inventory: Schedule of Utility Inventory (Details) - USD ($)	Sep. 30, 2015	Sep. 30, 2014
Details
Inventory, Finished Goods, Gross	$ 206,038	$ 589,423
Finished goods held by distributors	1,350,368	2,720,626
Inventory, Gross	1,556,406	3,310,049
Inventory Valuation Reserves	(813,935)	(1,660,729)
Inventory	$ 742,471	$ 1,649,320

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2. Summary of Significant Accounting Policies: Goodwill (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Details
Impairment of goodwill	$ 825,894	$ 0

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2. Summary of Significant Accounting Policies: Impairment of Long-lived Assets (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Impairment of long-lived assets	$ 0	$ (497,792)
Customer Contracts | CareServices
Impairment of long-lived assets		89,460
Patents
Impairment of long-lived assets		$ 408,332

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2. Summary of Significant Accounting Policies: Research and Development Costs (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Details
Research and development	$ 106,526	$ 215,074

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2. Summary of Significant Accounting Policies: Advertising Costs (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Details
Advertising Expense	$ 30,551	$ 48,778

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2. Summary of Significant Accounting Policies: Net Loss Per Common Share (Details) - shares	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Details
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	39,111,621	17,199,080

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2. Summary of Significant Accounting Policies: Net Loss Per Common Share: Schedule of common stock equivalents (Details) - shares	Sep. 30, 2015	Sep. 30, 2014
Details
Common stock options and warrants	9,497,551	10,991,576
Series D convertible preferred stock	225,000	225,000
Series E convertible preferred stock	477,830	477,830
Series F convertible preferred stock	16,065,328	5,361,000
Convertible debt - Shares	12,838,412	133,924
Restricted shares of common stock	7,500	9,750
Total common stock equivalents	39,111,621	17,199,080

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3. Discontinued Operations: Schedule of Assets Classified as Discontinued Operations (Details) - USD ($)	Sep. 30, 2015	Sep. 30, 2014
Assets of discontinued operations	$ 0	$ 712,403
Equipment Leased to Other Party
Assets of discontinued operations		111,435
Customer Contracts
Assets of discontinued operations		569,250
Patents
Assets of discontinued operations		$ 31,718

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3. Discontinued Operations: Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Chronic Illness Monitoring Revenue	$ 6,597,981	$ 6,107,941
Chronic Illness Monitoring Cost of Revenue	5,196,827	6,437,943
Gross profit (loss)	1,401,154	(330,002)
Total operating expenses	10,464,936	10,015,448
Total other expense	(2,277,655)	(1,663,570)
Loss from discontinued operations	(186,232)	(1,452,567)
Segment, Discontinued Operations
Chronic Illness Monitoring Revenue	152,686	1,003,238
Chronic Illness Monitoring Cost of Revenue	127,709	881,753
Gross profit (loss)	24,977	121,485
Total operating expenses	(211,209)	(1,047,629)
Impairment of Long-Lived Assets to be Disposed of		(497,792)
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property		(18,746)
Total other expense		(9,885)
Loss from discontinued operations	$ (186,232)	$ (1,452,567)

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4. Customer Contracts (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	$ 191,339	$ 156,293
Impairment of long-lived assets	0	(497,792)
Customer Contracts | Chronic Illness Monitoring
Cost Associated with Intangible Assets	214,106	214,106
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	214,106	214,106
Amortization of Intangible Assets	0	57,220
Customer Contracts | CareServices
Cost Associated with Intangible Assets	0	2,066,316
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	0	1,497,067
Amortization of Intangible Assets	$ 179,648	718,592
Impairment of long-lived assets		$ 89,460

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5. Property, Plant and Equipment Disclosure: Schedule of Property and Equipment (Details) - USD ($)	Sep. 30, 2015	Sep. 30, 2014
Property, Plant and Equipment, Gross	$ 327,109	$ 376,369
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	(191,339)	(156,293)
Property and equipment, net	135,770	220,076
Software and Software Development Costs
Property, Plant and Equipment, Gross	100,574	100,574
Leasehold Improvements
Property, Plant and Equipment, Gross	98,023	151,287
Furniture and Fixtures
Property, Plant and Equipment, Gross	68,758	69,776
Equipment
Property, Plant and Equipment, Gross	$ 59,754	$ 54,732

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5. Property, Plant and Equipment Disclosure (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Details
Loss on disposal of property and equipment	$ 42,336	$ 42,094
Depreciation, Amortization and Accretion, Net	$ 56,321	$ 219,465

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6. Patent License Agreement (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Common stock shares issued in purchase of patents				600,000
Series C stock shares issued in purchase of patents			(480,000)	480,000
Independent valuation of patents				$ 922,378
Value of the Common Stock issued				240,000
Value of the Series C Preferred Stock issued				$ 682,378
Impairment of long-lived assets	$ 0	$ (497,792)
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	191,339	156,293
Patents
Amortization of Intangible Assets	31,718	126,870
Impairment of long-lived assets		408,332
Cost Associated with Intangible Assets	514,046	514,046
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	$ 514,046	$ 482,328

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7. Accrued Expenses: Schedule of Accrued Expenses (Details) - USD ($)	Sep. 30, 2015	Sep. 30, 2014
Accrued expenses	$ 743,967	$ 1,451,331
Payroll Expense
Accrued expenses	270,974	308,529
Interest Expense
Accrued expenses	190,045	59,091
DeferredRevenueMember
Accrued expenses	147,344	18,534
Commissions and fees
Accrued expenses	64,432	453,744
Liability to issue common stock
Accrued expenses	40,000	522,087
Other Expense
Accrued expenses	$ 31,172
Deferred Rent
Accrued expenses		$ 89,346

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8. Notes Payable: Schedule of Debt (Details) - USD ($)	Sep. 30, 2015	Sep. 30, 2014
Gross notes payable before discount	$ 1,534,709	$ 1,601,435
Discount on notes payable	(274,793)	(169,450)
Notes payable current and noncurrent	1,259,916	1,431,985
Notes payable current portion	(1,259,916)	(1,212,937)
Notes payable, net of current portion	0	219,048
Note1Member
Gross notes payable before discount	421,413
Note2Member
Gross notes payable before discount	303,212	1,103,841
Note3Member
Gross notes payable before discount	300,000
Note4Member
Gross notes payable before discount	233,333	233,333
Note5Member
Gross notes payable before discount	212,490
Note6Member
Gross notes payable before discount	$ 64,261	64,261
Note7Member
Gross notes payable before discount		$ 200,000

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8. Notes Payable: Schedule of principal payments on notes payable (Details)	12 Months Ended
	Sep. 30, 2015 USD ($)
Details
Notes payable principal payments in 2016	$ 1,534,709

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9. Related-party Notes Payable: Schedule of related party notes payable (Details) - USD ($)	Sep. 30, 2015	Sep. 30, 2014
Gross notes payable related party before discount	$ 3,840,746	$ 2,016,532
Discount on notes payable related party		(346,912)
Notes Payable, Related Parties	3,840,746	1,669,620
Notes payable, related party	(492,495)	(1,669,620)
Notes payable, related party, net of current portion	3,348,251	0
Note1Member
Gross notes payable related party before discount	1,721,100	1,639,500
Note2Member
Gross notes payable related party before discount	1,303,135
Note3Member
Gross notes payable related party before discount	396,667
Note4Member
Gross notes payable related party before discount	324,016
Note5Member
Gross notes payable related party before discount	30,000	30,000
Note6Member
Gross notes payable related party before discount	26,721	26,721
Note7Member
Gross notes payable related party before discount	25,463
Note8Member
Gross notes payable related party before discount	$ 13,644	13,644
Note9Member
Gross notes payable related party before discount		291,667
Note10Member
Gross notes payable related party before discount		$ 15,000

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10. Loss On Induced Conversion of Debt and Sale of Common Stock (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Details
Debt and accrued interest converted to shares of common stock		$ 381,000
Debt and accrued interest due to related parties converted to shares of common stock		1,946,000
Loss on induced conversion of debt and sale of common stock	$ 0	$ 114,098

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12. Derivatives Liability (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Details
Derivatives liability	$ 79,347	$ 106,444
Gain (loss) on derivatives liability	$ 128,942	$ 373,293

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13. Preferred Stock (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Preferred stock shares authorized	10,000,000	10,000,000
Preferred stock par value	$ 0.00001	$ 0.00001
Series C stock shares issued in purchase of patents			480,000	(480,000)
Dividends payable	$ 567,350	$ 246,738
Issuance of Series E preferred stock for debt conversions		83,473
Dividends paid to Series E Shareholders	0	258,284
Redemption Price of Series E preferred stock	477,829	477,829
Issuance of Series F preferred stock for cash, net		3,580,771
Related Costs Considered in Conversion of Series F Preferred Stock		675,229
Issuance of Series F preferred stock for debt conversions		574,592
Cash paid to settle dividends and accrued interest on Series F preferred stock	73,815
Series C Preferred Stock
Dividends payable		$ 11,367
Common Stock issued to settle accrued dividends		11,599
Series D Preferred Stock
Dividends payable	$ 24,800	$ 84,212
Common Stock issued to settle accrued dividends	118,068
Conversion of Series D preferred stock - shares		893,218
Series E Preferred Stock
Dividends payable	$ 326,863	$ 320,071
Issuance of Series E preferred stock for debt conversions - shares		8,347
Series F Preferred Stock
Dividends payable	$ 643,320	$ 322,730
Common Stock issued to settle accrued dividends	184,541
Issuance of Series F preferred stock for debt conversions - shares		858
Issuance of Series F preferred stock for cash, net - shares		4,503

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14. Common Stock (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Common stock shares authorized	200,000,000	200,000,000
Fair Value of Unvested Common Stock	$ 2,607,016
Option1Member
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	69,600
Option2Member
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	1,761,606
Option3Member
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	31,051
Option4Member
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	68,750
Option5Member
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	780,000
Option6Member
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	600,000
Option7Member
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	720,000
Option8Member
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	55,000
Option 9
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	360,000
Option 10
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	944,417
Option11Member
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	770,000
Option12Member
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	53,500
Option13Member
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	45,000
Option14Member
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	89,397
Option15Member
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	$ 1,080,000
Common stock
Issuance of common stock for services - shares	22,047,659	10,896,970
Common stock | Option1Member
Issuance of common stock for services - shares	290,000
Common stock | Option2Member
Issuance of common stock for services - shares	7,177,103
Common stock | Option3Member
Issuance of common stock for services - shares	118,068
Common stock | Option4Member
Issuance of common stock for services - shares	275,000
Common stock | Option5Member
Issuance of common stock for services - shares	3,000,000
Common stock | Option6Member
Issuance of common stock for services - shares	2,000,000
Common stock | Option7Member
Issuance of common stock for services - shares	4,000,000
Common stock | Option8Member
Issuance of common stock for services - shares	305,556
Common stock | Option 9
Issuance of common stock for services - shares	2,000,000
Common stock | Option 10
Issuance of common stock for services - shares	3,372,917
Common stock | Option11Member
Issuance of common stock for services - shares	2,750,000
Common stock | Option12Member
Issuance of common stock for services - shares	250,000
Common stock | Option13Member
Issuance of common stock for services - shares	250,000
Common stock | Option14Member
Issuance of common stock for services - shares	509,976
Common stock | Option15Member
Issuance of common stock for services - shares	6,000,000

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15. Common Stock Options and Warrants: Schedule of fair value assumptions (Details) - $ / shares	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Minimum
Fair Value Assumptions, Exercise Price	$ 0.30	$ 0.50
Fair Value Assumptions, Expected Term	1 year	1 year
Fair Value Assumptions, Expected Volatility Rate	228.00%	101.00%
Fair Value Assumptions, Risk Free Interest Rate	0.22%	0.11%
Maximum
Fair Value Assumptions, Exercise Price	$ 1.00	$ 1.40
Fair Value Assumptions, Expected Term	2 years	3 years
Fair Value Assumptions, Expected Volatility Rate	302.00%	216.00%
Fair Value Assumptions, Risk Free Interest Rate	0.63%	0.92%

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15. Common Stock Options and Warrants (Details)	12 Months Ended
	Sep. 30, 2015 USD ($)
Details
Additional expense recognized related to Options and Warrants	$ 71,942
Additional expense deferred over remaining vesting period of Options and Warrants	7,960
Aggregate Intrinsic Value	$ 0
Weighted average remaining term of the warrants	2.91
Fair Value of Unvested Stock Options and Warrants	$ 154,522

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15. Common Stock Options and Warrants: Schedule of Share-based Compensation, Activity (Details) - $ / shares	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Details
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance	9,497,551	10,991,576
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance	$ 0.91	$ 1.05
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period	(1,494,025)
Share-based Compensation Arrangements by Share-based Payment Award, Options, Expirations in Period, Weighted Average Exercise Price	$ 1.52
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number	7,667,551
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 1.01

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16. Segment Information: Schedule of Segment Reporting Information, by Segment (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Net loss	$ (11,527,669)	$ (13,461,587)
Interest expense, net	(977,234)	(1,936,039)
Total assets	2,538,960	5,421,785
Corporate
Net loss	(10,757,547)	(9,957,268)
Interest expense, net	977,234	1,936,039
Total assets	767,302	550,370
Payments to Acquire Property, Plant, and Equipment	15,289	70,603
Depreciation, Depletion and Amortization, Nonproduction	57,036	92,823
Chronic Illness Monitoring
Revenue, Net	6,597,981	6,107,941
Net loss	(583,890)	(2,051,752)
Total assets	1,771,658	4,134,403
Depreciation, Depletion and Amortization, Nonproduction		57,220
CareServices
Revenue, Net	152,686	1,003,238
Net loss	(186,232)	(1,452,567)
Total assets		737,012
Depreciation, Depletion and Amortization, Nonproduction	233,664	972,819
Total
Revenue, Net	6,750,667	7,111,179
Net loss	(11,527,669)	(13,461,587)
Interest expense, net	977,234	1,936,039
Total assets	2,538,960	5,421,785
Payments to Acquire Property, Plant, and Equipment	15,289	70,603
Depreciation, Depletion and Amortization, Nonproduction	$ 290,700	$ 1,122,862

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17. Income Taxes (Details)	Sep. 30, 2015 USD ($)
Details
Operating Loss Carryforwards	$ 77,700,000

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17. Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($)	Sep. 30, 2015	Sep. 30, 2014
Details
Deferred Tax Assets, Operating Loss Carryforwards	$ 29,000,000	$ 23,858,000
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals	721,000	1,515,000
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits	1,728,000	2,007,000
Deferred Tax Assets, Tax Deferred Expense, Other	28,000	53,000
Deferred Tax Assets, Valuation Allowance	$ (31,477,000)	$ (27,433,000)

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17. Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Details
Current Federal Tax Expense (Benefit)	$ 3,919,000	$ 4,577,000
Current State and Local Tax Expense (Benefit)	380,000	444,000
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Amount	(367,000)	67,000
Other Tax Expense (Benefit)	112,000	135,000
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount	$ (4,044,000)	$ (5,223,000)

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18. Commitments and Contingencies (Details) - USD ($)	9 Months Ended	12 Months Ended
	Jun. 30, 2015	Sep. 30, 2015	Sep. 30, 2014
Details
Operating Leases, Income Statement, Sublease Revenue		$ 42,438
Operating Leases, Rent Expense, Net	$ 226,000	$ 31,000	$ 279,000

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18. Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Details)	Sep. 30, 2015 USD ($)
Details
Operating Leases, Future Minimum Payments Due, Next Twelve Months	$ 126,249
Operating Leases, Future Minimum Payments, Due in Two Years	130,036
Operating Leases, Future Minimum Payments, Due in Three Years	111,340
Operating Leases, Future Minimum Payments Due	$ 367,625

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19. Related Party Transactions Not Otherwise Disclosed (Details)	12 Months Ended
	Sep. 30, 2015 USD ($) shares
Purizer Corporation
Stock Issued During Period, Shares, Issued for Services | shares	250,000
Stock Issued During Period, Value, Issued for Services	$ 53,500
ADP Management
Other Cost of Services	$ 6,000
Mr. Jeffrey Peterson
Stock Issued During Period, Shares, Issued for Services | shares	2,000,000
Stock Issued During Period, Value, Issued for Services	$ 360,000
Other Cost of Services	$ 20,000