UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-K/A
(Mark One)
 (x)Annual Report pursuant to Section 13 or 15(d) of the Securities Act of 1934
        Period from October 15, 2004 (Date of Inception) to June 30, 2005

                                       or

             ( ) Transition Report pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
           For the transition period of _____________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. Employer
    incorporation or organization)                   Identification No)

               21344 Superior Street, Chatsworth, California 91311
 -------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

    Registrant's telephone number, including area code (818) 775-4602
                                                       ----------------

    Securities registered pursuant to Section 12(b) of the Exchange Act: None

    Securities registered pursuant to Section 12(g) of the Exchange Act:
                   Common Stock, par value $0.00001 per share
                                (Title of Class)

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    No  X
                                      ---    ---

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/A or any amendment to
this Form 10-K/A. [X]

Indicate by check mark whether the registrant is an accelerated filer.
Yes    No  X
   ---    ---

Indicate by check mark whether the registrant is a shell company.
Yes    No  X
   ---    ---

State 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: $2,513,197 as of December 31, 2004.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date: 2,091,605 shares as of October
15, 2005.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None
<PAGE>

                               RONCO CORPORATION.
                                   FORM 10-K/A
           PERIOD FROM OCTOBER 15 (Date of Inception) TO JUNE 30, 2005

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                                TABLE OF CONTENTS
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                                                                                                        Page No.
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PART I
<S>                                                                                                          <C>
Item 1.  Business.............................................................................................2

Item 2.  Properties..........................................................................................21

Item 3.  Legal Proceedings...................................................................................21

Item 4.  Submission of Matters to a Vote of Security Holders.................................................21


PART II

Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
         Equity Securities...................................................................................22

Item 6.  Selected Financial Data.............................................................................23

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations...............24

Item 7A. Quantitative and Qualitative Disclosures About Market Risk..........................................49

Item 8.  Financial Statements and Supplementary Data.........................................................50

Item 9.  Changes In and Disagreements With Accountants on Accounting and Financial Disclosures...............50

Item 9A. Controls and Procedures.............................................................................50

Item 9B. Other Information...................................................................................51


PART III

Item 10. Directors and Executive Officers of the Registrant..................................................52

Item 11. Executive Compensation..............................................................................57

Item 12. Related Stockholder Matters.........................................................................61

Item 13. Certain Relationships and Related Transactions......................................................64

Item 14. Certain Principal Accountant Fees and Services......................................................67

Item 15. Exhibits, Financial Statement Schedules.............................................................67

</TABLE>

<PAGE>

              CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

         Many of the statements included in this Annual Report on Form 10-K/A
contain forward-looking statements and information relating to our company. We
generally identify forward-looking statements by the use of terminology such as
"may," "will," "could," "should," "potential," "continue," "expect," "intend,"
"plan," "estimate," "anticipate," "believe," or similar phrases or the negatives
of such terms. We base these statements on our beliefs as well as assumptions we
made using information currently available to us. Such statements are subject to
risks, uncertainties and assumptions, including those identified in Item 7 under
the heading "Risk Factors," as well as other matters not currently considered
material by us. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated or projected. Important factors
that may affect these projections or expectations include, but are not limited
to those discussed in "Risk Factors."

The results of our operations have varied significantly in the past and we
expect our operations to continue to vary in the future. A number of factors,
some of which are outside of our control, will cause our results to fluctuate,
including:

      o     seasonal patterns affecting consumer spending, primarily related to
            the Christmas holiday season as well as other gift-centric holidays;

      o     other seasonal patterns affecting the performance of television
            media, primarily weather;

      o     the relative availability of attractive media time within a given
            period for us to promote our products;

      o     changes in interest rates, which may impact certain customers'
            decisions to make purchases through credit cards;

      o     the impact of general economic conditions;

      o     the introduction of new product offerings; and

      o     the introduction of new infomercials for existing products.

         Given such risks and uncertainties, prospective investors are cautioned
not to place undue reliance on such forward-looking statements. Forward-looking
statements do not guarantee future performance and should not be considered as
statements of fact.

         These forward-looking statements speak only as of the date of this
report and, unless required by law, we undertake no obligation to publicly
update or revise any forward-looking statements to reflect new information or
future events or otherwise. You should, however, review the factors and risks we
describe in other reports and documents we will file with the Securities and
Exchange Commission (or the SEC) after the date of this report. See "Available
Information" under Item 1 of Part I of this report.

         All references to "Ronco," "we," "our," "our company," "us" or the
"Company" in this Annual Report on Form 10-K/A refer to Ronco Corporation and
its subsidiary. As explained elsewhere in this report, our company was
previously named Fi-Tek VII, Inc. and operated as a "blank check" company (a
company with no significant business operations or specific business purpose)
before June 2005. In late June 2005, our company (then named Fi-Tek VII, Inc.)
closed a merger transaction resulting in a change of control. In connection with
this transaction, we changed our name to Ronco Corporation. In late June 2005,
we also acquired certain business and assets owned and operated by Mr. Ronald M.
Popeil and certain entities affiliated with Mr. Popeil, as described in this
report. All references to "our business," "Ronco's business" and similar
references to the business and assets described in this report refer to the
business and assets that were acquired in June 2005, and not to our operations
under the name Fi-Tek VII, Inc. before June 2005.

Explanatory Note

         This Amendment No. 1 on Form 10-K/A (this "Amendment") amends the
registrant's annual report on Form 10-K for the period ended June 30, 2005
originally filed on November 4, 2005 (the "Original Filing"). Ronco Corporation
(the "Company") is filing the amendment to include the disclosure as to
borrowings made by the Company on September 30, 2005 from Wells Fargo Bank,
National Association under a Revolving Line of Credit Note.

         Except as described above, no other changes have been made to the
original filing. This Amendment continues to speak as of the date of the
original filing, and the Registrant has not updated the disclosures contained
therein to reflect any events which occurred at a date subsequent to the filing
of the original filing.



<PAGE>

                                     PART I

ITEM 1. BUSINESS

OVERVIEW

         We are a developer, marketer and distributor of branded consumer
products for the kitchen and home. 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 the Ronco business, started selling products
under the Ronco brand over forty years ago. Since then, the Ronco brand has
developed into what we believe is one of the premier consumer brands in the
United States of America. Over the last six years, Ronco branded products have
been sold to over five million customers.

         Our company, Ronco Corporation, was incorporated under the name "Fi-Tek
VII, Inc." under the laws of the State of Delaware on July 12, 1990. Before June
2005, this corporation was a "blank check" company, which is a company that has
no specific business plan or purpose or has indicated that its business plan is
to engage in a merger or acquisition with an unidentified company or companies.
During this time, the corporation engaged in no significant operations other
than the search for, and identification and evaluation of, possible acquisition
candidates.

         In June 2005, our company (at the time operating under the name Fi-Tek
VII, Inc.) completed a series of related transactions, pursuant to which we
acquired assets comprising the Ronco business. The acquired assets and business
were previously owned and operated by Ronco Inventions, LLC, Popeil Inventions,
Inc., and RP Productions, Inc. (or collectively, the "Seller Entities"). We also
acquired certain patents and other intellectual property rights from Mr. Ronald
M. Popeil. Mr. Popeil is the primary beneficiary of a family trust, RMP Family
Trust, which owns and controls the Seller Entities.

         The following is a chronological summary of these various transactions:

         Transactions with Promoters and Others

         In October 2003, Richard Allen, Sr. contacted Mr. Popeil to explore the
possibility of purchasing the business of the Seller Entities. Mr. Allen
enlisted the assistance of UCC Capital Corporation, an advisory firm based in
New York, and certain of its principals to provide advice on the specific
structure of the proposed acquisition.

         On October 15, 2004, these parties formed Ronco Marketing Corporation
("RMC") for the purpose of acquiring the assets comprising the business of the
Seller Entities and certain patents and intellectual property rights from Mr.
Popeil. Upon formation shares of RMC's common stock were initially issued to a
group of entities owned and controlled by the principals of UCC Capital
Corporation, including Copper Beech Equity Partners LLC, Coll International LLC
and Content Holding LLC. We refer to these entities, collectively with their
affiliates, as the Venture Group. RMC secured its initial working capital
through the sale of additional shares of its common stock and the issuance of
approximately $392,000 in promissory notes to three investors, Frank Milewski,
Paul Wallace and the Terra Nova Group, who we refer to as the Ronco Private
Group.

         In December 2004, RMC entered into an Asset Purchase Agreement with the
Seller Entities and Mr. Popeil to acquire assets comprising the business and
assets of the Seller Entities and certain patents and intellectual property
rights from Mr. Popeil. In connection with the planned acquisition of these
assets, RMC subsequently completed a merger with our company, which resulted in
a change of control of our company. These transactions and certain financing
transactions related to the planned asset acquisition were consummated
contemporaneously in late June 30, 2005.

         Merger with RMC

         On May 23, 2005, we entered into an Agreement and Plan of Merger with
RMC. At this time, RMC's primary asset was its Asset Purchase Agreement with the
Seller Entities and Mr. Popeil. The closing of the transactions contemplated in
the merger agreement occurred on June 27, 2005. At the closing of the merger
with RMC, our company (then operating under the name Fi-Tek VII, Inc.) acquired
all of the outstanding shares of RMC through the merger of a wholly-owned
subsidiary of our company with and into RMC. RMC continued as the surviving
corporation after this transaction and became a wholly-owned subsidiary of our
company. Upon the closing of the merger, our company changed its name to "Ronco
Corporation" and completed a reverse 1 for 89 stock split of our outstanding
shares of common stock. In exchange for their shares of RMC, the former holders
of RMC common stock, including the constituents of the Venture Group and the
Ronco Private Group, received 800,002 post-reverse-split shares of our common
stock in the aggregate. Our then existing stockholders (the stockholders of our
company when it was operating as Fi-Tek VII, Inc.) retained the remaining
477,639 shares of our outstanding common stock following the merger and reverse
stock split of the common stock.

         Purchase of Assets from the Seller Entities and Ronald M. Popeil.

         On December 10, 2004, RMC entered into the previously described Asset
Purchase Agreement with the Seller Entities and Mr. Popeil to acquire the assets
and business of the Seller Entities and certain patents and intellectual
property rights from Mr. Popeil. The sale of assets and other transactions
contemplated under the Asset Purchase Agreement closed on June 30, 2005, at
which time RMC was a wholly-owned subsidiary of Ronco Corporation. At the
closing, the aggregate purchase price of the acquired assets was $56.509
million, including $40.209 million in cash and $16.3 million in the form of
promissory notes. As described below, the principal amount of the promissory
notes may be adjusted pursuant to the terms of the asset purchase agreement.
Costs associated with this transaction were approximately $5.7 million,
including fees to professional advisors who assisted with the transaction.


                                       2
<PAGE>

OUR PRODUCTS

      We operate in a single operating segment which designs, sources, markets
and distributes our product categories. We currently offer two product
categories: kitchen products and household products. 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. Some of our most notable
products include the following:

o    Showtime Rotisserie & BBQ              o    Chop-O-Matic

o    Six Star+ Cutlery Set                  o    Bagel Slicer

o    Electric Food Dehydrator               o    Dial-O-Matic

o    Popeil's Pasta Maker                   o    Inside the Shell Egg Scrambler

o    Solid Flavor Injector

      Our most prominent and successful product line today is our family of
Showtime Rotisserie & BBQ electric rotisserie ovens and accessories. We offer
several models of Showtime 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 Showtime
Rotisserie products have had very low return rates, averaging 3.0% of units
sold. Since the 1998 launch of this product family, over $750 million in
Showtime-related products have been sold. The majority of the sales originated
from direct response television marketing. In January 2005, our Showtime
Rotisserie oven was rated by the Wall Street Journal to be a superior
infomercial product offering and a superior cooking appliance.

      Currently, our second most prominent product line is the family Six Star+
Cutlery Set of knives for use in residential kitchens. We offer a range of
accessories that complement our Six Star+ Cutlery Set, including flatware, knife
sharpeners, scissors and wooden blocks. Since this product family's introduction
in November 2003, over 500,000 Six Star+ Cutlery Sets have been sold with a
return rate of less than 3%.

      Since 2002, the Showtime family of products and the Six Star+ Cutlery
family of products have accounted for in excess of 92% of our revenues.



                                       3
<PAGE>

Household Products

      We also manufacture or source, market and distribute a variety of
innovative, affordable and highly functional products for use in the home. These
products have applications for cleaning, personal care, recreation and other
purposes. We presently sell nominal amounts of these items, primarily through
our customer service and online channels. These products are not marketed
directly through infomercials. We believe these products can be successfully
re-introduced to the market over time. We also believe there is an opportunity
to repackage certain of these products for retail distribution. Notable
household products marketed under the Ronco brand name include:


o    The Pocket Fisherman                    o    The Rhinestone and Stud Setter

o    Mr. Microphone                          o    Mr. Dentist

o    The Smokeless Ashtray                   o    CleanAire Air Filter

o    GLH                                     o    Miracle Broom

o    The Cordless Electric Portable          o    Ronco record compilations
     Sewing Machine

         We believe that our products are characterized by their fundamental
utility, innovation, quality and value proposition. 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 the Ronco business. We
have established multiple sourcing relationships with manufacturers that provide
us with low-cost, high-volume production capacity, consistent product quality
and quick response times. We have also established a highly-efficient order
fulfillment system which integrates our own systems and processes with those of
nationally-recognized third-party telemarketing and fulfillment vendors. We
believe that our order fulfillment process provides a high degree of customer
satisfaction and leads to product up-sells and repeat business.

RECENT TRANSACTIONS

         Purchase of Ronco Business

         On December 10, 2004, RMC entered into an Asset Purchase Agreement with
Ronco Inventions, LLC, Popeil Inventions, Inc., and RP Productions, Inc.,
(collectively, the "Seller Entities") to acquire substantially all of the assets
of the Seller Entities and certain patents and intellectual property rights from
Mr. Popeil for a total purchase price of $56.509 million, consisting of $40.209
million in cash and $16.3 million in the form of promissory notes. Costs
associated with the transaction were approximately $5.7 million, including fees
to investment bankers and other professional advisors who assisted with the
transaction. The sale of assets and other transactions contemplated under the
asset purchase agreement closed on June 30, 2005, at which time RMC became our
wholly-owned subsidiary.



                                       4
<PAGE>


         In connection with the Merger, we entered into multi-year employment
agreements with Richard F. Allen, Sr., our Chief Executive Officer, and Evan J.
Warshawsky, our Chief Financial Officer. Each of Messrs. Allen and Warshawsky
were affiliated with, or employed by, one or more of the Seller Entities and Mr.
Popeil before consummation of the Merger. We also entered into a series of
agreements with Mr. Popeil, including a multi-year consulting agreement and a
new product development agreement, pursuant to which Mr. Popeil agreed to
continue marketing our products. Under these arrangements with Mr. Popeil, we
also acquired rights to any new products developed by Mr. Popeil.

         Merger with RMC

         On May 23, 2005, RMC entered into an Agreement and Plan of Merger with
Fi-Tek VII, Inc. The closing of the transactions contemplated in the merger
agreement occurred on June 27, 2005. At the closing of the merger with RMC,
Fi-Tek VII, Inc. received all of the outstanding shares of RMC and RMC became
our wholly-owned subsidiary. Upon closing of the merger, our company changed its
name to "Ronco Corporation" and completed a reverse stock split of our
outstanding shares of common stock. The former holders of RMC common stock
received 800,002 post-reverse-split shares of our common stock. The previous
stockholders of Fi-Tek VII, Inc. retained the remaining 477,639 shares of Ronco
Corporation's outstanding common stock.

         Financing of the Asset Purchase

         In connection with the purchase of the Ronco business, we issued and
sold 13,262,600 shares of our Series A Convertible Preferred Stock for an
aggregate of $50 million to finance the cash portion of the purchase price for
the Ronco business. These shares are convertible into 13,262,600 shares of our
common stock. We offered and sold these shares of Series A Convertible Preferred
Stock in a private transaction that closed contemporaneously with the closing of
the sale of the asset purchase. Purchasers of our Series A Convertible Preferred
Stock share the same voting rights as holder of our Common Stock and are also
entitled to certain rights with respect to the registration of their shares
     Richard F. Allen, Sr.
are entitled to receive dividends equal to $0.1885 per share, each year payable
quarterly in arrears, at our option, in cash or in additional Series A
Convertible Preferred stock. Additionally, if any distribution occurs, holders
of the Series A Convertible Preferred stock are entitled to receive prior in
preference to other securities, an amount per share equal to the greater of (i)
the Original Series A issuer price, or (ii) the amount the holder of the Series
A Convertible Preferred Stock would have received if the holder converted its
Series A Preferred Stock to common stock. The Series A Convertible Preferred
Stock is currently convertible into an equal number of common stock. In
connection with the sale of the Preferred Stock, we agreed to file a
registration statement with the Securities and Exchange Commission (or SEC) to
register the sale of the shares of common stock underlying the Preferred Stock.
We filed our Registration Statement on July 29, 2005. The registration statement
has not yet been declared effective.



                                       5
<PAGE>


      Promissory Notes

      In connection with the purchase of the Ronco business, RMC issued
promissory notes in the aggregate principal amount of $16.3 million. The
aggregate principal amount issued was based on the estimated net value of the
acquired current and other assets, as defined in the asset purchase agreement,
and may be adjusted based on the actual net value of these assets. The aggregate
principal amount may be increased if the actual net value of these acquired
assets exceeds the estimated amount, and decreased if the actual net value is
less than the estimated amount, as provided in the promissory notes. Under the
purchase agreement, we completed an accounting after the closing to determine
the actual net value of the acquired current and other assets as of the closing
date of the sale of the assets. According to our accounting, the actual net
value of these acquired assets is lower than the estimated value specified in
the purchase agreement, and we expect the aggregate principal amount of the
notes will be reduced to approximately $13.142 million. If the Seller Entities
and Mr. Popeil disagree with our calculations, they could contest the reduction
of the principal amount of the 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 of 9.5% per annum. The
required payment amounts under these promissory notes in any period are based on
the per-unit dollar value of products shipped by us within the period, as
provided in the purchase agreement. Any outstanding principal and interest on
the notes will become due and payable in full on the earlier of a change of
control transaction or June 29, 2010. We may prepay all or any portion of the
then-outstanding balance of these promissory notes at any time without incurring
a premium or penalty. Upon occurrence of an event of default (as defined in the
promissory notes) that is not cured within the time period specified in the
promissory notes, the interest rate on the promissory notes will increase
immediately 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 under the purchase agreement and will receive a right of first refusal
to purchase the intellectual property rights acquired under the purchase
agreement before these rights may be sold or transferred to any other party.


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 (or
DRTV), 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.


                                       6
<PAGE>

         According to the Direct Marketing Association 2004 Statistical Fact
Book, the U.S. electronic direct response industry, (including direct orders,
lead generation and traffic generation for both business to business and
business to consumer for TV, radio and the Internet), reached $296 billion in
2004. U.S. revenues from the DRTV medium have grown at a rate of 11% since 2003
and reached $167 billion in 2004. A recent study by the Electronic Retailing
Association showed 63% of Americans, or more than 136 million people, routinely
watch some form of DRTV advertising. Today, DRTV is said to account for 25% of
all television commercials (www.direct-response-television.com). According to
CyberAtlas, more than one-quarter (28.6%) of Americans have reportedly purchased
a product advertised via an infomercial. In a study conducted by Response
Magazine, 33% of the respondents indicated that product demonstration is the
primary reason for DRTV purchases, followed by price (16%).

         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. DRTV has succeeded as a medium in part because the format
allows potential purchasers to see products actually in use. DRTV combines the
power of television with the precision of direct marketing techniques. Top DRTV
product categories have historically included fitness equipment (Bowflex, Buns
of Steel, 60-Second Abs); housewares (Magic Bullet, Miracle Blade, Perfect
Pancake, Food Saver, George Foreman Grill, Turbo Cooker); beauty products
(Proactive, Natural Advantage, Youthful Essence); healthcare and diet products
(Six Week Makeover, CyberSonic, Ionic Breather, CortiSlim), and coins and
collectibles (The Franklin Mint, Morgan Mint, American Historic Society).

         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.

         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 package and 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 a
positive, high-energy environment to convey the direct and lifestyle 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.


                                       7
<PAGE>


         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 DRTV 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 the U.S. DRTV products internationally. A
DRTV company with a successful product in the United States of America may work
with one or more international distributors who specialize in bringing U.S. DRTV
products to countries around the world. Some of the leading international
distributors for DRTV products include Thane, Interglobal, TV Shop, TelSel, and
Northern Response. Management believes that the international market is
generally considered to have the potential of fifty to one-hundred percent of
the U.S. market size.

OUR HISTORY

      Ronald M. Popeil, our principal consultant and founder of the Ronco
business, first became a salesman at state and county fairs in the 1950s,
beginning with products like Chop-O-Matic(TM) that were made by his father. Mr.
Popeil worked as an independent contractor at Woolworth's in Chicago, selling
his father's products in the store and retaining the majority of the total sales
he generated. He was one of the first to advertise products on television,
forming a partnership with another individual to promote and distribute the
first Ronco product--the Spray Gun(TM).

      Mr. Popeil's earliest DRTV success was with the Chop-O-Matic(TM) product.
This was the first short-form infomercial as the medium is defined today. Mr.
Popeil ran longer-than-usual advertisements (one to two minutes) and had viewers
call a phone number to place an order. Over time, the Ronco brand grew and
expanded into other product lines. In four years, Mr. Popeil grew his revenues
from $200,000 to $8,800,000. In 1969, Mr. Popeil formed Castle Advertising, an
in-house advertising agency, to buy advertising time for his products. By 1984,
Mr. Popeil had developed and sold a variety of products including record
compilations, choppers, slicers, dicers, hosiery, microphones, button machines,
pottery and candle kits, and salad spinners.

      From 1987 to 1990, Mr. Popeil was in semi-retirement. In 1990, Mr. Popeil
moved to California, where he went back into the DRTV marketing business. Mr.
Popeil produced a 28-minute infomercial for the Ronco Electric Food Dehydrator.
This new form of selling allowed Mr. Popeil to interact with the audience and
give a full demonstration of the product's capabilities. The product generated
significant sales results and further convinced Mr. Popeil that the long-form
infomercial was the best sales presentation format invented for television. The
second long-form infomercial produced by Mr. Popeil was for the Great Looking
Hair product, and Mr. Popeil quickly became a media star, doing countless
television shows and newspaper interviews. The Great Looking Hair product sold
approximately 900,000 cans in one year. Several other products followed. Mr.
Popeil's most successful DRTV product is the Showtime Rotisserie & BBQ oven.
Since this product was launced in 1998, over $750 million worth of
Showtime-related products have been sold, the majority of which have originated
through DRTV marketing. In November 2003, Mr. Popeil produced a new infomercial
for the Six Star+ Cutlery Set of knives.


                                       8
<PAGE>


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 our long-term 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 70% 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 United States of America, we primarily focus on the top
90 markets for infomercials, airing on as many as 4 - 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
up-sell 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 through our internal media group,
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 is also entitled to agency commissions from media
outlets, thereby reducing our net media costs. Media expenditures are highly
volatile and depend on many factors, including type of TV 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.


                                       9
<PAGE>


      We also intend to supplement our direct response television distribution
channel by continuing to develop and expand indirect distribution channels such
as our wholesale distributors and our direct sales to retailers, as well as
other direct marketing channels such as online sales through our website,
www.ronco.com, our television retailing through the QVC station, our customer
service department and our third party outbound telemarketers.


Wholesale and Retail

      In addition to television marketing, we sell our products through the
television retailer QVC and selected traditional retailers. These wholesale
arrangements are made through agents and distributors. To manage our
relationship with QVC, we utilize a representation company, CSA, although the
product purchase orders are issued directly from QVC. Since 2002, between 19%
and 26% of our gross product sales have been through wholesale distribution
channels.

      Our current retail distribution is accomplished primarily through retail
distribution companies that issue purchase orders directly to us for product for
which orders have already been taken. The terms of sale require that irrevocable
letters of credit be in place before we make delivery of any product, or
alternatively, that 100% of the product cost is paid for, by wire transfer, in
advance of the product reaching our West Coast port of entry. In addition, we do
not accept returns for cash or credit from the distributors unless the product
is defective. Returns are accepted only in exchange for new product, and
distributors pay a $10 per unit turnaround fee. We are in the process of
expanding our business relationship with QVC to potentially include certain of
its foreign affiliates. Finally, there are a small number of direct wholesale
accounts that have purchased regularly from us, including Big Lots, Koolatron,
AOL, and Amazon.

      Our wholesale distribution is currently accomplished through distribution
agreements with M. Block & Sons and Englewood Marketing Group. M. Block & Sons
has a telemarketing fulfillment system that specializes in small accounts and is
expected to significantly improve our penetration into the single store and
small chain channels. Englewood Marketing Group has expertise in internet
fulfillment services that is expected to increase our penetration of the online
sector as well.

      We plan to expand our retail distribution 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. We are also
re-focusing our existing wholesale distribution relationships to target selected
smaller or regional retail chains while we attempt to develop direct
relationships with the larger retailers in an effort to capture a greater margin
percentage.


                                       10
<PAGE>


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 (leveraging annual media
expenditures of more than $40 million) 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, product recommendations, automated customer service, product
demonstrations, customer affinity programs and branding. The website redesign
should increase our ability to sell and up-sell online, and will position our
site for search engine optimization. Historically, online sales represented
approximately 7% 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+ Cutlery Set, a launch which overlapped with the marketing of our leading
Showtime 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:

      o     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 the Showtime 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, Mr. Popeil and the Company entered into a new
            product development agreement which ensures that Ronco will have an
            exclusive relationship with Mr. Popeil with respect to new product
            inventions for the next three years.

      o     ADD COMPLEMENTARY PRODUCTS TO OUR EXISTING PRIMARY PRODUCT LINES. We
            plan to introduce product line extensions to our major project
            families in the future, including the Showtime 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" in order to
            increase market share and retail shelf space in their categories; we
            believe this product differentiation is an additional opportunity to
            increase revenues.



                                       11
<PAGE>


      o     INTRODUCE NEW RONCO-BRANDED PRODUCT LINES THAT INNOVATE THROUGH
            PACKAGING AND PRICING. We believe the success experienced thus far
            with the Six Star+ 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.

      o     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
            joint venture with companies who have potentially successful product
            lines, but could benefit from our brand, marketing expertise and
            established distribution channels.

Long-Term Marketing & Distribution Strategy

      Our objective is to increase our revenue, profitability and cash flow
while growing our position as a leading 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:

      o     EXPAND RETAIL DISTRIBUTION. We believe there is a substantially
            untapped opportunity to market our products through traditional
            retailers. A leading publication serving the direct response
            television industry, Response Magazine, stated in its March 2004
            issue that products that are initially marketed through direct
            response television marketing may generate through retail
            distribution at least five (and in some cases as much as twenty)
            times the total unit sales realized from infomercial campaigns. To
            date, over five million Showtime Rotisserie & BBQ units have been
            sold. Approximately three million of those units were sold through
            DRTV channels and two million through retailers. This represents a
            ratio of less than one retail unit sale for each one DRTV 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 capture a
            greater margin percentage. As part of this strategy, we intend to
            selectively re-introduce certain of our existing products into
            retail distribution.



                                       12
<PAGE>


      o     MARKET DIRECTLY TO THE U.S. HISPANIC POPULATION. We believe the
            Hispanic population within the United States of America represents a
            growing and very attractive market for our products. According to a
            December 2004 Conference Board study, Hispanic-American households
            will sharply increase both their numbers and economic clout 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 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. From a media outlet
            perspective, we are in discussions with several leading, diversified
            Hispanic broadcasting companies to create national campaigns.

      o     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 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 include: (i)
            improving our technology infrastructure to accommodate higher
            traffic counts and simultaneous transaction processes; (ii)
            increasing online features to enable product up-sells, product
            recommendations, automated customer service, product demonstrations,
            customer affinity programs and overall branding; (iii) providing
            higher quality online streaming of past and future infomercials; and
            (iv) adding content that will draw potential customers to our sites
            for repeat visits and for longer durations, including online
            newsletters, sweepstakes and promotions, an expanding our recipe
            section featuring celebrity chef recipes and automated affiliate
            links.

      o     EXPAND INTERNATIONAL DISTRIBUTION. A nominal amount of product is
            currently sold in a few international markets--Korea (through SII),
            Australia (through Guthy-Renker), Great Britain and Germany (through
            QVC). In addition, the Showtime product is marketed in Canada either
            through television/telemarketing (via Northern U.S. television
            stations) or through retail outlets by Koolatron, a Canadian
            distribution company. 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 also present additional market opportunity. We are currently
            devising a plan to target these markets for export; this program
            will include both multi-national import/export companies, as well as
            individual in-country importers.



                                       13
<PAGE>


      o     LEVERAGE OUR CUSTOMER DATABASE FOR RELATIONAL MARKETING PROGRAMS. We
            maintain a database of over four million customers while adding many
            thousands of 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, email, email newsletter campaigns, and a Ronco Club
            concept.

MANUFACTURING

      We currently outsource manufacturing of our products, primarily to China.
We have a relationship with ThreeSixty Sourcing, a global sourcing company.
ThreeSixty has been sourcing Six Star+ Cutlery and related products since
November 2003. Delivery of Showtime Rotisseries from China began in September
2004. Our manufacturing was sourced in Korea prior to China. While production
had continued in Korea for much of 2004 during the transition to China, it is
anticipated that most of our Showtime Rotisseries will be produced in China in
2005. ThreeSixty 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 enjoy the protection of sixteen patents covering the design and
manufacture of the Showtime Rotisserie & BBQ, and own the tooling and dies
currently used by our manufacturers and their sub-contractors for production.
Manufacturing of the Showtime product line is streamlined. Since the primary
differentiation among all three Showtime 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 product arriving at port in Los Angeles. This quick turnaround enables us
to maintain relatively low levels of inventories and allows for very efficient
production.


                                       14
<PAGE>


FULFILLMENT AND CUSTOMER SERVICE

      We utilize telemarketing service bureaus to handle 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 use
West Telemarketing Services and LiveOps to handle the majority of the inbound
traffic. These entities are paid on a per-minute basis for their services.

      Potential customers call into a toll-free number, received by our
telemarketing partners. Our telemarketing vendors will route a customer's order
through OrderMotion (a commercial software product provided by a third-party
software vendor called CommercialWare) for approval. We use third-party vendors
to process customer payments - Paymentech for processing credit card orders and
Select Payment for processing e-checks. A notification of an approved or
declined order is re-submitted by these vendors to OrderMotion.

      If an order was declined, our customer service contacts the potential
customer to obtain an alternate method of payment. It is our experience that
approximately 25% of such orders are recovered. We operate an in-house 50-seat
call center as well as a 20-seat data entry center, which generate sales
revenues from inbound customer service inquiries, as well as outbound campaigns
to existing customers. This telemarketing center not only handles 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 OrderMotion. We utilize
Motivational Fulfillment to handle most of our fulfillment needs. Motivational,
which operates a 300,000 sq. ft. facility in Chino, California, receives and
stores product, tracks inventory, fulfills customer orders, and provides other
support functions. Motivational currently works on a batch file processing basis
to receive orders and transmit order ship status, and we are currently working
on implementation of new systems to enable real-time processing to provide
online order status, delivery tracking and management reporting. As we use
Federal Express's FedEx Ground service for our primary shipping needs, Federal
Express has also become a new fulfillment partner, handling East Coast
fulfillment requirements for Showtime products. Motivational will retain West
Coast fulfillment of Showtime products plus all cutlery products. Finally, we
utilize a separate fulfillment company for our Canadian orders. The majority of
our physical inventory is warehoused by our fulfillment partners.


                                       15
<PAGE>


ARRANGEMENTS WITH RONALD M. POPEIL

         On June 30, 2005, we acquired substantially all the assets of the
Seller Entities, including the intellectual property, certain manufacturing
assets and know-how related to our products. We also acquired certain patents
and other intellectual property rights from Mr. Ronald M. Popeil as part of the
same transaction. Mr. Popeil is the primary beneficiary of the trust that owns
and controls the Seller Entities. Mr. Popeil historically served in various
executive capacities for the Seller Entities and assumed management
responsibilities. The Seller Entities also relied on Mr. Popeil for his product
innovations. Although Mr. Popeil will not assume day-to-day operational duties
or executive responsibilities for our company, he will continue to be involved
in the business as a consultant to our company. We believe it is in the best
interests of our company and our stockholders to maintain a close working and
financial relationship with Mr. Popeil. Accordingly, we have entered into
certain agreements (which are summarized immediately below) with Mr. Popeil,
which we believe should provide significant incentives for Mr. Popeil to
continue his involvement with our company.

         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 will, 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):

            o     Speak as our chief spokesperson for non-financial matters in
                  all forms of media (not otherwise covered below);

            o     Promote our image by making up to six appearances per year on
                  nationally broadcast television programs (such as Oprah), if
                  invited or booked by us;

            o     Make personal appearances for leading national retailers;

            o     Participate in the mandatory production of up to three
                  long-form infomercials per year for the DRTV marketing of our
                  products; and

            o     Attend and participate in the Gourmet Show and Housewares Show
                  (at our discretion).

                                       16
<PAGE>


         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:

         o        Fees for chief public spokesperson, which will be negotiated
                  on a fair and reasonable basis as and when appearance requests
                  arise;

         o        $10,000 per day for appearances on nationally broadcast
                  television programs;

         o        $10,000 per day for appearances for leading national
                  retailers;

         o        $50,000 for each infomercial produced; and

         o        $50,000 per day for the Gourmet Show and Housewares Show.


         Mr. Popeil will be eligible to receive incentive stock options under
our 2005 Stock Incentive Plan that we intend to implement 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 "Marks"). The term of this
agreement will continue so long as the Marks are protected by applicable U.S.
law. Mr. Popeil retains as his sole and exclusive property, the ownership of the
worldwide royalty-free perpetual rights with respect to the Marks for certain
uses, including autobiographical works, various media projects, and a specific
licensing arrangement. We acknowledge that we will be acquiring the Marks
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 Seller Notes occur, we will grant Mr. Popeil a
non-exclusive license (at no cost to Mr. Popeil) to use the Marks 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,
to terminate the applicable patent or other intellectual property licenses held
by the Company.


                                       17
<PAGE>


         Mr. Popeil retains the right to approve all uses of his name and
likeness for any purpose including but not limited to quality of products and
products, quality of packaging and packaging, quality of advertising and
advertising, and quality of displays 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. The agreement contains other provisions that are customary for
transactions of this type.


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 will be offered a fifteen
(15) 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 Seller Notes
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 Seller 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 (15)
days of such breach.



                                       18
<PAGE>

SOURCES OF SUPPLY

      We maintain supply contracts with third party suppliers, located primarily
in the Far East, 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.

      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 TV 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 United States of
America, 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 these
businesses are not comparable to ours mainly 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. Currently, we believe there are
no competitive brands that market appliances equivalent to our proprietary
models (such as rotisserie, pasta maker 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+ 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 DRTV to create self-liquidating brand value.


                                       19
<PAGE>


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. In addition, we increased the limits of our directors and officers'
insurance commensurate with our status as a public company.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

      We have acquired a significant amount of proprietary technology covering
the design and manufacturer of our products. We rely on a combination of trade
secrets 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. Our proprietary technology
incorporates product design and manufacture of our products. 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 United States of America and various
countries around the world covering a variety of 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.

REGULATION

      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. In general, we have not experienced
difficulty complying with such regulations and compliance with them has not had
an adverse effect on our business. Our small electric appliance products sold in
the United States are listed by Underwriters Laboratory, Inc. (UL) and similar
products sold in other countries are listed with local organizations similar to
UL, if required.

EMPLOYEES

         We currently have approximately 174 employees, including executive,
management, warehouse, customer service, media buyers and maintenance personnel.
None of our employees are part of any labor. We believe that our relations with
our employees are good.



                                       20
<PAGE>

ITEM 2. PROPERTIES

      Our principal executive offices are located at 21344 Superior Street,
Chatsworth, California, 91311, where we lease office space and a storage
facility. Information concerning the location, use, approximate square footage
of our principal facilities and rent, all of which are currently leased on a
month-to-month basis, is set forth below:



<TABLE>
<CAPTION>
LOCATION                PRINCIPAL ACTIVITIES                                    AREA (SQ. FEET)            RENT
----------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                       <C>
Chatsworth, CA..........Principal   administrative   offices;   customer        17,532                    $12,556
                        service call center; and media buying offices;


Chatsworth, CA..........Products storage facility and administrative offices    29,000                    $18,758
</TABLE>


      We anticipate that we will be able to extend these leases on terms
satisfactory to us or, if necessary, locate substitute facilities on acceptable
terms. We believe that our existing facilities are well maintained and in good
operating condition.

      We are considering other office space alternatives, which could
potentially offer greater warehouse capacity. We are in the process of
negotiating a lease for new office and warehouse space and expect to relocate
our operations by March 1, 2006. The new space is located in close proximity to
our existing offices.

ITEM 3. LEGAL PROCEEDINGS

      We are not a party to any legal proceedings. In the past, the Seller
Entities have been defendants in several nominal legal actions related to the
products sold by those entities. Generally such actions have resulted in the
Seller Entities making a payment to the plaintiff in settlement of the claim.
None of the prior actions brought against the Seller Entities had a material
effect on their businesses, and we do not anticipate that any future actions
brought based on our planned products would have a material adverse effect on
our business or results of operation.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None.


                                       21
<PAGE>


                                     PART II


Item 5.  Market for  Registrant's Common Equity, Related Stockholder Matters
         and Issuer  Purchases of Equity Securities

      Our common stock is traded on the OTC Bulletin Board(R) under the symbol
"RNCP.OB." Before July 1, 2005, our common stock traded under the symbol
"FTYK.OB." The following table sets forth, for the calendar quarters indicated,
the high and low bid prices per share of common stock, as reported on the
Over-the-Counter Bulletin Board. The information has been adjusted to reflect a
1 for 89 reverse stock split of our common stock which took effect on June 27,
2005 in connection with our acquisition of the Ronco business. However, the
information set forth in the table below is based on our trading price before we
acquired the Ronco business. Accordingly, the stock price information has no
relationship to Ronco's historical financial results and we do not believe this
information provides any meaningful information concerning the performance of
our stock price after June 30, 2005. On October 31, 2005, the bid price of our
common stock was $6.25. These quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions.


Quarter Ended                                               Low      High
--------------------------------------------------------- -------  --------
March 31, 2003........................................... $ 0.89   $  1.78

June 30, 2003............................................ $ 0.89   $  1.78

September 30, 2003....................................... $ 0.89   $  2.67

December 31, 2003........................................ $ 1.78   $  8.90

March 31, 2004........................................... $ 2.67   $  4.45

June 30, 2004............................................ $ 2.67   $  5.34

September 30, 2004....................................... $ 4.45   $  4.45

December 31, 2004........................................ $ 2.67   $  8.90

March 31, 2005........................................... $ 5.78   $ 13.35

June 30, 2005............................................ $ 4.54   $ 26.70

      As of October 15, 2005, there were approximately 43 holders of record of
our common stock. We believe the number of beneficial owners of our common stock
is in excess of 43.

                                       22
<PAGE>

Dividend Policy

      We do not currently intend to pay any cash dividends on our common stock.
Any decision to declare and pay dividends in the future will be made at the
discretion of our Board of Directors and will depend on, among other things, our
results of operations, capital requirements, financial condition, contractual
restrictions and other factors that our Board of Directors may deem relevant. In
addition, the terms of our Series A Convertible Preferred Stock restrict our
ability to pay dividends on our common stock. The holders of the Series A
Convertible Preferred Stock are entitled to receive cumulative preferential
dividends at the rate of $0.1885 per share per annum (equal to 5% of the
purchase price of the preferred stock) payable quarterly in arrears in cash or
at our option on January 1, April 1, July 1, and October 1. We may not pay any
dividends on our common stock before we pay all dividends on our Series A
Convertible Preferred Stock.

Recent Sales of Unregistered Securities

      In connection with the termination of a consulting agreement with a
Company controlled by a former director of the company on October 24, 2005,
2005, we issued a non-qualified stock option to the former director, Mr. Brown,
which entitles him to purchase an aggregate of 10,000 shares of our common stock
at $5.75 per share, which was the fair market value of our common stock on the
date of grant. The option has a term of ten years.

      In connection with the purchase of the Ronco business on June 30, 2005, we
issued 13,650 shares of common stock to a consulting company for services
rendered. The fair market value of the stock was $51,460, based on the $3.77 per
share price of the Series A Convertible Preferred stock sold to investors on the
same day.

      Also in connection with the purchase of the Ronco business on June 30,
2005, we sold 160,063 share of common stock to a consultant for $1,601. The fair
market value of the stock was $603,438, based on the $3.77 per share price of
the Series A Convertible Preferred stock sold to investors on the same day.

      Subsequent to June 30, 2005, the consultant became the General counsel of
the company.

Item 6.  Selected Financial Data

      Our merger with Fi-Tek VII, Inc. on June 27, 2005 was treated for
accounting purposes as a reverse acquisition of a public shell, and the
transaction has been accounted for as a recapitalization, rather than a business
combination. Therefore, the historical financial statements of the Seller
Entities are reflected as our historical financial statement. Pro forma
information has not been presented since the transaction was not a business
combination.

      The following table presents selected historical combined financial data
of the Seller Entities, or "Predecessor," for the nine months ended June 29,
2005 and September 30, 2004, and for the years ended December 31, 2003 and 2002,
which has been derived from our audited combined financial statements, and for
the year ended December 31, 2001, which has been derived from our unaudited
combined financial statements. Our combined financial statements for the nine
months ended June 29, 2005 and September 30, 2004 were audited by Mahoney Cohen
& Co., CPA, P.C.. Our combined financial statements for the year ended December
31, 2003 were audited by VELAH Group LLP, and our combined financial statements
for the year ended December 31, 2002 were audited by Weinberg & Company. You
should read this information together with "Management's Discussion and Analysis
of Financial Condition and Results of Operations," and our consolidated and
combined financial statements and related notes, which are included elsewhere in
this Annual Report on Form 10-K/A. Historical results are not necessarily
indicative of the results to be expected in the future.



                                       23
<PAGE>

<TABLE>
<CAPTION>
000's OMITTED
                          Successor
                        -------------                                         Predecessor
                         Period from     -------------------------------------------------------------------------------------
                          10/15/04                                                      12 months     12 months     12 months
                          (Date of        9 months       9 months        12 months        Ended         ended         ended
                        Inception) to      ended           ended           ended       12/31/2002     12/31/2001    12/31/2000
                        June 30, 2005    6/29/2005       9/30/2004      12/31/2003      Restated      Unaudited     Unaudited
                        -------------    ---------       ---------      ----------     ----------     ----------    ----------
<S>                                     <C>            <C>             <C>            <C>            <C>           <C>
Net Sales ..............     $     --     $ 68,985         $ 63,245        $93,500        $98,362      $105,420      $186,305
Cost of Goods Sold .....                    16,844           16,842         29,274         36,153        33,517        61,437
                             --------     --------         --------        -------        -------      --------      --------
     Gross Profit.......           --       52,141           46,403         64,226         62,209        71,903       124,868

Gross margin                       --           76%              73%            69%            63%           68%           67%

SG&A                              766       50,446           53,988         67,653         71,937        77,825       129,183
                             --------     --------         --------        -------        -------      --------      --------
     Operating Income
       (Loss)...........         (766)       1,695           (7,585)        (3,427)        (9,728)       (5,922)       (4,315)

Operating exp (as % of
  Rev) .................          N/A           73%              85%            72%            73%           74%           69%
Interest and Other
  Expense (Income) .....          (11)       2,833              120           (386)          (254)         (443)         (547)
                             --------     --------         --------        -------        -------      --------      --------
     Pretax Loss........         (777)      (1,138)          (7,705)        (3,041)        (9,474)       (5,479)       (3,768)

Benefit For Income Taxes         (310)           0                0              0              0             0             0
                             --------     --------         --------        -------        -------      --------      --------
     Net Loss...........     $   (467)    $ (1,138)        $ (7,705)       $(3,041)       $(9,474)     $ (5,479)     $ (3,768)
                             ========     ========         ========        =======        =======      ========      ========
Net loss per share......     $   (.65)         N/A              N/A            N/A            N/A           N/A           N/A
</TABLE>

ODD's OMITTED                             Successor               Predecessor
                                        -------------           --------------
                                        June 30, 2005           Sept. 30, 2004
                                        -------------           --------------
Total assets ........................   $      63,762            $      24,404

Long-term liabilities ...............          10,282                   40,392

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation

      The following discussion and analysis of the results of operations and
financial condition of the Ronco Corporation as of June 30, 2005 and for the
period from October 15, 2004 (Date of Inception) to June 30, 2005 and the Seller
Entities (or the predecessor entities) for the nine months ended June 29, 2005
and September 30, 2004, and twelve months ended December 31, 2003 and 2002,
should be read in conjunction with Ronco's and the Seller Entities' financial
statements and the notes to those financial statements, which are contained
elsewhere in this report. Our discussion includes forward-looking statements
based upon current expectations that involve risks and uncertainties, such as
our plans, objectives, expectations and intentions. Actual results and the
timing of events could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors, including those
set forth under the headings Risk Factors, Cautionary Notice Regarding
Forward-Looking Statements and Business sections in this report.

Overview

      Ronco is a leading 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 DRTV or
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. Ronco
develops high quality, unique and affordable products, including small kitchen
appliances and accessories, food items, cook books, personal care products and
household items.


                                       24
<PAGE>

      Before June 27, 2005, Ronco Corporation was named Fi-Tek VII, Inc. Fi-Tek
VII, Inc. operated as a "blank check" company, which is a company that has no
specific business plan or purpose or has indicated that its business plan is to
engage in a merger or acquisition with an unidentified company or companies.
During this time, Fi-Tek VII, Inc. had no significant operations other than the
search for, and identification and evaluation of, possible acquisition
candidates. On June 27, 2005, Fi-Tek VII, Inc. consummated a reverse merger
transaction in which Ronco Marketing Corporation, or RMC, became a wholly-owned
subsidiary of Fi-Tek VII, Inc. In connection with this transaction, Fi-Tek VII,
Inc. changed its name to Ronco Corporation and completed a reverse stock split.
On June 30, 2005, Ronco Corporation, through RMC (as its wholly-owned
subsidiary), acquired assets comprising the business of Ronco Inventions, LLC,
Popeil Inventions, Inc. and RP Productions, Inc. (or the Seller Entities). Ronco
Corporation also acquired certain patents and intellectual property rights
directly from Mr. Ronald M. Popeil. Mr. Popeil is the primary beneficiary of RMP
Family Trust, a trust that owns and controls the Seller Entities. Ronco
Corporation also issued 13,262,600 shares of its Series A Convertible Preferred
Stock to finance the cash portion of the purchase price.

      Our merger with Fi-Tek VII, Inc. was accounted for as a recapitalization
rather than as a business combination. As a result, the historical financial
statements of the Seller Entities are reflected as our historical financial
statements. We acquired the Ronco business on the last day of our fiscal year
and did not conduct any business on such day. Therefore, our financial
statements from inception through June 30, 2005 reflect no revenue and only the
expenses associated with our status as a "blank check" company. The financial
statements for the Seller Entities, or Predecessor, reflect the operations of
the Ronco business before the date we acquired such business.

      In structuring our acquisition of the Ronco business, we decided not to
assume all of the liabilities of the Seller Entities. For instance, we did not
assume approximately $39 million in loans made by a shareholder of the Seller
Entities to the Seller Entities.

      We also did not assume certain contracts of the Seller Entities. The
Seller Entities entered into a product development agreement with Alan
Backus, a third party who co-invented the Showtime Rotisserie products, as well
as other products. Pursuant to this agreement, the Seller Entities paid Mr.
Backus 25% of the net profits, or were reimbursed by Mr. Backus for 25% of the
net losses, from these products. Such amounts were accrued on a quarterly basis.
The Seller Entities also entered into licensing agreements with Advantage
Corporation, an unrelated company that owned the patents on certain of the Ronco
products. Pursuant to this agreement, the Seller Entities paid license fees that
ranged from $6 to $17 per unit sold. This agreement was scheduled to expire in
2007, but was terminated on August 31, 2004 when the Seller Entities purchased
the related patents from AdVantage Partners. As of September 30, 2004, the
Seller Entities owed fees under these two agreements in the aggregate amount of
approximately $7.1 million. We did not assume these obligations when we
purchased the Ronco business.


                                       25
<PAGE>

Components of Revenue and Gross Profit

      Sources of Revenue

      We principally derive revenue from the sale of our products directly and
indirectly to consumers through DRTV, our website and customer service
department. We derive the majority of our revenue from DRTV sales. We also
generate revenue through shipping & handling fees for each order shipped by us
to consumers who purchase our products through our DRTV and online channels.
Management estimates that currently 78% of our customers pay for their orders in
a single payment, while approximately 22% of our customers elect to make
multiple payments.

      We also derive revenue from sales to our wholesale distribution partners.
We plan to expand our wholesale business in the future. Management estimates
that shipping and handling and extended service contracts accounts for
approximately 23% of our direct sales.

      A modest amount of revenue is derived each year by providing customer
lists to third parties for a fee as well as a small amount of 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.

      Cost 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. In November 2003,
we began to source product in China, starting with our cutlery products. In
September 2004, we began to source our Showtime Rotisserie products in China as
well. This change reduced our cost of goods by a substantial amount. Beginning
in late 2004, we generally took delivery of these finished goods at foreign
ports and paid for the freight costs required to transport the goods to our
domestic distribution centers. In general, 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.

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 DRTV comprise the largest portion of our overall
selling expenses.

                                       26
<PAGE>

      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 held by third-parties in future products.

      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 of America Post Office.
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.

      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, purchasing and inspection,
fulfillment and miscellaneous expenses. We expect that general and
administrative expenses will increase in absolute terms 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 Seller Entities consists of interest accrued on
the loans made to Ronco from Ronald M. Popeil and the RMP Family Trust. These
loans were not assumed by us and, therefore, this interest expense will not be
applicable to us. Also included in the interest expense (income) is a modest
amount of interest income on cash and security accounts. In the future, we will
have interest expense on the Seller's note related to our purchase of the Ronco
business.

                                       27
<PAGE>

      Income Taxes

      The Seller Entities were incorporated as pass-through entities and,
therefore, did not record income tax expense for federal or state purposes. In
the future, we will be subject to federal and state taxation as a corporation.

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, which directly results in higher profits. 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 are able to
extend the product line on television which increases the cumulative brand
awareness and increases the sell-through at retail.

The results of operations and liquidity of the Seller Entities are likely to
change as a result of our acquisition of the Ronco business. We did not assume
certain liabilities of the Seller Entities. For instance, we did not acquire
approximately $39 million of loans to an affiliate of the Seller Entities. As a
result, we will not have to pay principal or interest on this amount. In
addition, we acquired the patents that the Seller 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 Seller 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 did
issue notes in connection with the acquisition in the adjusted amount of
approximately $13.4 million. In addition, because the Seller Entities were
"pass-thru" entities for tax purposes, they did not pay "corporate" federal
income taxes. We will be subject to federal income taxes. We will also incur
additional costs associated with compliance with laws applicable to public
companies that were not applicable to the Seller Entities. Finally, we will no
longer have the financial resources of the shareholder of the Selling Entities
available to us for borrowings. We have recently entered into a factoring
agreement to provide us with liquidity and act as a substitute for the working
capital loans we previously obtained from the shareholder of the Selling
Entities. This agreement will permit 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
factors' fees) when the account is collected. In addition, we borrowed
approximately $1.2 million under a Revolving Line of Credit Note. 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 Seller Entities will
proved to be a good indicator or our future performance, particularly as that
performance is impacted by our expenses.


                                       28
<PAGE>

      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. We are unable to
quantify this potential change at this time.

Recent Accounting Pronouncements

      In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an
amendment of APB No. 43, Chapter 4." SFAS No. 151 retains the general principle
of APB 43, Chapter 4, "Inventory Pricing (AC Section I78)," that inventories are
presumed to be stated at cost; however, it amends APB 43 to clarify that
abnormal amounts of idle facility expense, freight, handling costs, and wasted
materials (spoilage) should be recognized as current-period charges and requires
the allocation of fixed production overheads to inventories based on the normal
capacity of the production facilities. The guidance is effective for inventory
costs incurred during fiscal years beginning after June 15, 2005. Earlier
application is permitted for inventory costs incurred during fiscal years
beginning after November 23, 2004. The Company has evaluated SFAS No. 151 and it
does not anticipate that the adoption of SFAS No. 151 will have a significant
impact on the Company's overall results of operations or financial position.

      In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment",
which establishes standards for transactions in which an entity exchanges its
equity instruments for goods or services. This standard requires a public entity
to measure the cost of employee services received in exchange for an award of
equity instruments based on the grant date fair value of the award. This
eliminates the exception to account for such awards using the intrinsic method
previously allowable under APB Opinion No. 25. SFAS No. 123 (R) will be
effective for the interim period beginning January 1, 2006. The Company
anticipates that the adoption will have an effect on the Company's results of
operations.

      In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets, an amendment of APB Opinion No. 20, Accounting for Nonmonetary
Transactions." The amendments made by SFAS No. 153 are based on the principle
that exchanges of nonmonetary assets should be measured based on the fair value
of the assets exchanged. Further, the amendments eliminate the narrow exception
for nonmonetary exchanges of similar productive assets and replace it with a
broader exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. This statement shall be applied prospectively and is effective
for nonmonetary asset exchanges occurring in fiscal periods beginning after June
15, 2005. Earlier application is permitted for nonmonetary asset exchanges
occurring in fiscal periods beginning after the date of issuance. The Company
does not anticipate that the adoption of SFAS No. 153 will have a significant
impact on the Company's overall results of operations or financial position.

      In May 2005, the FASB issued SFAS 154, "Accounting Changes and Error
Corrections," that applies to all voluntary changes in accounting principle.
This Statement requires retrospective application to prior periods' financial
statements of changes in accounting principle, unless it is impracticable to
determine either the period-specific effects or the cumulative effect of the
change. When it is impracticable to determine the period-specific effects of an
accounting change on one or more individual prior periods presented, this
Statement requires that the new accounting principle be applied to the balances
of assets and liabilities as of the beginning of the earliest period for which
retrospective application is practicable and that a corresponding adjustment be
made to the opening balance of retained earnings (or other appropriate
components of equity or net assets in the statement of financial position) for
that period rather than being reported in an income statement. When it is
impracticable to determine the cumulative effect of applying a change in
accounting principle to all prior periods, this Statement requires that the new
accounting principle be applied as if it were adopted prospectively from the
earliest date practicable. SFAS 154 will be effective for the Company for fiscal
year ended June 30, 2006. The Company does not anticipate that the adoption of
SFAS No. 154 will have an impact on the Company's overall results of operations
or financial position.

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 the Company, including
the use of estimates, are presented in Note 1 to our Consolidated and Combined
Financial Statements that appear elsewhere in this report.

      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, the collectability of 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 such 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 collectibility of 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 are 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 prior to revenue being recognized are included in deferred income on
the combined balance sheet for September 30, 2004. At June 30, 2005, deferred
revenue has been recorded at fair value in accordance with purchase accounting.


                                       29
<PAGE>

      We do not accrue warranty costs, since such were insignificant for the
nine months ended June 29, 2005 and September 30, 2004 and for the years ended
December 31, 2003 and 2002. Shipping and handling costs are included in selling,
general and administrative expenses.

      Accounts Receivable. Accounts Receivable are net of allowances and
anticipated discounts. An allowance for doubtful accounts is determined through
analysis of aging of accounts receivables at the date of the financial
statements, assessments of collectibility based on historical trends and an
evaluation of the impact of economic conditions. This amount is not significant
primarily due to the Company's history of minimal bad debts. An allowance for
discounts is based on those discounts relating to open invoices where trade
discounts have been extended to customers. Cost associated with potential
returns of products as well as allowable customer markdowns and operational
charge backs, net of expected recoveries, are included as a reduction to net
revenues and are part of the provision for allowances included in Accounts
Receivable. These provisions results from seasonal negotiations as well as
historic trends, net expected recoveries and the evaluation of current market
conditions. As of September 30, 2004, the allowance for doubtful accounts was
approximately $1.2 million.

      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. The Company writes down inventory for
estimated obsolescence equal to the difference between cost of inventory and the
estimated market value based upon assumptions about future demand and market
conditions.

      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 businesses acquired.
In accordance with SFAS 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 which could trigger an
impairment review include the following:

      o     Significant underperformance relative to expected historical or
            projected future operating results;

      o     Significant changes in the manner of use of the acquired assets or
            the strategy for the overall business; and

      o     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 upon 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.


                                       30
<PAGE>

      Patents are amortized over 19 years, customer relationships over 1.5 to 10
years and consulting agreements 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.

Results of Operations

Successor -  October 15, 2004 (Date of Inception) to June 30, 2005

      We acquired the Ronco business on the last day of the Company's fiscal
year. We did not ship any products on that day because we were conducting our
year-end physical inventory. Prior to the acquisition of the Ronco business, we
had no operations and generated no revenue. The selling, general and
administrative expense for this period was primarily made up of compensation
expense related to cash bonuses and stock issued to officers in connection with
the acquisition of the Ronco business.

Seller Entities

      In 2004, the Seller Entities, or predecessor, changed their year-end from
December 31 to September 30. In 2005, we adopted the year end of June 30 which
was the year end of Fi-Tek VII, Inc.(the name of the company was changed on June
30, 2005 to Ronco Corporation).

      Predecessor - Nine months ended June 29, 2005 compared to nine months
ended September 30, 2004

Net Sales. Net sales for the nine months ended June 29, 2005 were approximately
$69 million, an increase of 9.1% from approximately $63.2 million for the nine
months ended September 30, 2004. Net sales of our Showtime Rotisserie oven
products increased by approximately 7% during this nine month period, and net
sales of our cutlery product line increase by approximately 11.8% during this
nine month period. This increase resulted primarily because of the seasonality
of our sales. The nine months ended June 29, 2005 included our best sales season
from October to March (especially October through December) as compared to the
nine months ended September 30, 2004, which only includes a portion of these
months.


                                       31
<PAGE>

Gross Profit and Gross Margin. Gross profit for the nine months ended June 29,
2005 was $52.1 million, an increase of $5.7 million, or 12%, compared to the
nine months ended September 30, 2004. Gross margin for the nine months ended
June 29, 2005 was 76% as compared to 73% for the nine months ended September 30,
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
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.

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 $3.5 million, or 7%, compared to the nine months ended
September 30, 2004. This decline occurred primarily because we were not required
to pay royalties during the nine months ended June 29, 2005, principally related
to our rotisserie and cutlery products. These royalties amount to approximately
$3.1 million for the nine months ended September 30, 2004. As a percentage of
net sales, selling, general and administrative expenses for the nine months
ended June 29, 2005 were 73% as compared to 85% for the nine months ended
September 30, 2004. This improvement was also due to the elimination of our
royalty expense. 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.
Selling, general and administrative expenses also included approximately
$7,124,000 and $7,491,000 of fulfillment and shipping costs, for the nine months
ended June 29, 2005 and September 30, 2004, respectively.

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 ($7.6) million for the
nine months ended September 30, 2004. The increase in operating income was
primarily due to the $5.7 million increase in sales described above, a 3%
improvement in our gross margin and an 12% improvement in selling, general and
administrative expenses.

Net Loss. Our net Loss for the nine months ended June 29, 2005 decreased to
($1.1) million as compared to ($7.7) million for the nine months ended September
30, 2004. The decrease in net loss was primarily due to a $5.7 million increase
in sales, a 3% improvement in our gross margin and an 12% improvement in
selling, general and administrative expenses. This was offset by interest
expense of approximately $2.9 million for the nine months ended June 29, 2005
related to a loan from Ron Popeil, affiliated entities and RMP Family Trust.
these loans were not assumed by us when we acquired the Ronco business.

      Predecessor - Nine months ended September 30, 2004 compared to 12 months
ended December 31, 2003


                                       32
<PAGE>

Net Sales. Net sales for the nine months ended September 30, 2004 were
approximately $63.2 million, compared to $93.5 million for the twelve months
ended December 31, 2003. The decline in net sales for the nine months ended
September 30, 2004 is primarily because this is a nine month period, as opposed
to a twelve-month period, and this period does not include our results from the
fourth quarter of the calendar year, which historically is our best sales
quarter. The comparable period in 2003 is twelve months long and includes the
results from this fourth quarter. For comparative purposes, net sales for the
twelve months ended December 31, 2004, were $106.8 million. Comparing these
results to the calendar year 2003 results, our net sales for calendar year 2004
improved by approximately $13.3 million over calendar year 2003. This increase
resulted primarily from the introduction of a new cutlery product line in
November 2003, which accounted for approximately $38.8 million increase in sales
that was offset by a decline in Showtime Rotisserie revenues during this period,
and which product line was only being sold during one month of the 2003 calendar
year.

Gross Profit and Gross Margin. Gross profit for the nine months ended September
30, 2004 was $46.4 million, a decrease of $ 17.8 million, or 28%, compared to
the twelve months ended December 31, 2003. This decrease was primarily because
this is a nine month period, as opposed to a twelve-month period, and this
period does not include our results from the fourth quarter of the calendar
year, which historically is our best sales quarter . Gross margin for the nine
months ended September 30, 2004 was 73% as compared to 69% for the twelve months
ended December 31, 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 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 nine months ended September 30, 2004 were $54
million, a decrease of $13.7 million, or 20%, compared to the twelve months
ended December 31, 2003. This decrease occurred primarily because of the lower
net sales, described above, and decline in royalty and licensing expense of $8.9
million. As a percentage of net sales, selling, general and administrative
expenses for the nine months ended September 30, 2004 were 85% as compared to
72% for the twelve months ended December 31, 2003. The 2004 selling, general and
administrative expenses were higher because our fourth quarter usually accounts
for approximately 40% of our sales and most of our profits. Selling, general and
administrative expenses also included $7.5 million and $8.5 million of
fulfillment and shipping costs, for the nine months ended September 30, 2004 and
the twelve months ended December 31, 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 twelve months ended December 31, 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 ($3.4) million operating loss for the twelve
months ended December 31, 2003. The higher loss for 2004 is attributable to the
fact that the fourth quarter in not included and this period usually accounts
for approximately 40% of our annual sales.


                                       33
<PAGE>

Net Loss. Our net loss for the nine months ended September 30, 2004 increased to
($7.7) million as compared to $(3.0) million for the twelve months ended
December 31, 2003. The higher loss for 2004 is attributable to the fact that the
fourth quarter is not included and this period usually accounts for
approximately 40% of our sales.

      Predecessor - Twelve months ended December 31, 2003 compared to the twelve
months ended December 31, 2002

Net sales. Net sales were $93.5 million for 2003 compared to the $98.4 million
in 2002, a decrease of 5%. Substantially all of this revenue was generated from
sales of our Showtime Rotisserie line of products, as we only introduced our
cutlery line of products in November 2003. The decrease resulted from
management's decision to reduce media expenditures associated with its Showtime
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
is approximately 76%, which are higher than the 65% margins we achieve on our
Compact Rotisserie. Our cost of sales does not include fulfillment and shipping
costs, which are included in selling, general and administrative expenses,
and as such, our margin might not be comparable to other companies in our
industry.

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. 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.

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) 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 $4.2 million decrease in selling, general and
administrative expenses.


                                       34
<PAGE>

Liquidity and Capital Resources

      Historically, the Seller Entities funded operations primarily through cash
flow from operations and borrowings from the shareholder of the Seller 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. In November 2003, we started to source product in China beginning
with our cutlery products. In addition to significantly lowering our cost of
goods, the Chinese factories agreed to payment terms of thirty (30) days after
delivery of product. Previously, the Korean factories had required Letters of
Credit to be provided 2 to 4 weeks prior to shipment. The total effect of moving
manufacturing to China has been to increase our liquidity and improve our cash
flow. On September 30, 2005, we borrowed approximately $1.2 million from Wells
Fargo under a Revolving Line of Credit Note. We also entered into a factoring
agreement in October 2005 to provide us with a substitute for the shareholder
loans the Seller Entities previously obtained from their shareholder. As of June
30, 2005, our total working capital was $8.2 million as compared to a working
capital deficiency of $28,000 as of September 30, 2004. We believe that our cash
flows from operations and advances under our new factoring agreement and the
line of credit note will be sufficient to meet our working capital needs.

      Successor

      For the period from October 15, 2004 until 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 we used approximately $676,000 of cash
from operating activities to pay compensation to our management, to make certain
payments associated with the acquisition and for certain prepaid expenses. We
also used approximately $45 million from investing activities to acquire the
Ronco business. Finally, our financing activities provided approximately $46.4
million during this period. This represents the proceeds from the issuance of
our Series A Convertible Preferred Stock, less approximately $3.6 million of
issuance costs.

      Predecessor

      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. 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 in 2005 primarily to fund operating losses and
working capital specifically to reduce accounts payable and deferred income that
was partially offset by increases in inventories, accounts receivable and
prepaid expenses.

      For the nine months ended June 29, 2005 and September 30, 2004, our
investing activating 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 was partially offset by equipment purchases
of approximately $453,000. Our investment income in 2004 was approximately the
same as in 2005, but was offset in part by equipment purchases of approximately
$243,000.


                                       35
<PAGE>

      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 Seller
Entities and their stockholder. The Seller 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 $.4 million was
used to repay debt due to investors in Ronco Marketing Corporaton and
approximate $1.1 million was used for working capital.

      The Seller Notes

      In connection with our purchase of the Ronco business, we issued
promissory notes to the Seller 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 Seller 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. Interest is calculated on the basis of a 360-day year of twelve 30-day
months and charged for the actual number of days elapsed.

      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. We anticipate that we will
make principal payments on the notes during the year ending June 30, 2006 in the
amount of $2,876,000, which is based on management's estimate of the products to
be shipped in the next year. As the amount due under the notes is an estimate
based on volumes of products shipped, as described above, we have not estimated
the amounts that will be owed under the notes for subsequent fiscal years. 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.


                                       36
<PAGE>

      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.

      Factoring Agreement

      On October 25, 2005, we entered into a factoring agreement with Prestige
Capital Corporation. Pursuant to this agreement, we may sell up to $8 million of
our eligible accounts receivable to Prestige. Prestige will pay us between 75%
and 80% of the face value of the accounts receivable at the time of assignment,
and the balance, less amounts due to Prestige, when Prestige collects the
accounts receivable. Prestige's fee is based on a percentage of the face value
of each account receivable and varies between 2%, if the receivable is collected
within 15 days, to 5.75% if the receivable is collected within 75 days. The rate
goes up by 1% every 15 days thereafter. There is no maximum rate. In addition,
Prestige may require us to repay the amount it has advanced us, in certain
cases, if the receivable is not paid within 90 days. In such case Prestige would
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. This agreement is
secured by all of our accounts receivable, our inventory and our general
intangibles. As of October 28, 2005, we had assigned $4.2 millions to Prestige.
This agreement terminates on May 1, 2006, subject to certain renewal provisions
or earlier termination by Prestige.

      Revolving Line of Credit

      On September 30, 2005, the Company borrowed $1,234,000 from Wells Fargo
Bank, National Association under a Revolving Line of Credit Note. The
outstanding balance is due and payable on September 20, 2006 and is
collateralized by the Company's corporate bonds. The borrowings bear interest at
1% above LIBOR.


                                       37
<PAGE>

      Loans from the Seller Entities and Mr. Popeil

      In September 2004, RMP Family Trust, the stockholder of RPP and PII,
Popeil, the primary beneficiary of the trust, and affiliated entities, loaned
the Seller Entities $8,500,000, 28,750,000 and 1,900,000, respectively. These
loans are evidenced by promissory notes, which bear interest at 10% per annum
and are due on September 7, 2007. The proceeds from these loans were used to pay
off the balance owed by the Seller Entities for license fees outstanding as of
December 31, 2003. Interest expense related to these loans was approximately
$2,929,000 and $247,000 for the nine months ended June 29, 2005 and September
30, 2004, respectively. This amount is included in accrued expenses at September
30, 2004. These loans were not assumed by the Company.

      We 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.

Off-Balance Sheet Arrangements

      We do not have any off-balance sheet arrangements.

Contractual Obligations and Commercial Commitments

The only long term commitment that we have relates to the Sellers note. The
Promissory notes will bear simple interest at a rate equal to 9.5% per annum.
Interest will be calculated on the basis of a 360-day year of twelve 30-day
months and charged for the actual number of days elapsed. We are required to
repay the promissory notes in accordance with the terms of the asset purchase
agreement. The principal payments due with respect to the notes in any period
will be a determined by applying a per-unit dollar amount to the volume of our
products that are shipped within such period.

      Long-term debt consists of the following:

      Promissory notes to Seller Entities                      $13,158,180

      Less estimated current maturities                          2,876,000
                                                               -----------

                                                               $10,282,180
                                                               ===========

      The promissory notes to the Seller Entities is management's best estimate
      based on the estimated net value of the assets acquired, as defined. These
      promissory notes bear simple interest at a rate of 9.5% per annum. The
      required payment amounts under these promissory notes will be determined
      by applying a per-unit dollar amount, as defined, to the volumes of
      products, as defined, that are shipped within a period. Any outstanding
      principal amount and accrued but unpaid interest will become due and
      payable in full by June 29, 2010; and there is no pre-payment penalty on
      the promissory notes.

Effects of Inflation and Foreign Currency Fluctuations

      We do not believe that inflation or foreign currency fluctuations
significantly affected our financial position and results of operations as of
and for the fiscal year ended June 30, 2005.

Risk Factors

      We believe that the following risk factors are applicable to our business
and industry and to our equity securities. You should consider the following
factors and other information included herein, relating to our business and
prospects. If any of the following risks actually occurs, our business,
financial condition or operating results could be materially adversely affected.
In such case, the trading price of our common stock could decline.



                                       38
<PAGE>

Risks Related to Our Business

We have a history of 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 Seller Entities have been operating since 1991 under
various brands and entities. These entities have recorded operating losses at
various periods in our operating history. We believe these losses were primarily
caused by the combination of non-recurring expenses, license and product
development arrangements and inter-company financing arrangements. It is our
expectation that we can achieve positive operating profits under our current
corporate structure and business plan, in part because we did not assume these
burdensome obligations when we purchased the Ronco business. There can be no
assurance, however, that we will achieve or maintain our profitability targets.

Due to changes that occured in our financing and licensing arrangements, and
other changes that occured in connection with our acquisition of the Ronco
business, the financial statements of the Seller Entities may not be a good
indicator of our future performance.

      In connection with our acquisition of the Ronco business, we modified
certain of Ronco's business arrangements and did not assume certain of its
liabilities. For instance, we purchased the patents that Ronco licensed and
terminated product development and license fees. We also did not assume
approximately $39.2 million of related party loans to the Seller 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 Seller 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 statement may not be a good indicator of our future performance.

We are subject to FCC regulation with respect to the telemarketing aspects of
our business and industry, 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 the
direct response television program. 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. If we fail to purchase
sufficient quantities of media to market our products, or media that will
deliver our desired level of customer response, our ability to reach our
targeted customer will be reduced and our sales and profits will decline. 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.


                                       39
<PAGE>

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. 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 properly
operate and integrate these technologies may negatively impact our product
supply chain and may harm our business and operating results.

Sales from our wholesale business distributors accounted for almost 20% of our
net sales, in the aggregate, for 2005 and 2004, and the loss of business from
any of our major wholesale distributor could reduce our sales and substantially
harm our business.

      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 October 2005, we began shipping our
Rotisserie ovens to Wal-Mark. We will also re-focus our existing wholesale
distribution relationships to target selected smaller or regional retail chains.
In the past, we have used M. Block & Sons and Englewood Marketing Group as our
two major wholesale distributors to purchase our products and distribute our
products through retail channels M. Block & Sons accounted for approximately
9.2% and 5.5%, and Englewood Marketing Group accounted for approximately 6.4%
and 5.6%, of our net sales for the nine months ended June 29, 2005 and September
30, 2004, respectively. As a result, our wholesale revenues have been highly
concentrated. We


                                       40
<PAGE>

expect these distributors will remain important to our revenues as we plan to
continue selling our products through retailers. Our wholesale revenues could
decline if either one of these distributors experiences financial distress that
interferes with its ability to purchase our products, or underperforms relative
to our expectations. There can be no assurance that we will be able to increase
the number of wholesale distributors and decrease the customer concentration
within our wholesale revenues or get similar terms on wholesale agreements going
forward.

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 overall strategic direction of our
company, 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 Seller Entities' brand and marketing
strategies, product developments and overall strategic direction. 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 ensure his ongoing interest in the growth and
financial prospects of Ronco. 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.


                                       41
<PAGE>

      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
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.

      Furthermore, 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 successfully
to 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, Showtime and other brands are 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


                                       42
<PAGE>

the development or acquisition of new products that will be sold under our brand
names directly, through retail stores and online through the Ronco 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.

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 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 effected if conflicts arise
among our various sales channels or if the financial condition of our
distributors were to weaken.

      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.
Moreover, some of our wholesale and retail distributors may have insufficient
financial resources and may not be able to withstand adverse changes in business
conditions, including economic weakness and industry consolidation. Revenue from
indirect sales could suffer and we could experience disruptions in distribution
if our distributors' financial conditions or operations weaken.


                                       43
<PAGE>

We plan to sell more of our products through distributors. Due to the typical
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, 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 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 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 would suffer a material decrease in our sales and
profitability.

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


                                       44
<PAGE>

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 continuing effectiveness of our media and marketing
strategies, (ii) the continued 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 system, 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. Upgrades to
our online operations will result in higher sales through an improved customer
experience.

      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 or litigation 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 rely on our management team for the success of our business and the loss of
the services of any of these executives could negatively affect our operations.


                                       45
<PAGE>

      We rely on the contributions of Richard F. Allen, Sr., who is our
President and Chief Executive Officer. In addition to his other executive
duties, Mr. Allen is primarily responsible for the development of new
distribution channels for our products. We have entered into an employment
agreement with Mr. Allen for an initial period of four years beginning June 30,
2005. Our operations may be adversely affected should we lose the services of
Mr. Allen for any reason.

      We are also dependent upon the contributions of Evan J. Warshawsky, our
Chief Financial Officer, who has the primary executive responsibility for all of
our financial operations. We have entered into an employment agreement with Mr.
Warshawsky for an initial period of three years beginning June 30, 2005. Our
operations may be adversely affected should we lose the services of Mr.
Warshawsky for any reason.


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. If one of our officers or
directors makes a valid claim for indemnification under these provisions the
amount could be substantial and would be paid from our operating cash flow. As a
result, such funds would reduce the amount of funds available for our
operations.


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
anaylsis. 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 reflectd 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.

      We will test goodwill for impairment annually in accordance with generally
accepted accounting principles. 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.


                                       46
<PAGE>

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 intital 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 Seller Entities do not
reflect the additional costs


                                       47
<PAGE>

of complying with the various corporate governance and public reporting
requirements that now apply to our company. 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 margins and negatively impact our results of
operations.

Our ownership continues to be closely held, and our common stock has limited
liquidity. Consequently, stockholders may be unable to sell our common stock at
a suitable price.

      Approximately 77% of the outstanding shares of our common stock are
subject to lock-up agreements and other resale restrictions. Consequently, the
public float for our common stock is very limited. As a result, should you wish
to sell your common stock into the open market, you may encounter difficulty
selling large blocks of your shares of common stock or obtaining a suitable
price at which to sell your common stock.

We do not expect to pay cash dividends on our common stock.

      Some investors favor companies that pay dividends, particularly in general
downturns in the stock market. 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 payment of any dividends will be within the
discretion of our Board of Directors. We presently intend to retain all
earnings, if any, to implement our business plan. 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.

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 successfully compete in our industry.

We are required to make substantial penalty payments to holders of our Series A
Convertible Preferred Stock in the event a Registration Statement covering the
Common Stock issuable upon conversion is not declared effective by the
Securities and Exchange Commission on or before October 28, 2005 and such
penalty payments could negatively affect our liquidity and cash flow.

      In connection with the private sale of our Series A Convertible Preferred
Stock, we are required to pay a penalty equal to $500,000 (1% of the aggregate
offering price of the preferred stock) per month in the event a registration
statement covering the common stock issuable upon conversion of the preferred
stock is not declared effective by the Securities and Exchange Commission on or
before October 28, 2005. We filed our Registration Statement with the SEC on
July 29, 2005. As of October 31, 2005, the Registration Statement had not been
declared effective. Accordingly, unless we are able to negotiate a less onerous
solution with the holders of the preferred stock, we expect to be required to
make a penalty payment of $500,000 on November 5, 2005 and additional payments
in each succeeding month or portion thereof in which the Registration Statement
is not declared effective. Following the filing of this report, we plan to work
diligently to cause the registration statement to be declared effective as soon
as possible; however, we will have limited control over this process. The
requirement to make these payments could have a material negative impact on our
liquidity and cash flow.


                                       48
<PAGE>

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. 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.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

         Our Company is exposed to market risks, which includes changes in
interest rates and, to a lesser extent, foreign exchange rates. We do not engage
in financial transactions for trading, speculative or hedging purposes.


      The Seller Entities were party to an $8 million letter of credit agreement
with a bank. Pursuant to this agreement, any amounts due to the bank based on
draws upon letters of credit would bear interest at the rate of 4% per annum.
This agreement was terminated on June 29, 2005 as part of our acquisition of the
Ronco business and we did not assume any obligations under this agreement.

      On October 25, 2005, the Company entered into a factoring agreement with
Prestige Capital Corporation. Pursuant to this agreement, we may sell up to $8
million of our eligible accounts receivable to Prestige. Prestige will pay us
between 75% and 80% of the face value of the account receivable at the time of
assignment, and the balance, less amounts due to Prestige, when Prestige
collects the account receivable. Prestige's fee is based on a percentage of the
face value of each account receivable and varies between 2%, if the receivable
is collected within 15 days, to 5.75% if the receivable is collected within 75
days and goes up by 1% every 15 days thereafter. There is no maximum rate. In
addition, Presitge may require us to repay the amount it has advanced us, in
certain cases, if the receivable is not paid within 90 days. As of October 28,
2005, we had assigned $4.1 million in accounts receivable to Prestige. This
agreement terminates on May 1, 2006, subject to certain renewal provisions or
earlier termination by Prestige.

      On September 30, 2005 the Company borrowed $1,234,000 from Wells Fargo
Bank, National Association under a Revolving Line of Credit Note. The
outstanding balance is due and payable on September 20, 2006 and is
collateralized by the Company's corporate bonds. The borrowings bear interest at
1% above LIBOR.


                                       49
<PAGE>

         We enter into a significant amount of purchase obligations outside of
the United States, primarily in China, which are settled in U.S. Dollars.
Therefore, we believe we have minimal exposure to foreign currency exchange
risks. We do not hedge against foreign currency risks.


Item 8.  Financial Statements and Supplementary Data

         See pages F-1 through F-27 at the end of this document.


Item 9.  Changes In and Disagreements With Accountants on Accounting and
         Financial Disclosure

      On July 13, 2005, our Board of Directors appointed Mahoney Cohen &
Company, CPA, P.C. as our independent registered public accounting firm for the
period October 15 (date of inception) to June 30, 2005, and dismissed Stark
Winter Schenkein & Co., LLP, which had audited the Registrant's financial
statements for the year ended June 30, 2004.

      Our Board of Directors believes that the appointment of Mahoney Cohen &
Company, CPA, P.C. to audit our consolidated financial statements for the above
period and thereafter is in the best interests of our stockholders.

      Stark Winter Schenkein & Co., LLP's report on our financial statements for
the year ended June 30, 2004 did not contain an adverse opinion or disclaimer of
opinion, nor was it modified as to uncertainty, audit scope, or accounting
principles. There were no disagreements with Stark Winter Schenkein & Co., LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.

Item 9A. Controls and Procedures

      (a) Evaluation of disclosure controls and procedures. We maintain
"disclosure controls and procedures," as such term is defined in the Exchange
Act, that are designed to ensure that information required to be disclosed by us
in reports that we file or submit under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in the SEC rules and
forms, and that such information is accumulated and communicated to our
management, involving our Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure. In
designing and evaluating our disclosure controls and procedures, management
recognized that a control system no matter how well designed and operated, can
provide only reasonable, not absolute, assurance that the control system's
objectives will be met. Additionally, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within our company, have been detected. These inherent


                                       50
<PAGE>

limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple errors or mistakes.
Controls can also be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of the controls. The
design of any system of controls is based in part upon certain assumptions about
the likelihood of future events, and there can be no assurance that any design
will succeed in achieving its stated goals under all potential future
conditions.

         Our management, with the participation of our Chief Executive Officer
and Chief Financial Officer, evaluated the effectiveness of our disclosure
controls and procedures as of June 30, 2005. In connection with this evaluation
and documentation of our disclosure controls and procedures, including our
internal controls and procedures for financial reporting, our Chief Executive
Officer and Chief Financial Officer recognized that improvements were necessary
in the following areas:

         maintaining sufficient personnel with an appropriate level of
accounting knowledge, experience and training in the application of generally
accepted accounting principles commensurate with our financial reporting
requirements,

         maintaining adequate segregation of duties in key functions,

         maintaining adequate controls over spreadsheets used in our financial
reporting process,

         adequately documenting certain transactions and manual journal entries,
and
         adhering to a comprehensive closing calendar.

         We have taken measures to improve the effectiveness of our internal
controls and we believe these efforts are addressing the matters describe above.
These efforts include segregation of duties in key functions, creating formal
accounting controls, policies and procedures, hiring additional management and
staff experienced in financial reporting, and documentation of our accounting
and disclosure internal controls and procedures. We also performed additional
analysis and other post-closing procedures to ensure our consolidated financial
statements are prepared in accordance with US Generally Accepted Accounting
Principles.


         (b) Changes in internal control over financial reporting. There were no
changes in our internal control over financial reporting (as defined in Rule
13a-15(f) under the Exchange Act) identified in connection with the evaluation
described in Item 9(a) above that occurred during the year ended June 30, 2005
and that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.


Item 9B. Other Information

         None.


                                       51
<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

Executive Officers and Directors

         The following table sets forth the name, age and position of each of
our directors, executive officers and significant employees at October 31, 2005.

<TABLE>
<CAPTION>
Name                                    Age  Position(s)
--------------------------------------  ---  -----------------------------------------------
<S>                                     <C>  <C>
Richard F. Allen, Sr.................    57  President, Chief Executive Officer and Director
Evan J. Warshawsky...................    46  Chief Financial Officer and Secretary
Harold D. Kahn.......................    59  Director
A. Emerson Martin, II................    55  Director
Gregg A. Mockenhaupt.................    35  Director
</TABLE>

         Richard F. Allen, Sr. is our Chief Executive Officer, President and a
member of our board of directors, positions he has held since February 2005. Mr.
Allen is also currently the Chief Executive Officer and President of the Seller
Entities, positions he also has held since February 2005. Between 2003 and 2005,
Mr. Allen was a consultant to Ronco, assisting us with structuring financial
components for our 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 has served in
various executive positions with Milliken & Company (New York) and West Point
Pepperell (New York). Mr. Allen was the President of American Marketing &
Events, Inc. Mr. Allen graduated from the University of Arizona with a degree in
economics and a Masters degree in International Management from the American
Graduate School of International Management.

         Evan J. Warshawsky is our Chief Financial Officer and Secretary,
positions he has held since February 2005. Mr. Warshawsky joined Ronco
Inventions, LLC in 2002 as its Executive Vice President with responsibilities
for operations and IT systems, and served as its President from May 2003 until
February 2005. In his capacity as President of Ronco Inventions, LLC, Mr.
Warshawsky was responsible for substantially all of the operations of the Seller
Entities, including media, customer service, sourcing, fulfillment and
marketing. Since February 2005, Mr. Warshawsky has had primary responsibility
for the financial operations of the Seller Entities. From 2002, Mr. Warshawsky
was employed by Skycastle Entertainment, Inc., NBC's in-house promotions
company, as. Mr. Warshawsky graduated from the University of California at Los
Angles with a Bachelor of Arts degree in Economics and is a certified public
accountant.


                                       52
<PAGE>

         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 has been 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.

         A. Emerson Martin, II is a member of our board of directors, a position
he has held since June 2005. Mr. Martin is a Managing Director at Sanders Morris
Harris, a full-service investment bank, based in Houston, Texas, and has served
in this capacity since 2004. Between 2002 and 2004, he was head of investment
banking at Touchstone Group, a transnational financial services firm with
operations in the U.S. and the Arabian Gulf. From 1997 to 2002, he was head of
investment banking at Spencer Trask, a leading private equity firm. Prior to
1997, he was a Senior Managing Director at Donaldson, Lufkin, & Jenrette and
First Albany, investment and merchant banks, where he was involved with various
public and private financings and mergers and acquisitions work. Mr. Martin
started his corporate finance career at Salomon Smith Barney, Inc., a global
full-service financial company. Mr. Martin received a Bachelor of Arts degree
from Union College and a Masters in Business Administration from Columbia
University.

         Gregg A. Mockenhaupt is a member of our board of directors, a position
he has held since June 2005. Mr. Mockenhaupt is a Managing Director at Sanders
Morris Harris, a full-service investment bank, based in Houston, Texas, and has
served in this capacity since April 2004. Between 1996 and 2004, Mr. Mockenhaupt
served as a Managing Director at Crest Advisors, LLC, a boutique investment
banking firm, and as a Managing Director at Crest Communications Holdings LLC, a
private investment firm managing approximately $160 million in capital focused
on the communications industries. Prior to 1996, Mr. Mockenhaupt was a member of
Smith Barney, Inc.'s Advisory Group, where he was involved with a breadth of
merger and acquisition transactions and financial restructurings. Mr.
Mockenhaupt has served on the board of directors for several private and public
companies and is currently a director of TeraBurst Networks, Inc., d/b/a
QualCore Logic. Mr. Mockenhaupt graduated from the University of Pennsylvania's
Wharton School with a B.S. in Economics with concentrations in finance and
political science.

         No director, executive officer, promoter or control person of the
Company 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 either at the time of the bankruptcy or within two years prior to that
time; (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


                                       53
<PAGE>

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.

         There are no family relationships among any directors and executive
officers of the Company. Karen Allen, our Vice President of Product Development,
is the wife of Mr. Allen, our Chief Executive Officer. Mrs. Allen receives an
annual salary or $175,000.

Board of Directors and Committees

         Our Board of Directors currently consists of four members. We plan to
form audit, nominating and corporate governance and compensation committees that
will 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. We plan to appoint to these
committees individuals who are determined by our Board of Directors to be
"independent" within the meaning of these laws and requirements. We intend to
comply with future committee requirements as they become applicable to us. 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. Pending election of additional
independent directors, the Board has designated two non employee directors and
one independent director to be members of the Audit Committee and Compensation
Committee and the entire Board acts as the Nominating Committee.

Audit Committee

         The audit committee provides assistance to the 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 company's accounting practices and systems of
internal accounting controls. The audit committee oversees the audit efforts
of our independent accountants and review their independence.

         Our Board of Directors is currently acting as our audit committee. Our
Board of Directors has determined that we do not have a person qualifying as an
audit committee financial expert serving on our Board of Directors. Before June
30, 2005, our business was operated by companies that were not subject to the
public reporting requirements and these companies were not historically required
to include on their board or management 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.


                                       54
<PAGE>

Compensation Committee

         The Compensation Committee is responsible for recommending to the Board
of Directors the compensation for our executives. The compensation committee
determines our general compensation policies and the compensation provided to
our director 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.

Nominating and Corporate Governance Committee

         The entire Board consisting of three non employee directors and one
independent director acting as the Nominating and Governance Committee will be
responsible for assisting our Board of Directors in its 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 the
Board of Directors. The nominating and corporate governance committee will make
recommendations to the Board of Directors regarding candidates for directorships
and the size and composition of the board. In addition, the nominating and
corporate governance committee will oversee our corporate governance guidelines
and report and make recommendations to the board concerning corporate governance
matters.

Election of Directors and Officers

         Holders of our common stock and Series A Convertible Preferred Stock
are entitled to one (1) vote for each share held on all matters submitted to a
vote of the 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 the
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 the 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 Ethics
applicable to our Chief Executive Officer and Chief Financial Officer, and a
Code of Business Conduct and Ethics applicable to all of our employees, officers
and directors. Our Code of Ethics and Code of Business Conduct and Ethics are
currently not available on our website. We recently completed the acquisition
transactions described elsewhere in this report and became subject to the
reporting and other requirements under the Securities Exchange Act of 1934. We
are redesigning and reconfiguring our website at www.ronco.com to include links
to the text of our


                                       55
<PAGE>

Code of Ethics and Code of Business Conduct and Ethics. We intend to satisfy the
disclosure requirement under Item 10 of Form 8-K relating to amendments or
waivers from any provision of our Code of Ethics and 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
days business days following the date of amendment or waiver. Upon request, we
will provide to any person, without charge, a copy of our Code of Ethics and
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
provide a lead director on the board of directors; require non-employee
directors to meet independently from the other members of the board, and set
qualification standards for prospective members of the board of directors. These
guidelines require our Board of Directors to annually evaluate its effectiveness
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.

Indemnification Agreements

         In August 2005, we entered into an indemnification agreement with each
of our directors and executive officers. Each indemnification agreement provides
that we will indemnify such person against certain liabilities (including
settlements) and expenses actually and reasonably incurred by him or her in
connection with any threatened or pending legal action, proceeding or
investigation (other than actions brought by or in the right of our company) to
which he or she is, or is threatened to be, made a party by reason of his or her
status as a director, officer or agent of our company, provided that such
director or executive officer acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, our best interests and, with
respect to any criminal proceedings, had no reasonable cause to believe his or
her conduct was unlawful. With respect to any action brought by or in the right
of our company, a director or executive officer will also be indemnified, to the
extent not prohibited by applicable law, against expenses and amounts paid in
settlement, and certain liabilities if so determined by a court of competent
jurisdiction, actually and reasonably incurred by him or her in connection with
such action if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of our
company.


Compliance with Section 16(a) of the Securities Exchange Act of 1934


                                       56
<PAGE>

      Section 16(a) of the Exchange Act requires our executive officers and
directors, and persons who own more than 10% of a registered class of our equity
securities, to file reports of beneficial ownership and changes in ownership on
Forms 3, 4 and 5 with the Securities and Exchange Commission. Officers,
directors and greater than 10% stockholders are required to furnish us with
copies of all Forms 3, 4 and 5 they file.

      Based solely on our review of the copies of such forms and oral or written
representations from certain reporting persons that no Forms 5 were required for
those persons, we believe that all of our officers, directors and greater than
10% stockholders complied with all Section 16(a) filing requirements applicable
to them with respect to transactions during the nine months ended June 29, 2005.


Item 11. Executive Compensation

      The following table sets forth compensation for services rendered in all
capacities to us for the nine months ended June 29, 2005 and September 30, 2004
and for the fiscal year ended December 31, 2003, for our Chief Executive Officer
and our Chief Financial Officer. None of our other executive officers received
to date annual compensation in excess of $100,000.


<TABLE>
<CAPTION>
                                                             SUMMARY COMPENSATION TABLE
                                                             --------------------------

                                                                                                                 Long Term
     Name and                                                   Annual Compensation(1)                          Compensation
     Principal Position                                                                                            Awards
     ----------------------------             -----------------------------------------------------------    -------------------
                                  Year            Salary($)(2)         Bonus($)           Other Annual        Restricted Stock
                                                                                          Compensation           Awards ($)
                                                                                             ($)(3)
     ---------------------------- --------    -----------------    ------------------    ----------------    -------------------
<S>                               <C>               <C>               <C>                                       <C>
     Richard F. Allen, Sr.                                                                     --
     President, Chief Executive
     Officer and Director         2005              $108,933(4)       $315,000(5)                               3,009,177(6)
                                  2004                       --           --                   --                    --
                                  2003                       --           --                   --                    --

     Evan Warshawsky, Chief       2005              $112,500(7)       $150,000(10)             --                601,837(11)
     Financial Officer and        2004              $112,500(8)           --                   --                    --
     Secretary                    2003              $123,333(9)                                --                    --
</TABLE>

(1)   In accordance with the rules of the SEC, the Annual Compensation described
      in this table does not include medical or group life insurance or other
      benefits received by the named executive officers that are available
      generally to all of our salaried employees.


                                       57
<PAGE>

(2)   Includes medical insurance reimbursements.
(3)   Perquisites, including car allowances, and other personal benefits
      received by the named executive officers, in the aggregate, do not exceed
      the lesser of $50,000 or 10% of any such named executive officer's total
      annual compensation.
(4)   Reflects amounts received by Mr. Allen as Chief Executive Officer of Ronco
      Inventions, LLC for the nine months ended June 29, 2005.
(5)   Reflects bonus paid to Mr. Allen upon completion of the acquisition
      transactions that closed in June 2005.
(6)   Reflects value of 480,188 shares of our common stock issued, and 320,125
      shares of our common stock to be issued, to Mr. Allen pursuant to the
      terms of his employment agreement and restricted stock purchase agreement
      with us. Half of the 320,125 shares will be issued to Mr. Allen on each of
      the first two anniversaries of June 30, 2005. Mr. Allen purchased the
      480,188 shares from us at $0.01 per share on June 30, 2005 and will be
      entitled to purchase the remaining 320,125 shares at the same price. The
      fair market value of the stock is based on the price of the Series A
      Preferred stock sold to investors on the same day, which was sold at $3.77
      per share. These shares are subject to repurchase by us, at our option, at
      $0.01 per share, exercisable upon the termination of Mr. Allen's
      employment voluntarily or for "cause," or if certain performance targets
      are not satisfied.
(7)   Reflects amount paid to Mr. Warshawsky as an executive of Ronco
      Inventions, LLC for the nine months ended June 29, 2005.
(8)   Reflects amounts paid to Mr. Warshawsky as President of Ronco Inventions,
      LLC for the nine months ended September 30, 2004.
(9)   Reflects amounts paid to Mr. Warshawsky as President of Ronco Inventions,
      LLC for the year ended December 31, 2003.
(10)  Reflects bonus paid to Mr. Warshawsky upon completion of the acquisition
      transactions that closed in June 2005.
(11)  Reflects value of 160,063 shares of our common stock issued to Mr.
      Warshawsky under his employment agreement and restricted stock purchase
      agreement with us. Mr. Warshawsky purchased these shares for $0.01 per
      shares on June 30, 2005. The fair market value of the stock is based on
      the price of the Series A Preferred stock sold to investors on the same
      day, which was sold at $3.77 per share. The Company has an option to
      repurchase 50% of these shares (80,032) at $0.01 per share exercisable
      upon the termination of Mr. Warshawsky's employment voluntarily or for
      "cause." The repurchase right will lapse with respect to each 25% (40,016)
      of these shares on each of the first two anniversaries of June 30, 2005.

Compensation of Directors and in Addition, the Company will Pay for Resonable

      Each member of our Board of Directors who is not our employee will receive
an annual retainer of $25,000 and $1,500 for each meeting of our Board of
Directors attended. In addition, the Company will pay for reasonable travel
expenses. Under our 2005 Stock Incentive Plan, as defined below, non-employee
directors may be granted options to purchase shares of our common stock. Options
granted to directors will be exercisable at exercise prices per share equal to
the fair market value of our common stock on the date of grant. Each such option
will have a ten year term and will vest with respect to one-third of the common
stock subject thereto on the date of the next three annual


                                       58
<PAGE>

meetings of shareholders. In addition, each such option will become fully vested
upon a "change in control" (as defined in the plan) of us or such director's
death. In the event a non-employee director ceases to be a director for any
reason (other than death), such director may exercise his or her then vested
options for a period of six months after such departure. In the event of death,
his options shall remain exercisable for a period of twelve months. Messrs.
Martin and Mockenhaupt have each waived the right to the $25,000 annual retainer
and the annual grant of stock options.

      Our employee director does not receive any additional compensation for
serving on our board of directors or any committee of our board of directors,
and our non-employee directors do not receive any compensation from us other
than the retainer, attendance fees and stock option grants described above.

Employment Agreement with Richard F. Allen, Sr.

      We entered into an employment agreement with Richard F. Allen, Sr.,
commencing on June 30, 2005, which has an initial term of four (4) years. Mr.
Allen serves as our President and Chief Executive Officer and is a member of our
board of directors. Mr. Allen receives a base salary of $250,000 per year and is
entitled to a discretionary bonus of up to $600,000 per year. The amount of Mr.
Allen's bonus will be determined by the board of directors, or our compensation
committee once formed, and will be based on the achievement of certain financial
milestones as determined by the board of directors or compensation committee.

      On June 30, 2005, the commencement date of Mr. Allen's employment
agreement, we paid Mr. Allen a one-time cash bonus of $315,000 in consideration
of his role in the consummation of the transactions that resulted in the
acquisition of the assets and business from the Seller Entities and Mr. Popeil.
Mr. Allen also received the right to purchase 800,313 restricted shares of our
common stock pursuant to a Restricted Stock Purchase Agreement at a price of
$0.01 per share. Mr. Allen received 60% of these shares (480,188) on June 30,
2005, and will be entitled to receive an additional 20% of these shares
(160,063) on each of the first two anniversaries of June 30, 2005. These shares
are subject to repurchase by us, at our option, at $0.01 per share, exercisable
upon the termination of Mr. Allen's employment voluntarily or for "cause," or if
certain performance targets are not satisfied. In addition, our option to
repurchase these shares will immediately lapse if Mr. Allen's employment is
terminated without "cause."

      Mr. Allen's employment agreement would be terminated under its terms upon
the death or disability of Mr. Allen. If we terminate his employment agreement
for "Cause" (as defined in the agreement) or if Mr. Allen terminates his
employment voluntarily for any reason before the end of the term, Mr. Allen will
be entitled to receive his base salary through the date his employment
terminates in addition to his pro rata bonus. If Mr. Allen's employment is
terminated by us without "cause," then he will be entitled to receive: (i) base
salary through the termination date; (ii) a single sum payment of $1,000,000;
and (iii) reimbursement for the cost of up to the first 12 months of continuing
group health plan coverage that Mr. Allen and his covered dependents would be
entitled to receive under federal law.


                                       59
<PAGE>

Employment Agreement with Evan J. Warshawsky

      Effective June 30, 2005, we entered into an employment agreement with Evan
Warshawsky, which has an initial term of three years. Pursuant to the agreement,
Mr. Warshawsky will serve as our Chief Financial Officer. Mr. Warshawsky will
receive a base salary of $200,000 per year and will be entitled to a
discretionary bonus of up to $300,000. The amount of Mr. Warshawsky's bonus will
be determined by the board of directors, or compensation committee, based on the
achievement of certain financial milestones as determined by the board of
directors or compensation committee.

      On the June 30, 2005, the commencement date of Mr. Warshawsky's employment
agreement, we paid Mr. Warshawsky a one-time cash bonus of $150,000 in
consideration of his role in the transactions that resulted in the acquisition
of the assets and business acquired from the Seller Entities and Mr. Popeil. In
addition, Mr. Warshawsky also received the right to purchase 160,063 restricted
shares of our common stock pursuant to a restricted stock purchase agreement, at
a price of $0.01 per share. We have an option to repurchase 50% of these shares
(80,032) at $0.01 per share exercisable if Mr. Warshawsky's employment is
terminated voluntarily or for "cause." Our repurchase right will lapse with
respect to each 25% (40,016) of these shares on each of the first two
anniversaries of June 30, 2005. In addition, our option to repurchase these
shares will immediately lapse if Mr. Warshawsky's employment is terminated
without "cause." On June 30, 2005, Mr. Warshawsky exercised his right to
purchase these shares and we issued such shares of our common stock to Mr.
Warshawsky as of that date.

      Mr. Warshawsky's employment agreement would be terminated under the terms
of that agreement upon the death or disability of Mr. Warshawsky. If we
terminate his employment agreement for "cause" (as defined in the agreement) or
if Mr. Warshawsky terminates his employment voluntarily for any reason before
the end of the term, Mr. Warshawsky will be entitled to receive his base salary
through the date his employment terminates in addition to his pro rata bonus. If
Mr. Warshawsky's employment is terminated by us without "cause" then he will be
entitled to receive: (i) base salary through the termination date; (ii) the
greater of three times his current base salary or his total compensation in the
previous twelve months (salary plus bonus); and (iii) reimbursement for the cost
of up to the first 12 months of continuing group health plan coverage that Mr.
Warshawsky and his covered dependents would be entitled to receive under federal
law.

2005 Stock Incentive Plan

      We have adopted a stock option plan (the "2005 Stock Incentive Plan"). The
purpose of the 2005 Stock Incentive Plan is to attract, motivate, reward and
retain our management personnel, employees, our directors and other third
parties through the use of equity-based awards. The 2005 Stock Incentive Plan
provides for awards of options to purchase shares of our common stock, stock
appreciation rights, restricted stock, restricted stock units and other
equity-based awards related to our common stock. The 2005 Stock Incentive Plan
relates to 79,561 share equivalents.


                                       60
<PAGE>

Compensation Committee Interlocks and Insider Participation

      None of our executive officers serves as a member of the board of
directors or the compensation committee of any other company that has one or
more executive officers serving as a member of our board of directors. None of
our employees or current or former officers will be appointed to the
compensation committee we plan to form.


Item 12. Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters

      Set forth below is information as of October 15, 2005, as to each class of
our equity securities, beneficially owned by all of our directors and each of
our executive, directors and executive officers as a group, and each beneficial
owner of more than 5% of any class of our voting securities.

<TABLE>
<CAPTION>
                                                                                                        Percent of
                            Name and Address of                           Number of Shares              Voting Stock
Title of Class              Beneficial Owner                              Beneficially Owned (1)        outstanding (2)
--------------------------- --------------------------------------------  ----------------------        ---------------
<S>                                               <C>                          <C>     <C>                  <C>
Common stock and Series A   Richard F. Allen, Sr. (3) ..................       506,713 (4)                  3.3%
Convertible Preferred
Stock

Common stock and Series A   Evan J. Warshawsky (3)......................       186,588 (5)                  1.2%
Convertible Preferred
Stock


Common stock and Series A   All directors and executive  officers as a
Convertible Preferred       group (5 persons) ..........................       693,301 (6)                  4.5%
Stock
</TABLE>


                                       61
<PAGE>

<TABLE>
<CAPTION>
                           5% or greater holders:
<S>                        <C>                                               <C>                       <C>
Series A                   GLG Partners American Opp Fund................    1,000,000 (7)                 6.5%
Convertible Preferred      PO Box 9080t
Stock                      Georgetown, Grand Cayman
                           Cayman Islands
                           Attn: Noam Gottesman

Series A                   Heartland Group Inc solely on behalf              1,500,000 (8)                 9.8%
Convertible Preferred          of the Heartland Value Fund...............
Stock                      789 North Water Street
                           Suite 500
                           Milwaukee, WI 53202
                           Attn: Paul Beste

Series A                   Janus Investments Fund........................    1,591,512 (9)                10.4%
Convertible Preferred      151 Detroit Avenue
Stock                      Denver, CO 80206
                           Attn: William Bales

Series A                   LBI Group Inc.................................     795,756 (10)                 5.2%
Convertible Preferred      Lehman Brothers
Stock                      399 Park Avenue
                           New York, NY 10022
                           Attn: Jeffrey Ferrell

Series A                   Sanders Opportunity Fund (Institutional), L.P.   1,450,245 (11)                 6.8%
Convertible Preferred      Sanders Morris Harris Inc.
Stock                      320 Park Avenue
                           New York, NY 10022
</TABLE>
------------------------------------

(1)   Shares of our common stock subject to warrants or options that are
      currently exercisable or exercisable within 60 days are deemed to be
      beneficially owned for the purposes of computing the percentage of
      ownership set forth in the above table, but are not treated as outstanding
      for the purpose of computing the percentage ownership of any other person.
      Unless otherwise noted, all persons named in the table have sole voting
      and investment power with respect to all shares of stock beneficially
      owned by them.


                                       62
<PAGE>

(2)   Because the common stock and the Series A Convertible Preferred Stock each
      has one vote per share on all matters and the Series A Convertible
      Preferred Stock is currently convertible into shares of common stock on a
      one for one basis, the percentage ownership is presented on the basis of
      the percentage of the sum of the number of shares of common stock and the
      number of shares of Series A Convertible Preferred Stock outstanding.
      Percentages are based on a total of 15,354,205 shares of common stock
      either outstanding on October 15, 2005, or underlying the shares of Series
      A Convertible Preferred Stock outstanding on that date.

(3)   The address for Messrs. Allen and Warshawsky is 21344 Superior Street,
      Chatsworth, California 91311.

(4)   Consists of 480,188 shares of our common stock and 26,525 shares of our
      Series A Convertible Preferred Stock.

(5)   Consists of 160,063 shares of our common stock and 26,525 shares of our
      Series A Convertible Preferred Stock.

(6)   Consists of shares owned by Messrs. Allen and Warshawsky. No other
      directors or executive directors beneficially own any shares of our
      capital stock.

(7)   Noam Gottesman exercises voting and/or 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 the above
      entities.

(8)   Paul Beste exercises voting and/or 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 the above entities.

(9)   William Bales exercises voting and/or 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 the above entities.

(10)  Jeffrey Ferrell exercises voting and/or investment powers for these
      shares. Although Mr. Ferrell may be deemed to be the beneficial owner, Mr.
      Ferrell disclaims beneficial ownership of the shares owned by the above
      entities.

(11)  Consists of shares of our Series A Convertible Preferred Stock purchased
      in the private placement. Brad Sanders exercises voting and/or investment
      powers for these shares. Although Brad Sanders may be deemed to be the
      beneficial owner, Brad Sanders disclaims beneficial ownership of the
      shares owned by the above entities.


                                       63
<PAGE>

Equity Compensation Plan Information for Fiscal 2005

      The following table summarizes as of June 30, 2005 the shares of our
common stock subject to outstanding awards or available for future awards under
our equity compensation plans.

<TABLE>
<CAPTION>

                                                                     Weighted- average              Number of shares
                                           Number of shares            exercise price           remaining available for
                                           to be issued upon           of outstanding         future issuance under equity
                                              exercise of            options, warrants       compensation plans (excluding
                                              outstanding                and rights          shares reflected in the first
                                           options, warrants                                            column)
           Plan Category                      and rights
------------------------------------    ------------------------    ---------------------    -------------------------------
<S>                                     <C>                         <C>                      <C>
Equity compensation plans approved
   by security
   holders                                      320,125(1)                $0.01                              --
Equity compensation plans not
   approved by security
   holders                                                                                              79,561(2)
                                        ------------------------    ---------------------    -------------------------------
Total                                           320,125                   $0.01                         79,561
                                        ========================    =====================    ===============================
</TABLE>

(1)   These shares were awarded to Mr. Allen pursuant to his employment
      agreement with us and a restricted stock purchase agreement. Mr. Allen
      will be entitled to purchase 50% of these shares for $0.01 per share on
      each of the first two anniversaries of June 30, 2005. These shares are
      subject to repurchase by us, at our option, at $0.01 per share,
      exercisable upon the termination of Mr. Allen's employment voluntarily or
      for "cause," or if certain performance targets are not satisfied.

(2)   Consists of 79,561 shares that may be issued under our 2005 Stock
      Incentive Plan.

Item 13. Certain Relationships and Related Transactions

Origins of the Ronco Asset Purchase

      In October 2003, Richard Allen contacted Ron Popeil to explore the
possibility of effecting the purchase of the business of Ronco Inventions, LLC
and other entities affiliated with Mr. Popeil. Mr. Allen enlisted the assistance
of UCC Capital Corporation, an advisory firm based in New York, and certain of
its principals (collectively, the "Promoters") to provide advice on the specific
structure of the proposed asset purchase of Ronco.

      RMC was formed in October 2004 for the purpose of acquiring the assets
comprising the business of these entities and Mr. Popeil. Shares of the common
stock of RMC were issued to a group of entities owned, controlled and/or
affiliated with the Promoters consisting of Copper Beech Equity Partners LLC,
Coll International LLC, and Content Holding LLC (collectively and inclusive of
their affiliates, the "Venture Group"). On December 10, 2004, RMC entered into
an Asset Purchase Agreement with the Seller Entities and Mr. Popeil (the "Asset
Purchase Agreement"). The Venture Group collectively held 533,334 shares of
common stock (equaling approximately 3.5% of the sum of the issued and
outstanding common stock and Series A Convertible Preferred Stock). In addition,
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 cash and cash
equivalents of Ronco Corporation in excess of $6 million at the closing, which
fees were allocated among the members of the Venture Group and the Promoters as
mutually agreed. We


                                       64
<PAGE>

also reimbursed the Venture Group for certain expenses aggregating $700,000 that
the Venture Group incurred in connection with the purchase of these assets.

      Prior to the execution of the Asset Purchase Agreement, RMC secured its
initial working capital from a group of private accredited investors consisting
of Frank Milewski, Paul Wallace and the Terra Nova Group (collectively, the
"Ronco Private Group") through the sale of restricted shares and approximately
$392,000 in promissory notes of RMC. Upon the closing, the promissory notes held
by the Ronco Private Group were redeemed at face value. In addition, the Ronco
Private Group collectively owns 266,668 shares of common stock (equaling 1.7% of
the sum of the issued and outstanding common stock and Series A Convertible
Preferred Stock).

      The shares held by the Venture Group and the Ronco Private Group are
restricted shares, as defined by the Securities Act. The shares held by Copper
Beech, Content Holding and the Ronco Private Group are being registered pursuant
to the terms of the Registration Rights Agreement. The shares of common stock
held by Copper Beech and Content Holding 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 by each member of
the Venture Group through the public market. The Placement Agent may waive such
lockup agreement in its discretion.

      We have agreed to indemnify and hold harmless and generally release
Content Holding LLC, Copper Beech Equity Partners LLC, Copperfield Equity
Partners LLC (an affiliate of Copper Beech Equity Partners LLC), Coll
International LLC, 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 Seller 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.

      The Venture Group and the Ronco Private 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 Company Common Stock that those entities and persons
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 the Company
and the members of the Venture Group 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 the members of the Venture Group or the Ronco
Private Group and would not go to the Company.

Preferred Stock Financing

      As described elsewhere in this report, on June 30, 2005, we issued and
sold to our principal stockholders (including each beneficial owner of more than
5% of our voting securities) and to Messrs. Richard F. Allen, Sr. and Evan J.
Warshawsky, our Chief Executive Officer and Chief Financial Officer,
respectively, shares of our Series A Convertible Preferred


                                       65
<PAGE>

Stock to finance the cash portion of the purchase price of the assets that were
acquired under the Asset Purchase Agreement with Mr. Ronald M. Popeil and the
Seller Entities. These shares are convertible into 13,262,600 shares of our
common stock. We offered and sold these shares of Series A Convertible Preferred
Stock in a private transaction that closed contemporaneously with the closing of
the acquisition of the assets under the Asset Purchase Agreement. These shares
were sold at a price of $3.77.

      Under the terms of a Registration Rights Agreement with the purchasers of
the Series A Convertible Preferred Stock, the purchasers are entitled to certain
rights with respect to the registration of their shares under the Securities
Act.


                                       66
<PAGE>

Item 14. Certain Principal Accountant Fees and Services

 Audit and Non-Audit Fees

      The following is a summary of the fees billed to us by Mahoney Cohen &
Company., CPA, P.C., our independent registered public accounting firm, for
professional services rendered for the period ended June 30, 2005:


                                        Period Ended
Fee Category                            June 30, 2005
-----------------------------    ----------------------------
Audit Fees(1)                               $  216,000
                                 ----------------------------
Total Fees                                  $  216,000
                                 ----------------------------

------------------
(1) Consists of fees associated with the annual audit of our financial
statements.

On July 13, 2005, Our Board of Directors appointed Mahoney Cohen & Company, CPA,
P.C. as our independent auditors for the period from October 15, 2004 (date of
inception) to June 30, 2005. We did not procure any other services from Mahoney
Cohen & Company, CPA, P.C. in fiscal 2005 or 2004.

      The board of directors pre-approves all audit services and permitted
non-audit services (including the fees and terms thereof) to be performed by our
independent registered public accounting firm, subject to the de minimus
exceptions for non-audit services described in Section 10A(i)(1)(B) of the
Exchange Act, which are approved by the board of directors prior to the
completion of the audit. The board of directors may form and delegate authority
to committees consisting of one or more members when appropriate, including the
authority to grant pre-approvals of audit and permitted non-audit services,
provided that decisions of such committee to grant pre-approvals shall be
presented to the full board of directors at its next scheduled meeting.

      During fiscal 2005, the board of directors pre-approved all audit services
and permitted non-audit services performed by our independent registered public
accounting firm and did not rely upon the de minimus exceptions described in
Section 10A(i)(1)(B) of the Exchange Act.

      The board of directors has considered and determined that Mahoney Cohen &
Company, CPA, P.C.'s provision of these services is compatible with maintaining
its independence.

Item 15. Exhibits, Financial Statement Schedules

      (a) Financial Statements.

      (b) Financial Statement Schedules.

      (c) Exhibits.

          See Exhibit Index.


                                       67
<PAGE>

                                   SIGNATURES



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


Date:    November 3, 2005            RONCO CORPORATION


                                     By:   /s/ Evan J. Warshawsky
                                         ---------------------------------------
                                           Evan J. Warshawsky,
                                           Chief Financial Officer and Secretary


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>
         Signature                                   Title                         Date
         ---------                                   -----                         ----
<S>                                         <C>                                <C>
    /s/ Richard F. Allen, Sr.               Chief Executive Officer,            November 3, 2005
------------------------------------        President and Director
    Richard F. Allen, Sr.                   (Principal Executive Officer)


    /s/ Evan J. Warshawsky                  Chief Financial Officer             November 3, 2005
---------------------------                 and Secretary (Principal
    Evan J. Warshawsky                      Accounting Officer and
                                            Principal Financial Officer)


    /s/ Harold D. Kahn                              Director                    November 3, 2005
------------------------------------
    Harold D. Kahn

    /s/ A. Emerson Martin, II                       Director                    November 3, 2005
------------------------------------
    A. Emerson Martin, II

    /s/ Gregg A. Mockenhaupt                        Director                    November 3, 2005
------------------------------------
    Gregg A. Mockenhaupt

</TABLE>


                                       68
<PAGE>

                                  EXHIBIT INDEX
<TABLE>
<CAPTION>

Exhibit No.                                                  Description
----------------  --------------------------------------------------------------------------------------------------
<S>              <C>
       2.1       Agreement and Plan of Merger dated May 20, 2005, among Fi-Tek VII, Inc., now known as Ronco
                 Corporation; 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)      Articles of Incorporation of Fi-Tek VII, Inc., now known as Ronco Corporation, as amended.(4)

     3.1(ii)     Bylaws of Fi-Tek VII, Inc., now known as Ronco Corporation. (4)

       4.1       Certificate of Designation of Powers, Preferences and Rights of the Series A Convertible Preferred
                 Stock of Ronco Corporation. (4)

       4.2       Ronco Corporation 2005 Stock Incentive Plan. (4)*

      10.1       Consulting Agreement between Charles E. Campbell & Associates, Inc., Ronco Acquisition Corporation
                 and Ronco Marketing Corporation dated April 10, 2005. (2)

      10.2       Lock-Up Agreement for Copper Beech Equity Partners dated June 28, 2005. (4)

      10.3       Lock-Up Agreement for Content Holding LLC. (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. (4)

      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 by and among Ronald M. Popeil, Alan L. Backus and Ronco
                 Marketing Corporation. (4)

      10.9       Placement Agent Agreement dated May 26, 2005, between Ronco Marketing Corporation and
                 Sanders Morris Harris. (4)
</TABLE>


                                       69
<PAGE>

<TABLE>
<CAPTION>

Exhibit No.                                                  Description
----------------  --------------------------------------------------------------------------------------------------
<S>              <C>
      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      Warrant between Ronco Corporation and Sanders Morris Harris Inc. (4)

      10.12      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)

      10.13      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. (4)*

      10.16      Restricted Stock Purchase Agreement between Ronco Corporation and Evan Warshawsky. (4)*

      10.17      Restricted Stock Purchase Agreement between Ronco Corporation and Gilbert Azafrani (4)*

      10.18      Assignment and Assumption Agreement between Ronco Inc. and Ronco Marketing Corporation dated June
                 28, 2005 (4)

      10.19      Transition Service Agreement dated June 30, 2005 among Ronco Inventions LLC, Popeil Inventions
                 Inc., RP Productions, Inc. and Ronco Marketing Corporation (4)

      10.20      Purchase and Sale Agreement by and between Prestige Capital Corporation and Ronco Corporation dated as
                 of October 25, 2005 (3)

      14.1       Code of 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 (4)

      31.2       Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act (4)

      32.1       Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act (4)
</TABLE>


                                       70
<PAGE>

<TABLE>
<CAPTION>

Exhibit No.                                                  Description
----------------  --------------------------------------------------------------------------------------------------
<S>              <C>
      32.2       Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act (4)

</TABLE>

------------------------------------

(1)   Incorporated by reference from Exhibits 10.9 and 10.10 to Form 8-K filed
      July 1, 2005.

(2)   Incorporated by reference from Exhibit 10.1 to Registration Statement No.
      333-127056 filed July 29, 2005.

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

(4)   Filed herewith.

      *     Management Compensation Plan or Arrangements


                                       71
<PAGE>

Table of Contents


                        RONCO CORPORATION AND SUBSIDIARY

             INDEX TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S>                                                                                                <C>
        Report of Independent Registered Public Accounting Firm,
           Mahoney Cohen & Company, CPA, P.C.                                                       F-2 - F-3

        Independent Auditors' Report, VELAH Group LLP                                                  F-4

        Report of Independent Registered Public Accouting Firm, Weinberg & Company                     F-5

        Consolidated and Combined Balance Sheets at June 30, 2005 (Successor)
           and September 30, 2004 (Predecessor)                                                        F-6
        Consolidated and Combined Statements of Operations for the period
           from October 15, 2004 (Date of Inception) to June 30, 2005
           (Successor), for the nine months ended June 29, 2005 and September
           30, 2004, and for the years ended December 31, 2003 and 2002 (Predecessor)                  F-7

        Consolidated and Combined Statements of Stockholders' and Members'
             Equity (Deficiency) for the period from October 15, 2004 (Date of
           Inception) to June 30, 2005 (Successor), for the nine months ended
           June 29, 2005 and September 30, 2004, and for the years ended
           December 31, 2003 and 2002 (Predecessor)                                                    F-8

        Consolidated and Combined Statements of Cash Flows for the period from
           October 15, 2004 (Date of Inception) to June 30, 2005 (Successor),
           for the nine months ended June 29, 2005 and September 30, 2004, and
           for the years ended December 31, 2003 and 2002 (Predecessor)                                F-9

        Notes to Consolidated and Combined Financial Statements                                    F-10 - F-27
</TABLE>





                                      F-1
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Ronco Corporation and Subsidiary

We have audited the accompanying consolidated balance sheet of Ronco Corporation
and subsidiary (the "Successor" or "Company") as of June 30, 2005 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the period from October 15, 2004 (date of inception) through June 30,
2005. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company has determined that it
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Ronco Corporation
and subsidiary as of June 30, 2005, and the results of their operations and
their cash flows for the period from October 15, 2004 (date of inception)
through June 30, 2005 in conformity with accounting principles generally
accepted in the United States of America.

Mahoney Cohen & Company, CPA, P.C.
New York, New York
October 20, 2005, except for Note 20 paragraphs 1 and 2 which is as of October
25, 2005





                                      F-2
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Members and Stockholders
Ronco Inventions, LLC and Affiliated Companies

We have audited the accompanying combined balance sheet of Ronco Inventions, LLC
and Affiliated Companies (the "Predecessor" or the "Company") as of September
30, 2004, and the combined statements of operations, stockholders' and members'
deficiency and cash flows for the nine months ended June 29, 2005 and September
30, 2004. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company has determined that it
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Ronco Inventions,
LLC and Affiliated Companies as September 30, 2004, and the results of their
operations and their cash flows for the nine months ended June 29, 2005 and
September 30, 2004 in conformity with accounting principles generally accepted
in the United States of America.

Mahoney Cohen & Company, CPA, P.C.
New York, New York
October 20, 2005



                                      F-3
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Members and Stockholder
Ronco Inventions, LLC and Affiliated Companies:

We have audited the accompanying combined statements of operations,
stockholders' and members' deficiency, and combined cash flows of Ronco
Inventions, LLC and Affiliated Companies (collectively, the "Company"), which
are under common ownership and common management, for the year ended December
31, 2003. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the statements of operations, stockholders' and members'
deficiency, and combined cash flows referred to above present fairly, in all
material respects, the results of its operations and its cash flows of the
Company for the year then ended in conformity with accounting principles
generally accepted in the United States of America.

VELAH Group LLP
Los Angeles, California
August 19, 2004





                                      F-4
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Stockholders and Board of Directors
Ronco Inventions, LLC and Affiliated Entities


We have audited the accompanying combined balance sheet of Ronco Inventions, LLC
and Affiliated Entities as of December 31, 2002 and the related combined
statements of operations, accumulated deficit and cash flows for the year then
ended. These combined financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
combined financial statements based on our audit.

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

In our opinion, the combined financial statements referred to above present
fairly in all material respects, the financial position of Ronco Inventions, LLC
and Affiliated Entities as of December 31, 2002, and the results of their
operations and their cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of America.

As discussed in Note 15 to the combined financial statements, certain errors
resulting in an understatement of previously reported property and equipment at
December 31, 2002 were discovered by management of the Company during the period
ended June 29, 2005. Accordingly, the combined financial statements for the year
ended December 31, 2002 have been restated.


WEINBERG & COMPANY, P.A.


Boca Raton, Florida
June 12, 2003, except for note 15, as to which the date is October 12, 2005







                                      F-5
<PAGE>

                    RONCO CORPORATION AND SUBSIDIARY

                CONSOLIDATED AND COMBINED BALANCE SHEETS
                   JUNE 30, 2005 AND SEPTEMBER 30, 2004


<TABLE>
<CAPTION>
                                     ASSETS

                                                                                              Successor          Predecessor
                                                                                            June 30, 2005     September 30, 2004
                                                                                          ----------------     ----------------
<S>                                                                                       <C>                  <C>
CURRENT ASSETS:
    Cash and cash equivalents                                                             $        834,358     $      2,421,984
    Accounts receivable, net of allowance for doubtful accounts of
       $1,242,000 at September 30, 2004                                                          2,264,315            3,481,628
    Inventories                                                                                  8,968,199           11,465,549
    Prepaid expenses and other current assets                                                    2,537,506            3,005,629
    Due from predecessor entities                                                                  135,676                   --
                                                                                          ----------------     ----------------
       Total current assets                                                                     14,740,054           20,374,790

INVESTMENTS                                                                                      1,627,823            2,061,107

PROPERTY AND EQUIPMENT, Net                                                                        925,000            1,253,803

OTHER ASSETS:
    Production costs, net of accumulated amortization $588,986
       at September 30, 2004                                                                       100,000              313,039
    Due from affiliate                                                                                  --              190,034
    Deposits                                                                                       182,500              211,505

DEFERRED INCOME TAXES                                                                              310,000                   --

INTANGIBLE ASSETS                                                                               42,923,600                   --

GOODWILL                                                                                         2,953,481                   --
                                                                                          ----------------     ----------------

                                                                                          $     63,762,458     $     24,404,278
                                                                                          ================     ================

         LIABILITIES AND STOCKHOLDERS' AND MEMBERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES:
    Current maturities of notes payable                                                   $      2,876,000     $             --
    Accounts payable                                                                             3,156,080            7,883,089
    Accrued expenses                                                                               430,251              825,388
    Due to affiliates                                                                                   --              120,462
    Product development and license fees payable                                                        --            7,070,465
    Deferred income                                                                                 75,000            4,502,924
                                                                                          ----------------     ----------------

       Total current liabilities                                                                 6,537,331           20,402,328

LONG-TERM LIABILITIES:
    Loan payable to stockholder and affiliate                                                           --           39,150,000
    Deferred income                                                                                     --            1,241,662
    Notes payable, less current maturities                                                      10,282,180                   --

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' AND MEMBERS' EQUITY (DEFICIENCY)
    Series A Convertible Preferred stock, $.00001 par value;
      20,000,000 shares authorized; 13,262,600 shares issued and
      outstanding at June 30, 2005                                                                     133                   --
    Common stock, $.00001 par value; 500,000,000 shares authorized
      2,091,605 shares issued and outstanding at June 30, 2005                                          21                   --
    Common stock - Popeil Inventions, Inc., $1 par value; 1,000 shares authorized,
      issued and outstanding at September 30, 2004                                                      --                1,000
    Common stock - R.P.  Productions, Inc., $.0025 par value;
      10,000,000 shares authorized; 100 shares issued and outstanding at
      September 30, 2004                                                                                --                    1
    Common stock to be issued                                                                    1,206,870                   --
    Additional paid-in capital                                                                  49,513,066            1,194,375
    Deferred compensation                                                                       (3,310,096)                  --
    Accumulated deficit                                                                           (467,047)         (23,799,790)
    Members' deficit                                                                                    --          (13,785,298)
                                                                                          ----------------     ----------------

       Total stockholders' and members' equity (deficiency)                                     46,942,947          (36,389,712)

                                                                                          ----------------     ----------------

                                                                                          $     63,762,458     $     24,404,278
                                                                                          ================     ================
</TABLE>

                             See accompanying notes.

                                       F-6
<PAGE>

                        RONCO CORPORATION AND SUBSIDIARY

               CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

 PERIOD FROM OCTOBER 15, 2004 (DATE OF INCEPTION) TO JUNE 30, 2005, NINE MONTHS
ENDED JUNE 29, 2005 AND SEPTEMBER 30, 2004 AND YEARS ENDED DECEMBER 31, 2003 AND
                                      2002

<TABLE>
<CAPTION>
                                                                     Successor                        Predecessor
                                                                 ------------------     -----------------------------------------
                                                                    Period from
                                                                 October 15, 2004
                                                                (Date of Inception)     Nine Months Ended      Nine Months Ended
                                                                  to June 30, 2005         June 29, 2005       September 30, 2004
                                                                 ------------------     ------------------     ------------------
<S>                                                         <C>                       <C>                  <C>
Net sales                                                        $               --     $       68,985,101     $       63,245,257
Cost of sales                                                                    --            (16,844,057)           (16,842,282)

                                                                 ------------------     ------------------     ------------------

Gross profit                                                                     --             52,141,044             46,402,975

Selling, general and administrative expenses                                765,967             50,446,473             53,216,762
Impairment loss on equipment                                                     --                     --                771,048
                                                                 ------------------     ------------------     ------------------

                                                                            765,967             50,446,473             53,987,810
                                                                 ------------------     ------------------     ------------------

(Loss) income from operations                                              (765,967)             1,694,571             (7,584,835)

Other income, net                                                                --                 (7,840)                    --
Interest expense, net of interest income of
  $104,251 and $133,830 - June 29, 2005
  and September 30, 2004, respectively                                      (11,080)            (2,824,260)              (120,482)
                                                                 ------------------     ------------------     ------------------
Loss before benefit for income taxes                                       (777,047)            (1,137,529)            (7,705,317)

Benefit for income taxes                                                   (310,000)                    --                     --
                                                                 ------------------     ------------------     ------------------

Net loss                                                         $         (467,047)    $       (1,137,529)    $       (7,705,317)
                                                                 ==================     ==================     ==================

NET LOSS PER SHARE:

Net loss per share - basic and diluted                           $            (0.65)                   N/A                    N/A
                                                                 ==================     ==================     ==================

Weighted average shares outstanding - basic and diluted                     715,792                    N/A                    N/A
                                                                 ==================     ==================     ==================
</TABLE>

<TABLE>
<CAPTION>
                                                                            Predecessor
                                                               -------------------------------------
                                                                                       Year Ended
                                                                  Year Ended       December 31, 2002
                                                              December 31, 2003         Restated
                                                              -----------------    -----------------

<S>                                                            <C>                  <C>
Net sales                                                      $     93,500,173     $     98,362,744
Cost of sales                                                       (29,274,097)         (36,153,419)

                                                               ----------------     ----------------

Gross profit                                                         64,226,076           62,209,325

Selling, general and administrative expenses                         67,652,570           71,937,421
Impairment loss on Tooling                                                   --                   --
                                                               ----------------     ----------------

                                                                     67,652,570           71,937,421
                                                               ----------------     ----------------

(Loss) income from operations                                        (3,426,494)          (9,728,096)

Other income, net                                                       385,992              253,980
Interest expense, net of interest income of
  $104,251 and $133,830 - June 29, 2005
  and September 30, 2004, respectively                                       --                   --
                                                               ----------------     ----------------
Loss before benefit for income taxes                                 (3,040,502)          (9,474,116)

Benefit for income taxes                                                     --                   --
                                                               ----------------     ----------------

Net loss                                                       $     (3,040,502)    $     (9,474,116)
                                                               ================     ================

NET LOSS PER SHARE:

Net loss per share - basic and diluted                                      N/A                  N/A
                                                               ================     ================

Weighted average shares outstanding - basic and diluted                     N/A                  N/A
                                                               ================     ================
</TABLE>

                             See accompanying notes.

                                       F-7

<PAGE>

                        RONCO CORPORATION AND SUBSIDIARY

              CONSOLIDATED AND COMBINED STATEMENTS OF STOCKHOLDERS'
                        AND MEMBERS' EQUITY (DEFICIENCY)
       PERIOD FROM OCTOBER 15, 2004 (DATE OF INCEPTION) TO JUNE 30, 2005,
             NINE MONTHS ENDED JUNE 29, 2005 AND SEPTEMBER 30, 2004
                   AND YEARS ENDED DECEMBER 31, 2003 AND 2002

Successor:

<TABLE>
<CAPTION>
                                                   Ronco Corporation               Ronco Corporation
                                                      Common Stock             Series A Preferred Stock
                                              ----------------------------    --------------------------   Common Stock
                                                 Shares          Amount          Shares        Amount      to be Issued
                                              ------------    ------------    -----------    -----------   ------------
<S>                                              <C>          <C>              <C>           <C>            <C>
 BALANCE, beginning at October 15, 2004                 --    $         --             --    $        --    $        --
 (Date of Inception)

 Issuance of Common Stock                          800,002               8

 Recapitalization of Fi-Tek VII, Inc.              477,639               5

 Issuance of Preferred Stock                                                   13,262,600            133

 Issuance costs on Preferred Stock

 Issuance of Common Stock to officers at           640,251               6
 fair value (cash received $6,403)

 Issuance of Common Stock for transaction          173,713               2
 costs at fair value (cash received $1,601)

 Common stock to be issued to officer as                                                                      1,206,870
 deferred compensation at fair value
 (cash received $3,200)

 Net loss
                                              ------------    ------------    -----------    -----------    -----------

 BALANCE, June 30, 2005                          2,091,605    $         21     13,262,600    $       133    $ 1,206,870
                                              ============    ============    ===========    ===========    ===========

<CAPTION>
                                               Additional
                                                Paid-in          Deferred       Accumulated
                                                Capital        Compensation       Deficit           Total
                                              ------------     ------------     -----------     ------------
<S>                                           <C>              <C>              <C>             <C>
 BALANCE, beginning at October 15, 2004       $         --     $         --     $        --     $         --
 (Date of Inception)

 Issuance of Common Stock                            3,237                                             3,245

 Recapitalization of Fi-Tek VII, Inc.               11,784                                            11,789

 Issuance of Preferred Stock                    49,999,867                                        50,000,000

 Issuance costs on Preferred Stock              (3,570,460)                                       (3,570,460)

 Issuance of Common Stock to officers at         2,413,741       (2,106,426)                         307,321
 fair value (cash received $6,403)

 Issuance of Common Stock for transaction          654,897                                           654,899
 costs at fair value (cash received $1,601)

 Common stock to be issued to officer as                         (1,203,670)                           3,200
 deferred compensation at fair value
 (cash received $3,200)

 Net loss                                                                          (467,047)        (467,047)
                                              ------------     ------------     -----------     ------------

 BALANCE, June 30, 2005                       $ 49,513,066     $ (3,310,096)    $  (467,047)    $ 46,942,947
                                              ============     ============     ===========     ============
</TABLE>

Predecessor:

<TABLE>
<CAPTION>
                                   Popeil Inventions, Inc.           R.P. Productions, Inc.
                                        Common Stock                      Common Stock              Additional
                               -----------------------------     -----------------------------        Paid-in       Accumulated
                                  Shares           Amount           Shares           Amount           Capital         Deficit
                               ------------     ------------     ------------     ------------     ------------     ------------
<S>                                   <C>       <C>                       <C>     <C>              <C>              <C>
BALANCE, January 1, 2002              1,000     $      1,000              100     $          1     $  1,194,375     $(16,030,483)

Reclassification                         --               --               --               --               --        3,943,362

Prior period adjustment                  --               --               --               --               --         (135,489)

                               ------------     ------------     ------------     ------------     ------------     ------------
January 1, 2002, As restated          1,000            1,000              100                1        1,194,375       12,222,610

Net loss (Restated)                                                                                                   (5,712,123)

Dividends                                                                                                               (482,306)

                               ------------     ------------     ------------     ------------     ------------     ------------
BALANCE, December 31, 2002            1,000            1,000              100                1        1,194,375      (18,417,039)

Net loss                                                                                                                (364,024)

                               ------------     ------------     ------------     ------------     ------------     ------------
BALANCE, December 31, 2003            1,000            1,000              100                1        1,194,375      (18,781,063)

Net loss                                                                                                              (5,018,727)

                               ------------     ------------     ------------     ------------     ------------     ------------
BALANCE, September 30, 2004           1,000            1,000              100                1        1,194,375      (23,799,790)

Net loss (Income)                                                                                                      2,110,822

                               ------------     ------------     ------------     ------------     ------------     ------------
BALANCE, June 29, 2005                1,000     $      1,000              100     $          1     $  1,194,375     $(21,688,968)
                               ============     ============     ============     ============     ============     ============





<CAPTION>
                                      Ronco
                                 Inventions, LLC
                                     Members'
                                      Deficit           Total
                                   ------------     ------------
<S>                                <C>              <C>
BALANCE, January 1, 2002           $   (481,308)    $(15,316,415)

Reclassification                     (3,943,362)              --

Prior period adjustment                (235,367)         (371,056)

                                   ------------     ------------
January 1, 2002, As restated         (4,660,237)      15,687,471

Net loss (Restated)                  (3,761,993)      (9,474,116)

Dividends                                    --         (482,306)

                                   ------------     ------------
BALANCE, December 31, 2002           (8,422,230)     (25,643,893)

Net loss                             (2,676,478)      (3,040,502)

                                   ------------     ------------
BALANCE, December 31, 2003          (11,098,708)     (28,684,395)

Net loss                             (2,686,590)      (7,705,317)

                                   ------------     ------------
BALANCE, September 30, 2004         (13,785,298)     (36,389,712)

Net loss (Income)                    (3,248,351)      (1,137,529)

                                   ------------     ------------
BALANCE, June 29, 2005             $(17,033,649)    $(37,527,241)
                                   ============     ============
</TABLE>

                             See accompanying notes.


                                       F-8
<PAGE>

                        RONCO CORPORATION AND SUBSIDIARY

               CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
       PERIOD FROM OCTOBER 15, 2004 (DATE OF INCEPTION) TO JUNE 30, 2005,
             NINE MONTHS ENDED JUNE 29, 2005 AND SEPTEMBER 30, 2004
                   AND YEARS ENDED DECEMBER 31, 2003 AND 2002
<TABLE>
<CAPTION>
                                                                         Successor
                                                                  -----------------------
                                                                        Period from                     Predecessor
                                                                     October 15, 2004      ---------------------------------------
                                                                   (Date of Inception)     Nine Months Ended     Nine Months Ended
                                                                     to June 30, 2005        June 29, 2005      September 30, 2004
                                                                  -----------------------  -----------------    ------------------
<S>                                                                 <C>                    <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                        $         (467,047)    $      (1,137,529)    $      (7,705,317)
    Adjustments to reconcile net loss to net cash
   (used in) provided by operating activities:
      Depreciation and amortization                                                 --               601,671               953,928
      Gain on sale of property and equipment                                        --                    --                    --
      Impairment loss on Tooling                                                    --                    --               771,048
      Bad debt expense                                                              --                    --             1,588,371
      Deferred income taxes                                                   (310,000)                   --                    --
      Compensation expense from the issuance of common stock                   300,919                    --                    --
      Changes in operating assets and liabilities, net of effect
      of acquisition of businesses:
        Accounts receivable                                                         --             1,214,221             4,498,179
        Inventories                                                                 --             2,497,350            (5,652,929)
        Prepaid expenses and other current assets                             (210,490)              668,872             2,222,083
        Other assets                                                                --                (6,705)             (454,214)
        Accounts payable                                                            --            (4,994,730)              206,150
        Accrued expenses                                                        11,080             2,798,142               177,827
        Royalty and license fees payable                                            --              (580,027)          (40,380,573)
        Deferred income                                                             --            (3,444,870)            2,548,315
                                                                    ------------------     -----------------     -----------------

    Net cash (used in) provided by operating activities                       (675,538)           (2,383,605)          (41,227,132)
                                                                    ------------------     -----------------     -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Property and equipment purchased                                                --              (453,519)             (243,084)
    Proceeds from sale of property and equipment                                    --                    --                    --
    Deposit received on acquisition of Successor                                    --               100,000                    --
    Proceeds from investment in securities                                          --               500,000               500,003
    Acquisition of businesses, net of cash acquired of $12,293             (44,934,093)                   --                    --
                                                                    ------------------     -----------------     -----------------

    Net cash (used in) provided by investing activities                    (44,934,093)              146,481               256,919
                                                                    ------------------     -----------------     -----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from loans from stockholder and affiliate                              --                    --            39,150,000
    Proceeds from note payable                                                 391,810                    --                    --
    Payments on note payable                                                  (391,810)                   --                    --
    Net advances to affiliates                                                      --                12,339               (81,436)
    Dividends paid                                                                  --                    --                    --
    Proceeds from issuance of preferred stock, net of issuance
    costs of $3,570,460                                                     46,429,540                    --                    --
    Issuance of common stock                                                    14,449                    --                    --
                                                                    ------------------     -----------------     -----------------

    Net cash provided by (used in) financing activities                     46,443,989                12,339            39,068,564
                                                                    ------------------     -----------------     -----------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                           834,358            (2,224,785)           (1,901,649)

CASH AND CASH EQUIVALENTS, Beginning of Period                                      --             2,421,984             4,323,633
                                                                    ------------------     -----------------     -----------------

CASH AND CASH EQUIVALENTS, End of Period                            $          834,358     $         197,199     $       2,421,984
                                                                    ==================     =================     =================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
     Income taxes                                                   $               --     $           1,600     $           1,600
                                                                    ==================     =================     =================

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
    On June 30, 2005, the Company acquired businesses (see Note 2).
    The following table summarizes the purchase
    transaction on the date of acquisition:

      Purchase Price:
        Cash                                                        $       40,209,000
        Transaction costs (including $653,298 of common
        stock issued)                                                        5,728,859
        Notes Payable                                                       13,158,180
                                                                    ------------------
        Total purchase price                                                59,096,039

      Less Fair Value of:
        Assets acquired                                                     59,454,129
        Liabilities assumed                                                 (3,311,571)
                                                                    ------------------

      Goodwill                                                      $        2,953,481
                                                                    ==================


    On June 30, 2005, the Company issued common stock at fair value of $3,310,096 for deferred compensation.

    On June 30, 2005, the Company accrued $338,175 of transaction costs.

<CAPTION>
                                                                                    Predecessor
                                                                       -------------------------------------
                                                                          Year Ended          Year Ended
                                                                       December 31, 2003   December 31, 2002
                                                                                              (Restated)
                                                                       -----------------   -----------------
<S>                                                                     <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                            $    (3,040,502)    $    (9,474,116)
    Adjustments to reconcile net loss to net cash
   (used in) provided by operating activities:
      Depreciation and amortization                                           1,391,671           1,151,112
      Gain on sale of property and equipment                                       (624)                 --
      Impairment loss on equipment                                                   --                  --
      Bad debt expense                                                               --             760,036
      Deferred income taxes                                                          --                  --
      Compensation expense from the issuance of common stock                         --                  --
      Changes in operating assets and liabilities, net of effect
      of acquisition of businesses:
        Accounts receivable                                                    (670,591)          2,819,279
        Inventories                                                           1,338,015          (2,205,155)
        Prepaid expenses and other current assets                               (57,213)         (2,056,737)
        Other assets                                                           (361,481)            137,235
        Accounts payable                                                      1,030,675            (249,511)
        Accrued expenses                                                        237,059          (2,390,712)
        Royalty and license fees payable                                      1,497,327           9,303,930
        Deferred income                                                        (704,893)           (771,884)
                                                                        ---------------     ---------------

    Net cash (used in) provided by operating activities                         659,443          (2,976,523)
                                                                        ---------------     ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Property and equipment purchased                                           (555,842)         (1,330,786)
    Proceeds from sale of property and equipment                                  1,000                  --
    Deposit received on acquisition of Successor                                     --                  --
    Proceeds from investment in securities                                           --             111,691
    Acquisition of businesses, net of cash acquired of $12,293                       --                  --
                                                                        ---------------     ---------------

    Net cash (used in) provided by investing activities                        (554,842)         (1,219,095)
                                                                        ---------------     ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from loans from stockholder and affiliate                               --                  --
    Proceeds from note payable                                                       --             750,000
    Payments on note payable                                                   (375,000)           (375,000)
    Net advances to affiliates                                                   11,600             (56,315)
    Dividends paid                                                                   --            (482,306)
    Proceeds from issuance of preferred stock, net of issuance
    costs of $3,570,460                                                              --                  --
    Issuance of common stock                                                         --                  --
                                                                        ---------------     ---------------

    Net cash provided by (used in) financing activities                        (363,400)           (163,621)
                                                                        ---------------     ---------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                           (258,799)         (4,359,239)

CASH AND CASH EQUIVALENTS, Beginning of Period                                4,582,432           8,941,671
                                                                        ---------------     ---------------

CASH AND CASH EQUIVALENTS, End of Period                                $     4,323,633     $     4,582,432
                                                                        ===============     ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
     Income taxes                                                       $         1,600     $         1,600
                                                                        ===============     ===============
</TABLE>

                             See accompanying notes.


                                       F-9
<PAGE>


                        RONCO CORPORATION AND SUBSIDIARY

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS


NOTE 1  -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            Business

            Ronco Corporation (the "Company" or the "Successor"), a Delaware
            corporation, is a leading provider of proprietary consumer products
            for the kitchen and home. The Company markets its products primarily
            in the United States through the broadcast of direct response
            commercial announcements known as infomercials, internet
            advertising, its in-house customer service department,
            tele-marketing and through wholesale distributors to retailers.

            On June 27, 2005, Fi-Tek VII, Inc. ("Fi-Tek"), a publicly traded
            shell corporation, acquired all of the outstanding shares of Ronco
            Marketing Corporation ("RMC") through the merger of a wholly-owned
            subsidiary of Fi-Tek with and into RMC. RMC continued as the
            surviving corporation after this transaction and became a
            wholly-owned subsidiary of the Company. Upon closing of the merger,
            Fi-Tek changed its name to Ronco Corporation and completed a 1 to 89
            stock split of Fi-Tek outstanding shares of common stock. In
            exchange for their shares of RMC, the former holders of RMC common
            stock received 800,002 post-reverse split shares of the Company's
            stock. The Company's existing stockholders (the stockholders of the
            Company when it was operating as Fi-Tek) retained the remaining
            477,639 shares of the outstanding common stock of the Company
            following the merger and reverse stock split of the common stock.
            The transaction was accounted for as a reverse acquisition into a
            publicly traded shell corporation, and accordingly, no goodwill was
            recorded. As a result of the reverse acquisition, the historical
            financial statements of Fi-Tek for the periods prior to the date of
            the transaction are not presented.

            Effective June 30, 2005, the Company through its wholly-owned
            subsidiary, RMC, completed a series of transactions to acquire
            certain assets and assumed certain liabilities of Ronco Inventions,
            LLC ("RI" or "LLC"), a California limited liability company; Popeil
            Inventions, Inc. ("PII"), a Nevada S corporation; RP Productions,
            Inc. ("RPP") a Nevada S corporation (collectively, the "Seller
            Entities" or the "Predecessor"); and certain patents and other
            intellectual property rights from Ronald M. Popeil ("Popeil").

            Principles of Consolidation and Combination

            Successor - The accompanying consolidated financial statements
            include the accounts of the Company and its wholly-owned subsidiary,
            RMC.

            Predecessor - The accompanying combined financial statements include
            the accounts of the Seller Entities, which are affiliated through
            common ownership and management.

            All significant intercompany balances and transactions have been
            eliminated in consolidation or combination.

                                      F-10
<PAGE>

NOTE 1  -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

            Fiscal Year-End

            Successor - The Company has a fiscal year end of June 30.

            Predecessor - In 2004, the Seller Entities changed their fiscal
            year-end from December 31 to September 30. The combined Seller
            Entities financial statements include the results of operations for
            the nine months ended June 29, 2005 and September 30, 2004 and the
            results from operations for the years ended December 31, 2003 and
            2002.

            Cash and Cash Equivalents

            Cash and cash equivalents include all short-term, highly liquid
            investments purchased with original maturities of three months or
            less.

            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. The Company writes down inventory for estimated obsolescence
            equal to the difference between cost of inventory and the estimated
            market value based upon assumptions about future demand and market
            conditions.

            Revenue Recognition

            The Company and Seller Entities 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
            collectibility of 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 are
            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.

            For the nine months ended June 29, 2005 and September 30, 2004 and
            for the years ended December 31, 2003 and 2002, the Seller Entities
            generated approximately 99%, 98%, 92% and 96% of sales,
            respectively, from two kitchen products. The Seller Entities total
            sales are comprised of direct response and wholesale business of
            approximately 81% and 19%, $80% and 20%, 74% and 26%, and 74% and
            26% for the nine months ended June 29, 2005 and September 30, 2004
            and the years ended December 31, 2003 and 2002, respectively.

            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 prior to
            revenue being recognized are included in deferred income on the
            combined balance sheet for September 30, 2004. At June 30, 2005,
            deferred revenue has been recorded at fair value in accordance with
            purchase accounting, see Note 2.

            The Company and Seller Entities do not accrue warranty costs, since
            such were insignificant for the nine months ended June 29, 2005 and
            September 30, 2004 and for the years ended December 31, 2003 and
            2002.

                                      F-11
<PAGE>

NOTE 1  -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

            Shipping and Handling Costs

            Shipping and handling costs are included in selling, general and
            administrative expenses. For the nine months ended June 29, 2005 and
            September 30, 2004, and for the years ended December 31, 2003 and
            2002 shipping and handling costs approximated $7,124,000,
            $7,491,000, $8,468,000, $7,323,000, respectively.

            Investments

            Successor - The Company has accounted for investments as held to
            maturity which consist of securities that management has the ability
            and intent to hold to maturity and are carried at amortized cost
            which is equivalent to the fair value at June 30, 2005, in
            accordance with purchase accounting, see Note 2.

            Predecessor - The Seller Entities have classified their investments
            as held to maturity, which consist of securities that management has
            the ability and intent to hold to maturity and are carried at
            amortized cost. The Seller Entities determine specific
            identification for computing realized gains or losses for securities
            sold.

            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.

            Property and Equipment

            Successor - At June 30, 2005, the Company has accounted for property
            and equipment at fair value in accordance with purchase accounting,
            see Note 2. The Company provides for depreciation utilizing
            straight-line methods based on the estimated useful lives ranging
            from three to seven years.

            Predecessor - The Seller Entities policy is to record property and
            equipment at cost. The Seller Entities provide for depreciation and
            amortization utilizing accelerated methods based on the estimated
            useful lives ranging from three to seven years. Leasehold
            improvements are amortized over the shorter of the estimated life of
            the asset or lease term.

            Impairment of Long-Lived Assets

            The Company and Seller Entities evaluate long-lived assets for
            impairment whenever events or changes in circumstances indicate that
            the carrying value of an asset may not be recoverable. If the
            estimated future cash flows (undiscounted and without interest
            charges) from the use of an asset are less than the carrying value,
            a write-down would be recorded to reduce the related asset to its
            estimated fair value.

            During the nine months ended September 30, 2004, the Seller Entities
            recorded an impairment charge of approximately $771,000 for tooling
            that is no longer being used.

                                      F-12
<PAGE>

NOTE 1  -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

            Goodwill and Acquired Intangibles

            Intangible assets are comprised of patents, customer relationships,
            consulting agreement and trademarks. Goodwill represents acquisition
            costs in excess of the net assets of businesses acquired. In
            accordance with SFAS 142, "Goodwill and Other Intangible Assets"
            goodwill is no longer amortized; instead goodwill is tested for
            impairment on an annual basis. The Company assesses the impairment
            of identifiable intangibles and goodwill whenever events or changes
            in circumstances indicate that the carrying value may not be
            recoverable. Factors the Company considers to be important which
            could trigger an impairment review include the following:

                  o     Significant underperformance relative to expected
                        historical or projected future operating results;

                  o     Significant changes in the manner of use of the acquired
                        assets or the strategy for the overall business; and

                  o     Significant negative industry or economic trends.

            When the Company determines that the carrying value of intangibles
            and other long-lived assets may not be recoverable based upon 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, the Company records an impairment charge.
            The Company measures 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 being amortized over 19 years, customer relationships
            over 1.5 to 10 years and consulting agreements over 3 years,
            utilizing the straight-line method. Amortization expense has not
            been recorded since the Acquisition occurred on June 30, 2005, see
            Note 2.

            Trademarks have an indefinite life.

            Production Costs

            Successor - At June 30, 2005, the Company has accounted for
            production costs at fair value in accordance with purchase
            accounting, see Note 2.

            Predecessor - The Seller Entities amortize the production costs of
            infomercials on a straight-line basis based using an estimated
            useful life of three years.

            Income Taxes

            Successor - Deferred income tax assets and liabilities are computed
            annually for differences 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. Income tax expense is the tax payable or refundable for
            the period plus or minus the change during the period in deferred
            income tax assets and liabilities.

                                      F-13
<PAGE>

NOTE 1  -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

            Income Taxes - Continued

            Predecessor - PII and RPP have elected to be treated as S
            corporations for federal and state income tax purposes. Pursuant to
            these elections, the income or loss of the companies is included in
            the income tax returns of their stockholders. In addition, RI is a
            limited liability company, which is a non-taxable entity for federal
            and state income tax purposes. Accordingly, the members' have
            responsibility for payment of tax on their individual shares of
            income or losses.

            Advertising Costs

            Advertising costs are expensed when broadcast. Amounts paid for
            advertising prior to the broadcast are deferred as prepaid
            advertising costs until such time that the advertising has been
            broadcast.

            Advertising expense amounted to approximately $29,907,000,
            $31,096,000, $29,419,000, and $35,200,000 for the nine months ended
            June 29, 2005 and September 30, 2004 and years ended December 31,
            2003 and 2002, respectively.

            Fair Value of Financial Instruments

            Successor - The carrying amounts of significant financial
            instruments, which includes accounts receivable, accounts payable
            and accrued expenses are at fair value as of June 30, 2005 in
            accordance with purchase accounting, see Note 2.

            Predecessor - The carrying amounts of significant financial
            instruments, which includes accounts receivable, accounts payable
            and accrued expenses, approximated fair value as of September 30,
            2004 due to their short-term maturities. Fair value of related party
            loans cannot be determined due to lack of similar instruments
            available to the Seller Entities.

            Loss Per Share

            Successor - Basic and diluted net loss per share information for the
            period from October 15, 2004 (Date of Inception) to June 30, 2005 is
            presented in accordance with SFAS No. 128, Earnings Per Share. Basic
            loss per share is calculated by dividing the net loss attributable
            to common stockholders by the weighted-average common shares
            outstanding during the period. Diluted loss per share is calculated
            by dividing net loss attributable to common stockholders by the
            weighted-average common shares outstanding. The dilutive effect of
            preferred stock and warrants convertible into an aggregate of
            approximately 13,529,000 of common shares as of June 30, 2005, are
            not included as the inclusion of such would be anti-dilutive for all
            periods presented.

            Predecessor - Loss per share for the nine months ended June 29, 2005
            and September 30, 2005 and years ended December 31, 2003 and 2002 is
            not applicable to the Seller Entities as they were a combination of
            privately held companies that were different legal entities, and
            accordingly, the weighted-average number of common shares
            outstanding is not determinable.

                                      F-14
<PAGE>

NOTE 1  -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

            Accounting Pronouncements

            In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an
            amendment of APB No. 43, Chapter 4." SFAS No. 151 retains the
            general principle of APB 43, Chapter 4, "Inventory Pricing (AC
            Section I78)," that inventories are presumed to be stated at cost;
            however, it amends APB 43 to clarify that abnormal amounts of idle
            facility expense, freight, handling costs, and wasted materials
            (spoilage) should be recognized as current-period charges and
            requires the allocation of fixed production overheads to inventories
            based on the normal capacity of the production facilities. The
            guidance is effective for inventory costs incurred during fiscal
            years beginning after June 15, 2005. Earlier application is
            permitted for inventory costs incurred during fiscal years beginning
            after November 23, 2004. The Company has evaluated SFAS No. 151 and
            it does not anticipate that the adoption of SFAS No. 151 will have a
            significant impact on the Company's overall results of operations or
            financial position.

            In December 2004, the FASB issued SFAS No. 123(R), "Share-Based
            Payment", which establishes standards for transactions in which an
            entity exchanges its equity instruments for goods or services. This
            standard requires a public entity to measure the cost of employee
            services received in exchange for an award of equity instruments
            based on the grant date fair value of the award. This eliminates the
            exception to account for such awards using the intrinsic method
            previously allowable under APB Opinion No. 25. SFAS No. 123 (R) will
            be effective for the interim period beginning January 1, 2006. The
            Company anticipates that the adoption will have an effect on the
            Company's results of operations.

            In December 2004, the FASB issued SFAS No. 153, "Exchanges of
            Nonmonetary Assets, an amendment of APB Opinion No. 20, Accounting
            for Nonmonetary Transactions." The amendments made by SFAS No. 153
            are based on the principle that exchanges of nonmonetary assets
            should be measured based on the fair value of the assets exchanged.
            Further, the amendments eliminate the narrow exception for
            nonmonetary exchanges of similar productive assets and replace it
            with a broader exception for exchanges of nonmonetary assets that do
            not have commercial substance. A nonmonetary exchange has commercial
            substance if the future cash flows of the entity are expected to
            change significantly as a result of the exchange. This statement
            shall be applied prospectively and is effective for nonmonetary
            asset exchanges occurring in fiscal periods beginning after June 15,
            2005. Earlier application is permitted for nonmonetary asset
            exchanges occurring in fiscal periods beginning after the date of
            issuance. The Company does not anticipate that the adoption of SFAS
            No. 153 will have a significant impact on the Company's overall
            results of operations or financial position.

            In May 2005, the FASB issued SFAS 154, "Accounting Changes and Error
            Corrections," that applies to all voluntary changes in accounting
            principle. This Statement requires retrospective application to
            prior periods' financial statements of changes in accounting
            principle, unless it is impracticable to determine either the
            period-specific effects or the cumulative effect of the change. When
            it is impracticable to determine the period-specific effects of an
            accounting change on one or more individual prior periods presented,
            this Statement requires that the new accounting principle be applied
            to the balances of assets and liabilities as of the beginning of the
            earliest period for which retrospective application is practicable
            and that a corresponding adjustment be made to the opening balance
            of retained earnings (or other appropriate components of equity or
            net assets in the statement of financial position) for that period
            rather than being reported in an income statement. When it is
            impracticable to determine the cumulative effect of applying a
            change in accounting principle to all prior periods, this Statement
            requires that the new accounting principle be applied as if it were
            adopted prospectively from the earliest date practicable. SFAS 154
            will be effective for the Company for fiscal year ended June 30,
            2006. The Company does not anticipate that the adoption of SFAS No.
            154 will have an impact on the Company's overall results of
            operations or financial position.


                                      F-15
<PAGE>

NOTE 2 -    BUSINESS ACQUISTION

            On June 30, 2005, the Company completed the acquisition of certain
            of the Seller Entities' assets and assumption of certain
            liabilities; and the acquisition of patents and of certain
            intellectual property rights from Popeil (collectively, the
            "Acquisition"). The Acquisition was made pursuant to a purchase
            agreement between RMC and the Seller Entities and Popeil. The Board
            of Directors agreed to purchase the Seller Entities because of its
            leadership position in the direct response industry.

            The stated purchase price in the purchase agreement between RMC and
            the Seller Entities and Popeil was $56,509,000, of which the Company
            delivered $40,209,000 in cash on or before the closing. The
            remainder of $16,300,000 was made up of promissory notes issued to
            the Seller Entities. The promissory notes were based on the
            estimated net value of the acquired assets, as defined. The
            preliminary determination of net value of the acquired assets,
            resulted in approximately $3,142,000 reduction to the promissory
            notes.

            The purchase price subject to final agreement between the Company
            and the Seller Entities was $59,096,039, which consisted of the cash
            payment of $40,209,000, the adjusted promissory notes of
            $13,158,180, and transaction costs of $5,728,859, and are allocated
            as follows:

              Accounts receivable                            $   2,264,315
              Inventories                                        8,968,199
              Prepaid expenses and other current assets          2,327,016
              Due from predecessor entities                        135,676
              Investments                                        1,627,823
              Property and equipment                               925,000
              Production costs                                     100,000
              Deposits                                             182,500
              Intangibles                                       42,923,600
              Goodwill                                           2,953,481
              Accounts payable                                  (3,155,576)
              Accrued expenses                                     (80,995)
              Deferred income                                      (75,000)
                                                              ------------
              Total Purchase Price                            $ 59,096,039
                                                              ============

            The Company's management and the Board of Directors believes that
            the purchase of certain assets and assumption of certain liabilities
            of the Seller Entities and Popeil that resulted in approximately
            $2,953,000 of goodwill is justified because of the Seller Entities
            position in the marketplace and expected increased cash flows to the
            Company. The Company expects all of the goodwill will be deductible
            for income tax purposes.

            The promissory notes to the Seller Entities are subject to
            finalization between the Company and the Seller Entities as to the
            calculation of the estimated net value of the acquired assets, as
            defined.

                                      F-16
<PAGE>

NOTE 3 -    ACQUIRED INTANGIBLE ASSETS

            In connection with the Acquisition of the Seller Entities and
            Popeil, the Company recorded intangible assets as follows:

                  Amortizable Intangibles:

                                 Patents                      $     9,890,000
                                 Customer relationships             5,680,000
                                 Popeil consulting agreement        5,663,600
                                                              ----------------

                  Total amortizable intangibles               $    21,233,600
                                                              ===============

                  Unamortizable intangible assets:

                                 Trademarks                   $    21,690,000
                                 Goodwill                           2,953,481
                                                              ---------------

                  Total unamortizable intangibles             $    24,643,481
                                                              ===============


                  Estimated amortization expense:

                  For year ending June 30, 2006               $     5,946,000
                  For year ending June 30, 2007               $     4,199,000
                  For year ending June 30, 2008               $     2,452,000
                  For year ending June 30, 2009               $       565,000
                  For year ending June 30, 2010               $       565,000

NOTE 4  -   CONCENTRATIONS OF RISK

            Cash and Cash Equivalents

            The Company and Seller Entities maintain most of its cash balances
            at a bank located in California. Accounts at this institution are
            insured by the Federal Deposit Insurance Corporation up to $100,000.

            Accounts Receivable.

            Accounts Receivable are net of allowances and anticipated discounts.
            An allowance for doubtful accounts is determined through analysis of
            aging of accounts receivables at the date of the financial
            statements, assessments of collectibility based on historical trends
            and an evaluation of the impact of economic conditions. This amount
            is not significant primarily due to the Company's history of minimal
            bad debts. An allowance for discounts is based on those discounts
            relating to open invoices where trade discounts have been extended
            to customers. Cost associated with potential returns of products as
            well as allowable customer markdowns and operational charge backs,
            net of expected recoveries, are included as a reduction to net
            revenues and are part of the provision for allowances included in
            Accounts Receivable. These provisions results from seasonal
            negotiations as well as historic trends, net expected recoveries and
            the evaluation of current market conditions. As of September 30,
            2004, the allowance for doubtful accounts was approximately $1.2
            million.

            Suppliers

            The Seller Entities purchased approximately 99% and 94% of
            merchandise from three vendors for the nine months ended June 29,
            2005 and September 30, 2004, respectively. The Seller Entities
            purchased approximately 94% of their merchandise from one vendor for
            the years ended December 31, 2003 and 2002, respectively. These
            vendors have suppliers and manufacturing locations in Korea and
            China.

                                      F-17
<PAGE>

NOTE 5  -   INVESTMENTS

            Successor - At June 30, 2005, investments classified as held to
            maturity consisted of obligations of states and political
            subdivisions, including municipal bonds, which are valued at
            amortized cost which is equivalent to fair value of $1,627,823.

            Scheduled maturities of securities classified as held to maturity at
            June 30, 2005 were as follows:

                        Due in:
                                2007      $    30,001
                                2008        1,026,040
                                2015          120,552
                                2018          425,124
                                2019           26,106
                                          -----------
                                          $ 1,627,823
                                          ===========

            In October 2005, the municipal bond valued at $1,026,040 was called.

            Predecessor - Investments classified as held to maturity are as
            follows at September 30, 2004:

<TABLE>
<CAPTION>
                                                                             Gross          Gross
                                                         Amortized         Unrealized     Unrealized       Fair
                                                            Cost             Gains          Losses         Value
                                                        ------------      ------------   ------------   ------------
<S>                                                     <C>               <C>            <C>           <C>
                  Obligations of states and
                    political subdivisions,
                    including municipal bonds           $  2,061,107      $    140,443   $          -   $  2,201,550
                                                        ============      ============   ============   ============
</TABLE>

            All investments are pledged to a bank as collateral (see Note 11).

NOTE 6  -   PREPAID EXPENSES AND OTHER CURRENT ASSETS

            Prepaid expenses and other current assets consisted of the following
            at June 30, 2005 and September 30, 2004:

                                          Successor          Predecessor
                                        June 30, 2005     September 30, 2004
                                      -----------------   ------------------
            Prepaid advertising         $   1,474,447         $ 1,691,127
            Deposits                          716,232             683,219
            Prepaid insurance                 210,490             377,956
            Other                             136,337             253,327
                                        -------------         ------------
                                        $   2,537,506         $ 3,005,629
                                        =============         ============


                                      F-18

<PAGE>

NOTE 7  -   ACCRUED EXPENSES

            Accrued expenses consisted of the following at June 30, 2005 and
            September 30, 2004:
<TABLE>
<CAPTION>
                                                               Successor           Predecessor
                                                             June 30, 2005     September 30, 2004
                                                           ------------------  ------------------
<S>                                                         <C>                     <C>
            Accrued   payroll,   related   expenses  and
              fringe benefits                               $          -            $  287,541
            Accrued sales tax payable                                  -                61,746
            Accrued interest                                      11,080               246,699
            Finder and promoter fees                             150,000                     -
            Other                                                269,171               229,402
                                                            ------------            ----------
                                                            $    430,251            $  825,388
                                                            ============            ==========
</TABLE>

NOTE 8 -    PROPERTY AND EQUIPMENT

            Property and equipment consisted of the following at June 30, 2005
            and September 30, 2004:

<TABLE>
<CAPTION>
                                                           Successor             Predecessor
                                                         June 30, 2005       September 30, 2004
                                                       -------------------  -------------------
<S>                                                    <C>                   <C>
            Transportation equipment                   $        62,000       $     1,162,442
            Office furniture and equipment                     388,000             2,298,689
            Tooling                                            475,000               274,529
            Leasehold improvements                                   -               570,574
                                                       ----------------     -----------------
                                                               925,000             4,306,234

            Less: Accumulated depreciation and
                         amortization                                -             3,052,431
                                                       ----------------     ----------------
                                                       $       925,000      $      1,253,803
                                                       ================     ================
</TABLE>

            There was no depreciation expense for the period ended June 30, 2005
            as the Acquisition closed on the last day of the year-end.

            Depreciation and amortization expense was approximately $455,000,
            $804,000, $1,199,000 and $1,151,000, for the nine months ended June
            29, 2005 and September 30, 2004 and years ended December 31, 2003
            and 2002, respectively.

NOTE 9  -   DEFERRED INCOME

            Successor - At June 30, 2005, the Company accounted for deferred
            income at fair value in accordance with purchase accounting, see
            Note 2, which was valued at $75,000.

            Predecessor - As of September 30, 2004, deferred income consists of
            unamortized extended service contracts amounting to $2,482,799 and
            cash received on unshipped orders of $3,261,787. For the nine months
            ended June 29, 2005 and September 30, 2004 and for the years ended
            December 31, 2003 and 2002, revenues generated from extended
            services contracts were approximately $1,008,000, $1,183,000,
            $2,263,000, and $2,850,000, respectively.


                                      F-19
<PAGE>

NOTE 10  -  STOCKHOLDERS' EQUITY

            Successor:

            Series A Convertible Preferred Stock

            In connection with the Acquisition, on June 30, 2005, the Company
            sold 13,262,600 shares of Series A Convertible Preferred Stock for
            $50 million in a private placement. The preferred stock has certain
            special rights, as defined, and the qualifications of the preferred
            stock are as follows:

                  Conversion - The conversion ratio of the preferred stock is at
                  the rate of one share of common stock for each share of
                  preferred stock at the option of the holder. The Company, at
                  its option, may cause all of the outstanding shares of
                  preferred stock to be converted into shares of common stock,
                  as defined, (representing an 86% ownership of the Company
                  after redemption).

                  Voting Rights - Holders of preferred stock are entitled to the
                  number of votes per share that would be equivalent to the
                  number of shares of common stock into which a share of
                  preferred stock is convertible.

                  Dividends - The holders of preferred stock are entitled to
                  receive cumulative preferential dividends at the rate of
                  $0.1885 per share per annum, payable annually on each
                  anniversary date of issuance, as defined.

                  Liquidation - The holders of preferred stock will have the
                  right to receive, after payment of all creditors, the sum of
                  $3.77 per share of the preferred stock held, plus any accrued
                  and unpaid dividends, as defined, prior to any distributions
                  with respect to the common stock.

            Registration Rights Agreement

            On June 30, 2005, the Company entered into a Registration Rights
            Agreement ("Registration Rights Agreement") and under the terms of
            the agreement, the Company is obligated to file a shelf registration
            statement (Form S-1) covering the resale of the shares of common
            stock into which the shares of Series A Convertible Preferred Stock
            purchased are convertible. The Company is obligated to have the
            registration statement declared effective within 90 days after the
            closing (the date being October 28, 2005). In the event that the
            Company is unable to meet this filing deadline, the Company will be
            liable for a cash payment to the shareholders who are party to the
            Registration Rights Agreement, as liquidated damages. The amount
            will be equal to one percent of the per share price of the Series A
            Convertible Preferred Stock per month, or $500,000, until the
            Company has cured the deadline default, as defined.

            Warrants

            On June 30, 2005, the Company issued 266,667 warrants, with each
            warrant exercisable to purchase one share of common stock. The
            warrants have an exercise price of $3.77 per share and are
            exercisable for five years from July 1, 2005. The warrants are
            exercisable for cash or pursuant to a cashless exercise option
            provision.

            The warrants contain certain anti-dilution provisions, which will
            adjust the number of shares underlying the warrants and the exercise
            price in the event of stock splits, stock dividends, or other
            re-capitalizations of the Company.


                                      F-20
<PAGE>

NOTE 10  -  STOCKHOLDERS' EQUITY - CONTINUED

            Deferred compensation

            On June 30, 2005, in connection with an employment agreement, the
            Company sold 800,313 shares to its Chief Executive Officer ("CEO")
            for $.01 a share. These shares are subject to certain performance
            milestones. The Company has recorded deferred compensation of
            $3,009,177 based on the fair value of the common stock at June 30,
            2005, the market value was $3.77 a share. The deferred compensation
            will be amortized over three years based on the CEO's contract.

            The CEO received 60% of these shares (480,188) in connection with
            his employment agreement, and will be entitled to receive an
            additional 20% of these shares (160,063) on each of the first two
            anniversaries from June 30, 2005. These shares are subject to
            repurchase by the Company, at the Company's option, at $.01 per
            share, exercisable upon the termination of the CEO's employment,
            voluntarily or for "cause," or if certain performance targets are
            not satisfied, as defined.

            On June 30, 2005, in connection with an employment agreement, the
            Company sold 160,063 shares to its Chief Financial Officer ("CFO")
            for $.01 a share. The Company has valued these shares at $601,838
            based on the fair value of the common stock at June 30, 2005, the
            market value was $3.77 a share. The Company recorded $300,919 as
            compensation expense for the period from October 15, 2004 (Date of
            Inception) to June 30, 2005, and the remainder of $300,919 has been
            recorded as deferred compensation and is being amortized over three
            years based on CFO's contract.

            The Company has the option to repurchase 50% of these shares
            (82,032) at $.01 per share, exercisable if the CFO's employment is
            terminated voluntarily or for "cause," as defined. The Company's
            repurchase right will lapse with respect to each 25% (40,016) of
            these shares on each of the first two anniversaries from June 30,
            2005.

            Transaction Costs

            In connection with the Acquisition, the Company issued 13,650 shares
            of common stock to a consulting company for services rendered. These
            shares were valued at $51,460 based on the fair market value of the
            stock and are treated as transaction costs.

            In connection with the Acquisition, the Company sold 160,063 shares
            of common stock to an attorney for services rendered for $1,601.
            These shares were valued at $603,438 based on the fair market value
            of the stock and are treated as transaction costs. In addition, the
            Company incurred $128,500 of transaction costs to this attorney
            which was accrued at June 30,2005. Subsequent to June 30, 2005, the
            attorney became the General Counsel of the Company.

            Predecessor:

            Net losses of the LLC are allocated to the members first in amounts
            equal to cumulative net losses previously allocated and in
            proportion to their membership interest, which are 99% for one
            member and 1% for the other. Net losses of the LLC are allocated to
            members first in amounts equal to each member's pro rata share of
            net profits previously allocated, second, in proportion to each
            member's positive capital accounts until such capital accounts are
            reduced to zero, and third, in proportion to their membership
            interest until the capital accounts are reduced to zero and then to
            the member with the largest percentage interest.

                                      F-21

<PAGE>

NOTE 11 -   LETTER OF CREDIT

            Predecessor - The Seller Entities entered into an $8,000,000 letter
            of credit agreement with a bank for the opening of letters of credit
            plus any liability created by the payments of drafts drawn by the
            letter of credit. The agreement matures on March 31, 2006, as
            amended. The liability created by the payments of drafts drawn by
            the letters of credit bears interest at the rate of 4% per annum.

            The Seller Entities have pledged as collateral to the bank its
            investments, certificates of deposit and money market accounts. The
            minimum collateral base amount is $1,000,000, as amended. The
            agreement requires that the amount of collateral be equal to, or
            exceed, the amount of outstanding letters of credit plus any
            liability created by the payment of drafts drawn by the letters of
            credit. There was no liability created by the payment of drafts
            drawn by the letters of credit at June 29, 2005. The letter of
            credit agreement was terminated on June 29, 2005.

NOTE 12  -  LONG-TERM DEBT

            Long-term debt consists of the following:

            Promissory notes to Seller Entities                $ 13,158,180

            Less estimated current maturities                     2,876,000
                                                               ------------
                                                               $ 10,282,180
                                                               ============

            The promissory notes to the Seller Entities is management's best
            estimate based on the estimated net value of the assets acquired, as
            defined, see Note 2. These promissory notes bear simple interest at
            a rate of 9.5% per annum. The required payment amounts under these
            promissory notes will be determined by applying a per-unit dollar
            amount, as defined, to the volumes of products, as defined, that are
            shipped within a period. Any outstanding principal amount and
            accrued but unpaid interest will become due and payable in full by
            June 29, 2010; and there is no pre-payment penalty on the promissory
            notes.

            Upon occurrence of an event of default, as defined, that is not
            cured by the time period defined 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, Popeil will have the right to reclaim any
            ownership interest in his name and likeness previously sold or
            licensed to the Company and will receive a right of first refusal to
            purchase the intellectual property rights acquired before these
            rights may be sold or transferred to any other party.

            The estimated annual maturity of these promissory notes for the year
            ending June 30, 2006 is $2,876,000, which is based on management's
            estimate of the products to be shipped in the next year and applying
            the per-unit dollar amount per the promissory notes. As these
            promissory notes are an estimate based on volumes of products
            shipped, as described above, the Company has not estimated the
            annual maturities after the current year ending June 30, 2006.

                                      F-22

<PAGE>

NOTE 13  -  INCOME TAXES

            The benefit for income taxes for the period ended June 30, 2005
            consisted of the following:

            Current                                            $             --

            Deferred:
               Federal                                                 (241,000)
               State                                                    (69,000)
                                                               ----------------
               Total deferred                                          (310,000)
                                                               ----------------

            Benefit for income taxes                           $       (310,000)
                                                               ================

            The income tax effects of significant items, comprising the
            Company's net deferred income tax assets and liabilities, are as
            follows:

                                                                   Successor
                                                                 June 30, 2005
                                                               ----------------
            Deferred income tax assets:
               Net operating loss carry forwards               $        433,000

            Deferred income tax liability:
               Difference between book and tax
               basis of depreciation and amortization                   123,000
                                                               ----------------

            Net deferred income tax asset                      $        310,000
                                                               ================

            Reconciliation of the U.S. statutory rate with the Company's
            effective tax benefit is summarized as follows:

                                                                  Successor
                                                                 Period from
                                                              October 15, 2004
                                                                  (Date of
                                                             Inception) to June
                                                                  30, 2005
                                                             ------------------

            Federal statutory tax benefit                                  (34)%
            State income tax benefit, net of
               federal tax benefit                                          (6)
                                                              ----------------
            Effective tax benefit                                          (40)%
                                                              ================

            As of June 30, 2005, the Company had net operating loss
            carryforwards available in future periods to reduce income taxes
            that may be payable at those dates. For federal and California
            income tax purposes, net operating loss carryforwards amounted to
            approximately $1,088,000 and expire during the years 2025 and 2015,
            respectively.

            As described in Note 1 under Income Taxes, the Seller Entities did
            not pay income taxes, as the losses are included in the individual
            income tax returns of their stockholders and members for PII, RPP,
            and LLC.

                                      F-23

<PAGE>

NOTE 14  -  PRODUCT DEVELOPMENT AND LICENSE AGREEMENTS

            Predecessor - The Seller Entities entered into a product development
            agreement with a third party who co-invented the Showtime Rotisserie
            products, as well as a number of other products for the Seller
            Entities. Under the terms of the agreement, the Seller Entities
            incur an expense in an amount equal to 25% of net profits, as
            defined, or is reimbursed by the third party for 25% of net losses,
            as defined. For the nine months ended June 29, 2005 and September
            30, 2004 and for the years ended December 31, 2003 and 2002, the
            Seller Entities recorded income (expense) from the reimbursement of
            losses (payment of product development fees) of approximately
            $468,000, $1,407,000, ($1,777,000) and $1,097,000, respectively,
            which is included in selling, general and administrative expenses in
            the accompanying combined statements of operations. The Successor is
            not a party to this agreement.

            The Seller Entities also entered into licensing agreements with an
            unrelated company that holds the patents on certain of its products.
            Under the terms of the licensing agreements, as amended, the Seller
            Entities incur license fees ranging from $6 to $17 per unit sold
            through 2007. Licensing expense under these agreements for the nine
            months ended September 30, 2004 and for the years ended December 31,
            2003 and 2002 amounted to approximately $3,251,000, $10,004,000, and
            $11,346,000, respectively. In December 2004, the license agreements
            were amended and terminating them effective August 31, 2004.

            At September 30, 2004, the Seller Entities had product development
            and license fees payable to these two unrelated third parties in the
            amount of approximately $7,310,000.

NOTE 15 -   RESTATEMENT - 2002 and 2001

            Reclassification

            The accumulated deficit of the Seller Entities has been reclassified
            in the amount of $3,943,362 to reflect the portion of the losses for
            RI were included in accumulated deficit in the prior year's combined
            financial statements.

            Prior Period Adjustment

            The Seller Entities restated its depreciation and amortization
            expense for 2001 and 2002 for errors. The amortization periods used
            for leasehold improvements and the calculation of accelerated
            depreciation of equipment were corrected. The effects of correction
            are as follows:

<TABLE>
<CAPTION>

       Total stockholders' and members' deficiency,
<S>                                                                                    <C>
            December 31, 2001, as previously reported                                  $ (15,316,415)
       Correction of amortization of leasehold improvements                                 (371,056)
                                                                                       ---------------
       Accumulated and members deficit, December 31, 2001, as restated                   (15,687,471)
       Net income, as restated                                                            (9,474,116)
       Dividends                                                                            (482,306)
                                                                                       ---------------
       Total stockholders and members deficiency, December 31, 2002, as restated       $ (25,643,893)
                                                                                       ===============




       Net loss, December 31, 2002, as previously reported                             $ (10,094,336)
       Correction of amortization of leasehold improvements
            and accelerated depreciation                                                    (620,220)
                                                                                       ---------------
       Net loss, December 31, 2002, as restated                                        $  (9,474,116)
                                                                                       ===============
</TABLE>

NOTE 16  -  COMMITMENTS AND CONTINGENCIES

            Leases

                                      F-24

<PAGE>

            The Company and Seller Entities lease its facilities on a
            month-to-month basis with a six month early termination notice.
            Other premises and equipment are leased on a month-to-month basis.

            Predecessor - Rent expense under operating leases, including related
            party rent, for the nine months ended June 29, 2005 and September
            30, 2004 and for the years ended December 31, 2003 and 2002 were
            approximately $324,000, $303,000, $403,000 and $413,000,
            respectively.

            The Seller Entities lease office space from related party, Popeil.
            Rent expense paid to this related party under the month-to-month
            lease was $45,000, $45,000, $60,000 and $60,000 for the nine months
            ended June 29, 2005 and September 30, 2004 and for the years ended
            December 31, 2003 and 2002, respectively.

            Employment Agreements

            The Company has employment agreements with certain executives and a
            key employee which, among other things, require the Company to make
            severance payments and provide other benefits to the executives and
            a key employee in the event of their termination or effective
            disposition, as defined.

            Popeil Agreements

            On June 30, 2005, the Company entered into several agreements with
            Popeil which include a Consulting Services Agreement, a Trademark
            Co-Existence Agreement, a New Product Development Agreement, and an
            agreement that the Company will pay Popeil a percentage of the gross
            profits generated from the sale of the Company's products which
            result from Popeil's ongoing personal appearances on QVC, a
            wholesale customer, or other television or online shopping venues.

            The Consulting Agreement is for a term of three years for an annual
            base fee of $500,000 per year, paid in equal weekly installments. In
            addition, the Company will pay certain fees for personal
            appearances, as defined. Popeil will be eligible to receive
            incentive stock options at the sole discretion of the Board of
            Directors.

            The Trademark Co-Existence Agreement was entered into with respect
            to the names "Popeil," "Ron Popeil" and the name form of the
            likeness approved by Popeil, including the image, silhouette and
            voice (the "Marks"), as defined. The term of this agreement
            continues as long as the Marks are protected by the laws of the
            United States of America. Popeil retains the right to approve all
            uses of the name and likeness for any purpose, as defined.

            The New Product Development Agreement has terms that the Company
            will be offered a fifteen-day right of first refusal on all new
            consumer products, as defined, that are created by Popeil during the
            term. The purchase price of each new product will include the cost
            of any product designs, prototypes, tooling and a completed
            commercial or infomercial. Popeil will have creative control over
            all new consumer product created, as defined. Popeil has the right
            to terminate this agreement, if a breach to any provisions of this
            agreement or to any other of the above discussed agreements are
            breached and not cured to Popeil satisfaction within fifteen-days of
            such breach.

            Litigation

            The Company is, from time to time, the subject of litigation, claims
            and assessments arising out of matters occurring in its normal
            business operations. In the opinion of management, resolution of
            these matters will not have a material adverse effect on the
            Company's consolidated financial position, operations and cash
            flows.

                                      F-25
<PAGE>

NOTE 17  -  RELATED PARTY TRANSACTIONS

            Successor - As part of the Acquisition, the Company has a due from
            the Seller Entities of approximately $136,000 for assets that were
            not transferred at June 30, 2005. These current assets are
            non-interest bearing and are due on demand.

            Relationships Regarding the Acquisition

            As described in Note 1 under Business, the Company entered into
            certain transactions to acquire the assets of the Seller Entities
            and Popeil and issued stock to a group of entities owned, controlled
            and/or affiliated with the promoters; these entities collectively
            and inclusive of their affiliates are considered the "Venture
            Group." The Venture Group collectively held 533,334 shares of common
            stock of the Company. In addition, in connection with the
            Acquisition, the Company paid cash fees consisting of (i) a base fee
            of $1,800,000, and (ii) an incremental fee equal to five percent of
            any cash and cash equivalent of the Company in excess of $6 million
            at June 30, 2005, as mutually agreed.

            Prior to the Acquisition, RMC secured its initial working capital
            from a group of private accredited investors, collectively, the
            "Ronco Private Group" through the sales of shares and approximately
            $392,000 in promissory notes of RMC. On June 30, 2005, the
            promissory notes held by the Ronco Private Group were redeemed at
            face value plus accrued interest. In addition, the Ronco Private
            Group collectively owns 266,688 shares of common stock.

            The shares held by both the Venture Group and the Ronco Private
            Group are restricted shares. These shares are subject to the
            Registration Rights Agreement, see Note 10.

            The Company has agreed to indemnify and hold harmless and generally
            release the members of the Venture Group, their managers, directors
            and officers from and against any loss, claim, damage, liability or
            expense arising from the Acquisition, as defined.

            Predecessor Transactions:

            Loans Payable

            In September 2004, RMP Family Trust, the stockholder of RPP and PII,
            Popeil, the primary beneficiary of the trust, and affiliated
            entities loaned the Seller Entities $8,500,000 $28,750,000 and
            $1,900,000 respectively. These loans are evidenced by promissory
            notes, which bear interest at 10% per annum and are due on September
            7, 2007. The proceeds from these loans were used to pay off the
            balance owed by the Seller Entities for license fees outstanding as
            of December 31, 2003. Interest expense related to these loans was
            approximately $2,929,000 and $247,000 for the nine months ended June
            29, 2005 and September 30, 2004, respectively. This amount is
            included in accrued expenses at September 30, 2004. These loans were
            not assumed by the Company.

            Due from Affiliate

            At September 30, 2004, a non-interest bearing advance in the amount
            of approximately $190,000 was due from Popeil. This advance was not
            assumed by the Company.


                                      F-26

<PAGE>

            Due to Affiliates

            At September 30, 2004, the amount due to companies affiliated
            through common ownership for advances was approximately $120,000.
            Such advances are non-interest bearing and are due on demand. These
            advances were not assumed by the Company. During the nine months
            ended June 29, 2005 and September 30, 2004 and years ended December
            31, 2003 and 2002, the Company paid approximately $113,000,
            $108,000, $123,000 and $81,000, respectively, of consulting fees to
            an entity owned by an officer of the Seller Entities.

NOTE 18  -  STOCK OPTION PLAN

            The Company has adopted a stock option plan, the "2005 Stock
            Incentive Plan," under which it may grant employees nonqualified
            options to purchase 79,561 shares of the Company's common stock. As
            of June 30, 2005, the Company had not issued any options to any
            employees or directors.

NOTE 19  -  EMPLOYEE BENEFIT PLAN

            The Seller Entities sponsors a 401(k) defined contribution benefit
            plan covering substantially all of its employees. Under the plan,
            employees can make annual voluntary contributions not to exceed the
            lesser of an amount equal to 15% of their compensations or limits
            established by the Internal Revenue Service Code. The Seller
            Entities do not provide for matching contributions.

NOTE 20  -  SUBSEQUENT EVENTS

            On October 25, 2005, the Company, and Prestige Capital Corporation
            ("Prestige"), entered into a Purchase and Sale Agreement (the
            "Agreement") pursuant to which Prestige agreed to buy and accept,
            and the the Company agreed to sell and assign, certain accounts
            receivable owing to the Company, together with all rights of action
            accrued or to accrue thereon. Under the terms of the Agreement, upon
            the receipt and acceptance of each assignment of Accounts, Prestige
            shall pay the Company 75% of the face amount of the Accounts so
            assigned. The advance rate under the Agreement shall increase to 80%
            of the face amount of the Accounts assigned if the event of dilution
            of the Accounts is less than five percent for the first 60 days of
            the term of the Agreement. Under the Agreement, Prestige has agreed
            to purchase Accounts with a maximum aggregate face amount of
            $8,000,000. The fee payable by the Company to Prestige under the
            Agreement is 2% of the face amount of assigned Accounts if the
            receivable is collected within 15 days, 2.75% of the face amount if
            the receivable is collected within 30 days, 3.75% of the face amount
            if the receivable is collected within 45 days, 4.75% of the face
            amount if the receivable is collected within 60 days, and 5.75% of
            the face amount if the receivable is collected within 75 days.
            Thereafter, the rate goes up by 1% for each additional fifteen day
            period until the Account is paid. The initial term of the Agreement
            expires on May 1, 2006, but the Agreement will thereafter be
            automatically extended for additional one-year terms unless a party
            provides written notice of cancellation at least sixty days prior to
            the expiration of the initial or renewal term.

            Under the terms of the Agreement, the Company granted to Prestige a
            continuing security interest in, and lien upon, all accounts,
            instruments, inventory, documents, chattel paper and general
            intangibles, whether now owned or hereafter created or acquired, as
            security for the prompt performance and payment of all obligations
            of the Company to Prestige under the Agreement.

            On September 30, 2005, the Company borrowed $1,234,000 from Wells
            Fargo Bank, National Association under a Revolving Line of Credit
            Note. The outstanding balance is due and payable on September 20,
            2006 and is collateralized by the Company's corporate bonds. The
            borrowings bear interest at 1% above LIBOR.


                                      F-27