UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2011
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Commission File Number: 000-54348
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RVUE HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
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NEVADA
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94-3461079
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(State or other jurisdiction of incorporation
or organization)
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(I.R.S. Employer Identification No.)
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100 N.E. 3rd Avenue, Suite 200
Fort Lauderdale, Florida 33301
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(954) 525-6464
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(Address of principal executive offices,
including zip code)
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(Registrant’s telephone number,
including area code)
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Not Applicable
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(Former name, former address and former fiscal year, if changed since last report)
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o (Do not check if a smaller reporting company)
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Smaller reporting company þ
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
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The number of shares outstanding of each of the issuer’s classes of common stock as of the close of business on November 7, 2011 is as follows:
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Class
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Number of Shares
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Common Stock: $0.001 Par Value
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37,343,725
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PART I
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FINANCIAL INFORMATION
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Item 1.
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Financial Statements.
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Condensed Consolidated Balance Sheets – September 30, 2011 and December 31, 2010
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1
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Condensed Consolidated Statements of Operations – Three and nine-month period ended September 30, 2011 and 2010
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2
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Condensed Consolidated Statement of Stockholders’ Equity – Nine months ended September 30, 2011
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3
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Condensed Consolidated Statement of Cash Flows – Nine months ended September 30, 2011 and 2010
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4
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Notes to Condensed Consolidated Financial Statements
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5
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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11
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk.
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20
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Item 4.
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Controls and Procedures.
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20
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PART II
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OTHER INFORMATION
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Item 1.
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Legal Proceedings.
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21
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Item 1A.
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Risk Factors.
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21
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds.
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21
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Item 3.
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Defaults Upon Senior Securities.
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21
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Item 4.
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(Removed and Reserved).
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21
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Item 5.
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Other Information.
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21
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Item 6.
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Exhibits.
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21
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Signature
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22
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rVUE HOLDINGS, INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(unaudited)
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September 30,
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December 31,
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|||||||
2011
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2010
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|||||||
Assets
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||||||||
Current assets:
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||||||||
Cash and cash equivalents
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$ | 350,692 | $ | 2,334,121 | ||||
Accounts receivable, net of allowance for doubtful accounts of $37,651 as of December 31, 2010
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30,318 | 24,867 | ||||||
Prepaid expenses
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215,468 | 38,461 | ||||||
Due from Argo Digital Solutions, Inc.
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- | 172,012 | ||||||
Total current assets
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596,478 | 2,569,461 | ||||||
Property and equipment, net
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54,971 | 25,972 | ||||||
Software development costs
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247,164 | 380,054 | ||||||
Deposits
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17,488 | 13,510 | ||||||
$ | 916,101 | $ | 2,988,997 | |||||
Liabilities and Stockholders' Equity
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||||||||
Current liabilities:
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||||||||
Accounts payable
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$ | 108,640 | $ | 70,493 | ||||
Accrued expenses
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389,808 | 227,600 | ||||||
Deferred revenue
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31,975 | 31,975 | ||||||
Total current liabilities
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530,423 | 330,068 | ||||||
Commitments and contingencies (Note 7)
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||||||||
Stockholders' equity:
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||||||||
Preferred stock, $0.001 par value per share; 10,000,000 shares authorized; none issued or outstanding
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- | - | ||||||
Common stock, $0.001 par value per share; 140,000,000 shares authorized at September 30, 2011 and December 31, 2010; 37,343,725 and 37,273,725 issued and outstanding at September 30, 2011 and December 31, 2010
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37,344 | 37,274 | ||||||
Additional paid-in capital
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5,337,702 | 4,782,267 | ||||||
Accumulated deficit
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(4,989,368 | ) | (2,160,612 | ) | ||||
Total stockholders' equity
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385,678 | 2,658,929 | ||||||
$ | 916,101 | $ | 2,988,997 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(unaudited)
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For the Three Months
Ended September 30,
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For the Nine Months
Ended September 30,
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|||||||||||||||
2011
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2010
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2011
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2010
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Revenue
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||||||||||||||||
rVue advertising revenue
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$ | 2,152 | $ | 3,257 | $ | 126,595 | $ | 3,257 | ||||||||
Network
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115,247 | 129,504 | 335,746 | 399,692 | ||||||||||||
License
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- | 24,175 | - | 58,312 | ||||||||||||
117,399 | 156,936 | 462,341 | 461,261 | |||||||||||||
Costs and expenses
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||||||||||||||||
Cost of revenue
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46,396 | 44,422 | 195,882 | 120,143 | ||||||||||||
Selling, general and administrative expenses
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767,613 | 934,167 | 2,579,642 | 1,544,395 | ||||||||||||
Depreciation and amortization
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209,781 | 35,784 | 519,174 | 85,996 | ||||||||||||
Interest income
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(339 | ) | (5,824 | ) | (3,601 | ) | (5,884 | ) | ||||||||
Interest expense
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- | 789 | - | 65,815 | ||||||||||||
1,023,451 | 1,009,338 | 3,291,097 | 1,810,465 | |||||||||||||
Loss before provision for income taxes
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(906,052 | ) | (852,402 | ) | (2,828,756 | ) | (1,349,204 | ) | ||||||||
Provision for income taxes
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- | - | - | - | ||||||||||||
Net loss
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$ | (906,052 | ) | $ | (852,402 | ) | $ | (2,828,756 | ) | $ | (1,349,204 | ) | ||||
Net loss per common share - basic and diluted
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$ | (0.02 | ) | $ | (0.03 | ) | $ | (0.08 | ) | $ | (0.08 | ) | ||||
Shares used in computing net loss per share:
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||||||||||||||||
Basic and diluted
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37,297,312 | 24,485,687 | 37,281,587 | 17,781,452 |
rVUE HOLDINGS, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
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FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011
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(unaudited)
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Additional
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||||||||||||||||||||||||||||
Preferred Stock
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Common Stock
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Paid-In
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Accumulated
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Shares
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Amount
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Shares
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Amount
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Capital
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Deficit
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Total
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Balance, December 31, 2010
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- | $ | - | 37,273,725 | $ | 37,274 | $ | 4,782,267 | $ | (2,160,612 | ) | $ | 2,658,929 | |||||||||||||||
Common stock issued for services
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- | $ | - | 70,000 | 70 | 13,930 | $ | - | 14,000 | |||||||||||||||||||
Warrants issued for services
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- | - | - | - | 241,960 | - | 241,960 | |||||||||||||||||||||
Stock-based compensation expense
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- | - | - | - | 299,545 | - | 299,545 | |||||||||||||||||||||
Net loss
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- | - | - | - | - | (2,828,756 | ) | (2,828,756 | ) | |||||||||||||||||||
Balance, September 30, 2011
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- | $ | - | 37,343,725 | $ | 37,344 | $ | 5,337,702 | $ | (4,989,368 | ) | $ | 385,678 |
rVUE HOLDINGS, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(unaudited)
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For the Nine Months
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Ended September 30,
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||||||||
2011
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2010
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|||||||
Operating activities
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||||||||
Net loss
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$ | (2,828,756 | ) | $ | (1,349,204 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
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||||||||
Depreciation and amortization
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519,174 | 85,996 | ||||||
Stock-based compensation expense
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299,545 | 131,067 | ||||||
Common stock issued for services
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14,000 | 180,000 | ||||||
Warrants issued for services
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241,960 | - | ||||||
Bridge loan interest
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- | 64,746 | ||||||
Changes in operating assets and liabilities:
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||||||||
Accounts receivable
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(5,451 | ) | (34,187 | ) | ||||
Prepaid expenses
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(177,007 | ) | (44,500 | ) | ||||
Accounts payable
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42,016 | 102,611 | ||||||
Accrued expenses
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158,339 | 202,045 | ||||||
Deferred revenue
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- | 3,004 | ||||||
Cash used in operating activities
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(1,736,180 | ) | (658,422 | ) | ||||
Investing activities
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||||||||
Payments for property, equipment and capitalized software development
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(415,283 | ) | (158,224 | ) | ||||
Repayments by (advances to) Argo Digital Solutions, Inc.
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172,012 | (167,048 | ) | |||||
Change in deposits
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(3,978 | ) | (13,510 | ) | ||||
Cash used in investing activities
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(247,249 | ) | (338,782 | ) | ||||
Financing activities
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||||||||
Proceeds from the issuance of common stock
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- | 1,478,533 | ||||||
Investment subscription received
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- | 150,000 | ||||||
Repayment of capital lease obligations
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- | (5,784 | ) | |||||
Cash provided by financing activities
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- | 1,622,749 | ||||||
Increase (decrease) in cash and cash equivalents
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(1,983,429 | ) | 625,545 | |||||
Cash and cash equivalents, beginning of period
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2,334,121 | 117 | ||||||
Cash and cash equivalents, end of period
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$ | 350,692 | $ | 625,662 |
RVUE HOLDINGS, INC.
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Notes to Condensed Consolidated Financial Statements
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(unaudited)
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RVUE HOLDINGS, INC.
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Notes to Condensed Consolidated Financial Statements
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(unaudited)
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Three Months Ended
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Nine Months Ended
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|||||||||||||||
September 30,
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September 30,
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|||||||||||||||
2011
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2010
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2011
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2010
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|||||||||||||
Numerator:
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||||||||||||||||
Net loss
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$ | (906,052 | ) | $ | (852,402 | ) | $ | (2,828,756 | ) | $ | (1,349,204 | ) | ||||
Denominator:
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||||||||||||||||
Weighted-average shares outstanding
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37,297,312 | 25,485,687 | 37,281,587 | 17,781,452 | ||||||||||||
Effect of dilutive securities (1)
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- | - | - | - | ||||||||||||
Weighted-average diluted shares
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37,297,312 | 25,485,687 | 37,281,587 | 17,781,452 | ||||||||||||
Basic and diluted loss per share
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$ | (0.02 | ) | $ | (0.03 | ) | $ | (0.08 | ) | $ | (0.08 | ) |
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(1)
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The following stock options and warrants outstanding as of September 30, 2011 and 2010 were not included in the computation of dilutive loss per share because the net effect would have been anti-dilutive:
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Three Months Ended
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Nine Months Ended
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|||||||||||||||
September 30,
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September 30,
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|||||||||||||||
2011
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2010
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2011
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2010
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|||||||||||||
Stock Options
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534,874 | 1,431,618 | 1,330,803 | 716,798 | ||||||||||||
Warrants
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- | - | 78,860 | - | ||||||||||||
534,874 | 1,431,618 | 1,409,663 | 716,798 |
September 30,
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December 31,
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|||||||
2011
|
2010
|
|||||||
Cash
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$ | 65,377 | $ | 17,210 | ||||
Cash equivalents - money market funds
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285,315 | 2,316,911 | ||||||
Total cash and cash equivalents
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$ | 350,692 | $ | 2,334,121 |
RVUE HOLDINGS, INC.
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Notes to Condensed Consolidated Financial Statements
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(unaudited)
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Quoted Prices
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||||||||||||||||
in Active
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Significant
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|||||||||||||||
Markets for
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Other
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Significant
|
||||||||||||||
Identical
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Observable
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Unobservable
|
||||||||||||||
Instruments
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Inputs
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Inputs
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||||||||||||||
(Level 1)
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(Level 2)
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(Level 3)
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Total (a)
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|||||||||||||
Assets:
|
||||||||||||||||
September 30, 2011
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||||||||||||||||
Cash equivalents - money market funds
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$ | 285,315 | $ | - | $ | - | $ | 285,315 | ||||||||
December 31, 2010
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||||||||||||||||
Cash equivalents - money market funds
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$ | 2,316,911 | $ | - | $ | - | $ | 2,316,911 |
Property and Equipment
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Estimated
Useful Lives
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September 30,
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December 31,
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||||||||
(Years)
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2011
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2010
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|||||||||
Computers and software
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2 - 5 | $ | 86,167 | $ | 22,959 | ||||||
Furniture and equipment
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3 | 22,223 | 21,575 | ||||||||
Gross property and equipment
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108,390 | 44,534 | |||||||||
Less accumulated depreciation and amortization
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(53,419 | ) | (18,562 | ) | |||||||
Net property and equipment
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$ | 54,971 | $ | 25,972 |
RVUE HOLDINGS, INC.
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Notes to Condensed Consolidated Financial Statements
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(unaudited)
|
Software Development Costs
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Estimated
Useful Lives
|
September
30,
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December 31,
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||||||||
(Months)
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2011
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2010
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|||||||||
Software development costs
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18 - 36 | $ | 844,045 | $ | 492,618 | ||||||
Less accumulated amortization
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(596,881 | ) | (112,564 | ) | |||||||
Net software development costs
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$ | 247,164 | $ | 380,054 |
Accrued Expenses
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September 30,
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December 31,
|
||||||
2011
|
2010
|
|||||||
Investor relations fees
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$ | 202,029 | $ | 108,752 | ||||
Professional fees
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30,244 | 45,500 | ||||||
Personnel costs
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79,471 | 38,252 | ||||||
Deferred rent
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28,366 | 16,016 | ||||||
Directors fees
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38,000 | - | ||||||
Consulting fees
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- | 10,000 | ||||||
Other
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11,698 | 9,080 | ||||||
$ | 389,808 | $ | 227,600 |
Warrant Number
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Number
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Exercise
Price
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Date Issued
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Term
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|||||||
Series A
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8,624,995 | $ | 1.00 |
December 21, 2010
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Twelve Years
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||||||
B-1
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50,000 | $ | 0.37 |
May 24, 2011
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Five Years
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||||||
B-2
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1,000,000 | $ | 0.35 |
June 30, 2011
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Five Years
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RVUE HOLDINGS, INC.
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Notes to Condensed Consolidated Financial Statements
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(unaudited)
|
Number of
Options
|
Weighted
Average
Exercise
Price Per
Share
|
Weighted
Average
Remaining
Contractual
Term
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Aggregate
Intrinsic Value
|
|||||||||||||
Balance at December 31, 2010
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3,502,500 | $ | 0.22 | |||||||||||||
Options granted
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225,000 | $ | 0.32 | |||||||||||||
Options exercised
|
— | — | ||||||||||||||
Options forfeited
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(5,000 | ) | $ | 0.22 | ||||||||||||
Balance at September 30, 2011
|
3,722,500 | $ | 0.22 | 8.88 | $ | 184,300 | ||||||||||
Exercisable at September 30, 2011
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3,390,005 | $ | 0.23 | 8.82 | $ | 185,200 | ||||||||||
Expected to vest after September 30, 2011
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332,495 | $ | 0.28 | 9.44 | $ | 0 |
Three Months Ended September
30,
|
Nine Months Ended September
30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Cost of revenue
|
$ | 671 | $ | 731 | $ | 1,882 | $ | 1,076 | ||||||||
Selling, general and administrative expenses
|
35,752 | 86,435 | 297,663 | 129,991 | ||||||||||||
Total stock-based compensation expense
|
$ | 36,423 | $ | 87,166 | $ | 299,545 | $ | 131,067 |
RVUE HOLDINGS, INC.
|
Notes to Condensed Consolidated Financial Statements
|
(unaudited)
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
|
·
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Advertising revenue and transaction fee revenue is recognized in the period in which the advertising impressions occur, and when the following criteria have been met: (i) persuasive evidence of an arrangement exists, (ii) the fees are fixed or determinable, (iii) no significant Company obligations remain, and (iv) collection of the related receivable is reasonably assured.
|
|
·
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Revenue from the maintenance of private networks, and the production and distribution of network programming content, either under contract or on a piece by piece or monthly basis, is recognized ratably over the term of the related service period if the fees are fixed and determinable, delivery has occurred and collection is probable.
|
|
·
|
Software license revenue is recognized when: (i) there is pervasive evidence of an arrangement, (ii) the fees are fixed and determinable, (iii) the software product has been delivered, and (iv) there are no uncertainties surrounding product acceptance and collection is considered probable. Initial site fees are recognized over the estimated period the sites will be in use.
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Revenue
|
||||||||||||||||
rVue advertising revenue
|
$ | 2,152 | $ | 3,257 | $ | 126,595 | $ | 3,257 | ||||||||
Network
|
115,247 | 129,504 | 335,746 | 399,692 | ||||||||||||
License
|
- | 24,175 | - | 58,312 | ||||||||||||
117,399 | 156,936 | 462,341 | 461,261 | |||||||||||||
Costs and expenses
|
||||||||||||||||
Cost of revenue
|
46,396 | 44,422 | 195,882 | 120,143 | ||||||||||||
Selling, general and administrative expenses
|
767,313 | 934,167 | 2,579,642 | 1,544,395 | ||||||||||||
Depreciation and amortization
|
209,781 | 35,784 | 519,174 | 85,996 | ||||||||||||
Interest income
|
(339 | ) | (5,824 | ) | (3,601 | ) | (5,884 | ) | ||||||||
Interest expense
|
- | 789 | - | 65,815 | ||||||||||||
1,023,451 | 1,009,338 | 3,291,097 | 1,810,465 | |||||||||||||
Loss before provision for income taxes
|
(906,052 | ) | (852,402 | ) | (2,828,756 | ) | (1,349,204 | ) | ||||||||
Provision for income taxes
|
- | - | - | - | ||||||||||||
Net loss
|
$ | (906,052 | ) | $ | (852,402 | ) | $ | (2,828,756 | ) | $ | (1,349,204 | ) | ||||
Net loss per common share - basic and diluted
|
$ | (0.02 | ) | $ | (0.03 | ) | $ | (0.08 | ) | $ | (0.08 | ) | ||||
Shares used in computing net loss per share:
|
||||||||||||||||
Basic and diluted
|
37,297,312 | 24,485,687 | 37,281,587 | 17,781,452 |
Three Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
2011
|
2010
|
$ Change
|
% Change
|
|||||||||||||
Revenue Category
|
||||||||||||||||
rVue advertising revenue
|
$ | 2,152 | $ | 3,257 | $ | (1,105 | ) | -33.9 | % | |||||||
Network
|
115,247 | 129,504 | (14,257 | ) | -11.0 | % | ||||||||||
License
|
- | 24,175 | (24,175 | ) | -100.0 | % | ||||||||||
Total Revenue
|
$ | 117,399 | $ | 156,936 | $ | (39,537 | ) | -25.2 | % |
Three Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
2011
|
2010
|
$ Change
|
% Change
|
|||||||||||||
Compensation and benefits
|
$ | 33,267 | $ | 30,573 | $ | 2,694 | 8.8 | % | ||||||||
Stock-based compensation expense
|
671 | 731 | (60 | ) | -8.2 | % | ||||||||||
Network services
|
3,506 | 4,253 | (747 | ) | -17.6 | % | ||||||||||
rVue operations
|
8,952 | 8,865 | 87 | 1.0 | % | |||||||||||
Total
|
$ | 46,396 | $ | 44,422 | $ | 1,974 | 4.4 | % |
Three Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
2011
|
2010
|
$ Change
|
% Change
|
|||||||||||||
Compensation and benefits
|
$ | 366,680 | $ | 286,793 | $ | 79,887 | 27.9 | % | ||||||||
Stock-based compensation expense
|
35,752 | 86,435 | (50,683 | ) | -58.6 | % | ||||||||||
Facility expense
|
42,979 | 80,336 | (37,357 | ) | -46.5 | % | ||||||||||
Communications expense
|
14,066 | 18,994 | (4,928 | ) | -25.9 | % | ||||||||||
Travel expense
|
22,232 | 6,574 | 15,658 | 238.2 | % | |||||||||||
Advertising and marketing
|
24,346 | 6,342 | 18,004 | 283.9 | % | |||||||||||
Investor relations, investment banking and placement agent fees
|
125,660 | 256,711 | (131,051 | ) | -51.1 | % | ||||||||||
Professional and consulting fees
|
94,420 | 119,556 | (25,136 | ) | -21.0 | % | ||||||||||
Office support and supply expense
|
41,478 | 34,775 | 6,703 | 19.3 | % | |||||||||||
Bad debt expense
|
- | 37,651 | (37,651 | ) | -100.0 | % | ||||||||||
Total
|
$ | 767,613 | $ | 934,167 | $ | (166,554 | ) | -17.8 | % |
Nine Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
|
2011
|
2010
|
$ Change
|
% Change
|
||||||||||||
Revenue Category
|
||||||||||||||||
rVue advertising revenue
|
$ | 126,595 | $ | 3,257 | $ | 123,338 | 3,786.9 | % | ||||||||
Network
|
335,746 | 399,692 | (63,946 | ) | -16.0 | % | ||||||||||
License
|
- | 58,312 | (58,312 | ) | -100.0 | % | ||||||||||
Total Revenue
|
$ | 462,341 | $ | 461,261 | $ | 1,080 | 0.2 | % |
Nine Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
2011
|
2010
|
$ Change
|
% Change
|
|||||||||||||
Compensation and benefits
|
$ | 102,359 | $ | 100,781 | $ | 1,578 | 1.6 | % | ||||||||
Stock-based compensation expense
|
1,882 | 1,076 | 806 | 74.9 | % | |||||||||||
Network services
|
8,723 | 9,421 | (698 | ) | -7.4 | % | ||||||||||
rVue operations
|
82,918 | 8,865 | 74,053 | 835.3 | % | |||||||||||
Total
|
$ | 195,882 | $ | 120,143 | $ | 75,739 | 63.0 | % |
Nine Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
2011
|
2010
|
$ Change
|
% Change
|
|||||||||||||
Compensation and benefits
|
$ | 990,914 | $ | 658,765 | $ | 332,149 | 50.4 | % | ||||||||
Stock-based compensation expense
|
297,663 | 129,991 | 167,672 | 129.0 | % | |||||||||||
Facility expense
|
125,652 | 140,842 | (15,190 | ) | -10.8 | % | ||||||||||
Communications expense
|
40,495 | 38,603 | 1,892 | 4.9 | % | |||||||||||
Travel expense
|
57,378 | 19,017 | 38,361 | 201.7 | % | |||||||||||
Marketing
|
146,720 | 6,942 | 139,778 | 2,013.5 | % | |||||||||||
Investor relations, investment banking and placement agent fees
|
306,505 | 276,907 | 29,598 | 10.7 | % | |||||||||||
Professional and consulting fees
|
296,716 | 175,255 | 121,461 | 69.3 | % | |||||||||||
Managed services
|
200,356 | - | 200,356 | 100.0 | % | |||||||||||
Office support and supply expense
|
117,243 | 60,422 | 56,821 | 94.0 | % | |||||||||||
Bad debt expense
|
- | 37,651 | (37,651 | ) | -100.0 | % | ||||||||||
Total
|
$ | 2,579,642 | $ | 1,544,395 | $ | 1,035,247 | 67.0 | % |
Item 1A.
|
Risk Factors.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Item 3.
|
Defaults Upon Senior Securities.
|
Item 4.
|
(Removed and Reserved).
|
(a)
|
Index to Exhibits
|
Exhibit
No.
|
Exhibit Description
|
|
31.1*
|
Rule 13a-14(a) Certification of Chief Executive Officer.
|
|
31.2*
|
Rule 13a-14(a) Certification of Chief Financial Officer.
|
|
32.1**
|
Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.
|
EX-101.INS
|
XBRL Instance Document
|
|
EX-101.SCH
|
XBRL Taxonomy Extension Schema
|
|
EX-101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
EX-101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
EX-101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
EX-101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
rVue Holdings, Inc.
|
||
(Registrant)
|
||
Date: November 14, 2011
|
By:
|
/s/ David A. Loppert
|
Chief Financial Officer
|
||
(Duly Authorized Officer and
Principal Financial Officer)
|
EXHIBIT INDEX
|
Exhibit
No.
|
Exhibit Description
|
|
31.1*
|
Rule 13a-14(a) Certification of Chief Executive Officer.
|
|
31.2*
|
Rule 13a-14(a) Certification of Chief Financial Officer.
|
|
32.1**
|
Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.
|
EX-101.INS
|
XBRL Instance Document
|
|
EX-101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
EX-101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
EX-101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
EX-101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
EX-101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of rVue Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: November 14, 2011
|
/s/ Jason M. Kates
|
Jason M. Kates
|
|
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of rVue Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: November 14, 2011
|
/s/ David A. Loppert
|
David A. Loppert
|
|
Chief Financial Officer (Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
/s/ Jason M. Kates
|
Jason M. Kates
|
Chief Executive Officer
|
Date: November 14, 2011
|
/s/ David A. Loppert
|
David A. Loppert
|
Chief Financial Officer
|
Date: November 14, 2011
|
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M
CONDENSED CONSOLIDATED BALANCE SHEETS [PARENTHETICAL] (USD $) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Allowance for doubtful accounts (in dollars) | $ 0 | $ 37,651 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 140,000,000 | 140,000,000 |
Common stock, shares issued | 37,343,725 | 37,273,725 |
Common stock, shares outstanding | 37,343,725 | 37,273,725 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Revenue | ||||
rVue advertising revenue | $ 2,152 | $ 3,257 | $ 126,595 | $ 3,257 |
Network | 115,247 | 129,504 | 335,746 | 399,692 |
License | 0 | 24,175 | 0 | 58,312 |
Sales Revenue | 117,399 | 156,936 | 462,341 | 461,261 |
Costs and expenses | ||||
Cost of revenue | 46,396 | 44,422 | 195,882 | 120,143 |
Selling, general and administrative expenses | 767,613 | 934,167 | 2,579,642 | 1,544,395 |
Depreciation and amortization | 209,781 | 35,784 | 519,174 | 85,996 |
Interest income | (339) | (5,824) | (3,601) | (5,884) |
Interest expense | 0 | 789 | 0 | 65,815 |
Operating Expenses | 1,023,451 | 1,009,338 | 3,291,097 | 1,810,465 |
Loss before provision for income taxes | (906,052) | (852,402) | (2,828,756) | (1,349,204) |
Provision for income taxes | 0 | 0 | 0 | 0 |
Net loss | $ (906,052) | $ (852,402) | $ (2,828,756) | $ (1,349,204) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.02) | $ (0.03) | $ (0.08) | $ (0.08) |
Shares used in computing net loss per share: | ||||
Basic and diluted (in shares) | 37,297,312 | 24,485,687 | 37,281,587 | 17,781,452 |
DOCUMENT AND ENTITY INFORMATION | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Nov. 07, 2011 | |
Entity Registrant Name | rVue Holdings, Inc. | |
Entity Central Index Key | 0001455206 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | rvue | |
Entity Common Stock, Shares Outstanding | 37,343,725 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2011 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2011 |
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Stockholders' Equity and Stock Based Compensation | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Text Block Supplement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity and Share-based Payments [Text Block] | Note 6 - Stockholders’ Equity and Stock Based Compensation
Preferred Stock
The Company has ten million shares of authorized preferred stock, $0.001 par value, none of which are issued or outstanding. Under the terms of the Company’s Restated Articles of Incorporation, the Board of Directors is authorized to determine or alter the rights, preferences, privileges and restrictions of the Company’s authorized but unissued shares of preferred stock.
Common Stock
The Company has one hundred forty million shares of authorized common stock, $0.001 par value, of which 37,343,725 and 37,273,725 shares were issued and outstanding as of September 30, 2011 and December 31, 2010, respectively. All shares have equal voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company.
Common Stock Warrants
The Company has issued warrants, all of which are fully vested and available for exercise, as follows:
Equity Awards
Stock Option Activity
A summary of the Company’s stock option activity for the nine-month period ended September 30, 2011 is as follows:
Aggregate intrinsic value represents the value of the Company’s closing stock price on the last trading day of the fiscal period in excess of the weighted-average exercise price multiplied by the number of options outstanding or exercisable. The aggregate intrinsic value excludes the effect of stock options that have a zero or negative intrinsic value.
Stock-Based Compensation
Stock-based compensation cost for stock options is estimated at the grant date based on the fair-value as calculated by the Black-Scholes Merton (“BSM”) option-pricing model. The BSM option-pricing model incorporates various assumptions including expected volatility, expected life and interest rates. The Company’s computation of expected life is determined based on the simplified method as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term due to the limited period of time its equity shares have been publicly traded. The interest rate is based on the U.S. Treasury Yield curve in effect at the time of grant. The Company’s computation of expected volatility is based on comparable companies’ average historical volatility. The Company does not expect to pay dividends. While the Company believes these estimates are reasonable, the estimated compensation expense would increase if the expected life was increased or a higher expected volatility was used. The Company recognizes stock-based compensation cost as expense on a straight-line basis over the requisite service period.
During the three- and nine-month periods ended September 30, 2011, the Company granted 225,000 stock options, which had a weighted-average grant date fair value of $.25. During the three- and nine-month periods ended September 30, 2010, the Company granted 865,000 and 3,377,500 stock options, which had a weighted-average grant date fair value of $.12 and $.15, respectively.
The following table provides a summary of the stock-based compensation expense included in the Consolidated Statements of Operations for the three- and nine-month periods ended September 30, 2011 and 2010:
|
Financial Instruments | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Text Block Supplement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments Disclosure [Text Block] | Note 2 – Financial Instruments
Cash and cash equivalents
The following table summarizes the fair value of the Company’s cash and cash equivalents as of September 30, 2011 and December 31, 2010:
Accounts Receivable
The Company sells its services directly to its customers. The Company generally does not require collateral from its customers; however, the Company will require collateral in certain instances to limit credit risk. Accounts receivable from two of the Company’s customers accounted for approximately 74% and 15% of accounts receivable as of September 30, 2011. Accounts receivable from two of the Company’s customers accounted for approximately 56% and 35% of accounts receivable as of December 31, 2010.
|
Related Party Transactions and Certain Other Transactions | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | Note 8 - Related Party Transactions and Certain Other Transactions
Pursuant to a September 2009 Transition Services Agreement (the “Agreement”), as amended, Argo provided certain general and administrative services, including labor, technology, facilities and other services to the Company on an as needed basis in exchange for cash consideration. The Agreement terminated on May 13, 2010. As of December 31, 2010, the Company had advanced a net of $172,012 to Argo to cover its expenses, including accrued interest of $9,753. On January 17, 2011, Argo repaid the balance then outstanding in full.
The Company paid a consulting fee of $10,000 to one of its directors during the nine-month period ended September 30, 2011, and reimbursed the director $9,920 for out-of pocket expenses incurred in connection with Company business.
On March 14, 2011, the Company entered into a Consulting/Services Agreement to facilitate the marketing and promotion of direct TV advertised products with an entity that is wholly owned by a stockholder who beneficially owns more than 5% of the Company’s common stock. As of September 30, 2011, the Company had not recorded any transactions under this agreement.
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Commitments and Contingencies | 9 Months Ended |
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Sep. 30, 2011 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | Note 7 – Commitments and Contingencies
Other Off-Balance Sheet Commitments
The Company leases its Ft. Lauderdale office space under a non-cancelable operating lease arrangement. The lease is for a period of three years beginning July 1, 2010, and provides for one renewal option of three years. Effective October 1, 2011, the Company entered into a one year lease agreement for an office in an executive office complex in New York City. As of September 30, 2011, the Company’s total future minimum lease payments under these non-cancelable operating leases were $154,344. The Company does not currently utilize any other off-balance sheet financing arrangements.
Contingencies
The Company is subject to a legal proceeding that has not been adjudicated, which is discussed in Part II, Item 1 of this Form 10-Q under the heading “Legal Proceedings”. In the opinion of management, the Company does not have a probable liability related to this legal proceeding that would materially adversely affect its financial condition or operating results. However, the results of legal proceedings cannot be predicted with certainty. If the Company failed to prevail in this legal matter, the operating results of a particular reporting period could be materially adversely affected.
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Text Block] | Note 3 – Fair Value Measurements
The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.
The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1
– Quoted prices in active markets for identical assets or liabilities.
Level 2
– Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3
– Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.
The Company’s valuation techniques used to measure the fair value of money market funds were derived from quoted prices in active markets for identical assets or liabilities. The Company has no Level 2 or Level 3 assets or liabilities.
Assets/Liabilities Measured at Fair Value on a Recurring Basis
The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis as presented in the Company’s Condensed Consolidated Balance Sheets as of September 30, 2011 and December 31, 2010:
(a) The total fair value amounts for assets and liabilities also represent the related carrying amounts.
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Condensed Consolidated Financial Statement Details [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidated Financial Statement Details [Text Block] | Note 4 – Condensed Consolidated Financial Statement Details
The following tables show the Company’s condensed consolidated financial statement details as of September 30, 2011 and December 31, 2010:
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Income Taxes | 9 Months Ended |
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Sep. 30, 2011 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Note 5 - Income Taxes
There is no income tax benefit for the losses for the nine-month periods ended September 30, 2011 and 2010, since management has determined that the realization of the net deferred tax asset is not more likely than not to be realized and has created a valuation allowance for the entire amount of such benefit.
The Company's policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. As of December 31, 2010, the Company had no unrecognized tax benefits, or any tax related interest or penalties. There were no changes in the Company's unrecognized tax benefits during the period ended September 30, 2011. The Company did not recognize any interest or penalties during 2010 related to unrecognized tax benefits, or through the period ended September 30, 2011.
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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
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Balance at Dec. 31, 2010 | $ 0 | $ 37,274 | $ 4,782,267 | $ (2,160,612) | $ 2,658,929 |
Balance (in shares) at Dec. 31, 2010 | 0 | 37,273,725 | |||
Common stock issued for services | 0 | 70 | 13,930 | 0 | 14,000 |
Common stock issued for services (in shares) | 0 | 70,000 | |||
Warrants issued for services | 0 | 0 | 241,960 | 0 | 241,960 |
Stock-based compensation expense | 0 | 0 | 299,545 | 0 | 299,545 |
Net loss | 0 | 0 | 0 | (2,828,756) | (2,828,756) |
Balance at Sep. 30, 2011 | $ 0 | $ 37,344 | $ 5,337,702 | $ (4,989,368) | $ 385,678 |
Balance (in shares) at Sep. 30, 2011 | 0 | 37,343,725 |
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Significant Accounting Policies [Text Block] | Note 1 – Summary of Significant Accounting Policies
rVue Holdings, Inc., formerly known as Rivulet International, Inc. (“rVue” or the “Company”), was incorporated in the State of Nevada on November 12, 2008. rVue is an advertising technology company that operates an internet based demand-side platform (“DSP”) for planning, buying and managing Digital Out-of-Home (“DOOH”) and digital placed based media or advertising. The Company’s DSP connects advertisers and/or advertising agencies with third party DOOH media or networks, that allows the advertiser to create a targeted advertising campaign and media plan, and negotiate that media plan simultaneously with all the third-party networks selected. Prior to May 13, 2010, the Company was a shell company in the development stage, had no revenue, and its efforts were devoted to entering the automobile export business.
On March 29, 2010, the Company filed an Amended and Restated Articles of Incorporation to, among other things: (1) change its name from “Rivulet International, Inc.” to “Rvue Holdings, Inc.”; and (2) increase the number of authorized shares of capital stock from 75,000,000 shares to 150,000,000 shares, divided into two classes: 140,000,000 shares of common stock, par value $.001 per share, and 10,000,000 shares of preferred stock, par value $.001 per share.
On May 13, 2010, the Company acquired all of the issued and outstanding capital stock and the business of rVue, Inc., a Delaware corporation ("rVue Inc.") from Argo Digital Solutions, Inc., a Delaware corporation ("Argo"), as well as any and all assets related to the rVue business held by Argo, pursuant to an asset purchase agreement, dated as of May 13, 2010. The Company disposed of its pre-transaction assets and liabilities and succeeded to the business of rVue as its sole line of business. rVue, Inc., which began operations on September 15, 2009, became the accounting acquirer of the Company for financial statement purposes.
Basis of Presentation and Preparation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiary. Intercompany accounts and transactions have been eliminated. The preparation of these condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Significant estimates include bad debt reserves, assumptions used in the Black-Scholes-Merton options and warrant pricing models, valuation and depreciation and amortization periods of property, equipment and software development costs, among others. In the opinion of the Company’s management, all adjustments (including normal recurring adjustments) considered necessary to present fairly the unaudited condensed consolidated financial statements have been made.
The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto for the year ended December 31, 2010, included in its Annual Report on Form 10-K (the “2010 Form 10-K”).
The unaudited condensed consolidated statements of operations for the nine-month period ended September 30, 2011 are not necessarily indicative of the results that may be expected for the entire year.
Loss Per Common Share
Basic and diluted loss per common share is computed by dividing the loss by the weighted average number
of common shares outstanding for the period. Since the Company incurred losses attributable to common stockholders during the three and nine-month periods ended September 30, 2011 and 2010, diluted loss per common share has not been computed by giving effect to all potentially dilutive common shares that were outstanding during the three- and nine-month periods ended September 30, 2011 and 2010. Dilutive common shares consist of incremental shares issuable upon the exercise of stock options and warrants to the extent that the average fair value of the Company’s common stock for each period is greater than the exercise price of the derivative securities.
The following table sets forth the computation of basic and diluted loss per common share:
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