~~Page~~Table ~~----~~of PART I ITEM 1. BUSINESS................................................................ 1 ITEM 2. PROPERTIES.............................................................. 20 ITEM 3. LEGAL PROCEEDINGS....................................................... 20 ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS.................... 21 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES....................... 22 ITEM 6. SELECTED FINANCIAL DATA................................................. 24 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..................................... 26 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.............. 38 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA............................. 39 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE................................................ 39 ITEM 9A. CONTROLS AND PROCEDURES................................................. 39 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...................... 39 ITEM 11. EXECUTIVE COMPENSATION.................................................. 39 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.......................... 40 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................... 40 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K............................................................. 41Contents

~~Shares Voting Shares Director In Favor Withheld -------- ------------- -------- Gerry C. Quinn 30,944,846 32,460 John T. Stupka 30,944,846 32,460 Michael D. Beverley 30,944,846 32,460~~UNITED STATES

~~BID~~SECURITIES AND ~~PRICES~~EXCHANGE HIGH LOW ---- --- 2001 First Quarter $ 1.31 $0.38 Second Quarter $ 1.90 $0.32 Third Quarter $ 1.79 $0.93 Fourth Quarter $ 1.65 $0.84 2002 First Quarter $ 4.00 $1.22 Second Quarter $ 2.18 $0.96 Two months ended August 31, 2002 $ 1.06 $0.82 2003 First Quarter $ 1.04 $0.53 Second Quarter $ 0.99 $0.58 Third Quarter $ 0.71 $0.44 Fourth Quarter $ 0.70 $0.48COMMISSION

(a) (b) (c) Number of securities Weighted average remaining available for Number of securities to be exercise price of future issuance under issued upon exercise of outstanding equity compensation plans outstanding optionsWASHINGTON, options, warrants, (excluding securities Plan Category warrants and rights and rights reflected in column (a)) ------------- ------------------- ---------- ------------------------ Equity compensation plans approved by security holders 1,628,904 $1 D.~~41 4,646,642 Equity compensation plans not approved by security holders 302,360 1~~C.71 ~~-- --------- ----- --------- 1,931,264 $1.45 4,646,642 ========= ===== =========~~20549

Twelve months ended Eight,months ended August 31, August 31, 2003 2002 2002 2001 ------------------------------------------------------- (In thousands, except per share data) STATEMENT OF OPERATIONS DATA Revenues: Product $ 2,319 $ 11,936 $ 5,074 $ 12,796 Ratable product 9,837 9,618 6,780 7,026 Service 32,755 45,216 30,102 32,844 ------------------------------------------------------- Total revenues 44,911 66,770 41,956 52,666 ------------------------------------------------------- Cost of revenues: Product 1,953 9,426 3,996 9,810 Ratable product 6,871 7,634 5,213 5,814 Service 17,508 24,515 16,155 18,204 Inventory write-down to net realizable value - 4,693 - - Provision for settlement of litigation - 100 100 2,100 ------------------------------------------------------- Total cost of revenues 26,332 46,368 25,464 35,928 ------------------------------------------------------- Gross profit 18,579 20,402 16,492 16,738 ------------------------------------------------------- Expenses: General and administrative 9,456 11,856 7,943 8,349 Customer service 3,988 5,396 3,411 5,051 Sales and marketing 11,632 FORM 10~~,386 8,600 2,784 Engineering 1,800 2,433 1,374 4,107 Network services center~~ - 1,045 461 1,168 Severance and AutoLink termination costs - - - - Depreciation and amortization 5,626 7,087 4,322 4,673 ------------------------------------------------------- 32,502 38,203 26,111 26,132 ------------------------------------------------------- Operating loss (13,923) (17,801) (9,619) (9,394) Interest income 447 539 457 420 Interest expense (2,118) (2,124) (1,411) (6,642) Other (expense) income (426) (183) (183) - Gain on recapitalization and extinguishment of debt - - - 59,461 ------------------------------------------------------- (Loss) income before income taxes and cumulative effect of accounting change (16,020) (19,569) (10,756) 43,845 Income tax benefit - 978 978 - ------------------------------------------------------- (Loss) income before cumulative effect of accounting change (16,020) (18,591) (9,778) 43,845 Cumulative effect of accounting change - - - - ------------------------------------------------------- Net (loss) income $ (16,020) $ (18,591) $ (9,778) $ 43,845 ======================================================= Basic and diluted (loss) income per share: (Loss) income before cumulative effect of accounting change $ (0.33) $ (0.39) $ (0.20) $ 2.48 Cumulative effect of accounting change - - - - ------------------------------------------------------- Net (loss) income per share $ (0.33) $ (0.39) $ (0.20) $ 2.48 ======================================================= Weighted average number of shares outstanding Basic and diluted 48,349 48,172 48,233 17,649 Pro-forma basic and diluted (loss) income per share including effects of pending 5 for 1 reverse stock split: (Loss) income before cumulative effect of accounting change $ (1.66) $ (1.93) $ (1.01) $ 12.42 Cumulative effect of accounting change - - - - ------------------------------------------------------- Net (loss) income per share $ (1.66) $ (1.93) $ (1.01) $ 12.42 ======================================================= Pro-forma weighted average number of shares outstanding including effects of pending 5 for 1 reverse stock split: Basic and diluted 9,670 9,634 9,647 3,530 \-----Twelve months ended December 31,------\ 2001 2000 1999 1998 ------------------------------------------------------- (In thousands, except per share data) STATEMENT OF OPERATIONS DATA Revenues: Product $ 19,658 $ 41,971 $ 43,018 $ 16,950 Ratable product 9,864 12,093 - - Service 47,958 48,066 52,655 46,463 ------------------------------------------------------- Total revenues 77,480 102,130 95,673 63,413 ------------------------------------------------------- Cost of revenues: Product 15,239 30,031 34,752 13,222 Ratable product 8,236 10,006 - - Service 26,563 30,636 26,724 32,419 Inventory write-down to net realizable value 4,693 - - - Provision for settlement of litigation 2,100 - - - ------------------------------------------------------- Total cost of revenues 56,831 70,673 61,476 45,641 ------------------------------------------------------- Gross profit 20,649 31,457 34,197 17,772 ------------------------------------------------------- Expenses: General and administrative 12,482 12,478 14,706 22,875 Customer service 7,036 7,146 7,770 10,604 Sales and marketing 4,570 4,980 4,091 7,372 Engineering 5,166 4,345 2,685 5,399 Network services center 1,753 1,512 1,437 1,992 Severance and AutoLink termination costs - - (189) 5,357 Depreciation and amortization 7,438 5,907 6,551 5,829 ------------------------------------------------------- 38,445 36,368 37,051 59,428 ------------------------------------------------------- Operating loss (17,796) (4,911) (2,854) (41,656) Interest income 501 1,371 2,037 4,827 Interest expense (7,355) (13,368) (13,422) (17,099) Other (expense) income - 1,569 2,715 - Gain on recapitalization and extinguishment of debt 59,461 - - 18,867 ------------------------------------------------------- (Loss) income before income taxes and cumulative effect of accounting change 34,811 (15,339) (11,524) (35,061) Income tax benefit - - - - ------------------------------------------------------- (Loss) income before cumulative effect of accounting change 34,811 (15,339) (11,524) (35,061) Cumulative effect of accounting change - (5,206) - - ------------------------------------------------------- Net (loss) income $ 34,811 $ (20,545) $ (11,524) $ (35,061) ======================================================= Basic and diluted (loss) income per share: (Loss) income before cumulative effect of accounting change $ 1.25 $ (3.03) $ (2.31) $ (7.04) Cumulative effect of accounting change - (1.03) - - ------------------------------------------------------- Net (loss) income per share $ 1.25 $ (4.06) $ (2.31) $ (7.04) ======================================================= Weighted average number of shares outstanding Basic and diluted 27,928 5,058 4,995 4,980 Pro-forma basic and diluted (loss) income per share including effects of pending 5 for 1 reverse stock split: (Loss) income before cumulative effect of accounting change $ 6.23 $ (15.16) $ (11.54) $ (35.20) Cumulative effect of accounting change - (5.15) - - ------------------------------------------------------- Net (loss) income per share $ 6.23 $ (20.31) $ (11.54) $ (35.20) ======================================================= Pro-forma weighted average number of shares outstanding including effects of pending 5 for 1 reverse stock split: Basic and diluted 5,586 1,012 999 996K

Twelve months ended Eight months ended August 31, August 31, \--Twelve months ended December 31,--\ 2003 2002 2002 2001 2001 2000 1999 1998 ----------------------------------------------------------------------------------- (~~In thousands, except per share data~~Mark One) Capital expenditures $ 575 $ 1,470 $ 1,251 $ 1,236 $ 1,587 $ 2,600 $ 3,103 $10,520 OTHER OPERATING DATA Units installed, including network subscribers, at end of period 54,158 68,220 68,220 69,199 70,932 67,336 50,825 47,657

August 31, August 31, \-----------------December 31,----------------\ 2003 2002 2001 2000 1999 1998 ---------- ---------- --------- --------- --------- --------- BALANCE SHEET DATA Cash and short-term investments $ 5,105 $ 18,090 $ 14,889 $ 20,641 $ 17,768 $ 26,169 Working capital 753 8,337 12,486 20,825 35,660 29,143 Network, equipment and software, net 3,865 6,425 8,583 12,851 15,703 20,649 Total assets 56,100 81,403 87,597 81,044 74,073 103,126 Notes payable 14,316 14,254 14,109 92,484 92,090 91,697 Stockholders' equity (deficit) 19,490 35,418 44,179 (58,341) (38,051) (26,791)

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008

OR

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

For the transition period from to

~~Page~~COMMISSION FILE ~~Number~~NUMBER ~~(a) Documents filed as part of the report: (1) Independent Auditors' Report........................................................................ F~~0-1 Report of Previous Independent Auditors............................................................. F-3 Consolidated Balance Sheets as of August 31, 2003 and August 31, 2002............................... F-4 Consolidated Statements of Operations for the Year Ended August 31, 2003, the Eight Months Ended August 31, 2002, and the Years Ended December 31, 2001 and 2000....................... F-5 Consolidated Statements of Cash Flows for the Year Ended August 31, 2003, the Eight Months Ended August 31, 2002, and the Years Ended December 31, 2001 and 2000....................... F-6 Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the Year Ended August 31, 2003, the Eight Months Ended August 31, 2002, and the Years Ended December 31, 2001 and 2000...................................................... F-7 Notes to Consolidated Financial Statements.......................................................... F-8 (2) Financial Statement Schedules Independent Auditors' Report on Supplemental Schedule, Valuation and Qualifying Accounts............ S-1 Report of Previous Independent Auditors on Financial Statement Schedule............................. S-2 Schedule II-Valuation and Qualifying Accounts ...................................................... S-326140

~~EXHIBIT NUMBER TITLE ------ ----- 2.1 - Stock Purchase and Exchange Agreement by and between the Company~~Remote Dynamics, ~~Minorplanet Systems PLC and Mackay Shields LLC, dated February 14, 2001 (21) 2.2 - Asset Purchase Agreement by and between the Company and Aether Systems,~~ Inc. ~~dated March 15, 2002 (22) 3.1 - Restated Certificate of Incorporation of the Company, as amended (29) 3.2 - Second Amended and Restated By-Laws of the Company (20)~~

~~Signature Title Date /s/W. Michael Smith Chief Operating Officer -------------------~~ (~~Principal~~Exact name ~~Executive~~of ~~Officer)~~registrant ~~November~~as ~~25,~~specified ~~2003~~in W.its ~~Michael Smith /s/Robert Gray Chief Accounting Officer -------------- (Principal Financial and Accounting Officer~~charter) November 25, 2003 Robert Gray /s/Michael Beverley ------------------- Michael Beverley Director November 25, 2003 /s/Gerry C. Quinn ----------------- Gerry C. Quinn Director November 25, 2003 /s/John T. Stupka ----------------- John T. Stupka Director November 25, 2003

August 31, August 31, 2003 2002 --------- ---------- ASSETS Current assets: Cash and cash equivalents $ 5,105 $ 10,413 Short term investments - 7,677 Accounts receivable, net of allowance for doubtful accounts of $246 and $2,843, respectively 4,710 7,699 Inventories 2,190 1,581 Deferred product costs - current portion 1,600 6,149 Other current assets 1,081 2,779 --------- --------- Total current assets 14,686 36,298 Network, equipment and software, net of accumulated depreciation and amortization of $22,559 and $19,619 respectively 3,865 6,425 Deferred product costs - non-current portion 2,429 1,496 License rights, net of accumulated amortization of $5,730 and $3,116, respectively 33,485 36,100 Other assets, net of accumulated amortization of $407 and $338, respectively 1,635 1,084 --------- --------- Total assets $ 56,100 $ 81,403 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,703 $ 2,875 Telecommunications costs payable 2,500 3,268 Accrued interest payable 903 903 Deferred product revenues - current portion 3,316 8,054 Deferred service revenues 196 6,872 Other current liabilities 5,315 5,989 --------- --------- Total current liabilities 13,933 27,961 Deferred product revenues - non-current portion 6,217 2,791 Senior notes payable and other notes payable, net of unamortized discount of $125 and $185, respectively 14,316 14,254 Other non-current liabilities 2,144 979 --------- --------- Total liabilities 36,610 45,985 --------- --------- Commitments and contingencies (Note 18) Stockholders' equity: Common stock, $0.01 par value, 100,000,000 shares authorized; 48,424,960 shares issued and 48,349,161 shares outstanding at August 31, 2003 and 2002 484 484 Preferred Stock - Series E, $0.01 par value, 20,000 shares authorized; 1 share issued and outstanding at August 31, 2003 and 2002 - - Additional paid-in capital 218,601 218,509 Accumulated deficit (199,033) (183,013) Treasury stock, 75,799 shares at August 31, 2003 and 2002 at cost (562) (562) --------- --------- Total stockholders' equity 19,490 35,418 --------- --------- Total liabilities and stockholders' equity $ 56,100 $ 81,403 ========= =========

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

200 CHISHOLM PLACE, SUITE 120 PLANO, TEXAS		75075
(Address of principal executive offices)		(Zip Code)

~~Year~~Registrant’s telephone ended Eight months August 31, ended August 31, Year ended December 31, ---------- ---------------- ----------------------- 2003 2002 2001 2000 ---------- ---------------- ---------- --------- Revenues Product $ 2,319 $ 5,074 $ 19,658 $ 41,971 Ratable product 9,837 6,780 9,864 12,093 Service 32,755 30,102 47,958 48,066 --------- --------- --------- --------- Total revenues 44,911 41,956 77,480 102,130 --------- --------- --------- --------- Cost of revenues Product 1,953 3,996 15,239 30,031 Ratable product 6,871 5,213 8,236 10,006 Service 17,508 16,155 26,563 30,636 Inventory write-down to net realizable value - - 4,693 - Provision for settlement of litigation - 100 2,100 - --------- --------- --------- --------- Total cost of revenues 26,332 25,464 56,831 70,673 --------- --------- --------- --------- --------- --------- --------- --------- Gross profit 18,579 16,492 20,649 31,457 --------- --------- --------- --------- Expenses: General and administrative 9,456 7,943 12,482 12,478 Customer service 3,988 3,411 7,036 7,146 Sales and marketing 11,632 8,600 4,570 4,980 Engineering 1,800 1,374 5,166 4,345 Network services center - 461 1,753 1,512 Depreciation and amortization 5,626 4,322 7,438 5,907 --------- --------- --------- --------- 32,502 26,111 38,445 36,368 --------- --------- --------- --------- Operating loss (13,923) (9,619) (17,796) (4,911) Interest income 447 457 501 1,371 Interest expense (2,118) (1,411) (7,355) (13,368) Other (expense) income (426) (183) - 1,569 Gain on recapitalization - - 59,461 - --------- --------- --------- --------- (Loss) income before income taxes and cumulative effect of accounting change (16,020) (10,756) 34,811 (15,339) Income tax benefit - 978 - - --------- --------- --------- --------- (Loss) income before cumulative effect of accounting change (16,020) (9,778) 34,811 (15,339) Cumulative effect of accounting change - - - (5,206) --------- --------- --------- --------- Net (loss) income $ (16,020) $ (9,778) $ 34,811 $ (20,545) ========= ========= ========= ========= Basic and diluted (loss) income per share: (Loss) income before cumulative effect of accounting change $ (0.33) $ (0.20) $ 1.25 $ (3.03) Cumulative effect of accounting change - - - (1.03) --------- --------- --------- --------- Net (loss) income per share $ (0.33) $ (0.20) $ 1.25 $ (4.06) ========= ========= ========= ========= Weighted average number ~~of shares outstanding Basic and diluted 48~~,~~349~~ ~~48,233 27,928 5,058 ========= ========= ========= ========= Pro-forma basic and diluted (loss) per share~~ including ~~effects~~area ~~of pending 5 for 1 reverse stock split~~code: (~~Loss~~214) ~~income before cumulative effect of accounting change $ (1.66) $ (1.01) $ 6.23 $ (15.16) Cumulative effect of accounting change~~ 440- - - (5.15) --------- --------- --------- --------- Net (loss) income per share $ (1.66) $ (1.01) $ 6.23 $ (20.31) ========= ========= ========= ========= Pro-forma weighted average number of shares outstanding including effects of pending 5 for 1 reverse stock split: Basic and diluted 9,670 9,647 5,586 1,012 ========= ========= ========= =========5200

~~Year~~Securities registered ~~ended~~pursuant Eight months August 31, ended August 31, Year ended December 31, ---------- ---------------- ---------------------- 2003 2002 2001 2000 ---------- ---------------- -------- --------- Cash flows from operating activities: Net (loss) income $(16,020) $ (9,778) $ 34,811 $(20,545) Adjustments to reconcile net loss (income) to cash used in operating activities: Depreciation and amortization 3,011 2,574 6,070 5,907 Amortization of discount on notes payable 60 39 219 394 Amortization of license rights 2,615 1,748 1,368 - Gain on recapitalization - non-cash portion - - (56,682) - Inventory write-down to net realizable value - - 4,693 - Provision for bad debts 1,353 803 1,056 1,477 Non-cash compensation and consulting 92 532 - - Amortization of deferred service revenues (6,595) (5,376) Loss on equipment retired 302 - - - Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 2,780 3,615 212 (874) (Increase) decrease in inventory (609) 477 5,610 (3,924) Decrease (increase) in deferred product costs 3,616 3,054 6,477 (17,176) (Decrease) increase in accounts payable (1,172) 358 (5,475) 5,561 (Decrease) increase in deferred product revenues (1,312) (2,491) (7,605) 20,941 (Decrease) increase in accrued expenses and other current liabilities (428) (3,638) (4,512) 365 Other (755) (2,153) 1,373 387 -------- -------- -------- -------- Net cash used in operating activities (13,062) (10,236) (Section 12~~,385)~~ (~~7,487~~b) ~~-------- -------- -------- -------- Cash flows from investing activities: Additions to network, equipment, and software (575) (1,251) (1,587) (2,600) Proceeds from sale~~ of ~~assets~~the - 2,740 - - Liquidation of pledged securities - - - 12,705 Decrease (increase) in short-term investments 7,677 (3,543) (4,134) 12,601 Purchase of license rights - - (1,215) - -------- -------- -------- -------- Net cash provided by (used in) investing activities 7,102 (2,054) (6,936) 22,706 -------- -------- -------- -------- Cash flows from financing activitiesAct: Proceeds from sale of service contract 758 11,510 - - Proceeds from exercise of stock options - 485 - 255 Proceeds from issuance of common stock - - 9,450 - Payments on capital leases (106) (47) - - Common stock repurchased - - (15) - -------- -------- -------- -------- Net cash provided by financing activities 652 11,948 9,435 255 -------- -------- -------- -------- (Decrease) increase in cash and cash equivalents (5,308) (342) (9,886) 15,474 Cash and cash equivalents, beginning of period 10,413 10,755 20,641 5,167 -------- -------- -------- -------- Cash and cash equivalents, end of period $ 5,105 $ 10,413 $ 10,755 $ 20,641 ======== ======== ======== ======== Supplemental cash flow information: Interest paid $ 1,990 $ 997 $ 6,539 $ 12,974 ======== ======== ======== ======== Taxes paid $ - $ - $ 995 $ - ======== ======== ======== ======== Non-cash investing and financing activities: Note receivable received as proceeds from sale of assets and service contract $ - $ 12,000 $ - $ - ======== ======== ======== ======== Receivable held in escrow received as proceeds from sale of assets and service contract $ - $ 1,000 $ - $ - ======== ======== ======== ======== Purchases of assets through capital leases $ 178 $ 224 $ - $ - ======== ======== ======== ======== Fair value of License Rights acquired in exchange for 28,000,000 shares of common stock $ - $ - $ 38,000 $ - ======== ======== ======== ======== Fair Value of Senior Notes exchanged for 12,670,497 shares of common stock $ - $ - $ 20,273 $ - ======== ======== ======== ========

Preferred Stock Common Stock Common Stock - Class B Additional --------------- ------------------- ---------------------- Paid-in Shares Amount Shares Amount Shares Amount Capital --------------- ------------------- ---------------------- ---------- Stockholders' equity (deficit) at December 31, 1999 1,000 - 5,086,433 51 - - 149,946 Exercise of stock options 41,323 - 255 Conversion of Series D Preferred Stock to Class B Common Stock (1,000) - 1,000 - Net loss --------------- ------------------- ------------------ ---------- Stockholders' equity (deficit) at December 31, 2000 - - 5,127,756 51 1,000 - 150,201 Conversion of Class B Common to Common 320,000 3 (1,000) (3) Issuance of Series E Preferred Stock 1 - - 1 Common Stock issued to Minorplanet UK 30,000,000 300 47,625 Common Stock issued in Note Exchange 12,670,497 127 19,671 Common Stock repurchased Net income --------------- ------------------- ------------------ ---------- Stockholders' equity at December 31, 2001 1 - 48,118,253 481 - - 217,495 Exercise of stock options 306,707 3 482 Acceleration of vesting on stock options 532 Net loss --------------- ------------------- ------------------ ---------- Stockholders' equity at August 31, 2002 1 - 48,424,960 484 - - 218,509 Issuance of stock warrants 92 Net loss --------------- ------------------- ------------------ ---------- Stockholders' equity at August 31, 2003 1 $ - 48,424,960 $ 484 - $ - $ 218,601 =============== =================== ================== ========== Treasury Stock --------------- Accumulated Shares Amount Deficit Total --------------- ----------- --------- Stockholders' equity (deficit) at December 31, 1999 62,399 (547) (187,501) (38,051) Exercise of stock options 255 Conversion of Series D Preferred Stock to - Class B Common Stock - Net loss (20,545) (20,545) --------------- ---------- --------- Stockholders' equity (deficit) at December 31, 2000 62,399 (547) (208,046) (58,341) Conversion of Class B Common to Common - Issuance of Series E Preferred Stock 1 Common Stock issued to Minorplanet UK 47,925 Common Stock issued in Note Exchange 19,798 Common Stock repurchased 13,400 (15) (15) Net income 34,811 34,811 --------------- ---------- --------- Stockholders' equity at December 31, 2001 75,799 (562) (173,235) 44,179 Exercise of stock options 485 Acceleration of vesting on stock options 532 Net loss (9,778) (9,778) --------------- ---------- --------- Stockholders' equity at August 31, 2002 75,799 (562) (183,013) 35,418 Issuance of stock warrants 92 Net loss (16,020) (16,020) --------------- ---------- --------- Stockholders' equity at August 31, 2003 75,799 $ (562) $ (199,033) $ 19,490 =============== ========== =========None

~~For~~Securities registered ~~the~~pursuant ~~For~~to the Eight Year Ended Months Ended For the Year Ended August 31, August 31, December 31, ------------------------------------------------- 2003 2002 2001 2000 ------------------------------------------------- Net Section 12(~~loss~~g) ~~income,~~of asthe ~~reported $ (16,020) $ (9,778) $ 34,811 $ (20,545) Add~~Act: Stock-based employee compensation expense included in reported net income - 532 - - Deduct: Stock-based employee compensation expense determined under fair value based method for all awards (692) (798) (2,718) (643) ------------------------------------------------- Net (loss) income, pro forma $ (16,712) $ (10,044) $ 32,093 $ (21,188) ================================================= Net (loss) income per share - basic and diluted As reported $ (0.33) $ (0.20) $ 1.25 $ (4.06) Pro-forma $ (0.35) $ (0.21) $ 1.15 $ (4.20)

~~For the Year For the Year Ended Ended August 31~~Common Stock, ~~December 31, ------------------------------------------ 2003 2001 2000 ------------------------------------------ Dividend - - - Expected volatility 96~~$0.~~60%~~0001 ~~97.31%~~par ~~92.31% Risk free rate of return 3.02% 5.20% 5.89% Expected life in years 4.5 6.0 6.0~~value

Twelve months ended Eight months ended August 31, August 31, -------------------------- -------------------------- Unaudited Unaudited 2003 2002 2002 2001 ---- ---- ---- ---- Revenues $ 44,911 $ 66,770 $ 41,956 $ 52,666 Cost of revenues 26,332 46,368 25,464 35,928 -------- -------- -------- -------- Gross profit 18,579 20,402 16,492 16,738 -------- -------- -------- -------- Expenses 32,502 38,203 26,111 26,132 -------- -------- -------- -------- Operating loss (~~13,923)~~Title (17,801) (9,619) (9,394) -------- -------- -------- -------- Interest income 447 539 457 420 Interest expense (2,118) (2,124) (1,411) (6,642) Other expense (426) (183) (183) - Gain on recapitalization - - - 59,461 -------- -------- -------- -------- Loss before income taxes (16,020) (19,569) (10,756) 43,845 Income tax benefit - 978 978 - -------- -------- -------- -------- Net (loss) income $(16,020) $(18,591) $ (9,778) $ 43,845 ======== ======== ======== ======== -------- -------- -------- -------- Basic and diluted (loss) income per share $ (0.33) $ (0.39) $ (0.20) $ 2.48 ======== ======== ======== ======== Weighted average number of ~~shares outstanding: Basic and diluted 48,349 48,172 48,233 17,649 ======== ======== ======== ======== Pro-forma basic and diluted (loss~~ class) per share including effects of pending 5 for 1 reverse stock split $ (1.66) $ (1.93) $ (1.01) $ 12.42 Pro-forma weighted average number of shares outstanding including effects of pending 5 for 1 reverse stock split: Basic and diluted 9,670 9,634 9,647 3,530 ======== ======== ======== ========

~~August~~Indicate by ~~31,~~check ~~August~~mark ~~31,~~whether ~~2003~~the ~~2002~~registrant ~~---------~~is a well-~~--------~~known ~~Cash~~seasoned ~~and commercial paper $ 367 $ 2~~issuer,~~381~~ ~~Money~~as ~~market~~define in ~~accounts~~Rule ~~4,738~~405 ~~8,032~~of ~~--------~~the ~~--------~~Securities ~~Cash and cash equivalents $ 5,105 $ 10,413 ======== ======== U~~Act).S. Yes ~~Government~~o ~~and~~No ~~agency notes and bonds - 5,786 Commercial paper - 1,891 -------- -------- Short-term investments $ - $ 7,677 ======== ========~~ý

~~August~~Indicate by ~~31,~~check ~~August~~mark ~~31,~~whether ~~2003~~the ~~2002~~registrant ~~---------~~is ~~---------~~not ~~Complete~~required ~~systems~~to $file ~~1,507~~reports $pursuant ~~886~~to Section ~~Component~~13 ~~parts~~or ~~683~~Section ~~695~~15(d) ~~---------~~of ~~--------~~the $Act. Yes ~~2,190~~o $No ~~1,581 ========= ========~~ý

~~August~~Indicate by ~~31,~~check ~~August~~mark ~~31,~~whether ~~2003~~the ~~2002~~issuer ~~---------~~(1) filed ~~---------~~all ~~Network~~reports ~~service~~required ~~center~~to $be filed ~~15,529~~by $Section 13 or 15~~,508~~(d) ~~Computers,~~of ~~office~~the ~~equipment,~~Exchange ~~and~~Act ~~leasehold~~during ~~improvements~~the ~~5,718~~past 12 months ~~5,585~~(or ~~Machinery~~for ~~and~~such ~~equipment~~shorter ~~1,822~~period ~~1,811~~that ~~Software~~the ~~3,355~~registrant ~~3,140~~was ~~---------~~required ~~--------~~to file ~~26,424~~such 26reports),~~044~~ ~~Less: accumulated depreciation~~ and ~~amortization~~ (~~22,559~~2) has ~~(19,619)~~been ~~---------~~subject ~~--------~~to $such ~~3,865~~filing $requirements for ~~6,425~~the ~~=========~~past ~~========~~90 days. Yes ý No o

~~August~~Indicate by ~~31,~~check ~~August~~mark ~~31,~~if ~~2003~~disclosure ~~2002~~of ~~---------~~delinquent ~~---------~~filers ~~Minimum~~pursuant ~~lease~~to ~~payments~~Item ~~receivable~~405 $of Regulation S-K ~~2,924~~is $not 1contained herein,~~393~~ ~~Less:~~and ~~Allowance~~will ~~for~~not ~~uncollectibles~~be ~~(452)~~contained, ~~(189)~~to ~~---------~~the best ~~-------~~of ~~2,472~~the 1registrant’s knowledge,~~204~~ ~~---------~~in ~~-------~~definitive ~~Less:~~proxy ~~Unearned~~or ~~interest~~information statements ~~income~~incorporated ~~(827)~~by ~~(464)~~reference ~~---------~~in ~~-------~~Part III ~~Net~~of ~~investment~~this ~~in sales~~Form 10-~~type~~K ~~leases~~or any $amendment ~~1,645~~to $this ~~740 ========= =======~~Form 10-K. o

~~August~~Indicate by ~~31,~~check ~~August~~mark ~~31,~~whether ~~2003~~the ~~2002~~registrant ~~---------~~is ~~---------~~a ~~Accrued~~large ~~warranty~~accelerated ~~costs~~filer, $an accelerated ~~211~~filer, $a ~~392 Accounts payable~~ non-accelerated ~~related party 553 1~~filer,~~329~~ ~~Property,~~or ~~franchise,~~a ~~and~~smaller ~~other~~reporting ~~taxes~~company. ~~payable~~See the ~~733~~definitions ~~777 Provision for settlement~~ of ~~litigation~~“large ~~1,681~~accelerated 1filer,~~681~~” ~~Other~~“accelerated ~~2,137~~filer” ~~1,810~~and ~~--------~~“smaller reporting ~~--------~~company” $in ~~5,315~~Rule $12b-2 ~~5,989~~of ~~========~~the ~~========~~Exchange Act.

~~Twelve~~Large ~~months~~Accelerated ~~Eight~~Filer ~~months~~o ~~ended~~Accelerated ~~August~~Filer ~~31,~~o ~~ended August 31, Year ended December 31, 2003 2002 2001 2000~~ Non-~~--------------~~accelerated ~~---------------~~Filer ~~------------------------~~o ~~Current:~~Smaller ~~Federal~~reporting $company $ý (~~978)~~Do $not -check $if -a ~~State~~smaller -reporting ~~- - - --------- ---------- ------- -------- - (978~~company) ~~- - Deferred: Federal - - - - State - - - - --------- ---------- ------- -------- - - - - Income Tax Expense (Benefit) $ - $ (978) $ - $ - ========= ========== ======= ========~~

~~August~~Indicate by ~~31,~~check ~~August~~mark ~~31,~~whether ~~2003~~the ~~2002~~registrant ~~---------~~is ~~---------~~a ~~Deferred~~shell ~~tax~~company assets: Deferred revenue 2,247 3,425 Allowance for doubtful accounts 238 1,031 Other accrued liabilities 1,899 1,146 Inventory reserves 115 102 Intangible assets 498 958 Net operating loss carryforwards 60,174 53,550 ------ ------ Gross deferred tax assets 65,171 60,212 Valuation allowance (~~64,100)~~as ~~(58,706)~~defined ~~--------~~in Rule 12b-~~--------~~2 ~~Net~~of ~~deferred~~the ~~tax~~Exchange ~~assets 1,071 1,506 Deferred tax liabilities: Depreciation (1,071~~Act). Yes ~~(1,506)~~o ~~--------~~No ~~--------- Gross deferred tax liabilities (1,071) (1,506) -------- --------- Net deferred tax asset $ - $ - ======== =========~~ý

~~Year~~State ~~ended~~the aggregate ~~Eight~~market ~~Months~~value ~~August~~of ~~31,~~the ~~Ended~~voting ~~August~~and ~~31,~~non-voting ~~Year~~equity ~~Ended~~held ~~December~~by non-affiliates ~~31,~~of ~~2003~~the ~~2002~~Registrant ~~2001~~computed ~~2000~~by ~~----------~~reference ~~---------------~~to ~~-----------------------~~the ~~Income~~price ~~tax~~ at ~~federal~~which ~~statutory~~the common ~~rate~~equity ~~$(5,416)~~was ~~$(3,657)~~last ~~$(8~~sold,~~381)~~ ~~$(6,985)~~or ~~Valuation~~the ~~allowance~~average ~~5,394~~bid ~~2,796~~and ~~8,458~~asked ~~6,851~~price ~~Other~~of 22such ~~(117)~~common equity, ~~(77)~~as ~~134~~of ~~-------~~March ~~-------~~25, ~~------- ------- Provision for income taxes~~ 2009: $ ~~- $ (978) $ - $ - ======= ======= ======= =======~~413,322.

~~(c)~~Indicate by ~~Number~~check ofmark ~~securities~~whether ~~(a)~~the ~~(b)~~issuer ~~remaining~~filed ~~available~~all ~~for~~documents ~~Number~~and ofreports ~~securities~~required to be filed ~~Weighted~~by ~~average~~Section 12, ~~future~~13 ~~issuance~~or ~~under~~15(d) ~~issued~~of ~~upon~~the ~~exercise~~Exchange ofAct ~~exercise~~after ~~price~~the distribution of ~~equity compensation plans outstanding options, outstanding options, (excluding~~ securities ~~Plan~~under ~~Category warrants and rights warrants, and rights reflected in column (~~a)) ~~---------------------------------------------------------------------------------------------------------------------~~plan ~~Equity~~confirmed ~~compensation plans approved~~ by ~~security~~a ~~holders 1,628,904 $ 1~~court.41 4,646,642 Equity compensation plans not approved by security holders 302,360 1.71 - ------------------------------------------------------------------ 1,931,264 $ 1.45 4,646,642 ================================================================== Yes ý No o

~~Year~~As ended Eight months ended Year ended Year ended August 31, 2003 August 31, 2002 December 31, 2001 December 31, 2000 ---------------------------------------------------------------------------------------- Weighted Weighted Weighted Weighted Average Average Average Average Exercise Exercise Exercise Exercise Shares Price Shares Price Shares Price Shares Price ---------------------------------------------------------------------------------------- Outstanding at beginning of March ~~period 2~~25,~~577,664~~ ~~$ 1.59 3~~2009,~~805,829~~ ~~$ 1.59 330~~4,~~924 $ 1.38 341~~737,~~464 $ 1.36 Granted 400~~534,~~000~~793 ~~0.80~~shares - - 3,670,316 1.61 63,900 1.51 Exercised - - (306,707) 1.58 - - (41,323) 1.23 Forfeited or expired (1,348,760) 1.58 (921,458) 1.60 (195,411) 1.48 (33,117) 1.58 ---------------------------------------------------------------------------------------- Outstanding at end of period 1,628,904 $ 1.41 2,577,664 $ 1.59 3,805,829 $ 1.59 330,924 $ 1.38 ======================================================================================== Options exercisable at end of period 162,834 $ 1.61 923,034 $ 1.57 283,212 $ 1.46 153,189 $ 1.32 ======================================================================================== Weighted average fair value of options granted during the ~~period~~Registrant’s -Common $Stock 0were outstanding.~~57 - $ - - $ 1.28 - $ 1.18 ========================================================================================~~

~~Options~~Table ~~Outstanding Options Exercisable ------------------------------------------------------------------------------------ Number~~ of Weighted Average Weighted Average Number of Weighted Average Range of Option Price Options Remaining Life Exercise Price Options Exercise Price ------------------------------------------------------------------------------------------------------------------ $0.80 to $1.19 401,300 5.4 $ 0.80 1,300 $ 1.19 $1.41 to $1.78 1,224,204 3.7 1.60 158,814 1.60 $2.03 3,400 2.3 2.03 2,720 2.03 ------------------------------------------------------------------------------------ 1,628,904 4.1 $ 1.41 162,834 $ 1.61 ====================================================================================Contents

~~For the For the Eight Year Ended Months Ended August 31~~Remote Dynamics, 2003 August 31, 2002 Warranty product liability at beginning of period $ 491 $ 626 Accruals for product warranties issued 371 386 Product replacements (173) (973) Adjustments to pre-existing warranty estimates (175) 452 ----------- -------- Warranty product liability at end of period $ 514 $ 491 =========== ========Inc.

~~For the Year For the Eight Months For the Year Ended August 31, Ended August 31, Ended December 31, 2003 2002 2001~~ FORM 10---------------- -------------------- ------------------ Research and development costs $ 1,000 $ 667 $ 525 Contract service expenses 2,719 641 - Inventory and other purchases 146 - - --------- -------- -------- $ 3,865 $ 1,308 $ 525 ========= ======== ========K

AsFor the ofFiscal ~~August~~Year ~~31,~~Ended AsDecember ~~of August~~ 31, ~~2003 2002 ---------------- ---------------- Other current assets $ - $ 794 Other current liabilities $ 553 $ 248 Other non-current liabilities $ 1,760 $ 880~~2008

~~2001 2000 ---------- ---------- Revenues $ 15,331 $ 47,713~~INDEX

Twelve Months Ended August 31, 2003 NSC Systems VMI Consolidated ----------- --------- ------------ Revenues $ 39,854 $ 5,057 $ 44,911 Operating income (loss) 11,029 (24,952) (13,923) Interest expense 2,118 - 2,118 Interest income 117 330 447 Depreciation and amortization 2,803 2,823 5,626 Net income (loss) 8,918 (24,938) (16,020) Total assets 12,998 43,102 56,100 Capital expenditures 344 231 575 Other significant non-cash items: Purchases of assets through capital leases 178 - 178

PART I
Item 1.	Description of Business	1
Item 1A.	Risk Factors	7
Item 2.	Description of Properties	15
Item 3.	Legal Proceedings	15
Item 4.	Submission of Matters to a Vote of Security Holders	15

PART II
Item 5.	Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15
Item 6.	Selected Financial Information	16
Item 7.	Management’s Discussion and Analysis or Plan of Operations	16
Item 8.	Financial Statements	29
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	29
Item 9A.	Controls and Procedures	29
Item 9B.	Other Information	30

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	31
Item 11.	Executive Compensation	34
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	36
Item 13.	Certain Relationships, Related Transactions and Director Independence	37
Item 14.	Principal Accountant Fees and Services	40
Item 15.	Exhibits, Financial Statement Schedules	42

Signatures		44

~~Eight Months Ended August 31, 2002 NSC Systems VMI Consolidated~~ -~~----------~~ i --------- ------------ Revenues $ 40,786 $ 1,170 $ 41,956 Operating income (loss) 7,657 (17,276) (9,619) Interest expense 1,411 - 1,411 Interest income 347 110 457 Depreciation and amortization 2,503 1,819 4,322 Income tax benefit 978 - 978 Net income (loss) 7,388 (17,166) (9,778) Total assets 38,665 42,738 81,403 Capital expenditures 966 285 1,251 Other significant non-cash items: Note receivable received as proceeds from sale of assets and service contract 12,000 - 12,000 Receivable held in escrow received as proceeds from sale of assets and service contract 1,000 - 1,000 Purchases of assets through capital leases 224 - 224

~~Twelve~~Table Months Ended December 31, 2001 NSC Systems VMI Consolidated ----------- --------- ------------ Revenues $ 77,349 $ 131 $ 77,480 Operating loss (12,549) (5,247) (17,796) Interest expense 7,355 - 7,355 Interest income 501 - 501 Depreciation and amortization 6,068 1,370 7,438 Gain on recapitalization, net 59,461 - 59,461 Net income (loss) 40,058 (5,247) 34,811 Total assets 48,255 39,342 87,597 Capital expenditures 1,478 109 1,587 Other significant non-cash items: Fair Value of ~~License Rights acquired in exchange for 28,000,000 shares of common stock - 38,000 38,000 Principal amount of Senior Notes exchanged for 12,670,497 shares of common stock 20,273 - 20,273~~Contents

~~First~~PART Second Third Fourth 2003 Quarter Quarter Quarter Quarter ---- ------- ------- ------- ------- Total revenues $ 13,629 $ 12,045 $ 10,892 $ 8,346 Gross profit 5,595 5,200 4,584 3,201 Operating loss (3,956) (3,880) (2,739) (3,349) Net loss (4,473) (4,404) (3,228) (3,915) Basic and diluted loss per share $ (0.09) $ (0.09) $ (0.07) $ (0.08) Weighted average shares outstanding: Basic and diluted 48,349 48,349 48,349 48,349I

~~Two~~Item Months First Second Ending 2002 Quarter Quarter August 31, ---- ------- ------- ---------- Total revenues $ 14,982 $ 15,621 $ 11,353 Gross profit 6,520 6,093 3,879 Operating loss (3,991) (3,098) (2,530) Loss before income tax benefit (4,425) (3,515) (2,816) Income tax benefit - - 978 Net loss (4,425) (3,515) (1~~,838) Basic and diluted loss per share $ (0~~.~~09)~~ Description $of (0Business.~~07) $ (0.04) Weighted average shares outstanding: Basic and diluted 48,057 48,328 48,349~~

~~First~~In addition ~~Second~~to ~~Third~~the ~~Fourth~~historical ~~2001~~information ~~Quarter~~contained ~~Quarter~~herein, ~~Quarter~~the ~~Quarter~~discussion ~~----~~in this Form 10-~~------~~K ~~-------~~contains ~~-------~~certain forward-~~------~~looking ~~Total~~statements, ~~revenues~~within $the ~~22,436~~meaning of $Section 27A ~~17,212~~of $the ~~19,472~~Securities ~~$18,360~~Act ~~Gross~~of ~~profit~~1933 ~~7,640~~and ~~4,475~~Section 21E ~~6,646~~of ~~1,888~~the Securities ~~Operating~~Exchange ~~loss~~Act ~~(2,423)~~of (51934,~~874)~~ ~~(1,996)~~that (7involve risks and uncertainties,~~503)~~ ~~Net~~such ~~(loss)~~as statements ~~income~~concerning: ~~(5,582)~~growth ~~50,762~~and ~~(2,406)~~anticipated (7operating results; developments with our creditors; developments in our markets and strategic focus; new products and product enhancements; potential acquisitions and the integration of acquired businesses,~~963)~~ ~~Basic~~products and ~~diluted~~technologies; ~~(loss)~~strategic ~~income~~relationships ~~per~~and future ~~share~~economic $and (1business conditions. The cautionary statements made in this Form 10)-K $should ~~5.15~~be $read (0as being applicable to all related forward-looking statements whenever they appear in this Form 10-K.~~05)~~ $Our (0actual results could differ materially from the results discussed in the forward-looking statements.~~17)~~ Factors ~~Weighted~~that ~~average~~could ~~shares~~cause ~~outstanding:~~or ~~Basic~~contribute ~~and~~to ~~diluted~~such ~~5,065~~differences 9include,~~849~~ ~~48,056~~but 48are not limited to,~~047~~ those discussed under the section captioned “Risk Factors” in Item 1.A. of this Form 10-K as well as those cautionary statements and other factors set forth elsewhere herein.

First Second Third Fourth 2000 Quarter Quarter Quarter Quarter ---- ------- ------- ------- ------- Total revenues $ 16,312 $ 26,257 $ 29,780 $29,781 Gross profit 5,944 8,955 9,461 7,097 Operating (loss) income (1,793) (27) 492 (3,583) Loss before cumulative effect of accounting change (4,466) (3,003) (2,588) (5,282) Cumulative effect of accounting change (5,206) - - - Net loss (9,672) (3,003) (2,588) (5,282) Basic and diluted loss per share: Before cumulative effect of accounting change $ (0.89) $ (0.59) $ (0.51) $ (1.04) Cumulative effect of accounting change $ (1.03) $ - $ - $ - Basic and diluted loss per share $ (1.92) $ (0.59) $ (0.51) $ (1.04) Weighted average shares outstanding 5,038 5,064 5,065 5,065General

~~Additions~~We market, ~~Balance~~sell atand ~~Charged~~support toautomatic ~~Beginning~~vehicle oflocation ~~Costs~~(“AVL”) and ~~Balance~~mobile atresource management ~~Description~~solutions ~~Period~~targeting ~~Expenses~~companies ~~Deductions~~that ~~End~~own ofand ~~Period~~operate ~~-----------~~private ~~------------ ---------- ---------- ------------- Year ended December 31~~vehicle fleets, ~~2000~~construction ~~Allowance for doubtful accounts Accounts receivable 7~~equipment,~~448~~ ~~1,477~~and ~~(1,620)~~unpowered ~~7,305~~assets ~~Warranty~~such ~~reserve~~as ~~3,933~~containers ~~1,208~~and trailers. Our ~~(3,672)~~AVL ~~1,469~~solutions ~~Valuation~~are ~~allowance~~designed ~~against deferred tax asset 60,405 6,851 - 67,256 Year ended December 31, 2001 Allowance~~ for ~~doubtful~~diverse ~~accounts~~industry vertical ~~Accounts~~markets ~~receivable~~such ~~7,305~~as 1construction,~~056~~ ~~(4,807)~~field 3services,~~554~~ ~~Warranty reserve 1~~distribution,~~469~~ 1limousine,~~406 (2~~ electrical/plumbing,~~249)~~ ~~626~~waste ~~Provision for settlement of litigation - 2~~management,~~100~~ ~~(519)~~and ~~1,581~~government. Our ~~Valuation allowance against deferred tax asset 67~~core technology,~~256~~ 8telematics,~~458~~ ~~(19,804)~~combines ~~55,910~~wireless ~~Eight months ended August 31~~communications, ~~2002~~GPS ~~Allowance for doubtful accounts Accounts receivable 3~~location technology,~~554~~ ~~155~~geospatial ~~(866)~~solutions ~~2,843~~and ~~Allowance~~vehicle ~~for~~data ~~doubtful~~integration ~~accounts~~with ~~Lease payment receivables~~ a web-accessible ~~648~~application ~~(459)~~that ~~189~~aids ~~Warranty~~in ~~reserve~~the ~~626~~optimization ~~660 (795) 491 Provision for settlement~~ of ~~litigation~~remote ~~1,581~~business solutions. We ~~100~~believe ~~1,681~~our ~~Valuation~~fleet ~~allowance~~management ~~against~~solution ~~deferred~~contributes ~~tax~~to increased ~~asset~~operator ~~55,910~~efficiency ~~3,635~~by ~~(839)~~improving ~~58,706~~the ~~Year~~productivity ~~ended~~of ~~August~~mobile ~~31,~~workers through ~~2003~~real-time ~~Allowance~~position ~~for doubtful accounts Accounts receivable 2~~reports,~~843~~ ~~234~~route-traveled (2information,~~831)~~ ~~246~~and ~~Allowance~~exception based ~~for~~reporting ~~doubtful~~designed ~~accounts~~to ~~Lease~~highlight ~~payment~~mobile ~~receivables~~workforce ~~189~~inefficiencies. ~~1,144~~This in-depth ~~(881)~~reporting ~~452~~enables ~~Warranty~~our ~~reserve~~customers ~~491~~to ~~196~~correct ~~(173)~~those ~~514~~inefficiencies ~~Provision~~and deliver ~~for~~cost ~~settlement~~savings ofto ~~litigation~~their ~~1,681~~bottom ~~- - 1,681 Valuation allowance against deferred tax asset 58,706 5,394 - 64,100~~line.

~~EXHIBIT~~Our REDIview ~~NUMBER~~product ~~TITLE~~line ~~------~~forms ~~----- 2.1 - Stock Purchase and Exchange Agreement by and between~~ the ~~Company,~~basis Minorplanet Systems PLC and Mackay Shields LLC, dated February 14, 2001 (21) 2.2 - Asset Purchase Agreement by and between the Company and Aether Systems, Inc. dated March 15, 2002 (22) 3.1 - Restated Certificate of ~~Incorporation~~our ofcurrent ~~the Company, as amended (29) 3~~business plan.2 We -expect ~~Second~~this ~~Amended~~product ~~and~~line Restated By-Laws of the Company (20) 4.1 - Specimen of certificate representing Common Stock, $.01 par value, of the Company (1) 4.2 - Indenture dated September 23, 1997 by and among the Company, HighwayMaster Corporation and Texas Commerce Bank, National Association (the "Indenture") (8) 4.3 - First Supplemental Indenture, dated June 20, 2001, to ~~the~~provide ~~Indenture. (28) 4.4 - Pledge Agreement dated September 23, 1997, by and among~~ the ~~Company,~~foundation ~~Bear,~~for ~~Stearns~~a growth &in ~~Co.~~revenues ~~Inc.~~ and ~~Smith Barney Inc. (8) 4.5 - Registration Rights Agreement dated September 23~~, ~~1997,~~if byour ~~and~~revenues ~~among~~grow the Company, HighwayMaster Corporation, Bear, Stearns & Co. Inc. and Smith Barney Inc. (8) 4.9 - Warrant Registration Rights Agreement dated September 23, 1997, by and among the Company, Bear, Stearns & Co. Inc. and Smith Barney, Inc. (8) 10.1 - Registration Rights Agreement by and between the Company, Minorplanet Systems PLC and Mackay Shields LLC, dated as ofwe ~~June 21~~anticipate, ~~2001 (23) 10~~ultimately profitability.2 We -do ~~Exclusive~~not ~~License~~expect ~~and~~to ~~Distribution~~achieve ~~Agreement~~profitability byor positive ~~and~~cash ~~between~~flow ~~Minorplanet~~for ~~Limited, (an @Track subsidiary) and Mislex (302) Limited, dated June 21, 2001 (20) 10~~2009.3 Our -plans ~~Amended~~for ~~and~~2009 ~~Restated~~include ~~1994~~growing ~~Stock~~our subscriber ~~Option~~base ~~Plan~~through ofdirect ~~the~~sales ~~Company, dated February 4, 1994. (1) (4) (5) 10.4 - Amendment No. 1~~ to ~~the~~new ~~Amended~~ and ~~Restated~~existing ~~1994~~customers ~~Stock Option Plan (24) 10.5 - Amendment No. 2 to the Amended~~ and continuing ~~Restated 1994 Stock Option Plan (25) 10.6 - Amendment No. 3~~ to ~~the~~control ~~Amended~~our ~~and~~operating ~~Restated 1994 Stock Option Plan (30) 10~~costs.~~7 - Stock Option Agreement~~ However, ~~dated~~there ~~June~~can ~~22,~~be ~~1998,~~no assurance bythat ~~and~~we ~~between~~will ~~the~~achieve ~~Company~~our ~~and~~sales ~~John~~targets ~~Stupka~~for ~~(10) 10~~2009.8 Failure -to ~~Product~~do so ~~Development~~may ~~Agreement,~~have ~~dated~~a ~~December~~material ~~21,~~adverse ~~1995,~~effect ~~between~~on ~~HighwayMaster~~our ~~Corporation and IEX Corporation (2)(3) 10.9 - Software Transfer Agreement~~business, ~~dated~~financial ~~April~~condition ~~25, 1997, between HighwayMaster Corporation~~ and results ~~Burlington~~of ~~Motor Carriers, Inc~~operations. ~~(6)(7) 10.10 - Lease Agreement~~ Moreover, ~~dated~~despite ~~March~~actions ~~20,~~to ~~1998,~~increase ~~between HighwayMaster Corporation and Cardinal Collins Tech Center~~revenue, control ~~Inc.~~operating ~~(9) 10.11 - Stock Option Agreement dated November 24~~costs, ~~1998, by~~ and ~~between~~to ~~the~~improve ~~Company~~profitability and ~~Michael~~cash ~~Smith. (10) 10.12 - Agreement No. 980427 between Southwestern Bell Telephone Company~~flow, ~~Pacific~~our operating ~~Bell,~~losses ~~Nevada~~will ~~Bell,~~continue ~~Southern~~through ~~New~~2009 ~~England Telephone~~ and ~~HighwayMaster~~net ~~Corporation~~operating ~~executed~~cash onoutflows ~~January~~will continue ~~13,~~through ~~1999~~the ~~(11)(12)~~second ~~10.13~~quarter -of ~~Administrative Carrier Agreement entered into between HighwayMaster Corporation and Southwestern Bell Mobile Systems, Inc~~2009. on March 30, 1999 (11)(12) 10.14 - Addendum to Agreement entered into between HighwayMaster Corporation and International Telecommunications Data Systems, Inc. on February 4, 1999 (11)(12) 10.15 - Second Addendum to Agreement entered into between HighwayMaster Corporation and International Telecommunications Data Systems, Inc. on February 4, 1999 (11)(12)

We are not in compliance with certain of our obligations relating to our secured convertible notes. Our failure to comply with our obligations relating to these securities exposes us to demands for immediate repayment (in some cases, at a premium to outstanding principal) as well as default interest and liquidated damages claims by the security holders.

We have obtained the agreement of certain of our note holders to extend the payment schedule and maturity date of the notes and have resumed making payments to certain of our note holders of amounts due under the notes in the form of our common stock. We plan to continue to explore alternatives to restructure or otherwise satisfy our obligations to our note holders. However, we do not currently have the cash on hand to repay amounts due under our secured convertible notes if the note holders elect to exercise their repayment or other remedies. If our efforts to restructure or otherwise satisfy our obligations under the notes are unsuccessful, and we are unable to raise enough money to cover the amounts payable under the notes, we may be forced to restructure, file for bankruptcy, sell assets or cease operations.

We had a working capital deficit of $3.4 million, excluding the outstanding amount of our secured convertible notes of $10.8 million, as of December 31, 2008. We believe that we will have sufficient

- 1 -

Table of Contents

capital to fund our ongoing operations through 2009, assuming that we are able to meet our sales targets and to negotiate acceptable payment arrangements with our senior security holders, vendors and other creditors. The sufficiency of our cash resources depends to a certain extent on general economic, financial, competitive or other factors beyond our control. We do not currently have any arrangements for additional financing and we may not be able to secure additional debt or equity financing on terms acceptable to us, or at all, at the time when we need such financing. Furthermore, our ability to secure certain types of additional financings is restricted under the terms of our existing financing arrangements. There can be no assurance that we will be able to consummate a transaction for additional capital prior to substantially depleting our available cash reserves, and our failure to do so may force us to restructure, file for bankruptcy, sell assets or cease operations.

Our principal executive offices are located at 400 Chisholm Place, Suite 411, Plano, Texas 75075, and our telephone number is (214) 440-5200. Our website URL is www.remotedynamics.com. References to “we”, “us”, “our”, “Remote Dynamics, Inc.”, or “RMTD” refer to Remote Dynamics, Inc. and its subsidiaries. REDIview™ is a registered trademark of Remote Dynamics, Inc.

Company History and Recent Financings

We were originally incorporated in Delaware in 1994. We have undergone a number of changes in our business strategy and organization. We filed for bankruptcy in 2004, and changed our name to “Remote Dynamics, Inc.” in connection with our exit from bankruptcy that same year.

On November 30, 2006, we agreed to acquire from Bounce Mobile Systems, Inc. (“BMSI”) 100% of the capital stock of BounceGPS, Inc., a provider of mobile asset management solutions, in exchange for:

5,000 shares of our newly authorized series C convertible preferred stock (initially convertible into 51% of our fully diluted shares of common stock);

A series B subordinated secured convertible promissory note in the principal amount of $660,000;

An original issue discount series B subordinated secured convertible promissory note in the principal amount of $264,000;

A series E-7 warrant to purchase 1,547 shares of common stock; and

A series F-4 warrant to purchase 1,547 shares of common stock.

The acquisition closed on December 4, 2006. As part of the acquisition of BounceGPS, Inc., we acquired mobile subscribers, executive management and marketing expertise.

Bounce Mobile Systems, Inc. acquired control of our Company in the transaction and, accordingly, we have treated the transaction as a “reverse merger” for financial reporting purposes. Nonetheless, the historical operations of Remote Dynamics, Inc. represent substantially all of our continuing business and operations.

On November 20, 2007, we completed an increase in the number of our authorized shares of common stock to 750,000,000 and a one-for-fifty reverse stock split of our common stock. On August 13, 2008, we completed an increase in the number of our authorized shares of common stock to 5,000,000,000 and a one-for-four-hundred reverse stock split of our common stock. The share and per-share information disclosed within this Form 10-K reflect the completion of these reverse stock splits.

On or about April 13, 2009, we will complete an increase in the number of our authorized shares of common stock to 15,000,000,000.

We have historically relied on a series of financings and asset sales to fund our ongoing operations. A summary of our recent financing history is set forth below.

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Table of Contents

Series A Note Financing

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

The Series A Notes matured on February 23, 2008, and are currently due and payable. The Series A Notes are secured by substantially all of our assets. The Series A Notes are convertible at the option of the holder into our common stock at a fixed conversion price of $0.000117, subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents. We may make scheduled principal installment payments in cash or in registered shares of its common stock. If paid in common stock, certain conditions must be satisfied, and the number of registered shares to be paid to the holder must be an amount equal to the principal installment amount divided by eighty percent (80%) of the average of the closing bid price for the ten (10) trading days immediately preceding the principal payment date.

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

We have failed to comply with certain of our other obligations relating to the Series A Notes, including our failure to make scheduled principal payments and to register for resale the shares of common stock underlying the notes and warrants issued in the Series A private placement. The Series A Notes provide for a default interest rate of 10% per annum on the outstanding principal amount of the notes for periods in which certain specified events of default occur and are continuing and liquidated damages for non-compliance with our registration obligations. As of December 31, 2008, we have accrued $960,927 in default interest and liquidated damages under the Series A Notes.

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

In March, 2008, we resumed making payments to certain of our note holders of amounts due under the notes by issuing shares of our common stock under the terms of the notes. During 2008, we issued 55,669,326 shares of common stock as partial principal payments on the Series A Notes in satisfaction of $548,000 of obligations due under the notes. We expect to issue additional shares of our common stock in payment of amounts due under the notes during 2009 and thereafter. In general, the shares issued are available for immediate resale by the holders in accordance with Rule 144 under the Securities Act of 1933, as amended.

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

Series B Note Financing

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

The series B subordinated secured convertible promissory notes and the series B original issue discount series B subordinated secured convertible promissory notes (collectively, the “Series B Notes”) are secured by all of our assets, subject to existing liens, are due on dates ranging from December 4, 2009 to May 2011 and began scheduled amortization of principal (in nine quarterly installments) on dates ranging from August 1, 2007 to May 21, 2011. We may make principal installment payments in cash or in registered shares of our common stock. If paid in common stock, certain conditions must be satisfied, and the number of registered shares to be paid to the holder must be an amount equal to the principal installment amount divided by the lesser of (i) $1.00 and (ii) 90% of the average of the volume weighted average trading prices of the common stock for the ten trading days immediately preceding the principal payment. The Series B Notes are convertible into our common stock at a conversion price of $0.000124 per share, subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents.

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

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

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

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

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to pay to the placement agent for the transaction consideration consisting of (a) a cash sales commission of $150,480, (b) warrants to purchase 822 shares of our common stock at an exercise price of $0.000124 per share (as of December 31, 2008) and being exercisable for ten years, (c) series E-7 warrants to purchase 617 shares of our common stock, and (d) series F-4 warrants to purchase 617 shares of our common stock. We also paid $60,000 to Strands Management Company, LLC for consulting work as well as $59,816 in legal counsel fees as part of the private placement.

We have failed to comply with certain of our other obligations relating to the Series B Notes, including our failure to make scheduled principal payments and to register for resale the shares of common stock underlying the notes and warrants issued in the Series B private placement. The Series B Notes provide for a default interest rate of 10% per annum on the outstanding principal amount of the notes for periods in which certain specified events of default occur and are continuing and liquidated damages for non-compliance with our registration obligations. As of December 31, 2008, we have accrued $800,077 in default interest and liquidated damages under the Series B Notes.

Our non-compliance with the terms of the notes also exposes us to the risk that our note holders could exercise their prepayment or other remedies under the notes.

In March, 2008, we commenced making payments to certain of our Series B note holders of amounts due under the notes by issuing shares of our common stock under the terms of the notes. During 2008, we issued 17,873,879 shares of common stock as partial payments on the Series B Notes in satisfaction of $264,000 of obligations due under the notes. We expect to issue additional shares of our common stock in payment of amounts due under the notes during 2009 and thereafter.

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

Products and Services

We market and sell products and services in the AVL market in the United States. Our AVL products are designed to maximize the productivity of a mobile workforce as well as reduce vehicle mileage and fuel-related expenses.

We commercially launched our current product offering, REDIview, in 2005. REDIview is an Internet and service bureau-based software application that provides an extensive array of real-time and accurate mapping, trip replay, and vehicle activity reports. REDIview includes a series of exception-based reports designed to highlight inefficiencies in the operations of a fleet of vehicles, construction equipment, or non-powered assets, such as trailers or containers. Utilizing GPRS and ORBCOMM satellite technology and our proven, high-capacity network service center, customers may access their information securely through the Internet from any personal computer or certain other devices.

REDIview incorporates technologies that allow for fast and effective integration into legacy applications operated by companies with vehicle fleets and mobile workers. This design allows companies to easily extend their existing supply chain management systems to the mobile workforce for transaction processing and customer fulfillment. REDIview was also designed to be hardware and network agnostic to provide the maximum flexibility in designing solutions that best fit the customer’s specific needs.

The REDIview mobile data logging units combine global positioning system (GPS) technologies along with the latest in wireless and Internet protocol-based communications to deliver real-time location, speed, and other conditions of the vehicle on a minute-by-minute basis. In addition, the units may be configured to accept additional sensor inputs regarding operations of the vehicle and vehicle equipment.

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Competition

We believe that our primary competitors in the automatic vehicle location market include:

Largest Competitor – Our largest competitor is Trimble Navigation Limited. Trimble entered our market in 2007 through its acquisition of @Road, Inc. @Road's mobile resource management system enables vehicle location, wireless voice and text communications, and remote transaction processing with signature capture using a PDA. Trimble is an international provider of GPS and other advanced positioning solutions.

Mid-Sized Competitors – There are several other mid-sized companies that we routinely compete with throughout the United States. Mid-sized competitors include: Teletrac, Hughes Telematics, Telogis, Navtrak, Discrete Wireless and Fleetmatics.

Other Regional Competitors and Resellers - There are numerous smaller regional companies and national resellers selling into the market.

Employees

At December 31, 2008, we had 18 employees. Our employees are not represented by a collective bargaining agreement. None of our employees are represented by a labor organization, and we are not a party to any collective bargaining agreement. We have not experienced any work stoppages and consider our relations with our employees to be good.

Competition in the recruiting of personnel in the AVL industry is intense. We believe that our future success will depend in part on our continued ability to hire, motivate and retain qualified management, sales and marketing, and technical personnel. To date, we have not experienced significant difficulties in attracting or retaining qualified employees.

Infrastructure And Operations

Networks. We use wireless data and/or voice technologies, combined with GPS satellite technology, for all of our products. Our strategy is to select and use wireless networks that provide the “best fit” for each product and application or specific customer need.

Wireless Data Transmission. The REDIview product utilizes the general packet radio service (“GPRS”) bearer channel of the GSM network to provide Internet protocol based wireless data transmission. Currently, there are two major carriers providing GSM/GPRS coverage in the United States: T-Mobile and AT&T Wireless, both of which provide coverage in the major metropolitan areas in the United States. These carriers have announced joint arrangements to continue to expand GSM/GPRS coverage in the United States, including interoperability among the two carriers. We believe the coverage, bandwidth and price of the GSM/GPRS network make it best suited for the next generation technology. We also use the ORBCOMM Satellite network to provide services for customers that are in remote areas not covered by the GSM footprint.

Navigation Technology. GPS technology allows customers to identify the location of any mobile asset at any time via satellite. GPS is operated by the United States government, and broadcasts navigational information from a network of dedicated satellites orbiting the earth. GPS navigational receivers interpret signals from multiple satellites to determine the receiver’s geographical coordinates, elevation and velocity. GPS navigational signals can be received worldwide, without adaptation of the receiver unit to foreign standards. The Company believes that the network of GPS navigational satellites will be maintained by the United States Defense Department in an operational status for the foreseeable future. Although stand-alone GPS units are available for purchase by any consumer at relatively low cost, the Company believes that raw navigational information is of little use in tracking assets unless the GPS receiver is integrated with a computer system, such as the Company’s mobile communication units, to record routes traveled relative to mapped roadways or to transmit position reports to a central dispatcher.

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Strategic Service Alliances of the Company

AT&T Wireless. The Company provides GSM/GPRS data services to its REDIview customers pursuant to a data reseller agreement with AT&T Wireless now known as AT&T Wireless (“AT&T”) effective as of November 1, 2004 and a messaging agreement effective September 27, 2004. The data reseller agreement and messaging agreement have an initial term of two years and automatically renews for successive one year terms unless either party provides the other party with written notice of termination at least 30 days prior to the end of the initial term or any renewal term. However, the data reseller agreement and the messaging agreement may be terminated by AT&T or the Company for convenience upon 90 days prior written notice.

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

Key Manufacturers. The Company does not manufacture or assemble its products but purchases complete mobile units from multiple manufacturers to minimize risk and not become dependent on one supplier.

Item 1A. Risk Factors.

In addition to the other information in this Form 10-K, the following factors should be considered in evaluating Remote Dynamics, Inc. and our business.

We have operated at a significant loss in recent periods, have a substantial working capital deficit, and may not have adequate funds to continue as a going concern.

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

We do not expect to achieve positive operating cash flow until the second quarter of 2009. Our plans for 2009 include growing our subscriber base through direct sales to new and existing customers. However, there can be no assurance that we will achieve our sales targets for 2009. Failure to do so may have a material adverse effect on our business, financial condition and results of operations. Moreover, despite actions to increase revenue and to improve profitability and cash flow, our operating losses will continue in 2009 and net operating cash outflows will continue into at least the second quarter of 2009.

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

Ability to increase sales of the REDIview product line.

Retaining existing customers.

Training and development of new sales staff.

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

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We had a working capital deficit of $3.4 million, excluding the gross amount of our outstanding secured convertible notes of $10.8 million, as of December 31, 2008. We believe that we will have sufficient capital to fund our ongoing operations through 2009, assuming that we are able to meet our sales targets and operating cost reduction plans and to negotiate acceptable payment arrangements with our senior security holders, vendors and other creditors. The sufficiency of our cash resources depends to a certain extent on general economic, financial, competitive or other factors beyond our control. We do not currently have any arrangements for additional financing and we may not be able to secure additional debt or equity financing on terms acceptable to us, or at all, at the time when we need such financing. Further, our ability to secure certain types of additional financings is restricted under the terms of our existing financing arrangements. There can be no assurance that we will be able to consummate a transaction for additional capital prior to substantially depleting our available cash reserves, and our failure to do so may force us to restructure, file for bankruptcy, sell assets or cease operations.

We are currently not in compliance with our obligations under our senior securities and, as a result, our senior security holders may declare the securities immediately due and payable, we may be required to pay default interest, monetary liquidated damages and/or amounts in excess of the outstanding amount due under of the securities, and we may be forced to restructure, file for bankruptcy, sell assets or cease operations.

We are not in compliance with our obligations relating to our secured convertible notes and our convertible preferred stock, including with respect to our secured convertible notes, our failure to make required principal and other payments when due.

Our non-compliance with the terms of the notes exposes us to the risk that our note holders could seek to exercise prepayment or other remedies under the notes. Events of default under the notes include:

our failure to make the principal installment amount on a designated principal payment date;

our failure to comply with our registration obligations with respect to shares of our common stock issuable upon conversion of the note or exercise of warrants issued to the note investors;

the suspension from listing or failure of our common stock to be listed on the OTC Bulletin Board or one of the major exchanges;

our notice to the holder of our inability to comply or intention not to comply with proper requests for conversion of the notes;

our default in the performance of any material covenant in the notes, the purchase agreement for the notes, the registration rights agreement relating to the notes or any other ancillary documents relating to the notes;

our making of a false or incorrect representation or warranty in the purchase agreement for the notes, the registration rights agreement relating to the notes or any other ancillary documents relating to the notes;

our default in any payment of principal or interest on the indebtedness represented by the notes, or default in the observance or performance of any other agreement relating to such indebtedness in excess of $100,000;

our application for appointment of a receiver or liquidator or filing a petition in bankruptcy or other similar relief which is not dismissed within 30 days; and

the filing of a proceeding against us seeking the liquidation, reorganization, or dissolution of us or similar relief which is not dismissed within 30 days.

Upon the occurrence of an event of default on our secured convertible notes, the holders may (a) demand prepayment of the notes as described below, (b) demand that the principal amount of the notes then outstanding be converted into shares of our common stock at the conversion price discussed in more detail below, and/or (c) exercise any of the holder’s other rights or remedies under the transaction documents or applicable law. If the holders require us to prepay all or a portion of the notes, the prepayment price would be equal to 120% of the principal amount of the notes. The holders would also recover all other costs or expenses due in respect of the notes and the other transaction documents.

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Our failure to comply with our obligations relating to these securities also exposes us to default interest and liquidated damages claims by the note holders. As of December 31, 2008, we had incurred approximately $1,761,004 in default interest and liquidated damages under our secured convertible notes.

The holders of shares of convertible preferred stock have the right to cause us to redeem any or all of their shares at a price equal to 100% of face value, plus accrued but unpaid dividends, upon the occurrence of specified events, including our breach of any material term under the related financing documents (subject to applicable notice and cure periods).

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

We are repaying our secured convertible notes in shares of our common stock valued at a discount of the common stock’s trading price which results in a significant issuance of new shares of common stock to the note holders and causes material dilution to the then existing holders of our common stock.

We issued a significant number of shares of our common stock in payment of amounts due under our secured convertible notes during 2008 and expect to continue to do so in 2009 and thereafter. Under the terms of the notes, we have issued the shares at a discount to the trading price of our common stock. In general, the shares issued are available for immediate resale by the holders in accordance with Rule 144 under the Securities Act of 1933, as amended.

In 2008, and through March 25, 2009, we issued 3,067,407,599 shares of common stock as partial principal payments on the Series A Notes in satisfaction of $1,150,000 of obligations due under the notes. Additionally, we issued 1,065,811,416 shares of common stock as partial payments on the Series B Notes in satisfaction of $450,000 of obligations due under the notes.

To accommodate these share issuances, we completed an increase in the number of our authorized shares of common stock to 750,000,000 and a one-for-fifty reverse stock split of our common stock on November 20, 2007 and a further increase in the number of our authorized shares of common stock to 5,000,000,000 and a one-for-four-hundred reverse stock split on August 13, 2008. We are in the process of increasing our authorized shares of common stock to 15,000,000,000. We anticipate that we will issue the full number of newly authorized shares of common stock in 2009 in payment of amounts due under, or in connection with the conversion of, our outstanding convertible securities.

As of March 25, 2009, we would have to issue 85,299,736,567 shares of our common stock to repay amounts outstanding under our senior secured notes. Accordingly, we will likely need to implement additional reverse stock splits and/or increases in our authorized shares to meet our obligations to note holders.

There are a large number of shares of common stock underlying our senior securities that may be available for future sale and the sale of these shares may depress the market price of our common stock.

As of March 25, 2009, we had outstanding $3,044,516 principal amount of our Series A Notes and $6,948,439 principal amount of our Series B Notes, in each case, excluding accrued default interest and liquidated damages payable. To repay these amounts in shares of our common stock (utilizing the most recent conversion price), we would have to issue 85,299,736,567 shares of our common stock.

In general, any shares of common stock we issue in respect of our senior securities will be available for immediate resale by the holders in accordance with Rule 144 under the Securities Act of 1933, as amended.

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Sales of significant amounts of common stock in the public market, or the perception that such sales may occur, could materially decrease the market price of our common stock. These sales might also make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

We have pledged all of our assets to existing creditors.

Our secured convertible notes are secured by a lien on substantially all of our assets. A default by us under the secured convertible notes would enable the holders of the notes to take control of substantially all of our assets. The holders of the secured convertible notes have no operating experience in our industry and if we were to default and the note holders were to take over control of our Company, they could force us to substantially curtail or cease our operations. If this happens, an investor could lose their entire investment in our common stock.

In addition, the existence of our asset pledges to the holders of the secured convertible notes will make it more difficult for us to obtain additional financing required to repay monies borrowed by us, continue our business operations and pursue our growth strategy.

Potential future offerings could dilute the interest of our common stockholders.

We expect in the future to increase our capital resources by making additional offerings of equity and debt securities, including classes of preferred stock and common stock. However, there can be no assurances that we will be able to obtain any such financing on terms acceptable to us or at all. The effect of additional equity offerings may be the dilution of the equity of our stockholders or the reduction of the price of shares of our common stock, or both. We are unable to estimate the amount, timing or nature of additional offerings as they will depend upon market conditions and other factors.

BMSI can vote an aggregate of 96.0% of the voting power of our common stock and can exercise control over corporate decisions including the appointment of directors.

BMSI can vote an aggregate of 101,420,687,948 shares (or 96.0%) of the voting power of our common stock. Accordingly, BMSI will exercise control in determining the outcome of all corporate transactions or other matters, including the election of directors, mergers, consolidations, the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. Our other stockholders will be minority shareholders and as such will have little to no say in the direction of the Company and the election of directors. Additionally, it will be difficult if not impossible for investors to remove designees of BMSI as directors of the Company, which will mean BMSI will remain in control of who serves as officers of the Company as well as whether any changes are made in the Board of Directors. Potential investors in the Company should be aware that even if they own shares of our common stock and wish to vote them at annual or special shareholder meetings, their shares will likely have little effect on the outcome of corporate decisions.

The certificates of designation for our Series C and Series B convertible preferred stock contain restrictions on our ability to take certain actions without the approval of the Series C and Series B convertible preferred stockholders, including entering into mergers or issuing additional debt or equity, and also contains certain mandatory redemption events which could force us to redeem shares when we do not have the funds to do so.

We are prohibited from taking numerous actions without the approval of the holders of at least a majority of our series C, and, in certain cases, our series B convertible preferred stock, including, without limitation:

amending our certificate of incorporation or bylaws;

redeeming securities;

entering into an asset sale, merger or similar transaction;

creating or issuing senior or pari passu securities; or

issuing equity or debt securities.

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Accordingly, we may not be able to obtain the approval of our convertible preferred stockholders needed to complete a necessary or advisable financing transaction, or necessary to effect any other transaction that our board of directors deems to be in the best interests of our stockholders.

The certificate of designations for our convertible preferred stock also contain numerous redemption events, including any breach by us of any of the transaction documents pursuant to which we issued the securities. If any of these redemption events were to occur, the holders of our convertible preferred stock could force us to redeem their shares. We may not have the funds available to affect a forced redemption and the holders could take further actions such as forcing us into involuntary bankruptcy.

We face significant competition in the automatic vehicle location marketplace.

Our REDIview product faces significant competition from internal development teams of customers and potential customers and from several other suppliers of similar products, many of which may have greater name recognition and greater financial and technological resources. As the demand by business for mobile tracking services increase, the quality, functionality and breadth of competing products and services will likely improve and new competitors may enter the market. Further, the adoption of widespread industry standards may make it easier for new market entrants or existing competitors to improve their existing services, to offer some or all of the services we presently offer or may offer in the future, or to offer new services that we do not offer. We can provide no assurance that our products will compete successfully with the products of our competitors or that we will adapt to changes in the business, regulatory or technological environment as successfully as our competitors. If we are unable to compete successfully, our ability to acquire or retain customers may be limited which could result in a material adverse effect on our business, financial condition and results of operations.

We may be unable to adapt to shifts in technology in the wireless communications industry.

Technology in the wireless communications industry is in a rapid and continuing state of change as new technologies and enhancements to existing technologies continue to be introduced. Our future success will depend upon our ability to develop and market products and services that meet changing customer needs and that anticipate or respond to technological changes on a timely and cost-effective basis. We can offer no assurance that we will be able to keep pace with technological developments. Our failure to develop and market products and services that meet changing customer needs and that anticipate or respond to technological changes on a timely and cost-effective basis could result in a material adverse effect on our business, financial condition and results of operations.

If wireless carriers on which we depend for services decide to abandon or do not continue to expand their wireless networks, we may lose subscribers and our revenues could decrease.

Currently, our automatic vehicle location products rely primarily on GSM/GPRS networks. GPRS is the internet protocol-based dedicated high speed wireless data channel for the GSM wireless network. If wireless carriers abandon these protocols in favor of other types of wireless technology, we may not be able to provide services to our customers. In addition, if wireless carriers do not expand their coverage areas, we will be unable to meet the needs of our customers who may wish to use some of our services outside the current coverage area.

We rely primarily on AT&T Wireless for the provision of GSM/GPRS data services to our REDIview customers and our inability to renew our agreements with AT&T Wireless may require us to retrofit our installed base of REDIview units.

We provide GSM/GPRS data services to our REDIview customers pursuant to a data reseller agreement with AT&T Wireless effective as of November 1, 2004 and a messaging agreement effective September 27, 2004. The data reseller agreement and messaging agreement have an initial term of 2 years and automatically renews for successive one year terms unless either party provides the other party with written notice of termination at least 30 days prior to the end of the initial term or any renewal term. However, the data reseller agreement and the messaging agreement may be terminated by AT&T or by us for convenience upon 90 days prior written notice.

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If AT&T terminates the data reseller agreement and messaging agreement and ceases to provide GSM/GPRS services to us for resale to our customers, the REDIview units in our base of installed REDIview customers would no longer be able to send or receive data messages until we could reach an agreement with another provider and retrofit such units to utilize the GSM/GPRS service of this alternative provider. There can be no assurances that we would be able to reach an agreement with another wireless carrier for GSM/GPRS service and/or retrofit our existing REDIview customer base to utilize the GSM/GPRS service of the alternative provider. The failure to do so would have a material adverse effect on our business, financial condition and results of operations.

We depend on Global Positioning System technology owned and controlled by others. If we do not have continued access to GPS technology or satellites, our REDIview product line will cease to function.

Our REDIview products depend upon signals from GPS satellites built and maintained by the U.S. Department of Defense. GPS satellites and their ground support systems are subject to electronic and mechanical failures and sabotage. If one or more satellites malfunction, there could be a substantial delay before they are repaired or replaced, if at all, and our products and services may cease to function.

In addition, the U.S. government could decide not to continue to operate and maintain GPS satellites over a long period of time or to charge for the use of GPS. Furthermore, because of ever-increasing commercial applications of GPS and international political unrest, U.S. government agencies may become increasingly involved in the administration or the regulation of the use of GPS signals in the future. If factors such as these affect GPS by affecting the availability, quality, accuracy or pricing of GPS technology, these factors could have a material adverse effect on our business, financial condition and results of operations.

Any natural disaster, terrorist attack or other occurrence that renders our network service center inoperable could significantly hinder the delivery of our services to our customers because we lack an effective remote back-up communications system.

Currently, our disaster recovery systems focus on internal redundancy and diverse routing within the network services center operated by us. We do not currently have a remote back-up communications system that would enable us to continue to provide mobile communications services to our customers in the event of a natural disaster, terrorist attack or other occurrence that rendered our network services center inoperable. Accordingly, our business is subject to the risk that this disaster, attack, security intrusion by a computer hacker or other occurrence could hinder or prevent us from providing services to some or all of our customers. The delay in the delivery of our services could cause some of our customers to discontinue business with us which could have a material adverse effect on our business, financial condition and results of operations.

We depend on our key personnel, and the loss of one or more of these individuals could have a material adverse effect on our business, financial condition and results of operations.

We are dependent on the efforts of Gary Hallgren, our Chief Executive Officer, and Greg Jones, our Senior Vice President, Operations. We maintain employment agreements with these executives which expire in February 2010.

In addition, we are also dependent upon a group of our employees possessing valuable technical skills.

The loss of services of one or more of these individuals could materially and adversely affect our business and future prospects. We do not maintain key-man life insurance on any of our officers or employees. We can provide no assurance that we will be able to attract and retain additional management and technical personnel required in connection with the growth and development of our business.

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Increases in the wholesale rates for digital wireless service could reduce our service margin.

We currently purchase digital wireless service at wholesale rates to operate certain parts of our business. While we presently have no reason to belief that these rates will increase, these rates are outside of our control and any increase in the digital wireless serviced may have a material adverse effect on our costs which could decrease our profit margins and revenues.

Product liability claims could have a material adverse effect on our business by creating additional costs related to the payment or settlement of these claims.

It is possible that the operation of our products may give rise to product liability claims. Product liability claims present a risk of protracted litigation, substantial money damages, attorney’s fees, costs and expenses and diversion of our management’s attention. Product liability claims that exceed policy limits applicable to our liability insurance or that are excluded from the policy coverage could result in a material adverse effect on our business, financial condition and results of operations.

Changes in industry-specific government regulations could require us to materially increase our expenses to pay compliance fees.

We believe that our products and services are currently exempt from both Federal Communications Commission and state regulations. We rely on our long-distance providers and wireless providers to comply with any applicable regulatory requirements. In the event that our services are reclassified as “telecommunications services,” we could be forced to expend substantial time, money and resources to comply with the applicable regulations and contribute to applicable universal services funds mandated by federal regulations. An event like this could result in a material adverse effect on our business, financial condition and results of operations owing to this increase in expenses.

We may not be able to adequately protect our proprietary technology, and our intellectual property rights may be challenged by others.

Our products and services are highly dependent upon our technology and the scope and limitations of our proprietary intellectual property rights. In order to protect our technology, we rely on a combination of copyrights and trade secret laws, as well as certain customer licensing agreements, employee and third-party confidentiality and non-disclosure agreements and other similar arrangements. If our assertion of proprietary intellectual property rights is held to be invalid, or if another party’s use of our technology were to occur to any substantial degree, our business, financial condition and results of operations could be materially adversely affected.

Several of our competitors have obtained and can be expected to obtain patents that cover products or services directly or indirectly related to those which we offer. Our management attempts to be aware of patents containing claims that may pose a risk of infringement by our products or services. In addition, patent applications in the United States are confidential until a patent is issued; accordingly, our management cannot evaluate the extent to which our products or services may infringe on future patent rights being sought by others. In general, if it were determined that any of our products, services or planned enhancements infringed valid patent rights held by others, we would be required to obtain licenses to develop and market these products, services or enhancements from the holders of the patents, to redesign such products or services to avoid infringement, or to cease marketing such products or services or developing the enhancements. In this event, we also might be required to pay past royalties or other damages. We can provide no assurance that, should it become necessary, we would be able to obtain licenses on commercially reasonable terms, or that we would be able to design or redesign our products to incorporate alternative technologies, without a material adverse effect on our business, financial condition and results of operations.

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Our adoption of “Reverse Merger Accounting” makes comparisons of our financial position and results of operations with those of prior fiscal periods more difficult.

In connection with our acquisition of BounceGPS in December 2006, we implemented “Reverse Merger Accounting” in accordance with FAS 141 “Accounting for Business Combinations” whereby our financial statements reflect the historical operations of BounceGPS as they are the accounting acquirer. Accordingly, BounceGPS is deemed to be the purchaser and surviving company for accounting purposes and its net assets are included in the balance sheet at their historical book values and the results of operations of BounceGPS have been presented for the comparative prior period. The results of operations of Remote Dynamics, Inc. are included in our financial statements subsequent to December 4, 2006 with the purchase price allocated to the acquired assets and liabilities of Remote Dynamics, Inc. as of December 4, 2006. As a result, the consolidated financial statements for periods after our reverse merger are not comparable to our consolidated financial statements for the periods prior to our reverse merger. The application of “Reverse Merger Accounting” makes it more difficult to compare our post-merger operations and results to those in pre-merger periods and could therefore adversely affect trading in and the liquidity of our common stock.

Our certificate of incorporation and bylaws and state law contain provisions that could discourage a takeover.

We have adopted a certificate of incorporation and bylaws, which in addition to state law, may discourage, delay or prevent a merger or acquisition that any one of our stockholders may consider favorable. These provisions include the following:

authorizing the board to issue blank check preferred stock on terms it deems advisable;

prohibiting cumulative voting in the election of directors; and

limiting the persons who may call special meetings of stockholders;

We have adopted a certificate of incorporation that permits our board to issue shares of preferred stock without stockholder approval (other than approvals of the series B and series C convertible preferred stockholders currently required), which means that our board could issue shares with special voting rights or other provisions that could deter a takeover. In addition to delaying or preventing an acquisition, the issuance of a substantial number of shares of preferred stock could adversely affect the price of our common stock and dilute existing stockholders.

The price of our common stock is volatile.

Historically, market prices for securities of emerging companies in the telecommunications industry have been highly volatile. Future announcements concerning our business, our financial condition, the business of our competitors or our wireless providers, including results of technological innovations, new commercial products, financial transactions, government regulations, proprietary rights or product or patent litigation, may have a significant impact on the market price of shares of our common stock. The market price and trading volume of our common stock has been highly volatile in recent periods and our common stock is often thinly traded.

We do not expect to pay dividends on our common stock in the foreseeable future.

We have never paid cash dividends on our common stock and have no plans to do so in the foreseeable future. We intend to retain earnings, if any, to develop and expand our business.

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Item 2. Description of Properties.

Our headquarters are located in Plano, Texas. We occupy approximately 4,600 square feet of floor space in this facility. This facility includes our corporate administration, operations, marketing, research and development, sales and technical support personnel. The lease for our headquarters facility extends through August 2012.

Item 3. Legal Proceedings.

In March 2008, Teletouch Communications, Inc. brought a lawsuit against the Company alleging the Company was liable for payment of a $5.8 million default judgment obtained by Teletouch against DataLogic International, Inc., based on corporate alter ego and other claims (Teletouch Communications, Inc. dba Teletouch v. Remote Dynamics, Inc., Collin County, Texas District Court). The Company believes that Teletouch’s claims are without merit.

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

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

Not applicable.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

Our Common Stock was initially offered to the public in June, 1995, and was quoted on the NASDAQ National Market until February, 1999, after which time it began trading on the NASDAQ SmallCap Market under the symbol “HWYM.” Our common stock next traded under the symbol “REDI” on the NASDAQ SmallCap Market until February, 2006, when it began trading on the OTC Bulletin Board under the symbol “REDI.OB” following de-listing from the NASDAQ SmallCap Market. On November 20, 2007, our symbol changed to “RDYM.OB” concurrent with the effectiveness of our 1-for-50 reverse common stock split. On August 14, 2008, our symbol changed to “RMTD.OB” concurrent with the effectiveness of our 1-for-400 reverse common stock split. The following table sets forth the range of high and low trading prices on the OTC Bulletin Board, as applicable, for the Common Stock for the periods indicated. Such price quotations represent inter-dealer prices without retail markup, markdown or commission and may not necessarily represent actual transactions.

	SALE PRICES
	HIGH		LOW
2007
First Quarter	$	760.00	$	40.00
Second Quarter	$	108.00	$	28.00
Third Quarter	$	108.00	$	28.00
Fourth Quarter	$	200.00	$	200.00

2008
First Quarter	$	112.00	$	1.20
Second Quarter	$	5.20	$	0.08
Third Quarter	$	0.28	$	0.004
Fourth Quarter	$	0.0011	$	0.0002

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There were 31 holders of record of our common stock as of March 25, 2009. The last sale price for our common stock as reported on March 25, 2009 was $0.000125.

We did not pay dividends on our common stock for the year ended December 31, 2008 and have no plans to do so in the foreseeable future. Furthermore, covenants in the Certificates of Designation for our Series B convertible preferred stock and our Series C convertible preferred stock require the consent of a majority of the Series B convertible preferred stock and the Series C convertible preferred stock, voting as separate classes before may pay a dividend on our common stock.

We do not have an equity compensation plan.

Item 6. Selected Financial Data.

Not applicable.

Item 7. Management’s Discussion and Analysis or Plan of Operations.

“Safe Harbor” Statement under the Private Litigation Reform Act of 1995

This Annual Report, other than historical information, may include forward-looking statements, including statements with respect to financial results, product introductions, market demand, sales channels, industry trends, sufficiency of cash resources and certain other matters. These statements are made under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, including those discussed in the section entitled “Risk Factors” in Item 1.A. and elsewhere in this Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.

Overview

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

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

As shown in the tables below, we ended 2008 with 11,210 units in service representing a 17% increase from the 9,560 units in service we had as of the end of 2007.

		March 31, 2007				June 30, 2007				September 30, 2007				December 31, 2007
Ending REDIview units			8,838				9,226				9,057				9,560

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		March 31, 2008				June 30, 2008				September 30, 2008				December 31, 2008
Ending REDIview units			10,182				10,462				10,787				11,210

As a result of the securities issued to BMSI in our November 2006 Share Exchange Agreement and Note and Warrant Purchase Agreement transactions, BMSI obtained and currently has effective control of our board of directors, management, 96.0% of the voting power of our common stock outstanding, and beneficial ownership of approximately 62.2% of our common stock (on an as-converted, fully diluted basis). Accordingly, our financial statements reflect the historical operations of BounceGPS as the acquisition has been treated as a reverse merger in accordance with FAS 141 “Accounting for Business Combinations” with BounceGPS considered the accounting acquirer. Accordingly, BounceGPS is deemed to be the purchaser and surviving company for accounting purposes and its net assets are included in the balance sheet at their historical book values and the results of operations of BounceGPS have been presented for the comparative prior period. The results of operations of Remote Dynamics, Inc. are included in our financial statements subsequent to December 4, 2006 with the purchase price allocated to the acquired assets and liabilities of Remote Dynamics, Inc. as of December 4, 2006.

Results of Operations

Year Ended December 31, 2008, Compared to Year Ended December 31, 2007

Revenues for 2008 totaled $5,258,000 compared to $4,721,000 for 2007. Service revenue was $3,474,000 in 2008 compared to $3,176,000 for 2007. This 9% increase in service revenue is primarily attributable to an increase in units of service partially offset by a reduction in service revenue per unit. We ended 2008 with 11,210 units in service, a 17% increase over the 9,560 units in service at December 31, 2007. Service revenue per unit decreased 9%, from $30.69 per unit in 2007 to $27.88 per unit in 2008 due to competitive pressure and the decreasing cost of cellular technology. Product revenue was $1,567,000 in 2008 compared to $1,385,000 in 2007. This 13% increase is primarily attributable to the increase in units in service. In accordance with our revenue recognition policies, REDIview unit sales and the associated cost of sales are deferred and recognized over the customer’s contract life.

Total gross profit margin was 62.4% in 2008 compared 62.7% in 2007. The 2008 gross profit margin of 62.4% includes 4 percentage points or $588,000 of amortization of the deferred performance obligation of our installed base related to the reverse merger transaction on December 4, 2006. The amortization of the deferred performance obligation is complete at the end of 2008 and will not be incurred in 2009. Excluding the amortization of the deferred performance obligation, the 2008 gross profit margins total 58.7%. The 2007 gross profit margin includes 7 percentage points or $752,000 of amortization of the deferred performance obligation of our installed base related to the reverse merger transaction on December 4, 2006. Excluding the amortization of the deferred performance obligation, the 2007 gross profit margins total 55.6%. The Company expects gross profit margins of greater than 55% to continue throughout 2009.

Total operating expenses decreased from $4,208,000 in 2007 to $3,905,000 during 2008. This 7% decrease is attributable to management’s efforts to reduce expenses as well as a reduction in depreciation and amortization. General and administrative, sales and marketing, and engineering expenses decreased 5%, from $3,259,000 in 2007 to $3,096,000 in 2008. Depreciation and amortization expense decreased 15%, from $949,000 in 2007 to $809,000 in 2008.

Interest expense totaled $2,102,000 for 2008 compared to $4,757,000 for 2007. The current year interest expense primarily relates to the accretion of the Series A and Series B Notes in the amount of $392,000, and $828,000, respectively, as well as $647,000 of default interest and liquidated damages on the Series A and Series B Notes and $107,000 amortization of deferred financing fees. The 2007 interest expense primarily relates to the accretion of the Series A Notes, Series B Notes, and the HFS Note in the amount of $2,628,000, $625,000, and $616,000, respectively, as well as $812,000 of default interest and liquidated damages on the Series A and Series B Notes and $85,000 amortization of deferred financing fees.

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Interest income totaled $42,000 for 2008 compared to $105,000 for 2007. The interest income primarily relates to interest on internally financed leases from customers of our REDIview and legacy products.

We recorded a loss on the extinguishment of debt totaling $341,000 for 2007 for the exchange of Series A Notes into Series B Notes and the exchange of the HFS Note into Series B Notes. We also recorded a loss on the extinguishment of redeemable preferred stock totaling $363,000 for 2007 for the exchange of Series B preferred stock into Series B Notes.

Other income of $383,000 for 2007 is primarily due to the reversal of a legal accrual of $230,000 and gains from creditor resolution settlements of $83,000.

Adjusted EBITDA Presentation

EBITDA represents net income (loss) before interest, taxes, depreciation and amortization, and in the case of Adjusted EBITDA, before goodwill impairment, gains or losses on the extinguishment of debt and preferred stock, restructuring charges and other non-operating costs. EBITDA is not a measurement of financial performance under GAAP. However, we have included data with respect to EBITDA because we evaluate and project the performance of our business using several measures, including EBITDA. The computations of Adjusted EBITDA for 2008 and 2007 are as follows.

	Year Ended
	December 31,
	2008			2007
Net loss	$	(2,683	)	$	(6,221	)
Add non-EBITDA items included in net results:
Depreciation and amortization		809			949
Interest expense, net		2,060			4,652
Non-recurring reversal of legal accrual		—			(230	)
Loss on debt extinguishment		—			341
Loss on redeemable preferred stock extinguishment		—			363

Adjusted EBITDA	$	186		$	(146	)

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

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

Liquidity and Capital Resources

We have incurred significant operating losses since our inception and have limited financial resources until such time that we are able to generate positive cash flow from operations. We had cash and cash equivalents of $0 as of December 31, 2008 (compared to $228,000 as of December 31, 2007).

Net cash used in operations in 2008 was $247,000, primarily due to a net loss of $2.7 million offset by accretion of notes payable $1,293,000 and amortization of customer lists and other intangibles of $739,000. Net cash used in operations in 2007 was $887,000, primarily due to a net loss of $6.2 million offset by accretion of notes payable $3,871,000, loss on extinguishment of debt of $341,000, loss on extinguishment of redeemable preferred stock of $363,000, increase in accounts payable of $280,000, and depreciation and amortization of $1,035,000.

Net cash used in investing activities in 2008 was $16,000 versus $1,000 in 2007.

Net cash provided by financing activities in 2008 was $35,000, primarily due to the net proceeds of the Series B Note offering of $128,000 offset by payments on capital leases and other notes payable of $93,000. Net cash provided by financing activities in 2007 was $995,000, primarily due to the net proceeds of the Series B Note offering of $982,000.

We do not expect to achieve profitability in 2009. Key to achieving profitability is to obtain a REDIview customer base that provides monthly recurring revenues and corresponding gross margins that exceed operating costs and expenses to support the REDIview customer base. Our plans for 2009 include increasing direct sales to new and existing customers in an effort to build recurring revenue and continuing to identify additional operating cost reductions. However, there can be no assurance that we will achieve our sales targets for 2009. Failure to do so may have a material adverse effect on our business, financial condition and results of operations. Moreover, despite actions to increase revenue, to reduce operating costs and to improve profitability and cash flow, our operating losses will continue in 2009 and net operating cash outflows will continue into at least the second quarter of 2009.

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

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The following table summarizes our secured convertible notes payable by maturity dates as of December 31, 2008 (in 000’s) (as we currently are not in compliance with certain of our obligations relating to the Series A and B Notes, we classify the secured convertible notes payable as a current liability on our balance sheet):

		Principal				Less Discount				Carrying Amount
Fiscal Year ending December 31, 2008		$	10,781			$	1,301			$	9,480

We have failed to comply with our obligations relating to the notes, including our failure to make scheduled principal payments and to register for resale the shares of common stock underlying the notes and warrants issued in the related private placements. The notes provide for a default interest rate of 10% per annum on the outstanding principal amount of the notes for periods in which certain specified events of default occur and are continuing and for liquidated damages for non-compliance with our registration obligations. As of December 31, 2008, we have accrued $1,761,004 in default interest and liquidated damages under our secured convertible notes.

Our non-compliance with the terms of the notes also exposes to the risk that our note holders could seek to exercise prepayment or other remedies under the notes.

In March, 2008, we resumed making payments to certain of our note holders of amounts due under the notes by issuing shares of our common stock under the terms of the notes. In 2008, and through March 25, 2009, we issued 3,067,407,599 shares of common stock as partial principal payments on the Series A Notes in satisfaction of $1,150,000 of obligations due under the notes. Additionally, we issued 1,065,811,416 shares of common stock as partial payments on the Series B Notes in satisfaction of $450,000 of obligations due under the notes.

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

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Outstanding Debt, Preferred Securities and Warrants

Series A Notes

As of March 25, 2009 we had $3,044,516 principal amount of our Series A Notes outstanding. The Series A Notes are secured by substantially all of our assets. The Series A Notes are convertible at the option of the holder into our common stock at a fixed conversion price of $0.000117, subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents. We may make scheduled principal installment payments in cash or in registered shares of its common stock. If paid in common stock, certain conditions must be satisfied, and the number of registered shares to be paid to the holder must be an amount equal to the principal installment amount divided by eighty percent (80%) of the average of the closing bid price for the ten (10) trading days immediately preceding the principal payment date.

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

Series B Notes

As of March 25, 2009 we had $6,948,439 principal amount of our Series B Notes outstanding. The Series B Notes and the Series B OID Notes are secured by all of our assets, subject to existing liens, are due on dates ranging from December 4, 2009 to May 21, 2011 and began scheduled amortization of principal (in nine quarterly installments) on dates ranging from August 1, 2007 to May 21, 2011. We may make principal installment payments in cash or in registered shares of its common stock. If paid in common stock, certain conditions must be satisfied, and the number of registered shares to be paid to the holder must be an amount equal to the principal installment amount divided by the lesser of (i) $1.00 and (ii) 90% of the average of the volume weighted average trading prices of the common stock for the ten trading days immediately preceding the principal payment. The Series B Notes and Series B OID Notes are convertible into our common stock at a conversion price of $0.000124 per share, subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents.

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

Series B Preferred Stock

The series B convertible preferred stock issued to SDS in connection with our 2005 financing has a face amount of $10,000 per share ($5,220,000 in the aggregate), ranks senior to our series C convertible preferred stock and our common stock with respect to payment of amounts upon any liquidation, dissolution or winding up of the Company, and is entitled to receive non-cumulative dividends in an amount equal to 3% per year when, as, and if declared by our Board of Directors.

The series B convertible preferred stock is convertible into common stock at a conversion price of $31,000 per share, subject to adjustment for stock splits and combinations, and certain dividends and distributions.

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The holders of shares of series B convertible preferred stock have the right to cause us to redeem any or all of its shares at a price equal to 100% of face value, plus accrued but unpaid dividends in the following events:

We fail to remove any restrictive legend on any certificate or any shares of common stock issued to the holders of Series B convertible preferred stock upon conversion of the Series B convertible preferred stock as and when required and such failure continues uncured for five business days;

We provide written notice (or otherwise indicate) to any holder of Series B convertible preferred stock, or state by way of public announcement distributed via a press release, at any time, of our intention not to issue, or otherwise refuse to issue, shares of common stock to any holder of Series B convertible preferred stock upon conversion in accordance with the terms of the certificate of designation for our Series B convertible preferred stock;

We or any of our subsidiaries make an assignment for the benefit of creditors, or applies for or consents to the appointment of a receiver or trustee for us or for a substantial part of our property or business;

Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against us or any of our subsidiaries which shall not be dismissed within 60 days of their initiation;

We sell, convey or dispose of all or substantially all of our assets; or

We otherwise breach any material term under the private placement transaction documents, and if such breach is curable, shall fails to cure such breach within 10 business days after we have been notified thereof in writing by the holder.

The series B convertible preferred stock generally has the right to vote on all matters before the common stockholders on an as-converted basis voting together with the common stockholders as a single class. In addition, the holders of a majority of the Series B convertible preferred stock, voting as a separate class, have the right to appoint one member of our Board of Directors and one observer to meetings of our Board of Directors and its committees. Although the holder of our Series B convertible preferred stock retains the right to do so in the future, it has not yet exercised its right to appoint a board member.

Series C Preferred Stock

The series C convertible preferred stock issued to BMSI in connection with our acquisition of BounceGPS has a face amount of $1,000 per share ($5,379,000 in the aggregate), ranks junior to our series B convertible preferred stock and senior to our common stock with respect to payment of dividends and amounts upon any liquidation, dissolution or winding up of the Company, and is entitled to receive cumulative dividends in an amount equal to 8% per year (payable at the election of the holder in cash or additional shares).

The series C convertible preferred stock was initially convertible into 51% of the number of our fully diluted shares, as defined to include, without limitation:

Shares of common stock outstanding on the date of issuance of the Series C Preferred Stock;

Shares of common stock issuable upon conversion, exercise or exchange of any convertible security or purchase right outstanding on the date of issuance (including, without limitation, the series C convertible preferred stock, our series B convertible preferred stock, the Series A Notes, the Series B Notes, the Series B OID Notes and outstanding warrants);

Shares of common stock issuable upon conversion, exercise or exchange of any convertible security or purchase right issued after the issuance date of the series C convertible preferred stock in conversion, exercise or exchange of securities outstanding as of the issuance date or as a dividend, interest payment, liquidated damages, penalty, compromise, settlement or other payment of certain securities or pursuant to or in connection with any agreement, indebtedness or other obligation of the Company existing as of the issuance date, or with respect to any amendment, waiver or modification thereto or extension thereof;

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Shares of common stock issued after the issuance date of the series C convertible preferred stock as a dividend, interest payment, liquidated damages, penalty, compromise, settlement or other payment of certain securities or pursuant to or in connection with any agreement, indebtedness or other obligation of the Company existing as of the issuance date, or with respect to any amendment, waiver or modification thereto or extension thereof; and

Shares of common stock authorized for issuance from time to time under our equity incentive plans.

The holders of shares of Series C convertible preferred stock have the right to cause us to redeem any or all of its shares at a price equal to 100% of face value, plus accrued but unpaid dividends in the following events:

We sell, convey or dispose of all or substantially all of our assets;

We merge or consolidate with or into, or engage in any other business combination with, any other person or entity, in any case which results in either (i) the holders of our voting securities immediately prior to such transaction holding or having the right to direct the voting of fifty percent (50%) or less of our total outstanding voting securities of or such other surviving or acquiring person or entity immediately following such transaction or (ii) the members of our board of directors comprising fifty percent (50%) or less of the members of our board of directors or such other surviving or acquiring person or entity immediately following such transaction;

We have fifty percent (50%) or more of the voting power of our capital stock owned beneficially by one person, entity or “group”;

We experience any other change of control not otherwise addressed above; or

The series C convertible preferred stock generally has the right to vote on all matters before the common stockholders on an as-converted basis voting together with the common stockholders as a single class. In addition, the holders of a majority of the Series C convertible preferred stock, voting as a separate class, have the right to appoint a majority of the members of our Board of Directors (as long as we have not exercised our limited rights to redeem series C convertible preferred stock).

Warrants

As of March 25, 2009, we had outstanding the following common stock purchase warrants:

Series A-7 warrants to purchase 1,031 shares of common stock at an exercise price of $0.000117 per share subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents. The series A-7 warrants can be exercised on a cashless basis beginning one year after issuance if (i) the per share market value of a share of our common stock (either the volume the weighted average price or the fair market value as determined by an independent appraiser) is greater than the warrant price; and (ii) a registration statement for the warrant stock is not then in effect. The series A-7 warrants are exercisable for a seven-year period from the date of issuance (95 of these warrants are exercisable over 5 years).

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Series B-4 warrants to purchase 688 shares of common stock at an exercise price of $0.000117 per share subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents. The series B-4 warrants can be exercised on a cashless basis beginning one year after issuance if (i) the per share market value of a share of our common stock (either the volume the weighted average price or the fair market value as determined by an independent appraiser) is greater than the warrant price; and (ii) a registration statement for the warrant stock is not then in effect. The series B-4 warrants are exercisable for a four-year period beginning on the date a resale registration statement for the shares underlying the warrants is declared effective by the Securities and Exchange Commission (65 of these warrants are exercisable over 5 years).

Series C-3 warrants to purchase 1,375 shares of common stock at an exercise price of $0.000117 per share subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents. The series C-3 warrants can be exercised on a cashless basis beginning one year after issuance if (i) the per share market value of a share of our common stock (either the volume the weighted average price or the fair market value as determined by an independent appraiser) is greater than the warrant price; and (ii) a registration statement for the warrant stock is not then in effect. The series C-3 warrants are exercisable for a three-year period from the date of issuance. 125 of these warrants are exercisable over 5 years.

Series D-1 warrants (callable only at our option) to purchase 963 shares in the aggregate of common stock at an exercise price per share equal to the lesser of: (a) $17.50 and (b) 90% of the average of the 5 day volume weighted average price of our common stock on the OTC Bulletin Board preceding the call notice, as defined in the warrant.

Series E-7 Warrants to purchase 314,839 shares of common stock at an exercise price of $0.000117 per share, subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents. The series E-7 warrants are exercisable for a seven-year period from the date of issuance.

Series F-4 Warrants to purchase 314,839 shares of common stock at an exercise price of $0.000117 per share, subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents. The series F-4 warrants are exercisable for a four-year period beginning on the date a resale registration statement for the shares underlying the warrants is declared effective by the Securities and Exchange Commission.

The following warrants issued to SDS in connection with our 2005 financings: (i) a common stock purchase warrant with a 5-year term to purchase 83 shares of common stock at an exercise price of $200.00 per share, (ii) a common stock purchase warrant with a 5-year term to purchase 1,453 shares of common stock at an exercise price of $843.00, and (iii) a common stock purchase warrant with a 5-year term to purchase 100 shares at an exercise price of $35,000.00 per share.

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Warrants issued to the placement agents in our Series A Note financing to purchase 125 shares of common stock at an exercise price per share equal to $0.000117 with a term of 5 years following the closing.

Warrants issued to the placement agents in our Series B Note financing to purchase 617 shares of common stock at an exercise price per share equal to $0.000117 with a term of 5 years following the closing.

Contractual Obligations

The following summarizes the Company’s significant financial commitments at December 31, 2008 (in thousands):

	Payments due by period
	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Obligations under Series A Note and Warrant
Principal Payments – Notes & OID	$	3,646	$	3,646	$	—	$	—	$	—
Obligations under Series B Note and Warrant
Principal Payments – Notes & OID		7,135		7,135		—		—		—
Default Penalties & Interest – Series A Notes		961		961		—		—		—
Default Penalties & Interest – Series B Notes		800		800		—		—		—
Capital Lease Obligations		11		11		—		—		—
Operating Leases		14		14		—		—		—
Note Payable – Related Parties		250		250		—		—		—
Total	$	12,817	$	12,817	$	—	$	—	$	—

Critical Accounting Policies and Estimates

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

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

We recognize revenue when earned in accordance with the applicable accounting literature including: EITF No. 00-21, “Revenue Arrangements With Multiple Deliverables”, Statement of Position 97-2, “Software Revenue Recognition”, and Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements”, as amended by Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements”. Revenue is recognized when the following criteria are met: there is persuasive evidence that an arrangement exists, delivery has occurred and all obligations under such arrangement have been fulfilled, the price is fixed and determinable, and collectibility is reasonably assured.

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

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

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

Deferred Product Costs

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

Allowance for Doubtful Accounts

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

Inventory

We write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Historically, our estimates for inventory obsolescence have not differed materially from actual results.

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Stock-Based Compensation

In December of 2004, the Financial Accounting Standards Board (“FASB”) issued FAS 123R, which applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies to liabilities an entity may incur for goods or services that are based on the fair value of those equity instruments. For any unvested portion of previously issued and outstanding awards, compensation expense is required to be recorded based on the previously disclosed FAS 123 methodology and amounts. Prior periods presented are not required to be restated. We adopted FAS 123R as of January 1, 2006 and applied the standard using the modified prospective method. Remote Dynamics extinguished all prior stock options upon emergence from bankruptcy effective July 2, 2004 and has not issued any new stock options beyond that date.

Beneficial Conversion Feature

From time to time, the Company has debt with conversion options that provide for a rate of conversion that is below market value. This feature is normally characterized as a beneficial conversion feature ("BCF"), which is recorded by the Company pursuant to Emerging Issues Task Force (“EITF”) Issue No. 98-5 ("EITF 98-5"), Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, and EITF Issue No. 00-27, Application of EITF Issue No. 98-5 to Certain Convertible Instruments. If a BCF exists, the Company records it as a debt discount. Debt discounts are amortized to interest expense over the life of the debt on a straight-line basis, which approximates the effective interest method.

Issuance of Shares for Non-Cash Consideration

The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more reliably determinable. The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of EITF Issue No. 96-18, Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services and EITF Issue No. 00-18, Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Goodwill and Other Intangibles

We account for goodwill, the vehicle management information license right, and other intangibles in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”) and SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). SFAS 144 requires us to review for impairment of our long-lived assets, whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable and exceeds its fair value. Impairment evaluations involve our estimates of asset useful lives and future cash flows. When this event occurs, we estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the undiscounted expected future cash flows are less than the carrying amount of the asset and the carrying amount of the asset exceeds its fair value, we recognize an impairment loss. We generally utilize an income approach, a discounted future cash flow analysis and an analysis of market multiples to estimate fair value of the asset. Actual useful lives and cash flows could be different from those estimated. This could have a material affect on our operating results and financial position. We test goodwill for impairment on an annual basis, or between annual tests if we determine that a significant event or change in circumstances warrants such testing in accordance with the provisions of SFAS 142 which requires a comparison of the carrying value of goodwill to the fair value of the reporting unit. If the fair value of the reporting unit is less than the carrying value of goodwill, an adjustment to the carrying value of goodwill is required.

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Impact of Recently Issued Accounting Standards

Financial Accounting Standards No. 159 (“FAS 159”) In February 2007, the FASB issued FAS 159, The Fair Value Option for Financial Assets and Financial Liabilities, or FAS 159. FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of the guidance is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. FAS 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the fiscal year beginning on or before November 15, 2007, provided the provisions of FAS 157 are applied. We will adopted FAS 159 on January 1, 2008. The adoption of FAS 159 did not have a material impact to our consolidated financial statements.

Financial Accounting Standards No. 141 (R) (“FAS 141”) In December 2007, the FASB issued SFAS No. 141(R), Business Combinations. SFAS No. 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree and recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase. SFAS No. 141(R) also sets forth the disclosures required to be made in the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Accordingly, the Company will adopt this standard in fiscal 2009. The Company is currently evaluating the potential impact of the adoption of SFAS 141(R) on its consolidated financial statements.

Financial Accounting Standards No. 160 (R) (“FAS 160”) In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. SFAS 160 will change the accounting and reporting for minority interests, which will be recharacterized as non-controlling interests (NCI) and classified as a component of equity. This new consolidation method will significantly change the accounting for transactions with minority interest holders. SFAS 160 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements of SFAS 160 shall be applied prospectively. SFAS 160 is effective for fiscal years beginning after December 15, 2008 and, as such, the Company will adopt this standard in fiscal 2009. The Company is currently evaluating the potential impact of the adoption of SFAS 160 on its consolidated financial statements.

Financial Accounting Standards No. 161 (“FAS 161”) In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("FAS 161"). FAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. The provisions of FAS 161 are effective for the quarter ending February 28, 2009. The Company is currently evaluating the impact of the provisions of FAS 161.

Financial Accounting Standards No. 162 (“FAS 162”) In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, "The Hierarchy of Generally Accepted Accounting Principles"("FAS 162"). FAS 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section, 411 The Meaning of "Present Fairly in Conformity with Generally Accepted Accounting Principles". The statement is intended to improve financial reporting by identifying a consistent hierarchy for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP). The Company has not completed its evaluation of the effects, if any, that FAS 162 may have on its consolidated financial position, results of operations and cash flows.

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Off-Balance Sheet Arrangements

As of December 31, 2008, we did not have any significant off-balance sheet arrangements, as defined in Item 303 of Regulation S-K.

Quantitative and Qualitative Disclosures About Market Risk

We do not have any material exposure to market risk associated with our cash and cash equivalents. Our note payables are at a fixed rate and, thus, are not exposed to interest rate risk.

Item 8. Financial Statements.

The information required by this item is included on pages F-1 through F-6.

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 9A. Controls and Procedures

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

As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the year covered by this report. Based on the foregoing, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of December 31, 2008 were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Management’s Report on Internal Control Over Financial Reporting

Our Chief Executive Officer and Principal Financial Officer are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.

Internal control over financial reporting is promulgated under the Exchange Act as a process designed by, or under the supervision of, our Chief Executive Officer and Principal Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

•

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

•

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

•

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition or disposition of our assets that could have a material effect on the financial statements.

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Readers are cautioned that internal control over financial reporting, no matter how well designed, has inherent limitations and may not prevent or detect misstatements. Therefore, even effective internal control over financial reporting can only provide reasonable assurance with respect to the financial statement preparation and presentation.

Our management, under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our internal controls over financial reporting as of the end of the period covered by this report based upon the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2008.

Remote Dynamics, Inc. continues the process to complete a thorough review of its internal controls as part of its preparation for compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. Section 404 requires our management to report on, and our external auditors to attest to, the effectiveness of our internal control structure and procedures for financial reporting. As a non-accelerated filer under Rule 12b-2 of the Exchange Act, our first report under Section 404 as a smaller reporting company will be contained in our Form 10-K for the period ended December 31, 2009.

This annual report does not include an attestation report of the company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report.

There were no changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during our year ended December 31, 2008, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. In the estimation of our senior management, none of the following changes in the composition of management have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting:

Item 9B. Other Information

Not applicable.

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PART III

Item 10. Directors and Executive Officers of Remote Dynamics, Inc.

The following table presents information with respect to our directors and executive officers.

Name	Age	Position
David Walters	46	Director, Chairman
Keith Moore	48	Director, Secretary
Dennis Ackerman	61	Director
Thomas Friedberg	49	Director
Gary Hallgren	40	Chief Executive Officer
Greg Jones	43	Senior VP, Operations

Directors

DAVID WALTERS – Director and Chairman since December 5, 2006.

Mr. Walters has served as Chairman and Chief Executive Officer of Bounce Mobile Systems, Inc., since July 2006. Since February 2000, he has served as a managing member of Monarch Bay Capital Group, LLC, a consulting company, and since March 2006 as a managing member of Strands Management Company, LLC, also a consulting company. Since April 2006, he has served as a managing member of Monarch Bay Associates, LLC, a FINRA registered firm. Mr. Walters has extensive experience in investment management, corporate growth development strategies and capital markets. From October 1992 through July 2000, he served as executive vice president and managing director in charge of Capital Markets for Roth Capital (formerly Cruttenden Roth, "Roth"). As an equity partner and a key senior management member, he was instrumental in building the company's revenues from $7 million to $65 million. He managed the capital markets group and led over 100 financings (public and private), raising over $2 billion in growth capital. Mr. Walters sat on Roth's Board of Directors from 1994 through 2000. Previously, Mr. Walters has served as a vice president for both Drexel Burnham Lambert and Donaldson Lufkin and Jenrette in Los Angeles, and has run a private equity investment fund. Mr. Walters earned a B.S. in Bioengineering from the University of California, San Diego in 1985. Mr. Walters also serves as Chairman of the Board of Directors of Monarch Staffing, Inc. and STI Group, Inc. and a member of the Board of Directors of Precision Aerospace Components, Inc.

KEITH C. MOORE – Director and Secretary since December 5, 2006.

Mr. Moore has served his entire career founding, growing and financing technology and service companies. He is a managing member of Strands Management Company, LLC and Monarch Bay Associates, LLC. Throughout his career Mr. Moore has served in various executive capacities for micro-cap to Russell 1000 companies, including Activision, Inc., DataLogic International, Inc., POPcast Communications Corp., and Cinemaware, Inc. Mr. Moore has raised over $100 million for these organizations and has grown collective revenues in excess of $600 million. From 1996 through December 2007, Mr. Moore served in Chief Executive and other executive capacities for DataLogic International, Inc., Service Advantage International, Inc., POPcast Communications Corp., Cinemaware, Inc. and iTechexpress, Inc., overseeing their respective strategic growth and capital raises. From 1991 through 1996, Mr. Moore served as President, Chief Operating Officer, Chief Financial Officer, Director and Consultant of Activision, Inc. (NASDAQ: ATVI), recognized as the international market leader in videogames and multimedia software. Mr. Moore is a founder of International Consumer Technologies

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Corp. and was Vice President, Chief Financial Officer and Director since its inception in July 1986 until its merger into Activision in December 1991. Mr. Moore currently serves on the Board of Directors of Monarch Staffing, Inc., KG3, Inc. and Service Advantage International, Inc. Mr. Moore also serves on the Mission Hospital Foundation Executive Committee and Board of Directors. Mr. Moore earned a B.S. in Accounting and a Masters in Finance from Eastern Michigan University.

DENNIS ACKERMAN — Director since January 4, 2006.

Mr. Ackerman served as Director of the Bank of America Entrepreneurial Center from 1987 through December 2004. The Bank of America Entrepreneurial Center provides business planning and business plan implementation services for businesses. Since formation in 1987, the Center has assisted business with raising over $500 million in working capital. From 1974 through 1987, Mr. Ackerman served as President of an energy company with a distribution network covering five states. Mr. Ackerman obtained a B.S. degree in Comprehensive Science from the College of Education at Ohio State University in 1969.

THOMAS FRIEDBERG — Director since November 20, 2007.

Thomas W. Friedberg has been President of Mineral King Partners, LLC (and its predecessor TWF Consulting), a strategic consulting firm that provides competitive benchmarking, competitive and strategic financial analysis, and valuation services since 2004. Previously, Mr. Friedberg advised various technology companies, automobile salvage processors, specialty financial institutions, and telecommunications service providers, with an emphasis on wireless providers, for more than twenty years at firms such as Hambrecht & Quist, Piper Jaffray, and Tucker Anthony Sutro, and as a partner at Genesis Merchant Group Securities. Mr. Friedberg also served as Director of Investor Relations and Strategic Financial Analysis at US WEST NewVector Group, US WEST’s former publicly traded cellular and paging subsidiary where he directed the financial aspects and analysis of all merger and acquisitions undertaken by the Company. Mr. Friedberg received his MBA from the Wharton School at the University of Pennsylvania and BA and BS degrees from Stanford University. From 1999 to 2007, Mr. Friedberg served on the Governor’s Commission on Science and Technology for the State of Colorado at the appointment of Governor Bill Owens. Since March 2007, Mr. Friedberg has also been an independent FINRA-registered representative associated with Monarch Bay Associates, LLC. MBA provides placement agent and other investment banking services to us. See “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS”. Mr. Friedberg does not perform any services related to MBA’s engagement by us and does not have any direct or indirect pecuniary interest in MBA’s engagement by us.

Executive Officers

Except as disclosed under “Employment Agreements” below, all officers serve until their successors are duly elected and qualified or their earlier death, disability or removal from office.

GARY HALLGREN — Chief Executive Officer since February 16, 2007

Mr. Hallgren, age 40, previously served as Vice President, Technical Services of Presentation Products Inc., dba Spinitar, a systems integration company, from May 2005 to February 2007. Previously, Mr. Hallgren served as Chief Executive Officer (2002-2005) and Chief Operating Officer (2000-2002) of WirelessCar North America, Inc., a joint venture of Volvo, Ericsson and Brainheart Capital which provided wireless middleware and billing services to the telematics marketplace. Mr. Hallgren received his Bachelors degree in Engineering from University of Minnesota, Institute of Technology in 1991.

GREG JONES — Senior Vice President, Operations since February 16, 2007

Mr. Jones, age 43, previously served as Senior Director of Software Engineering for Aeris.net, a leading provider of wireless mobile to mobile solutions to the telematics industry, from October 2004 to February 2007. From 2000-2004, Mr. Jones served as Director of Technology and Development of WirelessCar North America, Inc., bringing to market wireless communications and billing solutions. Prior

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to WirelessCar, Mr. Jones served as Director of Internet Development at Liberty Enterprises, where he led a team that developed Liberty's hosted internet banking solution for credit unions.

There are no family relationships among the directors and executive officers of Remote Dynamics, Inc.

Organization of the Board of Directors and Meetings

Our Board of Directors currently consists of four board members: David Walters, Keith Moore, Dennis Ackerman, and Thomas Friedberg. All directors serve until the next annual meeting of the stockholders or until their respective successors are duly elected and qualified, or until their earlier death or removal from office.

The holder of a majority of the Series B convertible preferred stock has the right to appoint one representative to our Board of Directors and is entitled to designate one observer to meetings of our Board of Directors and its committees. Although the holder of our Series B convertible preferred stock retains the right to do so in the future, it has not yet exercised its right to appoint a board member. The holder of our Series B convertible preferred stock has designated Raahim Don as its board observer to attend the meetings of our Board of Directors and its committees. If the holder of a majority of the Series B convertible preferred stock provides written notice to us that it intends to designate a board member, then the Board of Directors can, by resolution, increase the size of the board by one board seat to accommodate the request.

Audit Committee. Our Board of Directors maintains a separately standing audit committee, currently composed of Keith Moore and Dennis Ackerman. Neither Mr. Ackerman nor Mr. Moore qualifies as “independent,” as required by Rule 4200(a)(15) of the National Association of Securities Dealers’ listing standards. The Audit Committee, with the assistance of our independent accountants, determines the adequacy of internal controls and other financial reporting matters, and reviews and recommends to the board of directors for approval all published financial statements.

Audit Committee Financial Expert. Our Board of Directors has determined that Keith Moore qualifies as an audit committee financial expert under the Sarbanes-Oxley Act of 2002 and the rules of the Securities and Exchange Commission. Mr. Moore does not qualify as independent under Rule 4200(a)(15) of the National Association of Securities Dealers’ listing standards.

Code of Ethics for Chief Executive Officer and Senior Financial Officers. On November 7, 2003, our Board of Directors adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A full copy of this Code is filed as Exhibit 14.1 filed in connection with our Annual Report on Form 10-K/A for the fiscal year ended August 31, 2004.

Nomination and Corporate Governance Committee. There have been no material changes to the procedures by which our stockholders may recommend nominees to our Board of Directors.

Indemnification of Directors and Officers. We indemnify each person who is or was a director, officer, employee or agent of Remote Dynamics, or serves at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, judgments, fines and amounts incurred in that capacity.

We will indemnify only for actions taken:

in good faith in a manner the indemnified person reasonably believed to be in or not opposed to the best interests of Remote Dynamics; or

with respect to criminal proceedings, not unlawful.

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We will also advance to the indemnified person payments incurred in defending a proceeding to which indemnification might apply, provided the recipient agrees to repay all such advanced amounts if it is ultimately determined that such person is not entitled to be indemnified. Our Bylaws specifically provide that the indemnification rights granted there under are nonexclusive. In accordance with our Bylaws, we have purchased insurance on behalf of our directors and officers in amounts that we believe to be reasonable.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership of securities and subsequent changes in beneficial ownership. Our officers, directors and greater-than-ten-percent stockholders are required by the Securities and Exchange Commission’s regulations to furnish us with copies of all Section 16(a) forms which they have filed.

To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no Form 5 reports were required, all of our officers, directors and beneficial owners of more than 10% of our common stock, the only class of securities registered under the Exchange Act, timely complied with all Section 16(a) filing requirements applicable to them during 2008, except that BMSI filed two late Form 4 reports, David Walters filed two late Form 4 reports and Keith Moore filed one late Form 4 report.

Compensation of Directors

Our Board of Directors has the authority to fix the compensation of directors. Our Bylaws provide that directors may be reimbursed for reasonable expenses for their services to us, and may be paid either a fixed sum for attendance at each Board of Directors meeting or a stated annual director fee. We also reimburse our directors for travel expenses.

DIRECTOR COMPENSATION
Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non-equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total Compensation ($)
David Walters	$	12,000	$	—	$	—	$	—	$	—	$	—	$	12,000
Dennis Ackerman		12,000		—		—		—		—		—		12,000
Keith Moore		12,000		—		—		—		—		—		12,000
Thomas Friedberg		12,000		—		—		—		—		—		12,000

Current directors David Walters, Dennis Ackerman, Keith Moore, and Thomas Friedberg receive an annual director's fee of $12,000, paid quarterly and prorated for service.

Item 11. Executive Compensation.

The following table describes compensation awarded, paid to or earned, for the last fiscal year, by us to our Chief Executive Officer and Senior Vice President of Operations during 2008.

SUMMARY COMPENSATION TABLE
Name and principal position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)			Total Compensation ($)
Gary Hallgren, Chief Executive Officer	2008	$	165,000	$	76,374	$	—	$	—	$	—	$	—	$	—	(1)	$	241,374
Greg Jones, Senior Vice President, Operations	2008		153,000		46,250		—		—		—		—		—	(2)		199,250

(1)	Mr. Hallgren became our Chief Executive Officer effective February 16, 2007.

(2)	Mr. Jones became our Senior Vice President, Operations effective February 16, 2007.

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The following table sets forth certain information concerning stock option awards granted to our executive officers and our directors.

OPTION AWARDS

STOCK AWARDS

Name

Number of securities underlying unexercised options (#) Exercisable

Equity Incentive Plan Awards: Number of Securities underlying unexercised unearned options (#)

Option

exercise price (#)

Option

expiration date

Number of shares or units of stock that have not vested (#)

Market value of shares or units of stock that have not vested ($)

Equity incentive plan awards: number of unearned shares, units or rights that have not vested (#)

Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)

Gary Hallgren, Chief Executive Officer

—

Greg Jones, Senior Vice President, Operations

—

Savings Plan

We have a 401(k) Retirement Investment Profit-Sharing Plan that covers all of our employees once they become eligible to participate. As permitted under the 401(k) Plan, employees may contribute up to 20% of their pre-tax earnings. The maximum amount of contributions by any employee each calendar year is $15,500, the maximum amount permitted under the Internal Revenue Code of 1986, as amended. We match 50% of an employee’s contribution to the 401(k) Plan up to 6% of pre-tax earnings for a total potential matching contribution of 3% of the employee’s pre-tax earnings.

Employment Agreements

As of December 31, 2008, we have employment agreements with Gary Hallgren, our Chief Executive Officer, and Greg Jones, our Senior Vice President, Operations. The following is a summary of the material details of the employment agreement.

Our employment agreement with Mr. Hallgren expires February 2010 and automatically renews in one year increments. The employment agreement provides for a base salary of $165,000. If the employment agreement is terminated by us (other than for specified cause events), Mr. Hallgren will receive his full base salary for the lesser of (a) twelve months and (b) the remaining term of the agreement (plus an additional six months if the termination occurs within 60 days of the occurrence of a change in control of the company).

Mr. Hallgren (together with other members of our senior management) will receive a quarterly bonus equal to 20% of our earnings before interest, taxes, depreciation and amortization. In addition, if we consummate certain corporate transactions in which the consideration received by our security holders exceeds $20 million, Mr. Hallgren (together with other members of our senior management) will receive a bonus equal to 10% of the aggregate transaction value exceeding $20 million. Mr. Hallgren will determine the allocation of the bonuses among Mr. Hallgren and the other members of our senior management.

Mr. Hallgren (together with other members of our senior management) will participate in an EBITDA Bonus Program and Corporate Transaction Bonus Program as the same may be established and

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maintained from time to time by us. Mr. Hallgren receives a cash draw of $2,083.33 per month as an advance against payments under such bonus programs.

Our employment agreement with Mr. Jones expires February 2010 and automatically renews in one year increments. The employment agreement provides for a base salary of $153,000. If the employment agreement is terminated by us (other than for specified cause events), Mr. Jones will receive his full base salary for the lesser of (a) six months and (b) the remaining term of the agreement (plus an additional six months if the termination occurs within 60 days of the occurrence of a change in control of the company).

Mr. Jones (together with other members of our senior management) will participate in an EBITDA Bonus Program and Corporate Transaction Bonus Program as the same may be established and maintained from time to time by us. Our Chief Executive Officer will determine the allocation of the bonuses among the members of our senior management. Mr. Jones receives a cash draw of $1,000 per month as an advance against payments under such bonus programs.

Compensation Committee Interlocks and Insider Participation

Due to the limited number of directors constituting our Board of Directors and there being no members of our executive team serving on the Board, we elected to suspend the operation of our Compensation Committee effective June 1, 2007. As a result, the full Board of Directors considers and participates in the compensation of our executive officers.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth certain information regarding beneficial ownership of our common stock as of March 30, 2009:

by each person who is known by us to beneficially own more than 5% of our common stock;

by each of our executive officers and directors; and

by all of our executive officers and directors as a group.

		Beneficial Ownership
		Number of Shares
Name and Address of	Nature of			Series B		Series C					Percent of
Beneficial Owner (1)	Beneficial Owner (1)	Common Stock		Preferred Stock		Preferred Stock		Total			Total (2)

Bounce Mobile Systems, Inc.	Stockholder		18,048,299,367		—		100,816,376,984		118,864,676,350	(3)		62.28	%
30950 Rancho Viejo Rd. #120
San Juan Capistrano, CA 92675

Dennis Ackerman	Director		53,647,440		—		—		53,647,440	(4)		*

Keith Moore	Director		1,638,919,355		—		—		1,638,919,355	(5)		*

Thomas Friedberg	Director		—		—		—		—			—

David Walters	Chairman and Director		19,687,218,721		—		100,816,376,984		120,503,595,705	(6)		63.14	%

Gary Hallgren	Chief Executive Officer		—		—		—		—			—

Greg Jones	Senior VP, Operations		—		—		—		—			—

All executive officers and
directors as a group
(6 persons)			21,379,785,516		—		100,816,376,984		122,196,162,500			64.03	%

* Less than 1%

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(1) Beneficial ownership is determined in accordance with the rules of the Commission and generally includes voting or investment power with respect to securities. In accordance with Commission rules, shares of the Company's common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially owned by the optionees. Subject to community property laws, where applicable, the persons or entities named in the table above have sole voting and investment power with respect to all shares of the Company's common stock indicated as beneficially owned by them.

(2) Based upon the following outstanding securities: (a) 4,737,534,793 shares of common stock, (b) 522 shares of our series B convertible preferred stock (which were convertible into 168 shares of common stock), (c) 5,379 shares of our series C convertible preferred stock (which were convertible into 100,816,376,984 shares of common stock), (d) $3,044,516 principal amount of our series A senior secured convertible promissory notes (which were convertible into 29,263,938,179 shares of common stock), (e) $6,948,439 principal amount of our series B subordinated secured convertible promissory notes (which were convertible into 56,035,798,387 shares of common stock), (f) series A-7 warrants exercisable for 1,031 shares of common stock, (g) series B-4 warrants exercisable for 688 shares of common stock, (h) series C-3 warrants exercisable for 1,375 shares of common stock, (i) series D-1 warrants exercisable for 963 shares of common stock, (j) series E-7 warrants exercisable for 314,839 shares of common stock, (k) series F-4 warrants exercisable for 314,839 shares of common stock, and (l) other warrants exercisable for 2,378 shares of common stock.

(3) Consists of shares of common stock issuable upon conversion or exercise of the following outstanding securities held by BMSI: (a) 5,379 shares of our series C convertible preferred stock, (b) 604,310,965 shares of our common stock, (c) $2,163,000 principal amount of series B subordinated secured convertible notes (including original issue discount series B subordinated secured convertible notes), (c) our series E-7 warrants to purchase 220,007 shares of our common stock, and (d) our series F-4 warrants to purchase 220,007 shares of our common stock.

(4) This individual beneficially owns 53,647,440 shares issuable upon conversion of a convertible promissory note issued by the Company.

(5) Represents shares of our Common Stock held by Strands Management Company, LLC. Keith Moore is a managing member and owns 50% of the interests of Strands Management Company, LLC.

(6) Represents shares of our Common Stock held by BMSI (as described in note #3 above) as well as shares of our Common Stock held by Strands Management Company, LLC. David Walters is a managing member and owns 50% of the interests of Strands Management Company, LLC.

Item 13. Certain Relationships and Related Transactions.

In connection with our November 2006 private placement, we agreed to pay $60,000 ($15,000 per closing) to Strands Management Company, LLC (“Strands”), formerly known as Monarch Bay Management Company, LLC, for consulting work. David Walters (our Chairman) and Keith Moore (a member of our Board of Directors) are managing members of Strands and each own 50% of Strands. As of December 31, 2006, the Company owed $15,000 to Strands for these services. The Company made payments totaling $15,000 and $60,000 for the year ended December 31, 2008 and 2007, respectively.

Additionally, we agreed to pay a $20,000 documentation fee to BMSI in connection with our December 2006 acquisition of BounceGPS from BMSI. David Walters (our Chairman) is the Chairman and Chief Executive Officer of BMSI and beneficially owns a majority of the outstanding common stock of BMSI. This payment was made in January 2007.

BounceGPS, our wholly owned subsidiary, had an agreement with Monarch Bay Capital Group, LLC (“MBCG”) for corporate development and chief financial officer services during the period from July

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2006 to May 2007. David Walters (our Chairman) is the managing member of MBCG and beneficially owns 100% of MBCG. The agreement was entered into prior to our December 2006 acquisition of BounceGPS and prior to Mr. Walters joining our Board of Directors. Under the agreement with MBCG, BounceGPS paid to MBCG a monthly fee of $20,000 in cash. Fees paid to MBCG totaled $0 and $80,000 for the years ended December 31, 2008 and 2007, respectively. Remaining amounts due to MBCG totaled $20,000 as of December 31, 2008.

On May 1, 2007, we entered into a Support Services Agreement with Strands. David Walters, our Chairman, and Keith Moore, our director, each are members of, and each own 50% of the ownership interests in Strands. Under the Support Services Agreement, Strands provides us with financial management services, facilities and administrative services, business development services, creditor resolution services and other services as agreed by the parties. We pay to Strands monthly cash fees of $22,000 for the services. In addition, Strands will receive fees equal to (a) 6% of the revenue generated from any business development transaction with a customer or partner introduced to us by Strands and (b) 20% of the savings to us from any creditor debt reduction resolved by Strands on our behalf. The initial term of the Support Services Agreement expires on May 1, 2009. Fees paid to Strands totaled $242,000 and $199,000 for the year ended December 31, 2008 and 2007, respectively. The Company had an outstanding balance due to Strands of $44,000 as of December 31, 2008.

On May 1, 2007, we entered into a Placement Agency and Advisory Services Agreement with Monarch Bay Associates, LLC (“MBA”). (MBA is a FINRA registered firm.) David Walters, our Chairman, and Keith Moore, our director, each are members of, and each owns 50% of the ownership interests in MBA. Under the agreement, MBA acts as our placement agent on an exclusive basis with respect to private placements of our capital stock and as our exclusive advisor with respect to acquisitions, mergers, joint ventures and similar transactions. MBA will receive fees equal to (a) 9% of the gross proceeds raised by us in any private placement (plus warrants to purchase 9% of the number of shares of common stock issued or issuable by us in connection with the private placement) and (b) 3% of the total consideration paid or received by us or our stockholders in an acquisition, merger, joint venture or similar transaction. The initial term of the Placement Agency and Advisory Services Agreement expired on May 1, 2008. A new agreement was entered into effective December 1, 2008. No fees were paid to MBA in 2007 or 2008.

On November 14, 2007, BounceGPS loaned $21,875 to BMSI. Interest accrued at an annual rate of 10%. David Walters, Chairman, is also the Chairman and Chief Executive Officer of BMSI and beneficially owns a majority of the outstanding common stock of BMSI. We received payment in full, including interest of $729 in March 2008.

On December 26, 2007, BounceGPS loaned $22,000 to Monarch Staffing, Inc. and $25,000 to a subsidiary of Monarch Staffing, Inc. Interest accrued at an annual rate of 10%. David Walters (our Chairman) is also the Chairman of Monarch Staffing and beneficially owns 41% of the outstanding common stock of Monarch Staffing. David Walters (a member of our Board of Directors) is also a director of Monarch Staffing and beneficially owns 41% of the outstanding common stock of Monarch Staffing. Keith Moore (a Director) is also a Director of Monarch Staffing and beneficially owns 41% of the outstanding common stock of Monarch Staffing. We received payment in full, including interest of $1,175 in March 2008.

On June 13, 2008, the Company borrowed $20,000 from Strands Management Company to cover short-term working capital needs. This amount was repaid on June 18, 2008 with interest of 10% per annum.

On September 16, 2008 and September 12, 2008, we entered into working capital line of credit promissory notes with Gary Hallgren, our Chief Executive Officer, and Strands Management Company, LLC, an entity owned by our directors David Walters and Keith Moore. Our Board of Directors has authorized borrowings of up to $100,000 under the terms of the promissory notes to meet our working

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capital funding needs. The promissory notes are unsecured, bear interest at an annual rate of 10% and are due and payable on demand by the lender.

On September 12, 2008, the Company borrowed $18,200 from Strands Management Company to cover short-term working capital needs. This amount was repaid on September 22, 2008 with interest of 10% per annum.

On September 16, 2008, the Company borrowed $16,500 from Gary Hallgren, the CEO, to cover short-term working capital needs. This amount was repaid on September 19, 2008 with interest of 10% per annum.

On November 6, 2008, we amended the working capital line of credit promissory note with Strands Management Company, increasing the authorized borrowings to $200,000. As of December 31, 2008, we have borrowed $106,000 against the note. Accrued interest under the note, totals $2,200 as of December 31, 2008.

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

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Item 14. Exhibits.

(a)

1. Consolidated Financial Statements.

The following consolidated financial statements of Remote Dynamics, Inc. and Subsidiaries, are submitted as a separate section of this report (See F-pages), and are incorporated by reference in Item 7:

Report of Independent Registered Public Accounting Firm	F-1

Consolidated Balance Sheets at December 31, 2008 and 2007	F-2
Consolidated Statements of Operations for the fiscal years ended December 31, 2008, and 2007	F-3
Consolidated Statements of Stockholders’ Deficit for the fiscal years ended December 31, 2008 and 2007	F-4
Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2008 and 2007	F-5
Notes to Consolidated Financial Statements	F-7

(b)

Exhibits

The following Exhibits are filed herewith pursuant to Item 601 of Regulation S-B or incorporated herein by reference to previous filings as noted:

Exhibit No.	Identification of Exhibit

2.1.1	Share Exchange Agreement with Bounce Mobile Systems, Inc. dated November 30, 2006 (1)

2.1.2

Registration Rights Agreement with Bounce Mobile Systems, Inc. dated December 4, 2006 (1)

2.1.3

Security Agreement with Bounce Mobile Systems, Inc. dated December 4, 2006 (1)

2.1.4

Series B subordinated secured convertible promissory note of issued to Bounce Mobile Systems, Inc. on December 4, 2006 (1)

2.1.5

Original issue discount series B subordinated secured convertible promissory note issued to Bounce Mobile Systems, Inc. on December 4, 2006 (1)

2.1.6

Series E-7 Warrant issued to Bounce Mobile Systems, Inc. on December 4, 2006 (1)

2.1.7

Series F-4 Warrant issued to Bounce Mobile systems, Inc. on December 4, 2006 (1)

3.1.1

Amended and Restated Certificate of Incorporation dated June 30, 2004 (2)

3.1.2

Certificate Of Amendment to the Amended and Restated Certificate of Incorporation dated May 26, 2006 (3)

3.1.3

Certificate Of Amendment to the Amended and Restated Certificate of Incorporation dated November 19, 2007

3.1.4

Certificate of Amendment to the Amended and Restated Certificate of Incorporation dated July 22, 2008 (12)

3.2	Third Amended and Restated By-Laws dated June 30, 2004 (4)

4.1	Specimen of certificate representing the Common Stock, $.01 par value, of Remote Dynamics, Inc. (5)

4.2	Amended and Restated Certificate of Designation, Preferences and Rights, Series B Convertible Preferred Stock, as filed with Secretary of State of Delaware on December 4, 2006 (1)

4.3	Certificate of Designation, Preferences and Rights, Series C Convertible Preferred Stock, as filed with Secretary of State of Delaware on December 4, 2006 (1)

10.1.1

Securities Purchase Agreement with SDS Capital Group SPC, Ltd. dated May 31, 2005 (6)

10.1.2

Amendment No. 1 to Securities Purchase Agreement with SDS Capital Group SPC, Ltd. (1)

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10.2.1

Registration Rights Agreement by and between Remote Dynamics, Inc. and SDS Capital Group SPC, Ltd. dated September 2, 2005 (6)

10.2.2

Stock Purchase Warrant issued to SDS Capital Group SPC, Ltd. on September 2, 2005 for purchase of 2,000,000 shares of common stock (6)

10.2.3

Stock Purchase Warrant issued to SDS Capital Group SPC, Ltd. on September 2, 2005 for purchase of 1,666,667 shares of common stock (6)

10.2.4

Stock Purchase Warrant issued to SDS Capital Group SPC, Ltd. on September 2, 2005 for purchase of 700,000 shares of common stock (6)

10.3.1

Note and Warrant Purchase Agreement dated as of February 23, 2006 (7)

10.3.2

Registration Rights Agreement dated as of February 23, 2006 (7)

10.3.3

Security Agreement dated as of February 23, 2006 (7)

10.3.4

Form of series A senior secured convertible promissory note due February 24, 2008 (7)

10.3.5

Form of original issue discount series A senior secured convertible promissory note due February 24, 2008 (7)

10.3.6

Form of Series A-7 Warrant issued on February 24, 2006 (7)

10.3.7

Form of Series B-4 Warrant issued on February 24, 2006 (7)

10.3.8

Form of Series C-3 Warrant issued on February 24, 2006 (7)

10.3.9

Form of Series D-1 Warrant issued on February 24, 2006 (7)

10.4.1

Note and Warrant Purchase Agreement dated as of November 30, 2006 (1)

10.4.2

Registration Rights Agreement dated as of November 30, 2006 (1)

10.4.3

Security Agreement dated as of November 30, 2006 (1)

10.4.4

Form of series B senior secured convertible promissory note due December 4, 2009 (1)

10.4.5

Form of original issue discount series B senior secured convertible promissory note due December 4, 2009 (1)

10.4.6

Form of Series E-7 Warrant issued on December 4, 2006 (1)

10.4.7

Form of Series F-4 Warrant issued on December 4, 2006 (1)

10.5.1

Amendment No. 1 to Note and Warrant Purchase Agreement dated as of April 2008(14)

10.5.2

Form of series B senior secured convertible promissory note due May 2011 (14)

10.5.3

Form of original issue discount series B senior secured convertible promissory note due May 2011 (14)

10.5.4

Form of Series E-7 Warrant issued in May 2008 (14)

10.5.5

Form of Series F-4 Warrant issued in May 2008 (14)

10.6.1

Addendum No.1 to Promissory Note with HFS Minorplanet Funding, LLC (13)

10.5#

2004 Restated Management Incentive Plan (8)

10.6.1#

Employment Agreement with Gary Hallgren dated February 16, 2007 (9)

10.6.2#

Employment Agreement with Greg Jones dated February 16, 2007 (9)

10.7	Consulting Agreement with Monarch Bay Management Company dated July 1, 2006 (10)

10.8.1

Support Services Agreement with Monarch Bay Management Company dated May 1, 2007 (13)

10.8.2

Addendum No. 1 to Support Services Agreement with Strands Management Company (14)

10.9	Placement Agency and Advisory Services Agreement with Monarch Bay Associates, LLC dated May 1, 2007 (13)

10.9.1*

Placement Agency and Advisory Services Agreement with Monarch Bay Associates, LLC dated December 1, 2008

10.10

Form of Working Capital Line of Credit Promissory Note (15)

14.1	Code of Ethics for Senior Financial Officers (11)

21.1*

Subsidiaries of Registrant

23.1*

Consent of Chisholm Bierwolf Nilson & Morrill, LLC

31.1*

Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934

31.2*

Certification of Principal Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934

32.1*

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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#	Management contract and/or compensatory plan, contract or arrangement

*	Filed herewith

(1)	Incorporated herein by reference to Remote Dynamics, Inc.’s Current Report on Form 8-K, as filed with the SEC on December 7, 2006.

(2)	Incorporated herein by reference to Remote Dynamics, Inc.’s Quarterly Report on Form 10-Q, as filed with the SEC on July 14, 2004.

(3)	Incorporated herein by reference to Remote Dynamics, Inc.’s Quarterly Report on Form 10-QSB, as filed with the SEC on July 17, 2006.

(4)	Incorporated herein by reference to Remote Dynamics, Inc.’s Annual Report on Form 10-K, as filed with the SEC on November 18, 2004.

(5)	Incorporated herein by reference to Remote Dynamics, Inc.’s Registration Statement on Form S-1, as amended (No. 33-9 1486), as declared effective by the SEC on June 22, 1995

(6)	Incorporated herein by reference to Remote Dynamics, Inc.’s Current Report on Form 8-K, as filed with the SEC on September 7, 2005.

(7)	Incorporated herein by reference to Remote Dynamics, Inc.’s Current Report on Form 8-K/A, as filed with the SEC on March 1, 2006.

(8)	Incorporated herein by reference to Remote Dynamics, Inc.’s Annual Report on Form 10-K, as filed with the SEC on November 18, 2004.

(9)	Incorporated herein by reference to Remote Dynamics, Inc.’s Current Report on Form 8-K, as filed with the SEC on February 22, 2007.

(10)	Incorporated herein by reference to Remote Dynamics, Inc.’s Annual Report on Form 10-K, as filed with the SEC on April 16, 2007.

(11)	Filed in connection with Company’s Form 10-K Annual Report for the year ended August 31, 2003.

(12)	Incorporated herein by reference to Remote Dynamics, Inc.’s Annual Report on Form 10-KSB, as filed with the SEC on March 24, 2008.

(13)	Incorporated herein by reference to Remote Dynamics, Inc.’s Quarterly Report on Form 10-QSB, as filed with the SEC on May 15, 2007.

(14)	Incorporated herein by reference to Remote Dynamics, Inc.’s Quarterly Report on Form 10-Q, as filed with the SEC on May 15, 2008.

(15)	Incorporated herein by reference to Remote Dynamics, Inc.’s Current Report on Form 8-K, as filed with the SEC on September 19, 2008.

Item 15. Principal Accountant Fees and Services

On March 23, 2007, the Audit Committee of our Board of Directors approved the engagement of Chisholm Bierwolf Nilson & Morrill LLC (“CBN”) to serve as our principal independent public accountant to audit our financial statements for the fiscal year ended December 31, 2006. On March 8, 2006, the Audit Committee of our Board of Directors approved the engagement of KBA Group LLP (“KBA”) to serve as our principal independent public accountant to audit our financial statements for the fiscal year ended August 31, 2006. Prior to March 8, 2006, our principal independent public accountant was BDO Seidman, LLP (“BDO”). Audit fees billed by CBN relate to the audits for the fiscal years ending December 31, 2008 and 2007. On March 27, 2007, the Company changed its’ fiscal year end from August 31 to December 31. The accountant fees paid to KBA Group and BDO Seidman relate to the previous fiscal year reporting of August 31. Audit fees billed by our principal independent public accountants for services rendered for the audit of our annual financial statements and review of our quarterly financial statements included in Form 10-Q for the last two fiscal years are presented below. Audit-related fees, tax fees, and other fees for services billed by our principal independent public accountant during each of the last two fiscal years are also presented in the following table:

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	Year Ended December 31,
	2008		2007

Chisholm, Bierwolf & Nilson
Audit fees	$	31,600	$	41,859
Audit-related fees (a)	$	2,913		3,325
Tax fees (b)	$	—		—
Registration Statement Fees	$	—		—
All other fees	$	3,066		303

KBA Group
Audit fees	$	—	$	—
Audit-related fees (a)	$	—		—
Tax fees (b)	$	—		—
Registration Statement Fees	$	—		—
All other fees	$	—		6,000

BDO Seidman
Audit fees	$	—	$	—
Audit-related fees (a)	$	—		—
Tax fees (b)	$	—		—
Registration Statement Fees	$	—		—
All other fees	$	—		10,000

Hartman, Leito & Bolt, LLP
Audit fees	$	—		—
Audit-related fees (a)	$	—		—
Tax fees (b)	$	—		14,805
Registration Statement Fees	$	—		—
All other fees	$	—		—

(a) Audit-related fees primarily include research services to validate certain accounting policies.

(b) Tax fees include costs for the preparation of our corporate income tax return.

In accordance with the Audit Committee Charter of our Audit Committee (“Charter”), all audit and non-audit services to be provided by our principal accountant relating to the audit of our financial statements must be pre-approved by our Audit Committee. The Charter further provides that if the services to be rendered by our principal accountant are services other than audit, review or attest services, the pre-approval requirement is waived if: (a) the aggregate amount of all such services provided by the principal accountant constitutes no more than five percent (5%) of the total amount of revenues paid by us to our principal accountant during the fiscal year in which the services are provided; and (b) such services were not recognized by us at the time of the engagement to be non-audit services; and (c) such services are promptly brought to the attention of our Audit Committee and approved prior to the completion of the audit by our Audit Committee or by one or more members of our Audit Committee who are members of the Board of Directors to whom authority to grant such approvals has been delegated by our Audit Committee. All the services provided by our principal accountants during the fiscal years ended December 31, 2008 and 2007 were pre-approved by our Audit Committee.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 31, 2009	REMOTE DYNAMICS, INC.
	(Registrant)

	By:	/s/ GARY HALLGREN
		Gary Hallgren
		Chief Executive Officer
		(Principal Executive Officer)

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

Signature	Title	Date

/s/ GARY HALLGREN	Chief Executive Officer	March 31, 2009
Gary Hallgren		March 31, 2009

/s/ DAVID WALTERS	Chairman and Director (Principal Financial and Accounting Officer)	March 31, 2009
David Walters		March 31, 2009

/s/ DENNIS ACKERMAN	Director	March 31, 2009
Dennis Ackerman

/s/ KEITH MOORE	Director and Secretary	March 31, 2009
Keith Moore

/s/ THOMAS FRIEDBERG	Director	March 31, 2009
Thomas Friedberg

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ANNUAL REPORT ON FORM 10-KSB

ITEM 7

FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2008 and 2007

REMOTE DYNAMICS, INC.

PLANO, TEXAS

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Remote Dynamics, Inc.

Plano, Texas

We have audited the accompanying consolidated balance sheets of Remote Dynamics, Inc. and subsidiaries (the “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Remote Dynamics, Inc. and subsidiaries as of December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has a significant working capital deficit, suffered recurring losses from operations and has negative cash flows from operating activities that raise substantial doubt about its ability to continue as a going concern. The Company’s plans in regard to these matters are described in Note 1 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Chisholm Bierwolf & Nilson, LLC

Chisholm Bierwolf & Nilson, LLC

Bountiful, Utah

March 31, 2009

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REMOTE DYNAMICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)


	December 31,			December 31,
	2008			2007
ASSETS

Current assets:
Cash and cash equivalents	$	—		$	228
Accounts receivable, net of allowance for doubtful accounts
of $85 and $54, respectively		803			526
Due from related parties		—			71
Inventories, net of reserve for obsolescence of $7 and $7, respectively		153			158
Deferred product costs - current portion		580			352
Lease receivables and other current assets, net		246			466
Total current assets		1,782			1,801

Property and equipment, net of accumulated depreciation
and amortization of $212 and $154, respectively		102			157
Deferred product costs - non-current portion		352			336
Goodwill		616			616
Customer Lists, net		1,610			2,162
Software, net		502			674
Tradenames, net		44			59
Deferred financing fees, net		135			191
Lease receivables and other assets, net		22			135
Total assets	$	5,165		$	6,131

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Accounts payable	$	1,363		$	1,530
Accounts payable - related parties		110			75
Deferred product revenues - current portion		952			1,197
Series A convertible notes payable (net of discount of $0 and $392, respectively)		3,646			3,801
Series B convertible notes payable (net of discount of $1,301 and $1,543, respectively)		5,834			5,007
Note payable - related parties		250			250
Accrued expenses and other current liabilities		2,392			1,770
Accrued expenses and other current liabilities - related parties		106			60
Total current liabilities		14,653			13,690

Deferred product revenues - non-current portion		588			590
Other non-current liabilities		34			110
Total liabilities		15,275			14,390

Commitments and contingencies

Redeemable Preferred Stock - Series B (3% when declared, $10,000 stated value,
650 shares authorized, 522 shares issued and outstanding at
December 31, 2008 and December 31, 2007, respectively (redeemable in
liquidation at an aggregate of $5,220,000 at December 31, 2008)		134			134
Redeemable Preferred Stock - Series C (8% cumulative, $1,000 stated value,
10,000 shares authorized, 5,274 and 5,202 shares issued and outstanding at
December 31, 2008 and December 31, 2007, respectively (redeemable in
liquidation at an aggregate of $5,274,000 at December 31, 2008)		—			—

Stockholders' deficit:
Common stock, $0.0001 par value, 5,000,000,000 shares authorized, 677,858,548
shares issued and 677,858,501 outstanding at December 31, 2008;
750,000,0000 shares authorized, 3,483 shares issued and 3,437 outstanding
at December 31, 2007, retroactively restated		68			14
Treasury stock, 47 shares at December 31, 2008 and December 31, 2007,
respectively, at cost, retroactively restated		—			—
Additional paid-in capital		1,675			897
Accumulated deficit		(11,987	)		(9,304	)
Total stockholders' deficit		(10,244	)		(8,393	)
Total liabilities and stockholders' deficit	$	5,165		$	6,131

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

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REMOTE DYNAMICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

	Year ended
	December 31,
	2008			2007
Revenues
Service	$	3,474		$	3,176
Ratable product		1,567			1,385
Product		217			160

Total revenues		5,258			4,721

Cost of revenues
Service		1,301			1,245
Ratable product		575			330
Product		99			186

Total cost of revenues		1,975			1,761

Gross profit		3,283			2,960

Expenses:

General and administrative		1,619			1,766
Sales and marketing		681			774
Engineering		796			719
Depreciation and amortization		809			949

Total expenses		3,905			4,208

Operating loss		(622	)		(1,248	)

Other income (expenses):

Interest income		42			105
Interest expense		(2,102	)		(4,757	)
Other income		(1	)		383
Loss on extinguishment of debt		-			(341	)
Loss on extinguishment of redeemable preferred stock		-			(363	)

Total other income (expenses)		(2,061	)		(4,973	)

Loss before income taxes		(2,683	)		(6,221	)

Income tax benefit		-			-

Net loss		(2,683	)		(6,221	)

Preferred stock dividend		-			-
Loss on redemption of preferred stock		-			-

Net loss attributable to common stockholders	$	(2,683	)	$	(6,221	)

Net loss per common share - basic and diluted	$	(0.19	)	$	(2,074	)

Weighted average number of common shares outstanding:
Basic and diluted		14,474			3

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

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REMOTE DYNAMICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE PERIOD JANUARY 1, 2007 THROUGH DECEMBER 31, 2008

(in thousands, except share information)


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


Common stock issued for services		128		1			8			—		—		—			9
Issuance of warrants in connection with Series B debt offering		—		—			45			—		—		—			45
Issuance of warrants in connection with exchange of Series A Notes to Series B Notes		—		—			5			—		—		—			5
Issuance of warrants in connection with exchange of Series B Preferred Stock to Series B Notes		—		—			6			—		—		—			6
Conversion of Series A Notes to common stock		32		—			10			—		—		—			10
Conversion of HFS Note to Series B Notes		—		—			13			—		—		—			13
Common stock issued as partial principal payments on Series A Notes		164		1			5			—		—		—			6
Net loss		—		—			—			—		—		(6,221	)		(6,221	)
Balance, December 31, 2007		3,437	$	14		$	897			47	$	—	$	(9,304	)	$	(8,393	)

Common stock issued for services		894		—			14			—		—		—			14
Common stock issued as partial principal payments on Series A Notes		55,669,326		6			542			—		—		—			548
Common stock issued as partial principal payments on Series B Notes		17,873,879		2			262			—		—		—			264
Conversion of Series C preferred stock		604,310,965		60			(60	)		—		—		—			—
Issuance of warrants in connection with Series B debt offering							2			—		—		—			2
Reduction of par value in association with reverse stock split		—		(14	)		18			—		—		—			4
Net loss		—		—			—			—		—		(2,683	)		(2,683	)
Balance, December 31, 2008		677,858,501	$	68		$	1,675			47	$	—	$	(11,987	)	$	(10,244	)

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

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REMOTE DYNAMICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (1 of 2)

(in thousands)

	Year ended December 31,
CASH FLOWS FROM OPERATING ACTIVITIES:	2008			2007
Net loss	$	(2,683	)	$	(6,221	)
Adjustments to reconcile net loss to cash used in
operating activities
Depreciation and amortization		70			154
Amortization of customer lists and other intangibles		739			795
Amortization of debt discount		17			7
Amortization of deferred financing fees		107			85
Accretion of HFS note payable		-			611
Accretion of Series A notes		392			2,628
Accretion of Series B notes		901			625
Provision for bad debt		159			72
Loss on extinguishment of debt		-			341
Loss on extinguishment of redeemable preferred stock		-			363
Loss on retirement of fixed assets		1			55
Common stock issued for services		14			9
Changes in operating assets and liabilities:
Accounts receivable		(404	)		(214	)
Due from related parties		71			(71	)
Inventory		6			128
Deferred product costs		(244	)		(377	)
Lease receivables and other assets		290			133
Deferred product revenue		(247	)		(142	)
Accounts payable		(18	)		260
Accounts payable - related parties		(35	)		20
Accrued expenses and other liabilities		570			(171	)
Accrued expenses and other liabilities - related parties		47			23

Net cash used in operating activities		(247	)		(887	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments made to acquire property and equipment		(16	)		(1	)

Net cash used in investing activities		(16	)		(1	)


CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Series B notes, net of offering costs		128			982
Proceeds from line of credit		-			69
Payments on capital leases and other notes payable		(93	)		(56	)

Net cash provided by financing activities		35			995

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(228	)		107
CASH AND CASH EQUIVALENTS, beginning of year		228			121

CASH AND CASH EQUIVALENTS, end of year		-			228

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

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REMOTE DYNAMICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (2 of 2)

(in thousands)



	Twelve months ended December 31,
	2008		2007
Supplemental Cash Flow Information:
Interest paid	$	12	$	7
Income taxes paid		—		—

Non-Cash Financing & Investing Activities:

Common stock issued for partial principal payment on Series A Notes	$	548	$	15
Common stock issued for partial principal payment on Series B Notes		264		13
Common stock issued for services		14		9

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

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REMOTE DYNAMICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	ORGANIZATION, BUSINESS OVERVIEW, ACQUISITIONS AND GOING CONCERN

Organization and Business Overview

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

We commercially introduced our current AVL product, REDIview, in 2005. REDIview was designed with a flexible architecture to accommodate expected additional functional requirements that will be required to effectively compete in the marketplace.

Our REDIview product line forms the basis of our current business plan. We expect this product line to provide the foundation for a growth in revenues and, if our revenues grow as we anticipate, ultimately profitability. We do not expect to achieve profitability for 2009. Our plans for 2009 include continuing to grow our sales staff as revenues allow and managing our indirect sales channel partners in an effort to grow out recurring revenue. However, there can be no assurance that we will achieve our sales targets or our targeted operating levels for 2009. Failure to do so may have a material adverse effect on our business, financial condition and results of operations. Moreover, despite actions to increase revenue, reduce operating costs and to improve profitability and cash flow, our operating losses will continue through 2009 and our net operating cash outflows will continue into at least the second quarter of 2009.

August 2008 Reverse Stock Split

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

On or about April 3, 2009, the Company will complete an increase in the number of its authorized shares of common stock to 15,000,000,000.

Share Exchange Agreement

Huron Holdings, Inc., a Nevada Corporation, (HHI) was originally incorporated on December 15, 1999. HHI provides local courier delivery services to commercial and residential locations in the Phoenix area. HHI utilized a fleet of delivery vans to perform these services on a contract basis for international based shipping and logistics companies. On June 30, 2006, HHI purchased certain assets (referred to as BounceGPS) from DataLogic International, Inc. (see below for further discussion on acquisition). On July 17, 2006, HHI changed its name to BounceGPS, Inc. (BounceGPS).

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On November 30, 2006, Remote Dynamics entered into a Share Exchange Agreement with Bounce Mobile Systems, Inc. (“BMSI”). Pursuant to the Share Exchange Agreement, Remote Dynamics agreed to acquire from BMSI 100% of the capital stock of BounceGPS, a provider of mobile asset management solutions, in exchange for 5,000 shares of Remote Dynamics’ newly authorized series C convertible preferred stock, a Series B Note in the principal amount of $660,000, a Series B OID Note in the principal amount of $264,000, an E-7 Warrant to purchase 1,547 shares of Remote Dynamics common stock, and a F-4 Warrant to purchase 1,547 shares of Remote Dynamics common stock.

As a result of the securities issued to BMSI in the Share Exchange Agreement and Note and Warrant Purchase Agreement transactions, BMSI obtained and currently has effective control of Remote Dynamics board of directors, management, 96.0% of the voting power of Remote Dynamics common stock outstanding, and beneficial ownership of approximately 62.2% of Remote Dynamics common stock (on a as-converted, fully diluted basis). Accordingly, the acquisition has been treated as a reverse merger in accordance with FAS 141 “Accounting for Business Combinations” with BounceGPS considered the accounting acquirer. Accordingly, BounceGPS is deemed to be the purchaser and surviving company for accounting purposes and its net assets are included in the balance sheet at their historical book values and the results of operations of BounceGPS have been presented for the comparative prior period.

The results of operations of Remote Dynamics are included in our financial statements subsequent to December 4, 2006 with the purchase price allocated to the acquired assets and liabilities of Remote Dynamics as of December 4, 2006. On December 4, 2006, Remote Dynamics consummated the Share Exchange Agreement and acquired 100% of the capital stock of BounceGPS commensurate with Remote Dynamics receiving a capital infusion from BMSI and other third parties.

Going Concern

We do not expect to achieve profitability for 2009 and we do not expect to achieve positive operating cash flow until at least the second quarter of 2009. Our plans for 2009 include increasing our sales staff and sales channel development in an effort to build recurring revenue and continuing to identify additional operating cost reductions. However, there can be no assurance that we will achieve our sales targets or our targeted operating results for 2009. Failure to do so may have a material adverse effect on our business, financial condition and results of operations. Moreover, despite actions to increase revenue, to reduce operating costs and to improve profitability and cash flow, our operating losses will continue through 2009 and net operating cash outflows will continue into at least the second quarter of 2009.

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

Ability to increase sales of the REDIview product line.

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

Retaining our existing customers.

Training and development of new sales staff.

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

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We had a working capital deficit of $3.4 million, excluding the outstanding amount of our secured convertible notes of $10.8 million, as of December 31, 2008. We believe that we will have sufficient capital to fund our ongoing operations through 2009, assuming that we are able to meet our sales targets and operating cost reduction plans and to negotiate acceptable payment arrangements with our senior security holders, vendors and other creditors. The sufficiency of our cash resources also depends to a certain extent on general economic, financial, competitive or other factors beyond our control.

In March, 2008, we resumed making payments to certain of our note holders of amounts due under the notes by issuing shares of our common stock under the terms of the notes. During the year ended December 31, 2008, we issued 55,669,326 shares of common stock as partial principal payments on the Series A Notes in satisfaction of $548,000 of obligations due under the notes. Additionally, we issued 17,873,879 shares of common stock as partial payments on the Series B Notes in satisfaction of $264,000 of obligations due under the notes. We expect to issue additional shares of our common stock in payment of amounts due under the notes during 2009 and thereafter. In general, the shares issued are available for immediate resale by the holders in accordance with Rule 144 under the Securities Act of 1933, as amended.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

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

Estimates Inherent in the Preparation of Financial Statements

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

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Revenue Recognition

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

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

Shipping and Handling Fees and Costs

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

Deferred Product Costs

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

Financial Instruments

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

The carrying amount of cash and cash equivalents, accounts receivable, notes payable, accounts payable and accrued liabilities approximates fair value because of their short-term maturity.

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Allowance for Doubtful Accounts

	December 31,
	2008			2007

Beginning balance	$	54		$	67
Additions		121			31
Deductions		(90	)		(44	)
Ending balance	$	85		$	54

Business and Credit Concentrations

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

AT&T provides GSM/GPRS data services to its REDIview customers pursuant to a data reseller agreement effective as of November 1, 2004 and a messaging agreement effective September 27, 2004. The data reseller agreement and messaging agreement have an initial term of two years and automatically renews for successive one year terms unless either party provides the other party with written notice of termination at least 30 days prior to the end of the initial term or any renewal term. However, the data reseller agreement and the messaging agreement may be terminated by AT&T or the Company for convenience upon 90 days prior written notice.

Inventories

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

Property and Equipment

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

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Valuation of Long-Lived Assets

We evaluate the recoverability of our long-lived assets under Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). SFAS 144 requires us to review for impairment of our long-lived assets, whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable and exceeds its fair value. Impairment evaluations involve our estimates of asset useful lives and future cash flows. When such an event occurs, we estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the undiscounted expected future cash flows are less than the carrying amount of the asset and the carrying amount of the asset exceeds its fair value, an impairment loss is recognized. We utilize an expected present value technique, in which multiple cash flow scenarios that reflect the range of possible outcomes and a risk-free rate are used, to estimate fair value of the asset.

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

significant negative industry trends,

significant changes in technology,

significant underutilization of the asset, and

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

Goodwill and Other Intangibles

We test our goodwill for impairment on an annual basis, or between annual tests if it is determined that a significant event or change in circumstances warrants such testing, in accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets”, (“SFAS 142”) which requires a comparison of the carrying value of goodwill to the fair value of the reporting unit. If the fair value of the reporting unit is less than the carrying value of goodwill, an adjustment to the carrying value of goodwill is required. See Note 1 and Note 5 for further discussion on goodwill and other intangible assets impairment.

Income Taxes

The Company accounts for income taxes under the provisions of SFAS No. 109, Accounting for Income Taxes. Under SFAS No. 109, deferred tax assets and liabilities are recognized for future tax benefits or consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such assets will not be realized through future operations.

Stock-Based Compensation

In December of 2004, the Financial Accounting Standards Board (“FASB”) issued FAS 123R, which applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies to liabilities an entity may incur for goods or services that are based on the fair value of those equity instruments. For any unvested portion of previously issued and outstanding awards, compensation expense is required to be recorded based on the previously disclosed FAS 123 methodology and amounts. Prior periods presented are not required to be restated. We adopted FAS 123R as of January 1, 2006 and applied the standard using the modified prospective method. Remote Dynamics extinguished all prior stock options upon emergence from bankruptcy effective July 2, 2004 and have not issued any new stock options beyond that date.

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Beneficial Conversion Feature

Issuance of Shares for Non-Cash Consideration

Earnings Per Share

The Company adopted the provisions of SFAS No. 128, Earnings Per Share ("EPS"). SFAS No. 128 provides for the calculation of basic and diluted earnings or loss per share. Basic loss per share includes no dilution and is computed by dividing income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution of securities that could share in the earnings or losses of the entity. Such amounts include shares potentially issuable pursuant to the Notes and the attached warrants and the convertible preferred stock (see Notes 8 and 10). For the years ended December 31, 2008 and 2007, basic and diluted loss per share are the same as the potentially dilutive shares were excluded from diluted loss per share as their effect would be anti-dilutive for the year then ended.

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

	For the Year Ended December
	2008		2007
Convertible notes payable		33,015,890,449		82,535
Convertible preferred stock		36,320,277,366		143,959
Outstanding warrants to purchase common stock		636,112		30,615

Stock warrants issued and outstanding total 636,112 at December 31, 2008.

New Accounting Standards

Financial Accounting Standards No. 159 (“FAS 159”) In February 2007, the FASB issued FAS 159, The Fair Value Option for Financial Assets and Financial Liabilities, or FAS 159. FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of the guidance is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. FAS 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the fiscal year beginning on or before November 15, 2007, provided the provisions of FAS 157 are applied. The adoption of FAS 159 did not have a material impact on the Company’s financial condition or results of operations.

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Financial Accounting Standards No. 160 (“FAS 160”) In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. SFAS 160 will change the accounting and reporting for minority interests, which will be recharacterized as non-controlling interests (NCI) and classified as a component of equity. This new consolidation method will significantly change the accounting for transactions with minority interest holders. SFAS 160 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements of SFAS 160 shall be applied prospectively. SFAS 160 is effective for fiscal years beginning after December 15, 2008 and, as such, the Company will adopt this standard in fiscal 2009. The Company is currently evaluating the potential impact of the adoption of SFAS 160 on its consolidated financial statements.

Financial Accounting Standards No. 162 (“FAS 162”) In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, "The Hierarchy of Generally Accepted Accounting Principles"

("FAS 162"). FAS 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section, 411 The Meaning of "Present Fairly in Conformity with Generally Accepted Accounting Principles". The statement is intended to improve financial reporting by

identifying a consistent hierarchy for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP). The Company has not completed its evaluation of the effects, if any, that FAS 162 may have on its consolidated financial position, results of operations and cash flows.

3.	INVENTORIES

Inventories consist of the following (in thousands):

	December 31,
	2008			2007
Complete systems	$	89		$	67
Component parts		71			98
Reserve for obsolescence – systems		(2	)		—
Reserve for obsolescence – parts		(5	)		(7	)
	$	153		$	158

4.	PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

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	December 31,
	2008			2007
Machinery and equipment		10			4
Capitalized software costs		62			62
Leasehold improvements		—			—
Vehicles, computer equipment, and other equipment		242			245
		314			311
Less: accumulated depreciation and amortization		(212	)		(154	)
	$	102		$	157

Total depreciation and amortization expense related to property and equipment charged to operations during the year ended December 31, 2008 and 2007 was $70,000 and $154,000, respectively.

5.	GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets consist of the following as of December 31, 2008 and 2007 (in thousands):

												Remaining
	Balance at									Balance at		Amortization
	December 31,									December 31,		Period
	2007		Addition		Amortization			Impairment		2008		(in months)

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

Other intangibles:
Customer lists		2,162		-		(552	)				1,610		35
Software		674		-		(172	)				502		35
Tradenames		59		-		(15	)				44		35
	$	3,511	$	-	$	(739	)	$	-	$	2,772

Total amortization expense for the other intangible assets for the year ended December 31, 2008 and 2007 was approximately $739,000 and $796,000, respectively.

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

		2009				2010				2011				2012				2013
Amortization Expense		$	739			$	739			$	678			$	—			$	—

6.	LEASE RECEIVABLES AND OTHER ASSETS

The net present value of the lease payments for sales-type leases is recognized as product revenue and deferred under the Company’s revenue recognition policy. The components of the net investment in sales-type leases are as follows (in thousands):

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	December 31,
	2008			2007

Minimum lease payments receivable	$	146		$	381
Less: Allowance for uncollectibles		(7	)		(16	)
		139			365

Less: Unearned interest income		(14	)		(55	)
Net investment in sales-type leases	$	125		$	310

The long-term portion of the net investment in sales-type leases at December 31, 2008 and 2007 was $126,000 and $279,000, respectively.

Total minimum lease payments receivable on sales-type leases as of December 31, 2008 are as follows (in thousands):

Fiscal Year Ending December 31,	2008

2009		133
2010		12
2011		1
Total minimum lease payments receivable	$	146

Income from operating leases is recognized ratably over the term of the leases. There are no future minimum rental payments due under operating leases as of December 31, 2008.

7.	ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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

	December 31,		December 31,
	2008		2007

Capital leases - current portion		29		36
Property, franchise, and other taxes payable		54		110
Accrued warranty costs		60		68
Accrued vacation		37		37
Accrual for Series A & B default penalty and interest		1,791		1,114
Legal, accounting, interest and other accruals		451		405
	$	2,422	$	1,770

8.	NOTES PAYABLE

HFS Note Payable

In 2004, Remote Dynamics issued a $2,000,000 convertible promissory note to HFS Minorplanet Funding LLC (“HFS”). The principal balance is due 36 months from the date of funding, with an annual interest rate of 12%.

As described in Note 1, as part of the purchase accounting for the reverse merger transaction, the debt was adjusted to fair value. Accordingly, the difference between the estimated fair value of $150,000 and the face amount of the note payable totaling $2,000,000 is recorded as a debt discount. The debt discount was accreted to interest expense over the remainder of the term of the note.

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On May 8, 2007, Remote Dynamics and HFS completed an exchange transaction in which: (a) the $2,000,000 convertible promissory note originally issued by the Company to HFS was cancelled, and (b) Remote Dynamics issued to HFS (i) $1,000,000 principal amount of our series B subordinated secured convertible promissory notes, (ii) $400,000 principal amount of our original issue discount series B subordinated secured convertible promissory notes, (iii) our series E-7 warrants to purchase 2,344 shares of our common stock and (iv) our series F-4 warrants to purchase 2,344 shares of our common stock. We recorded a loss on extinguishment of debt totaling $107,000 during the second quarter of 2007 in relation to the exchange.

DataLogic Note Payable

On June 30, 2006, BounceGPS issued a $250,000 note to DataLogic International, Inc. in conjunction with the acquisition described in Note 1. The note has a term of 2 years with an annual interest rate of 9%. Principal payments of $31,250 were scheduled to commence October 1, 2006 and quarterly thereafter. Interest is payable quarterly. BounceGPS is currently in default as principal and interest payments have not been made in accordance with the note agreement. The Company has accrued $66,551 of interest expense as of December 31, 2008. The $250,000 principal balance has been classified as current on the accompanying consolidated balance sheet due to the default mentioned above. Keith Moore, Director and Audit Committee Chair of the Company, was previously the CEO and Chairman of DataLogic International, Inc. BounceGPS has disputed the obligation to make any payments under the note. See Note 12 for further discussion on related party transactions.

Series A Note Financing

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

The Series A Notes are secured by substantially all of the Company’s assets. The Series A Notes mature 24 months from issuance and are convertible at the option of the holder into our common stock at a fixed conversion price of $0.000267 per share. Beginning on September 1, 2006 and continuing thereafter on the first business day of each month, Remote Dynamics must pay an amount to each holder of a Series A Note equal to 1/18th of the original principal payment of the note; provided, that if on any principal payment date the outstanding principal amount of the note is less than such principal installment amount, then Remote Dynamics must pay to the holder of the note the lesser amount. Remote Dynamics may make such principal installment amounts in cash or in registered shares of its common stock. If paid in common stock, certain conditions must be satisfied, and the number of registered shares to be paid to the holder must be an amount equal to the principal installment amount divided by eighty percent (80%) of the average of the closing bid price for the ten (10) trading days immediately preceding the principal payment date.

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

Series A-7 warrants to purchase 1,031 shares in the aggregate of common stock at an initial exercise price of $8,000 per share subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents. The exercise price of the series A-7 warrants was $0.000267 as of December 31, 2008. The series A-7 warrants can be exercised on a cashless basis beginning one year after issuance if (i) the per share market value of a share of our common stock (either the volume the weighted average price or the fair market value as determined by an independent

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appraiser) is greater than the warrant price; and (ii) a registration statement for the warrant stock is not then in effect. The series A-7 warrants are exercisable for a seven-year period from the date of issuance (95 of these warrants are exercisable over 5 years).

Series B-4 warrants to purchase 688 shares in the aggregate of common stock at an initial exercise price of $18,000 per share subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents. The exercise price of the series B-4 warrants was $0.000267 as of December 31, 2008. The series B-4 warrants can be exercised on a cashless basis beginning one year after issuance if (i) the per share market value of a share of our common stock (either the volume the weighted average price or the fair market value as determined by an independent appraiser) is greater than the warrant price; and (ii) a registration statement for the warrant stock is not then in effect. The series B-4 warrants are exercisable for a four-year period beginning on the date a resale registration statement for the shares underlying the warrants is declared effective by the Securities and Exchange Commission (65 of these warrants are exercisable over 5 years).

Series C-3 warrants to purchase 1,375 shares in the aggregate of common stock at an initial exercise price of $4,200 per share subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents. The exercise price of the series C-3 warrants was $0.000267 as of December 31, 2008. The series C-3 warrants can be exercised on a cashless basis beginning one year after issuance if (i) the per share market value of a share of our common stock (either the volume the weighted average price or the fair market value as determined by an independent appraiser) is greater than the warrant price; and (ii) a registration statement for the warrant stock is not then in effect. The series C-3 warrants are exercisable for a three-year period from the date of issuance (125 of these warrants are exercisable over 5 years).

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

Warrants issued to the placement agents in the financing to purchase 125 shares of common stock at an exercise price per share equal to $0.000267 with a term of 5 years following the closing.

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In March, 2008, we resumed making payments to certain of our note holders of amounts due under the notes by issuing shares of our common stock under the terms of the notes. During the year ended December 31, 2008, we issued 55,669,326 shares of common stock as partial principal payments on the Series A Notes in satisfaction of $548,000 of obligations due under the notes. We expect to issue additional shares of our common stock in payment of amounts due under the notes during 2009 and thereafter. In general, the shares issued are available for immediate resale by the holders in accordance with Rule 144 under the Securities Act of 1933, as amended.

The following tables summarize the Series A Notes as of December 31, 2008 and 2007 (000’s):

	Principal			Less Discount			Carrying Amount
Total Series A Notes – December 31, 2006	$	4,435		$	3,193		$	1,242
Accretion of Series A Notes		—			(2,628	)		2,628
Nite Capital Conversion		(10	)		—			(10	)
Exchange of Series A Notes for Series B Notes		(225	)		(172	)		(53	)
Partial Principal Payments		(6	)		—			(6	)
Total Series A Notes – December 31, 2007	$	4,194		$	392		$	3,801

	Principal			Less Discount			Carrying Amount
Total Series A Notes – December 31, 2007	$	4,194		$	392		$	3,801
Partial Principal Payments		(548	)		—			(548	)
Accretion of Series A Notes		—			(392	)		392
Total Series A Notes – December 31, 2008	$	3,646		$	0		$	3,646

Series B Note Financing

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

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May 2011. The Company may make principal installment payments in cash or in registered shares of its common stock. If paid in common stock, certain conditions must be satisfied, and the number of registered shares to be paid to the holder must be an amount equal to the principal installment amount divided by the lesser of (i) $1.00 and (ii) 90% of the average of the volume weighted average trading prices of the common stock for the ten trading days immediately preceding the principal payment. The Series B Notes are convertible into the Company’s common stock at a conversion price of $0.00045 per share (as of December 31, 2008), subject to adjustment for stock splits and combinations, certain dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets; issuances of additional shares of common stock, and issuances of common stock equivalents.

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

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

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

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

to pay to the placement agent for the transaction consideration consisting of (a) a cash sales commission of $150,480 (b) warrants to purchase 822 shares of the Company’s common stock at an exercise price of $0.00045 per share (as of December 31, 2008) and being exercisable for ten years, (c) series E-7 warrants to purchase 617 shares of the Company’s common stock, and (d) series F-4 warrants to purchase 617 shares of the Company’s common stock. The Company also paid $60,000 to Strands Management Company, LLC for consulting work as well as $59,816 in legal counsel fees as part of the private placement.

The Company has failed to comply with certain of its other obligations relating to the Series B Notes, including the Company’s failure to make scheduled principal payments and to register for resale the shares of common stock underlying the notes and warrants issued in the Series B private placement. The Series B Notes provide for a default interest rate of 10% per annum on the outstanding principal amount of the notes for periods in which certain specified events of default occur and are continuing and liquidated damages for non-compliance with our registration obligations. As of December 31, 2008, the Company has accrued $800,077 in default interest and liquidated damages under the Series B Notes.

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

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In March, 2008, the Company commenced making payments to certain of its Series B note holders of amounts due under the notes by issuing shares of the Company’s common stock under the terms of the notes. During the year ended December 31, 2008, the Company issued 17,873,879 shares of common stock as partial payments on the Series B Notes in satisfaction of $264,000 of obligations due under the notes. The Company expects to issue additional shares of its common stock in payment of amounts due under the notes during 2009 and thereafter.

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

BounceGPS Acquisition

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

The following table summarizes the Series B Notes as of December 31, 2008 and 2007 (000’s):

	Principal		Less Discount			Carrying Amount
Total Series B Notes – December 31, 2006	$	2,716	$	1,019		$	1,698
Issuance of Series B Notes		1,508		460			1,048
Exchange of Series A Notes to Series B Notes		401		120			282
Exchange of Series B Preferred Stock to Series B Notes		525		156			369
HFS Conversion		1,400		414			986
Accretion of Series B Notes		—		(625	)		625
Total Series B Notes – December 31, 2007	$	6,550	$	1,543		$	5,007

		Principal				Less Discount				Carrying Amount
Total Series B Notes – December 31, 2007		$	6,550			$	1,543

Filing Compare · Remote Dynamics Inc