**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 WASHINGTON,
        D.C. 20549
  **FORM
        10-QSB**
  **MARK
        ONE**
  x
              Quarterly
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934 for the Quarterly Period ended March 31, 2007;
                  or
  o
              Transition
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934 for the transition period from ________ to
                  ________
  *COMMISSION
        FILE NUMBER: 0-51170*
  **THE
        MEDICAL EXCHANGE, INC.**
 (Exact
        name of small business issuer as specified in its charter)
   Nevada
              
              N/A(State
                  or other jurisdiction of
              
              (I.R.S.
                  Employer Identification No.)incorporation
                  or organization)
   **17
        State Street**
 **New
        York, New York 10004**
 (Address
        of principal executive offices, including zip code)
 
 **646-214-1234**  ****
 (Issuer's
        telephone number, including area code)
  Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 12 months (or for such shorter
        period
        that the registrant was required to file such reports), and (2) has been
        subject
        to such filing requirements for the past 90 days. Yes  x No o
  Indicate
        by a check mark whether the registrant is a shell company (as defined in
        Rule
        1b-2 of the Exchange Act). Yes o No
        x
  As
        of May
        18, 2007, The Medical Exchange, Inc. had outstanding 10,800,000 shares of
        common
        stock, par value $0.001 per share.
  Transitional
        Small Business Disclosure Format (Check one) Yes o No x
  
  INDEX
        PAGE
 
 PART
                  I -- FINANCIAL INFORMATIONPAGEForward
                Looking Statements
              iiItem 1 -
              Financial
                StatementsCondensed
                  Consolidated Balance Sheets March 31, 2007 (Unaudited) and December
                  31,
                  2006 (Audited)
              1Unaudited
                  Condensed Consolidated Statements of Operations for the three months
                  ended
                  March 31, 2007 and 2006
              2Unaudited
                  Condensed Consolidated Statements of Cash Flows for the three months
                  ended
                  March 31, 2007 and 2006
              3Notes
                  to Condensed Consolidated Financial Statements
              4Item 2 -
              Management's
                Discussion
                and Analysis of Financial Condition and Results of Operations
              10Item 3 -
              Controls
                and
                Procedures
              12PART
                  II -- OTHER INFORMATIONItem 1 -
              Legal
                  Proceedings
              12Item 2 -
              Unregistered
                Sales of
                Equity Securities and Use of Proceeds
              12Item 3 -
              Defaults
                upon Senior
                Securities
              12Item 4 -
              Submission
                of Matters
                to a Vote of Security Holders
              12Item 5 -
              Other
                Information
              12Item 6 -
              Exhibits
              13SIGNATURES
              14
 
   -i-
   **FORWARD
        LOOKING STATEMENTS**
  The
        following discussion and explanations should be read in conjunction with
        the
        financial statements and related notes contained elsewhere in this quarterly
        report on Form 10-QSB. Certain statements made in this discussion are
        "forward-looking statements" within the meaning of the Private Securities
        Litigation Reform Act of 1995. Forward-looking statements can be identified
        by
        terminology such as "may", "will", "should", "expects", "intends",
        "anticipates", "believes", "estimates", "predicts", or "continue" or the
        negative of these terms or other comparable terminology and include, without
        limitation, statements below regarding: the Company's intended business plans;
        expectations as to product performance; intentions to acquire or develop
        other
        technologies; and belief as to the sufficiency of cash reserves. Because
        forward-looking statements involve risks and uncertainties, there are important
        factors that could cause actual results to differ materially from those
        expressed or implied by these forward-looking statements. Although the Company
        believes that expectations reflected in the forward-looking statements are
        reasonable, it cannot guarantee future results, performance or achievements.
        Moreover, neither the Company nor any other person assumes responsibility
        for
        the accuracy and completeness of these forward-looking statements. The Company
        is under no duty to update any forward-looking statements after the date
        of this
        report to conform such statements to actual results.
    -ii-
  **THE
        MEDICAL EXCHANGE, INC. AND SUBSIDIARY**
 **CONDENSED
        CONSOLIDATED BALANCE SHEETS**
  
 **ASSETS**March
                  31, 2007
              
              
              December
                  31, 2006(unaudited)
              
              
              (audited)Current
                  assets****Cash
                  and cash equivalents
              
              $
              73,371
              
              $
              7,484Inventory
              
              
              192,529
              
              
              --Prepaid
                  expenses and other current assets
              
              
              14,700
              
              
              --Total
                  current assets
              
              
              280,600
              
              
              7,484Property
                    and equipment, net of accumulated depreciationof $27,093and
                    $0, respectively
              
              
              18,482
              
              
              --Intangible
                    assets, net of amortization of $10,000and $0, respectively
              
              
              1,190,000
              
              
              --Goodwill
              
              
              784,857
              
              
              --Deferred
                    financing costs, net of amortization of $23,423and $0,
                    respectively
              
              
              89,160
              
              
              --Deferred
                  acquisition costs
              
              
              --
              
              
              55,550Total
                  assets
              
              $
              2,363,099
              
              $
              63,034**LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIENCY)**Current
                  liabilities****Accounts
                  payable and accrued expenses
              
              $
              269,990
              
              $
              101,548Secured
                  convertible notes, net of discount of
                  $1,630,130
              
              
              690,275
              
              
              --Loans
                  payable - related party
              
              
              49,973
              
              
              26,896Total
                  current liabilities
              
              
              1,010,238
              
              
              128,444Long
                  term liabilitiesSeverance
                  pay
              
              
              165,295
              
              
              --Total
                Liabilities
              
              
              1,175,533
              
              
              128,444Stockholders’
                  Equity (Deficiency)Preferred
                  stock $.001 par value per share,Authorized
                  20,000,000 shares,Issued
                  and outstanding 0 shares
              
              
              --
              
              
              --Common
                  stock, $.001 par value per shareAuthorized
                  50,000,000 shares;Issued
                    and outstanding10,660,000shares and10,200,000 shares, respectively
              
              
              10,660
              
              
              10,200Additional
                  paid-in capital
              
              
              1,722,478
              
              
              144,731Stock
                  subscription receivable
              
              
              (36,500
              )
              
              (36,500
              )Accumulated
                  other comprehensive loss
              
              
              (331
              )
              
              (331
              )Accumulated
                  deficit
              
              
              (508,741
              )
              
              (183,510
              )Total
                  Stockholders’ Equity (Deficiency)
              
              
              1,187,566
              
              
              (65,410
              )Total
                  Liabilities and Stockholders’ Equity (Deficiency)
              
              $
              2,363,099
              
              $
              63,034
 
 See
        notes
        to condensed consolidated financial statements
  1
  **THE
        MEDICAL EXCHANGE, INC. AND SUBSIDIARY**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS**
 
 
 Three
                  monthsended
                  March 31,2007
              
              
              2006(unaudited)
              
              
              (unaudited)Revenue
              
              $
              --
              
              $
              --Operating
                  expenses:Research
                  and development
              
              $
              27,006
              
              $
              --Selling,
                  general and administrative
              
              
              81,995
              
              
              1,839Total
                  operating expenses
              
              
              109,001
              
              
              1,839Loss
                  from operations
              
              
              (109,001
              )
              
              (1,839
              )Other
                  expenses:Interest
                    expense (including related partiesof $11,908 and $0)
              
              
              32,313
              
              
              --Amortization
                  of debt discount
              
              
              155,705
              
              
              --Amortization
                  of beneficial conversion feature
              
              
              4,789
              
              
              --Amortization
                  of deferred finance costs
              
              
              23,423
              
              
              --Net
                  loss
              
              
              (325,231
              )
              
              (1,839
              )Other
                  comprehensive lossForeign
                  currency translation adjustment
              
              
              --
              
              
              1Comprehensive
                  loss
              
              $
              (325,231
              )
              $
              (1,838
              )Basic
                  and diluted loss per share
              
              $
              (0.03
              )
              $
              (0.00
              )Weighted
                  average number ofshares
                  outstandingBasic
                  and diluted
              
              
              10,274,667
              
              
              2,112,500
 
 See
        notes
        to condensed consolidated financial statements
  2
   **THE
        MEDICAL EXCHANGE, INC. AND SUBSIDIARY**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 
 
 Three
                  monthsended
                  March 31,2007
              
              
              2006(Unaudited)
              
              
              (Unaudited)CASH
                FLOWS FROM
                OPERATING ACTIVITIES:Net
                  loss
              
              $
              (325,231
              )
              $
              (1,838
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Depreciation
                  and amortization
              
              
              33,767
              
              
              --Amortization
                  of note discount
              
              
              155,705
              
              
              --Amortization
                  of beneficial conversion feature of convertible debt
              
              
              4,789
              
              
              --Accretion
                  of interest on convertible promissory notes
              
              
              20,405
              
              
              --Increase
                  in net liability for severance pay
              
              
              14,492
              
              
              --Changes
                  in operating assets and liabilities:Inventory
              
              
              (110
              )
              
              --Prepaid
                  expenses and other current assets
              
              
              (1,856
              )
              
              --Accounts
                  payable and accrued expenses
              
              
              90,770
              
              
              1,820Net
                  cash used in operating activities
              
              
              (7,269
              )
              
              (18
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:Acquisition
                  of IDO Security Ltd., net of cash acquired of $19,974
              
              
              (980,026
              )
              
              --Purchases
                  of property and equipment
              
              
              (1,644
              )
              
              --Net
                  cash used in investing activities
              
              
              (981,670
              )
              
              --CASH
                  FLOWS FROM FINANCING ACTIVITIES:Proceeds
                  from issuance of secured convertible notes
              
              
              2,300,000
              
              
              --Payments
                  of deferred finance costs
              
              
              (325,000
              )
              
              --Proceeds
                  from related party loans
              
              
              17,882
              
              
              38Proceeds
                  from short-term debt
              
              
              47,738
              
              
              --Repayment
                  of short-term debt
              
              
              (985,794
              )
              
              (19
              )Net
                  cash provided by financing activities
              
              
              1,054,826
              
              
              19Net
                  increase (decrease) in cash
              
              
              65,887
              
              
              (1
              )Cash
                  at the beginning of period
              
              
              7,484
              
              
              1Cash
                  at the end of period
              
              $
              73,371
              
              $
              --Supplemental
                disclosures of cash flow
                information:Cash
                  paid for interest
              
              $
              32,313
              
              $
              --Non-cash
                  activities:Issuance
                  of common stock relating to convertible promissory notes
              
              $
              274,294
              
              $
              --
 
 
 See
        notes
        to condensed consolidated financial statements
 3
 **THE
        MEDICAL EXCHANGE INC.**
  NOTES
        TO
        THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  **NOTE
        1 - GENERAL**
 
 **Overview**
 The
        Medical Exchange, Inc. ("Med Ex") and IDO Security Ltd. ("IDO Ltd."), its
        Israeli-based subsidiary (collectively the "Company"), are engaged in the
        design, development and marketing of devices for the homeland security market
        that are used in security screening to detect concealed metallic objects
        through
        the use of electro-magnetic fields. These devices were designed specifically
        for
        applications in the security screening and detection market to complement
        the
        current detection methods for detecting metallic items during security
        screenings at security checkpoints in venues such as airports, prisons, schools,
        stadiums and other public locations and venues requiring individual
        security screening. IDO Ltd. has designed and developed a security screening
        device containing proprietary technology known as the MagShoe. The MagShoe
        device creates specific electro-magnetic fields that are capable of detecting
        the presence of metallic objects inside a person’s footwear, as well as next to
        or above the ankles, while ignoring metallic objects that are typically part
        of
        the footwear. The proprietary software included in the Magshoe provides for
        the
        collation and delivery of the screening results to the operator for immediate
        analysis. The MagShoe device has been designed to be portable and to integrate
        into and complement current security screening arrays and systems. The MagShoe
        has been deployed in various venues in several countries.
 
 Med
        Ex
        was incorporated in the State of Nevada on January 23, 2004. On July 25,
        2006,
        Med Ex, IDO Ltd. and the holders of all of the issued and outstanding share
        capital of IDO Ltd. (collectively the “IDO Selling Shareholders”) entered into a
        Securities Purchase Agreement pursuant to which Med Ex agreed to purchase
        all of
        the issued and outstanding share capital of IDO Ltd. (the “Acquisition
        Transaction”). On March 8, 2007, the Acquisition Transaction was consummated.
        Following the consummation of the Acquisition Transaction, IDO Ltd. became
        a
        wholly-owned subsidiary of Med Ex. Prior to the consummation of the Acquisition
        Transaction, Med Ex was a “shell company” as such term is defined in Rule 12b-2
        under the Securities Exchange Act of 1934, as amended. Following the Acquisition
        Transaction, Med Ex adopted the business of IDO Ltd.
 
 All
        references hereinafter to the “Company” shall mean and refer to, following the
        Acquisition Transaction, to Med Ex and its consolidated subsidiary IDO
        Ltd.
 
 On
        March
        9, 2007, the Board of Directors and shareholders of the Company approved
        amendments (the “Amendments”) to the Company’s Articles of Incorporation to (i)
        change the corporate name of the Company to “IDO Security Inc.” and (ii) change
        the capital structure of the Company to (X) increase the number of authorized
        shares of Common Stock, $0.001 par value per share (the “Common Stock”) from 25
        million to 50 million and (Y) create a class of preferred stock (the “Preferred
        Stock”) with 20 million shares of Preferred Stock authorized for issuance but
        unissued, with the number of series into which Preferred Stock may be divided,
        and the designations, powers, preferences and voting and other rights, and
        the
        qualifications. To become effective, the Amendments must be filed with the
        Nevada Secretary of State and designated as effective by the Board of Directors.
        The Company intends to implement the Amendments as soon as reasonably
        practicable following the 20th day following the mailing of the Information
        Statement to its shareholders. Such Information Statement was first mailed
        on or
        about May 2, 2007.
 
 In
        conjunction with the approval of the Amendments, the Company’s Board of
        Directors approved a three-for-one stock split. The record date for the stock
        split has not yet been fixed. The stock split will be effected following
        the
        effectiveness of the Amendments.
 
 **Basis
        of presentation**
 The
        accompanying unaudited consolidated financial statements of the Company have
        been prepared in accordance with generally accepted accounting principles
        for
        interim financial information and with Item 310(b) of Regulation S-B.
        Accordingly, they do not include all of the information and footnotes required
        by generally accepted accounting principles for complete financial statements.
        In the opinion of management, all adjustments (consisting of normal recurring
        accruals) considered necessary for a fair presentation have been included.
        Operating results for the three months ended March 31, 2007, are not necessarily
        indicative of the results that may be expected for the year ending December
        31,
        2007. These unaudited consolidated financial statements should be read in
        conjunction with the audited consolidated financial statements and footnotes
        thereto included in the Company's Transition Annual Report on Form 10-KT
        for the
        six months ended December 31, 2006, as filed with the Securities and Exchange
        Commission on February 23, 2007 and with the Company’s Current Report on Form
        8-K filed with the Securities and Exchange Commission on March 14, 2007.
        Previously, the Company had a June 30 fiscal year. On December 28, 2006,
        the
        Company changed its fiscal year to December 31, 2006.
  These
        financial statements have been prepared in accordance with generally accepted
        accounting principles applicable to a going concern, which assumes that the
        Company will be able to meet its obligations and continue its operations
        for its
        next fiscal year. Realization values may be substantially different from
        carrying values as shown and these financial statements do not give effect
        to
        adjustments that would be necessary to the carrying values and classification
        of
        assets and liabilities should the Company be unable to continue as a going
        concern. See Note 3.
 
 4
 
 **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 The
        following accounting policies have been identified as critical to the Company’s
        business operations and the understanding of its results of operations.
 
 **Principles
        of Consolidation**
 The
        accompanying condensed consolidated financial statements include the accounts
        of
        IDO Ltd., the Company's wholly-owned subsidiary. All significant inter-company
        transactions have been eliminated.
 
 **Use
        of Estimates**
 These
        financial statements and accompanying notes have been prepared in accordance
        with accounting principles generally accepted in the United States of America.
        The preparation of these financial statements requires management to make
        estimates, judgments and assumptions that affect the reported amounts of
        assets,
        liabilities, revenues and expenses. The Company continually evaluates the
        accounting policies and estimates we use to prepare the consolidated financial
        statements. The Company bases its estimates on historical experiences and
        assumptions believed to be reasonable under current facts and circumstances.
        Actual amounts and results could differ from these estimates made by management.
 
 **Functional
        Currency**
 The
        majority of Company’s sales are in United States dollars or in United States
        dollar linked currencies. In addition, the majority of the Company’s investing
        and financing activities are in United States dollars. Accordingly, the Company
        has determined the United States dollar as the currency of its primary economic
        environment and thus, its functional and reporting currency. Non-dollar
        transactions and balances have been measured in United States dollars in
        accordance with Statement of Financial Accounting Standard No. 52 “Foreign
        Currency Translation” (“SFAS No. 52”). All transaction gains and losses from the
        measurement of monetary balance sheet items denominated in non-dollar currencies
        are reflected in the statement of operations as financial income or expenses,
        as
        appropriate.
 
 **Revenue
        Recognition**
 Revenue
        is recognized upon the sale of product upon shipment to the customer, subject
        to
        the following criteria: persuasive evidence of an arrangement exists, the
        selling price is fixed and determinable and no significant obligations remain
        to
        the Company **** and
        collection of the related receivable is reasonable assured. When the above
        stated revenue recognition criteria are not met, the Company records deferred
        revenue.
 
 **Cash**
 The
        Company maintains cash in a bank account which may, at times, exceed federally
        insured limits. The Company has not experienced any loss on these
        accounts.
 
 **Inventories**
 Inventories,
        consisting of completed devices, devices partially completed and components
        are
        valued at the lower of cost determined by the moving-average basis or market.
        The value of the inventories is adjusted for estimated obsolescence or
        unmarketable inventory equal to the difference between the cost of inventory
        and
        the estimated market value based upon assumptions about future demand and
        market
        conditions.
 
 **Accounts
        Receivable**
 Accounts
        receivable are reported at their outstanding unpaid principal balances reduced
        by an allowance for doubtful accounts. The Company estimates doubtful accounts
        based on historical bad debts, factors related to specific customers’ ability to
        pay, and current economic trends. The Company writes off accounts receivable
        against the allowance when a balance is determined to be
        uncollectible.
 
 **Property
        and Equipment**
 Depreciation
        of property and equipment is provided for by the straight-line method over
        the
        estimated useful lives of the related assets. Long-lived assets are reviewed
        for
        impairment whenever events or changes in circumstances indicate that the
        carrying amount of the asset may not be recoverable.
 
 **Deferred
        Financing Costs**
 Deferred
        financing costs are being amortized over the respective lives of the convertible
        promissory notes.
 
 **Goodwill**
 Goodwill
        consists of the excess of cost over net assets acquired of IDO Ltd. on March
        8,
        2007. Management of the Company will evaluate the carrying value of goodwill
        annually or whenever a possible impairment is indicated.
 
 **Intangible
        Assets**
 The
        Company’s long-lived assets and certain identifiable intangibles are reviewed
        for impairment in accordance with Statement of Financial Accounting Standard
        No.
        144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No.
        144”) whenever events or changes in circumstances indicate that the carrying
        amount of an asset may not be recoverable.
 
 5
  Recoverability
        of assets to be held and used is measured by a comparison of the carrying
        amount
        of an asset to the future undiscounted cash flows expected to be generated
        by
        the assets. If such assets are considered to be impaired, the impairment
        to be
        recognized is measured by the amount by which the carrying amount of the
        assets
        exceeds the fair value of the assets. At March 31, 2007, Company believes
        that
        all of its long-lived assets are recoverable.
 
 Intangible
        assets consist of a patent that was purchased in connection with the Acquisition
        Transaction. The patent is being amortized using the straight line method
        over
        its estimated useful life of ten years. Amortization expense for the three
        months ended March 31, 2007 amounted to $10,000. Amortization expense is
        expected to be as follows: 2007 - $100,000, 2008 through 2011 - $120,000
        per
        year and thereafter - $620,000.
 
 **Research
        and Development**
 Costs
        incurred in connection with the research and development of the Company's
        products are expensed as incurred.
 
 **Marketing
        and Advertising**
 Marketing
        and advertising costs are expensed as incurred.
 
 **Severance
        pay**
 The
        Company’s subsidiary liability for severance pay is calculated pursuant to
        Israeli severance pay law based on the most recent salary of the employees
        multiplied by the number of years of employment as of balance sheet date.
        Employees are entitled to one month’s salary for each year of employment, or a
        portion thereof (on a pro-rata basis). Such liability in Israel is fully
        provided by monthly deposits in accordance with insurance policies and by
        an
        accrual. The deposited funds include profits accumulated through March 31,
        2007.
        The deposited funds may be withdrawn only upon the fulfillment of the obligation
        pursuant to Israeli severance pay law or labor agreements. The value of the
        deposited funds is based on the cash surrendered value of these policies,
        and
        includes immaterial profits.
 
 **Income
        Taxes**
 Income
        taxes are accounted for under the liability method. Under this method, deferred
        tax assets and liabilities are recorded based on the temporary differences
        between the financial statement and the tax bases of assets and liabilities
        and
        for operating loss carryforwards measured using the enacted tax rates in
        effect
        for the year in which the differences are expected to reverse. The Company
        periodically evaluates the realizability of its net deferred tax assets and
        records a valuation allowance if, based on the weight of available evidence,
        it
        is more likely than not that some or all of the deferred tax assets will
        not be
        realized.
 
 **Earning
        (loss) per share**
 Basic
        earnings (loss) per share are computed by dividing net income (loss) by the
        weighted-average number of shares of common stock outstanding during the
        period.
        Diluted earnings (loss) per share give effect to dilutive convertible
        securities, options, warrants and other potential common stock outstanding
        during the period, only in periods in which such effect is dilutive. The
        following securities have been excluded from the calculation of net loss
        per
        share, as their effect would be antidilutive:
  Shares
                  of Common StockIssuable
                  upon
                  Conversion/Exerciseof
                  asMarch
                  312007
              
              2006Warrants
              
              
              2,484,000
              
              
              ---Convertible
                  notes
              
              
              496,800
              
              
              ---
  
 **Recently
        issued accounting pronouncements**
 In
        February 2007, the Financial Accounting Standards Board ("FASB") issued
        Statement of Financial Accounting Standard ("SFAS") No. 159, "The Fair Value
        Option for Financial Assets and Financial Liabilities, including an amendment
        of
        FASB Statement No. 115". SFAS No. 159 permits entities to choose to measure
        many
        financial instruments and certain other items at fair value at specified
        election dates. This Statement applies to all entities, including not-for-
        profit organizations. SFAS No. 159 is effective as of the beginning of an
        entity's first fiscal year that begins after November 15, 2007. The Company
        is
        currently evaluating the impact of SFAS No. 159 on its consolidated financial
        statements.
 
 In
        September 2006, the Securities and Exchange Commission (“SEC”) issued Staff
        Accounting Bulletin (“SAB”) No. 108, "Considering the Effects of Prior Year
        Misstatements when Quantifying Misstatements in Current Year Financial
        Statements." SAB 108 provides guidance on the consideration of effects of
        the
        prior year misstatements in quantifying current year misstatements for the
        purpose of a materiality assessment. The SEC staff believes registrants must
        quantify errors using both a balance sheet and income statement approach
        and
        evaluate whether either approach results in quantifying a misstatement that,
        when all relevant quantitative and qualitative factors are considered, is
        material. SAB 108 was effective for the first annual period ending after
        November 15, 2006 with early application encouraged. The Company adopted
        the provisions of SAB 108 on December 31, 2006 and the impact of adoption
        was not material to its consolidated financial statements.
 
 6
  In
        September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" which
        applies under most other accounting pronouncements that require or permit
        fair
        value measurements. SFAS No. 157 provides a common definition of fair value
        as
        the price that would be received to sell or paid to transfer a liability
        in a
        transaction between market participants. The new standard also provides guidance
        on the methods used to measure fair value and requires expanded disclosures
        related to fair value measurements. SFAF No. 157 is effective for financial
        statements issued for fiscal years beginning after November 15, 2007. The
        Company does not expect this guidance to have a material impact on the financial
        statements.
 
 Management
        does not believe that any recent issued, but not yet effective, accounting
        standards if currently adopted, would have a material affect on the accompanying
        financial statements.
  **NOTE
        3 - GOING CONCERN**
 
 The
        accompanying consolidated financial statements have been prepared assuming
        the
        Company will continue as a going concern.
 
 At
        March
        31, 2007, the Company had not achieved profitable operations, has accumulated
        losses of $508,741 (since its inception), has a working capital deficiency
        of
        $729,638 and expects to incur further losses in the development of its business.
        These conditions cast substantial doubt about the Company’s ability to continue
        as a going concern.
 
 The
        Company’s ability to continue as a going concern is dependent upon its ability
        to generate future profitable operations and/or to obtain the necessary
        financing to meet its obligations and repay its liabilities arising from
        normal
        business operations when they come due. There can be no assurance the Company
        will be able to generate profitable operations and additional funding being
        available.
 
 The
        financial statements do not include any adjustments that might result from
        the
        outcome of this uncertainty. There can be no assurance that management will
        be
        successful in implementing a business plan or that the successful implementation
        of a business plan will actually improve the Company's operating
        results.
 
 The
        Company’s current cash resources are not sufficient to support any unforeseen
        contingencies that may arise or permit the Company to take advantage of business
        opportunities that may arise.
 
 **NOTE
        4 - ACQUISITION**
 
 On
        July
        25, 2006, Med Ex, IDO Ltd. and the IDO Selling Shareholders entered into
        a
        Securities Purchase Agreement (the “Aquisition Transaction”) pursuant to which
        Med Ex agreed to purchase all of the issued and outstanding share capital
        of IDO
        Ltd. On March 8, 2007, the Acquisition Transaction was completed for total
        consideration of $1,000,000. Acquisition costs of $55,550 were incurred by
        Med
        Ex to complete the transaction. Following the consummation of the transaction,
        IDO Ltd. became a wholly-owned subsidiary of Med Ex and Med Ex adopted the
        business of IDO Ltd.
  The
        Acquisition Transaction was accounted for as a purchase. The following table
        summarizes the estimated aggregated fair values of the assets acquired and
        the
        liabilities assumed.
  Cash
              
              $
              19,974Inventories
              
              
              192,419Other
                  current assets
              
              
              12,844Patents
              
              
              1,200,000Property
                  and equipment
              
              
              15,078Goodwill
              
              
              786,961Accounts
                  payable and accrued expenses
              
              
              (77,672
              )Amounts
                  due from related parties
              
              
              (943,251
              )Accrued
                  severance pay
              
              
              (150,803
              )$
              1,055,550
  Prior
        to
        the Acquisition Transaction, IDO Ltd. received loans for working capital
        purposes from third parties, including stockholders of Med Ex. At the date
        of
        the Acquisition Transaction, IDO Ltd. owed these parties the aggregate amount
        of
        $959,361. In connection with the Acquisition Transaction, these third parties
        assigned their rights to the loans to Med Ex. As such, the loan balances
        were
        offset against goodwill.
  In
          addition, prior to the Acquisition Transaction, IDO Ltd. received working
          capital loans from certain non-management related stockholders of Med Ex. 
Following the consummation of the Acquisition Transaction, the outstanding
          principal amount and accrued interest were repaid from the proceeds of
          the
          private placement of Company's securities referred to in Note 5.
 7
 
 The
        following table presents unaudited pro forma revenue, net loss and loss per
        share giving effect to the Acquisition Transaction as if it had been completed
        at the beginning of each period presented:
 
 Three
                  months Ended March 31,2007
              
              2006Revenue
              
              $
              19,985
              
              $
              8,050Net
                    loss
              
              $
              (754,834
              )
              $
              (696,332
              )Net
                  loss per share, basic and diluted
              
              $
              (0.07
              )
              $
              (0.33
              )
 
 **NOTE
        5 - PRIVATE PLACEMENT OF DEBT SECURITIES**
 
 On
        February 28, 2007 and March 29, 2007, the Company raised gross proceeds of
        $1,050,000 and $1,150,000, respectively, from the private placement of its
        120
        day Secured Convertible Notes (the “Notes”). The Notes were issued pursuant to a
        Subscription Agreement, dated February 28, 2007 (the "Subscription Agreement”),
        between the Company and certain investors ("Investors") pursuant to which
        the
        Company was able to raise up to $3 million from the placement of its promissory
        notes. In connection with the issuance of the Notes, the Company issued warrants
        (the “Investor Warrants”) to purchase up to 2,484,000 shares of the Company’s
        common stock, par value $0.001 (the “Common Stock”) at a per share exercise
        price of $5.00. The warrants are exercisable through the fifth anniversary
        of
        the effective date of a resale registration statement relating to the Common
        Stock underlying the securities sold. Under the terms of the Subscription
        Agreement, the Investors also received 460,000 restricted shares (the
“Incentive Shares”) of the Company’s Common Stock.
  Pursuant
        to the Subscription Agreement, the Company issued Notes to the Investors
        in the
        aggregate principal amount of $2,484,000, which reflects an original issue
        discount on the principal amount of the loan of 8% with respect to the 120
        day
        loan period and an effective annual interest rate of 23%. The Notes have
        a term
        of 120 days and are convertible into shares of the Company’s Common Stock at the
        holder’s option at any time at an initial conversion price of $5.00 per share,
        subject to adjustment in the event of certain capital adjustments or similar
        transactions, such as a stock split or merger and as further described below; *provided
        that* ,
        following the first anniversary of issuance, the conversion price will be
        the
        lesser of (i) $5.00 or (ii) seventy-five percent (75%) of the average of
        the
        three highest closing bid prices of the Common Stock as reported by Bloomberg
        L.P. for the stock’s principal trading market for the five trading days
        preceding but not including the date of conversion. Under the terms of the
        Notes, the holder of the Notes may declare the Notes immediately due and
        payable
        upon the occurrence of certain specified events of default, as defined. In
        the
        event that the Company is prohibited from issuing shares upon conversion
        of the
        Notes within a prescribed time period and upon an event of default, a change
        in
        control (as defined) or the dissolution, liquidation or winding up of the
        Company, the Company, upon request of the Note holders, is required to redeem
        the Notes by payment of 120% of their stated value.
 
 Notes
        in
        the aggregate principal amount of $1,134,000 and $1,350,000 are scheduled
        to
        mature, respectively, on June 28, 2007 and on July 29, 2007. Interest incurred
        on the Notes amounted to $20,405 for the three months ended March 31,
        2007.
 
 For
        financial reporting purposes, the Company recorded a discount of $1,503,260
        to
        reflect the value of the warrants and shares issued and in accordance with
        EITF
        No. 00-27, an additional discount of $287,364 to reflect the beneficial
        conversion feature of the Notes. The discounts are being amortized to the
        date
        of maturity unless converted earlier. Amortization for the three months ended
        March 31, 2007 amounted to $160,495.
 
 To
        secure
        Company’s obligations under the Notes and the Subscription Agreement, the
        Company granted to the Investors a security interest in substantially all
        of its
        assets, including without limitation, its intellectual property, under the
        terms
        and conditions of a Security Interest Agreement dated as of the date of the
        Notes. The security interest terminates upon payment or satisfaction of all
        of
        Company’s obligations under the Note. See Note 7.
 
 In
        April
        2007, pursuant to the Subscription Agreement the Company raised additional
        gross
        proceeds of $700,000 from the private placement of Notes in the principal
        amount
        of $756,000, which amount is scheduled to mature on August 16, 2007. In
        connection with this issuance the Company issued five-year warrants to purchase
        up to 756,000 shares of the Company’s Common Stock at a per share exercise price
        of $5.00. The investors also received 140,000 restricted shares of the Company’s
        Common Stock.
 
 In
        all
        material respects, the loans made to the Company in April 2007 pursuant to
        the
        Subscription Agreement were made on terms substantially similar to the terms
        that disclosed in Note 5, other than for the scheduled maturity dates of
        the
        Notes. The closing held on April 18, 2007 represents the final closing of
        the
        financing contemplated by the Subscription Agreement. One of the individual
        investors who advanced the Company $200,000 (evidenced by a promissory note
        in
        the amount of $216,000) is the husband of Ms. Irit Reiner, one of the Company’s
        directors.
 
 **NOTE
        6 - CAPITAL TRANSACTIONS**
 
 On
        March
        9, 2007, the Company’s Board of Directors and the majority of Company’s
        stockholders authorized:
  ·
                An
                    increase in the number of authorized shares of the Company’s Common Stock
                    from 25,000,000 to 50,0000 shares; and·
                the
                    designation of 20 million shares of the Company’s authorized capital stock
                    as preferred stock with the Board of Directors authorized to
                    fix the
                    number of shares of any series of preferred stock and to determine
                    the
                    designation of any such series, including the authority to determine
                    the
                    designation of any such series, including the authority to determine
                    the
                    rights, preferences, privileges and restrictions on any such
                    series of
                    preferred stock.
  8
 In
        conjunction with the above, the Board of Directors of the Company approved
        a
        three-for-one stock split. The record date for the stock split has not yet
        been
        fixed. The stock split will be effected following the effectiveness of the
        increase in the number of authorized shares of Common Stock and designation
        of
        preferred stock referred to above.
 
 **NOTE
        7 - RELATED PARTY TRANSACTIONS**
 
 The
        Company has received working capital loans from certain non-management
        affiliated stockholders of Med Ex (see Note 4). Amounts owed on the loans
        amounted to $49,973 at March 31, 2007. Interest incurred on the loans amounted
        to $11,908 for the three months ended March 31,
        2007.****
  9
   
 **ITEM
                  2.**
              **MANAGEMENT'S
                  DISCUSSION AND ANALYSIS OR PLAN OF
                  OPERATION**
 
 THE
        FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS
        AND THE NOTES RELATED TO THOSE STATEMENTS. SOME OF OUR DISCUSSION IS
        FORWARD-LOOKING AND INVOLVES RISKS AND UNCERTAINTIES. FOR INFORMATION REGARDING
        RISK FACTORS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, REFER
        TO
        THE RISK FACTORS SECTION OF THE OF THE COMPANY'S CURRENT REPORT ON FORM 8-K
        FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 14,
        2007.
  **OVERVIEW**
 
 The
        Medical Exchange Inc. was incorporated in the State of Nevada on January
        23,
        2004. On July 25, 2006, we, IDO Security Ltd. (“IDO Ltd.”) and IDO Ltd.’s
        Selling Shareholders entered into a Securities Purchase Agreement (the “Purchase
        Agreement”) pursuant to which we agreed to purchase all of the issued and
        outstanding share capital of IDO (the “Acquisition Transaction”). On March 8,
        2007, the Acquisition Transaction was consummated for total consideration
        of
        $1,000,000 that was paid to the Selling Stockholders. Acquisition costs of
        $55,550 were incurred to complete the transaction. Following the consummation
        of
        the transaction, IDO became a wholly-owned subsidiary of the Company.
 
 Following
        the Acquisition Transaction, we carried on IDO Ltd.’s business and are primarily
        engaged in the design, development and marketing of devices for the homeland
        security and loss prevention markets for use in security screening to detect
        metallic objects concealed on or in footwear, ankles and feet through the
        use of
        electro-magnetic fields. These devices were designed specifically for
        applications in the security screening to complement the current methods
        for the
        detection of metallic items during security screenings and at security
        checkpoints in venues such as airports, prisons, schools, stadiums and
        other public locations and other venues requiring individual security screening.
 
 The
        proprietary technology and method, through the use of a device developed
        and
        manufactured by the Company in Israel and marketed under the brand name
“MagShoe”, creates specific electro-magnetic fields that can intelligently
        detect the presence of metallic objects inside a persons footwear, as well
        as
        next to or above the ankles, while ignoring those metal objects that are
        normally found inside shoes. The proprietary software included in the Magshoe
        provides for the collation and delivery of the screening data to the operator
        for immediate analysis. The Magshoe obviates the need to remove the footwear
        being inspected.
 
 Our
        sole
        commercial product, “MagShoe” has been issued one patent by the United States
        Patent and Trademark Office in November 2005 covering various aspects of
        its
        unique technology and there is one patent application pending in Israel.
        In
        January 2006, the Magshoe was approved for use by the Department for Transport
        in the United Kingdom, after fields trials were conducted for the Home Office’s
        Police Scientific Development Branch. In addition, we have been certified
        by the
        International Organization for Standardization (“ISO”) under ISO 9001:2000
        compliance for the design, development and manufacture of electronic,
        electro-optic and electro-mechanical systems.
 
 We
        believe that the market for security and inspection products will continue
        to be
        positively impacted by the threat of terrorist activities and by new government
        regulations and appropriations for security and inspection products. We
        anticipate that the promulgation of new governmental regulation and standards
        will establish performance baselines against which we will be able to direct
        certain of our continued research and development spending and market our
        products to customers, worldwide.
 
 **CRITICAL
        ACCOUNTING POLICIES AND ESTIMATES**
 
 Our
        financial statements and accompanying notes have been prepared in accordance
        with accounting principles generally accepted in the United States of America
        ("GAAP"). The preparation of these financial statements required management
        to
        make estimates, judgments and assumptions that affect the reported amounts
        of
        assets, liabilities, revenues and expenses. We continually evaluate the
        accounting policies and estimates it uses to prepare the consolidated financial
        statements and bases its estimates on historical experiences and assumptions
        believed to be reasonable under current facts and circumstances. Actual amounts
        and results could differ from these estimates made by management.
 
 We
        believe our use if estimates and underlying accounting assumptions adhere
        to
        GAAP and are consistently and conservatively applied. We base our estimates
        on
        historical experience and on various other assumptions that we believe to
        be
        reasonable under the circumstances. Actual results may differ materially
        from
        these estimates under different assumptions or conditions. We continue to
        monitor significant estimates made during the preparation of our financial
        statements.
 
 Our
        significant accounting policies are summarized in Note 2 of Notes
        to Condensed Consolidated Financial Statements. While all these significant
        accounting policies impact its financial condition and results of operations,
        the Company views certain of these policies as critical. Policies determined
        to
        be critical are those policies that have the most significant impact on our
        consolidated financial statements and require management to use a greater
        degree
        of judgment and estimates. Actual results may differ from those estimates.
        Our
        management believes that given current facts and circumstances, it is unlikely
        that applying any other reasonable judgments or estimate methodologies would
        cause effect on our consolidated results of operations, financial position
        or
        liquidity for the presented in this report.
 
 10
 
 **MANAGEMENT’S
        DISCUSSION AND ANALYSIS**
 
 We
        are
        aggressively pursuing our business plan with respect to product development
        and
        enhancement and field testing, as well as initial marketing efforts. Following
        the Acquisition Transaction, we had seven employees. We intend to expand
        our
        internal management and administrative capacities. We expect to continue
        making
        substantial investment in equipment and to acquire inventory to facilitate
        the
        expansion of pilots and to prepare for commercialization.
 
 All
        references to financial results prior to the date of the Acquisition Transaction
        (e.g., March 8, 2007) shall mean and refer to the financial results of IDO
        Ltd.
        All references to results following the date of the Acquisition Transaction
        shall mean and refer to the financial results of the Medical Exchange Inc.
        and
        its consolidated subsidiary, IDO Ltd.
 
 **Revenues** - No
        revenues were recorded for the 2007 and 2006 Periods. Prior to the consummation
        of the Acquisition Transaction, IDO Ltd. generated limited revenues since
        the
        commencement of its activities in 2003.
 
 **Research
        and development** **-** Research
        and development expense consist primarily of expenses incurred in designing,
        developing and field testing our products. These expenses consist primarily
        of
        salaries and related expenses for personnel, contract design and testing
        services, supplies used and consulting and license fees paid to third parties.
        We incurred research and development expenses in the amount of $27,006 for
        the
        2007 Period. For the 2006 Period, no research and development expenses were
        incurred.
 
 **Selling,
        general and administrative expenses** -
        Selling, general and administrative expenses primarily consist of salaries
        and
        other related costs for personnel in executive and other administrative
        functions. Other significant costs include professional fees for legal,
        accounting and other services. We incurred selling, general and administrative
        expenses totaling $81,995 for the 2007 Period as compared to $1,839 for the
        2006
        Period. The increase in selling, general and administrative expenses is
        principally attributable to the intensified activities following the Acquisition
        Transaction.
 
 **Interest
        expense -** Interest
        expense for the 2007 Period were $32,313. No interest was incurred in the
        2006
        Period. Interest included $20,405 related to the convertible promissory notes
        and $11,908 to related parties.
 
 **Amortization
        -** For
        the
        2007 Period, we incurred amortization of $183,917. Amortization related to
        the
        debt discount, beneficial conversion feature and deferred finance costs incurred
        in connection with the placement of our convertible promissory notes which
        were
        issued in February and March 2007. These costs are amortized to the date
        of
        maturity of the debt unless converted earlier.
 
 **LIQUIDITY
        AND CAPITAL RESOURCES**
 
 To
        date
        we have financed our operations primarily from the sale of our
        securities.
 
 As
        of
        March 31, 2007, we had a cash balance of $73,371.
 
 Between
        February 28 and April 18, 2007, we raised $3,000,000 from the private placement
        (the “Private Placement”) to certain institutional and private investors
        (collectively, the “Investors”) of our 120 day Secured Convertible Notes
        (collectively, the “Notes”). The loans were advanced pursuant to a Subscription
        Agreement, dated as of February 28, 2007 (the “Subscription Agreement”).
        Pursuant to the Subscription Agreement, the Company issued to the Investors
        its
        Notes in the aggregate principal amount of $2,106,000, reflecting an original
        issue discount on the principal amount of the loans of 8% over the 120 day
        loan
        period. Notes in the aggregate principal amount of $1,134,000, $1,350,000
        and
        $756,000 are scheduled to mature, respectively, on June 28, 2007, July 29,
        2007
        and August 16, 2007. These investors have been granted a lien on all of our
        assets, including our intellectual property, to secure the repayment of amounts
        owing under the Notes and the Subscription Agreement.
  Cash
        used
        in operating activities in the 2007 Period was $7,269. The decrease in cash
        was
        primarily attributable to funding the cash losses for the period.
 
 Cash
        used
        in investing activities in 2007 Period was $981,670 and was primarily
        attributable to the consummation of the Acquisition Transaction.
 
 Cash
        provided by financing activities was $1,054,826 in the 2007 Period. The Company
        received proceeds of $2.3 million from the issuance of the Notes. In connection
        with such issuances, the Company incurred financing costs of $325,000. In
        addition, the Company repaid short-term debt incurred by IDO Ltd. totaling
        $985,794.
 
 We
        will
        need to raise additional funds to be able to satisfy our cash requirements
        over
        the next twelve months. Product development, corporate operations and marketing
        expenses will continue to require additional capital. Our current revenue
        from
        operations is insufficient to cover our current operating expenses and projected
        expansion plans which include the repayment of the Notes that are to come
        due
        between June and August 2007. We therefore are aggressively seeking additional
        financing through the sale of our equity and/or debt securities. No assurance
        can be provided that additional capital will be available to us on commercially
        acceptable or at all. Our auditors included a "going concern" qualification
        in
        their auditors' report for the six month period ended December 31, 2006.
        Such
        "going concern" qualification may make it more difficult for us to raise
        funds
        when needed. Additional equity financings may be dilutive to holders of our
        Common Stock.
  11
 **ITEM
                    3.**
                **CONTROLS
                    AND PROCEDURES**
  EVALUATION
          OF DISCLOSURE CONTROLS AND PROCEDURES. We maintain disclosure controls
          and
          procedures that are designed to ensure that information required to be
          disclosed
          in our Exchange Act reports is recorded, processed, summarized and reported
          within the time periods specified in the SEC's rules and forms, and that
          such
          information is accumulated and communicated to management, including our
          acting
          Chief Executive Officer (and Principal Financial and Accounting Officer),
          to
          allow timely decisions regarding required disclosure based closely on the
          definition of "disclosure controls and procedures" in Rule
          13a-14(c).
  As
          of the
          end of the period covered by this report, we carried out an evaluation,
          under
          the supervision and with participation of management, including our acting
          Chief
          Executive Officer (and Principal Financial and Accounting Officer), of
          the
          effectiveness of the design and operation of our disclosure controls and
          procedures. Based on the foregoing, our acting Chief Executive Officer
          (and
          Principal Financial and Accounting Officer)concluded that our disclosure
          controls and procedures were effective.
  CHANGES
        IN INTERNAL CONTROLS OVER FINANCIAL REPORTING. During the quarter ended March
        31, 2007, there have been no changes in our internal controls over financial
        reporting that have materially affected, or are reasonably likely to materially
        affect, these controls.
 
 **PART
        II - OTHER INFORMATION**
 
 **ITEM
                  1.**
              **LEGAL
                  PROCEEDINGS.**
  None.
 
 **ITEM
                  2.**
              **UNREGISTERED
                  SALES OF EQUITY SECURITIES AND USE OF
                  PROCEEDS**
  During
        the three months ended March 31, 2007, we issued unregistered securities
        as
        follows:
  (i)
        On
        February 28, 2007, we issued to certain investors our 120 day promissory
        notes
        in the aggregate principal of $1,134,000 in consideration of gross proceeds
        of
        $1,050,000. The Notes were issued pursuant to a Subscription Agreement, dated
        February 28, 2007 (the "Subscription Agreement”), between the Company and the
        investors pursuant to which were able to raise up to $3 million. In connection
        therewith, we issued to these investors warrants (the “Investor Warrants”) to
        purchase in the aggregate up to 1,134,000 shares of the Company’s common stock,
        par value $0.001 (the “Common Stock”) at a per share exercise price of $5.00.
        Under the terms of the Subscription Agreement, the Investors also
        received 200,000 restricted shares.
 
 On
        March
        29, 2007, we issued to certain investors our 120 day promissory notes in
        the
        aggregate principal of $1,35,000 in consideration of gross proceeds of
        $1,250,000. The Notes were issued pursuant to the Subscription Agreement.
        In
        connection therewith, we issued to these investors warrants Investor Warrants
        to
        purchase in the aggregate up to 1,350,000 shares of the Company’s Common Stock
        at a per share exercise price of $5.00. Under the terms of the Subscription
        Agreement, the Investors also received 260,000 restricted shares
  These
        securities were issued without registration under the Securities Act in reliance
        upon the exemption provided in Section 4(2) of the Securities Act. Appropriate
        legends were affixed to the share certificates issued in all of the above
        transactions. The Company believes that each of the recipients was an
“accredited investor” within the meaning of Rule 501(a) of Regulation D under
        the Securities Act, or had such knowledge and experience in financial and
        business matters as to be able to evaluate the merits and risks of an investment
        in our common stock. All recipients had adequate access, through their
        relationships with the Company and its officers and directors, to information
        about the Company. None of the transactions described above involved general
        solicitation or advertising.
 
 **ITEM
                  3.**
              **DEFAULTS
                  UPON SENIOR SECURITIES.**
  None.
 
 **ITEM
                  4.**
              **SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY
                  HOLDERS.**
  None.
 
 **ITEM
                  5.**
              **OTHER
                  INFORMATION.**
  None.
 
 12
  **ITEM
                    6.**
                **EXHIBITS.**
 Exhibit
                  Number
              Description
 4.2
              Form
                  of Class A Common Stock Purchase Warrant *10.1
              Securities
                  Purchase Agreement dated as of July 19, 2006 among The Medical
                  Exchange
                  Inc., IDO Security Ltd. and the selling shareholders identified
                  therein*10.2
              Employment
                  Agreement dated as of February 28, 2007 between IDO Security Ltd.
                  and Gill
                  Stiss*10.3
              Subscription
                  Agreement dated as of February 28, 2007 between the Company and
                  the
                  Investor specified therein*10.4
              Security
                  Agreement dated as of February 28, 2007 between the Company and
                  the
                  Investor specified therein*31
              CertificationPursuant
                  to Rule 13a-14a of the Securities Exchange Act of 1934, as
                  amended32
              CertificationPursuant
                  to Section 906 of  Sarbanes-Oxley Act of
                  2002
 
 *
        Filed
        as an exhibit to the Company’s Current Report on Form 8-K filed on March 14,
        2007 and incorporated herein by reference.
  13
   
 **SIGNATURES**
  In
        accordance with the requirements of the Exchange Act, the small business
        issuer
        has caused this report to be signed by the undersigned thereunto duly
        authorized.
   DATE:  May 21, 2007THE MEDICAL EXCHANGE, INC./s/
                  MICHAEL GOLDBERGMICHAEL
                  GOLDBERGACTING
                  CHIEF EXECUTIVE OFFICER (PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL
                  FINANCIAL AND ACCOUNTING OFFCIER)
     14