As filed with the Securities and Exchange Commission on December 30, 1998
Registration No. 333-61259
====================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT #1 TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
ASI ENTERTAINMENT, INC.
---------------------------------
(Exact Name of registrant as specified in its charter)
Delaware 52-2101695 3728
(State or other jurisdiction (I.R.S. Employer (Primary Standard
of incorporation or Identification Industrial Code
organization) Number)
Ronald J. Chapman, President
Suite 3, 1601 Main Road
Research, Victoria, 3095 Australia
613 9 437 1233
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
Richard Mason
15200 East Girard Avenue
Suite 3000
Aurora, Colorado 80014
Tel: 303/627-4480 Fax: 303/627-4783
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to: Cassidy & Associates, 1504 R Street, N.W.
Washington, D.C. 20009, 202/387-5400
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of
this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. / X /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Amount to be Proposed Proposed Amount of
Class of Registered Maximum Maximum Registration
Securities to Offering Aggregate Fee (1)(2)
be Registered Price Per Offering
Share Price
<S> <C> <C> <C> <C>
Common Stock
held by Selling
Security 5,754,337 $.0306(1) $176,083 $58
Common Stock
Options held by
Selling 4,927,173 $0.50(1) $2,463,586 $813
Security Holders
Shares of Common
Stock underlying
Options 4,927,173 -- -- --
TOTAL $2,639,669 $871(3)
</TABLE>
(1) There is no current market for the securities and the dollar amount
of the shares to be registered is de minimis based upon the
estimated per share of Common Stock book value ($.0306).
(2) Estimated solely for the purpose of calculating the registration fee
based on Rule 457(f)(2).
(3) Previously paid by electronic transfer.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION
STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO
DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES
THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER
BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH
DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
PROSPECTUS Subject to Completion, Dated ____, 1998
ASI ENTERTAINMENT, INC.
5,754,337 shares of Common Stock to be sold by the
Holders thereof
4,927,173 Options and 4,927,173 shares of Common Stock
underlying such Options
The Registration Statement of which this
Prospectus is a part relates to the offer and sale of
certain securities of ASI Entertainment, Inc., a
recently created Delaware Corporation (the "Company")
by the 36 holders thereof (the "Selling
Securityholders") including (i) 5,754,337 shares (the
"Shares") of the Company's common stock, par value
$.0001 per share (the "Common Stock")(ii) 4,927,173
transferable Options (the "Options") and (iii)
4,927,173 shares of Common Stock issuable upon
exercise of the Options (the "Option Shares"). The
Shares, Options and Option Shares are hereinafter
collectively referred to as the "Securities". All
costs incurred in the registration of the Securities
are being borne by the Company.
The Company, a development stage Delaware
corporation, was formed on April 29, 1998. The
Company acquired all the outstanding stock of ASI
Entertainment Pty. Ltd., an existing Australian
corporation, in exchange for shares of Common Stock of
the Company. The Company has three wholly owned
subsidiaries, ASI Entertainment Pty. Ltd. (Australia),
ASI Media Pty. Ltd. (an Australian subsidiary of ASI
Entertainment Pty. Ltd.) and ASI Technologies, Inc., a
newly created Delaware company. See "THE COMPANY."
(Unless otherwise indicated, ASI Entertainment, Inc.
and its subsidiaries are hereinafter collectively
referred to as the "Company.")
The Company offers to commercial airlines an
integrated data communication and in-flight digital
video entertainment system (the "ASI-9000 Program")
which provides system integration, airline
efficiencies, crew and passenger communications,
passenger information and entertainment, and value
added services tailored to its respective airline
customers' requests. The Company anticipates
receiving revenue from the sale of the advertising
space available in the video and audio programs as
well as other advertising areas. Since July, 1997,
the Company has installed the ASI-9000 Program on nine
aircraft operated by Air Europa, a Spanish airline,
but has yet to receive significant revenues from
advertisers or sponsors. See "BUSINESS".
The Company has limited operations, revenue
and capital. Prior to the Company's offering of the
Securities described herein, there has been no public
market for the Common Stock or Options of the Company
and there are no assurances that a public market will
develop following completion of this Offering or that,
if any such market does develop, it will be sustained.
The Options may be transferred immediately
upon the date that the registration statement of which
this Prospectus is a part (the "Registration
Statement") becomes or is declared effective by the
Securities and Exchange Commission (the "Effective
Date"). Each Option allows the holder thereof to
purchase one share of Common Stock at an exercise
price of $0.50 until June 30, 2000.
The Securities will become tradeable on the
Effective Date of this Prospectus. Sales of the
Securities being offered by Selling Securityholders,
or even the potential of such sales, may likely have
an adverse effect on the market prices of the
securities of the Company. The Selling
Securityholders will receive the proceeds from the
sale of the Securities being offered by them. The
Company will not receive any of the proceeds from such
sales. The Selling Securityholders, directly or
through agents, dealers or representatives to be
designated from time to time, may sell their
Securities on terms to be determined at the time of
sale. See "PLAN OF DISTRIBUTION." The Selling
Securityholders reserve the sole right to accept or
reject, in whole or in part, any proposed purchase of
the Securities being offered by them.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" CONTAINED IN THIS PROSPECTUS BEGINNING
ON PAGE 7.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
FOLLOWING THE COMPLETION OF THIS OFFERING,
CERTAIN BROKER-DEALERS MAY BE THE PRINCIPAL MARKET
MAKERS FOR THE SECURITIES OFFERED HEREBY. UNDER THESE
CIRCUMSTANCES, THE MARKET BID AND ASKED PRICES FOR THE
SECURITIES MAY BE SIGNIFICANTLY INFLUENCED BY
DECISIONS OF THE MARKET MAKERS TO BUY OR SELL THE
SECURITIES FOR THEIR OWN ACCOUNT. NO ASSURANCE CAN BE
GIVEN THAT ANY MARKET MAKING ACTIVITIES OF THE MARKET
MAKERS, IF COMMENCED, WILL BE CONTINUED.
IN CONNECTION WITH THIS OFFERING, CERTAIN
UNDERWRITERS MAY ENGAGE IN PASSIVE MARKET MAKING
TRANSACTIONS IN THE COMPANY'S COMMON STOCK ON NASDAQ
IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE
"PLAN OF DISTRIBUTION".
FOR A PERIOD OF AT LEAST ONE YEAR FOLLOWING
CLOSING OF THIS OFFERING, THE COMPANY WILL BE REQUIRED
BY THE SECURITIES EXCHANGE ACT OF 1934 TO FILE
PERIODIC REPORTS AND OTHER INFORMATION WITH THE
SECURITIES AND EXCHANGE COMMISSION. SUCH MATERIAL MAY
BE INSPECTED AT THE COMMISSION'S PRINCIPAL OFFICES AT
JUDICIARY PLAZA, 450 FIFTH STREET, N.W. WASHINGTON,
D.C. 20459 OR AT ITS WEB SITE HTTP://WWW.SEC.GOV AND
COPIES MAY BE OBTAINED ON PAYMENT OF CERTAIN FEES
PRESCRIBED BY THE COMMISSION. THE COMPANY WILL
FURNISH TO HOLDERS OF ITS COMMON STOCK ANNUAL REPORTS
CONTAINING AUDITED FINANCIAL STATEMENTS EXAMINED AND
REPORTED UPON, AND WITH AN OPINION EXPRESSED BY AN
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT. THE COMPANY
MAY ISSUE OTHER UNAUDITED INTERIM REPORTS TO ITS
SHAREHOLDERS AS IT DEEMS APPROPRIATE.
[LEGEND FOR RED HERRING PROSPECTUS ]
The information contained herein is subject to
completion or amendment. A registration statement
relating to these securities has been filed with the
Securities and Exchange Commission. These securities
may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes
effective. This prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy
nor shall there be any sale of these securities in any
state in which such offer, solicitation or sale would
be unlawful prior to registration or qualification
under the securities laws of any such state.
<TABLE>
<S> <C> <C> <C>
Underwriting Proceeds
Price to Discounts and to Company
Public Commissions(2) or Other Persons
Per Share Unknown $ 0 (3)
Per Option Unknown $ 0 (3)
Total Unknown $ 0 (3)
</TABLE>
(1) All the securities are being sold by the
Selling Securityholders and no offering price
to the public has been determined. Each
Selling Securityholder will sell its
securities in separate transactions at prices
to be negotiated at that time.
(2) The Securities are being sold by the Selling
Securityholders and the Company has no
agreements or understandings with any broker
or dealer for the sales of such Securities. A
Selling Securityholder may determine to use a
broker-dealer in the sale of its securities
and the commission paid to such broker-dealer
if any, will be determined at that time.
Prior to the involvement of any such
broker-dealer, such broker-dealer must seek
and obtain clearance of the compensation
arrangements from the National Association of
Securities Dealers, Inc. In such event, the
Company will file a post effective amendment
identifying such broker-dealer(s).
(3) The Company will not receive any proceeds from
the sale of the Securities. The Selling
Securityholders will receive the proceeds from
the sale of such Securities. The Company will
receive the proceeds from the exercise, if
any, of the Options. See "DESCRIPTION OF
SECURITIES".
The date of this Prospectus is ________________, 1998.
PROSPECTUS SUMMARY
The following summary is qualified in its
entirety by reference to and should be read in
conjunction with more detailed information and
financial data (including the financial statements and
the notes thereto) appearing elsewhere in this
Prospectus. Each prospective investor is urged to
read this Prospectus in its entirety, including the
financial data. All dollar figures are reported in
U.S. dollars unless otherwise indicated as Australian
dollars. As of August 8, 1998 the exchange rate for
US$1.00 was A$1.65.
1. THE COMPANY. ASI Entertainment, Inc. (the
"Company"), is a development stage Delaware
corporation. In July, 1998, the Company acquired all
the outstanding shares of common stock of ASI
Entertainment Pty. Ltd., an existing Australian
corporation specializing in in-flight entertainment in
an exchange for shares of the Company's Common Stock.
As a result of the stock exchange, ASI Entertainment
Pty. Ltd. and its Australian subsidiary, ASI Media
Pty. Ltd., became wholly-owned subsidiaries of the
Company. ASI Technologies, Inc., a newly created
Delaware corporation, is also a wholly-owned
subsidiary of the Company. Unless otherwise
indicated, the Company and its subsidiaries are
collectively referred herein to as the "Company". ASI
Entertainment Pty. Ltd. was a wholly owned subsidiary
of ASI Technologies Pty. Ltd. ("ASIT Australia"), an
Australian corporation, until 1996 when it became an
independent corporation through a corporate
restructuring. Certain of the officers, directors and
Selling Securityholders of the Company are
shareholders of ASIT Australia and Messrs. Chapman and
Chappell, directors of the Company, are the directors
of ASIT Australia. See "MANAGEMENT". The United
States offices of the Company are located at 15200
East Girard Avenue, Suite 3000 Aurora, Colorado 80014.
The Australian offices are located at Suite 3, 1601
Main Road, Research, Victoria, 3095 Australia.
2. BUSINESS OPERATIONS. The Company began
operations in July, 1997 and has limited sales and
revenues to date. See "FINANCIAL STATEMENTS" and
"BUSINESS". The Company has acquired from ASIT
Australia the ASI-9000 Program. The ASI-9000 Program
consists of and integrates (i) the ACAMS II, a cabin
management and communication hardware system, (ii) a
computer video system and (iii) a marketing program
for destination and corporate advertising on-board
commercial aircraft. The ACAMS system was developed
and is owned by ASIT Australia and flight tested on
Qantas Airways. The ACAMS II system is currently
undergoing a certification process to achieve approval
of the Federal Aviation Administration ("FAA") for use
on commercial aircraft. Once certified, the Company
intends to purchase the ACAMS II terminals from ASIT
Australia. The Company enters into agreements with
commercial airlines for the installation and
maintenance of the ASI-9000 Program. The ASI-9000
Program is designed to generate revenues from the sale
of advertising space on the in-flight video and audio
programs as well as other possible forms of
advertising from destination sponsors and
corporations. The Company subcontracts the
production, installation, and maintenance of the
ASI-9000 Program. Until final certification of the
ACAMS II, the Company is using the CMA-3200 computer
platform for installation of the ASI-9000 Program.
The Company has entered into an agreement with and has
installed the ASI-9000 Program on nine aircraft owned
by Air Europa, a Spanish airline.
3. THE OFFERING. The Company is not offering
any shares for sale. The Securities offered by the
Selling Securityholders included in the Registration
Statement of which this Prospectus is a part consist
of (i) 5,754,337 Shares (ii) 4,927,173 transferable
Options, and (iii) 4,927,173 shares of Option Stock.
The Shares of Common Stock offered by the Selling
Securityholders hereby, without giving effect to the
exercise of any Options, constitute 100% of the
outstanding Common Stock of the Company.
4. THE MARKET. The Company will market its
products to small and mid-sized United States domestic
and foreign airlines with approximately 10 to 200
aircraft, that operate with tight budgetary
constraints, and that compete with the major airlines.
The Company intends to sell its products utilizing
foreign media agents. The Company believes that Air
Europa and other airlines will choose to install the
Company's program because it allows the airline to
provide passengers value-added services at little cost
to the airline. The Company believes that its current
and future advertisers and sponsors will choose to
advertise on the Company's program because of the
relatively inexpensive cost of reaching a highly
targeted audience. In-flight advertisements will
promote a client advertiser's goods and services prior
to arrival in a destination city. Passengers will be
able to purchase products or make bookings directly
with participating advertisers. The Company believes
this advertising will be especially attractive to
companies offering goods or services in the
destination city. The Company believes that the
results from the testing of the system on Hawaiian
Airlines show that there is a market for destination
advertisers. See "BUSINESS".
5. USE OF PROCEEDS. The Company will not
receive any proceeds from the sale of the Securities
offered herein.
6. OFFERED BY. The Selling Securityholders
are offering the Securities through their own efforts
and, possibly, through one or more broker-dealers. If
used, broker-dealers may receive a selling commission
of the proceeds from the sale of the securities. No
selling commission will be paid to any officer of
director of the Company.
7. TRANSFER AGENT. Continental Stock
Transfer & Trust Company acts as transfer agent for
the Securities. See "DESCRIPTION OF
SECURITIES--Transfer Agent and Registrar."
8. TRADING MARKET. The Company intends to
initially apply for admission to quotation of its
securities on the NASD OTC Bulletin Board. The
Company intends to apply for listing on the Nasdaq
SmallCap Market when, and if, it qualifies for such
admission. There can be no assurance that the
Company's securities will be listed on any such
exchange or that the Company will meet the admission
requirements of the NASD OTC Bulletin Board or the
Nasdaq SmallCap Market. See "RISK FACTORS -- No
Current Trading Market for the Company's Securities"
and "DESCRIPTION OF SECURITIES - Admission to
Quotation to Nasdaq SmallCap Market and NASD OTC
Bulletin Board".
SELECTED FINANCIAL DATA
The following table sets forth selected
financial information in U.S. dollars concerning ASI
Entertainment Pty. Ltd. for the fiscal year ended June
30, 1998 and the unaudited selected financial
information for September 30, 1998.
At September 30, 1998 At June 30, 1998
(unaudited) (Audited)
Balance Sheet Data:
Current assets $26,318 $ 90,268
Fixed and other assets 1,406,839 1,446,460
Total Assets 1,433,157 1,536,728
Total Liabilities 5,949 8,271
Stockholders' equity (deficit) 1,427,208 1,528,457
Total Liabilities and Equity $ 1,433,157 1,536,728
Three Months Ended Year Ended
September 30 (Unaudited) June 30 (Audited)
1998 1997 1998
Income Statement Data:
Net Sales $ 17,735 $20,006 $44,957
Cost of Sales 9,293 10,003 22,478
Gross Profit 8,442 10,003 22,479
Operating Expenses 101,138 66,163 496,258
Net Loss $ (92,696) $(56.160) $(473,779)
The selected financial data above for the year
ended June 30, 1998 is a summary only and has been
derived from and is qualified in its entirety by
reference to the Company's financial statements and
the report related thereto from Weinberg & Company,
Certified Public Accountants, included elsewhere in
this Prospectus. See "EXPERTS" and "FINANCIAL
STATEMENTS."
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN
NATURE AND INVOLVE A HIGH DEGREE OF RISK. THEREFORE,
EACH PROSPECTIVE INVESTOR SHOULD, PRIOR TO PURCHASE,
CONSIDER VERY CAREFULLY THE FOLLOWING RISK FACTORS, AS
WELL AS ALL OF THE OTHER INFORMATION SET FORTH
ELSEWHERE IN THIS PROSPECTUS AND THE INFORMATION
CONTAINED IN THE FINANCIAL STATEMENTS, INCLUDING ALL
NOTES THERETO.
GOING CONCERN QUESTION; OPERATING LOSSES AND
ACCUMULATED DEFICIT; UNCERTAINTY OF FUTURE PROFITABILITY
The Company has suffered losses from
operations and has reduced working capital and
stockholders' equity that raise doubt about its
ability to continue as a going concern. The Company
had accumulated losses of $473,779 at June 30, 1998
and may be required to make significant additional
expenditures in connection with the development of the
ASI-9000 and its marketing. The Company's ability to
continue its operations is dependent upon its
receiving funds through its anticipated sources of
financing including exercise of the Options, revenues
from operations, and proceeds available from its
suppliers. The Company may be required to raise
additional capital through debt or equity financing.
There are no assurances that the Company will receive
any revenues from operations or other proceeds nor
that it will be able to raise such capital through
debt or equity financing. If the Company is not able
to raise such financing or to obtain alternative
sources of funding, management will be required to
curtail operations and there is no assurance that the
Company will be able to continue to operate. See
"FINANCIAL STATEMENTS".
FORWARD LOOKING STATEMENTS
This Prospectus contains forward-looking
statements that involve risks and uncertainties. The
Company's actual results could differ materially from
those anticipated in these forward-looking statements
as a result of certain factors, including those set
forth in the following risk factors and elsewhere in
this Prospectus.
LIMITED OPERATING HISTORY
The Company did not initiate operations until
July, 1997. To date, the Company has secured an
agreement with Air Europa for the installation of the
ASI-9000 Program on a limited number of their
aircraft. The Company has not received any
significant revenues and may experience many of the
problems, delays, expenses and difficulties commonly
encountered by early stage companies many of which are
beyond the Company's control. These include, but are
not limited to, unanticipated problems related to
product development, regulatory compliance,
manufacturing, marketing, additional costs and
competition and technological obsolescence, as well as
problems associated with sales or operations in
foreign countries. There can be no assurance that the
Company will be able to market the ASI-9000 Program to
additional airlines or that once installed that the
ASI-9000 Program will function as intended, meet with
customer acceptance or generate any revenue, or that
the Company will ultimately achieve profitability.
The Company has incurred significant development and
marketing operating losses to date and there can be no
assurance of future revenues or profits.
INTELLECTUAL PROPERTY MATTERS
The Company acquired the ASI-9000 Program from
ASIT Australia including the intellectual property
associated therewith. Such intellectual property
includes the ASI-9000 Program consisting of the
integration of the ACAMS II, a computer video system,
and the use of destination and corporate advertising
on board commercial aircraft, as well as the earlier
testing and certification procedures undertaken during
the development of the ASI-9000 Program and the ACAMS
II. While the Company and ASIT Australia (owner of
the ACAMS II hardware) seeks to protect its
intellectual property rights by non-disclosure
agreements, it does not have any registered trade
names, trademarks, patents or copyrights. The lack of
registered trademarks, patents or copyrights may
increase the difficulty of enforcing rights should any
other company use the Company's or ASIT Australia's
technology or claim prior use of such technology.
There is no assurance that any of the
Company's rights will be enforceable in protecting the
trade name and technology it owns or licenses, even if
ASIT Australia registers a patent or trademark,
against any prior users of a similar name or
technology or those seeking to utilize a similar name
in areas where the Company operates or to use similar
technology. The failure to enforce any of the
Company's rights could have the effect of reducing the
Company's ability to capitalize on the goodwill
associated with the trade name "ASI-9000" or its
proprietary technology. It is also possible that the
Company will encounter claims from prior users of a
similar name in areas where the Company operates.
SUCCESS OF PLAN OF OPERATION DEPENDENT ON REVENUES
GENERATED FROM ADVERTISERS
The Company's proposed plan of operation and
prospects will be largely dependent upon the Company's
ability to successfully attract advertisers. The
Company has limited experience and there is limited
information available concerning the potential
performance or market acceptance of the Company's
product. There can be no assurance that the Company
will be able to successfully implement its business
plan or that unanticipated expenses, problems, or
difficulties will not occur which would result in
material delays in its implementation. Because the
Company is relying on generating almost all of its
revenues from advertising rather than collecting
revenues upon installation, the start up costs of
installing the Company's systems and risks related to
securing advertisers and sponsors will be borne by the
Company alone. There are no assurances that the
Company will be able to generate sufficient revenues
from advertisers to become profitable.
UNPROVEN COMMERCIAL VIABILITY OF THE ASI-9000 PROGRAM
The Company has installed the ASI-9000 Program
on nine aircraft owned by Air Europa and is in the
process of negotiating with other airlines.
Notwithstanding the Company's current contract with
Air Europa, there can be no assurance that the
Company's product will be widely accepted by airlines
or airline passengers or that such acceptance will be
sustained for any significant period. The acceptance
of the Company's products is dependent on a number of
factors, including the technological quality and
features of its products compared to competitive
products, the actual and perceived ability of the
Company to timely and effectively service its
products, consumer demand and the purchasing patterns
of airlines. Many of these factors are beyond the
Company's control. As a result of these factors as
well as unanticipated problems which the Company may
experience, the Company is unable to predict when, if
ever, its products will be commercially viable.
COSTS OF INSTALLATION AND MAINTENANCE OF THE ASI-9000
PROGRAM
As part of its marketing and sales strategy,
the Company furnishes the ASI-9000 to the airlines at
little cost to the airline. The Company anticipates
receiving revenues from the sale of advertising. This
strategy results in "up-front" costs to the Company,
such as the costs relating to the purchase and
installation of the equipment, training of airline
personnel in the use of the equipment and maintenance
of the equipment, possibly prior to the receipt by the
Company of any revenues generated from that equipment.
See "PLAN OF OPERATION". The Company must have
funds available to it to acquire and produce the
ASI-9000 prior to receipt of revenues therefrom. If
the Company does not have the funds available, it will
not be able to acquire or produce or install the
ASI-9000 and it would not be able to sell advertising
space. There is no assurance that the Company will
have such funds available or will be able to borrow
such funds on terms acceptable to it.
RECENT ADVERSE PUBLICITY REGARDING IN-FLIGHT
ENTERTAINMENT SYSTEMS
On September 2, 1998, a Swissair aircraft
crashed into the Atlantic Ocean off the coast Canada.
The cause of this crash has not been determined but
early reports have speculated that overheated wiring
systems may have caused the aircraft to become
uncontrollable. Such reports have also indicated that
the onboard video and gaming systems may have directly
or indirectly partially caused the wires to overheat.
No definitive conclusions have been announced, but the
Federal Aviation Administration has been reported to
be reviewing in-flight entertainment systems.
Swissair has announced that it is disconnecting all
its in-flight entertainment and gaming systems until
further investigation is concluded. The systems
installed by the Company differ from those installed
on the Swissair aircraft, as the Swissair system
involved installing new interactive video screens in
every seat, requiring extensive wiring and
modifications to the aircraft. While the ASI system
can connect to this type of in-seat video systems, the
ASI-9000 Program is primarily targeted at airlines
which utilize the existing conventional overhead video
screens. The impact of the publicity regarding the
possibility of the faulty Swissair in-flight
entertainment system may have a severe impact on the
ability of the Company to market the ASI-9000 to
airlines as well as the potential for increased
difficulty in obtaining FAA certification for
installation of the systems.
POSSIBLE NEED FOR ADDITIONAL FINANCING TO CONTINUE
OPERATIONS
The Company anticipates that the proceeds from
earlier stock subscription, revenues from any exercise
of the Options, anticipated revenue from operations,
and proceeds available from its suppliers will be
sufficient to meet the Company's contemplated
operating and capital requirements for approximately
12 months following the Effective Date. However, the
Company's revenue from operations depend on numerous
factors, including the rate of market acceptance of
the Company's products, the Company's ability to
maintain and expand its client base, the rate of
expansion of the Company's products, the level of
resources required to expand the Company's marketing
and sales organization, and other factors. The timing
and amount of such capital requirements cannot
accurately be predicted. If capital requirements vary
materially from those currently planned, the Company
may require financing sooner than anticipated.
The Company anticipates that in the event that
a customer airline requires the Company to fund
additional equipment, such as the video system or
telephone system, the Company will negotiate with the
vendors of such equipment to finance such an
arrangement in exchange for a share of the revenues
generated from the advertising use of such equipment.
No assurances can be made that any vendor will agree
to such terms. The Company has no commitments for any
financing, and there can be no assurance that any such
commitments can be obtained on terms acceptable to the
Company, if at all. Any equity financing may be
dilutive to the Company's stockholders, and debt
financing, if available, may involve restrictive
covenants with respect to dividends, raising future
capital and other financial and operational matters.
If the Company is unable to obtain financing as
needed, the Company may be required to reduce the
scope of its operations or its anticipated expansion,
which could have a material adverse effect on the
Company, as well as the market price of the Common
Stock. See "BUSINESS."
POTENTIAL CONFLICTS TO WHICH CERTAIN DIRECTORS MAY BE
SUBJECT
The Company purchases, and plans on purchasing
in the future, the components for the ASI-9000 Program
from ASIT Australia. After installation of the
ASI-9000 Program, the Company subcontracts the
technical support services, including support for the
ASI-9000 Program software, development, video
compressions and programming, to ASIT Australia and
other companies. Messrs. Ronald J. Chapman and Graham
O. Chappell, officers and directors of the Company,
are officers, directors and shareholders of ASIT
Australia and may be subject to various conflicts of
interest, including among others, the negotiation of
agreements between the Company and ASIT Australia and
for the purchase of products and/or the provision of
services. The officers and directors of the Company
devote such time to the business and affairs of the
Company as they deem required but each such officer or
director has other duties and responsibilities with
ASIT Australia that may conflict with the time which
might otherwise be devoted to the duties with the
Company.
The Company's directors are responsible for
the review and approval of all agreements between the
Company and ASIT Australia to ensure that the terms of
the agreements are commercially reasonable. The
Company has in the past and plans to continue in the
future to purchase products and services from ASIT
Australia. The Company believes that purchases of
products and services from ASIT Australia have been
made on terms that are not materially different than
the Company could have obtained from unaffiliated
third parties. There is no assurance that the
Company's prior and future agreements are on terms
they could have received from an unaffiliated third
party and if the Company could have received better
terms, the Company's profitability may suffer from its
conflicting relationship with ASIT Australia.
LIMITED TERM AGREEMENT FOR LICENSE AGREEMENT WITH ASIT
AUSTRALIA
The agreement with ASIT Australia is a
five-year agreement with an automatic five-year
renewable term. The agreement provides that ASIT
Australia will not sell any ACAMS II hardware for use
in any ASI-9000 System to any entity other than the
Company. At the conclusion of this agreement, the
exclusive licensing arrangement between the Company
and ASIT Australia will expire. The Company believes
that within ten years the technology used in the ACAMS
hardware and the ASI-9000 will have developed and the
Company will be using more evolved hardware and
software so that the exclusive rights of the agreement
to such technology will no longer be as necessary to
the Company's business.
RISKS OF RELATIONSHIPS WITH PRIMARY SUPPLIERS AND
CUSTOMERS
The Company believes that to be successful it
may establish on-going partnership relationships with
certain airlines and/or manufacturers of airline
entertainment equipment. The Company's reliance on
these relationships may involve risks including among
other things, the risk of bankruptcy of the partner,
the inability of the such partner to undertake
necessary financial obligations, possible inconsistent
business goals or interests or a possible conflict on
business decisions or positions. The Company has not
entered into any such relationships as of the date
hereof.
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES
The majority of the Company's officers and
directors reside outside the United States. The
Company anticipates that a substantial portion of the
assets that may be developed or acquired by it will be
located outside the United States and, as a result, it
may not be possible for investors to effect service of
process within the United States upon the officers or
directors, or to enforce against the Company's assets
or against such person judgments obtained in United
States courts predicated upon the liability
provisions, and most particularly the civil liability
provisions, of the United States securities laws or
state corporation or other law.
COMPUTER SYSTEMS REDESIGNED FOR YEAR 2000
Many existing computer programs use only two
digits to identify a year in such program's date
field. These programs were designed and developed
without consideration of the impact of the change in
the century for which four digits will be required to
accurately report the date. If not corrected, many
computer applications could fail or create erroneous
results by or following the year 2000. Many of the
computer programs containing such date language
problems have been corrected by the companies or
governments operating such programs. Although none of
the Company's systems are effected by this problem,
the Company could be impacted by the failure of other
companies to timely correct their computer systems.
The Company's operations are dependent on the world
wide telecommunications networks including computer
systems, telephone systems, and delivery systems. If
any of these systems become inoperational the Company
will be directly and significantly effected.
NO DIVIDENDS PAID TO DATE
The Company has not paid any cash dividends on
its stock since inception. For the foreseeable
future, it is anticipated that any earnings which may
be generated from the Company's operations will be
used to finance the growth of the Company. Any cash
dividends will depend on earnings, if any, and on the
Company's financial requirements and other factors.
Dividends are paid at the discretion of the board of
directors. There can be no assurance that the Company
will be able to pay any dividends or, if able to so
make such dividends, that the board of directors will
deem it in the best interest of the Company to do so.
RELIANCE ON KEY MANAGEMENT
The Company's success is dependent upon the
experience and ability of its officers to administer
the Company's business. Ronald J. Chapman, President
and Chief Executive Officer, and Philip A. Shiels,
Vice President and Chief Financial Officer, are
responsible for the day to day management of the
Company. All major decisions regarding the Company
are made by the board of directors. The Company has
not entered into any employment agreement or other
understanding with any key executive or obtained any
"key man" life insurance on any officer's life. The
loss of the services of such key executives could have
a material adverse effect on the Company's ability to
successfully achieve its business objectives.
RAPID TECHNOLOGICAL CHANGE
The markets for in-flight entertainment
systems and interactive products are characterized by
rapid technological developments and changes in
customer preferences and requirements. As a result,
the Company's success is dependent upon its ability to
update on a regular basis and enhance the ASI-9000
Program to develop or acquire and introduce in a
timely manner new entertainment options and
programming software. There can be no assurance that
the Company will be successful in developing or
licensing and marketing enhancements of the airline
programs or that the cost of licensing programming
software from third parties or developing its own
software will not become prohibitive. If the ASI-9000
Program does not incorporate newer technologies and
programming software the Company's business and
operating results may be adversely affected.
GOVERNMENT REGULATION
The installation and use of cabin management
systems requires prior certification and approval by
the FAA and regulatory authorities of foreign
governments on each aircraft type and for each
airline. Prior to certification and approval, the
ASI-9000 Program must be installed on an aircraft and
tested, including an in-flight test. The Company has
received certification for the ASI-9000 Program on Air
Europa utilizing the CMA-3200 Multi Media Computer
platform. The ACAMS has been flight tested and
installed on Boeing 747-400 and Boeing 767-300
aircraft. The CMA-3200 has been flight tested and
installed on the Boeing 737-300, 757-200 and the
McDonnell-Douglas DC-9-30 and MD-82. The ACAMS II is
currently undergoing certification. There can be no
assurance that further certifications and approvals
will be obtained, or obtained in a timely fashion, in
connection with any of the Company's current contracts
or thereafter. In addition, when and if FAA
certification is required and obtained, federal law
grants to the FAA the authority to re-examine at any
time the basis upon which certification and approval
of the Company's products may be granted and, if
appropriate to amend or revoke such certification and
approvals, subject to certain appeal rights.
DEPENDENCE UPON LIMITED NUMBER OF POTENTIAL CUSTOMERS
The sole market for the Company's products is
on commercial airlines. There are a limited number of
major commercial airlines worldwide. Accordingly,
even assuming a sustained commercial viability and the
successful marketing of the ASI-9000 Program, the
Company expects to have contracts with a limited
number of airlines for placement of the ASI-9000
Program and the equipment placed with each such
airline may account for a substantial portion of the
Company's revenues. The inability to generate new
contracts or to replace expired or non-renewed
contracts could result in substantial losses in future
fiscal periods. Moreover, because the Company's
revenues will be based on its relationship with a
limited number of airlines, losses suffered by
individual airlines may have a direct adverse affect
on the Company's profitability.
The Company targets airlines who generate a
substantial amount of revenue from tourists. Because
the Company expects to generate substantially all of
its revenue from tourist destination sponsors and
corporate sponsors targeting a tourist audience, the
Company is dependent upon the airline tourist trade.
Because the tourist airline trade varies from season
to season the Company expects its revenues will vary
proportionally to tourist travel.
RISK OF FOREIGN OPERATIONS AND DEPENDENCE ON FOREIGN
SALES REPRESENTATIVES
Because the Company believes the ASI-9000
Program is commercially more viable on long haul
international flights, the Company's principal
targeted customers are international airlines.
Moreover, the Company intends to continue to use the
services of media sales representatives who locate and
negotiate contracts with foreign advertisers for the
sale of the advertising space. The Company intends to
pay the media sales representatives twice the standard
industry commission, which may increase the Company's
costs. Fees paid to such media sales representatives
are paid on a strictly commission basis from the
revenues received from the advertisers contracted by
such representative. There is no assurance that the
increase in business and revenues the Company receives
from paying a higher commission will offset the loss
of the excess commissions paid to the media agents.
See "BUSINESS".
A substantial portion of the Company's
operation will be subject to various factors
characteristic of conducting business outside the
United States, such as import duties, trade
restrictions, work stoppages, foreign currency
fluctuations, export controls or license requirements,
political or economic instability, impositions of
government controls and other factors, any or all of
which could have a material adverse effect on the
business of the Company. Agreements may also be more
difficult to enforce and receivables more difficult to
collect through a foreign country's legal or currency
expatriation systems. In addition, the laws of
certain countries relating to proprietary rights do
not protect the Company's products and intellectual
property rights to the same extent as do the laws of
the United States and Australia.
CURRENCY FLUCTUATIONS
The Company currently conducts its operations
with international airlines. As a result, certain
revenues, expenses, assets and liabilities of the
Company's operations may be denominated in foreign
currencies. These foreign denominated revenues,
expenses, assets and liabilities would need to be
translated to the Company's reporting currency, the
United States dollar. As a result, the Company's
operations may be exposed to a certain degree of
exchange rate risk. The Company does not currently
engage in any hedging activities to mitigate its
exchange rate risk and there can be no assurance that
the Company will not experience material losses as a
result of changes in the relative value of the foreign
currencies, as compared to the United States dollar.
The Company may engage in hedging activities in the
future, in which case there can be no assurance that
the Company will not experience losses as a result of
such hedging activities.
FINANCIAL CONDITIONS OF AIRLINE INDUSTRY
Over the last several years, the airline
industry has been characterized by increased service
and fare competition among domestic and foreign
airlines which has caused severe financial dislocation
in the airline industry. In the United States market,
several airlines have gone bankrupt and ceased all
operations; others have reorganized under the
provisions of the United States Bankruptcy Code and
have emerged as lower cost carrier; airlines which
have not sought bankruptcy protection are in the
process of attempting to reduce their cost of doing
business so as to compete effectively against lower
cost air carriers. These and other competitive
factors may have an affect on the international
airlines which the Company targets. Several
international carriers have been granted, or are
seeking, substantial capital inductions from their
government in order to continue operation. Airline
customers for the ASI -9000 Program may suffer
financial difficulties and there can be no assurance
that any airline customer for the ASI-9000 Program
will continue to provide its air transportation
services in the future. Further, there can be no
assurance that the Company can market the ASI-9000
Program to airlines that, in attempting to reduce
their costs of operations, are reducing the level of
certain cabin services that they are willing to
provide their passengers.
DEPENDENCE ON AND THE CYCLICAL NATURE OF AIR CARRIER
BUSINESS AND DEPENDENCE ON ADVERTISING REVENUES
The Company depends on its airline customers
who operate in a challenging business environment.
The air transportation industry is highly sensitive to
general economic conditions. Since a substantial
portion of passenger airline travel is discretionary,
particularly the tourism trade which the Company
targets, the industry tends to experience severe
adverse financial results during general economic
downturns. The airline industry may also be adversely
affected by unexpected global political developments.
Because the Company's revenues are heavily dependent
upon destination (tourism) based advertising, an
economic downturn that results in decreased airline
passengers may affect the Company's revenues.
RISKS RELATING TO GROWTH AND EXPANSION
Growth of the Company's business may place
significant pressures on the Company's management,
operation and technical resources. The Company
believes that for competitive reasons, it is important
to obtain a customer base as early as possible and
accordingly, the failure to expand operations in the
early years of the Company's business may hinder or
preclude significant future growth. If the Company is
successful in obtaining additional agreements with
airlines relating to the installation of the ASI-9000
Program, the Company may be required to raise
substantial additional funds and deliver large volumes
of products to its customer on a timely basis at a
reasonable cost to the Company. The Company contracts
all of its operations to third parties which may not
have the capital resources to meet wide scale
production requirements. The Company currently has
contracts with manufacturers for production, and may
enter into additional contracts with such domestic and
foreign manufacturers. However, there can be no
assurance that any manufacturing arrangement will be
entered into or will be successful, the Company's
efforts to conduct manufacturing activities will be
successful or that the Company or any supplier will be
able to satisfy commercial scale production
requirements on a timely and cost-effective basis.
The Company may be required to obtain additional
financing in order to pursue additional business
opportunities. The Company's success will also depend
in part upon its ability to provide airline customers
with timely service and support.
The Company will also be required to develop
and improve operational, management and financial
systems and control. Failure to manage growth would
have a material adverse effect on the business of the
Company and expenses arising from Company activities
to increase market penetration and support growth may
have a negative impact on operating results.
COMPETITION
The Company will compete with a number of
companies offering in-flight entertainment systems,
most of whom have substantially greater financial,
management, technical and other resources than the
Company and which offer products, systems or services
that airlines may purchase instead of the Company's
products. There can be no assurance that the Company
will compete effectively with such other companies or
other companies will not develop products which are
superior to the Company's or which achieve greater
market penetration.
The Company will also compete against other
advertising venues. The Company's competition will be
in many cases more established with proven success and
many of the Company's competitors will have greater
financial, management, marketing and other resources
than the Company. While the Company believes it can
compete for advertising revenues, there is no
assurance that advertisers will choose the Company's
product over more traditional advertising mediums.
DEPENDENCE ON THIRD PARTY SUPPLIERS AND SUBCONTRACTORS
The Company does not produce any product and
subcontracts the assembly of the ASI-9000 Program from
components purchased from third party suppliers, and
its dependence on such suppliers will reduce its
control over the manufacturing process. In addition,
the Company currently uses single suppliers for
certain of the hardware compromising the ASI-9000
Program. Although the Company believes that other
sources of supply are available, delays or increased
costs associated with locating and procuring such
supplies could have a material adverse effect on the
Company. The Company also subcontracts substantially
all manufacture, assembly, installation, repair and
customer service to third party companies. The
Company's profits could be affected by the risk of
bankruptcy or economic downturn of any of its
subcontractors, the inability of the subcontractor to
undertake necessary financial obligations, the
possible inconsistent business goals or interests of a
subcontractor, or a possible conflict on business
decisions.
FACTORS BEYOND THE COMPANY'S CONTROL
Numerous conditions beyond the Company's
control may substantially affect its success such as
rates of, and costs associated with, new customer
acquisition, customer retention of customer airlines,
costs relating to the expansion of operations,
including upgrading the Company's systems, the timing
and market acceptance of new products, changes in the
pricing policies of the Company's competitors, changes
in operating expenses, the introduction of alternative
technologies, increased competition in the Company's
markets and general economic factors.
CONTROL BY PRESENT STOCKHOLDERS
The number of outstanding shares of Common
Stock will not change pursuant to this offering,
except with the exercise of the Options. Prior to any
sale of the Securities offered hereby, the officers,
directors and affiliates owned a majority of the
Company's outstanding Common Stock. Accordingly, such
officers and directors have been in a position to
elect all of the Company's directors, to approve
amendments to its Certificate of Incorporation, to
authorize issuance of additional shares of stock, to
award performance bonuses and other compensation
arrangements and otherwise to direct the affairs of
the Company. Upon sale of some or all of the
Securities offered hereby, the present shareholders
may no longer be in a position to elect the Company's
directors or otherwise control the Company. However,
the Company may, in the future, make payments to ASIT
Australia for purchase of the ACAMS and other
equipment by issuance of shares of its Common Stock.
ASIT Australia may be in a position to receive a
sufficient number of such shares to control the
outcome of shareholder votes. Certain officers and
directors of the Company are controlling shareholders
of ASI Holdings Pty. Ltd., the controlling shareholder
of ASIT Australia. See "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT".
ACQUISITION FINANCING; ADDITIONAL DILUTION
The Company may attempt to finance future
purchases and acquisitions using shares of the
Company's Common Stock, options, cash, borrowed funds
or a combination thereof. The Company has no
arrangements, agreements or understandings to that
effect at this time. If the Company's Common Stock
does not maintain a sufficient market value, or if the
price of the Company's Common Stock is highly
volatile, or if potential acquisition candidates are
otherwise unwilling to accept the Company's Common
Stock as part of the consideration for the sale of
their businesses, the Company may be required to use
more of its cash resources or more borrowed funds in
order to initiate and maintain an acquisition program.
If the Company does not have sufficient cash
resources, its growth could be limited unless it is
able to obtain additional capital though debt or
equity offerings. The Company may also enter into
credit facilities with one or more lenders to obtain
financing to be used in connection with future
purchases or acquisitions. There can be no assurance
that the Company will be able to obtain such financing
if and when it is needed or that any such financing
will be available on terms it deems acceptable.
The Company has authorized but unissued and
unreserved shares of the Company's Common Stock which
the Company will be able to issue in order to finance
purchases or acquisitions without obtaining
stockholder approval for such issuance. Existing
shareholders may suffer dilution if the Company uses
its Common Stock as consideration for future purchases
or acquisitions. Moreover, the issuance of additional
shares of Company Common Stock may have a negative
impact on earnings per share and may negatively impact
the market price of the Company's Common Stock if any
trading market is established of which there can be no
assurance.
ISSUANCE OF FUTURE SECURITIES MAY DILUTE INVESTORS'
SHARE VALUE
The Certificate of Incorporation of the
Company authorizes the issuance of a maximum of
100,000,000 shares of Common Stock, $.0001 par value,
and 20,000,000 shares of Preferred Stock, $.0001 par
value. As of the date hereof there are 5,754,337
shares of Common Stock outstanding and no shares of
Preferred Stock outstanding. The future issuance of
all or part of the remaining authorized Common Stock
may result in substantial dilution in the percentage
of the Company's Common Stock held by the Company's
then existing shareholders, including purchasers of
the Securities offered herein. Moreover, any Common
Stock issued in the future may be valued on an
arbitrary basis by the Company. The issuance of the
Company's securities for future services or
acquisitions or other corporate actions may have the
effect of diluting the value of the Securities offered
hereby, and might have an adverse effect on any
trading market, should a trading market develop for
the Company's Common Stock. See "BUSINESS".
POSSIBLE INABILITY TO EXERCISE OPTIONS
Because the Options may be transferred, it is
possible that the Options may be acquired by persons
residing in states where the Company is unable to
qualify the Shares of Common Stock underlying the
Options for sale upon exercise. Option holders
residing in those states would have no choice but to
attempt to sell their Options (if a market then exists
as to which there can be no assurance) or let them
expire unexercised. Also, it is possible that the
Company may be unable, for unforeseen reasons, to
cause a registration statement covering the Shares
underlying the Options to be in effect when the
Options are exercisable. In that event, the Options
may expire unless extended by the Company as permitted
because a registration statement must be in effect,
including audited financial statements, in order for
Option holders to exercise their Options. See
"DESCRIPTION OF SECURITIES"
POTENTIAL ADVERSE EFFECTS OF AUTHORIZATION OF
PREFERRED STOCK
The Company has not designated or issued any
shares of its authorized shares of Preferred Stock.
The Company may, without further action or vote by
shareholders of the Company, designate and issue
shares of Preferred Stock. The terms of any series of
Preferred Stock, which may include priority claims to
assets and dividends and special voting rights, could
adversely affect the rights of holders of the Common
Stock and thereby reduce the value of the Common
Stock. The designation and issuance of Preferred
Stock favorable to current management or shareholders
could make the possible takeover of the Company or the
removal of management of the Company more difficult
and discourage hostile bids for control of the Company
which might have provided shareholders with premiums
for their Securities.
RESALES OF THE SECURITIES UNDER STATE SECURITIES LAWS
The National Securities Market Improvement Act
of 1996 ("NMSIA") limits the authority of states to
impose restrictions upon sales of Securities made
pursuant to SectionSection4(1) and 4(3) of the
Securities Act of companies which file reports under
Sections 13 or 15(d) of the Securities Exchange Act.
Sales of the Securities in the secondary market will
be made pursuant to Section 4(1) (sales other than by
an issuer, underwriter or broker). It is anticipated
that following the Effective Date the Selling
Securityholder's Securities will be eligible for
resale in the secondary market in each state.
NO CURRENT TRADING MARKET FOR THE COMPANY'S SECURITIES
There is currently no established public
trading market for the Securities. No assurance can
be given that an active trading market in the
Company's securities will develop after completion of
the Offering, or, if developed, that it will be
sustained. The Company intends to apply for admission
to quotation of the Securities on the NASD OTC
Bulletin Board and, if and when qualified, it intends
to apply for admission for listing on the Nasdaq
SmallCap Market. If the Company's securities are not
quoted on the NASD OTC Bulletin Board, then the
Company may offer its securities in what are commonly
referred to as the "pink sheets" of the National
Quotation Bureau, Inc. To qualify for quotation on
the NASD OTC Bulletin Board, an equity security must
have one registered broker-dealer, known as the market
maker, willing to list bid or sale quotations and to
sponsor the company for listing on the Bulletin Board.
There can be no assurance that a regular trading
market for the Common Stock will develop or that, if
developed, it will be sustained. There is no
assurance that the Company will ever meet the
requirements for admission to the Nasdaq SmallCap
Market. Various factors, such as the Company's
operating results, changes in laws, rules or
regulations, general market fluctuations, changes in
financial estimates by securities analysts and other
factors may have a significant impact on the market
price of the Securities. The market price for the
securities of public companies often experience wide
fluctuations which are not necessarily related to the
operating performance of such public companies. If
the Company is unable to satisfy the requirements for
listing on the Nasdaq SmallCap Market or becomes
unable to satisfy the requirements for continued
listing thereon, and trading, if any, is conducted in
the OTC market, a shareholder may find it more
difficult to dispose of, or to obtain accurate
quotations as to the market value of, the Company's
securities. See "DESCRIPTION OF SECURITIES".
LIMITATION OF LIABILITY AND INDEMNIFICATION OF
OFFICERS AND DIRECTORS
The Certificate of Incorporation and By-Laws
of the Company provide that the Company shall
indemnify its officers and directors against losses
sustained or liabilities incurred which arise from any
transaction in such officer's or director's respective
managerial capacity unless such officer or director
violates a duty of loyalty, did not act in good faith,
engaged in intentional misconduct or knowingly
violated the law, approved an improper dividend, or
derived an improper benefit from the transaction. The
Company's Certificate of Incorporation and By-Laws
also provide for the indemnification by it of its
officers and directors against any losses or
liabilities incurred as a result of the manner in
which such officers and directors operate the
Company's business or conduct its internal affairs,
provided that in connection with these activities they
act in good faith and in a manner which they
reasonably believe to be in, or not opposed to, the
best interests of the Company, and its conduct does
not constitute gross negligence, misconduct or breach
of fiduciary obligations. See
"MANAGEMENT--Indemnification of Officers, Directors,
Employees, and Agents".
PENNY STOCK REGULATION
The Company's Common Stock will be considered
"penny stock". Penny stocks generally are equity
securities with a price of less than $5.00 per share
other than securities registered on certain national
securities exchanges or listed on the Nasdaq Stock
Market, provided that current price and volume
information with respect to transactions in such
securities is provided by the exchange or system. The
Company's securities may be subject to "penny stock"
rules that impose additional sales practice
requirements on broker-dealers who sell such
securities to persons other than established customers
and accredited investors (generally those with assets
in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 together with their spouse). For
transactions covered by these rules, the broker-dealer
must make a special suitability determination for the
purchase of such securities and have received the
purchaser's written consent to the transaction prior
to the purchase. Additionally, for any transaction
involving a penny stock, unless exempt, the rules
require the delivery, prior to the transaction, of a
disclosure schedule prescribed by the Commission
relating to the penny stock market. The broker-dealer
also must disclose the commissions payable to both the
broker-dealer and the registered representative and
current quotations for the securities. Finally,
monthly statements must be sent disclosing recent
price information on the limited market in penny
stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell the
Company's securities. The foregoing required penny
stock restrictions will not apply to the Company's
securities if such securities maintain a market price
of $5.00 or greater. There can be no assurance that
the price of the Company's securities will be
maintained at such a level.
ADDITIONAL SECURITIES ENTERING PUBLIC MARKET WITHOUT
ADDITIONAL CAPITAL PURSUANT TO RULE 144
All of the 5,754,337 shares outstanding and
the subject of this registration statement are
currently "restricted securities" as such term is
defined in Rule 144 ("Rule 144") of the General Rules
and Regulations of the Securities and Exchange
Commission (the "Rules") promulgated under the
Securities Act. In general, under Rule 144, if
adequate public information is available with respect
to a company, a person who has satisfied a one year
holding period as to his restricted securities or an
affiliate who holds unrestricted securities may sell,
within any three month period, a number of that
company's shares that does not exceed the greater of
one percent of the then outstanding shares of the
class of securities being sold or, if the security is
trading on the Nasdaq Stock Market or an exchange, the
average weekly trading volume during the four calendar
weeks prior to such sale. Sales of restricted
securities by a person who is not an affiliate of the
company (as defined in the Securities Act) and who has
satisfied a two year holding period may be made
without any volume limitation. Pursuant to such Rule
144, after the expiration of the holding period
certain shares of Common Stock now restricted for
trading will become eligible for trading in the public
market without any payment therefore or increase to
the Company's capitalization. Possible or actual
sales of the Company's outstanding Common Stock by all
or some of the present stockholders may have an
adverse effect on the market price of the Company's
Shares should a public trading market develop. The
additional availability of such shares to be traded in
the public market would increase the "public float" of
the Company without any corresponding increase in the
Company's capital. Upon effectiveness of the
Registration Statement of which this Prospectus forms
a part, the 5,754,337 shares registered herein will no
longer be subject to Rule 144 except the 2,959,987
shares held by affiliates of the Company.
SELLING SECURITYHOLDERS MAY SELL SECURITIES AT ANY
PRICE OR TIME
After effectiveness of the Registration
Statement of which this Prospectus forms a part, the
Selling Securityholders may offer and sell their
Securities at a price and time determined by the
Selling Securityholder in accordance with applicable
federal and state securities laws. Affiliates of the
Company will be subject to limitations of Rule 144,
including its volume limitations in the sale of their
Shares. The timing of such sales and the price at
which the Securities are sold by the Selling
Securityholders could have an adverse effect upon the
public market for the Securities, should one develop.
THE COMPANY
ASI Entertainment Pty. Ltd. was incorporated
in Australia in 1993 as a subsidiary of ASIT Australia
until 1996 when it became an independent corporation
through a corporate restructuring. ASI Entertainment,
Inc. (the "Company") was incorporated in the state of
Delaware on April 29, 1998. In order to change its
situs of incorporation, in July, 1998, ASI
Entertainment, Inc. (Delaware) acquired all the
outstanding stock of ASI Entertainment Pty. Ltd., in
exchange for 5,293,990 shares of its Common Stock.
ASI Entertainment Pty. Ltd. purchased the ASI-9000
Program from ASIT Australia and the Company will
acquire the ACAMS II hardware from ASIT Australia.
The Company subcontracts the production, installation
and maintenance of the ASI-9000. ASI Entertainment,
Inc. (Delaware) has three wholly-owned subsidiaries,
ASI Entertainment Pty. Ltd., ASI Media Pty. Ltd. (an
Australian corporation), and ASI Technologies, Inc. (a
Delaware corporation). Certain of the officers,
directors and Selling Securityholders of the Company
are the officers, directors and shareholders of ASIT
Australia. See "MANAGEMENT".
The Company has an authorized capitalization
of 100,000,000 shares of Common Stock, par value of
$.0001 per share (the "Common Stock") and 20,000,000
shares of preferred stock, par value $.0001. See
"DESCRIPTION OF SECURITIES". The main offices of the
Company are located at Suite 3, 1601 Main Road,
Research, Victoria, 3095 Australia and its telephone
number is 61-3-9437-1233 and its fax number is
61-3-9437-1299. The United States offices of the
Company are located at 15200 East Girard Avenue, Suite
3000 Aurora, Colorado 80014.
USE OF PROCEEDS
The Company will not receive any proceeds from
the sale of the Securities being registered hereby.
The Company will receive the proceeds, if any, of
which there can be no assurance, from the exercise of
the Options. The Company has issued Options to
purchase 4,927,173 shares of its Common Stock at an
exercise price of $0.50 per share exercisable
commencing on the Effective Date until June 30, 2000.
The Company will receive the proceeds from the
exercise of the Options, up to a possible aggregate
amount of $2,463,586. The Company anticipates that it
will utilize the proceeds from any Options exercised
for installation expenses of the ASI-9000 on any new
contracts, for marketing and advertising the ASI-9000
and for travel expenses involved therewith, for
payment of the retainers to the officers of the
Company, and for general administrative purposes.
DIVIDEND POLICY
The Company currently intends to retain
substantially all of its earnings, if any, to support
the development of its business and has no present
intention of paying any dividends on its Common Stock
in the foreseeable future. Any future determination
as to the payment of dividends will be at the
discretion of the Board, and will depend on the
Company's financial condition, results of operations
and capital requirements, and such other factors as
the Board deems relevant.
BUSINESS
The Company provides an in-flight
entertainment and data communications systems for
airlines. The Company has purchased the ASI-9000 and
all intellectual property associated thereto from ASIT
Australia. The ASI-9000 Program consists of and
integrates (i) the ACAMS II, a cabin management and
communication hardware system, (ii) a computer video
system and (iii) a marketing program for destination
and corporate advertising on-board commercial
aircraft. The ASI-9000 Program is designed to
generate revenues from the sale of advertising space
on the in-flight video and audio programs as well as
other possible forums to destination sponsors and
corporations. The Company subcontracts the
production, installation, and maintenance of the
ASI-9000 Program. Until final certification of the
ACAMS II, the Company is using the CMA-3200 computer
platform for installation of the ASI-9000 Program.
The Company has entered into an agreement with and has
installed the ASI-9000 Program on nine aircraft owned
by Air Europa, a Spanish airline.
THE ASI-9000 PROGRAM
The Company has entered into an agreement with
and has installed its ASI-9000 Program on nine
aircraft owned by Air Europa, a Spanish airline. The
ASI-9000 Program consists of hardware and software
used for communications and to present in-flight
entertainment in a digital video form. The ASI-9000
Program utilizes one of two hardware platforms, the
CMA-3200 Multi Media Computer or the ASI ACAMS-EC486
Cabin Terminal (the"ACAMS II"). The CMA-3200 Multi
Media Computer provides the display and advertisements
portion of the audio and video programs. The ACAMS II
provides both the digital multi media capability of
the CMA-3200 plus a PC-computer based communications
link.
The ASI-9000 Program is designed to procure
advertising and entertainment features from the
tourism industry participants operating in cities or
regions to which its customer airlines fly. This
software also allows the flight attendants to send and
receive messages via the world wide aeronautical radio
and satellite network. The system runs continuously
from take-off until landing and the video player
automatically returns to the flight information show
carrying the customer's advertisements after the movie
or other entertainment selected by the airline has
finished.
The Company assumes full responsibility for
operation and administration of the video and audio
program, subject only to the airlines right to ensure
that the content of the program is suitable. There is
no assurance that the Company' customer airline
passengers will be satisfied with the Company's
product or that the Company's competitors will not
develop similar or better technology in the future.
The ASI-9000 Program is run on equipment which
must be aviation certified. Components of the system
are currently certified for use on the Boeing 747-400,
757-200, and 737-300, McDonnell Douglas DC-9, and MD
82 and the Company anticipates that it will be
certified for use on the Boeing 767 in the future.
The ACAMS system was flight tested on Qantas Airways.
The ACAMS II system is in the process of FAA required
certification for use on commercial aircraft.
ACAMS II
The ACAMS II system combines the
communications capability of the original ACAMS
system, which was tested on Qantas Airlines, with the
multi media capacity of the CMA-3200 into a single
unit. As a single unit, the ACAMS II saves space and
weight and provides the ability to show advertising
and to provide the capability to place purchase orders
from the aircraft for such advertised, and other,
items. The installation of the ACAMS II is less
expensive than that of the CMA-3200 which saves the
Company money on reduced installation costs. When the
ASI-9000 is installed on the ACAMS II hardware
platform, the ASI-9000 can provide system integration,
destination or other specific entertainment and
advertising, detailed flight information, crew and
passenger communications, passenger information and
ground communication, entertainment, electronic
product catalogues, electronic product ordering,
additional multi media capabilities, and a unique
computer video software and communications interface
which allows the system to run with minimal
operational input from flight attendants. The ACAMS
II hardware technology was developed by and is owned
by ASIT Australia. The Company will purchase the
ACAMS II terminals from ASIT Australia once the ACAMS
II is flight certified.
The software and compression technology offers
reduced advertising production cost by allowing the
frequent addition of new advertisers or the video
alteration of existing advertisements; all
advertisements are stored on the system for the entire
route structure and the digital computer technology
produces a high quality display. The Company believes
it will appeal to airlines because of its ease of use
and expansive functionality. All of its customers'
promotional advertisements or corporate advertisements
can be stored digitally in the ACAMS II cabin
terminal's memory. In contrast to the standard
industry tape system, the Company believes its product
decreases the necessity of cabin crew assistance, thus
decreasing the chance for human error associated with
playing and rewinding tapes. Because the individual
advertisements and promotional pieces are stored on a
computer, the ACAMS II can be programmed to play at
specific times according to the precise destination of
each flight, thus the Company's advertising customer
can be confident in reaching a highly targeted
audience.
The ACAMS II also has a communications device
which allows the flight attendants to communicate with
land via the aircraft radio and satellite
communications systems. The ACAMS II when connected
to the satellite communication system on the aircraft
can transmit and receive data when the aircraft is
flying over land or water worldwide. The ACAMS II
uses the international standard communications
protocol that allows the flight attendants to fax or
e-mail data for passengers.
If the ACAMS II does not obtain certification,
the Company will continue to use the CMA-3200 or
alternate equipment until such modifications can be
made on ACAMS II to allow for its certification.
CERTIFICATION PROCESS AND GOVERNMENT REGULATION
The installation and use of cabin management
systems requires prior certification and approval by
the FAA and regulatory authorities of foreign
governments on each aircraft type and for each
airline. The certification process begins with the
installation of the system on an aircraft after which
it is certified by an FAA accredited engineer. The
certification is then applicable to similar aircraft
types and modified for other aircraft type. In
countries other than the United States, the equivalent
aviation authority procedures will apply to the
certification of the system, but the United States FAA
sets the standards that are primarily used throughout
the world. Certification can take up to 120 days.
Prior to certification and approval, the
manufacturer must demonstrate that the system has been
designed and manufactured and complies with the
appropriate aviation standards, namely DO160C for
hardware and DO178 for software. Following this the
ASI-9000 Program must be installed on an aircraft and
tested, including an in-flight test. The Company has
received certification for the ASI-9000 Program on Air
Europa aircraft utilizing the CMA-3200 Multi Media
Computer platform. The ACAMS has been flight tested
and installed on Boeing 747-400 and Boeing 767-300
aircraft. The CMA-3200 has been flight tested and
installed on the Boeing 737-300, 757-200 and the
McDonnell-Douglas DC-9-30 and MD-82. The ACAMS II is
currently undergoing certification. The Company
anticipates certification approval for the ACAMS II
and is prepared to make what ever modifications are
required to obtain such approval.
PRODUCT DEVELOPMENT
Since 1993, ASIT Australia has spent over
A$5,000,000 developing the ASI program. The
technology behind the Company's ASI-9000 Program
evolved from a data link aviation communications
system, designated the Airline Communications and
Management System ("ACAMS") developed by ASIT
Australia in conjunction with Qantas Airways and
Swissair. The technology was sponsored by Qantas
Airways with the objective of using Qantas Airways as
a platform to create a product with export potential.
The requirements of this project mandated that ASIT
Australia both develop an interface which would allow
the crew to communicate through the aircraft's
satellite and radio communications data link and
develop an interface between the ACAMS datalink and
the aircraft's video systems. This interface evolved
into the ASI-9000 computer video.
ASIT Australia established a relationship with
the Canadian Marconi Company ("CMC") who arranged for
the ASI-9000 to be tested on Hawaiian Airlines. The
initial test program was carried out on Hawaiian
Airlines in conjunction with CMC and Hollingsead
International, Inc., a manufacturer of after market
video systems. ASIT Australia mounted its software on
CMC's CMA-3200 multi media computer equipment which
was installed together with Hollingsead's video
equipment on three aircraft operated by Hawaiian
Airlines.
OPERATIONS TO DATE
Hawaiian Airline Project. ASIT Australia
equipped three aircraft operated by Hawaiian Airlines
at a cost of $180,000 per aircraft but was unable to
equip the remaining ten aircraft originally
anticipated to be equipped as ASIT Australia was
unable to finance the purchase and installation price
of the video equipment of $50,000 per aircraft charged
by Hollingsead International, Inc. ASIT Australia had
secured 14 advertisers for the video program based on
total air time on all 13 aircraft but was not able to
receive any funds from such advertisers for air time
as only three aircraft were equipped with the
equipment. ASIT Australia had intended the Hawaiian
Airlines project to be a test program of its
"infotainment" program, to prove its feasibility and
to showcase its potential to advertisers. The Company
is not currently involved in the installation of any
of its equipment on Hawaiian Airlines.
Air Europa Project. The Company acquired the
CMA-3200 from ASIT Australia for an aggregate of
A$527,980 and installed nine CMA-3200 units on
aircraft operated by Air Europa. From July 1, 1997 to
June 30, 1998 (the first year of operations), the
Company has received approximately $44,957 in revenues
generated from the equipment on the Air Europa
aircraft. The company has obtained five major
advertisers on the Air Europa aircraft systems.
While the Company intends to provide the
ASI-9000 Program utilizing the ACAMS II for its future
contracts, the Company's present contracts have been
filled by mounting the software on the CMA-3200
manufactured by CMC. The Company does not currently
have any additional contracts for the installation of
the ASI-9000.
SALES AND PRICING
The Company's Supply and License Agreement to
be used with potential airline customers is based on
allocating five minutes of advertising space per
flight per hour with additional sponsorship times
available during the safety briefing presented prior
to take off. The Company anticipates that it will
work with the airline in developing an advertising
program that suits the airline's image profile. The
price and number of times the advertisement will run
may vary depending on available space and the flight
profile. Currently, the Company anticipates charging
US$2 per advertisement to as high as US$10 per
advertisement on a large aircraft where the
communications capability is available. Initially,
the Company intends to target major advertisers in
order to enhance the image of the presentation and
secure a revenue stream and, as a result, may be
offered substantial discounts. Passengers will be
able to make bookings, reservations or purchases of
in-flight advertisers' products while on board the
aircraft with such orders being transmitted via the
ASI-9000 Program. From the transmission records of
such bookings, reservations or purchases, the Company
will be able to bill the advertiser for an agreed
commission for each booking, reservation or purchase.
The Company's sales target for each ASI-9000 Program
in operation is revenue of US$100,000 per annum per
aircraft including advertising revenues and in-flight
booking commission.
In order to provide an additional incentive
for the media agents to procure advertising, the
Company plans on paying its media agents commission on
sales of up to 32% of revenue, two fold the industry
standard. The Company concluded that its target
airlines, which generate most of their revenues from
tourism, generate smaller profits from ticket sales by
offering discounted fares and then attempt to increase
their profits by charging for additional on board
services. These airlines may be interested in the
communications features of the ASI-9000 Program where
the passengers can order goods and services from the
cabin crew and the crew can place the order through
the ACAMS II.
The Company purchases from ASIT Australia
either the CMA-3200 hardware at $25,000 per unit or
the ACAMS II hardware at $30,000 per unit. The
Company subcontracts for the production of the
ASI-9000 integration technology. The cost to the
Company for installation of the ASI-9000 excluding the
hardware is approximately $5,000 per aircraft for
installation of units like those installed on the Air
Europa aircraft and up to $10,000 for units in which
the communications link is involved.
OPERATIONS AND SUPPLIERS
The Company has two offices in Melbourne,
Australia and Denver, Colorado. The Company's core
component of the ASI-9000, the ACAMS II Cabin
Terminal, has been manufactured to date by ASIT
Australia and Philips Defence Systems Group. While
the Company anticipates that it will install the
ASI-9000 Program with the ACAMS II in the future, its
current contracts employ the CMA-3200 manufactured by
Canadian Marconi Company.
The Company has outsourced all of its
operations to companies and individuals specializing
in either the manufacture and installation of avionics
or the procurement of advertisement sponsors. The
Company believes that it currently has sufficient
inventory to fill an order for its product by a new
customer airline. The Company will contract with an
installation company to install its product on the
customer airline. Once installed, the Company
outsources all of the engineering and technical
support services to ASIT Australia and other suitably
certified organizations. The acquisition of the
media, software development, video compressions and
programming of the ASI-9000 Program is provided by
ASIT Australia and sales functions will be handled by
media agents in destination cities.
MARKETING
After considering the competitive environment
of the airline entertainment industry, the Company
has decided on a marketing strategy to provide the
ASI-9000 program at little or no cost to a customer
airline in consideration for the Company receiving
sole and exclusive rights over the revenue stream
created from the sale of air time to advertisers
including destination specific tourist operators,
local, national and foreign corporate advertisers and
from other services provided by the equipment.
The Company researches the market and targets
selected airlines based on a commercial and technical
evaluation. The Company has formed relationships with
other avionics manufacturers who sell complimentary
products to the Company's ASI-9000 Program. The
Company anticipates these strategic partners will
introduce the Company to airlines as such target
airlines look for ways to enhance the products and
services they purchase from the alliance partner. The
Company anticipates that these airlines will be
commercially aggressive in competitive markets,
tourism based, and meet specific technical criteria.
The airlines which meet the Company's criteria usually
have fleets in the range of 10 to 200 aircraft,
operate on tight budgetary constraints, and compete
with the major airlines. Because the Company's
competitors' products are often expensive and require
major capital outlays by the airlines, the Company
believes that the target airlines may be receptive to
a self funding arrangement where the Company will
provide and install the system at nominal cost to the
airline. In return, the Company maintains ownership of
the equipment during the term of the contract and also
controls the total revenue stream generated by the
system over the term of the contract.
The Company believes that the ASI-9000 Program
appeals to airlines because airlines can upgrade their
overall presentation and corporate image at little or
no cost and the provide improved passenger service.
The Company also believes that with the current world
wide pressure on airline yields, some airlines have
become receptive to proposals to increase revenues.
The Company believes that this form of
marketing differs from the competition because its
competitors approach the airlines on the basis of the
airline purchasing the competitor's system rather than
licensing the system at nominal cost in exchange for
advertising rights. The Company conducts research
and targets only those airlines that fit its profile
and only then will the Company approve the investment.
This profile takes into account the manner in which
advertising is sold and how destination sponsors can
be attracted.
PROPERTY
The Company does not own any property other
than the its inventory of equipment. The Company
maintains its headquarters at the offices of Chapman
International Pty. Ltd. at which location it also
stores its in-flight computer equipment. The Company
does not have any written lease with Chapman
International which has indicated that the Company may
use such space as long as it requires. Chapman
International does not charge the Company for use of
its office space and facilities.
CUSTOMERS
The Company has entered into a Supply and
License Agreement with Air Europa whereby the Company
licensed the hardware, software and the operating
systems to Air Europa and installed the ASI-9000
Program utilizing the CMA-3200 computer platform on
two B737-300 aircraft and seven B757-200 aircraft.
The contract includes an option to install the ACAMS
II Cabin Management and Communications System on an
additional twelve B737's and two B767's. The ACAMS
II system is a second generation ACAMS not yet in
production and the option will only be viable if Air
Europa installs a data communications link on its
aircraft.
Pursuant to the current agreement with Air
Europa, the Company, through its subsidiary ASIE,
receives a license fee of $3,625 per calendar month
and a maintenance fee of approximately $1,875 for each
installed ASI-9000 Program from the advertising
revenues received from the systems. If insufficient
advertising funds are received to cover the license
and maintenance fees, the Company absorbs the
shortfall. Air Europe receives any amounts over the
$3,625 license fee and $1,875 maintenance fee (after
deduction of any direct costs, including payment of
commissions, if any, to any media sales
representatives).
The license for each ASI-9000 Program unit
lasts five years and upon expiration of such term, the
hardware will belong to Air Europa but Air Europa will
not acquire any rights to the software or operating
systems.
The Company anticipates that agreements with
future customers will not include a set monthly
licensing fee but will provide that the Company retain
the revenues generated from advertisers and sponsors
from which it will pay sales commissions and expenses.
There can be no assurance that the Company will be
able to reach such agreements with any future
customers.
COMPETITION
The Company competes for both advertising
space and provision of equipment to airlines. The
Company believes that it operates in a market niche
where there are no other companies providing both the
same product with a similar price structure. The
Company believes, however, that the market for
technologically advanced in-flight entertainment and
communications systems is emerging and that
competition to provide such services to the airlines
will be intense. The Company is aware of several
other companies that provide systems that compete with
the ASI-9000 Program , some of which have been
installed on aircraft. Most of these competitors have
substantial greater financial and other resources than
the Company and, accordingly, may have a significant
competitive advantage over the Company. The Company's
principal competitors include B/E Aerospace,Inc.,
Hughes Avicom International, Inc. (recently purchased
by Rockwell), Matsushita Avionics Systems Corporation
and Sony Trans Com. The Company is also aware of
several other companies that are developing in-flight
entertainment systems or seeking joint ventures in the
field.
The Company believes it will compete with
other companies based on the company's marketing plan
that requires only nominal capital expenditures from
the airline. The Company also believes that it will
compete by targeting airlines that will be attracted
to this structure which allows the airline to provide
more customer service at little cost to the airline.
The Company believes that most of the Company's
competitors are producing more technologically
advanced entertainment systems but at a far greater
expense to the airline both in the cost of the
entertainment system itself and in the operating cost
due to the extra weight of these in-flight systems.
Because the Company's marketing plan requires
that the Company purchase, produce and install the
ASI-9000 at its own expense rather than at the
expense of customer airlines, the initial costs to the
Company will be significantly greater than the costs
incurred by the Company's competitors who charge the
airlines for the purchase and installation of similar
equipment. The Company also incurs the maintenance
costs with the systems once installed and operational.
There is no assurance that the Company will have the
funds necessary to produce, purchase and install the
equipment once customer airlines are identified. The
Company anticipates that in the event that it does not
have sufficient funds to meet the initial expenses of
production and installation of the ASI-9000, it will
attempt to negotiate a revenue-sharing partnership
with vendors of the equipment or with the airlines.
There is no assurance that its competitors
will not offer services similar to the Company's with
a similar business plan. Nor is there an assurance
that passengers and airlines will not demand more
technologically advanced entertainment products or
that the Company will be able to compete with other
more established sources for advertising.
EMPLOYEES
The Company is managed by Ronald Chapman in
his capacity as President and Chief Executive Officer
and Philip Shiels in his capacity as Vice President
and Chief Financial Officer. The Company currently
has no employees.
AGREEMENTS WITH ASIT AUSTRALIA
By an agreement of January 9, 1996, ASI
Entertainment Pty. Ltd. (prior to becoming a
subsidiary of the Company) purchased from ASI
Technologies Pty. Ltd. ("ASIT Australia") for the
purchase price of A$1,200,000, among other items, 40
outstanding shares of ASI Media Pty. Ltd., 40 Units in
the ASI Media Unit Trust, the intellectual property of
the ASI-9000 Program, and all rights contained in an
exclusive Reseller Agreement of January 1, 1996, for
the ACAMS II Cabin Management and Communications
System. The purchase price was paid by the issuance
of 12,000,000 shares of ASI Entertainment Pty. Ltd.
common stock. The exclusive Reseller Agreement
provides, among other matters, that ASI Entertainment
Pty. Ltd. shall have the sole and exclusive right on a
world wide basis to purchase ACAMS terminals from ASI
Australia for use in the ASI-9000 at $30,000 each, or
such lesser price as mutually agreed from time to
time, and that ASI Australia shall provide all
necessary technical support services, including
training, to ASI Entertainment Pty Ltd. or its
customers in regard to such terminals. The Reseller
Agreement has a term of 5 years from the date of
execution (January 9, 1996) with an automatic 5 year
renewal at the option of ASI Entertainment Pty. Ltd.
By an agreement of December 16, 1996, ASI
Entertainment Pty. Ltd. (prior to becoming a
subsidiary of the Company) purchased from ASIT
Australia for the purchase price of A$527,980, the
hardware and equipment, including aircraft
certification on the Boeing 737 and Boeing 757,
relating to the Passenger Video Systems which had been
installed on certain aircraft operated by Air Europa
including 9 moving map displays (the CMA 3200), 9
cabin control units, 9 installation kits and 8 Sony
8.6" monitors. The purchase price was paid by the
issuance of 5,279,800 shares of ASI Entertainment Pty.
Ltd common stock.
ASI Entertainment Pty. Ltd. is a wholly-owned
subsidiary of the Company. The officers and directors
of ASI Entertainment Pty. Ltd. are Ronald J. Chapman,
President and a director of the Company, Graham O.
Chappell, a director of the Company, and Philip A.
Shiels, Chief Financial Officer.
ASI MEDIA PTY. LTD.
By a Deed of Trust of January 1, 1992, the ASI
Media Unit Trust was created ("ASIM Trust") for which
ASI Media Pty. Ltd. ("ASIM") acted as trustee. The
use of a "unit trust" entity in Australian is similar
to a joint venture partnership agreement as used in
the United States. By agreement between ASIM and ASI
Entertainment Pty. Ltd. of February 21, 1996 (the
"Media Agreement"), ASIM had the right to obtain and
sell the advertising and receive the revenues from the
ASI Entertainment Pty. Ltd. systems. As a
consequence, the beneficiaries of the ASIM Trust,
including ASI Entertainment Pty. Ltd. , and an
unrelated independent company (Vision, Inc.), and an
Australian public company (Australian Authorised
Investments, Ltd.), were entitled to receive the such
proceeds from the advertising and sponsorship of ASI
Entertainment Pty. Ltd. services. By agreement of
October 9, 1997, ASI Entertainment Pty. Ltd. acquired
for a purchase price of A$500,000 all of ASIM's right,
title and interest to the Media Agreement and the
Media Agreement was canceled and voided. The purchase
price was paid by distribution of 3,000,000 shares
(valued at $.10 per share) to all the beneficiaries of
the ASIM Trust except ASI Entertainment Pty. Ltd. No
distribution of shares was made to ASI Entertainment
Pty. Ltd. in its capacity as a Unit holder because
holding shares in itself is not permitted by Australia
corporate law. ASIM is a wholly-owned subsidiary of
the Company. The officers and directors of ASIM are
Ronald J. Chapman, director and secretary, and Graham
O. Chappell, director.
CHAPMAN INTERNATIONAL PTY. LTD.
Chapman International Pty. Ltd. provides
management services to the Company. Ronald J.
Chapman, President and a director of the Company, is
the owner of 50% of Chapman International Pty. Ltd.
and the beneficial owner, through the ownership of his
wife, of an additional 25%. Philip A. Shiels, a
director of the Company, is the owner of the remaining
25% of Chapman International Pty. Ltd. There are no
written agreements between the Company or its
subsidiary and Chapman International Pty. Ltd. There
is an understanding, however, that Chapman
International Pty. Ltd. will provide management and
marketing services for the Company. Chapman
International Pty. Ltd. has no legal recourse to
enforce any understanding between it and the Company
for use of its services and the Company could
determine to use alternate sources for management and
marketing services.
GUARANTEES
The suppliers used by the Company, CMC,
Hollingsead and ASI Australia, typically warrant their
products for three years. At the end of three years,
repairs are made on a time and material basis.
INDUSTRY OVERVIEW
The following information was derived from
reports of the World Airlines Entertainment
Association Airlines at www.waea.com and the Airbus
Industries 1998 Global Market Forecast of April 1998.
Airlines spent 15% more in 1997 than in 1996
on in-flight entertainment. This increase was due to
a continuing increase in the number of wide-body
aircraft installation, a new trend in retrofitting
narrow body aircraft with in-flight entertainment
systems, a continuing increase in demand for
programing due to more in-flight entertainment
aircraft and more "multi-channel" video systems, and a
trend toward more telephone-equipped aircraft and more
telephone units per aircraft.
In 1998, it is predicted that there will be
demand for over 16,700 jetliners of more than 70 seats
to satisfy an average traffic growth of 5 percent per
annum and replace some 8,500 aging aircraft.
Passenger traffic growth has been predicted at 4.9%
annually over the next 20 years. To meet this growth,
airlines are expected to add over 17,500 aircraft
worth more than $1.1 trillion to the existing fleets.
Approximately half of new aircraft deliveries are
expected to be wide body, long-haul aircraft that the
Company believes may represent a market for the
ASI-9000 Program.
Due to the high levels of capacity the
airlines are experiencing, many airlines opt to invest
capital in purchasing new aircraft rather than
upgrading existing airplanes. The current industry
trend in allocating capital primarily to acquiring new
aircraft should not affect the Company because the
installation of the Company's product requires little
or no capital outlay from the airline. The Company
installs its systems at nominal cost to the airline
with the goal of acquiring revenues from the sale of
advertising space.
PLAN OF OPERATION
OVERVIEW
The Company is a development stage company
formed to offer to commercial airlines its ASI-9000
Program which provides system integration, airline
efficiencies, crew and passenger communications,
passenger information and entertainment, and
value-added services tailored to its respective airline
customers' requests.
The Company has a very low cost structure as it
has no employees other than its two officers which are
paid a monthly retainer and does not maintain any
manufacturing or production operations. The Company
utilizes office space, without charge, from a company
beneficially owned by its President, Ronald Chapman.
The Company pays commissions to media sales
representatives only from revenues received from the
contracts which they place. Because of such low cost
structure, the Company anticipates that the proceeds
from earlier stock subscriptions, revenues from any
exercise of the Options, anticipated revenues from
operations, and proceeds available from its suppliers
will be sufficient to meet the Company's contemplated
operating and capital requirements for approximately 12
months following the Effective Date.
RESULTS AND PLAN OF OPERATIONS
The Company has suffered losses from
operations. The Company had accumulated losses of
$473,779 at June 30, 1998 and may be required to make
significant additional expenditures in connection with
the development of the ASI-9000 and its marketing. The
Company's ability to continue its operations is
dependent upon its receiving funds through its
anticipated sources of financing including exercise of
the Options, revenues from operations, and proceeds
available from its suppliers. However, the Company may
be required to raise additional capital through debt or
equity financing.
The Company's ASI-9000 Program evolved from
seven years of development. The CMA-3200 was
originally installed by ASIT Australia and Canadian
Marconi Company ("CMC") on Hawaiian Airlines as part of
a start up plan with the goal of testing the product's
commercial viability. The test program was carried out
in conjunction with CMC and Hollingsead International,
Inc., a manufacturer of after market video systems.
ASIT Australia mounted its software on CMC's CMA-3200
multi media computer equipment which was installed
together with Hollingsead's video equipment on three
Hawaiian aircraft.
ASIT Australia equipped three aircraft operated
by Hawaiian Airlines at a cost of $180,000 per aircraft
but was unable to equip the remaining ten aircraft as
ASIT Australia was unable to finance the purchase and
installation price of $50,000 per aircraft of the video
equipment charged by Hollingsead International, Inc.
ASIT Australia had secured 14 advertisers for the video
program based on air time on all 13 aircraft . Because
the ASIT Australia was unable to equip all 13 aircraft
with the video system, it was unable to receive funds
from the advertisers for air time on just three
aircraft. ASIT Australia had intended the Hawaiian
Airlines project to be a test program of its
"infotainment" program, to prove its feasibility and to
showcase its potential to advertisers. The Company is
not currently involved in the installation of any of
its equipment on Hawaiian Airlines.
The Company acquired the CMA-3200 from ASIT
Australia for an aggregate of A$527,980 and installed
nine CMA-3200 units on aircraft operated by Air Europa.
From July 1, 1997 to December 31, 1997 (the first six
months of operations), the Company has received
approximately $30,000 in revenues generated from the
equipment on the Air Europa aircraft. The Company has
obtained five major advertisers for air time on the Air
Europa system.
While the Company intends to provide the
ASI-9000 Program utilizing the ACAMS II for its future
contracts, the Company's present contracts have been
filled by mounting the software on the CMA-3200
manufactured by CMC. The Company does not currently
have any additional contracts for the installation of
the ASI-9000.
The Company intends to use future revenues, if
any, for the purchase of ASI-9000 Program units to be
installed on its current and future customer airlines
and for capital expenditures and working capital for
its proposed operations, and certain fees, costs and
expenses associated with this offering.
LIQUIDITY AND CAPITAL RESOURCES
The Company has used the proceeds from the sale
of the securities of ASI Entertainment Pty. Ltd. (prior
to becoming a subsidiary) for payment of operating
costs to date. The Company has received approximately
$45,000 in revenues from its Air Europa contract over
the past fiscal year ended June 30, 1998. The Company
has entered into a license fee arrangement with Air
Europa of $3,625 per calendar month for each ASI-9000
Program installed on its aircraft from the advertising
revenues received from that system. If insufficient
advertising funds are received to cover the license fee
the Company absorbs the shortfall. Air Europe
receives any amounts over the $3,625 license fee (after
deduction of any direct costs, including payment of
commissions, if any, to any media sales
representatives).
The Company anticipates such revenues to
increase as the Company expands the development of its
available operations including additional ground
communication and other services.
The Company's marketing plan anticipates that
the Company will install and maintain the ASI-9000 on
commercial airlines with little or no cost to the
airline. The Company will receive revenues from the
sale of the advertising space available on the video
and audio programs as well as other forms as developed.
This marketing plan requires significant initial
capital from the Company for the production,
acquisition, installation and maintenance of the
ASI-9000 Program possibly before any revenues are
received from the sale of the advertising space. The
Company may not have sufficient funds to purchase or
install the equipment in which case the Company will
have to seek additional capital. The Company may raise
additional capital by the sale of its equity
securities, through an offering of debt securities, or
from borrowing from a financial institution. The
Company does not have a policy on the amount of
borrowing or debt that the Company can incur. The
Company may also attempt to negotiate with vendors or
customer airlines revenue sharing arrangements by which
the Company will share the advertising revenue if the
vendor or customer airline provide capital for the
equipment.
The Company purchases from ASIT Australia
either the CMA-3200 hardware at $25,000 per unit or the
ACAMS II hardware at $30,000 per unit. The Company
subcontracts for the production of the ASI-9000
integration technology. The cost to the Company for
installation of the ASI-9000 excluding the hardware is
approximately $5,000 per aircraft on for a installation
unit like those installed on the Air Europa aircraft
per unit and up to $10,000 where the communications
link is involved.
MANAGEMENT
OFFICERS AND DIRECTORS
The officers and directors of the Company are as
follows:
Name Title
Ronald J. Chapman President and Director
Graham O. Chappell Director
Philip A. Shiels Vice President, Chief
Financial Officer and Director
Richard W. Mason Director
All directors of the Company hold office until
the next annual meeting of shareholders or until their
successors are elected and qualified. At present, the
Company's Bylaws provide for not less than one nor more
than five directors. Currently, there are four
directors of the Company. The Bylaws permit the Board
of Directors to fill any vacancy and such director may
serve until the next annual meeting of shareholders or
until his successor is elected and qualified. Officers
serve at the discretion of the Board of Directors.
The principal occupation and business
experience for each officer and director of the
Company, for at least the last five years are as follows:
RONALD J. CHAPMAN, 45, serves as President and
a director of the Company. Commencing in 1985, Mr.
Chapman founded and remains the managing director of
ASI Holdings Pty. Ltd., ASI Australia, ASI
Entertainment Pty. Ltd., and ASI Media Pty. Ltd. ASI
Entertainment Pty. Ltd. and ASI Media Pty. Ltd. are
subsidiaries of the Company. Since inception, Mr
Chapman has overseen the product development and
coordinated the marketing for ASIT Australia. Mr.
Chapman is also managing director and the beneficial
owner of 75% of Chapman International Pty Ltd., a
shareholder of the Company.
GRAHAM O. CHAPPELL, 53, has been a director of
the Company since its inception and a director of ASIT
Australia since 1987. Mr. Chappell has worked in the
aerospace industry for 30 years. Since 1985, Mr.
Chappell has operated as the principal of Chappell
Salikin Weil Associates Pty. Ltd. ("Chappell Salikin"),
Victoria, Australia, a private aviation trading and
aerospace, technology and defense industries
consultancy company. Chappell Salikin has served as a
consultant to ASIT Australia, ASI Holdings Pty. Ltd.
and ASI Entertainment Pty. Ltd. Mr. Chappell obtained
a Diploma of Aeronautical Engineering degree from the
Royal Melbourne Institute of Technology in 1968 and a
Masters of Science (Air Transport Engineering) from
Cranfield University in 1974.
PHILIP A. SHIELS, 46, has been a director of
the Company since 1996. From 1992 to the present, Mr.
Shiels has operated Shiels & Co., Victoria, Australia,
a private consulting practice providing management and
corporate advisory services. Shiels & Co. has served
as a consultant to ASIT Australia, ASI Holdings Pty.
Ltd. and ASI Entertainment Pty. Ltd. since 1994. Mr
Shiels has served as the Director of Finance for ASI
Holdings Pty. Ltd. Mr. Shiels received a Bachelor of
Business (Accountancy) Degree from the Royal Melbourne
Institute of Technology in 1976. Mr. Shiels has been
an Associate Member of the Institute of Chartered
Accountants in Australia since 1978.
RICHARD W. MASON, 65, has been a director of
the Company since June, 1998. From 1989 through 1997,
Mr. Mason served as president of Global Aviation
Associates, Inc. From June, 1997 to the present, Mr.
Mason served as chairman of the Board of Directors of
Global Aviation Company, Aurora, Colorado. Prior to
forming Global Aviation, Mr. Mason held the position of
Vice President of Combs Gates, Inc. (a subsidiary of
Gates Learjet, Denver Colorado), a company with which
he was associated twenty years. From 1995 to present,
Mr. Mason has served as vice president of Lasting
Treasures Publishing Company, Houston, Texas, a music
publishing company.
REMUNERATION
The Company does not intend to pay any officer
or director annual compensation exceeding $100,000
during the 12 months following incorporation of the
Company. The Company has not entered into any
employment agreements with its executive officers or
directors nor has it obtained any key-man life
insurance.
Each director is entitled to receive reasonable
expenses incurred in attending meetings of the Board of
Directors of the Company. The members of the Board of
Directors intend to meet at least quarterly during the
Company's fiscal year, and at such other times duly
called. The Company presently has four directors.
The following table sets forth the total
compensation paid or accrued by the Company on behalf
of the Chief Executive Officer and President of the
Company during 1997. No officer of the Company
received a salary and bonus in excess of $100,000 for
services rendered during the fiscal year ended June 30,
1998:
SUMMARY COMPENSATION TABLE
ANNNUAL COMPENSATION
FISCAL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS & AWARDS ALL OTHER
Ronald Chapman 1997 0 A$72,000(1)
Philip Shiels 1997 0 A$60,000(2)
(1) The Company paid Chapman International Pty. Ltd. a
fee of A$112,000 for management services rendered by
Messrs. Chapman and Shiels which fee was in turn paid
to Messrs. Chapman and Shiels for services rendered to
the Company for the fiscal year ended June 30, 1998.
Mr. Chapman receives a monthly retainer for services to
the Company of $6,000 and M. Shiels receives a monthly
retainer for services to the Company of $5,000.
INTERRELATIONSHIP OF ASI COMPANIES AND POSSIBLE
CONFLICT OF INTEREST
The Company purchases, and plans on purchasing
in the future, the components for the ASI-9000 Program
from ASIT Australia and subcontracts the technical
support services, including support for the ASI-9000
Program software, development, video compressions and
programming, to ASIT Australia and other companies.
The Company has used and may use in the future the
consulting services of Chappell Salikin Weil Associates
Pty. Ltd. and Shiels & Co.
There are no written agreements between the
Company and either of Chappell Salikin Weil Associates
Pty. Ltd. or Shiels & Co., but it is likely that the
Company will use the services of these companies.
Chappell Salikin Weil Associates Pty. Ltd. is a
private aviation trading and aerospace, technology and
defense industries consultancy company. Mr. Graham O.
Chappell is a director of the Company. Shiels & Co. is
a private consulting practice providing management and
corporate advisory services owned by Philip A. Shiels.
Mr. Shiels is a director of the Company.
Chapman International Pty. Ltd. has received
payment of fees from ASI Entertainment Pty. Ltd on
behalf of Ronald Chapman and Philip Shiels in their
capacities as President and Vice President/Chief
Financial Officer, respectively. Chapman International
Pty. Ltd. is expected to provide the management
services of Messrs. Chapman and Shiels to the Company
in the future. There are no written agreements between
the Company or its subsidiary and Chapman International
Pty. Ltd. There is an understanding, however, that
Chapman International Pty. Ltd. will provide management
services for the Company. Chapman International Pty.
Ltd. has no legal recourse to enforce any understanding
between it and the Company for use of its services and
the Company could determine to use alternate sources
for management and marketing services.
Messrs. Ronald J. Chapman and Graham O.
Chappell, officers and directors of the Company, are
officers and directors of ASIT Australia. The
controlling shareholder of ASIT Australia is ASI
Holdings Pty. Ltd. which, in turn, is controlled by
Chapman International Pty. Ltd. of which Ronald J.
Chapman is a 75% beneficial shareholder and Philip
Shiels, Chief Financial Officer and a director of the
Company, is a 25% shareholder. Graham O. Chappell is
the managing director and sole shareholder of Chappell
Salikin Weil Associates Pty. Ltd. which is a 25%
shareholder of ASIT Australia and a 20% shareholder of
ASI Holdings Pty. Ltd. Philip A. Shiels, Chief
Financial Officer and a director of the Company, is the
principal of Shiels & Co.
Such officers and directors may be subject to
various conflicts of interest, including among others,
the negotiation of agreements between the Company and
ASIT Australia and for the purchase of products and/or
the provision of services. The directors of the
Company devote such time to the business and affairs of
the Company as they deem required but each such
director has other duties and responsibilities with
ASIT Australia that may conflict with the time which
might otherwise be devoted to the duties with the
Company.
The Company owns the ASI-9000 Program and the
purchase rights to the ACAMS II through its
wholly-owned subsidiary ASI Entertainment Pty. Ltd. In
July, 1998, the Company exchanged all the outstanding
shares of common stock of ASI Entertainment Pty. Ltd.
for 5,293,989 shares of the Company's Common Stock and
exchanged, on a pro rata basis, all outstanding options
to purchase stock of ASI Entertainment Pty. Ltd. for
options to purchase Common Stock of the Company. ASI
Entertainment Pty. Ltd. is a wholly-owned subsidiary of
the Company. The officers and directors of ASI
Entertainment Pty. Ltd. are Ronald J. Chapman,
President and a director of the Company, Graham O.
Chappell, a director of the Company, and Philip A.
Shiels, Chief Financial Officer and a director of the
Company.
ASI Media Pty. Ltd. is wholly-owned subsidiary
of the Company. Ronald J. Chapman and Graham O.
Chappell are director and secretary and director of ASI
Media Pty. Ltd., respectively. See "BUSINESS".
RESEARCH TRUSTS
Ronald Chapman, President and a director of the
Company, holds a power of attorney for the trustee of
Research No. 1 Trust, a trust formed for the purposes
of holding shares and investments. Pursuant to the
terms of the trust, the beneficiaries of the trust may
be selected from time to time by the trustee. Research
No. 1 Trust holds 850,000 Shares and Options to
purchase 1,100,000 shares of Common Stock. Research
No. 1 Trust is a Selling Securityholder.
Philip A. Shiels, Chief Financial Officer and a
director of the Company, holds a power of attorney for
the trustee of Research No. 2 Trust, a trust formed for
the purposes of holding shares and investments.
Pursuant to the terms of the trust, the beneficiaries
of the trust may be selected from time to time by the
trustee. Research No. 2 Trust holds 250,000 Shares and
Options to purchase 250,000 shares of Common Stock.
Research No. 2 Trust is a Selling Securityholder.
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS
The Certificate of Incorporation and Bylaws of
the Company provide that the Company shall, to the
fullest extent permitted by applicable law, as amended
from time to time, indemnify all directors of the
Company, as well as any officers or employees of the
Company to whom the Company has agreed to grant
indemnification.
Section 145 of the Delaware General Corporation
Law ("DGCL") empowers a corporation to indemnify its
directors and officers and to purchase insurance with
respect to liability arising out of their capacity or
status as directors and officers provided that this
provision shall not eliminate or limit the liability of
a director (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii)
for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation
of law, (iii) arising under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal
benefit.
The Delaware General Corporation Law provides
further that the indemnification permitted thereunder
shall not be deemed exclusive of any other rights to
which the directors and officers may be entitled under
the corporation's by-laws, any agreement, vote of
shareholders or otherwise.
The effect of the foregoing is to require the
Company to indemnify the officers and directors of the
Company for any claim arising against such persons in
their official capacities if such person acted in good
faith and in a manner that he reasonably believed to be
in or not opposed to the best interests of the
corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his
conduct was unlawful.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, MAY BE
PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING
THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS
THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION
THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS
EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain
information as of the Effective Date of this Prospectus
regarding the beneficial ownership of the Company's
Common Stock by each officer and director of the
Company and by each person who owns in excess of five
percent of the Company's Common Stock.
Shares of Common Stock Percentage of Shares
Name, Position Beneficially Owned of Class Owned
and Address Prior to After
Offering(1) Offering(2)
Ronald J. Chapman (3) 3,809,987 50.9% 0%
President and director
160 Silvan Road, Wattle Glen
Victoria 3096 Australia
Graham O. Chappell (4) 1,293,412 19.6% 0%
Director
5 Marine Parade, Suite 2
St. Kilda, Victoria,
Australia 3148
Philip A. Shiels (5) 500,000 8% 0%
Chief Financial Officer and director
39 Alta Street
Canterbury, Victoria 3126,
Australia
Richard W. Mason 0 0% 0%
Director
3430 S. Nucla Way
Aurora, Colorado 80013
Chapman International
Pty. Ltd. (6) 950,000 8% 0%
160 Silvan Road
Wattle Glen, Victoria,
Australia 3096
ASI Technologies Pty.Ltd.(7) 616,575 44.5% 0%
("ASIT Australia)
3/1601 Main Road
Research, Victoria Australia
Research No. 1 Trust (8) 1,950,000 28.4% 0%
4th Floor
136 Broadway, Newmarket
Auckland 1 New Zealand
Wardour Consultants Ltd. (9) 1,562,500 24.0% 0%
Nine Queens Road
Suite 605-6
Central, Hong Kong
Swiss Time Australia
Pty. Ltd. (10) 537,500 10.8% 0%
2C Dudley Street
Brighton, Victoria,
Australia 3186
Research No. 2 Trust (11) 500,000 8.0% 0%
4th Floor
136 Broadway, Newmarket
Auckland 1 New Zealand
Heatherwood Pty. Ltd. (12) 450,006 7.5% 0%
93A Park Street
South Melbourne, Victoria,
Australia 3025
Pierce Mill Associates, Inc. (13) 417,189 7.2% 0%
1504 R Street N.W.
Washington, D.C. 20009
Maxwell Grant Productions
Pty Ltd.(14) 337,500 5.6% 0%
P.O. Box 103
Burnley, Victoria, Australia 3121
Vision, Inc.(15) 312,500 5.4% 0%
c/o Tramontana Accountants
Level 1 501 LaTrobe Street
Melbourne, Australia 3000
All the officers and directors 5,559,999 66.5% 0%
as a group (4 persons)
(1) Assumes 5,754,337 shares of Common Stock outstanding.
(2) Assumes sale of all the Securities offered by the Selling
Securityholders.
(3) Ronald J. Chapman, President and a director of
the Company, owns 125,006 shares directly and
is the managing director (president) and
majority shareholder of Chapman International
Pty. Ltd., and may be considered the
beneficial owner of the 450,000 Shares owned
by it. Chapman International Pty. Ltd. is the
controlling shareholder of ASIT Australia
which owns 659,975 Shares and Mr. Chapman is
the sole shareholder thereof and may be deemed
to be the beneficial owner of such Shares.
Mr. Chapman holds the power of attorney for
the trustee of the Research No. 1 Trust which
holds 850,000 Shares. The listed share
holdings also include the Options to purchase
500,000 Option Shares held by Chapman
International Pty. Ltd., Options to purchase
125,006 Option Shares held directly by Mr.
Chapman, and Options to purchase 1,100,000
Options Shares held by the Research No. 1
Trust. These Options are exercisable upon the
Effective Date of the Registration Statement
(4) Graham O. Chappell, a director of the Company,
is the managing director (president) and sole
shareholder of Chappell Salikin Weil Associates
Pty. Ltd. and is considered the beneficial
owner of the 625,006 Shares and 625,006 Option
Shares held by it. Mr. Chappell is the sole
shareholder of International Aviation Services
Pty. Ltd. which owns 43,400 shares of which Mr.
Chappell is considered the beneficial owner.
Chappell Salikin Weil Associates Pty. Ltd. is
20% shareholder of ASI Holdings Pty. Ltd. which
holds 61.5% of ASIT Australia. Mr. Chappell is
not deemed to be a beneficial holder thereof.
(5) Philip A. Shiels, Chief Financial Officer and a
director of the Company, holds the power of
attorney for the trustee of the Research No. 2
Trust which holds 250,000 Shares and 250,000
Options. These Options are exercisable upon
the Effective Date of the Registration
Statement Mr. Shiels is a 25% shareholder of
Chapman International Pty. Ltd. which owns 55%
of ASI Holdings Pty. Ltd. which, in turn, holds
61.5% of ASIT Australia. Mr. Shiels is not
deemed to be a beneficial owner thereof.
(6) Includes 450,000 Shares and 500,000 Options.
Ronald J. Chapman, President and a director of
the Company is the managing director
(president) and majority shareholder of Chapman
International Pty. Ltd., and Philip A. Shiels,
Chief Financial Officer and a director of the
Company, is a 25% shareholder of Chapman
International Pty. Ltd.
(7) ASIT Technologies is owned 61.5% by ASI
Holdings Pty. Ltd., 25% by Chappell Salikin
Weil Associates Pty. Ltd. and the remainder by
two unaffiliated entities. ASI Holdings Pty.
Ltd. is owned 55% by Chapman International Pty.
(see preceding footnote), 20% by Chappell
Salikin Weil Associates, and the remainder by
unaffiliated entities. Chappell Salikin Weil
Associates is solely owned by Graham O.
Chappell, a director of the Company.
(8) Includes 850,000 Shares and 1,100,000 Options.
Ronald J. Chapman, President and a director of
the Company, holds the power of attorney for
the trustee of the Research No. 1 Trust which
holds 850,000 Shares. These Options are
exercisable upon the Effective Date of the
Registration Statement
(9) Includes 812,500 Shares and 750,000 Options.
Wardour Consultants is an unrelated independent
entity.
(10) Includes 268,750 Shares and 268,750 Options.
Swiss Time Australia Pty. Ltd. is an unrelated
independent entity.
(11) Includes 250,000 Shares and 250,000 Options.
Philip A. Shiels, Chief Financial Officer and a
director of the Company, is the trustee and
beneficial shareholder of the 250,000 Shares
and 250,000 Options owned by Research No. 2
Trust.
(12) Includes 225,003 Shares and 225,003 Options.
Heatherwood Pty. Ltd. is an unrelated
independent entity.
(13) Pierce Mill Associates, Inc. is an affiliate of
Cassidy & Associates, the law firm which
prepared this registration statement and of
which James M. Cassidy is a principal. James
Cassidy is the sole shareholder of Pierce Mill
Associates. Mr. Cassidy owns 100% of Pierce
Mill Associates and is principal of Cassidy &
Associates, a Washington, D.C. securities law
firm, and is considered the beneficial owner of
the Shares issued to it.
(14) Includes 106,250 Shares and 231,250 Options.
Maxwell Grant Productions Pty. Ltd. is an
unrelated independent entity.
(15) Vision, Inc. is an unrelated independent entity.
SELLING SECURITYHOLDERS
The Company is registering for offer and sale
by the 36 holders thereof (the "Selling
Securityholders") (i) 5,754,337 shares of Common Stock
held by Securityholders of the Company; (ii) 4,927,173
options to purchase Company shares at $0.50 per share;
and (iii) 4,927,173 shares of Common Stock issuable
upon exercise of the Options. The Selling
Securityholders will offer their securities for sale on
a continuous or delayed basis pursuant to Rule 415
under the 1933 Act. See "RISK FACTORS--Additional
Shares Entering Public Market without Additional
Capital Pursuant to Rule 144" and "Selling
Securityholders May Sell Shares at any Price or Time."
The Company is applying for admission to the
NASD OTC Bulletin Board for the Shares; however, there
can be no assurance that the Shares will be accepted
for quotation thereon. See "RISK FACTORS--No Current
Trading Market for the Company's Securities" and
"DESCRIPTION OF SECURITIES--Admission to Quotation to
Nasdaq SmallCap Market and Bulletin Board"
All of the Selling Securityholders Securities
registered hereby will become tradeable and/or
exercisable on the Effective Date of the Registration
Statement of which this Prospectus is a part.
The following table sets forth the beneficial
ownership of the Securities of the Company held by each
person who is a Selling Securityholder and by all
Selling Securityholders as a group.
NAME AND ADDRESS OF PERCENT OF STOCK OWNED
BENEFICIAL OWNER COMMON STOCK OPTIONS PRIOR TO AFTER
OFFERING(1) OFFERING(2)
Chapman International
Pty. Ltd.(3) 450,000 500,000 7.8% 0%
160 Silvan Road, Wattle Glen
Victoria, Australia 3096
Ronald J. & P. Chapman 125,006 125,006 2.2% 0%
160 Silvan Road, Wattle Glen
Victoria, Australia 3096
Chappell Salikin Weil(4) 625,006 625,006 10.9% 0%
Associates Pty. Ltd
2/5 Marine Parade, St. Kilda
Victoria, Australia 3182
Albesda Pty. Ltd. (5) 12,500 12,500 0.2% 0%
54 Mathoura Road
Toorak, Victoria, 3142
Australia
ASI Technologies Pty.Ltd(6) 616,575 0 10.7% 0%
3/1601 Main Road
Research, Victoria
Australia 3095
Australian Authorised 103,125 0 1.8% 0%
Investments Ltd (7)
Suite R; Level 14
44 Martin Street
Sydney, NSW 2000
Australia
Avmar Pty. Ltd (8) 0 125,000 0% 0%
PO Box 760
Malanda, Queensland, 4885
Australia
Karen Boag 3,125 12,500 * 0%
c/o 3/1601 Main Road
Research Victoria 3095
Australia
Wolfgang Borner 20,625 20,625 * 0%
Kirchenstrasse 44D-81675
Munich, Germany
Capital General
Corporation Ltd.(9) 43,158 43,158 * 0%
Level 44 Rialto Tower South
525 Collins Street
Melbourne 3000 Australia
Beverly & David Chalmers 18,750 18,750 * 0%
2 Lorimer Road, Wattle Glen
Victoria 3096 Australia
David Chalmers 50,000 0 * 0%
PO Box 1086
Research, Victoria 3095
Australia
Charles Chan Lum Chow 75,000 75,000 1.3% 0%
c/o 108 Robinson Road
Mid-Level Hong Kong
Dallas George Clarke 0 187,500 0% 0%
18 Roma Street
Ferntree Gully, Victoria 3158
Australia
Nona Cole 18,750 18,750 * 0%
33 Flinders Parade
Barwon Heads, Victoria, 3227
Australia
Noel Dickinson 3,125 0 * 0%
c/o 3/1601 Main Road
Research, Victoria 3095
Australia
Kyi Ung Dzung 53,125 53,125 * 0%
Malham, Oval Way
Gerrards Cross Bucks SL9 8QD
United Kingdom
Robert Garner 3,125 12,500 * 0%
c/o 3/1601 Main Road
Research, Victoria 3095
Australia
Heatherwood Pty.Ltd.(10) 225,003 225,003 3.9% 0%
93A Park Street
South Melbourne,
Victoria 3205
Australia
Instil Enterprises PtyLtd(11) 62,500 62,500 1.1% 0%
Ground Floor
50 Hindmarsh Square
Adelaide, 5000
Australia
International Aviation
Services Pty.Ltd. (12) 43,400 0 * 0%
2/5 Marine Parade, St. Kilda
Victoria, Australia 3182
Darren Jones 1,875 6,250 * 0%
c/o 3/1601 Main Road
Research, Victoria 3095
Australia
Isobel Jones 3,750 18,750 * 0%
c/o 3/1601 Main Road
Research, Victoria 3095
Australia
Mark Lawrence 3,750 12,500 * 0%
c/o 3/1601 Main Road
Research, Victoria 3095
Australia
Maxwell Grant
Productions Pty. Ltd.(13) 106,250 231,250 1.8% 0%
P.O. Box 103
Burnley, Victoria 3121
Australia
Ng Kian Fong 5,250 5,250 * 0%
105 Cecil Street, Level 8
The Octagon, Singapore 0106
Pierce Mill
Associates,Inc.(14) 417,189 0 7.2% 0%
1504 R Street N.W.
Washington, D.C. 20009
Research Trust No. 1(15) 850,000 1,100,000 14.8% 0%
4th Floor
136 Broadway, Newmarket
Auckland 1 New Zealand
Research Trust No. 2 (16) 250,000 250,000 4.3% 0%
4th Floor
136 Broadway, Newmarket
Auckland 1 New Zealand
Lee Revell 3,125 0 * 0%
c/o 3/1601 Main Road
Research, Victoria 3095
Australia
Swiss Time Australia
Pty. Ltd. (17) 268,750 268,750 4.7% 0%
2C Dudley Street
Brighton, Victoria 3186
Australia
Irene Tcheng 75,000 75,000 1.3% 0%
Malham, Oval Way
Gerrards Cross Bucks SL9 8QD
United Kingdom
John Tcheng 62,500 62,500 1.1% 0%
Malham, Oval Way
Gerrards Cross Bucks SL9 8QD
United Kingdom
Lesley Tcheng 15,000 15,000 * 0%
Malham, Oval Way
Gerrards Cross Bucks SL9 8QD
United Kingdom
Victoria Tcheng 15,000 15,000 * 0%
Malham, Oval Way
Gerrards Cross Bucks SL9 8QD
United Kingdom
Vision, Inc. (18) 312,500 0 5.4% 0%
c/o Tramontana Accountants
Level 1 501 LaTrobe Street
Melbourne, Australia,3000
Wardour Consultants Ltd 812,500 750,000 9.8% 0%
Nine Queens Road
Suite 605-6
Central, Hong Kong
____________
Less than1%.
(1) Assumes 5,754,337 shares of Common Stock
outstanding.
(2) Assumes sale of all the Securities offered by
the Selling Securityholders.
(3) Ronald J. Chapman, the President and a
director of the Company, is the managing
director (president) and sole shareholder of
the named securityholder and is considered the
beneficial owner of the Shares and Options
offered hereby.
(4) Graham O. Chappell, a director of the Company,
is the managing director (president) and sole
shareholder of the named securityholder and is
considered the beneficial owner of the Shares
and Options offered hereby.
(5) Albesda Pty. Ltd. is an unrelated independent
entity.
(6) ASIT Australia is controlled by ASI Holdings of
which Chapman International Pty. Ltd. is the
controlling shareholder which in turn is
beneficially owned 75% by Ronald J. Chapman,
President and a director of the Company, and
25% by Philip Shiels, Chief Financial Officer
and a director of the Company. Chappell
Salikin Weil Associates Pty., of which the sole
shareholder is Graham O. Chappell, a director
of the Company, is a 25% shareholder of ASIT
Australia.
(7) Australian Authorised Investments Ltd. is an
unrelated Australian public company.
(8) Avmar Pty. Ltd. is an unrelated independent
entity.
(9) Capital General Corporation Ltd. is an
unrelated independent entity.
(10) Heatherwood Pty. Ltd. is an unrelated
independent entity.
(11) Instil Enterprises Pty. Ltd. is an unrelated
independent entity.
(12) International Aviation Services Pty. Ltd. is
owned by Graham Chappell, a director and
shareholder of the Company.
(13) Maxwell Grant Productions Pty. Ltd. is an
unrelated independent entity.
(14) Pierce Mill Associates, Inc. is an affiliate of
Cassidy & Associates, the law firm which
prepared this registration statement and of
which James M. Cassidy is a principal. James
Cassidy is the sole shareholder of Pierce Mill
Associates. Mr. Cassidy owns 100% of Pierce
Mill Associates and is principal of Cassidy &
Associates, a Washington, D.C. securities law
firm, and is considered the beneficial owner of
the shares of common stock of the Company
issued to it.
(15) Ronald J. Chapman, President and a director of
the Company, is the trustee and beneficial
shareholder of the 850,000 Shares and Options
owned by Research No. 1 Trust.
(16) Philip A. Shiels, Chief Financial Officer and a
director of the Company, is the trustee and
beneficial shareholder of the 250,000 Shares
and 250,000 Options owned by Research No. 2
Trust.
(16) Swiss Time Australia Pty. Ltd. is an unrelated
independent entity.
(17) Vision, Inc. is an unrelated independent entity.
In the event the Selling Securityholders
receive payment for the sale of their securities, the
Company will not receive any of the proceeds of such
sales. The Company is bearing all expenses in
connection with the registration of the securities of
the Selling Securityholders offered hereby.
The Securities owned by the Selling
Securityholders are being registered pursuant to Rule
415 of the General Rules and Regulations of the
Securities and Exchange Commission, which Rule pertains
to delayed and continuous offerings and sales of
securities. In regard to the Securities offered under
Rule 415, the Company has given certain undertakings in
Part II of the Registration Statement of which this
Prospectus is a part which, in general, commit the
Company to keep this Prospectus current during any
period in which offers or sales are made pursuant to
Rule 415.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has purchased the intellectual
property of the ASI-9000 from ASI Australia and has
contracted to purchase the ACAMS II, when available,
from ASIT Australia. ASIT Australia provides
maintenance and servicing of the ACAMS II equipment and
the ASI-9000 technology. Ronald J. Chapman, President
and a director of the Company, controls Chapman
International Pty. Ltd. which owns 55% of ASI Holdings
Pty. Ltd. ASIT Australia which, in turn, owns 61.5% of
ASI Australia. Philip A. Shiels, Chief Financial
Officer and a director of the Company, is a 25%
shareholder of Chapman International Pty. Ltd. Graham
O. Chappell, a director of the Company, is the managing
director (president) and sole shareholder of Chappell
Salikin Weil Associates Pty. Ltd. which is a 20%
shareholder of ASI Holdings Pty. Ltd. and 25%
shareholder in ASIT Australia.
Ronald Chapman, Graham Chappell, and Philip
Shiels are directors of the Company and directors of
the Company's subsidiaries ASI Entertainment Pty. Ltd.
("ASIE Australia") and ASI Media Pty. Ltd. Ronald
Chapman and Graham Chappell are the directors and
officers of ASIT Australia.
Chapman International Pty. Ltd. will likely
provide management services to the Company. Ronald J.
Chapman, President and a director of the Company, is
the beneficial owner of 75% of Chapman International
Pty. Ltd. and Philip A. Shiels, a director of the
Company, is the owner of the remaining 25%.
By an agreement of January 9, 1996, ASI
Entertainment Pty. Ltd. (prior to becoming a subsidiary
of the Company) purchased from ASI Technologies Pty.
Ltd. ("ASIT Australia") for the purchase price of
A$1,200,000, among other items, 40 outstanding shares
of ASI Media Pty. Ltd., the intellectual property of
the ASI-9000 Program, and all rights contained in the
exclusive Reseller Agreement for the ACAMS II Cabin
Management and Communications System. The purchase
price was paid by the issuance of 12,000,000 shares of
ASI Entertainment Pty. Ltd. common stock. The
exclusive Reseller Agreement provides, among other
matters, that ASI Entertainment Pty. Ltd. shall have
the sole and exclusive right on a world wide basis to
purchase ACAMS terminals from ASI Australia for use in
the ASI-9000 at $30,000 each, or such lesser price as
mutually agreed from time to time, and that ASI
Australia shall provide all necessary technical support
services, including training, to ASI Entertainment Pty
Ltd. or its customers in regard to such terminals. The
Reseller Agreement has a term of 5 years from the date
of execution (January 9, 1996) with an automatic 5 year
renewal at the option of ASI Entertainment Pty. Ltd.
By an agreement of December 16, 1996, ASI
Entertainment Pty. Ltd. (prior to becoming a subsidiary
of the Company) purchased from ASIT Australia for the
purchase price of A$527,980, the hardware and
equipment, including aircraft certification on the
Boeing 737 and Boeing 757, relating to the Passenger
Video Systems which had been installed on certain
aircraft operated by Air Europa including 9 moving map
displays (the CMA 3200), 9 cabin control units, 9
installation kits and 8 Sony 8.6" monitors. The
purchase price was paid by the issuance of 5,279,800
shares of ASI Entertainment Pty. Ltd common stock.
On September 30, 1997, ASI Entertainment Pty.
Ltd. (prior to becoming a subsidiary of the Company)
and ASIT Australia executed an agreement where ASI
Entertainment Pty. Ltd. purchased certain
communications systems and stocks, including but not
limited to, 36 ACAMS I systems, two ACAMS II prototype
systems, and 2 VI-4000 Satellite News Units, in
exchange for a purchase price of A$1,500,000 payable by
the issuance of 15,000,000 shares of common stock of
ASI Entertainment Pty. Ltd. and options to acquire
15,000,000 shares of ASI Entertainment Pty. Ltd. common
stock for A$0.10 per share.
On October 9, 1997, ASI Entertainment Pty.
Ltd. (prior to becoming a subsidiary of the Company)
and ASI Media Pty. Ltd. executed an agreement where
ASI Entertainment Pty. Ltd. acquired for a purchase
price of A$500,000 all of ASIM's right, title and
interest to the Media Agreement and the Media Agreement
was canceled and voided. The purchase price was paid
by distribution of 3,000,000 shares (valued at $.10 per
share) to all the beneficiaries of the ASIM Trust
except ASI Entertainment Pty. Ltd. As a result,
3,000,000 shares of ASI Entertainment Pty. Ltd. were
issued to Vision, Inc. and Australian Authorised
Investments, Ltd. as the beneficiaries of the ASIM
Trust. See "BUSINESS--ASI Media Pty. Ltd."
The Company has in the past and plans to
continue in the future to purchase products and
services from ASIT Australia.
DESCRIPTION OF SECURITIES
The Company has authorized capital of
100,000,000 shares of Common Stock, $.0001 par value,
and 20,000,000 shares of preferred stock, $.0001 par
value. As of the date hereof, the Company has
5,754,337 shares of Common Stock issued and outstanding
and no shares of Preferred Stock outstanding.
SHARES OF COMMONS STOCK
The Company is not offering any shares of
Common Stock in this registration statement. The 36
Selling Shareholders of the Company are registering an
aggregate of 5,754,337 shares of Common Stock for sale
at price to be determined in the future. The Company's
Common Stock is considered "penny stock" as that term
is defined by the Securities and Exchange Commission.
Special sales practice requirements apply to
broker-dealers on sales of penny stocks. The sales of
the Company's Common Stock will be subject to such
special rules.
Holders of the Common Stock do not have
preemptive rights to purchase additional shares of
Common Stock or other subscription rights. The Common
Stock carries no conversion rights and is not subject
to redemption or to any sinking fund provisions. All
shares of Common Stock are entitled to share equally in
dividends from sources legally available therefor when,
as and if declared by the Board of Directors and, upon
liquidation or dissolution of the Company, whether
voluntary or involuntary, to share equally in the
assets of the Company available for distribution to
stockholders. All outstanding shares are validly
authorized and issued, fully paid and nonassessable,
and all shares to be sold and issued as contemplated
hereby will be validly authorized and issued, fully
paid and nonassessable.
The Board of Directors is authorized to issue
additional shares of Common Stock, not to exceed the
amount authorized by the Company's Certificate of
Incorporation, and to issue options for the purchase of
such shares, on such terms and conditions and for such
consideration as the Board may deem appropriate without
further stockholder action.
PENNY STOCK REGULATION
Penny stocks generally are equity securities
with a price of less than $5.00 per share other than
securities registered on certain national securities
exchanges or listed on the Nasdaq Stock Market,
provided that current price and volume information with
respect to transactions in such securities is provided
by the exchange or system. The "penny stock" rules
impose additional sales practice requirements on
broker-dealers who sell such securities to persons
other than established customers and accredited
investors (generally those with assets in excess of
$1,000,000 or annual income exceeding $200,000 or
$300,000 together with their spouse). For transactions
covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of
such securities and have received the purchaser's
written consent to the transaction prior to the
purchase. Additionally, for any transaction involving
a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a disclosure
schedule prescribed by the Commission relating to the
penny stock market. The broker-dealer also must
disclose the commissions payable to both the
broker-dealer and the registered representative and
current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price
information on the limited market in penny stocks.
Consequently, the "penny stock" rules may restrict the
ability of broker-dealers to sell the Company's
securities. The foregoing required penny stock
restrictions will not apply to the Company's securities
if such securities reach and maintain a market price of
$5.00 or greater.
NONCUMULATIVE VOTING
Each holder of Common Stock is entitled to one
vote per share on all matters on which such
stockholders are entitled to vote. Shares of Common
Stock do not have cumulative voting rights. The
holders of more than 50 percent of the shares voting
for the election of directors can elect all the
directors if they choose to do so and, in such event,
the holders of the remaining shares will not be able to
elect any person to the Board of Directors.
PREFERRED STOCK
The Company's Certificate of Incorporation
authorize the issuance of 20,000,000 shares of
Preferred Stock, $.0001 par value per share. There has
been no preferred stock designated and issued. The
designation of such issued Preferred Stock provides
that each such share of Preferred Stock will have one
vote on all matters on which shareholders are entitled
to vote.
In the case of the voluntary or involuntary
liquidation, dissolution or winding up of the Company,
holders of shares of Preferred Stock are entitled to
receive the liquidation preference before any payment
or distribution is made to the holders of Common Stock
or any other series or class of the Company's stock
hereafter issued that ranks junior as to liquidation
rights to the Preferred Stock, but holders of the
shares of the Preferred Stock will not be entitled to
receive the liquidation preference of such shares until
the liquidation preference of any other series or class
of the Company's stock hereafter issued that ranks
senior as to liquidation rights to the Preferred Stock
("senior liquidation stock") has been paid in full.
The holders of Preferred Stock and all series or
classes of the Company's stock hereafter issued that
rank on a parity as to liquidation rights with the
Preferred Stock are entitled to share ratable, in
accordance with the respective preferential amounts
payable on such stock, in any distribution (after
payment of the liquidation preference of the senior
liquidation stock) which is not sufficient to pay in
full the aggregate of the amounts payable thereon.
After payment in full of the liquidation preference of
the shares of the Preferred Stock, the holders of such
shares will not be entitled to any further
participation in any distribution of assets by the
Company. Neither a consolidation or merger of the
Company with another corporation, nor a sale or
transfer of all or part of the Company's assets for
cash, securities or other property will be considered a
liquidation, dissolution or winding up of the Company.
The Board of Directors is authorized to provide
for the issuance of additional shares of Preferred
Stock in series and, by filing a certificate pursuant
to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be
included in each such series, and to fix the
designation, powers, preferences and rights of the
shares of each such series and the qualifications,
limitations or restrictions thereof without any further
vote or action by the shareholders. Any shares of
Preferred Stock so issued would have priority over the
Common Stock with respect to dividend or liquidation
rights. Any future issuance of Preferred Stock may
have the effect of delaying, deferring or preventing a
change in control of the Company without further action
by the shareholders and may adversely affect the voting
and other rights of the holders of Common Stock. At
present, the Company has no plans to issue any
Preferred Stock nor adopt any series, preferences or
other classification of Preferred Stock.
ADDITIONAL INFORMATION DESCRIBING STOCK
The above descriptions concerning the stock of
the Company do not purport to be complete. Reference
is made to the Company's Certificate of Incorporation
and By-Laws which are included as exhibits to the
Registration Statement of which this Prospectus is a
part and which are available for inspection at the
Company's offices. Reference is also made to the
applicable statutes of the State of Delaware for a more
complete description concerning rights and liabilities
of shareholders.
OPTIONS
The following is a summary of certain
provisions of the Options, but such summary does not
purport to be complete and is qualified in all respects
by reference to the Option Agreement filed as an
exhibit to the Registration Statement of which this
Prospectus forms a part. The Company has issued
options for the purchase of 4,927,173 shares of the
Company's common stock. The options may be separately
transferred immediately upon the Effective Date.
All shares of Common Stock to be issued and
allotted pursuant to the exercise of the Options shall
rank pari passu in all respects with the existing
issued Common Stock of the Company. The Options may be
transferred at any time commencing on the Effective
Date hereof and prior to the expiration date of such
Option. The Options may be exercised at any time
commencing on the Effective Date and expiring on June
30, 2000 at an exercise price of $0.50 per Share. The
Options shall be exercisable wholly or in part (in
multiples of 1,000 Options or as close thereto as is
possible) by notice in writing to the Company given at
any time prior to or on the expiration date and shall
be accompanied by the purchase price (the "application
monies") for the exercised Shares. Prior to exercise
thereof, there are no participating rights or
entitlements inherent in the Options to participate in
any new issue or bonus issue of securities which may be
offered to members of the Company from time to time
prior to the expiration date.
Option holders have the right to exercise their
Options prior to the record date set by the Board of
Director for determining entitlements to any capital
issue to the then existing members of the Company made
during the currency of the Options. In this regard,
Option holders shall be afforded the period of at least
14 days prior to, and inclusive of, the record date and
record book closing date (to determine entitlements to
the issue), to exercise their Options. In the event of
any reconstruction (including consolidation,
sub-division, reduction or return) of the issued
capital of the Company, the number of Options or the
exercise price of the Options or both shall be
reconstructed (as appropriate) in a manner which will
not result in any benefits being conferred on Option
holders which are not conferred on shareholders, but
(subject to the provisions with respect to rounding of
entitlements as sanctioned by the meeting of members
approving the reconstruction of capital) in all other
respects the terms for the exercise of the Options
shall remain unchanged.
The Company reserves the right to vary, amend,
alter and/or add to the terms and conditions attached
to the Options (the "changes") if the requirements of a
stock exchange on which the Company's shares are
granted official quotation, or, on which the Company
wishes to have its shares granted official quotation,
make it necessary for the changes to be made provided
that no changes may be made by the Company to the
exercise price of 50 cents per Option or the expiry
date of June 30, 2000 save as may be necessary by
reason of the operation of any requirements of a stock
exchange.
ADMISSION TO QUOTATION TO NASDAQ SMALLCAP MARKET AND
NASD OTC BULLETIN BOARD
If the Company meets the qualifications, the
Company intends to apply for quotation of its
Securities on the NASD OTC Bulletin Board. Until the
Company meets such qualifications, its Securities will
be quoted in the daily quotation sheets of the National
Quotation Bureau, Inc., commonly known as the "pink
sheets". If the Company's Securities are not quoted
on the NASD OTC Bulletin Board, a securityholder may
find it more difficult to dispose of, or to obtain
accurate quotations as to the market value of, the
Company's Securities. The over-the-counter market
("OTC") differs from national and regional stock
exchanges in that it (1) is not cited in a single
location but operates through communication of bids,
offers and confirmations between broker-dealers and (2)
securities admitted to quotation are offered by one or
more broker-dealers rather than the "specialist" common
to stock exchanges. To qualify for quotation on the
NASD OTC Bulletin Board, an equity security must have
one registered broker-dealer, known as the market
maker, willing to list bid or sale quotations and to
sponsor such a Company listing. If it meets the
qualifications for trading securities on the NASD OTC
Bulletin Board the Company's Securities will trade on
the NASD OTC Bulletin Board until such future time, if
at all, that the Company applies and qualifies for
admission for listing on the Nasdaq SmallCap Market.
There can be no assurance that the Company will qualify
or if qualified that it will be accepted for listing
of its securities on the NASD SmallCap Market.
To qualify for admission for listing on the
Nasdaq SmallCap Market, an equity security must, in
relevant summary, (1) be registered under the
Securities Exchange Act of 1934; (2) have at least
three registered and active market makers, one of which
may be a market maker entering a stabilizing bid; (3)
for initial inclusion, be issued by a company with
$4,000,000 in net tangible assets, or $50,000,0000 in
market capitalization, or $750,000 in net income in two
of the last three years (if operating history is less
than one year then market capitalization must be at
least $50,000,000); (4) have at a public float of at
least 1,000,000 shares with a value of at least
$5,000,000; (5) have a minimum bid price of $4.00 per
share; and (6) have at least 300 beneficial
shareholders.
TRADING OF SHARES
There are no outstanding options, options to
purchase, or securities convertible into, the shares of
the Company which are not being registered hereby. The
Company has not agreed with any shareholders, to
register their shares for sale, other than for this
registration. The Company does not have any other
public offerings in process or proposed.
TRANSFER AGENT AND REGISTRAR
Continental Stock Transfer & Trust Company, New
York, New York, serves as the transfer agent for the
Company.
REPORTS TO SHAREHOLDERS
The Company will furnish to holders of the
Shares annual reports containing audited financial
statements examined and reported upon, and with an
opinion expressed by, an independent certified public
accountant. The Company may issue other unaudited
interim reports to its shareholders as it deems
appropriate.
PLAN OF DISTRIBUTION
The Company will receive proceeds from the
exercise, if any, of the Options, aggregating a maximum
of $2,432,336 if all such Options are exercised. The
Company will not receive the proceeds from the sale of
the Securities by the Selling Securityholders pursuant
to this Prospectus.
The Selling Securityholders' Securities may be
sold to purchasers from time to time directly by and
subject to the discretion of the Selling
Securityholders. The Selling Securityholders may from
time to time offer the Securities for sale through
underwriters, dealers or agents, who may receive
compensation in the form of underwriting discounts,
concessions or commissions from the Selling
Securityholders and/or the purchasers of the Securities
for whom they may act as agents. The securities sold
by the Selling Securityholders may be sold from time to
time in one or more transactions: (i) at an offering
price that is fixed or that may vary from transaction
to transaction depending upon the time of sale or (ii)
at prices otherwise negotiated at the time of sale.
Such prices will be determined by the Selling
Securityholders or by agreement between the Selling
Securityholders and any underwriters.
Any underwriters, dealers or agents who
participate in the distribution of the securities may
be deemed to be "underwriters" under the Securities Act
and any discounts, commissions or concessions received
by any such underwriters, dealers or agents may be
deemed to be underwriting discounts and commissions
under the Securities Act.
At the time a particular offer is made by or on
the behalf of the Selling Securityholders, a
Prospectus, including any necessary supplement thereto,
will be distributed which will set forth the number of
shares of Common Stock and other securities being
offered and the terms of the offering, including the
name or names of any underwriters, dealers or agents,
the purchase price paid by any underwriter for the
Securities purchased from the Selling Securityholders,
any discounts, commissions and other items constituting
compensation from the Selling Securityholders, any
discounts, commissions or concessions allowed,
reallowed or paid to dealers, and the proposed selling
price to the public.
Pursuant to Regulation M of the General Rules
and Regulations of the Securities and Exchange
Commission, any person engaged in a distribution of
securities, including on behalf of a selling security
holder, may not simultaneously bid for, purchase or
attempt to induce any person to bid for or purchase
securities of the same class for a period of five
business days prior to the commencement of such
distribution and continuing until the selling security
holder (or other person engaged in the distribution) is
no longer a participant in the distribution.
If, at some time, the Company meets the
requirements of the Nasdaq SmallCap Market it will
apply for listing thereon. If is should be accepted
for listing thereon, then certain underwriters may
engage in passive market making transactions in the
Company's Common Stock in accordance with Rule 103 of
Regulation M.
In order to comply with the applicable
securities laws, if any, of certain states, the
securities will be offered or sold in such states
through registered or licensed brokers or dealers in
those states. In addition, in certain states, the
securities may not be offered or sold unless they have
been registered or qualified for sale in such states or
an exemption from such registration or qualification
requirement is available and with which the Company has
complied.
In addition and without limiting the
foregoing, the Selling Securityholders will be subject
to applicable provisions of the Exchange Act and the
rules and regulations thereunder in connection with
transactions in Shares during the effectiveness of the
Registration Statement of which this Prospectus is a part.
The Company will pay all of the expenses
incident to the registration of the Shares (including
registration pursuant to the securities laws of certain
states) other than commissions, expenses,
reimbursements and discounts of underwriters, dealers
or agents, if any.
LEGAL MATTERS
LEGAL PROCEEDINGS
The Company is not a party to any litigation
and management has no knowledge of any threatened or
pending litigation against the Company.
LEGAL OPINION
Cassidy & Associates, Washington, D.C. has
given its opinion as attorneys-at-law that the Shares,
when sold pursuant to the terms hereof and pursuant to
a valid and current prospectus in which those shares
are registered, will be fully paid and non-assessable.
James M. Cassidy, a principal of Cassidy & Associates,
is an officer and director of Pierce Mill Associates, a
Selling Securityholder. See "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" and "SELLING
SECURITYHOLDERS".
EXPERTS
The financial statements in this Prospectus
have been included in reliance upon the report of
Weinberg & Company, P.A., Certified Public Accountants,
and upon the authority of such firm as expert in
accounting
AVAILABLE INFORMATION
The Company has filed with the Securities and
Exchange Commission (the "Commission") a Registration
Statement on Form SB-2 (the "Registration Statement")
under the Securities Act with respect to the securities
offered hereby. This Prospectus does not contain all
the information contained in the Registration
Statement. For further information regarding the
Company and the securities offered hereby, reference is
made to the Registration Statement, including all
exhibits and schedules thereto, which may be inspected
without charge at the public reference facilities of
the Commission's Washington, D.C. office, 450 Fifth
Street, N.W., Washington, D.C. 20549. Each statement
contained in this Prospectus with respect to a document
filed as an exhibit to the Registration Statement is
qualified by reference to the exhibit for its complete
terms and conditions.
The Company will be subject to the
informational requirements of the Securities Exchange
Act of 1934 ("Exchange Act") and in accordance
therewith will file reports and other information with
the Commission. Reports, proxy statements and other
information filed by the Company can be inspected and
copied on the Commission's home page on the World Wide
Web at http://www.sec.gov or at the public reference
facilities of the Commission, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as
the following Regional Offices: 7 World Trade Center,
Suite 1300, New York, N.Y. 10048; and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois.
60661-2511. Such material can also be inspected at the
New York, Boston, Midwest, Pacific and Philadelphia
Stock Exchanges. Copies can be obtained from the
Commission by mail at prescribed rates. Request should
be directed to the Commission's Public Reference
Section, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
The Company intends to furnish its stockholders
with annual reports containing audited financial
statements and such other reports as may be required by
law.
FINANCIAL STATEMENTS
The audited financial statements for the fiscal
years ended June 30, 1997 and June 30, 1998 for ASI
Entertainment Pty. Ltd., the audited financial
statements for the fiscal year ended June 30, 1998 for
ASI Entertainment, Inc. (Delaware), and the unaudited
financial statements for the period ended September 30,
1998 follow herewith.
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998 AND 1997
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 - 2 - INDEPENDENT AUDITORS' REPORT
PAGE 3 - CONSOLIDATED BALANCE SHEETS AS
OF JUNE 30, 1998 AND 1997
PAGE 4 - CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1998 AND
1997 AND FOR THE PERIOD FROM DECEMBER
15, 1993 (INCEPTION) TO JUNE 30, 1998
PAGE 5 - CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY FOR THE
PERIOD FROM DECEMBER 15, 1993
(INCEPTION) TO JUNE 30, 1998
PAGE 6 - 7 - CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1998 AND
1997 AND FOR THE PERIOD FROM DECEMBER
15, 1993 (INCEPTION) TO JUNE 30, 1998
PAGE 8 - 19 - NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS AS OF JUNE 30, 1998
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
ASI Entertainment Pty. Ltd.
We have audited the accompanying consolidated balance
sheets of ASI Entertainment Pty., Ltd. and Subsidiary
(a development stage company) as of June 30, 1998 and
1997, and the related consolidated statements of
operations, changes in shareholders' equity and cash
flows for the years then ended and for the period from
December 15, 1993 (Inception) to June 30, 1998. These
consolidated financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence
supporting the amounts and disclosures in the
consolidated financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall consolidated financial
statements presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material
respects, the financial position of ASI Entertainment
Pty. Ltd. and Subsidiary (a development stage company)
as of June 30, 1998 and 1997, and the results of its
operations, and cash flows for the years then ended, in
conformity with generally accepted accounting
principles used in the United States of America.
The accompanying financial statements have been
prepared assuming that the Company will continue as a
going concern. As discussed in Note 11, the Company has
accumulated losses of $473,779 at June 30, 1998 and
anticipates recurring losses in connection with
continuing engineering, marketing, and general and
administrative expenses. Realization of certain assets
is dependent upon the Company's ability to meet its
future financing requirements, and the success of
future operations. These factors raise substantial
doubt about the Company's ability to continue as a
going concern unless the Company is able to raise the
necessary financing. Management's plans in regard to
these matters are also described in Note 11. The
financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
November 6, 1998
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30,1998 AND 1997
ASSETS
1998 1997
CURRENT ASSETS
Cash and cash equivalents $ 65,322 $ 84
Trade accounts receivable 6,588 -
Due from affiliate 15,311 -
Other receivables 3,047 -
Total Current Assets 90,268 84
Property and equipment, net 1,183,228 394,243
Investment in media rights, net 263,232 149,340
TOTAL ASSETS $1,536,728 $ 543,667
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
expenses $ 8,271 $ 45
Total Liabilities 8,271 45
Commitments and Contingencies
SHAREHOLDERS' EQUITY
Ordinary share capital, $0.07222
and $0.07595 historical at June
30, 1998 and 1997, respectively
($0.06155 and $0.07467 current
at June 30, 1998 and 1997,
respectively) par value,
200,000,000 shares authorized,
42,351,920 and 17,779,920
shares issued and outstanding
at June 30, 1998 and 1997,
respectively 3,058,584 1,350,308
Additional paid-in capital 4,119 -
Additional paid-in capital -
discount on shares (745,470) (745,470)
Deficit accumulated during
development stage (473,779) -
Cumulative translation adjustment (271,262) (23,941)
1,572,192 580,897
Less subscriptions receivable 43,735 37,275
Total Shareholders' Equity 1,528,457 543,622
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $1,536,728 $ 543,667
See accompanying notes to consolidated financial statements.
3
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
AND THE PERIOD FROM DECEMBER 15,1993 (INCEPTION)
TO JUNE 30, 1998
Cumulative From
December 15, 1993
(Inception) to
June 30, 1998 1998 1997
REVENUES $ 44,957 $ 44,957 $ -
Cost of sales 22,478 22,478 -
Gross Profit 22,479 22,479 -
EXPENSES:
Officers' compensation 90,288 90,288 -
Other employee
compensation 34,200 34,200 -
Accounting and auditing 15,224 15,224 -
Advertising 8,789 8,789 -
Amortization 49,473 49,473 -
Banking 531 531 -
Convention expense 2,909 2,909 -
Depreciation 72,228 72,228 -
Directors' fees 13,680 13,680 -
Engineering 22,720 22,720 -
Management fee 8,208 8,208 -
Marketing expense 15,157 15,157 -
Offering costs 95,458 95,458 -
Professional fees 29,919 29,919 -
Other office expenses,
rent and utilities 966 966 -
Travel 36,508 36,508 -
Total Expenses 496,258 496,258 -
NET LOSS $ (473,779) $ (473,779) $ -
Weighted average number
of shares outstanding
during the period 11,605,738 31,915,630 -
Net loss per common
share and equivalents $ (0.041) $ (0.015) $ -
See accompanying notes to consolidated financial statements.
4
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM DECEMBER 15, 1993(INCEPTION) TO JUNE 30, 1998
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<CAPTION>
Addi- Deficit Cumu-
tional Accumu- lative
Ordinary Addi- Paid-In lated Trans-
Shares tional Capital Devel- lation Subscrip-
Number of Paid-In Discount opment Adjust- tion
Shares Amount Capital On Shares Stage ment Receivable Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of ordinary
shares in December
1993 to ASI
Technologies Pty.
Ltd.("ASIT"),
founder 12 $1 $- $- $- $- $- $1
Balance,
June 30, 1994 12 1 - - - - - 1
Balance,
June 30, 1995 12 1 - - - - - 1
Net issuance of
ordinary shares
to ASIT 108 8 - - - - - 8
Issuance of ordinary
shares to ASIT in
exchange for assets
purchased 12,000,000 894,600 - (745,470) - - - 149,130
Issuance of ordinary
shares to investor
and employees 500,000 37,275 - - - - (37,275) -
Effect of foreign
currency translation
for 1996 - - - - - 8,302 - 8,302
Balance,
June 30, 1996 12,500,120 931,884 - (745,470) - 8,302 (37,275) 157,441
Issuance of ordinary
shares to ASIT in
exchange for assets
purchased 5,279,800 418,424 - - - - - 418,424
Effect of foreign
currency translation
for 1997 - - - - - (32,243) - (32,243)
Balance,
June 30, 1997 17,779,920 1,350,308 - (745,470) - (23,941) (37,275) 543,622
Issuance of ordinary
shares to
investors 6,572,000 429,226 4,119 - - - (43,735) 389,610
Issuance of ordinary
shares in exchange
for media rights 3,000,000 197,400 - - - - - 197,400
Issuance of ordinary
shares to ASIT
in exchange for
assets purchased 15,000,000 1,081,650 - - - - - 1,081,650
Write-off of
subscription
receivables - - - - - - 37,275 37,275
Effect of foreign
currency translation
for 1998 - - - - - (247,321) - (247,321)
Net loss 1998 - - - - (473,779) - - (473,779)
BALANCE,
JUNE 30, 1998 42,351,920 $3,058,584 $4,119 $(745,470) $(473,779) $(271,262) $(43,735) $1,528,457
</TABLE>
See accompanying notes to financial statement.
5
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
AND THE PERIOD FROM DECEMBER 15, 1993 (INCEPTION)
TO JUNE 30, 1998
Cumulative From
December 15, 1993
(Inception) to
June 30, 1998 1998 1997
Cash flows from operating
activities:
Net loss $ (473,779) $ (473,779) $ -
Adjustments to reconcile net
loss to net cash provided
by operating activities:
Depreciation 72,228 72,228 -
Amortization 49,473 49,473 -
Changes in operating assets
and liabilities:
(Increase) decrease in:
Trade accounts receivable (7,321) (7,321) -
Other receivables (3,386) (3,386) -
Increase (decrease) in:
Accounts payable and
accrued expenses 9,151 9,151 -
Total adjustments to
reconcile net loss to
net cash provided by
operating activities: 120,145 120,145 -
Net cash used in
operating activities (353,634) (353,634) -
Cash flows from investing
activities:
Advances to affiliate (17,015) (17,015) -
Net cash used in
investing activities (17,015) (17,015) -
Cash flows from financing
activities:
Proceeds from issuance of
ordinary shares, net 443,250 443,166 -
Net cash provided by
financing activities 443,250 443,166 -
Effect of exchange rate
changes on cash (7,279) (7,279) -
Net increase in cash 65,322 65,238 -
See accompanying notes to consolidated financial statements.
6
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
AND THE PERIOD FROM DECEMBER 15, 1993 (INCEPTION)
TO JUNE 30, 1998
Cumulative From
December 15, 1993
(Inception) to
June 30, 1998 1998 1997
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR - 84 84
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 65,322 $ 65,322 $ 84
Supplemental disclosure of non-cash financing activities:
In June 1998, the Company's board of directors approved the
write-off of certain subscriptions receivable from former
employees of the ASIT. The amount of $34,200 was included in the
statement of operations as other employee compensation for the
year ended June 30, 1998.
Effective October 9, 1997, 3,000,000 ordinary shares of the
Company were exchanged for all rights, title and interest in the
Media Agreement which was recorded on the acquisition date at
$224,010 (See Note 4).
On September 30, 1997, the Company issued 15,000,000 ordinary
shares and 15,000,000 options to purchase ordinary shares of the
Company in exchange for certain ACAMS Systems and other equipment
which was recorded on the acquisition date at $923,250 (See Note 5).
On December 16, 1996 the Company issued 5,279,800 ordinary shares
to ASIT in exchange for nine ACAMS systems (See Note 3), making
ASIT a 29.7% shareholder of the Company as of that date.
On January 30, 1996, the Company issued 325,000 ordinary shares to
a company listed on the Australian stock exchange and 175,000
shares to various employees of the Company.
On January 9, 1996, the Company issued 12,000,000 ordinary shares
to ASIT, its parent at that time, (See Note 9) in exchange for a
40% interest in ASI Media, a 40% beneficiary interest in the
Unit Trust, a value added reseller agreement for ACAMS, and
intellectual property of the ASI-9000 Program (See Note 6).
See accompanying notes to consolidated financial statements.
7
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
A. Organization
ASI Entertainment Pty., Ltd. (the "Company"), is an Australian
company incorporated in December 1993 under the corporation laws
of Victoria, and limited by shares as defined under such
corporation laws. The Company provides in-flight video and audio
entertainment and data communications to the commercial airline
industry. The Company's wholly owned subsidiary, ASI Media Pty.,
Ltd. ("ASI Media") is an inactive corporation whose sole purpose
is to act as trustee to the ASI Media Unit Trust (the "Unit
Trust") (See Note 4).
The Company is operating as a development stage company and
intends to generate revenues primarily from selling advertising
time on its ASI-9000 Program to be installed on commercial
aircraft (See Note 2 - Operations).
B. Principles of Consolidation
The accompanying consolidated financial statements includes the
accounts of the Company and its wholly owned inactive subsidiary,
ASI Media Pty., Ltd. All significant intercompany transactions
and balances have been eliminated in consolidation.
C. Basis of Presentation
The financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America.
The basis of accounting differs from that used in the Australian
statutory financial statements of the Company. Adjustments are
made to translate the statutory financial statements to United
States Generally Accepted Accounting Principles. The financial
statements are expressed in United States dollars. The functional
currency of the Company is the Australian dollar.
D. Use of Estimates
The accompanying consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles. The preparation of financial statements in accordance
with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues
8
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES - CONT'D
and expenses during the reporting period. Actual results could
differ from those estimates.
E. Revenue Recognition
Revenue during 1998 is derived from media sales relating to
equipment installed under one contract with a commercial airline
(See Note 8). Revenue from this contract is recognized on an
accrual basis as earned under the contract terms.
F. Cash and Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less at time of purchase to be cash
equivalents.
G. Property and Equipment
Property and equipment is stated at cost and depreciated using the
straight-line method over the estimated economic useful lives of 5
years. Expenditures for maintenance and repairs are charged to
expense as incurred. Major improvements are capitalized.
H. Investment in Media Rights
The investment in Media Rights is accounted for at cost, less
accumulated amortization (See Note 4).
I. Ordinary Share Options
The Company applies APB Opinion 25 and related Interpretations in
accounting for its ordinary share options.
J. Foreign Currency Translation
The functional currency of the Company and its subsidiary is the
Australian dollar. Financial statements for these entities are
translated into United States dollars at year-end exchange rates
as to assets and liabilities and weighted average exchange rates
as to revenues and expenses. Capital accounts are translated at
their historical exchange rates when the shares were issued. The
resulting translation adjustments are recorded in Shareholders'
Equity.
K. Income Taxes
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for
9
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES - CONT'D
Income Taxes" (SFAS 109). SFAS 109 is an asset and liability
approach that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events
that have been recognized in the Company's financial statements
or tax returns. In estimating future tax consequences, SFAS 109
generally considers all expected future events other than
enactments of changes in the law or rates. There was no current
income tax expense or benefit for the year ended June 30, 1997
since the Company did not commence operations until July 1, 1997
(See Note 2).
At June 30, 1998 , the Company had net operating loss
carryforwards of approximately $474,000 which expires under
Australian tax law in the year 2005. The deferred tax asset
created by this net operating loss has been fully offset by a
valuation allowance.
L. Per Share Data
Net loss per common share for the year ended June 30, 1998 is
computed by dividing net loss by the weighted average common
shares outstanding during the year as defined by Financial
Accounting Standards, No. 128, "Earnings per Share". The assumed
exercise of common share equivalents was not utilized since the
effect was anti-dilutive.
M. Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107, "Disclosures
about Fair Value of Financial Instruments", requires disclosures
of information about the fair value of certain financial
instruments for which it is practicable to estimate that value.
For purposes of this disclosure, the fair value of a financial
instrument is the amount at which the instrument could be
exchanged in a current transaction between willing parties, other
than in a forced sale or liquidation.
The carrying amounts of the Company's financial instruments,
including accounts payable and accrued liabilities, approximates
fair value due to the relatively short period to maturity for
these instruments.
N. New Accounting Pronouncements
The Financial Accounting Standards Board has recently issued
several new accounting pronouncements. Statement
10
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES - CONT'D
No. 130, "Reporting Comprehensive Income" establishes standards
for reporting and display of comprehensive income and its
components, and is effective for fiscal years beginning after
December 15, 1997. Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information" establishes
standards for the way that public business enterprises report
information about operating segments in annual financial
statements and requires that those enterprises report selected
information about operating segments in interim financial reports
issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas, and
major customers, and is effective for financial statements for
periods beginning after December 15, 1997. The Company believes
that its future adoption of these statements will not have a
material effect on the Company's financial position or results of
operations.
NOTE 2 - OPERATIONS
The Company was dormant from December 1993 (inception) until
January 1996, at which time it began to acquire assets and issue
stock. The Company commenced operations on July 1, 1997 and did
not have operating revenues or expenses prior to that date.
NOTE 3 - PROPERTY AND EQUIPMENT
On December 16, 1996, the Company purchased from ASI Technologies
Pty., Ltd. ("ASIT"), a related party, but not a shareholder at
that time (See Notes 5 and 9), nine Airline Cabin Management and
Communication Systems ("ACAMS"), a component of the ASI-9000
Program, for a price of $324,972 (as translated at June 30, 1998)
($394,243 as translated at June 30, 1997) through the issuance of
5,279,800 ordinary shares of the Company. On September 30, 1997,
the Company purchased additional ACAMS systems and other equipment
from ASIT for a price of $923,250 (as translated at June 30, 1998)
through the issuance of 15,000,000 ordinary shares and 15,000,000
options to purchase ordinary shares. The price of both purchases
represents ASIT's original cost basis in such systems.
The following is a summary of property and equipment at June 30,
1998 and 1997:
11
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
NOTE 3 - PROPERTY AND EQUIPMENT - (CONT'D)
1998 1997
Airline Cabin Management
and Communications Systems $1,248,222 $ 394,243
Less: Accumulated depreciation 64,994 -
$1,183,228 $ 394,243
The Company began depreciating the equipment on July 1, 1997 over
a period of 5 years. As of June 30, 1998 the equipment purchased
on September 30, 1997 has not yet been depreciated since it was
not yet placed in service. Placement of this equipment is
contingent upon future contracts or orders from commercial airlines.
NOTE 4 - INVESTMENTS
As discussed in Notes 5 and 6, on January 9, 1996, the Company
acquired from ASIT a 40% shareholder interest in ASI Media at a
cost of $30 and a 40% beneficiary interest in the Unit Trust,
which was in substance, an intangible asset, (see below) at a cost
of $149,340. On February 14, 1996, the Company acquired the
remaining 60% of ASI Media for $45 thereby making it a wholly
owned subsidiary of the Company. The total investment of $75 in
ASI Media is eliminated in consolidation.
As of June 30, 1997, ASI Media, under a February 21, 1996 Media
Agreement with the Company, held sole rights to market, sell and
receive revenues from the sale of advertising and sponsorship
related to the ASI-9000 Program installed on commercial aircraft.
Under the Deed of the Unit Trust all revenues generated from ASI
Media, the trustee, is distributed to the Unit Trust for
distribution to the beneficiaries. Effective October 9, 1997,
3,000,000 ordinary shares of the Company's capital were exchanged
for all rights, title and interest in the Media Agreement. The
substance of this transaction is to allow the Company to receive
100% of all future revenues generated from advertising and
sponsorship sales. On the transaction date of October 9, 1997 the
Company recorded as an intangible asset an Investment in Media
Rights of $224,010, and transferred the $149,340 investment in the
Unit Trust to Investment in Media Rights.
The Investment in Media Rights will be amortized over a period of
5 years beginning October 9, 1997 using the straight-line method.
Amortization expense for the year ended June 30, 1998 was $49,473.
12
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
NOTE 5 - ORDINARY SHARE CAPITAL
The Company was capitalized in December 1993 with 12 ordinary
shares of capital issued to ASIT, and in January 1996 with 108
additional ordinary shares issued to ASIT.
On January 9, 1996, the Company issued 12,000,000 ordinary shares
of capital to ASIT, its parent at that time, (See Note 9) in
exchange for a 40% interest in ASI Media, 40% beneficiary
interest in the Unit Trust, a value added reseller agreement for
ACAMS, and intellectual property of the ASI-9000 Program (See Note
6).
On January 23, 1996, ASIT, the Company's parent, in lieu of
payment transferred its 12,000,120 ordinary shares of the Company
(representing 100% of the shares then held by it) to various
companies to whom ASIT was indebted that are controlled by certain
directors of the Company.
On January 30, 1996, the Company issued 325,000 ordinary shares to
a company listed on the Australian Stock Exchange and 175,000
shares to various employees of the Company.
On December 16, 1996 the Company issued 5,279,800 ordinary shares
to ASIT in exchange for nine ACAMS systems (See Note 3), making
ASIT a 29.7% shareholder of the Company as of that date.
On September 30, 1997, the Company issued 15,000,000 ordinary
shares and 15,000,000 options to purchase ordinary shares of the
Company in exchange for certain ACAMS Systems and other equipment
purchased from ASIT. Concurrent with the agreement to acquire the
aforementioned equipment, ASIT assigned its ownership of the
15,000,000 shares and options to various entities to whom ASIT was
indebtned to.
Effective October 9, 1997, 3,000,000 ordinary shares of the
Company's capital were exchanged for all rights, title and
interest in the Media Agreement which was recorded on the
acquisition date at $224,010 (See Note 4).
Between September 30, 1997 and June 30, 1998 the Company issued
6,572,000 to various investors for cash.
NOTE 6 - ADDITIONAL PAID-IN CAPITAL - DISCOUNT ON SHARES
On January 9, 1996, the Company acquired from ASIT, its parent at
that time (See Notes 5 and 9), a 40% beneficiary interest in
ASI Media Unit Trust, a 40%
13
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
NOTE 6 - ADDITIONAL PAID-IN CAPITAL - DISCOUNT ON SHARES - CONT'D
shareholder interest in ASI Media Pty. Ltd., an exclusive value
added reseller agreement with ASIT for ACAMS Cabin Management
and Communications Systems, a teaming agreement between
ASIT and Canadian Marconi Corporation dated February 14, 1995, and
the intellectual property of the ASI-9000 Program for a total
purchase price of $894,600 as translated to United States Dollars
on the transaction date. Payment was made by issuing 12,000,000
ordinary shares of the Company to ASIT. The teaming agreement
was subsequently terminated and a portion of the purchase price
at the transaction date in the amount of $149,100 ($149,340 as
translated at the year-end rate) was allocated to the investment
in the Unit Trust and $30 to the investment in ASI Media. At the
purchase date of January 9, 1996, the technological feasibility
of the ASI-9000 Program had not yet been established and the
technology had no alternative future use. Consequently, all
research and development costs had been expensed by ASIT leaving a
zero historical cost basis as defined under Generally Accepted
Accounting Principles. The excess of the par value of the
shares issued by the Company over the original cost basis of ASIT
represents the remaining $745,470 of the purchase price. This
amount is considered a distribution of equity to ASIT since they
had no cost basis in the intellectual property of the ASI-9000
Program and the value added reseller agreement. Accordingly, the
$745,470 was recorded as Additional Paid-In Capital-discount on
shares.
NOTE 7 - SHARE OPTIONS
On January 30, 1996, the Company issued 4,000,000 options to
acquire ordinary shares to certain officers and directors of the
Company. The options are exercisable prior to December 31, 1998
at par value. All options remained unexercised at June 30, 1998.
The Company applies APB Opinion No. 25 and related interpretations
in accounting for ordinary share options. Accordingly, no
compensation cost has been recognized for options issued as of
June 30, 1998. Had compensation cost for the Company's issued
ordinary share options been determined based on the fair value at
the grant date consistent with SFAS No.123, Accounting for Stock
Based Compensation, the Company's approximate pro-forma net income
for the years ended June 30, 1998 and 1997 would have been as
follows:
14
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
NOTE 7 - SHARE OPTIONS - (CONT'D)
1998 1997
Net income (loss) as reported $ (473,779) $ -
Pro-forma net income (loss) $ (473,779) $ -
The options granted in January 1996 were granted at an exercise
price equal to fair market value of the ordinary shares at the
time of grant, vested immediately, and expire at December 31,
1998. Since the options vested in 1996 there was no pro-forma
effect of applying SFAS No. 123 for 1997 and 1998. The fair value
of the ordinary share option grant was estimated on the grant date
using an options pricing model for non-public entities where the
following assumptions were used: exercise price of par value;
risk-free interest rate of 5%; expected life of 3 years;
The effect of applying SFAS No.123 is not likely to be
representative of the effects on reported net income (loss) for
future years.
In 1998 and 1997, 28,572,020 and 6,500,100 options were issued,
respectively, for consideration by the option holders. The
unexercised options under these non-compensatory option issuances
at June 30, 1998 and 1997 were 35,072,120 and 6,500,100,
respectively. These options are exercisable at par value through
June 30, 2000 (See Note 9).
NOTE 8 - OPERATING AGREEMENTS
On December 13, 1995, the Company entered into a Supply and
License Agreement (the "Agreement") with an airline to supply,
license and install ASI-9000 Programs ("System") on the airline's
commercial aircraft. Under the terms of the Agreement, the
license term for each system will run for five years from the date
of diagnostic test completion (after installation) with an option
to renew. The hardware component of the System will become the
property of the airline at the expiry of the initial license term.
The Company will receive a maximum monthly license fee derived
from advertising revenues of $3,625 for each System, and a monthly
maintenance fee of $1,875 also derived from advertising revenues
under a separate maintenance support agreement. All advertising
and sponsor revenues after deduction of the license fee and direct
costs will be paid to the airline. The initial order under the
Agreement is for nine systems and an additional fourteen Systems
subject
15
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
NOTE 8 - OPERATING AGREEMENTS - (CONT'D)
to the airline approval of the license fee. (See Note 11) The
first nine systems were installed and approved by the airline
during 1996. As of June 30, 1997 no revenes had been generated.
The airline has the option to order additional systems under the
Agreement. The Company anticipates that agreements with future
customers will not include a set monthly licensing fee but will
provide that the Company retain the revenues generated from
advertisers and sponsors from which they will pay sales
commissions and expenses.
On January 9, 1996, the Company entered into an agreement with
ASIT, its parent at that time, (See Notes 5 and 9) whereby it
acquired the sole right to purchase ACAMS terminals from ASIT for
use in the ASI-9000 Program at a fixed price per terminal as
stipulated in the agreement or such lesser price as mutually
agreed upon from time to time in line with commercially
competitive prices from alternative suppliers. Under terms of the
agreement, ASIT may purchase hardware of a similar nature from
alternative suppliers if the price is lower than that stipulated
in the contract. Additionally, under the agreement ASIT has agreed
to provide technical support at commercially competitive rates.
The agreement is effective for 5 years with an option to renew on
the same terms and conditions.
NOTE 9 - RELATED PARTY TRANSACTIONS
At June 30, 1998 and 1997, ASIT was a 12.5% and 29.7%, respective
shareholder of the Company (See Note 5). As discussed in Note 8
above, the Company entered into an agreement to purchase ACAMS
systems from ASIT. In addition, as discussed in Note 3, 5 and 6
the Company purchased certain assets from ASIT during fiscal 1998
and 1997 through the issuance of ordinary shares.
Certain directors of the Company are also directors of ASIT.
During 1998 the Company paid management fees of $8,208 to a
company affiliated through common shareholders and directors. The
management fee covers office rent and certain utilities and office
expenses of shared offices. In addition, during 1998, the Company
reimbursed the same affiliate $27,497 in travel expenses which is
included in travel expenses in the Statement of Operations.
On September 30, 1997, in connection with an equipment purchase
from a related party (See Note 5) the Company
16
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
NOTE 9 - RELATED PARTY TRANSACTIONS - (CONT'D)
issued 15,000,000 options to purchase ordinary shares. The options
are immediately exercisable wholly or in part in multiples of
100,000 options at the par value of the ordinary shares and expire
on June 30, 2000.
During 1998 the Company advanced $15,311 to its affiliate as of
July 1, 1998, ASI Entertainment, Inc. (See Note 12)
NOTE 10 - COMMITMENTS AND CONTINGENCIES
The Company is aware of the issues associated with the programming
code in existing computer systems as the millennium (year 2000)
approaches. The "year 2000" problem is pervasive and complex as
virtually every computer operation will be affected in some way
by the rollover of the two-digit year value to 00. The issue is
whether computer systems will properly recognize date- sensitive
information when the year changes to 2000. Systems that do not
properly recognize such information could generate erroneous data
or cause a system to fail.
Although management believes that none of the Company's systems
are affected by this problem, the Company could be impacted by the
failure of other companies to timely correct their computer
systems. The Company's operations are dependent on the world wide
telecommunications networks including computer systems, telephone
systems, and delivery systems. If any of these systems become in-
operational the Company will be directly and significantly
effected. Management has not assessed the potential effect on the
Company's earnings.
NOTE 11 - GOING CONCERN
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As such, they
do not include adjustments relating to the recoverability of
recorded asset amounts and classification of recorded assets and
liabilities. The Company has accumulated losses of $473,779 at
June 30, 1998 and will be required to make significant
expenditures in connection with continuing engineering and
marketing efforts along with general and administrative expenses.
The Company's ability to continue its operations is dependent upon
its raising of capital through debt or equity financing in order
to meet its working capital needs.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern, and if
17
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
NOTE 11 - GOING CONCERN - (CONT'D)
substantial additional funding is not acquired or alternative
sources developed, management will be required to curtail its
operations.
The Company may raise additional capital by the sale of its equity
securities, through an offering of debt securities, or by
borrowing from a financial institution. The Company does not have
a policy on the amount of borrowing or debt that the Company can
incur. The Company may also attempt to negotiate with vendors or
customers, airline revenue sharing arrangements by which the
Company will share the advertising revenue if the vendor or
customer airline provide capital for the equipment. Management
believes that actions presently being taken to obtain additional
funding provide the opportunity for the Company to continue as a
going concern.
NOTE 12- SUBSEQUENT EVENTS
Merger with ASI Entertainment, Inc.
Under an agreement dated June 10, 1998, effective July 1, 1998,
ASI Entertainment, Inc., ("ASIEInc.") a new corporation formed on
April 29, 1998 under the laws of Delaware, acquired all of the
issued and outstanding ordinary shares of capital and ordinary
share options of the Company in exchange for common stock and
common stock options of ASIEInc. Under the terms of the
agreement, the Company's shares and options were exchanged at a
ratio of one share and one option of ASIEInc for every eight
shares and eight options of the Company. As a result of the
exchange, the Company and its wholly owned subsidiary became
wholly owned subsidiaries of ASIEInc, and the shareholders of the
Company became shareholders of approximately 92% of ASIEInc.
Generally Accepted Accounting Principles used in the United States
require that the Company whose shareholders retain a majority
interest in a combined business be treated as the acquirer for
accounting purposes. As a result, the merger will be treated as
an acquisition of ASIEInc. by the Company, and a recapitalization
of the Company. Accordingly, the Company's financial statements
immediately following the acquisition will be as follows: (1) The
Balance Sheet will consist of the Company's net assets at
historical cost and ASIEInc.'s net assets at historical cost and
(2) the Statement of Operations will include the Company's
operations, for the period presented and ASIEInc.'s operations
from the date of acquisition.
18
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
NOTE 12- SUBSEQUENT EVENTS - (CONT'D)
Common Stock Offering by Selling Securityholders of ASI
Entertainment, Inc.
ASIEInc. is in the process of preparing for filing of a
Registration Statement under Form SB-2 whereby the selling
security holders of ASIEInc will offer a certain percentage, as
defined in the offering document, of their issued and outstanding
common stock and common stock options of ASIEInc. ASIEInc is not
offering any new shares for sale as part of this filing and will
not receive any proceeds of the offering. Accordingly, all
offering costs have been expensed.
19
ASI ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
ASI ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 - INDEPENDENT AUDITORS' REPORT
PAGE 2 - BALANCE SHEET AS OF JUNE 30, 1998
PAGE 3 - 5 - NOTES TO BALANCE SHEET AS OF
JUNE 30, 1998
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
ASI Entertainment, Inc.
We have audited the accompanying balance sheet of ASI Entertainment, Inc. (a
development stage company) as of June 30, 1998. This financial statements is
the responsibility of the Company's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the balance sheet is free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the balance sheet. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the balance
sheet presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the balance sheet referred to above present fairly in all
material respects, the financial position of ASI Entertainment, Inc. (a
development stage company) as of June 30, 1998, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3, the
Company acquired ASI Entertainment Pty. Ltd. on July 1, 1998. ASI
Entertainment Pty. Ltd. has accumulated losses of $473,779 at June 30, 1998
and anticipates recurring losses in connection with continuing engineering,
marketing, and general and administrative expenses. Realization of certain
assets is dependent upon ASI Entertainment Pty. Ltd's ability to meet its
future financing requirements, and the success of future operations. These
factors raise substantial doubt about the Company's ability to continue as a
going concern subsequent to the acquisition unless the Company is able to
raise the necessary financing. Management's plans in regard to these matters
are described in Note 3 of the financial statements. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
November 10, 1998
ASI ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF JUNE 30, 1998
ASSETS
CURRENT ASSETS
Cash $ 15,453
TOTAL ASSETS 15,453
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Due to affiliate $ 15,311
Total Liabilities 15,311
STOCKHOLDERS' EQUITY
Preferred stock $0.0001 par value,
20,000,000 shares authorized,
none issued and outstanding -
Common stock, $0.0001 par value,
100,000,000 shares authorized,
417,189 shares issued and outstanding 42
Additional paid-in capital 100
Total Stockholders' Equity 142
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 15,453
See accompanying notes to balance sheet.
2
ASI ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO BALANCE SHEET
AS OF JUNE 30, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
A. Organization
ASI Entertainment, Inc. (the "Company"), is a development stage
company incorporated on April 29, 1998 under the corporation laws
of Delaware for the purpose of acquiring ASI Entertainment Pty.
Ltd. The Company had no operations through June 30, 1998.
ASI Entertainment Pty. Ltd. ("ASIE") (See Note 3) is a development
stage company incorporated in Australia in December 1993 under the
laws of Victoria, and limited by shares as defined under such
corporation laws. ASIE provides in-flight video and audio
entertainment and data communications to the commercial airline
industry. ASIE intends to generate revenues from selling
advertising time on its ASI-9000 Program to be installed on
commercial aircraft.
B. Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
C. Income Taxes
The Company accounts for income taxes under the Financial
Standards Board Statement of Financial Standards No. 109,
"Accounting for Income Taxes" ("Statement 109"). Under Statement
109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences expected to be recovered or settled. Under Statement
109, the effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes
the enactment date. There was no current or deferred income tax
expense or benefit as of June 30, 1998, due to the Company's
limited operations.
3
ASI ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO BALANCE SHEET
AS OF JUNE 30, 1998
NOTE 2 - RELATED PARTY
Due to Affiliate
During the period the Company's affiliate, as of July 1, 1998 (See
Note 4) ASI Entertainment Pty. Ltd., advanced funds in the amount
of $15,311 to maintain the Company's US bank account.
Legal Counsel
The legal counsel to the Company as of June 30, 1998 is also a
majority shareholder
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As such, they
do not include adjustments relating to the recoverability of
recorded asset amounts and classification of recorded assets and
liabilities. On July 1, 1998, the Company acquired 100% of ASI
Entertainment Pty. Ltd., ("ASIE") an Australian Corporation. ASIE
has accumulated losses of $473,779 at June 30, 1998 and will be
required to make significant expenditures in connection with
continuing engineering and marketing efforts along with general
and administrative expenses. The Company's ability to continue its
operations is dependent upon its raising of capital through debt
or equity financing in order to meet its working needs.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern subsequent to the
acquisition, and if substantial additional funding is not acquired
or alternative sources developed, management will be required to
curtail its operations.
The Company may raise additional capital by the sale of its equity
securities, through an offering of debt securities, or from
borrowing from a financial institution. The Company does not have
a policy on the amount of borrowing or debt that the Company can
incur. The Company may also attempt to negotiate with vendors or
customers, airline revenue sharing arrangements by which the
Company will share the advertising revenue if the vendor or
customer airline provide capital for the equipment. Management
believes that actions presently being taken to obtain additional
funding provide the opportunity for the Company to continue as a
going concern.
4
ASI ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO BALANCE SHEET
AS OF JUNE 30, 1998
NOTE 4 - SUBSEQUENT EVENTS
Acquisition
Under an agreement dated June 10, 1998, effective July 1, 1998,
the Company acquired all of the issued and outstanding ordinary
shares of capital and ordinary share options of ASIE in exchange
for common stock and common stock options of the Company. Under
the terms of the agreement, the ASIE's outstanding shares and
options were exchanged at a ratio of one share and one option of
the Company for every eight shares and eight options of ASIE. As
a result of the exchange, ASIE and its wholly owned inactive
subsidiary, ASI Media Pty. Ltd. became wholly owned subsidiaries
of the Company, and the shareholders of ASIE became shareholders
of approximately 92% of the Company. Generally accepted accounting
principles require that the Company whose shareholders retain a
majority interest in a combined business be treated as the
acquirer for accounting purposes. As a result, the merger will be
treated as an acquisition of the Company by ASIE, and a
recapitalization of ASIE using the purchase method of accounting
for financial reporting purposes. Accordingly, the Company's
financial statements immediately following the merger will be as
follows: (1) The balance sheet will consist of ASIE's net assets
at historical cost and the Company's net assets at historical cost
and (2) the statement of operations will include the ASIE's
operations for the period presented and the operations of the
Company from the date of acquisition.
Common Stock Offering by Selling Securityholders of ASI
Entertainment, Inc.
The Company is in the process of preparing for filing a
Registration Statement under Form SB-2 whereby the selling
securityholders of the Company will offer a certain
percentage, as defined in the offering document, of their issued
and outstanding common stock and common stock options of the
Company. The Company is not offering any shares for sale as part
of this filing and will not receive any proceeds of the offering.
Formation of Subsidiary
Subsequent to June 30, 1998, the Company incorporated a wholly
owned subsidiary, ASI Technologies, Inc. under the laws of Delaware.
5
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 14,495
Trade accounts receivable 11,823
Total Current Assets 26,318
NON CURRENT ASSETS
Property and equipment, net 1,160,343
Investments in media rights, net 246,496
Total Non Current Assets 1,406,839
TOTAL ASSETS $1,433,157
LIABILITIES AND SHARHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses 5,949
Total Liabilities 5,949
SHAREHOLDERS' EQUITY
Preferred stock $0.0001 par value, 20,000,000 shares
authorized, non issued and outstanding $
Common stock, $0.0001 par value, 100,000,000 shares
authorized, 5,754,337 shares issued and outstanding 575
Additional paid-in capital 2,273,065
Deficit accumulating during development stage (566,475)
Cumulative translation adjustment (279,957)
Total Shareholders' Equity 1,427,208
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,433,157
See accompanying notes to unaudited consolidated financial statements.
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDING SEPTEMBER 30, 1998 AND SEPTEMBER 30,
1997 AND FROM DECEMBER 15, 1993 (INCEPTION) TO SEPTEMBER 30,1998
Cumulative from
December 15,
1993 (Inception) July 1, 1997 to July 1, 1998 to
to September 30, September 30, September 30,
1998 1997 1998
REVENUES 62,692 20,006 17,735
Cost of sales 31,771 10,003 9,293
Gross Profit 30,921 10,003 8,442
EXPENSES:
Officers' compensation 110,484 19,500 20,196
Other employee
compensation 34,200 5,850 -
Accounting and auditing 27,297 663 12,073
Advertising and
promotion 8,865 975 76
Amortisation 64,773 - 15,300
Banking 632 132 101
Convention Expense 4,068 1,296 1,159
Communications 341 - 341
Depreciation 88,384 13,727 16,156
Directors fees 17,566 - 3,886
Engineering 24,551 6,305 1,831
Management fee 9,248 1,950 1,040
Marketing expense 24,663 4,367 9,506
Offering costs 106,914 812 11,456
Professional fees 29,919 - -
Other office expenses,
rent and utilities 966 68 -
Travel 44,525 10,518 8,017
Total Expenses 597,396 66,163 101,138
NET LOSS $ (566,475) $ (56,160) $ (92,696)
Weighted average number of shares
outstanding during the period
5,359,105 5,337,148 5,754,337
Net loss per common share and equivalents
$ (0.106) $ (0.011) $ (0.016)
See accompanying notes to unaudited consolidated financial statements.
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD JULY 1, 1998 TO SEPTEMBER 30, 1998
(UNAUDITED)
Cash flows from operating activities:
Net Loss (92,696)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 16,156
Amortization 15,300
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (5,273)
Other receivables 3,047
Increase (decrease) in:
Accounts payable and accrued expenses (2,276)
Total adjustments to reconcile net loss to net
cash provided by operating activities: 26,954
Net cash used in operating activities (65,742)
Effect of exchange rate changes on cash (396)
Net decrease in cash (66,138)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 80,633
CASH AND CASH EQUIVALENTS AT END OF PERIOD $14,495
See accompanying notes to unaudited consolidated financial statements.
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying unaudited consolidated financial statements include the
accounts of ASI Entertainment, Inc. and its wholly owned subsidiaries, ASI
Technologies, Inc. and ASI Entertainment Pty. Ltd., an Australian
corporation. ASI Media Pty. Ltd., an inactive wholly owned subsidiary of
the Australian corporation is also included. (All entities are collectively
referred to as "the Company").
Development Stage Company
The Company is operating as a development stage company and intends to
generate revenues primarily from selling advertising time on its ASI-9000
Program to be installed on commercial aircraft.
Basis of Presentation
The accompanying unaudited consolidated financial statements of the Company
have been prepared in accordance with Generally Accepted Accounting
Principles used in the United States and with the rules and regulations of
the United States Securities and Exchange Commission for the interim
financial information. Accordingly, they do not include all the information
and footnotes necessary for a comprehensive presentation of financial
position and results of operations.
Adjustments are made to translate the statutory financial statements of the
Company's Australian subsidiaries to Generally Accepted Accounting
Principles used in the United States. The functional currency of the
Company's Australian subsidiary is the Australian dollar. The functional
currency of the United States entities is the United States dollar. The
unaudited consolidated financial statements are expressed in United States
dollars. It is management's opinion that all other material adjustments
(consisting of normal recurring adjustments) have been made which are
necessary for a fair consolidated financial statement presentation. The
results for the interim period are not necessarily indicative of the results
to be expected for the year.
For further information, refer to the consolidated financial statements and
footnotes of ASI Entertainment Pty. Ltd. and ASI Entertainment, Inc. include
in the Company's Form SB-2 for the year ended June 30, 1998.
Per Share Data
Net loss per common share is computed by dividing net loss by the weighted
average common shares outstanding during the period as defined by Financial
Accounting Standards, No. 128, "Earnings per Share". The assumed exercise
of common share equivalents was not utilized since the effect was
anti-dilutive.
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(UNAUDITED)
NOTE 2. MERGER
Under an agreement dated June 10, 1998, ASI Entertainment, Inc. ("ASIEInc.")
a new corporation formed on April 29, 1998 under the laws of Delaware,
acquired all of the issued and outstanding ordinary shares of capital and
ordinary share options of ASI Entertainment Pty. Ltd. in exchange for common
stock and common stock options of ASIEInc. Under the terms of the
agreement, ASI Entertainment Pty. Ltd.'s shares and options were exchanged
at a ratio of one share and one option of ASIEInc. for every eight shares
and eight options of ASI Entertainment Pty. Ltd. As a result of the
exchange, ASI Entertainment Pty. Ltd. and its wholly owned subsidiary became
wholly owned subsidiaries of ASIEInc., and the shareholders of ASI
Entertainment Pty. Ltd. became shareholders of approximately 92% of ASIEInc.
Generally Accepted Accounting Principles used in the United States require
that the Company whose shareholders retain a majority interest in a combined
business be treated as the acquirer for accounting purposes. As a result,
the merger will be treated as an acquisition of ASIEInc. By ASI
Entertainment Pty. Ltd., and a recapitalization of ASI Entertainment Pty.
Ltd. Accordingly, the Company's financial statements immediately following
the acquisition follows: (1) The Balance Sheet will consist of ASI
Entertainment Pty. Ltd.'s net assets at historical cost and ASIEInc.'s net
assets at historical cost, and (2) the Statement of Operations includes ASI
Entertainment Pty. Ltd.'s operations for the period presented and ASIEInc.'s
operations from the date of acquisition.
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD JULY 1, 1998 TO SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<CAPTION>
DEFICIT
ACCUM-
ULATED
DURING CUMULATIVE
ADDITIONAL DEVELOP- TRANS-
COMMON SHARES PAID-IN MENT LATION
STOCK AMOUNT CAPITAL STAGE ADJUSTMENT TOTAL
<S> <C> <C> <C> <C> <C> <C>
Balance,
June 30, 1998 417,189 42 100 - - 142
Shares issued
pursuant to merger
with ASI Enter-
tainment Pty. Ltd. 5,337,148 533 - - - 533
Adjustment to
additional
paid-in capital - - 2,272,965 - - 2,272,965
under re-capital-
ization
accounting
Adjustment to
retained earnings
under
re-capitalization
accounting - - - (473,779) - (473,779)
Adjustment to
cumulative foreign
currency
translation - - - - (271,262) (271,262)
Effect of foreign
currency transla-
tion for period - - - - (8,695) (8,695)
Net Loss for
period - - - (92,696) - (92,696)
Balance
September 30,
1998 5,754,337 $575 $2,273,065 $(566,475) $(279,957) $1,427,208
</TABLE>
No dealer, salesman or any other person has been authorized to
give any information or to make any representations other than
those contained in this prospectus, and, if given or made,
such information or representations may not be relied on as
having been authorized by the Company or by any of the
Underwriters. Neither the delivery of this Prospectus nor any
sale made hereunder shall under any circumstances create an
implication that there has been no change in the affairs of the
Company since the date hereof. This Prospectus does not
constitute an offer to sell, or solicitation of any offer to
buy, by any person in any jurisdiction in which it is unlawful
for any such person to make such offer or solicitation.
Neither the delivery of this Prospectus nor any offer,
solicitation or sale made hereunder, shall under any
circumstances create any implication that the information herein
is correct as of any time subsequent to the date of the Prospectus.
------------------------
TABLE OF CONTENTS
Page
Prospectus Summary
Risk Factors
The Company
Use of Proceeds
Dividend Policy
Business
Plan of Operation
Management
Security Ownership of Certain
Beneficial Owners and Management
Selling Securityholders
Certain Relationships and Related Transactions
Description of Securities
Plan of Distribution
Legal Matters
Experts
Available Information
Index to Financial Statements
Until 90 days after the date of this Prospectus, all
dealers effecting transactions in the registered Securities,
whether or not participating in this distribution, may be
required to deliver a Prospectus.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection
with this Registration Statement. All of such expenses are
estimates, other than the filing fees payable to the Securities and
Exchange Commission.
Filing Fee - Securities and Exchange Commission $ 2,639
Fees and Expenses of Accountants and legal counsel 100,000
Blue Sky Fees and Expenses 2,000
Printing and Engraving Expenses 1,000
Miscellaneous Expenses 1,000
Total $104,639
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is incorporated in Delaware. Under Section 145
of the General Corporation Law of the State of Delaware, a Delaware
corporation has the power, under specified circumstances, to
indemnify its directors, officers, employees and agents in connection
with actions, suits or proceedings brought against them by a third
party or in the right of the corporation, by reason of the fact that
they were or are such directors, officers, employees or agents,
against expenses incurred in any action, suit or proceeding. The
Certificate of Incorporation and the By-laws of the Company provide
for indemnification of directors and officers to the fullest extent
permitted by the General Corporation Law of the State of Delaware.
The General Corporation Law of the State of Delaware provides
that a certificate of incorporation may contain a provision
eliminating the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty
as a director provided that such provision shall not eliminate or
limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under
Section 174 (relating to liability for unauthorized acquisitions or
redemptions of, or dividends on, capital stock) of the General
Corporation Law of the State of Delaware, or (iv) for any transaction
from which the director derived an improper personal benefit. The
Company's Certificate of Incorporation contains such a provision.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS,
OFFICERS OR PERSONS CONTROLLING THE COMPANY PURSUANT TO THE FOREGOING
PROVISIONS, IT IS THE OPINION OF THE SECURITIES AND EXCHANGE
COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS
EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The Company (and ASI Entertainment Pty. Ltd. prior to
becoming a subsidiary of the Company) issued shares of Common Stock,
par value $.0001 per share, to the following individuals or entities
for the consideration as listed in cash. If any of these sales were
made within the United States or to United States citizens or
residents, such sales were made in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act of 1933.
Pursuant to the stock exchange agreement between ASI Entertainment
Pty. Ltd. and the Company, by which ASI Entertainment Pty. Ltd.
became a subsidiary of the Company, the Company issued 5,293,990
shares of Common Stock for the outstanding stock of ASI Entertainment
Pty. Ltd., which resulted in an exchange ratio of eight shares of ASI
Entertainment Pty. Ltd. exchanged for each shares of Common Stock of
the Company issued. The chart herein below reflects the pre- and
post-exchange numbers. Some of holders of the shares listed below
have subsequently transferred their shares and the below list does
not purport to be a current listing of shareholders of the Company.
Number of Shares
Pre- Post- Consid-
Date Shareholder Exchange Exchange eration
1/16/96 ASI Technologies Pty. Ltd 12,000,00 1,500,000 A$1,200,000
1/16/96 ASI Technologies Pty. Ltd 10 12.5 A$10
1/16/96 ASI Technologies Pty. Ltd 20 2.5 A$2
12/16/96 ASI Technologies Pty. Ltd
("ASIT Australia") 5,279,800 659,975 A$527,980
1/30/96 ASI (Holdings) Pty. Ltd 500,000 62,500 A$50,000
8/08/97 Swiss Time Australia Pty Ltd 650,000 81,250 A$65,000
8/08/97 Maxwell Grant Productions 250,000 31,250 A$25,000
Pty. Ltd.
9/30/97 Wardour Consultants Limited 2,000,000 250,000 A$200,000
9/30/97 Research Trust No. 1 6,500,000 812,500 A$650,000
9/30/97 Research Trust No. 2 2,000,000 250,000 A$200,000
9/30/97 Wardour Consultants Limited 4,500,000 562,500 A$450,000
1/29/98 Swiss Time Australia Pty Ltd 1,500,000 187,500 A$150,000
1/29/98 Maxwell Grant Productions
Pty. Ltd. 400,000 50,000 A$40,000
3/18/98 Vision, Inc. 2,500,000 312,500 A$250,000
3/10/98 Albesda Pty.Ltd. 100,000 12,500 A$10,000
3/25/98 Nona Cole 150,000 18,750 A$15,000
5/01/98 Pierce Mill Associates, Inc. 417,189 $42
5/16/98 Australian Authorised
Investments Ltd. 500,000 62,500 A$50,000
5/15/98 Research Trust No. 1 300,000 37,500 A$30,000
5/15/98 John Tcheng 500,000 62,500 A$50,000
5/15/98 Irene Tcheng 600,000 75,000 A$60,000
5/15/98 Lesley Tcheng 120,000 15,000 A$12,000
5/15/98 Victoria Tcheng 120,000 15,000 A$12,000
5/15/98 Ky Ung Dzung 425,000 53,125 A$42,500
5/15/98 Charles Chan Lum Chow 600,000 75,000 A$60,000
5/15/98 Wolfgang Borner 165,000 20,625 A$16,500
5/15/98 Ng Kiam Fong 42,000 5,250 A$4,200
5/15/98 Beverly & David Chalmers 150,000 18,750 A$15,000
6/09/98 Capital General Corporation, Ltd. 43,138 **
6/10/98 Instil Enterprises Pty.Ltd. 500,000 62,500 A$50,000
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
3.1** Certificate of Incorporation
3.2** By-Laws of the Company
4.1* Form of Common Stock Certificate
5.1* Opinion of Cassidy & Associates
10.1 Form of Exchange of Stock Agreement between ASI
Entertainment Pty. Ltd. and ASI Entertainment, Inc.
10.2 Form of Exchange of Option Agreement between ASI
Entertainment Pty. Ltd and ASI Entertainment, Inc.
10.3* Option Agreement between ASI Entertainment Pty. Ltd
and holders thereof.
10.4* ASI Entertainment Pty. Ltd. Supply and License
Agreement with Air Europa
10.5 Purchase agreement of September 30, 1997 between ASI
Technologies Pty. Ltd. and ASI Entertainment Pty. Ltd.
10.6 Purchase agreement of December 16, 1996 with ASIT
Australia
10.7 Agreement of October 9, 1997 between ASI Media and
ASI Entertainment, Inc.
21.1* Subsidiaries of the Company
24.1 Consents of Accountant
24.2* Consent of Cassidy & Associates (included in
Exhibit 5)
27 Financial Data Schedule
---------------
* To be filed by Amendment.
** Previously filed
(b) The following financial statement schedules are
included in this Registration Statement.
None.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(b) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
(ii) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, ASI Entertainment, Inc. certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing
on Form SB-2 and has duly caused this Registration Statement on Form
SB-2 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the State of Victoria, Australia on the 27th day of
December, 1998.
ASI ENTERTAINMENT, INC.
By: /s/ Ronald J. Chapman
Ronald J. Chapman
President
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Ronald J. Chapman Director 12/27/98
/s/ Graham O. Chappell Director 12/27/98
/s/ Philip A. Shiels Director 12/27/98
This Agreement made as of this day of June, 1998, by
and among ASI ENTERTAINMENT INC. ("ASI"), a Delaware corporation,
and ASI ENTERTAINMENT PTY. LTD. (ACN 062 850 962) ("ASIE"), a
closely held Australian corporation, and the SHAREHOLDERS of ASIE
("the Shareholders"), the names and addresses of the Shareholders
are set out in Schedule 1 hereto.
WHEREAS, ASI desires to acquire One Hundred Percent (100%) of
the shares and options of ASIE and the Shareholders wish to
respectively exchange One Hundred Percent (100%) of their shares in
ASIE to ASI;
NOW, THEREFORE, in consideration of the mutual promises,
covenants and representations contained herein, ASI and ASIE and the
Shareholders AGREE AS FOLLOWS:
ARTICLE I
1.1 EXCHANGE OF SHARES. Subject to all the terms and
conditions of this Agreement, the Shareholders agree to exchange all
of their collectively held shares of common stock of ASIE, A$0.10
par value per share, (collectively, the "ASIE Shares") which
represent 100% of the issued and outstanding capital of ASIE, in a
tax-free exchange of shares with ASI.
1.2 EXCHANGE RATIO. The shares of common stock of ASIE
shall be exchanged at a ratio of one share of ASI for every eight
ASIE shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ASIE
ASIE represents and warrants to ASI that:
2.1 ORGANIZATION. ASIE is a corporation duly organized,
validly existing and in good standing in the State of Victoria,
Australia, and warrants that ASIE has all necessary powers to carry
on its business as now owned and operated by it.
2.2 CAPITAL. The issued and outstanding capital stock of
ASIE consists of 42,351,920 shares of common stock of ASIE, A$0.10
par value per share, all of which are fully paid and non-assessable.
There currently are not, and at the Effective Date and time of this
Agreement there shall not be, any outstanding subscriptions,
options, rights, warrants, debentures, other instruments,
convertible securities or other agreements or commitments obligating
ASIE to issue or transfer from Treasury any additional shares of its
capital stock of any class, excepting the options over shares in
ASIE to be exchanged for options over shares of ASI pursuant to the
option exchange agreement between the parties hereto of even date.
2.3 SUBSIDIARIES. ASIE has no subsidiaries, nor does it own
any interest in any other enterprise, excepting those as set out in
Schedule 2 hereto.
2.4 DIRECTORS AND OFFICERS. This Agreement is executed by
one officer, so authorized by the Board of Directors of ASIE.
2.5 FINANCIAL STATEMENTS. Schedule 3 hereto consists of
the audited financial statements of ASIE as of June 30, 1997 and
unaudited financial statements of ASIE at December 31, 1997. Since
preparation of the audited financial statements and unaudited
financial statements, there has not been any material change in the
financial condition or operation of ASIE.
2.6 ABSENCE OF UNDISCLOSED LIABILITIES. ASIE does not have
any debt, liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise not disclosed on its financial
statements.
2.7 TAX RETURNS. It has not yet been necessary for ASIE to
file federal, state or local tax returns required by law and ASIE
has not been required by law to pay any taxes, assessments and
penalties and none are due and payable. There are no present
disputes as to taxes of any nature, payable by ASIE.
2.8 TRADE NAMES AND RIGHTS. ASIE owns and holds all
necessary service marks, trade names, copyrights, patents and
proprietary and other rights necessary to its business as now
conducted or be conducted.
2.9 COMPLIANCE WITH LAWS. ASIE has complied with, and is not
in violation of, applicable federal, state, or local statutes, laws
and regulations, affecting the operation of its business.
2.10 LITIGATION. ASIE is not involved as a defendant or
plaintiff in any suit, action, arbitration or legal, administrative
or other proceeding, which to the best knowledge of ASIE, would
affect ASIE or its business, assets or financial condition in a
negative manner; or governmental investigation which is pending or,
to the best knowledge of ASIE, threatened against or affecting ASIE
or its business, assets or financial condition. ASIE is not in
default with respect to any order, writ, injunction or decree of any
federal, state, local/foreign court, department, agency or
instrumentality applicable to it.
2.11 AUTHORITY. ASIE has authorized the execution of this
Agreement and the consummation of the transactions contemplated
herein, and ASIE has full power and authority to execute, deliver
and perform this Agreement, and this Agreement is a legal, valid and
binding obligation of ASIE and is enforceable in accordance with its
terms and conditions.
2.12 ABILITY TO CARRY OUT OBLIGATIONS. The execution and
delivery of this Agreement by ASIE and the performance by ASIE of
its obligations hereunder in the time and manner contemplated will
not cause, constitute or conflict with or result in any of the
following: (a) a breach or violation of any provision of, or
constitute a default under any license, indenture, mortgage
instrument, article of incorporation, by-law, other agreement or
instrument to which ASIE is a patty, or by which it may be bound,
nor will any consents or authorizations of any party other than
those hereto be required, (b) any event that would permit any party
to any agreement or instrument, to terminate it or to accelerate the
maturity of any indebtedness or other obligation of ASIE, or, (c) an
event that would result in the creation or imposition of any lien,
charge or encumbrance on any asset of ASIE.
2.13 FULL DISCLOSURE. None of the representations and
warranties made by ASIE herein or in any Schedule, certificate or
memorandum furnished or to be furnished by ASIE, contains or will
contain any untrue statement of material fact or omit any material
fact the omission of which would be misleading.
2.14 ASSETS. ASI has good marketable title to all of its
property, free and clear of all liens, claims and encumbrances.
2.15 MATERIAL CONTRACTS. ASIE has no material contracts to
which it is a party or, by which it is bound, other than those known
to the Directors of ASI.
3.16 OPERATIONS. The business of ASIE from the date of this
Agreement up to and including the Effective Date will be carried on
in a proper and business like manner and there shall be no
distribution of dividends or other moneys to any shareholders or to
any other person on behalf of any shareholder of ASIE or payment of
shareholder's loans between the date of this Agreement and the
Effective Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ASI
ASI represents and warrants to ASIE that:
3.1 ORGANIZATION. ASI is a corporation duly organized,
validly existing and in good standing and has all necessary
corporate powers to carry on its business as now owned and operated
by it, is duly qualified to do business and is in good standing in
each of the States where its business requires qualification.
3.2 CAPITAL. ASI has or will have upon effectiveness of this
Agreement 416,992 shares (7.25% of the outstanding common shares
after effectiveness of the exchange of shares contemplated herein)
of common stock, $0.0001 par value per share, issued and
outstanding, fully paid and non assessable. There currently are
not, and at the Effective Date and time of this Agreement there
shall not be, any outstanding subscriptions, options, rights,
warrants, debentures, other instruments, convertible securities or
other agreements or commitments obligating ASI to issue or transfer
from Treasury any additional shares of its capital stock of any
class, excepting those contemplated to be issued pursuant to this
Agreement.
3.3 SUBSIDIARIES. ASI has no subsidiaries, excepting those
as set out in Schedule 4 hereto.
3.4 DIRECTORS AND OFFICERS. This Agreement is executed by
one officer, so authorized by the Board of Directors of ASI. The
name and title of that person is reflected on the signature page
hereto.
3.5 UNAUDITED BALANCE SHEET. An unaudited balance sheet of
ASI is currently reflected in Schedule 5 hereto. Since preparation
of the attached unaudited statement, there has not been any change
in the financial condition or operations of ASI.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. ASI does not have
any debt, liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise.
3.7 TAX RETURNS. It has not yet been necessary for ASI to
file federal. state or local tax returns required by law and ASI has
not been required by law to pay any taxes, assessments and penalties
and none are due and payable. There are no present disputes as to
taxes of any nature, payable by ASI.
3.8 TRADE NAMES AND RIGHTS. Other than registration of its
Company name, ASI does own nor use any patent, trademark, service
mark, trade name or copyright in its business.
3.9 COMPLIANCE WITH LAWS. ASI has complied with, and is not
in violation of, applicable federal, state or local statutes, laws
and regulations including state and federal securities laws and all
other laws affecting the operation of its business.
3.10 LITIGATION. ASI is not involved as a defendant or
plaintiff in any suit, action, arbitration or legal, administrative
or other proceeding which would affect ASI or its business, assets
or financial condition, or governmental investigation which is
pending or threatened against or affecting ASI or its business,
assets or financial condition. ASI is not in default with respect to
any order, writ, injunction or decree of any federal, state,
local/foreign court, department, agency or instrumentality
applicable to it.
3.11 AUTHORITY. The Board of Directors of ASI has authorized
the execution of this Agreement and the consummation of the
transactions contemplated herein, and ASI has full power and
authority to execute, deliver and perform this Agreement, and this
Agreement is a legal, valid and binding obligation of ASI and is
enforceable in accordance with its terms and conditions.
3.12 ABILITY TO CARRY OUT OBLIGATIONS. The execution and
delivery of this Agreement by ASI and the performance by ASI of its
obligations hereunder in the time and manner contemplated will not
cause, constitute or conflict with or result in any of the
following: (a) a breach or violation of any provision of, or
constitute a default under any license, indenture, mortgage
instrument, article of incorporation, by-law, other agreement or
instrument to which ASI is a party, or by which it may be bound, nor
will any consents or authorizations of any party other than those
hereto be required, (b) any event that would permit any party to any
agreement or instrument, to terminate it or to accelerate the
maturity of any indebtedness or other obligation of ASI, or, (c) an
event that would result in the creation or imposition of any lien,
charge or encumbrance on any asset of ASI.
3.13 FULL DISCLOSURE. None of the representations and
warranties made by ASI herein or in any Schedule, certificate or
memorandum furnished or to be furnished by ASI, or on its behalf,
contains or will contain any untrue statement of material fact or
omit any material fact the omission of which would be misleading.
3.14 ASSETS. ASI has good marketable title to all of its
property, free and clear of all liens, claims and encumbrances.
3.15 MATERIAL CONTRACTS. ASI has no material contracts to
which it is a party or by which it is bound which would affect this
transaction in a negative manner.
3.16 OPERATIONS. The business of ASI from the date of this
Agreement up to and including the Effective Date will be carried on
in a proper and business like manner and there shall be no
distribution of dividends or other moneys to any shareholders or to
any other person on behalf of any shareholder of ASI or payment of
shareholder's loans between the date of this Agreement and the
Effective Date.
ARTICLE IV
4.1 COVENANTS PRIOR TO AND SUBSEQUENT TO CLOSING. It is
agreed between the parties hereto that ASI may visit the offices of
ASIE to obtain copies of data contained in all currently active
files of current contracts and agreements of any and all categories
of business, with any company or person. Any and all such data and
documentation shall be delivered into the hands of an officer of ASI
or be delivered to an office of ASI and such data and documentation
shall include all copies of files, documents, shareholder's and
Director's minute books/records, etc. at the earliest possible time
on or after the Effective Date hereof.
ARTICLE V
CONDITIONS PRECEDENT TO ASI'S PERFORMANCE
5.1 CONDITIONS. ASI's obligations hereunder shall be subject
to the satisfaction at the Closing, of all the conditions set forth
in this Article V. ASI may waive any or all of these conditions in
whole or in part provided, however, that no such waiver of a
condition shall constitute a waiver by ASI of any other condition of
or any of ASI's other rights or remedies, at law or in equity, if
ASIE shall be in default of any of its representations, warranties
or covenants under this Agreement.
5.2 ACCURACY OF REPRESENTATIONS. Except as otherwise
permitted by this Agreement, all representations and warranties by
ASIE in this Agreement or in any written statement that shall be
delivered to ASI by ASIE under this Agreement shall be true and
accurate on and as of the Effective Date as though made at that time.
5.3 PERFORMANCE. ASIE shall have performed, satisfied and
complied with all covenants, agreements and conditions required by
this Agreement to be performed or complied with by it, on or before
the Effective Date.
5.4 ABSENCE OF LITIGATION. No action, suit, or proceeding
before any court or any governmental body or authority, pertaining
to the transaction contemplated by this Agreement or its
consummation, shall have been instituted or threatened against ASIE
on or before the Effective Date. No action, suit, or proceeding
before any court or any governmental body or authority that could
jeopardize or put at risk of loss, the current assets of ASIE, shall
have been instituted or threatened against ASIE on or before the
Effective Date of this Agreement. ASIE shall resolve in its favor,
any dispute, action or threat of legal action, from any court or any
governmental body, prior to the Effective Date of this Agreement, in
the event any such action or threat of action should currently
exist. Any dispute in which ASIE has a part, any action, suit, or
proceeding by any person, entity, court or governmental body or
authority against ASIE left unresolved on the Effective Date of this
Agreement, shall immediately render this Agreement, on that date,
forever null and void, without further notice from ASI.
ARTICLE VI
CONDITIONS PRECEDENT TO ASIE'S PERFORMANCE
6.1 CONDITIONS. ASIE's obligations hereunder shall be subject
to the satisfaction at the Closing, of all the conditions set forth
in this Article VI. ASIE may waive any or all of these conditions
in whole or in part provided, however, that no such waiver of a
condition shall constitute a waiver by ASIE of any other condition
of or any of ASIE's other rights or remedies, at law or in equity,
if ASI shall be in default of any of its representations, warranties
or covenants under this Agreement.
6.2 ACCURACY OF REPRESENTATIONS. Except as otherwise
permitted by this Agreement, all representations and warranties by
ASI in this Agreement or in any written statement that shall be
delivered to ASIE by ASI under this Agreement shall be true and
accurate on and as of the Effective Date as though made at that time.
6.3 PERFORMANCE. ASI shall have performed, satisfied and
complied with all covenants, agreements and conditions required by
this Agreement to be performed or complied with by it on or before
the Effective Date.
6.4 ABSENCE OF LITIGATION. No action. suit, or proceeding
before any court or any governmental body or authority, pertaining
to the transaction contemplated by this Agreement or its
consummation, shall have been instituted or threatened against ASI
on or before the Effective Date. No action, suit, or proceeding
before any court or any governmental body or authority that could
jeopardize or put at risk of loss, the current assets of ASI, shall
have been instituted or threatened against ASI on or before the
Effective Date of this Agreement. ASI shall resolve in its favor,
any dispute, action or threat of legal action, from any court or any
governmental body, prior to the Effective Date of this Agreement, in
the event any such action or threat of action should currently
exist. Any dispute in which ASI bas a part, any action, suit, or
proceeding by any person, entity, court or governmental body or
authority against ASI left unresolved on the Effective Date of this
Agreement, shall immediately render this Agreement, on that date,
forever null and void, without further notice from ASIE.
ARTICLE VII
EFFECTIVENESS
7.1 EFFECTIVE DATE. This Agreement shall become effective
for the parties hereto at 5:00 p.m. Australian Eastern Standard Time
on the 29th day of June, 1998 (the Effective Date").
7.2 EFFECTIVE DATE OBLIGATIONS. On the Effective Date:
(a) the Shareholders shall deliver to ASI certificates for
the ASIE Shares (representing 100% of ASIE's shares), all of which
are currently issued and outstanding, fully paid and non assessable
and unencumbered and free of any claims, liens, charges or the like,
duly endorsed to ASI at the earliest possible time, after the
Effective Date and hour of this Agreement.
(b) ASI shall issue the appropriate number of shares of
Common Stock of ASI, fully paid and non assessable,(representing
92.75% of ASI's then expanded issued capital) to the Shareholders
pursuant to the exchange ratio determined herein.
(c) the ASI Shares referred to in sub-clause (b) of this
clause 7.2 shall be issued in the numbers and to the persons and/or
companies (and/or their nominees) whose names and addresses are set
out in the Stock Distribution Schedule which is Schedule 1 hereto.
7.3 FUTURE CONDUCT OF ASI. ASI and ASIE acknowledge that on
the Effective Date, ASI shall appoint such of ASIE's nominees to the
Board of Directors of ASI and such other officers of ASI as ASIE
shall require and the current Board of Directors of ASI shall
simultaneous submit their resignations as directors of the Board.
ARTICLE VIII
MISCELLANEOUS
8.1 CAPTIONS AND HEADINGS. The article and paragraph headings
throughout this Agreement are for convenience and reference only and
shall not define, limit or add to the meaning of any provision of
this Agreement.
8.2 NO ORAL CHANGE. This Agreement and any provision hereof
may not be waived, changed, modified or discharged orally, but only
by an agreement in writing signed by the party against whom
enforcement of any such waiver, change, modification or discharge is
sought.
8.3 NON-WAIVER. The failure of any party to insist in any one
or more cases upon the performance of any of the provisions,
covenants or conditions of this Agreement or to exercise any option
herein contained shall not be construed as a waiver or
relinquishment in the future of any such provisions, covenants or
conditions. No waiver by any party of one breach by another party
shall be construed as a waiver with respect to any other subsequent
breach.
8.4 TIME OF ESSENCE. Time is of the essence of this Agreement
and of each and every provision hereof.
8.5 CHOICE OF LAW. This Agreement and its application shall
be governed by the laws of the State of Delaware in the United
States of America.
8.6 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
Facsimile transmission and execution of such document shall be
binding as though a hard copy.
8.7 NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be
deemed to have been duly given on the date of service if served
personally on the party to whom notice is to be given, or on the
tenth day after mailing; if mailed to the party to whom notice is
being given, by first class mail, postage prepaid, and properly
addressed as follows:
ASI Entertainment Inc. at
1504 R Street, NW
Washington, DC 20009
ASI Entertainment Pty. Ltd. at
Suite 3
1601 Main Road
Research, Victoria, Australia 3095;
The Shareholders at their respective addresses set out in
Schedule 1 hereto;
8.8 BINDING EFFECT. This Agreement shall enure to and be
binding upon the heirs, executors, personal representatives,
successors and assigns of each of the parties to this Agreement.
8.9 MUTUAL CONSIDERATION. The parties hereto shall cooperate
with each other to achieve the purpose of this Agreement and shall
execute such other and further documents and take such other and
further actions as may be necessary or convenient to effect the
transaction described herein for the best interests of all of the
parties hereto.
8.10 ANNOUNCEMENTS. ASI and ASIE will consult and
co-operate with each other as to the timing and content of any
public announcements regarding this Agreement.
8.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements of the parties
set forth in this Agreement or in any instrument, certificate,
opinion or other writing providing for in it, shall survive the
Closing on the Effective Date.
8.12 ENTIRE AGREEMENT. This Agreement supersedes any and all
prior agreements and understandings, if any, between the parties
hereto, and expresses the entire Agreement between the parties
hereto, and cannot be modified by any oral promise or statement by
whomsoever made.
ARTICLE IX
ARBITRATION
Any disputes arising from this Agreement, except for requests
for injunctive or other equitable relief, shall be decided by the
American Arbitration Association according to its rules and
regulations then in effect. In any adverse action, the parties
shall restrict themselves to claims for compensatory damages and no
claims shall be made by any party or affiliate for lost profits,
punitive, multiple or other damages.
.
IN WITNESS WHEREOF, the Parties hereto have fully executed
this Agreement, having affixed their respective and witnessed
Authorized Signatures.
ASI ENTERTAINMENT INC.
ASI ENTERTAINMENT PTY. LTD.
AGREEMENT BY AND AMONG
ASI ENTERTAINMENT INC., ASI ENTERTAINMENT PTY. LTD. AND
THE SHAREHOLDERS OF ASI ENTERTAINMENT PTY. LTD.
SCHEDULES
Schedule 1 Names and addresses of the Shareholders
Schedule 2 ASIE Subsidiaries
Schedule 3 Audited financial statements ASIE as of June 30, 1997
and unaudited financial statements of ASIE at December
31, 1997
Schedule 4 ASI Subsidiaries
Schedule 5 Unaudited balance sheet of ASI
This Agreement made as of this ___________________day of
June, 1998, by and among ASI ENTERTAINMENT INC. ("ASI"), a Delaware
corporation, and ASI ENTERTAINMENT PTY. LTD. (ACN 062 850 962)
("ASIE"), a closely held Australian corporation, and the
OPTIONHOLDERS of ASIE ("the Optionholders") who hold options over
shares in ASIE, the names and addresses of the Optionholders are set
out in Schedule 1 hereto.
WHEREAS, ASI desires to acquire One Hundred Percent (100%) of
the shares and options of ASIE and the Optionholders wish to
respectively exchange One Hundred Percent (100%) of their options in
ASIE to ASI;
NOW, THEREFORE, in consideration of the mutual promises,
covenants and representations contained herein, ASI and ASIE and the
Optionholders AGREE AS FOLLOWS:
ARTICLE I
1.1 EXCHANGE OF OPTIONS. Subject to all the terms and
conditions of this Agreement, the Optionholders agree to exchange
all of their collectively held options over shares of common stock
of ASIE, A$0.10 par value per share, (collectively, the "ASIE
Options") which represent 100% of the issued and outstanding options
over the capital of ASIE, in a tax-free exchange of options with ASI.
1.2 EXCHANGE RATIO. The shares of common stock of ASIE
underlying the ASIE Options shall be exchanged at a ratio of one
share of ASI for every eight shares of common stock of ASIE or such
other ratio as may be determined and authorized by the Boards of
Directors of ASIE and ASI. The exercise price for the purchase of
such shares shall be proportionately adjusted pursuant to the terms
contained in such option.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ASIE
ASIE represents and warrants to ASI that:
2.1 ORGANIZATION. ASIE is a corporation duly organized,
validly existing and in good standing in the State of Victoria,
Australia, and warrants that ASIE has all necessary powers to carry
on its business as now owned and operated by it.
2.2 CAPITAL. The issued and outstanding capital stock of
ASIE consists of 42,331,920 shares of common stock of ASIE, A$0.10
par value per share, all of which are fully paid and non-assessable.
There currently are not, and at the Effective Date and time of this
Agreement there shall not be, any outstanding subscriptions,
options, rights, warrants, debentures, other instruments,
convertible securities or other agreements or commitments obligating
ASIE to issue or transfer from Treasury any additional shares of its
capital stock of any class, excepting the ASIE Options set out in
Schedule 1 hereto.
2.3 SUBSIDIARIES. ASIE has no subsidiaries, nor does it own
any interest in any other enterprise, excepting those as set out in
Schedule 2 hereto.
2.4 DIRECTORS AND OFFICERS. This Agreement is executed by
one officer, so authorized by the Board of Directors of ASIE. The
name and title of that person is reflected on the signature page
hereto.
2.5 FINANCIAL STATEMENTS. Schedule 3 hereto consists of
the audited financial statements of ASIE as of June 30, 1997 and
unaudited financial statements of ASIE at December 31, 1997. Since
preparation of the audited financial statements and unaudited
financial statements, there has not been any material change in the
financial condition or operation of ASIE.
2.6 ABSENCE OF UNDISCLOSED LIABILITIES. ASIE does not have
any debt, liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise not disclosed on its financial
statements.
2.7 TAX RETURNS. It has not yet been necessary for ASIE to
file federal, state or local tax returns required by law and ASIE
has not been required by law to pay any taxes, assessments and
penalties and none are due and payable. There are no present
disputes as to taxes of any nature, payable by ASIE.
2.8 TRADE NAMES AND RIGHTS. ASIE owns and holds all
necessary service marks, trade names, copyrights, patents and
proprietary and other rights necessary to its business as now
conducted or be conducted.
2.9 COMPLIANCE WITH LAWS. ASIE has complied with, and is not
in violation of, applicable federal, state, or local statutes, laws
and regulations, affecting the operation of its business.
2.10 LITIGATION. ASIE is not involved as a defendant or
plaintiff in any suit, action, arbitration or legal, administrative
or other proceeding, which to the best knowledge of ASIE, would
affect ASIE or its business, assets or financial condition in a
negative manner; or governmental investigation which is pending or,
to the best knowledge of ASIE, threatened against or affecting ASIE
or its business, assets or financial condition. ASIE is not in
default with respect to any order, writ, injunction or decree of any
federal, state, local/foreign court, department, agency or
instrumentality applicable to it.
2.11 AUTHORITY. ASIE has authorized the execution of this
Agreement and the consummation of the transactions contemplated
herein, and ASIE has full power and authority to execute, deliver
and perform this Agreement, and is a legal, valid and binding
obligation of ASIE and is enforceable in accordance with its terms
and conditions.
2.12 ABILITY TO CARRY OUT OBLIGATIONS. The execution and
delivery of this Agreement by ASIE and the performance by ASIE of
its obligations hereunder in the time and manner contemplated will
not cause, constitute or conflict with or result in any of the
following: (a) a breach or violation of any provision of, or
constitute a default under any license, indenture, mortgage
instrument, article of incorporation, by-law, other agreement or
instrument to which ASIE is a patty, or by which it may be bound,
nor will any consents or authorizations of any party other than
those hereto be required, (b) any event that would permit any party
to any agreement or instrument, to terminate it or to accelerate the
maturity of any indebtedness or other obligation of ASIE, or, (c) an
event that would result in the creation or imposition of any lien,
charge or encumbrance on any asset of ASIE.
2.13 FULL DISCLOSURE. None of the representations and
warranties made by ASIE herein or in any Schedule, certificate or
memorandum furnished or to be furnished by ASIE, contains or will
contain any untrue statement of material fact or omit any material
fact the omission of which would be misleading.
2.14 ASSETS. ASI has good marketable title to all of its
property, free and clear of all liens, claims and encumbrances.
2.15 MATERIAL CONTRACTS. ASIE has no material contracts to
which it is a party or, by which it is bound, other than those known
to the Directors of ASI.
3.16 OPERATIONS. The business of ASIE from the date of this
Agreement up to and including the Effective Date will be carried on
in a proper and business like manner and there shall be no
distribution of dividends or other moneys to any shareholders or to
any other person on behalf of any shareholder of ASIE or payment of
shareholder's loans between the date of this Agreement and the
Effective Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ASI
ASI represents and warrants to ASIE that:
3.1 ORGANIZATION. ASI is a corporation duly organized,
validly existing and in good standing and has all necessary
corporate powers to carry on its business as now owned and operated
by it, is duly qualified to do business and is in good standing in
each of the States where its business requires qualification.
3.2 CAPITAL. ASI has or will have upon effectiveness of this
Agreement 416,992 shares (7.25% of the outstanding common shares
after effectiveness of the exchange of shares) of common stock,
$0.0001 par value per share, issued and outstanding, fully paid and
non assessable. There currently are not, and at the Effective Date
and time of this Agreement there shall not be, any outstanding
subscriptions, options, rights, warrants, debentures, other
instruments, convertible securities or other agreements or
commitments obligating ASI to issue or transfer from Treasury any
additional shares of its capital stock of any class, excepting those
contemplated to be issued pursuant to this Agreement.
3.3 SUBSIDIARIES. ASI has no subsidiaries, excepting those
as set out in Schedule 4 hereto.
3.4 DIRECTORS AND OFFICERS. This Agreement is executed by
one officer, so authorized by the Board of Directors of ASI. The
name and title of that person is reflected on the signature page
hereto.
3.5 UNAUDITED BALANCE SHEET. An unaudited balance sheet of
ASI is currently reflected in Schedule 5 hereto. Since preparation
of the attached unaudited statement, there has not been any change
in the financial condition or operations of ASI.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. ASI does not have
any debt, liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise.
3.7 TAX RETURNS. It has not yet been necessary for ASI to
file federal. state or local tax returns required by law and ASI has
not been required by law to pay any taxes, assessments and penalties
and none are due and payable. There are no present disputes as to
taxes of any nature, payable by ASI.
3.8 TRADE NAMES AND RIGHTS. Other than registration of its
Company name, ASI does own nor use any patent, trademark, service
mark, trade name or copyright in its business.
3.9 COMPLIANCE WITH LAWS. ASI has complied with, and is not
in violation of, applicable federal, state or local statutes, laws
and regulations including state and federal securities laws and all
other laws affecting the operation of its business.
3.10 LITIGATION. ASI is not involved as a defendant or
plaintiff in any suit, action, arbitration or legal, administrative
or other proceeding which would affect ASI or its business, assets
or financial condition, or governmental investigation which is
pending or threatened against or affecting ASI or its business,
assets or financial condition. ASI is not in default with respect to
any order, writ, injunction or decree of any federal, state,
local/foreign court, department, agency or instrumentality
applicable to it.
3.11 AUTHORITY. The Board of Directors of ASI has authorized
the execution of this Agreement and the consummation of the
transactions contemplated herein, and ASI has full power and
authority to execute, deliver and perform this Agreement, and this
Agreement is a legal, valid and binding obligation of ASI and is
enforceable in accordance with its terms and conditions.
3.12 ABILITY TO CARRY OUT OBLIGATIONS. The execution and
delivery of this Agreement by ASI and the performance by ASI of its
obligations hereunder in the time and manner contemplated will not
cause, constitute or conflict with or result in any of the
following: (a) a breach or violation of any provision of, or
constitute a default under any license, indenture, mortgage
instrument, article of incorporation, by-law, other agreement or
instrument to which ASI is a party, or by which it may be bound, nor
will any consents or authorizations of any party other than those
hereto be required, (b) any event that would permit any party to any
agreement or instrument, to terminate it or to accelerate the
maturity of any indebtedness or other obligation of ASI, or, (c) an
event that would result in the creation or imposition of any lien,
charge or encumbrance on any asset of ASI.
3.13 FULL DISCLOSURE. None of the representations and
warranties made by ASI herein or in any Schedule, certificate or
memorandum furnished or to be furnished by ASI, or on its behalf,
contains or will contain any untrue statement of material fact or
omit any material fact the omission of which would be misleading.
3.14 ASSETS. ASI has good marketable title to all of its
property, free and clear of all liens, claims and encumbrances.
3.15 MATERIAL CONTRACTS. ASI has no material contracts to
which it is a party or by which it is bound which would affect this
transaction in a negative manner.
3.16 OPERATIONS. The business of ASI from the date of this
Agreement up to and including the Effective Date will be carried on
in a proper and business like manner and there shall be no
distribution of dividends or other moneys to any shareholders or to
any other person on behalf of any shareholder of ASI or payment of
shareholder's loans between the date of this Agreement and the
Effective Date.
ARTICLE IV
4.1 COVENANTS PRIOR TO AND SUBSEQUENT TO CLOSING. It is
agreed between the parties hereto that ASI may visit the offices of
ASIE to obtain copies of data contained in all currently active
files of current contracts and agreements of any and all categories
of business, with any company or person. Any and all such data and
documentation shall be delivered into the hands of an officer of ASI
or be delivered to an office of ASI and such data and documentation
shall include all copies of files, documents, shareholder's and
Director's minute books/records, etc. at the earliest possible time
on or after the Effective Date hereof.
ARTICLE V
CONDITIONS PRECEDENT TO ASI'S PERFORMANCE
5.1 CONDITIONS. ASI's obligations hereunder shall be subject
to the satisfaction at the Closing, of all the conditions set forth
in this Article V. ASI may waive any or all of these conditions in
whole or in part provided, however, that no such waiver of a
condition shall constitute a waiver by ASI of any other condition of
or any of ASI's other rights or remedies, at law or in equity, if
ASIE shall be in default of any of its representations, warranties
or covenants under this Agreement.
5.2 ACCURACY OF REPRESENTATIONS. Except as otherwise
permitted by this Agreement, all representations and warranties by
ASIE in this Agreement or in any written statement that shall be
delivered to ASI by ASIE under this Agreement shall be true and
accurate on and as of the Effective Date as though made at that time.
5.3 PERFORMANCE. ASIE shall have performed, satisfied and
complied with all covenants, agreements and conditions required by
this Agreement to be performed or complied with by it, on or before
the Effective Date.
5.4 ABSENCE OF LITIGATION. No action, suit, or proceeding
before any court or any governmental body or authority, pertaining
to the transaction contemplated by this Agreement or its
consummation, shall have been instituted or threatened against ASIE
on or before the Effective Date. No action, suit, or proceeding
before any court or any governmental body or authority that could
jeopardize or put at risk of loss, the current assets of ASIE, shall
have been instituted or threatened against ASIE on or before the
Effective Date of this Agreement. ASIE shall resolve in its favor,
any dispute, action or threat of legal action, from any court or any
governmental body, prior to the Effective Date of this Agreement, in
the event any such action or threat of action should currently
exist. Any dispute in which ASIE has a part, any action, suit, or
proceeding by any person, entity, court or governmental body or
authority against ASIE left unresolved on the Effective Date of this
Agreement, shall immediately render this Agreement, on that date,
forever null and void, without further notice from ASI.
ARTICLE VI
CONDITIONS PRECEDENT TO ASIE'S PERFORMANCE
6.1 CONDITIONS. ASIE's obligations hereunder shall be subject
to the satisfaction at the Closing, of all the conditions set forth
in this Article VI. ASIE may waive any or all of these conditions
in whole or in part provided, however, that no such waiver of a
condition shall constitute a waiver by ASIE of any other condition
of or any of ASIE's other rights or remedies, at law or in equity,
if ASI shall be in default of any of its representations, warranties
or covenants under this Agreement.
6.2 ACCURACY OF REPRESENTATIONS. Except as otherwise
permitted by this Agreement, all representations and warranties by
ASI in this Agreement or in any written statement that shall be
delivered to ASIE by ASI under this Agreement shall be true and
accurate on and as of the Effective Date as though made at that time.
6.3 PERFORMANCE. ASI shall have performed, satisfied and
complied with all covenants, agreements and conditions required by
this Agreement to be performed or complied with by it on or before
the Effective Date.
6.4 ABSENCE OF LITIGATION. No action. suit, or proceeding
before any court or any governmental body or authority, pertaining
to the transaction contemplated by this Agreement or its
consummation, shall have been instituted or threatened against ASI
on or before the Effective Date. No action, suit, or proceeding
before any court or any governmental body or authority that could
jeopardize or put at risk of loss, the current assets of ASI, shall
have been instituted or threatened against ASI on or before the
Effective Date of this Agreement. ASI shall resolve in its favor,
any dispute, action or threat of legal action, from any court or any
governmental body, prior to the Effective Date of this Agreement, in
the event any such action or threat of action should currently
exist. Any dispute in which ASI bas a part, any action, suit, or
proceeding by any person, entity, court or governmental body or
authority against ASI left unresolved on the Effective Date of this
Agreement, shall immediately render this Agreement, on that date,
forever null and void, without further notice from ASIE.
ARTICLE VII
EFFECTIVENESS
7.1 EFFECTIVE DATE. This Agreement shall become effective
for the parties hereto at 5:00 p.m. Australian Eastern Standard Time
on the ________ day of June, 1998 (the "Effective Date").
7.2 EFFECTIVE DATE OBLIGATIONS. On the Effective Date:
(a) the Optionholders shall deliver to ASI Certificates for
the ASIE Options over shares in ASIE of A$0.10 par value,
(representing 100% of the ASIE Options), all of which are currently
issued and outstanding, duly endorsed to ASI at the earliest
possible time, after the Effective Date and hour of this Agreement.
(b) ASI shall issue non assessable options (the "ASI
Options") over shares of $0.0001 par value Common Stock to the
Optionholders pursuant to the exchange ratio and exercise price
determined herein.
(c) the terms and conditions of the ASI Options shall be as
set out in Schedule 6 hereto.
(d) the ASI Options referred to in clause 7.2 shall be issued
in the numbers and to the persons and/or companies (and/or their
nominees) whose names and addresses are set out in the Option
Distribution Schedule which is Schedule 8 hereto.
7.3 FUTURE CONDUCT OF ASI. ASI and ASIE acknowledge that on
the Effective Date, ASI shall appoint such of ASIE's nominees to the
Board of Directors of ASI and such other officers of ASI as ASIE
shall require and the current Board of Directors of ASI shall
simultaneous submit their resignations as directors of the Board.
ARTICLE VIII
MISCELLANEOUS
8.1 CAPTIONS AND HEADINGS. The article and paragraph headings
throughout this Agreement are for convenience and reference only and
shall not define, limit or add to the meaning of any provision of
this Agreement.
8.2 NO ORAL CHANGE. This Agreement and any provision hereof
may not be waived, changed, modified or discharged orally, but only
by an agreement in writing signed by the party against whom
enforcement of any such waiver, change, modification or discharge is
sought.
8.3 NON-WAIVER. The failure of any party to insist in any one
or more cases upon the performance of any of the provisions,
covenants or conditions of this Agreement or to exercise any option
herein contained shall not be construed as a waiver or
relinquishment in the future of any such provisions, covenants or
conditions. No waiver by any party of one breach by another party
shall be construed as a waiver with respect to any other subsequent
breach.
8.4 TIME OF ESSENCE. Time is of the essence of this Agreement
and of each and every provision hereof.
8.5 CHOICE OF LAW. This Agreement and its application shall
be governed by the laws of the State of Delaware in the United
States of America. and construed solely by the appropriate courts
of the State of Delaware.
8.6 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
Facsimile transmission and execution of such document shall be
binding as though a hard copy.
8.7 NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be
deemed to have been duly given on the date of service if served
personally on the party to whom notice is to be given, or on the
tenth day after mailing; if mailed to the party to whom notice is
being given, by first class mail, postage prepaid, and properly
addressed as follows:
ASI Entertainment Inc. at
1504 R Street, NW
Washington, DC 20009
ASI Entertainment Pty. Ltd. at
Suite 3
1601 Main Road
Research, Victoria, Australia 3095;
The Shareholders at their respective addresses set out in
Schedule 1 hereto;
The Optionholders at their respective addresses set out in
Schedule 1 hereto.
8.8 BINDING EFFECT. This Agreement shall enure to and be
binding upon the heirs, executors, personal representatives,
successors and assigns of each of the parties to this Agreement.
8.9 MUTUAL CONSIDERATION. The parties hereto shall cooperate
with each other to achieve the purpose of this Agreement and shall
execute such other and further documents and take such other and
further actions as may be necessary or convenient to effect the
transaction described herein for the best interests of all of the
parties hereto.
8.10 ANNOUNCEMENTS. ASI and ASIE will consult and
co-operate with each other as to the timing and content of any
public announcements regarding this Agreement.
8.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements of the parties
set forth in this Agreement or in any instrument, certificate,
opinion or other writing providing for in it, shall survive the
Closing on the Effective Date.
8.12 ENTIRE AGREEMENT. This Agreement supersedes any and all
prior agreements and understandings, if any, between the parties
hereto, and expresses the entire Agreement between the parties
hereto, and cannot be modified by any oral promise or statement by
whomsoever made.
ARTICLE IX
ARBITRATION
Any disputes arising from this Agreement, except for requests
for injunctive or other equitable relief, shall be decided by the
American Arbitration Association according to its rules and
regulations then in effect. In any adverse action, the parties
shall restrict themselves to claims for compensatory damages and no
claims shall be made by any party or affiliate for lost profits,
punitive, multiple or other damages.
.
IN WITNESS WHEREOF, the Parties hereto have fully executed
this Agreement, having affixed their respective and witnessed
Authorized Signatures.
ASI ENTERTAINMENT INC.
ASI ENTERTAINMENT PTY. LTD.
AGREEMENT BY AND AMONG
ASI ENTERTAINMENT INC., ASI ENTERTAINMENT PTY. LTD. AND
THE OPTIONHOLDERS OF ASI ENTERTAINMENT PTY. LTD.
SCHEDULES
Schedule 1 Names and addresses of the Optionholders
Schedule 2 ASIE Subsidiaries
Schedule 3 Audited financial statements ASIE as of June 30, 1997
and unaudited financial statements of ASIE at December
31, 1997
Schedule 4 ASI Subsidiaries
Schedule 5 Unaudited balance sheet of ASI
Schedule 6 Terms and conditions of the ASI Options
THIS DEED OF AGREEMENT is made the 30th day of September, 1997
PARTIES:
ASI TECHNOLOGIES PTY. LTD. (ACN 006 828 324) of Suite 3, 1601
Main Road, Research, Victoria, Australia ("ASIT')
and
ASI ENTERTAINMENT PTY. LTD. (ACN 062 850962) also of Suite 3,
1601 Main Road, Research, Victoria ("ASIE")
RECITALS:
A. ASIT has agreed to sell and ASIE has agreed to purchase
certain assets.
B. The parties hereto wish to record the agreements and
arrangements made between them.
AGREEMENT:
1. ASIT hereby agrees to sell to ASIE the assets described in
the Schedule hereto (the said assets") for a total price ("the
price") of A$1,500,000.
2. It is further agreed between the parties hereto as follows:
(a) ASIT shall within 7 days from the date hereof (the
"settlement date") assign transfer and set over absolutely (with
effect from 1 July, 1997) to ASIE all and singular the said
assets with the price being satisfied by ASIE issuing and
allotting to ASIT (and/or its nominees) on the settlement date
15,000,000 ordinary fully paid 10 cent shares ("the ASIE
shares") in the capital of ASIE and 15,000,000 options ("the
Options") over ordinary 10 cent shares in the capital of ASIE
with the terms and conditions of the Options being as set out
in clause 3 hereof;
(6) they shall each do and undertake all such acts, matters and
things and execute all such documents as shall be necessary to
ensure that with all due expedition
the said assets are assigned transferred and set over absolutely
to ASIE as
aforesaid and in the meantime the said assets shall be held in
trust by ASIT on
behalf of ASIE absolutely
3. The terms and conditions of the Options shall be:
(a) all shares in ASE to be issued and allotted pursuant
to the exercise of the Options
shall rank pari passu in all respects with the existing issued
share capital of ASIE;
(b) the Options shall expire 30 June, 2000 but may be
transferred at any time prior
to the expiry date;
(c) the Options are exercisable at 10 cents per Option;
(d) the Options shall be exercisable wholly or in part (in
multiples of 100,000 Options) by notice in writing to ASIE given
at any time prior to or on the expiry date and shall be
accompanied by the application monies ("the application monies")
or the shares resulting from the exercise of the Options;
(e) there are no participating rights or entitlements
inherent in the Options to participate in any new issue or bonus
issue of securities which may be offered to members of ASIE from
time to time prior to the expiry date;
(f) Option holders have the right to exercise their
Options prior to the date of
determining entitlements to any capital issue to the then
existing members of ASIE made during the currency of the
Options. In this regard, Option holders shall be afforded the
period of at least 14 days prior to, and inclusive of, the books
closing date (to determine entitlements to the issue), to
exercise their Options;
(g) in the event of any reconstruction (including
consolidation, subdivision, reduction or return) of the issued
capital of ASIE, the number of Options or the exercise price of
the Options or both shall be reconstructed (as. appropriate) in
a manner which will not result in any benefits being conferred
on Option holders which are not conferred on shareholders, but
(subject to the provisions with respect to: rounding of
entitlements as sanctioned by the meeting of members approving
the reconstruction of capital) in all other respects the terms
for the exercise of the Options shall remain unchanged;
(h) if the shares of ASIE shall be officially quoted on a
Stock Exchange, application for official quotation on that Stock
Exchange of the shares allotted and issued pursuant to the
exercise of Options will be made by ASIE within 14 days after
the date of allotment of such shares;
(i) shares allotted and issued pursuant to the exercise of
Options will be allotted and issued not more than 14 days after
the receipt of a properly executed exercise notice and the
application monies;
(j) ASIE reserves .the right to vary, amend, alter and/or
add to the terms and conditions attached to the Options ("the
changes") if the requirements of a Stock Exchange:
i. on which ASIE's shares are granted official
quotation; or,
ii. on which ASIE wishes to have its shares granted
official quotation
make it necessary for the changes to be made provided
that no changes may be made by ASIE to the exercise price of 10
cents per Option or the expiry date of 30 June, 2000 save as may
be necessary by reason of the operation of the matters set out
in sub-clause (g) hereof.
4. ASIE represents and warrants to and agrees with ASIT so
that ASIT may at all times rely on this clause that:
(a) on the settlement date ASIE will have only one class
of shares issued (being ordinary fully paid ten cent shares
ranking in all respects pad passu with each other share);
(b) ASIE is duly incorporated in and in good standing
under the laws of the State of Victoria, Australia;
(c) ASIT shall acquire valid and marketable title to the
ASIE shares free and clear of any liens claims charges or other
encumbrances or interests of third parties of any nature
whatsoever.
5. ASIE agrees to be liable for and indemnify ASIT in respect
and to the extent of any loss or expense incurred by reason of
any manner or thing being at any time found to be other than as
warranted or represented by ASIE in this Deed of Agreement.
6. ASIT represents and warrants to and agrees with ASIE so that
ASIE may at all times rely on this clause that:
(a) on. the date hereof and on the settlement date
ASIT has and will have sole and
absolute valid and marketable title to the said assets free and
clear of any liens claims charges or other encumbrances or
interests of third parties of any nature whatsoever;
(b) on the settlement date ASIE (by reason of the
sale and purchase hereby effected and the satisfaction of the
price by ASIE) shall acquire sole and absolute valid and
marketable title to the said assets free and clear of any liens
claims charges or other encumbrances or interests of third
parties of any nature whatsoever.
7. ASIT agrees to be liable for and indemnify ASIE in respect
and to the extent of any loss of expense incurred by reason of
any matter or thing being at any time found to be other than as
warranted or represented by ASIT in this Deed of Agreement.
8. There are no representations, promises, warranties,
covenants or undertaking other
than those contained in this Deed of Agreement which contains
the entire understanding of the parties and none of the terms
hereof may be waived or modified except by an express agreement
in writing signed by the parties hereto.
9. This Deed of Agreement constitutes the entire agreement
between the parties and shall supersede all prior negotiations,
representations, proposals and agreements whether oral or
written with respect to the subject matter of this Deed of
Agreement.
10. Time is of the essence of this Deed of Agreement.
11. Each of the parties undertakes to sign such documents and
perform all acts and things as may be reasonably required on or
after the execution of this Deed of Agreement to effect the
transactions contemplated by this Deed of Agreement.
12. This Deed of Agreement shall be binding upon and continue
for the benefit of each; party, its successors and permitted
assigns.
13. This Deed of Agreement shall be governed by and construed
in accordance with the law of the State of Victoria, Australia
and the parties submit to the jurisdiction of the Victorian courts.
14. Any notice may be given by a party to the other party
addressed to that other party at its address appearing in this
Deed of Agreement or to such other address as that party may
from time to time by notice in writing nominate as its new 6r
alternative address for service of notices. Proof that such
notice was properly addressed, pre-paid and posted shall be
sufficient evidence of service. Service shall be deemed to have
taken place:
(a) by personal delivery on the date of such delivery;
(b) by post within Australia forty-eight hours after
posting;
(c) by post outside Australia ten days after posting;
(d) by facsimile transmission when receipt: is
acknowledged.
15. If a party commits a breach of this Deed of Agreement, the
party in default shall, without prejudice to the other rights of
the other party, pay on demand
(a) all reasonable expenses incurred as a result of
the breach; and,
(b) interest on any money overdue during the period of
default at the rate of 15% per annum.
IN WITNESS whereof this Deed of Agreement has been
executed the day and year first hereinbefore written.
The Common Seal of ASI TECHNOLOGIES PTY. LTD.
was hereunto affixed in the presence of
The Common Seal of ASI ENTERTAINMENT PTY. LTD.
was hereunto affixed in the presence of
THIS DEED OF AGREEMENT is made the 16th day of December, 1996
PARTIES:
ASI TECHNOLOGIES PTY. LTD. (ACN 006 828 324) of Suite 3, 1601 Main Road,
Research, Victoria, Australia ("ASIT")
and
ASI ENTERTAINMENT PTY. LTD. (ACN 062 850 962) also of Suite 3, 1601 Main
Road, Research, Victoria, Australia ("ASIE")
RECITALS:
A. ASIT is the sole and absolute owner of certain hardware and equipment
RELATING to Passenger Video Systems which have been installed on certain
aircraft operated by AIR EUROPA as more particularly described in the
Schedule hereto ("the AE Systems"}.
B. ASIE and ASIT have reached agreement for the sale by ASIT to ASIE of the
AE. Systems
C. The parties hereto wish to record the agreement made between them
AGREEMENT:
1. It is agreed between ASIT and ASIE that ASIT shall sell and ASIE shall
purchase the AE Systems for the price of A$527,980
2. It is further agreed between the parties hereto as follows,
(a) ASIT shall within 7 days from the date hereof ("the settlement date")
assign transfer and set over absolutely (with effect on 1 July, 1996) TO
ASIE ALL AND singular the AE Systems with the price being satisfied by ASIE
issuing and allotting to ASIT (and/or its nominees) on the settlement date
5,279,800 ORDINARY fully paid 10 cent shares in the capital of ASIE ("the
ASIE shares");
(b) they shall each do and undertake all suck acts matters and things and
execute all such documents as shall be necessary to erasure that with all
due expedition the AE Systems are assigned transferred and sol over
absolutely to ASIE as aforesaid and in the meantime the AE Systems shall he
held in trust by ASIT on behalf of ASIE absolutely.
3. ASIE represents and warrants to and agrees with ASIT so that ASIT may
at all times rely on this clause that:
(a) on the settlement date ASIE will have only one class of shares issued
(being ordinary fully paid ten cent shares ranking in all respects pari
passu with each other share);
(b) ASIE is duly incorporated in and in good standing under the laws of the
State of Victoria, Australia;
(c) ASIT shall acquire valid and marketable title to the ASIE shares FREE
AND CLEAR of any liens claims charges or other encumbrances or interests of
THIRD PARTIES OF ANY nature whatsoever.
4. ASIE agrees to be liable for and indemnify ASIT in respect and TO THE
EXTENT of any loss or expense incurred by reason of any matter or thing
being at any time found to be other than as warranted or represented by ASIE
in this Deed of Agreement.
5. ASIT represents and warrants to and agrees with ASIE so that ASIE may at
all times rely on this clause that:
(a) on the date hereof and on the settlement date ASIT has and will have
sole and absolute valid and marketable title to the AE Systems free and
clear of any liens claims charges or other encumbrances or interests of
third parties of any nature whatsoever;
(b) on the settlement date ASIE (by reason of the sale and purchase hereby
effected and the satisfaction of the price by ASIE) shall acquire sole and
absolute valid and marketable title to the AE Systems free and clear of any
liens claims charges or other encumbrances or interests of third parties of
any nature whatsoever.
6. AS1T agrees to be liable for and indemnify ASIE in respect and to the
EXTENT OF ANY loss or expense incurred by reason of any matter or thing
being at any time found to be other than as warranted or represented by ASIT
in this Deed of AGREEMENT.
7. There are no representations, promises, warranties covenants or
undertakings other than those contained in this Deed of Agreement which
contains the entire understanding of the parties and none of the terms
hereof may be waived or modified except by an express agreement in writing
signed by both parties hereto.
8. This Deed of Agreement constitutes the entire agreement between the
parties and shall supersede all prior negotiations, representations,
proposals and agreements whether oral or written with respect to the subject
matter of this Deed OF AGREEMENT.
9. Time is of the essence of this Deed of Agreement.
10. Each of the parties undertakes to sign such documents and perform all
ACTS AND THINGS as may be reasonably required on or after the execution of
this Deed of Agreement to effect the transactions contemplated by this Deed
of Agreement.
l l. This Deed of Agreement shall be binding upon and continue for the
benefit of each party, its successors and permitted assigns.
12. This Deed of Agreement shall be governed by and construed in ACCORDANCE
WITH the law of the State of Victoria, Australia and the parties submit to
the JURISDICTION OF THE Victorian courts.
13. Any notice may be given by a party to the other party addressed to THAT
OTHER PARTY at its address appearing in this Deed of Agreement or to such
other address as that party may from time to time by notice in writing
nominate as its new or alternative address for service of notices. Proof
that such notice was properly addressed, pre-paid and posted shall be
sufficient evidence of service. Service shall be DEEMED TO HAVE TAKEN place:
(a) by personal delivery on the date of such delivery,
(b) by post within Australia forty-eight hours after posting,
(c) by post outside Australia ten days after posting,
(d) by facsimile transmission when receipt is acknowledged.
14. If a party commits a breach of this Deed of Agreement, the party in
default shall, without prejudice to the other rights of the other party, pay
on demand:
(a) all reasonable expenses incurred as a result of the breach; and,
(b) interest on any money overdue during the period of default at the RATE
OF 15% per annum.
IN WITNESS whereof this Deed of Agreement has been executed THE DAY AND YEAR
first hereinbefore written.
The Common Seal of ASI TECHNOLOGIES PTY. LTD. was hereunto affixed in the
presence of:
The Common Seal of ASI ENTERTAINMENT PTY. LTD. was hereunto affixed in the
presence of:
THE SCHEDULE
THE AE SYSTEMS:
The AE Systems comprise:
1. 9 Moving Map Displays (100-600-200X-001) (CMA 3200) - Serial Nos. 276-283;
2. 9 Cabin Control Units (100-600-206-001) - Serial Nos. 234, 247~239 and
261-266;
3. 9 Installation Kits (1700-02-01);
4. 8 Sony 8.6 inch Monitors.
THIS DEED OF AGREEMENT is made 9th October, 1997
PARTIES:
ASI ENTERTAINMENT PTY. LTD. (ACN 062 850 962) of Unit 3, 1601 Main Road,
Research, Victoria ("ASIE")
and
ASI MEDIA PTY. LTD (ACN 006 715 135) also of Unit 3, 1601 Main Road,
Research, Victoria ("ASIM") (in its capacity as Trustee of the ASI Media
Unit Trust as hereinafter defined)
RECITALS:
A. ASIM is the Trustee of the ASI Media Unit Trust ("the Trust") created by
Deed of Trust dated 1 January, 1992.
B. The beneficiaries of the Trust are:
i. ASIE which holds 40 A Class Units in the Trust (representing 40% of
the Units in the Trust);
ii. a company known as T.A.P.E. Pty. Ltd. (ACN 005 582 338) ("Tape")
which holds 50 A Class Units in the Trust (representing 50% of the Units in
the Trust);
iii. a company known as Australian Authorised Investments Ltd. (ACN
006 715 091) ("AAI") which holds 10 A Class Units in the Trust
(representing 10% of the Units in the Trust).
C. ASIM (as Trustee of the Trust) and ASIE entered into an Agreement on 21
February 1996 ("the Media Agreement") whereby ASIM was to have the sole
right to obtain advertising and sponsorship for the various services and
equipment supplied to the airline industry by ASIE save and except for any
gambling services or products.
D. It is agreed between the parties hereto that ASIM shall assign its
interest in the Media Agreement to ASIE on the terms and conditions and for
the consideration payable by ASIE hereinafter contained.
E. It is recorded that ASIM wishes to distribute to the Unit holders in the
Unit Trust the consideration payable by ASIE for the assignment by ASIM of
its interest in the Media Agreement.
AGREEMENT:
1. Pursuant to the power and authority conferred by clause 9 of the Media
Agreement (and with the consent of ASIE as contemplated thereby) ASIM (for
the consideration referred to in clause 2 hereof) hereby assigns all its
right title and interest in the Media Agreement to ASIE with effect from the
date hereof and the Media Agreement shall with effect from the date hereof
be canceled, void and of no further effect.
2. The consideration to be paid by ASIE to ASIM shall be the sum of $500,000
("the consideration") which shall be payable (subject to the provisions and
operation of clause 3 hereof) interest free in the meantime by ASIE to ASIM
by not later than 31 December, 1998 ("the settlement date").
3. In as much as:
a. ASIE would prefer to pay/satisfy as much of the consideration as
possible by the issue and allotment of ordinary fully paid 10 cent shares in
its capital ("ASIE Shares") and ASIM does not object to this preference of
ASIE;
b. ASIM wishes to distribute the consideration to the Unit holders in the
Unit Trust (as recorded in Recital E hereof);
c. ASIE (in its capacity as a Unit holder in the Unit Trust) is not
permitted by the Corporations Law to hold shares in itself so that it could
not receive its share of the consideration in ASIE Shares
then in furtherance of the foregoing it is agreed between ASIE and ASIM that
at any time prior to the settlement date:
i. ASIE may satisfy $250,000 of the consideration (representing Tape's
entitlement to a share of the consideration) by the issue and allotment to
Tape (at the direction of ASIM) of 2,500,000 ordinary fully paid 10 cent
shares in ASIE (representing Tape's interest in 50% of the Units in the
Trust and Tape's consequent entitlement to 50% of the consideration);
ii. ASIE may satisfy a further $50,000 of the consideration
(representing AAI's entitlement to a share of the consideration) by the
issue and allotment to AAI (at the direction of ASTM) of 500,000 ordinary
fully paid 10 cent shares in ASIE (representing AAI's interest in 10% of the
Units in the Trust and AAI's consequent entitlement to 10% of the
consideration);
iii. $200,000 in cash shall be paid to ASIM by ASIE (representing
ASIE's entitlement to a share of the consideration) on the settlement date
which shall be distributed (unless otherwise agreed between ASIE and ASIM)
by ASIM to ASIE (representing ASIE's interest in 40% of the Units in the
Trust and ASIE's consequent entitlement to 40 of the consideration).
4. There are no representations, promises, warranties, covenants or
undertakings other than those contained in this Deed of Agreement which
contains the entire understanding of the parties and none of the terms
hereof may be waived or modified except by an express agreement in writing
signed by the parties hereto.
5. This Deed of Agreement constitutes the entire agreement between the
parties and shall supersede all prior negotiations, representations,
proposals and agreements whether oral or written with respect to the subject
matter of this Deed of Agreement.
6. Each of the parties undertakes to sign such documents and perform all
acts and things as may be reasonably required on or after the execution of
this Deed of Agreement to effect the matters contemplated by this Deed of
Agreement.
7. This Deed of Agreement shall be binding upon and continue for the benefit
of each party, its successors and permitted assigns.
8. This Deed of Agreement shall be governed by and construed in accordance
with the law of the State of Victoria and the parties submit to the
jurisdiction of the Victorian courts.
9. Any notice may be given by either party to the other party addressed to
that other par at its address appearing in this Deed of Agreement or to such
other address as that party may from time to time by notice in writing
nominate as its new or alternative address for service of notices. Proof
that such notice was properly addressed, pre-paid and posted shall be
sufficient evidence of service. Service shall be deemed to have taken place:
a. by personal delivery on the date of such delivery;
b. by post within Australia forty-eight hours after posting;
c. by facsimile transmission when receipt is acknowledged.
10. If a party commits a breach of this Deed of Agreement, the party in
default shall, without prejudice to the other rights of the other party, pay
on demand:
a. all reasonable expenses incurred as a result of the breach; and,
b. interest on any money overdue during the period of default at the rate of
15% per annum.
IN WITNESS whereof this Deed of Agreement has been executed the day and year
first hereinbefore written.
EXECUTION:
The Common Seal of ASI ENTERTAINMENT PTY. LTD. was hereunto affixed in the
presence of:
The Common Seal of ASI MEDIA PTY. LTD. was hereunto affixed in the presence
of:
WEINBERG & COMPANY, PA
Town Executive Center
6100 Glades Road, Suite 314
Boca Raton, Florida 33434
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in the Form SB-2 Registration
Statement, as amended, of ASI Entertainment, Inc. of our reports as
of June 30, 1998, dated November 10, 1998 relating to the financial
statements of ASI Entertainment, Inc. which appear in such Form SB-2.
WEINBERG & COMPANY PA
Certified Public Accountants
Boca Raton, Florida
December 28, 1998
WEINBERG & COMPANY, PA
Town Executive Center
6100 Glades Road, Suite 314
Boca Raton, Florida 33434
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in the Form SB-2 Registration
Statement, as amended, of ASI Entertainment, Inc. of our reports as
of June 30, 1998 and 1997, dated November 6, 1998 relating to the
financial statements of ASI Entertainment Pty. Ltd. which appear in
such Form SB-2.
WEINBERG & COMPANY PA
Certified Public Accountants
Boca Raton, Florida
August 10, 1998
