~~-10-~~

~~Table of Contents~~

In December 2003, subsequent to the closing of this transaction, our capital contribution of $145,000 was distributed back to us. The Company received a distribution of approximately $680,000 on December 30, 2005 from Fairways NJ, which represented the Company’s share in the profit from the sale of a single tenant commercial real estate property interest, the sole asset held by Fairways NJ. In addition to the distribution, cash of $162,000, representing the Company’s share of the total escrow, iswas being held in escrow to fund any amounts owed by Fairways NJ to the purchaser, including any amounts owed for ~~standard~~the representations &and warranties made under the sale agreement. The balance of the escrow account ~~if any, is expected to be~~was released in December 2006. Since the date of the property interest acquisition, the Company has received cumulative cash distributions of approximately ~~$1,280,000~~$1,448,000 on its initial investment of $145,000 in Fairways NJ.

Fairways 36864, LP

In April 2004, we invested approximately $97,000 through ASE Investments for a 24.75% interest in Fairways 36864, LP, (whose other partners also included the Fairways Members) that participated in the development of and leaseback of single tenant commercial properties. In August and October 2004 these properties were sold and we recognized investment income of $84,000 in addition to the return of our original investment of $97,000.

Fairways Frisco, LP

On December 31, 2004, Fairways Frisco, L.P. ~~(Fairways Frisco)~~(“Fairways Frisco”) acquired certain indirect interests in various partnerships (the “Frisco Square Partnerships”) that own properties (the “Properties”) in the Frisco Square mixed-use real estate development in Frisco, ~~Texas, pursuant to a Master Agreement Regarding Frisco Square Partnerships (“Master Agreement”).~~Texas. Frisco Square is planned to include approximately 4 million developed square feet, including retail, offices, hotel, multi-family residences and municipal space.

~~The parties to~~Under the ~~Master Agreement were~~terms of the amended Frisco Square Partnerships agreements, Fairways ~~Group,~~Equities is the sole general partner of the Frisco Square Partnerships ~~Cole~~ and ~~Mary Pat McDowell,~~controls all operating activities, financing activities and development activities for the remainder of the Five Star Group which is Five Star Development Co., Inc., a Texas corporation, CMP Management, LLC, a Texas limited liability company, and CMP Family Limited Partnership, a Texas limited partnership. "Frisco Square Partnerships" is a group of entities comprised of Frisco Square Ltd. ("FSLTD"), Frisco Square B1-6 F1-11, Ltd., a Texas limited partnership, Frisco Square B1-7 F1-10, Ltd., a Texas limited partnership, and Frisco Square Properties, Ltd., a Texas limited partnership. "Fairways Group" is a group of entities comprised of Fairways Frisco, Fairways B1-6 F1-11, LLC, a Texas limited liability company, Fairways B1-7 F1-10, LLC, a Texas limited liability company, and Fairways FS Properties, LLC, a Texas limited liability company.Partnerships.

As further described herein, the Company holds a limited partnership interest in Fairways Frisco. The Company is not involved in the development or management of Frisco ~~Square,~~Square; rather it is solely a limited partner. The Company has invested $1,219,000 of cash into Fairways Frisco ~~and holds a 14% limited partnership interest~~ as of December 31, 2005. The Company was the initial contributing limited partner to Fairways Frisco and thus initially owned more than its current 14% limited partnership interest. However, as additional limited partners have made contributions, the Company’s interest has declined.2006. The Company has made no additional capital contributions subsequent to December 31, 2005. ~~However,~~ Fairways Frisco made two capital calls in 2006, which were not funded by the Company and thus diluted the Company’s limited partnership interest from 14% at December 31, 2005 to approximately 8.87% as of December 31, 2006. As of April 7, 2007, the general partner of the Frisco Square Partnerships indicated that they would be making a capital call of the limited partners in the amount of $4 million, the exact terms of which are currently being negotiated. The Company will not participate in this capital call. If this capital call is fully funded, the Company‘s limited partnership interest will be reduced.

-12-

Table of Contents

Fairways Frisco is expected to request additional capital contributions from the limited partners. At present, the Company does not intend to fund any additional capital requested from Fairways Frisco. The Company expects its limited partnership interest will be reduced further as additional limited partner contributions are received and the Company does not fund its limited partnership share of such capital contributions into Fairways Frisco. As of December 31, 2006, Fairways Frisco ~~made~~owned, either directly or indirectly, 60% of the Frisco Square Partnerships and the remaining 40% is owned by CMP Family Limited Partnership (“CMP”), which is controlled by Cole McDowell. Under the terms of the amended Frisco Square Partnerships, Fairways Frisco also has a ~~capital call for $1.9~~first priority distribution preference of $5.5 million, ~~in February 2006, which was not funded by the Company~~ and ~~thus~~it will ~~dilute the Company’s limited~~receive its pro-rata partnership interest ~~to approximately 11%.~~

~~-11-~~

~~Table~~ of ~~Contents~~the next $9.5 million of distributions from the Frisco Square Partnerships.

The table below summarizes the Frisco Square property partnerships as of December 31, ~~2005~~2006 and their respective appraised values and bank debt outstanding (the appraisals were performed by an independent third-party appraiser):

		(In millions)				(In millions)
Frisco Square Partnerships	Property	Appraised Value	Bank Debt	Net Appraised Value	Property		Appraised Value		Bank Debt		Net Appraised Value

Frisco Square B1-6 F1-11, Ltd.	155,000 sf apartments/retail	$ 20.4	$ 17.5	$ 2.9	155,000 sf apartments/retail		$	22.0	$	17.3	$4.7
Frisco Square B1-7 F1-10, Ltd.	61,400 sf office/retail	15.6	8.9	6.7	61,400 sf office/retail			15.1		8.9	6.3
Frisco Square Properties, Ltd.	2.1 acres/undeveloped lots	3.2	2.7	0.5	2.1 acres/undeveloped lots			3.3		2.0	1.3
Frisco Square Land, Ltd.	48.7 acres/undeveloped land	49.7	22.0	27.7	48.7 acres/undeveloped land			49.9		26.6	23.2

Total		$ 88.9	$ 51.1	$ 37.8			$	90.3	$	54.8	$35.5

Fairways Frisco’s share of the ~~Net Appraised Value~~net appraised value in the table above would be approximately ~~$29.4~~$30.9 million based upon the distribution terms and preferences in the Frisco Square Partnerships partnership agreements. The Company’s share of this amount would be approximately ~~$4.0~~$2.5 million based on its ownership of ~~14%~~8.87% of the limited partnership interests at December 31, ~~2005, which would be reduced to approximately $3.3 million as a result of the February 2006 capital call which was not funded by the Company.~~ 2006. The ~~Net Appraised Value~~net appraised value in the table above is based on an appraisal performed by an independent third party which is provided annually to its partners by the Frisco Square Partnerships pursuant to their partnership agreements. There can be no assurance that the real property held by the Frisco Square Partnerships could be sold at the ~~Net Appraised Value.~~net appraised value. The marketability and value of each property will depend upon many factors beyond our control and beyond the control of the Frisco Square Partnerships. Since investments in real property are generally illiquid, there is no assurance that there will be a market for the Frisco Square Partnerships properties. Furthermore, ~~our~~the Company’s partnership interest in Fairways Frisco is illiquid and represents a minority interest in Fairways Frisco, which may or may not be valued according to the liquidation value of the Frisco Square Partnerships.

~~On April 15, 2005, the parties to the Master Agreement agreed to terminate the Master Agreement effective as of April 15, 2005. In connection with the termination of the Master Agreement,~~Any additional financing obtained by the Frisco Square Partnerships ~~were amended such that Fairways Frisco owns, either directly or indirectly, 60% of~~will, in all likelihood, further dilute the Frisco Square Partnerships. The remaining 40% is owned by CMP Family Limited Partnership (“CMP”), which is controlled by Cole McDowell. CMP’s partnership interest is subject to further reduction and dilution as discussed below. Under the terms of the amended Frisco Square Partnerships, Fairways Frisco also has a first priority distribution preference of $5.5 million, and it will receive its pro-rata partnership interest of the next $9.5 million of distributions from the Frisco Square Partnerships. After $15 million of distributions have been made, Fairways Frisco’sCompany’s interest in ~~the Cash Flow of the Frisco Square Partnerships, as defined in the partnership agreements, will become 80% and CMP’s interest will become 20%.~~

Furthermore, Fairways Frisco’s partnership interest in the Frisco Square Partnerships may be increased up to 85% if certain capital call and limited partner capital loan provisions are not met by CMP. If Fairways Frisco’s partnership interest in the Frisco Square Partnerships is increased in the future, the Company’s indirect interest in the Frisco Square Partnerships would also increase on a pro-rata basis with its investment in Fairways Frisco. During the year ended December 31, 2005, CMP met the capital loan provisions by providing a $400,000 cash loan as required under the partnership agreement. Subsequent to December 31, 2005, an additional $400,000 capital loan request due from CMP was funded as required.~~Accordingly, Fairways Frisco’s partnership interest remains at 60%.~~

Under the terms of the amended Frisco Square Partnerships agreements, Fairways Equities, LLC ("FEL") is now the sole general partner of the Frisco Square Partnerships and controls all operating activities, financing activities and development activities for the Frisco Square Partnerships.

~~-12-~~

~~Table of Contents~~

Also on April 15, 2005, Fairways Frisco, through Frisco Square Land, Ltd., a newly created partnership, closed a financing transaction, the proceeds of which were used to repay the outstanding bank debt of Frisco Square, Ltd and to provide additional working capital for Fairways Frisco. Under the terms of the now terminated Master Agreement, Fairways Frisco held an option to acquire 50% of the partnership interests of Frisco Square, Ltd. Concurrently with the financing, all of the land and related development held by Frisco Square, Ltd. was transferred to Frisco Square Land, Ltd. in exchange for repayment of the bank debt, and the option to acquire 50% of the partnership interests of Frisco Square, Ltd. was cancelled. As a result of these changes, Fairways Frisco now has no interest in Frisco Square, Ltd. Fairways Frisco owns 60% of Frisco Square Land, Ltd., subject to the same increases for preference distributions and dilution to CMP if certain capital call and limited partner capital loan provisions are not met by CMP as discussed above.

The Company has not guaranteed any of the debt of the Frisco Square Partnerships or Fairways Frisco, L.P. The Company is not involved with any management, financing or other operating activities of the Frisco Square Partnerships or Fairways Frisco. However, in May 2005, the Company entered into an agreement with ~~FEL,~~Fairways Equities, pursuant to which the Company is entitled to receive 25% of the fees paid to ~~FEL~~Fairways Equities pursuant to the Fairways Frisco partnership agreement. These fees, including a monthly management fee, represent compensation to the Company for supplying resources to execute the initial transaction with the Frisco Square Partnerships in December 2004. During the ~~year~~years ended December 31, 2006 and 2005, the Company received fees allocated from ~~FEL~~Fairways Equities of $28,000 and $64,000, respectively under this agreement. Fairways Frisco is currently negotiating with lenders to modify or extend certain bank loans which are reflected as current liabilities at December 31, 2006.

~~On April 6, 2006, CMP delivered an offer to the Fairways Group to purchase 100%~~-13-

Table of Contents

Please see Note 2 of the Fairways Group’s interests, pursuant to the buy/sell provisions of the various partnership agreements. The offer of $79 million, before repayment of the Fairways Group’s debts, requires the Fairways Group to respond within 60 days to the offer, electing to either accept the offer, or to buy CMP’s interests based on the same valuation. Once the Fairways Group responds, the selected buyer (either the Fairways Group or CMP) will be required to close the purchase of the other partner interest within 60 days. Pursuant to the partnership agreements, financing of the purchase may be structured with a 20% cash paymentAscendant Consolidated Financial Statements contained herein and the ~~balance payable in four equal installments annually, with interest at~~audited consolidated financial statements of Fairways Frisco, L.P. and Subsidiaries for the prime rate plus 2% payable quarterly. As of the date of this report, the Fairways Group had not responded to CMP’s offer. The Company is not a direct party to the buy/sell provisions described above. ~~However, the Company’s aggregate share of this offer amount would be approximately $2.3 million over four~~ years ~~assuming distribution of the sale proceeds based on its ownership of 11% of the limited partnership interests subsequent to the February~~ended December 31, 2006 ~~capital call which the Company did not fund.~~and 2005 filed hereto as Exhibit 99.8.

Employees

We had the following full time and part-time employees as of December 31, ~~2005:~~2006:

Business Segment		Employees
Healthcare	~~155~~		130
Real estate advisory services	22		23
Corporate and other	3		2
Total Employees	~~180~~		155

In addition to our own employees, we use from time to time, and are dependent upon, various outside consultants or contractors to perform various support services including, legal and ~~accounting. The total Healthcare segment employees above include 59 employees of Park InfusionCare, which is reported by the Company as a discontinued operation.~~accounting services.

Available Information

We are a reporting company under the Exchange Act and file annual, quarterly and special reports, proxy statements and other information with the United States Securities and Exchange Commission. We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports available on or through our website (www.ascendantsolutions.com), free of charge, as soon as reasonably practicable after we have electronically filed or furnished such materials to the Securities and Exchange Commission. These filings are also available on the Securities and Exchange Commission's web site at www.sec.gov. In addition, you may read and copy any documents we file at the Securities and Exchange Commission’s public reference room at ~~450 Fifth~~100 F Street, ~~N.W.~~N.E., Washington, D.C. 20549, and at the regional offices of the Securities and Exchange Commission located at 233 Broadway, New York, New York 10279, and at 175 West Jackson Blvd., Suite 900, Chicago, Illinois 60604. You may obtain information on the operation of the Securities and Exchange Commission’s public reference room in Washington, D.C. by calling the Securities and Exchange Commission at 1-800-SEC-0330.

~~-13-~~-14-

Table of Contents

~~ITEM~~ITEM 1A. ~~RISKS RELATED TO OUR BUSINESS~~RISK FACTORS

We have limited funds and may require additional financing.

We have very limited funds, and such funds may not be adequate to take advantage of available business opportunities or fund the ones that we have acquired. Our ultimate success may depend upon our ability to raise additional capital. We have not investigated the availability, source, or terms that might govern the acquisition of additional capital and will not do so until we determine a more definitive and specific need for additional financing. Our access to capital is more limited since our stock is no longer traded on the NASDAQ National Market, since there is limited trading activity in our stock, since we incurred significant debt as a result of our acquisitions in 2004, and since we expect to incur additional debt in order to acquire entities in the future. In addition, one of our subsidiaries has committed to use commercially reasonable efforts to replace the loan facilities associated with the acquisition of the Park Assets, which could impair our ability to locate capital for other needs. If additional capital is needed, there is no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to us. If not available, our operations will be limited to those that can be financed with our existing capital.

We own subsidiaries that are highly leveraged.

Our subsidiaries are highly leveraged and, as a holding company, we depend on our subsidiaries’ revenues and cash flows to meet our obligations. Due to the high leverage, the availability of funds from these subsidiaries may be limited by contractual restrictions. Additionally, the degree to which our subsidiaries are leveraged has important consequences, including, but not limited to, the reduction in cash flow available to us for our operations and for future acquisitions, increased vulnerability to changes in economic conditions and the impairment of our ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes.

We may not be able to effectively integrate and manage our operating subsidiaries.

Our failure to effectively manage our recent and anticipated future growth could strain our management infrastructure and other resources and adversely affect our results of operations. We expect our recent and anticipated future growth to present management, infrastructure, systems, and other operating issues and challenges. These issues include controlling expenses, retention of employees, the diversion of management attention, the development and application of consistent internal controls and reporting processes, the integration and management of a geographically diverse group of employees, and the monitoring of third parties.

Any change in management may make it more difficult to integrate an acquired business with our existing operations. Any failure to address these issues at a pace consistent with our business could cause inefficiencies, additional operating expenses and inherent risks and financial reporting difficulties.

We are dependent upon management.

We currently have two individuals who are serving as management, including our President and CEO, and our Interim Chief Financial Officer. We are heavily dependent upon our management’s skills, talents and abilities to implement our business plan. Because investors will not be able to evaluate the merits of possible business acquisitions by us, they should critically assess the information concerning our management and Board of Directors. In addition to our own employees, we use from time to time and are dependent upon, various consultants or contractors to perform various support services including, legal and accounting.

We are dependent on a small staff to execute our business plan.

Because of the limited size of our staff, each acquisition becomes more difficult to integrate. Furthermore, it is difficult to maintain a complete segregation of duties related to the authorization, recording, processing and reporting of all transactions. In addition, our strategy of acquiring operating businesses will require our management and other personnel to devote significant amounts of time to integrating the acquired businesses with our existing operations. These efforts may temporarily distract their attention from day-to-day business and other business opportunities.

~~-14-~~-15-

Table of Contents

Certain of our subsidiaries account for a significant percentage of our revenues.

In ~~2005,~~2006, DHI accounted for approximately ~~68%~~74.1% of our revenue. In the future, one or more of our subsidiaries may continue to account for a significant percentage of our revenue. The reliance on any of these subsidiaries for a significant percentage of our revenue and their subsequent failure could negatively affect our results of operations.

Unforeseen costs associated with the acquisition of new businesses could reduce our profitability.

We have implemented our business strategy and made acquisitions of new businesses that may not prove to be successful. We now own an interest in six businesses, operating in different industries and we do not have experience in some of these areas. It is likely that we will encounter unanticipated difficulties and expenditures relating to our acquired businesses, including contingent liabilities, or needs for significant management attention that would otherwise be devoted to our other businesses. These costs may negatively affect our results of operations. Unforeseen costs at our recently acquired and to be acquired businesses, which have significant liabilities and commitments, could result in the inability to make required payments on indebtedness, which could result in a loss of our investments in these ~~companies and, in the case of CPOC, require us to make payments under our guaranty.~~companies.

We may enter into additional leveraged transactions in connection with an acquisition opportunity.

Based on our current cash position, it is likely that if we enter into any additional acquisitions, such acquisitions will be leveraged, i.e., we may finance the acquisition of the business opportunity by borrowing against the assets of the business opportunity to be acquired, or against the projected future revenues or profits of the business opportunity. This could increase our exposure to larger losses. A business opportunity acquired through a leveraged transaction is profitable only if it generates enough revenues to cover the related debt and expenses. Failure to make payments on the debt incurred to purchase the business opportunity could result in the loss of a portion or all of the assets acquired. There is no assurance that any business opportunity acquired through a leveraged transaction will generate sufficient revenues to cover the related debt and expenses.

We are restricted on our use of net operating loss carryforwards.

At December 31, ~~2005,~~2006, we had accumulated approximately $51 million of federal net operating loss carryforwards and approximately ~~$21~~$2.9 million of state net operating loss carryforwards, which may be used to offset taxable income and reduce income taxes in future years. The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards.

The federal net operating loss carryforwards, if not fully utilized, will expire from 2018 to ~~2024.~~2024 and the state net operating loss carryforwards will expire from 2007 to 2009. Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”) imposes an annual limitation on the portion of our federal net operating loss carryforwards that may be used to offset taxable income. We believe that the issuance of shares of common stock pursuant to the initial public offering on November 15, 1999 caused an “ownership change” for purposes of Section 382 of the Code on such date. Consequently, we believe that utilization of the portion of our federal net operating loss carryforwards attributable to the period prior to November 16, 1999 is limited by Section 382 of the Code. The date of an “ownership change” is based upon a factual determination of the value of our stock on such date. If the “ownership change” was determined to have occurred at a date after November 15, 1999, additional federal net operating loss carryforwards would be limited by Section 382 of the Code. In addition, a second “ownership change” may occur in the future as a result of future changes in the ownership of our stock, including our issuance of stock in connection with our acquisition of a business. A second “ownership change” would result in Code Section 382 limiting our deduction of our future federal net operating loss carryforwards.

Our results of operations are difficult to predict.

Although we generated net income of $1,023,000, $65,000 and $249,000 for the years ended December 31, 2006, 2005 and 2004 respectively, we have historically incurred net operating losses. ~~The Company experienced net losses of approximately $818,000 and $728,000 for the years ended December 31, 2003 and 2002, respectively.~~ There can be no assurance that we will continue to achieve profitability in the future.

~~-15-~~-16-

Table of Contents

RISKS SPECIFIC TO OUR OPERATING SUBSIDIARIES

Dougherty’s Holdings, Inc.

We may not be able to ~~enter into a successful transaction to sell or otherwise dispose of~~successfully operate our Park InfusionCare business.

On November 3, 2005, we issued a press release announcing that the board of directors of DHI committed to a plan to explore strategic alternatives for its infusion therapy business, Park InfusionCare. ~~DHI has retained~~On May 24, 2006, the ~~services~~board of ~~The Braff Group~~directors decided to ~~assist in exploring strategic alternatives for~~retain the operations of Park InfusionCare. ~~Neither the timing nor the benefits of a strategic transaction for~~

The infusion markets served by Park InfusionCare ~~if any, can be determined at this time,~~are highly competitive. Local, regional and national companies are currently competing in these markets and others may do so in the ~~Company can give no assurance~~future. Some of our competitors have greater financial, technical, marketing and managerial resources than we have. This competition could result in price competition and other competitive factors that ~~any strategic transaction will occur.~~could cause a decline in our revenue and profitability. We expect to continue to encounter competition in the future that could limit our ability to grow revenue and/or maintain acceptable pricing levels. In addition, the Park InfusionCare business may require additional working capital. If we are unable to successfully ~~complete a sale of~~operate Park InfusionCare, our working capital position will be adversely ~~affected.~~affected and we could experience a decline in our revenue and profitability.

Our pharmacy subsidiary is subject to extensive regulation.

Our pharmacists and pharmacies are required to be licensed by the Texas State Board of Pharmacy. The pharmacies are also registered with the federal Drug Enforcement Administration. By virtue of these license and registration requirements, the entities owned by DHI are obligated to observe certain rules and regulations, and a violation of such rules and regulations could result in fines and/or in a suspension or revocation of a license or registration. We believe that the operating entities owned by DHI currently have all the regulatory approvals necessary to conduct its business. However, we can give no assurance that they will be able to maintain compliance with existing regulations.

In recent years, an increasing number of legislative proposals have been introduced or proposed in Congress and in some state legislatures that would effect major changes in the health care system, either nationally or at the state level. We cannot predict whether any federal or state health care reform legislation will eventually be passed, and if so, the impact thereof on DHI’s financial position or results of operations. Health care reform, if implemented, could adversely affect the pricing of prescription drugs or the amount of reimbursement from governmental agencies and managed care payors, and consequently could be adverse to DHI and therefore, to us. However, to the extent health care reform expands the number of persons receiving health care benefits covering the purchase of prescription drugs, it may also result in increased purchases of such drugs and could thereby have a favorable impact on both DHI and the drug industry in general. Nevertheless, there can be no assurance that any future federal or state health care reform legislation will not adversely affect us, including our subsidiary DHI, or the retail drugstore industry generally.

In addition, a portion of DHI revenue is derived from high-end, technical pharmacy services, such as compounded prescriptions, intravenous infusion, injectables and pain management products that are not typically offered by chain drug stores, grocery pharmacies or mass merchandise pharmacies. Recently, there has been some controversy about the lack of federal regulation of these services. Additional federal and/or state regulations could also affect our business by putting additional burdens on us.

If we do not adequately respond to competitive pressures, demand for our products and services could decrease.

Our retail pharmacies operate in a highly competitive industry. The markets we serve are subject to relatively few barriers to entry. These pharmacies compete primarily on the basis of customer service, convenience of location and store design, price and product mix and selection. Some of our competitors have greater financial, technical, marketing and managerial resources than we have. Local, regional and national companies are currently competing in many of the health care markets we serve and others may do so in the future. In addition to traditional competition from independent pharmacies and other pharmacy chains, our pharmacies face competition from

-17-

Table of Contents

discount stores, supermarkets, combination food and drugstores, mail order distributors, hospitals and HMO’s. These other formats have experienced significant growth in their market share of the prescription and over-the-counter drug business. Consolidation among our competitors, such as pharmacy benefit managers (PBM’s) and regional and national infusion pharmacy or specialty pharmacy providers could result in price competition and other competitive factors that could cause a decline in our revenue and profitability.

~~-16-~~

~~Table of Contents~~

We expect to continue to encounter competition in the future that could limit our ability to grow revenue and/or maintain acceptable pricing levels.

Risk related to third party payors.

DHI’s revenues and profitability are affected by the continuing efforts of all third-party payors to contain or reduce the costs of health care by lowering reimbursement rates, narrowing the scope of covered services, increasing case management review of services and negotiating reduced contract pricing. Any changes in reimbursement levels from these third-party payor sources and any changes in applicable government regulations could have a material adverse effect on DHI’s revenues and profitability. Changes in the mix of patients among Medicare, Medicaid and other payor sources may also impact DHI’s revenues and profitability. There can be no assurance that DHI will continue to maintain the current payor or revenue mix.

Collectibility of accounts receivable.

DHI’s failure to maintain its controls and processes over billing and collecting, or the deterioration of the financial condition of its payors, could have a significant negative impact on its results of operations and financial condition. The collection of accounts receivable is one of DHI’s most significant challenges and requires constant focus and involvement by management and ongoing enhancements to information systems and billing center operating procedures. Further some of DHI’s payors and/or patients may experience financial difficulties, or may otherwise not pay accounts receivable when due, resulting in increased write-offs. There can be no assurance that DHI will be able to maintain its current levels of collectibility and days sales outstanding in future periods. If DHI is unable to properly bill and collect its accounts receivable, its results will be adversely affected.

We are substantially dependent on a single supplier of pharmaceutical products to sell products to us on satisfactory terms. A disruption in our relationship with this supplier could have a material adverse effect on our business.

We obtain a majority of our total merchandise, including over 90% of our pharmaceuticals, from a single supplier, AmerisourceBergen, with whom we have a long-term supply contract. Any significant disruptions in our relationship with AmerisourceBergen, or deterioration in AmerisourceBergen’s financial condition, could have a material adverse effect on us.

Failure to maintain sufficient sales to qualify for favorable pricing under our long term supply contract could increase the costs of our products.

Our long term supply agreement, as amended in November 2006, with AmerisourceBergen provides us with pricing and credit terms that are improved from those previously provided by ~~AmerisourceBergen to Park Pharmacy Corporation.~~AmerisourceBergen. In exchange for these improved terms, DHI has agreed to acquire 85% of its prescription pharmaceuticals and substantially all of its generic pharmaceutical products from AmerisourceBergen and to maintain certain minimum dollar monthly purchases.

If we are unable to satisfy minimum monthly purchase requirements of $900,000, we may be required to purchase our pharmaceutical products on less favorable pricing and credit terms. For the year ended December 31, ~~2005,~~2006, we purchased over ~~$23,159,000~~$23,858,000 of our pharmaceutical products from ~~Amerisource Bergen, of which $3,484,000 relates to our Park InfusionCare subsidiary currently classified as a discontinued operation.~~AmerisourceBergen.

The current or future shortage in licensed pharmacists, nurses and other clinicians could adversely affect our business.

The health care industry is currently experiencing a shortage of licensed pharmacists, nurses and other health care professionals. Consequently, hiring and retaining qualified personnel will be difficult due to intense competition for

-18-

Table of Contents

their services and employment. Any failure to hire or retain pharmacists, nurses or other health care professionals could impair our ability to expand or maintain our operations.

~~-17-~~

~~Table of Contents~~

Certain risks are inherent in providing pharmacy services, and our insurance may not be adequate to cover any claims against us.

Pharmacies are exposed to risks inherent in the packaging and distribution of pharmaceuticals and other health care products. Although we maintain professional liability and errors and omissions liability insurance, we cannot assure you that the coverage limits under our insurance programs will be adequate to protect us against future claims, or that we will maintain this insurance on acceptable terms in the future.

CRESA Partners of Orange County, L.P.

We have numerous significant competitors, some of which may have greater financial resources than we do.

We compete across a variety of business disciplines within the commercial real estate industry, including investment management, tenant representation, corporate services, construction and development management, property management, agency leasing, valuation and mortgage banking. In general, with respect to each of our business disciplines, we cannot assure you that we will be able to continue to compete effectively or maintain our current fee arrangements or margin levels or that we will not encounter increased competition. Each of the business disciplines in which we compete is highly competitive on an international, national, regional and local level. Depending on the product or service, we face competition from other real estate service providers, institutional lenders, insurance companies, investment banking firms, investment managers and accounting firms, many of which may have greater financial resources than we do. Many of our competitors are local or regional firms. We are also subject to competition from other large national and multi-national firms.

A significant portion of our operations are concentrated in southern California and our business could be harmed if the economic downturn continues in the southern California real estate markets.

During ~~2005~~2006 and ~~2004,~~2005, a significant amount of our real estate advisory services segment revenue was generated from transactions originating in California. As a result of the geographic concentrations in California, the continuation of the economic downturn in the California commercial real estate markets and in the local economies in the Orange County area could further harm our results of operations.

Our results of operations vary significantly among quarters, which makes comparison of our quarterly results difficult.

The nature of our business does not allow for ready comparison of operating results from quarter to quarter. Our transaction fees are highly dependent on transactions that do not occur ratably over the course of a year.

Our success depends upon the retention of our senior management, as well as our ability to attract and retain qualified and experienced employees.

Our continued success is highly dependent upon the efforts of our executive officers and CPOC’s existing management team. The loss of one or more of our members of the senior management team could have a material adverse effect on CPOC.

If we fail to comply with laws and regulations applicable to real estate brokerage, we may incur significant financial penalties.

Due to the nature of our operations, we are subject to numerous federal, state and local laws and regulations specific to the services performed. For example, the brokerage of real estate sales and leasing transactions requires us to maintain brokerage licenses in each state in which we operate. If we fail to maintain our licenses or conduct brokerage activities without a license, we may be required to pay fines or return commissions received or have licenses suspended. Furthermore, the laws and regulations applicable to our business also may change in ways that materially increase the cost of compliance.

~~-18-~~-19-

Table of Contents

We may have liabilities in connection with real estate brokerage activities.

As a licensed real estate broker, weCRESA and ~~our~~its licensed employees are subject to statutory due diligence, disclosure and standard-of-care obligations. Failure to fulfill these obligations could subject usCRESA or ~~our~~its employees to litigation from parties who purchased, sold or leased properties wethat CRESA or ~~they~~its employees brokered or managed. WeCRESA could become subject to claims by participants in real estate transactions claiming that weCRESA did not fulfill ~~our~~its statutory obligations as a broker.

RISKS RELATED TO OUR INVESTMENTS IN REAL ESTATE

The success of real estate developments is dependant on tenants to generate lease revenues.

Real estate developments are subject to the risk that, upon the expiration of leases for space located in the properties, leases may not be renewed by existing tenants, the space may not be re-leased to new tenants or the terms of renewal or releasing (including the cost of required renovations or concessions to tenants) may be less favorable than current lease terms. A tenant may experience a down-turn in its business which may cause the loss of the tenant or may weaken its financial condition, and result in the tenant’s failure to make rental payments when due, result in a reduction in percentage rent receivable with respect to retail tenants or require a restructuring that might reduce cash flow from the lease. In addition, a tenant of any of the properties may seek the protection of bankruptcy, insolvency, or similar laws, which could result in the rejection and termination of such tenant’s lease and thereby cause a reduction in our available cash flow. Although we have not experienced material losses from tenant bankruptcies, no assurance can be given that tenants will not file for bankruptcy or similar protection in the future or, if any tenants file, that they will affirm their leases or continue to make rental payments in a timely manner.

Real estate development strategies entail certain risks.

Real estate development activities entail certain risks, including:

·	the expenditure of funds on and devotion of management’s time to projects which may not come to fruition;

·	the risk that development or redevelopment costs of a project may exceed original estimates, possibly making the project uneconomic or causing the project to raise additional cash to fund such ~~costs~~costs;

·	the risk that occupancy rates and rents at a completed project will be less than anticipated or that there will be vacant space at the project;

·	the risk that expenses at a completed development will be higher than anticipated; and

the risk that permits and other governmental approvals will not be obtained. Because of the discretionary nature of these approvals and concerns which may be raised by various governmental officials, public interest groups and other interested parties during the approval and development process, our ability to develop properties and realize income from our projects could be delayed, reduced or eliminated.

·	the Frisco Square Partnerships’ future growth and real estate development requires additional capital..

·	the risk that a significant amount of debt, which is due during 2007, will require significant additional capital if it cannot be refinanced.

Based on the status of the Frisco Square development, the Frisco Square Partnerships will need to invest significant amounts of money over the next several years and currently anticipates real estate investments to be approximately $8.0 million for calendar 2007. The Frisco Square Partnerships could finance future expenditures from any of the following sources:

·	non-recourse, sale-leaseback or other financing

·	bank borrowings;

·	private placements of debt or equity or

·	some combination of the above.

If additional capital is needed, there is no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to the Frisco Square Partnerships and their partners. If not available, Frisco Square’s development will be limited to that which can be financed with its existing capital.

-20-

Table of Contents

Any additional financing obtained by the Frisco Square Partnerships will, in all likelihood, further dilute the Company’s interest in Fairways Frisco.

General economic conditions in the areas in which our properties are geographically concentrated may impact financial results.

Our real estate development investments are exposed to changes in the real estate market or in general economic conditions in Texas. Any changes may result in higher vacancy rates for commercial property and lower prevailing rents, lower sales prices or slower sales, lower absorption rates, and more tenant defaults and bankruptcies, which would negatively impact our financial performance. To the extent that weak economic conditions or other factors affect these regions more severely than other areas of the country, our financial performance could be negatively impacted.

Exposure of our assets to damage from natural occurrences such as earthquakes, and weather conditions that affect the progress of construction may impact financial results.

Natural disasters, such as earthquakes, floods or fires, or unexpected climactic conditions, such as unusually heavy or prolonged rain, may have an adverse impact on our ability to develop our properties and realize income from our projects.

~~-19-~~

~~Table of Contents~~

Illiquidity of real estate and reinvestment risk may reduce economic returns to investors.

Real estate investments are relatively illiquid and, therefore, our ability to vary our portfolio quickly in response to changes in economic or other conditions is limited. Further, certain significant expenditures, including property taxes, maintenance costs, mortgage payments, insurance costs and related charges must be made throughout the period of ownership of real property regardless of whether the real property is producing any income.

OTHER RISKS

We are controlled by our principal stockholders, officers and directors.

Our principal stockholders, officers and directors, and affiliates beneficially own approximately ~~53%~~55% of our Common Stock. As a result, such persons may have the ability to control and direct our affairs and business. Such concentration of ownership may also have the effect of delaying, deferring or preventing a change in control.

We have certain ~~transactions~~relationships with related parties.

We have relationships or transactions with related parties or affiliates of ours. Please see Note 1816 of the Ascendant Consolidated Financial Statements contained herein.

Our stock is not listed on The NASDAQ National Market.

Our stock is quoted and traded on the OTCBB. The OTCBB is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information inof OTC securities. An OTC security is not listed or traded on NASDAQ or a national securities exchange, and NASDAQ has no business relationship with the issuers quoted in the OTCBB. Issuers of all securities quoted on the OTCBB are subject to periodic filing requirements with the Securities and Exchange Commission or other regulatory authority. Even with OTCBB eligibility and trading, fewer investors have access to trade our common stock, which will limit our ability to raise capital through the sale of our securities.

In addition, our common stock is subject to penny stock regulations, which could cause fewer brokers and market makers to execute trades in our common stock. This is likely to hamper our common stock trading with sufficient volume to provide liquidity and could cause our stock price to further decrease.

-21-

Table of Contents

The penny stock regulations require that broker-dealers who recommend penny stocks to persons other than institutional accredited investors must make a special suitability determination for the purchaser, receive the purchaser’s written consent to the transaction prior to the sale and provide the purchaser with risk disclosure documents which identify risks associated with investing in penny stocks. These requirements have historically resulted in reducing the level of trading activity in securities that become subject to the penny stock rules. Holders of our common stock may find it more difficult to sell their shares of common stock, which is expected to have an adverse effect on the market price of the common stock.

We may be subject to litigation in the future.

We may be subject to future litigation or claims in the normal course of business, with or without merit. These claims may result in substantial costs and divert management’s attention and resources, which may seriously harm our business, prospects, financial condition and results of operations and may also harm our reputation, all of which may have a material adverse effect on our ability to pursue various strategic and financial alternatives as well as have a material adverse effect on our stock price. We may be unable to pay expenses or liabilities that may arise out of any possible legal claims.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable

~~-20-~~-22-

Table of Contents

~~ITEM~~ITEM 2. PROPERTIES

The physical properties used by the Company and its significant business segments are summarized below:

			Approximate
Business Segment	Property Type	Owned/Leased	~~Approximate Sq Ft.~~Square Feet
Healthcare	Corporate offices, retail pharmacies and infusion therapy centers	Leased	~~36,544~~43,698
Real estate advisory services	Corporate offices	Leased	22,173
Corporate and other	Corporate offices	Leased	~~5,069~~-

~~The Healthcare segment properties above include 17,079 square feet used by Park InfusionCare, which is reported by the Company as a discontinued operation.~~

Mr. James C. Leslie, the Company’s Chairman, controls, and Mr. Will Cureton, one of our directors, is indirectly a limited partner in the entity that owns the building located in Dallas, Texas in which the corporate office space is sub-leased by Ascendant and DHI. Also, through August 2005, Capital Markets paid rent for office space in the same building to an entity controlled by Mr. Leslie. We consider all of these leases to be at or below market terms for comparable space in the same building. ~~During the years ended December 31,~~

Beginning on March 16, 2005 ~~2004~~ and ~~2003,~~ending on October 13, 2006, Ascendant and Capital Markets paid rent of approximately $26,000, $67,200 and $45,000 directly to an entity controlled by Mr. Leslie. The remaining rent expense paid by Ascendant and DHI is paid under sublease agreements withsubleased space from an unrelated third party ~~and approximates $13,000 monthly. We also incur~~for approximately $7,000 per month. In October 2006, Ascendant began sharing office space with DHI. During the year ended December 31, 2006, DHI subleased space from an unrelated third party for $6,000 per month. In addition, Ascendant incurred certain shared office costs with an entity controlled by Mr. Leslie, which gives rise to reimbursements from us to that entity. These costs were approximately $9,000 in 2006.

During the year ended December 31, 2005 and 2004, Ascendant and Capital Markets paid aggregate rent of approximately $26,000 and $67,200 directly to an entity controlled by Mr. Leslie. The remaining rent expense paid by Ascendant and DHI was paid under sublease agreements with an unrelated third party for approximately $13,000 monthly. We also incurred certain shared office costs with an entity controlled by Mr. Leslie, which gave rise to reimbursements from us to that entity. These costs were approximately $24,300 ~~$22,800~~ and ~~$3,400~~$22,800 in 2005 ~~2004~~ and ~~2003,~~2004, respectively.

In addition, we have other relationships or transactions with other related parties or affiliates of ours. Please see Note 1816 to the Ascendant Consolidated Financial Statements contained herein.

~~ITEM~~ITEM 3. LEGAL PROCEEDINGS

OnIn January ~~29,~~ 2004, Bishopsgate Corp. and T.E. Millard filed a lawsuit in the 192^nd District Court of Dallas County, Texas against us, our officers and directors, and Park Pharmacy’s officers and directors claiming that we breached obligations to fund Bishopsgate’s proposed purchase of the Park Assets.

Mr. Millard filed a Chapter 13 bankruptcy case in Dallas, Texas on August 15, 2003. Millard’s Chapter 13 bankruptcy case was converted to a Chapter 7 liquidation bankruptcy case on December 20, 2004. Upon the conversion of the bankruptcy case, Daniel J. Sherman was appointed Chapter 7 Trustee. In August 2005, the Company, its officers and directors and Park Pharmacy’s officers and directors entered into a compromise and settlement agreement, which was approved by the bankruptcy ~~court, whereby the defendants collectively paid $80,000~~court. Please see Note 15 to the ~~bankruptcy Trustee in settlement of all claims. The Company’s insurance carrier provided the funds~~Ascendant Consolidated Financial Statements contained herein for the Company’s portion of the settlement amount, which was $55,000. In exchange for the settlement, and in satisfaction of the counterclaims filed against Millard and Bishopsgate Corp, the Company received all of the stock of Bishopsgate Corp. The stock has not been assigned any value in the Company’s financial statements and it is held by a newly-formed entity, DM-ASD Holding, Co.additional details.

Between January 23, 2001 and February 21, 2001, five putative class action lawsuits were filed in the United States District Court for the Northern District of Texas against us, certain of our directors, and a limited partnership of which a director is a partner. The five lawsuits assert causes of action under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, for an unspecified amount of damages on behalf of a putative class of individuals who purchased our common stock between various periods ranging from November 11, 1999 to January 24, 2000. ~~The lawsuits claim that we and the individual defendants made misstatements and omissions concerning our products and customers.~~

~~-21-~~

~~Table of Contents~~

In April 2001, the Court consolidated the lawsuits, and on July 26, 2002, plaintiffs filed a Consolidated Amended Complaint (“CAC”). We filed a motion to dismiss the CAC on or about September 9, 2002. On July 22, 2003, the Court granted in part and denied in part defendants’ motion to dismiss. On September 2, 2003, defendants filed an answer to the CAC. Plaintiffs then commenced discovery. On September 12, 2003, plaintiffs filed a motion for class certification, and on February 17, 2004, we filed our opposition. On July 1, 2004, the Court denied plaintiffs’ motion for certification. On September 8, 2004, the Fifth Circuit granted plaintiffs’ petition for permission to appeal the denial of class certification. On August ~~23,~~ 2005, the ~~Fifth Circuit affirmed the district court’s denial of class certification, The~~ Company settled the lead plaintiffs’ remaining individual claims for a confidential amount, which was paid by the Company’s ~~directors'~~directors’ and ~~officers'~~officers’ insurance carrier.

-23-

Table of Contents

Accordingly, the district court entered a final judgment dismissing the claims with prejudice in February 2006. Please see Note 15 to the Ascendant Consolidated Financial Statements contained herein for additional details.

In April 2006, we were notified by the Internal Revenue Service (“IRS”) that our federal income tax return for the 2004 tax year had been selected for review. In addition, in September 2006 we were notified by the IRS that the federal partnership income tax return of CPOC for the 2004 tax year had been selected for review. The IRS is currently conducting its reviews. At this time, we can make no representations or give any guidance regarding the potential outcome of this review and the impact, if any, it may have on ~~February 24, 2006.~~our financial position. However, we are not aware of any potential issues that may cause adjustment to our filed tax returns.

In September 2006, the Chapter 7 trustee for the bankruptcy estate of Quantum North America, Inc. sought to enforce two default judgments against us for alleged preferential and fraudulent transfers to the Company's predecessor, ASD Systems, Inc. in the aggregate amount of approximately $150,000, plus interest and attorneys fees. The transfers at issue occurred in 2000. The adversary proceedings filed in the bankruptcy case were styled: David Gottlieb Trustee v. ASD Systems, Inc.; Adv. Nos. 1:02-ap-02131-GM and 1:02-ap-01948. We took the position that the judgments were void based on defective service and neither Ascendant nor ASD were afforded the opportunity to defend the claims. We also disputed the underlying claims and were prepared to fully defend the Trustee's suit once the judgments were set aside. After presenting the Trustee with our defenses, we were able to settle the claims for a nominal payment of $5,000. We have a settlement in principle with the Trustee which is pending approval by the Bankruptcy Court.

We are also occasionally involved in other claims and proceedings, which are incidental to our business. We cannot determine what, if any, material affect these matters will have on our future financial position and results of operations.

~~ITEM~~ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

~~-22-~~-24-

Table of Contents

PART II.

~~ITEM~~ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET PRICES; RECORD HOLDERS AND DIVIDENDS

Our stock is quoted and traded on the OTC Bulletin Board (“OTCBB”). The OTCBB is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information inof over-the-counter (“OTC”) securities. An OTC security is not listed or traded on NASDAQ or a national securities exchange, and NASDAQ has no business relationship with the issuers quoted in the OTCBB. Issuers of all securities quoted on the OTCBB are subject to periodic filing requirements with the Securities and Exchange Commission or other regulatory authority. OTCBB requirements include, among other things, a broker-dealer acting as a market maker willing to enter a quote for the securities and requires us to remain current in our periodic filings under the Securities Exchange Act of 1934, as amended. Even with OTCBB eligibility and trading, ~~delisting~~our having been delisted adversely affects the ability or willingness of investors to purchase our common stock, which, in turn, severely affects the market liquidity of our securities.

~~Following~~The following is a summary of our stock’s quarterly market price ranges for the two most recent fiscal years. The price quotations noted herein represent prices between dealers, without retail mark-ups, mark-downs or commissions and may not represent actual transactions.


Fiscal year 2004:	High	Low
Fiscal year 2005:			High		Low
First quarter*	$1.95	$0.30	$	1.43	$	0.85
Second quarter*	1.70	0.71		1.77		1.20
Third quarter*	1.65	0.85		1.40		0.70
Fourth quarter*	1.35	0.75		0.93		0.51

Fiscal year 2005:
Fiscal year 2006:
First quarter*	$1.43	$0.85	$	0.85	$	0.47
Second quarter*	1.77	1.20		0.80		0.51
Third quarter*	1.40	0.70		0.62		0.33
Fourth quarter*	0.93	0.51		0.60		0.25

*These quotations represent high and low bid prices for our stock as reported by the OTCBB and Pink Sheets.

On March ~~31, 2006,~~30, 2007, the last reported sale price of our common stock on the OTCBB was ~~$0.70~~$0.33 per share.

At March ~~31, 2006,~~30, 2007, there were approximately ~~2,700~~1,800 registered and beneficial holders of record of our common stock.

The aggregate market value of the voting stock held by nonaffiliates of the ~~registrant,~~Company, based upon the closing price for ~~the registrant’s~~our common stock on the OTC Bulletin Board on June 30, ~~2005,~~2006, the last trading date of ~~registrant's~~our most recently completed second fiscal quarter was approximately ~~$14,874,000.~~$6,239,000.

We have not paid any cash dividends on our common stock and do not anticipate declaring dividends in the foreseeable future. Our current policy is to retain earnings, if any, to finance potential acquisitions and fund operations. The future payment of dividends will depend on the results of operations, financial condition, capital expenditure plans and other factors that we deem relevant and will be at the sole discretion of our Board of Directors.

~~-23-~~-25-

~~Table of Contents~~IT

~~-64-~~-67-

Table of Contents

ASCENDANT SOLUTIONS, INC.

Notes to Consolidated Financial Statements

~~16.~~

~~Computations of Basic and Diluted Net Income (Loss) Per Common Share~~

Years Ended December 31,

2005

2004

2003

Income (loss) from continuing operations, net of taxes $ 718,000 $ (87,000 ) $ (818,000 )
Income (loss) from discontinued operations, net of taxes (653,000 ) 336,000 -
Net income (loss) $ 65,000 $ 249,000 $ (818,000 )

Weighted average common shares outstanding-Basic 22,006,733 21,803,817 21,557,150
Effect of dilutive stock options and warrants 870,971 585,450 -
Weighted average common shares outstanding-Diluted 22,877,704 22,389,267 21,557,150

Basic earnings per share from:
Continuing operations $ 0.03 * $ (0.04 )
Discontinued operations $ (0.03 ) $ 0.02 $ -
Basic net income (loss) per share $ 0.00 $ 0.01 $ (0.04 )

Diluted earnings per share from:
Continuing operations $ 0.03 * $ (0.04 )
Discontinued operations $ (0.03 ) $ 0.02 $ -
Diluted net income (loss) per share $ 0.00 $ 0.01 $ (0.04 )

* Less than $0.01 per share

~~17.~~15.

Commitments and Contingencies

In connection with the acquisition of the Park Assets in 2004, DHI entered into a three year supply agreement with AmerisourceBergen Drug Corporation pursuant to which DHI and its newly acquired indirect subsidiaries agreed to purchase prescription and over-the-counter pharmaceuticals from AmerisourceBergen through March 2007. This supply agreement ~~will also provide~~provided DHI with pricing and payment terms that are improved from those previously provided by AmerisourceBergen to Park Pharmacy. In exchange for these improved terms, DHI ~~has~~ agreed to acquire 85% of its prescription pharmaceuticals and substantially all of its generic pharmaceutical products from AmerisourceBergen and agreed to minimum monthly purchases of $900,000 of all products in order to obtain new favorable pricing terms. For the ~~year~~years ended December 31, 2006 and 2005 and the period from the date of acquisition through December 31, 2004, DHI purchased over $23,858,000, $23,159,000 and $17,250,000, respectively, of its pharmaceutical products from ~~Amerisource Bergen,~~AmerisourceBergen.

As of ~~which $3,484,000 relates~~November 30, 2006, DHI entered into Amendment No. 1 (“Amendment”) to ~~Park InfusionCare currently classified as~~the supply agreement. The Amendment extends the supply agreement from March 24, 2007 to March 24, 2009. In addition, the Amendment (1) improves the pricing of goods purchased (2) changes the minimum order volume from $30,000,000 to $50,000,000 over the life of the agreement and (3) the percentage of generic drug purchases was changed from 2.50% to 6.0%. The Amendment also allows for the return of goods, in a ~~discontinued operation.~~saleable condition, within 180 days of the invoice date without a restocking fee and provides for a termination fee if DHI terminates the supply agreement before the expiration of the term of the agreement. The termination fee is a maximum of $50,000 but is reduced for each full month from December 1, 2006 until the date of termination. However, there is no termination fee if the minimum order volume has been satisfied. At December 31, 2006, DHI believes it has satisfied the minimum order volume.

The Amendment also provides for a rebate in the amount of $150,000 representing a 15.0% volume discount off the price of goods for the first $1,000,000 of net purchases purchased in the period after November 1, 2006 providing that DHI makes net purchases in excess of $1 million after November 1, 2006. In December 2006, DHI satisfied the net purchase requirement and received the $150,000 rebate.

In January 2005, the Company agreed to provide a limited indemnification to its partners in the Fairways 03 New Jersey LP investment for any losses those partners may incur under their personal guaranties of the partnership’s bank indebtedness. The Company’s partners in this investment are the Fairways Members. The Company’s indemnification to the Fairways Members is limited to its 20% pro rata partnership interest of the $2.6 million in bank debt that was guaranteed by the individuals. In December 2005, this bank debt was paid in full by Fairways 03 New Jersey LP and the Company’s limited indemnification agreement was cancelled.

Operating Leases

The Company and its subsidiaries lease its pharmacy, real estate advisory service and corporate offices and certain pharmacy equipment under non-cancelable operating lease agreements. Certain leases contain renewal options and provide that the Company pay taxes, insurance, maintenance and other operating expenses. Total rent expense for operating leases was approximately $1,431,000, $1,375,000 and $974,000 for the years ended December 31, 2006, 2005 and 2004, respectively.

~~-65-~~-68-

Table of Contents

ASCENDANT SOLUTIONS, INC.

Notes to Consolidated Financial Statements

Certain leases contain renewal options and provide that the Company pay taxes, insurance, maintenance and other operating expenses. Total rent expense for operating leases was approximately $1,131,000, $974,000 and $45,000 for the years ended December 31, 2005, 2004 and 2003, respectively.

Minimum lease payments under all non-cancelable operating lease agreements for the years ended December 31, are as follows:

2006	$	1,198,000
Years ending December 31,
2007		1,025,000	$	1,260,000
2008		966,000		1,108,000
2009		984,000		1,039,000
2010		831,000		836,000
2011				291,000
Thereafter		2,292,000		2,007,000
	$	7,296,000	$	6,541,000

Legal Proceedings

On January 29, 2004, Bishopsgate Corp. and T.E. Millard filed a lawsuit in the 192^nd District Court of Dallas County, Texas against ~~us, our~~the Company, its officers and directors, and Park Pharmacy’s officers and directors claiming that wethe Company breached obligations to fund Bishopsgate’s proposed purchase of the Park Assets. Mr. Millard filed a Chapter 13 bankruptcy case in Dallas, Texas on August 15, 2003. Millard’s Chapter 13 bankruptcy case was converted to a Chapter 7 liquidation bankruptcy case on December 20, 2004. Upon the conversion of the bankruptcy case, Daniel J. Sherman was appointed Chapter 7 Trustee. In August 2005, the Company, its officers and directors and Park Pharmacy’s officers and directors entered into a compromise and settlement agreement, which was approved by the bankruptcy court, whereby the defendants collectively paid $80,000 to the bankruptcy Trustee in settlement of all claims. The Company’s insurance carrier provided the funds for the Company’s portion of the settlement amount, which was $55,000. In exchange for the settlement, and in satisfaction of the counterclaims filed against Millard and Bishopsgate Corp, the Company received all of the stock of Bishopsgate Corp. The stock has not been assigned any value in the Company’s financial statements and it is held by a newly-formed entity, DM-ASD Holding, Co.

Between January 23, 2001 and February 21, 2001, five putative class action lawsuits were filed in the United States District Court for the Northern District of Texas against us, certain of our directors, and a limited partnership of which a director is a partner. The five lawsuits assert causes of action under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, for an unspecified amount of damages on behalf of a putative class of individuals who purchased our common stock between various periods ranging from November 11, 1999 to January 24, 2000. The lawsuits claim that wethe Company and the individual defendants made misstatements and omissions concerning ~~our~~the Company’s products and customers.

In April 2001, the Court consolidated the lawsuits, and on July 26, 2002, plaintiffs filed a Consolidated Amended Complaint (“CAC”). WeThe Company filed a motion to dismiss the CAC on or about September 9, 2002. On July 22, 2003, the Court granted in part and denied in part defendants’ motion to dismiss. On September 2, 2003, defendants filed an answer to the CAC. Plaintiffs then commenced discovery. On September 12, 2003, plaintiffs filed a motion for class certification, and on February 17, 2004, wethe Company filed ~~our~~its opposition. On July 1, 2004, the Court denied plaintiffs’ motion for certification. On September 8, 2004, the Fifth Circuit granted plaintiffs’ petition for permission to appeal the denial of class certification. On August 23, 2005, the Fifth Circuit affirmed the district court’s denial of class certification. The Company settled the lead plaintiffs’ remaining individual claims for a confidential amount, which was paid by the Company’s directors and ~~officers~~officer’s insurance carrier. Accordingly, the district court entered a final judgment dismissing the claims with prejudice on February 24, 2006.

In April 2006, the Company was notified by the Internal Revenue Service (“IRS”) that its federal income tax return for the 2004 tax year had been selected for review. In addition, in September 2006 the Company was notified by the IRS that the federal partnership income tax return of CPOC for the 2004 tax year had been selected for review. The IRS is currently conducting its reviews. At this time, the Company can make no representations or give any guidance regarding the potential outcome of this review and the impact, if any, on its financial position. However, the Company is not aware of any potential issues that may cause adjustment to its filed tax returns.

-69-

Table of Contents

ASCENDANT SOLUTIONS, INC.

Notes to Consolidated Financial Statements

In September 2006, the Chapter 7 trustee for the bankruptcy estate of Quantum North America, Inc. sought to enforce two default judgments against the Company for alleged preferential and fraudulent transfers to the Company's predecessor, ASD Systems, Inc. in the aggregate amount of approximately $150,000, plus interest and attorneys fees. The transfers at issue occurred in 2000. The adversary proceedings filed in the bankruptcy case were styled: David Gottlieb Trustee v. ASD Systems, Inc.; Adv. Nos. 1:02-ap-02131-GM and 1:02-ap-01948. The Company took the position that the judgments were void based on defective service and neither Ascendant nor ASD were afforded the opportunity to defend the claims. The Company also disputed the underlying claims and was prepared to fully defend the Trustee's suit once the judgments were set aside. After presenting the Trustee with our defenses, the Company was able to settle the claims for a nominal payment of $5,000.00. The Company has a settlement in principle with the Trustee which is pending approval by the Bankruptcy Court.

The Company is also occasionally involved in other claims and proceedings, which are incidental to its business. The Company cannot determine what, if any, material affect these matters will have on its future financial position and results of operations.

~~18.~~16. Related Party Transactions

During the fourth quarter of 2003, the Company entered into a participation agreement (the “Participation Agreement”) with Fairways Equities LLC (“Fairways”), an entity controlled by Jim Leslie, the Company’s Chairman, and Brant Bryan, Cathy Sweeney and David Stringfield who are principals of Capital Markets and shareholders of the Company (“Fairways Members”), pursuant to which the Company will receive up to 20% of the profits realized by Fairways in connection with all real estate acquisitions made by Fairways. Additionally, the Company will have an opportunity, but not the obligation, to invest in the transactions undertaken by Fairways. The Company’s profit participation with Fairways is subject to modification or termination by Fairways at the end of 2005 in the event that the aggregate level of cash flow (as defined in the Participation Agreement) generated by the acquired operating entities has not reached $2 million for the twelve months ended December 31, 2005. For the twelve months ended December 31, 2005, the Company did not meet this cash flow requirement and there has been no action taken by the Fairways Members to terminate the Participation Agreement. The Company is currently negotiating with the Fairways Members to modify the Participation Agreement, however, there can be no assurances that a mutually acceptable modification can be reached. The Company is unable to determine what real estate Fairways may acquire or the cost, type, location, or other specifics about such real estate.

~~-66-~~

~~Table of Contents~~

There can be no assurances that the Company will be able to generate the required cash flow to continue in the Fairways Participation Agreement after 2005, or that Fairways will be able to acquire additional real estate assets, that the Company will choose to invest in such real estate acquisitions or that there will be profits realized by such real estate investments. The Company does not have an investment in Fairways, but rather a profits interest through its Participation Agreement. As of December 31, 2005, the Company held a profits interest in one real estate development transaction pursuant to the Participation Agreement. The Company has no investment in the transaction, is not a partner in the investment partnership and it has received no distributions.

During the year ended December 31, 2005, CRESA Capital Markets Group, LP, a subsidiary of the Company received approximately $108,000 in cash advances from the 4 members of Fairways Equities, which were used to pay general operating expenses. The 4 members of Fairways Equities who each own 25% of its membership interests include James C. Leslie, the Chairman and principal shareholder of the Company, and Cathy Sweeney, Brant Bryan and David Stringfield, who are each shareholders of the Company as well as principals of CRESA Capital Markets Group, LP, a subsidiary of the Company (the “Fairways Members”). These non-interest bearing advances were repaid in full in December 2005 from the receipt of revenues from Capital Markets real estate advisory transactions.

Mr. James C. Leslie, the Company’s Chairman, controls, and Mr. Will Cureton, one of ~~our~~the Company’s directors, is indirectly a limited partner in the entity that owns the building in which the corporate office space is sub-leased by Ascendant and DHI.

Also, through August 2005, Capital Markets also paid rent for office space in the same building to an entity controlled by Mr. Leslie. The Company considers all of these leases to be at or below market terms for comparable space in the same building.

Beginning on March 16, 2005 and ending on October 13, 2006, Ascendant subleased space from an unrelated third party of approximately $7,000 per month. In October 2006, Ascendant began sharing office space with DHI. During the ~~years~~year ended December 31, 2006, DHI subleased space from an unrelated third party for $6,000 per month. In addition, Ascendant incurred certain shared office costs with an entity controlled by Mr. Leslie, which gives rise to reimbursements from the Company to that entity. These costs were approximately $9,000 in 2006.

-70-

Table of Contents

ASCENDANT SOLUTIONS, INC.

Notes to Consolidated Financial Statements

During the year ended December 31, 2005 ~~2004~~ and ~~2003,~~2004, Ascendant and Capital Markets paid aggregate rent of approximately $26,000 ~~$67,200~~ and ~~$45,000~~$67,200 directly to an entity controlled by Mr. Leslie. The remaining rent expense paid by Ascendant and DHI is paid under sublease agreements with an unrelated third party, and approximates $13,000 monthly. The Company also ~~incurs~~incurred certain shared office costs with an entity controlled by Mr. Leslie, which gives rise to reimbursements from the Company to that entity. These costs were approximately ~~$24,300, $22,800~~$24,000 and ~~$3,400~~$23,000 in 2005 ~~2004~~ and ~~2003,~~2004, respectively.

During the years ended December 31, 2006, 2005 and 2004, the Company paid fees to its directors of $2,500, $8,750 and $11,000, respectively, in exchange for their roles as members of the board of directors and its related committees. During 2006, the Company issued 99,770 shares of restricted stock to a director in lieu of cash fees for his role as members of the board of directors and its related committees for the year ended December 31, 2006. These restricted shares vested ratably over the three month period after the date of issuance. In July 2006, the Company issue 7,500 share of restricted stock to a director, for his annual restricted stock grant, which vests ratably over a three year period from the date of issuance. In July 2006, the Company issued 10,000 share of restricted stock to a newly elected director as his initial grant of restricted stock. This initial grant of restricted stock also vests ratably over a three year period from the date of issuance. Additionally, in May 2005, the Company issued 22,500 shares of restricted stock to directors in lieu of cash fees for their roles as members of the board of directors and its related committees for the year ended December 31, 2005. These restricted shares vested ratably at the end of each quarter ending June, September and December 2005, respectively.

The Company acquired CPOC on May 1, 2004 and in connection with that acquisition, it assumed a $500,000 note payable to Kevin Hayes, who is currently the Chairman of CPOC, and it entered into the Acquisition Note with Mr. Hayes. During the period from January 1, 2006 to June 2006, CPOC paid approximately $1,108,000 to Mr. Hayes for principal and interest under the assumed note and the Acquisition Note. In June 2006, ASDS entered into a credit agreement with First Republic Bank for a $5.3 million term note. The proceeds from the term note were used to retire the outstanding balance owed to Kevin Hayes under the Acquisition Note pursuant to the acquisition of CPOC in 2004 by the Company (through ASDS). The Acquisition Note was retired at a discount of approximately $100,000 to its outstanding principal balance of $ 5,400,000. During the year ended December 31, 2005 and for the period from the acquisition date through December 31, 2004, CPOC paid approximately $1,198,000 and $720,000, respectively to Mr. Hayes for principal and interest under the assumed note and the Acquisition Note.

Mr. Leslie, the Company’s Chairman, also serves as an advisor to the Board of Directors of CRESA Partners, LLC, a national real estate services firm. Also, Kevin Hayes, the Chairman of CPOC ~~serves~~served as the Chief Executive Officer of CRESA Partners, LLC from October 2005 to September 2006.

In March 2006, CPOC purchased a minority interest of approximately 2.7% in CRESA Partners, LLC. The amount paid for this investment was $160,000 and is accounted for under the cost method of accounting for investments. CPOC is a licensee of CRESA Partners, LLC.

In April 2004, the Company invested approximately $97,000 through ASE Investments for a 24.75% interest in Fairways 36864, LP, (whose other partners also included the Fairways Members) that participated in the development of and leaseback of single tenant commercial properties. In August and October 2004, respectively, these properties were sold and the Company recognized investment income of $84,000 in addition to the return of its original investment of $97,000.

The Company made an investment in Fairways 03 New Jersey, LP in December 2003, along with the Fairways Members and on substantially the same terms as the other limited partners in Fairways 03 New Jersey, LP. ~~As discussed in Note 17, the~~The Company agreed to indemnify the other partners of Fairways 03 New Jersey, LP (who are also the Fairways Members) for its 20% pro rata partnership interest of a guarantee of bank indebtedness which the partners provided to a bank. The limit of the Company’s indemnification under this agreement is $520,000. In December 2005, this bank debt was paid in full by Fairways 03 New Jersey LP and the Company’s limited indemnification agreement was cancelled.

Effective September 1, 2005, Capital Markets entered into an advisory services agreement with Fairways Equities whereby Fairways Equities will provide all of the professional and administrative services required by Capital Markets. In exchange, Capital Markets will pay Fairways Equities an administrative fee of 25% of gross revenues and a compensation fee of 40% of gross revenues, as compensation to the principals working on the transaction that generated the corresponding revenues.

Under the terms of the agreement, Fairways Equities assumed all of the administrative expenses, including payroll, of CRESA Capital Markets. Fairways Equities will only receive payments under the agreement if the Fairways Members close a real estate capital markets advisory transaction that generates revenue for Capital Markets. The impact of this agreement on Capital Markets is that it will have no administrative expenses or cash requirements unless it closes a revenue generating transaction. The principals in Capital Markets are also the four members of Fairways Equities. During the ~~year~~years ended December 31, 2006 and 2005, Capital Markets paid compensation fees to Fairways Equities under the advisory services agreement of approximately ~~$233,000.~~$262,000 and $233,000, respectively.

~~-67-~~-71-

Table of Contents

ASCENDANT SOLUTIONS, INC.

Notes to Consolidated Financial Statements

17.Unaudited Quarterly Financial Data for 2006 and 2005:

CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)
(In thousands except per share amounts)

	Quarters Ended 2006											2006
	March 31			June 30			Sept. 30			Dec. 31		YTD
							(Restated)
Revenue	$	13,604		$	12,889		$	12,284		$	16,640	$	55,417
Gross Profit		4,549			3,870			4,225			6,321		18,965
Income (loss) from continuing operations		(142	)		(410	)		(8	)		1,353		793
Discontinued operations		-			230			-			-		230
Net income (loss)		(142	)		(180	)		(8	)		1,353		1,023

Basic income (loss) per share:
Continuing operations	$	(0.01	)	$	(0.02	)		*		$	0.06	$	0.04
Discontinued operations	$	-		$	0.01		$	-		$	-	$	0.01
Net income (loss) per share, basic	$	(0.01	)	$	(0.01	)		*		$	0.06	$	0.05
Diluted income (loss) per share:
Continuing operations	$	(0.01	)	$	(0.02	)		*		$	0.06	$	0.04
Discontinued operations	$	-		$	0.01			-		$	-	$	0.01
Net income (loss) per share, diluted	$	(0.01	)	$	(0.01	)		*		$	0.06	$	0.05

Weighted average shares, basic		22,258			22,418			22,455			22,508		22,410
Weighted average shares, diluted		22,783			22,418			22,455			22,707		22,676

	Quarters Ended 2005										2005
	March 31		June 30			Sept. 30			Dec. 31		YTD

Revenue	$	13,269	$	12,576		$	12,023		$	15,099	$	52,967
Gross Profit		4,568		4,119			4,132			5,426		18,245
Income (loss) from continuing operations		1		(439	)		(452	)		1,185		295
Discontinued operations		-		-			(230	)		-		(230	)
Net income (loss)		1		(439	)		(682	)		1,185		65

Basic income (loss) per share:
Continuing operations		*	$	(0.02	)	$	(0.02	)	$	0.05	$	0.01
Discontinued operations	$	-		-			(0.01	)		-	$	(0.01	)
Net income (loss) per share, basic		*	$	(0.02	)	$	(0.03	)	$	0.05		*
Diluted income (loss) per share:
Continuing operations		*	$	(0.02	)	$	(0.02	)	$	0.05	$	0.01
Discontinued operations	$	-	$	-		$	(0.01	)	$	-	$	(0.01	)
Net income (loss) per share, diluted		*	$	(0.02	)	$	(0.03	)	$	0.05		*

Weighted average shares, basic		21,933		21,965			22,014			22,114		22,007
Weighted average shares, diluted		22,512		21,965			22,014			22,719		22,878
* Less than $0.01 per share

The quarterly earnings per share information will not tie across due to the different number of weighted average shares.

-72-

Table of Contents

ASCENDANT SOLUTIONS, INC.

Notes to Consolidated Financial Statements

As disclosed in a Current Report on Form 8-K filed on April 3, 2007, the Company identified an accounting error at our Park InfusionCare subsidiary where certain payments received from insurance companies during the year ended December 31, 2006 were incorrectly recorded as a liability. As a result, the Company will amend the previously filed Form 10-Q for the 3rd Quarter Financials with an aggregate impact of an increase to its previously reported revenue by $301,000 and will decrease its previously reported net loss by $179,000. As a result, the quarterly financial data for the quarter ended September 30, 2006 has been restated to reflect these adjustments.

As disclosed in a Current Report on Form 8-K filed on May 24, 2006, the board of directors decided to retain the operations of Park InfusionCare, which had previously been reported as a discontinued operation while the Company was pursuing a potential disposition or strategic transaction for its infusion therapy business. As a result of the board of director’s decision to retain the operations of Park InfusionCare, the Company has reported the operating results of Park InfusionCare as part of continuing operations. Consequently, the quarterly financial data for each quarter in 2005 have been adjusted to reflect Park InfusionCare as a part of continuing operations.

For the quarter ended March 31, 2005, these adjustments increased revenue by $2,388,000 and gross profit by $1,195,000. In addition, for the quarter ended June 30, 2005 these adjustments increased revenue by $2,461,000 and gross profit by $1,288,000. For the quarter ended September 30, 2005, these adjustments increased revenue by $2,261,000 and gross profit by $1,075,000. In addition, for the quarter ended December 31, 2005 these adjustments increased revenue by $1,961,000 and gross profit by $955,000. The Company also reclassified $108,000 in the quarter ended December 31, 2005 from other income to revenue as a result of the accounting error at Park InfusionCare. This reclassification entry was recorded to conform to the 2006 presentation. None of these adjustments had any effect on net income (loss) for any of the quarters.

~~19.~~~~Unaudited Quarterly Financial Data for 2005 and 2004:~~

CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)

(In thousands except per share amounts)

Quarters Ended 2005

2005

March 31

June 30

Sept. 30

Dec. 31

YTD

Revenue $ 10,881 $ 10,115 $ 9,762 $ 13,030 $ 43,788
Gross Profit 3,373 2,831 3,057 4,363 13,624
Income (loss) from continuing operations (46 ) (450 ) (174 ) 1,388 718
Discontinued operations 47 11 (508 ) (203 ) (653 )
Net income (loss) 1 (439 ) (682 ) 1,185 65

Basic income (loss) per share:

Continuing operations (0.00 ) (0.00 ) (0.10 ) 0.06 0.03
Discontinued operations 0.00 0.00 (0.02 ) (0.01 ) (0.03 )
Net income (loss) per share, basic 0.00 (0.02 ) (0.03 ) 0.05 0.00
Diluted income (loss) per share:

Continuing operations (0.00 ) (0.02 ) (0.01 ) 0.06 0.03
Discontinued operations 0.00 0.00 (0.02 ) (0.01 ) (0.03 )
Net income (loss) per share, diluted 0.00 (0.02 ) (0.03 ) 0.05 0.00

Weighted average shares, basic 21,933 21,965 22,014 22,114 22,007
Weighted average shares, diluted 22,512 21,965 22,014 22,719 22,878

Quarters Ended 2004

2004

March 31

June 30

Sept. 30

Dec. 31

YTD

Revenue $ 1,222 $ 9,497 $ 9,831 $ 11,075 $ 31,625
Gross Profit 609 2,963 3,125 3,356 10,053
Income (loss) from continuing operations (111 ) 70 (39 ) (7 ) (87 )
Discontinued operations 5 144 42 145 336
Net loss (106 ) 214 3 138 249

Basic income (loss) per share:

Continuing operations (0.01 ) 0.00 (0.00 ) (0.00 ) (0.00 )
Discontinued operations 0.00 0.01 0.00 0.01 0.02
Net income (loss) per share, basic (0.00 ) 0.01 0.00 0.01 0.01
Diluted income (loss) per share:

Continuing operations (0.01 ) 0.00 (0.00 ) (0.00 ) (0.00 )
Discontinued operations 0.00 0.01 0.00 0.01 0.02
Net income (loss) per share, diluted (0.00 ) 0.01 0.00 0.01 0.01

Weighted average shares, basic 21,666 21,733 21,883 21,933 21,804
Weighted average shares, diluted 21,666 21,925 22,419 22,600 22,389

~~The quarterly earnings per share information will not tie across due to the different number of weighted average shares.~~

~~-68-~~

~~Table of Contents~~

~~ASCENDANT SOLUTIONS, INC.~~

~~Notes to Consolidated Financial Statements~~

~~20.~~18. Subsequent Events

~~Subsequent to December 31, 2005, the Company settled class action securities litigation~~On February 20, 2007, Dougherty’s Pharmacy, Inc., Alvin Medicine Man, LP, Angleton Medicine Man, LP, and Santa Fe Medicine Man, LP), each a wholly-owned subsidiary of DHI, entered into a loan agreement with Amegy Bank National Association for a ~~confidential amount, which was paid by~~$2,000,000 revolving line of credit and a $2,200,000 term loan. Substantially all of the ~~Company’s directors~~proceeds from the Revolver and ~~officers insurance carrier. Accordingly,~~ the ~~district court entered a final judgment dismissing~~Term Loan were used to retire the ~~claims against the Company with prejudice on February 24, 2006.~~outstanding balance owed to Bank of Texas, N.A. under an existing credit facility. See Note 1710 for further information regarding ~~this litigation matter.~~the new credit facility.

~~21.~~19.Segment Information

The Company is organized in three segments: (i) healthcare, (ii) real estate advisory services and (iii) corporate and other businesses. The healthcare segment consists of the operations of DHI, while the real estate advisory services segment consists of the operations of the CRESA Partners of Orange County LP and CRESA Capital Markets Group LP. Key measures used by the Company’s management to evaluate business segment performance include revenue, cost of sales, gross profit, investment income and EBITDA. EBITDA is calculated as net income before deducting interest, taxes, depreciation and amortization. Although EBITDA is not a measure of actual cash flow because it does not consider changes in assets and liabilities that may impact cash balances, the Company believes it is a useful metric to evaluate operating performance.

~~Statements of operations and balance sheet data for the Company’s principal business segments for the years ended December 31, 2005 and 2004 are as follows (000’s omitted):~~

~~-69-~~-73-

Table of Contents

ASCENDANT SOLUTIONS, INC.

Notes to Consolidated Financial Statements

Delaware		75-2900905
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

16250 Dallas Parkway, Suite ~~205,~~100, Dallas, Texas		75248
(Address of principal executive offices)		(Zip Code)

	PART I.	Page
Item 1.	Business	2

Item 1A1A.	Risk Factors	1415

Item 1B.	Unresolved Staff Comments	22

Item 2.	Properties	2123

Item 3.	Legal Proceedings	2123

Item 4.	Submission of Matters to a Vote of Security Holders	2224

	PART II.

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases &of Equity Securities	2325

Item 6.	Selected Consolidated Financial Data	2426

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2527

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	3640

Item 8.	Consolidated Financial Statements and Supplementary Data	3842

Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	7175

Item 9A.	Controls and Procedures	7175

Item 9B.	Other Information	7176

	PART III.

Item 10.	Directors, ~~and~~ Executive Officers ~~of the Registrant~~and Corporate Governance	7277

Item 11.	Executive Compensation	7277

Item 12.	Security Ownership of Certain Beneficial Owners and Management
	and Related Stockholder Matters	7278

Item 13.	Certain Relationships and Related Transactions, and Director Independence	7278

Item 14.	Principal ~~Accountant~~Accounting Fees and Services	7378

	PART IV.

Item 15.	Exhibits and Financial Statement Schedules	7379

	Signatures	7480

Business Segment	Subsidiaries	Principal Business Activity
Healthcare	Dougherty’s Holdings, Inc. and Subsidiaries	Healthcare products and services provided through retail pharmacies, including specialty compounding pharmacy services and home infusion therapy centers

Real estate advisory services	CRESA Partners of Orange County, L.P., ASDS of Orange County, Inc., CRESA Capital Markets Group, L.P.	Tenant representation, lease management services, capital markets advisory services and strategic real estate advisory services

Corporate & other	Ascendant Solutions, Inc. and ASE Investments Corporation	Corporate administration, ~~principal real estate~~investments in Ampco Partners, Ltd., Fairways Frisco, L.P. and ~~investments not included in other segments~~Fairways 03 New Jersey, L.P.

Date	Entity	Business Segment	Transaction Description	% Ownership
April 2002	Ampco Partners, Ltd	Corporate & other	Investment in a non-sparking, non-magnetic safety tool manufacturing company	10%
August 2002	VTE, L.P.	Corporate & other	Investment to acquire early stage online electronic ticket exchange company	23%
October 2002	CRESA Capital Markets Group, L.P., ASE Investments Corporation	Real estate advisory services	Investment to form real estate capital markets and strategic advisory services companies	80%
November 2003	Fairways 03 New Jersey, L.P.	Corporate & other	Investment in a single tenant office building	20%
March 2004	Dougherty’s Holdings, Inc. and Subsidiaries	Healthcare	Acquisition of specialty pharmacies and infusion therapy centers	100%
April 2004	Fairways 36864, L.P.	Corporate & other	Investment in commercial real estate properties	24.75%
May 2004	CRESA Partners of Orange County, L.P., ASDS of Orange County, Inc.	Real estate advisory services	Acquisition of tenant representation and other real estate advisory services company	99%
December 2004	Fairways Frisco, L.P.	Corporate & other	Investment in a mixed-use real estate development	~~14%~~8.87%

							Cumulative		Cumulative		Cumulative
	Cumulative Cash		Cumulative Realized Cash		Cumulative Realized Cash		Cash		Realized Cash		Realized Cash
Segment	Investments		Returns		Return %		Investments		Returns		Returns %

Healthcare	$	1,500,000	$	814,000		54%	$	1,500,000	$	812,000		54	%
Real Estate Advisory Services		64,000		1,020,000		1,594%		64,000		1,434,000		2,241	%
Corporate & Other		1,992,000		1,868,000		94%		1,992,000		2,310,000		116	%
							$	3,556,000	$	4,556,000		128	%
	$	3,556,000	$	3,702,000		104%

	Balance at		Principal			Balance at							Balance at
	Acquisition		Payments			December 31, 2005		Balance at		Principal			December 31,
								Acquisition		Payments			2006
Bank of Texas Credit Facility	$	5,579,000		($ 1,120,000	)	$	4,459,000

Bank of Texas Credit Facility *								$	5,579,000	$	(1,364,000	)	$	4,215,000
AmerisourceBergen Note		750,000		(57,000	)		693,000		750,000		(92,000	)		658,000
Total debt assumed	$	6,329,000		($ 1,177,000	)	$	5,152,000	$	6,329,000	$	(1,456,000	)	$	4,873,000

												Acquisition
							Year Ended			Year Ended		Date to
							December 31,			December 31,		December 31,		Total
	Year Ended December 31, 2005		Acquisition Date to December 31, 2004		Total Distributions		2006			2005		2004		Distributions

Interest payments on Acquisition Note	$	480,000	$	211,000	$	691,000	$	201,000		$	480,000	$	211,000	$	892,000
Principal payments on Acquisition Note		718,000		-	$	718,000		6,082,000			718,000		-		6,800,000
Proceeds from First Republic Bank note								(5,300,000	)		-		-		(5,300,000	)
Interest payments on First Republic Bank note								223,000			-		-		223,000
Principal payments on First Republic Bank note								900,000			-		-		900,000
Total distributions received	$	1,198,000	$	211,000	$	1,409,000	$	2,106,000		$	1,198,000	$	211,000	$	3,515,000

					Year Ended				Year Ended				Acquisition Date
					December 31, 2006				December 31, 2005				to December 31, 2004
							Approximate				Approximate				Approximate
	Year Ended December 31, 2005		Acquisition Date to December 31, 2004		No. of		Transaction		No. of		Transaction		No. of		Transaction
	No. of Transactions	Approximate Transaction Value	No. of Transactions	Approximate Transaction Value	Transactions		Value		Transactions		Value		Transactions		Value
Revenue		$13,176,000		$8,858,000			$	13,531,000			$	13,176,000			$	8,858,000
Lease transactions	229	$432 million	200	$335 million		229	$	333 million		229	$	432 million		200	$	335 million
Real estate sales transactions	10	$44 million	7	$25 million		7	$	10 million		10	$	44 million		7	$	25 million
Project management transactions	50	$79 million	60	$45 million		71	$	85 million		50	$	79 million		60	$	45 million

																(in thousands, except per share data)
	(in thousands, except per share data)															December 31,
	2005			2004			2003			2002			2001			2006			2005			2004			2003			2002
Statements of Operations Data:
Revenues	$	43,788		$	31,625		$	505		$	-		$	2,284		$	55,417		$	52,967		$	39,291		$	505		$	-
Cost of revenues		30,164			21,572			-			-			2,242			36,452			34,722			25,055			-			-
Gross profit		13,624			10,053			505			-			42			18,965			18,245			14,236			505			-

Operating expenses:
Selling, general and administrative expenses		12,093			9,431			1,540			998			10,068			16,230			16,991			13,112			1,540			998
Impairment charges		-			-			112			-			5,892			-			-			-			112			-
Depreciation and amortization		611			443			63			18			2,158			713			652			494			63			18
Total operating expenses		12,704			9,874			1,715			1,016			18,118			16,943			17,643			13,606			1,715			1,016
Operating income (loss)		920			179			(1,210	)		(1,016	)		(18,076	)		2,022			602			630			(1,210	)		(1,016	)
Gain (loss) on disposal of assets		(1	)		(32	)		-			1			95
Loss on disposal of assets																	-			(1	)		(32	)		-			1
Equity in income (losses) of equity method investees		675			374			85			19			-			(356	)		675			374			85			19
Other income		73			19			-			-			-			155			73			19			-			-
Interest income (expense), net		(658	)		(405	)		30			59			364			(758	)		(763	)		(520	)		30			59
Minority interest		(50	)		(56	)		277			209			-			(65	)		(50	)		(56	)		277			209
Income tax provision		(241	)		(166	)		-			-			-			(205	)		(241	)		(166	)		-			-
Income (loss) from continuing operations		718			(87	)		(818	)		(728	)		(17,617	)		793			295			249			(818	)		(728	)
Income (loss) from discontinued operations		(653	)		336			-			-			-			230			(230	)		-			-			-
Net income (loss)	$	65		$	249		$	(818	)	$	(728	)	$	(17,617	)	$	1,023		$	65		$	249		$	(818	)	$	(728	)

Net income (loss) attributable to common shareholders	$	65		$	249		$	(818	)	$	(728	)	$	(17,617	)	$	1,023		$	65		$	249		$	(818	)	$	(728	)

Basic net income (loss) per share from:
Continuing operations	$	0.03			*		$	(0.04	)	$	(0.03	)	$	(0.83	)	$	0.04		$	0.01		$	0.01		$	(0.04	)	$	(0.03	)
Discontinued operations	$	(0.03	)	$	0.02		$	-		$	-		$	-		$	0.01		$	(0.01	)	$	-		$	-		$	-
	$	0.00		$	0.01		$	(0.04	)	$	(0.03	)	$	(0.83	)	$	0.05			*		$	0.01		$	(0.04	)	$	(0.03	)
Diluted net income (loss) per share
Continuing operations	$	0.03			*		$	(0.04	)	$	0.03		$	0.83		$	0.04		$	0.01		$	0.01		$	(0.04	)	$	0.03
Discontinued operations	$	(0.03	)	$	0.02		$	-		$	-		$	-		$	0.01		$	(0.01	)	$	-		$	-		$	-
	$	0.00		$	0.01		$	(0.04	)	$	(0.03	)	$	(0.83	)	$	0.05			*		$	0.01		$	(0.04	)	$	(0.03	)
* Less than $0.01 per share
Average common shares outstanding, basic		22,007			21,804			21,557			21,231			21,231			22,410			22,007			21,804			21,557			21,231
Average common shares outstanding, diluted		22,878			22,389			21,557			21,231			21,231			22,676			22,878			22,389			21,557			21,231

		2005			2004			2003			2002			2001
December 31,																	2006			2005			2004			2003			2002
Balance Sheet Data
Cash and cash equivalents	$	3,216		$	1,867		$	2,006		$	2,950		$	4,204		$	2,686		$	3,221		$	1,868		$	2,006		$	2,950
Working capital		3,539			4,320			2,120			3,063			4,000			(86	)		4,508			6,196			2,120			3,063
Assets held available for sale		2,207			2,626			-			-			-
Total assets		21,998			20,753			2,841			3,673			4,361			21,039			21,998			20,753			2,841			3,673
Liabilities related to assets held available for sale		2,897			2,271			-			-			-
Long-term debt (including current maturities)		10,235			10,634			-			-			-			9,930			11,924			12,616			-			-
Stockholders' equity		3,073			2,879			2,523			3,306			4,011			4,235			3,073			2,879			2,523			3,306

	Years Ended December 31,
	2005			2004

Income (loss) from discontinued operations:
Infusion therapy revenue	$	9,071,000		$	7,666,000
Cost of sales		4,558,000			3,483,000
Gross profit		4,513,000			4,183,000

Selling, general and administrative expenses		4,898,000			3,680,000
Depreciation and amortization		41,000			51,000
Interest expense, net		105,000			116,000
Other income		108,000			-
Charges related to discontinuance		230,000			-
Income (loss) from discontinued operations	$	(653,000	)	$	336,000

	Twelve Months Ended December 31, 2006
	Healthcare									Real Estate Advisory Services
	2006			2005			$ Change			2006			2005			$ Change
Revenue	$	41,062		$	39,136		$	1,926		$	14,355		$	13,831		$	524
Cost of Sales		28,048			26,517			1,531			8,404			8,205			199
Gross Profit		13,014			12,619			395			5,951			5,626			325
Operating expenses		12,292			13,143			(851	)		3,448			3,343			105
Equity in income (losses) of equity method investees		-			-			-			-			-			-
Other income		8			9			(1	)		100			-			100
Interest income (expense), net		(330	)		(330	)		-			(400	)		(444	)		44
Gain (loss) on sale of equipment		-			-			-			-			(1	)		1
Minority interests		-			-			-			(48	)		(37	)		(11	)
Income tax provision		-			-			-			(199	)		(209	)		10
Discontinued operations		230			(230	)		460			-			-			-
Net income	$	630		$	(1,075	)	$	1,705		$	1,956		$	1,592		$	364
Plus:
Interest (income) expense, net	$	330		$	330		$	-		$	400		$	444		$	(44	)
Income tax provision		-			-			-			199			209			(10	)
Depreciation & Amortization		391			332			59			297			304			(7	)
Discontinued operations		(230	)		230			(460	)		-			-			-
EBITDA from continuing operations	$	1,121		$	(183	)	$	1,304		$	2,852		$	2,549		$	303

	Twelve Months Ended December 31, 2006
	Corporate & Other									Consolidated
	2006			2005			$ Change			2006			2005			$ Change

Revenue	$	-		$	-		$	-		$	55,417		$	52,967		$	2,450
Cost of Sales		-			-			-			36,452			34,722			1,730
Gross Profit		-			-			-			18,965			18,245			720
Operating expenses		1,203			1,157			46			16,943			17,643			(700	)
Equity in income (losses) of equity method investees		(356	)		675			(1,031	)		(356	)		675			(1,031	)
Other income		47			64			(17	)		155			73			82
Interest income (expense), net		(28	)		11			(39	)		(758	)		(763	)		5
Gain (loss) on sale of equipment		-			-			-			-			(1	)		1
Minority interests		(17	)		(13	)		(4	)		(65	)		(50	)		(15	)
Income tax provision		(6	)		(32	)		26			(205	)		(241	)		36
Discontinued operations		-			-			-			230			(230	)		460
Net income	$	(1,563	)	$	(452	)	$	(1,111	)	$	1,023		$	65		$	958
Plus:
Interest (income) expense, net	$	28		$	(11	)	$	39		$	758		$	763		$	(5	)
Income tax provision		6			32			(26	)		205			241			(36	)
Depreciation & Amortization		25			16			9			713			652			61
Discontinued operations		-			-			-			(230	)		230			(460	)
EBITDA from continuing operations	$	(1,504	)	$	(415	)	$	(1,089	)	$	2,469		$	1,951		$	518

Contractual Obligations
As of December 31, 2005	Payments due by Period ($-000's omitted)
As of December 31, 2006											Payments due by Period ($-000's omitted)
	Less than		1-3		3-5		More than				Less than		1-3		3-5		More than
	1 year		Years		Years		5 years		Total		1 year		Years		Years		5 years		Total

Lease Obligations	$	1,198,000		2,975,000		831,000		2,292,000	$	7,296,000	$	1,260,000	$	2,147,000	$	1,127,000	$	2,007,000	$	6,541,000
Notes Payable		650,000		9,585,000		-		-	$	10,235,000		6,106,000		3,824,000		-		-		9,930,000

Total	$	1,848,000	$	12,560,000	$	831,000	$	2,292,000	$	17,531,000	$	7,366,000	$	5,971,000	$	1,127,000	$	2,007,000	$	16,471,000

	Fixed Rate		Variable		Total		Fixed Rate		Variable		Total

2006	$	425,000	$	225,000	$	650,000
2007		2,994,000		6,182,000		9,176,000	$	4,466,000	$	1,640,000	$	6,106,000
2008		32,000		-		32,000		43,000		1,200,000		1,243,000
2009		377,000		-		377,000		581,000		2,000,000		2,581,000
Thereafter		-		-		-		-		-		-
	$	3,828,000	$	6,407,000	$	10,235,000	$	5,090,000	$	4,840,000	$	9,930,000

	Page
ASCENDANT SOLUTIONS, INC.

~~Reports~~ Report of Independent Registered Public Accounting ~~Firms~~Firm	3943

Consolidated Balance Sheets as of December 31, ~~2005~~2006 and ~~2004~~2005	4144

Consolidated Statements of ~~Operations~~Income for the Years Ended December 31, 2006, 2005 ~~2004~~ and ~~2003~~2004	4245

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2006, 2005 ~~2004~~ and ~~2003~~2004	4346

Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, 2005 ~~2004~~ and ~~2003~~2004	4447

Notes to Consolidated Financial Statements	4649

							2006			2005		2004
	2005		2004		2003
Equity in income (losses) of equity method investees	$	100,000	$	82,000	$	66,000	$	96,000		$	100,000	$	82,000
Return of capital		14,000		29,000		46,000		48,000			14,000		29,000

Payments on demand note								(60,000	)		-		-
Total distributions received	$	114,000	$	111,000	$	112,000	$	84,000		$	114,000	$	111,000

ASCENDANT SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(000's omitted, except share amounts)

	December 31,			December 31,
	2005			2004

ASSETS

Cash and cash equivalents	$	3,216		$	1,867
Trade accounts receivable, net		3,492			4,129
Other receivables		165			156
Receivable from affiliates		85			71
Inventories		2,569			2,201
Prepaid expenses		451			502
Assets held available for sale		2,207			2,626
Total current assets		12,185			11,552
Property and equipment, net		909			629
Goodwill		7,299			7,299
Other intangible assets		426			758
Equity method investments		1,086			410
Other assets		93			105
Total assets	$	21,998		$	20,753

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable	$	2,583		$	1,407
Accrued liabilities		2,516			3,098
Notes payable, current		650			456
Liabilities related to assets held available for sale		2,897			2,271
Total current liabilities		8,646			7,232
Notes payable, long-term		9,585			10,178
Minority interests		694			464
Total liabilities		18,925			17,874
Commitments and contingencies (Notes 11 & 17)

Stockholders' equity:
Common stock, $0.0001 par value; 50,000,000 shares authorized; 22,180,900 and 21,933,400 shares issued and outstanding at December 31, 2005 and 2004, respectively		2			2
Additional paid-in capital		60,078			59,961
Deferred compensation		(66	)		(78	)
Accumulated deficit		(56,941	)		(57,006	)
Total stockholders' equity		3,073			2,879
Total liabilities and stockholders' equity	$	21,998		$	20,753

See accompanying notes to the Consolidated Financial Statements

ASCENDANT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(000's omitted, except share and per share amounts)

	Years Ended December 31,
	2005			2004			2003
Revenue:
Healthcare	$	29,957		$	21,866		$	-
Real estate advisory services		13,831			9,759			505
		43,788			31,625			505
Cost of sales:
Healthcare		21,959			16,185			-
Real estate advisory services		8,205			5,387			-
		30,164			21,572			-
Gross profit		13,624			10,053			505

Operating expenses:
Selling, general and administrative expenses		12,012			9,373			1,540
Non-cash stock compensation		81			58			-
Impairment charges		-			-			112
Depreciation and amortization		611			443			63
Total operating expenses		12,704			9,874			1,715
Operating income (loss)		920			179			(1,210	)
Equity in income of equity method investees		675			374			66
Other income		73			19			19
Interest income (expense), net		(658	)		(405	)		30
Loss on sale of property and equipment		(1	)		(32	)		-
Income (loss) before minority interest and income tax provision		1,009			135			(1,095	)
Minority interest		50			56			(277	)
Income tax provision		241			166			-
Income (loss) from continuing operations		718			(87	)		(818	)
Income (loss) from discontinued operations		(653	)		336			-
Net income (loss)	$	65		$	249		$	(818	)

Basic net income (loss) per share
Continuing operations	$	0.03			*		$	(0.04	)
Discontinued operations	$	(0.03	)	$	0.02		$	-
	$	0.00		$	0.01		$	(0.04	)
Diluted net income (loss) per share
Continuing operations	$	0.03			*		$	(0.04	)
Discontinued operations	$	(0.03	)	$	0.02		$	-
	$	0.00		$	0.01		$	(0.04	)
* Less than $0.01 per share

Average common shares outstanding, basic		22,006,733			21,803,817			21,557,150
Average common shares outstanding, diluted		22,877,704			22,389,267			21,557,150

See accompanying notes to the Consolidated Financial Statements.

ASCENDANT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(000's omitted, except share amounts)


	Common Stock				Additional								Total
	Class A				Paid-in		Deferred			Accumulated			Stockholders'
	Shares		Amount		Capital		Compensation			Deficit			Equity

Balance at January 1, 2003		21,230,900	$	2	$	59,822	$	(81	)	$	(56,437	)	$	3,306
Issuance of restricted stock to officers		435,000		-		-		-			-			-
Amortization of deferred compensation		-		-		-		35			-			35
Net loss		-		-		-		-			(818	)		(818	)
Balance at December 31, 2003		21,665,900	$	2	$	59,822	$	(46	)	$	(57,255	)	$	2,523
Exercise of stock options		200,000		-		49		-			-			49
Non-cash stock option compensation		-		-		18		-			-			18
Issuance of restricted stock to officers & directors		67,500		-		72		(72	)		-			-
Amortization of deferred compensation		-		-		-		40			-			40
Net income		-		-		-		-			249			249
Balance at December 31, 2004		21,933,400	$	2	$	59,961	$	(78	)	$	(57,006	)	$	2,879
Exercise of stock options		200,000		-		48		-			-			48
Issuance of restricted stock to directors		47,500		-		69		(69	)		-			-
Amortization of deferred compensation		-		-		-		81			-			81
Net income		-		-		-		-			65			65
Balance at December 31, 2005		22,180,900	$	2	$	60,078	$	(66	)	$	(56,941	)	$	3,073

ASCENDANT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's omitted)

	Years Ended December 31,
	2005			2004			2003
Operating Activities

Net income (loss)	$	65		$	249		$	(818	)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Provision for doubtful accounts		143			161			-
Depreciation and amortization		611			443			63
Deferred compensation amortization		81			41			35
Non-cash equity in losses (income) of equity method investees
Fairways Frisco, LP		537			-			-
Fairways 03 New Jersey, LP		(162	)		-			-
Non-cash stock option compensation		-			18			-
Loss on sale of property and equipment		1			41			-
Impairment charges		-			-			112
Minority interest		50			56			(277	)
Loss (income) from discontinued operations		653			(336	)		-
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable		494			(274	)		(3	)
Inventories		(368	)		(188	)		-
Prepaid expenses and other assets		40			(52	)		13
Accounts payable		1,176			(59	)		(21	)
Accrued liabilities		(582	)		178			10

Net cash provided by (used in) continuing operations		2,739			278			(886	)
Net cash provided by discontinued operations		1,569			1,481			-
Net cash provided by (used in) operating activities		4,308			1,759			(886	)

Investing Activities

Return of capital distributions		13			30	��		46
Proceeds from sale of property and equipment		-			38			-
Deferred acquisition costs		-			310			(310	)
Net cash acquired in acquisitions		-			1,614			-
Purchases of property and equipment		(560	)		(160	)		(32	)
Distributions to limited partners		(50	)		(31	)		-
Investment in limited partnerships		(1,065	)		(155	)		(146	)
Return of investment in limited partnerships		-			-			145
Payment of acquisition liabilities		-			(1,350	)		-

Net cash provided by (used in) continuing operations		(1,662	)		296			(297	)
Net cash used in discontinued operations		(9	)		(15	)		-
Net cash provided by (used in) investing activities		(1,671	)		281			(297	)

ASCENDANT SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(000's omitted, except par value and share amounts)

	December 31,			December 31,
	2006			2005

ASSETS

Cash and cash equivalents	$	2,686		$	3,221
Trade accounts receivable, net		5,339			5,108
Other receivables		387			171
Receivable from affiliates		66			85
Inventories, net		2,832			2,827
Prepaid expenses		637			452
Total current assets		11,947			11,864
Property and equipment, net		1,019			1,222
Goodwill		7,299			7,299
Other intangible assets		95			426
Equity method investments		419			1,086
Other assets		260			101
Total assets	$	21,039		$	21,998

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable	$	2,293		$	3,455
Accrued liabilities		3,634			2,852
Notes payable, current		6,106			1,049
Total current liabilities		12,033			7,356
Notes payable, long-term		3,824			10,875
Minority interests		947			694
Total liabilities		16,804			18,925
Commitments and contingencies (Notes 10 and 15)

Stockholders' equity:
Common stock, $0.0001 par value; 50,000,000 shares authorized; 22,508,170 and 22,180,900 shares issued and outstanding at December 31, 2006 and 2005, respectively		2			2
Additional paid-in capital		60,176			60,078
Deferred compensation		(25	)		(66	)
Accumulated deficit		(55,918	)		(56,941	)
Total stockholders' equity		4,235			3,073
Total liabilities and stockholders' equity	$	21,039		$	21,998

See accompanying notes to the Consolidated Financial Statements

ASCENDANT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
(000's omitted)


	Years Ended December 31,
	2005			2004			2003
Financing Activities

Proceeds from exercise of common stock purchase options		48			49			-
Proceeds from sale of limited partnership interests		230			230			239
Payments on notes payable		(1,287	)		(1,058	)		-
Proceeds from notes payable		341			-			-

Net cash provided by (used in) continuing operations		(668	)		(779	)		239
Net cash used in discontinued operations		(620	)		(1,400	)		-
Net cash (used in) provided by financing activities		(1,288	)		(2,179	)		239

Net increase (decrease) in cash and cash equivalents		1,349			(139	)		(944	)
Cash and cash equivalents at beginning of year		1,867			2,006			2,950

Cash and cash equivalents at end of year	$	3,216		$	1,867		$	2,006

Supplemental Cash Flow Information
Cash paid for income taxes	$	502		$	-		$	-
Cash paid for interest on notes payable	$	728		$	497		$	-

See accompanying notes to the Consolidated Financial Statements.

ASCENDANT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(000's omitted, except share and per share amounts)

	Years Ended December 31,
	2006			2005			2004
Revenue:
Healthcare	$	41,062		$	39,136		$	29,532
Real estate advisory services		14,355			13,831			9,759
		55,417			52,967			39,291
Cost of sales:
Healthcare		28,048			26,517			19,668
Real estate advisory services		8,404			8,205			5,387
		36,452			34,722			25,055
Gross profit		18,965			18,245			14,236

Operating expenses:
Selling, general and administrative expenses		16,190			16,910			13,054
Non-cash stock compensation		40			81			58
Depreciation and amortization		713			652			494
Total operating expenses		16,943			17,643			13,606
Operating income		2,022			602			630
Equity in income of equity method investees		(356	)		675			374
Other income		155			73			19
Interest income (expense), net		(758	)		(763	)		(520	)
Loss on sale of property and equipment		-			(1	)		(32	)
Income before minority interest and income tax provision		1,063			586			471
Minority interest		65			50			56
Income tax provision		205			241			166
Income from continuing operations		793			295			249
Income (loss) from discontinued operations		230			(230	)		-

Net income	$	1,023		$	65		$	249

Basic net income (loss) per share
Continuing operations	$	0.04		$	0.01		$	0.01
Discontinued operations	$	0.01		$	(0.01	)	$	-
	$	0.05			*		$	0.01
Diluted net income (loss) per share
Continuing operations	$	0.04		$	0.01		$	0.01
Discontinued operations	$	0.01		$	(0.01	)	$	-
	$	0.05			*		$	0.01
* Less than $0.01 per share

Average common shares outstanding, basic		22,409,814			22,006,733			21,803,817
Average common shares outstanding, diluted		22,675,722			22,877,704			22,389,267
See accompanying notes to the Consolidated Financial Statements.

							December 31			December 31
	December 31			December 31			2006			2005
	2005			2004
Inventory-retail pharmacy	$	1,849,000		$	1,498,000		$	1,650,000		$	1,849,000
Inventory-infusion/homecare		162,000			183,000			537,000			448,000
Inventory-general retail		568,000			578,000			665,000			568,000
Less: Inventory reserves		(10,000	)		(58,000	)		(20,000	)		(38,000	)
	$	2,569,000		$	2,201,000		$	2,832,000		$	2,827,000


	Estimated		December 31,			December 31,			Estimated		December 31,			December 31,
	Useful Lives		2005			2004			Useful Lives		2006			2005

Computer equipment and software		3 to 5 years	$	493,000		$	280,000			3 to 5 years	$	657,000		$	539,000
Furniture, fixtures and equipment		5 to 7 years		332,000			274,000			5 to 7 years		684,000			652,000
Leasehold improvements		Life of Lease		569,000			283,000			Life of Lease		609,000			607,000
Automotive equipment										5 years		12,000			-
				1,394,000			837,000					1,962,000			1,798,000
Less accumulated depreciation and amortization				(485,000	)		(208,000	)				(943,000	)		(576,000	)
			$	909,000		$	629,000				$	1,019,000		$	1,222,000

	Park Assets			CPOC

Net cash acquired	$	1,396,000		$	141,000
Trade accounts receivable		5,044,000			2,604,000
Inventory		2,281,000			-
Furniture, fixtures and equipment		547,000			312,000
Other assets		166,000			297,000
Patient prescriptions		544,000			-
Goodwill		-			7,299,000
Non-compete agreements		-			450,000
Accounts payable and accrued liabilities		(2,983,000	)		(2,910,000	)
Line of credit payable under secured $800,000 bank credit facility		-			(500,000	)
Note payable to related party		-			(500,000	)
Notes payable under equipment financing obligations		(23,000	)		(93,000	)
Allocated purchase price	$	6,972,000		$	7,100,000

	Patient		Non-compete		Patient		Non-compete
	Prescriptions		Agreements		Prescriptions		Agreements		Total

2006	$	181,000	$	150,000
2007		45,000		50,000	$	45,000	$	50,000	$	95,000
Thereafter		-		-		-		-		-
	$	226,000	$	200,000	$	45,000	$	50,000	$	95,000

	Ownership		Original		December 31,		December 31,		Ownership			Original		December 31,		December 31,
	%		Investment		2005		2004		%			Investment		2006		2005

Ampco Partners, Ltd.		10%	$	400,000	$	242,000	$	256,000		10	%	$	400,000	$	194,000	$	242,000
Fairways 03 New Jersey, LP		20%		145,000		162,000		-		20	%		145,000		-		162,000
Fairways Frisco, LP		14%		1,219,000		682,000		154,000		8.87	%		1,219,000		225,000		682,000
			$	1,764,000	$	1,086,000	$	410,000				$	1,764,000	$	419,000	$	1,086,000

Insurance premium finance notes payable
Term note payable in the principal amount of $86,250, payable in 9 equal installments of $9,804 through August 2006, interest payable at the fixed rate of 5.50%, secured by the Company's directors and officers insurance policies.	-	76,000
Term note payable in the principal amount of $82,875, payable in 9 equal installments of $9,450 through August 2007, interest payable at the fixed rate of 6.25%, secured by the Company's directors and officers insurance policies.	74,000	-
	9,930,000	11,924,000
Less current portion	(6,106,000)	(1,049,000)
	$3,824,000	$10,875,000