**UNITED
      STATES**


**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




OR




o
            **TRANSITION
                REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                OF
                1934**




For
      the
      transition period from: _______to _______




Commission
      file number:  000-31037





eRoomSystem
      Technologies, Inc.


(Exact
      name of small business issuer as specified in its charter)




Nevada
            
            87-0540713(State or other jurisdiction of incorporation or
              organization)
            
            (I.R.S. Employer Identification No.)





1072 Madison Ave., Lakewood, NJ 08701


(Address of principal executive offices)





(732)
      730-0116


(Issuer’s
      telephone number)




(Former
      name, former address and former fiscal year, if changed since last
      report)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.


YES x NO o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
                accelerated filero
            Accelerated
                fileroNon-accelerated filero(Do not check if a smaller reporting company)
            Smaller Reporting Companyx





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 24,048,165 shares of common stock.


Transitional
      Small Business Disclosure Format (check one): YES o NO x








**FORM
      10-Q**


**TABLE
      OF CONTENTS**




**PART
                I - FINANCIAL INFORMATION**
            **1****Item
                1. Financial Statements.**
            **1****Item
                2. Management's Discussion and Analysis of Financial Condition and
                Results
                of Operations.**
            **6****Item
                3. Quantitative and Qualitative Disclosures About Market
                Risk.**
            **12****Item
                4.  Controls and Procedures**
            **12****PART
                II - OTHER INFORMATION**
            **12****Item
                1. Legal Proceedings.**
            **12****Item
                1A. Risk Factors.**
            **12****Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds.**
            **12****Item
                3. Defaults Upon Senior Securities.**
            **12****Item
                4. Submission of Matters to a Vote of Security
                Holders.**
            **13****Item
                5. Other Information.**
            **13****Item
                6. Exhibits.**
            **13****SIGNATURE**
            **14**


-ii-


**PART
      I – FINANCIAL INFORMATION**




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




**eROOMSYSTEM
      TECHNOLOGIES, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS (UNAUDITED)**





**September 30,**
              **2008**
            
            **December 31,**
              **2007****ASSETS****CURRENT
                ASSETS**Cash
                and cash equivalents
            
            $
            1,700,542
            
            $
            355,970Marketable
                securities available for sale
            
            
            500,000
            
            
            1,998,002Accounts
                receivable, net of allowance for doubtful accounts of $20,415 and
                $32,399
                at September 30, 2008 and December 31, 2007, respectively
            
            
            115,681
            
            
            182,416Loan
                Receivable
            
            
            509,274
            
            
            -Prepaid
                expenses
            
            
            9,691
            
            
            10,831**Total
                Current Assets**
            
            
            2,835,188
            
            
            2,547,219**REFRESHMENT
                CENTERS IN SERVICE**,
                net of accumulated depreciation of****$1,412,773
                and $2,406,453 at September 30, 2008 and December 31, 2007,
                respectively
            
            
            147,927
            
            
            434,609**PROPERTY
                AND EQUIPMENT**Computer
                equipment and office equipment, net of accumulated depreciation of
                $8,512
                and $6,657, at September 30, 2008 and December 31, 2007,
                respectively
            
            
            4,270
            
            
            3,261**INVESTMENT
                IN MARKETABLE SECURITIES**
            
            
            14,075
            
            
            14,075**NOTE
                RECEIVABLE**
            
            
            190,968
            
            
            159,166**DEPOSITS**
            
            
            2,250
            
            
            2,432**Total
                Assets**
            
            $
            3,194,678
            
            $
            3,160,762**LIABILITIES
                AND STOCKHOLDERS' EQUITY****CURRENT
                LIABILITIES**Accounts
                payable
            
            $
            56,107
            
            $
            49,070Accrued
                liabilities
            
            
            42,066
            
            
            71,289Deferred
                maintenance revenue
            
            
            11,933
            
            
            10,462**Total
                Current Liabilities**
            
            
            110,106
            
            
            130,821**Total
                Liabilities**
            
            
            110,106
            
            
            130,821**COMMITMENTS
                AND CONTINGENCIES**
            
            
            -
            
            
            -**STOCKHOLDERS'
                EQUITY**Preferred
                stock, $0.001 par value; 5,000,000 shares authorized; none outstanding
            
            
            -
            
            
            -Common
                stock, $0.001 par value; 50,000,000 shares authorized; 24,048,165
                and
                23,973,165 shares outstanding at September 30, 2008 and December
                31, 2007,
                respectively
            
            
            24,048
            
            
            23,973Additional
                paid-in capital
            
            
            33,814,715
            
            
            33,792,010Warrants
                and options outstanding
            
            
            341,805
            
            
            346,585Accumulated
                deficit
            
            
            (31,045,996
            )
            
            (31,082,627
            )Accumulated
                other comprehensive loss
            
            
            (50,000
            )
            
            (50,000
            )**Total
                Stockholders' Equity**
            
            
            3,084,572
            
            
            3,029,941**Total
                Liabilities and Stockholders' Equity**
            
            $
            3,194,678
            
            $
            3,160,762




See
      accompanying notes to unaudited condensed consolidated financial
      statements


-1-





**eROOMSYSTEM
      TECHNOLOGIES, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
      (UNAUDITED)**





**For the Three Months**
              **Ended September 30,**
            
            **For the Nine Months**
              **Ended September 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007****REVENUE**Revenue-sharing
                arrangements
            
            $
            114,294
            
            $
            189,530
            
            $
            450,099
            
            $
            625,197Maintenance
                fees
            
            
            58,590
            
            
            63,643
            
            
            170,088
            
            
            196,892Product
                sales
            
            
            -
            
            
            65,194
            
            
            96,368
            
            
            125,891**Total
                Revenue**
            
            
            172,884
            
            
            318,367
            
            
            716,555
            
            
            947,980**COST
                OF REVENUE**Revenue-sharing
                arrangements
            
            
            46,330
            
            
            87,254
            
            
            197,093
            
            
            297,219Loss
                on impairment of refreshment centers
            
            
            -
            
            
            -
            
            
            64,835
            
            
            -Maintenance
            
            
            16,638
            
            
            14,716
            
            
            62,147
            
            
            44,558Product
                sales
            
            
            -
            
            
            10,175
            
            
            26,098
            
            
            27,085**Total
                Cost of Revenue**
            
            
            62,968
            
            
            112,145
            
            
            350,173
            
            
            368,862**GROSS
                MARGIN**
            
            
            109,916
            
            
            206,222
            
            
            366,382
            
            
            579,118**OPERATING
                EXPENSES**Selling,
                  general and administrative expense, including non-cash compensation
                  of $0,
                  $1,907, $18,000 and $13,157, respectively
            
            
            79,158
            
            
            84,347
            
            
            333,125
            
            
            298,305Research
                and development expense
            
            
            48,320
            
            
            -
            
            
            85,648
            
            
            -Interest
                and other income
            
            
            (28,977
            )
            
            (31,443
            )
            
            (89,022
            )
            
            (76,862
            )**Net
                Operating Expenses**
            
            
            98,501
            
            
            52,904
            
            
            329,751
            
            
            221,443**Income
                from Operations**
            
            
            11,415
            
            
            153,318
            
            
            36,631
            
            
            357,675Gain
                on forgiveness of liabilities and debt
            
            
            -
            
            
            -
            
            
            -
            
            
            8,500**Net
                Income**
            
            $
            11,415
            
            $
            153,318
            
            $
            36,631
            
            $
            366,175Unrealized
                loss on investment
            
            $
            -
            
            $
            (50,000
            )
            $
            -
            
            $
            (50,000
            )**Comprehensive
                Income**
            
            $
            11,415
            
            $
            103,318
            
            $
            36,631
            
            $
            316,175**Basic
                Earnings Per Common Share**
            
            $
            0.00
            
            $
            0.01
            
            $
            0.00
            
            $
            0.02**Diluted
                Earnings Per Common Share**
            
            $
            0.00
            
            $
            0.01
            
            $
            0.00
            
            $
            0.02





See
      accompanying notes to unaudited condensed consolidated financial
      statements


-2-


**eROOMSYSTEM
      TECHNOLOGIES, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)**




***For
                the Nine Months Ended September 30,***
            
            **2008**
            
            
            
            **2007****CASH
                FLOWS FROM OPERATING ACTIVITIES**Net
                income
            
            $
            36,631
            
            
            
            $
            366,175Adjustments
                to reconcile net income to net cash provided by operating
                activities:Depreciation
            
            
            198,948
            
            
            
            
            299,166Gain
                on forgiveness of debt and liabilities
            
            
            -
            
            
            
            
            (8,500
            )Gain
                on sale of refreshment centers
            
            
            (71,615
            )
            
            
            
            (47,398
            )Loss
                on impairment of refreshment centers
            
            
            64,835
            
            
            
            
            -Interest
                income from other receivable
            
            
            (21,076
            )
            
            
            
            (5,757
            )Amortization
                of discount on note receivable
            
            
            -
            
            
            
            
            (897
            )Non-cash
                compensation expense
            
            
            18,000
            
            
            
            
            13,157Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            66,735
            
            
            
            
            9,479Prepaid
                expenses
            
            
            1,140
            
            
            
            
            (31
            )Accounts
                payable
            
            
            7,037
            
            
            
            
            (2,437
            )Accrued
                liabilities
            
            
            (29,223
            )
            
            
            
            (50,025
            )Customer
                deposits and deferred maintenance revenue
            
            
            1,471
            
            
            
            
            (7,687
            )**Net
                Cash Provided By Operating Activities**
            
            
            272,883
            
            
            
            
            565,245**CASH
                FLOWS FROM INVESTING ACTIVITIES**Purchase
                of fixed assets
            
            
            (2,863
            )
            
            
            
            -Proceeds
                from sale of refreshment centers
            
            
            96,368
            
            
            
            
            70,961Purchase
                of investment
            
            
            (926,998
            )
            
            
            
            -Proceeds
                from sale of marketable securities
            
            
            2,425,000
            
            
            
            
            -Purchase
                of notes receivable
            
            
            (520,000
            )
            
            
            
            -Proceeds
                from note receivable
            
            
            -
            
            
            
            
            17,875Change
                in long term deposits and restricted funds
            
            
            182
            
            
            
            
            4,431**Net
                Cash Provided by Investing Activities**
            
            
            1,071,689
            
            
            
            
            93,267**CASH
                FLOWS FROM FINANCING ACTIVITIES****Net
                Cash Used in Financing Activities**
            
            
            -
            
            
            
            
            -**Net
                Increase in Cash**
            
            
            1,344,572
            
            
            
            
            658,512**Cash
                at Beginning of Period**
            
            
            355,970
            
            
            
            
            1,480,720**Cash
                at End of Period**
            
            $
            1,700,542
            
            
            
            $
            2,139,232**Supplemental
                Cash Flows Information**Cash
                paid for interest
            
            $
            -
            
            
            
            $
            -





See
      accompanying notes to unaudited condensed consolidated financial
      statements


-3-


**eROOMSYSTEM
      TECHNOLOGIES, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**




**NOTE
      1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING
      POLICIES**




***Condensed
      Financial Statements*** - The
      accompanying unaudited condensed consolidated financial statements include
      the
      accounts of eRoomSystem Technologies, Inc. and its subsidiaries (the "Company").
      These financial statements are condensed and, therefore, do not include all
      disclosures normally required by generally accepted accounting principles.
      These
      statements should be read in conjunction with the Company's audited financial
      statements for the fiscal year ended December 31, 2007 included in the Company's
      Annual Report on Form 10-KSB/A. In particular, the Company's organization,
      nature of operations and significant accounting principles were presented in
      Note 1 to the consolidated financial statements in that annual report. In the
      opinion of management, all adjustments necessary for a fair presentation have
      been included in the accompanying unaudited condensed consolidated financial
      statements and consist of only normal recurring adjustments. The results of
      operations presented in the accompanying unaudited condensed consolidated
      financial statements for the three and nine months ended September 30, 2008
      are
      not necessarily indicative of the results that may be expected for the full
      year
      ending December 31, 2008.




***Principles
      of Consolidation*** - The
      accompanying unaudited condensed consolidated financial statements include
      the
      accounts of eRoomSystem Technologies, Inc. and its wholly owned subsidiaries.
      Intercompany accounts and transactions have been eliminated in
      consolidation.




***Net
      Earnings Per Share of Common Stock*** - Basic
      earnings per share of common stock is computed by dividing net income by the
      weighted-average number of shares of common stock outstanding. Unvested shares
      of common stock are considered to be stock options for purposes of computing
      earnings per share. Diluted earnings per share of common stock are computed
      by
      dividing net income by the weighted-average number of shares of common stock
      and
      dilutive potential common stock equivalents outstanding. Potential common stock
      equivalents consist of shares issuable upon the exercise of stock options and
      warrants, and shares issuable upon the conversion of debt.




The
      following table is a reconciliation of the numerators and denominators used
      in
      the calculation of basic and diluted weighted-average common shares outstanding
      for the three and nine months ended September 30, 2008 and
      2007:





***For
                The Three Months***
              ***Ended
                September 30,***
            
            ***For
                The Nine Months***
              ***Ended
                September 30,******2008***
            
            ***2007***
            
            ***2008***
            
            ***2007***Basic
                net income
            
            $
            11,415
            
            $
            153,318
            
            $
            36,631
            
            $
            366,175Diluted
                net income
            
            $
            11,415
            
            $
            153,318
            
            $
            36,631
            
            $
            366,175Basic
                weighted-average common shares outstanding
            
            
            24,077,835
            
            
            23,973,165
            
            
            24,007,928
            
            
            23,940,198Effect
                of dilutive securitiesStock
                options and warrants
            
            
            334,964
            
            
            130,461
            
            
            351,410
            
            
            116,649Diluted
                weighted-average common shares outstanding
            
            
            24,412,799
            
            
            24,103,626
            
            
            24,359,338
            
            
            24,056,847Basic
                earnings per share
            
            $
            0.00
            
            $
            0.01
            
            $
            0.00
            
            $
            0.02Diluted
                earnings per share
            
            $
            0.00
            
            $
            0.01
            
            $
            0.00
            
            $
            0.02




During
      the three and nine months ended September 30, 2008 and 2007, there were
      potential common stock equivalents from options and warrants of 2,799,657,
      3,045,160, 2,783,211 and 3,058,972, respectively, which were not included in
      the
      computation of diluted earnings per share because their effect would have been
      anti-dilutive.




**NOTE
      2 - BUSINESS CONDITION**




During
      the year ended December 31, 2007 and the nine months ended September 30, 2008,
      the Company realized a net gain of $402,221 and $36,631, respectively. During
      the year ended December 31, 2007 and the nine months ended September 30, 2008,
      the Company's operations provided $765,270 and $272,883 of cash, respectively.
      The Company had a cash balance of $1,700,542 as of September 30, 2008. Up until
      the year ended December 31, 2004, the Company suffered recurring losses.
      Although the Company realized net income in the past four years, the Company
      is
      anticipating decreasing revenue as the Company’s existing hotel revenue-sharing
      and maintenance contracts conclude over the next couple of years. Realization
      of
      continued profitable operations is not assured. The accompanying financial
      statements do not include any adjustments relating to the recoverability and
      classification of asset carrying amounts or the amount and classification of
      liabilities that might result should the Company be unable to continue as a
      going concern. Management would like to acquire an existing operating company
      to
      enable the Company to increase revenues and long-term viability, and is
      continuously performing due diligence on third party companies for this purpose.
      The Company has also been performing research regarding potential further
      investments in either privately-held or publicly traded emerging growth stage
      companies.


-4-


**NOTE
      3 - NET INVESTMENT IN SALES-TYPE LEASE**




During
      June 2004, the Company entered into an agreement with a hotel property owner
      that amended a previous revenue sharing lease agreement that had previously
      been
      non-performing. Under the terms of that agreement, the Company recovered a
      receivable that had been written off in the previous year.




The
      new
      lease agreement terminates on December 31, 2008 at which time the hotel property
      owner takes ownership of the refreshment centers. The property is to make
      monthly payments of $7,200. The new lease agreement has been classified as
      a
      sales-type capital lease. Because the property has a history of non-performance
      and is still under the supervision of a bankruptcy court, the net investment
      in
      the capital lease has been fully allowed against. The following lists the
      components of the net investment in the sales-type lease as of September 30,
      2008:




Total
                minimum lease payments to be received
            
            $
            21,600Less:
                Allowance for uncollectibles
            
            
            (18,166
            )Net
                minimum lease payments receivable
            
            
            3,434Less:
                Unearned income
            
            
            (3,434
            )Net
                investment in sales-type lease
            
            $
            -




The
      Company recorded revenue sharing and maintenance fee revenue, relating to this
      property, in the amount of $21,600 and $64,800 for the three and nine months
      ended September 30, 2008.




Minimum
      lease payments for the three months ending December 31, 2008, the end of the
      lease term, is $21,600.





**NOTE
      4 – NOTE RECEIVABLE**




On
      July
      7, 2008, the Company funded an escrow account in the amount of $500,000 and
      signed an agreement to provide a secure loan to BlackBird Corporation, a Florida
      corporation (“BlackBird”), and an unrelated entity. The funding of the loan was
      contingent on completion of a transaction by BlackBird to acquire an unrelated
      company, USA Datanet Corporation. The acquisition took place on July 25,
      2008.





The
      loan
      is evidenced by a 10% senior secured convertible promissory note, made by
      BlackBird in favor of the Company (the “Secured Note”). The Secured Note matures
      on June 30, 2009 and bears interest at an annual rate of 10%, with interest
      payable quarterly on the last business day of each quarter. The interest rate
      increases to 18% if the note is unpaid after December 31, 2008.





**NOTE
      5 - STOCKHOLDERS’ EQUITY**





During
      the nine months ended September 30, 2008, options to purchase 35,000 shares
      of
      common stock expired. The Company recognized the carrying value of these options
      in the amount of $3,526 as additional paid in capital.





On
      May
      14, 2008, the Company issued 75,000 shares of common stock to its Board of
      Directors in recognition of services rendered. These shares were valued at
      $18,000 ($0.24 per share).




**NOTE
      6 – SUBSEQUENT EVENT**





On
      November 11, 2008, the Company granted exclusive rights to Acacia Patent
      Acquisition LLC (“APAC”), a Delaware limited liability company to its U.S.
      Patent No. 4939352, U.S. Patent No. 4883948 and U.S. Patent No. 4857714, and
      all
      related patent applications **** effective
      on the date of acceptable completion of due diligence of APAC. In consideration
      of which, APAC shall pay the Company a continuing royalty of 50% of all amounts
      received by APAC less costs.


-5-


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




As
      used
      in this Form 10-Q, references to the "Company," "we," “our” or "us" refer to
      eRoomSystem Technologies, Inc., unless the context otherwise
      indicates.





This
      Management’s Discussion and Analysis or Plan of Operations (“MD&A”) section
      of our Quarterly Report on Form 10-Q discusses our results of operations,
      liquidity and financial condition, and certain factors that may affect our
      future results. You should read this MD&A in conjunction with our
      consolidated financial statements and accompanying notes included in this
      Quarterly Report.





**Forward-Looking
      Statements**





This
      discussion contains forward-looking statements that involve risks and
      uncertainties. Our actual results could differ materially from those anticipated
      in these forward-looking statements as a result of various factors discussed
      elsewhere in this report.




Certain
      information included herein contains statements that may be considered
      forward-looking statements, such as statements relating to our anticipated
      revenues, gross margin and operating results, future performance and operations,
      plans for future expansion, capital spending, sources of liquidity and financing
      sources. Such forward-looking information involves important risks and
      uncertainties that could significantly affect anticipated results in the future,
      and accordingly, such results may differ from those expressed in any
      forward-looking statements made herein. These risks and uncertainties include,
      but are not limited to, those relating to our liquidity requirements, the
      continued growth of the lodging industry, the success of our
      product-development, marketing and sales activities, vigorous competition in
      the
      lodging industry, dependence on existing management, leverage and debt service
      (including sensitivity to fluctuations in interest rates), domestic or global
      economic conditions, the inherent uncertainty and costs of prolonged arbitration
      or litigation, and changes in federal or state tax laws or the administration
      of
      such laws. A complete discussion of these risks and uncertainties are contained
      in our Annual Report on Form 10-KSB/A, as filed with the Securities and Exchange
      Commission on April 30, 2008.




**Overview**




Our
      core
      business is the development and installation of an intelligent, in-room computer
      platform and communications network, or the eRoomSystem, for the lodging
      industry. The eRoomSystem is a computerized platform and processor-based system
      designed to collect and control data. The eRoomSystem supports our fully
      automated and interactive eRoomServ refreshment centers, eRoomSafes, eRoomEnergy
      products, and the eRoomTray. In 2005, we commenced our diversification strategy
      of investing in third party emerging growth companies. To this end, we have
      an
      investment totaling $10,000 in Identica Holdings Corporation (“Identica”). In
      addition, we have loaned Identica $150,000 in cash. The loan is secured by
      a
      security interest in all the assets of Identica and is evidenced by a promissory
      note. Although the loan was to be paid back in June 2008, we extended the due
      date to December 20, 2008. In consideration for making the loan, Identica issued
      a warrant to us to purchase one million (1,000,000) shares of common stock
      of
      Identica, exercisable at $0.15 per share at any time through May 20, 2010.
      In
      third quarter of 2008 we extended an additional $20,000 to Identica with the
      same terms. We may make additional investments in promising emerging growth
      companies, and potentially acquire an operating company if the opportunity
      arises.





On
      July
      25, 2008, we provided a secured loan to BlackBird Corporation, a Florida
      corporation (“BlackBird”), an unrelated entity. The funding of the loan took
      place on completion of a transaction by BlackBird to acquire an unrelated
      company, USA Datanet Corporation. The acquisition took place on July 24, 2008.
      The loan is evidenced by a 10% senior secured convertible promissory note,
      made
      by BlackBird (the “Secured Note”). The Secured Note matures on June 30, 2009 and
      bears interest at an annual rate of 10%, with interest payable quarterly on
      the
      last business day of each quarter.





Our
      existing products interface with the hotel's property management system through
      our eRoomSystem communications network. The hotel's property management system
      posts usage of our products directly to the hotel guest's room account. The
      solutions offered by our eRoomSystem and related products have allowed us to
      install our products and services in several premier hotel chains, including
      Marriott International, Hilton Hotels and Carlson Hospitality Worldwide, in
      the
      United States and internationally.




One
      of
      the byproducts of our technology is the information we have collected since
      our
      first product installation. To date, we have collected several million
      room-nights of data. Through our eRoomSystem, we are able to collect information
      regarding the usage of our products on a real-time basis. We use this
      information to help our customers increase their operating
      efficiencies.




**Description
      of Revenues**




Historically,
      we have received most of our revenues from the sale or placement under a
      revenue-sharing program of our products in hotels. We expect that these revenues
      will account for a substantial majority of our revenues for the foreseeable
      future. In addition, we may receive revenues in the future upon the sale of
      securities received in consideration for our investment made in a third party
      company in 2005; however, the return on such investment is not
      assured.


-6-


We
      also
      generate revenues from maintenance and support services relating to our existing
      installed products. Our dependence on the lodging industry, including its
      guests, makes us extremely vulnerable to downturns in the lodging industry
      caused by the general economic environment. Such a downturn could result in
      fewer purchases by hotel guests of goods and services from our products
      installed in hotels, and accordingly lower revenues where our products are
      placed pursuant to a revenue sharing agreement. Time spent by individuals on
      travel and leisure is often discretionary for consumers and may be particularly
      affected by adverse trends in the general economy. The success of our operations
      depends, in part, upon discretionary consumer spending and economic conditions
      affecting disposable consumer income such as employment, wages and salaries,
      business conditions, interest rates, availability of credit and
      taxation.




Our
      revenue-sharing program provides us with a seven-year revenue stream under
      each
      revenue-sharing agreement. Because many of our customers in the lodging industry
      traditionally have limited capacity to finance the purchase of our products,
      we
      designed our revenue-sharing program accordingly. Through our revenue-sharing
      plan, we have installed our products at little or no upfront cost to our
      customers and share in the recurring revenues generated from sales of goods
      and
      services related to our products. We retain the ownership of the eRoomServ
      refreshment centers and eRoomSafes throughout the term of the revenue-sharing
      agreements and the right to re-deploy any systems returned to us upon the
      expiration or earlier termination of the revenue-sharing agreements. We have
      failed to place any products, either on a revenue sharing or sale basis in
      the
      prior four fiscal years, and we have no present intention of placing new
      products in the future. We do, however, intend to continue to service and
      maintain our existing installed product base for the remaining life of the
      contracts relating thereto.





Our
      revenues over the past years have been declining as we have focused on service
      and maintenance of our existing installed products and have not installed new
      products at hotels and as existing revenue sharing agreements conclude. Given
      the foregoing, in 2005 we commenced our diversification strategy to invest
      in
      emerging growth companies. To this end, we invested in Identica Holdings
      Corporation, a privately held distributor and integrator of next-generation
      biometric security solutions, including the TechSphere hand vascular pattern
      biometric technology. We continue to explore opportunities and perform due
      diligence on third parties with respect to additional potential investments.
      At
      this time, we have not reached a definitive agreement to make further
      investments. In addition, we may acquire an operating company in the future
      if
      the opportunity arises. Over time, we may realize revenues from the sale of
      securities purchased from Identica, and other third party companies, if
      applicable. The timing and return on such investments, however, cannot be
      assured.





We
      anticipate that we will receive more than 50% of the recurring revenues from
      the
      sale of goods and services generated by our currently installed eRoomServ
      refreshment centers, eRoomSafes and eRoomTray solutions under revenue-sharing
      agreements. Our customers receive the remainder of the recurring
      revenues.





**Revenue
      Recognition**




Sales
      revenue from our products is recognized upon completion of installation and
      acceptance by the customer. We do not, however, expect to generate meaningful
      sales revenue as such revenues are limited to the sales of used equipment as
      well as replacement equipment and parts to hotel clients who previously
      purchased our products. Sales revenue from the placement of our eRoomServ
      refreshment centers and eRoomSafes under our revenue-sharing program are
      accounted for similar to an operating lease, with the revenues recognized as
      earned over the term of the agreement. In some instances, our revenue-sharing
      agreements provide for a guaranteed minimum daily payment by the hotel. We
      negotiated our portion of the revenues generated under our revenue-sharing
      program based upon the cost of the equipment installed and the estimated daily
      sales per unit for the specific customer.




We
      have
      entered into installation, maintenance and license agreements with most of
      our
      existing hotel customers. Installation, maintenance and license revenues are
      recognized as the services are performed, or pro rata over the service period.
      We defer all revenue paid in advance relating to future services and products
      not yet installed and accepted by our customers.




Our
      installation, maintenance and license agreements stipulate that we collect
      a
      maintenance fee per eRoomServ refreshment center per day, payable on a monthly
      basis. Our objective is to generate gross profit margins of approximately 40%
      from our maintenance-related revenues. We base this expectation on our
      historical cost of maintenance of approximately $0.04 per unit per day and,
      pursuant to our maintenance agreements, our projected receipt of generally
      not
      less than $0.08 per unit per day.




**Description
      of Expenses**




Cost
      of
      product sales consists primarily of production, shipping and installation costs.
      Cost of revenue-sharing arrangements consists primarily of depreciation of
      capitalized costs for the products placed in service. We capitalize the
      production, shipping, installation and sales commissions related to the
      eRoomServ refreshment centers, eRoomSafes, eRoomTrays and eRoomEnergy management
      products placed under revenue-sharing agreements. Cost of maintenance fee
      revenues primarily consists of expenses related to customer support and
      maintenance.




Selling,
      general and administrative expenses primarily consist of general and
      administrative expenses including professional fees, salaries and related costs
      for accounting, administration, finance, human resources, information systems
      and legal personnel.


-7-




Research
        and development expenses consist of payroll and related costs for hardware
        and
        software engineers, quality assurance specialists, management personnel,
        and the
        costs of materials used by our consultants in the maintenance of our existing
        installed products as well as research and development for new products.
        Our
        research and development expenses in the nine and three months ended September
        30, 2008 were $85,648 and $48,320, respectively.
  In
        accordance with Financial Accounting Standards Board, or FASB, Statement
        of
        Financial Accounting Standards, or SFAS, No. 86, “Accounting for the Costs
        of Computer Software to be Sold, Leased or Otherwise Marketed,” development
        costs incurred in the research and development of new software products to
        be
        sold, leased or otherwise marketed are expensed as incurred until technological
        feasibility in the form of a working model has been established. Internally
        generated capitalizable software development costs have not been material
        to
        date. We have charged our software development costs to research and development
        expense in our consolidated statements of operations.
  **Results
        of Operations**
  **Comparison
        of Three Months Ended September 30, 2008 and 2007**
  **Revenues**
  Revenue
        Sharing Arrangements — Our revenue from revenue sharing arrangements was
        $114,294 for the three months ended September 30, 2008, compared to $189,530
        for
        the three months ended September 30, 2007, representing a decrease of $75,236,
        or 39.7%. The decrease in revenue sharing revenue was due to the completion
        of a
        number of revenue sharing contracts in 2007 and 2008.
  Maintenance
        Fee Revenues — Maintenance fee revenues were $58,590 for the three months ended
        September 30, 2008, compared to $63,643 for the three months ended September
        30,
        2007, representing a decrease of $5,053 or 7.9%. The decrease in maintenance
        fee
        revenue was due to the completion of a number of revenue sharing and maintenance
        contracts in 2007 and 2008.
  Product
        Sales — Revenue from product sales was $0 for the three months ended September
        30, 2008, compared to $65,194 for the three months ended September 30, 2007,
        representing a decrease of $65,194 or 100%. The decrease in product sales
        revenues was primarily due to the fact that there were no product sales in
        the
        three months ended September 30, 2008.
  **Cost
        of Revenue**
  Cost
        of
        Revenue Sharing Revenue — Cost of revenue sharing revenue was $46,330 for the
        three months ended September 30, 2008, compared to $87,254 for the three
        months
        ended September 30, 2007 representing a decrease of $40,924 or 46.9%. The
        gross
        margin percentage on revenue sharing revenue was 59.5% for the three months
        ended September 30, 2008, compared to 54.0% for the three months ended September
        30, 2007. The increase in gross margin percentage relating to revenue sharing
        revenue is due to the completion of some revenue sharing contracts in 2007
        and
        2008.
  Cost
        of
        Maintenance Fee Revenue — Our cost of maintenance fee revenue was $16,638 for
        the three months ended September 30, 2008, compared to $14,716 for the three
        months ended September 30, 2007, representing an increase of $1,922, or 13.1%.
        The gross margin percentage on maintenance fee revenues was 71.6% for the
        three
        months ended September 30, 2008, compared to 76.9% for the three months ended
        September 30, 2007. The increase in our cost of maintenance fee revenue was
        due
        to the aging of the equipment being serviced.
  Cost
        of
        Product Sales Revenue — Our cost of product sales revenue for the three months
        ended September 30, 2008 was $0, compared to $10,175 for the three months
        ended
        September 30, 2007, a decrease of $10,175, or 100%. The gross margin percentage
        on revenue from product sales revenue was 0% for the three months ended
        September 30, 2008, compared to 84.4% for the three months ended September
        30,
        2007. The decrease in cost of product sales revenue relates to the fact that
        there were no product sales in the three months ended September 30, 2008
        versus
        the three months ended September 30, 2007.
 -8-
 The
        changes and percent changes with respect to our revenues and our cost of
        revenue
        for the three months ended September 30, 2008 and 2007 are summarized as
        follows:
 
 **For the Three Months****Ended September  30,****2008**
              
              **2007**
              
              **Change**
              
              **Percent**
                **Change****REVENUE**Revenue-sharing
                  arrangements
              
              $
              114,294
              
              $
              189,530
              
              $
              (75,236
              )
              
              -39.7
              %Maintenance
                  fees
              
              
              58,590
              
              
              63,643
              
              
              (5,053
              )
              
              -7.9
              %Product
                  sales
              
              
              -
              
              
              65,194
              
              
              (65,194
              )
              
              -100.0
              %**Total
                  Revenue**
              
              
              172,884
              
              
              318,367
              
              
              (145,483
              )
              
              -45.7
              %**COST
                  OF REVENUE**Revenue-sharing
                  arrangements
              
              
              46,330
              
              
              87,254
              
              
              (40,924
              )
              
              -46.9
              %Maintenance
              
              
              16,638
              
              
              14,716
              
              
              1,922
              
              
              13.1
              %Product
                  sales
              
              
              -
              
              
              10,175
              
              
              (10,175
              )
              
              -100.0
              %**Total
                  Cost of Revenue**
              
              $
              62,968
              
              $
              112,145
              
              $
              (49,177
              )
              
              -43.9
              %**GROSS
                  MARGIN PERCENTAGE**Revenue-sharing
                  arrangements
              
              
              59.5
              %
              
              54.0
              %Maintenance
              
              
              71.6
              %
              
              76.9
              %Product
                  sales
              
              
              -
              
              
              84.4
              %**Total
                  Gross Margin Percentage**
              
              
              63.6
              %
              
              64.8
              %
 
 Although
        the preceding table summarizes the net changes and percent changes with respect
        to our revenues and our cost of revenue for the three months ended September
        30,
        2008 and 2007, the trends contained therein are limited and should not be
        viewed
        as a definitive indication of our future results.
  **Operating
        Expenses**
  Selling,
        General and Administrative — Selling, general and administrative expenses,
        including non-cash compensation expense, were $79,158 for the three months
        ended
        September 30, 2008, compared to $84,347 for the three months ended September
        30,
        2007, representing a decrease of $5,189, or 6.2%. The decrease in our selling,
        general and administrative expenses was immaterial.
  Research
        and Development—Research and development expenses were $48,320 for the three
        months ended September 30, 2008, compared to $0 for the three months ended
        September 30, 2007 representing an increase of $48,320. The increase in our
        research and development expenses for the three months ended September 30,
        2008
        reflects new product development in 2008.
  Interest
        and other income was $28,977 for the three months ended September 30, 2008
        as
        compared to $31,443 for the three months ended September 30, 2007 representing
        a
        decrease of $2,466 or 7.8%. The decrease was due to the interest earned on
        our
        increasing balance of cash and investments in marketable
        securities.
 
 **Net
        Income Attributable to Common Stockholders**
  We
        realized net income of $11,415 for the three months ended September 30, 2008,
        compared to $153,318 during the three months ended September 30, 2007. The
        $141,903 decrease in net income was primarily due to decreasing revenue sharing
        agreements, as well as research and development costs. We may incur losses
        in
        the future as existing revenue sharing agreements with our hotel clients
        expire.
 
 **Comparison
        of Nine Months Ended September 30, 2008 and 2007**
  **Revenues**
  Revenue
        Sharing Arrangements — Our revenue from revenue sharing arrangements was
        $450,099 for the nine months ended September 30, 2008, compared to $625,197
        for
        the nine months ended September 30, 2007, representing a decrease of $175,098,
        or 28.0%. The decrease in revenue sharing revenue was due to the completion
        of a
        number of revenue sharing contracts in 2007 and 2008.
  Maintenance
        Fee Revenues — Maintenance fee revenues
        were $170,088 for the nine months ended September 30, 2008, compared to $196,892
        for the nine months ended September 30, 2007, representing a decrease of
        $26,804, or 13.6%. The decrease in maintenance fee revenue was due to the
        completion of a number of revenue sharing and maintenance contracts in 2007
        and
        2008.
  -9-
  Product
        Sales — Revenue from product sales was $96,368 for the nine months ended
        September 30, 2008, compared to $125,891 for the nine months ended September
        30,
        2007, representing a decrease of $29,523, or 23.5%. The decrease in product
        sales revenues was primarily due to the difference in sales of refreshment
        centers to hotels at the completion of their revenue share contracts in the
        nine
        months ended September 30, 2008.
  **Cost
        of Revenue**
  Cost
        of
        Revenue Sharing Revenue — Cost of revenue sharing revenue was $197,093 for the
        nine months ended September 30, 2008, compared to $297,219 for the nine months
        ended September 30, 2007 representing a decrease of $100,126 or 33.7%. The
        gross
        margin percentage on revenue sharing revenue was 56.2% for the nine months
        ended
        September 30, 2008, compared to 52.5% for the nine months ended September
        30,
        2007. The increase in gross margin percentage relating to revenue sharing
        revenue is due to the completion of some revenue sharing contracts in 2007
        and
        2008.
  Loss
        on
        Impairment of Refreshment Centers — During 2008, the Company assessed the
        carrying value of certain refreshment centers that had been used by a Hotel
        and
        taken out of service and recorded a loss due to impairment of $64,835.
 
 Cost
        of
        Maintenance Fee Revenue — Our cost of maintenance fee revenue was $62,147 for
        the nine months ended September 30, 2008, compared to $44,558 for the nine
        months ended September 30, 2007, representing an increase of $17,589, or
        39.5%.
        The gross margin percentage on maintenance fee revenues was 63.5% for the
        nine
        months ended September 30, 2008, compared to 77.4% for the nine months ended
        September 30, 2007. The increase in our cost of maintenance fee revenue was
        due
        to the aging of the equipment being serviced.
  Cost
        of
        Product Sales Revenue — Our cost of product sales revenue for the nine months
        ended September 30, 2008 was $26,098, compared to $27,085 for the nine months
        ended September 30, 2007, a decrease of $987, or 3.6%. The gross margin
        percentage on revenue from product sales revenue was 72.9% for the nine months
        ended September 30, 2008, compared to 78.5% for the nine months ended September
        30, 2007. The difference in cost of product sales revenue relates to the
        remaining basis of the refreshment centers sold in the nine months ended
        September 30, 2008 versus the nine months ended September 30, 2007.
 
 The
        changes and percent changes with respect to our revenues and our cost of
        revenue
        for the nine months ended September 30, 2008 and 2007 are summarized as
        follows:
 
 **For
                  the Nine Months****Ended
                  September 30,****2008**
              
              **2007**
              
              **Change**
              
              **Percent**
                **Change****REVENUE**Revenue-sharing
                  arrangements
              
              $
              450,099
              
              $
              625,197
              
              $
              (175,098
              )
              
              -28.0
              %Maintenance
                  fees
              
              
              170,088
              
              
              196,892
              
              
              (26,804
              )
              
              -13.6
              %Product
                  sales
              
              
              96,368
              
              
              125,891
              
              
              (29,523
              )
              
              -23.5
              %**Total
                  Revenue**
              
              
              716,555
              
              
              947,980
              
              
              (231,425
              )
              
              -24.4
              %**COST
                  OF REVENUE**Revenue-sharing
                  arrangements
              
              
              197,093
              
              
              297,219
              
              
              (100,126
              )
              
              -33.7
              %Loss
                  on impairment of refreshment centers in serivice
              
              
              64,835
              
              
              -
              
              
              64,835
              
              
              100.0
              %Maintenance
              
              
              62,147
              
              
              44,558
              
              
              17,589
              
              
              39.5
              %Product
                  sales
              
              
              26,098
              
              
              27,085
              
              
              (987
              )
              
              -3.6
              %**Total
                  Cost of Revenue**
              
              $
              350,173
              
              $
              368,862
              
              $
              (18,689
              )
              
              -5.1
              %**GROSS
                  MARGIN PERCENTAGE**Revenue-sharing
                  arrangements
              
              
              56.2
              %
              
              52.5
              %Maintenance
              
              
              63.5
              %
              
              77.4
              %Product
                  sales
              
              
              72.9
              %
              
              78.5
              %**Total
                  Gross Margin Percentage**
              
              
              51.1
              %
              
              61.1
              %
  Although
        the preceding table summarizes the net changes and percent changes with respect
        to our revenues and our cost of revenue for the nine months ended September
        30,
        2008 and 2007, the trends contained therein are limited and should not be
        viewed
        as a definitive indication of our future results.
  -10-
  **Operating
        Expenses**
  Selling,
        General and Administrative — Selling, general and administrative expenses,
        including non-cash compensation expense, were $333,125 for the nine months
        ended
        September 30, 2008, compared to $298,305 for the nine months ended September
        30,
        2007, representing an increase of $34,820, or 11.7%. The increase in our
        selling, general and administrative expenses reflects the write-off of an
        uncollectible account.
  Research
        and Development—Research and development expenses were $85,648 for the nine
        months ended September 30, 2008, compared to $0 for the nine months ended
        September 30, 2007 representing an increase of $85,648. The increase in our
        research and development expenses for the nine months ended September 30,
        2008
        reflects new product development in 2008.
  Interest
        and other income was $89,022 for the nine months ended September 30, 2008
        as
        compared to $76,862 for the nine months ended September 30, 2007 representing
        an
        increase of $12,160, or 15.8%. The increase was due to the interest earned
        on
        our loans receivable and increasing balance of cash and investments in
        marketable securities.
 
 **Net
        Income Attributable to Common Stockholders**
  We
        realized net income of $36,631 for the nine months ended September 30, 2008,
        compared to $366,175 during the nine months ended September 30, 2007. The
        $329,544 decrease in net income was primarily due to decreasing revenue sharing
        agreements, the loss on impairment of refreshment centers recognized, the
        write-off of an uncollectible account as well as research and development
        costs.
        We may incur losses in the future as existing revenue sharing agreements
        with
        our hotel clients expire.
 
 **Liquidity
        and Capital Resources**
  At
        September 30, 2008, our principal sources of liquidity consisted of $1,700,542
        of cash and working capital of $2,725,082, as compared to $355,970 of cash
        and
        working capital of $2,416,398 at December 31, 2007. In addition, our
        stockholders' equity was $3,084,572 at September 30, 2008, compared to
        stockholders' equity of $3,029,941 at December 31, 2007, an increase of $54,631.
        The increase in cash reflects the increase in working capital, decrease in
        investments and increase in stockholders' equity.
  At
        September 30, 2008, the Company had $500,000 invested in outstanding auction
        rate preferred securities (“ARPS”). ARPS are perpetual securities with dividend
        rates that are reset periodically—often weekly or monthly—when buyers and
        sellers come together at an auction. There is currently an imbalance between
        the
        number of buyers and sellers in the ARPS market that has resulted in a number
        of
“failed auctions.” This has created a lack of liquidity for ARPS investors.
        However, as we have already liquidated over $2,000,000 of these securities
        after
        the auctions failed and are continuing to liquidate our securities, we do
        not
        believe this will have a negative affect on our cash flows.
 
 Our
        accumulated deficit decreased from $31,082,627 at December 31, 2007 to
        $31,045,996 at September 30, 2008. The $36,631 decrease in accumulated deficit
        resulted directly from the net income realized for the nine months ended
        September 30, 2008. Our accumulated deficit may increase in the future as
        existing revenue sharing agreements with our hotel clients expire.
  Our
        operations provided net cash of $272,883 for the nine months ended September
        30,
        2008, compared to $565,245 during the nine months ended September 30, 2007.
        The
        $292,362 decrease in net cash provided by our operating activities resulted
        primarily from the decrease in net income during the nine months ended September
        30, 2008.
  Investing
        activities for the nine months ended September 30, 2008 provided net cash
        of
        $1,071,689, compared to $93,267 of net cash provided during the nine months
        ended September 30, 2007. The change consisted primarily of an increase in
        the
        sale of investment securities.
  There
        were no financing activities in the nine months ended September 30, 2008
        and
        2007.
 
 **Contractual
        Cash Obligations and Commercial Commitments**
  There
        were no significant contractual cash obligations or commercial commitments
        either on or off balance sheet as of September 30, 2008
 
 **Off
        Balance Sheet Arrangements**
 
 We
        have
        no off-balance sheet arrangements.
  -11-
  **Item
        3.**  **Quantitative
        and Qualitative Disclosures About Market Risk.**
 
 Smaller
        reporting companies are not required to provide the information required
        by Item
        305.
  **Item
        4.  Controls and Procedures**
  **Evaluation
        of Disclosure Controls and Procedures**
 
 Our
        disclosure controls and procedures are designed to ensure that information
        required to be disclosed in reports that we file or submit under the Securities
        Exchange Act of 1934 is recorded, processed, summarized and reported within
        the
        time periods specified in the rules and forms of the United States Securities
        and Exchange Commission. Our principal executive and financial officer has
        reviewed the effectiveness of our "disclosure controls and procedures" (as
        defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c))
        within the end of the period covered by this Quarterly Report on Form 10-Q
        and
        has concluded that the disclosure controls and procedures are effective to
        ensure that material information relating to the Company is recorded, processed,
        summarized, and reported in a timely manner. There were no significant changes
        in our internal controls or in other factors that could significantly affect
        these controls subsequent to the last day they were evaluated by our principal
        executive and financial officer.
 
 **Lack
        of Segregation of Duties**
  Management
        is aware that there is a lack of segregation of duties at the Company due
        to the
        small number of employees dealing with general administrative and financial
        matters. However, at this time management has decided that considering the
        abilities of the employees now involved and the control procedures in place,
        the
        risks associated with such lack of segregation are low and the potential
        benefits of adding employees to clearly segregate duties do not justify the
        substantial expenses associated with such increases. Management will
        periodically reevaluate this situation.
  **Changes
        in Internal Controls**
  There
        were no changes in our internal controls over financial reporting (as such
        item
        is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during
        the
        most fiscal quarter (the three months ended September 30, 2008), that have
        materially affected, or are reasonably likely to materially affect, our internal
        controls over financial reporting.
 
 **PART
        II - OTHER INFORMATION**
  **Item
        1. Legal Proceedings.**
  There
        are
        no pending legal proceedings to which the Company is a party or in which
        any
        director, officer or affiliate of the Company, any owner of record or
        beneficially of more than 5% of any class of voting securities of the Company,
        or security holder is a party adverse to the Company or has a material interest
        adverse to the Company. The Company’s property is not the subject of any pending
        legal proceedings.
  **Item
        1A. Risk Factors.**
 
 **General
        economic conditions may affect our revenue and harm our
        business.**
 
 As
        widely
        reported, financial markets in the United States, Europe and Asia have been
        experiencing extreme disruption in recent months. Unfavorable changes in
        economic conditions, including declining consumer confidence, inflation,
        recession or other changes, may lead our customers to delay or reduce purchases
        of our products and our results of operations and financial condition could
        be
        adversely affected thereby. Challenging economic conditions also may impair
        the
        ability of our customers or distributors to pay for products they have
        purchased, and as a result, our reserves for doubtful accounts and write-offs
        of
        accounts receivable could increase. Our cash flows may be adversely affected
        by
        delayed payments or underpayments by our customers. We are unable to predict
        the
        duration and severity of the current disruption in financial markets and
        adverse
        economic conditions in the U.S. and other countries.
 
 There
        have been no other material changes to the risks to our business described
        in
        our Annual Report on Form 10-KSB/A for the year ended December 31,
        2007 filed with the SEC on April 30, 2008.
 
 **Item
        2. Unregistered Sales of Equity Securities and Use of
        Proceeds.**
 
 None
  **Item
        3. Defaults Upon Senior Securities.**
  Not
        applicable.
  -12-
  **Item
        4. Submission of Matters to a Vote of Security Holders.**
  Not
        applicable.
  **Item
        5. Other Information.**
  On
        November 11, 2008, the Company entered into an Exclusive License Agreement
        (the
“License”) with Acacia Patent Acquisition LLC (“APAC”), a Delaware limited
        liability company. Pursuant to the terms of the license, the Company granted
        APAC worldwide exclusive rights to its U.S. Patent No. 4939352, U.S. Patent
        No.
        4883948 and U.S. Patent No. 4857714, and all related patent applications,
        foreign patents and foreign patent applications. In consideration for such
        grant, APAC shall pay the Company a continuing royalty of 50% of all amounts
        received by APAC less costs.
 
 The
        effective on the date of the grant will occur after, among others, the APAC
        has
        conducted its due diligence investigation of the patents during a period
        of up
        to sixty days following the effective date. During the period of APAC due
        diligence review, the Company has agreed not to discuss or negotiation or
        pursue
        with any third party any offers or proposals with respect to the patents.
 
 **Item
        6. Exhibits.**
  **Exhibit
                  No.**
              
              **Description**31.1
              
              Certification
                  pursuant to Section 302 of the Sarbanes-Oxley Act of
                  200232.1
              
              Certification
                  pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002
  -13-
  **SIGNATURE**
  Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this quarterly report on Form 10-Q to be signed on its behalf
        by the
        undersigned thereunto duly authorized.
  eRoomSystem
                  Technologies, Inc.(Registrant)Date:
                  November 17, 2008By:
              /s/
                  David A. GestetnerName:
              David
                  A. GestetnerTitle:
              President,
                  Chief Executive Officer, Secretary,and
                  Chairman of the Board(Principal
                  Executive, Financial,and
                  Accounting Officer)
  -14-