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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 September 30, 2012

or


[ ] 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 October 26, 2012, there were 75,910,814 outstanding shares of the issuer's Common Stock, $0.0001 par value.

 





















2





ASI ENTERTAINMENT, INC.


FORM 10-Q


FOR THE QUARTER ENDED SEPTEMBER 30, 2012



 

INDEX

 

 

PART I. FINANCIAL INFORMATION

4

ITEM 1. Financial Statements

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






















3




PART I. FINANCIAL INFORMATION


ITEM 1. Financial Statements


ASI ENTERTAINMENT, INC.

BALANCE SHEETS

(UNAUDITED)


 

September 30, 2012

June 30, 2012

ASSETS

 

 

 

 

 

CURRENT ASSETS

 

 

Cash and cash equivalents

$            69

$          101

Prepaid expenses

-

500

Total current assets

69

601

Intangible assets, net

4,614

4,614

TOTAL ASSETS

$         4,683

$       5,215

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

CURRENT LIABILITIES

 

 

Accounts payable and accrued expenses

$       28,086

$    23,186

Related party payables

301,342

289,579

Due to related parties

228,811

228,811

Total current liabilities

558,239

541,576

Total liabilities

558,239

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

(8,826,727)

(8,809,532)

Subscriptions payable

152,440

152,440

Total stockholders' deficit

(553,556)

(536,361)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$         4,683

$          5,215


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




4




ASI ENTERTAINMENT, INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)


 

Three Months Ending September 30,

 

2012

2011

REVENUE:

$                  -

$                  -

 

 

 

EXPENSES:

 

 

Accounting and auditing

10,525

-

Banking

198

267

Corporate administration

375

406

Corporate promotion

-

637

Officers management fee

6,000

5,875

Office expenses, rent, utilities

97

335

 

 

 

Total expenses

17,195

7,520

 

 

 

Net loss

$    (17,195)

$   (7,520)

 

 

 

Net loss per share, basic

$        (0.00)

$      (0.00)

 

 

 

Weighted average number of shares outstanding, basic

75,910,814

71,460,814






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




5



ASI ENTERTAINMENT, INC.

STATEMENTS OF CASH FLOWS

 (UNAUDITED)


 

Three Months Ending September 30,

 

2012

2011

 

 

 

Cash flows from operating activities:

 

 

Net loss

$    (17,195)

$     (7,520)

 

 

 

Adjustments to reconcile net loss to net cash used in

 operating activities:

 

 

Changes in operating assets and liabilities:

 

 

Decrease in prepaid expenses

500

-

Increase in accounts payable

4,900

46

Increase in related party payables

6,000

7,376

 

 

 

Net cash used in operating activities

(5,795)

(98)

 

 

 

Cash flow from financing activities:

 

 

Expenses paid on behalf of the company by a related party

5,597

-

Advances from related party

166

-

 

 

 

Net cash provided by financing activities

5,763

-

 

 

 

Net decrease in cash

(32)

(98)

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

101

158

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$             69

$               60




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




6




ASI ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 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.




7




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.






8




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 $8,826,727 at September 30, 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.




9




Note 3. Related Party Transactions


As of September 30, 2012 and June 30, 2012, the Company has recorded as "related party payables", $301,342 and $289,579, respectively, which are due mainly to advances made by the CEO to pay for operating expenses.


As of September 30, 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 to September 30, 2012 and in the three months to September 30, 2011 incurred expenses of approximately $6,000 and $5,875 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 month period ended September 30, 2012, the Company did not issue any shares of common stock.


















10




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 September 30, 2012 and the Form 10-K for the fiscal year ended June 30, 2012.


RESULTS AND PLAN OF OPERATIONS


THREE MONTHS ENDED SEPTEMBER 30, 2012 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2011


In the three month period ended September 30, 2012, the Company recorded revenue of nil and a gross profit of nil.  In the corresponding three month period ended September 30, 2011, the Company recorded revenue of nil and a gross profit of nil.


The Company had a net loss of $17,195 in the three month period ended September 30, 2012 compared to a net loss of $7,520 in the three month period ended September 30, 2011. Expenses increased from $7,520 in the three months ended September 30, 2011 to $17,195 in the three months ended September 30, 2012 primarily due to audit fees.


LIQUIDITY AND CAPITAL RESOURCES


The cash and cash equivalents balance decreased $32 during the three month period ended September 30, 2012 from $101 at July 1, 2012 to $69 at September 30, 2012.


The Company reported revenue of nil in the three months ending September 30, 2012 and nil in the three month period ending September 30, 2011.  The Company incurred a net loss of $17,195 from operating activities for the period July 1, 2012 to September 30, 2012 primarily due to auditing fees and officer’s management fees.  Cash used in operating activities reduced to $(5,795) during the three months ended September 30, 2012 from $98 during the comparative prior period primarily as a result of increased payables to related parties.



11




The cash flow of the Company from financing activities for the three months ending September 30, 2012 was $5,763 compared to cash flow from financing activities for the nine months ending September 30, 2011 of nil.


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.


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.


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 September 30, 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 September 30, 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.




12




(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 September 30, 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 September 30, 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. Mine Safety Disclosures


None


ITEM 5. Other Information


None


ITEM 6. Exhibits and Reports on Form 8-K


None







14




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

11/9/2012

 

 

 

By:  /s/ Ronald J. Chapman

Director

11/9/2012

 

 

 

By:  /s/ Philip A.  Shiels

Director

11/9/2012

 

 

 

By:  /s/ Graham O. Chappell

Director

11/9/2012



 

 

 

 

 

 

 

 

 

 












15