In April 2009, the FASB established guidance under ASC Topic 820-10-65-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. This guidance emphasizes that even if there has been a significant decrease in the volume and level of activity, the objective of a fair value measurement remains the same. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants. This guidance provides a number of factors to consider when evaluating whether there has been a significant decrease in the volume and level of activity for an asset or liability in relation to normal market activity. In addition, when transactions or quoted prices are not considered orderly, adjustments to those prices based on the weight of available information may be needed to determine the appropriate fair value. This guidance also requires increased disclosures. This guidance became effective for interim and annual reporting periods ending after June 15, 2009 and is applied prospectively. Early adoption was permitted for periods ending after March 15, 2009. The Company adopted this guidance in the second quarter of 2009; however, the Company determined that its adoption of this guidance had an immaterial impact on the Company's consolidated financial position and results of operations.
In April 2009, the FASB established guidance under ASC Topic 825-10-65-1, Interim Disclosures about Fair Value of Financial Instruments, which requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies that were previously only required in annual financial statements. This guidance became effective for interim reporting periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009. The Company adopted this guidance in the second quarter of 2009. See Note 3 of the Notes to Consolidated Condensed Financial Statements.
In September 2006, the established guidance under ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. This guidance does not require any new fair value measurements; rather, it applies under other accounting pronouncements that require or permit fair value measurements. The provisions of this guidance are to be applied prospectively as of the beginning of the fiscal year in which this guidance is initially applied, with any transition adjustment recognized as a cumulative-effect adjustment to the opening balance of retained earnings. On February 12, 2008, the FASB established guidance under ASC Topic 820-10, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions that are Not Orderly, which delayed the effective date of ASC 820 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The Company determined that its adoption of ASC 820 had an immaterial impact on the Company's consolidated financial position and results of operations. See Note 3 of the Notes to Consolidated Condensed Financial Statements.

Interest and other, net
Net interest expense was $306,000 for the third quarter of 2009, compared to $225,000 for the third quarter of 2008. The increase in net interest expense was primarily the result of the amortization of fees incurred in connection with the Sixth Amendment to Credit Agreement with WFF entered into on March 25, 2009. The net interest expense in 2008 and 2009 was primarily the result of the outstanding balances under the Revolving Credit Facility and the Amended Convertible Note and the amortization of related bank fees. Income taxes
The benefit from income taxes was $4,000 for the third quarter of 2009, which was primarily related to state taxes, compared to a benefit from income taxes of $393,000 for the third quarter of 2008. The benefit from income taxes for the three months ended September 30, 2008 was primarily the result of the favorable resolution of an uncertain tax matter which resulted in the recognition of $412,000 in tax benefits, partially offset by a provision for state taxes. As of September 30, 2009, the Company continued to record a full valuation allowance against net deferred tax asset balances. Discontinued operations
In late 2007, the Company entered into letters of intent with two companies to sell its SkyTel division in two separate transactions. The Company completed the sale of the SkyGuard and FleetHawk product lines in February 2008 and the sale of the remainder of the SkyTel division in June 2008. Accordingly, the results of the SkyTel division have been classified as discontinued operations in the accompanying financial statements. For the three months ended September 30, 2008, the SkyTel division had income before income taxes of $200,000. The SkyTel business had no revenues during the three months ended September 30, 2009 and 2008.
Business Segment Results
The Company operates two reportable business segments: Bell Techlogix, a provider of integrated technology product and service solutions and the Recreational Products Group, a wholesale distributor of aftermarket parts and accessories for the recreational vehicles, boats, snowmobiles, motorcycles and ATVs. The Company also separately records expenses related to corporate overhead which supports the business lines. The Company's former segment, SkyTel, has been reflected as a discontinued operation and, therefore, is not presented. Bell Techlogix
Bell Techlogix's revenues of $24.7 million for the third quarter of 2009 represented an 8.3% increase from the $22.8 million of revenues for the third quarter of 2008. Product revenues of $17.5 million for the third quarter of 2009 represented a 5.7% increase from the $16.6 million of product revenues for the third quarter of 2008, which was primarily the result of increased software sales into the K-12 and higher education markets. Service revenues of $7.2 million for the third quarter of 2009 represented a 15.2% increase from the $6.2 million of service revenues for the third quarter of 2008 due to a large project and a $150,000 contract termination fee which both occurred in the third quarter of 2009.
Bell Techlogix's operating income of $1.3 million for the third quarter of 2009 represented an $886,000 increase from the operating income of $398,000 for the third quarter of 2008. This increase was due to an increase of $558,000 in gross profit primarily related to the higher product revenues, an increase in certain vendor rebate programs and a $150,000 contract termination fee and a decrease of $328,000 in SG&A expenses due primarily to reductions in salaries and wages. Recreational Products Group
RPG revenues of $10.2 million for the third quarter of 2009 represented a 7.1% decrease from the $11.0 million of revenues for the third quarter of 2008. This decrease was primarily related to lower sales in the marine and power sports (snowmobile, motorcycle and ATV) product lines which can be attributed primarily to a continued decline in consumer spending at dealers partially offset by a 4.4% increase in revenues in the recreational vehicle product line. RPG operating income of $615,000 for the third quarter of 2009 represented a $274,000 increase from the operating income of $341,000 for the third quarter of 2008. This increase was primarily due to a $435,000 decrease in SG&A expenses as a result of reductions in headcount, freight and facility costs and an increase in gross profit margins from 27.6% in the third quarter of 2008 to 28.2% in the third quarter of 2009, partially offset by the lower revenues discussed above.

Corporate
Corporate overhead costs of $865,000 for the third quarter of 2009 represented a 19.6% decrease from $1.1 million for the third quarter of 2008. The decrease in costs of $211,000 was primarily the result of headcount reductions and related benefits and travel costs as well as savings in insurance, telecommunications and shareholder related expenses.
Nine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2008
The Company has provided a summary of its consolidated operating results for the nine months ended September 30, 2009, compared to the nine months ended September 30, 2008, followed by an overview of its business segment performance below:
Net revenues
Net revenues were $80.7 million for the nine months ended September 30, 2009 as compared to $83.0 million for the nine months ended September 30, 2008, representing a decrease of $2.3 million or 2.7%. The decrease was the result of a $4.2 million decrease in net revenues in the RPG segment, partially offset by a $1.9 million increase in net revenues in the Bell Techlogix segment. Gross profit
Gross profit was $16.5 million, or 20.4% of net revenues, for the nine months ended September 30, 2009, compared to $17.5 million, or 21.1% of net revenues, for the nine months ended September 30, 2008. The decrease in gross profit of $1.0 million was the result of a $0.8 million decrease in gross profit in the RPG segment and a $0.2 million decrease in gross profit in the Bell Techlogix segment.
Selling, general and administrative expenses SG&A expenses were $16.6 million, or 20.6% of net revenues, for the nine months ended September 30, 2009, compared to $18.4 million, or 22.2% of net revenues, for the nine months ended September 30, 2008. The decrease in SG&A expenses of $1.8 million consisted of reductions in SG&A expenses of $1.0 million in the RPG segment, $0.5 million in the Bell Techlogix segment and $0.3 million in the corporate segment for the nine months ended September 30, 2009. Interest and other, net
Net interest expense was $804,000 for the nine months ended September 30, 2009, compared to $671,000 for the nine months ended September 30, 2008. The increase in net interest expense was primarily the result of the allocation, during the nine months ended September 30, 2008, of $657,000 of interest expense to discontinued operations, partially offset by the decrease in the interest rate on the Amended Convertible Note from 8.0% to 4.0% effective June 13, 2008. The net interest expense in 2008 and 2009 was primarily the result of the outstanding balances under the Revolving Credit Facility and Amended Convertible Note and the amortization of related bank fees.
The loss on extinguishment of debt of $1.1 million recorded during the nine months ended September 30, 2008 related to the amendment of the convertible notes which resulted in a reduction in the conversion price from $76.20 per share down to $4.00 per share. The loss represented the write-off of the net balance of the beneficial conversion feature which had been recorded at issuance of the note in January 2007.
Income taxes
The benefit from income taxes was $11,000 for the nine months ended September 30, 2009, which was primarily related to state taxes, compared to a benefit from income taxes of $360,000 for the nine months ended September 30, 2008. The benefit from income taxes for the nine months ended September 30, 2008 was primarily the result of the favorable resolution of an uncertain tax matter which resulted in the recognition of $412,000 in tax benefits, partially offset by a provision for state taxes.
Discontinued operations
For the nine months ended September 30 2008, the SkyTel division had revenues of $35.1 million and a loss before income taxes of $1.7 million. During the nine months ended September 30, 2009, no revenue or operating income was attributable to discontinued operations.

Business Segment Results
Bell Techlogix
Bell Techlogix's revenues of $52.2 million for the nine months ended September 30, 2009 represented a 3.9% increase from the $50.2 million in revenues for the nine months ended September 30, 2008. Product revenues of $32.9 million for the nine months ended September 30, 2009 represented a 9.3% increase from the $30.1 million of product revenues for the nine months ended September 30, 2008, which was primarily the result of increased hardware and software sales into the K-12 and higher education markets. Service revenues of $19.3 million for the nine months ended September 30, 2009 represented a 4.2% decrease from the $20.2 million of service revenues for the nine months ended September 30, 2008. The service revenue decrease was primarily the result of a significant non-recurring project in the first quarter of 2008 and the expiration of certain services contracts during 2008 and 2009.
Bell Techlogix's operating income of $1.1 million for the nine months ended September 30, 2009 represented a $277,000 increase from the operating income of $856,000 for the nine months ended September 30, 2008. This increase was due to decrease of $543,000 in SG&A expenses due primarily to reductions in salaries and wages and freight costs, partially offset by a decline of $266,000 in gross profit. The decline in gross profit was primarily the result of the reduction in services revenues, which have a higher gross profit margin than product revenues.
Recreational Products Group
RPG revenues of $28.6 million for the nine months ended September 30, 2009 represented a 12.9% decrease from the $32.8 million for the nine months ended September 30, 2008. This decrease was primarily related to lower sales in the recreational vehicle and marine product lines attributed primarily to lower out of season purchases by dealers and a continued decline in consumer spending at dealers. As a result of the current economic uncertainty, many dealers have made strategic changes in buying habits to stock less product and order product from distributors as they need parts for repairs or as customers place orders. RPG operating income of $1.4 million for the nine months ended September 30, 2009 represented a $228,000 increase from the operating income of $1.2 million for the nine months ended September 30, 2008. This increase was primarily due to a $989,000 decrease in SG&A expenses as a result of reductions in headcount, freight and facility costs and an increase in gross profit margins from 26.6% for the nine months ended September 30, 2008 to 27.9% for the nine months ended September 30, 2009, partially offset by the lower revenues discussed above. Corporate
Corporate overhead costs of $2.7 million for the nine months ended September 30, 2009 represented a 9.3% decrease from $3.0 million for the nine months ended September 30, 2008. The decrease in costs of $278,000 was primarily the result of headcount reductions and related costs and savings in insurance, telecommunications and shareholder related expenses, partially offset by the $0.2 million reduction to expenses in 2008 due to a favorable legal settlement.

                         Changes in Financial Condition
Liquidity and Capital Resources
Selected financial data are set forth in the following tables (dollars in
thousands, except per share amounts):

                                                  September 30,       December 31,
                                                      2009                2008
   Cash and cash equivalents                     $         1,933     $        3,233
   Net working capital                           $        11,862     $       12,305
   Current ratio                                            2.09               1.98
   Long-term liabilities to capitalization (1)             108.3 %            101.7 %
   Shareholders' deficit per share               $         (2.60 )   $        (0.59 )
   Days' sales in receivables                                 44                 50

(1) Capitalization represents the sum of long-term liabilities and shareholders' deficit.

For the nine months ended September 30, 2009, net cash used in operating activities totaled $3.7 million, consisting of almost $3.6 million used in operating activities for continuing operations and $0.2 million used in operating activities for discontinued operations. The net cash used in operating activities for continuing operations consisted of a loss of $0.9 million, an increase in accounts receivable of $4.0 million and a decrease in accounts payable and accrued liabilities of $1.9 million, partially offset by non-cash expenses of $1.4 million and a decrease in inventory of $1.8 million. Net cash provided by investing activities totaled $3.0 million, consisting of $3.1 million in cash provided by investing activities for discontinued operations (the Company's former SkyTel division) from proceeds received related to the various SkyTel sale transactions, offset by $0.1 million in cash used in investing activities for continuing operations related to purchases of fixed assets. Net cash used in financing activities totaled $0.6 million, consisting of $0.3 million in payments of floor plan payables, $0.2 millions in payments of debt acquisition costs and $0.1 million in capital lease payments. For the nine months ended September 30, 2008, net cash used in operating activities totaled $4.7 million, consisting of $2.7 million used in operating activities for continuing operations and $2.0 million used in operating activities for discontinued operations (the Company's SkyTel division). The net cash used in operating activities for continuing operations was primarily the result of a loss of $2.3 million, a decrease in accounts payable and accrued liabilities of $5.2 million and an increase in accounts receivable of $1.3 million, partially offset by non-cash expenses of $3.2 million and an increase in inventory of $2.9 million. The net cash used in operating activities for discontinued operations was primarily the result of a loss from discontinued operations of $1.7 million, reductions in accounts payable and accrued liabilities of $7.8 million and an increase in inventory of $0.3 million, partially offset by non-cash expenses of $3.9 million and a reduction in accounts receivable of $3.9 million. Net cash provided by investing activities totaled $11.7 million, including $0.3 million used in investing activities for continuing operations and $11.9 million provided by investing activities for discontinued operations. Cash used in investing activities for continuing operations consisted of $0.8 million in purchases of fixed assets partially offset by $0.5 million in proceeds from a life insurance policy. Cash provided by investing activities for discontinued operations consisted of $13.0 million in cash proceeds, including $7.0 million from the sale of the SkyGuard and FleetHawk products lines to SkyGuard LLC in February 2008 and $6.0 million from the sale of the remainder of the SkyTel division to Velocita Wireless in June 2008, partially offset by $1.0 million in purchases of fixed assets (primarily pagers which are rented to customers). Cash used in financing activities totaled $6.1 million, consisting of $5.8 million used in financing activities for continuing operations, including $4.8 million to pay down the revolving line of credit, $0.8 million for payments of floor plan payables, $0.1 million in debt acquisition costs and $0.1 million in capital lease payments, and $0.3 million used in financing activities for discontinued operations related to payments of capital lease obligations.

Revolving Credit Facility with Wells Fargo Foothill As of September 30, 2009, the Company had no borrowings outstanding under its Revolving Credit Facility with WFF. The Company has utilized and will continue utilizing the Revolving Credit Facility periodically to fund working capital needs. The Revolving Credit Facility is secured by a lien on substantially all of the Company's assets.
Additional Advances under the Revolving Credit Facility will be available to the Company, up to the aggregate $10 million credit limit, subject to restrictions based on the borrowing base. The Advances may be used to finance ongoing working capital, capital expenditures and general corporate needs of the Company. Advances made under the Revolving Credit Facility bear interest, in the case of base rate loans, at a rate equal to the "base rate," which is the greater of . . .