LV hotel tech firm files to go public

A Las Vegas-based technology company hopes to soon sell stock to the public in an offering that could raise as much as $20.7 million.

eRoomSystem Technologies Inc. has filed with the Securities and Exchange Commission to sell 1.8 million shares of stock at $8 to $10 per share. It granted underwriter Donald & Co. Securities Inc. the right to sell an additional 270,000 shares to fill any overallotments. Proceeds will be used to help finance manufacturing, as well as repay debt.

Company officials say they can't comment on when this initial public offering will occur, citing SEC regulations. But Internet news site IPO.com reported that the offering, originally slated for pricing July 21, has been rescheduled for next week. No reason for the delay was provided.

The company produces a high-tech version of decidedly low-tech hotel room offerings -- snack centers and in-room safes. But the goal of placing these centers in rooms goes beyond just selling a bag of chips and a Bud.

eRoomSystem's refreshment centers run from an in-room computer system, tied into a central computer within the hotel. When a guest removes an item from the center, the item is automatically billed to the customer's credit card, and the hotel gains a precise count on what items need to be restocked. The second product running off the in-room computer system is an in-room safe. By tying this safe into the central computer system, a hotel employee can tell if a safe is locked from the front desk -- and can remind an absent-minded guest to empty the safe before leaving.

To date, the company has installed more than 10,000 refreshment centers and 3,500 safes in hotels operated by Marriott International, Best Western and Hilton Hotels. But the real focus of these installations, said General Manager Frank Hicks, is to place the computer system in the hotel room -- a system that could have many future applications.

One application the company is exploring is an in-room ATM, while another would automatically control a room's lights and air conditioning based on time of day and whether anyone is in the room, Hicks said. A third would offer high-speed wireless Internet access to customers throughout a hotel property.

"We see this expanding into all kinds of things," Hicks said.

In 1999, the company posted a loss of $3.7 million, an improvement over the loss of $4.1 million recorded in 1998. Revenues in 1999 were $540,000, down from just over $1 million in 1998. Revenues have been derived from the sale of the centers and safes, though the company is now focusing more of its efforts on revenue participation from the sale of product to hotel guests through its refreshment centers.

Revenues fluctuate widely, eRoomSystem said in its prospectus, because of "limited working capital to fund the assembly of our products," as well as the shift in focus to revenue-sharing.

Though the company is based in Las Vegas, most of its 42 employees work at an assembly center in St. George, Utah. That too will start to change, Hicks said, since the company is focusing much of its future efforts on breaking into the Las Vegas market, particularly with products like an in-room ATM. The ATM product is still in the research phase and isn't currently on the market.

"Vegas has been a tough one to crack, because the philosophy (of casinos) has been, let's keep them out of the rooms and in the casino," Hicks said. "I really do see the company going in that direction, more toward (Las Vegas)."

In its prospectus, the company said it will soon install its system and products on a trial basis in the Bellagio, its first Las Vegas installation.

"We are currently in negotiations with other major hotel-casinos for placement of our products," the prospectus said. "We are targeting Las Vegas ... since its 115,000 rooms are the most hotel rooms of any city in the world."

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