U.S.
SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 Form
10-Q
 
 (Mark
One)
 x Quarterly Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For
the quarterly period ended September 30, 2008
 
 o Transition Report
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For
the transition period from______________ to _______________
 
 Commission
File No. 000-26213
 
 ROOMLINX,
INC.
 
 (Exact
name of registrant as specified in its charter)
 
  Nevada
              83-0401552(State
      or other jurisdiction of
              (I.R.S.
      Employerincorporation
      or organization)
              Identification
      No.)
 
 2150 – W.
6th
Ave., Unit H Broomfield, Colorado 80020
 (Address
of principal executive offices)
 
 (303)
544-1111
 (Issuer's
telephone number)
   Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
 Yes o No x
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
 
 Large
      accelerated filer o
              Accelerated
      filer oNon-accelerated
      filer o
              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 o No x
 
 The
number of shares outstanding of the Issuer's common stock as of November 12,
2008 was 158,483,488.
  ROOMLINX, INC.
  INDEX
 
 PART
      I.  FINANCIAL INFORMATIONItem 1.
              Financial StatementsConsolidated Balance Sheets as of September 30, 2008
      (unaudited) and December 31, 2007Consolidated Statements of Operations for the
      Three Months and Nine Months Ended September 30, 2008 and 2007
      (unaudited)Consolidated Statements of Cash Flows for the Nine
      Months Ended September 30, 2008 and 2007 (unaudited)Notes to Consolidated Financial Statements
      (unaudited)Item 2.
              Management's Discussion and Analysis of Financial Condition
      and Results of OperationsForward-Looking
    StatementsGeneralCritical Accounting
PoliciesResults of OperationsFinancial ConditionItem 3.
              Quantitative and Qualitative Disclosures About Market
      RiskItem 4T.
              Controls and ProceduresPART
      II.  OTHER INFORMATIONItem 1.
              Legal ProceedingsItem 2.
              Unregistered Sales of Equity Securities and Use of
      ProceedsItem 3.
              Defaults Upon Senior SecuritiesItem 4.
              Submission of Matters to a Vote of Security
      HoldersItem 5.
              Other InformationItem 6.
              ExhibitsSignatures
 
 
 Index
  
 
 
 PART I.  FINANCIAL INFORMATION
 
 
 
 Index
  RoomLinX, Inc.CONSOLIDATED BALANCE
      SHEETSSeptember
      302008
                
                
                December
      31,ASSETS
                
                (Unaudited)
                
                
                2007Current
      assets:Cash
      and cash equivalents
                
                $
                2,542,339
                
                
                $
                915,165Accounts
      receivable, net
                
                
                231,367
                
                
                
                358,794Prepaid
      and other current assets
                
                
                26,896
                
                
                
                37,721Work
      in progress
                
                
                263,925
                
                
                
                382Inventory
                
                
                48,569
                
                
                
                -Total
      current assets
                
                
                3,113,096
                
                
                
                1,312,062Property
      and equipment, net
                
                
                117,342
                
                
                
                49,822Total
      assets
                
                $
                3,230,438
                
                
                $
                1,361,884LIABILITIES AND
      STOCKHOLDERS' (DEFICIT)Current
      liabilities:Accounts
      payable and accrued expenses
                
                $
                494,537
                
                
                $
                399,782Officer
      and stockholder note payable
                
                
                -
                
                
                
                12,500Accrued
      interest
                
                
                35,443
                
                
                
                35,926Deferred
      revenue
                
                
                425,627
                
                
                
                238,124Total
      current liabilities
                
                
                955,607
                
                
                
                686,332Convertible
      debentures
                
                
                3,141,813
                
                
                
                2,101,352Stockholders'
      (deficit):Preferred
      stock - $0.20 par value, 5,000,000 shares authorized:Class
      A - 720,000 shares authorized, issued and outstanding
                
                
                144,000
                
                
                
                144,000Series
      B - 2,000,000 shares authorized; none issued and
    outstanding
                
                
                -
                
                
                
                -Series
      C - 1,400 shares authorized; 1,000 issued and outstanding
                
                
                200
                
                
                
                -Common
      stock - $0.001 par value, 245,000,000 shares authorized:157,065,781
      and 149,068,107 shares issued and outstanding
                
                
                157,066
                
                
                
                149,068Additional
      paid-in capital
                
                
                23,387,981
                
                
                
                19,920,259Deferred
      stock compensation
                
                
                (320,770
                )
                
                
                (59,335
                )Accumulated
      (deficit)
                
                
                (24,235,459
                )
                
                
                (21,579,792
                )Total
      stockholders' (deficit)
                
                
                (866,982
                )
                
                
                (1,425,800
                )Total
      liabilities and stockholders' (deficit)
                
                $
                3,230,438
                
                
                $
                1,361,884
  The
accompanying notes are an integral part of these consolidated financial
statements.
 
 Index
  RoomLinX, Inc.CONSOLIDATED
      STATEMENTS OF OPERATIONS(Unaudited)for
      the Three Months Ended
                
                
                for
      the Nine Months EndedSeptember
      30,
                
                
                September
      30,2008
                
                
                2007
      (Restated)
                
                
                2008
                
                
                2007
      (Restated)RevenuesSystem
      sales and installation
                
                $
                299,176
                
                
                $
                54,779
                
                
                $
                499,354
                
                
                $
                552,998Service,
      maintenance and usage
                
                
                283,128
                
                
                
                333,484
                
                
                
                885,007
                
                
                
                1,001,468582,304
                
                
                
                388,263
                
                
                
                1,384,361
                
                
                
                1,554,466Costs
      and expensesSystem
      sales and installation
                
                
                288,295
                
                
                
                44,892
                
                
                
                353,909
                
                
                
                239,065Service,
      maintenance and usage
                
                
                276,989
                
                
                
                240,593
                
                
                
                744,336
                
                
                
                890,977Sales
      and marketing
                
                
                118,459
                
                
                
                48,390
                
                
                
                255,156
                
                
                
                153,973Product
      development
                
                
                183,665
                
                
                
                106,478
                
                
                
                429,609
                
                
                
                182,736General
      and administrative stock compensation
                
                
                559,344
                
                
                
                27,815
                
                
                
                578,830
                
                
                
                306,055General
      and administrative
                
                
                153,988
                
                
                
                133,246
                
                
                
                493,127
                
                
                
                508,621Depreciation
                
                
                6,792
                
                
                
                2,903
                
                
                
                19,711
                
                
                
                6,9611,587,533
                
                
                
                604,317
                
                
                
                2,874,677
                
                
                
                2,288,388Operating
      (loss)
                
                
                (1,005,229
                )
                
                
                (216,054
                )
                
                
                (1,490,316
                )
                
                
                (733,922
                )Other
      income (expense)Interest
      expense
                
                
                (39,011
                )
                
                
                (36,294
                )
                
                
                (112,916
                )
                
                
                (154,841
                )Financing
      expense
                
                
                (15,000
                )
                
                
                -
                
                
                
                (15,000
                )
                
                
                (252,207
                )Derivative
      expense
                
                
                125,858
                
                
                
                548,965
                
                
                
                (1,032,717
                )
                
                
                (579,383
                )Foreign
      currency gain (loss)
                
                
                (2,071
                )
                
                
                (1,578
                )
                
                
                (6,286
                )
                
                
                (9,432
                )Other
      income
                
                
                15,689
                
                
                
                9,703
                
                
                
                25,576
                
                
                
                7,176Income
      from discharge of indebtedness
                
                
                -
                
                
                
                6,506
                
                
                
                992
                
                
                
                1,471,71385,465
                
                
                
                527,302
                
                
                
                (1,140,351
                )
                
                
                483,026Income
      (loss) before income taxes
                
                
                (919,764
                )
                
                
                311,248
                
                
                
                (2,630,667
                )
                
                
                (250,896
                )Provision
      for income taxes
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Net
      income (loss)
                
                
                (919,764
                )
                
                
                311,248
                
                
                
                (2,630,667
                )
                
                
                (250,896
                )Series
      C Preferred Stock Dividends
                
                
                25,000
                
                
                
                -
                
                
                
                25,000
                
                
                
                -Net
      Income (loss) available to common shareholders
                
                $
                (944,764
                )
                
                $
                311,248
                
                
                $
                (2,655,667
                )
                
                $
                (250,896
                )Net
      Income (loss) per common share:Basic
      and diluted
                
                $
                (0.01
                )
                
                $
                0.00
                
                
                $
                (0.02
                )
                
                $
                (0.00
                )Weighted
      average shares outstanding:Basic
      and diluted
                
                
                156,067,018
                
                
                
                144,433,598
                
                
                
                152,833,251
                
                
                
                141,406,843156,067,018
                
                
                
                310,503,997
                
                
                
                152,833,251
                
                
                
                141,406,843
  The
accompanying notes are an integral part of these consolidated financial
statements.
 
 Index
  RoomLinX, Inc.CONSOLIDATED
      STATEMENTS OF CASH FLOWSfor
      the Nine Months Ended September 30, 2008 and 2007(Unaudited)20072008
                
                
                (Restated)Cash
      flows from operating activities:Net
      cash (used in) operating activities
                
                $
                (773,095
                )
                
                $
                (401,647
                )Cash
      flows from investing activities:Purchase
      of property and equipment
                
                
                (87,231
                )
                
                
                (25,466
                )Net
      cash (used in) investing activities
                
                $
                (87,231
                )
                
                $
                (25,466
                )Cash
      flows from financing activities:Cash
      proceeds from convertible debentures
                
                
                -
                
                
                
                2,300,000Cash
      Proceeds from Sale of Preferred Stock
                
                
                2,500,000Principal
      payments on convertible debenture
                
                
                -
                
                
                
                (550,000
                )Principal
      payments on notes payable
                
                
                -
                
                
                
                (277,500
                )Principal
      payments on officer and stockholder notes payable
                
                
                (12,500
                )
                
                
                (137,603
                )Net
      cash provided by financing activities
                
                
                2,487,500
                
                
                
                1,334,897Net
      increase (decrease) in cash and equivalents
                
                
                1,627,174
                
                
                
                907,784Cash
      and equivalents at beginning of period
                
                
                915,165
                
                
                
                144,540Cash
      and equivalents at end of period
                
                $
                2,542,339
                
                
                $
                1,052,324Supplemental
      Cash Flow InformationCash
      paid for interest
                
                $
                -
                
                
                $
                3,016Cash
      paid for income taxes
                
                $
                -
                
                
                $
                -Non-cash
      investing and financing activities:Accrued
      expenses converted to stock
                
                $
                30,000
                
                
                $
                -Notes
      payable converted to convertible debentures
                
                $
                -
                
                
                $
                (50,000
                )Accounts
      payable and accrued expenses forgiven
                
                $
                992
                
                
                $
                8,602Convertible
      debt forgiven
                
                $
                -
                
                
                $
                550,000Notes
      payable forgiven
                
                $
                -
                
                
                $
                37,500Interest
      and penalties forgiven
                
                $
                -
                
                
                $
                457,192Shareholder
      paybles forgiven
                
                $
                -
                
                
                $
                3,000Shareholder
      notes forgiven
                
                $
                -
                
                
                $
                139,397Shareholder
      interest and penalties forgiven
                
                $
                -
                
                
                $
                104,553Capital
      lease forgiven
                
                $
                -
                
                
                $
                418,418
  The
accompanying notes are an integral part of these consolidated financial
statements.
 
 Index
   Roomlinx, Inc.
 Notes
to Consolidated Financial Statements
 September
30, 2008
 (Unaudited)
 
 
 1.
              Overview
      and Summary of Significant Accounting
Policies
  Roomlinx,
Inc. (the “Company”) is incorporated under the laws of the state of
Nevada.  The Company sells, installs and services wired and wireless
high-speed internet networking solutions and in-room media and entertainment
systems, to hotels, resorts, convention centers, timeshare, corporate apartments
and special events locations. The Company installs and creates services that
address the productivity and communications needs of hotel guests, convention
center exhibitors, corporate apartment customers and individual consumers. The
Company utilizes third party contractors to install such hardware and
software.
 
 Basis of
Presentation:  The accompanying unaudited financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States of America for interim financial
information.  They do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements.  In the opinion of
management, all adjustments, consisting only of normal recurring adjustments
considered necessary for a fair presentation, have been included in the
accompanying unaudited financial statements.  Operating results for
the periods presented are not necessarily indicative of the results that may be
expected for the full year.  For further information, refer to the
financial statements and notes thereto, included in the Company's Form 10-KSB as
of and for the year ended December 31, 2007.
 
 Restatement:  The
2007 financial statements have been restated to reflect a capital contribution
from the forgiveness of shareholder payables and notes payable in the amount of
$244,950.  This adjustment resulted in an increase in the net loss for
the nine months ended September 30, 2007 of $244,950.  There was no
effect on previously reported net loss per share.
 
 Per Share
Amounts:  The Company computes net income per share under the
provisions of SFAS No. 128, “Earnings per Share” (SFAS 128).  Under
the provisions of SFAS 128, basic net income per share is computed by dividing
the Company’s net income for the period by the weighted-average number of shares
of common stock outstanding during the period.  Diluted net income per
share excludes potential common shares if the effect is
anti-dilutive.  Diluted net income per share is determined in the same
manner as basic net income per share except that the number of shares is
increased assuming exercise of dilutive stock options and warrants using the
treasury stock method and shares issuable upon conversion of convertible debt
and adding back to net income the related interest expense.
  Derivative financial
instruments:We do not use derivative instruments to hedge
exposures to cash flow, market, or foreign currency risks.
 
 We review
the terms of convertible debt instruments we issue to determine whether there
are embedded derivative instruments, including the embedded conversion option,
that are required to be bifurcated and accounted for separately as a derivative
financial instrument. In circumstances where the convertible instrument contains
more than one embedded derivative instrument, including the conversion option,
that is required to be bifurcated, the bifurcated derivative instruments are
accounted for as a single, compound derivative instrument. Also, in connection
with the sale of convertible debt, we may issue freestanding options or warrants
that may, depending on their terms, be accounted for as derivative instrument
liabilities, rather than as equity. We may also issue options or warrants to
non-employees in connection with consulting or other services they
provide.
 
 When the
ability to physical or net-share settle the conversion option or the exercise of
the freestanding options or warrants is deemed to be not within the control of
the company or if the conversion option, options or warrants are not indexed
only to the underlying common stock, the embedded conversion option or
freestanding options or warrants may be required to be accounted for as a
derivative financial instrument liability.
 
 Derivative
financial instruments are initially measured at their fair value. For derivative
financial instruments that are accounted for as liabilities, the derivative
instrument is initially recorded at its fair value and is then re-valued at each
reporting date, with changes in the fair value reported as charges or credits to
income. For option-based derivative financial instruments, we use the
Cox-Ross-Rubinstein binomial model to value the derivative
instruments.  To the extent that the initial fair values of the
freestanding and/or bifurcated derivative instrument liabilities exceed the
total proceeds received, an immediate charge to income is recognized, in order
to initially record the derivative instrument liabilities at their fair
value.
  
 Index
   The
discount from the face value of the convertible debt instruments resulting from
allocating some or all of the proceeds to derivative instruments, together with
the stated interest on the instrument, is amortized over the life of the
instrument through periodic charges to income, using the effective interest
method.
 
 Certain
instruments, including convertible debt and freestanding options or warrants
issued, may be subject to registration rights agreements, which may impose
penalties for failure to register the underlying common stock by a defined
date.  Any such penalties are accounted for in accordance with FAS 5
and are accrued when they are deemed probable.
 
 The
classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is re-assessed periodically,
including at the end of each reporting period. If re-classification is required,
the fair value of the derivative instrument, as of the determination date, is
re-classified. Any previous charges or credits to income for changes in the fair
value of the derivative instrument are not reversed. Derivative instrument
liabilities are classified in the balance sheet as current or non-current based
on whether or not net-cash settlement of the derivative instrument could be
required within 12 months of the balance sheet date.
 
 2.
              Officer
      and Stockholder Notes Payable
 
 From
November 2004 through January 2005, the Company received proceeds of $320,000 in
exchange for 10% promissory notes maturing six months from the date of
issuance.  During 2005, the Company repaid $40,000 of the
notes.  The Company was not able to retire the remaining balance of
the promissory notes as scheduled and was in default of the repayment
terms.  In June 2007, all interest and penalties were forgiven, and
the notes were settled for $142,603, of which $12,500 was paid in September
2008.
 
 3.
              Convertible
      Debentures
 
 On June
11, 2007 and June 13, 2007, we sold an aggregate of $2,300,000 principal amount
of Convertible Debentures due May 2012 (the “Convertible Debentures”) to a
number of investors in reliance on Section 4(2) of the Securities Act, and
pursuant to a Securities Purchase Agreement with certain investors (the “June
Purchase Agreement”).  In addition, a note payable in the amount of
$50,000 was converted into a convertible debenture.
 
 The
Convertible Debentures are initially convertible into Series B Preferred Stock,
which Series B Preferred Stock will not be convertible into Common Stock until
such time as the Company has sufficient number of shares of Common Stock
authorized to permit the conversion of the Convertible Debentures into Common
Stock, at which time the Convertible Debentures will automatically be
convertible into Common Stock and not Series B Preferred Stock.  The
conversion price into shares of Common Stock of the Convertible Debentures is
$0.02 per share, subject to certain standard anti-dilution
adjustments.  In the event that the Convertible Debentures are not
repaid when due, the conversion price will be reduced to $0.01 per
share.  Because this potential reduction in the conversion price
effectively indexes the return to the investors to a factor other than the
underlying value of our common stock, the embedded conversion option has been
bifurcated and accounted for separately as a derivative instrument
liability.
 
 Pursuant
to the June Purchase Agreement, each purchaser also received an option,
exercisable for a six month period from the Closing under the Purchase
Agreement, to purchase additional Convertible Debentures (“Additional
Convertible Debentures”) in an amount up to 50% of the original amount of
Convertible Debentures purchased.  This option was also accounted for
as a derivative instrument liability.  All such options expired
unexercised.
  
 Index
   The
Convertible Debentures bear interest at an annual rate of 6%, payable quarterly,
either in cash or, at the Company’s election, in shares of our capital
stock.  As of November 12, 2008, accrued interest aggregating $183,591
through September 30, 2008, has been settled in shares of our common
stock.
 
 Pursuant
to the terms of the June Purchase Agreement, we are obligated to register the
shares of Common Stock issuable on conversion of the Convertible Debentures
within one year of the Closing under the June Purchase Agreement or as soon as
our Common Stock is listed on the Over-the-Counter Bulletin Board, whichever is
sooner.  The June Purchase Agreement does not provide for any specific
penalties for not complying with this requirement, which has not yet been
met.  At November 12, 2008, the Company has not accrued any penalties
that may ultimately be paid, as it does not believe any penalties are probable
as of that date.
 
 4.
              Derivative
      Financial Instruments
 
 As
discussed above, the embedded conversion option in our Convertible Debentures
and options issued to the investors to acquire additional debentures have been
accounted for as derivative instrument liabilities.
 
 We use
the Cox-Ross-Rubinstein binomial model to value warrants, and the embedded
conversion option components of any bifurcated embedded derivative instruments
that are recorded as derivative liabilities. See Note 3 related to embedded
derivative instruments that have been bifurcated from our Convertible Debentures
and the options to acquire additional Convertible Debentures held by the
investors.  The options and conversion options can be exercised by the
holders at any time.  The options held by the investors to acquire
additional Convertible Debentures expired in December 2007.
 
 In
valuing the embedded conversion option components of the bifurcated embedded
derivative instruments and the options, at the time they were issued and at
September 30, 2008, we used the market price of our common stock on the date of
valuation, an expected dividend yield of 0%, an estimated volatility of 250%
based on a review of our historical volatility and the remaining period to the
expiration date of the option or repayment date of the convertible debt
instrument.  The risk-free rate of return used was 4.23%, based on
constant maturity rates published by the U.S. Federal Reserve, applicable to the
remaining life of the options.
 
 At
September 30, 2008, the following derivative liabilities were
outstanding:
  Issue
      Date
              Expiry
      Date
              Instrument
              
              Conversion/
                Exercise
      Price
                Per
      Share
              
              
              Value
      –
                Issue
      Date
              
              
              Value
      -
                September
      30, 2008June
      2007
              May
      2012
              $2,350,000
                Convertible
      Debentures
              
              $
              0.02
              
              
              $
              2,338,899
              
              
              $
              3,130,036June
      2007
              
              Convertible
      Debentures
                Carrying
      Amount
              
              
              
              
              
              
              
              
              
              
              11,777June
      2007
              December
      2007
              Option
      to acquire
                $1,175,000
                Convertible
      Debentures
              
              $
              0.03
              
              
              
              431,264
              
              
              
              0Total
      derivative financial instruments
              
              
              $
              2,770,163
              
              
              $
              3,141,813
 
 5.
              Stockholders'
      (Deficit)
  Preferred
Stock:   The Company has authorized 5,000,000
preferred shares with a $0.20 par value.  There are three designations
of the class of preferred shares: Class A, Series B, and Series C Preferred
Stock.  The Class A preferred stock is entitled to receive cumulative
annual dividends at the rate of 9%, payable in either cash or additional shares
of Class A Preferred Stock, at the option of the Company.  The Series
B Preferred Stock is not entitled to any dividends.  The Series C
stock accrues dividends at an annual rate of 6% per year, payable quarterly,
either in cash or, at the Company’s election, shares of common
stock.  As of September 30, 2008, there were 720,000 shares of Class A
Preferred Stock, no shares of Series B Preferred Stock, and 1,000 shares of
Series C Preferred Stock issued and outstanding.  Class A dividends
accrued and unpaid as of September 30, 2008, were $130,080, Series C dividends
accrued and unpaid as of September 30, 2008, were $25,000.
 
 On July
28, 2008, the Company’s board of directors approved the designation of 1,400
shares of Series C Preferred Stock.  The Series C preferred stock
accrues dividends at an annual rate of 6% per year, payable quarterly, either in
cash or, at the Company’s election, shares of common stock.  There are
no redemption rights associated with the Series C Stock.  Each holder
of Series C stock is entitled to voting rights on an “as converted” to common
stock basis together with the holders of common stock.
  
 Index
   On July
31, 2008 we entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with an investor group, and certain affiliated trusts (collectively,
the “Investors”), pursuant to which we simultaneously sold and issued to the
Investors an aggregate of $2,500,000 of Series C Preferred Stock (“Series C
Stock”).  In connection with the Purchase Agreement, we also issued
40,000,000 warrants to the Investors for the purchase of additional shares of
Series C Stock or Common Stock and entered into a Registration Rights Agreement
with the Investors.
 
 Each
share of Series C Stock is convertible into such number of shares of Common
Stock as is determined by dividing $2,500 by the initial conversion price of
$0.025 per share (or 100,000 shares of Common Stock for each share of Series C
Stock converted). However, the Series C Stock is not convertible into Common
Stock until such time as the Company has a sufficient number of shares of Common
Stock authorized to permit the conversion of all of the Series C Stock into
Common Stock, at which time the Series C Stock will automatically convert into
Common Stock.
 
 In
connection with the Purchase Agreement, we entered into a Registration Rights
Agreement. Pursuant to the Registration Rights Agreement, the Registrant is
obligated to register for resale under the Securities Act the shares of Common
Stock issuable upon conversion of the Series C Stock and exercise of the
Warrants beginning by April 30, 2009.
 
 Common Stock: The
Company has authorized 245,000,000 shares of $0.001 par value common
stock.  As of September 30, 2008, there were 157,065,781 shares of
common stock issued and outstanding.
 
 On
January 1, 2008, the Board approved issuance of 1,437,048 shares of our common
stock, valued at $0.025 per share for accrued interest of $35,926 for the fourth
quarter of 2007, pursuant to the clauses outlined in the convertible debenture
agreements of June 11, 2007.
 
 On April
1, 2008, the Board approved issuance of 1,386,890 shares of our common stock,
valued at $0.025 per share for accrued interest of $34,672 for the first quarter
of 2008, pursuant to the clauses outlined in the convertible debenture
agreements of June 11, 2007.
  On July
1, 2008, the Board approved issuance of 1,402,302 shares of our common stock,
valued at $0.025 per share for accrued interest of $35,057 for the period April
1 through June 30, 2008, pursuant to the clauses outlined in the convertible
debenture agreements of June 11, 2007.
  On July
15, 2008 Aaron Dobrinsky exercised 4,000,000 options at $0.01 per share on a
cashless basis resulting in the net issuance of 2,571,429 shares of common
stock.
 
 On August
19, 2008, the Company issued 1,200,000 shares as Board of Director compensation
for the year ended December 31, 2007. 800,000 of the shares were issued to Peter
Bordes and 400,000 of the shares were issued to Herbert Hunt.  The
shares were valued at $0.025 per share for a fair market value of
$30,000.  This compensation was accrued for in 2007.
 
 Warrants: On April
14, 2008, we issued to Creative Hospitality Associates (“CHA”) a Warrant
pursuant to a sales agent Agreement with CHA (the “Agreement”).
 
 The
Warrant is initially exercisable for Series B Preferred Stock.  At such
time as we have a sufficient number of shares of Common Stock authorized to
permit the exercise of the Warrant for Common Stock (the “Triggering Event”),
the Warrant will automatically be exercisable for Common Stock and not Series B
Preferred Stock.  The maximum number of shares of Common Stock for which
the Warrant is ultimately exercisable for is 15,000,000 and the ultimate
exercise price per share of Common Stock for which the Warrant is exercisable is
$0.02 per share, each of which is subject to adjustment and the conditions
contained in the Warrant.  The Warrant becomes ultimately exercisable for
such 15,000,000 shares of Common Stock pursuant to a vesting schedule as set
forth in the Warrant that provides that the Warrant becomes ultimately
exercisable for 500,000 shares of Common Stock with each 1,000 rooms in a hotel
or other property that CHA or its affiliate introduces to us and in which our
Media and Entertainment System is installed.
  
 Index
   On July
31, 2008, Pursuant to the Purchase Agreement above, the Company issued (i)
Series C-1 Warrants to purchase an aggregate of 200 shares of Series C Stock, at
an initial exercise price of $4,000 per share of Series C Stock, and (ii) Series
C-2 Warrants to purchase an aggregate of 200 shares of Series C Stock, at an
initial exercise price of $6,000 per share of Series C Stock.  The
Warrants are immediately exercisable and expire on the third anniversary of
their date of issuance.  At such time as the Company has a sufficient
number of shares of Common Stock authorized to permit the conversion of all
Series C Stock into Common Stock, each Warrant will no longer be exercisable for
shares of Series C Stock but instead will be exercisable for the number of
shares of Common Stock into which the Series C Stock that the Warrant could have
been exercised for prior thereto would have been convertible into, at an initial
exercise price of $.04 per share of Common Stock under the Series C-1 Warrants
and at initial exercise price of $.06 per share of Common Stock under the Series
C-2 Warrants.
 
 At
September 30, 2008, the Company had the following outstanding
warrants:
 
 Exercise
      Price
              
              
              Number
      of
                Common
      Shares
              
              
              Remaining
                Contractual
      Life
                (in
      years)
              
              
              Exercise
      Price
                times
      Number
                of
      Common Shares
              
              
              Weighted
                Average
                Exercise
      Price$0.020
              
              
              
              15,000,000
              
              
              4.5
              
              
              $
              300,000$0.020
              
              
              
              2,962,500
              
              
              3.7
              
              
              
              59,250$0.030
              
              
              
              7,000,000
              
              
              3.7
              
              
              
              210,000$0.030
              
              
              
              3,900,000
              
              
              3.2
              
              
              
              117,000$0.040
              
              
              
              20,000,000
              
              
              2.8
              
              
              
              800,000$0.060
              
              
              
              20,000,000
              
              
              2.8
              
              
              
              1,200,000$0.075
              
              
              
              10,963,333
              
              
              1.4
              
              
              
              822,25079,825,833
              
              
              
              
              
              
              $
              3,508,500
              
              
              $0.044
 
 
 Warrants
              
              Number
      of
                Common
      Shares
              
              
              Weighted
      Average Exercise PriceOutstanding
      at January 1, 2008
              
              
              24,825,833
              
              
              $
              0.049Issued
              
              
              55,000,000
              
              
              
              0.042Exercised
              
              
              -----
              
              
              
              -----Expired
      / Cancelled
              
              
              -----
              
              
              
              -----Outstanding
      at September 30, 2008
              
              
              79,825,833
              
              
              $
              0.044Exercisable
      at September 30, 2008
              
              
              64,825,833
              
              
              $
              0.050
 
 The
Company recorded compensation expense of $538,455 in connection with the
warrants granted during the quarter ended September 30, 2008.  The
fair value of the warrant grants was estimated on the date of grant utilizing
the Black-Scholes option pricing model with the following weighted average
assumptions for grants: expected life of warrants of 3 years, expected
volatility of 140%, risk-free interest rate of 2.8% and no dividend yield. The
weighted average fair value at the date of grant for warrants granted during the
quarter ended September 30, 2008, approximated $0.013 per warrant.
 
 The
Company recorded deferred compensation expense of $270,555 in connection with
warrants granted during the quarter ended June 30, 2008. The fair value of the
warrant grants was estimated on the date of grant utilizing the Black-Scholes
option pricing model with the following weighted average assumptions for grants:
expected life of warrants of 5 years, expected volatility of 144%, risk-free
interest rate of 4% and no dividend yield. The weighted average fair value at
the date of grant for warrants granted during the quarter ended June 30, 2008,
approximated $0.018 per warrant.
 
 Options: The
Company adopted a long term incentive stock option plan (the "Stock Option
Plan"). The Stock Option Plan provides for the issuance of 25,000,000 shares of
common stock upon exercise of options which may be granted pursuant to the Stock
Option Plan. As of September 30, 2008, options to purchase 20,650,000 shares
were outstanding and options to purchase 4,000,000 shares have been exercised.
The options vest as determined by the Board of Directors and are exercisable for
a period of no more than 10 years.
  
 Index
   On May
15, 2008, the Board of Directors approved the grant to employees and
consultants, under the Registrant’s Long-Term Incentive Plan, of an aggregate of
100,000 Incentive Stock Options and an aggregate of 100,000 Non-Qualified Stock
Options.  Such options were issued at an exercise price of $0.017 per
share and vest one-third (1/3) on each of the first three anniversaries of the
employment date.
 
 On July
15, 2008 Aaron Dobrinsky exercised 4,000,000 options at $0.01 per share on a
cashless basis resulting in the net issuance of 2,571,429 shares of common
stock.
 
 On July
21, 2008, the Board of Directors approved the grant of an aggregate of 400,000
Incentive Stock Options and an aggregate of 600,000 Non-Qualified Stock
Options.  Such options were issued at an exercise price of $0.02 per
share and vest one-third (1/3) on each of the first three anniversaries of the
employment date.
 
 On August
19, 2008, the Board of Directors approved the grant of an aggregate of 300,000
Incentive Stock Options.  Such options were issued at an exercise
price of $0.012 per share and vest one-third (1/3) on each of the first three
anniversaries of the grant date.
 
 On August
19, 2008, the Company granted an aggregate of 500,000 Non-Qualified Stock
Options (“NQOs”).  The NQOs were granted to Christopher Blisard with
respect to his service as a member of the Board of Directors during 2008 and
2009 and vest on December 31, 2009.  The options were issued at an
exercise price of $0.012 per share, representing the closing price of the
Company’s common stock on such date.
 
 At
September 30, 2008, the Company had the following outstanding stock
options:
 
 Exercise
      Price
              
              
              Number
      of
                Common
      Shares
              
              
              Remaining
                Contractual
      Life
                (in
      years)
              
              
              Exercise
      Price
                times
      Number
                of
      Common Shares
              
              
              Weighted
      Average Exercise Price$0.012
              
              
              
              800,000
              
              
              6.9
              
              
              $
              9,600$0.020
              
              
              
              1,000,000
              
              
              6.8
              
              
              
              20,000$0.017
              
              
              
              100,000
              
              
              6.6
              
              
              
              1,700$0.015
              
              
              
              1,950,000
              
              
              6.1
              
              
              
              29,250$0.025
              
              
              
              1,000,000
              
              
              5.6
              
              
              
              25,000$0.020
              
              
              
              13,600,000
              
              
              5.1
              
              
              
              272,000$0.026
              
              
              
              1,000,000
              
              
              3.9
              
              
              
              26,000$0.100
              
              
              
              1,000,000
              
              
              1.3
              
              
              
              100,000$0.017
              
              
              
              100,000
              
              
              0.1
              
              
              
              1,700$0.015
              
              
              
              100,000
              
              
              0.1
              
              
              
              1,50020,650,000
              
              
              
              
              
              
              $
              486,750
              
              
              $0.024
 
 
 Options
              
              Number
      of
                Shares
              
              
              Weighted
      Average Exercise PriceOutstanding
      at January 1, 2008
              
              
              23,750,000
              
              
              $
              0.025Granted
              
              
              2,000,000
              
              
              
              0.017Exercised
              
              
              4,000,000
              
              
              
              0.010Expired
              
              
              (1,100,000
              )
              
              
              0.019Outstanding
      at September 30, 2008
              
              
              20,650,000
              
              
              $
              0.024
 
 The
Company recorded deferred compensation expense of $28,025 in connection with
options granted during the quarter ended September 30, 2008. The fair value of
the option grants was estimated on the date of grant utilizing the Black-Scholes
option pricing model with the following weighted average assumptions for grants:
expected life of options of 7 years, expected volatility of 142%, risk-free
interest rate of 4% and no dividend yield. The weighted average fair value at
the date of grant for options granted during the quarter ended September 30,
2008, averaged $0.016 per option.
  
 Index
   The
Company recorded deferred compensation expense of $3,230 in connection with
options granted during the quarter ended June 30, 2008. The fair value of the
option grants was estimated on the date of grant utilizing the Black-Scholes
option pricing model with the following weighted average assumptions for grants:
expected life of options of 7 years, expected volatility of 144%, risk-free
interest rate of 4% and no dividend yield. The weighted average fair value at
the date of grant for options granted during the quarter ended June 30, 2008,
approximated $0.016 per option.
 
 6.
              Subsequent
      Events
 
 On
October 1, 2008, the Board approved issuance of 1,417,707 shares of our common
stock, valued at $0.025 per share for accrued interest of $35,443 for the period
July 1 through September 30, 2008, pursuant to the clauses outlined in the
convertible debenture agreements of June 11, 2007.
 
 On
October 31, 2008, the Registrant’s Board of Directors approved the grant of an
aggregate of 200,000 Incentive Stock Options and an aggregate of 100,000
Non-Qualified Stock Options.  Such options were issued at an exercise
price of $0.017 per share and vest one-third (1/3) on each of the first three
anniversaries of the employment date.
 
 Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
 
 FORWARD-LOOKING STATEMENTS
 
 This Form
10-Q contains or incorporates by reference “forward-looking statements,” as that
term is used in federal securities laws, about our financial condition, results
of operations and business.  These statements include, among
others:
 
 -
statements concerning the benefits that we expect will result from our business
activities and results of exploration that we contemplate or have completed,
such as increased revenues; and
 
 -
statements of our expectations, beliefs, future plans and strategies,
anticipated developments and other matters that are not historical
facts.
 
 These
statements may be made expressly in this document or may be incorporated by
reference to other documents that we will file with the SEC.  You can
find many of these statements by looking for words such as “believes,”
“expects,” “anticipates,” “estimates” or similar expressions used in this report
or incorporated by reference in this report.
 
 These
forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause our actual results to be materially different from
any future results expressed or implied in those statements.  Because
the statements are subject to risks and uncertainties, actual results may differ
materially from those expressed or implied.  We caution you not to put
undue reliance on these statements, which speak only as of the date of this
report.  Further, the information contained in this document or
incorporated herein by reference is a statement of our present intention and is
based on present facts and assumptions, and may change at any time and without
notice, based on changes in such facts or assumptions.
 
 GENERAL
 
 Roomlinx,
Inc., a Nevada corporation ("We," "Us" or the "Company"), provides two core
products and services:
  1. Wired
networking solutions and wireless fidelity networking solutions, also known as
Wi-Fi, for high speed internet access to hotels, resorts, convention centers,
timeshare, corporate apartments and special events locations. The Company
installs and creates services that address the productivity and communications
needs of hotel guests, convention center exhibitors and corporate apartment
customers. We specialize in providing advanced Wi-Fi wireless services such
as the wireless standards known as 802.11a/b/g.
  Hotel
customers sign long-term service agreements, where we provide the maintenance
for the networks, as well as the right to provide value added services over the
network.
  
 Index
   We derive
our revenues primarily from the installation of the wired and wireless networks
we provide to hotels, convention centers and apartment buildings. We derive
additional revenue from the maintenance of these networks. Customers typically
pay a one-time fee for the installation of the network and then pay monthly
maintenance fees for the upkeep and support of the network. During 2008 we made
a fundamental change in our business model pertaining to our on-site support. We
are no longer including on-site support in the base price for maintenance;
these services are either billed for at the time of service or the base price is
increased.
  2.
In-room media and entertainment solutions for hotels, resorts, and timeshare
properties.  The Company develops software and integrates hardware to
facilitate the distribution of entertainment, business applications, national
and local advertising, and content.  The content consists of adult,
Hollywood, and specialty programming, music, internet based television
programming, digital global newspapers, global radio and television stations,
business applications (allowing the guest to use Microsoft Office programs), and
hotel-specific services and advice.
  The
Company provides proprietary software an LCD television (optional), a media
console (consisting of a DVD player, CD burner, and numerous input jacks for the
hotel guest), a wireless keyboard with built-in mouse, and a remote
control.
  The
Company installs and supports these components.
  Hotel
customers sign long-term service agreements, where we provide the maintenance
for the networks, as well as the right to provide value added services over the
network.
  We derive
our revenues primarily from charging the hotels a monthly fee for the usage of
our software and proprietary media and entertainment system.   We
derive additional revenue from the rental of movies, printing service,
advertising and sale of products through our system.  We began
marketing this product in September 2007.  Since June 2007, we have
invested significant capital to develop our software, integrate our hardware,
and develop significant product and content partnerships.
  We have
incurred operating losses since our inception.  We will need to
increase our installation and maintenance revenues and improve our gross margins
to become profitable and sustain profitability on a quarterly and annual
basis.  We recently completed development of our Media and
Entertainment solution and have commenced marketing it.  There is no
assurance that we will be successful in our efforts.  We are not able
to predict with any certainty when, if ever, we will attain profitable
operations.
  We
currently have signed agreements to install into select rooms, as pilots, with a
select service property in the Denver Technological Center, managed and owned by
a large hotel corporation, and with a full service hotel located in Chicago, IL,
which is also owned by a large hotel corporation.  We have signed an
exclusive contract to provide our media and entertainment and HSIA products and
services to a Management and Ownership group, of high end properties, out of
Florida. We have signed contracts to install into a resort in Asheville, NC and
into select rooms of hotels in Merryville, IN and Lexington, KY.  We also
have completed the installation into 120 rooms of a full service hotel in the
Chicago, IL vicinity.
  Management’s
Discussion and Analysis (MD&A) is designed to provide the reader of the
financial statements with a narrative discussion of our results of operations;
financial position; liquidity and capital resources; critical accounting
policies and significant estimates; and the impact of recently issued accounting
standards.  Our MD&A is presented in five sections:
  ●
              Critical
      Accounting Policies●
              Results
      of Operations●
              Recent
      Accounting Pronouncements●
              Financial
      Condition●
              Forward-Looking
      Statements
  This
discussion should be read in conjunction with our consolidated financial
statements and accompanying Notes included in this report and in the 2007 annual
report on Form 10-KSB, as well as our reports on Form 8-K and other SEC
filings.
  
 Index
   CRITICAL ACCOUNTING POLICIES AND
ESTIMATES
  Management's
Discussion and Analysis of Financial Condition and Results of Operations discuss
our financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these
financial statements requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and
the related disclosures of contingent assets and liabilities. On an on-going
basis, management evaluates its estimates and judgments, including those related
to revenue recognition, allowance for doubtful accounts and property and
equipment valuation. Management bases its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates
under different assumptions and conditions.
  Management
believes the following critical accounting policies, among others, affect its
more significant judgments and estimates used in the preparation of its
consolidated financial statements.
  Our
system sales and installation revenue primarily consists of wired and wireless
network equipment and installation fees associated with the network and is
recognized as revenue when the installation is completed and the customer has
accepted such installation. Our service, maintenance and usage revenue, which
primarily consists of monthly maintenance fees related to the upkeep of the
network, is recognized on a monthly basis as services provided.
  We
estimate the collectability of our trade receivables. A considerable amount of
judgment is required in assessing the ultimate realization of these receivables,
including analysis of historical collection rates and the current
credit-worthiness of significant customers.
  Inventory
and work in progress represents the cost of hardware and software which has been
purchased by us for installation at our customers’ facilities, but has not been
accepted by the customer.
  We
capitalize and subsequently depreciate our property and equipment over the
estimated useful life of the asset. In assessing the recoverability of our
long-lived assets, including goodwill, we must make certain assumptions
regarding the useful life and contribution to the estimated future cash flows.
If such assumptions change in the future, we may be required to record
impairment charges for these assets not previously recorded.
  Since
inception, we have accumulated substantial net operating loss carry forwards for
tax purposes.  There are statutory limitations on our ability to
realize any future benefit from these potential tax assets and we are uncertain
as to whether we will ever utilize the tax loss carry
forwards.  Accordingly, we have recorded a valuation allowance to
offset the deferred tax asset.
  We
implemented SFAS No. 123(R), “Share-Based Payment,” which requires us to provide
compensation costs for our stock option plans determined in accordance with the
fair value based method prescribed in SFAS No. 123(R).  We estimate
the fair value of each stock option at the grant date by using the Black-Scholes
option-pricing model and provide for expense recognition over the service
period, if any, of the stock option.
  In
connection with the sale of debt or equity instruments, we may sell options or
warrants to purchase our common stock. In certain circumstances, these options
or warrants may be classified as derivative liabilities, rather than as equity.
Additionally, the debt or equity instruments may contain embedded derivative
instruments, such as conversion options, which in certain circumstances may be
required to be bifurcated from the associated host instrument and accounted for
separately as a derivative instrument liability.
 
 The
identification of, and accounting for, derivative instruments is complex. Our
derivative instrument liabilities are re-valued at the end of each reporting
period, with changes in the fair value of the derivative liability recorded as
charges or credits to income, in the period in which the changes occur. For
options, warrants and bifurcated conversion options that are accounted for as
derivative instrument liabilities, we determine the fair value of these
instruments using the Cox-Ross-Rubinstein binomial option pricing model. That
model requires assumptions related to the remaining term of the instruments and
risk-free rates of return, our current common stock price and expected dividend
yield, and the expected volatility of our common stock price over the life of
the instruments.  The identification of, and accounting for,
derivative instruments and the assumptions used to value them can significantly
affect our financial statements.
  
 Index
  RESULTS OF OPERATIONS
 
 Three months ended September
30, 2008 compared to three months ended September 30,
2007:
  For the
three months ended September 30, 2008, we reported a net loss of $919,764 and a
net loss available to common shareholders of $944,764, compared to a net
income of $311,248 available to common shareholders for the three
months ended September 30, 2007.  Our operating loss for the three
months ended September 30, 2008 was $1,005,229, a decline in operating
results of $789,175 compared to the operating loss of $216,054 that we
reported for the three months ended September 30, 2007.  $531,529 of
this variance is attributable to the non-cash stock compensation transactions
for the three months ended September 30, 2008.  The remainder, as
discussed below, is attributable to our continued investing of significant
capital in the design, production, and marketing of our new media and
entertainment product.
  System sales and
installation revenue. System sales and installation revenue
increased 446% to $299,176 during the three months ended September 30, 2008
from $54,779 during the three months ended September 30, 2007.  We
completed upgrades on three existing customers and completed a large equipment
sale, related to our media and entertainment product, during the three months
ended September 30, 2008, compared to one new installation during the three
months ended September 30, 2007.  This component of our revenue stream
is dependent upon the acquisition of new customers and the upgrade needs of
existing customers, which can vary from year to year.
  Service, maintenance and
usage revenue. Service, maintenance and usage revenue decreased 15% to
$283,128 for the three months ended September 30, 2008 from $333,484 for
the three months ended September 30, 2007. The decrease was due to a decrease in
the number of customers we service on a recurring basis to a total of
143 customers compared to 166 customers as of September 30,
2007.
  Cost of system sales and
installation. Cost of system sales and installation increased 542% to
$288,295 for the three months ended September 30, 2008 from $44,892 for the
three months ended September 30, 2007. The increase was attributable to the
increased corresponding revenue during the period as well as the increased costs
on the sale of equipment.
  Cost of service, maintenance
and usage. Cost of service, maintenance and usage increased 15% to
$276,989 for the three months ended September 30, 2008 from $240,593 for the
three months ended September 30, 2007.  The increase was attributable
to an increase in monitoring and on-site support costs.
  Sales and
marketing. Sales and marketing expense increased by $70,068 to
$118,458 during the three months ended September 30, 2008 from $48,390 for the
three months ended September 30, 2007.  During 2008, we continued
marketing our new media and entertainment product.  Our personnel and
personnel related costs increased by $44,528 to $90,595 in 2008 from
$46,067 in 2007; travel expenses increased by $8,229 to $10,552 in
2008 from $2,323 in 2007; and advertising expense increased to $17,311
in 2008 from $0 in 2007.
  Product Development.  In June 2007, we created a new department to handle the
majority of the design, production, and promotion of our new media and
entertainment product.  This new department incurred costs of $183,665
during the three months ended September 30, 2008, compared to $106,478 during
the three months ended September 30, 2007.  This cost included
$129,106 in labor and personnel expense in 2008 compared to $30,339 in
2007, and $54,559 in equipment, supplies and testing costs in 2008
compared to $76,139 in 2007.
  Stock compensation.For the three months ended September 30, 2008, the Company recorded
$20,889 of amortization of deferred compensation related to stock options,
compared to $27,815 for the three months ended September 30, 2007.  In
addition, the Company recorded stock compensation expense of $538,455 for the
fair market value warrants issued during the three months ended September 30,
2008.
  General and
administrative. General and administrative expense increased by $20,742
to $153,988 for the three months ended September 30, 2008 from $133,246 for
the three months ended September 30, 2007. During 2008, personnel and personnel
related costs increased $2,781 to $69,509 in 2008 from $66,728 in
2007; office related costs such as rent, telephone, and insurance
decreased $857 to $29,191 in 2008 from $30,048 in
2007; travel expenses increased $309 to $309 in 2008 from $0 in
2007; professional and corporate fees increased $27,811 to
$53,464 in 2008 from $25,653 in 2007; and bad debt expense decreased $9,302
to $1,514 for 2008 from $10,816 in 2007.
  
 Index
   Depreciation.
Depreciation of property and equipment increased to $6,792 for the three months
ended September 30, 2008 as compared to $2,903 for the three months ended
September 30, 2007.  This increase is attributable to the Company
purchasing capital assets for our new media and entertainment
product.
  Interest expense.
Interest expense on the convertible debentures increased $2,717 to $39,011 for
the three months ended September 30, 2008 as compared to $36,294 for the three
months ended September 30, 2007.
  Income from discharge of
indebtedness. During the
three months ended September 30, 2007, the Company negotiated settlements with
several vendors and realized discharge of indebtedness income of
$6,506.  The Company had no corresponding income during the three
months ended September 30, 2008.
  Derivative income (expense),
net.Derivative instruments income of $125,858 represents the net
unrealized (non-cash) change during the three months ended September 30, 2008,
in the fair value of our derivative instrument liabilities related to certain
embedded derivatives in our convertible debt that have been bifurcated and
accounted for separately.  The derivative instruments income for the
three months ended September 30, 2007 was $548,965.
  Dividends.  Dividends
of $25,000 have been accrued pursuant to issuance of Series C Preferred Stock on
July 31, 2008.
  Nine months ended September
30, 2008 compared to nine months ended September 30, 2007:
  For the
nine months ended September 30, 2008, we reported a net loss of $2,630,667 and a
net loss available to common shareholders of $2,655,677, compared to a net loss
of $250,896 available to common shareholders for the nine months ended
September 30, 2007.  Our operating loss for the nine months ended
September 30, 2008 was $1,490,316, a decline in operating results of
$756,394 compared to the operating loss of $733,922 that we reported for
the nine months ended September 30, 2007.  $272,775 of this variance
is attributable to the non-cash stock compensation transactions for the nine
months ended September 30, 2008.  The remainder, as discussed below,
is attributable to our continued investing of significant capital in the design,
production, and marketing of our new media and entertainment
product.
  System sales andinstallation
revenue. System sales and installation revenue decreased 10% to $499,354
during the nine months ended September 30, 2008 from $552,998 during the nine
months ended September 30, 2007.  We completed upgrades on ten
existing customers and completed a large equipment sale during the nine months
ended September 30, 2008, compared to eight new installations and eleven
upgrades during the nine months ended September 30, 2007. This component of our
revenue stream is dependent upon the acquisition of new customers and the
upgrade needs of existing customers, which can vary from year to
year.  Our shift in focus away from the HSIA product and services to
the Media and Entertainment products and services was also an attributing factor
in this decrease.
  Service, maintenance and
usage revenue. Service, maintenance and usage revenue decreased 12% to
$885,007 for the nine months ended September 30, 2008 from $1,001,468
for the nine months ended September 30, 2007. The decrease was due to a
decrease in the number of customers we service on a recurring basis to a total
of 143 customers compared to 166 customers as of September 30,
2007.
  Cost of system sales and
installation. Cost of system sales and installation increased 48% to
$353,909 for the nine months ended September 30, 2008 from $239,065 for the nine
months ended September 30, 2007. The increase was attributable to the increased
costs on the sale of equipment.
  Cost of service, maintenance
and usage. Cost of service, maintenance and usage decreased 16% to
$744,336 for the nine months ended September 30, 2008 from $890,977 for the nine
months ended September 30, 2007. The decrease was attributable to the
decrease in customers from 166 in 2007 to 143 in 2008, as well as operational
efficiencies created by network upgrades.
  Sales and
marketing.Sales
and marketing expense increased by $101,183 to $255,156 during the nine months
ended September 30, 2008 from $153,973 for the nine months ended September 30,
2007.  During 2008, we continued marketing our new media and
entertainment product.  Our personnel and personnel related
costs increased by $39,142 to $186,606 in 2008 from $147,464 in 2007;
travel expenses increased by $12,766 to $18,828 in 2008 from $6,062 in
2007; and advertising expense increased by $49,275 to $49,722 in 2008 from
$447 in 2007.
  
 Index
   Product Development.  In June 2007, we created a new department to handle the
majority of the design, production, and promotion of our new media and
entertainment product.  This new department incurred costs of $429,609
during the nine months ended September 30, 2008, compared to $182,736 during the
nine months ended September 30, 2007.  These costs included
$342,180 in labor and personnel expense in 2008 compared to $76,597 in
2007, and $87,429 in equipment, supplies and testing costs in 2008
compared to $106,139 in 2007.
  Stock compensation.For the nine months ended September 30, 2008, the Company recorded
$40,375 of amortization of deferred compensation related to stock options,
compared to $69,309 for the nine months ended September 30, 2007.  In
addition, the Company recorded stock compensation expense of $538,455 for the
fair market value warrants issued during the nine months ended September
30, 2008. For the nine months ended September 30, 2007, the Company recorded
$306,055 of amortization of deferred compensation related to stock options
granted in November 2006.
  General and
administrative. General and administrative expense decreased by
$15,494 to $493,127 for the nine months ended September 30, 2008 from $508,621
for the nine months ended September 30, 2007. During 2008, personnel and
personnel related costs increased $36,872 to $202,054 in 2008 from $165,182 in
2007; office related costs such as rent, telephone, and insurance increased
$15,465 to $93,328 in 2008 from $77,863 in 2007; travel expenses
increased $6,636 to $11,518 in 2008 from $4,882 in 2007; professional
and corporate fees decreased $85,239 to $150,515 in 2008 from $238,754
in 2007; and bad debt expense increased $10,772 to $35,712 for 2008 from
$21,940 in 2007.
  Depreciation.
Depreciation of property and equipment increased to $19,711 for the nine months
ended September 30, 2008 as compared to $6,961 for the nine months ended
September 30, 2007.  This increase is attributable to the Company
purchasing capital assets for our new media and entertainment
product.
  Interest expense.
Interest expense decreased $41,925 to $112,916 for the nine months ended
September 30, 2008 as compared to $154,841 for the nine months ended September
30, 2007. The decrease is attributable to the settlement of outstanding and
defaulted debt during the nine months ended September 30, 2007.
  Income from discharge of
indebtedness. During the
nine months ended September 30, 2007, the Company negotiated settlements with
several vendors and realized discharge of indebtedness income of
$1,471,712.  The Company had corresponding income during the nine
months ended September 30, 2008 of $992.
  Derivative income (expense),
net.Derivative instruments expense of $1,032,717 represents the net
unrealized (non-cash) change during the nine months ended September 30, 2008, in
the fair value of our derivative instrument liabilities related to certain
embedded derivatives in our convertible debt that have been bifurcated and
accounted for separately.  The derivative instruments expense for the
nine months ended September 30, 2007 was $579,383.
  Dividends.  Dividends
of $25,000 have been accrued pursuant to issuance of Series C Preferred Stock on
July 31, 2008.
  FINANCIAL CONDITION
 
 Liquidity
and Capital Resources
  As of
September 30, 2008 we had $2,542,339 in cash and cash
equivalents.  In July 2008, we sold $2,500,000 of Series C Preferred
Stock, which amount is sufficient to fund operating activities and continue
investing in our new media and entertainment product through 2009 and into
2010.
  Operating
Activities
 
 Net cash
used by operating activities was $773,095 for the nine months ended September
30, 2008 as compared to $401,627 used for the nine months ended September 30,
2007.
 
 
 Index
 
 Investing
Activities
 
 Net cash
used by investing activities was $87,231, used to purchase capital assets, for
the nine months ended September 30, 2008, as compared to net cash used for
investing activity of $25,466 for the nine months ended September 30,
2007.
 
 Financing
Activities
 
 Net cash
provided by financing activities for the nine months ended September 30, 2008
was $2,487,500 as compared to net cash provided by financing activities of
$1,334,897 for the nine months ended September 30, 2007.
 
 Item 3. Quantitative and Qualitative
Disclosures about Market Risk
  We are
exposed to risk from potential changes in the U.S./Canadian currency exchange
rates as they relate to our services and purchases for our Canadian
customers.
  Foreign
exchange gain / (loss)
  Foreign
transactions resulted in a loss of $6,286 for the nine months ended September
30, 2008 compared to a loss of $9,432 for the nine months ended September 30,
2007. The amount of gain (loss) will vary based upon the volume of foreign
currency denominated transactions and fluctuations in the value of the Canadian
dollar vis-à-vis the US dollar.
  Translation
of Financial Results
  Because
we translate a portion of our financial results from Canadian dollars to U.S.
dollars, fluctuations in the value of the Canadian dollar have a direct affect
on our reported consolidated results.  We do not hedge against the
possible impact of this risk.  A 10 percent adverse change in the
foreign currency exchange rate would not have a significant impact on our
consolidated results of operations or financial position.
  Item 4T.  Controls and Procedures
  (a)  Our
Management supervised and participated in an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures as of
September 30, 2008.  Based on that evaluation, our management,
including our principal executive and financial officer, concluded that our
disclosure controls and procedures were effective to ensure that information
required to be disclosed in the reports filed or submitted by the Company under
the Securities Exchange Act of 1934, as amended, is recorded, processed,
summarized and communicated to our management, including our principle executive
and financial officer, as appropriate, to allow timely decisions regarding
required disclosure within the time periods specified in the SEC’s rules and
forms.
  Internal
control systems, no matter how well designed, have inherent
limitations.  Therefore, even those systems that are determined to be
effective by provide only reasonable assurance with respect to financial
statement preparation and presentation.  Also, projections of any
evaluation of effectiveness to future periods are subject to risk that controls
may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
  (b)  There
were no changes in our internal control over financial reporting during the
period ended September 30, 2008, that materially affected, or are reasonably
likely to materially affect, our internal controls over financial
reporting.
  
 Index
    PART
II - OTHER INFORMATION
     
 Index
   Item 1. Legal Proceedings
 
 None
 
 Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
 
 On
January 1, 2008, the Board approved issuance of 1,437,048 shares of our common
stock, as interest for the fourth quarter of 2007, pursuant to the clauses
outlined in the convertible debenture agreements of June 11, 2007.
 
 On April
1, 2008, the Board approved issuance of 1,386,890 shares of our common stock, as
interest for the first quarter of 2008, pursuant to the clauses outlined in the
convertible debenture agreements of June 11, 2007.
  On July
1, 2008, the Board approved issuance of 1,402,302 shares of our common stock,
valued at $0.025 per share for accrued interest of $35,057 for the period April
1 through June 30, 2008, pursuant to the clauses outlined in the convertible
debenture agreements of June 11, 2007.
  On July
15, 2008 Aaron Dobrinsky exercised 4,000,000 options at $0.01 per share on a
cashless basis resulting in the net issuance of 2,571,429 shares of common
stock.
 
 On July
31, 2008 we entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with an investor group, and certain affiliated trusts (collectively,
the “Investors”), pursuant to which we simultaneously sold and issued to the
Investors an aggregate of $2,500,000 of Series C Preferred Stock (“Series C
Stock”).  In connection with the Purchase Agreement, the Registrant
also issued Warrants to the Investors for the purchase of additional shares of
Series C Stock or Common Stock and entered into a Registration Rights Agreement
with the Investors.
 
 Each
share of Series C Stock is convertible into such number of shares of Common
Stock as is determined by dividing $2,500 by the initial conversion price of
$0.025 per share (or 100,000 shares of Common Stock for each share of Series C
Stock converted). However, the Series C Stock is not convertible into Common
Stock until such time as the Company has a sufficient number of shares of Common
Stock authorized to permit the conversion of all of the Series C Stock into
Common Stock, at which time the Series C Stock will automatically convert into
Common Stock.
 
 The
Series C Stock accrues dividends at an annual rate of 6% per year, payable
quarterly, either in cash or, at the Registrant’s election, shares of the
Registrant’s capital stock.  There are no redemption rights associated
with the Series C Stock.  Each holder of Series C stock is entitled to
voting rights on an “as converted” to Common Stock basis together with the
holders of Common Stock.
 
 On August
19, 2008, the Company issued 1,200,000 shares as Board of Director compensation
for the year ended December 31, 2007. 800,000 of the shares were issued to Peter
Bordes and 400,000 of the shares were issued to Herbert Hunt.  The
shares were valued at $0.025 per share for a fair market value of
$30,000.  This compensation was accrued for in 2007.
 
 Item 3. Defaults Upon Senior Securities
 
 None
 
 Item 4. Submission of Matters to a Vote of Security
Holders
 
 None
 
 Item 5. Other Information
 
 None
 
 
 Index
 
 Item 6. Exhibits
 
 (a)  Exhibits.
 
 3.1 Certificate
of Designation of Series C Preferred Stock, incorporated by reference to Exhibit
3.1 of the Form 8-K filed by the Registrant on August 5, 2008.
  3.2 Form
of Series C-1 Warrant, incorporated by reference to Exhibit 3.2 of the Form 8-K
filed by the Registrant on August 5, 2008.
  3.3 Form
of Series C-2 Warrant, incorporated by reference to Exhibit 3.3 of the Form 8-K
filed by the Registrant on August 5, 2008.
  10.1 Form
of Securities Purchase Agreement among  an investor group, and certain
affiliated trusts, dated July 31, 2008, incorporated by reference  to
Exhibit 10.1 of the Form 8-K filed by the Registrant on August 5,
2008.
  10.2 Form
of Registration Rights Agreement among the Registrant and the parties to
the Securities Purchase Agreement identified in Exhibit 10.1 above, dated July
31, 2008, incorporated by reference to Exhibit 10.2 of the Form 8-K filed by the
Registrant on August 5, 2008.
 
 31.1
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the
Chief Executive and Chief Financial Officers.
 
 32.1
Certification of the Chief Executive and Chief Financial Officers pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 Index
 
 Signatures
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 Roomlinx,
      Inc.By:
              /s/ Michael S.
      WasikMichael S. WasikChief Executive OfficerChief Financial OfficerDate:
              11/12/08
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
  By:
              /s/ Michael S.
      WasikMichael S. WasikChief Executive Officer,Chief Financial Officer and DirectorDate:
              11/12/08