RVUE HOLDINGS, INC. - FORM 10-Q/A

Attached files

file	filename
EX-31.1 - RVUE HOLDINGS, INC.	v204421_ex31-1.htm
EX-32 - RVUE HOLDINGS, INC.	v204421_ex32.htm
EX-31.2 - RVUE HOLDINGS, INC.	v204421_ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

Amendment No. 1

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 333-158117

RVUE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

NEVADA		94-3461079
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

100 N.E. 3rd Avenue, Suite 200 Fort Lauderdale, Florida 33301		(954) 525-6464
(Address of principal executive offices, including zip code)		(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

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 o No o

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.

Large accelerated filer o		Accelerated filer o
Non-accelerated filer o	(Do not check if a smaller reporting company)	Smaller reporting company þ

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

The number of shares outstanding of each of the issuer’s classes of common stock as of the close of business on November 11, 2010 is as follows:

Class		Number of Shares
Common Stock: $0.001 Par Value		28,648,730

RVUE HOLDINGS, INC.

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	1
	Forward Looking Statements.	9

PART II	OTHER INFORMATION

Item 6.	Exhibits.	12

EXPLANATORY NOTE

This Amendment No.1 on Form 10-Q (the "Amendment") amends Part I – Item 2 and Part II – Item 6 of the Quarterly Report for rVue Holdings, Inc. (the "Company") on Form 10-Q for the quarterly period ended September 30, 2010, filed with the Securities and Exchange Commission (“Commission”) on November 12, 2010 (the "Original Report"). The Company is filing this Amendment in response to comments from the Staff of the Commission.

PART I – FINANCIAL INFORMATION

Item 2.

Management’s Discussion and Analysis Of Financial Condition And Results of Operations.

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and related notes included in Item 1 of the Original Report, as well as our audited financial statements as of December 31, 2009 and for the period from Inception (September 15, 2009) through December 31, 2009 included in Form 8-K/A filed with the Commission on August 17, 2010.

Overview

rVue is an advertising exchange that connects advertisers and advertising agencies with digital signage. We provide an online, internet based advertising exchange that connects advertisers and advertising agencies with third party Digital Out-Of-Home ("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. As of November 11, 2010, 97 networks comprising approximately 348,000 screens representing the top 50 Designated Market Area's ("DMA's") were accessible through the rVue exchange, and rVue had relationships with over 90 advertising agencies. For this service rVue receives a transaction fee of up to 4% of the gross advertising placed through rVue. As of the September 30, 2010, rVue had not generated significant revenues from advertisers utilizing its DOOH platform or technologies.

In connection with the Transaction, the Company acquired from Argo all of its assets related to the rVue business, which included all of the common stock of rVue, Inc. as well as software, contracts and technology. Such software and technology included the rVue demand side platform software as well as the rVue Client and Server Software which allows an end user to manage and operate a DOOH network. The Client Software is used to manage each screen or site and the Sever Software is used to manage the Client Software. rVue has licensed the Client and Server Software to Levoip Corporation for installation in Italy. Under the terms of the contract, Levoip is required to pay rVue: (1) a one-time initial site commissioning fee for first-time sites; (2) a recurring monthly license fee at a fixed dollar per site for each month a site utilizes the software; and (3) a 25% share of the gross third-party advertising displayed on the sites. We do not expect to generate significant additional revenues from the Levoip contract after September 30, 2010, inasmuch as we have recently been informed that Levoip has suspended its installation of additional sites. As of December 31, 2009 and as of September 30, 2010, the Company had generated $2,533 and $57,612 of revenue from the Levoip contract.

We provide Network and Administrative Service and receive fees for producing programming in our studios or with outside services for Mattress Firm and AutoNation. We also earn network and administrative service revenue under contracts pursuant to which we provide content production and technical services to Mattress Firm and Accenture on a monthly basis for a fixed monthly payment resulting in total monthly revenue of approximately $33,000. Through May 2010 we provided AutoNation with oversight and management services and content production for their in-house network. We monitored the network to ensure it was running at all times and created custom content for display on such networks. Since June 2010 we provide content creation services on an as needed basis for AutoNation. Mattress Firm operates an in-store network. We image computers to run the in-store network in each store location, and produce and create custom content such as in store sales promotions to display on such network. We assist Accenture with the maintenance and troubleshooting of a private network they operate. We provide 24/7 services to ensure that the network operates without interruption. We expect to continue to receive revenue from these services to AutoNation, Mattress Firm and Accenture during the next twelve months, but we do not intend to pursue additional network related service opportunities as the focus of our business is to earn transaction fees from rVue as discussed above.

Recent Developments

On March 29, 2010, the Company filed an Amended and Restated Articles of Incorporation to: (1) change our name from “Rivulet International, Inc.” to “Rvue Holdings, Inc.”; (2) designate a resident agent and registered office; (3) 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 (the “Common Stock”), and 10,000,000 shares of “blank check” preferred stock, par value $.001 per share (the “Preferred Stock”); (4) set the number of directors of the Company at no less than 1; (5) state the legal purpose of the Company; (6) provide for the limitation of liability of directors of the Company to the fullest extent permitted by the Nevada Revised Statutes; and (7) provide for the indemnification of officers and directors of the Company to the fullest extent permissible under the laws of the State of Nevada.

On May 13, 2010, we 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 "Asset Purchase Agreement"), by and between Argo, rVue, Inc. and the Company (the “Transaction”), in exchange for 12,500,000 shares of our Common Stock, or approximately 67% of our outstanding common shares upon the close of the asset sale (the “Transaction”). The Transaction was completed on May 13, 2010, and rVue, Inc. became a wholly-owned subsidiary of the Company. The Transaction is being accounted for as a reverse recapitalization of rVue, Inc. For accounting and financial reporting purposes rVue, Inc. is the acquiror and the Company is the acquired company. The Company succeeded to the business of rVue, Inc. and following the completion of the Transaction and Private Placement, disposed of its pre-merger assets. Consequently, the assets and liabilities and the operations that will be reflected in the historical financial statements of the Company prior to the closing of the Transaction will be those of rVue, Inc., and the consolidated financial statements after completion of the purchase and closing will include the assets and liabilities of the Company and rVue, Inc., historical operations of rVue, Inc. and operations of the Company from the closing date of the Transaction.

Results of Operation

rVue, Inc. commenced business operations on September 15, 2009 and has no comparative operating history for the three or nine months ended September 30, 2009. For the period from September 15, 2009 through September 30, 2009, rVue, Inc. had operating expenses and a net loss of $6,500.

Three Months Ended September 30, 2010

Revenue

We earned revenue in three categories as follows:

	Three Months Ended
	September 30,					June 30,
	2010		%			2010		%			$ Change			% Change

License Fees	$	24,175		15.4	%	$	20,480		13.3	%	$	3,695			18.0	%
Network and Administrative Services		129,504		82.5	%		133,877		86.7	%		(4,373	)		--3.3	%
Transaction Fees		3,257		2.1	%		-		-			3,257			100.0	%
Total Revenue	$	156,936		100.0	%	$	154,357		100.0	%	$	2,579			1.7	%

License Fees.

We earn revenue from the licensing of our Client and Server software and technology to third parties, including DOOH networks. We have granted an exclusive license for the use of our Client and Server software and technology in Italy to Levoip Corporation and categorize this revenue as “License” revenue. License revenue for the three month period ended September 30, 2010 was $24,175, compared to $20,480 for the three month period ended June 30, 2010, a $3,695 or 18.0% increase. The increase was attributable to additional sites installed in the quarter. We do not expect to generate significant additional revenues from the Levoip contract after September 30, 2010, inasmuch as we have recently been informed that Levoip has suspended its installation of additional sites.

Network and Administrative Services.

Network and Administrative Service revenue relate to fees we receive for producing programming in our studios or with outside services for Mattress Firm and AutoNation. We also earn network and administrative service revenue under contracts pursuant to which we provide content production and technical services to Mattress Firm and Accenture.

Effective December 1, 2009, we entered into an agreement to license certain software to an entity in Canada which was to build and operate a DOOH network. In consideration for entering into the agreement we received a $50,000 fee which we are recognizing over the 11-month period of the contract. Commencing January 1, 2010, we assumed certain contract work from Argo for Accenture, AutoNation and Mattress Firm which we consider to be network related services.

Network and Administrative Services revenue was $129,504 for the three month period ended September 30, 2010, compared to $133,877 for the three month period ended June 30, 2010, a $4,373 or 3.3% decrease. Network and Administrative Services revenue was comprised as follows:

	Three Months Ended
	September 30,		June 30,
	2010		2010		$ Change			% Change

Mattress Firm Contract Services	$	60,000	$	60,000	$	-			-
AutoNation Contract Services		-		17,500		(17,500	)		-100	%
AutoNation Production Services		9,915		6,815		3,100			45.5	%
Accenture Contract Services		35,925		35,925		-			-
Canada License Fee		13,637		13,637		-			-
Other		10,027		-		10,027			100.0	%
Total	$	129,504	$	133,877	$	(4,373	)		-3.3	%

The decrease in Network and Administrative Services revenue of $4,373 was attributable to the cancellation of the AutoNation contract in May 2010, resulting in no contract service revenue in the current quarter, partially offset by increases in AutoNation Production Services revenue and other fees.

Mattress Firm operates an in-store network. We image computers to run the in-store network in each store location, and produce and create the custom content that they display on such networks, such as in store sales promotions.

Through May 2010 we provided AutoNation with oversight and management services and content production for their in-house network. We monitored the network to ensure it was running at all times and created custom content for display on such networks. Since June 2010 we provide content creation services on an as needed basis for AutoNation, primarily producing in-house broadcast messages from management to staff.

We assist Accenture with the maintenance and troubleshooting of a private network they operate. We provide 24/7 services to ensure that the network operates without interruption.

We expect to continue to receive revenue from these services to AutoNation, Mattress Firm and Accenture during the next twelve months, but we do not intend to pursue additional network related service opportunities as the focus of our business is to complete the development of the rVue platform throughout 2010. As the rVue platform gains traction among advertisers and agencies, we expect to earn transaction fees from rVue related transactions in 2011.

Transaction Fees.

rVue Transactions fees were $3,257 in the three month period ended September 30, 2010. We had no rVue Transaction Fees in the three month period ended June 30, 2010. The transaction fee is a percentage of the advertising dollars spent on campaigns, which varies based upon the level of targeting, reporting and other assistance we provide.

While the majority of our revenue has been from Network and Administrative Services, the development of the rVue platform and generating transaction fees is the focus of our business. As the rVue platform gains traction with advertisers and agencies, we may generate additional transaction fees in 2011 from advertisers and agencies for placing advertising with DOOH networks through rVue, but we do not expect to earn significant additional transaction fees in the last quarter of 2010. Also, we cannot assure you that advertisers or agencies will accept the rVue platform as their platform of choice for placing advertising with DOOH networks.

Cost of Revenue for the three month period ended September 30, 2010 was $43,691 of which $30,574 was payroll, benefits and temporary labor, $8,865 related to rVue operations and $3,829 related to network services costs. Cost of Revenue represents the costs to deliver services and the cost of production. Cost of revenue increased by $6,093, or 16.2% over cost of revenue of $37,598 for the three month period ended June 30, 2010.

Selling general and administrative expenses (“SG&A”) were $934,898 for the three month period ended September 30, 2010. SG&A increased by $481,588, or 106.2%, from the $453,310 of SG&A for the three month period ended June 30, 2010. Changes by major component of SG&A between the three month period ended September 30, 2010 and the three month period ended June 30, 2010 are:

	Three Months Ended
	September 30,		June 30,
	2010		2010		$ Change			% Change

Payroll and benefits (excluding stock option expense)	$	286,792	$	260,117	$	26,675			10.3	%
Stock option expense		87,166		43,901		43,265			98.6	%
Facility expenses		80,336		40,840		39,496			96.7	%
Communications expenses		18,994		13,696		5,298			38.7	%
Travel expense		6,574		8,922		(2,348	)		-26.3	%
Marketing		58,982		692		58,290			8423.4	%
Investor relations expenses		149,072		20,000		129,072			645.4	%
Placement agent fees		100,000		-		100,000			100.0	%
Professional and consulting fees		74,556		44,631		29,925			67.1	%
Office support and supply expenses		34,775		20,511		14,264			69.5	%
Bad debt expense		37,651		-		37,651			100.0	%
Total	$	934,898	$	453,310	$	481,588			106.2	%

Pursuant to the Transition Services Agreement between Argo and rVue, Inc. through May 13, 2010, expenses were allocated between Argo and rVue as follows:

	% Allocation
	rVue			Argo
Payroll and benefits		80	%		20	%
Facility costs		50	%		50	%
Communications expense		63	%		37	%
Office support and supply expense		39	%		61	%

Commencing in May 2010, rVue ramped up its infrastructure, including its staff of engineers and support staff, and hired a new Chief Financial Officer. These costs are reflected in the increased payroll and benefit costs for the three month period ended September 30, 2010, compared to the three month period ended June 30, 2010.

Stock option expense was $87,166 for the three month period ended September 30, 2010 compared to $43,901 for the three month period ended June 30, 2010, a $43,265, or 98.6% increase. Options were granted on May 13, 2010 and September 17, 2010.

Facility cost increases were $2,153 for rent and associated expenses and $37,343 of non-recurring relocation expenses incurred in moving to new leased premises in July 2010.

Marketing expenses included $45,000 paid to a consultant in the three month period ended September 30, 2010 and $13,982 of general marketing expenses.

Investor relations expenses for the three month period ended September 30, 2010 consisted of $119,040 paid to investor relations consultants, and $30,032 for investor meetings, conferences and communication expenses, compared to $20,000 paid to investor relations consultants in the three month period ended June 30, 2010.

Placement agent fees for the three month period ended September 30, 2010 consisted of a fee of $100,000 paid to placement agents and in shares of the Company’s Common Stock in connection with the Private Placement.

Professional fees for the three month period ended September 30, 2010 consisted of $67,517 for legal, accounting and recruiting fees, and $5,164 for consulting and other fees, compared to $31,325 for legal, accounting and recruiting fees, and $13,306 for consulting and other fees, in the three month period ended June 30, 2010.

Office support and supply expenses increase were for insurance, which increased $10,183 in the current quarter, and $4,081 for all other office support and supply functions.

Bad debt expense was $37,651 for the three month period ended September 30, 2010 and represented amounts from two customers for which collection appears unlikely.

Depreciation and amortization was $35,784 for the three month period ended September 30, 2010 compared to $30,279 for the three month period ended June 30, 2010, a $5,505, or 18.2% increase. Depreciation expense is mainly for software development costs.

Interest income was $5,824 for the three months ended September 30, 2010, compared to $60 for the three month period ended June 30, 2010, a $5,764 increase. Interest income included $5,671 of interest due from Argo. Interest expense was $789 for the three months ended September 30, 2010, compared to interest expense of $64,425 for the three months ended June 30, 2010, a decrease of $63,636. During the three month period ended June 30, 2010 we redeemed our Bridge Loans and incurred $1,650 of interest on Bridge Loans and $62,248 attributable to the Bonus Shares issued in connection with the Bridge Loans which was treated as interest expense, and a reduction of capital lease interest of $262.

The Company’s results of operations for the three month period ended September 30, 2010 did not contain any unusual gains or losses from transactions not in the Company’s ordinary course of business.

Nine months Ended September 30, 2010

Revenue for the period was $461,261, of which $58,312 was from license fees, $399,692 was from network services and $3,257 was from rVue transactions fees.

License Fees.

We earn revenue from the licensing of our Client and Server software and technology to third parties, including DOOH networks. We have granted an exclusive license for the use of our Client and Server software and technology in Italy to Levoip Corporation and categorize this revenue as “License” revenue. License revenue for the nine month period ended September 30, 2010 was $58,312. We had no license fee revenue in the period ended September 30, 2009. We do not expect to generate significant additional revenues from the Levoip contract after September 30, 2010, inasmuch as we have recently been informed that Levoip has suspended its installation of additional sites.

Network and Administrative Services.

Network and Administrative Services revenue was $399,692 for the nine month period ended September 30, 2010 and was comprised as follows:

Mattress Firm Contract Services	$	180,000
AutoNation Contract Services		43,750
AutoNation Production Services		16,730
Accenture Contract Services		107,775
Canada License Fee		45,199
Other		6,238
	$	399,692

Mattress Firm operates an in-store network. We image computers to run the in-store network in each store location, and produce and create custom content such as in store sales promotions to display on such network.

We assist Accenture with the maintenance and troubleshooting of a private network they operate. We provide 24/7 services to ensure that the network operates without interruption.

Transaction Fees.

rVue transactions fees were $3,257 in the nine month period ended September 30, 2010. The transaction fee is a percentage of the advertising dollars spent on campaigns, which varies based upon the level of targeting, reporting and other assistance we provide.

We expect to earn transaction fees from advertisers and agencies for placing advertising with networks through rVue. This is the focus of our business and the area in which we expect to generate the majority of our revenue in 2011 and beyond. We do not expect that we will earn significant transaction fees in 2010. The transaction fee is a percentage of the advertising dollars spent on campaigns, which varies based upon the level of targeting, reporting and other assistance we provide.

Cost of revenue for the period was $119,067, of which $100,782 was payroll, benefits and temporary labor, $8,865 was related to rVue operations and $8,453 related to network service costs and $967 was for other costs. Cost of Revenue represents the costs to deliver rVue services and production costs.

SG&A were $1,545,471 for the nine month period ended September 30, 2010 compared to $6,500 for the period from Inception (September 15, 2009) through September 30, 2009. Changes by major component of SG&A between the nine month period ended September 30, 2010 and the period from Inception (September 15, 2009) through September 30, 2009 are:

	Nine Months Ended		Inception (September 15, 2009) through
	September 30, 2010		September 30, 2009		$ Change

Payroll and benefits (including temporary labor)	$	658,765	$	1,401	$	657,364
Stock option expense		131,067		-		131,067
Facility expenses		140,842		1,250		139,592
Communications expenses		38,603		737		37,866
Travel expense		19,017		-		19,017
Marketing		59,777		-		59,777
Investor relations expenses		169,072		-		169,072
Placement agent fees		100,000		-		100,000
Professional and consulting fees		130,255		-		130,255
Office support and supply expenses		60,422		3,112		57,310
Bad debt expense		37,651		-		37,651
Total	$	1,545,471	$	6,500	$	1,538,971

Depreciation and amortization was $85,996, interest income was $5,884, and interest expense was $65,815. Net loss was $1,349,204.

The Company’s results of operations for the nine month period ended September 30, 2010, and for the period from September 15, 2009 (inception) through September 30, 2009, did not contain any unusual gains or losses from transactions not in the Company’s ordinary course of business.

Liquidity And Capital Resources

Our business is still in the early stages, having commenced operations on September 15, 2009. As of December 31, 2009 and September 30, 2010, we had cash and cash equivalent balances of $117 and $625,662, respectively. Since our inception through September 30, 2010, we have incurred net losses, and at September 30, 2010 we had an accumulated deficit of $1,409,469 and total stockholders’ equity of $779,592. We expect to incur losses for the next six to nine months as we complete the roll out of rVue. There is no guarantee that we will ultimately be able to generate sufficient revenue or reduce our costs in the anticipated time frame to achieve and maintain profitability and have sustainable cash flows.

We did not have any material commitments for capital expenditures at September 30, 2010 and do not expect to have any during the next twelve months. Any required expenditure will be completed through internally generated funding or from proceeds from the sale of common or preferred stock, or borrowings.

We did not have any significant elements of income or loss not arising from continuing operations in either the three or nine month periods ended September 30, 2010, and do not expect any in the remainder of fiscal 2010. While our business is marginally seasonal, we do not expect this seasonality to have a material adverse affect on our results of operations or cash flows.

Cash Flows Provided by (Used In) Operating Activities

Net cash provided by (used in) operating activities totaled ($671,932) for the nine months ended September 30, 2010 compared to $44,645 for the period from inception (September 15, 2009) through September 30, 2009. In the nine month period ended September 30, 2010, cash was used to fund a net loss of $1,349,204, reduced by non cash depreciation of $85,996, stock compensation expense of $131,067, bridge loan interest settled in shares of common stock of $64,746, investor relations expense settled in shares of common stock of $80,000, placement agent fees settled in shares of common stock of $100,000, and net changes in components of working capital totaling $215,463. In the period from inception (September 15, 2009) through September 30, 2009, cash was provided by changes in components of working capital totaling $51,145, reduced by cash used to fund a net loss of $6,500.

Cash Flows From Investing Activities

Net cash used in investing activities totaled $325,272 for the nine months ended September 30, 2010 compared to $44,545 for the period from inception (September 15, 2009) through September 30, 2009. In the nine month period ended September 30, 2010 cash used in investing activities was comprised of $158,224 for software development costs and $167,048 advanced to Argo. In the period from inception (September 15, 2009) through September 30, 2009, cash used in investing activities was comprised of $10,590 for software development costs and $33,955 advanced to Argo.

Cash Flows From Financing Activities

Net cash provided by financing activities totaled $1,622,749 for the nine months ended September 30, 2010, and was comprised of $1,478,533 of net proceeds from the sale of common stock and $150,000 from investment subscriptions received, reduced by $5,784 used to repay capital lease obligations.

Financial Condition

As of September 30, 2010, we had working capital of $387,687, an accumulated deficit of $1,409,469 and total stockholders’ equity of $779,592, compared to a working capital deficit of $111,717, an accumulated deficit of $60,265 and total stockholders’ equity of $192,199 as of December 31, 2009. The increase in working capital was as a result of the sale of common stock under the Transaction described above.

We believe that with the cash we have on hand, cash generated through our operations, and cash we may raise through debt or equity issuances, we will have sufficient funds available to cover our cash requirements through the next twelve months.

Off-Balance Sheet Arrangements

Since our inception, except for standard operating leases, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.

Critical Accounting Policies

Management is responsible for the integrity of the financial information presented herein. Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Where necessary, they reflect estimates based on management's judgment. When selecting or evaluating accounting alternatives, management focuses on those that produce from among the available alternatives information most useful for decision-making. We believe that the critical accounting policies discussed below involve additional management judgment due to the sensitivity of the methods, assumptions and estimates necessary in determining the related asset, liability, revenue and expense amounts.

Software Development Costs

Our software development costs are being capitalized or expensed as required by ASC 340-40-05, “Internal Use Software". Costs incurred in the planning stage have been expensed. Costs incurred in the website application and infrastructure development stage are being capitalized or expensed in accordance with ASC 340-40-50. Costs incurred in the operating stage will be expensed as incurred; however costs incurred for upgrades or enhancements that provide added functionality or features will be expensed or capitalized as required by ASC 340-40-50.

Revenue Recognition

Our revenues are derived from the maintenance of certain private networks, the production and distribution of network programming, transaction fees from advertising campaigns placed through rVue, and the licensing of proprietary software.

	·	Revenue from the maintenance of private networks, and the production and distribution of network programming content, is recognized ratably over the term of the related service period.
	·	Transaction fee revenue is recognized once the advertisements have aired and the advertising campaign is completed in accordance with the advertising campaigns contractual terms.
	·	Software license revenue is accounted for in accordance with ASC 985-605, "Software Revenue Recognition". Software license revenue is recognized when there is pervasive evidence of an arrangement, the fees are fixed and determinable, the software product has been delivered, 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.

Deferred revenue consists of payments received in advance of revenue recognition.

Impact Of Recently Issued Accounting Standards

In January 2010, the Financial Accounting Standard Board (“FASB”) issued ASU 2010-06, Improving Disclosures about Fair Value Measurements. The ASU requires disclosing the amounts of significant transfers in and out of Level 1 and 2 fair value measurements and to describe the reasons for the transfers. The disclosures are effective for reporting periods beginning after December 15, 2009. Additionally, disclosures of the gross purchases, sales, issuances and settlements activity in Level 3 fair value measurements will be required for fiscal years beginning after December 15, 2010.

In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. ASU 2010-01 is effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis. The Company does not expect the provisions of ASU 2010-01 to have a material effect on the financial position, results of operations or cash flows of the Company.

Forward Looking Statements

This Quarterly Report on Form 10-Q and other written and oral statements made from time to time by us may contain so-called “forward looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995,” all of which are subject to risks and uncertainties. Forward looking statements can be identified by the use of words such as “expects,” “plans,” “will,” “forecasts,” “projects,” “intends,” “estimates,” and other words of similar meaning. One can identify them by the fact that they do not relate strictly to historical or current facts. The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward looking statements. Forward looking statements give the Company’s current expectations or forecasts of future events. Such statements are subject to risks and uncertainties that are often difficult to predict and beyond the Company’s control, and could cause the Company’s results to differ materially from those described. The risks, uncertainties and other factors that our shareholders and prospective investors should consider include the following:

We have a limited operating history, incurred losses and past performance is no guarantee of future performance;

We depend upon our senior management and our business may be adversely affected if we cannot retain them;

Our Chief Executive Officer has no experience running a public company;

If we fail to increase the number of our advertising clients or participating DOOH networks and if we fail to retain those clients, our revenues and our business will be harmed;

The market for advertising is highly competitive and we may be unable to compete successfully;

The effects of the recent and ongoing global economic crisis may adversely impact our business, operating results or financial condition;

Our limited operating history makes it difficult for us to accurately forecast revenues and appropriately plan our expenses;

We expect a number of factors to cause our operating results to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance;

Growth may place significant demands on our management and our infrastructure;

We may be unable to successfully execute our business strategy if we fail to continue to provide our customers with a high-quality customer experience;

Future acquisitions could disrupt our business and harm our financial condition and operating results;

We rely on our marketing efforts to attract new customers and must do so in a cost-effective manner; otherwise our operations will be harmed;

Misappropriation of our proprietary software and technology could materially affect our competitive position;

Our business relies heavily on our technology systems, and any failures or disruptions may materially and adversely affect our operations;

Our technology may infringe on rights owned by others, which may interfere with our ability to provide services, and our rVue web site may expose us to increased liability or expense under intellectual property, privacy or other law;

We may be unsuccessful in expanding our operations internationally, which could harm our business, operating results and financial condition;

Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information;

Our business is subject to the risks of hurricanes, fires, floods and other natural catastrophic events and to interruption by man-made problems such as computer viruses or terrorism;

As a public company, we incur significant increased costs which may adversely affect our operating results and financial condition;

We will need additional capital to fund ongoing operations and to respond to business opportunities, challenges, acquisitions or unforeseen circumstances. If such capital is not available to us, our business, operating results and financial condition may be harmed;

A further tightening of the credit markets may have an adverse effect on our ability to obtain short-term debt financing;

If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our Common Stock;

If use of the Internet, particularly with respect to the placement of online advertising, does not increase as rapidly as we anticipate, our business will be harmed;

Government regulation of the Internet is evolving, and unfavorable changes could substantially harm our business and operating results;

Seasonality may cause fluctuations in our financial results;

We may be unable to register for resale all of the shares of common stock and shares of common stock underlying the warrants included within the units sold in the Private Placement, in which case purchasers in the Private Placement will need to rely on an exemption from the registration requirements in order to sell such shares;

Because we became public by means of a reverse merger, we may not be able to attract the attention of major brokerage firms;

Following the Transaction, our stock price may be volatile;

We have not paid dividends in the past and do not expect to pay dividends in the future and any return on investment may be limited to the value of our Common Stock;

There is currently a very limited liquid trading market for our Common Stock and we cannot ensure that one will ever develop or be sustained;

Following the Transaction, our Common Stock may be deemed a "penny stock," which would make it more difficult for our investors to sell their shares;

Offers or availability for sale of a substantial number of shares of our Common Stock may cause the price of our Common Stock to decline;

Investor Relations Activities, Nominal “Float” and Supply and Demand Factors May Affect the Price of our Stock;

We may apply the proceeds of the Private Placement to uses that ultimately do not improve our operating results or increase the value of your investment;

Because our directors and executive officers are among our largest stockholders, they can exert significant control over our business and affairs and have actual or potential interests that may depart from those of subscribers in the Private Placement;

Exercise of options may have a dilutive effect on our common stock; and

Our amended and restated articles of incorporation allows for our board to create new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock.

Additional information concerning these and other risks and uncertainties is contained in our filings with the Securities and Exchange Commission, including the section titled “Risk Factors” in our Current Report on Form 8-K/A filed with the Securities and Exchange Commission on October 27, 2010. The Company is providing this information as of the date of this Quarterly Report on Form 10-Q and does not undertake any obligation to update any forward looking statements contained in this Quarterly Report on Form 10-Q as a result of new information, future events or otherwise. We have based these forward looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Forward looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. No forward looking statement can be guaranteed and actual future results may vary materially.

PART II – OTHER INFORMATION

Item 6.

Exhibits.

We have listed the exhibits by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K on the Exhibit list attached to this report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	rVue Holdings, Inc. (Registrant)


Date: December 3, 2010	By:	/s/ David A. Loppert
		Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)

Exhibit Index

Exhibit No.		Description
2.1		Asset Purchase Agreement, dated as of May 13, 2010, by and between Argo Digital Solutions, Inc., rVue, Inc. and rVue Holdings Inc. (2)
3.1		Amended and Restated Articles of Incorporation (1)
3.2		Amended and Restated Bylaws (2)
10.1		Form of Subscription Agreement (2)
10.2		Form of Registration Rights Agreement (2)
10.3		Form of Lockup Agreement (2)
10.4		Placement Agent Agreement, dated May 1, 2010, between rVue, Inc. and RAMPartners SA (2)
10.5		Form of Directors and Officers Indemnification Agreement (2) +
10.6		Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations dated as of May 13, 2010, by and between rVue Holdings, Inc. and Rivulet International Holdings, Inc. (2)
10.7		Stock Purchase Agreement dated as of May 13, 2010, by and between rVue Holdings, Inc., and the Buyers listed therein (2)
10.8		Employment Agreement between the Company and Jason M. Kates (2) +
10.9		Employment Agreement between the Company and David A. Loppert (2) +
10.10		rVue Holdings, Inc. 2010 Equity Incentive Plan (2) +
10.11		Form of Incentive Stock Option Grant (2) +
10.12		Form of Non-Qualified Stock Option Grant (2) +
10.16		Form of Bridge Loan Note Purchase Agreement (3)
10.17		Form of Bridge Loan Secured Promissory Note (3)
10.18		Form of Bridge Loan Security Agreement (3)
10.19		Agreement between RMS Networks, Inc. and Mattress Firm, Inc. dated November 15, 2005 (4)
10.20		Services Agreement between Accenture LLP and RMS Networks, Inc. effective as of April 26, 2006, as amended (4)
10.21		rVue Services and License Agreement by and between Argo Digital Solutions, Inc and Levoip Corporation dated as of May 5, 2009 (4)
31.1		Certification by Chief Executive Officer, pursuant to Exchange Act Rules 13A-14(a) and 15d-14(a) *
31.2		Certification by Chief Financial Officer, pursuant to Exchange Act Rules 13A-14(a) and 15d-14(a) *
32		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **

* Filed herewith ** Furnished herewith + Management contract or compensatory plan or arrangement
(1) Incorporated by reference to the copy of such document included as an exhibit to our Current Report on Form 8-K filed on April 21, 2010.
(2) Incorporated by reference to the copy of such document included as an exhibit to our Current Report on Form 8-K filed on May 19, 2010.
(3) Incorporated by reference to the copy of such document included as an exhibit to our Current Report on Form 8-K/A filed on October 27, 2010.
(4) Incorporated by reference to the copy of such document included as an exhibit to our Current Report on Form 8-K/A filed on December 3, 2010.

RVUE HOLDINGS, INC. Reports

Also read

Attached files