- Quarterly Report (10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009 .

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the period from to

Commission file number 0-26140

REMOTE DYNAMICS, INC.

(Exact name of registrant as specified in its charter)

Delaware		51-0352879
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

400 CHISHOLM PLACE, SUITE 411 PLANO, TEXAS		75075
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code ( 214) 440-5200

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such reports).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer ¨ Accelerated Filer ¨

Non-accelerated Filer ¨ Smaller reporting company x

(Do not check if a smaller reporting company)

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

Yes ¨ No x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE

PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes x No ¨

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.

Title of each class		Number of Shares Outstanding as of November 12, 2009
Common Stock, $.00001 par value		29,332,221,091

REMOTE DYNAMICS, INC. AND SUBSIDIARIES

Form 10-Q

INDEX

		PAGE
		NUMBER


PART I. FINANCIAL INFORMATION

Item 1	Financial Statements (unaudited)

	Consolidated Balance Sheets (Unaudited) at September 30, 2009
	and December 31, 2008	3

	Consolidated Statements of Operations (Unaudited)
	for the three and nine months ended September 30, 2009 and 2008	4

	Consolidated Statements of Stockholders’ Deficit (Unaudited)
	for the period from January 1, 2008 to September 30, 2009	5

	Consolidated Statements of Cash Flows (Unaudited)
	for the nine months ended September 30, 2009 and 2008	6

	Notes to Unaudited Consolidated Financial Statements	7

Item 2	Management’s Discussion and Analysis of Financial Conditions
	and Results of Operations	22

Item 4	Controls and Procedures	28

PART II.	OTHER INFORMATION

Item 1	Legal Proceedings	28

Item 2	Recent Sales of Unregistered Securities	28

Item 3	Defaults	29

Item 4	Submission of Matters to a Vote of Security Holders	29

Item 5	Other	29

Item 6	Exhibits	29

Signature		30

EXHIBITS:

EX – 31.1 Certification Pursuant to Section 302

EX – 32.1 Certification Pursuant to Section 906

ITEM 1: FINANCIAL STATEMENTS

REMOTE DYNAMICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	September 30,			December 31,
	2009			2008
	(unaudited)

ASSETS

Current assets:
Cash and cash equivalents	$	23		$	-
Accounts receivable, net of allowance for doubtful accounts of $102 and $85
as of September 30, 2009 and December 31, 2008, respectively		636			803
Inventories, net of reserve for obsolescence of $11 and $7
as of September 30, 2009 and December 31, 2008, respectively		148			153
Deferred product costs - current portion		512			580
Lease receivables and other current assets, net		32			246
Total current assets		1,351			1,782

Property and equipment, net of accumulated depreciation
and amortization of $262 and $212, respectively		69			102
Deferred product costs - non-current portion		322			352
Goodwill		616			616
Customer Lists, net		1,196			1,610
Software, net		372			502
Tradenames, net		33			44
Deferred financing fees, net		53			135
Lease receivables and other assets, net		14			22
Total assets	$	4,026		$	5,165

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Accounts payable	$	1,237		$	1,363
Accounts payable - related parties		56			110
Deferred product revenues - current portion		873			952
Series A convertible notes payable		2,722			3,646
Series B convertible notes payable (net of discount of $589 and $1,301, respectively)		6,116			5,834
Note payable - related parties		250			250
Accrued expenses and other current liabilities		2,553			2,392
Accrued expenses and other current liabilities - related parties		217			106
Total current liabilities		14,024			14,653

Deferred product revenues - non-current portion		546			588
Other non-current liabilities		-			34
Total liabilities		14,570			15,275
Commitments and contingencies

Redeemable Preferred Stock - Series B (3% when declared, $10,000 stated value,
650 shares authorized, 522 shares issued and outstanding at
September 30, 2009 and December 31, 2008, respectively (redeemable in
liquidation at an aggregate of $5,220,000 at September 30, 2009) )		134			134
Redeemable Preferred Stock - Series C (8% cumulative, $1,000 stated value,
10,000 shares authorized, 5,596 and 5,274 shares issued and outstanding at
September 30, 2009 and December 31, 2008, respectively (redeemable in
liquidation at an aggregate of $5,596,000 at September 30, 2009) )		-			-

Stockholders' deficit:
Common stock, $0.0001 par value, 15,000,000,000 shares authorized, 10,575,865,582
shares issued and 10,575,865,535 outstanding at September 30, 2009;
677,858,548 shares issued and 677,858,501 outstanding at December 31, 2008		1,058			68
Treasury stock, 47 shares at September 30, 2009 and December 31, 2008,
respectively, at cost, retroactively restated		-			-
Additional paid-in capital		2,076			1,675
Accumulated deficit		(13,812	)		(11,987	)
Total stockholders' deficit		(10,678	)		(10,244	)
Total liabilities and stockholders' deficit	$	4,026		$	5,165

The accompanying notes are an integral part of these consolidated financial statements.

REMOTE DYNAMICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2009			2008			2009			2008
Revenues
Service	$	946		$	901		$	2,815		$	2,555
Ratable product		321			433			941			1,125
Product		22			50			119			183
Total revenues		1,289			1,384			3,875			3,863

Cost of revenues
Service		550			306			1,198			995
Ratable product		193			164			575			399
Product		26			5			50			60
Total cost of revenues		769			475			1,823			1,454
Gross profit		520			909			2,052			2,409

Expenses:

General and administrative		372			423			1,203			1,194
Sales and marketing		132			165			493			515
Engineering		173			200			524			608
Depreciation and amortization		202			201			605			609
Total expenses		879			989			2,825			2,926
Operating loss		(359	)		(80	)		(773	)		(517	)

Other income (expenses):

Interest income		1			10			8			36
Interest expense		(301	)		(340	)		(1,060	)		(1,439	)
Other expense		-			-			-			(1	)
Total other expenses		(300	)		(330	)		(1,052	)		(1,404	)
Loss before income taxes		(659	)		(410	)		(1,825	)		(1,921	)

Income tax benefit		-			-			-			-

Net loss per common share - basic and diluted	$	(0.00	)	$	(136.67	)	$	(0.00	)	$	(640.33	)

Weighted average number of common shares outstanding:
Basic and diluted		10,480,136,386			3			6,660,463,819			3

The accompanying notes are an integral part of these consolidated financial statements.

REMOTE DYNAMICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE PERIOD JANUARY 1, 2008 THROUGH SEPTEMBER 30, 2009

(in thousands, except share information)

(Unaudited)

					Additional
	Common Stock				Paid-in			Treasury Stock				Accumulated
	Shares		Amount		Capital			Shares		Amount		Deficit			Total

Balance, January 1, 2008		3,437	$	14	$	897			47	$	-	$	(9,304	)	$	(8,393	)

Common stock issued for services		894		-		14			-		-		-			14
Common stock issued as partial principal payments on Series A Notes		55,669,326		4		555			-		-		-			559
Common stock issued as partial principal payments on Series B Notes		17,873,879		2		267			-		-		-			269
Conversion of Series C preferred stock		604,310,965		48		(60	)		-		-		-			(12	)
Issuance of warrants in connection with Series B debt offering						2			-		-		-			2
Net loss		-		-		-			-		-		(2,683	)		(2,683	)

Balance, December 31, 2008		677,858,501	$	68	$	1,675			47	$	-	$	(11,987	)	$	(10,244	)

Common stock issued as partial principal payments on Series A Notes		6,402,645,880		640		297			-		-		-			937
Common stock issued as partial principal payments on Series B Notes		3,255,173,554		326		104			-		-		-			430
Common stock issued as interest payments on Series B Notes		240,187,600		24		-			-		-		-			24
Net loss (unaudited)									-		-		(1,825	)		(1,825	)

Balance, September 30, 2009 (unaudited)		10,575,865,535	$	1,058	$	2,076			47	$	-	$	(13,812	)	$	(10,678	)

The accompanying notes are an integral part of these consolidated financial statements.

REMOTE DYNAMICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Nine Months Ended September 30,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,825	)	$	(1,921	)
Adjustments to reconcile net loss to cash used in operating activities
Depreciation and amortization		49			54
Amortization of customer lists and other intangibles		555			554
Amortization of debt discount		11			2
Amortization of deferred financing fees		82			80
Accretion of Series A notes		-			392
Accretion of Series B notes		701			682
Provision for bad debt		128			105
Loss on retirement of fixed assets		-			1
Common stock issued for services		-			14
Changes in operating assets and liabilities:
Accounts receivable		91			(285	)
Due from related parties		-			71
Inventory		5			(36	)
Deferred product costs		98			(146	)
Lease receivables and other assets		170			294
Deferred product revenue		(121	)		(213	)
Accounts payable		(126	)		(81	)
Accounts payable - related parties		(54	)		(29	)
Accrued expenses and other liabilities		182			162
Accrued expenses and other liabilities - related parties		17			42
Net cash used in operating activities		(37	)		(258	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments made to acquire property and equipment		(16	)		(16	)
Net cash used in investing activities		(16	)		(16	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Series B notes, net of offering costs		-			128
Proceeds from line of credit		130			-
Payment of line of credit		(36	)		(69	)
Payments on capital leases and other notes payable		(18	)		(13	)
Net cash provided by financing activities		76			46

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		23			(228	)
CASH AND CASH EQUIVALENTS, beginning of year		-			228
CASH AND CASH EQUIVALENTS, end of year		23			-

	Nine Months Ended September 30,
	2009		2008
Supplemental Cash Flow Information:
Interest paid	$	4	$	7
Taxes paid		-		-

Non-Cash Financing & Investing Activities:

Common stock issued for partial principal payment on Series A Notes	$	937	$	430
Common stock issued for partial principal payment on Series B Notes		429		247
Common stock issued for services				14
Common stock issued for interest payments on Series B Notes		24		-

The accompanying notes are an integral part of these consolidated financial statements.

REMOTE DYNAMICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

1. ORGANIZATION, BUSINESS OVERVIEW, AND GOING CONCER N

Organization and Business Overview

The consolidated financial statements presented are those of Remote Dynamics, Inc. and its wholly-owned subsidiaries, BounceGPS, Inc. (formerly known as Huron Holdings, Inc.) and HighwayMaster of Canada, LLC.

Remote Dynamics, Inc., a Delaware Corporation, (“Remote Dynamics”, “Company” and/or “We”) was originally incorporated on February 3, 1994. We market, sell and support automatic vehicle location (“AVL”) and mobile resource management solutions targeting companies that own and operate private vehicle fleets, construction equipment, and unpowered assets such as containers and trailers. Our AVL solutions are designed for diverse industry vertical markets such as construction, field services, distribution, limousine, electrical/plumbing, waste management, and government. Our core technology, telematics, combines wireless communications, GPS location technology, geospatial solutions and vehicle data integration with a web-accessible application that aids in the optimization of remote business solutions. We believe our fleet management solution contributes to increased operator efficiency by improving the productivity of mobile workers through real-time position reports, route-traveled information, and exception based reporting designed to highlight mobile workforce inefficiencies. This in-depth reporting enables our customers to correct those inefficiencies and deliver cost savings to their bottom line.

Our REDIview product line forms the basis of our current business plan. We expect this product line to provide the foundation for a growth in revenues and, if our revenues grow as we anticipate, ultimately profitability. We do not expect to achieve profitability or positive cash flow for 2009. Our plans for 2009 include growing our subscriber base through direct sales to new and existing customers and continuing to control our operating costs. However, there can be no assurance that we will achieve our sales targets for 2009. Failure to do so may have a material adverse effect on our business, financial condition and results of operations. Moreover, despite actions to increase revenue, control operating costs, and to improve profitability and cash flow, our operating losses and net operating cash outflows will continue through 2009.

August 2008 Reverse Stock Split

On August 13, 2008, we amended our Amended and Restated Certificate of Incorporation to (i) effect a one-for-four hundred reverse stock split of our common stock and (ii) authorize (after giving effect to the reverse stock split) 5,000,000,000 authorized shares of our common stock having a par value of $0.0001 per share. All equity transactions have been retroactively restated to reflect these changes.

April 2009 Increase in Authorized Common Stock

On April 17, 2009, we amended our Amended and Restated Certificate of Incorporation to increase our authorized shares of our common stock to 15,000,000,000.

November 2009 Increase in Authorized Common Stock

On November 3, 2009, we amended our Amended and Restated Certificate of Incorporation to increase our authorized shares of our common stock to 100,000,000,000 having a par value of $.00001 per share.

Going Concern

We have incurred significant operating losses since our inception, and these losses will continue for the near future. We may not ever achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profits on a quarterly or annual basis. For 2008 and 2007, our independent registered public accounting firm issued an opinion on our financial statements which included an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.

We do not expect to achieve profitability or positive cash flow for 2009. Our plans for 2009 include growing our subscriber base through direct sales to new and existing customers and continuing to control our operating costs. However, there can be no assurance that we will achieve our sales targets for 2009. Failure to do so may have a material adverse effect on our business, financial condition and results of operations.

Critical success factors in our plans to achieve positive cash flow from operations include:

Ability to increase sales of the REDIview product line.

Significant market acceptance of our product offerings from new customers, including our REDIview product line, in the United States.

Maintaining and expanding our direct sales channel.

Training and development of new sales staff.

There can be no assurances that any of these success factors will be realized or maintained.

We had a working capital deficit of $3.8 million, excluding the gross outstanding amount of our secured convertible notes of $9.4 million, as of September 30, 2009. We believe that we will have sufficient capital to fund our ongoing operations through 2009, assuming that we are able to meet our sales targets and operating cost reduction plans and to negotiate acceptable payment arrangements with our senior security holders, vendors and other creditors. The sufficiency of our cash resources depends to a certain extent on general economic, financial, competitive or other factors beyond our control.

We do not currently have any arrangements for additional financing and we may not be able to secure additional debt or equity financing on terms acceptable to us, or at all, at the time when we need such financing. Further, our ability to secure certain types of additional financings is restricted under the terms of our existing financing arrangements. There can be no assurance that we will be able to consummate a transaction for additional capital prior to substantially depleting our available cash reserves, and our failure to do so may force us to restructure, file for bankruptcy, sell assets or cease operations.

We have failed to comply with certain of our other obligations relating to our secured convertible notes, including our failure to make scheduled principal payments and to register for resale the shares of common stock underlying the notes and warrants issued in the related private placements. The notes provide for a default interest rate of 10% per annum on the outstanding principal amount of the notes for periods in which certain specified events of default occur and are continuing and for liquidated damages for non-compliance with our registration obligations. As of September 30, 2009, we have accrued $1,916,418 in default interest and liquidated damages under our secured convertible notes.

Our non-compliance with the terms of the notes also exposes us to the risk that our note holders could seek to exercise prepayment or other remedies under the notes. We have received one outstanding notice of default from a holder of our Series A Notes. The notice demands immediate payment in cash of $287,500. To date, we have made no payment in respect of the note holder demand and it remains outstanding

In March, 2008, we resumed making payments to certain of our note holders of amounts due under the notes by issuing shares of our common stock under the terms of the notes. In the first nine months of 2009, we issued 6,402,645,880 shares of common stock as partial principal payments on the Series A Notes in satisfaction of $937,110 of obligations due under the notes. Additionally, during the same period, we issued 3,255,173,554 shares of common stock as partial payments on the Series B Notes in satisfaction of $429,404 of obligations due under the notes. On September 8, 2009, a holder of our Series B Notes agreed to convert $1,688,032 of obligations due under the notes into 18,756,355,556 shares of our common stock. This conversion represents an issuance price of $.00009 per share. On November 6, 2009, we completed this transaction and issued 18,756,355,556 common shares in full satisfaction of $1,688,032 of obligations under the notes. We expect to issue additional shares of our common stock in payment of amounts due under the notes during the remainder of 2009 and thereafter. In general, the shares issued are available for immediate resale by the holders in accordance with Rule 144 under the Securities Act of 1933, as amended.

We do not currently have the cash on hand to repay amounts due under our secured convertible notes if the note holders elect to exercise their repayment or other remedies. If our efforts to restructure or otherwise satisfy our obligations under the notes are unsuccessful, and we are unable to raise enough money to cover the amounts payable under the notes, we may be forced to restructure, file for bankruptcy, sell assets or cease operations.

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. Accordingly, they do not include all footnote disclosures required by accounting principles generally accepted in the United States of America. These consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2008. The accompanying consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods in accordance with accounting principles generally accepted in the United States of America. The results for any interim period are not necessarily indicative of the results for the entire fiscal year. Certain prior year amounts have been reclassified to conform to current year presentation.

Principles of Consolidation

Our consolidated financial statements include our accounts and those of our wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.

Estimates Inherent in the Preparation of Financial Statements

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the collectibility of accounts receivable and lease receivables, the valuation of goodwill and intangibles, the valuation of common and preferred stock, the valuation of convertible notes payable, and the valuation allowance of the deferred tax asset. Actual results could differ from those estimates.

Revenue Recognition

We recognize revenue when earned in accordance with standards issued by the FASB. Revenue is recognized when the following criteria are met: there is persuasive evidence that an arrangement exists, delivery has occurred and all obligations under such arrangement have been fulfilled, the price is fixed and determinable and collectibility is reasonably assured.

Initial sale proceeds received under multiple-element sales arrangements that require us to deliver products and services over a period of time and which are not determined by us to meet certain criteria are deferred. All sales proceeds related to delivered products are deferred and recognized over the contract life that typically ranges from one to five years. Product sales proceeds recognized under this method are portrayed in the accompanying Consolidated Statement of Operations as “Ratable product revenues.” The related deferred revenue is classified as a current and long term liability in the Consolidated Balance Sheets under the captions “Deferred product revenues – current portion” and “Deferred product revenues non-current portion.” If the customer relationship is terminated prior to the end of the customer contract term, such deferred sales proceeds are recognized as revenue in the period of termination. Under sales arrangements, which initially meet the earnings criteria described above, revenues are recognized upon shipment of the products or upon customer acceptance of the delivered products if terms of the sales arrangement give the customer the right of acceptance.

Service revenue generally commences upon product installation and customer acceptance and is billed and recognized during the period such services are provided.

We provide lease financing to certain customers of our REDIview and legacy products. Leases under these arrangements are classified as sales-type leases or operating leases. These leases typically have terms of one to five years, and all sales type leases are discounted at interest rates ranging from 14% to 18% depending on the customer’s credit risk. The net present value of the lease payments for sales-type leases is recognized as product revenue and deferred under our revenue recognition policy described above. Income from operating leases is recognized ratably over the term of the leases.

Shipping and Handling Fees and Costs

We record amounts billed to customers for shipping and handling and related costs incurred for shipping and handling as components of “Product revenues” and “Cost of product revenues” respectively.

Deferred Product Costs

We defer certain product costs (generally consisting of the direct cost of product sold and installation costs) for our sales contracts determined to require deferral accounting. The deferred costs are classified as a current and long -term asset on the balance sheet under the captions “Deferred product costs – current portion” and “Deferred product costs non-current portion”. Such costs are recognized over the longer of the term of the service contract or the estimated life of the customer relationship and are portrayed in the accompanying Consolidated Statements of Operations as “Ratable product costs.” Such terms range from one to five years. If the customer relationship is terminated prior to the end of the estimated customer relationship period, such costs are recognized in the period of termination.

Financial Instruments

We consider all liquid interest-bearing investments with a maturity of ninety days or less at the date of purchase to be cash equivalents. Short-term investments mature between ninety days and one year from the purchase date. The Company maintains its cash balances at credit-worthy financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. The carrying amount of cash and cash equivalents, accounts receivable, notes payable, accounts payable and accrued liabilities approximates fair value because of their short-term maturity.

Allowance for Doubtful Accounts

We use estimates in determining the allowance for doubtful accounts based on historic collection experience, current trends and a percentage of the accounts receivable aging categories. In determining these percentages we review historical write-offs, including comparisons of write-offs to provisions for doubtful accounts and as a percentage of revenues and monitor collections amounts and statistics.

	September 30,			December 31,
	2009			2008

Beginning balance	$	85		$	54
Additions		83			121
Deductions		(66	)		(90	)
Ending balance	$	102		$	85

Business and Credit Concentrations

We continuously monitor collections and payments from our customers and maintain a provision for estimated accounts receivable that may eventually become uncollectible based upon historical experience and specific customer information. There is no guarantee that we will continue to experience the same credit loss history in future periods. If a significant change in the liquidity or financial condition of a large customer or group of customers were to occur, it could have a material adverse affect on the collectibility of our accounts receivable and future operating results.

AT&T provides GSM/GPRS data services to its REDIview customers pursuant to a data reseller agreement and a messaging agreement. The data reseller agreement and messaging agreement each automatically renew for successive one year terms unless either party provides the other party with written notice of termination at least 30 days prior to the end of the initial term or any renewal term. However, the data reseller agreement and the messaging agreement may be terminated by AT&T or the Company for convenience upon 90 days prior written notice.

If AT&T terminates the data reseller agreement and messaging agreement and ceases to provide GSM/GPRS s ervices to the Company for resale to its customers, the REDIview units in the Company’s base of installed REDIview customers would no longer be able to send or receive data messages until the Company could reach an agreement with another provider and retrofit such units to utilize the GSM/GPRS service of such alternative provider. There can be no assurances that the Company would be able to reach an agreement with another wireless carrier for GSM/GPRS service and/or retrofit its existing REDIview customer base to utilize the GSM/GPRS service of such alternative provider the failure to do so would have a material adverse effect on the Company’s business, financial condition and results of operations.

Inventories

Inventories consist primarily of component parts and finished products that are valued at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. The Company records a write-down for excess and obsolete inventory based on usage history and specific identification criteria. There is a risk we will forecast demand for our products and market conditions incorrectly and maintain excess inventories. Therefore, there can be no assurance that we will not maintain excess inventory and incur inventory lower or cost or market charges in the future.

Property and Equipment

Property and equipment is stated at cost and depreciated on a straight-line basis over the estimated useful lives of the various classes of assets, which generally ranged from two to seven years. After the reverse merger transaction and the associated purchase accounting, the new fair value of Remote Dynamic’s property and equipment is being depreciated on a straight-line basis over the estimated applicable remaining useful lives which generally ranged from one to five years. Maintenance and repairs costs are expensed as incurred.

Research and Development Costs

We expense research and development costs as incurred. During the nine months ended September 30, 2009 and 2008, we incurred $688 and $2,159, respectively, of research and development costs

Valuation of Long-Lived Assets

We evaluate the recoverability of our long-lived assets under standards issued by the FASB. They require us to review for impairment of our long-lived assets, whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable and exceeds its fair value. Impairment evaluations involve our estimates of asset useful lives and future cash flows. When such an event occurs, we estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the undiscounted expected future cash flows are less than the carrying amount of the asset and the carrying amount of the asset exceeds its fair value, an impairment loss is recognized. We utilize an expected present value technique, in which multiple cash flow scenarios that reflect the range of possible outcomes and a risk-free rate are used, to estimate fair value of the asset.

We assess the impairment in value to our long-lived assets whenever events or circumstances indicate that the carrying value may not be recoverable. Significant factors, which would trigger an impairment review, include the following:

significant negative industry trends,

significant changes in technology,

significant underutilization of the asset, and

significant changes in how the asset is used or is planned to be used.

Goodwill and Other Intangibles

We test our goodwill for impairment on an annual basis, or between annual tests if it is determined that a significant event or change in circumstances warrants such testing, in accordance with standards issued by the FASB, which requires a comparison of the carrying value of goodwill to the fair value of the reporting unit. If the fair value of the reporting unit is less than the carrying value of goodwill, an adjustment to the carrying value of goodwill is required. See Note 1 and Note 4 for further discussion on goodwill and other intangible assets impairment.

Income Taxes

The Company accounts for income taxes under standards issued by the FASB. Under those standards, deferred tax assets and liabilities are recognized for future tax benefits or consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such assets will not be realized through future operations.

Stock-Based Compensation

In December of 2004, the FASB issued a standard which applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies to liabilities an entity may incur for goods or services that are based on the fair value of those equity instruments. For any unvested portion of previously issued and outstanding awards, compensation expense is required to be recorded based on the previously disclosed methodology and amounts. Prior periods presented are not required to be restated. We adopted the standard as of January 1, 2006 and applied the standard using the modified prospective method. Remote Dynamics extinguished all prior stock options upon emergence from bankruptcy effective July 2, 2004 and have not issued any new stock options beyond that date.

Beneficial Conversion Feature

From time to time, the Company has debt with conversion options that provide for a rate of conversion that is below market value. This feature is normally characterized as a beneficial conversion feature ("BCF"), which is recorded by the Company pursuant to standards issued by the FASB . If a BCF exists, the Company records it as a debt discount. Debt discounts are amortized to interest expense over the life of the debt on a straight-line basis, which approximates the effective interest method.

Issuance of Shares for Non-Cash Consideration

The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more reliably determinable. The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of standards issued by the FASB . The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Earnings Per Share

The Company adopted the standard issued by the FASB, which provides for the calculation of basic and diluted earnings or loss per share. Basic loss per share includes no dilution and is computed by dividing income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution of securities that could share in the earnings or losses of the entity. Such amounts include shares potentially issuable pursuant to the Notes and the attached warrants and the convertible preferred stock (see Note 6). For the nine months ended September 30, 2009 and 2008, basic and diluted loss per share are the same as the potentially dilutive shares were excluded from diluted loss per share as their effect would be anti-dilutive for the year then ended.

The securities listed below were not included in the computation of diluted earnings per share as the effect from their conversion would have been antidilutive:

	For the Three and Nine Months
	Ended September 30,
	2009		2008
Convertible notes payable		93,793,463,313		2,127,493,694
Convertible preferred stock		121,578,666,397		2,392,537,667
Outstanding warrants to purchase common stock		633,775		636,018

Stock warrants issued and outstanding total 633,775 at September 30, 2009.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
	(in thousands, except						(in thousands, except
	per share amounts)						per share amounts)

NET LOSS (Numerator)	$	(659	)	$	(410	)	$	(1,825	)	$	(1,921	)

BASIC AND FULLY DILUTED
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING (Denominator)		10,480,136,386			3			6,660,463,819			3

BASIC AND FULLY DILUTED LOSS
PER COMMON SHARE	$	(0.00	)	$	(136.67	)	$	(0.00	)	$	(640.33	)

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board ("FASB") established the FASB Accounting Standards Codification (the "Codification") as the source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The introduction of the Codification does not change GAAP and other than the manner in which new accounting guidance is referenced, the adoption of these changes had no impact on the our consolidated financial statements.

In March 2008, the FASB issued changes to disclosures about derivative instruments and hedging activities. They are intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. The provisions of the standard are effective for the quarter ending March 31, 2009. The adoption of the standard did not have a material impact on its consolidated financial position, results of operations and cash flows.

In May 2008, the FASB issued a standard on the hierarchy of GAAP. The standard is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section, 411 The Meaning of "Present Fairly in Conformity with Generally Accepted Accounting Principles". The statement is intended to improve financial reporting by identifying a consistent hierarchy for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. GAAP. The Company has not completed its evaluation of the effects, if any, that the standard may have on its consolidated financial position, results of operations and cash flows.

In June 2008, the FASB reached a consensus on determining whether an instrument (or embedded feature) is indexed to an entity's own stock. We adopted the standard on January 1, 2009. The adoption did not have a material impact to our consolidated financial statements.

In May 2009, the FASB issued a standard on subsequent events. This pronouncement establishes standards for accounting for and disclosing subsequent events (events which occur after the balance sheet date but before financial statements are issued or are available to be issued). It requires an entity to disclose the date subsequent events were evaluated and whether that evaluation took place on the date financial statements were issued or were available to be issued. It is effective for interim and annual periods ending after June 15, 2009. The Company has adopted the standard.

In June 2009, the FASB issued a standard on the FASB accounting standards codification and the hierarchy of generally accepted accounting principles. The standard will become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non grandfathered non-SEC accounting literature not included in the Codification will become non authoritative. This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company does not expect the adoption of FAS 168 to have an impact on the Company’s results of operations, financial condition or cash flows.

3.	Inventories

Inventories consist of the following (in thousands):

	September 30,			December 31,
	2009			2008

Complete systems	$	94		$	89
Component parts		65			71
Reserve for obsolescence - systems		(2	)		(2	)
Reserve for obsolescence - parts		(9	)		(5	)
	$	148		$	153

4.	Goodwill and Other Intangible Assets

Goodwill and other intangible assets consist of the following (in thousands):

												Remaining
	Balance at									Balance at		Amortization
	December 31,									September 30,		Period
	2008		Addition		Amortization			Impairment		2009		(in months)

Goodwill	$	616	$	-	$	-		$	-	$	616		n/a

Other intangibles:
Customer lists		1,610		-		(414	)				1,196		26
Software		502		-		(130	)				372		26
Tradenames		44		-		(11	)				33		26
	$	2,772	$	-	$	(555	)	$	-	$	2,217

Total amortization expense for the other intangible assets for the nine months ended September 30, 2009 was approximately $555,000

Estimated aggregate amortization expense for each of the five succeeding fiscal years is as follows:

		2009				2010				2011				2012				2013
Amortization Expense		$	184			$	739			$	678			$	-			$	-

5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following (in thousands):

	September 30,		December 31,
	2009		2008

Capital leases - current portion		31		29
Property, franchise, and other taxes payable		68		54
Accrued warranty costs		45		60
Accrued vacation		52		37
Accrual for Series A & B default penalty and interest		1,943		1,761
Legal, accounting, interest and other accruals		414		451
	$	2,553	$	2,392

6. Notes Payable & Securities Purchase Agreements

DataLogic Note Payable

On June 30, 2006, BounceGPS issued a $250,000 note to DataLogic International, Inc. in conjunction with the acquisition described in Note 1. The note has a term of 2 years with an annual interest rate of 9%. Principal payments of $31,250 were scheduled to commence October 1, 2006 and quarterly thereafter. Interest is payable quarterly. BounceGPS is currently in default as principal and interest payments have not been made in accordance with the note agreement. The Company has accrued $83,379 of interest expense as of September 30, 2009. The $250,000 principal balance has been classified as current on the accompanying consolidated balance sheet due to the default mentioned above. Keith Moore, Director and Audit Committee Chair of the Company, was previously the CEO and Chairman of DataLogic International, Inc. BounceGPS has disputed the obligation to make any payments under the note. See Note 9 for further discussion on related party transactions.

Series A Note Financing

On February 24, 2006, Remote Dynamics closed a Note and Warrant Purchase Agreement with certain institutional investors pursuant to which Remote Dynamics sold $5.75 million of its series A senior secured convertible notes and original issue discount series A notes (collectively, “Series A Notes”) in a private placement transaction. In the private placement, Remote Dynamics received proceeds of approximately $4.1 million in cash (after deducting brokers’ commission but before payment of legal and other professional fees, the 15% original issue discount of $750,000 and the tendering of 50 shares of their 650 shares Series B preferred convertible stock with an aggregate face value of $500,000 by our sole series B preferred convertible stockholder).

The Series A Notes are secured by substantially all of the Company’s assets. The Series A Notes mature 24 months from issuance and are convertible at the option of the holder into our common stock at a conversion price of $0.0001 per share, subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents. Beginning on September 1, 2006 and continuing thereafter on the first business day of each month, Remote Dynamics must pay an amount to each holder of a Series A Note equal to 1/18th of the original principal payment of the note; provided, that if on any principal payment date the outstanding principal amount of the note is less than such principal installment amount, then Remote Dynamics must pay to the holder of the note the lesser amount. Remote Dynamics may make such principal installment amounts in cash or in registered shares of its common stock. If paid in common stock, certain conditions must be satisfied, and the number of registered shares to be paid to the holder must be an amount equal to the principal installment amount divided by eighty percent (80%) of the average of the closing bid price for the ten (10) trading days immediately preceding the principal payment date.

The purchasers of the Series A Notes (and the placement agent in the transaction) received the following common stock purchase warrants:

Series A-7 warrants to purchase 1,031 shares in the aggregate of common stock at an initial exercise price of $8,000 per share subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents. The exercise price of the series A-7 warrants was $0.0001 as of September 30, 2009. The series A-7 warrants can be exercised on a cashless basis beginning one year after issuance if (i) the per share market value of a share of our common stock (either the volume the weighted average price or the fair market value as determined by an independent appraiser) is greater than the warrant price; and (ii) a registration statement for the warrant stock is not then in effect. The series A-7 warrants are exercisable for a seven-year period from the date of issuance (95 of these warrants are exercisable over 5 years).

Series B-4 warrants to purchase 688 shares in the aggregate of common stock at an initial exercise price of $18,000 per share subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents. The exercise price of the series B-4 warrants was $0.0001 as of September 30, 2009. The series B-4 warrants can be exercised on a cashless basis beginning one year after issuance if (i) the per share market value of a share of our common stock (either the volume the weighted average price or the fair market value as determined by an independent appraiser) is greater than the warrant price; and (ii) a registration statement for the warrant stock is not then in effect. The series B-4 warrants are exercisable for a four-year period beginning on the date a resale registration statement for the shares underlying the warrants is declared effective by the Securities and Exchange Commission (65 of these warrants are exercisable over 5 years).

Series C-3 warrants to purchase 1,375 shares in the aggregate of common stock at an initial exercise price of $4,200 per share subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents. The exercise price of the series C-3 warrants was $0.0001 as of September 30, 2009. The series C-3 warrants can be exercised on a cashless basis beginning one year after issuance if (i) the per share market value of a share of our common stock (either the volume the weighted average price or the fair market value as determined by an independent appraiser) is greater than the warrant price; and (ii) a registration statement for the warrant stock is not then in effect. The series C-3 warrants are exercisable for a three-year period from the date of issuance (125 of these warrants are exercisable over 5 years). These warrants have expired.

Series D-1 warrants (callable only at our option) to purchase 963 shares in the aggregate of common stock at an exercise price per share equal to the lesser of: (a) $7,000 and (b) 90% of the average of the 5 day volume weighted average price of our common stock on the OTC Bulletin Board preceding the call notice, as defined in the warrant.

Warrants issued to the placement agents in the financing to purchase 125 shares of common stock at an exercise price per share equal to $0.0001 with a term of 5 years following the closing.

Under the Series A Note and Warrant Purchase Agreement, Remote Dynamics made certain covenants to the investors, including, as long as any notes or warrants remain outstanding, to have authorized and reserved for issuance 120% of the aggregate number of shares of the Company’s common stock needed for issuance upon conversion of the notes and exercise of the warrants. The Company also agreed to prepare and file resale registration statements with the SEC for the shares of common stock underlying the notes and warrants. If the registration statements are not filed or declared effective within specified time frames or the Company fails to meet other specified deadlines, the investors are entitled to monetary liquidated damages equal to 1.5% of the total amount invested by such investor in the private placement, plus an additional 1.5% liquidated damages for each 30-day period thereafter. The Company is obligated to maintain the effectiveness of the registration statements until the earlier of (a) the date when the underlying securities have been sold or (b) the date on which the underlying shares of common stock can be sold without restriction under Rule 144(k).

We have failed to comply with certain of our other obligations relating to the Series A Notes, including our failure to make scheduled principal payments and to register for resale the shares of common stock underlying the notes and warrants issued in the Series A private placement. The Series A Notes provide for a default interest rate of 10% per annum on the outstanding principal amount of the notes for periods in which certain specified events of default occur and are continuing and liquidated damages for non-compliance with our registration obligations. As of September 30, 2009, we have accrued $825,587 in default interest and liquidated damages under the Series A Notes.

The following table summarizes the Series A Notes as of September 30, 2009 (000’s):

				Less		Carrying
	Principal			Discount		Amount

Total Series A Notes - December 31, 2008	$	3,646		$	0	$	3,646

Partial Principal Payments in Common Shares	$	(937	)	$	-	$	(937	)

Reduced Interest Payment from Overpayment	$	13		$	-	$	13

Total Series A Notes - September 30, 2009	$	2,722		$	0	$	2,722

Series B Note Financing

On November 30, 2006, the Company entered into a Note and Warrant Purchase Agreement with BMSI and other accredited investors. Pursuant to the Note and Warrant Purchase Agreement, the Company received $1,691,500 in gross proceeds from the sale of up to (i) $1,691,500 principal amount of its series B subordinated secured convertible promissory notes, (ii) $1,278,200 principal amount of its original issue discount series B subordinated secured convertible promissory notes, (iii) series E-7 warrants to purchase 306,963 shares of the Company’s common stock and (iv) series F-4 warrants to purchase 306,963 shares of the Company’s common stock.

The series B subordinated secured convertible promissory notes and the series B original issue discount series B subordinated secured convertible promissory notes (collectively, the “Series B Notes”) are secured by all of the Company’s assets, subject to existing liens, are due on dates ranging from December 4, 2009 to May 2011 and began scheduled amortization of principal (in nine quarterly installments) on dates ranging from August 1, 2007 to May 2011. The Company may make principal installment payments in cash or in registered shares of its common stock. If paid in common stock, certain conditions must be satisfied, and the number of registered shares to be paid to the holder must be an amount equal to the principal installment amount divided by the lesser of (i) $1.00 and (ii) 90% of the average of the volume weighted average trading prices of the common stock for the ten trading days immediately preceding the principal payment. The Series B Notes are convertible into the Company’s common stock at a conversion price of $0.0009 per share (as of September 30, 2009), subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents.

Upon the occurrence of specified events of default under the Series B Notes, the holders may (a) demand prepayment of the notes as described below, (b) demand that the principal amount of the notes then outstanding be converted into shares of the Company’s common stock; and/or (c) exercise any of the holder’s other rights or remedies under the transaction documents or applicable law. If the holders require the Company to prepay all or a portion of the notes, the prepayment price would equal to 120% of the principal amount of the notes. The holders would also recover all other costs or expenses due in respect of the notes and the other transaction documents.

As part of the Series B Note financing, the Company agreed:

pursuant to the terms of "most favored nations" rights granted to the Series A note holders investors, to issue in exchange for $1,013,755 principal amount of the Series A Notes, an additional (i) $1,146,755 principal amount of Series B Notes, (ii) $458,702 principal amount of Series B OID Notes, (iii) series E-7 warrants to purchase 3,860 shares of the Company’s common stock and (iv) series F-4 warrants to purchase 3,860 shares of the Company’s common stock. The Company has not received and will not receive any additional proceeds from the exchange. As of September 30, 2009 and December 31, 2008, the Company had issued (i) $1,003,394 principal amount of Series B Notes, (ii) $401,357 principal amount of Series B OID Notes, (iii) series E-7 warrants to purchase 2,352 shares of the Company’s common stock and (iv) series F-4 warrants to purchase 2,352 shares of the Company’s common stock, in exchange for $901,144 principal amount of the Series A Notes. The exchange was completed as of December 31, 2007.


	·	to issue, in exchange for 50 shares of the Company’s Series B convertible preferred stock with an aggregate face value of $500,000 (held by SDS) an additional (i) $700,000 principal amount of Series B Notes, (ii) series E-7 warrants to purchase 1,172 shares of the Company’s common stock and (iii) series F-4 warrants to purchase 1,172 shares of the Company’s common stock. As of December, 31, 2007, this exchange was completed in its entirety.

to pay to the placement agent for the transaction consideration consisting of (a) a cash sales commission of $150,480 (b) warrants to purchase 822 shares of the Company’s common stock at an exercise price of $0.0001 per share (as of September 30, 2009) and being exercisable for ten years, (c) series E-7 warrants to purchase 617 shares of the Company’s common stock, and (d) series F-4 warrants to purchase 617 shares of the Company’s common stock. The Company also paid $60,000 to Strands Management Company, LLC for consulting work as well as $59,816 in legal counsel fees as part of the private placement.

The Company has failed to comply with certain of its other obligations relating to the Series B Notes, including the Company’s failure to make scheduled principal payments and to register for resale the shares of common stock underlying the notes and warrants issued in the Series B private placement. The Series B Notes provide for a default interest rate of 10% per annum on the outstanding principal amount of the notes for periods in which certain specified events of default occur and are continuing and liquidated damages for non-compliance with our registration obligations. As of September 30, 2009, the Company has accrued $1,090,832 in default interest and liquidated damages under the Series B Notes.

The Company’s non-compliance with the terms of the notes also exposes the Company to the risk that the note holders could exercise their prepayment or other remedies under the notes.

In March, 2008, the Company commenced making payments to certain of its Series B note holders of amounts due under the notes by issuing shares of the Company’s common stock under the terms of the notes. In the first nine months of 2009, the Company issued 3,255,173,554 shares of common stock as partial payments on the Series B Notes in satisfaction of $429,404 of obligations due under the notes. On September 8, 2009, a holder of our Series B Notes agreed to convert $1,688,032 of obligations due under the notes into 18,756,355,556 shares of our common stock. This conversion represents an issuance price of $.00009 per share. On November 6, 2009, we completed this transaction and issued 18,756,355,556 common shares in full satisfaction of $1,688,032 of obligations under the notes. The Company expects to issue additional shares of its common stock in payment of amounts due under the notes during the remainder of 2009 and thereafter.

The Company does not currently have the cash on hand to repay amounts due under its Series B Notes if the note holders elect to exercise their repayment or other remedies. If the Company’s efforts to restructure or otherwise satisfy its obligations under the notes are unsuccessful, and the Company is unable to raise enough money to cover the amounts payable under the notes, the Company may be forced to restructure, file for bankruptcy, sell assets or cease operations.

BounceGPS Acquisition

On November 30, 2006, Remote Dynamics entered into a Share Exchange Agreement with BMSI. Pursuant to the Share Exchange Agreement, the Company agreed to acquire from BMSI 100% of the capital stock of BounceGPS, Inc., a provider of mobile asset management solutions. As part of the consideration for the acquisition, the Company issued to BMSI a Series B Note in the principal amount of $660,000 and a Series B OID Note in the principal amount of $264,000. See Note 1 for a more detailed description of the acquisition

The following table summarizes the Series B Notes as of September 30, 2009 (000’s):

				Less			Carrying
	Principal			Discount			Amount
Total Series B Notes - December 31, 2008	$	7,135		$	1,301		$	5,834

Partial Principal Payments in Common Shares		(429	)		-			(429	)

Amortization of debt discount and beneficial conversion feature		-			(13	)		13

Accretion of Series B Notes		-			(698	)		698

Total Series B Notes - September 30, 2009	$	6,705		$	589		$	6,116

Accounting for Series B Notes and Warrant Purchase Agreement

In connection with the convertible Series B Notes and OID Notes, we issued warrants to the Note holders to purchase approximately 231.9 million shares of our common stock at exercise prices noted above. The fair value of the warrants was estimated to be approximately $399,000 using the Black-Scholes pricing model. The fair value of the warrants allocated to the warrants on a relative fair value basis was determined to be approximately $262,000 and was recorded as additional paid-in-capital and a debt discount. The debt discount will be amortized to interest expense over the terms of the notes.

Additionally, the Series B Notes and OID Notes were considered to have a beneficial conversion feature because they permitted the holders to convert their interest in the Series B Notes and OID Notes into shares of our common stock at a deemed effective fair value conversion price of $0.70 per share, which on the date of issuance, was lower than the price of our common stock of $0.75 per share. The total amount of the beneficial conversion feature was approximately $51,000. This amount was recorded as additional paid-in-capital and will be amortized to interest expense from the date of issuance to the earlier of the maturity of the Series B Notes or to the date of the conversion.

We recorded $264,934 of transaction costs as deferred financing fees. We also recorded $62,169 as deferred financing fees for the fair value of the placement agent warrants which were valued using the Black-Scholes pricing model. The deferred financing fees will be amortized to interest expense from the date of the Series B Notes to the earlier of the maturity of the Series B Notes or the date of conversion. During the nine months ended September 30, 2009, $79,000 of the deferred financing fees was amortized to interest expense.

7.	STOCKHOLDERS’ EQUITY

Common Stock

As of December 31, 2008 we had 5,000,000,000 shares of common stock authorized with a par value of $0.0001. We had 677,858,548 common stock shares issued and 677,858,501 shares outstanding.

On April 17, 2009, we amended our Amended and Restated Certificate of Incorporation to increase our authorized shares of our common stock to 15,000,000,000.

As of September 30, 2009 we had 15,000,000,000 shares of common stock authorized with a par value of $0.0001. We had 10,575,865,582 common stock shares issued and 10,575,865,535 shares outstanding.

On November 3, 2009, we amended our Amended and Restated Certificate of Incorporation to increase our authorized shares of our common stock to 100,000,000,000 having a par value of $.00001 per share.

In the first nine months of 2009, we issued 6,402,645,880 shares of common stock as partial principal payments on the Series A Notes in satisfaction of $937,110 of obligations due under the notes. Additionally, during the first nine months of 2009, we issued 3,255,173,554 shares of common stock as partial payments on the Series B Notes in satisfaction of $429,404 of obligations due under the notes. On September 8, 2009, a holder of our Series B Notes agreed to convert $1,688,032 of obligations due under the notes into 18,756,355,556 shares of our common stock. This conversion represents an issuance price of $.00009 per share. On November 6, 2009, we completed this transaction and issued 18,756,355,556 common shares in full satisfaction of $1,688,032 of obligations under the notes. We expect to issue additional shares of our common stock in payment of amounts due under the notes during the remainder of 2009 and thereafter. In general, the shares issued are available for immediate resale by the holders in accordance with Rule 144 under the Securities Act of 1933, as amended. These shares were issued in accordance with the original note terms and no gain or loss on conversion is necessary.

On February 28, 2009, we issued 105 shares of series C convertible preferred stock to BMSI in satisfaction of our dividend obligations under our outstanding series C convertible preferred stock for the period ended February 28, 2009. The shares have a face amount of $1,000 per share. On May 31, 2009, we issued 108 shares of series C convertible preferred stock to BMSI in satisfaction of our dividend obligations under our outstanding series C convertible preferred stock for the period ended May 31, 2009. On August 31, 2009, we issued 110 shares of series C convertible preferred stock to BMSI in satisfaction of our dividend obligations under our outstanding series C convertible preferred stock for the period ended August 31, 2009.

From October 1, 2009 to November 15, 2009, we made payments to certain holders of our Series B notes of amounts due under the notes by issuing shares of our common stock in accordance with the terms of the notes. These payments were in the form of 18,756,355,556 shares of our common stock in satisfaction of $1,688,032 of obligations due under the Series B notes, representing issuance prices of $.00009 per share.

Warrants

A summary of our warrants as of September 30, 2009 and 2008, and the changes during 2009 and 2008 are presented below:

				Weighted
	Number of			Average
	options			Exercise Price
Outstanding at January 1, 2008		636,113		$	8.320000
Granted		-		$	-
Exercised		-		$	-
Expired		-		$	-
Outstanding at December 31, 2008		636,113		$	0.000450
Granted		-		$	-
Exercised		-		$	-
Expired		(2,338	)	$	0.000117
Outstanding at September 30, 2009		633,775		$	0.000100

The fair value of each warrant has been estimated as of September 30, 2009 using the Black-Scholes option valuation model, using the following assumptions:

	Risk Free
	Interest Rate
1 Month		0.06	%
3 Month		0.14	%
6 Month		0.18	%
2 Year		0.95	%
3 Year		1.45	%
5 Year		2.31	%

Variance of Returns		244.40	%
Standard Deviation of Returns		156.30	%
Average Expected Term		2.7

Warrants outstanding and exercisable as of September 30, 2009 are:

Warrants Outstanding								Warrants Exercisable
				Weighted
				Average		Weighted				Weighted
				Remaining		Average				Average
Exercise		Number		Contractual		Exercise		Number		Exercise
Price		Outstanding		Life (Years)		Price		Exercisable		Price
$	200		83		0.92	$	200		83	$	200
843			1,453		0.92		843		1,453		843
35,000			100		0.92		35,000		100		35,000
0.000117			1,031		3.22		0.000117		1,031		0.000117
0.000117			688		0.50		0.000117		688		0.000117
0.000117			125		1.65		0.000117		125		0.000117
0.000117			314,839		4.43		0.000117		314,839		0.000117
0.000117			314,839		1.43		0.000117		314,839		0.000117
0.000117			617		2.43		0.000117		617		0.000117
			633,775						633,775

8.	Other Commitments and Contingencies

Product Warranty Guarantees

We provide a limited warranty on all REDIview product sales, at no additional cost to the customer, which provides for replacement of defective parts for one year after the product is sold. We provide a limited warranty on all VMI product sales, at no additional cost to the customer, which provides for replacement of defective parts during the contract term, typically ranging from one to five years. We establish an estimated liability for expected future warranty commitments based on a review of historical warranty expenditures associated with these products and other similar products. The product warranty liability, which is included in “Accrued expenses and other current liabilities” and “Other non-current liabilities” in the accompanying Consolidated Balance Sheets, totaled approximately $45,000 at September 30, 2009.

Other Purchase Commitments

As of September 30, 2009, we had approximately $124,000 in primarily inventory-related purchase commitments.

Litigation

In November 2009, we were served with a Citation in Delinquent Tax Suit filed by the Richardson, Texas Independent School District (Cause No. 09-40202, District Court of Dallas County, TX) seeking $78,000 in back taxes, penalties and interest. Dallas County, City of Richardson, Parkland Hospital District, Dallas Community College District and Dallas County School Equalization Fund have intervened in the suit and are seeking an additional $46,000 in back taxes, penalties and interest.

From time to time, we may be subject to legal proceedings and claims that arise in the ordinary course of business. We do not believe that any claims other than those described above exist where the outcome of such matters would have a material adverse affect on our consolidated financial position, operating results or cash flows. However, there can be no assurance such legal proceedings will not have a material impact on future results.

9.	Related Party Transactions

On May 1, 2007, we entered into a Support Services Agreement with Strands Management Company, LLC (“Strands”). David Walters, our Chairman, and Keith Moore, our director, each are members of, and each own 50% of the ownership interests in Strands. Under the Support Services Agreement, Strands provides us with financial management services, facilities and administrative services, business development services, creditor resolution services and other services as agreed by the parties. We pay to Strands monthly cash fees of $22,000 for the services. In addition, Strands will receive fees equal to (a) 6% of the revenue generated from any business development transaction with a customer or partner introduced to us by Strands and (b) 20% of the savings to us from any creditor debt reduction resolved by Strands on our behalf. The initial term of the Support Services Agreement expired on May 1, 2009. The Agreement automatically renews for an additional successive one-year period. Fees paid to Strands totaled $204.250 and $202,000 for the nine months ended September 30, 2009 and 2008, respectively. The Company had an outstanding balance due to Strands of $0 as of September 30, 2009.

On January 7, 2009, we borrowed $66,000 from the working capital line of credit promissory note with Strands. On January 13, 2009, we borrowed an additional $40,000 from the working capital line. On July 16, 2009, we made a payment of $6,250 against the line. As of September 30, 2009, we had borrowed $99,750 against the note. Accrued interest under the note totaled $9,547 as of September 30, 2009.

On February 25, 2009, we borrowed $24,000 from Gary Hallgren, the CEO, to cover short-term working capital needs. This amount was repaid on February 27, 2009 with interest of 10% per annum.

On April 28, 2009, we borrowed $33,000 from Strands. This amount was repaid by May 5, 2009 with interest of 10% per annum.

10.

Subsequent Events

On September 8, 2009, a holder of our Series B Notes agreed to convert $1,688,032 of obligations due under the notes into 18,756,355,556 shares of our common stock. This conversion represents an issuance price of $.00009 per share. On November 6, 2009, we completed this transaction and issued 18,756,355,556 common shares in full satisfaction of $1,688,032 of obligations under the notes.

All subsequent events have been included through the date of this filing.

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and related notes and the other financial information included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2008.

Information Regarding Forward-Looking Statements

Except for the historical information and discussions contained herein, statements contained in this Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The forward-looking statements generally include our management's plans and objectives for future operations, including plans, objectives and expectations relating to our future economic performance, business prospects, revenues, working capital, liquidity, ability to obtain financing, generation of income and actions of secured parties not to foreclose on our assets. The forward-looking statements may also relate to our current beliefs regarding revenues we might earn if we are successful in implementing our business strategies. The forward-looking statements generally can be identified by the use of the words "believe," "intend," "plan," "expect," "forecast," "project,” "may," "should," "could," "seek," "pro forma," "estimate," "continue," "anticipate" and similar words. The forward-looking statements and associated risks may include, relate to, or be qualified by other important factors, including, without limitation:

anticipated trends in our financial condition and results of operations;

our ability to finance our working capital and other cash requirements;

our business strategy for expanding our presence in the markets we serve; and

our ability to distinguish ourselves from our current and future competitors.

We do not undertake to update, revise or correct any forward-looking statements. The forward-looking statements are based largely on our current expectations and are subject to a number of risks and uncertainties. Actual results could differ materially from these forward-looking statements.

Important factors to consider in evaluating forward-looking statements include:

changes in external competitive market factors or in our internal budgeting process that might impact trends in our results of operations;

changes in our business strategy or an inability to execute our strategy due to unanticipated changes in the markets; and

various other factors that may prevent us from competing successfully in the marketplace.

Executive Summary

We market, sell and support automatic vehicle location (“AVL”) and mobile resource management solutions targeting companies that operate fleets of vehicles and equipment. Our AVL solutions are designed for fleets within diverse industry vertical markets such as construction, field services, distribution,, limousine, electrical/plumbing, waste management, and government. Our core technology, telematics, combines wireless communications, GPS location technology, geospatial solutions and vehicle data integration with a web-accessible application that aids in the optimization of remote business solutions. We believe our fleet management solution contributes to increased operator efficiency by improving the productivity of mobile workers through real-time position reports, route-traveled information, and exception based reporting designed to highlight mobile workforce inefficiencies. This in-depth reporting enables our customers to correct those inefficiencies and deliver cost savings to the bottom line.

Our REDIview product line forms the basis of our current business plan for 2009. We expect this product line to provide the foundation for a growth in revenues and, if our revenues grow as we anticipate, ultimately profitability. In implementing our business plan, we have completed a significant cost and operational-based restructuring, including rightsizing the workforce. We are focusing our efforts on enhancing the existing REDIview product line by adding new functionality in the areas of dispatching, security, and maintenance.

As shown in the tables below, we had 11,378 units in service as of September 30, 2009, representing a 5.5% increase from September 30, 2008 and a 1.5% increase since December 31, 2008.

September 30,	December 31,		March 31,		June 30,		September 30,
2008	2008		2009		2009		2009

10,787		11,210		11,129		11,283		11,378

Results of Operations - Three Months Ended September 30, 2009 Compared to Three Months Ended September 30, 2008

Total revenue for the three months ended September 30, 2009 totaled $1.29 million compared to $1.38 million during the three months ended September 30, 2008. In accordance with our revenue recognition policies, REDIview unit sales and the associated cost of sales are deferred and recognized over the customer’s contract life. Service revenue for the three months ended September 30, 2009 totaled $946,000 compared to $901,000 for the three months ended September 30, 2008. This 5% increase is primarily attributable to an increase in units in service. Units in service increased 5.5%, from 10,787 units in the third quarter of 2008 to 11,378 in the third quarter of 2009. Ratable product revenue for the second quarter of 2009 was $321,000 compared to $433,000 for the comparable period in 2008. The 26% decrease is due to the completion of the amortization of the deferred performance obligation in 2008 which contributed to $152,000 of revenue in the comparable period of 2008 which was not included in the 2009 period. The amortization of the deferred performance obligation was complete as of December 31, 2008. Excluding the deferred performance obligation, ratable product revenue increased 14% from the comparable period in 2008.

Total gross profit margin was 40% for the three months ended September 30, 2009 compared to 66% for the three months ended September 30, 2008. Service margin for the third quarter of 2009 was 42% compared to 66% for the third quarter of 2008. The Company had been accruing an airtime credit of $221,000 based on an agreement with AT&T that reflected reduced pricing on a subset of units agreed upon but not delivered by AT&T. This agreement was renegotiated to adjust all rates on the Company’s entire installed base, but only on a go-forward basis. As a result, the accrued airtime credit for prior periods was no longer appropriate and was reversed in the third quarter (and therefore reflected an increase in cost of service). Going forward, the Company expects that its cost of service will decrease as a result of the reduced airtime rates from AT&T. Excluding the credit reversal, the service margin for the third quarter was 65%. Ratable product margin was 40% for the third quarter of 2009 compared to 62% for the third quarter of 2008. Excluding the amortization of the deferred performance obligation, ratable product margin in the third quarter of 2008 would have been 42%.

Total operating expenses totaled $677,000 for the three months ended September 30, 2009 compared to $788,000 for the three months ended September 30, 2008. The 14% decrease from the comparable period in the prior year is primarily due to reduced bad debt expense and reduced headcount and the associated overhead costs.

Interest expense totaled $0.3 million for the three months ended September 30, 2009 and the three months ended September 30, 2009. The current period interest expense primarily consists of the accretion of the Series B Notes of $212,000.

Adjusted EBITDA Presentation

EBITDA represents net income (loss) before interest, taxes, depreciation and amortization, and in the case of Adjusted EBITDA, before goodwill impairment, gains or losses on the extinguishment of debt and preferred stock, restructuring charges and other non-operating costs. EBITDA is not a measurement of financial performance under GAAP. However, we have included data with respect to EBITDA because we evaluate and project the performance of our business using several measures, including EBITDA. The computations of Adjusted EBITDA for the quarters ended September 30, 2009 and 2008 were as follows.

	Three Months Ended
	September 30,
	2009			2008
Net loss	$	(632	)	$	(410	)
Add non-EBITDA items included in net results:
Depreciation and amortization		202			201
Interest expense, net		273			330
Other expense		-			-

Adjusted EBITDA	$	(157	)	$	121

Excluding the amortization of the deferred performance obligation and the reversal of the AT&T accrued airtime credit, adjusted EBITDA for the third quarter of 2008 would have been negative $31,000 compared to positive $64,000 for the third quarter of 2009. We consider adjusted EBITDA to be an important supplemental indicator of our operating performance, particularly as compared to the operating performance of our competitors, because this measure eliminates many differences among companies in financial, capitalization and tax structures, capital investment cycles and ages of related assets, as well as certain recurring non-cash and non-operating items. We believe that consideration of EBITDA should be supplemental, because EBITDA has limitations as an analytical financial measure. These limitations include the following: EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; EBITDA does not reflect the effect of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; and not all of the companies in our industry may calculate EBITDA in the same manner in which we calculate EBITDA, which limits its usefulness as a comparative measure.

Management compensates for these limitations by relying primarily on its GAAP results to evaluate its operating performance and by considering independently the economic effects of the foregoing items that are not reflected in EBITDA. As a result of these limitations, EBITDA should not be considered as an alternative to net income (loss), as calculated in accordance with generally accepted accounting principles, as a measure of operating performance, nor should it be considered as an alternative to cash flows as a measure of liquidity.

Results of Operations - Nine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2008

Total revenue for the nine months ended September 30, 2009 totaled $3.88 million compared to $3.86 million during the nine months ended September 30, 2008. Excluding the deferred performance obligation mentioned below, total revenue increased 13%. In accordance with our revenue recognition policies, REDIview unit sales and the associated cost of sales are deferred and recognized over the customer’s contract life. Service revenue for the nine months ended September 30, 2009 totaled $2.82 million compared to $2.56 million for the nine months ended September 30, 2008. This 10% increase is primarily attributable to an increase in units in service. Average units in service increased 10%, from 10,248 units in the first nine months of 2008 to 11,250 in the first nine months of 2009. Ratable product revenue for the nine months ended September 30, 2009 was $.9 million compared to $1.13 million for the comparable period in 2008. The 16% reduction is due to the completion of the amortization of the deferred performance obligation in 2008 which contributed to $434,000 of revenue in the comparable period of 2008 which was not included in the 2009 period. The amortization of the deferred performance obligation was complete as of December 31, 2008. Excluding the deferred performance obligation, ratable product revenue increased 36%.

Total gross profit margin was 53% for the nine months ended September 30, 2009 and 62% for the nine months ended September 30, 2008. Service margin for the first nine months of 2009 was 57% compared to 61% for the first nine months of 2008. The Company had been accruing an airtime credit of $221,000 based on an agreement with AT&T that reflected reduced pricing on a subset of units agreed upon but not delivered by AT&T. This agreement was renegotiated to adjust all rates on the Company’s entire installed base, but only on a go forward basis. As a result, the accrued airtime credit for prior periods was no longer appropriate and was reversed in the third quarter (and therefore reflected an increase in cost of service). Going forward, the Company expects that its cost of service will decrease as a result of the reduced airtime rates from AT&T. Excluding the credit reversal, the service margin for the third quarter was 65%. Ratable product margin was 39% for the first nine months of 2009 compared to 65% for the first nine months of 2008. Excluding the amortization of the deferred performance obligation, ratable product margin in the first nine months of 2008 would have been 42%.

Total operating expenses totaled $2.2 million for the nine months ended September 30, 2009 and $2.3 million for the nine months ended September 30, 2008, respectively.

Interest expense totaled $1.0 million for the nine months ended September 30, 2009 and $1.4 million for the nine months ended June 30, 2009. The $0.4 million decrease can be primarily attributed to the fact that the Series A Notes were fully accreted in February 2008. The accretion of the Series A Notes was $0 for the nine months ending September 30, 2009, compared to $0.4 million for the nine months ending September 30, 2008. The current period interest expense primarily consists of the accretion of the Series B Notes of $655,000, as well as $291,000 of accrued interest on the Series B Notes.

Adjusted EBITDA Presentation

EBITDA represents net income (loss) before interest, taxes, depreciation and amortization, and in the case of Adjusted EBITDA, before goodwill impairment, gains or losses on the extinguishment of debt and preferred stock, restructuring charges and other non-operating costs. EBITDA is not a measurement of financial performance under GAAP. However, we have included data with respect to EBITDA because we evaluate and project the performance of our business using several measures, including EBITDA. The computations of Adjusted EBITDA for the nine months ended September 30, 2009 and 2008 were as follows.

	Nine Months Ended
	September 30,
	2009			2008
Net loss	$	(1,798	)	$	(1,921	)
Add non-EBITDA items included in net results:
Depreciation and amortization		605			609
Interest expense, net		1,025			1,403
Other expense		-			1

Adjusted EBITDA	$	(168	)	$	92

Excluding the amortization of the deferred performance obligation and the reversal of the AT&T accrued airtime credit, adjusted EBITDA for the first nine months of 2008 would have been negative $342,000 compared to positive $53,000 for the first nine months of 2009 . We consider adjusted EBITDA to be an important supplemental indicator of our operating performance, particularly as compared to the operating performance of our competitors, because this measure eliminates many differences among companies in financial, capitalization and tax structures, capital investment cycles and ages of related assets, as well as certain recurring non-cash and non-operating items. We believe that consideration of EBITDA should be supplemental, because EBITDA has limitations as an analytical financial measure. These limitations include the following: EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; EBITDA does not reflect the effect of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; and not all of the companies in our industry may calculate EBITDA in the same manner in which we calculate EBITDA, which limits its usefulness as a comparative measure.

Liquidity and Capital Resources

We have incurred significant operating losses since our inception and have limited financial resources until such time that we are able to generate positive cash flow from operations. We had cash and cash equivalents of $23,000 as of September 30, 2009, compared to $0 as of December 31, 2008.

Net cash used by operations for the nine months ended September 30, 2009 was $37,000, primarily due to a net loss of $1.8 million offset by amortization of intangibles of $555,000, accretion of notes payable of $701,000, provision for bad debt expense of $128,000 and a net change of operating assets and liabilities of $235,000. Net cash used in operations for the nine months ended September 30, 2008 was $258,000, primarily due to a net loss of $1.9 million offset by amortization of intangibles of $554,000, accretion of notes payable of $1.1 million, provision for bad debt expense of $105,000 and a net change of operating assets and liabilities of $221,000.

Net cash used by investing for the nine months ended September 30, 2009 and 2008 was $16,000 due to payments made to acquire property and equipment.

Net cash provided by financing activities for the nine months ended September 30, 2009 was $76,000 primarily due to proceeds from the line of credit of $130,000 offset by payments of the line of $36,000.

On August 31, 2009, we issued 110 shares of Series C Preferred Stock to BMSI in satisfaction of our dividend obligations under our outstanding Series C Preferred Stock for the period ending August 31, 2009.

We expect to continue to issue additional shares of our common stock in payment of amounts due under our secured convertible notes and convertible preferred stock during the remainder of 2009 and thereafter. In general, the shares issued are available for immediate resale by the holders in accordance with Rule 144 under the Securities Act of 1933, as amended.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to product returns, bad debts, inventories, income taxes, warranty obligations, maintenance contracts and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The significant accounting policies and estimates, which we believe to be the most critical to aid in fully understanding and evaluating reported financial results, are stated in Management’s Discussion and Analysis of Financial Condition and Results of Operations reported in our Annual Report on Form 10-K for our fiscal year ended December 31, 2008.

ITEM 4: CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports made pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). is recorded, processed, summarized and reported within the timelines specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of the end of period covered by this report in timely alerting them to material information relating to Remote Dynamics, Inc. required to be disclosed in our periodic reports with the Securities and Exchange Commission.

There were no changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2009, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

ITEM 2: RECENT SALES OF UNREGISTERED SECURITIES

In the third quarter of 2009 we made payments to certain holders of our Series A secured convertible notes of amounts due under the notes by issuing shares of our common stock under the terms of the notes. These payments were in the form of 499,729,082 shares of our common stock in satisfaction of $48,723 of obligations due under the Series A notes, representing an issuance price of $.0001 per share. We believe the issuance of the shares was exempt from registration under Sections 3(a)(9) and 4(2) of the Securities Act and pursuant to Regulation D under the Securities Act. All of the persons receiving shares were accredited investors.

On August 31, 2009, we issued 110 shares of series C convertible preferred stock to BMSI in satisfaction of our dividend obligations under our outstanding series C convertible preferred stock for the period ended August 31, 2009. We believe the issuance of the shares was exempt from registration under Section 4(2) of the Securities Act and pursuant to Regulation D under the Securities Act. The entity receiving shares was an accredited investor.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

Our non-compliance with the terms of the notes also exposes to the risk that our note holders could seek to exercise prepayment or other remedies under the notes. We have received one outstanding notice of default from a holder of our Series A Notes. The notice demands immediate payment in cash of $287,500. To date, we have made no payment in respect of the note holder demand and it remains outstanding.

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On November 3, 2009, our majority stockholder gave its signed written consent to action without a meeting (i) to approve an amendment to our Amended and Restated Certificate of Incorporation to authorize 10,000,000,000 authorized shares of our common stock having a par value of $0.00001 per share. These matters are described in our definitive Information Statement on Schedule 14C filed with the Securities and Exchange Commission on October 13, 2009.

ITEM 5: OTHER INFORMATION

None.

ITEM 6: EXHIBITS

See the attached Index to Exhibits.

SIGNATURE

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

	REMOTE DYNAMICS, INC.

Date: November 12, 2009	By:	/s/ Gary Hallgren
		Gary Hallgren
		Chief Executive Officer
		(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date

/s/ GARY HALLGREN	Chief Executive Officer	November 12, 2009
Gary Hallgren		November 12, 2009

/s/ DAVID WALTERS	Chairman and Director (Principal Financial and Accounting Officer)	November 12, 2009
David Walters		November 12, 2009

/s/ DENNIS ACKERMAN	Director	November 12, 2009
Dennis Ackerman

/s/ KEITH MOORE	Director and Secretary	November 12, 2009
Keith Moore

/s/ THOMAS FRIEDBERG	Director	November 12, 2009
Thomas Friedberg

INDEX TO EXHIBITS

Exhibit No.		Identification of Exhibit

31.1		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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