f10q0613_ascend.htm

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements

ASCEND ACQUISITION CORP.
(a corporation in the development stage)
CONDENSED CONSOLIDATED
BALANCE SHEETS

	June 30,
	2013			December 31,
	(unaudited)			2012*

ASSETS
Current assets:
Cash	$	1,821		$	258,857
Prepaid asset		-			18,167
Total current assets		1,821			277,024
Capitalized software		-			374,214
Equipment, net		-			15,973
Total assets	$	1,821		$	667,211

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	177,939		$	119,980
Bridge loan payable		300,000			-
Due to member		1,626			1,626
Total current liabilities		479,565			121,606
Deferred revenue		121,875			121,875
Total liabilities		601,440			243,481
Commitments and Contingencies
Stockholders’ (Deficit) Equity:
Preferred stock, $0.0001 par value, authorized 1,000,000 shares; none issued
Common stock, $0.0001 par value, authorized 300,000,000 shares, issued and
outstanding 51,206,700 and 50,926,700 shares, respectively		5,121			5,093
Additional paid-in capital		2,289,957			2,225,340
Deficit accumulated during the development stage		(2,894,697	)		(1,806,703	)
Total stockholders’ (deficit) equity		(599,619	)		423,730
Total liabilities and stockholders’ (deficit) equity	$	1,821		$	667,211

ASCEND ACQUISITION CORP.
(a corporation in the development stage)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

													January 17, 2011
	Three Months			Three Months			Six Months			Six Months			(Inception)
	Ended			Ended			Ended			Ended			to
	June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012			June 30, 2013

Loss from Discontinued Operations	$	(254,519	)	$	(471,515	)	$	(1,087,994	)	$	(639,971	)	$	(2,932,173	)

Net Loss		(254,519	)		(471,515	)		(1,087,994	)		(639,971	)		(2,932,173	)

Net Loss Attributable to the Non-Controlling interest		-			-			-			-			37,476

Net Loss Attributable to Ascend Acquisition Corp.	$	(254,519	)	$	(471,515	)	$	(1,087,994	)	$	(639,971	)	$	(2,894,697	)

Weighted average shares of common stock outstanding
Basic and Diluted		50,985,162			50,926,700			50,956,092			46,729,624

Loss per common share attributable to discontinued operations and net loss
Basic and diluted		(0.00	)		(0.01	)		(0.02	)		(0.01	)

ASCEND ACQUISITION CORP.
(a corporation in the development stage)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

							January 17, 2011
	Six Months			Six Months			(Inception)
	Ended			Ended			To
	June 30, 2013			June 30, 2012			June 30, 2013
Cash flows from operating activities:
Net loss	$	(1,087,994	)	$	(639,971	)	$	(2,932,173	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		2,016			1,515			5,589
Impairment of capitalized software		374,214			-			374,214
Loss from abandonment of equipment		14,579			-			14,579
Impairment of investments		-			-			105,732
Equity loss from investment		-			-			12,009
Bad debt expense		-			-			52,705
Other income from deconsolidation of Rotvig Labs, LLC		-			-			(6,924	)
Stock compensation expense		64,645			3,653			105,894
Compensation for software development costs		-			-			64,900
Direct payment of operating expenses by member		-			-			4,500
Change in operating assets and liabilities:
Accrued interest receivable		-			(1,243	)		(2,946	)
Prepaid asset		18,167			(32,333	)		-
Accounts payable and accrued expenses		57,959			80,193			177,939
Payroll tax liabilities		-			(27,601	)		-
Deferred revenue		-			(56,250	)		121,875
Net cash used in operating activities		(556,414	)		(672,037	)		(1,902,107	)
Cash flows from investing activities:
Purchase of equipment		(622	)		(14,333	)		(20,168	)
Payments related to capitalized software development costs		-			(144,400	)		(374,214	)
Reduction of cash due to the deconsolidation of Rotvig Labs, LLC		-			-			(25,000	)
Investments in private companies		-			-			(50,000	)
Purchase of convertible notes receivable		-			-			(130,000	)
Proceeds from return of investment in private companies		-			12,500			12,500
Net cash used in investing activities		(622	)		(146,233	)		(586,882	)
Cash flows from financing activities:
Proceeds from convertible note payable		-			200,000			250,000
Proceeds from bridge loan payable		300,000			-			300,000
Repayment of convertible note payable		-			(250,000	)		(250,000	)
Member's contributions		-			-			167,375
Cash acquired in reverse merger		-			21,809			21,809
Proceeds from related party advance		-			1,626			1,626
Proceeds from private placement		-			2,000,000			2,000,000
Net cash provided by financing activities		300,000			1,973,435			2,490,810
Net (decrease) increase in cash and cash equivalents	$	(257,036	)	$	1,155,165		$	1,821
Cash at beginning of period		258,857			80,588
	$	1,821		$	1,235,753		$	1,821
Supplemental disclosure of non-cash financing activities:
Conversion of notes receivable / accrued interest into Investment in private company	$	-		$	-		$	80,241

Ascend Acquisition Corp. (“Ascend”) was formed on December 5, 2005 as a blank check company to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business. Andover Games, LLC (the “Company” or “Andover Games”), a development stage company, is a limited liability company formed on January 17, 2011 under the laws of the State of Delaware as Andover Fund, LLC. The name was changed in December, 2011 to Andover Games, LLC. The entity has an indefinite life. Through June 30, 2013, the Company's principal business was focused on developing mobile games for iPhone and Android platforms. The merger between Andover Games and Ascend was treated as an acquisition of Ascend by Andover Games and as a recapitalization of Andover Games as Andover Games members held a majority of the Ascend shares and exercised significant influence over the operating and financial policies of the consolidated entity. As Ascend was a non-operating public shell prior to the transaction, pursuant to Securities and Exchange Commission rules, the merger or acquisition of a private operating company into a non-operating public shell with nominal assets is considered a capital transaction in substance rather than a business combination. As a result, the condensed consolidated balance sheet, statement of operations, and statement of cash flows of Andover Games, LLC have been retroactively updated to reflect the recapitalization. The Company determined that no income tax benefit associated with any net operating loss carry-forwards would be recognized if it had been taxed as a corporation from inception, as it is more likely than not that such loss carryforwards would not be realized.

On February 29, 2012, Ascend and the Company closed the transactions under a Merger Agreement and Plan of Reorganization, as amended (the “Andover Merger Agreement”), with the Company becoming a wholly-owned subsidiary of Ascend. At the closing of the Andover Merger Agreement, the holders of membership interests of the Company received 38,195,025 shares of Ascend common stock, representing 75% of the fully diluted capitalization of Ascend immediately after the closing of the merger and the Financing (defined below), subject to further adjustment as provided for in the Andover Merger Agreement.

On June 12, 2013, Ascend entered into that certain Merger Agreement and Plan of Reorganization (“Kitara/NYPG Merger Agreement”) by and among Ascend, Ascend Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of Ascend (“Merger Sub LLC”), Ascend Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Ascend (“Merger Sub Inc.”), Kitara Media, LLC, a Delaware limited liability company (“Kitara Media”), New York Publishing Group, Inc., a Delaware corporation (“NYPG”), and those certain securityholders of Kitara Media and NYPG executing the “Signing Holder Signature Page” thereto, which securityholders hold all of the outstanding membership interests of Kitara Media (the “Kitara Signing Holder”) and all of the outstanding shares of common stock of NYPG (the “NYPG Signing Holder” and together with the Kitara Signing Holder, the “Signing Holders”). On July 1, 2013, the parties consummated the transactions contemplated by the Kitara/NYPG Merger Agreement (See Note 12). In connection with this transaction, the Company’s game development operations were discontinued as of June 30, 2013.

On June 28, 2013, stockholders together holding a majority of Ascend’s then outstanding common stock executed and delivered to Ascend a written consent authorizing and approving the change in Ascend’s name from “Ascend Acquisition Corp.” to “Kitara Media Corp.” The change in Ascend’s name was made to better reflect the combined company’s operations going forward. The change of Ascend’s name will be effective twenty calendar days after the mailing by Ascend of an information statement informing non-consenting stockholders of the action taken.

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, filed on April 9, 2013.

The condensed consolidated financial statements included the accounts of the Company and the less than majority owned variable interest entity for the period of time which it was controlled (see NOTE 3). Significant inter-company accounts and transactions have been eliminated in consolidation. During the 3 months ended December 31, 2012, the Company determined it no longer had a controlling interest in Rotvig Labs LLC (“Rotvig” or “Rotvig Labs”). As a result, the Company deconsolidated Rotvig and derecognized the assets, liabilities, and noncontrolling interest from the condensed consolidated financial statements (see NOTE 3).

The Company had minimal revenue from inception to date, and the Company has incurred a substantial loss from operations for the period from January 17, 2011 (inception) through June 30, 2013. Based on the Company’s liquidity position, continued losses could result in the Company not having sufficient liquidity or minimum cash levels to operate its business. As a result of the Company’s consummation of the Kitara/NYPG Merger Agreement on July 1, 2013, and the simultaneous capital raise of $2,000,000 on July 1, 2013, management believes that the Company has sufficient liquidity to meet its funding requirements through at least June 30, 2014.

Equipment is carried at cost and is depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

In accordance with ASC 985-20 “Accounting for the Cost of Computer Software to be Sold, Leased or Otherwise Marketed,” software development costs are expensed as incurred until technological feasibility (generally in the form of a working model) has been established. Research and development costs which consist primarily of salaries and fees paid to third parties for the development of software and applications are expensed as incurred. The Company capitalizes only those costs directly attributable to the development of the software. Capitalization of these costs begins upon the establishment of technological feasibility. Activities undertaken after the products are available for release to customers to correct errors or keep the product up to date are expensed as incurred. Capitalized software development costs will be amortized over the estimated economic life of the software once the product is available for general release to customers. Capitalized software development costs will be amortized over the greater of the ratio of current revenue to total projected revenue for a product or the straight-line method. The Company will periodically perform reviews of the recoverability of such capitalized software costs. At the time a determination is made that capitalized amounts are not recoverable based on the estimated cash flows to be generated from the applicable software, any remaining capitalized amounts are written off. During the three months ended June 30, 2013 and June 30, 2012 , the six months ended June 30, 2013 and June 30, 2012 and the period from January 17, 2011 (inception) through June 30, 2013, the Company expensed $ -, $-, $109,580, $- and $393,210 in software development costs, respectively. During the three months ended March 31, 2013, the Company recognized an impairment loss in the amount of $374,214 related to the software development costs which had been previously been capitalized through December 31, 2012. The determination was based on the fact that the Company will not be able to recover the value of its capitalized costs. The impairment charge which reduced the capitalized costs to $0 were based on non-recurring Level 3 fair value measurement and which are based on undeservable inputs (which reflect the Company’s internal market assumptions) that are supported by little or no market activity and that are significant to the fair value of the asset.

The Company recognized revenue from the sale of its social games and mobile applications (“Apps”) from two revenue sources: direct payment revenue or alternative payment service revenue. Direct payment revenue results from payments from the end users of Apps for virtual goods or currency (i.e. items within the game and virtual money to buy items and upgrades in a game) in an application from a variety of direct payment sources, less deductions for fraud, charge-backs, refunds, credit card processing fees or uncollected amounts (assuming all other recognition criteria are met). Alternative payment service revenue results from utilization of the platform provided by a publisher that is party to a collaborative arrangement with the Company (see “Collaborative Arrangements” – see NOTE 7). The publisher's platform incentivizes end users to complete certain tasks in response to advertisements presented within the application (i.e. to purchase other applications on the publisher’s platform). Revenue from the alternative payment service (subject to a “Recoupment Amount” by the vendor — see NOTE 7) would be recognized as the service is rendered, with a portion of the revenue allocated to the vendor. If the service period is not defined, the Company would recognize the revenue over the estimated service period. In conjunction with the collaborative arrangement, the Company receives proceeds that are recognized on a straight line basis over the period that the Company is required to keep its applications on the publisher’s platform.

During 2011, the Company consolidated Rotvig Labs, LLC (see NOTE 3), which qualified as a variable interest entity (“VIE”) because the Company determined that it was the primary beneficiary and had a controlling financial interest. Therefore, Rotvig’s financial statements were consolidated in the Company’s consolidated financial statements and the other member’s equity in Rotvig was recorded as non-controlling interest as a component of consolidated stockholders’ equity (deficit). At December 31, 2011, non-controlling interest was $27,424. During 2012, the Company determined it no longer had a controlling financial interest and deconsolidated Rotvig Labs (see NOTE 3).

The preparation of financial statements in conformity with generally accepted accounting principles in the United States 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 revenues and expenses during the reporting period. The significant estimates utilized related to the impairment of investment in private companies and capitalized software. Actual results could differ from those estimates.

Net loss per share, in accordance with the provisions of ASC 260, “Earnings Per Share” is computed by dividing net loss attributable to Ascend Acquisition Corp. by the weighted average number of shares of common stock outstanding during the period. As discussed above, the change in capital structure of the Company that occurred subsequent to December 31, 2011 requires retrospective presentation as if the change took place at the beginning of the period presented. The 8,731,675 shares of Ascend common stock outstanding at the date of the closing along with the 4,000,000 issued pursuant to the Financing are reflected as outstanding in the earnings per share calculation commencing with the date of closing. Common Stock equivalents have not been included in this computation since the effect would be anti-dilutive. During the six months ended June 30, 2013, 212,500 options were excluded from the calculation of diluted net loss per share because the net loss would cause these options to be antidilutive.

The Company has financial instruments, including investments in companies at cost, convertible notes receivable, and bridge loans, none of which are held for trading purposes. The Company estimates that the fair value of all financial instruments at June 30, 2013 does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying consolidated balance sheet. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is necessarily required in interpreting market data to develop the estimates of fair value, and, accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement, and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carryforwards will result in a benefit based on expected profitability by tax jurisdiction.

In accordance with ASC 740, the Company evaluates whether a valuation allowance should be established against the net deferred tax assets based upon the consideration of all available evidence and using a “more likely than not” standard. Significant weight is given to evidence that can be objectively verified. The determination to record a valuation allowance is based on the recent history of cumulative losses and current operating performance. In conducting the analysis, the Company utilizes an approach, which considers the current year loss, including an assessment of the degree to which any losses are driven by items that are unusual in nature and incurred to improve future profitability. In addition, the Company reviews changes in near-term market conditions and any other factors arising during the period, which may impact its future operating results.

The Company accounts for stock based compensation in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”). ASC 718 establishes accounting for stock-based awards exchanged for employee services. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the equity grant). The fair value of the Company’s common stock options are estimated using the Black Scholes option-pricing model with the following assumptions: expected volatility, dividend rate, risk free interest rate and the expected life. The Company calculates the expected volatility using the historical volatility over the most recent period equal to the expected term and evaluates the extent to which available information indicate that future volatility may differ from historical volatility. The expected dividend rate is zero as the Company does not expect to pay or declare any cash dividends on common stock. The risk-free rates for the expected terms of the stock options are based on the U.S. Treasury yield curve in effect at the time of the grant. The Company has not experienced significant exercise activity on stock options. Due to the lack of historical information, the Company determined the expected term of its stock option awards issued using the simplified method. The simplified method assumes each vesting tranche of the award has a term equal to the midpoint between when the award vests and when the award expires. The Company expenses stock-based compensation by using the straight-line method

During the three months ended June 30, 2013, the Company determined that it would abandon its operations related to the game development business. The Company ceased operations during June 2013 in contemplation of the Kitara/NYPG Merger Agreement. There will be no significant continuing cash flows or continuing operations related to the game development business. The losses from discontinued operations represent the pretax losses for each period presented in the consolidated statement of operations. For the three and six months ended June 30, 2012 and the period from January 17, 2011 (inception) to June 30, 2012, loss from discontinued operations included revenue of $28,125, $56,250, and $103,125, respectively. For the three and six months ended June 30, 2013, there were no revenues.

In August 2011 the Company invested $50,000 in an unsecured convertible promissory note issued by Ecko Entertainment, Inc. (“Ecko”). The note bears interest at 5% and matured on August 31, 2012. In the event Ecko closed a qualified financing of $2,000,000 prior to maturity of the note, all principal and accrued interest then outstanding would have automatically convert into shares of common stock. The price per share for such conversion shall equal the lesser of i) 70% of the price per share of the capital stock paid by investors in the qualified financing or ii) the price per share that would result based on a valuation of the company immediately prior to the closing of the qualified financing equal to $15,000,000. As of June 30, 2013, the note receivable with Ecko Entertainment was past due. Based on the facts and circumstances related to this receivable during 2012, the Company recorded an allowance for doubtful accounts for $52,705 for the principal amount and the related accrued interest. The Company will not record interest income on this receivable in future periods until it can be determined that the receivable can be collected.

In January 2011, the Company acquired a 50% membership interest in Rotvig Labs, LLC (“Rotvig Labs”) for $25,000. Rotvig Labs is also involved on developing applications for the mobile game industry. The Company evaluated its investment in Rotvig Labs and determined that it was the primary beneficiary and held a controlling interest in Rotvig Labs, and that the assets, liabilities and operations of Rotvig Labs should be consolidated into its financial statements. The key assumption in making this determination was that the Company held the sole cash basis investment at risk in the entity and share common management. The other founding member contributed services to the entity, which were recorded based on the agreed-upon capital contribution of $25,000, which approximates the fair value of the services rendered and the non-controlling interest at acquisition. The assets of Rotvig Labs can only be used to satisfy the liabilities of Rotvig Labs.

In April 2011, Rotvig Labs entered into a Service and Profit Sharing Agreement with Concepts Art House, Inc (“CAH”), a graphics design company. Under this agreement, CAH would provide $40,000 in committed art services in exchange for an eight percent (8%) membership interest in Rotvig Labs. CAH's membership interest is subject to vesting, whereby the equity interest is earned 25% for each $10,000 of committed art services provided for under the agreement. As of June 30, 2013, CAH had provided all such services and therefore had earned an 8% membership interest. Thus, the Company owns 46% of the membership interest of Rotvig Labs at June 30, 2013. In addition, CAH is entitled to profit sharing of 16% of Rotvig Labs’ gross revenue up to a cumulative amount of $80,000. After the cumulative $80,000 is reached CAH is entitled to 8% of gross revenues.

As of December 31, 2012, the Company determined that it no longer had a controlling interest in Rotvig Labs, LLC as the Company no longer had the power to direct the activities of Rotvig that most significantly impacted its economic performance. Prior to deconsolidation, the entity controlled these activities through common management. As a result of this evaluation, the Company deconsolidated Rotvig and deconsolidated the assets, liabilities, and non-controlling interest from its financial statements and no longer consolidated its results of operations. The Company will have a continuing 46% interest in the deconsolidated subsidiary, a related party entity. Upon deconsolidation of Rotvig, the Company determined that the investment in Rotvig had no value. This evaluation was made based upon the fact that the entity had no operations during the year ended December 31, 2012 and the Company had only experienced losses to date beyond the initial investment. As a result, the Company anticipated that it would not be able to recover any of its initial investment in Rotvig.

On September 14, 2011, the Company invested $80,000 in an unsecured and subordinated convertible promissory note issued by Game Closure, Inc. (“GCI”). The note bore interest at 2%, and had a maturity date of September 14, 2013. In December 2011, GCI issued and sold shares of its Preferred Stock to investors in an equity financing of at least $1,000,000 including conversion of this note. Based on the terms of the note, the outstanding principal and accrued interest then outstanding at the closing of the financing automatically converted into shares of Series A Preferred Stock equal to the number obtained by dividing the aggregate amount of principal and accrued interest outstanding by the amount equal to the lesser of i) 100% of the purchase price for the Preferred Stock in the financing or ii) the price per share of such Preferred Stock assuming a $16,000,000 fully diluted pre-money valuation of the company. Upon conversion of principal of $80,000 and accrued interest of $241, the Company received 174,989 shares of Series A Preferred Stock of GCI. The holders of this Series A Preferred Stock have a non-cumulative dividend right at a rate of $0.0871128 per annum and conversion privileges at $1.08891 per share (unless automatically converted upon a qualified financing). The investment is accounted for using the cost method. As of December 31, 2012, the Company determined that the investment in Game Closure had no value as it determined it would not likely be able to recover any of its initial investment. As a result, the carrying amount of the investment of $80,241 was reduced to its fair value of $-. This non-recurring Level 3 fair value measurement was based on unobservable inputs (which reflect the Company’s internal market assumptions) that are supported by little or no market activity and that are significant to the fair value of the investment.

During 2011, the Company invested $50,000 for a 33% membership interest in Tumbleweed Technologies, LLC (“Tumbleweed”). Subsequently, in September 2011, the Company contributed its interest in Tumbleweed for a 6.5% membership interest in Byte Factory, LLC (“Byte Factory”). The Company accounted for its investment in Tumbleweed under the equity method of accounting through the date of its transfer to Byte Factory. During the period from July 2011 through the date of transfer, the Company recognized losses under the equity method totaling $12,009, reducing the carrying value of the investment to $37,991. The Company accounts for its investment in Byte Factory under the cost method of accounting. Subsequent to December 31, 2011, the Company learned that Byte Factory was in the process of dissolution. Because of this fact, the Company assessed the value of its investment to determine whether there was any subsequent decline in value. The Company estimated the fair value of its investment in Byte Factory using a discounted cash flow model and determined there was a decline in value below the carrying value at December 31, 2011 that was other than temporary and recognized an impairment loss of $3,727 during the fourth quarter of 2011, reducing the carrying value to $34,264. In March 2012, Byte Factory repaid $12,500 of the original investment of $50,000, bringing its carrying value to $21,764. As of December 31, 2012, the Company determined that the investment in Tumbleweed Technologies had no value as it determined it would not likely be able to recover any of its initial investment. As a result, the carrying amount of the investment of $21,764 was reduced to its fair value of $-. This non-recurring Level 3 fair value measurement was based on unobservable inputs (which reflect the Company’s internal market assumptions) that are supported by little or no market activity and that are significant to the fair value of the investment.

On April 24, 2013 and June 3, 2013, Ascend issued secured promissory notes related to these advances (the “Secured Notes”) in favor of Ironbound, with an aggregate principal amount of $300,000. The principal balance, together with interest, on the Secured Notes was due June 23, 2013. Interest accrued on the unpaid balance at an annual rate of 15%. The Secured Notes granted Ironbound a security interest in all of Ascend’s and the Company’s assets. On July 1, 2013, in connection with the closing of the Kitara/NYPG Merger Agreement, Ascend sold an aggregate of 4,000,000 shares of common stock to Ironbound on a private placement basis, for an aggregate purchase price of $2,000,000, or $0.50 per share. $300,000 of the purchase price for such shares was paid by Ironbound through the cancellation of the Secured Notes and the related indebtedness. In connection with the cancellation, the security interest in all of Ascend’s and the Company’s assets in favor of Ironbound was terminated.

The Company is party to a Publisher Agreement (a “Collaborative Arrangement”) with a service provider to generate publishing revenue. The Company received $225,000 in deposits by the publisher. Two stockholders’ of the Company also co-founded this service provider. The Company may earn revenue based on direct payments under the application (100% of such payments allocated to the Company) and/or based on alternative payment service revenue which results from utilization of the platform provided by the publisher which incentivizes end users to complete certain tasks in response to advertisements presented within the application (i.e. to purchase other applications on the publisher’s platform) (70% of such revenues allocated to the Company). The latter revenue source is shared with the publisher, who will be the exclusive provider of the service that incentivizes the site user completion described above starting from the date that the first application begins utilizing this service. This revenue is subject to a $50,000 recoupment (the “Recoupment Amount”) which would be withheld by the service provider in settlement of the $225,000 deposit or any marketing credits (as discussed below) that it provides to the Company. The Company is required to maintain exclusivity on the publisher’s platform for 24 months, plus any extension period. In addition, the Company can receive $50,000 in marketing credits, which may be used in lieu of other forms of payment and only for the promotion and distribution of the applications within the publisher's network. The Company records the revenue related to this contract evenly over the 24 month exclusivity period. The Company recognized revenue in the amounts of $0, $28,125, $0, $56,250 and $103,125 for the three months ended June 30, 2013and June 30, 2012, the six months ended June 30, 2013 and June 30, 2012 and for the period January 17, 2011 (inception) through June 30, 2013, respectively.

In May 2011, the Company entered into a Development and Licensing Agreement with Infinitap, a consultant, to build an Android game platform for the Company. The Agreement called for a payment of $32,500 upon the execution of the agreement, and the final payment of $32,500 when the product is completed as agreed upon by the parties and shipped. The application was deployed as of December 31, 2011, with $55,250, expensed as software development costs through December 31, 2011. The consultant was also entitled to 20% of the net revenue paid to the Company by the publisher above (which primarily markets on Android) or Apple, Inc. platforms (less any marketing credits paid by the third parties), but only effective after the Company first receives $65,000 in such net revenue.

During 2012, the Company entered into amended agreements with Infinitap whereby the remaining unpaid expenses related to the original agreement were rolled into the new agreement. The updated agreement called for the payment of $202,000 to be paid as the service provider reaches various milestones related to software development. As of June 30, 2013, all milestones related to the contract had been achieved. In addition, the March 26, 2012 agreement called for a revenue sharing arrangement, whereby the Company was required to pay Infinitap eighteen percent (18%) of the revenues generated by the software (net of third party publisher operating fees) received by the Company. The Revenue Share was not payable unless and until the Company first receives $262,000 in revenues generated by the software (net of third party publisher operating fees). On May 20, 2013, the Company terminated the agreement with Infinitap and agreed to pay Infinitap an aggregate of $5,000 and transfer to it the ownership of the non-game source code developed by Infinitap for the Company in full consideration of all amounts owed to Infinitap.

During December 2012, the Company entered into a license agreement with NGHT, LLC (“NGHT”) to provide the Company with software research and marketing services. In exchange for the services, upon execution of the agreement, $50,000 was due to NGHT and is recorded in accounts payable and accrued expenses in the balance sheet. The Company was also required to pay fees of $50,000 related the release of a game on the Android and iPhone platforms. As of March 31, 2013, $25,000 was due NGHT related to the release of a game on the iPhone platform and is recorded in accounts payable and accrued expenses in the balance sheet. In addition, the Company was required to pay royalties of 10-12% to NGHT based on sales in excess of $1,000,000 during the term of the agreement. After the license agreement expires, the Company was required to pay 8% of net sales to NGHT. Additionally, the Company was required to make royalty payments of 20-35% related to advertising sales. On May 17, 2013, the Company entered into an amendment to the license agreement with NGHT. Pursuant to the amendment, the Company paid NGHT an aggregate of $26,250 in full consideration of all amounts owed to NGHT. Additionally, the royalty owed to NGHT was set at 10% of net sales received by the Company in excess of $262,500 on or after June 1, 2013. The terms of the agreement runs until the later of December 27, 2017 or the end of the game term subject to earlier termination by the parties under certain conditions (including the Company’s ability to achieve certain milestones in the game design).

As of June 30, 2013, the Company had 51,206,700 shares outstanding. The amount includes 38,195,025 shares issued to the owners of Andover Games prior to the merger between Andover Games and Ascend, 8,731,675 shares of Ascend outstanding as of the date of the merger and 4,000,000 shares issued pursuant to the Financing. In addition, during June 2013, Ascend issued 180,000 shares of common stock to United Talent Agency (see Note 11) and 100,000 shares to a former consultant. The Company recorded compensation expense of $56,000 related to these stock grants.

On May 7, 2012, the Company entered into consulting agreements with Meteor Group and its chairman, Dieter Abt under which Meteor Group and Mr. Abt are obligated to provide the Company with advice with respect to locating strategic relationships among their contacts, primarily well known consumer products and services (collectively the “Brands”). Pursuant to the agreements with Meteor Group and Mr. Abt, the Company granted them options to purchase an aggregate of 150,000 shares of the Company’s common stock, 50,000 of which are exercisable at $0.50 per share, 50,000 of which are exercisable at $0.75 per share and 50,000 of which are exercisable at $1.00 per share, vesting upon the entry by the Company of agreements with specific third parties to develop mobile games for such third parties. The Company also agreed to pay them a commission equal to 10% of any fees paid to the Company by a Brand to develop or modify an existing mobile game and 10% of net revenue (as defined in the agreements) the Company generates from any mobile game it releases for a Brand. The net revenue sharing arrangement will not begin, however, until the Company has recouped all of its direct expenses incurred in developing the game plus an additional 25% of its development expenses. The Company determined that the total fair value of these options was $7,533 utilizing the Black-Scholes method. The Company is amortizing the related expense over the 3 year probable vesting period.

On January 7, 2013, the Company entered into a letter agreement with United Talent Agency (“UTA”). UTA is an affiliate of Jeremy Zimmer, a member of the Company’s board of directors. Under the agreement, UTA was to assist the Company in structuring partnerships with media companies, brands and/or personalities who have not been previously introduced to the Company (a “Target”), with the purpose of creating licensed games for mobile or social platforms. The agreement was for a term of six months, with a six month tail. Pursuant to the agreement, UTA was to receive (i) a retainer of $15,000 per month of the term and (ii) a commission equal to 10% of the “net profits” (as defined in the agreement) on each product resulting from a partnership that is entered into with a Target prior to the expiration of the tail. The retainer will be recoupable against any commission payments. UTA was to continue to receive commissions after the term and tail with respect to partnerships meeting the foregoing conditions. UTA also was to receive 150,000 warrants exercisable at $0.75 per share vesting over two years and a contractual life of 3 years.

On July 1, 2013, Ascend consummated the transactions contemplated by the Kitara/NYPG Merger Agreement. Pursuant to the Kitara/NYPG Merger Agreement (as amended), (i) Merger Sub LLC merged with and into Kitara Media, with Kitara Media surviving the merger and becoming a wholly owned subsidiary of Ascend (“Kitara Media Merger”) and (ii) Merger Sub Inc. merged with and into NYPG, with NYPG surviving the merger and becoming a wholly owned subsidiary of Ascend (“NYPG Merger” and together with the Kitara Media Merger, the “Mergers”).

At the close of the Mergers, (i) the Kitara Signing Holder, holder of all of the outstanding membership units of Kitara Media, received an aggregate of 20,000,000 shares of Ascend’s common stock and (ii) the NYPG Signing Holder, holding all outstanding and issued shares of NYPG common stock, received (a) an aggregate of 10,000,000 shares of Ascend’s Common Stock and (b) two promissory notes (collectively, the “Closing Notes”), one in the amount of $100,000 being due and payable on January 1, 2014 and one in the amount of $200,000 being due and payable on January 1, 2023. Each of the Closing Notes accrues interest at a rate of 1% per annum, which will be due at the time the Closing Notes become due and payable. This transaction is expected to be accounted for as a reverse merger. As a result, it is expected that the financial statements of Kitara Media will become those of the registrant.

Pursuant to Mr. Regular’s employment agreement, he will receive a base salary of $350,000 per year and will be eligible to earn an annual performance bonus targeted to be approximately 50% of his base salary upon meeting performance objectives as defined from time to time. Mr. Regular also received an initial stock option grant of options to purchase 2,400,000 shares of Ascend’s common stock, such options exercisable at $0.20 per share and vesting on a quarterly basis throughout the 4-year term of the agreement. The options have a contractual life of 5 years.

Pursuant to Ms. Regular’s employment agreement, she will receive a base salary of $225,000 per year and will be eligible to earn an annual performance bonus targeted to be approximately 50% of her base salary upon meeting performance objectives as defined from time to time. Ms. Regular also received an initial stock option grant of options to purchase 500,000 shares of Ascend’s common stock, such options exercisable at $0.20 per share and vesting on a quarterly basis throughout the 4-year term of the agreement. The options have a contractual life of 5 years.

On July 1, 2013 as a condition to closing the Kitara/NYPG Merger Agreement, Ascend entered into a registration rights agreement with the Signing Holders for the shares of Ascend’s common stock received in connection with the transaction. Pursuant to the agreement, Ascend must, at its expense and upon the demand of the Signing Holders holding at least 30% of the shares issued in the transaction, use its reasonable best efforts to file a registration statement for such shares within 90 days (or 45 days if Ascend is eligible to file a registration statement on Form S-3) after it receives a written demand from such holders. Subject to certain limitations, the agreement also provides the Signing Holders certain piggyback registration rights for underwritten public offerings that Ascend may effect for its own account or for the benefit of other selling stockholders.

Effective July 22, 2013, Lisa VanPatten was hired as Ascend’s Chief Financial Officer pursuant to an at-will employment agreement. The employment agreement provides that Ms. VanPatten will receive a base salary of $160,000 and be eligible to receive a yearly bonus of $40,000 upon achievement of certain performance goals as to be mutually determined between Ascend and Ms. VanPatten. Additionally, subject to board approval, Ms. VanPatten will be granted an option to purchase 500,000 shares of Ascend’s common stock at an exercise price equal to the closing price of Ascend’s common stock on the date of grant, such options to vest in equal installments commencing on the first anniversary of the option grant. The options have a five year contractual life.

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.

We were formed on December 5, 2005 as a Delaware corporation. From our inception in 2005 until February 29, 2012, when we completed a reverse merger transaction with Andover Games, LLC (“Andover Games”), we were a blank check company and did not engage in active business operations other than our search for, and evaluation of, potential business opportunities for acquisition or participation. On February 29, 2012, we completed the reverse merger of Andover Games pursuant to a Merger Agreement and Plan of Reorganization (the “Andover Merger Agreement”) with Ascend Merger Sub, LLC, a Delaware limited liability company and our former wholly-owned subsidiary, Andover Games and the former members of Andover Games, whereby Andover Games became our wholly-owned direct subsidiary. Accordingly, the financial statements of Andover Games became our financial statements. Through June 30, 2013, our principal business was focused on developing mobile games for iPhone and Android platforms.

On June 12, 2013, we entered into a Merger Agreement and Plan of Reorganization (“Kitara/NYPG Merger Agreement”) with Kitara Media, LLC, a Delaware limited liability company (“Kitara Media”), New York Publishing Group, Inc., a Delaware corporation (“NYPG”), and all of the securityholders of Kitara Media and NYPG. On July 1, 2013, we consummated the transactions contemplated by the Kitara/NYPG Merger Agreement. In connection with the closing, the operations of Andover Games were discontinued and our operations are now entirely that of Kitara Media and NYPG. Kitara Media is an online video solutions provider that seeks to increase revenue to website publishers. NYPG is a publisher of Adotas, a website and daily email newsletter.

Revenue for the three months ended June 30, 2013 amounted to $0, while revenue for the three months ended June 30, 2012 amounted to $28,125, which is equal to three months of the deferred income from Andover Games’ contract with a service provider. The Company incurred the following expenses during the three months ended June 30, 2013: $118,873 administrative salaries, $27,640 in professional fees, and $108,006 related to other administrative costs. For the three months ended June 30, 2012, the Company had incurred $72,472 in salaries, $306,225 in professional fees and $121,564 related to other administrative costs.

Revenue for the six months ended June 30, 2013 amounted to $0, while revenue for the six months ended June 30, 2012 amounted to $56,250, which is equal to six months of the deferred income from Andover Games’ contract with a service provider. The Company incurred the following expenses during the six months ended June 30, 2013: $109,580 for salaries included in software development costs, $187,262 in administrative salaries, $198,097 in professional fees, $2,894 in filings with the Securities and Exchange Commission, $18,615 in rent, $45,042 in insurance expenses,$64,645 in stock compensation expense and $87,645 related to other administrative costs. In addition, the Company recognized $374,214 as an impairment loss on software development costs that had been previously capitalized through December 31, 2012. For the six months ended June 30, 2012, the Company incurred the following expenses: $94,347 in salaries, $452,500 in professional fees, $31,937 in filings with the Securities and Exchange Commission, $21,440 in rent expenses, $18,783 in insurance fees and $78,457 related to other administrative costs.

As of June 30, 2013, we had total assets of $1,821 and a deficit in working capital of $477,744. We had minimal revenues and incurred substantial losses from inception to date. Based on our liquidity position, continued losses could result in our not having sufficient liquidity or minimum cash levels to operate its business. As a result of the consummation of the Kitara/NYPG Merger Agreement on July 1, 2013, and the simultaneous capital raise of $2,000,000 on July 1, 2013, management believes that we have sufficient liquidity to meet our funding requirements through June 30, 2014.

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2013. The evaluation was conducted under the supervision and with the participation of management, including our chief executive officer and our chief financial officer. Disclosure controls and procedures mean our controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure controls and procedures are also designed to provide reasonable assurance that such information is accumulated and communicated to our management, including the chief executive officer, as appropriate to allow timely decisions regarding required disclosure. Our quarterly evaluation of disclosure controls and procedures includes an evaluation of some components of our internal control over financial reporting, and internal control over financial reporting is also separately evaluated on an annual basis for purposes of providing the management report that will be set forth in our Annual Report on Form 10-K.

The evaluation of our disclosure controls and procedures included a review of their objectives and design, our implementation of the controls, and the effect of the controls on the information generated for use in this Form 10-Q. In the course of the controls evaluation, we sought to identify any past instances of data errors, control problems or acts of fraud and sought to confirm that appropriate corrective actions, including process improvements, were being undertaken. This evaluation is performed on a quarterly basis so that the conclusions of management, including the chief executive officer, concerning the effectiveness of our disclosure controls and procedures can be reported in our periodic reports.

Our chief executive officer and chief financial officer have concluded, based on the evaluation of the effectiveness of the disclosure controls and procedures by our management required by Rules 13a-15 and 15d-15 under the Exchange Act, that as of June 30, 2013, our disclosure controls and procedures were not effective due to control deficiencies in three areas that we believe should be considered material weaknesses. A material weakness is defined within the Public Company Accounting Oversight Board's Auditing Standard No. 5 as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses were as follows:

1) We did not employ a full time Chief Financial Officer with the necessary skill set to prepare a complete set of financial statements and footnotes in accordance with generally accepted accounting principles. We have employed an external consultant to assist in preparing the financial statements and footnote disclosures, but the consultant is not involved in the day to day decision making to ensure that a complete presentation is made. Effective July 22, 2013, we have hired a full time Chief Financial Officer and believe this will remediate this material weakness.

Our management, including our chief executive officer and chief financial officer, do not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

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.

Exhibit No.		Description

	10.1	Form of Secured Promissory Note.

	31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	101	Condensed consolidated financial statements from the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2013, formatted in XBRL: (i) Balance Sheets, (ii) Statements of Operations, (iii) Statements of Cash Flows and (iv) Notes to Unaudited Financial Statements, as blocks of text and in detail.*

	101.INS	XBRL Instance Document*

	101.SCH	XBRL Taxonomy Extension Schema Document *

	101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document *

	101.DEF	XBRL Taxonomy Extension Definition Linkbase Document *

	101.LAB	XBRL Taxonomy Extension Label Linkbase Document*

	101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document *

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

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	x
(Do not check if smaller reporting company)

	Weighted-			Weighted
	Stock			Average		Average
	Options			Exercise Price		Contractual Life

Outstanding, January 1, 2013		770,000		$	0.45
Granted		-
Exercised		-
Cancelled/forfeited		(557,500	)	$	0.37
Outstanding, June 30, 2013		212,500		$	0.62		1.36
Exercisable, June 30, 2013		62,500		$	0.30		0.21

	ASCEND ACQUISITION CORP.

	By:	/s/ Robert Regular
		Robert Regular
		Chief Executive Officer (Principal executive officer)

	By:	/s/ Lisa VanPatten
		Lisa VanPatten
		Chief Financial Officer (Principal financial and accounting officer)

ASCEND ACQUISITION CORP.
(Exact Name of Registrant as Specified in Its Charter)