UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
(Mark One)
     QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR  15  (d)  OF  THE  SECURITIES
     EXCHANGE ACT OF 1934

     For the quarterly period ended:         June 30, 2003
                                             -------------
                                       OR

     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                 (I.R.S. Employer
   of incorporation or organization)           Identification No.)


                 106 East 13200 South, Draper, Utah 84020
                 ----------------------------------------
                (Address of principal executive offices)



                                (800) 316-3070
                                --------------
                         (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  NO

Applicable  Only  to  Issuers  Involved in  Bankruptcy  Proceedings  During  the
Preceding Five Years
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.  YES  NO

Applicable Only to Corporate Issuers
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:

    10,983,933 shares of common stock, $0.001 par value, as of August 14, 2003
    --------------------------------------------------------------------------

Transitional Small Business Disclosure Format (check one):  YES [ ]   NO [X]

<PAGE>



                                   FORM 10-QSB

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                  Page
                                                                                  ----
<S>                                                                             <C>
PART I - FINANCIAL INFORMATION                                                      1

     Item 1.  Financial Statements.                                                F-2

          Condensed Consolidated Balance Sheets (Unaudited)                        F-2

          Condensed Consolidated Statements of Operations (Unaudited)              F-4

          Condensed Consolidated Statements of Cash Flows (Unaudited)              F-5

          Notes to Condensed Consolidated Financial Statements (Unaudited)         F-6

     Item 2.  Management's Discussion and Analysis of Financial  Condition
              and Results of Operations.                                            10

PART II - OTHER INFORMATION                                                         20

     Item 1.  Legal Proceedings.                                                    20

     Item 2.  Changes in Securities and Use of Proceeds.                            20

     Item 3.  Defaults Upon Senior Securities.                                      20

     Item 4.  Submission of Matters to a Vote of Security Holders.                  20

     Item 5.  Other Information.                                                    20

     Item 6.  Exhibits and Reports on Form 8-K.                                     20


</TABLE>
                                        i


<PAGE>


PART I - FINANCIAL INFORMATION

     Item 1.  Financial Statements.


                 eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


<TABLE>
<CAPTION>
                                     ASSETS

                                                        June 30,     December 31,
                                                          2003           2002
---------------------------------------------------------------------------------
<S>                                                   <C>            <C>

CURRENT ASSETS
  Cash                                                 $  116,564     $  144,359
  Accounts receivable, net of allowance for doubtful
   accounts of $248,067  and
     $169,943 at June 30, 2003
   and December 31, 2002, respectively                    325,374        335,763
  Inventories                                             250,404        253,561
  Prepaid expenses                                          8,459        107,085
---------------------------------------------------------------------------------
     Total Current Assets                                 700,801        840,768
---------------------------------------------------------------------------------

REFRESHMENT CENTERS IN SERVICE, net of accumulated
 depreciation of $2,063,417 and $1,717,753 at
 June 30, 2003 and December 31, 2002, respectively      3,205,036      3,598,154
---------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT
  Production equipment                                     93,460         93,460
  Computer equipment                                       74,203         74,203
  Vehicles and other                                       43,559         65,795
---------------------------------------------------------------------------------
                                                          211,222        233,458
  Less accumulated depreciation and amortization         (125,203)      (112,357)
---------------------------------------------------------------------------------
     Net Property and Equipment                            86,019        121,101
---------------------------------------------------------------------------------

DEPOSITS                                                   73,688         75,688
---------------------------------------------------------------------------------

Total Assets                                           $4,065,544     $4,635,711
=================================================================================

</TABLE>


               See accompanying notes to condensed consolidated
                       financial statements (unaudited).

                                        F-2


                 eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES
          CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (CONTINUED)

<TABLE>
<CAPTION>
                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                        June 30,     December 31,
                                                          2003           2002
----------------------------------------------------------------------------------
<S>                                                   <C>            <C>

CURRENT LIABILITIES
  Notes payable and current portion of long-term debt  $   589,081    $   407,117
  Current portion of capital lease obligations               3,061          5,666
  Accounts payable                                         586,649        562,277
  Accrued liabilities                                      307,286        219,423
  Accrued interest                                          13,401         23,092
  Customer deposits                                         11,758         11,758
  Deferred maintenance revenue                             102,345         93,585
----------------------------------------------------------------------------------
     Total Current Liabilities                           1,613,581      1,322,918
----------------------------------------------------------------------------------

LONG-TERM DEBT, net of current portion                   1,853,870      1,920,264
----------------------------------------------------------------------------------

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;
     10,983,933 shares and
   10,897,931 shares outstanding at June 30, 2003
      and December 31, 2002, respectively                   10,984         10,898
  Additional paid-in capital                            31,709,868     31,570,454
  Warrants and options outstanding                       1,028,897      1,028,897
  Notes receivable from shareholders                      (237,530)      (232,050)
  Accumulated deficit                                  (31,914,126)   (30,985,670)
----------------------------------------------------------------------------------
     Total Stockholder's Equity                            598,093      1,392,529
----------------------------------------------------------------------------------

Total Liabilities and Stockholders' Equity             $ 4,065,544    $ 4,635,711
==================================================================================
</TABLE>

               See accompanying notes to condensed consolidated
                       financial statements (unaudited).

                                        F-3




                 eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>

                                        For the Three Months Ended    For the Six Months Ended
                                                 June 30,                     June 30,
                                        --------------------------  ----------------------------
                                           2003           2002           2003              2002
------------------------------------------------------------------------------------------------
<S>                                    <C>           <C>           <C>            <C>

REVENUE
  Product sales                         $    4,768    $   847,453    $     11,934   $   857,692
  Revenue-sharing arrangements             313,995        311,191        605,736        615,210
  Maintenance fees                          68,418         64,259        155,815        119,248
------------------------------------------------------------------------------------------------
     Total Revenue                         387,181      1,222,903        773,485      1,592,150
------------------------------------------------------------------------------------------------

COST OF REVENUE
  Product sales                                 -         645,026         39,809        646,252
  Revenue-sharing arrangements             178,761        164,470        358,242        328,939
  Maintenance                               34,698         89,275         86,314        201,772
------------------------------------------------------------------------------------------------
     Total Cost of Revenue                 213,459        898,771        484,365      1,176,963
------------------------------------------------------------------------------------------------

Gross Margin                               173,722        324,132        289,120        415,187
------------------------------------------------------------------------------------------------

OPERATING EXPENSES
  Selling, general and administrative
   (exclusive of non-cash compensation
   expense)                                420,693        654,678        831,889      1,079,198
  Research and development                   3,226         66,921         20,724        130,953
  Loss on disposal of equipment                941         90,156            941         90,156
  Non-cash compensation                         -         (39,597)        19,000         57,019
------------------------------------------------------------------------------------------------
     Total Operating Expenses              424,860        772,158        872,554      1,357,326
------------------------------------------------------------------------------------------------

Loss From Operations                      (251,138)      (448,026)      (583,434)      (942,139)
------------------------------------------------------------------------------------------------

OTHER INCOME (EXPENSE)
  Interest expense                        (217,113)      (125,873)      (405,811)      (236,268)
  Interest and other income                 30,784         20,485         60,789         35,513
------------------------------------------------------------------------------------------------
     Other Expense, Net                   (186,329)      (105,388)      (345,022)      (200,755)
------------------------------------------------------------------------------------------------

Net Loss                                $ (437,467)    $ (553,414)   $  (928,456)   $(1,142,894)
================================================================================================

Basic and Diluted Loss Per Common Share $    (0.04)    $    (0.05)   $     (0.08)   $     (0.12)
================================================================================================

BASIC AND DILUTED WEIGHTED-AVERAGE COMMON

   Shares Outstanding                   10,983,933     10,553,828     10,955,899      9,489,067
================================================================================================

</TABLE>


               See accompanying notes to condensed consolidated
                       financial statements (unaudited).

                                        F-4



                 eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                        For the Six Months Ended
                                                                 June 30,
                                                       --------------------------
                                                           2003           2002
---------------------------------------------------------------------------------
<S>                                                   <C>             <C>

CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                             $ (928,456)   $(1,142,894)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
   Depreciation                                           389,883        375,655
   Amortization                                                 -         33,749
   Interest income from shareholder receivables           (5,480)         (5,480)
   Loss on disposal of assets                              38,317         90,156
   Shares and options issued for lawsuit settlement             -              -
   Amortization of deferred offering costs and
   accretion of debt discount                             172,938          2,262
   Non-cash compensation expense                           19,000         57,019
   Changes in operating assets and liabilities:
     Accounts receivable                                   10,389       (163,304)
     Inventories                                            3,157       (212,608)
     Prepaid expenses                                     100,626         65,433
     Accounts payable                                      24,371       (276,363)
     Accrued liabilities                                   78,172       (156,288)
     Customer deposits and deferred maintenance revenue     8,760       (187,617)
---------------------------------------------------------------------------------
       Net Cash Used In Operating Activities              (88,323)    (1,520,280)
---------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment                            -         (1,952)
---------------------------------------------------------------------------------
       Net Cash Used In Investing Activities                    -         (1,952)
---------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from borrowings                                233,236        140,489
  Principal payments on notes payable                    (170,103)      (147,495)
  Principal payments on capital lease obligations          (2,605)        (8,234)
  Proceeds from issuance of common stock and warrants           -      1,297,605
  Proceeds from exercise of stock options                       -         15,150
  Proceeds from collection of notes receivable from
   shareholder                                                  -         26,000
---------------------------------------------------------------------------------
       Net Cash Provided by Financing Activities           60,528      1,323,515
---------------------------------------------------------------------------------

Net Decrease in Cash                                      (27,795)      (198,717)

Cash at Beginning of Period                               144,359      1,070,974
---------------------------------------------------------------------------------

Cash at End of Period                                  $  116,564    $   872,257
=================================================================================

Supplemental Cash Flows Information
  Cash paid for interest                               $  242,564    $   253,800
=================================================================================

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
  Stock exchanged for forgiveness of debt as part
   of private placement                                $        -     $   66,429

</TABLE>


               See accompanying notes to condensed consolidated
                       financial statements (unaudited).

                                        F-5




                 eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES
      NOTES TO CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (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 annual financial statements included
in the Company's December 31, 2002 Annual Report on Form 10-KSB.  In particular,
the  Company's organization, nature of operations and its significant accounting
principles were presented in Note 1 to the consolidated financial statements  in
that  report. In the opinion of management, all adjustments necessary for a fair
presentation  have  been  included  in the accompanying  condensed  consolidated
financial  statements  and  consist of only normal recurring  adjustments.   The
results  of  operations  presented  in the accompanying  condensed  consolidated
financial  statements for the six months ended June 30, 2003 are not necessarily
indicative of the results that may be expected for the full year ending December
31, 2003.

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

RSi BRE is a special purpose entity in which the Company does not have operating
control  but owns 100 percent of the outstanding capital stock. Previously,  RSi
BRE  did  not  qualify  for  consolidation and the investment  in  RSi  BRE  was
recognized under the equity method of accounting. In January 2003, the Financial
Accounting  Standards  Board  ("FASB")  issued  FASB  Interpretation   No.   46,
Consolidation  of  Variable Interest Entities, an Interpretation  of  Accounting
Research  Bulletin No. 51 ("FIN 46"). FIN 46 defined variable interest  entities
and  modified  the  requirements for their consolidation  from  ownership  of  a
controlling  voting interest to holding a majority variable interest  and  being
the primary beneficiary of the variable interest entity. The Company elected  to
adopt  FIN  46 at December 31, 2002; accordingly, the investment in RSi  BRE  is
presented  on  a consolidated basis in the accompanying financial statements  at
June  30, 2003 and December 31, 2002 and for the three and six months ended June
30,  2003.  Under  the  guidance  of  FIN  46,  the  Company  has  restated  the
accompanying  financial statements for the three and six months ended  June  30,
2002 to account for the investment in RSi BRE on a consolidated basis. There was
no  effect on net loss for the three and six months ended June 30, 2003 or  2002
as  a  result  of adopting FIN 46 as 100 percent of the loss from  RSi  BRE  was
previously recognized under the equity method of accounting.

Stock-Based  Compensation - At June 30, 2003, the Company  has  one  stock-based
employee  compensation  plan.  The  Company accounts  for  the  plan  under  the
recognition method and measurement principles of APB Opinion No. 25,  Accounting
for  Stock  Issued  to Employees, and related Interpretations.  During  the  six
months  ended  June 30, 2003 and 2002, the Company recognized none and  $57,019,
respectively, of compensation expense relating to stock options and warrants and
recognized  $19,000 and none, respectively, of compensation expense relating  to
stock  awards.   During  the  three months ended  June  30,  2002,  the  Company
recognized  a benefit from the reversal of expense relating to the effect  of  a
decreasing  stock  price  on  variable option in the  amount  of  $39,597.   The
following  table illustrates the effect on net loss and basic and  diluted  loss
per  common  share  if  the  Company  had applied  the  fair  value  recognition
provisions  of  FASB Statement No. 123, Accounting for Stock-Based Compensation,
to stock-based employee compensation:


                                        F-6



                 eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES
      NOTES TO CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>

                                     Three Months Ended June 30,    Six Months Ended June 30,
                                     ---------------------------   ----------------------------
                                         2003          2002            2003           2002
-----------------------------------------------------------------------------------------------
<S>                                 <C>            <C>            <C>            <C>

Net loss, as reported                $ (437,467)    $ (553,414)    $ (928,456)    $ (1,142,894)

Add: Stock-based employee
 compensation expense (benefit)
 included in net loss                         -        (39,597)        19,000           57,019

Deduct: Total stock-based employee
 compensation expense determined
 under fair value based method for
 all awards                                   -        (87,368)       (19,000)        (113,766)
-----------------------------------------------------------------------------------------------

Pro forma net loss                   $ (437,467)    $ (680,379)    $ (928,456)    $ (1,199,641)
===============================================================================================

Basic and diluted loss per common
share as reported                    $    (0.04)    $    (0.05)    $    (0.08)     $     (0.12)
===============================================================================================

Basic and diluted loss per common
share pro forma                      $    (0.04)    $    (0.06)    $    (0.08)     $     (0.13)
===============================================================================================

</TABLE>

Net  Loss Per Common Share - Basic loss per common share is computed by dividing
net  loss attributable to common stockholders by the weighted-average number  of
common  shares outstanding. Unvested common shares were considered to  be  stock
options  for purposes of computing loss per share and were not included  in  the
weighted-average number of common shares outstanding.  Diluted loss  per  common
share  is  computed by dividing net loss attributable to common stockholders  by
the weighted-average number of common shares and dilutive potential common share
equivalents  outstanding. As of June 30, 2003, there were options  and  warrants
outstanding  to purchase 2,948,330 common shares that were not included  in  the
computation  of  diluted loss per common share as their effect would  have  been
anti-dilutive,  thereby decreasing the loss per common share.  As  of  June  30,
2002,  there were options and warrants outstanding to purchase 1,670,631  common
shares  and  200,000  unvested  common shares that  were  not  included  in  the
computation  of  diluted loss per common share as their effect would  have  been
anti-dilutive, thereby decreasing the loss per common share.

NOTE 2 - BUSINESS CONDITION

Since  inception,  the Company has suffered recurring losses.  During  the  year
ended December 31, 2002 and the six months ended June 30, 2003, the Company  had
losses  of $3,550,923 and $928,456, respectively. During the year ended December
31,  2002 and the six months ended June 30, 2003, the Company's operations  used
$1,626,305 and $88,323 of cash, respectively. The Company had a cash balance  of
$116,564  as of June 30, 2003, of which $110,395 was restricted for the  purpose
paying  the  final  two  payments  of certain  long-term  obligations,  and  the
remaining  balance has been disbursed subsequent to June 30, 2003. At  June  30,
2003,  the  Company had a working capital deficiency of $912,780. Management  of
the  Company  has devoted substantially all of their efforts to raising  capital
for  the  Company, finding a merger candidate for the Company,  or  selling  the
Company  in  an  effort  to  pay  current  liabilities  and  to  date  has  been
unsuccessful  in  all  of these efforts. These matters raise  substantial  doubt
about  the  Company's ability to continue as a going concern.  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  is  currently negotiating with an investor whereby the  Company  may
issue  a  secured, convertible promissory note for $250,000 that is  convertible
into common stock at $0.05 per share, a warrant to purchase 5,000,000 shares  of
common  stock  at $0.05 per share and an option to purchase up to an  additional
$1,500,000  of  common  stock at $0.05 per share for a  period  of  five  years.
Realization of any proceeds from this potential financing is not assured.


                                        F-7


In  the  event the Company is unable to obtain adequate financing  in  the  near
term, Management is prepared to seek bankruptcy protection from creditors.


NOTE 3 - NOTES PAYABLE AND LONG-TERM DEBT

Financing  Agreement  -  Under the terms of a financing agreement  with  AMRESCO
Leasing Corporation, (the "finance company"), the finance company had agreed  to
fund  up  to  150% of the Company's product costs for each eRoomServ refreshment
center  that  had  been  in service for 90 days, subject to  the  related  hotel
customer  meeting certain requirements and other conditions during that  period.
As  part  of  the financing agreement, the Company formed SPE, a  wholly  owned,
consolidated  subsidiary.   SPE  owns all of the eRoomServ  refreshment  centers
funded by the finance company as well as the related revenue-sharing agreements.
The  finance company has a senior security interest in the eRoomServ refreshment
centers  financed  under the financing agreement and the corresponding  revenue-
sharing  agreements.  SPE is obligated to repay the amount  borrowed  under  the
terms of a note payable corresponding to each funding, pursuant to the financing
agreement  over  seven  years,  plus  interest,  at  a  variable  interest  rate
determined at the time of each funding.

At  June  30, 2003, SPE had an obligation for $1,413,458 outstanding  under  the
financing  arrangement,  which is secured by the eRoomServ  refreshment  centers
placed  by  the  Company  with hotel customers under  qualified  revenue-sharing
agreements.   The  outstanding notes payable accrue interest at  the  seven-year
U.S. Treasury Rate plus 12.5% per annum, which was approximately 18% at June 30,
2003.   The  notes  payable are collateralized by eRoomServ refreshment  centers
with  a carrying value of $1,568,353 at June 30, 2003.  SPE holds payments  from
hotel  customers in several restricted bank accounts for payment to the  finance
company  and  to the Company.  As of June 30, 2003, the Company had $110,395  of
restricted  cash and non-current deposits of  $73,688 that were  designated  for
this purpose.

On  September 18, 2002, management was notified by AMRESCO Leasing  Corporation
of  its  intention to cease funding loans to the Company. There is no assurance
that management will be successful in obtaining a new source of financing,  and
if  successful, that the terms of such new financing will be favorable  to  the
Company.   If  a  new  financing relationship is not  procured,  the  financial
condition  and  results of operation of the Company will  likely  be  adversely
affected.  During  2003,  AMRESCO Leasing Corporation assigned  the  rights  to
provide financing for SPE under the financing agreement to Boise Capital Group.
No borrowing arrangements have been made with Boise Capital Group.

2002  Convertible Note Payable to Stockholder - On November 8, 2002, the Company
entered  into  a  promissory note with Ash Capital LLC for  proceeds  of  up  to
$322,500. The note bears interest at 8%. The principal and interest are  due  on
November  8,  2003.  All  past  due amounts and accrued  interest  thereon  bear
interest at 18%. During the six months ended June 30, 2003, the Company borrowed
$120,500  under the terms of the promissory note, which increased the  principal
amount of the promissory note to $322,500.

At  any  time,  principal  and  accrued interest  on  the  promissory  note  are
convertible  into  Series D Preferred Stock at $0.90 per  share.  The  Series  D
Preferred  Stock  has  not  yet been designated.  In addition,  the  liquidation
preference, conversion rights, voting rights, registration rights and dividends,
if  any, have not been approved. It is anticipated that each share of the Series
D Preferred Stock will, in turn, be convertible into six shares of common stock,
at  $0.15 per share.  If the conversion date is after November 8, 2003  and  the
Series  D  Preferred  Stock has not been authorized by all  requisite  corporate
action,  the  promissory note can be converted into 17.8% of the lesser  of  the
authorized  capital stock or the outstanding capital stock of the  Company.  The
Company  has agreed not to increase the outstanding capital stock of the Company
or issues securities convertible into capital stock without prior consent of Ash
Capital.

The  Company  determined that Ash Capital LLC received a  beneficial  conversion
option  valued  at $322,500 on November 8, 2002.  Accordingly, the  Company  has
allocated  all of the $120,500 of proceeds received during the six months  ended



                                        F-8


June 30, 2003 to the beneficial conversion option that resulted in an offsetting
discount  to  the note payable. The discount on the note payable, including  the
unamortized  discount  at  December 31, 2002, is  being  amortized  to  interest
expense  from  the  dates proceeds were received through November  8,  2003,  in
accordance with EITF 98-5, Accounting for Convertible Securities with Beneficial
Conversion   Features  or  Contingently  Adjustable  Ratios,  and  EITF   00-27,
Application  of Issue No. 98-5 to Certain Convertible Instruments, and  amounted
to  $170,216 of accretion of the discount during the six months ended  June  30,
2003. The unamortized discount on the note was $133,866 at June 30, 2003.

NOTE 4 - COMMITMENTS AND CONTINGENCIES

In  November 2002, a former landlord in St. George, Utah filed a lawsuit against
the Company that alleges breach of a lease agreement.  On March 6, 2003, summary
judgment  was  granted  to the former landlord.  As a  result,  the  Company  is
indebted  to the former landlord in the amount of $41,000, plus attorney's  fees
to be determined by the court.

NOTE 5 - STOCKHOLDERS' EQUITY

The  Company issued 86,002 shares of common stock valued at $19,000  ($0.22  per
share)  to  its Board of Directors for services rendered during the  six  months
ended June 30, 2003.


                                        F-9



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


     The  following  discussion should be read in conjunction with our financial
statements  and  notes to our financial statements, included  elsewhere  in this
report.  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 within the meaning of Section 27A  of  the
Securities  Act of 1933, as amended, or the Securities Act, and Section  21E  of
the  Securities Exchange Act of 1934, as amended, or the Exchange Act,  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, as  filed  with
the Securities and Exchange Commission on March 31, 2003.

OVERVIEW

     eRoomSystem  Technologies,  Inc.  is  a  Nevada  corporation   that   was
incorporated  on  August 31, 1999. 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, and other proposed applications. In
addition,  we  have  expanded the products and services  offered  through  the
introduction in 2002 of our eRoomEnergy products, the eRoomServ upright multi-
vending  rack  and  the  eRoomTray (ambient tray for  dry  goods).  Additional
products and services will include information management services, additional
in-room  energy  management capabilities, credit card/smart card  capabilities
for direct billing and remote engineering and maintenance services.

     Our  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 abroad.

     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.  In the event we are able to solidify our business  and  procure
the  requisite third-party equity and debt financing, we also intend to market
this  information  to  suppliers of goods sold in  our  eRoomServ  refreshment
centers  and  to  other users desiring information on the buying  patterns  of
hotel  guests  for  goods  and  services. However,  if  we  do  not  obtain  a
significant  equity infusion by September 1, 2003 or reach  agreement  on  the
sale or merger of the Company with a third party, it is highly likely that  we
will  be  forced to seek protection under the United States Federal bankruptcy
laws.


                                        10


     Accounting Policies

     The  preparation  of  financial statements in conformity  with  generally
accepted  accounting principles requires our management to make estimates  and
assumptions  that affect reported amounts and disclosures, some of  which  may
require revision in future periods. The most sensitive estimates affecting our
financial  statements  include  future  volatility  used  in  valuing   equity
instruments, allowance for bad debts, depreciable lives of refreshment centers
in  service and property and equipment, amortization life of patents, deferred
maintenance revenue and accrued liabilities.  By their nature, these judgments
are  subject to an inherent degree of uncertainty. Our judgments are based  on
our  historical  experience, terms of existing contracts,  our  observance  of
industry  trends, information provided by or gathered from our  customers  and
information available from other outside sources, as appropriate. There can be
no  assurance  that  actual results will not differ from our  estimates.   The
following is a summary of what management believes are the critical accounting
policies  related  to our operations.  The application of these  policies,  in
some cases, requires our management to make subjective judgments regarding the
effect of matters that are inherently uncertain.


     Description of Revenues

     Historically, we have received substantially all of our revenues from the
sale, or placement under a revenue-sharing program, of our products in hotels.
Assuming  we  are  able  to  procure sufficient third-party  equity  and  debt
financing  to  continue as a going concern, we anticipate that these  revenues
will  account  for a substantial majority of our revenues for the  foreseeable
future.   We  also  generate  limited revenues from  maintenance  and  support
services.

     Our  dependence on the lodging industry makes us vulnerable to  downturns
in  the  lodging industry caused by the general economic environment.  In  the
past  20  months,  the lodging industry in the United States  has  experienced
significant  decreases  in occupancy rates, revenue  per  available  room,  or
revPAR,  as well as a sharp downturn in domestic airline travel. The  industry
downturn  has  resulted in many hotels delaying or declining  to  purchase  or
place  our  in-room  products  as well as failing  to  renew  our  maintenance
agreements. In addition, we believe the lodging industry downturn has resulted
in  fewer  purchases by hotel guests of goods and services from  our  products
installed in hotels and consequently affected our revenue-sharing revenues.

     Through our revenue-sharing program, we install 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, eRoomSafes  and  eRoomTrays
throughout  the term of the revenue-sharing agreements and the  right  to  re-
deploy  products returned to us upon the expiration or earlier termination  of
the  revenue-sharing agreements.  We believe that our revenue-sharing  program
may  increase future placements of our products; however, we cannot assure you
that we will be successful in this effort given our current cash position, the
significant  downturn in the lodging and travel industry and the inability  to
date  to  procure sufficient third-party financing or enter  into  a  sale  or
merger with a third party.

     We  have experienced substantial fluctuations in revenues from period-to-
period  as a result of limited working capital to fund our sales and marketing
efforts,  and  development  and manufacture of our products.  In  addition  to
limited working capital, fluctuations in revenues have partially resulted from
the  transition  to  our  revenue-sharing program  under  which  revenues  are
recognized  over  the seven-year life of the contract instead  of  immediately
upon  installation of our products. We anticipate that over the  next  several
years  the majority of our revenues, assuming we continue as a going  concern,
will result from the placement of our products pursuant to our revenue-sharing
program,  followed  by  sales  and,  to  a  lesser  extent,  from  maintenance
agreements.   We  project  that  we  will receive  approximately  60%  of  the
recurring  revenues  from  the sale of goods and  services  generated  by  our


                                        11


eRoomServ refreshment centers, eRoomSafes and eRoomTray solutions placed under
revenue-sharing  agreements.   Our customers  receive  the  remainder  of  the
recurring revenues.

     AMRESCO Leasing Corporation, or ALC, which previously provided more  than
$1,600,000  in financing relating to our products placed pursuant  to  revenue
sharing  contracts,  notified  us in writing on  September  18,  2002  of  its
intention  to  cease funding loans to us. Shortly following notification  from
ALC,  BCG Asset Management, LLC, a limited liability company comprised of  two
of AMRESCO's former principals, purchased the exclusive rights to provide post-
installation  financing for the funding of eRoomSystem products  placed  on  a
revenue  sharing  basis. Consequently, we have held discussions  with  several
financing  groups to establish a new financing source for our revenue  sharing
placements,  but  while  we  believe  a  new  financing  relationship  can  be
established, it is highly unlikely that it will occur without the infusion  of
sufficient third- party equity financing. If a new financing relationship  and
sufficient third-party equity financing is not procured by September 1,  2003,
we  will  likely be forced to seek protection under the United States  Federal
bankruptcy laws.


     Revenue Recognition

     Sales  revenue  from  our  products  is  recognized  upon  completion  of
installation and acceptance by the hotel. Sales revenue from the placement  of
our eRoomServ refreshment centers, eRoomSafes and eRoomTrays 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 negotiate 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 seek a gross profit margin of 30% or more on the sale and placement through
our  revenue-sharing program of eRoomServ refreshment centers, eRoomSafes  and
eRoomTrays.

     We  typically enter into installation, maintenance and license agreements
with our 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.


     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 and eRoomTrays placed
under  revenue-sharing agreements.  Cost of maintenance fee revenues primarily
consists  of expenses related to customer support and maintenance  and  legacy
issues related to product installations made prior to January 2001.

     Selling,  general  and administrative expenses include  selling  expenses
consisting  primarily  of  advertising, promotional activities,  trade  shows,
travel  and personnel-related expenses and general and administrative expenses
consisting  primarily  of professional fees, salaries and  related  costs  for
accounting, administration, finance, human resources, information systems  and
legal matters.

     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  these  employees  in  the
development of new or enhanced product offerings.

     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


                                        12


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 June 30, 2003 and 2002


     Revenues

     Product  Sales  - Revenues from product sales were $4,768 for  the  three
months ended June 30, 2003 as compared to $847,453 for the three months  ended
June 30, 2002, representing a decrease of $842,685, or 99.4%.  The decrease in
revenues  was  primarily the result of a large product sale occurring  in  the
three  months  ended  June 30, 2002, and only a small amount  of  parts  sales
occurring in the three months ended June 30, 2003.

     Revenue  Sharing Arrangements - Revenue from revenue sharing arrangements
was  $313,995 for the three months ended June 30, 2003 as compared to $311,191
for  the three months ended June 30, 2002, representing an increase of $2,804,
or 0.9%. The increase in revenue sharing revenue was immaterial.

     Maintenance Fee Revenues - Maintenance fee revenues were $68,418 for  the
three  months ended June 30, 2003 and $64,259 for the three months ended  June
30,  2002,  representing  an increase of $4,159,  or  6.5%.  The  increase  in
maintenance fee revenues was immaterial.


     Cost of Revenue

     Cost  of  Product Sales Revenue - Cost of product sales revenue  for  the
three  months ended June 30, 2003 was zero, compared to $645,026 for the three
months  ended  June 30, 2002. This decrease of $645,026 was  a  result  of  no
product  sales and minimal part sales.  The significant decrease in costs  was
primarily due to a large product sale that occurred in the three months  ended
June  30, 2003. Further, the product sales realized in the three months  ended
June  30,  2003 have no cost associated therewith as a result of such  product
part  sales  relating to existing inventory that had been  previously  written
down to zero value.  The gross margin percentage on revenue from product sales
revenue was 23.9% for the three months ended June 30, 2002.

     Cost  of  Revenue-Sharing Revenue - Cost of revenue-sharing  revenue  was
$178,761  for  the three months ended June 30, 2003, and $164,470  during  the
three  months  ended June 30, 2002, representing an increase  of  $14,291,  or
8.7%.   The slight increase in the cost of revenue-sharing revenue was due  to
the  addition  of  refreshment centers placed pursuant to our  revenue-sharing
program  in  the  twelve months ended June 30, 2003, and the  resulting  costs
associated with maintaining such units. The gross margin percentage on revenue-
sharing  revenue was 43.1% for the three months ended June 30, 2003 and  47.1%
for  the  three  months  ended June 30, 2002.  The decrease  in  gross  margin
percentage on revenue-sharing revenue was minimal.

     Cost of Maintenance Revenue - Cost of maintenance revenue was $34,698 for
the  three  months ended June 30, 2003 and $89,275 for the three months  ended
June  30, 2002, representing a decrease of $54,577, or 61.1%. The gross margin
percentage  on maintenance revenues was 49.2% for the three months ended  June
30,  2003  and (38.9%) for the three months ended June 30, 2002.  The decrease
in  our cost of maintenance revenue and the significant increase in the  gross
margin percentage were primarily due to cost-cutting measures realized through
a  reduction  in  field operations personnel responsible for  maintaining  the
units, and not having a significant event such as the one-time repair costs of
$35,000  associated with a hotel property in the three months ended  June  30,
2002.


                                        13



     The changes and percent changes with respect to our revenues and our cost
of revenue for the three months ended June 30, 2003 and 2002 are as follows:


<TABLE>
<CAPTION>
                                       For the Three Months
                                          Ended June 30,
                                     -----------------------                    Percent
                                        2003         2002           Change       Change
-----------------------------------------------------------------------------------------
<S>                                 <C>           <C>           <C>            <C>
REVENUE
 Product sales                       $   4,768     $  847,453    $ (842,685)      (99.4%)
 Revenue-sharing arrangements          313,995        311,191         2,804         0.9%
 Maintenance fees                       68,418         64,259         4,159         6.5%
----------------------------------------------------------------------------
    Total Revenue                      387,181      1,222,903      (835,722)       68.3%
----------------------------------------------------------------------------

COST OF REVENUE
 Product sales                              0        645,026        (645,026)    (100.0%)
 Revenue-sharing arrangements         178,761        164,470          14,291        8.7%
 Maintenance                           34,698         89,275         (54,577)     (61.1%)
-----------------------------------------------------------------------------
    Total Cost of Revenue             213,459        898,771        (685,312)     (76.2%)
-----------------------------------------------------------------------------

GROSS MARGIN PERCENTAGE
 Product sales                         100.0%          23.9%
 Revenue-sharing arrangements           43.1%          47.1%
 Maintenance                            49.2%         (38.9%)

    Total Gross Margin Percentage       44.9%          26.5%

</TABLE>


     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 June 30, 2003 and 2002, 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,  exclusive of non-cash compensation expense, were $420,693  for  the
three months ended June 30, 2003 and $654,678 for the three months ended  June
30, 2002, representing a decrease of $233,985, or 35.7%.  Selling, general and
administrative expenses represented 108.7% of our total revenue for the  three
months  ended  June 30, 2003 compared to 53.5% of our total  revenue  for  the
three  months ended June 30, 2002.  The decrease in our selling,  general  and
administrative expenses reflects, in part, the management's continued focus on
reducing fixed overhead expenses and variable costs.

     Research  and  Development Expenses - Research and  development  expenses
were $3,226 for the three months ended June 30, 2003 and $66,921 for the three
months  ended  June  30, 2002, representing a decrease of $63,695,  or  95.2%.
Research  and development expenses represented only 0.8% of our total  revenue
for the three months ended June 30, 2003 and 5.5% of our total revenue for the
three  months  ended June 30, 2002.  The decrease in research and  development
expenses  was primarily due to the completion of the research and  development
for  our new windows-based platform and other products and material reductions
in our research and development staff.

     Non-Cash  Compensation Expense - Non-cash compensation expense  (benefit)
was  zero for the three months ended June 30, 2003 and ($39,597) for the three
months ended June 30, 2002.  The non-cash compensation expense benefit for the
three  months  ended June 30, 2002 was due to the variable  accounting  method
used to account for options and warrants.


                                        14


     Other Expense, Net

     Other expense, net, was $186,329 for the three months ended June 30, 2003
and  $105,388  for  the  three months ended June  30,  2002,  representing  an
increase  of $80,941. The increase was due primarily to the increased interest
expenses related to a promissory note with Ash Capital, LLC.


     Net Loss

     We  incurred net losses of $437,467 and $553,414 during the three  months
ended June 30, 2003 and 2002, respectively.  The $115,947 decrease in the loss
attributable  to  common stockholders was primarily as a result  of  decreased
fixed  overhead  costs,  lower maintenance costs  and  realization  of  better
operating margins.  We have continued to incur losses subsequent to  June  30,
2003  and,  as a result, have experienced an increase in accumulated  deficit.
We believe that we will continue to incur losses for the foreseeable future.


Comparison of Six Months Ended June 30, 2003 and 2002


     Revenues

     Product  Sales  - Revenues from product sales were $11,934  for  the  six
months  ended  June 30, 2003 as compared to $857,692 for the six months  ended
June 30, 2002, representing a decrease of $845,758, or 98.6%. The decrease  in
revenues from product sales was a result of only minimal parts sales occurring
in the six months ended June 30, 2003.

     Revenue  Sharing Arrangements - Revenue from revenue sharing arrangements
was  $605,736 for the six months ended June 30, 2003 as compared  to  $615,210
for the six months ended June 30, 2002, representing a decrease of $9,474,  or
1.5%. The decrease in revenue sharing revenue was not material.

     Maintenance Fee Revenues - Maintenance fee revenues were $155,815 for the
six  months ended June 30, 2003 and $119,248 for the six months ended June 30,
2002, representing an increase of $36,567, or 30.7%.  This increase was due to
the installation of additional products in hotels subsequent to June 30, 2002.


     Cost of Revenue

     Cost of Product Sales Revenue - Cost of product sales revenue for the six
months  ended  June  30, 2003 was $39,809, compared to $646,252  for  the  six
months ended June 30, 2002, a decrease of $606,443, or 93.8%.  The significant
decrease  in  costs of product sales revenue was due to the  small  number  of
sales  during the six months ended June 30, 2003 as compared to the six months
ended June 30, 2002. The gross margin percentage on revenue from product sales
revenue was (233.6%) for the six months ended June 30, 2003, compared to 24.7%
for  the  six months ended June 30, 2002.  The significant decrease  in  gross
margin percentage was a result of inventory write-offs.

     Cost  of  Revenue Sharing Revenue - Cost of revenue sharing  revenue  was
$358,242  for the six months ended June 30, 2003 and $328,939 during  the  six
months ended June 30, 2002, representing an increase of $29,303, or 8.9%.  The
increase in the cost of revenue sharing revenue was due to an increased number
of  units previously placed pursuant to our revenue sharing program,  and  the
resulting  costs  associated with maintaining such  units.  The  gross  margin
percentage on revenue sharing revenue was 40.9% for the six months ended  June
30,  2003  and 46.5% for the six months ended June 30, 2002.  The decrease  in
gross  margin  percentage on revenue sharing revenue was primarily  due  to  a
small  decrease in revenues generated by refreshment centers placed in  client
hotels  pursuant to our revenue sharing program stemming from  somewhat  lower
occupancy rates in such hotels.


                                        15



     Cost of Maintenance Revenue - Cost of maintenance revenue was $86,314 for
the  six months ended June 30, 2003 and $201,772 for the six months ended June
30,  2002,  representing a decrease of $115,458, or 57.2%.  The  gross  margin
percentage on maintenance revenues was 44.6% for the six months ended June 30,
2003 and (69.2%) for the six months ended June 30, 2002.  The decrease in  our
cost of maintenance revenue related to the increase in gross margin related to
a  reduction  in  field operations personnel responsible for  maintaining  the
units,  and  the avoidance of a significant event such as the one-time  repair
costs of $35,000 associated with a hotel property in the six months ended June
30, 2002.


     The changes and percent changes with respect to our revenues and our cost
of revenue for the six months ended June 30, 2003 and 2002 are as follows:

<TABLE>
<CAPTION>
                                       For the Six Months
                                          Ended June 30,
                                     -----------------------                    Percent
                                        2003         2002           Change       Change
-----------------------------------------------------------------------------------------
<S>                                 <C>           <C>           <C>            <C>

REVENUE
 Product sales                       $  11,934     $  857,692    $  (845,755)     (98.6%)
 Revenue-sharing arrangements          605,736        615,210         (9,474)      (1.5%)
 Maintenance fees                      155,815        119,248         36,567       30.7%
-----------------------------------------------------------------------------------------
    Total Revenue                      773,485      1,592,150       (818,665)     (51.4%)
-----------------------------------------------------------------------------------------


COST OF REVENUE
 Product sales                          39,809        646,252       (606,443)     (93.8%)
 Revenue-sharing arrangements          358,242        328,939         29,303       (8.9%)
 Maintenance                            86,314        201,772       (115,458)     (57.2%)
-----------------------------------------------------------------------------------------
                                       484,365      1,176,963       (692,598)     (58.8%)
-----------------------------------------------------------------------------------------

GROSS MARGIN PERCENTAGE
 Product sales                          (233.6%)         24.7%
 Revenue-sharing arrangements             40.9%          46.5%
 Maintenance                              44.6%        (69.2%)

    Total Gross Margin Percentage         37.4%          26.1%

</TABLE>


     Although the preceding table summarizes the net changes and percent changes
with  respect  to our revenues and our cost of revenue for the six months  ended
June 30, 2003 and 2002, 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, exclusive of non-cash compensation expense, were $831,889 for the  six
months  ended  June 30, 2003 and $1,079,198 for the six months  ended  June  30,
2002,  representing  a  decrease of $247,309, or  22.9%.  Selling,  general  and
administrative  expenses represented 107.9% of our total  revenue  for  the  six
months  ended June 30, 2003 compared to 67.8% of our total revenue for  the  six
months  ended  June  30,  2002.   The  decrease  in  our  selling,  general  and
administrative expenses reflects, in part, the management's continued  focus  on
reducing fixed overhead expenses and variable costs.

     Research and Development Expenses - Research and development expenses  were
$20,724  for the six months ended June 30, 2003 and $130,953 for the six  months
ended June 30, 2002, representing a decrease of $110,229, or 84.2%. Research and
development  expenses represented only 2.7% of our total  revenue  for  the  six
months  ended  June 30, 2003 and 8.2% of our total revenue for  the  six  months
ended  June  30,  2002.  The decrease in research and development  expenses  was
primarily  due  to the completion of the research and development  for  our  new
windows-based  platform and other products and reductions in  our  research  and
development staff.


                                        16


     Non-Cash  Compensation Expense - Non-cash compensation expense was  $19,000
for the six months ended June 30, 2003 and $57,019 for the six months ended June
30, 2002.


     Other Expense, Net

     Other expense, net, was $345,022 for the six months ended June 30, 2003 and
$200,755  for  the six months ended June 30, 2002, representing an  increase  of
$144,267. The increase was related to a promissory note with Ash Capital, LLC.


     Net Loss

     We  incurred  net losses of $928,456 and $1,142,894 during the  six  months
ended  June 30, 2003 and 2002, respectively.  The $214,438 decrease in the  loss
attributable  to  common stockholders was due primarily to a decrease  in  fixed
overhead  expenses and slightly better operating margins.  We have continued  to
incur  losses subsequent to June 30, 2003 and, as a result, have experienced  an
increase  in  accumulated deficit.  We believe that we will  continue  to  incur
losses for the foreseeable future.


Liquidity and Capital Resources

     We  have been attempting to secure third-party equity financing since  June
2002 and a new debt financier since September 18, 2002. To date, we have had  no
success  in  achieving either objective. We have reduced expenses in  every  way
possible and management has not received compensation in nearly two months,  but
our  cash position is extremely precarious. Consequently, if we are not able  to
secure a substantial equity infusion by September 1, 2003, it is likely that  we
will  have no choice but to file for protection under the United States  Federal
bankruptcy laws.

     At  June  30, 2003, SPE had an obligation for $1,413,458 outstanding  under
the financing arrangement, which is secured by the eRoomServ refreshment centers
placed  by  the  Company  with hotel customers under  qualified  revenue-sharing
agreements.   The  outstanding notes payable accrue interest at  the  seven-year
U.S. Treasury Rate plus 12.5% per annum, which was approximately 18% at June 30,
2003.   The  notes  payable are collateralized by eRoomServ refreshment  centers
with  a carrying value of $1,568,353 at June 30, 2003.  SPE holds payments  from
hotel  customers in several restricted bank accounts for payment to the  finance
company  and  to the Company.  As of June 30, 2003, the Company had $110,395  of
restricted  cash and non-current deposits of  $73,688 that were  designated  for
this purpose.

     On   September  18,  2002,  management  was  notified  by  AMRESCO  Leasing
Corporation of its intention to cease funding loans to the Company. There is  no
assurance  that  management  will be successful in obtaining  a  new  source  of
financing,  and  if  successful, that the terms of such new  financing  will  be
favorable to the Company.  If a new financing relationship is not procured,  the
financial  condition  and results of operation of the  Company  will  likely  be
adversely affected. During 2003, AMRESCO Leasing Corporation assigned the rights
to  provide  financing for SPE under the financing agreement  to  Boise  Capital
Group.  No borrowing arrangements have been made with Boise Capital Group.

     Our  selling, general and administrative expenses totaled $831,889 for  the
six  months  ended June 30, 2003 as compared to $1,079,198 for  the  six  months
ended  June  30, 2002, a decrease of $247,309 or 22.9%. Despite this  reduction,
our  selling,  general  and  administrative  expenses  remain  higher  than  our
recurring revenues from existing revenue sharing and maintenance agreements.  We
have  offset this shortfall, in part, by all executives foregoing salaries  from
April  4,  2003  forward. However, as outlined above, this  negative  trend  has
placed  tremendous strain on cash flow and has put us in the position of  having
to  procure  new financing quickly or our business operations will  have  to  be
terminated.


                                        17


     At  June 30, 2003, our principal sources of liquidity consisted of $116,564
of  cash,  but  this  was offset by a working capital deficit  of  $912,780,  as
compared  to  $144,359  of cash and a working capital  deficit  of  $482,150  at
December 31, 2002.  In addition, our stockholders' equity was $598,093  at  June
30, 2003, compared to stockholders' equity of $1,392,529 at December 31, 2002, a
decrease  of  $794,436. The decrease in cash, working capital and  stockholders'
equity  reflects our continued losses, significant use of cash by our operations
and our inability to generate sufficient revenue to sustain our operations.

     Our  accumulated deficit at June 30, 2003 was $31,914,126  as  compared  to
$30,985,670  at  December  31, 2002, an increase of $928,456.  The  increase  in
accumulated  deficit  resulted from the net loss from  operations  for  the  six
months  ended  June 30, 2003.  We anticipate that our accumulated  deficit  will
continue to increase for the foreseeable future.

     We  used net cash of $88,323 in operating activities during the six  months
ended  June  30,  2003  as  compared  to  $1,520,280 in  operating  activities
during  the six months ended June 30, 2002.  The $1,431,957 decrease in the  use
of  net  cash  for operating activities primarily resulted from  a  decrease  in
material  changes  in  accounts  receivables,  inventories,  accounts  payables,
accrued liabilities, customer deposits and deferred maintenance revenues in  the
six  months  ended June 30, 2003 as compared to the six months  ended  June  30,
2002.

     Investing activities for the six months ended June 30, 2003 used  net  cash
of  $0 as compared to $1,952 used during the six months ended June 30, 2002,  an
immaterial change.

     Financing activities provided $60,528 during the six months ended June  30,
2003  as compared  to  net cash of  $1,323,515  provided  during the  six months
ended June 30, 2002. The primary source of cash during the six months ended June
30, 2003 was loans made to the Company by Ash Capital, LLC, and the decrease  in
net  cash provided by financing activities resulted primarily from the  lack  of
new financing activities in the six months ended June 30, 2003.

     The  placement  of products under revenue-sharing arrangements  is  capital
intensive.   We  estimate  that we must place approximately  10,000  more  units
pursuant  to  our  revenue-sharing program, along with the  continued  sale  and
placement  of  our products, in order to provide adequate cash  to  sustain  our
operations.  As  of  June 30, 2003, we had 5,339 units placed  pursuant  to  our
revenue-sharing  program, inclusive of the 2,047 units previously  held  by  RSi
BRE,  Inc.,  which  has been consolidated with the financial statements  of  the
Company.

     Although  we received proceeds from our financing arrangement with  AMRESCO
and,  in  March 2002, from our private placement of common stock, we  have  been
unable to procure additional investment monies. We will require additional  cash
to  finance our planned expansion, capital expenditures and to remain  a  viable
business entity.

     On  September 18, 2002, we were notified by AMRESCO Leasing Corporation  of
its  intention to cease funding loans to us. We have been working  with  several
financing  groups  to establish a new financing source for our  revenue  sharing
placements.  We believe a new financing relationship can be established provided
that we procure sufficient third party financing very quickly, however there can
be  no assurance that we will be successful in doing so, and if successful  that
the  terms  of  such new financing will be favorable to us.  If a new  financing
relationship  is not procured, our financial condition and results of  operation
will be adversely affected.

     In  April 2003, the Listing and Qualifications Panel of the NASDAQ SmallCap
market  delisted our common stock due to our failure to meet Nasdaq's continuing
listing  requirements, including minimum bid price of $1 per share and  tangible
net  assets  of  $2.5 million. We, however, commenced trading on  the  Over  the
Counter  Bulletin Board on the date we were delisted by Nasdaq under the  symbol
"ERMS.OB".


                                        18


<TABLE>
<CAPTION>


Contractual Cash      Payments Due by Period
Obligations                      Total       < 1 Year      1-3 Years     4-5 Years     > 5 Years
--------------------------------------------------------------------------------------------------
<S>                          <C>           <C>           <C>            <C>           <C>
Long-term Debt                $ 2,470,349   $   829,216   $   873,432    $  659,286    $  108,415

Capital Lease Obligations           3,061         3,061             -             -             -

Operating Leases                        -             -             -             -             -

Other Long-term Obligations*    1,094,106       336,648       673,296        84,162             -
--------------------------------------------------------------------------------------------------
Total                         $ 3,567,516   $ 1,168,925   $ 1,546,728    $  743,448    $  108,415

</TABLE>


*  Assumes  the  consolidation of RSi BRE, Inc., our wholly owned,  consolidated
subsidiary, which we commenced consolidating in fiscal year 2002.

Recent Downturns in the Airline, Travel and Lodging Industries

     Due  to  the  weakening economy and the events of September 11,  2001,  the
travel and lodging industries have experienced unprecedented downturns over  the
past  20  months. More specifically, the lodging industry has experienced  lower
hotel  occupancy  rates due to reduced business and leisure travel.   Since  the
success of our business is directly linked to the performance of the travel  and
lodging   industries,   the  substantial  layoffs  in  these   industries,   the
postponement of future hotel renovations and projects, the substantial  drop-off
in  guest  occupancy and the reduction in business and leisure travel, including
convention  traffic,  have  hurt our ability to finalize  contracts  with  hotel
properties  with which we have been meeting and negotiating as  well  as  obtain
third-party  financing.   While the lodging market has shown  limited  signs  of
improvement  over the past several months, in terms of occupancy  rates,  REVPAR
and   ADR   numbers,  the  market  remains  materially  weaker  than  prior   to
September 11, 2001.  In this regard, there is no assurance that we will be  able
to  close  contracts with our current potential customers or  that  we  will  be
successful  in  starting  discussions with other hotel  properties  even  if  we
procure  the  necessary third-party equity and debt financing, or enter  into  a
sale or merger transaction with a third party.

Qualitative and Quantitative Disclosures About Market Risk

     Our  products  are now manufactured and assembled in China.   Our  contract
manufacturer, International Display Works Ltd., or IDW, purchases all components
of   our  refreshment  center  and  eRoomTray  products  in  China.   Our   safe
manufacturer,  Hospitality Safe Corporation, or HSC, manufactures and  assembles
our eRoomSafes in China as well.  We pay IDW and HSC in U.S. dollars.

     Our products are primarily marketed in the United States, but we eventually
intend  to further expand our marketing to the international lodging market  and
to   other  industries  domestically  and  internationally  assuming  we  secure
sufficient  third-party equity and debt financing. As a  result,  our  financial
results  could  be  affected  by weak economic conditions  in  foreign  markets.
Because all of our revenues will be denominated in U.S. Dollars, a strengthening
of the dollar could make our products less competitive in foreign markets.

     As  we expand operations internationally, we will continue to evaluate  our
foreign  currency exposures and risks and develop appropriate hedging  or  other
strategies  to  manage  those risks.  We have not revised our  current  business
practices to conform to Europe's conversion to the Euro.


                                        19



PART II - OTHER INFORMATION


Item 1.  Legal Proceedings.

      In June 2002, we entered into a manufacturing relationship with IDW, which
has  manufacturing operations located in China. IDW manufactured 808 refreshment
centers  and  452  eRoomTrays on our behalf, relating to two hotels.  Under  the
terms  of  the  arrangement, we were contractually  obligated  to  pay  for  the
products  over  a certain period of time. We have failed to make  the  scheduled
payments as they have come due and IDW provided written notice to us that we are
in breach of the contract between us. IDW has requested that the two hotels make
their  respective  monthly revenue sharing lease payments directly  to  them  as
opposed  to us. These two hotels are making payments directly to IDW. We  intend
to  pay the outstanding balance due and payable to IDW immediately upon securing
sufficient third-party equity financing, if such financing is available.

      In  November 2002, a former landlord in St. George, Utah filed  a  lawsuit
against  us that alleged breach of a lease agreement.  On March 6, 2003, summary
judgment  was  granted to the former landlord and a judgment  has  been  entered
against  us  in  the  amount of $41,000, plus attorney's fees  of  approximately
$6,000.  We  intend  to pay the outstanding amount owed if we secure  sufficient
third party financing.

     The Company is also the subject of certain other legal matters and possible
litigations, which it considers incidental to its business activities. It is the
opinion  of  management, after discussion with legal counsel, that the  ultimate
disposition  of  these legal matters should not have a material  impact  on  the
consolidated financial condition or results of operations of the Company.


Item 2.  Changes in 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.

     Non applicable.


Item 5.  Other Information.

     Not applicable.


Item 6.  Exhibits and Reports on Form 8-K.

     (a)  Exhibits.

            Exhibit 31.   Certification of Principal Executive Officer

            Exhibit 32.   Certification Pursuant to Section 906 of the
                          Sarbanes-Oxley Act of 2002

     (b)  Reports on Form 8-K.

          On  July  29, 2003, we filed a Current Report on Form 8-K with respect
          to  the  completion   of Dr. Alan C. Ashton's term  on  the  board  of
          directors  and  compensation committee of the  Company  and  that  Dr.
          Ashton  will  not  be on the ballot for re-election to  the  board  of
          directors  of  the  Company. Further, Dr. Ashton's  decision  was  not
          related  to any disagreement with the Company on any matter pertaining
          to the Company's operations, policies or practices.



                                        20



          On  July  31, 2003, we filed a Current Report on Form 8-K with respect
          to  the  resignation of Mr. John J. Prehn from the Board of Directors,
          Compensation Committee and Audit Committee of the Company. Mr. Prehn's
          resignation  was not related to any disagreement with the  Company  on
          any  matter  pertaining  to  the  Company's  operations,  policies  or
          practices.  In addition, the Current Report provided that as  of  July
          31,  2003, Mr. Derek K. Ellis had resigned as chief accounting officer
          and  treasurer  of the Company. The resignation of Mr. Ellis  was  not
          related  to any disagreement with the Company on any matter pertaining
          to  the  Company's  operations,  policies  or  practices.   Mr.  Ellis
          continues as an employee of the Company and serves as a member of  the
          board  of  directors  of  its  wholly owned subsidiaries,  eRoomSystem
          Services, Inc., eRoomSystem SPE, Inc. and RSi BRE, Inc. Mr.  David  S.
          Harkness  will  serve  as the chief accounting officer  and  treasurer
          until a suitable replacement is named.

          On  August 19, 2003, we filed a Current Report on Form 8-K, concurrent
          with  the filing of this Quarterly Report on Form 10-QSB, with respect
          to  the  certification  by  our  Chief  Executive  Officer  and  Chief
          Accounting  Officer, David S. Harkness, pursuant to 18 U.S.C.  Section
          1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act  of
          2002.


                                    SIGNATURE

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

                           eRoomSystem Technologies, Inc.
                           (Registrant)

Date:  August 19, 2003     By:  /s/  David Harkness
                                -------------------------
                                David Harkness

                           Its: President, Chief Executive Officer, Chairman,
                                Chief Financial Officer and Treasurer





Exhibits: The following exhibits are included as part of this report:

              Exhibit 31.   Certification of Principal Executive Officer

              Exhibit 32.   Certification Pursuant to Section 906 of the
                            Sarbanes-Oxley Act of 2002





                                        21