UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2006

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

Commission file number: 000-51456

AD.VENTURE PARTNERS, INC.

(Exact name of registrant as specified in its charter)

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

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

(212) 703-7241

Registrant’s telephone number, including area code

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 during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

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

As of August 21, 2006, 11,249,997 shares of the registrant’s common stock, par value $0.001 per share, were outstanding.

AD.VENTURE PARTNERS, INC.

Table of Contents

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements	3
Balance Sheets	3
Statements of Operations	4
Statement of Cash Flows	5
Notes to Consolidated Financial Statements	6-10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3. Quantitative and Qualitative Disclosures about Market Risk	12
Item 4. Controls and Procedures	13

PART II - OTHER INFORMATION

Item 1. Legal Proceedings	14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3. Defaults Upon Senior Securities	14
Item 4. Submission of Matters to a Vote of Security Holders	14
Item 5. Other Information	14
Item 6. Exhibits	14
SIGNATURES	15

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

AD.VENTURE PARTNERS, INC.

(a corporation in the development stage)

BALANCE SHEETS

(UNAUDITED)

	June 30, 2006		March 31, 2006
ASSETS			(Restated)
Current Assets:
Cash and cash equivalents	$	352,189	$	579,029
Prepaid expenses		52,873		72,488
Total current assets	$	405,062	$	651,517

Investments held in Trust Account		51,496,984		51,108,343
Fixed assets, net of accumulated depreciation		3,808		4,062

Total assets	$	51,905,854	$	51,763,922

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accrued expenses	$	57,268	$	90,310
Taxes payable		64,000		116,000
Derivative liabilities		7,221,032		11,878,143
Total current liabilities	$	7,342,300	$	12,084,453

Common stock, and changes in Trust Account value attributable to shares subject to possible redemption, 1,799,100 shares at $5.60 per share		10,298,245		10,193,318

STOCKHOLDERS’ EQUITY
Preferred stock — $.0001 par value, 1,000,000 shares authorized; 0 shares issued and outstanding		—		—
Common stock — $.0001 par value, 50,000,000 shares authorized; 11,249,997 shares issued and outstanding (which includes 1,799,100 shares subject to possible redemption)		1,125		1,125
Additional paid-in capital		33,947,234		33,947,234
Retained earnings, net income		316,950		(4,462,208	)
Total stockholders’ equity		34,265,309		29,486,151
Total liabilities and stockholders’ equity	$	51,905,854	$	51,763,922

AD.VENTURE PARTNERS, INC.

(a corporation in the development stage)

STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended June 30, 2006			April 7, 2005 (Date of Inception) Through June 30, 2005			April 7, 2005 (Date of Inception) Through June 30, 2006 (Restated)

Operating costs	$	(101,567	)	$	(1,119	)	$	(317,660	)
Loss from operations		(101,567	)		(1,119	)		(317,660	)
Gain (loss) from derivative liabilities		4,657,111			—			(94,748	)
Other income—interest		392,541			310			1,132,643
Income before provision for income taxes		4,948,085			(809	)		720,235
Provision for income taxes		(64,000	)		—			(180,000	)
Net income	$	4,884,085		$	(809	)	$	540,235
Weighted average number of shares outstanding—basic		11,249,997			—			—
Net income per share—basic	$	0.43			—			—
Weighted average number of shares outstanding—diluted		12,945,649			—			—
Net income per share—diluted	$	0.03			—			—
					—
Pro Forma Adjustment:					—
Interest income attributable to common stock subject to possible redemption (net of taxes of $0)	$	(104,927	)		—		$	(223,285	)
Pro forma net income attributable to common stockholders not subject to possible redemption	$	4,779,158			—		$	316,950
Pro forma weighted average number of shares outstanding, excluding shares subject to possible redemption—basic		9,450,897			—			—
Pro forma net income per share, excluding shares subject to possible redemption—basic	$	0.51			—			—
Pro forma weighted average number of shares outstanding, excluding shares subject to possible redemption—diluted		11,146,549			—			—
Pro forma net income per share, excluding shares subject to possible redemption—diluted	$	0.03			—			—

AD.VENTURE PARTNERS, INC.

(a corporation in the development stage)

STATEMENT OF CASH FLOWS

(UNAUDITED)

	Three Months Ended June 30, 2006			April 7, 2005 (Date of Inception) Through June 30, 2005			April 7, 2005 (Date of Inception) Inception Through June 30, 2006 (Restated)
Cash flows from operating activities:
Net income	$	4,884,085		$	(809	)	$	540,235
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		254			—			1,269
Derivative liabilities		(4,657,111	)		—			94,748
Changes in operating assets and liabilities					—
Prepaid expenses		19,615			70,000			(52,873	)
Accrued expenses		(33,042	)					57,268
Accrued interest payable					(70,000	)
Taxes payable		(52,000	)					64,000
Notes payable to stockholder					87,018
Net cash provided by operating activities		161,801			86,209			704,647
Cash flows from investing activities:
Investments held in Trust Account		(388,641	)		—			(51,496,984	)
Purchase of property and equipment					—			(5,077	)
Net cash used in investing activities		(388,641	)		—			(51,502,061	)
Cash flows from financing activities:
Issuance of stock		—			—			51,148,503
Proceeds from notes payable to stockholder		—			—			150,000
Repayment of note payable to stockholder		—			—			(150,000	)
Proceeds from sale of common stock to founders		—			(9,375	)		1,000
Proceeds from issuance of representative’s option		—			—			100
Net cash provided by financing activities		—			(9,375	)		51,149,603
Net increase in cash and cash equivalents		(226,840	)		76,834			352,189
Cash and cash equivalents—beginning of period		579,029			—			—
Cash and cash equivalents—end of period	$	352,189		$	76,834		$	352,189

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note A—Organization And Business Operations

Ad.Venture Partners, Inc. (the "Company") was incorporated in Delaware on April 7, 2005. The Company was formed to serve as a vehicle for the acquisition through a merger, capital stock exchange, asset acquisition or other similar business combination (the “Business Combination”) of one or more operating business in the technology, media or telecommunications industries. The Company has not generated revenue. The Company is considered to be in the development stage and is subject to the risks associated with activities of development stage companies. The Company has selected March 31 as its fiscal year end.

The financial information in this report has not been audited, but in the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary to present fairly such information have been included. Operating results for the interim period are not necessarily indicative of the results to be expected for the full year.

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

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

Note B—Summary Of Significant Accounting Policies

[1]

Cash and cash equivalents:

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

[2]

Investments held in Trust Account:

At June 30, 2006, the investments held in the Trust Account consist of tax-exempt municipal money market funds, and are treated as trading securities and recorded at their market value. The excess of market over cost is included in interest income in the accompanying statement of operations.

[3]

Accounting for Warrants and Derivative Instruments

Emerging Issues Task Force issued EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock,” (“EITF 00-19”) requires freestanding contracts that are settled in a company's own stock, including common stock warrants, to be designated as an equity instrument, asset or a liability. In accordance with EITF 00-19, the Company determined that the warrants issued in connection with the Offering should be classified as a derivative liability due to the absence in the warrant agreement of provisions addressing the exercise of the warrants in the absence of an effective registration statement. Under interpretations of applicable federal securities laws, the issuance of shares upon exercise of the warrants in the absence of an effective registration statement could be deemed a violation of Section 5 of the Securities Act of 1933, as amended. To address this issue, the warrant agreement requires that the Company file, and use best efforts to cause to be declared and keep effective, a registration statement covering the issuance of the shares underlying the warrants. However, the warrant agreement fails to specify the remedies, if any, that would be available to warrantholders in the event there is no effective registration statement covering the issuance of shares underlying the warrants. Under EITF 00-19, the registration of the common stock underlying the warrants is not within the Company's control. In addition, under EITF 00-19, in the absence of explicit provisions to the contrary in the warrant agreement, the Company must assume that it could be required to settle the warrants on a net-cash basis, thereby necessitating the treatment of the potential settlement obligation as a liability.

Under the provisions of EITF 00-19, a contract designated as an asset or a liability must be carried at fair value on a company’s balance sheet, with any changes in fair value recorded in the company’s results of operations. The fair value of these warrants is shown on the Company’s balance sheet and the unrealized changes in the values of these derivatives are shown in the Company’s consolidated statement of operations as “Gain (loss) from derivative liabilities.” The price for the warrants is quoted on the Over the Counter Bulletin Board, consequently, the fair value of these warrants is estimated as the market price of a warrant at the end of each period. To the extent that the market price increases or decreases, the Company’s derivative liability will also increase or decrease, impacting the Company’s consolidated statement of operations.

As described in Note C below, in connection with the Offering, the Company sold to the underwriters an option to purchase 450,000 units, each of which consists of one share of common stock and two warrants that are identical to the Company’s public warrants except for the exercise price. The Company has determined that this option is a derivative that also contains an embedded derivative, the 900,000 warrants included in the units issuable upon exercise of the option. The Company considers this option to be an equity instrument, as the underlying units do not need to be registered prior to delivery. However, the shares issued upon exercise of the warrants included in the underlying units do require registration.

Statement of Financial Accounting Standard (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, requires all derivatives to be recorded on the balance sheet at fair value. Furthermore, paragraph 11(a) of SFAS No. 133 precludes contracts issued or held by a reporting entity that are both (1) indexed to its own stock and (2) classified as stockholders’ equity in its statement of financial position from being treated as derivative instruments. Hence, the option to purchase 450,000 units and the warrants to purchase an additional 900,000 shares, the latter being the embedded derivative, are separately valued and accounted for on the Company’s balance sheet. As such, the option to purchase 450,000 units is considered an equity instrument, as the underlying shares do not need to be registered, and all other criteria in EITF 00-19 required for the instrument to be accounted for as an equity instrument have been fulfilled. While the warrants are indexed to the Company’s common stock, the fact that the shares underlying the warrants require future registration in accordance with the warrant agreement requires the Company to classify these instruments as a liability in accordance with EITF 00-19, paragraph 14.

The Company performed a valuation of the option to purchase 450,000 units, and then allocated its fair value to its two components, the underlying 450,000 units and the embedded warrant to purchase an additional 900,000 shares. The fair value of the unit purchase option at August 31, 2005 was calculated, using the Black Scholes pricing model, at $1,873,367, or $4.16 per unit, using an expected, life of five years, volatility of 92.5% and a risk free interest rate of 3.87%. Because the Company has not consummated the Business Combination, management derived the volatility estimate based on the average five-year historical stock prices for a representative sample of 20 technology, media and telecommunications companies with market capitalizations below $500 million, which management believes is a reasonable benchmark to use in estimating the expected volatility of the units after the consummation of a Business Combination. Although an expected life of five years was used in this calculation, if the Company does not consummate a Business Combination within the prescribed time period and the Company liquidates, the option will become worthless.

As of June 30, 2006, the Company allocated $1,422,784 to the purchase option of 450,000 shares and $201,032 to the embedded warrants.

The Company has determined the fair values of the option and the embedded warrants subsequent to the initial valuation thereof using the Black Scholes pricing model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates, market prices and volatilities. Selection of these inputs involves management’s judgment and may impact net income. The Company continues to base its volatility assumption on the five-year average historical stock prices of the same representative sample of 20 technology, media and telecommunications companies as used in its initial valuation. The volatility factor used in Black Scholes has a significant effect on the resulting valuation of the derivative liabilities on the Company’s balance sheet. As of June 30, 2006, the volatility for the calculation of the embedded derivatives was approximated at 76.5%, and this volatility rate will likely change in the future.

[4]

Earnings per common share:

Earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net income per share is computed using the weighted average number of shares outstanding adjusted per the incremental shares attributed to outstanding options to purchase common stock.

[5]

Use of estimates:

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

[6]

Income taxes:

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

The Company recorded a deferred income tax asset for the tax effect of start-up costs and temporary differences, aggregating approximately $135,000. In recognition of the uncertainty regarding the ultimate amount of income tax benefits to be derived, the Company has recorded a full valuation allowance at June 30, 2006.

The effective tax rate differs from the statutory rate of 34% due to the increase in the valuation allowance.

Note C—Public Offering

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

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

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

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

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

Note D—Notes Payable to Stockholder

The Company issued an aggregate of $150,000 in promissory notes to Messrs. Balter and Slasky in April 2005. The notes bear interest at a rate of 4% per year. The notes were paid upon consummation of the Offering from the net proceeds of the Offering.

Note E—Related Party Transaction

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

Note F—Common Stock Reserved for Issuance

At June 30, 2006, 18,900,000 shares of stock were reserved for issuance upon exercise of redeemable warrants.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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

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

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

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

RESULTS OF OPERATIONS

Net Income

For the three months ended June 30, 2006, we had net income of approximately $4,884,085, consisting primarily of interest income of $392,541 related to the cash held in our trust account and gain on derivative liabilities of $4,657,111.

For the period from April 7, 2005 (inception) through June 30, 2006, we had net income of approximately $540,235, primarily as a result of interest income of $1,132,643 related to the cash held in our trust account and loss on derivative liabilities of $94,748.

LIQUIDITY AND CAPITAL RESOURCES

On August 31, 2005, we consummated our initial public offering of 9,000,000 units. Each unit consists of one share of common stock and two warrants. Each warrant entitles the holder to purchase from us one share of our common stock at an exercise price of $5.00. Our common stock and warrants started trading separately as of October 10, 2005. The net proceeds from the sale of our units, after deducting certain offering expenses of approximately $650,000, and an underwriting discount of approximately $2,160,000, were approximately $51,190,000. Of this amount, $50,380,000 was placed into a trust account and the remaining proceeds are available to be used by us to provide for business, legal and accounting due diligence on prospective acquisitions and to pay for continuing general and administrative expenses. As of June 30, 2006, we had approximately $51,496,984 of proceeds available for such uses. In addition, at June 30, 2006, we had $352,189 in cash available to fund the expenses of consummating a merger. We expect we may need to either defer expenses until the consummation of a business combination or obtain additional funds to fund such expenses.

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

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

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

As of June 30, 2006, the proceeds in the trust account were invested in money market funds composed of either primarily short-term securities issued or guaranteed by the U.S. government or tax-exempt municipal bonds.

Off-Balance Sheet Arrangements

Other than contractual obligations incurred in the normal course of business, we do not have any off-balance sheet financing arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets or any obligation arising out of a material variable interest in an unconsolidated entity. We do not have any majority-owned subsidiaries.

Contractual Obligations

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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

Item 4. Controls and Procedures.

Our management carried out an evaluation, with the participation of our chief executive officer (principal executive officer) and our president (principal financial and accounting officer), of the effectiveness of our disclosure controls and procedures as of June 30, 2006. Based upon that evaluation, our chief executive officer and president concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in 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 the rules and forms of the Securities and Exchange Commission.

There has not been any change in our internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act that occurred during the quarter ended June 30, 2006, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings incidental to the normal course of our business. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

We did not engage in any unregistered sales of equity securities during the three months ended June 30, 2006.

Item 3. Defaults Upon Senior Securities.

Not applicable.

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

Not applicable.

Item 5. Other information.

Not applicable.

Item 6. Exhibits.

31.1	Section 302 Certification of Chief Executive Officer
31.2	Section 302 Certification of Chief Financial Officer
32.1	Section 906 Certification

SIGNATURES

Pursuant to the requirements of Section 13 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.


	AD.VENTURE PARTNERS, INC.

Date: August 21, 2006	By:	/s/ Howard S. Balter
		Howard S. Balter Chairman and Chief Executive Officer (Principal Executive Officer)



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