From what Dang said...
1.2 will address
Offline Battle Mode: Practice offline. No credits will be given win or lose. ARMS system will work in offline mode. AI will balance towards what you have equipped.
Menu: In game menu will show who has disconnected or who is still in the game.
ARMS System: ARMS Balance for even match up in upgrades. If you have 10 upgrades and the lowest upgraded player has 2. Everyone will be balanced down to the first two upgrades.
Connectivity issue Fix: The update includes connectivity fix for people with problems connecting to games.
Thanks to Dang for posting this on TA.
