UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549







FORM
10-Q







x
            QUARTERLY REPORT UNDER SECTION
      13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934





For
the quarterly period ended March 31, 2008





OR





£
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




Commission
file number 000-26809




UVUMOBILE,
INC.


(Exact
name of registrant as specified in its charter)




Delaware
            
            91-1962104(State
      or other jurisdiction of incorporation)
            
            (IRS
      Employer Identification No.)




2160
      Satellite Boulevard, Suite 130, Duluth, Georgia
            
            30097(Address
      of principal executive offices)
            
            (Zip
      Code)




(678)
417-2000


Issuer's
telephone number, including area code




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
past 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 x
  No o




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.




Large
      Accelerated Filer £
            Accelerated
      Filer £Non-accelerated
      Filer £
            Smaller
      reporting company x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act): Yes oNo x




The total
number of shares of the issuer's common stock, $.001 par value, outstanding on
May 2, 2008 was 76,349,987.













SMARTVIDEO
TECHNOLOGIES INC.





Indexto Form 10-Q





Forward-Looking Statements
            
            iiPART
      I - FINANCIAL INFORMATIONItem
      1. Financial StatementsHistorical
      Financial StatementsCondensed Consolidated Balance Sheet
      (Unaudited)
            
            1Condensed Consolidated Statements of Operations
      (Unaudited)
            
            2Condensed Consolidated Statements of Cash Flows
      (Unaudited)
            
            3Notes to Condensed Consolidated Financial Statements
      (Unaudited)
            
            4Item
      2. Management's Discussion and Analysis of Financial
      Condition and Results of Operations
            
            14Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk
            
            17Item
      4. Controls and Procedures
            
            17PART
      II - OTHER INFORMATIONItem
      1. Legal Proceedings
            
            18Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds
            
            18Item
      3. Submission of Matters to a Vote of Security
      Holders
            
            18Item
      6. Exhibits
            
            18Signatures


- i
-
 Index




Unless the context otherwise
requires, all references to “uVuMobile,TM”the “Company,” “we,” “us” or “our”
refers to uVuMobile, Inc. and its subsidiary. References in this report to
annual financial data for uVuMobile refer to fiscal years ended December
31.




General
information about uVuMobile can be found at www.uvumobile.com. The Company makes
its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K and amendments to these reports filed or furnished pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 available free of
charge on its Website, as soon as reasonably practicable after they are
electronically filed with the SEC. The information on our website is not
incorporated into this report.




FORWARD-LOOKING STATEMENTS




The
information contained in this Form 10-Q, including the information incorporated
by reference into this Form 10-Q, includes forward-looking statements as defined
in the Private Securities Reform Act of 1995.  Forward looking
statements are based on current expectations rather than historical facts and
they are indicated by words or phrases such as “anticipate,” “could,” “may,”
“might,” “potential,” “predict,” “should,” “estimate,” “expect,” “project,”
“believe,” “intend,” “plan,” “envision,” “continue,” “target,” “contemplate,” or
“will” and similar words or phrases or comparable terminology.  These
statements involve estimates, assumptions and uncertainties that could cause
actual results to differ materially from those expressed for the reasons
described in this Form 10-Q.  You should not place undue reliance on
these forward-looking statements.




You
should be aware that our actual results could differ materially from those
contained in the forward-looking statements due to a number of factors,
including:




·
            general
      economic conditions;




·
            significant
      uncertainty inherent in the mobile entertainment services
      industry;




·
            we
      face intense and increasing competition from the telecommunications
      industry and the satellite and cable television industry; new competitors
      are likely to emerge and new technologies may further increase
      competition;




·
            our
      programming costs may increase beyond our current expectations and we may
      be unable to obtain or renew programming agreements on acceptable terms or
      at all;




·
            we
      are heavily dependent on complex information technologies and their
      support infrastructures; weaknesses in our information technology systems
      could have an adverse impact on our business; we may have difficulty
      attracting and retaining qualified personnel to maintain our information
      technology infrastructure;




·
            lack
      of funding to continue our operations and our ability to obtain future
      financing or funds;




·
            our
      ability to successfully obtain a diverse customer base or retain our
      existing customers;




·
            our
      ability to protect our intellectual property through patents, trademarks,
      copyrights and confidentiality
agreements;




·
            our
      ability to attract and retain a qualified employee
  base;




·
            our
      ability to respond to new developments in technology and new applications
      of existing technology before our
competitors;




·
            our
      ability to develop, maintain and enhance our strategic relationships with
      wireless carriers, multi-service operators (MSO’s), handset manufacturers
      and distributors, key streaming media technology companies and content
      providers;




·
            acquisitions,
      business combinations, strategic partnerships, divestures, and other
      significant transactions may involve additional
    uncertainties;




·
            our
      ability to maintain and execute a successful business strategy;
      and




·
            we
      may face other risks described from time to time in periodic and current
      reports we file with the United States Securities and Exchange Commission
      (“SEC”).




You
should also consider carefully the statements under “Risk Factors” and other
sections of this Form 10-Q, which address additional factors that could cause
actual results to differ from those set forth in the forward-looking statements
and could materially and adversely affect the Company’s business, operating
results and financial condition. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the applicable cautionary
statements.




The
forward-looking statements speak only as of the date on which they are made,
and, except to the extent required by federal securities laws, we undertake no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which the statement is made or to reflect the
occurrence of unanticipated events. In addition, the Company cannot assess the
impact of each factor on its business or the extent to which any factor, or
combination of factors, or factors it is unaware of, may cause actual results to
differ materially from those contained in any forward-looking
statements.





- ii
-
 Index





PARTI - FINANCIAL INFORMATION




UVUMOBILE,
INC. AND SUBSIDIARY





CONSOLIDATEDBALANCE SHEETS


March
31, 2008 and December 31, 2007







March
      31,
            
            
            December
      31,2007
            
            
            2007Assets
            
            (Unaudited)Current
      AssetsCash
            
            $
            352,957
            
            
            $
            1,078,055Accounts
      receivable - net of allowance for doubtful accounts of $22,000 and
      $22,000
            
            
            284,971
            
            
            
            275,402Prepaid expenses
            
            
            14,121
            
            
            
            32,306Total
      Current Assets
            
            
            652,049
            
            
            
            1,385,763Property
      and Equipment, net of accumulated depreciation of $1,996,679 and
      $1,793,926
            
            
            737,976
            
            
            
            940,729Other
      AssetsDeferred
      finance costs
            
            
            502,563
            
            
            
            549,795Intangible
      assets - net of accumulated amortization of $296,359 and
      $244,060
            
            
            17,433
            
            
            
            69,732Other
            
            
            36,111
            
            
            
            36,110Total
      Other Assets
            
            
            556,107
            
            
            
            655,637Total
      Assets
            
            $
            1,946,132
            
            
            $
            2,982,129Liabilities and
      Stockholders' DeficitCurrent
      LiabilitiesAccounts
      payable and accrued expenses
            
            $
            2,427,721
            
            
            $
            2,967,281Deferred
      revenues
            
            
            3,136
            
            
            
            7,840Loan
      payable and related accrued interest
            
            
            390,902
            
            
            
            95,255Total
      Current Liabilities
            
            
            2,821,759
            
            
            
            3,070,376Total
      Liabilities
            
            
            2,821,759
            
            
            
            3,070,376Commitments
      and Contingencies
            
            
            –
            
            
            
            –Stockholders'
      DeficitPreferred
      stock, Series A-1, Convertible, $.001 par value, 50,000,000 shares
      authorized,11,666,666 shares issued and 133,333 outstanding as of March
      31, 2008; 11,666,666 shares issued and 133,333 outstanding as of Dec. 31,
      2007.
            
            
            134
            
            
            
            134Preferred
      stock, Series B, Convertible, $.001 par value, 50,000,000 shares
      authorized,4,017,188 shares issued and 0 outstanding as of March 31, 2008;
      4,017,188 issued and 4,017,188 outstanding as of Dec. 31,
      2007.
            
            
            –
            
            
            
            4,017Common
      stock, $.001 par value, 300,000,000 shares authorized, 76,349,987 shares
      issued and outstanding as of March 31, 2008, 67,645,299 shares issued and
      outstanding as of Dec. 31, 2007.
            
            
            76,350
            
            
            
            67,645Additional
      paid-in capital
            
            
            73,737,805
            
            
            
            73,375,786Less:
      Deferred consulting fees
            
            
            –
            
            
            
            (2,752
            )Accumulated deficit
            
            
            (74,689,916
            )
            
            
            (73,533,077
            )Total Stockholders' Deficit
            
            
            (875,627
            )
            
            
            (88,247
            )Total Liabilities and Stockholders'
      Deficit
            
            $
            1,946,132
            
            
            $
            2,982,129







See
accompanying notes to consolidated financial statements





- 1
-
 Index




UVUMOBILE,
INC AND SUBSIDIARY





CONSOLIDATEDSTATEMENTS OF OPERATIONS


(Unaudited)







For
      the Three Months EndedMarch 31,2008
            
            
            2007RevenuesRevenue
            
            $
            283,606
            
            
            $
            334,732Total
      Revenues
            
            
            283,606
            
            
            
            334,732Cost
      of Goods SoldCost
      of goods sold
            
            
            83,500
            
            
            
            138,000Total
      Cost of Goods Sold
            
            
            83,500
            
            
            
            138,000Gross
      Profit
            
            
            200,106
            
            
            
            196,732Operating
      ExpensesBroadcast
      rights
            
            
            (1,534
            )
            
            
            99,807Compensation
      and benefits
            
            
            248,027
            
            
            
            662,625Consulting
      and professional fees
            
            
            127,872
            
            
            
            638,437Data
      center
            
            
            86,966
            
            
            
            227,568Depreciation
            
            
            255,052
            
            
            
            233,100Settlement
      expense
            
            
            50,180
            
            
            
            –Selling,
      general and administrative - inlcuding stock based compensation of $72,025
      and $1,645,261
            
            
            253,420
            
            
            
            2,154,692Total Operating Expenses
            
            
            1,019,983
            
            
            
            4,016,229Loss
      from Operations
            
            
            (819,877
            )
            
            
            (3,819,497
            )Other
      Income (Expense)Interest
      income
            
            
            5,917
            
            
            
            22,818Interest expense
            
            
            (342,879
            )
            
            
            (4,888
            )Total Other Income (Expense),
      Net
            
            
            (336,962
            )
            
            
            17,930Net Loss
            
            $
            (1,156,839
            )
            
            $
            (3,801,567
            )Net loss per share - Basic and
      Diluted
            
            $
            (0.02
            )
            
            $
            (0.07
            )Weighted
      Average Common Sharesoutstanding during the
      period
            
            
            67,757,033
            
            
            
            52,719,920







See
accompanying notes to unaudited consolidated financial statements





- 2
-
 Index





UVUMOBILE,
INC AND SUBSIDIARY





CONSOLIDATEDSTATEMENTS OF CASH FLOWS


(Unaudited)









For the Three Months Ended March
      31,2008
            
            
            2007Cash
      Flows from Operating ActivitiesNet
      loss
            
            $
            (1,156,839
            )
            
            $
            (3,801,567
            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Amortization
      of stock based compensation
            
            
            72,025
            
            
            
            825,796Amortization
      of broadcast rights
            
            
            –
            
            
            
            74,690Amortization
      of loan origination costs
            
            
            54,191
            
            
            
            –Amortization
      of intangible assets
            
            
            52,299
            
            
            
            –Depreciation
            
            
            202,753
            
            
            
            233,100Issuance
      of common stock for legal settlement
            
            
            300,000
            
            
            
            755,582Amortization
      of beneficial conversion
            
            
            254,184
            
            
            
            –Conversion
      of preferred stock to common stock
            
            
            (4,017
            )
            
            
            –Changes
      in operating assets and liabilities:(Increase)
      Decrease in:Accounts
      receivable
            
            
            (9,569
            )
            
            
            (147,477
            )Prepaid
      expenses
            
            
            11,225
            
            
            
            (46,558
            )Increase
      (Decrease) in:Accounts
      payable and accrued expenses
            
            
            (311,743
            )
            
            
            343,061Accrued
      interest payable
            
            
            41,463
            
            
            
            (795
            )Contracts
      rights payable
            
            
            –
            
            
            
            (417,075
            )Accrued settlement expense
            
            
            (231,070
            )
            
            
            –Net
      Cash Used in Operating Activities
            
            
            (725,098
            )
            
            
            (2,181,243
            )Cash
      Flows from Investing ActivitiesPurchase of equipment
            
            
            –
            
            
            
            (266,651
            )Net
      Cash Used in Investing Activities
            
            
            –
            
            
            
            (266,651
            )Net
      decrease in cash and cash equivalents
            
            
            (725,098
            )
            
            
            (2,447,894
            )Cash
      - Beginning of Period
            
            
            1,078,055
            
            
            
            3,696,581Cash
      - End of Period
            
            $
            352,957
            
            
            $
            1,248,687Supplemental
      Disclosure of Cash Flow InformationCash
      paid for:Income taxes
            
            $
            –
            
            
            $
            –Interest
            
            $
            –
            
            
            $
            –Supplemental
      Disclosure of Non-Cash Investing and Financing ActivitiesIssuance
      of common stock for settlement of accounts payable accrued
      expense
            
            $
            281,250
            
            
            $
            –Conversion
      of convertible preferred stock to common stock
            
            $
            –
            
            
            $
            200Forfeiture
      of stock based compensation
            
            $
            –
            
            
            $
            37,147







See
accompanying notes to unaudited consolidated financial statements





- 3
-
 Index




UVUMOBILE,
INC.





NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





Note 1 -
Organization




uVuMobile,
Inc. (hereinafter sometimes referred to as  “uVuMobileTM,” the
“Company,” “we,” “us,” or “our”) is a provider of video content distribution
services and technology.





Incorporated
in 1984, the Company acquired OVT, Inc., d/b/a SmartVideo, in November 2002,
subsequently changing its name to SmartVideo Technologies, Inc., and in June
2007, the Company changed its name to uVuMobile, Inc.  Although the
core business of the Company has remained constant, the Company has changed its
focus from distributing business-to-business services to the distribution of
video content to consumers.




Since
2002, the Company has been a provider of technology engaged in the aggregation
and distribution of streaming video content to consumers connected to the public
Internet. The Company has been in the business of purchasing the rights to video
and television content and delivering that content to subscribers for a fee.
Additionally, the Company also provides managed services for Internet
network operators (carriers) and for major producers, owners and distributors of
content. The Company intends to continue expanding its market opportunities
by delivering video services to all forms of devices capable of receiving an
Internet Protocol (IP) data stream and rendering that data stream into visible
images on displays.




In
January 2005, the Company launched its direct-to-consumer mobile video service
providing its customers with access to high-quality video programming that is
transmitted directly to SmartPhone cellular handsets and to Wi-Fi enabled PDA
devices. In addition, the Company has developed Real Time Streaming
Protocol (RTSP) and Java 2 Platform, Micro Edition (J2ME)
compatibility.





During
the fourth quarter of 2006, the Company expanded its product offerings to
include a new suite of mobile technology and content solutions, bringing
together a myriad of implementation choices, business models and marketing
plans. The Company believes these new products will aid its customers that are
seeking to capitalize on mobile technology opportunities. These new media
services combine TV, radio, and other media platforms with user-friendly
personalization, interactivity and targeted advertising.





Note 2 - Going Concern,
Significant Accounting Policies and Risks and Uncertainties




(A)           Going
Concern




As
reflected in the accompanying unaudited consolidated financial statements, the
Company has a net loss of $1,156,839 and net cash used in operations of $725,098
for the Quarter ended March 31, 2008. The Company also has an accumulated
deficit of $74,689,916 at March 31, 2008.





Based on
information currently available regarding its proposed plans and assumptions
relating to operations the Company anticipates that the net proceeds from the
closing of its last financing in 2007, together with revenues generated from
operations, will not be sufficient to meet its cash requirements for working
capital and capital expenditures beyond the second quarter of 2008. There can be
no assurance that the Company will be able to secure additional financing on
acceptable terms at or prior to the depletion of existing funds, or at all. If
adequate funds are not available or not available on acceptable terms, the
Company will be unable to continue as a going concern.  The Company
has no firm commitment for any additional capital.





(B)           Basis
Of Presentation





The
consolidated financial statements of uVuMobile include the accounts of its
wholly owned subsidiary, OVT, Inc. All significant transactions and balances
between the Company and its subsidiaries have been eliminated in
consolidation.





(C)           Use
Of Estimates





In
preparing financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and revenues and expenses during the periods presented. Actual
results may differ from these estimates.





Significant
estimates during 2007, 2006 and 2005 include depreciable lives on property and
equipment, the valuation of stock options/warrants granted for services, the
value of warrants issued in connection with debt and equity related financings,
valuation and related amortization of intangible broadcast rights pursuant to
Statement of Financial Accounting Standards (“SFAS”) No. 63 and the valuation
allowance for deferred tax assets since the Company had continuing operating
losses.




- 4
-
 Index




UVUMOBILE,
INC.





NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(D)           Cash
And Cash Equivalents





For the
purpose of the cash flow statements, the Company considers all highly liquid
investments with original maturities of three months or less at the time of
purchase to be cash equivalents.




The
Company minimizes its credit risk associated with cash by periodically
evaluating the credit quality of its primary financial institution. The balance
at times may exceed federally insured limits. At March 31, 2008, the balance
exceeded the federally insured limit by approximately
$252,957.  Additionally, at March 31, 2008, the Company had $2,000
maintained under a compensating balance agreement. The $2,000 is retained due to
potential credit card chargebacks that are unforeseen.





(E)           Equipment





Equipment
is stated at cost, less accumulated depreciation. Expenditures for maintenance
and repairs are charged to expense as incurred. Equipment consists primarily of
computer equipment. Depreciation is computed using the straight-line method over
the estimated useful lives of the assets, which is generally three
years.








For
      The Quarter EndedMarch 31,2008
            
            
            2007Depreciation
      and amortization expense
            
            $
            255,052
            
            
            $
            233,100











March
      31,
            
            
            December
      31,2008
            
            
            2007Computer
      equipment
            
            $
            1,646,244
            
            
            $
            2,655,155Proprietary
      software development
            
            
            1,083,948
            
            
            
            79,500Leasehold
      improvements
            
            
            4,463
            
            
            
            –2,734,655
            
            
            
            2,734,655Less
      accumulated depreciation
            
            
            (1,996,679
            )
            
            
            (1,793,926
            )Property
      and equipment, net
            
            $
            737,976
            
            
            $
            940,729








(F)           Broadcast
Rights





The
Company acquires rights to programming so that it may deliver this programming
to is subscribers.  The costs incurred in acquiring programs and
amortized over the license period or projected useful life of the
programming.  The broadcast rights are accounted for according to SFAS
No. 63 “Financial Reporting by Broadcasters”.  Program rights and the
related liabilities are recorded at the gross amount of the liabilities when the
license period has begun, the cost of the program is determinable, and the
program is accepted and available for airing.





(G)           Accounts
Receivable





Substantially
all of the Company’s accounts receivable are due from end-users. Collateral is
not required. Credit losses are provided for in the consolidated financial
statements. The Company has a limited history in evaluating such credit
losses.





(H)           Allowance
For Doubtful Accounts





Management
estimates the amount of required allowances for potential non-collectibility of
accounts receivable based upon past collection experience and consideration of
other relevant factors. However, past experience may not be indicative of future
collections and therefore additional charges could be incurred in the future to
reflect differences between estimated and actual collections. In January 2005,
the Company launched its direct-to-consumer mobile video service. While the
Company uses many of the features developed for the core technology in
delivering this new service, its focus on a direct-to-consumer model represents
a significant change in direction. The allowance for doubtful accounts at March
31, 2008 was $22,000 and at December 31, 2007, was $22,000.





- 5
-
 Index


UVUMOBILE,
INC.
 
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)


(I)           Earnings
Per Share




In
accordance with SFAS No. 128, “Earnings Per Share” (“EPS”), basic EPS is
computed by dividing the net income (loss) less preferred dividends for the
period by the weighted average number of shares outstanding. Diluted EPS is
computed by dividing net income (loss) less preferred dividends by the weighted
average number of shares outstanding including the effect of share equivalents.
Common share equivalents consist of shares issuable upon the exercise of certain
common stock purchase warrants, stock options, convertible debt, and Convertible
Preferred Stock. The Company has excluded these common share equivalents from
its computation of EPS due to their anti-dilutive effect as the Company has
reflected a net loss at March 31, 2008 and 2007, respectively. Accordingly,
basic and diluted EPS are the same.




The
following table shows all common stock equivalents outstanding at March 31,
2008, and 2007, respectively.







For the Quarter ended
      March 31,2008
            
            
            2007Common
      stock options
            
            
            7,495,000
            
            
            
            8,576,875Common
      stock warrants
            
            
            39,112,598
            
            
            
            35,010,149Common
      stock upon conversion of debt
            
            
            31,722,234
            
            
            
            –Preferred
      stock Series A-1
            
            
            133,000
            
            
            
            2,433,333Total
      Common Stock Options and Warrants
            
            
            78,462,832
            
            
            
            46,020,357







(J)           Stock
Based Compensation





In
December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment," which
replaces SFAS No. 123 and supersedes Accounting Principles Board (“APB”) Opinion
No. 25. Under SFAS No. 123(R), companies are required to measure the
compensation costs of share-based compensation arrangements based on the grant
date fair value and recognize the costs in the financial statements over the
period during which employees are required to provide services. Share-based
compensation arrangements include stock options, restricted share plans,
performance-based awards, share appreciation rights and employee share purchase
plans. In March 2005 the SEC issued Staff Accounting Bulletin No. 107, or “SAB
107”. SAB 107 expresses views of the staff regarding the interaction between
SFAS No. 123(R) and certain SEC rules and regulations and provides the staff's
views regarding the valuation of share-based payment arrangements for public
companies. SFAS No. 123(R) permits public companies to adopt its requirements
using one of two methods. On April 14, 2005, the U.S. Securities and
Exchange Commission (the “SEC”) adopted a new rule amending the compliance dates
for SFAS 123(R). Companies may elect to apply this statement either
prospectively, or on a modified version of retrospective application under which
financial statements for prior periods are adjusted on a basis consistent with
the pro forma disclosures required for those periods under SFAS No. 123.
Effective January 1, 2006, we have adopted SFAS No. 123(R) under the prospective
method.





(K)           Revenue
Recognition





The
Company follows the guidance of the Securities and Exchange Commission’s Staff
Accounting Bulletin No. 104 for revenue recognition.  In general, the
Company records revenue when persuasive evidence of an arrangement exists,
services have been rendered or product delivery has occurred, the sales price to
the customer is fixed or determinable, and collectability is reasonably
assured.




The
Company provides services to its business-to-business customers under
volume-based usage arrangements of its digital media and multimedia broadcast
products and services. Under certain arrangements, the customers are subject to
a base monthly fee or minimum monthly usage requirement in order to maintain a
customer’s preferential negotiated rates.




Revenues
for direct-to-consumer and custom applications are recognized as earned upon the
delivery of services to the Company’s subscription-based customers. This is
typically when a digital media or multimedia broadcast is viewed. Many of the
Company’s subscription-based customers access its programming through the
purchase of a monthly, semi-annual, or annual subscription fee for uVuMobile’s
mobile entertainment services.  Revenue received on annual
subscriptions is deferred and therefore is recognized ratably over the term of
the contract.





- 6
-
 Index




UVUMOBILE,
INC.
 
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)


(L)           Income
Taxes




The
Company accounts for income taxes under Financial Accounting Standards (“FAS”)
No. 109 “Accounting for Income Taxes” (“Statement 109”). Under Statement 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period, which includes the enactment
date.





(M)           Derivative
Liabilities





In June
2005, the Emerging Issues Task Force ("EITF") issued EITF 05-2, “The Meaning of
Conventional Convertible Debt Instrument in Issue No. 00-19". EITF 05-2 retained
the definition of a conventional convertible debt instrument as set forth in
EITF 00-19, and which is used in determining certain exemptions to the
accounting treatments prescribed under SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities". EITF 05-2 also clarified that certain
contingencies related to the exercise of a conversion option would not be
outside the definition of "conventional" and determined that Convertible
Preferred Stock with a mandatory redemption date would also qualify for similar
exemptions if the economic characteristics of the Preferred Stock are more akin
to debt than equity. EITF 05-2 is effective for new instruments entered into and
instruments modified in periods beginning after June 29, 2005. The Company
adopted the provisions of EITF 05-2 on July 1, 2005, which did not have a
material effect on its unaudited consolidated financial position, results of
operations and cash flows.





In July
2005, the FASB issued FASB Staff Position ("FSP") 150-5, "Accounting Under SFAS
150 for Freestanding Warrants and Other Similar Instruments on Redeemable
Shares". FSP 150-5 clarifies that warrants on shares that are redeemable or
puttable immediately upon exercise and warrants on shares that are redeemable or
puttable in the future qualify as liabilities under SFAS 150, regardless of the
redemption feature or redemption price. The FSP is effective for the first
reporting period beginning after June 30, 2005, with resulting changes to prior
period statements reported as the cumulative effect of an accounting change in
accordance with the transition provisions of SFAS 150. We adopted the provisions
of FSP 150-5 on July 1, 2005, which did not have a material effect on our
unaudited consolidated financial position, results of operations and cash
flows.





(N)           Product
Concentration





The
Company derives a substantial portion of its revenues from four types of
products: business-to-business, direct-to-consumer mobile video service, mobile
advertising and custom applications.








March
      31,Revenues
            
            2008
            
            
            2007Business-to-business
            
            $
            –
            
            
            
            –
            %
            
            $
            2,293
            
            
            
            1
            %Direct-to-consumer
            
            
            902
            
            
            
            1
            %
            
            
            128,939
            
            
            
            38
            %Mobile
      video services
            
            
            166,000
            
            
            
            58
            %
            
            
            –
            
            
            
            –
            %Mobile
      advertising
            
            
            4,704
            
            
            
            2
            %
            
            
            –
            
            
            
            –
            %Custom
      applications
            
            
            112,000
            
            
            
            39
            %
            
            
            203,500
            
            
            
            61
            %Total
      Revenue
            
            $
            283,606
            
            
            
            100
            %
            
            $
            334,732
            
            
            
            100
            %








The
Company could experience declines in demand for products, whether as a result of
general economic conditions, new competitive product releases, price
competition, lack of market acceptance, technological change or other
factors.





(O)           Long-Lived
Assets





The
Company accounts for long-lived assets in accordance with the provisions of SFAS
No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS
No. 144 requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future undiscounted net
cash flows expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value less costs to sell the asset.




- 7
-
 Index




UVUMOBILE,
INC.
 
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)




(P)           Goodwill
And Intangible Assets




The
Company accounts for goodwill and intangible assets in accordance with the
provisions of SFAS No. 142, “Goodwill and Other Intangible Assets”, which
requires goodwill and intangible assets with indefinite useful lives not be
amortized, but be tested for impairment annually or whenever indicators or
impairments arise.  Intangible assets that have finite lives continue
to be amortized over their estimated useful lives.  Out intangible
assets consist of contract based intangibles.





These
transactions were accounted for as a purchase business combination in accordance
with SFAS No. 141, “Business Combinations”.





As of
March 31, 2008 the Company’s identifiable intangible assets subject to
amortization consisted of the following:








As ofMarch 31, 2008
            
            
            December 31, 2007Intangible Assets
            
            
            Accumulated Amortization
            
            
            Intangible Assets
            
            
            Accumulated AmortizationContract
      Based
            
            $
            313,792
            
            
            $
            296,359
            
            
            $
            313,792
            
            
            $
            244,060Total
            
            $
            313,792
            
            
            $
            296,359
            
            
            $
            313,792
            
            
            $
            244,060








Amortization
of these intangible assets, recorded on a straight line basis over an average
finite useful life of 18 months.  The amortization expense for the
three months ended March 31, 2008 and 2007 was $52,299 and $22,086,
respectively.




Note 3 - Stockholders’
Equity (Deficit)




(A)           Preferred
Stock




(1)                 Capital
Structure




As of
March 31, 2008, the authorized Preferred Stock of the Company consisted of
50,000,000 shares of $.001 par value Series A-1 Preferred Stock of which
11,666,666 shares are issued and 133,333 shares are outstanding and are
designated as convertible, and Series B Preferred Stock with a par value of
$0.001 of which 4,017,188 are issued and 0 outstanding.





(B)           Common
Stock Issuances




(1) 
Capital Structure





As of
March 31, 2008, the authorized common stock of the Company consists of
300,000,000 shares of $.001 par value.




(2) 
Preferred Stock Conversions





During
the three months ended March 31, 2008, the Company converted 4,017,188 shares of
the Company’s Series B Convertible Preferred Stock to shares of common stock on
a one-to-one basis.





(3) 
Legal Settlements





During
the three months ended March 31, 2008, the Company settled one legal dispute for
an aggregate of 4,687,000 shares of common stock valued at $0.06 per
share.





(4) 
Warrant Conversions And Exercises




The
following is a summary of all common stock issued during the quarter ended March
31, 2008:





- 8
-
 Index





UVUMOBILE,
INC.
 
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)


Activity
            
            Quantity of Shares
            
            
            ValuationPreferred
      stock conversion
            
            
            4,017,188
            
            
            $
            –Legal
      settlements
            
            
            4,687,000
            
            
            
            281,250Total
            
            
            8,704,188
            
            
            $
            281,250








(C)           Other
Grants Of Common Stock Options And Warrants




(1) 
2004 Equity Incentive Plan




The Board
of Directors of the Company adopted the 2004 Equity Incentive Plan (“2004 Plan”)
effective January 1, 2004, to provide incentives to attract and retain
participating officers, directors, and key employees. The 2004 Plan allows for
the issuance of up to 5,000,000 shares of common stock in the form of incentive
awards, including, without limitation, stock options and restricted stock. This
Plan was approved by the stockholders at the Annual Meeting held on August 31,
2004.








(2) 
2005 Equity Incentive Plan




The Board
of Directors of the Company adopted the 2005 Equity Incentive Plan (“2005 Plan”)
on January 3, 2006 to provide incentives to attract and retain participating
officers, directors, employees, consultants and advisors. The 2005 Plan allows
for the issuance of 10,000,000 shares of common stock in the form of incentive
awards, including, without limitation, stock options and restricted stock. The
Plan was approved by the stockholders on February 23, 2006.





The
following tables summarize all stock option grants to employees and
non-employees as of March 31, 2008:







Stock Options
            
            Number of Options
            
            
            Weighted Average Exercise
    PriceBalance
      at December 31, 2007
            
            
            11,960,000
            
            
            
            1.14Granted
            
            
            275,000
            
            
            
            0.08Exercised
            
            
            –
            
            
            
            –Forfeited
            
            
            (4,740,000
            )
            
            
            1.78Balance
      at March 31, 2008
            
            
            7,495,000
            
            
            
            0.69Options
      exercisable at March 31, 2008
            
            
            4,327,917
            
            
            
            1.06Weighted
      average fair value of options granted during the three months ended March
      31, 2008
            
            
            275,000
            
            
            
            0.08





- 9
-
 Index




UVUMOBILE,
INC.
 
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)


Options Outstanding
            
            Options ExercisableExercise Price
            
            Number
      Outstanding as of March 31, 2008
            
            Weighted
      Average Remaining Contractual Years
            
            Weighted Average Exercise
    Price
            
            Number
      Exercisable at March 31, 2008
            
            Weighted Average Exercise
    Price$
            0.08
            
            275,000
            
            9.05
            
            $
            –
            
            –
            
            $
            0.08$
            0.09
            
            575,000
            
            8.97
            
            $
            0.01
            
            143,750
            
            $
            0.09$
            0.13
            
            2,900,000
            
            8.83
            
            $
            0.05
            
            1,079,167
            
            $
            0.13$
            0.15
            
            500,000
            
            8.70
            
            $
            0.01
            
            250,000
            
            $
            0.15$
            0.30
            
            405,000
            
            8.33
            
            $
            0.02
            
            151,875
            
            $
            0.30$
            0.35
            
            –
            
            8.28
            
            $
            –
            
            –
            
            $
            0.35$
            0.90
            
            –
            
            6.52
            
            $
            –
            
            –
            
            $
            0.90$
            0.97
            
            –
            
            7.65
            
            $
            –
            
            –
            
            $
            0.97$
            1.00
            
            225,000
            
            5.58
            
            $
            0.03
            
            206,250
            
            $
            1.00$
            1.02
            
            –
            
            7.92
            
            $
            –
            
            –
            
            $
            1.02$
            1.31
            
            190,000
            
            7.78
            
            $
            0.03
            
            131,250
            
            $
            1.31$
            1.36
            
            –
            
            7.40
            
            $
            –
            
            –
            
            $
            1.36$
            1.40
            
            150,000
            
            7.51
            
            $
            0.03
            
            125,000
            
            $
            1.40$
            1.44
            
            –
            
            8.44
            
            $
            –
            
            –
            
            $
            1.44$
            1.48
            
            250,000
            
            7.14
            
            $
            0.05
            
            225,000
            
            $
            1.48$
            1.50
            
            –
            
            6.97
            
            $
            –
            
            –
            
            $
            1.50$
            1.55
            
            1,500,000
            
            6.37
            
            $
            0.32
            
            1,500,000
            
            $
            1.55$
            1.58
            
            –
            
            6.40
            
            $
            –
            
            –
            
            $
            1.58$
            1.75
            
            –
            
            7.32
            
            $
            –
            
            –
            
            $
            1.75$
            1.78
            
            –
            
            –
            
            $
            –
            
            –
            
            $
            1.78$
            1.86
            
            –
            
            7.31
            
            $
            –
            
            –
            
            $
            1.86$
            1.90
            
            –
            
            6.84
            
            $
            –
            
            –
            
            $
            1.90$
            1.91
            
            –
            
            7.27
            
            $
            –
            
            –
            
            $
            1.91$
            1.95
            
            100,000
            
            7.22
            
            $
            0.03
            
            100,000
            
            $
            1.95$
            2.10
            
            50,000
            
            7.16
            
            $
            0.01
            
            50,000
            
            $
            2.10$
            2.20
            
            150,000
            
            7.26
            
            $
            0.05
            
            150,000
            
            $
            2.20$
            2.25
            
            50,000
            
            4.04
            
            $
            0.02
            
            40,625
            
            $
            2.25$
            2.30
            
            150,000
            
            5.92
            
            $
            0.05
            
            150,000
            
            $
            2.30$
            2.53
            
            –
            
            7.18
            
            $
            –
            
            –
            
            $
            2.53$
            2.77
            
            25,000
            
            7.17
            
            $
            0.01
            
            25,000
            
            $
            2.77$
            2.90
            
            –
            
            6.27
            
            $
            –
            
            –
            
            $
            2.90$
            2.91
            
            –
            
            6.29
            
            $
            –
            
            –
            
            $
            2.91$
            2.95
            
            –
            
            5.75
            
            $
            –
            
            –
            
            $
            2.95$
            3.27
            
            –
            
            7.15
            
            $
            –
            
            –
            
            $
            3.27$
            3.50
            
            –
            
            5.52
            
            $
            –
            
            –
            
            $
            3.507,495,000
            
            8.71
            
            $
            0.72
            
            4,327,917
            
            $
            1.06







At March
31, 2008, the Company had a total of 39,112,598 warrants
outstanding.   All of these warrants are
exercisable.  The life of the warrants range from zero to five
years.  The exercise price of these warrants range form $0.064 to
$3.50.  See additional disclosure above regarding warrant
activity.




(3)
            Stock  Plans




In 2006,
the Company adopted SFAS No. 123(R).  Under SFAS No. 123(R), companies
are required to measure the compensation costs of share-based compensation
arrangements based on the grant date fair value and recognize the costs in the
financial statements over the period during which employees are required to
provide services.   Share-based compensation arrangements include
stock options, restricted share plans, performance-based awards, share
appreciation rights and employee share purchase plans.




Note 4 – Office
Space





In August
2007, the Company assumed a sublease for approximately 4,541 square feet of
office space in Duluth, Georgia.  This office space currently serves
as the Company’s corporate headquarters.  This sublease calls for
monthly rental payments of approximately $6,528 and terminates on December 30,
2009.  Rent expense for the quarter ended March 31, 2008 and 2007 was
$19,584 and $64,110, respectively.





- 10
-
 Index


UVUMOBILE,
INC.
 
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)


Note 5 – Convertible
Promissory Notes





The
following is a summary of the activity for convertible debt issuances for the
quarter ended March 31, 2008 and the year ended December 31,
2007.  The accrued interest on the Convertible Promissory Notes was
approximately $40,700 as of March 31, 2008.








March
      31,
            
            
            December
      31,2008
            
            
            2007Convertible
      notes payable
            
            
            2,033,423
            
            
            
            2,033,423Loan
      discount
            
            
            (1,753,821
            )
            
            
            (2,008,005
            )Total
      convertible notes payable
            
            
            279,602
            
            
            
            25,418








Note 6 - Promissory
Notes





Concurrent
with the merger between Armagh and OVT, the Company assumed a $50,000 loan
payable to a third-party. The loan bears interest at 5% and is payable on
demand. The accrued interest on the loan payable was approximately $16,222 as of
March 31, 2008.





Note 7 - Commitments And
Contingencies





From
time-to-time, the Company is a party to claims and legal proceedings arising in
the ordinary course of business. The Company's management evaluates the exposure
to these claims and proceedings individually and in the aggregate and allocates
additional monies for potential losses on such litigation if it is possible to
estimate the amount of loss and determine if the loss is probable.





On
or about April 22, 2004, the Company filed a complaint in the United States
District Court, North District of Georgia (Case No. 1:04-CV-1123) against Rene
Hamouth, seeking the recovery of all profits realized by Mr. Hamouth resulting
from his alleged violations of Section 16(b) of the Securities Exchange Act of
1934 (the “Exchange Act”) relating to his purchases and sales of the Company’s
common stock since approximately January 1, 2003. The Company is seeking damages
in the amount of at least $151,428, interest on the amount of profits recovered
and all other general and equitable relief to which it may be entitled. Since
filing the complaint and serving Mr. Hamouth, Mr. Hamouth has filed an
answer. The court has entered a scheduling order, approving the Joint
Preliminary Planning Report and Discovery Plan. On March 16, 2005, the Company
received notice that Mr. Hamouth's attorney in this matter has withdrawn
from the case. On April 15, 2005, the Company filed a motion for summary
judgment on this matter. The motion was unopposed. On October 5, 2005, the Court
granted its motion and executed a judgment for us in the amount of
$172,342.  On July 16, 2007, the Company entered into a General
Release and Settlement Agreement with the Hamouth Family Trust and Rene
Hamouth.  (See October 20, 2006
Hamouth litigation paragraph below describing the settlement
agreement.)





On March
9, 2005, SmartVideo Europe, Ltd., or SVEL, which is not an affiliate of
uVuMobile, announced its intention to bring legal action in the form of a
mediation/arbitration against the Company in regard to its alleged repudiation
and breach of a distribution agreement between the parties, dated April 2, 2004,
which involved certain rights to distribute certain of the Company’s products.
The dispute includes claims of SVEL that the Company had anticipatorily breached
its agreement with SVEL, thus allegedly inhibiting the development of SVEL's
business utilizing the Company’s technology on an exclusive basis in 25
countries throughout the European Union. the Company contends that it had the
right to terminate the agreement because of breaches by SVEL. On or about
December 13, 2006, SVEL filed its Statement of Claim with the American
Arbitration Association. The Company filed its response to the Statement of
Claim on or about January 22, 2007. The parties have now agreed to mediate the
matter prior to proceeding with arbitration. The mediation, which was set for
October 23, 2007, has been postponed indefinitely.





On or
about July 18, 2006, Manhattan Investments, Inc. (“Manhattan”) filed a Complaint
against the Company in the United States District Court, Northern District of
California (Case No. C-06-4379), alleging that the Company has wrongfully
refused to remove the restrictive legend on a stock certificate representing
49,795 shares. The Complaint includes claims for breach of fiduciary and
statutory duties, conversion and fraud, and seeks injunctive relief, as well as
monetary damages. On October 2, 2006, the Company filed a Motion to Transfer for
Improper Venue. The Motion was granted by the Court on November 13,
2006.  On July 23, 2007 (the “Effective Date”) the Company entered
into a Settlement Agreement and Mutual Release (the “Agreement”) with
Manhattan.  Pursuant to the Agreement, the parties agreed, among other
things, that the Company will issue 850,000 shares of the Company’s common
stock, par value $0.001 to Manhattan within seven business days following a
determination by the Court that the issuance of such common stock is fair,
reasonable, and adequate to Manhattan (the “Judicial
Determination”).  The 850,000 shares of the Company’s common stock
will be issued in reliance on the exemption from the registration requirements
of the Securities Act of 1933, as amended (the “Act”), provided by Section
3(a)(10) of the Act.  The Agreement also requires the Company to pay
$35,000 to Manhattan within 15 days after the closing of an equity financing
transaction, provided that the Company completes such transaction.  In
addition, the agreement requires the Company to cause 49,795 shares of the
Company’s common stock currently owned by Manhattan to be re-issued without
restrictive legends within seven business days of the Effective
Date.  In exchange for the payments and actions described above, the
Agreement provides for a release of the Company and each of the owners,
stockholders, predecessors, successors, directors, officers, employees,
representatives, attorneys, subsidiaries, and affiliates of the Company from all
charges, claims, liabilities, agreements, damages, causes of action, suits,
costs, losses, debts and expenses of any nature by Manhattan.  The
Agreement further provides for a release of Manhattan and each of the trustees,
representatives, attorneys and affiliates of Manhattan, and all persons acting
by, through, under or in concert with them from any and all charges, claims,
liabilities, agreements, damages, causes of action, suits, costs, losses, debts
and expenses of any nature by the Company.  On July 24, 2007, the
United States District Court entered an Order making the above-referenced
Judicial Determination. At September 30, 2007, based on the settlement date
of July 23, 2007, the Company accrued a settlement liability and related expense
of $332,500 based on the quoted closing trading price of $0.35 per share for the
underlying 850,000 common shares in addition to the $35,000 in cash
payments.




- 11
-
 Index




UVUMOBILE,
INC.
 
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)


On or
about October 20, 2006, Hamouth Family Trust (“Hamouth”) filed a Complaint
against the Company in the Court of Chancery of the State of Delaware, in which
Hamouth seeks declaratory and injunctive relief, as well as damages in an
unspecified amount, related to the Company's alleged wrongful refusal to issue
new stock certificates without restrictive legends for 800,000 shares of stock
owned by Hamouth.  On July 16, 2007 (the “Effective Date”), the
Company entered into a General Release and Settlement Agreement (the
“Agreement”) with the Hamouth Family Trust and Rene Hamouth (the “Claimant
Parties”) related to the Company's alleged wrongful refusal to issue new stock
certificates without restrictive legends for 800,000 shares of stock owned by
the Hamouth Family Trust and a judgment against Rene Hamouth in favor of the
Company in the amount of $172,325.  Pursuant to the Agreement, the
parties agreed, among other things, that the Company will issue 3,000,000 shares
of the Company’s common stock, par value $0.001 (the “Settlement Shares”) to the
Hamouth Family Trust within six business days following a determination by the
Chancery Court that the issuance of such common stock is fair, reasonable, and
adequate to the Hamouth Family Trust (the “Judicial
Determination”).  The 3,000,000 shares of the Company’s common stock
will be issued in reliance on the exemption from the registration requirements
of the Securities Act of 1933, as amended (the “Act”), provided by Section
3(a)(10) of the Act.  In the event the Chancery Court declines to make
the Judicial Determination, the Hamouth Family Trust has certain specified
registration rights relating to the Settlement Shares.  The Agreement
also requires (i) the Company to pay $50,000 to the Hamouth Family Trust on the
Effective Date, (ii) the Company to pay $50,000 to the Hamouth Family Trust on
the 30th day following the Effective Date, (iii) the Company to pay $300,000 to
the Hamouth Family Trust within 30 days after the closing of an equity financing
transaction, provided that the Company completes such transaction within 120
days of the Effective Date.  In addition, the agreement requires the
Company to: (a) cause 800,000 shares of the Company’s common stock currently
owned by the Hamouth Family Trust to be re-issued without restrictive legends
within six business days of receipt of the certificates representing such shares
of common stock and (b) release a judgment in the amount of $172,325 it holds
against Rene Hamouth.  In exchange for the payments and actions
described above, the Agreement provides for a release of the Company and each of
the owners, stockholders, predecessors, successors, directors, officers,
employees, representatives, attorneys, subsidiaries, and affiliates of the
Company from all charges, claims, liabilities, agreements, damages, causes of
action, suits, costs, losses, debts and expenses of any nature by the Claimant
Parties.  The Agreement further provides for a release of the Claimant
Parties and each of the trustees, representatives, attorneys and affiliates of
the Claimant Parties, and all persons acting by, through, under or in concert
with them from any and all charges, claims, liabilities, agreements, damages,
causes of action, suits, costs, losses, debts and expenses of any nature by the
Company.  The Agreement also provides that neither the Company nor the
Claimant Parties will file or pursue certain specified claims, grievances,
complaints, lawsuits, or arbitrations.  On July 18, 2007, the Chancery
Court entered an Order making the above-referenced Judicial Determination. The
Company accrued a settlement liability and related expense of $955,000 based on
the quoted trading price of $0.185 per share for the 3,000,000 underlying common
shares in addition to the $400,000 in cash payments.  During 2007, the
Company made cash payments totaling $100,000 to Mr. Hamouth pursuant to the
Settlement Agreement dated July 16, 2007.  On February 25, 2008, the
Company entered into a General Release and Settlement Agreement (the
“Agreement”) with Mr. Hamouth for the third and final payment of
$300,000.  Pursuant to the Agreement dated February 25, 2008, in lieu
of cash the Company agreed to issue 4,687,000 shares of the Company’s common
stock in full and complete satisfaction of any and all obligations of the
Company concerning the third payment of $300,000.





On
September 9, 2006 and February 14, 2007, respectively, the Company received
correspondence from Epsom Investment Services, N.V. (“Epsom”) demanding
repayment of an alleged outstanding Demand Loan made in 2002 from Epsom to
Sharps Eliminations Technologies, Inc. (“Sharps”) in the amount of $50,000
bearing interest at 5%. Epsom claims that the Company agreed to repay this loan
on behalf of Sharps. The Company currently does not believe any such amounts are
due and owing to Epsom.  On March 27, 2008, the Company entered into a
Settlement Agreement (“the Agreement”) with Epsom.  Pursuant to the
Agreement dated March 27, 2008, in lieu of cash the Company agreed to issue
1,000,000 shares of the Company’s common stock in full and complete satisfaction
of any and all obligations of the Company concerning the alleged Demand
Loan.




- 12
-
 Index




UVUMOBILE,
INC.
 
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)


On
November 6, 2007, the Company filed a demand for arbitration against Jeremy
DeBonet (“DeBonet”) and Skyward Mobile, LLC (“Skyward”) alleging breach of
contract, misappropriation of trade secrets, conversion and deceptive trade
practices and unfair competition under the statutory and common law of the State
of Delaware arising, in part, out of DeBonet/Skyward’s failure to perform their
obligations under a technology development agreement between the Company and
DeBonet/Skyward.  More specifically, despite repeated demands by the
Company that DeBonet/Skyward turn over intellectual property for which the
Company has paid over a $500,000, DeBonet/Skyward have refused to do so. 
Furthermore, the Company believes that DeBonet/Skyward have converted the
intellectual property at issue through the wrongful exercise of dominion or
right of ownership over the Company’s intellectual property in denial of, or
inconsistent with the Company’s right as owner.  The Company is asking
for:  (a) judgment that DeBonet/Skyward have materially breached the
technology development agreement; (b) an order requiring DeBonet/Skyward to
perform their obligations under the technology development agreement, and to
produce all technology developed under the agreement, or in the alternative, a
judgment that the Company is entitled to an award of monetary damages; (c)
certain other monetary and declaratory relief.





Except as
set forth above, the Company believes that there are no material litigation
matters at the current time. The results of such litigation matters and claims
cannot be predicted with certainty, and an adverse outcome in one or more of
such matters and claims could have a material adverse impact on the Company’s
financial position, liquidity, or results of operations.





Note 8 – Related Party
Transactions





None





Note 9 – Subsequent
Events





None





- 13
-
 Index





Item2 –
Management’s Discussion and Analysis of Financial Condition and Results of
Operations





This
discussion presents management’s analysis of the Company’s results of operations
and financial condition as of and for each of the quarters ended March 31, 2008
and 2007, respectively. The discussion should be read in conjunction with its
audited consolidated financial statements and the notes related thereto which
appear elsewhere in this report.




Overview




uVuMobile,
Inc. (hereinafter sometimes referred to as “uVuMobileTM”,” the “Company,” “we,”
“us,” or “our”) is a provider of video content distribution services and
technology.





Incorporated
in 1984, the Company acquired OVT, Inc., d/b/a SmartVideo, in November 2002,
subsequently changing its name to SmartVideo Technologies, Inc., and in
June 2007, the Company changed its name to uVuMobile, Inc.  Although
the core business of the Company has remained constant, the Company has changed
its focus from distributing business-to-business services to the distribution of
video content to consumers.




Since
2002, the Company has been a provider of technology engaged in the aggregation
and distribution of streaming video content to consumers connected to the public
Internet. The Company has been in the business of purchasing the rights to video
and television content and delivering that content to subscribers for a fee.
Additionally, the Company also provides managed services for Internet
network operators (carriers) and for major producers, owners and distributors of
content. The Company intends to continue expanding its market opportunities by
delivering video services to all forms of devices capable of receiving an
Internet Protocol (IP) data stream and rendering that data stream into visible
images on displays.




In
January 2005, the Company launched its direct-to-consumer mobile video service
providing its customers with access to high-quality video programming that is
transmitted directly to SmartPhone cellular handsets and to Wi-Fi enabled PDA
devices. In addition, the Company has developed Real Time Streaming Protocol
(RTSP) and Java 2 Platform, Micro Edition (J2ME) compatibility.





During
the fourth quarter of 2006, the Company expanded its product offerings to
include a new suite of mobile technology and content solutions, bringing
together a myriad of implementation choices, business models and marketing
plans. The Company believes these new products will aid our customers seeking to
capitalize on mobile technology opportunities. These new media services combine
TV, radio, and other media platforms with user-friendly personalization,
interactivity and targeted advertising.





Critical
Accounting Policies And Estimates




The
Company relies on the use of estimates and makes assumptions that impact its
financial condition and results. These estimates and assumptions are based on
historical results and trends as well as the Company’s forecasts as to how
results and trends might change in the future. While the Company believes that
the estimates it uses are reasonable, actual results could differ from those
estimates.




The
Company believes that the accounting policies described below are critical to
understanding its business, results of operations and financial condition
because they involve more significant judgments and estimates used in the
preparation of its consolidated financial statements. An accounting policy is
deemed to be critical if it requires an accounting estimate to be made based on
assumptions about matters that are highly uncertain at the time the estimate is
made, and any changes in the different estimates that could have been used in
the accounting estimates that are reasonably likely to occur periodically could
materially impact its consolidated financial statements. The Company has
discussed the development, selection and application of its critical accounting
policies with the Audit Committee of its Board of Directors, and its Audit
Committee has reviewed its disclosure relating to its critical accounting
policies in this “Management’s Discussion and Analysis.”





The
Company’s most critical accounting policies and estimates that may materially
impact the Company’s results of operations include:





Revenue
Recognition





The
accounting related to revenue recognition in the digital media and multimedia
broadcast industry is complex and affected by interpretations of the rules and
an understanding of various industry practices, both of which are dynamic in
nature and subject to change. As a result, revenue recognition accounting rules
require the Company to make significant judgments.




The
Company typically provides services to its business-to-business customers under
volume-based usage arrangements of its digital media and multimedia broadcast
products and services. Revenues for direct-to-consumer and custom applications
are recognized as earned upon the delivery of service to its subscription-based
customers. This typically occurs when a digital media or multimedia broadcast is
viewed. Many of its subscription-based customers access its programming through
the purchase of a monthly, semi-annual, or daily subscription fee for its mobile
entertainment services.  Revenue from mobile advertising is recognized
when the related services are performed.  See Note 2(K) (Going
Concern, Significant Accounting Policies and Risks and Uncertainties) to the
consolidated financial statements included elsewhere in this
report.




- 14
-
 Index





Valuation
And Recoverability Of Long-Lived Assets




See Note
2(M) (Going Concern, Significant Accounting Policies and Risks and
Uncertainties) to the consolidated financial statements for the years ended
December 31, 2007, 2006, and 2005 for a description of the valuation and
recoverability of long-lived assets.





Income
Taxes




Income
taxes are accounted for using the liability method in accordance with Statement
of Financial Accounting Standards  No. 109, “Accounting for Income
Taxes” (SFAS
109). Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operation loss and tax credit carry forwards.  Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled.  The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.  The Company continues to record a
valuation allowance for the full amount of deferred income taxes, which would
otherwise be recorded for tax benefits related to operating loss carry forwards,
as realization of such deferred tax assets cannot be determined to be more
likely than not likely.





Accounting
For Stock-Based Compensation




In
December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No.
123(R), “Share-Based Payment,” which replaces SFAS No. 123 and supersedes APB
Opinion No. 25. Under SFAS No. 123(R), companies are required to measure the
compensation costs of share-based compensation arrangements based on the
grant-date fair value and recognize the costs in the financial statements over
the period during which employees are required to provide services. Share-based
compensation arrangements include stock options, restricted share plans,
performance-based awards, share appreciation rights and employee share purchase
plans. In March 2005, the SEC issued Staff Accounting Bulletin No. 107, or “SAB
107”. SAB 107 expresses views of the staff regarding the interaction between
SFAS No. 123(R) and certain SEC rules and regulations and provides the staff's
views regarding the valuation of share-based payment arrangements for public
companies. SFAS No. 123(R) permits public companies to adopt its requirements
using one of two methods. On April 14, 2005, the SEC adopted a new rule
amending the compliance dates for SFAS No. 123R. Companies may elect to apply
this statement either prospectively, or on a modified version of retrospective
application under which financial statements for prior periods are adjusted on a
basis consistent with the pro forma disclosures required for those periods under
SFAS No. 123. Effective January 1, 2006, the Company adopted SFAS No. 123(R)
using the prospective method.    See Note
2(S) (Going Concern, Significant Accounting Policies and Risks and
Uncertainties) to the consolidated financial statements for the years ended
December 31, 2007, 2006 and 2005 for a description of the valuation of
Stock-Based Compensation.





Recent
Accounting Pronouncements




See Note
2(V) to the consolidated financial statements for the years ended December 31,
2007, 2006, and 2005 for a description of previously disclosed new accounting
pronouncements and their impact on the Company.





FASB
161 -  Disclosures about Derivative Instruments and Hedging
Activities





In March
2008, the FASB issued FASB Statement No. 161, which amends and expands the
disclosure requirements of FASB Statement No. 133 with the intent to provide
users of financial statements with an enhanced understanding of how and why an
entity uses derivative instruments, how the derivative instruments and the
related hedged items are accounted for and how the related hedged items affect
an entity’s financial position, performance and cash flows. This Statement is
effective for financial statements for fiscal years and interim periods
beginning after November 15, 2008. Management believes this Statement will have
no impact on the financial statements of the Company once adopted.





Results
Of Operations





Quarter
Ended March 31, 2008 Compared To Quarter Ended March 31, 2007





Revenues




Revenues
for the quarter ended March 31, 2008, consisted primarily of proceeds from
custom applications and direct-to-consumer services.  The Company’s
revenues were $283,606 for the Quarter ended March 31, 2008 as compared to
$334,732 in the same period in 2007.  This increase is primarily
attributable to the Company’s decision in 2006 to change its focus from
direct-to-consumer services to multiple service offerings including custom
application and hosting services.





- 15
-
 Index





Cost
Of Goods Sold





For the
quarter ended March 31, 2008, Costs of Goods Sold decreased from approximately
$138,000 as compared to $83,500 for the same period in 2007.  This
increase is primarily attributable to the Company’s exit from its
direct-to-consumer business.








Broadcast
Rights




Broadcast
right expenses for the quarter ended March 31, 2008 was approximately $(1,530)
as compared to $99,800 for the same period in 2007. This decrease is
attributable to the Company’s decision to change its focus from a subscription
based model to custom applications and hosting services.





Compensation
And Benefits





The
Company’s compensation and benefits expenses decreased by approximately $414,600
or 62.6% for the year ended March 31, 2008 as compared to the same period in
2007.  The decrease is primarily attributable to staff reductions
during 2007.





Consulting
And Professional Fees




The
Company’s consulting and professional fees decreased by approximately $510,570
or 80%for the
quarter ended March 31, 2008, as compared to the same period in
2007.  The decrease is primarily attributable to the reduction in
legal fees.





Data Center




The
Company’s data center expenses consist primarily of those items related to the
maintenance of certain facilities and equipment at a third-party data center.
The decrease in data center expenses of approximately $140,600 or 61.8% for the
quarter ended March 31, 2008, when compared to 2007 is primarily attributable to
cost reductions due to the Company’s exit from its direct-to-consumer business
in the third quarter of 2007.





Stock-Based
Compensation




For the
quarter ended March 31, 2008, the Company recorded approximately $72,000, as
compared to $1,645,000 for the quarter ended March 31, 2007, in non-cash,
stock-based compensation. The compensation expense has been determined using the
Black-Scholes fair value method. The remainder of the non-cash, stock-based
compensation is related to the amortization of the deferred portion of previous
warrant grants. In the quarter ended March 31, 2008, the expense reflects the
grant of stock options under SFAS 123(R).  The decrease in stock-based
compensation expense was primarily attributable to a reduction in the number of
options issued and the exercise price of the options granted.





Depreciation
And Amortization




Depreciation
and amortization expense for the quarter ended March 31, 2008, increased by
approximately $22,000 when compared to the same period in 2007. This increase is
primarily attributable to the development of additional software and the
amortization of intangible assets during 2007.




Selling,
General And Administrative Expenses




Selling,
general and administrative expenses consist primarily of travel expenses related
to the marketing of the Company’s products and services, lease payments related
to the use of the Company’s corporate facilities, trade shows, and other general
and administrative expenses. The Company’s selling, general and administrative
costs decreased approximately $328,000 or 64.4% for the quarter ended March 31,
2008 when compared to the same period in 2007.  This decrease is
attributable to a reduction in staffing, travel related expenses, marketing and
advertising costs as well as a decrease in Directors’ compensation.





Interest
Income( Expense)




Interest
income for the quarter ended March 31, 2008, was approximately
$5,900.  Interest expense for the quarter ended March 31, 2008, was
approximately $342,900.





- 16
-
 Index





Liquidity And Capital Resources And
Going Concern





The
Company has incurred recurring losses and negative cash flows since
inception.  For the three months ended March 31, 2008, the Company had
an accumulated deficit of $74,689,916, a consolidated net loss of
$1,156,839 and consolidated net cash flows used in operations of $725,098.
As a result, the Company’s operations are not an adequate source of cash to fund
future operations and these matters raise substantial doubt about its ability to
continue as a going concern. To fund its cash requirements, the Company has
relied on private placements of equity and loans from stockholders and other
related entities. Although the Company closed on a $2.0 million debt financing
on December 17, 2007, its ability to continue its operations is contingent upon
obtaining additional financing and attaining profitable operations.





Cash
flows generated from operating activities during the year ended December
31, 2007 were not sufficient to offset its operating expenditures. Based on
information available regarding its proposed plans and assumptions relating to
operations, the Company anticipates that the net proceeds from its last
financing in 2007, together with projected cash flow from operations, will not
be sufficient to meet its cash requirements for working capital and capital
expenditures beyond second quarter of 2008. As a result, it will be necessary
for the Company to secure additional financing to support its operations. There
can be no assurance that the Company will be able to obtain such financing on
acceptable terms, or at all. If adequate funds are not available or not
available on acceptable terms, the Company will be unable to continue as a going
concern. The Company currently has no firm commitments for any additional
capital.





Item3.  Quantitative And Qualitative Disclosures About
Market Risk




We do not
use any derivative financial instruments for hedging, speculative, or trading
purposes. Our exposure to market risk is currently immaterial.





Item4.  Controls and Procedures





Our chief
executive officer and chief financial officer (the “Certifying Officers”) are
responsible for establishing and maintaining disclosure controls and procedures
for our Company and our subsidiary. Such officers have concluded (based upon
their evaluation of these controls and procedures as of the end of the period
covered by this report) that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in reports
we file and submit under the Exchange Act is recorded, processed, summarized and
reported as and when required. In addition, the Certifying Officers have
concluded that our disclosure controls and procedures have been designed to
ensure that information required to be disclosed in reports filed by us under
the Exchange Act is accumulated and communicated to management, including our
principal executive officers as appropriate, in a manner to allow timely
decisions regarding the required disclosure.





There
were no significant changes in our internal controls or other factors that could
significantly affect such controls subsequent to the date of his evaluation, and
there were no corrective actions taken with regard to significant deficiencies
and material weaknesses.




Our
management, including the Certifying Officers, do not expect that our disclosure
controls or our internal controls will prevent all error and all fraud. A
control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. In addition, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within a company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people or by management
override of the control. The design of any systems of controls also is based in
part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions. Because of these inherent limitations in
a cost-effective control system, misstatements due to error or fraud may occur
and not be detected.





- 17
-
 Index





PART
II - OTHER INFORMATION





Item1. Legal Proceedings




See Note
7 - Commitments and Contingencies to the Financial Statements included elsewhere
in this report which discuss material pending legal proceedings to which the
Company is a party and which are incorporated herein by
reference.




Item2.  Unregistered Sales of Equity Securities and Use of
Proceeds





As is
described in Note 7 - Commitments and Contingencies to the Financial Statements,
we issued 4,687,000 shares of common stock to the Hamouth Family Trust in
connection with a settlement agreement dated February 25, 2008. In addition, we
issued an aggregate of 3,892,188 shares of common stock to
Messrs. Glenn Singer, Michael Criden and
William J. Loughman upon conversion of their Series B Convertible
Preferred Stock and 125,000 shares of commons stock to Management Decisions Inc.
pursuant to a Settlement Agreement in lieu of payment for accounts
payable.




In each
of these unregistered issuances of equity securities, the Company relied on
Section 4(2) of the Securities Act of 1933, as amended.





Item3. Submission of Matters to a Vote of Security
Holders




On
February 13, 2008, the Company received the consent of a majority
of  the outstanding holders of record, as of January 3, 2008, of its
capital stock.  Capital stock is described as the Company’s common
stock, par value $0.001 per share, the Company’s Series A-1 Convertible
Preferred Stock, par value $0.001 per share, and the Company’s Series B
Convertible Preferred Stock, par value $0.001 per share.  The
following item was presented for the consent of the holders (the
“Shareholders”) of the Company’s issued and outstanding capital
stock.





(1)
            To
      amend the Company’s Certificate of Incorporation to increase the number of
      authorized shares of common stock from 150,000,000 shares to 300,000,000
      shares.





The
number of votes cast for the above is summarized in the table
below.  All numbers in the table below represent shares of common
stock or the voting equivalent thereof:





Item
      Submitted to Shareholders
            
            For
            
            
            Against
            
            
            Abstain
            
            
            Non-Votes
            
            
            Total(1)
            
            Increase
      in the number of Authorized shares of common stock from 150,000,000 shares
      to 300,000,000 shares
            
            44,267,506
            
            
            3,295,715
            
            
            1,532,433
            
            
            0
            
            
            49,095,654





The
amendment to the Certificate of Incorporation became effective on February 13,
2008, upon the filing of the Certificate of Amendment to the Certificate of
Incorporation with the Secretary of State of the State of Delaware.





Item6. Exhibits




Exhibits


31.1
            
            Certification
      of the Chief Executive Officer and President pursuant to Rule
      13a-14(a)/15d-14(a) of the Securities and Exchange Act of
      1934.31.2
            
            Certification
      of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the
      Securities and Exchange Act of 1934.32.1
            
            Certification
      of the Chief Executive Officer and President pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2003.32.2
            
            Certification
      of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2003.





- 18
-
 Index





SIGNATURES




In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.








UVUMOBILE,
INC.








By:
            /s/Scott Hughes
            
            Date:  May
      8, 2008Scott
      HughesPresident
      and Chief Executive Officer(Principal
      Executive Officer)By:
            /s/Ronald A. Warren
            
            Date:  May
      8, 2008Ronald
      A. WarrenChief
      Financial Officer(Principal
      Financial Officer and Principal Accounting Officer)