FILED AS OF DATE:
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ASI ENTERTAINMENT INC
CENTRAL INDEX KEY: 0001067873
STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY
EQUIPMENT, NEC [3728]
IRS NUMBER: 522101695
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: 10QSB
SEC ACT:
SEC FILE NUMBER: 000-27881
FILM NUMBER: 544289
BUSINESS ADDRESS:
STREET 1: 15200 EAST GIRARD AVENUE STE 212
STREET 2: STE 212
CITY: AURORA
STATE: CO
ZIP: 80014
BUSINESS PHONE: 970 881 3573
MAIL ADDRESS:
STREET 1: 79 TAMI RD
STREET 2:
CITY: RED FEATHER LAKES
STATE: CO
ZIP: 80545
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 September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from July 1, 2000 to September 30, 2000
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: 6,244,587
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ ]
<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 2000
INDEX
PART I. FINANCIAL INFORMATION........................................2
Item 1. Financial
Statements......................................................2
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........... .......................9
PART II: OTHER INFORMATION..........................................10
Item 1. Legal Proceedings.............................................10
Item 2. Changes in Securities and Use of Proceeds.....................10
Item 3. Defaults Upon Senior Securities...............................10
Item 4. Submission of Matters to a Vote of Security Holders............11
Item 5. Other Information..............................................11
Item 6. Exhibits and Reports on Form 8-K...............................11
SIGNATURES..............................................................12
-1-
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2000
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,548
Other receivables 48,648
------------
Total Current Assets 50,196
------------
NON CURRENT ASSETS
Property and equipment, net 922,764
Investments in media rights, net 110,659
------------
Total Non Current Assets 1,033,423
------------
TOTAL ASSETS $ 1,083,619
============
LIABILITIES AND SHARHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses 11,000
Due to related parties 81,909
------------
Total Liabilities 92,909
------------
STOCKHOLDERS' EQUITY
Preferred stock $0.0001 par value, 20,000,000
shares authorized, non issued and outstanding $ 0
Common stock, $0.0001 par value, 100,000,000
shares authorized, 6,244,587 shares issued
and outstanding 624
Additional paid-in capital 3,517,593
Additional paid-in capital - discount on shares (745,470)
Accumulated deficit (1,380,312)
Accumulated other comprehensive loss (401,725)
----------
Total Stockholders' Equity 990,710
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,083,619
============
See accompanying notes to unaudited consolidated financial statements.
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<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months Three months
ending ending
September 30, September 30,
2000 1999
--------- ---------
REVENUES 0 0
Cost of sales 0 0
--------- ---------
Gross Profit 0 0
--------- ---------
EXPENSES:
Accounting and auditing 3,667 3037
Advertising and promotion 566 0
Amortisation 14,400 16,250
Banking 70 135
Consulting expense 24,192 0
Corporate Administration 232 0
Depreciation 14,905 17,159
Directors fees 0 3,000
Engineering 3,920 0
Interest 0 924
Marketing expense 194 0
Officers' compensation 19,008 21,450
Other employee compensation 0 3,900
Office expenses, rent and
utilities 920 3,999
Travel 4,495 1,021
--------- ---------
Total Expenses 86,569 70,875
--------- ---------
NET LOSS (86,569) (70,875)
=========== =========
OTHER COMPREHENSIVE
INCOME (LOSS)
Foreign currency translation
gains (losses) (102,492) (22,841)
---------- ---------
COMPREHENSIVE LOSS (189,061) (93,716)
========== =========
Weighted average number of
shares outstanding during
the period 6,242,087 5,754,337
========== =========
Net Loss per common share
and equivalents (0.014) (0.012)
========== =========
See accompanying notes to unaudited consolidated financial statements.
-3-
<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months Three months
ending ending
September 30, September 30,
2000 1999
--------- ---------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net Loss (86,569) (70,875)
------------ ------------
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation 14,905 17,159
Amortisation 14,400 16,250
Changes in operating assets
and liabilities:
(Increase) decrease in:
Other Receivables (4,673) 0
Increase (decrease) in:
Accounts payable and accrued
expenses (9,879) 72
---------- ----------
Total adjustments to reconcile
net loss to cash provided by
operating activities: 14,753 33,481
---------- ----------
Net cash used in operating
activities (71,816) (37,394)
---------- ----------
Net cash provided by (used in)
investing activities 0 0
---------- ----------
Cash flow from financing
activities:
Increase (decrease) in loans
payable - bank 0 (2,223)
Increase (decrease) in amount
due to related parties 27,792 31,546
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three months Three months
ending ending
September 30, September 30,
2000 1999
--------- ---------
Proceeds from issuance of
common stock, net 1,250 7,100
--------- ----------
Net cash from financing
activities 29,042 36,423
---------- ----------
Effect of exchange rate
changes on cash (4,396) 748
---------- ----------
Net increase (decrease) in
cash (47,170) (223)
---------- ----------
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 48,718 1,100
---------- ----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD 1,548 877
========== ==========
See accompanying notes to unaudited consolidated financial statements.
-5-
<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO BALANCE SHEET
AS OF MARCH 31, 2000
(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").
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 convert 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, 2000.
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.
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<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO BALANCE SHEET
AS OF MARCH 31, 2000
(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 was 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 consists 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. The Company had
accumulated losses of approximately $1,380,000 at September 30, 2000 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.
-7-
<PAGE>
ASI ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO BALANCE SHEET
AS OF MARCH 31, 2000
(UNAUDITED)
Note 4. Issuance of common stock to investors
During the three months ended September 30, 2000, the Company issued 2,500
shares of common stock at $0.50 per share under the terms of a share option
agreement. As a result of the issue, the Company has taken up Additional
Paid-In Capital
of $1,250.
Note 5. 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 fifteen month period to March 31, 2000. ASI is
currently in discussions with the airline about re-installation of the
equipment and extension of the term of the agreement.
-8-
<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 September
30, 2000 and the Form 10-KSB for the fiscal year ended June 30, 2000.
RESULTS AND PLAN OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1999
No sales were made in the three month period ended September 30, 2000, pending
reinstallation of the Company's equipment in new Air Europa aircraft.
Similarly no sales were made in the three month period ending September 30,
1999.
The Company had a net loss of $86,569 in the three month period ended September
30, 2000 compared to a net loss of $70,875 in the three month period ended
September 30, 1999. Expenses increased from $70,875 in the three months ended
September 30, 1999 to $86,569 in the three months ended September 30, 2000 due
to higher consulting, engineering and travel expenses, but after lower office
expenses, officers' compensation and amortisation and depreciation.
The Company had a foreign currency translation loss of $102,492 for the three
months ended September 30, 2000 compared to a foreign currency translation
loss of $22,841 for the three month period ended September 30, 1999. As a
result, the Company recorded a comprehensive loss of $189,061 for the three
month period ended September 30, 2000 compared to a comprehensive loss of
$93,716 for the three month period ended September 30, 1999.
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) and from subsequent
capital raisings, 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 Europa 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 September 30, 2000, Air Europa has
been 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 decreased from $48,718 at June 30,
2000, to $1,548 at September 30, 2000, as a result of operating losses.
The Company had a net loss of $86,569 from operating activities for the period
July 1, 2000 to September 30, 2000, primarily consisting of compensation to
officers, depreciation, amortization and consulting expenses.
-9-
<PAGE>
The net loss from operating activities for such period was greater than the
net loss from operating activities for the period July 1, 1999 to September
30, 1999 primarily as a result of higher consulting, engineering and travel
costs.
The Company received no revenues for the three months ending September 30,
2000 as the revenue generated from the Air Europa contract was suspended until
the ASI-9000 Programs are reinstalled on different Air Europa aircraft.
The cash flow of the Company from financing activities for the three months
ending September 30, 2000 was from the proceeds of issuance of common stock
and from increased amounts due to related parties.
The Company had no cash flow from investing activities for the three months
ending September 30, 2000.
The Company's marketing plan anticipates that the Company will install and
maintain the ASI-9000 and Data3Mail programs on commercial airlines with
little or no cost to the airline. The Company will receive revenues from
communications and 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 and Data3Mail
programs possibly before any revenues are received. 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 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 and Data3Mail integration
technology. The cost to the Company for installation of the ASI-9000 or
Data3Mail, excluding the hardware, is $5,000 to $10,000 per aircraft.
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 Data3Mail installation integration technology. The Company will need
to pay the expenses of the installation of the ASI-9000 and Data3Mail. When
the Company enters into contracts for the ASI-9000 and Data3Mail 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
-10-
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
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.
On May 12, 2000, ASI announced the release of its Data3Mail system, an
in-flight email system with full global coverage based on ASI's existing
flight proven hardware and software platform. The core software was developed
and tested in conjunction with INMARSAT, COMSAT and SITA (the major providers
of satellite communications and ground based infrastructure for the airline
industry). The system is cheaper and faster than any other in-flight email
system publicized as being in development. Data3Mail sends and receives
passenger Emails via the cockpit satellite data link rather than the passenger
telephone line. Messages are prioritised so as not to interfere with cockpit
communications and charged by the kilobit per transmission. On September 10,
2000, the Company announced the release of a wireless Data3Mail system, an
option to the original Data3Mail system.
The Company will not proceed at this time with the previously announced
acquisition of Hatfield Aviation, Inc. ("Hatfield"), as the Company and
Hatfield were unable to re-negotiate the terms of the agreement.
Discussions with Hatfield are continuing.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
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<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 President and Director 11/15/2000
By: /s/
Philip A. Shiels Principal Financial Officer 11/15/2000
and Director
By: /s/
Graham O. Chappell Director 11/15/2000
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