UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

(X)  QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934 For the quarterly period ended March 31, 2004

                                       OR

(  ) TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 For the transition period from _____ to ______


                         Commission File Number 0-23153

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



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


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

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


Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Securities  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 [
]

On May 10, 2004, the issuer had a total of 28,354,908 shares of common stock
issued and outstanding. The issuer also had a total of 24,197 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 8,952,890 shares, and
1,835,824 shares of Series B Preferred Stock outstanding, convertible at any
time at the option of the holders thereof into common stock at the rate of one
share of common stock for each share of Series B Preferred Stock.

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



<PAGE>


                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                                 No.
<S>                                                                                                             <C>

PART I.  FINANCIAL INFORMATION

         Item 1.  Financial Statements

                  Unaudited Condensed Consolidated Balance Sheet as of March 31, 2004.............................3

                  Unaudited Condensed Consolidated Statements of Operations for
                  the three and six months ended March 31, 2004 and 2003..........................................4

                  Unaudited Condensed Consolidated Statements of Cash Flows for
                  the six months ended March 31, 2004 and 2003....................................................5

                  Notes to Unaudited Condensed Consolidated Financial Statements..................................7

         Item 2.  Management's Discussion and Analysis or Plan of Operation......................................13

         Item 3.  Controls and Procedures........................................................................18

PART II.  OTHER INFORMATION

         Item 2.  Changes in Securities and Use of Proceeds......................................................19

         Item 6.  Exhibits and Reports on Form 8-K...............................................................20

         Signatures..............................................................................................22
</TABLE>





<PAGE>


PART I - FINANCIAL INFORMATION

 Item 1.  Financial Statements
                                 REMOTEMDX, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                       March 31, 2004
                                                                                                    ---------------------
<S>                                                                                                 <C>
Assets
Current assets:
   Cash                                                                                                   129,350
   Restricted cash                                                                                        554,652
   Accounts receivable, net of allowance for doubtful accounts of $23,000                                 195,321
   Inventories                                                                                            318,464
   Prepaid expenses                                                                                        66,703
                                                                                                    ---------------------
                Total current assets                                                                    1,264,490
Property and equipment, net                                                                                56,581
Core technology, net                                                                                       70,000
Goodwill                                                                                                1,321,164
Other assets                                                                                                4,073
                                                                                                    ---------------------
                Total assets                                                                            2,716,308
                                                                                                    =====================
Liabilities and Stockholders' Deficit
Current liabilities:
   Notes payable                                                                                          775,000
   Bank line of credit                                                                                    550,681
   Related-party convertible notes payable                                                                169,676
   Convertible debentures, net of debt discount of $51,882                                                689,293
   Related-party line of credit                                                                           329,220
   Accounts payable                                                                                       330,817
   Accrued liabilities                                                                                    307,146
   Dividends payable                                                                                      281,711
   Deferred revenue                                                                                        12,261
   Common stock subject to mandatory redemption (see Note 6)                                            2,024,666
                                                                                                    ---------------------
                Total current liabilities                                                               5,470,471
                                                                                                    ---------------------
Commitments and contingencies
Redeemable common stock (see Note 10)                                                                           6
Stockholders' deficit:
   Preferred stock:
     Series A; 10% dividend, convertible, non-voting; $0.0001 par value; 40,000
        shares designated; 24,197 shares outstanding (aggregate liquidation
        preference of $439,040)                                                                                 3
     Series B; convertible; $0.0001 par value; 2,000,000 shares designated;
1,835,824 shares
       outstanding (aggregate liquidation preference of $5,687,820)                                           184

Common
   stock; $0.0001 par value; 50,000,000 shares authorized, 27,780,324 shares
   outstanding 2,778 Additional paid-in capital 62,557,818 Series A preferred
   stock subscription receivable - due from related party (300,000)

    Deferred consulting costs                                                                             (62,250)
   Accumulated deficit                                                                                (64,952,702)
                                                                                                    ---------------------
                Total stockholders' deficit                                                            (2,754,169)
                                                                                                    ---------------------
                Total liabilities and stockholders' deficit                                             2,716,308
                                                                                                    =====================
</TABLE>

           See accompanying notes to unaudited condensed consolidated
                             financial statements.


                                      -3-

<PAGE>


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



<TABLE>
<CAPTION>
                                                                     Three months ended                  Six months ended
                                                                          March 31,                         March 31,
                                                                   2004             2003             2004              2003
                                                              ---------------  ---------------   ------------------  ---------------

<S>                                                           <C>              <C>               <C>                 <C>
Net sales                                                     $       299,568  $     194,789     $       501,509     $     373,526
Cost of goods sold                                                    258,770        132,117             462,043           386,636
                                                              ---------------  ---------------   ------------------  ---------------
                Gross profit (loss)                                    40,798         62,672              39,466
                                                                                                                           (13,110)

Research and development expenses                                           -              -              49,532
                                                                                                                            98,061
Selling, general and administrative expenses                          797,649        818,652           1,500,561
                                                                                                                         1,848,900
Amortization of core technology                                        35,000         46,666              70,000
                                                                                                                            93,333
                                                              ---------------  ---------------   ------------------  ---------------

                Loss from operations                                 (791,851)      (802,646)         (1,580,627)       (2,053,404)
Other income (expense):
   Other income                                                        11,142             -               47,605                 -
   Interest income                                                      2,581            215               5,212                 -
   Interest expense                                                   (93,332)      (158,426)           (451,113)         (409,943)
                                                              ---------------  ---------------   ------------------  ---------------
            Loss before income taxes and discontinued                (871,460)      (960,857)         (1,978,923)       (2,463,347)
operations

Income tax benefit                                                          -              -                   -                -
                                                              ---------------  ---------------   ------------------  ---------------
                Loss before discontinued operations                  (871,460)      (960,857)         (1,978,923)       (2,463,347)

               Income (loss) on discontinued operations, net                -        (69,968)             99,515          (442,102)
of tax
                                                              ---------------  ---------------   ------------------  ---------------
                Net loss                                             (871,460)    (1,030,825)         (1,879,408)       (2,905,449)

Dividends on Series A preferred stock                                (141,468)      (148,022)           (281,711)         (305,102)
                                                              ---------------  ---------------   ------------------  ---------------
                Net loss attributable to common stockholders  $    (1,012,928) $  (1,178,847)    $    (2,161,119)    $  (3,210,551)
                                                              ===============  ===============   ==================  ===============
Net loss per common share from continuing operations - basic
   and diluted                                                $          (.04) $        (.08)    $          (.08)    $        (.22)
Net income (loss) per common share from discontinued
   operations - basic and diluted                             $          0.00  $        (.01)    $          0.00     $        (.03)
Net loss per common share - basic and diluted                 $          (.04) $        (.09)    $          (.08)    $        (.25)
                                                              ===============  ===============   ==================  ===============
Weighted average shares - basic and diluted                        26,376,000     12,664,000          25,619,000        12,761,000
                                                              ===============  ===============   ==================  ===============
</TABLE>









           See accompanying notes to unaudited condensed consolidated
                             financial statements.


                                      -4-
<PAGE>


                                 REMOTEMDX, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                          Six months ended
                                                                                              March 31,
                                                                                 ------------------------------------
                                                                                       2004              2003
                                                                                 ----------------  ------------------
Cash flows from operating activities:
<S>                                                                              <C>               <C>
   Net loss                                                                      $     (1,879,408) $    (2,905,449)
   Adjustments to reconcile net loss to net cash used in operating activities:
       Depreciation and amortization                                                       76,460          126,518
       Bad debt expense                                                                         -          162,000
       Loss on write-off of equipment charged to cost of sales                                  -           86,514
       Amortization of discount on purchase obligation to former
         SecureAlert shareholders                                                               -            5,825
       Amortization of deferred consulting and financing costs                            111,750          400,000
       Accretion of interest expense related to redeemable common stock                   263,666                -
       Common stock issued for services never rendered                                    (30,000)         289,934
       Changes in operating assets and liabilities:
               Increase in restricted cash                                                 (4,626)               -
           Accounts receivable, net                                                      (110,405)         549,210
           Inventories                                                                     45,973          346,987
           Other assets                                                                     8,544            1,834
           Increases in advances payable to related party for consulting
              services and expenses                                                       349,667                -
           Prepaid expenses                                                               (51,694)         (10,312)
           Accounts payable                                                                19,354         (108,589)
           Accrued liabilities                                                             (5,888)         139,787
           Deferred revenue                                                                (2,181)         (81,430)
                                                                                 ----------------  ------------------
                Net cash used in operating activities                                  (1,208,788)      (1,159,171)
                                                                                 ----------------  ------------------
Cash flows used in investing activities:
   Purchase of property and equipment                                                     (32,369)               -
                                                                                 ----------------  ------------------
                Net cash used in investing activities                                     (32,369)               -
                                                                                 ----------------  ------------------
Cash flows from financing activities:
   Payments on purchase obligations to former SecureAlert shareholders                    (98,794)               -
   Net advances from related-party line of credit                                         269,062          454,782
   Net payments on bank line of credit                                                       (105)        (248,525)
   Payments on related party notes                                                              -          (25,000)
   Proceeds from issuance of redeemable common stock                                      225,000                -
   Proceeds from sale of debentures and common stock                                      884,209                -
   Proceeds from issuance of notes payable                                                      -        1,110,908
   Payments on notes payable                                                              (45,759)        (114,517)
                                                                                 ----------------  ------------------
                Net cash provided by financing activities                               1,233,613        1,177,648
                                                                                 ----------------  ------------------
Net increase (decrease) in cash                                                            (7,544)          18,477
Cash, beginning of period                                                                 136,894           51,390
                                                                                 ----------------  ------------------
Cash, end of period                                                                       129,350  $        69,867
                                                                                 ================  ==================
</TABLE>


           See accompanying notes to unaudited condensed consolidated
                             financial statements.

                                      -5-

<PAGE>


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

<TABLE>
<CAPTION>
                                                                                        Six Months ended
                                                                                           March 31,
                                                                          ---------------------------------------------
                                                                                   2004                  2003
                                                                                (Unaudited)           (Unaudited)
                                                                          ---------------------   ---------------------
Cash paid for interest and taxes:
<S>                                                                       <C>                     <C>
   Cash paid for income taxes                                             $                 -     $                  -
   Cash paid for interest                                                              82,447                   57,801
Supplemental schedule of non-cash investing and financing activities:
  Issuance of shares of common stock in exchange
    for shares of Series A preferred stock                                                108                       37
  Issuance of shares of common stock in exchange
    for deferred consulting services                                                   54,000                        -
  Reduction of related party line-of-credit in exchange for
    exercise of common stock options                                                    1,620                   71,442
  Accrual of Preferred Series A stock dividends                                       281,711                  305,102
  Deferred financing costs paid for by issuance of redeemable
    common shares                                                                           -                   45,000
  Restricted cash received for debt                                                         -                  300,000

  Series A preferred stock issued in lieu of cash dividends                                 -                   17,374
          Conversion of debt and accrued interest converted into shares of
                stock                                                                  33,640                        -
           Reduction of subscription receivable
                                                                                      400,000                        -
  Sale of net assets for assumption of liabilities and return of common shares,
     detailed as follows:
    Accounts payable and accrued liabilities assumed
                                                                                            -                 (488,410)
    Bank line-of-credit assumed
                                                                                            -                 (300,000)
    Obligation to SecureAlert relieved
                                                                                            -                 (400,000)
    Accounts receivable sold
                                                                                            -                  370,501
    Inventory sold
                                                                                            -                  539,706
    Property and equipment, net of $80,331 accumulated
      depreciation sold                                                                     -                  183,484
    Common stock returned (401,952 shares)                                                  -                   94,719
</TABLE>


           See accompanying notes to unaudited condensed consolidated
                             financial statements.

                                      -6-

<PAGE>


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

(1)      ORGANIZATION AND NATURE OF OPERATIONS

RemoteMDx, Inc. was originally incorporated in Utah in July 1995 under the name
Volu-Sol, Inc. ("Volu-Sol"), as a wholly owned subsidiary of Biomune Systems,
Inc. ("Biomune"). Biomune spun off Volu-Sol by distributing shares of Volu-Sol's
common stock as a stock dividend to the holders of the common stock of Biomune
(the "Distribution"). As a consequence of the Distribution, Volu-Sol commenced
operations as a separate, independent company in October 1997. Effective July
27, 2001, Volu-Sol changed its name to RemoteMDx, Inc. RemoteMDx, Inc. and its
subsidiaries are collectively referred to as the "Company".

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


Historically, the Company's strategy was to capitalize on the global medical
diagnostic industry by providing "building block" stains and reagents. Although
the Company continues to conduct its medical stains and solutions business, over
the past three years, management has begun to pursue a more expanded role in the
medical diagnostic industry by researching innovative ways to manage patient
medical information as well as linking patients, physicians and payors through
remote health monitoring products. Additionally, through its acquisition of
SecureAlert II, Inc. ("SecureAlert") in July 2001, the Company is engaged in the
business of manufacturing and marketing mobile emergency and personal security
systems, and distributing consumer electronics products. The Company's revenues
for the three months and six months ended March 31, 2004 and 2003 were generated
from the sale of personal security products and services and from medical stains
and reagents.


Basis of Presentation


The accompanying condensed consolidated financial statements of the Company have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States have been
condensed or omitted pursuant to such rules and regulations. These condensed
consolidated financial statements reflect all adjustments (consisting only of
normal recurring adjustments) that, in the opinion of management, are necessary
to present fairly the results of operations of the Company for the periods
presented. These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's Form 10-KSB for the year ended September 30, 2003. The
results of operations for the three and six months ended March 31, 2004 are not
necessarily indicative of the results that may be expected for the fiscal year
ending September 30, 2004.


Going Concern


The Company has reoccurring net losses, has negative cash flows from operating
activities and has a working capital deficit, a stockholders' deficit 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.


Management's plans with respect to this uncertainty include converting debt
obligations to equity and raising additional capital from the sale of equity
securities, obtaining debt financing and enhance revenues and cash flows from
its operations by increasing selling and marketing efforts related to new and
existing products and services.


There can be no assurance that the Company will be able to raise sufficient
capital to meet its working capital needs. In addition, there can be no
assurance that the operations will generate positive cash flows and that the
Company will be economically successful from increasing selling and marketing
efforts to introduce new products into the market. Further, the Company may be
unable to complete the development and successful commercialization of any new
remote health monitoring products.



                                      -7-

<PAGE>

Principles of Consolidation


The consolidated financial statements include the accounts of the Company and
its wholly or majority-owned subsidiaries. All significant inter-company
transactions have been eliminated in consolidation.


Stock-Based Compensation


The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation.
Accordingly, no compensation cost has been recognized in the financial
statements for employees, except when the exercise price is below the market
price of the stock on the date of grant. Had compensation cost for the Company's
stock option plans been determined based on the fair value at the grant date for
awards in fiscal year 2004 and 2003 consistent with the provisions of SFAS No.
123, the Company's approximate net loss and loss per share would have been the
pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                   Three months ended                       Six months ended
                                                        March 31,                               March 31,
                                               2004                2003                2004                2003
                                         ---------------- --------------------- ----------------- ------------------------
<S>                                      <C>              <C>                   <C>               <C>
Net loss  - as reported                  $      (871,460) $         (1,030,825) $   (1,879,408)   $      (2,905,449)

Deduct total stock based employee
compensation  expense determined
under fair value based method for all
awards, net of related taxes                      (9,876)              (68,310)           (9,876)              (68,310)
                                         ---------------- --------------------- ----------------- ------------------------
Net loss - pro forma                     $      (881,336) $      (1,099,135)    $   (1,889,284)   $      (2,973,759)
                                         ---------------- --------------------- ----------------- ------------------------
Basic and diluted net loss per common
   share - as reported                   $    (0.04)      $      (0.09)         $   (0.08)        $      (0.25)
                                         ---------------- --------------------- ----------------- ------------------------
Basic and diluted net loss per common
   share - pro forma                     $    (0.04)      $      (0.09)         $   (0.08)        $      (0.25)
                                         ---------------- --------------------- ----------------- ------------------------
</TABLE>


                                      -8-
<PAGE>

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions:

                                                Six Months Ended
                                                    March 31,
                                        ----------------------------------
                                              2004            2003
                                        ----------------------------------
                                        ----------------------------------

Expected dividend yield                                -                -
Expected stock price volatility                      45%             146%
Risk-free interest rate                            2.72%            4.75%
Expected life of options                         5 years          5 years




The weighted average fair value of options and warrants granted during the six
months ended March 31, 2004 and 2003, were$0.45 and $2.73, respectively.


Impairment of Long-Lived Assets


Goodwill is not amortized but is subject to an impairment test, which is
performed at least annually. Goodwill is related to the acquisition of
SecureAlert (PAL Services) in July 2001. The Company tests goodwill for
impairment at least annually or when changes in circumstances may indicate
impairment. Impairment is measured by comparing the carrying value of the
component unit to which goodwill is assigned, namely the assets of its wholly
owned subsidiary SecureAlert, Inc. to the estimated fair value of the component
unit using an income approach method of estimated future cash flows. The
estimated future cash flows include those primarily related from mobile medical
alert devices of the component unit. If the carrying amount of the component
unit including goodwill is determined to exceed the estimated fair value of the
component unit then an impairment is recorded as the difference between the
carrying value and the fair market value.


The Company reviews its long-lived assets, other than goodwill, for impairment
when events or changes in circumstances indicate that the book value of an asset
may not be recoverable. The Company evaluates, at each balance sheet date,
whether events and circumstances have occurred which indicate possible
impairment. The Company uses an estimate of future undiscounted net cash flows
of the related asset or group of assets over the estimated remaining life in
measuring whether the assets are recoverable.

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.

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 March 31, 2004 and 2003, there were approximately 16,769,000 and
18,202,000 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.


Revenue Recognition


The Company derives its revenue primarily from the sale of mobile emergency and
personal security systems and reagent stains. Revenue, less reserves for
returns, is recognized upon shipment to the customer. The Company records
reserves for estimated returns of defective product. Amounts received in advance
of shipment are recorded as deferred revenue. Shipping and handling fees are
included as part of net sales. The related freight costs and supplies directly
associated with shipping products to customers are included as a component of
cost of goods sold.



                                      -9-
<PAGE>





(2)      INVENTORIES


       Substantially all items included in inventory are finished goods and
       consisted of the following as of March 31, 2004:

      Mobile emergency and personal security systems              281,751
      Reagent stains                                               36,713
                                                     ------------------------
                                                     ------------------------
                                                                  318,464
                                                     ========================
(3)      NOTES PAYABLE


Short-term notes payable consist of the following at March 31, 2004: 1) $300,000
note payable to an individual with interest at 12% due monthly. The principal on
the note is due at the earlier of the Company obtaining equity funding of
$2,000,000 or March 30, 2004. The note is unsecured and is currently in default.
2) $175,000 convertible note payable to an individual with interest at 12% due
monthly. The principal on the note is due at the earlier of the Company
obtaining equity funding of $2,000,000 or March 30, 2004. The note is
convertible at $1.50 per share which may be adjusted to reflect any dividend,
split or consolidation affect on the Company's stock. This note is unsecured. 3)
$300,000 note payable to a corporation with interest at 18%. On April 2, 2003,
David Derrick and James Dalton, and ADP Management Corp. ("ADP Management")
agreed to assume this note, however the note holder has not released the Company
of this obligation, ADP Management is a corporation owned and controlled by Mr.
Derrick and Mr. Dalton, both of whom are officers and directors of the Company,
and is currently in default.

(4)      CONVERTIBLE DEBENTURES


During the quarter ended March 31, 2004, the Company conducted a private
offering of debt and equity securities. The offering closed April 22, 2004. The
offering involved the sale of units, each unit consisting of $70,588 in
principal amount of convertible debentures, 54,467 shares of common stock, and
16,176 "origination shares" of common stock. In connection with this offering,
the Company raised $1,050,000 in gross proceeds while netting $884,209 after
expenses and commissions. At the quarter ended March 31, 2004, the debt discount
was $51,882.

(5)      BANK LINE OF CREDIT


As of March 31, 2004, the Company had $550,681 outstanding under a line of
credit with Zions First National Bank. The line of credit bears interest at
prime plus .25% (4.25% at March 31, 2004), matures on April 15, 2005, is limited
to $550,000 plus fees, and is secured by certificates of deposit which the
Company holds as restricted cash of $554,652.

(6)      COMMON STOCK SUBJECT TO MANDATORY REDEMPTION


As of March 31, 2004, the Company had 1,122,185 shares subject to a mandatory
redemption feature at prices ranging from $0.54 to $3.00 per share. The total
redemption value of $2,024,666 is included in current liabilities. The mandatory
redemption feature goes away when the Company's common stock is listed on a
national exchange.


(7)      RELATED-PARTY ADVANCES


As of March 31, 2004, the Company had related party advances payable to ADP
Management totaling $329,220. These advances bear interest at 4.75% and are due
on demand. During the six months ended March 31, 2004, the net cash borrowings
from ADP Management were $246,544.


(8)      RELATED-PARTY CONVERTIBLE PROMISSORY NOTES


In connection with the acquisition of SecureAlert (PAL Services) in July 2001
the Company assumed two promissory notes payable to former SecureAlert (PAL
Services) shareholders each with a principal balance of $250,000, and the
Company granted each of the note holders the right, at any time prior to July 2,
2002, to convert their note into 83,333 shares of the Company's common stock, or
to be paid $250,000 on July 2, 2002. The promissory notes were amended during


                                      -10-
<PAGE>

the three months ended December 31, 2002 to provide for payments of principal
and accrued interest at a rate of $20,000 per month until paid in full,
commencing March 25, 2003; the remaining balance on the notes of $169,676 at
March 31, 2004, continues to be convertible at the option of the holder at a
rate of $3.00 per share. The notes continue to bear interest at a rate of five
percent per year. During the six months ended March 31, 2004, the Company
recorded interest expense of $5,321 on these promissory notes.


 (9)    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 six months ended March 31, 2004, a total of 6,280 shares of
Series A Preferred Stock were converted into 2,323,677 shares of common stock.
As of March 31, 2004, there were 24,197 shares of Series A Preferred Stock
outstanding, which represents 8,952,890 common stock equivalents at a conversion
rate of 370 for 1. Subsequent to March 31, 2004, a total of 789 shares of Series
A Preferred Stock were converted into 291,930 shares of common stock.


The holders of the Series A Preferred Stock are entitled to dividends at the
rate of 10 percent per year on the stated value of the Series A Preferred Stock
(or $200 per share), payable in cash or in additional shares of Series A
Preferred Stock at the discretion of the board of directors. Dividends are fully
cumulative and accrue from the date of original issuance. During the three
months ended March 31, 2004 and 2003, the Company recorded $141,468 and
$148,022, respectively, in dividends on Series A Preferred Stock.


The Company may, at its option, redeem up to two-thirds of the total number of
shares of Series A Preferred Stock at a redemption price of 133 percent of the
stated value of Series A Preferred Stock; however, the Company may designate a
different and lower redemption price for all shares of Series A Preferred Stock
called for redemption by the Company. Through March 31, 2004, the Company had
not exercised its option to redeem shares of Series A Preferred Stock.


Series B Convertible Preferred Stock


In April 2002, the Company sold 1,835,824 shares of Series B Preferred Stock for
$3,366,273. Of these issuances 1,000,000 shares were sold to Matsushita Electric
Works, Ltd., a Japanese corporation ("MEW"). MEW was granted an anti-dilution
right on the common stock conversion feature of the 1,000,000 Series B shares it
purchased. If the Company should at any time during a two-year period (beginning
April 2002) issue or sell its common stock or any security exercisable into
common stock for an equivalent value of less than $3.00 per share, then the
conversion price of the 1,000,000 Series B shares into common stock will be
adjusted to the common stock equivalent value of those securities sold. On
December 12, 2003, the holders of a majority of the outstanding shares of Series
B Preferred Stock, including MEW, waived their rights under the anti-dilution
provisions of the Series B Preferred Stock designation of rights and preferences
and under other agreements with the Company through that date. The Company may
redeem the Series B Preferred Stock at any time. The redemption price will be a
minimum of 110 percent of the conversion price at the date of redemption. As of
March 31, 2004, the Company had not exercised its option to redeem shares of
Series B Preferred Stock.


(10)     COMMON STOCK

During the three months ended March 31, 2004, the Company issued 1,921,085
shares of common stock as follows:

     o    1,079,334  shares were issued upon the  conversion  of 2,917 shares of
          Series A Preferred Stock.

     o    100,000  shares were issued for services to be performed in subsequent
          periods.

     o    741,751  shares were issued from the sale of its debentures and equity
          securities for gross proceeds of $1,050,000.


Common Stock Subject to Redemption


Of the shares of common stock outstanding at March 31, 2004, a total of 58,333
shares are subject to redemption. In addition, the Company granted the holders
the option to put back their shares at a price of $3.00 per share beginning


                                      -11-
<PAGE>

April 30, 2004 and ending May 31, 2004. This option will not be exercisable if
the closing market price of the Company's common stock is at least $3.00 per
share on April 27, 28, and 29, 2004 and listed on a national stock exchange.
Subsequent to March 31, 2004, these conditions have not been met and the put
options are therefore exercisable.





Common Stock Options and Warrants


Options and warrants to purchase a total of 5,979,914 shares of common stock
were outstanding at March 31, 2004 with a weighted average exercise price of
$3.22 per share.


(11)     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 SecureAlert (PAL
services) segment is engaged in the business of developing, distributing and
marketing mobile emergency and personal security systems to distributors and
consumers, and distributing consumer electronics products to the manufactured
home market. Other (unallocated) loss consists of research and development,
selling, general and administrative expenses related to the Company's corporate
activities, including remote health monitoring and market and business
development activities.


The following table reflects certain financial information relating to each
reportable segment for each of the three-month periods ended March 31, 2004 and
2003:




<TABLE>
<CAPTION>
                                                                              Three Months
                                                                            Ended March 31,
                                                                   -----------------------------------
                                                                         2004              2003
                                                                   ------------------ ----------------
      Net sales:
        SecureAlert (PAL Services):
<S>                                                                <C>                <C>
           Consumer electronics                                    $                - $             -
           Mobile emergency and personal security systems                     159,341          51,644
                                                                   ------------------ ----------------
                                                                              159,341          51,644
        Reagents                                                              140,227         143,145
                                                                   ------------------ ----------------
                                                                   $          299,568 $       194,789
                                                                   ================== ================
      Net income (loss):
        SecureAlert (PAL Services)                                            (66,484)        107,833
        Reagents                                                               13,424          17,236
        Other (unallocated)                                                  (818,400)     (1,155,894)
                                                                   ------------------ ----------------
                                                                   $         (871,460)$    (1,030,825)
                                                                   ------------------ ----------------
</TABLE>


The following table reflects certain financial information relating to each
reportable segment for each of the six-month periods ended March 31, 2004 and
2003:


<TABLE>
<CAPTION>
                                                                               Six Months
                                                                            Ended March 31,
                                                                   -----------------------------------
                                                                         2004               2003
                                                                   ------------------ ------------------
      Net sales:
        SecureAlert (PAL Services):
<S>                                                                <C>                <C>
           Mobile emergency and personal security systems          $         217,293  $         103,031
                                                                   ------------------ ------------------

        Reagents                                                             284,216            270,495
                                                                   ------------------ ------------------
                                                                   $         501,509  $         373,526
                                                                   ================== ==================


                                      -12-
<PAGE>

      Net income (loss):
        SecureAlert (PAL Services)                                 $        (130,234) $        (808,742)
        Reagents                                                              38,226             18,656
        Other (unallocated)
                                                                          (1,767,400)        (2,115,363)
                                                                   ------------------ ------------------
                                                                   $      (1,879,408) $      (2,905,449)

      Identifiable assets:
           SecureAlert (PAL Services) (including goodwill of
                $1,321,164)                                                1,811,086
           Reagents                                                          130,195
           Other (unallocated)                                               775,027
                                                                   ------------------
                                                                   $       2,716,308
                                                                   ==================
</TABLE>

 (12)    SUBSEQUENT EVENTS


Subsequent to March 31, 2004, the Company has continued to conduct a private
offering of debt and equity securities. The offering involved the sale of units,
each unit consisting of $70,588 in principal amount of convertible debentures,
54,467 shares of common stock, and 16,176 "origination shares" of common stock.
Subsequent to March 31, 2004, the Company received gross proceeds of $400,000
from the private offering. Therefore, the Company issued to investors debentures
in the principal amount of $282,352, as well as 282,572 shares of common stock.
Of the shares issued to investors in the private placement, 217,868 shares were
issued upon exercise of options assigned by ADP Management and exercised upon
closing of the offering. Gross proceeds from this offering totaled $1,450,000.
This private offering of debt and equity securities closed on April, 22,2004.


The Company has opened a new $2,000,000 private offering of debt and equity
securities with similar "unit" terms as the previously closed offering, with all
shares originally issued in the offering by the Company.


In April 2004, the Company paid down the bank line of credit by $375,000
bringing the outstanding balance to $175,000.

Subsequent to March 31, 2004, a total of 789 shares of Series A Preferred Stock
were converted into 291,930 shares of common stock.


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 for
the year ended September 30, 2003.


Critical Accounting Policies

In Note 1 to the audited financial statements for the fiscal year ended
September 30, 2003 included in its Form 10-KSB, 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 that the
accounting principles utilized by it conform to generally accepted accounting
principles 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, the Company
evaluates its estimates, including those related to bad debts, inventories,
intangible assets, warranty obligations, product liability, revenue, and income
taxes. The Company bases its 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.



                                      -13-
<PAGE>

With respect to inventory reserves, revenue recognition and allowance for
doubtful accounts, the Company applies the following critical accounting
policies in the preparation of its financial statements:

Inventory Reserves

The nature of the Company's business requires it to maintain sufficient
inventory on hand at all times to meet the requirements of its customers. The
Company record finished goods inventory at the lower of standard cost, which
approximates actual costs (first-in, first-out) or market. Raw materials are
stated at the lower of cost (first-in, first-out), or market. General inventory
reserves are maintained for the possible impairment of the inventory. Impairment
may be a result of slow moving or excess inventory, product obsolescence or
changes in the valuation of the inventory. In determining the adequacy of its
reserves, the Company analyzes the following, among other things:

o        Current inventory quantities on hand;
o        Product acceptance in the marketplace;
o        Customer demand;
o        Historical sales;
o        Forecast sales;
o        Product obsolescence; and
o        Technological innovations.

Any modifications to these estimates of reserves are reflected in the cost of
goods sold within the statement of operations during the period in which such
modifications are determined necessary by management.

Revenue Recognition

The Company derives revenue primarily from the sale of consumer electronics and
reagent stains. Under applicable accounting principles, revenue, less reserves
for returns, is recognized upon shipment to the customer. From the date of the
acquisition of SecureAlert (PAL Services) in July 2001 through September 30,
2003, and for the year ended September 30, 2003, the provision for sales returns
was not material. Amounts received in advance of shipment are recorded as
deferred revenue. Shipping and handling fees are included as part of net sales.
The related freight costs and supplies directly associated with shipping
products to customers are included as a component of cost of goods sold.

Impairment of Long-lived Assets

Under applicable accounting principles, the Company does not amortize goodwill.
Goodwill is subject to an impairment test, which is performed at least annually.
The Company reviews its long-lived assets, other than goodwill, for impairment
when events or changes in circumstances indicate that the book value of an asset
may not be recoverable. The Company evaluates, at each balance sheet date,
whether events and circumstances have occurred which indicate possible
impairment. The Company uses an estimate of future undiscounted net cash flows
of the related asset or group of assets over the estimated remaining life in
measuring whether the assets are recoverable.

Accounting for Stock-based Compensation

The Company accounts for stock-based compensation issued to employees and
directors under Accounting Principles Board Opinion ("APB") No. 25, "Accounting
for Stock Issued to Employees," and related interpretations. Under APB No. 25,
compensation related to stock options, if any, is recorded if an option's
exercise price on the measurement date is below the fair value of the company's
common stock and amortized to expense over the vesting period. Compensation
expense for stock awards or purchases, if any, is recognized if the award or
purchase price on the measurement date is below the fair value of the common
stock and is recognized on the date of award or purchase. Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock Based
Compensation," requires pro forma information regarding net loss and net loss
per common share as if the company had accounted for its stock options granted
under the fair value method.

The Company accounts for stock-based compensation issued to persons other than
employees using the fair value method in accordance with SFAS No. 123 and
related interpretations. Under SFAS No. 123, stock-based compensation is


                                      -14-
<PAGE>

determined as either the fair value of the consideration received or the fair
value of the equity instruments issued, whichever is more reliably measurable.
The measurement date for these issuances is the earlier of either the date at
which a commitment for performance by the recipient to earn the equity
instruments is reached or the date at which the recipient's performance is
complete.

Allowance for Doubtful Accounts

The Company must make estimates of the collectability of accounts receivable. In
doing so, the Company analyzes accounts receivable and historical bad debts,
customer credit-worthiness, current economic trends and changes in customer
payment patterns when evaluating the adequacy of the allowance for doubtful
accounts.

Discontinued Operations

During the six months ended March 31, 2004, management determined to discontinue
its operating activities of consumer electronic distribution. The Company's
activities included wholesale distribution to home manufactures through December
31, 2002. On January 1, 2003, the Company entered into an agreement with
SecureAlert Entertainment LLC ("SAE"), an unaffiliated company, granting it
exclusive distribution rights to the Company's consumer electronics products to
the manufactured homes marketing channel in North America. In exchange for this
distribution the Company received a 7% royalty fee in connection with consumer
electronic products sold by SAE under the distribution rights agreement. This
agreement expired on December 31, 2003. Because of the Company's decision to
pursue a business model to sell and service mobile security devices, and the
significant market expansion costs required to continue its consumer electronic
products distribution the Company has discontinued the consumer electronics
operations. The discontinued operations for the three and six months ended March
31, 2004 and 2003 were as follows:


<TABLE>
<CAPTION>
                                               Three Months Ended                  Six Months Ended
                                                    March 31,                          March 31,
                                               --------------------           ----------------------------
                                                2004      2003                     2004         2003
                                               --------------------           ----------------------------
<S>                                            <C>       <C>                  <C>              <C>
Net Sales and royalties from                   $   -     $ 51,709             $     99,515     $ 120,786
consumer electronics product
Distribution

Costs associated with consumer
electronics operations                             -     (121,677)                       -      (562,888)
                                               --------------------           ----------------------------


Net income (loss) from
discontinued operations                        $   -     $(69,968)            $       99,515   $(442,102)
                                               ====================           ============================
</TABLE>




Continued Operations


The Company's focus is on building the mobile emergency and personal security
systems market, rater than the consumer electronics market. The following
discussion and analysis is therefore based only upon the continued operations of
the Company.


Three months ended March 31, 2004 Compared to Three months ended March 31, 2003


Net Sales


For the three months ended March 31, 2004, the Company had net sales of $299,568
compared to $194,789 for the three months ended March 31, 2003, an increase of


                                      -15-
<PAGE>

$104,779. The increase in net sales resulted primarily from focusing on the core
business model of the personal safety and medical monitoring. In addition, the
net sales increased by developing dealer-distribution channels.


SecureAlert (PAL Services) had net sales of $159,341 during the three months
ended March 31, 2004 compared to net sales of $51,644 for the three months ended
March 31, 2003. These sales consisted of mobile emergency and personal security
systems. CCG was a significant customer of SecureAlert (PAL Services) accounting
for 26% of SecureAlert's (PAL Services) sales during the period. No other
SecureAlert (PAL Services) customer accounted for 10% or more of its sales.


Reagents had revenues for the three months ended March 31, 2004 of $140,227,
compared to $143,145 during the quarter ended March 31, 2003. The Company
anticipates that Reagents' sales will decrease in the future as a percentage of
total sales. Fisher Scientific was a significant customer of Reagents,
accounting for 15% of Reagents' sales during the period. No other Reagents
customer accounted for 10% or more of its sales.


Cost of Goods Sold


For the three months ended March 31, 2004, cost of goods sold totaled $258,770
compared to $132,117 during the three months ended March 31, 2003, an increase
of $126,653. The increase in cost of sales was due primarily to the increase in
net sales. SecureAlert's (PAL Services) cost of goods sold totaled $172,982 or
109% of SecureAlert's (PAL Services) net sales during the three months ended
March 31, 2004. Personal emergency response products are sold below cost in
order to receive recurring revenues under a long-term monitoring agreement. The
Company has certain fixed costs associated with cost of goods sold such as
monitoring. As volume increases cost of goods sold as a percentage should
decrease. Therefore, the Company incurs a negative gross margin on SecureAlert's
(PAL Services) products. Reagents' cost of goods sold was $85,788 or 61% of
Reagents' net sales during the three months ended March 31, 2004, compared to
$83,970 or 59% of Reagents' net sales for the same period during the prior
fiscal year. The increase in cost of sales was primarily due to an increase in
production costs.


Research and Development Expenses


No research and development expenses were incurred for the three months ended
March 31, 2004.


Amortization of Core Technology


Core technology primarily represents patents in the area of remote security and
medical alert devices received in the acquisition of SecureAlert (PAL Services).
Core technology is amortized using the straight-line method over an estimated
useful life of three years and totaled $35,000 for the three months ended March
31, 2004.


Selling, General and Administrative Expenses


During the three months ended March 31, 2004, selling, general and
administrative expenses were $797,649, compared to selling, general and
administrative expenses in the prior year period of $825,710, a decrease of
$28,061. This decrease relates primarily to a reduction in labor costs. In
addition, amounts allocated to selling, general, and administrative expenses in
the three months ended March 31, 2003 included non-cash consideration of
approximately $373,000 paid in the form of common stock, consultants and
creditors in lieu of cash compensation and as consideration for services
provided to the Company as compared to approximately $197,000 related to such
expenses for the three months ended March 31, 2004.


Interest Income and Expense


During the three months ended March 31, 2004, interest expense totaled $93,332
compared to $158,426 paid in the three months ended March 31, 2003. This amount
consists primarily of non-cash interest expense of $52,500 related to the
issuance of common stock in settlement of various note obligations.





Six months ended March 31, 2004 Compared to Six months ended March 31, 2003


                                      -16-
<PAGE>

Net Sales


Net sales during the six months ended March 31, 2004 were $501,509 compared to
$373,526 in net sales during the six months ended March 31, 2003, an increase of
$127,983. The increase in net sales resulted primarily from the Company's
on-going efforts to develop dealer-distribution channels for its products.


SecureAlert (PAL Services) had net sales of $217,293 during the six months ended
March 31, 2004 compared to $103,031 during the six months ended March 31, 2003.
Reagents' had sales for the six months ended March 31, 2004 of $284,216,
compared to $270,495 during the same period in the prior fiscal year, relatively
unchanged from the prior year fiscal period. The Company anticipates that
Reagents' sales will decrease in the future as a percentage of total sales.


Cost of Goods Sold


During the six months ended March 31, 2004, cost of goods sold was $462,043
compared to $386,636 during the six months ended March 31, 2003, an increase of
$75,407. The increase in cost of sales resulted primarily from an increase in
net sales. SecureAlert's (PAL Services) cost of goods sold was $294,683 or 136%
of net sales in the six months ended March 31, 2004, compared to $220,761 or
214% of net sales during the same period one year ago. Remote medical products
are sold below cost in order to receive recurring revenues under a long-term
monitoring agreement. The Company has certain fixed costs associated with cost
of goods sold such as monitoring. As volume increases cost of goods sold as a
percentage should decrease. Reagents' cost of goods sold totaled $167,360 or 59%
of net sales during the six months ended March 31, 2004, compared to $165,874 or
61% of net sales during the same period in the prior fiscal year. The decrease
as a percentage of net sales was primarily due to a decrease in material, wages
and overhead costs.


Research and Development Expenses


During the six months ended March 31, 2004 and 2003, research and development
expense was $49,532 and $98,061, respectively, and consisted primarily of
expenses associated with the development of SecureAlert's (PAL Services)
personal security devices, and related services.


Amortization of Core Technology


Core technology primarily represents patents in the area of remote security and
medical alert devices received in the acquisition of SecureAlert (PAL Services).
Core technology is amortized using the straight-line method over an estimated
useful life of three years and totaled $70,000 for the six months ended March
31, 2004.


Selling, General and Administrative Expenses


During the six months ended March 31, 2004, selling, general and administrative
expenses totaled $1,500,561, compared to $1,848,900 during the six months ended
March 31, 2003, a decrease of $348,339. This decrease relates primarily to a
reduction in labor costs. In addition, amounts allocated to selling, general,
and administrative expenses in the six months ended March 31, 2003 included
non-cash consideration of approximately $601,000 paid in the form of common
stock and options granted to consultants and creditors in lieu of cash
compensation and as consideration for services provided to the Company compared
to approximately $696,000 in such expenses paid during the six months ended
March 31, 2004.


Interest Income and Expense


During the six months ended March 31, 2004, interest expense totaled $451,113.
This amount consists primarily of non-cash interest expense of $368,666 related
to common stock issuances under various note obligations.


Liquidity and Capital Resources


The Company is presently unable to finance its operations solely from cash flows
from operating activities. During the six months ended March 31, 2004, the
Company financed its operations primarily through borrowings from a related
party and third parties and from the sale of debt and equity securities of the
Company for net proceeds of $1,378,271.




                                      -17-
<PAGE>

As of March 31, 2004, the Company had cash of $129,350 and a working capital
deficit of $4,205,981, compared to cash of $136,894 and a working capital
deficit of $1,826,996 at September 30, 2003. This change includes $2,024,666
resulting from the reclassification of mezzanine capital to liabilities.


During the six months ended March 31, 2004, the Company's operating activities
used cash of $1,208,788, compared to cash of $1,159,171 used during the six
months ended March 31, 2003. The increase was primarily a result of the loss of
operations and an increase in accounts receivable.


The Company used cash of $32,369 for investing activities during the six months
ended March 31, 2004.


The Company's financing activities during the six months ended March 31, 2004
provided cash of $1,233,613 compared to $1,177,648 during the six months ended
March 31, 2003. During the six months ended March 31, 2004, the Company received
net cash proceeds of $269,062 in net advances from a related party and net
proceeds of $225,000 from the issuance of common stock subject to mandatory
redemption, as well as net cash proceeds of $884,209 from the sale of its
debentures and equity securities. Cash was decreased by $45,864 in payments to
notes payable, and $98,794 in payments to a related party note.


The Company incurred a net loss of $1,879,408 during the six months ended March
31, 2004. As of March 31, 2004, the Company had a net tangible stockholders'
deficit of $4,145,327 and an accumulated deficit of $64,952,702. These factors,
as well as the risk factors set out in the Company's annual report on Form
10-KSB for the year ended September 30, 2003, 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 include raising capital from
the sale of the Company's common stock or other debt and equity securities.


There is no assurance that the Company will be successful in its plans to raise
capital or meet its current financial obligations. There has been no adjustment
to the financial statements included in this report should management's plans
not be met.


Recent Developments


During the quarter ended March 31, 2004, the Company commenced a private
placement offering of its Series B convertible debentures. The offering closed
April 22, 2004. In connection with this offering, the Company raised gross
proceeds of $1,450,000. Each "unit" which was sold in the offering consisted of
$70,588 in principal amount of convertible debentures; 54,467 shares of common
stock; and 16,176 additional shares of common stock. Accordingly, debentures in
the principal amount of $1,023,526, as well as 1,024,324 shares of common stock
were purchased by investors in the offering.


The Company has opened a new $2,000,000 private offering of debt and equity
securities with similar "unit" terms as the previously closed offering, with all
shares originally issued in the offering by the Company.


In April 2004, the Company paid down the bank line of credit by $375,000
bringing the outstanding balance to $175,000.


Item 3.   Controls and Procedures


Evaluation of Disclosure Controls and Procedures. Based upon their review, the
Company's principal executive officer and principal financial officer have
concluded that the current disclosure controls and procedures (as defined in
Exchange Act Rules 240.13a-14(c) and 15d-14(c)) are effective in providing the
material information required to be disclosed in the reports it file or submits
under the Exchange Act. Their review was completed as of March 31, 2004.


Changes in Internal Controls. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
internal controls subsequent to the date the Company carried out this
evaluation.


                                      -18-
<PAGE>

                           PART II. OTHER INFORMATION


 Item 2.  Changes in Securities and Use of Proceeds


During the three months ended March 31, 2004, the Company issued 1,921,085
shares of common stock without registration of the offer and sale of the
securities under the Securities Act of 1933, as amended, as follows:

     o    100,000 shares for services rendered or to be rendered

     o    1,079,334  shares  upon the  conversion  of 2,917  shares  of Series A
          Preferred Stock, and

     o    741,751  shares were issued from the sale of its debentures and equity
          securities for gross proceeds of $1,050,000.


In each of these transactions the securities were issued without registration
under the Securities Act of 1933, as amended, in reliance upon exemptions from
registration applicable to limited or non-public offers and sales of securities.
The offer and sale of securities in the Company's private placement of debt and
equity were made solely to individuals or entities that were "accredited
investors" as that term is used in Rule 501 under Regulation D of the Securities
Act, in reliance on the exemptions from the registration requirements of the
Securities Act afforded by Section 4(2) and Rule 506 of Regulation D under the
Securities Act.




                                      -19-
<PAGE>


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)


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


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


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


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


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


     10.021997 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).


     10.031997  Transition  Plan  (incorporated  by reference  to the  Company's
          Registration Statement and Amendments thereto on Form 10-SB, effective
          December 1, 1997).

     10.04Securities  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)

     10.05Securities  Purchase  Agreements  with ADP Management and James Dalton
          (previously filed)

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

     10.07Loan  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)

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

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

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



                                      -20-
<PAGE>

     10.11Loan  Agreement (as amended and extended)  dated March 5, 2002 between
          ADP Management and the Company,  effective December 31, 2001 (filed as
          an exhibit to the  Company's  quarterly  report on Form 10-QSB for the
          quarter  ended  December 31,  2001) 10.12  License  Agreement  between
          RemoteMDx,  Inc. and SecureAlert (PAL Services),  Inc. as licensor and
          Matsushita  Electric  Works,  Ltd.,  as  licensee,  (April  12,  2002)
          Agreement  with  SecureAlert   Entertainment,   LLC,  with  amendments
          (January and June 2003) (previously filed)

     10.13Agreement  with  SAE  (incorporated  by  reference  to  the  Company's
          quarterly  report on Form 10-QSB for the quarter  ended  December  31,
          2002)

     10.14Agreement    between   the   Company   and   SecureAlert    Telematics
          (incorporated  by reference to the Company's  quarterly report on Form
          10-QSB for the quarter ended December 31, 2002)

     10.15 Amendments to SAE Agreement (previously filed)

     10.16Agreement  with  ADP  Management,  Derrick  and  Dalton  (April  2003)
          (previously filed)


     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)


(b)       Reports on Form 8-K


During the quarter ended March 31, 2004, the Company filed no reports on Form
8-K.






                                      -21-
<PAGE>


                                   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: May 17, 2004               By: /s/ David G. Derrick
                                    ------------------------------------------
                                    David G. Derrick,
                                    Chief Executive Officer




Date: May 17, 2004               By: /s/ Michael G. Acton
                                    ----------------------------------------
                                    Michael G. Acton,
                                    Principal Accounting Officer