The following information should be read in conjunction with the condensed interim financial statements and the notes thereto included in Item 1 of this Quarterly Report and in conjunction with the financial statements for the year ended December 31, 2008 contained in our Form 10-K filed on March 16, 2009. Except for historical information, the following discussion contains forward looking statements that involve risks and uncertainties, including statements regarding our anticipated revenues, profits, costs and expenses and revenue mix. These forward-looking statements include, among others, those statements including the words "may," "will," "plans," "seeks," "expects," "anticipates," "intends," "believes" and words of similar import. Such statements constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements.
This amendment is being filed to restate our condensed consolidated statements of operations, condensed consolidated balance sheets, condensed consolidated statements of cash flows, and notes to condensed consolidated financial statements for the quarterly period ended June 30, 2009 to correct an error in accounting for income taxes as described below and in footnote 16 to the condensed consolidated financial statements herein. We also revised the discussion under Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations and under Item 4, Controls and Procedures in light of the restatement. The error was discovered on October 29, 2009 in the preparation of the income tax provision for the quarter ended September 30, 2009.
Summary of Misstatement in the Quarter Ended June 30, 2009 During the quarter ended June 30, 2009 we entered into a plan of liquidation for the Wi-Sys legal entity as part of our consolidation of Wi-Sys' operations into PCTEL in order to achieve operating cost synergies. Pursuant to that liquidation, we incurred $275 of Canadian income taxes related to the transfer of assets from the Canadian entity to our U.S. entity. We initially recorded those taxes as income tax expense in the quarter. Under accounting for income taxes incurred related to the transfer of assets between companies in a controlled group, the Canadian taxes should have been charged to deferred taxes with the balance amortized over the life of the related assets. Therefore income tax expense during the quarter was overstated by $275.
Summary of Misstatement Year to date as of the Quarter Ended June 30, 2009 We filed an amendment for the quarter ended March 31, 2009 to restate our condensed consolidated statements of operations, condensed consolidated balance sheets, condensed consolidated statements of cash flows, and notes to condensed consolidated financial statements to correct two errors in accounting for income taxes as described below and in footnote 21 of that filing to the condensed consolidated financial statements therein. We also revised the discussion under Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations and under Item 4, Controls and Procedures in light of the restatement. The errors were discovered on October 29, 2009 in the preparation of the income tax provision for the quarter ended September 30, 2009. We acquired Wi-Sys Communications, a Canadian company, through a purchase of all of Wi-Sys' common stock for $2.3 million in cash on January 5, 2009. When recording the initial Wi-Sys balance sheet at fair value under purchase accounting in the quarter ended March, 31, 2009, we did not record a $223 deferred tax liability, with correspondent recording of additional goodwill, for the effect of the book over tax basis in the related intangible asset. We evaluated at the time, in error, that we would treat the permanent difference as a reconciling item in our reconciliation of effective tax rate to statutory rate. During the same quarter, we impaired all of our goodwill, resulting in goodwill impairment expense being understated by $223, equal to the amount of the unrecorded deferred tax liability.
Additionally, we discovered that we omitted the effect of compensation deduction limitations for U.S. income tax purposes under IRS Code Section 162(m) when calculating the tax provision. This resulted in income tax expense being understated by $127.
The effect of the misstatements year to date are presented in this amendment as compared to the original filings on form 10-Q for the quarters ended March 31, 2009 and June 30, 2009. The year to date effect of the misstatements on the income statement is that goodwill impairment expense is understated by $223, income tax expense is overstated by $148, and net income is overstated by $75. Introduction
PCTEL focuses on wireless broadband technology related to propagation and optimization. We design and develop innovative antennas that extend the reach of broadband and other wireless networks and that simplify the implementation of those networks. Our antenna solutions support public safety applications, unlicensed and licensed wireless broadband, fleet management, network timing, and other global positioning systems ("GPS") applications. We provide highly specialized software-defined radios that facilitate the design and optimization of broadband wireless networks. Our portfolio of scanning receivers and interference management solutions are used to measure, monitor and optimize cellular networks. We supply our products to public and private carriers, wireless infrastructure providers, wireless equipment distributors, Value Added Resellers ("VARs") and other Original Equipment Manufacturers ("OEMs"). We maintain expertise in several technology areas. These include digital signal processing ("DSP") chipset programming, radio frequency, software engineering, mobile, antenna design and manufacture, mechanical engineering, product quality and testing, advanced algorithm development, and cellular engineering. Growth in product revenue is dependent both on gaining further revenue traction in the existing product portfolio as well as further acquisitions to support the wireless initiatives. Revenue growth for antenna products is correlated to emerging wireless applications in broadband wireless, in-building wireless, wireless Internet service providers, GPS and Mobile SATCOM. Land mobile radio ("LMR"), private mobile radio ("PMR"), digital private mobile radio ("DPMR"), and on-glass mobile antenna applications represent mature markets. Our newest products address Worldwide Interoperability for Microwave Access ("WiMAX") standards and applications. Revenue for scanning receivers is tied to the deployment of new wireless technology, such as 2.5G and 3G, and the need for existing wireless networks to be tuned and reconfigured on a regular basis. On January 5, 2009, we acquired all of the outstanding share capital of Wi-Sys Communications Inc. ("Wi-Sys"), a Canadian manufacturer of products for GPS, terrestrial and satellite communication systems, including programmable GPS receivers and high performance antennas. The Wi-Sys product line augments our GPS antenna product line. During the second quarter 2009, we exited the Canadian facility and fully integrated the Wi-Sys product lines into our antenna product operations in Bloomingdale, Illinois. During the three months ended June 30, 2009 we incurred a restructuring charge of $0.2 million for employee severance, lease termination costs, and asset dispositions.
On March 14, 2008, we acquired certain assets of Bluewave Antenna Systems, Ltd ("Bluewave"). The Bluewave product line augments our LMR antenna product line. On October 9, 2008, we sold four of our antenna product families to Sigma Wireless Technology Ltd, a Scotland based company ("SWTS"). The four antenna product families represent the remaining antenna products from our acquisition of Sigma Wireless Technology Limited ("Sigma") in 2005. Sigma and SWTS are not related.
On January 4, 2008, we sold our Mobility Solutions Group ("MSG") to Smith Micro Software, Inc. (NASDAQ: SMSI) ("Smith Micro"). MSG produced mobility software products for WiFi, Cellular, IP Multimedia Subsystem ("IMS"), and wired applications. The financial results for MSG are presented in the financial statements as discontinued operations.
We also have a reporting unit that licenses an intellectual property portfolio in the area of analog modem technology. As of the second quarter 2009, the revenues and cash flows associated with this reporting unit are substantially complete. In 2009 and for comparable periods this reporting unit does not meet the quantitative threshold requirements of a reportable segment in accordance with FAS 131. As such, the results for licensing for all periods presented are aggregated with the rest of the company.

Current Economic Environment
We believe the current economic conditions have reduced spending by consumers and businesses in markets into which we sell our products in response to tighter credit, negative financial news and the continued uncertainty of the global economy. Consequently, the global demand for our products has also decreased. This decrease in demand is having a negative impact on our revenues, results of operations, and overall business. It is uncertain how long the current economic conditions will last or how quickly any subsequent economic recovery will occur. If the economy or markets into which we sell our products continue to slow or any subsequent economic recovery is slow to occur, our business, financial condition and results of operations could be further materially and adversely affected.
Results of Operations
Three Months and Six Months Ended June 30, 2009 and 2008

Revenues

                                                     Three Months Ended           Three Months Ended          Six Months Ended           Six Months Ended
                                                       June 30, 2009                June 30, 2008              June 30, 2009              June 30, 2008
Revenue                                               $           13,368           $           20,274          $         27,507           $         38,574
Percent change from year ago period                                (34.1 %)                      22.9 %                   (28.7 %)                    16.5 %

Revenues decreased 34.1% in the three months ended June 30, 2009 and 28.7% in the six months ended June 30, 2009 compared to the same periods in 2008 as both scanning receiver and antenna product lines experienced declines. In the three months ended June 30, 2009 versus the prior year, approximately 15% of the decline is attributable to antennas and approximately 19% of the decline is attributable to scanning receivers. In the six months ended June 30, 2009 versus the prior year, approximately 17% of the decline is attributable to antennas and approximately 12% of the decline is attributable to scanning receivers. Antenna revenues were lower in our distribution and OEM channels, reflecting declines in LMR and U.S. defense-related revenues. Scanning receiver revenues were lower due to reduced capital expenditures levels worldwide and due to delays in carrier spending caused by the transition from Evolution Date Optimized ("EVDO") to the Long-Term Evolution ("LTE") technology standard for communication networks.

Gross Profit

                                                    Three Months Ended          Three Months Ended          Six Months Ended           Six Months Ended
                                                       June 30, 2009               June 30, 2008             June 30, 2009              June 30, 2008
Gross profit                                          $           6,058           $           9,708          $         12,729           $         18,475
Percentage of revenue                                              45.3 %                      47.9 %                    46.3 %                     47.9 %
Percent of revenue change from year ago period                     (2.6 %)                      3.4 %                    (1.6 %)                     3.3 %

Gross margin of 45.3% in the three months ended June 30, 2009 was 2.6% lower than the comparable period in fiscal 2008. Scanners contributed 2.3% of the margin percentage decrease and antennas contributed 0.3% of the margin percentage decrease in the three months ended June 30, 2009 versus the comparable period in 2008. Gross margin of 46.3% in the six months ended June 30, 2009 was 1.6% lower than the comparable period in fiscal 2008. Scanners contributed 1.0% of the margin percentage decrease and antennas contributed 0.6% of the margin percentage decrease in the six months ended June 30, 2009 versus the comparable period in 2008. In the three months and six months ended June 30, 2009, the lower gross margin reflects the cost of lower overall volume over our fixed costs.

Research and Development

                                                     Three Months Ended         Three Months Ended           Six Months Ended          Six Months Ended
                                                        June 30, 2009              June 30, 2008              June 30, 2009             June 30, 2008
Research and development                               $           2,649          $           2,609           $          5,337          $          4,795
Percentage of revenues                                              19.8 %                     12.9 %                     19.4 %                    12.4 %
Percent change from year ago period                                  1.5 %                     (1.4 %)                    11.3 %                    (8.2 %)

Research and development expenses were virtually unchanged for the three months ended June 30, 2009 compared to the comparable period in 2008. Research and development expenses increased approximately $0.5 million for the six months ended June 30, 2009 compared to the comparable period in 2008. During the six months ended June 30, 2009, expenses were higher than the prior year because we invested in the

development of new scanning receivers and because of the acquisition of certain assets of Bluewave in March 2008 and Wi-Sys in January 2009.

Sales and Marketing

                                                    Three Months Ended          Three Months Ended          Six Months Ended           Six Months Ended
                                                       June 30, 2009               June 30, 2008             June 30, 2009              June 30, 2008
Sales and marketing                                   $           1,914           $           2,874          $          3,996           $          5,637
Percentage of revenues                                             14.3 %                      14.2 %                    14.5 %                     14.6 %
Percent change from year ago period                               (33.4 %)                      7.6 %                   (29.1 %)                     4.2 %

Sales and marketing expenses include costs associated with the sales and marketing employees, sales representatives, product line management, and trade show expenses.
Sales and marketing expenses decreased approximately $1.0 million for the three months ended June 30, 2009 and decreased approximately $1.6 million for the six months ended June 30, 2009 compared to the same periods in fiscal 2008. These decreases are due to the headcount reductions in several unproductive international sales offices and due to lower commissions to sales people and manufacturers representatives. The headcount reductions occurred in the third and fourth quarters of 2008.

General and Administrative

                                                       Three Months Ended          Three Months Ended           Six Months Ended           Six Months Ended
                                                          June 30, 2009               June 30, 2008              June 30, 2009              June 30, 2008
General and administrative                               $           2,543           $           2,981           $          5,076           $          5,753
Percentage of revenues                                                19.0 %                      14.7 %                     18.5 %                     14.9 %
Percent change from year ago period                                  (14.7 %)                     (4.7 %)                   (11.8 %)                   (12.4 %)

General and administrative expenses include costs associated with the general management, finance, human resources, information technology, legal, insurance, public company costs, and other operating expenses to the extent not otherwise allocated to other functions.
General and administrative expenses decreased approximately $0.4 million for the three months ended June 30, 2009 and approximately $0.7 million for the six months ended June 30, 2009 compared to the same periods in fiscal 2008. For the three months ended June 30, 2009, the expense decrease is due to $0.2 million lower stock compensation expense for employees in general and administrative functions and $0.2 million due to corporate cost reductions. For the six months ended June 30, 2009, the expense decrease is due to $0.5 million lower stock compensation expense for employees in general and administrative functions and $0.2 million due to corporate cost reductions.

Amortization of Intangible Assets

                                                      Three Months Ended          Three Months Ended          Six Months Ended         Six Months Ended
                                                        June 30, 2009               June 30, 2008              June 30, 2009             June 30, 2008
Amortization of other intangible assets                  $            553            $            552          $          1,106           $          992
Percentage of revenues                                                4.1 %                       2.7 %                     4.0 %                    2.6 %

Amortization was unchanged in the three months ended June 30, 2009 compared to the same period in 2008. Amortization expense related to the Wi-Sys acquisition in January 2009 offset the impact from the sale of product lines to SWTS in October 2008. Amortization increased approximately $0.1 million in the six months ended June 30, 2009 compared to the same period in 2008 due to the intangible amortization from the acquisitions of Bluewave in March 2008 and Wi-Sys in January 2009.

Restructuring Charges

                                                      Three Months Ended          Three Months Ended          Six Months Ended         Six Months Ended
                                                        June 30, 2009               June 30, 2008               June 30, 2009            June 30, 2008
Restructuring charges                                    $            340                        ($13 )          $          493           $          364
Percentage of revenues                                                2.5 %                      (0.1 %)                    1.8 %                    0.9 %

During the three months ended June 30, 2009 we recorded $0.2 million expense related to Wi-Sys restructuring and $0.1 million expense related to antenna operations. During the six months ended June 30, 2009, we recorded $0.2 million expense related to Wi-Sys restructuring and $0.3 million expense related to antenna operations.
In order to reduce costs with the antenna operations in the Bloomingdale, Illinois location, we terminated thirteen employees during the three months ended March 31, 2009 and terminated five additional employees during three months ended June 30, 2009. During the six months ended June 30, 2009, we recorded $0.3 million in restructuring expense for severance payments for these eighteen employees.
During the second quarter 2009, we exited the Ottawa, Canada location related to the Wi-Sys acquisition and integrated their operations in our Bloomingdale, Illinois location. The restructuring expense of $0.2 million relates to employee severance, lease termination, and other shut down costs.
During the three months ended June 30, 2008, we recorded a benefit related to final adjustments to our UMTS restructuring reserve. During the six months ended June 30, 2008, we incurred charges of approximately $0.3 million related to employee severance costs related to the reduction of corporate overhead and $0.1 million related to adjustments to our UMTS restructuring reserves. We streamlined our corporate overhead structure to reduce general and

administrative expenses
Impairment of Goodwill, as Restated

                                                   Three Months Ended         Three Months Ended          Six Months Ended         Six Months Ended
                                                      June 30, 2009              June 30, 2008             June 30, 2009             June 30, 2008
Impairment of goodwill                                     $         -                $         -          $          1,485               $        -
Percentage of revenues                                               -                          -                       5.4 %                      -

In March 2009, we recorded goodwill impairment of $1.5 million in accordance with FAS 142. This amount represented the remaining $0.4 million of goodwill for Licensing and the $1.1 million in goodwill recorded with the Wi-Sys acquisition in January 2009. We tested our goodwill for impairment because our market capitalization was below our book value at March 31, 2009. We considered this market capitalization deficit as a triggering event in accordance with FAS 142. There was no triggering event in the second quarter 2009. Loss on sale of product lines and related note receivable

                                                    Three Months Ended         Three Months Ended         Six Months Ended         Six Months Ended
                                                      June 30, 2009               June 30, 2008             June 30, 2009            June 30, 2008
Loss on sale of product lines and realted
note receivable                                        $            454                $         -           $          454               $        -
Percentage of revenues                                              3.4 %                        -                      1.7 %                      -

In the fourth quarter of 2008 we sold certain antenna products and related assets to SWTS. SWTS purchased the intellectual property, dedicated inventory, and certain fixed assets related to four of our antenna product families for $0.7 million, payable in installments at close and over a period of 18 months. The four product families represent the last remaining products acquired by us through our acquisition of Sigma in July 2005. SWTS and Sigma are unrelated. In the year ended December 31, 2008, we recorded a $0.9 million loss on sale of product lines, separately within operating expenses in the consolidated statements of operations. The net loss included the book value of the assets sold to SWTS, impairment charges in accordance with FAS 142 and FAS No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets", ("FAS 144"), and incentive payments due the new employees of SWTS, net of the proceeds due to us. We sold inventory with a net book value of $0.8 million and wrote off intangible assets including goodwill of $0.5 million. The intangible asset write-off was the net book value and the goodwill write-off was a pro-rata portion of goodwill in accordance with FAS 142. We paid incentive payments of $0.1 million and calculated $0.5 million in proceeds based on the principal value of the installment payments excluding imputed interest.
At June 30, 2009, we reserved for the $0.5 million receivable balance from SWTS due to uncertainty of collection. The reserve was recorded as a loss on sale of product line and related note receivable in the condensed consolidated statements of operations.

Gain on sale of assets and related royalties

                                                    Three Months Ended          Three Months Ended         Six Months Ended         Six Months Ended
                                                      June 30, 2009               June 30, 2008              June 30, 2009            June 30, 2008
Gain on sale of assets and related royalties           $            200            $            200           $          400           $          400
Percentage of revenues                                              1.5 %                       1.0 %                    1.5 %                    1.0 %

All royalty amounts represent royalties from Conexant. Payments under the royalty agreement with Conexant were completed at June 30, 2009. We do not expects any additional royalties.

Other Income, Net

                                                     Three Months Ended          Three Months Ended         Six Months Ended          Six Months Ended
                                                       June 30, 2009               June 30, 2008              June 30, 2009            June 30, 2008
Other income, net                                       $            201            $            652           $          366          $          1,437
Percentage of revenues                                               1.5 %                       3.2 %                    1.3 %                     3.7 %

Other income, net consists primarily of interest income and foreign exchange gains and losses. Other income, net decreased in the three months and six months ended June 30, 2009 compared to the comparable period in 2008 due to lower interest income and lower foreign exchange gains. For the three months ended June 30, 2009 and 2008, interest income was $0.2 million and $0.6 million, respectively. For the six months ended June 30, 2009 and 2008, interest income was $0.4 million and $1.2 million, respectively. Interest income decreased due to lower cash balances in 2009 compared to 2008 and because of lower interest rates. The cash balance during the first quarter 2008 includes the proceeds from the sale of MSG. We subsequently used a portion of the cash for a cash dividend and for repurchases of our common stock. In the three months ended June 30, 2009 and 2008, we recorded foreign exchange gains (losses) of $(4) and $52, respectively. In the six months ended June 30, 2009 and 2008, we recorded foreign exchange gains (losses) of $(34) and $218, respectively. Provision (Benefit) for Income Taxes, as Restated

. . .