**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 Washington,
        D.C. 20549
  **FORM
        10-K/A**
 **(Amendment
        No. 1)**
  x
              Annual
                  Report Under Section 13 or 15(d) of the Securities Exchange Act
                  of
                  1934
  For
        the
        fiscal year ended June 30, 2006
  o
              Transition
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934
  For
        the
        transition period from __________________ to
        ______________________.
  Commission
        file number 0-27471
 
 **RONCO
        CORPORATION**
 (Exact
        name of registrant as specified in its charter)
  **Delaware**
              **84-1148206**State
                  or other jurisdiction of
              (I.R.S.
                  Employerincorporation
                  or organization
              Identification
                  No.)
  **61
        Moreland Road, Simi Valley, California 93065**
 (Address
        of Principal Executive Offices)
  Registrant’s
        telephone number, including area code: **(805)
        433-1030**
  Securities
        registered pursuant to Section 12(b) of the Act:
  **None**
  Securities
        registered pursuant to Section 12(g) of the Act:
  **Common
        Stock, par value $.00001 per share**
  Indicate
        by check mark if the registrant is a well-known seasoned issuer, as defined
        in
        Rule 405 of the Securities Act.
  Yes  
        o No x
  Indicate
        by check mark if the registrant is not required to file reports pursuant
        to
        Section 13 or 15(d) of the Act.
  Yes  
        o No 
        x
  Indicate
        by check mark whether the registrant (1) has filed all reports required to
        be
        filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
        the
        preceding 12 months (or for such shorter period that the registrant was required
        to file such reports), and (2) has been subject to such filing requirements
        for
        the past 90 days.
  Yes  
        x No 
        o
  Indicate
        by check mark if disclosure of delinquent filers pursuant to Item 405 of
        Regulation S-K is not contained herein, and will not be contained, to the
        best
        of registrant’s knowledge, in definitive proxy or information statements
        incorporated by reference in Part III of this Form 10-K or any amendment
        to this
        Form 10-K.     x
 
  Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer or a non-accelerated filer.
  Large
        Accelerated File r o Accelerated
        Filer o Non-accelerated
        Filer x
  Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Act).
  Yes o No x
  The
        aggregate market value of the voting and non-voting common equity held by
        non-affiliates computed by reference to the price at which the common equity
        was
        last sold, or the average bid and asked price of such common equity, as of
        the
        last business day of the registrant’s most recently completed second
        fiscal quarter was $12,654,210 .
  At
        September 30, 2006, the issuer had 2,591,605 shares of common stock, par
        value
        $.00001 per share, issued and outstanding.
  DOCUMENTS
        INCORPORATED BY REFERENCE
  **None**
 
 
  
  **RONCO
        CORPORATION******
 **INDEX
        TO FORM 10-K**
  **Page****PART
                    I**Item
                  1.
              
              Business
              4Item
                  1A.
              
              Risk
                  Factors
              13**PART
                  II**Item
                  7.
              
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operation
              21**PART
                  III**Item
                  10.
              
              Directors
                  and Executive Officers of the Registrant
              36Item
                  12.
              
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              39Item
                  13.
              
              Certain
                  Relationships and Related Transactions
              45**PART
                  IV**Item
                  15.
              
              Exhibits
                  and Financial Statement Schedules
              47
  2
  **Explanatory
        Note**
  This
        amendment on Form 10-K/A (Amendment No. 1) is being filed to amend our annual
        report on Form 10-K for the fiscal year ended June 30, 2006, as filed with
        the Securities and Exchange Commission on October 13, 2006 (the “Original
        Report”), solely for the purpose of correcting certain inadvertent errors and
        omissions in the Original Report. This amendment reflects the following
        changes:
  ·
            including
                a missing check box on the cover page;  ·
            including
                disclosure regarding the assignment of our key man life insurance
                policy
                on Ron Popeil to Sanders Morris Harris;  ·
            including
                two risk factors related to dilution;  ·
            correcting
                the principal amount and description of certain terms of the loan
                transaction with Sander Morris Harris and other lenders completed
                in June
                2006;  ·
            including
                disclosure regarding Ron Stone’s position as Chief Financial Officer as of
                the date of the Original Report;  ·
            correcting
                the number of shares of Common Stock and Series A Convertible Preferred
                Stock beneficially owned by entities affiliated with Sanders Morris
                Harris.  ·
            including
                disclosure regarding our agreement with the holders of our Series
                Convertible Preferred Stock, dated June 2006, related to the payment
                of
                dividends thereon; and  ·
            including
                our Amended Restated Designation of Powers as an Exhibit
                hereto.  This
        amendment does not reflect events occurring after the filing of the Original
        Report, or modify or update those disclosures affected by subsequent events.
        This Amendment continues to speak as of the date of the Original Report,
        and
        does not modify or update any other item or disclosures in the Original
        Report.
  3
  **PART
        I**
  This
        report, including the sections entitled “Risk Factors,” “Management’s Discussion
        and Analysis of Financial Condition and Results of Operation” and “Business,”
contains “forward-looking statements” that include information relating to
        future events, future financial performance, strategies, expectations,
        competitive environment, regulation and availability of resources. These
        forward-looking statements include, without limitation, statements regarding:
        proposed new services; our expectations concerning litigation, regulatory
        developments or other matters; statements concerning projections, predictions,
        expectations, estimates or forecasts for our business, financial and operating
        results and future economic performance; statements of management’s goals and
        objectives; and other similar expressions concerning matters that are not
        historical facts. Words such as “may,” “will,” “should,” “could,” “would,”
“predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,”
“intends,” “plans,” “believes” and “estimates,” and similar expressions, as well
        as statements in future tense, identify forward-looking statements.
  Forward-looking
        statements should not be read as a guarantee of future performance or results,
        and will not necessarily be accurate indications of the times at, or by which,
        that performance or those results will be achieved. Forward-looking statements
        are based on information available at the time they are made and/or management’s
        good faith belief as of that time with respect to future events, and are
        subject
        to risks and uncertainties that could cause actual performance or results
        to
        differ materially from those expressed in or suggested by the forward-looking
        statements. Important factors that could cause these differences include,
        but
        are not limited to:
  ·
              seasonal
                  patterns affecting consumer spending, primarily related to the
                  Christmas
                  holiday season as well as other gift-centric
                  holidays;
  ·
              other
                  seasonal patterns affecting the performance of television media,
                  primarily
                  weather;
  ·
              availability
                  of raw materials and manufacturing capacity, which may limit the
                  ability
                  to get our products manufactured;
  ·
              the
                  relative availability of attractive media time within a given period
                  for
                  us to promote our products;
  ·
              changes
                  in interest rates, which may impact certain customers' decisions
                  to make
                  purchases through credit cards;
  ·
              the
                  impact of general economic
                  conditions;
  ·
              the
                  introduction of new product offerings;
                  and
  ·
              the
                  introduction of new infomercials for existing products.;
                  and
  ·
              other
                  factors discussed under the headings “Risk Factors,” “Management’s
                  Discussion and Analysis of Financial Condition and Results of Operations”
                  and “Business.”
  Forward-looking
        statements speak only as of the date they are made. You should not put undue
        reliance on any forward-looking statements. We assume no obligation to update
        forward-looking statements to reflect actual results, changes in assumptions
        or
        changes in other factors affecting forward-looking information, except to
        the
        extent required by applicable securities laws. If we do update one or more
        forward-looking statements, no inference should be drawn that we will make
        additional updates with respect to those or other forward-looking
        statements.
  **Item
                  1.**
              **Business.**
  **Corporate
        Overview**
  We
        are a
        developer, marketer and distributor of consumer products for the kitchen
        and
        home branded under the “Ronco” and “Popeil” names. Our products are primarily
        sold through direct response television marketing by broadcasting 30-minute
        long
        advertisements commonly referred to as “infomercials.” Ronald M. Popeil, our
        principal consultant and founder of our operating business, started selling
        products under the Ronco brand over forty years ago. Over the last six years,
        Ronco branded products have been sold to over five million
        customers.
  We
        were
        incorporated under the name Fi-Tek VII, Inc. under the laws of the State
        of
        Delaware on July 12, 1990. Before June 30, 2005, we were a “blank check”
company. During this time, we engaged in no significant operations other
        than
        the search for, and identification and evaluation of, possible acquisition
        candidates. The address of our principal executive offices is 61 Moreland
        Road,
        Simi Valley, California 93065 and our telephone number is (805)
        433-1030.
  In
        June
        2005, we (at the time operating under the name Fi-Tek VII, Inc.) completed
        a
        series of related transactions including the merger of our wholly-owned
        subsidiary, Ronco Acquisition Corporation, with and into Ronco Marketing
        Corporation and the acquisition of assets comprising the Ronco business from
        Ronco Inventions, LLC, Popeil Inventions, Inc., and RP Productions, Inc.,
        which
        we refer to collectively as the predecessor entities, and Mr. Popeil. On
        June
        30, 2005, in connection with these transactions, we changed our name to Ronco
        Corporation.
  4
  The
        following table summarizes these transactions and our corporate
        structure:
  
  
  5
  **Our
        Products**
  We
        operate in a single operating segment which designs, sources, markets and
        distributes our products. We currently offer two product categories: kitchen
        products and household products. The majority of our products were developed
        by
        Mr. Popeil, and we acquired the intellectual property rights underlying those
        product lines through our acquisition of assets from the predecessor entities
        and Mr. Popeil. All of our products carry the Ronco or Popeil brand
        names.
  *Kitchen
        Products*
  We
        manufacture or source, market and distribute innovative, affordable and highly
        functional products for use in kitchens. Our products include the
        following:
  ·
              ShowtimeTM
                  Rotisserie & BBQ
  ·
              Electric
                  Food Dehydrator
  ·
              Six
                  Star+TM Cutlery Set
  ·
              Popeil's
                  Pasta Maker
  ·
              Solid
                  Flavor Injector
  We
        have
        also, over the last year, reintroduced products previously sold by the
        Predecessor Entities, including the Chop-O-Matic, Bagel Slicer, Dial-O-Matic
        and
        Inside the Shell Egg Scrambler.
  Our
        most
        prominent and successful product line today is our family of ShowtimeTM
Rotisserie & BBQ electric rotisserie ovens and accessories. We offer several
        models of ShowtimeTM ovens including the standard unit, the compact unit and the
        professional unit. In addition, we sell a variety of accessories which
        complement this appliance, including cookbooks, food products, flavor injectors,
        gloves, racks, and self-turning kebab rods. Historically, our ShowtimeTM
rotisserie products have had very low return rates, averaging 3% of units
        sold.
        Since the 1998 launch of this product family, over $760 million in
        ShowtimeTM-related products have been sold. The majority of the sales originated
        from direct response television marketing.
  Another
        of our prominent product lines is the family of Six Star+TM Cutlery Sets of
        knives for use in residential kitchens. We offer a range of accessories that
        complement our Six Star+TM Cutlery Sets, including flatware, knife sharpeners,
        scissors and wooden blocks. Since this product family's introduction in November
        2003, over 650,000 Six Star+TM Cutlery Sets have been sold with a return rate of
        less than 3%.
  Since
        2002, the ShowtimeTM family of products and the Six Star+TM cutlery family of
        products have accounted for in excess of 94% of our revenues.
  *Household
        Products*
  We
        also
        manufacture or source, market and distribute the Pocket Fisherman and GLH
        Formula Number 9 Hair System. The Pocket Fisherman is being maintained because
        it is a classic and instantly identified with the Ronco brand. GLH has a
        very
        loyal following and we believe that it will offer licensing opportunities
        in the
        future.
  We
        believe that our products are characterized by their fundamental utility,
        innovation, quality and value.
  **Our
        Industry**
  Direct
        response marketing is a form of advertising or promotion that seeks to generate
        an immediate sale or lead from prospective customers. The direct response
        industry, which consists of direct response television, marketing, live home
        shopping channels, direct mail, catalogs, internet marketing and advertising,
        and outbound telemarketing, is one of the fastest growing segments of the
        retailing industry.
  Direct
        response marketing allows marketers to develop, test, implement, measure
        and
        modify their marketing programs. The advertiser can monitor exactly how much
        business is derived from each station, each commercial flight and each creative
        effort. Direct response television has succeeded as a medium in part because
        the
        format allows potential purchasers to see products actually in use. Direct
        response television combines the power of television with the precision of
        direct marketing. Top direct response television product categories have
        historically included fitness equipment, housewares, beauty products, healthcare
        and diet products, and coins and collectibles.
 
 Direct
        response television consists of both short-form infomercials and long-form
        infomercials. Short-form infomercials are typically one to three minutes
        in
        length and are used to market simple, easy-to-understand products with very
        affordable price points. In contrast, long-form infomercials are typically
        twenty-eight to thirty minutes in length and utilize a more elaborate sales
        pitch, which generally involves identifying a problem or need and introducing
        a
        product solution, supported by product demonstrations, question-and-answer
        sessions and audience testimonials. Long-form infomercials are the medium
        of
        choice for products sold at a higher price point and require a more elaborate
        presentation of the product's features and benefits.
  6
  Many
        infomercials are filmed before a studio audience and feature one or more
        hosts
        to explain and demonstrate the virtues of a given product, solicit audience
        member testimonials and then present the opportunity to purchase a given
        product
        through a toll-free phone number provided during the infomercial. The atmosphere
        created within an infomercial is generally positive and high-energy to convey
        the benefits created by a product. Often, celebrities are enlisted to act
        as
        hosts or to otherwise endorse products marketed through
        infomercials.
  Companies
        who market their products through direct response television typically purchase
        commercial airtime from local broadcast stations and regional and national
        cable
        television operators across the country, either directly or through media
        buying
        agencies. Infomercial programs are most commonly run during late night and
        overnight time periods during the week and throughout the day on
        weekends.
  Availability
        of time periods varies from station to station, depending on programming.
        The
        majority of customer purchases occur within the first four hours following
        the
        airing of infomercial programs. Some direct response television companies
        also
        choose to market their products through retail channels, particularly after
        a
        product has been on air a sufficient amount of time to build brand awareness
        required for success at the retail level.
  In
        addition to domestic television and retail channels, there is generally a
        significant demand for U.S. direct response television products internationally.
        A direct response television company with a successful product in the U.S.
        may
        work with one or more international distributors who specialize in bringing
        U.S.
        direct response television products to countries around the world. Some of
        the
        leading international distributors for direct response television products
        include Thane, Interglobal, TV Shop, TelSel, and Northern Response.
  **Marketing
        and Distribution**
  We
        primarily distribute our products through three channels: direct response
        television marketing, wholesale and retail outlets, and online commerce.
        These
        channels and new product strategy with respect to marketing and distribution
        are
        described below.
  *Direct
        Response Television (Infomercials)*
  We
        market
        our products direct to consumers through thirty-minute infomercials, which
        allow
        potential customers to see demonstrations and hear testimonials of our products.
        Since 2002, in excess of 77% of our gross product sales have been generated
        through direct response television marketing. Our infomercials provide viewers
        with the opportunity to purchase our products by calling a toll-free phone
        number provided during the infomercial. Of the 210 broadcast markets in the
        U.S., we primarily focus on the top 90 markets for infomercials, airing on
        as
        many as 4 to 8 stations in each market. We ensure the highest profitability
        from
        the broadcast of our infomercials by closely monitoring media costs per order
        and encouraging telemarketers to suggest additional products to all customers
        who call the toll-free number. Most of our infomercials air between Friday
        evening and Saturday afternoon to ensure the maximum viewership.
  We
        produce our own infomercials, and purchase television media through our internal
        media group, that does business as Castle Advertising, we purchase broadcast
        and
        cable time to reach consumers. Castle Advertising employs several highly
        trained
        media buyers who purchase media on our behalf at pricing that we believe
        is
        significantly below that which would be obtainable through the use of a
        third-party media buying agency. In contrast, other infomercial companies
        will
        typically have a modest staff of in-house buyers and outsource most of their
        media buying activities to third-party agencies. We believe this competitive
        practice provides us a distinct competitive advantage.
 
 Castle
        Advertising functions as an independent agency and receives agency commissions
        from media outlets, thereby reducing our net media costs. Media expenditures
        are
        highly volatile and depend on many factors, including type of television
        station, short or long-form infomercial, time slots for our target audience,
        rating and size of audience delivered, seasonal influences on available media
        inventory, general market trends, and negotiation of packaged
        deals.
  We
        also
        intend to supplement our direct response television distribution channel
        by
        continuing to develop and expand sales through our customer service department
        and our third party outbound telemarketers.
  *Wholesale
        and Retail Distributions*
  In
        addition to television marketing, we sell our products through selected
        traditional retailers. These wholesale arrangements are made through agents
        and
        distributors and directly to large retail chains. During the period from
        2002
        through June 30, 2005, sales through wholesale and retails distribution channels
        accounted for approximately 19% to 26% of our gross product sales. In the
        fiscal
        year ended June 30, 2006, sales through wholesale and retail distribution
        channels accounted for 38% of our gross product sales.
  7
  We
        plan
        to expand our retail distribution network by entering into direct distribution
        agreements with key national retailers of household and home improvement
        products. We are currently in discussions with a number of mass merchants,
        department stores and large retail chains in an effort to achieve wider retail
        distribution of our products nationwide. In September 2005, we began shipping
        our rotisserie ovens to Wal-Mart Stores, Inc. and have successfully secured
        a
        repeat of this program that shipped in September 2006.
  *Online
        Commerce*
  We
        sell
        direct to consumers through our website, www.ronco.com. Historically our
        website
        has primarily been used by viewers of our television infomercial as an alternate
        means of purchase and by existing customers to buy additional products and
        accessories. We plan to redesign the website to accommodate higher traffic
        counts and to support more robust features such as product up-sells (the
        recommendation of higher-priced versions of products) and cross-sells (the
        recommendation of related or complementary products), product recommendations,
        automated customer service, product demonstrations, customer affinity programs
        and branding. We expect that our website redesign will increase our ability
        to
        sell online, and will position our site for search engine optimization.
        Historically, online sales has represented approximately between 6 and 10%
        of
        our gross product sales.
  **New
        Product Strategy**
  We
        have
        historically focused a substantial portion of our creative, managerial and
        capital resources within a given period on a single product and have not
        diversified our business. Until the November 2003 launch of the Six Star+TM
Cutlery Set, a launch which overlapped with the marketing of our ShowtimeTM
Rotisserie line, Mr. Popeil had not simultaneously invested in and featured
        more
        than one major product line in a long-form infomercial at the same time.
        In
        addition, our historical product development efforts have relied solely on
        the
        inventions of Mr. Popeil, which could constrain our ability to respond to
        market
        opportunities on a timely basis or with forward-thinking product ideas. We
        intend to diversify our sources of product development and our emphasis on
        a
        given product category. We also intend to pursue a new product strategy by
        which
        we will:
  *Work
        Closely with Mr. Popeil to Create New Products that Leverage our Historical
        Competencies In Product Development and Marketing*
  As
        an
        inventor, Mr. Popeil has conceived of, developed and produced a succession
        of
        unique and highly-functional products that have been well-suited to infomercial
        marketing, which feature thorough product demonstrations, discussions of
        a
        product's virtues and user testimonials. As a model, the sales of our ShowtimeTM
product family demonstrates the effectiveness of infomercials as a marketing
        medium and the value that we can create through innovative product design.
        On
        June 30, 2005, we entered into a new product development agreement with Mr.
        Popeil which provides that we will have an exclusive relationship with Mr.
        Popeil with respect to new product inventions for the next two
        years.
 
 *Add
        Complementary Products to our Existing Primary Product
        Lines*
  We
        plan
        to introduce product line extensions to our major product families in the
        future, including the ShowtimeTM Rotisserie and the Food Dehydrator, to take
        advantage of their imbedded customer bases and our cumulative media investment
        in building each sub-brand. In addition, most of our products have not been
        “versioned.” We believe this type of product differentiation will result in
        extended product life and allow us to increase our market share and retail
        shelf
        space for our products.
  *Introduce
        New Ronco-branded Product Lines that Innovate through Packaging and
        Pricing*
  We
        believe the success experienced thus far with the Six Star+TM Cutlery Set product
        line serves as a demonstration of the value that the Ronco brand can bring
        to
        the marketing of less unique items. Our cutlery product line takes advantage
        of
        the large market in cutlery sold through direct response television. While
        we
        own no intellectual property with respect to this product line, we have created
        a strong market position for our product offering through the value proposition
        (24 knives for $39.95), the Ronco brand, and our infomercial marketing and
        sourcing expertise. We intend to continue to selectively leverage our brand
        and
        market position to introduce and sell non-proprietary products.
  *Introduce
        Unique Products from Third Parties that have the Opportunity to be Major
        Contributors*
  We
        regularly receive new product ideas. We anticipate formalizing a process
        of new
        product evaluation and market testing. This effort would include identification
        of products that could be the subject of infomercial marketing by us under
        a
        license or royalty arrangement. Opportunities also exist within the industry
        to
        either purchase or form a joint venture with companies who have potentially
        successful product lines, but could benefit from our brand, marketing expertise
        and established distribution channels.
  8
  **Long-Term
        Marketing and Distribution Strategy**
  Our
        objective is to increase our revenue, profitability and cash flow while growing
        our position as a direct response television marketer of branded products
        for
        use in the kitchen and elsewhere around the home. Our strategy for this
        objective includes the following key elements:
  *Expand
        Retail Distribution*
  We
        believe there is a substantially untapped opportunity to market our products
        through traditional retailers. To date, over five million ShowtimeTM Rotisserie
& BBQ units have been sold. Approximately three million of those units were
        sold through direct response television channels and two million through
        retailers. This represents a ratio of less than one retail unit sale for
        each
        one direct response television sale. Therefore, a core component of our strategy
        to increase revenue is to expand retail distribution of our products by entering
        into direct distribution agreements with key national retailers of household
        and
        home improvement products. We are also re-focusing our existing wholesale
        distribution relationships to target selected smaller or regional retail
        chains
        while we develop direct relationships with the larger retailers, in an effort
        to
        improve our gross margins. As part of this strategy, we have selectively
        re-introduced certain of our existing products into retail
        distribution.
  *Market
        Directly to the U.S. Hispanic Population*
  We
        believe the Hispanic population within the U.S. represents a growing and
        attractive market for our products. According to a December 2004 Conference
        Board study, Hispanic-American households will sharply increase both their
        numbers and spending power over the next 10 years. By 2010, Hispanic households
        are expected to reach approximately 13.5 million, up from less than 6 million
        in
        1990, the report finds. According to the Conference Board, in 2010 the Hispanic
        market will represent $670 billion in personal income, however, the domestic
        Spanish language television market is still largely untapped by the direct
        response industry. Historically, we approached this market opportunity by
        re-producing certain content from our library of infomercials with Spanish
        dubbing. We do not believe that these efforts are the most effective method
        of
        addressing this marketing opportunity. We believe the market opportunity
        requires a more comprehensive strategy and investment. We plan to increase
        our
        domestic Spanish language media exposure through the production of a new
        infomercial, produced entirely in Spanish, with a Hispanic host and appropriate
        recipes. Beginning in July, 2006, we initiated efforts to market our products
        to
        retailers who sell in the Hispanic markets.
  *Enhance
        Our Online Commerce Capabilities*
  While
        sales through our e-commerce distribution channel have grown substantially,
        we
        believe our current website lacks many commonly-available e-commerce features
        that would improve the customer experience and increase our sales. In order
        to
        address this untapped opportunity, we plan to make a number of modifications
        and
        enhancements to our existing website operations. The enhancements and
        improvements that were completed include improving our technology infrastructure
        to accommodate higher traffic counts and simultaneous transaction processes.
        We
        are continuing to increasing online features to enable product up-sells,
        product
        recommendations, automated customer service, product demonstrations, customer
        affinity programs and overall branding. We are also providing higher quality
        online streaming of past and future infomercials and adding content that
        will
        draw potential customers to our site for repeat visits and for longer durations,
        including online newsletters, sweepstakes and promotions, and an expanded
        our
        recipe section featuring celebrity chef recipes and automated affiliate links.
        We expect to complete these enhancements within the next twelve
        months.
  *Expand
        International Distribution*
  We
        sell a
        nominal amount of product in international markets. In addition, the ShowtimeTM
product is marketed in Canada either through television/telemarketing (via
        Northern U.S. television stations) and The Shopping Channel or through retail
        outlets. We believe that our international market opportunity is vastly untapped
        and that the emergence of additional television shopping channels in Western
        Europe, Latin America and Asia present additional market opportunities.
        Beginning in February 2006, we began targeting these markets for export;
        this
        program includes both multi-national import/export companies, as well as
        individual in-country importers. We have signed an agreement with Interglobal
        International Ltd. to act as our distributor in this endeavor.
  *Leverage
        our Customer Database for Relational Marketing Programs*
  We
        maintain a database of over four million customers while adding many thousands
        of new customers each month, which is a valuable asset for current and future
        sales. To date, we have not exploited the potential value of this asset.
        We
        currently generate revenues through mining our customer lists and occasionally
        renting our list to third parties for a fee. Among the tools we are currently
        testing or developing are outbound telemarketing programs, catalogs, direct
        mail
        offers, and email.
  **Manufacturing**
  We
        currently outsource manufacturing of our products, primarily to China. We
        have
        been sourcing Six Star+TM Cutlery and related products in China since November
        2003. Delivery of ShowtimeTM Rotisseries from China began in September 2004. Our
        manufacturing was sourced in Korea prior to China. Our Chinese sourcing partner
        will assist us going forward with product development, product line extensions,
        quality control, and ongoing review of manufacturing and distribution. We
        will
        continue to re-engineer many of our business processes over the next several
        years and expect that we will further enhance our profitability as a result.
        We
        believe that our profitability will be increased by developing new products
        that
        increases sales while maintaining our historic gross profits.
  9
  We
        enjoy
        the protection of sixteen patents covering the design and manufacture of
        the
        ShowtimeTM Rotisserie & BBQ, and own the tooling and dies currently used by
        our manufacturers and their sub-contractors for production. Manufacturing
        of the
        ShowtimeTM product line is streamlined. Since the primary differentiation among
        all three ShowtimeTM units is width, common parts, including side panels, motor,
        gear assemblies, and electrical wiring are utilized. This allows for extremely
        efficient production and allocation among suppliers. There is a six to eight
        week production cycle from issuance of a purchase order to the arrival of
        the
        product at port in Los Angeles. This quick turnaround enables us to maintain
        relatively low levels of inventories and allows for efficient
        production.
  **Fulfillment
        and Customer Service**
  We
        utilize telemarketing service bureaus to handle most of the inbound traffic
        generated by potential customers who are calling one of the toll-free phone
        numbers provided within our infomercials. Each show has a unique toll-free
        phone
        number, enabling us to gather important data for determining the profitability
        of individual shows and products and the efficacy of our media buying. We
        have
        also implemented the use of unique internet URL addresses to track the traffic
        increase from our media to internet sales.
  Potential
        customers call into a toll-free number, received by our telemarketing partners.
        Our telemarketing vendors route a customer's order, via order-fulfillment
        software, for approval. We use third-party vendors to process customer
        payments.
 
 When
        an
        order is placed and the original method of payment is declined, our customer
        service department contacts the potential customer to obtain an alternate
        method
        of payment.  It is our experience that approximately 75% of such orders are
        recovered. We operate an in-house 80 seat customer contact center and utilize
        strategic partnerships with off-site vendors for customer service support
        during
        our peak volume periods.  We also operate a 30-seat data entry center,
        which handles our written correspondence, product warranties, returns,
        collections and quality assurance for all aspects of our call center
        operations.  Together, these departments generate sales revenues from
        inbound customer service inquiries, as well as outbound campaigns to existing
        customers. This customer contact center not only handles basic customer service
        inquiries, but also has instituted a number of successful inbound and outbound
        telemarketing programs that are currently generating significant revenues
        at
        attractive margins.
  All
        approved orders are routed to a fulfillment house, which remits shipping
        status
        notifications back to us through our order-fulfillment software. The majority
        of
        our physical inventory is warehoused by our fulfillment partners.
  **Arrangements
        with Ronald M. Popeil**
  Although
        Mr. Popeil has not assumed day-to-day operational duties or executive
        responsibilities with us, he is continuing to be involved in our business
        as a
        consultant. We believe it is in our best interests and our stockholders'
        best
        interests to maintain a close working and financial relationship with Mr.
        Popeil. Accordingly, we have entered into several agreements with Mr. Popeil
        including a consulting services agreement, a trademark co-existence agreement
        and a new product development agreement. We have also entered into an agreement
        with Mr. Popeil pursuant to which we will pay Mr. Popeil a percentage of
        the
        gross profits generated from the sale of our products, which occur as a result
        of his ongoing personal appearances on QVC or other television or online
        shopping venues.
  *Consulting
        Agreement with Ronald M. Popeil*
  On
        June
        30, 2005, we entered into a consulting services agreement with Ronald M.
        Popeil
        for an initial term of three years. During the term of the agreement, Mr.
        Popeil
        will not enter into any consulting services, advisory services or employment
        agreement, nor directly provide consulting or advisory services to any entity
        or
        person that is in direct competition with our business or in violation of
        the
        new product development agreement, as described below. Pursuant to the
        consulting agreement, Mr. Popeil may, among other things, consult on the
        development of new products acquired by us pursuant to the new product
        development agreement. Mr. Popeil will also make the following personal
        appearances (each of which will be performed at Mr. Popeil's sole discretion,
        unless otherwise noted):
  ·
              Speak
                  as our chief spokesperson for non-financial matters in all forms
                  of media
                  (not otherwise covered below) ;
  ·
              Promote
                  our image by making up to six appearances per year on nationally
                  broadcast
                  television programs, if invited or booked by
                  us;
  ·
              Make
                  personal appearances for leading national
                  retailers;
  ·
              Participate
                  in the mandatory production of up to three long-form infomercials
                  per year
                  for the direct response television marketing of our products, if
                  we choose
                  to produce them; and
  ·
              Attend
                  and participate in the Gourmet Show and Housewares Show (at our
                  discretion).
  10
 
 We
        will
        pay Mr. Popeil an annual base fee of $500,000 per year, paid in equal weekly
        installments, at Mr. Popeil's direction, in the form of salary and/or payment
        of
        certain business expenses incurred by Mr. Popeil. In addition, we will pay
        Mr.
        Popeil certain fees for personal appearances in accordance with the following
        schedule:
  
 ·
              Fees
                  for chief public spokesperson, which will be negotiated on a fair
                  and
                  reasonable basis as and when appearance requests
                  arise;
  ·
              $10,000
                  per day for appearances on nationally broadcast television
                  programs;
  ·
              $10,000
                  per day for appearances for leading national
                  retailers;
  ·
              $50,000
                  for each infomercial produced; and
  ·
              $50,000
                  per day for the Gourmet Show and Housewares
                  Show.
  Mr.
        Popeil will be eligible to receive stock options under the stock incentive
        plan
        that we intend to implement during our next fiscal year, based on his
        contribution to our growth, as determined by our board of directors in its
        sole
        discretion. We will also provide customary indemnification to Mr. Popeil
        with
        respect to our products, appearances and other items.
  *Trademark
        Co-Existence Agreement*
  On
        June
        30, 2005, we also entered into an agreement with Mr. Popeil with respect
        to the
        names “Popeil,” “Ron Popeil” and the name and any form of the likeness approved
        by Mr. Popeil (or one of his representatives), including the image, silhouette
        and voice of Mr. Popeil. The term of this agreement will continue so long
        as the
        trademarks are protected by applicable U.S. law. Mr. Popeil retains as his
        sole
        and exclusive property, the worldwide royalty-free perpetual rights with
        respect
        to the trademarks for certain uses, including autobiographical works, various
        media projects, and a specific licensing arrangement. We acquired the trademarks
        subject to the rights of certain third parties, including QVC, the
        PopeilFamilyStore.com and Marketing Development Group. Should certain events
        of
        default with respect to the promissory notes issued in connection with our
        purchase of the assets of the predecessor entities occur, we will grant Mr.
        Popeil a non-exclusive license (at no cost to Mr. Popeil) to use the trademarks
        in connection with the manufacturing, marketing and sale of certain specific
        new
        products as to which Mr. Popeil elects, pursuant to the new product development
        agreement, and terminate the applicable patent or other intellectual property
        licenses we hold.
  Mr.
        Popeil retains the right to approve all uses of his name and likeness for
        any
        purpose including but not limited to products, packaging, advertising and
        displays, but with such approval not to be unreasonably withheld or delayed.
        Should Mr. Popeil die or become incapacitated, a designated representative
        of
        Mr. Popeil will exercise the right of approval.
  **New
        Product Development Agreement**
  On
        June
        30, 2005, we entered into a new product development agreement with Mr. Popeil.
        Under the terms of the agreement, we have a fifteen day right of first refusal
        on all new consumer products (excluding all products that are autobiographical
        in nature) that are created by Mr. Popeil during the term, to the extent
        that
        Mr. Popeil owns and controls the rights to such products. Should certain
        events
        of default with respect to the promissory notes issued to the predecessor
        entities occur, the right of first refusal described above will be suspended
        until such event of default is cured. The purchase price of each new product
        will be negotiated and agreed upon on a fair and reasonable basis. The purchase
        price will include the cost of any product designs, prototypes, tooling and
        a
        completed commercial or infomercial.
  The
        agreement also provides the terms of purchase for a specific product currently
        under development by Mr. Popeil, including a specific upfront payment and
        a
        per-manufactured-unit payment to be paid up to an aggregate maximum. We will
        also be obligated to pay the costs for all patent filings, tooling and
        infomercials related to this product and will be obligated to reimburse the
        out-of-pocket expenses incurred by Mr. Popeil in connection with the development
        of this product. All the intellectual property related to the product will
        remain with Mr. Popeil until the promissory notes, including any accrued
        and
        unpaid interest, are paid in full.
  Mr.
        Popeil will have creative control over all new consumer products created
        by Mr.
        Popeil and sold to us under the new product development agreement, and control
        over all packaging, advertising, naming and promotion, including, without
        limitation, creative control over all stages of new product conception,
        creation, design, development and completion. Mr. Popeil has no obligation
        under
        the terms of this agreement to develop new products. Mr. Popeil will have
        the
        right to terminate the agreement if we breach any provision of the new product
        development agreement, the asset purchase agreement, the trademark co-existence
        agreement or the consulting agreement with Mr. Popeil, if the breach is not
        cured to Mr. Popeil's reasonable satisfaction within fifteen days of such
        breach.
 
 **Sources
        of Supply**
  We
        maintain supply contracts with third party suppliers, located primarily in
        Asia,
        which include standard terms for production and delivery. Specific production
        amounts are ordered by separate purchase orders. We believe that we maintain
        good business relationships with our overseas manufacturers, although these
        relationships were strained due to our cash shortfall and our payments for
        products purchased exceeded our agreed upon terms.
  11
  We
        believe that the loss of any one supplier would not have a long term material
        adverse effect on our business because we believe we would be able to locate
        other suppliers that would be able to increase production to fulfill our
        requirements. However, the loss of a supplier could, in the short term,
        adversely affect our business until alternative supply arrangements are
        secured.
  **Backlog**
  Although
        we obtain firm purchase orders from our customers, customers typically do
        not
        make firm orders for delivery of products more than 30 days in advance. In
        addition, customers may reschedule or cancel firm orders. Therefore, we do
        not
        believe that the backlog of expected product sales covered by firm purchase
        orders is a meaningful measure of future sales.
  **Competition**
  The
        direct response television marketing industry includes numerous companies
        that
        market their products on television through infomercials. Competition among
        direct response companies is largely based on: (i) ability to place infomercials
        into television time slots that yield the highest viewership and customer
        generation for a particular product; (ii) ability to purchase air time at
        competitive prices, create brand awareness, and generate sales profitably;
        and
        (iii) product quality, reputation and pricing. In the U.S., we compete with
        several other companies and products in the direct response industry, including
        GT Brands, Telebrands, Idea Village, Guthy-Renker, Tilia (a division of Jarden,
        Inc.), and Sylmark. We believe, however, that we have a definite advantage
        due
        to the strength of our brand and the consistent quality of our
        products.
  We
        believe that manufacturers of small kitchen appliances, such as Cuisinart,
        Kitchen Aid, Oster, and DeLonghi, are not comparable competition because
        these
        products are mostly commoditized and are not characterized by unique, patented
        systems and designs. Currently, we believe there are very few competitive
        brands
        that market appliances equivalent to our proprietary models (such as the
        rotisserie and food dehydrator) in price, uniqueness or quality. We also
        compete
        with various manufacturers of kitchen knives and flatware, sold both through
        direct-to-consumer and retail channels. We believe that our Six Star+TM line of
        products favorably competes on quality and durability at very attractive
        price
        points. In addition, some mainstream manufacturers, such as Panasonic, Salton,
        Sharper Image, and Nautilus, have turned to direct response television to
        create
        self-liquidating brand value.
  **Insurance
        Matters**
  We
        currently carry insurance policies through major carriers for product liability,
        general liability, commercial property, automobile, plant and equipment,
        marine
        insurance, workers' compensation, directors and officers' insurance and excess
        liability. We currently have key man life insurance coverage and disability
        coverage on Ronald M. Popeil in the aggregate amount of $15 million. Under
        the
        terms of our June 2006 loan agreement with Sanders Morris Harris, we assigned
        proceeds payable under this key man life insurance policy to Sanders Morris
        Harris as a lender and as agent for the under lenders under the loan agreement.
        We have also increased the limits of our directors and officers' insurance
        commensurate with our status as a public company.
  **Intellectual
        Property and Proprietary Rights**
  We
        acquired a significant amount of proprietary technology covering the design
        and
        manufacturer of our products. We rely on patents and confidentiality,
        non-disclosure and assignment of inventions agreements to protect our
        proprietary rights. We hold over thirty patents on the proprietary design
        and
        manufacturing processes of our products.
  Our
        policy is to require employees and consultants to execute confidentiality
        agreements when their relationship with us begins. We also seek these protective
        agreements from suppliers and subcontractors. These agreements provide that
        confidential information developed or made known during the course of a
        relationship with us is to be kept confidential and not disclosed to third
        parties, except in specific circumstances. It might be possible for unauthorized
        third parties to copy aspects of our products or to obtain and use information
        that we regard as proprietary.
 
 We
        also
        have trademarks in the U.S. and various countries around the world covering
        a
        variety of our marks.
  Many
        participants in the consumer products industry have an increasing number
        of
        patents and patent applications. Third parties may, from time to time, assert
        infringement claims in the future alleging infringement by our current or
        future
        products. It is possible that these claims may require us to enter into license
        arrangements or may result in protracted and costly litigation, regardless
        of
        the merits of these claims.
  12
  **Government
        Regulation** s
  We
        are
        subject to federal, state and local regulations concerning consumer products
        safety. Foreign jurisdictions also have regulatory authorities overseeing
        the
        safety of consumer products. Foreign compliance regulations vary by country
        and
        because of these various certifications we have encountered a very lengthy
        approval process for marketing and selling products in the European Union
        (EU).
        This process has delayed shipments to our international distributor. We have
        completed the necessary electric and RoHS (a directive that bans the placing
        on
        the EU market of the new electrical and electronic equipment containing high
        levels of lead and other contaminants) certifications for the United Kingdom,
        which should enable us to expand our sales into this international market
        during
        the third and fourth quarters of fiscal 2007.  Our small electric appliance
        products sold in the United States are listed by Underwriters Laboratory,
        Inc.,
        which we refer to as UL, and similar products sold in other countries are
        listed
        with local organizations similar to UL, if required.
  **Employees**
  We
        currently have approximately 117 employees, including executive, management,
        warehouse, customer service, media buyers and maintenance personnel. None
        of our
        employees are members of a labor union. We believe that we have good relations
        with our employees.
  **Item
        1A.**  **Risk
        Factors.**
  **Cautionary
        Statements and Risk Factors**
  Several
        of the matters discussed in this document contain forward-looking statements
        that involve risks and uncertainties. Factors associated with the
        forward-looking statements that could cause actual results to differ materially
        from those projected or forecast are included in the statements below. In
        addition to other information contained in this report, readers should carefully
        consider the following cautionary statements *.*
  **Risks
        Related to our Business**
  *We
        have a history of operating losses and we may be unable to achieve or maintain
        profitability.*
  Ronald
        M.
        Popeil has been selling products under the Ronco brand name since the early
        1960s. The predecessor entities have been operating since 1991 under various
        brands and entities. These entities have recorded operating losses during
        various periods in their operating history. During this year, we continued
        to
        experience these losses as the revenue from the direct response sales decreased
        and had greater media expenditures on a per order basis. It is our expectation
        that we can achieve positive operating profits under our current business
        plan
        as we have recently seen an increase in our direct response sales and the
        decrease in the media expenditures on a per order basis. There can be no
        assurance, however, that we will achieve or maintain our profitability
        targets.
  *There
        can be no assurance that we will be ability to continue as a going
        concern*
  Our
        substantial historical operating losses, limited revenues, negative working
        capital and our capital needs raise substantial doubt about our ability to
        continue as a going concern. We can provide no assurances that cash generated
        from operations together with cash received in the future from external
        financing will be sufficient to enable us to continue as a going concern.
        If we
        are unable to obtain adequate funding or sufficiently increase revenues from
        the
        sale of our products to satisfy our working capital requirements, we could
        be
        required to significantly curtail or even shutdown our
        operations.
  *If
        we
        are unable to meet our increased need for liquidity our business and financial
        condition could be seriously harmed.*
  As
        a
        result of our strategy to increase our wholesale business, we will need to
        purchase more inventory, but we will have less available cash per product
        sold
        because we offer credit terms to wholesale customers. Thus, we will require
        additional working capital. We cannot be certain that additional capital
        will be
        available to us at all, or that, if it is available, it will be on terms
        favorable to us. Any inability to raise additional capital when we require
        it
        would seriously harm our business and financial condition. Any additional
        issuance of equity or equity-related securities will be dilutive to our
        stockholders.
  *We
        face risks associated with the use of debt to fund our operations, such as
        refinancing risk. We currently may have incidents of default of our debt
        obligations under multiple arrangements with lenders, as a result of which
        we
        could lose significant rights to our products and intellectual property assets,
        which would harm our business.*
  We
        are
        subject to the risks normally associated with debt financing, including the
        risk
        that our cash flow will be insufficient to meet required payments of principal
        and interest. If principal payments due at maturity cannot be refinanced,
        extended or repaid with proceeds from other sources, such as new equity capital,
        our cash flow may not be sufficient to repay amounts under the promissory
        notes
        that we issued in connection with our purchase of the Ronco business. We
        also
        may be unable to satisfy our debt obligations under other arrangements with
        lenders, including our obligations to Sanders Morris Harris and other lenders
        under the $3.0 million loan transaction completed in June 2006, our obligations
        under our factoring agreement and our obligations under our $4.0 million
        credit
        facility with Crossroads Capital that we closed on October 6,
        2006.
  13
  We
        may
        have defaulted under certain of our obligations with these lenders. Under
        the
        terms of our loan agreement with Sanders Morris Harris and other lenders
        that we
        closed in June 2006, we agreed to retain Richard F. Allen, Sr. as our Chief
        Executive Officer. On August 9, 2006, we terminated Richard F. Allen, Sr.
        as
        President and Chief Executive Officer of our company, at which point we were
        technically not in compliance with our obligations under the loan. In addition,
        we also have not made certain payments under the promissory notes issued
        in
        connection with the purchase of our Ronco business, including promissory
        notes
        issued to Mr. Popeil, which could result in an event of default under these
        notes.
  Our
        agreements with lenders provide that the interest rate on the notes will
        increase upon occurrence of default to which we have been notified in
        writing that is not cured in the time specified in the agreements. These
        agreements also provide that any unpaid principal and interest will become
        immediately due and payable. Accordingly, our default of obligations under
        these
        agreements will significantly increase our cash flow needs and cause us to
        incur
        substantial damages, all of which could harm our business. In addition, the
        promissory notes issued to Mr. Popeil provide that we could lose significant
        intellectual property rights if we default on our obligations under these
        notes.
        The loss of these intellectual property rights could have a material adverse
        effect on our business and results of operations.
  *Due
        to changes that occurred in our financing and licensing arrangements, and
        other
        changes that occurred in connection with our acquisition of the Ronco business,
        the financial statements of the predecessor entities may not be a good indicator
        of our future performance.*
  In
        connection with our acquisition of the Ronco business, we modified certain
        of
        the predecessor entities' business arrangements and did not assume certain
        of
        their liabilities. For instance, we purchased the patents that the predecessor
        entities licensed and terminated product development and license fees. We
        also
        did not assume approximately $39.2 million of related party loans to the
        predecessor entities. Although we will not have the expenses associated with
        these liabilities, we will incur the substantial costs associated with being
        a
        public company, pay income taxes (the predecessor entities did not pay taxes
        at
        the corporate level) and have to establish financing facilities since we
        will no
        longer be able to rely on Mr. Popeil to make loans to us, as needed. We cannot
        yet determine the amounts of these additional costs. As a result of these
        changes, our historical financial statements may not be a good indicator
        of our
        future performance.
  *Our
        shareholders will be subject to increasing dilution if the price of our common
        stock declines because we will be required to issue a higher number of shares
        of
        Series A Convertible Preferred Stock in payment of dividends on the Series
        A
        Convertible Preferred Stock. In addition, we will be required to issue an
        ever
        increasing number of shares of Series A Convertible Preferred Stock to satisfy
        our continuing obligations to pay dividends on the Series A Convertible
        Preferred Stock, because dividends are payable on additional shares of Series
        A
        Convertible Preferred Stock that we issue.*
 
 Our
        Series A Convertible Preferred Stock are entitled to cumulative preferential
        dividends at the annual rate of $0.1885 per share, payable quarterly in cash
        or
        in shares of Series A Convertible Preferred Stock. Pursuant to the terms
        of our
        agreements with our lenders, we are not allowed to make these dividends in
        cash,
        but expect to issue additional shares of Series A Convertible Preferred Stock
        to
        satisfy these obligations. The number of additional shares of Series A
        Convertible Preferred Stock that we are required to issue will be calculated
        by
        dividing the cash value of the dividends payable on the Series A Convertible
        Preferred Stock by the per share market value of the Series A Convertible
        Preferred Stock, as determined by our Board of Directors in good faith. Our
        Board of Directors has determined that the value of the Series A Convertible
        Preferred Stock is equal to the market price of our common stock for the
        purposes of determining the number of additional shares that we issue to
        pay
        dividends on the Series A Convertible Preferred Stock. As a result, if our
        common stock price declines over time, we will be required to issue a higher
        number of shares of Series A Convertible Preferred Stock to satisfy our dividend
        payment obligations. In addition, as more shares of Series A Convertible
        Preferred Stock are issued and remain outstanding, we will be required to
        issue
        an increasingly higher number of shares of Series A Convertible Preferred
        Stock
        to pay dividends to our Series A stockholders. The higher number of shares
        of
        Series A Convertible Preferred Stock will be convertible into a higher number
        of
        common stock, as a result of which you could suffer increasing dilution in
        percentage ownership and the economic value of the shares of common stock
        you
        purchase under this prospectus.
 
 *The
        sale of securities by us at a price or terms that cause an adjustment in
        the
        conversion price of the Series A Convertible Preferred Stock would result
        in an
        increase in the number of shares underlying the Series A Convertible Preferred
        Stock, which in turn could result in significant dilution to our existing
        holders of common stock, cause our stock price to decline and harm our business.*
 
 We
        may
        issued equity or debt securities in the future at prices that are below the
        conversion price of the Series A Convertible Preferred Stock, or under terms
        that require an adjustment in the rate at which our Series A Convertible
        Preferred Stock would be convertible into shares of our common stock. This
        will
        cause a decrease in the conversion price of the Series A Convertible Preferred
        Stock and result in an increase in the number of shares of common stock that
        would be issued upon conversion of the Series A Convertible Preferred Stock.
        In
        the future, we may also issue securities in connection with acquisition
        transactions or other types of transactions that similarly result in an
        adjustment in the conversion price of our Series A Convertible Preferred
        Stock.
        These types of issuances in the future could significantly dilute your ownership
        of common stock you purchase under this prospectus and cause our stock price
        to
        decline. We also may assume debt or incur impairment losses related to goodwill
        and other intangible assets if we acquire other companies or businesses,
        which
        could negatively affect our earnings and results of operations, cause our
        stock
        price to decline and harm our business.
  14
  *We
        are subject to Federal Communications Commission regulation with respect
        to the
        telemarketing aspects of our business, and our business could be harmed if
        these
        regulations limit the format and/or content of television direct marketing
        programs.*
  Our
        television direct marketing programs are significantly impacted by government
        regulation of television advertising, particularly those regulations adopted
        by
        the Federal Communications Commission. These regulations impose restrictions
        on,
        among other things, the air time, content, and format of our direct response
        television programs. If we are required to remove or alter the format or
        content
        of our television programs, our business could be harmed. Additional regulations
        may be imposed on television advertising in the future. Legislation regulating
        the content of television advertisements has been introduced and passed in
        Congress from time to time in the past. Additional regulations or changes
        in the
        current laws regulating and affecting television advertising may harm the
        results of our operations.
  *Our
        business model is dependent, in part, on our ability to purchase sufficient
        quantities of television media at attractive prices. If we fail to obtain
        attractive media prices for our direct response television programs, our
        profitability will decline and our business may be harmed.*
  While
        we
        intend to invest in and develop other distribution channels, direct response
        television is currently our main channel of distribution. Our business model
        is
        dependent in part on our ability to purchase television media time at attractive
        prices in order to broadcast our direct response television programs. We
        have
        formed our own media department, Castle Advertising, solely for the purpose
        of
        making these media purchases.
  The
        nominal cost of television media rises every year as a result of increasing
        competition for “paid programming” time slots. In addition, each network or
        station generally desires to increase annual revenues and they achieve revenue
        growth by increasing the price of their media. Castle Advertising faces the
        problem of having to negotiate low prices despite this upward pressure on
        prices. If we fail to obtain attractive prices for our media purchases and
        our
        media purchasing costs increase, our results of operations may be adversely
        affected and our operating profitability may decline. There can be no assurance
        that our media department will be able to acquire sufficient media at attractive
        prices.
  *Our
        direct response television revenues, in part, depend on our ability to
        successfully develop, produce and broadcast new and updated infomercials.
        If we
        fail to regularly renew our infomercial campaigns for our existing products,
        sales from such products will decline.*
  Historically,
        direct response television sales of our products are highest during the first
        four hours immediately following the airing of a long form infomercial for
        that
        specific product.
  In
        addition, direct response television sales from a particular long form
        infomercial decline as the infomercial ages. Therefore, our revenues from
        direct
        response television sales depend, in part, on the continued periodic airing
        of
        our existing infomercials and the development, production and broadcast of
        new
        and updated infomercials. Under the terms of our consulting agreement with
        Ronald M. Popeil, Mr. Popeil is obligated to appear in three long form
        infomercials per year for our products, if we choose to produce them. Mr.
        Popeil's consulting agreement has a term of three years beginning June 30,
        2005.
        If we are unable to produce or broadcast new and updated infomercials, or
        broadcast existing infomercials, for our products in a timely manner, our
        revenues from direct television sales could decrease, which could have a
        material adverse effect on our business, financial condition and results
        of
        operations.
  *Our
        operations are based, to a certain extent, on the successful integration
        of
        certain supply chain and operating technologies. Our inability or our vendors'
        inability to integrate these technologies may negatively impact our customer
        order process, and the fulfillment and delivery of our products, which could
        harm our business and operating results.*
  Some
        of
        our operating activities are outsourced to various vendors and service
        providers. These operating activities include taking customer orders, product
        manufacturing, product fulfillment and product delivery. We rely on certain
        hardware and software systems, provided by third-party vendors, to perform
        vital
        functions and processes with respect to our operations. Various supply chain
        and
        operating technologies have been used to implement these functions and
        processes. Our inability, or our vendors' inability, to operate and integrate
        these technologies properly may negatively impact our product supply chain
        and
        may harm our business and operating results.
  *The
        loss of any of our major wholesale distributors could reduce our sales and
        substantially harm our business.*
  Since
        2003, sales from our wholesale business distributors accounted for between
        11%
        and 16.4% of our gross product sales annually, in the aggregate. Since 2003,
        we
        have used M. Block & Sons and Englewood Marketing Group as our two wholesale
        distributors to purchase and distribute our products through retail channels.
        M.
        Block & Sons accounted for approximately 7.3% and 6.8%, and Englewood
        Marketing Group accounted for approximately 9.1% and 7.9%, of our net sales
        for
        the years ended June 30, 2006 and June 30, 2005, respectively. As a result,
        our
        wholesale revenues have been highly concentrated. Our wholesale revenues
        could
        decline if either one of these distributors experience financial distress
        that
        interfere with its ability to purchase our products, or under perform relative
        to our expectations. A core component of our strategy is to expand our retail
        distribution by entering into direct distribution agreements with key national
        retailers of household and home improvement products. In September 2005,
        we
        began shipping our ShowtimeTM Rotisserie ovens to Wal-Mart. We also plan to
        re-focus our existing wholesale distribution relationships to target selected
        smaller or regional retail chains. There can be no assurance that we will
        be
        able to establish direct relationships with other retail chains or that we
        will
        be able to increase the number of wholesale distributors that sell our products
        and decrease our reliance on these two distributors.
  15
  *We
        may be unable to expand our retail distribution by entering into direct
        distribution agreements with key national retailers on favorable terms, in
        which
        case we may be unable to generate sufficient revenues or adequate margins
        to
        offset the increase in our operating costs associated with this
        strategy.*
  We
        plan
        to implement our strategy to distribute our products through large national
        retailers in order to leverage the strength of the Ronco brands created through
        our direct response television distribution channel. There can be no assurance
        that we will be able to negotiate attractive distribution agreements with
        key
        national retailers or otherwise achieve substantial retail distribution of
        our
        products. Furthermore, if we are successful in placing our products with
        key
        national retailers, there can be no assurance that our products will have
        satisfactory sell-through rates or that sales will offset any additional
        costs
        associated with this strategy.
  *We
        rely on the services of Ronald M. Popeil to develop new products and to define
        our marketing strategy, and the loss of his services would negatively affect
        our
        operations.*
  Our
        future success depends, in part, on the continued service of Ronco's founder
        and
        chief inventor, Ronald M. Popeil. Mr. Popeil's name and identity are closely
        linked to the brand identity of Ronco Corporation. Additionally, Mr. Popeil
        has
        been essential to defining the predecessor entities' brand and marketing
        strategies and product developments. We have entered into an exclusive
        consulting agreement with Mr. Popeil for an initial term of three years,
        under
        which Mr. Popeil will continue to provide us with his expertise and services
        with respect to new products, marketing and other aspects of our operations.
        This agreement also contains a provision prohibiting Mr. Popeil from competing
        with us. We have also entered into several other agreements with Mr. Popeil
        to
        encourage his ongoing interest in our growth and financial prospects. The
        loss
        of Mr. Popeil's services for any reason would have an adverse effect on our
        business.
  *We
        rely on a limited number of offshore manufacturers, vendors and suppliers
        for
        the bulk of our product production capacity and the procurement of materials
        required to manufacture our products, and the loss of services and materials
        provided to us by any of these manufacturers, vendors or suppliers could
        result
        in product shortages.*
  We
        outsource our manufacturing and procurement needs to a small number of offshore
        manufacturers, vendors and suppliers in multiple geographic regions, which
        provides us with low cost production capacity. Because a small number of
        manufacturers, vendors and suppliers are responsible for the production of
        our
        products and procurement of materials for us, any breakdown in the manufacturing
        or procurement process could result in shortages of products or materials,
        and
        our revenues could decline due to the loss of one of these manufacturers,
        vendors or suppliers. An early termination by one of our manufacturers, vendors
        or suppliers would leave limited time to seek a replacement and as such,
        could
        harm our financial results, as it is unlikely that we would be able to rapidly
        replace that source.
  *Our
        earnings in future periods could be unfavorably impacted in the event of
        political instability or fluctuations in exchange rates.*
  Sourcing
        products abroad subjects our business to a variety of risks generally associated
        with doing business abroad, such as political instability, currency and exchange
        risks and local political issues. Our future performance will be subject
        to
        these factors, which are beyond our control.
  *Our
        prospects are dependent, to a certain extent, on our ability to successfully
        introduce new products on a timely basis. If we fail to continue to develop
        and
        successfully introduce new products, either directly or through third-party
        inventors, our revenues could decline.*
  Companies
        engaged in the direct response television marketing and consumer products
        industries regularly develop and introduce new products to consumers in order
        to
        grow their revenues and to compensate for the normal life cycle of any product.
        We are continually developing new products as well as new applications of,
        or
        modifications to, existing products. In addition, as part of our product
        strategy, we intend to work with third-party inventors for the first time
        in our
        history, which may result in our purchasing or licensing the rights to certain
        products or product lines from such parties. There can be no assurance that
        these efforts will be successful, or that we will be able to maintain a level
        of
        uniqueness, customer value or product quality with potential third-party
        products that we have experienced with products developed internally by us.
        There can be no assurance that we will not experience difficulties that could
        delay or prevent the successful development, introduction or marketing of
        these
        products, or that such new or enhanced products will adequately meet the
        requirements of current or prospective customers. Any failure by us to
        successfully design, develop, test and introduce such new products, or the
        failure of our recently introduced products to achieve market acceptance,
        could
        prevent us from maintaining our existing customer base, gaining new customers
        or
        expanding our markets and could have a material adverse effect on our business,
        financial condition and results of operations.
  *Our
        success depends largely on the value of our brands, and if the value of our
        brands were to diminish, our business would be adversely
        affected.*
  The
        prominence of our Ronco, Popeil, ShowtimeTM and other brands is a key component
        of our business. If our consumer brands or their associated merchandise lose
        their appeal to consumers, our business would be adversely affected. The
        value
        of our consumer brands could also be eroded by misjudgments in product
        development or selection, or by our failure to maintain a sufficient level
        of
        quality control. These events would likely reduce sales for our products.
        Moreover, we anticipate that we will expand our marketing and sales efforts
        through the development or acquisition of new products that will be sold
        under
        our brand names directly, through retail stores and online through our website.
        Misjudgments by us in the development or choice of new products could damage
        our
        existing or future brands. If any of these developments occur, our business
        would likely suffer and we may be required to write-down the carrying value
        of
        our goodwill.
  16
  *Our
        ability to compete successfully will depend, in part, on our ability to protect
        our intellectual property rights. Litigation required to enforce these rights
        can be costly, and there is no assurance that courts will enforce our
        intellectual property rights.*
  We
        rely
        on a combination of patents, trademarks, trade secrets, copyrights,
        nondisclosure agreements and other contractual provisions and technical measures
        to protect our intellectual property rights. Policing unauthorized use of
        our
        intellectual property, however, is difficult, especially in foreign countries.
        Litigation may be necessary in the future to enforce our intellectual property
        rights, to protect trade secrets, to determine the validity and scope of
        the
        proprietary rights of others, or to defend against claims of infringement
        or
        invalidity. Litigation could result in substantial costs and diversion of
        resources and could harm our business, operating results and financial condition
        regardless of the outcome of the litigation. In addition, there can be no
        assurance that the courts will enforce the contractual arrangements that
        we have
        entered into to protect our intellectual property rights. Our operating results
        could be harmed by the failure to protect such intellectual
        property.
  *If
        we
        fail to implement our product distribution strategy effectively, our revenue,
        gross margin and profitability could suffer.*
  We
        plan
        to use a variety of different distribution methods to sell our products,
        including direct response television sales, indirect sales through retail
        stores
        and sales through our internet website. Successfully managing the interaction
        of
        our direct and indirect channel efforts to reach all of the potential customer
        segments for our products is a complex process. Moreover, since each
        distribution method has distinct risks and gross margins, our failure to
        implement the most advantageous balance in the delivery model for our products
        could adversely affect our revenue and gross margins and therefore
        profitability.
  *Our
        financial results could be materially adversely affected if conflicts arise
        among our various sales channels or if we lose a distributor.*
  Our
        future operating results may be adversely affected by any conflicts that
        might
        arise among our various sales channels, the loss or deterioration of any
        alliance or distribution arrangement or the loss of retail shelf space. We
        primarily distribute our products through three channels: direct response
        television marketing, wholesale and retail outlets and online commerce. In
        order
        to achieve successful sales at all these channels of distribution, we must
        offer
        products that are differentiated by price or functionality through different
        channels of distribution. Alternatively, we must schedule the timing of our
        product offerings so that we are not offering the same product for sale through
        direct response media, and indirectly through retail and wholesale outlets,
        at
        the same time. If we do not follow this strategy, consumers may not be willing
        to buy our products directly from us if the same or similar products are
        available at retail and wholesale outlets, potentially at lower prices. If
        we
        fail to successfully manage these conflicts then our results of operations
        will
        decline.
 
 *We
        plan to sell more of our products through distributors and direct to retail
        chains. Due to the typically large size of these orders, which fluctuate
        seasonally and may be changed or canceled on short notice, cost-effective
        management of our inventory may become more complex and costly. If we are
        unable
        to accurately forecast orders and cancellations, our profitability may
        suffer.*
  We
        must
        manage inventory effectively, particularly with respect to sales to wholesalers
        and retail chains, which involves forecasting demand and pricing issues.
        Although a comparatively small portion of our sales volume is supplied through
        wholesale distributors, our strategy calls for increasing such sales, and
        such
        distributors and retail chains may increase orders during periods of product
        shortages, cancel orders if their inventory is too high or delay orders in
        anticipation of new products. Wholesalers and retail chains may also adjust
        their orders in response to the supply of our products and the products of
        our
        competitors and seasonal fluctuations in end-user demand. Our reliance upon
        indirect distribution methods may reduce visibility to demand and pricing
        issues, and therefore make forecasting more difficult. If we have excess
        inventory, we may have to reduce our prices and write-down inventory. Moreover,
        our use of wholesale distribution channels may limit our willingness or ability
        to adjust prices quickly and otherwise to respond to pricing changes by
        competitors. We also may have limited ability to estimate future product
        returns
        for products sold through wholesale distribution channels.
  *Claims
        made against us based on product liability could have a material adverse
        effect
        on our business.*
  Like
        any
        other distributor or manufacturer of consumer products, we are subject to
        product liability litigation. Whether frivolous or with merit, these claims
        divert management's time and resources from general operations. Consequently,
        our operations would be adversely affected. Additionally, there can be no
        assurance that the plaintiffs in these cases will not obtain large judgments
        against us, which may include substantial punitive damages that we would
        be
        forced to pay. As a result, we may suffer a material adverse impact to our
        earnings and financial health.
  *Our
        business may be adversely affected by certain customers seeking to directly
        source lower cost imported products.*
  In
        some
        cases, our wholesale and retail customers may find substantially similar,
        unbranded products produced by a foreign manufacturer for significantly less
        than our prices. Consequently, these wholesale or retail customers may elect
        to
        purchase the cheaper, unbranded products to offer in their stores or to their
        customers, and we could suffer a material decrease in our sales and
        profitability.
  17
  *If
        we
        do not execute our growth and profitability strategy successfully, our financial
        condition and results of operations will be adversely
        affected.*
  Our
        growth will depend to a significant degree on our ability to increase revenues
        from our direct marketing and retail businesses, to maintain existing vendor
        and
        distribution relationships and develop new relationships, and to maintain
        and
        enhance the reach and brand recognition of our existing products and any
        new
        products that we create or acquire. Our ability to implement our growth strategy
        will also depend on a number of other factors, many of which are or may be
        beyond our control including: (i) the effectiveness of our media and marketing
        strategies, (ii) the perception by consumers that we offer high quality products
        at attractive prices, (iii) our ability to develop and/or select new products
        that appeal to our customer base and to market such products effectively
        to our
        target audience, and (iv) our ability to attract, train and retain qualified
        employees and management. There can be no assurance that we will be able
        to
        implement our growth strategy successfully.
  *There
        can be no assurance that our internet technology systems will be able to
        handle
        increased traffic or that we will be able to upgrade our systems, if required,
        on a timely basis. If our online systems do not perform properly, we may
        lose
        online sales and our revenues may be adversely affected.*
  An
        element of our growth strategy is to generate a higher volume of traffic
        on, and
        use of, our internet website: www.ronco.com. Accordingly, the satisfactory
        performance, reliability and availability of www.ronco.com, transaction
        processing systems and network infrastructure will be critical to our reputation
        and our ability to attract and retain online customers, as well as to maintain
        adequate customer service levels. Our online revenues will depend on the
        number
        of visitors who shop on www.ronco.com and the volume of orders we can handle.
        Unavailability of our website or reduced order fulfillment performance could
        reduce the volume of goods sold and could also adversely affect consumer
        perception of our brand name. We may experience periodic system interruptions
        from time to time. If there is a substantial increase in the volume of traffic
        on www.ronco.com or the number of orders placed by customers, we may be required
        to expand and upgrade our technology, transaction processing systems and
        network
        infrastructure. There can be no assurance that we will be able to accurately
        project the rate or timing of increases, if any, in the use of www.ronco.com
        or
        expand and upgrade our systems and infrastructure to accommodate such increases
        on a timely basis. Any failure to manage the anticipated growth and expansion
        of
        our online sales could have a material adverse effect on our
        business.
 
 *We
        could face liability for breaches of security on the internet, which could
        expose us to damages and harm our business.*
  To
        the
        extent that our activities or the activities of third-party contractors involve
        the storage and transmission of information, such as credit card numbers,
        security breaches could disrupt our business, damage our reputation and expose
        us to a risk of loss, litigation, governmental actions and possible liability.
        We could be liable for claims based on unauthorized purchases with credit
        card
        information, impersonation or other similar fraud claims. These claims could
        result in substantial costs and a diversion of our management's attention
        and
        resources.
  *We
        may not be able to attract, retain or integrate key personnel, which may
        prevent
        us from successfully operating our
        business.*
  We
        may not be able to retain our key personnel or attract other qualified personnel
        in the future. Our success will depend upon the continued service of key
        management personnel. The loss of services of any of the key members of our
        management team or our failure to attract and retain other key personnel
        could
        disrupt operations and have a negative effect on employee productivity and
        morale and harm our financial results.
  *Indemnification
        obligations to our directors and officers may require the use of a significant
        amount of our funds, which would reduce funds that otherwise would be available
        for business operations.*
  Our
        certificate of incorporation and bylaws provide for the indemnification of
        our
        officers and directors and we intend to enter into indemnification agreements
        with each of our directors and executive officers. If one of our officers
        or
        directors makes a valid claim for indemnification, the amount could be
        substantial and any amount in excess of our insurance coverage would be paid
        from our operating cash flow. As a result, the amount of funds available
        for our
        operations would be reduced.
  *As
        a
        result of our acquisition of the Ronco business, we have a substantial amount
        of
        goodwill on our balance sheet, which is subject to annual impairment analysis.
        If the value of the Ronco business we acquired declines in the future, the
        resulting charge would negatively impact our earnings.*
  We
        accounted for our acquisition of the Ronco business using the purchase method
        of
        accounting. The total cost of this transaction is allocated to the underlying
        net assets based on their respective estimated fair values. As part of this
        allocation process, we must identify and attribute values and estimated lives
        to
        the intangible assets acquired. Such determinations involve considerable
        judgment, and often involve the use of significant estimates and assumptions,
        including those with respect to future cash inflows and outflows, discount
        rates
        and asset lives. These determinations will affect the amount of amortization
        expense recognized in future periods. If we later determine that any of these
        estimates and assumptions is incorrect, and that the value of the Ronco business
        that we acquired is less than the amount then reflected on our balance sheet,
        we
        will be required to reduce our income by the amount of such decline in value,
        which reduction is referred to as an impairment charge.
  18
  We
        will
        test goodwill for impairment annually in accordance with accounting principles
        generally accepted in the United States of America. If we conclude that our
        goodwill is impaired, we will reduce it by the amount of the impairment charge.
        Such write-downs could dramatically impact our earnings and may result in
        lower
        trading prices for our common stock.
  *Terrorist
        attacks and other acts of wider armed conflict may have an adverse effect
        on the
        United States of America and world economies and may adversely affect our
        business.*
  Terrorist
        attacks and other acts of violence or war, such as those that took place
        on
        September 11, 2001, could have an adverse effect on our business, results
        of
        operations or financial condition. There can be no assurance that there will
        not
        be further terrorist attacks against the United States of America or its
        businesses or interests. Attacks or armed conflicts that directly impact
        the
        internet or our physical facilities could significantly affect our business
        and
        thereby impair our ability to achieve our expected results. Further, the
        adverse
        effects that such violent acts and threats of future attacks could have on
        the
        United States of America and world economies could similarly have a material
        adverse effect on our business, results of operations and financial condition.
        Finally, further terrorist acts could cause the United States of America
        to
        enter into a wider armed conflict, which could disrupt our operations and
        result
        in a material adverse effect on our business, results of operations and overall
        financial condition.
 
 **Risks
        Related to Being a Public Company**
  *The
        requirements of complying with the Sarbanes-Oxley Act and evolving corporate
        governance and public disclosure regulations may strain our
        resources.*
  We
        are a
        relatively new public company, and thus we only recently became subject to
        certain laws that are applicable only to public companies. Changing laws,
        regulations and standards relating to corporate governance and public
        disclosure, including the Sarbanes-Oxley Act of 2002 and related rules and
        regulations, are creating uncertainty for public companies. We are presently
        evaluating and monitoring developments with respect to new and proposed rules
        and cannot predict or estimate the amount of the additional compliance costs
        we
        may incur or the timing of such costs. These new or changed laws, regulations
        and standards are subject to varying interpretations, in many cases due to
        their
        lack of specificity. As a result, their application in practice may evolve
        over
        time as new guidance is provided by courts and regulatory and governing bodies.
        This could result in continuing uncertainty regarding compliance matters
        and
        higher costs necessitated by creating initial disclosure and governance
        practices to comply with these laws and ongoing revisions to disclosure and
        governance practices. Maintaining appropriate standards of corporate governance
        and public disclosure may result in increased general and administrative
        expenses and a diversion of management time and attention from
        revenue-generating activities to compliance activities. For example, as a
        result
        of these requirements, we need to form and maintain multiple board committees
        and adopt policies regarding internal controls and disclosure controls and
        procedures. These rules and regulations also make it more difficult and more
        expensive to obtain director and officer liability insurance. We may be required
        to accept reduced policy limits and coverage or incur substantially higher
        costs
        to obtain the same or similar coverage that was available to the entities
        that
        operated the Ronco business before we acquired it. As a result, it may be
        more
        difficult for us to attract and retain qualified candidates to serve on our
        board of directors or as executive officers. Our efforts to evaluate and
        monitor
        developments with respect to these new rules also could result in additional
        costs in the future. In addition, if we fail to comply with new or changed
        laws,
        regulations and standards, regulatory authorities may initiate legal proceedings
        against us and our business and our reputation may be harmed.
  In
        addition, the financial statements of the predecessor entities do not reflect
        the additional costs of complying with the various corporate governance and
        public reporting requirements that now apply to us. We will incur significant
        legal, accounting and other expenses that are not reflected in the results
        of
        operations of our business before June 30, 2005. We estimate that these costs
        will be approximately $1 million annually, but they could be higher. These
        additional costs and the uncertainties associated with evolving requirements
        could materially impact our results of operations.
  *As
        of
        June 30, 2006, Ronco Corporation had material weakness in its internal controls,
        and its internal controls over financial reporting were not effective as
        of that
        date. If Ronco Corporation fails to maintain an effective system of internal
        controls, it may not be able to provide timely and accurate financial
        statements.*
 
 As
        more
        fully described in Item 9A, the Company’s management assessed the
        effectiveness of the Company’s internal controls over financial reporting as of
        June 30, 2006. In making this assessment, it used the criteria set forth by
        the Committee of Sponsoring Organizations of the Treadway Commission
        (COSO) in Internal Control - Integrated Framework. As a result of
        management’s assessment, management has concluded that, as of June 30,
        2006, Ronco Corporation did not maintain effective internal controls over
        financial reporting.
  The
        Public Company Accounting Oversight Board has defined a material weakness
        as a
        control deficiency, or combination of control deficiencies, that results
        in more
        than a remote likelihood that a material misstatement of the annual or interim
        statements will not be prevented or detected. Accordingly, a material weakness
        increases the risk that the financial information we report contains material
        errors.
 
 We
        have
        identified control deficiencies in our internal control over financial
        reporting, and we are implementing new or revised controls to address these
        matters. The steps we have taken and are taking to address the material
        weaknesses may not be effective, however. Any failure to effectively address
        control deficiencies or implement required new or improved controls, or
        difficulties encountered in their implementation, could limit our ability
        to
        obtain financing, harm our reputation, disrupt our ability to process key
        components of our result of operations and financial condition timely and
        accurately and cause us to fail to meet our reporting obligations under SEC
        rules and our various debt arrangements. Any failure to remediate the material
        weakness or significant deficiencies identified in our evaluation of our
        internal controls could preclude our management from determining our internal
        control over financial reporting is effective or, otherwise, from issuing
        in a
        timely manner its management report in the future.
  19
  *We
        do
        not expect to pay cash dividends on our common stock.*
  We
        presently do not expect to pay dividends on our common stock in the foreseeable
        future. The payment of dividends, if any, will be contingent upon our revenues
        and earnings, if any, capital requirements, and general financial condition.
        The
        holders of our Series A Convertible Preferred Stock are entitled to receive,
        out
        of funds legally available therefore, cumulative dividends at a rate equal
        to
        $0.1885 per annum, per share, which is equivalent to 5% of the Series A
        Convertible Preferred Stock's original issue price, in cash or at our option
        in
        additional shares of the Series A Convertible Preferred Stock. Any accrued
        dividends on the Series A Convertible Preferred Stock must be paid in full
        before we can pay a dividend on our common stock. Because we do not plan
        to pay
        dividends on our common stock, our stock may be less attractive to some
        investors, which could adversely affect our stock price.
  *We
        face risks associated with the use of debt to fund our operations, such as
        refinancing risk, and if we are unable to satisfy our debt service obligations
        and default, we could lose significant rights to our products and intellectual
        property assets, which would harm our business.*
  We
        are
        subject to the risks normally associated with debt financing, including the
        risk
        that our cash flow will be insufficient to meet required payments of principal
        and interest. If principal payments due at maturity cannot be refinanced,
        extended or repaid with proceeds from other sources, such as new equity capital,
        our cash flow may not be sufficient to repay amounts under the promissory
        notes
        that we issued in connection with our purchase of the Ronco business. A default
        on these notes by us could cause us to lose significant intellectual property
        rights, which could have a material adverse effect on our business and results
        of operations.
  *If
        our common stock becomes subject to the SEC's penny stock rules, broker-dealers
        may experience difficulty in completing customer transactions and trading
        activity in our securities may be severely limited.*
  If
        at any
        time we have net tangible assets of $5,000,000 or less and our common stock
        has
        a market price per share of less than $5.00, transactions in our common stock
        may be subject to the “penny stock” rules promulgated under the Securities
        Exchange Act of 1934. Under these rules, broker-dealers who recommend such
        securities to persons other than institutional investors:
  ·
              must
                  make a special written suitability determination for the
                  purchaser;
  ·
              receive
                  the purchaser's written agreement to a transaction prior to
                  sale;
  ·
              provide
                  the purchaser with risk disclosure documents which identify risks
                  associated with investing in “penny stocks” and which describe the market
                  for these “penny stocks” as well as a purchaser's legal remedies;
                  and
  ·
              obtain
                  a signed and dated acknowledgment from the purchaser demonstrating
                  that
                  the purchaser has actually received the required risk disclosure
                  document
                  before a transaction in a “penny stock” can be
                  completed.
  As
        a
        result of these requirements, broker-dealers may find it difficult to effectuate
        customer transactions and trading activity in our stock will be significantly
        limited. Accordingly, the market price of our stock may be depressed, and
        you
        may find it more difficult to sell your shares.
 
 *Our
        directors and our 5% or greater stockholders own a large percentage of us,
        and
        they could make business decisions with which you disagree that will affect
        the
        value of your investment.*
  Our
        directors and our 5% or greater stockholders beneficially own approximately
        95%
        of our outstanding common stock. Beneficial ownership is determined in
        accordance with the rules and regulations of the SEC. See “Security Ownership of
        Officers, Directors and Principal Stockholders.” These stockholders will be able
        to influence significantly all matters requiring approval by our stockholders,
        including the election of directors. Thus, actions might be taken even if
        other
        stockholders, including those who purchase shares in this offering, oppose
        them.
        This concentration of ownership might also have the effect of delaying or
        preventing a change of control of us, which could cause our stock price to
        decline.
  *Provisions
        in our corporate documents and our certificate of incorporation and bylaws,
        as
        well as the Delaware General Corporation Law, may prevent attempts to replace
        or
        remove our current management by our stockholders.*
  20
  Provisions
        of our certificate of incorporation and bylaws, as well as provisions of
        the
        Delaware General Corporation Law, could discourage unsolicited proposals
        to
        acquire us, even though such proposals may be beneficial to you. For example,
        our certificate of incorporation allows our board of directors to issue
        preferred stock with designations and rights that the board of directors
        may
        determine in its sole discretion. Our board of directors may be able to use
        this
        authority in a manner that could delay, defer or prevent a change in control.
        Additional provisions that could discourage unsolicited proposals to acquire
        us
        include:
  ·
              vacancies
                  as a result of a director's resignation may be filled by our board
                  of
                  directors; and
  ·
              restrictions
                  on our ability to cause the conversion of shares of Series A Convertible
                  Preferred Stock into shares of our common
                  stock.
  We
        are
        also subject to the provisions of Section 203 of the Delaware General
        Corporation Law, which could prevent us from engaging in a business combination
        with a 15% or greater stockholder for a period of three years from the date
        it
        acquired that status unless appropriate board or stockholder approvals are
        obtained.
  These
        provisions may make it more difficult or expensive for a third party to acquire
        a majority of our outstanding voting stock or may delay, prevent or deter
        a
        merger, acquisition, tender offer or proxy contest, which may negatively
        affect
        our stock price.
  **Risks
        Related to Our Industry**
  *We
        serve markets that are highly competitive and we may be unable to compete
        effectively against businesses that have greater resources than we
        do.*
  The
        direct response industry includes numerous companies that market their products
        on television through infomercials. We compete with several other companies
        and
        products in the direct response industry, including GT Brands, Telebrands
        Corporation, Idea Village, Guthy-Renker, Tilia (a division of Jarden, Inc.),
        and
        Sylmark. Many of our competitors, including some of those identified above,
        have
        been in business for a number of years, have established customer bases,
        are
        larger, and have greater financial resources than us. There can be no assurance
        that we will be able to compete successfully in our industry.
  *Our
        business is affected by general economic conditions in the U.S. retail industry,
        such as consumer confidence and spending, and any downturn in the retail
        industry could result in a decrease in our earnings and harm our
        business.*
  We
        are
        subject to broad economic factors that drive consumer spending and maintain
        the
        health of the retail industry in the United States of America. These factors
        include, but are not limited to, unemployment rates, consumer credit levels,
        consumer confidence, and household discretionary income. If any of these
        or
        other economic factors should erode, consumer spending would fall and the
        retail
        industry in the United States of America would suffer a downturn. Consequently,
        our earnings would be adversely impacted by lower sales.
  *The
        trend towards retail trade consolidation could cause our margins to decline
        and
        harm our business.*
  As
        we
        pursue our retail distribution strategy, our sales will be contingent upon
        the
        favorable wholesale prices that we can obtain from retailers. If retailers
        merge
        or the retail industry consolidates, the larger, combined retailers will
        have
        significant pricing power because of the sheer size of their retail networks.
        As
        a result, we may not be able to obtain reasonable prices for our products.
        Consequently, our margins will decline and our results of operations would
        be
        reduced. There can be no assurance that we will be able to obtain reasonable
        wholesale prices for our products under a scenario where retailers merge
        and
        consolidate into larger entities.
 
 *Government
        regulations could adversely impact our operations.*
  Throughout
        the world, most federal, state, provincial and local authorities require
        Underwriters Laboratory, Inc. or other safety regulation certification prior
        to
        marketing electrical appliances in those jurisdictions. Most of our electrical
        appliance products have such certifications. However, our products may not
        continue to meet such specifications. A determination that we are not in
        compliance with such rules and regulations could result in the imposition
        of
        fines or an award of damages to private litigants.
  **PART
        II**
  **Item
        7. Management’s Discussion and Analysis of Financial Condition and Results of
        Operation.**
  **Overview**
  We
        are a
        provider of proprietary branded consumer products for the kitchen and home,
        sold
        primarily through direct response distribution channels, which include direct
        response television (commonly known as infomercials), online sales through
        our
        website (www.ronco.com), telemarketing, direct mail and our customer service
        department. We also sell products through traditional wholesale/retail channels
        such as wholesale distributors. We develop and market high quality, unique
        and
        affordable products, including small kitchen appliances and accessories,
        food
        items, cookbooks, personal care products and household items.
  21
  Before
        June 30, 2005, we operated as Fi-Tek VII, Inc. and we were a “blank check”
company. During that time, we had no significant operations other than the
        search for, and identification and evaluation of, possible acquisition
        candidates. On June 29, 2005, we consummated a reverse merger transaction
        in
        which Ronco Marketing Corporation became our wholly-owned subsidiary. In
        connection with this transaction, we changed our name to Ronco Corporation
        and
        completed a reverse stock split. On June 30, 2005, we, through Ronco Marketing
        Corporation acquired assets comprising the business of Ronco Inventions,
        LLC,
        Popeil Inventions, Inc. and RP Productions, Inc. We also acquired certain
        patents and intellectual property rights directly from Mr. Ronald M. Popeil.
        Mr.
        Popeil is the primary beneficiary of the RMP Family Trust, a trust that owns
        and
        controls the predecessor entities. We also issued 13,262,600 shares of Series
        A
        Convertible Preferred Stock, not including four shares of Series A Convertible
        Preferred Stock that were paid for but that had not been issued as of the
        date
        of this report, to finance the cash portion of the purchase price.
  Our
        merger with Ronco Marketing Corporation was accounted for as a recapitalization
        rather than as a business combination. As a result, the historical financial
        statements of the predecessor entities are reflected as our historical financial
        statements. We acquired the assets comprising the Ronco business on the last
        day
        of our fiscal year on June 30, 2005 and did not conduct any business on that
        day. Therefore, our financial statements for June 30, 2005 reflect no revenue
        and only the expenses associated with our status as a “blank check” company. The
        financial statements for the predecessor entities reflect the operations
        of the
        Ronco business before the date we acquired the business.
  In
        2004,
        the predecessor entities changed their year-end from December 31 to September
        30. Upon completion of the merger in 2005, we adopted the year end of June
        30, which was the year end of Fi-Tek VII, Inc. (the name of our company was
        changed on June 30, 2005 to Ronco Corporation).
  In
        structuring our acquisition of the Ronco business, we did not assume all
        of the
        liabilities of the predecessor entities. For instance, we did not assume
        approximately $39 million in loans made by an affiliate of the predecessor
        entities to the predecessor entities. Accordingly, these liabilities are
        not reflected in our financial statements as of June 30, 2005 and
        2006.
  **Components
        of Revenue and Gross Profit**
  *Sources
        of Revenue.*
  We
        principally derive revenue from the sale of our products directly and indirectly
        to consumers. We market our products to consumers directly through direct
        response television, our website and customer service department. We derive
        the
        majority of our revenue from direct response television sales. We also generate
        revenue through shipping and handling fees for each order shipped by us to
        consumers who purchase our products through our direct response television
        and
        online channels. Management estimates that shipping and handling and extended
        service contracts accounts for approximately 23% of our direct sales. Management
        estimates that 78% of our customers pay for their orders in a single payment,
        and approximately 22% of our customers elect to make multiple
        payments.
  We
        also
        derive revenue from sales to our wholesale distribution partners and selling
        directly to retailers. We are re-focusing our existing wholesale distribution
        relationships to target selected smaller or regional retail chains while
        we
        develop direct relationships with the larger retailers, in an effort to improve
        our gross margins. As part of this strategy, we have selectively re-introduced
        certain of our existing products into retail distribution.
  A
        modest
        amount of revenue is derived each year by providing customer lists to third
        parties for a fee as well and from interest income from cash and security
        accounts.
  Our
        net
        sales are determined by subtracting an allowance for returns from our gross
        product sales and list sales. Our returns currently average less than 4%
        of our
        gross product sales.
  *Costs
        of Goods Sold.*
  Cost
        of
        goods sold consists primarily of the costs of the finished goods as received
        by
        us from our third-party manufacturing partners and purchasing and inspection
        costs. In November 2003, we began to source product in China, starting with
        our
        cutlery products. In September 2004, we began to source our ShowtimeTM Rotisserie
        products in China as well. This change reduced our cost of goods sold. In
        addition, our fulfillment and shipping costs are included in selling expenses
        and not in costs of good sold. As a result, our gross profit margins may
        not be
        comparable with those of similar companies. We generate higher gross margins
        on
        products sold through our direct response channels (including television,
        online
        sales and our customer service department) than through wholesale accounts.
        We
        expect our costs of good sold to increase as the sale of our products through
        our wholesale accounts increase, and our direct response sales decrease,
        as a
        percentage of our total product sales.
  22
 
 **Components
        of Operating Expenses and Other Items**
  *Selling
        Expenses.*
  Our
        selling expenses are the largest component of our cost structure and primarily
        consist of media expenditures, telemarketing and fulfillment costs, personnel
        compensation and associated expenses, license costs and royalties, credit
        card
        processing, and outbound shipping and logistics costs. Media expenditures
        associated with direct response television comprise the largest portion of
        our
        overall selling expenses.
  We
        pay
        per-minute fees to our telemarketing partners for their services in handling
        our
        inbound call traffic as well as certain outbound marketing programs. In
        addition, we also pay commissions, where applicable, to our customer service
        and
        data entry departments to encourage sales. License costs and royalties have
        historically been significant cost items for Ronco; however, as part of our
        purchase of the Ronco business, we acquired substantially all of the
        intellectual property related to these historical expenses. Accordingly,
        we will
        incur only modest royalty expenses in the future, related to the use of
        intellectual property that may be held by third-parties in products we market
        and sell in the future.
  In
        addition to media costs and inbound telemarketing fees, we also incur costs
        to
        third party fulfillment centers to store goods and process orders, and we
        incur
        shipping costs to FedEx and the United States Postal Service. Shipping from
        multiple fulfillment centers has enabled us to reduce our shipping costs
        and
        speed up delivery of product to our customers. We also pay fees to our credit
        card and electronic check processors for each customer transaction.
  Our
        current sales trend is an increase in wholesale sales as a percentage of
        total
        sales. This trend will result in lower selling expenses, as a percentage
        of
        sales, in the future because the media costs for direct response is
        significantly greater than the other selling expenses associated with wholesale
        sales.
  *General
        and Administrative Expenses.*
  Our
        general and administrative expenses consist of compensation and associated
        costs
        for general and administrative personnel, facility costs, as well as certain
        insurance, legal, audit, technology, fulfillment and shipping and miscellaneous
        expenses. We expect that general and administrative expenses will increase
        as we
        hire additional senior management personnel and provide new motivational
        incentive programs for current and future employees, incurring costs related
        to
        the anticipated growth of our business and our operation as a public
        company.
  *Interest
        Expense (Income).*
  Interest
        expense for the predecessor entities consisted of interest accrued on the
        loans
        made to the predecessor entities from Ronald M. Popeil and the RMP
        Family Trust. These loans were not assumed by us and, therefore, this interest
        expense is not applicable to us. Also included in the interest expense (income)
        is a modest amount of interest income on cash and security accounts. Interest
        expense for the successor company consisted of interest accrued on a loan
        made
        by Ronald M. Popeil in connection with the purchase of the Ronco assets and
        interest on our borrowings under Prestige factoring agreement.
  *Income
        Taxes.*
  Income
        tax expenses is the tax payable or refundable for the period plus or minus
        the
        change during the period in the deferred income tax assets and liabilities.
        We
        record deferred income tax assets and liabilities for differences between
        the
        financial statements and income tax bases of assets and liabilities. A valuation
        allowance is established, when necessary, to reduce deferred income tax assets
        to the amount expected to be realized. If we are profitable in the future,
        we
        will have significant net operating losses to offset our tax liability. The
        predecessor entities were incorporated as pass-through entities and, therefore,
        did not record income tax expense for federal or state purposes.
 
 **Trends
        that Affect our Business**
  Seasonal
        trends have an impact on our business, with the largest portion of revenues
        coming during the six-month period from October through March. This is due
        to
        holiday shopping and increased television viewing habits during periods of
        cold
        weather. The combination of these two factors allows us to purchase a higher
        amount of television media and generate a significantly greater response
        in the
        second and third quarters of our fiscal year, which directly results in higher
        profits in those quarters. In addition, the increased level of television
        exposure also indirectly impacts other channels such as online, customer
        service, and wholesale/retail sales.
  Another
        factor that affects our business is the age of a particular infomercial message.
        Typically, the response to an infomercial will decline over time, which in
        turn
        affects response rates and profitability. We monitor response rates on a
        daily
        basis and as the response rate declines below profitable levels, we will
        either
“refresh” the show by editing in a new offer or new footage, or produce a
        completely new show. In this way, we attempt to extend the product line on
        television, and increase the cumulative brand awareness and sell-through at
        retail.
  A
        number
        of changes have occurred since we acquired the Ronco businesses that are
        likely
        to affect the results of operations, capitalization and liquidity of the
        Ronco
        business. We did not assume certain liabilities of the predecessor entities.
        For
        instance, we did not acquire approximately $39 million of loans to an
        affiliate of the predecessor entities. As a result, we will not have to pay
        principal or interest on this amount. In addition, we acquired the patents
        that
        the predecessor entities licensed in order to operate the Ronco business.
        As a
        result, we did not acquire the product development and license agreements
        to
        which the predecessor entities were a party, and pursuant to which they paid
        substantial fees, and did not assume the $4.5 million liability associated
        with
        these agreements. On the other hand, we issued notes in connection with the
        acquisition in the adjusted amount of approximately $13.158 million. In
        addition, because the predecessor entities were “pass-thru” entities for tax
        purposes, they did not pay “corporate” federal income taxes. We are subject to
        federal income taxes. We are also incurring additional costs associated with
        compliance with laws applicable to public companies that were not applicable
        to
        the predecessor entities. Finally, we will no longer have the financial
        resources of the stockholder of the predecessor entities available to us
        for
        borrowings. In September 2005 we borrowed $1.2 million under a revolving
        line of
        credit and entered into a factoring agreement to provide us with liquidity
        and
        act as a partial substitute for the working capital loans we previously obtained
        from the stockholder of the predecessor entities. The factoring agreement
        permits us to sell up to $8 million of our accounts receivable to the factor
        and
        receive between 75% and 80% of the face amount of the account upon assignment
        to
        the factor, with the balance paid (less the factor’s fees) when the account is
        collected. We accounted for this financing as a sale of receivables in
        accordance with SFAS 140. Due to the impact of all of the changes in our
        business that are described above, we do not believe that the historical
        financial statements of the predecessor entities will prove to be a good
        indicator of our future performance, particularly as that performance is
        impacted by our expenses.
  23
  Our
        future strategy calls for us to place more emphasis on the wholesale market.
        If
        we are successful in increasing sales in this area, our gross margin is likely
        to decline as margins associated with wholesale revenues are typically lower
        than margins associated with direct response revenues. For instance, during
        the year ended June 30, 2006 our gross margin was 66% as compared with 76%
        for the year ended June 30, 2005. Our gross margins declined primarily because
        we increased sales through wholesale accounts from 22% to 38% of our total
        net
        sales. In addition, our advertising expense will also decline as we do not
        incur
        any advertising cost related to wholesale revenues. The growth of our wholesale
        business did not offset the decline in the direct response business during
        the
        year ending June 30, 2006; however, we believe that the wholesale business
        has
        proved to be a successful one for us.
  **Recent
        Accounting Pronouncements**
  In
        February 2006, the FASB issued SFAS 155, “Accounting for Certain Hybrid
        Financial Instruments—an amendment of FASB Statements No. 133 and 140,” that
        allows a preparer to elect fair value measurement at acquisition, at issuance,
        or when a previously recognized financial instrument is subject to a
        re-measurement (new basis) event, on an instrument-by-instrument basis, in
        cases
        in which a derivative would otherwise have to be bifurcated. It also eliminates
        the exemption from applying Statement 133 to interests in securitized financial
        assets so that similar instruments are accounted for similarly regardless
        of the
        form of the instruments. This Statement is effective for all financial
        instruments acquired or issued after the beginning of an entity's first fiscal
        year that begins after September 15, 2006. The Company does not anticipate
        that
        the adoption of SFAS No. 155 will have an impact on the Company's overall
        results of operations or financial position.
 
 In
        March
        2006, the FASB issued SFAS 156, “Accounting for Servicing of Financial Assets—an
        amendment of FASB Statement No. 140,” that applies to the accounting for
        separately recognized servicing assets and servicing liabilities. This Statement
        requires that all separately recognized servicing assets and servicing
        liabilities be initially measured at fair value, if practicable. An entity
        should adopt this Statement as of the beginning of its first fiscal year
        that
        begins after September 15, 2006. The Company does not anticipate that the
        adoption of SFAS No. 156 will have an impact on the Company's overall results
        of
        operations or financial position.
  In
        July
        2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty
        in
        Income Taxes. The Interpretation clarifies the way companies are to account
        for
        uncertainty in income tax reporting and filing and prescribes a consistent
        recognition threshold and measurement attribute for recognizing, derecognizing,
        and measuring the tax benefits of a tax position taken, or expected to be
        taken,
        on a tax return. The Interpretation is effective for fiscal years beginning
        after December 15, 2006, although early adoption is possible. The Company
        does
        not plan to adopt early and the Company is currently in the process of
        evaluating the impact, if any, the adoption of the Interpretation will have
        on
        the 2007 financial statements.
  In
        September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements” (“SFAS
        157”). SFAS 157 defines fair value, establishes a framework for measuring fair
        value, and expands disclosures about fair value measurements. This Statement
        shall be effective for financial statements issued for fiscal years beginning
        after November 15, 2007, and interim periods within those fiscal years. Earlier
        application is encouraged, provided that the reporting entity has not yet
        issued
        financial statements for that fiscal year, including any financial statements
        for an interim period within that fiscal year. The provisions of this statement
        should be applied prospectively as of the beginning of the fiscal year in
        which
        this Statement is initially applied, except in some circumstances where the
        statement shall be applied retrospectively. The Company is currently evaluating
        the effect, if any, of SFAS 157 on its financial statements.
 
 **Critical
        Accounting Policies**
  Included
        in the footnotes to the consolidated and combined financial statements in
        this
        report is a summary of all significant accounting policies used in the
        preparation of our consolidated and combined financial statements. We follow
        the
        accounting methods and practices as required by accounting principles generally
        accepted in the United States of America, also referred to as GAAP. The
        preparation of financial statements in conformity with GAAP requires management
        to make certain estimates and assumptions that affect the reported amounts
        of
        assets and liabilities and the reported amounts of revenues and expenses.
        Significant accounting policies employed by us, including the use of estimates,
        are presented in Note 1 to our consolidated and combined financial
        statements.
  24
  Critical
        accounting policies are those that are most important to the portrayal of
        our
        financial condition and our results of operations, and require management's
        most
        difficult, subjective and complex judgments as a result of the need to make
        estimates about the effect of matters that are inherently uncertain. Our
        most
        critical accounting policies, discussed below, pertain to revenue recognition,
        our ability to collect accounts receivable, the value of inventories, the
        impairment of goodwill, the useful lives of our other long-lived intangible
        assets, and the recoverability of deferred tax assets. In applying these
        policies, management must use its informed judgments and best estimates.
        Estimates, by their nature, are based on judgments and available information.
        The estimates that we make are based upon historical factors, current
        circumstances and the experience and judgment of our management. We evaluate
        our
        assumptions and estimates on an ongoing basis and may employ outside experts
        to
        assist in our evaluations. Changes in such estimates, based on more accurate
        future information, may affect amounts reported in future periods.
  *Revenue
        Recognition*
  We
        recognize revenue from the sale of products when the products are shipped
        to the
        customers, provided that the price is fixed, title has been transferred and
        our
        ability to collect the resulting receivable is reasonably assured. Net sales
        include revenue generated from products shipped, shipping and handling fees
        and
        revenue earned on extended service contracts, less returns and sales allowances.
        Revenue from free trial sales is recognized after the trial period is over
        and
        the customer has not returned the product. Returns and sales allowances are
        for
        damaged goods and anticipated customer returns.
  Revenue
        from the sale of extended service contracts is recognized on a straight-line
        basis over the life of the extended service contract. Extended service contract
        lives begin after the six-month free warranty period and range from three
        to
        four years. Amounts received from the sale of extended service contracts
        before
        revenue is recognized are included in deferred income. Deferred revenue acquired
        as part of our acquisition of the Ronco business was recorded at fair value
        at
        June 30, 2005 in accordance with purchase accounting.
 
 We
        do not
        accrue warranty costs, since such costs have been insignificant. Shipping
        and
        handling costs are included in selling, general and administrative
        expenses.
  *Accounts
        Receivable*
  We
        utilize the allowance method for accounting for losses from uncollectible
        accounts. We accrue our estimated product returns and record them as a part
        of
        our allowance for doubtful accounts and returns. Under this method, an allowance
        for doubtful accounts reflects our best estimate of probable losses inherent
        in
        the accounts receivable balance. Management has determined the allowance,
        based
        on the amount of our accounts receivable, the age of accounts receivable,
        known
        troubled accounts and historical experience regarding collection of bad debts.
        We also perform ongoing credit evaluations of our wholesale customers. The
        direct response business relates to customers who purchase our products in
        multiple installments and fail to make all of the required payments. Generally,
        we write off portions of the allowance against accounts receivable when direct
        response accounts are more than 180 days old or when we otherwise determine
        that
        accounts receivable will not be collected.
  *Inventories*
  Our
        inventories are valued at the lower of cost, determined by the first-in,
        first-out method, or market value. With respect to the acquisition of the
        Ronco
        business, we accounted for the inventories acquired at fair value in accordance
        with purchase accounting. Inventory costs are comprised primarily of product,
        freight and duty.  We write down inventory for estimated obsolescence equal
        to the difference between the cost of inventory and the estimated market
        value based upon assumptions about future demand and market conditions. To
        date,
        our inventory write-downs have not resulted in the market value of the inventory
        falling below the cost of the inventory. This is due, in part, to our practice
        of refurbishing obsolete inventory, which we have been able to sell at prices
        that exceed the cost of the inventory, including the cost of refurbishment.
        Accordingly, we have not adjusted the carrying value of inventory in the
        past
        due to the application of the lower of cost or market rule.
  *Intangible
        Assets and Goodwill*
  Intangible
        assets are comprised of patents, customer relationships, consulting agreement
        and trademarks. Goodwill represents acquisition costs in excess of the net
        assets of the businesses acquired. In accordance with SFAS No. 142, "Goodwill
        and Other Intangible Assets," goodwill is no longer amortized; instead goodwill
        is tested for impairment on an annual basis. We assess the impairment of
        identifiable intangibles and goodwill whenever events or changes in
        circumstances indicate that the carrying value may not be recoverable. Factors
        we consider to be important that could trigger an impairment review include
        the
        following:
  ·
              Significant
                  underperformance relative to expected historical or projected future
                  operating results;
  25
 
 ·
              Significant
                  changes in the manner of use of the acquired assets or the strategy
                  for
                  the overall business; and
  ·
              Significant
                  negative industry or economic
                  trends.
  When
        we
        determine that the carrying value of intangibles and other long-lived assets
        may
        not be recoverable based on the existence of one or more of the above indicators
        of impairment and the carrying value of the asset cannot be recovered from
        projected undiscounted cash flows, we record an impairment charge. We measure
        any impairment based on a projected discounted cash flow method using a discount
        rate determined by management to be commensurate with the risk inherent in
        the
        current business model. Significant management judgment is required in
        determining whether an indicator of impairment exists and in projecting cash
        flows.
  Patents
        are amortized over 19 years, customer relationships over 1.5 to 10 years
        and a
        consulting agreement over 3 years, utilizing the straight-line
        method.
 
 *Deferred
        Taxes*
  Deferred
        tax assets and liabilities are computed annually for difference between the
        financial statements and income tax bases of assets and liabilities. Such
        deferred income tax asset and liability computations are based on enacted
        tax
        laws and rates applicable to periods in which the differences are expected
        to
        reverse. A valuation allowance is established, when necessary, to reduce
        deferred income tax assets to the amount expected to be realized. The ultimate
        realization of the deferred tax asset is dependent upon the generation of
        future
        taxable income during the periods prior to the expiration of the related
        net
        operating losses. If our estimates and assumptions about future taxable income
        are not appropriate, the value of our deferred tax asset may not be
        recoverable.
  *Use
        of Estimates*
  The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of revenue and expenses
        during
        the reporting period. Actual results could differ from those estimates. We
        are
        not aware that any of our significant estimates are reasonably likely to
        change.
 
 **Results
        of Operations**
  *Year
        Ended June 30, 2006 Compared with Year Ended June 30, 2005*
  Before
        our acquisition of the Ronco business on June 30, 2005, we had no operations.
        As
        a result, the Ronco business is considered the predecessor company. For
        comparative purposes we have shown the predecessor company’s unaudited result
        for the year ended June 30, 2005.
  *Net
        Sales*
  Net
        sales
        for the year ended June 30, 2006 was $58.7 million, compared with $90.1 million
        for the year ended June 30, 2005. The decline of $31.4 million, or 34.8%,
        in net
        sales for the year ended June 30, 2006 is primarily due to a decline in direct
        response sales of our rotisserie ovens by approximately $12.7 million, a
        decline
        in direct response sales of our cutlery product line by $24.2 million, and
        an
        increase of approximately $1.9 million in direct response sales of our other
        products, including Popeil's Pasta Maker, Electric Food Dehydrator, GLH Formula
        Number 9 Hair System and the Pocket Fisherman. This decrease was partially
        offset by an increase of $0.6 million in revenue from list sales and commissions
        from telemarketers of $1.4 million during the year ended June 30, 2006 compared
        with $0.8 million in revenue from list sales and commissions for the year
        ended
        June 30, 2005. The percentages of revenue from list sales and commissions
        from
        telemarketers were 2.4% and 0.9% for the years ended June 30, 2006 and 2005,
        respectively. The decrease in direct response sales was partially offset
        by an
        increase in our wholesale sales by approximately $3 million.
  Net
        sales
        declined primarily due to the fact that our infomercials for our rotisserie
        and
        our cutlery lines are more than 2 years old and we have not provided our
        other
        products with any significant marketing support during the last several years.
        Historically our infomercials generate the highest sales in the first six
        months
        to a year, then decline as the infomercial loses its freshness. Our direct
        response sales declined to $34.9 million or by approximately 50.0% for the
        year
        ended June 30, 2006, compared with direct response sales of $69.9 million
        for
        the year ended June 30, 2005. Our sales through wholesale accounts increased
        to
        $22.4 million or by approximately 15.6% for the year ended June 30, 2006,
        compared with wholesale sales of $19.4 million for the year ended June 30,
        2005.
        We expect the direct response trend to reverse for our rotisserie and cutlery
        lines as we introduce new versions of these products and produce new
        infomercials. We also expect our wholesale revenues to continue to increase
        as
        we expand our distribution in retail stores and overseas.
  *Gross
        Profit and Gross Margin*
  Gross
        profit for the year ended June 30, 2006 was $38.7 million as compared with
        $68.7
        million for year ended June 30, 2005. This decrease is primarily due to a
        decrease in our direct response sales and a relative increase in sales, both
        in
        absolute dollars and as a percentage of total sales, through wholesale accounts.
        Wholesale sales represented 38.1% and 21.5% of total sales for the years
        ended
        June 30, 2006 and 2005, respectively. The increase in cost of goods sold
        was due
        to the increase in wholesale sales relative to direct response sales, because
        the wholesale sales have a higher cost of goods sold. We also increased our
        cost
        of sales by writing down $0.5 million of inventory to market price which
        was
        lower than the original cost. Our cost of goods sold does not include
        fulfillment and shipping costs, which are included in selling, general and
        administrative expenses. Accordingly, our margins might not be comparable
        with
        those of other companies in our industry.
  26
  The
        gross
        margin decreased from 76.3% for the year ended June 30, 2005 to 65.9% for
        the
        year ended June 30, 2006. Our gross margin decreased primarily because of
        an
        increase in our revenue from wholesalers, and a corresponding decrease in
        our
        direct response sales, as a percentage of our overall sales. Revenue from
        wholesalers accounted for approximately 38.1% of our net sales for the year
        ended June 30, 2006 as compared with 21.5% of our net sales for the year
        ended
        June 30, 2005. Revenue from our direct response sales accounted for 59.5%
        of
        sales for the year ended June 30, 2006 as compared with 77.6% of sales for
        the
        year ended June 30, 2005. Although we experienced increased cost savings
        from
        manufacturing during the year ended June 30, 2006 compared with the year
        ended
        June 30, 2005, these cost savings were offset by discounts that we provided
        to
        mass merchants which resulted in the gross margin percentages decreasing.
        The
        average gross margin percentage for our direct response business for the
        year
        ended June 30, 2006 was 80.6%, compared with 81.1% for the year ended June
        30,
        2005. The average gross margin percentage for our wholesale business for
        the
        year ended June 30, 2006 was 38.4%, compared with 56.8% for the year ended
        June
        30, 2005. The higher gross margin percentages for our direct response business
        during the year ended June 30, 2005 were caused primarily by a backlog of
        orders
        for our ShowtimeTM Rotisserie product line due to production delays by our
        outsource manufacturers in the year ended June 30, 2005. This in turn meant
        that
        a higher percentage of our direct response sales were from our Six Star+TM
Cutlery product line, which yields a higher gross margin than our ShowtimeTM
product line. The lower gross margin percentages for our wholesale business
        during the year ended June 30, 2006 were caused primarily by our efforts
        to
        liquidate older inventory to generate cash. For the year ended June 30, 2005,
        the Seller Entities primarily sold wholesalers products through distributors.
        Additionally we generated revenue from list sales and commissions from
        telemarketers, with respect to which we incurred no cost of sales. Accordingly,
        our gross margin from list sales and commissions was 100%, or 3.6% and 1.2%
        of
        total gross margin, for the years ended June 30, 2006 and 2005, respectively.
        Our cost of goods sold does not include fulfillment and shipping costs, which
        are included in selling, general and administrative expenses, and as such,
        our
        margins might not be comparable to other companies in our industry.
  *Selling,
        general and administrative expenses*
  Selling,
        general and administrative expenses for the year ended June 30, 2006 were
        $57.0
        million compared with $68.3 million for the year ended June 30, 2005. This
        decrease of approximately $11.3, or 16.5%, was primarily due to a $16.6 million
        reduction in advertising expenses associated with the decreased effectiveness
        of
        infomercials over time, a $1.7 million reduction in credit card fees and
        shipping and handling expense of $2.1 million due to the reduced sales. The
        decline was partially offset by an increase of $3.5 million in professional
        fees
        and salaries and related expenses. Salaries and related expenses were
        approximately $7.2 million for the year ended June 30, 2006 compared with
        approximately $6.1 million for the year ended June 30, 2005. The increase
        in
        salaries and related expenses was primarily due to the hiring of four additional
        executives and five managers to execute management's long term growth strategy,
        including the expansion of our retail business, international distribution
        and
        the development of new products. Professional fees increased to approximately
        $4.5 million for the year ended June 30, 2006 compared to approximately $2.1
        million for the year ended June 30, 2005. The increase in professional fees
        was
        primarily due to accounting and legal expenses incurred for compliance with
        SEC
        filing requirements and other aspects of the transition from a private company
        to a public company. We also recorded approximately $1.3 million for deferred
        compensation expenses related to amortization of stock based compensation
        awards
        to our Chief Executive Officer and Chief Financial Officer. We did not have
        any
        deferred compensation expense related to stock based compensation for the
        year
        ended June 30, 2005. In addition, for the year ended June 30, 2006 we incurred
        additional amortization expense of intangible assets of approximately $6.0
        million related to the acquisition of the Ronco business. Additionally, other
        selling, general and administrative expenses, such as travel, utilities,
        auto,
        license and royalties and repairs and maintenance, decreased by $1.7
        million.
  As
        a
        percentage of revenues, selling, general and administrative expenses increased
        from 75.9% for the year ended June 30, 2005 to 97.0% for the year ended June
        30,
        2006. This increase for the year was primarily due to a decrease in revenue,
        an
        increase in salaries and professional fees, deferred compensation and
        amortization of intangible assets related to the acquisition of the Ronco
        business, with a reduction in advertising expense, credit card fees and shipping
        and handling expense.
 
 *Impairment
        of Goodwill and Intangibles*
  Impairment
        of goodwill and intangibles for the year ended June 30, 2006 was approximately
        $24.5 million. The impairment of our goodwill and intangibles was primarily
        due
        to our significant decline in revenues and our lack of capital to develop
        new
        products and new infomercials. The following is the breakdown of the impairment
        charge for the year ended June 30, 2006.
 
 ImpairmentCustomer
                  Relationships
              
              $
              485,546Patents
              
              
              5,187,121Trademarks
              
              
              12,119,036Popeil
                  Agreement
              
              
              3,775,733Goodwill
              
              
              2,953,480**Total
                  Impairment**
              
              **$**
              **24,520,916**
  27
  *Operating
        income/loss*
  Our
        operating loss for the year ended June 30, 2006 was $42.8 million, compared
        with
        income of $0.4 million for the year ended June 30, 2005. The increase in
        our
        operating loss of approximately $43.2 million for the year ended June 30,
        2006
        compared to the year ended June 30, 2005 are primarily attributable to lower
        sales volume in our direct response business, impairment of our goodwill
        and
        intangibles partially offset by a reduction in selling general and
        administrative expenses.
  *Net
        interest expense*
  Our
        net
        interest expense for the year ended June 30, 2006 declined by approximately
        $1.5
        million as compared with the year ended June 30, 2005. This decline was
        primarily due to us not assuming approximately $39 million of debt that the
        Seller Entities borrowed from the RMP Family Trust, which were outstanding
        as of
        June 30, 2005. The interest expense for the year ended June 30, 2005 primarily
        relates to interest payable on a note issued to a shareholder of the Seller
        Entities in exchange for amounts loaned to finance the purchase of patents
        on
        products that the Seller Entity sold.
  *Income
        Tax*
  The
        Company recorded income tax benefit for the year ended June 30, 2006 as a
        reversal of deferred taxes from the prior year of $0.3 million since we do
        not
        expect to realize the net operating loss in the future. For the year ended
        June
        30, 2005, the predecessor entities did not pay any income taxes as they were
        pass-through entities. For comparative purposes, we have estimated the proforma
        tax expense using an effective rate of 40%.
  *Net
        loss*
  Our
        net
        loss for the year ended June 30, 2006 was $ 44.4 million, compared with a
        loss
        of $2.4 million for the comparable year ended June 30, 2005. The increase
        in our
        net loss of approximately $42 million for the year ended June 30, 2006 is
        due to
        the decrease in revenue and increase in operating expenses for the reasons
        described above. Our net loss attributable to common stockholders for the
        year
        ended June 30, 2006 increased by an additional $4.6 million due to dividend
        on
        our preferred stock.
  ***Ronco
        Corporation - June 30, 2005***
 
 We
        acquired the Ronco business from the predecessor entities on the last day
        of our
        fiscal year. We did not ship any products on that day because we were conducting
        our year-end physical inventory and thus we did not earn any revenue on that
        day. Prior to our acquisition of the Ronco business from the predecessor
        entities, we had no operations and generated no revenue. The selling, general
        and administrative expenses for this single day were primarily made up of
        compensation expense related to cash bonuses of $465,000 paid to our CEO
        and CFO **** and the
        stock issued to our CFO **** in
        connection with the acquisition of the predecessor entities, that constituted
        an
        expense of $300,919.
 
 ***Predecessor
        Entities - Nine Months Ended June 29, 2005 Compared to Nine Months Ended
        June
        30, 2004 (unaudited)***
  Because
        we did not have any operations or generate any revenue prior to our acquisition
        of the Ronco business, the entities from whom we purchased the Ronco business
        are considered to be our predecessor company. Accordingly, the results of
        operations of the predecessor entities prior to June 30, 2005 are shown as
        our
        results of operations.
 
 *Net
        Sales* .
 
 Net
        sales
        for the nine months ended June 29, 2005 were approximately $68.9 million,
        a
        decrease of $23.9 million, or 26%, from approximately $92.8 million for the
        nine
        months ended June 30, 2004. The decline in net sales consisted of a decline
        of
        $19.5 million from the direct response business due to the age of our
        infomercials, and a decline of $4.6 million from our wholesale business in
        the
        first half of 2005 as we transitioned a portion of our wholesale business
        from
        distributorship arrangements to direct relationships with larger retailers **.** Net
        sales of our ShowtimeTM Rotisserie oven products decreased by approximately 54%
        during the nine months ended June, 29 2005, also due to the age of our
        infomercials, and net sales of our cutlery product line increased by
        approximately 67% during this same period. The infomercial for our cutlery
        products began airing in November 2003, so sales for this product were strong
        during the period compared to sales of our ovens, for which our newest
        infomercial began airing in July 2003. Sales of our cutlery products were
        also
        higher compared to the comparable period in 2004 because we only introduced
        this
        line of products in November 2003, and thus sales of cutlery products were
        not
        included for the full nine months ended June 30, 2004.
  28
 
 *Gross
        Profit and Gross Margin* .
 
 Gross
        profit for the nine months ended June 29, 2005 was $52.1 million, a decrease
        of
        $13.4 million, or 20%, compared to the nine months ended June 30, 2004. Gross
        profit for the nine months ended June 29, 2005 declined compared to the
        comparable period in 2004 due to the reduction in net sales, which decline
        was
        partially offset by a reduction in costs of goods sold from $65.5 million
        for
        the nine months ended June 30, 2004, to $52.1 million in the comparable period
        in 2005. Gross margin for the nine months ended June 29, 2005 was 76% as
        compared to 71% for the nine months ended June 29, 2004. This increase in
        gross
        margin is primarily due to better pricing from our suppliers due to the
        migration of most of our outsourced production activities from Korea to China,
        which is a lower cost environment. Our cost of goods sold includes purchasing
        and inspection costs, but does not include fulfillment and shipping costs,
        which are included in selling, general and administrative expenses. As such,
        our
        gross margin might not be comparable to other companies in our
        industry.
 
 *Selling,
        General and Administrative Expenses* .
 
 Selling,
        general and administrative expenses for the nine months ended June 29, 2005
        were
        $50.4 million, a decline of $21.3 million, or 30%, compared to the nine months
        ended June 30, 2004. This decline occurred primarily because our royalty
        expense was reduced to $0.1 million for the nine months ended June 29, 2005,
        from approximately $7.6 million for the nine months ended June 30, 2004.
        Selling, general and administrative expenses also declined for the nine months
        ended June 29, 2005, due to a reduction in fulfillment and shipping costs
        from
        $10.5 million in 2004 to $7.6 million in 2005, which was due to the decline
        in
        net sales. In addition, our media expense declined in 2005 by $9.5 million
        because we purchased fewer television spots. We purchased fewer television
        spots
        because we anticipated a lower response rate to our infomercials due to their
        age. A lower response rate increases the per sale cost of our infomercials,
        which reduces the price we can pay for television spots and remain
        profitable.  When the price we can pay is reduced and we can only purchase
        less expensive television spots, we cannot generally purchase as many television
        spots as we would otherwise purchase. Our bad debt expense also declined
        by $1.5
        million primarily due to our hiring during this period of an independent
        consultant dedicated to managing our collection of multi-pay account
        receivables. As a percentage of net sales, selling, general and administrative
        expenses for the nine months ended June 29, 2005 were 73% as compared to
        77% for
        the nine months ended June 30, 2004. This improvement was primarily due to
        the
        elimination of our royalty expense, but was partially offset by an increase
        in
        advertising as a percentage of revenues from 40% to 43% in 2005 due to the
        declining response from our aging infomercials. We will not have to pay such
        royalties in the future because we acquired the applicable patents as part
        of
        our purchase of the Ronco business.
 
 *Operating
        Income (Loss)* .
 
 Our
        operating income for the nine months ended June 29, 2005 was $1.7 million
        as
        compared to an operating loss of ($6.3) million for the nine months ended
        June
        30, 2004. The increase in operating income was primarily due to the 5%
        improvement in our gross margin and a 30% improvement in selling, general
        and
        administrative expenses, which was partially offset by the $23.9 million
        decrease in sales described above.
 
 *Net
        Loss* .
 
 Our
        net
        loss for the nine months ended June 29, 2005 decreased to ($1.1) million
        as
        compared to ($6.3) million for the nine months ended June 30, 2004. The decrease
        in net loss was primarily due to the 5% improvement in our gross margin and
        a
        30% improvement in selling, general and administrative expenses, partially
        offset by a $23.9 million decrease in sales. This was also offset by interest
        expense of approximately $2.9 million for the nine months ended June 29,
        2005
        related to a loan from Ron Popeil, his affiliated entities and the RMP Family
        Trust. These loans were not assumed by us when we acquired the Ronco
        business.
 
 ***Predecessor
        Entities - Nine Months Ended September 30, 2004 Compared to Nine Months Ended
        September 30, 2003 (unaudited)***
 
 *Net
        Sales* .
 
 Net
        sales
        for the nine months ended September 30, 2004 were approximately $63.2 million,
        compared to $42.8 million for the nine months ended September 30, 2003. The
        increase in net sales for the nine months ended September 30, 2004 was primarily
        due to the introduction of a new cutlery product line in November 2003, which
        accounted for approximately $27.1 million of such increase, and $2.8 million
        in
        other sales. The cutlery product line was not offered during the comparable
        nine
        month period in 2003. The increase was potentially offset by a decrease in
        sales
        of our ShowtimeTM Rotisserie products of approximately $9.5 million in 2004
        compared to the same period ended in 2003. The decrease in sales from our
        ShowtimeTM Rotisserie products is due to the shift in television media from our
        ShowtimeTM Rotisserie product line to our cutlery product line.
 
 *Gross
        Profit and Gross Margin* .
 
 Gross
        profit for the nine months ended September 30, 2004 was $46.4 million, an
        increase of $17.8 million, or 62%, compared to the nine months ended September
        30, 2003. This increase was primarily due to the increase in net sales and
        proportionately smaller increase in costs of goods sold. **** Gross
        margin for the nine months ended September 30, 2004 was 73% as compared to
        67%
        for the nine months ended September 30, 2003. This increase in gross margin
        is
        primarily due to a change in product mix with the introduction of our cutlery
        product line in November 2003. The gross margin on our rotisserie ovens ranges
        from 65% to 75% whereas the gross margin on our cutlery products averages
        about
        76%. Our cost of goods sold includes purchasing and inspection costs, but
        does
        not include fulfillment and shipping costs, which are included in selling,
        general and administrative expenses. As such, our margins might not be
        comparable to other companies in our industry.
  29
  *Selling,
        General and Administrative Expenses* .
 
 Selling,
        general and administrative expenses for the nine months ended September 30,
        2004
        were $53.2 million, an increase of $22 million, or 71%, compared to the nine
        months ended September 30, 2003. This increase occurred primarily because
        of the
        higher net sales, described above, and the increase in advertising expenses
        from
        $13.1 million for the nine months ended September 30, 2003, to $31.1 million
        for
        the comparable period in 2004. As a percentage of net sales, selling, general
        and administrative expenses for the nine months ended September 30, 2004
        were
        84% as compared to 74% for the nine months ended September 30, 2003. Selling,
        general and administrative expenses increased as a percentage of net sales
        for
        the nine months ended September 30, 2004, due to the increase in advertising
        expenses, which occurred due to the declining response achieved from our
        aging
        infomercials. Selling, general and administrative expenses also included
        $8.1
        million and $4.9 million of fulfillment, and shipping cost for the nine months
        ended September 30, 2004 and the nine months ended September 30, 2003,
        respectively.
 
 *Impairment
        Loss on Tooling* .
 
 The
        impairment loss on tooling for the nine months ended September 30, 2004 was
        approximately $771,000, compared to no impairment loss for the nine months
        ended
        September 30, 2003. This impairment loss represented a write-off of out-of-date
        production tooling we previously used in connection with our current product
        lines.
 
 *Operating
        Loss* .
 
 Our
        operating loss for the nine months ended September 30, 2004 was ($7.6) million
        as compared to a ($3.3) million operating loss for the nine months ended
        September 30, 2003. The higher loss for 2004 is primarily attributable to
        the
        increase in advertising expenses during the nine months ended September 30,
        2004.
 
 *Net
        Loss* .
 
 Our
        net
        loss for the nine months ended September 30, 2004 increased to ($7.7) million
        as
        compared to ($3.1) million for the nine months ended September 30, 2003.
        The
        higher loss for 2004 is primarily attributable to the increase in advertising
        expenses during the nine months ended September 30, 2004.
 
 ***Year
        Ended December 31, 2003 Compared to Year Ended December 31,
        2002***
 
 *Net
        Sales* .
 
 Net
        sales
        were $93.5 million for 2003 compared to $98.4 million in 2002, a decrease
        of 5%.
        Substantially all of this revenue was generated from sales of our ShowtimeTM
Rotisserie line of products, as we only introduced our cutlery line of products
        in November 2003. ShowtimeTM Rotisserie product prices remained flat during both
        years. Of the ShowtimeTM Rotisseries, our compact rotisserie generated $26.1
        million in net sales and our standard rotisserie generated $61.3 million
        in net
        sales in 2003. In 2002, substantially all of our net sales were derived from
        sales of the compact rotisserie. Our cutlery products contributed $3.5 million
        in net sales during 2003. The decrease in net sales in 2003 resulted from
        management’s decision to reduce media expenditures associated with its ShowtimeTM
Rotisseries ovens during the first seven months of 2003 in order to reduce
        the
        number of poor performing air dates, thereby increasing overall
        profitability.
  *Gross
        Profit and Gross Margin* .
 
 Gross
        profit for the twelve months ended December 31, 2003 increased by 3% to $64.2
        million from $62.2 million for the same period of 2002. Gross margin was
        69% in
        2003 compared to 63% in 2002. This increase is attributed to the addition
        of our
        standard rotisserie to our oven product line and the introduction of our
        cutlery
        product line in November 2003. Our margins on our standard rotisserie are
        approximately 75% and on our cutlery product line are approximately 76%,
        which
        are higher than the 65% margins we achieve on our compact rotisserie. Our
        cost
        of sales includes purchasing and inspection costs, but does not include
        fulfillment and shipping costs, which are included in selling, general and
        administrative expenses. As such, our margin might not be comparable to other
        companies in our industry.
  30
 
 *Selling,
        General and Administrative Expenses* .
 
 Selling,
        general and administrative expenses for the twelve months ended December
        31,
        2003 decreased by approximately 6% to $67.7 million from $71.9 million for
        the
        twelve months ended December 31, 2002. The decrease in selling, general and
        administrative expenses was primarily due to a $4.1 million decrease in media
        expenses. The decline in media expenses was based on management’s decision to
        reduce media expenditures associated with the ShowtimeTM Rotisserie ovens to
        reduce the number of poor performing air dates and increase overall
        profitability. As a percentage of net sales, selling, general and administrative
        expenses were 72% and 73% for the twelve months ended December 31, 2003 and
        December 31, 2002, respectively. Selling, general and administrative expenses
        also included $8.5 million and $7.3 million of fulfillment and shipping costs
        for the twelve months ended December 31, 2003 and 2002, respectively.
        Fulfillment and shipping cost increased for the twelve months ended December
        31,
        2003 compared to 2002 because we changed our shipper from the U.S. postal
        service to FedEx. Although the cost of FedEx was greater than the U.S. postal
        service, the use of FedEx resulted in faster delivery times, which reduced
        our
        returns. Fulfillment costs also increased in 2003 with the introduction of
        our
        cutlery product line in November 2003 because such costs are fixed per unit
        shipped regardless of the unit price. Thus, our fulfillment costs per order
        for our cutlery product line were higher than our cost per order for our
        rotisserie line.
 
 *Operating
        Loss* .
 
 Our
        operating loss for the twelve months ended December 31, 2003 decreased to
        ($3.4)
        million from ($9.7) million for the same period of 2002. The decrease in
        operating loss was due primarily to the 6% increase in gross margin and a
        $4.3
        million decrease in selling, general and administrative expenses.
 
 *Net
        Loss* .
 
 Our
        net
        loss was ($3.0) million for the twelve months ended December 31, 2003 compared
        to a net loss of ($9.5) million for the twelve months ended December 31,
        2002.
        This reduction in our net loss was due primarily to the 6% increase in gross
        margin and a $4.3 million decrease in selling, general and administrative
        expenses.
 
 **Liquidity
        and Capital Resources**
 
 Historically,
        the predecessor entities funded operations primarily through cash flow from
        operations and borrowings from the shareholder of the predecessor entities.
        Principal liquidity needs have been for television media, the majority of
        which
        is required to be prepaid two to four weeks in advance of the air date, and
        for
        cost of goods. Since our acquisition of the Ronco business, we no longer
        have
        the ability to borrow from the shareholder of the predecessor entities, so
        we
        have had to identify alternative sources of financing to replace this prior
        source of financing. In addition, during the year ended June 30, 2006, we
        increased the volume of wholesale sales whereby we give extended payment
        terms
        to our customers, which increased our receivable collection time and thus
        increased our liquidity needs. This liquidity need is likely to increase
        as our
        wholesale business continues to grow. Our cost for television has declined
        and
        will continue to do so if our direct response business continues to decline,
        which we expect will reduce our need for liquidity. However, we expect the
        impact of this on our liquidity will be offset by our need to purchase more
        inventory to support our wholesale business.
 
 Based
        on
        our new strategy and the anticipated growth in our wholesale business, we
        believe that our liquidity needs will increase. The amount of such increase
        will
        depend on many factors, such as the establishment of a research and development
        program, whether we upgrade our technology, and the amount of inventory required
        for our expanding wholesale and international business.
 
 As
        of
        June 30, 2006, our total working capital deficit was $12.9 million as compared
        with a working capital surplus of $8.2 million as of June 30, 2005. Our June
        30,
        2006 negative working capital included all of our debt to the Seller Entities
        and Sanders Morris Harris totaling $14.5 million. As of June 30, 2006, we
        could
        be considered to have had an incident of default on both loans. In order
        to
        assist in meeting our liquidity needs, we entered into a factoring agreement
        in
        October 2005 to fund our working capital needs. We also reached agreements
        with
        some of our principal factories who produce our products to extend our payment
        terms from 30 days to 60 days. Despite these developments, our cash flow
        from
        operations, and advances under our factoring agreement are not sufficient
        to
        meet our current and future working capital needs. As a result, we are seeking
        additional sources of capital to assure that our working capital needs are
        met.
        Specifically, we are seeking a term loan and/or line of credit and/or equity
        of
        between $10 and $15 million. We are in negotiations with a lender regarding
        such
        a facility but have not yet been able to secure a credit facility on acceptable
        terms. On October 6, 2006, we signed a loan agreement with Crossroads Financial
        on a $4 million credit facility. We made changes in our business strategy
        in
        order to conserve cash, such as delaying further expansion of our wholesale
        business, delaying the development and marketing of new products, delaying
        the
        expansion of our international sales, delaying the development of new
        infomercials. Although we obtained financing through Crossroads if we do
        not
        close a financial facility of over $10 million by January 31, 2007, we may
        need
        to make further changes in our business strategy in order to conserve cash,
        such
        as delaying further expansion of our wholesale business and/or reducing
        advertising directed toward our direct response business.
  31
  ***Cash
        Flows - Year Ended June 30, 2006 Compared with Year Ended June 30,
        2005***
 
 For
        the
        year June 30, 2006, we used approximately $1 million in cash to fund our
        operations. This was primarily due to our net loss of approximately $44.4
        million. This was partially offset by a decrease in net accounts receivable
        of
        $1 million and prepaid expenses and other current assets of $1.9 million
        due to
        reduced sales during the fourth quarter of the year. Accounts payable and
        accrued expenses increased by $5.1 million due to obtaining an extension
        in the
        payment terms from our factories in China and generally paying our other
        vendors
        later. There was also a decrease in inventory by $.6 million due to reduced
        purchasing in the fourth quarter. Deferred income increased by $.7 million
        primarily because on June 30, 2005 due to purchase accounting we wrote off
        most
        of our deferred revenues. Our current deferred revenue balance represents
        cash
        we collected for products that we had not shipped by June 30, 2006. We also
        recorded an impairment loss of $24.5 million related to our goodwill and
        intangibles, which was primarily due to our substantial decline in sales,
        our
        lack of capital to invest in new products and infomercials, and the projected
        revenue generated from the intangible assets that were purchased. We recorded
        depreciation and amortization expense of $6.4 million, bad debt of $.5 million,
        $1.2 million of non-cash interest expense on notes to Seller Entities and
        non
        cash compensation expense of $1.3 million, for the year ended June 30,
        2006.
 
 For
        the
        year ended June 29, 2005, we used approximately $41.9 million in cash to
        fund
        our operations. This was primarily attributable to net loss of $2.4 million,
        a
        decrease in royalty payables of $38.5 million, a $2.5 million decrease in
        deferred revenues, a decrease in accrued expenses and accounts payable totaling
        $1.2 million and a build up of inventory of $1.4 million. The impact of this
        was
        partially offset by a decrease of $2.4 million in prepaid expenses and other
        current assets, depreciation and amortization expense of $.9 million and
        bad
        debt expense of $.9 million.
 
 For
        the
        year ended June 30, 2006, we used approximately $13,000 in investing activities.
        We paid approximately $0.5 million to purchase equipment, including software,
        and used approximately $0.5 million for the purchase of short term investments
        set aside as a credit card reserve for Wells Fargo Market Services, our credit
        card processor. In addition, we received approximately $1.0 million from
        the
        redemption of investments in securities.
 
 For
        the
        year ended June 29, 2005, we generated $.5 million from investing activities.
        We
        received approximately $1 million from redemption of investment securities,
        and
        $.1 million as a deposit on the purchase of the Ronco business. This was
        partially offset by the purchase of $.6 million of equipment including
        software.
 
 For
        the
        year ended June 30, 2006, we generated approximately $.6 from our financing
        activities. In September 2005 we received net proceeds of approximately $1.2
        million from a line of credit, which we used for working capital of which
        we
        repaid approximately $0.8 million in October 2005 leaving a total outstanding
        at
        June 30, 2006 of approximately $0.4 million; and $45,000 from a long-term
        loan
        in September 2005 of which we repaid approximately $7,000 through the fourth
        quarter leaving a balance of approximately $38,000 as of June 30, 2006, which
        we
        used to acquire a vehicle. In June 2006, we borrowed $1.5 million from Sanders
        Morris Harris to fund working capital. During the year ended June 30, 2006,
        we
        also paid approximately $1.3 million to the seller entities in connection
        with
        our acquisition of the Ronco business.
 
 During
        the years ended June 30, 2005, loans from the predecessor entities accounted
        for
        $39.3 million, the proceeds of which were used primarily to pay license and
        royalty fees of $38.5 million.
  ***Cash
        Flows - Nine Month Periods***
 
 For
        the
        one-day period of June 30, 2005, we did not generate any revenues, as we
        had
        just acquired the Ronco business and had not yet conducted any business.
        As a
        result, the $676,000 of cash used in operating activities was used primarily
        to
        compensate our management. For the nine months ended June 29, 2005 and September
        30, 2004, we used approximately $2.4 and $41.2 million in cash, respectively,
        to
        fund our operations. Substantially all of the amounts expended during the
        nine
        months ended September 30, 2004, were used to pay accrued royalty expenses
        on
        patents relating to our core products. We will no longer incur these expenses
        as
        we have acquired all rights to these patents. We used cash during the nine
        months ended June 29, 2005 primarily to fund operating losses and for our
        working capital needs. Specifically, we used cash to reduce accounts payable
        net
        of accrued expenses ($2.2 million), deferred income ($3.4 million), inventories
        ($2.5 million) and accounts receivable ($1.2 million). Inventory and accounts
        receivable decreased during the nine months ended June 25, 2005 because this
        period includes our slowest sales months, compared to the increase in inventory
        for the nine months ended September 30, 2004, which reflects our preparation
        for
        the busy holiday sales season. The decline in accounts receivable for this
        same
        period occurred because holiday sales had not yet begun. At the same time,
        accounts payable declined during the nine months ended June 29, 2005, because
        we
        had not yet begun buying inventory or advertising in anticipation of the
        holiday
        season. Deferred revenue declined during the nine months ended June 29, 2005
        compared to the nine months ended September 30, 2004 because such deferred
        revenue was unusually high during the nine months ended September 30, 2004
        due
        to backorders we experienced with respect to our ShowtimeTM Rotisserie
        ovens.
 
 For
        the
        one-day period of June 30, 2005, we used approximately $45 million from
        investing activities to acquire the Ronco business. For the nine months ended
        June 29, 2005 and September 30, 2004, our investing activities provided us
        with
        approximately $146,000 and $257,000 of cash, respectively. In 2005, this
        amount
        represents approximately $500,000 from our investment in securities, which
        represents an asset that we acquired when we acquired the Ronco business.
        This
        was partially offset by office equipment purchases of approximately $453,000.
        Our investment proceeds in 2004 were approximately the same as in 2005, which
        represented the proceeds from the redemption of investment securities, but
        were
        offset in part by office equipment purchases of approximately
        $243,000.
  32
 
 For
        the
        one-day period of June 30, 2005, our financing activities provided approximately
        $46.4 million. This represents the proceeds from the issuance of our Series
        A
        Convertible Preferred Stock, less approximately $3.6 million of issuance
        costs.
        For the nine months ended June 29, 2005 and September 30, 2004, our financing
        activities provided approximately $12,000 and $39.1 million of cash,
        respectively. In 2005, this amount represented an advance from an affiliate,
        and
        in 2004, this amount represented the proceeds of a loan from one of the
        predecessor entities and its stockholder. The predecessor entities used the
        proceeds from this loan to repay accrued royalty expenses on patents relating
        to
        our core products. We acquired these patents in connection with our acquisition
        of the Ronco business so we will no longer incur these expenses.
  ***Acquisition
        of the Ronco Business***
 
 On
        June
        30, 2005, we acquired the Ronco business. In connection with the acquisition,
        we
        sold $50 million of our Series A Convertible Preferred Stock. The proceeds
        from
        the stock sale were $46.4 million, which excludes $3.6 million in offering
        costs. We used approximately $40.2 million to pay the cash portion of the
        purchase price for the Ronco business and $4.7 million to pay transaction
        costs.
        We used the remaining proceeds as follows: approximately $0.4 million was
        used
        to repay debt due to investors in Ronco Marketing Corporation and approximate
        $1.1 million was used for working capital.
  ***The
        Notes***
 
 In
        connection with our purchase of the Ronco business, we issued promissory
        notes
        to the predecessor entities and Ronald M. Popeil. The aggregate principal
        amount
        of the notes is $16.3 million, which may be adjusted pursuant to the terms
        of
        the purchase agreement. The aggregate principal amount of the notes was based
        on
        the estimated net value of the Ronco business. The amount of the notes may
        be
        increased if the actual net value of the Ronco business exceeds the estimated
        amount, and decreased if the actual net value is less than the estimated
        amount,
        as provided in the notes. We completed an accounting after the closing of
        the
        acquisition to determine the actual net value of the Ronco business as of
        the
        closing date. According to our calculations, the actual net value is lower
        than
        the estimated value specified in the purchase agreement, and we expect the
        aggregate principal amount of the promissory notes will be reduced to
        approximately $13.158 million. If the predecessor entities and Mr. Popeil
        disagree with our calculations, they could contest the reduction of the
        principal amount of the promissory notes. Any dispute over the adjustment
        of the
        principal amount of the notes would be resolved through arbitration, pursuant
        to
        the asset purchase agreement.
 
 The
        promissory notes bear simple interest at a rate equal to 9.5% per annum.
        The
        principal payments due with respect to the promissory notes in any period
        will
        be determined by applying a per-unit dollar amount to the volume of our products
        that are shipped within such period. As of June 30, 2006, Mr. Popeil contends
        that we owe payments on the promissory notes of $1.3 million. We believe
        that
        the amount due at June 30, 2006, is approximately $400,000. We are in
        negotiations with Mr. Popeil to change the payment schedule under the notes,
        but
        to date we have not reached an agreement. In light of the fact that we have
        not
        made the required payments, either by our calculations or Mr. Popeil’s, we are
        considering the entire note due within the current period. Any outstanding
        principal amount and any accrued but unpaid interest will become due and
        payable
        in full on June 29, 2010. There is no pre-payment penalty on the promissory
        notes.
 
 Upon
        occurrence of an event of default that is not cured by the time period set
        forth
        in the promissory notes, the interest rate on the notes will increase to
        11% per
        annum and any unpaid principal and interest will become immediately due and
        payable. In addition, Mr. Popeil will have the right to reclaim any ownership
        interest in his name and likeness previously sold or licensed to us and will
        receive a right of first refusal to purchase the intellectual property rights
        we
        acquired as part of our acquisition of the Ronco business before these rights
        may be sold or transferred to any other party.
 
 ***Revolving
        Line of Credit***
 
 On
        September 21, 2005, we borrowed $1,234,000 from Wells Fargo Bank, National
        Association, under a revolving line of credit note. Interest is payable monthly
        and the outstanding balance is due and payable on September 20, 2006. This
        facility is collateralized by our corporate investment bonds. The borrowings
        bear interest at 1% above LIBOR or 1⁄2% below prime, at the Company’s option. The
        Company was paying a rate of 6.375% at June 30, 2006. There is no prepayment
        penalty on this revolving line of credit. In October 2005, we repaid $850,000
        of
        the borrowings because $1,000,000 of our corporate investment bonds, which
        were
        collateral for the loan, was called. The outstanding balance at June 30,
        2006
        was $384,000, with the loan being fully repaid and the line terminated by
        August
        31, 2006.
  ***Sanders
        Morris Harris Inc. Loan***
 
 On
        June
        9, 2006, we entered into to a letter loan agreement with Sander Morris Harris
        (SMH). Under the terms of the loan agreement, we also assigned proceeds under
        a
        life insurance policy for $15 million on the life of Ron Popeil to SMH, as
        a
        lender and as agent for the other lenders under the loan agreement. As
        consideration for the loan, we issued to SMH a subordinated promissory note
        in
        the principal amount of $1,500,000. As of June 9, 2006, A. Emerson Martin,
        II
        and Gregg A. Mockenhaupt were members of our Board of Directors and managing
        directors of SMH.
  33
 
 Pursuant
        to the loan agreement, SMH agreed to loan us an additional $1,500,000 subject
        to
        certain closing conditions, including the mailing of an offer by us to each
        of
        the holders of our Series A Convertible Preferred Stock to participate in
        a
        rights offering based on their pro rata ownership of outstanding Series A
        Convertible Preferred Stock and our closing on a credit agreement for a facility
        of not less than $15 million. This facility did not close within the stated
        time
        frame specified in the note but management believes that SMH will extend
        the
        additional $1.5 million if the credit agreement specified above closes by
        October 31, 2006.
  The
        loans
        under the loan agreement bear interest at a rate of 4.77% per annum. Interest
        will be due and payable on the first and second anniversary of the issuance
        of
        the notes and at the maturity date.
 
 The
        principal and interest payable on the notes issued under the loan agreement
        are
        convertible into shares of our common stock at conversion price based on
        the
        weighted average of the stock sale price for the forty days after the
        registration is effective. We filed a registration statement covering the
        resale
        of shares issuable upon conversion of these notes. To date, however, our
        registration statement has not been declared effective. Accordingly, the
        notes
        cannot be converted into shares.
 
 Under
        the
        terms of the loan agreement, we agreed to retain Richard F. Allen, Sr. as
        our
        Chief Executive Officer. On August 9, 2006, we terminated Richard F. Allen,
        Sr.
        as President and Chief Executive Officer of our company, at which point we
        have occurence of default of our obligations under the loan
        agreement.
  ***Factoring
        Agreement***
 
 On
        October 25, 2005, we entered into a purchase and sale agreement with Prestige
        Capital Corporation ("Prestige") , pursuant to which Prestige agreed to buy
        and
        accept, and we agreed to sell and assign, certain accounts receivable owing
        to
        us with recourse except for payment not received due to insolvency. This
        agreement provides that upon the receipt and acceptance of each assignment
        of
        accounts receivable, Prestige will pay us 75% of the face amount of the accounts
        so assigned. Under the agreement, Prestige agreed to purchase accounts with
        a
        maximum aggregate face amount of $8,000,000. The fee payable by us to Prestige
        under the agreement ranges from 2% to 5.75% of the face amount of assigned
        accounts if the receivable is collected within 15 to 75 days. Thereafter,
        the
        rate goes up by 1% for each additional fifteen day period following the 75
        day
        period until the account is paid. There is no maximum rate. In addition,
        Prestige may require us to repay the amount it has advanced to us, in certain
        cases, if the receivable is not paid within 90 days. In such case Prestige
        would
        not retain the account receivable. If an account receivable is not paid due
        to
        the bankruptcy of the customer, or due to certain similar events of insolvency,
        we will not be required to repay the cash advance to Prestige.  The initial
        terms of the agreement expired on May 1, 2006, and we gave notice not to
        renew
        the agreement for another one-year term. Prestige agreed to extend the term
        on a
        month to month basis. On October 6, 2006 we extended the term of our agreement
        with Prestige until October 1, 2007. There is no prepayment penalty associated
        with this extension.
 
 Pursuant
        to the terms of the agreement, we granted to Prestige a continuing security
        interest in our tangible and general intangible assets to secure our obligations
        under the agreement. If a receivable is not paid within 90 days, Prestige
        has
        the right to charge back our company.
 
 We
        accounted for this agreement with Prestige as a sale of receivables in
        accordance with SFAS 140, "Accounting for Transfers and Servicing of Financial
        Assets and Extinguishment of Liabilities." As of June 30, 2006, we had no
        outstanding borrowings under the agreement.
 
 ***Crossroads
        Financial, LLC***
 
 On
        October 6, 2006 we entered into a Loan and Security Agreement with Crossroads
        Financial, LLC, as the lender.  This facility consists of a revolving loan
        facility of up to $4,000,000 of which we borrowed $4,000,000 at the initial
        funding, to be used to pay certain existing indebtedness and fund general
        operating and working capital needs. This credit facility has a term
        expiring September 1, 2007 at which time all amounts due under the facility
        become due and payable, but is automatically renewed for consecutive one
        year
        terms unless terminated by written notice of either party 60 days prior to
        the
        end of the initial term or any renewal term.  The amount our
        Company may borrow under this credit facility is determined by a percentage
        of the cost of eligible inventory, up to a maximum of
        $4,000,000.  Interest under this facility is payable monthly, commencing
        October 1, 2006, with the interest rate equal to 18% per year.  We
        authorized the lender to collect all payments of interest, monthly monitoring
        fees, principal payments and any over advance (as defined in the Loan and
        Security Agreement) directly from our factor, Prestige Capital Corporation,
        which provides an accounts receivable factoring facility for our Company. 
In connection with the transactions contemplated by the loan agreement, we
        entered into a pledge agreement and Ronco Marketing Corporation executed
        a
        guaranty in favor of Crossroads Financial. Under these agreements, our
        obligations under this facility are secured by a lien on substantially all
        the
        assets of our Company including a pledge of the equity interests of its
        subsidiary, Ronco Marketing Corporation, and a secured guaranty by Ronco
        Marketing Corporation. This facility contains limited covenants, including
        covenants that we not sell or dispose of assets or properties
        other than inventory sold in the ordinary course of business, and that
        we keep the collateral free and clear of liens, except certain permitted
        liens. This facility includes customary default provisions, and all
        outstanding obligations may become immediately due and payable in the event
        of a
        default.  The loan can be prepaid upon payment of a prepayment penalty of
        $12,000 per month for each month remaining in the prepayment period (which
        includes the number of months remaining in the term at the time of the
        prepayment), with a minimum prepayment penalty of $100,000.
  34
 
 ***Going
        Concern***
  We
        incurred net losses of approximately $44.4 million for the year ended June
        30,
        2006, and had a working capital deficiency of approximately $12.9 million
        as of
        June 30, 2006. We have suffered significant losses from continuing operation
        and
        have negative cash flows from operation. These conditions raise substantial
        doubt about our ability to continue as a going concern.
 
 We
        currently plan to raise additional capital through one or more debt or equity
        financing transactions. On October 6, 2006, we closed a debt financing
        transaction with Crossroads Capital relating to a credit facility of up to
        $4.0
        million. However, funds available through this facility with Crossroads Capital
        may not be sufficient to finance our working capital requirements, and we
        may
        need to obtain additional funds in the immediate future. The additional funding
        we require may not be available on acceptable terms or at all and, if obtained
        through an equity financing transaction, could result in significant
        dilution.
 
 If
        we are
        unable to obtain adequate funding or sufficiently increase our revenues from
        the
        sale of our products to support our working capital needs, we could be required
        to significantly curtail or even shutdown our operations.
  ***Capital
        Resources***
  We
        have
        not incurred any significant capital expenses during the periods presented
        and
        do not have any significant anticipated capital expenditures for the coming
        year. If capital needs should arise, we will fund them from cash from operations
        or will obtain financing in connection with their acquisition.
  ***Off-Balance
        Sheet Arrangements***
 
 We
        do not
        have any off-balance sheet arrangements.
  **Contractual
        Obligations and Commercial Commitments**
 
 The
        following table illustrates our contractual obligations and commercial
        commitments as of June 30, 2006 and include the effects of our acquisition
        of
        the Ronco business.
  **Contractual
                  Obligations**
              
              **Payments
                  due by period****Total**
              
              **Less
                  than**
                **1
                  year**
              
              **1-3
                  years**
              
              **3-5
                  years**
              
              **More
                  than 5 years**Long-Term
                  Debt Obligations (1)
              
              
              45,613
              
              
              10,947
              
              
              21,894
              
              
              12,772
              
              
              —Long-Term
                  Debt Obligations, reclassified as Current Debt (2)
              
              
              15,131,724
              
              
              15,131,724
              
              
              —
              
              
              —
              
              
              —Estimated
                Future
                Interest on Debt (3)
              
              
              1,300,000
              
              
              1,300,000
              
              
              —
              
              
              —
              
              
              —Operating
                  Lease Obligations
              
              
              7,351,532
              
              
              495,605
              
              
              1,379,393
              
              
              1,464,408
              
              
              4,012,126Purchase
                  Obligations (4)
              
              
              5,867,494
              
              
              5,867,494
              
              
              —
              
              
              —
              
              
              —Total
              
              
              29,696,363
              
              
              22,805,770
              
              
              1,401,287
              
              
              1,477,180
              
              
              4,012,126 
 (1)
                Excludes
                    contractual obligations with a term of 30 days or less.(2)
                Includes
                    promissory notes to Seller Entities of $13,026,85, the Wells Fargo
                    line of credit of $384,000 and the loan from Sanders, Morris Harris
                    of $1,540,185 that may have an occurence of default, and are
                    classified as current on the financial statements.(3)
                The future
                  interest for
                  the Seller Note was only calculated for one year because the debt
                  is shown
                  as current on the financial statements.(4)
                $5,867,494
                    are purchase orders for future
                    sales.
 Our
        principal executive offices are located at 61 Moreland Road, Simi Valley,
        CA
        93065, where we lease office space and a storage facility for approximately
        $56,000 per month.
  **Effects
        of Inflation and Foreign Currency Fluctuations**
 
 We
        do not
        believe that foreign currency fluctuations significantly affected our financial
        position and results of operations as of and for the fiscal year ended June
        30,
        2006.
  35
 
 We
        do not
        believe that inflation or changing prices has had a material impact on our
        net
        sales, revenues or income from continuing operations for the year ended June
        30,
        2006.
 
 **PART
        III**
 
 **ITEM
        10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT**
  The
        following table sets forth the name, age and position of each of our directors,
        executive officers and significant employees as of September 30,
        2006.
 
 Name
              
              Age
              
              Position(s)Paul
                  Kabashima
              
              62
              
              Interim
                  Chief Executive Officer, Interim President, Chief Operating
                  OfficerRonald
                  C. Stone
              
              48
              
              Chief
                  Financial OfficerHarold
                  D. Kahn
              
              60
              
              DirectorThomas
                  J. Lykos, Jr.
              
              50
              
              DirectorJohn
                  S. Reiland
              
              57
              
              DirectorRichard
                  F. Allen, Sr.
              
              58
              
              Director
  **Paul
        Kabashima** was
        appointed as the Company's Chief Operating Officer on November 8, 2005 and
        as
        its interim Chief Financial Officer on April 18, 2006, In addition, Mr.
        Kabashima was also appointed as the Interim Chief Executive Officer and Interim
        President on August 9, 2006. From 1990 to 2005, Mr. Kabashima was employed
        by
        Mitsui & Co. (U.S.A.), Inc., the largest wholly owned subsidiary of Mitsui
& Co. Ltd. Japan which, through its operating divisions, is an exporter of
        American products throughout the world. Mr. Kabashima served in several
        capacities at Mitsui U.S.A., including business coordinator, administrative
        manager, senior manager, accounting and administration and deputy general
        manager. From 1997 to the present, he was a director and member of the executive
        compensation committee of Hannibal Industries, Inc. a privately owned fabricator
        of industrial tubing and warehouse storage racks. From 1993 to 2003, Mr.
        Kabashima was a director of Weisner Steel Products, Inc., a privately owned
        distributor of steel safety and harnessing products and from 1991 to 1999
        he was
        a director of Davis Wire Corporation, a privately owned manufacturer of wire
        products for agricultural, construction, communication and industrial users.
        Mr.
        Kabashima received a Bachelor of Science in Business Administration from
        California State University at Los Angeles and is a certified public
        accountant.
 
 **Richard
        F. Allen, Sr.** is
        our former Chief Executive Officer, President and a member of our board of
        directors since February 2005. Between February 2005 and June 2005, Mr. Allen
        was the Chief Executive Officer and President of the predecessor entities.
        Between 2003 and February 2005, Mr. Allen was a consultant to the predecessor
        entities, assisting them with structuring financial components for their
        marketing and sales departments. From 2000 through 2003, Mr. Allen was the
        President and Chief Executive Officer of Design Textiles International, LLC,
        a
        distributor and manufacturer of textile products. Mr. Allen has more than
        30
        years of experience in international marketing, product development, sourcing,
        manufacturing, international and domestic retail sales, brand management,
        financing, exporting and importing. Mr. Allen was the President of American
        Marketing & Events, Inc. between 1993 and 1995. Mr. Allen served in various
        executive positions with Milliken & Company (New York) and West Point
        Pepperell (New York) between 1972 and 1975. Mr. Allen graduated from the
        University of Arizona with a degree in Political Science and Economics and
        received a Masters degree in International Management from the American Graduate
        School of International Management.
 
 **Harold
        D. Kahn** is a
        member of our board of directors, a position he has held since June 2005.
        From
        March 2004 until present, Mr. Kahn was an independent retail consultant.
        For
        nearly 30 years, Mr. Kahn served in a variety of capacities for R. H. Macy
&
Co., Inc. and its successor, Federated Department Stores, Inc. Most recently,
        he
        was the Chairman and Chief Executive Officer of Macy's East, a position he
        held
        from 1994 to 2004 and for which he had full operating responsibility for
        a $5
        billion, 90 branch retail business. Prior to 1994, Mr. Kahn served in a
        succession of senior executive roles within Macy's / Federated, including:
        President of Montgomery Ward (1992 - 1994), Chairman and Chief Executive
        Officer
        of Macy's South & Bullock's (1989 - 1992), Chairman and Chief Executive
        Officer of Macy's California (1985 - 1989), and President of Macy's Atlanta
        (1981 - 1985). Mr. Kahn received a Bachelors degree in Business Administration
        from City College of New York and a Masters in Business Administration from
        the
        University of Maryland.
 
 **Thomas
        J. Lykos, Jr** ., is a
        member of our board of directors, a position he has held since December 2005.
        From May 1995 to the present, Mr. Lykos has been a founder and President
        of Home
        and Hearth, Inc., a developer and operator of economy extended-stay hotels.
        From
        1990 to 1995, Mr. Lykos served as Director of the Financial Institutions
        Group
        at Rauscher Pierce Refsnes, a full service investment bank, where he specialized
        in public and private offerings and mergers and acquisitions in a variety
        of
        industries including banks, thrifts, real estate investment trusts, mortgage
        banks and insurance companies. From 1988 to 1990, Mr. Lykos served as a Deputy
        Director of the FSLIC specializing in the resolution of insolvent financial
        institutions. From 1983 to 1988, Mr. Lykos served as Legal Counsel to the
        Senate
        Committee on Banking, Housing and Urban Affairs and Legal Counsel to the
        House
        Committee of Energy and Commerce in Washington, D.C. From 1982 to 1983, Mr.
        Lykos was an attorney for the United States Securities and Exchange Commission
        in the Division of Enforcement, and between 1981 and 1982, he was a corporate
        litigation attorney with the law firm of Bracewell and Patterson in Washington,
        D.C. Mr. Lykos received a Bachelor of Arts degree from Harvard College and
        a
        Juris Doctor from the University of Texas School of Law.
  36
 
 **John
        S. Reiland** was
        appointed to the Company’s Board of Directors on June 9, 2006 pursuant to the
        terms of the Loan Agreement described above. Subject to the Board of Directors
        final confirmation of Mr. Reiland’s compliance with all of the independence and
        knowledge requirements imposed by the Sarbanes-Oxley Act of 2002, the NASDAQ
        Stock Market, and the other rules and regulations promulgated by the Securities
        and Exchange Commission, the Board of Directors appointed Mr. Reiland to
        serve
        on its audit committee. Mr. Reiland also serves on the board of directors
        of
        Nova Oil, Inc. and New England Pantry, Inc. Since March 2006, Mr. Reiland
        has
        been a Senior Financial Analyst for Sanders Morris Harris, the largest
        investment banking firm headquartered in Texas. From March 2003 until March
        2006, he served as the Chief Financial Officer of US Dataworks, a developer
        of
        payment processing software focused on the financial services market, federal,
        state and local governments, billers and retailers. From March 2002 until
        December 2002, Mr. Reiland was the Interim Chief Executive Officer of New
        England Pantry, a New England-based convenience store chain. From
        November 2000 to February 2002, he was Chief Executive Officer of
        ServiceIQ, a privately held developmental stage company developing wireless
        communications devices for the field service industry. Mr. Reiland is a
        certified public accountant and began his career at Price Waterhouse &
Co. from 1973 to 1978. He received his B.B.A. from the University of Houston
        in
        1973.
 
 **Ronald
        C. Stone, was appointed as the Company’s Chief Financial Officer on September
        29, 2006. Mr. Stone** served
        as the Company’s Vice President of Finance and Corporate Controller from
        September 2005 through September 2006. From May 2005 to August 2005, Mr.
        Stone
        served as the named principle of Stone Consulting, a provider of business
        consulting services. Mr. Stone served as the Chief Financial Officer and
        Chief
        Operating Officer of Jill Kelly Productions, Inc., a production company,
        from
        September 2003 to April 2005. From May 2002 to August 2003, Mr. Stone served
        as
        the Controller of Jill Kelly Productions. Mr. Stone served as Chief Financial
        Officer of Linear Industries, Ltd. and Lintech Motion Control, Inc., which
        are
        each manufacturing and engineering companies in the motion control field,
        from
        January 1997 to April 2002. Mr. Stone received a B.A. in History from the
        University of California, Los Angeles and is a certified public
        accountant.
  Karen
        Allen, our former Vice President of Product Development, is the wife of Mr.
        Allen, our former Chief Executive Officer, President and member of our board of
        directors. Mrs. Allen received an annual salary of $170,000. There are no
        other
        family relationships among our directors and executive officers.
 
 None
        of
        our directors, executive officers, promoters or control persons has, within
        the
        last five years: (i) had a bankruptcy petition filed by or against any business
        of which such person was a general partner or executive officer at the time
        of
        the bankruptcy.; (ii) been convicted in a criminal proceeding or is currently
        subject to a pending criminal proceeding (excluding traffic violations or
        similar misdemeanors); (iii) been subject to any order, judgment or decree,
        not
        subsequently reversed, suspended or vacated, of any court of competent
        jurisdiction, permanently or temporarily enjoining, barring, suspending or
        otherwise limiting his involvement in any type of business, securities or
        banking activities; (iv) been found by a court of competent jurisdiction
        (in a
        civil action), the SEC or the Commodity Futures Trading Commission to have
        violated a federal or state securities or commodities law, and where judgment
        has not been reversed, suspended or vacated.
  **Board
        of Directors and Committees**
  As
        of
        September 30, 2006, our board of directors consisted of four members. We
        established audit and compensation committees that meet the criteria for
        independence under, and other applicable requirements of, the Sarbanes-Oxley
        Act
        of 2002, the current rules of the NASDAQ Stock Market and the rules and
        regulations adopted by the SEC. In addition, we plan to establish a nominating
        committee consisting of our entire board of directors. Our board of directors
        has adopted charters for these three committees. We are currently redesigning
        our website and intend to make the text of these charters available on our
        website at www.ronco.com.
  **Audit
        Committee**
  The
        audit
        committee provides assistance to our board of directors in fulfilling its
        legal
        and fiduciary obligations in matters involving our accounting, auditing,
        financial reporting, internal control and legal compliance functions by
        approving the services performed by our independent accountants and reviewing
        the adequacy of our accounting practices and systems of internal accounting
        controls. The audit committee oversees the audit efforts of our independent
        accountants and reviews their independence.
 
 John
        S.
        Reiland, Thomas J. Lykos Jr. and Harold D. Kahn are members of our audit
        committee. Our board of directors has appointed John S. Reiland as the chairman
        of the audit committee. Mr. Reiland is qualified as an audit committee financial
        expert. Before June 30, 2005, our business was operated by companies that
        were
        not subject to public reporting requirements and these companies were not
        historically required to include on their board any person meeting the
        qualifications of an audit committee financial expert. We plan to change
        the
        composition of our board of directors to include at least one person qualifying
        as an audit committee financial expert.
  37
  **Compensation
        Committee**
  The
        compensation committee is responsible for recommending to our board of directors
        the compensation for our executives. The compensation committee determines
        our
        general compensation policies and the compensation provided to our directors
        and
        executive officers. The compensation committee reviews and recommends bonuses
        for our officers and certain other employees. In addition, the compensation
        committee will review and determine equity-based compensation for our directors,
        officers, employees and consultants, and administer our stock option plans,
        employee stock purchase plans and other benefit plans. Our compensation
        committee members are John S. Reiland, Thomas J. Lykos Jr. and Harold D.
        Khan.
  **Executive
        Committee**
  Our
        executive committee consists of John S. Reiland, Thomas J. Lykos, Jr. and
        Harold
        D. Kahn. Our executive committee has been established by the Board and is
        authorized to the fullest extent permitted by the Delaware General Corporation
        Law and the Bylaws. The executive committee has the power and the authority,
        among other things, to declare a dividend and to authorize the issuance of
        stock, setting the agenda for board of directors meetings, establishing
        procedures for our shareholders to communicate with our board of directors
        and
        reviewing and approving our management operating plan.
  **Nominating
        Committee**
  Our
        executive committee will act as our nominating committee and will be responsible
        for assisting in the selection of individuals as nominees for election to
        the
        board of directors at annual meetings of our stockholders and for filling
        any
        vacancies or newly created directorships on our board of directors. The
        nominating committee will make recommendations to our board of directors
        regarding candidates for directorships and the size and composition of our
        board
        of directors.
  **Election
        of Directors and Officers**
  Holders
        of our common stock and Series A Convertible Preferred Stock are entitled
        to one
        vote for each share held on all matters submitted to a vote of our stockholders,
        including the election of directors. Cumulative voting with respect to the
        election of directors is not permitted by our certificate of incorporation.
        Our
        board of directors is elected at the annual meeting of our stockholders or
        at a
        special meeting called for that purpose. Each director holds office until
        the
        next annual meeting of the stockholders and until the director's successor
        is
        elected and qualified. If a vacancy occurs on our board of directors, including
        a vacancy resulting from an increase in the number of directors, the vacancy
        may
        be filled by the board of directors or by the stockholders at the next annual
        stockholders' meeting or at a special meeting of the stockholders called
        for
        that purpose.
  **Code
        of Business Conduct and Ethics**
  In
        August
        2005, our board of directors adopted a code of business conduct and ethics
        applicable to all of our employees, officers and directors. Our code of business
        conduct and ethics is currently not available on our website. We recently
        completed the acquisition transactions of the Ronco business. Before such
        time,
        we were a “blank check” company with no operations. As a result of these
        changes, we are redesigning and reconfiguring our website at www.ronco.com
        to
        include links to the text of our code of business conduct and ethics. We
        intend
        to satisfy the disclosure requirement relating to amendments to or waivers
        from
        any provision of our code of business conduct and ethics applicable to our
        principal executive officer, principal financial officer, principal accounting
        officer or controller by either filing a Form 8-K with the SEC or posting
        this
        information on our website within five business days following the date of
        any
        amendment or waiver. Upon request, we will provide to any person, without
        charge, a copy of our code of business conduct and ethics.
 
 **Corporate
        Governance Guidelines**
  In
        August
        2005, we also adopted corporate governance guidelines, which provide the
        framework for our governance. Our corporate governance guidelines require
        non-employee directors to meet independently from the other members of our
        board
        of directors and set qualification standards for prospective members of the
        board of directors. These guidelines require our board of directors to evaluate
        its effectiveness annually and the effectiveness of management, define director
        independence and establish a minimum number of meetings per year for the
        board
        of directors and its committees. The text of our corporate governance guidelines
        is currently not available on our website. As described above, we are
        redesigning and reconfiguring our website and intend to make our corporate
        governance guidelines available on our website. Upon request, we will provide
        to
        any person, without charge, a copy of our corporate governance
        guidelines.
  **Section
        16(a) Beneficial Ownership Reporting Compliance**
  Section
        16(a) of the Securities Exchange Act of 1934 requires our directors and
        executive officers and persons who own more than ten percent of our common
        stock
        file with the SEC initial reports of ownership and reports of changes in
        ownership of our common stock. These individuals are required by the SEC's
        regulations to furnish us with copies of all Section 16(a) reports filed
        by such
        persons. To our knowledge, based solely on our review of the copies of such
        reports furnished to us, all Section 16(a) filing requirements applicable
        to our
        directors, executive officers and greater than ten percent beneficial owners
        for
        the fiscal year ended June 30, 2006 were complied with on a timely
        basis.
  38


**ITEM
      12. SECURITY OWNERSHIP OF OFFICERS, DIRECTORS AND PRINCIPAL
      STOCKHOLDERS**




Set
      forth
      below is information as of September 28,2006, as to each class of our equity
      securities, beneficially owned by all of our directors and each of our executive
      officers, and all of our directors and executive officers as a group, and each
      beneficial owner of more than 5% of any class of our voting securities.





**Name
                and Address of****Beneficial
                Owner**
            
            **Title
                of Class**
            
            **Number
                of Shares****Beneficially
                Owned(1)**
            
            **Percent
                of****Class****Directors
                and Executive Officers**Richard
                F. Allen, Sr.(2)
            
            
            Common
                Stock
            
            
            511,346
            (4)
            
            19.5
            %Series
                A Convertible
            
            
            31,158
            (5)
            
            *Preferred
                StockEvan
                J. Warshawsky (3)
            
            
            Common
                Stock
            
            
            191,226
            (6)
            
            7.3
            %Series
                A Convertible
            
            
            31,163
            
            
            *Preferred
                StockHarold
                D. Kahn
            
            
            Common
                Stock
            
            
            0
            
            
            *Series
                A Convertible
            
            
            0
            
            
            *Preferred
                StockThomas
                J. Lykos, Jr.
            
            
            Common
                Stock
            
            
            0
            
            
            *Series
                A Convertible
            
            
            0
            
            
            *Preferred
                StockPaul
                Kabashima
            
            
            Common
                Stock
            
            
            0
            
            
            *Series
                A Convertible
            
            
            0
            
            
            *Preferred
                StockJohn
                S. Reiland (7) (8)
            
            
            Common
                Stock
            
            
            0
            
            
            *Series
                A Convertible
            
            
            0
            
            
            *Preferred
                StockAll
                directors and executive
            
            
            Common
                Stock
            
            
            702,572
            (11)
            
            26.5
            %(current
                and former) officersas
                a group (7 persons)Series
                A Convertible
            
            
            62,321
            
            
            *Preferred
                Stock




39




**Name
                and Address of****Beneficial Owner**
            
            **Title
                of Class**
            
            **Number
                of Shares Beneficially Owned(1)**
            
            **Percent
                of Class****5%
                or greater holders**Entities
                affiliated with
            
            
            Common
                Stock
            
            
            1,867,598
            (7)
            
            42.2
            %Sanders
                Morris Harris, Inc.600
                Travis, Suite 3100
            
            
            Series
                A Convertible
            
            
            1,600,931
            (8)
            
            10.6
            %Houston,
                TX 77002
            
            
            Preferred
                StockDon
              A. Sanders
            
            
            Common
                Stock
            
            
            1,847,641
            (9)
            
            41.6
            %600
              Travis, Suite 3100
            
            
            Series
                A Convertible
            
            
            1,847,641
            (9)
            
            12
            %Houston,
              TX 77002
            
            
            Preferred
                StockSanders
              Opportunity Fund
            
            
            Common
                Stock
            
            
            1,227,932
            (10)
            
            32
            %(Institutional),
              L.P.
            
            
            Series
                A Convertible
            
            
            1,227,932
            (10)
            
            8
            %600 Travis,
              Suite
              3100
            
            
            Preferred
                StockHouston,
              TX
              77002Bookbend
                & Co.
            
            
            Common
                Stock
            
            
            1,869,694
            (12)
            
            41.9
            %C/O
                State Street Bank & TrustBox
                5756
            
            
            Series
                A Convertible
            
            
            1,869,694
            (12)
            
            12.4
            %Boston,
                MA 02206
            
            
            Preferred
                StockHeartland
                Group, Inc.,
            
            
            Common
                Stock
            
            
            1,762,186
            (13)
            
            40.5
            %solely
                on behalf of theHeartland
                Value Fund
            
            
            Series
                A Convertible
            
            
            1,762,186
            (13)
            
            11.7
            %789
                North Water Street
            
            
            Preferred
                StockSuite
                500GLG
                Partners American Opp Fund
            
            
            Common
                Stock
            
            
            1,174,790
            (14)
            
            31.2
            %P.O.
                Box 9080tGeorgetown,
                Grand Cayman
            
            
            Series
                A Convertible
            
            
            1,174,790
            (14)
            
            7.8
            %Cayman
                Islands
            
            
            Preferred
                StockLBI
                Group, Inc.
            
            
            Common
                Stock
            
            
            934,847
            (15)
            
            26.5
            %Lehman
                Brothers399
                Park Avenue
            
            
            Series
                A Convertible
            
            
            934,847
            (15)
            
            6.2
            %New
                York, NY 10022
            
            
            Preferred
                StockThe
                Quaker Investment Trust -
            
            
            Common
                Stock
            
            
            892,842
            (16)
            
            25.6
            %Quaker
                StrategicGrowth
                Fund
            
            
            Series
                A Convertible
            
            
            892,842
            (16)
            
            5.9
            %260
                Franklin St., 16th Floor
            
            
            Preferred
                Stock#1600Boston,
                MA 02110Topwater
                Exclusive Fund II LLC
            
            
            Common
                Stock
            
            
            508,685
            (17)
            
            16.4
            %80
                Washington StreetSuite
                2-2
            
            
            Series
                A Convertible
            
            
            508,685
            (17)
            
            3.4
            %South
                Norwalk, CT 06854
            
            
            Preferred
                StockPalisades
                Master Fund L.P.
            
            
            Common
                Stock
            
            
            587,396
            (18)
            
            21.9
            %C/O
                PEF Advisors LLC200
                Mansell Court East Suite 5
            
            
            Series
                A Convertible
            
            
            87,396
            
            
            *Roswell,
                GA 30076
            
            
            Preferred
                Stock




40





**Name
                and Address of Beneficial Owner**
            
            **Title
                of Class**
            
            **Number
                of Shares Beneficially Owned(1)**
            
            **Percent
                of Class**BFS
                US Special Opportunities Trust PLC
            
            
            Common
                Stock
            
            
            311,616
            (19)
            
            10.7
            %8080
                North Central Pkwy
            
            
            Series
                A Convertible
            
            
            311,616
            (19)
            
            2.1
            %#210
            
            
            Preferred
                StockDallas,
                TX 75206Renaissance
                US Growth Investment Trust PLC
            
            
            Common
                Stock
            
            
            311,616
            (20)
            
            10.7
            %8080
                North Central Express
            
            
            Series
                A Convertible
            
            
            311,616
            (20)
            
            2.1
            %Suite
                210, LB59
            
            
            Preferred
                StockDallas,
                TX 75206Stanley
                Shopkorn
            
            
            Common
                Stock
            
            
            311,616
            (21)
            
            10.7
            %Shopkorn
                Associates410
                Park Avenue
            
            
            Series
                A Convertible
            
            
            311,616
            (21)
            
            2.1
            %New
                York, NY 100922
            
            
            Preferred
                StockTom
                and Nancy Juda Living Trust
            
            
            Common
                Stock
            
            
            311,616
            (22)
            
            10.7
            %410
                S. Lucerne BoulevardLos
                Angeles, California 90020
            
            
            Series
                A Convertible
            
            
            311,616
            (22)
            
            2.1
            %Preferred
                StockApogee
                Fund, L.P.
            
            
            Common
                Stock
            
            
            233,713
            (23)
            
            8.3
            %201
                Main St, #1555Ft
                Worth, TX 76102
            
            
            Series
                A Convertible
            
            
            233,713
            (23)
            
            1.5
            %Preferred
                StockColl
                International
            
            
            Common
                Stock
            
            
            177,778
            
            
            6.9
            %1330
                Avenue of the Americas,40th
                Floor
            
            
            Series
                A Convertible
            
            
            0
            
            
            *New
                York, NY 10019
            
            
            Preferred
                StockContent
                Holding LLC
            
            
            Common
                Stock
            
            
            177,778
            
            
            6.9
            %1330
                Avenue of the Americas,40th
                Floor
            
            
            Series
                A Convertible
            
            
            0
            
            
            *New
                York, NY 10019
            
            
            Preferred
                StockGilbert
                Azafrani
            
            
            Common
                Stock
            
            
            160,063
            (24)
            
            6.2
            %1725
                Oceanfront Walk #318Santa
                Monica, CA 90401
            
            
            Series
                A Convertible
            
            
            0
            
            
            *Preferred
                StockSandor
                Capital Master Fund, L.P.
            
            
            Common
                Stock
            
            
            158,597
            (25)
            
            5.8
            %2828
                Routh Street, #500Dallas,
                TX 75201
            
            
            Series
                A Convertible
            
            
            158,597
            (25)
            
            1.1
            %Preferred
                Stock




41





**Name
                and Address of Beneficial Owner**
            
            **Title
                of Class**
            
            **Number
                of Shares Beneficially Owned(1)**
            
            **Percent
                of Class**Copper
                Beech Equity Partners LLC
            
            
            Common
                Stock
            
            
            156,862
            
            
            6.1
            %445
                Park Avenue, 10th FloorNew
                York, NY 10022
            
            
            Series
                A Convertible
            
            
            0
            
            
            *Preferred
                StockAnthony
                & Sandra Mansour Family
            
            
            Common
                Stock
            
            
            155,809
            (26)
            
            5.7
            %Revocable
                Trust 12/17/854477
                Golden Foothill Parkway
            
            
            Series
                A Convertible
            
            
            155,809
            (26)
            
            1.0
            %El
                Dorado Hills, CA 95762
            
            
            Preferred
                StockAlpha
                Capital
            
            
            Common
                Stock
            
            
            155,808
            (27)
            
            5.7
            %LH
                Financial160
                Central Park, S., #2701
            
            
            Series
                A Convertible
            
            
            155,808
            (27)
            
            1.0
            %New
                York, NY 10021
            
            
            Preferred
                StockPaul
                Wallace
            
            
            Common
                Stock
            
            
            133,334
            
            
            5.1
            %156
                West 56th Street, Suite 1604New
                York, NY 10019
            
            
            Series
                A Convertible
            
            
            0
            
            
            *Preferred
                Stock




*
      Indicates less than one percent.


42





(1)
            Beneficial
                ownership is determined in accordance with the rules and regulations
                of
                the SEC. Under these rules, a person is deemed to beneficially own
                a
                security if that person has or shares voting power or investment
                power
                with respect to that security, or has the right to acquire beneficial
                ownership of that security within 60 days, including through the
                exercise
                of any option, warrant or other right or the conversion of any other
                security. More than one person may be considered to beneficially
                own the
                same security. Percentage of class is based on 2,591,605 shares of
                common
                stock outstanding as of September 28, 2006. Percentage of Series
                A
                Convertible Preferred Stock is based on 15,080,932 shares of Series
                A
                Convertible Preferred Stock outstanding as of September 28, 2006,
                not
                including an additional four shares of Series A Convertible Preferred
                Stock that were paid for but that have not yet been issued. Securities
                that are exercisable or convertible into shares of our common stock
                within
                60 days of the date of this prospectus are deemed outstanding for
                computing the percentage of the person or entity holding such securities
                but are not deemed outstanding for computing the percentage of any
                other
                person or entity. Percentage of class does not include shares of
                Series A
                Convertible Preferred Stock payable as a dividend on the outstanding
                shares of Series A Convertible Preferred Stock or issuable in payment
                of
                penalties associated with this registration statement. See “Description of
                Securities-Preferred Stock.”(2)
            The
                address for Mr. Allen is 21344 Superior
                Street, Chatsworth, California 91311.(3)
            The
                address for Mr. Warshawsky is 21344 Superior Street, Chatsworth,
                California 91311.(4)
            Consists
                of 480,188 shares of our common stock held individually by Mr. Allen
                and
                31,158 shares of our Series A Convertible Preferred Stock, including
                an
                additional four shares of Series A Convertible Preferred Stock that
                were
                paid for but that were not issued as of the date of this prospectus
                held
                by The Allen Peyser Family Trust of which Mr. Allen and his spouse,
                Karen
                Allen, are trustees and who both exercise voting and investment power
                over
                the shares. Mr. Allen and his spouse disclaim beneficiary ownership
                of the
                shares held by The Allen Peyser Family Trust. The shares of common
                stock
                are subject to repurchase by us, at our option, for $0.01 per share,
                exercisable if Mr. Allen voluntarily terminates his employment with
                us
                prior to June 30, 2008 or if certain performance targets are not
                satisfied. Each share of Series A Convertible Preferred Stock may
                be
                converted into one share of common stock at the option of the
                holder.(5)
            Consists
                of 31,158 shares of Series A Convertible Preferred Stock including
                four
                shares of Series A Convertible Preferred Stock that were paid for
                but that
                were not issued as of the date of this prospectus held by The Allen
                Peyser
                Family Trust of which Mr. Allen and his spouse, Karen Allen, are
                trustees
                and who both exercise voting and investment power over the shares.
                Mr.
                Allen and his spouse disclaim beneficiaries ownership of the shares
                held
                by The Allen Peyser Family Trust.(6)
            Consists
                of 160,063 shares of our common stock and 31,163 shares of our Series
                A
                Convertible Preferred Stock. Mr. Warshawsky acquired the shares of
                common
                stock subject to repurchase by us, at our option, for $0.01 per share,
                exercisable if Mr. Warshawsky voluntary terminates his employment
                or we
                terminate his employment for “cause.” Our repurchase option lapsed with
                respect to 50% of these shares on June 30, 2005. Our repurchase option
                will lapse with respect to 25% of these shares on each of the first
                two
                anniversaries of June 30, 2005. Each share of Series A Convertible
                Preferred Stock may be converted into one share of common stock at
                the
                option of the holder.


(7)
            Consists
                of an aggregate of 1,600,931 shares of our Series A Convertible Preferred
                Stock held by Sanders Opportunity Fund (Institutional), L.P., and
                Sanders
                Opportunity Fund, L.P.(the
                “SOF Funds”)and
                a warrant to purchase 266,667 shares of our common stock held by
                Sanders
                Morris Harris, Inc.The general partner of the SOF Funds is SOF Management, LLC, a wholly
                owned subsidiary of Sanders Morris Harris Inc.Each
                share of Series A Convertible Preferred Stock may be converted into
                one
                share of common stock at the option of the holder.Mr.
                Reiland, a member of our board of directors, is a Senior Financial
                Analyst
                at Sanders Morris Harris, Inc. Mr. Reiland disclaims beneficial ownership
                of the shares owned by the SOF Funds and Sanders Morris Harris,
                Inc.(8)
            Consists
                  of an aggregate of 1,600,931 shares of our Series A Convertible
                  Preferred
                  Stock held bythe
                  SOF Funds.The
                  general partner of the SOF Funds is SOF Management, LLC, a wholly
                  owned
                  subsidiary of Sanders Morris Harris Inc.Each
                  share of Series A Convertible Preferred Stock may be converted
                  into one
                  share of common stock at the option of the holder.Mr.
                  Reiland, a member of our board of directors, is a Senior Financial
                  Analyst
                  at Sanders Morris Harris, Inc. Mr. Reiland disclaims beneficial
                  ownership
                  of the shares owned by the SOF Funds and Sanders Morris Harris,
                  Inc.(9)
            Consists
                  of an aggregate of 1,600,931 shares of our Series A Convertible
                  Preferred
                  Stock held by the SOF Funds, 119,830 shares of Series A Convertible
                  Preferred held by Mr. Sanders, 74,012 shares of Series A Convertible
                  Preferred Stock held by Katherine U. Sanders, over which Mr. Sanders
                  exercises investment discretion, 29,371 shares of Series A Convertible
                  Preferred Stock held by Christine M. Sanders, Mr. Sanders spouse,
                  and
                  23,497 shares of Series A Convertible Preferred Stock held by the
                  Tanya Jo
                  Drury Trust, of which Mr. Sanders is a Trustee.The general partner of the SOF Funds is SOF Partners, LLC, a wholly
                  owned
                  subsidiary of Sanders Morris Harris Inc.  Don A. Sanders is the Chief
                  Investment Officer of SOF Management, LLC, andexercises
                  voting and investment powers for these shares.Mr.Sanders
                  disclaims beneficial ownership of the shares owned bythe
                  SOF Funds, Katherine U. Sanders, Christine M. Sanders, and the
                  Tanya Jo
                  Drury Trust.
                  Each share of Series A Convertible Preferred Stock may be converted
                  into
                  one share of common stock at the option of the holder.




43




(10)
            Consists
                  of an aggregate of 1,227,932 shares of our Series A Convertible
                  Preferred
                  Stock held by Sanders Opportunity Fund (Institutional), L.P.The general partner of the Sanders Opportunity Fund (Institutional),
                  L.P.
                  is SOF Management, LLC, a wholly owned subsidiary of Sanders Morris
                  Harris
                  Inc.  Don A. Sanders is the Chief Investment Officer of the SOF
                  Management, LLC andexercises
                  voting and investment powers for these shares.Mr.Sanders
                  disclaims beneficial ownership of the shares owned bythe
                  Sanders Opportunity Fund (Institutional), L.P.(11)
            Consists
                of shares beneficially owned by Messrs. Allen and
                Warshawsky.(12)
            Consists
                of 1,869,694 shares of our Series A Convertible Preferred Stock.
                William
                Bales exercises voting and investment powers for these shares. Although
                Mr. Bales may be deemed to be the beneficial owner, Mr. Bales disclaims
                beneficial ownership of the shares owned by Bookbend & Co. Each share
                of Series A Convertible Preferred Stock may be converted into one
                share of
                common stock at the option of the holder.(13)
            Consists
                of 1,762,186 shares of our Series A Convertible Preferred Stock.
                Paul
                Beste exercises voting and investment powers for these shares. Although
                Mr. Beste may be deemed to be the beneficial owner, Mr. Beste disclaims
                beneficial ownership of the shares owned by Heartland Group, Inc.
                Each
                share of Series A Convertible Preferred Stock may be converted into
                one
                share of common stock at the option of the holder.(14)
            Consists
                of 1,174,790 shares of our Series A Convertible Preferred Stock.
                Noam
                Gottesman exercises voting and investment powers for these shares.
                Although Mr. Gottesman may be deemed to be the beneficial owner,
                Mr.
                Gottesman disclaims beneficial ownership of the shares owned by GLG
                Partners American Opp Fund. Each share of Series A Convertible Preferred
                Stock may be converted into one share of common stock at the option
                of the
                holder.(15)
            LBI
                Group, Inc. is a wholly-owned subsidiary of Lehman Brothers, Inc.,
                which
                is a wholly-owned subsidiary of Lehman Brothers Holdings, Inc., which
                is a
                public company.(16)
            Consists
                of 892,842 shares of our Series A Convertible Preferred Stock. Manu
                Daftary exercises voting and investment powers for these shares.
                Each
                share of Series A Convertible Preferred Stock may be converted into
                one
                share of common stock at the option of the holder.(17)
            Consists
                of 508,685 shares of our Series A Convertible Preferred Stock. Travis
                Taylor and Manu Daftary exercise voting and investment powers for
                these
                shares. Each share of Series A Convertible Preferred Stock may be
                converted into one share of common stock at the option of the
                holder.(18)
            Consists
                of 500,000 shares of our common stock and 87,396 shares of our Series
                A
                Convertible Preferred Stock. The shares of common stock are subject
                to
                repurchase by us, at our option, for $0.01 per share, Paul Mannion
                and
                Andy Reckles exercise voting and investment powers for these shares.
                Each
                share of Series A Convertible Preferred Stock may be converted into
                one
                share of common stock at the option of the holder.(19)
            Consists
                of 311,616 shares of our Series A Convertible Preferred Stock. Russell
                Cleveland exercises voting and investment powers for these shares.
                Each
                share of Series A Convertible Preferred Stock may be converted into
                one
                share of common stock at the option of the holder.(20)
            Consists
                of 311,616 shares of our Series A Convertible Preferred Stock. Russell
                Cleveland exercises voting and investment powers for these shares.
                Each
                share of Series A Convertible Preferred Stock may be converted into
                one
                share of common stock at the option of the holder.(21)
            Consists
                of 311,616 shares of our Series A Convertible Preferred Stock. Each
                share
                of Series A Convertible Preferred Stock may be converted into one
                share of
                common stock at the option of the holder.(22)
            Consists
                of 311,616 shares of our Series A Convertible Preferred Stock. Tom
                Juda
                and Nancy Juda exercise voting and investment powers for these shares.
                Each share of Series A Convertible Preferred Stock may be converted
                into
                one share of common stock at the option of the holder.(23)
            Consists
                of 233,713 shares of our Series A Convertible Preferred Stock. Emmett
                Murphy exercises voting and investment powers for these shares. Each
                share
                of Series A Convertible Preferred Stock may be converted into one
                share of
                common stock at the option of the holder.(24)
            Mr.
                Azafrani was our general counsel.




(25)
            Consists
                of 158,597 shares of our Series A Convertible Preferred Stock. John
                Lemak
                exercises voting and investment powers for these shares. Each share
                of
                Series A Convertible Preferred Stock may be converted into one share
                of
                common stock at the option of the holder.(26)
            Consists
                of 155,809 shares of our Series A Convertible Preferred Stock. Anthony
                Mansour exercises voting and investment powers for these shares.
                Each
                share of Series A Convertible Preferred Stock may be converted into
                one
                share of common stock at the option of the holder.(27)
            Consists
                of 155,808 shares of our Series A Convertible Preferred Stock. Konrad
                Ackerman and Rainer Posch exercise voting and investment powers for
                these
                shares. Each share of Series A Convertible Preferred Stock may be
                converted into one share of common stock at the option of the
                holder.




44





**ITEM
      13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**




**Origins
      of the Ronco Asset Purchase**




In
      October 2003, Richard F. Allen, Sr., our former President and Chief Executive
      Officer, commenced discussions with Mr. Ronald M. Popeil regarding the
      possibility of affecting the purchase of the business of Ronco Inventions,
      LLC
      and other entities affiliated with Mr. Popeil, which we refer to as the
      predecessor entities. Mr. Allen enlisted the assistance of UCC Capital
      Corporation, an advisory firm based in New York, and certain of its principals,
      who we refer to collectively as the promoters to provide advice on the specific
      structure of the proposed asset purchase.




Ronco
      Marketing Corporation was formed in October 2004 for the purpose of acquiring
      the assets of the predecessor entities. Pursuant to the terms of an advisory
      agreement in connection with the structuring, negotiation and financing of
      the
      purchase of these assets, we paid cash fees consisting of (i) a base fee of
      $1,800,000 and (ii) an incremental fee equal to five percent (5%) of any of
      our
      cash and cash equivalents in excess of $6 million at the closing to Copperfield
      Equity Partners LLC, Coll International LLC, and Content Holding LLC. As
      compensation for their services in connection with the merger, we also issued
      Cooper Beech Equity Partners, Coll International and Content Holding an
      aggregate of 533,334 shares of common stock at a price of $0.01 per share.
      We
      also reimbursed Copperfield Equity Partners, Coll International, and Content
      Holding for certain expenses totaling approximately $700,000 that Copperfield
      Equity Partners, Coll International, and Content Holding incurred in connection
      with the purchase of these assets. As of December 31, 2005, Copper Beech Equity
      Partners, Coll International and Content Holding each beneficially owned 8.5%
      of
      our outstanding common stock. See “Business-The Ronco Acquisition.”




Prior
      to
      the execution of the asset purchase agreement on December 10, 2004, Ronco
      Marketing Corporation secured its initial working capital through the sale
      of
      restricted shares and approximately $392,000 in promissory notes of Ronco
      Marketing Corporation to a group of private accredited investors consisting
      of
      Frank Milewski, Paul Wallace and the Terra Nova Group. Upon the closing, the
      promissory notes held by these individuals and entity were redeemed at face
      value. In addition, as of June 30, 2005, Frank Milewski, Paul Wallace and the
      Terra Nova Group collectively owned 266,668 shares of common stock or 12.7%
      of
      our outstanding common stock.




The
      shares of our common stock held by Copper Beech Equity Partners, Coll
      International, Content Holding, Frank Milewski, Paul Wallace and the Terra
      Nova
      Group are restricted shares, as defined by the Securities Act. We are in the
      process of registering the shares held by Copper Beech LLC , Content Holding
      LLC, Frank Milewski, Paul Wallace and the Terra Nova Group. The shares of common
      stock held by Copper Beech LLC and Content Holding LLC are held under the terms
      of a 12-month lock-up agreement, which permits re-hypothecation and private
      sales of such shares of common stock, but prohibits the sale of common stock
      through the public market. The placement agent, Sanders Morris Harris, may
      waive
      such lockup agreement in its discretion.




We
      have
      agreed to indemnify and hold harmless and generally release Content Holding,
      Copper Beech Equity Partners, Copperfield Equity Partners (an affiliate of
      Copper Beech Equity Partners), Coll International, their managers, directors
      and
      officers from and against any loss, claim, damage, liability or expense arising
      out of or in connection with the purchase of assets from the predecessor
      entities and Mr. Popeil, including, without limitation, attorneys' fees,
      disbursements and any other costs and expenses in connection therewith, except
      to the extent such loss, claim, damage, liability or expense related to or
      resulted from the fraud, gross negligence, bad faith or willful misconduct
      of
      such party.




Copper
      Beech Equity Partners, Coll International, Content Holding, Frank Milewski,
      Paul
      Wallace and the Terra Nova Group have discussed with the placement agent the
      possibility of engaging in private re-sales of some or all of the 800,002 shares
      of our common stock that they received as a group in connection with these
      various transactions. Such re-sales would be permitted under the terms of the
      lock-up agreements between us and Copper Beech Equity Partners and Content
      Holding and would have to be done in compliance with an exemption from the
      registration requirements of the federal securities laws and any applicable
      state securities laws. The proceeds from any such private re-sales would go
      to
      Copper Beech Equity Partners, Coll International, Content Holding, Frank
      Milewski, Paul Wallace or the Terra Nova Group and would not go to
      us.





**Preferred
      Stock Financing**




On
      June
      30, 2005, we issued and sold 13,262,600 shares of Series A Convertible Preferred
      Stock for a purchase price of $3.77 per share to certain investors, including
      to
      certain beneficial owners of more than 5% of our voting securities and Messrs.
      Richard F. Allen, Sr. and Evan J. Warshawsky, our former Chief Executive Officer
      and former Chief Financial Officer, respectively. We sold the Series A
      Convertible Preferred Stock for total proceeds of $50 million to finance the
      cash portion of the purchase price of the assets that we acquired from Mr.
      Ronald M. Popeil and the predecessor entities. The shares of Series A
      Convertible Preferred Stock are convertible into an aggregate of 13,262,600
      shares of our common stock, as such number may be adjusted in the future. See
      “Business-The Ronco Acquisition.” In June 2006, we entered into an agreement
      with holders of more than 80% of our outstanding Series A Convertible Preferred
      Stock, under which the holders of the Series A Convertible Preferred Stock
      agreed to waive all penalties related to the registration rights agreement
      and
      agreed to receive dividends of 0.153857 shares per share of Series A Convertible
      Preferred Stock for the three quarters ended October 1, 2005, January 1, 2006
      and April 1, 2006. We also agreed to pay a dividend of 0.020933 shares per
      share
      for the quarter ended June 30, 2006. On July 21, 2006, our Board of Directors
      declared these dividends payable in shares of Series A Convertible Preferred
      Stock pursuant to the terms of such agreement.


45




**Registration
      Rights Agreement**




On
      June
      30, 2005, we entered into a registration rights agreement with the purchasers
      of
      our Series A Convertible Preferred Stock (including certain beneficial owners
      of
      more than 5% of our voting securities, Messrs. Richard F. Allen, Sr. and Evan
      J.
      Warshawsky, our former Chief Executive Officer and former Chief Financial
      Officer, respectively), Sanders Morris Harris and certain holders of our common
      stock. Under the terms of the agreement, we were obligated to file a
      registration statement covering the resale of certain outstanding shares of
      common stock, the shares of common stock into which the outstanding shares
      of
      Series A Convertible Preferred Stock are convertible and into which the warrant
      issued to Sanders Morris Harris is exercisable. We were obligated to have the
      registration statement declared effective by October 28, 2005. Because we were
      unable to meet this deadline, we are liable for a cash payment to the
      stockholders who are party to the registration rights agreement, equal to one
      percent of the per share price of the Series A Convertible Preferred Stock,
      or
      $500,000, per month. The registration rights agreement also provides that
      parties to the agreement have the right, under certain circumstances and subject
      to certain conditions, to require us to register under the Securities Act shares
      of our common stock held by them, but not registered as discussed above. The
      registration agreement also provides that we will pay all expenses in connection
      with any registration. To date we have been unable to complete the registration
      statement. In June 2006 the Series A Preferred shares holders agreed to waive
      all penalties related to the registration statement and also agreed to settle
      all accrued dividends for 2,318,332 shares of Series A Preferred
      Stock.




**Placement
      Agent Agreement**




On
      May
      26, 2005, we entered into a placement agent agreement with Sanders Morris Harris
      in connection with the preferred stock financing described above. Pursuant
      to
      the terms of the placement agent agreement and in consideration of services
      provided by Sanders Morris Harris, we paid Sanders Morris Harris $3,500,000,
      issued Sanders Morris Harris a warrant to purchase 266,667 shares of our common
      stock and reimbursed it for certain out-of-pocket expenses. The warrant has
      an
      exercise price of $3.77 per share and is exercisable for five years from July
      1,
      2005. Messrs. A. Emerson Martin, II and Gregg A. Mockenhaupt are each managing
      directors of Sanders Morris Harris and were also members of our board of
      directors when the warrants were issued.




**Ronco
      Marketing Corporation Merger**




On
      June
      29, 2005, we closed a merger transaction pursuant to an agreement and plan
      of
      merger dated May 23, 2005, by and among us, certain of our stockholders, Ronco
      Acquisition Corporation (our wholly-owned subsidiary) and Ronco Marketing
      Corporation. Pursuant to the merger agreement, we acquired Ronco Marketing
      Corporation by merging Ronco Acquisition Corporation with and into Ronco
      Marketing Corporation. Ronco Marketing Corporation was the surviving corporation
      and became our wholly-owned subsidiary. Pursuant to the agreement: (i) each
      share of our common stock issued and outstanding immediately prior to June
      29,
      2005 remained issued and outstanding; (ii) each share of Ronco Acquisition
      Corporation's common stock issued and outstanding immediately prior to June
      29,
      2005 ceased to be outstanding and was converted into one share of common stock
      of Ronco Marketing Corporation; and (iii) each share of Ronco Marketing
      Corporation's common stock issued and outstanding immediately prior to June
      29,
      2005 ceased to be outstanding and was converted into and exchanged for 1.6452794
      shares of our common stock, for an aggregate of 800,002 shares of our common
      stock.




**Indemnification
      of Directors and Officers**




Our
      certificate of incorporation and bylaws provide for the indemnification of
      our
      officers and directors. We intend to enter into indemnification agreements
      with
      each of our directors and executive officers.


46





**ITEM
      15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES**





The
      following documents are filed as part of this report:





(1)
            Financial
                Statements and Schedules.




See Index
        to Consolidated Financial Statements under Item 8 on page 43 and pages F-1
        through F-24 of the originally filed Annual Report on Form
        10-K.




FINANCIAL
      STATEMENT SCHEDULES




RONCO
      CORPORATION


Schedule
      II - Valuation and Qualifying Accounts


Description
              
              Balance
                  at
                beginning
                  of period
              
              Additions
                  Charged
                to
                  costs and expenses
              
              Deductions
              
              Balance
                  atend
                  of  periodAllowance
                  for doubtful accounts and sales returnsSuccessor:Year
                  ended June 30, 2006 (a)
              
              $
              —
              (b)
              $
              4,868,944.00
              (c)
              $
              (4,505,427
              )(d)
              $
              363,517Predecessor:Nine
                  months ended June 29, 2005
              
              $
              1,480,000
              
              $
              —
              
              $
              (1,180,000
              )(d)
              $
              300,000Nine
                  months ended September 30, 2004
              
              $
              5,526,430
              
              $
              1,474,147
              
              $
              (5,520,577
              )(d)
              $
              1,480,000Year
                  ended December 31, 2003
              
              $
              1,835,421
              
              $
              3,691,009
              
              $
              —
              
              $
              5,526,430Year
                  ended December 31, 2002
              
              $
              1,075,385
              
              $
              760,036
              
              $
              —
              
              $
              1,835,421





Notes:




(a)
            Prior
                to June 30, 2005, the Predecessor did not track allowance for bad
                debt and
                sales returns separately. Since June 30, 2005, the Successor has
                tracked
                bad debt and sales returns separately.(b)
            In
                accordance with purchase accounting, accounts receivable have been
                recorded at fair value at June 30, 2005 and accordingly no allowance
                for
                doubtful accounts and sales returns have been provided.(c)
            Includes
                $502,517 of bad debt expenses and $4,366,427 of sales
                returns.(d)
            Accounts
                written-off against the allowance net of
                recoveries.




(2)
      See
      Exhibit Index.


47




**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this amended report to be signed on its
      behalf by the undersigned, thereunto duly authorized.




Date:
                November 3, 2006**RONCO
                CORPORATION**By:
            /s/ Paul
                KabashimaPaul
                Kabashima .
              Chief
                Executive Officer





48




**EXHIBIT
      INDEX**




Exhibit
                No.
            
            Description2.1
            
            Agreement
                and Plan of Merger dated May 20, 2005, among Ronco Corporation (fka
                Fi-Tek
                VII, Inc.), the "FTK Insiders", Ronco Acquisition Corporation and
                Ronco
                Marketing Corporation.(4)2.2
            
            Asset
                Purchase Agreement dated December 10, 2004, as amended, among Ronco
                Marketing Corporation and Ronco Inventions, LLC, Popeil Inventions,
                Inc.,
                RP Productions, Inc., RMP Family Trust and Ronald M.
                Popeil.(4)3.1(i)
            
            Certificate
                of Incorporation of Ronco Corporation (fka Fi-Tek VII, Inc.), as
                amended.(4)3.1(ii)
            
            Bylaws
                of Ronco Corporation (fka Fi-Tek VII, Inc.). (4)4.1
            
            Certificate
                of Designation of Powers, Preferences and Rights of the Series A
                Convertible Preferred Stock of Ronco Corporation. (4)4.1.1
            
            Amended
                and Restated Designation of Powers.(6)4.2
            
            Warrant
                between Ronco Corporation and Sanders Morris Harris Inc.
                (3)4.3
            
            Form
                of Registration Rights Agreement between Ronco Corporation, the parties
                set forth on the signature page and Exhibit A thereto and other
                stockholders of the Company. (1)10.1
            
            Promissory
                Note dated June 30, 2005 between Ronco Marketing Corporation and
                Ronco
                Inventions, LLC. (5)10.2
            
            Lock-Up
                Agreement for Copper Beech Equity Partners dated June 29, 2005.
                (4)10.3
            
            Lock-Up
                Agreement for Content Holding LLC dated June 28,
                2005.(4)10.4
            
            Assignment
                and Assumption Agreement dated June 30, 2005, between Ronco Marketing
                Corporation and Ronald M. Popeil. (4)10.5
            
            Promissory
                Note dated June 30, 2005 between Ronco Marketing Corporation and
                Popeil
                Inventions, Inc. (5)10.6
            
            Consulting
                and Advisory Services Agreement dated June 30, 2005 between Ronco
                Marketing Corporation and Ronald M. Popeil. (4)10.7
            
            Trademark
                Co-Existence Agreement dated June 30, 2005 between Ronco Marketing
                Corporation and Ronald M. Popeil. (4)10.8
            
            New
                Product Development Agreement dated June 30, 2005 by and among Ronald
                M.
                Popeil and Ronco Marketing Corporation. (5)10.9
            
            Placement
                Agent Agreement dated May 26, 2005, between Ronco Marketing Corporation
                and Sanders Morris Harris. (4)10.10
            
            Advisory
                Agreement dated May 20, 2005, between Ronco Marketing Corporation
                and
                Copper Beech LLC, Copperfield Equity Partners LLC, Coll International
                LLC,
                and Content Holding LLC. (4)10.11
            
            Revolving
                Line of Credit Note dated September 20, 2005 between Ronco Corporation
                and
                Wells Fargo Bank, National Association. (5)10.12
            
            Securities
                Agreement Securities Account dated September 20, 2005 between Ronco
                Corporation and Wells Fargo Bank National Association.
                (5)10.13
            
            Employment
                Agreement between Ronco Corporation and Richard F. Allen, Sr.
                (4)10.14
            
            Employment
                Agreement between Ronco Corporation and Evan J. Warshawsky.
                (4)









10.15
            
            Restricted
                Stock Purchase Agreement between Ronco Corporation and Richard F.
                Allen,
                Sr. dated June 28, 2005. (4)*10.16
            
            Restricted
                Stock Purchase Agreement between Ronco Corporation and Evan Warshawsky
                dated June 29, 2005. (4)*





10.17
            
            Purchase
                and Sale Agreement by and between Prestige Capital Corporation and
                Ronco
                Corporation dated as of October 25, 2005 (2)10.18
            
            Restricted
                Stock Purchase Agreement between Ronco Corporation and Gilbert Azafrani
                dated June 28, 2005. (4)*10.19
            
            Letter
                Loan Agreement dated June 9, 2006 between Ronco Corporation and Sanders
                Morris Harris, Inc. (5)10.20
            
            Subordinated
                Promissory Note dated June 9, 2006 issued to Sanders Morris Harris,
                Inc.
                in the principal amount of $1,500,000 (5)10.21
            
            Security
                Agreement dated June 9, 2006 by Ronco Corporation in favor of Sanders
                Morris Harris, Inc. (5)10.22
            
            Assignment
                of Life Insurance Policy dated June 9, 2006 by Ronco Corporation
                in favor
                of Sanders Morris Harris, Inc. (5)14.1
            
            Code
                of Business Conduct and Ethics (4)21.1
            
            Subsidiaries
                of Ronco Corporation (4)31.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act (5)31.2
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act (5)32.1
            
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act (5)32.2
            
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act (5)





(1)
            Incorporated
                by reference from Exhibits 10.10 to Form 8-K filed July 1,
                2005.





(2)
            Incorporated
                by reference from Exhibit 10.1 to Form 8-K filed October 31,
                2005.





(3)
            Incorporated
                by reference from exhibit 10.11 to the Form 10-K filed on November
                4,
                2005.





(4)
            Incorporated
                by reference from the corresponding exhibit to the Form 10-K filed
                on
                November 4, 2005.





(5)
            Previously
                Filed.(6)
            Filed
                herewith.




*
      Management Compensation Plan or Arrangements