**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: March 31, 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 filer o
            Accelerated
                filer oNon-accelerated
                filer  o
                (Do not check if a smaller reporting company)
            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 May 9, 2008 was
      23,973,165 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
            1ITEM
                1. FINANCIAL STATEMENTS
            1Condensed
                Consolidated Balance Sheets (Unaudited)
            1Condensed
                Consolidated Statements of Operations (Unaudited)
            2Condensed
                Consolidated Statements of Cash Flows (Unaudited)
            3Notes
                to Condensed Consolidated Financial Statements (Unaudited)
            4ITEM
                2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR
                PLAN OF
                OPERATION
            6ITEM
                3. QUANTITIVE AND QUALITIVE DISCLOSURES ABOUT MARKET RISK
            10ITEM
                4. CONTROLS AND PROCEDURES
            10PART
                II – OTHER INFORMATION
            11ITEM
                1. LEGAL PROCEEDINGS
            11ITEM
                1A. RISK FACTORS
            11ITEM
                2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
            11ITEM
                3. DEFAULTS UPON SENIOR SECURITIES
            11ITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            11ITEM
                5. OTHER INFORMATION
            11ITEM
                6. EXHIBITS
            11SIGNATURE
            12


ii


**PART
      I - FINANCIAL INFORMATION**





**Item
      1. Financial Statements.**




**eROOMSYSTEM
      TECHNOLOGIES, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS (UNAUDITED)**




**March
                31,**
              **2008**
            
            **December
                31,**
              **2007****ASSETS****CURRENT
                ASSETS**Cash
                and cash equivalents
            
            $
            878,294
            
            $
            355,970Marketable
                securities available for sale
            
            
            1,600,000
            
            
            1,998,002Accounts
                receivable, net of allowance for doubtful accounts of $34,097 and
                $32,399
                at March 31, 2008 and December 31, 2007, respectively
            
            
            196,416
            
            
            182,416Prepaid
                expenses
            
            
            18,105
            
            
            10,831**Total
                Current Assets**
            
            
            2,692,815
            
            
            2,547,219**REFRESHMENT
                CENTERS IN SERVICE**,
                net of accumulated depreciation of $2,056,372 and $2,406,453 at March
                31,
                2008 and December 31, 2007, respectively
            
            
            338,130
            
            
            434,609**PROPERTY
                AND EQUIPMENT**Computer
                equipment and office equipment, net of accumulated depreciation of
                $7,202
                and $6,657, at March 31, 2008 and December 31, 2007,
                respectively
            
            
            3,525
            
            
            3,261**INVESTMENT
                IN MARKETABLE SECURITIES**
            
            
            14,075
            
            
            14,075**NOTE
                RECEIVABLE**
            
            
            162,916
            
            
            159,166**DEPOSITS**
            
            
            3,382
            
            
            2,432**Total
                Assets**
            
            $
            3,214,843
            
            $
            3,160,762**LIABILITIES
                AND STOCKHOLDERS' EQUITY****CURRENT
                LIABILITIES**Accounts
                payable
            
            $
            73,115
            
            $
            49,070Accrued
                liabilities
            
            
            41,049
            
            
            71,289Deferred
                maintenance revenue
            
            
            66,213
            
            
            10,462**Total
                Current Liabilities**
            
            
            180,377
            
            
            130,821**Total
                Liabilities**
            
            
            180,377
            
            
            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; 23,973,165
                and
                23,973,165 shares outstanding at March 31, 2008 and December 31,
                2007,
                respectively
            
            
            23,973
            
            
            23,973Additional
                paid-in capital
            
            
            33,796,790
            
            
            33,792,010Warrants
                and options outstanding
            
            
            341,805
            
            
            346,585Accumulated
                deficit
            
            
            (31,078,102
            )
            
            (31,082,627
            )Accumulated
                other comprehensive loss
            
            
            (50,000
            )
            
            (50,000
            )**Total
                Stockholders' Equity**
            
            
            3,034,466
            
            
            3,029,941**Total
                Liabilities and Stockholders' Equity**
            
            $
            3,214,843
            
            $
            3,160,762




See
      accompanying notes to unaudited condensed consolidated financial
      statements




-1-





**eROOMSYSTEM
      TECHNOLOGIES, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)**




***For
                the Three Months Ended March 31,***
            
            **2008**
            
            **2007****REVENUE**Revenue-sharing
                arrangements
            
            $
            187,481
            
            $
            219,972Maintenance
                fees
            
            
            55,305
            
            
            66,179Product
                sales
            
            
            16,448
            
            
            3,750**Total
                Revenue**
            
            
            259,234
            
            
            289,901**COST
                OF REVENUE**Revenue-sharing
                arrangements
            
            
            85,601
            
            
            107,747Maintenance
            
            
            20,007
            
            
            13,564Product
                sales
            
            
            12,140
            
            
            1,584**Total
                Cost of Revenue**
            
            
            117,748
            
            
            122,895**GROSS
                MARGIN**
            
            
            141,486
            
            
            167,006**OPERATING
                EXPENSES**Selling,
                general and administrative expense
            
            
            143,435
            
            
            107,118Research
                and development expense
            
            
            27,216
            
            
            -Interest
                and other income
            
            
            (33,690
            )
            
            (20,341
            )**Net
                Operating Expenses**
            
            
            136,961
            
            
            86,777**Income
                from Operations**
            
            
            4,525
            
            
            80,229Gain
                on forgiveness of liabilities and debt
            
            
            -
            
            
            8,500**Net
                Income**
            
            $
            4,525
            
            $
            88,729**Basic
                Earnings Per Common Share**
            
            $
            0.00
            
            $
            0.00**Diluted
                Earnings Per Common Share**
            
            $
            0.00
            
            $
            0.00




See
      accompanying notes to unaudited condensed consolidated financial
      statements




-2-





**eROOMSYSTEM
      TECHNOLOGIES, INC. AND SUBSIDIARIES**


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




***For
                the Three Months Ended March 31,***
            
            **2008**
            
            **2007****CASH
                FLOWS FROM OPERATING ACTIVITIES**Net
                income
            
            $
            4,525
            
            $
            88,729Adjustments
                to reconcile net income to net cash provided by operating
                activities:Depreciation
            
            
            86,146
            
            
            108,454Gain
                on forgiveness of debt and liabilities
            
            
            -
            
            
            (8,500
            )Gain
                on sale of refreshment centers
            
            
            10,878
            
            
            -Interest
                income from other receivable
            
            
            (3,750
            )
            
            (279
            )Amortization
                of discount on note receivable
            
            
            -
            
            
            (489
            )Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (14,000
            )
            
            42,843Prepaid
                expenses
            
            
            (7,274
            )
            
            (2,741
            )Accounts
                payable
            
            
            24,045
            
            
            (11,492
            )Accrued
                liabilities
            
            
            (30,240
            )
            
            (53,381
            )Customer
                deposits and deferred maintenance revenue
            
            
            55,751
            
            
            (580
            )**Net
                Cash Provided By Operating Activities**
            
            
            126,081
            
            
            162,564**CASH
                FLOWS FROM INVESTING ACTIVITIES**Purchase
                of fixed assets
            
            
            (809
            )
            
            -Purchase
                of investment
            
            
            (926,998
            )
            
            (425,000
            )Sale
                of investments
            
            
            1,325,000
            
            
            250,000Proceeds
                from note receivable
            
            
            -
            
            
            11,089Change
                in long term deposits and restricted funds
            
            
            (950
            )
            
            4,431**Net
                Cash Provided by (Used in) Investing Activities**
            
            
            396,243
            
            
            (159,480
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES****Net
                Cash Used in Financing Activities**
            
            
            -
            
            
            -**Net
                Increase in Cash**
            
            
            522,324
            
            
            3,084**Cash
                at Beginning of Period**
            
            
            355,970
            
            
            80,638**Cash
                at End of Period**
            
            $
            878,294
            
            $
            83,722**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 months ended March 31, 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 months ended March 31, 2008 and 2007:





*For
                the Three Months Ended March 31,*
            
            **2008**
            
            **2007**Basic
                net income
            
            $
            4,525
            
            $
            88,729Diluted
                net income
            
            $
            4,525
            
            $
            88,729Basic
                weighted-average common shares outstanding
            
            
            23,973,165
            
            
            23,898,165Effect
                of dilutive securitiesStock
                options and warrants
            
            
            316,271
            
            
            168,861Diluted
                weighted-average common shares outstanding
            
            
            24,289,436
            
            
            24,067,026Basic
                earnings per share
            
            $
            0.00
            
            $
            0.00Diluted
                earnings per share
            
            $
            0.00
            
            $
            0.00




At
      March
      31, 2008 and 2007, there were potential common stock equivalents from options
      and warrants of 2,828,350 and 3,098,760, 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 three months ended March 31, 2008,
      the
      Company realized a net gain of $402,221 and $4,525, respectively. During the
      year ended December 31, 2007 and the three months ended March 31, 2008, the
      Company's operations provided $765,270 and $126,081 of cash, respectively.
      The
      Company had a cash balance of $878,294 as of March 31, 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 March 31,
      2008:





Total
                minimum lease payments to be received
            
            $
            64,800Less:
                Allowance for uncollectibles
            
            
            (54,497
            )Net
                minimum lease payments receivable
            
            
            10,303Less:
                Unearned income
            
            
            (10,303
            )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 for the three months ended March 31,
      2008.




Minimum
      lease payments for the nine months ending December 31, 2008, the end of the
      lease term, is $64,800.





**NOTE
      4 - STOCKHOLDERS’ EQUITY**





During
      the three months ended March 31, 2008, options to purchase 25,000 shares of
      common stock expired. The Company recognized the value of these options in
      the
      amount of $3,526 as additional paid in capital.




-5-


**Item
      2. Management's Discussion and Analysis or Plan of
      Operation.**




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
      to us a warrant 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.
      We
      may make additional investments in promising emerging growth companies, and
      potentially acquire an operating company if the opportunity
      arises.





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.




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.


-6-




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.




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 three months ended March 31, 2008
      were
      $27,216.


-7-




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 March 31, 2008 and 2007**




**Revenues**




Revenue
      Sharing Arrangements — Our revenue from revenue sharing arrangements was
      $187,481 for the three months ended March 31, 2008, compared to $219,972 for
      the
      three months ended March 31, 2007, representing a decrease of $32,491, or 14.8%.
      The decrease in revenue sharing revenue was due to the completion of a number
      of
      revenue sharing contracts in 2007.




Maintenance
      Fee Revenues — Maintenance fee revenues were $55,305 for the three months ended
      March 31, 2008, compared to $66,179 for the three months ended March 31, 2007,
      representing a decrease of $10,874, or 16.4%. The decrease in maintenance fee
      revenue was due to the completion of a number of revenue sharing and maintenance
      contracts in 2007.




Product
      Sales — Revenue from product sales was $16,448 for the three months ended March
      31, 2008, compared to $3,750 for the three months ended March 31, 2007,
      representing an increase of $12,698, or 338.6%. The increase in product sales
      revenues was primarily due to the sale of refreshment centers to hotels at
      the
      completion of their revenue share contracts in the three months ended March
      31,
      2008.




**Cost
      of Revenue**




Cost
      of
      Revenue Sharing Revenue — Cost of revenue sharing revenue was $85,601 for the
      three months ended March 31, 2008, compared to $107,747 for the three months
      ended March 31, 2007 representing a decrease of $22,146 or 20.6%. The gross
      margin percentage on revenue sharing revenue was 54.3% for the three months
      ended March 31, 2008, compared to 51% for the three months ended March 31,
      2007.
      The increase in gross margin relating to revenue sharing revenue is due to
      the
      completion of some revenue sharing contracts in 2007.




Cost
      of
      Maintenance Fee Revenue — Our cost of maintenance fee revenue was $20,007 for
      the three months ended March 31, 2008, compared to $13,564 for the three months
      ended March 31, 2007, representing an increase of $6,443, or 47.5%. The gross
      margin percentage on maintenance fee revenues was 63.8% for the three months
      ended March 31, 2008, compared to 79.5% for the three months ended March 31,
      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 March 31, 2008 was $12,140, compared to $1,584 for the three months ended
      March 31, 2007, an increase of $10,556, or 666.4%. The gross margin percentage
      on revenue from product sales revenue was 26.2% for the three months ended
      March
      31, 2008, compared to 57.8% for the three months ended March 31, 2007. The
      significant increase in cost of product sales revenue relates to the remaining
      basis of the refreshment centers sold in the three months ended March 31,
      2008.





The
      changes and percent changes with respect to our revenues and our cost of revenue
      for the three months ended March 31, 2008 and 2007 are summarized as
      follows:


-8-




**For
                the Three Months****Ended
                March 31,****2008**
            
            **2007**
            
            **Change**
            
            **Percent**
              **Change****REVENUE**Revenue-sharing
                arrangements
            
            $
            187,481
            
            $
            219,972
            
            $
            (32,491
            )
            
            -14.8
            %Maintenance
                fees
            
            
            55,305
            
            
            66,179
            
            
            (10,874
            )
            
            -16.4
            %Product
                sales
            
            
            16,448
            
            
            3,750
            
            
            12,698
            
            
            338.6
            %**Total
                Revenue**
            
            
            259,234
            
            
            289,901
            
            
            (30,667
            )
            
            -10.6
            %**COST
                OF REVENUE**Revenue-sharing
                arrangements
            
            
            85,601
            
            
            107,747
            
            
            (22,146
            )
            
            -20.6
            %Maintenance
            
            
            20,007
            
            
            13,564
            
            
            6,443
            
            
            47.5
            %Product
                sales
            
            
            12,140
            
            
            1,584
            
            
            10,556
            
            
            666.4
            %**Total
                Cost of Revenue**
            
            $
            117,748
            
            $
            122,895
            
            $
            (5,147
            )
            
            -4.2
            %**GROSS
                MARGIN PERCENTAGE**Revenue-sharing
                arrangements
            
            
            54.3
            %
            
            51.0
            %Maintenance
            
            
            63.8
            %
            
            79.5
            %Product
                sales
            
            
            26.2
            %
            
            57.8
            %**Total
                Gross Margin Percentage**
            
            
            54.6
            %
            
            57.6
            %




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 March 31,
      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 $143,435 for the three months
      ended March 31, 2008, compared to $107,118 for the three months ended March
      31,
      2007, representing an increase of $36,317, or 33.9%. The increase in our
      selling, general and administrative expenses for the three months ended March
      31, 2008 to the three months ended March 31, 2007 reflects the write-off of
      an
      uncollectible account.




Research
      and Development—Research and development expenses were $27,216 for the three
      months ended March 31, 2008, compared to $0 for the three months ended March
      31,
      2007 representing an increase of $27,216. The increase in our research and
      development expenses for the three months ended March 31, 2007 reflects new
      product development in 2008.




Interest
      and other income was $33,690 for the three months ended March 31, 2008 as
      compared to $20,341 for the three months ended March 31, 2007 representing
      an
      increase of $13,349, or 65.6%. The increase 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 $4,525 for the three months ended March 31, 2008,
      compared to $88,729 during the three months ended March 31, 2007. The $84,204
      decrease in net income was primarily due to the significant increase in our
      selling, general and administrative costs and 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
      March
      31, 2008, our principal sources of liquidity consisted of $878,294 of cash
      and
      working capital of $2,512,438, as compared to $355,970 of cash and working
      capital of $2,416,398 at December 31, 2007. In addition, our stockholders'
      equity was $3,034,466 at March 31, 2008, compared to stockholders' equity of
      $3,029,941 at December 31, 2007, an increase of $4,525. The increase in cash
      reflects the increase in working capital, decrease in investments and increase
      in stockholders' equity.




At
      March
      31, 2008, the Company’s had $1,600,000 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 $950,000 of these securities after the auctions
      failed and are continuing to liquidate our securities at an accelerated rate,
      we
      do not believe this will have a negative affect on our cash flows.




-9-




Our
      accumulated deficit decreased from $31,082,627 at December 31, 2007 to
      $31,078,102 at March 31, 2008. The $4,525 decrease in accumulated deficit
      resulted directly from the net income realized for the three months ended March
      31, 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 $126,081 for the three months ended March 31,
      2008, compared to $162,564 during the three months ended March 31, 2007. The
      $36,483 decrease in net cash provided by our operating activities resulted
      primarily from the decrease in net income during the three months ended March
      31, 2008.




Investing
      activities for the three months ended March 31, 2008 provided net cash of
      $396,243, compared to $159,480 of net cash used during the three months ended
      March 31, 2007. The change consisted primarily of an increase in the sale of
      investment securities.




There
      were no financing activities in the three months ended March 31, 2008 and
      2007.




We
      may
      require additional capital in the future to remain viable and to achieve our
      long-term business objectives. There can be no assurance that such financing
      will be made available, or if it is made available, on acceptable terms. If
      such
      future financing is procured in the form of equity, the shareholdings of the
      current stockholders of the Company will be diluted.




**Contractual
      Cash Obligations and Commercial Commitments**




There
      were no significant contractual cash obligations or commercial commitments
      either on or off balance sheet as of March 31, 2008





**Off
      Balance Sheet Arrangements**





We
      have
      no off-balance sheet arrangements.





**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 March 31, 2008), that have
      materially affected, or are reasonably likely to materially affect, our internal
      controls over financial reporting.


-10-





**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.**





There
      have been no 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.**




Not
      applicable.





**Item
      3. Defaults Upon Senior Securities.**




Not
      applicable.





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




Not
      applicable.





**Item
      5. Other Information.**




Not
      applicable.





**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




-11-




**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:
                May 14, 2008By:
            /s/
                David A. GestetnerName:
            David
                A. GestetnerTitle:
            President,
                Chief Executive Officer, Secretary,and
                Chairman of the Board(Principal
                Executive, Financial,and
                Accounting Officer)




-12-