UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from October 1, 1999 to December 31, 1999
Commission file number 333-61259
ASI ENTERTAINMENT, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 522101695
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Suite 3, 1601 Main Road
Research, Victoria, 3095, Australia
(Address of principal executive offices)
(613)9437 1233
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 5,818,337
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ ]
<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
FORM 10-QSB
FOR THE QUARTER ENDED DECEMBER 31, 1999
INDEX
PART I. FINANCIAL INFORMATION...........................................1
Item 1. Financial
Statements......................................................1
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................11
PART II: OTHER INFORMATION..............................................12
Item 1. Legal Proceedings..............................................12
Item 2. Changes in Securities and Use of Proceeds......................12
Item 3. Defaults Upon Senior Securities................................12
Item 4. Submission of Matters to a Vote of Security Holders............12
Item 5. Other Information..............................................13
Item 6. Exhibits and Reports on Form 8-K...............................13
SIGNATURES.................................................................14
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1999
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 18,050
-----------
Total Current Assets 18,050
-----------
NON CURRENT ASSETS
Property and equipment, net 1,157,178
Investments in media rights, net 182,152
-----------
Total Non Current Assets 1,339,330
-----------
TOTAL ASSETS $ 1,357,380
===========
LIABILITIES AND SHARHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses 12,498
Due to related parties 108,108
-----------
Total Liabilities 120,606
-----------
SHAREHOLDERS' EQUITY
Preferred stock $0.0001 par value, 20,000,000
shares authorized, non issued and outstanding $ -
Common stock, $0.0001 par value, 100,000,000 shares
authorized, 5,818,337 shares issued and outstanding 582
Additional paid-in capital 3,073,641
Additional paid-in capital - discount on shares (681,476)
Deficit accumulating during development stage (967,921)
Accumulated other comprehensive loss (188,052)
-----------
Total Shareholders' Equity 1,236,774
-----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,357,380
===========
See accompanying notes to unaudited consolidated financial statements.
1
<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Year to December
Three months Three months date July 15, 1993
ending ending 1,1999 to (Inception)
December December December to December
31, 1999 31, 1998 31, 1999 31, 1999
---------- ---------- ---------- -----------
REVENUES 0 17,735 0 81,076
Cost of sales 0 8,867 0 40,971
---------- ---------- ---------- -----------
Gross Profit 0 8,868 0 40,105
---------- ---------- ---------- -----------
EXPENSES:
Accounting and auditing 14,288 17,022 17,324 68,043
Advertising and promotion 0 183 0 9,178
Amortisation 16,400 15,300 32,650 144,443
Banking 264 76 399 2,064
Consulting expense 0 0 0 11,429
Convention Expense 0 412 0 5,001
Corporate Administration 1,365 0 1,365 1,365
Depreciation 17,318 16,156 34,477 172,512
Directors fees 3,000 0 6,000 31,191
Engineering 0 118 0 24,760
Interest 927 0 1,851 1,851
Marketing expense 0 8,868 0 39,887
Offering costs 0 0 0 107,124
Officers' compensation 21,648 20,197 43,098 215,648
Other employee compensation 3,936 7,344 7,836 42,344
Office expenses, rent and
utilities 4,537 999 8,537 35,447
Professional fees 3,280 0 3,280 42,983
Travel 689 5,586 1,709 52,755
---------- ---------- ---------- -----------
Total Expenses 87,652 92,261 158,526 1,008,025
---------- ---------- ---------- -----------
NET LOSS $ (87,652) $ (83,393) $ (158,526) $ (967,920)
========== ========== ========== ===========
OTHER COMPREHENSIVE
INCOME (LOSS)
Foreign currency translation
gains (losses) 13,114 (141) (9,728) (188,053)
---------- ---------- ---------- -----------
COMPREHENSIVE LOSS $ (74,538) $ (83,534) $ (168,254) $(1,155,973)
========== ========== ========== ===========
Weighted average number of
shares outstanding during
the period 5,754,337 5,754,337 5,754,337 2,934,121
========== ========== ========== ===========
Net Loss per common share and
equivalents $ (0.0152) $ (0.0145) $ (0.0275) $ (0.3299)
========== ========== ========== ===========
See accompanying notes to unaudited consolidated financial statements.
2
<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Year to December
Three months Three months date July 15, 1993
ending ending 1,1999 to (Inception)
December December December to December
31, 1999 31, 1998 31, 1999 31, 1999
---------- ---------- ---------- ----------
Cash flows from operating
activities:
Net Loss $ (87,652) $ (83,393) $ (158,526) $ (967,920)
---------- ---------- ---------- ----------
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation 17,318 16,156 34,477 172,512
Amortisation 16,400 15,300 32,650 144,443
Consulting expense incurred
in exchange for common stock 0 0 0 11,429
Changes in operating assets
and liabilities:
(Increase) decrease in:
Trade accounts receivable 0 0 0 (651)
Other Receivables 0 0 0 (300)
Increase (decrease) in:
Accounts payable and accrued
expenses 12,261 18,359 12,333 13,262
---------- ---------- ---------- ----------
Total adjustments to reconcile
net loss to cash provided by
operating activities: 45,979 49,815 79,460 340,695
---------- ---------- ---------- ----------
Net cash used in operating
activites (41,673) (33,578) (79,066) (627,225)
---------- ---------- ---------- ----------
Net cash flow from investing
activities:
Advances to affiliates 0 11,716 0 (17,015)
Cash acquired through
recapitalization 0 0 0 15,453
---------- ---------- ---------- ----------
Net cash provided by (used in)
investing activities 0 11,716 0 (1,562)
---------- ---------- ---------- ----------
Cash flow from financing
activities:
Increase (decrease) in loans
payable - bank (30,733) 0 (32,956) (1,884)
Increase (decrease) in amount
due to related parties 15,271 0 46,817 104,603
Receipts of subscriptions
receivable 9,750 9,180 16,850 16,850
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Year to December
Three months Three months date July 15, 1993
ending ending 1,1999 to (Inception)
December December December to December
31, 1999 31, 1998 31, 1999 31, 1999
---------- ---------- ---------- ----------
Proceeds from issuance of
common stock, net 64,000 0 64,000 532,178
---------- ---------- ---------- -----------
Net cash from financing
activities 58,288 9,180 94,711 651,747
---------- ---------- ---------- -----------
Effect of exchange rate
changes on cash (558) (140) 1,305 (4,910)
---------- ---------- ---------- ----------
Net increase (decrease)in
cash 17,173 (12,822) 16,950 18,050
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 877 14,495 1,100 0
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 18,050 $ 1,673 $ 18,050 $ 18,050
========== ========== ========== ==========
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD DECEMBER 15, 1993 (INCEPTION) TO DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL DEFICIT
COMMON STOCK PAID-IN ACCUMULATED ACCUMULATED
------------ ADDITIONAL CAPITAL DURING OTHER SUBSCR-
NUMBER OF PAID-IN DISCOUNT DEVELOPMENT COMPREHENSIVE IPTIONS
SHARES AMOUNT CAPITAL ON SHARES STAGE INCOME (LOSS) RECEIVABLE TOTAL
------- ------- -------- --------- ----------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock in
December 1993 to ASI Technologies
Pty. Ltd. ("ASIT"), founder 2 $ 0 $ 1 $ 0 $ 0 $ 0 $ 0 $ 1
--------- ------- --------- -------- ------- -------- --------- --------
Balance, June 30, 1994 2 0 1 0 0 0 0 1
--------- ------- --------- -------- ------- -------- --------- --------
Balance, June 30, 1995 2 0 1 0 0 0 0 1
Net issuance of common stock to
ASIT 13 0 8 0 0 0 0 8
Issuance of common stock to ASIT
in exchange for assets purchased 1,500,000 150 894,450 (745,470) 0 0 0 149,130
Issuance of common stock to
investor and employees 62,500 6 37,269 0 0 0 (37,275) 0
Foreign currency translation gain 0 0 0 0 0 8,302 0 8,302
--------- ------- -------- -------- ------- -------- --------- --------
Balance, June 30, 1996 1,562,515 156 931,728 (745,470) 0 8,302 (37,275) 157,441
Issuance of common stock to ASIT
in exchange for assets purchased 659,975 66 418,358 0 0 0 0 418,424
Foreign currency translation loss 0 0 0 0 0 (32,243) 0 (32,243)
--------- ------- --------- -------- ------- -------- --------- --------
Balance, June 30, 1997 2,222,490 222 1,350,086 (745,470) 0 (23,941) (37,275) 543,622
Issuance of common stock to
investors 821,500 82 433,263 0 0 0 (43,735) 389,610
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD DECEMBER 15, 1993 (INCEPTION) TO DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL DEFICIT
COMMON STOCK PAID-IN ACCUMULATED ACCUMULATED
------------ ADDITIONAL CAPITAL DURING OTHER SUBSCR-
NUMBER OF PAID-IN DISCOUNT DEVELOPMENT COMPREHENSIVE IPTIONS
SHARES AMOUNT CAPITAL ON SHARES STAGE INCOME (LOSS) RECEIVABLE TOTAL
------- ------- -------- --------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock in
exchange for media rights 375,000 38 197,362 0 0 0 0 197,400
Issuance of common stock to ASIT
in exchange for assets purchased 1,875,000 188 1,081,462 0 0 0 0 1,081,650
Write-off of subscriptions
receivable 0 0 0 0 0 0 37,275 37,275
Foreign currency translation loss 0 0 0 0 0 (247,321) 0 (247,321)
Net loss 1998 0 0 0 0 (473,779) 0 0 (473,779)
--------- ------- ---------- --------- ---------- --------- --------- ----------
Balance, June 30, 1998 5,293,990 $ 530 $3,062,173 $(745,470) $ (473,779) $(271,262) $ (43,735) $1,528,457
Recapitalization, July 1, 1998 417,189 $ 42 $ 100 $ 0 $ 0 $ 0 $ 0 $ 142
Issuance of common stock in
exchange for consulting services 43,158 4 11,368 0 0 0 0 11,372
Receipt of subscriptions receivable 0 0 0 0 0 0 26,885 26,885
Foreign currency translation gain 0 0 0 0 0 92,937 0 92,937
Net loss 1999 0 0 0 0 (335,615) 0 0 (335,615)
--------- ------- ---------- --------- ---------- --------- --------- ----------
BALANCE, JUNE 30, 1999 5,754,337 576 3,073,641 (745,470) (809,394) (178,325) (16,850) 1,324,178
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD DECEMBER 15, 1993 (INCEPTION) TO DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL DEFICIT
COMMON STOCK PAID-IN ACCUMULATED ACCUMULATED
------------ ADDITIONAL CAPITAL DURING OTHER SUBSCR-
NUMBER OF PAID-IN DISCOUNT DEVELOPMENT COMPREHENSIVE IPTIONS
SHARES AMOUNT CAPITAL ON SHARES STAGE INCOME (LOSS) RECEIVABLE TOTAL
------- ------- -------- --------- ------------ ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipt of subscription receivable 0 0 0 0 0 0 7,100 7,100
Foreign currency translation
gain/(loss) 0 0 0 0 0 (22,841) 0 (22,841)
Net Loss for the three month
period to September 30, 1999 0 0 0 0 (70,875) 0 0 (70,875)
--------- ------- ---------- --------- ---------- --------- --------- ----------
Balance, September 30, 1999, 5,754,337 $ 576 $3,073,641 $(745,470) $ (880,269) $(201,166) $ (9,750) $1,237,562
========= ======= ========== ========= ========== ========= ========= ==========
Receipt of subscription receivable 0 0 0 0 0 0 9,750 9,750
Issuance of ordinary shares to
investors 64,000 6 0 63,994 0 0 0 64,000
Foreign currency translation
gain/(loss) 0 0 0 0 0 13,114 0 13,114
Net Loss for the three month
period to December 31, 1999 0 0 0 0 (87,652) 0 0 (87,652)
--------- ------- ---------- --------- ---------- --------- --------- ----------
Balance December 31, 1999 5,818,337 $ 582 $3,073,641 $(681,476) $ (967,921) $(188,052) $ 0 $1,236,774
========= ======= ========== ========= ========== ========= ========= ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
7
<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO BALANCE SHEET
AS OF DECEMBER 31, 1999
(UNAUDITED)
Note 1. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying unaudited consolidated financial statements include the
accounts of ASI Entertainment, Inc. and its wholly owned subsidiaries, ASI
Technologies, Inc. and ASI Entertainment Pty. Ltd., an Australian corporation.
ASI Media Pty. Ltd., an inactive wholly owned subsidiary of the Australian
corporation is also included. (All entities are collectively referred to as
"the Company").
Development Stage Company
The Company is operating as a development stage company and intends to
generate revenues primarily from selling advertising time on its ASI-9000
Program to be installed on commercial aircraft.
Basis of Presentation
The accompanying unaudited consolidated financial statements of the Company
have been prepared in accordance with Generally Accepted Accounting Principles
used in the United States and with the rules and regulations of the United
States Securities and Exchange Commission for the interim financial
information. Accordingly, they do not include all the information and
footnotes necessary for a comprehensive presentation of financial position and
results of operations.
Adjustments are made to translate the statutory financial statements of the
Company's Australian subsidiaries to Generally Accepted Accounting Principles
used in the United States. The functional currency of the Company's
Australian subsidiary is the Australian dollar. The functional currency of
the United States entities is the United States dollar. The unaudited
consolidated financial statements are expressed in United States dollars. It
is management's opinion that all other material adjustments (consisting of
normal recurring adjustments) have been made which are necessary for a fair
consolidated financial statement presentation. The results for the interim
period are not necessarily indicative of the results to be expected for the
year.
For further information, refer to the consolidated financial statements and
footnotes of ASI Entertainment Pty. Ltd. and ASI Entertainment, Inc. included
in the Company's Form 10KSB for the year ended June 30, 1999.
Per Share Data
Net loss per common share is computed by dividing net loss by the weighted
average common shares outstanding during the period as defined by Financial
Accounting Standards, No. 128, "Earnings per Share". The assumed exercise of
common share equivalents was not utilized since the effect was anti-dilutive.
8
<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO BALANCE SHEET
AS OF DECEMBER 31, 1999
(UNAUDITED)
Note 2. Merger
Under an agreement dated June 10, 1998, ASI Entertainment, Inc. ("ASIEInc.") a
new corporation formed on April 29, 1998 under the laws of Delaware, acquired
all of the issued and outstanding ordinary shares of capital and ordinary
share options of ASI Entertainment Pty. Ltd. in exchange for common stock and
common stock options of ASIEInc. Under the terms of the agreement, ASI
Entertainment Pty. Ltd.'s shares and options were exchanged at a ratio of one
share and one option of ASIEInc. for every eight shares and eight options of
ASI Entertainment Pty. Ltd. As a result of the exchange, ASI Entertainment
Pty. Ltd. and its wholly owned subsidiary became wholly owned subsidiaries of
ASIEInc., and the shareholders of ASI Entertainment Pty. Ltd. became
shareholders of approximately 92% of ASIEInc. Generally Accepted Accounting
Principles used in the United States require that the Company whose
shareholders retain a majority interest in a combined business be treated as
the acquirer for accounting purposes. As a result, the merger will be treated
as an acquisition of ASIEInc. by ASI Entertainment Pty. Ltd., and a
recapitalization of ASI Entertainment Pty. Ltd. Accordingly, the Company's
financial statements immediately following the acquisition follows: (1) The
Balance Sheet will consist of ASI Entertainment Pty. Ltd.'s net assets at
historical cost and ASIEInc.'s net assets at historical cost, and (2) the
Statement of Operations includes ASI Entertainment Pty. Ltd.'s operations for
the period presented and ASIEInc.'s operations from the date of acquisition.
Note 3. Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As such, they do not include
adjustments relating to the recoverability of recorded asset amounts and
classification of recorded assets and liabilities. On July 1, 1998, the
Company acquired 100% of ASI Entertainment Pty. Ltd., ("ASIE") an Australian
Corporation. ASIE has accumulated losses of approximately $968,000 at
December 31, 1999 and will be required to make significant expenditure in
connection with continuing engineering and marketing efforts along with
general and administrative expenses. The Company's ability to continue its
operations is dependant upon its raising of capital through debt or equity
financing in order to meet its working needs.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern subsequent to the acquisition, and if substantial
additional funding is not acquired or alternative sources developed,
management will be required to curtail its operations.
The Company may raise additional capital by the sale of its equity securities,
through an offering of debt securities, or from borrowing from a financial
institution. The Company does not have a policy on the amount of borrowing or
debt that the Company can incur. The Company may also attempt to negotiate
with vendors or customers, airline revenue sharing arrangements by which the
Company will share the advertising revenue if the vendor or customer airline
provide capital for the equipment. Management believes that actions presently
being taken to obtain additional funding provides the additional opportunity
for the Company to continue as a going concern.
9
<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO BALANCE SHEET
AS OF DECEMBER 31, 1999
(UNAUDITED)
Note 4. Revenue
Pending re-installation in new B-737-800 aircraft, ASI equipment has been
removed from six Air Europa B-757-200 aircraft. As a result, no revenue was
received by the Company in the twelve month period to December 31, 1999. Due
to the late delivery of the new aircraft, installations are not expected to be
finalised until the first quarter of 2000, when the advertising program will
recommence.
10
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the accompanying
consolidated financial statements for the three-month period ended December
31, 1999 and the Form 10-KSB for the fiscal year ended June 30, 1999.
RESULTS AND PLAN OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THREE MONTHS ENDED DECEMBER
31, 1998
No sales were made in the three month period ended December 31, 1999, pending
reinstallation of the Company's equipment in new Air Europa aircraft. In the
three month period ending December 31 , 1998 the Company had revenues of
$17,735.
The Company had a net loss of $87,652 in the three month period ended December
31, 1999 compared to a net loss of $83,393 in the three month period ended
December 31, 1998. Expenses decreased from $92,261 in the three months ended
December 31, 1998 to $87,652 in the three months ended December 31, 1999 due
to lower accounting and auditing fees, marketing expenses, employee
compensation costs and travel expenses, but after increases of directors fees,
professional fees and office expenses.
The Company had a foreign currency translation gain of $13,114 for the three
months ended December 31, 1999 compared to a foreign currency translation
loss of $141 for the three month period ended December 31, 1998. As a
result, the Company recorded a comprehensive loss of $74,538 for the three
month period ended December 31, 1999 compared to a comprehensive loss of
$83,534 for the three month period ended December 31, 1998.
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 entered into a license fee
arrangement with Air Europa providing a fee of $3,625 per calendar month for
each ASI-9000 Program installed on its aircraft from the advertising revenues
received from that system. If insufficient advertising funds are received to
cover the license fee the Company absorbs the shortfall. Air Europe receives
any amounts over the $3,625 license fee (after deduction of any direct costs,
including payment of commissions, if any, to any media sales representatives).
The Company anticipates such revenues to increase as the Company expands the
development of its available operations including additional ground
communication and other services. During the period from January 1, 1999 to
December 31, 1999, Air Europa was transferring the Company's equipment to
different aircraft and no revenues were received. The Company anticipates
revenues to recommence on completion of such reinstallation.
The Company's cash and cash equivalents increased from $877 at September 30,
1999 to $18,050 at December 31, 1999, primarily as a result of the issuance of
common stock.
The Company had a net loss of $87,652 from operating activities for the period
October 1, 1999 to December 31, 1999, primarily consisting of compensation to
officers, depreciation, amortization and accounting and auditing expenses.
The net loss from operating activities for such period was greater than the
net loss from operating activities for the period October 1, 1998 to December
31, 1998 primarily as a result of the Company not receiving revenue during the
11
<PAGE>
period. The Company received no income for the three months ending December
31, 1999 as the revenue generated from the Air Europa contract was suspended
while the ASI-9000 Programs were reinstalled on different Air Europa aircraft.
The cash flow of the Company from financing activities for the three months
ending December 31, 1999 was from the proceeds of issuance of common stock,
advances from related parties and increased accounts payable.
The Company had no cash flow from investing activities for the three months
ending December 31, 1999.
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 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.
The Company has no commitments for capital expenditures in the near future.
The Company purchases or subcontracts (on an per item basis) for the ASI-9000
and installation integration technology. The Company will need to pay the
expenses of the installation of the ASI-9000. When the Company enters into
contracts for the ASI-9000 it will contract with ASIT Australia for purchase
of the equipment and then contract for the integration technology.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
12
<PAGE>
ITEM 5. OTHER INFORMATION
On August 27, 1999, the Company entered into an agreement with Hatfield
Aviation, Inc. ("Hatfield"), a company doing business as an aviation
electrical and overhaul repairer, and the shareholders of Hatfield. Under the
terms of the agreement, subject to conditions precedent to closing, the
Company will acquire 100% of the issued and outstanding common stock of
Hatfield. As consideration for the common stock acquired the Company agreed
to pay a total purchase price of $2,500,000, consisting of $2,000,000 in cash
and the issuance of 500,000 shares of the Company's common stock. As of the
date of this report, the agreement has not closed and the Company had not
made any advance cash payments nor issuances of common stock to Hatfield. The
Company intends to raise capital required to close this transaction through
an offering of its equity securities.
On December 8, 1999 the Company signed a Heads of agreement with AirTV
Limited, a company which is developing a global satellite television system
that interfaces with existing in-flight entertainment systems on board
aircraft to provide direct television programming. AirTV is seeking to expand
the system by offering an internet service including E-mail and browser
capabilities aboard aircraft equipped with satellite data communications
equipment. Under the Heads of Agreement:
a) ASI will lead the preliminary technical and commercial evaluation of
the proposed internet service under the direction of AirTV.
b) ASI will formulate preliminary specifications of the proposed internet
service which will include the primary components of the system, conduct a
preliminary evaluation of the technical and commercial viability of the
internet service, and develop a list of suppliers for the primary
components.
c) Should ASI complete the work to the satisfaction of AirTV, it is the
intent of AirTV to award ASI an initial contract for the development for
AirTV of an on-board browser and to use the ASI ACAMS as a test platform
for such browser. If awarded, ASI will enjoy the status of being a
preferred supplier to AirTV for the development of the system software.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
13
<PAGE>
SIGNATURES
In accordance with the Exchange Act, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly
authorized.
ASI ENTERTAINMENT, INC.
SIGNATURE TITLE DATE
--------- ----- ----
By: /s/ Ronald J. Chapman
-----------------------
Ronald J. Chapman President and Director February 11, 2000
By: /s/ Philip A. Shiels
-----------------------
Philip A. Shiels Principal Financial Officer
and Director February 11, 2000
By: /s/ Graham O. Chappell
------------------------
Graham O. Chappell Director February 11, 2000
14
