UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                             ----------------------
                                   FORM 10-QSB


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

               FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 2005


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

             FOR THE TRANSITION PERIOD FROM __________ TO __________

                        COMMISSION FILE NUMBER 000-23305

                       FIRST VIRTUAL COMMUNICATIONS, INC.
                       ----------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


                     DELAWARE                                77-0357037
                     --------                                ----------
         (State or Other Jurisdiction of                  (I.R.S. Employer
          Incorporation or Organization)                 Identification No.)

        303 TWIN DOLPHIN DRIVE, SUITE 600
                 REDWOOD CITY, CA                              94065
                 ----------------                              -----
     (Address of Principal Executive Offices)                (Zip Code)

                                 (650) 801-6500
                                  -------------
              (Registrant's Telephone Number, Including Area Code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, $0.001
PAR VALUE

      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 [ ] No [X]

      Indicate by check mark whether the Registrant is an accelerated  filer (as
defined in Rule 121(b)2 of the Securities Exchange Act of 1934). Yes [ ] No [X]

      State the  number of shares  of Common  Stock  outstanding  of each of the
issuer's  classes of common  stock,  as of the latest  practicable  date:  as of
November 29, 2005 was 16,613,486.

                       DOCUMENTS INCORPORATED BY REFERENCE

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements ............................................. 1

Item 2.    Management's Discussion and Analysis ............................. 2

Item 3.    Controls and Procedures .......................................... 5

PART II.   OTHER INFORMATION

Item 1.    Legal Proceedings ................................................ 6

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds ...... 6

Item 3.    Defaults upon Senior Securities .................................. 6

Item 4.    Submission of Matters to a Vote of Security Holders .............. 6

Item 5.    Other Information ................................................ 6

Item 6.    Exhibits ......................................................... 6

                                       i

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS (Unaudited)

Condensed Consolidated Statement of Net Liabilities in Liquidation
     at September 30, 2005 ................................................. F-1

Condensed Consolidated Statements of Changes in Net Liabilities
     in Liquidation for the three and nine months ended September 30, 2005.. F-2

Condensed Consolidated Statements of Operations for the three and
     nine months ended September 30, 2004, Going Concern Basis ..............F-3

Condensed Consolidated Statement of Cash Flow for the nine months
     ended September 30, 2004, Going Concern Basis ......................... F-4

Notes to Condensed Consolidated Financial Statements ....................... F-5

                                       1

<PAGE>

--------------------------------------------------------------------------------
                       FIRST VIRTUAL COMMUNICATIONS, INC.
                       CONDENSED CONSOLIDATED STATEMENT OF
                         NET LIABILITIES IN LIQUIDATION
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)
                             (AMOUNTS IN THOUSANDS)
--------------------------------------------------------------------------------

                               ASSETS

Cash and cash equivalents                                               $ 1,701
                                                                        -------
Total assets in liquidation                                             $ 1,701
                                                                        =======

                             LIABILITIES

Estimated settlements to unsecured creditors                            $   500
Estimated liquidation expenses                                            1,573
                                                                        -------
Total liabilities in liquidation                                          2,073
                                                                        -------
Net liabilities in liquidation                                          $  (372)
                                                                        =======

--------------------------------------------------------------------------------
         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.

                                      F-1

<PAGE>

--------------------------------------------------------------------------------
                       FIRST VIRTUAL COMMUNICATIONS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
                         NET LIABILITIES IN LIQUIDATION
             FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005
                                   (Unaudited)
                             (Amounts in thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                         Three Months Ended         Nine Months Ended
                                                         September 30, 2005        September 30, 2005
                                                         ------------------        ------------------
<S>                                                      <C>                         <C>
Changes in net liabilities in liquidation:

Cash and cash equivalents                                    $  (154)                   $ 1,041
Accounts receivable                                               --                     (1,681)
Property and equipment                                            --                        (57)
Intangible assets                                                 --                     (4,360)
Secured liability settlements                                     --                      4,458
Estimated liquidation expenses                                   189                      1,531
                                                             -------                    -------
Decrease in net liabilities in liquidation                        35                        932
Net liabilities in liquidation at beginning of period           (407)                    (1,304)
                                                             -------                    -------
Net liabilities in liquidation at end of period              $  (372)                   $  (372)
                                                             =======                    =======
</TABLE>

--------------------------------------------------------------------------------
         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.

                                      F-2

<PAGE>

--------------------------------------------------------------------------------
                       FIRST VIRTUAL COMMUNICATIONS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004
                               GOING CONCERN BASIS
                                   (Unaudited)
                  (Amounts in thousands, except per share data)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                     Three Months Ended        Nine Months Ended
                                                     September 30, 2004        September 30, 2004
                                                     ------------------        ------------------
<S>                                                      <C>                        <C>
Revenue
      Software                                           $    994                    $  5,791
      Product                                                  --                         193
      Support service                                       1,469                       4,484
                                                         --------                    --------
           Total revenue                                    2,463                      10,468

Cost of sales
      Software                                                 28                         178
      Product                                                  --                          --
      Support service                                         444                       1,553
                                                         --------                    --------
           Total cost of sales                                472                       1,731
                                                         --------                    --------
Gross profit                                                1,991                       8,737
                                                         --------                    --------
Operating expense
      Research and development                              1,557                       5,376
      Sales and marketing                                   2,294                       8,042
      General and administrative                            1,507                       4,524
      Restructuring and other non-recurring charges         1,857                       4,792
                                                         --------                    --------
           Total operating expense                          7,215                      22,734
                                                         --------                    --------
Operating loss                                             (5,224)                    (13,997)
Other Income, net                                             248                         195
                                                         --------                    --------
Net loss                                                 $ (4,976)                   $(13,802)
                                                         ========                    ========
Basic and diluted net loss per share                     $  (0.31)                   $  (0.87)
                                                         ========                    ========
Shares used in computing basic and diluted net
   loss per share                                          16,106                      15,783
                                                         ========                    ========
</TABLE>

--------------------------------------------------------------------------------
         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.

                                      F-3

<PAGE>

--------------------------------------------------------------------------------
                       FIRST VIRTUAL COMMUNICATIONS, INC.
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
                               GOING CONCERN BASIS
                                   (Unaudited)
                             (Amounts in thousands)
--------------------------------------------------------------------------------

Cash flows from operating activities:
    Net loss                                                       $(13,802)
    Adjustments to reconcile net loss to net cash used in
       operating activities:
    Depreciation and amortization                                       901
    Provision for returns and doubtful accounts                         (23)
    Other                                                               (76)
    Changes in operating assets and liabilities:
       Accounts receivable                                              140
       Prepaid expenses and other assets                               (538)
       Accounts payable                                                 122
       Accrued liabilities                                            1,129
       Deferred revenue                                                (668)
                                                                   --------
         Net cash used in operating activities                      (12,815)
                                                                   --------
    Cash flows from investing activities:
       Acquisition of property and equipment                           (404)
       Sale of short-term investments                                   507
                                                                   --------
    Net cash provided by investing activities                           103
                                                                   --------
    Cash flows from financing activities:
       Proceeds from issuance of common stock, net                    3,705
       Payment related to issuance of common stock                     (128)
       Proceeds from drawdown of term loan                              917
       Payment on loan term debt                                       (917)
                                                                   --------
    Net cash provided by financing activities                         3,577
                                                                   --------
    Net decrease in cash and cash equivalents                        (9,135)
    Cash and cash equivalents at beginning of period                 11,562
                                                                   --------
    Cash and cash equivalents at end of period                     $  2,427
                                                                   ========

--------------------------------------------------------------------------------
         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.

                                      F-4

<PAGE>

--------------------------------------------------------------------------------
                       FIRST VIRTUAL COMMUNICATIONS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
--------------------------------------------------------------------------------

1.  DESCRIPTION OF REORGANIZATION AND SALE OF SUBSTANTIALLY ALL ASSETS

BANKRUPTCY AND REORGANIZATION

On January 20, 2005 First Virtual Communications,  Inc. ("FVC") filed Chapter 11
bankruptcy under the United States  Bankruptcy Code (the  "Bankruptcy  Code") on
behalf of itself and its wholly owned  domestic  subsidiary,  CUseeMe  Networks,
Inc.  ("CUseeMe")  (collectively,  the  "Company").  The Company  has  continued
limited   operations  as  debtors  in  possession  (the  "Debtors")   under  the
jurisdiction of the United States  Bankruptcy Court (the "Bankruptcy  Court") in
accordance  with the applicable  provisions of the Bankruptcy Code and orders of
the Bankruptcy Court.

On June 8, 2005,  the Bankruptcy  Court entered an order,  upon an amended joint
application  filed  by the  Debtors  and the  Official  Committee  of  Unsecured
Creditors  (the  "Creditors'  Committee"),  approving the  employment of Gregory
Sterling as Chief  Restructuring  Officer ("CRO") of the Debtors and designating
Mr. Sterling as the person responsible for the Debtors as debtors in possession.
The Company  reported the terms and conditions of Mr.  Sterling's  employment in
its Form 8-K filed with the  Securities and Exchange  Commission  (the "SEC") on
May 24,  2005.  Mr.  Sterling  was also  designated  as the  Plan's  Liquidating
Trustee.

On August 25, 2005,  the Company and the  Creditors'  Committee  jointly filed a
plan of reorganization  and a related  disclosure  statement with the Bankruptcy
Court that were  amended on  September  21,  2005.  On November  14,  2005,  the
Bankruptcy Court approved the amended  reorganization  plan (the "Plan"),  which
was  entered  on  November  29,  2005 (the  "Confirmation  Order"),  and  became
effective on December 12, 2005 (the "Effective Date").

The  purpose  of the Plan is to (1)  facilitate  a merger of FVC with  U.S.  Dry
Cleaning  Corporation  (i.e. a planned  reverse  Merger),  (2) make  payments to
creditors of and holders of interests  in the Debtors by  distributing  proceeds
received from the sale of the Debtors' assets (i.e. liquidation of substantially
all of the Company's assets), any amounts recovered in litigation, and any other
property  received  or  recovered  by the  related  Liquidating  Trust,  and (3)
distribute  the New Common  Stock,  as  defined,  to be issued  pursuant  to the
Merger. The assets described above shall be held by the Liquidating Trustee, who
will  administer and distribute the assets as specified in the Plan. The Plan is
intended to resolve all claims against the Debtors,  and all equity interests in
the Debtors of whatever character,  and whether or not allowed by the Bankruptcy
Court pursuant to Section 502 of the Bankruptcy Code.

The Plan calls for U.S.  Dry  Cleaning  Corporation  to merge with and into FVC.
Upon successful  completion of the Merger,  the  Liquidating  Trust will receive
275,698 shares of New Common Stock for the benefit of the  beneficiaries  of the
Liquidating  Trust in accordance with the Plan, the Liquidating Trust Agreement,
the Confirmation Order and applicable law. Additionally, the Liquidating Trustee
will receive 0.75% of common stock in the reorganized  debtor,  or approximately
63,600 shares of New Common Stock, upon successful completion of the Merger.

As more fully described in the Plan, it is anticipated  that the common stock of
the Reorganized Debtor, will begin to be publicly traded on the Over-the-Counter
Bulletin Board approximately two months following  confirmation of the Plan. For
purposes of  calculating  distributions  to be made under the Plan, the value of
the  275,698  shares of New  Common  Stock  shall be  calculated  based upon the
average  closing  bid price for a share of stock for the five (5)  trading  days
prior to the close of trading on the sixtieth day  following  the first day that
such stock was traded publicly. The Liquidating Trustee shall not distribute any
of the New  Common  Stock any  earlier  than the later of (a) the  sixtieth  day
following the first day that such stock was traded publicly, and (b) the date of
the initial  distribution  (other  than New Common  Stock) to holders of general
unsecured claims.

--------------------------------------------------------------------------------

                                      F-5

<PAGE>

--------------------------------------------------------------------------------
                       FIRST VIRTUAL COMMUNICATIONS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
--------------------------------------------------------------------------------

The  following  are certain  other  significant  provisions  of the Plan and the
Confirmation Order issued by the Bankruptcy Court:

      o     All assets and liabilities of FVC and CUseeMe were deemed merged and
            treated as though they were held and owed, respectively, by a single
            entity  for all  purposes  related  to the Plan  including,  voting,
            confirmation,  and  distribution.  No distribution  shall be made on
            account of any  intercompany  claim.  All  obligations  arising from
            guarantees  or  joint  or  several   liability  were   substantively
            consolidated,  which shall not, other than for purposes of the Plan,
            affect the legal and corporate structures of the Debtors.

      o     All executory contracts and unexpired leases were deemed rejected.

      o     On the Effective Date, all preferred and common stock interests were
            cancelled  and  extinguished.  It is expected that there will not be
            any funds available for distribution to holders of such interests.

      o     Except as otherwise  provided in the Plan, the Company  shall,  as a
            reorganized debtor,  continue to exist after the Effective Date as a
            corporate  entity,  with  all  the  powers  of a  corporation  under
            applicable law and in the  jurisdiction  in which it is incorporated
            and pursuant to its  certificate  or articles of  incorporation  and
            bylaws in effect prior to the  Effective  Date,  provided,  however,
            that as of the Effective Date, the Debtors'  property will be deemed
            to vest in the  Liquidating  Trust  consistent with the terms of the
            Plan and Liquidating Trust Agreement.

      o     Except as  otherwise  provided in the Plan,  all common stock of the
            reorganized  Debtor issued to holders of allowed  claims  (including
            common  stock to be  issued to the  CRO),  will be issued  under the
            exemption  from  registration  requirements  of  Section  5  of  the
            Securities  Act of  1933,  as  amended,  (and the  equivalent  state
            securities  laws)  provided by Section  1145(a)(1) of the Bankruptcy
            Code.

      o     Except as otherwise provided in the Plan or in any agreement entered
            into  in  connection  with  the  Plan,  on the  Effective  Date  all
            mortgages, deeds of trust, liens and any other security interests in
            or against the property of the Liquidating Trust were fully released
            and discharged,  and all right, title and interest of the holders of
            such  interests,  (including  any rights to  collateral  thereunder)
            shall remain vested in the Liquidating Trust.

      o     Except for  professionals  employed  in the  Chapter  11 cases,  all
            requests for payment of  administrative  expenses must be filed with
            the Bankruptcy  Court and served on certain parties on or before ten
            days after the Effective Date.

SALE OF ASSETS

On February 28, 2005,  following a competitive  bidding process  conducted under
the  supervision  of  the  Bankruptcy  Court,  FVC,  with  the  approval  of the
Creditors'  Committee,  accepted the offer of RADvision  Ltd.  ("RADvision")  to
purchase  substantially  all the assets of the Company for $7.15 million in cash
plus certain additional consideration, subject to Bankruptcy Court approval. The
"Purchase Agreement" consisted of an asset purchase agreement dated February 21,
2005 among FVC,  CUseeMe,  and RADvision,  a letter dated February 28, 2005 from
RADvision to the Company  setting forth certain  terms of  RADvision's  improved
bid, and certain portions of the record of the solicitation conference conducted
on February 28, 2005 during which RADvision  modified its improved bid. On March
14, 2005,  the Bankruptcy  Court entered an order ("Sale  Order")  approving the
Purchase Agreement.

On March 15, 2005, FVC and CUseeMe  completed a sale of substantially  all their
assets under the Purchase Agreement with RADvision, which acquired substantially
all the operating assets,  intellectual  property and customer  contracts of FVC
and CUseeMe for $7.15 million in cash and  assumption of certain  liabilities in
exchange  for the  assets,  free  and  clear  of any  liens,  claims,  or  other
interests.  In accordance with the Sale Order, FVC and CUseeMe used a portion of
the proceeds to repay all their  outstanding  secured  indebtedness and to pay a
$150,000  break-up  fee under a prior  asset  purchase  agreement  between  FVC,
CUseeMe,  and an  investment  partnership  led by  Millennium  Technology  Value
Partners,  L.P., a New York-based  private equity fund,  Silicon Valley Bank and
Morrison & Foerster  LLP.  The Sale Order also  provided  for  certain  employee
protections  and  other  benefits,  subject  to the  consent  of  the  Creditors
Committee, and certain other payments associated with the sale transaction.  FVC
and CUseeMe used the remaining proceeds to finance their bankruptcy cases.

--------------------------------------------------------------------------------

                                      F-6

<PAGE>

--------------------------------------------------------------------------------
                       FIRST VIRTUAL COMMUNICATIONS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
--------------------------------------------------------------------------------

2.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America ("GAAP") for interim financial information and pursuant
to the rules and regulations of the SEC. Accordingly; they do not include all of
the  information  and  footnotes   required  by  GAAP  for  complete   financial
statements.  The  unaudited  interim  financial  statements,  in the  opinion of
management, reflect all adjustments, consisting of normal recurring adjustments,
considered   necessary  for  a  fair  presentation,   except  for  the  sale  of
substantially all assets as described above.

These condensed  consolidated  financial  statements and notes should be read in
conjunction with the Company's audited consolidated financial statements for the
year ended  December 31, 2004 and notes thereto  ("December  31, 2004  Financial
Statements"),  included in the Company's Annual Report on Form 10-KSB filed with
the SEC on December 15, 2005.

The accompanying  condensed  consolidated financial statements for the three and
nine months ended September 30, 2004 are presented on the going concern basis of
accounting,  which  contemplates  realization  of  assets  and  satisfaction  of
liabilities  in the normal  course of business.  As  previously  reported in the
Company's  December 31, 2004 Financial  Statements,  management  determined that
liquidation  was  imminent on December  31,  2004.  Accordingly,  the  condensed
consolidated  financial statements as of and for the three and nine months ended
September 30, 2005 were prepared on the  liquidation  basis of accounting.  This
basis  of  accounting  is  considered  appropriate  when,  among  other  things,
liquidation of a company is probable and the net  realizable  value of assets is
reasonably  determinable.  Under this basis of accounting,  assets are valued at
their  estimated  net  realizable  values  and  liabilities  are stated at their
estimated settlement amounts.

USE OF ESTIMATES

The  preparation  of  financial  statements  in  conformity  with GAAP  requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses  during the reporting  periods.  Actual results
could  differ  from  those  estimates.  Significant  estimates  include  the net
realizable  values of  assets  and the  settlement  amount  of  liabilities,  in
accordance with the liquidation basis of accounting.

PRINCIPLES OF CONSOLIDATION

The  consolidated  financial  statements  include  the  accounts  of FVC and its
subsidiary.  All significant  intercompany  accounts and transactions  have been
eliminated.

CASH AND CASH EQUIVALENTS

The Company  considers  all highly liquid  investments  with a maturity of three
months or less when purchased to be cash equivalents.

ACCOUNTS RECEIVABLE

The net  realizable  value of  accounts  receivable  that was  reflected  in the
Company's  December 31, 2004  Financial  Statements,  totaling  $1,681,000,  was
collected from customers during the first quarter of 2005.

PROPERTY AND EQUIPMENT

Substantially  all property and  equipment  was sold to RADvision in March 2005.
The net  realizable  value of property and  equipment  that was reflected in the
Company's December 31, 2004 Financial Statements, totaling $57,000, was based on
the purchase price allocation included in the RADvision Purchase Agreement.

--------------------------------------------------------------------------------

                                      F-7

<PAGE>

--------------------------------------------------------------------------------
                       FIRST VIRTUAL COMMUNICATIONS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
--------------------------------------------------------------------------------

INTANGIBLE ASSETS

Intangible assets,  which were sold to RADvision in March 2005, were recorded at
their  estimated  net  realizable  value at December 31, 2004 based on the price
paid by RADvision as set forth in the purchase price allocation  included in the
aforementioned  Purchase  Agreement.  Such  intangible  assets were comprised of
technology and  distribution  networks at values of $3,295,000  and  $1,065,000,
respectively.

SECURED LIABILITY SETTLEMENTS

Secured  liability  settlements  totaling  $4,458,000  were  recorded  at  their
estimated net  settlement  amount at December 31, 2004 and were disbursed to the
secured  creditors during March 2005 out of the proceeds  received from the sale
of assets to RADvision  under the  provisions of the Plan and as directed by the
Bankruptcy Court.

ESTIMATED SETTLEMENTS DUE TO UNSECURED CREDITORS

Estimated  settlements to unsecured  creditors are presented at their  estimated
settlement  amounts and are based on the Liquidating  Trustee's  estimate of the
remaining  cash that will be available  after  disbursement  of all other claims
with higher priority in accordance with the Plan.

ESTIMATED LIQUIDATION EXPENSES

Estimated liquidation expenses represent the estimated  administrative  expenses
to liquidate the Company and consist primarily of legal and accounting fees.

3.  LITIGATION

As discussed in Note 1 to the Company's December 31, 2004 Financial  Statements,
the Company became subject to a federal class-action  securities lawsuit in late
2004 relating to the decline in the value of its common stock.  The case against
the Company  was  withdrawn  in early  2005;  however,  certain  former  Company
officers are still defendants.

Except as otherwise  provided in the Plan, the Liquidating Trust Agreement,  the
related Confirmation Order, or in any other agreement entered into in connection
with the Plan, in accordance  with section  1123(b) of the Bankruptcy  Code, the
estate and the Liquidating Trust shall retain and may; enforce,  sue on, settle,
or compromise  (or decline to do any of the  foregoing) all causes of action and
defenses that the Debtors may hold against any person or entity. The Liquidating
Trustee, in consultation with the Creditors'  Committee,  may pursue such causes
of action and defenses, as appropriate, in accordance with the best interests of
the estate or its successor(s)  who hold such rights.  Such causes of action and
defenses  are not barred or waived (or deemed to be barred or waived)  under the
doctrine of RES JUDICATA or other legal principles.  Nothing in the Confirmation
Order or in the Plan shall have any  preclusive  effect on such causes of action
or defenses.

--------------------------------------------------------------------------------

                                      F-8

<PAGE>

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

In addition to  historical  information,  management's  discussion  and analysis
includes certain forward-looking statements including, but not limited to, those
related to the growth and  strategies,  future  operating  results and financial
position as well as economic and market  events and trends of the  Company.  All
forward-looking  statements  made  by the  Company,  including  such  statements
herein, include material risks and uncertainties and are subject to change based
on factors beyond the control of the Company.  Accordingly, the Company's actual
results and financial  position could differ  materially from those expressed or
implied  in any  forward-looking  statement  as a  result  of  various  factors,
including  without  limitation those described in the Company's filings with the
Securities  and Exchange  Commission  regarding  risks  affecting  the Company's
financial conditions and results of operations.

BANKRUPTCY FILING

On January 20, 2005 First Virtual Communications,  Inc. ("FVC") filed Chapter 11
bankruptcy under the United States  Bankruptcy Code (the  "Bankruptcy  Code") on
behalf of itself and its wholly owned  domestic  subsidiary,  CUseeMe  Networks,
Inc.  ("CUseeMe")  (collectively,  the  "Company").  The Company  has  continued
limited   operations  as  debtors  in  possession  (the  "Debtors")   under  the
jurisdiction of the United States  Bankruptcy Court (the "Bankruptcy  Court") in
accordance  with the applicable  provisions of the Bankruptcy Code and orders of
the Bankruptcy Court.

COURT CONFIRMATION OF THE COMPANY'S PLAN OF REORGANIZATION

On August  25,  2005,  the  Company  and the  Official  Committee  of  Unsecured
Creditors (the "Creditors'  Committee")  jointly filed a plan of  reorganization
and a related  disclosure  statement with the Bankruptcy Court that were amended
on September 21, 2005. On November 14, 2005, the  Bankruptcy  Court approved the
amended reorganization plan (the "Plan"), which was entered on November 29, 2005
(the  "Confirmation  Order"),  and became  effective  on December  12, 2005 (the
"Effective Date").

The  purpose  of the Plan is to (1)  facilitate  a merger of FVC with  U.S.  Dry
Cleaning  Corporation  (i.e. a planned  reverse  Merger),  (2) make  payments to
creditors of and holders of interests  in the Debtors by  distributing  proceeds
received from the sale of the Debtors' assets (i.e. liquidation of substantially
all of the Company's assets), any amounts recovered in litigation, and any other
property  received  or  recovered  by the  related  Liquidating  Trust,  and (3)
distribute  the New Common  Stock,  as  defined,  to be issued  pursuant  to the
Merger. The assets described above shall be held by the Liquidating Trustee, who
will  administer and distribute the assets as specified in the Plan. The Plan is
intended to resolve all claims against the Debtors,  and all equity interests in
the Debtors of whatever character,  and whether or not allowed by the Bankruptcy
Court pursuant to Section 502 of the Bankruptcy Code.

The Plan calls for U.S.  Dry  Cleaning  Corporation  to merge with and into FVC.
Upon successful  completion of the Merger,  the  Liquidating  Trust will receive
275,698 shares of New Common Stock for the benefit of the  beneficiaries  of the
Liquidating  Trust in accordance with the Plan, the Liquidating Trust Agreement,
the Confirmation Order and applicable law.

It is anticipated that the common stock of the Reorganized Debtor, will begin to
be publicly  traded on the  Over-the-Counter  Bulletin Board  approximately  two
months  following   confirmation  of  the  Plan.  For  purposes  of  calculating
distributions  to be made under the Plan, the value of the 275,698 shares of New
Common Stock shall be calculated  based upon the average closing bid price for a
share of stock for the five (5)  trading  days  prior to the close of trading on
the sixtieth day  following  the first day that such stock was traded  publicly.
The  Liquidating  Trustee shall not  distribute  any of the New Common Stock any
earlier than the later of (a) the sixtieth day following the first day that such
stock was traded publicly,  and (b) the date of the initial  distribution (other
than New Common Stock) to holders of general unsecured claims

                                       2

<PAGE>

PAYMENT OF RETAINED  PROFESSIONALS IN THE BANKRUPTCY CASE OF THE COMPANY AND ITS
SUBSIDIARIES

On June 8, 2005,  the Bankruptcy  Court entered an order,  upon an amended joint
application  filed by the Debtors and the  Creditors'  Committee,  approving the
employment of Gregory  Sterling as Chief  Restructuring  Officer  ("CRO") of the
Debtors and designating  Mr. Sterling as the person  responsible for the Debtors
as debtors in possession.  The Company  reported the terms and conditions of Mr.
Sterling's  employment  in its Form 8-K filed with the  Securities  and Exchange
Commission  (the "SEC") on May 24, 2005. Mr. Sterling was also designated as the
Plan's Liquidating Trustee.  Additionally,  the Liquidating Trustee will receive
0.75% of common stock in the reorganized debtor, or approximately  63,600 shares
of New Common Stock, upon successful completion of the Merger.

CRITICAL ACCOUNTING ESTIMATES

In connection  with the adoption of the Plan, the  liquidation of  substantially
all assets,  and the planned reverse merger, we adopted the liquidation basis of
accounting  effective  December  31,  2004,  whereby  assets are valued at their
estimated  net  realizable  cash  values  and  liabilities  are  stated at their
estimated  settlement  amounts.   The  preparation  of  consolidated   financial
statements  using  the  liquidation  basis  of  accounting  requires  us to make
assumptions,  judgments and estimates that can have a significant  impact on our
reported net liabilities in liquidation. We base our assumptions,  judgments and
estimates on the most recent  information  available  and various  other factors
that we believe to be reasonable under the  circumstances.  Actual results could
differ   materially  from  these   estimates  under  different   assumptions  or
conditions.  On a regular  basis we  evaluate  our  assumptions,  judgments  and
estimates  and make  changes  accordingly.  We  believe  that  the  assumptions,
judgments and estimates involved in the accounting for the estimated settlements
to secured  and  unsecured  creditors,  estimated  costs to be  incurred  during
liquidation,  and estimated net realizable values of assets,  including accounts
receivable,  intangible  assets,  and property and equipment,  have the greatest
potential impact on our consolidated financial statements,  so we consider these
estimates to be our critical accounting policies.  We discuss below the critical
accounting estimates associated with these policies.

Estimated Settlement Costs
--------------------------

Secured  liability  settlements  totaling  $4,458,000  were  recorded  at  their
estimated net  settlement  amount at December 31, 2004 and were disbursed to the
secured  creditors during March 2005 out of the proceeds  received from the sale
of assets to RADVision  under the  provisions of the Plan and as directed by the
Bankruptcy  Court.  Therefore,  estimated  settlement costs to secured creditors
were estimated at zero at September 30, 2005. Estimated settlements to unsecured
creditors are presented at their estimated  settlement  amounts and are based on
the Liquidating  Trustee's estimate of the remaining cash that will be available
after  disbursement  of all other claims with higher priority in accordance with
the  Plan  ESTIMATED   LIQUIDATION  EXPENSES  Under  the  liquidation  basis  of
accounting,  we accrue for the remaining  estimated  costs to be incurred during
liquidation,  including compensation, fees of professional service providers and
miscellaneous  other  costs.  Such costs  were  estimated  at $1.573  million at
September  30, 2005.  Our  estimates  are based on actual  expenses  incurred to
liquidate the Company in 2005 plus additional  estimates to complete the reverse
merger and wind of the affairs of the Plan.  If there are delays,  or we are not
successful  in  achieving  these   objectives,   actual  costs  incurred  during
liquidation  may  increase,  reducing  any  assets  that  may  be  available  in
liquidation. ESTIMATED NET REALIZABLE VALUE OF ACCOUNTS RECEIVABLE

The net realizable  value of accounts  receivable  that was recorded at December
31, 2004,  totaling  $1,681,000;  was collected from customers  during the first
quarter of 2005.  Therefore,  we estimated the net realizable  value of accounts
receivable at September 30, 2005 to be zero.

Estimated Net Realizable Value of Intangible Assets
---------------------------------------------------

Intangible assets,  which were sold to RADvision in March 2005, were recorded at
their  estimated  net  realizable  value at December 31, 2004 based on the price
paid by RADvision as set forth in the purchase price allocation  included in the
related Purchase Agreement.  Such intangible assets were comprised of technology
and distribution networks at values of $3,295,000 and $1,065,000,  respectively.
Since  substantially  all of the assets were sold in March 2005, we estimate the
net realizable value to be zero at September 30, 2005.

                                       3

<PAGE>

Estimated Net Realizable Value of Property and Equipment
--------------------------------------------------------

Substantially  all property and  equipment  was sold to RADvision in March 2005.
The net  realizable  value of property  and  equipment  recorded at December 31,
2004,  totaling $57,000,  was based on the purchase price allocation included in
the RADvision  Purchase  Agreement.  Since  substantially all of the assets were
sold in March 2005, we estimate the net realizable value to be zero at September
30, 2005.

Liquidity and Capital Resources
-------------------------------

As  previously  mentioned,  the Company is operating  as a  debtor-in-possession
under the provisions of Chapter 11 of the Bankruptcy Code. Our primary objective
is to complete  the reverse  merger with U.S. Dry  Cleaning  Corporation  and to
wind-up the affairs of the Chapter 11 Bankruptcy.

On February 28, 2005,  following a competitive  bidding process  conducted under
the  supervision  of  the  Bankruptcy  Court,  FVC,  with  the  approval  of the
Creditors'  Committee,  accepted the offer of RADvision  Ltd.  ("RADvision")  to
purchase  substantially  all the assets of the Company for $7.15 million in cash
plus certain additional consideration,  subject to Bankruptcy Court approval. On
March 14, 2005, the Bankruptcy  Court entered an order ("Sale Order")  approving
the Purchase Agreement.

On March 15, 2005, FVC and CUseeMe  completed a sale of substantially  all their
assets under the Purchase Agreement with RADvision, which acquired substantially
all the operating assets,  intellectual  property and customer  contracts of FVC
and CUseeMe for $7.15 million in cash and  assumption of certain  liabilities in
exchange  for the  assets,  free  and  clear  of any  liens,  claims,  or  other
interests.  In accordance with the Sale Order, FVC and CUseeMe used a portion of
the proceeds to repay all their  outstanding  secured  indebtedness and to pay a
$150,000  break-up  fee under a prior  asset  purchase  agreement  between  FVC,
CUseeMe,  and an  investment  partnership  led by  Millennium  Technology  Value
Partners,  L.P., a New York-based  private equity fund,  Silicon Valley Bank and
Morrison & Foerster  LLP.  The Sale Order also  provided  for  certain  employee
protections  and  other  benefits,  subject  to the  consent  of  the  Creditors
Committee, and certain other payments associated with the sale transaction.  FVC
and CUseeMe used the remaining proceeds to finance their bankruptcy cases.

At September 30, 2005,  we estimate  that there are $1.573  million of remaining
liquidation  costs,  and  $500,000  of  remaining  cash  to  be  distributed  as
settlements to unsecured creditors.  Estimated liquidation expenses decreased by
$1.531  million  from  $3.104  million  at  December  31,  2004  due to net cash
disbursements  (not including secured creditor  payments) during the nine months
ended September 30, 2005.

Net  liabilities in liquidation  decreased to $(0.372)  million at September 30,
2005 from  $(1.304)  million at December 31, 2004.  This  decrease is due to the
sale of  substantially  all assets to RADvision and represents the net effect of
liquidating  the  assets  for cash,  but not being  able to pay all  outstanding
creditors at the time of sale due to priorities  imposed by the Bankruptcy  Code
and  Court.  Additionally,  the  estimated  liquidation  expenses  reduction  as
described  above   contributed  to  the  net  decrease  in  net  liabilities  in
liquidation.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2005

Estimated  liquidation  expenses decreased by $0.189 million from $1.762 million
at June 30, 2005 due to net cash  disbursements for  administrative  liquidation
costs during the three months  ended June 30, 2005 which  reduced the  estimated
remaining  administrative  costs  necessary to complete the  liquidation  of the
business.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2005

The Company's  operations have been  substantially  suspended with the filing of
Chapter 11 bankruptcy  on January 20, 2005, so the Company is no longer  engaged
in the conduct of business  and now operates for the sole purpose of holding and
liquidating  its assets and completing the reverse merger with U.S. Dry Cleaning
Corporation  as  described  above.  A  comparison  of the results of  operations
between  fiscal  periods would not be helpful to investors due to the Chapter 11
filing.

As mentioned  above,  the Company  completed a sale of  substantially  all their
assets  to  RADvision  for  $7.15  million  in cash and  assumption  of  certain
liabilities  on March 15, 2005. A substantial  portion of the proceeds were used
to pay all of the Company's  outstanding secured  indebtedness,  totaling $4.458
million, and other obligations.

                                       4

<PAGE>

Estimated  liquidation  expenses decreased by $1.531 million from $3.104 million
at  December  31,  2004  due  to  net  cash   disbursements  for  administrative
liquidation costs, offset by an increase in the estimated costs to liquidate the
business,  which reduced the estimated remaining  administrative costs necessary
to complete the liquidation of the business.

Pre-petition   unsecured   liabilities  whose  disposition  may  be  subject  to
settlement  or  otherwise  dependent  on the outcome of the Chapter 11 case have
been segregated and classified as estimated  settlements to unsecured  creditors
in the accompanying  September 30, 2005 condensed  consolidated statement of net
liabilities in liquidation.

ITEM 3.    CONTROLS AND PROCEDURES

An evaluation was not performed under the supervision and with the participation
of  our  management,   including  the  Chief   Restructuring   Officer,  of  the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures as of the end of the period covered by this Quarterly  Report on Form
10-QSB.  Officers  and  management  of the Company who may have  performed  such
evaluation  are no longer  present or in a capacity  to certify.  The  Company's
Chief Restructuring Officer was not hired until June 8, 2005.

During the fourth quarter of 2004,  substantially all personnel resigned or were
terminated  thereby leaving  significant  deficiencies in internal  control over
financial  reporting.  The CFO and Controller left the Company in November 2004,
but did  return as  consultants  to assist  with the  closing  of the  financial
statements  for the year  ended  December  31,  2004.  There  were no changes in
internal control over financial reporting during the quarter ended September 30,
2005 that affected or were reasonably likely to affect our internal control over
financial reporting.

                                       5

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

The Company became subject to a federal class-action  securities lawsuit in late
2004 related to the decline in the value of its common  stock.  The case against
the Company  was  withdrawn  in early  2005;  however,  the  officers  are still
defendants.

Except as otherwise  provided in the Plan, the Liquidating Trust Agreement,  the
Confirmation  Order, or in any other  agreement  entered into in connection with
the Plan, in accordance with section 1123(b) of the Bankruptcy  Code, the estate
and the  Liquidating  Trust shall retain and may;  enforce,  sue on, settle,  or
compromise  (or  decline  to do any of the  foregoing)  all causes of action and
defenses that the Debtors may hold against any person or entity. The Liquidating
Trustee, in consultation with the Creditors'  Committee,  may pursue such causes
of action and defenses, as appropriate, in accordance with the best interests of
the estate or its successor(s)  who hold such rights.  Such causes of action and
defenses  are not barred or waived (or deemed to be barred or waived)  under the
doctrine of RES JUDICATA or other legal principles.  Nothing in the Confirmation
Order or in the Plan shall have any  preclusive  effect on such causes of action
or defenses.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5.    OTHER INFORMATION

None.


ITEM 6.    EXHIBITS

Exhibit

No.                                 Description of Document
----              --------------------------------------------------------------
31.1              Certification  Pursuant to Rule 15d-14 of the  Securities  and
                  Exchange  Act as  amended,  as  Pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002

32.1              Certification  Pursuant to 18 U.S.C.  Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

                                       6

<PAGE>

                                   SIGNATURES

           In  accordance  with  Section 13 or 15(d) of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

FIRST VIRTUAL COMMUNICATIONS, INC.

By:        /s/ GREGORY STERLING                         Date:  December 23, 2005
           ---------------------------------
           Gregory Sterling
           Chief Restructuring Officer
           (Duly Authorized Officer and
           Principal Financial Officer)

<PAGE>

                                  EXHIBIT INDEX

Exhibit

No.                                  Description of Document
----              --------------------------------------------------------------
31.1              Certification  Pursuant to Rule 15d-14 of the  Securities  and
                  Exchange  Act as  amended,  as  Pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002

32.1              Certification  Pursuant to 18 U.S.C.  Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002