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 December 31, 2006

                                       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)

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

                                 (801) 451-6141
                           (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 [
]

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 6, 2007, the issuer had a total of 91,129,931 shares of common stock
issued and outstanding. The issuer also had a total of 9,375 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 3,468,754 shares, 12,999
shares of Series B Preferred Stock outstanding, convertible at any time at the
option of the holders thereof into approximately 134,472 shares of common stock,
and 5,643,711 shares of Series C Preferred Stock outstanding, convertible at any
time at the option of the holders thereof into approximately 16,931,133 shares
of common stock

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

                                TABLE OF CONTENTS


                                                                          Page
                                                                           No.
                                                                          ----

PART I.  FINANCIAL INFORMATION

      Item 1.  Financial Statements

               Condensed Consolidated Balance Sheet as of
                  December 31, 2006 (Unaudited)                             3

               Condensed Consolidated Statements of Operations
                  for the three months ended December 31, 2006
                  and 2005 (Unaudited)                                      4

               Condensed Consolidated Statements of Cash Flows
                  for the three months ended December 31, 2006
                  and 2005 (Unaudited)                                      5

               Notes to Condensed Consolidated Financial
                  Statements (Unaudited)                                    7

      Item 2.  Management's Discussion and Analysis or
                Plan of Operation                                          15

      Item 3.  Controls and Procedures                                     21


PART II.  OTHER INFORMATION

      Item 1.  Legal Proceedings                                           22

      Item 2.  Unregistered Sales of Equity Securities and
               Use of Proceeds                                             22

      Item 6.  Exhibits and Reports on Form 8-K                            23

      Signatures                                                           26

      Certifications







                                       2
<PAGE>

                          PART I. FINANCIAL INFORMATION

 Item 1.  Financial Statements

                        REMOTEMDX, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
                                                                  December 31,
                                                                      2006
                                                                ----------------
Assets
Current assets:
     Cash                                                       $     5,175,593
     Accounts receivable, net of allowance for
        doubtful accounts of $22,000                                    863,032
     Inventories (note 2)                                               154,670
     Subscription receivable                                          1,580,464
     Prepaid expenses                                                   408,487
                                                                ----------------
          Total current assets                                        8,182,246
     Property and equipment, net of accumulated
        depreciation and amortization  of $725,767
        (note 3)                                                      1,325,264
     Monitoring equipment, net of accumulated
        amortization of $474,604 (note 4)                             8,833,922
     Other assets                                                        48,778
                                                                ----------------

         Total assets                                           $    18,390,210
                                                                ================

Liabilities and Stockholders'  Equity
Current liabilities:
   Bank line of credit (note 5)                                 $     3,870,315
   Accounts payable                                                   5,283,048
   Accrued liabilities (note 6)                                       1,759,872
   Dividends payable                                                     91,542
   Deferred revenue                                                       3,498
   Related party line of credit                                          66,349
   Notes payable (note 7)                                               169,676
                                                                ----------------
     Total current liabilities                                       11,244,300

         Total liabilities                                           11,244,300

SecureAlert Series A Preferred Stock                                  3,590,000
Stockholders' equity:
     Preferred stock:
       Series A; 10% dividend, convertible,
        non-voting; $0.0001 par value; 40,000
        shares designated; 9,375 shares
        outstanding (aggregate liquidation
        preference of $24,938)                                                1
       Series B; convertible; $0.0001 par value;
        2,000,000 shares designated; 12,999 shares
        outstanding (aggregate liquidation
        preference of $38,997)                                                1
       Series C; convertible, $0.0001 par value;
        7,357,144 shares designated; 5,643,711
        shares outstanding (aggregate liquidation
        preference of $9,481,434)                                           564
     Common stock; $0.0001 par value; 175,000,000
        shares authorized, 89,571,928 shares
        outstanding                                                       8,957
Additional paid-in capital                                          120,642,599
Deferred compensation                                                (2,443,768)
Accumulated deficit                                                (114,652,444)
                                                                ----------------
         Total stockholders' equity                                   3,555,910
                                                                ----------------

         Total liabilities and stockholders' equity             $    18,390,210
                                                                ================


                  See accompanying notes to unaudited condensed
                       consolidated financial statements.


                                       3
<PAGE>
                        REMOTEMDX, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                         Three Months Ended
                                                           December 31,
                                                       2006             2005
                                                  --------------   -------------

Net sales                                         $      988,237   $    219,493

Cost of goods sold                                     2,205,393        107,143
                                                  --------------   -------------
      Gross profit                                    (1,217,156)       112,350

Operating expenses
       Research and development expenses               1,219,659        729,933
       Selling, general and administrative
         expenses (including $1,660,636 and
         $451,820 of compensation expense paid
         in stock or stock option/warrants,
         respectively.)                                5,196,926       1,743,612
                                                  --------------   -------------
              Loss from operations                    (7,633,741)    (2,361,195)
Other income (expense):
       Derivative valuation loss                               -       (490,901)
       Gain on revalued registration rights               52,500              -
       Other income                                          356          2,000
       Interest income                                    51,521          1,253
       Interest expense                                 (284,285)      (596,910)
                                                  --------------   -------------
              Loss before income taxes                (7,813,649)    (3,445,753)
Income tax benefit                                             -              -
                                                  --------------   -------------
              Net loss                                (7,813,649)    (3,445,753)
Dividends on Series A and C preferred stock             (237,856)      (124,461)
                                                  --------------   -------------

Net loss attributable to common shareholders      $   (8,051,505)  $ (3,570,214)
                                                  ==============   =============
Net loss per common share - basic and diluted     $        (0.10)  $      (0.08)
                                                  ==============   =============
Weighted average common shares outstanding -
  basic and diluted                                   83,018,000      47,166,000
                                                  ==============   =============


                  See accompanying notes to unaudited condensed
                       consolidated financial statements.


                                       4
<PAGE>
                        REMOTEMDX, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                         Three Months Ended
                                                            December 31,
                                                       2006             2005
                                                  --------------   -------------

Cash flows from operating activities:

  Net loss                                        $   (7,813,649)  $ (3,445,753)
    Adjustments to reconcile net loss to
      net cash used in operating activities:
        Depreciation and amortization                    471,676         16,427
        Derivative liability valuation                         -        490,901
        Common stock issued for penalties and
          services                                       557,550         27,000
        Common stock issued for interest                       -         63,366
        Amortization of deferred financing and
          consulting costs                               205,320        562,937
        Gain on registration rights liability            (52,500)             -
        Accretion of interest expense related
          to redeemable common stock and debt                  -        154,584
        Amortization of debt discount                          -        139,252
        Stock options vested during the period
          and/or issued for services                     982,567              -
        Increase in related party line of
          credit for services                            150,639        175,562
        Changes in operating assets and
          liabilities:
          Increase in restricted cash                          -         (1,461)
             Accounts receivable, net                   (633,604)         3,158
             Interest receivable                          15,604              -
             Inventories                                (115,394)         8,407
             Prepaid expenses                          2,095,248         (4,164)
             Accounts payable                          3,586,883        139,176
             Accrued liabilities                       1,116,701       (191,517)
             Deferred revenue                            (14,319)           218
                                                  --------------   -------------
                 Net cash provided by (used in)
                 operating activities                    552,722     (1,861,907)
                                                  --------------   -------------

Cash flows used in investing activities:
      Purchase of property, equipment and
        monitoring equipment                          (7,148,146)       (17,369)
                                                  --------------   -------------
                 Net cash used in
                 investing activities                 (7,148,146)       (17,369)
                                                  --------------   -------------

Cash flows from financing activities:
      Payment of accrued SecureAlert Series A
        Preferred Stock dividend                         (20,877)             -
      Payments under related-party line of credit       (128,839)      (192,314)
      Payments on bank line of credit                    (26,796)          (423)
      Decrease in subscription receivable                      -        504,900
      Proceeds from issuance of common stock           6,000,000        700,000
      Proceeds from the issuance of subsidiary
        stock                                                  -        600,000
      Proceeds from the exercise of warrants              75,000              -
      Proceeds from issuance of notes payable
        and convertible debentures                             -      1,075,000
      Payments on notes payable                                -        (10,955)
                                                  --------------   -------------
                 Net cash provided by
                 financing activities                  5,898,488      2,676,208
                                                  --------------   -------------
Net increase (decrease) in cash                         (696,936)       796,932

Cash, beginning of period                              5,872,529        416,036
                                                  --------------   -------------
Cash, end of period                               $    5,175,593   $  1,212,968
                                                  ==============   =============


                  See accompanying notes to unaudited condensed
                       consolidated financial statements.


                                       5
<PAGE>

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

                                                         Three Months Ended
                                                            December 31,
                                                       2006             2005
                                                  --------------   -------------

Cash paid for interest and taxes:
    Cash paid for income taxes                    $            -   $          -
    Cash paid for interest                               196,834         43,400

Supplemental schedule of non-cash investing
 and financing activities:
      Issuance of shares of common stock in
        exchange for shares of Series A
        preferred stock                                        1              1
    Issuance of Preferred Series A and C
        for stock dividends                              237,856        124,461
    Exercise of options for receivable                 1,580,464              -
    SecureAlert Series A dividends                        91,542              -
    Common stock issued for deferred financing
        costs                                                  -        721,050
    Issuance of shares of common stock in
        exchange for shares of Series B
        preferred stock                                        4              -
    Penalty shares issued for accrued liability          291,000              -






                  See accompanying notes to unaudited condensed
                       consolidated financial statements.




                                       6
<PAGE>
                        REMOTEMDX, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



(1)     BASIS OF PRESENTATION
        ---------------------

The accompanying condensed consolidated financial statements of RemoteMDx,  Inc.
and  subsidiaries  (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, 2006.  The results of operations  for the three months
ended December 31, 2006, are not necessarily  indicative of the results that may
be expected for the fiscal year ending September 30, 2007.

Going Concern

The Company has a history of  recurring  net  losses,  negative  cash flows from
operating  activities,  a working capital 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.

In order for the  Company  to remove  substantial  doubt  about its  ability  to
continue as a going concern,  the Company must generate positive cash flows from
operations  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 sale of equity  securities  and  expanding  its market for its
tracking products. There can be no assurance that revenues will increase rapidly
enough to payback operating losses and payback debts. 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 revenues or obtain additional financing, it will be unable to
continue the development of its products and may have to cease operations.

Principles of Consolidation

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

Stock-Based Compensation

Effective October 1, 2006, the Company adopted Statement of Financial Accounting
Standards  (SFAS) No. 123R,  using the modified  prospective  method.  SFAS 123R
requires the recognition of the cost of employee  services  received in exchange
for an award of equity  instruments in the financial  statements and is measured
based on the grant  date fair value of the award.  SFAS 123R also  requires  the
stock option compensation  expense to be recognized over the period during which
an  employee  is  required  to provide  service in  exchange  for the award (the
vesting period).  Prior to our adopting SFAS 123R, the Company accounted for its
stock-based compensation plans under Accounting Principles Board Opinion ("APB")
No. 25,  "Accounting  for Stock Issued to Employees"  ("APB 25").  Under APB 25,
generally no  compensation  expense is recorded  when the terms of the award are
fixed and the exercise  price of the employee stock option equals or exceeds the
fair value of the underlying stock on the date of grant. The Company adopted the
disclosure-only   provision  of  SFAS  No.   123,"Accounting   for   Stock-Based
Compensation" ("SFAS 123").


                                       7
<PAGE>

For  the  three  months  ended  December  31,  2006,   the  Company   calculated
compensation  expense of $747,452  related to the vesting of previously  granted
stock options and additional options granted during the period.

For options  granted  subsequent  October 1, 2006,  the fair value of each stock
option  grant will be  estimated  on the date of grant  using the  Black-Scholes
option pricing  model.  The Company  granted  150,000 stock options to employees
during the three months ended December 31, 2006. No stock options were issued to
employees  during the three months ended December 31, 2005. The weighted average
fair value of stock  options at the date of grant  during the three months ended
December 31, 2006,  was $0.69.  During the three months ended December 31, 2006,
890,000  options  issued  in prior  periods  vested  resulting  in  $496,033  of
compensation expense.

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:

                                                     December 31, 2006
                                                     -----------------

         Risk free interest rate                              4.69%
         Expected life                                        5 Years
         Dividend yield                                       n/a
         Volatility                                           145%

No options were granted to employees  during the three months ended December 31,
2005.

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

                                                    Weighted
                                   Weighted          Average
                       Shares       Average         Remaining        Aggregate
                        Under      Exercise        Contractual       Intrinsic
                       Option        Price            Life             Value
                     -----------------------------------------------------------

Outstanding at
  September 30,
  2006                3,607,500     $ 0.63
    Granted             150,000       1.85
    Exercised          (225,000)      0.58
    Forfeited                 -          -
    Expired                   -          -
                      ----------------------------------------------------------

Outstanding at
  December 31, 2006   3,532,500     $ 0.69       4.12 Years        3,261,475
                      =========

Exercisable at
  December 31, 2006   1,327,500     $ 1.22       4.11 Years        1,094,325
                      =========



                                       8
<PAGE>

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:

                                                                Weighted
                                                                 Average
                                              Non-Vested       Grant Date
                                                Options        Fair Value
                                           ----------------------------------

Non-vested at September 30, 2006                  3,095,001           $ 0.56
         Granted                                          -                -
         Vested                                    (890,000)            0.56
         Forfeited                                        -                -
                                           ----------------------------------

Non-vested at December 31, 2006                   2,205,001           $ 0.56
                                           =================

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

Prior to  October 1,  2006,  the  Company  determined  the value of  stock-based
compensation  arrangements  under  the  provisions  of APB 25 and made pro forma
disclosures  required under SFAS 123. Had compensation  expense for stock option
grants been  determined  based on the fair value at the grant  dates  consistent
with the method  prescribed in FASB 123, the Company's net loss and net loss per
share would have been  adjusted to the proforma  amounts  below for three months
ended December 31, 2005, as indicated below:

                                                                December 31,
                                                                    2005
                                                              ----------------

               Net loss applicable to common
                 shareholders - as reported                    $  (3,570,214)

               Add:  intrinsic value of employee stock based
               compensation                                                -
               Deduct:  total stock based employee
               compensation expense determined under fair
               value based method for all awards, net of
               related tax effects                                         -
                                                              ----------------

               Net loss - pro forma                            $  (3,570,214)
                                                              ----------------

               Basic and diluted loss per share - as reported  $      ( 0.08)
                                                              ----------------

               Basic and diluted loss per share - pro forma    $      ( 0.08)
                                                              ----------------
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.



                                       9
<PAGE>

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 December 31, 2006 and 2005, there were approximately 46,882,148 and
22,840,255  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,
2006,  consisted  of  3,468,754  shares  of  common  stock  underlying  Series A
Preferred Stock,  134,472 shares of common stock  underlying  Series B Preferred
Stock,  16,931,133  shares of common stock underlying  Series C Preferred Stock,
and 26,347,789 shares underlying options and warrants.  Of the 26,347,789 shares
underlying options and warrants, 23,658,043 shares underlie options and warrants
which have vested and 2,689,746  shares underlie options and warrants which have
not yet vested.

Revenue Recognition

The Company  derives  its  revenue  primarily  from the sale and  monitoring  of
offender tracking device systems and reagent stains.

The sale of offender  tracking  device systems may include the tracking  device,
such as the TrackerPal  device,  and/or the related monitoring  service.  If the
sale includes the device only, revenue from the sale is recognized  immediately.
Revenue from the monitoring service contracts is recognized monthly as earned in
accordance with the monitoring  service  contract.  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.

The sale of  reagent  stains  is  recognized  when an  agreement  with the buyer
exists,  the price is fixed or determinable,  the product has been shipped,  and
collection is reasonably assured.

(2)     INVENTORIES
        -----------

Substantially  all items  included in inventory are finished goods and consisted
of the following as of December 31, 2006:

          Offender tracking devices and accessories                $    114,072
          Reagent stains,  net of reserve for  obsolescence
          of $65,204                                                     40,598
                                                                   -------------
                   Total                                           $    154,670
                                                                   =============

(3)     PROPERTY AND EQUIPMENT
        ----------------------

Property and equipment at December 31, 2006, was as follows:

         Property and equipment                                    $  2,051,031
         Less:  accumulated depreciation                               (725,767)
                                                                   -------------

                  Total                                            $  1,325,264
                                                                   =============

During the three months ended December 31, 2006, the Company  purchased  $81,420
of tooling and computer equipment.

                                       10
<PAGE>

(4)     MONITORING EQUIPMENT
        --------------------

Monitoring equipment at December 31, 2006, was as follows:

         Monitoring equipment                                      $  9,308,526
         Less:  accumulated depreciation                               (474,604)
                                                                   -------------
                  Total                                            $  8,833,922
                                                                   =============

The Company began leasing leasing monitoring  equipment to agencies for offender
tracking in April 2006 under the terms of operating  leases.  As of December 31,
2006, the Company had deployed 15,027 TrackerPAL devices.  The Company is in the
process of training  and  assisting  agencies  in  activating  these  TrackerPAL
devices.  Once  activated  the Company will begin to monitor the  equipment  and
recognize revenue.  The monitoring equipment is depreciated on the straight-line
method over the  estimated  useful  lives of the related  assets of three years.
This cost is included in cost of goods sold.

(5)     BANK LINE OF CREDIT
        -------------------

As of December 31,  2006,  the  Company's  outstanding  balance  under a line of
credit with Citizen  National Bank was  $3,870,315.  The interest rate is 8% and
the line of credit  matures on June 30,  2008.  The line of credit is secured by
letters of credit for a total of $4 million and  SecureAlert's  assets excluding
TrackerPAL  products.  This note can be expanded up to $10 million 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 will pay 11% annual interest rate, paid monthly, on the
line of credit to the  entities  who  provided  and  arranged for the letters of
credit.

(6)     ACCRUED LIABILITIES
        -------------------

Accrued liabilities consisted of the following at December 31, 2006:

         Accrued tooling                                           $    116,000
         Accrued interest                                                71,260
         Accrued bonuses and director fees                               70,000
         Accrued payroll and employee benefits                          258,912
         Accrued commissions                                              4,500
         Accrued property taxes                                          12,000
         Accrued cellular costs                                         243,200
         Accrued legal expenses                                          50,000
         Accrued lawsuit settlement liability                           600,000
         Accrued engineering costs                                       85,000
         Registration rights liability                                  238,500
         Other accrued expenses                                          10,500
                                                                   -------------
                  Total                                            $  1,759,872
                                                                   =============

On November 9, 2006,  the Company  sold  3,000,000  shares of common  stock at a
purchase  price of $2.00 per share for  aggregate  proceeds of  $6,000,000.  The
Company also issued warrants to purchase up to an additional 7,000,000 shares of
the Company's  common stock.  In connection  with the sale of the Shares and the
Warrants, the Company granted registration rights to the purchaser.  The Company
agreed  to use its best  efforts  to have the  registration  statement  declared
effective within 30 days of filing the registration  statement.  The Company has
currently  incurred  an  aggregate  penalty of 300,000  shares of commons  stock
because the  registration  statement  was not filed within 30 days.  The Company
will continue to incur additional  penalties for each successive 30 day period a
registration  statement is not filed with no limit to the amount of penalty.  As
of December 31, 2006, the Company has recorded a registration  rights  liability
of $238,500 to value the 150,000  penalty  shares  still due to purchaser at the
$1.59 closing  market price due to the fact that it is probable that the penalty
will be incurred.


                                       11
<PAGE>

(7)     NOTES PAYABLE
        -------------

As of December  31,  2006,  the Company had  unsecured  notes  payable to former
SecureAlert   Shareholders  of  $169,676,   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.


(8)     RELATED-PARTY LINE OF CREDIT AND NOTE
        -------------------------------------

As of December 31, 2006, the Company owed to ADP Management, an entity owned and
controlled by two of the Company's officers and directors,  $66,349 under a line
of credit agreement.  Outstanding  amounts on the line of credit accrue interest
at 5.0% and are due on July 31, 2007. During the three months ended December 31,
2006, the net increase in the related party line of credit was $21,800.  The net
increase consisted of net cash repayments during the three months ended December
31,  2006,  of  $128,839  and net  increases  of  $150,639  related to a monthly
management fee owed to ADP Management,  and expenses  incurred by ADP Management
that are reimbursable by the Company.  Mr. Derrick's and Mr. Dalton's respective
salaries  are paid to ADP  Management  which in turn pays  Messrs.  Derrick  and
Dalton.  If the Company is unable to pay the management fee and the reimbursable
expenses in cash,  the related  party line of credit is increased for the amount
owed to ADP Management.

(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 three months ended December 31, 2006, a total of 8,357 shares
of Series A  Preferred  Stock were  converted  into  3,092,315  shares of common
stock.  This  included  170  shares  of  Series  A  Preferred  Stock  issued  in
satisfaction of accrued Series A Preferred  dividends  valued at $34,096.  As of
December  31,  2006,  there  were  9,375  shares  of  Series A  Preferred  Stock
outstanding, which represents 3,468,754 common stock equivalents at a conversion
rate of 370 for 1.  Subsequent to December 31, 2006,  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 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  December  31,  2006 and 2005,  the Company  recorded  $50,440 and
$124,461, 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 December 31, 2006, 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, 2006, a total of 40,333  shares of
Series B  Convertible  Preferred  Stock were  converted  into 351,824  shares of
common  stock.  As of December  31, 2006,  there were 12,999  shares of Series B
Preferred  Stock  outstanding  convertible  into  approximately  134,472  common
shares.  Subsequent to December 31, 2006, and as of the date of this Report,  no
additional  shares of Series B Convertible  Preferred  Stock had been  converted
into shares of common stock.

Series C Convertible Preferred Stock

As of December 31, 2006, no shares of Series C Convertible  Preferred Stock were
converted  into shares of common stock.  The holders of the Series C Convertible
Preferred  Stock are  entitled to dividends at the rate of 8 percent per year on
the stated value of the Series C Convertible Preferred Stock, payable in cash or
in additional  shares of Series C Convertible  Preferred Stock at the discretion
of the board of directors.  During the three months ended  December 31, 2006 and
2005, the Company recorded $187,416 and $0, respectively, in dividends on Series
C Convertible  Preferred  Stock.  As of December 31, 2006,  there were 5,643,711
shares of Series C Convertible  Preferred  Stock  outstanding  convertible  into
approximately 16,931,133 common shares. Subsequent to December 31, 2006, 466,001
shares of Series C Convertible  Preferred  Stock were  converted  into 1,398,003
shares of common stock.




                                       12
<PAGE>

SecureAlert, Inc., Preferred Shares

As of December 31, 2006,  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 $1.50
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 $1,350,000
($1.50 X 90 days X 10,000  contracts)  or $.385 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 may be converted  at the  holder's  option at any time
into an aggregate of 20%  ownership of the common  shares of  SecureAlert,  Inc.
During the three months ended December 31, 2006, no shares of SecureAlert Series
A Preferred Stock had been converted into shares of SecureAlert common stock.

(10)    COMMON STOCK
        ------------

During the three months ended December 31, 2006,  the Company  issued  9,437,075
shares of common stock as follows:

         o    293,333  shares were issued for services  performed for a value of
              $557,549.

         o    3,444,139  shares were issued from Series A and B Preferred  Stock
              conversions.

         o    2,549,603 shares were issued from the exercise of warrants.

         o    150,000 shares, valued at $291,000, were issued from a penalty for
              filing a registration statement late.

         o    3,000,000 shares were issued for $6,000,000 in cash.

Common Stock Options and Warrants

As of December 31, 2006,  23,658,043 of the 26,347,789  outstanding  options and
warrants were vested with a weighted  average exercise price of $1.02 per share.
During the three months ended December 31, 2006,  7,300,000 options and warrants
were issued with an exercise  price range of $1.73 to $2.00 per share and vested
immediately.  During the three months ended December 31, 2006,  various  warrant
holders  exercised  2,549,602  warrants  for  cash  proceeds  of  $75,000,   and
subscription  receivables  of  $1,580,464.  Subsequent to December 31, 2006, and
through the date of this report,  the subscription  receivable of $1,580,464 was
received by the Company.

(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 segment
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.




                                       13
<PAGE>

The following  table reflects  certain  financial  information  relating to each
reportable segment for three months ended December 31, 2006 and 2005:

                                                    Three Months Ended
                                                       December 31,
                                            ------------------ -----------------
                                                  2006               2005
                                            ------------------ -----------------
Sales to external customers:
     SecureAlert                              $       835,383   $        77,060

     Reagents                                         152,854           142,433

                                            ------------------ -----------------
                                              $       988,237   $       219,493

                                            ------------------ -----------------

Net (loss) income from operations  :
     SecureAlert                              $    (4,880,324)  $    (1,349,620)
     Reagents                                                            23,830
                                                      (66,722)
     Other (unallocated)                                             (2,119,963)
                                                   (2,866,603)
                                            ------------------ -----------------
                                              $    (7,813,649)  $    (3,445,753)
                                            ------------------ -----------------

Identifiable assets:
     SecureAlert                              $    11,594,297
     Reagents                                         199,193
     Other (unallocated)                            6,596,720
                                            ------------------
Total assets                                  $    18,390,210
                                            ==================

(12)    SUBSEQUENT EVENTS
        -----------------

Subsequent  to  December  31,  2006,  the  Company  entered  into the  following
transactions:

         1)   The Board of Directors  authorized  Messrs.  Derrick and Dalton to
              purchase  30%  of  Volu-Sol  Reagents  Corporation  for  $400,000.
              Subsequent  of December 31, 2006,  the Company  received  $250,000
              towards the  purchase.  It is  anticipated  that the Company  will
              receive the remaining $150,000 before March 31, 2007.
         2)   Subsequent  to  December  31,  2006,  466,001  shares  of Series C
              Convertible  Preferred Stock were converted into 1,398,003  shares
              of common stock.
         3)   The Company  entered into a settlement  agreement with  plaintiffs
              Michael Sibbett and HGR Enterprises, resolving all claims asserted
              in  litigation  against the  Company.  Pursuant to the  settlement
              agreement,  effective  February  1,  2007,  in  exchange  for  the
              dismissal of the litigation with prejudice,  the Company agreed to
              pay  $400,000  and  issue  160,000   unregistered  shares  of  the
              Company's  common stock with piggyback  registration  rights.  The
              Company  anticipates  that the action will be  dismissed  in early
              March 2007. The Company has accrued $600,000 for the settlement as
              of December 31, 2006.
         4)   Subsequent to December 31, 2006, the Company  received  $1,580,464
              of subscription receivables from the exercise of warrants.



                                       14
<PAGE>

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, 2006.  The Company  disclaims  any  obligation or
intention to update any forward-looking statement.

General
RemoteMDx,  Inc.  ("RemoteMDx"  or the  "Company")  markets  and sells  patented
wireless location  technologies and related monitoring  services,  and develops,
markets  and  sells  personal  security,  senior  supervision,   and  monitoring
services.  The  RemoteMDx  products and  monitoring  services  feature  wireless
products  that  utilize GPS and  cellular  technologies  in  conjunction  with a
monitoring  center.  These devices include a mobile  emergency  response device,
MobilePAL(TM),  which can locate  persons in distress,  no matter where they may
be, and dispatch the closest  emergency  service to their location.  The Company
also has developed a tracking device, TrackerPAL, which is being used to monitor
convicted  offenders in the criminal  justice system.  The Company believes that
its  technologies  and services will benefit the  healthcare and penal system as
they  allow  both  care  providers  and law  enforcement  officials  to  respond
immediately to a medical  market event or criminal  activity  respectively.  Our
customers  will be able to better  monitor and manage their own chronic  disease
and medical  conditions,  giving  peace of mind to them and their loved ones and
care providers. Similarly, law enforcement officials will be able to monitor the
location of offenders and parolees wearing the TrackerPAL product.

The Company's  primary health  monitoring  market consists of  approximately  35
million Americans over the age of sixty-five. Of these 35 million seniors, it is
estimated that 9.7 million  currently live alone.  However,  in most cases,  the
Company  anticipates  that the senior  customers will not purchase the Company's
products for themselves. Instead, based on the Company's experience, the Company
believes that it would be more effective to target the children or caregivers of
these seniors.  Therefore,  the primary target market is children,  friends, and
spouses of these individuals.

We derive our revenues from the following sources:

         o    Medical  Diagnostic Stains - We sell medical diagnostic stains and
              equipment  to  laboratories  throughout  the  United  States.  The
              Company  anticipates  that these sales will decrease in the future
              as a percentage of total sales.

         o    Monitoring  Services - We sell and lease the TrackerPAL devices as
              part of a monitoring  contract and collect a daily  monitoring fee
              on each device.

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 mobile  personal
emergency  market,  the  parolee and  probation  market,  and health  monitoring
industries.

Critical Accounting Policies

In  Note 1 to the  audited  financial  statements  for  the  fiscal  year  ended
September 30, 2006,  included in the Company's Annual Report on 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.


                                       15
<PAGE>

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.

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 records  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 its revenue primarily from selling or leasing the TrackerPAL
device and  providing  monitoring  services in  connection  with the device.  In
addition,  the  Company  receives  revenue  from the sell of medical  diagnostic
stains.

The sale of offender  tracking  device systems may include the tracking  device,
such as the TrackerPal  device,  and/or the related monitoring  service.  If the
sale includes the device,  revenue from the sale is recognized  immediately.  If
the sale includes the monitoring service,  revenue for the service is recognized
ratably  over the life of the  monitoring  service  contract.  Revenue  from the
monitoring  service contract is recognized  monthly as earned in accordance with
the monitoring  service  contract.  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.

The sale of  reagent  stains  is  recognized  when an  agreement  with the buyer
exists,  the price is fixed or determinable,  the product has been shipped,  and
collection is reasonably assured.



                                       16
<PAGE>

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, 2006 and 2005, no impairment
of long-lived assets was recorded.

Accounting for Stock-based Compensation

Effective October 1, 2006, the Company adopted Statement of Financial Accounting
Standards  (SFAS) No. 123R,  using the modified  prospective  method.  SFAS 123R
requires the recognition of the cost of employee  services  received in exchange
for an award of equity  instruments in the financial  statements and is measured
based on the grant  date fair value of the award.  SFAS 123R also  requires  the
stock option compensation  expense to be recognized over the period during which
an  employee  is  required  to provide  service in  exchange  for the award (the
vesting period).  Prior to our adopting SFAS 123R, the Company accounted for its
stock-based compensation plans under Accounting Principles Board Opinion ("APB")
No. 25,  "Accounting  for Stock Issued to Employees"  ("APB 25").  Under APB 25,
generally no  compensation  expense is recorded  when the terms of the award are
fixed and the exercise  price of the employee stock option equals or exceeds the
fair value of the underlying stock on the date of grant. The Company adopted the
disclosure-only   provision  of  SFAS  No.  123,   "Accounting  for  Stock-Based
Compensation" ("SFAS 123").

For  the  three  months  ended  December  31,  2006,   the  Company   calculated
compensation  expense of $747,452  related to the vesting of previously  granted
stock options.

For options  granted  subsequent  October 1, 2006,  the fair value of each stock
option  grant will be  estimated  on the date of grant  using the  Black-Scholes
option pricing  model.  The Company  granted  150,000 stock options to employees
during the three months ended December 31, 2006. No stock options were issued to
employees  during the three months ended December 31, 2005. The weighted average
fair value of stock  options at the date of grant  during the three months ended
December 31, 2006,  was $0.69.  During the three months ended December 31, 2006,
890,000  options  issued  in prior  periods  vested  resulting  in  $496,033  of
compensation expense.

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.


                                       17
<PAGE>

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

                                                     December 31, 2006
                                                     -----------------

         Risk free interest rate                              4.69%
         Expected life                                        5 Years
         Dividend yield                                       n/a
         Volatility                                           145%

No options were granted to employees  during the three months ended December 31,
2005.

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

                                                     Weighted
                                       Weighted       Average
                           Shares       Average      Remaining        Aggregate
                            Under      Exercise     Contractual       Intrinsic
                           Option        Price         Life             Value
                         -------------------------------------------------------

Outstanding at
  September 30, 2006     3,607,500       $ 0.63
    Granted                150,000         1.85
    Exercised             (225,000)        0.58
    Forfeited                    -            -
    Expired                      -            -
                         -------------------------------------------------------

Outstanding at
  December 31, 2006      3,532,500       $ 0.69       4.12 Years     3,261,475
                         ===========

Exercisable 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, 2006, is presented below:

                                                                    Weighted
                                                                     Average
                                                Non-Vested          Grant Date
                                                  Options           Fair Value
                                           ----------------------------------

Non-vested at September 30, 2006                  3,095,001           $ 0.56
         Granted                                          -                -
         Vested                                    (890,000)            0.56
         Forfeited                                        -                -
                                           ----------------------------------

Non-vested at December 31, 2006                   2,205,001           $ 0.56
                                           =================

As of December 31, 2006,  there was  approximately  $1,225,545  of  unrecognized
compensation  cost  related  to  stock  options  that  will be  recognized  over
approximately the next 2 years.

Prior to  October 1,  2006,  the  Company  determined  the value of  stock-based
compensation  arrangements  under  the  provisions  of APB 25 and made pro forma
disclosures  required under SFAS 123. Had compensation  expense for stock option
grants been  determined  based on the fair value at the grant  dates  consistent
with the method  prescribed in FASB 123, the Company's net loss and net loss per
share would have been  adjusted to the proforma  amounts  below for three months
ended December 31, 2005, as indicated below:

                                       18
<PAGE>
                                                                   December 31,
                                                                      2005
                                                                ----------------
               Net loss applicable to common
                 shareholders - as reported                     $    (3,570,214)

               Add:  intrinsic value of employee stock based
               compensation                                                   -
               Deduct:  total stock based employee
               compensation expense determined under fair
               value based method for all awards, net of
               related tax effects                                            -
                                                                ----------------

               Net loss - pro forma                             $    (3,570,214)
                                                                ----------------

               Basic and diluted loss per share - as reported   $        ( 0.08)
                                                                ----------------

               Basic and diluted loss per share - pro forma     $        ( 0.08)
                                                                ----------------

Three months ended  December 31, 2006,  compared to three months ended  December
31, 2005

         Net Sales

For the three  months  ended  December  31,  2006,  the Company had net sales of
$988,237  compared to $219,493 for the three months ended  December 31, 2005, an
increase of $768,744. The increase in net sales resulted primarily from the sale
and monitoring of offender tracking devices.

SecureAlert  (PAL  Services)  had net sales of $835,383  during the three months
ended  December 31, 2006,  compared to net sales of $77,060 for the three months
ended  December 31, 2005.  These sales  consisted of $813,521  from the sale and
monitoring of offender  tracking  devices and $21,862 from mobile  emergency and
personal  security  systems.  Security  Investment,  LLC, and the Oakland Police
Department were significant customers of SecureAlert, accounting for 48% and 16%
of SecureAlert sales during the period, respectively.

Reagents had revenues for the three months ended December 31, 2006, of $152,854,
compared to $142,433  during the three  months  ended  December  31,  2005.  The
Company  anticipates  that  Reagents'  sales  will  decrease  in the future as a
percentage  of total  sales.  Fisher  Scientific  is a  significant  customer of
Reagents,  accounting  for 29% 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 December 31, 2006,  cost of goods sold was $2,205,393
compared to  $107,143  during the three  months  ended  December  31,  2005,  an
increase of $2,098,250.  SecureAlert's  cost of goods sold totaled $2,111,909 or
253% of SecureAlert's net sales during the three months ended December 31, 2006.
The  largest  portion  of the cost of  goods  sold for the  three  months  ended
December 31, 2006, is related to $894,847 in communication costs associated with
the launch of the parolee  product.  The Company paid cellular costs on all SIMS
embedded in 15,027  TrackerPAL units that were deployed as of December 31, 2006.
Subsequent to December 31, 2006,  the Company has  negotiated  with the cellular
companies  to be charged for SIMS in devices  that are  monitored.  In addition,
$412,438 was included in SecureAlert's cost of good sold for payroll to increase
the monitoring  center staff and $372,490 for the amortization of the TrackerPAL
device.  Reagents'  cost of goods sold was $93,484 or 61% of Reagent's net sales
during the three months ended  December 31, 2006,  compared to $72,645 or 51% of
Reagent's  net sales for the same  period  during  the prior  fiscal  year.  The
decrease  as a  percentage  of net  sales was  primarily  due to a  decrease  in
material and labor costs.


                                       19
<PAGE>

        Research and Development Expenses

During  the  three  months  ended  December  31,  2006 and  2005,  research  and
development  expense was  $1,219,659 and $729,933,  respectively,  and consisted
primarily  of  expenses   associated  with  the  development  of   SecureAlert's
TrackerPAL device and related services.

         Selling, General and Administrative Expenses

During  the  three  months  ended  December  31,  2006,  selling,   general  and
administrative  expenses were $5,196,926 compared to $1,743,612 during the three
months  ended  December  31,  2005.   The  increase  of  selling,   general  and
administrative  expenses  are due  primarily  from the launch of the  TrackerPAL
product.  The increase of $3,453,314 relates primarily to an increase in payroll
and payroll  taxes of $296,266;  an increase in legal and  professional  fees of
$333,568;  an increase in outside services of $223,902;  an increase in shipping
costs of  $161,116;  an  increase  in travel of  $101,595;  an increase in other
selling,  general  and  administrative  expenses  of  $552,354;  an  increase in
compensation  of  $600,000  to settle the  lawsuit  between  the Company and HGR
Enterprises;  and an  increase in  consulting  costs of  $1,184,513.  Consulting
expense  increased  due to expenses  related to the issuance of common stock and
options to  employees  and the board of directors  of  $1,031,318.  In addition,
365,000 shares of common stock valued at $508,800 were issued to consultants for
services rendered and a penalty for filing the registration  statement late. The
majority of other  consulting  expense for the three months  ended  December 31,
2006,  is related to payments  issued to  consultants  for public  relations and
branding services and to increase the Company's presence in the capital markets.

         Interest Income and Expense

During the three  months  ended  December 31,  2006,  interest  expense  totaled
$284,285  compared to $596,910 paid in the three months ended December 31, 2005.
This amount consists  primarily of non-cash  interest  expense of  approximately
$84,801 related to unamortized  financing costs associated with shares of common
stock issued for prepaid  interest.  The  decrease of $312,625 is due  primarily
from  eliminating  convertible  debt with embedded  derivatives that were on the
books as of December 31, 2005.

Liquidity and Capital Resources

The Company is presently unable to finance its operations solely from cash flows
from operating activities.  During the three months ended December 31, 2006, the
Company financed its operations  primarily from the issuance of common stock and
exercise of warrants of the Company for net proceeds of $6,075,000.

As of December 31, 2006, the Company had  unrestricted  cash of $5,175,593 and a
working  capital  deficit  of  $3,062,054,  compared  to  unrestricted  cash  of
$5,872,529 and a working capital deficit of $2,410,471 at September 30, 2006.

During the three  months  ended  December  31,  2006,  the  Company's  operating
activities provided cash of $531,845, compared to $1,861,907 of cash used during
the three months ended  December 31,  2005.  The increase  cash was  primarily a
result an increase of accounts payable and accrued expenses.

The Company used cash of $7,148,146  for investing  activities  during the three
months ended December 31, 2006.

The Company's  financing  activities  during the three months ended December 31,
2006, provided cash of $5,919,365 compared to $2,676,208 during the three months
ended  December 31, 2005.  During the three months ended  December 31, 2006, the
Company had net proceeds of $6,000,000  from the sale of equity  securities  and
$75,000 from the exercise of warrants. Cash was decreased by $26,796 in payments
to the bank line of credit,  and $128,839 in net  payments on the related  party
line of credit.

The Company  incurred a net loss of  $7,813,649  through the three  months ended
December  31,  2006.  As of December  31,  2006,  the Company had a net tangible
stockholders'  equity of $3,555,910 and an accumulated  deficit of $114,652,444.
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, 2006,  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,  is to focus on sales of
the  TrackerPAL  product.  There can be no assurance that revenues will increase
rapidly enough to payback  operating losses and payback debts.  Likewise,  there
can be no  assurance  that the debt  holders will be willing to convert the debt

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<PAGE>

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 revenues or obtain additional  financing,  it will
be unable to continue  the  development  of its  products  and may have to cease
operations.

Recent Developments

Subsequent  to  December  31,  2006,  the  Company  entered  into the  following
transactions:

         1)   The Board of Directors  authorized  Messrs.  Derrick and Dalton to
              purchase  30%  of  Volu-Sol  Reagents  Corporation  for  $400,000.
              Subsequent  of December 31, 2006,  the Company  received  $250,000
              towards the  purchase.  It is  anticipated  that the Company  will
              receive the remaining $150,000 before March 31, 2007.
         2)   The Company  entered into a settlement  agreement with  plaintiffs
              Michael Sibbett and HGR Enterprises, resolving all claims asserted
              in  litigation  against the  Company.  Pursuant to the  settlement
              agreement,  effective  February  1,  2007,  in  exchange  for  the
              dismissal of the litigation with prejudice,  the Company agreed to
              pay  $400,000  and  issue  160,000   unregistered  shares  of  the
              Company's  common stock with piggyback  registration  rights.  The
              Company  anticipates  that the action will be  dismissed  in early
              March 2007.
         3)   The Company  entered into an agreement  with  Seguridad  Satelital
              Vehicular S.A. de C.V.  ("SSV"),  a company organized and existing
              under the laws of Mexico to deploy 10,000  TrackerPAL units over a
              16-month period.  SSV will purchase the device and pay the Company
              $2 per day for each device under a licensing  agreement.  In order
              to have exclusivity in Mexico, SSV must have 10,000 units deployed
              at the end of 16 months;  an additional  10,000 units  deployed by
              the end of 28 months  and  another  10,000  (for a total of 30,000
              units) deployed by the end of 40 months.
         4)   Due  to  the  ever  increasing   prevalence  of  digital  cellular
              technology,  many of the existing  analog  cellular  communication
              towers  upon  which the  MobilePAL  device  relies  upon are being
              phased out. As a result,  the Company will  discontinue  providing
              monitoring  service for the MobilePAL device on February 28, 2007.
              However,  the Company will continue  providing  monitoring service
              for all non-analog devices.

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,  the Chief  Executive
Officer and Chief Financial Officer conducted an evaluation of the effectiveness
of our  disclosure  controls and  procedures  as of December 31, 2006.  In their
evaluation,  the Chief Executive Officer and Chief Financial Officer  identified
deficiencies  that existed in the design or  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 related to the
failure to properly disclose equity and debt  transactions.  In addition,  there
have been deficiencies in our inventory  control process.  The deficiencies were
detected in the evaluation  process and the transactions have been appropriately
recorded and disclosed in this Form 10-QSB.  In addition,  we have not created a
"Disclosure  Controls  Committee"  to monitor and follow up on our  processes to
assure disclosures are complete and accurate;  however, we intend to have such a
committee in place by October 1, 2007.  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 accounting 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 matter  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.

                                       21
<PAGE>

Changes in Internal  Controls.  There has been no change in our internal control
over  financial  reporting  during the quarter ended  December 31, 2006 that has
materially affected,  or is reasonably likely to materially affect, our internal
control over financial  reporting.  Since the most recent evaluation date, there
have been no significant  changes in our internal control  structure,  policies,
and  procedures or in other areas that could  significantly  affect our internal
control over financial reporting.

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

Michael Sibbet and HGR Enterprises v. RemoteMDx and SecureAlert,  Third Judicial
District  Court,  Salt Lake  County,  State of Utah,  Civil No.  060915336.  The
Company and SecureAlert entered into a settlement agreement with the plaintiffs,
Michael  Sibbett  and HGR  Enterprises,  resolving  all claims  asserted  in the
litigation. Pursuant to the settlement agreement, effective February 1, 2007, in
exchange   for  the   dismissal   of  the   litigation   with   prejudice,   the
Company/SecureAlert agreed to pay $400,000 and issue 160,000 unregistered shares
of the Company's common stock with piggyback  registration  rights.  The Company
anticipates that the action will be dismissed in early March 2007.

Item 2.  Unregistered  Sales of Equity Securities and Use of Proceeds During the
three months ended  December 31, 2006, the Company  issued  9,437,075  shares of
common stock as follows:

         o    293,333  shares were issued for services  performed for a value of
              $557,549.

         o    3,444,139  shares were issued from Series A and B Preferred  Stock
              conversions.

         o    2,549,603 shares were issued from the exercise of warrants.

         o    150,000  shares,  with a value of  $291,000,  were  issued  from a
              penalty for filing a registration statement late.

         o    3,000,000 shares were issued for $6,000,000 in cash.

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.




                                       22
<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)

      3.01(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)

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

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

                                       23
<PAGE>

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

      10.08          Amended and Restated Loan and Security Agreement  (SunTrust
                     Bank and SecureAlert (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)

      10.09          Amended 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)

      10.10          Amended 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)

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

      10.12          License Agreement between  RemoteMDx,  Inc. and SecureAlert
                     (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)

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

      10.14          Agreement  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)

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

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

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

      10.19          Common Stock Puchase  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).

      10.20          Change in Terms Agreement between Citizen National Bank and
                     the Company (previously filed in August 2006).

      10.21          Securities Purchase Agreement between the Company and VATAS
                     Holding   GmbH,   a  German   limited   liability   company
                     (previously  filed as an exhibit to the  Company's  Current
                     Report  on  Form  8-K  filed   November   14,   2006,   and
                     incorporated herein by reference).

      10.22          Common Stock Purchase Warrant dated November 9, 2006.

      10.23          Settlement Agreement and Mutual Release between the Company
                     and Michael Sibbett and HGR  Enterprises,  LLC, dated as of
                     February 1, 2007.

      10.24          Distributor  Sales,  Service and License  Agreement between
                     the  Company  and  Seguridad  Satelital  Vehicular  S.A. de
                     C.V., dated as of February 5, 2007.

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


                                       24
<PAGE>

      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)




                                       25
<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: February 14, 2007                   By:      /s/ David G. Derrick
                                              ---------------------------------
                                                   David G. Derrick,
                                                   Chief Executive Officer




Date: February 14, 2007                   By:      /s/ Michael G. Acton
                                              ---------------------------------
                                                   Michael G. Acton,
                                                   Principal Accounting Officer







                                       26