The following discussion contains various forward-looking statements within the meaning of Section 21E of the Exchange Act. Although we believe that, in making any such statement, our expectations are based on reasonable assumptions, any such statement may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. When used in the following discussion, the words "anticipates," "believes," "expects," "intends," "plans," "estimates" and similar expressions, as they relate to us or our management, are intended to identify such forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from those anticipated. Factors that could cause actual results to differ materially from those anticipated, certain of which are beyond our control, are set forth in Item 1A under the caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking statements. Accordingly, we cannot be certain that any of the events anticipated by forward-looking statements will occur or, if any of them do occur, what impact they will have on us. We caution you to keep in mind the cautions and risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and to refrain from attributing undue certainty to any forward-looking statements, which speak only as of the date of the document in which they appear. We do not undertake to update any forward-looking statement.

Overview

We provide marketing technology solutions, which include digital signage, interactive kiosks, mobile messaging, social networking and web development solutions, to customers who use our products and services in certain retail and service markets. Through our proprietary RoninCast®X software, we provide enterprise, web-based and hosted content delivery systems that manage, schedule and deliver digital content over wireless and wired networks. We also provide custom interactive software solutions, content engineering and creative services to our customers.

While our marketing technology solutions have application in a wide variety of industries, we focus on three primary markets: (1) automotive, (2) food service (including quick serve restaurants (QSR), fast casual and managed food services markets), and (3) retail. The industries in which we sell goods and services are not new but their application of marketing technology solutions is relatively new (within the last five years) and these industries have not widely accepted or adopted these types of technologies as part of their marketing strategies. As a result, we remain an early stage company without an established history of profitability, or substantial or steady revenue. We believe this characterization applies to our competitors as well, which are working to promote broader adoption of marketing technology solutions and to develop profitable, substantial and steady sources of revenue.

We believe that the adoption of marketing technology solutions will increase substantially in years to come both in industries on which we currently focus and in other industries. We also believe that adoption of our marketing technology solutions, which includes digital signage, depends not only upon the software and services that we provide but upon the cost of hardware used to process and display content in digital signage systems. Digital media players and flat panel displays constitute a large portion of the expenditure customers make relative to the entire cost of digital signage systems. Costs of these digital media players and flat panel displays have historically decreased and we believe will continue to do so, though we do not manufacture either product and do not substantially affect the overall markets for these products. If prices continue to decline for this hardware, we believe that adoption of digital signage and other marketing technology solutions are likely to increase, though we cannot predict a precise rate at which adoption will occur.

Management focuses on a wide variety of financial measurements to assess our financial health and prospects but principally upon (1) sales, to measure the adoption of our marketing technology solutions by our customers, (2) cost of sales and gross profit, particularly expressed as gross profit percentage, to determine if sales have been made at levels of profit necessary to cover operating expenses on a long-term basis (based upon assumptions regarding adoption), (3) sales of hardware relative to software and services, understanding that hardware typically provides a lower gross profit margin than do software license fees and services, (4) operating expenses so that management can appropriately match those expenses with sales, and (5) current assets, especially cash and cash equivalents used to fund operating losses thus far incurred.

Our wholly-owned subsidiary, Wireless Ronin Technologies (Canada), Inc. ("RNIN Canada"), an Ontario, Canada provincial corporation located in Windsor, Ontario, maintains a vertical specific focus in the automotive industry and houses our content engineering operation. RNIN Canada develops digital content and sales support systems to help retailers train their sales staff and educate their customers at the point of sale. Today, the capabilities of this operation are integrated with our historical business to provide content solutions to all of our clients.

Our company and our subsidiary sell products and services primarily throughout North America.

Our Sources of Revenue

We generate revenue through system sales, license fees and separate service fees, including consulting, content development and implementation services, as well as ongoing customer support and maintenance, including product upgrades. We currently market and sell our software and service solutions primarily through our direct sales force, but we also utilize strategic partnerships and business alliances.

Our Expenses

Our expenses are primarily comprised of three categories: sales and marketing, research and development and general and administrative. Sales and marketing expenses include salaries and benefits for our sales associates and commissions paid on sales. This category also includes amounts spent on the hardware and software we use to prospect new customers, including those expenses incurred in trade shows and product demonstrations. Our research and development expenses represent the salaries and benefits of those individuals who develop and maintain our software products including RoninCast ® and other software applications we design and sell to our customers. Our general and administrative expenses consist of corporate overhead, including administrative salaries, real property lease payments, salaries and benefits for our corporate officers and other expenses such as legal and accounting fees.

Critical Accounting Policies and Estimates

A discussion of our critical accounting policies was provided in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2011. There were no significant changes to these accounting policies during the first half of 2012.

Results of Operations

All dollar amounts reported in Item 2 are in thousands, except per share information.

Three and Six Months Ended June 30, 2012 Compared to Three and Six Months Ended
June 30, 2011

The following table sets forth, for the periods indicated, certain unaudited
consolidated statements of operations information:



                                                                               Three Months Ended
                                       June 30,        % of total        June 30,        % of total         $ Increase        % Increase
                                         2012            sales             2011            sales            (Decrease)        (Decrease)
Sales                                  $   1,557             100.0 %     $   3,054             100.0 %     $     (1,497 )           (49.0 %)
Cost of sales                                612              39.3 %         1,662              54.4 %           (1,050 )           (63.2 %)

Gross profit (exclusive of
depreciation and amortization shown
separately below)                            945              60.7 %         1,392              45.6 %             (447 )           (32.1 %)
Sales and marketing expenses                 400              25.7 %           514              16.8 %             (114 )           (22.2 %)
Research and development expenses            396              25.4 %           620              20.3 %             (224 )           (36.1 %)
General and administrative expenses        1,280              82.2 %         1,568              51.3 %             (288 )           (18.4 %)
Depreciation and amortization
expense                                       75               4.8 %           122               4.0 %              (47 )           (38.5 %)

Total operating expenses                   2,151             138.2 %         2,824              92.5 %             (673 )           (23.8 %)

Operating loss                            (1,206 )           (77.5 %)       (1,432 )           (46.9 %)             226             (15.8 %)
Other income (expenses):
Interest expense                              (1 )            (0.1 %)           (7 )            (0.2 %)              (6 )            85.7 %
Interest income                               -                 -                1                -                  (1 )          (100.0 %)

Total other income (expense)                  (1 )            (0.1 %)           (6 )            (0.2 %)               5             (83.3 %)

Net loss                               $  (1,207 )           (77.5 %)    $  (1,438 )           (47.1 %)    $        231             (16.1 %)


                                                                               Three Months Ended
                                       June 30,        % of total        June 30,        % of total        $  Increase       %  Increase
                                         2012            sales             2011            sales            (Decrease)        (Decrease)
United States                          $   1,446              92.9 %     $   2,793              91.5 %     $     (1,347 )           (48.2 %)
Canada                                        92               5.9 %           237               7.8 %             (145 )           (61.2 %)
Other International                           19               1.2 %            24               0.7 %               (5 )           (20.8 %)

Total Sales                            $   1,557             100.0 %     $   3,054             100.0 %     $     (1,497 )           (49.0 %)

                                                                                 Six Months Ended
                                        June 30,        % of total        June 30,        % of total         $ Increase        % Increase
                                          2011            sales             2010            sales            (Decrease)        (Decrease)
Sales                                   $   3,330             100.0 %     $   5,451             100.0 %     $     (2,121 )           (38.9 %)
Cost of sales                               1,436              43.1 %         2,966              54.4 %           (1,530 )           (51.6 %)

Gross profit (exclusive of
depreciation and amortization shown
separately below)                           1,894              56.9 %         2,485              45.6 %             (591 )           (23.8 %)
Sales and marketing expenses                  858              25.8 %         1,277              23.4 %             (419 )           (32.8 %)
Research and development expenses             955              28.7 %         1,193              21.9 %             (238 )           (19.9 %)
General and administrative expenses         2,956              88.8 %         3,438              63.1 %             (482 )           (14.0 %)
Depreciation and amortization expense         155               4.7 %           266               4.9 %             (111 )           (41.7 %)

Total operating expenses                    4,924             147.9 %         6,174             113.3 %           (1,250 )           (20.2 %)

Operating loss                             (3,030 )           (91.0 %)       (3,689 )           (67.7 %)             659             (17.9 %)
Other income (expenses):
Interest expense                               (6 )            (0.2 %)          (18 )            (0.3 %)             (12 )            66.7 %
Interest income                                 1                -                3               0.1 %               (2 )           (66.7 %)

Total other income (expense)                   (5 )            (0.2 %)          (15 )            (0.3 %)              10             (66.7 %)

Net loss                                $  (3,035 )           (91.1 %)    $  (3,704 )           (68.0 %)    $        669             (18.1 %)


                                                                                 Six Months Ended
                                        June 30,        % of total        June 30,        % of total         $ Increase        % Increase
                                          2011            sales             2010            sales            (Decrease)        (Decrease)
United States                           $   3,083              92.6 %     $   4,885              89.6 %     $     (1,802 )           (36.9 %)
Canada                                        222               6.7 %           525               9.6 %             (303 )           (57.7 %)
Other International                            25               0.7 %            41               0.8 %              (16 )           (39.0 %)

Total Sales                             $   3,330             100.0 %     $   5,451             100.0 %     $     (2,121 )           (38.9 %)

Sales

Our sales during the three months ended June 30, 2012 decreased 49% or $1,497 to $1,557, compared to the same period in the prior year. The majority of this decrease was attributable to lower orders of the iShowroom-branded tower application received from Chrysler LLC. During the second quarter of 2011, we received a $1.8 million purchase order from Chrysler LLC for the iShowroom branded towers to be installed at 400 Chrysler dealerships. We have not received any additional iShowroom branded tower orders from Chrysler since the second quarter of 2011 as Chrysler continues to consume and deploy inventory from the purchase made in May 2011. During the second quarter of 2012, we received a total of 25 individual Fiat dealership orders compared to 22 for the same period in the prior year. We believe Chrysler will continue to rollout iShowroom-branded tower application with further dealership adoption and depletion of the existing inventory purchased back in May 2011. Additionally, Chrysler has required that all Fiat Dealerships adopt the iShowroom interactive application, which is being featured in the Fiat Style Center of the new Fiat Studio Facilities. However, since we do not have a contract with Chrysler requiring it to source all the various components of these solutions through us, and the purchase of the iShowroom branded towers remains within the discretion of the individual dealerships, we are unable to predict or forecast the timing or value of any future orders. As of June 30, 2012, we had received purchase orders for 400 dealers from Chrysler for the Branded Tower Salons and 225 Fiat orders from individual dealerships. Partially offsetting the decline in sales of interactive iShowroom kiosks during the second quarter of 2012 when compared to the same period a year ago was an increase in development and content orders from Chrysler. Chrysler has continued to invest in additional ways of extending the iShowroom interactive application including the ability to render the content to various devices such as tablets and smartphones. We believe this enhancement shows Chrysler's continued commitment to the iShowroom program as we continue to receive additional orders for further enhancements to the platform.

Sales to ARAMARK were up slightly during the second quarter of 2012 when compared to the same period in the prior year due to additional deployments of our digital menu board solutions within ARAMARK's food service locations. The total number of locations we manage for ARAMARK through our network operations center was approximately 250 as of June 30, 2012.

Our revenue for the first half of 2012 totaled $3,330 compared to $5,451 for the same period in the prior year, a decrease of $2,121 or 39%. The decrease in revenue when comparing the first half of 2012 to 2011 was due primarily to the $1.8 million purchase order we received in May 2011 from Chrysler LLC for the iShowroom branded towers representing 400 dealerships. During the first half of 2012, we generated $1,482 from this customer, compared to $2,494 for the same period in the prior year. Additionally, we received $842 fewer orders from individual Fiat dealerships for the interactive kiosks featuring iShowroom when comparing the first half of 2012 to the first half of 2011. Our revenue from ARAMARK during the first half of 2012 was also lower by $526 when compared to the same period in the prior year with fewer deployments of digital menu boards and interactive ordering kiosks to colleges and universities located throughout the U.S. Partially offsetting these decreases was an increase in revenue generated during the first half of 2012 with a new customer, Buffalo Wild Wings, for an initial five store deployment of our marketing technology solutions. This particular solution has an emphasis on creating a new guest experience through the interaction of a touchscreen photo booth application, which displays both consumer generated and client branded content. Additionally, the solution uses unique QR codes and email to allow customers to share their photos with their social networks, extending the content beyond the restaurant's locations to further promote its brand. We believe this implementation validates our capabilities beyond traditional digital menu boards and has the ability to generate additional revenue for us in the future.

We also generated additional revenue related to our recurring hosting revenue, which totaled approximately $940 during the first half of 2012, an 18% increase from $800 recognized during the same period in the prior year, as our installation base continues to grow. Due to the current economic environment and the lengthy sales cycle associated with deploying large scale marketing technology solutions, we are not able to predict or forecast our future revenue with any degree of precision at this time.

Cost of Sales

Our cost of sales declined 63% or $1,050 to $612 for the second quarter of 2012 compared to the same period in the prior year. On a year-to-date basis, our cost of sales declined 52% or $1,530 to $1,436 when comparing the first half of 2012 to the same period in the prior year. Both decreases were due primarily to the decline in hardware sales to Chrysler and fewer orders received from individual Fiat dealerships for the interactive kiosks featuring iShowroom. On a percentage basis, our overall gross margin improved to 61% for the second quarter of 2012, compared to 46% for the same period in 2011. Our gross margin on a percentage basis for the first half of 2012 was 57% compared to 46% for the same period in the prior year. The year over year improvement in our gross margin on a percentage basis for the periods presented was primarily due to a higher percentage of our revenue coming from development and professional service fees related to the sale of our new marketing technology offerings compared to higher level of hardware sales in 2011 associated with kiosks sold to Chrysler and individual Fiat dealerships. Also, we continue to see an improvement to our gross margin on a dollar and percentage basis related to our recurring hosting revenue as our installed basis continues to grow. Our ability to maintain these levels of gross margin on a percentage basis can be impacted in any given quarter by shifts in our sales mix. However, we believe that, over the long-term, our gross margin on a percentage basis will continue to increase as our recurring revenue grows.

Operating Expenses

Our operating expenses decreased 24% or $673 to $2,151 for the three months ended June 30, 2012 compared to the same period in the prior year. Total operating costs for the first half of 2012 totaled $4,924 compared to $6,174 for the same period in the prior year.

Sales and marketing expenses include the salaries, employee benefits, commissions, stock compensation expense, travel and overhead costs of our sales and marketing personnel, as well as tradeshow activities and other marketing costs. Total sales and marketing expenses decreased 22% or $114 to $400 for the three months ended June 30, 2012 compared to the same period in the prior year. Total sales and marketing costs for the first half of 2012 totaled $858 compared to $1,277 for the same period in the prior year. The decrease in sales and marketing expense when comparing the second quarter of 2012 to 2011 was primarily due a decrease in employee compensation expenses associated with the lower levels of sales during the periods presented and also a decrease in tradeshow and other marketing advertising expenses. The decrease in the first half of 2012 when compared to the same period in 2011 was also due to lower levels of compensation and employee related expenses of $215 attributable to the lower level of sales and other personnel changes made during first quarter of 2012. We also incurred a reduction in tradeshow costs of $110 during the first half of

2012 compared to the same period in 2011 as a result of concentrating our marketing dollars on more forums and user groups instead of the larger national tradeshows such as Digital Signage Expo. Lastly, our stock compensation expense was lower by $37 when comparing the first half of 2012, to the same period in 2011. Total stock compensation expense included in sales and marketing was $30 and $41 during the second quarter and first half of 2012, compared to $31 and $78 for the same periods in the prior year, respectively. We continue to focus our efforts to maximize the return on investment by attending select industry digital signage tradeshows, as we believe our presence is necessary to attract and retain new customers. We traditionally incur higher levels of tradeshow expenditures in the first quarter of our fiscal year compared to the remaining three quarters. Any significant increase in our sales and marketing expenses for the full year 2012 relative to 2011 would be the result of higher levels of commission expense resulting from an increase in our revenue, as we do not anticipate higher costs associated with tradeshows or marketing initiatives.

Research and development expenses include salaries, employee benefits, stock compensation expense, related overhead costs and consulting fees associated with product development, enhancements, upgrades, testing, quality assurance and documentation. Total research and development expenses for the second quarter of 2012 decreased 36% or approximately $224 to $396 when compared to the same period in the prior year. Total research and development expense during the first half of 2012 totaled $955 compared to $1,193 for the same period in the prior year. The decreases were primarily related to a higher level of costs being allocated to cost of goods sold related to billable development work performed for our customers and other personnel changes made during the first quarter of 2012, which resulted in a reduction in employee compensation expense. Additionally, we experienced lower levels of consulting expense during the second quarter and first half of 2012 when compared to the same periods in the prior year. We currently believe the level of expenditure in research and development for the two remaining quarters of 2012 will be at a similar level to that experienced during the second quarter of 2012. It continues to be critical for our success that we are able to further enhance our RoninCast ®X software as the need for a more sophisticated dynamic digital signage platform continues to evolve. Included in research and development expense was stock compensation expense of $26 and $39 during the second quarter and first half of 2012 compared to $11 and $24 for the same periods in the prior year, respectively.

General and administrative expenses include the salaries, employee benefits, stock compensation expense and related overhead cost of our finance, information technology, human resources and administrative employees, as well as legal and accounting expenses, consulting and contractor fees and bad debt expense. Total general and administrative expenses decreased 18% or $288 and 14% or $482 for the second quarter and first half of 2012, respectively, when compared to the same periods in the prior year. The decrease when comparing the first half of 2012 to 2011 was the result of lower employee-related stock compensation expense of $218, a reduction in employee compensation and related travel expenses of $156, and a decline in fees paid for professional services and other public company related expenses of $155 and $51, respectively. Partially offsetting these declines was a $200 increase in stock compensation expense associated with the fair market value of the stock and warrants issued to outside vendors for professional services and for common stock issued to our six non-employee board members as part of their compensation for board service during the first half of 2012. Total stock compensation expense for the second quarter and first half of 2012 totaled $59 and $194 compared to $131 and $412 for the same periods in the prior year. Included in general and administrative expenses was $15 and $200 of stock compensation expense for common stock and warrants issued to outside vendors for professional services and common stock issued to our six non-employee board members during the second quarter and first half of 2012. We currently believe our general and administrative costs will remain a similar level to that experienced during the second quarter of 2012 for the remaining two quarters of 2012.

Depreciation and amortization expense, which consists primarily of depreciation of computer equipment and office furniture and the amortization of purchased software and leasehold improvements made to our leased facilities, was lower by $47 and $111 when comparing the second quarter and first half of 2012 to the prior year periods. These decreases were primarily the result of minimal capital expenditures being made during the past twelve months.

Interest Expense

Interest expense during the first half of 2012 totaled $6 compared to $18 for the same period in 2011. Included in interest expense for the first half of 2012 and 2011 was $3 and $5, respectively, associated with the capital lease that we entered into in July 2010 and paid off in June 2012. The remaining amount was the result of the expense recognized related to the fair value of the warrant issued to Silicon Valley Bank as additional consideration for the $2,500 loan and security agreement we entered into in March 2010 and most recently modified effective June 30, 2012. The warrant vested 100% on date of grant and we are . . .