1347022--3/19/2010--POSITIVEID

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{product, liability, claim}

{product, candidate, development}

{stock, price, operating}

{system, service, information}

{stock, price, share}

{control, financial, internal}

{regulation, change, law}

{financial, litigation, operation}

{condition, economic, financial}

{personnel, key, retain}

{acquisition, growth, future}

Risks Related to the Operations and Business of PositiveID PositiveID has a history of losses, and expects to incur additional losses in the future. PositiveID is unable to predict the extent of future losses or when it will become profitable. s long-term capital needs may require additional sources of capital, and there can be no assurances that it will be successful in negotiating additional sources of long-term capital. Compliance with changing regulations concerning corporate governance and public disclosure may result in additional expenses. PositiveID depends on key personnel to manage its business effectively, and, if it is unable to hire, retain or motivate qualified personnel, its ability to design, develop, market and sell its systems could be harmed. During 2009, PositiveID failed to meet applicable Nasdaq Stock Market requirements. If in the future PositiveID were to fail to meet one of these requirements, its stock could be delisted by the Nasdaq Stock Market. If delisting occurs, it would adversely affect the market liquidity of its common stock and harm its businesses. We will continue to incur the expenses of complying with public company reporting requirements. Directors, executive officers, principal stockholders and affiliated entities own a significant percentage of PositiveID s capital stock, and they may make decisions that you do not consider to be in the best interests of its stockholders. Risks Related to PositiveID s Product Development Efforts PositiveID and its development partner Receptors LLC are in the early stages of developing a rapid influenza detection system for the H1N1 virus and an in vivo glucose-sensing RFID microchip, the effectiveness of both of which is unproven. PositiveID s product research and development activities may not result in a commercially-viable rapid influenza detection system, in vivo glucose-sensing RFID microchip, Easy Check breath glucose detection system, or iGlucose wireless communication device. The success and timing of development efforts, clinical trials, regulatory approvals, product introductions, collaboration and licensing arrangements, any termination of development efforts and other material events could cause volatility in our stock price. PositiveID anticipates future losses and may require additional financing, and PositiveID s failure to obtain additional financing when needed could force PositiveID to delay, reduce or eliminate PositiveID s product development programs or commercialization efforts. PositiveID s future product development efforts may not yield marketable products due to results of studies or trials, failure to achieve regulatory approvals or market acceptance, proprietary rights of others or manufacturing issues. PositiveID s industry changes rapidly as a result of technological and product developments, which may quickly render PositiveID s product candidates less desirable or even obsolete. If PositiveID is unable or unsuccessful in supplementing its product offerings, its revenue and operating results may be materially adversely affected. If PositiveID or Receptors are unable to develop and later market the products under development in a timely manner or at all, or if competitors develop or introduce similar products that achieve commercialization before the products enter the market, the demand for the products may decrease or the products could become obsolete. Risks Occasioned by the Xmark Transaction PositiveID will be unable to compete with Xmark s business for four years from the date of closing. Industry and Business Risks Related to Our ID Security Business PositiveID is unable to control many of the factors affecting consumer spending, and declines in consumer spending could reduce demand for PositiveID s products. The identity security market including PositiveID faces a significant amount of subscriber churn. As a result, PositiveID must obtain the subscribers it loses in the ordinary course of business and, if it fails to do so, its revenue and subscriber base will decline. Marketing laws and regulations may materially limit PositiveID s or its clients ability to offer PositiveID products and services to consumers. If PositiveID loses its ability to purchase data from a credit data reseller, some of which are PositiveID s competitor, which credit data reseller purchases the data from the three major credit reporting repositories, demand for its services would decrease. PositiveID s competitors, including those who have greater resources and experience than PositiveID has, may commercialize technologies that make PositiveID s obsolete or noncompetitive. Industry and Business Risks Related to Our HealthID Business PositiveID may never achieve market acceptance or significant sales of its healthcare products or systems. Implantation of PositiveID s implantable microchip may be found to cause risks to a person s health, which could adversely affect sales of its systems that incorporate the implantable microchip. If PositiveID is required to effect a recall of its implantable microchip, its reputation could be materially and adversely affected and the cost of any such recall could be substantial, which could adversely affect its results of operations and financial condition. Interruptions in access to, or the hacking into, PositiveID s Health Link PHR or its VeriMed patient information database may have a negative impact on its revenue, damage its reputation and expose PositiveID to litigation. Regulation of products and services that collect personally-identifiable information or otherwise monitor an individual s activities may make the provision of PositiveID s services more difficult or expensive and could jeopardize its growth prospects. If PositiveID fails to comply with anti-kickback and false claims laws, it could be subject to costly and time-consuming litigation and possible fines or other penalties.

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1347022--3/19/2010--POSITIVEID_Corp