U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

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

                For the quarterly period ended September 30, 2002

            |_| 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)

                     1935 Cordell Court, El Cajon, CA 92020
                    (Address of Principal Executive Offices)

                                 (619) 438-6000
                           (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:  21,231,627 shares of common stock as
of January 27, 2003.

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

<TABLE>
<CAPTION>


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

                                                      Three Months Ended September 30,        Nine Months Ended September 30,
                                                          2002               2001               2002             2001
                                                       (Unaudited)      (Unaudited)          (Unaudited)      (Unaudited)
REVENUES:                                                               (As restated                        (As restated
                                                                         see Note 1)                         see Note 1)
<S>                                                       <C>               <C>                  <C>               <C>

Communications                                          $ 1,634,301         $ 1,637,057       $ 4,924,604       $ 5,081,656
Video compression                                           727,276             707,546         2,635,589         1,823,891
Satellite transmission technology                         2,123,446           1,652,113         3,933,391         4,823,257
                                                      --------------    ----------------   ---------------  ----------------
TOTAL REVENUES                                            4,485,023           3,996,716        11,493,584        11,728,804
                                                      --------------    ----------------   ---------------  ----------------

COSTS AND EXPENSES:
Communications                                              748,461             650,326         2,188,292         2,137,341
Video compression                                           165,967             181,047           917,669           453,654
Satellite transmission technology                         1,727,011             904,596         2,612,788         2,173,148
                                                      --------------    ----------------   ---------------  ----------------
Gross profit, excluding depreciation and amortization     1,843,584           2,260,747         5,774,835         6,964,661
Selling, general and administrative                       3,099,668           2,515,591        10,491,559         7,668,696
Research and development                                     64,350             336,893           500,070         1,108,823
Asset impairment                                                  -                   -        11,821,590                 -
                                                      --------------    ----------------   ---------------  ----------------
LOSS FROM OPERATIONS                                     (1,320,434)           (591,737)      (17,038,384)       (1,812,858)
Interest expense - net                                      143,131             103,393           428,308           478,343
                                                      --------------    ----------------   ---------------  ----------------
LOSS BEFORE TAXES                                        (1,463,565)           (695,130)      (17,466,692)       (2,291,201)
Income tax (expense) benefit                                (99,041)            152,512         3,787,561           502,690
                                                      --------------    ----------------   ---------------  ----------------
NET LOSS                                                 (1,562,606)           (542,618)      (13,679,131)       (1,788,511)
Dividend requirement of Series C Preferred Stock           (178,594)                  -          (239,939)                -
                                                      --------------    ----------------   ---------------  ----------------
LOSS APPLICABLE TO COMMON STOCKHOLDERS                  $(1,741,200)          $(542,618)     $(13,919,070)      $(1,788,511)
                                                      ==============    ================   ===============  ================

BASIC AND DILUTED LOSS PER SHARE:                           $ (0.08)             $(0.03)          $ (0.66)          $ (0.08)


WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING, BASIC AND DILUTED                         21,231,627          21,198,637        21,235,803        21,135,126
Dilutive effect of:
Employee stock options                                      -                  -                 -                 -
Warrants                                                    -                  -                 -                 -
Convertible preferred stock                                 -                  -                 -                 -
Weighted average of common shares outstanding,
  assuming dilution                                      21,231,627          21,198,637        21,235,803        21,135,126
<FN>

See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

ADVANCED REMOTE COMMUNICATION SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS

                                                                  September 30,           December 31,
                                                                ------------------      -----------------
ASSETS                                                                2002                    2001
                                                                   (Unaudited)
<S>                                                                    <C>                     <C>
CURRENT ASSETS:
  Cash                                                           $    356,614            $   268,731
  Accounts receivable - net                                         2,713,720              3,810,809
  Inventories - net                                                 1,007,141              1,572,944
  Prepaid expenses and other assets                                   508,000                541,962
                                                            ------------------      -----------------
        Total current assets                                        4,585,475              6,194,446

DEPOSITS & OTHER ASSETS                                               258,950                289,849
PROPERTY - net                                                        538,861                487,402
CAPITALIZED SOFTWARE - net                                             91,648                234,871
GOODWILL - net                                                      4,890,083              5,434,138
PATENT - net                                                        1,571,571             13,607,983
                                                            ------------------      -----------------
TOTAL                                                            $ 11,936,588           $ 26,248,689
                                                            ==================      =================

LIABILITIES AND STOCKHOLDERS' (DEFICIT)/EQUITY

CURRENT LIABILITIES:
  Accounts payable                                               $  2,406,138           $  2,746,200
  Accrued expenses                                                  2,810,330              1,015,982
  Deferred revenue                                                  1,628,996              2,052,838
  Current portion of notes payable                                  6,313,552              6,685,065
                                                            ------------------      -----------------
        Total current liabilities                                  13,159,016             12,500,085

DEFERRED REVENUE                                                      879,444              1,570,613
DEFERRED TAX LIABILITY                                                                     4,364,333
COMMITMENTS AND CONTINGENCIES (Note 5)

STOCKHOLDERS' (DEFICIT)/EQUITY:
Preferred Stock, no par value, 1,000,000 shares authorized:
  Convertible preferred series C stock; Series C-1, 15,000
  shares authorized,  6,667 shares issued; Series C-2, 8,000
  shares authorized, 4,000 shares issued; Series C-3, 2,000
  shares authorized,  1,059.19 shares issued.
  Liquidation preference: $300 per share series C-1, $500
  per share series C-2 and $3,000 per share series C-3              6,828,668                      -
  Convertible preferred series B stock, 31.25 shares issued,
    liquidation preference $10,000 per share.                         312,500              3,512,500
  Common stock, no par value; 100,000,000 shares authorized,
    21,231,627 and 21,201,627 shares issued and outstanding
    at 2002 and 2001, respectively                                 22,655,466             22,280,750
  Accumulated deficit                                             (31,898,506)           (17,979,592)
                                                            ------------------      -----------------
        Total stockholders' (deficit)/equity                       (2,101,872)             7,813,658
                                                            ------------------      -----------------
TOTAL                                                             $ 11,936,588          $ 26,248,689
                                                            ==================      =================
<FN>

See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>

<TABLE>
<CAPTION>


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

                                                           Nine months ended September 30,
                                                              2002                  2001
                                                          (Unaudited)           (Unaudited)
                                                                                (As restated
                                                                                 see Note 1)
<S>                                                           <C>                    <C>
Operating activities:
Net loss                                                    $(13,679,131)         $ (1,788,511)
  Adjustments to reconcile net loss
   to net cash provided by (used in) operating activities:
    Asset impairment                                          11,821,590                     -
    Write off of capitalized software, net                       105,153                     -
    Deferred tax                                              (4,364,333)             (329,969)
    Depreciation and amortization                              1,147,560             1,802,064
    Issuance of common stock to vendor                             9,000                     -
    Adjustment to stock options and warrants                     365,716                     -
Changes in assets and liabilities:
    Restricted cash                                                    -               (78,775)
    Deposits and other assets                                     10,064                     -
    Accounts receivable, net                                   1,097,089               133,705
    Inventories, net                                             272,405              (119,525)
    Prepaid expenses and other assets                             33,962              (557,234)
    Deferred revenue                                          (1,115,011)            1,889,354
    Accounts payable and accrued expenses                      1,738,795             1,655,214
                                                        -----------------     -----------------
Net cash (used in) provided by operating activities           (2,557,141)            2,606,323
                                                        -----------------     -----------------

Investing activities:
   Capitalized software                                                -                 20,286
   Capital expenditures                                          (87,839)             (148,268)
                                                        -----------------     -----------------
Net cash used in investing activities                            (87,839)             (127,982)
                                                        -----------------     -----------------

Financing activities:
  Proceeds from line of credit                                         -               450,000
  Payments on line of credit                                    (750,000)             (150,000)
  Issuance of series C preferred stock, net                    3,628,668                     -
  Issuance of common shares, net                                       -                10,000
  Additions to notes payable                                      214,203                    -
  Principal payments on notes payable                           (360,008)           (2,579,187)
                                                        -----------------     -----------------
Net cash provided by (used in) financing activities            2,732,863            (2,269,187)
                                                        -----------------     -----------------

Net increase in cash                                              87,883               209,154
Cash at beginning of period                                      268,731                 2,089
                                                        -----------------     -----------------
Cash at end of period                                         $  356,614            $  211,243
                                                        =================     =================

SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Reclassification of accrued interest to note payable           $ 399,446
Increase in accounts receivable due to deferred                                     $2,000,000
revenue
Reclassification of demo equipment from inventory
to property - net                                              $ 293,398
Note payable in exchange for insurance premium                 $ 125,000
<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 nine months ended
September  30, 2002 and 2001 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 nine  months  ended  September  30,  2002  are not  necessarily
indicative of the results that may be expected for any other  interim  period or
for the year ending December 31, 2002.

Restatement  - ARCOMS'  quarterly  report on Form  10-QSB for the three and nine
month period ended  September  30, 2001 was amended to restate  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 September 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  Financial  Accounting  Standards  Board  ("FASB")
Statement of Financial  Accounting  Standards ("SFAS") No. 86.  Accordingly,  we
restated our financial  statements for this quarter to reflect the  presentation
of such costs as  research  and  development.  The  restatement  resulted  in an
increase in research and  development  expenses of $294,097 and $968,470 for the
three and nine months ended September 30, 2001, respectively.

In addition, subsequent to the issuance of our consolidated financial statements
for the quarter ended  September 30, 2001, we determined that it would have been
preferable  to  recognize a one time  license  fee ratably  over the term of the
agreement based on guidance provided by Staff Accounting Bulletin No. 101 issued
by the U.S.  Securities  and Exchange  Commission  ("SAB No. 101"),  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 an increase to satellite
transmission technology revenue of $200,000 for the three months ended September
30, 2001 and a decrease to satellite transmission technology revenue of $733,333
for the nine months ended September 30, 2001.

Business Conditions - Management's Plan to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared on a going
concern basis,  which contemplates the realization of assets and satisfaction of
liabilities  in the ordinary  course of business.  As shown in the  accompanying
consolidated   financial  statements,   the  Company  has  incurred  net  losses
applicable to common  shareholders of $1,741,200 for the quarter ended September
30, 2002 and net losses applicable to common shareholders of $13,919,070 for the
nine  months  ended  September  30,  2002 and  additionally  had net  losses  of
$4,850,555,  $9,111,425,  and  $926,288  for the years ended  December 31, 2001,
2000, and 1999,  respectively.  The loss for the nine months ended September 30,
2002 includes a non-cash  impairment  charge of $11,821,590  related to a patent
recorded  as  a  result  of  the  acquisition  of  Enerdyne  Technologies,  Inc.
("Enerdyne") and a goodwill impairment charge at Boatracs Gulfport  ("Gulfport")
and  OceanTrac  Limited  ("OceanTrac").  The years ended  December  31, 2001 and
December  31,  2000  included  non-cash  impairment  charges of  $2,300,000  and
$6,000,000,  respectively,  related  to  goodwill  recorded  as a result  of the
acquisition of Enerdyne.  In addition,  during 2001, 2000, and 1999, the Company
undertook significant research and development efforts and refined its marketing
and manufacturing processes,  all of which contributed  significantly to its net
losses for those years.  At September 30, 2002,  the Company had an  accumulated
deficit of $31,898,506  and at December 31, 2001, the Company had an accumulated
deficit of $17,979,592. Working capital was negative $8,573,541 at September 30,
2002 and negative  $6,305,639  at December 31, 2001.  At September  30, 2002 and
December  31,  2001 the Company had  classified  borrowings  from the sellers of
Enerdyne as a current  liability as the Company was not in  compliance  with its
debt covenants.

As more fully discussed below under  "Recapitalization  Arrangement," on May 31,
2002,  the Company  sold  shares of its  preferred  stock for gross  proceeds of
$4,000,000 and extended the maturity dates of its debt  agreements with its bank
and the two former  owners of Enerdyne.  In addition,  during the quarter  ended
September 30, 2002, the Company reduced its work force by 17% and  approximately
37% of the  remaining  workforce  had their  salaries  reduced by 30%. The chief
executive  officer's  salary was reduced by 50%.  However,  the Company does not
have sufficient cash available to fund operations for the next twelve months. In
order to continue as a going concern,  the Company must raise additional  funds,
including   through   possible  sale  of  assets  or  certain   operations   and
significantly  reduce the use of cash in operations..  There can be no assurance
that additional funds will be available on acceptable  terms, if at all, or that
the Company will be able to reduce use of cash in  operations to the point where
internal cash flow is sufficient to fund operations.  (See Item 2,  Management's
Discussion  and  Analysis of  Financial  Condition  and Results of  Operations -
Liquidity and Capital Resources.)

Recapitalization Arrangement

On May 31, 2002,  the Company  entered into an  agreement  (the "Stock  Purchase
Agreement")  with two  private  companies  (the  "Purchasers").  Under the Stock
Purchase Agreement,  the Company sold an aggregate of 10,667 shares of two newly
designated classes of the Company's preferred stock (series C-1 and series C-2),
having a total aggregate purchase price of $4,000,000 to the Purchasers pursuant
to a private  placement  exempt from  registration  under the  Securities Act of
1933.  As  part  of  the  total  purchase  price,   $500,000  was  paid  through
cancellation/conversion  of a  promissory  note that was entered into on May 16,
2002.  In addition,  the Company  offered all  existing  holders of its Series B
Preferred  Stock to exchange such shares for shares of a third newly  designated
class of its preferred  stock (series C-3) in a Tender Offer,  which closed July
26, 2002. Of the original 351.25 shares of Series B issued, 320 shares converted
to Series  C-3.  The  holders of the series C  preferred  stock are  entitled to
receive  cumulative  dividends at the rate of 10% per annum on each  outstanding
share of series C preferred stock  semi-annually  payable in either a like class
of Series C or cash. The series C preferred  ranks senior and prior to all other
outstanding  stock,  including  series B  preferred.  Each  share  of the  newly
designated  classes of preferred stock is convertible  into common stock at $.30
per share for  series  C-1  preferred  stock,  $.50 per  share  for  series  C-2
preferred  stock and $3 per  share for  series  C-3  preferred  stock and may be
adjusted for certain recapitalization events.

As part of the transaction  described above, the Chairman of the Company's Board
of  Directors  resigned  his  chairmanship  as well  as the  position  as  chief
executive  officer and president,  and four of the remaining five members of the
Company's Board of Directors resigned their  directorships.  Three new directors
were  appointed  to the  Company's  Board  of  Directors,  one of whom  was also
appointed Chairman and Chief Executive Officer. Concurrent with the execution of
the Stock Purchase Agreement, the Company's debt agreement with its bank as well
as its debt agreements with the two former owners of Enerdyne Technologies, Inc.
were  modified  to  extend  the  maturity  dates of the  loans  and to waive all
violations of the relative covenant  requirements  through the date of the Stock
Purchase Agreement (see Note 4).

In conjunction  with the Stock Purchase  Agreement,  the Company entered into an
employment  contract  with the  Chief  Executive  Officer  and  granted  him non
statutory  stock options to purchase  3,000,000  shares of the Company's  common
stock.

The  Stock  Purchase   Agreement  grants  the  investors  the  exclusive  right,
exercisable  by delivery of written notice to the Company during the period from
August 2, 2002  through  June 1, 2003 to  purchase  the assets of the  Company's
Boatracs division at a purchase price as defined in the agreement.  In the event
that the investors exercise their option to purchase Boatracs' assets,  they may
tender the Series C Preferred  Stock toward the purchase  price,  which shall be
valued at their  original  purchase  price plus  accrued  but  unpaid  dividends
thereon.

In an unrelated  transaction,  in September  2002 the  Purchasers  purchased the
Company's line of credit from the original issuing bank. (See Note 4.)

Settlement with QUALCOMM

On June 3, 2002, the Company executed an amendment to a license and distribution
agreement  ("the  Agreement")  the  Company  has  with  QUALCOMM,   Incorporated
("QUALCOMM")  and  paid  QUALCOMM   $500,000  in  order  to  reinstate   ARCOMS'
exclusivity  rights under the Agreement.  The exclusivity was reinstated through
September 30, 2002. In accordance with the amendment,  ARCOMS released  QUALCOMM
and waived any existing or future claims,  liabilities,  or arguments contesting
the number of units to be  purchased to meet the minimum  purchase  requirements
for maintaining exclusivity under the Agreement for all periods prior to October
1, 2003. The amendment also defined the revised  minimum  purchase  requirements
under  the   Agreement.   In  accordance   with  SFAS  No.  5  "Accounting   for
Contingencies,"  the Company  recorded  the payment of $500,000 to QUALCOMM as a
contingent  liability  as of March 31,  2002 with a  corresponding  increase  to
selling, general and administrative expenses for the quarter then ended.

Subsequent to June 2002, the Company became  delinquent on its accounts  payable
to QUALCOMM.  In December 2002,  QUALCOMM  informed the Company of its intent to
terminate  the  Agreement  unless the Company  became  current on its  financial
obligations  under  the  Agreement.  In  January  2003,  the  Company  reached a
settlement  with  QUALCOMM,  which  requires  the Company to pay its  delinquent
accounts  payable balance of  approximately  $300,000 at the rate of $35,000 per
month, plus interest of 1.5% per month on the delinquent balance,  and to remain
current on all of its other  obligations.  QUALCOMM  has  reserved  the right to
terminate the  agreement  without  further  notice in the event that the Company
does not comply with the terms of the settlement.

Reclassification  - Certain balances in the prior quarter have been reclassified
to conform to the presentation adopted in the current quarter.

Use of estimates - In preparing the financial statements, we have made estimates
and assumptions that affect the following:
                         Reported  amounts of assets and liabilities at the date
                         of the financial  statements;  Disclosure of contingent
                         assets  and  liabilities  at the date of the  financial
                         statements;   and  Reported  amounts  of  revenues  and
                         expenses during the period.
Actual amounts could differ from those estimates.

NOTE 2 - NEW ACCOUNTING PRONOUNCEMENTS

In  October  2002,  the FASB  issued  SFAS No.  147,  "Acquisitions  of  Certain
Financial Institutions." SFAS No. 147 removes the requirement in SFAS No. 72 and
Interpretation 9 thereto, to recognize and amortize any excess of the fair value
of  liabilities  assumed  over  the  fair  value of  tangible  and  identifiable
intangible assets acquired as an unidentifiable intangible asset. This statement
requires that those  transactions  be accounted for in accordance  with SFAS No.
141,  "Business  Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." In addition,  this statement  amends SFAS No. 144,  "Accounting for the
Impairment  or Disposal of  Long-Lived  Assets,"  to include  certain  financial
institution-related  intangible assets.  This statement is not applicable to the
Company.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal Activities." This statement addresses financial accounting
and  reporting  for  costs  associated  with  exit or  disposal  activities  and
nullifies  Emerging  Issues  Task  Force  ("EITF")  Issue No.  94-3,  "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)."  This statement
requires  that a  liability  for a cost  associated  with an  exit  or  disposal
activity be recognized when the liability is incurred.  Under EITF Issue 94-3, a
liability  for an exit  cost,  as  defined,  was  recognized  at the  date of an
entity's  commitment  to an exit plan.  The  provisions  of this  statement  are
effective for exit or disposal  activities that are initiated after December 31,
2002 with earlier application encouraged.

In April 2002, the FASB issued SFAS No. 145,  "Rescission of FASB Statements No.
4, 44, and 64,  Amendment of FASB Statement No. 13, and Technical  Corrections."
SFAS  No.  145  updates,   clarifies,   and   simplifies   existing   accounting
pronouncements. This statement rescinds SFAS No. 4, which required all gains and
losses from extinguishment of debt to be aggregated and, if material, classified
as an  extraordinary  item, net of related income tax effect.  As a result,  the
criteria in Accounting  Principles  Board Opinion No. 30 ("APB No. 30") will now
be used to classify  those gains and losses.  SFAS No. 64 amended SFAS No. 4 and
is no longer  necessary as SFAS No. 4 has been  rescinded.  SFAS No. 44 has been
rescinded  as it is no longer  necessary.  SFAS No.  145  amends  SFAS No. 13 to
require that certain lease  modifications  that have economic effects similar to
sale-leaseback  transactions  be accounted  for in the same manner as sale-lease
transactions.  This  statement  also makes  technical  corrections  to  existing
pronouncements.  While those  corrections are not substantive in nature, in some
instances, they may change accounting practice. This statement is not applicable
to the Company.

Effective  January  1,  2002,  the  Company  adopted  SFAS  No.  141,  "Business
Combinations,"  SFAS No. 142, "Goodwill and Intangible Assets" and SFAS No. 144,
"Accounting  for the Impairment or Disposal of Long-Lived  Assets." SFAS No. 142
sets forth the accounting for goodwill and intangible  assets already  recorded.
Commencing  January 1, 2002,  goodwill is no longer being amortized.  Factors we
consider important which could trigger an impairment review include  significant
under-performance  relative to expected historical or projected future operating
results,  significant changes in the manner of our use of the acquired assets or
the strategy for our overall business and significant  negative economic trends.
During the second quarter,  the Company employed outside  consultants to perform
an independent  valuation  analysis of the Company's total invested capital.  In
the analysis of the Company,  the consultants  utilized valuation techniques and
methodologies deemed appropriate under the circumstances.  The first step of the
valuation  test  compared  the fair value of a reporting  unit with its carrying
amount to identify  potential  impairment.  If the carrying value of a reporting
unit  exceeds its fair value,  the second step of the test is then  performed to
measure the amount of any impairment.  The fair value of the Company's patent at
Enerdyne  was  determined  utilizing an income  approach  based on a relief from
royalty method of valuation.  It was concluded that the fair value of the patent
was reasonably stated in the amount of $800,000,  net of related deferred taxes.
Accordingly,  the patent was written  down to this value,  resulting in an asset
impairment  charge of $11,277,535  in the quarter ended June 30, 2002.  Goodwill
was also evaluated and the Company recorded an impairment  charge to goodwill at
Boatracs  Gulfport and Canada in the aggregate amount of $544,055 in the quarter
ended June 30, 2002 after  evaluating  the current  technology  at Gulfport  and
projected future sales at both locations. With the adoption of SFAS No. 142, the
Company  reassessed  the useful lives and residual  values of all other acquired
intangible  assets to make any necessary  amortization  period  adjustments.  No
amortization period adjustments were necessary.

                                             As of September 30, 2002
                                Gross Carrying Amount   Accumulated Amortization
Amortized Intangible Assets
      Patent                           $1,633,323            $     1,752

      Non-compete Agreements              125,000                 87,970
                                        ---------             ----------
      TOTAL                            $1,758,323            $   149,722
                                        =========             ==========
Unamortized Intangible Asset
      Goodwill                         $8,173,495            $ 3,283,412
                                        =========             ==========
                Aggregate Amortization Expense:
                For the quarter ended September 30, 2002         $68,776


           Estimated Amortization Expense:
           For year ending December 31, 2002         $948,420
           For year ending December 31, 2003         $205,560
           For year ending December 31, 2004         $180,085
           For year ending December 31, 2005         $177,780
           For year ending December 31, 2006         $177,780


The following  table  reflects the  reconciliation  of reported net loss and net
loss  per  share  to  the  amounts   adjusted  for  the  exclusion  of  goodwill
amortization (in thousands):
<TABLE>
<CAPTION>

                                           Three Months Ended September 30,       Nine Months Ended September 30,
                                                 2002                2001               2002             2001
<S>                                              <C>                 <C>                <C>              <C>

 Loss applicable to common                    $(1,741)              $(543)           $(13,919)        $(1,789)
 shareholders
 Add Back: Goodwill Amortization                    0                 222                   0             667
                                               ------                ----              ------           -----
 Adjusted Net Loss                            $(1,741)              $(321)           $(13,919)        $(1,122)
                                               ======                ====              ======           =====

 Basic and Diluted Loss Per Share:              $(.08)              $(.03)             $(.66)           $(.08)
 Add Back:  Goodwill Amortization                   0                 .01                  0              .03
                                               ------                ----              ------           -----
 Adjusted Net Loss                              $(.08)              $(.02)             $(.66)           $(.05)
                                               ======                ====              ======           =====
</TABLE>

NOTE 3 - BALANCE SHEET DETAILS

                                                 9/30/2002           12/31/2001
                                              --------------      --------------
Accounts receivable                              $3,037,461          $3,936,044
   Less allowance for doubtful accounts            (323,741)           (125,235)
                                                  ---------          ----------
                                                 $2,713,720          $3,810,809
                                                  =========          ==========
Inventory:
     Raw materials                                 $886,766            $927,575
     Work in progress                                41,750             270,242
     Finished goods                                 236,863             463,186
                                                  ---------           ---------
                                                 $1,165,379          $1,661,003
    Less allowance for obsolete inventory          (158,238)            (88,059)
                                                  ---------           ---------
                                                 $1,007,141          $1,572,944
                                                  =========           =========
Property:
    Computers and equipment                      $1,738,853          $1,357,615
    Furniture and fixtures                          219,953             219,953
    Leasehold improvements                           84,531              84,531
                                                  ---------           ---------
                                                  2,043,337           1,662,099
        Less accumulated depreciation            (1,504,476)         (1,174,697)
                                                  ---------           ---------
                                                 $  538,861          $  487,402
                                                  =========           =========

Goodwill                                         $8,173,495          $9,102,022
    Less accumulated amortization                (3,283,412)         (3,667,884)
                                                  ---------           ---------
                                                 $4,890,083          $5,434,138
                                                  =========           =========

Patent                                           $1,633,323         $18,299,990
     Less accumulated amortization                  (61,752)         (4,692,000)
                                                  ---------          ----------
                                                 $1,571,571         $13,607,983
                                                  =========          ==========
NOTE 4 - LINE OF CREDIT AND NOTES PAYABLE

In September  2002, the  Purchasers  purchased the Company's line of credit from
the original  issuing bank. The Company is required to meet certain  restrictive
financial  and  operating  covenants  under the line of  credit.  Under the Loan
Modification  Agreement (see Note 1), the bank replaced  certain of the existing
covenants  with new  covenants.  At  September  30,  2002 the Company was not in
compliance  with the new covenants.  The interest rate at September 30, 2002 was
6.5% and the balance on the line of credit was $1,500,000.

The Loan  Modification  Agreement  prohibits  the Company from making  principal
payments on notes  payable to the two former  owners of  Enerdyne  Technologies,
Inc.  and has further  prohibited  making any future  principal  payments on the
notes until the balance of the line of credit has been fully paid.  The maturity
dates  of the  notes  have  been  extended  through  January  1,  2004,  and the
note-holders  permanently waived all events of default through May 29, 2002. The
balance of the loans at September 30, 2002 was approximately $4,752,000.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

In October 2001, the Company received  approximately  $1.4 million satisfying in
full an obligation to be paid future  guaranteed  royalty  payments  totaling $2
million.  The  future  guaranteed  royalty  payments  had been due to be paid at
specified  dates in 2003 and 2004.  The $1.4 million  received may be applied by
the payer against any royalties or certain  purchases  owed to the Company up to
the original amount of future  guaranteed  royalty payments of $2 million though
November  2004,  adjusted for interest at 15 percent per annum.  The Company has
not accrued for this potential  contingency  and does not believe it is probable
that the payment will be applied to royalties or purchases in the future.

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,  ARCOMS Europe and OceanTrac Limited . 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.  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 September 30, 2002 is
set forth below.

<TABLE>
<CAPTION>

                            Commun-               Video                Satellite
                           Ications            Compression            Technology            Consolidated
                        ----------------     ----------------      ------------------      ---------------
<S>                           <C>                  <C>                    <C>                  <C>

 Revenues                   $1,634,301            $727,276            $2,123,446             $4,485,023
 (Loss) from
 operations                  $(101,876)          $(724,816)            $(493,742)           $(1,320,434)
 Interest expense, net         $10,898            $118,737               $13,496               $143,131
 Depreciation and
 amortization                  $24,339             $89,677               $26,524               $140,540
</TABLE>

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

<TABLE>
<CAPTION>
                            Commun-               Video               Satellite
                            ications           Compression           Technology            Consolidated
                       ----------------     ----------------     ------------------        -------------
<S>                           <C>                   <C>                    <C>                 <C>

Revenues                    $1,637,057            $707,546            $1,652,113             $3,996,716
Income (loss) from
operations                    $313,032           $(775,659)            $(129,110)             $(591,737)
Interest expense, net          $10,365             $82,526               $10,502               $103,393
Depreciation and
amortization                   $53,160            $396,188              $153,242               $602,590

</TABLE>

Information by business  segment for the nine months ended September 30, 2002 is
set forth below.

<TABLE>
<CAPTION>
                           Commun-               Video               Satellite
                          Ications            Compression           Technology            Consolidated
                       ----------------     ----------------     ------------------       -------------
<S>                          <C>                  <C>                    <C>                   <C>

Revenues                    $4,924,604          $2,635,589            $3,933,391           $11,493,584
(Loss) from
operations                   $(430,465)        $(3,255,430)          $(1,530,899)          $(5,216,794)
(excluding asset
Impairment)
Asset impairment              $544,055         $11,277,535                     0           $11,821,590
Interest expense, net          $44,891            $348,230               $35,187              $428,308
Depreciation and
amortization                   $78,430            $991,319               $77,836            $1,147,585
Total assets                $1,438,128          $3,753,893            $6,744,567           $11,936,588
</TABLE>


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

<TABLE>
<CAPTION>
                           Commun-               Video               Satellite
                          Ications            Compression           Technology            Consolidated
                       ----------------     ----------------     ------------------       ------------
<S>                            <C>                <C>                  <C>                   <C>

Revenues                    $5,081,656          $1,823,891            $4,823,257           $11,728,804
Income (loss) from
operations                    $833,882         $(2,445,560)            $(201,180)          $(1,812,858)
Interest expense, net          $44,697            $390,221               $43,425              $478,343
Depreciation and
amortization                  $161,975          $1,172,669              $467,420            $1,802,064
Total assets                $2,547,468         $20,283,121            $9,219,961           $32,050,550
</TABLE>


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.  The
financial  position and results of  operations of our foreign  subsidiaries  are
generally   determined  using  the  U.S.  dollar  as  the  functional  currency.
Transactional  gains and losses are included in  determining  net income for the
period in which the exchange rate changes. Such amounts have remained immaterial
in the  aggregate.  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 9/30/02        Three months ended 9/30/01
                                  Long                                  Long
                Revenues      Lived Assets        Revenues          Lived Assets


United States   $2,244,362      $2,392,280       $2,301,909         $15,364,874
International    2,240,661               0        1,694,807               2,366
                 ---------       ---------        ---------          ----------
Total           $4,485,023      $2,392,280       $3,996,716         $15,367,240
                 =========       =========        =========          ==========

                                      Nine months ended        Nine months ended
                                           9/30/02                  9/30/01
                                          Revenues                  Revenues
     United States                      $  6,984,046              $  6,692,723
     International                         4,509,538                 5,036,081
                                          ----------                ----------
     Total                               $11,493,584               $11,728,804
                                          ==========                ==========
NOTE 7 - SUBSEQUENT EVENTS

In January 2003,  the Company  signed an "Agreement of Mutual  General  Release"
("the  Agreement")  with a  financial  advisor  (see  Part  11,  Item 1 -  Legal
Proceedings)  in full and final  settlement  of a claim  previously  made by the
advisor.  Pursuant to the Agreement,  the Company will pay the advisor  $100,000
commencing  January 2003 in ten equal installments of $10,000 each. In addition,
the Company  issued a stock warrant to purchase  200,000 shares of the Company's
common stock at a price of $.21 per share.  The warrant  expires in October 2007
and is valued at $15,650.  At September 30, 2002 the Company had accrued a total
expense of $115,000 in connection with the claim.

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 Form 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, 2001.

Critical Accounting Policies and Estimates

Valuation of long-lived and intangible assets and goodwill.

As discussed  under Note 2, effective  January 1, 2002, the Company adopted SFAS
No. 142 and  reassessed  the useful  lives and  residual  values of all acquired
intangible  assets.  In the quarter ended June 30, 2002, the Company  determined
that the value recorded for a patent was impaired  utilizing an income  approach
based on a relief from royalty  method of  valuation.  As a result,  the Company
recognized  an  impairment  loss to the  patent  of  $11,277,535  prior to a tax
benefit of  $4,130,079  in the quarter  ended June 30, 2002.  In  addition,  the
Company  recorded an  impairment to goodwill  recorded at Boatracs  Gulfport and
Canada  in  the  aggregate  amount  of  $544,055  due  to an  evaluation  of the
technology being used at Gulfport and future projected sales at both locations.

For the three months ended September 30, 2002 and 2001

Total  revenues for the quarter  ended  September 30, 2002,  were  $4,485,023 an
increase of $488,307 or 12%  compared to total  revenues of  $3,996,716  for the
quarter ended September 30, 2001.

Communications  revenues,  which  consist of revenues  from the sale of Boatracs
systems, software and data transmission and messaging, were $1,634,301 or 36% of
total revenues for the quarter ended September 30, 2002,  compared to $1,637,057
or 41% of total revenues for the quarter ended September 30, 2001. Revenues from
the sale of Boatracs  systems are recognized under SAB No. 101 over a three-year
period,  the estimated period of time the Company provides messaging services to
its  customers.  Included in  communications  revenues  are  revenues  from data
transmission  and messaging  revenues,  which remained  relatively  constant and
software revenues, which decreased 68%.

Video  compression  revenues  were  $727,276  or 16% of total  revenues  for the
quarter  ended  September  30, 2002,  an increase of $19,730 or 3%,  compared to
$707,546 or 18% of total revenues in the prior comparable quarter.  The increase
was primarily due to the completion of engineering and the sale of new products.

Revenues from satellite transmission  technology were $2,123,446 or 47% of total
revenues  for the  quarter  ended  September  30,  2002  compared to revenues of
$1,652,113 or 41% of total  revenues in the third quarter of 2001.  The increase
in  revenues  of  $471,333  or 29% is due  primarily  to an  increase  in system
integration revenues derived from a single contract.

Communications  expenses were $748,461 or 46% of communications revenues for the
quarter ended  September  30, 2002,  an increase of $98,135 or 15%,  compared to
$650,326  which  represented  40% of  communications  revenue in the  comparable
quarter of the prior year. Overall, gross margin for communications decreased 6%
to 54%  from  60%,  primarily  due to the  reduction  in  high  margin  software
revenues.

Video compression  expenses were $165,967 or 23% of video  compression  revenues
for the quarter ended September 30, 2002 a decrease of $15,080 or 8% compared to
$181,047  or 26% of video  compression  revenues in the same period of the prior
year.  Gross  margin  increased 3% to 77% in the third  quarter  compared to 74%
gross margin in the same quarter of the prior year.

Satellite  transmission  technology expenses were $1,727,011 or 81% of satellite
transmission  technology  revenues for the quarter ended  September 30, 2002, an
increase  of  $822,415  or  91%,  compared  to  $904,596  or  55%  of  satellite
transmission  technology  revenues  in the prior year third  quarter.  The gross
margin  decreased  26%  to 19%  from  45% in the  prior  year  primarily  due to
increased system integration  contracts which had a lower margin compared to the
quarter  ended  September  30, 2001 which had greater  royalty  revenues with no
related cost of sales expenses.

Selling,  general and  administrative  expenses were  $3,099,668 or 69% of total
revenues for the quarter  ended  September  30, 2002, an increase of $584,077 or
23%,  compared to  $2,515,591 or 63% of total  revenues in the prior  comparable
quarter.  Salary expense  increased by  approximately  $300,000 due primarily to
severance  agreements recorded in the third quarter. In August 2002, the Company
reduced its work force by 17%. In addition, highly paid employees' salaries were
reduced by 30% and the Chief  Executive  Officer's  salary  was  reduced by 50%.
General office  expenses  increased  $176,180  primarily due to the write off of
unamortized  bank fees and moving  expenses in connection with the relocation of
the  corporate  office  to El Cajon,  California.  Insurance  expense  increased
$118,566 due to overall  increases in director  and officer  liability,  workers
compensation and health insurance.  Amortization  expense decreased  $463,062 to
$71,764 due to the implementation SFAS No. 141 which eliminates the amortization
of goodwill and a $11.3 million write down of a patent in the quarter ended June
30, 2002 further reducing amortization expense.

Research and  development  expenses were $64,350 or 1% of total revenues for the
quarter  ended  September  30,  2002,  a decrease of $272,543 or 81% compared to
research  and  development  expenses of $336,893 or 8% of total  revenues in the
prior  comparable  quarter.  Research and  development  expenses for the quarter
ended  September 30, 2001 have been restated  (Note 1). The decrease in research
and development  expenses is due to completion of product  development  programs
and to the use of engineering personnel in system integration activities.

Interest  expense,  net was $143,131 for the third  quarter of 2002 and $103,393
for the third quarter of 2001, an increase of $39,738 or 38%.

The income tax  expense  for the quarter  ended  September  30, 2002 was $99,041
compared to an income tax benefit of $152,512 the prior comparable quarter.

For the nine months ended September 30, 2002 and 2001

Total revenues for the nine months ended September 30, 2002, were  $11,493,584 a
decrease of $235,220 or 2%  compared to total  revenues of  $11,728,804  for the
nine months ended September 30, 2001.

Communications  revenues,  which  consist of revenues  from the sale of Boatracs
systems, software and data transmission and messaging, were $4,924,604 or 43% of
total  revenues  for the nine months  ended  September  30,  2002, a decrease of
$157,052 or 3%  compared to  $5,081,656  or 43% of total  revenues  for the nine
months ended September 30, 2001.  Revenues from the sale of Boatracs systems are
recognized under SAB No. 101 over a three-year  period,  the estimated period of
time the  Company  provides  messaging  services to its  customers.  Included in
communications  revenues are revenues from data transmission and messaging which
decreased by 3% and software  revenues which decreased by 28% in the nine months
ended September 30, 2002.

Video compression revenues were $2,635,589 or 23% of total revenues for the nine
months ended  September  30, 2002,  an increase of $811,698 or 45%,  compared to
$1,823,891 or 16% of total revenues in the prior comparable period. The increase
was primarily due to increased sales of newly engineered  products to commercial
markets and  increased  orders for existing  products from  Enerdyne's  military
customers.

Revenues from satellite transmission  technology were $3,933,391 or 34% of total
revenues for the nine months ended  September  30, 2002  compared to revenues of
$4,823,257 or 41% of total revenues in the nine months ended September 30, 2001.
The  decrease in revenues of $889,866 or 18% is due  primarily to a reduction of
$600,382  in royalty  revenues  for the nine  months  ended  September  30, 2002
compared to the prior  comparable  period.  Royalty  revenues for 2001 have been
restated (Note 1).

Communications  expenses were $2,188,292 or 44% of  communications  revenues for
the nine months ended September 30, 2002, an increase of $50,951 or 2%, compared
to $2,137,341 which represented 42% of communications  revenue in the comparable
quarter of the prior year. Overall, gross margin for communications decreased by
2% to 56%.

Video compression  expenses were $917,669 or 35% of video  compression  revenues
for the nine months  ended  September  30 2002,  an increase of $464,015 or 102%
compared to $453,654 or 25% of video compression  revenues in the same period of
the prior year.  Gross  margin  decreased  10% to 65% in the nine  months  ended
September  30,  2002  compared  to a 75% gross  margin in the same period of the
prior year due to  increased  costs of a long term  project and the write off of
obsolete inventory in the second quarter of 2002.

Satellite  transmission  technology expenses were $2,612,788 or 66% of satellite
transmission  technology  revenues for the nine months ended September 30, 2002,
an  increase of $439,640 or 20%,  compared  to  $2,173,148  or 45% of  satellite
transmission technology revenues in the prior nine month period. The decrease in
gross  margin of 21% to 34% from 55% in the prior year  relates  primarily  to a
reduction  in royalty  revenues  for the nine months  ended  September  30, 2002
compared to the prior  period which do not have  associated  costs of goods sold
and a reduction in margins on system integration revenues.

Selling,  general and  administrative  expenses were $10,491,559 or 91% of total
revenues for the nine months ended September 30, 2002, an increase of $2,822,863
or 37%,  compared to $7,668,696 or 65% of total revenues in the prior comparable
period.  Salaries and related benefits  increased by approximately $1.5 million,
primarily  due to accrual of severance  costs for  terminated  employees  and to
shifting of engineering efforts from research and development activities.  Other
increases  in selling,  general  and  administrative  expenses  were in bad debt
expense,  consulting and general office  expenses,  and the recognition of costs
associated with the  modification of the terms of previously  issued options and
warrants and consulting fees associated  with the  Recapitalization  Arrangement
(Note  1).  In  addition,   the  Company  paid  Qualcomm  $500,000,   to  settle
distribution  exclusivity issues (see Note 1). Amortization expense decreased by
$1,258,704 to $325,022 due to the implementation  SFAS No. 141, which eliminates
the  amortization  of goodwill and a $11.3  million write off of a patent in the
second quarter of 2002 million further reducing amortization expense.

Research and development  expenses were $500,070 or 4% of total revenues for the
nine months ended  September 30, 2002, a decrease of $608,753 or 55% compared to
research and  development  expenses of $1,108,823 or 9% of total revenues in the
prior comparable period.  Research and development  expenses for the nine months
ended September 30, 2002 includes $150,400 of previously  capitalized patent and
software  development  costs.  Of this  amount,  $81,928  relates  to a software
project that attained  technological  feasibility  in 1999, but was abandoned in
the quarter ended June 30, 2002. The remaining $68,471 relates to projects where
the Company  determined  that the net realizable  value was less than the amount
capitalized.  Research  and  development  expenses  for the  nine  months  ended
September 30, 2001 have been restated (Note 1).

Interest expense, net was $428,308 for the nine month period ended September 30,
2002 and  $478,343  for the nine month  period  ending  September  30,  2001,  a
decrease of $50,035 or 10% due primarily to the repayment of the Company's  term
note with a bank in the second quarter of 2001.

The  income  tax  benefit  for the nine  months  ended  September  30,  2002 was
$3,787,561 compared to an income tax benefit of $502,690 in the prior comparable
period.  The income tax  benefit for the nine months  ended  September  30, 2002
included  the  reduction  of deferred  taxes  related to values  recorded  for a
patent, which was written down substantially.

Liquidity and Capital Resources

The Company's  cash balance at September  30, 2002 was $356,614,  an increase of
$87,883 compared to the December 31, 2001 cash balance of $268,731. At September
30,  2002,  working  capital  was  negative  $8,573,541  an increase in negative
working capital of $2,267,902 from the negative working capital of $6,305,639 at
December 31, 2001. Cash of $2,557,141 was used in operating activities,  cash of
$87,839 was used in investing  activities and cash of $2,732,863 was provided by
financing activities in the first nine months of 2002.

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. On May 31, 2002, the Company sold shares of its preferred stock
for gross  proceeds of  $4,000,000  and extended the maturity  dates of its debt
agreements  on a line of credit and to the two former  owners of Enerdyne.  (See
Note 1.)

The report of independent  auditors on the Company's December 31, 2001 financial
statements  includes an explanatory  paragraph  indicating  there is substantial
doubt about the Company's  ability to continue as a going concern.  Although the
Company has entered into a recapitalization arrangement (see Note 1) under which
it received additional financing and restructured its current debt arrangements,
the Company does not have  sufficient  cash available to fund operations for the
next twelve months.  In order to continue as a going  concern,  the Company must
raise additional funds and significantly reduce operating expenses. There can be
no assurance that additional funds will be available on acceptable  terms, if at
all,  or, in the absence of external  funding  that the Company  will be able to
reduce operating expenses to the point where internal cash flow is sufficient to
fund operations.  It is likely that any external funding, either debt or equity,
will  be  on  terms  that  could  result  in  substantial   dilution  to  common
stockholders.  If  unable to  achieve  its  fund-raising  or  operating  expense
reduction  goals,  the  Company's  ability  to  conduct  its  business  would be
materially adversely affected.

ITEM 4.  CONTROLS AND PROCEDURES

Within the 90 days prior to the date of filing  this Form  10-QSB,  the  Company
carried out an evaluation,  under the supervision and with the  participation of
the Company's  management,  including the Company's Chief Executive  Officer and
the  Company's  Chief  Financial  Officer,  of the  effectiveness  of design and
operation  of the  Company's  disclosure  controls  and  procedures  pursuant to
Exchange  Act Rule  13a-14.  Based upon that  evaluation,  the  Company's  Chief
Executive  Officer and the Company's Chief Financial  Officer concluded that the
Company's  disclosure  controls and procedures are effective in timely  alerting
them to material  changes in information  relating to the Company required to be
included in the Company's periodic SEC filings.

There have been no significant  changes in the Company's internal controls or in
other factors which could  significantly  affect internal controls subsequent to
the date the Company carried out its evaluation.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

The Company is not aware of any current or pending  legal  proceedings  to which
the Company is a party and which may have an adverse effect on the Company.

ITEM 2. CHANGES IN SECURITIES

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

As of December 31, 2001 the Company was in default under its existing  revolving
credit facility and subordinated  notes due to failure to meet certain financial
ratio covenants and as such,  balances were classified as current.  In May 2002,
we entered  into an amendment to our credit  facility  and  subordinated  notes,
which, among other provisions,  waived the defaults that existed at December 31,
2001 and reset all  covenants  for 2002 and  subsequent  years and as such,  the
balances were  reclassified as long-term and current.  At September 30, 2002 the
Company was not in compliance  with the revised  covenants and  accordingly  the
long-term debt has been classified as current.  For further information see Note
4 to the condensed consolidated financial statements.


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

On August 29, 2002 the Company  held its Annual  Meeting of  Stockholders  in El
Cajon, California. The following directors were elected:

                            SHARES
                            AUTHORIZED
 DIRECTOR                   TO VOTE:         VOTES FOR            VOTES AGAINST
 Elected by Series C-1 and C-2 Preferred Stockholders:

 Brandon Nixon              10,763,441       10,763,441                0
 Joseph Niehaus             10,763,441       10,763,441                0

 Elected by Series C-3 Preferred Stockholders:

 Harvey Gettleson            1,068,482        1,060,856                0

 Elected by shareholders of all classes of stock:

 Michael Silverman          33,190,149       24,477,141             3,219,317
 Mohammed Abutaleb          33,190,149       24,493,214             3,203,244

In addition,  an  amendment  to the ARCOMS 1996 stock option plan was  approved,
increasing  the  number  of  available  shares  in the  plan to  7,500,000  from
6,000,000.

    AUTHORIZED
    TO VOTE                    FOR               AGAINST
    33,190,149             19,139,055           3,853,139

There were no other proposals at the meeting.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

In June 2002, the Company filed Form 8-K advising the  Securities  and Exchange
Commission of a change in control. Amendment No. 1 to the 8-K was filed July 19,
2002 and Amendment No. 2 was filed August 26, 2002.

Exhibits

99.1     Written Statement of the Chief Executive Officer pursuant to 18 U.S.C.
         Section 1350.
99.2     Written Statement of the Chief Financial Officer pursuant to 18 U.S.C.
         Section 1350.
99.3     Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
         to Section 302 of the
         Sarbanes-Oxley Act of 2002 by the Chief Executive Officer.
99.4     Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
         Section 302 of the  Sarbanes-Oxley  Act of 2002 by the Chief  Financial
         Officer.






                                   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

January 27, 2003                   /s/ BRANDON L. NIXON
Date                               BRANDON L. NIXON
                                   CHIEF EXECUTIVE OFFICER
                                   CHAIRMAN

January 27, 2003                    /s/ PAUL WICKMAN
Date                               CHIEF FINANCIAL OFFICER

<PAGE>


EXHIBIT 99.1


                Written Statement of the Chief Executive Officer
                          Pursuant to 18 U.S.C. ss.1350

Solely for the purposes of complying with 18 U.S.C.  ss.1350, I, the undersigned
Brandon  L.  Nixon  of  Advanced  Remote  Communication  Solutions,   Inc.  (the
"Company"),  hereby  certify,  that to the best of my  knowledge,  the Quarterly
Report on Form 10-QSB of the Company for the quarter  ended  September  30, 2002
(the  "Report")  fully  complies with the  requirements  of Section 13(a) of the
Securities  Exchange  Act of 1934 and that  information  contained in the Report
fairly presents,  in all material respects,  the financial condition and results
of operations of the Company.



/s/ BRANDON L. NIXON,
Chief Executive Officer

January 27, 2003





EXHIBIT 99.2


                Written Statement of the Chief Financial Officer
                          Pursuant to 18 U.S.C. ss.1350

Solely for the purposes of complying with 18 U.S.C.  ss.1350, I, the undersigned
Paul  P.  Wickman  of  Advanced  Remote  Communication   Solutions,   Inc.  (the
"Company"),  hereby  certify,  that to the best of my  knowledge,  the Quarterly
Report on Form 10-QSB of the Company for the quarter  ended  September  30, 2002
(the  "Report")  fully  complies with the  requirements  of Section 13(a) of the
Securities  Exchange  Act of 1934 and that  information  contained in the Report
fairly presents,  in all material respects,  the financial condition and results
of operations of the Company.



/s/ PAUL P. WICKMAN
Chief Financial Officer

January 27, 2003
<PAGE>


Exhibit 99.3
                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Brandon L. Nixon, Chief Executive Officer of the Company, certify that:

1.       I have reviewed this quarterly report on Form 10-QSB of Advanced Remote
         Communications Solutions, Inc. (the "registrant");

2.       Based on my  knowledge,  this  quarterly  report  does not  contain any
         untrue  statement  of a material  fact or omit to state a statement  of
         material fact  necessary to make the  statements  made, in light of the
         circumstances  under which such  statements  were made,  not misleading
         with respect to the period covered by this quarterly report;

3.       Based on my knowledge,  the financial  statements,  and other financial
         information  included in this quarterly  report,  fairly present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this quarterly report;

4.       The  registrant's  other  certifying  officer and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

a)       designed  such  disclosure  controls  and  procedures  to  ensure  that
         material  information   relating  to  the  registrant,   including  its
         consolidated  subsidiaries,  is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

b)       evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation date"); and

c)       presented  in  this  quarterly   report  our   conclusions   about  the
         effectiveness  of the disclosure  controls and procedures  based on our
         evaluation as of the evaluation date;

5.       The registrant's other certifying  officer and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit  committee  of  registrant's   board  of  directors  (or  persons
         performing the equivalent function):

a)       all  significant  deficiencies  in the design or  operation of internal
         controls  which  could  adversely  affect the  registrant's  ability to
         record,   process,   summarize  and  report  financial  data  and  have
         identified  for the  registrant's  auditors any material  weaknesses in
         internal controls; and

b)       any fraud,  whether or not material,  that involves management or other
         employees  who have a  significant  role in the  registrant's  internal
         controls; and

6.       The registrant's  other certifying officer and I have indicated in this
         quarterly  report  whether  or not there  were  significant  changes in
         internal controls or in other factors that could  significantly  affect
         internal controls subsequent to the date of our most recent evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

Dated: January 27, 2003


Signed:




/s/ BRANDON L. NIXON
Chief Executive Officer


<PAGE>


Exhibit 99.4
                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Paul P. Wickman, Chief Financial Officer of the Company, certify that:

1.       I have reviewed this quarterly report on Form 10-QSB of Advanced Remote
         Communications Solutions, Inc. (the "registrant");

2.       Based on my  knowledge,  this  quarterly  report  does not  contain any
         untrue  statement  of a material  fact or omit to state a statement  of
         material fact  necessary to make the  statements  made, in light of the
         circumstances  under which such  statements  were made,  not misleading
         with respect to the period covered by this quarterly report;

3.       Based on my knowledge,  the financial  statements,  and other financial
         information  included in this quarterly  report,  fairly present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this quarterly report;

4.       The  registrant's  other  certifying  officer and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

a)       designed  such  disclosure  controls  and  procedures  to  ensure  that
         material  information   relating  to  the  registrant,   including  its
         consolidated  subsidiaries,  is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

b)       evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation date"); and

c)       presented  in  this  quarterly   report  our   conclusions   about  the
         effectiveness  of the disclosure  controls and procedures  based on our
         evaluation as of the evaluation date;

5.       The registrant's other certifying  officer and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit  committee  of  registrant's   board  of  directors  (or  persons
         performing the equivalent function):

a)       all  significant  deficiencies  in the design or  operation of internal
         controls  which  could  adversely  affect the  registrant's  ability to
         record,   process,   summarize  and  report  financial  data  and  have
         identified  for the  registrant's  auditors any material  weaknesses in
         internal controls; and

b)       any fraud,  whether or not material,  that involves management or other
         employees  who have a  significant  role in the  registrant's  internal
         controls; and

6.       The registrant's  other certifying officer and I have indicated in this
         quarterly  report  whether  or not there  were  significant  changes in
         internal controls or in other factors that could  significantly  affect
         internal controls subsequent to the date of our most recent evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

Dated: January 27, 2003


Signed:



/s/ PAUL P. WICKMAN
Chief Financial Officer