UNITED
STATES


SECURITIES
AND EXCHANGE
COMMISSION


Washington,
D.C. 20549





FORM
10-QSB/A





(Mark
One)





(X)
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the
quarterly period ended December 31, 2007





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 incorporation or organization)
            (IRS
      Employer Identification No.)








150
West Civic Center Drive


Suite
400


Sandy,
Utah 84070


(Address
of principal executive offices) (Zip Code)





(801)
451-6141


(Issuer's
telephone number, including area code)





Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or 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
[   ]





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes
[   ] No [X]





On
February 1, 2008, the issuer had a total of 131,521,046 shares of common stock
issued and outstanding. The issuer also had a total of 19 shares of Series A
Preferred Stock outstanding, convertible at any time at the option of the
holders thereof into common stock at the rate of 370 shares of common stock for
each share of Series A Preferred Stock, or a total of 7,178 shares, and 10,999
shares of Series B Preferred Stock outstanding, convertible at any time at the
option of the holders thereof into approximately 113,783 shares of common
stock.





Transitional
Small Business Disclosure Format (Check One): Yes
[   ]  No [X]











TABLE
OF CONTENTS








Page
      No.PART
      I.  FINANCIAL INFORMATIONItem
      1.
            Financial
      StatementsUnaudited
      Condensed Consolidated Balance Sheet as of December 31, 2007 (As
      Restated)
            4Unaudited
      Condensed Consolidated Statements of Operations for the three months ended
      December 31, 2007 and 2006 (As Restated)
            5Unaudited
      Condensed Consolidated Statements of Cash Flows for the three months ended
      December 31, 2007 and 2006 (As Restated)
            6Unaudited
      Notes to Condensed Consolidated Financial Statements (As
      Restated)
            8Item
      2.
            Management's
      Discussion and Analysis or Plan of Operation
            19Item
      3.
            Controls
      and Procedures
            25PART
      II.  OTHER INFORMATIONItem
      1.
            Legal
      Proceedings
            26Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            26Item
      6.
            Exhibits
      and Reports on Form 8-K
            27Signatures
            30Certifications








2





Explanatory
Note – Restatement of Condensed Consolidated Financial Statements




The
Company is restating its condensed consolidated financial statements as of and
for the three months ended December 31, 2007 and 2006 for the following
reasons:




1)
            The
      Company reviewed its existing contracts for compliance with its revenue
      recognition policies. After reviewing its existing contracts, the Company
      determined that $1,300,000 of revenues (with its associated cost of
      revenues of $952,341) previously recorded for the year ended September 30,
      2007 did not meet the requirements of SAB 104 and EITF
      00-21.  Of the $1,300,000 of deferred revenue as of September
      30, 2007, $33,333 (with its associated cost of revenues of $22,894) was
      recognized during the three months ended December 31,
  2007.




The
Company reviewed its existing contracts for compliance with its revenue
recognition policies. After reviewing its existing contracts, the Company
determined that $400,000 of revenues previously recorded for the three months
ended December 31, 2006 did not meet the requirements of SAB 104 and EITF
00-21.  The associated cost of revenues of $274,728 was also deferred
as of December 31, 2006.




2)
            For
      the three months ended December 31, 2007, the Company reported
      amortization expense of $211,181 and communication expense of $438,832
      related to non-billable units as selling, general and administrative
      expenses. A non-billable unit is a TrackerPAL device that did not generate
      any monitoring service revenue for the period.  Upon further
      review, the Company was unable to identify any accounting pronouncements
      specifying the appropriate classification of these expenses in the
      statement of operations.  Therefore, the Company looked to
      general practices of similar companies and determined to reclassify these
      expenses to cost of revenues.  The Company believes this
      reclassification is appropriate because the non-billable units do not
      directly meet the definition of research and development assets, they are
      not promotional assets, and they are not used by the Company for internal
      purposes.




The
effects of these restatements as of and for the three months ended December 31,
2007 and 2006 are as follows:





Previously
              Reported
            
            
            As
      RestatedBalance
      Sheet Items - 2007:Monitoring
      equipment, net of accumulated depreciation
            
            $
            2,119,798
            
            
            $
            3,049,245Total
      assets
            
            
            21,988,109
            
            
            
            22,917,556Deferred
      revenue
            
            
            34,894
            
            
            
            1,301,560Total
      current liabilities
            
            
            11,062,996
            
            
            
            12,329,662Accumulated
      deficit
            
            
            (135,101,671
            )
            
            
            (135,438,890
            )Total
      stockholders’ equity
            
            
            3,932,491
            
            
            
            3,595,272Total
      liabilities and stockholders’ equity
            
            
            21,988,109
            
            
            
            22,917,556Statement
      of Operations Items - 2007:Revenues
            
            
            3,605,545
            
            
            
            3,638,878Cost
      of revenues
            
            
            2,184,100
            
            
            
            2,857,007Selling,
      general and administrative expenses
            
            
            4,967,242
            
            
            
            4,317,229Net
      loss
            
            
            (2,352,383
            )
            
            
            (2,341,944
            )Net
      loss attributable to common stockholders
            
            
            (2,519,520
            )
            
            
            (2,509,081
            )Net
      loss per common share – basic and diluted
            
            
            (0.02
            )
            
            
            (0.02
            )Statement
      of Operations Items - 2006:Revenues
            
            
            988,237
            
            
            
            588,237Cost
      of revenues
            
            
            2,205,393
            
            
            
            1,930,665Net
      loss
            
            
            (7,813,649
            )
            
            
            (7,938,921
            )Net
      loss attributable to common stockholders
            
            
            (8,051,505
            )
            
            
            (8,176,777
            )Net
      loss per common share – basic and diluted
            
            
            (0.10
            )
            
            
            (0.10
            )





3





PART
I.  FINANCIAL INFORMATION


Item 1.  Financial Statements





REMOTEMDX,
INC. AND SUBSIDIARIES


UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEET


(As
Restated)




December
      31, 2007AssetsCurrent
      assets:Cash
              
              $
              7,713,104Accounts
      receivable, net of allowance for doubtful accounts
      of  $303,068
              
              
              6,170,561Inventories
      (note 2)
              
              
              47,059Receivables
              
              
              622,927Prepaid
      expenses
              
              
              217,114Total
      current assets
              
              
              14,770,765Property
      and equipment, net of accumulated depreciation and amortization
      of  $1,680,958 (note 3)
              
              
              2,050,433Monitoring
      equipment, net of accumulated depreciation and amortization of $2,977,486
      (note 4)
              
              
              3,049,245Goodwill
      and other intangible assets (note 5)
              
              
              2,989,754Other
      assets
              
              
              57,359Total
      assets
              
              $
              22,917,556Liabilities
      and Stockholders’ EquityCurrent
      liabilities:Bank
      line of credit (note 6)
              
              $
              3,670,451Accounts
      payable
              
              
              2,690,536Accrued
      liabilities (note 7)
              
              
              835,134Dividends
      payable
              
              
              289,948Deferred
      revenue
              
              
              1,301,560Current
      portion of long-term debt (note 8)
              
              
              3,542,033Total
      current liabilities
              
              
              12,329,662Related-party
      line of credit (note 9)
              
              
              8,053Long-term
      debt, net of current portion (note 8)
              
              
              629,518Total
      liabilities
              
              
              12,967,233Minority
      interest (note 10)
              
              
              2,765,051SecureAlert
      Series A Preferred Stock
              
              
              3,590,000Stockholders’
      equity:Preferred
      stock:Series
      A, 10% dividend, convertible, non-voting, $0.0001 par value: 40,000 shares
      designated; 19 shares outstanding (aggregate liquidation preference of
      $450)
              
              
              1Series
      B, convertible, $0.0001 par value: 2,000,000 shares designated; 10,999
      shares outstanding (aggregate liquidation preference of
      $32,997)
              
              
              1Series
      C, convertible, $0.0001 par value: 7,357,144 shares designated; no shares
      outstanding (aggregate liquidation preference of $0)
              
              
              -Common
      stock,  $0.0001 par value: 175,000,000 shares authorized,
      130,515,291 shares outstanding
              
              
              13,052Additional
      paid-in capital
              
              
              145,096,450Deferred
      compensation
              
              
              (6,075,342
              )Accumulated
      deficit
              
              
              (135,438,890
              )Total
      stockholders’ equity
              
              
              3,595,272Total
      liabilities and stockholders’ equity
              
              $
              22,917,556
  See
accompanying notes to unaudited condensed consolidated financial
statements.





4





REMOTEMDX,
INC. AND SUBSIDIARIES


UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(As
Restated)




Three
      Months EndedDecember
      31,2007
              
              
              2006Revenues:Products
              
              $
              1,238,971
              
              
              $
              152,854Monitoring
      services
              
              
              2,399,907
              
              
              
              435,383Total
      revenues
              
              
              3,638,878
              
              
              
              588,237Cost
      of revenues:Products
              
              
              693,043
              
              
              
              93,484Monitoring
      services
              
              
              2,163,964
              
              
              
              1,837,181Total
      cost of revenues
              
              
              2,857,007
              
              
              
              1,930,665Gross
      margin (deficit)
              
              
              781,871
              
              
              
              (1,342,428
              )Operating
      expenses:Selling,
      general and administrative expenses (including $2,019,945 and $1,660,636
      of compensation expense paid in stock or stock option / warrants,
      respectively)
              
              
              4,317,229
              
              
              
              5,196,926Research
      and development expenses
              
              
              1,040,447
              
              
              
              1,219,659Loss
      from operations
              
              
              (4,575,805
              )
              
              
              (7,759,013
              )Other
      income (expense):Gain
      on sale of intellectual property
              
              
              2,400,000
              
              
              
              -Gain
      on revalued registration rights
              
              
              -
              
              
              
              52,500Minority
      interest allocation
              
              
              165,580
              
              
              
              -Interest
      income
              
              
              33,189
              
              
              
              51,521Interest
      expense
              
              
              (375,510
              )
              
              
              (284,285
              )Other
      income
              
              
              10,602
              
              
              
              356Net
      loss
              
              
              (2,341,944
              )
              
              
              (7,938,921
              )Dividends
      on Series A and C preferred stock
              
              
              (167,137
              )
              
              
              (237,856
              )Net
      loss attributable to common stockholders
              
              $
              (2,509,081
              )
              
              $
              (8,176,777
              )Net
      loss per common share – basic and diluted
              
              $
              (0.02
              )
              
              $
              (0.10
              )Weighted
      average common shares outstanding – basic and diluted
              
              
              129,617,000
              
              
              
              83,018,000





See
accompanying notes to unaudited condensed consolidated financial
statements.





5




REMOTEMDX,
INC. AND SUBSIDIARIES


UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(As
Restated)





Three Months EndedDecember
      31,2007
            
            
            2006Cash
      flows from operating activities:Net loss
            
            $
            (2,341,944
            )
            
            $
            (7,938,921
            )Adjustments
      to reconcile net loss to net cash (used in) provided by
              operating
      activities:Depreciation
      and amortization
            
            
            441,165
            
            
            
            471,676Common
      stock issued for services
            
            
            621,085
            
            
            
            557,550Amortization
      of deferred financing and consulting costs
            
            
            1,393,656
            
            
            
            205,320Gain
      on registration rights liability
            
            
            -
            
            
            
            (52,500
            )Stock
      options vested during the period and/or issued for
services
            
            
            183,610
            
            
            
            982,567Increase
      in related-party line of credit for services
            
            
            204,509
            
            
            
            150,639Minority
      interest expense, net
            
            
            (165,582
            )
            
            
            -Changes
      in operating assets and liabilities:Accounts
      receivable, net
            
            
            (638,080
            )
            
            
            (633,604
            )Interest
      receivable
            
            
            (9,068
            )
            
            
            15,604Inventories
      and monitoring equipment
            
            
            27,194
            
            
            
            (390,122
            )Prepaid
      expenses and other assets
            
            
            102,134
            
            
            
            2,095,248Accounts
      payable
            
            
            (799,393
            )
            
            
            3,586,883Accrued
      liabilities
            
            
            (261,826
            )
            
            
            1,116,701Deferred
      revenue
            
            
            (42,199
            )
            
            
            385,681Net
      cash (used in) provided by operating activities
            
            
            (1,284,739
            )
            
            
            552,722Cash
      flows from investing activities:Purchase
      of property and equipment
            
            
            (43,313
            )
            
            
            -Purchase
      of monitoring equipment
            
            
            -
            
            
            
            (7,148,146
            )Net
      cash used in investing activities
            
            
            (43,313
            )
            
            
            (7,148,146
            )Cash
      flows from financing activities:Payment
      of accrued SecureAlert Series A Preferred Stock dividends
            
            
            -
            
            
            
            (20,877
            )Payments
      on related-party line of credit
            
            
            (436,219
            )
            
            
            (128,839
            )Payments
      on bank line of credit
            
            
            (188,534
            )
            
            
            (26,796
            )Payments
      on notes payable
            
            
            (78,644
            )
            
            
            -Cash
      acquired through acquisitions
            
            
            160,898
            
            
            
            -Proceeds
      from sale of common stock
            
            
            -
            
            
            
            6,000,000Proceeds
      from issuance of subsidiary stock
            
            
            1,575,000
            
            
            
            -Proceeds
      from exercise of warrants
            
            
            2,452,380
            
            
            
            75,000Net
      cash provided by financing activities
            
            
            3,484,881
            
            
            
            5,898,488Net
      increase (decrease) in cash
            
            
            2,156,829
            
            
            
            (696,936
            )Cash,
      beginning of period
            
            
            5,556,275
            
            
            
            5,872,529Cash,
      end of period
            
            $
            7,713,104
            
            
            $
            5,175,593








See
accompanying notes to unaudited condensed consolidated financial
statements.





6




REMOTEMDX,
INC. AND SUBSIDIARIES


UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


(As
Restated)





Three
      Months EndedDecember
      31,2007
            
            
            2006Cash
      paid for interest
            
            $
            197,104
            
            
            $
            196,834Supplemental
      schedule of non-cash investing and financing activities:Notes
      payable issued in acquisition of Midwest Monitoring & Surveillance,
      Inc.
            
            
            1,800,000
            
            
            
            -Note
      payable issued in acquisition of Court Programs, Inc., Court Programs of
      Florida, Inc., and Court Programs of Northern Florida,
Inc.
            
            
            1,147,500
            
            
            
            -Issuance
      of shares of common stock in exchange for shares of Series A preferred
      stock
            
            
            -
            
            
            
            1Issuance
      of shares of common stock in exchange for shares of Series B preferred
      stock
            
            
            1
            
            
            
            4Issuance
      of Preferred Series A for stock dividends
            
            
            -
            
            
            
            237,856Exercise
      of options for receivable
            
            
            -
            
            
            
            1,580,464SecureAlert
      Series A dividends
            
            
            167,035
            
            
            
            91,542Penalty
      shares issued for accrued liability
            
            
            -
            
            
            
            291,000








See
accompanying notes to unaudited condensed consolidated financial
statements.







7





REMOTEMDX,
INC. AND SUBSIDIARIES


UNAUDITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(As
Restated)






(1)        BASIS OF
PRESENTATION




The
accompanying condensed consolidated financial statements of RemoteMDx, Inc.
(“RemoteMDx”) and subsidiaries (collectively, 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 of America 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/A for the year ended September 30, 2007,
as amended and restated. The results of operations for the three months ended
December 31, 2007 are not necessarily indicative of the results that may be
expected for the fiscal year ending September 30, 2008.




Going
Concern


The
Company has a history of recurring net losses, negative cash flows from
operating activities in 2007, and an accumulated deficit. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.  In order for the Company to achieve
successful operations, the Company must generate positive cash flows from
operating activities and obtain the necessary funding to meet its projected
capital investment requirements.





Management’s
plans with respect to this uncertainty include raising additional capital from
the exercise of options, sale of Volu-Sol Reagents Corporation (“Volu-Sol”)
common stock, and expanding its market for its tracking
products.  There can be no assurance that revenues will increase
rapidly enough to deliver profitable operating results and pay the Company’s
debts as they come due.   Likewise, there can be no assurance
that the Company will be successful in raising additional capital from the sale
of equity or debt securities.  If the Company is unable to increase
cash flows from operating activities or obtain additional financing, it will be
unable to continue the development of its business and may have to cease
operations.





Principles
of Consolidation


The
condensed consolidated financial statements include the accounts of RemoteMDx
and its subsidiaries. All significant inter-company transactions have been
eliminated in consolidation.





Stock-Based
Compensation





For the
three months ended December 31, 2007, no stock options were granted to
employees.  The Company granted stock options for the purchase of
150,000 shares of common stock to employees during the three months ended
December 31, 2006.  The weighted average fair value of stock options
at the date of grant during the three months ended December 31, 2007 and 2006
was $0 and $0.69, respectively.





The
expected life of stock options represents the period of time that the stock
options granted are expected to be outstanding based on historical exercise
trends. The expected volatility is based on the historical price volatility of
common stock. The risk-free interest rate represents the U.S. Treasury bill rate
for the expected life of the related stock options. The dividend yield
represents the Company’s anticipated cash dividends over the expected life of
the stock options.





The
following are the weighted-average assumptions used for options granted during
the three months ended December 31, 2006:




December 31,
      2006Risk
      free interest rate
            4.69%Expected
      life
            5
      YearsDividend
      yield
            n/aVolatility
            145%





8





A summary
of employee stock option activity for the three months ended December 31, 2007,
is presented below:








WeightedWeighted
            
            AverageShares
            
            
            Average
            
            Remaining
            
            AggregateUnder
            
            
            Exercise
            
            Contractual
            
            IntrinsicOption
            
            
            Price
            
            Life
            
            ValueOutstanding
      at September 30, 2007
            
            
            3,295,000
            
            
            $
            0.64Granted
            
            
            -
            
            
            
            -Exercised
            
            
            (950,000
            )
            
            
            0.63Forfeited
            
            
            -
            
            
            
            -Expired
            
            
            -
            
            
            
            -Outstanding
      at December 31, 2007
            
            
            2,345,000
            
            
            $
            0.65
            
            3.80
      Years
            
            
            6,714,500Exercisable
      at December 31, 2007
            
            
            190,000
            
            
            $
            1.04
            
            3.91
      Years
            
            
            469,749





A summary
of the status of the Company's non-vested stock options as of and for the three
months ended December 31, 2007, is presented below:





WeightedAverageNon-Vested
            
            
            Grant
      DateOptions
            
            
            Fair
      ValueNon-vested
      at September 30, 2007
            
            
            2,155,000
            
            
            $
            0.61Granted
            
            
            -
            
            
            
            -Vested
            
            
            -
            
            
            
            -Forfeited
            
            
            -
            
            
            
            -Non-vested
      at December 31, 2007
            
            
            2,155,000
            
            
            $
            0.61





As of
December 31, 2007, there was approximately $1,268,000 of unrecognized
compensation cost related to stock options that will be recognized over
approximately the next two years.





A summary
of stock option activity for the three months ended December 31, 2006, is
presented below:





9








WeightedWeighted
            
            AverageShares
            
            
            Average
            
            Remaining
            
            AggregateUnder
            
            
            Exercise
            
            Contractual
            
            IntrinsicOption
            
            
            Price
            
            Life
            
            ValueOutstanding
      at September 30, 2006
            
            
            3,607,500
            
            
            $
            0.63Granted
            
            
            150,000
            
            
            
            1.85Exercised
            
            
            (225,000
            )
            
            
            0.58Forfeited
            
            
            -
            
            
            
            -Expired
            
            
            -
            
            
            
            -Outstanding
      at December 31, 2006
            
            
            3,532,500
            
            
            $
            0.69
            
            4.12
      Years
            
            
            3,261,475Exercisable
      at December 31, 2006
            
            
            1,327,500
            
            
            $
            1.22
            
            4.11
      Years
            
            
            1,094,325





A summary
of the status of the Company's non-vested stock options as of and for the three
months ended December 31, 2006, is presented below:





WeightedAverageNon-Vested
            
            
            Grant
      DateOptions
            
            
            Fair
      ValueNon-vested
      at September 30, 2006
            
            
            3,095,001
            
            
            $
            0.56Granted
            
            
            -
            
            
            
            -Vested
            
            
            (890,000
            )
            
            
            0.56Forfeited
            
            
            -
            
            
            
            -Non-vested
      at December 31, 2006
            
            
            2,205,001
            
            
            $
            0.56





As of
December 31, 2006, there was $1,225,545 of unrecognized compensation cost
related to stock options that will be recognized over approximately the next two
years.





Impairment
of Long-Lived Assets


The
Company reviews its long-lived assets for impairment when events or changes in
circumstances indicate that the book value of an asset may not be
recoverable.  The Company evaluates, at each balance sheet date,
whether events and circumstances have occurred which indicate possible
impairment. The Company uses an estimate of future undiscounted net cash flows
of the related asset or group of assets over the estimated remaining life in
measuring whether the assets are recoverable.  If the carrying amount
of an asset exceeds its estimated future cash flows, an impairment charge is
recognized for the amount by which the carrying amount exceeds the estimated
fair value of the asset.  Impairment of long-lived assets is assessed
at the lowest levels for which there are identifiable cash flows that are
independent of other groups of assets.  Assets to be disposed of are
reported at the lower of the carrying amount or fair value, less the estimated
costs to sell.





Net
Loss Per Common Share


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




10





Common
share equivalents consist of shares issuable upon the exercise of common stock
options and warrants, the conversion of the convertible debentures and related
accrued interest, and shares issuable upon conversion of preferred stock. As of
December 31, 2007 and 2006, there were 16,184,404 and 46,882,148 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.  The common share equivalents outstanding at December
31, 2007 consisted of 7,178 shares of common stock underlying Series A Preferred
Stock, 113,783 shares of common stock underlying Series B Preferred Stock, and
16,063,443 shares underlying options and warrants. Of the 16,063,443 shares
underlying options and warrants, 11,307,030 shares underlie options and warrants
which have vested and 4,756,413 shares underlie options and warrants which have
not yet vested.





Revenue
Recognition


The
Company’s revenue has historically been from three sources: (i) monitoring
services; (ii) monitoring device and other product sales; and (iii) medical
diagnostic stains sales.





Monitoring
Services


Monitoring
services include two components: a) contracts in which the Company provides
monitoring services and leases devices to distributors or end users in which the
Company retains ownership of the leased devices; and b) monitoring services
purchased by distributors or end users who have previously purchased devices and
have opted to use the Company’s monitoring services.





The
Company leases its devices under one-year contracts with customers that opt to
use the Company’s monitoring services.  However, these contracts may
be cancelled by either party at anytime with 30 days notice.  Under
the Company’s standard leasing contract, the leased device becomes billable on
the date of activation or 21 days from the date the device is assigned to the
lessee, and remains billable until the device is returned to the
Company.  The Company recognizes revenue on leased devices at the end
of each month that monitoring services have been provided.  In those
circumstances in which the Company receives payment in advance, the Company
records these payments as deferred revenue.





Monitoring Device Product
Sales


Although
not the focus of the Company’s business model, the Company sells its monitoring
devices in certain situations.  In addition, the Company sells home
security and Personal Emergency Response Systems.  The Company
recognizes product sales revenue when persuasive evidence of an arrangement with
the customer exists, title passes to the customer and the customer cannot return
the devices, prices are fixed or determinable (including sales not being made
outside the normal payment terms) and collection is reasonably
assured.





When
purchasing products (such as TrackerPAL devices) from the Company, customers
may, but are not required to, enter into monitoring service
contracts.   The Company recognizes revenue on monitoring
services for customers that have previously purchased devices at the end of each
month that monitoring services have been provided.





Multiple Element
Arrangements


The
majority of the Company’s revenue transactions do not have multiple elements. On
occasion, the Company has revenue transactions that have multiple elements (such
as product sales and monitoring services).  For revenue arrangements
that have multiple elements, the Company considers whether: (i) the delivered
devices have standalone value to the customer; (ii) there is objective and
reliable evidence of the fair value of the undelivered monitoring services,
which is generally determined by surveying the price of competitors’ comparable
monitoring services; and (iii) the customer does not have a general right of
return.  Based on these criteria, the Company recognizes revenue from
the sale of devices separately from the monitoring services to be provided to
the customer.  In accordance with EITF 00-21, if the fair value of the
undelivered element exists, but the fair value does not exist for one or more
delivered elements, then revenue is recognized using the residual method. Under
the residual method as applied to these particular transactions, the fair value
of the undelivered element (the monitoring services) is deferred and the
remaining portion of the arrangement (the sale of the device) is recognized as
revenue when the device is delivered and all other revenue recognition criteria
are met.





11





Medical Diagnostic Stain
Sales


The
Company recognizes medical diagnostic stains revenue when persuasive evidence of
an arrangement with the customer exists, title passes to the customer and the
customer cannot return the products, prices are fixed or determinable (including
sales not being made outside the normal payment terms) and collection is
reasonably assured.





Other
Matters


The
Company considers an arrangement with payment terms longer than the Company’s
normal terms not to be fixed or determinable, and revenue is recognized when the
fee becomes due.  Normal payment terms for the sale of monitoring
services are 30 days, and normal payment terms for device sales are between 120
and 180 days.  The Company sells its devices and services directly to
end users and to distributors.  Distributors do not have general
rights of return.  Distributors have no price protection or stock
protection rights with respect to devices sold to them by the
Company.  Generally, title and risk of loss pass to the buyer upon
delivery of the devices.





The
Company estimates its product returns based on historical experience and
maintains an allowance for estimated returns, which is recorded as a reduction
to accounts receivable and revenue.





Shipping
and handling fees are included in revenues.  The related freight costs
and supplies directly associated with shipping products to customers are
included as a component of cost of revenues.





(2)
            INVENTORIES





Substantially
all items included in inventory are finished goods and consisted of reagents
stains, net of reserve for obsolescence of $61,966, as of December 31,
2007.





(3)
            PROPERTY AND
      EQUIPMENT





Property
and equipment as of December 31, 2007, was as follows:





Property
      and equipment
            
            $
            3,731,391Less:  accumulated
      depreciation
            
            
            (1,680,958
            )Total
            
            $
            2,050,433





During
the three months ended December 31, 2007, the Company purchased $43,313 of
property and equipment.Depreciation expense for
the three months ended December 31, 2007 and 2006 was $144,410 and $99,186,
respectively.





(4)        MONITORING
EQUIPMENT





Monitoring
equipment as of December 31, 2007, was as follows:





Monitoring
      equipment
            
            $
            6,026,731Less:  accumulated
      depreciation
            
            
            (2,977,486
            )Total
            
            $
            3,049,245





Net
monitoring equipment of $3,049,245 includes $929,447 of equipment, net of
amortization, previously sold to customers that has been deferred and will be
recognized in future periods.  The Company has not depreciated the
equipment since the date the devices have been sold.





The
Company began leasing monitoring equipment to agencies for offender tracking in
April 2006 under operating lease arrangements.  The monitoring
equipment is depreciated using the straight-line method over the estimated
useful lives of the related assets of three years, and is included in cost of
revenues.  Depreciation expense in connection with monitoring
equipment for the three months ended December 31, 2007 and 2006 was $290,897 and
$372,490, respectively.




12




(5)        GOODWILL AND OTHER
INTANGIBLE ASSETS




Midwest Monitoring &
Surveillance


Effective
December 1, 2007, the Company purchased 51% ownership, including voting
interest, of Midwest Monitoring & Surveillance (“Midwest”) for $1,800,000 in
notes payable and up to 438,000 shares of the Company’s common
stock.  Midwest provides electronic monitoring for individuals on
parole.  The primary reason for the acquisition of Midwest was the
expansion of Company’s technology and name recognition throughout the midwest,
central and eastern United States.  The total consideration for the
purchase of Midwest was $4,382,643 comprised of  notes payable of
$1,800,000, shares of common stock valued at $1,752,000 (438,000 shares valued
at $4.00 per share), transaction costs of $31,497, and long-term liabilities
assumed of $799,146.





The
RemoteMDx shares issued as part of the consideration for the Midwest shares were
placed in escrow subsequent to December 31, 2007, and were subsequently released
by the Company in March 2008.





Court
Programs


Effective
December 1, 2007, the Company purchased 51% ownership, including voting
interest, of Court Programs, Inc., a Mississippi corporation, Court Programs of
Northern Florida, Inc., a Florida corporation, and Court Programs of Florida,
Inc., a Florida corporation (collectively, “Court Programs”) for $300,000 in a
note payable and up to 212,000 shares of the Company’s common
stock.  Court Programs is a distributor of electronic monitoring
devices to courts providing a solution to monitor individuals on
parole.  The primary reasons to acquire Court Programs are to expand
the Company’s technology and increase the Company’s name recognition throughout
the eastern United States.  The total consideration for the purchase
of Court Programs was $1,433,184 delineated a follows:  note payable
of $300,000, shares of common stock valued at $848,000 (212,000 shares valued at
$4.00 per share), transaction costs of $45,324, and long-term liabilities
assumed of $239,860.





The
RemoteMDx shares to be issued as part of the consideration for the Court
Programs shares were placed in escrow subsequent to December 31, 2007, and were
subsequently released by the Company in March 2008.





In
connection with the acquisitions of Midwest and Court Programs, the Company
recorded goodwill and other intangible assets.  The table below shows
the allocation of the goodwill and other intangibles for each
company:





Goodwill
      and other intangibles assetsGoodwillMidwest
            
            $
            78,585Court
      Programs
            
            
            587,386Other
      intangible assetsMidwest
            
            
            1,699,275Court
      Programs
            
            
            624,508Total
      goodwill and other intangible assets
            
            $
            2,989,754




The
Company has not yet completed the purchase price allocations related to the
acquisitions of Midwest and Court Programs.  However, the Company has
identified the following categories of intangible assets that pertain to the
acquisitions: trade name, non-compete agreements, customer relationships and
goodwill.




13





Supplemental
Pro Forma Results of Operations


The
following table presents the pro forma results of operations for the three
months ended December 31, 2007, and 2006 as though the Midwest and Court
Programs acquisitions had been completed as of the beginning of the period
presented:





Three
      Months EndedDecember
      31,2007
            
            
            2006Revenues:Products
            
            $
            1,238,971
            
            
            $
            152,854Monitoring
      services
            
            
            3,317,846
            
            
            
            1,694,084Total
      revenues
            
            
            4,556,817
            
            
            
            1,846,938Cost
      of revenues:Products
            
            
            693,043
            
            
            
            93,484Monitoring
      services
            
            
            2,654,527
            
            
            
            2,791,922Total
      cost of revenues
            
            
            3,347,570
            
            
            
            2,885,406Gross
      margin (deficit)
            
            
            1,209,247
            
            
            
            (1,038,468
            )Operating
      expenses:Selling,
      general and administrative expenses
            
            
            4,769,128
            
            
            
            5,796,809Research
      and development expenses
            
            
            1,040,447
            
            
            
            1,219,659Loss
      from operations
            
            
            (4,600,328
            )
            
            
            (8,054,936
            )Other
      income (expense):Gain
      on sale of intellectual property
            
            
            2,400,000
            
            
            
            -Gain
      on revalued registration rights
            
            
            -
            
            
            
            52,500Minority
      interest allocation
            
            
            165,580
            
            
            
            -Other
      income
            
            
            10,602
            
            
            
            356Interest
      income
            
            
            33,189
            
            
            
            51,521Interest
      expense
            
            
            (391,665
            )
            
            
            (315,636
            )Net
      loss
            
            
            (2,382,622
            )
            
            
            (8,266,195
            )Dividends
      on Series A and C preferred stock
            
            
            (167,137
            )
            
            
            (237,856
            )Net
      loss attributable to common stockholders
            
            $
            (2,549,759
            )
            
            $
            (8,504,051
            )Net
      loss per common share – basic and diluted
            
            $
            (0.02
            )
            
            $
            (0.10
            )Weighted
      average common shares outstanding – basic and diluted
            
            
            130,267,000
            
            
            
            83,018,000




(6)        BANK LINE OF
CREDIT




As of
December 31, 2007, the Company’s outstanding balance under a line of credit with
a bank was $3,670,451. The interest rate is 7.50% and the line of credit matures
on March 1, 2008. The line of credit is secured by letters of credit totaling
$4,000,000 and SecureAlert’s assets excluding TrackerPAL products. This line of
credit can be expanded up to $10,000,000 under certain terms and
conditions.  The letters of credit were provided as collateral by four
entities.  The entities received a total of 400,000 shares of the
Company’s common stock and were reimbursed $40,000 in cash for expenses related
to establishing the letters of credit in the year ended September 30,
2006.




In
addition, the Company pays monthly interest payments at an 11% annual interest
rate on the line of credit to the entities that provided the letters of
credit.




14





(7)        ACCRUED
LIABILITIES





Accrued
liabilities consisted of the following as of December 31, 2007:





Accrued
      payroll, taxes and employee benefits
            
            $
            243,581Accrued
      consulting costs
            
            
            126,500Accrued
      communication costs
            
            
            113,935Accrued
      interest
            
            
            83,420Accrued
      engineering costs
            
            
            68,460Accrued
      bonuses and directors fees
            
            
            55,000Accrued
      rental expenses
            
            
            55,000Accrued
      monitoring center costs
            
            
            32,170Accrued
      professional expenses
            
            
            22,377Accrued
      commissions
            
            
            15,000Other
      accrued expenses
            
            
            19,691Total
            
            $
            835,134





(8)        DEBT
OBLIGATIONS





Debt
obligations as of December 31, 2007 consisted of the following:





Notes
      payable due to three individuals for the acquisition of
      Midwest.  The notes are due January 20,
      2008.  Subsequent to December 31, 2007, the Company paid off
      these notes.
            
            $
            1,800,000Note
      payable due to an individual for the acquisition of Court
      Programs.  The note is due January 20,
      2008.  Subsequent to December 31, 2007, the Company paid off
      this note.
            
            
            1,147,500Notes
      payable to a financial institution bearing interest at 9%.  The
      notes mature in June 2011 and June 2016.  The notes are secured
      by property.
            
            
            305,845Note
      payable due to the Small Business Association (“SBA”).  The note
      bears interest at 4.17% and matures on April 6, 2037.
            
            
            233,081Notes
      payable for monitoring equipment.  The notes bear interest at
      10% and mature December 2008 and January 2009.  The notes are
      secured by the monitoring equipment.
            
            
            215,928Unsecured
      notes payable to former SecureAlert stockholders, with interest at 5%,
      payable in installments of $80,000 per month until paid in
      full.  These notes are currently in default, although these
      notes are subject to an offset provision which has never been provided to
      the Company.
            
            
            169,676Automobile
      loans with several financial institutions secured by the
      vehicles.  Interest rates range between 4.65% and 15.96%, due
      between November 2008 and November 2011.
            
            
            114,272Notes
      payable to three stockholders of Midwest.  Notes bear interest
      at rates ranging between 5% and 10% maturing on February
    2013.
            
            
            104,523Unsecured
      revolving line of credit with a bank, with interest at
    14.24%.
            
            
            43,010Unsecured
      revolving line of credit with a bank, with interest at
    8.85%.
            
            
            37,716Total
      debt obligations
            
            
            4,171,551Less
      current portion
            
            
            3,542,033Long-term
      portion
            
            $
            629,518




15




(9)       RELATED-PARTY LINE OF CREDIT
AND NOTE




As of
December 31, 2007, the Company owed $8,053 to ADP Management, an entity owned
and controlled by Mr. Derrick and Mr. Dalton (“Derrick” and “Dalton”), under a
line of credit agreement. Outstanding amounts on the line of credit accrue
interest at 11.0% and are due on August 31, 2009.  During the three
months ended December 31, 2007, the net decrease in the related-party line of
credit was $231,710.  The decrease consisted of net cash repayments
during the three months ended December 31, 2007, of $436,219 and an increase of
$204,509 related to monthly management fees and reimbursable expenses owed to
ADP Management.  Derrick’s and Dalton’s respective salaries are paid
to ADP Management which in turn pays Derrick and Dalton.  If the
Company is unable to pay the management fee and reimbursable expenses in cash,
the related-party line of credit is increased for the amount owed to ADP
Management.





(10)      MINORITY
INTEREST





Volu-Sol
Reagents


In
January 2007, Derrick and Dalton exercised their previously granted right (this
right was granted in February 2006) to purchase from RemoteMDx 2,500,000 shares
of Volu-Sol Reagents common stock for cash proceeds of $400,000, or $0.16 per
share.  Prior to the sale, RemoteMDx owned 100% of Volu-Sol Reagents
common stock.  The sale decreased RemoteMDx’s ownership to
70%.  During the year ended September 30, 2007, Volu-Sol Reagents
negotiated a non-exclusive license agreement with
RemoteMDx.  Additionally, Volu-Sol issued 3,375,000 shares of common
stock, with a three year anti-dilution provision, for net cash proceeds of
$1,150,000, or $0.34 per share, to various investors.  These
transactions decreased RemoteMDx’s ownership of Volu-Sol Reagent’s to
50%.





During
the three months ended December 31, 2007, Volu-Sol issued 3,937,500 shares of
Volu-Sol Reagents common stock for cash proceeds of $1,575,000.  In
addition, Volu-Sol issued 875,000 shares of its common stock for
services.  As of December 31, 2007, Volu-Sol Reagents had a total of
16,520,833 shares outstanding.  RemoteMDx had voting control for
50.82% of the outstanding shares of Volu-Sol as of December 31, 2007 and has
therefore included Volu-Sol Reagents in the accompanying consolidated financial
statements.





Subsequent
to December 31, 2007, RemoteMDx sold 3,000,000 shares of Volu-Sol common stock
for $2,400,000 in cash or $0.80 per share and 1,670,000 warrants with an
exercise price of $3.30 per share.





Midwest


Effective
December 1, 2007, the Company acquired 51% ownership of Midwest for $1,800,000
in notes payable, subsequently paid off in cash, and 438,000 shares of RemoteMDx
common stock.





Court
Programs


Effective
December 1, 2007, the Company acquired 51% ownership of Court Programs for
$300,000 in a note payable, subsequently paid off in cash, and 212,000 shares of
RemoteMDx common stock.





The
schedule below shows the allocation of the minority interest among the
entities:





Minority
      InterestVolu-Sol
      Reagents
            
            $
            2,789,945Midwest
            
            
            58,321Court
      Programs
            
            
            (83,215
            )Total
            
            $
            2,765,051




16




(11)      PREFERRED
STOCK




Series
A 10% Convertible Non-Voting Preferred Stock




Each
share of Series A Preferred Stock is convertible into 370 shares of common
stock. During the three months ended December 31, 2007, no shares of Series A
Preferred Stock were converted into common stock.  As of December 31,
2007, there were 19 shares of Series A Preferred Stock outstanding, which
represent 7,178 common stock equivalents at a conversion rate of 370 for 1.
Subsequent to December 31, 2007, and as of the date of this Report, no
additional shares of Series A Preferred Stock had been converted into shares of
common stock.




The
holders of the Series A Preferred Stock are entitled to dividends at the rate of
10% per year on the stated value of the Series A Preferred Stock (or $200 per
share), payable in cash 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 three months ended
December 31, 2007 and 2006, the Company recorded $102 and $50,440, 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% 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 December 31, 2007, the Company had
not exercised its option to redeem shares of Series A Preferred
Stock.




Series
B Convertible Preferred Stock




During
the three months ended December 31, 2007, a total of 2,000 shares of Series B
Convertible Preferred Stock were converted into 15,000 shares of common
stock.  As of December 31, 2006, there were 10,999 shares of Series B
Preferred Stock outstanding, convertible into approximately 113,783 common
shares.  Subsequent to December 31, 2007, through the date of this
Report, no additional shares of Series B Convertible Preferred Stock had been
converted into shares of common stock.




SecureAlert,
Inc. Preferred Stock




As of
December 31, 2007, there were 3,590,000 shares of SecureAlert Series A Preferred
Stock outstanding.  The holders of shares of Series A Preferred Stock
are entitled to receive quarterly dividends out of any of SecureAlert’s assets
legally available therefore, prior and in preference to any declaration or
payment of any dividend on the Common Stock of SecureAlert, at the rate of $1.54
per day times the number of SecureAlert’s parolee contracts calculated in days
during the quarter. For example, if there were an average of 10,000 parolee
contracts outstanding during the quarter, the total dividend would be $1,386,000
($1.54 X 90 days X 10,000 contracts) or $.386 per share of Series A Preferred
Stock. In no case will a dividend be paid if the gross revenue per contract per
day to SecureAlert averages less than $4.50. Dividends will be paid in cash to
the holders of record of shares of Series A Preferred Stock as they appear on
the books and records of SecureAlert on such record dates not less than ten (10)
days nor more than sixty (60) days preceding the payment dates thereof, as may
be fixed by the Board of Directors of SecureAlert. As a group, all SecureAlert
Series A Preferred Stock were convertible at the holders’ option at any time
into an aggregate of 20% ownership of the common shares of SecureAlert, Inc.
During the three months ended December 31, 2007, no shares of SecureAlert Series
A Preferred Stock had been converted into shares of SecureAlert common
stock.





On March
24, 2008, SecureAlert redeemed all outstanding shares of SecureAlert Series A in
exchange for 7,434,248 shares of RemoteMDx common stock.  The former
SecureAlert Series A stockholders are entitled receive to contingency payments
through March 23, 2011 based on a percentage of revenues from the Company’s
monitoring services.  The amount of the contingency payments is
determined based on a formula discussed in the Designation of Rights and
Preferences set forth in the Articles of Incorporation of SecureAlert, Inc., as
amended.  Subsequent to December 31, 2007, RemoteMDx issued 289,948
shares of common stock as consideration for dividends due to the former
SecureAlert Series A stockholders through December 31, 2007.





17




(12)      COMMON
STOCK




During
the three months ended December 31, 2007, the Company issued 3,175,206 shares of
common stock as follows:




·
            130,000
      shares were issued for services performed for a value of
      $621,085.




·
            15,000
      shares were issued from Series B Preferred Stock
    conversions.




·
            2,854,453
      shares were issued from the exercise of
  warrants.




·
            175,753
      shares were issued for dividends on SecureAlert Series A Preferred
      stock.




Common
Stock Options and Warrants




As of
December 31, 2007, 11,307,030 of the 16,063,443 outstanding options and warrants
were vested with a weighted average exercise price of $1.68 per
share.  During the three months ended December 31, 2007, 50,000
warrants were issued with an exercise price of $4.05 per share and vested
immediately.  During the three months ended December 31, 2007, various
warrant holders exercised 2,854,453 warrants resulting in cash proceeds to the
Company of $2,044,881.




(13)      SEGMENT
INFORMATION




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 electronic monitoring
segment (comprising the SecureAlert, Midwest, and Court Programs subsidiaries)
is engaged in the business of developing, distributing and monitoring offender
tracking devices. Other (unallocated) loss consists of research and development,
selling, general and administrative expenses related to the Company's corporate
activities, including remote health monitoring and market and business
development activities.





The
following table reflects certain financial information relating to each
reportable segment for three months ended December 31, 2007 and
2006:





Three Months EndedDecember
      31,2007
            
            
            2006Sales
      to external customers:Electronic
      monitoring
            
            $
            3,469,286
            
            
            $
            435,383Reagents
            
            
            169,592
            
            
            
            152,854$
            3,638,878
            
            
            $
            588,237Loss
      from operations:Electronic
      monitoring
            
            $
            (2,133,865
            )
            
            $
            (4,825,688
            )Reagents
            
            
            (284,246
            )
            
            
            (66,722
            )Other
      (unallocated)
            
            
            (2,157,694
            )
            
            
            (2,866,603
            )$
            (4,575,805
            )
            
            $
            (7,759,013
            )As
      ofIdentifiable
      assets:
            
            December
      31, 2007Electronic
      monitoring
            
            $
            14,892,645Reagents
            
            
            2,494,825Other
      (unallocated)
            
            
            5,530,086Total
      assets
            
            $
            22,917,556




18




(14)      SUBSEQUENT
EVENTS




Subsequent
to December 31, 2007, the Company entered into the following
transactions:





1)
            Issued
      212,000 shares of common stock and paid cash of $300,000 as payment in
      full on the note payable in connection with the acquisition of Court
      Programs.


2)
            Issued
      438,000 shares of common stock and paid cash of $1,800,000 as payment in
      full on the $1,800,000 notes payable in connection with the acquisition of
      Midwest.


3)
            Issued
      345,755 shares of common stock for services
  rendered.


4)
            Issued
      10,000 shares upon the exercise of options for cash proceeds of
      $6,000.


5)
            Sold
      3,000,000 shares of Volu-Sol common stock for $2,400,000 in
      cash.


.




(15)      COMMITMENTS
AND CONTINGENCIES




Onyx Consulting Group, LLC
v. RemoteMDx, Inc.  The dispute arises out of an agreement
between Onyx and the Company pursuant to which Onyx agreed to provide investor
relations related services to the Company.  On October 9, 2007, Onyx
served its Statement of Claim, in which it asserted a claim for breach of
contract, seeking as damages the value of 750,000 shares of restricted RemoteMDx
common stock it claims it is due under the agreement.  An arbitrator
has been appointed but discovery has not yet commenced.  The
arbitration hearing is scheduled for April 2008.  The Company has
asserted counterclaims against Onyx for breach of contract and
rescission.  On May 19, 2008, the Company settled this matter by
issuing 325,000 restricted shares of the Company's common stock to
Onyx.





Strategic Growth
International, Inc. v. RemoteMDx, Inc., This action was filed in response
to an action previously filed by the Company against SGI in Utah.  The
action arises out of a contract between SGI and the Company for certain investor
relations related services to be performed by SGI.  The SGI
Defendants’ Complaint alleges a single claim for Breach of Contract and seeks
recovery of: 1) the balance they claim remains due under the contract
(approximately $80,000); 2) the value of options to purchase 500,000 shares of
restricted RemoteMDx common stock at $0.50 per share; and 3) the value of one
million shares of restricted RemoteMDx common stock.  In its Answer
and Counterclaims, the Company denied the SGI Defendants’ allegations and
asserted counterclaims for:  (1) breach of contract; (2) rescission;
and (3) declaratory judgment.  On October 29, 2007, with the approval
of the court, the Company amended its Answer and Counterclaims to assert an
additional claim against SGI for fraudulent inducement. The Company seeks
rescission of its contract with SGI and the return of amounts the Company paid
SGI under the contract.  Discovery is ongoing and a final pretrial
conference is set for March 2008.  The Company intends to vigorously
defend itself against the SGI Defendants’ claim and to prosecute its
counterclaims against the SGI Defendants.  The Company has not accrued
any potential loss as the probability of incurring such losses is deemed remote
by management, after consultation with legal counsel.





Item
2.  Management’s Discussion and Analysis or Plan of
Operation





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/A
for the year ended September 30, 2007, as amended.  The Company
disclaims any obligation or intention to update any forward-looking
statement.




General


RemoteMDx,
Inc. (“RemoteMDx” or the “Company”) markets, monitors and sells the TrackerPAL
device.  The TrackerPAL is used to monitor convicted offenders that
are on probation or parole, in the criminal justice system.  The
TrackerPAL device utilizes GPS and cellular technologies in conjunction with a
monitoring center that is staffed 365 days a year.   The Company
believes that its technologies and services will benefit the law enforcement
officials and allow them to respond immediately to a problem involving one of
their offenders.  The parole and probation market consists of
approximately 4.9 million adults in the criminal justice system at any given
time. The TrackerPAL is targeted to meet the needs of this market.





19




Our
Strategy




Our goal
is to establish the Company as a significant marketer and distributor of leading
technology and services we have developed for the parolee and probation
market.




Critical
Accounting Policies




In Note 2
to the audited financial statements for the fiscal year ended September 30, 2007
included in the Company’s Form 10-KSB/A, as amended, the Company discusses those
accounting policies that are considered to be significant in determining the
results of operations and its financial position.  The Company
believes the accounting principles utilized by it conform to accounting
principles generally accepted in the United States of America.




The
preparation of consolidated financial statements requires management to make
significant estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses. By their nature, these judgments are subject
to an inherent degree of uncertainty. On an on-going basis, we evaluate our
estimates, including those related to bad debts, inventories, intangible assets,
warranty obligations, product liability, revenue, and income taxes. We base our
estimates on historical experience and other facts and circumstances that are
believed to be reasonable, and the results form the basis for making judgments
about the carrying value of assets and liabilities.  The actual
results may differ from these estimates under different assumptions or
conditions.




With
respect to revenue recognition, impairment of long-lived assets, and accounting
for stock-based compensation, the Company applies the following critical
accounting policies in the preparation of its financial statements:





Revenue
Recognition




The
Company’s revenue has historically been from three sources: (i) monitoring
services; (ii) monitoring device and other product sales; and (iii) sales of
medical diagnostic stains.




Monitoring
Services


Monitoring
services include two components: (a) lease contracts in which the Company
provides monitoring services and leases devices to distributors or end users and
the Company retains ownership of the leased device; and (b) monitoring services
purchased by distributors or end users who have previously purchased monitoring
devices and opt to use the Company’s monitoring services.





The
Company typically leases its devices under one-year contracts with customers
that opt to use the Company’s monitoring services.  However, these
contracts may be cancelled by either party at anytime with 30 days
notice.  Under the Company’s standard leasing contract, the leased
device becomes billable on the date of activation or 21 days from the date the
device is assigned to the lessee, and remains billable until the device is
returned to the Company.  The Company recognizes revenue on leased
devices at the end of each month that monitoring services have been
provided.  In those circumstances in which the Company receives
payment in advance, the Company records these payments as deferred
revenue.




Monitoring Device Product
Sales


Although
not the focus of the Company’s business model, the Company sells its monitoring
devices in certain situations. In addition, the Company sells home security and
PERS units.  The Company recognizes product sales revenue when
persuasive evidence of an arrangement with the customer exists, title passes to
the customer and the customer cannot return the devices, prices are fixed or
determinable (including sales not being made outside the normal payment terms)
and collection is reasonably assured.





When
purchasing products (such as TrackerPAL devices) from the Company, customers
may, but are not required to, enter into monitoring service contracts with the
Company.  The Company recognizes revenue on monitoring services for
customers that have previously purchased devices at the end of each month that
monitoring services have been provided.




Multiple Element
Arrangements


The
majority of the Company’s revenue transactions do not have multiple elements. On
occasion, the Company has revenue transactions that have multiple elements (such
as product sales and monitoring services).  For revenue arrangements
that have multiple elements, the Company considers whether: (i) the delivered
devices have standalone value to the customer; (ii) there is objective and
reliable evidence of the fair value of the undelivered monitoring services,
which is generally determined by surveying the price of competitors’ comparable
monitoring services; and (iii) the customer does not have a general right of
return.  Based on these criteria, the Company recognizes revenue from
the sale of devices separately from the monitoring services to be provided to
the customer.  In accordance with EITF 00-21, if the fair value of the
undelivered element exists, but the fair value does not exist for one or more
delivered elements, then revenue is recognized using the residual method. Under
the residual method as applied to these particular transactions, the fair value
of the undelivered element (the monitoring services) is deferred and the
remaining portion of the arrangement (the sale of the device) is recognized as
revenue when the device is delivered and all other revenue recognition criteria
are met.




20





Medical Diagnostic Stain
Sales


The
Company recognizes medical diagnostic stains revenue when persuasive evidence of
an arrangement with the customer exists, title passes to the customer and the
customer cannot return the products, prices are fixed or determinable (including
sales not being made outside the normal payment terms) and collection is
reasonably assured.





Other
Matters


The
Company considers an arrangement with payment terms longer than the Company’s
normal terms not to be fixed or determinable, and revenue is recognized when the
fee becomes due.  Normal payment terms for the sale of monitoring
services are 30 days, and normal payment terms for device sales are between 120
and 180 days.  The Company sells its devices and services directly to
end users and to distributors.  Distributors do not have general
rights of return.  Also, distributors have no price protection or
stock protection rights with respect to devices sold to them by the
Company.  Generally, title and risk of loss pass to the buyer upon
delivery of the devices.





The
Company estimates its product returns based on historical experience and
maintains an allowance for estimated returns, which is recorded as a reduction
to accounts receivable and revenue.





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





Impairment
of Long-lived Assets





The
Company reviews its long-lived assets for impairment when events or changes in
circumstances indicate that the book value of an asset may not be
recoverable.  The Company evaluates, at each balance sheet date,
whether events and circumstances have occurred which indicate possible
impairment. The Company uses an estimate of future undiscounted net cash flows
of the related asset or group of assets over the estimated remaining life in
measuring whether the assets are recoverable.  If the carrying amount
of an asset exceeds its estimated future cash flows, an impairment charge is
recognized for the amount by which the carrying amount exceeds the estimated
fair value of the asset.  Impairment of long-lived assets is assessed
at the lowest levels for which there are identifiable cash flows that are
independent of other groups of assets.  Assets to be disposed of are
reported at the lower of the carrying amount or fair value, less the estimated
costs to sell.  In addition, depreciation of the asset
ceases.  During the three months ended December 31, 2007 and 2006, no
impairment of long-lived assets was recorded.





Accounting
for Stock-based Compensation





For the
three months ended December 31, 2007, no stock options were granted to
employees.  The Company granted 150,000 stock options to employees
during the three months ended December 31, 2006.  The weighted average
fair value of stock options at the date of grant during the three months ended
December 31, 2007 and 2006 was $0 and $0.69, respectively.





The
expected life of stock options represents the period of time that the stock
options granted are expected to be outstanding based on historical exercise
trends. The expected volatility is based on the historical price volatility of
common stock. The risk-free interest rate represents the U.S. Treasury bill rate
for the expected life of the related stock options. The dividend yield
represents the Company’s anticipated cash dividend over the expected life of the
stock options.





The
following are the weighted-average assumptions used for options granted during
the three months ended December 31, 2006:





21





December 31,
      2006Risk
      free interest rate
            4.69%Expected
      life
            5
      YearsDividend
      yield
            n/aVolatility
            145%





A summary
of employee stock option activity for the three months ended December 31, 2007,
is presented below:




WeightedWeighted
            
            AverageShares
            
            
            Average
            
            Remaining
            
            AggregateUnder
            
            
            Exercise
            
            Contractual
            
            IntrinsicOption
            
            
            Price
            
            Life
            
            ValueOutstanding
      at September 30, 2007
            
            
            3,295,000
            
            
            $
            0.64Granted
            
            
            -
            
            
            
            -Exercised
            
            
            (950,000
            )
            
            
            0.63Forfeited
            
            
            -
            
            
            
            -Expired
            
            
            -
            
            
            
            -Outstanding
      at December 31, 2007
            
            
            2,345,000
            
            
            $
            0.65
            
            3.80
      Years
            
            
            6,714,500Exercisable
      at December 31, 2007
            
            
            190,000
            
            
            $
            1.04
            
            3.91
      Years
            
            
            469,749




A summary
of the status of the Company's non-vested stock options as of and for the three
months ended December 31, 2007, is presented below:





WeightedAverageNon-Vested
            
            
            Grant
      DateOptions
            
            
            Fair
      ValueNon-vested
      at September 30, 2007
            
            
            2,155,000
            
            
            $
            0.61Granted
            
            
            -
            
            
            
            -Vested
            
            
            -
            
            
            
            -Forfeited
            
            
            -
            
            
            
            -Non-vested
      at December 31, 2007
            
            
            2,155,000
            
            
            $
            0.61





As of
December 31, 2007, there was approximately $1,268,000 of unrecognized
compensation cost related to stock options that will be recognized over
approximately the next two years.





Three
months ended December 31, 2007, compared to three months ended December 31,
2006





Revenues




For the
three months ended December 31, 2007, the Company had revenues of $3,638,878
compared to $588,237 for the three months ended December 31, 2006, an increase
of $3,050,641. The increase in revenues resulted primarily from the sale and
monitoring of offender tracking devices.




During
the year ended September 30, 2007, the Company delivered TrackerPAL devices to
distributors with a sales value of $1,300,000 that did not meet the requirements
of EITF 00-21 and SAB 104 for revenue recognition.  During the three
months ended December 31, 2007, $33,333 of the $1,300,000 was recognized as
revenue and the remaining $1,266,667 is deferred and will be recognized in
future periods.




22




SecureAlert
had revenues of $2,908,390 during the three months ended December 31, 2007,
compared to revenues of $435,383 for the three months ended December 31, 2006.
These revenues in the three months ended December 31, 2007 consisted of
$1,033,333 from the sale of offender tracking devices, $1,855,149 from the
monitoring of offender tracking devices, and $19,908 from home and personal
security systems.  Electronic Monitoring Services and QuestGuard were
significant customers of SecureAlert, accounting for 36% and 29%, respectively,
of SecureAlert revenues for the three months ended December 31,
2007.  No other SecureAlert customer accounted for 10% or more of its
revenues.




Reagents
had revenues for the three months ended December 31, 2007 of $169,592, compared
to $152,854 during the three months ended December 31, 2006. The increase in
revenues of $16,738 resulted primarily from hemotology product
sales.  Although revenues increased for the three months ended
December 31, 2007 compared to the same period in 2006, the Company anticipates
that Reagents' revenues will decrease in the future as a percentage of total
revenues.  The following are significant customers of Reagents
accounting for more than 10% of Reagents’ revenues during the
period:  Thermo Fisher Scientific (previously known as Fisher
Scientific) accounted for 25%, Cardinal Health Medical accounted for 14%, and
Esbe Scientific accounted for 11%.  No other Reagents customer
accounted for 10% or more of Reagent’s revenues.





On
December 1, 2007, the Company acquired Midwest. For the month ended December 31,
2007, Midwest had revenues of $351,583.  These revenues consisted of
$311,631 from the monitoring of offender tracking devices, $36,046 from the sale
of equipment, and $3,906 from other miscellaneous sales.





On
December 1, 2007, the Company acquired Court Programs. For the month ended
December 31, 2007, Court Programs had revenues of $209,313 from the monitoring
of offender tracking devices and parolee services.





Cost
of Revenues





For the
three months ended December 31, 2007, cost of revenues was $2,857,007 compared
to $1,930,665 during the three months ended December 31, 2006, an increase of
$926,342.  Cost of revenues increased due to an increase in revenues
for the same period.  SecureAlert's cost of revenues totaled
$2,431,258, or 84%, of SecureAlert's revenues during the three months ended
December 31, 2007, compared to $1,837,181, or 422%, of SecureAlert’s revenues
during the three months ended December 31, 2006.  SecureAlert’s cost
of revenues for the December 31, 2007 of $2,431,258 was comprised of the
following:  device costs of $693,043, commissions of $120,176,
communication costs of $702,132, location costs of $11,441, monitoring center
costs of $456,318, amortization of $270,979, personal emergency response costs
of $3,626, and other TrackerPAL costs of $173,543.  SecureAlert’s cost
of revenues for the three months ended December 31, 2006 of $1,837,181 was
comprised of the following:  communication costs of $894,847,
monitoring center costs of $412,438, amortization of $442,788, personal
emergency response costs of $80,600, and other TrackerPAL costs of
$6,508.





Midwest’s
cost of revenues totaled $173,915 for the one month ended December 31,
2007.  Court Programs cost of revenues totaled $137,613 for the one
month ended December 31, 2007.





Reagents'
cost of revenues was $114,221, or 67%, of Reagent's revenues during the three
months ended December 31, 2007, compared to $93,484, or 61%, of Reagent's
revenues for the same period during the prior fiscal year. The increase as a
percentage of revenues was primarily due to an increase in material, shipping
and labor costs.





As
indicated above, $1,300,000 of device deliveries did not meet the requirements
of EITF 00-21 and SAB104 for revenue recognition.  The corresponding
cost of revenues is $952,341.  During the three months ended December
31, 2007, $22,894 of the $952,341 was recognized as cost of revenues and the
remaining $929,447 is deferred and will be recognized in future
periods.





Research
and Development Expenses





During
the three months ended December 31, 2007 and 2006, research and development
expense was $1,040,447 and  $1,219,659, respectively, and consisted
primarily of expenses associated with the development of SecureAlert’s
TrackerPAL device and related services.




23





Selling,
      General and Administrative Expenses





During
the three months ended December 31, 2007, selling, general and administrative
expenses were $4,317,229 compared to $5,196,926 during the three months ended
December 31, 2006.  The decrease of $879,697 relates primarily to a
decrease in the following expenses:  bad debt of $13,684, commissions
of $26,867, consulting of $770,998, investment relations and banking fees of
$154,282, equipment lease of $13,898, legal and professional fees of $228,199,
outside services of $184,883, overhead allocation of $67,000, rent of $13,136,
supplies of $31,111, and other decreases in selling, general and administrative
expenses of $184,626.  Furthermore, the decrease of $879,697 in
selling, general and administrative expenses was offset, in part, by increases
in the following expenses: advertising of $32,224, amortization of $2,387,
automobile expense of $22,749, board of directors fees of $10,000, depreciation
of $45,224, insurance of $25,064, payroll and taxes of $201,318, rent of
$27,271, repairs and maintenance of $11,948, telephone of $41,309, travel of
$359,942 and other increases in selling, general and administrative expenses of
$29,551.  The decrease in consulting of $770,998 relates primarily a
decrease in public relations expense for the three months ended December 31,
2007 compared to the three months ended December 31, 2006.




Interest
      Income and Expense




During
the three months ended December 31, 2007, interest expense totaled $375,510
compared to $284,285 paid in the three months ended December 31, 2006. This
amount consists primarily of non-cash interest expense of $178,406 related to
unamortized financing costs associated with shares of common stock issued for
prepaid interest. The increase of $91,225 is due primarily from the issuance of
common stock to extend the Company’s related-party line of credit.




Liquidity
and Capital Resources




The
Company is presently unable to finance its business solely from cash flows from
operating activities. During the three months ended December 31, 2007, the
Company financed its business primarily from the sale and issuance of common
stock of the Company’s subsidiary Volu-Sol and the exercise of warrants for the
purchase of common stock of the Company for net proceeds of
$4,027,380.




As of
December 31, 2007, the Company had unrestricted cash of $7,713,104 and working
capital of $2,441,103, compared to unrestricted cash of $5,556,275 and working
capital of $1,296,985 as of September 30, 2007.




During
the three months ended December 31, 2007, the Company's operating activities
used cash of $1,284,739, compared to $552,722 of cash provided during the three
months ended December 31, 2006.




The
Company used cash of $43,313 for investing activities during the three months
ended December 31, 2007.




The
Company's financing activities during the three months ended December 31, 2007,
provided cash of $3,484,881 compared to $5,898,488 during the three months ended
December 31, 2006. During the three months ended December 31, 2007, the Company
had net proceeds of $1,575,000 from the sale of equity securities by the
Company’s subsidiary Volu-Sol, $2,452,380 from the exercise of warrants, and
$160,898 of cash acquired through the purchase of Midwest and Court
Programs.  Cash decreased due to $188,534 in payments on the bank line
of credit, $436,219 in net payments on the related-party line of credit, and
$78,644 in payments on notes payable.  Cash provided by financing
activities was used to fund operating activities and purchase monitoring
equipment.





The
Company incurred a net loss of $2,341,944 for the three months ended December
31, 2007. As of December 31, 2007, the Company had stockholders' equity of
$3,595,272 and an accumulated deficit of $135,438,890.  These factors,
as well as the risk factors set out in the Company's annual report on Form
10-KSB/A for the year ended September 30, 2007, as amended, 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.  The Company’s plans with respect to this uncertainty,
are to focus on the lease of the TrackerPAL product and increasing its
monitoring services revenues.  There can be no assurance that revenues
will increase rapidly enough to deliver profitable operating results and pay the
Company’s debts as they come due.  Likewise, there can be no assurance
that the debt holders will be willing to convert the debt obligations to equity
securities or that the Company will be successful in raising additional capital
from the sale of equity or debt securities.  If the Company is unable
to increase cash flows from operating activities or obtain additional financing,
it will be unable to continue the development of its business and may have to
cease operations.




24




Recent
Developments




Subsequent
to December 31, 2007, the Company entered into the following
transactions:





1)
            Issued
      212,000 shares of common stock and paid off the $300,000 note payable in
      connection with the acquisition of Court
  Programs.


2)
            Issued
      438,000 shares of common stock and paid off the $1,800,000 notes payable
      in connection with the acquisition of
Midwest.


3)
            Issued
      345,755 shares of common stock for services
  rendered.


4)
            Issued
      10,000 shares upon the exercise of options for cash proceeds of
      $6,000.


5)
            Sold
      3,000,000 shares of Volu-Sol for $2,400,000 in
  cash.


.




Item
3.   Controls and Procedures




Evaluation of Disclosure
Controls and Procedures.  We maintain disclosure controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Securities Exchange Act of 1934, as amended (the
Exchange Act), is recorded, processed, summarized, and reported within the
required time periods, and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow for timely decisions regarding
disclosure.




As
required by Rule 13a-15(b) under the Exchange Act, we conducted an evaluation,
under the supervision of our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of our disclosure controls and procedures as of
September 30, 2007.  In our evaluation, we identified deficiencies
that existed in the tracking of leased equipment, revenue recognition, expense
classification, and design and operation of our internal control over financial
reporting that we and our independent registered public accounting firm
considered to be “material weaknesses.”  A material weakness is a
significant deficiency or combination of significant deficiencies that results
in more than a remote likelihood that a material misstatement of the annual or
interim financial information will not be prevented or detected.




The
deficiencies in our internal control over financial reporting relate to the
failure to properly disclose equity transactions, tracking of leased equipment,
revenue recognition and classification of expenses.  The deficiencies
were detected in the evaluation process and the transactions have been
appropriately recorded and disclosed in this Form 10-QSB/A.  We are in
the process of improving our internal control over financial reporting in an
effort to resolve these deficiencies through improved supervision and training
of our staff, but additional effort is needed to fully remedy these
deficiencies.  Our management, audit committee, and directors will
continue to work with our auditors and outside advisors to ensure that our
controls and procedures are adequate and effective.




Based on
the matters identified above, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures were not
effective. These deficiencies have been disclosed to our audit
committee.




Changes in Internal Control
over Financial Reporting. Other than as described above, there were no
changes in our internal control over financial reporting identified in
connection with the evaluation required by paragraph (d) of Exchange Act Rules
13a-15 or 15d-15 that occurred during our last fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.




Limitations on Effectiveness
of Controls. A system of controls, however well designed and operated,
can provide only reasonable, and not absolute, assurance that the system will
meet its objectives. The design of a control system is based, in part, upon the
benefits of the control system relative to its costs. Control systems can be
circumvented by the individual acts of some persons, by collusion of two or more
people, or by management override of the control. In addition, over time,
controls may become inadequate because of changes in conditions, or the degree
of compliance with the policies or procedures may deteriorate. In addition, the
design of any control system is based in part upon assumptions about the
likelihood of future events.




Section 404
Assessment. Section 404 of the Sarbanes-Oxley Act of 2002 requires
management’s annual review and evaluation of our internal controls and an
attestation of the effectiveness of these controls by our independent registered
public accounting firm beginning with our Form 10-K for the fiscal year ending
on September 30, 2008. We plan to dedicate significant resources, including
management time and effort, in connection with our Section 404 assessment. The
evaluation of our internal controls will be conducted under the direction of our
senior management. We will continue to work to improve our controls and
procedures, and to educate and train our employees on our existing controls and
procedures in connection with our efforts to maintain an effective controls
infrastructure at our Company.




25





PART
II.  OTHER INFORMATION





Item
1. Legal Proceedings





Onyx Consulting Group, LLC
v. RemoteMDx, Inc.  The dispute arises out of an agreement
between Onyx and the Company pursuant to which Onyx agreed to provide investor
relations related services to the Company.  On October 9, 2007, Onyx
served its Statement of Claim, in which it asserted a claim for breach of
contract, seeking as damages the value of 750,000 shares of restricted RemoteMDx
common stock it claims it is due under the agreement.  An arbitrator
has been appointed but discovery has not yet commenced.  The
arbitration hearing is scheduled for April 2008.  The Company has
asserted counterclaims against Onyx for breach of contract and
rescission.  On May 19, 2008, the Company settled this matter by
issuing 325,000 restricted shares of RemoteMDx common stock to
Onyx.





Strategic Growth
International, Inc. v. RemoteMDx, Inc., This action was filed in response
to an action previously filed by the Company against SGI in Utah.  The
action arises out of a contract between SGI and the Company for certain investor
relations related services to be performed by SGI.  The SGI Complaint
alleges a single claim for breach of contract and seeks recovery of: 1) the
balance SGI claims remains due under the contract (approximately $80,000); 2)
the value of options to purchase 500,000 shares of restricted common stock of
the Company at $0.50 per share; and 3) the value of one million shares of
restricted common stock of the Company.  In its Answer and
Counterclaims, the Company denied SGI’s allegations and asserted counterclaims
for:  (1) breach of contract; (2) rescission; and (3) declaratory
judgment.  On October 29, 2007, with the approval of the court, the
Company amended its Answer and Counterclaims to assert an additional claim
against SGI for fraudulent inducement. The Company seeks rescission of its
contract with SGI and the return of amounts the Company paid SGI under the
contract.  Discovery is ongoing and a final pretrial conference is set
for March 2008.  The Company intends to vigorously defend itself
against SGI’s claims and to prosecute its counterclaims against
SGI.  The Company has not accrued any potential loss as the
probability of incurring such losses is deemed remote by management, after
consultation with legal consel.





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


During
the three months ended December 31, 2007, the Company issued 3,175,206 shares of
common stock as follows:




·
            130,000
      shares were issued for services performed for a value of
      $621,085.  These shares were issued without registration under
      the Securities Act of 1933, as amended (“Securities Act”), in reliance on
      Section 4(2) of the Securities Act and the rules and regulations
      promulgated thereunder.  In each case, the shares were issued
      pursuant to privately negotiated transactions with individuals or entities
      who had provided service to the Company; there was no public offering of
      the securities, no general solicitation or advertising was made or done in
      connection with the issuances, and the shares were issued in paper
      certificate form with appropriate restrictive legends prominently affixed
      on the certificates.




·
            15,000
      shares upon Series B Preferred Stock conversions.  These shares
      were issued without registration under the Securities Act in reliance on
      Sections 3(a)(9) and 4(2) of the Securities Act and the rules and
      regulations promulgated thereunder.  The recipients of the
      common stock were accredited investors and were already security holders
      of the Company.  The common shares were issued pursuant to the
      terms of the rights and preferences of the preferred class of securities
      that were converted, and there was no public offering of
      securities.  Additionally, no general solicitation or general
      advertising was made or done in connection with the issuances, and no cash
      consideration was paid in connection with the conversion of the preferred
      stock.




·
            2,854,453
      shares upon the exercise of warrants.  These shares were issued
      without registration under the Securities Act in reliance on Section 4(2)
      of the Securities Act and the rules and regulations promulgated
      thereunder.  There was no public offering of securities in
      connection with these issuances.  Additionally, no general
      solicitation or advertising was done in connection with the issuance, and
      the shares issued upon exercise of the warrants were issued in paper
      certificate form, with appropriate restrictive legends prominently affixed
      on the certificates.




·
            175,753
      shares were issued for dividends on SecureAlert Series A Preferred stock.
      These shares were issued without registration under the Securities Act in
      reliance on Sections 3(a)(9) and 4(2) of the Securities Act and the rules
      and regulations promulgated thereunder.  The recipients of the
      common stock were accredited investors and were already security holders
      of the Company.  The common shares were issued pursuant to the
      terms of the rights and preferences of the preferred class of securities
      that were converted, and there was no public offering of
      securities.  Additionally, no general solicitation or general
      advertising was made or done in connection with the issuances, and no cash
      consideration was paid in connection with the conversion of the preferred
      stock.




26




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).




3.01(1)
            Amendment
      to Articles of Incorporation for Change of Name (previously filed as
      Exhibit on Form 10-KSB for the year ended September 30,
    2001)




3.01(2)
            Amendment
      to Articles of Incorporation Amending Rights and Preferences of Series A
      Preferred Stock (previously filed as Exhibit on Form 10-KSB for the year
      ended September 30, 2001)




3.01(3)
            Amendment
      to Articles of Incorporation Adopting Designation of Rights and
      Preferences of Series B Preferred Stock (previously filed as Exhibit on
      Form 10-QSB for the six months ended March 31,
  2002)




3.01(4)
            Certificate
      of Amendment to the Designation of Rights and Preferences Related to
      Series A 10% Cumulative Convertible Preferred Stock of RemoteMDx, Inc.
      (incorporated by reference to the Company’s annual report on Form 10-KSB
      for the year ended September 30,
2001)




3.01(5)
            Certificate
      of Amendment to the Designation of Rights and Preferences Related to
      Series C 8% Convertible Preferred Stock of RemoteMDx, Inc. (incorporated
      by reference to the Company’s Current Report on Form 8-K, filed with the
      Commission on March 24, 2006)




3.01(6)
            Articles
      of Amendment to Articles of Incorporation filed July 12, 2006 (previously
      filed as exhibits to the Company’s current report on Form 8-K filed July
      18, 2006, and incorporated herein by
reference).




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




3.03
            Articles
      of Amendment to the Fourth Amended and Restated Designation of Right and
      Preferences of Series A 10% Convertible Non-Voting Preferred Stock of
      RemoteMDx, Inc. (previously filed as Exhibit on Form 10-QSB for the nine
      months ended June 30, 2007, filed in August
  2007).




3.04
            Articles
      of Amendment to the Designation of Right and Preferences of Series A
      Convertible Redeemable Non-Voting Preferred Stock of SecureAlert, Inc.
      (previously filed as Exhibit on Form 10-QSB for the nine months ended June
      30, 2007, filed in August 2007).




27




4.01
            2006
      Equity Incentive Award Plan (previously filed in August 2006 the Form
      10-QSB for the nine months ended June 30,
2006)




10.01
            Distribution
      and Separation Agreement (incorporated by reference to the Company's
      Registration Statement and Amendments thereto on Form 10-SB, effective
      December 1, 1997).




10.02
            1997
      Stock Incentive Plan of the Company, (incorporated by reference to the
      Company’s Registration Statement and Amendments thereto on Form 10-SB,
      effective December 1, 1997).




10.03
            1997
      Transition Plan (incorporated by reference to the Company’s Registration
      Statement and Amendments thereto on Form 10-SB, effective December 1,
      1997).




10.04
            Securities
      Purchase Agreement for $1,200,000 of Series A Preferred Stock
      (incorporated by reference to the Company’s Registration Statement and
      Amendments thereto on Form 10-SB, effective December 1,
    1997)




10.05
            Loan
      Agreement (as amended) dated June 2001 between ADP Management and the
      Company (incorporated by reference to the Company’s annual report on Form
      10-KSB for the year ended September 30,
2001)




10.06
            Loan
      Agreement (as amended and extended) dated March 5, 2002 between ADP
      Management and the Company, effective December 31, 2001 (filed as an
      exhibit to the Company’s quarterly report on Form 10-QSB for the quarter
      ended December 31, 2001)




10.07
            Agreement
      with ADP Management, Derrick and Dalton (April 2003) (previously filed as
      Exhibit on Form 10-QSB for the six months ended March 31,
      2003)




10.08
            Security
      Agreement between Citizen National Bank and the Company (previously filed
      on Form 8-K in July 2006).




10.09
            Promissory
      Note between Citizen National Bank and the Company (previously filed on
      Form 8-K in July 2006).




10.10
            Common
      Stock Purchase Agreement dated as of August 4, 2006 (previously filed as
      an exhibit to the Company’s current report on Form 8-K filed August 7,
      2006 and incorporated herein by
reference).




10.11
            Change
      in Terms Agreement between Citizen National Bank and the Company
      (previously filed as Exhibit on Form 10-KSB for the year ended September
      30, 2006)




10.12
            Securities
      Purchase Agreement between the Company and VATAS Holding GmbH, a German
      limited liability company (previously filed on Form 8-K in November
      2006).




10.13
            Common
      Stock Purchase Warrant between the Company and VATAS Holding GmbH dated
      November 9, 2006 (previously filed as Exhibit on Form 10-QSB for the three
      months ended December 31, 2006, filed in February
  2007).




10.14
            Settlement
      Agreement and Mutual Release between the Company and Michael Sibbett and
      HGR Enterprises, LLC, dated as of February 1, 2007 (previously filed as
      Exhibit on Form 10-QSB for the three months ended December 31, 2006, filed
      in February 2007).




10.15
            Distributor
      Sales, Service and License Agreement between the Company and Seguridad
      Satelital Vehicular S.A. de C.V., dated as of February 5, 2007 (previously
      filed as Exhibit on Form 10-QSB for the three months ended December 31,
      2006, filed in February 2007).




10.16
            Distributor
      Agreement between the Company and QuestGuard, dated as May 31,
      2007.  Portions of this exhibit were redacted pursuant to a
      request for confidential treatment filed with the Securities and Exchange
      Commission (previously filed as Exhibit on Form 10-QSB for the nine months
      ended June 30, 2007, filed in August
2007).




28




10.17
            Stock
      Purchase Agreement between the Company and Midwest Monitoring &
      Surveillance, Inc., dated effective December 1, 2007 (previously filed as
      Exhibit on Form 10-KSB for the year ended September 30, 2007, filed in
      January 2008).




10.18
            Stock
      Purchase Agreement between the Company and Court Programs, Inc., Court
      Programs of Florida Inc., and Court Programs of Northern Florida, Inc.,
      dated effective December 1, 2007 (previously filed as Exhibit on Form
      10-KSB for the year ended September 30, 2007, filed in January
      2008).




10.19
            Sub-Sublease
      Agreement between the Company and Cadence Design Systems, Inc., a Delaware
      corporation, dated March 10, 2005 (previously filed as Exhibit on Form
      10-KSB/A for the year ended September 30, 2007, filed in April
      2008).




10.20
            Patent
      Assignment Agreement between Futuristic Medical Devices, LLC, dated
      September 14, 2007 (previously filed as Exhibit on Form 10-KSB/A for the
      year ended September 30, 2007, filed in April
  2008).




10.21
            Patent
      Assignment Agreement between Futuristic Medical Devices, LLC, dated
      September 14, 2007 (previously filed as Exhibit on Form 10-KSB/A for the
      year ended September 30, 2007, filed in April
  2008).




10.22
            Patent
      Assignment Agreement between Futuristic Medical Devices, LLC, dated
      September 14, 2007 (previously filed as Exhibit on Form 10-KSB/A for the
      year ended September 30, 2007, filed in April
  2008).




10.23
            Patent
      Assignment Agreement between Futuristic Medical Devices, LLC, dated
      December 20, 2007 (previously filed as Exhibit on Form 10-KSB/A for the
      year ended September 30, 2007, filed in April
  2008).




10.24
            Stock
      Purchase Agreement (sale of Volu-Sol Reagents Corporation shares to
      Futuristic Medical, LLC), dated January 15, 2008, including voting
      agreement (previously filed as Exhibit on Form 10-KSB/A for the year ended
      September 30, 2007, filed in April
2008).




14
            Code
      of Business Conduct and Ethics (previously filed as Exhibit on Form 10-KSB
      for the year ended September 30, 2007, filed in January
    2008).




31.1
            Certification
      of President and Chief Executive Officer under Section 302 of
      Sarbanes-Oxley Act of 2002




31.2
            Certification
      of Chief Financial Officer under Section 302 of Sarbanes-Oxley Act of
      2002




32
            Certification
      under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section
      1350)




29


SIGNATURES





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







REMOTEMDX,
      INC.Date:
      June 18, 2008
            By:
            /s/ David G. DerrickDavid
      G. Derrick,Chief
      Executive OfficerDate:
      June 18, 2008
            By:
            /s/ Michael G. ActonMichael
      G. Acton,Principal
      Accounting Officer








30