UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q




(Mark
One)





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





For the
quarterly period ended June 30, 2009




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.)5095 West 2100 South,
      West Valley City, Utah
                84120(Address
      of principal executive offices)
                (Zip
      Code)





(801)
974-9474


(Registrant's
telephone number, including area code)





Volu-Sol
Reagents Corporation




(Former
name, former address and former fiscal year, if changed since last
report)





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 x  No  ̈





[The
registrant became subject to the reporting requirements of the Securities
Exchange Act on January 14, 2009 when its registration statement on Form S-1
became effective. It filed a registration statement under Section 12 of the
Securities Exchange Act on January 26, 2009.]





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





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





Large
      accelerated filer  ̈
              Accelerated
      filer  ̈Non-accelerated
      filer  ̈
              Smaller
      reporting company x




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


As of
August 10, 2009, the issuer had 11,142,639 shares of common stock
outstanding.











ActiveCare,
Inc.


(Formerly
Volu-Sol Reagents Corporation)





Table
of Contents





PagePART
      I – FINANCIAL INFORMATION
                                3Item
      1. Financial Statements
                                3Condensed
      Balance Sheets (unaudited)
                                3Condensed
      Statements of Operations (unaudited)
                                4Condensed
      Statements of Cash Flows (unaudited)
                                5Notes
      to Condensed Financial Statements (unaudited)
                                6Item
      2. Management's Discussion and Analysis of Financial Condition and Results
      of Operations
                                12Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
                                18Item
      4T.  Controls and Procedures
                                19PART
      II – OTHER INFORMATION
                                19Item
      1. Legal Proceedings.
                                19Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                                20Item
      3. Defaults Upon Senior Securities
                                20Item
      4. Submission of Matters to a Vote of Security Holders
                                20Item
      5. Other Information
                                20Item
      6. Exhibits
                                20SIGNATURES
                                22







2







PART
I – FINANCIAL INFORMATION





Item 1.  Financial
Statements.


ActiveCare,
Inc.


(Formerly
Volu-Sol Reagents Corporation)


Condensed
Balance Sheets


(Unaudited)










June
      30, 2009
                                                          
                                                          
                                                          September
      30, 2008AssetsCurrent
      assets:Cash
                                                          
                                                          $
                                                          400,504
                                                          
                                                          
                                                          $
                                                          474,146Accounts
      receivable, net of allowance fordoubtful accounts of $2,000 and $2,500,
respectively
                                                          
                                                          
                                                          78,809
                                                          
                                                          
                                                          
                                                          91,667Inventories,
      net of reserve of $33,539 and $39,141, respectively (note
    2)
                                                          
                                                          
                                                          50,835
                                                          
                                                          
                                                          
                                                          51,183Interest
      receivable
                                                          
                                                          
                                                          14,252
                                                          
                                                          
                                                          
                                                          -Prepaid
      expenses and other assets
                                                          
                                                          
                                                          18,512
                                                          
                                                          
                                                          
                                                          7,250Total
      current assets
                                                          
                                                          
                                                          562,912
                                                          
                                                          
                                                          
                                                          624,246Property
      and equipment, net of accumulateddepreciation of $405,655 and $396,787, respectively  (note
      2)
                                                          
                                                          
                                                          55,056
                                                          
                                                          
                                                          
                                                          52,375License
      agreement, net of amortization of $6,316 and $0,
    respectively
                                                          
                                                          
                                                          293,684
                                                          
                                                          
                                                          
                                                          -Related
      party note receivable (note 3)
                                                          
                                                          
                                                          295,513
                                                          
                                                          
                                                          
                                                          598,793Total
      assets
                                                          
                                                          $
                                                          1,207,165
                                                          
                                                          
                                                          $
                                                          1,275,414Liabilities and
      Stockholders’ EquityCurrent
      liabilities:Accounts
      payable
                                                          
                                                          $
                                                          99,112
                                                          
                                                          
                                                          $
                                                          72,159Accrued
      expenses
                                                          
                                                          
                                                          106,288
                                                          
                                                          
                                                          
                                                          145,293Accrued
      payable on license agreement
                                                          
                                                          
                                                          300,000
                                                          
                                                          
                                                          
                                                          -Total
      current liabilities
                                                          
                                                          
                                                          505,400
                                                          
                                                          
                                                          
                                                          217,452Total
      liabilities
                                                          
                                                          
                                                          505,400
                                                          
                                                          
                                                          
                                                          217,452Stockholders’
      equity:Preferred
      stock; $0.00001 par value, 10,000,000 shares authorized; 0 and 0 shares
      issued and outstanding, respectively
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -Common
      stock, $0.00001 par value, 50,000,000 shares authorized; 11,142,639
      and 8,982,639 shares issued and outstanding, respectively
                                                          
                                                          
                                                          111
                                                          
                                                          
                                                          
                                                          3,698,750Additional
      paid-in capital
                                                          
                                                          
                                                          4,338,167
                                                          
                                                          
                                                          
                                                          -Accumulated
      deficit
                                                          
                                                          
                                                          (3,636,513
                                                          )
                                                          
                                                          
                                                          (2,640,788
                                                          )Total
      stockholders’ equity
                                                          
                                                          
                                                          701,765
                                                          
                                                          
                                                          
                                                          1,057,962Total
      liabilities and stockholders’ equity
                                                          
                                                          $
                                                          1,207,165
                                                          
                                                          
                                                          $
                                                          1,275,414







See
accompanying notes to condensed financial statements.




3





ActiveCare,
Inc.


(Formerly
Volu-Sol Reagents Corporation)


Condensed
Statements of Operations


(Unaudited)




Three months
      ended
                                                                                                                        
                                                                                                                        
                                                                                                                        Nine months
      endedJune 30,
                                                                                                                        
                                                                                                                        
                                                                                                                        June 30,2009
                                                                                                                        
                                                                                                                        
                                                                                                                        2008
                                                                                                                        
                                                                                                                        
                                                                                                                        2009
                                                                                                                        
                                                                                                                        
                                                                                                                        2008Sales,
      net
                                                                                                                        
                                                                                                                        $
                                                                                                                        118,952
                                                                                                                        
                                                                                                                        
                                                                                                                        $
                                                                                                                        122,721
                                                                                                                        
                                                                                                                        
                                                                                                                        $
                                                                                                                        350,019
                                                                                                                        
                                                                                                                        
                                                                                                                        $
                                                                                                                        467,148Cost of goods
      sold
                                                                                                                        
                                                                                                                        
                                                                                                                        95,224
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        120,773
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        299,136
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        365,855Gross
      profit
                                                                                                                        
                                                                                                                        
                                                                                                                        23,728
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        1,948
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        50,883
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        101,293Operating
      expensesResearch
      and development
                                                                                                                        
                                                                                                                        
                                                                                                                        12,538
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        124,362
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        138,944
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        494,705Selling,
      general and administrative
                                                                                                                        
                                                                                                                        
                                                                                                                        550,947
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        216,704
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        956,757
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        876,760Loss
      from operations
                                                                                                                        
                                                                                                                        
                                                                                                                        (539,757
                                                                                                                        )
                                                                                                                        
                                                                                                                        
                                                                                                                        (339,118
                                                                                                                        )
                                                                                                                        
                                                                                                                        
                                                                                                                        (1,044,818
                                                                                                                        )
                                                                                                                        
                                                                                                                        
                                                                                                                        (1,270,172
                                                                                                                        )Other income
      (expenses):Interest
      income
                                                                                                                        
                                                                                                                        
                                                                                                                        2,262
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        4,539
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        14,723
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        13,246Gain
      on forgiveness of payable
                                                                                                                        
                                                                                                                        
                                                                                                                        -
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        -
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        33,207
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        -Other
      income (expenses)
                                                                                                                        
                                                                                                                        
                                                                                                                        1,661
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        (5,769
                                                                                                                        )
                                                                                                                        
                                                                                                                        
                                                                                                                        1,163
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        (4,427
                                                                                                                        )Net
    loss
                                                                                                                        
                                                                                                                        $
                                                                                                                        (535,834
                                                                                                                        )
                                                                                                                        
                                                                                                                        $
                                                                                                                        (340,348
                                                                                                                        )
                                                                                                                        
                                                                                                                        $
                                                                                                                        (995,725
                                                                                                                        )
                                                                                                                        
                                                                                                                        $
                                                                                                                        (1,261,353
                                                                                                                        )Net loss per common share –
      basic and diluted
                                                                                                                        
                                                                                                                        $
                                                                                                                        (0.05
                                                                                                                        )
                                                                                                                        
                                                                                                                        $
                                                                                                                        (0.04
                                                                                                                        )
                                                                                                                        
                                                                                                                        $
                                                                                                                        (0.11
                                                                                                                        )
                                                                                                                        
                                                                                                                        $
                                                                                                                        (0.15
                                                                                                                        )Weighted average shares –
      basic and diluted
                                                                                                                        
                                                                                                                        
                                                                                                                        10,072,000
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        8,983,000
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        9,346,000
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        8,180,000





See
accompanying notes to condensed financial statements.





4





ActiveCare,
Inc.


(Formerly
Volu-Sol Reagents Corporation)


Condensed
Statements of Cash Flows


(Unaudited)


Nine
      Months EndedJune
      30,2009
                                                                        
                                                                        
                                                                        2008Cash
      flows from operating activities:Net
      loss
                                                                        
                                                                        $
                                                                        (995,725
                                                                        )
                                                                        
                                                                        $
                                                                        (1,261,353
                                                                        )Adjustments
      to reconcile net loss to net cash usedIn
      operating activities:Depreciation
      and amortization
                                                                        
                                                                        
                                                                        15,184
                                                                        
                                                                        
                                                                        
                                                                        7,397Common
      stock issued for services
                                                                        
                                                                        
                                                                        187,497
                                                                        
                                                                        
                                                                        
                                                                        350,000Warrants
      issued for services
                                                                        
                                                                        
                                                                        252,031
                                                                        
                                                                        
                                                                        
                                                                        -Changes
      in operating assets and liabilities:Accounts
      receivable
                                                                        
                                                                        
                                                                        12,858
                                                                        
                                                                        
                                                                        
                                                                        38,288Interest
      receivable
                                                                        
                                                                        
                                                                        (14,252
                                                                        )
                                                                        
                                                                        
                                                                        -Inventories
                                                                        
                                                                        
                                                                        348
                                                                        
                                                                        
                                                                        
                                                                        2,226Prepaid
      expenses and other assets
                                                                        
                                                                        
                                                                        (11,262
                                                                        )
                                                                        
                                                                        
                                                                        (12,471
                                                                        )Accounts
      payable
                                                                        
                                                                        
                                                                        26,953
                                                                        
                                                                        
                                                                        
                                                                        (2,713
                                                                        )Accrued
      liabilities
                                                                        
                                                                        
                                                                        (39,005
                                                                        )
                                                                        
                                                                        
                                                                        93,749Net
      cash used in operating activities
                                                                        
                                                                        
                                                                        (565,373
                                                                        )
                                                                        
                                                                        
                                                                        (784,877
                                                                        )Cash
      flows from investing activities:Payments
      for property and equipment
                                                                        
                                                                        
                                                                        (11,549
                                                                        )
                                                                        
                                                                        
                                                                        (11,852
                                                                        )Net
      cash used in investing activities
                                                                        
                                                                        
                                                                        (11,549
                                                                        )
                                                                        
                                                                        
                                                                        (11,852
                                                                        )Cash
      flows from financing activities:Payments
      to related-party note
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        (1,487,000
                                                                        )Proceeds
      from  related-party note
                                                                        
                                                                        
                                                                        303,280
                                                                        
                                                                        
                                                                        
                                                                        625,397Proceeds
      from the sale of common stock
                                                                        
                                                                        
                                                                        200,000
                                                                        
                                                                        
                                                                        
                                                                        2,198,333Net
      cash provided by financing activities
                                                                        
                                                                        
                                                                        503,280
                                                                        
                                                                        
                                                                        
                                                                        1,336,730Net
      increase (decrease) in cash
                                                                        
                                                                        
                                                                        (73,642
                                                                        )
                                                                        
                                                                        
                                                                        540,001Cash,
      beginning of period
                                                                        
                                                                        
                                                                        474,146
                                                                        
                                                                        
                                                                        
                                                                        752,404Cash,
      end of period
                                                                        
                                                                        $
                                                                        400,504
                                                                        
                                                                        
                                                                        $
                                                                        1,292,405Supplemental
      Cash Flow Information:Cash
      paid for income taxes
                                                                        
                                                                        $
                                                                        -
                                                                        
                                                                        
                                                                        $
                                                                        -Cash
      paid for interest
                                                                        
                                                                        $
                                                                        -
                                                                        
                                                                        
                                                                        $
                                                                        -Non
      Cash Investing and Financing Activities:Patent
      license purchased with debt
                                                                        
                                                                        $
                                                                        300,000
                                                                        
                                                                        
                                                                        $
                                                                        -







See
accompanying notes to condensed financial statements.





5





ActiveCare,
Inc.


(Formerly
Volu-Sol Reagents Corporation)


Notes to
Condensed Financial Statements


(Unaudited)





1.      
      Organization and Nature of
Operations





ActiveCare,
Inc. (formerly Volu-Sol Reagents Corporation) (the “Company” or “ActiveCare”)
was formed March 5, 1998, as a wholly owned subsidiary of RemoteMDx, Inc.
(formerly Volu-Sol, Inc.), a Utah corporation
(“RemoteMDx”).  RemoteMDx was originally a wholly owned subsidiary of
Biomune Systems, Inc. (“Biomune”) and was spun off from Biomune in 1997 to
engage in the business of manufacturing and marketing medical diagnostic
substances.  This business was initially conducted as an
unincorporated division of Biomune, called the Volu-Sol Medical
Division.  Biomune purchased the business in 1991 from Logos
Scientific, Inc.  Effective July 15, 2009, the Company changed its
name to ActiveCare, Inc., and its state of incorporation to
Delaware.





During
the twelve months ended December 31, 2008, the ownership interest of RemoteMDx
in the Company was reduced through (a) the sale of shares of the Company’s
common stock by the Company to investors in private transactions and (b) the
sale and transfer of shares of the Company’s common stock by RemoteMDx in
private transactions. RemoteMDx completed its divestiture of ActiveCare through
the distribution of approximately 1,421,667 shares of the Company’s common stock
to the shareholders of RemoteMDx.  Each shareholder of RemoteMDx
received one (1) share of ActiveCare common stock for every 117 shares of
RemoteMDx common stock owned of record on January 30, 2009, subject to
adjustment in the event of a stock split or reverse split of RemoteMDx common
stock prior to the date of distribution.  Fractional shares were not
issued and were rounded up to the nearest whole share. Approximately 3,500
shares were issued by the Company in lieu of fractional shares. The distribution
date was February 27, 2009.  Following the distribution of the
Company’s shares RemoteMDx retained no ownership interest in the
Company.





The
Company sells medical diagnostic substances and equipment to laboratories
throughout the United States.





Going Concern


The
Company has recurring net losses, negative cash flows from operating activities,
and an accumulated deficit. These factors 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 achieve successful
operations, the Company must generate positive cash flows from operating
activities and obtain the necessary funding to meet its projected capital
investment requirements.





In order
for the Company to remove substantial doubt about its ability to continue as a
going concern, the Company must generate positive cash flows from operations and
obtain the necessary funding to meet its projected capital investment
requirements.  Management’s plans with respect to this uncertainty
include raising additional capital from the sale of the Company’s common
stock.  There can be no assurance that revenues will increase rapidly
enough to offset operating losses and repay debts.  If the Company is
unable to increase revenues or obtain additional financing, it will be unable to
continue the development of its products and may have to cease
operations.





2.     
       Summary of Significant Accounting
Policies





Use of Estimates in the Preparation of
Financial Statements


The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.





Fair Value of Financial
Instruments


The
carrying amounts reported in the accompanying financial statements for cash,
accounts receivable, accounts payable, accrued liabilities, and other debt
obligations approximate fair values because of the immediate or short-term
maturities of these financial instruments.




6





Concentration 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 such
accounts.





In the
normal course of business, the Company provides credit terms to its customers.
Accordingly, the Company performs ongoing credit evaluations of its customers'
financial condition and requires no collateral from its
customers.  The Company maintains an allowance for uncollectable
accounts receivable based upon the expected collectability of all accounts
receivable.





During
nine months ended June 30, 2009 and 2008, the Company had sales to entities
which represented more than 10% of its revenues.  Thermo Fisher
Scientific, Inc. accounted for approximately 17.61% ($61,624) and Richard-Allan
Scientific Co. 12.70% ($44,457) for the nine months ended June 30,
2009.  The Company had the following sales to entities which
represented more than 10% of its revenues during the nine months ended June 30,
2008:  Thermo Fischer Scientific, Inc accounted for 24.84% ($116,042),
Cardinal Health Medical accounted for 13.25% ($61,876).  No other
customer accounted for more than 10% of the Company’s revenues for the nine
months ended June 30, 2009 and 2008.





Cash and Cash Equivalents


Cash and
cash equivalents consist of cash and investments with original maturities to the
Company of three months or less.





Accounts Receivable


Accounts
receivable are carried at original invoice amount less an estimate made for
doubtful receivables based on a review of all outstanding amounts on a monthly
basis.  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.  Trade
receivables are written off when deemed uncollectible.  Recoveries of
trade receivables previously written off are recorded when
received.  A trade receivable is considered to be past due if any
portion of the receivable balance has not been received by the contractual pay
date.  Interest is not charged on trade receivables that are past
due.





Inventories


Inventories
are recorded at the lower of cost or market, cost being determined on a
first-in, first-out ("FIFO") method. Inventories consisted of raw materials,
work-in-process, and finished goods.  Inventories as of June 30, 2009
and September 30, 2008 were as follows:





June
      30,
                    
                    
                    September
      30,2009
                    
                    
                    2008Raw
      materials
                    
                    $
                    40,495
                    
                    
                    $
                    39,829Work
      in process
                    
                    
                    4,523
                    
                    
                    
                    6,604Finished
      goods
                    
                    
                    39,356
                    
                    
                    
                    43,891Reserve
      for inventory obsolescence
                    
                    
                    (33,539
                    )
                    
                    
                    (39,141
                    )Total
      inventory
                    
                    $
                    50,835
                    
                    
                    $
                    51,183





Provisions,
when required, are made to reduce excess and obsolete inventories to their
estimated net realizable values. Due to competitive pressures and technological
innovation, it is possible that estimates of the net realizable value could
change in the near term.





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, typically
three to seven years.  Leasehold improvements are amortized over the
shorter of the estimated useful lives of the asset or the term of the
lease.  Expenditures for maintenance and repairs are expensed while
renewals and improvements over $500 are capitalized.  When property
and equipment are disposed, any gains or losses are included in the results of
operations.




7




Property
and equipment consisted of the following as of June 30, 2009 and September 30,
2008:





June
      30, 2009
                  
                  
                  September
      30, 2008Equipment
                  
                  $
                  165,267
                  
                  
                  $
                  153,718Software
                  
                  
                  6,580
                  
                  
                  
                  6,580Leasehold
      improvements
                  
                  
                  268,366
                  
                  
                  
                  268,366Furniture
      and fixtures
                  
                  
                  20,498
                  
                  
                  
                  20,498460,711
                  
                  
                  
                  449,162Accumulated
      depreciation
                  
                  
                  (405,655
                  )
                  
                  
                  (396,787
                  )Property
      and equipment, net of accumulated depreciation
                  
                  $
                  55,056
                  
                  
                  $
                  52,375





Depreciation
expense for the nine months ended June 30, 2009 and 2008 was $8,868 and $7,397,
respectively.





Revenue Recognition




The
Company’s revenue has historically been from two sources: (i) diagnostic
equipment product sales; and (ii) sales of medical diagnostic
stains.






Diagnostic Equipment Product
Sales






Although
not the focus of the Company’s business model, the Company sells its diagnostic
equipment devices in certain situations. The Company recognizes product sales
revenue when persuasive evidence of an arrangement with the customer exists,
title passes to the customer and the customer cannot return the devices, prices
are fixed or determinable and collection is reasonably assured.






Medical Diagnostic Stain
Sales






The
Company recognizes medical diagnostic stains revenue when persuasive evidence of
an arrangement with the customer exists, title passes to the customer, prices
are fixed or determinable and collection is reasonably assured.




Shipping
and handling fees are included as part of net sales. The related freight costs
and supplies directly associated with shipping products to customers are
included as a component of cost of goods sold. Neither the sale of diagnostic
equipment nor the sale of medical diagnostic stains contains multiple
deliverables.





Customers
order either of the Company’s product lines by purchase order.  The
Company does not enter into long-term contracts.  Its diagnostic
equipment sales were $3,750 for the nine months ended June 30, 2009 and its
medical diagnostic stain sales were $346,269 for the nine months ended June 30,
2009.  All of the Company’s sales are made with net 30-day payment
terms.





In
connection with SFAS No. 48 criteria to qualify for the recognition of revenue
at the time of sale, the Company notes the following:




·
            ActiveCare’s
      price to the buyer is fixed or determinable at the date of
      sale.




·
            The
      buyer has paid ActiveCare, or the buyer is obligated to pay ActiveCare
      within 30 days, and the obligation is not contingent on resale of the
      product.




·
            The
      buyer's obligation to ActiveCare would not be changed in the event of
      theft or physical destruction or damage of the
  product.




·
            The
      buyer acquiring the product for resale has economic substance apart from
      that provided by ActiveCare.




·
            ActiveCare
      does not have significant obligations for future performance to directly
      bring about resale of the product by the
buyer.




·
            The
      amount of future returns can be reasonably estimated and they are
      negligible.




·
            Customers
      may return diagnostic equipment within 30 days of the purchase date.
      Customers may return the medical diagnostic stains within 30 days of the
      purchase date provided that the stain’s remaining life is at least 8
      months. Customers must obtain prior authorization for a product
      return.




8





The
Company’s products have not been modified significantly for several
years.  There is significant history on which to base the Company’s
estimates of sales returns.  These sales returns have been
negligible.





The
Company has 70 types of products based on the number of individual SKUs in its
inventory.  Most of these 70 SKUs are for medical diagnostic stain
inventory.  For example, certain medical diagnostic stains are
packaged in different sizes, and each packaged size (i.e. 16 oz., 32 oz., and 48
oz.) has a unique SKU in inventory.  Paragraph 37 of SFAS No. 131
states that, “an enterprise shall report revenues from external customers for
each product and service or each group of similar products and services unless
it is impractical to do so.”  The vast majority of the Company’s sales
are of medical diagnostic stains, with a minimal portion of sales being
diagnostic equipment. Because diagnostic equipment sales are not material to the
financial statements, the Company discloses sales as one line item.





The
Company’s revenue recognition policy for sales to distributors is the same as
the policy for sales to end-users.





A
customer qualifies as a distributor by completing a distributor application and
proving its sales tax status.  Upon qualifying as a distributor, a
customer receives a 35% discount from retail prices, and the distributor
receives an additional 5% discount when product is purchased in case
quantities.  The Company’s distributors are not required to maintain
specified amounts of product on hand, and distributors are not required to make
minimum purchases to maintain distributor status.  Distributors have
no stock rotation rights or additional rights of return.  Sales to
distributors are recorded net of discounts.





Sales
returns have been negligible, and any and all discounts are known at the time of
sale.  Sales are recorded net of sales returns and sales
discounts.  There are no significant judgments or estimates associated
with the recording of revenues.





Research
and Development Costs


All
expenditures for research and development are charged to expense as incurred.
These expenditures in both the nine months ended June 30, 2009 and 2008 were for
the development of a medical home monitoring device and associated services. For
the nine months ended June 30, 2009 and 2008, research and development expenses
were $138,944 and $494,705, respectively.





Advertising
Costs


The
Company expenses advertising costs as incurred.  Advertising expenses
for the nine months ended June 30, 2009 and 2008 were approximately $5,221 and
$681, respectively.





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 statement and tax
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.  Interest and penalties related
to income tax liabilities, when incurred, are classified in interest expense and
income tax provisions, respectively.





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 period.





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





9





Recent
Accounting Pronouncements


In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities.SFAS No. 159 permits companies to
choose to measure many financial instruments and certain other items at fair
value.  SFAS No. 159 is effective for financial statements issued for
fiscal years beginning after November 15, 2007.  The Company does not
expect the adoption of SFAS No. 159 to have a material impact on its financial
statements.





In September 2008, the FASB ratified
EITF Issue No. 08-5,Issuer’s Accounting
for Liabilities Measured at Fair Value with a Third-Party Credit
Enhancement(EITF 08-5).
EITF 08-5 provides guidance for measuring liabilities issued with an attached
third-party credit enhancement (such as a guarantee). It clarifies that the
issuer of a liability with a third-party credit enhancement (such as a
guarantee) should not include the effect of the credit enhancement in the fair
value measurement of the liability. EITF 08-5 is effective for the first
reporting period beginning after December 15, 2008.The Company has not
yet determined the effect on its financial statements, if any that will occur
upon adoption of EITF 08-5.





In October 2008, the FASB issued FSP FAS
157-3Determining Fair
Value of a Financial Asset in a Market That Is Not Active(FSP FAS 157-3). FSP FAS 157-3
clarified the application of SFAS No. 157 in an inactive market. It demonstrated
how the fair value of a financial asset is determined when the market for that
financial asset is inactive. FSP FAS 157-3 was effective upon issuance,
including prior periods for which financial statements had not been issued.The effect of adopting FSP FAS 157-3 did not have a material effect on
the Company’s financial statements.





In
November 2008, the FASB ratified EITF Issue No. 08-6, Equity Method Investment Accounting
Considerations(EITF 08-6). EITF 08-6 clarifies the accounting for
certain transactions and impairment considerations involving equity method
investments. EITF 08-6 is effective for fiscal years beginning after December
15, 2008, with early adoption prohibited. The Company has not yet determined the
effect on its financial statements, if any that will occur upon adoption of EITF
08-6.





3.            Patent
License Agreement





During
the quarter ended June 30, 2009, the Company licensed the use of certain patents
from Futuristic Medical Devices, LLC.  This license agreement will aid
the Company as it furthers its business plan.  The Company is required
to pay $300,000 plus a 5% royalty on the net sales of all licensed
products.  The Company has the right to purchase the underlying
patents.





4.            Related-Party
Note Receivable





In
October 2004, the Company entered into a Loan Agreement with
RemoteMDx.  Under the terms of the Loan Agreement, RemoteMDx borrowed
from the Company under a note which was repayable, together with interest at an
annual rate of 5%.  As of June 30, 2009 and September 30, 2008,
RemoteMDx owed the Company $309,766 (including $14,252 of accrued but unpaid
interest) and $598,793, respectively.  The note is due and payable on
December 31, 2009.





5.     
      Preferred Stock





The
Company is authorized to issue 10,000,000 shares of undesignated preferred
stock, par value $0.00001 per share.  Pursuant to the Company's
Certificate of Incorporation, the Company's board of directors has the authority
to amend the Company's Certificate of Incorporation, without further shareholder
approval, to designate and determine, in whole or in part, 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 and 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.





6.   
        Common Stock





The
Company is authorized to issue 50,000,000 shares of common stock, $0.00001 par
value per share.  During the period ended June 30, 2009, the Company
sold 160,000 shares of common stock for $200,000.  Subsequent to June
30, 2009, the Company re-incorporated under the laws of Delaware and changed its
name to ActiveCare, Inc.  All common stock and additional paid-in
capital adjustments resulting from the reincorporation have been retroactively
applied.





10





7.       
    Warrants





During
the quarter ended June 30, 2009, the Company issued warrants to the board of
directors of the Company for the purchase of an aggregate of 13,500,000 shares
of common stock at prices ranging from $0.25 to $1.25 per share.  All
of these warrants are subject to the following vesting
schedule.




The fair value of each warrant granted
was estimated on the date of grant using the Black-Scholes valuation model and
assumes that the performance goals will be achieved using the following inputs:
Exercise price ranging from $0.25 to $1.25; Risk free interest rate of between
2.02% - 2.71%; Expected life of 5 years; Expected dividend of 0%; and a
volatility factor of 141%.  If such performance goals are not met, no
compensation cost is recognized and any recognized compensation cost is
reversed.  Expected volatilities are based on historical volatility of
a peer company’s common stock among other factors. The Company uses historical
data to estimate option exercise and employee termination within the valuation
model.  The risk-free rate for periods within the contractual life of
the option is based on the U.S. Treasury yield curve in effect at the time of
grant.




A summary of the activity of the
warrants as of June 30, 2009 is presented below:




Performance
      Options
                  
                  Shares
                  
                  
                  Weighted-Average
                    Exercise
    Price
                  
                  Weighted-Average
                    Remaining
                    Contractual
      Term
                  
                  Aggregate
                    Intrinsic
    ValueOutstanding atOctober 1,
      2008
                  
                  
                  0
                  
                  
                  $
                  0.00Granted
                  
                  
                  13,500,000
                  
                  
                  $
                  0.29Exercised
                  
                  
                  0
                  
                  
                  $
                  0.00Forfeited
                  
                  
                  0
                  
                  
                  $
                  0.00Outstanding atJune 30,
    2009
                  
                  
                  13,500,000
                  
                  
                  $
                  0.29
                  
                  5 years
                  
                  $
                  13,000,000Exercisable atJune 30,
    2009
                  
                  
                  0
                  
                  
                  $
                  0.00
                  
                  0
                  
                  $
                  0.00




The weighted-average grant-date fair
value of options granted during the years 2009 was $0.26.







Number of
      Options
                  Vesting
      Criteria1,060,000
                  When
      the Company’s stock is trading or sold2,060,000
                  $5,000,000
      in annualized revenue2,060,000
                  $10,000,000
      in annualized revenue2,080,000
                  $15,000,000
      in annualized revenue2,080,000
                  $20,000,000
      in annualized revenue2,080,000
                  $25,000,000
      in annualized revenue2,080,000
                  When
      the Company achieves
profitability





The total
expense associated with these warrants is $3,452,921, of which $252,031 is being
recognized as non-cash consulting expense during the June 30, 2009
quarter.  The balance of $3,200,890 will be expensed in future
periods.





11





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





The following discussion and analysis should be read in conjunction
with our financial statements and related notes included elsewhere in this
filing. Except for historical information contained herein, this “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
contains forward-looking statements. These statements involve known and unknown
risks and uncertainties that may cause actual results or outcomes to be
materially different from any future results, performances or achievements
expressed or implied by such forward-looking statements, and statements which
explicitly describe such issues. Investors are urged to consider any statement
labeled with the terms “believes,” “expects,” “intends’” or “anticipates” to be
uncertain and forward-looking. Our actual results and the timing of selected
events discussed below could differ materially from those expressed in, or
implied by, these forward-looking statements.




Overview





Our
current core business has been the manufacture, distribution and sale of medical
diagnostic stains and solutions.  We continue to define our business
plan and marketing strategy.  In connection with the spin-off of the
Company from RemoteMDx, Inc. (“RemoteMDx”), we acquired from RemoteMDx exclusive
license rights to certain technology, including patent rights, utilizing GPS and
cellular communication and monitoring technologies for use in the healthcare and
personal security markets.  We also acquired by license the exclusive
rights to certain patents owned by Futuristic Medical Devices, LLC for
technologies that are complementary to the patented technology licensed to the
Company by RemoteMDx.  We are currently developing and we plan to
market a new product line for monitoring and providing assistance to mobile and
homebound seniors and the chronically ill, including those who may require a
personal assistant to check up on them during the day to ensure their safety and
well being and know where they are at all times.




Under our
developing business model, we expect that the majority of our customers will be
seniors who are mobile and want "peace of mind" knowing that their location is
known at all times and that they can request assistance at
anytime.  Our business plan is to sell or give customers a device
and require payment of a monthly subscription for
services.  Different services range from requesting emergency
services to receiving calls throughout the day from the care center to
remind them of specific events and ensuring their health and state of
mind.  When an elderly person falls or is in need of help, the longer the
patient waits for emergency help, the higher the hospitalization costs and the
higher the mortality rate. By subscribing to our services, a subscriber
will have access to a care center specialist who can immediately contact
emergency services and provide directions on how to reach the subscriber in the
event of an emergency.




In the
future, we plan to monitor vital signs of the elderly and alert the patient and
appropriate family members and emergency personnel when abnormal vitals are
identified at the care center.  We plan to integrate third party
bio-medical sensors to capture specific vital signs such as glucose, blood
pressure, and SPO2 and transmit the measurements to the care
center.




With U.S.
healthcare costs spiraling upward, we believe that cost containment is a
primary issue facing the industry.  This pressure will only intensify
during the 21st century as the baby-boom generation is aging.  As of 2005,
35 million Americans were 65 years of age or older according to the US Census
Bureau, and this number is projected to increase to 54 million by the year 2020,
according to a study by the Economic Research Service of the U.S. Department of
Agriculture (on file with the Company). By that year, 1 in 6 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 its present size.  With
an aging population, and because approximately 80% of healthcare costs occur in
the last two years of life, according to an article published in the National
Review Online (on file with the Company), viable cost saving options are
needed.




In
addition to the aging, approximately one in every four Americans suffers from a
chronic illness, according to a 2004 presentation to the American Telemedicine
Association (on file with the Company) which typically becomes more severe and
prominent with age.  The demographics of chronic illnesses include over 15
million people with diabetes and close to 14 million with coronary heart disease
(according to reports published by the American Heart Association), and over 10
million with osteoporosis (according to a study by the University of Maryland
Medical Center).  Various industry studies, including a study published in
the IBM Systems Journal in 2007 (on file with the Company) and a study conducted
by heart specialists from Columbia Presbyterian Medical Center Cardiac
Transplant Service (on file with the Company), have been conducted showing the
cost savings that are attributed to the daily monitoring of the chronically
ill.




We believe
through the technologies being developed by the Company, that we can enhance the
life of the elderly and enable them to live a more "normal" life style by
being mobile and providing peace of mind knowing that their vital signs
are being monitored and their location is known at all times.  We can
immediately communicate with the patient and emergency personnel in times of
need and communicate the patient’s location and an abbreviated medical
history.




The care
center will be staffed around the clock with advisors that will receive calls
originating from the product.  There will be two ways in which the
specialist at the care center will be engaged.





12




ActiveOne




Under the
trademark ActiveOneTM we are developing a product that incorporates GPS,
cellular, full detection which is connected to a 24 hour care center with the
push of a button. The transmitter can be worn on a neck pendant or carried in a
purse, and it sends a cellular signal to our care center. When the member pushes
the button, the staff at the care center evaluates the situation, deciding
whether to call an ambulance or a designated friend or family
member.




GPS
Location Services / Cellular Services




There are
many products that provide GPS tracking integrated with cellular
services.  These products and services can be found in the
transportation industry for vehicle and asset tracking and in the sports
industry.




We are
working to integrate the PERS and GPS location/Cellular services together and
provide a comprehensive solution for the senior market.  We intend to
work with strategic partners to design, develop and deliver a water resistant
wrist device that interfaces with a GPS/Cellular communications device and
transmits GPS location and a voice call to our care
center.




Currently,
there are separate products on the market that provide service to the Personal
Emergency Response (PERS) industry and products that provide geographical
locations, and clinical health parameters.  However, we believe that
no product on the market today has successfully integrated both products
together to provide a service.  We feel that it is imperative to bring
such a solution to the market.




We plan
to develop end user products and a care center application and infrastructure to
interface with the patient and the care center advisors.




During
the nine months ended June 30, 2009, we spent $138,944 on research and
development.  Research and development has taken place on a
GPS/Cellular communications device and on a water resistant watch that will
detect falls and include a speaker and microphone.  The watch will be
universal for women and men with an adjustable strap.




The care
center and the related products will be developed by our team.  We
have identified and are negotiating with several potential vendors for services
that will further our objectives.  Our goal is to develop a
wrist-watch sized PERS device, and we anticipate that we may work with one or
more vendors to develop such a product.




Competition
in Personal Emergency Response System (PERS) Markets




We have
identified the following entities that appear to compete directly in one or more
of our markets.  Note that all these entities target the senior that
is confined to the home, as opposed to our intended customer who is typically
more mobile:




·
            ADT
      – specializing in home security, they offer a pendent device/home
      communications station.·
            Alertone
      – offers a wristband and pendent device / home communications
      device.·
            American
      Medical Alarms – offers a pendent device/home communications
      device.·
            Life
      Alert – offers a pendent device/home communications
  device.·
            Lifeline
      – owned by Philips is the largest provider in the industry with over
      700,000 subscribers.  Offers a pendent device/home
      communications station.  They also send out alerts to family
      members or caregivers when the monitoring center receives an
      alarm.·
            Life
      Station – offers a wristband, belt clip, pendent devices / home
      communications station.·
            Rescue
      Alert – offers a pendent device/home communications
      station.  Claims to have the best panic button range of 600 feet
      to the home communication device.   Monitoring center that
      is staffed with certified EMT
advisors.




13





Recent
Developments





During
the period ended June 30, 2009, the Company entered into a license and
distribution agreement (“License Agreement”) with euromicron AG, a German
corporation (“euromicron”).  Under the terms of this License
Agreement, the Company granted euromicron exclusive distribution rights and
related licenses to use and distribute the technologies and products of the
Company in certain countries of Europe.  The Company will provide
support, training, and other services under the License Agreement.





Critical
Accounting Policies





Use
of Estimates in the Preparation of Financial Statements




The
preparation of financial statements requires management to make significant
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses during the reporting period.  By their nature,
these estimates and judgments are subject to an inherent degree of
uncertainty.  On an on-going basis, we evaluate our estimates,
including those related to bad debts, inventories, intangible assets, warranty
obligations, product liability, revenue recognition, and income
taxes.  We base our estimates on historical experience and other facts
and circumstances that are believed to be reasonable and the results provide a
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources.  Actual results may
differ from these estimates under different assumptions or conditions, and these
differences may be material.




With
respect to concentration of credit risk, allowances for doubtful accounts
receivable, inventories, impairment of assets, revenue recognition, and research
and development, those material accounting policies that we believe are critical
to an understanding of our financial results and condition are as
follows:




Concentration
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 such
accounts.




In the
normal course of business, the Company provides credit terms to its customers.
Accordingly, the Company performs ongoing credit evaluations of its customers'
financial condition and requires no collateral from its
customers.  The Company maintains an allowance for uncollectable
accounts receivable based upon the expected collectability of all accounts
receivable.




Accounts
Receivable




Accounts
receivable are carried at original invoice amount less an estimate made for
doubtful receivables based on a review of all outstanding amounts on a monthly
basis.  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.  Trade
receivables are written off when deemed uncollectible.  Recoveries of
trade receivables previously written off are recorded when
received.  A trade receivable is considered to be past due if any
portion of the receivable balance has not been received by the contractual pay
date.  Interest is not charged on trade receivables that are past
due.




Inventories




Inventories
are recorded at the lower of cost or market, cost being determined on a
first-in, first-out ("FIFO") method. Inventories consist of raw materials,
work-in-process, and finished goods.  Provisions, when required, are
made to reduce excess and obsolete inventories to their estimated net realizable
values. Due to competitive pressures and technological innovation, it is
possible that estimates of the net realizable value could change in the near
term.





14





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, typically
three to seven years.  Leasehold improvements are amortized over the
shorter of the estimated useful lives of the asset or the term of the
lease.  Expenditures for maintenance and repairs are expensed while
renewals and improvements over $500 are capitalized.  When property
and equipment are disposed, any gains or losses are included in the results of
operations.





Revenue
Recognition




The
Company’s revenue has historically been from two sources: (i) diagnostic
equipment product sales; and (ii) sales of medical diagnostic
stains.




Diagnostic Equipment Product
Sales




Although
not the focus of the Company’s business model, the Company sells its diagnostic
equipment devices in certain situations. The Company recognizes product sales
revenue when persuasive evidence of an arrangement with the customer exists,
title passes to the customer, prices are fixed or determinable, and collection
is reasonably assured.




Medical Diagnostic Stain
Sales




The
Company recognizes medical diagnostic stains revenue when persuasive evidence of
an arrangement with the customer exists, title passes to the customer, prices
are fixed or determinable, and collection is reasonably assured.




Shipping
and handling fees are included as part of net sales. The related freight costs
and supplies directly associated with shipping products to customers are
included as a component of cost of goods sold.





We have
no sales that contain multiple deliverables.  All of our revenues
consist of sales of products, either (1) diagnostic equipment or (2) medical
diagnostic stains.  The diagnostic equipment does not require
installation or customization.





Historically
and consistently all of our sales are made with net 30-day payment
terms.  We have not changed our payment terms in the recent past (at
least for five years).  We have no plans to change our payment terms
in the future.





Our
products have not been modified significantly for several
years.  There is significant history on which to base our estimates of
sales returns.  These sales returns have been
negligible.  Customers may return diagnostic equipment within 30 days
of the purchase date.  Customers may return the medical diagnostic
stains within 30 days of the purchase date provided that the stain’s remaining
life is at least 8 months.  Customers must obtain prior authorization
for a product return.





In
connection with SFAS No. 48 criteria to qualify for the recognition of revenue
at the time of sale, we note the following:





·
            ActiveCare’s
      price to the buyer is fixed or determinable at the date of
      sale.·
            The
      buyer has paid ActiveCare, or the buyer is obligated to pay ActiveCare
      within 30 days, and the obligation is not contingent on resale of the
      product.





·
            The
      buyer's obligation to ActiveCare would not be changed in the event of
      theft or physical destruction or damage of the product.·
            The
      buyer acquiring the product for resale has economic substance apart from
      that provided by ActiveCare.·
            ActiveCare
      does not have significant obligations for future performance to directly
      bring about resale of the product by the buyer.·
            The
      amount of future returns can be reasonably estimated and they are
      negligible.




15





We have
70 types of products based on the number of individual SKUs in our
inventory.  Most of these 70 SKUs are for medical diagnostic stain
inventory.  For example, certain medical diagnostic stains are
packaged in different sizes, and each packaged size (i.e. 16 oz., 32 oz., and 48
oz.) has a unique SKU in inventory.  Paragraph 37 of SFAS No. 131
states that, “an enterprise shall report revenues from external customers for
each product and service or each group of similar products and services unless
it is impractical to do so.”  The vast majority of our sales are of
medical diagnostic stains, with a minimal portion of sales being diagnostic
equipment. Because diagnostic equipment sales are not material to the
financial statements, we disclose sales as one line item.





Our
revenue recognition policy for sales to distributors is the same as the policy
for sales to end-users.





A
customer qualifies as a distributor by completing a distributor application and
proving its sales tax status.  Upon qualifying as a distributor, a
customer receives a 35% discount from retail prices, and the distributor
receives an additional 5% discount when product is purchased in case
quantities.  Our distributors are not required to maintain specified
amounts of product on hand, and distributors are not required to make minimum
purchases to maintain distributor status.  Distributors have no stock
rotation rights or additional rights of return.  Sales to distributors
are recorded net of discounts.





Sales
returns have been negligible, and any and all discounts are known at the time of
sale.  Sales are recorded net of sales returns and sales
discounts.  There are no significant judgments or estimates associated
with the recording of revenues.





Results
of Operations





Three
Months Ended June 30, 2009 and 2008





Net
Sales





The
Company’s fiscal year ends on September 30.  During the fiscal quarter
ended June 30, 2009, we had net sales of $118,952 compared to $122,721 in the
fiscal quarter ended June 30, 2008.  The small decrease from 2009 to
2008 was due to a reduction in orders of Wright-Giemsa stain.





Cost
of Goods Sold




Cost of
goods sold totaled $95,224 in the fiscal quarter ended June 30, 2009, compared
to $120,773 for the quarter ended June 30, 2008.  The decrease of
approximately $25,549 relates to a reduction in payroll associated with
manufacturing.





Research
and Development Expenses





During
the quarter ended June 30, 2009, the Company incurred research and development
expenses of $12,538 compared to $124,362 in research and development expense
incurred during the fiscal quarter ended June 30, 2008. The research and
development expenses in the quarter ended June 30, 2009 decreased due to
re-evaluation of our research and development partners.  We expect
research and development expense to increase in future periods as we develop our
new product line.





Selling,
General and Administrative Expenses





During
the three months ended June 30, 2009, the Company’s selling, general and
administrative expenses totaled $550,947, compared to the same period one year
ago, which totaled $216,704.  The increase in 2009 is the result of
the following:





·
            Legal
      and accounting fees associated with the spin-off of the Company from
      RemoteMDx


·
            Board
      of Director fees


·
            Consulting
      related to the market and marketing of the Company’s
    products


·
            Amortization
      of warrants issued for services totaling
  $252,031





16





Other
Income and Expense





During
the quarter ended June 30, 2009, interest income was $2,262, compared to $4,539
in the quarter ended June 30, 2008.  The decrease in interest income
was due to the Company having less cash on hand.





Net
Loss





The
Company had a net loss for the three months ended June 30, 2009 totaling
$535,834, compared to a net loss of $340,348 for the same period one year
ago.  This increase in net loss is due primarily to an increase in
amortization of warrants issued for services as described above.





Nine
Months Ended June 30, 2009 and 2008





Net
Sales





During
the nine months ended June 30, 2009, we had net sales of $350,019 compared to
$467,148 in the nine months ended June 30, 2008.  The change from 2008
to 2009 was due to a reduction in orders of Wright-Giemsa
stain.  During the 2008 fiscal year, prior management of the Company
changed the formula for Wright-Giemsa stain and customers did not respond well
to the changed formula.  The Company has reintroduced the old formula
and is encouraging customers to once again order this product.





Cost
of Goods Sold




Cost of
goods sold totaled $299,136 in the first nine months ended June 30, 2009,
compared to $365,855 for the nine months ended June 30, 2008.  The
decrease of approximately $67,000 relates to a reduction in revenues described
above.





Research
and Development Expenses





During
the nine months ended June 30, 2009, the Company incurred research and
development expenses of $138,944 compared to $494,705 during the nine months
ended June 30, 2008. The research and development expenses in the nine months
ended June 30, 2009 decreased due to a re-evaluation of our research and
development partners.  We expect this expense to increase in future
periods as we develop our new product line.





Selling,
General and Administrative Expenses





During
the nine months ended June 30, 2009, the Company’s selling, general and
administrative expenses totaled $956,757 compared to the same period one year
ago, which totaled $876,760.  This increase is primarily due to the
amortization expense of warrants issued for services.





Other
Income and Expense





During
the nine months ended June 30, 2009, interest income was $14,723, compared to
$13,246 in the nine months ended June 30, 2008.  The increase in
interest income was due to the Company having more cash on hand.  The
Company also settled one of its outstanding payables at less than face
value.  This increased other income by approximately
$33,000.





Net
Loss





The
Company had a net loss for the nine months ended June 30, 2009 totaling
$995,725, compared to a net loss of $1,261,353 for the same period one year
ago.  This decrease in net loss is due primarily to a decrease in
research and development as described above.





17








Liquidity
and Capital Resources





The
Company has not historically financed operations entirely from cash flows from
operating activities.  During the year ended September 30, 2008, the
Company supplemented cash flows with funding from the sale of equity
securities.





At June
30, 2009, the Company had unrestricted cash of $400,504, compared to cash of
$474,146 at September 30, 2008. At September 30, 2008, the Company had working
capital of $406,794, compared to working capital of $57,512 at June 30,
2009.





During
the nine months ended June 30, 2009, the Company’s operating activities used
cash of $565,373.





Investing
activities for the nine months ended June 30, 2009 used cash of
$11,549.





Financing
activities for the nine months ended June 30, 2009, provided $503,280 of net
cash.





During
the nine months ended June 30, 2009, the Company incurred a net loss of $995,725
and had negative cash flows from operating activities totaling $565,373,
compared to a net loss of $1,261,353 and negative cash flows from operating
activities of $1,247,092 for the year ended September 30, 2008.  As of
September 30, 2008, the Company’s working capital was $406,794 compared to
working capital of $57,512 at June 30, 2009.  As of June 30, 2009, the
Company had an accumulated deficit of $3,636,513 compared to $2,640,788 at
September 30, 2008, and total stockholders’ equity at June 30, 2009 was $701,765
compared to $1,057,962 at September 30, 2008.




Recent
Accounting Pronouncements




In May
2009, the FASB issued SFAS No. 165, "Subsequent Events," which establishes
general accounting standards and disclosure for events that occur after the
balance sheet date but before the financial statements are issued or are
available to be issued.  It requires the disclosure of the date
through which an entity has evaluated subsequent events and the basis for that
date.  SFAS 165 is effective for interim and annual financial periods
ending after June 15, 2009 and requires prospective application.  The
Company adopted SFAS 165 during the third fiscal quarter
ended June 30, 2009, and its application had no impact on the Company’s
consolidated financial statements.  The Company evaluated subsequent
events through the date the accompanying financial statements were issued, which
was August 10, 2009.





In June
2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards CodificationTM
and the Hierarchy of Generally Accepted Accounting Principles – a replacement of
FASB Statement No. 162.”  SFAS 168 replaces SFAS No. 162, “The
Hierarchy of Generally Accepted Accounting Principles” and establishes the “FASB
Accounting Standards CodificationTM” (Codification) as the source of
authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with generally accepted accounting principles
(GAAP).  Rules and interpretive releases of the Securities and
Exchange Commission (SEC) are also sources of authoritative GAAP for SEC
registrants.  SFAS 168 is effective for interim and annual
financial periods ending after September 15, 2009.  On this
effective date, the Codification will supersede all then-existing Non-SEC
accounting and reporting standards.  All other non-grandfathered
Non-SEC accounting literature not included in the Codification will become
non-authoritative.  Once the Codification is in effect, all of its
content will carry the same level of authority, effectively superseding SFAS
162.  The Company will adopt SFAS 168 during its year
ending September 30, 2009 and does not anticipate that the adoption of this
standard will have a material impact on its consolidated financial
statements.




Going
Concern




The
significant accumulated deficits and negative cash flows of the Company raise
substantial doubt about the Company’s ability to continue as a going concern.
The financial statements included in this report do not include any adjustments
that might result from the outcome of this uncertainty.  Our plan with
respect to this uncertainty is to focus on sales of our reagent products and
completing strategic acquisitions and business combinations, and to raise
capital through the offer and sale of our equity securities.  There
can be no assurance that revenues will increase rapidly enough to offset
operating losses and repay debts.  Likewise, there can be no assurance
that the Company will be successful in raising additional capital from the sale
of equity or debt securities.  If the Company is unable to increase
revenues or obtain additional financing, it will be unable to continue the
development of its products and would likely cease operations.







Item
3.  Quantitative and Qualitative Disclosures about Market
Risk.





None.





18




Item
4T.  Controls and Procedures.





Under the
supervision and with the participation of our management, including our Chief
Executive Officer and our Chief Financial Officer, we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934 (the “Exchange Act”)). Based upon that evaluation, the Chief Executive
Officer and the Chief Financial Officer concluded that, as of the end of the
period covered by this report, our disclosure controls and procedures were not
effective.  We and our auditors identified a material weakness
discussed below in the Report of Management on Internal Control over Financial
Reporting.





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 Rule 13a-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 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 the Company's annual or
interim financial statements will not be prevented or detected.





In the
course of the management's assessment, it has identified the following material
weakness in internal control over financial reporting:




Because
of the small size of the Company, in terms of the number of employees, the
Company lacks segregation of duties and that is a material
weakness.  As the Company grows, this weakness will be
mitigated.





We are in
the process of improving our internal control over financial reporting in an
effort to eliminate this material weakness through improved supervision and
training of our staff, but additional effort is needed to fully remedy this
deficiency. Our management, audit committee, and directors will continue to work
with our auditors and outside advisors to ensure that our controls and
procedures are adequate and effective.




PART
II – OTHER INFORMATION







Item
1. Legal Proceedings.





The
Company is not involved in any legal proceedings which management believes will
have a material effect upon the financial condition of the Company, nor are any
such material legal proceedings anticipated.





19




Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.





In April
2009, the Company sold 160,000 shares of common stock to its former parent,
RemoteMDx, Inc. for $200,000.  The offer and sale of the shares were
not registered in reliance upon exemptions from registration extended under
Section 4(2) of the Securities Act of 1934 for private offers and
sales.  Proceeds from the sale of the shares were used by the Company
for general corporate purposes.





Item
3.  Defaults upon Senior Securities.





None.





Item
4. Submission of Matters to a Vote of Security Holders.





During
the quarter ended June 30, 2009, the Company solicited written consents of its
shareholders to change the name of the Company to ActiveCare, Inc., and to
reincorporate the Company in the state of Delaware.  A sufficient
number of shares consented to these changes and the amendments and other
necessary filings were made to effect these changes on July 15,
2009.  A total of 7,635,913 shares (69.87 percent) voted in favor, 220
shares against and 294 shares abstained on the proposal to change the name of
the Company.  A total of 7,256,103 shares (66.40 percent) voted in
favor, 831 shares against and 217 shares abstained on the proposal to
reincorporate in Delaware.  Both proposals were adopted by more than
two-thirds of the issued and outstanding shares of the Company eligible to
vote.  Copies of the amendment to change the corporate name and the
Delaware certificate of incorporation are filed as exhibits to this
report.




Item
5. Other Information.





On June 23, 2009, the Company appointed Robert J. Welgos as a new
director of the Company.  Mr. Welgos has a BS 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, Process
Laboratories.  He also served as the Manager, North American
Distributor Sales, where he helped to expand sales volume from $7 million to $33
million in 5 years, and to establish internal policies and
procedures.  Additionally, he worked as Director of International
Operations, where he established distribution networks throughout Pacific Rim
and South America, during which time sales volume grew from zero to $28 million
in 6 years. 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.





Also on
June 23, 2009, the board of directors of the Company formed an Audit Committee
and a Compensation Committee.  Mr. Welgos serves as the chairman of
the Audit Committee.  The other member of this committee is board
member William Martin.  The chairman of the Compensation Committee is
Jack Johnson and the other member of the committee is James
Carter.  All of the members of the Audit and Compensation Committees
are independent directors.





Item
6. Exhibits.





Exhibit
Number                       Description





(3)(i)
              Articles
      of Incorporation of Registrant (previously filed as an exhibit to the
      Company’s Registration Statement on Form S-1 and incorporated herein by
      reference).





(3)(ii)
            Articles
      of Amendment to Articles of Incorporation of Registrant (previously filed
      as an exhibit to the Company’s Registration Statement on Form S-1 and
      incorporated herein by reference).





(3)(iii)
            Bylaws
      of Registrant (previously filed as an exhibit to the Company’s
      Registration Statement on Form S-1 and incorporated herein by
      reference).





(3)(iv)
            Certificate
      of Incorporation (Delaware) July 15,
2009





(3)(v)
            By-Laws
      reflecting change of the corporate
name





(4)
            Specimen
      of common stock certificate (previously filed as an exhibit to the
      Company’s Registration Statement on Form S-1 and incorporated herein by
      reference).





20





(10)(i)
            Lease
      Agreement between RJF Company Ltd., and the Company, dated as of August 1,
      2005 (previously filed as an exhibit to the Company’s Registration
      Statement on Form S-1 and incorporated herein by
    reference).





(10)(ii)
            Loan
      Agreement between the Company and RemoteMDx (previously filed as in
      exhibit to the Company’s Registration Statement on Form S-1 and
      incorporated herein by reference).





(10)(iii)
            Promissory
      Note dated as of October 1, 2008 (previously filed as an exhibit to the
      Company’s Registration Statement on Form S-1 and incorporated herein by
      reference).





(10)(iv)
            Professional
      Services Contract between the Company and VPI Engineering, dated as of
      September 27, 2007, together with addenda (previously filed as an exhibit
      to the Company’s Registration Statement on Form S-1 and incorporated
      herein by reference).





(10)(v)
            Securities
      Purchase Agreement between the Company and ADP Management, dated as of
      November 15, 2007 (previously filed as an exhibit to the Company’s
      Registration Statement on Form S-1 and incorporated herein by
      reference).





(10)(vi)
            License
      Agreement between the Company and RemoteMDx,
  Inc.*





(10)(vii)
            License
      Agreement between the Company and Futuristic Medical Devices
      LLC*





(10)(viii)
            License
      Agreement between the Company and euromicron
AG*





(11)
            Computation
      of Statement of Earnings (included in financial statements filed
      herewith)





(31)(i)
            Rule
      13a–14(a)/15d–14(a) Certifications*





(32)
            Section
      1350 Certifications*








* Filed
herewith.





21





SIGNATURES





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





ActiveCare,
      Inc./s/  James
      DaltonJames
      Dalton
                    Chairman
      of the Board of Directors
                    and
      Chief Executive Officer (Principal
                    Executive
      Officer)




Date:
      August 11, 2009




/s/  Michael
      G. ActonMichael
      G. Acton
                    Chief
      Financial Officer (Principal
                    Financial
      and Accounting
Officer)




Date:
      August 11, 2009








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