UNITED STATES SECURITIES AND
EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q

[X]                             QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)
                                          
 OF
THE SECURITIES EXCHANGE ACT OF 1934
                                      For
the Quarterly Period Ended June 30, 2000

OR

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

Commission File
Number:   000-27945

ASD SYSTEMS, INC.(Exact name of registrant as specified
in its charter)

|Texas                           | 75-2737041         
|------------------------------- | -------------------
|(State or other jurisdiction of | (I.R.S. Employer   
|Incorporation or organization)  | Identification No.)

|                                              |           
|--------------------------------------------- | ----------
|3737 Grader Street, Suite 110, Garland, Texas | 75041     
|(Address of principal executive offices)      | (Zip Code)

Registrants telephone
number, including area code:  214.348.7200

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such
filing requirements for the past 90
days                  YES
[X]     NO  [  ]

At July 31, 2000, there were 21,224,900 shares
of common stock outstanding.





<PAGE>

PART I.
FINANCIAL INFORMATION

ITEM 1.   FINANCIAL
STATEMENTS

ASD SYSTEMS, INC.

|Unaudited
        Balance Sheets as of June 30, 2000 and December 31,
        1999..                 | 2
|----------------------------------------------------------------------------------------------------------------- | -
|                                                                                                                  |  
|Unaudited
        Statements of Operations for the Three and Six Months
        Ended June 30, 2000 and 1999... | 3
|                                                                                                                  |  
|Unaudited
        Statements of Cash Flows for the Six Months Ended June
        30, 2000 and 1999..        | 4
|                                                                                                                  |  
|Notes to
        Interim Financial
        Statements                                                             | 5

1

<PAGE>

ASD SYSTEMS, INC.
BALANCE SHEETS
(000s Omitted)
(Unaudited)

|                                                                                                                                                                                                                                                       | June 30,   
        2000      
        ------------------- | December 31,
        1999        
        -------------------
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------- | -------------------------------------------------------------
|Assets                                                                                                                                                                                                                                                 |                                                            |                                                              
|                                                                                                                                                                                                                                                       |                                                            |                                                              
|Current
        assets:                                                                                                                                                                                                                                |                                                            |                                                              
|Cash
        and cash
        equivalents                                                                                                                                                                                                              | $    24,673                                                | $    37,278                                                  
|Accounts
        receivable, less allowance for doubtful
            accounts of $37 at June 30, 2000
        and
            $100 at December 31,
        1999.                                                                          | 1,814                                                      | 2,379                                                        
|Prepaid
        expenses..                                                                                                                                                                                                            | 200                                                        | 63                                                           
|Total
        current
        assets.                                                                                                                                                                                                   | 26,687                                                     | 39,720                                                       
|Property and
        equipment,
        net.                                                                                                                                                                                              | 5,438                                                      | 4,680                                                        
|Notes
        receivable.                                                                                                                                                                                                            | 175                                                        | --                                                           
|Other
        assets                                                                                                                                                                                                                                   | 66                                                         | 53                                                           
|Total
        assets                                                                                                                                                                                                                                   | $   32,366 
        =======                                | $    44,453 
        =======                                 
|                                                                                                                                                                                                                                                       |                                                            |                                                              
|Liabilities
        and Stockholders Equity                                                                                                                                                                                                           |                                                            |                                                              
|                                                                                                                                                                                                                                                       |                                                            |                                                              
|Current
        liabilities:                                                                                                                                                                                                                           |                                                            |                                                              
|Accounts
        payable...                                                                                                                                                                                                           | $      1,377                                               | $       1,648                                                
|Accrued
        liabilities....                                                                                                                                                                                                       | 1,804                                                      | 737                                                          
|Current
        portion of long-term
        debt..                                                                                                                                                                                         | 340                                                        | 340                                                          
|Total
        current
        liabilities...                                                                                                                                                                                             | 3,521                                                      | 2,725                                                        
|Long term
        debt...                                                                                                                                                                                                           | 510                                                        | 680                                                          
|Stockholders
        equity (deficit):                                                                                                                                                                                                                |                                                            |                                                              
|Preferred
        stock, $.0001 par value:
             Authorized shares --
        7,500,000
             Issued and outstanding
        
        none..                                                                                           | --                                                         | --                                                           
|Common
        stock, $.0001 par value:    Authorized
        shares--50,000,000Issued and
        outstanding shares--21,153,400
                at June
        30, 2000 and 21,097,400 at
                December
        31,
        1999.... | 2                                                          | 2                                                            
|Additional
        paid-in
        capital.                                                                                                                                                                                                          | 59,640                                                     | 59,604                                                       
|Accumulated
        deficit                                                                                                                                                                                                                            | (31,307)                                                   | (18,558)                                                     
|Total
        stockholders
        equity                                                                                                                                                                                                             | 28,335                                                     | 41,048                                                       
|Total
        liabilities and stockholders
        equity.                                                                                                                                                                                       | $      32,366 
        ========                            | $      44,453 
        ========                              

See accompanying notes.

2







<PAGE>

ASD SYSTEMS, INC.
STATEMENTS OF OPERATIONS
(000s Omitted, except per share amounts)
(Unaudited)

|                                                                                                               | Three Months Ended
        June 30,
        ----------------------------------------- | Six Months Ended
        June 30,
        --------------------------------------
|-------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------
|                                                                                                               | 2000
        --------------------                                                     | 1999
        ----------------                                                   
|Revenues..                                                                                       | $    1,452                                                                            | $    2,479                                                                      
|Cost of
        revenues..                                                                          | 1,494                                                                                 | 1,647                                                                           
|Gross profit
        (loss)                                                                                    | (42)                                                                                  | 832                                                                             
|Operating
        expenses:.                                                                         |                                                                                       |                                                                                 
|Selling,
        general, and administrative
            expenses...                              | 5,367                                                                                 | 1,722                                                                           
|Depreciation
        and amortization.....                                                                   | 531                                                                                   | 253                                                                             
|Restructuring
        costs
        ..                                                                   | 2,460                                                                                 | --                                                                              
|Total
        operating
        expenses.....                                                            | 8,358                                                                                 | 1,975                                                                           
|Operating
        (loss).......                                                                        | (8,400)                                                                               | (1,143)                                                                         
|Interest
        income (expense),
        net.                                                          | 492                                                                                   | (30)                                                                            
|Net
        loss.....                                                                            | $  (7,908)         
        ======                                                    | $  (1,173)    
        ======                                                   
|Basic and
        diluted net loss per share.                                                              | $    (0.37)         
        ======                                                   | $    (0.11)    
        ======                                                  
|Average
        shares used in computing basic and 
                  diluted
        net loss per share. | 21,146           
        ======                                                      | 10,500     
        ======                                                      



See accompanying notes.

3

<PAGE>





ASD SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
(000s Omitted)
(Unaudited)

|                                                                          | Six Months Ended
        June 30,
        -----------------------------------------------
|------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------
|                                                                          | 2000
        -------------------------                                                   
|Net cash
        used in operating activities.                  | $   (9,428)                                                                              
|Investing
        Activities                                              |                                                                                          
|Purchases of
        property and
        equipment..           | (3,043)                                                                                  
|Net cash used
        in investing
        activities        ....      | (3,043)                                                                                  
|Financing
        Activities                                              |                                                                                          
|Borrowing on
        revolving line of
        credit..             | --                                                                                       
|Payments on
        revolving line of
        credit...         | --                                                                                       
|Proceeds from
        issuances of Common
        Stock                   | --                                                                                       
|Proceeds from
        exercise of common stock
        options..     | 56                                                                                       
|Borrowings of
        long-term
        debt.                | --                                                                                       
|Payments of
        long-term
        debt.                 | (170)                                                                                    
|Other                                                                     | (20)                                                                                     
|Net cash
        provided by (used in) financing
        activities       | (134)                                                                                    
|Net increase
        (decrease) in cash and cash
        equivalents. | (12,605)                                                                                 
|Cash and cash
        equivalents at beginning of
        period..   | 37,278                                                                                   
|Cash and cash
        equivalents at end of
        period.       | $   24,673        
        =======                                                       





See accompanying notes.

4

<PAGE>

ASD SYSTEMS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS

1.        Basis
of Presentation:

The
unaudited financial statements included herein reflect all
adjustments, consisting only of normal recurring adjustments,
which in the opinion of management are necessary to fairly state
the companys financial position, results of operations and
cash flows for the periods presented. These financial statements
should be read in conjunction with the companys audited
financial statements included in the companys Form 10-K for
the year ended December 31, 1999 as filed with the Securities and
Exchange Commission. The results of operations for the period
ended June 30, 2000 are not necessarily indicative of the results
to be expected for any subsequent quarter or for the entire
fiscal year ending December 31, 2000. The December 31, 1999
balance sheet was derived from audited financial statements, but
does not include all disclosures required by generally accepted
accounting principles.

2.       Computation
of Basic and Diluted Net Loss Per Common Share

|                                                                      | Three months ended
        --------------------------------------------- | Six months ended
        ---------------------------------------------
|--------------------------------------------------------------------- | ------------------------------------------------------------------------ | ----------------------------------------------------------------------
|                                                                      | June 30, 2000
        ---------------------                              | June 30,
        1999
        --------------------                    
|Net
        loss..                                            | $         7,908                                                          | $           1,173                                                     
|Weighted
        average number of
          shares outstanding... | 21,146,000                                                               | 10,500,000                                                            
|Basic and
        diluted net loss per
          share...      | $         (0.37)                                                         | $            (0.11)                                                   

3.        Contingent
Liability

On April 21, 2000, the Original Honey Baked Ham
Company of Georgia, Inc. ("HBH") filed suit against the
company to recover damages for breach of contract related to
services performed by the company for HBH in 1999. The lawsuit
seeks compensatory damages, incidental and consequential damages
and other costs, fees and expenses including attorneys fees
and legal expenses in excess of $10.0 million. We filed a claim
and are actively exploring a number of possible counterclaims
against HBH. Management denies plaintiffs allegations and
intends to vigorously defend the lawsuit. Since this claim is at
a very early stage, the company is unable to predict with any
certainty what the outcome with respect to any claim might be,
and therefore the company has not provided a reserve for
potential claims, nor has it provided a reserve against its
receivable from HBH.

4.        Restructuring
costs

In
May, 2000, the company terminated the development of its browser
based software known as Mercury and eliminated its software
development department. In addition, the company completed a
thorough reorganization and eliminated positions. The write-off
of Mercury, plus the severance and other costs related to these
events, amounted to $2,460.

5

<PAGE>

ITEM
2.          MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                 RESULTS
OF OPERATIONS

Except for the historical information
contained herein, the matters discussed below contain
forward-looking statements which involve known and unknown risks,
uncertainties and other factors which may cause the actual
results, performance or achievements of the company, or industry
results, to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. The company expressly disclaims any
obligation to update this information or publicly release any
revision or reflect events or circumstances after the date of
this report. Such factors include among others: our ability to
achieve or sustain profitability; our limited operating history;
the risks associated with the failure of our systems and services
to achieve widespread market acceptance or meet specific client
needs; significant client concentration; the fact that our client
contracts are either short-term or terminable with minimal
notice; systems risks and uncertainties, including rapid
technological change; the risks related to the possible inability
of our system to connect to and manage a larger number of
clients; business conditions in the fulfillment industry
generally; the impact of market competitors and their service
offerings; and such other factors that are more fully described
in the companys Form 10-K for the year ended December 31,
1999.

The Company

ASD
Systems, Inc. is a Texas corporation with principal executive
offices located at 3737 Grader Street, Suite 110, Garland, Texas
75041. The companys telephone number is 214.348.7200.

Overview

We
offer software and service solutions that enable Internet
retailers and direct marketing businesses to outsource their
order management and fulfillment operations. Our systems automate
and integrate information received from real-time Web sites, call
centers, fulfillment centers and vendors. We have assembled a
network of call centers and fulfillment centers which, at June
30, 2000, consisted of one company-owned call center, four
third-party call centers, one company-owned fulfillment center
and seven third-party fulfillment centers. Our network can
increase or decrease in size and services offered to meet the
specific needs of our clients.

We
derive our revenues from systems services, call center services,
fulfillment services and, to a much lesser extent, other
services. Other services consist of client management services,
Web site related services and consulting services. For the three
and six months ended June 30, 2000, the percentage of total
revenues by service category was as follows:

Service
        Category
        % of Total Revenue for
          Three Months EndedJune
        30, 2000
        % of Total Revenue for
          Six Months EndedJune
        30, 2000Systems
        services
        35%
        34%Call center
        services
        40%
        40%Fulfillment
        services
        25%
        26%Other
        services
        Less than 1%
        Less than 1%TOTAL
        100%                          
        ==========
        100%                   
        ==========


We
typically charge on a per-transaction basis for systems
processing, on a per-minute basis for call center services and on
a per-item basis for fulfillment services. Additional fees are
billed for other services. We price our services based on a
variety of factors including the depth and complexity of the
services provided, the amount of required systems customization,
length of contract and other factors. Our revenues are recognized
as our services are rendered and the majority of our clients are
billed on a weekly basis. Our client contracts can be cancelled
on a 180 or fewer days notice.

6

<PAGE>

Our expenses are comprised of:

cost of
        revenues, which consists primarily of compensation and
        related expenses of our call center, fulfillment center,
        and technical services employees and the variable costs
        of third-party call center and fulfillment center
        services;selling,
        general and administrative, which consists primarily of
        compensation and related expenses for our executive
        group; our sales and marketing staff; our client service
        and administrative personnel and software technicians;
        occupancy costs; software costs; marketing programs;
        other administrative personnel; anddepreciation
        and amortization expense.


Results of Operations

Comparison
of the Three Months Ended June 30, 2000 to the Three Months Ended
June 30, 1999

Revenues.
Our revenues decreased 41% to $1.5 million for the three months
ended June 30, 2000 from $2.5 million for the three months ended
June 30, 1999. The decrease in revenue over the period was due
primarily to a decrease in the number of full three months
equivalent clients at June 30, 2000 compared to June 30, 1999.
Sears accounted for 81% of total revenues for the three months
ended June 30, 2000 and 57% of total revenues for the three
months ended June 30, 1999.

Cost
of Revenues. Cost of revenues decreased 9% to $1.5
million for the three months ended June 30, 2000 from $1.6
million for the three months ended June 30, 1999. The decrease in
the cost of revenue is due primarily to the reduction of call
center, fulfillment center and technical service personnel
required to support existing clients. As a percentage of
revenues, cost of revenues was 103% for the three months ended
June 30, 2000 and 66% for the three months ended June 30, 1999.

Selling,
General and Administrative Expense. For the three months
ended June 30, 2000, our selling, general and administrative, or
SG&A expense was $5.4 million compared to $1.7 million for
the same period of 1999, an increase of 211%. The increase in
costs was primarily the result of increased employee levels to
match the anticipated increase in activity. Additionally, we
accrued approximately $400,000 for employment agreement
provisions payable in the future. See our discussion of
restructuring costs for an explanation of how we have taken
actions to reduce our SG&A expenses.

Depreciation
and Amortization. For the three months ended June 30,
2000, depreciation and amortization expense was approximately
$531,000 compared to $253,000 for the same period of 1999, an
increase of 110%. Depreciation and amortization expense increased
to 37% of revenues for the three months ended June 30, 2000 from
10% for the three months ended June 30, 1999. The increase
corresponds with the increase in computer equipment purchased for
internal use.

Restructuring
Costs.In May, 2000, we began the process of reviewing
our overall business plan, beginning with major changes to
specific components of our operations. We decided to terminate
the software development of Mercury, a browser-based platform,
and replace it with Omnigy, our new services platform which
combines third party technologies with proprietary integration
and framework. We also changed our business name to
"Ascendant Solutions". In connection with our
restructuring, we terminated and paid severance to 55 employees.
The reductions were primarily in Mercury software development and
systems services groups, and certain executive positions. We have
identified our costs related to these changes and classified them
as restructuring costs in the accompanying statements of
operations so that our results will be more easily comparable to
future periods as we operate under our new direction.
Restructuring charges incurred to date have totaled $2,460,000,
broken down into the following summary:

7

<PAGE>

| | Write off of
        Mercury software | $     1,294,000                
| | ------------------------------------- | -------------------------------
| | Employee
        severance and other  |                                
| |                                       |                                
| | payroll
        and benefit charges   | 804,000                        
| | Professional
        services         | 260,000                        
| | Other                                 | 102,000                        
| | Total                                 | $   2,460,000
        =========

Restructuring charges in the amount of $440,000
remained unpaid as of June 30, 2000.

Interest
income (expense), net. For the three months ended June
30, 2000 interest income, net of expense, was approximately
$492,000 compared to approximately $30,000 in net interest
expense for the prior year. The interest income for the current
year is attributed to investment income on proceeds from our
initial public offering completed in the fourth quarter of 1999.

Comparison of the Six Months Ended June
30, 2000 to the Six Months Ended June 30, 1999

Revenues.
Our revenues decreased 34% to $3.1 million for the six months
ended June 30, 2000 from $4.7 million for the six months ended
June 30, 1999. The decrease in revenue over the period was due
primarily to a decrease in the number of full six months
equivalent clients at June 30, 1999 compared to June 30, 2000.
Sears accounted for 82% of total revenues for the six months
ended June 30, 2000 and 78% of total revenues for the six months
ended June 30, 1999.

Cost
of Revenues. Cost of revenues were $3.3 for both six
month periods ending June 30, 2000 and June 30, 1999. As a
percentage of revenues, cost of revenues was 107% for the six
months ended June 30, 2000 and 71% for the six months ended June
30, 1999. The increase in costs was primarily the result of
increased employee levels to match the anticipated activity.

Selling,
General and Administrative Expense. For the six months
ended June 30, 2000, our selling, general and administrative, or
SG&A, expense was $10.1 million compared to $3.0 million for
the same period of 1999, an increase of 234%. The increase in
costs was primarily the result of increased employee levels to
match the anticipated activity. Additionally, we accrued
approximately $400,000 for employment agreement provisions
payable in the future. See our discussion of restructuring costs
for an explanation of how we have taken actions to reduce our
SG&A expenses.

Depreciation
and Amortization. For the six months ended June 30, 2000,
depreciation and amortization expense was approximately $995,000
compared to $574,000 for the same period of 1999, an increase of
73%. Depreciation and amortization expense increased to 32% of
revenues for the six months ended June 30, 2000 from 12% for the
six months ended June 30, 1999. The increase corresponds with the
increase in computer equipment purchased for internal use.

Restructuring
Costs.In May, 2000, we began the process of reviewing
our overall business plan, beginning with major changes to
specific components of our operations. We decided to terminate
the software development of Mercury, a browser-based platform,
and replace it with Omnigy, our new services platform which
combines third party technologies with proprietary integration
and framework. We also changed our business name to
"Ascendant Solutions". In connection with our
restructuring, we terminated and paid severance to 55 employees.
The reductions were primarily in Mercury software development and
systems services groups, and certain executive positions. We have
identified our costs related to these changes and classified them
as restructuring costs in the accompanying statements of
operations so that our results will be more easily comparable to
future periods as we operate under our new direction.
Restructuring charges incurred to date have totaled $2,460,000,
broken down into the following summary:

<PAGE>

| | Write off of
        Mercury software | $1,294,000                 
| | ------------------------------------- | ---------------------------
| | Employee
        severance and other  |                            
| |                                       |                            
| | payroll
        and benefit charges   | 804,000                    
| | Professional
        services         | 260,000                    
| | Other                                 | 102,000                    
| | Total                                 | $2,460,000
        ========

Restructuring charges in the amount of $440,000
remained unpaid as of June 30, 2000.

Interest
income (expense), net. For the six months ended June 30,
2000 interest income, net of expense, was approximately $969,000
compared to approximately $68,000 in net interest expense for the
prior year. The interest income for the current year is
attributed to investment income on proceeds from our initial
public offering completed in the fourth quarter of 1999.

Factors Affecting Operating Results

We
have experienced significant fluctuations in our results of
operations from quarter to quarter. As a result of these
fluctuations, period-to-period comparison of our operating
results is not necessarily meaningful and should not be relied
upon as an indicator of future performance. We expect our future
operating results to fluctuate. Factors that are likely to cause
these fluctuations include:

demand for
        and market acceptance of our order management and
        fulfillment systems and services, specifically our new
        Omnigy platform;client
        retention;fluctuations
        in third-party call center and fulfillment center costs;timing and
        magnitude of capital expenditures;costs
        relating to the expansion of our operations and the
        development and/or acquisition of additional software
        applications;introduction
        of new systems and services or enhancements by us or our
        competitors;the ability
        to meet the technological demands of our clients;changes in
        our pricing policies or those of our competitors;economic
        conditions specific to the order management and
        fulfillment industry, as well as generally; andthe effect of
        potential strategic acquisitions or alliances.


9

<PAGE>

As a result of these and other factors, our
future operating results may fall below the expectations of
securities analysts and investors. In this event, the price of
our common stock could decrease, perhaps significantly.

Seasonality

Our
revenues and business are seasonal. We expect to continue to
experience seasonal fluctuation of revenues and operating results
in the future which, we believe, will cause period-to-period
comparisons of our results of operations to be inappropriate as
indicators of future performance. Many retail businesses,
including Sears and other clients, sell more products during the
holiday season than in any other portion of the year. For
example, the Sears Wish Book catalog is mailed only twice per
year during the third and fourth calendar quarters. Accordingly,
because we generate the vast majority of our revenue on a
per-transaction basis, we recognize a disproportionate portion of
our annual revenue in the last three months of the year. As a
result of our seasonal business, we also have additional risks in
processing a large volume of transactions in short time periods.

Liquidity and Capital Resources

Prior
to our initial public offering, we financed our operations
principally through funds from the private placement of equity
securities. We completed our initial public offering of 5,750,000
shares of common stock in November 1999, which yielded net
proceeds of approximately $41.9 million. Prior to the initial
public offering, we also supplemented our capital needs with
short-term borrowings under a credit facility maintained with
Comerica Bank-Texas. As of June 30, 2000, we had working capital
of approximately $23.2 million.

For
the six months ended June 30, 2000, net cash used in operating
activities was approximately $9.4 million compared to
approximately $1.4 million for the six months ended June 30,
1999. The increase in cash used resulted primarily from operating
losses, and approximately $712,000 related to the restructuring
costs.

Our
capital expenditures amounted to approximately $3.0 million for
the six months ended June 30, 2000 and approximately $1.6 million
for the six months ended June 30, 1999. For the six months ended
June 30, 2000 capital expenditures included software development
costs of $505,000 related to the Mercury software platform
(before it was discontinued). The remainder of the additions
related primarily to the purchase of software and other technical
equipment.

We
historically maintained a $2.0 million revolving line of credit
with Comerica Bank which was secured by our assets. This facility
expired on May 13, 2000 and to date has not been renewed. No
assurances can be made that we will be able to secure a new
facility with terms and an amount acceptable to the company if
and when we desire to do so.

We
believe that the proceeds from our initial public offering closed
in November 1999 will be sufficient to meet our working capital
and capital expenditure requirements for at least the next 12
months. However, the execution of our business plan will require
substantial additional capital to fund our operating losses,
working capital needs, sales and marketing expenses, lease
payments and capital expenditures thereafter. In the event our
plans or assumptions change or prove to be inaccurate we may be
required to seek additional sources of capital. In addition,
although no significant business acquisitions were planned or
reasonably likely at the time of filing this report, we may need
to seek additional sources of capital to the extent any
materializes during that period. Sources of additional capital
may include public and private equity and debt financings, sales
of nonstrategic assets and other financing arrangements.

ITEM
3.        QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We
currently do not engage in commodity futures trading or hedging
activities and do not enter into derivative financial instrument
transactions for trading or other speculative purposes. We also
do not currently engage in transactions in foreign currencies or
in interest rate swap transactions that could expose us to market
risk.

10

<PAGE>

We
may be exposed, in the normal course of doing business, to market
risk through changes in interest rates. We currently minimize
such risk by investing our temporary cash primarily in repurchase
obligations collateralized by commercial mortgages. As a result,
we do not believe that we have a material interest rate risk to
manage.

11

<PAGE>

PART II.
OTHER INFORMATION

ITEM
1.        LEGAL
PROCEEDINGS

On
April 21, 2000, the Original Honey Baked Ham Company of Georgia,
Inc. ("HBH") filed suit against the company to recover
damages for breach of contract related to services performed by
the company for HBH in 1999. The lawsuit seeks compensatory
damages, incidental and consequential damages and other costs,
fees and expenses including attorneys fees and legal
expenses in excess of $10.0 million. We filed a claim and are
actively exploring a number of possible counterclaims against
HBH. Management denies plaintiffs allegations and intends
to vigorously defend the lawsuit. Since this claim is at a very
early stage, the company is unable to predict with any certainty
what the outcome with respect to any claim might be, and
therefore the company has not provided a reserve for potential
claims, nor has it provided a reserve against its receivable from
HBH.

ITEM
2.        CHANGES IN
SECURITIES AND USE OF PROCEEDS

Use of Proceeds

|(1)        On
        November 10, 1999, the Securities and Exchange
        Commission declared effective the Registration Statement
        on Form S-1 (File No. 333-85983) relating to our initial
        public offering. Net offering proceeds to us from this
        offering were approximately $41,880,000.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                      
|(2)        Unchanged
        since originally reported in our Annual Report on Form
        10-K for the year ended December 31, 1999.                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                      
|(3)        Unchanged
        since originally reported in our Annual Report on Form
        10-K for the year ended December 31, 1999.                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                      
|(4)(i)-(vi)  Unchanged
        since originally reported in our Annual Report on Form
        10-K for the year ended December 31, 1999.                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                      
|(vii)         From
        November 10, 1999 (the effective date of the
        Registration Statement) to June 30, 2000 (the ending date
        of this report), we expended net offering proceeds for
        the following uses:                                                                                  

| | Construction
        of plant, building and
        facilities..  | $ | 0          
| | -------------------------------------------------------------------------- | - | -----------
| | Purchase and
        installation of machinery and
        equipment. | $ | 3,540,000  
| | Purchase of
        real
        estate                                    | $ | 0          
| | Acquisition
        of other
        businesses..            | $ | 0          
| | Repayment of
        indebtedness                                          | $ | 3,570,000  
| | Working
        capital..                              | $ | 10,210,000 
| | Temporary
        investments.                            | $ | 24,560,000*

All of the payments referenced above were
direct or indirect payments to others.

*        Pending
final application of the net proceeds of the offering, we have
invested such proceeds primarily in cash and cash equivalents.

(viii)        Material
change in the use of proceeds: Not applicable.

We
have not yet determined the actual use of the proceeds derived
from the offering, and thus cannot estimate the amounts to be
used for each purpose discussed above. The amounts and timing of
these expenditures will vary significantly depending on a number
of factors, including such factors as the amount, if any, of cash
generated by our operations and the market response to our
service offerings. Accordingly, our management will have broad
discretion in the application of the net proceeds. Our
stockholders will not have the opportunity to evaluate the
economic, financial or other information on which we base our
decisions on how to use the proceeds.

ITEM
3.        DEFAULTS UPON
SENIOR SECURITIES

None

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

(a)
        We held our
        Annual Meeting of Stockholders on May 12, 2000.(b)
        Proxies for
        the meeting were solicited pursuant to Regulation 14
        under the Securities Exchange Act of 1934, as amended;
        there was no solicitation in opposition to
        managements nominees as listed in the Proxy
        Statement and all such nominees were elected.


The
following two directors were elected as Class A directors to
serve a three-year term ending with the 2003 Annual Meeting of
Stockholders:

| | Class A Directors
        --------------------------------------- | 
| | ----------------------------------------------------------------- | 
| | Paul G. Sherer                                                    | 
| | David E. Bowe                                                     | 

Directors
continuing in office after the meeting were:

| | Class B Directors
        --------------------------------------- | 
| | ----------------------------------------------------------------- | 
| | Kevin P. Yancy                                                    | 
| | Jonathan R. Bloch                                                 | 
| |                                                                   | 
| | Class C Directors
        --------------------------------------- | 
| | Norman Charney                                                    | 
| | Alan E. Salzman                                                   | 

|(c) |  | Our proposal
        to increase the number of shares available under our 1999
        Long Term Incentive Plan received the following votes:
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------

| | For     | 9,159,586
| | ------- | ---------
| | Against | 185,335  
| | Abstain | 6,900    
| |         |          

Our proposal
        to ratify the appointment of Ernst & Young LLP as our
        independent auditors for the year ending
        December 31, 2000 received the following votes:


| | For     | 13,832,880
| | ------- | ----------
| | Against | 28,220    
| | Abstain | 4,996     

|(d) | Not
        applicable.
|--- | -----------------------

ITEM
5.        OTHER
INFORMATION

13

<PAGE>

Recent Events

None

ITEM
6.        EXHIBITS AND
REPORTS ON FORM 8-K

|(a) | Exhibits                                
|--- | ----------------------------------------
|    |                                         
|    | 27.1     Financial
        Data Schedule
|    |                                         
|(b) | Reports on
        Form 8-K             
|    |                                         
|    | None                                    



14

<PAGE>

SIGNATURE

Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

|Date:
        August 14, 2000 |  | ASD
        SYSTEMS, INC., d/b/a Ascendant Solutions
|----------------------------- |  | ----------------------------------------------------
|                              |  |                                                     
|                              |  |                                                     
|                              |  |                                                     
|                              |  |                                                     
|                              |  |                                                     





15

<PAGE>

EXHIBIT INDEX



|No.  | Description                    
|---- | -------------------------------
|     |                                
|     |                                
|27.1 | Financial
        Data Schedule

16