Forward-looking Statements

This document contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, among other things, forward-looking statements with respect to our future financial or business performance, conditions or strategies and other financial and business matters, including expectations regarding growth trends and activities in the wireless data business. Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "intend," "estimate," "assume," "strategy," "plan," "outlook," "outcome," "continue," "remain," "trend," and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may," or similar expressions. We caution that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q, and we assume no duty to update forward-looking statements. Actual results could differ materially from those anticipated in these forward-looking statements and future results could differ materially from historical performance.

The following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: our inability to reposition our platform to capture greater recurring service revenue; the risks that a substantial portion of Orbit One's revenues are derived from government contracts that may be terminated by the government at any time; variations in quarterly operating results; delays in the development, introduction, integration and marketing of new wireless services; customer acceptance of services; economic conditions resulting in decreased demand for our products and services; the risk that our strategic alliances and partnerships will not yield substantial revenues; changes in financial and capital markets; the inability to attain revenue and earnings growth in our wireless data business; changes in interest rates; inflation; the introduction, withdrawal, success and timing of business initiatives and strategies; competitive conditions; the inability to realize revenue enhancements; and extent and timing of technological changes. Actual events, developments and results could differ materially from those anticipated or projected in the forward-looking statements as a result of certain uncertainties set forth below and elsewhere in this document. Subsequent written or oral statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this report and those in our reports previously and subsequently filed with the Securities and Exchange Commission.

Overview

The following Management's Discussion and Analysis ("MD&A") is intended to help the reader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited financial statements and the accompanying notes to the financial statements in this Quarterly Report on Form 10-Q for the period ended September 30, 2009.

Net sales decreased 39% to $11.5 million for the three-month period ended September 30, 2009, as compared to $19.0 million for the three-month period ended September 30, 2008. Net sales decreased 35% to $36.8 million for the nine-month period ended September 30, 2009, as compared to $56.9 million for the nine-month period ended September 30, 2008. The decline in net sales for the three-month and nine-month periods is the result of decreased hardware sales, as service sales for the comparative quarters increased.

Although we are experiencing lower than anticipated demand in some of our business units due to general economic uncertainty including poor conditions in the housing and auto market, we believe that our pipeline of future sales opportunities remains solid. We have tightened our credit policies in response to the economic climate, in particular to our hardware-only sales, which may impact revenues for the balance of the year.

We recognized an operating loss of $367,000 for the three-month period ended September 30, 2009, as compared to operating earnings of $528,000 for the three-month period ended September 30, 2008. We recognized an operating loss of $2.1 million for the nine-month period ended September 30, 2009, as compared to operating earnings of $395,000 for the nine-month period ended September 30, 2008.

We recognized a net loss of $2.2 million for the three-month period ended September 30, 2009, or ($0.15) per basic and diluted share, as compared to net earnings of $77,000, or $0.01 per basic and diluted share for the three-month period ended September 30, 2008. We recognized a net loss of $4.7 million for the nine-month period ended September 30, 2009, or ($0.33) per basic and diluted share, as compared to a net loss of $323,000, or ($0.02) per basic and diluted share for the nine-month period ended September 30, 2008.

Critical Accounting Policies and Estimates

The MD&A is based upon our condensed consolidated financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. The preparation of our condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of revenue, expenses, assets, and liabilities during the periods reported. Estimates are used when accounting for certain items such as deferred revenue, allowance for doubtful accounts, depreciation or amortization periods, income taxes and valuation of intangible assets. We base our estimates on historical experience, where applicable and other assumptions that we believe are reasonable under the circumstances. There can be no assurance that actual results will not differ from those estimates and such differences could be significant.

Goodwill and intangible assets

Goodwill and certain intangible assets with indefinite lives are not amortized but are subject to an annual impairment test, and more frequently, if events or circumstances occur that would indicate a potential decline in our fair value. An impairment charge will be recognized only when the implied fair value of a reporting unit's goodwill is less than its carrying amount. As of December 31, 2008 we identified six reporting units, 4 of which had associated goodwill. The six reporting units were Wireless (which excludes Airdesk, LLC and Orbit One LLC), Airdesk, LLC, Orbit One LLC ("Orbit One"), Digital Multimedia, Networking Integration and Wireline Data Communications. The four reporting units with associated goodwill were Wireless, Airdesk, LLC, Orbit One, LLC and Digital Multimedia. Due to the recent consolidation of our hardware management and network platforms, we will no longer maintain separate reporting for Airdesk and Wireless, and thus we are combining the Airdesk reporting unit with Wireless (excluding Airdesk LLC and Orbit One LLC) reporting unit beginning January 1, 2009. For our 2008 annual review, we used standard modeling techniques to estimate a fair market value for each of the four reporting units containing goodwill. This included a combination of a discounted cash flow analysis and, where available, the use of public company market comparables in similar industries. We used historical information, our 2009 business plan and expected future development projects to prepare nine year financial projections used in the discounted cash flow analysis for each of the reporting units.

The growth rate assumptions used in our most recent annual impairment test were consistent with operating results for the nine months ended September 30, 2009, and no events or circumstances occurred that would require us to perform an interim impairment test for these same periods.

A summary of the critical assumptions utilized for our impairment tests are outlined below. We believe this information provides relevant information to understand our goodwill impairment testing and evaluate our goodwill balances.

A breakdown of our goodwill balance by reporting unit at September 30, 2009 follows:

                   (In thousands)
Wireless excluding Airdesk and Orbit One Unit          $ 12,472
Orbit One Unit (part of Wireless)                         4,428
Airdesk Unit (part of Wireless)                           5,938
BNI Unit (part of Digital Multimedia and Networking)        949
Total Goodwill                                         $ 23,787

We recorded a goodwill impairment charge of $4.0 million at December 31, 2008. We do not believe that this charge will impact our future liquidity or operating results. In determining the impairment charge, we considered economic conditions. Specifically, for all of our reporting units we reduced expected short term revenues due to current and expected economic conditions. We only anticipate economic recovery and consequent impact on revenues to begin in 2010.

For our Wireless (excluding Airdesk LLC and Orbit One LLC) reporting unit, we use a discounted cash flow model to determine the fair value and a 20% discount rate, as this reporting unit's risks mirror that of the Company as a whole. Our historical revenue growth rate averaged 25% over the past four years. We use a more conservative revenue growth rate than our historical growth rate in this reporting unit, due to expected changes in customer hardware purchasing patterns and due to the current uncertain economic climate. We adjust our margins from historical four year average of 42% for this reporting unit to reflect expected changes in the mix of revenues, with higher margin service revenues making up a larger portion of total revenues versus lower margin hardware sales. We use historical growth rates for SG&A and R&D as the base line for determining future growth but exclude the current year, as we built out a new internal service sales team which would not occur in future periods. Depreciation and amortization and capital expenditures are kept at historic run rates. We use historical accounts receivable days outstanding, inventory turns and accounts payable days outstanding to determine the projected changes in working capital requirements. The combination of all these factors determined our cash flow growth rates.

Based upon our goodwill impairment analysis conducted in the fourth quarter of 2008, a hypothetical reduction in the fair value of our Wireless (excluding Airdesk and Orbit One LLC) reporting unit of 9.7% , would have resulted in the carrying value of the reporting unit exceeding its fair value and thus require a Step 2 analysis and possible impairment. Over the forecast period, this means that our cumulative projected revenues would have to decrease by 4% (representing a proportional decrease in our average growth rate of 6% over the forecast period), or our cumulative projected profitability would have to decrease by 11% (representing a proportional decrease in our average profitability growth rate of 8%). A 1.3% increase to the discount rate that we applied also would have resulted in the carrying value of the reporting unit exceeding its fair value.

We believe that our cash flow analysis was appropriate as our projections took the present challenging economic environment into account and are consistent with our current operating results.

For our Airdesk reporting unit, we use a combination of a discounted cash flow analysis and use of public company market comparables to determine the fair value. In the cash flow model, we use a 20% discounted rate, as this reporting unit's risks mirrored that of the Company as a whole. We give the cash flow model a 75% weighting with the balance attributed to market comparables since we only had nine comparable enterprises. The results from the cash flow model are similar to the market approach as the calculated enterprise value from the cash flow model was within 3% of market approach. Our projections showed an initial decline in revenues as hardware sales are expected to decline due to current adverse economic conditions. The revenues are forecasted to recover in the following years, as we believe the wireless data communications industry is in its infancy and expect to see growth rebound to historical levels by 2010. In the past several years, the cost of the wireless modules have decreased from our suppliers as the technology improves. In our analysis, margins were expected to be similar to that of historical rates. SG&A expenses are forecasted to decrease in the first year as the result of a full year impact of cost reductions made during the calendar year 2008 then returning to historical growth rates. Depreciation and amortization and non acquisition related capital expenditures are kept at historic run rates. We use historical accounts receivable days outstanding, inventory turns and accounts payable days outstanding to determine the projected changes in working capital requirements. The combination of all these factors determines our cash flow growth rates.

Based upon our goodwill impairment analysis conducted in the fourth quarter of 2008, a hypothetical reduction in the fair value of our Airdesk reporting unit of 5.0%, would have resulted in the carrying value of the reporting unit exceeding its fair value and thus require a Step 2 analysis and possible impairment. Over the forecast period, this means that we would need to have a 3.0% decrease in our cumulative projected revenue (representing a proportional decrease in our average growth rate of 6% over the forecast period), a 6.0% decrease in our cumulative projected profitability (representing a proportional decrease in our average profitability growth rate of 2%), or a 1% increase to our discount rate.

We believe that our cash flow analysis was appropriate as our projections took the present challenging economic environment into account and are consistent with our current operating results.

In our Orbit One reporting unit, we used a discounted cash flow model to determine the fair value as we cannot determine any market comparables for this unit. We use 20% discounted rate as this reporting unit's risks mirrored that of the Company as a whole. A combination of existing contractual agreements and targeting specific of industries is used to determine the first year's revenue growth rate, the following years' revenue growth rates are based on expected industry growth rates. Margins are projected to decline as a combination of expected pricing pressures in the market and lower margin hardware sales are expected to make up a larger portion of total revenues versus higher margin service sales. SG&A expenses are forecasted to decrease in the first year as the result of a full year impact of cost reductions made during the calendar year 2008 then returning to historical growth rates. As a result of the discounted cash flow model Step 1 test, we determined that the goodwill for this reporting unit was impaired. Management, with the assistance of the outside appraisal firm, determined the fair value of the reporting unit including any intangible assets. This resulted in a goodwill impairment charge of $3.1 million for the year ending December 31, 2008. As of December 31, 2008, Orbit One would have incurred additional impairment charges if revisions were made to the discounted cash flow analysis as follows:

Discount rate increased by 1%               $ 499,000
Revenue growth rate decreased by 1%            69,000
Profitability growth rate decreased by 1%      65,000

In our Digital Multimedia reporting unit, we used a combination of a discounted cash flow analysis and use of public company market comparables to determine the fair value. In the cash flow model we used a 25% discounted rate as we believed this reporting unit's risks were higher than that of the company as a whole due to long sales cycles causing significant fluctuations in annual revenues for this reporting unit. We gave the cash flow model greater weighting of 90% with the balance on the market comparables since we only had a limited number of market comparables. First year forecast revenues were projected to decline from the prior year as the long sales cycle gives us greater visibility, and the following year shows revenue recovering as the result of the completion of new product development projects currently in process, thus increasing product offerings. Years following have declining revenue growth rates than the wireless businesses, as this unit is in a more mature industry. Margins were projected to decline due to expected pricing pressures. SG&A expenses are forecast to decrease in the first year as the result a full year impact of cost reductions made during the calendar year 2008 then returning to historical growth rates. For the year ended December 31, 2008, as a result of the discounted cash flow model and market analysis (Step 1 test), we determined the goodwill for this reporting unit was impaired. Management determined the fair value of the reporting unit including any intangible assets, which resulted in a goodwill impairment charge of $925,000 for the year ending December 31, 2008. As of December 31, 2008, The Digital Multimedia reporting unit would have incurred additional impairment charges if revisions were made to the discounted cash flow analysis as follows:

Discount rate increased by 1%               $  52,000
Revenue growth rate decreased by 1%           233,000
Profitability growth rate decreased by 1%      19,000

Additionally, the sum of the fair value of all our reporting units was less than our market capital at December 31, 2008, indicating that our projections were reasonable and not aggressive.

For additional information regarding our critical accounting policies see our Annual Report on Form 10-K for the year ended December 31, 2008 and the condensed consolidated financial statements contained therein.

Results of Operations

Three and Nine Months Ended September 30, 2009 Compared to Three and Nine Months
Ended September 30, 2008:

Net Sales

Net sales for our reportable segments for the three and nine months ended
September 30, 2009 and 2008 are summarized in the following table:

                      Three Months Ended                                     Nine Months Ended
                         September 30,                                         September 30,
                                                 Amount       Percent                                  Amount        Percent
 (In thousands)        2009          2008        Change       Change         2009          2008        Change        Change
Net sales:
 Wireless M2M
Data
Communications
  Hardware          $    3,793     $ 10,235     $ (6,442 )         -63 %   $  14,075     $ 33,098     $ (19,023 )         -57 %
  Service                7,002        6,486          516             8 %      20,144       18,831         1,313             7 %
    Subtotal            10,795       16,721       (5,926 )         -35 %      34,219       51,929       (17,710 )         -34 %
 Digital
Multimedia,
Networking and
Wireline Security
  Hardware                 184        1,397       (1,213 )         -87 %         482        2,647        (2,165 )         -82 %
  Service                  570          859         (289 )         -34 %       2,115        2,281          (166 )          -7 %
    Subtotal               754        2,256       (1,502 )         -67 %       2,597        4,928        (2,331 )         -47 %
Total net sales     $   11,549     $ 18,977     $ (7,428 )         -39 %   $  36,816     $ 56,857     $ (20,041 )         -35 %

Net sales from Wireless M2M Data Communications segment decreased 35% to $10.8 million for the three-month period ended September 30, 2009, as compared to $16.7 million for the three-month period ended September 30, 2008. Net sales from Wireless M2M Data Communications segment decreased 34% to $34.2 million for the nine-month period ended September 30, 2009, as compared to $51.9 million for the nine-month period ended September 30, 2008. The decrease in Wireless M2M Data Communications total net sales is the result of decreased hardware net sales, as discussed below.

Hardware net sales from Wireless M2M Data Communications decreased 63% to $3.8 million for the three-month period ended September 30, 2009, as compared to $10.2 million for the three-month period ended September 30, 2008. Hardware net sales from Wireless M2M Data Communications decreased 57% to $14.1 million for the nine-month period ended September 30, 2009, as compared to $33.1 million for the nine-month period ended September 30, 2008. The decrease in Wireless M2M Data Communications hardware sales is primarily due to the fact that in the nine-month period ended September 30, 2008 there was increased demand for devices used for wireless communications between alarm installations and central monitoring stations. This was related to the Federal Communications Commission (FCC) ruling which allowed carriers to cease providing Advanced Mobile Phone System (AMPS) analog network service and provide only digital service as of February 18, 2008. There was also a decrease in demand for our wireless modules due to the effect of the economy on our customers, as well as a result of our tighter credit controls, which were implemented in January 2009.

Service net sales from Wireless M2M Data Communications increased 8% to $7.0 million for the three-month period ended September 30, 2009, as compared to $6.5 million for the three-month period ended September 30, 2008. Service net sales from Wireless M2M Data Communications increased 7% to $20.1 million for the nine-month period ended September 30, 2009, as compared to $18.8 million for the nine-month period ended September 30, 2008. Connection increases were generated by sales of our security hardware, sales of our wireless modules used in the door entry control solutions used by real estate agents and brokers, as well as by end users and value added resellers who utilize our network to provide customer solutions. Our wireless subscriptions at September 30, 2009 were 855,000, a 21.7% increase in subscriptions over the period ended September 30, 2008. While subscriptions have increased at a higher rate than service net sales, the average revenue per unit has decreased due to our customer mix. We continue to focus on increasing subscriptions to our network due to the recurring nature of the service revenues.

Net sales from Digital Multimedia, Networking and Wireline Security decreased 67% to $754,000 for the three-month period ended September 30, 2009, as compared to $2.3 million for the three-month period ended September 30, 2008. Net sales from Digital Multimedia, Networking and Wireline Security decreased 47% to $2.6 million for the nine-month period ended September 30, 2009, as compared to $4.9 million for the nine-month period ended September 30, 2008.

Hardware sales from Digital Multimedia, Networking and Wireline Security decreased 87% to $184,000 for the three-month period ended September 30, 2009, as compared to $1.4 million for the three-month period ended September 30, 2008. Hardware sales from Digital Multimedia, Networking and Wireline Security decreased 82% to $482,000 for the nine-month period ended September 30, 2009, as compared to $2.6 million for the nine-month period ended September 30, 2008. The decrease in hardware sales was primarily the result of a decrease in sales of our interactive videoconferencing hardware (PowerPlay), which is sold directly and indirectly to distance-learning customers. Capital spending by targeted distance learning customers is largely funded by government entities and, as a result, is difficult to predict and can fluctuate significantly from period to period.

Service net sales from Digital Multimedia, Networking and Wireline Security service revenues decreased 34% to $570,000 for the three-month period ended September 30, 2009, as compared to $859,000 for the three-month period ended September 30, 2008. Service net sales from Digital Multimedia, Networking and Wireline Security service revenues decreased 7% to $2.1 million for the nine-month period ended September 30, 2009, as compared to $2.3 million for the nine-month period ended September 30, 2008. Our installation and integration services are primarily, either directly or indirectly, provided to large wireline and wireless telecommunication companies. The decrease for the comparable three and nine month periods is due to a decrease in demand for these services.

Cost of Sales

Cost of sales for our reportable segments for the three and nine months ended
September 30, 2009 and 2008 are summarized in the following table:

                      Three Months Ended                                     Nine Months Ended
                         September 30,                                         September 30,
                                                 Amount       Percent                                  Amount        Percent
 (In thousands)       2009           2008        Change       Change         2009          2008        Change        Change
Cost of Sales:
 Wireless M2M
Data
Communications
  Cost of
hardware sales      $   3,380      $  9,040     $ (5,660 )         -63 %   $  12,418     $ 29,717     $ (17,299 )         -58 %
  Cost of service
sales                   2,759         2,327          432            19 %       7,387        5,854         1,533            26 %
    Subtotal            6,139        11,367       (5,228 )         -46 %      19,805       35,571       (15,766 )         -44 %
 Digital
Multimedia,
Networking
and   Wireline
Security
  Cost of
hardware sales             69           623         (554 )         -89 %         193        1,121          (928 )         -83 %
  Cost of service
sales                     236           307          (71 )         -23 %         730          901          (171 )         -19 %
    Subtotal              305           930         (625 )         -67 %         923        2,022        (1,099 )         -54 %
Total cost of
sales               $   6,444      $ 12,297     $ (5,853 )         -48 %   $  20,728     $ 37,593     $ (16,865 )         -45 %

Cost of hardware sales from Wireless M2M Data Communications segment decreased 63% to $3.4 million for the three-month period ended September 30, 2009, as compared to $9.0 million for the three-month period ended September 30, 2008. Cost of hardware sales from Wireless M2M Data Communications segment decreased 58% to $12.4 million for the nine-month period ended September 30, 2009, as compared to $29.7 million for the nine-month period ended September 30, 2008. The decrease in cost of hardware sales from Wireless M2M Data Communications segment is primarily the result of decreased hardware sales.

Cost of service sales from Wireless M2M Data Communications segment increased 19% to $2.8 million for the three-month period ended September 30, 2009, as compared to $2.3 million for the three-month period ended September 30, 2008. Cost of service sales from Wireless M2M Data Communications segment increased 26% to $7.4 million for the nine-month period ended September 30, 2009, as compared to $5.9 million for the nine-month period ended September 30, 2008. The increase in cost of service sales from Wireless M2M Data . . .