U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 Amendment No. 2
                                  FORM 10-QSB/A

            |X| Quarterly Report Pursuant to Section 13 or 15 (d) of
                       the Securities Exchange Act of 1934

                  For the quarterly period ended June 30, 2001

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

            For the transition period from __________ to ___________

                         Commission File Number 0-11038



                  ADVANCED REMOTE COMMUNICATION SOLUTIONS, INC.
        (Exact name of small business issuer as specified in its charter)

                              California 33-0644381
      (State or other jurisdiction of (I.R.S. Employer Identification No.)
                         Incorporation or organization)

           10675 Sorrento Valley Road, Suite 200, San Diego, CA 92121
                    (Address of Principal Executive Offices)

                                 (858) 450-7600
                           (Issuer's telephone number)


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



                       APPLICABLE ONLY TO CORPORATE FILERS

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 21,143,554 shares of common
stock as of August 11, 2001.

     Transitional Small Business Disclosure Format (check one): Yes __ No X



<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>


ADVANCED REMOTE COMMUNICATION SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

                                                            Three Months Ended June 30,         Six Months Ended June 30,
                                                            2001              2000              2001             2000
REVENUES:                                                 Restated        (As restated        Restated       (As restated
                                                           see Note 1     see Note 1)          see Note 1     see Note 1)
<S>                                                        <C>              <C>                <C>              <C>
Communications                                            $ 1,647,713       $ 1,790,487         3,381,820       $3,630,908
Video compression                                             404,790         1,009,807         1,116,345        1,725,552
Satellite transmission technology                           2,519,911         1,190,690         3,171,145        2,211,468
                                                       ---------------   ---------------   ---------------   --------------
TOTAL REVENUES                                              4,572,414         3,990,984         7,669,310        7,567,928
                                                       ---------------   ---------------   ---------------   --------------

COSTS AND EXPENSES:
Communications                                                697,747           787,036         1,424,236        1,569,325
Video compression                                             115,306           261,518           272,608          417,085
Satellite transmission technology                             857,243           799,429         1,268,552        1,435,677
                                                       ---------------   ---------------   ---------------   --------------
Gross margin                                                2,902,118         2,143,001         4,703,914        4,145,841
Selling, general and administrative                         2,540,425         2,857,767         5,153,104        5,558,952
Research and development                                      584,540           259,882           771,931          513,167
                                                       ---------------   ---------------   ---------------   --------------
LOSS FROM OPERATIONS                                         (222,847)         (974,648)       (1,221,121)      (1,926,278)
Interest expense - net                                       (190,112)         (205,144)         (374,950)        (501,152)
                                                       ---------------   ---------------   ---------------   --------------
LOSS BEFORE TAXES                                            (412,959)       (1,179,792)       (1,596,071)      (2,427,430)
Income tax benefit                                             90,603           320,574           350,178          596,302
                                                       ---------------   ---------------   ---------------   --------------
LOSS BEFORE CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE                   (322,356)         (859,218)       (1,245,893)      (1,831,128)
Cumulative effect of a change in accounting principle         -                 -                 -               (333,275)

                                                       ---------------   ---------------   ---------------   --------------
NET LOSS                                                   $ (322,356)       $ (859,218)      $(1,245,893)    $ (2,164,403)
                                                       ===============   ===============   ===============   ==============

BASIC AND DILUTED EARNINGS PER SHARE:
Loss before cumulative effect of a change in
accounting principle                                          $ (0.02)          $ (0.04)          $ (0.06)         $ (0.09)
Cumulative effect on prior years of a change in
accounting principle                                          -                 -                 -                $ (0.01)

                                                       ---------------   ---------------   ---------------   --------------
INCOME (LOSS) PER COMMON SHARE                                $ (0.02)          $ (0.04)          $ (0.06)         $ (0.10)
                                                       ===============   ===============   ===============   ==============


WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING                                              21,114,635        20,916,914        21,102,844       20,849,651
Dilutive effect of:
  Employee stock options                                       41,618        -                     57,908          -
  Warrants                                                   -                 -                 -                 -
WEIGHTED AVERAGE COMMON SHARES
                                                       ---------------   ---------------   ---------------   --------------

  OUTSTANDING                                              21,156,253        20,916,914        21,160,752       20,849,651
                                                       ===============   ===============   ===============   ==============

<FN>


See notes to consolidated financial statements.
</FN>

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

ADVANCED REMOTE COMMUNICATION SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS



                                                        June 30,                 December 31,
                                                      ----------------        ------------------
ASSETS                                                    2001                     2000
                                                       (Unaudited)
                                                       Restated See note 1
<S>                                                      <C>                        <C>
CURRENT ASSETS:
  Cash                                                       $711,229                   $2,089
  Restricted cash                                             235,491                  152,099
  Accounts receivable - net                                 2,364,314                3,263,327
  Inventories - net                                         1,483,502                1,361,075
  Prepaid expenses and other assets                         1,772,528                1,328,931
                                                      ----------------       ------------------
        Total current assets                                6,567,064                6,107,521

LONG TERM CONTRACT RECEIVABLE                               2,000,000                -
PROPERTY - net                                                535,628                  574,912
CAPITALIZED SOFTWARE - net                                    248,769                  345,654
GOODWILL - net                                              8,205,105                8,663,958
PATENT - net                                               14,646,635               15,209,135
                                                      ----------------       ------------------

                                                          $32,203,201              $30,901,180
                                                      ================       ==================

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                         $2,287,588               $1,563,886
  Accrued expenses                                          1,377,913                1,075,149
  Deferred revenue                                          1,963,271                  311,461
  Current portion of notes payable                          3,061,707                5,571,388
                                                      ----------------       ------------------
        Total current liabilities                           8,690,479                8,521,884

DEFERRED REVENUE                                            2,600,000                -
NOTES PAYABLE                                               3,100,151                3,115,831
DEFERRED TAX LIABILITY                                      6,148,025                6,373,026
                                                      ----------------       ------------------
        Total liabilities                                  20,538,655               18,010,741

STOCKHOLDERS' EQUITY:
Convertible preferred series B stock,
no par value: 1,000,000 shares authorized,
376.25 shares issued, liquidation preference
$10,000 per share                                           3,762,500                3,762,500
Common stock, no par value; 100,000,000
shares authorized, 21,143,554 and 21,090,922
shares issued and outstanding                              22,240,750               22,220,750
at 2001 and 2000, respectively
Accumulated deficit                                       (14,338,704)             (13,092,811)
                                                      ----------------       ------------------
        Total stockholders' equity                         11,664,546               12,890,439
                                                      ----------------       ------------------

                                                          $32,203,201              $30,901,180
                                                      ================       ==================
<FN>

See notes to consolidated financial statements.

</FN>
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

ADVANCED REMOTE COMMUNICATION SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


                                                                        Six months ended June 30,
                                                                     2001                   2000
                                                                   Restated             (As restated
                                                                   see Note 1            see Note 1)
<S>                                                                  <C>                  <C>

Operating activities:
Net loss                                                            $(1,245,893)           $(2,164,403)
  Adjustments to reconcile net income (loss)
   to net cash provided by (used in) operating activities:
    Loss on disposal of property                                          7,531              -
    Deferred tax benefit                                               (225,001)              (266,351)
    Depreciation and amortization                                     1,187,100              1,417,130
    Issuance of common stock warrants                                         -                139,125
Changes in assets and liabilities:
    Restricted cash                                                     (83,392)             -
    Accounts receivable, net                                            899,013              1,283,716
    Inventories, net                                                   (122,427)              (214,009)
    Prepaid expenses and other assets                                  (443,597)              (124,888)
    Deferred revenue                                                  2,251,810              -
    Accounts payable and accrued expenses                             1,046,466             (1,135,200)

                                                               -----------------      -----------------
Net cash provided by (used in) operating activities                   3,271,610             (1,064,880)
                                                               -----------------      -----------------

Investing activities:
   Capitalized software                                                  69,338              -
   Capital expenditures                                                (106,447)              (115,274)
                                                               -----------------      -----------------

Net cash used in investing activities                                   (37,109)              (115,274)
                                                               -----------------      -----------------

Financing activities:
  Proceeds from line of credit                                          200,000                955,000
  Payments on line of credit                                           (150,000)              (555,000)
  Issuance of series B preferred stock                                -                        737,500
  Issuance of common shares, net                                      -                        378,146
  Cash received from stock options exercised                          -                        136,374
  Principal payments on notes payable                                (2,575,361)            (1,101,391)

                                                               -----------------      -----------------
Net cash (used in) provided by financing activities                  (2,525,361)               550,629
                                                               -----------------      -----------------

Net increase (decrease) in cash                                         709,140               (629,525)

Cash at beginning of period                                               2,089                857,634
                                                               -----------------      -----------------

Cash at end of period                                                 $ 711,229              $ 228,109
                                                               =================      =================

SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Common shares issued for accounts payable                              $ 20,000              -
Conversion of Series A Preferred Stock into Series B                  -                    $ 3,000,000
Issuance of warrants                                                  -                      $ 139,125


<FN>

See notes to consolidated financial statements.

</FN>
</TABLE>






<PAGE>


                     ADVANCED REMOTE COMMUNICATION SOLUTIONS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The  accompanying  consolidated  financial  statements  as of the  three and six
months  ended June 30,  2001 and 2000 are  unaudited  and have been  prepared in
accordance with accounting principles generally accepted in the United States of
America for interim  financial  information  and with the  instructions  to Form
10-QSB.  Accordingly,  they do not include all of the  information and footnotes
required by  accounting  principles  generally  accepted in the United States of
America for complete  financial  statements.  In the opinion of management,  all
adjustments  considered  necessary for a fair  presentation  have been included.
Operating  results  for the three and six  months  ended  June 30,  2001 are not
necessarily indicative of the results that may be expected for any other interim
period or for the year ending December 31, 2001.

Restatement. This amendment to ARCOMS' quarterly report on Form 10-QSB/A for the
three and six month  periods  ended June 30, 2001 is being filed for the purpose
of amending and restating Items 1 and 2 of Part I of our original Form 10-QSB to
reflect  the  restatement  of  our  consolidated   financial  statements.   This
restatement   relates  to  certain   capitalized   software  costs  and  revenue
recognition of one particular licensing agreement.

Subsequent  to the issuance of our  consolidated  financial  statements  for the
quarter ended June 30, 2001, we determined  that certain  software  products for
which costs had been  capitalized  had not met the  definition of  technological
feasibility as provided in Statement of Financial  Accounting  Standards No. 86.
Accordingly,  we are  restating  our  financial  statements  for this quarter to
reflect the  presentation  of such costs as research  and  development.  The
restatement  results in an  increase  in research  and  development  expenses of
$547,676 and $674,373, respectively, for the three and six months ended June 30,
2001.

In addition, subsequent to the issuance of our consolidated financial statements
for the  quarter  ended June 30,  2001,  we  determined  that it would have been
preferable  to  recognize one time based license fee ratably  over the term of
the  agreement based on guidance  provided by Staff Accounting  Bulleting
No. 101 issued by the U.S. Securities and Exchange Commission,  rather than
recognizing the entire fee upon  receipt.  The  amount  of the  fee  was
$1,200,000  all of  which  we had recognized in the quarter ended March 31,
2001.  The term of the agreement is 18 months.  The  restatement  results  in
a  increase  to  satellite  transmission technology  revenue of $200,000 for
the three months ended June 30, 2001,  and a decrease to satellite
transmission  technology  revenue of $933,333 for the six months ended June 30,
2001.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin ("SAB") No. 101, Revenue Recognition in Financial  Statements.  SAB No.
101 provides guidance in applying  accounting  principles  generally accepted in
the United States to revenue recognition in financial statements,  including the
recognition of  non-refundable  up-front  payments  received in conjunction with
contractual  arrangements  that have multiple  performance  elements and require
continuing  involvement.  SAB No. 101 requires  that such fees be  recognized as
products are delivered or services are performed that represent the  culmination
of a separate earnings process.

Prior  to the  adoption  of  SAB  No.  101,  the  Company  recognized  sales  of
communication  equipment  at the time the  equipment  was shipped to  customers.
However,  under the  provisions of SAB No. 101, the delivery of equipment by the
Company is not  considered  the  culmination  of an earnings  process  until the
related  messaging  service is  provided by the  Company to its  customers.  The
Company  implemented  SAB No. 101 in the  fourth  quarter of 2000 as a change in
accounting  principle,   retroactive  to  January  1,  2000,  by  deferring  and
recognizing  these up-front  payments over the estimated period of the messaging
services.  The cumulative effect of this change through December 31, 1999, which
was  recorded  in 2000,  of  changing  the  method of  revenue  recognition  was
$(333,275)  or  $(0.01)  per  share.  However,  the  effect  on the  results  of
operations  for the three and six months  ended June 30,  2000,  which have been
restated in accordance  with SAB 101, was an increase in revenue of $229,649 and
$494,064  respectively,  an  increase  in cost of  goods  sold by  $113,064  and
$242,928,  and a  decrease  of  loss  before  cumulative  effect  of  change  in
accounting  principle of $76,945 and $165,749 compared to the results previously
reported for the three and six months ended June 30, 2000, respectively.

NOTE 2 - NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
No. 141,  Business  Combinations,  and  Statement  No. 142,  Goodwill  and Other
Intangible Assets. Statement 141 requires that the purchase method of accounting
be used for all business  combinations  initiated after June 30, 2001 as well as
all  purchase  method  business  combinations  completed  after  June 30,  2001.
Statement 141 also specifies  criteria  intangible assets acquired in a purchase
method business  combination  must meet to be recognized and reported apart from
goodwill, noting that any purchase price allocable to an assembled workforce may
not be accounted  for  separately.  Statement 142 will require that goodwill and
intangible  assets with  indefinite  useful  lives no longer be  amortized,  but
instead  tested  for  impairment  at  least  annually  in  accordance  with  the
provisions of Statement  142.  Statement  142 will also require that  intangible
assets with definite useful lives be amortized over their  respective  estimated
useful lives to their estimated  residual values, and reviewed for impairment in
accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of.

The Company is required to adopt the  provisions of Statement  141  immediately,
except with regard to business combinations  initiated prior to July 1, 2001 and
Statement 142 effective January 1, 2002. Goodwill and intangible assets acquired
in  business  combinations  completed  before  July 1, 2001 will  continue to be
amortized  prior to the adoption of Statement 142. The Company does not have any
intangible assets determined to have an indefinite life.

Statement  141 will require upon  adoption of  Statement  142,  that the Company
evaluate its existing  intangible  assets and goodwill  that were  acquired in a
prior purchase business combination, and to make any necessary reclassifications
in order to conform with the new criteria in Statement 141 for recognition apart
from  goodwill.  Upon adoption of Statement 142, the Company will be required to
reassess the useful lives and residual values of all intangible  assets acquired
in purchase business  combinations,  and make any necessary  amortization period
adjustments  by  the  end  of the  first  interim  period  after  adoption.  Any
impairment  loss will be measured as of the date of adoption and  recognized  as
the cumulative  effect of a change in accounting  principle in the first interim
period.

In connection with the transitional  goodwill impairment  evaluation,  Statement
142 will  require the Company to perform an  assessment  of whether  there is an
indication  that goodwill is impaired as of the date of adoption.  To accomplish
this the Company must  identify its  reporting  units and determine the carrying
value of each reporting unit by assigning the assets and liabilities,  including
the existing goodwill and intangible  assets, to those reporting units as of the
date of  adoption.  The Company will then have up to six months from the date of
adoption to determine  the fair value of each  reporting  unit and compare it to
the reporting unit's carrying amount.  To the extent a reporting unit's carrying
amount exceeds its fair value,  an indication  exists that the reporting  unit's
goodwill  may be impaired  and the Company  must  perform the second step of the
transitional  impairment  test. In the second step, the Company must compare the
implied fair value of the reporting  unit's  goodwill,  determined by allocating
the  reporting   unit's  fair  value  to  all  of  it  assets   (recognized  and
unrecognized) and liabilities in a manner similar to a purchase price allocation
in accordance with Statement 141, to its carrying amount, both of which would be
measured  as of the  date  of  adoption.  This  second  step is  required  to be
completed  as  soon as  possible,  but no  later  than  the  end of the  year of
adoption. Any transitional  impairment loss will be recognized as the cumulative
effect  of a change  in  accounting  principle  in the  Company's  statement  of
earnings.

As of the date of adoption,  the Company expects to have unamortized goodwill in
the amount of approximately $7.7 million,  unamortized  identifiable  intangible
assets in the amount of  approximately  $14 million which will be subject to the
transition provisions of Statements 141 and 142. Amortization expense related to
goodwill was  $1,359,522  and $458,853 for the year ended  December 31, 2000 and
the six  months  ended June 30,  2001,  respectively.  Because of the  extensive
effort  needed  to  comply  with  adopting  Statements  141 and  142,  it is not
practicable to reasonably  estimate the impact of adopting  these  Statements on
the Company's financial statements at the date of this report, including whether
any  transitional  impairment  losses will be required to be  recognized  as the
cumulative effect of a change in accounting principle.

NOTE 3 - BALANCE SHEET DETAILS

                                                 6/30/2001       12/31/2000


                                              ----------------  ---------------
Accounts receivable                              $1,732,037         $3,185,722

Accounts receivable - unbilled                      714,798            135,225
Less allowance for doubtful accounts                (82,521)           (57,620)
                                              ----------------  ---------------
                                                 $2,364,314         $3,263,327
                                              ----------------  ---------------
Inventory:
     Raw materials                                 $902,824           $693,568
     Work in progress                               214,251            204,790
     Finished goods                                 406,427            502,717
                                              ----------------  ---------------
                                                 $1,523,502         $1,401,075
 Less allowance for obsolete inventory               40,000             40,000
                                              ----------------  ---------------
                                                 $1,483,502         $1,361,075
                                              ----------------  ---------------
Property:

    Computers and equipment                      $1,499,438         $1,428,178
    Furniture and fixtures                          271,100            268,310
    Leasehold improvements                           83,574             88,832
                                              ----------------  ---------------
                                                  1,854,112          1,785,320
      Less accumulated depreciation               1,318,484          1,210,408
                                              ----------------  ---------------
                                                   $535,628           $574,912
                                              ----------------  ---------------

Capitalized software                               $276,316           $345,654
      Less accumulated amortization                  27,547                  -
                                              ----------------  ---------------
                                                   $248,769           $345,654
                                              ----------------  ---------------

Goodwill                                        $11,481,272        $11,481,272
    Less accumulated amortization                 3,276,167          2,817,314
                                              ----------------  ---------------
                                                 $8,205,105         $8,663,958
                                              ----------------  ---------------

Patent                                          $18,000,000        $18,000,000
     Less accumulated amortization                3,353,365          2,790,865
                                              ----------------  ---------------
                                                $14,646,635        $15,209,135
                                              ----------------  ---------------
Accrued expenses:
     Taxes payable                                 $444,469           $269,586
     Other accrued expenses                         933,444            805,563
                                              ----------------  ---------------
                                                 $1,377,913         $1,075,149
                                              ----------------  ---------------


NOTE 4 - SIGNIFICANT CONTRACTS

During the second quarter of 2001, the Company received $1 million in connection
with the  termination  of a license  agreement  with a  customer  of  Innovative
Communications  Technologies,  Inc. (ICTI). As this fee represented, in part, an
agreed-upon amount in lieu of future guaranteed  royalty payments  contractually
due under the  original  agreement,  the Company has  recorded the $1 million as
satellite transmission technology revenue in the second quarter.

On June 22, 2001,  ICTI entered into a new exclusive  license  agreement for the
use of technology. The initial term of the exclusive license is through November
2004.  Upon  execution  of the  agreement  in the second  quarter,  the  Company
received  a $1.5  million  cash  payment,  which  represents  the  first of four
guaranteed  royalty  payments  totaling  $3.5  million to be  recorded  over the
license term. The Company will recognize the guaranteed payments  systematically
over the license  period.  Revenue of $83,333 was recorded in the second quarter
and the balance received was recorded as deferred revenue.  Included in the long
term  contract  receivable  on the  consolidated  balance  sheet  is $2  million
representing the remaining guaranteed payments due under the license agreement.

NOTE 5 - NOTES PAYABLE

On  March  13,  2001 the  Company  signed a  Change  in Terms  Agreement  on the
Company's  line of credit,  increasing  the interest  rate to equal the lender's
prime rate,  currently at eight  percent,  plus one percent.  Another  Change in
Terms  Agreement was signed May 18, 2001  increasing  the interest rate to equal
the lender's prime rate plus two percent and changed the financial and operating
covenants  under the bank  debt.  At June 30,  2001 the  balance  on the line of
credit was  $1,750,000  and a term loan with the bank had been paid in full. The
Company  is  required  to  meet  certain  restrictive  financial  and  operating
covenants under the line of credit.  The Company was in compliance with the debt
covenants on June 30, 2001.  Pursuant to the Agreement,  the bank has prohibited
principal  payments totaling  approximately  $1,500,000 on notes payable,  which
were due over twelve  months  through  July 1, 2001 to the two former  owners of
Enerdyne Technologies, Inc. One former owner is a director of the Company.

NOTE 6 - GEOGRAPHIC AND BUSINESS SEGMENT INFORMATION

The Company operates three reportable business segments:  communications,  video
compression  and satellite  transmission  technology.  The Company's  reportable
segments  are  strategic  business  units  that  offer  different  products  and
services.  They are managed separately based on fundamental differences in their
operations.

The  communications  segment  consists of the  operations of Boatracs,  Boatracs
Gulfport   ("Gulfport"),   ARCOMS  Europe   ("Europe")  and  OceanTrac   Limited
("OceanTrac").  The communications  segment has exclusive distribution rights in
the  United  States  for  marine  application  of  the  OmniTRACS(R)  system  of
satellite-based  communication  and tracking  systems  manufactured  by QUALCOMM
Incorporated ("QUALCOMM"). In addition, the Company's wholly owned subsidiaries,
Europe  and  OceanTrac,  have  agreements  with  QUALCOMM's  authorized  service
providers in Europe and Canada for marine  distribution of OmniTRACS(R) in parts
of Europe and  Canada.  Gulfport  is a provider  of  software  applications  and
service  solutions  to  the  commercial  work  boat  and  petroleum  industries,
including customers of Boatracs.

The  video   compression   segment   consists  of  the  operations  of  Enerdyne
Technologies,  Inc.  ("Enerdyne")  which  the  Company  acquired  in July  1998.
Enerdyne is a provider of versatile,  high performance digital video compression
products and multiplexing equipment to government and commercial markets.

The satellite  transmission  technology  segment  consists of the  operations of
ICTI.  ICTI  is  engaged  in  designing  and  implementing  bandwidth  efficient
multimedia  satellite  networks and develops  customized  software  solutions to
manage and allocate available satellite  power/bandwidth resources to optimize a
satellite system's lifecycle costs.

Corporate overhead expenses have been allocated based on revenue percentages of
each segment to total revenues.

Information by business segment for the three months ended June 30, 2001 is set
forth below.

                       Commun-         Video        Satellite
                      ications      Compression     Technology      Consolidated
                      ------------- --------------  --------------  ------------
Revenues                $1,647,713        $404,790      $2,519,911    $4,572,414

Income (loss) from
operations                $299,157     $(1,196,517)       $674,513    $(222,847)

Interest expense, net
                           $15,984        $149,578         $24,550      $190,112
Depreciation and
amortization               $45,012        $388,288        $154,490      $587,790

Information by business segment for the six months ended June 30, 2001 is set
forth below.

                     Commun-         Video         Satellite
                    ications      Compression     Technology      Consolidated
                    ---------------------------- ---------------- --------------
Revenues              $3,381,820      $1,116,345     $3,171,145,      $7,669,310
Income (loss) from
operations              $518,713     $(1,667,910)       $(71,924)   $(1,221,121)
Interest expense,
 net                     $34,688        $307,363         $32,899        $374,950
Depreciation and
amortization            $107,907        $763,813        $315,380      $1,187,100

Total assets          $3,721,666     $20,332,032      $8,149,503     $32,203,201


Information  by business  segment  for the three  months  ended June 30, 2000 is
set forth  below.  The  segment  information  has been restated from the amounts
previously reported (see Note 1).

                    Commun-         Video       Satellite
                   ications      Compression    Technology         Consolidated
                  -------------- -------------- --------------    --------------
Revenues             $1,790,487      $1,009,807     $1,190,690      $3,990,984
Income (loss) from
operations             $136,647       $(744,861)     $(366,434)      $(974,648)
Interest expense,
 net                    $15,186        $182,337         $7,621        $205,144

Depreciation and
amortization            $70,823        $490,590       $148,975        $710,388


Information by business  segment for the six months ended June 30, 2000 is set
forth below.  The segment  information has been restated from the amounts
previously reported (see Note 1).

                    Commun-        Video        Satellite
                   ications      Compression     Technology       Consolidated
                   ------------- ------------  --------------  ---------------
Revenues             $3,630,908  $1,725,552      $2,211,468       $7,567,928
Income (loss)from
operations             $332,17  $(1,589,829)      $(668,622)     $(1,926,278)
Interest expense,
  net                   $70,733    $386,228         $44,191         $501,152

Depreciation and
amortization           $143,235    $976,620        $297,275       $1,417,130

Total assets         $3,199,451 $27,661,645      $6,473,086      $37,334,182


The  Company  has two  foreign  subsidiaries:  Europe and  OceanTrac.  Europe is
located in the Netherlands and provides  communication  services to the European
market.   OceanTrac  provides  communication  services  in  Eastern  Canada.  In
addition,  Enerdyne and ICTI have foreign  sales.  The following  tables present
revenues and long lived assets for each of the  geographical  areas in which the
Company operates:

                Three months ended 6/30/01         Three months ended 6/30/00
                                  Long                                  Long
               Revenues       Lived Assets      Revenues          Lived Assets


United States  $2,059,834    $25,632,262       $3,212,581         $31,727,900
International   2,512,580          3,875          778,403              32,941
            -------------    -----------    -------------       -------------
Total          $4,572,414    $25,636,137       $3,990,984         $31,760,841
            -------------    -----------   --------------      --------------

                         Six months ended      Six months ended 6/30/00
                                6/30/01
                             Revenues                  Revenues
  United States            $4,390,816                $5,918,869
  International             3,278,494                 1,649,059
                          -----------                 ---------
  Total                    $7,669,310                $7,567,928
                          -----------                 ---------


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS

Overview

The Company has three business segments:
         1.  Boatracs, the communications segment,
         2. Enerdyne Technologies, Inc. ("ENERDYNE"), the video compression
            segment, a wholly owned    subsidiary, and
         3. Innovative Communications Technologies, Inc. ("ICTI"), the
            satellite technology segment, a wholly owned subsidiary.

Statements  within  this  10-QSB  which  are  not  historical  facts,  including
statements  about  strategies and  expectations  for new and existing  products,
technologies,  and opportunities,  are  forward-looking  statements that involve
risks and  uncertainties.  The  Company  wishes to  caution  readers to the risk
factors inherent to the business  including,  but not limited to, the continuing
reliance  upon  QUALCOMM,  one of the major  suppliers of equipment  sold by the
Boatracs business segment,  reliance upon QUALCOMM's Network Management Facility
through which the Boatracs' business segment message transmissions are formatted
and processed,  the  development of more advanced  technology by competitors and
continuing  technological  innovation by the Company.  These and other risks are
more fully described in the Company's  Annual Report on Form 10-KSB for the year
ended December 31, 2000.

For the three months ended June 30, 2001 and 2000

Total  revenues for the quarter  ended June 30, 2001,  were  $4,572,414,  an
increase of $581,430 or 15% compared to total  revenues of $3,990,984 for the
quarter ended June 30, 2000.

Communications  revenues,  which  consist of revenues  from the sale of Boatracs
systems, software and data transmission and messaging, were $1,647,713 or 36% of
total revenues for the quarter ended June 30, 2001, a decrease of $142,774 or 8%
compared to $1,790,487  or 45% of total  revenues for the quarter ended June 30,
2000.  Revenues for the quarter  ended June 30, 2000 have been  restated for SAB
No. 101 (see Note 1). The decrease in communication revenues was caused by lower
system and  software  sales which were  partially  offset by an increase in data
transmission and messaging revenues.

Video compression revenues were $404,790 or 9% of total revenues for the quarter
ended June 30, 2001, a decrease of $605,017,  or 60%,  compared to $1,009,807 or
25% of total revenues in the prior comparable quarter. This was caused by delays
in the development of product software applications.

Revenues from satellite transmission  technology were $2,519,911 or 55% of total
revenues for the quarter  ended June 30, 2001 compared to revenues of $1,190,690
or 30% of total revenues in the second quarter of 2000. The increase in revenues
of $1,329,221 or 112% is due primarily to the license fee recorded in the second
quarter of 2001 of $1.0 million.

Communications  expenses were $697,747 or 42% of communications revenues for the
quarter ended June 30, 2001, a decrease of $89,289 or 11%,  compared to $787,036
which represented 44% of communications revenue in the comparable quarter of the
prior year.  Gross margin for  communications  increased 2% in the quarter ended
June 30,  2001 to 58% from 56% in the same  period of the  prior  year due to an
increase in the margins on the sale of  Boatracs  systems and data  transmission
and messaging, offset by a decline in the margin on software revenues.

Video compression expense was $115,306 or 28% of video compression  revenues for
the quarter  ended June 30,  2001,  a decrease  of  $146,212 or 56%  compared to
$261,518  or 26% of video  compression  revenues in the same period of the prior
year.  Gross  margin  declined 2% to 72% in the second  quarter  compared to the
prior year.

Satellite  transmission  technology  expenses  were $857,243 or 34% of satellite
transmission  technology  revenues  for the  quarter  ended  June 30,  2001,  an
increase of $57,814 or 7%, compared to $799,429 or 67% of satellite transmission
technology  revenues in the prior year  second  quarter.  The  increase in gross
margin of 33% to 66% from 33% in the  prior  year  relates  to  revenues  from a
license  assignment  fee  recorded in the second  quarter of 2001 which does not
have associated costs of good sold.

Selling,  general and  administrative  expenses were  $2,540,425 or 56% of total
revenues  for the quarter  ended June 30,  2001,  a decrease of $317,342 or 11%,
compared to  $2,857,767  or 72% of total  revenues in the prior year  comparable
quarter. Amortization expense decreased $98,350 to $522,780 due to an impairment
charge to  goodwill  in the  fourth  quarter  of 2000  related  to the  Enerdyne
acquisition, decreasing future amortization expense.

Research and development expenses were $584,540 or 13% of total revenues for the
quarter  ended June 30,  2001,  an  increase  of  $324,658  or 125%  compared to
research  and  development  expenses of $259,882 or 7% of total  revenues in the
prior  comparable  quarter.  The increase relates to an increase in research and
development projects, mainly in the video compression segment.

Interest  expense,  net was $190,112 for the second quarter of 2001 and $205,144
for the second quarter of 2000, a decrease of $15,032 or 7% due primarily to the
reduction of principal on the Company's term note with a bank.

The income tax  benefit  for the quarter  ended June 30,  2001 was  $90,603
compared  to an income tax  benefit of $320,574  the prior comparable quarter.

For the six months ended June 30, 2001 and 2000

Total  revenues  for the six months  ended June 30, 2001,  were  $7,669,310,  an
increase of $101,382 or 1% compared to total  revenues of $7,567,928 for the six
months ended June 30, 2000.

Communications  revenues,  which  consist of revenues  from the sale of Boatracs
systems, software and data transmission and messaging, were $3,381,820 or 44% of
total revenues for the six months ended June 30, 2001, a decrease of $249,088 or
7% compared to $3,630,908 or 48% of total revenues for the six months ended June
30, 2000. Revenues for the six months ended June 30, 2000 have been restated for
SAB No. 101 (see Note 1). The decrease in  communication  revenues was caused by
lower system and software sales,  which were partially  offset by an increase in
data transmission and messaging revenues.

Video compression  revenues were $1,116,345 or 15% of total revenues for the six
months  ended June 30,  2001,  a  decrease  of  $609,207,  or 35%,  compared  to
$1,725,552 or 23% of total  revenues in the prior  comparable  period.  This was
caused by delays in the development of product software applications.

Revenues from satellite transmission  technology were $3,171,145 or 41% of total
revenues  for the six  months  ended  June 30,  2001  compared  to  revenues  of
$2,211,468 or 29% of total  revenues in the  comparable  six months of 2000. The
increase  in  revenues  of  $959,677  or 43% is due  primarily  to license  fees
recorded in the second quarter of 2001 totaling $1.0 million.

Communications  expenses were $1,424,236 or 42% of  communications  revenues for
the six months ended June 30,  2001,  a decrease of $145,089 or 9%,  compared to
$1,569,325 which represented 43% of communications revenue in the comparable six
months of the prior year. Gross margin for communications  increased one percent
to 58% in the six months  ended  June 30,  2001 from 57% in the  comparable  six
months of the prior year,  reflecting a higher margin on Boatracs  system sales,
offset by a reduced margin on software revenue.

Video compression expense was $272,608 or 24% of video compression  revenues for
the six months  ended June 30,  2001,  a decrease of $144,477 or 35% compared to
$417,085  or 24% of video  compression  revenues in the same period of the prior
year. Gross margin remained  constant at 76% in the first six months compared to
the same comparable period in the prior year.

Satellite  transmission  technology expenses were $1,268,552 or 40% of satellite
transmission  technology  revenues  for the six months  ended June 30,  2001,  a
decrease  of  $167,125  or  12%,  compared  to  $1,435,677  or 65% of  satellite
transmission  technology  revenues in the prior year six months. The increase in
gross  margin  of 25% to 60% from 35% in the prior  year  relates  primarily  to
revenues  from  license  fees in the  second  quarter  of 2001 which do not have
associated costs.

Selling,  general and  administrative  expenses were  $5,153,104 or 60% of total
revenues  for the six months  ended June 30, 2001, a decrease of $405,848 or 7%,
compared to $5,558,952 or 73% of total revenues in the prior comparable  period.
Amortization  expense  decreased  $193,361 to  $1,048,900  due to an  impairment
charge to  goodwill  in the  fourth  quarter  of 2000  related  to the  Enerdyne
acquisition, decreasing future amortization expense.

Research and development expenses were $771,931 or 10% of total revenues for the
six months  ended June 30,  2001,  an increase  of  $258,764 or 50%  compared to
research  and  development  expenses of $513,167 or 7% of total  revenues in the
prior comparable six months. The decrease relates to an increase in research and
development projects mainly at the video compression segment.

Interest expense, net was $374,950 for the first six months of 2001 and $501,152
for the first six months of 2000, a decrease of $126,202 or 25% due primarily to
the reduction of principal on the Company's term note with a bank.

The  income tax  benefit  for the six months  ended June 30,  2001 was  $350,178
compared to income tax benefit of $596,302 in the prior comparable period.

Liquidity and Capital Resources

The  Company's  cash  balance at June 30,  2001 was  $711,229,  an  increase  of
$709,140  compared to the December 31, 2000 cash balance of $2,089.  At June 30,
2001, working capital was negative  $2,123,415,  a decrease of $290,948 from the
negative  working capital of $2,414,363 at December 31, 2000. Cash of $3,271,610
was  provided by  operating  activities,  cash of $37,109 was used in  investing
activities and cash of $2,525,361 was used in financing  activities in the first
six months of 2001. During the quarter ended June 30, 2001, the Company received
total payments of $2.5 million related to two different license  agreements.  Of
this payment,  $1.8 million was used to pay off its bank term note. In addition,
the  Company  received  payment  on a license  agreement  in the  amount of $1.2
million.

On March 13, 2001, the Company signed a Change in Terms Agreement increasing the
interest rate to equal the lender's prime rate, currently at eight percent, plus
one percent.  The Company signed an additional Change in Terms Agreement,  dated
May 18, 2001  increasing the interest rate to equal the lender's prime rate plus
two percent,  changing the  financial  and  operating  covenants  and  requiring
certain mandatory  prepayments on the Company's bank debt. At June 30, 2001, the
term loan with the bank had been  paid in full and  $1,750,000  was drawn on the
line of credit.  The Company is required to meet certain  restrictive  financial
and operating  covenants under the bank debt. The Company was in compliance with
the debt covenants on June 30, 2001.

The Company anticipates making capital  expenditures of at least $300,000 during
2001, excluding assets which may be acquired in business combinations.  To date,
the Company has financed its working capital needs through  private loans,  bank
debt,  the  issuance  of common  and  preferred  stock and cash  generated  from
operations.  Any expansion of the Company's business may require a commitment of
substantial  funds.  To the extent that the net  proceeds  of private  financing
activities and internally generated funds are insufficient to fund the Company's
operating  requirements,  it may be necessary for the Company to seek additional
funding, either through collaborative  arrangements or through public or private
financing. There can be no assurance that additional financing will be available
on  acceptable  terms or at all.  When  additional  funds are  raised by issuing
equity  securities,  dilution to the existing  shareholders  result. If adequate
funds are not available in the future, the Company's business would be adversely
affected.

The report of independent  auditors on the Company's December 31, 2000 financial
statements  includes an explanatory  paragraph  indicating  there is substantial
doubt about the Company's  ability to continue as a going  concern.  The Company
believes that going forward, it will be able to continue as a going concern. The
Company  reported an increase in revenues  and earnings for the six months ended
June 30, 2001 and paid off the term debt with its bank. In addition, the Company
received total  payments of $2.5 million in the second  quarter  relating to two
different  license  agreements.  This  payment  resulted  in an increase to cash
provided by operating activities.  In August, the Company negotiated an increase
in its line of credit to $2,000,000  and a reduction in the interest on the line
of credit to lender's prime rate plus one and one half percent.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

The Company is not aware of any current or pending legal proceedings to which it
is a party.

ITEM 2. CHANGES IN SECURITIES

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

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

On May 16, 2001, the Company held its Annual Meeting of Shareholders at the
corporate office of Enerdyne Technologies, Inc. ("Enerdyne"), a wholly owned
subsidiary, located at 1935 Cordell Court, El Cajon, California.

The following directors were elected:
                                         For                     Against
Michael Silverman                    21,166,436                   12,455
Scott Boden                          20,639,930                  275,708
Mohammed Abutaleb                    21,166,617                   12,455
John Major                           21,161,798                   17,274
Andrew Werth                         21,162,798                   16,274

There were no other proposals for shareholder vote at the Annual Meeting.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

On August 1, 2001, the Company filed with the Securities and Exchange Commission
a Form 8-K indicating that the Company had dismissed its current certifying
accountants and engaged KPMG LLP.


<PAGE>


                                                              SIGNATURES


In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its
behalf by the Undersigned, thereunto duly authorized.



                                  ADVANCED REMOTE COMMUNICATION SOLUTIONS, Inc.
                                  Registrant


May 13,  2002                  /s/ MICHAEL L. SILVERMAN
Date                              MICHAEL SILVERMAN
                                  PRESIDENT, CHIEF EXECUTIVE OFFICER CHAIRMAN
                                  OF THE BOARD


May 13, 2002                  /s/  DEAN B. KERNUS
Date                             CHIEF FINANCIAL OFFICER