UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

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FORM 10-K

 

x

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2011

 

¨

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______________to ______________

 

Commission File Number 000-51840

 

ASCEND ACQUISITION CORP.

(Exact Name of Issuer as Specified in Its Charter)

 

Delaware (State of Incorporation)

20-3881465 (Issuer I.R.S. Employer I.D. Number)

 

970 West Broadway, PMB 402, Jackson, WY (Address of principal executive offices)

83002 (zip code)

 

(307) 633-2831

(Issuer’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

None

 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock, $.0001 par value per share

 

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ¨   No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  Yes ¨   No x

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days.  Yes x   No ¨

 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x   No ¨

 

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

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one).

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x
(Do not check if a smaller reporting company)

 

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

 

As of June 30, 2011 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the common stock held by non-affiliates of the registrant was approximately $195,784.

 

As of February 27, 2012, there were 8,731,675 shares of Common Stock, $.0001 par value per share, outstanding.

 

Documents incorporated by reference: None.

  

 

ASCEND ACQUISITION CORP.

FORM 10-K

TABLE OF CONTENTS

 

FORWARD LOOKING STATEMENTS		2
PART I
ITEM 1.	BUSINESS	2
ITEM 1A.	RISK FACTORS	6
ITEM 1B.	UNRESOLVED STAFF COMMENTS	8
ITEM 2.	PROPERTIES	8
ITEM 3.	LEGAL PROCEEDINGS	8
ITEM 4.	[REMOVE AND RESERVE]
PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	9
ITEM 6.	SELECTED FINANCIAL DATA	9
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	9
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	10
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	10
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	10
ITEM 9A(T).	CONTROLS AND PROCEDURES	10
ITEM 9B.	OTHER INFORMATION	12
PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	13
ITEM 11.	EXECUTIVE COMPENSATION	14
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	14
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	15
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	17
PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	17

 

 

 

Forward Looking Statements

 

All statements other than statements of historical fact included in this Form 10-K including, without limitation, statements under “Management’s Discussion and Analysis or Plan of Operation” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward looking statements. When used in this Form 10-K, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward looking statements. Such forward looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward looking statements as a result of certain factors detailed in our filings with the Securities and Exchange Commission. All subsequent written or oral forward looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.

 

In assessing forward-looking statements contained herein, readers are urged to carefully read those statements. Among the factors that could cause actual results to differ materially are: inability to protect our intellectual property; inability to obtain necessary financing; competition; loss of key personnel; increases of costs of operations; continued compliance with government regulations; and general economic conditions.

 

A description of key factors that have a direct bearing on our results of operations is provided under “Risk Factors” included on Item 1A of this form 10-K.

 

PART I

 

ITEM 1.

BUSINESS.

 

General

 

We were formed on December 5, 2005 to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with a currently unidentified operating business. The registration statement for our initial public offering ("the Offering") was declared effective May 11, 2006. On May 17, 2006, we sold 6,000,000 units in the Offering and on May 22, 2006, we sold 900,000 units in the Offering subject to the underwriters’ overallotment option. Each of our units originally consisted of one share of our common stock, $.0001 par value per share, and two redeemable common stock purchase warrants. Each warrant originally entitled the holder to purchase from us one share of common stock at an exercise price of $5.00. We received net proceeds of approximately $37,203,000 from the Offering. All activity from December 5, 2005 through May 17, 2006 related to our formation and initial public offering.

 

On July 31, 2007, we announced that we had signed a definitive agreement to acquire e.PAK Resources (S) Pte. Ltd. (“ePAK”), a privately held, full-service supplier of semiconductor transfer and handling products. We were required to complete our business combination with ePAK by May 17, 2008. However, on April 28, 2008, we announced that we had abandoned the proposed business combination with ePAK (effectively terminating the definitive agreement). The transaction was abandoned because we were unable to finalize our proxy statement relating to our special meeting of stockholders with the Securities and Exchange Commission in order to timely hold such meeting and consummate the acquisition. This was due to the fact that certain conditions to the consummation of the acquisition had not been satisfied and would not have been satisfied prior to May 17, 2008. Although we requested that ePAK waive such conditions, ePAK refused to do so. As a result, we were unable to finalize our proxy statement and were forced to abandon the acquisition.

 

Because we were unable to consummate our business combination prior to May 17, 2008, our board of directors contemplated alternatives for preserving value for stockholders Ultimately, the board of directors proposed to amend our certificate of incorporation:

 

·

to permit the continuance of our company as a corporation beyond the time currently specified in our certificate of incorporation without the limitations related to the Offering;

·

to increase the authorized shares of common stock from 30,000,000 shares to 300,000,000 shares of common stock; and

 

·

to effect a one-for-ten reverse stock split of our common stock, in which every 10 shares of Common Stock outstanding as of the effective date of the amendment will be converted into one share of Common Stock.

 

Our stockholders approved all of these amendments at a special meeting held on September 4, 2008. In addition to these amendments, on September 18, 2008 we distributed the amounts in the Trust Fund established by us at the consummation of the Offering and into which a certain amount of the net proceeds of the Offering were deposited (the “Trust Fund”). The aggregate amount in the Trust Fund was approximately $41,128,676 or approximately $5.96 per original share of common stock issued in the Offering (“IPO Shares”). Only holders of our IPO Shares received proceeds from the distribution of the Trust Fund, after establishing a reserve for Delaware franchise taxes.

 

In January 2011, we entered into and consummated a Stock Purchase Agreement (the “Purchase Agreement”) with Don K. Rice, our former chief executive officer, president and treasurer, and Ironbound Partners Fund, LLC (“Ironbound”), a Delaware limited liability company and an affiliate of Jonathan Ledecky, our chief executive officer and sole director. Pursuant to the Purchase Agreement, Mr. Rice sold an aggregate of 7,293,550 shares of our common stock to Ironbound for an aggregate purchase price of $310,000 and Mr. Ledecky became our sole officer and director.

 

From September 2008 until December 2011, we were seeking to acquire a business or company or identify some other opportunity for us and our shareholders’ benefit.

 

On December 30, 2011, we entered into a Merger Agreement and Plan of Reorganization (the “Merger Agreement”) among us, Ascend Merger Sub, LLC, our wholly owned subsidiary, Andover Games, LLC, a Delaware limited liability company (“Andover Games”), and the members of Andover Games (“Signing Members”). Upon the consummation of the transactions contemplated by the Merger Agreement, Andover Games will become our wholly-owned subsidiary of Ascend. Andover Games is a company formed to create and distribute game applications on current smartphone and other mobile platforms, namely iOS and Android, as well as future competing smartphone platforms. The merger is expected to be consummated in February 2012 after the fulfillment of certain closing conditions as described in the Merger Agreement.

 

A more complete description of Andover Games, the terms of the Merger Agreement and the transactions contemplated thereby are described in detail under Item 1.01 of our Current Report on Form 8-K, dated December 30, 2011 and filed with the SEC on January 4, 2012.

 

For purposes of presentation, unless otherwise indicated in this Annual Report on Form 10-K, it is assumed that the transaction with Andover Games will not be completed and we will continue to seek to acquire a business or company or identify some other opportunity for us and our shareholders’ benefit.

 

Current Business Plan

 

Our plan is to seek, investigate, and if such investigation warrants, acquire one or more operating businesses desiring the perceived advantages of a publicly held corporation. We will not restrict our search to any specific business, industry, or geographical location, and may participate in business ventures of virtually any kind or nature. Discussion of the proposed business under this caption and throughout this Annual Report is purposefully general and is not meant to restrict our virtually unlimited discretion to search for and enter into a business combination.

 

We may seek a combination with a firm that only recently commenced operations, a developing company in need of additional funds to expand into new products or markets or seeking to develop a new product or service, or an established business which may be experiencing financial or operating difficulties and needs additional capital which is perceived to be easier to raise by a public company. In some instances, a transaction may involve acquiring or merging with a corporation which does not need substantial additional cash but which desires to establish a public trading market for its common stock. We may purchase assets and establish wholly-owned subsidiaries in various businesses or purchase existing businesses as subsidiaries.

 

 

Selecting a transaction will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries, and shortages of available capital, we believe that there are numerous firms seeking the benefits of a publicly-traded corporation. Such perceived benefits of a publicly traded corporation may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for the principals of a business, creating a means for providing incentive stock options or similar benefits to key employees, providing liquidity (subject to restrictions of applicable statutes) for all stockholders, and other items. Potentially transactions may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such transactions extremely difficult and complex.

 

We currently have insufficient capital with which to provide the owners of businesses significant cash or other assets. However, we may conduct a private placement in connection with any transaction if a target business requires additional working capital for future operations. Management believes we will offer owners of businesses the opportunity to acquire a controlling ownership interest in a public company at substantially less cost than is required to conduct an initial public offering. The owners of the businesses will, however, incur significant post-merger or acquisition registration costs in the event they wish to register a portion of their shares for subsequent sale. We will also incur significant legal and accounting costs in connection with the acquisition of a target business, including the costs of preparing Current Reports on Form 8-K, agreements, and related reports and documents.

 

Sources of Opportunities

 

We will seek a potential target business from all known sources, but will rely principally on personal contacts of our management as well as indirect associations between it and other business and professional people. We do not presently anticipate that we will engage any professional firm specializing in business acquisitions or reorganizations in order to locate a target but, as is customary in the industry, we may pay a finder’s fee for introducing us to an acquisition prospect that we ultimately acquire. If any such fee is paid, it will be approved by our Board of Directors and will be in accordance with the industry standards.

 

Evaluation of Opportunities

 

The analysis of new business opportunities will be undertaken by or under the supervision of management. See “Item 10. Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance With Section 16(a) of the Exchange Act” for information about our current management. We intend to concentrate on identifying prospective business opportunities that may be brought to our attention through present associations with management. In analyzing prospective business opportunities, management will consider, among other factors, such matters as:

 

1. the available technical, financial and managerial resources,

 

2. working capital and other financial requirements,

 

3. history of operations, if any,

 

4. prospects for the future,

 

5. present and expected competition,

 

6. the quality and experience of management services which may be available and the depth of that management,

 

7. the need for further research, development or exploration relating to the target’s products or services,

 

8. specific risk factors not now affecting the business but which may be anticipated to impact our proposed ctivities in the future,

 

9. the potential for growth or expansion,

 

10. the potential for profit,

 

11. the perceived public recognition or acceptance of products, services or trades, and

 

12. name identification.

 

 

Management will meet personally with management and key personnel of any business we will acquire as part of their investigation. To the extent possible, we intend to utilize written reports and personal investigation to evaluate the above factors.

 

Opportunities in which we participate will present certain risks, many of which cannot be identified adequately prior to selecting a specific opportunity. Our stockholders must, therefore, depend on management to identify and evaluate such risks. Some businesses may be in the development stage (in that they have not generated significant revenues from their principal business activities prior to our participation). Even after our participation, there is a risk that the combined enterprise may not become a going concern or advance beyond the development stage. Other opportunities may involve new and untested products, processes, or market strategies that may not succeed. We (and therefore our stockholders) will assume such risks.

 

The investigation of specific target businesses and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention as well as substantial costs for accountants, attorneys, and others. If a decision is made not to participate in a specific transaction, the costs incurred in the related investigation would not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific transaction, the failure to consummate that transaction may result in the loss by us of the related costs incurred.

 

There is the additional risk that we will not find a suitable target. We do not believe we will generate revenue without finding and completing a transaction with a suitable target company. If no such target is found, no return on an investment in us will be realized, and there will not, most likely, be a active market for our stock.

 

Competition

 

We are an insignificant participant among firms that engage in business combinations with, or financing of, development stage enterprises. There are many established management and financial consulting companies and venture capital firms that have significantly greater financial and personal resources, technical expertise and experience than ours. In view of our limited financial resources and management availability, we will continue to be at a significant competitive disadvantage relative to our competitors.

 

Regulation and Taxation

 

Although we will be subject to regulation under the Securities Act of 1933 and the Securities Exchange Act of 1934, management believes we will not be subject to regulation under the Investment Company Act of 1940 insofar as we will not be engaged in the business of investing or trading in securities. In the event we engage in business combinations that result in our holding passive investment interests in a number of entities, we could be subject to regulation under the Investment Company Act of 1940. In such event, we would be required to register as an investment company and could be expected to incur significant registration and compliance costs. We have obtained no formal determination from the Securities and Exchange Commission as to our status under the Investment Company Act of 1940 and, consequently, any violation of such Act would subject us to material adverse consequences.

 

We intend to structure a merger or acquisition in such manner as to minimize federal and state tax consequences to us and to any target company.

 

 

Employees

 

We have one executive officer. This individual is not obligated to devote any specific number of hours to our matters and intends to devote only as much time as he deems necessary to our affairs. The amount of time he will devote in any time period will vary based on the demands of our business. We do not intend to have any full time employees prior to the consummation of a business combination.

 

ITEM 1A.

RISK FACTORS

 

WE HAVE NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS.

 

We have no operating history, have received no revenues and have never earned a profit from operations.  We have no significant assets or financial resources.  We will, in all likelihood, sustain operating expenses without corresponding revenues, at least until we complete a business combination.  This may result in our incurring a net operating loss that will increase continuously until we complete a business combination with a profitable business opportunity.  There is no assurance that we will identify a target business or complete a business combination.  The continuation of our company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our company to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations.  These factors raise substantial doubt regarding our ability to continue as a going concern.

 

WE NEED ADDITIONAL CAPITAL TO CONTINUE OPERATIONS

 

We have in the past relied, and will continue to rely, on loans from our officers, directors and stockholders (which such loans may or may not be convertible into our securities) to supplement our working capital needs.  None of our officers, directors or stockholders is under any obligation to provide us with any such loans.  Accordingly, if they do not agree to loan us funds at a time when funds are necessary, we may need to suspend operations and cease searching for a target business to acquire until funds become available to us.

 

OUR PROPOSED OPERATIONS ARE SPECULATIVE.

 

The success of our proposed plan of operation will depend to a great extent on the operations, financial condition, and management of the identified target business.  While we intend to seek business combinations with entities having established operating histories, we may not successfully locate candidates meeting such criteria.  In the event we complete a business combination, the success of our operations may depend upon management of the successor firm or venture partner firm together with numerous other factors beyond our control.

 

ATTRACTIVE BUSINESS OPPORTUNITIES AND COMBINATIONS ARE SCARCE, AND COMPETITION FOR THEM IS FIERCE.

 

We are, and will continue to be, an insignificant participant in the business of seeking merger candidates.  A large number of established and well-financed entities, including venture capital firms, are active in mergers and acquisitions of companies that may also be desirable target candidates for us.  Nearly all such entities have significantly greater financial resources, technical expertise, and managerial capabilities than our company.  We are, consequently, at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination.  Moreover, we will also compete with numerous other small public companies in seeking merger or acquisition candidates.

 

WE DEPEND HEAVILY ON OUR SOLE OFFICER, AND HE MAY DEVOTE ONLY A LIMITED AMOUNT OF TIME TO OUR BUSINESS.

 

While seeking a business combination, Jonathan J. Ledecky, our sole officer, anticipates devoting only a minimal amount of time to our business.  Mr. Ledecky has not entered into a written employment or non-compete agreement with us and is not expected to do so in the foreseeable future.  We have not obtained key man life insurance on him.  Notwithstanding the limited time commitment of Mr. Ledecky, the loss of his services could adversely affect development of our business.  See “Item 10. Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act” for more information about Mr. Ledecky’s business activities.

 

 

OUR MANAGEMENT MAY HAVE FUTURE CONFLICTS OF INTEREST WITH US.

 

Jonathan J. Ledecky, our sole officer, may in the future participate in business ventures that could compete directly with us.  Additional conflicts of interest and non-arms length transactions may also arise in the future in the event Mr. Ledecky is involved in the management of any firm with which we transact business.  Our Code of Ethics prohibits us from consummating a business combination with an entity that is affiliated with any of our officers, directors or founders, but it does not prohibit us from entering into other related-party transactions.   However, our board of directors is responsible for reviewing and approving related-party transactions to the extent we enter into such transactions.

 

REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE AN ACQUISITION.

 

Companies subject to Section 13 of the Securities Exchange Act of 1934 (the "Exchange Act") must provide certain information about significant acquisitions, including certified financial statements for the company acquired, covering one or two years, depending on the relative size of the acquisition.  The time and additional costs that may be incurred by some target businesses to prepare such statements may significantly delay or even preclude us from completing an otherwise desirable acquisition.  Target businesses that do not have or are unable to obtain the required audited statements may not be appropriate for acquisition so long as the reporting requirements of the Exchange Act are applicable.

 

WE HAVE CONDUCTED NO RESEARCH AS TO MARKET FOR A TRANSACTION SUCH AS THAT WHICH WE PROPOSE, AND WE HAVE MARKETING ORGANIZATION TO ASSIST US IN PURSUING SUCH A TRANSACTION.

 

We have not conducted or received results of market research indicating that market demand exists for the transactions contemplated by us.  Moreover, we do not have, and do not plan to establish, a marketing organization.  Even if there is demand for a business combination as contemplated by us, there is no assurance we will successfully complete such transaction.

 

WE EXPECT TO LACK DIVERSIFICATION EVEN IF WE COMPLETE A BUSINESS COMBINATION

 

In all likelihood, our proposed operations, even if successful, will result in a business combination with only one entity.  Consequently, the resulting activities will be limited to that entity's business.  Our inability to diversify our activities into a number of areas may subject us to economic fluctuations within a particular business or industry, thereby increasing the risks associated with our operations.

 

WE COULD BECOME SUBJECT TO IMPOSING REGULATIONS.

 

Although we will be subject to regulation under the Exchange Act, we do not believe we will not be subject to regulation under the Investment Company Act of 1940, insofar as we will not be engaged in the business of investing or trading in securities.  However, in the event we engage in business combinations that results in our holding passive investment interests in a number of entities, we could be subject to regulation under the Investment Company Act of 1940.  In such event, we would be required to register as an investment company and could be expected to incur significant registration and compliance costs.

 

A BUSINESS COMBINATION WOULD PROBABLY RESULT IN A CHANGE IN CONTROL AND MANAGEMENT.

 

A business combination involving the issuance of our common stock will, in all likelihood, result in stockholders of a private company obtaining a controlling interest in us.  Any such business combination may require our management members to sell or transfer all or a portion of our common stock beneficially that they own, or resign from their positions with us.  The resulting change in control of us could result in removal of present management or a reduction in our participation in our future affairs.

 

 

A BUSINESS COMBINATION WOULD PROBABLY RESULT IN A REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOR EXISTING STOCKHOLDERS.

 

Our primary plan of operation is based upon a business combination with a target business that, in all likelihood, would result in our issuing securities to stockholders of such target business.  Issuing previously authorized and unissued common stock of we will reduce the percentage of shares owned by present and prospective stockholders, and could effect a change in our control and/or management.

 

A BUSINESS COMBINATION COULD RESULT IN ADVERSE TAX CONSEQUENCES.

 

Federal and state tax consequences will, in all likelihood, be major considerations in any business combination we may undertake.  Typically, these transactions may be structured to result in tax-free treatment to both companies, pursuant to various federal and state tax provisions.  We intend to structure any business combination so as to minimize the federal and state tax consequences to both us and the target business.  We cannot assure you, however, that a business combination will meet the statutory requirements for a tax-free reorganization, or that the parties will obtain the intended tax-free treatment upon a transfer of stock or assets.  A non-qualifying reorganization could result in the imposition of both federal and state taxes, which may have an adverse effect on both parties to the transaction.

 

REQUIREMENTS OF AUDITED FINANCIAL STATEMENTS MAY LIMIT BUSINESS COMBINATION CANDIDATES

 

Any potential target business will need to provide audited financial statements.  This requirement may limit the number of potential target businesses with which we may consummate a business combination.

 

WE MAY HAVE TO WAIT AT LEAST A YEAR AFTER A TRANSACTION TO LIST ON A NATIONAL SECURITIES EXCHANGE.

 

On November 9, 2011, the SEC approved new rules of the three major U.S. securities exchanges that toughen the standards that companies going public through a reverse merger must meet to become listed on those exchanges. As a result, in order to be listed on such an exchange following the completion of a business combination, we will have to meet the listing standards of such a securities exchange. Accordingly, under certain circumstances, we will need to complete a one-year “seasoning period” by trading on the Over-The-Counter Bulletin Board following such transaction, have filed an annual report on Form 10-K covering a full fiscal year commencing after the filing with the SEC of all information regarding our business combination and having maintained a requisite minimum bid price for a sustained period of time. Accordingly, we may not be permitted to have our securities listed until such time and we may not meet the other listing requirements of such securities exchange at that time. If we do not become listed on a national securities exchange, it may limit the liquidity and price of our securities.

 

ITEM 1B.

UNRESOLVED STAFF COMMENTS.

 

Not Applicable.

 

ITEM 2.

PROPERTIES.

 

We maintain our principal executive offices at 970 West Broadway, PMB 402, Jackson, WY 83002 on a rent-free basis provided by our Chief Executive Officer. We consider our current office space, combined with other office space otherwise available to our executive officers, adequate for our current operations.

 

ITEM 3.

LEGAL PROCEEDINGS.

 

The Company is not party to any litigation.

 

 

PART II

 

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

Market Information

 

Our common stock is quoted on the OTC Bulletin Board under the symbols ASCQ. From our inception until May 2010, we also had units and warrants quoted on the OTC Bulletin Board under the symbols ASCQU and ASCQW, respectively. The following table sets forth the high and low closing bid quotations for the calendar quarters indicated for the past two years for our common stock. The over-the-counter market quotations reported below reflect inter-dealer prices, without markup, markdown or commissions and may not represent actual transactions.

 

		Common Stock
		High				Low
Fiscal 2011:
Fourth Quarter		$	0.24			$	0.05
Third Quarter		$	0.25			$	0.11
Second Quarter		$	0.30			$	0.15
First Quarter		$	0.20			$	0.11
Fiscal 2010:
Fourth Quarter		$	0.07			$	0.042
Third Quarter		$	0.10			$	0.0311
Second Quarter		$	0.07			$	0.021
First Quarter		$	0.35			$	0.0311

 

Holders

 

As of February 27, 2012, there were 8 holders of record of our common stock. We believe we have significantly more beneficial holders of our common stock.

 

Dividends

 

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

 

ITEM 6.

SELECTED FINANCIAL DATA.

 

Not Applicable.

 

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following discussion should be read in conjunction with our Consolidated Financial Statements and footnotes thereto contained in this report.

 

Results of Operations

 

Year Ended December 31, 2011 Compared to the Year Ended December 31, 2010

 

General and administrative expenses for the year ended December 31, 2011 were $80,048 compared to $62,295 for the year ended December 31, 2010, an increase of $17,753. Legal and professional fees were $66,463 in 2011 compared to $38,504 in 2010, an increase of $27,959. This increase is due primarily to legal fees of $25,000 paid for the proposed merger with Andover Games. Insurance expense for the year ended December 31, 2011 amounted to $3,357 compared to $13,942 for the period ended December 31, 2010, a decrease of $10,585. Other operating expenses, which include SEC expense, supplies and trustee expenses, increased $378 in 2011 compared to 2010.

 

 

During the year ended December 31, 2011 and 2010, we had convertible notes payable outstanding to our chief executive officer, Jonathan Ledecky, and our former chief executive officer, Don K. Rice, respectively. Interest expense recorded for the year ended December 31, 2011 amounted to $380 compared to $14,832 of interest expense relating to these loans for the years ended December 31, 2010. The decrease was primarily the result of notes converted to common shares in January 2011.

 

Net loss for the year ended December 31, 2011 was $80,414, compared to a net loss of $77,127 for the year ended December, 2010, as a result of the items mentioned above.

 

Liquidity and Capital Resources

 

At December 30, 2011, we had $30,461 of cash on hand. We have in the past relied, and will continue to rely, on loans from our officers, directors and stockholders (which such loans may or may not be convertible into our securities) to supplement our working capital needs. None of our officers, directors or stockholders is under any obligation to provide us with any other loans. Accordingly, if they do not agree to loan us funds at a time when funds are necessary, we may need to suspend operations and cease searching for a target business to acquire until funds become available to us.

 

The accompanying financial statements have been prepared on a going concern basis, which implies we will continue to meet our obligations and continue our operations for the next fiscal year. Realization value may be substantially different from carrying values as shown and the accompanying financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. As of December 31, 2011, we had not generated revenues and had an accumulated deficit of $578,352.

 

Our continuation as a going concern is dependent upon the continued financial support from our shareholders, our ability to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding our ability to continue as a going concern.

 

Off-balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

 

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not Applicable.

 

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

This information appears following Item 15 of this Report and is included herein by reference.

 

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

Pursuant to Item 304(b) of Regulation S-K, there has been no disagreement or any reportable event that would require additional disclosure in this Form 10-K.

 

ITEM 9A.

CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

  

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2011. The evaluation was conducted under the supervision and with the participation of management, including our chief executive 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 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 is set forth below.

 

 

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-K. 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 has concluded, based on the evaluation of the effectiveness of the disclosure controls and procedures by our management, that as of December 31, 2011, our disclosure controls and procedures were not effective due to the material weaknesses described in Management's Report on Internal Control over Financial Reporting below.

 

Management's Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:

 

·

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets;

 

·

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the board of directors; and

 

·

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements.

 

Because of their inherent limitations, any system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Our management, including the chief executive officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2011, based on the framework defined in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

Management's assessment of the control environment included all significant locations and subsidiaries.

 

Material Weaknesses

 

Based on our evaluation under COSO, management concluded that our internal control over financial reporting was not effective as of December 31, 2011, due to control deficiencies in two 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.

 

 

1)

We did not sufficiently segregate duties over incompatible functions at our corporate headquarters.

 

Our inability to sufficiently segregate duties is due to a small number of personnel at the corporate headquarters, which management expects to remedy when the acquisition of an operating company is completed.

 

2)

In conjunction with the lack of segregation of duties, we did not institute specific anti-fraud controls.

 

While management found no evidence of fraudulent activity, certain individuals have access to both accounting records and corporate assets, principally the operating bank account. Management believes this exposure to fraudulent activity is not material either to the operations of the company or to the financial reporting; however, management has instituted Key Controls specifically designed to prevent and detect-on a timely basis-any potential loss due to fraudulent activity.

 

Limitations on Effectiveness of Controls and Procedures

 

Our management, including our chief executive officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error 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 our 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.

 

This Annual Report on Form 10-K does not include an attestation report of the Company's independent registered public accounting firm regarding Internal Control over Financial Reporting.  The Company's Internal Control over Financial Reporting was not subject to attestation by the Company's independent registered public accounting firm pursuant to the provisions of the Dodd-Frank Act that permit the Company to provide only management's report on Internal Control over Financial Reporting in this annual report.

 

Changes in Internal Control over Financial Reporting

 

There have not been any changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect its internal control over financial reporting.

 

ITEM 9B.

OTHER INFORMATION.

 

None.

 

 

PART III

 

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 

Directors and Executive Officers

 

Our current directors and executive officers are as follows:

 

Name		Age		Position
Jonathan J. Ledecky		54		Chief Executive Officer and Director

 

Mr. Ledecky has served as our chief executive officer and a member of our Board of Directors since January 2011. Mr. Ledecky has served as chairman of Ironbound, a private investment management fund, since March 1999.  Since June 1999, Mr. Ledecky has also served as chairman of the Ledecky Foundation, a philanthropic organization which contributes funds to programs for the education of disadvantaged inner city youth in Washington, D.C., New York and Boston.  From June 2007 to October 2009, Mr. Ledecky served as president, secretary and a member of the board of directors of Triplecrown Acquisition Corp., a blank check company that completed a business combination with Cullen Agricultural Technologies, Inc.  From July 2005 to December 2007, Mr. Ledecky served as president, secretary and a director of Endeavor Acquisition Corp., a blank check company that completed a business combination with American Apparel.  From January 2007 to April 2009, Mr. Ledecky served as president, secretary and a director of Victory Acquisition Corp., a blank check company that did not complete a business combination and returned all of its capital, representing approximately $330 million, to its public shareholders.  In October 1994, Mr. Ledecky founded U.S. Office Products and served as its chief executive officer until November 1997 and chairman until June 1998. During his tenure, U.S. Office Products completed over 260 acquisitions, and grew to a Fortune 500 company with over $2.6 billion in revenues. In June 1998, U.S. Office Products completed a comprehensive restructuring plan whereby four separate entities were spun off to stockholders and U.S. Office Products underwent a leveraged recapitalization. In connection with these transactions, Mr. Ledecky resigned from his position as chairman of U.S. Office Products and became a director of each of the four spin-off entities. In February 1997, Mr. Ledecky founded Building One Services Corporation (originally Consolidation Capital Corporation), an entity formed to identify attractive consolidation opportunities which ultimately focused on the facilities management industry. In November 1997, Building One raised $552 million in an initial public offering. Mr. Ledecky served as Building One’s chief executive officer from November 1997 through February 1999 and as its chairman from inception through its February 2000 merger with Group Maintenance America Corporation. During his tenure with Building One, it completed 46 acquisitions and grew to over $1.5 billion in revenues. From July 1999 to July 2001, Mr. Ledecky was vice chairman of Lincoln Holdings, owners of the Washington sports franchises in the NBA, NHL and WNBA. Since June 1998, Mr. Ledecky has served as a director of School Specialty, a Nasdaq Global Market listed education company that provides products, programs and services that enhance student achievement and development. School Specialty was spun out of U.S. Office Products in June 1998. Since 1994, Mr. Ledecky has been involved with numerous other companies in director positions.

 

Mr. Ledecky was a trustee of George Washington University, served as a director of the U.S. Chamber of Commerce and served as commissioner on the National Commission on Entrepreneurship. In addition, in 2004, Mr. Ledecky was elected the Chief Marshal of the 2004 Harvard University Commencement, a singular honor bestowed by his alumni peers for a 25th reunion graduate deemed to have made exceptional contributions to Harvard and the greater society while achieving outstanding professional success.

 

Mr. Ledecky received a B.A. (cum laude) from Harvard University in 1979 and a M.B.A. from the Harvard Business School in 1983.

 

We believe Mr. Ledecky is well-qualified to serve as a member of the Board of Directors due to his public company experience, operational experience and business contacts.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934 requires our officers, directors and persons who own more than ten percent of a registered class of our equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and ten percent stockholders are required by regulation to furnish us with copies of all Section 16(a) forms they file. Based solely on copies of such forms received or written representations from certain reporting persons that no Form 5s were required for those persons, we believe that, during the fiscal year ended December 31, 2011, all filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with.

 

 

Code of Ethics

 

In May 2006, our board of directors adopted a code of ethics that applies to our directors, officers and employees. Requests for copies of our code of ethics should be sent in writing to Ascend Acquisition Corp., 970 West Broadway, PMB 402, Jackson, Wyoming, 83002.

 

Corporate Governance

 

We currently do not have audit, nominating or compensation committees as we are not a listed issuer and are not required to have such committees.

 

ITEM 11.

EXECUTIVE COMPENSATION.

 

Since our formation, no executive officer has received any cash compensation for services rendered to us, and we have not granted any stock options or stock appreciation rights or any awards under long-term incentive plans.

  

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

The following table sets forth information regarding the beneficial ownership of our common stock as of February 27, 2012 by:

 

£

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

 

£

each of our officers and directors; and

 

£

all of our officers and directors as a group.

 

Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.

 

Name of Beneficial Owner		Number of Shares				Percent of Class
Ironbound Partners Fund, LLC 970 West Broadway, PMB 402 Jackson, Wyoming 83002			7,468,550	(1)(2)			85.5	%
Jonathan J. Ledecky 970 West Broadway, PMB 402 Jackson, Wyoming 83002			7,468,550	(2)			85.5	%
All current executive officers and directors as a group (1 person)			7,468,550	(2)			85.5	%

 

(1)

Jonathan J. Ledecky is the Managing Member of Ironbound and as such has sole voting and dispositive power over the shares held by Ironbound.

(2)

Does not include an aggregate of 5,000,000 shares of common stock issuable upon conversion of a promissory note held by Ironbound which may not be convertible within 60 days.

 

 

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

 

In January 2011, we executed a convertible promissory note in favor of Donald K. Rice, a former officer and director, with a principal amount of $15,000. The promissory note represented amounts advanced to us by Mr. Rice during August and November 2010. The promissory note was due and payable in full on demand, and bore interest at the rate of 5% per annum. At any time prior to the payment in full of the entire balance of the promissory note, Mr. Rice had the option of converting all or any portion of the unpaid balance of the promissory note into shares of our common stock at a conversion price equal to $0.15 per share, subject to adjustment upon certain events.

 

In January 21, 2011, we entered into and consummated the Purchase Agreement with Mr. Rice and Ironbound. Pursuant to the Purchase Agreement, Mr. Rice converted all principal and accrued interest on convertible promissory notes held by him, including the one issued to him in January 2011 described above, into an aggregate of 7,075,000 shares of our common stock. Immediately after the conversion of the notes, Mr. Rice sold to Ironbound such shares together with an additional 218,550 shares of common stock of the Company held by Mr. Rice, or an aggregate of 7,293,550 shares of common stock for an aggregate purchase price of $310,000.

 

In connection with our initial public offering in May 2006, we had entered into a registration rights agreement with Mr. Rice providing for registration rights with respect to certain of the shares held by Mr. Rice. In connection with the Purchase Agreement, these rights were assigned by Mr. Rice to Ironbound. Accordingly, pursuant to the registration rights agreement, Ironbound has the right to demand that we register certain of the shares of common stock acquired by it from Mr. Rice. In addition, Ironbound has certain “piggy-back” registration rights on registration statements filed by us with respect to such securities. We are required to bear the expenses incurred in connection with the filing of any such registration statements.

 

In March 2011, we executed a convertible promissory note in favor of Jonathan Ledecky, with a principal amount of $25,000. The note was due and payable in full on demand and bore interest at the rate of 5% per annum. At any time prior to the payment in full of the entire balance of the note, Mr. Ledecky had the option of converting all or any portion of the unpaid balance of the note into shares of our common stock at a conversion price equal to $0.19 per share, subject to adjustment upon certain events. The conversion price was based on the market price of our common stock at the time of the issuance of the note.

 

In July 2011, we executed a convertible promissory note in favor of Mr. Ledecky, with a principal amount of $10,000. The promissory note represented amounts advanced to us by Mr. Ledecky during June 2011. The promissory note was due and payable in full on demand and bore an interest rate of 5% per annum. At any time prior to the payment in full of the entire balance of the note, Mr. Ledecky had the option of converting all or any portion of the unpaid balance of the note into shares of our common stock at a conversion price equal to $0.20 per share, subject to adjustment upon certain events. The conversion price was at a premium to the market price of our common stock at the time of the issuance of the note.

 

In July 2011, Mr. Ledecky converted the $35,000 principal amount of the promissory notes issued to him in March 2011 and June 2011 into an aggregate of 175,000 shares of common stock, or $0.20 per share. Although the promissory note issued to Mr. Ledecky in March 2011 had a conversion price of $0.19, Mr. Ledecky voluntarily converted such note into our common stock at $0.20 per share. Additionally, the accrued interest on the notes totaling $380 was forfeited and credited to additional paid-in capital as part of the cost of securities issued. We have agreed to file a registration statement with the SEC to register the resale of the shares of common stock issued upon conversion of the promissory notes promptly after consummation by us of a merger, stock exchange, asset acquisition or other form of business combination and to use its best efforts to have such registration statement declared effective as soon as possible. We are required to bear the expenses incurred in connection with the filing of such registration statement.

 

In December 2011, we executed a convertible promissory note in favor of Ironbound with a principal amount of $250,000 to fund amounts required pursuant to the Merger Agreement. The promissory note represented amounts advanced to us by Ironbound so that we could provide certain bridge financing to Andover Games upon execution of the Merger Agreement. The note is due and payable in full upon closing of the merger or, if not consummated, on demand and bears interest at the rate of 5% per annum. If the transactions contemplated by the Merger Agreement are not consummated, at any time prior to the payment in full of the entire balance of the note, Ironbound has the option of converting all or any portion of the unpaid balance of the note into shares of our common stock at a conversion price equal to $0.05 per share, subject to adjustment upon certain events. The conversion price was based on the market price of our common stock on the closing at the time of the issuance of the note. The proceeds from the issuance of this note was received in January 2012.

 

 

Related party policy

 

Our Code of Ethics requires us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interest, except under guidelines approved by the board of directors (or the audit committee). Related-party transactions are defined as transactions in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5 percent beneficial owner of our common stock, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10 percent beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position. While we have agreed not to consummate a business combination with an entity that is affiliated with any of our officers, directors or founders, we are not prohibited from entering into other related-party transactions.

 

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

 

Our board of directors is responsible for reviewing and approving related-party transactions to the extent we enter into such transactions. The board of directors will consider all relevant factors when determining whether to approve a related party transaction, including whether the related party transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest in the transaction. No director may participate in the approval of any transaction in which he is a related party, but that director is required to provide the other members of the board of directors with all material information concerning the transaction. Additionally, we require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions. These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.

 

Independence of Directors

 

Nasdaq rules require that a board of directors be comprised of a majority of independent directors. We adhere to the rules of Nasdaq in determining whether a director is independent. Our board of directors also will consult with counsel to ensure that the board’s determinations are consistent with those rules and all relevant securities and other laws and regulations regarding the independence of directors. Nasdaq listing standards define an “independent director” generally as a person, other than an officer of a company, who does not have a relationship with the company that would interfere with the director’s exercise of independent judgment. We have determined that currently we do not have a director who would be considered “independent” in accordance with Nasdaq rules.

 

 

 PART IV

 

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

  

In January 2009, we engaged GBH as our independent registered public accounting firm to audit our financial statements for the fiscal year ended December 31, 2008. GBH also audited our financial statements for the fiscal years ended December 31, 2011, 2010 and 2009.

 

Audit Fees

 

We paid GBH approximately $19,700 and $14,500 in fees for audit and review services during the years ended December 31, 2011 and 2010, respectively.

 

Tax Fees

 

We did not pay our principal accountants any fees during the years ended December 31, 2011 and December 31, 2010 for professional services rendered for tax compliance, tax advice and tax planning.

 

All Other Fees

 

Not Applicable.

 

Audit Committee Approval

 

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

 

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

 

(a)

The following Exhibits are filed as part of this report.

 

  

Exhibit No.		Description
2.1		Merger Agreement and Plan of Reorganization, dated as of December 30, 2011, by and among Ascend Acquisition Corp., Ascend Merger Sub, LLC, Andover Games, LLC and the members of Andover Games, LLC. (1)
3.1		Second Amended and Restated Certificate of Incorporation.  (2)
3.2		By-laws. (3)
4.1		Specimen Unit Certificate. (3)
4.2		Specimen Common Stock Certificate. (3)
4.3		Specimen Warrant Certificate. (3)
4.4		Form of Unit Purchase Option. (4)
4.5		Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant. (3)
4.6		Warrant Clarification Agreement, dated December 31, 2006, between the Registrant and Continental Stock Transfer & Trust Company. (4)
10.1		Form of Registration Rights Agreement among the Registrant and the Initial Stockholders. (3)
10.2		Form of lock-up agreement. (1)
10.3		Form of right of first look agreement. (1)
10.4		Form of bridge note. (1)
10.5		Form of escrow agreement. (1)
10.6		Form of employment agreement for Craig dos Santos. (1)
10.7		Convertible promissory note in the original principal amount of $250,000 executed by the Company in favor of Ironbound Partners Fund, LLC. (1)
21.1		List of Subsidiaries.
31		Certification of Chairman, Chief Executive Officer and President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

(1) Incorporated by reference to the Registrant’s Current Report on Form 8-K dated December 30, 2011 and filed with the SEC on January 4, 2012.

(2)  Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 and filed with the SEC on March 31, 2009.

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

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

 

  

ASCEND ACQUISITION CORP.

(A Development Stage Company)

 INDEX TO FINANCIAL STATEMENTS

 

	Page
Report of independent registered public accounting firm	F-1
Balance Sheets as of December 31, 2011 and 2010	F-2
Statements of Operations for the years ended December 31, 2011 and 2010 and for the period from December 5, 2005 (inception) to December 31, 2011	F-3
Statements of Stockholders’ Equity (Deficit) for the period from December 5, 2005 (inception) to December 31, 2011	F-4
Statements of Cash Flows for the years ended December 31, 2011 and 2010 and for the period from December 5, 2005 (inception) to December 31, 2011	F-5
Notes to the Financial Statements	F-6

  

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders

Ascend Acquisition Corp.

(A Development Stage Company)

Jackson, Wyoming

 

We have audited the accompanying balance sheets of Ascend Acquisition Corp. (A Development Stage Company) (the “Company”) as of December 31, 2011 and 2010, and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended and for the period from inception (December 5, 2005) to December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements for the period from December 5, 2005 (inception) to December 31, 2007 were audited by other auditors and our opinion, insofar as it relates to cumulative amounts included for such prior periods, is based solely on the reports of such other auditors.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects the financial position of Ascend Acquisition Corp. as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended and for the period from inception (December 5, 2005) to December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that Ascend Acquisition Corp. will continue as a going concern. As discussed in Note 1 to the financial statements, Ascend Acquisition Corp. has not generated revenues and has an accumulated deficit, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 1. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

 

/s/ GBH CPAs, PC

 

GBH CPAs, PC

www.gbhcpas.com

Houston, Texas

February 27, 2012

 

 

ASCEND ACQUISITION CORP.

(A Development Stage Company)

BALANCE SHEETS

 

		December 31,				December 31,
		2011				2010
ASSETS
Current assets:
Cash and cash equivalents		$	30,461			$	2,577
Note receivable			50,000				-
Prepaid expenses			-				1,982
Total assets		$	80,461			$	4,559
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses		$	916			$	6,606
Advances from related party			1,626				15,000
Convertible notes payable to related party			-				305,000
Accrued interest on convertible notes payable to related party			-				26,829
Total liabilities			2,542				353,435
Stockholders’ Equity (Deficit):
Preferred stock, $0.0001 par value, 1,000,000 shares authorized; none issued			-				-
Common stock, $0.0001 par value, 300,000,000 shares authorized; 8,731,675 and 856,675 shares issued and outstanding			873				86
Additional paid-in capital			655,398				148,976
Deficit accumulated during the development stage			(578,352	)			(497,938	)
Total stockholders’ equity (deficit)			77,919				(348,876	)
Total liabilities and stockholders’ equity (deficit)		$	80,461			$	4,559

 

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

 

ASCEND ACQUISITION CORP.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

 

										December 5, 2005
		Year Ended				Year Ended				(Inception) to
		December 31,				December 31,				December 31,
		2011				2010				2011
General and administrative expenses		$	80,048			$	62,295			$	2,053,415
Operating loss			(80,048	)			(62,295	)			(2,053,415	)
Other income (expense):
Interest income			14				-				12,703
Interest on trust fund investment			-				-				2,052,557
Interest expense			(380	)			(14,832	)			(175,582	)
Gain on extinguishment of debt			-				-				892,597
Total other income (expense)			(366	)			(14,832	)			2,782,275
Net income (loss)		$	(80,414	)		$	(77,127	)		$	728,860
Weighted average shares of common stock outstanding, basic and diluted			8,064,757				856,675
Loss per common share, basic and diluted		$	(0.01	)		$	(0.09	)

 

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

 

 

ASCEND ACQUISITION CORP.

(A Development Stage Company)

STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

 

														Deficit
														Accumulated
										Additional				during the
		Common Stock								Paid-In				Development
		Shares				Amount				Capital				Stage				Total
Sale of 150,000 shares of common stock to initial stockholders on December 5, 2005 at $0.167 per share			150,000			$	15			$	24,985			$	-			$	25,000
Net loss			-				-				-				(1,131	)			(1,131	)
Balance, December 31, 2005			150,000				15				24,985				(1,131	)			23,869
Sale of 690,007 units, net of underwriters’ discount and offering expenses (includes 137,931 shares subject to possible redemption)			690,007				69				37,203,263				-				37,203,332
Proceeds from issuance of insider units			16,668				2				1,000,000				-				1,000,002
Proceeds subject to possible conversion of 137,931 shares at approximately $55.81 per share			-				-				(7,698,189	)			-				(7,698,189	)
Proceeds from issuance of option			-				-				100				-				100
Net income			-				-				-				382,734				382,734
Balance, December 31, 2006			856,675				86				30,530,159				381,603				30,911,848
Net income			-				-				-				6,434				6,434
Balance, December 31, 2007			856,675				86				30,530,159				388,037				30,918,282
Net income			-				-				-				572,777				572,777
Return of capital to public shareholders			-				-				(30,530,159	)			(1,307,212	)			(31,837,371	)
Beneficial conversion feature of convertible note payable to related party			-				-				146,250				-				146,250
Shares issued by principal shareholder for services			-				-				2,726				-				2,726
Balance, December 31, 2008			856,675				86				148,976				(346,398	)			(197,336	)
Net loss			-				-				-				(74,413	)			(74,413	)
Balance, December 31, 2009			856,675				86				148,976				(420,811	)			(271,749	)
Net loss			-				-				-				(77,127	)			(77,127	)
Balance, December 31, 2010			856,675				86				148,976				(497,938	)			(348,876	)
Shares issued for conversion of debt			7,250,000				725				381,484				-				382,209
Sale of common stock on July 25, 2011 at $0.2 per share			625,000				62				124,938				-				125,000
Net loss			-				-				-				(80,414	)			(80,414	)
Balance, December 31, 2011			8,731,675			$	873			$	655,398			$	(578,352	)		$	77,919

 

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

 

 

ASCEND ACQUISITION CORP.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

 

										December 5,
		Year Ended				Year Ended				2005 (Inception)
		December 31,				December 31,				to December 31,
		2011				2010				2011
Cash flows from operating activities:
Net income (loss)		$	(80,414	)		$	(77,127	)		$	728,860
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Interest income on investments held in trust			-				-				(2,052,557	)
Amortization of debt discount			-				-				146,250
Shares issued for services			-				-				2,726
Forfeiture of accrued interest on convertible debt			380				-				27,209
Change in operating assets and liabilities:
Prepaid expenses			1,982				-				-
Accounts payable and accrued expenses			(5,690	)			2,206				916
Accrued interest due to related party			-				14,832				-
Net cash used in operating activities			(83,742	)			(60,089	)			(1,146,596	)
Cash flows from investing activities:
Investment in note receivable			(50,000	)			-				(50,000	)
Purchase of treasury bills held in trust			-				-				(15,485,695	)
Purchase of municipal securities held in trust			-				-				(30,809,507	)
Sale/maturity of treasury bills held in trust			-				-				15,613,788
Sale of municipal securities held in trust			-				-				31,176,329
Purchase of Pennsylvania municipal securities held in trust			-				-				(39,005,118	)
Redemption of Pennsylvania municipal securities held in trust			-				-				41,203,675
Distribution of trust assets to public shareholders			-				-				(41,128,675	)
Net cash provided used in investing activities			(50,000	)			-				(38,485,203	)
Cash flows from financing activities:
Gross proceeds from initial public offering			-				-				41,400,000
Payment of costs of public offering			-				-				(3,244,468	)
Proceeds from advances and convertible notes payable to stockholder			36,626				55,000				436,626
Repayment of advances and convertible notes payable to stockholder			-				-				(80,000	)
Proceeds from sale of shares of common stock to founding stockholders			-				-				25,000
Proceeds from private placement			125,000				-				125,000
Proceeds from issuance of option			-				-				100
Proceeds from sale of insider units			-				-				1,000,002
Net cash provided by financing activities			161,626				55,000				39,662,260
Net increase (decrease) in cash and cash equivalents			27,884				(5,089	)			30,461
Cash and cash equivalents at beginning of period			2,577				7,666				-
Cash and cash equivalents at end of period		$	30,461			$	2,577			$	30,461
Supplemental Disclosure of cash flow information
Cash paid for interest		$	-			$	-			$	-
Cash paid for income taxes			-				-				-
Non-cash financing activities:
Conversion of related party advances into convertible notes			15,000				-				15,000
Conversion of convertible notes and interest into common shares			382,209				-				382,209

 

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

 

 

ASCEND ACQUISITION CORP.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

 

1. Organization and Business Operations

 

Ascend Acquisition Corporation (“the Company”) was incorporated in Delaware on December 5, 2005 as a blank check company whose objective was to acquire an operating business.

 

The registration statement for the Company’s initial public offering (“the Offering”) was declared effective May 11, 2006. The Company consummated the Offering, including the over-allotment option, on May 17, 2006 and May 22, 2006, respectively, and received total net proceeds of approximately $37,203,000. Substantially all of the net proceeds of the Offering were intended to be applied toward consummating a business combination with an operating business (“Business Combination”). The Company was required to complete a Business Combination by May 17, 2008. On April 28, 2008, the Company announced that it was abandoning its proposed Business Combination with e.PAK Resources (S) Pte. Ltd. (“ePAK”). Accordingly, the Company faced mandatory liquidation.

 

On September 4, 2008, the Company’s shareholders voted to continue the Company’s existence as a public company without any of the blank check company restrictions previously applicable to it. In addition, the shareholders agreed to a 1 for 10 share reverse split of the common stock of the Company, and to increase the authorized shares from 30,000,000 to 300,000,000. The assets of the trust were distributed to the public shareholders on September 18, 2008. The current primary activity of the Company involves seeking an operating business to acquire or merge with. The Company has not selected any target business and does not currently intend to limit potential candidates to any particular field or industry although it may choose to do so at a later time.

 

These financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. Realization value may be substantially different from carrying values as shown and these financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. As of December 31, 2011, the Company has not generated revenues and has an accumulated deficit of $578,352 since inception. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

 

2. Summary of Significant Accounting Policies

 

Use of Estimates

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

 

Concentration of Credit Risk

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

 

Cash and Cash Equivalents

The Company considers deposits that can be redeemed on demand and investments that have original maturities of less than three months, when purchased, to be cash equivalents.

 

 

Fair Value of Financial Instruments

The Company’s financial instruments are cash and cash equivalents, note receivable, accounts payable, and convertible notes payable. The recorded values of cash and cash equivalents, note receivable and accounts payable approximate their fair values based on their short-term nature. The recorded value of the convertible notes payable approximates their fair value, as interest approximates market rates.

 

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

 

A tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits. Since the Company is a development stage company that began operations on December 5, 2005, there have been no audits of filed tax returns as of this time, however, the Company believes its accruals are sufficient and it does not expect the total amounts of any uncertain tax position to significantly increase or decrease within the next year.

 

Earnings per Common Share

Basic earnings per share (“EPS”) are computed by dividing net income applicable to common stock by the weighted average common shares outstanding during the period. Diluted EPS reflects the additional dilution for all potentially dilutive securities such as stock warrants. For periods where losses are reported, adjustments that would decrease net loss or increase the weighted-average number of common shares outstanding due to the effect of common stock equivalents are excluded from the diluted loss per share calculation, because their inclusion would be anti-dilutive. As of December 31, 2011and 2010, there were no dilutive securities.

 

Stock-based compensation

The Company accounts for transactions in which we issue equity instruments to acquire goods or services from non-employees based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

 

Debt

The Company accounts for debt at the face amount of the debt offset by applicable discounts and recognizes interest expense for accrued interest payable under the terms of the debt. Principal and interest payments due within one year are classified as current, whereas principal and interest payments for periods beyond one year are classified as long term. Beneficial conversion features of debt are valued and the related amounts recorded as discounts on the debt.  Discounts are amortized to interest expense using the effective interest method over the term of the debt.  Any unamortized discount upon settlement or conversion of debt is recognized immediately as interest expense.

 

Subsequent Events

The Company has evaluated subsequent events through the date that such financial statements were issued.

 

Recently Issued Accounting Pronouncements

 

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on their results of operations, financial position or cash flow.

 

 

3. Note Receivable

 

On December 30, 2011, the Company entered into a Merger Agreement and Plan of Reorganization (the “Merger Agreement”) by and among the Company, Ascend Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Merger Sub”), Andover Games, LLC, a Delaware limited liability company (“Andover Games”), and the members of Andover Games (“Signing Members”). Upon the consummation of the transactions contemplated by the Merger Agreement, Merger Sub will be merged with and into Andover Games, with Andover Games surviving the merger and becoming a wholly-owned subsidiary of the Company. Signing Members will receive a number of shares of the Company’s common stock equal to 75% of the Company’s outstanding shares immediately after the merger. Andover Games is a company formed to create and distribute game applications on current smartphone and other mobile platforms, namely iOS and Android, as well as future competing smartphone platforms. According to the Merger Agreement, prior to the closing, the Company shall use its commercial best efforts to raise at least $4 million of equity capital through the sale of the Company’s common stock, warrants, or preferred stock. The merger is expected to be consummated in February 2012 after the fulfillment of certain closing conditions.

 

Pursuant to the Merger Agreement, Ascend provided a $50,000 bridge loan to Andover Games in December 2011, and an additional $200,000 bridge loan to Andover Games in January 2012 (collectively, the “Bridge Loans”). The Bridge Loans are evidenced by promissory notes bearing interest at the prime annual rate plus 5%. The promissory notes are due on the earlier of the closing of the merger or six months from the date of the note. The notes are convertible, at the Company’s sole discretion, into securities of Andover Games if the merger is not consummated under certain situations as provided for in such notes.

 

To fund the merger, in January 2012, the Company received a loan from Ironbound Partners Fund, LLC (“Ironbound”), an affiliate of Jonathan Ledecky, the Company’s chief executive officer and sole director, in an aggregate principal amount of $250,000. The note is due and payable in full upon closing of the merger or, if not consummated, on demand and bears interest at the rate of 5% per annum. If the transactions contemplated by the Merger Agreement are not consummated, at any time prior to the payment in full of the entire balance of the note, Ironbound has the option of converting all or any portion of the unpaid balance of the note into shares of the Company’s common stock at a conversion price equal to $0.05 per share, subject to adjustment upon certain events. The conversion price was based on the market price of the Company’s common stock on the closing at December 30, 2011.

 

4. Convertible Notes Payable to Related Party

 

In November 2008, the Company issued a convertible promissory note (the “First Note”) to Don K. Rice, the Company’s former officer and director, with a principal amount of $195,000. The principal balance of the First Note included the principal balance of an earlier promissory note executed on June 16, 2008, plus accrued interest and additional advances made by Mr. Rice thereafter. The First Note was due and payable in full on demand, and bore interest at the rate of 5% per annum. At any time prior to the payment in full of the entire balance of the First Note, Mr. Rice had the option of converting all or any portion of the unpaid balance of the First Note into shares of the Company’s common stock at a conversion price equal to $0.04 per share, subject to adjustment upon certain events. The conversion price was based on the then recent market prices and near non-liquidity of the Company’s common stock, the number of shares that would be issued and the effect that the sale of such shares would have on the market for the Company’s common stock, and the legal constraints on the sale of such shares. The Company evaluated the terms of the First Note and concluded that the First Note did not result in a derivative; however, the Company concluded that there was a beneficial conversion feature since the First Note was convertible into shares of the Company’s common stock at a discount to the market value of the common stock. The discount related to the beneficial conversion feature was valued at $146,250 at inception based on the intrinsic value of the discount. The discount was fully amortized at December 31, 2008 due to the short-term nature of the First Note. For the year ended December 31, 2008, $146,250 was charged to interest expense associated with the amortization of the debt discount resulting in an effective interest rate of approximately 77%.

 

In August 2009, the Company executed a convertible promissory note (the “Second Note”) to Mr. Rice, with a principal amount of $50,000. The principal balance of the Second Note included additional advances made by Mr. Rice during 2009. The Second Note was due and payable in full on demand, and bore interest at the rate of 5% per annum. At any time prior to the payment in full of the entire balance of the Second Note, Mr. Rice had the option of converting all or any portion of the unpaid balance of the Second Note into shares of the Company’s common stock at a conversion price equal to $0.05 per share, subject to adjustment upon certain events. The conversion price was based on the then market price of the Company’s common stock. The Company evaluated the terms of the Second Note and concluded that the Second Note did not result in a derivative and that there was not a beneficial conversion feature.

 

 

In March 2010, the Company issued a convertible promissory note (the “Third Note”) to Mr. Rice, with a principal amount of $30,000. The principal balance of the Third Note included additional advances made by Mr. Rice during the fourth quarter of 2009 through February 2010. The Third Note was due and payable in full on demand and bore interest at the rate of 5% per annum. At any time prior to the payment in full of the entire balance of the Third Note, Mr. Rice had the option of converting all or any portion of the unpaid balance of the Third Note into shares of the Company’s common stock at a conversion price equal to $0.06 per share, subject to adjustment upon certain events. The conversion price was based on the then market price of the Company’s common stock. The Company evaluated the terms of the Third Note and concluded that the Third Note did not result in a derivative and that there was not a beneficial conversion feature.

 

In August 2010, the Company issued a convertible promissory note (the “Fourth Note”) to Mr. Rice, with a principal amount of $30,000. The principal balance of the Fourth Note included additional advances made by Mr. Rice from May 2010 through July 2010. The Fourth Note was due and payable in full on demand and bore interest at the rate of 5% per annum. At any time prior to the payment in full of the entire balance of the Fourth Note, Mr. Rice had the option of converting all or any portion of the unpaid balance of the Fourth Note into shares of the Company’s common stock at a conversion price equal to $0.05 per share, subject to adjustment upon certain events. The conversion price was based on the market price of the Company’s common stock at or about the time of the issuance of the Fourth Note. The Company evaluated the terms of the Fourth Note and concluded that the Fourth Note did not result in a derivative and that there was not a beneficial conversion feature.

 

In January 2011, the Company issued a convertible promissory note (the “Fifth Note” and together with the First Note, Second Note, Third Note and Fourth Note, the “Notes”) to Mr. Rice, with a principal amount of $15,000. The principal balance of the Fifth Note included additional advances made by Mr. Rice during August and November 2010. The Fifth Note was due and payable in full on demand and bore interest at the rate of 5% per annum. At any time prior to the payment in full of the entire balance of the Fifth Note, Mr. Rice had the option of converting all or any portion of the unpaid balance of the Fifth Note into shares of the Company’s common stock at a conversion price equal to $0.15 per share, subject to adjustment upon certain events. The conversion price was based on the market price of the Company’s common stock at or about the time of the issuance of the Fifth Note. The Company evaluated the terms of the Fifth Note and concluded that the Fifth Note did not result in a derivative and that there was not a beneficial conversion feature.

 

On January 12, 2011, Mr. Rice converted the entire principal balances of the Notes into an aggregate of 7,075,000 shares of Common Stock of the Company. The Notes had an aggregate outstanding principal balance of $320,000, for an average per-share conversion price of $0.045. Additionally, the accrued interest on the Notes totaling $26,829 was forfeited and credited to additional paid-in capital as part of the proceeds from securities issued.

 

In March 2011, the Company executed a convertible promissory note (the “March 2011 Note”) in favor of Jonathan J. Ledecky, with a principal amount of $25,000. The March 2011 Note was due and payable in full on demand and bore an interest rate of 5% per annum. At any time prior to the payment in full of the entire balance of the note, Mr. Ledecky had the option of converting all or any portion of the unpaid balance of the note into shares of the Company’s common stock at a conversion price equal to $0.19 per share, subject to adjustment upon certain events. The conversion price was based on the market price of the Company’s common stock at the time of the issuance of the March 2011 Note.

 

On June 30, 2011, Mr. Ledecky advanced the Company an additional $10,000 to cover its working capital requirements. On July 19, 2011, the Company executed a convertible promissory note (the “July 2011 Note”) in favor of Mr. Ledecky to evidence this advance. The July 2011 Note was due and payable in full on demand and bore an interest rate of 5% per annum. At any time prior to the payment in full of the entire balance of the note, Mr. Ledecky had the option of converting all or any portion of the unpaid balance of the note into shares of the Company’s Common Stock at a conversion price equal to $0.20 per share, subject to adjustment upon certain events. The conversion price was at a premium to the market price of the Company’s common stock at the time of the issuance of the July 2011 Note.

 

On July 27, 2011, Mr. Ledecky converted the $25,000 principal amount of the March 2011 Note and the $10,000 principal amount of the June 2011 Note into an aggregate of 175,000 shares of common stock of the Company, or $0.20 per share. Although the March 30, 2011 note had a conversion price of $0.19, Mr. Ledecky voluntarily converted such note into common stock at $0.20 per share. Additionally, the accrued interest on the notes totaling $380 was forfeited and credited to additional paid-in capital as part of the cost of securities issued.

 

 

5. Income Taxes

 

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

 

		For the year ended December 31,
		2011				2010
Statutory federal income tax rate			34.0	%			34.0	%
Change in valuation allowance			(34.0	)%			(34.0	)%
Effective income tax rate			-				-

  

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

 

		December 31,
		2011				2010
Net operating losses		$	353,446			$	326,106
Valuation allowance			(353,446	)			(326,106	)
		$	-			$	-

 

At December 31, 2011, we had federal income tax net operating loss (NOL) carryforwards of approximately $1,039,548. The NOL carryforwards expire from 2027 through 2032. The value of these carryforwards depends on the Company’s ability to generate taxable income. The change in ownership in prior years and any future changes in ownership, as defined by federal income tax regulations, could significantly limit our ability to utilize our net operating loss carryforwards. Additionally, because federal tax laws limit the time during which the net operating loss carryforwards may be applied against future taxes, if we fail to generate taxable income prior to the expiration dates we may not be able to fully utilize the net operating loss carryforwards to reduce future income taxes. We have had cumulative losses and there is no assurance of future taxable income, therefore, valuation allowances have been recorded to fully offset the deferred tax asset at December 31, 2011 and 2010. The valuation allowance increased by $28,145 in 2011 as a result of the deductible loss for 2011.

 

6. Stockholders’ Equity (Deficit)

 

The Offering

 

On May 17, 2006, the Company sold 6,000,000 units (“Units”) in the Offering and on May 22, 2006, the Company sold an additional 900,000 Units related to the underwriter’s over-allotment option. Each Unit consisted of one-tenth share (as adjusted) of the Company’s common stock, $0.0001 par value, and two Redeemable Common Stock Purchase Warrants (“Warrants”). As adjusted, ten Warrants entitled the holder to purchase from the Company one share of common stock at an exercise price of $50.00. The Warrants expired on May 10, 2010.

 

The Company agreed to pay the underwriter in the Offering (“Underwriter”), an underwriting discount of 8% of the gross proceeds of the Offering and a non-accountable expense allowance of 1% of the gross proceeds of the Offering. However, the Underwriter agreed that 2.3% of the underwriting discount ($952,200) would not be payable unless and until the Company completed a business combination and waived its right to receive such payment if the Company was unable to complete a business combination. Since the acquisition of ePAK was abandoned in April 2008, the $952,200 deferred payment due to the underwriter was no longer payable and was reclassified to additional paid in capital during the year ended December 31, 2008.

 

In connection with the Offering, the Company also issued an option (“Option”), for $100, to the Underwriter to purchase 300,000 Units at an exercise price of $7.50 per Unit, expiring May 10, 2011. The Units issuable upon exercise of the Option are identical to the Units sold in the Offering. The Company has accounted for the fair value of the Option, inclusive of the receipt of the $100 cash payment, as an expense of the Offering that resulted in a charge directly to stockholders’ equity. The Company estimated that, as of the date of issuance, the fair value of the Option was approximately $711,000 ($2.37 per Unit) using a Black-Scholes option-pricing model. The fair value of the Option granted to the Underwriter was estimated using the following assumptions: (1) expected volatility of 46.56%, (2) risk-free interest rate of 4.31% and (3) expected life of 5 years. The Option may be exercised for cash or on a "cashless" basis, at the holder's option, such that the holder may use the appreciated value of the Option (the difference between the exercise prices of the Option and the underlying Warrants and the market price of the Units and underlying securities) to exercise the option without the payment of any cash.

 

 

Common Stock

 

On September 19, 2008, the Company’s Certificate of Incorporation was further amended to increase the authorized shares of common stock from 30,000,000 to 300,000,000. In addition, the common shares were adjusted for a reverse split of 1 common share for each 10 common shares previously held. All references in the accompanying financial statements to the number of shares of stock have been retroactively restated to reflect these transactions.

 

A summary of stock warrant transactions follows:

 

						Weighted
						Average
		Warrants				Price
Outstanding as of December 31, 2009			14,733,348			$	48.27
Granted			-				-
Cancelled or expired			(14,133,348	)			50.00
Exercised			-				-
Outstanding as of December 31, 2010			600,000				7.50
Granted			-
Cancelled or expired			(600,000	)			7.50
Exercised			-				-
Outstanding as of December 31, 2011			-			$	-

 

On July 27, 2011, the Company sold an aggregate of 625,000 shares of common stock to three accredited investors on a private placement basis, for an aggregate purchase price of $125,000, or $0.20 per share.

 

7. Related Party Transactions

 

In March 2010, the Company executed a convertible promissory note (the “Third Note”) to Don K. Rice, the Company’s former chief executive officer, with a principal amount of $30,000. In August 2010, the Company executed another convertible promissory note (the “Fourth Note”) to Mr. Rice, with a principal amount of $30,000. In January 2011, the Company executed another convertible promissory note (the “Fifth Note”) to Mr. Rice, with a principal amount of $15,000. Third Note, Fourth Note and Fifth Note together with the First and Second Note were converted into 7,075,000 shares of the Company’s common stock in January 2011. See Note 4.

 

In March and July 2011, the Company executed two convertible promissory notes to Jonathan Ledecky, our chief executive officer and sole director with an aggregated principal amount of $35,000. On July 27, 2011, Mr. Ledecky converted both of his notes into 175,000 shares of Common Stock of the Company.

 

As of December 31, 2011 and 2010, Mr. Rice had outstanding advances to the Company totaling $0 and $15,000 for working capital. As of December 31, 2011 and 2010, Mr. Ledecky had outstanding advances to the Company totaling $1,626 and $0 for working capital. These advances are non-interest bearing, unsecured and due on demand.

 

8. Subsequent Events

 

On December 30, 2011, the Company entered into the Merger Agreement. Pursuant to the Merger Agreement, in January 2012, the Company received a loan from Ironbound in an aggregate principal amount of $250,000, and provided a $200,000 bridge loan to Andover Games (see Note 3).

 

 

SIGNATURES

 

Pursuant to the requirements of the Section 13 or 15 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 28^th day of February 2012. 

 

	ASCEND ACQUISITION CORP.
	By:	/s/ Jonathan J. Ledecky
		Jonathan J. Ledecky
		Chief Executive Officer and Director (Principal Executive Officer and Principal Financial and Accounting Officer)

 

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Name		Title		Date
/s/ Jonathan J. Ledecky		Chief Executive Officer and Director (Principal		February 28, 2012
Jonathan J. Ledecky		Executive Officer and Principal Financial and Accounting Officer)