Unassociated Document

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements	2
Balance Sheets	2
Statements of Operations	3
Statement of Cash Flows	4
Notes to Consolidated Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3. Quantitative and Qualitative Disclosures about Market Risk	16
Item 4. Controls and Procedures	16

PART II - OTHER INFORMATION

Item 1. Legal Proceedings	17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3. Defaults Upon Senior Securities	17
Item 4. Submission of Matters to a Vote of Security Holders	17
Item 5. Other Information	17
Item 6. Exhibits	17
SIGNATURES	18

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

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

We are filing this Amendment No. 1 to the Quarterly Report on Form 10-Q to restate our financial statements to record the warrants and the unit purchase option as derivative liabilities. For information concerning the background of the restatements, the specific adjustments made, and management’s discussion and analysis of our results of operations giving effect to the restated information, see “Restatement of Financial Statements” at Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes B and C to our Financial Statements.

For the convenience of the reader, this Form 10-Q/A sets forth the entire Form 10-Q which was prepared and relates to the Company as of December 31, 2005. However, this Form 10-Q/A only amends and restates the Items described above to reflect the effects of the restatement and no attempt has been made to modify or update other disclosures presented in our Form 10-Q. Accordingly, except for the foregoing amended information, this Form 10-Q/A continues to speak as of February 14, 2006 (the original filing date of the Form 10-Q), and does not reflect events occurring after the filing of our Form 10-Q and does not modify or update those disclosures affected by subsequent events. Unless otherwise stated, the information in this Form 10-Q/A not affected by such current restatements is unchanged and reflects the disclosures made at the time of the original filing.


	December 31, 2005 (unaudited)		September 30, 2005 (unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	614,405	$	785,055
Cash held in trust account		50,779,664		50,380,000
Prepaid expenses		90,809		109,838
Total current assets		51,484,878		51,274,893

Fixed assets, net of accumulated depreciation		4,316		—
Total assets	$	51,489,194	$	51,274,893

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accrued expenses	$	26,623	$	1,000
Accrued offering costs		—		145,000
Derivative liabilities		8,557,253		8,125,973
Total current liabilities		8,583,876		8,271,973

Common stock, subject to possible redemption, 1,799,100 shares at $5.60 per share		10,155,989		10,074,960
Stockholders’ equity
Preferred stock, $.0001 par value, authorized 1,000,000 shares; none issued and outstanding		—		—
Common stock, $.0001 par value, authorized 50,000,000 shares; issued and outstanding 11,249,997 shares (which includes 1,799,100 shares subject to possible redemption)		1,125		1,125
Additional paid-in capital		32,343,046		32,343,461
Retained earnings		405,158		583,374
Total stockholders’ equity		32,749,329		32,927,960
Total liabilities and stockholders’ equity	$	51,489,194	$	51,274,893

	Three Months Ended December 31, 2005 (unaudited)			April 7, 2005 (inception) to December 31, 2005 (unaudited)

Operating expenses	$	(71,182	)	$	(92,381	)
Loss from operations		(71,182	)		(92,381	)
Gain (loss) from derivative liabilities		(431,280	)		173,219
Interest income, net		405,275			405,349
Net income (loss)	$	(97,187	)	$	486,187
Adjustments: accretion of trust account relating to common stock subject to possible conversion		(81,029	)		(81,029	)
Net income (loss) attributable to common stockholders	$	(178,216	)	$	405,158
Weighted average shares outstanding - basic		11,249,997			6,475,188
Net income (loss) per share	$	(0.01	)	$	0.08
Weighted average of shares outstanding - diluted		11,249,997			6,928,363
Net income(loss) per share - diluted	$	(0.01	)	$	0.06
Pro Forma Adjustment:
Interest income attributable to common stock subject to possible redemption		—			—
Pro forma net income (loss) attributable to common stockholders not subject to possible redemption		(178,216	)		405,158
Pro forma weighted average number of shares outstanding, excluding shares subject to possible redemption - basic		9,450,897			5,630,572
Pro forma net income (loss) per share, excluding shares subject to possible redemption - basic	$	(0.02	)	$	0.07
Pro forma weighted average number of shares outstanding, excluding shares subject to possible redemption - diluted		9,450,897			6,083,747
Pro forma net income(loss) per share, excluding shares subject to possible redemption - diluted	$	(0.02	)	$	0.06

Cash flows from operating activities
Net income	$	486,187
Adjustments to reconcile net income to net cash provided by operations Gain from derivative liabilities		(173,219	)
Depreciation		761
Changes in operating assets and liabilities
Prepaid expenses		(90,809	)
Accrued expenses		26,623

Net cash provided by operating activities		249,543
Investing Activities
Purchases of property and equipment		(5,077	)
Cash held in Trust Account		(50,779,664	)
Net cash used in investing activities		(50,784,741	)

Financing activities
Issuance of stock		51,148,503
Proceeds from sale of common stock to founders		1,000
Proceeds from issuance of representative’s option		100
Proceeds from notes payable to stockholders		150,000
Repayment of notes payable to stockholders		(150,000	)

Net cash provided by financing activities		51,149,603

Net increase in cash		614,405

Cash, beginning of period		—

Cash, end of period	$	614,405

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

The registration statement for the Company’s initial public offering (the “Offering”) (as described in Note D) was declared effective on August 25, 2005. The Company consummated the Offering on August 31, 2005 and received net proceeds of approximately $51,190,000. The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Offering, although substantially all of the net proceeds of the Offering are intended to be generally applied toward a Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect a Business Combination. Of the net proceeds, $50,380,000 was placed in a trust account (“Trust Account”) and invested in money market funds meeting conditions of the Investment Company Act of 1984 or securities issued and guaranteed by the United States until the earlier of (i) the consummation of the first Business Combination or (ii) the distribution of the Trust Account as described below. The remaining proceeds may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. The Company, after signing a definitive agreement for the acquisition of a target business, will submit such transaction for stockholder approval. In the event that holders of 20% or more of the shares issued in the Offering vote against the Business Combination, the Business Combination will not be consummated. However, the persons who were stockholders prior to the Offering (the “Initial Stockholders”) will participate in any liquidation distribution only with respect to any shares of the common stock acquired in connection with or following the Offering.

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

Net income (loss) per share is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding for the period. During the three months ended December 31, 2005, the diluted loss per share was identical to the basic loss per share because the warrants and unit purchase option were anti-dilutive as the elimination of a loss due to the increase in derivative liabilities was greater than the effect of an increase in the number of potential common shares. The dilutive impact of 965,300 shares from the 18,000,000 warrants outstanding with an exercise price of $5.00 per share were not included in the computation of earnings per share in the three months ended at December 31, 2005 since their inclusion would be anti-dilutive.

Emerging Issues Task Force issue EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock,” (“EITF No. 00-19”) requires freestanding contracts that are settled in a company's own stock to be designated as an equity instrument, asset or a liability. In accordance with EITF No. 00-19, the Company determined that the warrants issued in connection with the Offering (the “public warrants”) and the unit purchase option issued to the underwriters in connection with the Offering (further described in Note D below) should be classified as a derivative liability.

The reclassification of the warrants as a derivative liability is required under EITF No. 00-19 due to the absence in the warrant agreement of provisions addressing the exercise of the warrants in the absence of an effective registration statement. Under interpretations of applicable federal securities laws, the issuance of shares upon exercise of the warrants in the absence of an effective registration statement could be deemed a violation of Section 5 of the Securities Act of 1933, as amended (the “Securities Act”). To address this issue, the warrant agreement requires that the Company file, and use best efforts to cause to be declared and keep effective, a registration statement covering the issuance of the shares underlying the warrants. However, the warrant agreement fails to specify the remedies, if any, that would be available to warrantholders in the event there is no effective registration statement covering the issuance of shares underlying the warrants. Under EITF No. 00-19, the registration of the common stock underlying the warrants is not within the Company's control. In addition, under EITF No. 00-19, in the absence of explicit provisions to the contrary in the warrant agreement, the Company must assume that it could be required to settle the warrants on a net-cash basis, thereby necessitating the treatment of the potential settlement obligation as a liability.

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

Under the provisions of EITF No. 00-19, a contract designated as an asset or a liability must be carried at fair value on a company’s balance sheet, with any changes in fair value recorded in the company’s results of operations. The fair value of these warrants and the unit purchase option are shown on the Company’s balance sheet and the unrealized changes in the values of these derivatives are shown in the Company’s consolidated statement of operations as “Gain (loss) from derivative liabilities.” The Company determined the initial valuation of the warrants based upon the difference between the per-unit offering price of the units in the Offering and the discounted per-share amount placed into the Trust Account and the valuation of the warrants at September 30, 2005 based upon the difference between the market price of the units and the discounted per-share amount placed into the Trust Account. Thereafter, since the warrants are quoted on the Over-the-Counter Bulletin Board, the fair value of the warrants was determined based on the market price of the warrants at the end of each period. To the extent that the market price increases or decreases, the Company’s derivative liability will also increase or decrease, impacting the Company’s consolidated statement of operations. As of December 30, 2005, the closing sale price for the warrants was $0.38, resulting in a total warrant liability of $6,840,000.

The Company has determined the fair values of the unit purchase option at December 31, 2005 using a Black Scholes pricing model adjusted to include a separate valuation of the embedded warrants. The following assumptions were used for the Black Scholes pricing model: an expected life of 4.65 years, volatility of 84.3% and a risk-free rate of 4.36%. Valuations derived from this model are subject to ongoing internal and external verification and review. Selection of these inputs involves management’s judgment and may impact net income. The Company continues to base its volatility assumption on the five-year average historical stock prices of the same representative sample of 20 technology, media and telecommunications companies as used in its initial valuation. The volatility factor used in Black Scholes model has a significant effect on the resulting valuation of the derivative liabilities on the Company’s balance sheet. For the embedded warrants, we based the valuation on the closing sale price for the public warrants as of December 30, 2006 adjusted by the percentage difference between the valuations obtained, using a Black Scholes pricing model (with the same assumptions) for the public warrants and the embedded warrants. We did not use the Black Scholes pricing model for the embedded warrants because the valuation obtained using that model did not correlate to the value of the public warrants.

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

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

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

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

The accompanying financial statements for the quarterly period ended December 31, 2005 and the period from April 7, 2005 (Date of Inception) through December 31, 2005 have been restated to effect the changes described above. The impact of the adjustments to the financial statements relating to the classification of and accounting for the warrants and the unit purchase option for the quarterly period ended December 31, 2005 and the period from April 7, 2005 (Date of Inception) through December 31, 2005 are summarized below:

	Quarterly Period Ended December 31, 2005 (unaudited)									April 7, 2005 (Date of Inception) Through December 31, 2005 (unaudited)
	As Previously Reported			Adjustments			As Restated			As Previously Reported			Adjustments		As Restated

Operating expenses	$	(71,182	)	$	—		$	(71,182	)	$	(92,381	)	$	—	$	(92,381	)
Loss from operations		(71,182	)		—			(71,182	)		(92,381	)		—		(92,381	)
Gain (loss) from derivative liabilities		—			(431,280	)		(431,280	)		—			173,219		173,219
Interest income, net		313,924			91,351			405,275			405,349					405,349
Net income (loss)	$	242,742		$	(339,929	)	$	(97,187	)	$	312,968		$	173,219	$	486,187
Weighted average number of shares outstanding—basic		11,249,997			—			11,249,997			6,475,188			—		6,475,188
Net income(loss) per share - basic	$	0.02			—		$	(0.01	)	$	0.05			—	$	0.08
Weighted average of shares outstanding - diluted		11,249,997			—			11,249,997			6,475,188			453,175		6,928,363
Net income (loss) per share - diluted		0.02			—		$	(0.01	)		0.05			—	$	0.06
Pro Forma Adjustment:
Interest income attributable to common stock subject to possible redemption		(62,753	)		(18,276	)		(81,029	)		(81,029	)		—		(81,029	)
Pro forma net income (loss) attributable to common stockholders not subject to possible redemption	$	179,989		$	(358,205	)	$	(178,216	)	$	231,939		$	173,219	$	405,158
Pro forma weighted average number of shares outstanding, excluding shares subject to possible redemption - basic		—			9,450,897			9,450,897			—			5,630,572		5,630,572
Pro forma net income (loss) per share, excluding shares subject to possible redemption - basic		—			—		$	(0.02	)		—			—	$	0.07
Pro forma weighted average number of shares outstanding, excluding shares subject to possible redemption - diluted		—			9,450,897			9,450,897			—			6,083,747		6,083,747
Pro forma net income (loss) per share, excluding shares subject to possible redemption - diluted		—			—		$	(0.02	)		—			—	$	0.06

	December 31, 2005 (unaudited)							September 31, 2005 (unaudited)
	As Previously Reported		Adjustments			As Restated		As Previously Reported			Adjustments			As Restated
ASSETS
Current assets
Cash and cash equivalents	$	614,405		—		$	614,405	$	785,055			—		$	785,055
Cash held in trust account		50,779,664		—			50,779,664		50,380,000			—			50,380,000
Prepaid expenses		90,809		—			90,809		109,838			—			109,838
Total current assets		51,484,878		—			51,484,878		51,274,893			—			51,274,893

Fixed assets, net of accumulated depreciation		4,316		—			4,316		—			—			—
Total assets	$	51,489,194		—		$	51,489,194	$	51,274,893			—		$	51,274,893

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accrued expenses	$	26,623		—		$	26,623	$	1,000			—		$	1,000
Accrued offering costs		—		—			—		145,000			—			145,000
Derivative liabilities		—		8,557,253			8,557,253		—			8,125,973			8,125,973
Total current liabilities		26,623		8,557,253			8,583,876		146,000			8,125,973			8,271,973

Common stock, subject to possible redemption, 1,799,100 shares at $5.60 per share		10,155,989		—			10,155,989		10,093,236			(18,276	)		10,074,960
Stockholders’ equity
Preferred stock, $.0001 par value, authorized 1,000,000 shares; none issued and outstanding		—		—			—		—			—			—
Common stock, $.0001 par value, authorized 50,000,000 shares; issued and outstanding 11,249,997 shares (which includes 1,799,100 shares subject to possible redemption)		1,125		—			1,125		1,125			—			1,125
Additional paid-in capital		41,073,518		(8,730,472	)		32,343,046		41,073,933			(8,730,472	)		32,343,461
Retained earnings (deficit)		231,939		173,219			405,158		(39,401	)		622,775			583,374
Total stockholders’ equity		41,306,582		(8,557,253	)		32,749,329		41,035,657			(8,125,973	)		32,927,960
Total liabilities and stockholders’ equity	$	51,489,194		—		$	51,489,194	$	51,274,893			—		$	51,274,983

On August 31, 2005, the Company consummated an initial public offering of 9,000,000 units (“Units”). Each Unit consists of one share of the Company’s common stock, $.0001 par value, and two warrants (“Warrants”). Each Warrant entitles the holder to purchase from the Company one share of common stock at an exercise price of $5.00. Each warrant is exercisable on the later of (a) the completion of a Business Combination or (b) August 25, 2006 and expires on August 25, 2010. The Warrants are redeemable at a price of $0.01 per Warrant upon 30 days notice after the Warrants become exercisable, only in the event that the last sale price of the common stock is at least $8.50 per share for any 20 trading days within a 30 trading day period ending on the third day prior to the date on which notice of redemption is given.

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

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

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

The Company has estimated, based upon a Black Scholes model, that the fair value of the purchase option on the date of sale is approximately $1,906,382, using an expected life of five years, volatility of 94.4%, and a risk-free rate of 4.12%. However, because the Company has not consummated the Business Combination, management derived the volatility estimate based on the average five-year historical stock prices for a representative sample of 20 technology, media and telecommunications companies with market capitalizations below $500 million, which management believes is a reasonable benchmark to use in estimating the expected volatility of the units after the consummation of a Business Combination. Although an expected life of five years was used in this calculation, if the Company does not consummate a Business Combination within the prescribed time period and liquidates, the option will become worthless.

As part of the Offering, the Company and the managing underwriters agreed that, within the first 45 calendar days after separate trading of the warrants commenced, the managing underwriters or certain of their principals, affiliates or designees would place bids for and, if their bids were accepted, spend up to $400,000 to purchase warrants in the public marketplace at prices not to exceed $0.70 per warrant. The managing underwriters agreed that any warrants purchased by them or their affiliates or designees would not be sold or transferred until completion of a Business Combination by the Company. Additionally, the chief executive officer and the president agreed with the representative of the underwriters, that within the first 45 calendar days after the separate trading of the warrants commenced, they or certain of their affiliates or designees would collectively place bids for, and if their bids were accepted, spend up to $1,600,000 to purchase warrants in the public marketplace at prices not to exceed $0.70 per warrant. The chief executive officer and president further agreed that any warrants purchased by them or their affiliates or designees will not be sold or transferred until the completion of a Business Combination. The units separated on October 10, 2005 and, within the time specified, management purchased 3,794,403 warrants at an average price of $0.4216, and the underwriter purchased 948,600 warrants at an average price of $0.4216.

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

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

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

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

	Quarterly Period Ended December 31, 2005 (unaudited)									April 7, 2005 (Date of Inception) Through December 31, 2005 (unaudited)
	As Previously Reported			Adjustments			As Restated			As Previously Reported			Adjustments		As Restated

Operating expenses	$	(71,182	)	$	—		$	(71,182	)	$	(92,381	)	$	—	$	(92,381	)
Loss from operations		(71,182	)		—			(71,182	)		(92,381	)		—		(92,381	)
Gain (loss) from derivative liabilities		—			(431,280	)		(431,280	)		—			173,219		173,219
Interest income, net		313,924			91,351			405,275			405,349					405,349
Net income (loss)	$	242,742		$	(339,929	)	$	(97,187	)	$	312,968		$	173,219	$	486,187
Weighted average number of shares outstanding--basic		11,249,997			—			11,249,997			6,475,188			—		6,475,188
Net income (loss) per share - basic	$	0.02			—		$	(0.01	)	$	0.05			—	$	.08
Weighted average of shares outstanding - diluted		11,249,997			—			11,249,997			6,475,188			453,175		6,928,363
Net income (loss) per share - diluted		0.02			—		$	(0.01	)		0.05			—	$	0.06
Pro Forma Adjustment:
Interest income attributable to common stock subject to possible redemption		(62,753	)		(18,276	)		(81,029	)		(81,029	)		—		(81,029	)
Pro forma net income (loss) attributable to common stockholders not subject to possible redemption	$	179,989		$	(358,205	)	$	(178,216	)	$	231,939		$	173,219	$	405,158
Pro forma weighted average number of shares outstanding, excluding shares subject to possible redemption - basic		—			9,450,897			9,450,897			—			5,630,572		5,630,572
Pro forma net income (loss) per share, excluding shares subject to possible redemption - basic		—			—		$	(0.02	)		—			—	$	0.07
Pro forma weighted average number of shares outstanding, excluding shares subject to possible redemption - diluted		—			9,450,897			9,450,897			—			6,083,747		6,083,747
Pro forma net income (loss) per share, excluding shares subject to possible redemption - diluted		—			—		$	(0.02	)		—			—	$	0.06

	December 31, 2005 (unaudited)							September 31, 2005 (unaudited)
	As Previously Reported		Adjustments			As Restated		As Previously Reported			Adjustments			As Restated
ASSETS
Current assets
Cash and cash equivalents	$	614,405		—		$	614,405	$	785,055			—		$	785,055
Cash held in trust account		50,779,664		—			50,779,664		50,380,000			—			50,380,000
Prepaid expenses		90,809		—			90,809		109,838			—			109,838
Total current assets		51,484,878		—			51,484,878		51,274,893			—			51,274,893

Fixed assets, net of accumulated depreciation		4,316		—			4,316		—			—			—
Total assets	$	51,489,194		—		$	51,489,194	$	51,274,893			—		$	51,274,893

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accrued expenses	$	26,623		—		$	26,623	$	1,000			—		$	1,000
Accrued offering costs		—		—			—		145,000			—			145,000
Derivative liabilities		—		8,557,253			8,557,253		—			8,125,973			8,125,973
Total current liabilities		26,623		8,557,253			8,583,876		146,000			8,125,973			8,271,973

Common stock, subject to possible redemption, 1,799,100 shares at $5.60 per share		10,155,989		—			10,155,989		10,093,236			(18,276	)		10,074,960
Stockholders’ equity
Preferred stock, $.0001 par value, authorized 1,000,000 shares; none issued and outstanding		—		—			—		—			—			—
Common stock, $.0001 par value, authorized 50,000,000 shares; issued and outstanding 11,249,997 shares (which includes 1,799,100 shares subject to possible redemption)		1,125		—			1,125		1,125			—			1,125
Additional paid-in capital		41,073,518		(8,730,472	)		32,343,046		41,073,933			(8,730,472	)		32,343,461
Retained earnings (deficit)		231,939		173,219			405,158		(39,401	)		622,775			583,374
Total stockholders’ equity		41,306,582		(8,557,253	)		32,749,329		41,035,657			(8,125,973	)		32,927,960
Total liabilities and stockholders’ equity	$	51,489,194		—		$	51,489,194	$	51,274,893			—		$	51,274,983

We were formed on April 7, 2005, for the purpose of acquiring, through a merger, capital stock exchange, asset acquisition or other similar business combination, one or more operating businesses in the technology, media or telecommunications industries. Our initial business combination must be with a target business or businesses whose fair market value is at least equal to 80% of net assets at the time of such acquisition. We intend to utilize cash derived from the proceeds of our recently completed public offering, our capital stock, debt or a combination of cash, capital stock and debt, in effecting a business combination.

The net proceeds from the sale of our units, after deducting certain offering expenses of approximately $650,000, and an underwriting discount of approximately $2,160,000, were approximately $51,190,000. Of this amount, $50,380,000 was placed into a trust account and the remaining proceeds are available to be used by us to provide for business, legal and accounting due diligence on prospective acquisitions and to pay for continuing general and administrative expenses. As of December 31, 2005, we had $614,405 of proceeds available for such uses.

We expect to use substantially all of the net proceeds of this offering to acquire a target business, including identifying and evaluating prospective acquisition candidates, selecting the target business and structuring, negotiating and consummating the business combination. To the extent that our capital stock is used in whole or in part as consideration to effect a business combination, the proceeds held in the trust account as well as any other net proceeds not expended will be used to finance the operations of the target business. We believe we will have sufficient available funds outside of the trust account to operate through August 31, 2007, assuming that a business combination is not consummated during that time. Until we enter into a Business Combination, the company expects to use its available resources for general working capital as well as legal, accounting and due diligence expenses for structuring and negotiating a business combination and legal and account fees relating to our SEC reporting obligations.

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, we may need to raise additional funds through a private offering of debt or equity securities if such funds are required to consummate a business combination that is presented to us. We would only consummate such a financing simultaneously with the consummation of a business combination.

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

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

We currently have no operating business and have not selected any potential target businesses. If we are unable to find a suitable target business by February 28, 2007 (or August 31, 2007 if a letter of intent, agreement in principle or a definitive agreement has been executed by February 28, 2007 and the business combination relating thereto has not yet been consummated by such date), we will be forced to liquidate. If we are forced to liquidate, the per-share liquidation may be less than the price at which public stockholders purchased their shares because of the expenses related to our initial public offering, our general and administrative expenses and the anticipated costs of seeking a business combination. Additionally, if third parties make claims against us, the offering proceeds held in the trust account could be subject to those claims, resulting in a further reduction to the per-share liquidation price. Under Delaware law, our stockholders who have received distributions from us may be held liable for claims by third parties to the extent such claims are not been paid by us. Furthermore, our warrants will expire worthless if we liquidate before the completion of a business combination.

Since our initial public offering, we have been actively engaged in sourcing a suitable business combination candidate. We have met with target companies, service professionals and other intermediaries to discuss our company, the background of our management and our combination preferences. In the course of these discussions, we have also spent time explaining the capital structure of the initial public offering, the combination approval process and the timeline under which we are operating before the proceeds of the offering are returned to investors.

Consistent with the disclosures in our prospectus, we have focused our search on companies in the technology, media or telecommunications industries. Overall, we would gauge the environment for target companies to be competitive and we believe that private equity firms and strategic buyers represent our biggest competition. Our management believes that many of the fundamental drivers of alternative investment vehicles like our company are becoming more accepted by investors and potential business combination targets; these include a difficult environment for initial public offerings, a cash-rich investment community looking for differentiated opportunities for incremental yield and business owners seeking new ways to maximize their shareholder value while remaining invested in the business. However, there can be no assurance that we will find a suitable business combination in the allotted time.

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

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

There has not been any change in our internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act that occurred during the quarter ended December 31, 2005, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Our management reached this conclusion despite its finding that our financial statements should be restated because the determination concerning the classification of the warrants and the unit purchase option involves complex area of accounting literature that is continuously evolving.

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

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

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

Delaware		20-2650200
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

360 Madison Avenue, 21^st Floor New York, New York		10017
(Address of principal executive offices)		(Zip Code)

31.1	Section 302 Certification of Chief Executive Officer

31.2	Section 302 Certification of Chief Financial Officer

32.1	Section 906 Certification


Date: January 12, 2007	AD.VENTURE PARTNERS, INC.

	By:	/s/ Howard S. Balter
		Howard S. Balter Chairman and Chief Executive Officer (Principal Executive Officer)




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