**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-K/A**







x
            **ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**




**For
      the period April 7, 2005 (Date of Inception) through March 31,
      2006**




**OR**




o
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**




**Commission
      file number: 000-51456**







**AD.VENTURE
      PARTNERS, INC.**


(Exact
      name of registrant as specified in its charter)




**Delaware**
              (State
                or other jurisdiction of
              incorporation
                or organization)
            **20-2650200**
              (I.R.S.
                Employer Identification No.)**360
                Madison Avenue, 21st Floor, New York, NY**
              (Address
                of principal executive offices)
            **10017**
              (Zip
                Code)





**REGISTRANT’S
      TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 703-7241**




**SECURITIES
      REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:**




**None.**




**SECURITIES
      REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:**




**Title
                of Each Class**
            
            **Name
                of Each Exchange on Which Registered**Units,
                each consisting of one share of Common Stock, $0.0001 par value,
                and one
                Warrant
            
            OTC
                Bulletin BoardCommon
                Stock, par value $0.001 per share
            
            OTC
                Bulletin BoardWarrants
                to Purchase Common Stock
            
            OTC
                Bulletin Board




Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act. Yes o No x




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act. Yes o No x




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




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K. o




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




Large
                accelerated filer o
            Accelerated filer o
            Non-accelerated filer x





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




The
      aggregate market value of the registrant’s voting equity held by non-affiliates
      of the registrant, computed by reference to the closing sales price for the
      registrant’s units, each consisting of one share of the registrant’s common
      stock and two warrants, each exercisable for an additional share of common
      stock, on September 30, 2005, as reported on the OTC Bulletin Board, was
      approximately $53,550,000.




As
      of
      June 28, 2006, 11,249,997 shares of the registrant's common stock, par value
      $0.001 per share, were outstanding.










**T** **ABLE** **** **OF** **C** **ONTENTS**


**P****AGE**PART
                I
            
            
            
            1Item
                1.
            
            Business
            
            2Item
                1A.
            
            Risk
                Factors
            
            8Item
                1B.
            
            Unresolved
                Staff Comments
            
            21Item
                2.
            
            Properties
            
            21Item
                3.
            
            Legal
                Proceedings
            
            21Item
                4.
            
            Submission
                of Matters to a Vote of Security Holders
            
            21PART
                II
            
            
            
            20Item
                5.
            
            Market
                for Registrant’s Common Equity, Related Stockholder Matters, and Issuer
                Purchases of Equity Securities
            
            21Item
                6.
            
            Selected
                Financial Data
            
            23Item
                7.
            
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            25Item
                7A.
            
            Quantitative
                and Qualitative Disclosure About Market Risk
            
            30Item
                8.
            
            Financial
                Statements and Supplementary Data
            
            30Item
                9.
            
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosures
            
            42Item
                9A.
            
            Controls
                and Procedures
            
            42Item
                9B.
            
            Other
                Information
            
            42PART
                III
            
            
            
            43Item
                10.
            
            Directors
                and Executive Officers of the Registrant
            
            43Item
                11.
            
            Executive
                Compensation
            
            45Item
                12.
            
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            
            46Item
                13.
            
            Certain
                Relationships and Related Transactions
            
            46Item
                14.
            
            Principal
                Accountant Fees and Services
            
            48Item
                15.
            
            Exhibits
                and Financial Statement Schedules
            
            49SIGNATURES
            
            
            
            51




-i-


**Explanatory
      Note**




This
      Annual Report on Form 10-K/A is being filed as Amendment No. 1 to our Annual
      Report on Form 10-K which was originally filed with the Securities and Exchange
      Commission (“SEC”) on June 29, 2006. In connection with the preparation of our
      Current Report on Form 10-Q for the quarter ended June 30, 2006, and after
      consulting with our independent registered accounting firm, Eisner LLP
      (“Eisner”), we determined, based on recent interpretations of the accounting for
      warrants under Emerging Issues Task Force No. 00-19 “Accounting for Derivative
      Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own
      Stock” (“EITF 00-19”), that the fair value of the warrants issued as part of the
      units sold in our initial public offering (the “public warrants”) and the
      warrants issuable upon the exercise of the unit purchase option (the “embedded
      warrants”) issued to the underwriters in our initial public offering should be
      reported as a derivative liability rather than as equity as has been our
      practice. We are filing this Form 10-K/A to restate our financial statements
      to
      reflect the classification of these warrants as derivative liabilities and
      the
      non-operating gains and losses relating to such classification. For information
      concerning the background of the restatements, the specific adjustments made,
      and management’s discussion and analysis of our results of operations giving
      effect to the restated information, see “Restatement of Financial Statements” at
      Item 7. “Management’s Discussion and Analysis of Financial Condition and
      Results of Operations” and Notes B and C to our Financial Statements.




This
      Form
      10-K/A amends and restates only certain information in the following sections
      as
      a result of the current restatements described above:




Part
      I  —
Item
      1A. Risk Factors;




Part
      II  —
      Item 6. Selected Financial Data;




Part
      II  —
      Item 7. Management’s Discussion and Analysis of Financial Condition and
      Results of Operations;




Part
      II  —
      Item 7A. Quantitative and Qualitative Disclosure About Market
      Risk




Part
      II  —
      Item 8. Financial Statements and Supplementary Data; and




Part
      III  —
      Item 15. Exhibits and Financial Statement Schedules.




In
      addition, we are also including currently dated Sarbanes Oxley Act
      Section 302 and Section 906 certifications of the Chief Executive
      Officer and Chief Financial Officer that are attached to this Form 10-K/A as
      Exhibits 31.1, 31.2, 32.1 and 32.2.




For
      the
      convenience of the reader, this Form 10-K/A sets forth the entire Form 10-K
      which was prepared and relates to the Company as of March 31, 2006.
      However, this Form 10-K/A only amends and restates the Items described above
      to
      reflect the effects of the restatement and no attempt has been made to modify
      or
      update other disclosures presented in our Form 10-K. Accordingly, except for
      the
      foregoing amended information, this Form 10-K/A continues to speak as of
      June 29, 2006 (the original filing date of the Form 10-K), and does not
      reflect events occurring after the filing of our Form 10-K and does not modify
      or update those disclosures affected by subsequent events. Unless otherwise
      stated, the information in this Form 10-K/A not affected by such current
      restatements is unchanged and reflects the disclosures made at the time of
      the
      original filing.




1


**PART
      I**




**Item
      1.**  ***Business***




**General**




We
      are a
      Delaware blank check company, organized in 2005 for the purpose of acquiring,
      through a merger, capital stock exchange, asset acquisition or other similar
      business combination, one or more operating businesses in the technology, media
      or telecommunications industries. Since our initial public offering in August
      2005, we have been actively engaged in sourcing a suitable business combination
      candidate. We have met with target companies, service professionals and other
      intermediaries to discuss our company, the background of our management and
      our
      combination preferences. However, we have not selected any target company with
      which to consummate a business combination.




We
      believe that there are opportunities for acquisitions in the technology, media
      and telecommunications industries. In addition, we believe there exists
      significant potential for growth in these industries as markets expand in
      response to product innovation and increasing global access to technology.
      The
      emergence of voice over Internet protocol, digital music players and Internet
      advertising are all examples of recent technological advances spawning new
      industries and markets. In addition, we believe there is significant potential
      for growth in the technology, media and telecommunications industries outside
      the United States .




Our
      management team has significant experience starting, financing, growing and
      operating technology, media and telecommunications companies. Mr. Balter,
      our chairman of the board and chief executive officer, and Mr. Slasky, our
      president and secretary, have over 24 combined years of experience in these
      industries. Through our management team and our directors, we believe that
      we
      have extensive contacts and sources from which to generate acquisition
      opportunities. These contacts and sources include private equity and venture
      capital funds, public and private companies, investment bankers, attorneys
      and
      accountants. The members of our management team intend to use their operating
      and transaction experience to find and evaluate potential target companies
      and
      to maintain and build on the relationships that they have developed through
      their years of experience in the technology, media and telecommunications
      industries.




**Effecting
      a business combination**




*General*




We
      intend
      to use cash derived from the proceeds of our initial public offering, our
      capital stock, debt or a combination of these to effect a business combination
      involving one or more operating businesses in the technology, media or
      telecommunications industries. Although substantially all of the proceeds of
      our
      initial public offering are intended to be generally applied toward effecting
      a
      business combination as described in this prospectus, the proceeds are not
      otherwise being designated for any
      more
      specific purposes. A business combination may involve the acquisition of, or
      merger with, one or more operating businesses that do not need substantial
      additional capital but desire to establish a public trading market for their
      shares, while avoiding what they may deem to be adverse consequences of
      undertaking a public offering itself. We believe these include certain time
      delays, significant expense, loss of voting control and compliance with various
      federal and state securities laws. In the alternative, a business combination
      may involve one or more companies that may be financially unstable or in the
      early stages of development or growth.




*We
      have not identified a target business or target industry*




Subject
      to the requirement that our initial business combination must be with one or
      more operating businesses in the technology, media or telecommunications
      industries that, collectively, have a fair market value of at least 80% of
      our
      net assets at the time of the acquisition, as described below in more detail,
      we
      have virtually unrestricted flexibility in identifying and selecting prospective
      acquisition candidates .
      Accordingly, there is no basis for investors to evaluate the possible merits
      or
      risks of the particular industry in which we may ultimately operate or the
      target businesses with which we may ultimately complete a business
      combination.




2


*Sources
      of target businesses*




Acquisition
      candidates have been and we believe will continue to be brought to our attention
      from various unaffiliated sources, including private equity and venture capital
      funds, public and private companies, investment bankers, attorneys and
      accountants, who may present solicited or unsolicited proposals. Our officers
      and directors and their affiliates have solicited such proposals, and may also
      bring to our attention acquisition candidates. In addition, the positions held
      and contacts maintained by the members of our management within the financial
      community have generated, and we anticipate will continue to generate, other
      unsolicited proposals. We may engage the services of professional firms that
      specialize in business acquisitions on a formal basis, in which event we may
      pay
      a finder’s fee or other compensation. In addition, we may be asked to pay
      finder’s fees or other compensation to other sources providing proposals to us.
      We would not pay finder’s fees or other compensation to any source in respect of
      a proposal unless we consummate a business combination as a result of such
      proposal or, prior to receiving such proposal, we had engaged that source to
      provide us with proposals on a compensated basis. Any such finder’s fee or
      compensation would be subject to arm’s-length negotiations between the Company
      and any such professional firms or other sources of proposals. In no event,
      however, will we pay any of our existing officers, directors, stockholders
      or
      any entity with which they are affiliated any finder’s fee or other compensation
      for services rendered to us prior to or in connection with the consummation
      of a
      business combination .




*Selection
      of target businesses and structuring of a business combination*




Our management
      diligently reviews all of the proposals we receive with respect to prospective
      target businesses. In evaluating prospective target businesses, our management
      considers, among other factors, the following:




·
            financial
                condition and results of operation;




·
            growth
                potential;




·
            experience
                and skill of management and availability of additional personnel;




·
            capital
                requirements;




·
            competitive
                position;




·
            barriers
                to entry into the targeted businesses’ industries;




·
            stage
                of development of the products, processes or services;




·
            degree
                of current or potential market acceptance of the products, processes
                or
                services;




·
            proprietary
                features and degree of intellectual property or other protection
                of the
                products, processes or services;




·
            regulatory
                environment of the industry; and




·
            costs
                associated with effecting the business combination.




These
      criteria are not intended to be exhaustive. Any evaluation relating to the
      merits of a particular business combination with one or more operating
      businesses will be based, to the extent relevant, on the above factors as well
      as other considerations deemed relevant by our management in effecting a
      business combination consistent with our business objective. In evaluating
      prospective target businesses, we generally conduct an extensive due diligence
      review which encompasses, among other things, meetings with incumbent management
      and inspection of facilities, as well as review of financial and other
      information which is made available to us.




3


We
      will
      endeavor to structure a business combination so as to achieve the most favorable
      tax treatment to us, the target businesses and their stockholders, as well
      as
      our own stockholders. We cannot assure you, however, that the Internal Revenue
      Service or appropriate state tax authority will agree with our tax treatment
      of
      the business combination.




The
      time
      and costs required to select and evaluate target businesses and to structure
      and
      complete the business combination cannot presently be ascertained with any
      degree of certainty. Any costs incurred with respect to the identification
      and
      evaluation of prospective target businesses with which a business combination
      is
      not ultimately completed will result in a loss to us and reduce the amount
      of
      capital available to otherwise complete a business combination. However, we
      will
      not pay any finders or consulting fees to our existing directors, officers,
      stockholders or special advisers, or any of their respective affiliates, for
      services rendered to or in connection with a business combination.




*Fair
      market value of target businesses*




The
      initial target businesses that we acquire must have a fair market value equal
      to
      at least 80% of our net assets at the time of such acquisition. The fair market
      value of such businesses will be determined by our board of directors based
      upon
      standards generally accepted by the financial community, such as actual and
      potential sales, earnings and cash flow and book value. If our board is not
      able
      to independently determine that the target businesses have a sufficient fair
      market value or if a conflict of interest exists, such as if management selects
      a company affiliated with one of our initial stockholders as a prospective
      target business, we will obtain an opinion from an unaffiliated, independent
      investment banking firm which is a member of the NASD with respect to the
      satisfaction of such criteria. We expect that any such opinion will be included
      in our proxy soliciting materials furnished to our stockholders in connection
      with a business combination, and that such independent investment banking firm
      will be a consenting expert. However, we will not be required to obtain an
      opinion from an investment banking firm as to the fair market
      value if our board of directors independently determines that the target
      businesses have sufficient fair market value and no conflict of interest
      exists.




*Possible
      lack of business diversification*




The
      net
      proceeds from our initial public offering provided us with
      approximately $51,190,000, which we may use to complete a business combination.
      While we may seek to effect a business combination with more than one target
      business, our initial business acquisition must be with one or more operating
      businesses whose fair market value, collectively, is at least equal to 80%
      of
      our net assets at the time of such acquisition. At the time of our initial
      business combination, we may not be able to acquire more than one target
      operating business contemporaneously because of various factors, including
      possible complex accounting issues, which would include generating pro forma
      financial statements reflecting the operations of several target businesses
      as
      if they had been combined, and numerous logistical issues, which include
      attempting to coordinate the timing of negotiations, proxy statement disclosure
      and closing with multiple target businesses. In addition, we would also be
      exposed to the risk that conditions to closings with respect to the acquisition
      of one or more of the target businesses would not be satisfied bringing the
      fair
      market value of the business combination below the required fair market value
      of
      80% of our net assets threshold. As a result, we are likely to complete a
      business combination with only a single operating business, which may have
      only
      a limited number of products or services. The resulting lack of diversification
      may :




·
            result
                in our dependency upon the performance of a single operating
                business;




·
            result
                in our dependency upon the development or market acceptance of a
                single or
                limited number of products, processes or
                services; and




·
            subject
                us to numerous economic, competitive and regulatory developments,
                any or
                all of which may have a substantial adverse impact upon the particular
                industry in which we may operate subsequent to a business
                combination.




4


In
      this
      case, we will not be able to diversify our operations or benefit from the
      possible spreading of risks or offsetting of losses, unlike other entities
      which
      may have the resources to complete several business combinations in different
      industries or different areas of a single industry so as to diversify risks
      and
      offset losses. Further, the prospects for our success may be entirely dependent
      upon the future performance of the initial target business or businesses we
      acquire.




In
      addition, if our business combination entails the contemporaneous acquisition
      of
      several operating businesses at the same time and may be with different sellers,
      we would need to convince such sellers to agree that the purchase of their
      businesses is contingent upon the simultaneous closings of the other
      acquisitions.




*Limited
      ability to evaluate the target business’ management*




Although
      we intend to closely scrutinize the management of prospective target businesses
      when evaluating the desirability of effecting a business combination, we cannot
      assure you that our assessment of the target business’ management will prove to
      be correct. In addition, we cannot assure you that the future management will
      have the necessary skills, qualifications or abilities to manage a public
      company intending to embark on a program of business development. Furthermore,
      the future role of our officers and directors, if any, in the target businesses
      cannot presently be stated with any certainty. While it is possible that one
      or
      more of our officers and directors will remain associated with us in some
      capacity following a business combination, we will not request that the
      resignation or retention of our current management be included as a condition
      in
      any agreement with respect to a business combination. In any event, it is
      unlikely that any of them will devote their full efforts to our affairs
      subsequent to a business combination. Moreover, we cannot assure you that our
      officers and directors will have significant experience or knowledge relating
      to
      the operations of the particular target businesses acquired .




Following
      a business combination, we may seek to recruit additional managers to supplement
      the incumbent management of the target businesses. We cannot assure you that
      we
      will have the ability to recruit additional managers, or that additional
      managers will have the requisite skills, knowledge or experience necessary
      to
      enhance the incumbent management .




*Opportunity
      for stockholders to approve a business combination*




Prior
      to
      the completion of a business combination, we will submit the transaction to
      our
      stockholders for approval, even if the nature of the acquisition is such as
      would not ordinarily require stockholder approval under applicable state law.
      In
      connection with seeking stockholder approval of a business combination, we
      will
      furnish our stockholders with proxy solicitation materials prepared in
      accordance with the Securities Exchange Act of 1934, which, among other matters,
      will include a description of the operations of the target business and certain
      required financial information regarding the business.




In
      connection with the vote required for our initial business combination, all
      of
      our initial stockholders, including all of our officers and directors, have
      agreed to vote the shares of common stock owned by them immediately before
      our
      initial public offering in accordance with the majority of the shares of common
      stock voted by the public stockholders; however, they may cast votes with
      respect to any shares of common stock acquired in connection with or following
      our initial public offering in any manner as they may determine in their
      discretion. As a result, an initial stockholder who acquires shares during
      or
      after our initial public offering may vote against the proposed business
      combination with respect to those shares, and retain the right to exercise
      the
      conversion rights attributable to such shares in the event that a business
      combination transaction is approved by a majority of our public stockholders. We
      will proceed with the initial business combination only if a majority of the
      shares of common stock voted by the public stockholders are voted in favor
      of
      the business combination and public stockholders owning less than 19.99% of
      the
      shares sold in our initial public offering exercise their conversion
      rights .




*Conversion
      rights*




At
      the
      time we seek stockholder approval of any business combination, we will offer
      each public stockholder the right to have such stockholder’s shares of common
      stock converted to cash if the stockholder votes against the business
      combination and the business combination is approved and completed. The actual
      per-share conversion price will be equal to the amount in the trust account,
      inclusive of any interest (net of taxes payable on income of the funds in the
      trust account and calculated as of two business days prior to the consummation
      of the proposed business combination), divided by the number of shares sold
      in
      our initial public offering. Without taking into any account interest earned
      on
      the trust account, the initial per-share conversion price would be $5.60 or
      $.40
      less than the per-unit initial public offering price of $6.00. An eligible
      stockholder may request conversion at any time after the mailing to our
      stockholders of the proxy statement and prior to the vote taken with respect
      to
      a proposed business combination at a meeting held for that purpose, but the
      request will not be granted unless the stockholder votes against the business
      combination and the business combination is approved and completed. Any request
      for conversion, once made, may be withdrawn at any time up to the date of the
      meeting. It is anticipated that the funds to be distributed to stockholders
      entitled to convert their shares who elect conversion will be distributed
      promptly after completion of a business combination. Public stockholders who
      convert their stock into their share of the trust account still have the right
      to exercise the warrants that they received as part of the units. We will not
      complete any business combination if public stockholders, owning 20% or more
      of
      the shares sold in our initial public offering, both vote against a business
      combination, and, subsequently, exercise their conversion rights .




5


*Liquidation
      if no business combination*




If
      we do
      not complete a business combination within 18 months after the consummation
      of
      our initial public offering, which occurred on August 31, 2005, or within 24
      months if the extension criteria described below have been satisfied, we will
      dissolve and distribute to all of our public stockholders, in proportion to
      their respective equity interests, an aggregate sum equal to the amount in
      the
      trust account, inclusive of any interest, plus any remaining net assets. Our
      initial stockholders have waived their respective rights to participate in
      any
      liquidation distribution occurring upon our failure to consummate a business
      combination, but only with respect to those shares of common stock acquired
      by
      them prior to our initial public offering; they will participate in any
      liquidation distribution with respect to any shares of common stock acquired
      in
      connection with or following our initial public offering. There will be no
      distribution from the trust account with respect to our warrants, and all rights
      with respect to our warrants will effectively cease upon our
      liquidation.




If
      we
      were to expend all of the net proceeds of our initial public offering, other
      than the proceeds deposited in the trust account, and without taking into
      account interest, if any, earned on the trust account, the initial per-share
      liquidation price would be $5.60, or $.40 less than the per-unit offering price
      of $6.00. The proceeds deposited in the trust account could, however, become
      subject to the claims of our creditors that could be prior to the claims of
      our
      public stockholders. We
      cannot
      assure you that the actual per-share liquidation price will not be less than
      $5.60, plus interest, due to claims of creditors. Messrs. Balter and Slasky
      have agreed pursuant to an agreement with us and Wedbush Morgan Securities
      Inc.,
      the representative of the underwriters for our initial public offering, that,
      if
      we liquidate prior to the consummation of a business combination, they will
      be
      personally liable to ensure that the proceeds of the trust account are not
      reduced by the claims of vendors for services rendered or products sold to
      us,
      or claims by any target businesses with which we have entered into a letter
      of
      intent, confidentiality agreement or other written agreement, in each case
      to
      the extent the payment of such debts or obligations actually reduces the amount
      of funds in the trust account. However, we cannot assure you that
      Messrs. Balter and Slasky will be able to satisfy those
      obligations .




Prior
      to
      completion of a business combination, we will seek to have all vendors,
      prospective target businesses or other entities that we engage execute
      agreements with us waiving any right, title, interest or claim of any kind
      in or
      to any monies held in the trust account for the benefit of our public
      stockholders. In the event that a vendor, prospective target business or other
      entity were to refuse to execute such a waiver, our decision to engage such
      vendor or other entity or to enter into discussions with such target businesses
      would be based on our management’s determination that we would be unable to
      obtain, on a reasonable basis, substantially similar services or opportunities
      from another entity willing to execute such a waiver.




If
      we
      enter into either a letter of intent, an agreement in principle or a definitive
      agreement to complete a business combination prior to the expiration of 18
      months after the consummation of our initial public offering, but are unable
      to
      complete the business combination within the 18-month period, then we will
      have
      an additional six months in which to complete the business combination
      contemplated by the letter of intent, agreement in principle or definitive
      agreement. If we are unable to do so by the expiration of the 24-month period
      from the consummation of our initial public offering, we will then liquidate.
      Upon notice from us, the trustee of the trust account will commence liquidating
      the investments constituting the trust account and will turn over the proceeds
      to our transfer agent for distribution to our public stockholders. We anticipate
      that our instruction to the trustee would be given promptly after the expiration
      of the applicable 18-month or 24-month period.




6


Under
      Delaware law, we will need to submit a plan of dissolution to our stockholders
      for approval, which could delay our dissolution, the giving of notice to the
      trustee and the distribution of our assets to the public stockholders. We cannot
      assure you that our stockholders will approve our dissolution in a timely manner
      or will ever approve our dissolution. As a result, we cannot provide investors
      with assurances of a specific time frame for our dissolution and
      liquidation.




Our
      public stockholders will be entitled to receive funds from the trust account
      only in the event of our liquidation or if the stockholders seek to convert
      their respective shares into cash upon a business combination that the
      stockholder voted against and that is actually completed by us. In no other
      circumstances, except as required by applicable law, will a stockholder have
      any
      right or interest of any kind to or in the trust account.




Under
      the
      Delaware General Corporation Law, stockholders may be held liable for claims
      by
      third parties against a corporation to the extent of distributions received
      by
      them in a dissolution. If the corporation complies with certain procedures
      intended to ensure that it makes reasonable provision for all claims against
      it,
      including a 60-day notice period during which any third-party claims can be
      brought against the corporation, a 90-day period during which the corporation
      may reject any claims brought, and an additional 150-day waiting period before
      any liquidating distributions are made to stockholders, any liability of
      stockholders with respect to a liquidating distribution is limited to the lesser
      of such stockholder’s pro rata share of the claim or the amount distributed to
      the stockholder, and any liability of the stockholder would be barred after
      the
      third anniversary of the dissolution. However, it is our intention to make
      liquidating distributions as soon as reasonably practical after dissolution
      and,
      therefore, do not intend to comply with this procedure. As such, our
      stockholders could potentially be held liable for any claims by third parties
      to
      the extent of any distribution received by them in a dissolution and any
      liability of our stockholders may extend beyond the third anniversary of our
      dissolution.




**Competition**




In
      identifying, evaluating and selecting target businesses, we may encounter
      intense competition from other entities having a business objective similar
      to
      ours. Many of these entities are well established and have extensive experience
      identifying and effecting business combinations directly or through affiliates.
      Many of these competitors possess greater technical, human and other resources
      than us and our financial resources will be relatively limited when contrasted
      with those of many of these competitors. While we believe there are numerous
      potential target businesses that we could acquire with the net proceeds from
      our
      initial public offering, our ability to compete in acquiring certain sizable
      target businesses will be limited by our available financial resources. This
      inherent competitive limitation gives others an advantage in pursuing the
      acquisition of target businesses. Further:




·
            our
                obligation to seek stockholder approval of a business combination
                may
                delay the completion of a transaction;




·
            our
                obligation to convert into cash shares of common stock held by our
                stockholders in certain instances may reduce the resources available
                to us
                to effect a business combination; and




·
            our
                outstanding warrants and the purchase option granted to Wedbush Morgan
                Securities Inc., and the future dilution they potentially represent,
                may
                not be viewed favorably by certain target businesses.




Any
      of
      these factors may place us at a competitive disadvantage in successfully
      negotiating a business combination. Our management believes, however, that
      our
      status as a public entity and potential access to the United States public
      equity markets may give us a competitive advantage over privately-held entities
      having a similar business objective as ours in acquiring a target business
      on
      favorable terms .




7


Based
      upon publicly available information, as of June 27, 2006, approximately 63
      similarly structured “blank check” companies have completed initial public
      offerings since August 2003, and numerous others have filed registration
      statements. Of these companies, we estimate that only seven companies have
      consummated a business combination, while twenty-one other companies have
      announced that they have entered into definitive agreements or letters of intent
      with respect to potential business combinations, but have not yet consummated
      such business combinations. Accordingly, there are approximately 59 “blank
      check” companies which we estimate to have more than $3.7 billion in trust, and
      potentially an additional 38 “blank check” companies with more than an
      additional $2.9 billion in trust, that have filed registration statements,
      and
      are or will be seeking to enter into a business combination. While some of
      these
      companies have specific industries in which they must identify a potential
      target business, a number of these companies may complete a business combination
      in any industry they choose. Further, the fact that only seven “blank check”
companies have completed a business combination, and twenty-one other companies
      have entered into definitive agreements or letters of intent with respect to
      potential business combinations, may be an indication that there are a limited
      number of attractive target businesses available or that many target businesses
      may not be inclined to enter into a business combination with a publicly-held
      “blank check” company.




If
      we
      succeed in effecting a business combination, there will be, in all likelihood,
      intense competition from competitors of the target businesses. In particular,
      certain industries that experience rapid growth frequently attract an
      increasingly larger number of competitors, including competitors with
      increasingly greater financial, marketing, technical, human and other resources
      than the initial competitors in the industry. The degree of competition
      characterizing the industry of any prospective target business cannot presently
      be ascertained. We cannot assure you that, subsequent to a business combination,
      we will have the resources to compete effectively, especially to the extent
      that
      the target businesses are in high-growth industries .




**Facilities**





We
      do not
      own any real estate or other physical properties. Our headquarters are located
      at 360 Madison Avenue, 21 st Floor,
      New York, New York 10017. We entered into an informal agreement with an
      unrelated third party whereby we pay a base rent of $2,058 per month on a
      month-to-month basis in exchange for office space and certain administrative
      services. We
      believe that our office facilities are suitable and adequate for our business
      as
      it is presently conducted.





**Employees**




We
      currently have two officers, both of whom are also members of our board of
      directors. We have no other employees. These individuals are not obligated
      to
      devote any specific number of hours to our matters and intend to devote only
      as
      much time as they deem necessary to our affairs. We do not intend to have any
      full time employees prior to the consummation of a business
      combination.




**Item
      1A.**  ***Risk
      Factors***




*An
      investment in our securities involves a high degree of risk. You should consider
      carefully all of the material risks described below, together with the other
      information contained in this annual report on Form 10-K. If any of the
      following events occur, our business, financial conditions and results of
      operations may be materially adversely affected.*




**Risks
      associated with our business**




***We
      are a development stage company with no operating history and, accordingly,
      you
      will have no basis upon which to evaluate our ability to achieve our business
      objective.***




We
      are a
      recently incorporated development stage company with limited operating results
      to date. Since we have a limited operating history, you have a limited basis
      upon which to evaluate our ability to achieve our business objective, which
      is
      to acquire one or more operating businesses in the technology, media or
      telecommunications industries. We will not generate any revenues (other than
      interest income on the proceeds of our initial public offering) until, at the
      earliest, after the consummation of a business combination. We cannot assure
      you
      as to when or if a business combination will occur.




8


***We
      may not be able to consummate a business combination within the required time
      frame, in which case, we would be forced to
      liquidate.***




We
      must
      complete a business combination with a fair market value of at least 80% of
      our
      net assets at the time of acquisition by February 28, 2007 (or August 31, 2007
      if a letter of intent, agreement in principle or a definitive agreement has
      been
      executed by February 28, 2007 and the business combination relating thereto
      has
      not yet been consummated by such date). If we fail to consummate a business
      combination within the required time frame, we will be required to dissolve
      and
      liquidate our assets. We may not be able to find suitable target businesses
      within the required time frame. In addition, our negotiating position and our
      ability to conduct adequate due diligence on any potential target may be reduced
      as we approach the deadline for the consummation of a business
      combination.




***Because
      there are numerous companies with a business plan similar to ours seeking to
      effectuate a business combination, it may be more difficult for us to do
      so.***




Based
      upon publicly available information, as of June 27, 2006, approximately 63
      similarly structured “blank check” companies have completed initial public
      offerings since August 2003, and numerous others have filed registration
      statements. Of these companies, we estimate that only seven companies have
      consummated a business combination, while twenty-one other companies have
      announced that they have entered into definitive agreements or letters of intent
      with respect to potential business combinations, but have not yet consummated
      such business combinations. Accordingly, there are approximately 59 “blank
      check” companies which we estimate to have more than $3.7 billion in trust, and
      potentially an additional 38 “blank check” companies with more than an
      additional $2.9 billion in trust, that have filed registration statements,
      and
      are or will be seeking to enter into a business combination. While some of
      these
      companies have specific industries in which they must identify a potential
      target business, a number of these companies may complete a business combination
      in any industry they choose. Further, the fact that only seven “blank check”
companies have completed a business combination, and twenty-one other companies
      have entered into definitive agreements or letters of intent with respect to
      potential business combinations, may be an indication that there are a limited
      number of attractive target businesses available or that many target businesses
      may not be inclined to enter into a business combination with a publicly-held
      “blank check” company. Because of this competition, we cannot assure you that we
      will be able to effectuate a business combination within the required time
      period. If we are unable to find a suitable target operating business within
      such time periods, the terms of our amended and restated certificate of
      incorporation will require us to liquidate.




***If
      we are forced to liquidate before a business combination, our public
      stockholders will receive less than $6.00 per share upon distribution of
      the trust account and our warrants will expire
      worthless*** ***.***




If
      we are
      unable to complete a business combination and are forced to liquidate our
      assets, the per-share liquidation will be less than $6.00 because of the
      expenses related to the initial public offering, our general and administrative
      expenses and the anticipated costs of seeking a business combination.
      Furthermore, the warrants will expire worthless if we liquidate before the
      completion of a business combination.




***You
      will not be entitled to protections normally afforded to investors of blank
      check companies under federal securities laws.***





Since
      we
      had net tangible assets in excess of $5,000,000 and filed a Current Report
      on
      Form 8-K with the SEC upon consummation of the initial public offering,
      including an audited balance sheet demonstrating this fact, we believe that
      we
      are exempt from rules promulgated by the SEC to protect investors of blank
      check
      companies such as Rule 419. Accordingly, investors will not be afforded the
      benefits or protections of those rules.





***If
      third parties bring claims against us, the proceeds held in the trust account
      could be reduced and the per-share liquidation price received by stockholders
      will be less than $5.60 per share*** ***.***




Our
      placing of funds in the trust account may not protect those funds from third
      party claims against us. Although we will seek to have all vendors, prospective
      target businesses or other entities we engage execute agreements with us waiving
      any right, title, interest or claim of any kind in or to any monies held in
      the
      trust account for the benefit of our public stockholders, there is no guarantee
      that they will execute such agreements or that such waivers would be held
      enforceable if challenged. Nor is there any guarantee that such entities will
      agree to waive any claims they may have in the future as a result of, or arising
      out of, any negotiations, contracts or agreements with us and will not seek
      recourse against the trust account for any reason.. If we are unable to complete
      a business combination and are forced to liquidate, Howard S. Balter, our
      chairman of the board and chief executive officer, and Ilan M. Slasky, our
      president and secretary, have agreed, under certain circumstances, to be
      personally liable to ensure that the proceeds in the trust account are not
      reduced by the claims of vendors for services rendered or products sold to
      us,
      or claims of any target businesses with which we have entered into a letter
      of
      intent, confidentiality agreement or other written agreement, in each case
      to
      the extent the payment of such debts or obligations actually reduces the amount
      of funds in the trust accounts. However, we cannot assure you that
      Messrs. Balter and Slasky will be able to satisfy those obligations.
      Accordingly, the proceeds held in the trust account could be subject to claims
      which could take priority over the claims of our public stockholders and the
      per-share liquidation price could be less than $5.60, plus interest (net of
      taxes payable on income of the funds in the trust account), due to claims of
      such creditors.




9


***Under
      Delaware law, our dissolution requires the approval of the holders of a majority
      of our outstanding stock, without which we will not be able to dissolve and
      liquidate, and distribute our assets to our public stockholders.***




Under
      Delaware law, our dissolution requires the affirmative vote of stockholders
      owning a majority of our then outstanding common stock. Soliciting the vote
      of
      our stockholders will require the preparation of preliminary and definitive
      proxy statements, which will need to be filed with the Securities and Exchange
      Commission and could be subject to their review. This process could take a
      substantial amount of time ranging from one to several months. As a result,
      the
      distribution of our assets to the public stockholders could be subject to a
      considerable delay. Furthermore, we may need to postpone the stockholders
      meeting, resolicit our stockholders, or amend our plan of dissolution and
      liquidation to obtain the required stockholder approval, all of which would
      further delay the distribution of our assets and result in increased costs.
      If
      we are not able to obtain approval from a majority of our stockholders, we
      will
      not be able to dissolve and liquidate and we may not be able to distribute
      funds
      from our trust account to holders of our common stock sold in this offering
      and
      these funds may not be available for any other corporate purpose. We cannot
      assure you that our stockholders will approve our dissolution in a timely manner
      or will ever approve our dissolution. As a result, we cannot provide investors
      with assurances of a specific timeframe for our dissolution and liquidation.
      If
      our stockholders do not approve a plan of dissolution and liquidation and the
      funds remain in the trust account for an indeterminate amount of time, we may
      be
      considered to be an investment company. Please see the section entitled “Risk
      Factors—If we are deemed to be an investment company, we would be subject to
      burdensome regulation which would restrict our activities and make it difficult
      for us to complete a business combination.”





***Under
      Delaware law, the requirements and restrictions relating to our initial public
      offering contained in our amended and restated certificate of incorporation
      may
      be amended, which could reduce or eliminate the protection afforded to our
      stockholders by such requirements and restrictions.***





Our
      amended and restated certificate of incorporation contains certain requirements
      and restrictions relating to our initial public offering that will continue
      to
      apply to us until the consummation of a business combination. Specifically,
      our
      amended and restated certificate of incorporation provides, among other things,
      that:





·
            upon
                consummation of our initial public offering, $50,380,000 was placed
                into
                the trust account, which proceeds may not be disbursed from the trust
                account except in connection with a business combination, upon our
                liquidation or as otherwise permitted in the amended and restated
                certificate of incorporation:




·
            prior
                to the consummation of a business combination, we will submit such
                business combination to our stockholders for approval;




·
            we
                may consummate the business combination if approved by a majority
                of the
                shares of common stock voted by the public stockholders and public
                stockholders owning less than 20% of the shares sold in our initial
                public
                offering exercise their conversion rights;




10


·
            if
                a business combination is approved and consummated, public stockholders
                who voted against the business combination and exercised their conversion
                rights will receive their pro rata share of the trust
                account;




·
            if
                a business combination is not consummated or a letter of intent,
                an
                agreement in principle or a definitive agreement is not signed within
                the
                time periods specified in this prospectus, then we will be dissolved
                and
                distribute to all of our public stockholders their pro rata share
                of the
                trust account; and




·
            we
                may not consummate any other merger, capital stock exchange, stock
                purchase, asset acquisition or similar transaction other than a business
                combination that meets the conditions specified in this prospectus,
                including the requirement that the business combination be with an
                operating business whose fair market value is equal to at least 80%
                of our
                net assets at the time of such business
                combination.




Our
      amended and restated certificate of incorporation may not be amended until
      we
      complete a business combination. However, provisions prohibiting amendment
      of a
      company’s certificate of incorporation may be deemed invalid under Delaware law.
      If a court concluded that the prohibition on amending certain provisions of
      our
      charter was invalid, the above-described provisions would be amendable and
      any
      such amendment could reduce or eliminate the protection afforded to our
      stockholders.




***Our
      stockholders may be held liable for claims by third parties against us to the
      extent of distributions received by them.***





If
      we do
      not complete a business combination within 18 months after the consummation
      of our initial public offering (or within 24 months after the consummation
      of our initial public offering if a letter of intent, agreement in principle
      or
      definitive agreement is executed within 18 months after the consummation of
      our initial public offering and the business combination relating thereto is
      not
      consummated within such 18-month period), we will initiate procedures to
      dissolve. Under the Delaware General Corporation Law, stockholders may be held
      liable for claims by third parties against a corporation to the extent of
      distributions received by them in a dissolution. If the corporation complies
      with certain procedures intended to ensure that it makes reasonable provision
      for all claims against it, including a 60-day notice period during which any
      third-party claims can be brought against the corporation, a 90-day period
      during which the corporation may reject any claims brought, and an additional
      150-day waiting period before any liquidating distributions are made to
      stockholders, any liability of stockholders with respect to a liquidating
      distribution is limited to the lesser of such stockholder’s pro rata share of
      the claim or the amount distributed to the stockholder, and any liability of
      the
      stockholder would be barred after the third anniversary of the dissolution.
      However, it is our intention to make liquidating distributions to our
      stockholders as soon as reasonably possible after dissolution and, therefore
      do
      not intend to comply with those procedures. As such, our stockholders could
      potentially be liable for any claims to the extent of distributions received
      by
      them in a dissolution and any liability of our stockholders may extend beyond
      the third anniversary of such dissolution.




***Because
      we have not currently selected a target business with which to complete a
      business combination, our investors are unable to currently ascertain the merits
      or risks of any particular target business’
operations.***




Because
      we have not yet selected any prospective target businesses, investors have
      no
      current basis to evaluate the possible merits or risks of any particular target
      business’ operations. To the extent we complete a business combination with a
      financially unstable company or an entity in its development stage, we may
      be
      affected by numerous risks inherent in the business operations of those
      entities. Although our management will endeavor to evaluate the risks inherent
      in a particular target business, we cannot assure you that we will properly
      ascertain or assess all of the significant risk factors, or that we will have
      adequate time to complete due diligence. We also cannot assure you that an
      investment in our units will not ultimately prove to be less favorable to
      investors than a direct investment, if an opportunity were available, in any
      particular target business.




11


***A
      significant portion of working capital could be expended in pursuing
      acquisitions that are not consummated.***





The
      investigation of each specific target business and the negotiation, drafting,
      and execution of relevant agreements, disclosure documents and other instruments
      requires substantial management time and attention and substantial costs for
      accountants, attorneys and others. In addition, we may opt to make a deposit
      or
      down payment or pay exclusivity or similar fees in connection with structuring
      and negotiating a business combination. If a decision is made not to complete
      a
      specific business combination, the costs incurred up to that point in connection
      with the abandoned transaction, potentially including a deposit or down payment
      or exclusivity or similar fees, would not be recoverable. Furthermore, even
      if
      an agreement is reached relating to a specific target business, we may fail
      to
      consummate the transaction for any number of reasons, including those beyond
      our
      control such as that shares representing 20% or more of the shares of common
      stock purchased by our public stockholders vote against the transaction and
      exercise their conversion rights even though a majority of our public
      stockholders approve the transaction. Any such event will result in a loss
      to us
      of the related costs incurred, which could adversely affect subsequent attempts
      to locate and acquire or merge with another business.




***We
      may issue shares of our capital stock, including through convertible debt
      securities, to complete a business combination, which would reduce the equity
      interest of our stockholders and likely cause a change in control of our
      ownership*** ***.***




Our
      Amended and Restated Certificate of Incorporation authorizes the issuance of
      up
      to 50,000,000 shares of common stock, par value $.0001 per share, and
      1,000,000 shares of preferred stock, par value $.0001 .
      Currently, there are 19,400,003
      authorized but unissued shares of our common stock available for issuance (after
      appropriate reservation for the issuance of shares upon full exercise of our
      outstanding warrants and the purchase option granted to Wedbush Morgan
      Securities Inc.) and all of the 1,000,000 shares of preferred stock
      available for issuance. Although we have no commitments as of this date to
      issue
      any securities, we may issue a substantial number of additional shares of our
      common stock or preferred stock, or a combination of both, including through
      convertible debt securities, to complete a business combination. The issuance
      of
      additional shares of our common stock or any number of shares of preferred
      stock, including upon conversion of any debt securities :




·
            may
                significantly reduce your equity interest in us;




·
            will
                likely cause a change in control if a substantial number of our shares
                of
                common stock or voting preferred stock are issued, which may affect,
                among
                other things, our ability to use our net operating loss carry forwards,
                if
                any, and most likely also result in the resignation or removal of
                our
                present officers and directors; and




·
            may
                adversely affect prevailing market prices for our securities.




***We
      may issue notes or other debt securities, or otherwise incur substantial debt,
      to complete a business combination, which may adversely affect our leverage
      and
      financial condition.***




We
      may
      choose to incur a substantial amount of debt to finance a business combination.
      The incurrence of debt :




·
            may
                lead to default and foreclosure on our assets if our operating revenues
                after a business combination are insufficient to service our debt
                obligations;




·
            may
                cause an acceleration of our obligations to repay the debt even if
                we make
                all principal and interest payments when due if we breach the covenants
                contained in the terms of any debt documents, such as covenants that
                require the maintenance of certain financial ratios or reserves,
                without a
                waiver or renegotiation of such covenants;




·
            may
                create an obligation to immediately repay all principal and accrued
                interest, if any, upon demand to the extent any debt securities are
                payable on demand; and




12


·
            may
                hinder our ability to obtain additional financing, if necessary,
                to the
                extent any debt securities contain covenants restricting our ability
                to
                obtain additional financing while such security is outstanding, or
                to the
                extent our existing leverage discourages other potential in.




***The
      loss of key executives could adversely affect our ability to
      operate.***





Our
      operations are dependent upon a small group of key executives consisting of
      Mr.
      Balter, our chairman and chief executive officer, and Mr. Slasky, a director
      and
      our president and secretary. We believe that our success depends on the
      continued service of our executive management team. Although we currently intend
      to retain our existing management and enter into employment or other
      compensation arrangements with them following our initial business combination,
      we cannot assure you that such individuals will remain with us for the immediate
      or foreseeable future. We do not have employment contracts with any of our
      current executives. The unexpected loss of the services of one or more of these
      executives could have a detrimental effect on us.




***Our
      ability to successfully effect a business combination and to be successful
      afterwards will be completely dependent upon the efforts of our key personnel,
      some of whom may join us following a business combination, who may be unfamiliar
      with the requirements of operating a public company and whom we would have
      only
      a limited ability to evaluate*** ***.***




Our
      ability to successfully effect a business combination will be completely
      dependent upon the efforts of our key personnel. The future role of our key
      personnel following a business combination, however, cannot presently be fully
      ascertained. Specifically, the members of our current management are not obliged
      to remain with us subsequent to a business combination. As a result, our
      management and other key personnel, particularly our chairman of the board
      and
      chief executive officer, and our president and secretary, may not remain
      associated with us following a business combination and we may employ other
      personnel following a business combination. While we intend to closely
      scrutinize any additional individuals we engage after a business combination,
      we
      cannot assure you that our assessment of these individuals will prove to be
      correct. These individuals may be unfamiliar with the requirements of operating
      a public company as well as United States securities laws, which could cause
      us
      to have to expend time and resources helping them become familiar with such
      laws. This could be expensive and time-consuming and could lead to various
      regulatory issues that may adversely affect our operations .




***Our
      officers and directors may allocate their time to other businesses, thereby
      causing conflicts of interest in their determination as to how much time to
      devote to our affairs. This could have a negative impact on our ability to
      consummate a business combination.***




Our
      officers and directors are not required to, and will not, commit their full
      time
      to our affairs, which may result in a conflict of interest in allocating their
      time between our operations and other businesses. This could have a negative
      impact on our ability to consummate a business combination. We do not intend
      to
      have any full time employees prior to the consummation of a business
      combination. Each of our officers are engaged in several other business
      endeavors and are not obligated to contribute any specific number of hours
      per
      week to our affairs. If our officers’ and directors’ other business affairs require
      them to devote substantial amounts of time to such affairs in excess of their
      current commitment levels, it could limit their ability to devote time to our
      affairs and could have a negative impact on our ability to consummate a business
      combination. We cannot assure you that these conflicts will be resolved in
      our
      favor.




***Our
      officers and directors are and may in the future become affiliated with entities
      engaged in business activities similar to those intended to be conducted by
      us
      and, accordingly, may have conflicts of interest in determining to which entity
      a particular business opportunity should be presented*** ***.***




Our
      officers and directors may in the future become affiliated with entities,
      including other blank check companies, engaged in business activities similar
      to
      those intended to be conducted by us. Additionally, our officers and directors
      may become aware of business opportunities that may be appropriate for
      presentation to us as well as the other entities with which they are or may
      be
      affiliated. Further, certain of our officers and directors are currently
      involved in other businesses that are similar to the business activities that
      we
      intend to conduct following a business combination. Due to these existing
      affiliations, they may have fiduciary obligations to present potential business
      opportunities to those entities prior to presenting them to us which could
      cause
      additional conflicts of interest. Accordingly, they may have conflicts of
      interest in determining to which entity a particular business opportunity should
      be presented. We cannot assure you that these conflicts will be resolved in
      our
      favor .




13


***Because
      all of our directors own shares of our securities that will not participate
      in
      liquidation distributions, they may have a conflict of interest in determining
      whether a particular target business is appropriate for a business
      combination*** ***.***




All
      of
      our directors own stock in our company, but have, with respect to those shares
      of common stock acquired by them prior to our initial public offering, waived
      their right to receive distributions upon our liquidation in the event we fail
      to complete a business combination. Additionally, Messrs. Balter and Slasky purchased
      3,794,403 warrants at an average price of $0.4216 pursuant to agreements with
      Wedbush Morgan Securities Inc., the representative of the underwriters in our
      initial public offering. Those
      shares and warrants owned by our directors will be worthless if we do not
      consummate a business combination. The personal and financial interests of
      our
      directors may influence their motivation in identifying and selecting target
      businesses and completing a business combination in a timely manner.
      Consequently, our directors’ discretion in identifying and selecting suitable
      target businesses may result in a conflict of interest when determining whether
      the terms, conditions and timing of a particular business combination are
      appropriate and in our stockholders’ best interest .




***Our
      directors’ and officers’ interests in obtaining reimbursement for out-of-pocket
      expenses incurred by them may lead to a conflict of interest in determining
      whether a particular target business is appropriate for a business combination
      and in the public stockholders’ best interest.***





Our
      initial stockholders, including all of our officers and directors, will not
      receive reimbursement for any out-of-pocket expenses incurred by them to the
      extent that such expenses exceed the amount of available proceeds from our
      initial public offering not deposited in the trust account unless the business
      combination is consummated. The amount of available proceeds was initially
      based
      on management’s estimates of the costs needed to fund our operations for
      24 months and consummate a business combination. Those estimates may prove
      to be inaccurate, especially if a portion of the available proceeds is used
      to
      make a down payment or pay exclusivity or similar fees in connection with a
      business combination or if we expend a significant portion of
      the
      available proceeds in pursuit of a business combination that is not consummated.
      The financial interest of our directors and officers could influence their
      motivation in selecting a target business or proceeding with a business
      combination and thus, there may be a conflict of interest in determining whether
      a particular business combination is in the public stockholders’ best interest.
      Specifically, our initial stockholders may view potential business combinations
      where such excess expenses would be repaid more favorably than those where
      such
      excess expenses would not be repaid or any business combination in which such
      excess expenses would be repaid more favorably than no business
      combination.




***Our
      management’s interest in employment with us following a business combination may
      lead to them to pursue business combinations or negotiate compensation
      arrangements that may not be in our public stockholders’ best
      interests.***





We
      intend
      to retain our current management and enter into employment or other compensation
      arrangements with them following our initial business combination. Our current
      management’s financial interest in such employment or other compensation
      arrangements may lead to a conflict of interest in determining whether a
      particular target business is appropriate for a business combination or whether
      these arrangements are appropriate under the circumstances. These potential
      conflicts of interests may not be resolved in manner that is in our public
      stockholders’ best interests.




***We
      may engage in a business combination with one or more target businesses that
      have relationships with entities with which our initial stockholders also have
      relationships, which may raise potential conflicts of
      interest.***




In
      light
      of our initial stockholders’ involvement with other technology, media and
      telecommunications businesses and our purpose to consummate a business
      combination with one or more operating businesses in those same sectors, we
      may
      decide to acquire one or more businesses affiliated with our initial
      stockholders. Despite our obligation to obtain an opinion from an independent
      investment banking firm that a business combination with one or more businesses
      affiliated with our initial stockholders is fair to our stockholders from a
      financial point of view, potential conflicts of interest may still exist, and
      as
      a result, the terms of the business combination may not be as advantageous
      to
      our public stockholders as it would be absent any conflicts of
      interest .




14


***If
      our common stock becomes subject to the SEC’s penny stock rules, broker-dealers
      may experience difficulty in completing customer transactions and trading
      activity in our securities may be adversely affected.***




If
      at any
      time we have net tangible assets of $5,000,000 or less and our common stock
      has
      a market price per share of less than $5.00, transactions in our common stock
      may be subject to the “penny stock” rules promulgated under the Securities
      Exchange Act of 1934, as amended. Under these rules, broker-dealers who
      recommend such securities to persons other than institutional accredited
      investors must:




·
            make
                a special written suitability determination for the purchaser;




·
            receive
                the purchaser’s written agreement to a transaction prior to sale;




·
            provide
                the purchaser with risk disclosure documents that identify certain
                risks
                associated with investing in “penny stocks” and that describe the market
                for these “penny stocks” as well as the purchaser’s legal remedies; and




·
            obtain
                a signed and dated acknowledgment from the purchaser demonstrating
                that
                the purchaser has actually received the required risk disclosure
                document
                before a transaction in a “penny stock” can be completed.




If
      our
      common stock becomes subject to these rules, broker-dealers may find it
      difficult to effect customer transactions and trading activity in our securities
      may be adversely affected. As a result, the market price of our securities
      may
      become depressed, and you may find it more difficult to sell our
      securities.




***It
      is probable that we will only be able to complete one business combination,
      which may cause us to be solely dependent on a single business and a limited
      number of products or services*** ***.***




The
      net
      proceeds of our initial public offering provided us with approximately
      $51,190,000, which we may use to complete a business combination. While we
      may
      seek to effect a business combination with more than one target business, our
      initial business acquisition must be with one or more operating businesses
      whose
      fair market value, collectively, is at least equal to 80% of our net assets
      at
      the time of such acquisition. At the time of our initial business combination,
      we may not be able to acquire more than one target business contemporaneously
      because of various factors, including possible complex accounting issues, which
      would include generating pro forma financial statements reflecting the
      operations of several target businesses as if they had been combined, and
      numerous logistical issues, which would include attempting to coordinate the
      timing of negotiations, proxy statement disclosure and closing with multiple
      target businesses. In addition, we would also be exposed to the risk that
      conditions to closings with respect to the acquisition of one or more of the
      target businesses would not be satisfied, bringing the fair market value of
      the
      business combination below the required threshold of 80% of our net assets.
      As a
      result, we are likely to complete a business combination with only a single
      operating business, which may have only a limited number of products or
      services. The resulting lack of diversification may :




·
            result
                in our dependency upon the performance of a single operating
                business;




·
            result
                in our dependency upon the development or market acceptance of a
                single or
                limited number of products, processes or
                services; and




·
            subject
                us to numerous economic, competitive and regulatory developments,
                any or
                all of which may have a substantial adverse impact upon the particular
                industry in which we may operate subsequent to a business
                combination.




In
      this
      case, we will not be able to diversify our operations or benefit from the
      possible spreading of risks or offsetting of losses, unlike other entities
      that
      may have the resources to complete several business combinations in different
      industries or different areas of a single industry so as to diversify risks
      and
      offset losses. Further, the prospects for our success may be entirely dependent
      upon the future performance of the initial target business we
      acquire .




15


***Because
      of our limited resources and the significant competition for business
      combination opportunities, we may not be able to consummate an attractive
      business combination.***




We
      expect
      to encounter intense competition from other entities having a business objective
      similar to ours, including venture capital and private equity funds, leveraged
      buyout funds, operating businesses and other entities and individuals, both
      foreign and domestic, competing for acquisitions. Many of these entities are
      well established and have extensive experience in identifying and effecting
      business combinations directly or through affiliates. Many of these competitors
      possess greater technical, human and other resources than we do and our
      financial resources will be relatively limited when contrasted with those of
      many of these competitors. Our ability to compete in acquiring certain sizable
      target businesses will be limited by our available financial resources.
      Further :




·
            our
                obligation to seek stockholder approval of a business combination
                may
                delay the consummation of a business combination;




·
            our
                obligation to convert shares of common stock into cash in certain
                instances may reduce the resources available for a business
                combination;
                and




·
            our
                outstanding warrants and the purchase option granted to Wedbush Morgan
                Securities Inc., the representative of the underwriters in our initial
                public offering, and the future dilution they potentially represent,
                may
                not be viewed favorably by target businesses.




Any
      of
      these factors may place us at a competitive disadvantage in successfully
      negotiating a business combination .




***We
      may be unable to obtain additional financing, if required, to complete a
      business combination or to fund the operations and growth of the target
      business, which could compel us to restructure or abandon a particular business
      combination.***




Although
      we believe that the net proceeds of the initial public offering will be
      sufficient to allow us to consummate a business combination, we cannot ascertain
      the capital requirements for any particular business combination. If the net
      proceeds of the initial public offering prove to be insufficient, either because
      of the size of the business combination or the depletion of the available net
      proceeds in search of target businesses, or because we become obligated to
      convert into cash a significant number of shares from dissenting stockholders,
      we will be required to seek additional financing through the issuance of equity
      or debt securities or other financing arrangements. We cannot assure you that
      such financing would be available on acceptable terms, if at all. To the extent
      that additional financing proves to be unavailable when needed to consummate
      a
      particular business combination, we would be compelled to restructure or abandon
      that particular business combination and seek alternative target business
      candidates. In addition, if we consummate a business combination, we may require
      additional financing to fund the operations or growth of the target businesses.
      The failure to secure additional financing could have a material adverse effect
      on the continued development or growth of the target businesses. None of our
      officers, directors or stockholders is required to provide any financing to
      us
      in connection with or after a business combination.




***Our
      initial stockholders, including our officers and directors, control a
      substantial interest in us and thus may influence certain actions requiring
      stockholder vote*** ***.***




Our
      initial stockholders, including our officers and directors, collectively own
      approximately 20% of our issued and outstanding shares of common stock.
      Additionally, Messrs. Balter and Slasky purchased 3,794,403 warrants at an
      average price of $0.4216 pursuant to agreements with Wedbush Morgan Securities
      Inc., the representative of the underwriters in our initial public offering.
      Although these warrants are not exercisable until after the completion of our
      initial business combination, the exercise at that time would further increase
      the initial stockholders’ ownership of the issued and outstanding shares of our
      common stock .




16


Our
      board
      of directors is divided into three classes, each of which will generally serve
      for a term of three years with only one class of directors being elected in
      each
      year. It is unlikely that there will be an annual meeting of stockholders to
      elect new directors prior to the consummation of a business combination, in
      which case all of the current directors will continue in office at least until
      the consummation of the business combination. If there is an annual meeting,
      as
      a consequence of this “staggered” board of directors, only a minority of the
      board of directors could be considered for election. As a result of their
      substantial beneficial ownership, our officers and directors may exert
      considerable influence on actions requiring a stockholder vote, including the
      election of officers and directors, amendments to our certificate of
      incorporation, the approval of benefit plans, mergers and similar transactions
      (other than approval of the initial business combination). Moreover, except
      to
      the extent stockholder proposals are properly and timely submitted, our
      directors will determine which matters, including prospective business
      combinations, to submit to a stockholder vote. As a result, they will exert
      substantial control over actions requiring a stockholder vote both before and
      following a business combination .




***Our
      outstanding warrants may have an adverse effect on the market price of common
      stock and make it more difficult to effect a business
      combination.***




In
      connection with our initial public offering, as part of the units, we issued
      warrants to purchase 18,000,000 shares of common stock. In
      addition, we issued to Wedbush Morgan Securities Inc. an option to purchase
      up
      to a total of 450,000 units, which, if exercised, will result in the
      issuance of warrants to purchase an additional 900,000 shares of common
      stock. To the extent we issue shares of common stock to effect a business
      combination, the potential for the issuance of substantial numbers of additional
      shares upon exercise of these warrants could make us a less attractive
      acquisition vehicle in the eyes of a target business as such securities, when
      exercised, will increase the number of issued and outstanding shares of our
      common stock and reduce the value of the shares issued to complete the business
      combination. Accordingly, our warrants may make it more difficult to effectuate
      a business combination or increase the cost of a target business. Additionally,
      the sale, or even the possibility of sale, of the shares underlying the warrants
      could have an adverse effect on the market price for our securities or on our
      ability to obtain future public financing. If and to the extent these warrants
      are exercised, you may experience dilution to your holdings .




***If
      our initial stockholders exercise their registration rights, it may have an
      adverse effect on the market price of our common stock and the existence of
      these rights may make it more difficult to effect a business
      combination.***




Our
      initial stockholders are entitled to demand that we register the resale of
      their
      shares of common stock in certain circumstances . If
      our
      initial stockholders exercise their registration rights with respect to all
      of
      their shares of common stock, then there will be an additional 2,249,997 shares of common stock eligible for trading in the public market.
      The presence of this additional number of shares of common stock eligible for
      trading in the public market may have an adverse effect on the market price
      of
      our common stock. In addition, the existence of these rights may make it more
      difficult to effect a business combination or increase the cost of a target
      business, as the stockholders of a particular target business may be discouraged
      from entering into a business combination with us or will request a higher
      price
      for their securities as a result of these registration rights and the potential
      future effect their exercise may have on the trading market for our common
      stock.




***Our
      securities are quoted only on the OTC Bulletin Board, which limits the liquidity
      and price of our securities more than if our securities were quoted or listed
      on
      the NASDAQ National Market or a national securities
      exchange.***




Our
      securities are traded in the over-the-counter market and are quoted only on
      the
      OTC Bulletin Board, an inter-dealer automated quotation system for equity
      securities sponsored and operated by The NASDAQ Stock Market, Inc., but not
      included in the NASDAQ National Market. Quotation of our securities on the
      OTC
      Bulletin Board limits the liquidity and price of our securities more than if
      our
      securities were quoted or listed on the NASDAQ National Market or a national
      securities exchange. Lack of liquidity will limit the price at which you may
      be
      able to sell our securities or your ability to sell our securities at
      all.




17


***We
      may experience volatility in earnings due to how we are required to account
      for
      our public warrants and the embedded warrants.***




Under
      EITF No. 00-19, the fair value of the public warrants and the embedded warrants
      must be reported as a derivative liability rather than equity due to the absence
      in the warrant agreement of provisions addressing the exercise of the warrants
      in the absence of an effective registration statement. Under interpretations
      of
      applicable federal securities laws, the issuance of shares upon exercise of
      the
      warrants in the absence of an effective registration statement could be deemed
      a
      violation of Section 5 of the Securities Act of 1933, as amended. To address
      this issue, the warrant agreement requires that we file, and use best efforts
      to
      cause to be declared and keep effective, a registration statement covering
      the
      issuance of the shares underlying the warrants. However, the warrant agreement
      fails to specify the remedies, if any, that would be available to warrantholders
      in the event that we do not maintain an effective registration statement
      covering the issuance of shares underlying the warrants. Under EITF No. 00-19,
      the registration of the common stock underlying the warrants is not within
      our
      control. In addition, under EITF No. 00-19, in the absence of explicit
      provisions to the contrary in the warrant agreement, we must assume that we
      could be required to settle the warrants on a net-cash basis, thereby
      necessitating the treatment of the potential settlement obligation as a
      liability. Further, EITF No. 00-19 requires that we record the potential
      settlement obligation at each reporting date using the current estimated fair
      value of the warrants, with any changes being recorded in our statement of
      operations. The potential settlement obligation will continue to be reported
      as
      a derivative liability until such time as the warrants are exercised, expire,
      or
      we are otherwise able to modify the warrant agreement. As a result, we could
      experience volatility in our net income due to changes that occur in the value
      of the warrant liability at each reporting date.




***If
      we are deemed to be an investment company, we may be required to institute
      burdensome compliance requirements and our activities may be restricted, which
      may make it difficult for us to complete a business
      combination*** ***.***




In
      order
      not to be regulated as an investment company under the Investment Company Act
      of
      1940, or the 1940 Act, unless we can qualify for an exclusion, we must ensure
      that we are engaged primarily in a business other than investing, reinvesting
      or
      trading of securities and that our activities do not include investing,
      reinvesting, owning, holding or trading “investment securities.” Our business
      will be to identify and consummate a business combination and thereafter to
      operate the acquired business or businesses. The funds in the trust account
      will
      remain invested in money market funds composed of either primarily short-term
      securities issued or guaranteed by the U.S. government or tax-exempt municipal
      bonds until we use them to complete a business combination. By limiting the
      investment of the funds to these instruments, we believe that we will not be
      considered an investment company under the 1940 Act. The trust account and
      the
      purchase of government securities for the trust account is intended as a holding
      place for funds pending the earlier to occur of either:




(i) the
      consummation of our primary business objective, which is a business combination,
      or (ii) absent a business combination, our dissolution, liquidation and
      distribution of our assets, including the proceeds held in the trust account,
      as
      part of our plan of dissolution and liquidation. If we fail to invest the
      proceeds as described above or if we cease to be primarily engaged in our
      business as set forth above, we may be considered to be an investment company
      and thus be required to comply with the 1940 Act.




If
      we are
      deemed to be an unregistered investment company, among other things, any
      contract we enter into while unregistered would be rendered unenforceable.
      In
      addition, if we did register under the 1940 Act, we would be subject to certain
      restrictions on our activities, including:




Ÿ
            
            restrictions
                on the nature of our investments;




Ÿ
            
            restrictions
                on the issuance of securities; and




Ÿ
            
            restrictions
                on the amount of debt we may incur;




each
      of
      which may make it difficult for us to consummate a business combination. We
      would also become subject to burdensome regulatory requirements, including
      reporting, record keeping, voting, proxy and disclosure requirements, and the
      costs of meeting these requirements would reduce the funds we have available
      outside the trust account to consummate a business combination.




18


***Our
      directors, including those who serve on our Audit Committee, may not be
      considered “independent” under the policies of the North American Securities
      Administrators Association, Inc. and, therefore, may take actions or incur
      expenses that are not deemed to be independently approved or independently
      determined to be in our best interest.***




Under
      the
      policies of the North American Securities Administrators Association, Inc.,
      an
      international organization devoted to investor protection, because each of
      our
      directors owns shares of our securities and may receive reimbursement for
      out-of-pocket expenses incurred by them in connection with activities on our
      behalf such as identifying potential target businesses and performing due
      diligence on suitable business combinations, state securities administrators
      could take the position that such individuals are not “independent.” If this
      were the case, they would take the position that we would not have the benefit
      of independent directors examining the propriety of expenses incurred on our
      behalf and subject to reimbursement. Additionally, there is no limit on the
      amount of out-of-pocket expenses that could be incurred and there will be no
      review of the reasonableness of the expenses by anyone other than our board
      of
      directors, which would include persons who may seek reimbursement, or a court
      of
      competent jurisdiction if such reimbursement is challenged. To the extent such
      out-of-pocket expenses exceed the available proceeds not deposited in the trust
      account, such out-of-pocket expenses would not be reimbursed by us unless we
      consummate a business combination. In addition, we may opt to make down payments
      or pay exclusivity or similar fees in connection with structuring and
      negotiating a business combination, which may have the effect of reducing the
      available proceeds not deposited in the trust account available for
      reimbursement of out-of-pocket expenses incurred on our behalf. We will not
      require, however, that the reimbursement of out-of-pocket expenses be included
      as a term or condition in any agreement with respect to a business combination.
      Although we believe that all actions taken by our directors on our behalf will
      be in our best interests, whether or not they are deemed to be “independent,” we
      cannot assure you that this will actually be the case. If actions are taken,
      or
      expenses are incurred that are actually not in our best interests, it could
      have
      a material adverse effect on our business and operations and the price of our
      stock held by the public stockholders .




**Risks
      associated with the technology, media and telecommunications
      industries**




***Our
      investments in the technology, media or telecommunications companies may be
      extremely risky and we could lose all or part of our
      investments*** ***.***




An
      investment in technology, media or telecommunications companies may be extremely
      risky relative to an investment in companies operating in other sectors due,
      in
      part, to the following factors :




·
            they
                typically have limited operating histories, narrower product lines
                and
                smaller market shares than larger businesses, which tend to render
                them
                more vulnerable to competitors’ actions and market conditions, as well as
                general economic downturns;




·
            because
                they tend to be privately owned, there is generally little publicly
                available information about these businesses; therefore, we may not
                learn
                all of the material information we need to know regarding these
                businesses;




·
            they
                are more likely to depend on the management talents and efforts of
                a small
                group of persons; therefore, the death, disability, resignation or
                termination of one or more of these persons could have a material
                adverse
                impact on the operations of any technology, media or telecommunications
                company we may acquire; and




·
            they
                generally have less predictable operating results, may from time
                to time
                be parties to litigation, may be engaged in rapidly changing businesses
                with products subject to a substantial risk of obsolescence, and
                may
                require substantial additional capital to support their operations,
                finance expansion or maintain their competitive position.




19


***The
      technology, media and telecommunications industries are highly cyclical, which
      may affect our future performance and ability to sell our products and, in
      turn,
      hurt our profitability*** ***.***




Technology,
      media and telecommunications products and services tend to be relatively
      expensive and buyers tend to defer purchases during periods of economic
      weakness, opting instead to continue to use what they already own. Conversely,
      during periods of economic strength, technology, media and telecommunications
      sales frequently exceed expectations. As a consequence, revenues and earnings
      for technology, media and telecommunications companies may fluctuate more than
      those of less economically sensitive companies. Due to the cyclical nature
      of
      these technology, media and telecommunications industries, inventories may
      not
      always be properly balanced, resulting in lost sales when there are shortages
      or
      write-offs when there are excess inventories. This may adversely affect the
      business, financial condition, and results of operations of any target
      businesses that we may acquire .




***If
      we are unable to keep pace with the changes in the technology, media and
      telecommunications industries, the products of any target business that we
      acquire could become obsolete and it could hurt our results of
      operations*** ***.***




The
      technology, media and telecommunications industries are generally characterized
      by intense, rapid changes, often resulting in product obsolescence or short
      product life cycles. Our ability to compete after the consummation of a business
      combination will be dependent upon our ability to keep pace with changes in
      these industries. If we are ultimately unable to adapt our operations as needed,
      our business, financial condition and results of operations following a business
      combination will be adversely affected .




***The
      technology, media and telecommunications industries are highly competitive
      and
      we may not be able to compete effectively which could adversely affect our
      revenues and profitability upon consummation of a business
      combination*** ***.***




The
      technology, media and telecommunications industries are rapidly evolving and
      intensely competitive. We expect competition to intensify in the future. Many
      of
      the competitors we will face upon consummation of a business combination may
      have significantly greater financial, technical, marketing and other resources
      than we do. In addition, the management of our competitors may have greater
      operating resources and experience in their respective industries. Some of
      these
      competitors may also offer a wider range of services than we can and have
      greater name recognition and a larger client base. These competitors may be
      able
      to respond more quickly and effectively to new or changing opportunities,
      technologies and client requirements. They may also be able to undertake more
      extensive promotional activities, offer more attractive terms to clients, and
      adopt more aggressive pricing policies. If we are unable to compete effectively
      following a business combination, our business, financial condition, results
      of
      operations and prospects could be materially adversely affected .




***We
      may not be able to comply with government regulations that may be adopted with
      respect to the telecommunications and media industries*** ***.***




Certain
      segments of the telecommunications and media industries, including wireline
      and
      wireless telecommunications networks, broadcast networks and radio stations,
      have historically been subject to substantial government regulation. In the
      past, the regulatory environment, particularly with respect to the
      telecommunications industry and the television and radio industry, has been
      fairly rigid. We cannot assure you that regulations currently in effect or
      adopted in the future will not have a material adverse affect on our ability
      to
      acquire a particular telecommunications or media target or on any target
      business acquired by us .




***We
      may be unable to protect or enforce the intellectual property rights of any
      target businesses that we acquire.***




After
      completing a business combination, the procurement and protection of trademarks,
      copyrights, patents, domain names, trade dress, and trade secrets will be
      critical to our success. We will likely rely on a combination of copyright,
      trademark, trade secret laws and contractual restrictions to protect any
      proprietary technology and rights that we may acquire. Despite our efforts
      to
      protect those proprietary technology and rights, we may not be able to prevent
      misappropriation of those proprietary rights or deter independent development
      of
      technologies that compete with the business we acquire. Our competitors may
      file
      patent applications or obtain patents and proprietary rights that block or
      compete with our patents. Litigation may be necessary in the future to enforce
      our intellectual property rights, to protect our trade secrets, or to determine
      the validity and scope of the proprietary rights of others. It is also possible
      that third parties may claim we have infringed their patent, trademark,
      copyright or other proprietary rights. Claims or litigation, with or without
      merit, could result in substantial costs and diversions of resources, either
      of
      which could have a material adverse effect on our competitive position and
      business. Depending on the target business or businesses that we acquire, it
      is
      likely that we will have to protect copyrights, trademarks, patents, and domain
      names in an increasing number of jurisdictions, a process that is expensive
      and
      may not be successful in every location. With respect to certain proprietary
      rights, such as trademarks and copyrighted materials, of the target business
      or
      businesses that we will acquire, we expect that the target business or
      businesses will have entered into license agreements in the past and will
      continue to enter into such agreements in the future. These licensees may take
      actions that diminish the value of such target business or businesses’
proprietary rights or cause harm to such target business or businesses’
reputation.




20


**Item
      1B.**  ***Unresolved
      Staff Comments***




Not
      applicable.




**Item
      2.**  ***Properties***




We
      do not
      own any real estate or other physical properties. Our headquarters are located
      at 360 Madison Avenue, 21 st Floor,
      New York, New York 10017. We entered into an informal agreement with an
      unrelated third party whereby we pay a base rent of $2,058 per month, on a
      month-to-month basis in exchange for office space and certain administrative
      services. We
      believe that our office facilities are suitable and adequate for our business
      as
      it is presently conducted.




**Item
      3.**  ***Legal
      Proceedings***




We
      are
      not currently subject to any material legal proceedings, nor, to our knowledge,
      is any material legal proceeding threatened against us. From time to time,
      we
      may be a party to certain legal proceedings incidental to the normal course
      of
      our business. While the outcome of these legal proceedings cannot be predicted
      with certainty, we do not expect that these proceedings will have a material
      effect upon our financial condition or results of operations.




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




No
      matters were submitted to a vote of stockholders during the quarter ended March
      31, 2006.




**PART
      II**




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




**Price
      Range of Common Stock**




Our
      units, which consist of one share of our common stock, par value $.0001 per
      share, and two warrants, each to purchase an additional share of our common
      stock, trade on the OTC Bulletin Board under the symbol “AVPAU.” Our common
      stock has traded separately on the OTC Bulletin Board under the symbol “AVPA”
since October 10, 2005. Our warrants have traded separately on the OTC Bulletin
      Board under the symbol “AVPAW” since October 10, 2005. Each warrant entitles the
      holder to purchase from us one share of our common stock at an exercise price
      of
      $5.00 commencing the later of the completion of the initial business combination
      or August 25, 2006. Our warrants will expire at 5:00 p.m., New York City time,
      on August 25, 2010, or earlier upon redemption.




The
      following tables set forth, for the calendar quarter indicated, the quarterly
      high and low bid information of the Company’s units, common stock and warrants,
      respectively, as reported on the OTC Bulletin Board. The quotations listed
      below
      reflect interdealer prices, without retail markup, markdown or commission and
      may not necessarily represent actual transactions.




21




**Units****Quarter
                ended**
            
            **High**
            
            **Low**March
                31, 2006
            
            $
            6.90
            
            $
            6.03December
                31, 2005
            
            $
            6.12
            
            $
            5.85September
                30, 2005
            
            $
            6.05
            
            $
            5.85







(1)Represents
                the high and low bid information for our units from our initial public
                offering on August 25, 2005 through September 30, 2005.




**Common
                Stock****Quarter
                ended**
            
            
            **High**
            
            
            **Low**March
                31, 2006
            
            $
            5.60
            
            $
            5.32December
                31, 2005(1)
            
            $
            5.34
            
            $
            5.14





(1)Represents
                the high and low bid information for our shares of common stock from
                October 10, 2005, the date that our common stock first became separately
                tradable, through December 31, 2005.




**Warrants****Quarter
                ended**
            
            
            **High**
            
            
            **Low**March
                31, 2006
            
            $
            0.71
            
            $
            0.37December
                31, 2005(1)
            
            $
            0.50
            
            $
            0.31







(1)Represents
                the high and low bid information for our warrants from October 10,
                2005,
                the date that our warrants first became separately tradable, through
                December 31, 2005.





**Holders
      of Common Equity**




As
      of
      June 26, 2006, we had approximately 10 stockholders of record of our common
      stock.




**Dividends**




We
      have
      not paid any dividends on our common stock to date and do not intend to pay
      dividends prior to the completion of a business combination. The payment of
      dividends in the future will be contingent upon our revenues and earnings,
      if
      any, capital requirements and general financial condition subsequent to
      completion of a business combination. The payment of any dividends subsequent
      to
      a business combination will be within the discretion of our board of directors.
      It is the present intention of our board of directors to retain all earnings,
      if
      any, for use in our business operations and, accordingly, our board does not
      anticipate declaring any dividends in the foreseeable future.




**Recent
      Sales of Unregistered Securities**




We
      did
      not engage in any unregistered sales of equity securities during the three
      months ended March 31, 2006.




22


**Use
      of Proceeds from Registered Offering**




On
      August
      25, 2005, we commenced our initial public offering of units, each consisting
      of
      one share of our common stock, par value $.0001 per share, and two warrants,
      each exercisable for one share of our common stock, pursuant to a registration
      statement on Form S-1 (File No. 333-124141), which registration statement was
      declared effective on August 25, 2005. Wedbush Morgan Securities Inc. served
      as
      lead managing underwriter for our initial public offering, which closed on
      August 31, 2005. The net proceeds from our initial public offering were
      approximately $51,190,000, after deducting offering expenses of approximately
      $650,000 and underwriting discounts of $2,160,000. As of September 1, 2005,
      $50,380,000 of this amount had been placed in trust for purposes of consummating
      a business combination, with approximately $810,000 remaining.




For
      the
      period from April 7, 2005 (date of inception) through March 31, 2006, we paid
      or
      incurred an aggregate of approximately $1,115,000 in expenses, which have been
      or will be paid out of the proceeds of our initial public offering not held
      in
      trust for the following purposes:




·
            expenses
                related to our initial public
                offering;




·
            repayment
                  of the notes payable to Messrs. Balter and Slasky, which loan was
                  repaid
                  in full, with interest, and
                  cancelled;




·
            premiums
                associated with our directors and officers liability insurance;




·
            for
                payment of estimated taxes incurred as a result of interest income
                earned
                on funds currently held in the trust account;




·
            expenses
                for due diligence and investigation of prospective target businesses;




·
            legal
                and accounting fees relating to our SEC reporting obligations and
                our
                investigation of prospective target businesses;
                and




·
            for
                miscellaneous expenses.




As
      of
      March 31, 2006, approximately $51,108,343 was held in trust and we had
      approximately $579,029 of our offering proceeds not held in trust remaining
      and
      available to us for our activities in connection with identifying and conducting
      due diligence of a suitable business combination, and for general corporate
      matters.




**Item
      6.**  ***Selected
      Financial Data***




The
      following table summarizes the relevant financial data for our business and
      should be read in conjunction with our financial statements, and the notes
      and
      schedules related thereto, which are included in this annual report on Form
      10-K/A. To date, our efforts have been limited to organizational activities
      and
      activities relating to our initial public offering.




**SELECTED
                FINANCIAL DATA**
              **(As
                Restated)****Income
                Statement Data****For
                the Period April 7, 2005 (Inception) through March 31,
                2006**Loss
                from operations
            
            $
            (216,093
            )Gain
                (loss) from derivative liabilities
            
            
            (4,751,859
            )Other
                income - interest
            
            
            740,102Income
                before provision for income taxes
            
            
            (4,227,850
            )Provision
                for income taxes
            
            
            116,000Net
                income
            
            $
            (4,343,850
            )**Balance
                Sheet Data****March
                31, 2006**Cash
                and cash equivalents
            
            $
            579,029Prepaid
                expenses
            
            
            72,488Total
                current assets
            
            
            651,517Investments
                held in Trust Account
            
            
            51,108,343Fixed
                assets, net of accumulated depreciation
            
            
            4,062Total
                assets
            
            $
            51,763,922Accrued
                expenses
            
            $
            90,310Taxes
                payable
            
            
            116,000Derivative
                liabilities
            
            
            11,878,143Total
                current liabilities
            
            
            12,084,453Common
                stock subject to possible redemption
            
            
            10,193,318Total
                stockholders’ equity
            
            
            29,486,151Total
                liabilities and stockholders’ equity
            
            $
            51,763,922





23




The
      total
      assets amount includes the approximately $51,108,343 being held in the trust
      account, which will be available to us only upon the consummation of a business
      combination within the time period described in this annual report. If a
      business combination is not so consummated, we will be dissolved and the
      proceeds held in the trust account will be distributed solely to our public
      stockholders.




We
      will
      not proceed with a business combination if public stockholders owning 20% or
      more of the shares sold in our initial public offering vote against the business
      combination and exercise their conversion rights. Accordingly, we may effect
      a
      business combination if public stockholders owning less than 20% of the shares
      sold in our initial public offering exercise their conversion rights. If this
      occurred, we would be required to convert to cash up to approximately 19.99%
      of
      the 9,000,000 shares of common stock sold in our initial public offering, or
      1,799,100 shares of common stock, at an initial per share conversion price
      of
      $5.60, without taking into account interest earned on the trust account. The
      actual per share conversion price will be equal to the amount in the trust
      account, including all accrued interest (net
      of
      taxes payable on income of the funds in the trust account and calculated as
      of
      two business days prior to the consummation of the proposed business
      combination) ,
      divided
      by the number of shares of common stock sold in our initial public
      offering.




**Item
      7.**  ***Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations***




**FORWARD-LOOKING
      STATEMENTS**




The
      following discussion should be read in conjunction with our combined
      consolidated financial statements and the notes thereto included elsewhere
      in
      this Form 10-K.




This
      Form
      10-K contains forward-looking statements regarding the plans and objectives
      of
      management for future operations. This information may involve known and unknown
      risks, uncertainties and other factors which may cause our actual results,
      performance or achievements to be materially different from future results,
      performance or achievements expressed or implied by any forward-looking
      statements. Forward-looking statements, which involve assumptions and describe
      our future plans, strategies and expectations, are generally identifiable by
      use
      of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,”
“believe,” “intend” or “project” or the negative of these words or other
      variations on these words or comparable terminology. These forward-looking
      statements are based on assumptions that may be incorrect, and we cannot assure
      you that these projections included in these forward-looking statements will
      come to pass. Our actual results could differ materially from those expressed
      or
      implied by the forward-looking statements as a result of various factors. We
      have based the forward-looking statements included in this annual report on
      Form
      10-K on information available to us on the date of this annual report on Form
      10-K.




24




**MANAGEMENT’S
      DISCUSSION AND ANALYSIS**


**OF
      FINANCIAL CONDITION AND RESULTS OF OPERATIONS**




**Restatement
      of Financial Statements**




We
      have
      determined it necessary to restate our financial statements contained within
      our
      Form 8-K dated September 6, 2005 for the period of April 1, 2005 (date of
      inception) to August 31, 2005, and this Form 10-K for the period from inception
      through March 31, 2006 to record the warrants issued as part of the units sold
      in our initial public offering and the warrants issuable upon the exercise
      of
      the unit purchase option issued to the underwriters in our initial public
      offering as derivative liabilities. We had previously issued financial
      statements which did not classify the fair value of the warrants as a derivative
      liability, and our previously filed financial statements should no longer be
      relied upon. Upon review, we have determined that the warrants should be
      reported as a derivative liability rather than as equity as has been our
      practice. The fair value of the warrants are now recorded as a derivative
      liability on our balance sheet. Changes in the fair values of these instruments
      will result in adjustments to the amount of the recorded derivative liabilities
      and the corresponding gain or loss will be recorded in our statement of
      operations. At the date of the conversion of each respective instrument or
      portion thereof (or exercise of the options or warrants or portion thereof,
      as
      the case may be), the corresponding derivative liability will be reclassified
      as
      equity.




The
      accompanying financial statements for the period from inception through March
      31, 2006 have been restated to effect the changes described above. The impact
      of
      the adjustments related to the classification of and accounting for the warrants
      for the period from inception through March 31, 2006 are summarized
      below:




**Statement
      of Operations Impact**








**April
                7, 2005****(Date
                of Inception)****Through****March
                31, 2006****(As
                Restated)****As
                Previously Reported**
            
            **Adjustments**
            
            **As
                Restated**Operating
                costs
            
            $
            (216,093
            )
            
            —
            
            $
            (216,093
            )Loss
                from operations
            
            
            (216,093
            )
            
            —
            
            
            (216,093
            )Gain
                (loss) from derivative liabilities
            
            
            —
            
            
            (4,751,859
            )
            
            (4,751,859
            )Other
                income--interest
            
            
            740,102
            
            
            —
            
            
            740,102Income
                before provision for income taxes
            
            
            524,009
            
            
            (4,751,859
            )
            
            (4,227,850
            )Provision
                for income taxes
            
            
            (116,000
            )
            
            —
            
            
            (116,000
            )Net
                income
            
            $
            408,009
            
            $
            (4,751,859
            )
            $
            (4,343,850
            )Weighted
                average number of sharesoutstanding--basic
            
            
            7,696,020
            
            
            —
            
            
            7,696,020Net
                income per share--basic
            
            $
            0.05
            
            
            —
            
            $
            (0.56
            )Weighted
                average number of sharesoutstanding--diluted
            
            
            8,793,060
            
            
            —
            
            
            8,793,060Net
                income per share--diluted
            
            $
            0.05
            
            
            —
            
            $
            0.05Pro
                Forma Adjustment:Interest
                income attributable to common stock subject to possible redemption
                (net of
                taxes of $0)
            
            $
            (118,358
            )
            
            —
            
            $
            (118,358
            )Pro
                forma net income attributable to common stockholders not subject
                to
                redemption
            
            $
            289,651
            
            $
            (4,751,859
            )
            $
            (4,462,208
            )Pro
                forma weighted average number of shares outstanding, excluding shares
                subject to possible redemption--basic
            
            
            6,607,360
            
            
            —
            
            
            6,607,360Pro
                forma net income per share, excluding shares subject to possible
                redemption—basic
            
            $
            0.04
            
            
            —
            
            $
            (0.68
            )Pro
                forma weighted average number of shares outstanding, excluding shares
                subject to possible redemption—diluted
            
            
            7,485,102
            
            
            —
            
            
            7,485,102Pro
                forma net income per share, excluding shares subject to possible
                redemption—diluted
            
            $
            0.04
            
            
            —
            
            $
            0.04





25





**Balance
      Sheet Impact**





**April
                7, 2005****(Date
                of Inception)****Through****March
                31, 2006****(As
                Restated)****As
                Previously Reported**
            
            **Adjustments**
            
            **As
                Restated****ASSETS**Current
                AssetsCash
                and cash equivalents
            
            $
            579,029
            
            
            —
            
            $
            579,029Prepaid
                expenses
            
            
            72,488
            
            
            —
            
            
            72,488Total
                current assets
            
            
            651,517
            
            
            —
            
            
            651,517Investments
                held in Trust Account
            
            
            51,108,343
            
            
            —
            
            
            51,108,343Fixed
                assets, net of accumulated depreciation
            
            
            4,062
            
            
            —
            
            
            4,062Total
                Assets
            
            $
            51,763,922
            
            
            —
            
            $
            51,763,922**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilitiesAccrued
                expenses
            
            $
            90,310
            
            
            —
            
            $
            90,310Taxes
                payable
            
            
            116,000
            
            
            —
            
            
            116,000Derivative
                liability
            
            
            —
            
            
            11,878,143
            
            
            11,878,143Total
                current liabilities
            
            
            206,310
            
            
            11,878,143
            
            
            12,084,453Common
                Stock, and changes in Trust Account value attributable to shares
                subject
                to possible redemption, 1,799,100 shares at $5,60 per share
            
            
            10,193,318
            
            
            —
            
            
            10,193,318**STOCKHOLDERS’
                EQUITY**Common
                stock, $0.0001 par value; 50,000,000 shares authorized; 11,249,997
                issued
                and outstanding (which includes 1,799,100 shares subject to possible
                redemption)
            
            
            1,125
            
            
            —
            
            
            1,125Additional
                paid-in capital
            
            
            41,073,518
            
            
            (7,126,284
            )
            
            33,947,234Deficit
                accumulated during the development stage
            
            
            289,651
            
            
            (4,751,859
            )
            
            (4,462,208
            )Total
                stockholders’ equity
            
            
            41,364,294
            
            
            (11,878,143
            )
            
            29,486,151Total
                liabilities and stockholders’ equity
            
            $
            51,763,922
            
            
            —
            
            $
            51,763,922





26




Except
      as
      otherwise clearly stated, all financial information contained in this Annual
      Report on Form 10-K/A gives effect to the restatements.




**Overview**




We
      were
      formed on April 7, 2005 as a blank check company for the purpose of acquiring,
      through a merger, capital stock exchange, asset acquisition or other similar
      business combination, one or more operating businesses in the technology, media
      or telecommunications industries. We intend to use cash derived from the net
      proceeds of our initial public offering, which closed on August 31, 2005,
      together with any additional financing arrangements that we undertake, to effect
      a business combination.




The
      net
      proceeds from our initial public offering on August 31, 2005 were approximately
      $51,190,000, after deducting offering expenses of approximately $650,000 and
      underwriting discounts of $2,160,000. Of this amount, $50,380,000 was placed
      in
      a trust account, with approximately $810,000 remaining for our use to cover
      business, legal and accounting due diligence expenses on prospective
      acquisitions and continuing general and administrative expenses.




We
      expect
      to use substantially all of the net proceeds discussed above to acquire one
      or
      more operating businesses, including identifying and evaluating prospective
      acquisition candidates, selecting one or more operating businesses, and
      structuring, negotiating and consummating the business combination, including
      the making of a down payment or the payment of exclusivity or similar fees
      and
      expenses, if any. However, we may not use all of the proceeds held in the trust
      account in connection with a business combination, either because the
      consideration for the business combination is less than the proceeds in trust
      or
      because we finance a portion of the consideration with capital stock or debt
      securities that we can issue. In that event, the proceeds held in the trust
      account as well as any other net proceeds not expended will be used to finance
      the operations of the target business or businesses.




We
      may
      issue additional capital stock or debt securities to finance a business
      combination. The issuance of additional capital stock, including upon conversion
      of any convertible debt securities we may issue, or the incurrence of debt,
      could have material consequences on our business and financial condition. The
      issuance of additional shares of our capital stock (including upon conversion
      of
      convertible debt securities):




·
            may
                significantly reduce the equity interest of our stockholders;




·
            will
                likely cause a change in control if a substantial number of our shares
                of
                common stock or voting preferred stock are issued, which may affect,
                among
                other things, our ability to use our net operating loss carry forwards,
                if
                any, and may also result in the resignation or removal of one or
                more of
                our present officers and directors; and




·
            may
                adversely affect prevailing market prices for our common stock.




Similarly,
      if we issue debt securities, it could result in:




·
            default
                and foreclosure on our assets if our operating revenues after a business
                combination are insufficient to pay our debt obligations;




·
            acceleration
                of our obligations to repay the indebtedness even if we make all
                principal
                and interest payments when due if we breach the covenants contained
                in any
                debt securities, such as covenants that require the satisfaction
                or
                maintenance of certain financial ratios or reserves, without a waiver
                or
                renegotiation of such covenants;




·
            an
                obligation to immediately repay all principal and accrued interest,
                if
                any, upon demand to the extent any debt securities are payable on
                demand;
                and




·
            our
                  inability to obtain additional financing, if necessary, to the
                  extent any
                  debt securities contain covenants restricting our ability to obtain
                  additional financing while such security is outstanding, or to
                  the extent
                  our existing leverage discourages other potential
                  investors.


27




**Results
      of Operations and Liquidity**




Through
      March 31, 2006, our efforts have been limited to organizational activities,
      activities relating to our initial public offering, activities relating to
      identifying and evaluating prospective acquisition candidates and activities
      relating to general corporate matters. We have neither engaged in any operations
      nor generated any revenues, other than interest income earned on the proceeds
      of
      our initial public offering. As of March 31, 2006, approximately $51,108,343
      was
      held in trust and we had approximately $579,029 of our offering proceeds not
      held in trust remaining and available to us for our activities in connection
      with identifying and conducting due diligence of a suitable business
      combination, and for general corporate matters.




For
      the
      period April 7, 2005 (date of inception) through March 31, 2006, we earned
      approximately $740,102 in interest income.




For
      the
      period April 7, 2005 (date of inception) through March 31, 2006, we paid or
      incurred an aggregate of approximately $1,115,500 in expenses for the following
      purposes:




·
            expenses
                related to our initial public
                offering;




·
            repayment
                  of the notes payable to two of our initial stockholders, Messrs.
                  Balter
                  and Slasky, which loans were repaid in full, with interest, and
                  cancelled;




·
            premiums
                associated with our directors and officers liability insurance;




·
            payment
                of estimated taxes incurred as a result of interest income earned
                on funds
                currently held in the trust account;




·
            expenses
                for due diligence and investigation of prospective target businesses;




·
            expenses
                in legal and accounting fees relating to our SEC reporting obligations
                and
                our investigation of prospective target businesses;
                and




·
            miscellaneous
                expenses.




We
      believe we will have sufficient available funds outside of the trust account
      to
      operate through August 31, 2007, assuming that a business combination is not
      consummated during that time. We do not believe we will need to raise additional
      funds in order to meet the expenditures required for operating our business.
      If
      we determine that we need to raise additional funds prior to a business
      combination, we will likely do so through a private offering of debt because
      our
      underwriting agreement prohibits us from issuing additional equity securities
      prior to a business combination. However, we may need to raise additional funds
      through a private offering of debt or equity securities if such funds are
      required to consummate a business combination that is presented to us. We would
      only consummate such a financing simultaneously with the consummation of a
      business combination.




**Critical
      Accounting Policies**




The
      preparation of financial statements and related disclosures in conformity with
      generally accepted accounting principles in the United States requires
      management to make estimates and assumptions that affect the reported
      consolidated amounts of assets and liabilities, disclosure of contingent assets
      and liabilities at the date of the financial statements, and revenues and
      expenses during the periods reported. Actual results could materially differ
      from those estimates. We have determined that we currently are not subject
      to
      any critical accounting policies.




28




Accounting
      for Warrants and Derivative Instruments




Emerging
      Issues Task Force issue EITF 00-19, “Accounting for Derivative Financial
      Instruments Indexed to, and Potentially Settled in, a Company's Own Stock,”
(“EITF 00-19”) requires freestanding contracts that are settled in a company's
      own stock, including common stock warrants, to be designated as an equity
      instrument, asset or a liability. In accordance with EITF 00-19, we determined
      that the warrants issued in connection with our initial public offering should
      be classified as a derivative liability due to the absence in the warrant
      agreement of provisions addressing the exercise of the warrants in the absence
      of an effective registration statement. Under interpretations of applicable
      federal securities laws, the issuance of shares upon exercise of the warrants
      in
      the absence of an effective registration statement could be deemed a violation
      of Section 5 of the Securities Act of 1933, as amended. To address this issue,
      the warrant agreement requires that we file, and use best efforts to cause
      to be
      declared and keep effective, a registration statement covering the issuance
      of
      the shares underlying the warrants. However, the warrant agreement fails to
      specify the remedies, if any, that would be available to warrantholders in
      the
      event there is no effective registration statement covering the issuance of
      shares underlying the warrants. Under EITF 00-19, the registration of the common
      stock underlying the warrants is not within our control. In addition, under
      EITF
      00-19, in the absence of explicit provisions to the contrary in the warrant
      agreement, we must assume that we could be required to settle the warrants
      on a
      net-cash basis, thereby necessitating the treatment of the potential settlement
      obligation as a liability.




Under
      the
      provisions of EITF 00-19, a contract designated as an asset or a liability
      must
      be carried at fair value on a company’s balance sheet, with any changes in fair
      value recorded in the company’s results of operations. The fair value of these
      warrants is shown on our balance sheet and the unrealized changes in the values
      of these derivatives are shown in our consolidated statement of operations
      as
“Gain (loss) from derivative liabilities.” The price for the warrants is quoted
      on the Over the Counter Bulletin Board, consequently, the fair value of these
      warrants is estimated as the market price of a warrant at the end of each
      period. To the extent that the market price increases or decreases, our
      derivative liability will also increase or decrease, impacting our consolidated
      statement of operations.




In
      connection with our initial public offering, we sold to the underwriters an
      option to purchase 450,000 units, each of which consists of one share of common
      stock and two warrants that are identical to our public warrants except for
      the
      exercise price. We have determined that this option is a derivative that also
      contains an embedded derivative, the 900,000 warrants included in the units
      issuable upon exercise of the option. We consider this option to be an equity
      instrument, as the underlying units do not need to be registered prior to
      delivery. However, the shares issued upon exercise of the warrants included
      in
      the underlying units do require registration.




Statement
      of Financial Accounting Standard (“SFAS”) No. 133, “Accounting for Derivative
      Instruments and Hedging Activities,” as amended, requires all derivatives to be
      recorded on the balance sheet at fair value. Furthermore, paragraph 11(a) of
      SFAS No. 133 precludes contracts issued or held by a reporting entity that
      are
      both (1) indexed to its own stock and (2) classified as stockholders’ equity in
      its statement of financial position from being treated as derivative
      instruments. Hence, the option to purchase 450,000 units and the warrants to
      purchase an additional 900,000 shares, the latter being the embedded derivative,
      are separately valued and accounted for on our balance sheet. As such, the
      option to purchase 450,000 units is considered an equity instrument, as the
      underlying shares do not need to be registered, and all other criteria in EITF
      00-19 required for the instrument to be accounted for as an equity instrument
      have been fulfilled. While the warrants are indexed to our common stock, the
      fact that the shares underlying the warrants require future registration in
      accordance with the warrant agreement requires us to classify these instruments
      as a liability in accordance with EITF 00-19, paragraph 14.




We
      performed a valuation of the option to purchase 450,000 units, and then
      allocated its fair value to its two components, the underlying 450,000 units
      and
      the embedded warrant to purchase an additional 900,000 shares. The fair value
      of
      the unit purchase option at August 31, 2005 was calculated, using the Black
      Scholes pricing model, at $1,873,367, or $4.16 per unit, using an expected
      life
      of five years, volatility of 92.5% and a risk free interest rate of 3.87%.
We
      allocated $1,634,438 to the purchase option of 450,000 shares and $238,929
      to
      the warrants to purchase an additional 900,000 shares, according to their
      respective values.Because we have not consummated the Business
      Combination, we derived the volatility estimate based on the average five-year
      historical stock prices for a representative sample of 20 technology, media
      and
      telecommunications companies with market capitalizations below $500 million,
      which we believe is a reasonable benchmark to use in estimating the expected
      volatility of the units after the consummation of a business combination.
      Although an expected life of five years was used in this calculation, if we
      do
      not consummate a business combination within the prescribed time period and
      we
      liquidate, the option will become worthless.




29


We
      have
      determined the fair values of the option and the embedded warrants subsequent
      to
      the initial valuation thereof using the Black Scholes pricing model. Valuations
      derived from this model are subject to ongoing internal and external
      verification and review. The model uses market-sourced inputs such as interest
      rates, market prices and volatilities. Selection of these inputs involves
      management’s judgment and may impact net income. We continue to base our
      volatility assumption on the five-year average historical stock prices of the
      same representative sample of 20 technology, media and telecommunications
      companies as used in its initial valuation. The volatility factor used in Black
      Scholes has a significant effect on the resulting valuation of the derivative
      liabilities on our balance sheet. As of March 31, 2006, the volatility for
      the calculation of the embedded derivatives was approximated at 79.8%, and
      this
      volatility rate will likely change in the future.




**Item
      7A.**  ***Quantitative
      and Qualitative Disclosure About Market Risk***




To
      date,
      our efforts have been limited to organizational activities and activities
      relating to our initial public offering and the identification of a target
      business; we have neither engaged in any operations nor generated any revenues.
      As the proceeds from our initial public offering held in trust have been
      invested in short term investments, our only market risk exposure relates to
      fluctuations in interest rates.




As
      of
      March 31, 2006, approximately $51,108,343 was held in trust for the purposes
      of
      consummating a business combination. As of March 31, 2006, the proceeds held
      in
      trust have been invested in a Smith Barney Municipal Market Fund, Class Y.
      The
      average rating in the portfolio is MIG 1. As of March 31, 2006, the effective
      annualized interest rate payable on our investment was approximately 2.67%.
      In
      addition, w e
      have
      issued warrants that are accounted for as derivative liabilities. One of the
      factors determining the fair value of the liability is the risk-free interest
      rate. The fluctuation of the liabilities due to interest rate changes has been
      minimal.




Assuming
      no other changes to our holdings as of March 31, 2006, a 1% decrease in the
      underlying interest rate payable on our investments as of March 31, 2006 would
      result in a decrease of approximately $126,020 in the interest earned on our
      investments for the following 90-day period, and a corresponding decrease in
      our
      net increase in stockholders’ equity resulting from operations, if any, for that
      period.




We
      have
      not engaged in any hedging activities since our inception on April 7, 2005.
      We
      do not expect to engage in any hedging activities with respect to the market
      risk to which we are exposed.




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




**Index
      to Financial Statements**




**Documents**
            
            **Page**Report
                of Independent Registered Public Accounting Firm
            
            
            31Balance
                Sheet at March 31, 2006, as restated
            
            
            32Statement
                of Operations for the period from April 7, 2005 (inception) through
                March
                31, 2006, as restated
            
            
            33Statement
                of Stockholders’ Equity for the period from April 7, 2005 (inception)
                through March 31, 2006, as restated
            
            
            34Statement
                of Cash Flows for the period from April 7, 2005 (inception) through
                March
                31, 2006, as restated
            
            
            35Notes
                to Financial Statements
            
            
            36




30




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




Board
      of
      Directors and Stockholders


Ad.Venture
      Partners, Inc.




We
      have
      audited the accompanying balance sheet of Ad.Venture Partners, Inc. (a
      development stage company) (the “company”) as of March 31, 2006 and the related
      statements of operations, stockholders’ equity and cash flows for the period
      from April 7, 2005 (date of inception) through March 31, 2006. These financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audit.




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




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Ad.Venture Partners, Inc. as of
      March 31, 2006 and the results of its operations and its cash flows for the
      period from April 7, 2005 (date of inception) through March 31, 2006 in
      conformity with U.S. generally accepted accounting principles.




As
      discussed in Note C to the accompanying financial statements, the Company has
      restated its financial statements as of and for the year ended March 31, 2006
      to
      reflect additional non-operating gains and losses and the classification of
      warrants to purchase common stock associated with the units sold at the initial
      public offering of the Company and warrants to purchase common stock embedded
      in
      a purchase option issued to the underwriters in connection with the initial
      public offering as derivative liabilities.




/s/
      Eisner  LLP




New
      York,
      New York


June
      24,
      2006, except for Notes B and C, for which the date is August 18,
      2006




31


**AD.VENTURE
      PARTNERS, INC.**


**(a
      development stage company)**




**BALANCE
      SHEET**




**March
                31, 2006**
              **(As
                Restated)****ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            579,029Prepaid
                expenses
            
            
            72,488Total
                current assets
            
            
            651,517Investments
                held in Trust Account
            
            
            51,108,343Fixed
                assets, net of accumulated depreciation
            
            
            4,062Total
                assets
            
            $
            51,763,922**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities:Accrued
                expenses
            
            $
            90,310Taxes
                payable
            
            
            116,000Derivative
                liabilities
            
            
            11,878,143Total
                current liabilities
            
            
            12,084,453Common
                Stock, and changes in Trust Account value attributable to shares
                subject
                to possible redemption, 1,799,100 shares at $5.60 per
                share
            
            
            10,193,318**STOCKHOLDERS’
                EQUITY**Common
                stock—$.0001 par value; 50,000,000 shares authorized; 11,249,997 shares
                issued and outstanding (which includes 1,799,100 shares subject to
                possible redemption)
            
            
            1,125Preferred
                stock—$.0001 par value; 1,000,000 shares authorized; 0 shares issued and
                outstanding
            
            
            0Additional
                paid-in capital
            
            
            33,947,234Retained
                earnings (Deficit)
            
            
            (4,462,208
            )Total
                stockholders’ equity
            
            
            29,486,151Total
                liabilities and stockholders’ equity
            
            $
            51,763,922




See
      notes
      to financial statements





32




**AD.VENTURE
      PARTNERS, INC.**


**(a
      development stage company)**




**STATEMENT
      OF OPERATIONS**









**April
                7, 2005**
              **(Date
                of Inception) Through**
              **March
                31, 2006**
              **(As
                Restated)**Operating
                costs
            
            $
            (216,093
            )Loss
                from operations
            
            
            (216,093
            )Gain
                (loss) from derivative liabilities
            
            
            (4,751,859
            )Other
                income—interest
            
            
            740,102Income
                before provision for income taxes
            
            
            (4,227,850
            )Provision
                for income taxes
            
            
            (116,000
            )Net
                income
            
            $
            (4,343,850
            )Weighted
                average number of shares outstanding—basic
            
            
            7,696,020Net
                income per share—basic
            
            $
            (0.56
            )Weighted
                average number of shares outstanding—diluted
            
            
            8,793,060Net
                income per share—diluted
            
            $
            0.05Pro
                Forma Adjustment:Interest
                income attributable to common stock subject to possible redemption
                (net of
                taxes of $0)
            
            $
            (118,358
            )Pro
                forma net income attributable to common stockholders not subject
                to
                redemption
            
            $
            (4,462,208
            )Pro
                forma weighted average number of shares outstanding, excluding shares
                subject to possible redemption—basic
            
            
            6,607,360Pro
                forma net income per share, excluding shares subject to possible
                redemption—basic
            
            $
            (0.68
            )Pro
                forma weighted average number of shares outstanding, excluding shares
                subject to possible redemption—diluted
            
            
            7,704,400Pro
                forma net income per share, excluding shares subject to possible
                redemption—diluted
            
            $
            0.04




See
      notes
      to financial statements




33


**AD.VENTURE
      PARTNERS, INC.**


**(a
      development stage company)**




**STATEMENT
      OF STOCKHOLDERS’ EQUITY**




**As
      Restated**




**Common
                Stock**
            
            
            **Additional
              Paid-**
            
            
            **Retained**
                **Earnings****Shares**
            
            
            **Amount**
            
            
            **In
                Capital**
            
            
            **(Deficit)**
            
            
            **Total****Balance—April
                7, 2005 (date of inception)**
            
            
            —
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —Contributions
                from initial stockholders
            
            
            2,249,997
            
            
            225
            
            
            775
            
            
            —
            
            
            1,000Sale
                of 9,000,000 units and representative’s option, net of underwriters’
                discount and offering expenses
            
            
            9,000,000
            
            
            900
            
            
            51,147,703
            
            
            —
            
            
            51,148,603Net
                proceeds subject to possible redemption of 1,799,100 shares
            
            
            —
            
            
            —
            
            
            (10,074,960
            )
            
            —
            
            
            (10,074,960
            )Reclassification
                to derivative liabilities (warrants) to part of proceeds from the
                sale of
                the warrants and the embedded warrants
            
            
            —
            
            
            —
            
            
            (7,126,284
            )
            
            —
            
            
            (7,126,284
            )Change
                in accretion of Trust Account relating to common stock subject to
                possible
                redemption, net of tax
            
            
            —
            
            
            —
            
            
            —
            
            
            (118,358
            )
            
            (118,358
            )Net
                income
            
            
            —
            
            
            —
            
            
            —
            
            
            (4,343,850
            )
            
            (4,343,850
            )**Balance—March
                31, 2006 (as restated)**
            
            
            11,249,997
            
            $
            1,125
            
            $
            33,947,234
            
            $
            (4,462,208
            )
            $
            29,486,151




See
      notes
      to financial statements




34


**AD.VENTURE
      PARTNERS, INC.**


**(a
      development stage company)**




**STATEMENT
      OF CASH FLOWS**




**April
                7, 2005**
              **(Date
                of Inception) Through**
              **March
                31, 2006**
              **(As
                Restated)****Cash
                flows from operating activities:**Net
                income
            
            $
            (4,343,850
            )Adjustments
                to reconcile net income to net cash provided by operating activities:Derivative
                liabilities
            
            
            4,751,859Depreciation
            
            
            1,015Changes
                in operating assets and liabilities:Prepaid
                expenses
            
            
            (72,488
            )Accrued
                expenses
            
            
            90,310Taxes
                payable
            
            
            116,000Net
                cash provided by operating activities
            
            
            542,846**Cash
                flows from investing activities:**Cash
                held in Trust Account
            
            
            (51,108,343
            )Purchases
                of property and equipment
            
            
            (5,077
            )Net
                cash used in investing activities
            
            
            (51,113,420
            )**Cash
                flows from financing activities:**Issuance
                of stock
            
            
            51,148,503Proceeds
                from notes payable to stockholder
            
            
            150,000Repayment
                of note payable to stockholder
            
            
            (150,000
            )Proceeds
                from sale of common stock to founders
            
            
            1,000Proceeds
                from issuance of representative’s option
            
            
            100Net
                cash provided by financing activities
            
            
            51,149,603Net
                increase in cash and cash equivalents
            
            
            579,029Cash
                and cash equivalents—beginning of period
            
            
            —Cash
                and cash equivalents—end of period
            
            $
            579,029




See
      notes
      to financial statements




35


**AD.VENTURE
      PARTNERS, INC.**


**(a
      development stage company)**




**NOTES
      TO FINANCIAL STATEMENTS**


**March
      31, 2006**




**NOTE
        A—ORGANIZATION
        AND
        BUSINESS
        OPERATIONS**




Ad.Venture
      Partners, Inc. (the "Company") was incorporated in Delaware on April 7, 2005.
      The Company was formed to serve as a vehicle for the acquisition through a
      merger, capital stock exchange, asset acquisition or other similar business
      combination (the “Business Combination”) of one or more operating business in
      the technology, media or telecommunications industries. The Company has neither
      engaged in any operations nor generated revenue. The Company is considered
      to be
      in the development stage and is subject to the risks associated with activities
      of development stage companies. The Company has selected March 31 as its fiscal
      year end.





The
      registration statement for the Company’s initial public offering (the
“Offering”) (as described in Note C) was declared effective on August 25,
      2005. The Company consummated the Offering on August 31, 2005 and received
      net proceeds of approximately $51,190,000. The Company’s management has broad
      discretion with respect to the specific application of the net proceeds of
      the
      Offering, although substantially all of the net proceeds of the Offering are
      intended to be generally applied toward a Business Combination. Furthermore,
      there is no assurance that the Company will be able to successfully effect
      a
      Business Combination. Of the net proceeds, $50,380,000 was placed in a trust
      account (“Trust Account”) and invested in mutual funds and municipal money
      market funds until the earlier of (i) the consummation of the first Business
      Combination or (ii) the distribution of the Trust Fund as described below.
      The remaining proceeds may be used to pay for business, legal and accounting
      due
      diligence on prospective acquisitions and continuing general and administrative
      expenses. The Company, after signing a definitive agreement for the acquisition
      of a target business, will submit such transaction for stockholder approval.
      In
      the event that holders of 20% or more of the shares issued in the Offering
      vote
      against the Business Combination, the Business Combination will not be
      consummated. However, the persons who were stockholders prior to the Offering
      (the “Initial Stockholders”) will participate in any liquidation distribution
      only with respect to any shares of the common stock acquired in connection
      with
      or following the Offering.





In
      the
      event that the Company does not consummate a Business Combination within 18
      months from the date of the consummation of the Offering, or 24 months from
      the
      consummation of the Offering if certain extension criteria have been satisfied
      (the “Acquisition Period”), the proceeds held in the Trust Fund will be
      distributed to the Company’s public stockholders, excluding the Initial
      Stockholders to the extent of their initial stock holdings. In the event of
      such
      distribution, it is likely that the per share value of the residual assets
      remaining available for distribution (including Trust Account assets) will
      be
      less than the initial public offering price per share in the Offering (assuming
      no value is attributed to the Warrants contained in the Units to be offered
      in
      the Proposed Offering discussed in Note C)).




**NOTE
        B—SUMMARY
        OF
        SIGNIFICANT
        ACCOUNTING
        POLICIES**




**[1]**
            **Cash
                and cash equivalents:**





The
      Company considers all highly liquid investments with original maturities of
      three months or less to be cash equivalents.





**[2]**
            **Investments
                held in Trust Account:**





At
      March
      31, 2006, the investments held in the Trust Account consist of tax-exempt
      municipal money market funds, and are treated as trading securities and recorded
      at their market value. The excess of market over cost is included in interest
      income in the accompanying statement of operations.




36




**[3]**
            **Accounting
                for Warrants and Derivative
                Instruments**




Emerging
      Issues Task Force issue EITF 00-19, “Accounting for Derivative Financial
      Instruments Indexed to, and Potentially Settled in, a Company's Own Stock,”
(“EITF 00-19”) requires freestanding contracts that are settled in a company's
      own stock, including common stock warrants, to be designated as an equity
      instrument, asset or a liability. In accordance with EITF 00-19, the Company
      determined that the warrants issued in connection with the Offering should
      be
      classified as a derivative liability due to the absence in the warrant agreement
      of provisions addressing the exercise of the warrants in the absence of an
      effective registration statement. Under interpretations of applicable federal
      securities laws, the issuance of shares upon exercise of the warrants in the
      absence of an effective registration statement could be deemed a violation
      of
      Section 5 of the Securities Act of 1933, as amended. To address this issue,
      the
      warrant agreement requires that the Company file, and use best efforts to cause
      to be declared and keep effective, a registration statement covering the
      issuance of the shares underlying the warrants. However, the warrant agreement
      fails to specify the remedies, if any, that would be available to warrantholders
      in the event there is no effective registration statement covering the issuance
      of shares underlying the warrants. Under EITF 00-19, the registration of the
      common stock underlying the warrants is not within the Company's control. In
      addition, under EITF 00-19, in the absence of explicit provisions to the
      contrary in the warrant agreement, the Company must assume that it could be
      required to settle the warrants on a net-cash basis, thereby necessitating
      the
      treatment of the potential settlement obligation as a liability.




Under
      the
      provisions of EITF 00-19, a contract designated as an asset or a liability
      must
      be carried at fair value on a company’s balance sheet, with any changes in fair
      value recorded in the company’s results of operations. The fair value of these
      warrants is shown on the Company’s balance sheet and the unrealized changes in
      the values of these derivatives are shown in the Company’s consolidated
      statement of operations as “Gain (loss) from derivative liabilities.” The price
      for the warrants is quoted on the Over the Counter Bulletin Board, consequently,
      the fair value of these warrants is estimated as the market price of a warrant
      at the end of each period. To the extent that the market price increases or
      decreases, the Company’s derivative liability will also increase or decrease,
      impacting the Company’s consolidated statement of operations.




As
      described in Note C below, in connection with the Offering, the Company sold
      to
      the underwriters an option to purchase 450,000 units, each of which consists
      of
      one share of common stock and two warrants that are identical to the Company’s
      public warrants except for the exercise price. The Company has determined that
      this option is a derivative that also contains an embedded derivative, the
      900,000 warrants included in the units issuable upon exercise of the option.
      The
      Company considers this option to be an equity instrument, as the underlying
      units do not need to be registered prior to delivery. However, the shares issued
      upon exercise of the warrants included in the underlying units do require
      registration.




Statement
      of Financial Accounting Standard (“SFAS”) No. 133, “Accounting for Derivative
      Instruments and Hedging Activities,” as amended, requires all derivatives to be
      recorded on the balance sheet at fair value. Furthermore, paragraph 11(a) of
      SFAS No. 133 precludes contracts issued or held by a reporting entity that
      are
      both (1) indexed to its own stock and (2) classified as stockholders’ equity in
      its statement of financial position from being treated as derivative
      instruments. Hence, the option to purchase 450,000 units and the warrants to
      purchase an additional 900,000 shares, the latter being the embedded derivative,
      are separately valued and accounted for on the Company’s balance sheet. As such,
      the option to purchase 450,000 units is considered an equity instrument, as
      the
      underlying shares do not need to be registered, and all other criteria in EITF
      00-19 required for the instrument to be accounted for as an equity instrument
      have been fulfilled. While the warrants are indexed to the Company’s common
      stock, the fact that the shares underlying the warrants require future
      registration in accordance with the warrant agreement requires the Company
      to
      classify these instruments as a liability in accordance with EITF 00-19,
      paragraph 14 .




The
      Company performed a valuation of the option to purchase 450,000 units, and
      then
      allocated the fair value to its two components, the underlying 450,000 units
      and
      the warrants to purchase an additional 900,000 shares. The fair value of the
      unit purchase option at August 31, 2005 was calculated, using the Black
      Scholes pricing model, at $1,873,367, or $4.16 per unit, using an expected
      life
      of five years, volatility of 92.5% and a risk free interest rate of 3.87%.
      The
      Company allocated $1,634,438 to the purchase option of 450,000 shares and
      $238,929 to the warrants to purchase an additional 900,000 shares, according
      to
      their respective fair values. Because the Company has not consummated the
      Business Combination, management derived the volatility estimate based on the
      average five-year historical stock prices for a representative sample of 20
      technology, media and telecommunications companies with market capitalizations
      below $500 million, which management believes is a reasonable benchmark to
      use
      in estimating the expected volatility of the units after the consummation of
      a
      Business Combination. Although an expected life of five years was used in this
      calculation, if the Company does not consummate a Business Combination within
      the prescribed time period and the Company liquidates, the option will become
      worthless.




37




**[4]**
            The
                Company has determined the fair values of the option and the embedded
                warrants subsequent to the initial valuation thereof using the Black
                Scholes pricing model. Valuations derived from this model are subject
                to
                ongoing internal and external verification and review. The model
                uses
                market-sourced inputs such as interest rates, market prices and
                volatilities. Selection of these inputs involves management’s judgment and
                may impact net income. The Company continues to base its volatility
                assumption on the five-year average historical stock prices of the
                same
                representative sample of 20 technology, media and telecommunications
                companies as used in its initial valuation. The volatility factor
                used in
                Black Scholes has a significant effect on the resulting valuation
                of the
                derivative liabilities on the Company’s balance sheet. As of
                March 31, 2006, the volatility for the calculation of the embedded
                derivatives was approximated at 79.8%, and this volatility rate will
                likely change in the future.





**[5]**
            **Earnings
                per common share:**





Earnings
      per share is computed by dividing net income attributable to common stockholders
      by the weighted average number of common shares outstanding for the period.
      Diluted net income per share is computed using the weighted average number
      of
      shares outstanding adjusted per the incremental shares attributed to outstanding
      options to purchase common stock.





**[6]**
            **Use
                of estimates:**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.





**[7]**
            **Income
                taxes:**





Deferred
      income taxes are provided for the differences between the bases of assets and
      liabilities for financial reporting and income tax purposes. A valuation
      allowance is established when necessary to reduce deferred tax assets to the
      amount expected to be realized.





The
      Company recorded a deferred income tax asset for the tax effect of start-up
      costs and temporary differences, aggregating approximately $135,000. In
      recognition of the uncertainty regarding the ultimate amount of income tax
      benefits to be derived, the Company has recorded a full valuation allowance
      at
      March 31, 2006.





The
      effective tax rate differs from the statutory rate of 34% due to the increase
      in
      the valuation allowance .




**NOTE
        C — RESTATEMENTAND
        RECLASSIFICATIONOF
        PREVIOUSLY
        ISSUED
        FINANCIAL
        STATEMENTSAND
        DERIVATIVE
        LIABILITY**




The
      Company has determined it necessary to restate its financial statements
      contained within the Company's Form 10-K for the period from inception through
      March 31, 2006 to record the warrants as derivative liabilities. The Company
      had
      previously issued financial statements which did not classify the fair value
      of
      the warrants as a derivative liability, and the Company’s previously filed
      financial statements should no longer be relied upon. The Company, upon review,
      has determined that the warrants should be reported as a derivative liability
      rather than as equity as has been the Company’s practice. The fair value of the
      warrants are now recorded as a derivative liability on the Company’s balance
      sheet. Changes in the fair values of these instruments will result in
      adjustments to the amount of the recorded derivative liabilities and the
      corresponding gain or loss will be recorded in the Company’s statement of
      operations. At the date of the conversion of each respective instrument or
      portion thereof (or exercise of the options or warrants or portion thereof,
      as
      the case may be), the corresponding derivative liability will be reclassified
      as
      equity. For more information on the valuation of the warrants and allocation
      of
      their fair value, see Note B, [3], “Accounting for Warrants and Derivative
      Instruments.”




38




The
      accompanying financial statements for the period from inception through March
      31, 2006 have been restated to effect the changes described above. The impact
      of
      the adjustments related to the classification of and accounting for the warrants
      for the period from inception through March 31, 2006 are summarized
      below:




**Statement
      of Operations Impact**





**April
                7, 2005****(Date
                of Inception)****Through****March
                31, 2006****(As
                Restated)****As
                Previously Reported**
            
            **Adjustments**
            
            **As
                Restated**Operating
                costs
            
            $
            (216,093
            )
            
            —
            
            $
            (216,093
            )Loss
                from operations
            
            
            (216,093
            )
            
            —
            
            
            (216,093
            )Gain
                (loss) from derivative liabilities
            
            
            
            
            
            (4,751,859
            )
            
            (4,751,859
            )Other
                income--interest
            
            
            740,102
            
            
            —
            
            
            740,102Income
                before provision for income taxes
            
            
            524,009
            
            
            (4,751,859
            )
            
            (4,227,850
            )Provision
                for income taxes
            
            
            (116,000
            )
            
            —
            
            
            (116,000
            )Net
                income
            
            $
            408,009
            
            $
            (4,751,859
            )
            $
            (4,343,850
            )Weighted
                average number of shares
              outstanding--basic
            
            
            7,696,020
            
            
            —
            
            
            7,696,020Net
                income per share--basic
            
            $
            0.05
            
            
            —
            
            $
            (0.56
            )Weighted
                average number of shares
              outstanding--diluted
            
            
            8,793,060
            
            
            —
            
            
            8,793,060Net
                income per share--diluted
            
            $
            0.05
            
            
            —
            
            $
            0.05Pro
                Forma Adjustment:Interest
                income attributable to common stock subject to possible redemption
                (net of
                taxes of $14,857)
            
            $
            (118,358
            )
            
            —
            
            $
            (118,358
            )Pro
                forma net income attributable to common stockholders not subject
                to
                redemption
            
            $
            289,651
            
            $
            (4,751,859
            )
            $
            (4,462,208
            )Pro
                forma weighted average number of shares outstanding, excluding shares
                subject to possible redemption--basic
            
            
            6,607,360
            
            
            —
            
            
            6,607,360Pro
                forma net income per share, excluding shares subject to possible
                redemption—basic
            
            $
            0.04
            
            
            —
            
            $
            (0.68
            )Pro
                forma weighted average number of shares outstanding, excluding shares
                subject to possible redemption—diluted
            
            
            7,485,102
            
            
            —
            
            
            7,704,400Pro
                forma net income per share, excluding shares subject to possible
                redemption—diluted
            
            $
            0.04
            
            
            —
            
            $
            0.04





39




**Balance
      Sheet Impact**





**April
                7, 2005****(Date
                of Inception)****Through****March
                31, 2006****(As
                Restated)****As
                Previously Reported**
            
            **Adjustments**
            
            **As
                Restated****ASSETS**Current
                AssetsCash
                and cash equivalents
            
            $
            579,029
            
            
            —
            
            $
            579,029Prepaid
                expenses
            
            
            72,488
            
            
            —
            
            
            72,488Total
                current assets
            
            
            651,517
            
            
            —
            
            
            651,517Investments
                held in Trust Account
            
            
            51,108,343
            
            
            —
            
            
            51,108,343Fixed
                assets, net of accumulated depreciation
            
            
            4,062
            
            
            —
            
            
            4,062Total
                Assets
            
            $
            51,763,922
            
            
            —
            
            $
            51,763,922**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilitiesAccrued
                expenses
            
            $
            90,310
            
            
            —
            
            $
            90,310Taxes
                payable
            
            
            116,000
            
            
            —
            
            
            116,000Derivative
                liability
            
            
            —
            
            
            11,878,143
            
            
            11,878,143Total
                current liabilities
            
            
            206,310
            
            
            11,878,143
            
            
            12,084,453Common
                Stock, and changes in Trust Account value attributable to shares
                subject
                to possible redemption, 1,799,100 shares at $5,60 per share
            
            
            10,193,318
            
            
            —
            
            
            10,193,318**STOCKHOLDERS’
                EQUITY**Common
                stock, $0.0001 par value; 50,000,000 shares authorized; 11,249,997
                issued
                and outstanding (which includes 1,799,100 shares subject to possible
                redemption)
            
            
            1,125
            
            
            —
            
            
            1,125Additional
                paid-in capital
            
            
            41,073,518
            
            
            (7,126,284
            )
            
            33,947,234Deficit
                accumulated during the development stage
            
            
            289,651
            
            
            (4,751,859
            )
            
            (4,462,208
            )Total
                stockholders’ equity
            
            
            41,364,294
            
            
            (11,878,143
            )
            
            29,486,151Total
                liabilities and stockholders’ equity
            
            $
            51,763,922
            
            
            —
            
            $
            51,763,922




**NOTE
        D—PUBLIC
        OFFERING**


On
      August 31, 2005, the Company consummated an initial public offering of
      9,000,000 units (“Units”). Each Unit consists of one share of the Company’s
      common stock, $.0001 par value, and two warrants (“Warrants”). Each Warrant
      entitles the holder to purchase from the Company one share of common stock
      at an
      exercise price of $5.00. Each warrant is exercisable on the later of
      (a) the completion of a Business Combination or (b) August 25,
      2006 and expires on August 25, 2010. The Warrants are redeemable at a price
      of $.01 per Warrant upon 30 days notice after the Warrants become
      exercisable, only in the event that the last sale price of the common stock
      is
      at least $8.50 per share for any 20 trading days within a 30 trading day period
      ending on the third day prior to the date on which notice of redemption is
      given.





In
      connection with the Offering, the Company paid the underwriters an underwriting
      discount of 4% of the gross proceeds of the Offering. In addition, the Company
      agreed to pay the underwriters additional underwriting fees and expenses of
      $1,620,000 upon the consummation of the initial business combination. The
      Company expects that such additional fees and expenses will be paid out of
      the
      proceeds in the trust account. Of such additional fees and expenses $1,080,000
      constitute additional underwriting fees and $540,000 constitutes an additional
      non-accountable expense allowance.





40




The
      Company also sold to the representative of the underwriters for a purchase
      price
      of $100 an option to purchase up to a total of 450,000 units at a price of
      $7.50
      per unit. The units issuable upon the exercise of this option are identical
      to
      those offered in the prospectus, except that the exercise price of the warrants
      underlying the underwriters’ purchase option is $6.65. This option is
      exercisable commencing on the later of the consummation of a business
      combination and one year from the date of the prospectus and expiring five
      years
      from the date of the prospectus and may be exercised on a cashless basis. The
      option may not be sold, transferred, assigned, pledged or hypothecated for
      a
      one-year period following the date of the prospectus. However, the option may
      be
      transferred to any underwriter and selected dealer participating in the offering
      and their bona fide officers or partners.





The
      holders of the option have demand and piggy-back registration rights under
      the
      Securities Act for periods of five and seven years, respectively, from the
      date
      of the prospectus with respect to registration of the securities directly and
      indirectly issuable upon exercise of the option. The exercise price and number
      of units issuable upon exercise of the option may be adjusted in certain
      circumstances, including in the event of a stock dividend, recapitalization,
      reorganization, merger or consolidation. However, the option will not be
      adjusted for issuances at a price below its exercise price.





As
      part
      of the Offering, the Company and the managing underwriters agreed that, within
      the first 45 calendar days after separate trading of the warrants commenced,
      the
      managing underwriters or certain of their principals, affiliates or designees
      would place bids for and, if their bids were accepted, spend up to $400,000
      to
      purchase warrants in the public marketplace at prices not to exceed $.70 per
      warrant. The managing underwriters agreed that any warrants purchased by them
      or
      their affiliates or designees would not be sold or transferred until completion
      of a Business Combination by the Company. Additionally, the chief executive
      officer and the president agreed with the representative of the underwriters,
      that within the first 45 calendar days after separate trading of the warrants
      commenced, they or certain of their affiliates or designees would collectively
      place bids for, and if their bids were accepted, spend up to $1,600,000 to
      purchase warrants in the public marketplace at prices not to exceed $.70 per
      warrant. The chief executive officer and president further agreed that any
      warrants purchased by them or their affiliates or designees will not be sold
      or
      transferred until completion of a Business Combination. The units separated
      on
      October 10, 2005 and, within the time specified, management purchased 3,794,403
      warrants at an average price of $0.4216, and the underwriter purchased 948,000
      warrants at an average price of $0.4216.




**NOTE
        E—NOTES
        PAYABLE
        TO STOCKHOLDER**


The
      Company issued an aggregate of $150,000 in promissory notes to Messrs. Balter
      and Slasky in April 2005. The notes bear interest at a rate of 4% per year.
      The
      notes were paid upon consummation of the Offering from the net proceeds of
      the
      Offering.




**NOTE
        F—RELATED
        PARTY
        TRANSACTION**




Following
      the consummation of its initial public offering, the Company cancelled its
      office agreement with Innovation Interactive, LLC, a company where certain
      of
      the Initial Stockholders served in executive capacities, under which the Company
      agreed to pay an administrative fee of $7,500 per month for office space and
      general and administrative services. Following cancellation of that arrangement,
      the Company relocated its offices under an informal agreement with an unrelated
      third party whereby the Company has agreed to pay a base rent of $2,058 per
      month, on a month-to-month basis, in exchange for office space and certain
      administrative services.




**NOTE
        G—COMMON
        STOCK
        RESERVEDFOR
        ISSUANCE**




At
      March
      31, 2006, 18,900,000 shares of stock were reserved for issuance upon exercise
      of
      redeemable warrants.




41


**Item
      9.**  ***Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosures***




Not
      applicable.




**Item
      9A.**  ***Controls
      and Procedures***




**Disclosure
      Controls and Procedures**




As
      of the
      end of the period covered by this annual report on Form 10-K, our chief
      executive officer and chief financial officer conducted an evaluation of our
      disclosure controls and procedures (as defined in Rules 13a-15(e) of the
      Securities Exchange Act of 1934). Based upon this evaluation, our chief
      executive officer and chief financial officer concluded that our disclosure
      controls and procedures are effective in timely alerting them of any material
      information relating to us that is required to be disclosed by us in the reports
      we file or submit under the Securities Exchange Act of 1934.




**Internal
      Control Over Financial Reporting**




There
      have been no changes in our internal control over financial reporting (as
      defined in Rule 13-15(f) of the Securities Exchange Act of 1934) that occurred
      during the period April 7, 2005 (date of inception) through March 31, 2006
      that
      have materially affected, or are reasonably likely to materially affect, our
      internal control over financial reporting.




**Item
      9B.**  ***Other
      Information***




None.




42




**PART
      III**




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




**Directors
      and Executive Officers**




Our
      current directors and executive officers are as follows:




**Name**
            
            **Age**
            
            **Position**
            
            **Year**
              **Appointed/Elected**Howard
                S. Balter
            
            43
            
            Chairman
                and Chief Executive Officer
            
            2005Ilan
                M. Slasky
            
            36
            
            President,
                Secretary and Director
            
            2005Lawrence
                J. Askowitz*
            
            40
            
            Director
            
            2005Dr.
                Shlomo Kalish*
            
            54
            
            Director
            
            2005





*
      Member
      of the Audit Committee




**Howard
      S. Balter** is
      our
      chairman and chief executive officer. In addition, Mr. Balter has been
      chairman and a managing member of Innovation Interactive, LLC, a diversified
      Internet advertising company, from May 2002 when it was acquired in a management
      buy-out from Net2Phone, Inc. until its sale in November 2005. Prior to that
      he
      was chief executive officer and a director of Net2Phone, Inc., a leading
      Internet telephony company. Mr. Balter was a director at Net2Phone, Inc.
      from October 1997 to October 2001, its chief executive officer from January
      1999
      to October 2001 and its vice chairman of the board of directors from May 1999
      to
      October 2001. Mr. Balter also served as Net2Phone, Inc.’s treasurer from
      October 1997 to July 1999. Prior to his employment with Net2Phone, Inc.,
      Mr. Balter was employed by IDT Corp., a diversified international
      telecommunications company, where he was chief operating officer from 1993
      to
      1998 and chief financial officer from 1993 to 1995. Mr. Balter was a
      director of IDT Corp. from December 1995 to January 1999 and vice chairman
      of
      IDT Corp.’s board of directors from October 1996 to January 1999 .




**Ilan
      M. Slasky** is
      our
      president, secretary and one of our directors. In addition, Mr. Slasky has
      been vice chairman and a managing member of Innovation Interactive, LLC since
      May 2002 until its sale in November 2005. Prior to that he was chief financial
      officer at Net2phone, Inc. from January 1999 to January 2002. Prior to his
      employment with Net2Phone, Inc., Mr. Slasky was employed by IDT Corp.,
      where he was its executive vice president of finance from December 1997 to
      January 1999, its director of carrier services from November 1996 to July 1997
      and its director of finance from May 1996 to November 1996. Mr. Slasky
      worked for Merrill Lynch as a supervisor in the Risk Management group from
      1992
      to 1993, as an assistant fixed income trader from 1993 to 1994 and as a
      collateral management specialist in the Global Equity Derivatives group from
      1994 to 1995 .




**Lawrence
      J. Askowitz** is
      one of
      our directors. In addition, Mr. Askowitz is a founder and partner at
      Z Communications Capital, which advises and acquires communication and
      media technology companies. Before founding Z Communications Capital, from
      April
      2004 to April 2005, Mr. Askowitz was the telecommunication and media
      technology partner at ZelnickMedia Corporation, a private equity firm that
      acquires and operates media businesses. Mr. Askowitz was employed by
      Deutsche Bank in the Telecommunications Corporate Finance Group, where he served
      as a director from September 2000 through December 2001 and as a managing
      director and head of the U.S. Wireless Banking practice from January 2002
      to September 2003. From April 1998 to December 1999, Mr. Askowitz was a
      vice president at Credit Suisse First Boston in the Media &
Telecommunications Corporate Finance Group and the Mergers &
Acquisitions Group and served as a director of those groups from January 2000
      to
      September 2000. From 1987 to 1998, Mr. Askowitz was employed by Lazard
      where he worked as an analyst, associate and vice president in the Banking
      and
      Public Finance Departments. Mr. Askowitz served as a director of Horizon
      PCS, Inc., a provider of personal communications services under the Sprint
      brand
      from October 2004 until July 2005 when it merged into iPCS Inc., another Sprint
      affiliate .
      Since
      November 1, 2005, Mr. Askowitz has served on the Advisory Board of Infogate
      Online, an IPTV middleware provider.




**Dr. Shlomo
      Kalish** is
      one of
      our directors. Dr. Kalish has been the chairman and chief executive officer
      of Jerusalem Global Ventures Ltd., a venture capital firm that manages funds
      focusing on early stage investments in software, communications, homeland
      security and life sciences since 2000. Dr. Kalish was general partner of
      Concord Ventures, a venture capital firm, from 1997 to 1999. He founded Jerusalem
      Global Ltd., and served as chairman and chief executive officer from 1994 to
      1997. From 1985 to 1994, Dr. Kalish was a member of the faculty at Tel Aviv
      University School of Management. Dr. Kalish has served as a director of:
      Valor Computerized Systems, Ltd., an engineering software company, since
      November 1999; Camero, Inc., a developer of through-wall imaging micro-power
      radar, since June 2004; Certagon Ltd., an integrated application environment
      software provider, since March 2003; Chiasma Inc., a biotechnology company
      that
      develops non-invasive alternatives to macromolecule therapies, since May 2001;
      LocatioNet Systems Ltd., a developer of a comprehensive location-based service
      system for the wireless market, since October 2000; Notal Vision Ltd., a
      developer of solutions for the opthalmic industry, since April 2001; Saifun
      Semiconductors Ltd., a non-volatile memory solutions provider, since
      April 1998; and VideoCodes, a digital video broadcasting software provider,
      since March 2004. Dr. Kalish is also a member of the board of governors of
      Bar Ilan University, the Technion and The Jerusalem College of
      Technology.




43


**Number
      and Terms of Directors**




Our
      board
      of directors has four directors and is divided into three classes with only
      one
      class of directors being elected in each year and each class serving a
      three-year term. The term of office of the first class of directors, consisting
      of Mr. Askowitz, will expire at our first annual meeting of stockholders.
      The term of office of the second class of directors, consisting of Dr. Kalish
      and Mr. Slasky, will expire at the second annual meeting. The term of office
      of
      the third class of directors, consisting of Mr. Balter, will expire at the
      third
      annual meeting. Each of our current directors has served on our board since
      our
      inception in April 2005.




These
      individuals will play a key role in identifying and evaluating prospective
      acquisition candidates, selecting the target business, and structuring,
      negotiating and consummating its acquisition. None of these individuals has
      been
      a principal of or affiliated with a public company or blank check company that
      executed a business plan similar to our business plan and none of these
      individuals is currently affiliated with such an entity. However, we believe
      that the skills and expertise of these individuals, their collective access
      to
      acquisition opportunities and ideas, their contacts, and their transaction
      expertise should enable them to successfully identify and effect an acquisition,
      although we cannot assure you that they will, in fact, be able to do
      so.




**Committee
      of the Board of Directors**




Our
      Board
      of Directors has established an Audit Committee, which reports to the Board
      of
      Directors. Mr. Askowitz and Dr. Kalish serve as members of our Audit Committee.
      Our Board of Directors has determined that it does not have an “audit committee
      financial expert” as that term is defined under Item 401 of Regulation S-K of
      the Securities Exchange Act of 1934, as amended. In light of our limited
      operations at this time, our Board of Directors has determined that it will
      postpone any decision on whether to search for an audit committee financial
      expert until we can more accurately ascertain our future business
      operations.




The
      Audit
      Committee is required to be composed entirely of at least two independent
      directors.




**Section
      16(a) Beneficial Ownership Reporting Compliance**




Pursuant
      to Section 16(a) of the Securities Act of 1934, the Company’s directors and
      executive officers, and any persons holding 10% or more of its common stock,
      are
      required to report their beneficial ownership and any changes therein to the
      Commission and the Company. Specific due dates for those reports have been
      established, and the Company is required to report herein any failure to file
      such reports by those due dates. Based on the Company’s review of Forms 3, 4 and
      5 filed by such persons, the Company believes that during the fiscal year ended
      March 31, 2006 all Section 16(a) filing requirements applicable to such persons
      were met in a timely manner.




**Special
      Advisors**





We
      consult from time-to-time with certain individuals who have demonstrated
      experience in the financial and technology-related sectors, who we call our
      special advisors. Our special advisors have no formal rights or duties as such,
      are not considered consultants or members of our management and therefore owe
      no
      fiduciary duties to us or our stockholders. We consider all special advisors
      to
      have equal stature and we expect them to act as an informal advisory panel
      for
      us. We expect to look to our special advisors primarily for assistance with
      locating and evaluating prospective target businesses. We have initially
      identified the following individuals as our special advisors.





44


**Thomas
      Rogers** has
      served as a special advisor since May 2005. Mr. Rogers has served on the
      board of directors of TiVo Inc., a digital video recording company, since
      September 2003 and has served as the vice chairman of the board since October
      2004. On June 27, 2005, TiVo Inc. announced Mr. Rogers would be named
      its chief executive officer effective July 1, 2005. He has been the
      chairman of the board of Teleglobe, a global telecom, mobile telephony and
      voice
      over Internet protocol company, since November 2004. Mr. Rogers has been
      the chairman of TRget Media LLC, a media industry investment and operations
      advisory firm, since June 2003 and the senior operating executive for media
      and
      entertainment for Cerberus Capital Management, L.P. since January 2004.
      Mr. Rogers was chairman and chief executive officer of PRIMEDIA Inc., a
      targeted media company, from October 1999 to April 2003. From January 1987
      to
      October 1999, Mr. Rogers worked for NBC, the television network, as
      president of NBC Cable and executive vice president of NBC. Mr. Rogers led
      the founding of CNBC, the business news channel and established the
      NBC/Microsoft cable channel, and Internet joint venture, MSNBC.





**Ken
      Jacquin** has
      served as a special advisor since June 2005. Mr. Jacquin has been the chief
      financial officer of Winder Farms, a home delivery business, since January
      2005.
      From January 2000 through March 2004, Mr. Jacquin was employed by Deutsche
      Bank as a director in Equity Capital Markets. Between June 1995 and December
      1999, Mr. Jacquin was an associate and then a vice president of the Media
      and Telecommunications Group at Banker’s Trust, formerly Alex Brown &
Sons.





We
      may
      identify, from time to time, additional individuals to serve as special advisors
      if those individuals possess a level of experience within the technology, media
      and telecommunications sectors that we believe may be beneficial to us. We
      will
      not compensate individuals for service as special advisors, other than providing
      reimbursement for any out-of-pocket expenses incurred in connection with
      activities on our behalf such as identifying potential target businesses and
      performing due diligence on suitable business combinations .




**Code
      of Ethics**




We
      have
      adopted a code of ethics that applies to directors, officers and employees.
      You
      may obtain a copy of the Company’s code, free of charge, by contacting our
      corporate secretary, Mr. Ilan M. Slasky, at 360 Madison Avenue,
      21 st Floor,
      New York, NY 10017. The Company intends to disclose amendments to or waivers
      from a required provision of the code on Form 8-K.




**Item
      11.**  ***Executive
      Compensation***




No
      executive officer, director or initial stockholder, nor any affiliate thereof,
      has received any cash compensation for services rendered. No compensation of
      any
      kind, including finder’s and consulting fees, will be paid to any of our initial
      stockholders, including our officers and directors, or any of their respective
      affiliates, for services rendered prior to or in connection with a business
      combination. However, these individuals will be reimbursed for any out-of-pocket
      expenses incurred in connection with activities on our behalf such as
      identifying potential target businesses and performing due diligence on suitable
      business combinations. There is no limit on the amount of these out-of-pocket
      expenses and there will be no review of the reasonableness of the expenses
      by
      anyone other than our board of directors, which includes persons who may seek
      reimbursement, or a court of competent jurisdiction if such reimbursement is
      challenged, provided that no proceeds held in the trust account will be used
      to
      reimburse out-of-pocket expenses prior to a business combination. If all of
      our
      directors are not deemed “independent,” we will not have the benefit of
      independent directors examining the propriety of expenses incurred on our behalf
      and subject to reimbursement. In addition, since the role of our current
      management and directors subsequent to a business combination is uncertain,
      we
      have no ability to determine what remuneration, if any, will be paid to our
      current management and directors prior to or after a business combination by
      any
      target businesses.




45


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




The
      following table sets forth information regarding the beneficial ownership of
      our
      common stock as of June 1 2006, by:




l
            each
                person known by us, as a result of such person’s public filings with the
                SEC and the information contained therein, to be the beneficial owner
                of
                more than 5% of our outstanding shares of common stock;




l
            each
                of our officers and directors; and




l
            all
                of our officers and directors as a group.




Unless
      otherwise indicated, we believe that all persons named in the table have sole
      voting and investment power with respect to all shares of common stock
      beneficially owned by them.




**Name**
            
            **Number
                of Shares**
            
            **Percentage
                of Class(3)**
            
            **Relationship
                to Us**Howard
                S. Balter
            
            1,012,500
            
            9.0%
            
            Chairman
                and Chief Executive OfficerIlan
                M. Slasky
            
            1,012,500
            
            9.0%
            
            President,
                Secretary and DirectorLawrence
                J. Askowitz
            
            45,000
            
            *
            
            DirectorDr.
                Shlomo Kalish
            
            45,000
            
            *
            
            DirectorExecutive
                officers and directors as a group
            
            2,115,000
            
            18.8%Sapling,
                LLC(1)(4)
              535
                Fifth Avenue
              31st
                Floor
              New
                York, New York 10017
            
            723,416
            
            6.4%
            
            StockholderAmaranth
                LLC(2)(5)
              One
                American Lane
              Greenwich,
                Connecticut 06831
            
            1,109,000
            
            9.9%
            
            StockholderSatellite
                Asset Management, L.P.(6)
              10
                East 30th Street
              21st
                Floor
              New
                York, NY 10022
            
            803,100
            
            7.1%
            
            Stockholder





*
      Represents less than one percent.




(1)
            Shares
                beneficially held as a group together with Fir Tree Recovery Master
                Fund,
                L.P.




(2)
            Shares
                beneficially held as a group together with Amaranth Advisors L.L.C.
                and
                Nicholas M. Maounis.




(3)
            Based
                on a total of 11,249,997 shares of the Company’s common stock issued and
                outstanding on June 1, 2006.




(4)
            Based
                upon information contained in the Schedule 13G filed September 23,
                2005,
                by Sapling, LLC and Fir Tree Recovery Master Fund,
                L.P.




(5)
            Based
                upon information contained in the Schedule 13G/A filed January 30,
                2006 by
                Amaranth LLC, Amaranth Advisors L.L.C. and Nicholas M.
                Maounis.




(6)
            Based
                upon information contained in the Schedule 13G/A filed February 15,
                2006,
                by Satellite Asset Management, L.P.




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




**Conflicts
      of Interest**




Investors
      should be aware of the following potential conflicts of interest:




l
            None
                of our officers and directors are required to commit their full time
                to
                our affairs and, accordingly, they may have conflicts of interest
                in
                allocating management time among various business
                activities.




46


l
            In
                light of Messrs. Balter’s and Slasky’s prior involvement with Innovation
                Interactive, LLC and our objective of effecting a business combination
                with one or more operating businesses in the technology, media or
                telecommunications industries, we may determine to enter into a business
                combination with Innovation Interactive,
                LLC.




l
            Our
                officers and directors may in the future become affiliated with entities,
                including other blank check companies, engaged in business activities
                similar to those intended to be conducted by us.




l
            Since
                our directors own shares of our common stock that will be subject
                to
                lock-up agreements restricting their sale until six months after
                a
                business combination is successfully completed, our board may have
                a
                conflict of interest in determining whether a particular target business
                is appropriate to effect a business combination. The personal and
                financial interests of our directors and officers may influence their
                motivation in identifying and selecting target businesses and completing
                a
                business combination in a timely
                manner.




l
            In
                the event we elect to make a substantial down payment, or otherwise
                incur
                significant expenses, in connection with a potential business combination,
                our expenses could exceed the remaining proceeds not held in trust.
                Our
                officers and directors may have a conflict of interest with respect
                to
                evaluating a particular business combination if we incur such excess
                expenses. Specifically, our officers and directors may tend to favor
                potential business combinations with target businesses that offer
                to
                reimburse any expenses in excess of our available proceeds not held
                in
                trust.




l
            Our
                officers and directors may have a conflict of interest with respect
                to
                evaluating a particular business combination if the retention or
                resignation of any such officers and directors were included by a
                target
                business as a condition to any agreement with respect to a business
                combination.




In
      general, officers and directors of a corporation incorporated under the laws
      of
      the State of Delaware are required to present business opportunities to a
      corporation if:




l
            the
                corporation could financially undertake the opportunity;




l
            the
                opportunity is within the corporation’s line of business; and




l
            it
                would not be fair to the corporation and its stockholders for the
                opportunity not to be brought to the attention of the corporation.




Accordingly,
      as a result of multiple business affiliations, our officers and directors may
      have similar legal obligations relating to presenting business opportunities
      meeting the above-listed criteria to other entities. In addition, conflicts
      of
      interest may arise when our board evaluates a particular business opportunity
      with respect to the above-listed criteria. We cannot assure you that any of
      the
      above mentioned conflicts will be resolved in our favor.




In
      order
      to minimize potential conflicts of interest which may arise from multiple
      corporate affiliations, each of our officers and directors has agreed in
      principle, until the earlier of a business combination, our liquidation or
      such
      time as he ceases to be an officer or director, to present to us for our
      consideration, prior to presentation to any other entity, any business
      opportunity which may reasonably be required to be presented to us under
      Delaware law, subject to any fiduciary obligation arising from a relationship
      established prior to the establishment of a fiduciary relationship with
      us.




The
      initial stockholders have agreed to waive their respective rights to participate
      in any liquidation distribution occurring upon our failure to consummate a
      business combination, but only with respect to those shares of common stock
      acquired by them prior to our initial public offering; they will participate
      in
      any liquidation distribution with respect to any shares of common stock acquired
      in connection with or following that offering. In addition, in connection with
      the vote required for our initial business combination, all of our initial
      stockholders, including all of our officers and directors, have agreed to vote
      the shares of common stock owned by them immediately before our initial public
      offering in accordance with the majority of the shares of common stock voted
      by
      the public stockholders; however, they may cast votes with respect to any shares
      of common stock acquired in connection with or following our initial public
      offering in any manner as they may determine in their discretion. As a result,
      an initial stockholder who acquired shares during or after our initial public
      offering may vote against the proposed business combination with respect to
      those shares, and retain the right to exercise the conversion rights
      attributable to such shares in the event that a business combination transaction
      is approved by a majority of our public stockholders.




47


**Item
      14.**  ***Principal
      Accountant Fees and Services***




Eisner
      LLP (“Eisner”) is exclusively responsible for the opinion rendered in connection
      with its examination.




**For
                the Period April 7, 2005 (Inception) through March 31,
                2006**
            
            **Fiscal
                Year Ended March 31, 2005**Audit
                Fees
            
            $
            35,000
            
            
            N/AAudit-Related
                Fees
            
            
            —
            
            
            N/ATax
                Fees
            
            
            —
            
            
            N/AAll
                Other Fees
            
            
            —
            
            
            N/ATotal
                Fees:
            
            $
            35,000
            
            
            N/A




*Audit
      Fees.* Audit
      fees consist of fees billed for professional services rendered for the audit
      of
      our year-end financial statements and services that are normally provided by
      Eisner in connection with statutory and regulatory filings.




*Audit-Related
      Fees.* Audit-related services consist of fees billed for assurance and related services
      that are reasonably related to the performance of the audit or review of our
      financial statements and are not reported under “Audit Fees.” These services
      include attest services that are not required by statute or regulation and
      consultations concerning financial accounting and reporting
      standards.




*Tax
      Fees.* Tax fees
      consist of fees billed for professional services for tax compliance. These
      services include assistance regarding federal, state, and local tax
      compliance.




*All
      Other Fees.* All
      other fees would include fees for products and services other than the services
      reported above.




**Policy
      on Board Pre-Approval of Audit and Permissible Non-audit Services of Independent
      Auditors**




The
      Audit
      Committee is responsible for appointing, setting compensation, and overseeing
      the work of the independent auditor. In recognition of this responsibility,
      the
      Audit Committee has established a policy to pre-approve all audit and
      permissible non-audit services provided by the independent auditor.




In
      addition to retaining Eisner to audit our consolidated financial statements
      for
      the period April 7, 2005 (date of inception) through March 31, 2006, we may
      retain Eisner to provide advisory services and due diligence work in connection
      with prospective business combinations to us in our 2006 fiscal year. We
      understand the need for Eisner to maintain objectivity and independence in
      its
      audit of our financial statements.




48


**PART
      IV**




**Item
      15.**  ***Exhibit
      and, Financial Statement Schedules***




**1.**  **Financial
      Statements:**




**Page**Index
                to Financial Statements
            
            30Report
                of Independent Registered Public Accounting Firm
            
            31Balance
                Sheet at March 31, 2006
            
            32Statement
                of Operations for the period from April 7, 2005 (inception) through
                March
                31, 2006
            
            33Statement
                of Stockholders’ Equity for the period from April 7, 2005 (inception)
                through March 31, 2006
            
            34Statement
                of Cash Flows for the period from April 7, 2005 (inception) through
                March
                31, 2006
            
            35Notes
                to Financial Statements
            
            36




**2.**  **Financial
      Statement Schedule(s):**




No
      financial statement schedules are filed herewith because (i) such schedules
      are
      not required or (ii) the information required has been presented in the
      aforementioned financial statements.




**3.**  **Exhibits:**




**Exhibit**
              **Number**
            
            **Description
                of Document**3.1
            
            Amended
                and Restated Certificate of Incorporation *3.2
            
            By-laws
                **4.1
            
            Specimen
                Unit Certificate ***4.2
            
            Specimen
                Common Stock Certificate **4.3
            
            Specimen
                Warrant Certificate ***4.4
            
            Form
                of Warrant Agreement entered into by and between Continental Stock
                Transfer & Trust Company and the Registrant *4.5
            
            Form
                of Purchase Option issued to Wedbush Morgan Securities Inc.
                *10.1
            
            Form
                of Letter Agreement entered into by and between the Registrant and
                each of
                the initial stockholders ***10.2
            
            Form
                of Letter Agreement entered into by and between Wedbush Morgan Securities
                Inc. and each of the initial stockholders ***10.3
            
            Form
                of Lock-up Agreement entered into by and between Wedbush Morgan Securities
                Inc. and each of the initial stockholders ***10.5
            
            Form
                of Investment Management Trust Agreement entered into by and between
                Continental Stock Transfer & Trust Company and the Registrant
                *10.6
            
            Promissory
                Note issued by the Registrant to Howard S. Balter **10.7
            
            Promissory
                Note issued by the Registrant to Ilan M. Slasky **10.8
            
            Form
                of Registration Rights Agreement entered into by and among the Registrant
                and each of the initial stockholders ***10.9
            
            Form
                of Warrant Purchase Agreement entered into by and between the Registrant
                and Howard S. Balter and Ilan M. Slasky *14.1
            
            Code
                of Ethics ****31.1
            
            Certification
                of Chief Executive Officer and Principal Accounting Officer pursuant
                to
                Rule 13a-14 of the Securities Exchange Act of 1934, as
                amended32.1
            
            Certification
                of Chief Executive Officer and Principal Accounting Officer pursuant
                to
                Section 906 of the Sarbanes-Oxley Act of 200299.1
            
            Amended
                and Restated Audit Committee Charter
                *****







*
            Previously
                filed in connection with amendment no. 5 to Ad.Venture Partners,
                Inc.’s
                registration statement on Form S-1 (File No. 333-124141) filed on
                August
                24, 2005.




49


**
            Previously
                filed in connection with Ad.Venture Partners, Inc.’s registration
                statement on Form S-1 (File No. 333-124141) filed on April 18, 2005.




***
            Previously
                filed in connection with amendment no. 1 to Ad.Venture Partners,
                Inc.’s
                registration statement on Form S-1 (File No. 333-124141) filed on
                June 30,
                2005.




****
            Previously
                filed in connection with amendment no. 2 to Ad.Venture Partners,
                Inc.’s
                registration statement on Form S-1 (File No. 333-124141) filed on
                August
                8, 2005.




*****
            Incorporated
                by reference to the Company’s Form 10-K filed with the Securities and
                Exchange Commission on June 29,
                2006.




50


**SIGNATURES**




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




AD.VENTURE
                PARTNERS, INC.Date:
                August 29, 2006
            
            /s/
HOWARDS.
                BALTER**Howard
                S. Balter**
              **Chief
                Executive Officer**




Date:
                August 29, 2006
            
            ***Howard
                  S. Balter**
                **Chairman
                  and Chief Executive Officer (Principal Executive
                  Officer)**




Date:
                August 29, 2006
            
            ***Ilan
                  M. Slasky**
                **President,
                  Secretary and Director (Principal Financial and Accounting
                  Officer**




Date:
                August 29, 2006
            
            ***Lawrence
                  J. Askowitz**
                **Director**




Date:
                August 29, 2006
            
            ***Dr.
                    Shlomo Kalish**
                  **Director**




Date:
                August 29, 2006
            
            /s/
                HOWARDS.
                BALTER**Howard
                    S. Balter**
                  **Pursuant
                    to Power of Attorney filed*
                  *with
                    the Annual Report on*
                  *Form 10-K
                    on June 29,
                    2006*




51