| [X]                  | Quarterly                  Report pursuant to Section 13 or 15(d) of the Securities Exchange                  Act of                  1934  |
|----------------------|---------------------------------------------------------------------------------------------------------------------------------------------|
|                 |                                                                                                                                        |
|                 | For                  the quarterly period ended September 30, 2007                                                                          |
|                 | OR                                                                                                                                          |
| [   ] | Transition                  Report pursuant to Section 13 or 15(d) of the Securities Exchange                  Act of                  1934 |
|                 |                                                                                                                                        |

| DELAWARE                                                  | 75-2626358                        |
|-----------------------------------------------------------|-----------------------------------|
| (State                  or other jurisdiction             | (I.R.S.                  Employer |
| Of                  incorporation or organization)        | Identification                    |
|                                                      | No.)                              |
|                                                      |                              |
| 10226                  SAN PEDRO AVENUE, SUITE 200        |                              |
| SAN                  ANTONIO, TEXAS                       | 78216                             |
| (Address                  of principal executive offices) | (Zip                  Code)       |

----

----

**PART        I - FINANCIAL INFORMATION**

**Item        1.                      Consolidated        Financial Statements**

|                                                                                                                                       |   | September                  30, |   | December                  31, |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|--------|-------------------------------|
|                                                                                                                                       |   | 2007                           |   | 2006                          |
| **ASSETS**                                                                                                                                 |
| **Current                  Assets:**                                                                                                       |   |                           |   |                          |
| Cash                  and cash equivalents                                                                                                 | $      | 1,969                          | $      | 452                           |
| Trade                  accounts receivable, net                                                                                            |   | 1,067                          |   | 1,308                         |
| Inventories                                                                                                                                |   | 466                            |   | 736                           |
| Prepaid                  expenses and other current assets                                                                                 |   | 232                            |   | 107                           |
| Total                  current assets                                                                                                      |   | 3,734                          |   | 2,603                         |
| **Property                  and Equipment – net**                                                                                    |   | 204                            |   | 192                           |
| **Other                  Assets:**                                                                                                         |   |                           |   |                          |
| Goodwill                                                                                                                                   |   | 4,612                          |   | 4,612                         |
| Other                  intangible assets                                                                                                   |   | 23                             |   | 28                            |
| Other                  assets                                                                                                              |   | 506                            |   | 363                           |
| Total                  assets                                                                                                              | $      | 9,079                          | $      | 7,798                         |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**                                                                                  |
| **Current                  Liabilities:**                                                                                                  |   |                           |   |                          |
| Trade                  accounts payable                                                                                                    | $      | 595                            | $      | 1,473                         |
| Accrued                  expenses                                                                                                          |   | 382                            |   | 263                           |
| Deferred                  legal settlement                                                                                                 |   | 364                            |   | 388                           |
| Accrued                  compensation                                                                                                      |   | 387                            |   | 382                           |
| Bank                  factoring advance                                                                                                    |   | -                              |   | 312                           |
| Other                  current liabilities                                                                                                 |   | 115                            |   | 9                             |
| Deferred                  revenue                                                                                                          |   | 189                            |   | 210                           |
| Total                  current liabilities                                                                                                 |   | 2,032                          |   | 3,037                         |
| **Long-Term                  Liabilities**                                                                                                 |   | -                              |   | -                             |
| **Total                  Liabilities**                                                                                                     |   | 2,032                          |   | 3,037                         |
| **Commitments                  and Contingencies**                                                                                         |   | -                              |   | -                             |
| **Stockholders'                  Equity:**                                                                                                 |   |                           |   |                          |
| Preferred                  stock, $5 par value, issuable in series; 2,000,000 shares authorized;                  Series A,                |   |                           |   |                          |
| LIBOR+2%                  cumulative convertible; 195,351 shares authorized, issued and                  outstanding                       |   | 977                            |   | 977                           |
| Common                  stock, $0.01 par value, 100,000,000 shares authorized; 32,106,302                  and                  22,657,610 |   |                           |   |                          |
| shares                  issued at September 30, 2007 and December 31, 2006,                  respectively                                  |   | 321                            |   | 227                           |
| Additional                  paid-in-capital                                                                                                |   | 141,451                        |   | 132,957                       |
| Stock                  subscription receivable                                                                                             |   | (2,600)                        |   | -                             |
| Accumulated                  deficit                                                                                                       |   | (133,102)                      |   | (129,400)                     |
| Total                  stockholders' equity                                                                                                |   | 7,047                          |   | 4,761                         |
| Total                  liabilities and stockholders' equity                                                                                | $      | 9,079                          | $      | 7,798                         |

----

|                                                                                               |   | Three                  months ended September 30, |
|----------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|
|                                                                                               |   | 2007                                              |   | 2006 |
| Net                  sales                                                                         | $      | 1,843                                             | $ | 1,933 |
| Cost                  of sales (exclusive of depreciation shown separately                  below) |   | 761                                               |   | 932 |
| Gross                  profit                                                                      |   | 1,082                                             |   | 1,001 |
| Other                  operating costs:                                                            |   |                                              |   |   |
| Selling,                  general and administrative                                               |   | 2,513                                             |   | 2,631 |
| Depreciation                  and amortization                                                     |   | 31                                                |   | 118 |
|                                                                                               |   | 2,544                                             |   | 2,749 |
| Operating                  loss                                                                    |   | (1,462)                                           |   | (1,748) |
| Other                  income (expense):                                                           |   |                                              |   |   |
| Interest                  income                                                                   |   | 29                                                |   | 10 |
| Interest                  expense                                                                  |   | (1)                                               |   | - |
| Gain                  on sale of assets                                                            |   | 489                                               |   | - |
| Other,                  net                                                                        |   | -                                                 |   | 1 |
|                                                                                               |   | 517                                               |   | 11 |
| Loss                  before income taxes and discontinued operations                              |   | (945)                                             |   | (1,737) |
| Income                  taxes                                                                      |   | (1)                                               |   | - |
| Loss                  from continuing operations                                                   |   | (946)                                             |   | (1,737) |
| Loss                  from discontinued operations                                                 |   | -                                                 |   | - |
| Net                  loss                                                                          |   | (946)                                             |   | (1,737) |
| Dividend                  requirements on preferred stock                                          |   | (8)                                               |   | (8) |
| Net                  loss allocable to common shareholders                                         | $      | (954)                                             | $ | (1,745) |
| Basic                  and diluted earnings (loss) per share from:                                 |   |                                              |   |   |
| Continued                  operations                                                              | $      | (0.03)                                            | $ | (0.08) |
| Discontinued                  operations                                                           |   | 0.00                                              |   | (0.00) |
| Basic                  and diluted loss per share                                                  | $      | (0.03)                                            | $ | (0.08) |
|                                                                                               |   |                                              |   |   |
| Number                  of common shares used in computation                                       |   | 32,100,254                                        |   | 22,620,110 |
|                                                                                               |   |                                              |   |   |

----

|                                                                                               |   | Nine                  months ended September 30, |
|----------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|
|                                                                                               |   | 2007                                             |   | 2006 |
| Net                  sales                                                                         | $      | 5,949                                            | $ | 6,846 |
| Cost                  of sales (exclusive of depreciation shown separately                  below) |   | 2,686                                            |   | 3,348 |
| Gross                  profit                                                                      |   | 3,263                                            |   | 3,498 |
| Other                  operating costs:                                                            |   |                                             |   |   |
| Selling,                  general and administrative                                               |   | 7,312                                            |   | 8,201 |
| Depreciation                  and amortization                                                     |   | 89                                               |   | 359 |
|                                                                                               |   | 7,401                                            |   | 8,560 |
| Operating                  loss                                                                    |   | (4,138)                                          |   | (5,062) |
| Other                  income (expense):                                                           |   |                                             |   |   |
| Interest                  income                                                                   |   | 56                                               |   | 20 |
| Interest                  expense                                                                  |   | (49)                                             |   | - |
| Gain                  on sale of assets                                                            |   | 484                                              |   | - |
| Other,                  net                                                                        |   | (29)                                             |   | 2 |
|                                                                                               |   | 462                                              |   | 22 |
| Loss                  before income taxes and discontinued operations                              |   | (3,676)                                          |   | (5,040) |
| Income                  taxes                                                                      |   | (2)                                              |   | - |
| Loss                  from continuing operations                                                   |   | (3,678)                                          |   | (5,040) |
| Loss                  from discontinued operations                                                 |   | -                                                |   | (12) |
| Net                  loss                                                                          |   | (3,678)                                          |   | (5,052) |
| Dividend                  requirements on preferred stock                                          |   | (25)                                             |   | (25) |
| Net                  loss allocable to common shareholders                                         | $      | (3,703)                                          | $ | (5,077) |
| Basic                  and diluted earnings (loss) per share from:                                 |   |                                             |   |   |
| Continued                  operations                                                              | $      | (0.12)                                           | $ | (0.24) |
| Discontinued                  operations                                                           |   | 0.00                                             |   | (0.00) |
| Basic                  and diluted loss per share                                                  | $      | (0.12)                                           | $ | (0.24) |
|                                                                                               |   |                                             |   |   |
| Number                  of common shares used in computation                                       |   | 29,767,250                                       |   | 21,036,224 |
|                                                                                               |   |                                             |   |   |

----

|                                                                                                          |   | Nine                  months ended September 30, |
|---------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|
|                                                                                                          |   | 2007                                             |   | 2006 |
| **Operating                  Activities:**                                                                    |   |                                             |   |   |
| Net                  loss                                                                                     | $      | (3,678)                                          | $ | (5,052) |
| Adjustments                  to reconcile net loss to net cash used in operating                  activities: |   |                                             |   |   |
| Gain                  on sale of assets                                                                       |   | (484)                                            |   | - |
| Non                  cash stock compensation                                                                  |   | 354                                              |   | 534 |
| Services                  rendered for warrants issued                                                        |   | 134                                              |   | - |
| Rent                  forgiveness for stock warrants issued                                                   |   | 46                                               |   | - |
| Depreciation                  and amortization                                                                |   | 89                                               |   | 359 |
| Provision                  for losses on accounts receivable                                                  |   | 144                                              |   | 16 |
| Loss                  on early collection of notes receivable                                                 |   | 29                                               |   | - |
| Changes                  in operating assets and liabilities, net of dispositions:                            |   |                                             |   |   |
|      Trade                  accounts receivable                                      |   | 97                                               |   | 327 |
|      Inventories                                                                     |   | 254                                              |   | 29 |
|      Prepaid                  and other current assets                               |   | 103                                              |   | 135 |
|      Trade                  accounts payable                                         |   | (878)                                            |   | 85 |
|      Accrued                  and other current liabilities                          |   | 121                                              |   | 44 |
| Net                  cash used in operating activities                                                        |   | (3,669)                                          |   | (3,523) |
| **Investing                  Activities:**                                                                    |   |                                             |   |   |
| Purchases                  of property and equipment                                                          |   | (101)                                            |   | (71) |
| Proceeds                  from sale of assets                                                                 |   | 100                                              |   | - |
| Net                  cash used in investing activities                                                        |   | (1)                                              |   | (71) |
| **Financing                  Activities:**                                                                    |   |                                             |   |   |
| Sale                  of common stock, net of stock acquisition costs                                         |   | 5,450                                            |   | 2,193 |
| Net                  repayment of short term debt                                                             |   | (268)                                            |   | - |
| Exercise                  of stock options                                                                    |   | 5                                                |   | - |
| Payment                  of preferred stock dividends                                                         |   | -                                                |   | (17) |
| Net                  cash provided by (used in) financing activities                                          |   | 5,187                                            |   | 2,176 |
| Net                  increase (decrease) in cash and cash equivalents                                         |   | 1,517                                            |   | (1,418) |
| Cash                  and cash equivalents, beginning of period                                               |   | 452                                              |   | 2,140 |
| Cash                  and cash equivalents, end of period                                                     | $      | 1,969                                            | $ | 722 |
| **Non                  cash investing and financing activities:**                                             |   |                                             |   |   |
| Purchase                  of assets from Ecomatrix Funding, allocated to goodwill                  for        |   |                                             |   |   |
| 2,000,000                  shares of common stock                                                             | $      | -                                                | $ | 1,820 |
| Subscription                  receivable for shares of stock                                                  | $      | 2,600                                            | $ | - |
| Stock                  acquisition costs for warrants issued                                                  | $      | 78                                               | $ | - |
| Note                  receivable issued in sale of assets                                                     | $      | 400                                              | $ | - |
| **Supplemental                  cash flow information:**                                                      |   |                                             |   |   |
| Cash                  paid during the year for:                                                               |   |                                             |   |   |
| Interest                                                                                                      | $      | 49                                               | $ | - |
| Income                  taxes                                                                                 | $      | -                                                | $ | - |
|                                                                                                          |   |                                             |   |   |

----

**Notes        to the Consolidated Financial Statements**

**Note        1                      Organization**

**Note        2                      Basis        of Presentation**

**Note        3                      Summary        of Significant Accounting Policies**

**Use        of Estimates**

**Revenue        Recognition**

**Uncertainty        in Income Taxes**

**Stock-Based        Compensation**

----

|                                     | September                  30, 2007 |   | September                  30, 2006 |
|------------------------------------------|-------------------------------------|--------|-------------------------------------|
| Expected                  life in years  | 2.5                                 |   | 5.5                                 |
| Expected                  volatility     | 89%                                 |   | 81%                                 |
| Risk-free                  interest rate | 4.8                                 |   | 4.7                                 |

**Earnings        (Loss) Per Share**

**Reclassifications**

**Note        4                      Business        Acquisitions, Divestures and Stockholder’s Equity**

**Acquisitions**

**Advanced        Security Link**

**STC        Holdings, Inc.**

**FAS        Construction Management, Inc.**

**Divesture**

**ABM        Data Systems Business -**

**Sale        of Equity**

**Item        2.                      Management’s        Discussion and Analysis of Financial Condition and Results of        Operations**

**Forward        Looking Statements**

**Business        Description**

**Physical        and Electronic Security**

**School        Safety**

**Construction        Management and Contractor Services**

**Growth        Strategy and Competition**

**Cash        Requirements**

**Financial        Condition, Liquidity and Capital Resources**

**Risks        Associated With Our Common Equity**

**Long-Term        Debt**

----

**Results        of Operations**

|                                                 |                                                   |                                             |                                                   |          |                                              |   |                                    |                                               |
|------------------------------------------------------|--------------------------------------------------------|--------------------------------------------------|--------------------------------------------------------|---------------|---------------------------------------------------|--------|-----------------------------------------|----------------------------------------------------|
|                                                 |                                                   |                                             |                                                   |          |                                              |   |                                    |                                               |
|                                                 | Three                  months ended September 30, 2007 |                                             | Three                  months ended September 30, 2006 |          | Three                  months ended September 30, |
|                                                 |  Dollars                                          | %                  of                  Net Sales |                                                   |  Dollars | %                  of                  Net Sales  |   | Change                  In Dollar Value | Percentage                  Change In Dollar Value |
|                                                 |                                                   |                                             |                                                   |          |                                              |   |                                    |                                               |
| Net                  Sales                           | $1,843                                                 | 100%                                             |                                                   | $1,933        | 100%                                              |   | $(90)                                   | -5%                                                |
| Gross                  profit                        | 1,082                                                  | 59%                                              |                                                   | 1,001         | 52%                                               |   | 81                                      | 8%                                                 |
| Selling,                  general and administrative | 2,513                                                  | 136%                                             |                                                   | 2,631         | 136%                                              |   | (118)                                   | -4%                                                |
| Operating                  loss                      | (1,462)                                                | -79%                                             |                                                   | (1,748)       | -90%                                              |   | 286                                     | 16%                                                |
| Net                  loss                            | (946)                                                  | -51%                                             |                                                   | (1,737)       | -90%                                              |   | 791                                     | 46%                                                |

----

|                                                 |                                                  |                                             |                                                  |          |                                             |   |                                    |                                               |
|------------------------------------------------------|-------------------------------------------------------|--------------------------------------------------|-------------------------------------------------------|---------------|--------------------------------------------------|--------|-----------------------------------------|----------------------------------------------------|
|                                                 |                                                  |                                             |                                                  |          |                                             |   |                                    |                                               |
|                                                 | Nine                  months ended September 30, 2007 |                                             | Nine                  months ended September 30, 2006 |          | Nine                  months ended September 30, |
|                                                 |  Dollars                                         | %                  of                  Net Sales |                                                  |  Dollars | %                  of                  Net Sales |   | Change                  In Dollar Value | Percentage                  Change In Dollar Value |
|                                                 |                                                  |                                             |                                                  |          |                                             |   |                                    |                                               |
| Net                  Sales                           | $5,949                                                | 100%                                             |                                                  | $6,846        | 100%                                             |   | $(897)                                  | -13%                                               |
| Gross                  profit                        | 3,263                                                 | 55%                                              |                                                  | 3,498         | 51%                                              |   | (235)                                   | -7%                                                |
| Selling,                  general and administrative | 7,312                                                 | 123%                                             |                                                  | 8,201         | 120%                                             |   | (889)                                   | -11%                                               |
| Operating                  loss                      | (4,138)                                               | -70%                                             |                                                  | (5,062)       | -74%                                             |   | 924                                     | 18%                                                |
| Net                  loss                            | (3,678)                                               | -62%                                             |                                                  | (5,052)       | -74%                                             |   | 1,374                                   | 27%                                                |

**Item        3.                      Controls        and Procedures**

**Evaluation        of Disclosure Controls and Procedures**

**Changes        in Internal Controls**

**PART        II – OTHER INFORMATION**

**Item        1.                      Legal        Proceedings**

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

~~valued at        approximately $9.5 million and is ~~

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

**Exhibits**

**Reports        on Form 8-K**

----

|   | SIGNATURES |
|--------|------------|

|                               | MDI,                  INC. |                                                               |
|------------------------------------|----------------------------|--------------------------------------------------------------------|
|                               |                       |                                                               |   |
| November                  12, 2007 | By:                        | /s/ Michael                  Sweet                            |   |
|                               |                       | Michael                  Sweet                                     |   |
|                               |                       | Senior                  Vice President and Chief Financial Officer |   |
|                               |                       |                                                               |   |