|   |   |                                                                                 |
|--------|--------|--------------------------------------------------------------------------------------|
| þ |   | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

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

|                            |   |                |
|---------------------------------|--------|---------------------|
| Delaware                        |   | 43-1641533          |
| (State or other jurisdiction of |   | (I.R.S. Employer    |
| incorporation or organization)  |   | Identification No.) |

|                          |   |                                        |
|-------------------------------|--------|---------------------------------------------|
| (Title of each class)         |   | (Name of each exchange on which registered) |
| Common Stock, $0.01 par value |   | OTC Bulletin Board                          |

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

|                                   |   |                          |
|----------------------------------------|--------|-------------------------------|
| Class                                  |   | Outstanding at April 25, 2011 |
| Common Stock, $.01 par value per share |   | 29,697,225 shares             |

----

|         |   |                                                                                           |   |   |
|--------------|--------|------------------------------------------------------------------------------------------------|--------|--------|
| Item         |   | Description                                                                                    |   | Page   |
|         |   |                                                                                           |   |   |
|         |   | PART III                                                                                       |   |   |
|  10     |   | Directors, Executive Officers and Corporate Governance                                         |   | 3      |
|  11     |   | Executive Compensation                                                                         |   | 5      |
|  12     |   | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |   | 12     |
|  13     |   | Certain Relationships and Related Transactions, and Director Independence                      |   | 13     |
|  14     |   | Principal Accountant Fees and Services                                                         |   | 13     |
|         |   |                                                                                           |   |   |
|         |   | PART IV                                                                                        |   |   |
|  15.    |   | Exhibits and Financial Statement Schedules                                                     |   | 15     |
|         |   |                                                                                           |   |   |
|         |   | Signatures                                                                                     |   | 16     |
|         |   |                                                                                           |   |   |
| Exhibit 31.1 |   |                                                                                           |   |
| Exhibit 31.2 |   |                                                                                           |   |

----

| Current Directors    |   | Age    |   | Positions                                                                                                                   |   | Board Member Since |
|----------------------|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|--------|--------------------|
|                 |   |   |   |                                                                                                                        |   |               |
| John R. Block        |   | 76     |   | Independent Board Member, Nominating Committee (Chair) and Compensation Committee                                           |   | December 2007 |
| Joseph J. Grillo     |   | 53     |   | Non-Independent Board Member, President and Executive Officer of Company                                                    |   | January 2008  |
| Daniel E. Penni      |   | 63     |   | Independent Board Member (Chair), Audit & Governance Committee, Compensation Committee (Chair) and Nominating Committee |   | March 1995    |
| Dennis G. Rawan      |   | 67     |   | Independent Board Member, Audit & Governance Committee and Nominating Committee                                         |   | December 2002 |
| Michael S. Zarriello |   | 61     |   | Independent Board Member, Audit & Governance Committee (Chair) and Compensation Committee                               |   | December 2007 |

----

| Name              | Age    | Position                              |
|-------------------|--------|---------------------------------------|
|              |   |                                  |
| Joseph J. Grillo  | 53     | Chief Executive Officer and President |
| Jason G. Prescott | 36     | Chief Financial Officer               |
| Parke H. Hess     | 53     | Chief Operating Officer               |

----

|   | · | each person who served as our chief executive officer in 2010; |
|--------|--------|----------------------------------------------------------------|

|   | · | each person who served as our chief financial officer in 2010; and |
|--------|--------|--------------------------------------------------------------------|

|   | · | each person who served as our chief operating officer in 2010. |
|--------|--------|----------------------------------------------------------------|

----

| Name and PrincipalPosition                              |   | Year       |   | Salary  |          |   | Bonus   |    |          | StockAwards |   |    | OptionAwards  |   |   | Non-Equity Incentive Plan Compensation(1) |          | All Other Compensation |   | Total   |         |
|---------------------------------------------------------|--------|------------|--------|---------|---------------|--------|---------|---------|---------------|-------------|--------|---------|---------------|--------|--------|-------------------------------------------|---------------|------------------------|--------|---------|--------------|
|                                                    |   |       |   |    |          |   |    |    |          |        |   |    |          |   |   |                                      |          |                   |   |    |         |
| Joseph J. Grillo(2)                                     |   | 2010       |   | $       | 337,500       |   |    | $       | 200,000       | (14)        |   | $       | —       |   |   | $                                         | —       |                   |   | $       | 97,891       |   | $ | 9,896 | (11) | $ | 645,287 |   |
| Chief Executive Officer    and President |   | 2009       |   | 345,145 |          |   | — |    |          | 126,563     | (6)    |    | 126,563       | (7)    |   | 67,500                                    |          | 14,510                 | (8)    | 680,281 |         |
|  Jason G. Prescott(3)                              |   |  2010 |   |  $ |  140,000 |   |    |  $ |  — |        |   |  $ |  — |   |   |  $                                   |  — |                   |   |  $ |  82,947 |   |  $ |  — |   |  $ |  222,947 |   |
| Chief Financial Officer                                 |   | 2009       |   | 140,000 |          |   | — |    |          | 14,000      | (6)    |    | 14,000        | (7)    |   | 10,000                                    |          | —                |   | 178,000 |         |
|                                                    |   |       |   |    |          |   |    |    |          |        |   |    |          |   |   |                                      |          |                   |   |    |         |   |   |   |   |   |   |   |
| Lorraine M. Breece(4)                                   |   | 2010       |   | $       | 94,500        |   |    | $       | —       |        |   | $       | —       |   |   | $                                         | —       |                   |   | $       | —      |   | $ | 326,597 | (12) | $ | 421,097 |   |
| Former Chief Financial Officer                          |   | 2009       |   | 189,242 |          |   | — |    |          | 47,250      | (6)    |    | 47,250        | (7)    |   | 22,680                                    |          | 4,410                  | (9)    | 310,832 |         |
|  Parke H. Hess(5)                                  |   |  2010 |   |  $ |  180,000 |   |    |  $ |  100,000 |  (15)  |   | $       |  — |   |   |  $                                   |  — |                   |   |  $ |  21,600 |   |  $ |  327,528 |  (13) |  $ |  629,128 |   |
| Chief Operating Officer                                 |   | 2009       |   |    | 184,077       |   |    |    | —       |        |   |    | 45,000        | (6)    |   |                                      | 45,000        | (7)                    |   |    | 21,600       |   |   | 10,656 | (10) |   | 306,333 |   |

|   | (1) | The amounts shown in this column were paid under the terms of incentive and recognition policies for fiscal years 2010 and 2009, which were entered into with each of our named executive officers for the achievement of specified performance objectives. For a description of the material terms of each of these policies, see the discussion under “Our 2010 Incentive and Recognition Policies” below. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Mr. Grillo became our chief executive officer and president effective January 3, 2008. |
|--------|-----|----------------------------------------------------------------------------------------|

|   | (3) | On June 30, 2010, we appointed Mr. Prescott as our chief financial officer |
|--------|-----|----------------------------------------------------------------------------|

|   | (4) | Ms. Breece served as our chief financial officer through June 30, 2010. |
|--------|-----|-------------------------------------------------------------------------|

|   | (5) | On March 24 2008, we appointed Mr. Hess as our chief operating officer. |
|--------|-----|-------------------------------------------------------------------------|

|   | (6) | We granted 117,187, 12,962, 43,750 and 41,666 shares of restricted stock to Messrs. Grillo, Prescott, Breece and Hess, respectively on October 1, 2009.  The restricted stock vests ratably over three years. The value of the option awards is the aggregate grant date fair value calculated in accordance with FASB ASC Topic 718. Refer to “Item 8. Financial Statements and Supplementary Data – Footnote 1, Organization and Summary of Significant Accounting Policies – Stock-Based Compensation” in our Annual Report on Form 10-K for the year ended December 31, 2009 for discussion of the assumptions used in calculating the expense under FASB ASC Topic 718. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (7) | On October 1, 2009, we issued 130,756, 14,463, 48,815 and 46,491 options to purchase shares of our common stock to Messrs. Grillo, Prescott, Breece and Hess, respectively. These options were issued with an exercise price of $1.08 and vest ratably over three years. SEC regulations require us to disclose the aggregate grant date fair value calculated in accordance with FASB ASC Topic 718. The value of the option awards is the amount of the awards that we recognized for financial reporting purposes under FASB ASC Topic 718. Refer to “Item 8. Financial Statements and Supplementary Data – Footnote 1, Organization and Summary of Significant Accounting Policies – Stock-Based Compensation”  in our Annual Report on Form 10-K for the year ended December 31, 2009 for discussion of the assumptions used in the calculating the expense under FASB ASC Topic 718. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (8) | Amount represents $13,406 for Mr. Grillo’s cellular telephone and internet services paid for during 2009 as well as $1,104 for Mr. Grillo’s club dues. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (9) | Amounts represent Ms. Breece’s cellular telephone and internet services paid for during 2009. |
|--------|-----|-----------------------------------------------------------------------------------------------------|

|   | (10) | Amount represents Mr. Hess’s cellular telephone and internet services paid for during 2009. |
|--------|------|---------------------------------------------------------------------------------------------------|

|   | (11) | Amount represents $8,792 for Mr. Grillo’s cellular telephone and internet services paid for during 2010 as well as $1,104 for Mr. Grillo’s club dues. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (12) | Amount represents $2,389 for Ms. Breece’s cellular telephone and internet services paid for during 2010, $21,808 for vacation hours paid out in 2010 and $302,400 for amounts accrued in 2010 due to Ms. Breece under the terms of her severance agreement. Ms. Breece’s employment was terminated on June 30, 2010. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (13) | Amount represents $8,374 for Mr. Hess’s cellular telephone and internet services paid for during 2010, $31,154 for vacation hours paid to Mr. Hess in 2010 and $288,000 for amounts accrued in 2010 due to Mr. Hess under the terms of his severance provisions of his employment agreement.  During 2010, Mr. Hess was notified that his services would be terminated effective December 31, 2010.  Subsequently, the Company extended Mr. Hess’s employment through May 31, 2011. The Company expects to begin making the severance payments to Mr. Hess on June 1, 2011. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (14) | Amount represents a discretionary bonus award to Mr. Grillo in 2010 to recognize Mr. Grillo for the additional duties and responsibilities he has assumed. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (15) | Amount represents a discretionary bonus award to Mr. Hess in 2010 to recognize Mr. Hess for the additional duties and responsibilities he has agreed to assume in the completion of critical divestiture and investment transactions. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                  |   | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) |    |    |   |   |       | Date ofBoard or Compensation Committee Action |   |   | All other Stock Awards: Number of Securities |   |   | All other Option Awards: Number of Securities Underlying Options |   |   | Exercise or Base Price of Option Awards |   |    | Grant Date Fair Value of Stock and Option Awards |   |
|-----------------------|--------|--------------------------------------------------------------------|---------|---------|--------|--------|------------|-----------------------------------------------|--------|--------|----------------------------------------------|--------|--------|------------------------------------------------------------------|--------|--------|----------------------------------------------|--------|---------|--------------------------------------------------|--------|
|                  | Target |                                                               |    | Maximum |   |   | Grant Date |                                          |   |   |                                         |   |   |                                                             |   |   |                                         |   |
|                  |   |                                                               |    |    |   |   |       |                                          |   |   |                                         |   |   |                                                             |   |   |                                         |   |    |                                             |   |   |   |   |
| Joseph J. Grillo      |   | $                                                                  | 337,500 |    |   | $      | 675,000    |                                          |   |   | N/A                                          |   |   |                                                             | N/A    |   |                                         |   | — |                                             |   |   | — |   |   | $ | — |   |   | $ | — |   |
|                  |   |                                                               |    |    |   |   |       |                                          |   |   |                                         |   |   |                                                             |   |   |                                         |   |    |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Jason G. Prescott     |   | $                                                                  | 84,000  |    |   | $      | 168,000    |                                          |   |   | N/A                                          |   |   |                                                             | N/A    |   |                                         |   | — |                                             |   |   | — |   |   | $ | — |   |   | $ | — |   |
|                  |   |                                                               |    |    |   |   |       |                                          |   |   |                                         |   |   |                                                             |   |   |                                         |   |    |                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Lorraine M. Breece(2) |   |                                                               | N/A     |    |   |   | N/A        |                                          |   |   | N/A                                          |   |   |                                                             | N/A    |   |                                         |   | — |                                             |   |   | — |   |   | $ | — |   |   | $ | — |   |
|  Parke H. Hess   |   | $                                                                  | 108,000 |    |   | $      | 216,000    |                                          |   |   | N/A                                          |   |   |                                                             | N/A    |   |                                         |   | — |                                             |   |   | — |   |   | $ | — |   |   | $ | — |   |

|   | (1) | Our non-equity incentive plans, under which our named executive officers have been, or may have been, paid incentive compensation, in cash, with respect to fiscal year 2010, consist of incentive and recognition policies tailored for each of Messrs. Grillo, Prescott and Hess. The terms of the incentive and recognition policies with respect to 2010, to which each of Messrs. Grillo Prescott and Hess are parties, provide for target/maximum amounts of incentive compensation based upon the achievement of specified performance objectives. The amounts listed in the “Target” column represent the amount of incentive compensation that could have been earned by our named executive officers under their respective incentive and recognition policies for 2010, based on their achievement of all specified performance objectives (as discussed below). |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Due to Ms. Breece’s termination during 2010, she was not a participant in the non-equity incentive plan for 2010 |
|--------|-----|------------------------------------------------------------------------------------------------------------------------|

|   | · | The performance objectives applicable to his incentive and recognition policy for 2010; and |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | The weighting of such performance objectives, stated as a dollar amount. |
|--------|--------|--------------------------------------------------------------------------|

| Performance Objective |   | Weighting |    |
|-----------------------|--------|-----------|---------|
|                  |   |      |    |
| Revenue(1)            |   | $         | — |   |
| EBITDA (2)            |   | 16,983    |    |
| Cash(2)               |   | 13,408    |    |
| Discretionary(3)      |   | 67,500    |    |
| Total(4)              |   | $         | 97,891  |   |

|   | (1) | Mr. Grillo did not achieve this objective. |
|--------|-----|--------------------------------------------|

|   | (2) | Mr. Grillo achieved a portion of this objective. |
|--------|-----|--------------------------------------------------|

|   | (3) | Mr. Grillo earned $67,500 under his 2010 incentive and recognition policy based on the board of directors decision to provide Mr. Grillo a discretionary cash bonus for the achievement of certain individual goals. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | This amount has been reflected as the amount earned by Mr. Grillo as non-equity incentive plan compensation in the Summary Compensation Table above. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| Performance Objective |   | Weighting |    |
|-----------------------|--------|-----------|---------|
|                  |   |      |    |
| Revenue(5)            |   | $         | — |   |
| EBITDA(6)             |   | 39,451    |    |
| Cash(6)               |   | 26,696    |    |
| Discretionary(7)      |   | 16,800    |    |
| Total(8)              |   | $         | 82,947  |   |

----

|   | (5) | Mr. Prescott did not achieve this objective. |
|--------|-----|----------------------------------------------|

|   | (6) | Mr. Prescott achieved a portion of this objective |
|--------|-----|---------------------------------------------------|

|   | (7) | Mr. Prescott earned $16,800 under his 2010 incentive and recognition policy based on the board of directors decision to provide Mr. Prescott a discretionary cash bonus for the achievement of certain individual goals. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (8) | This amount has been reflected as the amount earned by Mr. Prescott as non-equity incentive plan compensation in the Summary Compensation Table above. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| Performance Objective |   | Weighting |    |
|-----------------------|--------|-----------|---------|
|                  |   |      |    |
| Revenue(9)            |   | $         | — |   |
| Operating income(9)   |   | —   |    |
| Cash(9)               |   | —   |    |
| Discretionary(10)     |   | 21,600    |    |
| Total(11)             |   | $         | 21,600  |   |

|   | (9) | Mr. Hess did not achieve this objective. |
|--------|-----|------------------------------------------|

|   | (10) | Mr. Hess earned $21,600 under his 2010 incentive and recognition policy based on the board of directors decision to provide Mr. Hess a discretionary cash bonus for the achievement of certain individual goals. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (11) | This amount has been reflected as the amount earned by Mr. Hess as non-equity incentive plan compensation in the Summary Compensation Table above. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|                   |   | Option Awards                                                   |   | Stock Awards                                                      |   |
|------------------------|--------|-----------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|
|    Name |   | Number of Securities Underlying Unexercised Options Exercisable |   | Number of Securities Underlying Unexercised Options Unexercisable |   | Equity Incentive Plan Awards: Number of Securities Underlying Unearned Options |   | Option Exercise Price |   | Option Expiration Date |   | Number of Shares or Units of Stock That Have Not Vested |   | Market Value of Shares of Units of Stock That Have Not Vested |   | Equity Incentive Plan Awards: Number of Unearned 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 |   |
| Joseph J. Grillo       |   |                                                            |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Digital Angel          |   | 68,750                                                          |   | —                                                           |   | — |   | $ | 5.36 |   | 01/03/2018 |   | — |   | — |   | — |   | — |   |
|                   |   | 27,370                                                          |   | —                                                           |   | — |   | $ | 5.04 |   | 01/30/2018 |   | — |   | — |   | — |   | — |   |
|                   |   | 20,833                                                          |   | 10,417 (1)                                                        |   | — |   | $ | 2.64 |   | 09/29/2018 |   | — |   | — |   | — |   | — |   |
|                   |   | 33,333                                                          |   | 16,667 (2)                                                        |   | — |   | $ | 0.52 |   | 12/12/2018 |   | — |   | — |   | — |   | — |   |
|                   |   | 43,586                                                          |   | 87,170 (3)                                                        |   | — |   | $ | 0.97 |   | 10/01/2019 |   | — |   | — |   | — |   | — |   |
|                   |   | —                                                         |   | —                                                           |   | — |   |   | — |   | — |   | 78,124 (8) |   | $ | 28,906 |   | — |   | — |   |
| Jason G. Prescott      |   | 5,250                                                           |   | —                                                           |   | — |   | $ | 21.68 |   | 03/16/2014 |   | — |   | — |   | — |   | — |   |
| Digital Angel          |   | 5,250                                                           |   | —                                                           |   | — |   | $ | 29.04 |   | 02/25/2015 |   | — |   | — |   | — |   | — |   |
|                   |   | 4,375                                                           |   | —                                                           |   | — |   | $ | 18.64 |   | 06/14/2016 |   | — |   | — |   | — |   | — |   |
|                   |   | 4,667                                                           |   | 2,333(4)                                                          |   | — |   | $ | 0.52 |   | 12/12/2018 |   | — |   | — |   | — |   | — |   |
|                   |   | 4,821                                                           |   | 9,642(5)                                                          |   | — |   | $ | 0.97 |   | 10/01/2019 |   | — |   | — |   | — |   | — |   |
|                   |   | —                                                         |   | —                                                           |   | — |   | — |   | — |   | 8,641(9) |   | $ | 3,197 |   | — |   | — |   |
| Lorraine M. Breece     |   |                                                            |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Digital Angel          |   | 1,128                                                           |   | —                                                           |   | — |   | $ | 3.84 |   | 01/01/2012 |   | — |   | — |   | — |   | — |   |
|                   |   | 312                                                             |   | —                                                           |   | — |   | $ | 22.40 |   | 07/25/2011 |   | — |   | — |   | — |   | — |   |
|                   |   | 1,250                                                           |   | —                                                           |   | — |   | $ | 31.20 |   | 11/03/2011 |   | — |   | — |   | — |   | — |   |
|                   |   | 6,104                                                           |   | —                                                           |   | — |   | $ | 20.24 |   | 07/29/2012 |   | — |   | — |   | — |   | — |   |
|                   |   | 1,750                                                           |   | —                                                           |   | — |   | $ | 24.88 |   | 05/02/2015 |   | — |   | — |   | — |   | — |   |
|                   |   | 6,250                                                           |   | —                                                           |   | — |   | $ | 25.84 |   | 07/06/2013 |   | — |   | — |   | — |   | — |   |
|                   |   | 17,500                                                          |   | —                                                           |   | — |   | $ | 8.88 |   | 08/15/2017 |   | — |   | — |   | — |   | — |   |
|                   |   | 437                                                             |   | —                                                           |   | — |   | $ | 12.00 |   | 06/20/2018 |   | — |   | — |   | — |   | — |   |
|                   |   | 437                                                             |   | —                                                           |   | — |   | $ | 25.60 |   | 06/20/2018 |   | — |   | — |   | — |   | — |   |
|                   |   | 625                                                             |   | —                                                           |   | — |   | $ | 12.00 |   | 06/20/2018 |   | — |   | — |   | — |   | — |   |
|                   |   | 8,334                                                           |   | —                                                           |   | — |   | $ | 0.52 |   | 12/12/2018 |   | — |   | — |   | — |   | — |   |
| Thermo Life            |   | 70,000                                                          |   | —                                                           |   | — |   | $ | 0.05 |   | 04/18/2011 |   | — |   | — |   | — |   | — |   |
| Parke H. Hess          |   |                                                            |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Digital Angel          |   | 37,500                                                          |   | —                                                           |   | — |   | $ | 5.44 |   | 03/25/2018 |   | — |   | — |   | — |   | — |   |
|                   |   | 16,667                                                          |   | 8,333 (6)                                                         |   | — |   | $ | 0.52 |   | 12/12/2018 |   | — |   | — |   | — |   | — |   |
|                   |   | 15,497                                                          |   | 30,994 (7)                                                        |   | — |   | $ | 0.97 |   | 10/01/2019 |   | — |   | — |   | — |   | — |   |
|                   |   | —                                                         |   | —                                                           |   | — |   |   | — |   | — |   | 27,777(10) |   | $ | 10,277 |   | — |   | — |   |

----

|   | (1) | 10,417 options vest on September 29, 2011. |
|--------|-----|--------------------------------------------|

|   | (2) | 16,667 options vest on December 12, 2011. |
|--------|-----|-------------------------------------------|

|   | (3) | 43,585 and 43,585 options vest on October 1, 2011 and October 1, 2012, respectively. |
|--------|-----|--------------------------------------------------------------------------------------|

|   | (4) | 2,333 options vest on December 12, 2011. |
|--------|-----|------------------------------------------|

|   | (5) | 4,821 and 4,821 options vest on October 1, 2011 and October 1, 2012, respectively. |
|--------|-----|------------------------------------------------------------------------------------|

|   | (6) | 8,333 options vest on December 12, 2011. |
|--------|-----|------------------------------------------|

|   | (7) | 15,497 and 15,497 options vest on October 1, 2011 and October 1, 2012, respectively. |
|--------|-----|--------------------------------------------------------------------------------------|

|   | (8) | 39,062 and 39,062 restricted shares of our common stock vest on October 1, 2011 and October 1, 2012, respectively. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------|

|   | (9) | 4,321 and 4,320 restricted shares of our common stock vest on October 1, 2011 and October 1, 2012, respectively. |
|--------|-----|------------------------------------------------------------------------------------------------------------------|

|   | (10) | 13,889 and 13,888 restricted shares of our common stock vest on October 1, 2011 and October 1, 2012, respectively. |
|--------|------|--------------------------------------------------------------------------------------------------------------------|

| Name              |   | Potential Payment |      |
|-------------------|--------|-------------------|-----------|
|              |   |              |      |
| Joseph J. Grillo  |   | $                 | 1,012,500 |   |
| Jason G. Prescott |   | 140,000           |      |
| Parke H. Hess     |   | 288,000           | (1)       |
| Total             |   | $                 | 1,440,500 |   |

|   | (1) | As of December 31, 2010, we have accrued the $288,000 due to Mr. Hess for severance payments under the terms of his employment agreement.  During 2010, Mr. Hess was notified that his services would be terminated effective December 31, 2010.  Subsequently, the Company extended Mr. Hess’s employment through May 31, 2011. See the discussion under “Executive Employment Arrangements with Named Executive Officers” below. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (a) |   | any person or entity (or persons or entities acting as a group) other than one of its Affiliates acquires stock of the Company that, together with stock then held by such person, entity or group, results in such person, entity or group holding more than fifty percent (50%) of the total combined voting power of all classes of the then issued and outstanding securities of the Company; or |
|--------|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) |   | the sale of all or substantially all of the properties and assets of the Company to any person or entity which is not a subsidiary, parent or affiliate of the Company. |
|--------|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|    Name        |   | Fees Earned or Paid in Cash |   | Stock Awards |   | Option Awards |   | Non-Equity Incentive Plan Compensation |    | Nonqualified Deferred Compensation Earnings |   | All Other Compensation |   | Total        |    |
|-------------------------------|--------|-----------------------------|--------|--------------|--------|---------------|--------|----------------------------------------|---------|---------------------------------------------|--------|------------------------|--------|--------------|---------|
|                          |   |                        |   |         |   |          |   |                                   |    |                                        |   |                   |   |         |    |
| John R. Block(1)              |   | $                           | 32,400 |         | $      | —       |   | $                                      | — |                                        | $      | —                |   | $            | — |   | $ | — |   | $ | 32,400 |   |
| Daniel E.  Penni(2) |   | 77,400                      |   | —      |   | —       |   | —                                |    | 600(5)                                      |   | —                |   | 78,000       |    |
| Dennis G. Rawan(3)            |   | 36,000                      |   | —      |   | —       |   | —                                |    | —                                     |   | —                |   | 36,000       |    |
| Michael S. Zarriello(4)       |   | 46,800                      |   | —      |   | —       |   | —                                |    | —                                     |   | —                |   | 46,800  |    |

|   | (1) | As of December 31, 2010, Mr. Block held options to purchase 146,875 shares of our common stock. |
|--------|-----|-------------------------------------------------------------------------------------------------|

|   | (2) | As of December 31, 2010, Mr. Penni held options to purchase 86,487 shares of our common stock. |
|--------|-----|------------------------------------------------------------------------------------------------|

|   | (3) | As of December 31, 2010, Mr. Rawan held options to purchase 56,562 shares of our common stock. |
|--------|-----|------------------------------------------------------------------------------------------------|

|   | (4) | As of December 31, 2010, Mr. Zarriello held options to purchase 179,687 shares of our common stock. |
|--------|-----|-----------------------------------------------------------------------------------------------------|

|   | (5) | Amount represents payments for personal cellular telephone usage during 2010. |
|--------|-----|-------------------------------------------------------------------------------|

|   | · | Mr. Penni – 200,000 shares |
|--------|--------|----------------------------------|

|   | · | Mr. Rawan – 200,000 shares |
|--------|--------|----------------------------------|

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|                                                           |   | Equity Compensation Plan Information |      |
|----------------------------------------------------------------|--------|--------------------------------------|-----------|
|                                                           |   |                                 |      |   |   |   |   | (c) |   |
|                                                           |   | (a)                                  |      |   | (b) |   |   | Number of securities |   |
|                                                           |   | Number of                            |      |   | Weighted-average |   |   | remaining available for |   |
|                                                           |   | securities to be                     |      |   | exercise price per |   |   | future issuance under |   |
|                                                           |   | issued upon exercise                 |      |   | share of outstanding |   |   | equity compensation plans |   |
|                                                           |   | of outstanding options               |      |   | options, warrants |   |   | (excluding securities |   |
| Plan Category (1)                                              |   | warrants and rights                  |      |   | and rights |   |   | reflected in column (a)) |   |
| Equity compensation plans approved by security holders         |   |                                 | 3,889,932 |   |   | $ | 11.23 |   |   |   | 1,742,307 | (2) |
| Equity compensation plans not approved by security holders (3) |   |                                 | 221,874   |   |   |   | 13.39 |   |   |  |   |
| Total                                                          |   |                                 | 4,111,806 |   |   |   | 11.34 |   |   |   | 1,742,307 |   |

| (1) |   | A narrative description of the material terms of our equity compensation plans is set forth in Note 10 to our consolidated financial statements.                                                                                 |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Includes 24,787 shares available for future issuance under our 1999 Employees Stock Purchase Plan.                                                                                                                               |
| (3) |   | We have made grants outside of our equity plans and have outstanding options exercisable for shares of our common stock. These options were granted as an inducement for employment or for the rendering of consulting services. |

|   | (i) | each person known to us to beneficially own more than 5% of our common stock, |
|--------|-----|-------------------------------------------------------------------------------|

|   | (ii) | each of the named executive officers (as disclosed in the summary compensation table), |
|--------|------|----------------------------------------------------------------------------------------|

|   | (iii) | each of our directors, and |
|--------|-------|----------------------------|

|   | (iv) | all of the current executive officers and directors as a group. |
|--------|------|-----------------------------------------------------------------|

|                                                                |   | Aggregate        |      |   |        |   |
|---------------------------------------------------------------------|--------|------------------|-----------|--------|-------------|--------|
|                                                                |   | Number of Shares |      |   | Percent of  |   |
|                                                                |   | Beneficially     |      |   | Outstanding |   |
| Name of Beneficial Owner                                            |   | Owned(1)         |      |   | Shares      |   |
|                                                                |   |             |      |   |        |   |
| Five Percent Stockholders:                                          |   |             |      |   |        |   |
| None                                                                |   |             | —   |   |        |   | — | % |
| Executive Officers and Directors(2):                                |   |             |      |   |        |   |   |   |
| Joseph J. Grillo                                                    |   |             | 1,071,639 |   |        |   | 3.5 | % |
| Jason G. Prescott                                                   |   |             | 37,337    |   |        |   | * |   |
| Lorraine M. Breece(3)                                               |   |             | 44,521    |   |        |   | * |   |
| Parke H. Hess                                                       |   |             | 145,737   |   |        |   | * |   |
| John R. Block                                                       |   |             | 163,959   |   |        |   | * |   |
| Daniel E. Penni                                                     |   |             | 206,866   |   |        |   | * |   |
| Dennis G. Rawan                                                     |   |             | 71,671    |   |        |   | * |   |
| Michael S. Zarriello                                                |   |             | 182,902   |   |        |   | * |   |
| All current directors and executive officers as a group (7 persons) |   |             | 1,880,111 |   |        |   | 6.0 | % |

----

| *      |   | Represents less than 1% of the issued and outstanding shares of common stock of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (1)    |   | This table includes presently exercisable stock options and options that are exercisable within sixty days of April 25, 2011, in accordance with Rule 13d-3(d) under the Exchange Act. The following directors and executive officers hold the number of exercisable options set forth following their respective names: Joseph J. Grillo — 193,872; Jason G. Prescott — 24,363; Lorraine M. Breece — 44,127; Parke H. Hess — 69,664; John R. Block — 130,209; Daniel E. Penni — 69,821; Dennis G. Rawan — 39,896; Michael S. Zarriello — 163,021; and all current directors and officers as a group — 690,846 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (2)    |   | All of these individuals share the same business address: 490 Villaume Avenue, South Saint Paul, Minnesota 55075.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (3)    |   | Ms. Breece’s employment with the Company was terminated on June 30, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

|                                                                         |   | 2010     |    |   | 2009     |   |
|------------------------------------------------------------------------------|--------|----------|---------|--------|----------|--------|
|                                                                         |   |     |    |   |     |   |
| Audit Fees                                                                   |   | $        | 341,000 |   |     | $      | 449,469 |   |
| Audit-Related Fees (review of registration statements and other SEC filings) |   |     | 13,000  |   |     |   | 77,634 |   |
| Tax Fees                                                                     |   |  |    |   |  |   |
| All Other Fees                                                               |   |  |    |   |  |   |
|      Total Fees                                     |   | $        | 354,000 |   |     | $      | 527,103 |   |

----

----

| (a)    |   | Documents filed as part of this report |
|--------|--------|----------------------------------------|
|   |   |                                   |
| (3)    |   | Exhibits                               |

| ExhibitNumber |   | Description                                                                                                                      |
|---------------|--------|----------------------------------------------------------------------------------------------------------------------------------|
|          |   |                                                                                                                             |
| 31.1          |   | Certification by Joseph J. Grillo, Chief Executive Officer and President, pursuant to Exchange Ace Rules 13a-14(a) and 15d-14(a) |
|          |   |                                                                                                                             |
| 31.2          |   | Certification by Jason G. Prescott, Chief Financial Officer, pursuant to Exchange Ace Rules 13a-14(a) and 15d-14(a)              |

----

|              | DIGITAL ANGEL CORPORATION   |                                        |
|-------------------|---------------------------------------|---------------------------------------------|
|              | By:                         | /s/ Joseph J. Grillo                        |   |
| Date: May 2, 2011 |                                  | Joseph J. Grillo                       |   |
|              |                                  | President and Chief Executive Officer  |   |

|                           |   |                                                                          |   |        |
|--------------------------------|--------|-------------------------------------------------------------------------------|--------|-------------|
| Signature                      |   | Title                                                                         |   | Date        |
|                           |   |                                                                          |   |        |
|  /s/ Joseph J. Grillo     |   | President, Chief Executive Officer and Director (Principal Executive Officer) |   | May 2, 2011 |
|  (Joseph J. Grillo)       |   |                                                                          |   |        |
|                           |   |                                                                          |   |        |
|  /s/ Jason G. Prescott    |   | Chief Financial Officer (Principal Accounting Officer)                        |   | May 2, 2011 |
|  (Jason G. Prescott)      |   |                                                                          |   |        |
|                           |   |                                                                          |   |        |
|  /s/ Daniel E. Penni      |   | Chairman of the Board of Directors                                            |   | May 2, 2011 |
|  (Daniel E. Penni)        |   |                                                                          |   |        |
|                           |   |                                                                          |   |        |
|  /s/ John R. Block        |   | Director                                                                      |   | May 2, 2011 |
|  (John R. Block)          |   |                                                                          |   |        |
|                           |   |                                                                          |   |        |
|  /s/ Dennis G. Rawan      |   | Director                                                                      |   | May 2, 2011 |
|  (Dennis G. Rawan)        |   |                                                                          |   |        |
|                           |   |                                                                          |   |        |
|  /s/ Michael S. Zarriello |   | Director                                                                      |   | May 2, 2011 |
| (Michael S. Zarriello)         |   |                                                                          |   |        |

----

| Exhibit |   |                                                                                                                                  |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------|
| Number  |   | Description                                                                                                                           |
|    |   |                                                                                                                                  |
| 31.1    |   | Certification by Joseph J. Grillo, Chief Executive Officer and President, pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) |
|    |   |                                                                                                                                  |
| 31.2    |   | Certification by Jason G. Prescott, Chief Financial Officer, pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a)              |