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 December 19, 2012 is as follows:

RVUE HOLDINGS, INC.

TABLE OF CONTENTS

rVUE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

rVUE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

rVUE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012

(unaudited)

rVUE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

RVUE HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements
(unaudited)

Note 1 – Summary of Significant Accounting Policies

rVue Holdings, Inc., formerly known as Rivulet International, Inc. (“We”, “rVue” or the “Company”), was incorporated in the State of Nevada on November 12, 2008. We are an advertising technology company that has developed and operates an integrated advertising exchange and digital distribution platform – rVue – for the Digital Out-of-Home (“DOOH”) industry.

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. 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 developments 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, 2011, included in our Annual Report on Form 10-K (the “2011 Form 10-K”).

The unaudited condensed consolidated statement of operations for the nine months ended September 30, 2012 is not necessarily indicative of the results that may be expected for the entire year.

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 $9,363,199 at September 30, 2012. 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. On September 10, 2012, we raised an additional $1,200,000 through the sale of common stock that also triggered the conversion of secured convertible promissory notes (the “New Notes”) that had been issued between January 27, 2012 and July 24, 2012, into 42,301,442 shares of Common Stock.

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.

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 nine months ended September 30, 2012 and 2011, diluted loss per common share has not been computed by giving effect to all potentially dilutive common shares that were outstanding during the nine months ended September 30, 2012 and 2011. 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, and shares issuable upon the conversion of notes.

RVUE HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements
(unaudited)

The following table sets forth the computation of basic and diluted loss per common share:

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 September 30, 2012, and December 31, 2011:

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 three of our customers accounted for 41.0%, 31.4% and 24.5% of total accounts receivable at September 30, 2012, and 72.8% and 19.0% from two of our customers at December 31, 2011. We had no allowance for doubtful accounts at either September 30, 2012 or at December 31, 2011.

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.

RVUE HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements
(unaudited)

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 September 30, 2012 and December 31, 2011 were as follows:

The fair value of the money market funds, classified as Level 1, utilized quoted prices in active markets. The fair value of derivative liabilities, classified as Level 3, utilized a simulation analysis using a binomial lattice model and other unobservable inputs.

Rollforward of Level 3 Liabilities

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 September 30, 2012:

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 liabilities for the nine- month period ended September 30, 2012:

Note 6 – Condensed Consolidated Financial Statement Details

The following tables show the Company’s condensed consolidated financial statement details as of September 30, 2012 and December 31, 2011:

RVUE HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements
(unaudited)

Depreciation expense was $28,598 and $34,857 for the nine months ended September 30, 2012 and 2011, respectively.

Amortization expense was $394,070 and $484,317 for the nine months ended September 30, 2012 and 2011, respectively.

Note 7 – Convertible Notes

In November and December 2011 we entered into certain Promissory Note Purchase Agreements (“PNPAs”) in the aggregate principal amount of $285,000 with certain investors, including our Chief Executive Officer and our Chief Financial Officer (the “PNPA Investors”). We issued $285,000 of Secured Convertible Secured Promissory Notes (the “Notes”). The Notes are secured by all of our assets and bear interest at the rate of 6% per annum. Principal and accrued interest is due at maturity on December 19, 2012. In the event we enter into a strategic investment prior to December 19, 2012, the holder may, at their option, convert the unpaid principal and interest into shares of our common stock at 75% of the price paid by the strategic investor. At maturity, at the option of the holder, unpaid principal and interest may be converted into shares of our common stock at a conversion price of $.25.

We determined that the embedded conversion feature in the Notes is a derivative as defined in Accounting Standards Codification Topic 815, Derivatives and Hedging, (“ASC 815”). The key factors in this analysis included: (i) determining that the conversion feature met the definition of a derivative, and (ii) that a scope exception was not applicable to the Company, as the conversion feature was not considered indexed to the Company’s own stock, due to the various potential adjustments to the conversion price.

RVUE HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements
(unaudited)

Derivative financial instruments are initially measured at their fair value and are then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. At November 30, 2011 we valued the derivative instrument at $101,600 and at December 31, 2011 we valued the derivative instrument at $100,900, recognizing a $700 change in fair value.

The initial fair value of the derivative was recorded as a reduction of the Notes. This original issue discount will be amortized as interest expense over the term of the Notes. At December 31, 2011, the Notes were carried at $185,248, which is net of unamortized original issue discount of $101,600. On January 27, 2012 the Notes, which with accrued interest, had an outstanding balance of $288,067, were exchanged, as discussed below. The Notes were carried at $193,911, net of unamortized original issue discount of $76,700, resulting in a loss on early extinguishment of the Notes of $17,456, and a gain of $24,200 on the change in the fair value of derivatives.

On January 27, 2012, we entered into Secured Promissory Note Purchase Agreements (“New Agreements”) with investors (“New Investors”) for the purchase of promissory notes (“New Notes”) with an aggregate principal amount of $935,000. The PNPA Investors agreed to convert their Notes, totaling $288,067, into New Notes. We issued to the New Investors and the PNPA Investors New Notes with an aggregate principal amount of $1,223,067 and warrants to purchase 3,057,666 shares of our common stock at $.20 per share, exercisable for a period of five years (the “Series C Warrants”). The New Notes are secured by all of our assets and bear interest at the rate of 6% per annum. Principal and accrued interest is due at maturity on January 31, 2013 (the “Maturity Date”). If, prior to maturity, we consummate a financing or related financing of equity securities with aggregate gross proceeds of a least $500,000 (collectively, a “Subsequent Offering”) then all of the unpaid principal amount of the New Notes and any accrued but unpaid interest thereon shall automatically be deemed converted into fully paid and non-assessable securities of the Company sold in the Subsequent Offering (the “Subsequent Offering Securities”) on the same terms and conditions as the other investors in the Subsequent Offering; provided, however, that the number of Subsequent Offering Securities to be issued to the holders of the New Notes upon such conversion shall be equal to the quotient, rounded to the nearest whole number, obtained by dividing (x) the unpaid principal amount of the New Note plus any accrued but unpaid interest thereon by the lower of (y) 70% of the price per security issued in the Subsequent Offering or (z) $.20 (the “Conversion Price”). If no Subsequent Offering is closed by the Company by the Maturity Date, then all of the unpaid principal and interest due under the New Notes will be due and payable, and may, at the option of the holder, be converted into shares of our common stock at a conversion price of $0.20. In the event that we fail to raise $1.5 million in common equity by July 24, 2012, the Conversion Price shall be reduced from $.20 to $.10 and the exercise price of the Series C Warrants shall be reduced to $.10 (“Ratchet Provision”).

On May 10, 2012, we amended the New Agreement to: (i) increase the maximum aggregate principal amount of the Notes issuable under the New Agreement to $1,775,000 from $1,275,000, (ii) remove the ratchet provision in the New Agreement and all references thereto in the Notes and Warrants, and (iii) change the collateral agent with respect thereto.

On May 11, 2012, we issued additional New Notes in the aggregate principal amount of $300,000 and Series C Warrants to purchase 750,000 shares of our common stock at $0.20 per share, exercisable for a period of five years to an entity that is wholly owned by a stockholder and director of ours. We received net proceeds of $300,000 from the sale of these additional New Notes.

On July 24, 2012, we issued additional New Notes in the aggregate principal amount of $200,000 and Series C Warrants to purchase 500,000 shares of our common stock at $0.20 per share, exercisable for a period of five years to an entity that is wholly owned by a stockholder and director of ours. We received net proceeds of $200,000 from the sale of these additional New Notes.

We determined that the embedded conversion feature in the New Notes and the Series C Warrants are derivatives as defined in ASC 815. At January 27, 2012 we valued the embedded derivative conversion feature of the New Notes at $705,100 and the Series C Warrants at $.134 per warrant. The initial fair value of the embedded conversion feature and warrants was recorded as a reduction of the New Notes. This original issue discount will be amortized as interest expense over the term of the Notes. We valued the embedded derivative conversion feature of the New Notes issued on May 11, 2012 at $167,000 and the Series C Warrants at $0.147 per warrant. We valued the embedded derivative conversion feature of the New Notes issued on July 24, 2012 at $53,900 and the Series C Warrants at $0.086 per warrant. The initial fair value of the embedded conversion feature and warrants was recorded as a reduction of the New Notes. This original issue discount will be amortized as interest expense over the term of the Notes. The warrants issued with the New Notes on May 11, 2012 and July 24, 2012 did not meet the definition of a derivative, and were recorded as additional paid-in capital.

RVUE HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements
(unaudited)

Pursuant to the amended New Agreements discussed above, the ratchet provision contained in the original agreements has been removed. Since the Series C Warrants no longer had derivative features as a result of the modification, the amount of derivative warrant liabilities associated with the shares have been reclassified from derivative warrant liabilities to additional paid-in capital. The amount reclassified due to this modification was $446,419. As discussed above, the embedded derivative conversion feature contains other adjustment provisions in addition to the Ratchet Provision, and the removal of the Ratchet Provision did not change the classification of the embedded derivative conversion feature as a derivative liability.

On September 10, 2012, we sold 20,000,000 shares of Common Stock to Acorn Composite Corporation (“Acorn”), for an aggregate cash purchase price of $1,200,000 (the “Equity Financing”).  The shares of Common Stock were issued to Acorn without registration in reliance upon the exemption provided by Section 4(2) of the Securities Act of 1933, as amended, as a transaction by the Company not involving any public offering.  

Since the Equity Financing qualifies as a Subsequent Offering, the principal of and accrued interest on the New Notes, aggregating $1,776,667, automatically converted into an aggregate of 42,301,442 shares of Common Stock upon consummation of the Equity Financing.  Prior to conversion, the New Notes were carried at $1,164,658, which includes accrued interest of $53,594 and which is net of unamortized original issue discount of $612,009 and the embedded conversion feature was valued at $761,426. Upon conversion of the debt, the Company recorded a loss on early extinguishment of debt of $635,172.

As of December 7, 2012, Robert Roche, a member of our Board of Directors, is deemed to beneficially own 42,654,878 shares of Common Stock, or 40.2%, consisting of: (i) 200,000 shares issuable upon exercise of options that are exercisable within 60 days, (ii) 36,821,545 shares that are owned by Acorn (of which Mr. Roche is the sole owner and therefore may be deemed to have voting and dispositive power over such securities) and (iii) 5,833,333 shares issuable upon the exercise of warrants that are exercisable within 60 days that are owned by Acorn.

Note 8 - Income Taxes

There is no income tax benefit for the losses for the nine-month periods ended September 30, 2012 and 2011, respectively, 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.

Our policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. At December 31, 2011, we had no unrecognized tax benefits, or any tax related interest or penalties. There were no changes in unrecognized tax benefits during the period ended September 30, 2012. We did not recognize any interest or penalties during 2011 related to unrecognized tax benefits, or through the period ended September 30, 2012.

Note 9 - Stockholders’ Equity and Stock Based Compensation

Equity Awards

Stock Option Activity

A summary of the Company’s stock option activity for the nine-month period ended September 30, 2012 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.

RVUE HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements
(unaudited)

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.

We did not grant any options during the three- and nine-month periods ended September 30, 2012 or 2011.

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, 2012 and 2011:

Note 10 – Commitments and Contingencies

Other Off-Balance Sheet Commitments

We lease our Ft. Lauderdale office space under a non-cancelable operating lease. 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, we entered into a one-year lease agreement for an office in an executive office complex in New York City. As of September 30, 2012, our total future minimum lease payments under these non-cancelable operating leases was $57,066. Rent expense was $68,922 and $57,066 for the nine-month periods ended September 30, 2012 and 2011, respectively. We do not currently utilize any other off-balance sheet financing arrangements.

Contingencies

We are subject to certain legal proceedings that have not been adjudicated, which are 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 probable liability related to these legal proceedings that would materially adversely affect our financial condition or operating results. However, the results of legal proceedings cannot be predicted with certainty. If we fail to prevail in any of these legal matters, the operating results of a particular reporting period could be materially adversely affected.

Note 11 - Related Party Transactions and Certain Other Transactions

In September 2009 we and Argo Digital Solutions, Inc. (“Argo”), the company from whom we acquired substantially all our assets in May 2010, entered into a Transition Services Agreement (the “TSA”). Argo agreed to provide certain general and administrative services, including labor, technology, facilities and other services to us on an as needed basis in exchange for cash consideration. The TSA was terminated on May 13, 2010 and, pursuant to the Asset Purchase Agreement between us and Argo as of May 13, 2010, any and all advances and payments made by us to or on behalf of Argo and owing by Argo to us were to be repaid by Argo on or prior to May 13, 2011, with interest at ten (10%) percent per annum. At December 31, 2010, we had advanced a net of $172,012 to Argo, including accrued interest of $9,753. On January 17, 2011, Argo repaid the balance then outstanding in full.

RVUE HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements
(unaudited)

We paid a consulting fee of $10,000 to one of our 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 our business during the nine-month period ended September 30, 2011.

In March 2011, we entered into a Consulting/Services Agreement to facilitate the marketing and promotion of direct TV advertised products with Acorn, an entity that is wholly owned by Robert Roche, a stockholder and director of ours who beneficially owns 40.2% of our outstanding shares of Common Stock as of November 1, 2012. We did not record any significant revenue under this contract in either of the nine-month periods ended September 30, 2012 or 2011.

In January 2012, in connection with the sale of the New Notes, we agreed to reimburse an investor (the “Lead Investor”) $65,000 for costs and expenses incurred by it (including, without limitation, legal and administrative fees) payable in cash or shares of our Common Stock at our election. On February 8, 2012, we issued 325,000 shares of our Common Stock to the Lead Investor as payment. Robert Roche, who is the sole stockholder of Acorn, is the grantor of the trust that controls the majority member of the Lead Investor. His sister is the manager of both the Lead Investor and the majority member of the Lead Investor. As of November 8, 2012, the Lead Investor beneficially owns 17.6% of our outstanding Common Stock. Mr. Roche disclaims any beneficial ownership of securities held by the Lead Investor as he does not have voting or dispositive powers over such securities. In addition another one of our directors is a minority member of the Lead Investor.

In May 2012, the Company and the Lead Investor agreed to amend the agreement with the investors in the New Notes to: (i) issue up to an additional $500,000 of Notes, (ii) remove the ratchet language providing for an adjustment to the conversion price of the Notes and the exercise price of the Warrants in the event $1.5 million in common equity was not raised by the Company within 180 days of the original sale of the Notes, and (iii) change the collateral agent from David A. Loppert to Theresa M. Roche.

On May 11, 2012, the Company issued additional New Notes in the aggregate principal amount of $300,000 (out of the additional $500,000 that was just authorized) and Series C Warrants to purchase 750,000 shares of our common stock (the “Warrant Stock”), at $.20 per share (the “Warrant Price”) exercisable for a period of five years to Acorn. We received net proceeds of $300,000 from the sale of these additional New Notes. On July 24, 2012, the Company issued additional New Notes in the aggregate principal amount of $200,000 and Series C Warrants to purchase 500,000 shares of Warrant Stock at $.20 per share exercisable for a period of five years to Acorn. We received net proceeds of $200,000 from the sale of these additional New Notes.

The Warrant Stock may be redeemed prior to the expiration date of the Warrants, at the option of the Company, at a price of $.001 per share (the “Redemption Price”) upon 10 days written notice to the Holder; provided that (i) our shares of common stock have had a closing sales price greater than $1.00 per share for twenty (20) consecutive trading days and (ii) at the date of the redemption notice and during the entire redemption period there is an effective registration statement covering the resale of the Warrant Stock. The Warrant may be exercised by the Holder, for cash, at any time after notice of redemption has been given by the Company and prior to the time and date fixed for redemption. On and after the redemption date, the Holder shall have no further rights except to receive, upon surrender of the Warrant, the Redemption Price of the applicable Warrant Stock.

In July 2012, the Company entered into a consulting agreement with the previous chief executive officer and shareholder for continued business and technical development services. Under the consulting agreement, the Company is obligated to grant 500,000 shares of restricted stock which vests in twelve months beginning on the first month anniversary of the date of the grant. We paid a consulting fee of $27,000 under the consulting contract during the nine-month period ended September 30, 2012.

On September 10, 2012, we sold 20,000,000 shares of Common Stock to Acorn, for an aggregate cash purchase price of $1,200,000.  Since the Equity Financing qualifies as a Subsequent Offering, the principal of and accrued interest on the New Notes, aggregating $1,776,667, automatically converted into an aggregate of 42,301,442 shares of Common Stock upon consummation of the Equity Financing.  Immediately following the consummation of the Equity Financing and the Note Conversions, the Company had 100,691,954 shares of Common Stock issued and outstanding.

As of December 7, 2012, Robert Roche, a member of our Board of Directors, is deemed to beneficially own 42,654,878 shares of Common Stock, or 40.2%, consisting of: (i) 200,000 shares issuable upon exercise of options that are exercisable within 60 days, (ii) 36,821,545 shares that are owned by Acorn (of which Mr. Roche is the sole owner and therefore may be deemed to have voting and dispositive power over such securities) and (iii) 5,833,333 shares issuable upon the exercise of warrants that are exercisable within 60 days that are owned by Acorn.

RVUE HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements
(unaudited)

Following the conversion of the Notes, the first priority security interest on all of the Company’s and its subsidiaries’ assets that was held by the holders of the Notes was terminated.

Note 12 – Supplemental Non-Cash Information

During the nine months ended September 30, 2012, the Company modified the warrants resulting in a reclassification of the derivative warrant liability to equity totaling $446,419. Additionally during the nine months ended September 30, 2012, the Company paid debt issuance costs of $95,000 by issuing 475,000 shares of its stock. The remaining amortization of these debt issuance costs totaling $42,778 were offset against the conversion of the Company’s Notes on September 10, 2012.

There were no non-cash transactions noted for the nine months ended September 30, 2011.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This section and other parts of this Form 10-Q contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those Risk Factors discussed in Part II, Item 7, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 (the “2011 Form 10-K”) filed with the U.S. Securities and Exchange Commission (“SEC”). The following discussion should be read in conjunction with the 2011 Form 10-K and the Condensed Consolidated Financial Statements and notes thereto included elsewhere in this Form 10-Q. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Available Information

The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) are filed with the SEC. Such reports and other information filed by the Company with the SEC are available on the Company’s website at www.rvue.com when such reports are available on the SEC website. The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy, and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only.

Executive Overview

We are an advertising technology company and operate rVue, a demand-side platform (“DSP”) for planning, buying and managing Digital Place-Based Networks and Digital Billboards and Signage (collectively “Digital Out-of-Home” or “DOOH”) advertising. We provide media services, including an online, internet based DSP that 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. Through our strategic media services group, we execute campaigns on behalf of advertising clients or their agencies. We earn transaction fees for processing these transactions.

As of December 14, 2012, 182 networks comprising approximately 93,677 locations and 752,031 screens representing the top 50 DMAs were accessible through rVue, delivering approximately 252 million daily impressions.  Through our strategic media services group, we execute complete campaigns on behalf of advertising clients or their agencies.

We also provide network services and receive fees, either under contract or on a monthly basis, from three clients for which we receive monthly fixed fees of $31,975 plus additional amounts for special projects. We expect to continue to receive revenue from these three clients 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 advertising revenue and transaction fees from rVue as discussed above.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions, and estimates that affect the amounts reported in its condensed consolidated financial statements and accompanying notes. Note 1, “Summary of Significant Accounting Policies” of this Form 10-Q and in the Notes to Consolidated Financial Statements in the Company’s 2011 Form 10-K describes the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates and such differences may be material.

Management believes the Company’s critical accounting policies and estimates are those related to software development costs, derivative instruments, revenue recognition, stock-based compensation and income taxes. Management considers these policies critical because they are both important to the portrayal of the Company’s financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters. The Company’s senior management has reviewed these critical accounting policies and related disclosures with the Audit Committee of the Company’s Board of Directors.

Results of Operations

Three Months Ended September 30, 2012 and 2011:

Our unaudited results of operations for the three-month periods ended September 30, 2012 and 2011 were as follows:

Revenue

Revenue was $114,238 for the three-month period ended September 30, 2012 compared to $117,399 for the three-month period ended September 30, 2011, a $3,161 decline, or 2.7%. We earned revenue as follows:

rVue fees

rVue fees were $18,313 for the three-month period ended September 30, 2012, a $16,161 improvement over the $2,152 rVue fees for the three-month period ended September 30, 2011. While the majority of our revenue historically has been from network services and license fees, the development of the rVue platform and generating revenue and fees is the focus of our business. As the rVue platform gains traction with advertisers and agencies, we expect to generate additional revenue and fees in 2012 from advertisers and agencies for placing advertising with DOOH 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 2012 and beyond. We cannot assure you that advertisers or agencies will accept the rVue platform as their platform of choice for placing advertising with DOOH networks.

Network

Network revenue was $95,925 for the three-month period ended September 30, 2012, a $19,322, or 16.8%, decrease compared to the $115,247 for the three-month period ended September 30, 2011. We earned fixed monthly fees of $31,975 from two clients and fees from special projects from one client. We expect to continue to receive revenue from these services to these clients for the next twelve months, but we do not intend to pursue additional network-related service opportunities as the focus of our business is the rVue platform.

Cost of Revenue

Cost of revenue consists primarily of expenses for the purchase of advertising impressions from third-party networks, the cost to deliver network services and the cost of producing content for our network clients.

Cost of revenue was $22,300 for the three-month period ended September 30, 2012 compared to $46,396 for the three-month period ended September 30, 2011, a $24,096 decline, or 51.9%, and was comprised of:

Selling, general and administrative expenses

Selling, general and administrative expenses (“SG&A”) were $509,510 for the three-month period ended September 30, 2012, compared to $767,613 for the three-month period ended September 30, 2011, a $258,103 decrease, or 33.6%. Changes by major component of SG&A are:

Compensation and benefits decreased $133,715, or 36.5% for the three months ended September 30, 2012 when compared to the three months ended September 30, 2011. This change was due to an $59,087 reduction in the amount of payroll costs being capitalized for software development, a reduction in payroll of $152,857 due to staff reductions that were implemented in the three months ended September 30, 2012, a $20,260 reduction in the vacation accrual for recent staff reductions, a $12,864 reduction in healthcare costs due to staff reductions and a reduction of payroll tax expense of $6,821 due to lower payroll costs.

Stock-based compensation expense varies depending on the term over which the options vest. Options that were granted in 2010 and 2011 have now vested and are fully expensed, resulting in a lower expense in the three-month period ended September 30, 2012 compared to the expense for the three-month period ended September 30, 2011.

Advertising and marketing expense decreased by $20,293, or 83.4%, in the three-month period ended September 30, 2012, when compared to the three-month period ended September 30, 2011.

Investor relations and investment banking fees for the three-month period ended September 30, 2012 decreased $122,280, or 97.3%, when compared to the three-month period ended September 30, 2011. The Company ended its agreement with its investor relations representative to reduce its operating costs.

Professional and consulting fees for the three-month period ended September 30, 2012 were up $78,611, or 83.3%, compared to the three-month period ended September 30, 2011. Consulting fees increased approximately $27,000 due to consulting fees paid to former CEO Jason Kates, as prescribed in his separation agreement plus $48,000 paid to ODK Capital Management, legal fees decreased $15,677, fees related to SEC filings and Sarbanes-Oxley work decreased $10,018 and directors’ fees increased $5,000 while accounting and other fees increased $4,475.

Depreciation and amortization

Depreciation and amortization was $126,979 for the three-month period ended September 30, 2012 compared to $209,781 for the three-month period ended September 30, 2011, a $82,802 decline, or 39.5%. For the three-month period ended September 30, 2012, depreciation and amortization expense for software development was $99,479, while amortization of loan costs was $27,500. For the three-month period ended September 30, 2011, depreciation and amortization expense was mainly for software development.

Interest income

Interest income was $93 for the three-month period ended September 30, 2012 compared to $339 for the three-month period ended September 30, 2011, a $246 decline, or 72.6%. Interest income is a function of cash on hand.

Interest expense

We issued Notes in November 2011 and New Notes in January and May 2012. The interest on these notes accrues at 6% per annum and totaled $19,833 for the three-month period ended September 30, 2012. The original issue discount represents the amortization of the initial value of the embedded derivative components of the Notes and New Notes, as more fully discussed in Note 7 to our Condensed Consolidated Financial Statements. These Notes were redeemed on September 10, 2012.

Nine Months Ended September 30, 2012 and 2011:

Our unaudited results of operations for the nine-month periods ended September 30, 2012 and 2011 were as follows:

Revenue

Revenue was $353,161 for the nine-month period ended September 30, 2012, compared to $462,341 for the nine-month period ended September 30, 2011, a $109,180 decline, or 23.6%. We earned revenue as follows:

rVue fees

rVue fees were $46,142 for the nine-month period ended September 30, 2012, a decrease of $80,453, or 63.6%, when compared to the $126,595 for the nine-month period ended September 30, 2011. While the majority of our revenue historically has been from network services and license fees, the development of the rVue platform and generating revenue and fees is the focus of our business. As the rVue platform gains traction with advertisers and agencies, we expect to generate additional revenue and fees in 2012 from advertisers and agencies for placing advertising with DOOH 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 2012 and beyond. We cannot assure you that advertisers or agencies will accept the rVue platform as their platform of choice for placing advertising with DOOH networks.

Network

Network revenue was $307,019 for the nine-month period ended September 30, 2012, a decrease of $28,727, or 8.6%, when compared to network revenue of $335,746 for the nine-month period ended September 30, 2011. We earned fixed monthly fees of $31,975 from two clients and fees from special projects from one client. We expect to continue to receive revenue from these services to these clients for the next twelve months, but we do not intend to pursue additional network-related service opportunities as the focus of our business is the rVue platform.

Cost of Revenue

Cost of revenue was $93,560 for the nine-month period ended September 30, 2012 compared to $195,882 for the nine-month period ended September 30, 2011, a decrease of $102,322, or 52.2%. This cost was comprised of:

Cost of revenue consists primarily of expenses for the purchase of advertising impressions from third-party networks, the cost to deliver network services and the cost of producing content for our network clients. Compensation and benefits included $4,200 of severance paid during the nine months ended September 30, 2012.

Selling, general and administrative expenses

Selling, general and administrative expenses (“SG&A”) were $1,965,648 for the nine-month period ended September 30, 2012, compared to $2,579,642 for the nine-month period ended September 30, 2011, a $596,177 decrease, or 23.8%. Changes by major component of SG&A are:

Compensation and benefits increased $57,023, or 5.8%. Payroll decreased $70,632 and included $17,840 of severance and $38,000 of deferred compensation paid during the nine months ended September 30, 2012. In the nine months ended September 30, 2011, we had hired outside professionals to run our managed services group and we paid them $193,668. Those services are now provided by our employees. Payroll taxes and costs increased $6,867 and insurance increased by $13,619, all as a result of increased rates and costs. The vacation accrual decreased $78,583 due to staff reductions, while relocation and temporary labor costs decreased $26,402. The amount of payroll that was capitalized for software development decreased by $190,724.

Stock-based compensation expense varies depending on the term over which the options vest. Options that were granted in 2010 and 2011 have now vested and are fully expensed, resulting in a lower expense in the nine-month period ended September 30, 2012 when compared to the expense for the nine-month period ended September 30, 2011.

Advertising and marketing expense declined by $115,347, or 78.6%, in the nine-month period ended September 30, 2012 compared to the nine-month period ended September 30, 2011. The nine-month period ended September 30, 2011 included $80,000 for a one-time momentum advertising program.

Investor relations and investment banking fees for the nine-month period ended September 30, 2012 decreased $172,216, or 56.2%, when compared to the nine-month period ended September 30, 2011. This reduction is primarily due to the Company’s termination of its agreement with its investor relations representative to reduce its operating costs.

Professional and consulting fees for the nine-month period ended September 30, 2012 increased $113,147, or 38.1%, compared to the nine-month period ended September 30, 2011. Consulting fees increased approximately $96,200 due to consulting fees paid to former CEO Jason Kates, as prescribed in his separation agreement plus $48,000 paid to ODK Capital Management, legal fees increased approximately $14,452, fees related to SEC filings and Sarbanes-Oxley work increased approximately $9,127 and directors’ fees increased approximately $11,667 while recruiting fees and accounting and other fees decreased approximately $16,174 and $2,125, respectively.

Managed services costs, which were $200,356 for the nine-month period ended September 30, 2011,were eliminated in the second half of 2011 resulting in no comparable expense in the nine-month period ending September 30, 2012. These services are now provided by our employees.

Depreciation and amortization

Depreciation and amortization was $422,668 for the nine-month period ended September 30, 2012 compared to $519,174 for the nine-month period ended September 30, 2011, a decrease of $96,506, or 18.6%. Except for $54,375 of loan cost amortization in the nine-month period ended September 30, 2012, depreciation and amortization expense is mainly for software development.

Interest income

Interest income was $263 for the nine-month period ended September 30, 2012 compared to $3,601 for the nine-month period ended September 30, 2011, a decrease of $3,338, or 92.7%. Interest income is a function of cash on hand.

Interest expense

We issued Notes in November 2011 and New Notes in January 2012 and May 2012. The interest on these notes accrues at 6% per annum and totaled $54,935 for the nine-month period ended September 30, 2012. The original issue discount represents the amortization of the initial value of the embedded derivative components of the Notes and New Notes, as more fully discussed in Note 7 to our Condensed Consolidated Financial Statements.

Loss on early extinguishment of debt

Holders of the Notes exchanged those Notes for New Notes in January 2012, resulting in a loss on extinguishment of debt of $17,456 in January 2012. Upon conversion of the New Notes in September 2012, the Company recognized a loss on extinguishment of debt of $635,172.

Except as discussed above, our results of operations for the nine-month periods ended September 30, 2012 and 2011 did not contain any unusual gains or losses from transactions not in our 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 September 30, 2012, we had cash and cash equivalents totaling $971,168. Since our inception, we have incurred net losses, and at September 30, 2012, we had an accumulated deficit of $9,363,199 and total stockholders’ equity of $561,456. We expect to continue to incur losses in fiscal 2012. 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, 2012. We have budgeted capital expenditures of approximately $200,000 for fiscal 2012, primarily capitalized labor for software development. 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 the nine-month periods ended September 30, 2012 and 2011. While our business is marginally seasonal, we do not expect this seasonality to have a material adverse effect on our results of operations or cash flows.

Cash used in operating activities

Net cash used in operating activities totaled $1,526,177 for the nine-month period ended September 30, 2012 compared to $1,736,180 for the nine-month period ended September 30, 2011. In the nine-month period ended September 30, 2012, cash was used to fund a net loss of $3,585,614, reduced by non cash depreciation of $422,668, stock-based compensation expense of $23,602, common stock issued for services valued at $50,947, convertible loan interest of $1,033,716, a net gain in the fair value of derivative liabilities of $229,182, a loss on early extinguishment of debt of $652,628, and changes in operating assets and liabilities totaling $105,057.

In the nine-month period ended September 30, 2011, cash was used to fund a net loss of $2,828,756, reduced by non cash depreciation of $519,174, stock-based compensation expense of $299,545 and common stock issued for services valued at $14,000. This cash usage was partially offset by changes in operating assets and liabilities totaling $17,897.

Cash used in investing activities

Net cash used in investing activities totaled $157,572 for the nine-month period ended September 30, 2012 compared to $247,249 of net cash used by investing activities in the nine-month period ended September 30, 2011. In the nine-month period ended September 30, 2012, cash used in investing activities consisted of $157,572 for software development costs. In the nine-month period ended September 30, 2011, cash used in investing activities consisted of $415,283 for software development costs and $3,978 for deposits, reduced by $172,012 repaid by Argo.

Cash from financing activities

Net cash provided by financing activities totaled $2,635,000 for the nine-month period ended September 30, 2012. The cash-generating activities included the issuance of New Notes totaling $1,435,000 plus the issuance of Common Stock of $1,200,000. We had no financing activities in the nine-month period ended September 30, 2011.

Financial condition

As of September 30, 2012, we had a working capital surplus of $461,431, an accumulated deficit of $9,363,199 and total stockholders’ equity of $561,456, compared to a working capital deficit of $670,911, an accumulated deficit of $5,777,585 and total stockholders’ deficit of $362,196 at December 31, 2011. The improvement in our financial condition was due to the successful raise of $2,635,000 of equity that was offset by an increase in our net loss, the use of cash on hand, the amortization of the original issue discount associated with the Notes and New Notes, and the change in the fair value of our derivative instruments.

We believe that with the cash we have on hand and the cash we expect to raise through future securities issuances, that we will have sufficient funds available to cover our cash requirements through the next twelve months. We further expect that key strategic relationships that we have entered into and that we expect to enter into will lead to additional revenue opportunities.

At December 31, 2011 our registered independent public accounting firm expressed substantial doubt as to our ability to continue as a going concern because, since inception, we have incurred substantial losses and negative cash flows from operations. Management’s plans to address these concerns include (i) having raised $935,000 and $300,000 through the sale of convertible notes in January 2012 and May 2012, respectively, (ii) having raised $1,200,000 through the issuance of Common Stock in September 2012, (iii) staff reductions in March 2012 which will result in an approximately $430,000 of annual savings, (iv) a hiring and expansion freeze, including the abandonment of plans to open new offices, until we generate sufficient revenue to warrant a change, and (v) entering into additional strategic relationships which are expected to lead to additional revenue opportunities.

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.

Item 3. Quantitative And Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act were not effective as of September 30, 2012, to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In response to the identified material weaknesses, the Company is working on improving its control activities. Management believes that actions recently taken, along with other improvements not yet implemented, will address the material weaknesses in the Company’s internal control over financial reporting. Company management plans to continue to review and make changes to overall design of its control environment, including the roles and responsibilities within the organization and reporting structure, as well as policies and procedures to improve the overall internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the three and nine-month periods ended September 30, 2012, which were identified in connection with management’s evaluation required by paragraph (d) of Rule 13a-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in litigation relating to claims arising out of our operations in the normal course of business.

On or about March 8, 2011, Viewpoint Securities, Inc. commenced an action in the Circuit Court of the 17^th Judicial District in Broward County, Florida, alleging that we owe them a placement agent fee of $210,000 and warrants to purchase 175,167 shares of our common stock for purported services rendered in connection with our December 2010 private placement. On July 29, 2011, we answered their Second Amended Complaint and asserted various defenses to the claims asserted therein. Additionally, we filed a Counterclaim for rescission of the Agreement. On January 9, 2012, Viewpoint filed an amended answer to our counterclaim. We believe the case is without merit and are vigorously defending ourselves in connection therewith. In the opinion of management, we do not believe that we have a probable liability related to this legal proceeding that would materially adversely affect our financial condition or operating results. However, the results of legal proceedings cannot be predicted with certainty. If we fail to prevail in this legal matter, the operating results of a particular reporting period could be materially adversely affected.

On or about February 22, 2012, Brooke Capital Investments LLC commenced an action in the Circuit Court of the 17^th Judicial District in Broward County, Florida, alleging that we owe them 750,000 shares of our common stock for services rendered in connection with an amended Investor Relations Consulting Agreement that we entered into with Brooke. On April 10, 2012, we answered their Complaint and asserted various defenses to the claims asserted therein. Additionally, we filed a Counterclaim for rescission of the Agreement. We believe the case is without merit and intend to vigorously defend ourselves in connection therewith. In the opinion of management, we do not believe that we have a probable liability related to this legal proceeding that would materially adversely affect our financial condition or operating results. However, the results of legal proceedings cannot be predicted with certainty. If we fail to prevail in this legal matter, the operating results of a particular reporting period could be adversely affected.

On or about September 14, 2012, Casville Investments, Ltd, MBC Investment, SA, and Watkins International, LTD., individually and derivatively on behalf of Argo Digital Solutions, Inc. (“Plaintiffs”), commenced an action in the United States District Court for the Southern District of New York alleging various claims against the Company, certain of its former employees, and Argo Digital Solutions, Inc. (“Argo”).  Plaintiffs allege misconduct related to the alleged sale of Argo’s stock and assets.  We believe the case is without merit and intend to vigorously defend ourselves in connection therewith. In the opinion of management, we do not believe that we have a probable liability related to this legal proceeding that would materially adversely affect our financial condition or operating results. However, the results of legal proceedings cannot be predicted with certainty. If we fail to prevail in this legal matter, the operating results of a particular reporting period could be adversely affected.

Item 1A. Risk Factors.

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

SIGNATURE

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.