##### 



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, DC 20549
  Form 10-KSB
  þ

ANNUAL REPORT UNDER SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE FISCAL YEAR ENDED
    DECEMBER 31, 2006.o

TRANSITION REPORT UNDER SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934   Commission File Number
    001-33169
  Wireless Ronin Technologies,
    Inc.
 (Name of Small Business Issuer
    in Its Charter)
  Minnesota

41-1967918(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)   14700 Martin Drive, Eden Prairie, Minnesota 55344
 (Address of Principal Executive
    Offices, including Zip Code)
  (952) 564-3500
 (Issuers Telephone Number,
    Including Area Code)
  Securities registered under Section 12(b) of the
    Exchange Act:
 Common Stock ($0.01 par value)
  Securities registered under Section 12(g) of the
    Exchange Act:
 None
 (Title of Class)
  o
  þ o
  Regulation S-B Form 10-KSB Form 10-KSB. o
  Rule 12b-2 o þ
        DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TABLE OF
    CONTENTS
  PART IITEM 1

DESCRIPTION OF
    BUSINESS


3ITEM 2

DESCRIPTION OF
    PROPERTY


14ITEM 3

LEGAL
    PROCEEDINGS


14ITEM 4

SUBMISSION OF
    MATTERS TO A VOTE OF SECURITY HOLDERS


14PART IIITEM 5

MARKET FOR COMMON
    EQUITY, RELATED SHAREHOLDER MATTERS AND SMALL BUSINESS ISSUER
    PURCHASES OF EQUITY SECURITIES


16ITEM 6

MANAGEMENTS
    DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


18ITEM 7

FINANCIAL
    STATEMENTS


35ITEM 8

CHANGES IN AND
    DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
    DISCLOSURE


35ITEM 8A

CONTROLS AND
    PROCEDURES


36ITEM 8B

OTHER
    INFORMATION


36PART IIIITEM 9

DIRECTORS,
    EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
    GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
    ACT


37ITEM 10

EXECUTIVE
    COMPENSATION


40ITEM 11

SECURITY OWNERSHIP
    OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
    SHAREHOLDER MATTERS


45ITEM 12

CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE


50ITEM 13

EXHIBITS


54ITEM 14

PRINCIPAL
    ACCOUNTANT FEES AND SERVICES


55SIGNATURES


56INDEX TO FINANCIAL
    STATEMENTS


F-1EXHIBIT
    INDEX


E-1   2




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##### 



PART I  ITEM 1
    DESCRIPTION
    OF BUSINESS  History
  ®
  General
    Business
    Strategy
    Focus on Vertical Markets.
  Marketing and Branding Initiatives.
    Leverage Strategic Partnerships and Reseller
    Relationships.
  Outsource Essential Operating Functions.
  Custom Solutions.
 3




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##### 



New Product Development.
  Industry
    Background
  Digital Signage.
      Growth of Digital Signage.
  
    Compliance and effectiveness issues with traditional
    point-of-purchase
    signage.  Our review of the current market
    indicates that most retailers go through a tedious process to
    produce traditional static
    point-of-purchase
    and in-store signage. They create artwork, send such artwork to
    a printing company, go through a proof and approval process and
    then ship the artwork to each store. According to an article
    appearing in The Retail Bulletin (February 19, 2006), it is
    estimated that less than 50% of all static in-store signage
    programs are completely implemented once they are delivered to
    stores. We believe our signage solution can enable prompt and
    effective implementation of retailer signage programs, thus
    significantly improving compliance and effectiveness.
    Growing awareness that digital signage is more
    effective.  We believe that a majority of brand
    buying decisions are made while in the retail store. Research
    presented at the 2005 Digital Signage Business conference shows
    that digital signage receives up to 10 times the eye contact of
    static signage and, depending upon the market, may significantly
    increase sales for new products that are digitally advertised. A
    study by Arbitron, Inc. found that 29% of the consumers who have
    seen video in a store say they bought a product they were not
    planning on buying after seeing the product featured on the
    in-store video display. We believe that our dynamic digital
    signage solutions provide a valuable alternative to advertisers
    currently using static signage.
    Changes in the advertising landscape.  With the
    introduction of personal video recorders (PVRs) and satellite
    radio, we believe retailers, manufacturers and advertising firms
    are struggling with ways to present their marketing message
    effectively. A recent article in Infomercial Media states that
    PVRs (TiVo, for example) will be in over 30% of US homes within
    the next five years. Although viewers are watching
    20-30% more
    television, they are using PVR technology to bypass as much as
    70% of the commercials. In addition, satellite radio continues
    to grow in popularity with limited
    and/or
    commercial free programming. We believe the use of digital
    signage will continue to grow as advertisers seek alternatives
    to traditional media. 4




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##### 




    Decreasing hardware costs associated with digital
    signage.  The high cost of monitors has been an
    obstacle of digital signage implementation for a number of
    years. The price of digital display panels has been falling due
    to increases in component supplies and manufacturing capacity.
    As a result, we believe that hardware costs are likely to
    continue to decrease, resulting in continued growth in this
    market. We employ digital displays from a variety of
    manufacturers. This independence allows us to give our customers
    the hardware their system requires while taking advantage of
    improvements in hardware technology, pricing reductions and
    availability. We partner with several key hardware vendors,
    including NEC, Richardson Electronics (Pixelink), LG, Hewlett
    Packard and Dell.  The
    RoninCast Solution
  24/7
      Features
    and benefits of the RoninCast system include:
  
    Effective Conveyance of Message.  Studies have
    shown digital signs to be an effective means of attracting the
    attention of customers and improving message recall. We believe
    that the display of complex graphics and videos creates a more
    appealing store environment.
    Centrally Controlled.  RoninCast empowers the
    end-user to distribute content from one central location. As a
    result, real-time marketing decisions can be managed in-house
    ensuring retailers communication with customers is
    executed system-wide at the right time and the right place. Our
    content management software recognizes the receipt of new
    content, displays the content, and reports back to the central
    location(s) that the media player is working properly.
    Wireless Delivery.  RoninCast can distribute
    content within an installation wirelessly. RoninCast is
    compatible with current wireless networking technology and does
    not require additional capacity within an existing network.
    RoninCast uses Wireless Local Area Network (WLAN) or wireless
    data connections to establish connectivity. By installing or
    using an existing onsite WLAN, RoninCast can be incorporated
    throughout the venue without any environmental network cabling.
    We also offer our mobile communications solution for off-site
    signage where WLAN is not in use or practical.
    Network Control.  Each remote media player is
    uniquely identified and distinguished from other units as well
    as between multiple locations. RoninCast gives the end-user the
    ability to view the media players status to determine if
    the player is functioning properly and whether the correct
    content is playing. A list of all units on the system is
    displayed allowing the end-user to view single units or clusters
    of units. The system also allows the end-user to receive
    information regarding the health of the network before issues
    occur. In addition, display monitors can be turned on or off
    remotely.
    Ease and Speed of Message Delivery.  Changing
    market developments or events can be quickly incorporated into
    our system. The end-user may create entire content distributions
    on a daily, weekly or 5




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##### 



monthly basis. Furthermore, the system allows the end-user to
    interject quick daily updates to feature new or overstocked
    items, and then automatically return to the previous content
    schedule.  
    Scalability/Mobility.  By utilizing a wireless
    network, the RoninCast system provides the ability to easily
    move signage or
    scale-up
    to incorporate additional digital signage. Displays can be moved
    to or from any location under a wireless network. Customers are
    able to accommodate adds/moves/changes within their environment
    without rewiring network connections. And when the customer
    wants to add additional digital signage, only electrical power
    needs to be supplied at the new location.
    Data Collection.  Through interactive touch
    screen technology, RoninCast software can capture user data and
    information. This information can provide feedback to both the
    customer and the marketer. The ability to track customer
    interaction and data mine user profiles, in a non-obtrusive
    manner, can provide customers feedback that would otherwise be
    difficult to gather.
    Integrated Applications.  RoninCast can
    integrate digital signage with other applications and databases.
    RoninCast is able to use a database feed to change the content
    or marketing message, making it possible for our customers to
    deliver targeted messages. Data feeds can be available either
    internally within a business or externally through the Internet.
    For example, our customers can specify variable criteria or
    conditions which RoninCast will analyze, delivering marketing
    content relevant to the changing environment.
    Compliance/Consistency.  RoninCast addresses
    compliance and consistency issues associated with print media
    and alternative forms of visual marketing. Compliance measures
    the frequency of having the marketing message synchronized
    primarily with product availability and price. Compliance issues
    cause inconsistencies in pricing, product image and
    availability, and store polices. RoninCast addresses compliance
    by allowing message updates and flexible control of a single
    location or multiple locations network-wide. RoninCast allows
    our customers to display messages, pricing, images, and other
    information on websites that are identical to those displayed at
    retail locations.  Our
    Markets
    point-of-purchase point-of-purchase
  Retail. 1 2 point-of-purchase point-of-purchase
  Hospitality.
 6




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##### 



pick-up,
  Specialized Services.
  Public Spaces.
  Our
    Customers
    
    Sealy Corporation  We entered into a sale and
    purchase agreement with Sealy Corporation in July 2006. During
    2005, we worked with Sealy to develop the
    SealyTouchtm
    system, which is an in-store, interactive shopping and training
    aid for mattress customers and retail associates. Sealy
    distributes its products through approximately 2,900 dealers at
    approximately 7,000 locations. Sealy purchased 50 systems in
    2006. We have agreed to work with Sealy on an exclusive basis in
    the bedding manufacture and retail field and will be
    Sealys exclusive vendor for these systems during the
    three-year term of the agreement, assuming Sealys
    satisfaction of minimum order requirements described below, and
    contingent upon the successful conclusion of Sealys system
    beta testing and the parties entering into a master services
    agreement and certain other related agreements. Our commitment
    to work with Sealy on an exclusive basis is subject to Sealy
    ordering either: (i) 250 SealyTouch systems per calendar
    quarter beginning with the quarter ending June 30, 2007, or
    (ii) a total of 2,000 systems deliverable in quantities of
    at least 250 systems per calendar quarter, commencing with the
    quarter ending June 30, 2007. The agreement, however, does
    not obligate Sealy to purchase a minimum number of systems.
    Sales to Sealy Corporation represented 11.4% of total sales for
    the year ended December 31, 2006 and 4.9% of total sales
    for the year ended December 31, 2005.
    Canterbury Park  We have installed RoninCast
    throughout the Canterbury Park gaming facility. In addition,
    Canterbury installed digital signage twenty-five miles away at
    the Minneapolis/St. Paul International airport utilizing
    RoninCast with mobile communications. Both in-house and off-site
    digital signage is controlled from one central location. Sales
    to Canterbury Park represented 0.1% of total sales for the year
    ended December 31, 2006 and 8.9% of total sales for the
    year ended December 31, 2005. 7




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##### 




    Coca-Cola 
    The Midwest region fountain division provides RoninCast displays
    as a means of extending their contracts with various customers,
    including restaurants, theatres, convenience stores and
    supermarkets. This division also uses its marketing co-op
    program with customers as a brand awareness/reward tool. Sales
    to this customer represented 0.0% of total sales for the year
    ended December 31, 2006 and 4.8% of total sales for the
    year ended December 31, 2005.
    GetServd.com  GetServd.com is a full service
    digital advertising firm located in Calgary, Alberta, that runs
    the RoninCast digital signage network for many of North
    Americas leading paint suppliers, including industry pace
    setters Hirshfields in the Midwest and Miller Paint in the
    Northwest. GetServd.com creates custom signage networks for
    their customers to promote their various vendors, create related
    sales opportunities and reduce perceived wait time for their
    customers. Sales through GetServd.com represented 11.6% of total
    sales for the year ended December 31, 2006. We had no sales
    to this customer in the year ended December 31, 2005.
    Foxwoods Resort Casino  Foxwoods is the
    largest casino in the world, with 340,000 square feet of
    gaming space in a complex that covers 4.7 million square
    feet. More than 40,000 guests visit Foxwoods each day. Foxwoods
    purchased RoninCast to control, administer and maintain
    marketing content on its property from its marketing
    headquarters in Norwich, Connecticut. Sales to Foxwoods Resort
    Casino represented 8.8% of total sales for the year ended
    December 31, 2006 and no sales for the year ended
    December 31, 2005.
    Las Vegas Convention and Visitors Authority 
    By using our solution for wayfinding (touch screen technology),
    advertising and event scheduling, this digital signage
    installation exemplifies how digital signage can enhance an
    environment while providing advanced technology to control,
    administer and maintain marketing content from one centralized
    location. Sales to Las Vegas Convention and Visitors Authority
    represented 0.8% of total sales for the year ended
    December 31, 2006 and 2.4% of total sales for the year
    ended December 31, 2005.
    Mystic Lake Casino and Resort  We have
    installed RoninCast displays for several applications, including
    offsite advertising at the Mall of America, Wall of Winners,
    promotion of casino winners, general kiosks and upcoming casino
    events. Sales to Mystic Lake Casino and Resort represented 1.0%
    of total sales for the year ended December 31, 2006. We had
    no sales to this customer in the year ended December 31,
    2005.
    Showtickets.com  Showtickets.com uses
    RoninCast to control content in Las Vegas to promote ticket
    sales for shows and events throughout Las Vegas. An example of
    our scalability, Showtickets.com has continued to increase their
    digital signage presence over the past three years. Sales to
    Showtickets.com represented 1.4% of total sales for the year
    ended December 31, 2006 and 2.4% of total sales for the
    year ended December 31, 2005.
    University of Akron  The University uses
    RoninCast as an information system for students and faculty.
    Starting with a small installation footprint, the University
    continues to grow their digital signage network with recurring
    orders for expansion. Sales to the University of Akron
    represented1.6% of total sales for the year ended
    December 31, 2006 and 1.7% of total sales for the year
    ended December 31, 2005.
    Wynn Las Vegas  Content developed exclusively
    by Wynn for its proprietary outdoor display is previewed, edited
    and approved using our system. Sales to Wynn Las Vegas
    represented 0.4% of total sales for the year ended
    December 31, 2006. We had no sales to this customer in the
    year ended December 31, 2005.  Product
    Description
   8




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##### 



Master Controller (MC)
  End-Point Controller (EPC)
  End-Point Viewer (EPV)
  Site Controller (SC)
  Network Builder (NB)
  Schedule Builder (SB)
  Zone Builder (ZB)
  RoninCast Wall (RCW)
 9




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##### 



Database Client (DBC)
  Event Log Viewer (EVL)
  Software Development Kit (SDK) look-and-feel.
  Key
    Components
    User-Friendly
    Network Control
    Diverse
    Content Choices
    Intelligent
    Content Distribution
      one-to-one
    Distributed
    Management
   10




---



##### 



Enterprise-Level Compatibility
    Flexible
    Network Design
    and/or dial-up/DSL
  dial-up/DSL
  Security
           11




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##### 



Specialized
    Products
          Our
    Suppliers
    
    Bailiwick Data Systems, Inc. and National Service Center
    (installation services);
    Samsung America, LG Electronics USA, NEC Display Solutions and
    Richardson Electronics Ltd. (monitors).
    Hewlett Packard Company, Dell USA, LP (computers); and
    Chief Manufacturing, Inc. (fixtures).    Agreement
    with Marshall Special Assets Group, Inc.
   12




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##### 



Ongoing
    Development
    Services
  fee-for-service
      Intellectual
    Property
    ® ® tm tm .
   13




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##### 



Competition
    Regulation
    Employees
    ITEM 2
    DESCRIPTION
    OF PROPERTY    ITEM 3
    LEGAL
    PROCEEDINGS    ITEM 4
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   14




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##### 



Executive
    Officers of the Registrant
    Name

Age

Position with CompanyJeffrey C. Mack


53


Chairman, President, Chief
    Executive Officer and DirectorChristopher F. Ebbert


40


Executive Vice President and Chief
    Technology OfficerJohn A. Witham


55


Executive Vice President and Chief
    Financial OfficerStephen E. Jacobs


58


Executive Vice President and
    SecretaryScott W. Koller


44


Executive Vice President, Sales
    and MarketingBrian S. Anderson


52


Vice President and Controller   Jeffrey C. Mack
  Christopher F. Ebbert
  John A. Witham
  Stephen E. Jacobs
  Scott W. Koller
 15




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##### 



Brian S. Anderson
 PART II  ITEM 5
    MARKET
    FOR COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND SMALL
    BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES  Market
    Information
  mark-up,
  Period

High


LowFourth Quarter 2006

$
7.18


$
3.50   Holders
    Dividends
    Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    Sale of
    Unregistered Securities During the Fourth Quarter of Fiscal Year
    2006
     16




---



##### 



Form 8-K.
  Use of
    Proceeds
           17




---



##### 



Net Proceeds

$
18,356,047
(1)Repayment of Outstanding Debt and
    Accrued Interest


1,757,276Inventory and Product Delivery
    Costs


497,503Sales and Marketing


225,008Research and Development


78,240Maintain Facilities, including
    Lease Obligations


25,494Management Compensation


40,000Working Capital


341,666Remaining Net Proceeds at
    December 31, 2006

$
15,390,860     (1)
    
    Proceeds net of non-cash accruals were $18.0 million at
    December 31, 2006.          Gross


GrossUnrealized


Unrealized


FairCost


Gains


Losses


ValueDebt securities:Issued by Federal government
    agencies (maturing 2007)

$
7,176,779


$
16,732


$



$
7,193,511$
7,176,779


$
16,732


$



$
7,193,511   ITEM 6
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OR PLAN OF OPERATION  Forward-Looking
    Statements
  This Annual Report on
    Form 10-KSB
    contains certain forward-looking statements of expected future
    developments, as defined in the Private Securities Litigation
    Reform Act of 1995. When used in this Annual Report on
    Form 10-KSB,
    the words anticipates, believes,
    expects, intends, plans,
    estimates and similar expressions, as they relate to
    us or our management, are intended to identify such
    forward-looking statements. These forward-looking statements
    reflect our expectations and are based on currently available
    data; however, actual results are subject to future risks and
    uncertainties, which could materially affect actual
 18




---



##### 



performance. Risks and uncertainties that could affect such
    performance include, but are not limited to, the following: our
    estimates of future expenses, revenue and profitability; trends
    affecting our financial condition and results of operations; our
    ability to obtain customer orders; the availability and terms of
    additional capital; our ability to develop new products; our
    dependence on key suppliers, manufacturers and strategic
    partners; industry trends and the competitive environment; and
    the impact of losing one or more senior executives or failing to
    attract additional key personnel. See our Cautionary
    Statement, which appears later in this Item 6, for
    additional information.
  These events and uncertainties are difficult or impossible to
    predict accurately and many are beyond our control. We assume no
    obligation to publicly release the result of any revisions that
    may be made to any forward-looking statements to reflect events
    or circumstances after the date of such statements or to reflect
    the occurrence of anticipated or unanticipated events.
  Overview
    The
    Services We Provide
    Our
    Sources of Revenue
    Our
    Expenses
    Critical
    Accounting Policies and Estimates
   19




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##### 



Revenue
    Recognition
    
    Software and software license sales
    System hardware sales
    Content development services
    Training and implementation
    Maintenance and support contracts  97-2, SOP 98-9 SOP 97-2, No. 00-21 00-21)
          Software
    and software license sales
   20




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##### 



System
    hardware sales
    Professional
    service revenue
  time-and-materials time-and-materials time-and-materials
    Maintenance
    and support revenue
      Basic
    and Diluted Loss per Common Share
    Deferred
    Income Taxes
   21




---



##### 



Accounting
    for Stock-Based Compensation
          Net loss:As reported

$
(4,789,925
)Add: Employee compensation expense
    included in net loss


Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards


(13,880
)Pro forma

$
(4,803,805
)Basic and diluted loss per common
    share:As reported

$
(7.18
)Pro forma

$
(7.21
)  22




---



##### 



2006 Grants


2005 GrantsExpected volatility factors


61 .7
%


n/aApproximate risk free interest
    rates


5.0
%


5.0
%Expected lives


5 Years



5 Years     EITF 96-18, 00-18,
  Year
    Ended December 31, 2006 Compared to Year Ended
    December 31, 2005
    December 31


Increase2006


2005


(Decrease)Sales

$
3,145,389


$
710,216


$
2,435,173Cost of Sales


1,545,267



939,906



605,361Gross Profit


1,600,122



(229,690
)


1,829,812Sales and marketing expenses


1,462,667



1,198,629



264,038Research and development expenses


875,821



881,515



(5,694
)General administrative expenses


3,579,968



1,690,601



1,889,367Operating expenses


5,918,456



3,770,745



2,147,711Operating loss


(4,318,334
)


(4,000,435
)


(317,899
)Other income (expenses):Interest expense


(10,124,216
)


(804,665
)


(9,319,551
)Loss on Debt Modification


(367,153
)






(367,153
)Interest Income


21,915



1,375



20,540Sundry


51



13,800



(13,749
)(10,469,403
)


(789,490
)


(9,679,913
)Net loss

$
(14,787,737
)

$
(4,789,925
)

$
(9,997,812
)   Sales
   23




---



##### 



Cost
    of Sales
    Operating
    Expenses
    Interest
    Expense
    Liquidity
    and Capital Resources
  Operating
    Activities
    Investing
    Activities
    Financing
    Activities
    Form SB-2,
  
    We sold to the underwriter of our initial public offering for
    $50 a warrant to purchase 450,000 shares of our common
    stock exercisable at $4.80 per share. The warrant is not
    exercisable during the first 360 days after the date of our
    final prospectus (November 28, 2006) and expires on
    the fourth 24




---



##### 



anniversary of issuance. The warrant contains customary
    anti-dilution provisions and certain demand and participatory
    registration rights. The warrant may not be sold, transferred,
    assigned or hypothecated for a period of one year from the date
    of our final prospectus, except to officers or partners of the
    underwriter of our initial public offering and members of the
    selling group
    and/or their
    officers or partners.  
    Pursuant to the terms of convertible debenture agreements which
    we entered into with the Spirit Lake Tribe, a federally
    recognized Native American tribe, our indebtedness to the Spirit
    Lake Tribe incurred in 2005 aggregating $3,000,000 automatically
    converted into 1,302,004 shares of common stock.
    Pursuant to various note conversion agreements with 21 holders
    of convertible notes or debentures, an aggregate of $2,029,973
    principal amount of notes was automatically converted into
    634,362 shares of our common stock. In addition, we issued
    40,728 common shares in lieu of the payment of accrued interest
    in the amount of $130,344 due certain holders of such notes and
    debentures.      67-month
    Contractual
    Obligations
  Operating
    and Capital Leases
       25




---



##### 



Payment Due by PeriodContractual Obligations

Total


Less Than 1 Year


1-3 Years


3-5 Years


More Than 5 YearsCapital Lease Obligations

$
322,232


$
137,316


$
184,916


$



$
Operating Lease Obligations


247,060



92,467



154,593







Total

$
569,292


$
229,783


$
339,509


$



$
     Recent
    Accounting Pronouncements
    05-8. 05-8). 05-8 05-8 05-8
     26




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##### 



Subsequent
    Events
      CAUTIONARY
    STATEMENT
  Wireless Ronin Technologies, Inc., or persons acting on our
    behalf, or outside reviewers retained by us making statements on
    our behalf, or underwriters of our securities, from time to
    time, may make, in writing or orally, forward-looking
    statements as defined under the Private Securities
    Litigation Reform Act of 1995. This Cautionary Statement, when
    used in conjunction with an identified forward-looking
    statement, is for the purpose of qualifying for the safe
    harbor provisions of the Litigation Reform Act and is
    intended to be a readily available written document that
    contains factors which could cause results to differ materially
    from such forward-looking statements. These factors are in
    addition to any other cautionary statements, written or oral,
    which may be made, or referred to, in connection with any such
    forward-looking statement.
  The following matters, among others, may have a material
    adverse effect on our business, financial condition, liquidity,
    results of operations or prospects, financial or otherwise, or
    on the trading price of our common stock. Reference to this
    Cautionary Statement in the context of a forward-looking
    statement or statements shall be deemed to be a statement that
    any one or more of the following factors may cause actual
    results to differ materially from those in such forward-looking
    statement or statements.
  Risks
    Related to Our Business
  Our
    operations and business are subject to the risks of an early
    stage company with limited revenue and a history of operating
    losses. We have incurred losses since inception, and we have had
    only nominal revenue. We may not ever become or remain
    profitable.
   27




---



##### 



Our
    success depends on our RoninCast system achieving and
    maintaining widespread acceptance in our targeted markets. If
    our products contain errors or defects, our business reputation
    may be harmed.
    
    our ability to demonstrate RoninCasts economic and other
    benefits;
    our customers becoming comfortable with using RoninCast; and
    the reliability of the software and hardware comprising
    RoninCast and our other products.    We may
    experience fluctuations in our quarterly operating
    results.
  period-to-period
 28




---



##### 



Our
    prospective customers often take a long time to evaluate our
    products, with this lengthy and variable sales cycle making it
    difficult to predict our operating results.
    
    reduced need to upgrade existing visual marketing systems;
    introduction of products by our competitors;
    lower prices offered by our competitors; and
    changes in budgets and purchasing priorities.    Adequate
    funds for our operations may not be available, requiring us to
    curtail our activities significantly.
    Difficulty
    in developing and maintaining relationships with third party
    manufacturers, suppliers and service providers could adversely
    affect our ability to deliver our products and meet our
    customers demands.
    Reductions
    in hardware costs will likely decrease hardware pricing to our
    customers and would reduce our per unit revenue.
   29




---



##### 



Because
    our future business model relies upon strategic partners and
    resellers, we expect to face risks not faced by companies with
    only internal sales forces.
    
    we may not be able to adequately train our partners and
    resellers to sell and service our products;
    they may emphasize competitors products or decline to
    carry our products; and
    channel conflict may arise between other third parties
    and/or our
    internal sales staff.  Our
    industry is characterized by frequent technological change. If
    we are unable to adapt our products and develop new products to
    keep up with these rapid changes, we will not be able to obtain
    or maintain market share.
      Our
    future success depends on key personnel and our ability to
    attract and retain additional personnel.
    
    Jeffrey C. Mack, Chairman of the Board of Directors, President
    and Chief Executive Officer;
    John A. Witham, Executive Vice President and Chief Financial
    Officer;
    Christopher F. Ebbert, Executive Vice President and Chief
    Technology Officer; and
    Scott W. Koller, Executive Vice President, Sales and Marketing.   30




---



##### 



Our
    ability to succeed depends on our ability to protect our
    intellectual property, and if any third parties make
    unauthorized use of our intellectual property, or if our
    intellectual property rights are successfully challenged, our
    competitive position and business could suffer.
    Our
    industry is characterized by frequent intellectual property
    litigation, and we could face claims of infringement by others
    in our industry. Such claims are costly and add uncertainty to
    our business strategy.
    
    pay substantial damages;
    cease the manufacture, use or sale of infringing products;
    discontinue the use of certain technology; or
    obtain a license under the intellectual property rights of the
    third party claiming infringement, which license may not be
    available on reasonable terms or at all.   31




---



##### 



If our
    security measures protecting our customers intellectual
    property and other information fail, we may be subject to claims
    based on such failure.
    We
    could have liability arising out of our previous sales of
    unregistered securities.
  and/or
  We
    compete with other companies that have more resources, which
    puts us at a competitive disadvantage.
        Risks
    Related to Our Securities
  We
    must implement additional finance and accounting systems,
    procedures and controls in order to satisfy requirements
    applicable to public companies, which will increase our costs
    and divert managements time and attention.
   32




---



##### 



Our
    management has broad discretion over the use of the net proceeds
    from our initial public offering and may apply the proceeds in
    ways that do not improve our operating results or increase the
    value of our common stock.
    If we
    fail to comply with the NASDAQ requirements for continued
    listing, our common stock could be delisted from the NASDAQ
    Capital Market, which could hinder our investors ability
    to obtain timely quotations on the price of our common stock, or
    dispose of our common stock in the secondary
    market.
  over-the-counter
 33




---



##### 



An
    active market for our common stock may not develop or be
    sustained and the market price of our stock may be subject to
    wide fluctuations.
      
    price and volume fluctuations in the overall stock market from
    time to time;
    significant volatility in the market price and trading volume of
    companies in our industry;
    actual or anticipated changes in our earnings or fluctuations in
    our operating results or in the expectations of financial market
    analysts;
    investor perceptions of our industry, in general, and our
    company, in particular;
    the operating and stock performance of comparable companies;
    general economic conditions and trends;
    major catastrophic events;
    loss of external funding sources;
    sales of large blocks of our stock or sales by insiders; or
    departures of key personnel.  Our
    directors, executive officers and the Spirit Lake Tribe together
    may exercise significant control over our company.
    Our
    articles of incorporation, bylaws and Minnesota law may
    discourage takeovers and business combinations that our
    shareholders might consider in their best
    interests.
   34




---



##### 



We do
    not anticipate paying cash dividends on our shares of common
    stock in the foreseeable future.
    A
    substantial number of shares will be eligible for future sale by
    our current investors and the sale of those shares could
    adversely affect our stock price.
  lock-up
    lock-up
    ITEM 7
    FINANCIAL
    STATEMENTS  Page F-1.
  ITEM 8
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE   35




---



##### 



ITEM 8A
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
    Rules 13a-15(e) 15d-15(e)).
  Changes
    in Internal Control Over Financial Reporting
    ITEM 8B
    OTHER
    INFORMATION   36




---



##### 



PART III  ITEM 9
    DIRECTORS,
    EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
    GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
    ACT    IndependentName

Age

Position

DirectorJeffrey C. Mack


53


Chairman, President, Chief
    Executive Officer and Director

NoChristopher F. Ebbert


40


Executive Vice President and Chief
    Technology Officer

N/AJohn A. Witham


55


Executive Vice President and Chief
    Financial Officer

N/AStephen E. Jacobs


58


Executive Vice President and
    Secretary

N/AScott W. Koller


44


Executive Vice President, Sales
    and Marketing

N/ABrian S. Anderson


52


Vice President and Controller

N/ADr. William F. Schnell(2)(3)


51


Director

YesCarl B. Walking Eagle Sr.


65


Director

YesGregory T. Barnum(1)(2)(3)


52


Director

YesThomas J. Moudry(1)(2)


46


Director

YesBrett A. Shockley(1)(3)


47


Director

Yes     (1)
    
    Member of the Audit Committee.(2)
    
    Member of the Compensation Committee.(3)
    
    Member of the Corporate Governance and Nominating Committee.  Executive
    Officers
  Jeffrey C. Mack
  Christopher F. Ebbert
 37




---



##### 



John A. Witham
  Stephen E. Jacobs
  Scott W. Koller
  Brian S. Anderson
  Directors
    Jeffrey C. Mack.
  William F. Schnell
  Carl B. Walking Eagle Sr.
  Gregory T. Barnum
 38




---



##### 



Thomas J. Moudry
  Brett A. Shockley
    Audit
    Committee Matters
  Rule 10A-3.
  Regulation S-K.
  Code of
    Ethics
  Regulation S-B
  Section 16(a)
    Beneficial Ownership Reporting Compliance
   39




---



##### 



ITEM 10
    EXECUTIVE
    COMPENSATION    SUMMARY
    COMPENSATION TABLE
  Change inNon-


PensionEquity


Value andIncentive


Nonquali-Plan


fied Deferred


All OtherStock


Option


Compen-


Compensa-


Compen-Name and




Salary


Bonus


Awards


Awards


sation


tion Earnings


sation


TotalPrincipal Position

Year


($)(1)


($)


($)(2)


($)(2)


($)


($)


($)(3)


($)Jeffrey C. Mack,


2006



171,769



100,000







173,747











804



446,320Chairman,President, ChiefExecutive Officerand DirectorJohn A. Witham,


2006



127,596



60,000







145,197















332,793Executive VicePresident andChief FinancialOfficerScott W. Koller,


2006



169,425



30,000







48,128















247,553Executive VicePresident, Salesand Marketing     (1)
    
    Effective January 1, 2007, the annual base salaries of the
    named executive officers were adjusted as follows:
    Mr. Mack  $225,000; Mr. Witham 
    $175,000; and Mr. Koller  $160,000.(2)
    
    Represents the dollar amount recognized for financial statement
    reporting purposes with respect to fiscal year 2006 in
    accordance with FAS 123R. See Managements
    Discussion and Analysis or Plan of Operation 
    Critical Accounting Policies and Estimates 
    Accounting for Stock-Based Compensation.(3)
    
    Represents the amount we paid in premiums for a $500,000 life
    insurance policy for Mr. Mack, of which the beneficiary is
    Mr. Macks spouse.  Executive
    Employment Agreements
   40




---



##### 



agreed-upon
  Warrant
    Repricing
    WarrantName

SharesJeffrey C. Mack


21,666Stephen E. Jacobs


23,333Christopher F. Ebbert


15,000Marshall Group


4,444Barry W. Butzow


16,667Michael Frank


22,222     2006
    Equity Incentive Plan
     41




---



##### 



Name and Position

Number of SharesJeffrey C. Mack


291,666
(1)Chairman, President, Chief
    Executive Officer and DirectorJohn A. Witham


141,666
(2)Chief Financial Officer and
    Executive Vice PresidentScott W. Koller


95,000
(3)Executive Vice President, Sales
    and MarketingExecutive Group


699,332
(4)Non-Executive Director Group


Non-Executive Officer Employee
    Group


80,662     (1)
    
    Represents (a) a five-year option for the purchase of
    166,666 shares of common stock at $4.00 per share,
    which vested 25% on March 30, 2006 and vests 25% on each of
    March 30, 2007, March 30, 2008 and March 30,
    2009, and (b) a five-year option for the purchase of
    125,000 shares of common stock at $5.65, which vests 25% on
    each of January 1, 2008, January 1, 2009,
    January 1, 2010 and January 1, 2011.(2)
    
    Represents (a) a five-year option for the purchase of
    66,666 shares of common stock at $4.00 per share,
    which vested 25% on March 30, 2006 and vests 25% on each of
    March 30, 2007, March 30, 2008 and March 30,
    2009, and (b) a five-year option for the purchase of
    75,000 shares of common stock at $5.65, which vests 25% on
    each of January 1, 2008, January 1, 2009,
    January 1, 2010 and January 1, 2011.(3)
    
    Represents a five-year option for the purchase of
    95,000 shares of common stock at $5.65 per share,
    which vests 25% on each of January 1, 2008, January 1,
    2009, January 1, 2010 and January 1, 2011.(4)
    
    In addition to the awards specifically listed in this table,
    this entry includes (a) a five-year option for the purchase
    of 75,000 shares of common stock at $5.65 per share
    held by Christopher F. Ebbert, our Executive Vice President and
    Chief Technology Officer, which vests 25% on each of
    January 1, 2008, January 1, 2009, January 1, 2010
    and January 1, 2011, (b) an option for the purchase of
    15,000 shares of common stock at $5.65 per share held
    by Stephen E. Jacobs, our Executive Vice President and
    Secretary, which vested in full on February 2, 2007, and
    expires on December 31, 2007, (c) a five-year option
    for the purchase of 50,000 shares of common stock at
    $5.65 per share held by Brian S. Anderson, our Vice
    President and Controller, which vests 25% on each of
    January 1, 2008, January 1, 2009, January 1, 2010
    and January 1, 2011, (d) a five-year option for the
    purchase of 25,000 shares of common stock at $6.25 per
    share held by Mr. Anderson, which vested 25% on
    December 11, 2006 and vests 25% on each of
    December 11, 2007, December 11, 2008 and
    December 11, 2009, and (e) a restricted stock award
    for 6,000 shares held by Mr. Anderson, which vests in
    full on January 1, 2008, subject to Mr. Anderson being
    employed by us on such date. 42




---



##### 



Performance
    Bonus Plan for 2007
    Name and Position of Executive Officer

2007 Bonus PotentialJeffrey C. Mack

$
175,000Chairman, President, Chief
    Executive Officer and DirectorJohn A. Witham

$
70,000Executive Vice President and Chief
    Financial OfficerScott W. Koller

$
25,000Executive Vice President, Sales
    and MarketingChristopher F. Ebbert

$
30,000Executive Vice President and Chief
    Technology OfficerBrian S. Anderson

$
25,000Vice President and Controller     Outstanding
    Equity Awards At Fiscal Year End
    Option AwardsEquityIncentive PlanNumber of


Number of


Awards:Securities


Securities


Number ofUnderlying


Underlying


SecuritiesUnexercised


Unexercised


UnderlyingOptions


Options


Unexercised


Option(#)


(#)


Unearned


Exercise


OptionExercisable


Unexercisable


Options


Price


ExpirationName

(1)


(1)


(#)


($)


DateJeffrey C. Mack,


35,354
(2)










2.25



07/12/2009Chairman, President


18,333
(2)










6.75



09/02/2010Chief Executive Officer


21,666
(2)










9.00



03/31/2011and Director


41,666
(3)


125,000
(3)






4.00



03/30/2011



125,000
(4)






5.65



09/27/2011John A. Witham,


22,222
(2)










9.00



01/18/2011Executive Vice President


16,666
(3)


50,000
(3)






4.00



03/30/2011and Chief Financial






75,000
(4)






5.65



09/27/2011OfficerScott W. Koller,


1,388
(2)










6.75



12/15/2009Executive Vice


5,555
(2)










6.75



08/04/2010President, Sales


2,777
(2)










11.25



10/10/2010and Marketing


1,851
(2)










9.00



02/06/201111,111
(2)










9.00



03/24/2011



95,000
(4)






5.65



09/27/2011  43




---



##### 



(1)
    
    Unless otherwise indicated, represents shares issuable upon the
    exercise of stock options awarded under our 2006 Equity
    Incentive Plan.(2)
    
    Represents shares purchasable upon the exercise of warrants.(3)
    
    These options vest 25% on March 30, 2006 and an additional
    25% on of March 30, 2007, March 30, 2008 and
    March 30, 2009.(4)
    
    These options vest 25% on January 1, 2008 and an additional
    25% on each of January 1, 2009, January 1, 2010 and
    January 1, 2011.    Director
    Compensation
    FeesEarned or








Non-Equity


NonqualifiedPaid in


Stock


Option


Incentive Plan


Deferred


All OtherCash


Awards


Awards


Compensation


Compensation


Compensation


TotalName

($)


($)


($)(1)


($)


Earnings


($)


($)Dr. William F. Schnell










37,617















37,617Carl B. Walking Eagle Sr.










37,671















37,617Gregory T. Barnum










37,617















37,617Thomas J. Moudry










37,617















37,617Brett A. Shockley










37,617















37,617Michael Frank(2)










37,617















37,617Barry W. Butzow(2)










37,617















37,617Susan K. Haugerud(2)










37,617















37,617Michael J. Hopkins(3)


























     (1)
    
    Each of the options awarded to directors has a five-year term,
    was granted on February 27, 2006 and is exercisable at
    $4.00 per share. Compensation expense recognized for these
    option awards during fiscal year 2006 under FAS 123R is set
    forth in the above table.(2)
    
    Mr. Frank, Mr. Butzow and Ms. Haugerud resigned
    from the Board during 2006.(3)
    
    Mr. Hopkins, who continues to serve as an employee of our
    company, resigned from the Board during 2006. Although
    Mr. Hopkins was not compensated for his Board service, we
    paid $92,343 in total compensation to Mr. Hopkins for his
    service as an employee during the year ended December 31,
    2006.  2006
    Non-Employee Director Stock Option Plan
   44




---



##### 



Michael Frank(1)


10,000 sharesCarl B. Walking Eagle Sr


40,000 sharesBarry W. Butzow(1)


10,000 sharesGregory T. Barnum


40,000 sharesThomas J. Moudry


40,000 sharesBrett A. Shockley


40,000 sharesWilliam F. Schnell


40,000 sharesSusan K. Haugerud(1)


10,000 shares     (1)
    
    Mr. Frank, Mr. Butzow and Ms. Haugerud resigned
    from the Board since receiving a grant of options, but are
    entitled to exercise such options for 10,000 shares.    ITEM 11
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED SHAREHOLDER MATTERS    
    each person who is known by us to own beneficially more than 5%
    of our common stock;
    each current director;
    each of our executive officers; and
    all directors and executive officers as a group.      45




---



##### 



Beneficial OwnershipName and Address of Beneficial Owner

Shares


PercentCarl B. Walking Eagle Sr.


1,356,446
(1)


13.8
%Spirit Lake Tribe


1,346,446
(2)


13.7
%Perkins Capital Management,
    Inc.


1,156,613
(3)


11.8
%Gruber and McBaine Capital
    Management, LLC


723,350
(4)


7.4
%Heartland Advisors, Inc.


723,000
(5)


7.4
%Barry W. Butzow


594,499
(6)


5.9
%Stephen E. Jacobs


178,765
(7)


1.8
%Jeffrey C. Mack


160,686
(8)


1.6
%Christopher F. Ebbert


140,316
(9)


1.4
%Dr. William F. Schnell


111,147
(10)


1.1
%John A. Witham


55,555
(11)


*Scott W. Koller


24,307
(12)


*Thomas J. Moudry


15,000
(13)


*Gregory T. Barnum


10,000
(14)


*Brett A. Shockley


10,000
(14)


*Brian S. Anderson


8,472
(15)


*All current executive officers and
    directors as a group (11 persons)


2,070,694(16
)


20.0
%     *
    
    Less than 1%(1)
    
    Includes 1,346,446 shares owned by Spirit Lake Tribe. Carl
    B. Walking Eagle Sr. is the Vice Chairman of the Spirit Lake
    Tribal Council and may be deemed to beneficially own the shares
    held by Spirit Lake Tribe. Mr. Walking Eagle disclaims
    beneficial ownership of the shares owned by Spirit Lake Tribe
    except to the extent of his pecuniary interest in such shares.
    Includes 10,000 shares issuable upon exercise of options
    granted under the 2006 Non-Employee Director Stock Option Plan.
    The address for the shareholder is P.O. Box 359, Main
    Street, Fort Totten, ND 58335.(2)
    
    The address for the shareholder is P.O. Box 359, Main
    Street, Fort Totten, ND 58335.(3)
    
    As set forth in the Schedule 13G filed on January 12,
    2007 by Perkins Capital Management, Inc. The Schedule 13G
    reports that these shares are owned by investment advisory
    clients of Perkins Capital Management, Inc. The
    Schedule 13G reports that these shares represent
    247,038 shares over which such entity has sole voting power
    and 1,156,613 shares over which such entity has sole
    dispositive power (representing 846,613 common equivalents and
    310,000 warrants to purchase common stock). The address of this
    shareholder is 730 East Lake Street, Wayzata, MN 55391.(4)
    
    As set forth in the Schedule 13G filed on February 12,
    2007 by Gruber and McBaine Capital Management, LLC, Jon D.
    Gruber, J. Patterson McBaine and Eric Swergold. The
    Schedule 13G reports that these shares are owned by
    investment advisory clients of Perkins Capital Management, Inc.
    The Schedule 13G reports that these shares represent
    247,038 shares over which such entity has sole voting power
    and 1,156,613 shares over which such entity has sole
    dispositive power (representing 846,613 common equivalents and
    310,000 warrants to purchase common stock). The address of this
    shareholder is 730 East Lake Street, Wayzata, MN 55391.(5)
    
    As set forth in the Schedule 13G filed on February 9,
    2007 by Heartland Advisors, Inc. and William O. Nasgovitz. The
    Schedule 13G reports that Heartland Advisors, Inc.
    (HA) is a registered investment advisor whose
    clients have the right to receive or the power to direct the
    receipt of dividends and proceeds from the sale of these shares.
    Mr. Nasgovitz is the president and principal shareholder of
    HA. The Heartland Value Fund, a series of the Heartland Group,
    Inc., a registered investment company, owns 723,000 shares
    or 9.9% of the class of securities reported herein. The
    remaining shares disclosed in this filing are owned by various
    other accounts managed by HA on a discretionary basis. The
    Schedule 13G reports that these shares represent
    723,000 shares over which such entity has shared voting
    power and 46




---



##### 



723,000 shares over which such entity has shared
    dispositive power. The address of this shareholder is 789 North
    Water Street, Milwaukee, WI 53202.(6)
    
    Includes 10,000 shares purchasable upon exercise of options
    granted under the 2006 Non-Employee Director Stock Option Plan,
    and 232,770 shares purchasable upon exercise of warrants.
    The address for the shareholder is 9714 Brassie Circle, Eden
    Prairie, MN 55437.(7)
    
    Includes 126,960 shares purchasable upon exercise of
    warrants and 15,000 shares issuable upon exercise of
    options granted under the 2006 Equity Incentive Plan.(8)
    
    Includes 75,353 shares purchasable upon exercise of
    warrants and 41,666 shares issuable upon exercise of
    options granted under the 2006 Equity Incentive Plan.
    Mr. Mack has pledged 2,000 shares as security for a
    loan.(9)
    
    Includes 92,055 shares purchasable upon exercise of
    warrants.(10)
    
    Includes 2,083 shares purchasable upon exercise of
    warrants, 10,000 shares issuable upon the exercise of
    options granted under the 2006 Non-Employee Director Stock
    Option Plan, and 80,731 shares beneficially owned by SHAG
    LLC (of which 11,109 shares are purchasable upon exercise
    of warrants.) Dr. Schnell is an owner of SHAG LLC and may
    be deemed to beneficially own the shares held by SHAG LLC.
    Dr. Schnell disclaims beneficial ownership of the shares
    held by SHAG LLC except to the extent of his pecuniary interest
    in such shares. The address for the shareholder is 1000 East
    1st St, Duluth, MN 55805.(11)
    
    Represents 22,222 shares purchasable upon exercise of
    warrants and 33,333 shares issuable upon exercise of
    options granted under the 2006 Equity Incentive Plan.(12)
    
    Includes 22,682 shares purchasable upon exercise of
    warrants.(13)
    
    Includes 10,000 shares issuable upon exercise of options
    granted under the 2006 Non-Employee Director Stock Option Plan.(14)
    
    Represents shares issuable upon exercise of options granted
    under the 2006 Non-Employee Director Stock Option Plan.(15)
    
    Represents 6,250 shares issuable upon the exercise of
    options granted under the 2006 Equity Incentive Plan and
    2,222 shares purchasable upon exercise of warrants.(16)
    
    Includes 343,577 shares purchasable upon exercise of
    warrants, 187,916 shares issuable upon exercise of options
    and 1,427,177 shares beneficially owned by entities related
    to two of our directors (of which 11,109 shares are
    purchasable upon exercise of warrants).  Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    47




---



##### 



Number ofSecuritiesRemainingAvailablefor FutureIssuanceUnder EquityNumber of Securities


Weighted-Average


Compensationto be Issued Upon


Exercise Price of


Plans (ExcludingExercise of


Outstanding


SecuritiesOutstanding Options,


Options, Warrants


Reflected inWarrants and Rights


and Rights


Column(a))Plan Category

(a)


(b)


(c)Equity compensation plans
    approved by security holders


0


$
N/A



N/AEquity compensation plans not
    approved by security holders


1,298,566
(1)

$
5.22



580,668
(2)Total


1,298,566


$
5.22



580,668     (1)
    
    Represents: (a) 5,555 shares of common stock
    underlying a five-year warrant exercisable at $0.45 per
    share issued to an executive officer, which warrant expires on
    November 18, 2007; (b) 555 shares of common stock
    underlying a five-year warrant exercisable at $0.45 per
    share issued to a non-executive officer employee, which warrant
    expires on January 27, 2008; (c) 13,888 shares of
    common stock underlying a five-year warrant exercisable at
    $0.09 per share issued to an executive officer, which
    warrant expires on January 1, 2009;
    (d) 3,333 shares of common stock underlying a
    five-year warrant exercisable at $6.75 per share issued to
    an executive officer, which warrant expires on February 1,
    2009; (e) 13,888 shares of common stock underlying a
    five-year warrant exercisable at $6.75 per share issued to
    an executive officer, which warrant expires on April 29,
    2009; (f) 3,333 shares of common stock underlying a
    five-year warrant exercisable at $6.75 per share issued to
    an executive officer, which warrant expires on May 1, 2009;
    (g) 222 shares of common stock underlying a five-year
    warrant exercisable at $6.75 per share issued to a
    non-executive officer employee, which warrant expires on
    July 12, 2009; (h) 35,354 shares of common stock
    underlying five-year warrants exercisable at $2.25 share
    issued to an executive officer, which warrants expire on
    July 12, 2009; (i) 3,333 shares of common stock
    underlying a five-year warrant exercisable at $6.75 share
    issued to an executive officer, which warrant expires on
    August 1, 2009; (j) 3,333 shares of common stock
    underlying a five-year warrant exercisable at $6.75 per
    share issued to an executive officer, which warrant expires on
    November 1, 2009; (k) 14,276 shares of common
    stock underlying five-year warrants exercisable at
    $2.25 per share issued to executive officers, which
    warrants expire on January 26, 2010;
    (l) 27,777 shares of common stock underlying a
    five-year warrant exercisable at $0.09 per share issued to
    an executive officer, which warrant expires on January 26,
    2010; (m) 3,333 shares of common stock underlying a
    five-year warrant exercisable at $6.75 per share issued to
    an executive officer, which warrant expires on February 1,
    2010; (n) 222 shares of common stock underlying
    five-year warrants exercisable at $6.75 per share issued to
    non-executive officer employees, which warrants expire on
    February 18, 2010; (o) 277 shares of common stock
    underlying a five-year warrant exercisable at $6.75 per
    share issued to a non-executive officer employee, which warrant
    expires on February 23, 2010; (p) 1,666 shares of
    common stock underlying a five-year warrant exercisable at
    $6.75 per share issued to a non-executive officer employee,
    which warrant expires on April 9, 2010;
    (q) 833 shares of common stock underlying a five-year
    warrant exercisable at $6.75 per share issued to a
    non-executive officer employee, which warrant expires on
    April 18, 2010; (r) 13,888 shares of common stock
    underlying a five-year warrant exercisable at $6.75 per
    share issued to an executive officer, which warrant expires on
    April 29, 2010; (s) 3,333 shares of common stock
    underlying a five-year warrant exercisable at $6.75 per
    share issued to an executive officer, which warrant expires on
    May 1, 2010; (t) 8,888 shares of common stock
    underlying five-year warrants exercisable at $6.75 per
    share issued to executive officers, which warrants expire on
    August 4, 2010; (u) 388 shares of common stock
    underlying five-year warrants exercisable at $9.00 per
    share issued to non-executive officers employee, which warrants
    expire on August 9, 2010; (v) 31,666 shares of
    common stock underlying five-year warrants exercisable at
    $6.75 per share issued to executive officers, which
    warrants expire on September 2, 2010;
    (w) 27,776 shares of common stock underlying five-year
    warrants 48




---



##### 



exercisable at $6.75 per share issued to an executive
    officer, which warrants expire on September 3, 2010;
    (x) 2,777 shares of common stock underlying a
    five-year warrant exercisable at $11.25 per share issued to
    an executive officer, which warrant expires on October 10,
    2010; (y) 1,666 shares of common stock underlying a
    five-year warrant exercisable at $11.25 per share issued to
    a non-executive officer employee, which warrant expires on
    November 8, 2010; (z) 1,481 shares of common
    stock underlying a five-year warrant exercisable at
    $9.00 per share issued to a non-executive officer employee,
    which warrant expires on December 13, 2010; (aa)
    27,920 shares of common stock underlying five-year warrants
    exercisable at $9.00 per share issued to non-executive
    officer employees, which warrants expire on December 16,
    2010; (bb) 111 shares of common stock underlying a
    five-year warrant exercisable at $9.00 per share issued to
    a non-executive officer employee, which warrant expires on
    December 20, 2010; (cc) 3,333 shares of common
    stock underlying five-year warrants exercisable at
    $9.00 per share issued to non-executive officer employees,
    which warrants expire on December 28, 2010;
    (dd) 6,944 shares of common stock underlying a
    five-year warrant exercisable at $9.00 per share issued to
    an executive officer, which warrant expires on December 30,
    2010; (ee) 5,184 shares of common stock underlying
    five-year warrants exercisable at $9.00 per share issued to
    non-executive officer employees, which warrants expire on
    December 30, 2010; (ff) 296 shares of common stock
    underlying a five-year warrant exercisable at $9.00 per
    share issued to a non-executive officer employee, which warrant
    expires on January 6, 2011; (gg) 22,222 shares of
    common stock underlying a five-year warrant exercisable at
    $9.00 per share issued to an executive officer, which
    warrant expires on January 18, 2011; (hh) 2,222 shares
    of common stock underlying a five-year warrant exercisable at
    $9.00 per share issued to a non-executive officer employee,
    which warrant expires on January 19, 2011;
    (ii) 2,222 shares of common stock underlying a
    five-year warrant exercisable at $9.00 per share issued to
    a non-executive officer employee, which warrant expires on
    January 30, 2011; (jj) 1,851 shares of common stock
    underlying a five-year warrant exercisable at $9.00 per
    share issued to an executive officer, which warrant expires on
    February 6, 2011; (kk) 11,111 shares of common stock
    underlying a five-year warrant exercisable at $9.00 per
    share issued to an executive officer employee, which warrant
    expires on March 24, 2011; (ll) 11,111 shares of
    common stock underlying a five-year warrant exercisable at
    $9.00 per share issued to a non-executive officer employee,
    which warrant expires on March 24, 2011;
    (mm) 51,666 shares of common stock underlying
    five-year warrants exercisable at $9.00 per share issued to
    executive officers, which warrants expire on March 31,
    2011; (nn) 200,000 shares of common stock underlying
    options granted under our 2006 Non-Employee Director Stock
    Option Plan exercisable at $4.00 per share issued to
    directors, which options expire on February 27, 2011,
    vested as to 50,000 shares on February 27, 2006 and
    vest 25% with respect to options held by each director upon such
    directors reelection to the board; (oo) 30,000 shares
    of common stock underlying options granted under our 2006
    Non-Employee Director Stock Option Plan exercisable at
    $4.00 per share issued to directors who no longer serve on
    our board, which options expire on February 27, 2011,
    vested in full on February 27, 2006; (pp)
    233,332 shares of common stock underlying options granted
    under our 2006 Equity Incentive Plan exercisable at
    $4.00 per share issued to executive officers, which options
    ex pire on March 30, 2011, vested 25% on March 30,
    2006 and vest 25% on each of March 30, 2007, March 30,
    2008 and March 30, 2009; (qq) 25,000 shares of common
    stock underlying an option granted under our 2006 Equity
    Incentive Plan exercisable at $6.25 per share issued to an
    executive officer which option expires on December 11,
    2011, vested 25% on December 11, 2006 and vests 25% on each
    of December 11, 2007, December 11, 2008 and
    December 11, 2009; (rr) 420,000 shares of common stock
    underlying options granted under our 2006 Equity Incentive Plan
    exercisable at $5.65 per share issued to executive
    officers, which options expire on December 27, 2011 and
    vest 25% on each of January 1, 2008, January 1, 2009,
    January 1, 2010 and January 1, 2011; (ss)
    15,000 shares of common stock underlying an option granted
    under our 2006 Equity Incentive Plan exercisable at
    $5.65 per share issued to an executive officer, which
    option expires on May 3, 2007 and vested in full on
    February 2, 2007; and (tt) 6,000 shares of common
    stock underlying a restricted stock award granted under our 2006
    Equity Incentive Plan to an executive officer, which vests in
    full on January 1, 2008, subject to executive officer being
    employed by us on such date.(2)
    
    Represents 300,668 shares remaining available for issuance
    under our 2006 Equity Incentive Plan and 280,000 shares
    remaining available for issuance under our 2006 Non-Employee
    Director Stock Option Plan. Descriptions of such plans appear
    under the caption Executive Compensation. 49




---



##### 



ITEM 12
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE      Convertible
    Notes
         50




---



##### 



51




---



##### 



Non-Convertible
    Notes
    Other
    Financing Agreements
    36-month
   52




---



##### 



90-day
  90-day
    36-month
   53




---



##### 



Warrant
    Repricing
    WarrantName

SharesJeffrey C. Mack


21,666Stephen E. Jacobs


23,333Christopher F. Ebbert


15,000Marshall Group


4,444Barry W. Butzow


16,667Michael Frank


22,222     Executive
    Employment Agreements
    Director
    Independence
    Rule 10A-3
    ITEM 13
    EXHIBITS   54




---



##### 



ITEM 14
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES  Audit and
    Non-Audit Fees
    December 31,2006Audit fees(1)

$
168,422Tax fees(2)


6,000Total Fees

$
174,422     (1)
    
    Audit fees consisted of fees for services provided in connection
    with the audit of our financial statements, reviews of our
    quarterly financial statements, and for professional services in
    connection with our initial public offering.(2)
    
    Tax fees consisted of the aggregate fees billed for tax
    compliance, tax advice, and tax planning.    Pre-Approval
    Policies and Procedures
   55




---



##### 



SIGNATURES      By:
    /s/  Jeffrey
    C. Mack      attorney-in-fact attorney-in-fact attorney-in-fact
    Signature

Title

Date/s/  Jeffrey
    C. MackJeffrey
    C. Mack

Chairman of the Board, President,
    Chief Executive Officer and Director
    (Principal Executive Officer)

March 28, 2007/s/  John
    A. WithamJohn
    A. Witham

Executive Vice President and Chief
    Financial Officer 
    (Principal Financial Officer)

March 28, 2007/s/  Brian
    S. AndersonBrian
    S. Anderson

Principal Accounting Officer,
    Vice President and Controller

March 28, 2007/s/  William
    F. SchnellWilliam
    F. Schnell

Director

March 28, 2007Carl
    B. Walking Eagle Sr.

Director/s/  Gregory
    T. BarnumGregory
    T. Barnum

Director

March 28, 2007/s/  Thomas
    J. MoudryThomas
    J. Moudry

Director

March 28, 2007/s/  Brett
    A. ShockleyBrett
    A. Shockley

Director

March 28, 2007  56




---



##### 



INDEX TO
    FINANCIAL STATEMENTSWireless Ronin Technologies, Inc. Report of
    Independent Registered Public Accounting Firm


F-2Financial
    StatementsBalance
    Sheets


F-3Statements of
    Operations


F-4Statements of
    Shareholders Equity (Deficit)


F-5Statements of Cash
    Flows


F-7Notes to Financial
    Statements


F-8  F-1




---



##### 



The Board of Directors and Shareholders

Wireless Ronin Technologies, Inc.

Eden Prairie, Minnesota



We have audited the accompanying balance sheets of Wireless
    Ronin Technologies, Inc. as of December 31, 2006 and 2005,
    and the related statements of operations, shareholders
    equity (deficit) and cash flows for the years then ended. These
    financial statements are the responsibility of the
    companys management. Our responsibility is to express an
    opinion on these financial statements based on our audits.



We conducted our audits in accordance with the standards of the
    Public Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audit to obtain
    reasonable assurance about whether the financial statements are
    free of material misstatement. The Company is not required to
    have, nor were we engaged to perform, an audit of its internal
    control over financial reporting. Our audit included
    consideration of internal control over financial reporting as a
    basis for designing audit procedures that are appropriate in the
    circumstances, but not for the purpose of expressing an opinion
    on the effectiveness of the Companys internal control over
    financial reporting. Accordingly, we express no such opinion. An
    audit includes examining, on a test basis, evidence supporting
    the amounts and disclosures in the financial statements. An
    audit also includes assessing the accounting principles used and
    significant estimates made by management as well as evaluating
    the overall financial statement presentation. We believe that
    our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred to above
    present fairly, in all material respects, the financial position
    of Wireless Ronin Technologies, Inc. as of December 31,
    2006 and 2005 and the results of its operations and its cash
    flows for the years then ended, in conformity with
    U.S. generally accepted accounting principles.



As discussed in Note A to the financial statements,
    effective January 1, 2006, the Company adopted Financial
    Accounting Standards Board Statement No. 123(R),
    Share Based Payment.



/s/  Virchow,
    Krause & Company, LLP



Minneapolis, Minnesota

March 15, 2007

F-2




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##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  BALANCE
    SHEET
 DECEMBER 31, 2006 AND 2005
  2006


2005ASSETSCURRENT ASSETSCash and cash equivalents

$
8,273,388


$
134,587Marketable securities 
    available for sale


7,193,511



Accounts receivable, net


1,128,730



216,380Inventories


255,850



391,503Prepaid expenses and other current
    assets


148,024



25,717Total current assets


16,999,503



768,187PROPERTY AND EQUIPMENT, net


523,838



384,221OTHER ASSETSDeposits


22,586



17,591Deferred financing costs, net






143,172Total other assets


22,586



160,763TOTAL ASSETS

$
17,545,927


$
1,313,171LIABILITIES AND
    SHAREHOLDERS EQUITY (DEFICIT)CURRENT LIABILITIESBank lines of credit and notes
    payable

$



$
844,599Short-term notes
    payable  related parties






64,605Current maturities of long-term
    obligations


106,311



1,402,616Current maturities of long-term
    obligations  related parties






3,000,000Accounts payable


948,808



306,528Deferred revenue


202,871



1,087,426Accrued liabilities


394,697



544,704Total current liabilities


1,652,687



7,250,478LONG-TERM LIABILITIESNotes payable, less current
    maturities


155,456



970,861Notes payable  related
    parties, less current maturities






697,300Total long-term liabilities


155,456



1,668,161Total liabilities


1,808,143



8,918,639COMMITMENTS AND CONTINGENCIESSHAREHOLDERS EQUITY (DEFICIT)Capital stock, $0.01 par
    value, 66,666,667 shares authorizedPreferred stock,
    16,666,667 shares authorized, no shares issued and
    outstanding at December 31, 2006 and 2005






Common stock,
    50,000,000 shares authorized; 9,825,621, and
    784,037 shares issued and outstanding at December 31,
    2006 and 2005, respectively


98,256



7,840Additional paid-in capital


49,056,509



11,032,668Accumulated deficit


(33,433,713
)


(18,645,976
)Accumulated other comprehensive
    income


16,732



Total shareholders equity
    (deficit)


15,737,784



(7,605,468
)TOTAL LIABILITIES AND
    SHAREHOLDERS EQUITY (DEFICIT)

$
17,545,927


$
1,313,171    F-3




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  STATEMENTS
    OF OPERATIONS
 YEARS ENDED DECEMBER 31, 2006 AND 2005
  2006


2005SalesHardware

$
1,852,678


$
576,566Software


1,107,913



66,572Services and other


184,798



67,078Total sales


3,145,389



710,216Cost of salesHardware


1,429,585



517,503Software






Services and other


78,272



32,156Inventory lower of cost or market
    adjustment


37,410



390,247Total cost of sales


1,545,267



939,906Gross profit (loss)


1,600,122



(229,690
)Operating expenses:Sales and marketing expenses


1,462,667



1,198,629Research and development expenses


875,821



881,515General and administrative expenses


3,579,968



1,690,601Total operating expenses


5,918,456



3,770,745Operating loss


(4,318,334
)


(4,000,435
)Other income (expenses):Interest expense


(10,124,216
)


(804,665
)Loss on debt modification


(367,153
)


Interest income


21,915



1,375Other


51



13,800(10,469,403
)


(789,490
)Net loss

$
(14,787,737
)

$
(4,789,925
)Basic and diluted loss per common
    share

$
(9.71
)

$
(7.18
)Basic and diluted weighted average
    shares outstanding


1,522,836



666,712    F-4




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  STATEMENTS
    OF SHAREHOLDERS EQUITY (DEFICIT)
 YEARS ENDED DECEMBER 31, 2006 AND 2005
  Accumulated


TotalAdditional





Other


ShareholdersCommon Stock


Paid-In


Accumulated


Comprehensive


EquityShares


Par Value


Capital


Deficit


Income


(Deficit)Balances at December 31, 2004


583,659


$
5,837


$
9,154,627


$
(13,856,051
)

$



$
(4,695,587
)Sales of equity instruments for
    cash consideration:Equity units sold at $9.00 per
    unit


113,884



1,139



1,023,861











1,025,000Common stock sold at $9.00 per
    share


9,998



100



89,900











90,000Common stock sold at $4.50 per
    share


22,222



222



99,778











100,000Common stock issued to related
    parties for:Short-term notes payable to related
    parties at $2.19 per share


33,332



333



72,799











73,132Payment of accrued interest to
    related party at $9.00 per share


19,443



194



174,806











175,000Common stock issued for:Services at $1.80 per share


833



8



1,492











1,500Services at $9.00 per share


666



7



5,993











6,000Warrants issued to related parties
    for:Short-term notes
    payable  related parties










65,925











65,925Notes payable  related
    parties










33,954











33,954Short-term borrowings 
    related parties










115,628











115,628Deferred financing
    costs  related party










28,479











28,479Warrants issued for:Short-term notes payable










12,465











12,465Notes payable










48,409











48,409Deferred financing costs










25,782











25,782Services










78,770











78,770Net loss














(4,789,925
)






(4,789,925
)Balances at December 31, 2005


784,037


$
7,840


$
11,032,668


$
(18,645,976
)

$



$
(7,605,468
)    F-5




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  STATEMENTS
    OF SHAREHOLDERS EQUITY (DEFICIT)
 YEARS ENDED DECEMBER 31, 2006 AND 2005
  Accumulated


TotalAdditional





Other


ShareholdersCommon Stock


Paid-In


Accumulated


Comprehensive


EquityShares


Par Value


Capital


Deficit


Income


(Deficit)Balances at December 31, 2005


784,037


$
7,840


$
11,032,668


$
(18,645,976
)

$



$
(7,605,468
)Stock issued to related parties for:Interest expense to related party
    at $9.00 per share


24,999



250



224,750











225,000Stock issued to related parties for
    short-term notes payable


45,332



453



202,192











202,645Stock issued for short-term notes
    payable


20,000



200



58,662











58,862Warrants issued to related parties
    for:Short-term notes payable










268,872











268,872Deferred financing costs










39,499











39,499Warrants issued for:Notes payable










18,697











18,697Bridge notes










1,893,500











1,893,500Compensation expense










405,151











405,151Directors










300,937











300,937Beneficial conversion of short-term
    notes payable










5,700,290











5,700,290Repricing of warrants










81,126











81,126Proceeds from initial public
    offering of common stock, less offering costs


5,175,000



51,750



17,951,804











18,003,554Conversion of long-term obligations
    into common stock


3,628,056



36,281



10,407,123











10,443,404Conversion of accrued interest into
    common stock


147,642



1,476



470,994











472,470Exercise of warrants


555



6



244











250Comprehensive incomeNet loss














(14,787,737
)






(14,787,737
)Unrealized income on investments


















16,732



16,732Total comprehensive income














(14,787,737
)


16,732



14,804,469Balances at December 31, 2006


9,825,621


$
98,256


$
49,056,509


$
(33,433,713
)

$
16,732


$
15,737,784    F-6




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  STATEMENTS
    OF SHAREHOLDERS CASH FLOWS
 YEARS ENDED DECEMBER 31, 2006 AND 2005
  2006


2005Cash flows from operating activitiesNet loss

$
(14,787,737
)

$
(4,789,925
)Adjustments to reconcile net loss
    to net cash used in operating activitiesDepreciation and amortization


1,196,027



151,830Loss on disposal of property and
    equipment






7,355Allowance for doubtful receivables


21,000



2,500Inventory lower of cost or market
    adjustment


37,410



390,247Debt discount amortization


3,569,509



63,647Debt discount
    amortization  related party


606,912



37,617Common stock issued for interest
    expense  related party


225,000



175,000Common stock issued for services






7,500Issuance of warrants for short-term
    borrowings  related parties


39,499



115,628Issuance of warrants for services






78,770Issuance of warrants as
    compensation expense


706,088



Repricing of warrants


81,126



Beneficial conversion of notes
    payable


4,107,241



Change in assets and liabilitiesAccounts receivable


(933,350
)


(191,332
)Inventories


95,595



(52,289
)Prepaid expenses and other current
    assets


(122,307
)


787Deposits


(4,995
)


(3,485
)Accounts payable


697,280



154,000Deferred revenue


(884,555
)


6,593Accrued liabilities


390,516



460,683Net cash used in operating
    activities


(4,959,741
)


(3,384,874
)Cash flows used in investing
    activitiesPurchases of property and equipment


(310,926
)


(272,114
)Purchases of marketable securities


(7,176,779
)


Net cash used in investing
    activities


(7,487,705
)


(272,114
)Cash flows provided by financing
    activitiesNet proceeds from (payments on)
    bank lines of credit and short-term notes payable


(350,000
)


400,000Payment for deferred financing costs


(864,509
)


(100,000
)Proceeds from short-term notes
    payable  related parties


4,825,000



200,000Payments on short-term notes
    payable  related parties


(335,601
)


Proceeds from long-term notes
    payable


194,242



Proceeds from long-term notes
    payable  related parties






3,000,000Payments on long-term notes payable


(872,939
)


(1,023,069
)Proceeds (Payments) on long-term
    notes payable  related parties


(13,750
)


1,215,000Proceeds from issuance of common
    stock and equity units


18,003,554



Proceeds from exercise of warrants


250



Net cash provided by financing
    activities


20,586,247



3,691,931INCREASE IN CASH AND CASH
    EQUIVALENTS


8,138,801



34,943Cash and cash equivalents at
    beginning of year


134,587



99,644Cash and cash equivalents at end of
    year

$
8,273,388


$
134,587    F-7




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
  NOTE A 
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Nature
    of Business and Operations
  Overview
    ®
  Summary
    of Significant Accounting Policies
    1.
    Revenue Recognition    
    Software and software license sales
    System hardware sales
    Content development services
    Training and implementation
    Maintenance and support contracts  97-2, SOP 98-9 SOP 97-2, No. 00-21 00-21)
    Multiple-Element Arrangements
 F-8




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE A 
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
   1.
    Revenue Recognition  (continued)       Software
    and software license sales
    System
    hardware sales
    Professional
    service revenue
  time-and-materials time-and-materials time-and-materials
    Maintenance
    and support revenue
   F-9




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE A 
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
   1.
    Revenue Recognition  (continued)     Cash and Cash Equivalents
    3.
    Accounts Receivable    4.
    Inventories  first-in,
  5.
    Depreciation and Amortization      Property and equipmentEquipment


3 - 5 yearsDemonstration equipment


3 - 5 yearsFurniture and fixtures


7 yearsPurchased software


3 yearsLeased equipment


3 yearsLeasehold improvements


5 yearsIntangible assetsDeferred financing costs


1 - 5 years  F-10




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE A 
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
   5.
    Depreciation and Amortization  (continued)    6.
    Advertising Costs    7.
    Software Development Costs    8.
    Basic and Diluted Loss per Common Share    9.
    Deferred Income Taxes    10.
    Accounting for Stock-Based Compensation   F-11




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE A 
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
   10.
    Accounting for Stock-Based
    Compensation  (continued)          Net loss:As reported

$
(4,789,925
)Add: Employee compensation expense
    included in net loss


Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards


(13,880
)Pro forma

$
(4,803,805
)Basic and diluted loss per common
    share:As reported

$
(7.18
)Pro forma

$
(7.21
)  F-12




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE A 
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
   10.
    Accounting for Stock-Based
    Compensation  (continued)    2006 Grants


2005 GrantsExpected volatility factors


61.7
%


n/aApproximate risk free interest
    rates


5.0
%


5.0
%Expected lives


5 Years



5 Years     EITF 96-18, 00-18,
  11.
    Fair Value of Financial Instruments    12.Registration
    Rights Agreements
  05-4, No. 00-19, 05-4 05-4.
 F-13




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE A 
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
   13.Use
    of Estimates
    14.
    Recent Accounting Pronouncements    05-8. 05-8). 05-8 05-8 05-8
     F-14




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE A 
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
   14.
    Recent Accounting Pronouncements  (continued)    NOTE B 
    CONCENTRATION OF CREDIT RISK
      Year Ended


Year EndedDecember 31,


December 31,Customer

2006


2005A


15.9
%


*B


11.6
%


*C


11.4
%


*D



*


10.0
%38.9
%


10.0
%     *
    
    Sales from this customer were less than 10% of total sales for
    the period reported.      December 31,


December 31,Customer

2006


2005A


17.7
%


*B


13.1
%


*C


11.5
%


*D


11.4
%


*E



*


41.1
%F



*


30.8
%G



*


14.3
%53.7
%


86.2
%     *
    
    Accounts receivable from this customer were less than 10% of
    total accounts receivable for the period reported. F-15




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
  NOTE C 
    MARKETABLE SECURITIES
      Gross


GrossUnrealized


Unrealized


FairCost


Gains


Losses


ValueDebt securities:Issued by Federal government
    agencies (maturing 2007)

$
7,176,779


$
16,732


$



$
7,193,511$
7,176,779


$
16,732


$



$
7,193,511  F-16




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
  NOTE D 
    INVENTORIES
    December 31,


December 31,2006


2005Finished goods

$
158,051


$
143,483Product components and supplies


97,799



248,020$
255,850


$
391,503     NOTE E 
    PROPERTY AND EQUIPMENT
    December 31,


December 31,2006


2005Leased equipment

$
380,908


$
180,756Equipment


162,507



139,953Leasehold improvements


136,812



100,430Demonstration equipment


99,839



59,738Purchased software


70,246



66,573Furniture and fixtures


30,333



24,598880,645



572,048Less: accumulated depreciation and
    amortization


(356,807
)


(187,827
)$
523,838


$
384,221   NOTE F 
    OTHER ASSETS
    December 31,


December 31,2006


2005Deposits

$
22,586


$
17,591Deferred financing costs, net






143,172$
22,586


$
160,763   Deferred
    financing costs
   F-17




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE F 
    OTHER ASSETS (CONTINUED)
          NOTE G 
    BANK LINES OF CREDIT AND NOTES PAYABLE
    December 31,


December 31,2006


2005Lines of credit  bank

$



$
750,000Short-term note
    payable  shareholder






94,599$



$
844,599   Lines
    of credit  bank
    Short-term
    note payable  shareholder
   F-18




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE G 
    BANK LINES OF CREDIT AND NOTES PAYABLE
    (CONTINUED)
      Convertible
    bridge notes payable
     F-19




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE G 
    BANK LINES OF CREDIT AND NOTES PAYABLE
    (CONTINUED)
    NOTE H 
    SHORT-TERM NOTES PAYABLE  RELATED
    PARTIES
  Short-term
    notes payable  related parties
        EITF 96-19,
   F-20




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE H 
    SHORT-TERM NOTES PAYABLE  RELATED PARTIES
    (CONTINUED)
  Short-term
    borrowings  related parties
  year-to-year
      NOTE I 
    DEFERRED REVENUE
    December 31,


December 31,2006


2005Deferred maintenance

$
149,555


$
18,531Customer deposits


53,316



332,236Gaming industry license






500,000Restaurant industry license






236,659$
202,871


$
1,087,426      F-21




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE I 
    DEFERRED REVENUE (CONTINUED)
    NOTE J 
    ACCRUED LIABILITIES
    December 31,


December 31,2006


2005Compensation

$
347,083


$
102,380Deferred gain on sale leaseback


30,241



50,455Sales tax and other


17,373



11,071Interest






380,798$
394,697


$
544,704       NOTE K 
    LONG-TERM NOTES PAYABLE
    December 31,


December 31,2006


2005Capital lease obligations

$
261,767


$
96,563Convertible bridge notes payable






1,438,923Note payable to customer






384,525Note payable to supplier






232,193Non-convertible notes payable






221,273261,767



2,373,477Less: current maturities


(106,311
)


(1,402,616
)$
155,456


$
970,861   Convertible
    bridge notes payable
   F-22




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE K 
    LONG-TERM NOTES PAYABLE (CONTINUED)
            Non-convertible
    notes payable
        Note
    payable to customer
   F-23




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE K 
    LONG-TERM NOTES PAYABLE (CONTINUED)
  Note
    payable to supplier
    Capital
    Lease Obligations
      December 31,


December 31,2006


2005Cost

$
380,907


$
180,756Less: accumulated amortization


(157,030
)


(92,874
)Total

$
223,877


$
87,882       Year Ending December 31,

Amount2007

$
137,3162008


108,3792009


76,537Total payments


322,232Less: portion representing interest


(60,465
)Principal portion


261,767Less: current portion


(106,311
)Long-term portion

$
155,456     Year Ending December 31,

Amount2007

$
106,3112008


89,5242009


65,932Total

$
261,767  F-24




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
  NOTE L 
    LONG-TERM NOTES PAYABLE  RELATED PARTIES
    December 31,


December 31,2006


2005Convertible debenture payable

$



$
3,000,000Convertible bridge notes payable






683,550Non-convertible notes payable






13,750



3,697,300Less: current maturities






(3,000,000
)$



$
697,300   Convertible
    debenture payable
        Convertible
    bridge notes payable
     F-25




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE L 
    LONG-TERM NOTES PAYABLE  RELATED PARTIES
    (CONTINUED)
        Non-convertible
    notes payable
        NOTE M 
    COMMITMENTS AND CONTINGENCIES
  Operating
    Leases
       F-26




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE M 
    COMMITMENTS AND CONTINGENCIES (CONTINUED)
    Year Ending December 31,

Amount2007

$
92,4672008


82,4342009


72,159Total

$
247,060   NOTE N 
    SHAREHOLDERS EQUITY (DEFICIT)
  Stock
    Split
  one-for-six two-for-three
  Warrants
      Outstanding at beginning of year


567,600


$
9.25



412,446


$
9.57Granted


1,666,386



3.78



183,637



8.45Exercised


(556
)


0.45







Expired


(4,500
)


43.61



(28,483
)


3.38Outstanding at end of year


2,228,930


$
4.99



567,600


$
9.25Non-exercisable


(450,000
)Outstanding and exercisable at end
    of year


1,778,930


$
5.03         F-27




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
  NOTE N 
    SHAREHOLDERS EQUITY (DEFICIT) (CONTINUED)
  2006


2005Expected life


3 - 5 Years



3 - 5 YearsDividend yield


0 %



0 %Expected volatility


61.718%



61.718%Risk-free interest rate


5.0%



5.0%             NOTE O 
    STOCK-BASED COMPENSATION
  Warrants
      December 31, 2006


December 31, 2005Weighted





WeightedCommon


Average


Common


AverageStock


Exercise


Stock


ExerciseWarrants


Price


Warrants


PriceOutstanding at beginning of year


329,337


$
6.31



137,522


$
3.08Granted


51,037



9.00



191,815



8.63Exercised














Expired














Outstanding and exercisable at end
    of year


380,374


$
6.06



329,337


$
6.31  F-28




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE O 
    STOCK-BASED COMPENSATION (CONTINUED)
      Warrants Outstanding and ExercisableWeighted-Average


Weighted-Range of




Remaining


Average


AggregateExercise

Number


Contractual


Exercise


IntrinsicPrices

Outstanding


Life


Price


Value$0.09  - $2.24


47,222



1.58 Years


$
0.13



$2.25  - $6.74


67,411



2.74 Years



2.25



$6.75  - $8.99


119,444



3.12 Years



6.75



$9.00  - $11.24


145,186



4.12 Years



9.07



$11.25 - $22.50


1,111



0.02 Years



22.50



380,374



3.23 Years


$
6.06


$
685,011     Stock
    options
  2006
    Equity Incentive Plan
      2006
    Non-Employee Director Stock Option Plan
   F-29




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE O 
    STOCK-BASED COMPENSATION (CONTINUED)
        WeightedCommon


Average


AggregateStock


Exercise


IntrinsicOptions


Price


ValueOutstanding at beginning of year





$




Granted


553,333



4.00



Exercised










Forfeited or cancelled


(90,000
)


4.00



Outstanding and exercisable at end
    of year


463,333


$
4.00


$
815,466     Stock Options OutstandingWeighted-Average


Weighted-Range of




Remaining


AverageExercise

Number


Contractual


ExercisePrices

Outstanding


Life


Price$4.00 - $4.99


463,333



4.22 Years


$
4.00463,333



4.22 Years


$
4.00          F-30




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE O 
    STOCK-BASED COMPENSATION (CONTINUED)
  Restricted
    stock units
    Total
    stock-based compensation
    Year Ended December 31, 2006Pro FormaAs


UnderReported


APB No. 25


DifferenceNet Loss

$
(14,787,737
)

$
(14,000,523
)

$
(787,214
)Cash flows used in operating
    activities


(4,959,741
)


(4,959,741
)


Cash flows from in financing
    activities


20,586,247



20,586,247



Basic and diluted loss per common
    share

$
(9.71
)

$
(9.19
)

$
0.52     Stock-based compensation costs
    included in:Sales and marketing expenses

$
65,729General and administrative expenses


721,485Total stock-based compensation
    costs

$
787,214   NOTE P 
    INCOME TAXES
   F-31




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE P 
    INCOME TAXES (CONTINUED)
    2006


2005Current asset:Allowance for doubtful accounts

$
10,000


$
1,000Property and equipment


(28,000
)


(29,000
)Accrued expenses


11,000



14,000Non-current asset:Net operating loss carryforwards


9,881,000



6,203,000Deferred tax asset


9,874,000



6,189,000Less: valuation allowance


(9,874,000
)


(6,189,000
)Net deferred tax asset

$



$
         Income tax provision:Deferred:Federal

$
(3,096,000
)

$
(1,617,000
)State


(589,000
)


(307,000
)Change in valuation allowance


3,685,000



1,924,000Total income tax expense (benefit)

$



$
    F-32




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
   NOTE P 
    INCOME TAXES (CONTINUED)
    Year Ended December 31,2006


2005Federal statutory rate


(34.0
)%


(34.0
)%State taxes


(6.5
)


(6.5
)Other


(0.1
)


0.3Change in valuation allowance


40.6



40.2
%



%   NOTE Q 
    SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION
  Year Ended


Year EndedDecember 31,


December 31,2006


2005Cash paid for:Interest

$
1,505,429


$
424,329Noncash Investing and Financing
    Activities:Common stock issued for notes
    payableRelated parties


202,645



73,132Non-related parties


58,862



Warrants issued for notes payableRelated parties


268,872



99,879Non-related parties


1,912,197



60,874Long-term notes payable converted
    into common stockRelated parties


3,683,550



Non-related parties


1,346,423



Short-term notes payable converted
    into common stockNon-related parties


4,582,333



Related parties


831,097



Beneficial conversion of
    short-term notes payable


1,593,049



Stock and warrants issued for
    deferred financing costsRelated parties






28,479Non-related parties






25,782Conversion of accounts payable
    into long-term notes 
    payable  related parties


55,000



15,000Conversion of deferred revenue
    into long-term notes payable






328,275Conversion of accrued interest
    into long-term notes payable


76,531



112,423Conversion of accrued interest
    into common stock


472,471



Non-related parties


325,350



Related parties


147,121



Issuance of note payable in
    exchange for inventory






482,193Non-cash purchase of fixed assets
    through capital lease


5,910



  F-33




---



##### 



WIRELESS
    RONIN TECHNOLOGIES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2006 AND 2005
  NOTE R 
    RELATED PARTY TRANSACTIONS
      NOTE S 
    SUBSEQUENT EVENTS
     F-34




---



##### 



EXHIBIT INDEX  ExhibitNumber

Description3
.1

Articles of Incorporation, as
    amended of the Registrant (incorporated by reference to our
    Pre-Effective Amendment No. 1 to
    Form SB-2
    filed on October 12, 2006 (File
    No. 333-136972)).3
.2

Bylaws, as amended of the
    Registrant (incorporated by reference to our Registration
    Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).4
.1

See exhibits 3.1 and 3.2.4
.2

Specimen form of common stock
    certificate of the Registrant (incorporated by reference to our
    Pre-Effective Amendment No. 1 to
    Form SB-2
    filed on October 12, 2006 (File
    No. 333-136972)).4
.3

Form of Current Warrant to
    Purchase Common Stock of the Registrant (incorporated by
    reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).4
.4

Form of Previous Warrant to
    Purchase Common Stock of the Registrant (incorporated by
    reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).4
.5

Form of Convertible Debenture Note
    issued to lenders, including related parties (including the
    extension thereto) (incorporated by reference to our
    Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).4
.6

Promissory Note issued to SHAG LLC
    in the amount of $100,000 dated November 11, 2005
    (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).4
.7

Promissory Note issued to Jack
    Norqual in the amount of $300,000 dated December 27, 2005
    (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).4
.8

Promissory Note issued to Barry
    Butzow in the amount of $300,000 dated December 27, 2005
    (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).4
.9

Form of Note Conversion
    Agreement by and between the Registrant and certain lenders
    (including the addendum thereto) (incorporated by reference to
    our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).4
.10

Note Conversion Agreement by
    and between the Registrant and Galtere International Master
    Fund L.P., dated March 3, 2006 (incorporated by
    reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).4
.11

Note Conversion Agreement by
    and between the Registrant and SHAG LLC, dated March 9,
    2006 (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).4
.12

Letter regarding
    Note Extension by Barry Butzow dated June 27, 2006
    (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).4
.13

Letter regarding
    Note Extension by Jack Norqual dated June 27, 2006
    (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.1

Wireless Ronin Technologies, Inc.
    2006 Equity Incentive Plan (incorporated by reference to our
    Definitive Proxy Statement on Schedule 14A filed on
    December 26, 2006 (File
    No. 001-33169)).10
.2

Wireless Ronin Technologies, Inc.
    2006 Non-Employee Director Stock Option Plan (incorporated by
    reference to our Definitive Proxy Statement on Schedule 14A
    filed on December 26, 2006 (File
    No. 001-33169)).10
.3

Form of Loan and Subscription
    Agreement by and between the Registrant and each purchaser of
    12% Convertible Bridge Notes (incorporated by reference to
    our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.4

Form of the Registrants
    12% Convertible Bridge Notes (incorporated by reference to
    our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.5

Form of Warrant to Purchase Shares
    of Common Stock issued by the Registrant to purchasers of
    12% Convertible Bridge Notes (incorporated by reference to
    our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)). E-1




---



##### 



ExhibitNumber

Description10
.6

Employment Agreement, dated as of
    April 1, 2006, between the Registrant and Jeffrey C. Mack
    (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.7

Employment Agreement, dated as of
    April 1, 2006, between the Registrant and Christopher F.
    Ebbert (incorporated by reference to our Registration Statement
    on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.8

Employment Agreement, dated as of
    April 1, 2006, between the Registrant and Stephen E. Jacobs
    (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.9

Employment Agreement, dated as of
    April 1, 2006, between the Registrant and Scott W. Koller
    (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.10

Employment Agreement, dated as of
    April 1, 2006, between the Registrant and John A. Witham
    (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.11

Employment Agreement, dated as of
    December 13, 2006 between the Registrant and Brian S.
    Anderson (incorporated by reference to our Current Report on
    Form 8-K/A
    filed on December 15, 2006 (File
    No. 001-33169)).10
.12

Amended and Restated Convertible
    Debenture Purchase Agreement between the Registrant and the
    Spirit Lake Tribe dated September 7, 2005 (incorporated by
    reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.13

10% Convertible Debenture in
    principal amount of $3,000,000 dated September 7, 2005
    (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.14

Amendment No. 1 to Amended
    and Restated Convertible Debenture Purchase Agreement between
    the Registrant and the Spirit Lake dated February 27, 2006
    (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.15

Guaranty by and between Stephen E.
    Jacobs and Winmark Corporation dated December 8, 2004
    (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.16

Commercial Guaranty by and between
    the Registrant, as Borrower, Signature Bank, as Lender and
    Michael J. Hopkins, as Guarantor dated January 12, 2006
    (incorporated by reference to our Pre-Effective Amendment
    No. 1 to
    Form SB-2
    filed on October 12, 2006 (File
    No. 333-136972)).10
.17

Commercial Guaranty by and between
    the Registrant, as Borrower, Signature Bank, as Lender and Barry
    Butzow, as Guarantor dated November 10, 2005 (incorporated
    by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.18

Commercial Guaranty by and between
    the Registrant, as Borrower, Signature Bank, as Lender and Barry
    Butzow, as Guarantor dated November 2, 2004 (incorporated
    by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.19

Sale and Purchase Agreement, dated
    July 11, 2006, between Sealy Corporation and the Registrant
    (incorporated by reference to our Pre-Effective Amendment
    No. 4 to
    Form SB-2
    filed on November 22, 2006 (File
    No. 333-136972)).10
.20

Amendment No. 2 to Amended
    and Restated Convertible Debenture Agreement and Debenture
    between the Registrant and Spirit Lake Tribe dated July 18,
    2006 (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.21

Note Amendment Agreement by
    and between the Registrant and Galtere International Master
    Fund L.P. dated July 21, 2006 (incorporated by
    reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.22

Form of Note Amendment
    Agreement by and between the Registrant and certain lenders
    dated July 27, 2006 (incorporated by reference to our
    Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)). E-2




---



##### 



ExhibitNumber

Description10
.23

Form of Non-Qualified Stock Option
    Agreement Granted under the 2006 Equity Incentive Plan
    (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on August 29, 2006 (File
    No. 333-136972)).10
.24

Form of Incentive Stock Option
    Agreement Granted under the 2006 Equity Incentive Plan.10
.25

Letter Amendment, dated
    October 5, 2006, to the Sale and Purchase Agreement between
    Sealy Corporation and the Registrant (incorporated by reference
    to our Registration Statement on
    Form SB-2
    filed on October 12, 2006 (File
    No. 333-136972)).10
.26

Form of Option Agreement Granted
    under the 2006 Non-Employee Director Stock Option Plan
    (incorporated by reference to our Pre-Effective Amendment
    No. 2 to
    Form SB-2
    filed on October 30, 2006 (File
    No. 333-136972)).10
.27

Hardware Partnership Agreement,
    dated September 14, 2006, by and between Richardson
    Electronics Ltd. and the Registrant (incorporated by reference
    to our Pre-Effective Amendment No. 3 to
    Form SB-2
    filed on November 7, 2006 (File
    No. 333-136972)).10
.28

Amendment to Sale and Purchase
    Agreement, dated as of January 24, 2007, between the
    Registrant and Sealy Corporation (incorporated by reference to
    our Current Report on
    Form 8-K
    filed on January 26, 2007 (File
    No. 001-33169)).10
.29

Mutual Termination, Release and
    Agreement, dated February 13, 2007, between the Registrant
    and The Marshall Special Assets Group, Inc. (incorporated by
    reference to our Current Report on
    Form 8-K
    filed on February 16, 2007 (File
    No. 001-33169)).21


Subsidiaries of the Registrant
    (incorporated by reference to our Registration Statement on
    Form SB-2
    filed on November 27, 2006 (File
    No. 333-136972)).24


Powers of Attorney (included on
    Signatures Page).31
.1

Chief Executive Officer
    Certification pursuant to Exchange Act
    Rule 13a-14(a).31
.2

Chief Financial Officer
    Certification pursuant to Exchange Act
    Rule 13a-14(a).32
.1

Chief Executive Officer
    Certification pursuant to 18 U.S.C. Section 1350.32
.2

Chief Financial Officer
    Certification pursuant to 18 U.S.C. Section 1350.  E-3