RVUE HOLDINGS, INC. |
(Exact name of registrant as specified in its charter) |
NEVADA | | 94-3461079 |
(State or other jurisdiction of incorporation | | (I.R.S. Employer Identification No.) |
or organization) | | |
10740B West Grand Avenue | | |
Franklin Park , IL 60131 | | (855) 261-8370 |
(Address of principal executive offices, | | (Registrant’s telephone number, |
including zip code) | | including area code) |
Not Applicable |
(Former name, former address and former fiscal year, if changed since last report) |
Large accelerated filer ¨ | | Accelerated filer ¨ |
Non-accelerated filer ¨ (Do not check if a smaller reporting company) | | Smaller reporting company þ |
Class | | Number of Shares |
Common Stock: $0.001 Par Value | | 116,878,620 |
PART I | FINANCIAL INFORMATION | |
| | |
Item 1. | Financial Statements. | |
| Condensed Consolidated Balance Sheets March 31,2013 and December 31, 2012 | 1 |
| Condensed Consolidated Statements of Operations Three Months Ended March 31, 2013 and 2012 | 2 |
| Condensed Consolidated Statements of Stockholders’ Equity Three Months Ended March 31, 2013 | 3 |
| Condensed Consolidated Statements of Cash Flows Three Months Ended March 31,2013 and 2012 | 4 |
| Notes to Condensed Consolidated Financial Statements | 5 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 12 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 19 |
Item 4. | Controls and Procedures. | 19 |
| | |
PART II | OTHER INFORMATION | |
| | |
Item 1. | Legal Proceedings. | 20 |
Item 1A. | Risk Factors. | 21 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 21 |
Item 3. | Defaults Upon Senior Securities. | 21 |
Item 4. | Mine Safety Disclosures. | 21 |
Item 5. | Other Information. | 21 |
Item 6. | Exhibits. | 22 |
rVUE HOLDINGS, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
| | March 31, | | December 31, | | ||
| | 2013 | | 2012 | | ||
| | (unaudited) | | | | | |
Assets | | | | | | | |
Current assets: | | | | | | | |
| | | | | | | |
Cash and cash equivalents | | $ | 741,758 | | $ | 848,174 | |
Accounts receivable | | | 50,628 | | | 163,074 | |
Prepaid expenses | | | 32,106 | | | 56,380 | |
| | | | | | | |
Total current assets | | | 824,492 | | | 1,067,628 | |
| | | | | | | |
Property and equipment, net | | | 3,866 | | | 8,548 | |
| | | | | | | |
Software development costs | | | 32,725 | | | 23,232 | |
Deposits | | | 13,410 | | | 13,510 | |
| | | | | | | |
| | $ | 874,493 | | $ | 1,112,918 | |
| | | | | | | |
Liabilities and Stockholders' Equity | | | | | | | |
Current liabilities: | | | | | | | |
| | | | | | | |
Accounts payable | | $ | 102,782 | | $ | 154,600 | |
Accrued expenses | | | 333,949 | | | 389,848 | |
Subscription investment payable | | | - | | | 270,000 | |
Accrued stock-based compensation | | | 748,000 | | | - | |
Deferred revenue | | | 11,975 | | | 11,975 | |
| | | | | | | |
Total current liabilities | | | 1,196,706 | | | 826,423 | |
| | | | | | | |
Commitments and contingencies (Note 9) | | | | | | | |
| | | | | | | |
Stockholders' equity/(deficit): | | | | | | | |
Preferred stock, $0.001 par value per share; 10,000,000 shares authorized; none issued or outstanding | | | - | | | - | |
Common stock, $0.001 par value per share; 140,000,000 shares authorized at March 31, 2013 and December 31, 2012; 111,528,620 issued and outstanding at March 31, 2013 and 100,691,954 at December 31, 2012, respectively | | | 111,529 | | | 100,692 | |
Additional paid-in capital | | | 10,434,949 | | | 9,802,786 | |
Accumulated deficit | | | (10,868,691) | | | (9,616,983) | |
| | | | | | | |
Total stockholders' equity/(deficit) | | | (322,213) | | | 286,495 | |
| | | | | | | |
| | $ | 874,493 | | $ | 1,112,918 | |
rVUE HOLDINGS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(unaudited) |
| | For the Three Months Ended March 31, | | ||||
| | 2013 | | 2012 | | ||
Revenue | | | | | | | |
| | | | | | | |
rVue advertising revenue | | $ | 79,289 | | $ | 16,319 | |
Network | | | 58,225 | | | 115,169 | |
| | | 137,514 | | | 131,488 | |
Costs and expenses | | | | | | | |
Cost of revenue | | | 64,843 | | | 56,209 | |
Selling, general and administrative expenses | | | 1,311,131 | | | 927,847 | |
Depreciation and amortization | | | 13,472 | | | 123,668 | |
Interest income | | | (224) | | | (136) | |
Interest expense | | | - | | | 296,483 | |
Change in fair value of derivative | | | - | | | 443,711 | |
Loss on early extinguishment of debt | | | - | | | 17,456 | |
| | | | | | | |
| | | 1,389,222 | | | 1,865,238 | |
| | | | | | | |
Loss before provision for income taxes | | | (1,251,708) | | | (1,733,750) | |
Provision for income taxes | | | - | | | - | |
| | | | | | | |
Net loss | | $ | (1,251,708) | | $ | (1,733,750) | |
Net loss per common share - basic and diluted | | $ | (0.01) | | $ | (0.05) | |
Shares used in computing net loss per share: | | | | | | | |
| | | | | | | |
Basic and diluted | | | 109,000,990 | | | 37,663,796 | |
rVUE HOLDINGS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY |
FOR THE THREE MONTHS ENDED MARCH 31, 2013 |
(unaudited) |
| | | | | | | | | | | | | | Additional | | | | | | | | |
| | Preferred Stock | | Common Stock | | Paid-In | | Accumulated | | | | | ||||||||||
| | Shares | | Amount | | Shares | | Amount | | Capital | | Deficit | | Total | | |||||||
| | | | | | | | | | | | | | | | | | | | | | |
Balance, December 31, 2012 | | | - | | | - | | | 100,691,954 | | $ | 100,692 | | $ | 9,802,786 | | $ | (9,616,983) | | $ | 286,495 | |
| | | | | | | | | | | | | | | | | | | | | | |
Common stock issued for compensation and services | | | - | | | - | | | 836,666 | | $ | 837 | | $ | 124,663 | | | - | | $ | 125,500 | |
| | | - | | | - | | | | | | | | | | | | - | | | - | |
| | | | | | | | | | | | | | | | | | - | | | | |
Common stock issued | | | - | | | - | | | 10,000,000 | | $ | 10,000 | | $ | 507,500 | | | - | | $ | 517,500 | |
| | | - | | | - | | | | | | | | | | | | - | | | | |
| | | - | | | - | | | - | | | - | | | | | | - | | | | |
| | | - | | | - | | | - | | | - | | | | | | - | | | | |
Net loss | | | - | | | - | | | - | | | - | | | - | | | (1,251,708) | | $ | (1,251,708) | |
| | | | | | | | | | | | | | | | | | | | | | |
Balance, March 31, 2013 | | | - | | $ | - | | | 111,528,620 | | $ | 111,529 | | $ | 10,434,949 | | $ | (10,868,691) | | $ | (322,213) | |
rVUE HOLDINGS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(unaudited) |
| | For the Three Months Ended March 31, | | ||||
| | 2013 | | 2012 | | ||
Operating activities | | | | | | | |
Net loss | | $ | (1,251,708) | | $ | (1,733,750) | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | |
Depreciation and amortization | | | 13,472 | | | 123,668 | |
Stock-based compensation expense | | | 748,000 | | | 15,620 | |
Common stock issued for services | | | 40,833 | | | 95,000 | |
Convertible loan interest | | | - | | | 296,361 | |
Change in fair value of derivative instruments | | | - | | | 443,711 | |
Loss on early extinguishment of debt | | | - | | | 17,456 | |
Changes in operating assets and liabilities: | | | | | | | |
Accounts receivable | | | 112,446 | | | 88,779 | |
Prepaid expenses | | | 24,274 | | | 45,870 | |
Accounts payable | | | (51,818) | | | (23,133) | |
Accrued expenses | | | (40,232) | | | (10,995) | |
| | | | | | | |
Cash used in operating activities | | | (404,733) | | | (641,413) | |
Investing activities | | | | | | | |
| | | | | | | |
Payments for property, equipment and software development | | | (18,283) | | | (57,364) | |
Change in deposits | | | 100 | | | (100) | |
Cash used in investing activities | | | (18,183) | | | (57,464) | |
Financing activities | | | | | | | |
Proceeds from convertible notes | | | - | | | 935,000 | |
Proceeds from the issuance of common stock | | | 316,500 | | | - | |
| | | | | | | |
Cash provided by financing activities | | | 316,500 | | | 935,000 | |
Increase (decrease) in cash and cash equivalents | | | (106,416) | | | 236,123 | |
Cash and cash equivalents, beginning of period | | | 848,174 | | | 19,917 | |
Cash and cash equivalents, end of period | | $ | 741,758 | | $ | 256,040 | |
RVUE HOLDINGS, INC. |
Notes to Condensed Consolidated Financial Statements |
(unaudited) |
RVUE HOLDINGS, INC. |
Notes to Condensed Consolidated Financial Statements |
(unaudited) |
| | Three Months Ended | | ||||
| | March 31, | | ||||
| | 2013 | | 2012 | | ||
Numerator: | | | | | | | |
Net loss | | $ | (1,251,708) | | $ | (1,733,750) | |
| | | | | | | |
Denominator: | | | | | | | |
| | | | | | | |
Weighted-average shares outstanding | | | 109,000,990 | | | 37,663,796 | |
Effect of dilutive securities (1) | | | - | | | - | |
| | | | | | | |
Weighted-average diluted shares | | | 109,000,990 | | | 37,663,796 | |
| | | | | | | |
Basic and diluted loss per share | | $ | (0.01) | | $ | (0.05) | |
| (1) | The following stock options, warrants and convertible notes outstanding as of March 31 2013 and 2012 were not included in the computation of dilutive loss per share because the net effect would have been anti-dilutive: |
| | Three Months Ended | | ||||
| | March 31 | | ||||
| | 2013 | | 2012 | | ||
Stock options | | | - | | | 405,312 | |
Warrants | | | - | | | 361,460 | |
Convertible notes | | | - | | | 6,180,365 | |
| | | - | | | 6,947,137 | |
| | March 31, | | December 31, | | ||
| | 2013 | | 2012 | | ||
Cash | | $ | 15,346 | | $ | 17,193 | |
Cash equivalents - money market funds | | | 726,412 | | | 830,981 | |
| | | | | | | |
Total cash and cash equivalents | | $ | 741,758 | | $ | 848,174 | |
RVUE HOLDINGS, INC. |
Notes to Condensed Consolidated Financial Statements |
(unaudited) |
| | Quoted Prices in Active Markets for Identical Instruments (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Total | | ||||
March 31,2013 | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Cash equivalents - money market funds | | $ | 726,412 | | $ | - | | $ | - | | $ | 726,412 | |
| | | | | | | | | | | | | |
December 31, 2012 | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Cash equivalents - money market funds | | $ | 830,981 | | $ | - | | $ | - | | $ | 830,981 | |
Balance, January 1, 2012 | | $ | 100,900 | |
Purchases | | | 1,114,827 | |
Settlements | | | (76,700) | |
Realized and unrealized (gains) losses included in earnings | | | 520,411 | |
Balance at March 31, 2012 | | | 1,659,438 | |
RVUE HOLDINGS, INC. |
Notes to Condensed Consolidated Financial Statements |
(unaudited) |
Prepaid expenses | | March 31, 2013 | | December 31, 2012 | | ||
Insurance | | $ | 9,198 | | $ | 16,978 | |
Licenses and subscriptions | | | 12,220 | | | 13,332 | |
Prepaid Rent | | | 4,341 | | | 12,964 | |
Services | | | - | | | 12,500 | |
Other | | | 6,347 | | | 606 | |
| | $ | 32,106 | | $ | 56,380 | |
Property and Equipment | | Estimated Useful Lives | | March 31, | | December 31, | | |||
| | (Years) | | 2013 | | 2012 | | |||
Computers and software | | | 2 - 5 | | $ | 86,977 | | $ | 86,977 | |
Furniture and equipment | | | 3 | | | 22,573 | | | 22,573 | |
Gross property and equipment | | | | | | 109,550 | | | 109,550 | |
Less accumulated depreciation | | | | | | (105,684) | | | (101,002) | |
Net property and equipment | | | | | $ | 3,866 | | $ | 8,548 | |
Software Development Costs | | Estimated Useful Lives | | March 31 | | December 31, | | |||
| | (Months) | | 2013 | | 2012 | | |||
Software development costs | | | 18 | | $ | 1,079,806 | | $ | 1,061,522 | |
Less accumulated amortization | | | | | | (1,047,081) | | | (1,038,290) | |
Net software development costs | | | | | $ | 32,725 | | $ | 23,232 | |
Accrued Expenses | | | | December 31, | | ||
| | March 31, 2013 | | 2012 | | ||
Investor relations fees | | $ | - | | $ | 5,600 | |
Personnel costs | | | 19,923 | | | 52,191 | |
Directors fees | | | 28,375 | | | 144,667 | |
Professional fees | | | 23,305 | | | 69,724 | |
Deferred rent | | | 4,341 | | | 8,682 | |
Network costs | | | 37,517 | | | 44,209 | |
Stock issuance costs | | | 69,000 | | | | |
Other | | | 33,988 | | | 37,275 | |
Consulting fees | | | 117,500 | | | 27,500 | |
| | | | | | | |
| | $ | 333,949 | | $ | 389,848 | |
RVUE HOLDINGS, INC. |
Notes to Condensed Consolidated Financial Statements |
(unaudited) |
| | Number of Options | | Weighted Average Exercise Price Per Share | | Weighted Average Remaining Contractual Term | | Aggregate Intrinsic Value | | ||||
| | | | | | | | | | | | | |
Balance at December 31, 2012 | | | 2,326,667 | | $ | 0.24 | | | 7.80 | | | - | |
Options granted | | | - | | | - | | | | | | | |
Options exercised | | | - | | | - | | | | | | | |
Options forfeited | | | (501,667) | | $ | 0.22 | | | | | | | |
Balance at March 31, 2013 | | | 1,825,000 | | $ | 0.24 | | | 7.02 | | $ | - | |
Exercisable at March 31, 2013 | | | 1,825,000 | | $ | 0.24 | | | 7.02 | | $ | - | |
Expected to vest after March 31, 2013 | | | - | | $ | | | | | | $ | - | |
RVUE HOLDINGS, INC. |
Notes to Condensed Consolidated Financial Statements |
(unaudited) |
RVUE HOLDINGS, INC. |
Notes to Condensed Consolidated Financial Statements |
(unaudited) |
| | For the Three Months Ended March 31, | | ||||
| | 2013 | | 2012 | | ||
Revenue | | | | | | | |
| | | | | | | |
rVue fees | | $ | 79,289 | | $ | 16,319 | |
Network | | | 58,225 | | | 115,169 | |
| | | 137,514 | | | 131,488 | |
Costs and expenses | | | | | | | |
Cost of revenue | | | 64,843 | | | 56,209 | |
| | | | | | | |
Selling, general and administrative expenses | | | 1,311,131 | | | 927,847 | |
Depreciation and amortization | | | 13,472 | | | 123,668 | |
Interest income | | | (224) | | | (136) | |
Interest expense | | | - | | | 296,483 | |
Change in fair value of derivative | | | - | | | 443,711 | |
Loss on early extinguishment of debt | | | - | | | 17,456 | |
| | | | | | | |
| | | 1,389,222 | | | 1,865,238 | |
| | | | | | | |
Loss before provision for income taxes | | | (1,251,708) | | | (1,733,750) | |
Provision for income taxes | | | - | | | - | |
| | | | | | | |
Net loss | | $ | (1,251,708) | | $ | (1,733,750) | |
| | | | | | | |
Net loss per common share - basic and diluted | | $ | (0.01) | | $ | (0.05) | |
Shares used in computing net loss per share: | | | | | | | |
| | | | | | | |
Basic and diluted | | | 109,000,990 | | | 37,663,796 | |
| | Three Months ended March 31, | | | | | | | | ||||
Revenue Category | | 2013 | | 2012 | | $ Change | | % Change | | ||||
| | | | | | | | | | | | | |
rVue Revenue Core Fees | | $ | 79,289 | | $ | 16,319 | | $ | 62,970 | | | 385.9 | % |
| | | | | | | | | | | | | |
Network Revenue Non Core Fees | | | 58,225 | | | 115,169 | | | (56,944) | | | -49.4 | % |
Total Revenue | | $ | 137,514 | | $ | 131,488 | | $ | 6,026 | | | 4.6 | % |
| | Three Months Ended | | | | | | | | ||||
| | March 31, | | | | | | | | ||||
| | 2013 | | 2012 | | $ Change | | % Change | | ||||
Compensation and benefits | | $ | 1,349 | | $ | 41,150 | | $ | (39,801) | | | -96.7 | % |
Stock-based compensation expense | | | | | | 593 | | | (593) | | | -100 | % |
Network services | | | 180 | | | 3,880 | | | (3,700) | | | -95.4 | % |
rVue operations | | | 63,314 | | | 10,586 | | | 52,728 | | | 498 | % |
Total | | $ | 64,843 | | $ | 56,209 | | $ | 8,634 | | | 15.4 | % |
| | Three Months Ended | | | | | | | | ||||
| | March 31, | | | | | | | | ||||
| | 2013 | | 2012 | | $ Change | | % Change | | ||||
Compensation and benefits | | $ | 135,438 | | $ | 476,259 | | $ | (340,821) | | | -71.6 | % |
Stock-based compensation expense | | | 748,000 | | | 15,027 | | | 732,973 | | | 4,877.7 | % |
Facility expense | | | 35,063 | | | 46,842 | | | (11,779) | | | -25.1 | % |
Communications expense | | | 31,616 | | | 19,748 | | | 11,868 | | | 60.1 | % |
Debt issuance expense | | | 0 | | | 65,000 | | | (65,000) | | | -100.0 | % |
Travel expense | | | 19,776 | | | 18,114 | | | 1,662 | | | 9.2 | % |
Advertising and marketing expense | | | 65,905 | | | 13,108 | | | 52,797 | | | 402.8 | % |
Investor relations and investment banking fees | | | 707 | | | 107,628 | | | (106,921) | | | -99.3 | % |
Professional and consulting fees | | | 247,327 | | | 136,241 | | | 111,086 | | | 81.5 | % |
Office support and supply expense | | | 27,299 | | | 29,880 | | | (2,581) | | | -8.6 | % |
Total | | $ | 1,311,131 | | $ | 927,847 | | $ | 383,284 | | | 41.3 | % |
| | Three Months Ended | | ||||
| | March 31, | | ||||
| | 2013 | | 2012 | | ||
Interest on convertible notes | | $ | - | | $ | 14,337 | |
Original issue discount | | | - | | | 282,136 | |
| | $ | - | | $ | 296,483 | |
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 |
| | |
| rVue Holdings, Inc. | |
| (Registrant) | |
| | |
Date: August 20, 2013 | By: | /s/ Mark P. Pacchini |
| | Acting 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 |
| | |
I, Mark P. Pacchini, certify that: | |
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: August 20, 2013 | /s/ Mark P. Pacchini |
| Mark P. Pacchini |
| 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: August 20, 2013 | /s/Mark P. Pacchini |
| Mark P. Pacchini |
| Acting 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/ Mark P. Pacchini | |
Mark P. Pacchini | |
Chief Executive Officer | |
Date: August 20, 2013 | |
| |
/s/ Mark P. Pacchini | |
Mark P. Pacchini | |
Acting Chief Financial Officer | |
Date: August 20, 2013 | |
Supplemental Non-Cash Information
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3 Months Ended |
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Mar. 31, 2013
|
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Supplemental Non Cash Information [Abstract] | |
Supplemental Non Cash Information [Text Block] | Note 11 Supplemental Non-Cash Information During the three months ended March 31, 2013, the Company accrued for fees associated with the equity raised in 2013 which will be paid in future issuance of common stock totaling $42,000 and issuance of warrants totaling $27,000. Additionally, in 2013, the Company reversed the accrued director fees balance of $81,667 upon the issuance of shares to officers and directors in lieu of cash compensation. There were no non-cash transactions noted during the three months ended March 31, 2012. |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
|
3 Months Ended | |
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Mar. 31, 2013
|
Mar. 31, 2012
|
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Revenue | ||
rVue advertising revenue | $ 79,289 | $ 16,319 |
Network | 58,225 | 115,169 |
Revenues | 137,514 | 131,488 |
Costs and expenses | ||
Cost of revenue | 64,843 | 56,209 |
Selling, general and administrative expenses | 1,311,131 | 927,847 |
Depreciation and amortization | 13,472 | 123,668 |
Interest income | (224) | (136) |
Interest expense | 0 | 296,483 |
Change in fair value of derivative | 0 | 443,711 |
Loss on early extinguishment of debt | 0 | 17,456 |
Operating Expenses | 1,389,222 | 1,865,238 |
Loss before provision for income taxes | (1,251,708) | (1,733,750) |
Provision for income taxes | 0 | 0 |
Net loss | $ (1,251,708) | $ (1,733,750) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.01) | $ (0.05) |
Shares used in computing net loss per share: | ||
Basic and diluted (in shares) | 109,000,990 | 37,663,796 |
Financial Instruments
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2013
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Investments, All Other Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments Disclosure [Text Block] | Note 4 Financial Instruments Cash and cash equivalents The following table summarizes the fair value of the Company’s cash and cash equivalents as of March 31, 2013 and December 31, 2012:
Accounts Receivable We sell our services directly to our customers. We generally do not require collateral from our customers; however, we will require collateral in certain instances to limit credit risk. Accounts receivable from two of our customers accounted for 44.1%, and 39.1% of total accounts receivable at March 31, 2013, and accounts receivable from one of our customers accounted for 85.5% of total accounts receivable at December 31, 2012, respectively. We had no allowance for doubtful accounts at either March 31, 2013 or at December 31, 2012. |
Going Concern (Details Textual) (USD $)
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Mar. 31, 2013
|
Dec. 31, 2012
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Accumulated deficit | $ (10,868,691) | $ (9,616,983) |
Summary of Significant Accounting Policies (Policies)
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3 Months Ended |
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Mar. 31, 2013
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Accounting Policies [Abstract] | |
Consolidation, Policy [Policy Text Block] | Basis of Presentation and Preparation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. 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 us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, fair values of financial instruments, useful lives of capitalized software development costs and property and equipment, fair values of stock-based awards, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. 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, 2012, included in our Annual Report on Form 10-K (the “2012 Form 10-K”). The unaudited condensed consolidated statement of operations for the three months ended March 31, 2013 is not necessarily indicative of the results that may be expected for the entire year. |
Financial Instruments (Details) (USD $)
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Mar. 31, 2013
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Dec. 31, 2012
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Cash and cash equivalents | $ 741,758 | $ 848,174 |
Cash [Member]
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Cash and cash equivalents | 15,346 | 17,193 |
Money Market Funds [Member]
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Cash and cash equivalents | $ 726,412 | $ 830,981 |
Loss Per Common Share (Details 1)
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3 Months Ended | |
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Mar. 31, 2013
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Mar. 31, 2012
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Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 6,947,137 |
Stock Options [Member]
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Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 405,312 |
Warrant [Member]
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Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 361,460 |
Convertible Notes Payable [Member]
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Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 6,180,365 |
Stockholders' Equity and Stock Based Compensation (Details Textual) (USD $)
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3 Months Ended |
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Mar. 31, 2013
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Contingent Expense | $ 748,000 |
Stock Issued During Period, Value, New Issues | 517,500 |
Director [Member]
|
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Stock Issued During Period, Shares, New Issues | 816,667 |
Stock Issued During Period, Value, New Issues | 40,833 |
Michael Mullarkey [Member]
|
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Stock Issued During Period, Shares, Issued For Services | 4,400,000 |
Preferred Stock [Member]
|
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Stock Issued During Period, Shares, Issued For Services | 0 |
Stock Issued During Period, Shares, New Issues | 0 |
Stock Issued During Period, Value, New Issues | 0 |
Common Stock [Member]
|
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Stock Issued During Period, Shares, Issued For Services | 836,666 |
Stock Issued During Period, Shares, New Issues | 10,000,000 |
Stock Issued During Period, Value, New Issues | $ 10,000 |
Loss Per Common Share (Details) (USD $)
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3 Months Ended | |
---|---|---|
Mar. 31, 2013
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Mar. 31, 2012
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Numerator: | ||
Net loss | $ (1,251,708) | $ (1,733,750) |
Denominator: | ||
Weighted-average shares outstanding | 109,000,990 | 37,663,796 |
Effect of dilutive securities (1) | 0 | 0 |
Weighted-average diluted shares (in shares) | 109,000,990 | 37,663,796 |
Basic and diluted loss per share (in dollars per share) | $ (0.01) | $ (0.05) |
Going Concern
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3 Months Ended |
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Mar. 31, 2013
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Going Concern [Abstract] | |
Going Concern [Text Block] | Note 2 Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have sustained losses and experienced negative cash flows from operations since inception, and have an accumulated deficit of $10,868,691 at March 31, 2013. These factors raise substantial doubt about our ability to continue to operate in the normal course of business. We have funded our activities to date almost exclusively from equity and debt financings. We will continue to require substantial funds to continue development of our core business. Management’s plans in order to help meet our operating cash flow requirements include (i) financing activities such as private placements of common stock, and issuances of debt and convertible debt instruments, (ii) staff reductions, (iii) a hiring and expansion freeze, and (iv) the establishment of strategic relationships which we believe will lead to the generation of additional revenue opportunities. While we believe that we will be successful in obtaining the necessary financing to fund our operations, there are no assurances that such additional funding will be achieved or that we will succeed in our future operations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. |
Fair Value Measurements
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Mar. 31, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Text Block] | Note 5 Fair Value Measurements Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable: Level 1 - Quoted prices for identical instruments in active markets. Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable directly or indirectly. Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are unobservable. We are responsible for the valuation process and as part of this process we used data from an outside source to establish fair value. We performed due diligence to understand the inputs used or how the data was calculated or derived, and we corroborated the reasonableness of external inputs in the valuation process. Assets and liabilities measured at fair value on a recurring basis at March 31, 2013 and December 31, 2012 were as follows:
The fair value of the money market funds, classified as Level 1, utilized quoted prices in active markets. The Company had no Level 2 and Level 3 assets or liabilities at March 31, 2013 and December 31, 2012. The Company had level 3 derivative liabilities at March 31, 2012 as a result of a conversion feature contained in a Promissory Note Agreement, as well as related stock warrants. These transactions are more fully described in Note 9 of the Company’s annual report on Form 10-K filed for the year ended December 31, 2012. The table below sets forth a summary of changes in the fair value of the Company’s Level 3 liabilities for the three month period ended March 31, 2012:
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Loss Per Common Share
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2013
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] | Note 3 - 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 months ended March 31, 2013 and 2012, diluted loss per common share has not been computed by giving effect to all potentially dilutive common shares that were outstanding during the three months ended March 31, 2013 and 2012. Dilutive common shares include 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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Financial Instruments (Details Textual)
|
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Customer One [Member]
|
||
Entity Wide Accounts Receivable Major Customer Percentage | 44.10% | 85.50% |
Customer Two [Member]
|
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Entity Wide Accounts Receivable Major Customer Percentage | 39.10% |
Condensed Consolidated Financial Statement Details (Details Textual) (USD $)
|
3 Months Ended | |
---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
|
Depreciation | $ 4,681 | $ 9,172 |
Amortization | $ 8,791 | $ 114,496 |
Supplemental Non-Cash Information (Details Textual) (USD $)
|
3 Months Ended |
---|---|
Mar. 31, 2013
|
|
Non Cash Future Issuance Of Common Stock | $ 42,000 |
Non Cash Future Issuance Of Warrants | 27,000 |
Non Cash Issuance Of Shares To Officers In Lieu Of Cash | $ 81,667 |
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