U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)
(X)      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

                                       OR

(   )    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO  ___________


                                                  Commission File Number 0-23153

                                 REMOTEMDX, INC.
        (Exact name of small business issuer as specified in its charter)



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


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

                                 (801) 974-9474
                           (Issuer's telephone number)


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 __

As of May 10, 2002, the issuer had issued and outstanding 10,323,937 shares of
common stock, par value $0.0001.

Transitional Small Business Disclosure Format (Check One): Yes __      No X
                                                                         ---

THIS FILING INCLUDES UNAUDITED FINANCIAL STATEMENTS THAT HAVE NOT BEEN REVIEWED
IN ACCORDANCE WITH RULE 310(b) OF REGULATION S-B PROMULGATED BY THE SECURITIES
AND EXCHANGE COMMISSION, BECAUSE THE COMPANY DETERMINED IT WAS UNABLE TO OBTAIN
SUCH A REVIEW FROM THE COMPANYS CURRENT AUDITOR, ARTHUR ANDERSEN LLP. SEE
"INFORMATION WITH RESPECT TO FINANCIAL STATEMENTS" AT PAGE 8 FOR MORE
INFORMATION.



                                       1


<PAGE>


                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                 No.
                                                                                                                ----

PART I.  FINANCIAL INFORMATION

         1.       Financial Statements

<S>                                                                                                              <C>
                  Unaudited Condensed Consolidated Balance Sheet as of March 31, 2002.............................3

                  Unaudited Condensed Consolidated Statements of Operations for
                  the three and six months ended March 31, 2002 and 2001..........................................4

                  Unaudited Condensed Consolidated Statements of Stockholders' Equity (Deficit)
                  for the six months ended March 31, 2002.........................................................5

                  Unaudited Condensed Consolidated Statements of Cash Flows for
                  the six months ended March 31, 2002 and 2001....................................................6

                  Notes to Unaudited Condensed Consolidated Financial Statements..................................8

         2.       Management's Discussion and Analysis or Plan of Operation......................................16

PART II. OTHER INFORMATION.......................................................................................22

         2.       Changes in Securities and Use of Proceeds......................................................22

         5.       Other Information..............................................................................22

         6.       Exhibits and Reports on Form 8-K...............................................................22
</TABLE>



                                       2

<PAGE>


                                     PART I
 Item 1 - Financial Statements

                                 REMOTEMDX, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                        March 31, 2002
                                                                                        --------------
Assets
Current assets:
<S>                                                                                        <C>
   Cash                                                                                        50,965
   Cash in escrow                                                                                   0
   Accounts receivable, net of allowance for doubtful accounts of $87,124                     726,573
   Inventories                                                                              1,618,394
   Prepaid expenses                                                                            35,185
                                                                                        --------------
                Total current assets                                                        2,431,117
Property and equipment, net of accumulated depreciation and amortization of $489,055          307,212
Core technology, net of accumulated amortization of $140,000                                  420,000
Goodwill                                                                                    7,776,209
                                                                                        --------------
                Total assets
                                                                                           10,934,538
                                                                                        ==============
Liabilities and Stockholders' Equity
Current liabilities:
   Outstanding check liability
                                                                                              138,201
   Purchase obligation to former SecureAlert shareholders, net of discount of $34,278
                                                                                              565,722
   Notes payable                                                                            2,037,574
   Bank line of credit                                                                      1,850,000
   Related-party convertible notes payable                                                    500,000
   Related-party line of credit                                                               401,964
   Series A 15% convertible debentures                                                         40,000
   Accounts payable                                                                         1,493,153
   Accrued liabilities                                                                        517,010
   Dividends payable                                                                          244,833
   Deferred revenue                                                                            23,399
                                                                                        --------------
                Total current liabilities                                                   7,811,856
                                                                                        --------------
Commitments and contingencies (Notes 3,5,6 and 7)
Redeemable common stock at redemption value of $3 per share; 192,000 shares outstanding       576,000
Stockholders' equity:
   Preferred stock:
     Series A; 10% dividend, convertible, non-voting; $0.0001 par value; 30,000 shares
       designated;                                                                                  3
        30,104 shares outstanding (aggregate liquidation preference of
     $8,333,291) Series B; convertible; $0.0001 par value; 2,000,000 shares
     designated; 835,824
       shares outstanding (aggregate liquidation preference of $2,507,472)                         84
   Common stock;  $0.0001 par value; 50,000,000 shares authorized, 8,783,517 shares               879
     outstanding
   Additional paid-in capital                                                              39,829,760
   Deferred consulting costs                                                                 (150,000)
   Deferred financing costs                                                                  (497,465)
   Series A preferred stock subscription receivable - due from related party                 (338,300)
   Accumulated deficit                                                                    (36,298,279)
                                                                                        --------------
                Total stockholders' equity                                                  2,546,682
                                                                                        --------------
                Total liabilities and stockholders' equity
                                                                                           10,934,538
                                                                                        ==============
</TABLE>





                  See accompanying notes to unaudited condensed
                       consolidated financial statements.


                                       3

<PAGE>




                                 REMOTEMDX, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                             Three months ended              Six months ended
                                                                  March 31,                      March 31,
                                                       ------------------------------------------------------------
                                                           2002           2001             2002           2001
                                                       ------------------------------------------------------------
<S>                                                    <C>            <C>              <C>            <C>
Net sales                                                 2,601,519        141,560        4,889,770        255,765
Cost of goods sold                                        2,230,730         87,725        4,080,832       158,5755
                                                              -----------------------------------------------------
                Gross profit                                370,789         53,835          808,938         97,190

Research and development expenses                            93,657              0          279,408              0
Selling, general and administrative expenses             10,992,954      1,521,925       12,796,990      2,176,629
Amortization of core technology                              46,666              0           93,333              0
                                                       ------------------------------------------------------------
                Loss from operations                    (10,762,479)    (1,468,090)     (12,360,793)    (2,079,439)
Other income (expense):
   Interest income                                            1,915          1,661            5,368          3,905
   Interest expense                                        (406,306)       (13,050)      (1,989,930)       (13,050)
                                                       ------------------------------------------------------------
                Net loss                                (11,166,870)    (1,479,479)     (14,345,355)    (2,088,584)
Dividends on Series A preferred stock                      (123,928)       (80,690)        (244,833)      (152,920)
                                                       ------------------------------------------------------------
                Net loss attributable to common        $(11,290,798)  $ (4,445,992)    $(14,590,188)  $ (5,146,287)
                stockholders
                                                       ============================================================
Net loss per common share - basic and diluted          $      (1.42)  $      (1.40)    $      (1.92)  $      (1.68)
                                                       ============================================================
Weighted average shares - basic and diluted               7,972,464      3,183,591        7,588,394      3,066,420
                                                       ============================================================
</TABLE>























                  See accompanying notes to unaudited condensed
                       consolidated financial statements.


                                       4

<PAGE>


                                 REMOTEMDX, INC.
       CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                      Redeemable                    Preferred Stock                                       Additional
                                                      ---------------------------------------------
                                     Common Stock          Series A              Series B               Common Stock        Paid-In
                                 ------------------------------------------------------------------------------------------
                                   Shares    Amounts    Shares     Amount     Shares     Amount      Shares      Amount     Capital
                                 ---------------------------------------------------------------------------------------------------
<S>                               <C>       <C>          <C>         <C>     <C>          <C>      <C>            <C>    <C>
Balance at September 30, 2001           0         0      24,181      2       700,001      70       7,841,585      784    27,652,020

Issuance of redeemable common
  stock for:
   Cash                            32,000    96,000
   Services                       110,000   330,000
   Conversion from common stock    50,000   150,000                                                  (50,000)      (5)     (149,995)
Issuance of common stock for:
   Services                                                                                          238,036       24       744,085
   Conversion of debentures and                          (1,983)     -                                19,937        2        59,809
     interest
   Conversion of Series A                                                                            733,959       74           (74)
     preferred stock
Issuance of Series A preferred
  stock for:
   Cashless exercise of warrants                          5,812      1                                                           (1)
   Settlement of liability
     associated with borrowings
     under a related-party line
     of credit                                            2,094                                                          11,091,415
Issuance of Series B preferred                                               135,823      14                                366,159
   stock for cash:
Issuance of common stock options                                                                                             66,342
   to consultants for services
Amortization of deferred
   consulting costs
Amortization of deferred
   financing costs
Net loss
Dividends on Series A preferred
stock
                                 ---------------------------------------------------------------------------------------------------
Balance at March 31, 2002         192,000   576,000      30,104      3       835,824      84       8,783,517      879    39,829,760

                                 ===================================================================================================
</TABLE>





<TABLE>
<CAPTION>
                                                             Preferred
                                    Deferred   Deferred       Stock
                                    Consulting  Financing  Subscriptions  Accumulated
                                      Costs       Costs     Receivable      Deficit
                                 -----------------------------------------------------
<S>                                 <C>          <C>         <C>         <C>
Balance at September 30, 2001          -           -        (338,300)    21,708,091

Issuance of redeemable common
  stock for:
   Cash                                         (165,000)
   Services
   Conversion from common stock
Issuance of common stock for:
   Services                        (300,000)    (290,000)
   Conversion of debentures and
     interest
   Conversion of Series A
     preferred stock
Issuance of Series A preferred
  stock for:
   Cashless exercise of warrants
   Settlement of liability
     associated with borrowings
     under a related-party line
     of credit                                  (131,250)
Issuance of Series B preferred
   stock for cash:
Issuance of common stock options
   to consultants for services
Amortization of deferred            150,000
   consulting costs
Amortization of deferred                          88,965
   financing costs
Net loss                                                                (14,345,355)
Dividends on Series A preferred                                            (244,833)
stock

                                 -----------------------------------------------------
Balance at March 31, 2002          (150,000)    (497,285)   (338,300)   (36,298,279)

                                 =====================================================
</TABLE>


                  See accompanying notes to unaudited condensed
                       consolidated financial statements.


                                       5

<PAGE>


                                 REMOTEMDX, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                          Six months ended
                                                                                              March 31,
                                                                                 -----------------------------------
                                                                                       2002              2001
                                                                                 -----------------------------------
Cash flows from operating activities:
<S>                                                                              <C>                 <C>
   Net loss                                                                        (14,345,355)      $   (2,088,584)
   Adjustments to reconcile net loss to net cash used in operating activities:
       Depreciation and amortization                                                   149,213               13,730
       Amortization of discount on purchase obligation to former
         SecureAlert shareholders                                                       49,781                    -
       Amortization of deferred consulting costs                                       150,000                    -
       Amortization of deferred financing costs                                         88,785
       Interest expense related to preferred stock issuances associated
         with borrowings under related-party line of credit                         11,060,165                    -
       Common stock issued for services                                                 54,108              400,000
       Preferred stock issued for services                                                   0              695,000
       Redeemable common stock issued for services                                     165,000                    -
       Common stock options issued for services                                         48,249               12,799
       Changes in operating assets and liabilities:
           Accounts receivable, net                                                   (390,519)                  39
           Inventories                                                                (618,618)              (1,781)
           Prepaid expenses                                                             31,332                 (352)
           Accounts payable                                                            311,527              (49,029)
           Accrued liabilities                                                        (124,586)              47,461
           Deferred revenue                                                            (59,761)                   -
                                                                                 -----------------------------------
                Net cash used in operating activities                               (3,430,679)            (970,717)
                                                                                 -----------------------------------
Cash flows from investing activities:
   Purchase of property and equipment                                                  (16,704)              (3,100)
   Disposal of fixed assets                                                              8,046                    -
   Note receivable                                                                           -             (150,710)
                                                                                 -----------------------------------
                        Net cash used in investing activities                           (8,658)            (153,810)
                                                                                 -----------------------------------
Cash flows from financing activities:
   Payments on purchase obligations to former SecureAlert shareholders                (600,000)                   -
   Net borrowings under related-party line of credit                                   385,964                    -
   Net borrowings on bank line of credit                                             1,256,413                    -
   Proceeds from issuance of redeemable common stock                                    96,000                    -
   Proceeds from issuance of Series B preferred stock, net of cash offering costs      366,173                    -
   Proceeds from issuance of notes payable                                           2,683,720              535,000
   Proceeds from issuance of debentures                                                      -              500,000
   Payments on notes payable                                                          (896,146)                   -
                                                                                 -----------------------------------
                Net cash provided by financing activities                            3,292,124            1,035,000
                                                                                 -----------------------------------
Net increase (decrease) in cash                                                       (147,213)             (89,527)
Cash, beginning of period                                                               59,977              278,421
                                                                                 -----------------------------------
Cash, end of period                                                              $     (87,236)      $      188,894

                                                                                 ===================================
</TABLE>

                  See accompanying notes to unaudited condensed
                       consolidated financial statements.



                                       6
<PAGE>


                                 REMOTEMDX, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                Six months ended
                                                                                    March 31,
                                                                       ------------------------------------
                                                                             2002              2001
                                                                       ------------------------------------
Supplemental disclosure of cash flow information:
<S>                                                                          <C>                     <C>
   Cash paid for interest                                                    311,814                 0
Supplemental schedule of non-cash investing and financing activities:
   Series A convertible debentures and related accrued interest
     converted into shares of common stock                                    59,811                 0
   Series A preferred stock dividends                                        244,833                 0
   Conversion of accrued liability into a note payable                       250,000                 0
   Deferred consulting costs resulting from issuance of nonforfeitable
     common stock                                                            300,000                 0
   Deferred financing costs resulting from issuance of nonforfeitable
     redeemable common stock                                                 165,000                 0
</TABLE>































                  See accompanying notes to unaudited condensed
                       consolidated financial statements.


                                       8

<PAGE>


                        REMOTEMDX, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

INFORMATION WITH RESPECT TO FINANCIAL STATEMENTS

This filing includes unaudited financial statements that have not been reviewed
by the Company's independent auditors in accordance with Rule 310(b) of
Regulation S-B promulgated by the Securities and Exchange Commission, because
the Company determined it was unable to obtain such a review from its current
auditors, Arthur Andersen LLP.

On May 13, 2002, the Company, based on the recommendation of the Audit Committee
of the Company's Board of Directors, terminated the engagement of Arthur
Andersen LLP as the Company's independent public accountants. Subject to the
recommendation of the Audit Committee, the Company will retain new independent
public accountants, which will review the financial statements for the quarterly
period ended March 31, 2002 in accordance with Rule 310(b). The Company will
amend this report if necessary following the review by the new audit firm.

No independent auditor has reviewed the financial statements set forth below or
opined that such statements present fairly, in all material aspects, the
financial position, results of operations, cash flows and changes in
stockholders equity of RemoteMDx, Inc. and its subsidiaries for the three and
six months ended March 31, 2002.

(1)      ORGANIZATION AND NATURE OF OPERATIONS

The Company is a technology-based remote personal safety, medical, health
monitoring and diagnostic services company. The Company creates solutions for
real-time monitoring of personal safety, security, and health needs. The Company
contracts with national call centers for delivery of monitoring services.

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 two years management has begun to pursue a more expanded role in the
medical diagnostic industry by providing innovative ways to manage patient
medical information as well as linking patients, physicians and payors through
remote health monitoring products. Additionally, through its acquisition of
SecureAlert II, Inc. ("SecureAlert") in July 2001 (see Note 3), the Company is
engaged in the business of manufacturing and marketing mobile emergency and
personal security systems, and consumer electronics products. The Company's
revenues for the six months ended March 31, 2002, were generated primarily from
the sale of consumer electronics and personal security products and to a lesser
extent from medical stains and reagents. The Company is pursuing the development
of remote health monitoring products.

(2)      BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements of the Company have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States have been
condensed or omitted pursuant to such rules and regulations. These condensed
consolidated financial statements reflect all adjustments (consisting only of
normal recurring adjustments) that, in the opinion of management, are necessary
to present fairly the results of operations of the Company for the periods
presented. These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's Form 10-KSB for the year ended September 30, 2001. The
results of operations for the six months ended March 31, 2002 are not
necessarily indicative of the results that may be expected for the fiscal year
ending September 30, 2002.

(3)      ACQUISITION OF SECUREALERT

On July 2, 2001, the Company consummated a merger agreement to acquire
SecureAlert, a Tennessee corporation engaged in the business of manufacturing
and selling home and personal security devices and other electronic devices. The


                                       8

<PAGE>

consideration for the acquisition consisted of 1,433,333 shares of common stock
with a fair value of $4,299,999 and $1,400,000 in cash. Of the acquisition
consideration, 233,333 shares of common stock and $200,000 in cash were
delivered upon consummating the merger agreement. The remaining 1,200,000 shares
and $1,200,000 in cash were to be delivered in installments on the last day of
each of six successive calendar quarters beginning September 30, 2001.


The Company failed to pay the required September 30, 2001 installment payments
of cash and shares. On October 15, 2001, the Company received a notice of
default. On November 30, 2001, the Company and the former SecureAlert
shareholders amended the merger agreement. The amended agreement required the
Company to (i) disburse the $200,000 and 200,000 share payments due originally
on September 30, 2001 on or before December 5, 2001, (ii) pay a fee of $10,000
to a former shareholder of SecureAlert on or before December 5, 2001, for the
extension through December 14, 2001 of the shareholder's letter of credit in the
amount of $202,000 securing the bank line of credit (see Note 5) and (iii)
distribute the $200,000 and 200,000 share payments originally due on December
31, 2001 on or before December 14, 2001, provided that if the Company could not
obtain a new line of credit replacing the then current bank line of credit, the
due date would be extended to December 31, 2001. In addition, Mr. David Derrick,
the Company's chief executive officer and chairman of the board of directors,
and Mr. James Dalton, a director of the Company, agreed to personally establish
a letter of credit in the principal amount of $800,000 in favor of the bank and
use their best efforts to obtain the release of the personal guarantees of four
of the former SecureAlert shareholders under a bank line of credit.
Additionally, the agreement, as amended, now provides that if in the event of
default, and if the former SecureAlert shareholders exercise their right to
receive the shares of SecureAlert, they will have one year from that date to
repay intercompany borrowings (approximately $2,461,000 at December 31, 2001)
less any amount then outstanding under an intercompany loan agreement ($600,000
at March 31, 2002). The obligation to repay this amount would be personally
guaranteed by four former SecureAlert shareholders.


Notwithstanding the above, the former shareholders of SecureAlert requested that
the required payments be made after December 31, 2001. During December 2001, the
Company deposited $210,000 of the required payments into an account for the
benefit of the former shareholders of SecureAlert. Subsequent to December 31,
2001, the Company made the required payments and satisfied all of the above
requirements of the amended agreement. The Company also timely paid the
commitments due March 31, 2002. The remaining 600,000 shares have been placed in
escrow and are to be released in installments of 200,000 shares on the last day
of each of three consecutive calendar quarters, beginning June 30, 2002.
Additionally, the remaining $600,000 in cash is scheduled to be paid in
installments of $200,000 on the same dates.

If the Company issues or sells any shares of common stock through June 2003 for
consideration which is less than $3.00 per share, then the number of shares
issuable to the former SecureAlert shareholders will be increased to an amount
equal to $4,299,999 divided by the new per share value.

The following unaudited pro forma financial information for the six months ended
March 31, 2001 presents the results of operations of the Company as if the
acquisition of SecureAlert had occurred as of October 1, 2000, the beginning of
the Company's fiscal year 2001, after giving effect to certain adjustments,
including the amortization of core technology, interest expense and the issuance
of common shares. The pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of future results or what
would have occurred had the acquisition been made on October 1, 2000.

                                                            Six months ended
                                                             March 31, 2001
                                                         ----------------------
      Revenues                                             $      804,011
      Net loss attributable to common shareholders               (680,029)
      Basic and diluted net loss per common share                  (0.23)

In addition to the acquisition consideration, the Company agreed to grant
employment-based options to purchase up to an aggregate of 1,000,000 shares of
common stock to four former officers and directors of SecureAlert and current
employees of the Company. The options have an exercise price of $3.00 per share
and are exercisable over five years from the date of vesting. Vesting was to
occur on the date that SecureAlert achieved $20,000,000 in aggregate gross
revenues for the two-year period commencing on July 2, 2001 and the number of
shares issuable upon exercise of the options was to be decreased by the amount
that gross revenues were less than $20,000,000 divided by $3.00 per share. In
addition, if SecureAlert had a loss for the two-year period following July 2,
2001, the number of shares issuable upon exercise of the options was to be


                                       9

<PAGE>

decreased at the rate of one share for every $3.00 of loss incurred. On November
30, 2001, the option terms were amended and all options were immediately vested.

(4)      INVENTORIES

Substantially all items included in inventory are finished goods and consist of
the following as of March 31, 2002:

      Consumer electronics                                     $      383,569
      Mobile emergency and personal security systems           $    1,184,631
      Reagent stains                                           $       50,194
                                                          --------------------
                                                                  $ 1,618,394
                                                          ====================


(5)      NOTES PAYABLE

During the six months ended March 31, 2002, the Company entered into an
agreement with a consultant whereby the Company issued an $800,000 promissory
note as payment of $250,000 for services rendered and accrued prior to September
30, 2001 and for $550,000 in cash. During the six months ended March 31, 2002,
the Company received $425,000 of the cash and as of March 31, 2002, $125,000
remains due from the consultant. The promissory note bears interest at a rate of
22.5 percent per year and is due on September 30, 2002. Interest is payable
monthly commencing on November 1, 2001. If the Company fails to make the monthly
interest payments within 15 days of the due date, the entire principal balance
and accrued interest become immediately due and payable. The promissory note is
personally guaranteed by Messrs. Derrick and Dalton and collateralized by
1,000,000 shares of the Company's common stock held by them. As of March 31,
2002, $545,000 is outstanding under the promissory note. Furthermore, the
Company issued 100,000 shares of common stock to the consultant for services to
be performed through September 30, 2002. The value of these shares ($300,000)
was recorded as deferred consulting in the accompanying condensed consolidated
financial statements and is being amortized on a straight-line basis over the
term of service. The deferred consulting is being amortized over the term of the
agreement.

During the six months ended March 31, 2002, the Company entered into an
agreement with a company whereby the Company borrowed $1,543,974, with interest
payable at 10 percent per year and repayable in six monthly installments of
$264,886. The borrowings are secured by certain of the Company's inventory. Two
officers of the Company personally guarantee the borrowings; however, Messrs.
Derrick and Dalton indemnify the two officers from their personal guarantees.
One of the two officers has a three-percent ownership interest in the lending
company. As of March 31, 2002, $792,574 remains outstanding under the agreement.
Subsequent to March 31, 2002, the above payment terms were modified such that
the outstanding amount is repayable in 12 monthly installments of $91,734.

(6)      BANK LINE OF CREDIT

As of March 31, 2002, the Company had $1,850,000 outstanding under a line of
credit agreement with SunTrust Bank. Borrowings under the line of credit were
limited to the lesser of $600,000 or a borrowing base equal to the sum of 60
percent of the Company's current accounts receivable, as defined in the
agreement, plus 40 percent of the Company's current inventory, as defined in the
agreement. The interest rate associated with the line of credit was the 30-day
average LIBOR rate plus 2.15 percent (4.20 percent as of March 31, 2002) and
borrowings were due January 31, 2002. Additionally, the agreement required the
Company to maintain certain financial and non-financial covenants and required
the bank's consent to certain transactions, including transactions between
SecureAlert and RemoteMDx, Inc. Subsequent to March 31, 2002, the Company
renegotiated this line of credit to increase the borrowing base to $1,850,000.
Additionally, the due date of the line of credit was extended to July 1, 2002
and all financial covenants were removed. The amended line of credit requires
that borrowings are collateralized by certificates of deposit and personal
letters of credit as discussed below.

During the six months ended March 31, 2002, a trust, whose trustee is the
brother of an executive officer of the Company, provided a $300,000 letter of
credit as collateral for the line of credit. The trust's letter of credit
expires on June 30, 2002. As consideration for establishing the letter of
credit, the Company issued 15,000 shares of common stock to the trust. The trust
has the option, but not the obligation, to require the Company to repurchase


                                       10

<PAGE>

these shares on June 30, 2002 at a price of $3.00 per share (see Note 11). The
value of these shares ($45,000) was recorded as a deferred financing cost and as
redeemable common stock in the accompanying condensed consolidated balance sheet
as of March 31, 2002. The deferred financing costs are being amortized as
interest expense over the term of the letter of credit. In the event that the
bank draws on the letter of credit, the Company will repay the amount drawn
together with interest thereon at a rate of 12 percent per year until paid in
full.

In December  2001,  Mr.  Derrick  assigned  two  certificates  of deposit in the
aggregate amount of $500,000 as collateral for the line of credit.

During the six months ended March 31, 2002, Tom Natale, the President of the
Company, assigned a certificate of deposit in the amount of $100,000 as
collateral for the line of credit. This assignment expires on June 30, 2002. As
consideration for the assignment, the Company issued 5,000 shares of its common
stock to Mr. Natale.

During the six months ended March 31, 2002, one of the former shareholders of
SecureAlert, established two letters of credit in the aggregate amount of
$402,000 as collateral for the line of credit. A letter of credit in the amount
of $202,000 expires on June 30, 2002 and the second letter of credit in the
amount of $200,000 expires on August 30, 2002. As consideration for establishing
the letters of credit, the Company issued 20,000 shares of its common stock to
the individual. The individual also received warrants to purchase 10,000 shares
of the Company's common stock at an exercise price of $3.00 per share. These
warrants expire on December 31, 2006.

During the six months ended March 31, 2002, a relative of an employee of the
Company assigned two certificates of deposit in the aggregate amount of $200,000
as collateral for the line of credit. This assignment expires on June 30, 2002.
As consideration for the assignment, the Company issued 10,000 shares of its
common stock to the individual.

During the six months ended March 31, 2002, an individual established a letter
of credit in the amount of $100,000 as collateral for the line of credit. This
letter of credit expires on July 31, 2002. As consideration for establishing the
letter of credit, the Company issued 5,000 shares of its common stock to the
individual.

Each of the three individuals noted above has the option, but not the
obligation, to require the Company to repurchase the shares issued to them in
connection with these transactions at the end of six months from the date of the
assignment of their respective certificate of deposit or letter of credit, at a
price of $3.00 per share (see Note 11). In the event that the bank draws on the
letter of credit or asserts a claim against the certificates of deposit, the
Company will repay the amount drawn or claimed together with interest thereon at
a rate of 12 percent per year until paid in full. Additionally, the assignments
are secured by the assets of the Company.


During the six months ended March 31, 2002, the Company established a letter of
credit with a bank in the amount of $250,000 as collateral for the line of
credit. This letter of credit expires on August 1, 2002 and is personally
guaranteed by a shareholder of the Company, however, Messrs. Derrick and Dalton
have agreed to indemnify the shareholder from his personal guarantee. As
consideration for the guarantee, the Company issued 10,000 shares of its common
stock to the individual.

The value of the shares and warrants issued to the above individuals for
establishing letters of credit or assigning certificates of deposit, will be
recorded as deferred financing cost and amortized as interest expense over the
respective term of the letter of credit or assignment.

(7)      RELATED-PARTY LINE OF CREDIT

As of March 31, 2002, $401,964 in borrowings were outstanding under a line of
credit agreement with ADP Management, an entity controlled by Mr. Derrick.
Through March 31, 2002, borrowings bore interest at the prime rate (4.75 percent
at March 31, 2002) and were due on December 31, 2002.

Under the terms of this line of credit, the Company was required to issue to ADP
Management a warrant to purchase one share of Series A Preferred Stock at a
price of $200 per share for every $200 in principal loaned under the line of
credit. The warrants included a cashless exercise provision. Based on the terms
of the line of credit and a common stock value of $3.00 per share, upon a
cashless exercise of the warrants ADP Management had the ability to receive 0.82
shares of Series A Preferred Stock or approximately 303 shares of common stock
for each $200 advanced under the line of credit, assuming conversion of the
Series A preferred shares.


                                       11

<PAGE>


During the six months ended March 31, 2002, borrowings under the line of credit
totaled $1,872,822 and repayments totaled $1,490,999. Despite the fact that a
portion of the borrowings were repaid within a relatively short period of time,
the Company was obligated to issue warrants to ADP Management to purchase up to
7,228 shares of Series A Preferred Stock as described above.

In March 2002, the Company and ADP Management entered into an amendment to the
line of credit agreement, effective December 31, 2001. The independent members
of the Company's Board of Directors negotiated the amendment on behalf of the
Company. The amendment terminated the obligation to grant warrants to purchase
shares of Series A Preferred Stock, capped at 6,668 the number of shares of
Series A Preferred Stock issuable upon conversion or under warrants granted at
December 31, 2001 and canceled all unexercised warrants to purchase shares of
Series A Preferred Stock. The 6,688 shares of Series A Preferred Stock include
shares issued to ADP Management during the six months ended December 31, 2001,
resulting from ADP Management's exercise of warrants. These shares have been
recorded as outstanding in the accompanying condensed consolidated financial
statements as of December 31, 2001.

Additionally, the amendment extended the due date of amounts advanced under the
loan agreement from December 31, 2001 to December 31, 2002, and provided that
ADP Management would advance the balance of approximately ($600,000) to the
Company no later than March 31, 2002. Under the amended and extended agreement,
borrowings and guarantees do not bear interest. In consideration of ADP
Management making the additional advances as required by the amended agreement,
the Company granted to ADP Management warrants to purchase 3,450,000 shares of
common stock at an exercise price equivalent to the conversion price of the
Series A Preferred Stock issuable pursuant to the warrants originally provided
for under the line of credit prior to amendment. This exercise price is the
equivalent of $0.54 per share. These warrants do not have a cashless exercise
feature and expire March 31, 2007. The amendment also provides that ADP
Management will convert all of its shares of Series A Preferred Stock into
shares of common stock based upon the current conversion terms of the Series A
Preferred Stock.

During the six months ended March 31, 2002, the Company recorded interest
expense of $1,539,530 associated with the line of credit with ADP Management.
This amount includes $1,531,775 in non-cash interest expense related to the
6,668 shares of Series A Preferred Stock issued under the line of credit.

(8)      SERIES A 15 % CONVERTIBLE DEBENTURES

During the year ended September 30, 2001, the Company issued Series A 15%
convertible debentures. The debentures and related interest may be converted at
the option of the holder into shares of common stock at an initial conversion
rate of $3.00 per share and were due on or before August 1, 2001. Total
debentures outstanding and related accrued interest at March 31, 2002, were
$40,000 and $6,669, respectively. During the six months ended March 31, 2002, no
debentures were converted into common stock. The Company is currently
negotiating with the holders of these notes in an effort to extend the due date
or convert the debentures and related interest into shares of common stock.

(9)     RELATED-PARTY CONVERTIBLE PROMISSORY NOTES

In connection with the acquisition of SecureAlert (see Note 3), the Company
assumed two promissory notes payable to former SecureAlert shareholders each
with a principal balance of $250,000, and the Company granted each of the note
holders the right, at any time prior to July 2, 2002, to convert their note into
83,333 shares of the Company's common stock, or to be paid $250,000 on July 2,
2002. The promissory notes bear interest at a rate of five percent per year and
are due July 2, 2002. During the six months ended March 31, 2002, the Company
recorded interest expense of $6,300 on these promissory notes.

(10)    PREFERRED STOCK

Series A 10 % Convertible Non-Voting Preferred Stock

During the six months ended March 31, 2002, the Company issued 6,688 shares of
Series A Preferred Stock related to the exercise of warrants issued in
connection with the line of credit with ADP Management (see Note 7). Each share
of Series A Preferred Stock is convertible into 370 shares of common stock.
During the six months ended March 31, 2002, 678.26 shares of Series A Preferred
Stock owned by ADP Management were converted into 250,956 shares of common
stock. As of March 31, 2002, there were 30,104 shares of Series A Preferred
Stock outstanding, which represents 11,138,480 common stock equivalents at a


                                       12

<PAGE>

conversion rate of 370 for 1. Subsequent to March 31, 2002, ADP Management
converted 4,077.71 shares of Series A Preferred Stock into 1,515,420 shares of
common stock.

The holders of the Series A Preferred Stock are entitled to dividends at the
rate of 10 percent per year on the stated value of the Series A Preferred Stock
(or $200 per share), payable in cash or in additional shares of Series A
Preferred Stock at the discretion of the board of directors. Dividends are fully
cumulative and accrue from the date of original issuance. During the six months
ended March 31, 2002 and 2001, the Company recorded $244,833 and $152,920,
respectively, in dividends on Series A Preferred Stock.

The Company may, at its option, redeem up to two-thirds of the total number of
shares of Series A Preferred Stock at a redemption price of 133 percent of the
stated value of Series A Preferred Stock; however, the Company may designate a
different and lower redemption price for all shares of Series A Preferred Stock
called for redemption by the Company. Through March 31, 2002, the Company has
not exercised its option to redeem shares of Series A Preferred Stock.

Warrants to Purchase Series A Preferred Stock

Under the line of credit agreement with ADP Management (see Note 7), as of June
1, 2001, the Company was to grant ADP Management the right to purchase one share
of Series A Preferred Stock at an exercise price of $200 per share for each $200
advanced under the line of credit. The warrants were to expire on December 31,
2002. The Series A Preferred Stock warrants included a cashless exercise
provision. This arrangement was amended by the Company and ADP Management in
March 2002, at which time all unexercised warrants at December 31, 2001 were
terminated and the number of shares issuable upon the exercise of warrants at
December 31, 2001 was capped at 6,688 shares of Series A Preferred Stock. (See
Note 7.)

Subscription to Purchase Series A Preferred Stock

As of March 31, 2002, $338,300 remains outstanding from MK Financial, an entity
controlled by Mr. Derrick. Management expects this amount to be paid during
fiscal year 2002.

Series B Convertible Preferred Stock

As of March 31, 2002, there were 835,824 shares of Series B Preferred Stock
outstanding. Shares of Series B Preferred Stock are convertible into shares of
common stock on a 1-for-1 basis. Subsequent to March 31, 2002, the Company
issued 1,000,000 shares of Series B Preferred Stock for gross proceeds to the
Company of $3,000,000 in connection with a strategic alliance with Matsushita
Electric Works, Ltd.

The Company may redeem the Series B Preferred Stock at its option at any time.
The redemption price will be a minimum of 110 percent of the conversion price at
the date of redemption. As of March 31, 2002, the Company has not exercised its
option to redeem shares of Series B Preferred Stock.

(11)     COMMON STOCK

During the six months ended March 31, 2002, the Company issued 1,133,932 shares
of common stock as follows:

        o  32,000 shares were issued for cash proceeds of $96,000,

        o  348,036 shares were issued for services rendered or to be rendered,

        o  733,959 shares were issued upon the conversion of 1,983 shares of
           Series A Preferred Stock (see Note 10), and

        o  19,937 shares were issued as the result of the conversion of
           convertible debentures in the amount of $55,000 together with accrued
           interest of $6,669 (see Note 8).

Common Stock Subject to Redemption

Of the shares of common stock outstanding at March 31, 2002, 192,000 shares of
common stock are subject to redemption as follows: (1) the holder of 32,000 of
these shares has the option to require the repurchase of these shares at a price
of $3.00 per share by giving notice of exercise of this option in writing to the
Company within a 60-day period commencing at the end of nine months from date of


                                       13

<PAGE>

issuance. This option automatically expires if it is not exercised within the
60-day period; (2) the holder of 105,000 shares has the option, subsequent to
March 31, 2002, to require the repurchase of these shares at a price of $3.00
per share, however, if the common stock is then traded in the over-the-counter
market or on a recognized exchange and the holder can readily and efficiently
sell the shares at $3.00 or more per share, this put option will terminate; and
(3) the holder of 55,000 shares has the option to require the Company to
repurchase these shares between June 30, 2002 and August 31, 2002, at a price of
$3.00 per share.

Common Stock Options and Warrants

During the six months ended March 31, 2002, the Company granted options to: (1)
employees for the purchase of a total of 180,000 shares of common stock; (2) a
consultant for the purchase of 45,000 shares of common stock and (3) two outside
directors for the purchase of an aggregate of 400,000 shares of common stock.
All of the options described above have an exercise price of $3.00 per share,
expire five years from the date of grant and are immediately exercisable. During
the six months ended March 31, 2002, options to purchase 14,250 shares of common
stock expired. As of March 31, 2002, options and warrants to purchase a total of
2,690,227 shares of common stock with a weighted average exercise price of $3.95
per share remain outstanding.

Subsequent to March 31, 2002, the Company issued warrants to an investor for the
purchase of 1,000,000 shares of common stock at a price of $3.00 per share.
These warrants expire in April 2007.

(12)     NET LOSS PER COMMON SHARE

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

Common share equivalents consist of shares issuable upon the exercise of common
stock options and warrants, shares reserved for issuance in connection with the
acquisition of SecureAlert, the conversion of convertible debentures and related
accrued interest, the exercise of Series A Preferred Stock warrants and shares
issuable upon conversion of preferred stock. As of March 31, 2002 and 2001,
there were 7,141,640 and 11,974,304 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, thereby decreasing the net
loss per common share.

(13)     SEGMENT INFORMATION

As a result of the acquisition of SecureAlert in July 2001 (see Note 3), the
Company is organized into two business segments based primarily on the nature of
the Company's products. The 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 SecureAlert segment is
engaged in the business of developing, distributing and marketing mobile
emergency and personal security systems to distributors and consumers, and
distributing consumer electronics products to the manufactured home market.
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.


                                       14

<PAGE>

The following table reflects certain financial information relating to each
reportable segment for each of the three-month periods ended March 31, 2002 and
2001:

<TABLE>
<CAPTION>
                                                                         2002              2001
                                                                   ----------------------------------
      Net sales:
        SecureAlert:
<S>                                                                     <C>             <C>
           Consumer electronics                                          2,260,891              0
           Mobile emergency and personal security systems                  187,387              0
                                                                   ----------------------------------
                                                                         2,448,278              0
        Reagents                                                           153,241        141,560
                                                                   ----------------------------------
                                                                         2,601,519        141,560
                                                                   ==================================
      Operating gain (loss):
        SecureAlert                                                       (667,085)             0
        Reagents                                                            23,157         21,982
        Other (unallocated)                                            (10,806,024)    (1,446,108)
                                                                   ----------------------------------
                                                                       (10,762,479)    (1,468,090)
                                                                   ==================================
</TABLE>



(14)     RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." Certain provisions of these statements are effective for business
combinations entered into after June 30, 2001. Accordingly, the Company was
required to apply certain provisions of the new standards for the acquisition of
SecureAlert (see Note 3). Under the new rules, goodwill and intangible assets
deemed to have indefinite lives are no longer amortized but are subject to
annual impairment tests in accordance with the statements. Other intangible
assets will continue to be amortized over their useful lives. As allowed by
these statements, the Company adopted the remaining provisions on October 1,
2001. The adoption of these remaining provisions did not impact the Company's
results of operations, financial position or liquidity.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," which replaces SFAS Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." The accounting model for long-lived assets to be disposed of by
sale applies to all long-lived assets, including discontinued operations, and
replaces the provisions of APB Opinion No. 30, "Reporting Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business," for
the disposal of segments of a business. This statement requires that those
long-lived assets be measured at the lower of carrying amount or fair value less
cost to sell, whether reported in continuing operations or in discontinued
operations. Therefore, discontinued operations will no longer be measured at net
realizable value or include amounts for operating losses that have not yet
occurred. This statement also broadens the reporting of discontinued operations.
The Company adopted the provisions of this statement on October 1, 2001. The
adoption of this statement did not have a material impact on the Company's
results of operations, financial position or liquidity.


                                       15

<PAGE>


Item 2 - Management's Discussion and Analysis or Plan of Operation

Introduction

RemoteMDx is a technology-based remote personal safety, medical, health
monitoring and diagnostic services company. The Company creates solutions for
real-time monitoring of personal safety, security, and health needs. The Company
contracts with national call centers for the delivery of monitoring services.
The Company was incorporated in Utah in July 1995 under the name Volu-Sol, Inc.,
as a wholly owned subsidiary of Biomune Systems, Inc. ("Biomune"). Biomune spun
off the Company by distributing shares of the Company's common stock pro rata as
a stock dividend to the holders of the common stock of Biomune (the
"Distribution"). As a consequence of the Distribution, RemoteMDx commenced
operations as a separate, independent, publicly held company in October 1997.


The Company has been engaged in the business of manufacturing and marketing
medical diagnostic stains, solutions and related equipment for over 10 years.
The Company continues to conduct its medical stains and solutions business
through a wholly owned subsidiary, Volu-Sol Reagents Corporation ("Reagents"),
and operates its remote health monitoring and diagnostic business under the
names "Remote Medical Diagnostics" and "RemoteMDx." The Company also owns
SecureAlert, Inc. ("SecureAlert"), a wholly owned subsidiary engaged in the
business of manufacturing and marketing mobile emergency and personal security
systems, and consumer electronics products.


Business Strategy


Historically, the Company's strategy was to capitalize on the global medical
diagnostic industry by providing "building block" stains and reagents and
growing through the selective acquisition of complementary businesses, devices
and product lines. Over the past two years, management began to pursue a more
expanded role in the medical diagnostic industry by developing innovative ways
to manage patient medical information as well as linking patients, physicians
and payors through remote monitoring devices. To reflect this new emphasis, the
Company changed its corporate name to "RemoteMDx, Inc." and acquired SecureAlert
II, Inc. ("SecureAlert II") in July 2001.


New Business Direction


Under its new business direction, RemoteMDx is specializing in providing
personal security and monitoring products and services to meet the needs of a
rapidly growing elderly population. The RemoteMDx family of products and
services offered under the Magnavox(R) brands include both wireless and wired
modes of connecting the elderly by the touch of a single button with emergency
services, doctors, healthcare providers and loved ones. By utilizing global
positioning satellite or "GPS" technology, the Company's Pal Services(TM)
response center can locate the person in distress and dispatch the closest
emergency services to the caller's location. In addition, through the Company's
HomePal(TM) products, Pal Services(TM) is designing products to monitor the
vital signs of its clientele on a daily basis and report to care providers if
their health is within given parameters.


RemoteMDx's next generation product being developed through its strategic
alliance with Battelle Memorial Institute ("Battelle"), is a wireless,
wristwatch-type monitoring device equipped with GPS technology that is designed
to be worn at all times by persons suffering from chronic health problems. This
device, known as "PalWatch(TM)" unobtrusively takes the vital signs of the
wearer and transmits the data wirelessly to a health care provider regardless of
where the wearer is located. The PalWatch enables the care provider to remind
the patient to take medications and provides monitoring capabilities in case of
emergencies. Voice contact can be established with the monitoring center at the
touch of a single button when vital signs are outside of established parameters
or in case of emergencies. The PalWatch gives the chronically ill patient the
safety and mobility to live a more normal life while being in constant contact
with health care providers. It also provides the assurance that a live personal
assistant is available to help if the wearer encounters an emergency.


The Company plans to be the first to provide a combination of emergency response
systems and remote monitoring of the chronically ill. RemoteMDx plans to
implement a quality technological solution to promote efficiency in an industry
that is failing to do so. It is expected that RemoteMDx's technology products
and services will provide more timely capture of patient condition data leading
to earlier and more cost effective treatments. This should result in improved


                                       16

<PAGE>

patient satisfaction and outcomes through consistent and convenient access to
healthcare, while creating a portable electronic trail to a patient's medical
history. This in turn is expected to lower the cost of patient and physician
interaction, reducing costs for healthcare payors and providers.


The Company's SecureAlert subsidiary sells mobile and personal security systems,
as well as consumer electronics products from its headquarters in Knoxville,
Tennessee. During the six months ended March 31, 2002, SecureAlert began
distribution of its new emergency cellular devices with global positioning
satellite ("GPS") technology, the MobilePAL+GPS(TM). Other mobile security
products include the 911Phone and related services. New applications of the core
technology will also be introduced during fiscal year 2002, including technology
and services for remote monitoring of the chronically ill. Currently,
SecureAlert generates a majority of its revenues from the sale of consumer
electronics. SecureAlert expects that by the end of fiscal year 2002 its product
mix will be approximately evenly divided between consumer electronics and mobile
and personal security products and services.

 Special Note Regarding Forward-looking Information
 Certain statements in this Item 2 - "Management's Discussion and Analysis or
 Plan of Operation" are "forward-looking statements" within the meaning of the
 Securities Exchange Act of 1934 (the "Exchange Act"). For this purpose, any
 statements contained or incorporated in this report that are not statements of
 historical fact may be deemed to be forward-looking statements. The words,
 "believes," "will," "plans," "anticipates," "expects" and similar expressions
 are intended to identify forward-looking statements. A number of important
 factors could cause the actual results of the Company to differ materially from
 those anticipated by forward-looking statements. These factors include those
 set forth under the caption "Risk Factors" in Item 6 - "Management's Discussion
 and Analysis or Plan of Operation" in the Company's Annual Report on Form
 10-KSB for the year ended September 30, 2001.

Significant Accounting Policies

The Company's discussion and analysis of its financial condition and results of
operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements 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 sales and
expenses during the reporting period. Significant accounting policies and areas
where substantial judgements are made include:

Intangible and Long-lived Assets - Intangible assets consist of goodwill and
core technology. In accordance with Statement of Financial Accounting Standards
("SFAS") No. 142, goodwill is not amortized but is subject to an impairment
test, which will be performed at least annually. Through the impairment test,
the fair value of the reporting unit to which the goodwill is assigned will be
compared with the reporting unit's carrying amount, including goodwill. A second
test to determine the amount of impairment will be performed if the carrying
amount of the reporting unit exceeds the fair value. This test will result in
allocating the fair value to all of the assets and liabilities as if the
reporting unit had been acquired and comparing the resulting fair value of
goodwill to the carrying amount. The Company uses a market or income approach in
determining the fair value of the reporting unit. The Company has not yet tested
its goodwill for impairment. The Company plans to perform the annual impairment
test on June 30, 2002 or earlier to the extent facts and circumstances indicate
that a potential impairment has occurred. As of March 31, 2002, the Company does
not believe that its goodwill is impaired. However, it is possible that the
goodwill could be impaired in the near term based upon changes in market and
other conditions and the amount of impairment loss could be material to the
results of Company's operations.

The Company reviews its long-lived assets, other than goodwill, for impairment
when events or changes in circumstances indicate that the book value of an asset
may not be recoverable. 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 remaining life in measuring
whether the assets are recoverable. As of March 31, 2002, the Company does not
consider any of its other long-lived assets to be impaired.

Revenue Recognition - The Company derives its revenue primarily from the sale of
consumer electronics and reagent stains. Revenue, less reserves for returns, is
recognized upon shipment to the customer. The Company provides its customers a


                                       17

<PAGE>

30-day right of return policy for telephone products and no return rights for
its other products. From the date of the acquisition of SecureAlert through
March 31, 2002, the provision for sales returns was not significant.

Stock-based Compensation - The Company accounts for its stock-based compensation
issued to employees and directors under Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees". Under APB Opinion
No. 25, compensation related to stock options, if any, is recorded if an
option's exercise price on the measurement date is below the fair value of the
Company's common stock, and amortized to expense over the vesting period.
Compensation expense for stock awards or purchases, if any, is recognized if the
award or purchase price on the measurement date is below the fair value of the
Company's common stock, and is recognized on the date of award or purchase. The
Company accounts for its stock-based compensation issued to non-employees using
the fair value method in accordance with SFAS No. 123 and related
interpretations. Under SFAS No. 123, stock-based compensation is determined as
either the fair value of the consideration received or the fair value of the
equity instruments issued, whichever is more reliably measurable. The
measurement date for these issuances is the earlier of the date at which a
commitment for performance by the recipient to earn the equity instruments is
reached or the date at which the recipient's performance is complete. The
estimated fair value of stock-based compensation issued to non-employees is
subject to assumptions made regarding the fair value of the Company's common
stock (as the Company's common stock is not currently actively traded on any
exchange), risk-free interest rates, expected exercise lives and volatility.
Actual results could differ from these estimates.

Three months ended March 31, 2002 Compared to Three months ended March 31, 2001

Net Sales


For the three months ended March 31, 2002, the Company had net sales of
$2,601,519 compared to $141,560 for the three months ended March 31, 2001, an
increase of $2,459,959. The increase in net sales resulted primarily from the
acquisition of SecureAlert in July 2001. SecureAlert had net sales of $2,448,278
during the three months ended March 31, 2002. These sales consisted of
$2,260,891 of consumer electronics and $187,387 of mobile emergency and personal
security systems. Reagents had revenues for the three months ended March 31,
2002 of $153,241, relatively unchanged from the prior year fiscal period. The
Company anticipates that Reagents' sales will decrease in the future as a
percentage of total sales.


Cost of Goods Sold


For the three months ended March 31, 2002, the Company had cost of goods sold of
$2,230,730 compared to $87,725 for the three months ended March 31, 2001, an
increase of $2,143,005. The increase in cost of sales resulted primarily from
the acquisition of SecureAlert. SecureAlert's cost of goods sold totaled
$2,137,672 or 87% of SecureAlert's net sales during the three months ended March
31, 2002. Reagents' cost of goods sold totaled $93,058 or 61% of Reagent's net
sales for the three months ended March 31, 2002, compared to $87,725 or 62% of
Reagent's net sales for the same period during the prior fiscal year. The
increase as a percentage of net sales was primarily due to increased materials
costs, wages and overhead costs.


Research and Development Expenses


For the three months ended March 31, 2002, the Company incurred research and
development expenses of $93,657. During the three months ended March 31, 2002,
research and development expenses consisted primarily of expenses associated
with the development of SecureAlert's personal security devices, and related
services and common stock options valued at $20,550 that were granted to a
consultant.


Amortization of Core Technology


Core technology primarily represents patents in the area of remote security and
medical alert devices received in the acquisition of SecureAlert. Core
technology is amortized using the straight-line method over an estimated useful
life of three years and totaled $46,666 for the three months ended March 31,
2002.


                                       18

<PAGE>



Selling, General and Administrative Expenses


During the three months ended March 31, 2002, the Company incurred selling,
general and administrative expenses of $10,992,945 compared to $1,521,925 for
the three months ended March 31, 2001, an increase of $9,471,020. This increase
relates primarily to the following: (1) approximately $914,265 of selling,
general and administrative expenses from SecureAlert, (2) approximately $711,000
related to additional legal, accounting and consulting fees, (3) $9,534,000
related to consulting expenses paid to ADP Management, (4) $100,000 primarily
related to increases in salaries, warrants, and related benefits due to an
increase in personnel and (5) approximately $130,000 of increased travel and
other expenses. These increases were offset partially by a decrease of $9,000 in
directors' fees.


Interest Income and Expense


During the three months ended March 31, 2002, the Company incurred interest
expense of $406,306. This amount consists primarily of non-cash interest expense
of $355,536 related to preferred stock issuances under a related-party line of
credit, together with approximately $22,303 in amortization of a discount on the
purchase obligation to former shareholders of SecureAlert and approximately
$51,000 in interest related to other borrowings.


Six months ended March 31, 2002 Compared to Six months ended March 31, 2001

Net Sales


For the six months ended March 31, 2002, the Company had net sales of $4,889,770
compared to $255,765 for the six months ended March 31, 2001, an increase of
$4,634,005. The increase in net sales resulted primarily from the acquisition of
SecureAlert in July 2001. SecureAlert had net sales of $4,602,080 during the six
months ended March 31, 2002. These sales consisted of $4,248,038 of consumer
electronics and $354,042 of mobile emergency and personal security systems.
Reagents had revenues for the six months ended March 31, 2002 of $278,690,
relatively unchanged from the prior year fiscal period. The Company anticipates
that Reagents' sales will decrease in the future as a percentage of total sales.


Cost of Goods Sold


For the six months ended March 31, 2002, the Company had cost of goods sold of
$4,080,832 compared to $158,575 for the six months ended March 31, 2001, an
increase of $3,922,257. The increase in cost of sales resulted primarily from
the acquisition of SecureAlert. SecureAlert's cost of goods sold totaled
$3,890,465 or 85% of SecureAlert's net sales during the six months ended March
31, 2002. Reagents' cost of goods sold totaled $190,367 or 66% of Reagent's net
sales for the six months ended March 31, 2002, compared to $158,575 or 62% of
Reagent's net sales for the same period during the prior fiscal year. The
increase as a percentage of net sales was primarily due to increased materials
costs, wages and overhead costs.


Research and Development Expenses


For the six months ended March 31, 2002, the Company incurred research and
development expenses of $279,408. During the six months ended March 31, 2002,
research and development expenses consisted primarily of expenses associated
with the development of SecureAlert's personal security devices, and related
services and common stock options valued at $68,799 that were granted to a
consultant.


Amortization of Core Technology


Core technology primarily represents patents in the area of remote security and
medical alert devices received in the acquisition of SecureAlert. Core
technology is amortized using the straight-line method over an estimated useful
life of three years and totaled $93,333 for the six months ended March 31, 2002.


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<PAGE>


Selling, General and Administrative Expenses


During the six months ended March 31, 2002, the Company incurred selling,
general and administrative expenses of $12,890,320 compared to $2,176,629 for
the six months ended March 31, 2001, an increase of $10,713,691. This increase
relates primarily to the following: (1) approximately $1,561,245 of selling,
general and administrative expenses from SecureAlert, (2) approximately $800,000
related to additional legal, accounting and consulting fees, (3) $9,595,000
related to consulting expenses paid to ADP Management, (5) $200,000 primarily
related to increases in salaries and related benefits due to an increase in
personnel and (6) approximately $230,000 of increased travel and other expenses.
These increases were offset in part by a decrease of $33,000 in directors' fees.


Interest Income and Expense


During the six months ended March 31, 2002, the Company incurred interest
expense of $1,989,930. This amount consists primarily of non-cash interest
expense of $1,801,061 related to preferred stock issuances under a related-party
line of credit, together with approximately $22,303 in amortization of a
discount on the purchase obligation to former shareholders of SecureAlert and
approximately $162,000 in interest related to other borrowings.


Liquidity and Capital Resources


The Company currently is unable to finance its operations solely from cash flows
from operating activities. During the six months ended March 31, 2002, the
Company financed its operations primarily through borrowings from a related
party and the sale of equity securities.


As of March 31, 2002, the Company had negative cash of $87,236 and a working
capital deficit of $5,380,739 compared to cash of $59,977 and a working capital
deficit of $2,865,119 at September 30, 2001. This change is primarily the result
of cash used in operations of $3,430,679.


During the six months ended March 31, 2002, the Company's operating activities
used cash of $3,430,679 compared to cash of $970,717 used during the six months
ended March 31, 2001. The increase was primarily a result of the net loss of
$12,256,771, that includes non-cash items totaling $11,765,301 for depreciation
and amortization, interest expense related to a related-party line of credit,
common and redeemable common stock issued for services and common stock options
issued for services, coupled with increases and decreases in working capital
components.


The Company's investing activities for the six months ended March 31, 2002 used
$16,704 to purchase property and equipment.


The Company's financing activities during the six months ended March 31, 2002
provided cash of $3,292,124 compared to $335,000 during the six months ended
March 31, 2001. During the six months ended March 31, 2002, the Company received
cash of $96,000 from the issuance of redeemable common stock, $2,683,720 from
the issuance of notes payable and $385,964 from net borrowings from a related
party. This cash was decreased by $896,146 for payments on notes payable, and by
net borrowings of $1,256,413 on the Company's line of credit with SunTrust. All
of the financing activities for the six months ended March 31, 2001 were
provided by the related party line of credit.


The Company incurred a net loss of $14,345,355 and had negative cash flows from
operating activities of $3,430,679 during the six months ended March 31, 2002.
As of March 31, 2002, the Company had a working capital deficit of $5,380,739,
net tangible stockholders' equity of $2,546,682 and an accumulated deficit of
$36,298,279, compared to a working capital deficit of $2,865,119, a net tangible
stockholders' deficit of $2,683,057 and an accumulated deficit of $21,708,091 at
September 30, 2001. These factors, as well as the risk factors set out in the
Company's annual report on Form 10-KSB for the year ended September 30, 2001,
raise substantial doubt about the Company's ability to continue as a going
concern. The unaudited condensed consolidated financial statements included in
this report do not include any adjustments that might result from the outcome of
this uncertainty.


Management's plans with respect to this uncertainty include raising additional
capital from the sale of debt and equity securities. In furtherance of this
plan, subsequent to March 31, 2002, the Company raised additional debt financing


                                       20

<PAGE>

from Mr. Derrick and his affiliates, increased its borrowings under a line of
credit with SunTrust, and sold 1,000,000 shares of Series B Preferred Stock to
investors for net proceeds of approximately $3,000,000. The Company also plans
to enhance revenues and cash flows from the SecureAlert operation by increasing
its selling and marketing efforts related to existing products and services.
There can be no assurance that the Company will be able to raise sufficient
capital to meet its working capital needs over the next twelve months, which
include $600,000 in cash to fund the balance of the purchase obligation
associated with the Company's acquisition of SecureAlert. In addition, there can
be no assurance that the SecureAlert operations will improve and generate
positive cash flows from operating activities and that it will be successful
introducing new products into the market. Further, the Company may be unable to
complete the development and successful commercialization of any remote health
monitoring products.


In February 2001, the Company entered into a loan agreement with ADP Management,
a Utah corporation owned and controlled by David Derrick, the Company's CEO and
Chairman. The loan agreement was amended in March 2001 and again in June 2001.
During 2001, the agreement provided that the Company could borrow up to
$3,000,000. For the six months ended March 31, 2002, borrowings under this
arrangement totaled $1,872,822 and repayments totaled $1,490,999. The amount
outstanding at March 31, 2002 was $401,964. Prior to December 31, 2001, the
Company granted to ADP Management the option to purchase one share of Series A
Preferred Stock for every $200 in principal loaned under the line of credit,
which option included a cashless exercise feature. Through June 1, 2001, the
borrowings bore interest at 12 percent per year. Subsequent to June 1, 2001,
borrowings bore interest at the prime rate (4.75 percent at December 31, 2001).
Borrowings under the arrangement were due on December 31, 2001.


Effective December 31, 2001, the Company and ADP Management entered into an
extension and modification of the loan agreement. The extension and modification
was negotiated on behalf of the Company by the audit committee of the board of
directors and was approved unanimously by the board of directors, with Messrs.
Derrick, Dalton and Kirton abstaining. The amendment (1) extended the date for
repayment of all amounts advanced under the loan agreement to December 31, 2002;
(2) provided that ADP Management would loan or facilitate credit to the Company
of up to $2,000,000 before March 31, 2002; (3) provided that amounts borrowed
after December 31, 2001 do not bear interest; (4) capped at 6,688 the number of
shares of Series A Preferred Stock issued with respect to amounts advanced or
guaranteed as of December 31, 2001; (5) required that all shares of Series A
Preferred Stock issued to ADP Management be converted into shares of common
stock; (6) cancelled all unexercised warrants for the purchase of Series A
Preferred Stock at December 31, 2001; and (7) provided that if ADP extended the
remaining $600,000 available under the agreement by March 31, 2002, the Company
would grant ADP Management warrants for the purchase of 3,450,000 shares of
common stock at an exercise price that is equivalent to the conversion price of
the Series A Preferred Stock issuable under the loan agreement prior to
amendment. That price is the equivalent of $0.54 per common share. The warrants
expire March 31, 2007 and do not have a cashless exercise provision.


During the six months ended March 31, 2002, the Company recorded interest
expense of $1,539,530 associated with this line of credit. This amount includes
$1,531,775 in non-cash interest expense related to the Series A Preferred Stock
warrants.


SecureAlert has a line of credit agreement with SunTrust. As of March 31, 2002,
the Company had $1,850,000 outstanding under this line of credit. During the
quarter ended March 31, 2002, SecureAlert and SunTrust entered into an amended
and restated revolving promissory note. As amended, SecureAlert may borrow up to
$1,850,000 under the note, with accrued interest due in monthly installments
beginning in February 2002. The due date of this line of credit was extended to
July 1, 2002. The borrowings under the amended line of credit agreement are
collateralized by certificates of deposit and personal letters of credit from
several parties, including several shareholders and officers and a $250,000
letter of credit from a bank that is guaranteed by a shareholder. See Note 6 to
the Company's unaudited condensed consolidated financial statements included in
this report.


                                       21

<PAGE>



                           PART II. OTHER INFORMATION


 Item 2. Changes in Securities and Use of Proceeds

During the six months ended March 31, 2002, the Company issued 1,133,932 shares
of common stock without registration of the offer and sale of the securities
under the Securities Act of 1933, as amended, as follows:

     o   32,000 shares were issued for cash proceeds of $96,000,
     o   348,036 shares were issued for services rendered or to be rendered,
     o   733,959 shares were issued upon the conversion of 1,983 shares of
         Series A Preferred Stock, and
     o   19,937 shares were issued as the result of the  conversion of
         convertible  debentures in the amount of $55,000,  together with
         accrued interest of $6,669.

In each of these transactions the securities were issued to individuals or
entities that were "accredited investors" as that term is used in Rule 501 under
Regulation D of the Securities Act. The issuance of the securities was
accomplished without registration under the Securities Act in reliance on the
exemptions from the registration requirements of the Securities Act afforded by
Section 4(2) and Rule 506 of Regulation D under the Securities Act.

Item 5.  Other Information

 On April 9, 2002, the Company entered into a License Agreement with Matsushita
 Electric Works, Ltd., a Japanese corporation ("MEW"). Under the License
 Agreement, the Company granted MEW a nontransferable, worldwide, exclusive
 license under certain of the Company's patents to use, manufacture, have
 manufactured, market, distribute and sell the Company's one-button emergency
 wireless telephone device, with and without global positioning satellite
 technology, under the terms of the License Agreement. The license granted to
 MEW includes the right to grant sublicenses as provided in the agreement. MEW
 will pay the Company a royalty equal to one percent (1%) of the net selling
 price of all products sold by MEW or its sublicensees, in countries where the
 patents or any of them are registered and issued, during the term of the
 agreement. No royalty will be paid in connection with sales pursuant to a
 proposed government-sponsored program in the United States, or for (1) sales of
 products incorporating mobile identification numbers provided by the Company,
 (2) products sold to customers in any market covered by an effective call
 center services agreement entered into with the Company as contemplated by the
 agreement, or (3) products sold to customers in any market covered by call
 center services provided by a third party who adopts the Company's Telematics
 Operating Program owing to MEW's effort. The License Agreement is expected to
 continue in effect for the life of the patents.


 In connection with the new strategic alliance created by the execution of the
 License Agreement, MEW also made an equity investment in the Company. MEW
 purchased 1,000,000 shares of Series B Preferred Stock at a price of $3.00 per
 share. As an indication of the parties' mutual interest in a long-term
 relationship, the Company also granted MEW a warrant to purchase 1,000,000
 shares of common stock at a price of $3.00 per share. The Company granted MEW
 piggyback registration rights with respect to the common stock issuable upon
 conversion of the Series B Preferred Stock and exercise of the warrant. MEW
 also has the right to appoint a representative to serve as a member of the
 Company's board of directors for as long as it continues to own the shares.


Item 6.  Exhibits and Reports on Form 8-K

(a)       Exhibits Required by Item 601 of Regulation S-B

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).


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<PAGE>

         3.01(1)           Amendment to Articles of Incorporation for Change of
                           Name (previously filed)


         3.01(2)           Amendment  to  Articles  of  Incorporation  Amending
                           Rights and  Preferences of Series A  Preferred Stock
                           (previously filed)

         3.01(3)           Amendment to Articles of Incorporation  Adopting
                           Designation of Rights and Preferences of Series B
                           Preferred Stock (previously filed)

         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)

         3.02              Bylaws (incorporated by reference to the Company's
                           Registration Statement on Form 10-SB, effective
                           December 1, 1997)

         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              Securities Purchase Agreements with ADP Management
                           and James Dalton (previously filed)

        10.06              Agreement and Plan of Merger (SecureAlert)
                           (previously filed as exhibit to Current Report on
                           Form 8-K)

        10.07              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)

        10.08              Amended and Restated Loan and Security Agreement
                           (SunTrust Bank and SecureAlert), dated August 3, 2001
                           (incorporated by reference to the Company's annual
                           report on Form 10-KSB for the year ended September
                           30, 2001)

        10.09              Amended and Restated Loan and Security Agreement
                           (SunTrust Bank and SecureAlert), dated January 24,
                           2002 (filed as an exhibit to the Company's quarterly
                           report on Form 10-QSB for the quarter ended December
                           31, 2001)

        10.10              Amended and Restated Loan and Security Agreement
                           (SunTrust Bank and SecureAlert) dated March 1, 2002
                           (filed as an exhibit to the Company's quarterly
                           report on Form 10-QSB for the quarter ended December
                           31, 2001)



                                       23



<PAGE>

        10.11              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)

        10.12              License  Agreement  between  RemoteMDx,  Inc. and
                           SecureAlert,  Inc. as licensor and  Matsushita
                           Electric Works, Ltd., as licensee, (April 9, 2002).

         (b) Reports on Form 8-K

The Company filed no reports on Form 8-K in the quarter ended March 31, 2002.




                                       24

<PAGE>


                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



                                 REMOTEMDX, INC.




Date: May 20, 2002            By:      /s/ David G Derrick
                                   --------------------------------------------
                                       David G. Derrick,
                                       Chief Executive Officer




Date:  May 20, 2002           By:      /s/ Michael G. Acton
                                   --------------------------------------------
                                       Michael G. Acton,
                                       Principal Accounting Officer





















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