10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

¨ TRANSITION REPORT UNDER 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.

(Name of small business issuer 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 and telephone number of principal executive offices)	(Zip Code)
Issuer’s telephone number: (732) 730-0116

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.001 par value

(Title of each class)

(Title of each class)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   x        No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the proceeding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   x        No   ¨

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 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                    ¨
Non-accelerated filer             ¨	Smaller reporting company   x
(Do not check if a smaller reporting company)

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 of the issuer’s common stock issued and outstanding as of November 2, 2010 was 23,907,865 shares.

EROOMSYSTEM TECHNOLOGIES, INC.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	1
Item 1. Financial Statements	1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.	9
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	14
Item 4(T).  Controls and Procedures	15
PART II - OTHER INFORMATION	15
Item 1. Legal Proceedings.	15
Item 1A. Risk Factors.	15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	15
Item 3. Defaults Upon Senior Securities.	15
Item 4. Removed and Reserved.	15
Item 5. Other Information.	15
Item 6. Exhibits.	15

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	September 30,			December 31,
	2010			2009
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,052,220		$	2,302,620
Investment in certificate of deposit		104,593			-
Investment in equity securities available for sale		34,000			-
Investment in real property tax liens		75,448			-
Accounts receivable, net of allowance for doubtful accounts of  $17,181 at September 30, 2010 and $19,087 at December 31, 2009		95,721			105,826
Inventory		75,031			75,911
Advance to supplier		49,278			53,011
Note receivable		522,685			522,685
Prepaid expenses		62,236			18,716
Total Current Assets		3,071,212			3,078,769
PROPERTY AND EQUIPMENT
Computer and office equipment, net of accumulated depreciation of $26,021 at September 30, 2010 and $11,971 at December 31, 2009		78,623			4,801
INTANGIBLE ASSETS, net of accumulated amortization of $2,954 at September 30, 2010and $1,688 at December 31, 2009		2,110			3,376
DEPOSITS		2,250			4,950
Total Assets	$	3,154,195		$	3,091,896
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	20,552		$	25,037
Accrued liabilities		51,082			94,640
Customer deposits		2,004			2,004
Total Current Liabilities		73,638			121,681
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; outstanding: 23,907,865 shares at September 30, 2010 and 23,832,865 shares at December 31, 2009		23,908			24,123
Additional paid-in capital		34,156,705			34,079,467
Treasury stock at cost; 0 shares at September 30, 2010 and 290,300 shares at December 31, 2009		-			(38,453	)
Warrants and options outstanding		-			103,123
Accumulated deficit		(31,134,056	)		(31,148,045	)
Accumulated other comprehensive gain (loss)		34,000			(50,000	)
Total Stockholders' Equity		3,080,557			2,970,215
Total Liabilities and Stockholders' Equity	$	3,154,195		$	3,091,896

See accompanying notes to condensed consolidated financial statements

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eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2010			2009			2010			2009
REVENUE AND INVESTMENT INCOME (LOSSES)
Product sales	$	213,371		$	115,277		$	623,357		$	155,383
Maintenance fees		48,687			45,158			148,239			120,986
Revenue-sharing arrangements		-			45,559			-			194,374
Interest income		32,206			20,101			85,258			93,836
Loss on other than temporary decline in marketable securities		-			-			(50,000	)		-
Total Revenue and Investment  Income (Losses)		294,264			226,095			806,854			564,579
COST OF REVENUE
Product sales		138,229			96,008			389,999			128,763
Maintenance		4,757			23,533			27,892			31,156
Revenue-sharing arrangements		-			8,691			-			55,642
Total Cost of Revenue		142,986			128,232			417,891			215,561
OPERATING EXPENSES
Selling, general and administrative expense, including non-cash compensation of $0, $1,079, $12,351 and $20,175, respectively		84,158			237,309			320,525			480,526
Research and development expense		21,426			2,031			54,449			7,116
Net Operating Expenses		105,584			239,340			374,974			487,642
Net Income (Loss)		45,694			(141,477	)		13,989			(138,624	)
OTHER COMPREHENSIVE INCOME
Unrealized gain (loss) on investment in equity securities		(51,000	)		-			34,000			-
Reclassification adjustment for losses included in operations		-			-			50,000			-
Comprehensive Income (Loss)	$	(5,306	)	$	(141,477	)	$	97,989		$	(138,624	)
Basic Earnings (Loss) Per Common Share	$	-		$	(0.01	)	$	-		$	(0.01	)
Diluted Earnings (Loss) Per Common Share	$	-		$	(0.01	)	$	-		$	(0.01	)

See accompanying notes to condensed consolidated financial statements

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eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Nine Months Ended September 30,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	13,989		$	(138,624	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		15,315			59,027
Gain on sale of refreshment centers		-			(7,277	)
Loss from other than temporary decline in marketable securities		50,000			14,074
Non-cash compensation expense		12,351			20,175
Changes in operating assets and liabilities:
Accounts receivable		10,105			10,102
Accrued interest receivable		-			(10,082	)
Inventory		880			(34,373	)
Advance to supplier		3,733			-
Prepaid expenses		(43,520	)		42,007
Accounts payable		(4,485	)		(9,732	)
Accrued liabilities		(43,558	)		4,177
Customer deposits and deferred maintenance revenue		-			(6,552	)
Net Cash Provided By (Used In) Operating Activities		14,810			(57,078	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(87,869	)		(3,031	)
Proceeds from sale of refreshment centers		-			66,750
Purchase of investments in real property tax liens		(115,736	)		-
Proceeds from collectioins of real property tax liens		40,288			-
Purchase of investment in certificate of deposit		(104,593	)		-
Payment of note receivable		-			183,159
Change in long-term deposits and restricted funds		2,700			(3,100	)
Net Cash Provided by (Used In) Investing Activities		(265,210	)		243,778
Net Increase (Decrease) in Cash		(250,400	)		186,700
Cash and Cash Equivalents at Beginning of Period		2,302,620			2,135,814
Cash and Cash Equivalents at End of Period	$	2,052,220		$	2,322,514

See accompanying notes to condensed consolidated financial statements

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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 wholly-owned subsidiaries (the "Company"). Intercompany accounts and transactions have been eliminated in consolidation. 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 for the fiscal year ended December 31, 2009 included in the Company's Annual Report on Form 10-K. In particular, the Company's organization, nature of operations and significant accounting principles were presented in Note 1 to the consolidated financial statements in that annual report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2010 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2010.

Cash and Cash Equivalents – Cash and cash equivalents include highly-liquid debt investments with original maturities of three months or less, readily convertible to known amounts of cash. At September 30, 2010, the Company had cash in excess of federally insured limits of $290,729.

Earnings (Loss) Per Common Share - Basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings (loss) per common share is computed by dividing net income (loss) by the weighted-average number of shares of common stock and dilutive potential common stock equivalents outstanding during the period. Potential common stock equivalents consist of shares issuable upon the exercise of stock options and warrants.

The following table is a reconciliation of the numerators and denominators used in the calculation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2010 and 2009:

	For The Three Months Ended September 30,					For The Nine Months Ended September 30,
	2010		2009			2010		2009
Net income (loss)	$	45,694	$	(141,477	)	$	13,989	$	(138,624	)
Basic weighted-average common shares outstanding		23,907,865		24,123,165			23,865,283		24,092,121
Effect of dilutive stock options and warrants		44,056		-			35,294		-
Diluted weighted-average common shares outstanding		23,951,921		24,123,165			23,900,577		24,092,121
Basic earnings (loss) per share	$	-	$	(0.01	)	$	-	$	(0.01	)
Diluted earnings (loss) per share	$	-	$	(0.01	)	$	-	$	(0.01	)

During the three and nine months ended September 30, 2010, there were 2,037,844 potential common stock equivalents from options and warrants and during the three and nine months ended September 30, 2009, there were 2,215,844 potential common stock equivalents from options and warrants that were not included in the computation of diluted earnings (loss) per share because their effect would have been anti-dilutive.

Reclassifications – Certain reclassifications have been made to the 2009 condensed financial statements to conform to the 2010 presentation. The reclassifications had no effect on net loss for the three or nine months ended September 30, 2009.

Recent Accounting Pronouncements –

Disclosures about Fair Value Measurements – In January 2010, the FASB issued guidance that will require the Company to present separately information about purchases, sales, issuances and settlements, on a gross basis, in the reconciliation of fair value measurements using significant unobservable inputs (Level 3). This guidance is effective for fiscal years beginning after December 15, 2010. The Company is currently evaluating this guidance and does not expect that the adoption of this guidance will have a material effect on the Company.

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eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2 - BUSINESS CONDITION

During the year ended December 31, 2009 and the nine months ended September 30, 2010, the Company realized a net loss of $137,649 and net income of $13,989, respectively. During the year ended December 31, 2009 and the nine months ended September 30, 2010, the Company's operations used $55,616 and provided $14,810 of cash, respectively. The Company had a cash and cash equivalent balance of $2,052,220 as of September 30, 2010. Although the Company realized net income in the nine months ended September 30, 2010, there is no assurance that the Company will not suffer losses in the future. The Company’s remaining hotel maintenance contracts are concluding; however, the Company has additional contracts with hotels due to the recent purchase of the Kooltech refreshment centers. 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 plans to acquire an existing operating company to enable the Company to increase revenues and long-term viability. The Company has also been performing research regarding potential further investments in either privately-held or publicly-traded emerging growth-stage companies. There is no assurance that a viable operating company or investment can be purchased under terms acceptable to the Company.

NOTE 3 – INVESTMENTS

Investment in Certificate of Deposit – At September 30, 2010, the Company had invested in an unsecured certificate of deposit issued by a bank in the amount of $104,593 that earns interest at 0.995% and matures on January 9, 2011.

Investment in Equity Securities Available for Sale – As discussed further in Note 5, the Company was issued 50,000 shares of stock in Blackbird Corporation in July 2008. On June 7, 2010, Blackbird entered into a share exchange with RPID later renamed Spot Mobile International Ltd (“Spot Mobile”). The 50,000 shares of common stock of Blackbird were exchanged for 1,700,000 restricted shares of common stock of Spot Mobile. The Spot Mobile shares were reverse split in October 2010 to 56,667 shares. Spot Mobile’s common stock is publicly traded and had a post-split market value of $0.60 per share on September 30, 2010. The Company recorded an $85,000 unrealized gain on the investment in Spot Mobile at June 30, 2010; therefore, a $51,000 unrealized loss was recorded during the three months ended September 30, 2010, which resulted in a $34,000 unrealized gain on the Spot Mobile common stock during the nine months ended September 30, 2010, which unrealized gain is included in other comprehensive income.

During the year ended December 31, 2007, the Company reduced the carrying value of its investment in Aprecia, Inc. to zero through a $50,000 charge to other comprehensive loss. During the nine months ended September 30, 2010, the Company determined that Aprecia, Inc. was no longer an operating company, that the decline in value of this investment was other than temporary and recognized the $50,000 loss in operations.

Investments in equity securities as of September 30, 2010 are summarized below:

	Cost		Unrealized		Unrealized		Fair
Equity Securities	Basis		Gains		Losses		Value
Spot Mobile	$	-	$	34,000	$	-	$	34,000

At September 30, 2010, accumulated other comprehensive income consisted solely of the unrealized holding gain from the investment in Spot Mobile.

Investment in Real Property Tax Liens – During the nine months ended September 30, 2010, the Company purchased $119,844 in real property tax liens from various municipalities in New Jersey. Through September 30, 2010, the Company had collected $44,396 in tax lien settlements. The New Jersey municipal tax liens are receivable from the real property owners and are secured by a first priority lien on the related real property. Upon foreclosure, the Company would obtain ownership of the real property. The tax lien receivables accrue interest up to 18% per annum, accrue penalties at 2% to 6% per annum and are also increased by the amount of any collection expenses incurred. The investment in the real property tax liens are accounted for as an investment in troubled debts and are carried at cost. Collection of interest, penalties and expense reimbursements is not certain and is recognized upon being realized.

NOTE 4 - INVENTORY

The Company maintains an inventory of product that is sold in the refreshment centers in a number of hotels. The inventory is purchased as finished goods.

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eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 5– NOTE RECEIVABLE

On July 24, 2008, the Company extended a loan in the amount $500,000 to Blackbird Corporation (“Blackbird”). The loan is evidenced by a 10% senior secured convertible promissory note made by Blackbird in favor of the Company (the “Secured Note”). In addition, Blackbird issued 50,000 shares of its common stock to the Company. On the date of issuance and since that date, the fair value of Blackbird’s common stock was not determinable and the shares were valued at zero. The Secured Note was extended to December 31, 2010. The interest rate increased to 18% after December 31, 2008, with interest payable quarterly on the last business day of each quarter. The carrying amount of the Secured Note was increased by $22,685 of accrued interest prior to 2010. Blackbird is current in its interest payments under the current requirements of the extended loan.

The note receivable is evaluated for impairment on a quarterly basis. If projections were to indicate that the carrying value of the promissory note was not recoverable, the carrying value would be reduced by the estimated excess of the carrying value over the projected discounted cash flows. The Blackbird promissory note was evaluated for impairment as of September 30, 2010 and no impairment was deemed necessary.

NOTE 6 – PURCHASE OF ASSETS

On June 17, 2009, the Company purchased the assets of Kooltech SPE from Cardinal Pointe Capital (“CPC”), which consisted of automated minibars, automated baskets and product inventory. The Company formed a subsidiary, eFridge, LLC (“eFridge”) for the purposes of this purchase. The purchase price is an amount equal to 30% of eFridge’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) and 30% of eFridge’s cash flow related to any related new equipment purchased.  Payment of the purchase price is payable by eFridge to CPC on a monthly basis within twenty days after the end of each month.

In addition, the Company agreed that in the event eFridge or any other subsidiary of the Company purchases any new Kooltech equipment from the manufacturers thereof or brokers the sale of new Kooltech equipment or equipment materially similar to Kooltech’s to third parties, the Company will pay to CPC an amount equal to $30 per mini-bar and $15 per automated basket so purchased or brokered. No payments have been made to CPC through September 30, 2010, as eFridge has not had a positive EBITDA during the fifteen months since the purchase date.

During the nine months ended September 30, 2010, the Company purchased vending machines for placement in a hotel in the amount of $68,351. These machines are being depreciated over a 7 year period.

NOTE 7 – FAIR VALUE MEASUREMENTS

Generally accepted accounting principles define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, a hierarchy has been established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data.

Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

The Company uses fair value to measure certain assets and liabilities on a recurring basis when fair value is the primary measure for accounting.  Fair value is also used on a nonrecurring basis to measure certain assets when applying lower of cost or market accounting or when adjusting carrying values.  Fair value is also used when evaluating impairment on certain assets, including goodwill, intangibles, and long-lived assets.

Following is a description of the valuation methodologies used for assets measured at fair value.  There have been no changes in the methodologies used at September 30, 2010.

Investment in Certificate of Deposit – The investment in the certificate of deposit is based on quoted prices for similar assets in active markets.

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eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Investment in Equity Securities Available for Sale – The investment in equity securities available for sale is based on quoted prices in active markets for identical assets.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following tables set forth by level, within the fair value hierarchy, the estimated fair values of the Company’s financial assets measured on a recurring basis as of September 30, 2010:

	Level 1		Level 2		Level 3		Total
Investment in Certificate of Deposit	$	-	$	104,593	$	-	$	104,593
Investment in Equity Securities Available for Sale		34,000		-		-		34,000
Total Assets Measured at Fair Value	$	34,000	$	104,593	$	-	$	138,593

NOTE 8 – CHANGES TO REVENUE

During the nine months ended September 30, 2010, the Company’s revenue shifted from being primarily revenue sharing arrangements to one of product sales. The Company has added some hotels through the purchase of KoolTech’s refreshment centers through which the Company provides a turnkey solution to those hotels. The Company provides drinks as well as other refreshments in the refreshment centers and the sale of these products to the Hotel guests using the auspices of the Hotel is accounted for as product sales. The Company has a number of one year contracts with the Hotels in this regards, all of which expire in the next few months.

Given the Company’s change in focus on investing in third party emerging growth companies as well loaning money to same, interest income for all periods presented was reclassified to revenue during the nine months ended September 30, 2010.

NOTE 9 - STOCKHOLDERS’ EQUITY

Based on guidance issued by the Financial Accounting Standards Board, options and warrants outstanding were reclassified to additional paid-in capital on January 1, 2010. During the nine months ended September 30, 2010, the Company constructively retired 290,300 shares of common stock from treasury stock to common stock and additional paid-in capital. The Company had repurchased the shares in previous periods under its repurchase program.

On June 4, 2010, the Company issued 75,000 shares of common stock to its Board of Directors in recognition of services rendered. These shares were valued at $11,250 ($0.15 per share).

During the nine months ended September 30, 2010, the Company granted options to purchase 7,500 shares of common stock to an employee for services rendered. These options, which vested immediately, have an exercise price of $0.18 per share and are exercisable through March 22, 2015. These options were valued at approximately $0.15 per share, or $1,101, using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 2.65%, dividend yield of 0.0%, volatility of 115% and expected life of 5 years. These options expired when the employee left the Company in July 2010.

Compensation expense relating to stock options of $1,101 was recognized during the nine months ended September 30, 2010. There was no unrecognized compensation related to stock options at September 30, 2010.

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eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

A summary of stock option and warrant activity for the nine months ended September 30, 2010 is as follows:

							Weighted-
				Weighted -			Average
				Average			Remaining		Aggregate
	Options and			Exercise			Contractual		Intrinsic
	Warrants			Price			Term (Years)		Value
Balance, December 31, 2009		2,263,344			$	0.32
Granted		7,500				0.18
Expired		(40,000	)			0.29
Balance,  September 30, 2010		2,230,844			$	0.32		2.0	$	15,650
Exercisable, September 30, 2010		2,230,844			$	0.32		2.0	$	15,650
Weighted-average fair value of options granted during the period ended September 30, 2010					$	0.15

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

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

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. In 2009, we purchased Kooltech refreshment centers that were installed in various hotels from CPC. We may make additional investments in promising emerging growth companies, and potentially acquire an operating company if the opportunity arises.

On July 24, 2008, we provided a secured loan to BlackBird Corporation, a Florida corporation (“BlackBird”), an unrelated entity. The funding of the loan took place on completion of a transaction by BlackBird to acquire an unrelated company, USA Datanet Corporation. The acquisition took place on July 24, 2008. The loan is evidenced by a 10% senior secured convertible promissory note, made by BlackBird (the “Secured Note”). The Secured Note matured on June 30, 2009 and the interest rate increased to 18% annually as of January 1, 2009, with interest payable quarterly on the last business day of each quarter. An extension to the note was provided through December 31, 2010 at an interest rate of 18%.

On June 17, 2009, the Company purchased the assets of Kooltech SPE which had been acquired by Cardinal Pointe Capital (“CPC”). CPC sold the minibars, baskets and stock owned by Kooltech SPE to the Company. The Company has formed a subsidiary, eFridge, LLC (“eFridge”) for the purposes of this purchase. The purchase price is an amount equal to thirty percent (30%) of eFridge’s EBITDA and an amount equal to thirty percent (30%) of New Equipment Cash Flow.  Payment of the Purchase Price shall be made by eFridge to CPC on a monthly basis within twenty days after the end of each month, based on the eFridge’s EBITDA for the month then ended.

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.

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Liquidity and Capital Resources

At September 30, 2010, our principal sources of liquidity consisted of $2,052,220 of cash and working capital of $2,997,574, as compared to $2,302,620 of cash and working capital of $2,957,088 at December 31, 2009. In addition, our stockholders' equity was $3,080,557 at September 30, 2010, compared to stockholders' equity of $2,970,215 at December 31, 2009, an increase of $110,342. The decrease in cash primarily reflects the payment of some accrued liabilities as well as the purchase of fixed assets and an investment.

Our accumulated deficit decreased from $31,148,045 at December 31, 2009 to $31,134,056 at September 30, 2010. The $13,989 decrease in accumulated deficit resulted directly from the net income realized for the nine months ended September 30, 2010. Our accumulated deficit may increase in the future as existing maintenance agreements with our hotel clients expire and if we don’t succeed in bringing our new Kooltech equipment up to par.

Cash flow provided in operations for the nine months ended September 30, 2010 was $14,810 as compared to $57,078 used for the same period ended September 30, 2009.

Investing activities for the nine months ended September 30, 2010 used net cash of $265,210, compared to $243,778 of net cash provided during the nine months ended September 30, 2009.

There were no financing activities in the nine months ended September 30, 2010 and 2009.

Results of Operations

Description of Revenues

Although historically, we have received most of our revenues from the sale or placement under a revenue-sharing program of our products in hotels, presently most of our revenues are derived from agreements with hotels in which we provide the equipment as well as the product and the labor for restocking. A portion of revenue earned is paid to the hotel. We also generate revenues from maintenance and support services relating to our existing installed products. In addition, we generate revenue from loans to third party companies.

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. 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.

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 and turn-key programs accordingly. Through our revenue-sharing plan, we have installed our products at little or no upfront cost to our customers and we receive a share in the recurring revenues generated from sales of goods and services related to our products and the hotel provides the product and labor. Through our turn-key solution, our products are installed with no upfront cost to our customers and we provide product and labor for restocking and pay the hotel a small percentage of the recurring revenues generated from sales of goods and services related to our products. We retain the ownership of the refreshment centers and safes throughout the term of the agreements and the right to re-deploy any systems returned to us upon the expiration or earlier termination of the agreements.

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. Recently however, we have taken over the operation of Kooltech minibars located in various hotels. Additionally, in 2005 we commenced our diversification strategy to invest in emerging growth companies. 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 third party companies, if applicable. The timing and return on such investments, however, cannot be assured.

Revenue Recognition

Historically, we have received most of our revenues from the sale or placement under a revenue-sharing program of our products in hotels. More recently we have purchased minibars and baskets already placed in hotels and setup turnkey solution at these hotels. In these hotels we receive most of the revenues for the product sold in the minibars and baskets. We pay up to 3-5% of revenues to some of the hotels. We also receive limited revenues through the parts procurement online website we setup in December 2008 for the material handling industry. Additionally, we receive revenues from a loan made to a third party. We may realize revenues from the sale of securities purchased from third party companies in the future.

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Sales revenue from the sale of products in the refreshment centers placed on a turn-key arrangement is recognized upon completion of the sale.

Sales revenue from the placement of our refreshment centers and safes 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.

We also generate revenues from maintenance and support services relating to our existing installed products. We have entered into installation, maintenance and license agreements with many 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 cost of goods and labor as well as remaining basis on sale of old refreshment centers. 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. Research and development expenses in the nine months ended September 30, 2010 and 2009 were $54,449 and $7,116, respectively.

In accordance with generally accepted accounting principles 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 condensed consolidated statements of operations.

Comparison of Three Months Ended September 30, 2010 and 2009

Revenues

Product Sales — Revenue from product sales was $213,371 for the three months ended September 30, 2010, compared to $115,277 for the three months ended September 30, 2009, representing an increase of $98,094, or 85.1%. The increase in product sales revenues was primarily due to the sale of product in new hotels added in 4th quarter, 2009.

Maintenance Fees— Maintenance fees were $48,687 for the three months ended September 30, 2010, compared to $45,158 for the three months ended September 30, 2009, representing an increase of $3,529, or 7.8%. The increase in maintenance fee revenue was immaterial.

Revenue Sharing Arrangements — Our revenue from revenue sharing arrangements was $0 for the three months ended September 30, 2010, compared to $45,559 for the three months ended September 30, 2009, representing a decrease of $45,559, or 100%. The decrease in revenue sharing revenue was due to the completion of revenue sharing contracts in 2009.

Interest — Our income from interest was $32,206 for the three months ended September 30, 2010, compared to $20,101 for the three months ended September 30, 2009, representing an increase of $12,105, or 60.2%. The increase related to loss recorded in the three months ended September 30, 2009. Revenue from interest was reclassified from operating expenses to demonstrate that it is presently an integral part of our core business plan.

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Cost of Revenue

Cost of Product Sales Revenue — Our cost of product sales revenue for the three months ended September 30, 2010 was $138,229, compared to $96,008 for the three months ended September 30, 2009, an increase of $42,221, or 44%. The increase in cost of product sales revenue relates to the increase in Hotels since September 30, 2009.

Cost of Maintenance Revenue — Our cost of maintenance revenue was $4,757 for the three months ended September 30, 2010, compared to $23,533 for the three months ended September 30, 2009, representing a decrease of $18,776, or 79.8%. The decrease in our cost of maintenance fee revenue was decreased cost of servicing of Kooltech equipment.

Cost of Revenue Sharing Revenue — Cost of revenue sharing revenue was $0 for the three months ended September 30, 2010, compared to $8,691 for the three months ended September 30, 2009 representing a decrease of $8,691 or 100%.

The changes and percent changes with respect to our revenues and our cost of revenue for the three months ended September 30, 2010 and 2009 are summarized as follows:

	For the Three Months EndedSeptember30,
								Percent
	2010		2009		Change			Change
REVENUE
Product sales	$	213,371	$	115,277	$	98,094			85.1	%
Maintenance fees		48,687		45,158		3,529			7.8	%
Revenue-sharing arrangements		-		45,559		(45,559	)		-100.0	%
Interest income		32,206		20,101		12,105			60.2	%
Total Revenue		294,264		226,095		68,169			30.2	%
COST OF REVENUE
Product sales		138,229		96,008		42,221			44.0	%
Maintenance		4,757		23,533		(18,776	)		-79.8	%
Revenue-sharing arrangements		-		8,691		(8,691	)		-100.0	%
Total Cost of Revenue	$	142,986	$	128,232	$	14,754			11.5	%

Although the preceding table summarizes the net changes and percent changes with respect to our revenues and our cost of revenue for the three months ended September 30, 2010 and 2009, 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 $84,158 for the three months ended September 30, 2010, compared to $237,309 for the three months ended September 30, 2009, representing a decrease of $153,151, or 64.5%. The decrease in our selling, general and administrative expenses related to the start-up costs for the Kooltech equipment as well as the write-off of an uncollectible account that took place during the three months ended September 30, 2009.

Research and Development—Research and development expenses were $21,426 for the three months ended September 30, 2010, compared to $2,031 for the three months ended September 30, 2009 representing an increase of $19,395. The increase in our research and development expenses for the three months ended September 30, 2010 reflects an increase in new product development in 2010.

Net Income Attributable to Common Stockholders

We realized a net income of $45,694 for the three months ended September 30, 2010, compared to a net loss of $141,477 during the three months ended September 30, 2009. The $187,171 increase in net income was primarily related to the increase in revenue as well as a decrease in the many costs involved in the equipment purchase from CPC during the three months ended September 30, 2009. We may incur losses in the future as existing with our hotel clients expire and as we replace some older models of refreshment centers.

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Comparison of Nine months Ended September 30, 2010 and 2009

Revenues

Product Sales — Revenue from product sales was $623,357 for the nine months ended September 30, 2010, compared to $155,383 for the nine months ended September 30, 2009, representing an increase of $467,974, or 301.2%. The increase in product sales revenues was primarily due to the sale of product in our new hotels added since June 30, 2009 utilizing the Kooltech refreshment centers.

Maintenance Fee Revenues — Maintenance fee revenues were $148,239 for the nine months ended September 30, 2010, compared to $120,986 for the nine months ended September 30, 2009, representing an increase of $27,253, or 22.5%. The increase in maintenance fee revenue was due to additional maintenance services at a hotel.

Revenue Sharing Arrangements — Our revenue from revenue sharing arrangements was $0 for the nine months ended September 30, 2010, compared to $194,374 for the nine months ended September 30, 2009, representing a decrease of $194,374, or 100%. The decrease in revenue sharing revenue was due to the completion of revenue sharing contracts in 2009.

Interest Income - Our revenue from interest and other income was $85,258 for the nine months ended September 30, 2010 as compared to $93,836 for the nine months ended September 30, 2009, representing a decrease of $8,578, or 9.1%. The decrease related to the sharply decreasing interest rates. Revenue from interest and other income was reclassified from operating expenses to demonstrate that it is presently an integral part of our core business plan.

Loss on other than temporary decline in marketable securities — The loss represented the write-off of an investment made in 2005 in Aprecia, Inc. in the amount of $50,000. Aprecia is no longer an operating company and therefore, a loss was recognized during the nine months ended September 30, 2010.

Cost of Revenue

Cost of Product Sales Revenue — Our cost of product sales revenue for the nine months ended September 30, 2010 was $389,999, compared to $128,763 for the nine months ended September 30, 2009, an increase of $261,236 or 202.9%. The increase in cost of product sales revenue relates to the increased minibar product sold and labor provided in the nine months ended September 30, 2010 versus the nine months ended September 30, 2009. We are presently providing a complete turnkey solution to the hotels, which includes providing equipment labor and product for the Kooltech equipment that we purchased in June, 2009.

Cost of Maintenance Fee Revenue — Our cost of maintenance fee revenue was $27,892 for the nine months ended September 30, 2010, compared to $31,156 for the nine months ended September 30, 2009, representing a decrease of $3,264, or 10.5%. The decrease in our cost of maintenance fee revenue was due to greater efficiencies put into place.

Cost of Revenue Sharing Revenue — Cost of revenue sharing revenue was $0 for the nine months ended September 30, 2010, compared to $65,642 for the nine months ended September 30, 2009 representing a decrease of $55,642 or 100%.

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The changes and percent changes with respect to our revenues and our cost of revenue for the nine months ended September 30, 2010 and 2009 are summarized as follows:

	For the Nine Months EndedSeptember30,
									Percent
	2010			2009		Change			Change
REVENUE
Product sales	$	623,357		$	155,383	$	467,974			301.2	%
Maintenance fees		148,239			120,986		27,253			22.5	%
Revenue-sharing arrangements		-			194,374		(194,374	)		-100.0	%
Interest income		85,258			93,836		(8,578	)		-9.1	%
Loss on other than temporary decline in marketable securities		(50,000	)		0		(50,000	)
Total Revenue		806,854			564,579		242,275			42.9	%
COST OF REVENUE
Product sales		389,999			128,763		261,236			202.9	%
Maintenance		27,892			31,156		(3,264	)		-10.5	%
Revenue-sharing arrangements		-			55,642		(55,642	)		-100.0	%
Total Cost of Revenue	$	417,891		$	215,561	$	202,330			93.9	%

Although the preceding table summarizes the net changes and percent changes with respect to our revenues and our cost of revenue for the nine months ended September 30, 2010 and 2009, 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 $320,525 for the nine months ended September 30, 2010, compared to $480,526 for the nine months ended September 30, 2009, representing a decrease of $160,001, or 33.3%. The decrease in our selling, general and administrative expenses relates to the increased expenses during the nine months ended September 30, 2009 due to startup costs after the purchase of Kooltech equipment as well as the write-off of an uncollectible account.

Research and Development—Research and development expenses were $54,449, for the nine months ended September 30, 2010, compared to $7,116 for the nine months ended September 30, 2009 representing an increase of $47,333. The increase in our research and development expenses for the nine months ended September 30, 2010 reflects an increase in new product development in 2010.

Net Income (Loss) Attributable to Common Stockholders

We realized a net income of $13,989 for the nine months ended September 30, 2010, compared to a net loss of $138,624 during the nine months ended September 30, 2009. The $152,613 increase in net income was primarily related to the increase in revenue over the nine months as well as a decrease in the many costs incurred during the nine months ended September 30, 2009 that were involved in the equipment purchase from CPC.

Contractual Cash Obligations and Commercial Commitments

There were no significant contractual cash obligations or commercial commitments either on or off balance sheet as of September 30, 2010.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

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Item 4(T).  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 Chief Executive Officer and Chief Financial Officer has reviewed the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q and have 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.

Changes in Internal Controls over Financial Reporting

There have been no changes  in the  Company’s  internal  control  over  financial reporting identified in connection with the evaluation required by paragraph (d) of Rule  240.15d-15  that occurred during the Company’s last fiscal quarter that has  materially  affected,  or is reasonable  likely to materially  affect,  the Company internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

Item 1A. Risk Factors.

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Removed and Reserved.

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 2002
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

	eRoomSystem Technologies, Inc.
	(Registrant)
Date: November 12, 2010
	By:	/s/ David A. Gestetner
	Name:	David A. Gestetner
	Title:	President, Chief Executive Officer, Secretary,
		and Chairman of the Board
		(Principal Executive, Financial,
		and Accounting Officer)

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EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO 18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, David A. Gestetner hereby certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of eRoomSystem Technologies, Inc. (the “registrant”) for the period ended September 30, 2010;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other  certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2010
By:	/s/ David A. Gestetner
Name:	David A. Gestetner
Title:	President, Chief Executive Officer, Secretary,
	and Chairman of the Board
	(Principal Executive, Financial,
	and Accounting Officer)

-2-

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the report on Form 10-Q for the quarterly period ended September 30, 2010 of eRoomSystem Technologies, Inc. (the "Registrant"), as filed with the Securities and Exchange Commission on the date hereof (the "Report"), David A. Gestetner, President, Chief Executive Officer, Secretary, and Chairman of the Board of the Registrant, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Registrant.

Date: November 12, 2010
By:	/s/ David A. Gestetner
Name:	David A. Gestetner
Title:	President, Chief Executive Officer, Secretary,
	and Chairman of the Board
	(Principal Executive, Financial,
	and Accounting Officer)