MTWO 10-Q Quarterly Report Sept. 30, 2012

TROIKA MEDIA GROUP, INC.

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10-Q 1 t74988_10q.htm FORM 10-Q t74988_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2012

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 Number: 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.)

11101 W. 120 th Ave., Suite 200, Broomfield, Colorado 80021

(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 o

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

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 November 10, 2012, was 6,405,413.

ROOMLINX, INC.


INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets as of September 30, 2012 (unaudited) and December 31, 2011		1

Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)		2

Consolidated Statement of Changes in Equity for the Nine Months Ended September 30, 2012 (unaudited)		3

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011 (unaudited)		4

Notes to Consolidated Financial Statements (unaudited)		5-14

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

Item 3. Quantitative and Qualitative Disclosures About Market Risk		23

Item 4. Controls and Procedures		24

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		26

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		26

Item 6. Exhibits		26

Signatures		28

Roomlinx, Inc.

CONSOLIDATED BALANCE SHEETS


	September 30, 2012			December 31, 2011
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,930,993		$	361,228
Accounts receivable, net		1,395,327			889,657
Leases receivable, current portion		970,452			994,728
Prepaid and other current assets		593,003			192,221
Inventory, net		3,423,554			1,244,072
Total current assets		9,313,329			3,681,906

Property and equipment, net		885,072			2,145,831
Leases receivable, non-current		2,082,901			2,697,696
Total assets	$	12,281,302		$	8,525,433

LIABILITIES AND EQUITY

Current liabilities:
Accounts payable	$	2,927,564		$	632,428
Accrued expenses and other current liabilities		316,447			462,296
Notes payable and other obligations, current portion		34,458			63,182
Unearned income, current portion		208,373			245,058
Deferred revenue, current portion		2,930,759			611,572
Total current liabilities		6,417,601			2,014,536

Deferred revenue, less current portion		89,522			-
Other non-current liabilities		46,240			-
Notes payable and other obligations, less current portion		52,399			1,582
Unearned income, less current portion		238,263			363,381
Line of credit, net of discount		3,921,670			3,025,223

Total liabilities		10,765,695			5,404,722

Equity:
Preferred stock - $0.20 par value, 5,000,000 shares authorized:
Class A - 720,000 shares authorized, issued and outstanding (liquidation preference of $144,000 at September 30, 2012 and December 31, 2011)		144,000			144,000
Common stock - $0.001 par value, 200,000,000 shares authorized: 6,405,413 and 5,118,877 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively		6,405			5,119
Additional paid-in capital		36,865,383			33,102,512
Accumulated deficit		(35,572,771	)		(30,185,925	)
Accumulated other comprehensive income (loss)		13,573			(8,802	)
Total Roomlinx, Inc. shareholders' equity		1,456,590			3,056,904
Non-controlling interest		59,017			63,807
Total equity		1,515,607			3,120,711
Total liabilities and equity	$	12,281,302		$	8,525,433

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

Roomlinx, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

for the nine months ended September 30, 2012 and 2011

(unaudited0


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,

	2012			2011			2012			2011
Revenues:
Hospitality	$	2,165,599		$	946,350		$	5,368,757		$	3,268,166
Residential		221,615			237,532			691,384			697,819
Total		2,387,214			1,183,882			6,060,141			3,965,985

Direct costs and operating expenses:
Direct Costs (exclusive of operating expenses and depreciation shown seperately below):
Hospitality		1,918,368			601,680			4,862,279			2,183,481
Residential		145,675			170,832			485,237			477,583
Operating expenses
Operations		628,638			190,608			1,550,403			627,380
Product development		312,076			150,393			837,586			523,953
Selling, general and administrative		737,066			382,899			1,995,343			1,418,413
Depreciation		191,389			175,816			559,364			522,687
Loss on asset impairment		1,112,470			-			1,112,470			-
		5,045,682			1,672,228			11,402,682			5,753,497
Operating loss		(2,658,468	)		(488,346	)		(5,342,541	)		(1,787,512	)

Non-operating income (expense):
Interest expense		(157,259	)		(90,036	)		(450,455	)		(222,107	)
Interest income		86,279			59,423			224,188			191,639
Other income		181,962			2,037			181,962			4,141
		110,982			(28,576	)		(44,305	)		(26,327	)

Net loss		(2,547,486	)		(516,922	)		(5,386,846	)		(1,813,839	)

Less: Net (income) loss attributable to the non-controlling interest		(7,850	)		1,065			(4,790	)		1,135

Net loss attributable to the Company		(2,555,336	)		(515,857	)		(5,391,636	)		(1,812,704	)

Other comprehensive income (loss):
Currency translation gain		29,766			4,385			22,375			7,342

Comprehensive loss		(2,525,570	)		(511,472	)		(5,369,261	)		(1,805,362	)

Comprehensive loss attributable to the non-controlling interest		-			-			-			-

Comprehensive loss attributable to the Company	$	(2,525,570	)	$	(511,472	)	$	(5,369,261	)	$	(1,805,362	)

Net loss per common share:
Basic and diluted	$	(0.40	)	$	(0.10	)	$	(0.93	)	$	(0.36	)

Weighted average shares outstanding:
Basic and diluted		6,404,631			5,115,203			5,803,265			5,056,412

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

Roomlinx, Inc.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the nine months ended September 30, 2012

(unaudited)


	Roomlinx, Inc. Shareholders
										Accumulated
	Preferred Stock A			Common Stock			Additional			Other									Total
	Number of	Par Value		Number of	Par Value		Paid - in			Comprehensive			Accumulated			Non-Contolling			Stockholders’
	Shares		$0.20	Shares	$0.001		Capital			Income			(Deficit)			Interes t			Equity
Balances, January 1, 2012	720,000	$	144,000	5,118,877	$	5,119	$	33,102,512		$	(8,802	)	$	(30,185,925	)	$	63,807		$	3,120,711

Warrants issued in conjuction with draw on line of credit								350,167												350,167
Shares issued at $2.50 per share, net of costs				1,280,000		1,280		2,992,031												2,993,311
Cashless option exercises				6,536		6		(6	)											-
Stock based compensation								420,679												420,679
Comprehensive income (loss):
Net loss														(5,386,846	)		(4,790	)		(5,391,636	)
Other comprehensive income (loss):
Translation gain											22,375									22,375
Balances, September 30, 2012	720,000	$	144,000	6,405,413	$	6,405	$	36,865,383		$	13,573		$	(35,572,771	)	$	59,017		$	1,515,607

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

Roomlinx, Inc.

CASH FLOW STATEMENTS

for the nine months ended September 30, 2012 and 2011


	2012			2011
	(unaudited)			(unaudited)

Net loss	$	(5,386,846	)	$	(1,813,839	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		559,364			522,687
Amortization of debt discount		246,614			111,274
Stock-based compensation		420,679			471,408
Settlement of royalty payable		(179,834	)		-
Provision for uncollectable accounts		40,000			(18,535	)
Loss on cancellation of contracts		60,211			-
Reserve for inventory obsolescence		22,500			-
Asset impairment		1,112,470			-
Change in operating assets and liabilities:
Accounts receivable		(592,176	)		(53,679	)
Prepaid and other current assets		(400,782	)		(29,254	)
Inventory		(2,348,144	)		(1,028,559	)
Accounts payable and other liabilities		2,375,361			103,824
Unearned income		(161,803	)		(182,408	)
Deferred revenue		2,408,709			323,995
Total adjustments		3,563,169			220,753
Net cash used in operating activities:		(1,823,677	)		(1,593,086	)

Cash flows from investing activities:
Lease financing provided to customers		(142,879	)		(612,047	)
Payments received on leases receivable		721,739			536,015
Purchase of property and equipment		(183,789	)		(131,718	)
Net cash provided by (used in) investing activities:		395,071			(207,750	)

Cash flows from financing activities:
Proceeds from sale of common stock, net		2,993,311			125,000
Proceeds from the line of credit		1,000,000			1,880,000
Proceeds from notes payable		45,000			-
Payments on capital lease		(9,700	)		(7,698	)
Payments on notes payable		(47,824	)		(52,026	)
Net cash provided by financing activities		3,980,787			1,945,276

Effects of foreign currency translation		17,584			(31,100	)

Net increase in cash and equivalents		2,569,765			113,340
Cash and equivalents at beginning of period		361,228			314,368
Cash and equivalents at end of period	$	2,930,993		$	427,708

Supplemental Cash Flow Information:
Cash paid for interest	$	202,231		$	90,730

Non-cash investing and financing activities:
Transfer of asset	$	-		$	19,041
Assets acquired under capital lease	$	34,617		$	-
Debt discount on warrants issued in connection with line of credt	$	350,167		$	590,411

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

Roomlinx, Inc.

Notes to Consolidated Financial Statements

September 30, 2012

(Unaudited)

1. Organization and Significant Accounting Policies

Description of Business: Roomlinx, Inc. (“Roomlinx” or 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; including its proprietary Interactive TV platform, internet, and free to guest and on demand programming. Roomlinx also sells, installs and services telephone, internet, and television services for residential consumers. 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, as well as residential consumers.

Basis of Consolidation: The consolidated financial statements include Roomlinx, Inc. and its wholly-owned subsidiaries and Arista Communications, LLC, a 50% subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

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. The results for the three-month and nine-month periods ended September 30, 2012 are not necessarily indicative of the results expected for the year ending December 31, 2012. These interim financial statements should be read in conjunction with the consolidated financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the SEC on March 30, 2012.

Reclassification: Certain amounts in the 2011 financial statements have been reclassified to conform to the current year presentation.

Revenue Recognition : Revenue is derived from the installation and ongoing services of in-room media, entertainment, and HD television programming solutions in addition to wired networking solutions and WiFi Fidelity networking solutions. Revenue is recognized when all applicable recognition criteria have been met, which generally include a) persuasive evidence of an existing arrangement; b) fixed or determinable price; c) delivery has occurring or service has been rendered; d) collectability of the sales price is reasonably assured.

Installations and service arrangements are contractually predetermined and such contractual arrangements may provide for multiple deliverables, revenue is recognized in accordance with ASC Topic 605, Multiple Deliverable Revenue. The application of ASC Topic 605 may result in the deferral of revenue recognition for installations across the service period of the contract and the re-allocation and/or deferral of revenue recognition across various service arrangements. Below is a summary of such application of the revenue recognition policy as it relates to installation and service arrangements the Company has with its customers.

The Company enters into contractual arrangements to provide multiple deliverables which may include some or all of the following - systems installations and a variety of services related to high speed internet access, free-to-guest, video on demand and iTV systems as well as residential phone, internet and television. Each of these elements must be identified and individually evaluated for separation. The term “element” is used interchangeably with the term “deliverable” and the Company considers the facts and circumstances as it relates to its performance obligations in the arrangement and includes product and service elements, a license or right to use an asset, and other obligations negotiated for and assumed in the agreement. Analyzing contractual arrangements to identify all of the elements requires the use of judgment. In the determination of the elements included in Roomlinx agreements, embedded software and inconsequential or perfunctory activities were taken into consideration.

Once the Deliverables have been identified, we determine the Relative Fair Value of each Element under the concept of Relative Selling Price (RSP) for which the Company applied the hierarchy of selling price under ASC Topic 605 as follows:

VSOE - Vendor specific objective evidence is still the most preferred criteria with which to establish fair value of a deliverable. VSOE is the price of a deliverable when a company sells it on an open market separately from a bundled transaction.

TPE - Third party evidence is the second most preferred criteria with which to establish fair value of a deliverable. The measure for the pricing of this criterion is the price that a competitor or other third party sells a similar deliverable in a similar transaction or situation.

RSP - Relative selling price is the price that management would use for a deliverable if the item were sold separately on a regular basis which is consistent with company selling practices. The clear distinction between RSP and VSOE is that under VSOE, management must sell or intend to sell the deliverable separately from the bundle, or has sold the deliverable separately from the bundle already. With RSP, a company may have no plan to sell the deliverable on a stand-alone basis.

Hospitality Installation Revenues

Hospitality installations include High Speed Internet Access (HSIA), Interactive Television (iTV), Free to Guest (FTG) and Video on Demand (VOD). Under the terms of these typical product sales and equipment installation contracts, a 50% deposit is due at the time of contract execution and is recorded as deferred revenue. Upon the completion of the installation process, deferred revenue is realized. However, in some cases related to VOD installations or upgrades, the Company extends credit to customers and records a receivable against the revenue recognized at the completion of the installation.

Additionally, the Company may provide the customer with a lease financing arrangement provided the customer has demonstrated its credit worthiness to the satisfaction of the Company. Under the terms and conditions of the lease arrangements, these leases have been classified and recorded as Sale-Type Leases under ASC Topic 840-30 and accordingly, revenue is recognized upon completion and customer acceptance of the installation which gives rise to a lease receivable and unearned income.

Hospitality Service, Content and Usage Revenues

The Company provides ongoing 24x7 support to both its hotel customers and their guests, content and maintenance as applicable to those products purchased, installed and serviced under contract. Generally, support is invoiced in arrears on a monthly basis for content and usage, which are dependent on guest take rates and buying habits. Service maintenance and usage revenue also includes revenue from meeting room services, which are billed as the events occur.

Residential Revenues

Residential revenues consist of equipment sales and installation charges, support and maintenance of voice, internet, and television services, and content provider residuals, installation commissions, and management fees. Installations charges are added to the monthly service fee for voice, internet, and television, which is invoiced in advance creating deferred revenue to be realized in the appropriate period. The Company’s policy prohibits the issuance of customer credits during the month of cancelation. The Company earns residuals as a percent of monthly customer service charges and a flat rate for each new customer sign up. Residuals are recorded monthly. Commissions and management fees are variable and therefore revenue is recognized at the time of payment.

Concentrations

Credit Risk: The Company’s operating cash balances are maintained in financial institutions and periodically exceed federally insured limits. The Company believes that the financial strength of these institutions mitigates the underlying risk of loss. To date, these concentrations of credit risk have not had a significant impact on the Company’s financial position or results of operations.

Accounts Receivable: At September 30, 2012 and 2011, the Company had three customers who accounted for 39% (15%, 14% and 10%) and two customers who accounted for 46% (26% and 20%) of accounts receivable, respectively.

Revenue: During the three months ended September 30, 2012 and 2011, two customers contributed 37% (20% and 17%) and 30% (17% and 13%), respectively of Roomlinx’s US hospitality revenue.

During the nine months ended September 30, 2011, two customers contributed 23% (12% and 11%) of Roomlinx’s US hospitality revenue compared to 2012 wherein Roomlinx had expanded its customer base sufficiently to eliminate concentration of risk defined as customers with greater than 10% of revenue.

Fair Value Measurement: The Company discloses fair value information about financial instruments based on 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 September 30, 2012.

The respective carrying value of certain financial instruments approximate their fair values. These financial instruments include cash and cash equivalents, accounts receivable, leases receivable, accounts payable, accrued liabilities, capital lease obligations, notes payable and the line of credit. The carrying value of cash and cash equivalents, accounts receivable, leases receivable, accounts payable and accrued liabilities approximate fair value due to their short term nature. The carrying amount of capital lease obligations and notes payable approximates their fair values as the pricing and terms of these liabilities approximate market rates. The fair value of the line of credit is not practicable to estimate because of the related party nature of the underlying transactions. The Company has no financial instruments with the exception of cash and cash equivalents (level 1) valued on a recurring basis.

Long-Lived Assets: The Company reviews the carrying value of long-lived assets, such as property and equipment, whenever events or circumstances indicate the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized to reduce the carrying value of the asset to its estimated fair value.

Segments: We operate and prepare our financial reports based on two segments; Hospitality and Residential. We have determined these segments based on the location, design, and end users of our products.

Hospitality: Our Hospitality segment includes hotels, resorts, and timeshare properties in the United States, Canada, and Other Foreign. As of September 30, 2012 and 2011, Other Foreign included Mexico and Aruba. The products offered under our hospitality segment include the installation of, and the support and service of, high-speed internet access networks, proprietary Interactive TV platform, free to guest programming, and on-demand movie programming, as well as advertising and e-commerce products.

Residential: Our residential segment includes multi-dwelling unit customers and business customers (non-hospitality) in the United States. The products offered include the installation of, and the support and service of, telephone, internet, and television services.

Foreign Currency Translation: The US Dollar is the functional currency of the Company. Assets and liabilities denominated in foreign currencies are re-measured into US Dollars and the resulting gains and losses are included in the consolidated statement of operations as a component of other income (expense).

Earnings Per Share: The Company computes earnings per share 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 the exercise of the Company’s stock options and warrants. Potentially dilutive securities, purchase stock options and warrants, are excluded from the calculation when their inclusion would be anti-dilutive, such as periods when a net loss is reported or when the exercise price of the instrument exceeds the fair market value. Accordingly, the weighted average shares outstanding have not been adjusted for dilutive shares. Outstanding stock options and warrants are not considered in the calculation as the impact of the potential common shares (totaling approximately 2,477,541 and 1,130,744 as of September 30, 2012 and 2011, respectively) would be to decrease the net loss per share.

Use of Estimates: The preparation of the Company’s consolidated 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2. Leases Receivable

As of September 30, 2012, the Company had $3,053,353 in leases receivable, compared to $3,692,424 at December 31, 2011. During the nine months ended September 30, 2012 and 2011 the Company received payments of $721,739 and $536,015 respectively. During the nine months ended September 30, 2012, the Company entered into a lease receivable for an aggregate amount of $142,879. These leases have initial terms of 60 months and an average interest rate of 9.5%. In addition, during the nine months ended September 30, 2012, the Company recorded a loss of $60,211 related to the early termination of lease receivable contracts. This loss is net of the return of equipment to inventory and is included in direct costs in the consolidated statement of comprehensive income (loss).

Future minimum receipts on lease receivables are as follows:

Twelve Months Ended September 30,	Minimum Receipts
2013	$	1,002,045
2014		920,268
2015		702,009
2016		359,305
2017		69,726
	$	3,053,353

3. Inventory

Inventory, principally large order quantity items which are required for the Company’s media and entertainment installations, is stated at the lower of cost (first-in, first-out) basis or market. The Company generally maintains only the inventory necessary for contemplated installations. Work in progress represents the cost of equipment and third party installation related to installations which were not yet completed.

The Company performs an analysis of slow-moving or obsolete inventory periodically and any necessary valuation reserves, which could potentially be significant, are included in the period in which the evaluations are completed. As of September 30, 2012 and December 31, 2011, the inventory obsolescence reserve was mainly related to raw materials.

Inventory balances as of September 30, 2012 and December 31, 2011 are as follows:

	2012			2011
Raw materials	$	1,177,553		$	671,991
Work in process		2,358,501			662,081
		3,536,054			1,334,072
Reserve for obsolescence		(112,500	)		(90,000	)
Inventory, net	$	3,423,554		$	1,244,072

4. Asset Impairment

The Company’s wholly-owned subsidiary, Cardinal Hospitality, Ltd. (“CHL”) provides video-on-demand (“VOD”) utilizing proprietary technology to approximately 130 hotel properties in Canada (“the CHL properties”). The CHL properties are primarily economy-class hotels.

During the three months ended September 30, 2012, the Company determined that it would no longer utilize its proprietary VOD system in future VOD service installations. Rather than invest in upgrading or refreshing its proprietary technology, the Company determined it would purchase a third-party platform for all future VOD installations. In addition, it concluded that its primary business strategy and technology development efforts will be focused on its proprietary interactive TV platform. Due to the economy class nature of the CHL properties, management determined that the interactive TV platform is not appropriate for deployment at those properties. Consequently, while services provided to the CHL properties will continue, no significant new business development will be pursued.

As a result of this strategic change we performed an evaluation as of September 30, 2012 of our long-lived assets associated with the CHL properties consisting primarily of property, plant, and equipment and property receivables. In assessing impairment for long-lived assets we followed the provisions of ASC 360. We performed our testing of the asset group at the individual property level, and our assessment included contractual terms and identifiable cash flows associated with providing on-going service.

In performing the test, we determined that the total of the expected future undiscounted cash flows directly related to services provided at the CHL properties was less than the carrying value of the asset group. Therefore, an impairment charge was required. An impairment charge of approximately $920,000 and $47,000 related to PP&E and property receivables, respectively, represented the difference between the fair values of the asset group and its carrying values and is reflected as Loss on asset impairment in the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2012. The impairment charges resulted from the excess of the carrying value of the asset group over the fair value (calculated based on the discounted expected future cash flows associated with VOD and free to guest services during the underlying contractual period).

In addition, we performed an analysis of the value of inventory held by CHL to determine the impact of the change in business strategy, as of September 30, 2012. We determined that a write off of approximately $146,000 was required to reflect the obsolete nature of the inventory associated with VOD service. The charge is included in the Loss on asset impairment in the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2012.

5. Settlement of Royalty Payable

In November 2011, the Company entered into a revised license agreement for studio films. Under the terms of the agreement, the Company was required to pay $105,000 in four equal quarterly payments to settle all previous amounts due to a studio. In August 2012, the Company made the final payment resulting in a gain on the settlement of royalty payable in the amount of $179,834, such amount representing the excess of the accrued liability less the agreed upon settlement of $105,000. The settlement of royalty payable is included in other income on the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2012.

6. Line of Credit

On June 5, 2009 we entered into a Revolving Credit, Security and Warrant Purchase Agreement (the “Credit Agreement”) with Cenfin LLC (the owner of Cenfin LLC beneficially owns approximately 31.8% of the Company’s common stock, inclusive of warrants, as of September 30, 2012), a Delaware limited liability company (“Cenfin”) which permits us to borrow up to $25 million until June 5, 2017. Advances must be repaid at the earlier of 5 years from the date of borrowing or at the expiration of the Credit Agreement. The principal balance may be repaid at any time without penalty. Borrowings accrue interest, payable quarterly on the unpaid principal and interest at a rate equal to the Federal Funds Rate at July 15 of each year plus 5% (approximately 5.25%). The Credit Agreement is collateralized by substantially all of our assets, and requires we maintain a total outstanding indebtedness to total assets ratio of less than 3 to 1.

Amounts outstanding under the Credit Agreement were $5,176,000 and $4,176,000 at September 30, 2012 and December 31, 2011, respectively. These advances will be repaid at various dates between 2014 and 2017. A total of $19,824,000 is available for future borrowings. Interest expense of $196,846 and $98,601 was recorded for the nine month periods ended September 30, 2012 and 2011, respectively.

The Credit Agreement requires that, in conjunction with each advance, we issue Cenfin warrants to purchase shares of Roomlinx common stock equal to 50% of the principal amount funded divided by (i) $2.00 on the first $5,000,000 of borrowings on or after July 15, 2010 ($4,712,000 as of September 30, 2012) or (ii) thereafter the fair market value of the Company’s common stock on the date of such draw for advances in excess of $5,000,000. The exercise price of the warrants is $2.00 for the warrants issued on the first $5,000,000 of borrowings made after July 15, 2010 and, thereafter, the average of the high and low market price for the Company’s common stock on the date of issuance. The exercise period of these warrants expire three years from the date of issuance.

Using the Black-Scholes pricing model adjusted for a blockage discount, warrants issued during the nine months ended September 30, 2012 were valued at approximately $350,000 (see Note 7). The fair value of warrants issued since inception of the Credit Agreement is approximately $2,760,000 which is being amortized to earnings as additional interest expense over the term of the related indebtedness, accordingly additional interest expense of $246,614 and $111,274 was recorded for the nine month periods ended September 30, 2012 and 2011, respectively. The unamortized balance of the debt discount was $1,254,330 and $1,150,777 at September 30, 2012 and December 31, 2011, respectively. Borrowings outstanding are reported net of the debt discount associated with these borrowings.

Future minimum payments under the line of credit are as follows:

Twelve Months Ended September 30,	Minimum Payments
2013	$	-
2014		340,000
2015		1,106,000
2016		2,130,000
2017		1,600,000
	$	5,176,000

7. Commitments and Contingencies

Operating Leases: On April 10, 2012 the Company executed a lease agreement for office space with an effective date of May 1, 2012. Terms of the lease establish a base rent per square foot plus operating expenses throughout the term of the lease which expires September 30, 2015, and which includes the lessor waiving several months of base rent and pre-defined annual escalation of the base rent per square foot. At September 30, 2012, the Company has a deferred rent liability of $69,361 included in other liabilities (current and non-current) as of September 30, 2012. The Company’s future minimum lease payments are as follows: $130,225 for the twelve months ended September 30, 2013; $147,273 for the twelve months ended September 30, 2014; and $152,085 for the twelve months ended September 30, 2015.

Capital Lease Obligations : The Company has capital lease arrangements related to the acquisition of software. These arrangements are collateralized by the software and expire at varying dates through September 2015 with future minimum lease payments as follows: $14,143 for the twelve months ended September 30, 2013; $13,210 for the twelve months ended September 30, 2014; and $6,605 for the twelve months ended September 30, 2015.

8. Equity

Preferred Stock: The Company has authorized 5,000,000 preferred shares with a $0.20 par value, of which 720,000 shares have been designated as Class A Preferred Stock. The Class A Preferred stock has a liquidation preference of $0.20 per share and 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. As of September 30, 2012 and December 31, 2011, there were 720,000 shares of Class A Preferred Stock issued and outstanding. Class A dividends accumulated and unpaid as of September 30, 2012, were $181,920; these dividends have not been declared by the board of directors and therefore are not included in accrued expenses.

Common Stock: The Company has authorized 200,000,000 shares of $0.001 par value common stock. As of September 30, 2012 and December 31, 2011, there were 6,405,413 and 5,118,877 shares of common stock issued and outstanding, respectively.

On May 4, 2012, the Company entered into a Securities Purchase Agreement (the “SPA”) with certain investors (collectively, the “Investors”), pursuant to which the Investors purchased Units from the Company for a purchase price of $2.50 per Unit. Each Unit consisted of (x) one share of common stock of the Company and (y) a warrant to purchase one-half share of common stock at an exercise price of $3.75 per share, subject to adjustment as provided in the warrant. The Company sold and issued an aggregate of 1,200,000 shares of common stock to the Investors and issued warrants to the Investors for the purchase of an additional 600,000 shares of common stock. Subsequently on June 20, 2012, the Company sold and issued an additional 80,000 shares of common stock and 40,000 warrants to certain other investors pursuant to an amendment to the SPA. In the aggregate, the Company received net proceeds of $2,993,311 (gross proceeds of $3,200,000 less $206,689 of offering expenses) from these transactions. Proceeds from such transactions are being used for general corporate and working capital purposes including deployment of the Company’s iTV applications under a Master Service Agreement with Hyatt Corporation announced on March 13, 2012.

Management reviewed the accounting treatment for the warrants issued under the SPA and determined the warrants met the applicable requirement under ASC 815-40-25 for equity classification. Accordingly, these warrants are classified within shareholders’ equity as of September 30, 2012. Under the terms of a Registration Rights Agreement (“RRA”) between the Company and the Investors in conjunction with the SPA, the Company filed a Form S-1 Registration Statement with the SEC on June 18, 2012, for the purpose of registering under the Securities Act the shares of common stock issued pursuant to the SPA and the shares of common stock to be issued upon exercise of the warrants issued pursuant to the SPA. Such registration statement was declared effective by the SEC on August 30, 2012 and accordingly, the Company no longer has potential liability for liquidated damages to the holders of such shares and warrants in respect of not having such registration statement timely declared effective by the SEC.

Warrants:

During the nine months ended September 30, 2012, 250,000 warrants were granted pursuant to the clauses in the Cenfin Credit Agreement. The warrants were issued at an exercise price of $2.00, vested immediately, and expire 3 years from the date of grant. In addition, 640,000 warrants were issued pursuant to clauses in the Stock Purchase Agreement dated May 4, 2012 at an exercise price of $3.75, vested immediately, and expire 3 years from the grant date.

During the nine months ended September 30, 2011, 470,000 warrants were granted pursuant to the Credit Agreement. The warrants were issued at an exercise price of $2.00, vested immediately, and expire at 3 years from the grant dates. In addition, an aggregate of 62,500 warrants previously issued under the Credit Agreement were exercised. The warrants were exercised at a strike price of $2.00 resulting in cash receipts of $125,000.

The following are assumptions utilized in estimation of the fair value of the warrants granted during the nine month periods ended September 30, 2012 and 2011:

	2012			2011
Term	3 years			3 years
Expected volatility		108% - 148	%		122% - 125	%
Risk free interest rate		0.35% - 0.57	%		0.33% - 1.18	%
Dividend yield		0	%		0	%

The following is a summary of such outstanding warrants for the nine month period ended September 30, 2012:

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

Outstanding at January 1, 2012		726,550		$	2.21
Granted and Issued		890,000			3.26
Expired/Cancelled		(70,000	)		3.00
Outstanding and exercisable at September 30, 2012		1,546,550		$	2.79		2.26	$	539,400

Options: In 2004, the Company adopted a long term incentive stock option plan (the “Stock Option Plan”) which covers key employees, officers, directors and other individuals providing bona fide services to the Company. The Stock Option Plan provides for the issuance of up to 1,200,000 shares of common stock upon exercise of options which may be granted pursuant to the Stock Option Plan. As of September 30, 2012, options to purchase 930,991 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.

During the nine month period ended September 30, 2012, the board of directors approved the grant of an aggregate of 441,247 Incentive Stock Options and an aggregate of 238,320 Non-Qualified options. Such options were issued at exercise prices between $2.30 and $4.00, vest at various times over three years, and expire 7 years from the grant date.

During the nine month period ended September 30, 2011, the board of directors approved the grant of 10,000 Incentive Stock Options at an exercise price of $3.75. These options vest on the anniversary date over a two year period and expire 7 years from the grant date.

The following are the assumptions utilized in the estimation of stock-based compensation related to the stock option grants for the nine month periods ended September 30, 2012 and 2011:

	2012		2011
Expected term	7 years		7 years
Expected volatility		218% - 225%		132%
Risk free interest rate		1.11% - 1.69%		2.48%
Dividend yield		0%		0%

A summary of stock option activity under the Stock Option Plan for the nine months ended September 30, 2012 is presented below:

Options	Number of Shares			Weighted Average Exercise Price		Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2012		404,194		$	2.78
Granted		679,567			3.72
Exercised		(14,000	)		1.03
Forfeited		(138,770	)		3.61
Outstanding at September 30, 2012		930,991		$	3.37		5.19	$	133,660
Exercisable at September 30, 2012		321,982		$	2.74		2.82	$	117,660

The Company recorded stock-based compensation expense of $420,679 and $284,795 for the nine month periods ended September 30, 2012 and 2011, respectively. The amounts are recorded in direct costs, operations, product development and selling, general and administrative expense in the consolidated statement of comprehensive income (loss). The fair value of stock options that vested and became exercisable during the nine months ended September 30, 2012 and 2011 was $24,620 and $161,768 respectively. At September 30, 2012, there was approximately $1,915,119 in unrecognized compensation cost related to stock options that will be recorded over a weighted average future period of approximately 3 years.

A summary of the activity of non-vested options under the Company’s plan for the nine months ended September 30, 2012 is presented below:

	Non-vested Shares Underlying Options			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
Non-vested at January 1, 2012		63,296		$	3.68	$	2.98
Granted		679,567			3.72		3.84
Vested		(9,397	)		3.64		1.90
Forfeited		(124,457	)		3.63		3.61
Non-vested at September 30, 2012		609,009		$	3.70	$	3.66

9. Segment Information

Financial information for our segments, as of September 30, 2012 and 2011, is as follows:

	Hospitality			Residential			Corporate			Totals

Three months ended September 30, 2012
Revenue	$	2,165,599		$	221,615		$	-		$	2,387,214
Operating loss	$	(2,181,514	)	$	(45,306	)	$	(431,648	)	$	(2,658,468	)
Net loss	$	(1,985,025	)	$	(45,306	)	$	(517,155	)	$	(2,547,486	)

Three months ended September 30, 2011
Revenue	$	946,350		$	237,532		$	-		$	1,183,882
Operating loss	$	(280,628	)	$	(4,753	)	$	(202,965	)	$	(488,346	)
Net loss	$	(261,595	)	$	(4,753	)	$	(250,574	)	$	(516,922	)

Nine months ended September 30, 2012
Revenue	$	5,368,757		$	691,384		$	-		$	6,060,141
Operating loss	$	(4,114,148	)	$	(111,821	)	$	(1,116,572	)	$	(5,342,541	)
Net loss	$	(3,909,414	)	$	(111,821	)	$	(1,365,611	)	$	(5,386,846	)

Nine months ended September 30, 2011
Revenue	$	3,268,166		$	697,819		$	-		$	3,965,985
Operating loss	$	(1,015,692	)	$	(26,565	)	$	(745,255	)	$	(1,787,512	)
Net loss	$	(931,089	)	$	(26,565	)	$	(856,185	)	$	(1,813,839	)

As of September 30, 2012
Total assets	$	11,786,695		$	286,746		$	207,861		$	12,281,302

Financial information of geographical data by segment

	United States			Canada			Other Foreign			Totals
Three months ended September 30, 2012
Hospitality Revenue	$	1,950,500		$	189,334		$	25,765		$	2,165,599
Residential Revenue		221,615			-			-			221,615
Totals	$	2,172,115		$	189,334		$	25,765		$	2,387,214

Three months ended September 30, 2011
Hospitality Revenue	$	663,746		$	233,272		$	49,332		$	946,350
Residential Revenue		237,532			-			-			237,532
Totals	$	901,278		$	233,272		$	49,332		$	1,183,882

Nine months ended September 30, 2012
Hospitality Revenue	$	4,771,142		$	494,204		$	103,411		$	5,368,757
Residential Revenue		691,384			-			-			691,384
Totals	$	5,462,526		$	494,204		$	103,411		$	6,060,141

Nine months ended September 30, 2011
Hospitality Revenue	$	2,383,418		$	737,968		$	146,780		$	3,268,166
Residential Revenue		697,819			-			-			697,819
Totals	$	3,081,237		$	737,968		$	146,780		$	3,965,985

As of September 30, 2012
Total assets	$	11,550,935		$	626,479		$	103,888		$	12,281,302

Roomlinx’s Canadian hospitality revenue is dependent on a significant customer. For the three months and nine months ended September 30, 2012, such customer accounted for 55% and 54%, respectively, and for the three months and nine months ended September 30, 2011, such customer accounted for 53% and 51%, respectively.

10. Contingent Liabilities

The Company is in receipt of a District Court Civil Summons, dated May 29, 2012, in the matter of “CLC Networks, Inc. and Skada Capital, LLC v. Roomlinx, Inc.”, commenced in the District Court of Boulder County, Colorado (the “Action”). The plaintiffs in the Action claim that the Company owes them certain unpaid sales commissions, including with respect to Hyatt Corporation in connection with that certain Master Services and Equipment Purchase Agreement, as described in the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on March 13, 2012. The Company believes the plaintiffs’ claims are without merit. The Action is currently pending.

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

The following discussion and analysis should be read in conjunction with the “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations ” section and the consolidated financial statements and related notes thereto included in our December 31, 2011 Annual Report on Form 10-K, filed with the SEC and with the unaudited interim financial statements and related notes thereto presented in this Quarterly Report on Form 10-Q, as well as our reports on Form 8-K and other SEC filings .

FORWARD-LOOKING STATEMENTS

This report contains or incorporates forward-looking statements within the meaning of the federal securities laws that involve risks and uncertainties. We develop forward-looking statements by combining currently available information with our beliefs and assumptions. These statements relate to future events, including the Company’s future performance, and management’s expectations, beliefs, intentions, plans or projections relating to the future and some of these statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “seeks,” “future,” “continue,” “contemplate,” “would,” “will,” “may,” “should,” and the negative or other variations of those terms or comparable terminology or by discussion of strategy, plans, opportunities or intentions. As a result, actual results, performance or achievements may vary materially from those anticipated by the forward-looking statements. These statements include, among others:

- Statements concerning the benefits that are expected to result from business activities and results of exploration that are contemplated or completed, such as increased revenues; and

- Statements of the Company’s expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts.

Among the factors that could cause actual results, performance or achievements to differ materially from those indicated by such forward-looking statements are:

●

the volume and timing of systems sales and installations, the length of sales cycles and the installation process and the possibility that the Company’s products will not achieve or sustain market acceptance;

●

the timing, cost and success or failure of new product and service introductions, development and product upgrade releases;

●

competitive pressures including product offerings, pricing and promotional activities;

●

errors or similar problems in its products;

●

the outcome of any legal proceeding that has been or may be instituted against the Company and others;

●

the ability to attract and retain qualified personnel;

●

maintaining intellectual property rights and successful litigation involving intellectual property rights;

●

legislative, regulatory and economic developments;

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risks related to third-party suppliers and the ability to obtain, use or successfully integrate third-party licensed technology;

●

breach of security by third parties; and

●

those factors discussed in “Risk Factors” in the Company’s periodic filings with the Securities and Exchange Commission (the “SEC”).

Roomlinx makes these statements under the protection afforded by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Because forward-looking statements are subject to assumptions and uncertainties, actual results, performance or achievements may differ materially from those expressed or implied by such forward-looking statements. Stockholders are cautioned not to place undue reliance on such statements, which speak only as of the date such statements are made. Except to the extent required by applicable law or regulation, Roomlinx undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

GENERAL

Overview

Roomlinx, Inc., a Nevada corporation (“we,” “us” or the “Company”), provides four core products and services:

In-room media and entertainment

Roomlinx provides a suite of in-room media and entertainment products and services for hotels, resorts, and time share properties. Products and services included within our in-room media and entertainment offering include our proprietary Interactive TV platform (“iTV”) and on-demand movies.

The Company develops proprietary software and integrates hardware to facilitate the distribution of its Interactive TV platform. With Roomlinx iTV guests will have access to a robust feature set through the HDTV such as:

●

Internet Apps including Netflix, Pandora, Hulu, YouTube, Facebook, and many more

●

International and U.S. television programming on demand

●

Click and Go TV program guide or Interactive Program Guide (dware)

●

Web Games

●

MP3 player and thumb drive access

●

Ability to send directions from the iTV system to a mobile device

Hotel guests can also easily order room service, interact with hotel associates, make restaurant reservations, edit and print documents as well as gain direct access to local dining, shopping, nightlife, cultural events or attractions all through a dynamic user interface on the TV. The Interactive TV platform integrates the TV and Internet experience.

The Company provides proprietary software, a media console, which may include a DVD player, and numerous input jacks for the hotel guest, a proprietary wireless keyboard with built-in mouse, and a proprietary remote control with a built in mouse. The Company installs and supports these components.

The Company also supplies video-on-demand services to the hospitality industry. Roomlinx offers a full selection of video-on-demand services and technology; including first non-theatrical release Hollywood motion pictures, adult, and specialty content.

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.

The Company generates revenue through:

●

Ongoing connectivity service and support contracts

●

Network design and installation services

●

Delivery of content and advertising

●

Delivery of business and entertainment applications

●

E-commerce

●

The customization of its software

●

Software licensing

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Delivery of pay-per-view content

●

Sale of video-on-demand systems

Free-To-Guest Television Programming.

Our hotel satellite television programming services provide for delivery and viewing of 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.

The Company generates revenue through:

●

The design and installation of FTG systems

●

Delivery of television programming fees and/or commissions

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 lineup.

Wired Networking Solutions and Wireless Fidelity Networking Solutions.

We provide wired networking solutions and wireless fidelity networking solutions, also known as Wi-Fi, for high speed internet access at hotels, resorts, and timeshare locations. The Company installs and creates services that address the productivity and communications needs of hotel, resort, and timeshare guests. We specialize in providing advanced Wi-Fi wireless services such as the wireless standards known as 802.11a/b/g/n/i.

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.

The Company generates revenue through:

●

Ongoing connectivity service and support contracts

●

Network design and installation services

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.

Residential Media and Communications

We provide residential and business customers telecommunication services including telephone, satellite television, and wired and wireless internet access. Telephone service is provided through traditional, analog “twisted pair” lines, as well as digital voice over internet protocol (“VoIP”) Analog phone service is typically provided via an interconnection agreement with CenturyLink, Inc. (formerly Qwest Communications), which allows the Company to resell CenturyLink service through their wholesale and retail accounts with CenturyLink. VoIP service is provided at properties where the Company maintains a broadband internet service to the end customer, allowing the Company to provide digital phone service (VoIP) over the same lines as their internet service.

Television service is typically provided via the Company’s agreements with DISH Network and DirecTV. Most television service to customers is provided via a head-end distribution system, or an L-Band digital distribution system. Television service is offered in high definition whenever possible.

Internet service is provided via both wired and wireless network design. The Company provisions and manages broadband access to the residential customers through both wholesale and resale methods. Wholesale methods exist when the Company owns and controls the internet circuit and resale methods exist when the Company uses an affiliated third party to provide the internet circuit.

The Company generates revenue through:

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Network design and installation services

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Delivery of telephone service (billed monthly)

●

Delivery of Internet service (billed monthly)

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Delivery of television service (billed by the satellite provider with monthly commissions paid to the Company)

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Management fees for the management of affiliated communication systems

Trends and Business Outlook

Our goal is to be the leading provider of in-room entertainment, programming, and internet connectivity to the hospitality industry. Accordingly, we have developed a menu of product offerings that differentiate us from other market participants in terms of usability, technical innovation and breadth of offerings. Organizationally, we are building the scale, capacity, and reach to respond to our customers’ needs quickly. Over the past year we have taken significant steps towards these goals, and in the first quarter of 2012 we signed a master service agreement with Hyatt Corporation. We anticipate installing up to 60,000 Hyatt hotel rooms through March 2014. As a result, management’s focus has shifted to operations in order to execute on the Hyatt master service agreement.

Where and how people communicate and access content is continuously changing, and this change has been documented by hotels when reviewing their guests’ habits. Hotel guests are accessing content from the internet or alternative mobile sources such as laptops and smartphones. Our Interactive TV (“iTV”) platform was developed to embrace these changing habits and allow guests easy access to their content, work files, and the internet via the in-room flat panel LCD television screen. The majority of our business growth is the result of our development of platforms that meet the hotel guests’ expectations for accessibility to content and the value that it brings to the hotel owner. Guest usage rates of iTV are higher at our current hotel installations than with traditional systems. Our objective is to monetize the greater usage by guests of our iTV services as we increase our base of installed hotel rooms. Consequently, we are investing in sales and marketing and customer support capabilities. In addition we will continue to invest in the development and enhancement of the iTV platform as a differentiation from competitors.

Although our results demonstrate the initial success of our efforts, general economic conditions and market uncertainty may negatively impact our financial results in future periods. We anticipate that the rate of new orders may vary significantly from quarter to quarter. In addition our ability to complete installations of our iTV system in a timely and efficient manner may be negatively impacted by our internal operating capabilities as we build the internal structure and capabilities necessary to meet customer demands. Consequently, if anticipated sales and shipments in any quarter do not occur when expected, expenses and inventory levels could be disproportionately high, and our operating results for that quarter and future quarters may be adversely affected. Further, given the lag between the incurrence of expenses in connection with sales “wins” and the resulting revenue stream, we anticipate that, while we will see organic growth that positions us for future profitability, our costs of sales and other operating expenses will exceed our revenues in the near term. We have incurred operating losses since our inception and the financial resources available to us may not be sufficient to exploit all sales opportunities or to allow us to continue to adequately invest in the efforts described above.

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.

The Company enters into contractual arrangements to provide multiple deliverables which may include some or all of the following - systems installations and a variety of services related to high speed internet access, free-to-guest programming, video on demand, and iTV as well as residential phone, internet and television. Each of these elements must be identified and individually evaluated for separation. The term “element” is used interchangeably with the term “deliverable” and the Company considers the facts and circumstances as it relates to its performance obligations in the arrangement and includes product and service elements, a license or right to use an asset, and other obligations negotiated for and assumed in the agreement. Analyzing an arrangement to identify all of the elements requires the use of judgment, however, once the deliverables have been identified, the Relative Fair Value of each Element was determined under the concept of Relative Selling Price (RSP) for which the Company applied the hierarchy of selling price under ASU Topic 650.

The effect of application of this standard may be to defer revenue recognition for installations across the service period of the contract and to re-allocate and/or defer revenue recognition across various service arrangements.

In order to promote the Interactive TV platform, Roomlinx has agreed to provide certain customers with direct sales-type lease financing to cover the cost of installation. These transactions result in the recognition of revenue and associated costs in full upon the customer’s acceptance of the installation project and give rise to a lease receivable and unearned income.

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.

Inventory includes materials on-hand at our warehouses as well as the cost of hardware, software, and labor which has been incurred by us for installation at our customer’s property, but has not been accepted by the customer.

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 to 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.

RESULTS OF OPERATIONS

On March 12, 2012, Roomlinx and Hyatt Corporation entered into a Master Services and Equipment Purchase Agreement (hereinafter the “Hyatt MSA”) pursuant to which Roomlinx agreed to provide in-room media and entertainment solutions, including its proprietary Interactive TV (or iTV) platform, high speed internet, free-to-guest, on-demand programming and related support services, to Hyatt-owned, managed or franchised hotels that are located in the United States, Canada and the Caribbean. Roomlinx’s iTV system may be provided in the “full option” (Interactive TV), the “mid option” (SmartTV) or the “lite option” (Video on Demand).

THREE MONTHS ENDED SEPTEMBER 30, 2012 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2011

Revenues for the three months ended September 30, 2012 and 2011 were $2,387,214 and $1,183,882 respectively, an increase of $1,203,332 or 102%, resulting primarily from installation revenue associated with the Hyatt MSA.

Hospitality

Hospitality revenue includes revenue from network and media system installations, support services, and recurring revenue from in-room media and entertainment services. Hospitality revenue and associated direct costs were $2,165,599 and $1,918,368 for the three months ended September 30, 2012, and $946,350 and $601,680 for the comparable year earlier period. The increase in direct costs as a percentage of hospitality revenue is primarily related to management’s decision to increase monthly recurring revenue through the execution of agreements such as the Hyatt MSA. Additionally, the Company wrote-off approximately $51,000 to direct costs and operating expenses related to obsolete inventory.

Our Hospitality segment includes hotel and meeting rooms in the following geographic segments: United States, Canada, and Other Foreign. As of September 30, 2012 and 2011, Other Foreign included Mexico and Aruba. The products offered under our hospitality segment include the installation of, and the support and service of, high-speed internet access, interactive TV services, free to guest programming, and on-demand programming, as well as advertising and e-commerce products.

United States: US hospitality revenue for the three months ended September 30, 2012 and 2011 was $1,950,500 and $663,746 respectively, an increase of $1,286,754 or 194%. This increase is primarily due to the increase of installation revenue of $1,022,828 to $1,233,784 over same period in 2011, primarily the result of the Hyatt MSA. Recurring revenue increased $203,493 to $699,676 or 41%.

Canada: Canadian hospitality revenue for the three months ended September 30, 2012 and 2011was $189,334 and $233,272 respectively, a decrease of $43,938 or 19%. This revenue is primarily variable as it is dependent on hotel guest purchases of video on demand films.

Other Foreign: Other foreign hospitality revenue for the three months ended September 30, 2012 and 2011 was $25,765 and $49,332, respectively, a decrease of $23,567 or 48%.

Residential

Our residential segment includes multi-dwelling unit and business customers in the United States. The products offered include the installation of, and the support and service of, telephone, internet, and television services.

Residential revenue for the three months ended September 30, 2012 and 2011 was $221,615 and $237,532 respectively, and a decrease of $15,917 or 7%.

Operational Expenses

Total operating expense for the three months ended September 30, 2012 and 2011 was $2,981,642 and $899,716 respectively, an increase of $2,081,926, or 231%. This increase is primarily due to (i) a one-time charge recognizing a loss attributable to the impairment of assets in the amount of $1,112,470 (more fully described below), (ii) an increase in personnel costs of $664,610 to support the execution of the installation of our products and their subsequent support in accordance with the Hyatt MSA dated March 12, 2012 and (iii) various operating expenses described below.

Our operations department expense increased $438,030 to $628,638 in the three months ended September 30, 2012 compared to the same period in 2011. This increase is primarily due to an increase of $405,069 in payroll and related expenses for increased staffing levels to support our commitments in regards to the Hyatt MSA and approximately $26,000 of office rent.

Our product development department expense increased $161,683 to $312,076 in the three months ended September 30, 2012 compared to same period in 2011. This increase is primarily due to an increase in payroll and related costs of $153,994 to further product enhancements.

Our selling, general and administrative expenses increased $354,167 to $737,066 in the three months ended September 30, 2012 compared to the same period in 2011. This increase is primarily attributable to an increase in payroll and related costs of $105,547, and approximate increases of $83,000 in professional fees, $47,000 in marketing costs, $65,000 of bad debt expense and $30,000 in various overhead expenses. Depreciation expense for the three months ended September 30, 2012 and 2011 was $191,389 and $175,816 respectively, an increase of $15,573 or 9%.

During the three months ended September 30, 2012 the Company recognized a $1,112,470 loss on the impairment of assets due to circumstances (See note 4) indicating the carrying value of Cardinal Hospitality, Ltd. (“CHL”) assets would not be recoverable from the estimated future cash flows expected to result from their use and eventual disposition. This loss resulted in the write-down of approximately $920,000 of property and equipment, $146,000 of inventory and $46,000 of property receivables.

Our operating loss for the three months ended September 30, 2012 and 2011 was $2,658,468 and $488,346 respectively, an increase of $2,170,122 or 444%. This increase is due primarily to recognition of a loss on impairment of assets and personnel costs as more fully described above.

Non-Operating

For the three months ended September 30, 2012 and 2011, our non-operating income was $268,241 and $61,460 respectively, an increase of $206,781. Non-operating income consists primarily of interest income earned on lease receivables and a gain on the settlement of royalty payable to a studio for VOD content in the amount of $179,834.

Our non-operating expenses for the three months ended September 30, 2012 and 2011 were $157,259 and $90,036 respectively, an increase of $67,223. This increase is primarily attributable to an increase in interest expense of $29,975 consistent with the increase in our line of credit and an increase in financing costs of $37,598 associated with debt discount expense on warrants issued pursuant to draws against our line of credit.

For the three months ended September 30, 2012, we reported a net loss of $2,547,486, compared to a net loss of $516,922 for the three months ended September 30, 2011. As discussed above, the one-time recognition of a loss on asset impairment and increased personnel costs attributable to the Hyatt MSA were the primary factors that contributed to the increased net loss.

NINE MONTHS ENDED SEPTEMBER 30, 2012 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2011

Revenues for the nine months ended September 30, 2012 and 2011 were $6,060,141 and $3,965,985 respectively, an increase of $2,094,156 or 53%, resulting from an increase in installation revenues primarily related to the Hyatt MSA.

Hospitality

Hospitality revenue includes revenue from network and media system installations, support services, and recurring revenue from in-room media and entertainment services. Hospitality revenue and associated direct costs were $5,368,757 and $4,862,279 for the nine months ended September 30, 2012, and $3,268,166 and $2,183,481 for the comparable year earlier period. The increase in direct costs as a percentage of hospitality revenue is primarily related to management ’ s decision to increase monthly recurring revenue through the execution of agreements such as the Hyatt MSA. Additionally, the Company recorded a $51,000 charge to direct costs and operating expenses related to obsolete inventory.

United States: US hospitality revenue for the nine months ended September 30, 2012 and 2011 was $4,771,142 and $2,383,418 respectively, an increase of $2,387,724 or 100%. This increase is primarily due to the increase of installation revenue of $1,885,798 to $2,849,911 over same period in 2011, primarily the result of the Hyatt MSA. Recurring revenue increased $379,725 to $1,894,014 or 25%.

Canada: Canadian hospitality revenue for the nine months ended September 30, 2012 and 2011 was $494,204 and $737,968 respectively, a decrease of $243,764 or 33%. This revenue is primarily variable as it is dependent on hotel guest purchases of video on demand films.

Other Foreign: Other foreign hospitality revenue for the nine months ended September 30, 2012 and 2011 was $103,411and $146,780, respectively, a decrease of $43,369 or 30%.

Residential

Residential revenue for the nine months ended September 30, 2012 and 2011 was $691,384 and $697,819 respectively, a decrease of $6,435 or 1%.

Operational Expenses

Total operating expense for the nine months ended September 30, 2012 and 2011 was $6,055,166 and $3,092,433 respectively; an increase of $2,962,733 or 96%. This increase is primarily due to a one-time charge recognizing a loss attributable to the impairment of assets in the amount of $1,112,470 (more fully described below) and an increase in personnel costs of $1,393,852 to support the execution of the installation of our products and their subsequent support in accordance with the Hyatt MSA dated March 12, 2012.

Our operations department expense increased $923,023 to $1,550,403 in the nine months ended September 30, 2012 compared to the same period in 2011. This increase is primarily due to an increase of $868,923 in payroll and related expenses for increased staffing levels to support our commitments in regards to the Hyatt MSA and approximately $29,000 of office rent.

Our product development department expense increased $313,633 to $837,586 in the nine months ended September 30, 2012 compared to same period in 2011. This increase is primarily due to an increase in payroll and related costs of $334,040 and a decrease of approximately $21,000 in test equipment.

Our selling, general and administrative expenses increased $576,930 to $1,995,343 in the nine months ended September 30, 2012 compared to the same period in 2011. This increase is primarily attributable to an increase in payroll and related costs of $190,889, and approximate increases of $115,000 in professional fees, $65,000 in marketing costs, $90,000 in bad debt expense and $95,000 in various overhead expenses.

Depreciation expense for the nine months ended September 30, 2012 and 2011 was $559,364 and $522,687 respectively, an increase of $36,677 or 7%.

On September 30, 2012 the Company recognized a $1,112,470 loss on the impairment of assets due to circumstances (See note 4) indicating the carrying value of Cardinal Hospitality, Ltd. (“CHL”) assets would not be recoverable from the estimated future cash flows expected to result from their use and eventual disposition. This loss resulted in the write-down of approximately $920,000 of property and equipment, $146,000 of inventory and $46,000 of property receivables.

Our operating loss for the nine months ended September 30, 2012 and 2011 was $5,342,541 and $1,787,512 respectively, an increase of $3,555,029 or 199%. As discussed above, the one-time recognition of a loss on asset impairment and increased personnel costs attributable to the Hyatt MSA were the primary factors that contributed to the increased net loss.

Non-Operating

For the nine months ended September 30, 2012 and 2011, our non-operating income was $406,150 and $195,780 respectively, and increase of $210,370. Non-operating income consists primarily of interest income earned on lease receivables and a gain on the settlement of royalty payable to a studio for VOD content in the amount of $179,834.

Our non-operating expenses for the nine months ended September 30, 2012 and 2011 were $450,455 and $222,107 respectively, an increase of $228,348. This increase is primarily attributable to an increase in interest expense of $98,325 consistent with the increase in our line of credit and an increase in financing costs of $135,340 associated with debt discount expense on warrants issued pursuant to draws against our line of credit.

For the nine months ended September 30, 2012, we reported a net loss of $5,386,846 compared to a net loss of $1,813,839 for the nine months ended September 30, 2011. This increase is due primarily to recognition of a loss on impairment of assets and personnel costs as more fully described above.

FINANCIAL CONDITION

LIQUIDITY & CAPITAL RESOURCES

As of September 30, 2012 we had $2,930,993 in cash and cash equivalents. That amount, in addition to the credit facility provided by Cenfin, LLC, is sufficient to fund operating activities, new product installations, and to continue investing in our new media and entertainment product through September 30, 2013. Working capital at September 30, 2012 was $2,895,728, an increase of approximately $1.2 million compared to December 31, 2011. The increase primarily reflects the proceeds from the sale of equity.

We minimize borrowings under the credit facility by requiring customers to pay a 50% deposit prior to commencement of installation activities. In addition we obtained trade credit from suppliers for a significant portion of installation materials presently held in inventory. Customer deposits and trade credit are significant sources of liquidity. Should the Company be unable to obtain sufficient amounts of trade credit to finance inventory or should delays in installations result in payments under trade lines occurring sooner than deployment of the underlying inventory, borrowings under the credit facility will increase.

Operating Activities

Net cash used by operating activities was $1,823,677 and $1,593,086 for the nine months ended September 30, 2012 and 2011, respectively. The increase in cash used in operations of $230,591 was attributable to the increase in net loss of $3,573,007 less the increase cash provided by operations of $3,342,416. Cash provided by operations included (i) an increase of $1,195,170 in non-cash expenses due to a $1,112,470 loss on asset impairment and other recurring non-cash adjustments such as stock based compensation and the amortization of debt discount, and (ii) an increase of $2,147,246 from the fluctuation in changes in operating assets and liabilities resulting from the Company requiring a 50% deposit at the time of hotel agreement execution and obtaining favorable vendor terms related to significant equipment purchases.

Investing Activities

Net cash provided by investing activities was $395,071 for the nine months ended September 30, 2012, compared to $207,750 used in investing activities during the same period in 2011. The increase in cash provided by investing activities of $602,821 consists of (i) an increase in cash receipts against leases receivable of $185,724, and (ii) a savings of $469,168 resulting from a reduction in equipment installation lease financing provided to customers in 2012 versus 2011, less an increase in capital expenditures of $52,071.

Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2012 and 2011 were $3,980,787 and $1,945,276 respectively. The increase in cash of $2,035,512 is primarily attributable to the sale of common stock as a result of the Company having entered into a Securities Purchase Agreement (“SPA”) on May 4, 2012 with certain investors (collectively, the “Investors”), which resulted in proceeds of $2,993,311 after transaction costs, pursuant to which the Investors purchased Units from Roomlinx for a purchase price of $2.50 per Unit, defined as one share of common stock plus a warrant to purchase one-half share of common stock at an exercise price of $3.75. See Note 7 for further details. As a result of the SPA to fund operations, the Company was able to reduce its need to borrow against its line of credit over the same nine month period by $880,000.

Contractual Obligations

We have operating and capital lease commitments, note payable commitments, and a line of credit commitment. The following table summarizes these commitments at September 30, 2012:

Twelve
Months Ended	Line of		Notes		Lease Obligations				Minimum
September 30,	Credit		Payable		Capital		Operating		Payments

2013	$	-	$	26,008	$	14,143	$	130,225	$	170,376
2014		340,000		13,957		13,210		147,273		514,440
2015		1,106,000		13,957		6,605		152,085		1,278,647
2016		2,130,000		12,794		-		-		2,142,794
2017		1,600,000		-		-		-		1,600,000
	$	5,176,000	$	66,716	$	33,958	$	429,583	$	5,706,257

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 currency translation resulted in a gain of $22,375 for the nine months ended September 30, 2012 compared to a gain of $7,342 for the nine months ended September 30, 2011. 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 vis-à-vis 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 directly affect on our reported consolidated results. We do not hedge against the possible impact of this risk. A ten 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

Management’s Evaluation of Disclosure Controls and Procedures

As of September 30, 2012, our management, including our Chief Executive Officer and Chief Financial Officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b). Based on their review and evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective. 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.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during our fiscal quarter ended September 30, 2012 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

The Company is in receipt of a District Court Civil Summons, dated May 29, 2012, In the matter of “CLC Networks, Inc. and Skada Capital, LLC v. Roomlinx, Inc.”, commenced in the District Court of Boulder County, Colorado (the “Action”). The plaintiffs in the Action claim that the Company owes them certain unpaid sales commissions, including with respect to Hyatt Corporation in connection with that certain Master Services and Equipment Purchase Agreement, as described in the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on March 13, 2012. The Company believes the plaintiffs’ claims are without merit. The Action is currently pending.

Other than the foregoing, no material legal proceedings to which the Company (or any officer or director of the Company, or any affiliate or owner of record or beneficially of more than five percent of the Common Stock, to management’s knowledge) is party to or to which the property of the Company is subject is pending, and no such material proceeding is known by management of the Company to be contemplated.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

10.1 Master Service and Equipment Purchase Agreement, dated March 12, 2012, by and between Hyatt Corporation and the Company incorporated by reference to Exhibit 10.1 of the registrant’s Current Report on Form 10-Q/A (Amendment No. 1) filed on July 27, 2012. *

31.1 Certification of the chief executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 **

31.2 Certification of the chief financial officer to Section 302 of the Sarbanes-Oxley Act of 2002**

32.1 Certification of the chief executive officer and chief financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **

*Portions of this exhibit have been omitted pursuant to an August 6, 2012 Securities and Exchange Commission order granting registrant’s request for confidential treatment filed separately with the Securities and Exchange Commission. Brackets surrounding asterisks in this exhibit denote the omissions.

** Filed herewith

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

	Date:	November 13, 2012

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

	By:	/s/ Anthony DiPaolo
		Anthony DiPaolo
		Chief Financial Officer

	Date:	November 13, 2012

TABLE OF CONTENTS

Part I. Financial Information Item 1. Financial Statements Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations 14 Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk 23 Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures 24 Item 4. Controls and Procedures Part II. Other Information Item 1. Legal Proceedings 26 Item 1. Legal Proceedings Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds 26 Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 6. Exhibits 26 Item 6. Exhibits Item 3 . Quantitative and Qualitative Disclosures About Market Risk Part II - Other Information Item 3. Defaults Upon Senior Securities Item 4. Mine Safety Disclosures Item 5. Other Information

MTWO 10-Q Quarter ended Sept. 30, 2012