U.S.
SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-Q
 
 (Mark
One)
 xQUARTERLY REPORT
UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the
quarterly period ended September 30, 2008
 
  ̈TRANSITION REPORT
UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 
 For the
transition period from ___________ to ___________
 
 Commission
file number: 000-29087
 
 Datascension,
Inc.
 (Exact
name of registrant as specified in its charter)
 
 Nevada
                
                87-0374623(State
      or other jurisdiction of
                
                (IRS
      Employerincorporation
      or organization)
                
                Identification
      No.)
 
 407
      W Imperial Hwy, Suite 314, Brea, CA
                
                92821(Address
      of principal executive offices)
                
                (Zip
      Code)
 
 888-996-9238
 
 (Issuer's
telephone number)
  
 (Former
name, former address and former fiscal year,
 if
changed since last report)
 
 Check
whether the issuer (1) 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 xNo  ̈
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large
      accelerated filer  ̈
              
              Accelerated
      filer  ̈Non-accelerated
      filer  ̈
              (Do
      not check if a smaller reporting company)
              Smaller
      reporting company x
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 Yes  ̈No x
 
  
  APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
 PROCEEDING
DURING THE PRECEDING FIVE YEARS
 
 Check
whether the Registrant filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court.
 Yes  ̈No  ̈
 
 APPLICABLE
ONLY TO CORPORATE ISSUERS
 
 The
Registrant has 21,307,361 shares outstanding, par value $.001 per share as of
November 14, 2008. The Registrant has 508,500 shares of Preferred Stock Series B
issued and outstanding as of November 14, 2008. The Registrant has 15,000 shares
of Preferred Stock Series C issued and outstanding as of November 14,
2008.
  
  TABLE OF
CONTENTS
 
 Page
                  No.PART
      I.
                FINANCIAL
      INFORMATION
                3Item
      1.
                Financial
      Statements
                3Balance
      Sheet (unaudited)
                4Statements
      of Operations (unaudited)
                5Statements
      of Cash Flows (unaudited)
                6Notes
      to Financial Statements
                7Item
      2.
                Management's
      Discussion and Analysis of Plan of Operation
                16Item
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                21Item
      4T.
                Controls
      and Procedures
                21PART
      II.
                OTHER
      INFORMATION
                21Item
      1.
                Legal
      Proceedings
                21Item
      2.
                Unregistered
      Sales of Equity and Use of Proceeds
                21Item
      3.
                Defaults
      upon Senior Securities
                21Item
      4.
                Submission
      of Matters to a Vote of Security Holders
                21Item
      5.
                Other
      Information
                21Item
      6.
                Exhibits
      and Reports on Form 8-K
                21Signatures
                22
  
 PART I.
FINANCIAL INFORMATION
 
 Item 1.
Financial Statements.
 
 The
condensed financial statements of Datascension, Inc., a Nevada corporation
("DSEN"), included herein have been prepared in accordance with the instructions
to quarterly reports on Form 10-Q pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote data
necessary for fair presentation of financial position and results of operations
in conformity with accounting principles generally accepted in the United States
of America have been condensed or omitted. It is therefore suggested that these
financial statements be read in conjunction with the summary of significant
accounting policies and notes to financial statements included in DSEN's Annual
Report on Form 10-KSB for the year ended December 31, 2007.
 
 In the
opinion of management, all adjustments necessary in order to make the financial
position, results of operations and changes in financial position at September
30, 2008, and for all periods presented not misleading have been made. The
results of operations for the period ended September 30, 2008 are not
necessarily an indication of operating results to be expected for the full year
ending December 31, 2008.
  3
  DATASCENSION,
INC.
 CONDENSED
CONSOLIDATED BALANCE SHEET
  09/30/2008
                        
                        
                        12/31/2007UNAUDITED
                        
                        
                        AUDITEDASSETSCurrent
      assetsCash
                        
                        $
                        547,937
                        
                        
                        $
                        46,930Accounts
      receivable
                        
                        
                        2,443,897
                        
                        
                        
                        3,071,764Receivable
      due from related party
                        
                        
                        958,559
                        
                        
                        
                        1,530,124Prepaid
      expenses
                        
                        
                        39,695
                        
                        
                        
                        56,666Total
      current assets
                        
                        
                        3,990,088
                        
                        
                        
                        4,705,484Property
      and equipment, net of depreciation
                        
                        
                        1,551,020
                        
                        
                        
                        3,146,788Other
      assetsWebsite
      assets, net of amortization
                        
                        
                        -
                        
                        
                        
                        3,207Deposits
                        
                        
                        156,426
                        
                        
                        
                        15,618Goodwill
                        
                        
                        -
                        
                        
                        
                        1,692,782Total
      other assets
                        
                        
                        156,426
                        
                        
                        
                        1,711,607Total
      assets
                        
                        $
                        5,697,534
                        
                        
                        $
                        9,563,879LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                        
                        $
                        314,324
                        
                        
                        $
                        316,333Accrued
      expenses
                        
                        
                        2,065,831
                        
                        
                        
                        491,603Short
      term notes payable
                        
                        
                        24,267
                        
                        
                        
                        35,499Loan
      payable to Comerica Bank
                        
                        
                        1,374,207
                        
                        
                        
                        1,727,688Current
      portion of long term debt
                        
                        
                        89,949
                        
                        
                        
                        3,580,816Total
      current liabilities
                        
                        
                        3,868,578
                        
                        
                        
                        6,151,939Long
      term debt
                        
                        
                        4,075,077
                        
                        
                        
                        45,977Long
      term debt notes payable, net of current portion
                        
                        
                        4,075,077
                        
                        
                        
                        45,977Total
      liabilities
                        
                        
                        7,943,655
                        
                        
                        
                        6,197,916Stockholders'
      equityCommon
      stock, $0.001 par value, 200,000,000 shares authorized 21,307,361 and
      35,775,972 issued and outstanding at September 30, 2008 and December 31,
      2007 respectively
                        
                        
                        21,307
                        
                        
                        
                        35,776Additional
      paid in capital, common stock
                        
                        
                        16,361,757
                        
                        
                        
                        16,188,782Preferred
      stock, Series B, $0.001 par value, 10,000,000 shares authorized, 505,500
      shares issued and outstanding at September 30, 2008 and December 31,
      2007
                        
                        
                        506
                        
                        
                        
                        506Additional
      paid in capital, preferred Series B
                        
                        
                        481,994
                        
                        
                        
                        481,994Preferred
      stock, Series C, $.001 par value, 1,000 shares authorized, 15,000 shares
      issued and outstanding at September 30, 2008
                        
                        
                        1
                        
                        
                        
                        -Additional
      paid in capital, preferred Series C
                        
                        
                        14,999
                        
                        
                        
                        -Treasury
      stock (15,095,833 shares), at cost
                        
                        
                        (134,388
                        )
                        
                        
                        (134,388
                        )Accumulated
      deficit
                        
                        
                        (18,992,297
                        )
                        
                        
                        (13,206,707
                        )Total
      stockholders' equity
                        
                        
                        (2,246,121
                        )
                        
                        
                        3,365,963Total
      liabilities and stockholders' equity
                        
                        $
                        5,697,534
                        
                        
                        $
                        9,563,879
 
 The
accompanying notes to the financial statements should be read in conjunction
with the above financial statements
  4
  DATASCENSION,
INC.
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
  For the
                    
                    
                    For the
                    
                    
                    For the
                    
                    
                    For theThree months
                    
                    
                    Three months
                    
                    
                    Nine months
                    
                    
                    Nine monthsEnded
                    
                    
                    ended
                    
                    
                    ended
                    
                    
                    ended9/30/2008
                    
                    
                    9/30/2007
                    
                    
                    9/30/2008
                    
                    
                    9/30/2007Revenues
                    
                    $
                    3,975,576
                    
                    
                    $
                    5,140,592
                    
                    
                    $
                    14,014,679
                    
                    
                    $
                    14,783,286Cost
      of  goods sold
                    
                    
                    3,479,922
                    
                    
                    
                    4,665,902
                    
                    
                    
                    12,359,564
                    
                    
                    
                    12,566,031Gross
      profit
                    
                    
                    495,654
                    
                    
                    
                    474,690
                    
                    
                    
                    1,655,115
                    
                    
                    
                    2,217,255Expenses:Selling,
      general and administrative
                    
                    
                    611,806
                    
                    
                    
                    553,253
                    
                    
                    
                    1,962,982
                    
                    
                    
                    1,668,909Depreciation
      and amortization
                    
                    
                    60,499
                    
                    
                    
                    60,460
                    
                    
                    
                    181,377
                    
                    
                    
                    163,581Total
      expenses
                    
                    
                    672,305
                    
                    
                    
                    613,713
                    
                    
                    
                    2,144,359
                    
                    
                    
                    1,832,490Operating
      Income
                    
                    
                    (176,651
                    )
                    
                    
                    (139,023
                    )
                    
                    
                    (489,244
                    )
                    
                    
                    384,765Other
      income(expense):Interest
      expense
                    
                    
                    (220,858
                    )
                    
                    
                    (279,986
                    )
                    
                    
                    (649,046
                    )
                    
                    
                    (794,693
                    )Loss
      on write off of goodwill
                    
                    
                    (1,692,782
                    )
                    
                    
                    -
                    
                    
                    
                    (1,692,782
                    )
                    
                    
                    -Loss
      on write off of property and equipment
                    
                    
                    (2,950,452
                    )
                    
                    
                    -
                    
                    
                    
                    (2,950,452
                    )
                    
                    
                    -Loss
      on write off of website assets
                    
                    
                    (3,207
                    )
                    
                    
                    -
                    
                    
                    
                    (3,207
                    )
                    
                    
                    -Total
      other income (expense)
                    
                    
                    (4,867,299
                    )
                    
                    
                    (279,986
                    )
                    
                    
                    (5,295,487
                    )
                    
                    
                    (794,693
                    )Net
      income (loss) before income taxes
                    
                    
                    (5,043,950
                    )
                    
                    
                    (419,009
                    )
                    
                    
                    (5,784,731
                    )
                    
                    
                    (409,928
                    )Income
      taxes
                    
                    
                    859
                    
                    
                    
                    -
                    
                    
                    
                    859
                    
                    
                    
                    -Net
      loss
                    
                    $
                    (5,044,809
                    )
                    
                    $
                    (419,009
                    )
                    
                    $
                    (5,785,590
                    )
                    
                    $
                    (409,928
                    )Basic
      weighted average number of common shares outstanding
                    
                    
                    25,220,404
                    
                    
                    
                    32,624,562
                    
                    
                    
                    32,472,111
                    
                    
                    
                    27,925,198Diluted
      weighted average number of common shares outstanding
                    
                    
                    25,220,404
                    
                    
                    
                    32,624,562
                    
                    
                    
                    32,472,111
                    
                    
                    
                    27,925,198Basic
      net loss per share
                    
                    $
                    (0.20
                    )
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.18
                    )
                    
                    $
                    (0.01
                    )Diluted
      net loss per share
                    
                    $
                    (0.20
                    )
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.18
                    )
                    
                    $
                    (0.01
                    )
 
 The
accompanying notes to the financial statements should be read in conjunction
with the above financial statements.
  5
  DATASCENSION,
INC.
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
  Unaudited
                            
                            
                            UnauditedFor the
                            
                            
                            For theNine months ended
                            
                            
                            Nine months ended9/30/2008
                            
                            
                            9/30/2007Cash
      flows from operating activitiesNet
      loss
                            
                            $
                            (5,785,590
                            )
                            
                            $
                            (409,928
                            )Adjustments
      to reconcile net loss to net cash provided (used)by
      operating activities:Depreciation
      and amortization
                            
                            
                            181,377
                            
                            
                            
                            163,581Loss
      on write off of goodwill
                            
                            
                            1,692,782
                            
                            
                            
                            -Loss
      on write off of property and equipment
                            
                            
                            2,950,452
                            
                            
                            
                            -Loss
      on write off of property and equipment - subsidiary
company
                            
                            
                            (1,484,147
                            )
                            
                            
                            -Loss
      on write off of website assets
                            
                            
                            3,207
                            
                            
                            
                            -Issuance
      of common stock for services
                            
                            
                            173,506
                            
                            
                            
                            -Changes
      in operating assets and liabilities:Decrease
      (increase) in accounts receivable
                            
                            
                            627,867
                            
                            
                            
                            (929,138
                            )Decrease
      (increase) in prepaid expenses
                            
                            
                            16,971
                            
                            
                            
                            (543,903
                            )(Increase)
      decrease in deposits
                            
                            
                            (140,808
                            )
                            
                            
                            26,131Decrease
      in accounts payable
                            
                            
                            (2,009
                            )
                            
                            
                            (16,039
                            )Increase
      in accrued expenses
                            
                            
                            1,574,228
                            
                            
                            
                            32,623Net
      cash used by operating activities
                            
                            
                            (192,164
                            )
                            
                            
                            (1,676,673
                            )Cash
      flows from investing activitiesPurchases
      of property and equipment
                            
                            
                            (51,914
                            )
                            
                            
                            (229,898
                            )Net
      cash used by investing activities
                            
                            
                            (51,914
                            )
                            
                            
                            (229,898
                            )Cash
      flows from financing activitiesIncrease
      (decrease) in notes payable
                            
                            
                            527,001
                            
                            
                            
                            881,978Increase
      (decrease) in loan payable to Comerica Bank
                            
                            
                            (353,481
                            )
                            
                            
                            -Increase
      (decrease) in convertible debt/notes payable
                            
                            
                            -
                            
                            
                            
                            (2,313,914
                            )Issuance
      of common stock
                            
                            
                            -
                            
                            
                            
                            3,051,368Decrease
      in receivable due from related party
                            
                            
                            571,565
                            
                            
                            
                            -Net
      cash provided by financing activities
                            
                            
                            745,085
                            
                            
                            
                            1,619,432Net
      increase (decrease) in cash
                            
                            
                            501,007
                            
                            
                            
                            (287,139
                            )Cash,
      beginning balance
                            
                            
                            46,930
                            
                            
                            
                            592,289Cash,
      ending balance
                            
                            $
                            547,937
                            
                            
                            $
                            305,150Interest
      paid
                            
                            $
                            130,167
                            
                            
                            $
                            370,625Taxes
      paid
                            
                            $
                            859
                            
                            
                            $
                            2,400Supplemental
      disclosure of non-cash transactionsDebt
      converted to equity
                            
                            $
                            -
                            
                            
                            $
                            3,025,000
 
 The
accompanying notes to the financial statements should be read in conjunction
with the above financial statements.
  6
  DATASCENSION,
INC.
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 Note 1 -
HISTORY AND ORGANIZATION OF THE COMPANY
 
 Datascension,
Inc. (the "Company") (formerly known as Nutek, Inc.) was incorporated in August
1991 under the laws of the State of Nevada as Nutek, Inc. and is engaged in the
market research industry.
 
 Datascension
International, Inc. and related assets were purchased on September 27, 2001 for
$2,200,000 using company shares at fair market value. Datascension
International, Inc. is a data solutions company representing a unique expertise
in the collecting, storage, processing, and interpretation of data. During 2002,
Datascension International, Inc. expanded operations into Costa
Rica.
 
 NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Basis
of Accounting
 
 The
Company's policy is to prepare the financial statements on the accrual basis of
accounting. The fiscal year end is December 31.
 
 In the
opinion of management, all adjustments necessary in order to make the financial
position, results of operations and changes in financial position at December
31, 2007, and for all periods presented not misleading have been
made.
 
 Cash
and Cash Equivalents
 
 Cash and
cash equivalents consist of highly liquid investments with maturities of three
months or less when purchased.
 
 Investments
and Marketable Securities
 
 The
Company has adopted FASB No. 115. Equity securities are classified as available
for sale and reported at fair value.
 
 Investments
are recorded at the lower of cost or market. Any reductions in market value
below cost are shown as unrealized losses in the consolidated statement of
operations.
 
 Consolidation
Policy
 
 The
accompanying consolidated financial statements include the accounts of
Datascension, Inc. and Datascension International, Inc. All significant inter-
company balances and transactions have been eliminated.
 
 Use
of Estimates
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires that management make estimates and assumptions
which affect the reported amounts of assets and liabilities as of the date of
the financial statements and revenues and expenses for the periods reported.
Actual results may differ from these estimates.
 
 Comprehensive
Income
 
 Statements
of Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS
130), requires that total comprehensive income be reported in the financial
statements. The Company does not have any items considered to be other
comprehensive income for the year ended December 31, 2007 and for the periods
presented.
  7


Fixed
Assets
 
 Fixed
assets are stated at cost. Expenditures that materially increase the life of the
assets are capitalized. Ordinary maintenance and repairs are charged to expense
as incurred. When assets are sold or otherwise disposed of, the cost and the
related accumulated depreciation and amortization are removed from the accounts
and any resulting gain or loss is recognized at that time.
 
 Depreciation
is computed primarily on the straight-line method for financial statement
purposes over the following estimated useful lives:
 
 Computer
      equipment
                5
      yearsFurniture
      and fixtures
                7
      yearsOffice
      equipment
                5
      years
 
 All
assets are booked at historical purchase price and there is no variance between
book value and the purchase price.
 
 Revenue
Recognition
 
 We
recognize revenues when survey data is completed in accordance with the terms of
our agreements. Research products are delivered within a short period, generally
ranging from a few days to approximately eight weeks. We do not believe that
there are realistic alternatives to our revenue recognition policy given the
short period of service delivery and the requirement to deliver completed
surveys to our customers. We do not believe there is significant risk of
recognizing revenue prematurely since our contracts are standardized, the
earnings process is short and no single project accounts for a significant
portion of our revenue.
 
 Intangible
Assets
 
 The
Company has adopted SFAS No. 142, "Goodwill and Other Intangible Assets", which
requires that goodwill and other indefinite lived intangible assets are no
longer amortized, but reviewed annually, or sooner if deemed necessary, for
impairment. Intangible assets with finite lives are amortized over the useful
life. Under guidance from SFAS No. 142, management has determined that the
assets in the subsidiaries determined to be discontinued operations should be
impaired. The respective assets have been written down. See Note 13,
Discontinued Operations.
 
 Net
Income (Loss) Per Share
 
 Basic net
income (loss) per share is computed using the weighted average number of shares
of common stock outstanding for the periods presented. The net income (loss) for
the period  is divided by the weighted average number of shares
outstanding for that period to arrive at  net income per
share.
 
 Diluted
net income (loss) per share reflects the potential dilution that could occur if
the securities or other contracts to issue common stock were exercised or
converted into common stock.
 
 Compensated
Absences
 
 The
Company has made no accrual for vacation or sick pay because the Company does
not provide for these benefits.
 
 8
  Advertising
  Advertising
costs are expensed when incurred. Advertising for the year ended December 31,
2007 amounted to $9,000 and for the nine months ended September 30, 2008
amounted to $31,382.
 
 Research
and Development
 
 The
Company expenses its research and development costs in the periods
incurred.
 
 Concentrations
of Credit Risk
 
 Credit
risk represents the accounting loss that would be recognized at the reporting
date if counter parties failed completely to perform as contracted.
Concentrations of credit risk (whether on or off balance sheet) that arise from
financial instruments exist for groups of customers or counter parties when they
have similar economic characteristics that would cause their ability to meet
contractual obligations to be similarly affected by changes in economic or other
conditions described below.
 
 The
Company operates in one segment, the market research industry. Over 90% of the
Company's customers are located either in the United States of America or
Canada.
 
 During
the year ended December 31, 2007, the Company had three major clients,
Ipsos-Reid (21.2%), Orbis (10.6%), and Synovate (8.3%). During the nine months
ended September 30, 2008, the Company had nine major clients, which accounted
for 66.1% of the company’s business. Management believes the loss of one of
these clients would affect the operations of the company in the short
term.
 
 Recently
Issued Accounting Pronouncements
 
 In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements” (“SFAS No. 157”). SFAS No. 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007. However, on February
12, 2008, the FASB issued FASB Staff Position (FSP) No. FAS 157-2, “Effective
Date of FASB Statement No. 157,” (“FSP No. 157-2”), which delays the effective
date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities,
except for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). FSP No. 157-2 defers the
effective date of SFAS No. 157 to fiscal years beginning after November 15,
2008, and interim periods within those fiscal years for items within scope of
FSP No. 157-2. The Company does not believe that the adoption of SFAS No. 157
will have a material impact on its condensed consolidated financial
statements.
 
 In
February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS
No.159, “The Fair Value Option for Financial Assets and Financial Liabilities -
Including an amendment of FASB Statement No.115”. SFAS No.159 permits entities
to choose to measure eligible financial instruments and other items at fair
value at specified election dates. A business entity shall report unrealized
gains and losses on items for which the fair value option has been elected in
earnings at each subsequent reporting date. The fair value option may be applied
instrument by instrument but only upon the entire instrument - not portions of
the instrument. Unless a new election date occurs, the fair value option is
irrevocable. SFAS No.159 is effective as of the beginning of an entity's first
fiscal year that begins after November 15, 2007. The Company does not expect
that the adoption of SFAS No. 159 will have a material effect on the Company's
consolidated financial statements.
  On
December 12, 2007, Emerging Issues Task Force (“EITF”) No. 07-01,
"Accounting for Collaborative Arrangements Related to the Development and
Commercialization of Intellectual Property," ("EITF No. 07-01"), was
issued. EITF No. 07-01 prescribes the accounting for collaborations. It requires
certain transactions between collaborators to be recorded in the income
statement on either a gross or net basis within expenses when certain
characteristics exist in the collaboration relationship. EITF No. 07-01 is
effective for the Company's collaborations existing after January 1, 2009.
The Company is currently evaluating the impact this standard will have on its
condensed consolidated financial statements.
  9
  In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations,” (“SFAS No. 141(R)”), which replaces FASB Statement
No. 141. SFAS No. 141(R) establishes principles and requirements
for how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any non-controlling
interest in the acquiree, the goodwill acquired and the expenses incurred in
connection with the acquisition. SFAS No. 141(R) also establishes
disclosure requirements to enable the evaluation of the nature and financial
effects of the business combination. SFAS No. 141(R) is effective for
fiscal years beginning after December 15, 2008. Earlier adoption is not
permitted. As a result, the Company will apply the provisions of SFAS
No. 141(R) prospectively to business combinations that close on or after
January 1, 2009. The Company is currently evaluating the impact, if any,
the adoption of SFAS No. 141(R) may have on its condensed consolidated
financial statements.
 
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financials Statements, an Amendment of ARB No. 51” (“SFAS No.
160”). SFAS No. 160 clarifies the accounting for noncontrolling interests and
establishes accounting and reporting standards for the noncontrolling interest
in a subsidiary, including classification as a component of equity. SFAS No. 160
is effective for fiscal years beginning after December 15, 2008. The
Company is currently evaluating the impact that adopting SFAS No. 160 will have
on its condensed consolidated financial statements.
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities — An Amendment of FASB Statement
No. 133” (“SFAS No. 161”), which amends and expands the
disclosure requirements of SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities” to require qualitative disclosure about
objectives and strategies in using derivatives, quantitative disclosures about
fair value amounts of gains and losses on derivative instruments, and
disclosures about the underlying credit-risk-related contingent features in
derivative agreements. SFAS No. 161 is intended to improve financial
reporting by requiring transparency about the location and amounts of derivative
instruments in an entity’s financial statements; how derivative instruments and
related hedged items are accounted for under SFAS No. 133; and how
derivative instruments and related hedged items affect its financial position,
financial performance and cash flows. SFAS No. 161 is effective for
financial statements issued for fiscal years beginning after November 15,
2008. The Company is currently evaluating the potential impact, if any, the
adoption of SFAS No. 161 may have on its condensed consolidated
financial statements.
 
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” The current GAAP hierarchy, as set forth in the American
Institute of Certified Public Accountants (AICPA) Statement on Auditing
Standards No. 69, The Meaning of Present Fairly in Conformity With Generally
Accepted Accounting Principles, has been criticized because (1) it is directed
to the auditor rather than the entity, (2) it is complex, and (3) it ranks FASB
Statements of Financial Accounting Concepts. The FASB believes that the GAAP
hierarchy should be directed to entities because it is the entity (not its
auditor) that is responsible for selecting accounting principles for financial
statements that are presented in conformity with GAAP. Accordingly, the FASB
concluded that the GAAP hierarchy should reside in the accounting literature
established by the FASB and is issuing this Statement to achieve that result.
This Statement is effective 60 days following the SEC’s approval of the Public
Company Accounting Oversight Board amendments to AU Section 411, The Meaning of
Present Fairly in Conformity With Generally Accepted Accounting Principles. The
adoption of FASB 162 is not expected to have a material impact on the Company’s
financial position.
 
 Accounts
Receivable
 
 Accounts
receivable are stated at the amount management expects to collect from
outstanding balances. Management provides for probable uncollectible amounts
through a charge to earnings and a credit to a valuation allowance based on its
assessment of the current status of individual accounts. Balances outstanding
after management has used reasonable collection efforts are written off through
a charge to the valuation allowance and a credit to trade accounts receivable.
Changes in the valuation allowance have not been material to the financial
statements.
  10
  Stock
Based Compensation
 
 The
Company applies SFAS 123R in accounting for stock options issued to employees.
For stock options and warrants issued to non-employees, the Company applies SFAS
No. 123, Accounting for Stock-Based Compensation, which requires the recognition
of compensation cost based upon the fair value of stock options at the grant
date using the Black-Scholes option pricing model.
 
 NOTE 3 –
RECEIVABLE DUE FROM RELATED PARTY
 
 The
Company has a receivable due from Datascension, S.A. in the amount of
$1,496,560, which is prepayment for various operating expenses. Datascension
S.A. is controlled by Scott Kincer but is now consolidated with
Datascension, Inc. for accounting purposes.  The amount is
non-interest bearing and due on demand.
 
 NOTE 4 -
PROPERTY AND EQUIPMENT
 
 Property
and equipment are made up of the following as of September 30,
2008:
 
 Computer
      equipment
                                
                                $
                                611,899Office
      equipment
                                
                                
                                420,064Lease
                                
                                
                                904,377Vehicles
                                
                                
                                127,439Software
                                
                                
                                15,9832,079,762Less
      accumulated depreciation and amortization
                                
                                
                                528,742$
                                1,551,020
 
 Depreciation
expense for the nine months ended September 30, 2008 was $181,377.
 
 NOTE 5 –
WRITEOFF AND WRITEDOWN OF ASSETS
 
 Datascension
also incurred a writedown of $4,646,441 in assets as of September 30,
2008.  The following constituted the writedown in assets as of
September 30, 2008:
 
 Leasehold improvements
                    
                    $
                    1,989,326Machinery
      and equipment
                    
                    
                    922,889Office
      equipment
                    
                    
                    1,072,913Software
                    
                    
                    230,000Sub-total
                    
                    
                    4,215,128Less
      accumulated amortization & depreciation
                    
                    
                    1,264,676Total
      write-off of property and equipment
                    
                    
                    2,950,452Write-off
      Goodwill and website
                    
                    
                    1,695,989Total
                    
                    $
                    4,646,441
 
 11


NOTE 6 -
NOTES PAYABLE





Since
November 2004, the Company had entered into several different convertible debt
agreements, the most recent being December 12, 2006. In past funding
arrangements, the specific terms of the funding arrangements contained certain
covenants and liquidated damages which were deemed to make the
notes  be considered non-conventional. Such treatment required a
valuation of all derivative items of the notes, which created a liability on the
balance sheets, coupled with a liability for the value of any warrants that were
outstanding at the balance sheet date. The December 2006 note settled all prior
interest, liquidated damages and other perceived "negative" items that were
tainting the debt. The latter note also served to amend and limit the
liabilities, so as to satisfy the EITF 00-27 requirements and end the
requirement of the company to have the derivative accounting treatment. Below is
a summary of the major terms of the notes outstanding as of September 30,
2008.





Upon the
entering into of the December 2006 transaction, the company removed all of the
prior derivative liability portions of the convertible debt, as all clauses had
been removed from the debts and agreements. This resulted in an expense to
remove the debt discounts that were previously being accreted, as well as the
financing costs being accreted over the remaining term. Concurrently, there was
an income item reported  for a corresponding write off of the
liabilities associated with derivatives and the warrant liabilities on the
books.





NOTES
PAYABLE - $1,875,000, NOVEMBER 2004





In
November 2004, the Company issued $1,875,000 in principal amount of Notes to
third parties. As part of the financing transaction, the Company issued warrants
to purchase 3,125,000 shares of common stock at a per share purchase price of
$0.30 per share.





The Notes
accrue interest at a rate of prime + 3% per annum. The Notes were  due
and payable in November 2007. The convertible note and warrant documents were
filed in an 8-K by the Company on November 23, 2004. The Note was entered into
pursuant to the terms of a subscription agreement between the Company and the
Holder, which was also included in the 8-K filed on November 23, 2004. The
$1,875,000 in proceeds from the financing transaction were originally allocated
to the debt features and to the warrants based upon their fair values. After the
latter allocations, there was $170,061 of remaining value to be allocated to the
Note on the financial statements. The debt discount was being accreted using the
effective interest method over the term of the note.





In 2007,
6,559,919 shares were issued to settle $2,055,065 of principal and interest on
the convertible notes. An additional 2,841,667 shares were issued to satisfy
outstanding warrants.





As of
September 30, 2008, the unpaid principal amount due on the remaining note to
Alpha Capital Anstalt is $157,500. The note holder has extended the due date of
this note to June, 2009. There is accrued and unpaid interest of $
47,237.





NOTES
PAYABLE - $2,274,288, JUNE 2006





In June
2006, the Company issued two notes to third parties. One note had a principal
amount of $1,702,859 and the other note had a principal amount of $571,429. As
part of the financing transaction, the Company issued warrants to purchase
4,865,311 shares of common stock at a per share purchase price of $0.40 per
share.





The Notes
accrue interest at a rate of 6% per annum. Interest is to be paid quarterly.
Should the interest payment be in default then the interest rate increases to
10%. The Notes are due and payable in June 2008. After a thorough review of the
terms of the note and respective covenants, the Company has presented the entire
debt as a current liability on the balance sheet. The convertible note and
warrant documents were filed in an 8-K by the Company on June 16, 2006. The Note
was entered into pursuant to the terms of a subscription agreement between the
Company and the Holder, which was also included in the 8-K filed on June 16,
2006. The $1,702,859 in proceeds from the financing transaction were allocated
to the debt features and to the warrants based upon their fair values. After the
latter allocations, there was $318,796 of remaining value to be allocated to the
Note on the financial statements. The debt discount was being accreted using the
effective interest method over the term of the note.





12




In
December, 2007, accrued interest of $25,753 was added to the note due the
Longview Fund LP increasing the principal amount of the note to
$1,728,612.  The note holders have extended the due date of the notes
to January 15, 2010.





As of
September 30, 2008, both notes are unpaid and there is $223,599 of accrued
interest.





NOTES
PAYABLE - $2,065,458, DECEMBER 2006





In
December 2006, the Company issued $2,065,458 in principal amount of Notes to
third parties. As part of the financing transaction, 1,280,000 warrants were
issued to the note holders of the December 2006 notes with a 5 year term and a
$0.45 exercise price. In 2007, the note holder converted some debt and interest
into shares of stock along with the exercise of the warrants which were attached
to the note.





The Notes
accrue interest at a rate 14% per annum. The Notes are due and payable in
December 2008. The note and warrant documents were filed in an 8-K by the
Company on December 18, 2006. This note is not convertible into common stock of
the company. Upon issuance, the company allocated $1,867,328 to the debt and
$198,130 to the warrants based on the relative fair values of each. The value of
the warrants was determined using a 56% volatility, five year terms, and a $0.45
exercise price. The debt discount of $198,130 will be amortized over the two
year term of the notes.





The note
holders have extended the due date of the notes to January 15,
2010.





In
December, 2007 accrued interest of $40,685 was added to the note due the
Longview Fund LP increasing the amount of the note at December 31, 2007 to
$1,193,643. The remaining note in the amount of $571,429 is due to Alpha Capital
Anstalt.





The note
is unpaid and there is $ 112,252 of accrued interest outstanding at September
30, 2008.





In
December, 2007, the Company issued a Secured Promissory Note to Alpha Capital
Anstalt in the amount of $103,665 at an interest rate of 14% per annum. This
note was for interest and penalties that had accrued previously.  The
interest rate on this note has increased to the 18% default rate.





At
September 30, 2008, this note is unpaid and there is $18,745 of accrued
interest.





OTHER
NOTES





The
Company had entered into long-term notes payable. These notes have been paid
down to the current balances due within the next twelve months.





Note
payable to a lender, monthly payments of $10,044 inclusive of 15.00% annual
interest through May 2009. At September 30, 2008 the balance due was
$76,019.





Note
payable to a lender, monthly payments of $2,424 inclusive of 15.00% annual
interest through March, 2009. At September 30, 2008 the balance due was
$13,930.





Total
      Current portion of Notes Payable
                    
                    $
                    89,949Principal
      maturities are as follows:Twelve months ended December 31, 2008
                    
                    $
                    34,461Twelve
      months ended December 31, 2009
                    
                    
                    55.488$
                    89.949


13





Additionally,
the company has the following short term notes payable as of September 30,
2008.





Wells
      Fargo Bank
                    
                    $
                    24,267





On or
about September 4, 2008, the Company borrowed $400,000 from three
individuals.  The Notes have a term of 18 months from the date of
issuance and bear interest at the rate of $12% per annum.  Interest is
due and payable quarterly in arrears during the term of the Notes and principal
and accrued and unpaid interest are due in full at maturity.  Warrants
to purchase 250,000 shares of the Company’s common stock were issued in
connection therewith.  The warrants have an exercise price of $.10 per
share and a term of five years from the date of issuance.





NOTE 7 -
STOCKHOLDERS' EQUITY





In the
nine months ended September 30, 2008, 221,389 shares were issued to the Longview
Fund, LP for past due interest, 200,000 shares were issued for services rendered
that had been accrued at December 31, 2007 and 30,000 shares were issued to Bob
Sandelman, a former director for services rendered as a director. In May, 2008,
80,000 shares were issued in settlement of contract entered into for
professional services.





On July
25, 2008, the Company entered into an agreement with Longview Fund, pursuant to
which the Longview Fund exchanged 15,000,000 shares of its Common Stock for
receipt of 1,000 shares of its Series C Preferred Stock.





NOTE 8 -
RELATED PARTY TRANSACTIONS





Series
C Preferred Stock





On July
25, 2008, the Company filed a Certificate of Designation with the Secretary of
State of the State of Nevada authorizing a series of preferred stock, under its
articles of incorporation, known as “Series C Preferred Stock”. This Certificate
of Designation was approved by the Registrant’s Board of Directors. The
Certificate of Designation sets forth the following terms for the Series C
Preferred Stock:





Authorized
      Shares:
            1,000Per
      Share Stated Value:
            $15,000Liquidation
      Preference:
            Per
      share Stated ValueConversion
      Price into Common Stock:
            $.30
      per share, as adjusted from time to time as set forth in the Certificate
      of DesignationVoting
      Rights:
            The
      Series C Preferred Shares shall vote along with the Common Stock on an as
      converted basis and shall have two votes per
  share




On July
25, 2008, the Company entered into an agreement with Longview Fund, pursuant to
which the Longview Fund exchanged 15,000,000 shares of its Common Stock for
receipt of 1,000 shares of its Series C Preferred Stock.





Extension
of Maturity Dates of Certain Notes





On or
about August 12, 2008, Longview Fund, L.P. extended the maturity date of its
promissory notes due from the Company and issued in June 2006 and December 2006
to January 15, 2010, and Alpha Capital Anstalt extended the maturity date of its
promissory notes due from the Company and issued in November 2004, June 2006 and
December 2006 to January 15, 2010. A further discussion of these notes is set
forth in Note 6 above.





14




Longview
Fund





As of
September 30, 2008, Longview Fund, L.P. owned 49.9% of the issued and
outstanding common stock of the Company. Due to this stock ownership, the
Company is controlled by Longview Fund, L.P. and is deemed a “controlled
corporation”. As of July 30, 2008, due to the exchange of 15,000,000 shares of
the Company’s Common Stock, into shares of Series C Preferred Stock, which holds
two votes per share when voting alongside the Common Stock of the Company,
Longview Fund controls 64.5% voting control of the Company. See Note 6 for a
description of promissory notes of the Company issued to Longview Fund, L.P. and
this footnote supra  for
a further description of the Series C Preferred Stock.





Longview
Fund, L.P. may take actions that conflict with the interests of other
shareholders. Due to the 64.5% ownership of voting control, Longview Fund, L.P.
has substantial control over the Company and has substantial power to elect
directors and to generally approve all actions requiring the approval of the
holders of the Company’s voting stock. See Note 6 above for a discussion of
certain promissory notes due by the Company to Longview Fund, L.P.





The
Company has a receivable due from Datascension, S.A. in the amount of
$1,496,560, which is prepayment for various operating expenses. Datascension
S.A. is controlled by Scott Kincer but is now consolidated with
Datascension, Inc. for accounting purposes.   The amount is
non-interest bearing and due on demand.





During
the nine months ended September 30, 2008, the company billed approximately $
1,058,369 to Sandelman & Associates, a company controlled by a former board
member, which amounted to 7.5% of total revenue for the period.





NOTE 9 -
FOREIGN OPERATIONS





The
company currently operates out of Costa Rica. Management does not feel there is
a currency risk or need to assess a foreign currency translation adjustment or
other comprehensive income item as income and expense items are negotiated in
the US dollar. The Company maintains their accountings records in U.S. dollars
and all payments are made in US dollars. All debts and assets on the books of
the company are valued based on US dollars and are not translated from a foreign
currency amount. The Company currently coordinates all foreign operations, and
supervision activities using part time employees, consultants and contract
labor. Approximately 99% of the company's workforce is outside of the United
States. Currently approximately 90% of the company's clients are US based
companies. Any resulting foreign exchange fluctuations do not affect the payment
of employees, contract labor or off shore operations.





NOTE
10 – CREDIT AGREEMENT





On
September 6, 2007, Datascension, Inc. (the “Company”), as borrower, entered into
a Credit Agreement with Comerica Bank, as lender (dated as of August 30, 2007),
which provides for a revolving credit facility of up to $2,000,000. The Credit
Agreement provides for a one year term, and outstanding balances bear interest
at the rate equal to the prime rate (as determined by Comerica Bank from time to
time) plus two percent (2%). Under the Credit Agreement, the Company may borrow
funds from Comerica Bank from time to time in an amount equal to 85% of eligible
receivables (as set forth in the Credit Agreement), and all advances under the
Credit Agreement are secured by a first lien against all of the assets of
Datascension, Inc. and its subsidiary, Datascension, Inc. (a California
corporation), as well as a pledge of the stock of the subsidiary. As of
September 30, 2008, the amount due under the Credit Agreement was $1,374,207.
The Company is in default of certain covenants under the Credit Agreement at
September 30, 2008, and was subsequently paid off in full on or about November
7, 2008.  See subsequent events in Note 11.




15




NOTE
11 – SUBSEQUENT EVENTS





Auditor




On
November 7, 2008, the Company notified Larry O’Donnell, CPA, the independent
accountant engaged as the principal accountant to audit the financial statements
of the Company, that he was dismissed as the Company’s independent registered
accountant, effective immediately.




On
November 5, 2008, the Company engaged KBL, LLP, as its independent registered
accounting firm. The decision to change accountants was recommended and approved
by Company’s Board of Directors.





Wells
Fargo





On
November 7, 2008, the Company entered into an Account Purchase Agreement
(“Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”)
pursuant to which Wells Fargo has agreed to purchase certain accounts receivable
from the Company from time to time, up to $4.5 million, at a price equal to the
face value of each such receivable less a discount equal to .5% plus the then
existing prime rate, plus three percent plus other fees and charges. Any
accounts sold to Wells Fargo for which payment is not received within the
proscribed time periods in the Agreement shall be subject to repurchase by the
Company. To secure this repurchase and other obligations of the Company
thereunder, the Company granted a first lien on all of its assets to Wells
Fargo. In connection therewith, the Longview Fund and Alpha Capital Anstalt
agreed to subordinate their security interests in the Company’s collateral to
the security interests of Wells Fargo.





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





The
following is a discussion of certain factors affecting DSEN's results of
operations, liquidity and capital resources. You should read the following
discussion and analysis in conjunction with the Registrant's condensed
consolidated financial statements and related notes that are included herein
under Item 1 above.





Overview





Datascension
Inc, ("DSEN"), through its sole subsidiary Datascension International, Inc., is
engaged in data gathering and conducting outsourced market research. Its
expertise is in the collection, storage, and processing of data. Datascension
International's management team has over 30 years of experience in working with
clients to gather the information they need to make changes or advancements to
their operations. Datascension International services a variety of industries
and customers (including the hospitality, entertainment, and automotive sectors)
with emphasis and commitment to customer service, quality assurance and on-time
project management.





Critical
Accounting Policies and Estimates





Our
discussion and analysis of financial condition and results of operations is
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenue and
expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, we evaluate our estimates. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable
under the circumstances. These estimates and assumptions provide a basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions, and these differences may
be material.





We
believe the following critical accounting policies affect its more significant
judgments and estimates used in the preparation of its consolidated financial
statements.





16




Foreign
Currency





DSEN
maintains its accounting records in U.S. dollars and all payments are made in US
dollars. Any resulting foreign exchange fluctuations do not affect the payment
of employees, contract labor or off shore operations.





Revenue
Recognition.





We
recognize revenues as the survey data is collected for the client in accordance
with the terms of our agreements. Research products are delivered within a short
period, generally ranging from a few days to approximately eight weeks. An
appropriate deferral is made for direct costs related to contracts in process,
and no revenue is recognized until delivery of the data has taken place.
Billings rendered in advance of services being performed, as well as customer
deposits received in advance, are recorded as a current liability included in
deferred revenue. We are required to estimate contract losses, if any, and
provide for such losses in the period they are determined and estimable. We do
not believe that there are realistic alternatives to our revenue recognition
policy given the short period of service delivery and the requirement to deliver
completed surveys to our customers. We do not believe there is significant risk
of recognizing revenue short and no single project accounts for a significant
portion of our revenue.





Basis
of Accounting





The
Company's policy is to prepare the financial statements on the accrual basis of
accounting. The Company's year end is December 31.





In the
opinion of management, all adjustments necessary in order to make the financial
position, results of operations and changes in financial position at September
30, 2008, and for all periods presented not misleading have been made. The
results of operations for the period ended September 30, 2008 are not
necessarily an indication of operating results to be expected for the full year
ending December 31, 2007.





Recently
issued accounting standards





In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities." This Statement permits entities to
choose to measure many financial instruments and certain other items at fair
value that are not currently required to be measured at fair value. The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in earnings caused by measuring related
assets and liabilities differently without having to apply complex hedge
accounting provisions. This Statement also establishes presentation and
disclosure requirements designed to facilitate comparisons between entities that
choose different measurement attributes for similar types of assets and
liabilities. This Statement is effective for financial statements issued for
fiscal years beginning after November 15, 2007. The Company does not believe the
adoption of SFAS No. 159 will have an impact upon on our financial statements
and footnote disclosures.





DSEN's
website address is http://www.datascension.com.





Results
of Operations





Analysis
of the nine months ended September 30, 2008 compared to the nine months ended
September 30, 2007.





For the
nine months, ended September 30, 2008, DSEN has generated $14,014,679 in
revenues compared to $14,783,286 in revenues for the nine months ended September
30, 2007, for a decrease of $768,607. The decrease in revenue is a result of
losing Orbis, Inc., a cost plus client beginning in May, 2008.





Cost of
goods sold for the nine months ended September 30, 2008 was $12,359,564 compared
to $12,566,031 for the nine months ended September 30, 2007 or a decrease of
$206,467. This decrease was due to a decrease in hourly personnel.





17




Total
selling, general and administrative expenses increased to $1,962,982 for the
nine months ended September 30, 2008 from $1,668,909 for the nine months ended
September 30, 2007, or an increase of $294,073. The increase is partially due to
the hiring of a fulltime CFO and a salesperson to market inbound services. Both
employees started January 1, 2008. The hiring of these two individuals along
with additional marketing to clients in the US has increased all expenses
related to travel between the US and Costa Rica.





Depreciation
expense for the nine months ended September 30, 2008 was $181,377 compared to
$163,581 for the nine months ended September 30, 2007, or an increase of
$17,796.





Interest
expense for the nine months ended September 30, 2008 was $649,046 compared to
$794,693  for the nine months ended September 30, 2007 a decrease of $
145,647. This decrease is due to the conversion of debt held by Longview Fund LP
into stock in June, 2007.





Datascension
also incurred a writedown of $4,646,441 in assets for the nine-months ended
September 30, 2008 as compared to no writedown in assets during the nine-months
ended September 30, 2007, or an increase of $4,646,441.  The following
constituted the writedown in assets as of September 30, 2008:





Leasehold improvements
                  
                  $
                  1,989,326Machinery
      and equipment
                  
                  
                  922,889Office
      equipment
                  
                  
                  1,072,913Software
                  
                  
                  230,000Sub-total
                  
                  
                  4,215,128Less
      accumulated amortization & depreciation
                  
                  
                  1,264,676Total
      write-off of property and equipment
                  
                  
                  2,950,452Write-off
      Goodwill and website
                  
                  
                  1,695,989Total
                  
                  $
                  4,646,441





Datascension
generated a net loss of $5,785,590 for the nine months ended September 30, 2008,
versus a net loss of $409,928 for the same period in 2007. The difference of
$5,375,662 is primarily a result of the writedown of $4,646,441 in assets and
the decrease in gross profits of $562,140.





For the
nine months ended September 30, 2008, DSEN increased its working capital by a
net amount of $1,567,965 from $(1,446,455) as of December 31, 2007 to $121,510
as of September 30, 2008. This is mainly due to a decrease in the current
portion of long term debt of approximately $3.5 million partially offset by an
increase in accrued expenses of approximately $1.5 million.





Significant
Subsequent Events occurring after September 30, 2008:





Auditor





On
November 7, 2008, the Company notified Larry O’Donnell, CPA, the independent
accountant engaged as the principal accountant to audit the financial statements
of the Company, that he was dismissed as the Company’s independent registered
accountant, effective immediately.




On
November 5, 2008, the Company engaged KBL, LLP, as its independent registered
accounting firm. The decision to change accountants was recommended and approved
by Company’s Board of Directors.





18




Wells
Fargo





On
November 7, 2008, the Company entered into an Account Purchase Agreement
(“Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”)
pursuant to which Wells Fargo has agreed to purchase certain accounts receivable
from the Company from time to time, up to $4.5 million, at a price equal to the
face value of each such receivable less a discount equal to .5% plus the then
existing prime rate, plus three percent plus other fees and charges. Any
accounts sold to Wells Fargo for which payment is not received within the
proscribed time periods in the Agreement shall be subject to repurchase by the
Company. To secure this repurchase and other obligations of the Company
thereunder, the Company granted a first lien on all of its assets to Wells
Fargo. In connection therewith, the Longview Fund and Alpha Capital Anstalt
agreed to subordinate their security interests in the Company’s collateral to
the security interests of Wells Fargo.





Capital
Resources and Liquidity





On
September 30, 2008 DSEN had total assets of $5,697,534 compared to $9,563,879 on
September 30, 2007, a decrease of $3,866,345. The reason for the decrease in
assets is a result of the write off of Goodwill and Property and
Equipment.  DSEN had a total stockholders' equity of $2,246,121 on
September 30, 2008 compared to $3,365,963 on September 30, 2007, a decrease in
equity of $1,119,842, which is due to the losses generated in the past
year.





All
assets are booked at historical purchase price and there is no variance between
book value and the purchase price.





On
September 30, 2008 DSEN had Property and Equipment of $1,551,020 compared to
$3,146,788 on September 30, 2007, or a decrease of $1,595,768, net of
depreciation for the nine months. The decrease is due to the write off assets
that were previously located in Brea, California.





DSEN's
capital resources are comprised primarily of private investors, who are either
existing contacts of the Registrant's management or who come to the attention of
the Registrant through brokers, financial institutions and other intermediaries.
The Registrant’s access to capital is always dependent upon general financial
market conditions. The Registrant's capital resources are not anticipated to
change materially in 2008.





DSEN has
financed operations through the collections of accounts receivable, servicing of
existing contracts and the sale of common stock and through financing from
financial institutions. In order to sustain operations in the near term, it is
anticipated that DSEN will need to raise additional capital to expand
operations. DSEN will also need to raise immediate capital to refinance its
credit facility with Comerica Bank, which matures on August 30, 2008. If it is
unable to raise this capital, it may be unable to continue operations, if
Comerica exercises its remedies against collateral which consists of a first
lien on DSEN’s assets.





DSEN's
future capital requirements will depend on numerous factors, including the
profitability of our research projects and our ability to control costs. We
believe that our current assets will be sufficient to meet our operating
expenses and capital expenditures. However, we cannot predict when and if any
additional capital contributions may be needed and we may need to seek one or
more substantial new investors. New investors could cause substantial dilution
to existing stockholders.





There can
be no assurances that DSEN will be successful in raising additional capital via
debt or equity funding, or that any such transactions, if consummated, will be
on terms favorable to DSEN. In the event that additional capital is not obtained
from other sources, it may become necessary to alter development plans or
otherwise abandon certain ventures.





If DSEN
needs to raise additional funds in order to fund expansion, develop new or
enhanced services or products, respond to competitive pressures or acquire
complementary products, businesses or technologies, any additional funds raised
through the issuance of equity or convertible debt securities, the percentage
ownership of the stockholders of DSEN will be reduced, stockholders may
experience additional dilution and such securities may have rights, preferences
or privileges senior to those of DSEN's Common Stock. DSEN could incur
significant amounts of indebtedness to finance its operations, and any such
indebtedness could contain covenants, which would restrict DSEN's
operations.





19




Off-Balance
Sheet Arrangements.





DSEN
currently does not have any off-balance sheet arrangements.





Forward-Looking
Information





This
quarterly report contains forward-looking statements. The forward- looking
statements include all statements that are not statements of historical fact.
The forward-looking statements are often identifiable by their use of words such
as "may," "expect," "believe," "anticipate," "intend," "could," "estimate," or
"continue," "Plans" or the negative or other variations of those or comparable
terms. Our actual results could differ materially from the anticipated results
described in the forward-looking statements. Factors that could affect our
results include, but are not limited to, those discussed in Item 2,
"Management's Discussion and Analysis or Plan of Operation" and included
elsewhere in this report. DSEN makes no commitment to update any forward-looking
statement or to disclose any facts, events, or circumstances after the date
hereof that may affect the accuracy of any forward-looking
statement.





Item 3.
Quantitative and Qualitative Disclosures About Market Risk





Our
exposure to market risk for changes in interest rates relates primarily to the
market-driven increase or decrease in interest rates, and the impact of those
changes on the Company’s ability to realize a return on invested or available
funds. We ensure the safety and preservation of our invested principal funds by
limiting default risk, market risk and reinvestment risk. We mitigate default
risk by investing in short term high-credit investment grade securities and/or
commercial checking and savings accounts.





ITEM
4T. CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures




As of the
end of the period covered by this Report on Form 10-Q, management performed,
with the participation of our Chief Executive Officer and Chief Accounting
Officer, an evaluation of the effectiveness of our disclosure controls and
procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our
disclosure controls and procedures are designed to ensure that information
required to be disclosed in the report we file or submit under the Exchange Act
is recorded, processed, summarized, and reported within the time periods
specified in the SEC’s forms, and that such information is accumulated and
communicated to our management including our Chief Executive Officer and our
Chief Accounting Officer, to allow timely decisions regarding required
disclosures. Our Chief Executive Officer and our Chief Accounting Officer
concluded that, as of September 30, 2008, our disclosure controls and procedures
were effective.





Internal
Control Over Financial Reporting




There has
been no change in the Company's internal control over financial reporting during
the most recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial
reporting.





PART
II – OTHER INFORMATION





Item 1.
Legal Proceedings.





DSEN is
not a party to any pending material legal proceeding. To the knowledge of
management, no federal, state or local governmental agency is presently
contemplating any proceeding against DSEN. To the knowledge of management, no
director, executive officer or affiliate of DSEN, any owner of record or
beneficially of more than 5% of DSEN's common stock is a party adverse to DSEN
or has a material interest adverse to DSEN in any proceeding.





Item 2.
Unregistered Sales of Equity Security and Use of Proceeds.





None.





20




Item 3.
Defaults Upon Senior Securities





None.





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





None.





Item 5.
Other Information





None.





Item 6.
Exhibits and Reports on Form 8-K





Exhibits





(a)
Exhibit 31. Certifications required by Rule 13a-14(a) or Rule 15d-
14(a)





31.1 and
32.2 Certification of Chief Executive Officer and Principal Financial Officer
pursuant to 18 U.S.C.ss.1850 as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.





(b)
Exhibit 32. Certifications required by Rule 13a-14(b) or Rule 15d- 14(b) and
section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
1350





32.1 and
32.2 Certification of Chief Executive Officer and Principal Financial Officer
pursuant to 18 U.S.C.ss.1850 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.





(c)
Reports on Form 8-K




Current
Report on Form 8-K, filed on January 23, 2008





Current
Report on Form 8-K, filed on July 24, 2008





Current
Report on Form 8-K, filed on July 31, 2008





Current
Report on Form 8-K, filed on August 1, 2008





Current
Report on Form 8-K/A, filed on August 15, 2008





(d) Other
Exhibits




Exhibit
10.48 Account Purchase Agreement with Wells Fargo Bank




21




SIGNATURES





In
accordance with the Securities Exchange Act of 1934, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





Datascension,
      Inc./s/ D. Scott KincerD.
      Scott KincerPresident,
      Chairman and Director(Principal
      Executive Officer)/s/ David P. LiebermanDavid
      P. Lieberman(Principal
      Financial Officer)Date:
      December __, 2008


22