Troika Media Group, Inc. - Quarter Report: 2010 March (Form 10-Q)

t68056_10q.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2010

o Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from______________ to _______________

Commission File No. 000-26213

ROOMLINX, INC.

(Exact name of registrant as specified in its charter)

	Nevada	83-0401552
	(State or other jurisdiction of	(I.R.S. Employer
	incorporation or organization)	Identification No.)

2150 W. 6th Ave., Unit H Broomfield, Colorado 80020

(Address of principal executive offices)

(303) 544-1111

(Issuer’s telephone number)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

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 preceding 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer o	Accelerated filer o
	Non-accelerated filer o	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

The number of shares outstanding of the Issuer’s common stock as of May 12, 2010 was 423,790,259.

ROOMLINX, INC.


INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

	Consolidated Balance Sheets as of March 31, 2010 (unaudited) and December 31, 2009	2

	Consolidated Statements of Operations for the Three Months Ended March 31, 2010 and 2009 (unaudited)	3

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and 2009 (unaudited)	4

	Notes to Consolidated Financial Statements (unaudited)	5

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

	Forward-Looking Statements	10
	General	10
	Critical Accounting Policies	11
	Results of Operations	12
	Recent Accounting Pronouncements
	Financial Condition	14

Item 3. Quantitative and Qualitative Disclosures About Market Risk		14

Item 4. Controls and Procedures		15

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		17

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		17

Item 3. Defaults Upon Senior Securities		17

Item 4. Submission of Matters to a Vote of Security Holders		17

Item 5. Other Information		17

Item 6. Exhibits		17

Signatures		18

PART I. FINANCIAL INFORMATION

Roomlinx, Inc.
CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2010
	(Unaudited)			2009
ASSETS

Current assets:
Cash and cash equivalents	$	489,217		$	656,080
Accounts receivable, net		217,767			458,614
Lease receivable, current portion		91,254			85,145
Prepaid and other current assets		39,861			34,296
Inventory		244,936			240,755
Total current assets		1,083,035			1,474,890

Property and equipment, net		243,972			267,378
Lease receivable, non-current		313,495			341,620
Total assets	$	1,640,502		$	2,083,888

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:
Accounts payable and accrued expenses	$	254,874		$	341,233
Capital lease, current portion		9,797			9,615
Deferred revenue		175,050			200,477
Total current liabilities		439,721			551,325

Capital lease, non-current		13,316			15,840
Line of credit		464,000			464,000
Total liabilities		917,037			1,031,165

Stockholders’ equity:
Preferred stock - $0.20 par value, 5,000,000 shares authorized:
Class A - 720,000 shares authorized, issued and outstanding		144,000			144,000
Series B - 2,000,000 shares authorized; none issued and outstanding		-			-
Series C - 1,400 shares authorized; none issued and outstanding		-			-
Common stock - $0.001 par value, 1,500,000,000 shares authorized:
387,190,252 shares issued and outstanding,		387,190			387,190
Additional paid-in capital		26,833,349			26,786,371
Accumulated (deficit)		(26,641,074	)		(26,264,838	)
Total stockholders’ equity		723,465			1,052,723
Total liabilities and stockholders’ equity	$	1,640,502		$	2,083,888

The accompanying notes are an integral part of these consolidated financial statements.

Roomlinx, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2010 and 2009
(Unaudited)

	2010			2009

Revenues
System sales and installation	$	48,125		$	24,804
Service, maintenance and usage		164,802			213,171
Media and entertainment		180,288			443,706
		393,215			681,680

Cost of good sold
System sales and installation		34,829			6,323
Service, maintenance and usage		99,896			154,023
Media and entertainment		102,926			388,988
		237,651			549,334
Gross profit		155,564			132,346

Operating expenses
Operations		162,868			88,678
Product development		70,553			87,909
Sales and marketing		130,482			97,953
General and administrative		146,596			114,689
Depreciation		23,406			12,931
		533,905			402,160
Operating loss		(378,341	)		(269,814	)

Other income (expense)
Interest expense		(10,754	)		(41,931	)
Financing expense		-			-
Derivative income (expense)		-			820,471
Foreign currency (loss)		(1,103	)		(2,951	)
Interest income		13,962			19,383
Other income (expense)		-			(39	)
		2,105			794,933

Income (loss) before income taxes		(376,236	)		525,119

Provision for income taxes		-			-

Net income (loss)		(376,236	)		525,119

Series C Preferred dividend		-			29,032

Net income (loss) available to common shareholders	$	(376,236	)	$	496,087

Net income (loss) per common share:
Basic and diluted	$	(0.00	)	$	0.00

Weighted average shares outstanding:
Basic		387,190,253			168,153,580
Diluted		387,190,253			385,458,857

The accompanying notes are an integral part of these consolidated financial statements.

Roomlinx, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2010 and 2009
(Unaudited)
	2010			2009

Cash flows from operating activities:
Net income (loss)	$	(376,236	)	$	525,119

Adjustments to reconcile net (loss) to net cash (used by) operating activities:
Depreciation		23,406			12,931
Derivative (income)		-			(820,471	)
Derivative carrying value increase		-			7,164
Common stock, warrants, and options issued as compensation		46,978			14,494
Non-cash interest expense		-			35,443
Provision for uncollectible accounts		(8,232	)		(10,780	)
Changes in operating assets and liabilities:
Accounts receivable		249,079			28,785
Inventory and work in process		(4,181	)		127,080
Prepaid and other current assets		(5,565	)		(15,529	)
Accounts payable and accrued expenses		(86,360	)		22,828
Deferred revenue		(25,427	)		(270,855	)
Total adjustments		189,698			(868,910	)

Net cash (used in) operating activities		(186,538	)		(343,791	)

Cash flows from investing activities:
Leases receivable		-			(61,122	)
Payments received on leases receivable		22,016			10,603
Purchase of property and equipment		-			(584	)

Net cash provided by (used in) investing activities		22,016			(51,103	)

Cash flows from financing activities:
Payments on capital lease		(2,341	)		-

Net cash used in financing activities		(2,341	)		-

Net decrease in cash and equivalents		(166,863	)		(394,894	)

Cash and equivalents at beginning of period		656,080			1,941,215

Cash and equivalents at end of period	$	489,217		$	1,546,321

Supplemental Cash Flow Information
Cash paid for interest	$	7,545		$	-
Cash paid for income taxes	$	-		$	-

Non-cash investing and financing activities:
Common stock issued for dividends	$	-		$	91,532

The accompanying notes are an integral part of these consolidated financial statements.

Roomlinx, Inc.

Notes to Consolidated Financial Statements

March 31, 2010

(Unaudited)

1. Overview and Summary of Significant Accounting Policies

Description of Business: Roomlinx, Inc. (the “Company”) is incorporated under the laws of the state of Nevada. The Company sells, installs, and services in-room media and entertainment solutions for hotels, resorts, and time share properties. The Company develops software and integrates hardware to facilitate the distribution of Hollywood, adult, and specialty content, business applications, national and local advertising, and concierge services. The Company also sells, installs and services hardware for wired networking solutions and wireless fidelity networking solutions, also known as Wi-Fi, for high-speed internet access to hotels, resorts, and time share locations. The Company installs and creates services that address the productivity and communications needs of hotel, resort and time share guests. The Company utilizes third party contractors to install such hardware and software.

Basis of Presentation: The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. They do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included in the accompanying unaudited financial statements. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the financial statements and notes thereto, included in the Company’s Form 10-K as of and for the year ended December 31, 2009.

Reclassification: Certain amounts in the 2009 financial statements have been reclassified to conform to the current year presentation.

Per Share Amounts: The Company computes earnings per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the period. Dilutive common stock equivalents consist of shares issuable upon conversion of convertible preferred shares and the exercise of the Company’s stock options and warrants.

Use of Estimates: The preparation of the Company’s consolidates financial statements in conformity with generally accepted accounting principles requires the Company’s management to make estimates and assumptions that affect the amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Derivative financial instruments: We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.

We review the terms of convertible debt instruments we issue to determine whether there are embedded derivative instruments, including the embedded conversion option, that are required to be bifurcated and accounted for separately as a derivative financial instrument. In circumstances where the convertible instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. Also, in connection with the sale of convertible debt, we may issue freestanding options or warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. We may also issue options or warrants to non-employees in connection with consulting or other services they provide.

When the ability to physical or net-share settle the conversion option or the exercise of the freestanding options or warrants is deemed to be not within the control of the company or if the conversion option, options or warrants are not indexed only to the underlying common stock, the embedded conversion option or freestanding options or warrants may be required to be accounted for as a derivative financial instrument liability.

Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based derivative financial instruments, we use the Cox-Ross-Rubinstein binomial model to value the derivative instruments. To the extent that the initial fair values of the freestanding and/or bifurcated derivative instrument liabilities exceed the total proceeds received, an immediate charge to income is recognized, in order to initially record the derivative instrument liabilities at their fair value.

The discount from the face value of the convertible debt instruments resulting from allocating some or all of the proceeds to derivative instruments, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income, using the effective interest method.

Certain instruments, including convertible debt and freestanding options or warrants issued, may be subject to registration rights agreements, which may impose penalties for failure to register the underlying common stock by a defined date. Any such penalties are accounted for in accordance with Codification ASC 450-10 and are accrued when they are deemed probable.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed periodically, including at the end of each reporting period. If re-classification is required, the fair value of the derivative instrument, as of the determination date, is re-classified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

2. Line of Credit

On June 5, 2009, the Company, entered into a Revolving Credit, Security and Warrant Purchase Agreement (the “Credit Agreement”) with Cenfin LLC, a Delaware limited liability company (“Cenfin”), pursuant to which Cenfin agreed to make revolving loans to Roomlinx from time to time in a maximum outstanding amount of $5,000,000 and pursuant to which, upon the making of each such Revolving Loan, Roomlinx will issue to Cenfin a Revolving Credit Note evidencing such Revolving Loan and a Warrant to purchase a number of shares of Roomlinx Common Stock equal to 50% of the principal amount funded in respect of such Revolving Loan divided by $.02 per share. Each Revolving Credit Note will bear interest at a rate of 9% per annum and mature on the fifth anniversary of its issuance. Each Warrant will be exercisable for a three year period from its issuance at an initial exercise price of $.02 per share.

On March 10, 2010 the Credit Agreement was amended to increase the aggregate revolving credit commitment to $25,000,000 and expand the permitted use of proceeds to include certain capital expenditures. The rest of the terms remained in accordance with the original agreement.

At March 31, 2010 the balance of this line was $464,000, and will be repaid by 2014. The line of credit is subject to certain financial and non-financial covenants; the Company was in compliance with all covenants as of March 31, 2010.

3. Convertible Debentures

On June 11, 2007 and June 13, 2007, the Company sold an aggregate of $2,350,000 principal amount of Convertible Debentures due May 2012 (the “Convertible Debentures”) to a number of investors pursuant to a Securities Purchase Agreement (the “June Purchase Agreement”). $2,300,000 of the debentures were purchased with cash and $50,000 was converted from a note payable.

The Convertible Debentures are initially convertible into Series B Preferred Stock, which Series B Preferred Stock will not be convertible into Common Stock until such time as the Company has sufficient number of shares of Common Stock authorized to permit the conversion of the Convertible Debentures into Common Stock, at which time the Convertible Debentures will automatically be convertible into Common Stock and not Series B Preferred Stock. The conversion price into shares of Common Stock of the Convertible Debentures is $0.02 per share, subject to certain standard anti-dilution adjustments. In the event that the Convertible Debentures are not repaid when due, the conversion price will be reduced to $0.01 per share. Because this potential reduction in the conversion price effectively indexes the return to the investors to a factor other than the underlying value of our common stock, the embedded conversion option has been bifurcated and accounted for separately as a derivative instrument liability.

Pursuant to the June Purchase Agreement, each purchaser also received an option, exercisable for a six month period from the Closing under the Purchase Agreement, to purchase additional Convertible Debentures (“Additional Convertible Debentures”) in an amount up to 50% of the original amount of Convertible Debentures purchased. This option has also been accounted for as a derivative instrument liability. All such options have expired unexercised.

The Convertible Debentures bear interest at an annual rate of 6%, payable quarterly, either in cash or, at the Company’s election, in shares of our capital stock at two and one-half cents ($.025) per share of common stock or a 10% discounted stock price from the average market price for the 20 business days preceding the interest payment date, whichever is greater. All interest to date has been settled in shares of common stock.

On May 14, 2009, $100,000 of the debentures were converted into 5 million shares of Common Stock at a conversion price of $0.02 per share, the conversion price specified in the Debentures.

On July 7, 2009, $100,000 of the debentures were converted into 5 million shares of Common Stock at a conversion price of $0.02 per share, the conversion price specified in the Debentures.

On September 9, 2009 $280,200 of the debentures were converted into 14,010,000 shares of common stock at a conversion price of $0.02 per share, the conversion price specified in the Debentures.

On September 9, 2009, the Company eliminated the majority of its outstanding debt and all convertible debentures by entering into a Debt Conversion Agreement (the “Conversion Agreement”) with Lewis Opportunity Fund, L.P., the holder of a majority of the then outstanding principal amount of Convertible Debentures issued by the Company on June 12, 2007 (the “Debentures”). Pursuant to the Conversion Agreement, all then outstanding Debentures (in an aggregate principal amount of $1,869,800) were converted into an aggregate of 93,490,000 shares of Roomlinx common stock at a conversion price of $0.02 per share, the conversion price specified in the Debentures. Pursuant to the Conversion Agreement, the Company has agreed to pay to the converting Debenture holders an aggregate of $112,188, an amount equal to interest that would have accrued on the converted principal amount of Debentures over a one (1) year period if the Debentures would not have been converted.

4. Derivative Financial Instruments

As discussed above, the embedded conversion option in our Convertible Debentures and options issued to the investors to acquire additional debentures have been accounted for as derivative instrument liabilities.

We use the Cox-Ross-Rubinstein binomial model to value warrants, and the embedded conversion option components of any bifurcated embedded derivative instruments that are recorded as derivative liabilities. See Note 5 related to embedded derivative instruments that have been bifurcated from our Convertible Debentures and the options to acquire additional Convertible Debentures held by the investors. The options and conversion options can be exercised by the holders at any time. The options held by the investors to acquire additional Convertible Debentures expired in December 2007.

In valuing the embedded conversion option components of the bifurcated embedded derivative instruments and the options, at the time they were issued and at March 31, 2010, we used the market price of our common stock on the date of valuation, an expected dividend yield of 0%, an estimated volatility of 250% based on a review of our historical volatility and the remaining period to the expiration date of the option or repayment date of the convertible debt instrument. The risk-free rate of return used was 1.11%, based on constant maturity rates published by the U.S. Federal Reserve, applicable to the remaining life of the options.

At December 31, 2009, and March 31, 2010, there were no derivative liabilities outstanding.

5. Stockholders’ Equity

Preferred Stock: The Company has authorized 5,000,000 preferred shares with a $0.20 par value. There are three designations of the class of preferred shares: Class A, Series B, and Series C Preferred Stock. The Class A preferred stock is entitled to receive cumulative annual dividends at the rate of 9%, payable in either cash or additional shares of Class A Preferred Stock, at the option of the Company. The Series B Preferred Stock is not entitled to any dividends. The Series C stock accrues dividends at an annual rate of 6% per year, payable quarterly, either in cash or, at the Company’s election, shares of common stock through March 5, 2009. As of March 31, 2010, there were 720,000 shares of Class A Preferred Stock, no shares of Series B Preferred Stock, and no shares of Series C Preferred Stock issued and outstanding. Class A dividends accrued and unpaid as of March 31, 2010, were $149,520; these dividends have not been declared by the board so they are not included in accrued expenses.

Common Stock: As of March 31, 2010 the Company has authorized 1,500,000,000 shares of $0.001 par value common stock. As of March 31, 2010, there were 387,190,259 shares of common stock issued and outstanding.

Warrants: On March 31, 2010, the Company had the following outstanding warrants:

Exercise Price		Number of Shares		Remaining Contractual Life (in years)	Exercise Price times Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value
$	0.0200		3,100,000	2.72	$	62,000			$	15,500
$	0.0230		375,000	2.65	$	8,625			$	750
$	0.0200		8,500,000	2.22	$	170,000			$	42,500
$	0.0600		20,000,000	1.31	$	1,200,000			$	-
$	0.0400		20,000,000	1.31	$	800,000			$	-
$	0.0300		7,000,000	2.20	$	210,000			$	-
$	0.0200		1,000,000	2.20	$	20,000			$	5,000
$	0.0200		1,962,500	2.20	$	39,250			$	9,812
$	0.0300		3,900,000	1.75	$	117,000			$	-
			65,837,500		$	2,626,875	$	0.043	$	73,562

Warrants	Number of Shares			Weighted Average Exercise Price		Remaining Contractual Life (in years)	Aggregate Intrinsic Value

Outstanding at January 1, 2010		82,425,833		$	0.044
Issued		-			-
Exercised		-			-
Expired/Cancelled		(16,588,333	)		0.057
Outstanding at March 31, 2010		65,837,500		$	0.024	1.890	$	84,813
Exerciseable at March 31, 2010		65,837,500		$	0.040	1.890	$	84,813

Options: The Company adopted a long term incentive stock option plan (the “Stock Option Plan”). The Stock Option Plan provides for the issuance of 120,000,000 shares of common stock upon exercise of options which may be granted pursuant to the Stock Option Plan. As of March 31, 2010, options to purchase 30,500,000 shares were outstanding. The options vest as determined by the Board of Directors and are exercisable for a period of no more than 10 years.

On March 31, 2010, the Company had the following outstanding options:

Exercise Price		Number of Shares		Remaining Contractual Life (in years)	Exercise Price times Number of Shares			Weighted Average Exercise Price	Aggregate Intrinsic Value
$	0.0250		350,000	6.28	$	8,750			$	-
$	0.0330		10,000,000	6.19	$	330,000			$	-
$	0.0100		1,450,000	5.90	$	14,500			$	21,750
$	0.0100		200,000	5.90	$	2,000			$	3,000
$	0.0170		200,000	5.59	$	3,400			$	1,600
$	0.0120		800,000	5.39	$	9,600			$	10,400
$	0.0200		600,000	5.31	$	12,000			$	3,000
$	0.0150		950,000	4.61	$	14,250			$	9,500
$	0.0250		1,000,000	4.10	$	25,000			$	-
$	0.0200		13,500,000	3.64	$	270,000			$	67,500
$	0.0260		1,000,000	2.36	$	26,000			$	-
			30,050,000		$	715,500	$	0.0238	$	116,750

Options	Number of Shares			Weighted Average Exercise Price		Remaining Contractual Life (in years)	Aggregate Intrinsic Value

Outstanding at January 1, 2010		30,550,000		$	0.025
Issued		-			-
Exercised		-			-
Expired/Cancelled		(500,000	)		0.100

Outstanding at March 31, 2010		30,050,000		$	0.024	4.850	$	116,750
Vested at March 31, 2010		17,666,667		$	0.020	4.420	$	94,267
Exerciseable at March 31, 2010		17,666,667		$	0.020	4.420	$	94,267

5. Subsequent Events

On April 27, 2010, Cenfin exercised 11,600,000 warrants at $0.02 per share, for an aggregate of $232,000, in accordance with the Credit Agreement entered into on June 5, 2009.

On April 29, 2010, Roomlinx entered into a securities purchase agreement with investors for an aggregate of 25,000,000 shares of common stock. The shares were purchased at $0.04 per share for an aggregate of $1,000,000.

On April 12, 2010, the Board of Directors granted 2,244,000 aggregate incentive stock options to employees of Roomlinx and 681,250 non-incentive stock options to contractors of Roomlinx. These options have an exercise price of $0.031, the fair market value on the grant date, and vest in three equal annual installments on the grant anniversary date. The options expire at the end of the business day on the 7th anniversary of the grant date.

All material subsequent events from the balance sheet date through the date of issuance of this report have been disclosed above.

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

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains or incorporates by reference “forward-looking statements,” as that term is used in federal securities laws, about our financial condition, results of operations and business. These statements include, among others:

- statements concerning the benefits that we expect will result from our business activities and results of exploration that we contemplate or have completed, such as increased revenues; and

- statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts.

These statements may be made expressly in this document or may be incorporated by reference to other documents that we will file with the SEC. You can find many of these statements by looking for words such as “believes,” “expects,” “anticipates,” “estimates” or similar expressions used in this report or incorporated by reference in this report.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied in those statements. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied. We caution you not to put undue reliance on these statements, which speak only as of the date of this report. Further, the information contained in this document or incorporated herein by reference is a statement of our present intention and is based on present facts and assumptions, and may change at any time and without notice, based on changes in such facts or assumptions.

GENERAL

Roomlinx, Inc., a Nevada corporation (“We,” “Us” or the “Company”), provides three core products and services:

1. Wired networking solutions and wireless fidelity networking solutions, also known as Wi-Fi, for high speed internet access to hotels, resorts, and timeshare locations. The Company installs and creates services that address the productivity and communications needs of hotel guests, convention center exhibitors and corporate apartment customers. We specialize in providing advanced Wi-Fi wireless services such as the wireless standards known as 802.11a/b/g.

Hotel customers sign long-term service agreements, where we provide the maintenance for the networks, as well as the right to provide value added services over the network.

We derive revenues from the installation of the wired and wireless networks we provide to hotels, resorts, and timeshare properties. We derive additional revenue from the maintenance of these networks. Customers typically pay a one-time fee for the installation of the network and then pay monthly maintenance fees for the upkeep and support of the network. During 2008 we made a fundamental change in our business model pertaining to our on-site support. We are no longer including on-site support in the base price for maintenance; these services are either billed for at the time of service or the base price is increased.

2. In-room media and entertainment product and services for hotels, resorts, and time share properties. The Company develops software and integrates hardware to facilitate the distribution of entertainment, business applications, national and local advertising, and on demand content. The content consists of high definition and standard definition adult, Hollywood, and specialty programming, music, internet based television programming, digital global newspapers, global radio and television stations, business applications (allowing the guest to use Microsoft Office programs), and hotel-specific services and advice.

The Company provides proprietary software an LCD television (optional), a media console (consisting of a DVD player, CD burner, and numerous input jacks for the hotel guest), a proprietary wireless keyboard with built-in mouse, and a proprietary remote control.

The Company installs and supports these components.

Hotel customers sign long-term service agreements, where we provide the maintenance for the networks, as well as the right to provide value added services over the network.

We derive our revenues primarily from selling our proprietary hardware and software to hotels, resorts and time share locations as well as delivering content and providing security and support of the media and entertainment product. We derive additional revenue from the rental of movies, printing service, advertising and sale of products through our system. We began marketing this product in September 2007. Since June 2007, we have invested significant capital to develop our software, integrate our hardware, and develop significant product and content partnerships.

3. High definition and standard definition television programming for hotels, resorts, and time share properties. The Company installs and provides services that address the entertainment and information needs of hotel guests and resort guests. We specialize in providing advanced high definition equipment for delivering digital television programming such as ESPN, HBO, Starz, and other specialty and local channels.

We derive revenues from the installation of the programming equipment we provide to hotels, resorts, and timeshare properties. We derive additional revenue from the television programming fees we provide to hotels, resorts, and timeshare properties. Customers typically pay a one-time fee for the installation of the equipment and then pay monthly programming fees for delivery of a specific TV channel line up.

We have incurred operating losses since our inception. We will need to increase our installation and maintenance revenues and improve our gross margins to become profitable and sustain profitability on a quarterly and annual basis. There is no assurance that we will be successful in our efforts.

We have successfully completed the installation of multiple properties, and have signed contracts to install additional properties.

Management’s Discussion and Analysis (MD&A) is designed to provide the reader of the financial statements with a narrative discussion of our results of operations; financial position; liquidity and capital resources; critical accounting policies and significant estimates; and the impact of recently issued accounting standards. Our MD&A is presented in five sections:

●	Critical Accounting Policies

●	Results of Operations

●	Recent Accounting Pronouncements

●	Financial Condition

●	Forward-Looking Statements

This discussion should be read in conjunction with our consolidated financial statements and accompanying Notes included in this report and in the 2009 annual report on Form 10-K, as well as our reports on Form 8-K and other SEC filings.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s Discussion and Analysis of Financial Condition and Results of Operations discuss our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, allowance for doubtful accounts and property and equipment valuation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Our system sales and installation revenue primarily consists of wired and wireless network equipment and installation fees associated with the network and is recognized as revenue when the installation is completed and the customer has accepted such installation.

Our service, maintenance and usage revenue, which primarily consists of monthly maintenance fees related to the upkeep of the network, is recognized on a monthly basis as services are provided.

Media and Entertainment product revenue primarily consists of media and entertainment equipment purchases, installation of that equipment, software and content license fees, and maintenance fees related to the upkeep of the system. Revenue on the equipment and installations is recognized when the installation is complete and the customer has accepted such installation. Revenue on the service and maintenance is recognized as invoiced per the individual contracts.

We estimate the collectability of our trade receivables. A considerable amount of judgment is required in assessing the ultimate realization of these receivables, including analysis of historical collection rates and the current credit-worthiness of significant customers.

Work in progress represents the cost of hardware, software, and labor which has been incurred by us for installation at our customers’ facilities, but has not been accepted by the customer.

We capitalize and subsequently depreciate our property and equipment over the estimated useful life of the asset. In assessing the recoverability of our long-lived assets, including goodwill, we must make certain assumptions regarding the useful life and contribution to the estimated future cash flows. If such assumptions change in the future, we may be required to record impairment charges for these assets not previously recorded.

Since inception, we have accumulated substantial net operating loss carry forwards for tax purposes. There are statutory limitations on our ability to realize any future benefit from these potential tax assets and we are uncertain as to whether we will ever utilize the tax loss carry forwards. Accordingly, we have recorded a valuation allowance to offset the deferred tax asset.

The Company provides compensation costs for our stock option plans determined in accordance with the fair value based method prescribed in ASC 718. We estimate the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model and provide for expense recognition over the service period, if any, of the stock option.

In connection with the sale of debt or equity instruments, we may sell options or warrants to purchase our common stock. In certain circumstances, these options or warrants may be classified as derivative liabilities, rather than as equity. Additionally, the debt or equity instruments may contain embedded derivative instruments, such as conversion options, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.

The identification of, and accounting for, derivative instruments is complex. Our derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income, in the period in which the changes occur. For options, warrants and bifurcated conversion options that are accounted for as derivative instrument liabilities, we determine the fair value of these instruments using the Cox-Ross-Rubinstein binomial option pricing model. That model requires assumptions related to the remaining term of the instruments and risk-free rates of return, our current common stock price and expected dividend yield, and the expected volatility of our common stock price over the life of the instruments. The identification of, and accounting for, derivative instruments and the assumptions used to value them can significantly affect our financial statements.

RESULTS OF OPERATIONS

Three months ended March 31, 2010 compared to three months ended March 31, 2009:

Our revenues for the three months ended March 31, 2010 were $393,215, a decrease of $288,465 or 42% over our $681,680 in revenues for the three months ended March 31, 2009. This decrease is primarily due to a lack of installations due to our focus on securing contracts with large hotel corporations. The RFP (Request for Proposal) and contract process for these groups takes longer than our typical contract process and we are currently in the RFP process with three large hotel groups; This decrease in installations was offset slightly by an increase in our recurring revenue generated by our media and entertainment product; these revenues have increased to $112,058 or 311% over the $20,196 from first quarter last year. This is a strong validation of our shift in efforts towards maximizing recurring revenues resulting from our new product offering.

Our cost of goods sold for the three months ended March 31, 2010 was $237,651 a decrease of $311,683 or 57% over our $549,334 cost of goods sold for the three months ended March 31, 2009. These results are primarily attributable to the lower sales as outlined above. Also, in July 2009, we brought our call center in house; this eliminated the high cost of outsourcing as well as enabled us to use our workforce more efficiently.

Our gross profit for the three months ended March 31, 2010 was $155,564, an increase of $23,218 or 17% over the $132,346 gross profit for the three months ended March 31, 2009. These results are primarily due to the higher gross profit margins of our recurring revenue stream related to our media and entertainment products and services. Another contributing factor is our increase in gross profit margins on the sales of our high speed internet access equipment and service upgrades.

Our operating expenses for the three months ended March 31, 2010 were $533,905 compared to $402,160 for the three months ended March 31, 2009, an increase of 33%. This increase was due to the departmental changes detailed below.

Our operations department grew significantly throughout 2009 and had personnel expenses increase $58,923 from $73,856 to $132,779, and office expenses increased $15,267 from $14,823 to $30,090. We reduced our product development departmental costs to $70,553 during the three months ended March 31, 2010 from $87,909 in 2009. This decrease was primarily due to a decrease in personnel expense of $18,960 from $85,487 to $66,527 and a decrease in travel of $1,558 from $2,421 to 863 offset by an increase in office expenses of $3,163.

Our sales and marketing department expenses increased $32,529 to $130,482 in 2010 from $97,953 in 2009. This increase is attributable to an increase in personnel expenses of $13,034, an increase in office expenses of $6,760, an increase in advertising expenses of $8,907, and an increase in travel expenses of $3,828.

Our general and administrative expenses increased $31,907 to $146,596 in 2010 from $114,689 in 2009. This increase is primarily attributable to an increase in personnel expense of $7,579, an increase in professional services of $8,449, and an increase in stock compensation expense of $ 32,484, offset by a decrease in office expenses of $16,670

Depreciation expense increased $10,475 to $23,406 in 2010 from $12,931 in 2009. This increase is due to the depreciation of the equipment used for our resort model properties.

Our operating loss increased to $378,341 during the three months ended March 31, 2010 compared to and operating loss of $269,814 during the three months ended March 31, 2009. This increase is primarily a result of the increase in operating expenses from 2009 to 2010 and the decrease in first quarter revenues.

For the three months ended March 31, 2010, our non-operating income decreased to $13,962 compared to $839,854 during the three months ended March 31, 2009. This decrease is primarily due to the derivative gains we received in 2009 of $820,471; without these gains we would have had $19,383 in non-operating income in 2009. The remainder of the difference is due to a decrease in interest income.

Our non-operating expenses for the three months ended March 31, 2010 decreased to $11,857 from $44,921 during the three months ended March 31, 2009. Our interest expense for the three months ended March 31, 2010 was $10,754 compared to $41,931 for the three months ended March 31, 2009, a decrease of 74%. This decrease is primarily due to the conversion of our convertible debentures in 2009. Due to our conversion of the convertible debentures we will no longer incur a 6% per annum interest expense going forward. The company also started accruing interest on the line of credit in 2009. Our foreign currency loss improved to $1,103 for the three months ended March 31, 2010 as compared to $2,951 for the three months ended March 31, 2009, this decrease is due to the fluctuations in the value of the foreign currency.

During 2009, the Company was subject to the non-cash effects of derivatives. During the three months ended March 31, 2009, there was a derivative gain of $820,471. Due to our conversion of the convertible debentures we no longer incur the non-cash derivative gains or expenses.

For the three months ended March 31, 2010, we reported a net loss of $376,236, compared to a net gain of $496,087 for the three months ended March 31, 2009. The decrease in non-cash derivative gains of $820,471 and the increase in expenses, offset by our increased higher gross profit margins relating to our media and entertainment product and services are primary factors in these results.

Fair Value of Financial Instruments. ASC 825, “Disclosures About Fair Value of Financial Instruments,” requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” (“ASC 820”) defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2010.

The respective carrying value of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash and cash equivalents, accounts payable and accrued liabilities. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value, or they are receivable or payable on demand.

Recently Adopted Accounting Standards. The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (“FASB”), the SEC, and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on US GAAP and the impact on the Company.

Fair Value Measurements – In January 2010, ASU No. 2010-06 amended existing disclosure requirements about fair value measurements by adding required disclosures about items transferring into and out of levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchase, sales, issuances, and settlements relative to level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation. The ASU was adopted during the period ended March 31, 2010, and its adoption had no impact on the Company’s consolidated financial position, results of operations or cash flows.

Consolidations - ASU No. 2009-17 revises the consolidation guidance for variable-interest entities. The modifications include the elimination of the exemption for qualifying special purpose entities, a new approach for determining who should consolidate a variable-interest entity, and changes to when it is necessary to reassess who should consolidate a variable-interest entity. The ASU was adopted during the period ended March 31, 2010 and its adoption had no impact on the Company’s consolidated financial position, results of operations or cash flows.

Recently Issued Accounting Standards. The following accounting standards updates were recently issued and have not yet been adopted by the Company. These standards are currently under review to determine their impact on the Company’s consolidated financial position, results of operations, or cash flows.

ASU No. 2010-11 was issued in March 2010, and clarifies that the transfer of credit risk that is only in the form of subordination of one financial instrument to another is an embedded derivative feature that should not be subject to potential bifurcation and separate accounting. This ASU will be effective for the first fiscal quarter beginning after June 15, 2010, with early adoption permitted.

ASU No. 2010-13 was issued in April 2010, and will clarify the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades. This ASU will be effective for the first fiscal quarter beginning after December 15, 2010, with early adoption permitted.

There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.

The FASB issued Accounting Standards Update (ASU) No. 2009-13, Revenue Recognition (Topic 605): Multiple Deliverable Revenue Arrangements - A Consensus of the FASB Emerging Issues Task Force.” This update provides application guidance on whether multiple deliverables exist, how the deliverables should be separated and how the consideration should be allocated to one or more units of accounting. This update establishes a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence, if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific or third-party evidence is available. The Company will be required to apply this guidance prospectively for revenue arrangements entered into or materially modified after January 1, 2011; however, earlier application is permitted. The management is in the process of evaluating the impact of adopting this ASU update on the Company’s financial statements.

FINANCIAL CONDITION

LIQUIDITY & CAPITAL RESOURCES

As of March 31, 2010 we had $489,217 in cash and cash equivalents, which amount, in addition to the financing obtained to fund our interactive TV installations, is sufficient to fund operating activities, new product installations, and to continue investing in our new media and entertainment product through 2010. Working capital at March 31, 2010 was $643,314.

Operating Activities

Net cash used by operating activities was $186,538 for the three months ended March 31, 2010 as compared to $343,791 used for the three months ended March 31, 2009. The change was primarily due to the effect of derivative expense, stock compensation expense, and changes in operating assets.

Investing Activities

Net cash gained by investing activities was $22,016 for the three months ended March 31, 2010 as compared to $51,103 provided by investing activities for the three months ended March 31, 2009. During the three months ended March 31, 2010 $22,016 in leases receivable payments, for our media and entertainment product installations, were received and no new leases were entered into, compared to leases payments of $10,603 and $61,122 in leases entered into in 2009. During the three months ended March 31, 2010 there were no purchases of property and equipment, compared to $584 in 2009.

Financing Activities

Net cash used for financing activities was $2,342 for the three months ended March 31, 2010, attributable to payments on our capital lease for software compared to no cash used for financing for the three months ended March 31, 2009.

Contractual Obligations

We have operating and capital lease commitments. The following table summarizes these commitments at March 31, 2010:

	Total		Less than 1 year		1-3 years		3-5 years
Operating lease obligations	$	236,650		56,796		170,388		9,466
Capital lease obligations		23,113		9,797		13,316		-
Total	$	259,763		66,593		183,704		9,466

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to risk from potential changes in the U.S./Canadian currency exchange rates as they relate to our services and purchases for our Canadian customers.

Foreign exchange gain / (loss)

Foreign transactions resulted in a loss of $1,103 for the three months ended March 31, 2010 compared to a loss of $2,951 for the three months ended March 31, 2009. The amount of gain (loss) will vary based upon the volume of foreign currency denominated transactions and fluctuations in the value of the Canadian dollar versus the US dollar.

Translation of Financial Results

Because we translate a portion of our financial results from Canadian dollars to U.S. dollars, fluctuations in the value of the Canadian dollar have a direct affect on our reported consolidated results. We do not hedge against the possible impact of this risk. A 10 percent adverse change in the foreign currency exchange rate would not have a significant impact on our consolidated results of operations or financial position.

Item 4. Controls and Procedures

(a) Management’s Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer/Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer/Principal Accounting Officer have concluded that information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer/Principal Accounting Officer, to allow for timely decisions regarding required disclosure of material information required to be disclosed in the reports that we file or submit under the Exchange Act. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving these objectives and our Chief Executive Officer and Chief Financial Officer/Principal Accounting Officer have concluded that our disclosure controls and procedures are effective to a reasonable assurance level of achieving such objectives. However, it should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

(b) Management’s Report on Internal Control over Financial Reporting

Our Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is designed 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. The Company’s internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2010. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of these controls.

Based on this assessment, management has concluded that as of March 31, 2010, our internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

There were no changes in our internal control over financial reporting during our fiscal quarter ended March 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None.

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

On April 27, 2010, Cenfin LLC exercised previously issued warrants to acquire 11,600,000 shares of Roomlinx common stock for $0.02 per share, or an aggregate exercise price of $232,000.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

Item 6. Exhibits

10.1 Securities Purchase Agreement, dated April 29, 2010, among Roomlinx, Inc., Verition Multi-Strategy Master Fund Ltd. and Wilmot Advisors LLC (incorporated by reference to Exhibit 10.1 of Roomlinx Current Report on Form 8-K filed with the SEC on May 5, 2010).

10.2 Registration Rights Agreement, dated April 29, 2010, among Roomlinx, Inc., Verition Multi-Strategy Master Fund Ltd. and Wilmot Advisors LLC (incorporated by reference to Exhibit 10.2 of Roomlinx Current Report on Form 8-K filed with the SEC on May 5, 2010).

31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Chief Executive and Chief Financial Officers.

32.1 Certification of the Chief Executive and Chief Financial Officers pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		Roomlinx, Inc.

	By:	/s/ Michael S. Wasik
		Michael S. Wasik
		Chief Executive Officer
		Chief Financial Officer

	Date:	5/14/10

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

	By:	/s/ Michael S. Wasik
		Michael S. Wasik
		Chief Executive Officer,
		Chief Financial Officer and Director

	Date:	5/14/10