10-Q

Table Of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

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

For the quarterly period ended September 30, 2015

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________   To __________

Commission file number 000-31037

eRoomSystem Technologies, Inc.

(Exact name of registrant as specified in its charter)

Nevada	87-0540713
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
150 Airport Road, Suite 1200, Lakewood, NJ	08701
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code: (732) 730-0116

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

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

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

Large accelerated filer           ☐	Accelerated filer                    ☐
Non-accelerated filer             ☐	Smaller reporting company   ☒
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐    No ☒

The number of shares of the issuer’s common stock issued and outstanding as of November 4, 2015 was 24,217,865 shares.

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EROOMSYSTEM TECHNOLOGIES, INC.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	8
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	11
Item 4.	Controls and Procedures	12
PART II - OTHER INFORMATION		13
Item 1.	Legal Proceedings	13
Item 1A.	Risk Factors	13
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 3.	Defaults Upon Senior Securities	13
Item 4.	Mine Safety Disclosures	13
Item 5.	Other Information	13
Item 6.	Exhibits	13

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	Sept 30,			December 31,
	2015			2014
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,411,699		$	1,453,971
Restricted cash		-			61,350
Investment in available for sale securities		24,018			24,455
Notes receivable		824,415			702,500
Accounts receivable, net of allowance for doubtful accounts of $7,805 and $5,101		103,698			67,771
Inventory		104,278			79,191
Advance to hotels		76,343			74,370
Prepaid expenses		10,647			111,064
Total Current Assets		2,555,098			2,574,672
PROPERTY AND EQUIPMENT
Property and equipment, net of accumulated depreciation of $22,001 and $15,409		47,383			63,287
INVESTMENT IN REAL PROPERTY TAX LIENS		26,386			22,688
DEPOSITS		2,933			2,933
Total Assets	$	2,631,800		$	2,663,580
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	27,396		$	22,783
Accrued liabilities		54,394			87,998
Securities borrowed		-			60,959
Total Current Liabilities		81,790			171,740
Total Liabilities		81,790			171,740
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 5,000,000 shares authorized; none outstanding		-			-
Common stock, $0.001 par value; 50,000,000 shares authorized; shares outstanding 24,217,865 and 24,167,865		24,218			24,168
Additional paid-in capital		34,211,957			34,203,953
Accumulated deficit		(31,687,449	)		(31,738,002	)
Accumulated other comprehensive income		1,284			1,721
Total Stockholders' Equity		2,550,010			2,491,840
Total Liabilities and Stockholders' Equity	$	2,631,800		$	2,663,580

See accompanying notes to condensed consolidated financial statements.

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eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

	For the three months ended September 30,						For the nine months ended September 30,
	2015			2014			2015			2014
REVENUE	$	229,873		$	198,051		$	644,163		$	577,632
COST OF REVENUE		137,596			97,838			371,963			303,364
GROSS MARGIN		92,277			100,213			272,200			274,268
OPERATING EXPENSES
Selling, general and administrative expense, including non-cash compensation of $1,619, $600, $8,054 and $8,669		95,114			98,224			290,382			324,183
Research and development expense		13,103			8,633			35,672			33,073
Net Operating Expenses		108,217			106,857			326,054			357,256
OTHER INCOME
Investment Income		23,464			15,973			104,407			186,284
Net Income		7,524			9,329			50,553			103,296
Other Comprehensive Income
Unrealized holding gain (loss)		(801	)		(191	)		(437	)		15,542
Reclassification to realized gain (included in net income)		-			-			-			(14,858	)
Comprehensive Income	$	6,723		$	9,138		$	50,116		$	103,980
Basic Income Per Common Share	$	0.00		$	0.00		$	0.00		$	0.00
Diluted Income Per Common Share	$	0.00		$	0.00		$	0.00		$	0.00

See accompanying notes to condensed consolidated financial statements.

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eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 

	For the nine months ended September 30,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	50,553		$	103,296
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		8,441			8,138
Accrued interest receivable		(2,539	)		(2,000	)
Gain on sale of marketable securities		(40,160	)		(14,858	)
Gain on sale of equipment		-			(850	)
Loss on writedown of equipment		-			33,645
Loss on writedown of note receivable		-			22,500
Non-cash compensation expense		8,054			8,669
Changes in operating assets and liabilities:
Restricted cash		61,350			-
Accounts receivable		(35,927	)		(26,829	)
Inventory		(17,624	)		(34,983	)
Advance to hotels		(1,973	)		(15,083	)
Prepaid expenses		417			(3,552	)
Accounts payable		4,613			9,844
Accrued liabilities		(33,604	)		(30,430	)
Borrowed shares		(60,959	)		-
Customer deposits		-			(4,313	)
Net Cash Provided by (Used In) Operating Activities		(59,358	)		53,194
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		-			(6,901	)
Purchases of investments in real property tax liens		(3,698	)		(9,266	)
Proceeds from sale of equipment		-			850
Advances made under notes receivable		(390,000	)		(250,000	)
Proceeds from collection of note receivable		270,624			250,000
Purchase of marketable securities		(618,107	)		(25,000	)
Proceeds from sale of marketable securities		758,267			39,858
Proceeds from collection of note receivable, non-performing		-			399,863
Net Cash Provided by Investing Activities		17,086			399,404
Net Increase (Decrease) in Cash		(42,272	)		452,598
Cash and cash equivalents at Beginning of Period		1,453,971			1,376,822
Cash and cash equivalents at End of Period	$	1,411,699		$	1,829,420

See accompanying notes to condensed consolidated financial statements.

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eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Condensed Financial Statements - The accompanying unaudited condensed consolidated financial statements include the accounts of eRoomSystem Technologies, Inc. and its wholly-owned subsidiaries (the "Company"). Intercompany accounts and transactions have been eliminated in consolidation. These financial statements are condensed and, therefore, do not include all disclosures normally required by generally accepted accounting principles. These statements should be read in conjunction with the Company's annual financial statements for the fiscal year ended December 31, 2014 included in the Company's Annual Report on Form 10-K. In particular, the Company's organization, nature of operations and significant accounting principles were presented in Note 1 to the consolidated financial statements in that annual report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying unaudited condensed consolidated financial statements for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015.

Cash and Cash Equivalents – Cash and cash equivalents include highly-liquid debt investments with original maturities of three months or less, readily convertible to known amounts of cash.

Investments in Debt Securities Available for Sale – Debt and equity securities available for sale include securities that can be sold at any time based upon needs or market conditions. Available for sale securities are accounted for at fair value, with unrealized gains and losses on these securities, net of income tax provisions, reflected in stockholders’ equity as accumulated other comprehensive income (loss).

Accounts Receivable - Accounts receivable are stated at the historical carrying amount, net of write-offs and allowances. The Company has established an overall allowance based upon historical experience of 7% of the outstanding balance in addition to any specific customer collection issues identified by the Company. Uncollectible accounts receivable are written off when a settlement is reached or when the Company has determined that the balance will not be collected.

Inventory - The Company maintains an inventory of product that is sold in the refreshment centers in a number of hotels. The inventory is purchased as finished goods and is valued using the first in, first out method.

Advances to Hotels – The Company makes advances to hotels for their purchases of alcoholic beverages. The hotels’ alcoholic beverages are placed in the Company’s refreshment centers and the advances are settled at the date the hotel customers purchase the beverages from the refreshment centers.

Notes Receivable - The notes receivable are stated at the historical carrying amount, less a loan loss allowance, and are evaluated for impairment. When projections indicate that the carrying value of the note is not recoverable, the carrying value will be reduced by the estimated excess of the carrying value over the projected discounted cash flows. The Company has evaluated the collectability of current notes receivable and believes the notes are realizable as they are secured by the related real property and the estimated fair value of the real property is in excess of the carrying value of the notes and the estimated cost to foreclose and sell the real property.

Investment in Real Property Tax Liens – The investments in the real property tax liens are accounted for as an investment in troubled debts and are carried at cost. Collection of interest, penalties and expense reimbursements is not certain and is recognized upon being realized. The Company has evaluated the collectability of the tax liens and believes the investments are realizable over time as the first position liens are secured by the related real property and the estimated fair value of the real property is in excess of the carrying value of the tax liens and the estimated cost to foreclose and sell the real property. Therefore no impairment was recognized on the tax liens at September 30, 2015 and December 31, 2014.

Property and Equipment: Property and equipment consist primarily of eRoomServ refreshment centers and are stated at cost, less accumulated depreciation. Major additions and improvements are capitalized, while repairs and maintenance costs are expensed when incurred.

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eROOMSYSTEM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Net Earnings per Common Share - Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income, by the weighted-average number of common shares and dilutive potential common share equivalents outstanding. When dilutive, the incremental potential common shares issuable upon exercise of stock options are determined by the treasury stock method.

The following table is a reconciliation of the numerators and denominators used in the calculation of basic and diluted loss per share for the three and nine months ended September 30, 2015 and 2014:  

	For the three months ended September 30,				For the nine months ended September 30,
	2015		2014		2015		2014
Net income	$	7,524	$	9,329	$	50,553	$	103,296
Basic weighted-average common shares outstanding		24,217,865		24,164,278		24,187,462		24,146,326
Effect of dilutive securities
Stock options and warrants		63,920		1,471		57,593		1,023
Diluted weighted-average common shares outstanding		24,281,785		24,165,749		24,245,055		24,147,349
Basic income per share	$	0.00	$	0.00	$	0.00	$	0.00
Diluted income per share	$	0.00	$	0.00	$	0.00	$	0.00

During the nine months ended September 30, 2015 and 2014, there were 92,500 and 267,500, respectively, of potential common stock equivalents from options that were not included in the computation of diluted loss per share because their effect would have been anti-dilutive.

NOTE 2 – INVESTMENTS

Investment in Real Property Tax Liens – At September 30, 2015, the Company held $26,386 of real property tax liens, carried at lower of cost or estimated net realizable value, from various municipalities in New Jersey. The New Jersey municipal tax liens are receivable from the real property owners and are secured by a first priority lien on the related real property. Upon foreclosure, the Company would obtain ownership of the real property. The tax lien receivables accrue interest up to 18% per annum, accrue penalties at 2% to 6% and are also increased by the amount of any collection expenses incurred. Additional investments in real property tax liens were made during the nine months ended September 30, 2015 in the amount of $3,698. The investment in the real property tax liens are accounted for as an investment in troubled debts and are carried at cost. Collection of interest, penalties and expense reimbursements is not certain and is recognized upon being realized.

Investment in Available for Sale Debt Securities

Debt and Equity Securities	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
Corporate Debt Securities	$	22,734	$	1,284	$	-	$	24,018

The corporate debt securities mature on August 31, 2018 and May 29, 2020.

NOTE 3 – NOTES RECEIVABLE

Non-Performing Loan

On July 24, 2008, the Company loaned $500,000 to BlackBird Corporation (“BlackBird”) under the terms of a 10% senior secured convertible promissory note (the “Secured Note”). The Secured Note bore interest at 10% per annum, payable quarterly, and was due June 30, 2009. In addition, BlackBird issued 50,000 shares of its common stock to the Company. BlackBird further agreed in July 2008, notwithstanding the terms of the note, if the loan was not repaid by January 1, 2009, interest on the note would accrue at 18% per annum starting January 1, 2009. The Secured Note was not paid by January 1, 2009 and it continued to accrue interest at 18% per annum. On April 1, 2011, the Company agreed to extend the due date of the Secured Note to June 30, 2011.

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BlackBird did not pay its interest payment for the second quarter of 2011 in a timely fashion. On November 3, 2011, the Company entered into a forbearance agreement with BlackBird to reduce the interest rate on the Secured Note to 10% retroactive to April 1, 2011 and to not foreclose on BlackBird’s assets if BlackBird remains in compliance with the terms of the agreement. As part of this agreement, BlackBird agreed to pay all outstanding interest due on the loan through September 30, 2011 by November 11, 2011. BlackBird also agreed to make monthly interest payments within 10 days after the end of each month. The outstanding accrued interest of $25,069 as of September 30, 2011 was paid in full on November 10, 2011.

The concession granted to BlackBird on November 3, 2011 constituted a troubled debt restructuring under current accounting guidance. As a result, the note was classified as a long-term asset. Interest income under the terms of the Secured Note was no longer being recognized until the carrying value would be recovered, and payments received were recognized as a reduction of the carrying value of the note. During second quarter 2014, the Secured Note was paid in full and interest income of $124,451 was recognized. The carrying value of the note receivable was $399,863 at December 31, 2013.

Notes Receivable

In 2015 and 2014, the Company loaned $1,090,000 in amounts ranging from $250,000 to $450,000 to various parties for a one year term with mortgage notes ranging in interest from 5% - 12%. Interest is due and payable monthly. The entire principal amounts are due and payable on the maturity date. The mortgages are collateralized by either commercial or residential property. Proceeds collected on these notes in 2015 and 2014 totaled $270,624 and $400,000, respectively. The carrying amounts of loans outstanding on September 30, 2015 and December 31, 2014 were $824,415 and $702,500 including interest accrued. The carrying amount of the note receivable approximates its fair value based on its short-term maturity.

Accrued interest on notes receivable was $5,039 and $2,500 at September 30, 2015 and December 31, 2014 respectively, and was included in notes receivable in the accompanying consolidated balance sheets.

NOTE 4 – STOCKHOLDERS’ EQUITY

During the nine months ended September 30, 2014, the Company granted options to purchase 75,000 shares of common stock to employees for services rendered. These options, which vested immediately, have an exercise price of $0.05 per share and are exercisable through March 24, 2019. These options were valued at approximately $0.04 per share, or $3,069, using the Black-Scholes option pricing model with the following assumptions: market value of the common stock of $0.05 per share, risk free interest rate of 1.76%, dividend yield of 0.0%, volatility of 117% and expected life of 5 years. The pricing model utilized the full life of the options as the Company generally has a low turnover rate of its employees.

During the nine months ended September 30, 2015, the Company granted options to purchase 75,000 shares of common stock to an employee and a consultant for services rendered. These options, which vested immediately, have an exercise price range of $0.06 to $0.08 per share and are exercisable through August 31, 2020. These options were valued at approximately $0.05 per share, or $4,054, using the Black-Scholes option pricing model with the following assumptions: market value of the common stock of $0.06 to $0.08 per share, risk free interest rate of 1.36% through 1.47%, dividend yield of 0.0%, volatility of 115%-116% and expected life of 5 years. The pricing model utilized the full life of the options as the Company generally has a low turnover rate of its employees.

Stock-based compensation expense relating to stock options of $8,054 and $8,669 was recognized during the nine months ended September 30, 2015 and 2014, respectively. There was no unrecognized compensation related to stock options at September 30, 2015. A summary of stock option and warrant activity for the six months ended September 30, 2015 is as follows: 

	Options and Warrants		Exercise Price Range					Weighted - Average Exercise Price		Weighted- Average Life		Aggregate Intrinsic Value
Balance, December 31, 2014		242,500	$	0.05	-	$	0.22	$	0.09		6	$	4,250
Granted		75,000		0.06	-		0.08		0.07		5	$	1,750
Balance, September 30, 2015		317,500		0.05	-		0.22		0.08		6	$	5,750
Exercisable, September 30, 2015		317,500	$	0.05	-	$	0.22	$	0.08		6	$	5,750
Weighted-average fair value of options granted during the nine months ended September 30, 2015												$	0.05

All of the options and warrants were exercisable at September 30, 2015. At September 30, 2015 the intrinsic value for the options and warrants outstanding was $5,750.

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NOTE 5 – FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

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

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

The Company uses fair value to measure certain assets and liabilities on a recurring basis when fair value is the primary measure for accounting. Fair value is also used on a nonrecurring basis to measure certain assets when applying lower of cost or market accounting or when adjusting carrying values. Fair value is also used when evaluating impairment on certain assets, including notes receivable and long-lived assets. The following table sets forth the estimated fair values of the Company’s financial instruments that are measured at fair value on a reoccurring basis as of September 30, 2015 and December 31, 2014:

Fair Value of Financial Instruments 

Fair Value of Financial Instruments
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2015
Assets:
Debt securities available for sale	$	24,018	$	-	$	24,018	$	-
December 31, 2014
Assets:
Debt securities available for sale	$	24,455	$	-	$	24,455	$	-

Fair Value of Financial Instruments Not Required To Be Reported at Fair Value

The fair values of real property tax liens, notes receivable and notes receivable, non-performing, are based on a combination of the stated or implied interest rates at the measurement dates, approximate their carrying amounts and are considered to fall within Level 3 of the fair value hierarchy.

NOTE 6 – CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

The Company's historical revenues and receivables have been derived primarily from the lodging industry. The Company offers credit terms in connection with its sale of products from refreshment centers. The Company performs ongoing credit evaluations of its customers' financial condition and does not require collateral from its customers. The Company maintains an allowance for uncollectible accounts receivable based upon a percentage of accounts receivable at year end.

At September 30, 2015, the Company had accounts receivable from one customer which accounted for 39% of total accounts receivable and from a second customer which accounted for 20% of total accounts receivable.

During the nine months ended September 30, 2015, revenues from one customer accounted for 34% of total revenues and 28% from a second customer.

During the nine months ended September 30, 2014, revenues from one customer accounted for 36% of total revenues and 27% from a second customer. 

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

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

This Management’s Discussion and Analysis or Plan of Operations (“MD&A”) section of our Quarterly Report on Form 10-Q discusses our results of operations, liquidity and financial condition, and certain factors that may affect our future results. You should read this MD&A in conjunction with our consolidated financial statements and accompanying notes included in this Quarterly Report.

Forward-Looking Statements

This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors discussed elsewhere in this report.

Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to our anticipated revenues, and operating results, future performance and operations, plans for future expansion, capital spending, sources of liquidity and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include, but are not limited to, those relating to our liquidity requirements, the continued growth of the lodging industry, the success of our product-development, marketing and sales activities, vigorous competition in the lodging industry, dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, the inherent uncertainty and costs of prolonged arbitration or litigation, and changes in federal or state tax laws or the administration of such laws.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

Overview

In January 2014, the Company introduced to the lodging industry an amenity management platform, or the AMENITIES MANAGER™. The platform’s core is proprietary software that provides a cloud-based system to assist a hotel in enhancing its image and theme through distinctive products and managing its amenities with optimized efficiency.

The AMENITIES MANAGER™ delivers solutions in order to reduce operating costs, enhance hotel guest satisfaction and provide higher operating profits to our customers. The solutions offered by our AMENITIES MANAGER™ and related products have allowed us to establish relationships with many premier hotel chains. In addition to providing our customers with valuable amenity management solutions that pay for itself, our revenue-sharing program has allowed us to partner with our customers and provide our solutions at little or no up-front cost. Our customers share in revenues generated from the sale of goods and services related to our platform. As an alternative solution, we offer a turnkey arrangement which provides both products and restockers to hotels.

We continue to deploy our Amenities Manager™ at all hotels that we service. Additionally, to date, we have deployed over 12,000 refreshment centers at many hotel properties.

The solutions offered by our eRoomSystem and related products have allowed us to install our products and services in several premier hotel chains, including Marriott International, Hilton Hotels, Carlson Hospitality Worldwide, as well as in other boutique hotels in the United States.

Results of Operations

Revenue Recognition

We generate revenues from the sale of products in hotel in-room refreshment centers, from maintenance services and the lease of equipment. Revenue from the sale of refreshments from the refreshment centers is recognized upon removal of the item from the refreshment center by the hotel guest. Maintenance revenue is recognized as the services are performed. Lease revenue is recognized over the term of the lease. 

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Description of Expenses

Cost of revenue consists primarily of cost of goods sold, as well as customer support and maintenance. 

Selling, general and administrative expenses primarily consist of general and administrative expenses including professional fees, salaries and related costs for accounting, administration, finance, human resources, information systems and legal personnel.

Research and development expenses consist of payroll and related costs for hardware and software engineers, quality assurance specialists, management personnel, and the costs of materials used by our consultants in research and development for new products. Research and development expenses in the nine months ended September 30, 2015 and 2014 were $35,672 and $33,073, respectively.

In accordance with ASC Codification Topic 730, “Accounting for Research and Development Costs”, development costs incurred in the research and development of new software products to be sold, leased or otherwise marketed are expensed as incurred until technological feasibility in the form of a working model has been established. Internally generated capitalizable software development costs have not been material to date. We have charged our software development costs to research and development expense in our condensed consolidated statements of operations.

Comparison of three months ended September 30, 2015 and 2014

Revenue

Revenue from product sales and maintenance was $229,873 for the three months ended September 30, 2015, compared to $198,051 for the three months ended September 30, 2014, representing an increase of $31,822, or 16%. The increase in revenues related to improved sales in 2015.

Cost of Revenue

Our cost of product sales and maintenance revenue for the three months ended September 30, 2015 was $137,596, compared to $97,838 for the three months ended September 30, 2014, an increase of $39,758, or 41%. The increase in cost of revenue related to the increase in sales as well as an increase in cost of labor. The gross margin percentage on revenue from product sales and maintenance revenue was 40% in 2015 as compared to 51% in 2014.

The changes and percent changes with respect to our revenues and our cost of revenue for the three months ended September 30, 2015 and 2014 are summarized as follows:

	For the three months ended September 30,
	2015		2014		Change		Percent Change
REVENUE	$	229,873	$	198,051	$	31,822		16	%
COST OF REVENUE	$	137,596	$	97,838	$	39,758		41	%

Although the preceding table summarizes the net changes and percent changes with respect to our revenues and our cost of revenue for the three months ended September 30, 2015 and 2014, the trends contained therein are limited and should not be viewed as a definitive indication of our future results.

Operating Expenses

Selling, General and Administrative — Selling, general and administrative expenses, including non-cash compensation expense, were $95,114 for the three months ended September 30, 2015, compared to $98,224 for the three months ended September 30, 2014, representing a decrease of $3,110, or 3%.

Research and Development—Research and development expenses were $13,103 for the three months ended September 30, 2015, compared to $8,633 for the three months ended September 30, 2014 representing an increase of $4,470 or 52%.

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Investment Income

Our investment income was $23,464 for the three months ended September 30, 2015, compared to $15,973 for the three months ended September 30, 2014, representing an increase of $7,491, or 47%.

Net Income

We realized a net income of $7,524 for the three months ended September 30, 2015, compared to a net income of $9,329 for the three months ended September 30, 2014.

Comparison of nine months ended September 30, 2015 and 2014

Revenue

Revenue from product sales and maintenance was $644,163 for the nine months ended September 30, 2015, compared to $577,632 for the nine months ended September 30, 2014, representing an increase of $66,531, or 12%. The increase in revenues related to improved sales in 2015.

Cost of Revenue

Our cost of product sales and maintenance revenue for the nine months ended September 30, 2015 was $371,963, compared to $303,364 for the nine months ended September 30, 2014, an increase of $68,599, or 23%. The increase in cost of revenue related to the increase in sales as well as an increase in cost of labor. The gross margin percentage on revenue from product sales revenue was 42% in 2015 as compared to 47% in 2014.

The changes and percent changes with respect to our revenues and our cost of revenue for the nine months ended September 30, 2015 and 2014 are summarized as follows: 

	For the nine months ended September 30,
	2015		2014		Change		Percent Change
REVENUE	$	644,163	$	577,632	$	66,531		12	%
COST OF REVENUE	$	371,963	$	303,364	$	68,599		23	%

Although the preceding table summarizes the net changes and percent changes with respect to our revenues and our cost of revenue for the nine months ended September 30, 2015 and 2014, the trends contained therein are limited and should not be viewed as a definitive indication of our future results.

Operating Expenses

Selling, General and Administrative — Selling, general and administrative expenses, including non-cash compensation expense, were $290,382 for the nine months ended September 30, 2015, compared to $324,183 for the nine months ended September 30, 2014, representing a decrease of $33,801, or 10% due to a write-off of obsolete inventory in 2014.

Research and Development—Research and development expenses were $35,672 for the nine months ended September 30, 2015, compared to $33,073 for the nine months ended September 30, 2014 representing an increase of $2,599 or 8%.

Investment Income

Our investment income was $104,407 for the nine months ended September 30, 2015, compared to $186,284 for the nine months ended September 30, 2014, representing a decrease of $81,877, or 44%. The decrease in investment income related to the recapture of interest income during the three months ended June 30, 2014 due to payment in full of the Blackbird note receivable.

Net Income

We realized a net income of $50,553 for the nine months ended September 30, 2015, compared to a net income of $103,296 for the nine months ended September 30, 2014. The $52,743 change during the nine months ended September 30, 2015 related primarily to the recapture of interest income during the nine months ended September 30, 2014, as discussed above.

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Liquidity and Capital Resources

Our accumulated deficit decreased from $31,738,002 at December 31, 2014 to $31,687,449 at September 30, 2015. The $50,553 decrease in accumulated deficit resulted directly from the net income realized for the nine months ended September 30, 2015.  

At September 30, 2015, our principal sources of liquidity consisted of $1,411,699 of cash and working capital of $2,473,308, as compared to $1,453,971 of cash and working capital of $2,402,932 at December 31, 2014. In addition, our stockholders' equity was $2,550,010 at September 30, 2015, compared to stockholders' equity of $2,491,840 at December 31, 2014, an increase of $58,170. We believe that we have sufficient funds for the next twelve months.

Net cash used in operations for the nine months ended September 30, 2015 was $59,358 as compared to $53,194 provided in the period ended September 30, 2014.

Investing activities for the nine months ended September 30, 2015 provided net cash of $17,086, compared to $399,404 of net cash provided during the nine months ended September 30, 2014. The change in cash used related to the proceeds from the payment of the Blackbird note.

There were no financing activities in the nine months ended September 30, 2015 and 2014.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which stipulates that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation.  ASU 2014-09 will be effective for the Company retrospectively beginning January 1, 2017, with early adoption not permitted. Management is currently evaluating the impact of the pending adoption of ASU 2014-09 on the Company’s consolidated financial statements.

Contractual Cash Obligations and Commercial Commitments

There were no significant contractual cash obligations or commercial commitments either on or off balance sheet as of September 30, 2015.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

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

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Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission. Our Chief Executive Officer and Chief Financial Officer have reviewed the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q and have concluded that because of the material weakness in our internal control over financial reporting due to lack of segregation of duties, the Company’s disclosure controls and procedures were not effective as of September 30, 2015 to ensure that information required to be disclosed by the Company in the reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that the Company’s disclosure and controls are designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Notwithstanding the material weakness discussed below, our principal executive officer and principal financial officer have concluded that the condensed consolidated financial statements (unaudited) included in this Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.

Lack of Segregation of Duties

Management is aware that there is a lack of segregation of duties at the Company due to the small number of employees dealing with general administrative and financial matters. However, at this time management has decided that considering the abilities of the employees now involved and the control procedures in place, the risks associated with such lack of segregation are low and the potential benefits of adding employees to clearly segregate duties do not justify the substantial expenses associated with such increases. Management will periodically reevaluate this situation.

Changes in Internal Controls over Financial Reporting

There have been no changes  in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that have materially affected, or are reasonable likely to materially  affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

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

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

On April 20, 2015, the Company granted immediately exercisable five-year options to purchase an aggregate of 50,000 shares of common stock at an exercise price of $0.06 per share to an employee for services provided to the Company.

On June 15, 2015, the Company granted shares of common stock to Lawrence K. Wein, a member of the Board of Directors, in the amount of 25,000 shares and to James Savas, a member of the Board of Directors, in the amount of 25,000 shares. The shares were issued for services provided to the Company.

On August 31, 2015, the Company granted immediately exercisable five-year options to purchase an aggregate of 25,000 shares of common stock at an exercise price of $0.08 per share to a consultant for services provided to the Company.

We believe that the above issuances were exempt from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(2) thereof and/or Regulation D promulgated thereunder.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.	Description
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURE

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

	eRoomSystem Technologies, Inc.
	(Registrant)
Date: November 9, 2015
	By:	/s/ David A. Gestetner
	Name:	David A. Gestetner
	Title:	President, Chief Executive Officer, Secretary,
		and Chairman of the Board
		(Principal Executive, Financial, and Accounting Officer)

14

EX-31.1

EXHIBIT 31.1

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

AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, David A. Gestetner hereby certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of eRoomSystem Technologies, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2015
	/s/ David A. Gestetner
	David A. Gestetner
	President, Chief Executive Officer,
	Secretary, and Chairman of the Board
	(Principal Executive, Financial, and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 of eRoomSystem Technologies, Inc. (the "Registrant"), as filed with the Securities and Exchange Commission on the date hereof (the "Report"), David A. Gestetner, President, Chief Executive Officer, Secretary, and Chairman of the Board of the Registrant, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: November 9, 2015
	/s/ David A. Gestetner
	David A. Gestetner
	President, Chief Executive Officer, Secretary, and Chairman of the Board
	(Principal Executive, Financial, and Accounting Officer)

XML

Note 3 - Notes Receivable

9 Months Ended

Sep. 30, 2015

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 3 – NOTES RECEIVABLE

Non-Performing Loan

On July 24, 2008, the Company loaned $500,000 to BlackBird Corporation (“BlackBird”) under the terms of a 10% senior secured convertible promissory note (the “Secured Note”). The Secured Note bore interest at 10% per annum, payable quarterly, and was due June 30, 2009. In addition, BlackBird issued 50,000 shares of its common stock to the Company. BlackBird further agreed in July 2008, notwithstanding the terms of the note, if the loan was not repaid by January 1, 2009, interest on the note would accrue at 18% per annum starting January 1, 2009. The Secured Note was not paid by January 1, 2009 and it continued to accrue interest at 18% per annum. On April 1, 2011, the Company agreed to extend the due date of the Secured Note to June 30, 2011.

BlackBird did not pay its interest payment for the second quarter of 2011 in a timely fashion. On November 3, 2011, the Company entered into a forbearance agreement with BlackBird to reduce the interest rate on the Secured Note to 10% retroactive to April 1, 2011 and to not foreclose on BlackBird’s assets if BlackBird remains in compliance with the terms of the agreement. As part of this agreement, BlackBird agreed to pay all outstanding interest due on the loan through September 30, 2011 by November 11, 2011. BlackBird also agreed to make monthly interest payments within 10 days after the end of each month. The outstanding accrued interest of $25,069 as of September 30, 2011 was paid in full on November 10, 2011.

The concession granted to BlackBird on November 3, 2011 constituted a troubled debt restructuring under current accounting guidance. As a result, the note was classified as a long-term asset. Interest income under the terms of the Secured Note was no longer being recognized until the carrying value would be recovered, and payments received were recognized as a reduction of the carrying value of the note. During second quarter 2014, the Secured Note was paid in full and interest income of $124,451 was recognized. The carrying value of the note receivable was $399,863 at December 31, 2013.

Notes Receivable

In 2015 and 2014, the Company loaned $1,090,000 in amounts ranging from $250,000 to $450,000 to various parties for a one year term with mortgage notes ranging in interest from 5% - 12%. Interest is due and payable monthly. The entire principal amounts are due and payable on the maturity date. The mortgages are collateralized by either commercial or residential property. Proceeds collected on these notes in 2015 and 2014 totaled $270,624 and $400,000, respectively. The carrying amounts of loans outstanding on September 30, 2015 and December 31, 2014 were $824,415 and $702,500 including interest accrued. The carrying amount of the note receivable approximates its fair value based on its short-term maturity.

Accrued interest on notes receivable was $5,039 and $2,500 at September 30, 2015 and December 31, 2014 respectively, and was included in notes receivable in the accompanying consolidated balance sheets.

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Note 2 - Investments

9 Months Ended

Sep. 30, 2015

Notes to Financial Statements

Cost and Equity Method Investments Disclosure [Text Block]

NOTE 2 – INVESTMENTS

Investment in Real Property Tax Liens

– At September 30, 2015, the Company held $26,386 of real property tax liens, carried at lower of cost or estimated net realizable value, from various municipalities in New Jersey. The New Jersey municipal tax liens are receivable from the real property owners and are secured by a first priority lien on the related real property. Upon foreclosure, the Company would obtain ownership of the real property. The tax lien receivables accrue interest up to 18% per annum, accrue penalties at 2% to 6% and are also increased by the amount of any collection expenses incurred. Additional investments in real property tax liens were made during the nine months ended September 30, 2015 in the amount of $3,698. The investment in the real property tax liens are accounted for as an investment in troubled debts and are carried at cost. Collection of interest, penalties and expense reimbursements is not certain and is recognized upon being realized.

Investment in Available for Sale Debt Securities

Debt and Equity Securities	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
Corporate Debt Securities	$	22,734	$	1,284	$	-	$	24,018

The corporate debt securities mature on August 31, 2018 and May 29, 2020.

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
CURRENT ASSETS
Cash and cash equivalents	$ 1,411,699	$ 1,453,971
Restricted cash		61,350
Investment in available for sale securities	$ 24,018	24,455
Notes receivable	824,415	702,500
Accounts receivable, net of allowance for doubtful accounts of $7,805 and $5,101	103,698	67,771
Inventory	104,278	79,191
Advance to hotels	76,343	74,370
Prepaid expenses	10,647	111,064
Total Current Assets	2,555,098	2,574,672
PROPERTY AND EQUIPMENT
Property and equipment, net of accumulated depreciation of $22,001 and $15,409	47,383	63,287
INVESTMENT IN REAL PROPERTY TAX LIENS	26,386	22,688
DEPOSITS	2,933	2,933
Total Assets	2,631,800	2,663,580
CURRENT LIABILITIES
Accounts payable	27,396	22,783
Accrued liabilities	$ 54,394	87,998
Securities borrowed		60,959
Total Current Liabilities	$ 81,790	171,740
Total Liabilities	$ 81,790	$ 171,740
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 5,000,000 shares authorized; none outstanding
Common stock, $0.001 par value; 50,000,000 shares authorized; shares outstanding 24,217,865 and 24,167,865	$ 24,218	$ 24,168
Additional paid-in capital	34,211,957	34,203,953
Accumulated deficit	(31,687,449)	(31,738,002)
Accumulated other comprehensive income	1,284	1,721
Total Stockholders' Equity	2,550,010	2,491,840
Total Liabilities and Stockholders' Equity	$ 2,631,800	$ 2,663,580

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 50,553	$ 103,296
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	8,441	8,138
Accrued interest receivable	(2,539)	(2,000)
Gain on sale of marketable securities	$ (40,160)	(14,858)
Gain on sale of equipment		(850)
Loss on writedown of equipment		33,645
Loss on writedown of note receivable		22,500
Non-cash compensation expense	$ 8,054	$ 8,669
Changes in operating assets and liabilities:
Restricted cash	61,350
Accounts receivable	(35,927)	$ (26,829)
Inventory	(17,624)	(34,983)
Advance to hotels	(1,973)	(15,083)
Prepaid expenses	417	(3,552)
Accounts payable	4,613	9,844
Accrued liabilities	(33,604)	$ (30,430)
Borrowed shares	$ (60,959)
Customer deposits		$ (4,313)
Net Cash Provided by (Used In) Operating Activities	$ (59,358)	53,194
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(6,901)
Purchases of investments in real property tax liens	$ (3,698)	(9,266)
Proceeds from sale of equipment		850
Advances made under notes receivable	$ (390,000)	(250,000)
Proceeds from collection of note receivable	270,624	250,000
Purchase of marketable securities	(618,107)	(25,000)
Proceeds from sale of marketable securities	$ 758,267	39,858
Proceeds from collection of note receivable, non-performing		399,863
Net Cash Provided by Investing Activities	$ 17,086	399,404
Net Increase (Decrease) in Cash	(42,272)	452,598
Cash and cash equivalents at Beginning of Period	1,453,971	1,376,822
Cash and cash equivalents at End of Period	$ 1,411,699	$ 1,829,420

XML

Note 3 - Notes Receivable (Details Textual) - USD ($)						3 Months Ended	9 Months Ended		12 Months Ended	21 Months Ended
	Nov. 10, 2011	Apr. 01, 2011	Jun. 30, 2009	Jan. 01, 2009	Jul. 24, 2008	Jun. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Sep. 30, 2015	Dec. 31, 2013
Non-Performing Loan Receivable [Member]
Payments to Acquire Notes Receivable					$ 500,000
Loan Receivable, Interest Rate		10.00%	10.00%	18.00%	10.00%
Sale of Stock, Number of Shares Issued in Transaction					50,000
Proceeds from Collection of Notes Receivable	$ 25,069
Investment Income, Interest						$ 124,451
Notes, Loans and Financing Receivable, Net, Noncurrent											$ 399,863
Notes Receivable [Member] | Minimum [Member]
Payments to Acquire Notes Receivable										$ 250,000
Loan Receivable, Interest Rate										5.00%
Notes Receivable [Member] | Maximum [Member]
Payments to Acquire Notes Receivable										$ 450,000
Loan Receivable, Interest Rate										12.00%
Notes Receivable [Member]
Payments to Acquire Notes Receivable										$ 1,090,000
Proceeds from Collection of Notes Receivable							$ 270,624		$ 400,000
Loan Receivable Term (years)										1 year
Notes, Loans and Financing Receivable, Net, Current							824,415		702,500	$ 824,415
Interest Receivable, Current							5,039		2,500	5,039
Payments to Acquire Notes Receivable							390,000	$ 250,000
Proceeds from Collection of Notes Receivable							270,624	$ 250,000
Notes, Loans and Financing Receivable, Net, Current							$ 824,415		$ 702,500	$ 824,415

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Note 4 - Stockholders' Equity - Summary of Stock Option and Warrant Activity (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Minimum [Member]
Balance, December 31, 2014 (in dollars per share)	$ 0.05	$ 0.05
Granted (in dollars per share)	0.06
Exercisable, September 30, 2015 (in dollars per share)	0.05
Maximum [Member]
Balance, December 31, 2014 (in dollars per share)	0.22	$ 0.22
Granted (in dollars per share)	0.08
Exercisable, September 30, 2015 (in dollars per share)	$ 0.22
Balance, December 31, 2014 (in shares)	317,500	242,500
Balance, December 31, 2014 (in dollars per share)	$ 0.08	$ 0.09
Balance, December 31, 2014	6 years	6 years
Share Based Compensation Arrangement By Share Based Payment Award Options And Warrants Outstanding Intrinsic Value	$ 5,750	$ 4,250
Granted (in shares)	75,000
Granted (in dollars per share)	$ 0.07
Granted	5 years
Granted	$ 1,750
Exercisable, September 30, 2015 (in shares)	317,500
Exercisable, September 30, 2015 (in dollars per share)	$ 0.08
Exercisable, September 30, 2015	6 years
Exercisable, September 30, 2015	$ 5,750
Weighted-average fair value of options granted during the nine months ended September 30, 2015 (in dollars per share)	$ 0.05

XML

Note 1 - Basis of Presentation and Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Notes to Financial Statements

Basis of Presentation and Significant Accounting Policies [Text Block]

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Condensed Financial Statements

- The accompanying unaudited condensed consolidated financial statements include the accounts of eRoomSystem Technologies, Inc. and its wholly-owned subsidiaries (the "Company"). Intercompany accounts and transactions have been eliminated in consolidation. These financial statements are condensed and, therefore, do not include all disclosures normally required by generally accepted accounting principles. These statements should be read in conjunction with the Company's annual financial statements for the fiscal year ended December 31, 2014 included in the Company's Annual Report on Form 10-K. In particular, the Company's organization, nature of operations and significant accounting principles were presented in Note 1 to the consolidated financial statements in that annual report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying unaudited condensed consolidated financial statements for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015.

Cash and Cash Equivalents

– Cash and cash equivalents include highly-liquid debt investments with original maturities of three months or less, readily convertible to known amounts of cash.

Investments in Debt Securities Available for Sale

– Debt and equity securities available for sale include securities that can be sold at any time based upon needs or market conditions. Available for sale securities are accounted for at fair value, with unrealized gains and losses on these securities, net of income tax provisions, reflected in stockholders’ equity as accumulated other comprehensive income (loss).

Accounts Receivable

- Accounts receivable are stated at the historical carrying amount, net of write-offs and allowances. The Company has established an overall allowance based upon historical experience of 7% of the outstanding balance in addition to any specific customer collection issues identified by the Company. Uncollectible accounts receivable are written off when a settlement is reached or when the Company has determined that the balance will not be collected.

Inventory

-

The Company maintains an inventory of product that is sold in the refreshment centers in a number of hotels. The inventory is purchased as finished goods and is valued using the first in, first out method.

Advances to Hotels

– The Company makes advances to hotels for their purchases of alcoholic beverages. The hotels’ alcoholic beverages are placed in the Company’s refreshment centers and the advances are settled at the date the hotel customers purchase the beverages from the refreshment centers.

Notes Receivable

- The notes receivable are stated at the historical carrying amount, less a loan loss allowance, and are evaluated for impairment. When projections indicate that the carrying value of the note is not recoverable, the carrying value will be reduced by the estimated excess of the carrying value over the projected discounted cash flows. The Company has evaluated the collectability of current notes receivable and believes the notes are realizable as they are secured by the related real property and the estimated fair value of the real property is in excess of the carrying value of the notes and the estimated cost to foreclose and sell the real property.

Investment in Real Property Tax Liens –

The investments in the real property tax liens are accounted for as an investment in troubled debts and are carried at cost. Collection of interest, penalties and expense reimbursements is not certain and is recognized upon being realized. The Company has evaluated the collectability of the tax liens and believes the investments are realizable over time as the first position liens are secured by the related real property and the estimated fair value of the real property is in excess of the carrying value of the tax liens and the estimated cost to foreclose and sell the real property. Therefore no impairment was recognized on the tax liens at September 30, 2015 and December 31, 2014.

Property and Equipment:

Property and equipment consist primarily of eRoomServ refreshment centers and are stated at cost, less accumulated depreciation. Major additions and improvements are capitalized, while repairs and maintenance costs are expensed when incurred.

Net Earnings per Common Share

- Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income, by the weighted-average number of common shares and dilutive potential common share equivalents outstanding. When dilutive, the incremental potential common shares issuable upon exercise of stock options are determined by the treasury stock method.

The following table is a reconciliation of the numerators and denominators used in the calculation of basic and diluted loss per share for the three and nine months ended September 30, 2015 and 2014:  

	For the three months ended September 30,				For the nine months ended September 30,
	2015		2014		2015		2014
Net income	$	7,524	$	9,329	$	50,553	$	103,296
Basic weighted-average common shares outstanding		24,217,865		24,164,278		24,187,462		24,146,326
Effect of dilutive securities
Stock options and warrants		63,920		1,471		57,593		1,023
Diluted weighted-average common shares outstanding		24,281,785		24,165,749		24,245,055		24,147,349
Basic income per share	$	0.00	$	0.00	$	0.00	$	0.00
Diluted income per share	$	0.00	$	0.00	$	0.00	$	0.00

During the nine months ended September 30, 2015 and 2014, there were 92,500 and 267,500, respectively, of potential common stock equivalents from options that were not included in the computation of diluted loss per share because their effect would have been anti-dilutive.

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Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Allowance for doubtful accounts	$ 7,805	$ 5,101
Accumulated depreciation	$ 22,001	$ 15,409
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares outstanding (in shares)	24,217,865	24,167,865

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Note 5 - Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2015

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

Fair Value of Financial Instruments
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2015
Assets:
Debt securities available for sale	$	24,018	$	-	$	24,018	$	-
December 31, 2014
Assets:
Debt securities available for sale	$	24,455	$	-	$	24,455	$	-

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 04, 2015
Entity Registrant Name	eRoomSystem Technologies Inc
Entity Central Index Key	0001110361
Trading Symbol	erms
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		24,217,865
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Amendment Flag	false

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Note 1 - Basis of Presentation and Significant Accounting Policies (Details Textual) - shares	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	92,500	267,500

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Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
REVENUE	$ 229,873	$ 198,051	$ 644,163	$ 577,632
COST OF REVENUE	137,596	97,838	371,963	303,364
GROSS MARGIN	92,277	100,213	272,200	274,268
OPERATING EXPENSES
Selling, general and administrative expense, including non-cash compensation of $1,619, $600, $8,054 and $8,669	95,114	98,224	290,382	324,183
Research and development expense	13,103	8,633	35,672	33,073
Net Operating Expenses	108,217	106,857	326,054	357,256
OTHER INCOME
Investment Income	23,464	15,973	104,407	186,284
Net Income	7,524	9,329	50,553	103,296
Other Comprehensive Income
Unrealized holding gain (loss)	$ (801)	$ (191)	$ (437)	15,542
Reclassification to realized gain (included in net income)				(14,858)
Comprehensive Income	$ 6,723	$ 9,138	$ 50,116	$ 103,980
Basic Income Per Common Share (in dollars per share)	$ 0	$ 0	$ 0	$ 0
Diluted Income Per Common Share (in dollars per share)	$ 0	$ 0	$ 0	$ 0

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Note 6 - Concentration of Credit Risk and Significant Customers

9 Months Ended

Sep. 30, 2015

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

NOTE 6 – CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

The Company's historical revenues and receivables have been derived primarily from the lodging industry. The Company offers credit terms in connection with its sale of products from refreshment centers. The Company performs ongoing credit evaluations of its customers' financial condition and does not require collateral from its customers. The Company maintains an allowance for uncollectible accounts receivable based upon a percentage of accounts receivable at year end.

At September 30, 2015, the Company had accounts receivable from one customer which accounted for 39% of total accounts receivable and from a second customer which accounted for 20% of total accounts receivable.

During the nine months ended September 30, 2015, revenues from one customer accounted for 34% of total revenues and 28% from a second customer.

During the nine months ended September 30, 2014, revenues from one customer accounted for 36% of total revenues and 27% from a second customer. 

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Note 5 - Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2015

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE 5 – FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

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

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

The Company uses fair value to measure certain assets and liabilities on a recurring basis when fair value is the primary measure for accounting. Fair value is also used on a nonrecurring basis to measure certain assets when applying lower of cost or market accounting or when adjusting carrying values. Fair value is also used when evaluating impairment on certain assets, including notes receivable and long-lived assets. The following table sets forth the estimated fair values of the Company’s financial instruments that are measured at fair value on a reoccurring basis as of September 30, 2015 and December 31, 2014:

Fair Value of Financial Instruments

 

Fair Value of Financial Instruments
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2015
Assets:
Debt securities available for sale	$	24,018	$	-	$	24,018	$	-
December 31, 2014
Assets:
Debt securities available for sale	$	24,455	$	-	$	24,455	$	-

Fair Value of Financial Instruments Not Required To Be Reported at Fair Value

The fair values of real property tax liens, notes receivable and notes receivable, non-performing, are based on a combination of the stated or implied interest rates at the measurement dates, approximate their carrying amounts and are considered to fall within Level 3 of the fair value hierarchy.

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Note 4 - Stockholders' Equity (Details Textual) - USD ($)	9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Employee [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 0.06
Share Price	$ 0.06
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	1.36%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	115.00%
Employee [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 0.08
Share Price	$ 0.08
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	1.47%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	116.00%
Employee [Member]
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures	$ 75,000	$ 75,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price		$ 0.05
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value	$ 0.05	$ 0.04
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value	$ 4,054	$ 3,069
Share Price		$ 0.05
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate		1.76%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate	0.00%	0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate		117.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term	5 years	5 years
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 0
Allocated Share-based Compensation Expense	8,054	$ 8,669
Share Based Compensation Arrangement By Share Based Payment Award Options And Warrants Outstanding Intrinsic Value	$ 5,750		$ 4,250

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Note 1 - Basis of Presentation and Significant Accounting Policies - Schedule of Earnings Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Net income	$ 7,524	$ 9,329	$ 50,553	$ 103,296
Basic weighted-average common shares outstanding (in shares)	24,217,865	24,164,278	24,187,462	24,146,326
Effect of dilutive securities
Stock options and warrants (in shares)	63,920	1,471	57,593	1,023
Diluted weighted-average common shares outstanding (in shares)	24,281,785	24,165,749	24,245,055	24,147,349
Basic Income Per Common Share (in dollars per share)	$ 0	$ 0	$ 0	$ 0
Diluted Income Per Common Share (in dollars per share)	$ 0	$ 0	$ 0	$ 0

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Note 2 - Investments (Tables)

9 Months Ended

Sep. 30, 2015

Notes Tables

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

Debt and Equity Securities	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
Corporate Debt Securities	$	22,734	$	1,284	$	-	$	24,018

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Condensed Financial Statements

- The accompanying unaudited condensed consolidated financial statements include the accounts of eRoomSystem Technologies, Inc. and its wholly-owned subsidiaries (the "Company"). Intercompany accounts and transactions have been eliminated in consolidation. These financial statements are condensed and, therefore, do not include all disclosures normally required by generally accepted accounting principles. These statements should be read in conjunction with the Company's annual financial statements for the fiscal year ended December 31, 2014 included in the Company's Annual Report on Form 10-K. In particular, the Company's organization, nature of operations and significant accounting principles were presented in Note 1 to the consolidated financial statements in that annual report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying unaudited condensed consolidated financial statements for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

– Cash and cash equivalents include highly-liquid debt investments with original maturities of three months or less, readily convertible to known amounts of cash.

Marketable Securities, Policy [Policy Text Block]

Investments in Debt Securities Available for Sale

– Debt and equity securities available for sale include securities that can be sold at any time based upon needs or market conditions. Available for sale securities are accounted for at fair value, with unrealized gains and losses on these securities, net of income tax provisions, reflected in stockholders’ equity as accumulated other comprehensive income (loss).

Trade and Other Accounts Receivable, Policy [Policy Text Block]

Accounts Receivable

- Accounts receivable are stated at the historical carrying amount, net of write-offs and allowances. The Company has established an overall allowance based upon historical experience of 7% of the outstanding balance in addition to any specific customer collection issues identified by the Company. Uncollectible accounts receivable are written off when a settlement is reached or when the Company has determined that the balance will not be collected.

Inventory, Policy [Policy Text Block]

Inventory

-

The Company maintains an inventory of product that is sold in the refreshment centers in a number of hotels. The inventory is purchased as finished goods and is valued using the first in, first out method.

Receivables, Policy [Policy Text Block]

Advances to Hotels

– The Company makes advances to hotels for their purchases of alcoholic beverages. The hotels’ alcoholic beverages are placed in the Company’s refreshment centers and the advances are settled at the date the hotel customers purchase the beverages from the refreshment centers.

Finance, Loans and Leases Receivable, Policy [Policy Text Block]

Notes Receivable

- The notes receivable are stated at the historical carrying amount, less a loan loss allowance, and are evaluated for impairment. When projections indicate that the carrying value of the note is not recoverable, the carrying value will be reduced by the estimated excess of the carrying value over the projected discounted cash flows. The Company has evaluated the collectability of current notes receivable and believes the notes are realizable as they are secured by the related real property and the estimated fair value of the real property is in excess of the carrying value of the notes and the estimated cost to foreclose and sell the real property.

Investment, Policy [Policy Text Block]

Investment in Real Property Tax Liens –

The investments in the real property tax liens are accounted for as an investment in troubled debts and are carried at cost. Collection of interest, penalties and expense reimbursements is not certain and is recognized upon being realized. The Company has evaluated the collectability of the tax liens and believes the investments are realizable over time as the first position liens are secured by the related real property and the estimated fair value of the real property is in excess of the carrying value of the tax liens and the estimated cost to foreclose and sell the real property. Therefore no impairment was recognized on the tax liens at September 30, 2015 and December 31, 2014.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment:

Property and equipment consist primarily of eRoomServ refreshment centers and are stated at cost, less accumulated depreciation. Major additions and improvements are capitalized, while repairs and maintenance costs are expensed when incurred.

Earnings Per Share, Policy [Policy Text Block]

Net Earnings per Common Share

- Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income, by the weighted-average number of common shares and dilutive potential common share equivalents outstanding. When dilutive, the incremental potential common shares issuable upon exercise of stock options are determined by the treasury stock method.

The following table is a reconciliation of the numerators and denominators used in the calculation of basic and diluted loss per share for the three and nine months ended September 30, 2015 and 2014:  

	For the three months ended September 30,				For the nine months ended September 30,
	2015		2014		2015		2014
Net income	$	7,524	$	9,329	$	50,553	$	103,296
Basic weighted-average common shares outstanding		24,217,865		24,164,278		24,187,462		24,146,326
Effect of dilutive securities
Stock options and warrants		63,920		1,471		57,593		1,023
Diluted weighted-average common shares outstanding		24,281,785		24,165,749		24,245,055		24,147,349
Basic income per share	$	0.00	$	0.00	$	0.00	$	0.00
Diluted income per share	$	0.00	$	0.00	$	0.00	$	0.00

During the nine months ended September 30, 2015 and 2014, there were 92,500 and 267,500, respectively, of potential common stock equivalents from options that were not included in the computation of diluted loss per share because their effect would have been anti-dilutive.

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Note 1 - Basis of Presentation and Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2015

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the three months ended September 30,				For the nine months ended September 30,
	2015		2014		2015		2014
Net income	$	7,524	$	9,329	$	50,553	$	103,296
Basic weighted-average common shares outstanding		24,217,865		24,164,278		24,187,462		24,146,326
Effect of dilutive securities
Stock options and warrants		63,920		1,471		57,593		1,023
Diluted weighted-average common shares outstanding		24,281,785		24,165,749		24,245,055		24,147,349
Basic income per share	$	0.00	$	0.00	$	0.00	$	0.00
Diluted income per share	$	0.00	$	0.00	$	0.00	$	0.00

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Note 4 - Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2015

Notes Tables

Schedule Of Share Based Compensation Shares Authorized Under Stock Option And Warrant Plans By Exercise Price Range [Table Text Block]

	Options and Warrants		Exercise Price Range					Weighted - Average Exercise Price		Weighted- Average Life		Aggregate Intrinsic Value
Balance, December 31, 2014		242,500	$	0.05	-	$	0.22	$	0.09		6	$	4,250
Granted		75,000		0.06	-		0.08		0.07		5	$	1,750
Balance, September 30, 2015		317,500		0.05	-		0.22		0.08		6	$	5,750
Exercisable, September 30, 2015		317,500	$	0.05	-	$	0.22	$	0.08		6	$	5,750
Weighted-average fair value of options granted during the nine months ended September 30, 2015												$	0.05

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Note 2 - Investments - Schedule of Available-For-Sale Equity Securities Reconciliation (Details)	9 Months Ended
	Sep. 30, 2015 USD ($)
Debt Securities [Member]
Corporate Debt Securities, Cost Basis	$ 22,734
Corporate Debt Securities, Unrealized Gains	$ 1,284
Corporate Debt Securities, Unrealized Losses
Corporate Debt Securities, Fair Value	$ 24,018
Corporate Debt Securities, Fair Value	$ 24,018

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Note 6 - Concentration of Credit Risk and Significant Customers (Details Textual) - Customer Concentration Risk [Member]	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Customer A [Member] | Accounts Receivable [Member]
Concentration Risk, Percentage	39.00%
Customer A [Member] | Sales Revenue, Goods, Net [Member]
Concentration Risk, Percentage	34.00%	36.00%
Customer B [Member] | Accounts Receivable [Member]
Concentration Risk, Percentage	20.00%
Customer B [Member] | Sales Revenue, Goods, Net [Member]
Concentration Risk, Percentage	28.00%	27.00%

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Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) (Parentheticals) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Selling, general and administrative expense, non-cash compensation	$ 1,619	$ 600	$ 8,054	$ 8,669

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Note 4 - Stockholders' Equity

9 Months Ended

Sep. 30, 2015

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE 4 – STOCKHOLDERS’ EQUITY

During the nine months ended September 30, 2014, the Company granted options to purchase 75,000 shares of common stock to employees for services rendered. These options, which vested immediately, have an exercise price of $0.05 per share and are exercisable through March 24, 2019. These options were valued at approximately $0.04 per share, or $3,069, using the Black-Scholes option pricing model with the following assumptions: market value of the common stock of $0.05 per share, risk free interest rate of 1.76%, dividend yield of 0.0%, volatility of 117% and expected life of 5 years. The pricing model utilized the full life of the options as the Company generally has a low turnover rate of its employees.

During the nine months ended September 30, 2015, the Company granted options to purchase 75,000 shares of common stock to an employee and a consultant for services rendered. These options, which vested immediately, have an exercise price range of $0.06 to $0.08 per share and are exercisable through August 31, 2020. These options were valued at approximately $0.05 per share, or $4,054, using the Black-Scholes option pricing model with the following assumptions: market value of the common stock of $0.06 to $0.08 per share, risk free interest rate of 1.36% through 1.47%, dividend yield of 0.0%, volatility of 115%-116% and expected life of 5 years. The pricing model utilized the full life of the options as the Company generally has a low turnover rate of its employees.

Stock-based compensation expense relating to stock options of $8,054 and $8,669 was recognized during the nine months ended September 30, 2015 and 2014, respectively. There was no unrecognized compensation related to stock options at September 30, 2015. A summary of stock option and warrant activity for the six months ended September 30, 2015 is as follows: 

	Options and Warrants		Exercise Price Range					Weighted - Average Exercise Price		Weighted- Average Life		Aggregate Intrinsic Value
Balance, December 31, 2014		242,500	$	0.05	-	$	0.22	$	0.09		6	$	4,250
Granted		75,000		0.06	-		0.08		0.07		5	$	1,750
Balance, September 30, 2015		317,500		0.05	-		0.22		0.08		6	$	5,750
Exercisable, September 30, 2015		317,500	$	0.05	-	$	0.22	$	0.08		6	$	5,750
Weighted-average fair value of options granted during the nine months ended September 30, 2015												$	0.05

All of the options and warrants were exercisable at September 30, 2015. At September 30, 2015 the intrinsic value for the options and warrants outstanding was $5,750.

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Note 2 - Investments (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Minimum [Member]
Investment in real property tax liens, penalty rate	2.00%
Maximum [Member]
Investment in real property tax liens, penalty rate	6.00%
Investment Owned, at Fair Value	$ 26,386
Investment Interest Rate	18.00%
Payments to Acquire Investments	$ 3,698	$ 9,266