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As filed with the Securities and Exchange Commission on May 31 , 2011
 
Registration No. 333- 171776
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM S-1
 
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Amendment No. 1)  
 
ROOMLINX, INC. 

 (Exact name of registrant as specified in its charter)
 
Nevada
 
8742
 
83-0401552
(State or other jurisdiction
of incorporation or organization)
 
(Primary Standard Industrial
Classification Code Number)
 
(I.R.S. Employer
Identification Number)
 
2150 W. 6th Ave., Unit H
Broomfield, CO 80020
(303) 544-1111
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
 
Michael S. Wasik
Chief Executive Officer
Roomlinx, Inc.
2150 W. 6th Ave., Unit H
Broomfield, CO 80020
(303) 544-1111
(Name, address, including zip code, and telephone number, including area code, of agent for service)
 
With copies to:
Alan C. Ederer, Esq.
Westerman Ball Ederer Miller & Sharfstein, LLP
1201 RXR Plaza
Uniondale, NY 11556
Telephone: (516) 622-9200
Facsimile: (516) 622-9212
 
Approximate date of commencement of proposed sale to the public:  From time to time after the effective date of this registration statement, as shall be determined by the Selling Stockholders identified herein.
 
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. þ
 
 
 

 
 
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer o
  
Accelerated filer o
  
Non-accelerated filer o
  
Smaller reporting company þ
       
(Do not check if a smaller reporting
company)
   
 
CALCULATION OF REGISTRATION FEE
 
Title of each class
of securities to be registered
  Number of shares to be registered (1)     Proposed maximum
offering price
per share (2)
   
Proposed maximum
aggregate
offering price
   
Amount of registration
fee(4) 
 
Common stock, par value $.001 per share(3)
   
1,645,485
   
$
2.88
   
$
4,738,997
   
$
550
 
                                 
Common stock, par value $.001 per share(4)
   
21,000
   
$
2.88
   
$
60 ,480
   
$
7
 
                                 
Total
   
1,666,485
   
$
2.88
   
$
4,799,477
   
$
557
 
                                 
 
(1)
Pursuant to Rule 416 under the Securities Act of 1933, as amended, this registration statement also covers such additional shares of common stock as may be issued as a result of stock splits, dividends and combinations.
 
(2)
Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c) of the Securities Act and based upon the average of the closing bid and ask prices of our common stock on January 12, 2011 on the OTC Bulletin Board.
 
(3)
Represents shares of common stock currently issued and outstanding and held by the selling stockholders.
 
(4)
Represents shares of common stock issuable upon exercise of outstanding warrants held by the selling stockholders.
 
(4)
The registration fee with respect to the shares has been previously paid.
 
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 
 

 
 
 
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.  THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.  THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE OF THESE SECURITIES IS NOT PERMITTED.
 
 
   Subject to completion
Dated May 31 , 2011
 
PRELIMINARY PROSPECTUS
 
1,666,485 Shares
 
Roomlinx, Inc.
 
Common Stock
 
The selling stockholders identified on page 48 of this prospectus are offering on a resale basis a total of up to 1,666,485  shares of our common stock, including 1,645,485 shares of our issued and outstanding common stock and 21,000 shares issuable upon the exercise of outstanding warrants.  We will not receive any proceeds from the sale of these shares by the selling stockholders.  We would receive gross proceeds in the approximate amount of $ 60,480 assuming the exercise of all the warrants in full by payment of cash.  To the extent any of these warrants are so exercised, we intend to use the proceeds for general working capital.
 
All costs, expenses and fees in connection with the registration of the shares being offered hereby will be borne by the selling stockholders.  Brokerage commissions and similar selling expenses, if any, attributable to the sale of the shares will be borne by the selling stockholders.
 
            Our common stock trades on the OTC Bulletin Board under the symbol “RMLX”.  On May 19 , 2011, the last sales price of our common stock as reported on the OTC Bulletin Board was $2. 00 per share.
  
We have not authorized anyone to provide information different from that contained in this prospectus. Neither the delivery of this prospectus nor the distribution or sale of the securities offered hereby means that information contained in this prospectus is correct after the date of this prospectus. You should assume that the information contained in this prospectus is accurate only as of the date on the front cover of this prospectus. This prospectus is not an offer to sell or solicitation of an offer to buy these securities in any circumstances under which the offer or solicitation is unlawful.
 
THE SECURITIES OFFERED BY THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK.  FOR MORE INFORMATION, SEE “RISK FACTORS” BEGINNING ON PAGE 4.
 
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
The date of this prospectus is   ___________, 2011.
 


 
 

 

TABLE OF CONTENTS
 
PROSPECTUS SUMMARY
 
1
     
RISK FACTORS
  4
     
NOTE REGARDING FORWARD-LOOKING STATEMENTS
  11
     
DESCRIPTION OF BUSINESS
  12
     
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
  23
     
MANAGEMENT
  35
     
EXECUTIVE AND DIRECTOR COMPENSATION
  38
     
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  41
     
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  43
     
MARKET FOR COMMON EQUITY AND RELATED MATTERS
  46
     
USE OF PROCEEDS
  47
     
SELLING STOCKHOLDERS
  47
     
PLAN OF DISTRIBUTION
  50
     
DESCRIPTION OF SECURITIES
  54
     
INTEREST OF NAMED EXPERTS AND COUNSEL
  56
     
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
  57
     
ABOUT THIS PROSPECTUS
  57
     
WHERE YOU CAN FIND MORE INFORMATION
  58
     
VALIDITY OF COMMON STOCK
  58
     
TRANSFER AGENT
  58
     
EXPERTS
  58
     
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  58
     
INCORPORATION BY REFERENCE
  58
     
FINANCIAL STATEMENTS
 
F-1

 
 

 

PROSPECTUS SUMMARY
 
This summary provides a brief overview of the key aspects of this offering.  Because it is only a summary, it does not contain all of the detailed information contained elsewhere in this prospectus or in the documents incorporated by reference into this prospectus or included as exhibits to the registration statement that contains this prospectus.  This summary may not contain all of the information that may be important to you.  We urge you to read this entire prospectus carefully, including the risks of investing in our common stock discussed under “Risk Factors” and the financial statements and other information that is incorporated by reference into this prospectus, before making an investment decision. 
 
All references in this prospectus to “Roomlinx”, “we”, “us”, “our”, “the Company”, “the Corporation”  or “our Company” refer to Roomlinx, Inc.
 
The Company
 
Roomlinx, Inc. was formed in 1998 and is incorporated under the laws of the State of Nevada.  Our principal executive office is located at 2150 W 6th Avenue, Broomfield, CO 80020.  Our telephone number is (303) 544-1111 and our internet address is www.roomlinx.com.  Our common stock trades on the OTC Bulletin Board under the symbol “RMLX”.
 
On October 1, 2010, Roomlinx, Inc. acquired 100% of the membership interests of Canadian Communications, LLC and its wholly owned subsidiaries, Cardinal Broadband, LLC, Cardinal Connect, LLC, and Cardinal Hospitality, Ltd.  The acquisition of Canadian Communications, LLC also included a 50% joint venture interest in Arista Communications, LLC; Roomlinx, Inc. has maintained this 50% joint venture interest. Subsequent to the acquisition, the assets and liabilities of Canadian Communications, LLC, Cardinal Connect, LLC, and Cardinal Broadband, LLC were transferred to Roomlinx, Inc.  Cardinal Broadband became a division of Roomlinx, Inc., and management plans to dissolve the separate entities Canadian Communications, LLC, Cardinal Broadband, LLC, and Cardinal Connect, LLC.  Cardinal Hospitality, Ltd. remains a separate and wholly owned subsidiary of Roomlinx, Inc.
 
The Company’s primary business is focused on providing in-room media and entertainment solutions along with wired networking solutions and Wireless Fidelity networking solutions, also known as Wi-Fi, for high speed internet access to hotels, resorts, and time share properties. Subsequent to the acquisition of Canadian Communications, LLC, the Company also provides both wired and wireless internet access, satellite television service, and telephone service (both POTS and Voice over Internet Protocol (“VOIP”), to residential and business customers.  In addition, the Company now provides Video-on-Demand service to the hotel and timeshare industry throughout Canada, the United States, Mexico, and Aruba. As of December 31, 2010, our current customer base consisted of 253 hospitality properties representing approximately 39,263 hotel rooms served, and 19 residential communities and small businesses, representing an additional 2,100 customers.
 
Recent Financial Developments
 
On July 27, 2010, the Company effected a 1-for-100 reverse split of its outstanding shares of Common Stock.  All references to shares of Common Stock and prices per share of Common Stock contained in this prospectus and the Registration Statement of which it forms a part reflect and give effect to that reverse split.
 
On June 5, 2009, the Company entered into a $5,000,000 Revolving Credit, Security and Warrant Purchase Agreement with Cenfin LLC.  On March 11, 2010, the terms of the agreement were amended to increase the credit limit to $25,000,000.  Effective July 15, 2010, the agreement was further amended to modify the interest rate and the exercise price of warrants issuable in connection with the agreement.
 
On September 9, 2009, LAM Opportunity Fund LTD converted $280,200 principal amount of Roomlinx Convertible Debentures into 140,100 shares of Roomlinx common stock pursuant to the terms of the Convertible Debentures.
 
 
1

 
 
On September 9, 2009, the Company entered into a Debt Conversion Agreement, pursuant to which all then outstanding Debentures (in an aggregate principal amount of $1,869,800) were converted into an aggregate of 934,900 shares of Roomlinx common stock at a conversion price of $2.00 per share, the conversion price specified in the Debentures.
 
On April 29, 2010, Roomlinx issued and sold to certain investors an aggregate of 250,000 shares of common stock at a price $4.00 per share for an aggregate of $1,000,000.  The investors were also granted certain registration rights with respect to the purchased shares pursuant to a Registration Rights Agreement entered into by Roomlinx and the investors, pursuant to which Registration Statement of which this Prospectus forms a part has been filed.
 
On August 18, 2010, Roomlinx issued and sold 187,500 shares to certain investors at a price of $4.00 per share for an aggregate purchase price of $750,000.  The investors were also granted certain registration rights with respect to the purchased shares pursuant to a Registration Rights Agreement entered into by Roomlinx and the investors, pursuant to which Registration Statement of which this prospectus forms a part has been filed.
 
On October 1, 2010, Roomlinx, Inc. acquired 100% of the membership interests of Canadian Communications, LLC for aggregate consideration of $500,000 in cash and the issuance of 270,000 shares of Roomlinx’s common stock.  .
 
On October 1, 2010, Roomlinx appointed Edouard A. Garneau as its Chief Financial Officer and entered into an Employment Agreement with him.  Edouard A. Garneau was the President of Canadian Communications, LLC .  Effective with Mr. Garneau’s appointment as Chief Financial Officer, Mike Wasik, Roomlinx’s Chief Executive Officer, no longer holds the title or responsibilities of the Chief Financial Officer of Roomlinx.

On April 26, 2011, the Company drew down on $200,000 under its revolving line of credit, pursuant to its existing Credit Agreement with Cenfin LLC.
 
For more information on these and other recent developments, see “DESCRIPTION OF BUSINESS - Recent Developments” beginning on page 12.
 
Risk Factors
 
An investment in the shares of our common stock involves a high degree of risk and may not be an appropriate investment for persons who cannot afford to lose their entire investment.  For a discussion of some of the risks you should consider before purchasing shares of our common stock, you are urged to carefully review and consider the section entitled “Risk Factors” beginning on page 4 of this prospectus.
 

 
2

 

The Offering
 
The selling stockholders identified on page  48 of this prospectus are offering on a resale basis a total of up to 1, 666,485  shares of our common stock, including 1,645,485 shares of our issued and outstanding common stock and 21,000 shares issuable upon the exercise of outstanding warrants.  For a complete description of the terms and conditions of our common stock, you are referred to the section in this prospectus entitled “Description of Securities.”
 
Shares of Common Stock offered
   
1,666,485
 
         
Shares of Common Stock outstanding before the offering (1)
 
5,113,423
 
         
Shares of Common Stock outstanding after the offering (2)
 
5,134,423
 
         
Common Stock OTCBB trading symbol
 
RMLX
 
 
(1)
Based on the number of shares outstanding as of May 20 , 2011, but does not include (i) 660,550 shares issuable upon the exercise of outstanding and exercisable warrants to purchase our common stock and (ii) 366,194 shares issuable upon the exercise of outstanding options to purchase our common stock, of which 129,027 are not yet exercisable.
(2)
Based on the number of shares outstanding as of May 20 , 2011, but does not include (i) 639,550 shares issuable upon the exercise of outstanding and exercisable warrants to purchase our common stock and (ii) 366,194 shares issuable upon the exercise of outstanding options to purchase our common stock, of which 129,027 are not yet exercisable.
 
The offering will terminate on the date on which (i) all of the issued and outstanding shares of our common stock being offered hereby have been sold hereunder and (ii) all of the Warrants expire and/or have been exercised in full for shares of our common stock and such shares have been sold hereunder.
 
Use of Proceeds
 
We will not receive any proceeds from the sale of the common stock by the selling stockholders pursuant to this prospectus. However, we will receive the applicable exercise price upon the issuance of Warrant Shares in the event that any Warrants are properly exercised.   If all such Warrants are properly exercised in full by payment of cash, the total proceeds we would receive are $ 60,480 .  We expect to use the proceeds, if any, that we receive from the exercise of Warrants for general working capital purposes.

 
3

 

RISK FACTORS
 
The purchase of shares of our common stock is very speculative and involves a very high degree of risk.  An investment in our company is suitable only for the persons who can afford the loss of their entire investment.  Accordingly, investors should carefully consider the following risk factors, as well as other information set forth herein, in making an investment decision with respect to our securities. We have sought to identify what we believe to be all material risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise.
 
Risks Relating to Our Business
 
We Have Only a Limited Operating History, Which Makes It Difficult to Evaluate an Investment in Our Common Stock.
 
We have only a limited operating history on which you can evaluate our business, financial condition and operating results. We face a number of risks encountered by early stage technology companies that participate in new technology markets, including our ability to:
 
Maintain our engineering and support organizations, as well as our distribution channels;
Negotiate and maintain favorable usage rates with our vendors;
Retain and expand our customer base at profitable rates;
Recoup our expenses associated with the wireless devices we resell to subscribers;
Manage expanding operations, including our ability to expand our systems if our subscriber base grows substantially;
Attract and retain management and technical personnel; and
Anticipate and respond to market competition and changes in technologies as they develop and become available.
 
We may not be successful in addressing or mitigating these risks and uncertainties, and if we are not successful our business could be significantly and adversely affected.
 
Some Of Our Supplies Are Provided By One Supplier Each
 
The remote control devices required to utilize our services are currently supplied by a single supplier.  The content for our unlimited movie services is currently supplied by a single supplier.  Our set top boxes are currently supplied by a single supplier, although we are currently testing set top boxes from additional suppliers.  It would require some time in order for us to replace a supplier.  Therefore, in the event that the supply of any of these items from any of these suppliers was to be interrupted without sufficient notice, it would have a material adverse impact on us.
 
To Generate Increased Revenue We Will Have to Increase Substantially the Number of Our Customers, Which May be Difficult to Accomplish.
 
Adding new customers will depend to a large extent on the success of our direct and indirect distribution channels and acquisition strategy, and there can be no assurance that these will be successful. Our customers experiences may be unsatisfactory to the extent that our service malfunctions or our customer care efforts, including our website and 800 number customer service efforts, do not meet or exceed subscriber expectations. In addition, factors beyond our control, such as technological limitations of the current generation of devices, which may cause our customers’ experiences with our service to not meet their expectations, can adversely affect our revenues.
 
We May Acquire or Make Investments in Companies or Technologies That Could Cause Loss of Value to Our Stockholders and Disruption of Our Business.
 
 
4

 
 
Subject to our capital constraints, we intend to continue to explore opportunities to acquire companies or technologies in the future. Entering into an acquisition entails many risks, any of which could adversely affect our business, including:
 
Failure to integrate the acquired assets and/or companies with our current business;
The price we pay may exceed the value we eventually realize;
Loss of share value to our existing stockholders as a result of issuing equity securities as part or all of the purchase price;
Potential loss of key employees from either our current business or the acquired business;
Entering into markets in which we have little or no prior experience;
Diversion of management’s attention from other business concerns;
Assumption of unanticipated liabilities related to the acquired assets; and
The business or technologies we acquire or in which we invest may have limited operating histories, may require substantial working capital, and may be subject to many of the same risks we are.
 
We Have Limited Resources and We May be Unable to Effectively Support Our Operations.
 
We must continue to develop and expand our systems and operations in order to remain competitive. We expect this thesis to place strain on our managerial, operational and financial resources. We may be unable to develop and expand our systems and operations for one or more of the following reasons:
 
We may not be able to retain at reasonable compensation rates qualified engineers and other employees necessary to expand our capacity on a timely basis;
We may not be able to dedicate the capital necessary to effectively develop and expand our systems and operations; and
We may not be able to expand our customer service, billing and other related support systems.
 
If we cannot manage our operations effectively, our business and operating results will suffer.
 
Our Business Prospects Depend in Part on Our Ability to Maintain and Improve Our Services as Well as to Develop New Services.
 
We believe that our business prospects depend in part on our ability to maintain and improve our current services and to develop new services. Our services will have to achieve market acceptance, maintain technological competitiveness and meet an expanding range of customer requirements. We may experience difficulties that could delay or prevent the successful development, introduction or marketing of new services and service enhancements. Additionally, our new services and service enhancements may not achieve market acceptance.
 
If We Do Not Respond Effectively and on A Timely Basis to Rapid Technological Change, Our Business Could Suffer.
 
Our industry is characterized by rapidly changing technologies, industry standards, customer needs and competition, as well as by frequent new product and service introductions. Our services are integrated with the computer systems of our customers. We must respond to technological changes affecting both our customers and suppliers. We may not be successful in developing and marketing, on a timely and cost-effective basis, new services that respond to technological changes, evolving industry standards or changing customer requirements. Our success will depend, in part, on our ability to accomplish all of the following in a timely and cost-effective manner:
 
Effectively using and integrating new technologies;
Continuing to develop our technical expertise;
Enhancing our engineering and system design services;
 
 
5

 
 
Developing services that meet changing customer needs;
Advertising and marketing our services; and
Influencing and responding to emerging industry standards and other changes.
 
We Depend on Retaining Key Personnel. The Loss of Our Key Employees Could Materially Adversely Affect Our Business.
 
Due to the technical nature of our services and the dynamic market in which we compete, our performance depends in part on our retaining key employees. Competitors and others may attempt to recruit our employees. A major part of our compensation to our key employees is in the form of stock option grants. A prolonged depression in our stock price could make it difficult for us to retain our employees and recruit additional qualified personnel.
 
An Interruption in the Supply of Products and Services That We Obtain From Third Parties Could Cause a Decline in Sales of Our Services.
 
In designing, developing and supporting our services, we rely on many third party providers. These suppliers may experience difficulty in supplying us products or services sufficient to meet our needs or they may terminate or fail to renew contracts for supplying us these products or services on terms we find acceptable. If our liquidity deteriorates, our vendors may tighten our credit, making it more difficult for us to obtain suppliers on terms satisfactory to us. Any significant interruption in the supply of any of these products or services could cause a decline in sales of our services, unless and until we are able to replace the functionality provided by these products and services. We also depend on third parties to deliver and support reliable products, enhance their current products, develop new products on a timely and cost-effective basis and respond to emerging industry standards and other technological changes.
 
We May Face Increased Competition, Which May Negatively Impact Our Prices for Our Services or Cause Us to Lose Business Opportunities.
 
The market for our services is becoming increasingly competitive. Our competitors may use the same products and services in competition with us. With time and capital, it would be possible for competitors to replicate our services and offer similar services at a lower price. We expect that we will compete primarily on the basis of the functionality, breadth, quality and price of our services. Our current and potential competitors include:
 
Other wireless high speed internet access providers, such as SDSN, Guest-Tek Wayport, Greentree, Core Communications and StayOnLine;
Other viable network carriers, such as SBC, Comcast, Sprint and COX Communications; and
Other internal information technology departments of large companies.
 
Many of our existing and potential competitors have substantially greater financial, technical, marketing and distribution resources than we do. Additionally, many of these companies have greater name recognition and more established relationships with our target customers. Furthermore, these competitors may be able to adopt more aggressive pricing policies and offer customers more attractive terms than we can. In addition, we have established strategic relationships with many of our potential competitors. In the event such companies decide to compete directly with us, such relationships would likely be terminated, which could have a material adverse effect on our business and reduce our market share or force us to lower prices to unprofitable levels.
 
We May be Sued by Third Parties For Infringement of Their Proprietary Rights and We May Incur Substantial Defense Costs and Possibly Substantial Royalty Obligations or Lose The Right to Use Technology Important To Our Business.
 
Any intellectual property claims, with or without merit, could be time consuming and expensive to litigate or settle and could divert management attention from administering our business. A third party asserting infringement claims against us or our customers with respect to our current or future products may materially adversely affect us by, for example, causing us to enter into costly royalty arrangements or forcing us to incur settlement or litigation costs.
 
 
6

 
 
Our Quarterly Operating Results are Subject to Significant Fluctuations and, As A Result, Period-To-Period Comparisons of Our Results of Operations are Not Necessarily Meaningful.
 
The success of our brand building and marketing campaigns;
Price competition from potential competitors;
The amount and timing of operating costs and capital expenditures relating to establishing the Company’s business operations;
The demand for and market acceptance of our products and services;
Changes in the mix of services sold by our competitors;
Technical difficulties or network downtime affecting communications generally;
The ability to meet any increased technological demands of our customers; and
Economic conditions specific to our industry.
 
Therefore, our operating results for any particular quarter may differ materially from our expectations or those of security analysts and securities traders and may not be indicative of future operating results. The failure to meet expectations may cause the price of our common stock to decline. Since we are susceptible to these fluctuations, the market price of our common stock may be volatile, which can result in significant losses for investors who purchase our common stock prior to a significant decline in our stock price.
 
 A Significant Amount of Our Common Stock is Held by a Few Stockholders
 
As of May 20 , 2011, Matthew Hulsizer and Jennifer Just, directly and indirectly, together with certain of their affiliates, held  1,492,522 (or approximately 29.2 %) of our outstanding shares of common stock and could, therefore, have a significant influence on us.
 
Potential Fluctuations In Quarterly Operating Results
 
Our quarterly operating results may fluctuate significantly in the future as a result of a variety of factors, most of which are outside of our control, including: the demand for our products and services; seasonal trends in purchasing; the amount and timing of capital expenditures and other costs relating to the development of our products and services; price competition or pricing changes in the industry; technical difficulties or system downtime; general economic conditions, and economic conditions specific to the hospitality industry. Our quarterly results may also be significantly impacted by the impact of the accounting treatment of acquisitions, financing transactions or other matters. Due to the foregoing factors, among others, it is likely that our operating results will fall below our expectations or those of investors in some future quarter.
 
Limitation of Liability and Indemnification of Officers and Directors
 
Our officers and directors are required to exercise good faith and high integrity in the management of our affairs. Our Articles of Incorporation provides, however, that our officers and directors shall have no personal liability to us or our stockholders for damages for any breach of duty owed to us or our stockholders, unless they breached their duty of loyalty, did not act in good faith, knowingly violated a law, or received an improper personal benefit.  Our Articles of Incorporation and By-Laws also provide for the indemnification by us of our officers and directors against any losses or liabilities they may incur by reason of their serving in such capacitates, provided that they do not breach their duty of loyalty, act in good faith, do not knowingly violate a law, and do not received an improper personal benefit. Additionally, we have entered into individual  Indemnification Agreements with each of our directors and officers to implement with more specificity the indemnification provisions provided by the Company’s By-Laws and provide, among other things, that to the fullest extent permitted by applicable law, the Company will indemnify such director or officer against any and all losses, expenses and liabilities arising out of such director’s or officer’s service as a director or officer of the Company, as the case may be. The Indemnification Agreements also contain detailed provisions concerning expense advancement and reimbursement.
 
 
7

 
 
Disclosure Controls and Procedure and Potential Inability to Make Required Public Filings
 
As of March 31 , 2011, we have 31 full-time employees .   Given our limited personnel, we may be unable to maintain effective controls to insure that we are able to make all required public filings in a timely manner. In fact, from December 27, 2005 until May 14, 2009, our Common Stock was removed from listing from the OTC Bulletin Board as a result of our failure to timely make all our required public filings .   If we do not make all public filings in a timely manner, our shares of common stock may again be delisted from the OTC Bulletin Board and we could also be subject to regulatory action and/or lawsuits by stockholders.  
 
Risks Relating to Our Common Stock
 
Resale of Shares Offered by this Prospectus Could Adversely Affect the Market Price of Our Common Stock and Our Ability to Raise Additional Equity Capital
 
The sale or availability for sale, of common stock in the public market pursuant to this prospectus may adversely affect the prevailing market price of our common stock and may impair our ability to raise additional capital by selling equity or equity-linked securities.  This prospectus covers the resale of a significant number of shares of our common stock. In fact, the registration statement will make publicly available for resale up to 1,666,485 shares of our common stock. This figure represents approximately 32.5 % of the shares of our common stock outstanding immediately after the effectiveness of this registration statement (assuming the issuance of all of the shares registered under this registration statement).  The resale of a substantial number of shares of our common stock in the public market pursuant to this offering, and afterwards, could adversely affect the market price for our common stock and make it more difficult for you to sell our shares at times and prices that you feel are appropriate. Furthermore, we expect that, because there are a large number of shares offered hereby, the selling stockholder will continue to offer shares covered by this prospectus for a significant period of time, the precise duration of which we cannot predict. Accordingly, the adverse market and price pressures resulting from this offering may continue for an extended period of time and continued negative pressure on the market price of our common stock could have a material adverse effect on our ability to raise additional equity capital.
 
Articles of Incorporation Grants the Board of Directors the Power to Designate and Issue Additional Shares of Preferred Stock.
 
Our Articles of Incorporation grants our Board of Directors authority to, without any action by our stockholders, designate and issue, from our authorized capital, shares in such classes or series as it deems appropriate and establish the rights, preferences, and privileges of such shares, including dividends, liquidation and voting rights. The rights of holders of classes or series of preferred stock that may be issued could be superior to the rights of the common stock offered hereby.  Our board of directors’ ability to designate and issue shares could impede or deter an unsolicited tender offer or takeover proposal. Further, the issuance of additional shares having preferential rights could adversely affect other rights appurtenant to the shares of common stock offered hereby. Any such issuances will dilute the percentage of ownership interest of our stockholders and may dilute our book value.
 
Lack of Liquid Trading Market for Common Stock
 
Although our stock is quoted on the OTC Bulletin Board (the “OTCBB”) under the symbol “RMLX”, the market for our common stock is not liquid as there have been days when our stock did not trade even though it was quoted.
 
 
8

 
 
Limited Market Due To Penny Stock
 
Our stock differs from many stocks, in that it is considered a penny stock. The Securities and Exchange Commission has adopted a number of rules to regulate penny stocks. These rules include, but are not limited to, Rules 3a5l-l, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and Exchange Act of 1934, as amended. Because our securities probably constitute penny stock within the meaning of the rules, the rules would apply to our securities and us. The rules may further affect the ability of owners of our stock to sell their securities in any market that may develop for them. There may be a limited market for penny stocks, due to the regulatory burdens on broker-dealers. The market among dealers may not be active. Investors in penny stock often are unable to sell stock back to the dealer that sold them the stock. The mark-ups or commissions charged by the broker-dealers may be greater than any profit a seller may make. Because of large dealer spreads, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor. In some cases, the stock may fall quickly in value. Investors may be unable to reap any profit from any sale of the stock, if they can sell it at all.
 
Stockholders should be aware that, according to the Securities and Exchange Commission Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. These patterns include: control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; “boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons; excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.
 
Furthermore, the penny stock designation may adversely affect the development of any public market for our shares of common stock or, if such a market develops, its continuation. Broker-dealers are required to personally determine whether an investment in penny stock is suitable for customers. Penny stocks are securities (i) with a price of less than five dollars per share; (ii) that are not traded on a recognized” national exchange; (iii) whose prices are not quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks must still meet requirement (i) above); and (iv) of an issuer with net tangible assets less than $2,000,000 (if the issuer has been in continuous operation for at least three years) or $5,000,000 (if in continuous operation for less than three years), or with average annual revenues of less than $6,000,000 for the last three years. Section 15(g) of the Exchange Act and Rule 15g-2 of the Commission require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor’s account. Potential investors in our common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be penny stock. Rule 15g-9 of the Commission requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor.
 
This procedure requires the broker-dealer to (i) obtain from the investor information concerning his financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for the Company’s stockholders to resell their shares to third parties or to otherwise dispose of them.
 
The Trading Price Of Our Common Stock May Fluctuate Significantly Due To Factors Beyond Our Control
 
 
9

 
 
The trading price of our common stock will be subject to significant fluctuations in response to numerous factors, including:
 
 
Variations in anticipated or actual results of operations;
 
Announcements of new products or technological innovations by us or our competitors;
 
Changes in earnings estimates of operational results by analysts;
 
Inability of market makers to combat short positions on the stock;
 
Inability of the market to absorb large blocks of stock sold into the market; and
 
Comments about us or our markets posted on the Internet.
 
Moreover, the stock market from time to time has experienced extreme price and volume fluctuations, which have particularly affected the market prices for emerging growth companies and which often have been unrelated to the operating performance of the companies. These broad market fluctuations may adversely affect the market price of our common stock. If our stockholders sell substantial amounts of their common stock in the public market, the price of our common stock could fall. These sales also might make it more difficult for us to sell equity or equity related securities in the future at a price we deem appropriate.
 
We Do Not Intend to Pay Dividends on Our Common Stock.
 
We have never paid or declared any cash dividends on our common stock and intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares of common stock unless they sell them.
 
Sarbanes-Oxley and Federal Securities Laws Reporting Requirements Can Be Expensive
 
As a public reporting company, we are subject to the Sarbanes-Oxley Act of 2002, as well as the information and reporting requirements of the Securities Exchange Act of 1934, as amended, and other federal securities laws. The costs of compliance with the Sarbanes-Oxley Act and of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC, and furnishing audited reports to stockholders, are significant and may increase in the future.

 
10

 
 
CAUTIONARY STATEMENT NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This Prospectus 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.  Forward-looking statements may be identified by words such as “believes”, “expects”, “anticipates”, “estimates”, “projects”, “intends”, “should”, “seeks”, “future”, continue”, or the negative of such terms, or other comparable terminology. 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.
 
Forward-looking statements are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are based on our beliefs as well as assumptions made by and information currently available to us.  Factors that could cause actual results to differ materially include, but are not limited to:
 
the volume and timing of systems sales and installations, the length of sales cycles and the installation process and the possibility that 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;
our ability to establish and maintain strategic relationships;
the possibility of product-related liabilities;
risks related to third-party suppliers and our ability to obtain, use or successfully integrate third-party licensed technology;
our ability to attract and retain qualified personnel;
the ability to successfully acquire and integrate Canadian Communications LLC;
regulatory and economic developments; and
those factors discussed in “Risk Factors” in our periodic filings with the SEC.
 
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 these 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.
 
Unless otherwise required by applicable law, the Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

 
11

 

DESCRIPTION OF BUSINESS
 
The following discussion 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 this prospectus.
 
General
 
As used in this Prospectus and the Registration Statement of which it forms a part, references to “Roomlinx”, “the Company”, “we”, “our”, “ours”, and “us” refer to Roomlinx, Inc. and consolidated Subsidiaries, unless otherwise indicated.
 
We prepare our financials in United States dollars and in accordance with generally accepted principles as applied in the United States, referred to U.S. GAAP.  In this Annual Report, references to “$” and “dollars” are to United States dollars and “CDN” are to Canadian dollars.
 
Background
 
Roomlinx, Inc.
 
Roomlinx, Inc. was formed in 1998, is incorporated under the laws of the state of Nevada, and has its headquarters at 2150 W 6 th Avenue Unit H, Broomfield, CO 80020.  Our telephone number is (303) 544-1111 and our internet address is www.roomlinx.com.  Our common stock trades on the OTC Bulletin Board under the symbol “RMLX”.
 
On October 1, 2010, Roomlinx, Inc. acquired 100% of the membership interests of Canadian Communications, LLC and its wholly owned subsidiaries, Cardinal Broadband, LLC, Cardinal Connect, LLC, and Cardinal Hospitality, Ltd.  The acquisition of Canadian Communications, LLC also included a 50% joint venture interest in Arista Communications, LLC; Roomlinx, Inc. has maintained this 50% joint venture interest. Subsequent to the acquisition, the assets and liabilities of Canadian Communications, LLC, Cardinal Connect, LLC, and Cardinal Broadband, LLC were transferred to Roomlinx, Inc.  Cardinal Broadband became a division of Roomlinx, Inc., and management plans to dissolve the separate entities Canadian Communications, LLC, Cardinal Broadband, LLC, and Cardinal Connect, LLC.  Cardinal Hospitality, Ltd. remains a separate and wholly owned subsidiary of Roomlinx, Inc.
 
Cardinal Broadband, a Division of Roomlinx, Inc.
 
Cardinal Broadband, LLC was formed in 2005 as a Colorado Limited Liability Company.  Pursuant to the acquisition of Canadian Communications, LLC on October 1, 2010, Roomlinx, Inc. became the 100% member of Cardinal Broadband, LLC.  Subsequent to the acquisition, Cardinal Broadband became a division of Roomlinx, Inc., and management plans to dissolve the Limited Liability Company in 2011.
 
Cardinal Hospitality, Ltd.
 
Cardinal Hospitality, Ltd. was formed in September of 2005, and is incorporated in British Columbia, Canada.  Pursuant to the October 1, 2010 acquisition of Canadian Communications, LLC, Roomlinx, Inc. became the sole shareholder of Cardinal Hospitality, Ltd.  It remains a separate and wholly owned subsidiary of Roomlinx, Inc.
 
Arista Communications, LLC.
 
Arista Communications, LLC is a joint venture between Cardinal Broadband and Wiens Real Estate Ventures, LLC, with each entity having a 50% membership interest.
 
 
12

 
 
Business
 
The Company’s primary business is focused on providing in-room media and entertainment solutions along with wired networking solutions and Wireless Fidelity networking solutions, also known as Wi-Fi, for high speed internet access to hotels, resorts, and time share properties. Subsequent to the acquisition of Canadian Communications, LLC, the Company also provides both wired and wireless internet access, satellite television service, and telephone service (both POTS and Voice over Internet Protocol (“VOIP”), to residential and business customers.  In addition, the Company now provides Video-on-Demand service to the hotel and timeshare industry throughout Canada, the United States, Mexico, and Aruba. As of December 31, 2010, our current customer base consisted of 253 hospitality properties representing approximately 39,263 hotel rooms served, and 19 residential communities and small businesses, representing an additional 2,100 customers.
 
Roomlinx, Inc.
 
Roomlinx’ wired and wireless networking solution offers easy to use access, providing instant and seamless connections for laptop users from anywhere throughout a property, including guest rooms, meeting rooms, back office and public areas, over a high-speed connection. Users on this network have access to home and corporate email accounts and Virtual Private Networks, also known as VPNs. Guests have flexible billing options, choosing from any one of free service, flat rate, time-based usage or unlimited. In addition these users can expand the service to include value-added services such as wireless point of sale, maintenance, check-in and internet telephony services.
 
The Roomlinx in-room media and entertainment products include its proprietary Interactive TV platform, internet, and free-to-guest and on-demand programming.     Roomlinx provides premium applications for internet-based business and entertainment media to venues serving the visitor-based market such as hotels, resorts, and time share properties.  The Interactive TV offering includes a broad range of content and features to satisfy guests while maximizing revenue opportunities for the hotelier.  The solution includes movies, international and US television programming, music and news, games, local travel and concierge information, and business productivity tools that include desktop applications, conferencing and printing applications.
 
The Company generates revenue through:
 
1.  
Ongoing connectivity service and support contracts
2.  
Network design and installation services
3.  
Delivery of content and advertising
4.  
Delivery of business and entertainment applications
5.  
E-commerce
6.  
The customization of its software for the in-room media product
7.  
Delivery of pay-per-view content
 
 
13

 
 
The following are examples of three different custom user interfaces of the Roomlinx Interactive TV platform in use today:
 
(IMAGE)
 
 
14

 
 
Cardinal Broadband, a Division of Roomlinx, Inc.
 
Cardinal Broadband offers residential and business customers telecommunication services including telephone, satellite television, and wired and wireless internet access.  Cardinal Broadband is a Certified Local Exchange Carrier (“CLEC”), and as such has a tariff filed with the Colorado Public Utility Commission that allows it to provide traditional land line services throughout Colorado.  Cardinal Broadband offers “bundled” service wherever possible, meaning that they can provide telephone, television, and internet service to the same customer, allowing a single point of contact for customer service and a single invoice for  multiple services.
 
Telephone service is provided through traditional, analog “twisted pair” lines, as well as digital Voice Over Internet Protocol.  Analog phone service is typically provided via an Interconnection agreement with Qwest Communications, which allows Cardinal Broadband to resell Qwest service through their wholesale and retail accounts with Qwest.  VOIP service is provided at properties where Cardinal Broadband maintains a broadband internet service to the end customer, allowing Cardinal Broadband to provide digital phone service (VOIP) over the same lines as their internet service.
 
Television service is typically provided via Cardinal Broadband’s agreements with DISH Networks 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. Cardinal Broadband provisions and manages broadband access to their customers through multiple provisioning methods:
 
1.  
Wholesale method where Cardinal Broadband owns and controls the Internet circuit; and
2.  
Resale method where Cardinal Broadband utilizes an affiliated third party to provide the Internet circuit.
 
Cardinal Broadband generates revenue through:
 
1)  
Delivery of telephone service, billed on a monthly basis;
2)  
Delivery of internet access, billed on a monthly basis;
3)  
Delivery of television service, billed by the satellite provider with monthly commissions paid to Cardinal Broadband by the provider;
4)  
Installation and maintenance revenue; and
5)  
Management fees for the management of affiliated telecommunication systems.
 
Cardinal Hospitality, Ltd.
 
Cardinal Hospitality, Ltd (“CHL”) supplies video-on-demand services to the hospitality industry.  CHL operates systems throughout Canada.  CHL, a British Columbia corporation, was formed in 2006 with the acquisition of the proprietary Video-on-Demand (VOD) technology formerly offered through GalaVu Entertainment Networks.  CHL also acquired the existing contracts of GalaVu.  CHL became a wholly owned subsidiary of Roomlinx with the acquisition of Canadian Communications on October 1, 2010.  CHL offers a full selection of video-on-demand services and technology; including first non-theatrical release Hollywood motion pictures, adult, and specialty content.
 
CHL is based in Halifax, Nova Scotia, and is owned and managed by Roomlinx.  CHL is the second largest provider of VOD in Canada, with approximately 5% of the total available rooms and close to 50% of those rooms currently offering VOD.
 
Revenue is generated as follows:
 
1)  
Pay-per-view movies and specialty content; and
2)  
Sales of VOD systems.
 
 
15

 
 
Arista Communications, LLC.
 
Arista Communications, LLC (“Arista Com”) is a joint venture with the developer of the Arista residential/retail/office development in Broomfield, Colorado, formed to provide telecommunication services to the Arista community.  Arista Com provides telephone, television, and internet connectivity to the residents and businesses of the Arista development, including the 1 st Bank Center (formally the Broomfield Event Center), an 8,000-seat music and sports venue.  Roomlinx owns a 50% membership interest in Arista Com through its Cardinal Broadband division.  Cardinal Broadband manages the operations of Arista Com.
 
Highlights
 
The highlights and business developments for the year ended December 31, 2010 include the following:
 
v
Total revenues increased 84% and gross profit increased 22%.
 
v
Shareholder equity increased 314%
 
v
US hospitality revenues increased 62%
 
v
Foreign hospitality revenues increased 446%
 
v
Roomlinx was awarded the pilot project for Hyatt Corporation and successfully installed Interactive TV, Satellite HD TV, and a High Speed Internet network into the Andaz on 5 th Avenue in New York City.
 
v
Roomlinx installed its Interactive TV platform into our largest property to date – a 610 room hotel in Chicago.
 
v
Successfully integrated our Interactive TV platform with ATT’s wired and wireless network at a major luxury brand hotel.
 
v
Successfully completed the acquisition of Canadian Communications LLC and its wholly owned subsidiaries.
 
v
Created a Free-To-Guest TV division giving them the ability and expertise to install and support Satellite TV for Hotels and MDUs.
 
v
Increased our channel sales agents from 23 in 2009 to over 30 by the end of 2010.
 
v
Rolled out version 2.5 of the Roomlinx Interactive TV platform.
 
Recent Financial Developments
 
On June 5, 2009, the Company entered into a $5,000,000 Revolving Credit, Security and Warrant Purchase Agreement (the “Credit Agreement”) with Cenfin LLC, a Delaware limited liability company.  On March 11, 2010, the terms of the agreement were amended to increase the credit limit to $25,000,000. On July 30, 2010, with effect as of July 15, 2010, the terms of the agreement were amended to change (1) the interest rate to the Federal Funds Rate plus 5% and (2) the strike price of warrants issued in connection with any draws of the line of credit after the first $5,000,000 of borrowings after July 15, 2010 from $2.00 per share to the fair market value of the Company’s common stock on the date of such draw.
 
On September 9, 2009, LAM Opportunity Fund LTD converted $280,200 principal amount of Roomlinx Convertible Debentures into 140,100 shares of Roomlinx common stock pursuant to the terms of the Convertible Debentures.
 
 
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On September 9, 2009, the Company entered into a Debt Conversion Agreement , pursuant to which all then outstanding Debentures (in an aggregate principal amount of $1,869,800) were converted into an aggregate of 934,900 shares of Roomlinx common stock at a conversion price of $2.00 per share, the conversion price specified in the Debentures.
 
On April 29, 2010, Roomlinx entered into a securities purchase agreement with investors for an aggregate of 250,000 shares of common stock .   The shares were purchased at $4.00 per share for an aggregate of $1,000,000. The investors were also granted certain registration rights with respect to the purchased shares pursuant to a Registration Rights Agreement entered into by Roomlinx and the investors, pursuant to which Registration Statement of which this Prospectus forms a part has been filed.
 
On July 27, 2010, the Company effected a 1-for-100 reverse split of its outstanding shares of Common Stock, which reverse stock split was approved by shareholders on May 28, 2010.  All references to shares of Common Stock and prices per share of Common Stock contained in this prospectus and the Registration Statement of which it forms a part reflect and give effect to that reverse split.
 
On August 18, 2010, Roomlinx issued and sold 187,500 shares to certain investors at a price of $4.00 per share for an aggregate purchase price of $750,000.  The investors were also granted certain registration rights with respect to the purchased shares pursuant to a Registration Rights Agreement entered into by Roomlinx and the investors, pursuant to which Registration Statement of which this prospectus forms a part has been filed.
 
On August 30, 2010, Cenfin exercised 170,500 warrants at $2.00 per share, for an aggregate of $341,000, in accordance with the Credit Agreement entered into on June 5, 2009.
 
On October 1, 2010, Roomlinx, Inc. acquired 100% of the membership interests of Canadian Communications, LLC for aggregate consideration of $500,000 in cash and the issuance of 270,000 shares of Roomlinx’s common stock, of which 79,000 are being held back as security for the sellers’ indemnification obligations .   Roomlinx, Canadian Communications, LLC, Peyton Communications, LLC, Garneau Alliance LLC, Peyton Holdings Corporation and Ed Garneau entered into a Unit Purchase Agreement providing for the above described transaction.
 
During 2010, an aggregate of 391,125 warrants were exercised pursuant to the clauses in securities purchase agreements.  The warrants were exercised at various strike prices and resulted in the distribution of an aggregate of 387,400 shares of common stock .
 
On October 1, 2010, Roomlinx appointed Edouard A. Garneau as its Chief Financial Officer and entered into an Employment Agreement with him.  Edouard A. Garneau was the President of Canadian.  Effective with Mr. Garneau’s appointment as Chief Financial Officer, Mike Wasik, Roomlinx’s Chief Executive Officer, no longer holds the title or responsibilities of the Chief Financial Officer of Roomlinx.
 
During 2010, the board of directors approved the grant of an aggregate of 77,942 Incentive Stock Options and an aggregate of 6,813 Non-Qualified Stock Options.  Such options were issued at various exercise prices, vest at various rates, and expire 7 years from the grant dates.
 
During 2010, 340,800 warrants were granted pursuant to the clauses in securities purchase agreements.  The warrants were issued at various prices, vest at various rates, and expire at various dates.
 
On March 3, 2011, 65,000 warrants were granted, pursuant to the clauses outlined in the Credit Agreement dated June 5, 2009.  Such warrants were issued at an exercise price of $2.00 per share and vest immediately; the warrants expire 3 years from the date of issuance.
 
On March 3, 2011, 62,500 warrants were exercised at $2.00 per share, for an aggregate of $125,000, in accordance with the Credit Agreement entered into on June 5, 2009 .
 
On April 7, 2011, an aggregate of 30,000 shares of common stock were awarded to Judson Just and Jay Copppoletta for services rendered as independent directors of Roomlinx, Inc.  The aggregate value of the stock on the date of issuance was $60,000 based on the closing price of the stock for that day.

On April 18, 2011, an aggregate of 62,008 shares of common stock were awarded to employees of Roomlinx, Inc. in accordance with 2010 employee incentive plan.  The aggregate value of the stock on the date of issuance was $111,614 based on the closing price of the stock for that day.

On April 26, 2011, the Company drew down on $200,000 under its revolving line of credit, pursuant to its existing Credit Agreement with Cenfin LLC.

On April 26, 2011, 50 ,000 warrantsto purchase 50,000 shares  were granted to Cenfin LLC pursuant to the terms of the Credit Agreement (as amended on March 10, 2010 and July 15, 2010).  Such warrants were issued at an exercise price of $2.00 per share, vesting immediately, and expiring three years from the date of issuance.
 
 
17

 
 
Our Services
 
Currently we offer the following services to our customers:
 
v
site-specific determination of needs and requirements;
v
design and installation of the wireless or wired network;
v
customized development, design and installation of a media and entertainment system;
v
IP-based delivery of on-demand high-definition and standard-definition programming including Hollywood, Adult, and specialty content;
v
delivery of television programming via satellite (Direct TV or Dish Networks);
v
delivery of an electronic television programming guide (EPG) viewed via the television;
v
full maintenance and support of the network and Interactive TV product;
v
technical support to assist guests, hotel staff, and residential and business customers, 24 hours a day, 7 days a week, 365 days a year;
v
hotel staff and management training;
v
marketing assistance and continuous network and system monitoring to ensure high quality of service;
v
advertising sales and advertising sales support; and
v
management of affiliated telecommunications systems.
 
Our strategy is to focus our resources on delivering quality communication, information, advertising, and E-commerce services to the hospitality industry and residential/business customers. We plan to aggressively penetrate the hotel, resort, and timeshare verticals through direct sales, channel sales agents, and acquisitions. We plan to continually develop our Interactive TV platform to meet the needs of the ever changing habits of the hotel guest.   The networks that we install can supply a hotel with all of the internet requirements to the hotel’s back office, guest rooms, restaurants, lobbies, convention center , and meeting rooms over the internal local area network (LAN). Users access the Internet without any modification to their computer and can walk freely about the premises while still being connected to the network.   In our residential system deployments, we offer bundled service (television, telephone, and internet access) to the residents of the particular development.
 
When we commence service to a new hotel property, we install hardware in the hotel and integrate that hardware into the hotel’s billing server. We give the client hotel property two options in acquiring our high-speed Internet services: the hotel can buy the system and pay us a monthly service fee to maintain technical support (usually on a per room per month basis), or the hotel can lease-to-own the system with a third party , or us, and pay us a monthly service fee. We also obtain fee income by enabling “ meeting rooms ” for our hotel customers.
 
We believe that we will continue to increase sales and gross profits by offering our Interactive TV platform to our current wired and wireless internet customer base .   Roomlinx’ goal is to be the sole source solution for in-room technology, redefining how the hotel guests access traditional free-to-guest television, contemporary web content, premium, pre-release, and high-definition material, along with business tools and information specific to the property and their stay. We currently deliver this via our user-friendly, streamlined interface displayed on a sleek, flat-panel HD LCD television and powered by our Roomlinx media console .   We believe we have truly converged the television and personal computer into one offering in hotel rooms. We also believe we have developed a truly unique and proprietary product in our Interactive TV platform.
 
Our residential and business telecommunications division, Cardinal Broadband, continues to expand its customer base by adding new residential developments, as well as continuing to market to its current residential properties in order to increase its penetration at those properties.
We seek to deepen penetration within our installed customer base and expand the breadth of our overall customer base by distinguishing our current and future offerings with value-added solutions through increased marketing activities and continued custom, proprietary software development efforts that enhance the Interactive TV platform.

 
18

 
 
Our Strategy
 
Our short term strategies include the following:
 
v
We are seeking to grow the number of rooms installed with our Interactive TV platform
v
We are seeking to make our Interactive TV platform our core competency and focus on quality service and highly-profitable opportunities;
v
We are seeking to grow the number of rooms under management. We can improve our margins through the recurring revenues that we receive from rooms under management;
v
We are seeking to attain preferred vendor status or become a brand standard with premier hotel chains. Our hotel customers include many of the country’s most highly regarded hotel chains. If we are successful in attaining preferred vendor status or becoming a brand standard, we will be able to expand our services to cover the applicable chain’s site map;
v
We are seeking to leverage our core competency by expanding the markets we serve beyond the United States and Canada into Central America and the Caribbean.
v
We hope to expand the IP-based services and Interactive TV platform that we offer to include:
●    
IP-based television programming;
●    
Integration with multiple web applications including:
       
3D games
    
Dining reservations
●    
Television programming bundles
●    
Custom integration with the Hotel’s back office applications
●    
Expanded IP-based advertising through the LCD television and laptop;
●    
Expanded IP-based E-Commerce through the LCD television and laptop;
●    
Managed technical services, to provide special technical services to users.
●    
Growth in our custom software development and professional service revenues
v
Through acquisition or organic growth we plan to:
  
Increase our media and entertainment base of customers.
  
Increase our high speed internet base of customers
  
Continue to focus on increasing revenues in our Canadian and other foreign segments.
  
Offer additional synergistic technologies or services that allow us to sell more of our Interactive TV product
  
Expand our customer base in the residential and business markets
 
Our longer term strategies include the following:
 
v
We hope to be able to offer our Interactive TV platform to the consumer market;
v
Expansion into the European and Asian hotel industries; and,
v
We have begun to consider other infrastructure and value added services to include in our Interactive TV platform.
 
Ultimately, we hope to position ourselves as our customers’ central communications, entertainment and media provider. However, we cannot assure our investors that we will be successful in attaining these goals or that we will not pursue other strategies when opportunities arise. Capital constraints and competition, among other factors, may preclude us from attaining our goals.
 
Sales and Marketing
 
Sales
 
As of May 20 , 2011, our direct sales force consisted of 4 persons and our channel sales program consisted of 1 master sales agent and over 30 sales agents. While we will always require a small in-house team of direct sales representatives, we believe that if we are to grow the scale of our operations, it will be necessary for us to develop a channel sales program utilizing sales agents and re-sellers. As a result, our direct sales are supplemented by strategic alliances with communication marketing companies and communication providers. These organizations already have preferred access to customers, which may give us an advantage in the marketplace. These sales representatives are paid on a commission basis. We provide sales training and packaged marketing materials to our independent representatives in order to obtain optimum installation contracts.
 
 
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There are four succinct areas of outsource marketing in the hospitality sector that we concentrate our sales efforts on:
 
v
Hospitality Consultants - This group sells consulting services to hotel ownership and management groups.  For the most part, they have strong relationships with the aforementioned groups to provide consulting expertise.
 
v
Independent Communication Sales Representatives, and Representative Organizations – this group sells communication products into the hotel industry.  Because they sell multiple lines of communication services to hotels, they have direct contact with the Information Systems director. These services save money for the hotels as well as providing them with additional income to the hotel, and as such they have good access to the decision-maker in this market.
 
v
Wholesale Equipment Suppliers, Equipment Installers in the Hospitality Market - This group sells and installs central phone systems - also known as PBX systems - voice mail systems, property management systems and software related services directly into the hotel market. Since these services are directly related to both the income and marketing sides of the hospitality area, we believe that their access to this clientele is very good.
 
v
The Hotel Interconnect Individual or Companies - This group handles the installation and the maintenance for the independent communications sales representative and interconnect companies.
 
Typically, at least one and often all four of the above groups interact with the hotel industry on a daily basis. This provides us with a valuable source of sales and marketing personnel with direct contact into the industry.
 
Marketing
 
We typically deploy a marketing mix consisting of grass roots marketing by joining industry specific affiliations such as HTNG (Hotel Technology Next Generation) and AHLA (American Hotel and Lodging Association) direct mail, internet direct response, print ads in periodicals aimed at hospitality industry, and tradeshow sponsorship and support.
 
Operations
 
We have built a foundation on which to achieve quality customer service and scalability . We have achieved this by building the internal infrastructure , partnerships, and quality controls to scale quickly and offer quality services within   the following areas : system integration, system deployment, software development, project management, and technical support and service.
 
For our high speed wired and wireless offering we act as a system design and integrator that aggregates the products and services required to install wireless high-speed networks and deploys them through a delivery infrastructure that combines in-house technical and RF (radio frequency) experts with select system integrators in the customer’s area. After installation we seek to manage the network under a long-term contract.
 
For our proprietary Interactive TV platform we control the development of the product in-house allowing us to have ultimate control of response time to customer requests for product customization and version updates .   For installation and support we utilize both certified partners and in-house personnel .   We use In-house personnel for project management and pro-active monitoring of our technical components in the field.
 
 
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For our residential telecommunications offerings, we design and deploy these projects using in-house personnel, as well as occasionally outsourcing installation labor if needed.  Ongoing service and support is provided using in-house resources.  Television content and bandwidth provisioning is secured through 3 rd party providers, such as DISH Network, DirecTv, and Qwest.
 
Competition
 
Wired and Wireless High-Speed Internet Offering
 
The market for our high-speed internet (“HSIA”) services has leveled off. Our competitors may use the same products and services in competition with us. With time and capital, it would be possible for competitors to replicate our services and offer similar services at a lower price. We expect that we will compete primarily on the basis of the functionality, breadth, quality and price of our services. Our current and potential competitors include:
 
- Other wireless high-speed internet access providers, such as i Bahn, Guest-Tek, AT&T, and LodgeNet;
- Other internal information technology departments of large companies.
 
Many of our existing and potential competitors may have greater financial, technical, marketing and distribution resources than we do. Additionally, many of these companies may have greater name recognition and more established relationships with our target customers.
 
Media and Entertainment
 
The market for our Interactive TV services is in its infancy .   Due to technological advances we believe many of the larger companies will not be able to react quickly in duplicating our offering .  The market for free to guest services in the hospitality industry is strong, and we believe it will remain strong for the future due to the demand for HD content.   We continue to win customers by being a single source for all of a hotel’s telecommunication needs.
 
Current competition consists of players offering portions of our offering, such as video on demand ,   internet access , and free-to-guest programming ; these competitors include :
 
- LodgeNet, SuiteLinq, KoolKonnect, NXTV , World Cinema, and Guest-Tek .
 
Residential and Business Telecommunications
 
This market is served by multiple competitors, primarily the Incumbent Local Exchange Carriers (ILECs) (Qwest), the cable company (Comcast), and multiple small independent companies providing individual television, telephone, and internet services.  We believe we will continue to gain customers by distinguishing ourselves from our competitors by superior service and competitive pricing.  Sometimes we gain a competitive advantage because we are not the ILEC or large cable company, as many customers prefer a company who is not so large and cannot give customized attention to their individual needs. Many of our existing and potential competitors may have greater financial, technical, marketing and distribution resources than we do. Additionally, many of these companies may have greater name recognition and more established relationships with our target customers.
 
Research and Development
 
We seek to continually enhance the features and performance of our existing products and services. In addition, we are continuing to evaluate new products to meet our customers’ expectations of ongoing innovation and enhancements.
 
 
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Our ability to meet our customers expectations depends on a number of factors, including our ability to identify and respond to emerging technological trends in our target markets, develop and maintain competitive products, enhance our existing products by adding features and functionality that differentiate them from those of our competitors and offering products on a timely basis and at competitive prices. Consequently, we have made, and we intend to continue to make, investments in research and development.
 
Patents and Trademarks
 
We own the registered trademarks of “SuiteSpeed ®,” “SmartRoom®,” and “Roomlinx®”.  We also have proprietary processes and other trade secrets that we utilize in our business.
 
Employees
 
As of March 31 , 2011 we had a total of 31 full-time personnel and 2 part-time personnel. None of our employees are covered by a collective bargaining agreement. We believe that our relations with our employees are good.
 
Environmental Matters
 
We believe that we are in compliance with all current federal and state environmental laws and currently have no costs associated with compliance with environmental laws or regulations.
 
Dependence on Key Customers and Suppliers
 
We are not dependent on any single customer or a few major customers for a material portion of our revenues.
 
The remote control devices required to utilize our services are currently supplied by a single supplier.  The content for our unlimited movie services is currently supplied by a single supplier.  Our set top boxes are currently supplied by a single supplier, although we are currently testing set top boxes from additional suppliers.  It would require some time in order for us to replace a supplier.  Therefore, in the event that the supply of any of these items from any of these suppliers was to be interrupted without sufficient notice, it would have a material adverse impact on us.
 
Legal Proceedings
 
As of May 20 , 2011, 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.
 
Description of Property
 
We lease our principal offices, which are located at 2150 West 6th Avenue, Unit H, Broomfield, CO 80020, consisting of approximately 6,400 square feet.

 
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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 
Statements used in this prospectus, in filings by the Company with the Securities and Exchange Commission (the “SEC”), in the Company’s press releases or other public or stockholder communications, or made orally with the approval of an authorized executive officer of the Company that utilize the words or phrases “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions speaking to anticipated actions, results or projections in the future speak only as of the date made, are based on certain assumptions and expectations which may or may not be valid or actually occur, and which involve various risks and uncertainties, such as those set forth under “Risk Factors”.  The Company cautions readers not to place undue reliance on any such statements and that the Company’s actual results for future periods could differ materially from those anticipated or projected.
 
Unless otherwise required by applicable law, the Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.
 
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included as part of this prospectus.
 
General
 
Overview
 
Roomlinx, Inc., a Nevada corporation (“we,” “us” or the “Company”), provides four core products and services:
 
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.
 
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.
 
In-room media and entertainment.
 
We provide 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, Satellite TV programming, and on-demand movies.
 
The Company develops proprietary software and integrates hardware to facilitate the distribution of its Interactive TV platform.  The Interactive TV platform includes 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 such as the ability to order room service on the television or laptop .
 
 
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The Company provides proprietary software, an LCD television (optional), a media console , which may include 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 with a built in mouse . 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 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 s.   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. Our hotel satellite television programming products 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.
 
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 lineup.
 
Residential Media and Communications:
 
Our products 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.  Analog phone service is typically provided via an Interconnection agreement with Qwest Communications, which allows the Company to resell Qwest service through their wholesale and retail accounts with Qwest.  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 Networks 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 their 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.
 
We derive revenues through installations and delivery of telephone service and internet access, which is billed on a monthly basis, and delivery of television service which is billed by the satellite provider with monthly commissions paid to the Company by the provider.  We also derive revenues from management fees for the management of affiliated communication systems.
 
 
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Trends and Business Outlook
 
Our goal is to be the leading provider of all facets of in-room hotel, resort and timeshare entertainment, programming and internet connectivity.  We believe that we are developing the scale, capacity, and reach to respond to customers’ needs quickly and that our product offerings differentiate us from other market participants in terms of usability, technical innovation and breadth of offerings. Over the past year, we have taken significant steps towards these goals and in the second quarter of 2010, we began to see the benefits of many of these decisions and investments, such as our success in being selected by a major hotel chain from among other industry participants.
 
We believe there has been a fundamental shift in the way people communicate and from where they get their content.  This shift is affecting guest habits within the hotel room.   Hotel guests are getting their content from the internet or alternative, mobile sources like computers and smartphones.  Roomlinx developed the Interactive TV platform to embrace these changing habits and allow guests easy access to their content, work, and the internet via the in-room flat panel LCD.   The majority of Roomlinx’ growth in 2010 can be attributed to the sale of their Interactive TV product.  We have seen strong usage of the Interactive TV platform at our current hotel installations and we believe there is even greater ability to monetize our Interactive TV platform as we increase hotel penetration and usage.    We believe our Interactive TV platform creates a true differentiation for Roomlinx and we will continue to invest in product enhancements and Interactive TV sales and marketing efforts.
 
Although our current results demonstrate the initial success of our efforts, general economic conditions and market uncertainty may still negatively affect our financial results in future periods.  We anticipate that the rate of new orders may vary significantly from quarter to quarter. 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.
 
Our acquisition of Canadian Communications, LLC will be a further driver of sales growth and fill out the Company’s product and service offerings. We will continue to look for additional acquisitions that will enhance our market penetration within the hotel sector, increase profits, and offer product synergies.
 
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
 
Results of Operations    
 
As noted above, on October 1, 2010, Roomlinx acquired Canadian Communications LLC and its subsidiaries. The operating results of Canadian Communications LLC and its subsidiaries are included in the accompanying discussion and analysis and consolidated statements of operations for periods subsequent to the completion of the acquisition, October 1, 2010.
 
 
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Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
 
Our revenues for the year ended December 31, 2010 were $4,495,196, an increase of $2,054,339 or 84% over our $2,440,857 in revenues for the year ended December 31, 2009.  Of this increase, $542,324 is attributable to the revenue streams we acquired from Canadian Communications, LLC. The remaining increase of over $1.5 million is due to increased installations, hardware sales, and recurring revenue streams of our media and entertainment products.
 
Our cost of goods sold for the year ended December 31, 2010 was $3,429,701 an increase of $1,865,560 or 119% over our $1,564,141 cost of goods sold for the year ended December 31, 2009.  Of this increase, $392,381 is attributable to the cost of goods sold associated with the revenue streams we acquired from Canadian Communications, LLC.  The remaining increase of 1,473,179 is due to the increased sales mentioned above.
 
Our gross profit for the year ended December 31, 2010 was $1,065,495, an increase of $188,779 or 22% over the $876,716 gross profit for the year ended December 31, 2009.  Of this increase, $149,943 is attributable to the acquisition of Canadian Communications.  The remaining increase is primarily due to the increased revenues discussed above, partially offset by increased cost of goods sold.  Our gross profit margins for 2009 and 2010 were 36% and 24% respectively.  This decrease is primarily due to a large hardware sale in 2010 that had a margin of approximately 5%.
 
Hospitality
 
Our Hospitality segment includes hotel and meeting rooms in the following geographic segments: United States, Canada, and Other Foreign.  As of December 31, 2010, 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:   Our US Hospitality revenues increased $1,423,713 or 62% from $2,286,714 for the year ended December 31, 2009 to $3,710,427 for the year ended December 31, 2010.  This increase is primarily due to increased installations, hardware sales, and recurring revenue streams of our media and entertainment products.
 
Our US Hospitality cost of goods sold increased $1,448,108 or 96% from $1,501,234 for the year ended December 31, 2009 to $2,949,342 for the year ended December 31, 2010.  This increase is primarily attributable to the increased media and entertainment sales mentioned above.
 
The gross profit associated with our US Hospitality revenue streams decreased $24,395 or 3%, from $785,480 during the year ended December 31, 2009 to $761,085 during the year ended December 31, 2010.  This decrease is primarily attributable to a large hardware sale that had a margin of approximately 5%.
 
Canada:   Our Canadian revenues increased $284,892 or 222% from $128,273 for the year ended December 31, 2009 to $413,165 for the year ended December 31, 2010.  $265,597, or 93%, of this increase is attributable to Video-On-Demand revenue stream we acquired with the acquisition of Canadian Communications, LLC.  The remaining increase of approximately $20,000 is primarily due to increased hardware sales.
 
Our Canadian cost of goods sold increased $255,769 or 453% from $56,440 for the year ended December 31, 2009 to $312,209 for the year ended December 31, 2010.  $247,279, or 97%, of this increase is attributable to the Video-On-Demand revenue stream we acquired with the acquisition of Canadian Communications, LLC.  The remaining increase of approximately $8,500 is primarily attributable to the increased hardware sales mentioned above.
 
 
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The gross profit associated with our Canadian hospitality revenue streams increased $29,123, or 41%, from $71,833 during the year ended December 31, 2009 to $100,956 during the year ended December 31, 2010.  This increase is primarily attributable to the increased Video-On-Demand and hardware sales mentioned above.
 
Foreign:   Our foreign revenues increased $115,427 or 446% from $25,870 for the year ended December 31, 2009 to $141,297 for the year ended December 31, 2010.  $79,000, or 68%, is primarily due to increased recurring revenue streams of our Interactive TV platform.   $36,684, or 32%, of this increase is attributable to Video-On-Demand revenue stream we acquired with the acquisition of Canadian Communications, LLC.
 
Our foreign cost of goods sold increased $29,234 or 452% from $6,467 for the year ended December 31, 2009 to $35,701 for the year ended December 31, 2010.  $10,834, or 37% of this increase, is attributable to the Video-On-Demand revenue stream we acquired with the acquisition of Canadian Communications, LLC.  The remaining increase of approximately $18,500 is proportionate to the increased Interactive TV sales mentioned above.
 
The gross profit associated with our foreign hospitality revenue streams increased $86,193, or 444%, from $19,403 during the year ended December 31, 2009 to $105,596 during the year ended December 31, 2010.  This increase is primarily attributable to the increased Interactive TV and Video-On-Demand sales mentioned above.
 
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.
 
Our residential revenues for the year ended 2010 were $230,307; our cost of goods sold for the period same period were $118,161; and our gross profit for the same period was $112,146. This revenue stream is entirely attributable to the acquisition of Canadian Communications, LLC which was not effective for 2009.
 
Operational Expenses
 
Our operating expenses for the year ended December 31, 2010 were $2,907,450 compared to $2,045,353 for the year ended December 31, 2009, an increase of $862,097 or 42%.  This increase was primarily due to the growth of our Company throughout 2009 and 2010, including personnel expenses and office expenses.   Part of this growth included the acquisition of Canadian Communications, as well as our current preparations to build a strong foundation to support the large growth opportunity believed to exist over the next eighteen months.  The added operating expenses associated with this acquisition were approximately $153,316, or 19% of the increase, and were primarily personnel and professional service expenses.
 
Our operations department expenses increased $229,882 to $724,887 in the year ended December 31, 2010 compared to the same period in 2009.  This increase is primarily due to increased personnel and office expenses.  Personnel expenses increased $188,950 and office expenses increased $80,369.  These increases were partially offset by a decrease in travel expense of $39,437.  These increases are an example of our efforts to create a strong support foundation in order to support the growth opportunities as we begin to work with large hotel groups.
 
 
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Our product development department expenses increased $124,387 to $414,098 in the year ended December 31, 2010 compared to same period in 2009.  This increase is primarily due to increased personnel costs and office expenses.  Personnel expenses increased $95,125, office expenses increased $27,360, and travel expenses increased $1,902.  During 2010 we brought in a Chief Technical Officer in order to properly lay out our product roadmap and begin to create stronger documentation and procedures. This allows us to continue to enhance our media and entertainment product offerings in order to accommodate the growing customer demands.  These demands have included integration of internet apps such as Netflix and Hulu, as well as a development effort that includes the integration of Free-to-Guest programming into our exiting Interactive TV platform.
 
Our sales and marketing department expenses increased $203,188 to $602,630 in the year ended December 31, 2010 compared to same period in 2009.  This increase is primarily due to increased personnel costs, office expenses, advertising costs, and travel expenses.  Personnel expenses increased $128,894, office expenses increased $33,185, advertising expenses increased $29,900, and travel expenses increased $11,209.  Throughout 2010 we increased our sales staff and our marketing budget in order to reach more prospective customers.  This strategy brought us into relationships with a few large hotel groups and we feel that our continued and expanding relationships with these groups validate our decisions in this area.
 
Our general and administrative department expense increased $124,500 in the year ended December 31, 2010 compared to the same period in 2009.  This increase is primarily due to the increase in personnel, professional services, finance expenses, stock compensation expense, and bad debt expense.  These increases were partially offset by a decrease in office expenses.  Personnel expenses increased $134,887, professional services increased $24,277, finance expenses increased $10,490, travel expenses increased $2,881, stock compensation expense increased $9,055, and bad debt expense increased $58,223.  Office expenses decreased $115,313.  These increases are another example of our efforts to create a strong support foundation in order to support the anticipated growth opportunities as we begin to work with large hotel groups.
 
Our operating loss increased to $1,841,955 during the year ended December 31, 2010 compared to $1,168,637 during the year ended December 31, 2009; an increase of $673,318. This 58% increase is primarily attributable to the increase in our operating expenses and the decreased gross profit margins discussed above.
 
Depreciation expense for the years ended December 31, 2010 and 2009 was $250,670 and $66,670, respectively.  This increase is primarily a result of the depreciable property acquired in the Canadian Communications, LLC acquisition.
 
Non-Operating
 
For the year ended December 31, 2010, our non-operating income increased to $673,336 compared to $70,826 during the year ended December 31, 2009.  This increase is primarily due to an increase in interest income to $102,229 in 2010 from $68,017 in 2009, as well as the gain on acquisition of Canadian Communications, LLC of $556,927 in 2010. The interest income pertains to the equipment leases to our customers.
 
Our non-operating expenses for the year ended December 31, 2010 decreased to $100,385 from $280,602 during the year ended December 31, 2009.  Our interest expense for the year ended December 31, 2010 was $62,682 compared to $274,476 for the year ended December 31, 2009, a decrease of 77%.  This decrease is primarily due to the conversion of the convertible debentures in 2009. Financing expenses for the year ended December 31, 2010 increased to $33,842, incurred as debt discount expense for the warrants issued in association to the draws on our line of credit, compared to $99, incurred for the capital lease, for the year ended December 31, 2009.  Our foreign currency loss improved to $3,861 for the year ended December 31, 2010 as compared to $6,027 for the year ended December 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 year ended December 31, 2009, there was a derivative expense of $1,409,356. Due to our conversion of the convertible debentures we will no longer incur the non-cash derivative gains or expenses, and nothing was incurred in 2010.
 
 
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For the year ended December 31, 2010, we reported a net loss of $1,268,898, compared to a net loss of $2,787,769 for the year ended December 31, 2009; this is an improvement of 54% over 2009.  The decrease in non-cash derivative expense of $1,409,356 and the decrease in non-operating expenses, offset by our increased operations expenses are primary factors in these results.
 
Financial Condition
 
Liquidity and Capital Resources
 
As of December 31, 2010 we had $314,368 in cash and cash equivalents, which 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 2011.  Working capital at December 31, 2010 was $1,461,813.
 
Operating Activities
 
Net cash used by operating activities was $1, 185,098 for the year ended December 31 , 2010 as compared to $1, 411,823 used for the year ended December 31 , 2009. During 2010, our net receivables increased by $394,386 or 86%, our inventory increased by $651,746 or 271%, our prepaid and other current assets increased by $101,126 or 295%, our accounts payable and accrued expenses increased by $618,612 or 183%, our deferred revenue decreased by $63,947 or 32% and our accrued interest increased by $6,490 or 189% .
 
Investing Activities
 
Net cash used by investing activities was $2,334,511 for the year ended December 31, 2010 as compared to $332,767 in investing activity for the year ended December 31, 2009.  During 2010 our investments in Lease Receivables increased $1,506,503, or 353%; and our investment in property and equipment increased $16,536, or 6%. We also acquired $2,299,685 in net assets with our acquisition of Canadian Communications, LLC for a net gain of $556,927.
 
Financing Activities
 
Net cash provided by financing activities was $3,177,897 for the year ended December 31, 2010; this increase in financing of $2,718,422 was primarily a combination of $1,750,000 in stock purchases and 1,232,000 in draws on our line of credit, offset by payments made on our lease and notes payable., Our cash provided by financing for the year ended December 31, 2009 was $459,455, which was primarily attributable to draw downs on our line of credit for media and entertainment product installations.
 
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 December 31, 2010:
 
   
Total
   
Less than 1
year
   
1 - 3 years
   
3 - 5 Years
 
Operating Lease Obligation
  $ 198,932     $ 58,224     $ 140,708     $ -  
Capital Lease Obligation
    16,791       11,198       5,593       -  
Notes Payable
    143,664       80,650       63,014       -  
Line of Credit
    2,196,986       113,286       788,728       1,294,941  
Total
  $ 2,556,373     $ 263,358     $ 998,043     $ 1,294,941  
 
 
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Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010
 
 
Our revenues for the three months ended March 31, 2011 were $1,423,172, an increase of $1,029,957, or 262%, over our $393,215 in revenues for the three months ended March 31, 2010.  Of this increase, $536,199 is due to increased installations, hardware sales, and recurring revenue streams of our media and entertainment products.  The remaining increase of $493,758 is attributable to the revenue streams from Canadian Communications, LLC.
 
 
Our cost of goods sold for the three months ended March 31, 2011 was $961,141 an increase of $723,490, or 304%, over our $237,651 cost of goods sold for the three months ended March 31, 2010.  Of this increase, $359,393 is attributable to the increased cost of goods sold associated with the revenue streams we acquired from Canadian Communications, LLC.  The remaining increase of $364,097 is due to the organic increased sales mentioned above.
 
 
Our gross profit for the three months ended March 31, 2011 was $462,031, an increase of $306,467, or 197%, over the $155,564 gross profit for the three months ended March 31, 2010.  Of this increase, $134,365 is attributable to the acquisition of Canadian Communications.  The remaining increase of $327,666 is primarily due to the increased organic revenues discussed above, partially offset by increased cost of goods sold.
 
 
Hospitality
 
 
Our Hospitality segment includes hotel and meeting rooms in the following geographic segments: United States, Canada, and Other Foreign.  As of March 31, 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:   Our US Hospitality revenues for the three months ended March 31, 2011 were $886,371, an increase of $554,999, or 167%, over the $331,372 in revenue for the three months ended March 31, 2010.   This increase is primarily due to increased installations, hardware sales, and recurring revenue streams of our media and entertainment products.
 
 
Our US Hospitality cost of goods sold for the three months ended March 31, 2011 was $604,123, an increase of $411,127, or 213%, over the $192,996 in cost of goods sold for the three months ended March 31, 2010.  This increase is primarily attributable to the increased media and entertainment sales mentioned above.
 
 
The gross profit associated with our US Hospitality business was $282,248 for the three months ended March 31, 2011; an increase of $143,572, or 104%, over the $138,676 in gross profit for the three months ended March 31, 2010.  This increase is attributable to the increase in US sales partially offset by increased cost of goods sold mentioned above.
 
 
Canada:   Our Canadian hospitality revenues for the three months ended March 31, 2011 were $264,992, an increase of $227,244, or 602%, over the $37,748 in revenue for the three months ended March 31, 2010.   $238,571, or 105%, of this increase is attributable to Video-On-Demand revenue stream we acquired with the acquisition of Canadian Communications, LLC.  There was a decrease in hardware sales of $11,327 that slightly offset this increase.
 
 
Our Canadian hospitality cost of goods sold for the three months ended March 31, 2011 was $184,193, an increase of $153,995, or 510%, over the $30,198 in cost of goods sold for the three months ended March 31, 2010.   $165,991, or 108%, of this increase, is attributable to the Video-On-Demand business acquired through the acquisition of Canadian Communications, LLC.  The cost of goods sold related to the other services to Canadian hotels was reduced by $11,996, thereby reducing the total increase.
 
 
30

 
 
The gross profit associated with our Canadian hospitality revenue streams was $80,799 for the three months ended March 31, 2011; an increase of $73,249, or 970%, over the $7,550 in gross profit for the three months ended March 31, 2010.  This increase is primarily attributable to the increased Video-On-Demand and hardware sales mentioned above.
 
 
Foreign:   Our foreign hospitality revenues for the three months ended March 31, 2011 were $48,669, an increase of $24,574, or 102%, over the $24,095 in revenue for the three months ended March 31, 2010.  $20,104, or 82%, of this increase is attributable to Video-On-Demand business acquired through the acquisition of Canadian Communications, LLC.  The remaining increase of $4,470 is primarily due to increased   recurring revenue streams of our Interactive TV platform.  
 
 
Our foreign cost of goods sold for the three months ended March 31, 2011 was $18,798, an increase of $4,341, or 30%, over the $14,457 in cost of goods sold for the three months ended March 31, 2010.   There was an increase of $15,781 that is attributable to the Video-On-Demand revenue stream we acquired with the acquisition of Canadian Communications, LLC.  This increase was partially offset by a decrease of $11,440 related to the other services to foreign hotels.
 
 
The gross profit associated with our foreign hospitality revenue streams was $29,871 for the three months ended March 31, 2011, an increase of $20,233, or 210%, over the $9,638 in gross profit for the three months ended March 31, 2010.  This increase is primarily attributable to the increased Interactive TV and Video-On-Demand sales mentioned above.
 
 
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.
 
 
Our residential revenues for the three months ended March 31, 2011 were $223,140; our cost of goods sold for the period same period were $154,027; and our gross profit for the same period was $69,113. This revenue stream is entirely attributable to the acquisition of Canadian Communications, LLC which was not effective for the three months ended March 31, 2010.
 
 
Operational Expenses
 
 
Our operating expenses for the three months ended March 31, 2011 were $1,114,248 compared to $533,905 for the three months ended March 31, 2010; an increase of $580,343, or 109%.  This increase was primarily due to the growth of our Company throughout 2010, including personnel expenses and office expenses.   Part of this growth included the acquisition of Canadian Communications, as well as our current preparations to build a strong foundation to support the large growth opportunity believed to exist over the next eighteen months.
 
Our operations department expenses increased $69,109 to $231,977 in the three months ended March 31, 2011 compared to the same period in 2010.  This increase is primarily due to increased personnel expenses.  Personnel expenses increased $80,908.  These increases were partially offset by a decrease in office expense of $15,690.  These increases are an example of our efforts to create a strong support foundation in order to support the growth opportunities as we begin to work with large hotel groups.

Our product development department expenses increased $145,174 to $215,727 in the three months ended March 31, 2011 compared to same period in 2010.  This increase is primarily due to increased personnel costs and equipment expenses.  Personnel expenses increased $108,154 and equipment expenses increased $18,812.  During 2010 we brought in a Chief Technical Officer in order to properly lay out our product roadmap and begin to create stronger documentation and procedures. This allows us to continue to enhance our media and entertainment product offerings in order to accommodate the growing customer demands.  These demands have included integration of internet apps such as Netflix and Hulu, as well as a development effort that includes the integration of Free-to-Guest TV programming into our exiting Interactive TV platform.
 
 
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Our general and administrative expenses increased $101,206 to $378,284 in the three months ended March 31, 2011 compared to the same period in 2010.  This increase is primarily due to the increase in personnel, professional services, and stock compensation expense.  Personnel related and professional service expenses increased approximately $87,454, and stock compensation expense increased approximately $14,146.  The increases are another example of our efforts to create a strong support foundation in order to support the anticipated growth opportunities as we begin to work with large hotel groups.  Part of the 2011 increase in professional services the Company incurred were onetime expenses related to the acquisition of Canadian Communications which made up approximately $22,000 of the increase in professional services.

Depreciation expense for the three months ended March 31, 2011 and 2010 was $174,460 and $23,406, respectively.  The increase is primarily a result of the depreciable property acquired in the Canadian Communications, LLC acquisition.

Our operating loss increased to $538,417 during the three months ended March 31, 2011 compared to $378,341 during the three months ended March 31, 2010; an increase of $160,076. This 42% increase is attributable to the increase in our operating expenses discussed above.


Non-Operating

For the three months ended March 31, 2011, our non-operating income increased to $64,578 compared to $13,962 during the three months ended March 31, 2010.  This increase is primarily due to an increase in interest income pertaining to the equipment leases to our customers.

Our non-operating expenses for the three months ended March 31, 2011 increased to $63,528 from $11,857 during the three months ended March 31, 2010.  Our interest expense for the three months ended March 31, 2011 was $31,550 compared to $10,754 for the three months ended March 31, 2010, an increase of 193%.  This increase is primarily attributable to the increased balance on our line of credit. We incurred financing expenses of $28,193 for the three months ended March 31, 2011.  These financing expenses are the debt discount expense for the warrants issued in association to the draws on our line of credit, there were no finance expenses incurred in the three months ended March 31, 2010.  Our foreign currency loss was $3,550 for the three months ended March 31, 2011 as compared to $1,103 for the three months ended March 31, 2010.  This decrease is due to the fluctuations in the value of the foreign currency.
 
For the three months ended March 31, 2011, we reported a net loss of $539,177, compared to a net loss of $376,236 for the three months ended March 31, 2010. The increases in operating and non-operating expenses, discussed above, are primary factors in these results.
 
 
Financial Condition
 
 
Liquidity & Capital Resources
 
As of March 31, 2011 we had $170,489 in cash and cash equivalents, which 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 2011.  Working capital at March 31, 2011 was $1,317,723.

Operating Activities

Net cash used by operating activities was $212,698 for the three months ended March 31, 2011 as compared to $186,538 used for the three months ended March 31, 2010.  Our net receivables, as of March 31, 2011, increased by $777,391, or 357% compared to the same period in 2010, our inventory increased by $506,812 or 207%, our prepaid and other current assets increased by $90,120 or 226%, our accounts payable and accrued expenses increased by $649,918 or 255%, our deferred revenue increased by $42,192 or 24% and our accrued interest increased by $9,120or 100%.
 
 
32

 
 
Investing Activities

Net cash used by investing activities was $306,360 for the three months ended March 31, 2011 as compared to $22,016 received from investing activities the three months ended March 31, 2010.  Our investments in lease receivables, as of March 31, 2011, increased $233,385, or 12% as compared to the same period in 2010.

Financing Activities

Net cash provided by financing activities was $358,257 for the three months ended March 31, 2011; this increase in financing of $360,598 was primarily a combination of $125,000 in stock purchases and $260,000 in draws on our line of credit, offset by payments made on our lease and notes payable. Our cash used by financing for the three months ended March 31, 2010 was $2,341, which was attributable to payments on our lease.

 
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 March 31, 2011:


   
Total
   
Less than 1 year
   
1 - 3 years
   
3 - 5 Years
 
Operating Lease Obligation
  $ 184,376     $ 43,668     $ 140,708     $ -  
Capital Lease Obligation
    13,322       7,843       5,479       -  
Notes Payable
    101,643       38,279       63,363       -  
Line of Credit
    1,956,000       -       464,000       1,492,000  
Total
  $ 2,255,341     $ 89,790     $ 673,550     $ 1,492,000  
 
Off Balance Sheet Arrangements
 
We do not have any off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
 
Inflation
 
We believe that inflation has not had a material effect on our operations to date.
 
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 wired and wireless network 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.
 
Television programming revenue primarily consists of equipment purchases, installation of the equipment, and television programming fees. Revenue on the equipment and installations is recognized when the installation is complete and the customer has accepted such installation.  Revenue on the programming fees are recognized as invoiced per the individual contracts.
 
Residential revenue primarily consists of telephone, internet, and television set-up and services as well as residual commissions on these products.  Customers are billed and revenue is recognized as the set-up is completed and for the period of service being sold.
 
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 customers’ facilities, but has not been accepted by the customer.
 
 
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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 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.
 
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.
 
Recent Accounting Standards
 
For information regarding other recently adopted or issued accounting standards and their effect on the Company, see “ Recently Adopted Accounting Standards” and “Recently Issued Accounting Standards ” in Note 2 of the Notes to Consolidated Financial Statements contained herein.

 
34

 

MANAGEMENT
 
Executive Officers and Directors
 
The biographies of each of our current executive officers, directors and significant employees below contain information regarding the person’s positions with the Company, business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and, for directors, the experiences, qualifications, attributes or skills that led to the conclusion that the person should serve as a director for the Company.
 
Name
 
Age
 
Position and Offices with the Company
Michael S. Wasik
 
4 2
 
Chief Executive Officer and Chairman of the Board of Directors
Edouard A. Garneau
 
4 9
 
Chief Financial Officer
Judson Just
 
40
 
Director
Jay Coppoletta
 
32
 
Director
 
Michael S. Wasik has served as the Company’s Chief Executive Officer and member of the Board of Directors since November 2, 2005.  Mr. Wasik joined the Roomlinx Executive Management team in August of 2005 after executing the merger of his company, SuiteSpeed, with Roomlinx.   During Mr. Wasik’s first 3 years as CEO, he successfully restructured Roomlinx’ balance sheet, eliminating debt and raising just under ten million in debt and equity financing.    He also took Roomlinx from a non-reporting, pink sheet company to a fully reporting company with the SEC currently trading on the OTC exchange.  Currently Mr. Wasik is responsible for leading Roomlinx, which includes the development and market penetration of Roomlinx’ newest product, Roomlinx Interactive TV.
 
Prior to the Roomlinx merger, Wasik was the CEO/Founder of SuiteSpeed Inc. a wireless Internet provider within the hospitality market.  Having launched SuiteSpeed in late 2002, Wasik was responsible for defining technology architecture, market direction, and the overall vision for this fast growing WiFi company. Wasik expanded the company’s geographical coverage from its Denver backyard to serving hotel chains and independents across the U.S.  Under his direction, SuiteSpeed was on Mercury’s top 100 fastest growing companies list for 2003 and 2004.
 
Mr. Wasik is also the Founder and Chairman of the Board of TRG Inc., an IT consulting company.  Having launched TRG in late 1997 with no outside funding, Mr. Wasik was responsible for the overall sales and marketing effort, and defined TRG’s overall vision. Under his leadership, the company achieved average growth of 300% per year, over the first four years with positive EBITDA.  Mr. Wasik expanded the company’s billable resources from 6 consultants in 1997 to 60 consultants in 2000 serving Fortune 500 corporations across the U.S.  Mr. Wasik has managed over 60 people in 4 offices throughout the United States.
 
Mr. Wasik was nominated for the 2005 Ernst and Young Entrepreneur of the Year award and currently sits on the Editorial Board for Hotel Executive publication.
 
Edouard A. Garneau has served as the Company’s chief financial officer since October 1, 2010.  Prior to joining Roomlinx, Mr. Garneau was President and LLC Manager for Canadian Communications, LLC.  At Canadian, his role involved oversight and management of its three operational divisions, including all financial, personnel and operational matters.  He formed and launched the Cardinal Broadband division in 2005 when he was COO of Cardinal Communications, Inc.  He also led the negotiations for, and ultimately the purchase of, the current video-on-demand divisions (Cardinal Connect and Cardinal Hospitality) from Entertainment and Media Telecoms while serving as CEO of Cardinal Communications, Inc.  Canadian served over 24,000 rooms in Canada, the United States and Aruba, and maintained and supported its propriety systems for vendors in Australia, England and South Africa.  Prior to Canadian Communications, Mr. Garneau served as Chief Executive Officer and Director for Cardinal Communications, Inc., a publicly traded, diversified telecommunications and real estate development company.  He served in that role since November 2005, and prior to that he served as Chief Operating Officer for the company since the merger of Cardinal Communications, Inc. with Sovereign Partners on February 18 , 2005.
 
 
35

 
 
Judson P. Just, CFA has spent the last eleven years with PEAK6 Investments, LP as a Portfolio Manager for two private funds, an Analyst, Trader and Manager of the founding family’s Family Office.  Established in 1997, PEAK6 Investments, LP is a leading financial institution in Chicago with an established track record of success in proprietary trading. Recently recognized as one of “ Chicago’s Best and Brightest Employers to Work For, ” the company is also rapidly expanding its commercial focus to include innovative initiatives in the online media, retail options brokerage and asset management.  Judson is also a Board member for Solution BioSciences, an animal health technology company ; and Vassol Inc., the developer of NOVA® the first commercially available technology to measure actual blood flow rates in individual vessels using MRA/MRI scanners .  Prior to PEAK6, Judson spent six years as a Trader for Heartland Funds, a specialist in small cap equities.
 
Jay Coppoletta is the Chief Legal Officer of PEAK6 Investments, L.P., a position he has held since February 2010.  PEAK6 Investments, L.P. is a Chicago based financial institution engaged in proprietary trading, asset management and retail brokerage services.  Prior to joining PEAK6, Mr. Coppoletta was an associate in the Chicago office of Sidley Austin LLP for over six years.  Sidley Austin LLP is an international law firm with over fifteen offices and 1,600 attorneys.  Mr. Coppoletta’s practice while at Sidley Austin LLP focused on mergers and acquisitions and counseling boards of directors of public companies.  Mr. Coppoletta is a member of the state bar of Illinois and graduated magna cum laude from the University of Michigan Law School, where he was a member of the Law Review, in 2003.  Mr. Coppoletta received a Bachelor of Arts summa cum laude from Loyola University Chicago in 2000 .   Mr. Coppoletta provides the Roomlinx Board of Directors with experience in corporate governance matters and strategic transactions.
 
Independence of Directors
 
The Board of Directors has determined that  Judson Just and Jay Coppoletta are “independent” as defined in NASDAQ Marketplace Rule 4200.
 
Involvement in Certain Legal Proceedings
 
In December 2008, Cardinal Communications, Inc. filed for protection under Chapter 11 of the U.S. Bankruptcy Code.  In addition, several of Cardinal’s real estate development subsidiaries filed bankruptcy as well.  Most of the subsidiaries filed under Chapter 7 and were liquidated.  Cardinal Communications, Inc.’s Plan of Reorganization was approved in May 2009.  Ed Garneau, our Chief Financial Officer, was the Chief Executive Officer and director of Cardinal Communications, Inc. from 2005 through the reorganization in 2009.  After the Plan of Reorganization was approved in 2009, Mr. Garneau left Cardinal to run Canadian Communications, LLC.  Although Cardinal was a publicly traded company for a number of years, it voluntarily, and in cooperation with the Securities and Exchange Commission, terminated its reporting status in April 2008, and was delisted and ceased trading as a public entity.
 
 
36

 
 
To our knowledge, except as discussed in the preceding paragraph, none of our directors or executive officers has during the past ten years (i) been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; (iii) been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; (iv) been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; (v) been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or (vi) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
 
 
37

 

EXECUTIVE AND DIRECTOR COMPENSATION
 
Summary Compensation Table
 
The following table sets forth the cash and non-cash compensation for awarded to or earned by (i) each individual serving as our chief executive officer during the fiscal year ended December 31, 2010 and (ii) each other individual that served as an executive officer at the conclusion of the fiscal year ended December 31, 2010 and who received in excess of $100,000 in the form of salary and bonus during such fiscal year (collectively, the “named executive officers”). 
 
Name
and
Principal
Position
Year
 
Salary
($)
   
Bonus
($)
   
Stock
Awards
($)
   
Option
Awards
($)
(1)
   
Non-Equity
Incentive Plan
Compensation
   
Nonqualified
Deferred
Compensation
Earnings
   
All
Other
Compen-
sation
($)
   
Total
($)
 
                                                   
Michael S. Wasik
2010
 
$
150,000
   
$
-
   
$
-
   
$
9,634
   
$
-
   
$
-
   
$
-
   
$
159,634
 
                                                                   
Chief Executive Officer
2009
 
$
150,000
   
$
-
   
$
-
   
$
78,068
   
$
-
   
$
-
   
$
-
   
$
228,068
 
 

 
(1)
In 2009 the following assumptions were used to determine the fair value of stock option awards granted: historical volatility of 142%, expected option life of 7.0 years and a risk-free interest rate of 3.25%. 
 
(2)
In 2010 the following assumptions were used to determine the fair value of stock option awards granted: historical volatility of 128%, expected option life of 7.0 years and a risk-free interest rate of 3.29%. 
 
Executive Employment Arrangements
 
On June 5, 2009, the Company entered into an Employment Agreement (the “Employment Agreement”) with Mr. Michael S. Wasik, our Chief Executive Officer and Chairman of the Board of Directors, replacing a prior employment agreement that had expired .   Pursuant to the Employment Agreement, Mr. Wasik continues to serve as our Chief Executive Officer for a starting base salary of $150,000 per year. In addition, Mr. Wasik is eligible for payment of a bonus based on his performance, as, when and in an amount determined by the Compensation Committee and/or the Board of Directors .   Assuming the achievement of all relevant performance criteria and established milestones, Mr. Wasik will have a target annual bonus of at least 100% of his base salary plus an incentive stock option to purchase 50,000 shares of our Common Stock.
 
The Employment Agreement may be terminated at any time by either the Company or Mr. Wasik; provided, however, that in the event Mr. Wasik terminates for “Good Reason” or the Company terminates without “Cause”, each as defined in the Employment Agreement, then Mr. Wasik shall, on the fulfillment of certain conditions, be entitled to severance compensation equal to twelve (12) months’ salary.
 
Further to the Employment Agreement and in consideration of services already performed, on June 5, 2009, Mr. Wasik was granted a stock option under our Long-Term Incentive Plan to purchase 100,000 shares of our Common Stock at an exercise price equal to $3.30 per share, vesting fifty percent (50%) on each of June 5, 2010 and June 5, 2011.
 
 
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On October 1, 2010, the Company entered into an Employment Agreement ( the “Employment Agreement”) with Mr. Garneau to serve as Chief Financial Officer . Pursuant to the Employment Agreement, Mr. Garneau’s starting base salary is $150,000 per year. In addition, Mr. Garneau will be eligible for payment of a bonus based on his performance, as, when and in an amount determined by the Compensation Committee and/or the Board of Directors of Roomlinx. Assuming the achievement of all relevant performance criteria and established milestones, Mr. Garneau will have a target annual bonus of at least 100% of his base salary.
 
The Employment Agreement may be terminated at any time by either Roomlinx or Mr. Garneau; provided, however, that in the event Mr. Garneau terminates for “Good Reason” or Roomlinx terminates without “Cause”, each as defined in the Employment Agreement, then Mr. Garneau shall, on the fulfillment of certain conditions, be entitled to severance compensation equal to twelve (12) months’ salary.
 
In addition, further to the Employment Agreement and as an inducement to acceptance of an offer of employment, on October 1, 2010, pursuant to Roomlinx’s standard stock option award agreement, Mr. Garneau was granted options to purchase 40,000 shares of Roomlinx Common Stock at an exercise price equal to $4.50 per share, the last publicly reported sales price of a share of Roomlinx Common Stock on the Effective Date, vesting equally over a three year period.

 
39

 
 
Outstanding Equity Awards At Fiscal Year-End (Fiscal Year-End December 31, 2010 )
 
Name
 
Number of
Securities
Underlying
Unexercised
Options 
(#) 
Exercisable
   
Number of
Securities
Underlying
Unexercised
Options 
(#)
Unexercisable
   
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options 
(#)
   
Option
Exercise
Price 
($)
 
Option
Expiration
Date
 
Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)
   
Market
Value
of
Shares
or Units
of Stock
That
Have
Not
Vested
($)
   
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)
   
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
($)
 
Michael S.
                                                 
Wasik
    10,000       -       -     $ 2.60  
08/10/12
    -     $ -       -     $ -  
                                                                   
Michael S.
                                                                 
Wasik
    100,000       -       -     $ 2.00  
11/20/13
    -     $ -       -     $ -  
                                                                   
Michael S.
                                                                 
Wasik
    100,000       50,000       -     $ 3.30  
06/05/16
    -     $ -       -     $ -  
                                                                   
Michael S.
                                                                 
Wasik
    3,378       3,378       -     $ 3.10  
04/12/17
    -     $ -       -     $ -  
                                                                   
Edouard
                                                                 
Garneau
    40,000       40,000       -     $ 4.50  
10/01/17
    -     $ -       -     $ -  
                                                                   
 
Director Compensation Table – Fiscal Year-End December 31, 2010
 
Name
 
Fees
Earned
or Paid
in Cash
($)
   
Stock
Awards
($)
   
Option
Awards
($)
   
Non-Equity
Incentive Plan
Compensation
($)
   
Nonqualified
Deferred
Compensation
Earnings
($)
   
All Other
Compensation
($)
   
Total
($)
 
Michael S. Wasik
 
$
-
   
$
-
   
$
-
   
$
-
   
$
-
   
$
-
   
$
-
 
                                                         
Judson Just
 
$
-
   
$
-
   
$
-
   
$
-
   
$
-
   
$
-
   
$
-
 
                                                         
Jay Coppoletta
 
$
-
   
$
-
   
$
-
   
$
-
   
$
-
   
$
-
   
$
-
 
                                                         
 
 
40

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
Common Stock and Class A Preferred Stock
 
The following tables set forth certain information regarding the beneficial ownership of our common stock and preferred stock, as of May 20 , 2011, by (i) each person who is known by us to be the beneficial owner of more than 5% of our outstanding common stock or any class or series of voting preferred stock; (ii) each of our named executive officers, current directors, and nominees for directors; and (iii) all of our named executive officers and current directors as a group.  In determining the number and percentage of shares beneficially owned by each person, shares that may be acquired by such person by conversion of convertible debt convertible and under options or warrants exercisable within 60 days of May 20 , 2011 are deemed beneficially owned by such person and are deemed outstanding for purposes of determining the total number of outstanding shares for such person and are not deemed outstanding for such purpose for all other stockholders.   The percentage ownership is based upon 5,113,423 shares of Common Stock and 720,000 shares of Class A Preferred Stock issued and outstanding as of May 20 , 2011.  Shares of Class A Preferred Stock are non-voting and are not convertible into shares of Common Stock.
 
COMMON AND CLASS A PREFERRED STOCK
 
Name and Address
 
Number of Shares
of Common
Stock
Beneficially 
Owned
   
Percent of
Common Stock
Beneficially
Owned
   
Number of
Shares of
Class A
Preferred
Stock
Beneficially
Owned
   
Percent of
Class A
Preferred
Stock
Beneficially
Owned
 
                         
Michael S. Wasik(1)
    427,336       8. 1 %     0       *  
                                 
Judson Just
    35,000       *       0       *  
                                 
Jay Coppoletta
    15,400       *       0       *  
                                 
Edouard A. Garneau(2)
    42,000       *       0       *  
                                 
Jennifer Just(3)
c/o Roomlinx, Inc.
2150 W. 6th Ave., Unit H
Broomfield, CO 80020
    1,946,081       34.7 %     0       *  
                                 
Matthew Hulsizer(4)
c/o Roomlinx, Inc.
2150 W. 6th Ave., Unit H
Broomfield, CO 80020
    1,944,581       34.7 %     0       *  
                                 
Lewis Opportunity Fund, L.P.
500 Fifth Avenue, Suite 2240
New York, NY  10110
    648,107       12.7 %     0       *  
                                 
Verition Multi-Strategy Master Fund Ltd.
c/o Maples Corporate Services Limited
PO Box 309, Ugland House
Grand Cayman, KY1-1104
Cayman Islands
    375,518       7. 3 %     0       *  
                                 
All executive officers and directors (4 persons)
    519,736       9.9 %     0       *  
                                 
 
 
41

 
______________________
* less than 1%
 
(1)
Includes (i) 267 ,336 outstanding shares owned by Mr. Wasik, (ii) options to purchase 10,000 shares at $2.60 per share which expire on August 10, 2012, (iii) options to purchase 100,000 shares at $2.00 per share which expire on November 20, 2013 and (iv) options to purchase 50,000 shares at $3.30 per share which expire on June 5, 2016.
   
(2)
Includes 42,000 shares owned by Garneau Alliance, LLC, of which Mr. Garneau is Manager.  Does not include options granted to Mr. Garneau to purchase 40,000 shares at $4.50 per share which are not yet exercisable.
   
(3)
Includes (i) 976,140 shares of Common Stock jointly owned with Matthew Hulsizer (ii) 42,441 shares of Common Stock owned by the Just Descendant Trust, (iii) warrants jointly owned with Matthew Hulsizer expiring July 31, 2011 to purchase 184,000 shares of Common Stock at $4.00 per share, (iv) warrants jointly owned with Matthew Hulsizer expiring July 31, 2011 to purchase 184,000 shares of Common Stock at $6.00 per share, (v) warrants owned by the Just Descendant Trust expiring July 31, 2011 to purchase 8,000 shares of Common Stock at $4.00 per share, (vi) warrants owned by the Just Descendant Trust expiring July 31, 2011 to purchase 8,000 shares of Common Stock at $6.00 per share, (vii) 424,000 shares of Common Stock owned by Cenfin LLC, an affiliate of Jennifer Just, (viii) warrants owned by Cenfin LLC expiring March 3 , 201 4 to purchase 65 , 0 00 shares of Common Stock at $2.00 per share, (ix) warrants owned by Cenfin LLC expiring April 22, 2014 to purchase 50,000 shares of Common Stock at $2.00 per share, and (x) 4,500 shares held as Custodian for the benefit of her children.
   
(4)
Includes (i) 976,140 shares of Common Stock jointly owned with Jennifer Just, (ii) 42,441 shares of Common Stock owned by the Hulsizer Descendant Trust, (iii) warrants jointly owned with Jennifer Just expiring July 31, 2011 to purchase 184,000 shares of Common Stock at $4.00 per share, (iv) warrants jointly owned with Jennifer Just expiring July 31, 2011 to purchase 184,000 shares of Common Stock at $6.00 per share, (v) warrants owned by the Hulsizer Descendant Trust expiring July 31, 2011 to purchase 8,000 shares of Common Stock at $4.00 per share and (vi) warrants owned by the Hulsizer Descendant Trust expiring July 31, 2011 to purchase 8,000 shares of Common Stock at $6.00 per share, (vii) 424,000 shares of Common Stock owned by Cenfin LLC, an affiliate of Matthew Hulsizer, (viii) warrants owned by Cenfin LLC expiring March 3, 2014 to purchase 65,000 shares of Common Stock at $2.00 per share, (ix) warrants owned by Cenfin LLC expiring April 22, 2014 to purchase 50,000 shares of Common Stock at $2.00 per share, and (x) 3,000 shares held as Custodian for the benefit of his child.
 
 
42

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
On July 31, 2008, the Company sold and issued an aggregate of 1,000 shares of Series C Preferred Stock (“Series C Stock”) at a purchase price of $2,500 per share (or an aggregate of $2,500,000) to Matthew Hulsizer, Jennifer Just and certain affiliated trusts (the “Series C Investors”).  Jennifer Just is the sister of Judson Just, a Director of the Company since July 31, 2008.  The Series C Stock accrued dividends at an annual rate of 6% per year, payable quarterly, either in cash or, at the Company’s election, shares of the Common Stock.  Pursuant to the Series C Preferred Stock Purchase Agreement, the Investors also received (i) Series C-1 Warrants to purchase an aggregate of 200 shares of Series C Stock, at an initial exercise price of $4,000 per share of Series C Stock, and (ii) Series C-2 Warrants to purchase an aggregate of 200 shares of Series C Stock, at an initial exercise price of $6,000 per share of Series C Stock, each expiring on the third anniversary of their date of issuance.  
 
On August 19, 2008 the Company granted, under our Long-Term Incentive Plan, an aggregate of 5,000 Non-Qualified Stock Options to Christopher Blisard with respect to his service as a member of the Board of Directors during 2009 and vested on December 31, 2009.  The options were issued at an exercise price of $1.20 per share, representing the closing price of the Company’s Common Stock on the grant date.
 
On March 10, 2009, upon the filing of a Certificate of Amendment to the Company’s Articles of Incorporation increasing the number of authorized shares of the Company’s Common Stock and pursuant to the terms of the Series C Stock Purchase Agreement, (i) all 1,000 shares of Series C Stock were converted into an aggregate of 1,000,000 shares of Common Stock, (ii) the Series C-1 Warrants were no longer exercisable for Series C Stock but instead became exercisable for an aggregate of 200,000 shares of Common Stock at an initial exercise price of $4.00 per share and (iii) the Series C-2 Warrants were no longer exercisable for Series C Stock but instead became exercisable for an aggregate of 200,000 shares of Common Stock at an initial exercise price of $6.00 per share.
 
On March 31, 2009, the Company’s Board of Directors approved the issuance of 61,022 shares of common stock with a fair value of $91,532 for the payment of previously accrued dividends on Series C Preferred Stock.  The shares were issued on April 2, 2009.
 
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”).  Cenfin is an affiliate of Jennifer Just and Matthew Hulsizer, joint owners, together with certain affiliated trusts, of in excess of 20% of our Common Stock.  Jennifer Just is the sister of Judson Just, a Director of the Company.  Pursuant to the Credit Agreement, 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 agreed to 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 $2.00 per share.  Each Revolving Credit Note bears interest at a rate of 9% per annum and matures on the fifth anniversary of its issuance. Each Warrant is exercisable for a three year period from its issuance at an initial exercise price of $2.00 per share. On June 14, 2009, 85,000 warrants were granted by Roomlinx to Cenfin pursuant to the Credit Agreement.  The Credit Agreement was approved by a majority of the members of the Company’s Board of directors, excluding Judson Just.
 
As of September 30, 2009, the Company was in default under the Credit Agreement as a result of the Company’s failure to obtain duly executed account control agreements with respect to its primary depositary and disbursement accounts as required by the Credit Agreement.  On November 10, 2009, Cenfin waived such default and the Company and Cenfin amended the Credit Agreement to delete that requirement from the Credit Agreement on a going-forward basis.  At December 31, 2009, $464,000 of borrowings were outstanding under the Credit Agreement.
 
On December 17, 2009, 31,000 warrants were granted by Roomlinx to Cenfin pursuant to the Credit Agreement.  Such warrants were issued at an exercise price of $2.00 per share, vested immediately and expire three years from the date of issuance.
 
 
43

 
 
On March 10, 2010, the Company and Cenfin executed an amendment (the “Amendment”) to the Credit Agreement.  Pursuant to the Amendment, the Revolving Credit Commitment under the Credit Agreement was increased from $5,000,000 to $25,000,000 and the permitted Use of Proceeds was expanded to include certain capital expenditures.  The remaining terms of the Credit Agreement were not amended.  The Amendment was approved by a majority of the Company’s Board of directors, excluding Judson Just.  At April 12, 2010, $464,000 of borrowings were outstanding under the amended Credit Agreement.
 
On April 27, 2010, Cenfin exercised the 116,000 warrants previously granted to it, purchasing 116,000 shares of the Company’s Common Stock at a price of $2.00 per share.
 
On July 30, 2010, with effect as of July 15, 2010, the Company and Cenfin LLC entered into a Second Amendment to Revolving Credit, Security and Warrant Purchase Agreement (the “Amendment”).  The Amendment changed (1) the interest rate under the Credit Agreement to the Federal Funds Rate plus 5% and (2) the strike price of warrants issued in connection with any draws of the line of credit after the first $5,000,000 of borrowings after July 15, 2010 to the fair market value of the Company’s common stock on the date of such draw.
 
On August 2, 2010, warrants to purchase 170,500 shares were granted to Cenfin LLC pursuant to the terms of the Credit Agreement (as amended on March 10, 2010 and July 15, 2010).  Such warrants were issued at an exercise price of $2.00 per share, vesting immediately and expiring three years from the date of issuance.
 
On August 18, 2010, Roomlinx issued and sold (i) 87,500 shares of its Common Stock to Verition Multi-Strategy Master Fund Ltd., (ii) 67,500 shares of its Common Stock to Wilmot Advisors LLC, (iii) 27,500 shares of its Common Stock to Arceus Partnership, (iv) 2,500 shares of its Common Stock to Ted Hagan and (v) 2,500 shares of its Common Stock to Josh Goldstein.  These issuances were at a price of $4.00 per share for an aggregate purchase price of $750,000. 
 
On August 30, 2010, Cenfin LLC exercised the 170,500 warrants granted to it on August 2, 2010 at $2.00 per share, for an aggregate of $341,000.
 
On September 30, 2010, warrants to purchase 75,000 shares were granted to Cenfin LLC pursuant to the terms of the Credit Agreement (as amended on March 10, 2010 and July 15, 2010).  Such warrants were issued at an exercise price of $2.00 per share, vesting immediately and expiring three years from the date of issuance.
 
On October 1, 2010, Cenfin LLC exercised the 75,000 warrants granted to it on September 30, 2010 at an exercise price of $2.00 per share, for an aggregate of $150,000.
 
On October 1, 2010, Roomlinx, Inc. acquired 100% of the membership interests of Canadian Communications, LLC for aggregate consideration of $500,000 in cash and the issuance of 270,000 shares of Roomlinx’s common stock, of which 79,000 are being held back as security for the sellers’ indemnification obligations.  At the sellers’ direction, and in consideration of releases of indebtedness and other obligations owed by Canadian, on October 1, 2010, Roomlinx issued (i) 48,000 shares of its Common Stock to Peyton Communications, LLC, (ii) 162,000 shares of its Common Stock to Thunderbird Management Limited Partnership, (iii) 18,000 shares of its Common Stock to AEJM Enterprises Limited Partnership, and (v) 42,000 shares of its Common Stock to Garneau Alliance, LLC.
 
 
44

 
 
On October 1, 2010, the Company entered into an Employment Agreement with Mr. Edouard A. Garneau, previously the President and LLC Manager for Canadian Communications, LLC, to serve as the Chief Financial Officer of the Company (the “CFO Employment Agreement”).  Pursuant to the CFO Employment Agreement, Mr. Garneau’s starting base salary is $150,000 per year. In addition, Mr. Garneau is eligible for payment of a bonus based on his performance, as, when and in an amount determined by the Compensation Committee and/or the Board of Directors of Roomlinx. Assuming the achievement of all relevant performance criteria and established milestones, Mr. Garneau will have a target annual bonus of at least 100% of his base salary.  In addition, further to the CFO Employment Agreement and as an inducement to acceptance of an offer of employment, on October 1, 2010, pursuant to Roomlinx’s standard stock option award agreement, Mr. Garneau was granted options to purchase 40,000 shares of Roomlinx Common Stock at an exercise price equal to $4.50 per share, the last publicly reported sales price of a share of Roomlinx Common Stock on October 1, 2010, vesting equally over a three year period.  The CFO Employment Agreement may be terminated at any time by either Roomlinx or Mr. Garneau; provided, however, that in the event Mr. Garneau terminates for “Good Reason” or Roomlinx terminates without “Cause”, each as defined in the Employment Agreement, then Mr. Garneau shall, on the fulfillment of certain conditions, be entitled to severance compensation equal to twelve (12) months’ salary.
 
On December 20, 2010, warrants to purchase 62,500 shares were granted to Cenfin LLC pursuant to the terms of the Credit Agreement (as amended on March 10, 2010 and July 15, 2010).  Such warrants were issued at an exercise price of $2.00 per share, vesting immediately and expiring three years from the date of issuance.
 
On March 3, 2011, Cenfin LLC exercised the 62,500 warrants granted to it on December 20,2010 at $2.00 per share, for an aggregate of $125,000.

On March 3, 2011 warrants to purchase 65,000 shares were granted to Cenfin LLC pursuant to the terms of the Credit Agreement (as amended on March 10, 2010 and July 15, 2010).  Such warrants were issued at an exercise price of $2.00 per share, vesting immediately, and expiring three years from the date of issuance.

On April 7, 2011, an aggregate of 30,000 shares of common stock were awarded to Judson Just and Jay Coppoletta for services rendered as independent directors of Roomlinx, Inc.  The aggregate value of the stock on the date of issuance was $60,000 based on the closing price of the stock for that day.

On April 18, 2011, an aggregate of 62,008 shares of common stock were awarded to employees of Roomlinx, Inc. in accordance with 2010 employee incentive plan.  The aggregate value of the stock on the date of issuance was $111,614 based on the closing price of the stock for that day.

On April 26, 2011, the Company drew down on $200,000 under its revolving line of credit, pursuant to its existing Credit Agreement with Cenfin LLC..

On April 26, 2011, 50 ,000 warrants to purchase 50,000 shares were granted to Cenfin LLC pursuant to the terms of the Credit Agreement (as amended on March 10, 2010 and July 15, 2010).  Such warrants were issued at an exercise price of $2.00 per share, vesting immediately, andexpiring three years from the date of issuance.
 
There have been no transactions, or series of similar transactions, during 2007, 2008, 2009 or 2010, or any currently proposed transaction, or series of similar transactions, to which the Company was or is to be a party, in which the amount involved exceeded or is expected to exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year end for the last two completed fiscal years and in which any director of our company, any executive officer of our company, any stockholder owning of record or beneficially 5% or more of our common stock, or any member of the immediate family of any of the foregoing persons, had, or will have, a direct or indirect material interest (a “Related Person Transaction”), except as otherwise disclosed above.
 
The Company’s policy with regards to Related Person Transactions requires that where a transaction has been identified as a Related Person Transaction, the noninterested members of the Board of Directors of the Company must approve or ratify it. Management must present to such noninterested members of the Board of Directors a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to the Company of the transaction and whether any alternative transactions were available. To identify Related Person Transactions, the Company relies on information supplied by its executive officers and Directors. In considering Related Person Transactions, the noninterested members of the Board of Directors take into account the relevant available facts and circumstances including, but not limited to (a) the risks, costs and benefits to the Company, (b) the impact on a Director’s independence in the event the related person is a director, immediate family member of a Director or an entity with which a Director is affiliated, (c) the terms of the transaction, (d) the availability of other sources for comparable services or products and (e) the terms available to or from, as the case may be, unrelated third parties or to or from employees generally. In the event a Director has an interest in the proposed transaction, the Director must recuse himself or herself from the deliberations and approval. In determining whether to approve, ratify or reject a Related Person Transaction, the noninterested members of the Board of Directors look at, in light of known circumstances, whether the transaction is in, or is not inconsistent with, the best interests of the Company and its stockholders, as determined by them in the good faith exercise of their discretion.

 
45

 

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
Market Information
 
Our Common Stock trades on the OTC Bulletin Board under the symbol “RMLX”. On  May 19 , 2011, the last sales price of our Common Stock as reported by the OTC Bulletin Board was $ 2.00 per share. 
 
The following table sets forth for the periods indicated the high and low daily closing prices of our common stock for the period from January 1, 2008 through December 31, 2010 as reported by the OTC Bulletin Board.  The prices below have been adjusted to reflect the 1-for-100 reverse split of our Common Stock that was effective on July 27, 2010.
 
   
High
   
Low
 
1st Quarter 2011, ended 3/31/11
  $ 3.00     $ 1.45  
4th Quarter 2010, ended 12/31/10
 
$
4.20
   
$
2.75
 
3rd Quarter 2010, ended 9/30/10
 
$
5.00
   
$
2.50
 
2nd Quarter 2010, ended 6/30/10
 
$
5.30
   
$
2.55
 
1st Quarter 2010, ended 3/31/10
 
$
2.70
   
$
1.22
 
4th Quarter 2009, ended 12/31/09
 
$
3.00
   
$
1.80
 
3rd Quarter 2009, ended 9/30/09
 
$
3.20
   
$
2.10
 
2nd Quarter 2009, ended 6/30/09
 
$
4.50
   
$
1.22
 
1st Quarter 2009, ended 3/31/09
 
$
2.00
   
$
0.80
 
4th Quarter 2008, ended 12/31/08
 
$
2.50
   
$
1.00
 
3rd Quarter 2008, ended 9/30/08
 
$
3.00
   
$
1.10
 
2nd Quarter 2008, ended 6/30/08
 
$
3.00
   
$
1.50
 
1st Quarter 2008, ended 3/31/08
 
$
2.80
   
$
1.60
 
 
As of May 13 , 2011, there were 5,113,423 shares of Common Stock issued and outstanding, of which 3, 280,067 shares were held by non-affiliates of the Company.
 
As of May 20 , 2011, (i) 848,883 shares of our common stock were subject to issuance under outstanding options or warrants currently exercisable for the purchase of, or securities currently convertible into, our Common Stock and (ii) 130,924 shares of our common stock were subject to issuance under outstanding options or warrants not yet exercisable for the purchase of, or securities not yet convertible into, our Common stock. 
 
Holders
 
The number of record holders of our common stock as of May 13 , 2011 was approximately 295 based on information received from our transfer agent.  This amount excludes an indeterminate number of stockholders whose shares are held in “street” or “nominee” name.
 
Dividends
 
We have not paid any dividends on our common stock since our inception.  There are no restrictions currently in effect which preclude us from declaring dividends. However, dividends may not be paid on the Common Stock while there are unpaid dividends on the Class A Preferred Stock, which bears a 9% cumulative dividend.  As of  March 31, 2011 , unpaid Class A Preferred Stock dividends aggregated $1 62 , 480 .  It is our current intention to retain any earnings in the foreseeable future to finance the growth and development of our business and not pay dividends on the Common Stock. 

 
46

 

USE OF PROCEEDS
 
We will not receive any proceeds from the sale of the common stock by the selling stockholders pursuant to this prospectus. However, we will receive the applicable exercise price upon the issuance of Warrant Shares in the event that any Warrants are properly exercised.   If all such Warrants are properly exercised in full by payment of cash, the total proceeds we would receive is $ 60,480 .  We expect to use the proceeds, if any, that we receive from the exercise of Warrants for general working capital purposes.
 
SELLING STOCKHOLDERS
 
The selling stockholders identified on the table below (the “Selling Stockholders”) are offering on a resale basis a total of up to 1,666,485  shares of our common stock, including 1,645,485 shares of our issued and outstanding common stock and 21,000 shares issuable upon the exercise of outstanding warrants.  We will not receive any proceeds from the sale of these shares by the selling stockholders.  We would receive gross proceeds in the approximate amount of $ 60,480 assuming the exercise of all the warrants in full by payment of cash.  To the extent any of these warrants are so exercised, we intend to use the proceeds for general working capital.
 
For purposes of the table below, beneficial ownership is determined in accordance with the rules of the Securities Exchange Commission, and includes voting and investment power with respect to shares. Each selling stockholder’s percentage of ownership in the following table is based on 5,021,415 shares of common stock issued and outstanding as of May 20, 2011 and 5,134,423 shares of common stock issued and outstanding after this offering is completed.  Shares of common stock subject to warrants and options currently exercisable or exercisable within 60 days from May 20, 2011 are deemed outstanding for computing the percentage ownership of the person holding the warrants and/or options, but are not deemed outstanding for computing the percentage of any other person.
 
Shares listed under the column “Shares Offered by this Prospectus” represent the number of shares that may be sold by the selling stockholders pursuant to this prospectus. Pursuant to Rule 416 of the Securities Act, the registration statement of which this prospectus is a part also covers any additional shares of our common stock which become issuable in connection with such shares because of any stock split, stock dividend, or similar transaction which results in an increase in the number of outstanding shares of our common stock.
 
The information under the heading “Shares Beneficially Owned After the Offering” assumes the selling stockholder sells all of its shares covered hereby to unaffiliated third parties, that the selling stockholders will acquire no additional shares of our common stock prior to the completion of this offering, and that any other shares of our common stock beneficially owned by the selling stockholders will continue to be beneficially owned. The selling stockholders may dispose of all, part or none of their shares offered by this prospectus.
 
The Selling Stockholders may have sold, transferred or otherwise disposed of all or a portion of their shares of common stock in transactions exempt from the registration requirements of the Securities Act since the date on which they provided to us the information regarding their shares of common stock.
 
All costs, expenses and fees in connection with the registration of the shares being offered hereby will be borne by the Selling Stockholders.  Brokerage commissions and similar selling expenses, if any, attributable to the sale of the shares will be borne by the Selling Stockholders.

 
47

 
 
   
Shares Beneficially
Owned Prior to this
Offering
   
Number of
Shares to
be Sold in
this
   
Shares Beneficially
Owned After this
Offering
 
Selling Stockholder
 
Number
   
Percent
   
Offering
   
Number
   
Percent
 
Verition Multi-Strategy Master Fund Ltd. (1)(3)
   
375,518
     
7. 3
%
   
312,500
     
63,018
     
1.3
%
Wilmot Advisors LLC(1)(3)
   
164,695
     
3. 2
%
   
92,500
     
72,195
     
1.5
%
Arceus Partnership(2)(3)
   
27,500
     
  *
     
27,500
     
0
     
*
 
Theodore Hagan(3)
   
2,500
     
  *
     
2,500
     
0
     
*
 
Josh Goldstein(3)
   
2,500
     
  *
     
2,500
     
0
     
*
 
Peyton Communications, LLC(4)
   
48,000
     
*
%
   
48,000
     
0
     
*
 
Thunderbird Management Limited Partnership(5)
   
162,000
     
3. 2
%
   
162,000
     
0
     
*
 
AEJM Limited Partnership(5)
   
18,000
     
*
     
18,000
     
0
     
*
 
Garneau Alliance, LLC(6)
   
42,000
     
*
     
42,000
     
0
     
*
 
Lewis Opportunity Fund, L.P. (7)(8)
   
648,107
     
12.7
%
   
648,107
     
0
     
*
 
Heller Capital Investments LLC (7)(9)
   
51,936
     
1.0
%
   
1,398
     
50,538
     
1.0
 
Jill Solomon(10)
   
86,884
     
1.7
%
   
23,675
     
63,209
     
1.3
%
Carmine and Barbara Santandrea, jointly(7)
   
63,113
     
1.2
%
   
4,013
     
59,100
     
1.2
%
MIN Capital Retirement Trust(7)(11)
   
2,765
     
*
 
   
2,765
     
0
     
*
%
Warren Duffy(7)
   
4,013
     
*
     
4,013
     
0
     
*
 
Martin Leibowitz Trust(7)(12)
   
27,676
     
*
     
2,676
     
25,000
     
*
 
Michael S. Wasik(13)
   
427,336
     
8.1
%    
252,336
     
175,000
     
3.1
 
Westerman Ball Ederer Miller & Sharfstein, LLP (14)
   
20,000
     
*
 
   
20,000
     
0
     
*
%
 
* less than 1%
 
(1) Verition Fund Management LLC serves as the investment manager to Verition Multi-Strategy Master Fund Ltd. and Wilmot Advisors LLC.  In such capacity, Verition Fund Management LLC may be deemed to have voting and investment power with respect to the shares held by Verition Multi-Strategy Master Fund Ltd. ad Wilmot Advisors LLC.  Nicholas Maounis is currently the managing member of Verition Fund Management LLC and in such capacity may be deemed to have has voting and investment power with respect to the shares held by Verition Multi-Strategy Master Fund Ltd. and Wilmot Advisors LLC.
 
(2) Manousos Vourkoutiotis may be deemed to have voting and investment power with respect to the shares held by Arceus Partnership.
 
(3)  The shares being offered hereby were acquired from Roomlinx in private placements on April 29, 2010 and/or August 18, 2010 at a purchase price of $4.00 per share.  In connection with that acquisition, we agreed to file a registration statement, of which this prospectus forms a part, covering the resale of those shares.
 
(4)  The shares being offered hereby were acquired by the selling stockholder on October 1, 2010 in partial consideration of for the sale to Roomlinx of 100% of the membership interests of Canadian Communications, LLC.  Bailey Peyton may be deemed to have voting and investment power with respect to the shares held by this Selling Stockholder.
 
(5)  The shares being offered hereby were acquired by the selling stockholder on October 1, 2010 in partial consideration of for the sale to Roomlinx of 100% of the membership interests of Canadian Communications, LLC.  Edwin L. Buckmaster may be deemed to have voting and investment power with respect to the shares held by this Selling Stockholder.
 
 
48

 
 
(6) The shares being offered hereby were acquired by the selling stockholder on October 1, 2010 in partial consideration of for the sale to Roomlinx of 100% of the membership interests of Canadian Communications, LLC.  Edouard A . Garneau, the Chief Financial Officer of Roomlinx, may be deemed to have voting and investment power with respect to the shares held by this Selling Stockholder.
 
(7)  The shares being offered hereby were issued to the Selling Stockholder on September 9, 2009 upon conversion of convertible debt originally purchased during June 2007.
 
( 8 )  W. Austin Lewis IV may be deemed to have voting and investment power with respect to the shares held by this Selling Stockholder.
 
( 9 )  Ronald I. Heller may be deemed to have voting and investment power with respect to the shares held by this Selling Stockholder.
 
( 10 )  The shares being offered hereby consist of (i) 2,675 issued and outstanding shares (issued to the Selling Stockholder on September 9, 2009 upon conversion of convertible debt) and (ii) 21,000 shares issuable upon exercise of warrants at $4.50 per share (issued to the Selling stockholder on November 18, 2010 as compensation for services rendered).
 
( 11 )  Robert Friedman is the trustee of this Selling Stockholder and in such capacity may be deemed to have voting and investment power with respect to the shares held by it.
 
( 12 )  Martin Leibowitz is the trustee of this Selling Stockholder and in such capacity may be deemed to have voting and investment power with respect to the shares held by it.
 
( 13 )  The shares being offered hereby were issued to Mr. Wasik, the Company’s CEO, in connection with the August 10, 2005 merger of SuiteSpeed, Inc. (a company Mr. Wasik founded) into Roomlinx.
 
( 14 )  The shares being offered hereby were issued in 2006 to Westerman Ball Ederer Miller & Sharfstein, LLP, the Company’s outside legal counsel, as payment for legal services rendered.  Alan C. Ederer may be deemed to have voting and investment power with respect to the shares held by this Selling Stockholder.

 
49

 

PLAN OF DISTRIBUTION
 
We are registering the shares of common stock offered by this prospectus on behalf of the Selling Stockholders.  As used in this prospectus, “Selling Stockholder” includes donees, pledges, transferees and other successors in interest selling shares received from a Selling Stockholder after the date of this prospectus, whether as a gift, pledge, partnership distribution or other form of transfer.  All costs, expenses and fees in connection with the registration of the shares of common stock offered hereby will be borne by the Selling Stockholders.  Brokerage commissions and similar selling expenses, if any, attributable to the sale of shares of common stock will be borne by the Selling Stockholders.
 
Sales of shares of common stock offered hereby may be effected by the Selling Stockholders from time to time in one or more types of transactions (which may include block transactions):
 
 
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
 
 
block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;
 
 
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
 
 
an exchange distribution in accordance with the rules of the applicable exchange;
 
 
privately negotiated transactions;
  
 
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
 
 
broker-dealers may agree with the selling stockholder to sell a specified number of such shares at a stipulated price per share;
 
 
a combination of any such methods of sale; and
 
 
any other method permitted pursuant to applicable law.
 
The Selling Stockholders may effect sales of shares of common stock offered hereby at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at privately negotiated prices.  Any of these transactions may or may not involve brokers or dealers.  Any such broker-dealers may receive compensation in the form of discounts, concessions, or commissions from the Selling Stockholders and/or the purchaser(s) of shares of common stock for whom those broker-dealers may act as agents or to whom they sell as principal, or both (which compensation as to a particular broker-dealer might be in excess of customary commissions).  The Selling Stockholders have advised us that the Selling Stockholders have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their securities, nor is there any underwriter or coordinating broker acting in connection with the proposed sale of shares of common stock by the Selling Stockholders.  In the event a Selling Stockholders engages a broker-dealer or other person to sell the shares offered hereby, the names of such agents and the compensation arrangements will be disclosed in a post-effective amendment to the Registration Statement to which this prospectus relates, which must be filed prior to any such sales.
 
The Selling Stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as a Selling Stockholder under this prospectus. The Selling Stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
 
 
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In connection with the sale of our common stock or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume.  The Selling Stockholders may also loan or pledge the common stock to broker-dealers that in turn may sell these securities.  The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities, which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
 
The aggregate proceeds to the Selling Stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any.  The Selling Stockholders reserve the right to accept and, together with his agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents.
 
The Selling Stockholders may also resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act, provided that they meet the criteria and conform to the requirements of that rule.
 
A selling stockholder that is a broker-dealer is deemed to be an “underwriter” within the meaning of Section 2(11) of the Securities Act in connection with the sale of shares offered hereby.  A selling stockholder that is not a broker-dealer that acts in connection with the sale of the shares offered hereby might be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act. Any commissions received by deemed “underwriters” within the meaning of Section 2(11) of the Securities Act and any profit on the resale of the securities sold by them while acting as principals might be deemed to be underwriting discounts or commissions under the Securities Act.  No Selling Stockholder is a broker-dealer or an affiliate of a broker-dealer, except as indicated in the notes to the table of Selling Stockholders above under “Selling Stockholders”.  Each Selling Stockholder who is a broker-dealer or an affiliate of a broker-dealer has certified to us that it acquired the securities subject to this prospectus and the registration statement of which it forms a part, in the ordinary course of such Selling Stockholder’s business and, at the time of its purchase of such securities, such Selling Stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.
 
To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.
 
In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers.  In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
 
We have advised each Selling Stockholder that it may not use shares covered under this prospectus and the registration statement of which it forms a part, to cover short sales of common stock made prior to the date on which the registration statement shall have been declared effective by the Securities and Exchange Commission.  If a Selling Stockholder uses this prospectus for any sale of the common stock, it will be subject to the prospectus delivery requirements of the Securities Act. The Selling Stockholders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such Selling Stockholders in connection with resales of their respective shares under the registration statement.
 
 
51

 
 
 In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the Selling Stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act.  The Selling Stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.
 
We have agreed to indemnify the Selling Stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.
 
The offering being conducted pursuant to this prospectus will terminate on the date on which (i) all of the issued and outstanding shares of our common stock being offered hereby have been sold hereunder and (ii) all of the Warrants expire and/or have been exercised in full for shares of our common stock and such shares have been sold hereunder.
 
Penny Stock Rules
 
You should note that our common stock is a penny stock covered by Rules 15g-1 through 15g-6 and 15g-9 promulgated under the Securities Exchange Act of 1934, as amended. Under those Rules, a “penny stock” is generally defined to be any equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Those Rules impose additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The Rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the Rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the Rules require that prior to a transaction in a penny stock not otherwise exempt from these Rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these Rules. Consequently, these Rules may affect the ability of broker-dealers to trade our shares of our common stock. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock and may also affect your ability to resell your shares of common stock due to broker-dealer reluctance to undertake the above described regulatory burdens.
 
Shares Eligible For Future Sale
 
Upon completion of this offering and assuming the issuance of all of the shares covered by this prospectus that are issuable upon exercise of warrants, there will be 5, 134,423 shares of our common stock issued and outstanding.  In addition, there will be (i) 639,550 shares issuable upon exercise of additional outstanding warrants to purchase our common stock, (ii)  237,167 shares issuable upon the exercise of outstanding vested options to purchase our common stock, and (iii) 129,027 shares issuable upon the exercise of outstanding options to purchase our common stock which have not yet vested. The shares purchased in this offering will be freely tradable without registration or other restriction under the Securities Act, except for any shares purchased by an “affiliate” of our Company (as defined under the Securities Act).
 
 
52

 
 
Our currently outstanding shares of common stock that were issued in reliance upon the “private placement” exemptions under the Securities Act are deemed “restricted securities” within the meaning of Rule 144 under the Securities Act.  Restricted securities may not be sold unless they are registered under the Securities Act or are sold pursuant to an applicable exemption from registration, including an exemption under Rule 144.
 
In general, under Rule 144, any person (or persons whose shares are aggregated) including persons deemed to be affiliates, whose restricted securities have been fully paid for and held for at least six months from the later of the date of issuance by us or acquisition from an affiliate, may sell such securities in broker’s transactions or directly to market makers, provided, in the case of sales by an affiliate, that the number of shares sold in any three-month period may not exceed the greater of one percent of the then-outstanding shares of our common stock or the average weekly trading volume of our shares of common stock in the over-the-counter market during the four calendar weeks preceding the sale.  Sales under Rule 144 are also subject to the availability of current public information about our Company and, with respect to affiliates, certain notice requirements.  After one year has elapsed from the later of the issuance of restricted securities by us or their acquisition from an affiliate, such securities may be sold without limitation by persons who are not affiliates under the rule.
 
We are unable to predict with certainty the effect which sales of the shares of common stock offered by this prospectus might have upon our ability to raise additional capital.  Nevertheless, it is possible that the resale of shares offered hereby could adversely affect the trading price of our common stock.

 
53

 

DESCRIPTION OF SECURITIES
 
Our authorized capital stock consists of 200,000,000 shares of common stock, par value $.001 per share (“Common Stock”), and 5,000,000 shares of preferred stock, par value $.20 per share (“Preferred Stock”), of which 720,000 shares have been designated as “Class A Preferred Stock”.  As of the close of business on May 20, 2011 , there were 5,113,423 shares of Common Stock and 720,000 shares of Class A Preferred Stock issued and outstanding.  In addition, there were (i) 660,550 shares of Common Stock issuable upon exercise of outstanding Warrants to purchase our Common Stock, (ii) 237,167 shares of Common Stock issuable upon the exercise of outstanding vested Options to purchase our Common Stock, and (iii) 129,027 shares of Common Stock issuable upon the exercise of outstanding Options to purchase our Common Stock which have not yet vested.  Both the Common Stock and Class A Preferred Stock are registered under Section 12(g) of the Securities Exchange Act of 1934, as amended.  A description follows:
 
Common Stock
 
Voting Rights.  A Holder of Common Stock is entitled to one vote per share of Common Stock on all matters submitted for action by the stockholders.  A quorum for the transaction of business at any meeting of the holders of Common Stock is the majority of the votes of all shares issued and outstanding. All shares of Common Stock are equal to each  other  with  respect  to the  election  of  directors; therefore,  the holders of more than 50% of the outstanding Common Stock present at a  meeting  at which a quorum is  present  and at which  directors  are being elected  can, if they choose to do so,  elect all of the  directors.  Thus, the holders of as little as 25.01% of the outstanding Common Stock could elect directors.  The terms of directors are not staggered.  Directors are elected annually to serve until the next annual meeting of stockholders and until their successor is elected and qualified.  Stockholders do not have rights to cumulate their votes in the election of directors under our bylaws or applicable provisions of the Private Corporations Law of the State of Nevada.
 
Dividends.  The holders of common stock have the right to receive dividends, when and if declared, by our Board of Directors out of funds legally available therefor. We have not paid any cash dividends on our common stock since our inception.  There are no restrictions currently in effect which preclude us from declaring dividends, with the exception that dividends may not be paid on Common Stock while there are unpaid dividends on the Class A Preferred Stock, which bears a 9% cumulative dividend.  As of  March 31, 201 1 , unpaid Class A Preferred Stock dividends aggregated $1 62 , 480 .  It is our current intention to retain any earnings in the foreseeable future to finance the growth and development of our business and not pay dividends on the Common Stock.
 
 Liquidation. If we liquidate, holders of our Common Stock would share ratably in any assets available for distribution to stockholders after payment of all our obligations.
 
Other. Holders of our Common Stock are not entitled to any preemptive or subscription rights. All issued and outstanding shares of Common Stock are fully paid and non-assessable.
 
Preferred Stock
 
Under our Articles of Incorporation, the board of directors has the power, without further action by the holders of the Common Stock, to designate the relative rights and preferences of the Preferred Stock, and to issue the Preferred Stock in one or more series as designated by the board of directors. The designation of rights and preferences could include preferences as to liquidation, redemption and conversion rights, voting rights, dividends or other preferences, any of which may be dilutive of the interest of the holders of the common stock or the Preferred Stock of any other series. The issuance of Preferred Stock may have the effect of delaying or preventing a change in control of the Company without further stockholder action and may adversely affect the rights and powers, including voting rights, of the holders of the common stock.
 
Currently, the shares of Preferred Stock we have outstanding are 720,000 shares of Class A Preferred Stock.
 
 
54

 
 
Class A Preferred Stock
 
Dividends.  Dividends are payable on outstanding shares of Class A Preferred Stock at the rate of 9% per annum, payable in either cash or additional shares of Class A Preferred Stock, at the option of the Company.  As of  March 31, 201 1 , unpaid Class A Preferred Stock dividends aggregated $ 162 , 48 0.
 
Redemption.  Shares of Class A Preferred Stock may be redeemed at the election of the Company at any time and from time to time in whole or in part by paying $0.20 per share plus all unpaid dividends, but only after 30-days prior written notice.
 
Voting and Other Rights.  Shares of Class A Preferred Stock carry preferential liquidation rights at $0.20 per share plus all accrued but unpaid dividends, but do not have voting rights or a sinking fund for redemption.
 
Warrants
 
As of May 20 , 2011, we had warrants outstanding exercisable for the purchase of an aggregate of 660,550 shares of our Common Stock (“Warrant Shares”).  The registration statement of which this prospectus forms a part covers the registration of 21,000 Warrant Shares.  The warrants may be exercised for the following aggregate number of Warrant Shares and have the following exercise prices per share and expiration dates:
  
Number of Shares of
Common Stock for
which Warrants Exercisable
Exercise Price
per Share
Expiration Date
50,000
$2.00
April 26, 2014
65,000
$2.00
March 3, 2014
3,750
$2.30
November 24, 2012
70,000
$3.00
June 11, 2012
39,000
$3.00
December 28, 2011
200,000
$4.00
July 31, 2011
32,800
$4.50
November 18, 2015
200,000
$6.00
July 31, 2011
 
Antitakeover Effects of Provisions of Nevada Law and Our Articles of Incorporation
 
Provisions of Nevada law and our Articles of Incorporation could discourage takeover attempts. These include the following:
 
Nevada Business Combination Law.  Nevada has a business combination law, which prohibits certain business combinations between Nevada corporations and “interested stockholders” for three years after the interested stockholder first becomes an interested stockholder, unless the corporation’s Board of Directors approves the combination in advance.  For purposes of Nevada law, an interested stockholder is any person who is: (a) the beneficial owner, directly or indirectly, of 10% or more of the voting power of the outstanding voting shares of the corporation, or (b) an affiliate or associate of the corporation and at any time within the previous three years was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then-outstanding shares of the corporation.  The definition of “business combination” contained in the statute is sufficiently broad to cover virtually any kind of transaction that would allow a potential acquirer to use the corporation’s assets to finance the acquisition or otherwise to benefit its own interests rather than the interests of the corporation and its other stockholders.  The effect of Nevada’s business combination law is to potentially discourage parties interested in taking control of our Company from doing so if it cannot obtain the approval of our Board of Directors.
 
 
55

 
 
Our Right to Issue Preferred Stock. Our Articles of Incorporation grants our Board of Directors authority to, without any action by our stockholders, issue preferred stock with voting rights or preferences that could prevent or discourage unsolicited takeover attempts.
 
Nevada Control Share Law.  We are not now subject to Nevada’s control share law.  However, in the future we may become subject to it.  A corporation is subject to Nevada’s control share law if it has more than 200 stockholders, at least 100 of whom are stockholders of record and residents of Nevada, and it does business in Nevada or through an affiliated corporation. The law focuses on the acquisition of a “controlling interest” which means the ownership of outstanding voting shares sufficient, but for the control share law, to enable the acquiring person to exercise the following proportions of the voting power of the corporation in the election of directors: (i) one-fifth or more but less than one-third, (ii) one-third or more but less than a majority, or (iii) a majority or more.  The ability to exercise such voting power may be direct or indirect, as well as individual or in association with others.  The effect of the control share law is that the acquiring person, and those acting in association with it, obtains only such voting rights in the control shares as are conferred by a resolution of the stockholders of the corporation, approved at a special or annual meeting of stockholders.  The control share law contemplates that voting rights will be considered only once by the other stockholders.  Thus, there is no authority to strip voting rights from the control shares of an acquiring person once those rights have been approved. If the stockholders do not grant voting rights to the control shares acquired by an acquiring person, those shares do not become permanent non-voting shares. The acquiring person is free to sell its shares to others. If the buyers of those shares themselves do not acquire a controlling interest, their shares do not become governed by the control share law.  If control shares are accorded full voting rights and the acquiring person has acquired control shares with a majority or more of the voting power, any stockholder of record, other than an acquiring person, who has not voted in favor of approval of voting rights is entitled to demand fair value for such stockholder’s shares.  Nevada’s control share law may have the effect of discouraging takeovers of the Company.
 
INTEREST OF NAMED EXPERTS AND COUNSEL
 
As of May 31 , 2011, Westerman Ball Ederer Miller & Sharfstein, LLP, our outside legal counsel, owned 20,000 shares of our Common Stock, all of which are being offered hereby.

 
56

 

DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
 
The Nevada Private Corporations Law generally provides that a corporation is empowered to indemnify any person who is made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving, at the request of the corporation, in any of such capacities of another corporation or other enterprise, if such director, officer, employee or agent acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Under Nevada law, a director or officer may not be indemnified where his act or failure to act constitutes a breach of his or her fiduciary duty and such breach involved intentional misconduct, fraud, or a knowing violation of law. This statute describes in detail the right of corporations such as our Company to indemnify any such person.
 
Our Articles of Incorporation and our By-laws provide generally for mandatory indemnification of our directors and officers to the fullest extent permitted under the Nevada Private Corporations Law if they have been successful in the defense of any claim asserted against them, and permissive indemnification for any claim asserted against them if it appears they acted in good faith and in a manner not opposed to the best interests of the Company. We are also permitted to indemnify all other persons whom we requested to act on behalf of the Company in the same manner. Our By-Laws permit us to advance expenses on behalf of any person, including officers and directors, with regard to any action or proceeding, provided that we receive an undertaking to repay all such advances if it is determined that such person was not entitled to be indemnified by us.  Additionally, we have entered into individual Indemnification Agreements with each of our directors and officers to implement with more specificity the indemnification provisions provided by the Company’s By-Laws and provide, among other things, that to the fullest extent permitted by applicable law, the Company will indemnify such director or officer against any and all losses, expenses and liabilities arising out of such director’s or officer’s service as a director or officer of the Company, as the case may be. The Indemnification Agreements also contain detailed provisions concerning expense advancement and reimbursement.
 
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and persons controlling our Company pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. 
 
In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of our Company in the successful defense of any action, suit or proceeding) is asserted by any of our directors, officers or controlling persons in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of that issue.
 
ABOUT THIS PROSPECTUS
 
This prospectus is not an offer or solicitation in respect to these securities in any jurisdiction in which such offer or solicitation would be unlawful.  This prospectus is part of a registration statement that we filed with the SEC.  The registration statement that contains this prospectus (including the exhibits to the registration statement) contains additional information about our company and the securities offered under this prospectus.  That registration statement can be read at the SEC’s website or offices indicated under the section of this prospectus entitled “Where You Can Find More Information.”  We have not authorized anyone else to provide you with different information or additional information.  You should not assume that the information in this prospectus, or any supplement or amendment to this prospectus, is accurate at any date other than the date indicated on the cover page of such documents.
 
 
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WHERE YOU CAN FIND MORE INFORMATION
 
Federal securities law requires us to file information with the SEC concerning our business and operations. Accordingly, we file annual, quarterly, and special reports and other information with the SEC. You may read and copy any of this material at the Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may receive information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding companies that, like us, file information electronically with the SEC.  Upon written request delivered to Roomlinx, Inc., Attn:  Michael S. Wasik, CEO, 2150 W. 6th Ave., Unit H, Broomfield, CO 80020, we will send to any securityholder a copy of our annual report, complete with audited financial statements, at no charge to the securityholder.
 
VALIDITY OF COMMON STOCK
 
Legal matters in connection with the validity of the shares offered by this prospectus will be passed upon by Westerman Ball Ederer Miller & Sharfstein, LLP, of Uniondale, New York.
 
TRANSFER AGENT
 
The current transfer agent for the shares of our Common Stock is American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, NY 11219.
 
EXPERTS
 
        The consolidated financial statements of the Company as of December 31, 2010 and 2009 included in this Prospectus and Registration Statement have been included herein in reliance on the report of StarkSchenkein, LLP, independent registered certified public accounting firm, given on the authority of that firm as experts in accounting and auditing.
 
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
None.
 
INCORPORATION BY REFERENCE
 
We maintain an internet site at http://www.roomlinx.com which contains information concerning our Company. The information contained on our internet site is not incorporated by reference in this prospectus and should not be considered a part of this prospectus.

 
58

 
 
 
ROOMLINX, INC.
 
INDEX TO FINANCIAL STATEMENTS
 
Roomlinx, Inc. Financial Statements for the Fiscal Years Ended December 31, 2010 and 2009
 
Page
     
Report of Independent Registered Public Accounting Firm
 
F-2
     
Consolidated Balance Sheets as of December 31, 2010 and 2009
 
F-3
     
Consolidated Statements of Operations for the Years ended December 31, 2010 and 2009
 
F-4
     
Consolidated Statements of Cash Flows for Years ended December 31, 2010 and 2009
 
F-5
     
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Years ended December 31, 2010 and 2009
 
F-6
     
Notes to Consolidated Financial Statements
 
F-7
     
Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010   F-29
     
Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010   F-30
     
Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010
  F-31
     
Notes to Consolidated Financial Statements
  F-32
 
 
F-1

 
 
 
(STARK SCHENKEIN LLP LOGO)
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
Shareholders and Board of Directors
Roomlinx, Inc.

We have audited the accompanying consolidated balance sheets of Roomlinx, Inc., as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Roomlinx, Inc., as of December 31, 2010 and 2009, and the results of its consolidated operations, and its consolidated cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
 
Denver, Colorado
March 31, 2011
 
3600 South Yosemite Street | Suite 600 | Denver, CO 80237 | P: 303.694.6700 | TF: 888.766.3985 | F: 303.694.6761 | www.starkcpas.com
An Independent Member of BKR International
 
 
F-2

 
 
Roomlinx, Inc.
CONSOLIDATED BALANCE SHEETS
December 31,
             
   
2010
   
2009
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
  $ 314,368     $ 656,080  
Accounts receivable, net
    853,000       458,614  
Leases receivable, current portion
    446,329       85,145  
Prepaid and other current assets
    135,422       34,296  
Inventory
    892,501       240,755  
Total current assets
    2,641,620       1,474,890  
                 
Property and equipment, net
    2,665,565       267,378  
Leases receivable, non-current
    1,486,939       341,620  
Total assets
  $ 6,794,124     $ 2,083,888  
                 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
                 
Current liabilities:
               
Accounts payable and accrued expenses
  $ 956,408     $ 337,796  
Accrued interest
    9,927       3,437  
Capital lease, current portion
    10,361       9,615  
Notes payable, current portion
    66,581       -  
Deferred revenue
    136,530       200,477  
Total current liabilities
    1,179,807       551,325  
                 
Capital lease, non-current
    5,479       15,840  
Notes payable, non-current
    59,286       -  
Line of credit, net of discount
    1,195,938       464,000  
                 
Total liabilities
    2,440,510       1,031,165  
                 
Stockholders’ equity: