Form 10Q

10-Q 1 asi_10q.htm CURRENT REPORT Form 10Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2012

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ____ to _____

Commission file number 000-27881

ASI ENTERTAINMENT, INC.

(Exact name of small business issuer as specified in its charter)

Delaware

522101695

(State or other jurisdiction of

incorporation or organization)

(IRS Employer Identification No.)

Level 1, 45 Exhibition Street

Melbourne, Victoria, 3000, Australia

(Address of principal executive officers)

+61 3 9016 3021

(Issuer's telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ]

(do not check if a smaller reporting company)

Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

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

As of February 04, 2013, there were 75,910,814 outstanding shares of the issuer's Common Stock, $0.0001 par value.

ASI ENTERTAINMENT, INC.

FORM 10-Q

FOR THE QUARTER ENDED DECEMBER 31, 2012



	INDEX

PART I. FINANCIAL INFORMATION	4
ITEM 1. Financial Statements (Unaudited)	4
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	11
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	12
ITEM 4. Controls and Procedures	12
PART II. OTHER INFORMATION	13
ITEM 1. Legal Proceedings	13
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	13
ITEM 3. Defaults upon Senior Securities	13
ITEM 4. Mine Safety Disclosures	13
ITEM 5. Other Information	13
ITEM 6. Exhibits and Reports on Form 8-K	13
Signatures	14

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

ASI ENTERTAINMENT, INC.

BALANCE SHEETS

(UNAUDITED)



	December 31, 2012	June 30, 2012
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$ 67	$ 101
Prepaid expenses	2,572	500
Total current assets	2,639	601
Intangible assets, net	4,614	4,614
TOTAL ASSETS	$ 7,253	$ 5,215

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued expenses	$ 23,596	$ 23,186
Related party payables	323,012	289,579
Due to related parties	228,811	228,811
Total current liabilities	575,419	541,576
Total liabilities	575,419	541,576

STOCKHOLDERS' DEFICIT

Preferred stock $0.0001 par value, 20,000,000 shares authorized, none issued and outstanding	-	-

Common stock, $0.0001 par value, 100,000,000 shares authorized, 75,910,814 and 75,910,814 shares issued and outstanding, respectively	7,591	7,591

Additional paid-in capital	8,113,145	8,113,145
Treasury stock - par value (50,000 shares)	(5)	(5)
Accumulated deficit	(8,841,337)	(8,809,532)
Subscriptions payable	152,440	152,440
Total stockholders' deficit	(568,166)	(536,361)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 7,253	$ 5,215

The accompanying notes are an integral part of these financial statements.

ASI ENTERTAINMENT, INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ending Dec 31, 2012	Three Months Ending Dec 31, 2011	Six Months Ending Dec 31, 2012	Six Months Ending Dec 31, 2011
EXPENSES:
Accounting and auditing	5,500	16,126	16,025	16,126
Banking	369	239	567	506
Corporate administration	2,140	1,572	2,515	1,978
Corporate promotion	-	661	-	1,298
Directors fees	-	50,000	-	50,000
Officers management fees	6,000	6,000	12,000	11,875
Office expenses, rent, utilities	234	452	331	787
Travel	-	200	-	200
Patent fees	367	865	367	865

Total expenses	14,610	76,115	31,805	83,635

Net loss	$ (14,610)	$ (76,115)	$ (31,805)	$ (83,635)

Net loss per share, basic	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)

Weighted average number of shares outstanding, basic	75,910,814	73,219,056	75,910,814	72,330,379

The accompanying notes are an integral part of these financial statements.

ASI ENTERTAINMENT, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ending December 31,
	2012	2011

Cash flows from operating activities:
Net loss	$ (31,805)	$ (83,635)

Adjustments to reconcile net loss to net cash used in operating activities:
Compensatory stock issuances - directors	-	50,000
Changes in operating assets and liabilities:
Increase in prepaid expenses	2,072	-
Increase in accounts payable	410	967
Increase in related party payables	12,000	11,875

Net cash used in operating activities	(21,467)	(20,793)

Cash flows from financing activities:
Expenses paid on behalf of the company by a related party	15,870	20,635
Advances from related party	333	-
Payment made on AP by related party	5,230	-

Net cash provided by financing activities	21,433	20,635

Net decrease in cash	(34)	(158)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	101	158

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 67	$ -

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Non-cash investing and financing activities:

Shares issued for payables conversion	$ -	$ 50,000

The accompanying notes are an integral part of these financial statements.

ASI ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2012

(UNAUDITED

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles used in the United States of America and with the rules and regulations of the United States Securities and Exchange Commission for 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.

The functional currency of the Company is the United States dollar. The unaudited financial statements are expressed in United States dollars. It is management's opinion that any material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair 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 financial statements and footnotes included in the Company's Form 10-K for the year ended June 30, 2012.

Use of Estimates

The preparation of financial statements in conformity with U.S. 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.

Such estimates and assumptions impact, among others, the valuation allowance for deferred tax assets, due to continuing and expected future losses, and share-based payments.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates.

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, ASC Topic 260, "Earnings per Share". Basic earnings per common share ("EPS") calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

Cash and cash equivalents:

For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.

Income taxes

The Company accounts for its income taxes in accordance with FASB ASC Topic 740-10, "Income Taxes", which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Fair value of financial instruments:

The carrying value of cash equivalents and accounts payable and accrued expenses approximates fair value due to the short period of time to maturity.

Revenue Recognition

The Company recognizes revenue on an accrual basis. Revenue is generally realized or realizable and earned when all of the following criteria are met: 1) persuasive evidence of an arrangement exists between the Company and our customer(s); 2) services have been rendered; 3) our price to our customer is fixed or determinable; and 4) collectability is reasonably assured.

Long-lived Assets

In accordance with the Financial Accounting Standards Board ("FASB") Accounts Standard Codification (ASC) ASC 360-10, "Property, Plant and Equipment," the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. Capitalized costs are amortized based on current and future revenue for each asset with an annual minimum equal to the straight-line amortization over the remaining estimated economic life of the asset.

Stock-based compensation

The Company records stock based compensation in accordance with the guidance in ASC Topic 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.

Recent pronouncements

Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on the Company's present or future financial position, results of operations or cash flows.

Note 2. Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has accumulated losses of $8,841,337 at December 31, 2012 and will be required to make significant expenditures in connection with development of the SafeCell intellectual property, seeking addition funding through investments and general and administrative expenses. The Company's ability to continue its operations is dependent upon its raising of capital through debt or equity financing in order to meet its working capital needs.

These conditions raise substantial doubt about the Company's ability to continue as a going concern, and if 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. Management believes that actions presently being taken to obtain additional funding provides the additional opportunity for the Company to continue as a going concern. However, there is no assurance of additional funding being available or on acceptable terms, if at all. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Note 3. Related Party Transactions

As of December 31, 2012 and June 30, 2012, the Company has recorded as "related party payables", $323,012 and $289,579, respectively, which are due mainly to advances made by the CEO to pay for operating expenses.

As of December 31, 2012 and June 30, 2012, the Company had "due to related parties" of $228,811 and $228,811 respectively which are advances made by related parties to provide capital and outstanding directors fees. These amounts are non-interest bearing, unsecured and due on demand.

The Company in the three months and six month ending December 31, 2012 incurred expenses of approximately $6,000 and $12,000 respectively to entities affiliated through common stockholders and directors for management expenses. The Company in the three months and six month ending December 31, 2011 incurred expenses of approximately $6,000 and $11,875 respectively to entities affiliated through common stockholders and directors for management expenses. These expenses have been classified as officers management fees in the accompanying financial statements. Amounts payable and due to related parties remain as a liability until paid with cash or settled with shares of stock. These amounts are non-interest bearing, unsecured and due on demand.

Note 4. Stockholders' Deficit

During the 3 months and 6 months ended December 31, 2012, the Company did not issue any shares of common stock.

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report on form 10-Q includes "forward-looking statements" as defined by the Securities and Exchange Commission. These statements may involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations, are generally identifiable by use of the words "may," "will," "could", "should," "expect," "anticipate," "estimate," "believe," "intend" or "project" or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect. Actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. The company undertakes no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

The following discussion should be read in conjunction with the accompanying financial statements for the three month period ended December 31, 2012 and the Form 10-K for the fiscal year ended June 30, 2012.

RESULTS AND PLAN OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 2012 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2011

In the three month period ended December 31, 2012, the Company recorded revenue of nil and a gross profit of nil. In the corresponding three month period ended December 31, 2011, the Company recorded revenue of nil and a gross profit of nil.

The Company had a net loss of $14,610 in the three month period ended December 31, 2012 compared to a net loss of $76,115 in the three month period ended December 31, 2011. Expenses decreased from $76,115 in the three months ended December 31, 2011 to $14,610 in the three months ended December 31, 2012 primarily due to decreased audit fees and director’s fees.

SIX MONTHS ENDED DECEMBER 31, 2012 COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2011

In the six month period ended December 31, 2012, the Company recorded revenue of nil and a gross profit of nil. In the corresponding six month period ended December 31, 2011, the Company recorded revenue of nil and a gross profit of nil.

The Company had a net loss of $31,805 in the six month period ended December 31, 2012 compared to a net loss of $83,635 in the six month period ended December 31, 2011. Expenses decreased from $83,635 in the six months ended December 31, 2011 to $31, 805 in the six months ended December 31, 2012 primarily due to decreased directors fees.

LIQUIDITY AND CAPITAL RESOURCES

The cash and cash equivalents balance decreased $34 during the six month period ended December 31, 2012 from $101 at July 1, 2012 to $67 at December 31, 2012.

The Company reported revenue of nil in the six months ending December 31, 2012 and nil in the six month period ending December 31, 2011. The Company incurred a net loss of $31,805 from operating activities for the period July 1, 2012 to December 31, 2012 primarily due to auditing fees and officers management fees. Cash used in operating activities increased to $21,467 during the six months ended December 31, 2012 from $20,793 during the comparative prior period.

The cash flow of the Company from financing activities for the six months ending December 31, 2012 was $21,433 compared to cash flow from financing activities for the six months ending December 31, 2011 of $20,635.

The Company's plan for the SafeCell intellectual property will require funding for the completion of the patent application, then further funding for marketing to set up license and royalty agreements.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable

ITEM 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

Our management, including the Company's Chief Executive Officer/Principal Financial Officer, and the Company's President, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined In Rule 13a- 15(e) and 15d-15e under the Securities Exchange Act of 1934 (the "Exchange Act") as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our management concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective such that the information required to be disclosed by us in the reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in SEC's rules and forms and (ii) accumulated and communicated to our management to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance however, that the effectiveness of the controls system are met and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud if any, within a company have been detected.

Management has determined that, as of December 31, 2012, there were material weaknesses in both the design and effectiveness of our internal control over financial reporting. As a result, our management has concluded that our internal control over financial reporting was not effective as of December 31, 2012. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The deficiencies in our internal controls over financial reporting and our disclosure controls and procedures are related to lack of appropriate experience and knowledge of U.S. GAAP and SEC reporting requirements of our management and a lack of segregation of duties due to the size of the company. The company plans to take steps to rectify these weaknesses in the future.

(b) Changes in internal controls.

The Company's management including the Chief Executive Officer/Principal Financial Officer, and President, evaluated whether any changes in our internal controls over financial reporting, occurred during the quarter ended December 31, 2012. Based on that evaluation, our management concluded that no change occurred in the Company's internal controls over financial reporting during the quarter ended December 31, 2012 that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1 Legal Proceedings

None

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

ITEM 3. Defaults upon Senior Securities

None

ITEM 4. Submission of Matters to a Vote of Security Holders

None

ITEM 5. Other Information

None

ITEM 6. Exhibits and Reports on Form 8-K

None

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/ Richard Lukso	Director	2/8/2013

By: /s/ Ronald J. Chapman	Director	2/8/2013

By: /s/ Philip A. Shiels	Director	2/8/2013

By: /s/ Graham O. Chappell	Director	2/8/2013