**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-KSB**


**(MARK
      ONE)**





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





**For
      the fiscal year ended December 31, 2006**




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




**For
      the transition period from to**


**Commission
      file number** **000-51840**





**ASCEND
                ACQUISITION CORP.****(Name
                of small business issuer in its
                charter)**





**Delaware**
              
              **20-3881465**(State
                  or other jurisdiction of incorporation or organization)
              
              (I.R.S.
                  Employer Identification No.)




**435
                  Devon Park Drive, Bldg. 400, Wayne, PA**
              **19087**(Address
                  of principal executive offices)
              (Zip
                  Code)


**Issuer’s
      telephone number: (610) 293-2512**





**Securities
      registered under Section 12(b) of the Exchange Act: None**





**Securities
      registered under Section 12(g) of the Exchange Act:**





**Units
        consisting of one share of Common Stock,**
 **par
        value $.0001 per share, and two Warrants**
 
 **Common
        Stock, par value $.0001 per share**
 
 **Warrants
        to purchase shares of Common Stock**














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 x No o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB.  x





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





State
      issuer’s revenues for its most recent fiscal year: None





State
      the
      aggregate market value of voting and non-voting common equity held by
      non-affiliates of registrant based upon the average bid and asked sale price
      on
      March 5, 2007: $25,236,316.49





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date: 8,566,667 as of March 14, 2007




**DOCUMENTS
      INCORPORATED BY REFERENCE**





None.





Transitional
      Small Business Disclosure Format (Check one): Yes o No x







***CAUTIONARY
      STATEMENT FOR FORWARD-LOOKING STATEMENTS***





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




**PART
      I**




**Item
      1. Description of Business** **.**




**Introduction**






We
      are a
      blank check company formed to serve as a vehicle for the acquisition of an
      operating business. We were incorporated in Delaware on December 5, 2005. The
      registration statement for our initial public offering ("the Offering") was
      declared effective May 11, 2006. On May 17, 2006, we sold 6,000,000 units in
      the
      Offering and on May 22, 2006, we sold 900,000 units in the Offering. The total
      units sold of 6,900,000 includes all of the 900,000 units subject to the
      underwriters’ overallotment option. Each of our units consists of one share of
      our common stock, $.0001 par value per share, and two redeemable common stock
      purchase warrants. Each warrant entitles the holder to purchase from us one
      share of common stock at an exercise price of $5.00. We received net proceeds
      of
      approximately $37,203,000 from the Offering.




Don
      K.
      Rice, our chairman of the board, chief executive officer, president and
      treasurer, purchased 166,667
      Units at $6.00 per unit (for an
      aggregate purchase price of $1,000,002) from us. This purchase took place on
      a
      private placement basis simultaneously with the consummation of the Offering.
      The “insider units” are identical to the Offering units; however, Mr. Rice has
      waived his right to receive distributions upon our liquidation prior to a
      business combination with respect to the securities underlying the insider
      units. Additionally, he has agreed that the insider units and underlying
      securities will not be sold or transferred by him until after we have completed
      a business combination.




Our
      management has broad discretion with respect to the specific application of
      the
      net proceeds of the Offering. $38,510,202, which includes $1,000,002 relating
      to
      the sale of insider units and $952,200 deferred payment due to the underwriter,
      of these net proceeds has been placed in a trust account and invested in United
      States “government securities” within
      the meaning of Section 2(a)(16) of the Investment Company Act of 1940 with
      a
      maturity of 180 days or less, or in money market funds meeting certain
      conditions under Rule 2a-7 promulgated under the Investment Company Act of
      1940. The
      funds held in the trust account will not be released until the earlier of the
      date on which we consummate a business combination or liquidate our
      assets.








1




We
      are
      not presently engaged in, and we will not engage in, any substantive commercial
      business until we consummate a business combination. We intend to utilize cash
      derived from the proceeds of the Offering, our capital stock, debt or a
      combination of these in effecting a business combination. Although substantially
      all of the net proceeds of the Offering are intended to be applied generally
      toward effecting a business combination, the proceeds are not otherwise being
      designated for any more specific purposes. A business combination may involve
      the acquisition of, or merger with, a company which does not need substantial
      additional capital but which desires to establish a public trading market for
      its shares, while avoiding what it may deem to be adverse consequences of
      undertaking a public offering itself. These include time delays, significant
      expense, loss of voting control and compliance with various Federal and state
      securities laws. In the alternative, we may seek to consummate a business
      combination with a company that may be financially unstable or in its early
      stages of development or growth. While we may seek to effect business
      combinations with more than one target business, we will probably have the
      ability, as a result of our limited resources, to effect only a single business
      combination.




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




We
      anticipate that target business candidates will be brought to our attention
      from
      various unaffiliated sources, including investment bankers, venture capital
      funds, private equity funds, leveraged buyout funds, management buyout funds
      and
      other members of the financial community, who may present solicited or
      unsolicited proposals. Our officers, directors and stockholders as well as
      their
      affiliates may also bring to our attention target business candidates. We have,
      and may again in the future, engage professional firms that specialize in
      business acquisitions to assist us in our search for a target business. If
      we
      do, we may be required to pay such firm a finder’s fee or other compensation. In
      no event, however, will we pay any of our initial officers, directors or
      stockholders (collectively, our “Founders”) or any entity with which they are
      affiliated any finder’s fee or other compensation for services rendered to us
      prior to or in connection with the consummation of a business
      combination.




Subject
      to the requirement that our initial business combination must be with a target
      business with a fair market value that is at least 80% of our net assets at
      the
      time of such acquisition, our management has virtually unrestricted flexibility
      in identifying and selecting a prospective target business. We have not
      established any other specific attributes or criteria (financial or otherwise)
      for prospective target businesses. In evaluating a prospective target business,
      our management will consider, among other factors, the following:




·
            financial
                condition and results of
                operations;




·
            growth
                potential;




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




·
            capital
                requirements;




·
            competitive
                position;




·
            barriers
                to entry;








2




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




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




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




·
            regulatory
                environment of the industry; and




·
            costs
                associated with effecting the business
                combination.




These
      criteria are not intended to be exhaustive. Any evaluation relating to the
      merits of a particular business combination will be based, to the extent
      relevant, on the above factors as well as other considerations deemed relevant
      by our management in effecting a business combination consistent with our
      business objective. In evaluating a prospective target business, we will conduct
      an extensive due diligence review which will encompass, among other things,
      meetings with incumbent management and inspection of facilities, as well as
      review of financial and other information which is made available to us. This
      due diligence review will be conducted either by our management or by
      unaffiliated third parties we may engage, although we have no current intention
      to engage any such third parties. We will also seek to have all prospective
      target businesses execute agreements with us waiving any right, title, interest
      or claim of any kind in or to any monies held in the trust account. If any
      prospective target business refused to execute such agreement, it is unlikely
      we
      would continue negotiations with such target business.




*Fair
      market value of target business*




The
      target business that we acquire must have a fair market value equal to at least
      80% of our net assets at the time of such acquisition, although
      we may acquire a target business whose fair market value significantly exceeds
      80% of our net assets. In order to consummate such an acquisition, we may issue
      a significant amount of our debt or equity securities to the sellers of such
      businesses and/or seek to raise additional funds through a private offering
      of
      debt or equity securities. Since we have no specific business combination under
      consideration, we have not entered into any such fund raising arrangement and
      have no current intention of doing so. The fair
      market value the target will be determined by our board of directors based
      upon
      standards generally accepted by the financial community, such as actual and
      potential sales, earnings and cash flow and book value. If our board is not
      able
      to independently determine that the target business has a sufficient fair market
      value, we will obtain an opinion from an unaffiliated, independent investment
      banking firm with respect to the satisfaction of such criteria. Since any
      opinion, if obtained, would merely state that fair market value meets the 80%
      of
      net assets threshold, it is not anticipated that copies of such opinion would
      be
      distributed to our stockholders, although copies will be provided to
      stockholders who request it. We will not be required to obtain an opinion from
      an investment banking firm as to the fair market value if our board of directors
      independently determines that the target business complies with the 80%
      threshold.




*Opportunity
      for stockholder approval of business combination*




Pursuant
      to our certificate of incorporation, prior to the completion of a business
      combination, we will submit the transaction to our stockholders for approval,
      even if the nature of






3




the
      acquisition is such as would not ordinarily require stockholder approval under
      applicable state law. We view this requirement as an obligation to our
      stockholders and will not take any action to amend or waive this provision
      in
      our certificate of incorporation. In connection with seeking stockholder
      approval of a business combination, we will furnish our stockholders with proxy
      solicitation materials prepared in accordance with the Securities Exchange
      Act
      of 1934, as amended, which, among other matters, will include a description
      of
      the operations of the target business and audited historical financial
      statements of the business.




In
      connection with the vote required for any business combination, all of our
      Founders have agreed to vote their respective initial shares and the shares
      included within the insider units (“Founder Shares”) in accordance with the
      majority of the shares of common stock voted by the public stockholders. This
      voting arrangement shall not apply to shares included in units purchased in
      the
      Offering or purchased following the Offering in the open market by any of our
      initial stockholders, officers and directors. Accordingly, they may vote these
      shares on a proposed business combination any way they choose. We will proceed
      with the business combination only if a majority of the shares of common stock
      voted by the public stockholders are voted in favor of the business combination
      and public stockholders owning less than 20% of the shares sold in the Offering
      exercise their conversion rights and vote against the business combination.




*Conversion
      rights*




Pursuant
      to our certificate of incorporation, at the time we seek stockholder approval
      of
      any business combination, we will offer each public stockholder the right to
      have such stockholder’s share of common stock converted to cash if the
      stockholder votes against the business combination and the business combination
      is approved and completed. We view this requirement as an obligation to our
      stockholders and will not take any action to amend or waive this provision
      in
      our certificate of incorporation. Our initial stockholders will not have such
      conversion rights with respect to any shares of common stock owned by them,
      directly or indirectly, whether included in their initial shares, included
      in
      their insider units or purchased by them in this offering or in the
      aftermarket.  The
      actual per-share conversion price will be equal to the amount in the trust
      account, inclusive of any interest (calculated as of two business days prior
      to
      the consummation of the proposed business combination), divided by the number
      of
      shares sold in the Offering. As of December 31, 2006, the per-share conversion
      price would have been $5.70. An eligible stockholder may request conversion
      at
      any time after the mailing to our stockholders of the proxy statement and prior
      to the vote taken with respect to a proposed business combination at a meeting
      held for that purpose, but the request will not be granted unless the
      stockholder votes against the business combination and the business combination
      is approved and completed. Any request for conversion, once made, may be
      withdrawn at any time up to the date of the meeting. It is anticipated that
      the
      funds to be distributed to stockholders entitled to convert their shares who
      elect conversion will be distributed promptly after completion of a business
      combination. Public stockholders who convert their stock into their share of
      the
      trust account still have the right to exercise any warrants they still hold.




We
      will
      not complete any business combination if public stockholders, owning 20% or
      more
      of the shares sold in the Offering, both exercise their conversion rights and
      vote against the business combination. Accordingly, it is our understanding
      and
      intention in every case to structure and consummate a business combination
      in
      which approximately 19.99% of the public stockholders may exercise their
      conversion rights and the business combination will still go
      forward.






4




*Liquidation
      if no business combination*




Pursuant
      to, among other documents, our certificate of incorporation, if we do not
      complete a business combination within 18 months after the completion of the
      Offering (November 17, 2007), or within 24 months (May 17, 2008) if the
      extension criteria described below have been satisfied, we will be dissolved.
      We
      view this obligation to dissolve and liquidate as an obligation to our
      stockholders and will not take any action to amend or waive any provision of
      our
      certificate of incorporation to allow us to survive for a longer period of
      time
      if it does not appear we will be able to consummate a business combination
      within the foregoing time periods. Upon dissolution, we will distribute to
      all
      of our public stockholders, in proportion to their respective equity interests,
      an aggregate sum equal to the amount in the trust account, inclusive of any
      interest, plus any remaining net assets. The Founders have waived their rights
      to participate in any liquidation distribution with respect to their Founder
      Shares and their shares included within the insider units. There will be no
      distribution from the trust account with respect to our warrants which will
      expire worthless. We will pay the costs of liquidation and dissolution from
      our
      remaining assets outside of the trust fund.




If
      we
      were to expend all of the net proceeds of the Offering, other than the proceeds
      deposited in the trust account, and without taking into account interest, if
      any, earned on the trust account, the initial per-share liquidation price would
      be $5.58. The proceeds deposited in the trust account could, however, become
      subject to the claims of our creditors, which could have higher priority than
      the claims of our public stockholders. We cannot assure you that the actual
      per-share liquidation price will not be less than $5.58, plus interest, due
      to
      claims of creditors. Don
      K.
      Rice has personally agreed, pursuant to an agreement with us and
      EarlyBirdCapital that, if we liquidate
      prior to the consummation of a business combination, he will be
      personally liable to pay debts and obligations to target businesses or vendors
      or other entities that are owed money by us for services rendered or contracted
      or products sold to us in
      excess of the net proceeds of the Offering not held in the trust account. We
      cannot assure you, however, that he would be able to satisfy those
      obligations.




If
      we
      enter into either a letter of intent, an agreement in principle or a definitive
      agreement to complete a business combination prior to the expiration of 18
      months (November 17, 2007) after the completion of the Offering, but are unable
      to complete the business combination within the 18-month period, then we will
      have an additional six months (May 17, 2008) in which to complete the business
      combination contemplated by the letter of intent, agreement in principle or
      definitive agreement. If we are unable to do so within 24 months following
      the
      completion of the Offering, we will then liquidate. Upon notice from us, the
      trustee of the trust account will liquidate the investments constituting the
      trust account and will turn over the proceeds to our transfer agent for
      distribution to our public stockholders. We anticipate that our instruction
      to
      the trustee would be given promptly after the expiration of the applicable
      18-month or 24-month period.




Under
      the
      Delaware General Corporation Law, stockholders may be held liable for claims
      by
      third parties against a corporation to the extent of distributions received
      by
      them in a dissolution. If the corporation complies with certain procedures
      set
      forth in Section 280 of the Delaware General Corporation Law intended to ensure
      that it makes reasonable provision for all claims against it, including a 60-day
      notice period during which any third-party claims can be brought against the
      corporation, a 90-day period during which the corporation may reject any claims
      brought, and an additional 150-day waiting period before any liquidating
      distributions are made to stockholders, any liability of stockholders with
      respect to a liquidating distribution is limited to the lesser of such
      stockholder’s pro rata share of the claim or the amount distributed to the
      stockholder, and any liability of the stockholder would be barred after the
      third anniversary of the dissolution. However,






5




as
      stated
      above, it is our intention to make liquidating distributions to our stockholders
      as soon as reasonably possible after dissolution and, therefore, we do not
      intend to comply with those procedures. As such, our stockholders could
      potentially be liable for any claims to the extent of distributions received
      by
      them in a dissolution and any liability of our stockholders may extend beyond
      the third anniversary of such dissolution. Because we will not be complying
      with
      Section 280, Section 291(b) of the Delaware General Corporation Law requires
      us
      to adopt a plan of dissolution that will provide for our payment, based on
      facts
      known to us at such time, of (i) all existing claims, (ii) all pending claims
      and (iii) all claims that may be potentially brought against us within the
      subsequent 10 years. However, because we are a blank check company, rather
      than
      an operating company, and our operations will be limited to searching for
      prospective target businesses to acquire, the only likely claims to arise would
      be from our vendors (such as accountants, lawyers, investment bankers, etc.)
      or
      potential target businesses. As described above, we are obligated to have all
      vendors and prospective target businesses execute agreements with us waiving
      any
      right, title, interest or claim of any kind in or to any monies held in the
      trust account. As a result of this obligation, the claims that could be made
      against us are significantly limited and the likelihood that any claim that
      would result in any liability extending to the trust is remote. Moreover,
      because we are obligated to obtain the waiver letters described above, the
      funds
      held in trust would be excluded from the claims of any creditors in connection
      with any bankruptcy proceeding.




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




**Competition**




In
      identifying, evaluating and selecting a target business, we may encounter
      intense competition from other entities having a business objective similar
      to
      ours. There are numerous blank check companies that have completed initial
      public offerings in the United States that are seeking to carry out a business
      plan similar to our business plan. Furthermore,
      there are a number of additional offerings for blank check companies that are
      still in the registration process but have not completed initial public
      offerings and there are likely to be more blank check companies filing
      registration statements for initial public offerings prior to our completion
      of
      a business combination. Additionally,
      we may be subject to competition from entities
      other than blank check companies having a business objective similar to ours,
      including venture capital firms, leverage buyout firms and operating businesses looking
      to expand their operations through the acquisition of a target business. Many
      of
      these entities are well established and have extensive experience identifying
      and effecting business combinations directly or through affiliates. Many of
      these competitors possess greater technical, human and other resources than
      us
      and our financial resources will be relatively limited when contrasted with
      those of many of these competitors. While we believe there may be numerous
      potential target businesses that we could acquire, our ability to compete in
      acquiring certain sizable target businesses will be limited by our available
      financial resources. This inherent competitive limitation gives others an
      advantage in pursuing the acquisition of a target business. Further, the
      following may not be viewed favorably by certain target businesses:




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






6




·
            our
                obligation to convert into cash shares of common stock held by our
                public
                stockholders to such holders that both vote against the business
                combination and exercise their conversion rights may reduce the resources
                available to us for a business combination; and




·
            our
                outstanding warrants and options, and the future dilution they represent.




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




If
      we
      succeed in effecting a business combination, there will be, in all likelihood,
      intense competition from competitors of the target business. We cannot assure
      you that, subsequent to a business combination, we will have the resources
      or
      ability to compete effectively.




**Employees**




We
      have
      two executive officers. These individuals are not obligated to devote any
      specific number of hours to our matters and intend to devote only as much time
      as he deems necessary to our affairs. The amount of time they will devote in
      any
      time period will vary based on whether
      a
      target business has been selected for the business combination and the stage
      of
      the business combination process the company is in. Accordingly, once management
      locates a suitable target business to acquire, they will spend more time
      investigating such target business and negotiating and processing the business
      combination (and consequently spend more time to our affairs) than they would
      prior to locating a suitable target business. W e
      presently expect Mr. Rice to devote an average of approximately 10 hours per
      week to our business. We do not intend to have any full time employees prior
      to
      the consummation of a business combination.




**Risks
      associated with our business**




In
      addition to other information included in this report, the following factors
      should be considered in evaluating our business and future
      prospects.




***We
      are a development stage company with no operating history and very limited
      resources.***




We
      are a
      recently incorporated development stage company with no operating results to
      date. Since we do not have an operating history, you will have no basis upon
      which to evaluate our ability to achieve our business objective, which is to
      acquire an unidentified operating business. We will not generate any revenues
      until, at the earliest, after the consummation of a business
      combination.




***If
      the net proceeds of the Offering not being placed in trust are insufficient
      to
      allow us to operate for at least the next 24 months, we may be unable to
      complete a business combination.***




We
      believe that the funds available to us outside of the trust account will be
      sufficient to allow us to operate for at least 24 months, assuming that a
      business combination is not consummated during that time. However,
      we cannot assure you that our estimates will be accurate.






7




We
      could
      use a portion of the funds not being placed in trust to pay fees to consultants
      to assist us with our search for a target business. W e
      could
      also use a portion of the funds not being placed in trust as a down payment
      or
      to fund a “no-shop” provision (a provision in letters of intent designed to keep
      target businesses from “shopping” around for transactions with other companies
      on terms more favorable to such target businesses) with respect to a particular
      proposed business combination, although we do not have any current intention
      to
      do so. If we entered into a letter of intent where we paid for the right to
      receive exclusivity from a target business and were subsequently required to
      forfeit such funds (whether as a result of our breach or otherwise), we might
      not have sufficient funds to continue searching for, or conduct due diligence
      with respect to, a target business.




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




There
      are
      numerous blank check companies that are seeking to carry out a business plan
      similar to our business plan. Furthermore, there are a number of additional
      offerings for blank check companies that are still in the registration process
      but have not completed initial public offerings and there are likely to be
      more
      blank check companies filing registration statements for initial public
      offerings prior to our completion of a business combination. While some of
      those
      companies must complete a business combination in specific industries, a number
      of them may consummate a business combination in any industry they choose.
      Therefore, we may be subject to competition from these and other companies
      seeking to consummate a business plan similar to ours. Because of this
      competition, we cannot assure you that we will be able to effectuate a business
      combination within the required time periods.




***If
      third parties bring claims against us, the proceeds held in trust could be
      reduced and the per-share liquidation price received by stockholders will be
      less than $5.58 per share, plus interest.***




Our
      placing of funds in trust may not protect those funds from third party claims
      against us. Although
      we will seek to have all vendors and service providers we engage and prospective
      target businesses we negotiate with, execute agreements with us waiving any
      right, title, interest or claim of any kind in or to any monies held in the
      trust account for the benefit of our public stockholders, there is no guarantee
      that they will execute such agreements. Nor is there any guarantee that, even
      if
      such entities execute such agreements with us, they will not seek recourse
      against the trust account. Accordingly, the
      proceeds held in trust could be subject to claims which could take priority
      over
      the claims of our public stockholders. We cannot assure you that the per-share
      distribution from the trust fund, if we liquidate, will not be less than $5.58,
      plus interest, due to such claims. If we liquidate before the completion of
      a
      business combination and distribute the proceeds held in trust to our public
      stockholders, Don K. Rice, our chairman of the board, chief executive officer,
      president and treasurer, has agreed that he will be personally liable to ensure
      that the proceeds in the trust account are not reduced by the claims of target
      businesses or claims of vendors or other entities that are owed money by us
      for
      services rendered or contracted for or products sold to us. However, we cannot
      assure you that he will be able to satisfy those obligations. Nevertheless,
      we
      are obligated to have all vendors and prospective target businesses execute
      agreements with us waiving any right, title, interest or claim of any kind
      in or
      to any monies held in the trust account. Accordingly, we believe the likelihood
      of Mr. Rice having to indemnify the trust is minimal.






8




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




We
      will
      liquidate and dissolve if we do not complete a business combination within
      18
      months after consummation of the Offering (November 17, 2007) or within 24
      months (May 17, 2008) if certain extension criteria are satisfied. Under
      Sections 280 through 282 of Delaware General Corporation Law, stockholders
      may
      be held liable for claims by third parties against a corporation to the extent
      of distributions received by them in a dissolution. If the corporation complies
      with certain procedures intended to ensure that it makes reasonable provision
      for all claims against it, including a 60-day notice period during which any
      third-party claims can be brought against the corporation, a 90-day period
      during which the corporation may reject any claims brought, and an additional
      150-day waiting period before any liquidating distributions are made to
      stockholders, any liability of stockholders with respect to a liquidating
      distribution is limited to the lesser of such stockholder’s pro rata share of
      the claim or the amount distributed to the stockholder, and any liability of
      the
      stockholder would be barred after the third anniversary of the dissolution.
      However, it is our intention to make liquidating distributions to our
      stockholders as soon as reasonably possible after dissolution and, therefore,
      we
      do not intend to comply with those procedures, As such, our stockholders could
      potentially be liable for any claims to the extent of distributions received
      by
      them in a dissolution and any liability of our stockholders may extend beyond
      the third anniversary of such dissolution. Accordingly, we cannot assure you
      that third parties will not seek to recover from our stockholders amounts owed
      to them by us.




***An
      effective registration statement may not be in place when an investor desires
      to
      exercise warrants, thus precluding such investor from being able to exercise
      his, her or its warrants and causing such warrants to be practically
      worthless.***




No
      warrant will be exercisable and we will not be obligated to issue shares of
      common stock unless at the time a holder seeks to exercise such warrant, a
      prospectus relating to the common stock issuable upon exercise of the warrant
      is
      current and the common stock has been registered or qualified or deemed to
      be
      exempt under the securities laws of the state of residence of the holder of
      the
      warrants. Under the terms of the warrant agreement, we have agreed to use our
      best efforts to meet these conditions and to maintain a current prospectus
      relating to the common stock issuable upon exercise of the warrants until the
      expiration of the warrants. However, we cannot assure you that we will be able
      to do so, and if we do not maintain a current prospectus related to the common
      stock issuable upon exercise of the warrants, holders will be unable to exercise
      their warrants and we will not be required to settle any such warrant exercise.
      If the prospectus relating to the common stock issuable upon the exercise of
      the
      warrants is not current or if the common stock is not qualified or exempt from
      qualification in the jurisdictions in which the holders of the warrants reside,
      the warrants may have no value, the market for the warrants may be limited
      and
      the warrants may expire worthless.




***An
      investor will only be able to exercise a warrant if the issuance of common
      stock
      upon such exercise has been registered or qualified or is deemed exempt under
      the securities laws of the state of residence of the holder of the
      warrants.***




No
      warrants will be exercisable and we will not be obligated to issue shares of
      common stock unless the common stock issuable upon such exercise has been
      registered or qualified or deemed to be exempt under the securities laws of
      the
      state of residence of the holder of the warrants. Because the exemptions from
      qualification in certain states for resales of warrants and for issuances of
      common stock by the issuer upon exercise of a warrant may be different, a






9




warrant
      may be held by a holder in a state where an exemption is not available for
      issuance of common stock upon an exercise and the holder will be precluded
      from
      exercise of the warrant. At the time that the warrants become exercisable
      (following our completion of a business combination), we expect to either
      continue to be listed on the American Stock Exchange, a national securities
      exchange, which would provide an exemption from registration in every state,
      or
      we would register the warrants in every state (or seek another exemption from
      registration in such states). Accordingly, we believe holders in every state
      will be able to exercise their warrants as long as our prospectus relating
      to
      the common stock issuable upon exercise of the warrants is current. However,
      we
      cannot assure you of this fact. As a result, the warrants may be deprived of
      any
      value, the market for the warrants may be limited and the holders of warrants
      may not be able to exercise their warrants if the common stock issuable upon
      such exercise is not qualified or exempt from qualification in the jurisdictions
      in which the holders of the warrants reside.




***Since
      we have not yet selected a particular industry or target business with which
      to
      complete a business combination, we are unable to currently ascertain the merits
      or risks of the industry or business in which we may ultimately
      operate.***




We
      may
      consummate a business combination with a company in any industry we choose
      and
      are not limited to any particular industry or type of business. Accordingly,
      there is no current basis for you to evaluate the possible merits or risks
      of
      the particular industry in which we may ultimately operate or the target
      business which we may ultimately acquire. To
      the
      extent we complete a business combination with a financially unstable company
      or
      an entity in its development stage, we may be affected by numerous risks
      inherent in the business operations of those entities. If we
      complete a business combination with an entity in an industry characterized
      by a
      high level of risk, we may be affected by the currently unascertainable risks
      of
      that industry. Although
      our management will endeavor to evaluate the risks inherent in a particular
      industry or target business, we cannot assure you that we will properly
      ascertain or assess all of the significant risk factors. We also cannot assure
      you that an investment in our securities will not ultimately prove to be less
      favorable than a direct investment, if an opportunity were available, in a
      target business.




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




Our
      certificate of incorporation authorizes the issuance of up to 30,000,000 shares
      of common stock, par value $.0001 per share, and 1,000,000 shares of preferred
      stock, par value $.0001 per share. We currently have 6,399,999 authorized but
      unissued shares of our common stock available for issuance (after appropriate
      reservation for the issuance of shares upon full exercise of our outstanding
      warrants and option granted to the underwriter). All of the 1,000,000 shares
      of
      preferred stock are available for issuance. Although we currently have no
      commitments to issue our securities, we will, in all likelihood, issue a
      substantial number of additional shares of our common stock or preferred stock,
      or a combination of common and preferred stock, to complete a business
      combination. The issuance of additional shares of our common stock or any number
      of shares of our preferred stock:




•  may
      significantly reduce the equity interest of stockholders;




•  may
      subordinate the rights of holders of common stock if we issue preferred stock
      with rights senior to those afforded to our common stock;






10




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




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




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




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




•  acceleration
      of our obligations to repay the indebtedness even if we have made all principal
      and interest payments when due if we breach certain covenants that require
      the
      maintenance of certain financial ratios or reserves without a waiver or
      renegotiation of that covenant;




•  our
      immediate payment of all principal and accrued interest, if any, if the debt
      security is payable on demand; and




•  our
      inability to obtain additional necessary financing if the debt security contains
      covenants restricting our ability to obtain such financing while such security
      is outstanding.




***Our
      ability to successfully effect a business combination and to be successful
      thereafter will be totally dependent upon the efforts of our key personnel,
      some
      of whom may join us following a business combination*** ***.***




Our
      ability to successfully effect a business combination will be totally dependent
      upon the efforts of our key personnel. The role of our key personnel in the
      target business, however, cannot presently be ascertained. Although some of
      our
      key personnel, such as Don K. Rice, may remain with the target business in
      senior management or advisory positions following a business combination, it
      is
      likely that some or all of the management of the target business will remain
      in
      place. Moreover,
      our key personnel will be able to remain with the company after the consummation
      of a business combination only if they are able to negotiate employment or
      consulting agreements in connection with the business combination. Such
      negotiations would take place simultaneously with the negotiation of the
      business combination and could provide for such individuals to receive
      compensation in the form of cash payments and/or our securities for services
      they would render to the company after the consummation of the business
      combination. While the personal and financial interests of such individuals
      may
      influence their motivation in identifying and selecting a target business,
      the
      ability such individuals to remain with the company after the consummation
      of a
      business combination will not be the determining factor in our decision as
      to
      whether or not we will proceed with any potential business combination. While
      we
      intend to closely scrutinize any individuals we engage after a business
      combination, we cannot assure you that our assessment of these individuals
      will
      prove to be correct. These
      individuals may be unfamiliar with the requirements of operating a public
      company which could cause us to have to expend time and resources helping them
      become familiar with such requirements. This could be expensive and
      time-consuming and could lead to various regulatory issues which may adversely
      affect our operations.




11






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




Our
      officers and directors are not required to commit their full time to our
      affairs, which could create a conflict of interest when allocating their time
      between our operations and other commitments. We do not intend to have any
      full
      time employees prior to the consummation of a business combination. All
      of
      our executive officers are engaged in several other business endeavors and
      are
      not obligated to devote any specific number of hours to our affairs. If our
      officers’ and directors’ other business affairs require them to devote more
      substantial amounts of time to such affairs, it could limit their ability to
      devote time to our affairs and could have a negative impact on our ability
      to
      consummate a business combination. We cannot assure you that these conflicts
      will be resolved in our favor.




***One
      of our executive officers and our special advisor are now, and our other
      officers and directors and their affiliates may in the future become, affiliated
      with entities engaged in business activities similar to those intended to be
      conducted by us and accordingly, may have conflicts of interest in determining
      to which entity a particular business opportunity should be
      presented.***




Each
      of
      Don K. Rice, our chairman of the board, chief executive officer, president
      and
      treasurer, and Arthur Spector, our special advisor, has pre-existing contractual
      and fiduciary obligations to other entities, with business plans similar to
      ours. Accordingly, to the extent such individuals identify business
      opportunities that may be suitable for those other entities, they must honor
      their pre-existing obligations to such entities and offer those opportunities
      to
      them prior to offering them to us. Additionally, our other directors may in
      the
      future become affiliated with entities, including other “blank check” companies,
      engaged in business activities similar to those intended to be conducted by
      us.
      Additionally, our officers and directors may become aware of business
      opportunities which may be appropriate for presentation to us and the other
      entities to which they owe fiduciary duties. Accordingly, they may have
      conflicts of interest in determining to which entity a particular business
      opportunity should be presented in addition to those set forth above. We cannot
      assure you that these conflicts will be resolved in our favor.




***All
      of our officers and directors own shares of our common stock and Don K. Rice
      owns warrants which will not participate in liquidation distributions and
      therefore they may have a conflict of interest in determining whether a
      particular target business is appropriate for a business
      combination.***




All
      of
      our officers and directors own shares of our common stock that were issued
      prior
      to the Offering and Don K. Rice, our chairman of the board, chief executive
      officer, president and treasurer, purchased insider units upon consummation
      of
      the Offering. Such individuals have waived their right to receive distributions
      with respect to those shares upon our liquidation if we are unable to consummate
      a business combination. The
      shares acquired prior to the Offering and included in the insider units, as
      well
      as any warrants included in the insider units, and any warrants purchased by
      our
      officers or directors in the Offering or in the aftermarket will be worthless
      if
      we do not consummate a business combination. The personal and financial
      interests of our directors and officers may influence their motivation in timely
      identifying and selecting a target business and completing a business
      combination. Consequently, our directors’ and officers’ discretion in
      identifying and selecting a suitable target business may result in a conflict
      of






12




interest
      when determining whether the terms, conditions and timing of a particular
      business combination are appropriate and in our stockholders’ best
      interest.




***After
      our business combination, we will be solely dependent on a single business
      and a
      limited number of products or services.***




Our
      business combination must be with a business with a fair market value of at
      least 80% of our net assets at the time of such acquisition, although this
      may
      entail the simultaneous acquisitions of several operating businesses at the
      same
      time. By consummating a business combination with only a single entity, our
      lack
      of diversification may subject us to numerous economic, competitive and
      regulatory developments. Further, we would not be able to diversify our
      operations or benefit from the possible spreading of risks or offsetting of
      losses, unlike other entities which may have the resources to complete several
      business combinations in different industries or different areas of a single
      industry .
      Accordingly, the prospects for our success may be:




•  solely
      dependent upon the performance of a single business, or




•  dependent
      upon the development or market acceptance of a single or limited number of
      products, processes or services.




Alternatively,
      if our business combination entails the simultaneous acquisitions of several
      operating businesses at the same time from different sellers, we would face
      additional risks, including difficulties
      and expenses incurred in connection with the subsequent integration of the
      operations and services or products of the acquired companies into a single
      operating business. If we are unable to adequately address these risks, it
      could
      negatively impact our profitability and results of operations.




***The
      ability of our stockholders to exercise their conversion rights may not allow
      us
      to effectuate the most desirable business combination or optimize our capital
      structure.***




When
      we
      seek stockholder approval of any business combination, we will offer each public
      stockholder (but not our Founding stockholders) the right to have his, her
      or
      its shares of common stock converted to cash if the stockholder votes against
      the business combination and the business combination is approved and completed.
      Such holder must both vote against such business combination and then exercise
      his, her or its conversion rights to receive a pro rata portion of the trust
      account. Accordingly, if our business combination requires us to use
      substantially all of our cash to pay the purchase price, because we will not
      know how many stockholders may exercise such conversion rights, we may either
      need to reserve part of the trust account for possible payment upon such
      conversion, or we may need to arrange third party financing to help fund our
      business combination in case a larger percentage of stockholders exercise their
      conversion rights than we expect. Since we have no specific business combination
      under consideration, we have not taken any steps to secure third party
      financing. Therefore, we may not be able to consummate a business combination
      that requires us to use all of the funds held in the trust account as part
      of
      the purchase price, or we may end up having a leverage ratio that is not optimal
      for our business combination. This may limit our ability to effectuate the
      most
      attractive business combination available to us.




***Because
      of our limited resources and structure, we may not be able to consummate an
      attractive business combination.***






13




We
      expect
      to encounter intense competition from entities other than blank check companies
      having a business objective similar to ours, including venture capital funds,
      leveraged buyout funds and operating businesses competing for acquisitions.
      Many
      of these entities are well established and have extensive experience in
      identifying and effecting business combinations directly or through affiliates.
      Many of these competitors possess greater technical, human and other resources
      than we do and our financial resources will be relatively limited when
      contrasted with those of many of these competitors. While we believe that there
      are numerous potential target businesses that we could acquire, our ability
      to
      compete in acquiring certain sizable target businesses will be limited by our
      available financial resources. This inherent competitive limitation gives others
      an advantage in pursuing the acquisition of certain target businesses.
      Furthermore, the obligation we have to seek stockholder approval of a business
      combination may delay the consummation of a transaction. Additionally, our
      outstanding warrants, and the future dilution they potentially represent, may
      not be viewed favorably by certain target businesses. Any of these obligations
      may place us at a competitive disadvantage in successfully negotiating a
      business combination. If
      we are
      unable to consummate a business combination with a target business within the
      prescribed time periods, we will be forced to liquidate.




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




Although
      we believe our current assets will be sufficient to allow us to consummate
      a
      business combination, because we have not yet identified any prospective target
      business, we cannot ascertain the capital requirements for any particular
      transaction. If we require further funds, either because of the size of the
      business combination, the depletion of our available cash in search of a target
      business, or the obligation to convert into cash a significant number of shares
      from dissenting stockholders, we will be required to seek additional financing.
      We cannot assure you that such financing will be available on acceptable terms,
      if at all. To the extent that additional financing proves to be unavailable
      when
      needed to consummate a particular business combination, we would be compelled
      to
      either restructure the transaction or abandon that particular business
      combination and seek an alternative target business candidate. In addition,
      if
      we consummate a business combination, we may require additional financing to
      fund the operations or growth of the target business. The failure to secure
      additional financing could have a material adverse effect on the continued
      development or growth of the target business. None of our officers, directors
      or
      stockholders is required to provide any financing to us in connection with
      or
      after a business combination.




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




Our
      initial stockholders (including all of our officers and directors) collectively
      own 19.5% of our issued and outstanding shares of common stock. **** Our
      board
      of directors is divided into three classes, each of which will generally serve
      for a term of three years with only one class of directors being elected in
      each
      year. It is unlikely that there will be an annual meeting of stockholders to
      elect new directors prior to the consummation of a business combination, in
      which case all of the current directors will continue in office until at least
      the consummation of the business combination. If there is an annual meeting,
      as
      a consequence of our “staggered” board of directors, only a minority of the
      board of directors will be considered for election and our initial






14




stockholders,
      because of their ownership position, will have considerable influence regarding
      the outcome. Accordingly, our initial stockholders will continue to exert
      control at least until the consummation of a business combination.




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




We
      currently have outstanding warrants to purchase 14,133,334 shares of common
      stock and an option to purchase 300,000 units by the underwriter, which, if
      exercised, include 300,000 shares of common stock and warrants to purchase
      an
      additional 600,000 shares of common stock. To the extent we issue shares of
      common stock to effect a business combination, the potential for the issuance
      of
      a substantial number of additional shares upon exercise of these warrants and
      option could make us a less attractive acquisition vehicle in the eyes of a
      target business. Such securities, when exercised, will increase the number
      of
      issued and outstanding shares of our common stock and reduce the value of the
      shares issued to complete the business combination. Accordingly, our warrants
      and option may make it more difficult to effectuate a business combination
      or
      increase the cost of acquiring the target business. Additionally, the sale,
      or
      even the possibility of sale, of the shares underlying the warrants and option
      could have an adverse effect on the market price for our securities or on our
      ability to obtain future financing. If and to the extent these warrants and
      option are exercised, our shareholders may experience dilution to their
      holdings.




***Our
      management’s ability to require holders of our warrants to exercise such
      warrants on a cashless basis will cause holders to receive fewer shares of
      common stock upon their exercise of the warrants than they would have received
      had they been able to exercise their warrants for
      cash.***




If
      we
      call our warrants for redemption after the redemption criteria described
      elsewhere in this document have been satisfied, our management will have the
      option to require any holder that wishes to exercise his warrant to do so on
      a
“cashless basis.” If our management chooses to require holders to exercise their
      warrants on a cashless basis, the number of shares of common stock received
      by a
      holder upon exercise will be fewer than it would have been had such holder
      exercised his warrant for cash. This will have the effect of limiting the
      potential “upside” of the holder’s investment in our company.




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




Our
      initial stockholders are entitled to make a demand that we register the resale
      of their initial shares at any time commencing three months prior to the date
      on
      which their shares are released from escrow. If our initial stockholders
      exercise their registration rights with respect to all of their initial shares
      and the insider units sold, then there will be an additional 1,666,667 shares
      of
      common stock eligible for trading in the public market. The presence of these
      additional shares of common stock trading in the public market may have an
      adverse effect on the market price of our common stock. In addition, the
      existence of these rights may make it more difficult to effectuate a business
      combination or increase the cost of acquiring the target business, as the
      stockholders of the target business may be discouraged from entering into a
      business combination with us or will request a higher price for their securities
      because of the potential effect the exercise of such rights may have on the
      trading market for our common stock.






15




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




If
      we are
      deemed to be an investment company under the Investment Company Act of 1940, we
      may be
      subject to certain restrictions that may make it more difficult for us to
      complete a business combination ,
      including:




•  restrictions
      on the nature of our investments; and




•  restrictions
      on the issuance of securities,




In
      addition, we may have imposed upon us burdensome requirements,
      including:




•  registration
      as an investment company;




•  adoption
      of a specific form of corporate structure; and




•  reporting,
      record keeping, voting, proxy, compliance policies and procedures and disclosure
      requirements and other rules and regulations.




We
      do not
      believe that our anticipated principal activities will subject us to the
      Investment Company Act of 1940. To this end, the proceeds held in trust may
      be
      invested by the trust agent only in United States “government securities” within
      the meaning of Section 2(a)(16) of the Investment Company Act of 1940 having
      a
      maturity of 180 days or less or in money market funds meeting certain conditions
      under Rule 2a-7 promulgated under the Investment Company Act of 1940 **.** By
      restricting the investment of the proceeds to these instruments, we intend
      to
      meet the requirements for the exemption provided in Rule 3a-1 promulgated under
      the Investment Company Act of 1940. If we were deemed to be subject to that
      act,
      compliance with these additional regulatory burdens would require additional
      expense for which we have not allotted.




***If
      we effect a business combination with a company located outside of the United
      States, we would be subject to a variety of additional risks that may negatively
      impact our operations.***




We
      may
      effect a business combination with a company located outside of the United
      States. If we did, we would be subject to any special considerations or risks
      associated with companies operating in the target business’ home jurisdiction,
      including any of the following:




·
            rules
                and regulations or currency conversion or corporate withholding taxes
                on
                individuals;




·
            tariffs
                and trade barriers;




·
            regulations
                related to customs and import/export matters;




·
            longer
                payment cycles;






16




·
            tax
                issues, such as tax law changes and variations in tax laws as compared
                to
                the United States;




·
            currency
                fluctuations;




·
            challenges
                in collecting accounts receivable;




·
            cultural
                and language differences; and




·
            employment
                regulations.




We
      cannot
      assure you that we would be able to adequately address these additional risks.
      If we were unable to do so, our operations might suffer.






***If
      we effect a business combination with a company located outside of the United
      States, the laws applicable to such company will likely govern all of our
      material agreements and we may not be able to enforce our legal rights.***






If
      we
      effect a business combination with a company located outside of the United
      States, the laws of the country in which such company operates will govern
      almost all of the material agreements relating to its operations. We cannot
      assure you that the target business will be able to enforce any of its material
      agreements or that remedies will be available in this new jurisdiction. The
      system of laws and the enforcement of existing laws in such jurisdiction may
      not
      be as certain in implementation and interpretation as in the United States.
      The
      inability to enforce or obtain a remedy under any of our future agreements
      could
      result in a significant loss of business, business opportunities or capital.
      Additionally, if we acquire a company located outside of the United States,
      it
      is likely that substantially all of our assets would be located outside of
      the
      United States and some of our officers and directors might reside outside of
      the
      United States. As a result, it may not be possible for investors in the United
      States to enforce their legal rights, to effect service of process upon our
      directors or officers or to enforce judgments of United States courts predicated
      upon civil liabilities and criminal penalties of our directors and officers
      under Federal securities laws.




**Item
      2. Description of Property.**




We
      maintain our principal executive offices at 435 Devon Park Drive, Building
      400,
      Wayne, Pennsylvania 19087. The cost for this space is included in the $7,500
      per-month fee 400 Building LLC charges us for general and administrative
      services pursuant to a letter agreement between us and 400 Building LLC. We
      believe, based on rents and fees for similar services in the Philadelphia
      metropolitan area, that the fee charged by 400 Building LLC is at least as
      favorable as we could have obtained from an unaffiliated person. We consider
      our
      current office space, combined with other office space otherwise available
      to
      our executive officers, adequate for our current operations.




**Item
      3. Legal Proceedings.**




We
      are
      not presently a party to any pending legal proceeding.






17




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






There
      were no matters submitted to a vote of security holders during the fourth
      quarter of the year ended December 31, 2006.




18


**PART
      II**





**Item
      5. Market for Common Equity and Related Stockholder
      Matters.**




Our
      units, common stock and warrants are each quoted on the OTC Bulletin Board
      under
      the symbols ASAQU, ASAQ and ASAQW, respectively. The following table sets forth
      the high and low closing bid quotations for the calendar quarter indicated
      since
      such units commenced public trading on May 12, 2006. The over-the-counter market
      quotations reported below reflect inter-dealer prices, without markup, markdown
      or commissions and may not represent actual transactions. Our common stock
      and
      warrants commenced public trading on July 25, 2006. Prior to May 12, 2006,
      there
      was no established public trading market for our common stock.




Units
            
            Common
                Stock
            
            Warrants2006
            
            High
            
            Low
            
            High
            
            Low
            
            High
            
            LowSecond
                Quarter (starting May 12)
            
            $
            6.23
            
            $
            5.98Third
                Quarter
            
            $
            6.20
            
            $
            5.92
            
            $
            5.37
            
            $
            5.20
            
            $
            0.45
            
            $
            0.22Fourth
                Quarter
            
            $
            6.20
            
            $
            5.97
            
            $
            5.35
            
            $
            5.29
            
            $
            0.41
            
            $
            0.35






Units
            
            Common
                Stock
            
            Warrants2007
            
            High
            
            Low
            
            High
            
            Low
            
            High
            
            LowFirst
                Quarter*
            
            $
            6.35
            
            $
            6.11
            
            $
            5.57
            
            $
            5.35
            
            $
            0.46
            
            $
            0.35




*Through
      March 5, 2007.




We
      have
      not paid any cash dividends on the common stock and we do not intend to pay
      any
      dividends prior to the consummation of a business combination.




As
      of
      March 5, 2007, we had 2 holders of record of our units, 5 holders of record
      of
      our common stock and 1 holder of record of our warrants.




**Recent
      Sales of Unregistered Securities and Use of Proceeds**




In
      December 2005, we issued 875,000 shares of common stock without
      registration under the Securities Act of 1933, as amended, for $25,000 in cash,
      at a purchase price of approximately $0.029 per share, as follows:







Stockholders
            
            Number
                of SharesDon
                K. Rice
            
            
            695,000Russell
                C. Ball III
            
            
            60,000Stephen
                L. Brown
            
            
            60,000Arthur
                Spector
            
            
            60,000




Such
      shares were issued in connection with our organization pursuant to the exemption
      from registration contained in Section 4(2) of the Securities Act as they
      were sold to sophisticated, wealthy individuals or entities. Effective April
      19,
      2006, our board of directors authorized a stock dividend of 0.714285 shares
      of
      common stock for each outstanding share of common stock, increasing the total
      number of shares of common stock outstanding prior to the Offering to 1,500,000
      and effectively lowering the purchase price to $0.0167 per share.






19





Don
      K.
      Rice had also committed to purchase 166,667 units at $6.00 per unit (for an
      aggregate purchase price of $1,000,002) from us. This purchase took place on
      a
      private placement basis simultaneously with the consummation of the Offering
      on
      May 17, 2006.





On
      May
      17, 2006, we consummated the Offering of 6,000,000 Units, with each Unit
      consisting of one share of our common stock and two warrants, each to purchase
      one share of our common stock at an exercise price of $5.00 per share. On May
      22, 2006, we closed on an additional 900,000 Units that were subject to the
      underwriters’ over-allotment option. The Units were sold at an offering price of
      $6.00 per unit, generating total gross proceeds of $41,400,000.
      EarlyBirdCapital, Inc. acted as lead underwriter. The securities sold in the
      Offering were registered under the Securities Act of 1933 on a registration
      statement on Form S-1 (No. 333-131529). The Securities and Exchange Commission
      declared the registration statement effective on May 11, 2006.





We
      paid a
      total of $3,244,000 in underwriting discounts and commissions and offering
      expenses, excluding the $952,200 of deferred offering costs due to the
      underwriter when a Business Combination is consummated, which was deposited
      in
      the trust account. After deducting the underwriting discounts and commissions
      and the offering expenses, the total net proceeds to us from the Offering,
      including $1,000,002 related to the sale of insider units, were approximately
      $38,203,000. $38,510,203 was deposited into the trust account (or $5.58 per
      share sold in the Offering), which includes the $952,200 of deferred payment
      due
      to the underwriter. The remaining proceeds are available to be used to provide
      for business, legal and accounting due diligence on prospective business
      combinations and continuing general and administrative expenses.





**Item
      6. Plan of Operation.**





The
      following discussion should be read in conjunction with our Financial Statements
      and related Notes thereto included elsewhere in this report.




We
      were
      formed on December 5, 2005 to serve as a vehicle to effect a merger, capital
      stock exchange, asset acquisition or other similar business combination with
      a
      currently unidentified operating business. We intend to utilize the proceeds
      of
      our initial public offering, our capital stock, debt or a combination of cash,
      capital stock and debt, in effecting a business combination. All activity from
      December 5, 2005 through May 17, 2006 related to our formation and initial
      public offering described below. Since that date, we have been searching for
      a
      target business to acquire.




Net
      income of $382,734 reported for the year ended December 31, 2006 consists of
      $15,972 expense for director and officer liability insurance, $57,500 expense
      for a monthly administrative services agreement, $51,665 for franchise and
      state
      capital stock taxes, $76,867 for legal, accounting and consulting expenses,
      $32,700 for state income taxes and $66,724 for other expenses. Interest on
      the
      trust fund investment was $675,701, excluding $168,816 of deferred interest,
      and
      interest earned on the money market accounts was $8,461.






20




Net
      loss
      of $1,131 reported for the period December 5, 2005 (inception) to December
      31,
      2005 consists of $1,192 of formation costs, net of $61 of interest income earned
      on the money market account.




Net
      income of $381,603 reported for the period from December 5, 2005 (inception)
      to
      December 31, 2006 consists of $15,972 expense for director and officer liability
      insurance, $57,500 expense for a monthly administrative services agreement,
      $51,665 for franchise and state capital stock taxes, $76,867 for legal,
      accounting and consulting expenses, $32,700 for state income taxes and $67,916
      for other expenses. Interest on the trust fund investment was $675,701,
      excluding $168,816 of deferred interest, and interest earned on the money market
      accounts was $8,522.




We
      consummated our Offering on May 17, 2006 and the over-allotment option on May
      22, 2006. $38,510,202, which includes $36,558,000 of the net proceeds of the
      Offering, $1,000,002 related to the sale of insider units and $952,200 deferred
      payment due to the underwriter, is held in trust and the remaining proceeds
      are
      available to be used to provide for business, legal and accounting due diligence
      on prospective acquisitions and continuing general and administrative expenses.
      We intend to use substantially all of the net proceeds of the Offering,
      including the funds held in the trust account (excluding the deferred portion
      of
      the underwriters discounts and commission), to acquire a target business. To
      the
      extent that our capital stock is used in whole or in part as consideration
      to
      effect a business combination, the remaining proceeds held in the trust account,
      as well as any other net proceeds not expended, will be used as working capital
      to finance the operations of the target business.




We
      believe that we have sufficient available funds outside of the trust account
      to
      operate for at least 24 months from the date of the Offering (May 17, 2008),
      assuming that a business combination is not consummated during that
      time. Over
      this time period, we will be using these funds for identifying and evaluating
      prospective acquisition candidates, performing business due diligence on
      prospective target businesses, traveling to and from the offices, plant or
      similar locations of prospective target businesses, reviewing corporate
      documents and material agreements of prospective target businesses, selecting
      the target business to acquire and structuring, negotiating and consummating
      the
      business combination. We anticipate that we will incur approximately $180,000
      for the administrative fee payable to 400 Building LLC ($7,500 per month for
      two
      years), $120,000 of expenses for legal, accounting and other expenses attendant
      to the due diligence investigations, structuring and negotiating of a business
      combination, $80,000 of expenses in legal and accounting fees relating to our
      SEC reporting obligations, $75,000 of expenses for the due diligence and
      investigation of a target business, and $215,000 for general working capital
      that will be used for miscellaneous expenses and reserves, including
      approximately $80,000 for director and officer liability insurance premiums.
      We
      do not believe we will need to raise additional funds in order to meet the
      expenditures required for operating our business. However, we may need to raise
      additional funds through a private offering of debt or equity securities if
      it
      is required to consummate a business combination that is presented to us. We
      would only consummate such a fundraising simultaneously with the consummation
      of
      a business combination.




We
      are
      obligated, commencing May 11, 2006, to pay to 400 Building LLC, an affiliate
      of
      Arthur Spector, our
      special advisor ,
      a
      monthly fee of $7,500 for general and administrative services.




On
      December 20, 2005, Don K. Rice advanced an aggregate of $80,000 to us for
      payment of offering expenses on our behalf. The loan was payable without
      interest on the earlier of December 20, 2006 or the consummation of the
      Offering. This loan was repaid on May 24, 2006 out of proceeds of the
      Offering.








21




Don
      K.
      Rice had also committed to purchase 166,667 units at $6.00 per unit (for an
      aggregate purchase price of $1,000,002) from us. This purchase took place on
      a
      private placement basis simultaneously with the consummation of the Offering
      on
      May 17, 2006.





In
      connection with our initial public offering, we issued to the underwriter,
      for
      $100, an option to purchase up to a total of 300,000 units. We estimated that
      the fair value of this option was approximately $711,000
      ($2.37 per Unit) using a Black-Scholes option-pricing model. The fair value
      of
      the option granted to the underwriter was estimated as of the date of grant
      using the following assumptions: (1) expected volatility of 46.56%, (2)
      risk-free interest rate of 4.31% and (3) expected life of 5 years.





*Off-balance
      sheet arrangements*





Options
      and warrants issued in conjunction with our initial public offering are
      equity-linked derivatives and, accordingly, represent off-balance sheet
      arrangements. The options and warrants meet the scope exception in paragraph
      11(a) of FAS 133 and are accordingly not accounted for as derivatives for
      purposes of FAS 133, but instead are accounted for as equity. See Note 6 to
      the
      financial statements for more information.





22


**Item
      7. Financial Statements.**





**Report
      of Independent Registered Public Accounting Firm**




To
      the
      Board of Directors


Ascend
      Acquisition Corp.





We
      have
      audited the accompanying balance sheets of Ascend Acquisition Corp. (a
      corporation in the development stage) as of December 31, 2006 and 2005, and
      the related statements of operations, stockholders' equity, and cash flows
      for
      the year ended December 31, 2006, the period from December 5, 2005 (inception)
      to December 31, 2005 and the cumulative period from December 5, 2005
      (inception) to December 31, 2006. These financial statements are the
      responsibility of the Company's management. Our responsibility is to express
      an
      opinion on these financial statements based on our audits.





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





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Ascend Acquisition Corp. as of
      December 31, 2006 and 2005, and the results of its operations and its cash
      flows for the year ended December 31, 2006, the period from December 5, 2005
      (inception) to December 31, 2005 and the cumulative period from December 5,
      2005 (inception) to December 31, 2006 in conformity with accounting principles
      generally accepted in the United States.





The
      accompanying financial statements have been prepared assuming that Ascend
      Acquisition Corp. will continue as a going concern.  As discussed in Note 1
      to the financial statements, Ascend Acquisition Corp. may face a mandatory
      liquidation by November 17, 2007 if a business combination is not consummated,
      unless certain extension criteria are met, which raises substantial doubt about
      its ability to continue as a going concern.  The financial statements do
      not include any adjustments that might result from the outcome of this
      uncertainty.








/s/
      GOLDSTEIN GOLUB KESSLER LLP





New
      York,
      New York


February
      22, 2007





23





**ASCEND
      ACQUISITION CORP.**


**(a
      corporation in the development stage)**





**BALANCE
      SHEETS**


**December
                31,**
              **2006**
            
            **December
                31,**
              **2005****ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            423,590
            
            $
            80,061Investments
                held in trust
            
            
            39,354,720
            
            
            -Prepaid
                expenses
            
            
            10,028
            
            
            -Deferred
                income taxes
            
            
            28,100
            
            
            -Total
                current assets
            
            
            39,816,438
            
            
            80,061Deferred
                offering costs associated with initial public offering
            
            
            -
            
            
            25,000Total
                assets
            
            $
            39,816,438
            
            $
            105,061**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities:Accounts
                payable and accrued expenses
            
            $
            42,585
            
            $
            1,192Income
                taxes payable
            
            
            42,800
            
            
            -Deferred
                interest
            
            
            168,816
            
            
            -Deferred
                payment due to underwriter
            
            
            952,200
            
            
            -Note
                payable, stockholder
            
            
            -
            
            
            80,000Total
                liabilities
            
            
            1,206,401
            
            
            81,192CommitmentsCommon
                stock, subject to possible conversion, 1,379,310 shares atconversion
                value
            
            
            7,698,189
            
            
            -Stockholders’
                Equity:Preferred
                stock, $.0001 par value, authorized 1,000,000 shares; none
              issued
            
            
            -
            
            
            -Common stock, $.0001 par value, authorized 30,000,000 shares;
                issued
              and
                outstanding 8,566,667 shares (which includes 1,379,310 shares subject
                to
                possible conversion) and 1,500,000 shares, respectively
            
            
            857
            
            
            150Additional
                paid-in capital
            
            
            30,529,388
            
            
            24,850Retained
                earnings (deficit) accumulated during development stage
            
            
            381,603
            
            
            (1,131
            )Total
                stockholders’ equity
            
            
            30,911,848
            
            
            23,869Total
                liabilities and stockholders’ equity
            
            $
            39,816,438
            
            $
            105,061





The
      accompanying notes should be read in conjunction with the financial
      statements.


24


**ASCEND
      ACQUISITION CORP.**


**(a
      corporation in the development stage)**





**STATEMENTS
      OF OPERATIONS**


**Year**
                **Ended**
                **December
                  31, 2006**
              
              **December
                  5, 2005 (Inception) to**
                **December
                  31,**
                **2005**
              
              **December
                  5, 2005**
                **(Inception)
                  to**
                **December
                  31,**
                **2006**General
                  and administrative expenses
              
              $
              268,728
              
              $
              1,192
              
              $
              269,920Operating
                  loss
              
              
              (268,728
              )
              
              (1,192
              )
              
              (269,920
              )Other
                  income:Interest
                  income
              
              
              8,461
              
              
              61
              
              
              8,522Interest
                  on trust fund investment
              
              
              675,701
              
              
              -
              
              
              675,701Total
                  other income
              
              
              684,162
              
              
              61
              
              
              684,223Income
                  (loss) before income taxes
              
              
              415,434
              
              
              (1,131
              )
              
              414,303Income
                  tax provision
              
              
              (32,700
              )
              
              -
              
              
              (32,700
              )Net
                  income (loss)
              
              $
              382,734
              
              $
              (1,131
              )
              $
              381,603


Weighted
                average shares of commonstock
                outstandingBasic
                and diluted
            
            
            6,015,617
            
            
            1,500,000
            
            
            5,704,592Earnings
                per common shareBasic
                and diluted
            
            $
            .06
            
            $
            (.00
            )
            $
            .07





The
      accompanying notes should be read in conjunction with the financial
      statements.


25




**ASCEND
      ACQUISITION CORP.**


**(a
      corporation in the development stage)**





**STATEMENTS
      OF STOCKHOLDERS’ EQUITY**




**Retained****Earnings****(Deficit)****Accumulated****Additional**
            
            **during
                the****Common
                Stock**
            
            **Paid-In**
            
            **Development********Shares**
            
            ******Amount**
            
            ******Capital**
            
            ******Stage**
            
            ******Total**Sale
                of 1,500,000 shares of common
              stock
                to initial stockholders on
              December
                5, 2005 at $0.0167 per share
            
            
            1,500,000
            
            $
            150
            
            $
            24,850
            
            $
            -
            
            $
            25,000Net
                loss for the period December 5, 2005 (inception)
              to
                December 31, 2005
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,131
            )
            
            (1,131
            )**Balance,
                December 31, 2005**
            
            
            1,500,000
            
            
            150
            
            
            24,850
            
            
            (1,131
            )
            
            23,869Sale
                of 6,900,000 units, net of underwriters’
              discount
                and offering expenses (includes 1,379,310
              shares
                subject to possible redemption)
            
            
            6,900,000
            
            
            690
            
            
            37,202,642
            
            
            -
            
            
            37,203,332Proceeds
                from issuance of
              insider
                units
            
            
            166,667
            
            
            17
            
            
            999,985
            
            
            -
            
            
            1,000,002Proceeds
                subject to possible conversion of 1,379,310
              shares
                at approximately $5.58 per share
            
            
            -
            
            
            -
            
            
            (7,698,189
            )
            
            -
            
            
            (7,698,189
            )Proceeds
                from issuance of option
            
            
            -
            
            
            -
            
            
            100
            
            
            -
            
            
            100Net
                income for the year ended December 31, 2006
            
            
            -
            
            
            -
            
            
            -
            
            
            382,734
            
            
            382,734**Balance,
                December 31, 2006**
            
            
            8,566,667
            
            $
            857
            
            $
            30,529,388
            
            $
            381,603
            
            $
            30,911,848








The
      accompanying notes should be read in conjunction with the financial
      statements.


26


**ASCEND
      ACQUISITION CORP.**


**(a
      corporation in the development stage)**





**STATEMENTS
      OF CASH FLOWS**





**Year
                Ended**
              **December
                31, 2006**
            
            **December
                5,**
              **2005
                (Inception) to December 31, 2006**
            
            **December
                5, 2005 (Inception) to**
              **December
                31, 2006****Cash
                flows from operating activities:**Net
                income (loss)
            
            $
            382,734
            
            $
            (1,131
            )
            $
            381,603Adjustments
                to reconcile net income (loss) to net cash used in
              operating
                activities:Interest
                income on investments held in trust
            
            
            (844,517
            )
            
            -
            
            
            (844,517
            )Change in operating assets and liabilities:Decrease
                (increase) in prepaid expenses
            
            
            (10,028
            )
            
            -
            
            
            (10,028
            )Increase
                in deferred tax asset
            
            
            (28,100
            )
            
            -
            
            
            (28,100
            )Increase
                in accounts payable and accrued expenses
            
            
            41,393
            
            
            1,192
            
            
            42,585Increase
                in income taxes payable
            
            
            42,800
            
            
            -
            
            
            42,800Increase
                in deferred interest
            
            
            168,816
            
            
            -
            
            
            168,816Net
                cash used in operating activities
            
            
            (246,902
            )
            
            61
            
            
            (246,841
            )**Cash
                flows from investing activities:**Purchase
                of treasury bills held in trust
            
            
            (15,485,695
            )
            
            -
            
            
            (15,485,695
            )Purchase
                of municipal securities held in trust
            
            
            (30,809,507
            )
            
            -
            
            
            (30,809,507
            )Sale/maturity
                of treasury bills held in trust
            
            
            15,613,788
            
            
            -
            
            
            15,613,788Sale
                of municipal securities held in trust
            
            
            31,176,329
            
            
            -
            
            
            31,176,329Purchase
                of Pennsylvania municipal securities held in trust
            
            
            (39,005,118
            )
            
            -
            
            
            (39,005,118
            )Net
                cash used in investing activities
            
            
            (38,510,203
            )
            
            -
            
            
            (38,510,203
            )**Cash
                flows from financing activities:**Gross
                proceeds from initial public offering
            
            
            41,400,000
            
            
            -
            
            
            41,400,000Proceeds
                from note payable to stockholder
            
            
            -
            
            
            80,000
            
            
            80,000Repayment
                of note payable to stockholder
            
            
            (80,000
            )
            
            -
            
            
            (80,000
            )Proceeds
                from sale of shares of common stock to founding
                stockholders
            
            
            -
            
            
            25,000
            
            
            25,000Proceeds
                from issuance of option
            
            
            100
            
            
            -
            
            
            100Proceeds
                from sale of insider units
            
            
            1,000,002
            
            
            -
            
            
            1,000,002Payment
                of costs of public offering
            
            
            (3,219,468
            )
            
            (25,000
            )
            
            (3,244,468
            )Net
                cash provided by financing activities
            
            
            39,100,634
            
            
            80,000
            
            
            39,180,634Net
                increase in cash and cash equivalents
            
            
            343,529
            
            
            80,061
            
            
            423,590Cash
                and cash equivalents at beginning of period
            
            
            80,061
            
            
            -
            
            
            -Cash
                and cash equivalents at end of period
            
            $
            423,590
            
            $
            80,061
            
            $
            423,590




Supplemental
                schedule of non-cash financing activity:Accrual of costs of public offering
            
            $
            -
            
            $
            32,401
            
            $
            -Deferred payment due to underwriter
            
            
            952,200
            
            
            -
            
            
            952,200





The
      accompanying notes should be read in conjunction with the financial
      statements.


27




**ASCEND
      ACQUISITION CORP.**


**(a
      corporation in the development stage)**





**NOTES
      TO FINANCIAL STATEMENTS**




**1.
      Organization and Business Operations**





The
      Company was incorporated in Delaware on December 5, 2005 as a blank check
      company whose objective is to acquire an operating business.





The
      registration statement for the Company’s initial public offering (“the
      Offering”) was declared effective May 11, 2006. The Company consummated the
      Offering, including the over-allotment option, on May 17, 2006 and May 22,
      2006,
      respectively, and received total net proceeds of approximately $37,203,000
      (Note
      5). The Company’s management has broad discretion with respect to the specific
      application of the net proceeds of the Offering, although substantially all
      of
      the net proceeds of the Offering are intended to be generally applied toward
      consummating a business combination with an operating business (“Business
      Combination”). Furthermore, there is no assurance that the Company will be able
      to successfully effect a Business Combination. An amount of $38,510,202, which
      includes $1,000,002 relating to the sale of insider units and $952,200 deferred
      payment due to the underwriter (Note 5), is being held in an interest-bearing
      trust account (“Trust Account”) until the earlier of (i) the consummation of a
      Business Combination or (ii) liquidation of the Company. Under the agreement
      governing the Trust Account, funds will be invested in United States “government
      securities” within the meaning of Section 2(a)(16) of the Investment Company Act
      of 1940 with a maturity of 180 days or less, or in money market funds meeting
      certain conditions under Rule 2a-7 promulgated under the Investment Company
      Act
      of 1940. The remaining net proceeds (not held in the Trust Account) may be
      used
      to pay for business, legal and accounting due diligence on prospective
      acquisitions and continuing general and administrative expenses.





The
      Company, after signing a definitive agreement for the acquisition of a target
      business, will submit such transaction for stockholder approval. In the event
      that stockholders owning 20% or more of the shares sold in the Offering vote
      against the Business Combination and exercise their conversion rights described
      below, the Business Combination will not be consummated. All of the Company’s
      stockholders prior to the Offering, including all of the officers and directors
      of the Company (“Initial Stockholders”), have agreed to vote their 1,500,000
      founding shares of common stock in accordance with the vote of the majority
      in
      interest of all other stockholders of the Company (“Public  Stockholders”)
      with respect to any Business Combination. After consummation of a Business
      Combination, these voting safeguards will no longer be applicable.





With
      respect to a Business Combination that is approved and consummated, any Public
      Stockholder who voted against the Business Combination may demand that the
      Company convert his shares to cash. The per share conversion price will equal
      the amount in the Trust Account, calculated as of two business days prior to
      the
      consummation of the proposed Business Combination, divided by the number of
      shares of common stock held by Public Stockholders at the consummation of the
      Offering. Accordingly, Public Stockholders holding 19.99% of the aggregate
      number of shares owned by all Public Stockholders may seek conversion of their
      shares in the event of a Business Combination. Such Public Stockholders are
      entitled to receive their per





28


**ASCEND
      ACQUISITION CORP.**


**(a
      corporation in the development stage)**





**NOTES
      TO FINANCIAL STATEMENTS**





**1.
      Organization and Business Operations (continued)**





share
      interest in the Trust Account computed without regard to the shares held by
      Initial Stockholders. Accordingly, a portion of the net proceeds of the Offering
      has been classified as common stock subject to conversion and 19.99% of the
      interest earned on the Trust Account has been recorded as deferred interest
      in
      the accompanying December 31, 2006 balance sheet.




The
      Company’s Amended and Restated Certificate of Incorporation provides for
      mandatory liquidation of the Company in the event that the Company does not
      consummate a Business Combination within 18 months from the date of the
      consummation of the Offering (November 17, 2007), or 24 months from the
      consummation of the Offering (May 17, 2008) if certain extension criteria have
      been satisfied. In the event of liquidation, it is likely that the per share
      value of the residual assets remaining available for distribution (including
      Trust Account assets) will be less than the initial public offering price per
      share in the Offering due to costs related to the Offering, general and
      administrative expenses incurred prior to the liquidation event and since no
      value would be attributed to the Warrants contained in the Units sold
      (Note 5).





The
      Company may face a mandatory liquidation by November 17, 2007 if a business
      combination is not consummated, unless certain extension criteria are met,
      which
      raises substantial doubt about its ability to continue as a going concern. 
The financial statements do not include any adjustments that might result from
      the outcome of this uncertainty.





**2.
      Summary of Significant Accounting Policies**





**Use
      of Estimates**


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





**Concentration
      of Credit Risk**


Financial
      instruments that potentially subject the Company to credit risk consist of
      cash
      equivalents and short-term investments. The Company’s policy is to place
      investments with financial institutions evaluated as being creditworthy, or
      in
      short-term money market funds which are exposed to minimal interest rate and
      credit risk and in a highly rated United States Treasury Bills. At times, the
      Company has bank balances in excess of federally insured limits.


29


**ASCEND
      ACQUISITION CORP.**


**(a
      corporation in the development stage)**





**NOTES
      TO FINANCIAL STATEMENTS**





**2.
      Summary of Significant Accounting Policies (continued)**





**Fair
      Value of Financial Instruments**


The
      following methods and assumptions are used to estimate the fair value of each
      class of financial instruments for which it is practical to
      estimate:





*Cash* :
      The
      carrying amount approximates the fair value.





*Investment
      in Pennsylvania Municipal Money Market account:* This
      investment is considered a trading security. The investment is carried at market
      value, which approximates cost plus accrued interest.





**Deferred
      Interest**


A
      portion
      (19.99%) of the interest earned on the Trust Account has been deferred on the
      balance sheet as it represents interest attributable to the common stock subject
      to possible conversion (See Note 1).





**Income
      Taxes**


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





**Earnings
      per Common Share**


Basic
      earnings per share (“EPS”) are computed by dividing net income applicable to
      common stock by the weighted average common shares outstanding during the
      period. Diluted EPS reflects the additional dilution for all potentially
      dilutive securities such as stock warrants.





**Recently
      Issued Accounting Standards**


In
      June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” an
      interpretation of FASB Statement No. 109 (“FIN 48”), which provides
      criteria for the recognition, measurement, presentation and disclosure of
      uncertain tax positions. A tax benefit from an uncertain position may be
      recognized only if it is “more likely than not” that the position is sustainable
      based on its technical merits. The provisions of FIN 48 are effective for fiscal
      years beginning after December 15, 2006. The Company does not expect FIN 48
      will have a material effect on its consolidated financial condition or results
      of operations.





**3.
      Investments Held in Trust**





Investments
      held in trust at December 31, 2006 consist of a Pennsylvania Municipal Money
      Market trust obligation of $39,248,419, plus accrued interest of
      $106,301.


30


**ASCEND
      ACQUISITION CORP.**


**(a
      corporation in the development stage)**





**NOTES
      TO FINANCIAL STATEMENTS**


**4.
      Earnings per Share**





The
      following table sets forth the computation of basic and diluted earnings per
      share:





**Year
                Ended December 31, 2006**
            
            **December
                5, 2005 (Inception) to**
              **December
                31, 2005**
            
            **December
                5, 2005 (Inception) to**
              **December
                31, 2006**Numerator:
                Net income (loss)
            
            $
            382,734
            
            $
            (1,131
            )
            $
            381,603Denominator:
                Average common shares
              outstanding
            
            
            6,015,617
            
            
            1,500,000
            
            
            5,704,592Basic
                and diluted earnings per share
            
            $
            .06
            
            $
            (
                .00
            )
            $
            .07





No
      computation for diluted earnings per share was prepared for the Redeemable
      Common Stock Purchase Warrants (see Note 5) to purchase an aggregate of
      14,133,334 shares of common stock at $5.00 per share and the underwriters’
option (see Note 5) to purchase 300,000 Units at an exercise price of $7.50
      per
      Unit, respectively, that were outstanding at December 31, 2006 because the
      shares underlying the conversion of the warrants are contingently issuable
      and
      the exercise price of the underwriters’ option is in excess of the related
      market value of the Units.





**5.
      Stockholders’ Equity**





**The
      Offering**


On
      May
      17, 2006, the Company sold 6,000,000 units (“Units”) in the Offering and on May
      22, 2006, the Company sold an additional 900,000 Units related to the
      underwriter’s over-allotment option. Each Unit consists of one share of the
      Company’s common stock, $.0001 par value, and two Redeemable Common Stock
      Purchase Warrants (“Warrants”). Each Warrant entitles the holder to purchase
      from the Company one share of common stock at an exercise price of $5.00
      commencing on the later of the completion of a Business Combination with a
      target business or May 11, 2007 and expiring May 10, 2010. The Warrants will
      be
      redeemable, at the Company’s option, at a price of $.01 per Warrant upon 30
      days’ notice after the Warrants become exercisable, only in the event that the
      last sale price of the common stock is at least $8.50 per share for any 20
      trading days within a 30 trading day period ending on the third day prior to
      the
      date on which notice of redemption is given. The Company agreed to pay
      EarlyBirdCapital, Inc., the underwriter in the Offering (“Underwriter”) an
      underwriting discount of 8% of the gross proceeds of the Offering and a
      non-accountable expense allowance of 1% of the gross proceeds of the Offering.
      However, the Underwriter agreed that 2.3% of the underwriting discount
      ($952,200) will not be payable unless and until the Company completes a Business
      Combination and has waived its right to receive such payment upon the Company's
      liquidation if it is unable to complete a Business Combination.


31


**ASCEND
      ACQUISITION CORP.**


**(a
      corporation in the development stage)**





**NOTES
      TO FINANCIAL STATEMENTS**





**5.
      Stockholders’ Equity (continued)**





**The
      Offering (continued)**





In
      connection with this Offering, the Company also issued an option (“Option”), for
      $100, to the Underwriter to  purchase
      300,000 Units at an exercise price of $7.50 per Unit. The Units issuable upon
      exercise of the Option are identical to the Units sold in the Offering. The
      Company has accounted for the fair value of the Option, inclusive of the receipt
      of the $100 cash payment, as an expense of the Offering resulting in a charge
      directly to stockholders’ equity. The Company  estimated
      that, as of the date of issuance, the fair value of the Option was approximately
      $711,000 ($2.37 per Unit) using a Black-Scholes option-pricing model. The fair
      value of the Option granted to the Underwriter was estimated using the following
      assumptions: (1) expected volatility of 46.56%, (2) risk-free interest rate
      of
      4.31% and (3) expected life of 5 years. The Option may be exercised for cash
      or
      on a "cashless" basis, at the holder's option, such that the holder may use
      the
      appreciated value of the Option (the difference between the exercise prices
      of
      the Option and the underlying Warrants and the market price of the Units and
      underlying securities) to exercise the option without the payment of any cash.





**Common
      Stock**


The
      Company’s initial stockholders purchased 875,000 common shares for $25,000 on
      December 5, 2005. On April 19, 2006, the Company's Board of Directors authorized
      a stock dividend of 0.714285 shares of common stock for each share of common
      stock outstanding, bringing the initial outstanding shares to 1,500,000. On
      April 20, 2006, the Company's Certificate of Incorporation was amended to
      increase the authorized shares of common stock from 15,000,000 to 30,000,000
      shares of common stock. All references in the accompanying financial statements
      to the number of shares of stock have been retroactively restated to reflect
      these transactions.





**Preferred
      Stock**


The
      Company is authorized to issue 1,000,000 shares of preferred stock, par value
      $.0001 per share, with such designations, voting and other rights and
      preferences as may be determined from time to time by the Board of
      Directors.





The
      agreement with the Underwriter prohibits the Company, prior to a Business
      Combination, from issuing preferred stock which participates in the proceeds
      of
      the Trust Account or which votes as a class with the Common Stock on a Business
      Combination.





**6.
      Note Payable, Stockholder**





The
      Company issued an $80,000 unsecured promissory note to an Initial Stockholder,
      who is also an officer, on December 20, 2005. The note was non interest-bearing
      and was due following the consummation of the Offering from the net proceeds
      of
      such Offering. The note was repaid on May 24, 2006.


32


**ASCEND
      ACQUISITION CORP.**


**(a
      corporation in the development stage)**





**NOTES
      TO FINANCIAL STATEMENTS**





**7.
      Income taxes**





The
      provision for income taxes consists of the following:




**For
                the year ended December
                31,**
            
            **For
                the period**
              **December
                5, 2005****(inception)**
              **to****December
                31,****2006**
            
            **2005**
            
            **2006**Current
                federal
            
            $
            28,100
            
            $
            -
            
            $
            28,100Deferred
                federal
            
            
            (28,100
            )
            
            -
            
            
            (28,100
            )Current
                state
            
            
            32,700
            
            
            -
            
            
            32,700Deferred
                state
            
            
            -
            
            
            -
            
            
            -$
            32,700
            
            $
            -
            
            $
            32,700





The
      total
      provision for income taxes differs from that amount which would be computed
      by
      applying the U.S. Federal income tax rate to income before provision for income
      taxes as follow:




**For
                the year ended December
                31,**
            
            **For
                the period**
              **December
                5, 2005****(inception)**
              **to****December
                31,****2006**
            
            **2005**
            
            **2006**Statutory
                federal income tax rate
            
            
            34.0
            %
            
            (34.0
            %)
            
            34.0
            %Permanent
                differences and other
            
            
            (34.0
            %)
            
            -
            
            
            (34.0
            %)State
                tax effect
            
            
            7.9
            %
            
            
            
            
            7.9
            %Increase
                in valuation allowance
            
            
            -
            
            
            34.0
            %
            
            -Effective
                income tax rate
            
            
            7.9
            %
            
            -
            
            
            7.9
            %





The
      tax
      effect of temporary differences that give rise to the net deferred tax asset
      is
      as follows:




**December
                31,****2006**
            
            **2005**Expenses
                deferred for income tax purposes
            
            $
            88,100
            
            $
            -Deferred
                interest
            
            
            16,000Federal
                net operating loss carryforwards
            
            
            -
            
            
            385Valuation
                allowance
            
            
            (76,000
            )
            
            (385
            )Net
                deferred tax asset
            
            $
            28,100
            
            $
            -





During
      the year ended December 31, 2006, the Company paid $9 in federal income taxes
      for 2005 and $18,000 to Pennsylvania for 2006 income tax.





33


**ASCEND
      ACQUISITION CORP.**


**(a
      corporation in the development stage)**





**NOTES
      TO FINANCIAL STATEMENTS**





**8.**  **Commitments**





The
      Company presently occupies office space provided by an affiliate of the
      Company’s special advisor. Such affiliate has agreed that, until the Company
      consummates a Business Combination, it will make such office space, as well
      as
      certain office and secretarial services, available to the Company, as may be
      required by the Company from time to time. The Company has agreed to pay such
      affiliate $7,500 per month for such services commencing May 11,
      2006.





Pursuant
      to letter agreements with the Company and the Underwriter, the Initial
      Stockholders have waived their right to receive distributions with respect
      to
      their founding shares upon the Company's liquidation.





One
      of
      the Initial Stockholders committed to purchase 166,667 Units at $6.00 per unit
      (for an aggregate purchase price of $1,000,002) privately from the Company.
      These purchases took place simultaneously with the consummation of the Offering.
      All of the proceeds received from this purchase have been placed in the Trust
      Account. The Units purchased by such Initial Stockholder are identical to the
      Units offered in the Offering except that if the Company calls the Warrants
      for
      redemption, the Warrants underlying these Units may be exercisable on a
      "cashless basis" so long as such Warrants are held by such Initial Stockholder
      or his affiliates. Additionally, such Initial Stockholder has waived his right
      to receive distributions upon the Company’s liquidation prior to a Business
      Combination with respect to the securities underlying these Units. This Initial
      Stockholder has further agreed that the Units and underlying securities will
      not
      be sold or transferred by him until after the Company has completed a Business
      Combination and has agreed to vote the shares of common stock underlying these
      Units in accordance with the vote of the majority in interest of the Public
      Stockholders with respect to any Business Combination.





The
      Initial Stockholders will be entitled to registration rights with respect to
      their founding shares pursuant to an agreement signed on May 11, 2006. The
      holders of the majority of these shares are entitled to make up to two demands
      that the Company register these shares at any time commencing February 11,
      2009.
      In addition, the Initial Stockholders have certain "piggy-back" registration
      rights on registration statements filed subsequent to May 11, 2009.





34


**Item
      8. Changes In and Disagreements with Accountants on Accounting and Financial
      Disclosure** **.**





Not
      applicable.





**Item
      8A. Controls and Procedures.**





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in company reports filed or
      submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is
      recorded, processed, summarized and reported, within the time periods specified
      in the Securities and Exchange Commission’s rules and forms. Disclosure controls
      and procedures include, without limitation, controls and procedures designed
      to
      ensure that information required to be disclosed in company reports filed or
      submitted under the Exchange Act is accumulated and communicated to management,
      including our chief executive officer, as appropriate to allow timely decisions
      regarding required disclosure.





As
      required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive
      Officer (principal executive, financial and accounting officer) carried out
      an
      evaluation of the effectiveness of the design and operation of our disclosure
      controls and procedures as of December 31, 2006. Based upon his evaluation,
      he
      concluded that our disclosure controls and procedures were
      effective.





Our
      internal control over financial reporting is a process designed by, or under
      the
      supervision of, our chief executive officer and effected by our board of
      directors, management and other personnel, to provide reasonable assurance
      regarding the reliability of our financial reporting and the preparation of
      our
      financial statements for external purposes in accordance with generally accepted
      accounting principles (United States). Internal control over financial reporting
      includes policies and procedures that pertain to the maintenance of records
      that
      in reasonable detail accurately and fairly reflect the transactions and
      dispositions of our assets; provide reasonable assurance that transactions
      are
      recorded as necessary to permit preparation of our financial statements in
      accordance with generally accepted accounting principles (United States), and
      that our receipts and expenditures are being made only in accordance with the
      authorization of our board of directors and management; and provide reasonable
      assurance regarding prevention or timely detection of unauthorized acquisition,
      use or disposition of our assets that could have a material effect on our
      financial statements.





During
      the most recently completed fiscal quarter, there has been no change in our
      internal control over financial reporting that has materially affected, or
      is
      reasonably likely to materially affect, our internal control over financial
      reporting.





**Item
      8B. Other Information.**





Not
      applicable.


35





**PART
      III**





**Item
      9. Directors, Executive Officers, Promoters, Control Persons and Corporate
      Governance; Compliance With Section 16(a) of the Exchange
      Act.**





**Directors
      and Executive Officers**




Our
      current directors and executive officers are as follows:




**Name**
            
            **Age**
            
            **Position**Don
                K. Rice
            
            58
            
            Chairman
                of the Board, Chief Executive Officer, President and
                TreasurerStephen
                L. Brown
            
            68
            
            Secretary
                and DirectorRussell
                C. Ball III
            
            40
            
            Director




***Don
      K. Rice*** has been
      our chairman of the board, chief executive officer, president and treasurer
      since our inception. Mr. Rice was a co-founder and has been a managing partner
      of RSTW Partners since 1989. RSTW Partners is a privately held firm that,
      through limited partnerships, invests primarily in the subordinated debt of
      middle market companies located throughout the United States. Prior to forming
      RSTW Partners, from 1986 to December 1988, Mr. Rice was affiliated with First
      Texas Merchant Banking Group, a firm which specialized in providing subordinated
      debt financing, and was its vice president from 1986 to 1988 and president and
      chief executive officer from May 1988 to December 1988. He was also vice
      president of PruCapital, Inc., an investment subsidiary of The Prudential
      Insurance Company of America, from March 1984 to April 1986. Mr.
      Rice
      has served as a member of the board of directors of NationsHealth, Inc. since
      its inception in August 2003. NationsHealth is a Nasdaq listed company that,
      through its wholly owned subsidiary, NationsHealth L.L.C., provides medical
      products and pharmacy benefits to Medicare participants and other senior
      citizens. NationsHealth, Inc. was originally known as Millstream Acquisition
      Corporation, a blank check company with an objective to acquire an operating
      business with significant growth potential. Mr.
      Rice
      has also served as a member of the board of directors of Millstream II
      Acquisition Corporation, an OTC Bulletin Board listed blank check company formed
      to serve as a vehicle for the acquisition of an operating business, since its
      inception in September 2004. Mr. Rice received a B.B.A. and M.B.A. from the
      University of Texas.




***Stephen
      L. Brown*** has
      been
      our secretary and a member of our board of directors since our inception. Since
      October 2004, Mr. Brown has served as chairman of the board of Brimco LLC,
      a
      private investment firm. From October 1986 to October 2004, Mr. Brown served
      as
      chairman of the board and chief executive officer of The Franklin Capital Corp.
      (now Patient Safety Technologies, Inc.), an American Stock Exchange listed
      investment company. From January 1983 to June 1997, Mr. Brown was also the
      founder and chairman of the board of S.L. Brown & Company, Inc., a private
      equity firm. Mr. Brown is a member of the board of directors of Copley Financial
      Services Corp., a mutual fund specializing in the energy sector and Cashbox
      plc,
      an independent automated teller machine (ATM) deployer listed on the Alternative
      Investment Market (AIM) of the London Stock Exchange. In addition, Mr. Brown
      is
      an active board member and trustee of The Peddie School. Mr. Brown received
      a
      B.A. from Brown University and a J.D. from the New York University School of
      Law.






36




***Russell
      C. Ball III*** has been
      a member of our board of directors since our inception. Mr. Ball has served
      as
      the chief executive officer of Wind River Holdings, L.P. (formerly the AMC
      Group, L.P.), a private investment company which acquires and grows businesses
      in partnership with management, since May 1993. These companies include
      Philadelphia Mixing Solutions (agitators for the water treatment and chemical
      industries); Philadelphia Gear Corporation (high performance gears and gear
      drives); Samson Rope Technologies (high performance cordage); United National
      Group (specialty and surplus line insurance); Goddard Systems, Inc. (franchised
      child care centers), and AMC Delancey (real estate). Previous to his current
      position, Mr. Ball was involved in the growth and divestiture of a variety
      of
      manufacturing businesses. He currently sits on the Board of Governors of Merion
      Golf Club and serves on the Membership Committee. He is also a member of the
      Board of Trustees of The Haverford School, where he heads the Development
      Committee and serves on the Trusteeship Committee. Mr. Ball received a B.A.
      from
      Harvard University and an M.B.A. from Pennsylvania State
      University.




Our
      board
      of directors is divided into three classes with only one class of directors
      being elected in each year and each class serving a three-year term. The term
      of
      office of the first class of directors, consisting of Russell C. Ball III,
      will
      expire at our first annual meeting of stockholders. The term of office of the
      second class of directors, consisting of Stephen L. Brown, will expire at the
      second annual meeting. The term of the third class of directors, consisting
      of
      Don K. Rice, will expire at the third annual meeting.




**Special
      advisor**




***Arthur
      Spector*** has
      served as our special advisor since our inception. Mr. Spector has served as
      chairman of the board of NationsHealth, Inc. since its inception in August
      2003
      and served as its chief executive officer and president from August 2003 until
      August 2004. Since September 2004, Mr. Spector has also been the chairman of
      the
      board, chief executive officer and president of Millstream II Acquisition
      Corporation. From March 1995 to October 2002, Mr. Spector served as chairman
      of
      the board of Neoware Systems, Inc. (“Neoware Systems”), a manufacturer of
      sophisticated computer appliances and related software, and he also served
      as
      its president and chief executive officer from May 1996 until June 1997. Neoware
      Systems was originally known as Information Systems Acquisition Corp., a blank
      check company with an objective to acquire an operating business in the
      information systems industry. Information Systems Acquisition Corp. was formed
      in 1992 and from its inception until it merged with Human Designed Systems,
      Inc.
      in March 1995, Mr. Spector was its chairman of the board, president and chief
      executive officer. In this role, Mr. Spector directed the completion of a public
      offering that raised gross proceeds of approximately $13.8 million. Mr. Spector
      has served as a director of Docucorp International, Inc., a public document
      automation company, since May 1997. Mr. Spector has also been a director of
      Metallurg Holdings, Inc. and Metallurg, Inc. since July 1998 and has been
      executive vice president of Metallurg Holdings, Inc. since July 1998 and
      treasurer since August 2000. He was elected vice chairman of the board of
      Metallurg Holdings, Inc. and Metallurg, Inc. in November 2002. Metallurg
      Holdings, Inc. is the holding company for Metallurg, Inc., a company that
      produces and sells specialty metals, alloys and chemicals. From 1998 to 2002,
      Mr. Spector served as a director of USDATA Corporation, a global supplier of
      component-based production software. Mr. Spector received a B.S. from the
      Wharton School of Finance at the University of Pennsylvania and a J.D. from
      The
      University of Pennsylvania Law School.






37




In
      addition to Mr. Spector’s experience described above, he has had significant
      experience in mergers and acquisitions and managing private equity funds. Since
      January 1997, he has served as managing director of the general partner and
      of
      the management company of Safeguard International Fund, L.P., a private equity
      fund investing primarily in controlling positions in industrial companies in
      North America and Europe. From 1995 to 1996, Mr. Spector served as director
      of
      acquisitions of Safeguard Scientifics, Inc., a public company that owns
      controlling interests in and operates numerous private companies. From 1997
      to
      1998, Mr. Spector served as a managing director of TL Ventures LLC, whose
      present successor is TL Ventures L.P., a fund management company organized
      to
      manage the day-to-day operations of several of the TL Ventures funds which
      invest in companies in the internet, software, information technology,
      communications and life sciences industries.




These
      individuals will play a key role in identifying and evaluating prospective
      acquisition candidates, selecting the target business, and structuring,
      negotiating and consummating its acquisition. We believe that the skills and
      expertise of these individuals, their collective access to acquisition
      opportunities and ideas, their contacts, and their transactional expertise
      should enable them to successfully identify and effect an
      acquisition.




**Code
      of Ethics**




In
      May
      2006, our board of directors adopted a code of ethics that applies to our
      directors, officers and employees. Requests for copies of our code of ethics
      should be sent in writing to Ascend Acquisition Corp., 435 Devon Park Drive,
      Building 400, Wayne, Pennsylvania 19087.




**Compliance
      with Section 16(a) of the Exchange Act**




Section
      16(a) of the Securities Exchange Act requires our directors, executive officers
      and persons who are the beneficial owners of more than ten percent of our common
      stock (collectively, the "Reporting Persons") to file reports of ownership
      and
      changes in ownership with the Securities and Exchange Commission and to furnish
      us with copies of these reports.




Based
      solely on copies of such forms received or written representations from certain
      Reporting Persons that no Form 5s were required for those persons, we believe
      that, during the fiscal year ended December 31, 2006, all filing requirements
      applicable to the Reporting Persons were complied with.




**Corporate
        Governance**
  We
        currently do not have audit or nominating committees as we are not a listed
        issuer and are not required to have such committees. In connection with a
        proposed business combination, we anticipate applying to have our securities
        listed on a national securities exchange. At that time, we will adhere to
        the
        rules of whatever exchange we seek to have our securities listed on and will
        form audit and nominating committees, if required.




**Item
      10. Executive Compensation.**




No
      executive officer has received any cash compensation for services rendered
      to
      us. Commencing May 11, 2006 through the acquisition of a target business, we
      will pay 400 Building LLC, an
      affiliate of Arthur Spector, a
      fee of
      $7,500 per month for providing us with office space and certain office and
      secretarial services. However, this arrangement is solely for our benefit and
      is
      not intended to provide Mr. Spector c ompensation
      in lieu of a salary. Other
      than the $7,500 per month administrative fee ,
      no
      compensation of any kind, including finders, consulting or other similar fees,
      will be paid to any of our existing stockholders, including our directors,
      or
      any of their respective affiliates, prior to, or for any services they render
      in
      order to effectuate, the consummation of a business combination. However, such
      individuals will be reimbursed for any out-of-pocket expenses incurred in
      connection with activities on our behalf such as identifying potential target
      businesses and performing due diligence on suitable business combinations.
      There
      is no limit on the amount of these out-of-pocket expenses and there will be
      no
      review of the reasonableness of the expenses by anyone other than our board
      of
      directors, which includes persons who may seek reimbursement, or a court of
      competent jurisdiction if such reimbursement is challenged. Because
      of the foregoing, we will generally not have the benefit of independent
      directors examining the propriety of expenses incurred on our behalf and subject
      to reimbursement.






38




Since
      our
      formation, we have not granted any stock options or stock appreciation rights
      or
      any awards under long-term incentive plans.




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




The
      following table sets forth information regarding the beneficial ownership of
      our
      common stock as of March 5, 2007, by:




·
            each
                person known by us to be the owner of more than 5% of our outstanding
                shares of common stock;




·
            each
                of our executive officers and directors; and




·
            all
                our executive officers and directors as a
                group.




Unless
      otherwise indicated, we believe that all persons named in the table have sole
      voting and investment power with respect to all shares of common stock
      beneficially owned by them. As of March 5, 2007, 8,566,667 shares of our common
      stock were issued and outstanding.




**Name
                and Address of Beneficial Owner****(1)**
            **Amount
                and**
              **Nature
                of**
              **Beneficial**
              **Ownership**
            **Approximate**
              **Percentage**
              **of
                Outstanding**
              **Common
                Stock**Don
                K. Rice
            1,358,096(2)
            15.9%.
              Russell
                C. Ball III(3)
            102,857
            1.2%Stephen
                L. Brown(4)
            102,857
            1.2%Fir
                Tree, Inc.(5)
            839,500(6)
            9.8%Hummingbird
                Management LLC(7)
            748,100
            8.7%David
                M. Knott(8)
            451,500(9)
            5.3%Azimuth
                Opportunity, Ltd.(10)
            433,000
            5.1%All
                directors and executive officers as a group (three
                individuals)
            1,563,810(2)
            18.3%


___________________________________






39




(1)
            Unless
                otherwise indicated, the business address of each of the individuals
                is
                435 Devon Park Drive, Building 400, Wayne, Pennsylvania
                19087.




(2)
            Does
                not include 953,334 warrants held by Mr. Rice, which warrants are
                not
                exercisable and will not become exercisable within 60
                days.




(3)
            Mr.
                Ball’s business address is Wind River Holdings, L.O. 555 Croton Road,
                King
                of Prussia, Pennsylvania 19406.




(4)
            Mr.
                Brown’s business address is Brimco LLC, 750 Lexington Avenue, New York,
                New York 10022.




(5)
            The
                business address of Fir Tree, Inc. is 505 Fifth Avenue, 23rdFloor, New York, New York 10017.




(6)
            Represents
                (i) 649,049 shares of common stock held by Sapling, LLC, and (ii)
                190,451
                shares of common stock held by Fir Tree Recovery Master Fund, L.P.
                Fir
                Tree, Inc. is the investment manager of both entities and exercises
                voting
                and disposition power over the shares. The foregoing was derived
                from a
                Schedule 13G/A filed with the SEC on February 14,
                2007.




(7)
            The
                business address of Hummingbird Management LLC is 460 Park Avenue,
                12thFloor, New York, New York 10022.




(8)
            The
                business address of David M. Knott is Dorset Management Company,
                485
                Underhill Blvd., Suite 205, Syosset, New York
                11791.




(9)
            Represents
                shares held by Mr. Knott and Dorset Management Company. The foregoing
                was
                derived from a Schedule 13G/A filed with the SEC on February 14,
                2007.




(10)
            The
                business address of Azimuth Opportunity, Ltd. is c/o W. Smiths Finance,
                Nemours Chambers, P.O. Box 3170, Road Town, Tortola, British Virgin
                Islands.




All
      of
      the initial shares (but not any shares included within the insider units) have
      been placed in escrow with Continental Stock Transfer & Trust Company, as
      escrow agent, until the earliest of:




·
            May
                11, 2009; and




·
            the
                consummation of a liquidation, merger, stock exchange or other similar
                transaction which results in all of our stockholders having the right
                to
                exchange their shares of common stock for cash, securities or other
                property subsequent to our consummating a business combination with
                a
                target business.




During
      the escrow period, the holders of these shares will not be able to sell or
      transfer their securities except to their spouses and children or trusts
      established for their benefit, but will retain all other rights as our
      stockholders, including, without limitation, the right to vote their shares
      of
      common stock and the right to receive cash dividends, if declared. If dividends
      are declared and payable in shares of common stock, such dividends will also
      be
      placed in escrow. If we are unable to effect a business combination and
      liquidate, none of our existing stockholders will receive any portion of the
      liquidation proceeds with respect to their initial shares.






40




Mr.
      Rice
      is our “promoter” as that term is defined under the Federal securities
      laws.




**Item
      12. Certain Relationships and Related Transactions** **,
      and Director Independence.**




In
      December 2005, we issued 875,000 shares of our common stock to the individuals
      set forth below for $25,000 in cash, at an average purchase price of
      approximately $0.029 per share as follows:





**Name**
            
            **Number
                of Shares**
            
            **Relationship
                to Us**Don
                K. Rice
            
            
            695,000
            
            
            Chairman
                of the Board, Chief Executive Officer, President and
                TreasurerStephen
                L. Brown
            
            
            60,000
            
            
            Secretary
                and DirectorRussell
                C. Ball III
            
            
            60,000
            
            
            DirectorArthur
                Spector
            
            
            60,000
            
            
            Special
                Advisor




Effective
      April 19, 2006, our board of directors authorized a stock dividend of 0.714285
      shares of common stock for each outstanding share of common stock, effectively
      lowering the purchase price to $0.0167 per share.




The
      holders of the majority of these shares will be entitled to make up to two
      demands that we register these shares. The holders of the majority of these
      shares may elect to exercise these registration rights at any time commencing
      three months prior to the date on which these shares of common stock are
      released from escrow. In addition, these stockholders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent
      to
      the date on which these shares of common stock are released from escrow. We
      will
      bear the expenses incurred in connection with the filing of any such
      registration statements.




Don
      K.
      Rice, our chairman of the board, chief executive officer, president and
      treasurer, has purchased insider units (for an aggregate purchase price of
      $1,000,002) from us. This purchase took place on a private placement basis
      simultaneously with the consummation of the Offering. All of the proceeds
      received from this purchase were placed in the trust fund. The insider units
      are
      identical to the units being offered to the public; however, Mr. Rice has waived
      his right to receive distributions upon our liquidation prior to a business
      combination with respect to the securities underlying the insider units.
      Additionally, he has agreed that the insider units and underlying securities
      will not be sold or transferred by him until after we have completed a business
      combination.




400
      Building LLC, an affiliate of Arthur Spector, has agreed that, commencing May
      11, 2006 through the acquisition of a target business, it will make available
      to
      us a small amount of office space and certain office and secretarial services,
      as we may require from time to time. We have agreed to pay 400 Building LLC
      $7,500 per month for these services. Mr. Spector is the sole member and sole
      manager of 400 Building LLC and, as a result, will benefit from the transaction
      to the extent of his interest in 400 Building LLC. However, this arrangement
      is
      solely for our benefit and is not intended to provide Mr. Spector compensation
      in lieu of a salary. We believe, based on rents and fees for similar services
      in
      the Philadelphia metropolitan area, that the fee charged by 400 Building LLC
      is
      at least as favorable as we could have obtained from an unaffiliated person.
      However, as our directors may not be deemed “independent,” we did not have the
      benefit of disinterested directors approving this transaction.






41




Don
      K.
      Rice advanced us an aggregate of $80,000 to cover expenses related to the
      Offering. The loan was repaid on May 24, 2006 from the proceeds of the Offering
      not placed in trust.




We
      will
      reimburse our officers, directors and special advisor for any reasonable
      out-of-pocket business expenses incurred by them in connection with certain
      activities on our behalf such as identifying and investigating possible target
      businesses and business combinations. There is no limit on the amount of
      out-of-pocket expenses reimbursable by us, which will be reviewed only by our
      board or a court of competent jurisdiction if such reimbursement is
      challenged.




Other
      than the $7,500 per-month administrative fee and reimbursable out-of-pocket
      expenses payable to our officers and directors, no compensation or fees of
      any
      kind, including finder’s fees, consulting fees or other similar compensation,
      will be paid to any of our existing stockholders, officers or directors who
      owned our common stock prior to this offering, or to any of their respective
      affiliates, prior to or with respect to the business combination.




All
      ongoing and future transactions between us and any of our officers and directors
      or their respective affiliates, including loans by our officers and directors,
      will be on terms believed by us to be no less favorable to us than are available
      from unaffiliated third parties. Such transactions or loans, including any
      forgiveness of loans, will require prior approval by a majority of our
      uninterested “independent” directors (to the extent we have any) or the members
      of our board who do not have an interest in the transaction, in either case
      who
      had access, at our expense, to our attorneys or independent legal counsel.
      We
      will not enter into any such transaction unless our disinterested "independent"
      directors (or, if there are no "independent" directors, our disinterested
      directors) determine that the terms of such transaction are no less favorable
      to
      us than those that would be available to us with respect to such a transaction
      from unaffiliated third parties.




**Independence
      of Directors**




Currently, only
      Russell C. Ball would be considered “independent” as that term is commonly
      used. In connection with a proposed business combination, we anticipate applying
      to have our securities listed on a national securities exchange. At that time,
      we will adhere to the rules of whatever exchange we seek to have our securities
      listed on.




**Item
      13. Exhibits and Reports on Form 8-K.**




(a)
      The
      following Exhibits are filed as part of this report.









42





Exhibit
                No.
              Description3.1
              Amended
                  and Restated Certificate of Incorporation. (1)3.2
              By-laws.
                  (1)4.1
              Specimen
                  Unit Certificate. (1)4.2
              Specimen
                  Common Stock Certificate. (1)4.3
              Specimen
                  Warrant Certificate. (1)4.4
              Form
                  of Unit Purchase Option. (2)4.5
              Form
                  of Warrant Agreement between Continental Stock Transfer & Trust
                  Company and the Registrant. (1)4.6
              Warrant
                  Clarification Agreement, dated December 31, 2006, between the Registrant
                  and Continental Stock Transfer & Trust Company. (2)10.1
              Letter
                  Agreement among the Registrant, EarlyBirdCapital, Inc. and Don
                  K. Rice.
                  (1)10.2
              Letter
                  Agreement among the Registrant, EarlyBirdCapital, Inc. and Russell
                  C. Ball
                  III. (1)10.3
              Letter
                  Agreement among the Registrant, EarlyBirdCapital, Inc. and Stephen
                  L.
                  Brown. (1)10.4
              Letter
                  Agreement among the Registrant, EarlyBirdCapital, Inc. and Arthur
                  Spector.
                  (1)10.5
              Form
                  of Investment Management Trust Agreement between Continental Stock
                  Transfer & Trust Company and the Registrant. (1)10.6
              Form
                  of Stock Escrow Agreement between the Registrant, Continental Stock
                  Transfer & Trust Company and the Initial Stockholders.
                  (1)10.7
              Form
                  of Letter Agreement between 400 Building LLC and Registrant regarding
                  administrative support. (1)10.8
              Promissory
                  Note, dated December 20, 2005 issued to Don K. Rice.
                  (1)10.9
              Form
                  of Registration Rights Agreement among the Registrant and the Initial
                  Stockholders. (1)10.10
              Subscription
                  Agreement among the Registrant, Don K. Rice, Graubard Miller and
                  EarlyBirdCapital, Inc.10.11
              Warrant
                  Purchase Agreement among EarlyBirdCapital, Inc. and Don K. Rice.
                  (1)
   43
  10.12
              Letter
                  agreement, dated March 8, 2006, among the Registrant, Don K. Rice,
                  Russell
                  C. Ball III, Stephen L. Brown and Arthur Spector. (1)31
              Certification
                  of Chairman, Chief Executive Officer and
                  President pursuant to Section 302 of the Sarbanes-Oxley Act of
                  2002.32
              Certification
                  of Chief Executive Officer pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.


(1)
            Incorporated
                by reference to the Registrant’s Registration Statement on Form S-1 or
                amendments thereto (SEC File No.
                333-131529).


(2)
            Incorporated
                by reference to the Registrant’s Current Report on Form 8-K dated December
                31, 2006 and filed with the SEC on January 3,
                2007.


44





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





The
      firm
      of Goldstein Golub Kessler LLP acts as our principal accountant. Goldstein
      Golub
      Kessler LLP (“the Firm”) has a continuing relationship with RSM
      McGladrey, Inc. (“RSM”) ,
      from
      which it leases auditing staff who are full time, permanent employees of RSM
      and
      through which its partners provide non-audit services. The Firm has no full
      time
      employees and therefore, none of the audit services performed were provided
      by
      permanent full-time employees of the Firm. The Firm manages and supervises
      the
      audit and audit staff, and is exclusively responsible for the opinion rendered
      in connection with this examination.





Other
      services, which do not include Financial Information Systems Design and
      Implementation fees, have been provided by RSM.





The
      following is a summary of fees paid to our principal accountant for services
      provided.





**Audit
      Fees**





During
      2006, our principal accountant charged $14,000 for work performed in connection
      with our Form 10-QSB filings for the quarters ended March 31, 2006, June 30,
      2006 and September 30, 2006. We expect to be billed $15,000 - $17,000 in
      connection with the audit of the December 31, 2006 financial statements.




Our
      principal accountant charged us $35,000 for services they performed in
      connection with our initial public offering, including the financial statements
      included in the Current Report of Form 8-K filed with the Securities and
      Exchange Commission on May 18, 2006.





**Audit-Related
      Fees**





During
      2006 and 2005, our principal accountant did not render assurance and related
      services reasonably related to the performance of the audit or review of
      financial statements.





**Tax
      Fees**





During
      2006, RSM charged us $2,300 for preparation of our 2005 federal tax return.





**All
      Other Fees**





During
      2006 and 2005, there were no fees billed for products and services provided
      by
      the principal accountant other than those set forth above.




**Audit
      Committee Approval**




We
      currently do not have an audit committee. However, our board of directors has
      approved the services described above.


45





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





ASCEND
                  ACQUISITION CORP.By:
                  /s/ Don K. RiceDon
                  K. RiceChairman
                  of the Board, Chief Executive Officer, President and
                  TreasurerDate:
                  March 16, 2007




In
      accordance with the Exchange Act, this report had been signed below by the
      following persons on behalf of the registrant in the capacities and on the
      dates
      indicated.




/s/
                  Don K. RiceDon
                  K. RiceChairman
                  of the Board, Chief Executive Officer,
                President
                  and Treasurer
                (Principal
                  executive and financial and accounting officer)Date:
                  March 16, 2007/s/
                  Stephen L. BrownStephen
                  L. BrownSecretary
                  and DirectorDate:
                  March 16, 2007/s/
                  Russell C. Ball IIIRussell
                  C. Ball IIIDirectorDate:
                  March 16, 2007