**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**




**FORM 10-Q/A**




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




**For
      the quarterly period ended September 30, 2005**




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





**(212)
      682-5357**


Registrant’s
      telephone number, including area code




Indicate
      by check mark whether the Registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ý No o




Indicate
      by check mark whether the Registrant is an accelerated filer (as defined in
      Rule 12b-2 of the Exchange Act).     Yes o No ý




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




As
      of
      November 14, 2005, 11,249,997 shares of the registrant’s common stock, par value
      $0.001 per share, were outstanding.
















**AD.VENTURE
      PARTNERS, INC.**




**Table
      of Contents**




**PART I
                - FINANCIAL INFORMATION****Item
                1. Financial Statements**Balance
                SheetsStatements
                of OperationsStatement
                of Cash FlowsNotes
                to Consolidated Financial Statements**Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations****Item
                3. Quantitative and Qualitative Disclosures about Market
                Risk****Item
                4. Controls and Procedures****PART II
                - OTHER INFORMATION****Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds****Item
                6. Exhibits****SIGNATURES**







2




**Explanatory
      Note**




On
      August
      21, 2006, Ad.Venture Partners, Inc. (the “ ***Company*** ”),
      filed
      a Form 8-K (the “ ***August
      2006 Form 8-K*** ”)
      to
      notify investors that it determined, after consulting with its independent
      registered accounting firm, Eisner LLP, that, 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
      No. 00-19*** ”),
      the
      fair value of the warrants issued as part of the units sold in the Company’s
      initial public offering (the “ ***public
      warrants*** ”)
      and
      the warrants issuable upon the exercise of the unit purchase option issued
      to
      the underwriters in the initial public offering (the “ ***embedded
      warrants*** ”)
      should
      be reported as a derivative liability rather than as equity as had been the
      Company’s practice. The August 2006 Form 8-K disclosed that the financial
      statements contained within the Company's Form 8-K filed September 6,
      2005 (the “ ***September
      2005 Form 8-K*** ”)
      and
      the Form 10-K for the period from inception through March 31, 2006 (the
“ ***Form
      10-K*** ”)
      should
      no longer be relied upon and stated the Company’s intention to amend such Form
      8-K and the Form 10-K to record the warrants as derivative liabilities and
      make
      additional non-operating gains and losses related to the classification of
      and
      accounting for the public warrants and the embedded warrants.




On
      August
      29, 2006, the Company filed Amendment No. 1 to the September 2005 Form
      8-K and Amendment No. 1 to the Form 10-K (collectively, the “ ***Prior
      Amended Filings*** ”)
      with
      restated financial statements that classified that the fair value of the public
      warrants and the embedded warrants as derivative liabilities rather than as
      equity.




After
      the
      Company filed the Prior Amended Filings, as a result of comments received from
      and discussions with the staff of the Securities and Exchange Commission (the
      “ ***SEC*** ”),
      the
      Company determined that the interpretation of EITF No. 00-19 would also require
      the unit purchase option to be classified as a derivative liability to be
      adjusted to fair value at each balance sheet date. As a result, on September
      25,
      2006, the Company filed an amendment to the August 2006 Form 8-K disclosing
      (i)
      the date on which the Company first concluded that the financial statements
      contained within the September 2005 Form 8-K and Form 10-K should no longer
      be
      relied upon; (ii) that, on September 19, 2006, the Company determined to further
      restate its financial statements to record the unit purchase option issued
      to
      the underwriters in the Company’s initial public offering as a liability; (iii)
      that, as a result of such determination, the Company would file further
      amendments to the September 2005 8-K and the Form 10-K, which amendments would
      restate the previously restated financial statements included in the Prior
      Amended Filings, (iv) that the previously restated financial statements
      contained in the Prior Amended Filings should no longer be relied upon, (v)
      that
      the financial statements contained within the Company’s Forms 10-Q for the
      quarterly periods ended September 30, 2005, December 31, 2005 and June 30,
      2006
      (the “ ***Forms
      10-Q*** ”)
      should
      no longer be relied upon; and (vi) that the Company would amend the Forms 10-Q
      to restate the financial statements contained therein.




We
      are
      filing this Amendment No. 1 to the Quarterly Report on Form 10-Q to restate
      our
      financial statements to record the warrants and the unit purchase option as
      derivative liabilities. 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 2. “Management’s
      Discussion and Analysis of Financial Condition and Results of Operations” and
      Notes B and C to our Financial Statements.




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




Part
      I  —
Item
      1.
      Financial Statements




Part
      I  —
      Item 2. Management’s Discussion and Analysis of Financial Condition and
      Results of Operations;




Part
      I  —
      Item 4. Controls and Procedures; and




Part
      II  —
      Item 6. 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-Q/A as
      Exhibits 31.1, 31.2, 32.1 and 32.2.




3




**PART I
      - FINANCIAL INFORMATION**




**Item
      1.****Financial
      Statements.**




Reference
      is made to our financial statements beginning on page F-1 of this
      report.




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




This
      Quarterly Report on Form 10-Q includes forward-looking statements within
      the meaning of Section 27A of the Securities Act of 1933, as amended, and
      Section 21E of the Securities Exchange Act of 1934, as amended.  We
      have based these forward-looking statements on our current expectations and
      projections about future events. These forward-looking statements are subject
      to
      known and unknown risks, uncertainties and assumptions about us that may cause
      our actual results, levels of  activity, performance or achievements to be
      materially different from any future results, levels of activity, performance
      or
      achievements expressed or implied by such forward-looking statements.  In
      some cases, you can identify forward-looking statements by terminology such
      as
“may,” “should,” “could,” “would,” “expect,” “plan,”  “anticipate,”
“believe,” “estimate,” “continue,” or the negative of such terms or other
      similar expressions.  Factors that might cause or contribute to such a
      discrepancy include, but are not limited to, those described in our other
      Securities and Exchange Commission  filings. The following discussion
      should be read in conjunction with our financial statements and related notes
      thereto included elsewhere in this report.




**Restatement
      of Financial Statements**




On
      August
      21, 2006, we filed a Form 8-K (the “ ***August
      2006 Form 8-K*** ”)
      to
      notify investors that we determined, after consulting with our independent
      registered accounting firm, Eisner LLP, that, 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
      No. 00-19*** ”),
      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 issued
      to
      the underwriters in our initial public offering (the “ ***embedded
      warrants*** ”)
      should
      be reported as a derivative liability rather than as equity as had been our
      practice. The August 2006 Form 8-K disclosed that the financial statements
      contained within the Company's Form 8-K filed September 6, 2005 (the
“ ***September
      2005 Form 8-K*** ”)
      and
      the Form 10-K for the period from inception through March 31, 2006 (the
“ ***Form
      10-K*** ”)
      should
      no longer be relied upon and stated our intention to amend such Form 8-K and
      the
      Form 10-K to record the warrants as derivative liabilities and make additional
      non-operating gains and losses related to the classification of and accounting
      for the public warrants and the embedded warrants.




On
      August
      29, 2006, we filed Amendment No. 1 to the September 2005 Form 8-K and Amendment
      No. 1 to the Form 10-K (collectively, the “ ***Prior
      Amended Filings*** ”)
      with
      restated financial statements that classified that the fair value of the public
      warrants and the embedded warrants as derivative liabilities rather than as
      equity.




After
      we
      filed the Prior Amended Filings, as a result of comments received from and
      discussions with the staff of the SEC, we determined that the interpretation
      of
      EITF No. 00-19 would also require the unit purchase option to be classified
      as a
      derivative liability to be adjusted to fair value at each balance sheet date.
      As
      a result, on September 25, 2006, we filed an amendment to the August 2006 Form
      8-K disclosing (i) the date on which we first concluded that the financial
      statements contained within the September 2005 Form 8-K and Form 10-K should
      no
      longer be relied upon; (ii) that, on September 19, 2006, we determined to
      further restate its financial statements to record the unit purchase option
      issued to the underwriters in our initial public offering as a liability; (iii)
      that, as a result of such determination, we would file further amendments to
      the
      September 2005 8-K and the Form 10-K, which amendments would restate the
      previously restated financial statements included in the Prior Amended Filings,
      (iv) that the previously restated financial statements contained in the Prior
      Amended Filings should no longer be relied upon, (v) that the financial
      statements contained within our Forms 10-Q for the quarterly periods ended
      September 30, 2005, December 31, 2005 and June 30, 2006 (the “ ***Forms
      10-Q*** ”)
      should
      no longer be relied upon; and (vi) that we would amend the Forms 10-Q to restate
      the financial statements contained therein.




4




The
      accompanying financial statements for the period from April 7, 2005 (Date of
      Inception) through September 30, 2005 have been restated to effect the changes
      described above. The impact of the adjustments to the financial statements
      relating to the classification of and accounting for the warrants and the unit
      purchase option for the period from April 7, 2005 (Date of Inception) through
      September 30, 2005 are summarized below:




**Statement
      of Operations Impact**








**April
                7, 2005 (Date of Inception) Through September 30,
                2005**
              **(unaudited)****As
                Previously Reported**
            
            **Adjustments**
            
            **As
                Restated****Organization
                and operating costs**
            
            $
            (21,199
            )
            $
            —
            
            $
            (21,199
            )**Loss
                from operations**
            
            
            (21,199
            )
            
            —
            
            
            (21,199
            )**Gain
                (loss) from derivative liabilities**
            
            
            —
            
            
            604,499
            
            
            604,499**Interest
                income, net of interest expense of $2,300**
            
            
            74
            
            
            —
            
            
            74**Net
                income (loss)**
            
            $
            (21,125
            )
            $
            604,499
            
            $
            583,374Weighted
                average number of shares outstanding basic
            
            
            3,890,176
            
            
            997
            
            
            3,891,173**Net
                income (loss) per share — basic**
            
            $
            (0.01
            )
            
            —
            
            $
            0.15Weighted
                average number of shares outstanding —diluted
            
            
            —
            
            
            4,047,476
            
            
            4,047,476Net
                income per share — diluted
            
            
            —
            
            
            —
            
            $
            0.01





**Balance
      Sheet Impact**





**September
                30, 2005**
              **(unaudited)****As
                Previously Reported**
            
            **Adjustments**
            
            **As
                Restated****ASSETS****Current
                assets**Cash
                and cash equivalents
            
            $
            785,055
            
            
            —
            
            $
            785,055Cash
                held in trust account
            
            
            50,380,000
            
            
            —
            
            
            50,380,000Prepaid
                expenses
            
            
            109,838
            
            
            —
            
            
            109,838Total
                assets
            
            $
            51,274,893
            
            
            —
            
            $
            51,274,893**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****Current
                liabilities**Accrued
                expenses
            
            $
            1,000
            
            
            —
            
            $
            1,000Accrued
                offering costs
            
            
            145,000
            
            
            —
            
            
            145,000Derivative
                liabilities
            
            
            —
            
            
            8,125,973
            
            
            8,125,973Total
                current liabilities
            
            
            146,000
            
            
            8,125,973
            
            
            8,271,973Common
                stock, subject to possible redemption, 1,799,100 shares at $5.60
                per
                share
            
            
            10,074,960
            
            
            —
            
            
            10,074,960**Stockholders’
                equity**Preferred
                stock, $.0001 par value, authorized 1,000,000 shares; none issued
                and
                outstanding
            
            
            —
            
            
            —
            
            
            —Common
                stock, $.0001 par value, authorized 50,000,000 shares; issued and
                outstanding 11,249,997 shares (which includes 1,799,100 shares subject
                to
                possible redemption)
            
            
            1,125
            
            
            —
            
            
            1,125Additional
                paid-in capital
            
            
            41,073,933
            
            
            (8,730,472
            )
            
            32,343,461Retained
                earnings (deficit)
            
            
            (21,125
            )
            
            604,499
            
            
            583,374Total
                stockholders’ equity
            
            
            41,053,933
            
            
            (8,125,973
            )
            
            32,927,960Total
                liabilities and stockholders’ equity
            
            $
            51,274,893
            
            
            —
            
            $
            51,274,893







5





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




**Overview**




We
      were
      formed on April 7, 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.  Our initial business combination must be with a target
      business or businesses whose fair market value is at least equal to 80% of
      net
      assets at the time of such acquisition.  We intend to utilize cash derived
      from the proceeds of our recently completed public offering, our capital stock,
      debt or a combination of cash, capital stock and debt, in effecting a business
      combination.




On
      August 31, 2005, we consummated our initial public offering of 9,000,000
      units.  Each unit consists of one share of common stock and two
      warrants.  Each warrant entitles the holder to purchase from us one share
      of our common stock at an exercise price of $5.00.  Our common stock and
      warrants started trading separately as of October 10, 2005.




The
      net
      proceeds from the sale of our units, after deducting certain offering expenses
      of approximately $650,000, and an underwriting discount of approximately
      $2,160,000, were approximately $51,190,000. Of this amount, $50,380,000 was
      placed into a trust account and the remaining proceeds are available to be
      used
      by us to provide for business, legal and accounting due diligence on prospective
      acquisitions and to pay for continuing general and administrative expenses.
      As
      of September 30, 2005, we had $785,055 of proceeds available for such
      uses.




We
      expect
      to use substantially all of the net proceeds of this offering to acquire a
      target business, including identifying and evaluating prospective acquisition
      candidates, selecting the target business and structuring, negotiating and
      consummating the business combination. To the extent that our capital stock
      is
      used in whole or in part as consideration to effect a business combination,
      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. 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. From September 30, 2005 through
      August 31, 2007, we anticipate the following expenses:




·
            approximately
                $175,000 of expenses for legal, accounting and other expenses attendant
                to
                the due diligence investigations, structuring and negotiating of
                a
                business combination;




·
            $145,000
                for expenses for the due diligence and investigation of a target
                business




·
            $140,000
                of expenses in legal and accounting fees relating to our SEC reporting
                obligations; and




·
            $325,055
                for general working capital that will be used for office space,
                miscellaneous expenses and reserves, including approximately $150,000
                for
                director and officer liability insurance premiums.




6




We
      do not
      believe we will need to raise additional funds in order to meet the expenditures
      required for operating our business. 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.




In
      connection with the initial public offering, we agreed to pay the underwriters
      additional underwriting fees and expenses of $1,620,000 upon the consummation
      of
      our initial business combination. We expect that such fees and expenses will
      be
      paid out of the proceeds in the trust account. Of such fees and expenses,
      $1,080,000 constitute additional underwriting fees and $540,000 constitutes
      an
      additional non-accountable expense allowance.




Following
      the consummation of the initial public offering, we cancelled the office service
      agreement with Innovation Interactive, LLC, an affiliate of Howard S. Balter,
      our chairman of the board and chief executive officer, Ilan M. Slasky, our
      president, secretary and director, and Will Margiloff, one of our directors.
      In
      October, we relocated our office and entered into an informal agreement with
      an
      unrelated third party whereby we pay $2,058 per month, on a month-to-month
      basis, in exchange for office space and certain administrative
      services.




As
      of
      September 30, 2005, the proceeds in the trust account were invested in a Smith
      Barney Municipal Money Market Fund, Class Y. The average rating in the portfolio
      is MIG 1.




We
      currently have no operating business and have not identified any potential
      target businesses. If we are unable to find a suitable target business 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), we will be forced to liquidate. If we are forced to liquidate, the
      per-share liquidation may be less than the price at which public stockholders
      purchased their shares because of the expenses related to our initial public
      offering, our general and administrative expenses and the anticipated costs
      of
      seeking a business combination. Additionally, if third parties make claims
      against us, the offering proceeds held in the trust account could be subject
      to
      those claims, resulting in a further reduction to the per-share liquidation
      price. Under Delaware law, our stockholders who have received distributions
      from
      us may be held liable for claims by third parties to the extent such claims
      are
      not been paid by us. Furthermore, our warrants will expire worthless if we
      liquidate before the completion of a business combination.




**Item
      3.**  **Quantitative
      and Qualitative Disclosures About Market Risk.**




Market
      risk is the sensitivity of income to changes in interest rates, foreign
      exchanges, commodity prices, equity prices and other market-driven rates or
      prices. We are not presently engaged in and, if a suitable business target
      is
      not identified by us prior to the prescribed liquidation date of the trust
      account, we may not engage in, any substantive commercial business. Accordingly,
      we are not and, until such time as we consummate a business combination, we
      will
      not be, exposed to risks associated with foreign exchange rates, commodity
      prices, equity prices or other market-driven rates or prices. The net proceeds
      of our initial public offering held in the trust account have been invested
      only
      in money market funds meeting conditions of the Investment Company Act of 1940.
      Given our limited risk in our exposure to money market funds, we do not view
      the
      interest rate risk to be significant.




7




**Item
      4.****Controls
      and Procedures.**




Our
      management carried out an evaluation, with the participation of our chief
      executive officer (principal executive officer) and our president (principal
      financial and accounting officer), of the effectiveness of our disclosure
      controls and procedures as of September 30, 2005. Based upon that
      evaluation, our chief executive officer and president concluded that our
      disclosure controls and procedures were effective to ensure that information
      required to be disclosed by us in reports that we file or submit under the
      Securities Exchange Act of 1934 is recorded, processed, summarized, and reported
      within the time periods specified in the rules and forms of the Securities
      and Exchange Commission. However, based on a review of relevant accounting
      literature and comments received from and discussions with the staff of the
      SEC
      and in consultation with Eisner, we determined that we needed to reclassify
      certain amounts in our financial statements to report the warrants and the
      unit
      purchase option as derivative liabilities. As a result of this determination,
      we
      are restating our financial statements for the period April 7, 2005 (inception)
      to August 31, 2005, the quarterly periods ended September 30, 2005, December
      31,
      2005 and June 30, 2006, and the period from April 7, 2005 (inception) to March
      31, 2006. Management has determined that the failure to properly classify such
      derivative liabilities was not due to a deficiency in disclosure controls and
      procedures but rather the result of an interpretation of the requirements
      imposed by EITF No. 00-19.




There
      has
      not been any change in our internal control over financial reporting in
      connection with the evaluation required by Rule 13a-15(d) under the
      Exchange Act that occurred during the quarter ended September 30, 2005,
      that has materially affected, or is reasonably likely to materially affect,
      our
      internal control over financial reporting. Our management reached this
      conclusion despite its finding that our financial statements should be restated
      because the determination concerning the classification of the warrants and
      the
      unit purchase option involves complex area of accounting literature that is
      continuously evolving.




8




**PART II
      - OTHER INFORMATION**




**Item
      2.** **Unregistered
      Sales of Equity Securities and Use of Proceeds.**




On
      August 31, 2005, we consummated our initial public offering of 9,000,000
      units.  Each unit consists of one share of common stock and two
      warrants.  Each warrant entitles the holder to purchase from us one share
      of our common stock at an exercise price of $5.00.  The units were sold at
      an offering price of $6.00 per unit, generating total gross proceeds of
      $54,000,000. Wedbush Morgan Securities Inc. acted as lead underwriter. The
      securities sold in the offering were registered under the Securities Act of
      1933
      on a registration statement on Form S-1 (No. 333-124141). The
      Securities and Exchange Commission declared the registration statement effective
      on August 25, 2005.




We
      paid a
      total of $2,160,000 in underwriting discounts and commissions, and approximately
      $650,000 has been paid for costs and expenses related to the offering. In
      connection with the initial public offering, we agreed to pay the underwriters
      additional underwriting fees and expenses of $1,620,000 upon the consummation
      of
      our initial business combination. We expect that such fees and expenses will
      be
      paid out of the proceeds in the trust account. Of such fees and expenses,
      $1,080,000 constitute additional underwriting fees and $540,000 constitutes
      an
      additional non-accountable expense allowance.




After
      deducting the underwriting discounts and the offering expenses, the total net
      proceeds to us from the offering were approximately $51,190,000, of which
      $50,380,000 was deposited into a trust fund (or $5.60 per unit sold in the
      offering) and the remaining proceeds are available to be used to provide for
      business, legal and accounting due diligence on prospective business
      combinations and continuing general and administrative expenses.




**Item
      6.** **Exhibits.**




31.1
            Section 302
                Certification of Chief Executive Officer31.2
            Section 302
                Certification of Chief Financial Officer32.1
            Section 906
                Certification




9




**SIGNATURES**




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




**AD.VENTURE
              PARTNERS, INC.**Date: January
              12, 2007
            By:
            /s/ Howard
              S.
              BalterHoward S. Balter
              *Chairman
                  and Chief Executive*
                *Officer
                  (Principal Executive Officer)*




By:
            /s/ Ilan
              M.
              SlaskyIlan M. Slasky
              *President
                  and Secretary*
                *(Principal
                  Financial and Accounting Officer)*






10




**AD.VENTURE
      PARTNERS, INC.**


(a
      corporation in the development stage)




**BALANCE
      SHEET**


**September
      30, 2005**




**(As
      Restated)**




**ASSETS****Current
                assets**Cash
                and cash equivalents
            
            $
            785,055Cash
                held in trust account
            
            
            50,380,000Prepaid
                expenses
            
            
            109,838Total
                assets
            
            $
            51,274,893**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****Current
                liabilities**Accrued
                expenses
            
            $
            1,000Accrued
                offering costs
            
            
            145,000Derivative
                liabilities
            
            
            8,125,973Total
                current liabilities
            
            
            8,271,973Common
                stock, subject to possible redemption, 1,799,100 shares at $5.60
                per
                share
            
            
            10,074,960**Stockholders’
                equity**Preferred
                stock, $.0001 par value, authorized 1,000,000 shares; none issued
                and
                outstanding
            
            
            —Common
                stock, $.0001 par value, authorized 50,000,000 shares; issued and
                outstanding 11,249,997 shares (which includes 1,799,100 shares subject
                to
                possible redemption)
            
            
            1,125Additional
                paid-in capital
            
            
            32,343,461Retained
                earnings
            
            
            583,374Total
                stockholders’ equity
            
            
            32,927,960Total
                liabilities and stockholders’ equity
            
            $
            51,274,893




*See
        accompanying notes to financial statements.*


F-1




**AD.VENTURE
      PARTNERS, INC.**


(a
      corporation in the development stage)




**STATEMENT
      OF OPERATIONS**




**(As
      Restated)**




**For
                the Period**
              **April
                7, 2005**
              **(inception)
                to**
              **September
                30, 2005****Organization
                and operating costs**
            
            $
            (21,199
            )**Loss
                from operations**
            
            
            (21,199
            )**Gain
                (loss) from derivative liabilities**
            
            
            604,499**Interest
                income, net of interest expense of $2,300**
            
            
            74**Net
                income**
            
            $
            583,374**Weighted
                average shares outstanding - basic**
            
            
            3,891,173**Net
                income per share****-****basic**
            
            $
            0.15**Weighted
                average number of shares outstanding - diluted**
            
            
            4,047,476**Net
                income per share - diluted**
            
            $
            0.01




*See
        accompanying notes to financial statements.*




F-2




**AD.VENTURE
      PARTNERS, INC.**


(a
      corporation in the development stage)




**STATEMENT
      OF CASH FLOWS**


**For
      period from April 7, 2005 (inception) to September 30,
      2005**




**(As
      Restated)**




**Cash
                flows from operating activities**Net
                income
            
            $
            583,374Adjustments
                to reconcile net income to net cash used in operationsGain
                (loss) from derivative liabilities
            
            
            (604,499
            )Changes
                in operating assets and liabilitiesPrepaid
                expenses
            
            
            (109,838
            )Accrued
                expenses
            
            
            1,000**Net
                cash provided by (used in) operating activities**
            
            
            (129,963
            )**Investing
                Activities**Cash
                held in Trust Account
            
            
            (50,380,000
            )**Net
                cash used in investing activities**
            
            
            (50,380,000
            )**Financing
                activities**Issuance
                of stock
            
            
            51,293,918Proceeds
                from sale of common stock to founders
            
            
            1,000Proceeds
                from issuance of representative’s option
            
            
            100Proceeds
                from notes payable to stockholders
            
            
            150,000Repayment
                of notes payable to stockholders
            
            
            (150,000
            )**Net
                cash provided by financing activities**
            
            
            51,295,018**Net
                increase in cash**
            
            
            785,055**Cash,
                beginning of period**
            
            
            —**Cash,
                end of period**
            
            $
            785,055**Supplemental
                schedule of non-cash financing activities:**Accrued
                offering costs
            
            $
            145,000




*See
        accompanying notes to financial statements.*


F-3




**NOTES
      TO FINANCIAL STATEMENTS**




**NOTE
      A — ORGANIZATION, BUSINESS OPERATIONS**  **AND
      SUBSEQUENT EVENTS**




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 (“ ***Business
      Combination*** ”)
      of one
      or more operating businesses 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
      financial information in this report has not been audited, but in the opinion
      of
      management, all adjustments (consisting only of normal recurring adjustments)
      considered necessary to present fairly such information have been included.
      Operating results for the interim period are not necessarily indicative of
      the
      results to be expected for the full year.




The
      registration statement for the Company’s initial public offering (the
“ ***Offering*** ”)
      (as
      described in Note D) 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 is being held in a trust account
      (“ ***Trust
      Account*** ”)
      and
      invested in money market funds meeting conditions of the Investment Company
      Act
      of 1984 or securities issued and guaranteed by the United States until the
      earlier of (i) the consummation of the first Business Combination or
      (ii) the distribution of the Trust Account 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
      Company will be required to commence proceedings to dissolve, liquidate and
      distribute the proceeds held in the Trust Account to its 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 in the Offering discussed in Note D).





**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.




F-4




**[2]**
            **Income
                per common share:**




Income
      per share is computed by dividing net income applicable to common stockholders
      by the weighted average number of common shares outstanding for the period.
      During the period from inception to September 30, 2005, the diluted earnings
      per
      share calculation was based on computed shares, warrants and unit purchase
      option values as determined by applying the Black-Scholes model as of September
      30, 2005 (since the various components started trading separately on October
      10,
      2005). The warrants issuable upon the exercise of the unit purchase option
      issued to the underwriters in the initial public offering were not dilutive
      as
      of September 30, 2005 and thus were not included in the diluted earnings per
      share computation.





**[3]**
            **Accounting
                for 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
      No. 00-19*** ”)
      requires freestanding contracts that are settled in a company's own stock to
      be
      designated as an equity instrument, asset or a liability. In accordance with
      EITF No. 00-19, the Company determined that the warrants issued in connection
      with the Offering (the “ ***public
      warrants*** ”)
      and
      the unit purchase option issued to the underwriters in connection with the
      Offering (further described in Note D below) should be classified as a
      derivative liability.




The
      reclassification of the warrants as a derivative liability is required under
      EITF No. 00-19 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 (the “ ***Securities
      Act*** ”).
      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
      No. 00-19, the registration of the common stock underlying the warrants is
      not
      within the Company's control. In addition, under EITF No. 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.




Similarly,
      the reclassification of the unit purchase option as a derivative liability
      (as
      described in Note C below) is required under EITF No. 00-19 due to the absence
      in the unit purchase option of provisions addressing the exercise of the unit
      purchase option in the absence of an effective registration statement. Under
      interpretations of applicable federal securities laws, the issuance of units
      upon exercise of the unit purchase option in the absence of an effective
      registration statement could be deemed a violation of Section 5 of the
      Securities Act. The reclassification of the unit purchase option as a derivative
      liability is required under EITF No. 00-19 because the registration of the
      units
      underlying the unit purchase option is not within the Company's control.




Under
      the
      provisions of EITF No. 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 and the unit purchase option are 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 Company determined the initial valuation of the
      warrants based upon the difference between the per-unit offering price of the
      units in the Offering and the discounted per-share amount placed into the Trust
      Account and the valuation of the warrants at September 30, 2005 based upon
      the
      difference between the market price of the units and the discounted per-share
      amount placed into the Trust Account. Thereafter, since the warrants are quoted
      on the Over-the-Counter Bulletin Board, the fair value of the warrants will
      be
      determined based on the market price of the warrants 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.




The
      Company has determined the fair values of the unit
      purchase option
      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 model has a significant
      effect on the resulting valuation of the derivative liabilities on the Company’s
      balance sheet. As of September 30, 2005, the volatility for the calculation
      of the embedded derivatives was approximated at 92.0%, and this volatility
      rate
      will likely change in the future.




F-5




**[4]**
            **Use
                of estimates:**




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




**[5]**
            **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 $4,395. 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
      September 30, 2005.




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





**Note
      C — Restatement and Reclassification of Previously Issued Financial Statements
      and Derivative Liabilities**




On
      August
      21, 2006, the Company filed a Form 8-K (the “ ***August
      2006 Form 8-K*** ”)
      to
      notify investors that it determined, after consulting with its independent
      registered accounting firm, Eisner LLP, that, based on recent interpretations
      of
      the accounting for warrants under EITF No. 00-19, the fair value of the public
      warrants and the warrants issuable upon the exercise of the unit purchase option
      (the “ ***embedded
      warrants*** ”)
      should
      be reported as a derivative liability rather than as equity as had been our
      practice. The August 2006 Form 8-K disclosed that the financial statements
      contained within the Company's Form 8-K filed September 6,
      2005 (the “ ***September
      2005 Form 8-K*** ”)
      and
      the Form 10-K for the period from inception through March 31, 2006 (the
“ ***Form
      10-K*** ”)
      should
      no longer be relied upon and stated our intention to amend such Form 8-K and
      the
      Form 10-K to record the warrants as derivative liabilities and make additional
      non-operating gains and losses related to the classification of and accounting
      for the public warrants and the embedded warrants.




On
      August
      29, 2006, the Company filed Amendment No. 1 to the September 2005 Form
      8-K (the “ ***Prior
      Amended Form 8-K*** ”) ****** and
      Amendment No. 1 to the Form 10-K (the “ ***Prior
      Amended Form 10-K*** ”,
      and
      together with the Prior Amended Form 8-K, collectively, the “ ***Prior
      Amended Filings*** ”)
      with
      restated financial statements that classified that the fair value of the public
      warrants and the embedded warrants as derivative liabilities rather than as
      equity.




After
      the
      Company filed the Prior Amended Filings, as a result of comments received from
      and discussions with the staff of the SEC, the Company determined that the
      interpretation of EITF No. 00-19 would also require the unit purchase option
      to
      be classified as a derivative liability to be adjusted to fair value at each
      balance sheet date. As a result, on September 25, 2006, the Company filed an
      amendment to the August 2006 Form 8-K disclosing (i) the date on which it first
      concluded that the financial statements contained within the September 2005
      Form
      8-K and Form 10-K should no longer be relied upon; (ii) that, on September
      19,
      2006, the Company determined to further restate its financial statements to
      record the unit purchase option issued to the underwriters in our initial public
      offering as a liability; (iii) that, as a result of such determination, the
      Company would file further amendments to the September 2005 8-K and the Form
      10-K, which amendments would restate the previously restated financial
      statements included in the Prior Amended Filings, (iv) that the previously
      restated financial statements contained in the Prior Amended Filings should
      no
      longer be relied upon, (v) that the financial statements contained within the
      Company’s Forms 10-Q for the quarterly periods ended September 30, 2005,
      December 31, 2005 and June 30, 2006 (the “ ***Forms
      10-Q*** ”)
      should
      no longer be relied upon; and (vi) that the Company would amend the Forms 10-Q
      to restate the financial statements contained therein.




F-6




The
      accompanying financial statements for the period from April 7, 2005 (Date of
      Inception) through September 30, 2005 have been restated to effect the changes
      described above. The impact of the adjustments to the financial statements
      relating to the classification of and accounting for the warrants and the unit
      purchase option for the period from April 7, 2005 (Date of Inception) through
      September 30, 2005 are summarized below:




**Statement
      of Operations Impact**





**April
                7, 2005 (Date of Inception) Through September 30,
                2005**
              **(unaudited)****As
                Previously Reported**
            
            **Adjustments**
            
            **As
                Restated****Organization
                and operating costs**
            
            $
            (21,199
            )
            $
            —
            
            $
            (21,199
            )**Loss
                from operations**
            
            
            (21,199
            )
            
            —
            
            
            (21,199
            )**Gain
                (loss) from derivative liabilities**
            
            
            
            
            
            604,499
            
            
            604,499**Interest
                income, net of interest expense of $2,300**
            
            
            74
            
            
            —
            
            
            74**Net
                income (loss)**
            
            $
            (21,125
            )
            $
            604,499
            
            $
            583,374**Weighted
                average number of shares outstanding - basic**
            
            
            3,890,176
            
            
            997
            
            
            3,891,173**Net
                income (loss) per share - basic**
            
            $
            (0.01
            )
            $
            —
            
            $
            0.15**Weighted
                average number of shares**
              **outstanding
                - diluted**
            
            
            —
            
            
            4,047,476
            
            
            4,047,476**Net
                income (loss) per share - diluted**
            
            
            —
            
            
            —
            
            $
            0.01





**Balance
      Sheet Impact**





**September
                30, 2005**
              **(unaudited)****As
                Previously Reported**
            
            **Adjustments**
            
            **As
                Restated****ASSETS****Current
                assets**Cash
                and cash equivalents
            
            $
            785,055
            
            
            —
            
            $
            785,055Cash
                held in trust account
            
            
            50,380,000
            
            
            —
            
            
            50,380,000Prepaid
                expenses
            
            
            109,838
            
            
            —
            
            
            109,838Total
                assets
            
            $
            51,274,893
            
            
            —
            
            $
            51,274,893**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****Current
                liabilities**Accrued
                expenses
            
            $
            1,000
            
            
            —
            
            $
            1,000Accrued
                offering costs
            
            
            145,000
            
            
            —
            
            
            145,000Derivative
                liabilities
            
            
            —
            
            
            8,125,973
            
            
            8,125,973Total
                current liabilities
            
            
            146,000
            
            
            8,125,973
            
            
            8,271,973Common
                stock, subject to possible redemption, 1,799,100 shares at $5.60
                per
                share
            
            
            10,074,960
            
            
            —
            
            
            10,074,960**Stockholders’
                equity**Preferred
                stock, $.0001 par value, authorized 1,000,000 shares; none issued
                and
                outstanding
            
            
            —
            
            
            —
            
            
            —Common
                stock, $.0001 par value, authorized 50,000,000 shares; issued and
                outstanding 11,249,997 shares (which includes 1,799,100 shares subject
                to
                possible redemption)
            
            
            1,125
            
            
            —
            
            
            1,125Additional
                paid-in capital
            
            
            41,073,933
            
            
            (8,730,472
            )
            
            32,343,461Retained
                earnings (deficit)
            
            
            (21,125
            )
            
            604,499
            
            
            583,374Total
                stockholders’ equity
            
            
            41,053,933
            
            
            (8,125,973
            )
            
            32,927,960Total
                liabilities and stockholders’ equity
            
            $
            51,274,893
            
            
            —
            
            $
            51,274,893




F-7




**NOTE
      D — INITIAL 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 $0.01 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 our 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.




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 “ ***unit
      purchase option*** ”).
      The
      units issuable upon the exercise of the unit purchase option are identical
      to
      those offered in the prospectus, except that the exercise price of the warrants
      underlying the unit purchase option is $6.65. The unit purchase 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
      unit purchase option may not be sold, transferred, assigned, pledged or
      hypothecated for a one-year period following the date of the prospectus.
      However, the unit purchase 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 unit purchase 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 unit
      purchase option. The exercise price and number of units issuable upon exercise
      of the unit purchase option may be adjusted in certain circumstances, including
      in the event of a stock dividend, recapitalization, reorganization, merger
      or
      consolidation. However, the unit purchase option will not be adjusted for
      issuances at a price below its exercise price.




The
      Company has estimated, based upon a Black Scholes model, that the fair value
      of
      the purchase option on the date of sale is approximately $1,906,382, using
      an
      expected life of five years, volatility of 94.4%, and a risk-free rate of 4.12%.
      However, 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 capitalization 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 liquidates, the option will become
      worthless.




F-8




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 are accepted, spend up to $400,000 to purchase warrants
      in
      the public marketplace at prices not to exceed $0.70 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 the separate
      trading of the warrants has commenced, they or certain of their affiliates
      or
      designees would collectively place bids for, and if their bids are accepted,
      spend up to $1,600,000 to purchase warrants in the public marketplace at prices
      not to exceed $0.70 per warrant. The chief executive officer and president
      have
      further agreed that any warrants purchased by them or their affiliates or
      designees will not be sold or transferred until the completion of a Business
      Combination.





**NOTE
      E — NOTES PAYABLE TO STOCKHOLDERS**




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 service agreement with Innovation Interactive, LLC, a company where
      certain of the Initial Stockholders serve in executive capacities, under which
      the Company agreed to pay an administrative fee of $7,500 per month for office
      space and general administrative services. In October, the Company relocated
      its
      office and entered into an informal agreement with an unrelated third party
      whereby the Company has agreed to pay $2,058 per month, on a month-to-month
      basis, in exchange for office space and certain administrative
      services.




F-9