----

----

| [X] | ANNUAL      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|-----|------------------------------------------------------------------------------------------|

|   | For      the fiscal year ended September 30,2007 |
|--------|--------------------------------------------------|

| [   ] | TRANSITION      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|----------------------|----------------------------------------------------------------------------------------------|

|   | For      transition period from   to  . |
|--------|---------------------------------------------------|

| UTAH                                                                | 87-0543981                             |
|---------------------------------------------------------------------|----------------------------------------|
| (State      or other jurisdiction of incorporation or organization) | (IRS      Employer Identification No.) |

| 150      West Civic Center Drive                    |            |
|-----------------------------------------------------|-----------------|
| Suite      400                                      |            |
| Sandy,      Utah                                    | 84070           |
|  (Address      of principal executive offices) | (Zip      Code) |

| Securities      registered under Section 12(b) of the Act: | Name      of each exchange on which registered: |
|------------------------------------------------------------|-------------------------------------------------|
| None                                                       | None                                            |

| Securities      registered under Section 12(g) of the Act: | Common      Stock, $0.0001 par value |
|------------------------------------------------------------|--------------------------------------|

| Check      whether the issuer is not required to file reports pursuant to Section 13      or 15 of the Exchange  Act.  [   ] |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|          |                                                                                                                                                   | Page No. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|          |                                                                                                                                                   |     |
| PART      I.  |                                                                                                                                                   |     |
|          |                                                                                                                                                   |     |
| Item      1   | Description      of Business                                                                                                                           | 3        |
|          |                                                                                                                                                   |     |
| Item      2.  | Description      of Property                                                                                                                           | 11       |
|          |                                                                                                                                                   |     |
| Item      3.  | Legal      Proceedings                                                                                                                                 | 11       |
|          |                                                                                                                                                   |     |
|          |                                                                                                                                                   |     |
| PART      II. |                                                                                                                                                   |     |
|          |                                                                                                                                                   |     |
| Item      5.  | Market      for Common Equity, Related Stockholder Matters and Small Business Issuer      Purchases of Equity Securities                               | 12       |
|          |                                                                                                                                                   |     |
| Item      6.  | Management’s      Discussion and Analysis or Plan of Operation                                                                                   | 17       |
|          |                                                                                                                                                   |     |
| Item      7.  | Financial      Statements                                                                                                                              | 35       |
|          |                                                                                                                                                   |     |
| Item      8A  | Controls      and Procedures                                                                                                                           | 35       |
|          |                                                                                                                                                   |     |
|          |                                                                                                                                                   |     |
| PART      III |                                                                                                                                                   |     |
|          |                                                                                                                                                   |     |
| Item      9.  | Directors,      Executive Officers, Promoters and Control Persons and Corporate      Governance; Compliance with Section 16 (a) of the Exchange    Act | 36       |
|          |                                                                                                                                                   |     |
| Item      10. | Executive      Compensation                                                                                                                            | 40       |
|          |                                                                                                                                                   |     |
| Item      11. | Security      Ownership of Certain Beneficial Owners and Management and Related      Stockholder Matters                                               | 47       |
|          |                                                                                                                                                   |     |
| Item      12. | Certain      Relationships and Related Transactions and Director      Independence                                                                     | 49       |
|          |                                                                                                                                                   |     |
| Item      13. | Exhibits                                                                                                                                               | 50       |
|          |                                                                                                                                                   |     |
| Item      14. | Principal      Accountant Fees and Services                                                                                                            | 53       |
|          |                                                                                                                                                   |     |
| Signatures    |                                                                                                                                                   | 54       |

----

|                                                       |   | Previously      Reported |         |   | As      Restated |   |
|------------------------------------------------------------|--------|--------------------------|--------------|--------|------------------|--------|
|                                                       |   |                     |         |   |             |   |
| Balance      Sheet Items:                                  |   |                     |         |   |             |   |
| Monitoring      equipment, net of accumulated depreciation |   | $                        | 2,787,133    |   |             | $      | 3,739,474 |   |
| Total      assets                                          |   |                     | 15,284,348   |   |             |   | 16,236,689 |   |
| Deferred      revenue                                      |   |                     | 14,247       |   |             |   | 1,314,247 |   |
| Total      current liabilities                             |   |                     | 8,432,830    |   |             |   | 9,732,830 |   |
| Total      liabilities                                     |   |                     | 8,672,593    |   |             |   | 9,972,593 |   |
| Accumulated      deficit                                   |   |                     | (132,749,287 | )      |             |   | (133,096,946 | ) |
| Total      stockholders’ equity                      |   |                     | 1,625,527    |   |             |   | 1,277,868 |   |
| Total      liabilities and Stockholders’ equity      |   |                     | 15,284,348   |   |             |   | 16,236,689 |   |
|                                                       |   |                     |         |   |             |   |   |   |
| Statement      of Operation Items - 2007:                  |   |                     |         |   |             |   |   |   |
| Revenues                                                   |   |                     | 8,570,540    |   |             |   | 7,270,540 |   |
| Cost      of revenues                                      |   |                     | 8,974,174    |   |             |   | 13,881,895 |   |
| Selling,      general and administrative expenses          |   |                     | 20,217,587   |   |             |   | 16,116,535 |   |

| Royalty      settlement expense                                                |   |   | 1,759,010   |   |   |   | -           |   |
|--------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|
| Net      loss                                                                  |   |   | (26,022,912 | )      |   |   | (26,370,571 | )      |
| Net      loss attributable to common stockholders – basic and    diluted |   |   | (26,573,515 | )      |   |   | (26,921,174 | )      |
| Net      loss per common share - basic and diluted                             |   | $      | (0.26       | )      |   | $      | (0.26       | )      |
|                                                                           |   |   |        |   |   |   |        |   |
| Statement      of Cashflows:                                                   |   |   |        |   |   |   |        |   |
| Net      loss                                                                  |   |   | (26,022,912 | )      |   |   | (26,370,571 | )      |
| Inventories                                                                    |   |   | (12,083     | )      |   |   | (964,424    | )      |
| Deferred      revenues                                                         |   |   | (3,570      | )      |   |   | 1,296,430   |   |

----

|   | · | Monitoring      Services – Following activation, TrackerPAL device users pay a daily fee      for monitoring services provided by us through a majority owned      subsidiary, SecureAlert, Inc. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Product      Sales – Although not the focus of our business model, we sell our      TrackerPAL devices in certain situations.  In addition, the      Company sells home security and Personal Emergency Response Systems      (“PERS”). |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Medical      Diagnostic Stains – Through another majority owned subsidiary, we sell      medical diagnostic stains and equipment to laboratories throughout the      United States. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | · | 24/7      nationwide two-way voicecommunication; |
|--------|--------|--------------------------------------------------|

|   | · | Automated      reporting of location and alarms; |
|--------|--------|--------------------------------------------------|

|   | · | Inclusion      and exclusion area alarms; |
|--------|--------|-------------------------------------------|

|   | · | Proximity      alarm; |
|--------|--------|-----------------------|

|   | · | Automated      alert notification; |
|--------|--------|------------------------------------|

|   | · | Tamper      resistant band and alarm; |
|--------|--------|---------------------------------------|

|   | · | Battery      status alerts; |
|--------|--------|-----------------------------|

|   | · | Web-based      real-time tracking; |
|--------|--------|------------------------------------|

|   | · | Active      monitoring; and |
|--------|--------|-----------------------------|

|   | · | Enhanced      GPS/GSM location. |
|--------|--------|---------------------------------|

----

|   | · | Ankle      electronics, a wireless body-worn tracking  device; |
|--------|--------|----------------------------------------------------------------|

|   | · | OTD-Cuff,      a single-use, security-enabled band used to fasten the ankle electronics      to the offender; |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | Fixture      for charging up to 2 batteries at once;and |
|--------|--------|---------------------------------------------------------|

|   | · | Rechargeable      battery pack, a custom-tooled battery used to power the ankle      device. |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | · | The      Company has waterproofed the device by applying a chemical-based ‘weld’      around the back panel seam and augmenting the seal integrity of the rear      hatch of the device thus, significantly minimizing water ingression into      the device. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      average battery operation time is approximately 14 hours.  The      Company has discovered the battery life can be extended if the electrical      connectivity between the battery and the device is      improved.  Each battery has contact pins which transmit the      power from the battery to the device.  However, these battery      pins at times become dirty, impeding transmitting the power from the      battery to the device that reduces operational time.  The      Company is currently in the process of implementing multiple enhancements      to improve the battery connectivity between the battery and the      device. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Company has encountered irregularities with the battery chargers due to a      manufacture’s Integrated Circuit (“IC”) chip design flaw resulting in      inconsistent charger behavior.   The battery charger issue      can only be fully addressed by replacement of these IC      chips.  The Company’s contract manufacturer is in the process of      swapping out these battery chargers from the field, replacing the IC chip,      and redeploying the charger. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | The      Company has experienced cellular issues due to the GPS antenna currently      used in the device.  The Company is redesigning and will install      a new cellular antenna that will improve coverage and enhance tracking      offenders using the device. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      current strap design of the device uses custom security screws covered by      cosmetic caps.  Usability improvements have been implemented for      both the screws and the caps.  The Company has noticed devices      becoming damaged as a result of screws becoming stripped.  The      improvements to the attachment mechanism have dramatically reduced the      likelihood to strip screws and have made the strap easier to      install.  The cosmetic cap improvements have made it easier for      authorized personnel to remove the cap; thus, avoiding the early potential      to scar outer housing of the OTD when being removed from the      ankle.  Enhancing the strap design with new screws will mitigate      the stripping of screws and damaging of the device when it is being      removed. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  Patent      Title                                                                                                           | ApplicationPatent      Number                     | Filing      / Issue Dates | StatusExpiration      Date                              |
|-----------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------|---------------------------|---------------------------------------------------------|
|  Emergency      Phone With Single Button activation                                                                          |  7,251,471                                   |  7/31/07             |  2018                                              |
| Remote      Tracking and Communication Device                                                                                     | 11/202,427                                        | 8/10/05                   | Issued      (have not yet received the expiration date) |
| Remotely      Controllable Thermostat                                                                                             | 6,260,765                                         | 7/17/01                   | 2020                                                    |
| Emergency      Phone with Alternate Number Calling Capability                                                                     | 7,092,695                                    | 8/15/06              | 2018                                               |
| Multiple      Emergency Response ServicesCombination      Emergency Phone and Personal Audio Device                               | 6,285,867                                         | 9/4/01                    | 2018                                                    |
| Alarm      and Alarm Management System for Remote Tracking Devices                                                                | 11/489,992                                        | 7/14/06                   |  Pending                                           |
| A      Remote Tracking Device and a System and Method for Two-Way Voice      Communication Between Device and a Monitoring Center |  11/486,989                                  |  7/14/06             |  Pending                                           |
| A      Remote Tracking System with a Dedicated Monitoring Center                                                                  |  11/486,976                                  |  7/14/06             |  Pending                                           |
| Remote      Tracking System and Device with Variable Sampling                                                                     | 11/486,991                                        |  7/14/06             |  Pending                                           |
| Methods      for Establishing Emergency Communications Between a Communications Device      and a Response Center                 | 11/830,398                                        | 7/30/07                   | Pending                                                 |
|                                                                                                                              |                                              |                      |                                                    |
| The      following table shows international patents:                                                                        |                                              |                      |                                                    |
| Patent Title                                                                                                                      | Patent      Number /      Jurisdiction            | Filing / Issue Dates      | Status/Expiration      Date                             |
| Remote      Tracking and Communication Device                                                                                | PCT/US2006/030432(Patent      Cooperation Treaty) |  8/4/06              |  Pending                                           |
|            Emergency Phone with Single-Button Activation                                            | ZL      01807350.6(China)                         |  10/5/05             |  2021                                              |
| Emergency      Phone with Single-Button Activation                                                                                | EP      01924386.4(European      Union)           |  3/28/01             |  Pending                                           |
|            Emergency Phone with Single-Button Activation                                                 | JP      2001-571568(Japan)                        |  3/28/01             |  Pending                                           |
| Alarm      and Alarm Management System for Remote Tracking Devices                                                           | PCT/US2007/072736(Patent      Cooperation Treaty) |  7/3/07              |  Pending                                           |
| A      Remote Tracking Device and a System and Method for Two-Way Communication      Between the Device and a Monitoring Center   | PCT/US2007/072740(Patent      Cooperation Treaty) |  7/3/07              |  Pending                                           |
| A      Remote Tracking System with a Dedicated Monitoring Center                                                                  | PCT/US2007/072743(Patent      Cooperation Treaty) |  7/3/07              |  Pending                                           |
| Remote      Tracking System and Device with Variable Sampling and Sending Capabilities      Based on Environmental Factors        | PCT/US2007/072746(Patent      Cooperation Treaty) |  7/3/07              |  Pending                                           |

----

| Patent Title                                                         | Application      /Patent Number | Filing / Issue Dates |
|----------------------------------------------------------------------|---------------------------------|----------------------|
| Interference      Structure for Emergency Response System Wristwatch |  6,366,538                 |  4/2/02         |
| Emergency      Phone for Automatically Summoning                     | 6,226,510                       | 5/1/01               |
| Panic      Button Phone                                              | 6,044,257                       | 3/28/00              |

|  Mark                                                      | Application      Number | RegistrationNumber |  Status/Next Action               |
|-----------------------------------------------------------------|-------------------------|--------------------|----------------------------------------|
| MOBILE911                                                       | 75/615,118              | 2,437,673          | Registered                             |
| MOBILE911SIREN      WITH 2-WAY VOICE COMMUNICATION & DESIGN | 76/013,886              | 2,595,328          | Registered                             |
| WHEN      EVERY SECOND MATTERS                                  | 76/319,759              | 2,582,183          | Registered                             |
| MOBILEPAL                                                       | 78/514,031              | 3,035,577          | Registered                             |
| HOMEPAL                                                         | 78/514,093              | 3,041,055          | Registered                             |
| PAL      SERVICES                                               | 78/514,514              | 3,100,192          | Registered                             |
| REMOTEMDX                                                       | 78/561,796              |               | Allowed-Awaiting      Statement of Use |
| TRACKERPAL                                                      | 78/843,035              | 3,345,878          | Registered                             |
| MOBILE911                                                       | 78/851,384              | 3,212,937          | Registered                             |
| TRACKERPAL                                                      | CA      1,315,487       |               | Pending                                |
| TRACKERPAL                                                      | MX      805,365         | 960954             | Registered                             |

----

|   | · | ProTech      Monitoring Inc., Odessa, FL – This company has satellite tracking software      technology that operates in conjunction with the GPS and wireless      communication networks. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | ISecuretrac      Inc., Omaha, NE – This company supplies electronic monitoring equipment      for tracking and monitoring persons on pretrial release, probation,      parole, or work release. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Sentinel      Security and Communications, Inc., Rochester NY– This company supplies      monitoring and supervision solutions for the offender      population. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Omni      Link, Alpharetta, GA – This company provides a one-piece device combined      with GPS and cellular networks to electronically track an      individual. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Item      5. | Market      for Common Equity and Related Stockholder Matters and Small Business      Issuer Purchase of EquitySecurities |
|--------------|---------------------------------------------------------------------------------------------------------------------------|

|                  |   | High   |   |   | Low    |   |
|-----------------------|--------|--------|--------|--------|--------|--------|
| Fiscal Year      2006 |   |   |   |   |   |   |
| First      Quarter    |   | $      | 0.90   |   |   | $      | 0.75 |   |
| Second      Quarter   |   | $      | 0.70   |   |   | $      | 0.55 |   |
| Third      Quarter    |   | $      | 1.85   |   |   | $      | 1.56 |   |
| Fourth      Quarter   |   | $      | 2.06   |   |   | $      | 1.99 |   |
|                  |   |   |   |   |   |   |   |   |
| Fiscal Year      2007 |   |   |   |   |   |   |   |   |
| First      Quarter    |   | $      | 1.63   |   |   | $      | 1.51 |   |
| Second      Quarter   |   | $      | 1.54   |   |   | $      | 1.40 |   |
| Third      Quarter    |   | $      | 1.69   |   |   | $      | 1.60 |   |
| Fourth      Quarter   |   | $      | 2.84   |   |   | $      | 2.40 |   |

----

|   | · | 750,000      shares were issued in June 2007 pursuant to registration rights covenants      contained in a securities purchase agreement; the Company was late in      filing a registration statement covering the securities sold under the      agreement to a single investor within the agreed upon time following the      issuance of the shares.  The 750,000 additional shares were      issued as a penalty for the delay in filing the registration      statement.  Based on the market price of the Company’s common      stock on the date of issue, the Company booked an expense of $663,000 in      connection with this penalty payment.  The recipient of these      shares represented in the original securities purchase agreement that it      was an accredited investor as defined in Rule 501 under the Securities      Act.  These shares of common stock were issued without      registration under the Securities Act in reliance on Section 4(2) of the      Securities Act and the rules and regulations promulgated thereunder,      including Regulation D and Rule 506.  There were no      non-accredited investors involved in this  issuance. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 500,000      shares were issued in July 2007 to ADP Management Corporation (“ADP      Management”), an affiliate of the Company, as inducement for ADP      Management to extend an existing line-of-credit      agreement.  Based on the market price of the Company’s common      stock on the date of issue, the Company booked an expense associated with      this payment of $800,000.  See “Certain Relationships and      Related Transactions and Director Independence.”  ADP Management      is an entity owned and controlled by Messrs. Derrick and Dalton, two      officers and directors of the Company. See also notes to “Summary      Compensation Table” under “Item 10, Executive Compensation” at page 39 of      this Report.  These shares of common stock were issued without      registration under the Securities Act in reliance on Section 4(2) of the      Securities Act and the rules and regulations promulgated      thereunder.  Both of the principal officers and owners of ADP      Management are officers and directors of RemoteMDx, and as such, were      accredited investors with respect to this transaction.  There      were no non-accredited investors involved in this issuance of      shares. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 100,000      shares valued at $168,750 were approved for issuance to an officer of the      Company as consideration for stock options the officer forfeited at the      request of the Company during 2006.  The shares have not been      delivered to the officer and consequently, the officer cannot currently      vote, sell, or assign the shares.  These shares of common stock      were issued without registration under the Securities Act in reliance on      Section 4(2) of the Securities Act and the rules and regulations      promulgated thereunder.  The recipient of the shares was an      officer of the Company at the time of the issuance; as such, he was an      accredited investor with respect to these shares.  There were no      non-accredited investors involved in this issuance of    shares. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | 494,333      shares valued at $886,479 were issued from October 2006 to July 2007 to      eight unaffiliated consultants for consulting services provided to the      Company.  These consulting services consisted of services from      sales and marketing introductions and related services, public relations      and investor relation services.  These shares of common stock      were issued without registration under the Securities Act in reliance on      Section 4(2) of the Securities Act and the rules and regulations      promulgated thereunder.  In each case, the shares were issued      pursuant to privately negotiated transactions with entities who had      provided service to the Company; there was no public offering of      securities; no general solicitation or general advertising was made or      done in connection with the issuances; and the shares were issued in paper      certificate form, with appropriate restrictive legends prominently affixed      on the certificates. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 425,000      shares valued at $777,750 were issued in April 2007 for public relations      services.  These shares of common stock were issued without      registration under the Securities Act in reliance on Section 4(2) of the      Securities Act and the rules and regulations promulgated      thereunder.  These shares were issued pursuant to a privately      negotiated transaction to an entity which had provided services to the      Company.  There was no public offering of      securities.  Additionally, no general solicitation or general      advertising was made or done in connection with the issuance, and the      shares were issued in paper certificate form, with appropriate restrictive      legends prominently affixed on the certificates.  Subsequently,      the Company registered the resale of 125,000 of these shares in a      registration statement filed with the SEC, which was declared effective      September 19, 2007. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 60,000      shares valued at $109,800 were issued in April 2007 to a company for      product design services.  These shares of common stock were      issued without registration under the Securities Act in reliance on      Section 4(2) of the Securities Act and the rules and regulations      promulgated thereunder.  These shares were issued pursuant to a      privately negotiated transaction to an entity that had an existing      relationship with the Company and which had provided services to the      Company.  There was no public offering of      securities.  Moreover, no general solicitation or general      advertising was made or done in connection with the issuance, and the      shares were issued in paper certificate form, with appropriate restrictive      legends prominently affixed on the      certificates.   Subsequently, the Company registered the      resale of these shares in a registration statement filed with the SEC,      which was declared effective September 19,2007. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 88,520      shares valued at $131,010 were issued in July 2007 to Futuristic Medical      Devices, LLC (“Futuristic”) to settle amounts owed as royalties due on      previously performed monitoring services.  In addition, we      issued 1,100,000 shares to Futuristic valued at $1,628,000 to terminate      the Company’s obligation to pay royalties with respect to future      monitoring revenue on units sold or distributed by Futuristic on behalf of      the Company.  The Company has no continuing obligation to      Futuristic under the terminated agreement. These shares of common stock      were issued without registration under the Securities Act in reliance on      Section 4(2) of the Securities Act and the rules and regulations      promulgated thereunder.  These shares were issued pursuant to a      privately negotiated transaction in settlement of amounts owed or that may      be owed as royalty payments, and there was no public offering of      securities.  Futuristic is an accredited investor.  No      general solicitation or general advertising was made or done in connection      with the issuance of the shares, and the shares were issued in paper      certificate form, with appropriate restrictive legends prominently affixed      on the certificates.  Subsequently, the Company registered the      resale of these shares in a registration statement filed with the SEC,      which was declared effective September 19,2007. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 600,000      shares valued at $888,000 were issued in July 2007 to PFK Development      Group, Ltd. (“PFK”) to settle amounts owed on past and future royalties.      The Company has no continuing obligation to PFK under the terminated      consulting agreement.  These shares of common stock were issued      without registration under the Securities Act in reliance on Section 4(2)      of the Securities Act and the rules and regulations promulgated      thereunder.  PFK is an accredited investor.  These      shares were issued pursuant to a privately negotiated settlement of an      obligation of the Company.  In this transaction, there was no      public offering of securities; no general solicitation or general      advertising was made or done in connection with the issuance; and the      shares were issued in paper certificate form, with appropriate restrictive      legends prominently affixed on thecertificates. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | On      February 2, 2007, the Company issued 160,000 shares to HGR Enterprises,      LLC (“HGR”) valued at $196,800, in connection with the settlement of a      lawsuit between HGR and Michael Sibbett on the one hand, and the Company      and SecureAlert, Inc., on the other hand, and agreed to register the      resale of those shares by HGR.  We also issued 40,000 shares      valued at $51,600 to Liberty Capital, LLC for services in connection with      settling the lawsuit.  These shares of common stock were issued      without registration under the Securities Act in reliance on Section 4(2)      of the Securities Act and the rules and regulations promulgated      thereunder.  These shares were issued pursuant to a privately      negotiated transaction in settlement of litigation.  There was      no public offering of these securities, and no general solicitation or      general advertising was made or done in connection with the      issuance.  The shares were issued in paper certificate form,      with appropriate restrictive legends prominently affixed on the      certificates.  Subsequently, the Company registered the resale      of these shares in a registration statement filed with the SEC, which was      declared effective September 19,2007. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 6,694,329      shares of common stock were issued upon conversion of the Company’s Series      A Preferred stock from October 2006 through September 2007. Each share of      Series A Preferred stock may be converted at the holder’s option at any      time into 370 shares of common stock.  These shares of common      stock were issued without registration under the Securities Act in      reliance on Sections 3(a)(9) and 4(2) of the Securities Act and the rules      and regulations promulgated thereunder.  The shares of common      stock were issued to individuals who were already security holders of the      Company and were issued pursuant to the terms of the rights and      preferences of the preferred class of securities being      converted.  These shares were issued pursuant to a privately      negotiated transaction.  There was no public offering of      securities, and no general solicitation or general advertising was made or      done in connection with the issuances.  No cash consideration      was paid in connection with the conversion of the preferred      stock. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 351,824      shares of common stock were issued upon conversion of the Company’s Series      B Preferred stock in November and December 2006.  Each share of      Series B Preferred stock is convertible at any time into shares of common      stock.  The number of shares of common stock into which each      share of Series B Preferred stock may be converted is determined by      dividing the original purchase price paid per share of Series B Preferred      stock, namely $3.00, by the conversion price.  These shares of      common stock were issued without registration under the Securities Act in      reliance on Sections 3(a)(9) and 4(2) of the Securities Act and the rules      and regulations promulgated thereunder.  The recipients of the      common shares were accredited investors and were already security holders      of the Company.  The common shares were issued pursuant to the      terms of the rights and preferences of the preferred class of securities      that were converted, and there was no public offering of      securities.  Additionally, no general solicitation or general      advertising was made or done in connection with the issuances, and no cash      consideration was paid in connection with the conversion of the preferred      stock. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 17,293,463      shares of common stock were issued upon conversion of the Company’s Series      C Preferred stock from January through March 2007.  The holders      of the Series C Preferred stock converted those shares at a conversion      rate of $1.68 per common share issued in the      conversion.   These shares of common stock were issued      without registration under the Securities Act in reliance on Sections      3(a)(9) and 4(2) of the Securities Act and the rules and regulations      promulgated thereunder.  The shares of common stock were issued      to individuals who were already security holders of the      Company.  These shares were issued pursuant to privately      negotiated transactions.  There was no public offering of      securities, no general solicitation or general advertising was made or      done in connection with the issuances, and no consideration was paid in      connection with the conversion of the preferred  stock. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      November 2006 and March 2007, 3,081,000 shares were issued for $6,162,000      in cash in a private placement of common stock and 7,189,000 common stock      purchase warrants to five accredited investors who had previously invested      in the Company.  Each investor paid $2.00 per share and received      warrants to purchase common stock at an exercise price of $2.00 per share      for five years.  Shares issued in this offering, including      shares issuable upon the future exercise of warrants included in the      offering were subject to registration rights.  A registration      statement covering 3,000,000 such shares and 7,000,000 shares issuable      under the warrants was subsequently filed by the Company and declared      effective by the Securities and Exchange Commission on September 19,      2007.  The initial issuance of the shares of common stock and      the warrants were done without registration under the Securities Act in      reliance on Section 4(2) of the Securities Act and the rules and      regulations promulgated thereunder.  Each investor signed a      purchase agreement in which the investor made representations to the      Company that included being an accredited investor, and purchasing for the      investor’s own account and not with a view to distribute the      shares.  These shares were issued pursuant to privately      negotiated transactions.  There was no public offering of      securities.  No general solicitation or general advertising was      made or done in connection with the issuance, and the shares and warrants      were issued in paper certificate form, with appropriate restrictive      legends prominently affixed on thecertificates. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | 15,466,763      shares were issued upon the exercise of warrants between December 2006 and      September 2007.  The exercise prices ranged from $0.40 to $1.85      per share.  The warrants had been granted in connection with      services rendered to the Company.   These shares of common      stock were issued without registration under the Securities Act in      reliance on Section 4(2) of the Securities Act and the rules and      regulations promulgated thereunder.  These shares were issued      pursuant to privately negotiated transactions with individuals and      entities that had provided services to the Company.  There was      no public offering of securities in connection with these      issuances.  Additionally, no general solicitation or general      advertising was made or done in connection with the issuance, and the      shares issued upon exercise of the warrants were issued in paper      certificate form, with appropriate restrictive legends prominently affixed      on the certificates.  Subsequently, the Company registered the      resale of 2,767,043 of the shares in a registration statement filed with      the SEC, which was declared effective September 19,  2007. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 2,854,453      shares of common stock were issued upon the exercise of previously granted      and outstanding stock options providing $2,800,700 in cash to the      Company.  The options were exercised in October and November      2007.  The exercise prices ranged from $0.54 to $1.73 per      share.  The options were granted to employees, officers, and      directors of the Company pursuant to plans approved by the      stockholders. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 175,753      shares of common stock were issued for SecureAlert Series A Preferred      stock. |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | 15,000      shares of common stock were issued in October 2007 upon the conversion of      RemoteMDx Series B Preferred stock by an accredited      investor.  These shares of common stock were issued without      registration under the Securities Act in reliance on Sections 3(a)(9) and      4(2) of the Securities Act and the rules and regulations promulgated      thereunder.  The shares of common stock were issued to an      individual who was already a security holder of the      Company.  These shares were issued pursuant to a privately      negotiated transaction.  Additionally, there was no public      offering of securities, no general solicitation or general advertising was      made or done in connection with the issuances, and no consideration was      paid in connection with the conversion of the preferred    stock. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 70,000      shares of common stock were issued for services rendered valued at      $480,700. |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | · | Effective      December 1, 2007, the Company entered into a purchase agreement to acquire      51% of the issued and outstanding capital stock of Midwest Monitoring      & Surveillance, Inc. (“MM&S”) with, at the Company’s option, the      right to acquire the remaining 49% of MM&S capital stock. The      consideration for the initial purchase of 51% of the outstanding MM&S      shares, which gave control of MM&S to the Company, was $3,400,000,      consisting of $1,800,000 in notes payable and the balance through the      issuance of 438,000 shares of the Company’s common stock.  These      shares of common stock were issued without registration under the      Securities Act in reliance on Section 4(2) of the Securities Act and the      rules and regulations promulgated thereunder.  The shares were      issued in connection with a privately negotiated transaction with an      entity of which the Company was acquiring a controlling      interest.  There was no public offering of      securities.  Additionally, no general solicitation or general      advertising was made or done in connection with the issuance of these      shares, and the shares were issued in paper certificate form, with      appropriate restrictive legends prominently affixed on the      certificates. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Effective      December 1, 2007, the Company entered into a purchase agreement to acquire      51% of the issued and outstanding capital stock of Court Programs, Inc.,      Court Programs of Northern Florida, Inc., and Court Programs of Florida      (collectively, “Court Programs”) with, at the Company’s option, the right      to acquire the remaining 49% of Court Programs capital      stock.  The consideration for the initial purchase of 51% of the      outstanding Court Programs shares, which gave control of Court Programs to      the Company, was $1,145,500, consisting of $300,000 in a note payable and      the balance through the issuance of 212,000 shares of the Company’s common      stock.  These shares of common stock were issued without      registration under the Securities Act in reliance on Section 4(2) of the      Securities Act and the rules and regulations promulgated      thereunder.  The shares were issued in connection with a      privately negotiated transaction with an entity of which the Company was      acquiring a controlling interest.  There was no public offering      of securities.  Additionally, no general solicitation or general      advertising was made or done in connection with the issuance of these      shares, and the shares were issued in paper certificate form, with      appropriate restrictive legends prominently affixed on the      certificates. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Overview      - a general description of our business and the markets in which we      operate; our objectives; our areas of focus; and challenges and risks of      our business. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Recent      Developments – a brief description of business developments occurring      after the year ended September 30, 2007 and prior to the filing of this      Report. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Results      of Operations - an analysis of our Company’s consolidated results of      operations for the last two fiscal years presented in our consolidated      financial statements. Except to the extent that differences among our      operating segments are material to an understanding of our business as a      whole, we present the discussion in the MD&A on a consolidated      basis. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Liquidity      and Capital Resources - an analysis of cash flows; off-balance sheet      arrangements and aggregate contractual obligations; an overview of      financial position; and the impact of inflation and changing      prices. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Critical      Accounting Policies - a discussion of accounting policies that require      critical judgments and estimates. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Management      of expanded inventory base |
|--------|--------|--------------------------------------------|

|   | · | Control      of operations that are more geographically diverse than our prior      operations. |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | Collection      of added customer accounts. |
|--------|--------|---------------------------------------------|

|   | · | The      need to secure additional operating and working  capital. |
|--------|--------|--------------------------------------------------------------------|

|   | · | The      ability to reduce overhead costs and streamline  operations. |
|--------|--------|-----------------------------------------------------------------------|

|   | · | Potential      conflicts arising from the distribution of products or services from      providers who are or may be competitors of the  Company. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Availability      of trained support personnel. |
|--------|--------|-------------------------------------------------|

----

|   | · | The      sale of one patent for total consideration of $2,400,000; payment in full      was received in January 2008. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | The      acquisition of 51% of the issued and outstanding capital stock of      MM&S, together with the option, exercisable after January 1, 2009, and      prior to March 31, 2009, to acquire the remaining 49% of MM&S capital      stock. The consideration for the initial purchase of 51% of the      outstanding MM&S shares was $3,468,780, consisting of $1,800,000 of      cash and 438,000 shares of the Company’s common stock (valued at $3.81 per      share, the quoted market value on the date of the      transaction).  The RemoteMDx shares to be issued as part of the      consideration for the MM&S shares were placed in escrow, and were      subsequently released by the Company in March 2008.  See,      “Recent Sales of Unregistered Securities” beginning on page 13,      above. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      acquisition of Court Programs for $1,147,500, payable by delivery of a      note payable of $300,000 and 212,000 shares of the Company’s common      stock.  We also acquired an option to purchase the remaining      outstanding shares of Court Programs on or before March 1,      2009.  See, “Recent Sales of Unregistered Securities” beginning      on page 13, above. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | RemoteMDx      sold certain shares of common stock of Volu-Sol.  In addition,      Volu-Sol issued shares of its common stock for cash and for      services.  These transactions reduced RemoteMDx’s direct      ownership in Volu-Sol to less than 50%.  The following table      sets forth the beneficial ownership interest of RemoteMDx in Volu-Sol, as      of the dates indicated: |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                           |   | RemoteMDx Beneficial Ownershipof Volu-Sol Reagents      Corporation  |   |                |   |                                                |   |
|--------------------------------|--------|---------------------------------------------------------------------------|--------|---------------------|--------|-----------------------------------------------------|--------|
|        As of Period Ended |   | Direct      Ownership                                                     |   | Voting      Control |   | Total      Direct Ownership and Voting      Control |   | Total      Shares Issued and Outstanding |   | Percentage      Beneficially Owned by RemoteMDx |   |
| September      30, 2007        |   | 5,833,333                                                                 |   | 0                   |   | 5,833,333                                           |   | 11,170,833 |   | 52.2 | % |
| December      31, 2007         |   | 5,833,333                                                                 |   | 2,562,500           | 1      | 8,395,833                                           |   | 16,520,833 |   | 50.8 | % |
| March      31, 2008            |   | 2,833,333                                                                 |   | 5,562,500           | 2      | 8,395,833                                           |   | 17,965,277 |   | 46.7 | % |

|   | 1 | RemoteMDx      retains voting control over these shares through an irrevocable proxy      granted by the holders of record, who include directors, officers, and      affiliates of the Company. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2 | RemoteMDx      retains voting control by irrevocable proxy granted by the holders      identified in note 1, above, as well as Futuristic (3,000,000      shares). |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                             |   |  Year      Ended September 30, |        |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------|-------------|
|                                                                                             |   | 2007                                |        |   | 2006 |   |
|  Revenues                                                                                   |   | $                                   | 7,270,540   |   |   | $ | 1,070,141 |   |
| Cost      of revenues                                                                            |   |                                | 13,881,895  |   |   |   | 940,132 |   |
| Gross      profit (loss)                                                                         |   |                                | (6,611,355  | ) |   |   | 130,009 |   |
| Research      and development expenses                                                           |   |                                | 4,708,256   |   |   |   | 2,087,802 |   |
| Selling,      general  and administrative expenses                                     |   |                                | 16,116,535  |   |   |   | 16,025,373 |   |
| Loss      from operations                                                                        |   |                                | (27,436,146 | ) |   |   | (17,983,166 | ) |
| Other      income (expense):                                                                     |   |                                |        |   |   |   |   |   |
|          Gain      on sale of intellectual property |   |                                | 2,400,000   |   |   |   | - |   |
| Derivative      valuation gain (loss)                                                            |   |                                | -           |   |   |   | 629,308 |   |
| Loss      on revalued registration rights                                                        |   |                                | (663,000    | ) |   |   | - |   |
| Loss      on sale of asset                                                                       |   |                                | (228,800    | ) |   |   | - |   |
| Minority      interest allocation                                                                |   |                                | 153,772     |   |   |   | - |   |
| Interest      and other income                                                                   |   |                                | 602,176     |   |   |   | 97,190 |   |
| Interest      expense                                                                            |   |                                | (1,198,573  | ) |   |   | (6,541,077 | ) |
|      Net      loss                                                      |   |                                | (26,370,571 | ) |   |   | (23,797,745 | ) |

----

----

----

| Description of Obligation         |   | Annual Interest Rate |   | Maturity Date |                 | Principal      Balance as of9/30/07 |   |
|-----------------------------------|--------|----------------------|--------|---------------|----------------------|-------------------------------------|--------|
| Advances      from ADP Management |   |                 | 11     | %             | August      31, 2009 |                                | $      | 239,763 | (1) |
| Note      to Stockholder          |   |                 | 5      | %             | January      2004    |                                |   | 84,838 |   |
| Note      to Stockholder          |   |                 | 5      | %             | January      2004    |                                |   | 84,838 |   |
| Bank      Line of Credit          |   |                 | 19.25  | %             | March      1, 2008   |                                |   | 3,858,985 | (2) |
| Total                             |   |                 |   |          |                 |                                | $      | 4,268,424 |   |

| (1) | By      agreement dated August 19, 2004, ADP Management, an entity owned and      controlled by Messrs. Derrick and Dalton, provided a $500,000 line of      credit to the Company.  During the year ended September 30,      2007, borrowings on the line of credit increased by $195,214 due to a      monthly management fee, that includes the salaries of Mr. Derrick and Mr.      Dalton, owed to ADP Management, and expenses incurred by ADP Management      that are reimbursable by the Company.  The Company made cash      repayments to ADP Management during fiscal year 2007 totaling      $503,310.  During the year ended September 30, 2007, the parties      increased the amount available under the line of credit from $500,000 to      $5,000,000, including any guarantees made by ADP Management. As      consideration for increasing the size of the line, ADP Management was      granted 500,000 restricted shares of the Company’s common stock and an      increase in the annual interest rate from 5% to  11%. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | As      of September 30, 2007, the outstanding balance on the line of credit was      $3,858,985.  The Company pays 8.25% interest to a bank and 11%      to entities that provided and arranged for the letters of credit resulting      in a total interest rate of 19.25%. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                         |   | Payments      Due By Period |      |
|------------------------------|--------|-----------------------------|-----------|
| Contractual      Obligations |   | Total                       |      |   | Less      Than1      Year |   |   | 1      – 3 Years |   |   | 3      – 5Years |   |   | More      than5      Years |   |
|                         |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Notes      payable           |   | $                           | 4,268,424 |   |   | $ | 4,028,661 |   |   | $ | 239,763 |   |   | $ | - |   |   | $ | - |   |
| Operating      leases        |   |                        | 704,253   |   |   |   | 398,858 |   |   |   | 270,823 |   |   |   | 34,572 |   |   |   | - |   |
| Total                        |   | $                           | 4,972,677 |   |   | $ | 4,427,519 |   |   | $ | 510,586 |   |   | $ | 34,572 |   |   | $ | - |   |

----

|   | · | Current      inventory quantities on hand; |
|--------|--------|--------------------------------------------|

|   | · | Product      acceptance in the marketplace; |
|--------|--------|---------------------------------------------|

|   | · | Customer      demand; |
|--------|--------|-----------------------|

|   | · | Historical      sales; |
|--------|--------|------------------------|

|   | · | Forecast      sales; |
|--------|--------|----------------------|

|   | · | Product      obsolescence; and |
|--------|--------|--------------------------------|

|   | · | Technological      innovations. |
|--------|--------|---------------------------------|

----

----

No. 159 requires that unrealized gains and losses onitems for which the fair value option has been elected be reported in earningsat each reporting date. SFAS No. 159 is effective for fiscal yearsbeginning after November 15, 2007 and is required to be adopted by theCompany beginning in the first quarter of fiscal 2009. Although the Company willcontinue to evaluate the application of SFAS No. 159, management does notcurrently believe adoption will have a material impact on the Company'sfinancial condition or operating results.

----

|                         | September 30, 2007 | September 30, 2006 |
|------------------------------|--------------------|--------------------|
|                         |               |               |
| Risk      free interest rate | 4.57%              | 4.59%              |
| Expected      life           | 5      Years       | 5      Years       |
| Cash      dividend yield     | -                  | -                  |
| Volatility                   | 142%               | 129%               |

|                                    |   | Shares      Under Option |      |   | Weighted      Average Exercise Price |   | Weighted      Average Remaining Contractual  Life |   | Aggregate      Intrinsic Value |   |
|-----------------------------------------|--------|--------------------------|-----------|--------|--------------------------------------|--------|-------------------------------------------------------------|--------|--------------------------------|--------|
|                                    |   |                     |      |   |                                 |   |                                                        |   |                           |   |
| Outstanding      at September 30, 2006  |   |                     | 3,607,500 |   |                                 | $      | 0.63                                                        |   | 3.63      Years                |   | $ | 5,567,276 |   |
|      Granted   |   |                     | 320,000   |   |                                 |   | 1.58                                                        |   | 4.53      Years                |   |   | 342,899 |   |
|      Exercised |   |                     | (462,500  | )      |                                 |   | 1.06                                                        |   | 2.93      Years                |   |   | 790,875 |   |
|      Forfeited |   |                     | (100,000  | )      |                                 |   | 0.60                                                        |   |  3.63      Years          |   |   | 217,000 |   |
|      Expired   |   |                     | (70,000   | )      |                                 |   | 1.46                                                        |   |  2.26      Years          |   |   | 97,650 |   |
| Outstanding      at September 30, 2007  |   |                     | 3,295,000 |   |                                 |   | 0.64                                                        |   |  3.97      Years          |   |   | 7,015,700 |   |
| Exercisable      at September 30, 2007  |   |                     | 1,140,000 |   |                                 |   | 0.69                                                        |   |  3.98      Years          |   |   | 2,365,649 |   |

|                                                                                                                                                             |   | September      30, 2006 |        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-------------|
|                                                                                                                                                             |   |                    |        |
| Net      loss applicable to common stockholders      – as reported                                                                                    |   | $                       | (24,440,257 | ) |
|                                                                                                                                                             |   |                    |        |   |
| Add:  intrinsic      value of employee stock-based compensation                                                                                        |   |                    | -           |   |
| Deduct:  total      employee stock-based compensation expense determined under fair value      based method for all awards, net of related tax effects |   |                    | (1,400,148  | ) |
|                                                                                                                                                             |   |                    |        |   |
| Net      loss applicable to common stockholders– pro forma                                                                                                 |   | $                       | (25,840,405 | ) |
| Basic      and diluted net loss per common share – as reported                                                                                             |   | $                       | (      0.44 | ) |
| Basic      and diluted net loss per common share – pro forma                                                                                               |   | $                       | (      0.46 | ) |

----

|   | · | Develop      and introduce functional and attractive product and service      offerings; |
|--------|--------|------------------------------------------------------------------------------------------|

|   | · | Increase      awareness of our brand and develop consumer  loyalty; |
|--------|--------|---------------------------------------------------------------------|

|   | · | Respond      to competitive and technologicaldevelopments; |
|--------|--------|------------------------------------------------------------|

|   | · | Build      an operational structure to support our business;  and |
|--------|--------|-------------------------------------------------------------------|

|   | · | Attract,      retain and motivate qualifiedpersonnel. |
|--------|--------|-------------------------------------------------------|

----

----

----

----

----

----

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

|   | · | Manipulation      of prices through prearranged matching of purchases and sales and false      and misleading press releases; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|

|   | · | “Boiler      room” practices involving high pressure sales tactics and unrealistic      price projections by inexperienced sales  persons; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

| Name                    | Age    | Position                                             |
|-------------------------|--------|------------------------------------------------------|
|                    |   |                                                 |
| David      G. Derrick   | 55     | Chief      Executive Officer and Chairman (Director) |
| James      J. Dalton    | 65     | President      and Vice Chairman (Director)          |
| Michael      G. Acton   | 44     | Chief      Financial Officer, Secretary-Treasurer    |
| Bruce      G. Derrick   | 50     | Chief      Technology Officer                        |
| Randy      E. Olshen    | 44     | President      of SecureAlert, Inc.                  |
| G.      Scott Horrocks  | 46     | President      of Volu-Sol Reagents Corporation      |
| Peter      McCall       | 50     | Director                                             |
| Robert      E. Childers | 63     | Director                                             |
| David      P. Hanlon    | 63     | Director                                             |
| Larry      G. Schafran  | 69     | Director                                             |

----

----

----

| The      Board of Directors |
|-----------------------------|

----

|   | · | Retain      qualified officers. |
|--------|--------|---------------------------------|

|   | · | Provide      overall corporate direction for the officers and also to provide direction      that is specific to the officer’s respective areas of      authority.  The level of compensation amongst the officer group,      in relation to one another, is also considered in order to maintain a high      level of satisfaction within the leadership group. We consider the      relationship that the officers maintain to be one of the most important      elements of the leadership group. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Provide      a performance incentive for theofficers. |
|--------|--------|-------------------------------------------------------|

|   | · | achievement      of specific goals; |
|--------|--------|-------------------------------------|

|   | · | professional      education and development; |
|--------|--------|----------------------------------------------|

|   | · | creativity      in the form of innovative ideas and analysis for new programs and      projects; |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | new      program implementation; |
|--------|--------|----------------------------------|

|   | · | attainment      of company goals, budgets, andobjectives; |
|--------|--------|-----------------------------------------------------------|

|   | · | results      oriented determination andorganization; |
|--------|--------|------------------------------------------------------|

|   | · | positive      and supportive direction for company personnel;  and |
|--------|--------|--------------------------------------------------------------------|

|   | · | community      involvement. |
|--------|--------|-----------------------------|

|   | · | Base      salary; |
|--------|--------|-------------------|

|   | · | Performance      bonus and commissions; |
|--------|--------|-----------------------------------------|

|   | · | Stock      options and stock awards |
|--------|--------|-------------------------------------|

|   | · | Employee      benefits in the form of: |
|--------|--------|----------------------------------------|

----

----

----

| Name      and Principal Position           | Year | Salary      ($) | Bonus      ($)                                           | Stock      Awards                                                    | Option      Grants                                                                     | Non-Equity      Incentive Plan Compensation | All      Other Compensation | Total      ($)                   |
|--------------------------------------------|------|-----------------|----------------------------------------------------------|----------------------------------------------------------------------|----------------------------------------------------------------------------------------|---------------------------------------------|-----------------------------|----------------------------------|
| (a)                                        | (b)  | (c)             | (d)                                                      | (e)                                                                  | (f)                                                                                    | (g)                                         | (h)                         | (i)                              |
| David      Derrick – CEO (1)         | 2007 | $240,000        | $              0 | $                0 | $        441,461                                                             | $0                                          | $94,370                     | $         775,831 |
|                                       | 2006 | $240,000        | $              0 | $321,428                                                             | $1,016,198                                                                             | $0                                          | $65,689                     | $1,643,315                       |
| Michael      Acton – CFO (2)         | 2007 | $100,000        | $25,000                                                  | $                0      | $                   0 | $0                                          | $18,313                     | $        143,313       |
|                                       | 2006 | $100,000        | $25,000                                                  | $       30,000                                                  | $        274,685                                                             | $0                                          | $17,030                     | $        446,715       |
| Jim      Dalton – President of       | 2007 | $240,000        | $              0 | $                0 | $        441,461                                                             | $0                                          | $12,130                     | $        693,591       |
| RemoteMDx,      Inc. (3)                   | 2006 | $240,000        | $              0 | $321,428                                                             | $1,016,198                                                                             | $0                                          | $16,298                     | $1,593,924                       |
| Randy      Olshen – President of     | 2007 | $200,000        | $              0 | $                0 | $                   0 | $0                                          | $14,353                     | $        214,353       |
| SecureAlert,      Inc. (4)                 | 2006 | $149,000        | $50,000                                                  | $                0 | $        549,369                                                             | $0                                          | $13,520                     | $        761,889       |
| G.      Scott Horrocks –President of | 2007 | $200,000        | $              0 | $                0 | $                   0 | $0                                          | $14,730                     | $        214,730       |
| Volu-Sol      Reagents Corporation (5)     | 2006 | $125,000        | $              0 | $                0 | $                   0 | $0                                          | $       3,380          | $        128,380       |

| (1) | During      the year ended September 30, 2007, the Company issued a 120-day option to      purchase 1,500,000 shares of common stock to Mr. Derrick valued at      $441,461 using the Black-Scholes option-pricing model.  Column      (h) includes additional compensation for health, dental, life, and vision      insurance paid on Mr. Derrick’s behalf by the Company.  In      addition, country club dues are also included.  Amounts shown do      not include consideration and fees paid to ADP Management in connection      with a line of credit agreement.  See Item 12 “Certain      Relationships and Related Transactions and Director      Independence.”  During the year ended September 30, 2006, the      Company issued 535,714 shares of common stock to Mr. Derrick valued at      $321,428.  In addition, the Company granted the following      warrants to Mr. Derrick:  500,000 warrants with an exercise      price of $0.56 per share valued at $342,830, the remaining 1,250,000 of      the 2,500,000 warrants with an exercise price of $0.54 per share vested      for a value of $536,026, and 250,000 warrants with an exercise price of      $0.60 per share valued at $137,342. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Mr.      Acton received bonuses in the amount of $25,000. Column (h) includes      additional compensation for health, dental, life, and vision insurance      paid on Mr. Acton’s behalf by the Company.  During the year      ended September 30, 2006, the Company issued 50,000 shares of common stock      to Mr. Acton valued at $30,000. The Company granted Mr. Acton 500,000      options at $0.60 per share valued at $274,685.  The 500,000      options would vest as follows:  250,000 vest upon deployment of      3,500 devices, 125,000 vest upon deployment of a total of 20,000 devices,      and 125,000 vest upon deployment of a total of 30,000      devices.  As of the date of this Report, 250,000 options had      vested and had been exercised for cash proceeds to the Company of      $150,000.  In addition, upon the successful deployment of 30,000      units, this compensation package will automatically renew with a new      exercise price set at the then current fair market  value. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | During      the year ended September 30, 2007, the Company issued a 120-day option to      purchase 1,500,000 shares of common stock to Mr. Dalton valued at $441,461      using the Black-Scholes option pricing method. Column (h) includes      additional compensation for health, dental, and vision insurance paid on      Mr. Dalton’s behalf by the Company.  During the year ended      September 30, 2006, the Company issued 535,714 shares of common stock to      Mr. Dalton valued at $321,428.  In addition, the Company granted      the following warrants to Mr. Dalton:  500,000 warrants with an      exercise price of $0.56 per share valued at $342,830, the remaining      1,250,000 of the 2,500,000 warrants with an exercise price of $0.54 per      share vested for a value of $536,026, and 250,000 warrants with an      exercise price of $0.60 per share valued at $137,342.  Amounts      shown do not include consideration and fees paid to ADP Management in      connection with the credit line agreement.  See Item 12 “Certain      Relationships and Related Transactions and Director      Independence.” |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Column      (h) includes additional compensation for health, dental, and vision      insurance paid on his behalf.  During the year ended September      30, 2006, the Company granted 1,000,000 options with an exercise price of      $0.60 per share valued at $549,369.  As of September 30, 2007,      200,000 of these options werevested. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Column      (h) includes amounts paid for health, dental, and vision      insurance. |
|-----|--------------------------------------------------------------------------------------|

----

| Options      and Warrants Awards | Stock      Awards                                                                               |
|----------------------------------|-------------------------------------------------------------------------------------------------|
| Name                             | Number      of Securities Underlying Unexercised Options and Warrants (#)      Exercisable | Number      of Securities Underlying Unexercised Options and      Warrants (#) Unexercisable | Equity      Incentive Plan Awards: Number of Securities Underlying Unexercised      Unearned Options and Warrants (#) | Option      and Warrants Exercise Price ($) | Option      and Warrants Expiration Date | Number      of Shares or Units of Stock That Have Not Vested (#) | Market      Value of Shares or Units of Stock That Have Not Vested ($) | Equity      Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights      That Have Not Vested (#) | Equity      Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units,      or Other Rights That Have Not Vested ($) |
| (a)                              | (b)                                                                                             | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
|  David      Derrick         |  0      (1)                                                                                |  1,000,000 |  0 |  $2.15      (1) |  8/28/2012      (1) |  1,000,000 |  $620,000 |  1,000,000 |  $620,000 |
|  Michael      Acton         |  350,000      (2)                                                                          |  250,000      (2) |  250,000      (2) |  $0.60      to $0.70 (2) |  Various      Dates (2) |  250,000 |  $542,500 |  250,000 |  $542,500 |
|  Jim      Dalton (3)        |  0      (1)                                                                                |  1,000,000 |  0 |  $2.15      (1) |  8/28/2012      (1) |  1,000,000 |  $620,000 |  1,000,000 |  $620,000 |
|  Randy      Olshen (4)      |  200,000                                                                                   |  800,000 |  800,000 |  $0.60 |  05/17/2011 |  800,000 |  1,736,000 |  800,000 |  1,736,000 |

|   | ___________________ |
|--------|---------------------|

|   | Note:  Market      value is based on the fair market value of our common stock on September      30, 2007 in the amount of $2.77 pershare. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| Name               | Grant Date | Exp. Date |   | Exercise Price |   |   | # of Warrants |   |      | Vested |   |   | Unvested |   |
|--------------------|------------|-----------|--------|----------------|--------|--------|---------------|--------|-----------|--------|--------|--------|----------|--------|
| David      Derrick | 8/29/2007  | 8/28/2012 |   | $              | 2.15   |   |          |   | 1,000,000 |   |   |   | 0        |   |   |   | 1,000,000 |   |
| Totals             |       |      |   |           |   |   |          |   | 1,000,000 |   |   |   | 0        |   |   |   | 1,000,000 |   |

| Name               | Grant Date | Exp. Date |   | Exercise Price |   |   | # of Warrants |   |    | Vested |   |   | Unvested |   |
|--------------------|------------|-----------|--------|----------------|--------|--------|---------------|--------|---------|--------|--------|--------|----------|--------|
| Michael      Acton | 8/25/2005  | 8/24/2010 |   | $              | 0.70   |   |          |   | 100,000 |   |   |   | 100,000  |   |   |   | 0 |   |
| Michael      Acton | 5/18/2006  | 5/17/2011 |   | $              | 0.60   |   |          |   | 500,000 |   |   |   | 250,000  |   |   |   | 250,000 |   |
| Totals             |       |      |   |           |   |   |          |   | 600,000 |   |   |   | 350,.000 |   |   |   | 250,000 |   |

----

| Name              | Grant Date | Exp. Date |   | Exercise Price |   |   | # of Warrants |   |      | Vested |   |   | Unvested |   |
|-------------------|------------|-----------|--------|----------------|--------|--------|---------------|--------|-----------|--------|--------|--------|----------|--------|
| James      Dalton | 8/29/2007  | 8/28/2012 |   | $              | 2.15   |   |          |   | 1,000,000 |   |   |   | 0        |   |   |   | 1,000,000 |   |
| Totals            |       |      |   |           |   |   |          |   | 1,000,000 |   |   |   | 0        |   |   |   | 1,000,000 |   |

| Name              | Grant Date | Exp. Date |   | Exercise Price |   |   | # of Options |   |      | Vested |   |   | Unvested |   |
|-------------------|------------|-----------|--------|----------------|--------|--------|--------------|--------|-----------|--------|--------|--------|----------|--------|
| Randy      Olshen | 5/18/2006  | 5/17/2011 |   | $              | 0.60   |   |         |   | 1,000,000 |   |   |   | 200,000  |   |   |   | 800,000 |   |
| Totals            |       |      |   |           |   |   |         |   | 1,000,000 |   |   |   | 200,000  |   |   |   | 800,000 |   |

| Name               | Grant Date | Exp. Date |   | Exercise Price |   |   | # of Options |   | Status    |
|--------------------|------------|-----------|--------|----------------|--------|--------|--------------|--------|-----------|
| David      Derrick | 3/6/2007   | 7/4/2007  |   | $              | 1.30   |   |         |   | 1,500,000 |   | Exercised |
| James      Dalton  | 3/6/2007   | 7/4/2007  |   | $              | 1.30   |   |         |   | 1,500,000 |   | Exercised |
| David      Derrick | 8/29/2007  | 8/28/2012 |   | $              | 2.15   |   |         |   | 1,000,000 |   | Unvested |
| James      Dalton  | 8/29/2007  | 8/28/2012 |   | $              | 2.15   |   |         |   | 1,000,000 |   | Unvested |
| Totals             |       |      |   |           |   |   |         |   | 5,000,000 |   |   |

| Name                            | Shares      Acquired on Exercise(#) | Value      Realized($) | Number      of Securities Underlying Unexercised Options at 9/30/2007      Exercisable/Unexercisable | Value      of Unexercised In-the-Money Options/SARs at 9/30/2007 ($)      Exercisable/Unexercisable      (1) |
|---------------------------------|-------------------------------------|------------------------|------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|
|  David      G. Derrick (2) |  6,386,155                     |  -                |  0/1,000,000                                                                                    |  $0/$620,000                                                                                            |
| James      J. Dalton (2)        | 6,386,155                           | -                      | 0/1,000,000                                                                                          | $0/$620,000                                                                                                  |
| Randy      Olshen (3)           | -                                   | -                      | 200,000/800,000                                                                                      | $434,000/$1,736,000                                                                                          |
| Michael      G. Acton (4)       | 100,000                             | -                      | 350,000/250,000                                                                                      | $749,500/$542,500                                                                                            |

| (1) | Value      is based on the fair market value of our common stock on September 30,      2007, in the amount of $2.77 pershare. |
|-----|-------------------------------------------------------------------------------------------------------------------------------|

| (2) | Mr.      Derrick and Mr. Dalton each hold 1,000,000 warrants with exercise prices      of $2.15 per share.  None of the 1,000,000 warrants were vested      at September 30, 2007.  During the year ended September 30,      2007, Mr. Derrick and Mr. Dalton each exercised 6,386,155 warrants with      exercise prices ranging from $0.54 to $1.30 per share.  Warrants      issued to ADP Management are included in both Mr. Derrick and Mr. Dalton’s      options in the table above. See “Certain Relationships and Related      Transactions.” |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | The      exercise price of these options is $0.60 per  share. |
|-----|---------------------------------------------------------------|

| (4) | The      exercise prices of these options range from $0.54 to $0.70 per      share. |
|-----|-------------------------------------------------------------------------------------|

----

| Name                            | Shares      Acquired on Exercise(#) | Value      Realized ($) | Number      of Securities Underlying Unexercised Options at 9/30/2007      Exercisable/Unexercisable | Value      of Unexercised In-the-Money Options/SARs at 9/30/2007 ($)      Exercisable/Unexercisable      (1) |
|---------------------------------|-------------------------------------|-------------------------|------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|
|  David      G. Derrick (2) |  -                             |  -                 |  4,886,155/0                                                                                    |  $6,954,925/$0                                                                                          |
| James      J. Dalton (2)        | -                                   | -                       | 4,886,155/0                                                                                          | $6,954,925/$0                                                                                                |
| Randy      Olshen (3)           | -                                   | -                       | 25,000/975,000                                                                                       | $34,570/$1,355,250                                                                                           |
| Bryan      Dalton (4)           | -                                   | -                       | 25,000/975,000                                                                                       | $34,570/$1,355,250                                                                                           |
| Michael      G. Acton (5)       | -                                   | -                       | 200,000/500,000                                                                                      | $274,000/$695,000                                                                                            |

| (1) | Value      is based on the fair market value of our common stock on September 30,      2006 in the amount of $1.99 pershare. |
|-----|------------------------------------------------------------------------------------------------------------------------------|

| (2) | Mr.      Derrick and Mr. Dalton hold 3,250,000 options with exercise prices ranging      from $0.54 to $0.60 per share. In addition, 1,636,155 options ranging from      $0.54 to $0.75 per share issued to ADP Management are included in both Mr.      Derrick and Mr. Dalton’s options in the table above. See “Certain      Relationships and RelatedTransactions.” |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | The      exercise price of these options is $0.60 per  share. |
|-----|---------------------------------------------------------------|

| (4) | The      exercise price of these options is $0.60 per  share. |
|-----|---------------------------------------------------------------|

| (5) | The      exercise prices of these options range from $0.54 to $0.70 per      share. |
|-----|-------------------------------------------------------------------------------------|

----

| Name(a)                |   | Fees      earned or paid in cash($)(b) |   |   | Stock      awards ($)(c) |   |   | Warrants      awards($)(d) |   |   | Non-equity      incentive plan compensation($)(e) |   |   | All      other compensation ($)(f) |   |   | Total($)(g) |   |
|------------------------|--------|----------------------------------------|--------|--------|--------------------------|--------|--------|----------------------------|--------|--------|---------------------------------------------------|--------|--------|------------------------------------|--------|--------|-------------|--------|
| Peter      McCall      |   | $                                      | 60,000 |   |                     |   | 0      |                       |   | $      | 78,372                                            |   |   | $                                  | 0      |   |        | $      | 0 |   |   | $ | 138,372 |   |
| Robert      Childers   |   | $                                      | 60,000 |   |                     |   | 0      |                       |   | $      | 156,744                                           |   |   | $                                  | 0      |   |        | $      | 0 |   |   | $ | 216,744 |   |
| Larry      G. Schafran |   | $                                      | 60,000 |   |                     |   | 0      |                       |   | $      | 0                                                 |   |   | $                                  | 0      |   |        | $      | 0 |   |   | $ | 60,000 |   |
| David      P. Hanlon   |   | $                                      | 60,000 |   |                     |   | 0      |                       |   | $      | 0                                                 |   |   | $                                  | 0      |   |        | $      | 0 |   |   | $ | 60,000 |   |

| Title      of Class | Name      and Address of Beneficial Owner                                     | Amount      and nature of beneficial ownership | Percent      of Class |
|---------------------|-------------------------------------------------------------------------------|------------------------------------------------|-----------------------|
| Common              | VATAS      Holdings GmbH(1)Friedrichstrasse      9510117      Berlin, Germany | 17,678,926                                     | 13.96%                |

| (1) | Includes      10,678,926 shares of common stock, and 7,000,000 shares issuable upon      exercise of warrants. |
|-----|----------------------------------------------------------------------------------------------------------------|

----

| Title of Class | Name of Beneficial Owner                               |   | Amount      and nature of beneficial      ownership |       |   | Percent of Class |   |
|----------------|--------------------------------------------------------|--------|-----------------------------------------------------|------------|--------|------------------|--------|
| Common         | David      G. Derrick (1)                              |   |                                                | 5,806,664  |   |             |   | 4.45 | % |
|           | James      Dalton (2)                                  |   |                                                | 5,718,387  |   |             |   | 4.38 | % |
|           | Michael      G. Acton (3)                              |   |                                                | 800,507    |   |             |   | * |   |
|           | Peter      McCall (4)                                  |   |                                                | 797,733    |   |             |   | * |   |
|           | Robert      Childers (5)                               |   |                                                | 1,068,657  |   |             |   | * |   |
|           | Larry      Schafran (6)                                |   |                                                | 157,800    |   |             |   | * |   |
|           | Randy      Olshen                                      |   |                                                | -          |   |             |   | * |   |
|           | David      Hanlon                                      |   |                                                | 195,035    |   |             |   | * |   |
|           | Officers      and Directors as a Group (8 persons) (7) |   |                                                | 10,176,500 |   |             |   | 7.80 | % |

| (1) | Mr.      Derrick is the Chief Executive Officer and Chairman of the Board of      Directors.  Includes 1,021,714 shares of common stock and      416,667 warrants that have vested. In addition, 4,368,283 shares of common      stock in the name of ADP Management, an entity controlled by Messrs.      Derrick and Dalton, are included. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Mr.      Dalton is the President of RemoteMDx and Vice President on the Board of      Directors.  Includes 933,437 shares of commons tock and 416,667      warrants that have been vested. In addition, 4,368,283 shares of common      stock in the name of ADP Management, an entity controlled by Messrs.      Derrick and Dalton, are included. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Mr.      Acton is the Chief Financial Officer of the  Company. |
|-----|----------------------------------------------------------------|

| (4) | Mr.      McCall is a director.  Includes 294,400 shares of common stock      and 503,333 shares issuable upon exercise of warrants held by Mr.      McCall. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Mr.      Childers is a director.  Includes (a) 343,143 shares of common      stock owned of record by the Robert E. Childers Living Trust and 255,514      shares owned of record by Mr. Childers.  In addition, 470,000      shares issuable upon exercise of stock warrants held by Mr. Childers have      been included. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Mr.      Schafran is a director.  Includes 7,800 shares of common stock      owned of record by Mr. Schafran.  In addition, 157,000 shares of      common stock issuable upon exercise of stock warrants held by Mr. Schafran      have been included. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Duplicate      entries eliminated. |
|-----|------------------------------------|

|   | · | All      compensation plans previously approved by security holders;      and |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | All      compensation plans not previously approved by security      holders. |
|--------|--------|-------------------------------------------------------------------------------|

| Plan category                                               | Number      of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted      average exercise price of outstanding options, warrants and rights | Number      of securities remaining available for future      issuance |
|-------------------------------------------------------------|--------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------|------------------------------------------------------------------------|
| Equity      compensation plans approved by security holders | 10,000,000                                                                                       | $1.35                                                                            | 9,855,000                                                              |

----

|   | - | has      been any time during the past three years employed by the Company or by      any parent or subsidiary of theCompany; |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------|

|   | - | has      accepted or has a family member who accepted any compensation from the      Company in excess of $60,000 during any period of twelve consecutive      months within the three years preceding the determination of independence,      other than compensation for board or board committee    service; |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | is      a family member of an individual who is, or at any time during the past      three years was, employed by the Company as an executive      officer; |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | is,      or has a Family Member who is, a partner in, or a controlling shareholder      or an executive officer of, any organization to which the Company made, or      from which the company received, payments for property or services in the      current or any of the past three fiscal years that exceed 5% of the      recipient's consolidated gross revenues for that year, or $200,000,      whichever is more: |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | is,      or has a family member who is, employed as an executive officer of another      entity where at any time during the past three years any of the executive      officers of the Company serve on the compensation committee of such other      entity; or |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | is,      or has a family member who is, a current partner of the Company's outside      auditor, or was a partner or employee of the Company's outside auditor who      worked on the Company's audit at any time during any of the past three      years. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (a) | Exhibits |
|-----|----------|

| Exhibit Number | Title of Document                                                                                                                                                                                                                                                                                             |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.01           | Articles      of Incorporation (incorporated by reference to the Company's Registration      Statement and Amendments thereto on Form 10-SB, effective December 1,      1997).                                                                                                                           |
| 3.01(1)        | Amendment      to Articles of Incorporation for Change of Name (previously filed as      Exhibit on Form 10-KSB for the year ended September 30, 2001)                                                                                                                                                   |
| 3.01(2)        | Amendment      to Articles of Incorporation Amending Rights and Preferences of Series A      Preferred Stock (previously filed as Exhibit on Form 10-KSB for the year      ended September 30, 2001)                                                                                                     |
| 3.01(3)        | Amendment      to Articles of Incorporation Adopting Designation of Rights and      Preferences of Series B Preferred Stock (previously filed as Exhibit on      Form 10-QSB for the six months ended March 31, 2002)                                                                                    |
| 3.01(4)        | Certificate      of Amendment to the Designation of Rights and Preferences Related to      Series A 10% Cumulative Convertible Preferred Stock of RemoteMDx, Inc.      (incorporated by reference to the Company’s annual report on Form 10-KSB      for the year ended September 30, 2001)        |
| 3.01(5)        | Certificate      of Amendment to the Designation of Rights and Preferences Related to      Series C 8% Convertible Preferred Stock of RemoteMDx, Inc. (incorporated      by reference to the Company’s Current Report on Form 8-K, filed with the      Commission on March 24, 2006)               |
| 3.01(6)        | Articles      of Amendment to Articles of Incorporation filed July 12, 2006 (previously      filed as exhibits to the Company’s current report on Form 8-K filed July      18, 2006, and incorporated herein by reference).                                                                        |
| 3.02           | Bylaws      (incorporated by reference to the Company’s Registration Statement on Form      10-SB, effective December 1, 1997)                                                                                                                                                                     |
| 3.03           | Articles      of Amendment to the Fourth Amended and Restated Designation of Right and      Preferences of Series A 10% Convertible Non-Voting Preferred Stock of      RemoteMDx, Inc. (previously filed as Exhibit on Form 10-QSB for the nine      months ended June 30, 2007, filed in August 2007).  |
| 3.04           | Articles      of Amendment to the Designation of Right and Preferences of Series A      Convertible Redeemable Non-Voting Preferred Stock of SecureAlert, Inc.      (previously filed as Exhibit on Form 10-QSB for the nine months ended June      30, 2007, filed in August 2007).                     |
| 4.01           | 2006      Equity Incentive Award Plan (previously filed in August 2006 the Form      10-QSB for the nine months ended June 30, 2006)                                                                                                                                                                     |

----

|          |                                                                                                                                                                                                                                                                                                                                                                             |
|--------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  9.01                                       | Voting      Trust Agreement (see Exhibit 10.24)                                                                                                                                                                                                                                                                                                                        |
|  10.01                                      | Distribution      and Separation Agreement (incorporated by reference to the Company's      Registration Statement and Amendments thereto on Form 10-SB, effective      December 1, 1997).                                                                                                                                                                                  |
| 10.02                                            | 1997      Stock Incentive Plan of the Company, (incorporated by reference to the      Company’s Registration Statement and Amendments thereto on Form 10-SB,      effective December 1, 1997).                                                                                                                                                                        |
| 10.03                                            | 1997      Transition Plan (incorporated by reference to the Company’s Registration      Statement and Amendments thereto on Form 10-SB, effective December 1,      1997).                                                                                                                                                                                             |
| 10.04                                            | Securities      Purchase Agreement for $1,200,000 of Series A Preferred Stock      (incorporated by reference to the Company’s Registration Statement and      Amendments thereto on Form 10-SB, effective December 1, 1997)                                                                                                                                          |
| 10.05                                            | Loan      Agreement (as amended) dated June 2001 between ADP Management and the      Company (incorporated by reference to the Company’s annual report on Form      10-KSB for the year ended September 30, 2001)                                                                                                                                                     |
| 10.06                                            | Loan      Agreement (as amended and extended) dated March 5, 2002 between ADP      Management and the Company, effective December 31, 2001 (filed as an      exhibit to the Company’s quarterly report on Form 10-QSB for the quarter      ended December 31, 2001)                                                                                                   |
| 10.07                                            | Agreement      with ADP Management, Derrick and Dalton (April 2003) (previously filed as      Exhibit on Form 10-QSB for the six months ended March 31,      2003)                                                                                                                                                                                                          |
| 10.08                                            | Security      Agreement between Citizen National Bank and the Company (previously filed      on Form 8-K in July 2006).                                                                                                                                                                                                                                                     |
| 10.09                                            | Promissory      Note between Citizen National Bank and the Company (previously filed on      Form 8-K in July 2006).                                                                                                                                                                                                                                                        |
| 10.10                                            | Common      Stock Purchase Agreement dated as of August 4, 2006 (previously filed as      an exhibit to the Company’s current report on Form 8-K filed August 7,      2006 and incorporated herein by reference).                                                                                                                                                     |
| 10.11                                            | Change      in Terms Agreement between Citizen National Bank and the Company      (previously filed as Exhibit on Form 10-KSB for the year ended September      30, 2006)                                                                                                                                                                                                   |
| 10.12                                            | Securities      Purchase Agreement between the Company and VATAS Holding GmbH, a German      limited liability company (previously filed on Form 8-K in November      2006).                                                                                                                                                                                                |
| 10.13                                            | Common      Stock Purchase Warrant between the Company and VATAS Holding GmbH dated      November 9, 2006 (previously filed as Exhibit on Form 10-QSB for the three      months ended December 31, 2006, filed in February 2007).                                                                                                                                           |
| 10.14                                            | Settlement      Agreement and Mutual Release between the Company and Michael Sibbett and      HGR Enterprises, LLC, dated as of February 1, 2007 (previously filed as      Exhibit on Form 10-QSB for the three months ended December 31, 2006, filed      in February 2007).                                                                                               |
| 10.15                                            | Distributor      Sales, Service and License Agreement between the Company and Seguridad      Satelital Vehicular S.A. de C.V., dated as of February 5, 2007 (previously      filed as Exhibit on Form 10-QSB for the three months ended December 31,      2006, filed in February 2007).                                                                                    |
| 10.16                                            | Distributor      Agreement between the Company and QuestGuard, dated as May 31,      2007.  Portions of this exhibit were redacted pursuant to a      request for confidential treatment filed with the Securities and Exchange      Commission (previously filed as Exhibit on Form 10-QSB for the nine months      ended June 30, 2007, filed in August 2007).  |

----

| 10.17                                     |   | Stock      Purchase Agreement between the Company and Midwest Monitoring &      Surveillance, Inc., dated effective December 1, 2007 (previously filed as      Exhibit on Form 10-KSB for the year ended September 30, 2007, filed in      January 2008).                                                              |
|-------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.18                                     |   | Stock      Purchase Agreement between the Company and Court Programs, Inc., Court      Programs of Florida Inc., and Court Programs of Northern Florida, Inc.,      dated effective December 1, 2007 (previously filed as Exhibit on Form      10-KSB for the year ended September 30, 2007, filed in January      2008).  |
|            10.19 |   | Sub-Sublease      Agreement between the Company and Cadence Design Systems, Inc., a Delaware      corporation, dated March 10, 2005.                                                                                                                                                                                       |
|       10.20 |   | Patent      Assignment Agreement between Futuristic Medical Devices, LLC, dated      September 14, 2007.                                                                                                                                                                                                                   |
|            10.21 |   | Patent      Assignment Agreement between Futuristic Medical Devices, LLC, dated      September 14, 2007.                                                                                                                                                                                                                   |
|            10.22 |   | Patent      Assignment Agreement between Futuristic Medical Devices, LLC, dated      September 14, 2007.                                                                                                                                                                                                                   |
|            10.23 |   | Patent      Assignment Agreement between Futuristic Medical Devices, LLC, dated      December 20, 2007.                                                                                                                                                                                                                    |
|            10.24 |   | Stock      Purchase Agreement (sale of Volu-Sol Reagents Corporation shares to      Futuristic Medical, LLC), dated January 15, 2008, including voting      agreement.                                                                                                                                                     |
|            10.25 |   | Change      in Terms Agreement between Citizen National Bank and the Company, dated      March 14, 2008.                                                                                                                                                                                                                   |
|            10.26 |   | Statement      of Work from Wireless Endeavors (a/k/a/ neXaira or Puracom), dated January      8, 2005.                                                                                                                                                                                                                    |
|       10.27 |   | Terms      and Conditions of the agreement between Spectrum Design Solutions, Inc.      and the Company, dated April 30, 2007.                                                                                                                                                                                             |
|            10.28 |   | Contract      Agreement between Dyanmic Source Manufacturing and the Company, dated      September 18, 2006.                                                                                                                                                                                                               |
|            10.29 |   | Distribution      Agreement between Electronic Monitoring Services Corporation and the      Company, dated September 20, 2007.                                                                                                                                                                                             |
|            10.30 |   | Distribution      Agreement between Security Investment Holdings, LLC and the Company, dated      December 28, 2006.                                                                                                                                                                                                       |
| 14                                        |   | Code      of Business Conduct and Ethics (previously filed as Exhibit on Form 10-KSB      for the year ended September 30, 2007, filed in January2008).                                                                                                                                                                    |
| 23.1                                      |   | Consent      of Independent Registered Public Accounting Firm                                                                                                                                                                                                                                                              |
| 31.1                                      |   | Certification      of President and Chief Executive Officer under Section 302 of      Sarbanes-Oxley Act of 2002                                                                                                                                                                                                           |
| 31.2                                      |   | Certification      of Chief Financial Officer under Section 302 of Sarbanes-Oxley Act of      2002                                                                                                                                                                                                                         |
| 32                                        |   | Certification      under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. SECTION      1350)                                                                                                                                                                                                                       |

----

----

|   | RemoteMDx,      Inc.                       |
|--------|--------------------------------------------|
|   |                                       |   |
|   |                                       |   |
|   | By:                                        | /s/  David      G. Derrick |
|   |                                       |      David      G. Derrick, Chief Executive Officer |
|   |                                       |   |
|   | Dated:   June      18, 2008 |

| Signature                              |   | Title                                   | Date               |
|----------------------------------------|--------|-----------------------------------------|--------------------|
|                                   |   |                                    |               |
|                                   |   |                                    |               |
| /s/  DavidDerrick            |   | Director,      Chairman, and            | June      18, 2008 |
| David      G. Derrick                  |   | Chief      Executive Officer            |               |
|                                   |   | (principal      executive officer)      |               |
|                                   |   |                                    |               |
|                                   |   |                                    |               |
| /s/  James Dalton            |   | Director,      Vice Chairman, President | June      18, 2008 |
| James      Dalton                      |   |                                    |               |
|                                   |   |                                    |               |
|                                   |   |                                    |               |
| /s/  Peter McCall            |   | Director                                | June      18, 2008 |
| Peter      McCall                      |   |                                    |               |
|                                   |   |                                    |               |
|                                   |   |                                    |               |
| /s/  Robert E.      Childers |   | Director                                | June      18, 2008 |
| Robert      E. Childers                |   |                                    |               |
|                                   |   |                                    |               |
|                                   |   |                                    |               |
| /s/  Larry G.      Schafran  |   | Director                                | June      18, 2008 |
| Larry      G. Schafran                 |   |                                    |               |
|                                   |   |                                    |               |
|                                   |   |                                    |               |
| /s/  David P.    Hanlon      |   | Director                                | June      18, 2008 |
| David      P. Hanlon                   |   |                                    |               |
|                                   |   |                                    |               |
| /s/  Michael G.    Acton     |   | Chief      Financial Officer            | June      18, 2008 |
| Michael      G. Acton                  |   | (principal      accounting officer)     |               |

----

|   | RemoteMDx,      Inc.Consolidated      Financial Statements (As Restated)September      30, 2007 and 2006 |
|--------|----------------------------------------------------------------------------------------------------------|

----

----

|                                                                     | Page        |
|--------------------------------------------------------------------------|-------------|
|                                                                     |        |
| Report      of Independent Registered Public Accounting Firm             | F -      3  |
|                                                                     |        |
| Consolidated Balance Sheet (As Restated)                                 | F -      4  |
|                                                                     |        |
| Consolidated Statements of Operations (AsRestated)                       | F -      6  |
|                                                                     |        |
| Consolidated Statements of Stockholders’ Equity (As      Restated) | F -      7  |
|                                                                     |        |
| Consolidated Statements of Cash Flows (AsRestated)                       | F -      11 |
|                                                                     |        |
| Notes      to Consolidated Financial Statements (As Restated)            | F -      14 |

----

| HANSEN, BARNETT & MAXWELL,      P.C.A      Professional CorporationCERTIFIED PUBLIC ACCOUNTANTS                               |   |  Registered      with the Public CompanyAccounting      Oversight Board                                                                                                                                                                           |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 5      Triad Center, Suite 750Salt      Lake City, UT 84180-1128Phone:      (801) 532-2200Fax:      (801) 532-7944www.hbmcpas.com |   |                                                |
|                                                                                                                              |   |                                                                                                                                                                                                                                                   |

----

----

| Assets                                                                                                    |   |
|-----------------------------------------------------------------------------------------------------------|--------|
|                                                                                                      |   |   |   |
| Current      assets:                                                                                      |   |   |   |
| Cash                                                                                                      |   | $ | 5,556,275 |   |
| Accounts      receivable, net of allowance for doubtful accounts of      $163,000                         |   |   | 4,498,812 |   |
| Inventories,      net of reserve of $46,906 (note 2)                                                      |   |   | 51,359 |   |
| Receivables      (note 3)                                                                                 |   |   | 605,174 |   |
| Prepaid      expenses and other assets                                                                    |   |   | 318,195 |   |
| Total      current assets                                                                                 |   |   | 11,029,815 |   |
|                                                                                                      |   |   |   |   |
| Property      and equipment, net of accumulated depreciation and amortization of      $1,112,018 (note 2) |   |   | 1,430,768 |   |
| Monitoring      equipment, net of accumulated depreciation of $1,388,515 (note      4)                    |   |   | 3,739,474 |   |
| Other      assets                                                                                         |   |   | 36,632 |   |
|                                                                                                      |   |   |   |   |
| Total      assets                                                                                         |   | $ | 16,236,689 |   |

----

----

| Liabilities and      Stockholders’ Equity                                                                            |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                       |   |   |   |
| Current      liabilities:                                                                                                  |   |   |   |
| Bank      line of credit (note 6)                                                                                          |   | $ | 3,858,985 |   |
| Accounts      payable                                                                                                      |   |   | 3,065,187 |   |
| Accrued      expenses (note 5)                                                                                             |   |   | 1,026,068 |   |
| Deferred      revenue                                                                                                      |   |   | 1,314,247 |   |
| Notes      payable (note 8)                                                                                                |   |   | 169,676 |   |
| Dividends      payable (note 9)                                                                                            |   |   | 298,667 |   |
| Total      current liabilities                                                                                             |   |   | 9,732,830 |   |
|                                                                                                                       |   |   |   |   |
| Long-term      liabilities:                                                                                                |   |   |   |   |
| Related-party      line of credit (note 7)                                                                                 |   |   | 239,763 |   |
| Total      liabilities                                                                                                     |   |   | 9,972,593 |   |
|                                                                                                                       |   |   |   |   |
| SecureAlert      Series A preferred stock (note 10)                                                                        |   |   | 3,590,000 |   |
| Minority      interest (note 11)                                                                                           |   |   | 1,396,228 |   |
| Stockholders’      equity:                                                                                           |   |   |   |   |
| Preferred      stock; 20,000,000 shares authorized; 9,397,144                                                              |   |   |   |   |
| Shares      designated; 10,602,856 shares undesignated.                                                                    |   |   |   |   |
| Series      A convertible preferred stock;  10% dividend,                                                        |   |   |   |   |
| not-voting      non-participating; $0.0001 par value, $200 stated value;                                                   |   |   |   |   |
| 40,000      shares designated;  19 shares issued and outstanding (aggregate      liquidation preference of $314) |   |   | 1 |   |
| Series      B convertible preferred stock; $0.0001 par value;                                                              |   |   |   |   |
| 2,000,000      shares designated; 12,999 shares issued and                                                                 |   |   |   |   |
| outstanding      (aggregate liquidation preference of $38,997)                                                             |   |   | 1 |   |
| Series      C convertible preferred stock; $0.0001 par value;                                                              |   |   |   |   |
| 7,357,144      shares designated; no shares outstanding                                                                    |   |   |   |   |
| (aggregate      liquidation preference of $0)                                                                              |   |   | - |   |
| Common      stock, $0.0001 par value, 175,000,000 shares                                                                   |   |   |   |   |
| authorized;      127,340,085 shares issued and outstanding                                                                 |   |   | 12,734 |   |
| Additional      paid-in capital                                                                                            |   |   | 142,238,576 |   |
| Deferred      compensation                                                                                                 |   |   | (7,468,998 | ) |
| Subscriptions      receivable                                                                                              |   |   | (407,500 | ) |
| Accumulated      deficit                                                                                                   |   |   | (133,096,946 | ) |
| Total      stockholders’ equity                                                                                      |   |   | 1,277,868 |   |
|                                                                                                                       |   |   |   |   |
| Total      liabilities and stockholders’ equity                                                                      |   | $ | 16,236,689 |   |

----

----

|                                                                                                                                                                    |   | 2007   |        |   | 2006   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Revenues:                                                                                                                                                               |   |   |        |   |   |   |
| Products                                                                                                                                                                |   | $      | 2,188,431   |   |   | $      | 678,541 |   |
| Monitoring      services                                                                                                                                                |   |   | 5,082,109   |   |   |   | 391,600 |   |
| Total      revenues                                                                                                                                                     |   |   | 7,270,540   |   |   |   | 1,070,141 |   |
| Cost      of revenues:                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Products                                                                                                                                                                |   |   | 3,784,515   |   |   |   | 370,468 |   |
| Monitoring      services                                                                                                                                                |   |   | 10,097,380  |   |   |   | 569,664 |   |
| Total      cost of revenues                                                                                                                                             |   |   | 13,881,895  |   |   |   | 940,132 |   |
|                                                                                                                                                                    |   |   |        |   |   |   |   |   |
| Gross      margin (deficit)                                                                                                                                             |   |   | (6,611,355  | )      |   |   | 130,009 |   |
| Operating      expenses:                                                                                                                                                |   |   |        |   |   |   |   |   |
| Selling,      general and administrative (including $8,074,126 and $8,453,840 of      compensation expense paid in stock or stock option / warrants,      respectively) |   |   | 16,116,535  |   |   |   | 16,025,373 |   |
| Research      and development                                                                                                                                           |   |   | 4,708,256   |   |   |   | 2,087,802 |   |
| Loss      from operations                                                                                                                                               |   |   | (27,436,146 | )      |   |   | (17,983,166 | ) |
|                                                                                                                                                                    |   |   |        |   |   |   |   |   |
| Other      income (expense):                                                                                                                                            |   |   |        |   |   |   |   |   |
| Derivative      valuation gain                                                                                                                                          |   |   | -           |   |   |   | 629,308 |   |
| Gain      on sale of intellectual property                                                                                                                              |   |   | 2,400,000   |   |   |   | - |   |
| Interest      income                                                                                                                                                    |   |   | 117,737     |   |   |   | 30,051 |   |
| Interest      expense (including $396,018 and $6,229,485 paid in stock and      warrants, respectively)                                                                 |   |   | (1,198,573  | )      |   |   | (6,541,077 | ) |
| Loss      on revalued registration rights                                                                                                                               |   |   | (663,000    | )      |   |   | - |   |
| Loss      on sale of asset                                                                                                                                              |   |   | (228,800    | )      |   |   | - |   |
| Minority      interest allocation                                                                                                                                       |   |   | 153,772     |   |   |   | - |   |
| Other      income                                                                                                                                                       |   |   | 484,439     |   |   |   | 67,139 |   |
| Net      loss                                                                                                                                                           |   |   | (26,370,571 | )      |   |   | (23,797,745 | ) |
| Series      A and C preferred stock dividends                                                                                                                           |   |   | (550,603    | )      |   |   | (642,512 | ) |
|                                                                                                                                                                    |   |   |        |   |   |   |   |   |
| Net      loss applicable to common stockholders                                                                                                                         |   | $      | (26,921,174 | )      |   | $      | (24,440,257 | ) |
| Net      loss per common share – basic and diluted                                                                                                                |   | $      | (0.26       | )      |   | $      | (0.44 | ) |
| Weighted      average common shares – basic and diluted                                                                                                           |   |   | 102,826,000 |   |   |   | 55,846,000 |   |

----

----

|                                                                     |   | Preferred Stock |    |   |     |   |   |     |   |   |         |   |   |   |   |
|--------------------------------------------------------------------------|--------|-----------------|---------|--------|----------|--------|--------|----------|--------|--------|--------------|--------|--------|--------|--------|
|                                                                     |   | Series A        |    |   | Series B |   |   | Series C |   |   | Common Stock |   |
|                                                                     |   | Shares          |    |   | Amount   |   |   | Shares   |   |   | Amount       |   |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at October 1, 2005                                          |   |            | 26,007  |   |     | $      | 3      |     |   |   | 1,369,157    |   |   | $      | 137    |   |   |   | - |   |   |   | - |   |   |   | 45,129,042 |   |   | $ | 4,513 |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock for:                                       |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion      of Series A Preferred stock                              |   |            | (10,843 | )      |     |   | (1     | )        |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 4,014,916 |   |   |   | 401 |   |
| Conversion      of Series B Preferred stock                              |   |            | -       |   |     |   | -      |     |   |   | (1,315,825   | )      |   |   | (132   | ) |   |   | - |   |   |   | - |   |   |   | 7,171,380 |   |   |   | 717 |   |
| Services                                                                 |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 5,846,428 |   |   |   | 585 |   |
| Cash                                                                     |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 6,883,334 |   |   |   | 688 |   |
| Debt      and accrued interest                                           |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 10,739,753 |   |   |   | 1,074 |   |
| Exercise      of options and warrants                                    |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 350,000 |   |   |   | 35 |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of Series C Preferred Stock for:                           |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Debt      and accrued interest                                           |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | 617,352 |   |   |   | 62 |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of warrants for:                                           |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Debt                                                                     |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Services                                                                 |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization      of deferred consulting and financing fees              |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of RemoteMDx Series C Preferred stock for cash             |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | 4,739,788 |   |   |   | 474 |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Record      beneficial conversion feature on notes                       |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of Series A and C Preferred stock for dividends            |   |            | 2,146   |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | 175,226 |   |   |   | 17 |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      stock dividend on SecureAlert Series A preferred    stock |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Subscriptions      receivable                                            |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                            |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at September  30, 2006                            |   |            | 17,310  |   |     | $      | 2      |     |   |   | 53,332       |   |   | $      | 5      |   |   |   | 5,532,366 |   |   | $ | 553 |   |   |   | 80,134,853 |   |   | $ | 8,013 |   |

----

----

|                                                                     |   | Additional      Paid-in Capital |        |   | Deferred      Financing and Consulting |   |       | Preferred      Stock Subscriptions Receivable |   |   | Accumulated      Deficit |   |
|--------------------------------------------------------------------------|--------|---------------------------------|-------------|--------|----------------------------------------|--------|------------|-----------------------------------------------|--------|--------|--------------------------|--------|
|                                                                     |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |
| Balance      at October 1, 2005                                          |   | $                               | 76,113,623  |   |                                   | $      | (3,363,126 | )                                             |   | $      | (504,900                 | )      |   | $ | (80,463,694 | ) |
|                                                                     |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |   |   |   |   |
| Issuance      of common stock for:                                       |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |   |   |   |   |
| Conversion      of Series A Preferred stock                              |   |                            | (400        | )      |                                   |   | -          |                                          |   |   | -                        |   |   |   | - |   |
| Conversion      of Series B Preferred stock                              |   |                            | (586        | )      |                                   |   | -          |                                          |   |   | -                        |   |   |   | - |   |
| Services                                                                 |   |                            | 3,983,022   |   |                                   |   | (1,935,000 | )                                             |   |   | -                        |   |   |   | - |   |
| Cash                                                                     |   |                            | 7,909,312   |   |                                   |   | -          |                                          |   |   | -                        |   |   |   | - |   |
| Debt      and accrued interest                                           |   |                            | 6,855,629   |   |                                   |   | (1,434,550 | )                                             |   |   | -                        |   |   |   | - |   |
| Exercise      of options and warrants                                    |   |                            | 251,965     |   |                                   |   | -          |                                          |   |   | -                        |   |   |   | - |   |
|                                                                     |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |   |   |   |   |
| Issuance      of Series C Preferred stock                                |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |   |   |   |   |
| Debt      and accrued interest                                           |   |                            | 1,037,090   |   |                                   |   | -          |                                          |   |   | -                        |   |   |   | - |   |
|                                                                     |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |   |   |   |   |
| Issuance      of warrants for:                                           |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |   |   |   |   |
| Debt                                                                     |   |                            | 255,012     |   |                                   |   | -          |                                          |   |   | -                        |   |   |   | - |   |
| Services                                                                 |   |                            | 5,108,869   |   |                                   |   | (2,776,889 | )                                             |   |   | -                        |   |   |   | - |   |
|                                                                     |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |   |   |   |   |
| Amortization      of deferred consulting and financing fees              |   |                            | -           |   |                                   |   | 6,860,477  |                                          |   |   | -                        |   |   |   | - |   |
|                                                                     |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |   |   |   |   |
| Issuance      of Remote MDX Series C Preferred stock for cash            |   |                            | 7,439,085   |   |                                   |   | -          |                                          |   |   | (1,712,565               | )      |   |   | - |   |
|                                                                     |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |   |   |   |   |
| Record      beneficial conversion feature on notes                       |   |                            | 2,786,364   |   |                                   |   | -          |                                          |   |   | -                        |   |   |   | (2,464,936 | ) |
|                                                                     |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |   |   |   |   |
| Issuance      of Series A and C Preferred stock for dividends            |   |                            | (18         | )      |                                   |   | -          |                                          |   |   | -                        |   |   |   | - |   |
|                                                                     |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |   |   |   |   |
| Preferred      stock dividend on SecureAlert Series A Preferred    stock |   |                            | (20,877     | )      |                                   |   | -          |                                          |   |   | -                        |   |   |   | - |   |
|                                                                     |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |   |   |   |   |
| Subscriptions      receivable                                            |   |                            | -           |   |                                   |   | -          |                                          |   |   | 2,217,465                |   |   |   | - |   |
|                                                                     |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |   |   |   |   |
| Net      loss                                                            |   |                            | -           |   |                                   |   | -          |                                          |   |   | -                        |   |   |   | (23,797,745 | ) |
|                                                                     |   |                            |        |   |                                   |   |       |                                          |   |   |                     |   |   |   |   |   |
| Balance      at September  30, 2006                            |   | $                               | 111,718,090 |   |                                   | $      | (2,649,088 | )                                             |   | $      | -                        |   |   | $ | (106,726,375 | ) |

----

----

|                                                                     |   | Preferred Stock |    |   |     |   |   |     |   |   |         |   |   |   |   |
|--------------------------------------------------------------------------|--------|-----------------|---------|--------|----------|--------|--------|----------|--------|--------|--------------|--------|--------|--------|--------|
|                                                                     |   | Series A        |    |   | Series B |   |   | Series C |   |   | Common Stock |   |
|                                                                     |   | Shares          |    |   | Amount   |   |   | Shares   |   |   | Amount       |   |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at October 1, 2006                                          |   |            | 17,310  |   |     | $      | 2      |     |   |   | 53,332       |   |   | $      | 5      |   |   |   | 5,532,366 |   |   | $ | 553 |   |   |   | 80,134,853 |   |   | $ | 8,013 |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock for:                                       |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion      of Series A Preferred stock                              |   |            | (18,093 | )      |     |   | (1     | )        |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 6,694,329 |   |   |   | 670 |   |
| Conversion      of Series B Preferred stock                              |   |            | -       |   |     |   | -      |     |   |   | (40,333      | )      |   |   | (4     | ) |   |   | - |   |   |   | - |   |   |   | 351,824 |   |   |   | 35 |   |
| Conversion      of Series C Preferred stock                              |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | (5,764,488 | ) |   |   | (576 | ) |   |   | 17,293,463 |   |   |   | 1,729 |   |
| Registration      rights penalty                                         |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 750,000 |   |   |   | 75 |   |
| Extension      of related-party line of credit                           |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 500,000 |   |   |   | 50 |   |
| Services                                                                 |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 3,067,853 |   |   |   | 307 |   |
| Cash                                                                     |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 3,081,000 |   |   |   | 308 |   |
| Exercise      of options and warrants                                    |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 15,466,763 |   |   |   | 1,547 |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of warrants for services                                   |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization      of deferred consulting and financing fees              |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of Series A & C Preferred stock for dividends          |   |            | 802     |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | 232,122 |   |   |   | 23 |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      stock dividend on SecureAlert Series A preferred    stock |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Subscription      receivable                                             |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                            |   |            | -       |   |     |   | -      |     |   |   | -            |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                     |   |            |    |   |     |   |   |     |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at September  30, 2007                            |   |            | 19      |   |     | $      | 1      |     |   |   | 12,999       |   |   | $      | 1      |   |   |   | - |   |   | $ | - |   |   |   | 127,340,085 |   |   | $ | 12,734 |   |

----

|                                                                      |   | Additional      Paid- in Capital |        |   | Deferred      Financing      and Consulting |   |       | Preferred      Stock      Subscriptions      Receivable |   |   | Accumulated      Deficit |   |
|---------------------------------------------------------------------------|--------|----------------------------------|-------------|--------|---------------------------------------------|--------|------------|---------------------------------------------------------|--------|--------|--------------------------|--------|
|                                                                      |   |                             |        |   |                                        |   |       |                                                    |   |   |                     |   |
| Balance      at October 1, 2006                                           |   | $                                | 111,718,090 |   |                                        | $      | (2,649,088 | )                                                       |   | $      | -                        |   |   | $ | (106,726,375 | ) |
|                                                                      |   |                             |        |   |                                        |   |       |                                                    |   |   |                     |   |   |   |   |   |
| Issuance      of common stock for:                                        |   |                             |        |   |                                        |   |       |                                                    |   |   |                     |   |   |   |   |   |
| Conversion      of Series A Preferred stock                               |   |                             | (668        | )      |                                        |   | -          |                                                    |   |   | -                        |   |   |   | - |   |
| Conversion      of Series B Preferred stock                               |   |                             | (31         | )      |                                        |   | -          |                                                    |   |   | -                        |   |   |   | - |   |
| Conversion      of Series C Preferred stock                               |   |                             | (1,153      | )      |                                        |   | -          |                                                    |   |   | -                        |   |   |   | - |   |
| Registration      rights penalty                                          |   |                             | 662,925     |   |                                        |   | -          |                                                    |   |   | -                        |   |   |   | - |   |
| Extension      of related-party line of credit                            |   |                             | 799,950     |   |                                        |   | (800,000   | )                                                       |   |   | -                        |   |   |   | - |   |
| Services                                                                  |   |                             | 4,837,883   |   |                                        |   | -          |                                                    |   |   | -                        |   |   |   | - |   |
| Cash                                                                      |   |                             | 6,161,692   |   |                                        |   | -          |                                                    |   |   | -                        |   |   |   | - |   |
| Exercise      of options and warrants                                     |   |                             | 11,377,486  |   |                                        |   | -          |                                                    |   |   | (6,081,024               | )      |   |   | - |   |
|                                                                      |   |                             |        |   |                                        |   |       |                                                    |   |   |                     |   |   |   |   |   |
| Issuance      of warrants for services                                    |   |                             | 6,988,864   |   |                                        |   | (4,970,162 | )                                                       |   |   | -                        |   |   |   | - |   |
|                                                                      |   |                             |        |   |                                        |   |       |                                                    |   |   |                     |   |   |   |   |   |
| Amortization      of deferred consulting and financing fees               |   |                             | -           |   |                                        |   | 950,252    |                                                    |   |   | -                        |   |   |   | - |   |
|                                                                      |   |                             |        |   |                                        |   |       |                                                    |   |   |                     |   |   |   |   |   |
| Issuance      of Series A and C Preferred Stock for dividends             |   |                             | (220        | )      |                                        |   | -          |                                                    |   |   | -                        |   |   |   | - |   |
|                                                                      |   |                             |        |   |                                        |   |       |                                                    |   |   |                     |   |   |   |   |   |
| Preferred      stock dividends on SecureAlert Series A Preferred    stock |   |                             | (306,242    | )      |                                        |   | -          |                                                    |   |   | -                        |   |   |   | - |   |
|                                                                      |   |                             |        |   |                                        |   |       |                                                    |   |   |                     |   |   |   |   |   |
| Subscriptions      receivable                                             |   |                             | -           |   |                                        |   | -          |                                                    |   |   | 5,673,524                |   |   |   | - |   |
|                                                                      |   |                             |        |   |                                        |   |       |                                                    |   |   |                     |   |   |   |   |   |
| Net      loss                                                             |   |                             | -           |   |                                        |   | -          |                                                    |   |   | -                        |   |   |   | (26,370,571 | ) |
|                                                                      |   |                             |        |   |                                        |   |       |                                                    |   |   |                     |   |   |   |   |   |
| Balance      at September 30, 2007                                        |   | $                                | 142,238,576 |   |                                        | $      | (7,468,998 | )                                                       |   | $      | (407,500                 | )      |   | $ | (133,096,946 | ) |

----

----

|                                                                                            |   | 2007   |        |   | 2006   |   |
|-------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Cash      flows from operating activities:                                                      |   |
| Net      loss                                                                                   |   | $      | (26,370,571 | )      |   | $      | (23,797,745 | ) |
| Adjustments      to reconcile net loss to net cash used in operating operating      activities: |   |   |        |   |   |   |   |   |
| Depreciation      and amortization                                                              |   |   | 2,067,421   |   |   |   | 231,982 |   |
| Registration      payment arrangement expense                                                   |   |   | 663,000     |   |   |   | - |   |
| Amortization      of debt discount                                                              |   |   | -           |   |   |   | 1,223,092 |   |
| Amortization      of deferred consulting and financing services                                 |   |   | 950,252     |   |   |   | 6,826,077 |   |
| Amortization      of interest expense related to debt                                           |   |   | -           |   |   |   | 1,809,643 |   |
| Beneficial      conversion feature recorded as interest expense                                 |   |   | -           |   |   |   | 321,429 |   |
| Derivative      liability valuation                                                             |   |   | -           |   |   |   | (629,308 | ) |
| Common      stock issued for services                                                           |   |   | 4,641,390   |   |   |   | 2,048,606 |   |
| Common      stock issued to settle lawsuit                                                      |   |   | 196,800     |   |   |   | - |   |
| Common      stock issued for interest                                                           |   |   | -           |   |   |   | 88,100 |   |
| Common      stock options and warrants issued to board of    directors                          |   |   | 235,116     |   |   |   | - |   |
| Options      and warrants issued to consultants for services                                    |   |   | 900,664     |   |   |   | 2,366,378 |   |
| Options      and warrants issued to related party for services                                  |   |   | 882,922     |   |   |   | - |   |
| Impairment      of monitoring equipment                                                         |   |   | 1,454,784   |   |   |   | - |   |
| Interest      income on restricted cash                                                         |   |   | -           |   |   |   | 5,628 |   |
| Increase      in related-party line of credit for services                                      |   |   | 698,524     |   |   |   | 662,007 |   |
| Loss      on sale of receivable                                                                 |   |   | 228,800     |   |   |   | - |   |
| Minority      interest in net loss                                                              |   |   | (153,772    | )      |   |   | - |   |
| Change      in operating assets and liabilities:                                                |   |   |        |   |   |   |   |   |
| Accounts      receivable                                                                        |   |   | (4,498,184  | )      |   |   | (132,647 | ) |
| Interest      receivable                                                                        |   |   | 14,026      |   |   |   | (15,604 | ) |
| Inventories                                                                                     |   |   | (964,424    | )      |   |   | 7,300 |   |
| Prepaid      expenses and other assets                                                          |   |   | 1,594,090   |   |   |   | (2,476,280 | ) |
| Accounts      payable                                                                           |   |   | 1,369,022   |   |   |   | 338,880 |   |
| Accrued      liabilities                                                                        |   |   | 621,201     |   |   |   | (275,443 | ) |
| Deferred      revenues                                                                          |   |   | 1,296,430   |   |   |   | 278 |   |
| Net      cash used in operating activities                                                      |   |   | (14,172,509 | )      |   |   | (11,397,627 | ) |

----

----

|                                                                         |   | 2007   |       |   | 2006   |   |
|------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                                         |   |   |       |   |   |   |
| Cash      flows from investing activities:                                   |   |   |       |   |   |   |
| Purchase      of property and equipment                                      |   | $      | (573,174   | )      |   | $      | (1,093,690 | ) |
| Net      purchases of monitoring equipment                                   |   |   | (3,684,216 | )      |   |   | (2,241,800 | ) |
| Proceeds      from the disposal of fixed assets                              |   |   | -          |   |   |   | 1,507 |   |
| Net      cash used in investing activities                                   |   |   | (4,257,390 | )      |   |   | (3,333,983 | ) |
|                                                                         |   |   |       |   |   |   |   |   |
| Cash      flows from financing activities:                                   |   |   |       |   |   |   |   |   |
| Payments      on a related-party line of credit                              |   |   | (503,310   | )      |   |   | (635,073 | ) |
| Payments      of SecureAlert Series A dividends                              |   |   | (28,452    | )      |   |   | - |   |
| Payments      on a bank line of credit                                       |   |   | (366,126   | )      |   |   | (3,952 | ) |
| Proceeds      from bank line of credit                                       |   |   | 328,000    |   |   |   | 3,900,640 |   |
| Decrease      in subscriptions receivable                                    |   |   | -          |   |   |   | 504,900 |   |
| Payment      on notes payable                                                |   |   | -          |   |   |   | (2,043,623 | ) |
| Proceeds      from the exercise of options and warrants                      |   |   | 10,971,533 |   |   |   | 252,000 |   |
| Proceeds      from note payable                                              |   |   | -          |   |   |   | 517,500 |   |
| Proceeds      from the issuance of SecureAlert Series A Preferred      stock |   |   | -          |   |   |   | 600,000 |   |
| Proceeds      from the issuance of Series C Preferred stock                  |   |   | -          |   |   |   | 7,439,558 |   |
| Proceeds      from issuance of debt                                          |   |   | -          |   |   |   | 1,746,153 |   |
| Proceeds      from the issuance of subsidiary common stock                   |   |   | 1,550,000  |   |   |   | - |   |
| Proceeds      from sale of common stock                                      |   |   | 6,162,000  |   |   |   | 7,910,000 |   |
| Net      cash provided by financing activities                               |   |   | 18,113,645 |   |   |   | 20,188,103 |   |
|                                                                         |   |   |       |   |   |   |   |   |
| Net      increase (decrease) in cash                                         |   |   | (316,254   | )      |   |   | 5,456,493 |   |
|                                                                         |   |   |       |   |   |   |   |   |
| Cash,      beginning of year                                                 |   |   | 5,872,529  |   |   |   | 416,036 |   |
| Cash,      end of year                                                       |   | $      | 5,556,275  |   |   | $      | 5,872,529 |   |
|                                                                         |   |   |       |   |   |   |   |   |
|                                                                         |   |   |       |   |   |   |   |   |
| Supplemental      Cash Flow Information:                                     |   |   |       |   |   |   |   |   |
|                                                                         |   | 2007   |       |   | 2006   |   |
|                                                                         |   |   |       |   |   |   |   |   |
| Cash      paid for interest                                                  |   | $      | 802,554    |   |   | $      | 311,592 |   |

----

----

|                                                                                                                                                                |   | 2007   |    |   | 2006   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Supplemental      schedule of non-cash investing and financing    activities:                                                                                       |   |   |    |   |   |   |
|                                                                                                                                                                |   |   |    |   |   |   |
| Issuance      of 6,694,329 and 4,014,916 common shares, respectively, in exchange      for 18,093 and 10,843 shares of Series A Preferred stock,      respectively  |   | $      | 670     |   |   | $      | 401 |   |
|                                                                                                                                                                |   |   |    |   |   |   |   |   |
| Issuance      of 351,824 and 7,171,380 common shares, respectively, in exchange      for 40,333 and 1,315,825 shares of Series B Preferred stock,      respectively |   |   | 35      |   |   |   | 717 |   |
|                                                                                                                                                                |   |   |    |   |   |   |   |   |
| Issuance      of 17,293,463 and zero common shares, respectively, in exchange for      5,764,488 and zero shares of Series C Preferred stock,      respectively     |   |   | 1,729   |   |   |   | - |   |
|                                                                                                                                            |   |   |    |   |   |   |   |   |
| Issuance      of 500,000 and 4,057,500 common shares, respectively, for deferred      consulting and financing services                                             |   |   | 800,000 |   |   |   | 3,369,550 |   |
|                                                                                                                                            |   |   |    |   |   |   |   |   |
| Preferred      Series A and C stock dividends                                                                                                                       |   |   | 550,603 |   |   |   | 642,512 |   |
|                                                                                                                                                                |   |   |    |   |   |   |   |   |
| SecureAlert      Series A Preferred stock dividends accrued                                                                                                         |   |   | 298,667 |   |   |   | 20,877 |   |
|                                                                                                                                                                |   |   |    |   |   |   |   |   |
| Notes      payable and accrued interest converted into zero and 7,586,299 shares of      common stock, respectively                                                 |   |   | -       |   |   |   | 2,671,653 |   |
|                                                                                                                                            |   |   |    |   |   |   |   |   |
| Notes      payable and accrued interest converted into zero and 736,400 shares of      Series C Preferred stock, respectively                                       |   |   | -       |   |   |   | 1,037,152 |   |
|                                                                                                                                            |   |   |    |   |   |   |   |   |
| Series      B and C debentures converted into zero and 2,030,184 shares of common      stock, respectively                                                          |   |   | -       |   |   |   | 913,583 |   |
|                                                                                                                                                                |   |   |    |   |   |   |   |   |
| Issuance      of zero and 400,000 common shares, respectively, for establishing letters      of credit to secure a line of credit                                   |   |   | -       |   |   |   | 656,000 |   |
|                                                                                                                                            |   |   |    |   |   |   |   |   |
| Issuance      of 280,000 and zero shares of common stock, respectively, from the      increase in subscriptions receivable                                          |   |   | 407,500 |   |   |   | - |   |

----

----

| 1.     | Organizationand      Natureof      Operations | Explanatory      Note – Restatement of Consolidated Financial Statements The      Company has restated its consolidated financial statements as of September      30, 2007 and for the years ended September 2007 and 2006 for the following      reasons:    |
|--------|-----------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                          | 1)                                                                                                                                                                                                                                                                                 | The      Company reviewed its existing contracts for compliance with its revenue      recognition policies.  After reviewing its existing contracts,      the Company determined that $1,300,000 of revenues previously recorded for      the year ended September 30, 2007 did not meet the requirements of SAB 104      or EITF 00-21. The Company has recorded the $1,300,000 as deferred revenue      as of September 30, 2007, and will recognize this amount as revenue in      future periods.  The associated cost of revenues of $952,341 was      also deferred as of September 30, 2007, and will be recognized in future      periods.  |
|   |                                          | 2)                                                                                                                                                                                                                                                                                 | For      the year ended September 30, 2007, the Company previously reported      amortization expense of $826,425 and communication expenses of $2,266,627      for non-billable units as selling, general and administrative expenses. A      non-billable monitoring unit is a TrackerPAL device that did not generate      any monitoring service revenue for the respective period.  Upon      further review, the Company was unable to identify any accounting      pronouncements specifying the appropriate classification of these expenses      in the statement of operations.  Therefore, the Company looked      to general practices of similar companies and determined to reclassify      these expenses to cost of revenues.  The Company believes this      reclassification is appropriate because the non-billable monitoring units      do not directly meet the definition of research and development assets,      they are not promotional assets, and they are not used by the Company for      internal purposes. |

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| 1.     | Organizationand      Natureof      OperationsContinued | 3)                                                                                                                                  | During      the year ended September 30, 2007, the Company entered into settlement      agreements with two entities to terminate two existing royalty      agreements.  The settlement expense totaling $2,767,010 for the      two contracts comprised of $1,759,010 previously reflected as a royalty      settlement expense and $1,008,000 previously reflected as an operating      expense in the consolidated statement of operations for the year ended      September 30, 2007.  The Company was unable to identify any      accounting pronouncements specifying appropriate classification of these      expenses in the statement of operations.  Therefore, the Company      looked to general practices of similar companies and determined to      reclassify these expenses to cost of revenues.  The Company      believes this reclassification is appropriate because the $2,767,010 of      settlement expenses do not directly meet the definition of research and      development expenses, they are not promotional expenses, and they are not      general or administrative expenses. |
|--------|--------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                   |                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                   | The      effects of the restatement as of September 30, 2007 and for the years      ended September 30, 2007 and 2006 is asfollows: |

|                                                            |   | PreviouslyReported |         |   | As      Restated |   |
|-----------------------------------------------------------------|--------|--------------------|--------------|--------|------------------|--------|
|                                                            |   |               |         |   |             |   |
| Balance      Sheet Items - 2007:                                |   |               |         |   |             |   |
| Monitoring      equipment, net of accumulated      depreciation |   | $                  | 2,787,133    |   |             | $      | 3,739,474 |   |
| Total      assets                                               |   |               | 15,284,348   |   |             |   | 16,236,689 |   |
| Deferred      revenue                                           |   |               | 14,247       |   |             |   | 1,314,247 |   |
| Total      current liabilities                                  |   |               | 8,432,830    |   |             |   | 9,732,830 |   |
| Total      liabilities                                          |   |               | 8,672,593    |   |             |   | 9,972,593 |   |
| Accumulated      deficit                                        |   |               | (132,749,287 | )      |             |   | (133,096,946 | ) |
| Total      stockholders’ equity                           |   |               | 1,625,527    |   |             |   | 1,277,868 |   |
| Total      liabilities and Stockholders’      equity      |   |               | 15,284,348   |   |             |   | 16,236,689 |   |
|                                                            |   |               |         |   |             |   |   |   |
| Statement      of Operations Items - 2007:                      |   |               |         |   |             |   |   |   |
| Revenues                                                        |   |               | 8,570,540    |   |             |   | 7,270,540 |   |

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|                                                   |   | PreviouslyReported |        |   | As      Restated |   |
|--------------------------------------------------------|--------|--------------------|-------------|--------|------------------|--------|
| Cost      of revenues                                  |   | $                  | 8,974,174   |   |             | $      | 13,881,895 |   |
| Selling,      general and administrative      expenses |   |               | 20,217,587  |   |             |   | 16,116,535 |   |
| Royalty      settlement expense                        |   |               | 1,759,010   |   |             |   | - |   |
| Net      loss                                          |   |               | (26,022,912 | )      |             |   | (26,370,571 | ) |
| Net      loss attributable to common      stockholders |   |               | (26,573,515 | )      |             |   | (26,921,174 | ) |
| Net      loss per common share                         |   |               |        |   |             |   |   |   |
| -      basic and diluted                               |   |               | (0.26       | )      |             |   | (0.26 | ) |
|                                                   |   |               |        |   |             |   |   |   |
| Statement of Cashflows Items-      2007:               |   |               |        |   |             |   |   |   |
| Net      loss                                          |   |               | (26,022,912 | )      |             |   | (26,370,571 | ) |
| Inventories                                            |   |               | (12,083     | )      |             |   | (964,424 | ) |
| Deferred      revenues                                 |   |               | (3,570      | )      |             |   | 1,296,430 |   |

|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |   | BackgroundRemoteMDx,      Inc., was originally incorporated in Utah in July 1995 under the name      Volu-Sol, Inc. ("Volu-Sol").  Effective July 27, 2001, Volu-Sol      changed its name to RemoteMDx, Inc. RemoteMDx, Inc. and its subsidiaries      are collectively referred to as the "Company."                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   | Historically, the Company's strategy was to      capitalize on the global medical diagnostic industry by providing      "building block" stains and reagents. Although the Company continues to      conduct its medical stains and solutions business, over the past three      years, management has begun to pursue a more expanded role engaging in the      business of manufacturing and marketing mobile emergency and personal      security systems, and tracking devices used to monitor convicted offenders      in the criminal justice system. The Company's revenues for the year ended      September 30, 2007, were generated primarily from the sale, lease and      monitoring of parolee tracking devices, and secondarily from the sale of      medical stains and reagents. |

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| 1.     | Organizationand      Natureof      OperationsContinued | Going      ConcernThe      Company has incurred recurring net losses and negative cash flows from      operating activities for the years ended September 30, 2007 and      2006.  In addition, the Company has an accumulated deficit of      $133,096,946 as of September 30, 2007. 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 continue as a going concern, the Company must      generate positive cash flows from operating activities 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 exercise of      warrants and expanding its market for its tracking      products.  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 cash flows from operating activities or      obtain additional financing, it will be unable to continue the development      of its products and may have to cease operations. |
|--------|--------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
| 2.     | Summary      ofSignificantAccountingPolicies           | Principles      of ConsolidationThe      accompanying consolidated financial statements include the accounts of      RemoteMDx, Inc. and its subsidiaries, Volu-Sol Reagents Corporation and      SecureAlert, Inc. (collectively, the “Company”)  All      intercompany balances and transactions have been eliminated in      consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|   |                                                   | Use      of Estimates in the Preparation of Financial StatementsThe      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 StatementsThe      carrying amounts reported in the accompanying consolidated 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.  The carrying amounts of the Company’s debt      obligations approximate fair value as the interest rates approximate      market interest rates.                                                                                                                                                                                                                                                                  |

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| 2.     | Summary      ofSignificantAccountingPoliciesContinued | Concentration      of Credit RiskThe      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 and requires no collateral. Accordingly, the Company performs      ongoing credit evaluations of its customers' financial      condition. Based      upon the expected collectability of its accounts receivable, the Company      maintains an allowance for doubtful accounts receivable. The      Company had revenues from entities which represent more than 10% of the      Company’s total revenues as follows for the years ended September      30: |
|--------|-------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |

|           |   | 2007   |      |   | 2006   |   |
|----------------|--------|--------|-----------|--------|--------|--------|
| Company      A |   | $      | 3,229,760 |   |   | $      | - |   |
| Company      B |   |   | 928,800   |   |   |   | - |   |
| Company      C |   |   | -         |   |   |   | 228,437 |   |

|   |   | Cash      EquivalentsCash      equivalents consist of investments with original maturities to the Company      of three months or less.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|   |   | Accounts      ReceivableAccounts      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 cash is received.  A      trade receivable is considered to be past due if any portion of the      receivable balance has not been received by the Company within its normal      terms.  Interest income is not recorded on trade receivables      that are past due, unless that interest is  collected. |

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| 2.     | Summary      ofSignificantAccountingPolicies | InventoriesInventories      are recorded at the lower of cost or market, cost being determined on a      first-in, first-out ("FIFO") method. Substantially all items included in      inventory are finished goods and consist of the  following: |
|--------|----------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Continued                                    |                                                                                                                                                                                                                                               |   |

| Reagent      stains                     |   | $      | 98,265  |   |
|-----------------------------------------|--------|--------|---------|--------|
| Reserve      for inventory obsolescence |   |   | (46,906 | )      |
| Net      inventory                      |   | $      | 51,359  |   |

|   |   | General      inventory reserves are maintained for the possible impairment of the      inventory.  Impairment may be a result of slow moving or excess      inventory, product obsolescence or changes in the valuation of the      inventory. In determining the adequacy of reserves, management analyzes      the following, among other things:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
|   |   |  ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Current      inventory quantities on hand; |
|   |   |  ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Product      acceptance in the marketplace; |
|   |   |  ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Customer      demand; |
|   |   |  ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Historical      sales; |
|   |   |  ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Forecast      sales; |
|   |   |  ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Product      obsolescence; and |
|   |   |  ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Technological      innovations. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
|   |   | Any      modifications to these estimates of reserves are reflected in cost of      revenues within the statement of operations during the period in which      such modifications are determined necessary by management. Property      and EquipmentProperty      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 tnhree 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 are      capitalized.  When property and equipment are disposed of, any      gains or losses are included in the results of  operations. |

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| 2.     | Summary      of | Property      and equipment consisted of the following as of September 30,      2007: |
|--------|-----------------|--------------------------------------------------------------------------------------------|
|   | Significant     |                                                                                       |   |

|  Accounting | Equipment                     |   | $      | 1,453,661  |   |
|------------------|-------------------------------|--------|--------|------------|--------|
|  Policies   | Tooling      and dies         |   |   | 500,683    |   |
|  Continued  | Leasehold      improvements   |   |   | 358,029    |   |
|             | Furniture      and fixtures   |   |   | 230,413    |   |
|             |                          |   |   | 2,542,786  |   |
|             | Accumulated      depreciation |   |   | (1,112,018 | )      |
|             |                          |   |   |       |   |
|             |                          |   | $      | 1,430,768  |   |

|   |   | Depreciation      expense for the years ended September 30, 20007 and 2006, was $485,436 and      $129,868, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|   |   | Impairment      of Long-Lived Assets and GoodwillThe      Company reviews its long-lived assets for impairment when events or      changes in circumstances indicate that the book value of an asset may not      be recoverable and in the case of goodwill, at least annually, The Company      evaluates, at each balance sheet date, whether events and circumstances      have occurred which indicate possible impairment. The Company uses an      estimate of future undiscounted net cash flows of the related asset or      group of assets over the estimated remaining life in measuring whether the      assets are recoverable.  If the carrying amount of an asset      exceeds its estimated future cash flows, an impairment charge is      recognized for the amount by which the carrying amount exceeds the      estimated fair value of the asset.  Impairment of long-lived      assets is assessed at the lowest levels for which there are identifiable      cash flows that are independent of other groups of      assets.  Assets to be disposed of are reported at the lower of      the carrying amount or fair value, less the estimated costs to      sell.  During the years ended September 30, 2007 and 2006, the      Company disposed of $1,454,784 and $0, respectively, in monitoring      equipment that was initially used as test units and had served its useful      life.  This expense was recorded as research and development      expense. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|   |   | Revenue      RecognitionThe      Company’s revenue has historically been from three sources:      (i) monitoring services; (ii) monitoring device and other product      sales; and (iii) medical diagnostic stains  sales.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

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| 2.     | Summary      ofSignificantAccountingPoliciesContinued | Monitoring      ServicesMonitoring      services include two components: a) contracts in which the Company      provides monitoring services and leases devices to distributors or end      users in which the Company retains ownership of the leased devices; and b)      monitoring services purchased by distributors or end users who have      previously purchased devices and have opted to use the Company’s      monitoring services. The      Company leases its devices under one-year contracts with customers that      opt to use the Company’s monitoring services.  However, these      contracts may be cancelled by either party at anytime with 30 days      notice.  Under the Company’s standard leasing contract, the      leased device becomes billable on the date of activation or 21 days from      the date the device is assigned to the lessee, and remains billable until      the device is returned to the Company.  The Company recognizes      revenue on leased devices at the end of each month that monitoring      services have been provided.  In those circumstances in which      the Company receives payment in advance, the Company records these      payments as deferred revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|-------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|   |                                                  | Monitoring      Device Product SalesAlthough      not the focus of the Company’s business model, the Company sells its      monitoring devices in certain situations.  In addition, the      Company sells home security and Personal Emergency Response      Systems.  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 (including sales not being made outside the      normal payment terms) and collection is reasonably assured. When      purchasing products (such as TrackerPAL devices) from the Company,      customers may, but are not required to, enter into monitoring service      contracts.   The Company recognizes revenue on monitoring      services for customers that have previously purchased devices at the end      of each month that monitoring services have been provided. Multiple      Element ArrangementsThe      majority of the Company’s revenue transactions do not have multiple      elements. On occasion, the Company has revenue transactions that have      multiple elements (such as product sales and monitoring      services).  For revenue arrangements that have multiple      elements, the Company considers whether: (i) the delivered devices have      standalone value to the customer; (ii) there is objective and reliable      evidence of the fair value of the undelivered monitoring services, which      is generally determined by surveying the price of competitors’ comparable      monitoring services; and (iii) the customer does not have a general right      of return. |

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| 2.     | Summary      ofSignificantAccountingPoliciesContinued | Based      on these criteria, the Company recognizes revenue from the sale of devices      separately from the monitoring services to be provided to the      customer.  In accordance with EITF 00-21, if the fair value of      the undelivered element exists, but the fair value does not exist for one      or more delivered elements, then revenue is recognized using the residual      method. Under the residual method as applied to these particular      transactions, the fair value of the undelivered element (the monitoring      services) is deferred and the remaining portion of the arrangement (the      sale of the device) is recognized as revenue when the device is delivered      and all other revenue recognition criteria are met.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|-------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|   |                                                  | Medical      Diagnostic Stain SalesThe      Company recognizes medical diagnostic stains revenue when persuasive      evidence of an arrangement with the customer exists, title passes to the      customer and the customer cannot return the products, prices are fixed or      determinable (including sales not being made outside the normal payment      terms) and collection is reasonably assured. Other      MattersThe      Company considers an arrangement with payment terms longer than the      Company’s normal terms not to be fixed or determinable, and revenue is      recognized when the fee becomes due.  Normal payment terms for      the sale of monitoring services are 30 days, and normal payment terms for      device sales are between 120 and 180 days.  The Company sells      its devices and services directly to end users and to      distributors.  Distributors do not have general rights of      return.  Distributors have no price protection or stock      protection rights with respect to devices sold to them by the      Company.  Generally, title and risk of loss pass to the buyer      upon delivery of the devices. The collection terms for the diagnostic      stains and reagent product sales are net 30 days.  The Company      estimates its product returns based on historical experience and maintains      an allowance for estimated returns, which is recorded as a reduction to      accounts receivable and revenue. |

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| 2.     | Summary      of SignificantAccountingPoliciesContinued | Shipping      and handling fees are included in net revenues.  The related      freight costs and supplies directly associated with shipping products to      customers are included as a component of cost of revenues. Research and Development      CostsAll      expenditures for research and development are charged to expense as      incurred. These expenditures in both 2007 and 2006 were for the      development of SecureAlert’s TrackerPAL device and associated services.      For the years ended September 30, 2007 and 2006, research and development      expenses were $4,708,256 and $2,087,802, respectively. Included in the      $4,708,256 in research and development for the year ended September 30,      2007, is $1,454,784 in monitoring equipment disposed of during the year      that was initially used as test units and had served its useful      life. Advertising      CostsThe      Company expenses advertising costs as incurred.  Advertising      expense for the years ended September 30, 2007 and 2006, was $155,981 and      $118,300, respectively.                                                                                                                                            |
|--------|--------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |
|   |                                                   | Stock-Based      CompensationEffective      October 1, 2006, the Company adopted Statement of Financial Accounting      Standards (“SFAS”) No. 123R, using the modified prospective method. SFAS      No. 123R requires the recognition of the cost of employee services      received in exchange for an award of equity instruments in the financial      statements and is measured based on the grant date fair value of the      award. SFAS      No. 123R also requires the stock option compensation expense to be      recognized over the period during which an employee is required to provide      service in exchange for the award (the vesting period). Prior to adopting      SFAS No. 123R, the Company accounted for its stock-based compensation      plans under Accounting Principles Board Opinion ("APB") No. 25, Accounting      for Stock Issued to Employees. Under APB No. 25, generally no      compensation expense is recorded when the terms of the award are fixed and      the exercise price of the employee stock option equals or exceeds the fair      value of the underlying stock on the date of grant. The Company adopted      the disclosure-only provisions of SFAS No. 123, Accounting      for Stock-BasedCompensation. |

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| 2.     | Summary      of | Listed      below is the SFAS No. 123 disclosure table for the year ended September      30, 2006: |
|--------|-----------------|----------------------------------------------------------------------------------------------------|
|   | Significant     |                                                                                               |   |

|  Accounting Policies |                                                                                                                                                             |   | September      30, 2006 |        |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-------------|
|  Continued                | Net      loss applicable to common stockholders      – as reported                                                                                         |   | $                       | (24,440,257 | ) |
|                           |                                                                                                                                                             |   |                    |        |   |
|                           | Add:  intrinsic      value of employee stock-based compensation                                                                                        |   |                    | -           |   |
|                           | Deduct:  total      employee stock-based compensation expense determined under fair value      based method for all awards, net of related tax effects |   |                    | (1,400,148  | ) |
|                           |                                                                                                                                                             |   |                    |        |   |
|                           |                                                                                                                                                             |   |                    |        |   |
|                           | Net      loss applicable to common stockholders – pro forma                                                                                                |   | $                       | (25,840,405 | ) |
|                           |                                                                                                                                                             |   |                    |        |   |
|                           | Basic      and diluted net loss per common share – as reported                                                                                             |   | $                       | (.44        | ) |
|                           | Basic      and diluted net loss per common share – pro forma                                                                                               |   | $                       | (.46        | ) |

|   |   | For      the year ended September 30, 2007, the Company calculated compensation      expense of $900,664 related to the vesting of previously granted stock      options and additional options granted during the period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|   |   | For      options granted subsequent to October 1, 2006, the fair value of each      stock option grant is estimated on the date of grant using the      Black-Scholes option-pricing model. The Company granted 320,000 and      3,140,000 stock options to employees during the years ended September 30,      2007 and 2006, respectively.  The weighted average fair value of      stock options at the date of grant during the year ended September 30,      2007 and 2006, was $1.43 and $0.76, respectively. The expected life of      stock options represents the period of time that the stock options granted      are expected to be outstanding based on historical exercise trends. The      expected volatility is based on the historical price volatility of common      stock. The risk-free interest rate represents the U.S. Treasury bill rate      for the expected life of the related stock options. The dividend yield      represents the Company’s anticipated cash dividends over the expected life      of the stock options. |

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| 2.     | Summary      of Significant | The      following are the weighted-average assumptions used for options granted      during the years ended September 30, 2007 and 2006,  respectively: |
|--------|-----------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Accounting                  |                                                                                                                                                     |

|  Policies Continued |                                 |   | Years      EndedSeptember      30, |   |
|-------------------------------|--------------------------------------|--------|------------------------------------|--------|
|                          |                                 |   | 2007                               |   |   | 2006 |   |
|                          |                                 |   |                               |   |   |   |   |
|                          | Expected      cash dividend yield    |   |                               | -      |   |   |   | - |   |
|                          | Expected      stock price volatility |   |                               | 142%   |   |   |   | 129% |   |
|                          | Risk-free      interest rate         |   |                               | 4.57%  |   |   |   | 4.59% |   |
|                          | Expected      life of options        |   | 5      years                       |   |   | 5years |   |

|   |   | A      summary of stock option activity for the year ended September 30, 2007, is      presented below: |
|--------|--------|---------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                    |   |

|   |                                   |   |   |          |   | Weighted |   |  Weighted      Average |   |                  |
|--------|----------------------------------------|--------|--------|---------------|--------|----------|--------|-----------------------------|--------|-----------------------|
|   |                                   |   | Shares |          |   | Average  |   |  Remaining             |   |  Aggregate       |
|   |                                   |   | Under  |          |   | Exercise |   |  Contractual           |   |  Intrinsic       |
|   |                                   |   | Option |          |   | Price    |   |  Life                  |   |  Value           |
|   |                                   |   |   |          |   |     |   |                        |   |                  |
|   | Outstanding      at September 30, 2006 |   |   | 3,607,500     |   |     | $      | 0.63                        |   |                  |   |   |
|   | Granted                                |   |   |  320,000 |   |     |   | 1.58                        |   |                  |   |   |
|   | Exercised                              |   |   | (462,500      | )      |     |   | 1.06                        |   |                  |   |   |
|   | Forfeited                              |   |   | (100,000      | )      |     |   | 0.60                        |   |                  |   |   |
|   | Expired                                |   |   | (70,000       | )      |     |   | 1.46                        |   |                  |   |   |
|   | Outstanding      at September 30, 2007 |   |   | 3,295,000     |   |     |   | 0.64                        |   |  3.97      Years |   |      $7,015,700 |
|   | Exercisable      at September 30, 2007 |   |   | 1,140,000     |   |     |   | 0.69                        |   |  3.98      Years |   |       2,365,649 |

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| 2.     | Summary      of SignificantAccountingPoliciesContinued | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|   |                                                   | Net      Loss Per Common ShareBasic      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      attributable to common stockholders by the sum of the weighted-average      number of common shares outstanding and the weighted-average dilutive      common share equivalents outstanding.  The computation of      Diluted EPS does not assume exercise or conversion of securities that      would have an anti-dilutive effect.                                   Common      share equivalents consist of shares issuable upon the exercise of common      stock options and warrants, and shares issuable upon conversion of      preferred stock.  As of September 30, 2007 and 2006, there were      19,029,546 and 45,132,452 outstanding common share equivalents,      respectively, that were not included in the computation of diluted net      loss per common share as their effect would be    anti-dilutive. |
|   |                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|   |                                                   | Recent      Accounting PronouncementsIn      June 2006, the Financial Accounting Standards Board (“FASB”) issued      FASB Interpretation No. ("FIN") 48, Accounting for Uncertainty in Income      Taxes-an Interpretation of FASB Statement No. 109. FIN 48 clarifies      the accounting for uncertainty in income taxes by creating a framework for      how companies should recognize, measure, present, and disclose in their      financial statements uncertain tax positions that they have taken or      expect to take in a tax return. FIN 48 is effective for fiscal years      beginning after December 15, 2006, and is required to be adopted by      the Company beginning in the first quarter of fiscal 2008. Although the      Company will continue to evaluate the application of FIN 48, management      does not currently believe adoption will have a material impact on the      Company's financial condition or operating  results.                                                                                                                                                                                                                               |

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| 2.     | Summary      ofSignificantAccountingPoliciesContinued | In      September 2006, the FASB issued SFAS No. 157, Fair Value      Measurements, which defines fair value, provides a framework for measuring      fair value, and expands the disclosures required for fair value      measurements. SFAS No. 157 applies to other accounting pronouncements      that require fair value measurements; it does not require any new fair      value measurements. SFAS No. 157 is effective for fiscal years      beginning after November 15, 2007, and is required to be adopted by      the Company beginning in the first quarter of fiscal 2009. Although the      Company will continue to evaluate the application of SFAS No. 157,      management does not currently believe adoption will have a material impact      on the Company's financial condition or operating results.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------|-------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|   |                                                  | In February 2007, the FASB issued SFAS      No. 159, The Fair Value Option for Financial Assets and Financial      Liabilities-including an amendment of FASB Statement No. 115 ("SFAS      No. 159"). SFAS No. 159 allows companies to choose to elect      measuring eligible financial instruments and certain other items at fair      value that are not required to be measured at fair value. SFAS No. 159      requires that unrealized gains and losses on items for which the fair      value option has been elected be reported in earnings at each reporting      date. SFAS No. 159 is effective for fiscal years beginning after      November 15, 2007 and is required to be adopted by the Company      beginning in the first quarter of fiscal 2009. Although the Company will      continue to evaluate the application of SFAS No. 159, management does      not currently believe adoption will have a material impact on the      Company's financial condition or operatingresults. Effective      October 1, 2006, the Company adopted Statement of Financial Accounting      Standards (“SFAS”) No. 123R (“SFAS 123R”), using the modified prospective      method. SFAS 123R requires the recognition of the cost of employee      services received in exchange for an award of equity instruments in the      financial statements and is measured based on the grant date fair value of      the award. SFAS 123R also requires the stock option compensation expense      to be recognized over the period during which an employee is required to      provide service in exchange for the award (the vesting period). Prior to      adopting SFAS 123R, the Company accounted for its stock-based compensation      plans under Accounting Principles Board Opinion ("APB") No. 25,      "Accounting for Stock Issued to Employees" ("APB 25"). Under APB 25,      generally no compensation expense is recorded when the terms of the award      are fixed and the exercise price of the employee stock option equals or      exceeds the fair value of the underlying stock on the date of grant. The      Company adopted the disclosure-only provision of SFAS No. 123,"Accounting      for Stock-Based Compensation" ("SFAS123"). |

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| 3.     | Receivables | As      of September 30, 2007, the Company had $605,174 in      receivables.  Of this amount, $601,578 resulted from the sale of      three patents for a total of $2,400,000.  A description of each      patent sold is shown below: |
|--------|-------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |        |                                                                                                                                                                                                                                                       |   |

|   | Patent      Title                                                    |   | Patent      Number |      | Issue      Date |
|--------|----------------------------------------------------------------------|--------|--------------------|-----------|-----------------|
|   |                                                                 |   |               |      |            |
|   | Interference      Structure for Emergency Response System Wristwatch |   |               | 6,366,538 |            | 4/2/02 |
|   |                                                                 |   |               |      |            |   |
|   | Emergency      Phone for Automatically Summoning                     |   |               | 6,226,510 |            | 5/1/01 |
|   |                                                                 |   |               |      |            |   |
|   | Panic      Button Phone                                              |   |               | 6,044,257 |            | 3/28/00 |

|   |       | As      of September 30, 2007, the Company had received $1,800,000 of the sales      price in cash and the remaining $601,578 is reflected as a note      receivable, which includes accrued interest of $1,578.  The note      is due on March 15, 2008, and bears interest at 6% per    annum. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |       |                                                                                                                                                                                                                                                                                                       |   |
| 4.     | Monitoring | Monitoring      equipment at September 30, 2007, is as follows:                                                                                                                                                                                                                                            |
|   | Equipment  |                                                                                                                                                                                                                                                                                                       |   |

|   | Monitoring      equipment          |   | $      | 5,127,989  |   |
|--------|------------------------------------|--------|--------|------------|--------|
|   | Less      accumulated depreciation |   |   | (1,388,515 | )      |
|   | Monitoring      Equipment, net     |   | $      | 3,739,474  |   |

|   |   |                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |   | The      Company began leasing monitoring equipment to agencies for offender      tracking in April 2006 under operating lease      arrangements.  During the year ended September 30, 2007, the      Company had sold or leased 10,424 TrackerPAL devices.  The      monitoring equipment is depreciated using the straight-line method over an      estimated useful life of 3 years. |

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| 4.     | MonitoringEquipmentContinued | As      of September 30, 2007, the Company had monitoring equipment totaling      $952,341 which has been sold to customers and is located at customer’s      premises, but because the earnings process is not complete the associated      revenue has been deferred.  The Company does not continue to      depreciate monitoring equipment that has been sold to  customers. |
|--------|------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                         |                                                                                                                                                                                                                                                                                                                                                                                             |   |
|   |                         | Amortization      expense for the years ended September 30, 2007 and 2006, was $1,581,985      and $102,114, respectively.                                                                                                                                                                                                                                                                       |

| 5.     | Accrued  | Accrued      expenses consisted of the following as of September 30, 2007: |
|--------|----------|----------------------------------------------------------------------------|
|   | Expenses |                                                                       |   |

|   | Accrued      payroll and payroll taxes                    |   | $      | 282,350   |   |
|--------|-----------------------------------------------------------|--------|--------|-----------|--------|
|   | Accrued      communication costs                          |   |   | 234,448   |   |
|   | Accrued      legal expenses                               |   |   | 146,000   |   |
|   | Accrued      board of directors fees                      |   |   | 145,000   |   |
|   | Accrued      manufacturing costs                          |   |   | 79,415    |   |
|   | Accrued      interest                                     |   |   | 77,940    |   |
|   | Accrued      bonuses                                      |   |   | 30,000    |   |
|   | Accrued      commissions and other costs                  |   |   | 30,915    |   |
|   |      Total      accrued expenses |   | $      | 1,026,068 |   |

| 6.     | Bank      Line ofCredit | During      the year ended September 30, 2007, the Company had a $4,000,000 line of      credit with a bank.  The interest rate is 8.25% and the line of      credit matures on March 1, 2008.  The line of credit is secured      by letters of credit for a total of $4,000,000 and SecureAlert’s assets      including TrackerPAL products.  This line of credit can be      expanded up to $10,000,000 under certain terms and      conditions.  The letters of credit were provided as collateral      by four unrelated entities.  The entities received a total of      400,000 shares valued at $240,000 of the Company’s common stock and were      reimbursed $40,000 in cash for expenses related to establishing the      letters of credit.  In addition, the Company pays 11% annual      interest rate, paid monthly, on the line of credit to the entities that      provided the letters of credit.  As of September 30, 2007, the      outstanding balance of the line of credit was $3,858,985 and was due and      payable on March 1, 2008. |
|--------|-------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |

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| 7.     | Related      PartyTransactions | The      Company has entered into certain transactions with related parties. These      transactions consist mainly of financing transactions and consulting      arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|   |                           | Related      Party Advances PayableAs      of September 30, 2007, the Company owed $239,763 to ADP Management, an      entity owned and controlled by two of the Company’s officers and      directors, Mr. Derrick and Mr. Dalton, under a line-of-credit      agreement.  Outstanding amounts on the line of credit accrue at      11% and are due on August 31, 2009.  During the year ended      September 30, 2007, the Company increased the line of credit from $500,000      to $5,000,000, including any guarantees made by ADP      Management.  As a result, ADP Management was granted 500,000      restricted shares of the Company’s common stock and an increase in the      annual interest rate from 5% to 11%. During      the year ended September 30, 2007, the line of credit increased $698,524      due to a monthly management fee owed to ADP Management, including salaries      for Mr. Derrick and Mr. Dalton and expenses incurred by ADP Management      that are reimbursable by the Company. The Company made cash repayments      during the year of $503,310. Consulting      ArrangementsIn      March 2000, the Company agreed to pay consulting fees to ADP Management      for assisting the Company to develop its new business direction and      business plan and to provide introductions to strategic technical and      financial partners.  Under the terms of this agreement, ADP      Management was paid a consulting fee of $40,000 per month and the Company      agreed to reimburse the expenses incurred by ADP Management in the course      of performing services under the consulting arrangement. The      ADP Management agreement also requires ADP Management to pay the salaries      of Mr. Derrick as Chief Executive Officer and Chairman of the Board of      Directors of the Company and Mr. Dalton as president and Vice-Chairman of      the Board of Directors of the Company.  The Board of Directors,      which at the time did not include either of these individuals, approved      both of these arrangements. |

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| 8.     | Notes      Payable | As      of September 30, 2007, the Company had unsecured notes of $169,676 payable      to former SecureAlert stockholders, with interest at 5%, payable in      installments of $80,000 per month until paid in full. These notes are      currently in default, although these notes are subject to an offset      provision which has never been provided to the Company. |
|--------|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |               |                                                                                                                                                                                                                                                                                                                                                                         |   |
|   |               | The      following schedule shows the principal payments due under the Company’s      bank line of credit, related-party line of credit and notes payable as of      September 30, 2007:                                                                                                                                                                               |

|   | Years Ending September      30: |   | Amount |
|--------|---------------------------------|--------|--------|
|   | 2008                            |   | $      | 4,028,661 |
|   | 2009                            |   |   | - |
|   | 2010                            |   |   | 239,763 |
|   |                            |   |   |   |
|   | Total                           |   | $      | 4,268,424 |

| 9.     | Preferred      Stock | The      Company is authorized to issue up to 20,000,000 shares of preferred stock,      $0.0001 par value per share. The Company's Board of Directors has the      authority to amend the Company's Articles of Incorporation, without      further stockholder 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.                                                                                                                                                                                                                                                           |
|--------|----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|   |                 | Series      A 10 % Convertible Non-Voting Preferred StockThe      Company has designated 40,000 shares of preferred stock as Series A 10%      Convertible Non-Voting Preferred stock ("Series A Preferred stock"). As of      September 30, 2007, there were 19 shares of Series A Preferred Stock      outstanding, which represent 7,178 common stock equivalents at a      conversion rate of 370 for 1.                                                                                                                                                                                                                                                                                                                                                                 |
|   |                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|   |                 | DividendsThe      remaining holder of the Series A Preferred stock, is entitled to dividends      at the rate of 10% per year on the stated value of the Series A Preferred      stock (or $200 per share), payable in cash, additional shares of Series A      Preferred stock, or common shares of RemoteMDx at the discretion of the      Board of Directors. Dividends are fully cumulative and accrue from the      date of original issuance to the holders of record as recorded on the      books of the Company at the record date or date of declaration if no      record date is set.  During the years ended September 30, 2007      and 2006, the Company recorded $160,638 and $348,133 in dividends on      Series A Preferred stock,respectively. |

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| 9.     | PreferredStockContinued | ConvertibilitySeries      A Preferred Stock is convertible at 370 shares of common stock for each      share of Series A Preferred stock. During      the year ended September 30, 2007, 18,093 shares of Series A Preferred      stock were converted into 6,694,329 shares of common      stock.  During the year ended September 30, 2006, 10,843 shares      of Series A Preferred stock were converted into 4,014,916 shares of common      stock.  As of September 30, 2007, there were 19 shares of Series      A Preferred stock outstanding, which may convert into 7,178 shares of      common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|-------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|   |                    | Voting      Rights and Liquidation PreferenceThe      holders of Series A Preferred stock have no voting rights and are entitled      to a liquidation preference of $2.00 per share plus unpaid dividends      multiplied by 133%. Optional      RedemptionThe      Company may, at its option, redeem up to two-thirds of the      total   number of shares of Series A Preferred stock at any      time. As of September 30, 2007, the redemption price was 133% of the      conversion price of Series A Preferred stock; however, the Company may      designate a different and lower conversion price for all shares of Series      A Preferred stock called for redemption by the Company. Through September      30, 2007, the Company has not exercised its option to redeem shares of      Series A Preferred stock. Issuances      of Series A Preferred StockDuring      the years ended September 30, 2007 and 2006, the Company had recorded and      issued 802 and 2,146 shares, respectively, of Series A Preferred stock for      payment of Series A accrued dividends. |
|   |                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|   |                    | Series      B Convertible Preferred StockOn      June 7, 2001, the holders of the Company's Series A Preferred stock      approved the designation of 2,000,000 shares of a preferred stock, the      Series B Convertible Preferred stock ("Series B Preferred stock")      previously approved by the Board ofDirectors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

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| 9.     | PreferredStockContinued | DividendsThe      Company will not pay dividends on the Series B Preferred stock unless      dividends are declared by the Board of Directors, in which case the Series      B Preferred stock would be paid dividends prior and in preference to any      declaration or payment of any dividends to common stock, and subject to      the preferences of the holders of the Series A Preferred      stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|-------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   |                    | ConvertibilityEach      share of Series B Preferred stock is convertible at any time into shares      of common stock at an initial rate of $3.00 per share of common. Each      share of Series B Preferred stock will automatically convert into shares      of common stock at the then effective conversion rate on the closing of a      firm commitment underwritten public offering with an aggregate public      offering price of not less than $20,000,000. The Company has issued shares      of common stock or securities convertible into common stock for      consideration per share less than $3.00 per share.  The      conversion rate will automatically be adjusted to a price equal to the      aggregate consideration received by the Company for that issuance divided      by the number of shares of common stock issued. As      of September 30, 2007, there were 12,999 shares of Series B Preferred      stock outstanding, which may convert into 134,472 shares of common      stock. Voting      Rights and Liquidation PreferenceHolders      of shares of Series B Preferred stock are entitled to one vote per share      of Series B Preferred stock on all matters upon which holders of the      common stock of the Company are entitled to vote. The holders of Series B      Preferred stock are entitled to a liquidation preference of $3.00 per      share, plus all accrued and unpaid dividends.  For purposes of      this liquidation preference, the Series A Preferred stock ranks on a      parity with the Series B Preferred stock. Optional      RedemptionThe      Company may redeem the Series B Preferred stock at its option at any time.      The redemption price will be a minimum of 110% of the conversion price at      the date of redemption. Series      C Convertible Preferred StockThe Company      has designated 7,357,144 shares of preferred stock as Series C Convertible      Preferred stock, $.0001 par value per share.  During the      year ended September 30, 2006, the Company issued 5,357,143 shares of      Series C Preferred stock for $7,439,558 in cash and $1,037,152 from      conversion of debt and accrued    interest. |

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| 9.     | PreferredStockContinued | ConvertibilityOne      share of Series C Preferred stock is convertible into three shares of the      Company’s common stock, subject to adjustments. During the year ended      September 30, 2007, the holders of Series C Preferred stock converted      5,764,488 shares of Series C Preferred stock into 17,293,463 shares of      common stock. DividendsThe      stock has an 8% dividend that may be paid in cash or additional shares of      Series C Preferred stock at the option of the Company.  During      the years ended September 30, 2007 and 2006, the Company recorded $389,965      and $294,379 in dividends on Series C Preferred stock,      respectively.  For the years ended September 30, 2007 and 2006,      the Company issued 232,122 and 175,226 shares, respectively of Series C      Preferred stock for dividends.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|-------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|   |                    | Voting      Rights and Liquidation PreferenceHolders      of shares of Series C Preferred stock are entitled to one vote per share      of Series C Preferred stock on all matters upon which holders of the      common stock of the Company are entitled to vote. Generally the holders of      Series C Preferred stock are entitled to a liquidation preference of $1.68      per share, plus all accrued and unpaid dividends.  For purposes      of this liquidation preference, the Series C Preferred stock ranks on a      parity with the Series B Preferred stock. Optional      RedemptionThe      Company may redeem the Series C Preferred stock at its option at any      time.  The redemption price payable by the Company shall be      equal to the greater of (a) $4.00 plus any and all accrued dividends or      (b) 110% of the current Conversion Price per share at the time of the      redemption, as adjusted for stock dividends, stock splits, stock      combinations, other dividends or distributions, reclassifications,      exchanges, or substitutions plus any and all accrued      dividends. During      the year ended September 30, 2007, the Company sent out a letter to all      Series C Preferred stockholders giving them notice to redeem all Series C      Preferred stock.  The holders were required to convert their      shares of Series C Preferred stock into common stock or redeem them for $4      per share.  During the year ended September 30, 2007, 5,764,488      shares of Series C Preferred shares converted into 17,293,463 shares of      common stock.  As of September 30, 2007, there were no shares of      Series C Preferred stockoutstanding. |

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| 10.    | SecureAlertPreferred      Stock | SecureAlert,      Inc. Series A Preferred SharesDuring      the year ended September 30, 2007, and pursuant to Board of Directors      approval, the Company amended the articles of incorporation of its      subsidiary, SecureAlert, Inc. to establish 3,590,000 shares of preferred      stock designated as Series A Convertible Redeemable Non-Voting Preferred      stock (“SecureAlert Series A Preferred stock”).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|---------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|   |                            | DividendsThe      holders of shares of SecureAlert Series A Preferred stock shall be      entitled to receive quarterly dividends out of any of SecureAlert’s assets      legally available therefore, prior and in preference to any declaration or      payment of any dividend on the common stock of SecureAlert, at the rate of      $1.54 per day times the number of SecureAlert’s parolee contracts      calculated in days during the quarter.  For example, if there      were an average of 10,000 parolee contracts outstanding during the      quarter, the total dividend would be $1,386,000 ($1.54 x 90 days x 10,000      contracts) or $0.386 per share of SecureAlert Series A Preferred      stock.  In no case will a dividend be paid if the gross revenue      per contract per day to SecureAlert averages less than      $4.50.  Dividends will be paid in cash to the holders of record      of shares of SecureAlert Series A Preferred stock as they appear on the      books and records of SecureAlert on such record dates not less than ten      (10) days nor more than sixty (60) days preceding the payment dates      thereof, as may be fixed by the Board of Directors of the      Company. During      the years ended September 30, 2007 and 2006, the Company recorded $306,242      and $20,877 in dividends on SecureAlert Series A Preferred      stock. ConvertibilityAs      a group, all SecureAlert Series A Preferred stock may be converted at the      holder’s option at any time into an aggregate of 20% ownership of the      common shares of SecureAlert, Inc. |

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| 10.    | SecureAlertPreferred      StockContinued | As      of September 30, 2007, the total outstanding SecureAlert Series A      Preferred shares were 3,590,000.  Because the preferred stock      sold was Series A Preferred stock of the Company’s subsidiary,      SecureAlert, Inc., the consideration received from the sale has been      recorded similar to minority interest as a separate component of the      balance sheet outside of permanent equity. Subsequent      to September 30, 2007, the Company entered into a stock redemption      agreement with SecureAlert Series A Preferred  stockholders to      redeem all outstanding shares for 7,434,249 shares of RemoteMDx common      stock.  The redemption price will eliminate all future dividends      due to SecureAlert Series A    Preferred  stockholders.                                                                                |
|--------|------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 11.    | MinorityInterest                         | During      the year ended September 30, 2007, Messrs. Derrick and Dalton exercised      their previously granted right (which was granted in February 2006) to      purchase from the Company 2,500,000 shares of Volu-Sol common stock for      cash proceeds of $400,000 or $0.16 per share.  Prior to the      sale, the Company owned 100% of Volu-Sol common stock.  The sale      decreased the Company’s ownership to 70%.  During the year ended      September 30, 2007, Volu-Sol negotiated a non-exclusive license agreement      with the Company.  Additionally, the Company issued 3,375,000      shares of common stock, with a three year anti-dilution provision, for net      cash proceeds of $1,150,000, or $0.34 per share, to various      stockholders.  These transactions decreased the Company’s      ownership of Volu-Sol to 50%. |
|   |                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 12.    | CommonStock                              | Authorized      SharesThe      Company is authorized to issue up to 175,000,000 shares of common      stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|   |                                     | Common      Stock IssuancesDuring      the year ended September 30, 2007, the Company issued 47,205,232 shares of      common stock.  Of these shares, 6,694,329 shares were issued      upon conversion of 18,093 shares of Series A Preferred stock; 351,824      shares were issued upon conversion of 40,333 shares of Series B Preferred      stock; 17,293,463 shares were issued upon conversion of 5,764,488 shares      of Series C Preferred stock; 750,000 shares were issued pursuant to a      registration payment arrangement; 500,000 shares were issued to a related      party to increase the line of credit; 3,067,853 shares were issued for      services in the amount of $4,837,883; 3,081,000 shares were issued for      cash proceeds of $6,162,000; and 15,466,763 shares were issued from the      exercise of options and warrants.                                                  |

----

----

| 12.    | CommonStockContinued     | During      the year ended September 30, 2006, the Company issued 35,005,811 shares of      common stock.  Of these shares, 5,846,428 shares were issued for      services in the amount of $3,983,607; 4,014,916 shares were issued upon      the conversion of 10,843 shares of Series A Preferred stock; 7,171,380      shares were issued upon the conversion of 1,315,825 shares of Series B      Preferred stock; 10,739,753 shares were issued for debt and accrued      interest of $7,893,782; 350,000 were issued from the exercise of options      and warrants; and the remaining 6,883,334 were issued for  cash.                                                                                                                                                                                                                                                             |
|--------|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
| 13.    | Options      andWarrants | Stock      Incentive PlanDuring      the year ended September 30, 2006, the stockholders approved the 2006      Equity Incentive Award Plan (the “2006 Plan”).    The      2006 Plan provides for the grant of incentive stock options and      nonqualified stock options, restricted stock, stock appreciation rights,      performance shares, performance stock units, dividend equivalents, stock      payments, deferred stock, restricted stock units, other stock-based awards      and performance-based awards to employees and certain non-employees who      have important relationships with the Company.  A total of      10,000,000 shares are authorized for issuance pursuant to awards granted      under the 2006 Plan.  During the year ended September 30, 2007,      the Company granted 145,000 options under this plan. |
|   |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|   |                     | A      summary of stock option and warrant activity, including stock options and      warrants granted inside and outside the plans discussed above, for the      years ended September 30, 2007 and 2006, is as  follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

|   |                                      |   | Number      ofOptions      andWarrants |        |   | ExercisePrice      PerShare |              |
|--------|-------------------------------------------|--------|----------------------------------------|-------------|--------|-----------------------------|-------------------|
|   |                                      |   |                                   |        |   |                        |              |   |   |
|   | Outstanding      as of September 30, 2005 |   |                                   | 13,766,043  |   |                        | $                 | .54      to 3.00 |   |
|   | Granted                                   |   |                                   | 11,529,076  |   |                        | .56      to 1.41  |   |
|   | Expired      or cancelled                 |   |                                   | (3,347,727  | )      |                        | .70      to 3.00  |   |
|   | Exercised                                 |   |                                   | (350,000    | )      |                        | .54      to 0.75  |   |
|   |                                      |   |                                   |        |   |                        |              |   |   |
|   | Outstanding      as of September 30, 2006 |   |                                   | 21,597,392  |   |                        | .54      to 3.00  |   |
|   | Granted                                   |   |                                   | 13,509,000  |   |                        | 1.23      to 2.15 |   |
|   | Expired      or cancelled                 |   |                                   | (751,733    | )      |                        | .60      to 3.00  |   |
|   | Exercised                                 |   |                                   | (15,466,763 | )      |                        | .50      to 1.85  |   |
|   |                                      |   |                                   |        |   |                        |              |   |   |
|   | Outstanding      as of September 30, 2007 |   |                                   | 18,887,896  |   |                        | $                 | .54      to 3.00 |   |

----

----

|   |                     |                                                                                                                       |   |
|--------|--------------------------|----------------------------------------------------------------------------------------------------------------------------|--------|
| 13.    | Options      andWarrants | The      following table summarizes information about stock options and warrants      outstanding as of September 30,2007: |

|  Continued |                   | Options      and WarrantsOutstanding | Options      and WarrantsExercisable |
|-----------------|------------------------|--------------------------------------|--------------------------------------|
|            |                   |                                 | Weighted                             |   |   |   |
|            |                   |                                 | Average                              |   |   |   |
|            |                   |                                 | Remaining                            | Weighted |   | Weighted |
|            | Range      of          |                                 | Contractual                          | Average |   | Average |
|            | Exercise               | Number                               | Life                                 | Exercise | Number | Exercise |
|            | Prices                 | Outstanding                          | (Years)                              | Price | Exercisable | Price |
|            | $.54      – 3.00 | 18,887,896                           | 2.68                                 | $0.64 | 13,548,150 | $1.45 |

|   |   | As      of September 30, 2007, 13,548,150 of the 18,887,896 outstanding options      and warrants were vested.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|   |   | During      the year ended September 30, 2007, the Company issued 13,509,000 common      stock options and warrants as follows: 7,189,000 in connection with the      sale of common stock, 320,000 to employees, 350,000 to consultants,      650,000 to the Board of Directors, and 5,000,000 to related parties (David      Derrick and James Dalton).  The exercise prices range from $1.23      to $2.15 per share.  The exercise price for the options granted      during the year ended September 30, 2007 were based upon the quoted market      price of the Company’s shares on the date of grant. During      the year ended September 30, 2006, the Company issued 11,529,076 common      stock options as follows: 3,170,000 to employees, 600,000 to SecureAlert      Series A Preferred stockholders, 365,150 for debt, 5,413,926 to      consultants, 480,000 to the Board of Directors, and 1,500,000 to related      parties (David Derrick and James Dalton).  The exercise prices      range from $0.56 to $1.41 per share. The exercise price for the options      granted during the year ended September 30, 2006 were based upon the      quoted market price of the Company’s shares on the date of      grant. |

----

----

| 14.    | Income      Taxes | For      the years ended September 30, 2007 and 2006, the Company incurred net      operating losses of approximately $26,371,000 and $23,798,000,      respectively.  The amount and ultimate realization of the      benefits from the net operating losses is dependent, in part, upon the tax      laws in effect, the Company's future earnings, and other future events,      the effects of which cannot be determined.  The Company has      established a valuation allowance for all deferred income tax assets not      offset by deferred income tax liabilities due to the uncertainty of their      realization.  Accordingly, there is no benefit for income taxes      in the accompanying consolidated statements of operations. As      of September 30, 2007, the Company has net operating loss carryforwards      available to offset future taxable income, if any, of approximately      $87,200,000 which will begin to expire in 2018.  The utilization      of the net operating loss carryforwards is dependent upon the tax laws in      effect at the time the net operating loss carryforwards can be      utilized.  The Internal Revenue Code contains provisions that      likely could reduce or limit the availability and utilization of these net      operating loss carryforwards.  For example, limitations are      imposed on the utilization of net operating loss carryforwards if certain      ownership changes have taken place or will take place.  Due to      the frequency of equity transactions within the Company, it is likely that      the use of net operating loss carryforwards will be      limited.  The Company      will perform an analysis to determine whether any such limitations have      occurred as the net operating losses are utilized. Deferred      income taxes are determined based on the estimated future effects of      differences between the financial statement and income tax reporting bases      of assets and liabilities given the provisions of currently enacted tax      laws and the tax rates expected to be in place. |
|--------|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|   |              | The      deferred income tax assets (liabilities) are comprised of the following as      of September 30, 2007:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

|   |                                  |   | 2007   |        |
|--------|---------------------------------------|--------|--------|-------------|
|   | Net      operating loss carryforwards |   | $      | 32,524,000  |   |
|   | Depreciation      and reserves        |   |   | 490,000     |   |
|   | Accruals      and reserves            |   |   | 54,000      |   |
|   | Valuation      allowance              |   |   | (33,068,000 | ) |
|   |                                  |   | $      | -           |   |

----

----

| 14.    | Income      TaxesContinued | Reconciliations      between the benefit for income taxes at the federal statutory income tax      rate and the Company's benefit for income taxes for the years ended      September 30, 2007 and 2006 are as follows: |
|--------|----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                       |                                                                                                                                                                                                                    |   |

|   |                                                                 |   | 2007   |        |   | 2006   |   |
|--------|----------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
|   |                                                                 |   |   |        |   |   |   |
|   | Federal      income tax benefit at statutory      rate               |   | $      | 8,966,000   |   |   | $      | 8,092,000 |   |
|   | State      income tax benefit, net of federal      income tax effect |   |   | 1,318,000   |   |   |   | 1,190,000 |   |
|   | Loss      on non-deductible expenses                                 |   |   | (79,000     | )      |   |   | (118,000 | ) |
|   | Change      in valuation allowance                                   |   |   | (10,205,000 | )      |   |   | (9,164,000 | ) |
|   |                                                                 |   |   |        |   |   |   |   |   |
|   | Benefit      for income taxes                                        |   | $      | -           |   |   | $      | - |   |

| 15.    | CommitmentandContingencies | Legal      MattersOnyx      Consulting Group, LLC v. RemoteMDx, Inc.  The dispute arises out of an agreement between      Onyx and the Company pursuant to which Onyx agreed to provide investor      relations related services to the Company.  On October 9, 2007,      Onyx served its Statement of Claim, in which it asserted a claim for      breach of contract, seeking as damages the value of 750,000 shares of      restricted RemoteMDx common stock it claims it is due under the      agreement.  An arbitrator has been appointed but discovery has      not yet commenced.  The arbitration hearing is scheduled for      April 2008.  The Company has asserted counterclaims against Onyx      for breach of contract and rescission.  The Company intends to      vigorously defend itself against Onyx’s claim and to prosecute its      counterclaims against Onyx.   The Company has not accrued      any potential loss as the probability of incurring such losses is deemed      remote.                          |
|--------|----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|   |                       | SecureAlert, Inc.      v. The Jaxara Group, LLC, et al.  SecureAlert, Inc. filed a Complaint for breach      of contract and other claims against defendants Jaxara Group, LLC, Daniel      Boice and Alexander Petty (collectively, “Jaxara”) in the United States      District Court for the District of Utah.  The action arose out      of contracts between SecureAlert and Jaxara for certain software      programming work to be performed by Jaxara.  Jaxara responded by      asserting breach of contract and other counterclaims against      SecureAlert.  Although SecureAlert believed its claims to be      meritorious, in June, 2007, SecureAlert agreed to settle the action based      primarily on Jaxara’s limited financial ability to pay any judgment      obtained in the action.  SecureAlert received Jaxara’s $25,000      settlement payment in July, 2007 and, pursuant to the parties’ stipulated      request for dismissal, the Court dismissed the entire action with      prejudice on August 22,2007. |

----

----

| 15.    | CommitmentandContingenciesContinued | Strategic      Growth International, Inc. v. RemoteMDx, Inc., This action was filed in      response to an action previously filed by the Company against SGI in      Utah.  The action arises out of a contract between SGI and the      Company for certain investor relations related services to be performed by      SGI.  The SGI Defendants’ Complaint alleges a single claim for      Breach of Contract and seeks recovery of: 1) the balance they claim      remains due under the contract (approximately $80,000); 2) the value of      options to purchase 500,000 shares of restricted RemoteMDx common stock at      $0.50 per share; and 3) the value of one million shares of restricted      RemoteMDx common stock.  In its Answer and Counterclaims, the      Company denied the SGI Defendants’ allegations and asserted counterclaims      for:  (1) breach of contract; (2) rescission; and (3)      declaratory judgment.  On October 29, 2007, with the approval of      the court, the Company amended its Answer and Counterclaims to assert an      additional claim against SGI for Fraudulent inducement. The Company seeks      rescission of its contract with SGI and the return of amounts the Company      paid SGI under the contract.  Discovery is ongoing and a final      pretrial conference is set for January 16, 2008.  The Company      intends to vigorously defend itself against the SGI Defendants’ claim and      to prosecute its counterclaims against the SGI Defendants.  The      Company has not accrued any potential loss as the probability of incurring      such losses is deemed remote. |
|--------|-------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|   |                                | Lease      ObligationsIn      March 2005, the Company entered into an agreement to lease a facility      under a noncancellable operating lease that expires in November 2008.      Future minimum rental payments under the non-cancelable operating lease as      of September 30, 2007, are approximately as  follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

|   | Years Ending September      30: |   | Amount |    |
|--------|---------------------------------|--------|--------|---------|
|   | 2008                            |   | $      | 212,200 |   |
|   | 2009                            |   |   | 36,100  |   |
|   |                            |   | $      | 248,300 |   |

----

----

| 15.    | CommitmentandContingenciesContinued | Rent      expense related to this non-cancelable operating lease was approximately      $213,000 and $122,000 for the years ended September 30, 2007 and      2006, respectively. The increase in rent expense from 2006 to 2007 of      $91,000 resulted from an expansion of approximately 5,000 square feet of      office space. |
|--------|-------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                |                                                                                                                                                                                                                                                                                                                                      |   |
|   |                                | In      addition, the Company’s subsidiary, Volu-Sol Reagents Corporation, leases      a facility under a non-cancelable operating lease that expires in November      2010.  Future minimum rental payments under the non-cancelable      operating lease as of September 30, 2007 are approximately as      follows:    |

|   | Years Ending September      30: |   | Amount |    |
|--------|---------------------------------|--------|--------|---------|
|   | 2008                            |   | $      | 71,720  |   |
|   | 2009                            |   |   | 73,584  |   |
|   | 2010                            |   |   | 75,496  |   |
|   | 2011                            |   |   | 12,636  |   |
|   |                            |   | $      | 233,436 |   |

|   |   | Rent      expense related to this non-cancelable operating lease was approximately      $71,000 and $69,000 for the years ended September 30, 2007 and 2006,      respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|   |   | Indemnification      AgreementsIn      November 2001, the Company's Board of Directors agreed that the Company      would indemnify officers and directors of the Company against personal      liability incurred by them in the conduct of their duties for the Company.      In the event that any of the officers or directors of the Company are sued      or claims or actions are brought against them in connection with the      performance of their duties and the individual is required to pay an      amount, the Company will immediately repay the obligation together with      interest thereon at the greater of 10% per year or the interest rate of      any funds borrowed by the individual to satisfy their      liability. Cellular      Access AgreementDuring      the year ended September 30, 2006, the Company entered into several      agreements with cellular organizations to provide communication services.      The cost to the Company during the years ended September 30, 2007 and      2006, was approximately $2,593,000 and $290,000,    respectively. |

----

----

| 16.    | SegmentInformationContinued | The      Company is organized into two business segments based primarily on the      nature of the Company's products. The Company's Reagents segment is      engaged in the business of manufacturing and marketing medical diagnostic      stains, solutions and related equipment to hospitals and medical testing      labs. The Company's SecureAlert segment is engaged in the business of      developing, distributing and marketing mobile emergency and personal      security systems to distributors and consumers, and tracking devices for      monitoring offenders in the criminal justice system. Other (unallocated)      loss consists of research and development, selling, general and      administrative expenses related to the Company's corporate activities,      including remote health monitoring and market and business development      activities. The      accounting policies of the business segments are the same as those      described in the summary of significant accounting policies (see Note      2). |
|--------|-----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
|   |                        | The      following table reflects certain financial information relating to each      reportable segment for each of the years ended September 30, 2007 and      2006:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

|   |                                                                               |   | For      the Years Ended September 30, |        |
|--------|------------------------------------------------------------------------------------|--------|----------------------------------------|-------------|
|   |                                                                               |   | 2007                                   |        |   | 2006 |   |
|   | Revenues:                                                                          |   |                                   |        |   |   |   |
|   |         SecureAlert,      Inc.             |   | $                                      | 6,615,209   |   |   | $ | 391,600 |   |
|   |         Volu-Sol      Reagents Corporation |   |                                   | 655,331     |   |   |   | 678,541 |   |
|   |                                                                               |   |                                   |        |   |   |   |   |   |
|   |                                                                               |   | $                                      | 7,270,540   |   |   | $ | 1,070,141 |   |
|   |                                                                               |   |                                   |        |   |   |   |   |   |
|   | Operating      loss:                                                               |   |                                   |        |   |   |   |   |   |
|   | SecureAlert, Inc.                                                                  |   | $                                      | (16,718,728 | ) |   | $ | (6,061,427 | ) |
|   | Volu-Sol Reagents      Corporation                                                 |   |                                   | (504,219    | ) |   |   | (68,201 | ) |
|   | Other    (unallocated)                                                             |   |                                   | (10,213,199 | ) |   |   | (11,853,538 | ) |
|   |                                                                               |   |                                   |        |   |   |   |   |   |
|   |                                                                               |   | $                                      | (27,436,146 | ) |   | $ | (17,983,166 | ) |
|   |                                                                               |   |                                   |        |   |   |   |   |   |
|   | Depreciation      and amortization:                                                |   |                                   |        |   |   |   |   |   |
|   | SecureAlert, Inc.                                                                  |   | $                                      | 2,054,150   |   |   | $ | 218,701 |   |
|   | Volu-Sol Reagents      Corporation                                                 |   |                                   | 6,301       |   |   |   | 2,542 |   |
|   | Other    (unallocated)                                                             |   |                                   | 6,970       |   |   |   | 10,739 |   |
|   |                                                                               |   |                                   |        |   |   |   |   |   |
|   |                                                                               |   | $                                      | 2,067,421   |   |   | $ | 231,982 |   |

----

----

| 16. | Segment |   |   |
|-----|---------|--------|--------|

|  Information Continued |                                                                    |   | For      the Years Ended September 30, |       |
|----------------------------------|-------------------------------------------------------------------------|--------|----------------------------------------|------------|
|                             |                                                                    |   | 2007                                   |       |   | 2006 |   |
|                             | Capital      expenditures:                                              |   |                                   |       |   |   |   |
|                             |             SecureAlert, Inc.             |   | $                                      | 537,333    |   |   | $ | 1,073,217 |   |
|                             |             Volu-Sol Reagents Corporation |   |                                   | 34,841     |   |   |   | 20,473 |   |
|                             |                                                                    |   |                                   |       |   |   |   |   |   |
|                             |                                                                    |   | $                                      | 573,174    |   |   | $ | 1,093,690 |   |
|                             |                                                                    |   |                                   |       |   |   |   |   |   |
|                             | Interest      income:                                                   |   |                                   |       |   |   |   |   |   |
|                             |             SecureAlert, Inc.             |   | $                                      | 249        |   |   |   | 3,272 |   |
|                             |             Volu-Sol Reagents Corporation |   |                                   | 11,765     |   |   |   | - |   |
|                             |             Other (unallocated)           |   |                                   | 105,723    |   |   |   | 26,779 |   |
|                             |                                                                    |   |                                   |       |   |   |   |   |   |
|                             |                                                                    |   | $                                      | 117,737    |   |   | $ | 30,051 |   |
|                             |                                                                    |   |                                   |       |   |   |   |   |   |
|                             | Interest      Expense                                              |   |                                   |       |   |   |   |   |   |
|                             | SecureAlert, Inc.                                                       |   | $                                      | 16,954     |   |   | $ | 271,696 |   |
|                             | Volu-Sol Reagents      Corporation                                      |   |                                   | -          |   |   |   | 3 |   |
|                             | Other    (unallocated)                                                  |   |                                   | 1,181,619  |   |   |   | 6,269,378 |   |
|                             |                                                                    |   |                                   |       |   |   |   |   |   |
|                             |                                                                    |   | $                                      | 1,198,573  |   |   | $ | 6,541,077 |   |
|                             |                                                                    |   |                                   |       |   |   |
|                             |                                                                    |   |                                   |       |   |   |
|                             |                                                                    |   | As      of September 30, 2007          |       |   |   |   |   |
|                             | Identifiable      assets:                                               |   |                                   |       |   |   |   |   |   |
|                             | SecureAlert, Inc.                                                       |   | $                                      | 9,933,490  |   |   |   |   |   |
|                             | Volu-Sol Reagents      Corporation                                      |   |                                   | 984,331    |   |   |   |   |   |
|                             | Other    (unallocated)                                                  |   |                                   | 5,318,868  |   |   |   |   |   |
|                             |                                                                    |   | $                                      | 16,236,689 |   |   |   |   |   |

| 17.    | SubsequentEvents | Subsequent      to September 30, 2007, the Company entered into the following      transactions: |
|--------|------------------|--------------------------------------------------------------------------------------------------|
|   |             | 1)                                                                                               | 2,854,453      shares of common stock were issued upon the exercise of options providing      $2,800,700 in cash to the Company. |
|   |             |                                                                                             |   |
|   |             | 2)                                                                                               | 175,753      shares of common stock were issued for SecureAlert Series A Preferred      stock dividends. |
|   |             |                                                                                             |   |
|   |             | 3)                                                                                               | 15,000      shares of common stock were issued from the conversion of Preferred      stock. |
|   |             |                                                                                             |   |
|   |             | 4)                                                                                               | 70,000      shares of common stock were issued for services rendered valued at      $480,700. |
|   |             |                                                                                             |   |
|   |             | 5)                                                                                               | The      Company entered into a purchase agreement to acquire 51% of the issued and      outstanding capital stock of Midwest Monitoring & Surveillance, Inc.      (“MM&S”) with, at the Company’s option, the right to acquire the      remaining 49% of MM&S capital stock. The consideration for the initial      purchase of 51% of the outstanding MM&S shares, which will give      control of MM&S to the Company, is $3,400,000, $1,800,000 payable in      notes payable and 438,000 shares of the Company’s common      stock. |
|   |             |                                                                                             |   |
|   |             | 6)                                                                                               | The      Company entered into a Stock Purchase Agreement to acquire 51% of the      issued and outstanding capital stock of Court Programs, Inc., Court      Programs of Northern Florida, Inc., and Court Programs of Florida (the      “Court Programs”) with, at the Company’s option, the right to acquire the      remaining 49% of the Court Programs capital stock.  The      consideration for the initial purchase of 51% of the outstanding Court      Programs’ shares, which will give control of Court Programs to the      Company, is $1,145,500; $300,000 payable in a note payable and 212,000      shares of the Company’s common stock. |
|   |             |                                                                                             |   |
|   |             | 7)                                                                                               | On      December 20, 2007, the Company sold and assigned its rights under Patent      Number 6,636,732 (issued October 21, 2003) for the sum of      $2,400,000.  The Company collected the full $2,400,000 sales      price in January 2008. |

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