As filed with the Securities and Exchange Commission on
August 12, 1998
Registration No.
====================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
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 IRS Employer Primary Standard
jurisdiction or Identification Industrial Class-
organization Number ification Code
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
13900 East Harvard Avenue
Suite 212
Aurora, Colorado 80014
303/368-4434
(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
Title of Each Proposed Proposed Amount
Class of Amount Maximum Maximum of Regis-
Securities To be Offering Aggregate tration
to be Registered Registered Price Per Offering Fee(1)(2)
Share Price
Common Stock held
by Selling Security
Holders 5,754,337 $.0306(1) $176,083 $58
Common Stock Options
held by Selling Security
Holders 4,927,173 $0.50(1) $2,463,586 $813
Shares of Common
Stock underlying
Options 4,927,173 ---- ----- ----
$2,639,669 $871(3)
(1) There is no current market for the securities and the
dollar amount of the Shares to be registered is de minimis
based upon the estimated per share of Common Stock book value
($.0306).
(2) Estimated solely for the purpose of calculating the
registration fee based on Rule 457(f)(2).
(3) 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.
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.
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 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 8.
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.
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.
The date of this Prospectus is August ____, 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 13900 East Harvard Avenue, Suite 212, Denver,
Colorado 80013. 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 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 year ended 1997 and the unaudited selected
financial information for the nine months ended March 31, 1998:
At March 31, 1998 At June 30, 1997
(unaudited) (Audited)
Balance Sheet Data:
Current assets $1,111,179 $ 84
Fixed and other assets 582,394 543,583
Total Assets 1,693,573 543,667
Total Liabilities 33,523 45
Stockholders' equity
(deficit) 1,660,050 543,622
Total Liabilities and
Equity $ 1,693,573 $ 543,667
Nine Months Ended Year Ended
March 31 (Unaudited) June 30 (Audited)
1998 1997 1997
Income Statement Data:
Net Sales $ 36,958 $ ---- $ ----
Cost of Sales 18,800 ---- ----
Gross Profit 18,158 ---- ----
Operating Expenses 247,860 ---- ----
Net Loss $ (229,702) ---- ----
The selected financial data above for the year ended
June 30, 1997 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.
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.
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.
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 to negotiate
contracts with foreign advertisers. The Company intends to
pay the media sales representatives twice the standard
industry commission, which may increase the Company's costs.
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, Inc, 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. 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 person 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 SectionSection13 or 15(d)
of the Securities Exchange Act. Sales of the Securities in
the secondary market will be made pursuant to Section4(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
to quotation on the Nasdaq SmallCap Market. If the Company's
securities are not listed for quotation 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 listing 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 quotation
on the Nasdaq SmallCap Market or becomes unable to satisfy
the requirements for continued quotation 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
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 quoted
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 the issued and outstanding shares of the Company
other than those registered herein to the extent not sold or
transferred pursuant to this Offering, are "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.
SELLING SECURITYHOLDERS MAY SELL SECURITIES AT ANY PRICE OR
TIME
Selling Securityholders may offer and sell their
Securities at a price and time determined by the Selling
Securityholder. 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
The Company was incorporated in the state of Delaware on
April 29, 1998. In July, 1998, the Company acquired all the
outstanding stock of ASI Entertainment Pty. Ltd., an existing
Australian in-flight entertainment company, in exchange for
5,293,990 shares of the Company's Common Stock. ASI
Entertainment Pty. Ltd. was incorporated in Australia in 1993
and was a subsidiary of ASIT Australia until 1996 when it
became an independent corporation through a corporate
restructuring. The Company purchased the ASI-9000 Program
from ASIT Australia and will acquire the ACAMS II hardware
from ASIT Australia. The Company subcontracts the
production, installation and maintenance of the ASI-9000.
The Company 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 13900 East Harvard Avenue, Suite 212, Denver,
Colorado 80013.
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.
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. When the ASI-9000 is installed on
the ACAMS II hardware platform, the ASI-9000 will 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 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 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 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 customer's
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.
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.
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. From this test
the Company has been able to gauge the appeal and viability of the
ASI-9000 Program.
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 air time on all 13
aircraft and ASIT Australia was not able to receive any funds
from such advertisers for air time on only three aircraft.
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 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 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. The Company anticipates that the term
of the sponsor contacts will range from six months to twelve
months. The Company's sales target for each ASI-9000 Program
in operation is revenue of US$100,000 per annum per aircraft
including advertising sales, in-flight bookings, and
commission. There is no assurance that this target can be
reached.
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 which is created from selling 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.
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 (2) B737-300 aircraft and seven (7)
B757-200 aircraft. The contract includes an option by
agreement to install the ACAMS II Cabin Management and
Communications System on a further twelve (12) B737's and two
(2) B767's. The ACAMS II system is a second generation ACAMS
and is not yet in production and the option will only be
considered should Air Europa install a data communications
link. Under the Agreement, the Company receives all revenue
generated from advertisers and sponsors on behalf of Air
Europa from which the Company deducts a license fee of
$3625.00 per calendar month per aircraft during the term.
Every six months, any shortfall of the advertising revenue to
cover the license fee must be absorbed by the Company and any
surplus after deduction of direct costs and the licence fee
is paid to Air Europa. The license for each system unit will
last 5 years and upon expiring, the hardware will belong to
Air Europa but Air Europa will not acquire any rights in the
licensed 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 advertises 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. 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, and an
Australian public company, 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.
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
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.
RESULTS AND PLAN OF OPERATIONS
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. The Company is studying the feasibility of implementing a full
ASI-9000 Program on Hawaiian Airlines in conjunction with ASIT Australia,
CMC and Hollingsead International.
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 but ASIT Australia was not able
to receive any funds from such advertisers for air time on three aircraft.
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 airtime 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 $30,000 in
revenues from its Air Europa contract over the past six months. 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 Chief Financial Officer, 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 company he was associated with for
thirty years.
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 1997:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION COMPENSATION
PRINCIPAL POSITION YEAR SALARY ALL OTHER
Ron Chapman 1997 0 30,000
Philip Shiels 1997 0 30,000
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. Chapman International Pty. Ltd. has received payment of fees on
behalf of Ron Chapman and Philip Shiels from ASI Entertainment Pty. Ltd and
is expected to provide management services to the Company in the future.
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 Percentage of Shares
Common Stock of Class Owned
Beneficially Prior to After
Owned Offering Offering
Name, Position and Address
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) 1,250,012 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.(3)(4) 659,975 44.5% 0%
("ASIT Australia)
3/1601 Main Road
Research, Victoria
Australia
Research No. 1 Trust (7) 1,950,000 28.4% 0%
4th Floor
136 Broadway, Newmarket
Auckland 1 New Zealand
Wardour Consultants Ltd. (8) 1,562,500 24.0% 0%
Nine Queens Road
Suite 605-6
Central, Hong Kong
Swiss Time Australia
Pty. Ltd. (9) 537,500 10.8% 0%
2C Dudley Street
Brighton, Victoria, Australia 3186
Research No. 2 Trust (10) 500,000 8.0% 0%
4th Floor
136 Broadway, Newmarket
Auckland 1 New Zealand
Heatherwood Pty. Ltd. (11) 450,006 7.5% 0%
93A Park Street
South Melbourne, Victoria, Australia 3025
Pierce Mill Associates, Inc.(12) 417,189 7.2% 0%
1504 R Street N.W.
Washington, D.C. 20009
Maxwell Grant Productions
Pty Ltd.(13) 337,500 5.6% 0%
P.O. Box 103
Burnley, Victoria, Australia 3121
Vision, Inc. 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 is
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 as the sole shareholder
thereof Mr. Chapman is 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 includes 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. 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.
(7) Includes 850,000 Shares and 1,100,000 Options.
(8) Includes 812,500 Shares and 750,000 Options.
(9) Includes 268,750 Shares and 268,750 Options.
(10) Includes 250,000 Shares and 250,000 Options.
(11) Includes 225,003 Shares and 225,003 Options.
(12) 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.
(13) Includes 106,250 Shares and 231,250 Options.
SELLING SECURITYHOLDERS
The Company is registering for offer and sale by the holders thereof
(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
so listed. 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.
Percent of
Name and Address of Common Stock Owned
Beneficial Owner Stock Options Prior to After
Offering Offering
(1) (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. 12,500 12,500 0.2% 0%
54 Mathoura Road
Toorak, Victoria, 3142
Australia
ASI Technologies
Pty. Ltd (5) 659,975 0 11.5% 0%
3/1601 Main Road
Research, Victoria
Australia 3095
Australian Authorised 103,125 0 1.8% 0%
Investments Ltd
Suite R; Level 14
44 Martin Street
Sydney, NSW 2000
Australia
Avmar Pty. Ltd. 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. 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. 225,003 225,003 3.9% 0%
93A Park Street
South Melbourne,
Victoria 3205
Australia
Instil Enterprises Pty Ltd 62,500 62,500 1.1% 0%
Ground Floor
50 Hindmarsh Square
Adelaide, 5000
Australia
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. 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.(6) 417,189 0 7.2% 0%
1504 R Street N.W.
Washington, D.C. 20009
Research Trust No. 1(7) 850,000 1,100,000 14.8% 0%
4th Floor
136 Broadway, Newmarket
Auckland 1 New Zealand
Research Trust No. 2 (8) 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. 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. 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
____________
(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) 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.
(6) 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.
(7) 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.
(8) 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.
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 all the rights and interests in
an exclusive media sponsorship and advertising rights agreement for a
purchase price of A$500,000, payable by the issuance of common stock. As a
result, 3,000,000 shares of ASI Entertainment Pty. Ltd. were issued to
Vision, Inc. and Australian Authorised Investments, 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 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. 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.
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 listing 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 listed for
trading 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 listing 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
to quotation on the Nasdaq SmallCap Market. There can be no assurance that
the Company will qualify or if qualified that it will be accepted for
admission to quotation of its securities on the NASD SmallCap Market.
To qualify for admission to quotation 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. 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.
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.
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.
Under applicable rules and regulations promulgated under the Exchange
Act, any person engaged in a distribution of securities may not
simultaneously bid for or purchase securities of the same class for a period
of two business days prior to the commencement of such distribution. 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 year ended June 1997
and the unaudited financial statements for the period ended March 31, 1998
follow herewith.
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 - INDEPENDENT AUDITORS' REPORT
PAGE 2 - CONSOLIDATED BALANCE SHEET AS
OF JUNE 30, 1997
PAGE 3 - CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY FOR THE
PERIOD FROM DECEMBER 15, 1993
(INCEPTION) TO JUNE 30, 1997
PAGE 4 - 12 - NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS AS OF JUNE 30, 1997
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
ASI Entertainment Pty. Ltd.
We have audited the accompanying consolidated balance sheet of
ASI Entertainment Pty., Ltd. and Subsidiary (a development
stage company) as of June 30, 1997, and the related
consolidated statement of shareholders' equity for the period
from December 15, 1993 (Inception) to June 30, 1997. 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 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 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 statement. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
consolidated financial statements presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above presents fairly in all material respects, the
financial position of ASI Entertainment Pty. Ltd. and
Subsidiary (a development stage company) as of June 30, 1997,
in conformity with generally accepted accounting principles
used in the United Stated of America.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
July 28, 1998
<PAGE>
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 84
Total Current Assets 84
Property and equipment - net 394,243
Investments 149,340
TOTAL ASSETS $ 543,667
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 45
Total Liabilities 45
Commitments and Contingencies
SHAREHOLDERS' EQUITY
Ordinary share capital, $0.07595 historical
($0.07467 current) par value, 200,000,000
shares authorized, 17,779,920 shares issued
and outstanding 1,350,308
Additional paid-in capital - discount
on shares (745,470)
Cumulative translation adjustment (23,941)
580,897
Less subscriptions receivable 37,275
Total Shareholders' Equity 543,622
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 543,667
See accompanying notes to consolidated financial statements.
2
<PAGE>
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, 1997
ADDI- CUMULA-
ORDINARY SHARES TIONAL TIVE
NUMBER PAID-IN TRANS-
OF CAPITAL LATION SUBSCRIP-
SHARES AMOUNT DISCOUNT ADJUST- TION
ON SHARES MENT RECEIVABLE TOTAL
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 trans-
lation 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 trans-
lation for 1997 - - - (32,243) - (32,243)
BALANCE, JUNE 30,
1997 17,779,920 $(745,470) $(37,275)
$1,350,308 $(23,941) $543,622
See accompanying notes to financial statements.
3
<PAGE>
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Organization
ASI Entertainment Pty., Ltd. (the "Company"), an
Australian company incorporated in December 1993
under the corporation laws of Victoria, and limited
by shares as defined under such corporation laws,
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") of
which the Company is a 40% beneficiary.
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.
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 statutory
financial statements of the Company. Adjustments
are made to translate the statutory financial
statements to U.S. GAAP. The financial statements
are expressed in U.S. dollars. The functional
currency of the Company is the Australian dollar.
4
<PAGE>
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT'D
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
and expenses during the reporting period. Actual
results could differ from those estimates.
E. 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.
F. Investment in Unit Trust
The investment in the ASI Media Unit Trust
representing a 40% beneficiary interest is
accounted for at cost. (See Note 4).
G. Foreign Currency Translation
The functional currency of the Company and its
subsidiary is the local currency. 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.
5
<PAGE>
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT'D
H. Income Taxes
The Company accounts for income taxes under
Statement of Financial Accounting Standards No.
109, "Accounting for 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. Since operations commenced on July
1, 1997, there is no income tax effect at June
30, 1997.
I. 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.
J. New Accounting Pronouncements
The Financial Accounting Standards Board has
recently issued several new accounting
pronouncements. Statement No. 129, "Disclosure
of Information about Capital Structure"
establishes standards for disclosing information
about an entity's capital structure, and is
effective for financial statements for periods
ending after December 15, 1997. Statement No.
6
<PAGE>
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT'D
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 commenced operations on July 1, 1997
and did not have operating revenues or expenses
prior to that date.
7
<PAGE>
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
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 $394,243
through the issuance of 5,279,800 ordinary shares
of the Company's capital. The price represents
ASIT's original cost basis in such systems.
The following is a summary of property and
equipment at June 30, 1997:
Airline Cabin Management and Communications
Systems $394,243
The Company will begin depreciating this
equipment on July 1, 1997 over a period of 5
years.
NOTE 4 - INVESTMENTS
As discussed in Note 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
recorded 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.
Investments at June 30, 1997 consists of the cost
of the 40% beneficiary interest in the Unit
Trust.
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
8
<PAGE>
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
NOTE 4 - INVESTMENTS - CONT'D
Company's capital were exchanged for all rights,
title and interest in the Media Agreement. The
effect 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 an investment in Media Rights,
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.
NOTE 5 - ORDINARY SHARE CAPITAL
The Company was originally capitalized in
December 1993 with 12 ordinary shares of capital
issued to ASIT, and in January 1996 with 108
additional ordinary shares issued 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,
sold 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 to, that are controlled by certain
directors of the Company.
On January 30, 1996, the Company issued 325,000
ordinary shares of capital 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 of capital to ASIT in exchange
for nine ACAMS systems (See Note 3), making ASIT
a 29.7% shareholder of the Company as of that
date.
9
<PAGE>
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
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% shareholder interest in ASI Media
Pty. Ltd., an exclusive value added reseller
agreement with ASIT for ACAMS II 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's capital 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 of capital 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, 1997.
10
<PAGE>
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
NOTE 8 - OPERATING AGREEMENTS
On December 13, 1995, the Company entered into a
Supply and License Agreement (the "Agreement")
with an airline (the "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 term. The
Company will receive a monthly license fee of
$3,625 for each System and a monthly maintenance
fee of $1,875 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 to the Airline approval of the license
fee. (See Note 11) 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.
11
<PAGE>
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
NOTE 9 - RELATED PARTY TRANSACTIONS
At June 30, 1997, ASIT was a 29.7% 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 and 6 the Company
purchased certain assets from ASIT during fiscal
1996 and 1997 through the issuance of ordinary
shares.
Certain directors of the Company are also
directors of ASIT.
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
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. Management has not
assessed the potential effect on the Company's
earnings.
NOTE 11- SUBSEQUENT EVENTS
Acquisition of Media Rights
Effective October 9, 1997, the Company exchanged
3,000,000 ordinary shares of its capital for all
rights, title and interest in the Media Agreement
(See Note 4). The effect of this transaction is
to allow the Company to receive 100% of all
12
<PAGE>
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
future revenues generated from advertising and
sponsorship sales. On the transaction date of
October 9, 1997 the Company recorded a $224,010
Investment in Media Rights, and transferred the
$149,340 investment in the Unit Trust to
Investment in Media Rights.
Acquisition of Equipment and Inventories
On September 30, 1997, the Company issued
15,000,000 ordinary shares of its capital and
15,000,000 options to purchase ordinary shares of
the Company in exchange for certain ACAMS Systems
and other equipment and inventories of ASIT
having an approximate value of $990,000.
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.
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 using the purchase method of
accounting for financial reporting purposes.
13
<PAGE>
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
Accordingly, the ASIEInc. 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
ASIE's net assets at fair market value (acquired
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.
Common Stock Offering by Selling Securityholders
of ASI Entertainment, Inc.
ASIEInc. is in the process of preparing for
filing a registration statement under Form SB-2
whereby the selling securityholders 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 shares
for sale as part of this filing and will not
receive any proceeds of the offering.
Installation of the ASI-9000 Program
Since July 1997, under the supply and license
agreement with an airline, as discussed in Note
8, the Company has installed the ASI-9000 Program
on nine commercial aircrafts.
14
<PAGE>
Unaudited Management Accounts
Balance Sheet
As At 31 March, 1998
US$(*) US$(*)
CURRENT ASSETS
Cash 10,033
Trade Debtors 7,196
Inventory 994,500
Sundry Debtors 66,300
Loans 33,150
TOTAL CURRENT ASSETS 1,111,179
PLANT AND EQUIPMENT, NET 350,051 297,543
OTHER ASSETS
Investments net of amortisation 270,068
Formation Expenses - at Cost 829
Development Costs Capitalised 13,954
TOTAL OTHER ASSETS 284,851
TOTAL ASSETS 1,693,573
CURRENT LIABILITIES
Trade Creditors 9,739
Sundry Creditors 23,750
Loans 33
33,523
TOTAL LIABILITIES 33,523
SHAREHOLDER FUNDS
Common stock, authorised
200,000,000 shares, 2,799,446
38,329,920 shares issued at
March 31, 1998 par value
$0.0663 at historical par value
Additional paid-in capital -
discount on shares (745,470)
Subscriptions receivable (37,275)
2,016,701
Accumulated Losses (229,702)
Foreign Currency Translation Account (126,949)
TOTAL STOCKHOLDERS EQUITY 1,660,050
TOTAL LIABILITIES & STOCKHOLDERS EQUITY 1,693,573
* - Conversion to US$'s based on the exchange rate at
March 31, 1998 of A$1 = US $0.663.
The accompanying notes are an integral part of these condensed accounts.
<PAGE>
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 MARCH 31, 1998
ADDI-
TIONAL CUMU-
PAID-IN LATIVE
ORDINARY SHARES CAPITAL TRANS SUBSCRIP-
NUMBER DISCOUNT LATION TION
OF ON ADJUST- RECEIV-
SHARES AMOUNT SHARES MENT ABLE TOTAL
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 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 - - - 18,424
<PAGE>
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 900,000 66,150 - - - 66,150
Issuance of ordinary
shares to
ASIT in exchange
for assets
purchased 15,000,000 1,072,200 - - - 1,072,200
Issuance of ordinary
shares to
investors 1,900,000 127,750 - - - 127,750
Issuance of ordinary
shares to
investors 100,000 6,685 - - - 6,685
Issuance of ordinary
shares to
Vision, Inc.
in exchange for
assets
purchased 2,500,000 166,322 - - - 166,322
Issuance of ordinary
shares to
investors 150,000 10,031 - - - 10,031
Effect of foreign
currency translation
for 1998 - - - (103,008) - (103,008)
BALANCE, MARCH 31,
1998 38,329,920 $(745,470) $(37,275)
$2,799,446 $(126,949) $1,889,752
Unaudited Management Accounts
Trading and Profit and Loss Statement
For the Period 1 July, 1997 to 31 March, 1998
US$ US$
REVENUE 36,958
COST OF SALES 18,800
GROSS PROFIT 18,158
EXPENSES
Selling Expenses 33,783
General and
administration expenses 125,532
Development Expenses 3,490
Amortisation 29,775
Depreciation 55,280
TOTAL EXPENSES 247,860
OPERATING LOSS (229,702)
INCOME TAX EXPENSE (Note 1E) 0
NET LOSS (229,702)
* Conversion to US$'s based on the average exchange
rate of A$1 = US$0.698
The accompanying notes are an integral part of these condensed accounts.
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD JULY 1, 1997 TO MARCH 31, 1998
US$ US$
Cash Flow from Operating Activities:
Net Income (Loss) (229,702)
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
- - Amortisation 28,282
- - Depreciation 52,508 80,790
Changes in operating assets and liabilities
- - Trade Debtors (7,196)
- - Inventory (994,500)
- - Loan Unsecured 33
- - Sundry Debtors (66,300)
- - Trade Creditors 9,700
- - Sundry Creditors 23,750 (1,034,513)
NET CASH USED IN OPERATING ACTIVITIES (1,183,425)
Cash Flow from Financing Activities:
- - Issue of ordinary stock adjusted
for currency translation 1,346,130
- - Adjustment for currency
translation 27,853 1,373,983
NET CASH USED IN FINANCING ACTIVITIES
Cash Flow from Investing Activities:
- - Acquisition of media rights (165,750)
- - Development costs capitalised (13,954)
- - Formation Expenses (829)
NET CASH USED IN INVESTING ACTIVITIES (180,533)
Increase (decrease) in cash 10,025
Cash at beginning of period 8
Cash at end of period 10,033
Supplemental disclosures of cash flow information:
Cash paid for interest 0
Cash paid for income taxes 0
The accompanying notes are an integral part of these condensed accounts.
<PAGE>
ASI ENTERTAINMENT PTY. LTD. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Presentation
The accompanying unaudited, condensed financial statements
have been prepared in accordance with the instructions to
Form 10-QSB, and therefore, do not include all information
and footnotes necessary for a complete presentation of the
results of operations, the financial position, and cash
flows, in conformity with generally accepted accounting
principles. This report on Form 10-QSB for the nine months
ended 31 March, 1998 should be read in conjunction with the
Company's annual report on Form 10-KSB for the year ended
June 30, 1997.
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. 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 and expenses during the
reporting period. Actual results could differ from those
estimates.
D. Foreign Currency Translation
The functional currency of the Company and its subsidiary
is the local currency. Financial statements for these
entities are translated into United States dollars at
period-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.
E. Income Taxes
The Company commenced operations on July 1, 1997, and has
not generated profits since that date. Accordingly, there
is no income tax liability at March 31, 1998.
NOTE 2 - INVENTORY
On September 30, 1997, the Company issued 15,000,000
ordinary shares of its capital (and 15,000,000 options to
purchase ordinary shares of the Company) in exchange for
certain ACAMS Systems and other inventories of ASI
Technologies Pty. Ltd. ( ASIT), having an approximate
value of $990,000.
<PAGE>
NOTE 3 - INVESTMENTS
Investments at March 31, 1998 consist of 100% of ASI Media
Pty. Ltd. and the cost of the 90% beneficial interest in
the ASI Media Unit Trust, taken up as Media Rights.
The total investment of $75 in ASI Media is eliminated in
consolidation.
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 effect 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 an investment in Media Rights, and
transferred the $298,350 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.
NOTE 4 - ORDINARY SHARE CAPITAL
At July 1, 1997, the Company had 17,779,920 ordinary shares
on issue.
In the period to March 31, 1998 the Company issued an
additional 20,550,000 ordinary shares. On September 30,
1997, the Company issued 15,000,000 ordinary shares of its
capital (and 15,000,000 options to purchase ordinary shares
of the Company) in exchange for certain ACAMS Systems and
other inventories of ASIT (refer Note 2.). On March 18,
1998 2,500,000 ordinary shares were issued to Vision, Inc.
in exchange for 50% of the units in the ASI Media Unit
Trust as referred to in Note 3. During the period a
further 3,050,000 ordinary shares have been issued to new
investors in the Company.
NOTE 5 - RELATED PARTY TRANSACTIONS
At June 30, 1997, ASIT was a 29.7% shareholder of the
Company. As discussed in Note 4 above, the Company entered
into an agreement with ASIT to purchase ACAMS systems and
other inventories in exchange for an additional 15,000,000
ordinary shares. These shares were subsequently
distributed by direction, reducing ASIT's shareholding in
the Company to 5,279,800 ordinary shares.
Certain directors of the Company are also directors of
ASIT.
<PAGE>
NOTE 6 - 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 using the purchase method
of accounting for financial reporting purposes.
Accordingly, the ASIEInc. 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 ASIE's net assets at fair market value
(acquired 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.
Common Stock Offering by Selling Securityholders of ASI
Entertainment, Inc.
ASIE Inc. is in the process of preparing for filing a
registration statement under Form SB-2 whereby the selling
securityholders of ASIE Inc will offer a certain
percentage, as defined in the offering document, of their
issued and outstanding common stock and common stock
options of ASIE Inc. ASIE Inc is not offering any shares
for sale as part of this filing and will not receive any
proceeds of the offering.
<PAGE>
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. <PAGE>
========================
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
----------
PROSPECTUS
----------
____, 1998
=======================
<PAGE>
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
$.0001 per share, to the following individuals or entities for the
consideration as listed in cash. If any of these sales were made
within the United States or to United States citizens or residents,
such sales were made in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. Pursuant to
the stock exchange agreement between ASI Entertainment Pty. Ltd. and
the Company, by which ASI Entertainment Pty. Ltd. became a subsidiary
of the Company, the Company issued 5,293,990 shares of Common Stock for
the outstanding stock of ASI Entertainment Pty. Ltd., which resulted
in an exchange ratio of eight shares of ASI Entertainment Pty. Ltd.
exchanged for each shares of Common Stock of the Company issued. The
chart herein below reflects the pre- and post-exchange numbers. Some
of holders of the shares listed below have subsequently transferred
their shares and the below list does not purport to be a current
listing of shareholders of the Company.
Number of Shares
Date Shareholder Pre-Exchange Post- Consid-
Exchange eration
(A$)
1/16/96 ASI Technologies Pty. 12,000,000 1,500,000 1,200,000
1/16/96 ASI Technologies Pty. 100 12.5 10
1/16/96 ASI Technologies Pty. 20 2.5 2
6/10/98 Instil Enterprises Pty. 500,000 62,500 50,000
12/16/96 ASI Technologies Pty. 5,279,800 659,975 527,980
8/08/97 Swiss Time Australia 650,000 81,250 65,000
08/97 Maxwell Grant Productions 250,000 31,250 25,000
9/30/97 Wardour Consultants
Limited 2,000,000 250,000 200,000
9/30/97 Research Trust No.1 6,500,000 812,500 650,000
9/30/97 Research Trust No.2 2,000,000 250,000 200,000
9/30/97 Wardour Consultants
Limited 4,500,000 562,500 450,000
1/29/98 Swiss Time Australia
Pty.Ltd. 1,500,000 187,500 150,000
1/29/98 Maxwell Grant Productions
Pty. Ltd. 400,000 50,000 40,000
1/30/96 ASI (Holdings) Pty.Ltd 500,000 62,500 50,000
2/01/98 Pierce Mill Associates,Inc. 417,189
3/18/98 Vision, Inc. 2,500,000 312,500 250,000
3/10/98 Albesda Pty.Ltd. 100,000 12,500 10,000
3/25/98 Nona Cole 150,000 18,750 15,000
5/16/98 Australian Authorised
Investments Ltd. 500,000 62,500 50,000
5/15/98 Research Trust No.1 300,000 37,500 30,000
5/15/98 John Tcheng 500,000 62,500 50,000
5/15/98 Irene Tcheng 600,000 75,000 60,000
5/15/98 Lesley Tcheng 120,000 15,000 12,000
5/15/98 Victoria Tcheng 120,000 15,000 12,000
5/15/98 Ky Ung Dzung 425,000 53,125 42,500
5/15/98 Charles Chan Lum Chow 600,000 75,000 60,000
5/15/98 Wolfgang Borner 165,000 20,625 16,500
5/15/98 Kiam Fong Ng 42,000 5,250 4,200
5/15/98 Beverly&David Chalmers 150,000 18,750 15,000
6/09/98 Capital General
Corporation, Ltd. 43,138 *****
<PAGE>
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* Stock Exchange Agreement between ASI Entertainment Pty. Ltd.
and ASI Entertainment, Inc.
10.2* Option Exchange 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. Contract with Air Europa
21.1* Subsidiaries of the Company
24.1 Consent of Accountant
24.2* Consent of Cassidy & Associates (included in Exhibit 5)
27* Financial Data Schedule
- ---------------
* To be filed by Amendment.
(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.
<PAGE>
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 7th day of August, 1998.
ASI ENTERTAINMENT, INC.
By: /s/ 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 August 7, 1998
/s/ Graham O. Chappell Director August 7, 1998
/s/ Philip A. Shiels Director August 7, 1998
/s/ Richard Mason Director August 7, 1998
CERTIFICATE OF INCORPORATION
OF
ASI ENTERTAINMENT, INC.
ARTICLE ONE
Name
The name of the Corporation is ASI Entertainment, Inc.
ARTICLE TWO
Duration
The Corporation shall have perpetual existence.
ARTICLE THREE
Purpose
The purpose for which this Corporation is organized is to
engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
ARTICLE FOUR
Shares
The total number of shares of stock which the Corporation shall
have authority to issue is 120,000,000 shares, consisting of
100,000,000 shares of Common Stock having a par value of $.0001 per
share and 20,000,000 shares of Preferred Stock having a par value of
$.0001 per share.
The Board of Directors is authorized to provide for the
issuance of the 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.
The authority of the Board of Directors with respect to each
series of Preferred Stock shall include, but not be limited to,
determination of the following:
A. The number of shares constituting that series and the
distinctive designation of that series;
B. The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates,
and the relative rights of priority, if any, of payment of dividends
on share of that series;
C. Whether that series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of such
voting rights;
D. Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events as
the Board of Directors shall determine;
E. Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable, and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates;
F. Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the
terms and amount of such sinking fund;
G. The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, and the relative rights of priority, if any, of
payment of shares of that series; and
H. Any other relative rights, preferences and limitations of
that series.
ARTICLE FIVE
Commencement of Business
The Corporation is authorized to commence business as soon as
its certificate of incorporation has been filed.
ARTICLE SIX
Principal Office and Registered Agent
The post office address of the initial registered office of the
Corporation and the name of its initial registered agent and its
business address is
The Prentice-Hall Corporation System, Inc.
1013 Centre Road
Wilmington, Delaware 19805 (County of New Castle)
The initial registered agent is a resident of the State of
Delaware.
ARTICLE SEVEN
Incorporator
Lee W. Cassidy, 1504 R Street, N.W., Washington, D.C. 20009.
ARTICLE EIGHT
Pre-Emptive Rights
No Shareholder or other person shall have any pre-emptive
rights whatsoever.
ARTICLE NINE
By-Laws
The initial by-laws shall be adopted by the Shareholders or the
Board of Directors. The power to alter, amend, or repeal the
by-laws or adopt new by-laws is vested in the Board of Directors,
subject to repeal or change by action of the Shareholders.
ARTICLE TEN
Number of Votes
Each share of Common Stock has one vote on each matter on which
the share is entitled to vote.
ARTICLE ELEVEN
Majority Votes
A majority vote of a quorum of Shareholders (consisting of the
holders of a majority of the shares entitled to vote, represented in
person or by proxy) is sufficient for any action which requires the
vote or concurrence of Shareholders, unless otherwise required or
permitted by law or the by-laws of the Corporation.
ARTICLE TWELVE
Non-Cumulative Voting
Directors shall be elected by majority vote. Cumulative voting
shall not be permitted.
ARTICLE THIRTEEN
Interested Directors, Officers and Securityholders
A. Validity. If Paragraph (B) is satisfied, no contract or
other transaction between the Corporation and any of its directors,
officers or securityholders, or any corporation or firm in which any
of them are directly or indirectly interested, shall be invalid
solely because of this relationship or because of the presence of
the director, officer or securityholder at the meeting of the Board
of Directors or committee authorizing the contract or transaction,
or his participation or vote in the meeting or authorization.
B. Disclosure, Approval, Fairness. Paragraph (A) shall apply
only if:
(1) The material facts of the relationship or interest of each
such director, officer or securityholder are known or disclosed:
(a) to the Board of Directors or the committee and it
nevertheless authorizes or ratifies the contract or transaction by a
majority of the directors present, each such interested director to
be counted in determining whether a quorum is present but not in
calculating the majority necessary to carry the vote; or
(b) to the Shareholders and they nevertheless authorize or
ratify the contract or transaction by a majority of the shares
present, each such interested person to be counted for quorum and
voting purposes; or
(2) the contract or transaction is fair to the Corporation as
of the time it is authorized or ratified by the Board of Directors,
the committee or the Shareholders.
ARTICLE FOURTEEN
Indemnification and Insurance
A. Persons. The Corporation shall indemnify, to the extent
provided in Paragraphs (B), (D) or (F) and to the extent permitted
from time to time by law:
(1) any person who is or was director, officer, agent or
employee of the Corporation, and
(2) any person who serves or served at the Corporation's
request as a director, officer, agent, employee, partner or trustee
of another corporation or of a partnership, joint venture, trust or
other enterprise.
B. Extent--Derivative Suits. In case of a suit by or in the
right of the Corporation against a person named in Paragraph (A) by
reason of his holding a position named in Paragraph (A), the
Corporation shall indemnify him, if he satisfies the standard in
Paragraph (C), for expenses (including attorney's fees but excluding
amounts paid in settlement) actually and reasonably incurred by him
in connection with the defense or settlement of the suit.
C. Standard--Derivative Suits. In case of a suit by or in the
right of the Corporation, a person named in Paragraph (A) shall be
indemnified only if:
(1) he is successful on the merits or otherwise, or
(2) he acted in good faith in the transaction which is the
subject of the suit, and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the Corporation.
However, he shall not be indemnified in respect of any claim, issue
or matter as to which he has been adjudged liable for negligence or
misconduct in the performance of his duty to the Corporation unless
(and only to the extent that) the court in which the suit was
brought shall determine, upon application, that despite the
adjudication but in view of all the circumstances, he is fairly and
reasonably entitled to indemnity for such expenses as the court
shall deem proper.
D. Extent--Nonderivative Suits. In case of a suit, action or
proceeding (whether civil, criminal, administrative or
investigative), other than a suit by or in the right of the
Corporation against a person named in Paragraph (A) by reason of his
holding a position named in Paragraph (A), the Corporation shall
indemnify him, if he satisfies the standard in Paragraph (E), for
amounts actually and reasonably incurred by him in connection with
the defense or settlement of the suit as
(1) expenses (including attorneys' fees),
(2) amounts paid in settlement
(3) judgments, and
(4) fines.
E. Standard--Nonderivative Suits. In case of a nonderivative
suit, a person named in Paragraph (A) shall be indemnified only if:
(1) he is successful on the merits or otherwise, or
(2) he acted in good faith in the transaction which is the
subject of the nonderivative suit, and in a manner 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,
he had no reason to believe his conduct was unlawful. The
termination of a nonderivative suit by judgement, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the person failed to
satisfy this Paragraph (E) (2).
F. Determination That Standard Has Been Met. A determination
that the standard of Paragraph (C) or (E) has been satisfied may be
made by a court of law or equity or the determination may be made by:
(1) a majority of the directors of the Corporation (whether or
not a quorum) who were not parties to the action, suit or
proceeding, or
(2) independent legal counsel (appointed by a majority of the
directors of the Corporation, whether or not a quorum, or elected by
the Shareholders of the Corporation) in a written opinion, or
(3) the Shareholders of the Corporation.
G. Proration. Anyone making a determination under Paragraph
(F) may determine that a person has met the standard as to some
matters but not as to others, and may reasonably prorate amounts to
be indemnified.
H. Advance Payment. The Corporation may pay in advance any
expenses (including attorney's fees) which may become subject to
indemnification under paragraphs (A) - (G) if:
(1) the Board of Directors authorizes the specific payment and
(2) the person receiving the payment undertakes in writing to
repay unless it is ultimately determined that he is entitled to
indemnification by the Corporation under Paragraphs (A) - (G).
I. Nonexclusive. The indemnification provided by Paragraphs
(A) - (G) shall not be exclusive of any other rights to which a
person may be entitled by law or by by-law, agreement, vote of
Shareholders or disinterested directors, or otherwise.
J. Continuation. The indemnification and advance payment
provided by Paragraphs (A) - (H) shall continue as to a person who
has ceased to hold a position named in paragraph (A) and shall inure
to his heirs, executors and administrators.
K. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who holds or who has held any
position named in Paragraph (A) against any liability incurred by
him in any such positions or arising out of this status as such,
whether or not the Corporation would have power to indemnify him
against such liability under Paragraphs (A) - (H).
L. Reports. Indemnification payments, advance payments, and
insurance purchases and payments made under Paragraphs (A) - (K)
shall be reported in writing to the Shareholders of the Corporation
with the next notice of annual meeting, or within six months,
whichever is sooner.
M. Amendment of Article. Any changes in the General
Corporation Law of Delaware increasing, decreasing, amending,
changing or otherwise effecting the indemnification of directors,
officers, agents, or employees of the Corporation shall be
incorporated by reference in this Article as of the date of such
changes without further action by the Corporation, its Board of
Directors, of Shareholders, it being the intention of this Article
that directors, officers, agents and employees of the Corporation
shall be indemnified to the maximum degree allowed by the General
Corporation Law of the State of Delaware at all times.
ARTICLE FIFTEEN
Limitation On Director Liability
A. Scope of Limitation. No person, by virtue of being or
having been a director of the Corporation, shall have any personal
liability for monetary damages to the Corporation or any of its
Shareholders for any breach of fiduciary duty except as to the
extent provided in Paragraph (B).
B. Extent of Limitation. The limitation provided for in this
Article shall not eliminate or limit the liability of a director to
the Corporation or its Shareholders (i) for any breach of the
director's duty of loyalty to the Corporation or its Shareholders
(ii) for any acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law (iii) for any
unlawful payment of dividends or unlawful stock purchases or
redemptions in violation of Section 174 of the General Corporation
Law of Delaware or (iv) for any transaction for which the director
derived an improper personal benefit.
IN WITNESS WHEREOF, the incorporator hereunto has executed this
certificate of incorporation on this 24th day of April, 1998.
Lee W. Cassidy, Incorporator
ASI ENTERTAINMENT, INC.
BY-LAWS
ARTICLE I
The Stockholders
SECTION 1.1. ANNUAL MEETING. The annual meeting of the
stockholders of ASI Entertainment, Inc. (the "Corporation") shall be
held on the third Thursday in May of each year at 10:30 a.m. local
time, or at such other date or time as shall be designated from time
to time by the Board of Directors and stated in the notice of the
meeting, for the election of directors and for the transaction of
such other business as may come before the meeting.
SECTION 1.2. SPECIAL MEETINGS. A special meeting of the
stockholders may be called at any time by the written resolution or
request of two-thirds or more of the members of the Board of
Directors, the president, or any executive vice president and shall
be called upon the written request of the holders of two-thirds or
more in amount, of each class or series of the capital stock of the
Corporation entitled to vote at such meeting on the matters(s) that
are the subject of the proposed meeting, such written request in
each case to specify the purpose or purposes for which such meeting
shall be called, and with respect to stockholder proposals, shall
further comply with the requirements of this Article.
SECTION 1.3. NOTICE OF MEETINGS. Written notice of each
meeting of stockholders, whether annual or special, stating the
date, hour and place where it is to be held, shall be served either
personally or by mail, not less than fifteen nor more than sixty
days before the meeting, upon each stockholder of record entitled to
vote at such meeting, and to any other stockholder to whom the
giving of notice may be required by law. Notice of a special
meeting shall also state the purpose or purposes for which the
meeting is called and shall indicate that it is being issued by, or
at the direction of, the person or persons calling the meeting. If,
at any meeting, action is proposed to be taken that would, if taken,
entitle stockholders to receive payment for their stock, the notice
of such meeting shall include a statement of that purpose and to
that effect. If mailed, notice shall be deemed to be delivered when
deposited in the United States mail or with any private express mail
service, postage or delivery fee prepaid, and shall be directed to
each such stockholder at his address, as it appears on the records
of the stockholders of the Corporation, unless he shall have
previously filed with the secretary of the Corporation a written
request that notices intended for him be mailed to some other
address, in which case, it shall be mailed to the address designated
in such request.
SECTION 1.4. FIXING DATE OF RECORD. (a) In order that the
Corporation may determine the stockholders entitled to notice of or
to vote at any meeting of stockholders, or any adjournment thereof,
the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the
date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to
notice of, or to vote at, a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice
is given, or if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of, or to
vote at, a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may fix
a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing
without a meeting (to the extent that such action by written consent
is permitted by law, the Certificate of Incorporation and these
By-Laws), the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which date
shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of
Directors, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is required by law, shall be
the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation
by delivery to its registered office in its state of incorporation,
its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has
been fixed by the Board of Directors and prior action by the Board
of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior
action.
(c) In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders entitled
to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than
sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall
be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
SECTION 1.5. INSPECTORS. At each meeting of the stockholders,
the polls shall be opened and closed and the proxies and ballots
shall be received and be taken in charge. All questions touching on
the qualification of voters and the validity of proxies and the
acceptance or rejection of votes, shall be decided by one or more
inspectors. Such inspectors shall be appointed by the Board of
Directors before or at the meeting, or, if no such appointment shall
have been made, then by the presiding officer at the meeting. If
for any reason any of the inspectors previously appointed shall fail
to attend or refuse or be unable to serve, inspectors in place of
any so failing to attend or refusing or unable to serve shall be
appointed in like manner.
SECTION 1.6. QUORUM. At any meeting of the stockholders the
holders of such number of all of the outstanding shares of the
capital stock of the Corporation taken together as a single class as
represents one-third of all votes that may be made at such meeting,
present in person or represented by proxy, shall constitute a quorum
of the stockholders for all purposes, unless the representation of a
larger number shall be required by law, and, in that case, the
representation of the number so required shall constitute a quorum.
If the holders of the amount of stock necessary to constitute a
quorum shall fail to attend in person or by proxy at the time and
place fixed in accordance with these By-Laws for an annual or
special meeting, a majority in interest of the stockholders present
in person or by proxy may adjourn, from time to time, without notice
other than by announcement at the meeting, until holders of the
amount of stock requisite to constitute a quorum shall attend. At
any such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the
meeting as originally notified.
SECTION 1.7. BUSINESS. The chairman of the Board, if any, the
president, or in his absence the vice-chairman, if any, or an
executive vice president, in the order named, shall call meetings of
the stockholders to order, and shall act as chairman of such
meeting; provided, however, that the Board of Directors or executive
committee may appoint any stockholder to act as chairman of any
meeting in the absence of the chairman of the Board. The secretary
of the Corporation shall act as secretary at all meetings of the
stockholders, but in the absence of the secretary at any meeting of
the stockholders, the presiding officer may appoint any person to
act as secretary of the meeting.
SECTION 1.8. STOCKHOLDER PROPOSALS. No proposal by a
stockholder shall be presented for vote at a special or annual
meeting of stockholders unless such stockholder shall, not later
than the close of business on the fifth day following the date on
which notice of the meeting is first given to stockholders, provide
the Board of Directors or the secretary of the Corporation with
written notice of intention to present a proposal for action at the
forthcoming meeting of stockholders, which notice shall include the
name and address of such stockholder, the number of voting
securities that he holds of record and that he holds beneficially,
the text of the proposal to be presented to the meeting and a
statement in support of the proposal.
Any stockholder who was a stockholder of record on the
applicable record date may make any other proposal at an annual
meeting or special meeting of stockholders and the same may be
discussed and considered, but unless stated in writing and filed
with the Board of Directors or the secretary prior to the date set
forth hereinabove, such proposal shall be laid over for action at an
adjourned, special, or annual meeting of the stockholders taking
place sixty days or more thereafter. This provision shall not
prevent the consideration and approval or disapproval at the annual
meeting of reports of officers, directors, and committees, but in
connection with such reports, no new business proposed by a
stockholder, qua stockholder, shall be acted upon at such annual
meeting unless stated and filed as herein provided.
Notwithstanding any other provision of these By-Laws, the
Corporation shall be under no obligation to include any stockholder
proposal in its proxy statement materials or otherwise present any
such proposal to stockholders at a special or annual meeting of
stockholders if the Board of Directors reasonably believes the
proponents thereof have not complied with Sections 13 or 14 of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder; nor shall the Corporation be required to
include any stockholder proposal not required to be included in its
proxy materials to stockholders in accordance with any such section,
rule or regulation.
SECTION 1.9. PROXIES. At all meetings of stockholders, a
stockholder entitled to vote may vote either in person or by proxy
executed in writing by the stockholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the secretary
before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise
provided in the proxy.
SECTION 1.10. VOTING BY BALLOT. The votes for directors, and
upon the demand of any stockholder or when required by law, the
votes upon any question before the meeting, shall be by ballot.
SECTION 1.11. VOTING LISTS. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten
days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and
the number of shares of stock registered in the name of each
stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary
business hours for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is
to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof and may be
inspected by any stockholder who is present.
SECTION 1.12. PLACE OF MEETING. The Board of Directors may
designate any place, either within or without the state of
incorporation, as the place of meeting for any annual meeting or any
special meeting called by the Board of Directors. If no designation
is made or if a special meeting is otherwise called, the place of
meeting shall be the principal office of the Corporation.
SECTION 1.13. VOTING OF STOCK OF CERTAIN HOLDERS. Shares of
capital stock of the Corporation standing in the name of another
corporation, domestic or foreign, may be voted by such officer,
agent, or proxy as the by-laws of such corporation may prescribe, or
in the absence of such provision, as the board of directors of such
corporation may determine.
Shares of capital stock of the Corporation standing in the name
of a deceased person, a minor ward or an incompetent person may be
voted by his administrator, executor, court-appointed guardian or
conservator, either in person or by proxy, without a transfer of
such stock into the name of such administrator, executor,
court-appointed guardian or conservator. Shares of capital stock of
the Corporation standing in the name of a trustee may be voted by
him, either in person or by proxy.
Shares of capital stock of the Corporation standing in the name
of a receiver may be voted, either in person or by proxy, by such
receiver, and stock held by or under the control of a receiver may
be voted by such receiver without the transfer thereof into his name
if authority to do so is contained in any appropriate order of the
court by which such receiver was appointed.
A stockholder whose stock is pledged shall be entitled to vote
such stock, either in person or by proxy, until the stock has been
transferred into the name of the pledgee, and thereafter the pledgee
shall be entitled to vote, either in person or by proxy, the stock
so transferred.
Shares of its own capital stock belonging to this Corporation
shall not be voted, directly or indirectly, at any meeting and shall
not be counted in determining the total number of outstanding stock
at any given time, but shares of its own stock held by it in a
fiduciary capacity may be voted and shall be counted in determining
the total number of outstanding stock at any given time.
ARTICLE II
Board of Directors
SECTION 2.1. GENERAL POWERS. The business, affairs, and the
property of the Corporation shall be managed and controlled by the
Board of Directors (the "Board"), and, except as otherwise expressly
provided by law, the Certificate of Incorporation or these By-Laws,
all of the powers of the Corporation shall be vested in the Board.
SECTION 2.2. NUMBER OF DIRECTORS. The number of directors
which shall constitute the whole Board shall be not fewer than one
nor more than five. Within the limits above specified, the number
of directors shall be determined by the Board of Directors pursuant
to a resolution adopted by a majority of the directors then in
office.
SECTION 2.3. ELECTION, TERM AND REMOVAL. Directors shall be
elected at the annual meeting of stockholders to succeed those
directors whose terms have expired. Each director shall hold office
for the term for which elected and until his or her successor shall
be elected and qualified. Directors need not be stockholders. A
director may be removed from office at a meeting expressly for that
purpose by the vote of stockholders holding not less than two-thirds
of the shares entitled to vote at an election of directors.
SECTION 2.4. VACANCIES. Vacancies in the Board of Directors,
including vacancies resulting from an increase in the number of
directors, may be filled by the affirmative vote of a majority of
the remaining directors then in office, though less than a quorum;
except that vacancies resulting from removal from office by a vote
of the stockholders may be filled by the stockholders at the same
meeting at which such removal occurs provided that the holders of
not less than two-thirds of the outstanding capital stock of the
Corporation (assessed upon the basis of votes and not on the basis
of number of shares) entitled to vote for the election of directors,
voting together as a single class, shall vote for each replacement
director. All directors elected to fill vacancies shall hold office
for a term expiring at the time of the next annual meeting of
stockholders and upon election and qualification of his successor.
No decrease in the number of directors constituting the Board of
Directors shall shorten the term of an incumbent director.
SECTION 2.5. RESIGNATIONS. Any director of the Corporation
may resign at any time by giving written notice to the president or
to the secretary of the Corporation. The resignation of any
director shall take effect at the time specified therein and, unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
SECTION 2.6. PLACE OF MEETINGS, ETC. The Board of Directors
may hold its meetings, and may have an office and keep the books of
the Corporation (except as otherwise may be provided for by law), in
such place or places in or outside the state of incorporation as the
Board from time to time may determine.
SECTION 2.7. REGULAR MEETINGS. Regular meetings of the Board
of Directors shall be held as soon as practicable after adjournment
of the annual meeting of stockholders at such time and place as the
Board of Directors may fix. No notice shall be required for any
such regular meeting of the Board.
SECTION 2.8. SPECIAL MEETINGS. Special meetings of the Board
of Directors shall be held at places and times fixed by resolution
of the Board of Directors, or upon call of the chairman of the
Board, if any, or vice-chairman of the Board, if any, the president,
an executive vice president or two-thirds of the directors then in
office.
The secretary or officer performing the secretary's duties
shall give not less than twenty-four hours' notice by letter,
telegraph or telephone (or in person) of all special meetings of the
Board of Directors, provided that notice need not given of the
annual meeting or of regular meetings held at times and places fixed
by resolution of the Board. Meetings may be held at any time
without notice if all of the directors are present, or if those not
present waive notice in writing either before or after the meeting.
The notice of meetings of the Board need not state the purpose of
the meeting.
SECTION 2.9. PARTICIPATION BY CONFERENCE TELEPHONE. Members
of the Board of Directors of the Corporation, or any committee
thereof, may participate in a regular or special or any other
meeting of the Board or committee by means of conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
SECTION 2.10. ACTION BY WRITTEN CONSENT. Any action required
or permitted to be taken at any meeting of the Board of Directors,
or of any committee thereof, may be taken without a meeting if prior
or subsequent to such action all the members of the Board or such
committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of
the Board or committee.
SECTION 2.11. QUORUM. A majority of the total number of
directors then in office shall constitute a quorum for the
transaction of business; but if at any meeting of the Board there be
less than a quorum present, a majority of those present may adjourn
the meeting from time to time.
SECTION 2.12. BUSINESS. Business shall be transacted at
meetings of the Board of Directors in such order as the Board may
determine. At all meetings of the Board of Directors, the chairman
of the Board, if any, the president, or in his absence the
vice-chairman, if any, or an executive vice president, in the order
named, shall preside.
SECTION 2.13. INTEREST OF DIRECTORS IN CONTRACTS. (a) No
contract or transaction between the Corporation and one or more of
its directors or officers, or between the Corporation and any other
corporation, partnership, association, or other organization in
which one or more of the Corporation's directors or officers, are
directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board
or committee which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if:
(1) The material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are
known to the Board of Directors or the committee, and the
Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of
the disinterested directors, even though the disinterested
directors be less than a quorum; or
(2) The material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are
known to the stockholders entitled to vote thereon, and
the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by
the Board of Directors, a committee of the Board of
Directors or the stockholders.
(b) Interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a
committee which authorizes the contract or transaction.
SECTION 2.14. COMPENSATION OF DIRECTORS. Each director of the
Corporation who is not a salaried officer or employee of the
Corporation, or of a subsidiary of the Corporation, shall receive
such allowances for serving as a director and such fees for
attendance at meetings of the Board of Directors or the executive
committee or any other committee appointed by the Board as the Board
may from time to time determine.
SECTION 2.15. LOANS TO OFFICERS OR EMPLOYEES. The Board of
Directors may lend money to, guarantee any obligation of, or
otherwise assist, any officer or other employee of the Corporation
or of any subsidiary, whether or not such officer or employee is
also a director of the Corporation, whenever, in the judgment of the
directors, such loan, guarantee, or assistance may reasonably be
expected to benefit the Corporation; provided, however, that any
such loan, guarantee, or other assistance given to an officer or
employee who is also a director of the Corporation must be
authorized by a majority of the entire Board of Directors. Any such
loan, guarantee, or other assistance may be made with or without
interest and may be unsecured or secured in such manner as the Board
of Directors shall approve, including, but not limited to, a pledge
of shares of the Corporation, and may be made upon such other terms
and conditions as the Board of Directors may determine.
SECTION 2.16. NOMINATION. Subject to the rights of holders of
any class or series of stock having a preference over the common
stock as to dividends or upon liquidation, nominations for the
election of directors may be made by the Board of Directors or by
any stockholder entitled to vote in the election of directors
generally. However, any stockholder entitled to vote in the
election of directors generally may nominate one or more persons for
election as directors at a meeting only if written notice of such
stockholder's intent to make such nomination or nominations has been
given, either by personal delivery or by United States mail, postage
prepaid, to the secretary of the Corporation not later than (i) with
respect to an election to be held at an annual meeting of
stockholders, the close of business on the last day of the eighth
month after the immediately preceding annual meeting of
stockholders, and (ii) with respect to an election to be held at a
special meeting of stockholders for the election of directors, the
close of business on the fifth day following the date on which
notice of such meeting is first given to stockholders. Each such
notice shall set forth: (a) the name and address of the stockholder
who intends to make the nomination and of the person or persons to
be nominated; (b) a representation that the stockholder is a holder
of record of stock of the Corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting
to nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as
would be required to be included in a proxy statement filed pursuant
to the proxy rules of the Securities and Exchange Commission, had
the nominee been nominated, or intended to be nominated, by the
Board of Directors, and; (e) the consent of each nominee to serve as
a director of the Corporation if so elected. The presiding officer
at the meeting may refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedure.
ARTICLE III
Committees
SECTION 3.1. COMMITTEES. The Board of Directors, by
resolution adopted by a majority of the number of directors then
fixed by these By-Laws or resolution thereto, may establish such
standing or special committees of the Board as it may deem
advisable, and the members, terms, and authority of such committees
shall be set forth in the reslutions establishing such committee.
SECTION 3.2. EXECUTIVE COMMITTEE NUMBER AND TERM OF OFFICE.
The Board of Directors may, at any meeting, by majority vote of the
Board of Directors, elect from the directors an executive committee.
The executive committee shall consist of such number of members as
may be fixed from time to time by resolution of the Board of
Directors. The Board of Directors may designate a chairman of the
committee who shall preside at all meetings thereof, and the
committee shall designate a member thereof to preside in the absence
of the chairman.
SECTION 3.3. EXECUTIVE COMMITTEE POWERS. The executive
committee may, while the Board of Directors is not in session,
exercise all or any of the powers of the Board of Directors in all
cases in which specific directions shall not have been given by the
Board of Directors; except that the executive committee shall not
have the power or authority of the Board of Directors to (i) amend
the Certificate of Incorporation or the By-Laws of the Corporation,
(ii) fill vacancies on the Board of Directors, (iii) adopt an
agreement or certification of ownership, merger or consolidation,
(iv) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets,
or a dissolution of the Corporation or a revocation of a
dissolution, (v) declare a dividend, or (vi) authorize the issuance
of stock.
SECTION 3.4. EXECUTIVE COMMITTEE MEETINGS. Regular and
special meetings of the executive committee may be called and held
subject to the same requirements with respect to time, place and
notice as are specified in these By-Laws for regular and special
meetings of the Board of Directors. Special meetings of the
executive committee may be called by any member thereof. Unless
otherwise indicated in the notice thereof, any and all business may
be transacted at a special or regular meeting of the executive
meeting if a quorum is present. At any meeting at which every
member of the executive committee shall be present, in person or by
telephone, even though without any notice, any business may be
transacted. All action by the executive committee shall be reported
to the Board of Directors at its meeting next succeeding such
action.
The executive committee shall fix its own rules of procedure,
and shall meet where and as provided by such rules or by resolution
of the Board of Directors, but in every case the presence of a
majority of the total number of members of the executive committee
shall be necessary to constitute a quorum. In every case, the
affirmative vote of a quorum shall be necessary for the adoption of
any resolution.
SECTION 3.5. EXECUTIVE COMMITTEE VACANCIES. The Board of
Directors, by majority vote of the Board of Directors then in
office, shall fill vacancies in the executive committee by election
from the directors.
ARTICLE IV
The Officers
SECTION 4.1. NUMBER AND TERM OF OFFICE. The officers of the
Corporation shall consist of, as the Board of Directors may
determine and appoint from time to time, a chief executive officer,
a president, one or more executive vice-presidents, a secretary, a
treasurer, a controller, and/or such other officers as may from time
to time be elected or appointed by the Board of Directors, including
such additional vice-presidents with such designations, if any, as
may be determined by the Board of Directors and such assistant
secretaries and assistant treasurers. In addition, the Board of
Directors may elect a chairman of the Board and may also elect a
vice-chairman as officers of the Corporation. Any two or more
offices may be held by the same person. In its discretion, the
Board of Directors may leave unfilled any office except as may be
required by law.
The officers of the Corporation shall be elected or appointed
from time to time by the Board of Directors. Each officer shall
hold office until his successor shall have been duly elected or
appointed or until his death or until he shall resign or shall have
been removed by the Board of Directors.
Each of the salaried officers of the Corporation shall devote
his entire time, skill and energy to the business of the
Corporation, unless the contrary is expressly consented to by the
Board of Directors or the executive committee.
SECTION 4.2. REMOVAL. Any officer may be removed by the Board
of Directors whenever, in its judgment, the best interests of the
Corporation would be served thereby.
SECTION 4.3. THE CHAIRMAN OF THE BOARD. The chairman of the
Board, if any, shall preside at all meetings of stockholders and of
the Board of Directors and shall have such other authority and
perform such other duties as are prescribed by law, by these By-Laws
and by the Board of Directors. The Board of Directors may designate
the chairman of the Board as chief executive officer, in which case
he shall have such authority and perform such duties as are
prescribed by these By-Laws and the Board of Directors for the chief
executive officer.
SECTION 4.4. THE VICE-CHAIRMAN. The vice-chairman, if any,
shall have such authority and perform such other duties as are
prescribed by these By-Laws and by the Board of Directors. In the
absence or inability to act of the chairman of the Board and the
president, he shall preside at the meetings of the stockholders and
of the Board of Directors and shall have and exercise all of the
powers and duties of the chairman of the Board. The Board of
Directors may designate the vice-chairman as chief executive
officer, in which case he shall have such authority and perform such
duties as are prescribed by these By-Laws and the Board of Directors
for the chief executive officer.
SECTION 4.5. THE PRESIDENT. The president shall have such
authority and perform such duties as are prescribed by law, by these
By-Laws, by the Board of Directors and by the chief executive
officer (if the president is not the chief executive officer). The
president, if there is no chairman of the Board, or in the absence
or the inability to act of the chairman of the Board, shall preside
at all meetings of stockholders and of the Board of Directors.
Unless the Board of Directors designates the chairman of the Board
or the vice-chairman as chief executive officer, the president shall
be the chief executive officer, in which case he shall have such
authority and perform such duties as are prescribed by these By-Laws
and the Board of Directors for the chief executive officer.
SECTION 4.6. THE CHIEF EXECUTIVE OFFICER. Unless the Board of
Directors designates the chairman of the Board or the vice-chairman
as chief executive officer, the president shall be the chief
executive officer. The chief executive officer of the Corporation
shall have, subject to the supervision and direction of the Board of
Directors, general supervision of the business, property and affairs
of the Corporation, including the power to appoint and discharge
agents and employees, and the powers vested in him by the Board of
Directors, by law or by these By-Laws or which usually attach or
pertain to such office.
SECTION 4.7. THE EXECUTIVE VICE-PRESIDENTS. In the absence of
the chairman of the Board, if any, the president and the
vice-chairman, if any, or in the event of their inability or refusal
to act, the executive vice-president (or in the event there is more
than one executive vice-president, the executive vice-presidents in
the order designated, or in the absence of any designation, then in
the order of their election) shall perform the duties of the
chairman of the Board, of the president and of the vice-chairman,
and when so acting, shall have all the powers of and be subject to
all the restrictions upon the chairman of the Board, the president
and the vice-chairman. Any executive vice-president may sign, with
the secretary or an authorized assistant secretary, certificates for
stock of the Corporation and shall perform such other duties as from
time to time may be assigned to him by the chairman of the Board,
the president, the vice-chairman, the Board of Directors or these
By-Laws.
SECTION 4.8. THE VICE-PRESIDENTS. The vice-presidents, if
any, shall perform such duties as may be assigned to them from time
to time by the chairman of the Board, the president, the
vice-chairman, the Board of Directors, or these By-Laws.
SECTION 4.9. THE TREASURER. Subject to the direction of chief
executive officer and the Board of Directors, the treasurer shall
have charge and custody of all the funds and securities of the
Corporation; when necessary or proper he shall endorse for
collection, or cause to be endorsed, on behalf of the Corporation,
checks, notes and other obligations, and shall cause the deposit of
the same to the credit of the Corporation in such bank or banks or
depositary as the Board of Directors may designate or as the Board
of Directors by resolution may authorize; he shall sign all receipts
and vouchers for payments made to the Corporation other than routine
receipts and vouchers, the signing of which he may delegate; he
shall sign all checks made by the Corporation (provided, however,
that the Board of Directors may authorize and prescribe by
resolution the manner in which checks drawn on banks or depositaries
shall be signed, including the use of facsimile signatures, and the
manner in which officers, agents or employees shall be authorized to
sign); unless otherwise provided by resolution of the Board of
Directors, he shall sign with an officer-director all bills of
exchange and promissory notes of the Corporation; whenever required
by the Board of Directors, he shall render a statement of his cash
account; he shall enter regularly full and accurate account of the
Corporation in books of the Corporation to be kept by him for that
purpose; he shall, at all reasonable times, exhibit his books and
accounts to any director of the Corporation upon application at his
office during business hours; and he shall perform all acts incident
to the position of treasurer. If required by the Board of
Directors, the treasurer shall give a bond for the faithful
discharge of his duties in such sum and with such sure ties as the
Board of Directors may require.
SECTION 4.10. THE SECRETARY. The secretary shall keep the
minutes of all meetings of the Board of Directors, the minutes of
all meetings of the stockholders and (unless otherwise directed by
the Board of Directors) the minutes of all committees, in books
provided for that purpose; he shall attend to the giving and serving
of all notices of the Corporation; he may sign with an
officer-director or any other duly authorized person, in the name of
the Corporation, all contracts authorized by the Board of Directors
or by the executive committee, and, when so ordered by the Board of
Directors or the executive committee, he shall affix the seal of the
Corporation thereto; he may sign with the president or an executive
vice-president all certificates of shares of the capital stock; he
shall have charge of the certificate books, transfer books and stock
ledgers, and such other books and papers as the Board of Directors
or the executive committee may direct, all of which shall, at all
reasonable times, be open to the examination of any director, upon
application at the secretary's office during business hours; and he
shall in general perform all the duties incident to the office of
the secretary, subject to the control of the chief executive officer
and the Board of Directors.
SECTION 4.11. THE CONTROLLER. The controller shall be the
chief accounting officer of the Corporation. Subject to the
supervision of the Board of Directors, the chief executive officer
and the treasurer, the controller shall provide for and maintain
adequate records of all assets, liabilities and transactions of the
Corporation, shall see that accurate audits of the Corporation's
affairs are currently and adequately made and shall perform such
other duties as from time to time may be assigned to him.
SECTION 4.12. THE ASSISTANT TREASURERS AND ASSISTANT
SECRETARIES. The assistant treasurers shall respectively, if
required by the Board of Directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as the
Board of Directors may determine. The assistant secretaries as
thereunto authorized by the Board of Directors may sign with the
chairman of the Board, the president, the vice-chairman or an
executive vice-president, certificates for stock of the Corporation,
the issue of which shall have been authorized by a resolution of the
Board of Directors. The assistant treasurers and assistant
secretaries, in general, shall perform such duties as shall be
assigned to them by the treasurer or the secretary, respectively, or
chief executive officer, the Board of Directors, or these By-Laws.
SECTION 4.13. SALARIES. The salaries of the officers shall be
fixed from time to time by the Board of Directors, and no officer
shall be prevented from receiving such salary by reason of the fact
that he is also a director of the Corporation.
SECTION 4.14. VOTING UPON STOCKS. Unless otherwise ordered by
the Board of Directors or by the executive committee, any officer,
director or any person or persons appointed in writing by any of
them, shall have full power and authority in behalf of the
Corporation to attend and to act and to vote at any meetings of
stockholders of any corporation in which the Corporation may hold
stock, and at any such meeting shall possess and may exercise any
and all the rights and powers incident to the ownership of such
stock, and which, as the owner thereof, the Corporation might have
possessed and exercised if present. The Board of Directors may
confer like powers upon any other person or persons.
ARTICLE V
Contracts and Loans
SECTION 5.1. CONTRACTS. The Board of Directors may authorize
any officer or officers, agent or agents, to enter into any contract
or execute and deliver any instrument in the name of and on behalf
of the Corporation, and such authority may be general or confined to
specific instances.
SECTION 5.2. LOANS. No loans shall be contracted on behalf of
the Corporation and no evidences of indebtedness shall be issued in
its name unless authorized by a resolution of the Board of
Directors. Such authority may be general or confined to specific
instances.
ARTICLE VI
Certificates for Stock and Their Transfer
SECTION 6.1. CERTIFICATES FOR STOCK. Certificates
representing stock of the Corporation shall be in such form as may
be determined by the Board of Directors. Such certificates shall be
signed by the chairman of the Board, the president, the
vice-chairman or an executive vice-president and/or by the secretary
or an authorized assistant secretary and shall be sealed with the
seal of the Corporation. The seal may be a facsimile. If a stock
certificate is countersigned (i) by a transfer agent other than the
Corporation or its employee, or (ii) by a registrar other than the
Corporation or its employee, any other signature on the certificate
may be a facsimile. In the event that any officer, transfer agent
or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer,
transfer agent, or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue. All
certificates for stock shall be consecutively numbered or otherwise
identified. The name of the person to whom the shares of stock
represented thereby are issued, with the number of shares of stock
and date of issue, shall be entered on the books of the Corporation.
All certificates surrendered to the Corporation for transfer shall
be canceled and no new certificates shall be issued until the former
certificate for a like number of shares of stock shall have been
surrendered and canceled, except that, in the event of a lost,
destroyed or mutilated certificate, a new one may be issued therefor
upon such terms and indemnity to the Corporation as the Board of
Directors may prescribe.
SECTION 6.2. TRANSFERS OF STOCK. Transfers of stock of the
Corporation shall be made only on the books of the Corporation by
the holder of record thereof or by his legal representative, who
shall furnish proper evidence of authority to transfer, or by his
attorney thereunto authorized by power of attorney duly executed and
filed with the secretary of the Corporation, and on surrender for
cancellation of the certificate for such stock. The person in whose
name stock stands on the books of the Corporation shall be deemed
the owner thereof for all purposes as regards the Corporation.
ARTICLE VII
Fiscal Year
SECTION 7.1. FISCAL YEAR. The fiscal year of the Corporation
shall begin on the first day of July in each year and end on the
last day of June in each year.
ARTICLE VIII
Seal
SECTION 8.1. SEAL. The Board of Directors shall approve a
corporate seal which shall be in the form of a circle and shall have
inscribed thereon the name of the Corporation.
ARTICLE IX
Waiver of Notice
SECTION 9.1. WAIVER OF NOTICE. Whenever any notice is
required to be given under the provisions of these By-Laws or under
the provisions of the Certificate of Incorporation or under the
provisions of the corporation law of the state of incorporation,
waiver thereof in writing, signed by the person or persons entitled
to such notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice. Attendance
of any person at a meeting for which any notice is required to be
given under the provisions of these By-Laws, the Certificate of
Incorporation or the corporation law of the state of incorporation
shall constitute a waiver of notice of such meeting except when the
person attends for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because
the meeting is not lawfully called or convened.
ARTICLE X
Amendments
SECTION 10.1. AMENDMENTS. These By-Laws may be altered,
amended or repealed and new By-Laws may be adopted at any meeting of
the Board of Directors of the Corporation by the affirmative vote of
a two-thirds or more of the members of the Board, or by the
affirmative vote of the holders of 75 percent or more of the
outstanding capital stock of the Corporation (assessed upon the
basis of votes and not on the basis of number of shares) entitled to
vote generally in the election of directors, voting together as a
single class, cast at a meeting of the stockholders called for that
purpose.
ARTICLE XI
Indemnification
SECTION 11.1. INDEMNIFICATION. The Corporation shall
indemnify its officers, directors, employees and agents to the
fullest extent permitted by the General Corporation Law of Delaware,
as amended from time to time.
[END]
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
of ASI Entertainment, Inc. of our reports as of June 30, 1997, dated
July 28, 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
